CRM Handbook, The: A Business Guide to Customer Relationship Management

Jill Dych
Publisher: Addison Wesley

Copyright 2001 Addison Wesley

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 2

Acknowledgments
A business writer, trying to consolidate and make sense of the varied disciplines that comprise the intricate apparatus of even the simplest new technology trend, incurs many debts ! am grateful to those who have contributed to this book and proud to acknowledge their help "hanks first and foremost to the sub#ects of my case studies, and to those who guided me to them: $eth %eonard of &eri'on (ommunications) *onica "yson of +arrah,s -ntertainment) +arry -gler of -ddie $auer) .ari /pdal of 0nion $ank of 1orway) 2egina Wallace of Juniper $ank) and *ike /verly and -d *agin from +ewlett Packard "hese people had the generosity and authority to say yes "hanks too go to $ill Prentice and 1elle 3chant' of 3A3) .im 3tanick and (arrie $allinger from "eradata) 3usan Poser and 3usan 0mphrey from /racle) and *ary (han, fellow management consultant and world traveler *y reviewers represent the best and the brightest in the (2* industry, and share credit for this book,s real4 world perspective +ats off to $rian $erliner, Joy $lake, James (raig, (apers Jones, .elly *ooney, 2obin 1eidorf, *arcia 2obinson, David %inthicum, and Anne "homas *anes "hanks, too, to .im *outsos, editor of DB2 Magazine, for letting me reclaim te5t from an article ! wrote on clickstream analysis And to the vendors who provided e5amples of real, working products6$rian +oover of "ouchscape, 7adra 1ally and *ary 8ros of "eradata, 9ancy /shita from /racle, and John 8ill from (hannel Wave6you,ve enriched the +andbook immensely ! feel as if ! have a personal troop of (2* gurus in 7ran 7ra'er, %inda *c+ugh, and John -arle, who together corner the market on personali'ation, voice recognition and wireless technology, and (2* planning e5pertise, and who plowed through my drafts with the patience and understanding of good friends -van %evy lived through the writing of this book, revealing his own (2* battle scars at aberrant hours and without complaint !,m grateful to him for many things, foremost of which is that he,s still talking to me now that the book,s finished Addison4Wesley,s *ary /,$rien, whose imagination and creativity were the seeds of the +andbook, was indispensable in its development, as was editorial assistant Alicia (arey, copy editor e5traordinaire *alinda *c(ain, and the inimitable Addison4Wesley production staff And a final shout out to my colleagues at $aseline (onsulting 8roup, who picked up the slack when the going got tough, in particular 8ordon %evy and David 2ankell 9ou are (2* best4practices personified:

About the Author

Jill Dych is a partner with $aseline (onsulting 8roup, a firm speciali'ing in the implementation and analysis of customer databases As vice president of $aseline,s management consulting practice, Jill leads teams through front4 and back4end reviews of strategic technology initiatives, including data warehousing, database marketing, and (2* planning and implementation Jill speaks regularly at marketing and technology conferences, and her writings on technology and workplace issues have been featured in Information Week, EAI Journal, Oracle Magazine, DM Review,; The hicago Tri!une, and The Wa"hington Time" 3he is the author of the acclaimed book e#Data$ Turning Data into Information with Data Warehou"ing <Addison4Wesley, =>>>?, which has been translated into 3panish, .orean, and Japanese Jill was recently named a W!"! Woman by Women in "echnology !nternational

Introduction
/n one of those preternaturally warm spring afternoons, when many of their colleagues had forsaken them for the beach, around @>> conference attendees packed themselves into a hall at the %os Angeles (onvention (enter to hear about (ustomer 2elationship *anagement A group of high4profile e5perts was assembling to deliver a heralded panel discussion on the current and future state of the (2* market Attendance swelled to standing room only /n the panel were e5ecutives from both established and emerging (2* vendors /ne panelist headed a company that sold an !nternet storefront product Another ran a sales4force automation company A third represented a ma#or database vendor "here was a call center system vice president and, to his left, a chief privacy officer At the end of the line sat a renegade technology analyst

