CRM: Customer Relationship Management

Objectives

• CRM is a strategy…• CRM & SCM are the company’s

DNA • Collaboration is the key to a

leadership management based in customer satisfaction and loyalty

Getting Ready…

• Strategy• CRM• Logistics• Collaboration

Strategy

• 70’s & 80’s: strategy hot but difficult– Focus on Japanese implementation success

• Exercise in best practices, not strategy

• 90’s: Change, speed, being dynamic, reinventing business as e-business

• Strategy is considered rigid and inflexible

• Wal-Mart, Dell and Intel prove that strategies work - even in times of rapid business and technological change

“…a plan or method to achieve a specific objective”

CRM

…is a comprehensive strategic approach to providing seamless coordination between sales, customer service, marketing, field support and other customer-touching functions for the purpose of creating competitive advantage through relationships with the customers you choose to serve.

CRM Is A Strategy

• Began as Sales Force Automation in early 90’s

• Is an organic process by which organizations become customer-centric– New strategies - > redesigned functions - >

reengineered work processes - > supporting technology

– Can’t change how we interact with customers without changing internally focused organizational values and structures

CRM Is Difficult

• CRM isn’t cheap, easy or optional• Means the dissolution of

departmental silos• Requires long-term effort• Attitudes / behaviors of CEOs /

senior management are some of the reasons CRM is difficult

#1 CRM Decision• Who are your key customers?• What is their current value and strategic

value?– Clearly defined customer profitability / value– Definition communicated to the customer– Gaps in the current relationship identified– Goals and timelines set with that customer– If can’t resolve, mutually agree to no longer

work together• “Hire” the right customers from the

beginningCustomers are not all equal.

Treat different customers differently.

G2000 Enterprises: Y2000 CRM

• Stovepiped approach• Little thought to CRM ecosystem or

front-office process integration• Single function / channel

deployments

Source: Steven Bonadio, Application Delivery Strategies, META Group

G2000 Enterprises: Y2000/01 CRM

• Automation / integration of individual, intra-enterprise customer-facing processes with back-office / supply chain functions – Demonstrable ROI– Efficient customer-focused fulfillment

required Source: Steven Bonadio, Application Delivery Strategies, META Group

G2000 Enterprises: Y2002 CRM

• Proliferation of multi-process, cross-functional front- to back-office supply chain integration efforts across multiple channels– Growing use of CRM, SCM and ERM

application suites / architectures– Maturing EAI frameworks and XML-

based messaging standardsSource: Steven Bonadio, Application Delivery Strategies, META Group

G2000 Enterprises: Y2003/04 CRM

• Demand fulfillment ‘norm’ of downstream supply-driven push is replaced by upstream demand-driven pull– Vendor consolidation/solution expansion– Collaborative supply chain network evolution– CRM infusion within G2000 organizations

• Competitive advantage: Map existing CRM activities in marketing, sales and service to companion back-office/supply-chain functions

Source: Steven Bonadio, Application Delivery Strategies, META Group

CRM + ERM + SCM

“Organizations can no longer afford to view customer relationship management (CRM), enterprise resource management (ERM), and supply chain management (SCM) initiatives as separate. Synchronizing front-office, back-office, and supply chain activities is critical to attracting/retaining customers, fulfilling demand, and improving cycle times.”

Source: Steven Bonadio, Application Delivery Strategies, META Group

Effective Fulfillment = Loyal Customers

• Make it easier to do business with you and more difficult to go elsewhere

• Create learning relationships– Identify the customer immediately– Act on information gathered previously– With each interaction, ask for feedback and

‘reward’ the customer– As move along the learning curve, the

customer gets a product they can’t get anywhere else because they helped create it

Value of Customer Loyalty

• Tangible– 5% increase in customer retention can

boost profits 25% to 125%– Shorter customer relationships = lost profits

• 4 to 7 x more to replace a lost customer• “Old” customers buy more

• Intangible– Image, references and additional work– Challenging projects increase internal skills

and knowledge

Logistics

Right Channel

Right Customer

Right Product

Right Price

Right Time

Right Docs…management of the flow of materials from the point of origin to the point of consumption to meet customers’ needs

Collaboration

• Formal structure• Exchange of proprietary

information• Direct access and processing• ‘Real-time’• Visibility• Impact of the Internet

…the act of working together; to cooperate…

CRM + Logistics + Collaboration

A comprehensive, cooperative strategy encompassing all links in a supply chain - - designed to provide the seamless flow of materials from the point of origin to the point of consumption - - the success of which creates competitive advantage for the suppliers.

CRM + Logistics + Collaboration

Right Channel

Right Customer

Right Product

Right Price

Right Time

Right Docs

New Ways to Collaborate• Collaborative Business Communities

– Old: Suppliers - > Manufacturers - > Distributors - > Customers - > Consumers

– New: Value network - > End-User– Challenges: Support infrastructure,

leadership roles, technology, trust, change…a new paradigm

– Benefits: • Better visibility• Increased velocity• Reduced impact of variability

New Ways to Collaborate• Merge-in-transit

– 3rd party adds value to product between its origin and its ultimate destination

– Objective: Reduce cost of getting products to customers

• Suppliers ship to consolidation or merge point where order is held; ships as single order when complete

– Examples• Cisco and Fed-Ex (in beta test)• GroceryWorks.com

Return on Your Investment

• Financial Performance Measures• Productivity Performance Measures• Quality Performance Measures• Response Time Performance

Measures• Return on Customer Loyalty

Future Considerations / Next Steps

• Evaluate / develop CRM / Logistics strategies• Assess current state of business processes

and do gap analysis• Develop business case and metrics• Evaluate CRM / Collaboration technology

options• Implement Web-based B2B or B2C scenarios

– Personalization– One-to-one marketing

Service levels and logistics costs will differentiate trading communities

Manufacturer Distribution

Manufacturer Distributor

100% Fulfillment -Multiple Ordering/Shipping Points

Manufacturer Distributor

Dynamic Pricing Driven ByDynamic Demand

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Dynamic Prices

Questions or Comments?