evecrmf3.ppt

1
Customer Relation
Management
Margaret Since-Hymas
Sarye Lange
Jodi Krause
John Curtright
Chris Hoffmeister

2
What Is CRM?
 A strategy used to understand a customer.
 A process to gather and sort information.
 Allows for better analysis of what a
customer needs in order to be satisfied.
 Attempts to makes all information
available about a customer to all aspects
within a company.
 “CRM is a paradigm shift in terms of what
you are focusing on.”

5
History of CRM
 Beginning unknown- concept has existed
since trade began
 Resulted from increase in customer base
and individualization
 A way to process mass amounts of
customer information

6
Size of Spending
 The median annual CRM budget runs over $1
million with an implementation time of four
years.
 26% of united states businesses expect to be
spending $500,000 or more on CRM projects
over the next two years.
MIT Sloan Management Review, Larry Yu. Cambridge:Summer 2001. Vol 42 Iss 4 pg 18, www.Jupiter.com.. "What
We're Buying" www.cio.com viewev 10-12-03

7
Size of Spending
 In a 2001 survey,
spending levels on CRM
are forecasted to rise
from $9.7 billion in 2001
to $16.5 billion in 2006.
 Other research shows
that spending could be as
great as $30.6 billion by
2005.
MIT Sloan Management Review, Larry Yu. Cambridge:Summer 2001. Vol 42 Iss 4 pg 18, www.Jupiter.com.. "What
We're Buying" www.cio.com viewev 10-12-03
“Watch out for CRM Hidden Costs” by A. Mello as seen on October 20, 2003 at
http://techupdate.zdnet.com/techupdate/stories/main/0,14179,2818263,00.html

8
Spending by Region
 North America: grew 5% in 2002
 Europe: fell 22% in 2002
 Asia: fell 15% in 2002
Gartner group-
• Predicts that market will fall 8% in 2003
• Predicts market will grow 5% annually from
2003-2007
www.4gartner.com Viewed November 2, 2003

9
Market Leaders
 Popular among most major industries.
 Forecasted leaders (most CRM technology
spending):
 Financial service companies-$5.4 billion in
2006.
 Retail-$3.2 billion in 2006.
 Telecommunications $2.9 billion in 2006.

10
Benefits of CRM
1. Customer loyalty/increase in market
share
2. Increase in sales and profits
3. Greater frequency of sales, repeated
business/reordering, larger sales, higher
customer count and new customers
4. Marketing and promotion savings
“Report On Customer Relationship Management.” www.lexisnexis.com March 2003, Viewed October 18, 2003.

11
Benefits Cont.
5. Fewer complaints, more complaints
resolved
6. Customers remaining with the
organization
7. Positive customer response
8. Differentiation
9. Improved employee morale and
productivity

12
Benefits Cont.
10. Improved employees relationships
11. Fewer employee grievances, less
absenteeism and less tardiness
12. Less employee turnover

13
CRM Yields
 “It costs 6-7 times
more to acquire a
new customer than to
retain an existing
one.” Harvard
Business Review

14
Just How Much Information Is
Held in CRM Packages?
 “Online customer service contacts will
grow from 870 million in 2001 to 4.7
billion in 2006”
 This is a predicted jump of 3.83 billion
contacts in a mere 5 years! (Keep in mind
the multiple channels of information for
each customer.)
www.4gartner.com Viewed November 2, 2003

15
How Does Information Enter an
Organization?
Many organizations have various ways to
gather customer information:
 Telephone
 Fax
 Web
 Other
 Personal contact

16
What Must Be Done With All the
Information?
 Sort information for relevance
 All relevant information must be included
when implementing CRM
 Any irrelevant information must be
excluded when implementing CRM in
order to reduce costs and time efforts

17
What Information is Relevant?
 Customer information must sorted through and
organized. The question must be asked of what
information is valuable and what is useless.
 Useful information:
 Responses to surveys/campaigns.
 Purchase dates.
 Shipping dates.
 Demographic data.
 Web sales data.

