Customer Relationship Management at Maruti Suzuki

Submitted on 20-Feb-2012 Group#08 (Section B) Basu Agarwal Bikram Satapathy Saloni Goel Shruti Mishra Srinivas Dhenuvukonda (FT12416) (FT12417) (FT12455) (FT12462) (FT12467)

Great Lakes Institute of Management, Chennai

Index
Page 1.0 2.0 Introduction Various Technologies at Maruti Suzuki Level of CRM 3.0 Analytical CRM 3.1 3.2. 3.3 3.4 4.0 Data base Direct marketing-Data analysis Cross-selling of various value added services 5 5 6 6 3 4

Customer Retention for Service at dealers, satisfaction, thereby, sales retention for the future 7 8 10 10 10

Operational CRM 4.1 4.2 4.3 4.4 Campaign management for promoting the special offers SX4 Pre-launch Campaign management on MSD CRM 4.0 Insights for Dealer Development Division (DDD) & used car division (TRUE VALUE) Loyalty card implementation (Auto card) 11

5.0 6.0 7.0 8.0

Strategic CRM Philosophical CRM Challenges addressed by MS Dynamics CRM 4.0 Future challenges of Marutis CRM

11 12 14 14

Great Lakes Institute of Management, Chennai

1.0 Introduction
Maruti Suzuki is the Indian passenger car market leader for several decades. It has crossed the 10 million cumulative domestic sales mark here today. It is the only automobile company in India to cross this milestone. The Company, which had rolled out its first car in December 1983, attained 5 million domestic sales in February 2006. The next 5 million domestic sales have been achieved in six years. The 10 millionth vehicles, a Red Swift Vxi, was dispatched to Coimbatore on February 9th, 2012 from the Company's Manesar plant. While Maruti 800 and Omni powered sales for almost two decades, the Alto has been India's best-selling car for the last over 7 years. In recent years, the success of WagonR and Swift, among others, has accelerated the Company's progress towards the 10 million mark. Dedicating this milestone to customers, Shinzo Nakanishi, Managing Director and CEO, Maruti Suzuki India Limited, said, "Maruti Suzuki's success story is closely linked with the success story of India in the last two decades. Even as India has grown and transformed, Maruti Suzuki has evolved to meet changing demands. He said, we will continue to drive the growth and evolution of India's car market. I thank employees, dealers and suppliers for their support and commitment". Top five Maruti Suzuki models in cumulative sales Models M800 Alto + K10 Omni Wagon R Swift Cumulative Units sold 26.36 lakh units 19.08 lakh units 14.37 lakh units 11.14 lakh units 6.85 lakh units

Despite holding strong position in the market, Maruti Suzuki losing market share drastically due hyper competition prevailed with the entry of foreign players such as Ford, Chevrolet, Toyota, Honda & Renault etc. With that competition in place, the marketers now had to focus on customer oriented activities to stay in touch and retain them. Also, Maruti used communicates with the dealers and dealers, in turn, the dealers communicate with the end customers and vice versa. With this, there is lot of widened gap of understanding the customer needs and wants. With that dissatisfied customers are growing immensely. there is no proper channelizing system to deploy the customer complaints and then solve them on time. Diagnosing these dynamic changes in the customer market, Maruti wanted to Great Lakes Institute of Management, Chennai 3

communicate with the existing customers directly and understands the requirements and serve them better. Hence, Maruti had to initiate various customer focused marketing activities such introducing Customer Relationship Management (CRM) to retain the customers, acquire new customers & increase the customer satisfaction& loyalization.
Maruti Suzuki

Maruti Suzuki

Dealer

Dealer

Customer

Customer

Fig 1(a). Traditional Communication

Fig 1(b). Direct Communication through CRM

2.0. Various technologies at Maruti Suzuki

HCL technologies implemented the CRM at Maruti Suzuki. They have implemented Microsoft Dynamics CRM 4.0 in a span of approximately 6 months. Application
Dealers Management system ERP CRM