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # $

As they began talking, it became clear that each of the panelists had a different perspective on (2* "he president of the database company talked at length about connecting databases to applications, after the privacy officer had finished weighing in on the risks of opt4in marketing "he call center e5ecutive discussed new advances in live chat "he analyst inveighed against (2* vendors who didn,t offer sufficient analytics, making a few of his co4panelists shift in their chairs !n fact, the discussion topics were so far removed from one another that the panelists might as well have been speaking different languages As the moderator Auickly learned, integrating the discussion in any meaningful way was a more significant undertaking than a mere hour would allow As with the (2* marketplace, there was no holi"tic me""age6#ust different conversations 3huffling out of the auditorium, none of the attendees left with a clear (2* vision they could take back to work and begin promoting 1evertheless, we all have our eyes on the (2* ball Aberdeen 8roup,s B(ustomer 2elationship *anagement: 9ear =>>> -ditionC report predicts the (2* market will grow from DE billion in FGGG to more than D=H billion by =>>I 3uch pronouncements6and there are many6represent sufficient ammunition for many companies to target (2* before thoroughly scoping it "he problem is the noise (ompanies worldwide are declaring themselves Bcustomer4focusedC and forking over millions of dollars on (2*4related technologies /ver4hyped vendor products clash with varied interpretations of (2* ob#ectives, leading many companies to simply automate ineffective marketing and customer support processes And because many of these processes rely on sporadically gathered data and shoddy business practices <B! can,t help you) you,ll have to talk to our billing department6and they,re closedC?, these firms were no closer to building solid customer relationships than prior to adopting (2* %ikewise, customers have more choices than ever before, and a vendor,s arch competitor is often6as the current sound bite goes6#ust a mouse4click away Without customers, products don,t sell and revenues don,t materiali'e And without establishing customer loyalty, a profitable customer can be as fleeting as a dot4com Web site 3uddenly, customers matter "hus, banks have succeeded in automating their marketing processes and calculating customer value (ommunications companies are busy trying to reduce churn 2etailers and e4tailers alike are launching customer loyalty programs with alarming speed And everyone has an !nternet strategy for stimulating purchases "he only thing many of these forward4thinking companies have in common is their struggle to separate the truth from the hype "his book seeks to mitigate the spin rampant in the (2* marketplace, first by defining (2* and its various components and then by providing a guide to successful delivery of a (2* program !t will serve both as a resource, defining and illustrating key (2* concepts, and as a field guide, directing you in the best approaches for adopting and implementing your own (2* solution !n the latter role, the +andbook points out mistakes as well as successes, allowing you to learn from those who fell too early for the hype <BWe,re your one4stop (2* shop:C? !n the former role, it will help clear the clutter and provide straightforward e5planations of the various types of (2*, as well as how they can work together And, like a good (2* initiative, the book revolves around the customer,s e5perience After all, no matter how informative the material or how knowledgeable the source, the message should always be geared toward the right audience (2* conference panel organi'ers, take note:

How to Read This Book

"his book is written for a wide range of readers, from e5ecutives to practitioners Part I is geared toward e5ecutives, pro#ect managers, and businesspeople interested in understanding the components of (2* and their definitions, as well as how those components are being used Part II is for pro#ect managers, consultants, business analysts, and technical practitioners who need practical tips on (2* planning and implementation 2eaders with specific areas of interest can skip to individual chapters Table I-1 briefly e5plains each chapter and its audience focus Table I-1. The Handbook's Chapters and Their Intended Audiences Part I: De ining CRM Chapter Part I e plains t!pes o" CR#$o""ering real-li"e e amples o" how businesses are using them$and e plains how the! "it together. Description Intended Audience

Chapter 1: +ello, !ntroduces (2*,s value proposition from a Any reader needing an introduction to (2* business perspective and e5plains why and its role in business strategy should read 8oodbye "he companies are rushing to #ump on the (2* this chapter 1ew 3pin on (ustomer %oyalty bandwagon

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # %

Chapter 2: (2* -5plores marketing,s recent history and transition from product focus to customer in *arketing focus to the latest cra'e: improving the customer,s e5perience 7or e5ecutives in charge of planning and funding customer loyalty, acAuisition, and retention programs and for marketing staff, including product, segment, and campaign managers 3ales management might consider starting here prior to reading Chapter 4

