LAURS & BRIDZ CASE

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MODULE 8

MAR 6826 CUSTOMER RELATIONSHIP MANAGEMENT

Prof. Nancy Rauseo

Module 8 - CRM Analysis & Readiness

There are four different perspectives of CRM: strategic, operational, analytical and collaborative. Keep in mind that many CRM initiative or projects, can have one or more of these perspectives. A large-scale, corporate CRM project in a company like General Electric, will most likely span all four perspectives. But a small, local company may focus its CRM project on operational objectives. Think of these perspectives as the SCOPE and the OBJECTIVES sought out by the company.

If we’re a customer-centric company, it has to start here. We studied the drivers of customers today; we looked at what changes are taking place so we can understand them better; we discussed ways to uniquely identify a customer and the differentiate them every time they come into contact with us. Before we look at implementing any CRM initiative, it’s important that we figure out where we are going. And that’s what Module 3 is all about.

This module is all about planning, implementing and managing a CRM initiative or project. We will be using a five-step best practice process that has been designed with a large scale CRM project in mind. So it’s important for you to understand that not all CRM projects will include all of the phases, processes or tools mentioned in this chapter.

You never know, though, when you’ll be involved in a CRM project, so knowing ALL the phases and corresponding tools and methods will help you in the future.

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Module Learning Objectives

1. Identify the major stages of the CRM planning and implementation process and the deliverables of each stage.

2. Explain the importance of planning in the implementation of a CRM initiative or project.

3. Define concepts like CRM vision and strategy as key components of planning.

4. Recognize the variety of tools, methods and models available for CRM planning and assessing readiness.

“Although good planning can make or break a CRM initiative, planning is more than simply drafting a list of action items.”

Source: Dyché (2002)

The key to successful CRM is careful planning and analysis. As stated by our expert on the slide, CRM planning is much more than just a things to do list. The planning process for creating a CRM strategy consists of:

• understanding the current CRM state and readiness of your company and employees;

• defining a common CRM vision for your department or company, also called the desired CRM state;

• identifying the gaps between your current state and readiness and your desired state; and

• preparing a CRM proposal and working with key stakeholders to develop your CRM destination strategy that will close the gaps and ensure the implementation of the desired state.

The first one is that you should be able to identify the five major phases in a CRM implementation. You should be able to understand why these phases have been placed in their sequence. Try not to memorize but rather make common sense of these phases. I’ll be using an example related to a “remodeling of the house” to help us grasp the concepts. Throughout or discussion, let’s assume that you currently own an old house. It’s a great house and you see yourself living there for many more years. But the time has come that it needs to be updated. The same thing happens in a company – customer needs and the business environment change requiring the company to change because the current structure just doesn’t do the job anymore.

The fourth objective is that you should be able to recognize a number of tools and processes that can be applied in each phase of an implementation. There are many different techniques, processes, and tools that a company can use to complete each phase of a CRM project.

MAR 6826 Customer Relationship Management

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CRM Best Practice Planning Process

1. The first stage is to define your CRM destination. According to Gartner, the primary cause of CRM failure is the inability of a company to develop and effectively implement a strategy for relating to customers. A company must know where it is going; it must have a clear destination or, as I refer to it, the compass. Lots of research and analysis are required in order to determine where a company wants to go in terms of its future in CRM. The deliverables from the 1st stage are a high-level strategic plan, a business case and proposal for CRM. This stage is the goal of Module 3 of this program.

2. In the second stage, the company uses the gaps and CRM opportunities of the company to design a blueprint for what it wants to look like in the future. This blueprint is the detailed roadmap of the new CRM infrastructure for getting to the destination. This infrastructure includes the new processes, customer information requirements, experiences, technology, metrics, and so on. After designs are completed, another business case should be documented to help quantify and prioritize sub-projects.

3. Stage 3 is the actual building or construction of the CRM infrastructure design developed in stage 2. Again, another business case should be developed after this stage so implementation efforts can be planned for effectively and efficiently.

In the last stage, the company focuses on putting the new strategies in place and making them reality. This requires adoption and acceptance from key stakeholders. With regard to company involvement, CRM projects are normally cross-functional meaning they affect several functions or departments.

