CRM: Still in its Infancy

Dhairya Maheshwari ( PA- 04) Tanmay Dodal (QA 20)

Introduction to CRM
The expression CRM has been in use since early 1990s

Many attempts have been made to define the domain of CRM

Consensus has not yet emerged The meaning of 3 letter acronym CRM is contested Misunderstood as Customer Relationship Marketing

CRM Practice at a Standstill

CRM has reached the awkward stage in its adoption cycle The concepts and its benefits are widely accepted but not implemented The label CRM has loosely applied to anything that suggests customer centricity No single definition has been used Many misunderstandings The relationship building should start with an understanding of the customers needs They talk about share of the wallet but fail to realize you cant get access to it until u have access to customers heart and mind

Misunderstanding of CRM
1]CRM is a database marketing: Building and exploiting customer database for marketing purpose Stored on computers Used for Marketing purpose

2] CRM is a Marketing Process: CRM application used for Market segmentation, customer acquisition, customer retention, and customer development
Used throughout the enterprise than just marketing department HR, R& D and Operations Management

Misunderstanding of CRM
3] CRM is an IT issue: Do not focus on strategic initiatives IT is an enabler, facilitator Importance of people and process is ignored 4] CRM is about Loyalty schemes: Loyalty scheme play 2 roles: a] Generate data that can be used for acquisition and retention b] Reluctant to exit

5] CRM can be implemented by any company:

CRM Concept
Customer relationship management (CRM) is a model for managing a companys interactions with current and future customers. It involves using technology to organize, automate, and synchronize sales, marketing, customer service, and technical support.

Win- Win strategy

Success & Failure Rate of CRM

Failure Rate: 50 80 % Gartners 2002 Study of European CRM Survey: more than 50 % Cap Gemini E & Y: 70 % Failure Peppers & Roggers: 80 % Failure crmindustry.com: 56 % Failure

CRM Scenario
Most Popular Business Concept Acceptance has been confirmed Enthusiasm has been Proven

Investment has been quantified

CRM has not been the Panacea many had hoped

Planning and Implementation

Reasons for Failure of CRM

Lack of Business Case Lack of Executive (Top Management) sponsorship Lack of strategy Absence of Process Reengineering Failure to Create Customer Focus Organization with Cross functional Involvement Lack of CRM Project Plan Failure of Change management Over reliance of Technology Integration Problem

Reasons for Failure of CRM

Lack of Business Plan: Projection of cost savings as the main driver Focuses more on Subjective issue without taking into account all relevant details After approval , do not stick to business case Absence of tools required for measuring customer value

Reasons for Failure of CRM

Lack of Executive Sponsorship: Departments in an organization can improve the performance with CRM If successful, project gets internal support

Rejection from Steering Committee

Reluctance of Executive towards investment because of cost

Reasons for Failure of CRM

Lack of strategy: Goals must be quantifiable and precise : Building a strategy Lack of strategy Lack of direction

Focus is on the organization and not the customer Failure to communicate the objectives Missing Linkage between CRM and High level Business strategy

Reasons for Failure of CRM

Adopting New Technology without changing Business Process: Monitoring the Business Process is crucial New approach need reengineering of the process If any new technology adopted, new business process New technology with old Business Process leads : A]Speeding of the old faulty process B] Repetition of same old mistakes

Reasons for Failure of CRM

Failure to Create Customer Focus organisation: Focus is on the organization and not customer Vertical thinking Right people were not deputed and were not qualified

Reasons for Failure of CRM

Lack of Effective CRM Plan: Getting influenced by the competitor Carried away by Software vendors deal Hasty decision of CRM Implementation

Reasons for Failure of CRM

Failure of Change Management: CRM changes many things in an organisation Structure , peoples role , Processes change but management of this change is difficult