18
Types of Customer Information
Descriptive Behavioral Contextual
Purpose
Understand
Customer
Understand
customer's behavior
Understand
behavioral drivers
Examples
Contact, Size,
Socioeconomic,
demographics
Purchases, uses,
communication,
lifestyle
satisfaction,
events, competitor
actions, attitudes
Sources
Operational systems,
external data
sources
Internal systems,
loyalty schemes,
external data sources
News feeds,
employees, market
research
Strengths
Readily available
Personalizes to
company
Relevant to
customer
Weaknesses Low differentiation,
data privacy
Data overload,
system intergration
complexity
Difficult to gather
and structure into
system
Key to Success Accuracy Completeness Creativity

19
What Is a Main Goal of CRM?
 To understand customers for “profitable
cross-channel customer relationships.”
 To attempt to improve customer relations
to increase customer retention.
 To Gain insight into customer behavior
and answer what is valuable to them.

20
Questions to Ask to Improve
Customer Relationships?
1. About What do customers care most & what
do they want in the future?
2. What will happen if we only provide
“mediocre” service?
3. How do we value customer relationships?
4. How can we improve our customer retention
and satisfaction?
5. What will the future bring to customer service?

21
Implementation
 Must be more than a financial investment
 Keys to successful implementation:
 Do it incrementally
 Scalable architecture
 Be prepared technologically
 Have adequate manpower for the amount of
incoming data

22
Industry Leaders
 Siebel-voted the
“CRM Platform
2003” by
Network Word
Italy
 Industry specific,
leading sales
application suit
 Packaged
SEBL ORCL PSFT SAP Industry
MarketCap: 6.79B 66.74B 9.04B 48.56B 110.91M
Employ-ees: 5,909 40,650 8,180 29,165 268
Rev. Growth(ttm): -20.20% -2.00% -6.00% 18.70% 0.00%
Revenue (ttm): 1.64B 9.48B 1.95B 7.77B 53.69M
Gross Margin(ttm): 61.47% 75.67% 62.82% 63.52% 66.44%
EBITDA(ttm): -2.70M 3.79B 314.24M 2.35B -247.00K
Oper. Margins (ttm): -12.11% 36.58% 8.17% 25.90% 0.44%
NetIncome (ttm): -82.97M 2.40B 125.08M 1.30B -1.83M
EPS (ttm): -0.171 0.447 0.394 1.033 -0.1
PE(ttm): 28.57 55.13 37.73 39.94
PEG(ttm): 9.72 2.51 3.5 2.44 2.02
PS (ttm): 4.71 6.89 4.3 5.77 2.4
DIRECTCOMPETITORCOMPARISON

23
CRM Applications
 Reporting-
compilation, who is
best customer and
what are they buying.
 O&F- finalization step,
assist in creating
contracts, invoices,
etc.

24
CRM Applications Cont.
 Sales-allows salespersons access to company
database and resources
 Marketing-allows centralization of focus on
current marketing techniques and markets
 Customer service-management of different
customer touch points
 Document management-way to keep and
maintain records in a way that can be access
quickly

25
Vendors
Specialized Vendors
 Firstwave- first company to offer totally
web-based CRM solution-packaged or ASP
 TechExcel- only CRM solution designed for
software and product development
companies (packaged)
 Knowledge concepts- Firmworks,
accounting software specific

26
CRM: NOT Primarily Technological
 54% of CRM spending levels is attributable to
technology components.
 Quote from Judith Kincaid, author of Customer
Relationship Management: Getting it Right!”
“CRM is not just buying a piece of software to automate
some of your current processes and then plugging it in .
If it were that easy, more companies would have had
CRM success already.”
“CRM is no silver bullet. CRM program success is achieved
by completing small, focused projects that add up to a
big victory over the long run.”

27
Reasons for Failure
 A recent survey from business intelligence
quotes success rates for CRM implementation as
around 10%.
 Reasons:
 Lack of communication between users.
 Incomplete picture.
 Inability to adapt to newer technology.
 Managements limited understanding, poor planning or
lack of skills.
 Company politics, inertia and budget constraints.

