customer relation management

11

Customer Relation Customer Relation ManagementManagement

Margaret Since-HymasMargaret Since-HymasSarye LangeSarye LangeJodi KrauseJodi Krause

John CurtrightJohn CurtrightChris HoffmeisterChris Hoffmeister

22

What Is CRM?What Is CRM? A A strategy strategy used to understand a used to understand a

customer.customer. A A processprocess to gather and sort information. to gather and sort information. Allows for better analysis of what a Allows for better analysis of what a

customer needs in order to be satisfied.customer needs in order to be satisfied. Attempts to makes all information Attempts to makes all information

available about a customer to all aspects available about a customer to all aspects within a company.within a company.

““CRM is a paradigm shift in terms of CRM is a paradigm shift in terms of what you are focusing on.”what you are focusing on.”

33

CRMCRM

44

http://www.microsoft.com/BusinessSolutions/content/demos/MSCRMdemos/full_demo.htm

55

History of CRMHistory of CRM

Beginning unknown- concept has Beginning unknown- concept has existed since trade beganexisted since trade began

Resulted from increase in customer Resulted from increase in customer base and individualizationbase and individualization

A way to process mass amounts of A way to process mass amounts of customer informationcustomer information

66

Size of SpendingSize of Spending

The median annual CRM budget runs The median annual CRM budget runs over $1 million with an implementation over $1 million with an implementation time of four years.time of four years.

26% of united states businesses expect 26% of united states businesses expect to be spending $500,000 or more on to be spending $500,000 or more on CRM projects over the next two years.CRM projects over the next two years.

MIT Sloan Management Review, Larry Yu. Cambridge:Summer 2001. Vol 42 Iss 4 pg 18, 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 10-12-03www.Jupiter.com.. "What We're Buying" www.cio.com viewev 10-12-03

77

Size of SpendingSize of Spending In a 2001 survey, In a 2001 survey,

spending levels on spending levels on CRM are forecasted to CRM are forecasted to rise from $9.7 billion rise from $9.7 billion in 2001 to $16.5 in 2001 to $16.5 billion in 2006.billion in 2006.

Other research shows Other research shows that spending could that spending could be as great as $30.6 be as great as $30.6 billion by 2005.billion by 2005.

MIT Sloan Management Review, Larry Yu. Cambridge:Summer 2001. Vol 42 Iss 4 pg 18, 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 10-12-03www.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 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.htmlhttp://techupdate.zdnet.com/techupdate/stories/main/0,14179,2818263,00.html

88

Spending by RegionSpending by Region

North America: grew 5% in 2002North America: grew 5% in 2002 Europe: fell 22% in 2002Europe: fell 22% in 2002 Asia: fell 15% in 2002Asia: fell 15% in 2002

Gartner group- Gartner group- • Predicts that market will fall 8% in 2003Predicts that market will fall 8% in 2003• Predicts market will grow 5% annually Predicts market will grow 5% annually

from 2003-2007from 2003-2007www.4gartner.comwww.4gartner.com Viewed November 2, 2003 Viewed November 2, 2003

http://www.4gartner.com/

99

Market LeadersMarket Leaders

Popular among most major Popular among most major industries.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.

1010

Benefits of CRMBenefits of CRM

1.1. Customer loyalty/increase in market Customer loyalty/increase in market shareshare

2.2. Increase in sales and profitsIncrease in sales and profits

3.3. Greater frequency of sales, repeated Greater frequency of sales, repeated business/reordering, larger sales, business/reordering, larger sales, higher customer count and new higher customer count and new customerscustomers

4.4. Marketing and promotion savingsMarketing and promotion savings““Report On Customer Relationship Management.” Report On Customer Relationship Management.” www.lexisnexis.comwww.lexisnexis.com March 2003, Viewed October 18, 2003. March 2003, Viewed October 18, 2003.

http://www.lexisnexis.com/

1111

Benefits Cont.Benefits Cont.

