Customer Relationship Management
(CRM)
Nancy Prives
Julien Couilloud
Eric Meyer
Jon Stegen
April 22, 2004
1
Agenda
Introduction of CRM
Discussion of CRM Components
Critical Success Factors for CRM
Implementation of CRM
Case Study of Nexstar
Conclusion
2
What is CRM?
“CRM is…a long-term commitment,
best when initiated in a well-defined
scope and with clear objectives, and
then slowly grown and expanded as
successes and failures are realized.”
Kay Mandati, Relationship Manager for
BMW North America
McKim, Bob, “The differences between CRM and database marketing” Journal of Database Management, Vol. 9, 4, July 2002, pp. 371 – 3
375.
What is CRM?
“CRM is not a tool or a technology; it is
a business practice that utilizes
technology and requires
organizational evolution.”
Joe Rapolla, CRM Manager for Venvidi
Universal Music Group
McKim, Bob, “The differences between CRM and database marketing” Journal of Database Management, Vol. 9, 4, July 2002, pp. 371 –
375.
4
CRM Defined
“CRM, or Customer Relationship Management,
is a company-wide business strategy
designed to reduce costs and increase
profitability by solidifying customer loyalty.
True CRM brings together information from all
data sources within an organization (and
where appropriate, from outside the
organization) to give one, holistic view of
each customer in real time.”
5
“What is CRM?” from www.destinationcrm.com/articles/default.asp?ArticleID=1747 , viewed 3/11/04
What CRM is Not




A
A
A
A
Database Marketing System
Software Package
Pure Marketing Strategy
Pure IT Strategy
“What is CRM?” from www.destinationcrm.com/articles/default.asp?ArticleID=1747 , viewed 3/11/04 and Howlett, Dennis, and Keith Rodgers, “What is
CRM?” from http://www.destinationcrm.com/articles/default.asp?ArticleID=3293 , viewed 3/11/04
6
Why CRM?

Higher costs associated with getting
new customers
• Five to one
• Industrial sales: 8-10 calls vs. 2-3 calls
• Marketing for Web customers: $34 vs. $6.80

Better to retain customers & build
loyalty
• Up-sell
• Cross sell
Howlett, Dennis, and Keith Rodgers, “What is CRM?” from http://www.destinationcrm.com/articles/default.asp?ArticleID=3293 , viewed 3/11/047
and Byun, Jongbok and Paul Gray, “Customer Relationship Management” from http://crm.ittoolbox.com/documents/document.asp?i=2629 ,
viewed 3/11/04
45
40
35
30
25
20
15
10
5
0
Aberdeen Group
AMR Research
2005
2004
2003
2002
2001
2000
Forrester
Research
1999
Billions of $
Size of CRM Market
Yankee Group
Year
8
Size of CRM Market



Hewson Group reported $8.8 billion
in 2003
Aberdeen Group projects $17.7
billion in 2006
Key point to remember: market is in
the billions
http://www.crm2day.com/library/EpZZEEuEluLDzGsHRc.php , viewed4/10/04 and
9
http://www.destinationcrm.com/articles/default.asp?ArticleID=3293 , viewed 4/15/04
CRM Vendors






Siebel Systems
PeopleSoft
Oracle
Nortel Networks (Clarify)
SalesLogix
E.piphany
http://www.crm2day.com/library/EpZZEEuEluLDzGsHRc.php , viewed 4/10/04 and
http://www.destinationcrm.com/articles/default.asp?ArticleID=3293 , viewed 4/15/04
10
Dealing with Channels
ATM
Phone
Teller
Personal banker
Mail
Internet
11
End to End CRM Infrastructure
Call Center
Web
Access
E-mail
Store
Direct
Sales
Fax
Refined Business Processes
Process
Improvement
Business Intelligence
Integrated database
Billing
Call center
Accounts
Sales
….
Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002
12
Scope of CRM

CRM modules:
•
•
•
•
Sales Force Automation
Marketing Automation
Call center
Analytics/Datamining
13
Sales Force Automation

Contact management
• Name, address, phone number …
• Organization charts, behavior characteristics

Account Management
• Multiple links to other information

Opportunity Management
•
•
•
•
•
•
Specific opportunities
Sales rep working on case
Assigned revenue credit
Potential for closing
Competition
…
14
Cont’d

