CRM –

Concepts & Functional

Aspects

Lecture 4 – 6 (14th November 2009)

IIFT MBA(IB) 2007 - 10, Trimester - VIII

Re-cap of the last class
Agenda
„ Introduction
„ Stakeholder Expectation
„ Overview of CRM
„ Group Exercise #1
„ Detail Discussion on each functionalities
„ Group Exercise #2
„ Case Studies
„ Exam Preparation
„ Conclusion of the course

18-Nov-2009 3
Definition of CRM
„ There are many perspectives and definitions of
CRM. At its most simple, CRM could be
thought of at three levels:
„ CRM is about the implementation of a specific
technology solution project
„ CRM is the implementation of an integrated series of
customer-oriented technology solutions
„ CRM is a holistic strategic approach to managing
customer relationships in order to create shareholder
value

18-Nov-2009 4
Relationship Marketing

18-Nov-2009 5
Classification of CRM
„ Analyst firms classify CRM into several types:
„ Operational CRM
„ Analytical CRM
„ Collaborative CRM

„ Other terminology used in the CRM market

includes
„ Strategic CRM
„ e-commerce CRM
„ Partner relationship marketing or PRM

18-Nov-2009 6
CRM Strategic Framework

18-Nov-2009 7
Class 4 - 5
CRM Distribution

Public Process
not assigned
Services Industries
Financial 1%
5% 18%
Services
2%

Service
Industries
26%

Discrete
Industries
Retail 26%
6% Consumer
Products
16%
18-Nov-2009 9
CRM Strategic Framework

18-Nov-2009 10
Customer-Centric
E-Business
with CRM
Components of CRM

18-Nov-2009 12
CRM Major Components

„ CRM Marketing

„ CRM Sales

„ CRM E-Commerce

„ CRM Service

„ CRM Interaction Centre

„ CRM Analytics

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CRM Sales
„ Ensures consistency, effectiveness, and predictability
throughout the sales cycle
„ Sales Planning and Forecasting
„ Territory Management
„ Account and Contact Management
„ Activity Management
„ Opportunity Management
„ Quotation and Order Management
„ Contract Management and Leasing
„ Incentive and Commission Management
„ Sales Analytics

18-Nov-2009 14
 Entire CRM Sales Suite

Account & Quotation & Contract Incentive &

Sales Planning Territory Activity Opportunity
Enterprise Sales Contact Order Management & Commission
& Forecasting Management Management Management
Management Management Leasing Management

Account & Quotation & Incentive &

Sales Planning Territory Activity Opportunity Contract
Field Sales Contact Order Commission
& Forecasting Management Management Management Management
Management Management Management

Quotation & Order Shopping Basket Interactive Selling

E-Selling Price Management Web Auctions Collaborative Selling
Management Management & Configuration

Incentive &
Account & Contact Opportunity Quotation & Order
Telesales Activity Management Commission
Management Management Management
Management

Account & Pricing & Interactive Quotation & Multi-tier Sales

Activity Opportunity Partner
Channel Sales Contact Contract Selling & Order Tracking &
Management Management Compensation
Management Management Configuration Management Forecasting

Collaborative Distributed Catalog & Distributed Order & Hosted Order

Channel Commerce Hosted Partner Sites
Showroom Content Management Inventory Management Management

Interaction Channel
Analytics Customer Analytics Product Analytics Marketing Analytics Sales Analytics Service Analytics
Analytics

18-Nov-2009 15
 Customer Order Fulfillment
Receives the “hot lead”, Maintains sales team
Qualifies a lead as a checks and accepts it and assigns products
“hot lead” or product categories
Sales
Sales
Representative
Lead Representative
Qualifier 22 33
11

Plans activities per Sales

Sales Monitors Win/Loss phase (Sales Representative
Manager Analyses Methodology) 44
99
Qualifies
opportunity (Sales Sales
Sales Methodology) Representative
Representative Creates
quotation 55
Creates 88
sales order Sales Develops value
Sales
Representative Representative proposition
18-Nov-2009 77 16
66
 Sales Planning & Forecasting
Valuates the planned 11 Sets sales targets
Strategic & conducts
quantity & calculates Planner
the expected profit performance reviews
Performs market
Sales
Financial analysis & defines 22
66 Planner
Manager
strategies

Plans & monitors 33 Sales

Supply Chain Representative
55 transactions with
Planner
the partner
44 Channel Delivers market-driven
Ensures the availability of Manager sales plan by Accounts,
capacity & establishes a Territories & Opportunities
logistical quantity