5.5. Fewer complaints, more complaints Fewer complaints, more complaints resolvedresolved

6.6. Customers remaining with the Customers remaining with the organizationorganization

7.7. Positive customer responsePositive customer response8.8. DifferentiationDifferentiation9.9. Improved employee morale and Improved employee morale and

productivityproductivity““Report On Customer Relationship Management.” Report On Customer Relationship Management.” www.lexisnexis.comwww.lexisnexis.com March 2003, Viewed October 18, 2003. March 2003, Viewed October 18, 2003.


1212

Benefits Cont.Benefits Cont.

10.10. Improved employees relationshipsImproved employees relationships

11.11. Fewer employee grievances, less Fewer employee grievances, less absenteeism and less tardinessabsenteeism and less tardiness

12.12. Less employee turnoverLess employee turnover

““Report On Customer Relationship Management.” Report On Customer Relationship Management.” www.lexisnexis.comwww.lexisnexis.com March 2003, Viewed October 18, 2003. March 2003, Viewed October 18, 2003.


1313

CRM YieldsCRM Yields

““It costs 6-7 times It costs 6-7 times more to acquire a more to acquire a new customer than new customer than to retain an to retain an existing one.” existing one.” Harvard Business Harvard Business ReviewReview

1414

Just How Much Information Just How Much Information Is Held in CRM Packages?Is Held in CRM Packages?

““Online customer service contacts Online customer service contacts will grow from 870 million in 2001 to will grow from 870 million in 2001 to 4.7 billion in 2006”4.7 billion in 2006”

This is a predicted jump of 3.83 This is a predicted jump of 3.83 billion contacts in a mere 5 years! billion contacts in a mere 5 years! (Keep in mind the multiple channels (Keep in mind the multiple channels of information for of information for eacheach customer.) customer.)

www.4gartner.comwww.4gartner.com Viewed November 2, 2003 Viewed November 2, 2003

http://www.4gartner.com/

1515

How Does Information Enter an How Does Information Enter an Organization?Organization?

Many organizations have various ways Many organizations have various ways to gather customer information:to gather customer information:

TelephoneTelephone FaxFax WebWeb OtherOther Personal contactPersonal contact

1616

What Must Be Done With All What Must Be Done With All the Information?the Information?

Sort information for relevanceSort information for relevance All relevant information must be All relevant information must be

included when implementing CRMincluded when implementing CRM Any irrelevant information must be Any irrelevant information must be

excluded when implementing CRM in excluded when implementing CRM in order to reduce costs and time order to reduce costs and time effortsefforts

1717

What Information is What Information is Relevant?Relevant?

Customer information must sorted through Customer information must sorted through and organized. The question must be asked and organized. The question must be asked of what information is valuable and what is of what information is valuable and what is useless.useless.

Useful information:Useful information: Responses to surveys/campaigns.Responses to surveys/campaigns. Purchase dates.Purchase dates. Shipping dates.Shipping dates. Demographic data.Demographic data. Web sales data.Web sales data.

1818

Types of Customer Types of Customer InformationInformationDescriptive Behavioral Contextual

PurposeUnderstand Customer

Understand customer's behavior

Understand behavioral drivers

ExamplesContact, Size, Socioeconomic, demographics

Purchases, uses, communication, lifestyle

satisfaction, events, competitor actions, attitudes

SourcesOperational systems, external data sources

Internal systems, loyalty schemes, external data sources

News feeds, employees, market research

Strengths Readily availablePersonalizes 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

1919

What Is a Main Goal of CRM?What Is a Main Goal of CRM?

To understand customers for “profitable To understand customers for “profitable cross-channel customer relationships.”cross-channel customer relationships.”

To attempt to improve customer To attempt to improve customer relations to increase customer relations to increase customer retention.retention.

To Gain insight into customer behavior To Gain insight into customer behavior and answer what is valuable to them.and answer what is valuable to them.



2020

Questions to Ask to Improve Questions to Ask to Improve Customer Relationships?Customer Relationships?

1.1. About What do customers care most & About What do customers care most & what do they want in the future?what do they want in the future?