Example: Contact Management
15
Saleslogix.com
Cont’d

Sales forecasting
16
Saleslogix.com
SFA Benefits
• $$

Increase revenue/reduce costs
• Customer retention

Through relationship
• Synchronization

Up to date info everywhere
17
Marketing Automation (EMA)

e-version of marketing campaigns
• Execute
• Monitor
• Refine
18
Traditional Marketing Campaign
Marketing
Campaign
Other
Email
Phone
Registr.
Phone
Registr.
Campaign
Refinement
Time
Marketing
Campaign
Other
Email
Campaign
Refinement
19
Greenberg, Paul, CRM at the speed of light, Mc Graw-Hill, California 2001.
EMA
E-Marketing Campaign
EMA tools
Campaign
refinement
Refinement
Refinement
Feedback
Time
Direct mail
Email
Feedback
Phone
Registr.
Feedback
20
Greenberg, Paul, CRM at the speed of light, Mc Graw-Hill, California 2001.
EMA Benefits



Information gathering, extraction, and analysis
reduced
Refinement of campaign in midstream
Free up labor
22
Call Centers

Customer Service Counter


Helpdesk
Call Center
23
Example
2
1
3
4
Customer Profile
5
CRM Server/
datawarehouse
24
Greenberg, Paul, CRM at the speed of light, Mc Graw-Hill, California 2001.
Functionalities

Automated Intelligent Call Routing
• Identify who is calling and why
• Use caller history
• Route the caller

Workforce Management Software
• Call volume forecast
• Agent scheduling
25
Call Center Benefits

Service Consistency
• Call-scripting

Monitoring
• Feedback on service
• CSR efficiency

Cost cutting
• Time spent reduced
26
Analytics/Data mining
Customer contact
Corporate contact
Product list
Sales revenues
Payment data
SFA
Sales revenues
Customer
segments
Promotion history
Campaign
response
Customer score
MARKETING
Customer contacts
Trouble-ticket
history
Survey responses
Payment data
CONTACT
CENTER
How to get a single version of the Customer Truth ?
27
Greenberg, Paul, CRM at the speed of light, Mc Graw-Hill, California 2001.
Need for integration

Risk of CRM “stovepipes”
• Ex: Client receives cross sell promo after complain

Motivating customer to come back?
•
•
•
•
•
•
Preferred products
Consumption rate
Values
Lifestyle
Life stage
Behavior outside your company
 Impossible with information “snapshots”!
 Build central data warehouse
Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002
28
Need for analysis
Non CRM data:
- ERP
- Financial
- Billing
Analytical CRM
Prospect
qualification
Work Force
Optimization
Enterprise data
• Don’t let your data seat
in a data warehouse!
• Use software solution
for analysis
Customer
profiling
Risk
scoring
Operational CRM
-Activity Mgt
- Contact Mgt
- Campaign Mgt
- Pricing
-Customer support
Revenue
analysis
Campaign
measurement
Channel
analysis
Churn
analysis
Customer
segmentation
29
Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002.
Implementation rate

42% of CRM licenses not installed
•
•
•
•
Discounts
Implementation (5 times cost of license)
Maintenance costs (1/4 of license cost/seat)
Inadequate resources
Martin Schneider, Customer Relationship Management, 2004
30
Success rate

5 years ago
• High failure rate (70% Tafti, 2002)


Reason: “Boil the ocean!” + Techno first
Today
• Most projects see payback <1year

Secret?
 Better methodology
 Smaller projects and reasonable objective
Martin Schneider, Customer Relationship Management, 2004
Tafti, 2004
31
Critical Success Factors

Planning & setting the direction
• CRM-focused vision


Reasonable & specific expectations
Reasonable & specific time table
• Explain importance & relevance of CRM


Need support & involvement of management
Need support & involvement of staff
Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley,
Boston, 2002.
Gordon, Ian. “Best Practices: Customer Relationship Management” Ivey Business Journal
Online, 2002, pp. 1-6.
Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship
Technologies, Prentice Hall PTR, Upper Saddle River, 2001.
32
Critical Success Factors

Planning & setting the direction
(Cont.)
• Resource allocation
• Align individual goals with CRM goals
Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley,
Boston, 2002.
Gordon, Ian. “Best Practices: Customer Relationship Management” Ivey Business Journal
Online, 2002, pp. 1-6.
Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship
Technologies, Prentice Hall PTR, Upper Saddle River, 2001.
33
Critical Success Factors