18-Nov-2009 17
 Activity Management
Inititiates marketing Customer calls to
campaign for new request product
product Customer
demonstation
Campaign
Manager
22
Sales
11 Representative
Checks calendar
and creates Activity
33
Creates “Customer Demo”
Sales follow-up
Representative activity
99 Creates task list, Sales
88 gathers information Representative
Writes and prepares visit
visit report 44
Sales
Representative Sales
Sales Representative Visits the
77 Representative Customer
66 55
18-Nov-2009
Creates a 18
quotation
 Contract Management
Customer negotiates Sales
Sales representative terms & conditions for representative
wins opportunity buying product creates contract
22 with favorable
11 conditions
33

Customer agrees Customer accepts

to continue contract 44
88 buying product
Sales manager
releases contract
55
77
66
Near contract completion Customer releases
date, sales representative products against contract
contacts customer to renew at regular intervals
18-Nov-2009 19
contract
CRM Sales - Market Trends
„ Prompt reactions to market dynamics require an
integrated e-business planning
„ Complex and fast-changing business requires
great flexibility
„ Planning will shift away from instantaneous and
retrospective budgeting tasks toward a rolling
and continuous predictive modeling
„ Behavioral patterns witnessed using past data are
being used to predict future behavior

18-Nov-2009 20
CRM & Territory Mgmt.
„ Territory Management enables you to structure
and organize your sales market by dividing it
into territories according to criteria of your
choice, such as size, region, or product line
„ Use flexible territory
structures to plan and
analyze your sales quotas
„ Monitor and manage your
plan/actual achievement
in a rolling forecast

18-Nov-2009 21
Sales Order Cycle

18-Nov-2009 22
Lead management Cycle

18-Nov-2009 23
Lead Management
„ Leads facilitate your company’s chance to make
business.
„ With the help of leads, you can provide a streamlined
link between marketing and sales so as to accelerate
the process between first interest and sales.
„ Leads do not provide you with complete details of
potential business opportunities, but they can help you
to find out more about a potential opportunity.
„ Lead Management is designed to help automate the
initial pre-sales process, freeing up your sales
department to focus on the most valuable prospects
and opportunities.

18-Nov-2009 24
CRM Marketing
CRM Marketing Topics
„ Marketing Planning & Campaign Management
„ Marketing Calendar
„ Personalized Mail Forms
„ Segmentation
„ Product Proposals
„ Campaign Automation
„ External List Management

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Applications in Marketing

18-Nov-2009 27
Marketing Planning Cycle

18-Nov-2009 28
Marketing Calendar Views

18-Nov-2009 29
Marketing Calendar Views

18-Nov-2009 30
Designing a M-Plan

18-Nov-2009 31
M-Plan & Campaign
„ Marketing Plan (strategic planning)
„ Defining strategic goals
„ Targeted market share, budget, etc.
„ Top-down allocation to brand, region, etc.

„ Campaign/Promotion (operative level)

„ Defining event characteristics
„ Dates, objectives, tactics, etc.
„ Defining execution parameters
„ Products, prices, etc.
„ Defining intended audience (customer segmentation)
„ Execution
18-Nov-2009 32
18-Nov-2009 33
18-Nov-2009 34
WBS Structures
„ Work breakdown structure (WBS) elements can
be used as a container for collecting actual costs
and revenues resulting from your marketing
projects.
„ WBS elements as collectors of actual costs or
revenues can be matched up with marketing
elements (CRM) as collectors of planned costs
or revenues to calculate campaign success.

18-Nov-2009 35
Campaign Management
„ Marketing activities can be planned at various
levels, from campaigns for individual products at
a local level to high-level marketing plans for the
entire company.
„ Use of marketing activities
„ Use of existing data / historical data such as
customer data and profiles
„ Start marketing actions.

18-Nov-2009 36
Customer Segmentation
„ To communicate with your customers in a
targeted way, you must know who your
customers are and you must have information
on their interests and purchasing behavior.

