CRM: Customer Relationship Management

Objectives CRM is a strategy… CRM & SCM are the company’s DNA Collaboration is the key to a leadership management based in customer satisfaction and loyalty

Getting Ready… Strategy CRM Logistics Collaboration

Strategy 70’s & 80’s: strategy hot but difficult “…a plan or method to achieve a specific objective” 70’s & 80’s: strategy hot but difficult Focus on Japanese implementation success Exercise in best practices, not strategy 90’s: Change, speed, being dynamic, reinventing business as e-business Strategy is considered rigid and inflexible Wal-Mart, Dell and Intel prove that strategies work - even in times of rapid business and technological change

CRM …is a comprehensive strategic approach to providing seamless coordination between sales, customer service, marketing, field support and other customer-touching functions for the purpose of creating competitive advantage through relationships with the customers you choose to serve.

CRM Is A Strategy Began as Sales Force Automation in early 90’s Is an organic process by which organizations become customer-centric New strategies - > redesigned functions - > reengineered work processes - > supporting technology Can’t change how we interact with customers without changing internally focused organizational values and structures

CRM Is Difficult CRM isn’t cheap, easy or optional Means the dissolution of departmental silos Requires long-term effort Attitudes / behaviors of CEOs / senior management are some of the reasons CRM is difficult

Customers are not all equal. Treat different customers differently. #1 CRM Decision Who are your key customers? What is their current value and strategic value? Clearly defined customer profitability / value Definition communicated to the customer Gaps in the current relationship identified Goals and timelines set with that customer If can’t resolve, mutually agree to no longer work together “Hire” the right customers from the beginning Customers are not all equal. Treat different customers differently.

G2000 Enterprises: Y2000 CRM Stovepiped approach Little thought to CRM ecosystem or front-office process integration Single function / channel deployments Source: Steven Bonadio, Application Delivery Strategies, META Group

G2000 Enterprises: Y2000/01 CRM Automation / integration of individual, intra-enterprise customer-facing processes with back-office / supply chain functions Demonstrable ROI Efficient customer-focused fulfillment required Source: Steven Bonadio, Application Delivery Strategies, META Group

G2000 Enterprises: Y2002 CRM Proliferation of multi-process, cross-functional front- to back-office supply chain integration efforts across multiple channels Growing use of CRM, SCM and ERM application suites / architectures Maturing EAI frameworks and XML-based messaging standards Source: Steven Bonadio, Application Delivery Strategies, META Group

G2000 Enterprises: Y2003/04 CRM Demand fulfillment ‘norm’ of downstream supply-driven push is replaced by upstream demand-driven pull Vendor consolidation/solution expansion Collaborative supply chain network evolution CRM infusion within G2000 organizations Competitive advantage: Map existing CRM activities in marketing, sales and service to companion back-office/supply-chain functions Source: Steven Bonadio, Application Delivery Strategies, META Group

CRM + ERM + SCM “Organizations can no longer afford to view customer relationship management (CRM), enterprise resource management (ERM), and supply chain management (SCM) initiatives as separate. Synchronizing front-office, back-office, and supply chain activities is critical to attracting/retaining customers, fulfilling demand, and improving cycle times.” Source: Steven Bonadio, Application Delivery Strategies, META Group

Effective Fulfillment = Loyal Customers Make it easier to do business with you and more difficult to go elsewhere Create learning relationships Identify the customer immediately Act on information gathered previously With each interaction, ask for feedback and ‘reward’ the customer As move along the learning curve, the customer gets a product they can’t get anywhere else because they helped create it

Value of Customer Loyalty Tangible 5% increase in customer retention can boost profits 25% to 125% Shorter customer relationships = lost profits 4 to 7 x more to replace a lost customer “Old” customers buy more Intangible Image, references and additional work Challenging projects increase internal skills and knowledge

Logistics …management of the flow of materials from the point of origin to the point of consumption to meet customers’ needs Right Channel Right Customer Right Product Right Price Right Time Right Docs

Collaboration Formal structure Exchange of proprietary information …the act of working together; to cooperate… Formal structure Exchange of proprietary information Direct access and processing ‘Real-time’ Visibility Impact of the Internet “Real-time doesn’t mean ‘immediate.’ It means responses to inputs are fast enough to affect subsequent inputs to guide the process.”

CRM + Logistics + Collaboration A comprehensive, cooperative strategy encompassing all links in a supply chain - - designed to provide the seamless flow of materials from the point of origin to the point of consumption - - the success of which creates competitive advantage for the suppliers. “Real-time doesn’t mean ‘immediate.’ It means responses to inputs are fast enough to affect subsequent inputs to guide the process.”

CRM + Logistics + Collaboration Right Channel Right Customer Right Product Right Price Right Time Right Docs Right Partners Right Technology

New Ways to Collaborate Collaborative Business Communities Old: Suppliers - > Manufacturers - > Distributors - > Customers - > Consumers New: Value network - > End-User Challenges: Support infrastructure, leadership roles, technology, trust, change…a new paradigm Benefits: Better visibility Increased velocity Reduced impact of variability

New Ways to Collaborate Merge-in-transit 3rd party adds value to product between its origin and its ultimate destination Objective: Reduce cost of getting products to customers Suppliers ship to consolidation or merge point where order is held; ships as single order when complete Examples Cisco and Fed-Ex (in beta test) GroceryWorks.com

Return on Your Investment Financial Performance Measures Productivity Performance Measures Quality Performance Measures Response Time Performance Measures Return on Customer Loyalty

Future Considerations / Next Steps Evaluate / develop CRM / Logistics strategies Assess current state of business processes and do gap analysis Develop business case and metrics Evaluate CRM / Collaboration technology options Implement Web-based B2B or B2C scenarios Personalization One-to-one marketing

Service levels and logistics costs will differentiate trading communities Manufacturer Distribution

Manufacturer Distributor

100% Fulfillment - Multiple Ordering/Shipping Points Distributor Manufacturer

Dynamic Pricing Driven By Dynamic Demand 100% R2 Dynamic Prices R3 R4 Capacity % Revenue 1 R5 R6 0% R7 Price per Ton

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