Chapter 6 Kalakota UAS

Chapter Six
Integrating Processes
to Build Relationships:
Customer Relationship
Management
Introduction
Customer dissatisfaction with service widespread
– Expectations of customers higher than ever
– “Does your company deserve my patronage and
loyalty?”
– Starting point today: What was exceptional yesterday
Organizations with long-standing customer bases find they

lack the info and data to make good service decisions
– 90% companies don’t have sales and service integration
Companies must view their service encounter through the

eyes of their customers
– To maintain ongoing relationships strong
– Acquisition and selling costs of new customer very high
– Dissatisfied customers primarily due to lack of customer
service
– 70% of complaining customers will do business again if
their complaint quickly addressed
© e-Business Strategies, -2- www.ebstrategy.com
The Basics of CRM
Timely delivery of excellent service
Combination of business process and technology
When competition is fierce, companies go back to

basics: create value for customer
Execs must ask

– Can their companies’ infrastructures allow value creation?
– Can their companies’ existing CRM infrastructures support
doing business in the e-world
Only by integrating sales and service infrastructure with

all aspects of operations can management see change in
customer relationships

Top Demand Drivers in CRM Verticals
Telecommunications – Primary CRM applications
include:
– Multi-channel contact centers
– Business intelligence
– Customer data integration and analysis
– Web-based billing systems
– Marketing automation/campaign management systems
– Mobile CRM
Banking and Financial Services – Primary CRM

applications include:
– Profitability analysis
– Target marketing
– Data mining
– Product personalization
Source: Gartner Group, 2001

Top Demand Drivers in CRM Verticals
Retail – Primary CRM applications use e-
commerce transaction and point-of-sale data to
drive:
– One-to-one marketing
– Cross selling
– Personalized content management and
merchandizing
Source: Gartner Group, 2001
Few retailers are providing improved interaction but many

customers are demanding it --- this is an opportunity for
companies to distinguish themselves.

Strategic Business Drivers
Are these “hot buttons” that influence your
business?
– Customer-driven businesses
– 360-degree customer view
– Personalization/one-to-one marketing
– Complex and more diverse channels
– Automated sales
– Shrinking margins due to product commoditization
– Scattered global customers
These are strategic level questions aimed at CxO
and other senior level executives to uncover CRM
opportunities.
© e-Business Strategies, www.ebstrategy.com

Strategic Business Drivers
This chapter
– Clarify the concept of multi-channel organization
– Discuss apps supporting customer-focused
business model
– Discuss how marketing practices and systems
must be reworked to support ecommerce
environment
Service levels on the Web today often leave a

lot to be desired. As buyers jump from site to
site -- only to ultimately abandon the shopping
cart without buying anything from anyone --
revenues slip away.
Defining CRM
Integrated sales, marketing, and service
strategy
– precludes lone showmanship
– depends on coordinated enterprise-wide actions
CRM software suite

– Helps better manage customer relationships by
tracking customer interactions of all types
– Automates selling and customer service cycle
• direct-mail marketing campaigns, telemarketing,
telesales, lead qualification, response mgmt,
lead tracking, opportunity mgmt, quotes and
order configuration
Defining CRM
Business Goals
– Using existing relationships to grow revenue
– Using integrated information for excellent service
– Introducing consistent, replicable channel
processes and procedures
CRM is an
integrated
framework and
strategy, not
product

Managing the Customer Life Cycle:
The Three Phases of CRM
Metrics
•Direct and indirect sales
Acquire •Customer service
improvements
Differentiation
• Innovation
• Convenience
Bundling Adaptability
• Reduce Cost • Listening
• Customer Service • New Products
En
n
tai
ha
Re
nc
e
Metrics Metrics
•Lifetime value •Tangible and intangible benefits
•Share of wallet •Brand equity gains
© e-Business Strategies, - 10 - www.ebstrategy.com