Service & communication
management
• High quality service for customers
• High quality support for employees
• Communication integration
Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley,
Boston, 2002.
Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship
Technologies, Prentice Hall PTR, Upper Saddle River, 2001.
34
Critical Success Factors

Technology relationship strategies
• Ensure proper integration of technology
& business strategies
• On-going technology training
Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley,
Boston, 2002.
Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship
Technologies, Prentice Hall PTR, Upper Saddle River, 2001.
35
Critical Success Factors

Personnel development & enterprise
management
• Value your employees
• Goals for improving each person’s
productivity
• Encourage cooperation
Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley,
Boston, 2002.
Lacity, Mary, Management of IT Projects,” 2003.
Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship
Technologies, Prentice Hall PTR, Upper Saddle River, 2001.
36
Critical Success Factors

Information protection
• Customer info is an asset
• Rules & policies
• Accountability
• Customer privacy
Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley,
Boston, 2002.
Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship
Technologies, Prentice Hall PTR, Upper Saddle River, 2001.
37
Critical Success Factors

Resource investments & application
strategies
• Portfolio of technology investments
• Information into knowledge for a sustainable
competitive advantage
• Process, not a project
• Ongoing evaluation
Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley,
Boston, 2002.
Gordon, Ian. “Best Practices: Customer Relationship Management” Ivey Business Journal
Online, 2002, pp. 1-6.
Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship
Technologies, Prentice Hall PTR, Upper Saddle River, 2001.
38
Critical Success Factors

Contribution
• Rewards & explanations
• Various forms of measurement
• Rewards improve customer service
Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley,
Boston, 2002.
Gordon, Ian. “Best Practices: Customer Relationship Management” Ivey Business Journal
Online, 2002, pp. 1-6.
Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship
Technologies, Prentice Hall PTR, Upper Saddle River, 2001.
39
Implementation

Adequate time & resources for
implementation
• Implementation in small steps

Be flexible
Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley,
Boston, 2002.
Gordon, Ian. “Best Practices: Customer Relationship Management” Ivey Business Journal
Online, 2002, pp. 1-6.
Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship
Technologies, Prentice Hall PTR, Upper Saddle River, 2001.
40
Customer Focus




Strategies focus on end-customer
relationship
Sell what the customer wants
Measure customer attitudes
Keep track of competitors
Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley,
Boston, 2002.
Gordon, Ian. “Best Practices: Customer Relationship Management” Ivey Business Journal
Online, 2002, pp. 1-6.
Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship
Technologies, Prentice Hall PTR, Upper Saddle River, 2001.
41
Best practices Summarized