Over reliance on Technology: Organization not ready for technology

Employees lack the skill set

Reasons for Failure of CRM

Integration of CRM: CRM software and Technology comprises of a web of very complex technologies Integration of database, application programs and Computer Networks is must Integration done after CRM implementation

Reasons for Failure of CRM

Data Quality is Ignored: Updated data and Accurate data Customer data is the foundation on which other CRM activities work

Inferior Quality Data

Organizational Politics are driving totally disconnected initiatives: Employees may feel there power is taken away Resistance is seen Departmental Politics

Consultancy Firm Views Regarding Failure of CRM

According to Technology and Consultancy Firm Accenture Failure of CRM is due to : Focusing on capital building Failure to obtain and maintain the executive support Failure to align key internal functions Inability to link CRM with high level business strategy Lack of an integrated plan

Consultancy Firm Views Regarding Failure of CRM

According to Harvard Business review, reasons for failure are: Implementing CRM technology before strategy creation

Installing CRM technology before creating a customer focused organization

Assuming that More CRM is better Stalking and not wooing the Customers

Case Study of Cigna Corporation

Cigna healthcare: New claims processing and customer service processes and systems Migrated 3.5 milion of its members 1 billion dollar initiative towards CRM and technology infrastructure

Case Study of Cigna Corporation

Integrated process and systems for enrollment, eligibility and claim: a]Customer would get one bill b]faster and efficient processing of medical claims

Aimed for making the healthcare accessible online: a] Members to enroll b] Check the status of the claims and benefits

Case Study of Cigna Corporation

Implementation of the new customer service processes and systems Small scale migration moving its members in small groups During this time,problems were limited and manageable Customer service areas were being revamped

Lay off of 3100 employees and invested $32 million in the new regional service centers
Mass migration to new infrastructure

Case Study of Cigna Corporation

Problems emerged: Members had trouble obtaining, confirming and inquiring about coverage Membership data problems Member ID cards :Issued with incorrect numbers and prescription icons Reps struggled to navigate the systems Problems in one area cascaded into others: a]Staffing levels were inadequate b]lack of training Nations 4th largest insurer lost 6% of its healthcare membership

Success Factors
1] Strong Internal Partnerships around the CRM strategy: CRM should touch all the areas of the organisation Responsibility of management to build parternship CRM needs to be discussed and implemented Rebuild partnerships with the area that is lacking CRM

Success Factors
2] Employees at all levels and all areas accurately collect information for the CRM system: Employee should understand what information is to be captured and why it is important

3] CRM tools : Customer and Employee friendly Integration should be done to make it Customer interactive

Success Factors
4] Report out the data you use, and use the data you report: CRM strategy should be used to run the data Sharing of the data should be done with the team 5] Dont go High tech when low tech would do: Organizations that successfully implement CRM look for the simplest solution when implementing their CRM strategy

Case Study of
Background:
Nordstrom was founded in Seattle more than 100 years ago and has embraced customer service from day one. In the 1980s the firms customer service became legendary: Clerks were known to pay shoppers parking tickets Rush deliveries to offices Unquestionably accept returns Lend cash to strapped customers Send tailors to customers homes

Case Study of
The 8 Management Principles of Americas #1 Customer Service Company are:
1. 2. 3. 4. 5. 6. Provide your customer with choices Create and inviting place for your customer Hire nice, motivated people Encourage Internal Competition Empower Employees to take ownership Commit 100% to customer service

Case Study of
Provide Customers With Choices
Provides customers with a wide and deep inventory: Typically carries between 150,000 and 200,000 pairs of shoes Wide assortment of apparel and cosmetics to choose from For customers credit ease, Nordstrom has a card for every budget: Nordstrom Retail, Nordstrom Legacy, Nordstrom Platinum, Nordstrom Platinum Legacy