2.2. What will happen if we only provide What will happen if we only provide “mediocre” service?“mediocre” service?

3.3. How do we value customer relationships?How do we value customer relationships?4.4. How can we improve our customer How can we improve our customer

retention and satisfaction?retention and satisfaction?5.5. What will the future bring to customer What will the future bring to customer

service?service?““Report On Customer Relationship Management.” Report On Customer Relationship Management.” www.lexisnexis.comwww.lexisnexis.com March 2003, Viewed October 18, 2003. March 2003, Viewed October 18, 2003.


2121

ImplementationImplementation

Must be more than a financial Must be more than a financial investmentinvestment

Keys to successful implementation:Keys to successful implementation: Do it incrementallyDo it incrementally Scalable architectureScalable architecture Be prepared technologicallyBe prepared technologically Have adequate manpower for the Have adequate manpower for the

amount of incoming dataamount of incoming data

2222

Industry LeadersIndustry Leaders

Siebel-voted Siebel-voted the “CRM the “CRM Platform 2003” Platform 2003” by Network by Network Word ItalyWord Italy

Industry Industry specific, specific, leading sales leading sales application suitapplication suit

PackagedPackaged

SEBL ORCL PSFT SAP Industry

Market Cap: 6.79B 66.74B 9.04B 48.56B 110.91MEmploy ees: 5,909 40,650 8,180 29,165 268Rev. Growth (ttm): -20.20% -2.00% -6.00% 18.70% 0.00%Revenue (ttm): 1.64B 9.48B 1.95B 7.77B 53.69MGross Margin (ttm): 61.47% 75.67% 62.82% 63.52% 66.44%EBITDA (ttm): -2.70M 3.79B 314.24M 2.35B -247.00KOper. Margins (ttm): -12.11% 36.58% 8.17% 25.90% 0.44%Net Income (ttm): -82.97M 2.40B 125.08M 1.30B -1.83MEPS (ttm): -0.171 0.447 0.394 1.033 -0.1PE (ttm): 28.57 55.13 37.73 39.94PEG (ttm): 9.72 2.51 3.5 2.44 2.02PS (ttm): 4.71 6.89 4.3 5.77 2.4

DIRECT COMPETITOR COMPARISON

2323

CRM ApplicationsCRM Applications

Reporting-Reporting-compilation, who is compilation, who is best customer and best customer and what are they what are they buying.buying.

O&F- finalization O&F- finalization step, assist in step, assist in creating contracts, creating contracts, invoices, etc.invoices, etc.

2424

CRM Applications Cont.CRM Applications Cont.

Sales-allows salespersons access to Sales-allows salespersons access to company database and resourcescompany database and resources

Marketing-allows centralization of focus on Marketing-allows centralization of focus on current marketing techniques and marketscurrent marketing techniques and markets

Customer service-management of different Customer service-management of different customer touch pointscustomer touch points

Document management-way to keep and Document management-way to keep and maintain records in a way that can be maintain records in a way that can be access quicklyaccess quickly

2525

VendorsVendorsSpecialized VendorsSpecialized Vendors

Firstwave- first company to offer Firstwave- first company to offer totally web-based CRM solution-totally web-based CRM solution-packaged or ASPpackaged or ASP

TechExcel- only CRM solution TechExcel- only CRM solution designed for software and product designed for software and product development companies (packaged)development companies (packaged)

Knowledge concepts- Firmworks, Knowledge concepts- Firmworks, accounting software specificaccounting software specific

2626

CRM: CRM: NOTNOT Primarily Primarily TechnologicalTechnological

54% of CRM spending levels is attributable 54% of CRM spending levels is attributable to technology components.to technology components.

Quote from Judith Kincaid, author of Quote from Judith Kincaid, author of Customer Relationship Management: Customer Relationship Management: Getting it Right!”Getting it Right!”

““CRM is not just buying a piece of software to CRM is not just buying a piece of software to automate some of your current processes and automate some of your current processes and then plugging it in . If it were that easy, more then plugging it in . If it were that easy, more companies would have had CRM success already.”companies would have had CRM success already.”