„ Dividing your customer master into different

groups is called customer segmentation and
depends to a great extent on planned marketing
activity.
18-Nov-2009 37
Customer Segmentation
„ Customer segmentation used to be ‘mass market’ and
‘key customers’.
„ With data warehousing solution, we are now better able
to analyze each customer’s use of different services, as
well as an individual’s total net worth to the
organization.
„ We can understand the profit and costs associated with
each customer, which means better, more customized
services for customers and increased profitability for
the organization.
„ Customer profiles/models are then created and used to
feed information into campaign management software.
18-Nov-2009 38
Customer Segmentations
„ Attributes (e.g. Hobbies)

„ Information Sets (e.g. Postal Code)

„ Data History (e.g. past Sales History)

„ External List data

18-Nov-2009 39
Customer Segmentation

18-Nov-2009 40
ELM
„ The External List Management business scenario
provides you with a comprehensive solution to
manage your external address lists to acquire new
customers, increase market share, and increase
brand awareness.
„ Address lists can be obtained from external
providers of marketing data (for example, Claritas,
Dun & Bradstreet, or Schober).
„ Marketing campaigns can be prepared and triggered
from CRM to enable customer acquisition.
18-Nov-2009 41
Sample Questionnaire

18-Nov-2009 42
Customer Identification & ELM

18-Nov-2009 43
Customer Master Data
„ E-Mail Campaigns
„ Tele Calling / Cold Calling
„ External Lists (data agency)
„ Surveys

18-Nov-2009 44
Rented Address
„ Rented address is list of Master data which is
rented out for a fixed period of time.

„ ERP treats rented address as virtual customers

and automatically deletes the rented address
after the validity period.

18-Nov-2009 45
Lead to Sales Transaction

18-Nov-2009 46
Lead Processing

18-Nov-2009 47
Sample Questionnaire

18-Nov-2009 48
Opportunity Success Steps

18-Nov-2009 49
18-Nov-2009 50
END – QUESTIONS &
DISCUSSIONS
CRM –
Concepts & Functional
Aspects

Lecture 11 – 13 (21st November 2009)

IIFT MBA(IB) 2007 - 10, Trimester - VIII

Re-cap of the last class
CRM Service
Components of CRM

16/Aug/10 4
CRM Service
 CRM service offers a blend of rich
functionalities and capabilities focused on after
sales service / support, service contract
management, service resource management,
installed-base management, etc

16/Aug/10 5
Offerings
 Service Order Processing
 Warranty Claim Management
 Complaint Processing
 Recall Management
 Service Contract Management
 Service Resource Planning
 Service Analytics

16/Aug/10 6
Service Organization Structure
Global Service

Americas EMEA APAC

Service Service Service

India Japan
Service Service

Office Delhi Office Bangalore

Group Del 1 Group Del 2

16/Aug/10 7
Service Organization Structure
– Position and Holders

Office Delhi

Group Del 1 Group Del 2

Position Service Service

Manager Representative

Employee Ramesh
Kumar

User RKUMAR

16/Aug/10 8
Service Products - Definition
 A service product is a master record that is used to represent
services. These can be internal services or services performed at
a customer’s site.
 Service products are used in:
 Service Process Item
 Service Confirmation Item
 Service Contract Item
 Product data includes the information required for specific
business processes (such as customer inquiries, sales orders,
service processes, contracts), and other basic data that essentially
describes and categorizes the product. For example:
 Data of a descriptive nature such as size and weight
 Data with a control function such as the item category group for
determining the item category for each item in a CRM order

16/Aug/10 9
Service Order Cycle

16/Aug/10 10
Service Order Management
 Contents
 Service Quotation
 Service Order
 Contract / Warranty check
 Resource Planning
 Service Confirmation
 Amount Allocation
 Service Billing
 Controlling Integration
 Controlling Integration
 Product Service Letter
16/Aug/10
 Objectives
To understand the functions,
features, structure and
contents of Service Order
To understand the steps for
service order processing
To understand creation of
service order and quotation.
To understand the additional
functions like amount
allocation, contract and
warranty determination
To understand the controlling
and logistic integration
11
Amount Allocation Flow

Create service Conf

with amount allocation

Enter actual
quantities
Post actual
Set status to costs
Complete

Create billing Store distribution

request rule & account
assignment object
Change allocation
items

ERP
Close billing
Post actual revenue
CRM

request items
Create billing Tx
from billing due list Report cost &
revenue
Transfer Billing
document
16/Aug/10 12
Splitting Rules
 Splitting Rules can be defined in service order, service
confirmation, or billing request, according to which the costs and
revenues from the items in the document are distributed to
various cost recipients such as payers or bill-to parties.
 The splitting rules can be created for cost distribution at both
header and item level.
For Example: A rule can be created to bill the customer and Insurer.
 Grouping of items links them together and the items inherit the Split rule
applied to the group. Grouping of items can also be derived from product
types

Type of replacements of Car Bill to Customer Bill to Insurer

Rubber Fittings (Incl of Labor charges) 90% 10%
Plastic Fittings (Incl of Labor charges) 60% 40%
Metal Parts (Incl of Labor charges) 40% 60%
16/Aug/10 13
 Service Billing
What is Billed ? How is Billing performed ? When is Billing performed ?