28
CRM case study:
Empire Blue Cross and
Blue Shield of New York

29
Company Background
 Founded: 1935
 Headquarters: New York
 Employees: 6,500, plus 1,800 independent
brokers
 Customers: 29,000 corporate customers,
representing 4.8 million individual
customers
 Revenues (2001): $4.3 billion

30
Company Background
 Serves the 28 eastern and southeastern
counties of New York State and 10
contiguous counties in New Jersey and
Connecticut
 Empire is the largest health insurance
provider in New York

31
Before 2000
 Paper-based sales process
 Customer had no contact with Empire and
vice versa
 Broker could not generate quote or
process paperwork
 Empire could not verify information with
customer

32
Application Process before 2000

33
Application Process Problems
 Paper-based: long (about 27 days)
 Delay–filled sales process
 Often difficult to make changes to plans
 Outdated enrollment forms when plans were
revised
 Brokers were dependent on Empire relations
staff, who were available during business hours
only.

34
“We had 33 redundancy audit checks-
where we go over information to make
sure it’s correct. We had created this
nightmare.”
-Steven Bell, Vice President of E-Business
Operations, Empire Blue Cross and Blue
Shield

35
Implementation of CRM
 In 1999 a team sat down and tracked the
process
 Cut the essential steps from 80 to 40
 Off the shelf CRM product not enough
 Integration with current legacy
mainframes
 Outsourcing: Firepond of Waltham, Mass
 Close cooperation with in-house IT
department

36
Empire’s Broker Services
Application
 Live in October of 2000
 Includes quote engine and proposal
configurator
 Password protected
 Broker can go online to create custom
proposals, pull information together about
plan options, and print information specific
to the customer’s specifications

37
 Broker can enroll new accounts
 Agents can maintain customer information
online
 24 hr access
 Process now only took 2-3 days

38
Updates since 2000
 New service was developed in-house
 Additional sites were added: “Blue Tools”
 Employers can now enroll employees
 Individual members can now access and update
personal data, check claims status and request
ID cards
 Brokers can now service their accounts online
 Physicians can now check patient eligibility,
submit claims, and check co-payments and
deductibles online

39
Application Process after 2000
WWW.EMPIREBLUE.
COM
Agent
Broker
Physician
Customer
Member

41
Conclusion
 CRM is a tool to focus on your customers’ needs.
 Empire Blue Cross and Blue Shield uses CRM
technology to facilitate the sales process of
health insurance coverage.
 With this technology, Empire makes it easier for
brokers, employers, individual members and
physicians to come together in a 24 hr, easy to
use environment.

42
CRM in Sports
Seattle Mariners

"Onyx Helps Build Fan and
Sponser Loyalty for the Seattle
Mariners" 43
Seattle Mariners
 Established in 1977
 Defeated New York Yankees in 1995 Playoffs
 Started to increase fan support
 Opened Safeco Field
 Record-tying 116 wins in 2001
 2002 Sales (mil.) $167.0
 Most profitable team in the Major League
 Highest attendance in the American League
(3.4million)

"Mike Rogoway, Knowledge Base" 44
Successful Problems?
 Increase in fan support highlighted inadequacies
in their IT technology
 As sales increased the lack of integrated systems
hurt customer service
 13 Disconnected databases
 Most Alarming: An excel spreadsheet outlining
season ticket holders was maintained by the
secretary of the CEO.
 Decision to implement a CRM system took place
in 2000

Larry Witherspoon
 Vice President of Technology
 Responsible for food and ticketing
 Responsible for implementation of a CRM
system
 Currently enrolled in the MBA program at
the University of Washington

"John Hogan, www.crm.com" 46
Onyx to the Rescue
 Larry Witherspoon: Mariners Vice President of
IT services
 Selected Onyx Employee and Customer Portal
for CRM system
 Systems were implemented in 12 weeks, just in
time for the 2001 season
 Project was implemented in house by
Witherspoon and 4 other people

Mariners" 47
Main Goal
 Frances Traisman manager of customer
communications and senior account
executive said “Our main goal with the
Onyx system is customer retention,
because it is much easier to keep a
current season ticket holder or a 15-game
ticket holder than to go out and find a
new one.”

Mariners" 48
Additional Comments by Traisman
 Traisman continued “This is a business
based on passion more than anything. If
the fans feel disconnected from us and if
they don’t feel we care about them,
they’re not going to stay fans, and that
affects the bottom line.”