““CRM is no silver bullet. CRM program success is CRM is no silver bullet. CRM program success is achieved by completing small, focused projects achieved by completing small, focused projects that add up to a big victory over the long run.”that add up to a big victory over the long run.”



2727

Reasons for FailureReasons for Failure A recent survey from business intelligence A recent survey from business intelligence

quotes success rates for CRM quotes success rates for CRM implementation as around 10%.implementation as around 10%.

Reasons:Reasons: Lack of communication between users.Lack of communication between users. Incomplete picture.Incomplete picture. Inability to adapt to newer technology.Inability to adapt to newer technology. Managements limited understanding, poor Managements limited understanding, poor

planning or lack of skills.planning or lack of skills. Company politics, inertia and budget Company politics, inertia and budget

constraints.constraints.

2828

CRM case study:CRM case study:

Empire Blue Cross and Empire Blue Cross and Blue Shield of New YorkBlue Shield of New York

2929

Company BackgroundCompany Background

Founded: 1935Founded: 1935 Headquarters: New YorkHeadquarters: New York Employees: 6,500, plus 1,800 Employees: 6,500, plus 1,800

independent brokersindependent brokers Customers: 29,000 corporate Customers: 29,000 corporate

customers, representing 4.8 million customers, representing 4.8 million individual customersindividual customers

Revenues (2001): $4.3 billionRevenues (2001): $4.3 billion

3030

Company BackgroundCompany Background

Serves the 28 eastern and Serves the 28 eastern and southeastern counties of New York southeastern counties of New York State and 10 contiguous counties in State and 10 contiguous counties in New Jersey and ConnecticutNew Jersey and Connecticut

Empire is the largest health Empire is the largest health insurance provider in New Yorkinsurance provider in New York

3131

Before 2000Before 2000

Paper-based sales processPaper-based sales process Customer had no contact with Customer had no contact with

Empire and vice versa Empire and vice versa Broker could not generate quote or Broker could not generate quote or

process paperworkprocess paperwork Empire could not verify information Empire could not verify information

with customerwith customer

3232

Application Process before Application Process before 20002000

Cust. Specs Broker Empire Brokers

relations department

Price Quote

Customer

One set of paperwork (for filing purposes)

Group application

60 sets of paperwork, to be sent to 11 departments at Empire

67% returned or verified

3333

Application Process Application Process ProblemsProblems

Paper-based: long (about 27 days)Paper-based: long (about 27 days) Delay–filled sales process Delay–filled sales process Often difficult to make changes to plansOften difficult to make changes to plans Outdated enrollment forms when plans Outdated enrollment forms when plans

were revisedwere revised Brokers were dependent on Empire Brokers were dependent on Empire

relations staff, who were available during relations staff, who were available during business hours only.business hours only.

3434

“ “We had 33 redundancy audit checks-We had 33 redundancy audit checks-where we go over information to where we go over information to make sure it’s correct. We had make sure it’s correct. We had created this nightmare.”created this nightmare.”

-Steven Bell, Vice President of E--Steven Bell, Vice President of E-Business Operations, Empire Blue Business Operations, Empire Blue Cross and Blue ShieldCross and Blue Shield

3535

Implementation of CRMImplementation of CRM

In 1999 a team sat down and tracked the In 1999 a team sat down and tracked the process process

Cut the essential steps from 80 to 40Cut the essential steps from 80 to 40 Off the shelf CRM product not enough Off the shelf CRM product not enough Integration with current legacy Integration with current legacy

mainframesmainframes Outsourcing: Firepond of Waltham, Mass Outsourcing: Firepond of Waltham, Mass Close cooperation with in-house IT Close cooperation with in-house IT

departmentdepartment

3636

Empire’s Broker Services Empire’s Broker Services ApplicationApplication

Live in October of 2000Live in October of 2000 Includes quote engine and proposal Includes quote engine and proposal

configuratorconfigurator Password protectedPassword protected Broker can go online to create custom Broker can go online to create custom

proposals, pull information together proposals, pull information together about plan options, and print about plan options, and print information specific to the customer’s information specific to the customer’s specificationsspecifications