Flat-rate
Service Contract
According to
Item Periodically – as per the
Contractual
contract conditions
price agreements
N
Contract
related? Flat-rate
As Order is placed
According to
service &price
Y
agreements in the
Service Process After completion of
Transaction
Item order and release
for Billing
Y Resource Related
N according to the
Transaction After completion of
service performed &
related? Confirmation & release
price agreements
for Billing
in the confirmation

Service Confirmation
item Release for Billing

16/Aug/10 14
Flow to Backend ERP

ATP Check result

Service Order ATP Info (on plant level)
Header
Item
Spare Part 1 Reservation
Spare Part 2 (On plant Level)
Reserva
tion Disposition

Service technician
dispatched Delivery

Stock movement update

Goods
Issue – Purchase Purchase
Material Confirmation Reservation
Update requisition Order for
of
Reserv of Material &
Materials
Material Services
ation

16/Aug/10 15
Warranty
 Warranties can be categorized as follows:
 Category based on enterprise partner:
 Customer Warranty
 Vendor Warranty

 Validity:
 Time-dependent: Example Warranty for 1 year
 Counter-dependent: Warranty for first 10000 Kms in case
of a car
 Time and counter dependent: Warranty for first 1000
Kms or less than one year (which-ever is earlier)

16/Aug/10 16
Warranty Claim Cycle

16/Aug/10 17
Warranty Validation
 Automatic check in Service Order, Repair Order and
Complaint
 Coverage of a product is checked to be serviced against the
scope of coverage
 Warranty validation / update
 Warranted data is visible in service transaction
 Warranty Pricing and Billing integration
 Immediate determination of influence on pricing & billing
 Accounting indicator is copies as default from warranty
 Pricing conditions based on accounting indicator
 Rule-based Warranty Cost Assignment
 Immediate determination of influence on cost settlement

16/Aug/10 18
Complaint & Return
Topics
 Complaint Management
 Logistics Integration
 Escalation Management
 Defect Tracking
 Task management

16/Aug/10 20
Complaint & Return Cycle

16/Aug/10 21
Process – Best Practices
 Complaints and Return should be created directly from
items in the original transaction
 Follow-up action must be chosen such as a credit
memo or delivering a replacement
 Catalogs can be defined with damage codes enabling a
quick complaint creation and statistical evaluation
 Status information provides an overview of process at
any time
 Links to all relevant document for an access to
complete information

16/Aug/10 22
Recall Management &
Product Service Letters
PSL Processing

16/Aug/10 24
Process – Best Practices
 PSL are documents given out by OEM’s or
authorized vendors to avoid risk or complex
repairs.
 PSL’s are used in product re-call process
 PSL’s should update a separate Inventory and
should be replenished with additional product of
the same product type.
 PSL’s should be linked to Service Order, and
ERP to update the inventory.

16/Aug/10 25
Service Contract
Management
Service Contract Cycle

16/Aug/10 27
Service Contract
 Service Contract is a long-term service agreement
with customer (s) about content and coverage of
services
 Describes and records:
 The period during which the services are to be provided
 Service Level agreements
 Parts that are covered by contracted services
 Product list containing services and spare parts included
in contract entitlements
 Price agreements for services and parts
 Limit contracted services or spare parts in terms of value
and /or quantity

16/Aug/10 28
Service Contract Creation

Service Contract
Service Agreement
Quotation

Service Contract W/o Reference

Follow up Service
Transaction
e.g., Service Order

16/Aug/10 29
Service Level Agreement
 SLAs define the attributes (such as content, scope and means)
for the service products (for example, maintenance, Hotline)
agreed on with the customer in the service contract.
 Escalation procedures monitors and assist in ensuring
Compliance of service with SLA
 Impacts the pricing of service based on Service level (Response
time of 2 hours to breakdown will be expensive to response time
12 hours.) Done by condition technique of pricing.
 Controls processing of service processes referring to contracts
 Service and Response Profiles:
 Are assigned to a the service product master
 Profiles are copied when a service product is added to service contract
 Can be viewed in Service Data tab