Technology
Oracle 9i Oracle-business suite Microsoft dynamics CRM

Suppliers
Wipro, Oracle Wipro, Oracle HCL, Microsoft, SAS

Great Lakes Institute of Management, Chennai

3.0 Analytical CRM 3.1. The data base

The database is the pre requisite for any kind of data analysis that is done in the analytical CRM module. Since Maruti has established network of data centers through dealer transactions and toll free number-call center data capturing etc. Maruti through various channels. Those are the following. 1) Any Time Maruti- toll free call center (operated by HCL Technologies at Noida). All kinds of queries are logged at (ATM) and the kind of information received into the following areas. a) New sales queries due to campaigning or advertising by Maruti b) Existing customer sales queries/complaints c) Service complaints These databases are automated to get migrated with respective operational CRM software modules from the call Centre. 2) Dealer Management System (DMS), dealer transaction module which is connected through extranet to the central server of Maruti. a) All the queries (sales/service/true value) are logged onto the DMS portal by the channel partners. b) The same data is migrated to the Microsoft dynamics Software at Maruti. The database from these sources is used for need analysis after the data is cleaned using various data warehouse/data mining techniques.

DMS

MSD server

CTPI RDBMS DW DA SAS platform

ATM

HCL call Centre server

Fig 2. Customer Database flow for analytical CRM

Great Lakes Institute of Management, Chennai

3.2. Direct marketing-Data analysis

The problem with direct marketing is with the fact that success rates of direct marketing are very low. For example, some survey suggests that national average of catalog sales success ratio is about 2% ! With such success ratio, selling low profit margin products through direct marketing may not be feasible. Analytic methods that can select customers who are more likely to buy products are needed. The following techniques can be used in selecting customers;

Customer profiling Customer segmentation Customer scoring Predictive modeling

These techniques can reduce marketing cost by eliminating customer groups who are unlikely to place orders. The techniques that are extensively used in Direct Mail Marketing are RFM analysis, clustering loyalty scoring etc.

3.3. Cross-selling of various value added services

Cross-selling is to sell other products to existing customers. To increase the success rate, other products tend to be co-products or related products. For example, a customer who bought a SWIFT car will likely to purchase extra accessories, extended warranty and Auto card. The following chart shows customer purchasing behaviors;

Cells in red color indicate that there is positive relationship between two products. That is, when customers buy one product, they tend to buy the other product as well. Cells in blue color Great Lakes Institute of Management, Chennai 6

indicate the opposite. When customers buy one product, they tend to not buy the other product. Brightness of cells indicates the relative strength of relationships. The chart shows that the following product pairs have strong positive relationship;

Product P ~ Product O Product P ~ Product F Product O ~ Product F

Also notice that most product pairs show negative relationship (in blue). Knowing negative relationship can prevent from wasteful marketing efforts! The strongest pairs as follows;

Product E ~ Product H Product G ~ Product J Product G ~ Product H

3.4. Customer Retention for Service at dealers, satisfaction, thereby, sales retention for the future
In the current scenario of Indian passenger car industry, customer churn is a big problem as the competitors are pouring sops on customers .Also; it is the duty of OEM to ensure that every customer is retained by the dealer for service needs. As in these days, the margins on sales of new cars for dealers is almost vanished or narrowed down, it is the service business that makes the dealers viable. Also, acquiring a new customer is costly when compared to retain the existing customer. Hence, retention of customers for both future purchase of the cars and current service needs is necessary for Maruti Suzuki.

For obvious reasons, the most important strategy in customer retention is to identify groups that are likely to leave (potentially to rival providers) through performing retention (alternatively defection) rate analysis. Once they are identified, preventive measures can be developed and actions can be followed to prevent defections. The following techniques can be used to identify customer groups of defection risk; The main objectives of MS Dynamics CRM at the analytical level are to provide the predictive modeling for probable dissatisfied customer in the service and provide the insights to the related department. The satisfaction scores and churn scores can be calculated at this level

Great Lakes Institute of Management, Chennai

Defector profiling Develop profiles of risky groups based on demographic, geographic and psychographic attributes. Defection scoring Build neural network predictive models that can predict likelihood of defection.

4.0. Operational CRM

Operational CRM generally refers to services that allow an organization to take care of their customers.it provides support for various business process, which can include sales, marketing and service. The operational CRM addresses the various issues such as high customer turnover, ROI on marketing and promoting, customer satisfaction scores etc.