3737

Broker can enroll new accountsBroker can enroll new accounts Agents can maintain customer Agents can maintain customer

information onlineinformation online 24 hr access24 hr access Process now only took 2-3 daysProcess now only took 2-3 days

3838

Updates since 2000Updates since 2000

New service was developed in-houseNew service was developed in-house Additional sites were added: “Blue Tools”Additional sites were added: “Blue Tools” Employers can now enroll employeesEmployers can now enroll employees Individual members can now access and Individual members can now access and

update personal data, check claims status update personal data, check claims status and request ID cardsand request ID cards

Brokers can now service their accounts Brokers can now service their accounts onlineonline

Physicians can now check patient eligibility, Physicians can now check patient eligibility, submit claims, and check co-payments and submit claims, and check co-payments and deductibles onlinedeductibles online

3939

Application Process after Application Process after 20002000

WWW.EMPIREBLUE.COM

Agent

Broker

Physician

Customer

Member

4141

ConclusionConclusion

CRM is a tool to focus on your customers’ CRM is a tool to focus on your customers’ needs.needs.

Empire Blue Cross and Blue Shield uses Empire Blue Cross and Blue Shield uses CRM technology to facilitate the sales CRM technology to facilitate the sales process of health insurance coverage. process of health insurance coverage.

With this technology, Empire makes it With this technology, Empire makes it easier for brokers, employers, individual easier for brokers, employers, individual members and physicians to come together members and physicians to come together in a 24 hr, easy to use environment.in a 24 hr, easy to use environment.

4242

CRM in SportsCRM in Sports

Seattle MarinersSeattle Mariners

"Onyx Helps Build Fan and Spons"Onyx Helps Build Fan and Sponser Loyalty for the Seattle Marinerser Loyalty for the Seattle Mariners""

4343

Seattle MarinersSeattle Mariners

Established in 1977Established in 1977 Defeated New York Yankees in 1995 PlayoffsDefeated New York Yankees in 1995 Playoffs Started to increase fan supportStarted to increase fan support Opened Safeco FieldOpened Safeco Field Record-tying 116 wins in 2001Record-tying 116 wins in 2001 2002 Sales (mil.) $167.02002 Sales (mil.) $167.0 Most profitable team in the Major LeagueMost profitable team in the Major League Highest attendance in the American League Highest attendance in the American League

(3.4million)(3.4million)

"Mike Rogoway, Knowledge Base"Mike Rogoway, Knowledge Base""

4444

Successful Problems?Successful Problems?

Increase in fan support highlighted Increase in fan support highlighted inadequacies in their IT technologyinadequacies in their IT technology

As sales increased the lack of integrated As sales increased the lack of integrated systems hurt customer servicesystems hurt customer service

13 Disconnected databases13 Disconnected databases Most Alarming: An excel spreadsheet Most Alarming: An excel spreadsheet

outlining season ticket holders was outlining season ticket holders was maintained by the secretary of the CEO. maintained by the secretary of the CEO.

Decision to implement a CRM system took Decision to implement a CRM system took place in 2000place in 2000


4545

Larry WitherspoonLarry Witherspoon

Vice President of Technology Vice President of Technology Responsible for food and ticketingResponsible for food and ticketing Responsible for implementation of a Responsible for implementation of a

CRM systemCRM system Currently enrolled in the MBA Currently enrolled in the MBA

program at the University of program at the University of WashingtonWashington

"John Hogan, www.crm.com""John Hogan, www.crm.com" 4646

Onyx to the RescueOnyx to the Rescue

Larry Witherspoon: Mariners Vice Larry Witherspoon: Mariners Vice President of IT services President of IT services

Selected Onyx Employee and Customer Selected Onyx Employee and Customer Portal for CRM systemPortal for CRM system