Mariners" 49
CRM Functions
 Automate customer service and support
activities
 Manage season-ticket holder, suite, and
sponsorship sales
 Target new and existing customers and sponsors
 Perform market analysis and organize tailored
marketing promotions to specific customer
segments
 Integrate ballpark operations into Onyx to
provide 360-degree information for total
customer satisfaction

Mariners" 50
Applications of CRM Functions
 Incident records serve as complaint forms
(i.e. broken seats)
 Automated birthday announcements for
season ticket holders
 Review concession stand locations and
plan future locations
 Tracking based on Compass Club Members
card

Surprising Results
 Most surprising result: “The number 1
complaint of the first home stand?
Sauerkraut. No sauerkraut. I was
amazed…Now (with CRM) you can identify a
trend and you can correct it quickly.” Larry
Witherspoon

"www.hoovers.com" 52
Ticket Sales
 1998 2.64 Million (5th in
AL)
the AL)
the AL)
 2001 3.51 Million (led AL)
 2002 3.54 Million (led AL)
0
0.5
1
1.5
2
2.5
3
3.5
4
1998 1999 2000 2001 2002

Return on Investment
 System cost $500,000
 ROI was not as important as building
customer loyalty
 “Success will be seen when performance
on the field decreases and customers
remain loyal.” –Witherspoon
 Potential Revenue increase of $10 million
per year due to an 8% increase in season
ticket revenue
 Limited growth due to number of seats in
the stadium (47,116)

"Howard Baldwin, Customer Care
for Smaller Businesses" 54
Customer Service Improvement
 “By using a CRM system to
track complaints, the
organization noticed patterns
and addressed them.
Concession complaints, for
instance, dropped by 80%
between 2001 and 2002.”-
Witherspoon

Why will this be successful?
 Relatively small number of variables
compared to many CRM projects
 “They only have 20 pieces of information
about a single customer, we’ve got
hundreds and hundreds.” –Kelsey
Corcoran (Verizon Wireless CRM Manager)
 More uniform sample- Baseball fans

"John Cook, Technology in the
Ballpark? Of course, it's Seattle" 56
Future of CRM in Seattle
 Implementing predictive modeling in
limited CRM programs
 Designed to highlight seasonal buying
patterns in merchandise and concession
sales.
 Goal: To reduce costs buy lowering
inventory while avoiding stock-outs

57
Source: www.rbc.com
RBC
FINANCIAL
GROUP
CRM IN BANKING

58
RBC FINANCIAL GROUP
- Canada’s Largest Bank
- Five major business lines:
1. RBC Royal Bank
(personal & commercial banking)
2. RBC Insurance
3. RBC Investments
(wealth management)
4. RBC Capital Markets
(corporate & investment banking)
5. RBC Global Services
(transaction processing)
Source: www.rbc.com

59
RBC FINANCIAL GROUP
- $270 billion in assets*
- 23 million retail accounts
- 700 products
- 58,000 employees
- 10 million clients throughout the world
(incl. personal, commercial, corporate, & public sector)
* Financial data for RBC Financial Group reported in Canadian Dollars as of 2001
Source: “Customer Profitability and Customer Relationship Management at RBC Financial Group,” Harvard Business School # 1-102-072
prepared by Research Associate Lisa Brem under the supervision of Professor V.G. Narayanan

60
RBC FINANCIAL GROUP
This business line includes:
- 50% of RBC’s cash net income
- Over 1,300 branches
- 4,800 ABMs (ATMs)
- 87,250 POS terminals
- 1.4 million online banking customers
- 2 million telephone banking customers
- International network of 300 offices in
30 countries
RBC ROYAL BANK

61
RBC FINANCIAL GROUP
- Address
- Age
- Account balance(s)
- Company contacts
- Qualified service
level
CRM Goal:
Provide to personal bankers, upon demand, all
contacts, transactions, accounts, & interactions
with a customer.
- Current & future
profitability
- Current products
- Target products
- Reaction to direct
marketing

62
RBC FINANCIAL GROUP
Organization Chart- Executives Only
Source: www.rbc.com
Chief Executive Officer
Vice-
Chairman &
CFO
Senior
Executive
V-P HR &
Public
Affairs
Vice-
Chairman,
RBC
Capital
Markets
Chairman &
CEO, RBC
Dain
Rauscher
Vice-
Chairman,
RBC
Banking
Vice-
Chairman &
Chief Risk
Officer
Vice-
Chairman,
RBC Global
Services &
CIO
Vice-
Chairman,
RBC
Investments
Chairman &
CEO, RBC
Insurance