High Level of Communication
Management Support
Strategy Drives Technology
Implement Incrementally
Hire outside experts if necessary
Involve Knowledgeable Users
Customer-Oriented Focus
Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley,
Boston, 2002.
Gordon, Ian. “Best Practices: Customer Relationship Management” Ivey Business Journal
Online, 2002, pp. 1-6.
Lacity, Mary, Management of IT Projects,” 2003.
Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship
Technologies, Prentice Hall PTR, Upper Saddle River, 2001.
42
Confidential and Proprietary
A Closer Look at CRM in the
Financial Services Industry
43
Company Background
Confidential and Proprietary
• Founded on June 29, 1999 as a collaboration of a
experienced mortgage management team and the
investment firm, Kohlberg Kravis Roberts & Co.
• Management Team with over 100 years of combined
industry experience
• Corporate Operations begins in 2000 as the
company positions itself as a direct lender and
mortgage processing BPO
Source: www1.nexstar.com/servlet/nexstar.PressReleases, viewed 3/1/04
44
Nexstar’s Business Model
Confidential and Proprietary
• Mortgage Processing Outsourcer: Balanced
portfolio of large national lenders, mediumsized regional lenders, and small credit
unions and community banks
• BPO is largest portion of business (over 90%)
• Direct Lender: Similar to traditional mortgage
companies; Not the strategic focus (demanddriven)
45
Nexstar’s Products / Services
Confidential and Proprietary
• Offers a variety of mortgage products to clients and
direct consumers (Conventional, Jumbo, FHA, Fixed
rate mortgages, Adjustable Rate Mortgages, Flex 97)
• Customer service levels must higher than other
lenders for Nexstar’s Business Model to succeed
• Workflow managed in three distinct work channels:
– Channel One: Lender Clients and Nexstar Direct
– Channel Two: Washington Mutual
– Channel Three: Chase Manhattan
46
The IT Environment at Nexstar
Confidential and Proprietary
Jerry Halbrook
CIO/COO/Co-Founder
Rich Gagliano
Nexstar IT Manager
St. Louis, MO
Steven Bucuvalas
Chief Techology Officer
Evergreen, CO
In-House IT Staff
(Help Desk/ Strategic IT)
Eotek IT Staff
(Web-Based Techology)
47
The IT environment at Nexstar
Confidential and Proprietary
• In-house IT staff (St. Louis, MO)
– Approximately 15 full time IT staff
– In-house functions includes: help desk, new
workstation setup, strategic IT (mostly in webbased technologies), Eotek facilitation
• Eotek IT staff (Evergreen, CO)
–
–
–
–
Over 30 full time IT staff
Web-development and web-methods technology
Implement new web-based rollouts
Other software maintenance (Siebel, Loanquest)
48
Nexstar / Eotek Relationship
Confidential and Proprietary
• Upon incorporation, Eotek chosen as an independent
consulting firm on web-based technologies
• Nexstar purchases Eotek on August 26, 1999
• Currently, Eotek develops and manages 100% of the
Nexstar’s web-based technology, as well as comanaging many of its other IT software, such as
Siebel and Loanquest.
Source: www1.nexstar.com/servlet/nexstar.PressReleases, viewed 3/1/04
49
CRM in the Mortgage Industry
Confidential and Proprietary
• Volatility of the market hinders large
investments in CRM
• In-house CRM initiatives are rare; most use
large CRM vendors and ASPs
• Most market participants look at CRM as a
technology, not as a strategy or process
50
CRM at Nexstar
Confidential and Proprietary
• Mr. Christopher Hunter
– Business Analyst
– Business Process Manager
– Technology Team Analyst
• Professional Experience
– Bachelor’s Degree in Computer Science
– Business Analyst at Oracle CRM
– Independent Consultant for Siebel
51
Nexstar’s CRM Overview
Confidential and Proprietary
• Nexstar’s business model necessitates the
use of CRM
• “In reality, Nexstar’s business processes and
technology are used solely to bolster
customer service levels (workflow
management)…not deliver CRM”
• “Although not the intended purpose, all of
Nexstar’s software combined can be
considered a superior CRM tool…at least
compared to other industry competitors”
Chris Hunter, Nexstar Financial Corporation
52
Nexstar’s CRM Overview
Confidential and Proprietary
• Nexstar’s biggest CRM tool: Siebel CRM
Solutions Software
• External consultants have used both
successfully and unsuccessfully
• A cost-conscious management does not
support large IT projects at this time
53
The Siebel/Avaya Relationship
Confidential and Proprietary
• Siebel CRM Solutions
– One of the big three CRM software companies (with
OracleCRM and PeopleSoft CRM)
– An industry leader that multiple verticals that allow for
customization of CRM capabilities (CRM for everyone
philosophy)
– Caters to businesses of all sizes
– According to Gartner Group’s Vendor Ratings, Siebel
received an overall positive rating
• Avaya Professional Services
– A Siebel Alliance Partner that provided Computer
Telephony Integration (CTI)
Sources: www.siebel.com/for everyone, viewed 3/1/04
www.siebel.com/gartner/reg_leader.shtm, viewed 3/1/04
54
Siebel Proposed Benefits
Confidential and Proprietary
• Increase call center workflow via call and
email routing
• Allow customer communication and
interactions with various media (email, fax,
phone)
• Improve customer service by combining
customer information in one user interface
Source: www.siebel.com, viewed 3/1/04
55
Choosing Siebel
Confidential and Proprietary
• Parties involved with process: Nexstar Senior
Management and External Consultant, Eotek
• The choice narrowed to two big players: PeopleSoft
CRM and Siebel
• Siebel was the easy choice due to vast
customization of applications (verticals), product
reliability, and unparalleled service and
implementation support functions
• Siebel was more closely aligned with the strategic
business model of Nexstar
56
Choosing Siebel
Confidential and Proprietary
“When we looked at the Siebel-Avaya partnership, it
was clear that this was far more than just a marketing
agreement; it was a tight, strategic alliance with truly
integrated offerings. As we designed our
infrastructure, we knew that we could count on the
durability of this high-level collaboration.”
Richard Harkwell, VP of Customer Experience
Source: http://www.siebel.com/common/includes/case_study.shtm, viewed 2/28/04
57
Siebel Implementation
Confidential and Proprietary
• Rollout of Siebel Call Center, Siebel
eFinance, and Avaya CRM fully deployed and
functional to the call center (approx 75
agents) in 90 days
• Implementation conducted by Siebel Global
Services, Avaya Professional Services, and
Eotek
• Eotek helped to integrate Siebel with the
current web-based technology, CCR Web
Source: http://www.siebel.com/common/includes/case_study.shtm, viewed 2/28/04
58
Post-Implementation Evaluation
Confidential and Proprietary
• A third party consulting firm was employed by
Nexstar to evaluate the implementation of
Siebel
• It was intended to ensure that the the proper
functionalities were delivered and that full
integration was made will Nexstar existing
system, CCRWeb
• The name of the firm could not be released
59
Siebel: A User’s Perspective
Confidential and Proprietary
60
Siebel: A User’s Perspective
Confidential and Proprietary
61
Siebel: A User’s Perspective
Confidential and Proprietary
62
Siebel: A User’s Perspective
Confidential and Proprietary
63
Siebel: A Strategic Success?
Confidential and Proprietary
“The Siebel-Avaya Solution also enables Nexstar to
streamline the process of responding to customer
inquiries….Avaya and Siebel work in tandem to
identify callers by ID number, draw their customer
records from the Siebel database, and then route
calls automatically to the most appropriate agent
based on overall agent availability and skill level.”
Richard Harkwell, VP of Customer Experience
Source: http://www.siebel.com/common/includes/case_study.shtm, viewed 2/28/04
64
Siebel: A Strategic Success?
Confidential and Proprietary
• Siebel successfully delivered all the proposed
customer communication and customer
service capabilities it promised
• Payment for Siebel allowed financial
flexibility: negotiated flat rate per seat; paid
on an annual basis
• Project delivered on-time and changes were
relatively easy to implement with Siebel
Global Services, but a large portion of the
CRM functionalities are not currently used
65
Siebel: A CRM Success Story?
Confidential and Proprietary
BEST PRACTICE
YES
High Level of Communication
X
Management Support
X
Strategy Drives Technology
X
Implement Incrementally
Hire outside experts if necessary
Involve Knowledgeable Users
NO
X
X
X
66
Customer-Oriented Focus
Other CRM Initiatives
Confidential and Proprietary
• According to Christopher Hunter, Nexstar is
beginning to look more closely at CRM
opportunities, although funding remains a
issue with management
• Currently, Nexstar is negotiating with a
potential client to expand CRM initiatives
• Most of the talk is centered around an
“offspring of CRM”: Partner Relationship
Management (PRM)
67
Conclusion