Systems were implemented in 12 weeks, Systems were implemented in 12 weeks, just in time for the 2001 seasonjust in time for the 2001 season

Project was implemented in house by Project was implemented in house by Witherspoon and 4 other peopleWitherspoon and 4 other people


4747

Main GoalMain Goal

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


4848

Additional Comments by Additional Comments by TraismanTraisman

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


4949

CRM FunctionsCRM Functions

Automate customer service and support Automate customer service and support activitiesactivities

Manage season-ticket holder, suite, and Manage season-ticket holder, suite, and sponsorship salessponsorship sales

Target new and existing customers and Target new and existing customers and sponsorssponsors

Perform market analysis and organize tailored Perform market analysis and organize tailored marketing promotions to specific customer marketing promotions to specific customer segmentssegments

Integrate ballpark operations into Onyx to Integrate ballpark operations into Onyx to provide 360-degree information for total provide 360-degree information for total customer satisfactioncustomer satisfaction


5050

Applications of CRM Applications of CRM Functions Functions

Incident records serve as complaint Incident records serve as complaint forms (i.e. broken seats)forms (i.e. broken seats)

Automated birthday announcements Automated birthday announcements for season ticket holdersfor season ticket holders

Review concession stand locations Review concession stand locations and plan future locationsand plan future locations

Tracking based on Compass Club Tracking based on Compass Club Members cardMembers card


Surprising ResultsSurprising Results

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

"www.hoovers.com""www.hoovers.com" 5252

Ticket SalesTicket Sales

1998 2.64 Million (51998 2.64 Million (5thth in in AL)AL)

1999 2.92 Million (41999 2.92 Million (4thth in in the AL)the AL)

2000 3.15 Million (42000 3.15 Million (4thth in in the AL)the AL)

2001 3.51 Million (led AL)2001 3.51 Million (led AL) 2002 3.54 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 InvestmentReturn on Investment

System cost $500,000System cost $500,000 ROI was not as important as building ROI was not as important as building

customer loyaltycustomer loyalty ““Success will be seen when Success will be seen when

performance on the field decreases and performance on the field decreases and customers remain loyal.” –Witherspooncustomers remain loyal.” –Witherspoon

Potential Revenue increase of $10 Potential Revenue increase of $10 million per year due to an 8% increase million per year due to an 8% increase in season ticket revenuein season ticket revenue

Limited growth due to number of seats Limited growth due to number of seats in the stadium (47,116)in the stadium (47,116)

"Howard Baldwin, Customer Care"Howard Baldwin, Customer Care for Smaller Businesses" for Smaller Businesses"

5454

Customer Service Customer Service ImprovementImprovement

““By using a CRM system By using a CRM system to track complaints, the to track complaints, the organization noticed organization noticed patterns and addressed patterns and addressed them. Concession them. Concession complaints, for instance, complaints, for instance, dropped by 80% between dropped by 80% between 2001 and 2002.”-2001 and 2002.”-WitherspoonWitherspoon


5555

Why will this be successful?Why will this be successful?

Relatively small number of variables Relatively small number of variables compared to many CRM projectscompared to many CRM projects

““They only have 20 pieces of They only have 20 pieces of information about a single customer, information about a single customer, we’ve got hundreds and hundreds.” –we’ve got hundreds and hundreds.” –Kelsey Corcoran (Verizon Wireless Kelsey Corcoran (Verizon Wireless CRM Manager)CRM Manager)

More uniform sample- Baseball fansMore uniform sample- Baseball fans

"John Cook, Technology in the Ba"John Cook, Technology in the Ballpark? Of course, it's Seattle"llpark? Of course, it's Seattle"

5656

Future of CRM in SeattleFuture of CRM in Seattle

Implementing predictive modeling in Implementing predictive modeling in limited CRM programslimited CRM programs

Designed to highlight seasonal Designed to highlight seasonal buying patterns in merchandise and buying patterns in merchandise and concession sales.concession sales.