Chapter 3: (2* (overs why customer service is the locus of (ustomer support staff members at all levels most (2* programs and how new will en#oy comparing their company contact and (ustomer customer service strategies and center environments with the best practices 3ervice technologies promise to enhance customer outlined in this chapter Also of interest to loyalty6not to mention a company,s marketing staff considering other customer revenues touchpoints Chapter 4: 3ales "he birthplace of (2*, 37A includes a 7orce Automation variety of tactical and strategic functions "his chapter goes from managing customer leads and accounts to sharing customer knowledge via wireless media Chapter 5: (2* 8iven the challenges e4business presents, this chapter discusses where the customer in e4$usiness fits in the supply chain for both $=$ and $=( relationships Chapter 6: Analytical (2* Analytical (2* leverages the data gathered from cross4functional customer touchpoints to help companies make strategic decisions "his chapter covers the risks and rewards of analy'ing and acting on new customer knowledge 3ales managers and sales reps alike can use this chapter as a benchmark for how they,re managing their customer contacts and leads Also valuable for field service personnel 7or managers and developers responsible for delivering e4business, particularly e(2*, as well as users and developers of -2P and supply chain management systems 7or business people for whom decision support is a critical #ob function, as well as data analysts using sophisticated predictive techniAues Also helpful for marketing managers who rely on data analysis for launching new programs

Part II: Deli!ering CRM Chapter Chapter 7: Planning 9our (2* Program

Part II describes the key components of a (2* program and offers e5amples and checklists for ensuring they are performed thoroughly and in the right seAuence to mitigate risk and ensure successful (2* delivery Description -5plains how to evaluate your company against (2* critical success factors "his chapter also describes how to gauge the comple5ity of your (2* initiative and how that comple5ity determines a range of planning and development activities, including reAuirements gathering and 2/! calculation Discusses (2* technology software features and e5plains reAuirements4driven technology selection "his chapter contains checklists and interview Auestions for both (2* software vendors and application services providers <A3Ps? Intended Audience 7or business analysts and consultants who will be gathering and documenting (2* reAuirements, as well as pro#ect managers who will be charged with translating them into a working (2* system Also helpful for (2* sponsors and end users who must understand the tasks and resources necessary in (2* planning 7or !" e5ecutives and pro#ect managers charged with leading (2* technology selection efforts, as well as stakeholders who need to understand (2* technology4 selection best practices "he vendor evaluation Auestions might help vendors better prepare for prospect and client presentations "echnical staff, (2* development team members, and pro#ect managers will be interested in the roles integral to (2* pro#ects, as will (2* stakeholders who want to learn more about where to begin

Chapter 8: (hoosing 9our (2* "ool

Chapter 9: *anaging 9our (2* Pro#ect

Describes how to delineate, prioriti'e, and staff (2* pro#ects and highlights some common roadblocks to successful development Discusses establishing success metrics and measuring against them, and includes a (2* !mplementation 2oadmap

"his chapter introduces some of the main $usiness sponsors and pro#ect managers Chapter 10: interested in ensuring the success of their 9our (2* 7uture roadblocks known to sabotage (2* programs !t also covers some controversial (2* programs, as well as business users (2* trends who want a preview of (2* features on the hori'on

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # &

Further Reading A compendium of books, maga'ines, #ournals, and Web sites to aid readers in their (2* research Glossary Definitions for the (2*4related terms used throughout the book, as well as coverage of some current business and technology bu''words

"oward the end of the content chapters, you,ll find a B(hecklist for 3uccess,C describing the best practices involved in achieving the ob#ectives discussed in that chapter <!f you,re underway with (2*, use this checklist as a tool to perform gap analysis against your current pro#ect ? !n addition, because (2* is inherently a business management initiative, each chapter concludes with a section titled B"he *anager,s $ottom %ine,C summari'ing the discussion for managers and e5ecutives who might be sponsoring (2* in their companies

%art I& 'e"ining CR# Chapter 1. Hello( )oodb!e& The *ew +pin on Customer ,o!alt!
"he so4called typical customer no longer e5ists, and companies have been learning this lesson the hard way 0ntil very recently, business was more concerned about the Bwhat,sC than about the Bwho,s C !n other words, companies were focused on selling as many products and services as possible, without regard to who was buying them *ost corporations cling to this product4centric view even today, basing their organi'ational structures and compensation plans on the products they sell, not the customers who buy "he $urger .ing slogan of the FGJ>s inviting the fast4food consumer to B+ave it your wayC was positively unorthodo5 for its era, as companies across industries offered standard products to the consumer population at large *oreover, FGK>s and FGJ>s corporate America bet their profits on classic marketing tactics6primarily television ads, mass mailings, and billboards6and then sat back and waited for the customers to pour in $ut the baby boomers came of age and competition burgeoned (onsumers had more choices than ever before about where to do their banking, their grocery shopping, and their vacationing Deregulation increased competition even further as it drove prices down (ompanies were forced to invent new methods of interacting with customers to reduce costs and gain market share 0se of automated teller machines <A"*s? and interactive voice response <!&2? systems increased $ut customers weren,t necessarily more satisfied than before -5ecutives soon reali'ed cost4reduction tactics weren,t enough to satisfy either customers or shareholders, who continued to call them on the carpet for eroding margins *a5imi'ing profitability was the real name of the game "he parado5 was that companies couldn,t very well increase profits while simultaneously enticing new customers with price breaks A"L" and *(! learned this the hard way in the FGE>s as they and other long4distance companies mailed millions of DF>> checks out to consumers, who switched their long4distance service and switched it back again