CTPI DMS MSD server RDBMS DW ATM HCL call Centre server DA SAS platform Microsoft Dynamics CRM 4.0 Interface

MS Office

Fig 3. Operational CRM Architecture

A campaign is a record for storing the details about a marketing effort that uses multiple tasks to reach customers. The following diagram illustrates how to use a campaign in Microsoft Dynamics CRM to track the marketing efforts.

Great Lakes Institute of Management, Chennai

When everything is ready to plan a new marketing campaign, the first steps are often gathering information and determining your audience. From there, one can create your team and your budget for the campaign and get ready for launch. All this information, as well as data about the campaign tasks, can be stored in a campaign record, allowing you easy access to the details of a particular campaign. You can also run reports on the campaigns and see what marketing works best for your organization.

Great Lakes Institute of Management, Chennai

4.1. Campaign management for promoting the special offers

CRM division of Maruti Suzuki runs campaign management using MSD CRM 4.0 to target various segments of customers using the data available from analytical CRM.these kind of campaigns are run to promote the products with some offers such as cash discounts, bundling offers, exchange offers etc. CRM will contact each and every customer with customized marketing program. Interested customers will respond back, the responses from the customers are again captured by CRM database. This can be further analysed for insights using analytical CRM frame work. Hence, CRM is an iterative process.

4.2. SX4 Pre-launch Campaign management on MSD CRM 4.0

The launch of SX4 is an example of Marutis CRM campaign management for positioning a new product using MSD CRM successfully. The objectives were to position the car in the sedan segment in competion with Honda City, to conquer new customers and loyalize the previous model Baleno. An integrated communication campaign was launched that coordinated TV and print campaigns, direct marketing, preview events, electronic media, as well as dealer marketing. The goal of entire marketing was to select relevant prospects for the actual launch in the upcoming period. The activity started by one-to-one bulk email marketing followed by print and TV advertising. Based on the responses of this activity, the prospects are called for preview launch, thereby; the contact details of these hot prospects are passed to dealers for the follow up once the product entered into the actual market. The effectiveness of the campaign was measured in terms of response rate, cost per contact, ROI on campaign & quality of prospects. Overall the campaign was extremely successful, not only premium positioning but also in terms of leading sales in the targeted segment (Honda Siel /Ford fiesta/Hyundai Verna).

4.3. Insights for Dealer Development Division (DDD) & used car division (TRUE VALUE)
There are two major responsibilities of the DDD division. 1. Improving the customer satisfaction of the existing customers through dealer activities. 2. Enhancing dealer network by analyzing the demographic variables. Analytical CRM will provide the satisfaction scores (defection scores) upon which there will be action taken by the relevant division for improving the customer satisfaction measures. This would help the dealers to increase profitability by retaining them. Also, analytical CRM will provide the cluster analysis, upon which the DDD will take action to appoint a new dealer in the city or close down the existing one. Great Lakes Institute of Management, Chennai 10

The TRUE VALUE division undertakes trade-in activities of any car in the market. Operational CRM will provide recommendations based on the data from DMS or Maruti ecommerce portal of exchange of cars or other sources.

4.4. Loyalty card implementation (Auto card)

Maruti Suzuki loyalty card is a unique loyalty reward program designed exclusively for the owners of Maruti cars. The program is loaded with powerful features and offers the customers best services along with exciting rewards and privileges. With this program the customers will not only get reward points on spending but also on the contribution to the ever increasing sales of Maruti cars. Like, whenever the customers recommend his friends or colleagues, he/she would earn reward points which can redeemed while buying any product or service from Maruti. Maruti ties up SBI Bank to penetrate into rural market. MSD CRM 4.0 will help the Loyalty program department in tracking the customers and their purchase benefits so that it can provide insights and recommendations for one-to-one marketing through SMSs and emails. This would help Maruti retain these customers and offer custom solutions to each customer.