The New CRM Architecture: Organizing
around the Customer
To determine how CRM and supporting tech will work
together for your firm, ask these questions
– Are most of company’s apps designed simple to automate
existing departmental processes?
– Are these apps capable of identifying and targeting best
customers, those who are the most profitable?
– Are these apps capable of real-time customization of
products and services?
– Do these apps track when the customer contacts the
company, regardless of the contact point?
– Are these apps capable of creating a consistent user
experience across all contact points the customer chooses?
If answers to each is no, seriously consider CRM

architecture

The New CRM Architecture: Organizing
around the Customer
Customer
Lifecycle Acquire Enhance Retain
{
Direct Cross-Sell & Proactive
Partial Marketing Up-Sell Service
Functional
Solutions
Sales Force
Customer Support
Automation
Complete
Integrated Integrated CRM Applications
Solutions
Cross-Functional Processes
Breaking Down Departmental Walls

Features of the New CRM Architecture
• Integrates solutions spanning entire customer
life cycle
– Proactive marketing
– Customer care
– Call centers
• Automated transaction management

capabilities
• Personalization and one-to-one marketing
• Customer analytics and business intelligence
• Field sales automation

Portfolio of CRM Process Competencies
Customer Service
and Billing
Marketing and
Fulfillment Web
ail or
Em ct r
U
e
p e
VR
os m Loyalty &
Pr usto
x
Fa
C Retention
Telephone Programs
Sales
 Cross-sell
t
 Up-sell en
 TeleSales
Field Sales
gem ture
and Service
a na truc
ct M fras
a
ont al In
C
h nic
c
Te

How it Fits Together
Source: Microsoft Corporation, 2000

What Capabilities Make Up Leading Edge
CRM?
Operational excellence
– Ensuring responsiveness and
accurate delivery
– Providing seamless interactions
across all interaction channels
Analytical insight
A
– Sales planning and forecasting
– Analyzing, predicting and driving Analytical
customer value and behaviour
– Identifying the right time to make the
right offer to the right market
– Consistently enhancing the customer Operational Collaborative
experience in virtual channels
Collaborative optimization
O C
– Involving customers to
better accommodate their needs
– Demand driven supply chain and
fulfillment integration

Integration Requirements of Next Gen CRM
Infrastructure
Closed loop CRM
infrastructure must integrate
– Customer content
– Customer contact information
– End-to-end business
processes
– The extended enterprise or
partners
– Systems
Less than 2% of companies provide on-demand cross-
channel integration of website and call center
42% of top-ranked Web sites took longer than five days to

reply to customer emails or never replied at all
Source: Cisco Systems

Next Generation CRM Trends
Back Office
The multi-channel Front Office
integrated experience Customer
Web
The rise of the call Partners Customer Service

and Billing
E Mailrs
Application Integration
Marketing and
center as a Fulfillment
Purchases
Touch Points
Loyalty &
Call
multipurpose Sales
 Cross-sell
Telephone
Retention
Programs
Center
customer contact History

 Up-sell
 TeleSales
Field Sales
and Service
SFA
point
Operations
POS
Listening portals: Marketing Direct

Next-generation CRM Mail
capabilities Billing
Wireless
CRM portals, sales

force ASPs, and
hosted applications Customers
Multi-Channel CRM
Multi-channel shopping behavior has become
mainstream; yet widespread retailer excellence
remains elusive ( some catalog retailers are
exceptional)
Women and young adults are multi-channel

shoppers
The role of the catalog has never been more

important (Sears recently bought Lands-End)
Analytical CRM -- Segmentation and personalization

capabilities are becoming more critical

Multi-Channel Shopper Profiles
Store
Store + Catalog Online + Store
Catalog Online
Online + Catalog
• Tri-Channel Shoppers are demanding (well-informed) consumers;
• Servicing Tri-Channel Shoppers is very challenging-requires high-
levels of coordination!
Primary Reasons for Tri-Channel Shopper
Displeasure
•Late delivery
•Poor product information
•Product out-of stock
•Product misrepresentation
•Website performance issues
•High shipping and handling charges
How can CRM applications help address these issues?