63
RBC FINANCIAL GROUP
Implementation Timeline
McLaughlin
hired to
implement CRM;
oversees CRM
infrastructure,
Information
Management,
Internet
Banking, &
Privacy
1997 1998 1999 2000
Customer
Survey
creates a
platform
for CRM
Software
selection to
facilitate
CRM
CRM software and
practices continue
to be modified
based on internal
& external
customer
feedback
Information changes
focus to profitable
customers & how to
make unprofitable
customers into
profitable ones

64
RBC FINANCIAL GROUP
Benefits to Bank & Customer
Before:
Conventional wisdom: key differentiator for
banks was a 24/7 call center and a branch on
every corner
After:
Most important to the customer was customer
intimacy, including trust, reassurance, a
feeling that the bank knows them,
understands their needs, recognizes who they
are and values their business

65
Before:
Every branch had a different way to generate
sales leads, account managers were
responsible for creating their own lists.
Quality of lead list was based on quality of
manager’s query and when you had time to
stop by the appropriate department.
After:
Centralized and standardized sales leads
customized by interest of customers in a sub-
segment, reminders for sales managers to call
and offer products
RBC FINANCIAL GROUP

66
Before:
Product and functional silos; corporate
processes were executed more from
consensus and conversations than a clear
road map.
After:
Bank determined a set of customer treatment
strategies—such as the decision to offer
pre-approved credit for credit lines—for
hundreds of micro-segments; ultimate
objective of one-to-one marketing.
RBC FINANCIAL GROUP

67
Before:
Customer Profitability Measurement:
A- most profitable B- less profitable
C- not profitable or loss
Little consideration to future potential
After:
Customer segments: Key, Nexus, Prime
CPM changed by at least two deciles for 70%
due to more accurate spread information,
customer specific risk assessments,
transaction based fee and costs elements.
Invest in some sub-segments to nurture our
relationship with potentially profitable
customers, take losses in the short term.
RBC FINANCIAL GROUP

68
RBC FINANCIAL GROUP
CRM Initiatives

69
RBC FINANCIAL GROUP
Net Income by Year
($million)
Source: www.rbc.com
1998 1999 2000 2001 2002
$1,772 $1,725
$2,208
$2,435
$2,898

70
CRM and the customer
 Improved customer service –no more “I
will connect you to someone who can help
you”
 Easier to get the services I desire –”wow
they have sauerkraut!”
 Easier access to my services through a
web-based CRM (Empire & RBC)

71
 "Consumers have, inherently, internally
contradictory desires -- [they want] to be
treated as individuals, to be treated
personally, and they desire relevance in all
commercial contacts with them," said
Harry Watkins, CRM research director at
Boston-based Aberdeen group. "They also
have reasonable paranoia concerning the
personal information that companies have;
[Information] that is required to deliver all
of that relevance."
CRM and Privacy

73
CRM and Privacy
 CRM collects personal information to
provide specialized services
 Customers are increasingly worried about
what is being done with their personal
information
 With new privacy laws, customers have to
be informed that data is being collected

74
Future
 Continues improvements in establishing
relationships with customers, but
implementation practices still problematic
 Firms recognizing importance of database
building and customer data capturing
 Increase in real time analysis of customer
behavior and what likely to buy
 Chief customer officer

75
Failure Rate
 12% of CRM packages never go live
 Only 16% of CRM projects actually
improve business performance in a
measurable way
 CRM project risk the highest rates of
failure for companies (32% and 55% after
one year)
 Only 21% improve customer satisfaction.

76
Best Practices
 CRM system needs to monitored and
continuously modified.
 Align CRM system with corporate strategy.
 Must be endorsed by company’s upper
management.
 Collaboration across departments.

77
Best Practices
 Keep simple- varying levels of skills.
 Vendor definition of success needs to
match that of company.
 Set clear benchmarks to measure success.
 Customer acquisition costs, conversion rates from
lookers to buyers, retention rate.

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