16/Aug/10 30
SLA Continued…
 Standard SLA parameters can defined as:
 Time frame of service availability
 Reaction Time
 Closure time
 Service window and Response Time Profiles are defined as:
 Service product master
 Service contract item
 Examples of parameters within a SLA:
 Response time (technician on site within a specified time)
 Operating time/availability time (working time of the service or support
center)
 Downtime (maximum number of breakdowns per year)
 Availability (assured system availability in %)
 Solution time (maximum period of time allowed for the solution of a
problem)
16/Aug/10 31
In-House Repairs
The Process…
 Service organization receives a request for a repair via email or phone. The
agent enters the repair request and the system checks for an existing warranty
 The defective product is returned by the customer using the return material
authorization number issued
 Technical analysis of the returned product is performed by service employee
and he / she decides that the customer should be given a replacement for the
defective product
 The system then calculates the price for the planned repair and required spare
parts, as per the price agreements in the service contract and the warranty
contract. A service quotation is generated by the agent.
 The quotation is accepted by the Customer and after this the service
representative repairs the product and confirms his working times and
materials used, subsequently service representative records his finding by
documenting it.
 Subsequently the billing is triggered by the service representative based on
confirmed time and spare parts used in accordance to existing warranties and
price agreements
 Service managers performs analysis to understand the main defect reasons
16/Aug/10 33
Process Chart
In-house Repair Order

Repair Request Items

SUB-ITEMS
CRM
Return
Loan Loan
Return repaired Spare
Device Device Scrapping Spare
Request Product Parts
Spare
Request Request Parts
Request Parts

Repair
Return Steps
Return Loan Loan
repaired Goods
Item Device Device Reservation
Product Issue
(Inbound) Item (Outb) Item (Inb)
Item (Outb)
Resource
Planning
ERP
16/Aug/10 34
Diagnostics in In-House Repair

In-House Repair Sales Order

Repair Request Return Item

Return Request

Diagnostic
Inspection
result
•By reviewing the diagnostic of Recording
sub-items the defects of the
receipt goods can be analyzed
Repair step 1
•The sub-item is a service item
represented by a service product Repair step 2

Spare Part 1
16/Aug/10 35
Functions in In-House Repair
 Reference Objects
 To provide additional information about the product that is a subject of
repair
 Can be also assigned at header level of the in-house repair order
 Contract determination
 For any Service contracts from in-house repair order processing, based on
 Business partner, validity period, object list
 Product list and value / quantity limits
 Based on the agreed SLA and In-house repair order pricing a service
contract assignment affects the calculation of the delivery dates.
 Warranty determination
 An automatic check determine an existing warranty
 Return Material Authorization
 The Unique CRM in-house repair order number

16/Aug/10 36
Integration with ERP (Logistics)
 Availability Information
 To view ATP information
 ERP Reservation
 On creating the in-house repair order the system
creates an ERP reservation in the In-house repair
service plant for all spare part items
 Update Reservation and Spare Part Stock
 Integration of Loan Device Processing
 To deliver loan device to the customer

16/Aug/10 37
Pictorial View of Integration

16/Aug/10 38
Resource Planning
Resource Planning Cycle

16/Aug/10 40
Interaction Centre
Closed-loop interaction cycle

16/Aug/10 42
CRM Analytics
 Steps for CRM Analytics
CRM Analytics helps you capture
and integrate your data into a single
360 degree view of your customer
Ma ata
Analytical methods can be used
to analyze your relationships
with your customers and the
efficiency of your actions

Data
D
ste
r

... ... ...

Insights
hts
Actions

ig
Ins

Targets Relationship Planning

Relationship Optimization helps you to coordinate
The insights gained from the analysis your actions and focus
enable personalized, customer-oriented your employees on
actions to be triggered common targets
16/Aug/10 44
BW Architecture

16/Aug/10 45
Analytics in CRM Sales
 Sales Analytics contains the following:
 Territory Management Analysis
 Activity Management Analysis
 Opportunity Management Analysis
 Sales Quotation and Order Management Analysis
 Contract Management Analysis
 Sales Pipeline Analysis
 Sales Funnel Analysis
 Sales Performance Analysis
 Billing Analysis

16/Aug/10 46
Methods for Supporting
CRM Analytics
 Critical steps to success:
 Capture all relevant customer information from different sources and
integrate it into a customer knowledge base with a 360° view
 Measure and monitor the relevant key performance indicators to assess
the success of your business
 Uncover hidden patterns and trends that impact your business, and apply
these learnings to predict future shifts in your customers‘ behavior
 Plan clear objectives for your business and
coordinate your resources in order to achieve
your goals
 Deploy analytical results to optimize your
operational processes and empower your
employees to make informed decisions

16/Aug/10 47
End of Session