Roadmap for Managers
• Involve top management
• Define a vision of integrated CRM
• Establish the CRM strategy and specify its

objectives
• Understand the customer
• Review cultural changes that will need to

occur
• Develop a business case
• Evaluate current readiness

• Evaluate appropriate applications with an
uncompromising focus on ease of doing
business
• Identify and target quick wins
• Put ownership of the end-to-end project in the

hands of a single manager
• Implement in stages
• Be sure to create a closed-loop CRM

environment
• Create concrete measurement goals

CRM Scorecard

Anticipate Organizational Changes
Organizational resistance to CRM inevitable
– Current incentive systems work against CRM as
they reward performance that deals with only part
of the customer’s relationship with organization
– Requires careful transition from existing silo-
centric infrastructure to an integrated customer-
centric infrastructure
– Organizations with global operations must manage
customer interactions in different languages, time
zones, currencies, and regulatory environments
Impact on corporation’s front line staff

particularly evident
CRM Key Benefits
• Deeper understanding of customers
• Increased marketing and selling opportunities
• Identifying the most profitable customers
• Making it easier for sales and channel partners to sell
• Faster response to customer inquiries
• Increased efficiency through automation
• Receiving customer feedback that leads to new and

improved products or services
• Obtaining information that can be shared with

business partners

Measuring Success or ROI
• Accelerated revenue growth
• Fewer product returns
• Increased sales conversion per sales channel

(the ratio of leads to customer sales)
• Reduced cost per customer order
• Increased profit per sales person
• Reduced technical support time

CRM Assessment – Gather Information
What do your customers expect from
you?
What percentage of product and

services sales come from your current
installed base?
How much do your customers know

about the products and services you
offer?
Are your employees equipped with the

information they need to understand
your customers’ preferences, needs
and interests?
How effective are your marketing

efforts compared to your competitors?

Tell Us More
Are your product life cycles shrinking and are you
getting new products to market faster?
Can you provide real-time customer data to your sales

force?
Have you found a cost-effective method of converting

prospects into profitable customers?
How do your customers prefer to be contacted?
Are you prepared to support your customers if your

customer base doubles?
Is your sales force prepared to scale effectively as

growth occurs?

E-Business
Strategies, Inc.
www.ebstrategy.com
contact@ebstrategy.com
678-339-1236 x201
Fax - 678-339-9793

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Chapter Six

Organizations with long-standing customer bases find they

Companies must view their service encounter through the

Combination of business process and technology

When competition is fierce, companies go back to

Execs must ask

Only by integrating sales and service infrastructure with

© e-Business Strategies, -3- www.ebstrategy.com

Banking and Financial Services – Primary CRM

© e-Business Strategies, -4- www.ebstrategy.com

Few retailers are providing improved interaction but many

© e-Business Strategies, -5- www.ebstrategy.com

© e-Business Strategies, www.ebstrategy.com

Service levels on the Web today often leave a

CRM software suite

© e-Business Strategies, -9- www.ebstrategy.com

© e-Business Strategies, - 10 - www.ebstrategy.com

If answers to each is no, seriously consider CRM

© e-Business Strategies, - 11 - www.ebstrategy.com

© e-Business Strategies, - 12 - www.ebstrategy.com

• Automated transaction management

• Personalization and one-to-one marketing

• Customer analytics and business intelligence

• Field sales automation

© e-Business Strategies, - 14 - www.ebstrategy.com

Source: Microsoft Corporation, 2000

© e-Business Strategies, - 15 - www.ebstrategy.com

© e-Business Strategies, - 16 - www.ebstrategy.com

42% of top-ranked Web sites took longer than five days to

© e-Business Strategies, - 17 - www.ebstrategy.com

The rise of the call Partners Customer Service

customer contact History

Listening portals: Marketing Direct

CRM portals, sales

Women and young adults are multi-channel

The role of the catalog has never been more

Analytical CRM -- Segmentation and personalization

© e-Business Strategies, - 19 - www.ebstrategy.com

Store + Catalog Online + Store

•Poor product information

•Product out-of stock

•Website performance issues

•High shipping and handling charges

How can CRM applications help address these issues?

© e-Business Strategies, - 21 - www.ebstrategy.com

• Define a vision of integrated CRM

• Establish the CRM strategy and specify its

• Understand the customer

• Review cultural changes that will need to

• Develop a business case

• Evaluate current readiness

• Identify and target quick wins

• Put ownership of the end-to-end project in the

• Be sure to create a closed-loop CRM

• Create concrete measurement goals

© e-Business Strategies, - 24 - www.ebstrategy.com

Impact on corporation’s front line staff

• Increased marketing and selling opportunities

• Identifying the most profitable customers

• Making it easier for sales and channel partners to sell

• Faster response to customer inquiries

• Increased efficiency through automation

• Receiving customer feedback that leads to new and