Integration/silos
Business strategy/one view of
customer
IT enabled
Customer Centric
68
Outsourcing?

Variety of services
• Hosting, application, call centers, …

Ex of benefits
• Call center: >40% cost saving on 30 user sales force
automation
• Implementation: Weeks instead of Months
Brendan B Read, Call Center Magazine, San Francisco, Nov 2001
69
Outsourcing off-shore?

Off-shore?
• >150,000 contact workers employed oversees

Keep in mind
• Cross cultural misunderstanding
• Training
• Customers should not ask themselves where they are calling
Brendan B Read, Call Center Magazine, San Francisco, Nov 2001
70
References







Dyche, Jill, The CRM Guide to Customer Relationship Management,
Addison-Wesley, Boston, 2002.
Gordon, Ian. “Best Practices: Customer Relationship Management” Ivey
Business Journal Online, 2002, pp. 1-6.
Lacity, Mary, Management of IT Projects,” 2003.
Swift, Ronald, Accelerating Customer Relationships: Using CRM and
Relationship Technologies, Prentice Hall PTR, Upper Saddle River, 2001.
Brendan B Read, Call Center Magazine, San Francisco, Nov 2001
Martin Schneider, Customer Relationship Management, 2004
Greenberg, Paul, CRM at the speed of light, Mc Graw-Hill, California 2001.
71