1. BGS Customer Relationship Management Chapter 4 Organization and CRM Chapter 4 Organization and CRM Thomson Publishing 2007 All Rights Reserved

2. Introduction Multiple Dimensions Business dimension Technological dimension People dimension Time dimension

3. Introduction McKinsey Study Ten organizational characteristics fall into three distinct categories: structure, skills, and processes Structure – Manage trade-offs around critical roles and resource access – Centrally located analytical experts – Cross-function integration – Quick access to multiple customer opportunities

4. Introduction McKinsey Study Skills – Priority on customer analytics and insights across key decision makers – Carefully balanced core CRM skill sets – Skill gaps identified and filled quickly

5. Introduction McKinsey Study Processes – Customer-specific metrics and scorecards embedded into performance evaluations, incentives, and financial plans – Decision support automated – IT and business reengineered to ensure responsiveness to customer

6. The Human Factor Leadership – Start small – Customer centric – Across whole organization Human Resource Capacity – CRM enablers – CRM users

7. The Human Factor Communication – Solicit feedback before setting strategy Feedback dimensions include financial, people, technology, value chain, competitive environment, and macroenvironmental forces – Develop “Phase” approach Cooperation – Internal – External

8. The Human Factor People – Knowledge base – Skill gaps – Role conflict – Customer selection – Maintain momentum

9. Organization Environment Culture Indicators that may lead to a sub-optimal CRM initiative include: – Reward structure that favors adherence to hard nonflexible standards – Production orientated versus marketing orientated – Leadership from offshore entity – Executive leadership out-of-touch with customer

10. Organization Environment Culture Indicators that may lead to a sub-optimal CRM initiative include: – Lack of empowerment – Predominately top-down decision making and information flow – Internal competitive work methodology and reward systems not aligned with CRM strategy

11. Organization Environment Size Size is not a determinant of an organization’s potential CRM success. Different sizes do create different advantages and disadvantages. A large organization’s advantage can be a disadvantage for a small organization and its disadvantage an advantage for the smaller organization.

12. Organization Environment Size Large organization advantages – Financial resources or access to those resources – Economies of scale with respect to technology and human resources – Potentially deeper levels of CRM expertise or easier access to that expertise – Technology and CRM consultative suppliers more ready available

13. Organization Environment Size Large organization advantages – Large customer base can generate appropriate funding dollars – Large amount of customer and prospect data can enable more in-depth marketing intelligence

14. Organization Environment Size Large organization disadvantages – Functional structure and silos – Large employee base increases complexity in CRM training and implementation – Customer and prospect data may have proliferated throughout the organization with no thoughts to a single view of the customer – Cost of creating a single accurate view may be prohibitive

15. Organization Environment Structure Functional or “silo” – Can inhibit quick response – Adds complexity to CRM strategy Product/Service or brand alignment – Good at collecting customer information relative to specific brand – May inhibit ability to create a holistic view across brands

16. Organization Environment Structure Geographic structure challenges – Communication of CRM strategies and best practices throughout all customer interaction points – Timely and accurate dissemination of relative customer information from all interaction touch points; ability to process this information quickly with an accurate reverse information flow

17. Organization Environment Structure Geographic structure challenges – Flexibility in changing CRM strategy to optimize specific geographic opportunities or adjust to geographic nuances, constraints, or opportunities – Integration of value chain members across geographic boundaries – Ability to sustain CRM momentum to decentralized employees

18. Organization Environment Structure Geographic structure challenges – Adopt input from decentralized employees into best practices for same or different areas – Support organization entities for different time zone customers, including Internet and phone interactions

19. Organization Environment Structure Account management – Heavy customer interaction – Extensive use of CRM-enabling software Industry category Impact on value chain Matrix Can be optimal for CRM Structure around customer Increase in complexity and cost the more fragmented the customer base

20. Organization Environment Technology Integration across all areas is desired Changes in technology solutions over time Impact on current operations if changes made Different licenses, leases, or contractual terms for the same or different OEMs Organizational silo-based decisions

21. Organization Environment Technology Budget constraints Strategic and technical understanding and leadership High skill level employee turnover Resistance to frequent change of business process caused by rapid technology change Merger and acquisition activity complicates the issues

22. Organization Environment Process Hard versus soft standards Staffing Outsourcing functions Cost constraints Realistic assessment of required depth and breadth of desired customer relationship

23. Value Chain Organization Business functions provided by different value chain members have increased in number and complexity Rapid changes in technology create: – Pressure to adopt in effort to remain competitive – Dilemma, as rapid adoption creates challenges of coordination

24. Value Chain Organization Changes to pull and push strategies need coordination throughout chain Business function changes need to be coordinated with technology changes across the chain

25. Other Considerations Knowledge management: The process of transferring captured information into knowledge that can be shared by respective parties within the organization or value chain in an effort to enable CRM efforts CRM is a long-term strategy that requires a long-term investment strategy

26. Summary CategoryStage 1Stage 2Stage 3Stage 4 CRM Planning Limited budget Annual planning within required budget Planning part of corp. strategy Value chain inclusion in corp. CRM planning Market Research NoneFocus groups, survey Batch transact- ion analysis Integrated analysis, including real-time activity

27. Summary CategoryStage 1Stage 2Stage 3Stage 4 CRM Orientation Mass market SegmentsCustom- ization by segments Custom- ization by individual CRM Channel MGMT. NoneBasic internal SLA’s tied to CRM strategy Basic external SLA’s tied to CRM strategy Integrated CRM strategy tied to end cust. value proposition

28. Summary CategoryStage1Stage 2Stage 3Stage 4 Communica- tion DisparateCoordin- ated internally Coordinated internally with external parameters Channel- integrated dialogue with end customer MKT Organization Sales orientat- ion Sales and MKT Org. coordination across all functions Value chain member integration

29. Summary CategoryStage 1Stage 2Stage 3Stage 4 CRM methodology training NoneSales and MKT Cross organiza- tional Value chain coordina- tion Employee recognition None tied to CRM Informal based on “at-a- boys” Formal based on predefined metrics Tied directly to internal and external customer satisfaction and loyalty

30. Summary CategoryStage 1Stage 2Stage 3Stage 4 Customer relationship NoneEfficient complaint handling Hard standards for customer interaction Empower- ment with soft standards TechnologyBasic and disparate Internal customer state-of- the-art External customer state-of- the-art Value chain integration