MAR 6826 Customer Relationship Management

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Develop the CRM Strategy

1. Conduct situation analysis – where are you today?

2. Educate yourself on CRM

3. Develop the CRM vision – where do you want to go in the future? What do want to look like? What’s your desired state?

4. Set priorities – what’s most important?

5. Establish goals and objectives

6. Identify resources: people, process and technology

7. Develop the business case

Strategy

Gartner Outlines 3 Steps to a Successful CRM Strategy: The economic upswing spawns a return of the $100 million CRM project, according to a Gartner analyst. By Juan Martinez - Posted Apr 21, 2010 http://www.destinationcrm.com/Articles/PrintArticle.aspx?ArticleID=66669

CRM strategy is a high level plan of action that aligns people, processes and technology to achieve customer-related goals. Success with a CRM initiative requires knowledge of where you are today and a glimpse of where you are going (vision). Let’s go to our house – before we can start remodeling, we first need to figure out what our present situation is: what’s working or not working in the house; what do I think I’ll need in the future; what are my alternatives (I need to do research and educate myself on what’s available); I may not have the money to do it all so I’ll have to prioritize my wish list and establish specific goals and objectives; I have to figure out the people I need to help me: architects, construction companies, electricians, etc. I need to have an idea of what these will cost, etc.

A KEY step is setting a CRM vision statement. A vision statement is your “wannabe” or desired state. The vision is what we use as our barometer.

Let’s now talk a little more about each of these sub-steps. I am not going to cover each one in detail but am going to highlight the main ones. You will be expected, however, to read the entire chapter and be familiar with them.

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The deliverable of this phase of CRM planning is a CRM Business Case and Proposal. You can also refer to this as the CRM Strategic Plan or Strategy. The key components of a CRM Strategic Plan are:

 Summary of Current Situation (where we are today)

 Mission statement (who we are and what we do)

 Vision statement (what we want to look like in the future, your ‘wannabe’ state or desired state)

 Description of Desired State (details of your vision)

 Gaps, opportunities, and priorities (what we must change to get there)

 Goals and objectives (what we want to accomplish and why)

 Critical success factors (how we will measure our success)

 Strategies (how we are going to achieve our goals)

 Resources and requirements (what we need to get there)

 Costs and Benefits (what will it cost us and what will we gain)

The CRM Strategic Plan & Business Case

OCBC Bank in Singapore transformed its business from operations-centric to customer-centric using a five-year transformation plan. The bank’s goal is to “break away from the pack and find sustainable means to differentiate ourselves from competitors.”

To read more, visit: http://www.1to1media.com/Vie w.aspx?DocID=29738

A CRM strategy must be linked to the company’s business strategy and objectives. It focuses on how the company will build and deliver value to its customers and the company in conjunction with the marketing strategies. A company’s business strategy must consist of a marketing strategy as well as a CRM strategy. The marketing strategy focuses on the product life cycle whereas the CRM strategy focuses on the customer’s lifecycle. This slide shows the elements or outline of a CRM strategic plan, which is the compass or game plan that a company uses to create a sustainable competitive advantage in its relationships with its customers. It’s a combination of competitive moves and business approaches that managers can employ to create and deliver value to customers while achieving organizational objectives. A strategic plan consists of a mission, a vision, objectives, critical success factors and the recommended strategies or actions/approaches. A good rule of thumb to follow ~ Objectives are the ‘ends’ and the strategic plan (or the strategies and actions) are the ‘means’ of achieving them. A CRM strategic plan is developed with the following inputs: the voice of the customer, the trends in the business & competitive environments, the availability of resources, the company’s current strengths, weaknesses, capabilities and experience, problems, issues or challenges, and opportunities and threats.

The ultimate deliverable A CRM strategy is a HIGH-LEVEL PLAN OF ACTION. Here’s an example of an outline for a CRM strategic plan. A persuasive CRM Business Case or Strategic Plan takes into consideration the company’s current situation and objectives, outlines a customer- centric vision and blueprint, and creates a platform to review the costs, benefits, and risks associated with CRM. The basis for the business case is a thorough, situation analysis. In the business world, if you were a manager in charge of a CRM project, you would need to present executive management with a document detailing all of the sections noted in this slide. This is how you will get funding and the necessary resources to plan and implement CRM.

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Situation Analysis: Gartner Building Blocks

Source: Gartner Group

8. Metrics

1. Customer Vision

3. Valued Customer Experience

4. Organizational Collaboration

2. Customer-Centric Strategy

5. Customer Processes

7. Technology

6. Customer Information

This is the comprehensive model from Gartner Group that we already looked at in Module 1. It can help companies perform an assessing of their current situation, in each of the eight areas shown. The idea is to ask how the company is doing in each area. For example, if we were to conduct a situation analysis on the area of CUSTOMER-CENTRIC STRATEGIES, we could ask questions like:

Who are your customers? Consumers? Businesses? What are their characteristics? Who are our potential customers? What are our current goals for them? Where are we focused? What customers? Markets? How do we serve customers? Products? Services? What approaches are we using to meet customer needs? How are we allocating our resources? How well do we know our customers? What do we know about our customers? What don’t we know? Do we know what our customers want to feel and remember? How convenient is it for customers to express their thoughts, ideas, or opinions with us? Positive and negative?