Goal: To reduce costs buy lowering Goal: To reduce costs buy lowering inventory while avoiding stock-outsinventory while avoiding stock-outs

5757

Source: www.rbc.com

RBCRBCFINANCIALFINANCIAL

GROUPGROUP

CRMCRM IN BANKING IN BANKING

5858

RBC FINANCIAL GROUPRBC FINANCIAL GROUP- Canada’s Largest BankCanada’s Largest Bank

- Five major business lines:Five major business lines:1.1. RBC Royal BankRBC Royal Bank

(personal & commercial (personal & commercial banking)banking)

2.2. RBC InsuranceRBC Insurance

3.3. RBC InvestmentsRBC Investments(wealth management)(wealth management)

4.4. RBC Capital MarketsRBC Capital Markets (corporate & investment (corporate & investment

banking)banking)

5.5. RBC Global ServicesRBC Global Services(transaction processing)(transaction processing)Source: www.rbc.com

5959

RBC FINANCIAL GROUPRBC FINANCIAL GROUP

- $270 billion in assets*$270 billion in assets*

- 23 million retail accounts23 million retail accounts

- 700 products700 products

- 58,000 employees58,000 employees

- 10 million clients throughout the world10 million clients throughout the world

(incl. personal, commercial, corporate, & public sector)(incl. personal, commercial, corporate, & public sector)

* Financial data for RBC Financial Group reported in Canadian Dollars as of 2001* 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

6060


This business line includes:This business line includes:- 50% of RBC’s cash net income50% of RBC’s cash net income- Over 1,300 branchesOver 1,300 branches- 4,800 ABMs (ATMs)4,800 ABMs (ATMs)- 87,250 POS terminals87,250 POS terminals- 1.4 million online banking customers1.4 million online banking customers- 2 million telephone banking 2 million telephone banking

customerscustomers- International network of 300 offices International network of 300 offices

in 30 countriesin 30 countries

RBC ROYAL BANKRBC ROYAL BANK


6161


- AddressAddress

- AgeAge

- Account balance(s)Account balance(s)

- Company contactsCompany contacts

- Qualified service Qualified service levellevel

CRM Goal:CRM Goal:

Provide to personal bankers, upon Provide to personal bankers, upon demand, all contacts, transactions, demand, all contacts, transactions,

accounts, & interactions with a customer.accounts, & interactions with a customer.

- Current & future Current & future profitabilityprofitability

- Current Current productsproducts

- Target productsTarget products

- Reaction to Reaction to direct marketingdirect marketing


6262

RBC FINANCIAL GROUPRBC FINANCIAL GROUPOrganization Chart- Executives OnlyOrganization 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

6363

RBC FINANCIAL GROUPRBC FINANCIAL GROUPImplementation TimelineImplementation 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

6464

RBC FINANCIAL GROUPRBC FINANCIAL GROUPBenefits to Bank & CustomerBenefits to Bank & Customer

Before:Before:

Conventional wisdom: key differentiator Conventional wisdom: key differentiator for banks was a 24/7 call center and a for banks was a 24/7 call center and a branch on every cornerbranch on every corner

After:After:

Most important to the customer was Most important to the customer was customer intimacy, including trust, customer intimacy, including trust, reassurance, a feeling that the bank reassurance, a feeling that the bank knows them, understands their needs, knows them, understands their needs, recognizes who they are and values recognizes who they are and values their businesstheir business


6565

Before:Before:Every branch had a different way to Every branch had a different way to generate sales leads, account managers generate sales leads, account managers were responsible for creating their own were responsible for creating their own lists. Quality of lead list was based on lists. Quality of lead list was based on quality of manager’s query and when you quality of manager’s query and when you had time to stop by the appropriate had time to stop by the appropriate department.department.

After:After:Centralized and standardized sales leads Centralized and standardized sales leads customized by interest of customers in a customized by interest of customers in a sub-segment, reminders for sales sub-segment, reminders for sales managers to call and offer productsmanagers to call and offer products



6666

Before:Before:Product and functional silos; corporate Product and functional silos; corporate processes were executed more from processes were executed more from consensus and conversations than a consensus and conversations than a clear road map.clear road map.