Case Study of
Create an Inviting Place for Your Customer: Store layout like a wheel The hub is the escalator and the spokes are the marble aisles that lead directly back to each of the 30 departments or so Convenience Wide Aisles: along with wider escalators and elevators, make it easy for customers to circulate through the entire store Large waiting rooms, furnished and welcoming Refreshments Currently 4 restaurant concepts; from espresso cart to fullline restaurant

Case Study of
Hire Nice, Motivated Employees: The best salespeople are entrepreneurial self-starters. Nordstrom gives people the freedom to do whatever it takes to make the customer happy (as long as its legal)

Encourage Employee Competition Sales people, who are paid on commission, are judged on their performance, not their obedience orders. Workers are sorted out by a natural selection process where only the fittest survive. The company has very high expectations. If you dont meet them, youre gone.

Case Study of
Empower the Employees to Take Ownership:
Nordstrom gives the people on the sales floor the freedom to make good judgmentsand management supports them in those decisions. No questions asked return policy (transaction service) Personal thank-you notes from employees (post transaction service) Sales people receive constant pep talks from management

Commit 100% to Customer Service:

Nordstrom does not consider customer service a strategy, but rather a way of life Nordstrom continually reinforces this attitude by spreading stories of customer service that are above and beyond the call of duty

Case Study of

The Inverted Pyramid represents the companys philosophy and structure, placing customers at the top. Next are those who directly serve customers

Steps to a CRM Initiative

IDIC Model suggested by Don Peppers and Martha Rogers

Building Relationship with Doctors

1] Identification:
MR maintains a list of doctors of his area The list : MSL (Must See List) MVL ( Must Visit List) Key Driver : Integration of this data to a central database Addition of data a] Membership directories of Associations: IMA have a directory which lists personal information Good source to begin Individual associations for all the specialities

Building Relationship with Doctors

b] List of Conference Participants: Speciality organises national level conference Details collected through sponsorship of front desk,organising contests List can be mined for details of speciality wise break up, geographical coverage 2] Differentiation: MRs would classify his doctors through ABC ( Pareto Analysis) Differentiation done on the basis of perception of MR This would help in subclassifying into the important doctors and not so important ones

Building Relationship with Doctors

3] Interaction: To build on the data that has been collected Interaction can be done at Two Levels : a] Personally at MR level MR can collect information by interacting with customers Formal structured questionnaire can also be administered Biggest hurdle : MR himself b] Interaction at Corporate Level: Structured Questionnaires can be mailed to doctors Yield a lower rate of return but the quality of information is superior

Building Relationship with Doctors

4] Customisation: Maintaining Personal relationship by greeting on various occasions To customise the interaction with Doctor based on the data

Master Database is generated which would record every contact with the doctor
Master Database would be a key driver to foster a learning relationship

From CRM to CMR

The time has passed for customer relationship management Its time to recast the discipline of CRM as one of greater customer empowerment Customer management of relationships(CMR) makes doing business better for the customer. CMR requires management change not change management CMR also needs operational and process changes that will allow the company to respond to individual customers needs CMR will touch every business and cultural area, every human relationship and every technology CMR is not about launching yet another campaign CMR is about creating an experience, personalizing the interaction with individual customers

CRM
The company is in control Makes business better for the company Tracks customers by transaction Forces customers to do what you believe theyll want Customers feel stalked Organized around products and services

CMR
The customer is in control Makes business better for the customer Tracks customers as individuals Lets customers tell you what they care about Customers are empowered Organized around customers

References
1. Customer Relationship Management, Concepts and Technologies, Francis Buttle 2. Customer Relationship Management, A Strategic Imperative in the World e-business, PriceWaterCoopers,Stanley A. Brown 3. Customer Relationship Management,Kristin Anderson & Carol Kerr 4. Understanding CRM,Present and Future,R.S.Prasad 5. Customer Relationship Management,Emerging Concepts,Tools and Applications,Jagdish N sheth,Atul Parvatiyar,G Shainesh 6. Customer Relationship Management,A Strategic Approach to Marketing,Kaushik Mukherjee