5.0 Strategic CRM

Customers

Owners

Strategic CRM
Employees

partners

Suppliers
competito rs

Fig 4: Strategic CRM framework for Maruti Suzuki Great Lakes Institute of Management, Chennai 11

Owners: A successful CRM strategy should create value for not only customers but for also investors or owners. Its top-down approach. Hence, management commitment is crucial to implement successfully. Customers: customers are the major focus of the CRM strategy Partners: partners such as dealers commitment in supporting the data is crucial for success of the CRM. Suppliers: Suppliers (HCL, SAS , Microsoft etc)the success of the CRM strategy largely depends on the quality of the product chosen and quality of service provided by them and commitment. Management: Employees: Key stake holders are employees in this process. There will be resistance for change of existing systems to new CRM strategy. Top management seriousness will ensure adaptation of CRM among the employees. Competitors: competitors practices influence the selection of CRM as it is a competitive advantage that it can create over the competitors.

6.0 Philosophical CRM

The following are the Maruti Suzukis philosophies for implementing CRM To identify customer success factors To create customer based culture To adopt customer based measures To develop end to end process to serve customers with the existing products To maintain competitive edge in serving the customer

Great Lakes Institute of Management, Chennai 12

The overall activities of CRM division mapping of those of other divisions in Maruti Suzuki is given in the following Table. Divisions of Maruti CRM Division of Maruti Suzuki Analytical CRM Operational CRM Strategic CRM
To implement CRM on Microsoft Dynamics CRM 4.0.plotform. Inhouse developed and customized. To identify customer success factors To create customer based culture To adopt customer based measures To develop end to end process to serve customers with the existing products To maintain competitive edge in serving the customer

Philosophical CRM

Marketing

Cluster analysis, RFM analysis, Clustering

Campaign management

Sales

Need analysis,

Lead management, complaint management, sales satisfaction Network enhancement, New dealer establishment Complaint management, Customer satisfaction

Dealer Development

Clustering

Service

Customer churning, defection scoring

Sales support Division(Used cars, Auto card, other activities)

Clustering, RFC,

Trade-in promotion, Loyalty program

Great Lakes Institute of Management, Chennai 13

7.0. Challenges addressed by MS Dynamics CRM 4.0 at Maruti Suzuki

Create and maintain the platform for reporting & dash-board creation as a Business Intelligence initiative to leverage data of over 6 million customers. Data migration from DMS (Oracle 9i platform to) Microsoft Dynamics CRM 4.0 platform, the two different technologies migrated successfully for the strategic purpose of Maruti Suzuki. Customer level data-mining for enhanced decision making of stake-holders such as Brand managers, Network development team and used car divisions etc. Advanced Analytics: Predictive Models for Up-Sell, Cross-Sell and other business problems. Monitoring of data of the company in terms of sourcing, sufficiency & quality . It has catered the needs of brand managers for effective campaigning and targeting the right set of customers cost effectively.

8.0. The future challenges for Maruti Suzukis CRM

There is lot of service campaign budget over spending on huge set of customers. To optimize the utilization of service budget using CRM analytics, so that only right set of customers is targeted for campaigning. Hence, fully integrated CRM is the next big challenge. Holistic integration of CRM with SCM: A holistic integration of CRM systems with SCM systems in preliminary value-add activities represents further evolution in an OEMs CRM activities.. Car design controlled by demand profiles provides better capacity planning and thereby can help reduce fixed costs. As a result, OEMs considerably improve their variability. To operationalize these strategies, an OEM first needs to have an overview of all internal CRM strategies. OEMs that have already centralized their CRM need to develop an extensive strategy that incorporates customer-specific national and regional CRM solutions. It is anticipated that only concepts that combine realistic goals with positive economic results will succeed. Helping the dealer better Sales forecasting: currently Maruti dealers are forecasting based on tactical measures. The CRM can be extended to integrate with DMS, there by better accuracy of forecasting of vehicles and thus less inventory costing, in turn, helps increase dealers profitability. Maruti launched e-commerce portal for used cars trade in recently & integrating the CRM with the e- commerce portal for better insights for the used car business.

Great Lakes Institute of Management, Chennai 14

References:
http://www.marutisuzuki.com/ http://www.marutisuzuki.com/showroom.aspx http://en.wikipedia.org/wiki/Maruti_Suzuki www.hcltech.com www.microsoft.com Customer relationship management, a database approach, V Kumar, Werner J. Reinartz

-----------------------------END-------------------------------------

Great Lakes Institute of Management, Chennai 15