After:After:Bank determined a set of customer Bank determined a set of customer treatment strategies—such as the treatment strategies—such as the decision to offerdecision to offerpre-approved credit for credit lines—for pre-approved credit for credit lines—for hundreds of micro-segments; ultimate hundreds of micro-segments; ultimate objective of one-to-one marketing. objective of one-to-one marketing.



6767

Before:Before:Customer Profitability Measurement: Customer Profitability Measurement: A- most profitableA- most profitableB- less profitableB- less profitableC- not profitable or loss C- not profitable or loss Little consideration to future potentialLittle consideration to future potential

After:After:Customer segments: Key, Nexus, Prime Customer segments: Key, Nexus, Prime CPM changed by at least two deciles for 70% CPM changed by at least two deciles for 70% due to more accurate spread information, due to more accurate spread information, customer specific risk assessments, customer specific risk assessments, transaction based fee and costs elements. transaction based fee and costs elements. Invest in some sub-segments to nurture our Invest in some sub-segments to nurture our relationship with potentially profitable relationship with potentially profitable customers, take losses in the short term.customers, take losses in the short term.



6868

RBC FINANCIAL GROUPRBC FINANCIAL GROUPCRM InitiativesCRM Initiatives


6969

RBC FINANCIAL GROUPRBC FINANCIAL GROUPNet Income by YearNet Income by Year

($million)($million)

Source: www.rbc.com

1998 1999 2000 2001 2002

$1,772 $1,725

$2,208

$2,435

$2,898

7070

CRM and the customerCRM and the customer

Improved customer service –no more Improved customer service –no more “I will connect you to someone who “I will connect you to someone who can help you”can help you”

Easier to get the services I desire Easier to get the services I desire –”wow they have sauerkraut!”–”wow they have sauerkraut!”

Easier access to my services through Easier access to my services through a web-based CRM (Empire & RBC)a web-based CRM (Empire & RBC)

7171

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

CRM and PrivacyCRM and Privacy

7272


7373


CRM collects personal information to CRM collects personal information to provide specialized services provide specialized services

Customers are increasingly worried Customers are increasingly worried about what is being done with their about what is being done with their personal informationpersonal information

With new privacy laws, customers With new privacy laws, customers have to be informed that data is have to be informed that data is being collectedbeing collected

7474

FutureFuture

Continues improvements in establishing Continues improvements in establishing relationships with customers, but relationships with customers, but implementation practices still problematicimplementation practices still problematic

Firms recognizing importance of database Firms recognizing importance of database building and customer data capturingbuilding and customer data capturing

Increase in real time analysis of customer Increase in real time analysis of customer behavior and what likely to buybehavior and what likely to buy

Chief customer officerChief customer officer

7575

Failure RateFailure Rate

12% of CRM packages never go live12% of CRM packages never go live Only 16% of CRM projects actually Only 16% of CRM projects actually

improve business performance in a improve business performance in a measurable waymeasurable way

CRM project risk the highest rates of CRM project risk the highest rates of failure for companies (32% and 55% failure for companies (32% and 55% after one year)after one year)

Only 21% improve customer Only 21% improve customer satisfaction.satisfaction.

7676

Best PracticesBest Practices

CRM system needs to monitored and CRM system needs to monitored and continuously modified.continuously modified.

Align CRM system with corporate Align CRM system with corporate strategy.strategy.

Must be endorsed by company’s Must be endorsed by company’s upper management.upper management.

Collaboration across departments.Collaboration across departments.

7777

Best PracticesBest Practices

Keep simple- varying levels of skills.Keep simple- varying levels of skills. Vendor definition of success needs to Vendor definition of success needs to

match that of company.match that of company. Set clear benchmarks to measure Set clear benchmarks to measure

success.success. Customer acquisition costs, conversion rates Customer acquisition costs, conversion rates

from lookers to buyers, retention rate.from lookers to buyers, retention rate.

7878

QuestionsQuestions

customer relation management

Documents