How can we tell where we need to make improvements to improve customer perceptions? How difficult is it to tell?

What is our market share? Customer share?

We would use this model to go through each of the eight blocks. SO it serves like a checklist to make sure we cover all the bases.

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This is a great quick reference tool to assess the level of readiness that a company is at when it comes to achieving a customer-centric organization. The left-hand column shows the eight building blocks of CRM. There are five levels of readiness, depending to what degree the company has in place the blocks.

MAR 6826 Customer Relationship Management

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Here’s another set of criteria used by Gartner to determine if a company is truly customer-centric based on the habits in place for listening to the voice of the customer and taking action.

MAR 6826 Customer Relationship Management

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Gartner’s Customer Experience Maturity Model

Level 1 (Initial): The focus on improving the CX is fragmented. Processes are ad hoc, disconnected and disorganized. There may be multiple individual advocates, but they have little awareness of each other, no formal strategy is in place, and there is limited acceptance of the importance of CX maturity across the organization.

Level 2 (Developing): A VoC function has been established and a vice president of CX may have been appointed. An audit of existing activities has taken place. Gaps have been identified, requirements for improvements have been assessed, responsibilities have been assigned, and an implementation plan is in place.

Level 3 (Defined): A vision has been outlined and management buy-in secured. Goals, practices and performance metrics are fully defined. Processes are standardized, integrated, documented and implemented. Formal governance and a compliance model are in place.

Level 4 (Managed): A CX metric has reached parity with profitability in terms of importance for executives, and all employees are focused on its improvement as much as on profit. CX improvement has been systematized.

Level 5 (Optimizing): The culture of the organization has changed, so that employees do the right thing without being asked, given incentives or pressurized. Employees are empowered to take action and innovate. A culture of alert defense of an excellent CX has taken hold.

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Source: Peppers, Rogers, & Dorf (1999)

Situation Analysis: One-to-One Gap Tool

The One-to-One Gap Tool rates the company culturally and organizationally based on the following criteria:

Customer Relationship Management

TThhee OOnnee--ttoo--OOnnee GGaapp TTooooll Source: Is Your Company Ready for One-to-One Marketing? By Don Peppers, Martha Rogers & BobDorf, Harvard Business Review. January-February 1999.

Instructions: 1) This exercise is to be administered to employees at various levels and in various functions in your

company. It is designed to capture a robust analysis of how your company sees itself both culturally and organizationally.

2) It should also be given to a representative group of customers, with the language tailored

appropriately, in order to expose the gap between internal and external perceptions.

3) For each question listed below, select the statement that most closely reflects your opinion of the company as you view it today – not as you think it should be or it might be in the future.

CUSTOMER RELATIONSHIPS Question 1. How effectively does the company differentiate its customers?

1. W e do not differentiate among customers.

2. W e try to differentiate among customers.

3. W e collect and use information gleaned from interactions with customers to differentiate each customer and to evaluate the importance of each relationship.

4. W e have a continuously updated customer knowledge database that provides all the critical business information about our relationships with individual customers.

Question 2. What steps has the company taken to improve the total experience of its customers?

1. W e pay little or no attention to the total experience of customers.

2. W e know all the points where customers are in contact with the business, and we manage these areas effectively.

3. W e conduct frequent surveys with selected customers and make improvements based on their feedback.

4. W e have a continual dialogue with each customer and use well-developed methods to improve our relationships.

Question 3. How effectively does the company measure and react to customers’ expectations?

1. W e make no effort to understand our customers’ expectations.

2. W e have some idea of our customers’ expectations and use them in building relationships.

3. W e periodically solicit customers’ input about expectations and take actions to improve the relationships where possible.

4. W e work as a team with our customers to ensure that their expectations are met or exceeded.

Question 4. How effectively does the company understand and anticipate customers’ behavior?

1. W e pay little or no attention to the behavior of our customers.

2. W e understand the trends and buying patterns of our customers and consider them when making critical decisions.

3. W e collect data on our customers’ preferences and other behaviors and use that information in our business planning.

4. W e maintain a profile of each customer and refer to it when dealing with customers.