The Cost o" Ac-uiring Customers

1owadays, the competition is #ust a mouse4click away -mbattled companies are slouching toward the reali'ation that without customers, products don,t sell and revenues don,t materiali'e "hey have been forced to become smarter about selling, and this means becoming smarter about who,s buying (ompanies are reading the competitive writing on the wall and looking to technology for a leg up "his, combined with the oft4Auoted factoid that it costs a company si5 times[1] more to sell a product to a new customer than it does to sell to an e5isting one6the old Bbird in the handC thus coming to roost6has motivated businesses to try to ma5imi'e e5isting customer relationships And the main way to sAuee'e every drop of value from e5isting customers is to know who the best customers are and motivate them to stay that way !ndeed, a good starter definition of customer relationship management .CR#/ is

[1]

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # '

Although si5 times is acknowledged as the prevalent figure, reports on new4customer acAuisition costs vary, from as low as three times to as high as thirteen times

"he infrastructure that enables the delineation of and increase in customer value, and the correct means by which to motivate valuable customers to remain loyal6indeed, to buy again As we,ll see throughout this book, (2* is about more than simply managing customers and monitoring their behaviors (2* has the potential to change a customer,s relationship with a company and increase revenues in the bargain "he most forward4thinking companies have recogni'ed from past failures that (2* smacks of strategy, and thus technology alone can,t address high4profile issues such as new4customer acAuisition and Web4based marketing "o these companies, (2* is much more than a standalone pro#ect accounted for by a single organi'ation, it,s a !u"ine"" %hilo"o%h& that affects the company4at4large <We,ll see e5amples later of companies who practice (2* without even using the term ? "hese firms have articulated their ultimate visions for (2* to communicate them to every facet of operations "he following list represents a set of legitimate (2* business ob#ectives from several of my clients currently in the throes of their (2* programs: BWe want to thoroughly understand our customers, needs6even before they know them themselves C6A mid4market financial institution BDecreasing customer churn by increasing customer satisfaction C6A competitive local e5change carrier B*otivating customers to initiate revenue4generating contacts with us C6An online insurance company B!ncreasing the likelihood of the ,right response, by a given customer or customer segment C6A catalog retailer B"o use technology to improve customer service and enable a greater degree of customer differentiation in order to deliver uniAue customer interactions C6A data services firm BWe want to attract customers6both old and new6through more personali'ed communications C6 An online retailer

"he point here is that there is not one but many visions for (2* success (2* promises to help companies get to know their customers well enough to understand which ones to keep and which ones they should be willing to lose6and why6and how not to overspend in the meantime (2* also means automating many of the business processes and accompanying analysis and saving precious time in the bargain And saving money (harles 3chwab,s multimillion4dollar investment in 3iebel,s (2* product, which the brokerage firm uses to track each interaction with a customer or prospect, was recouped in less than two years [2] 3tories of wildly successful (2* programs have invaded both print and cyberspace, spurring otherwise cynical e5ecutives to turn their heads in the (2* direction After all, who could argueM
[2]

2oberts4Witt, 3arah % , B!t,s the (ustomer, 3tupid:C ' Magazine, June =J, =>>>, =K

Who indeedM "he estimated J> percent of companies who have tried implementing standalone (2* systems and failed, as well as the legions of other companies who have taken missteps on their e4business #ourneys might have a few comments As with enterprise resource planning <-2P?, supply chain management <3(*?, and other wide4reaching corporate programs that mandate a combination of innovative technologies, new business processes, and organi'ational buy4in, (2*,s failures are vast and visible

0rom Customer Ac-uisition to Customer ,o!alt!

!n his book Wh& We Bu&, self4described retail anthropologist Paco 0nderhill notes that if consumers purchased only what they really needed, the economy would collapse !ndeed, one could argue that the heady mi5ture of good times and popular fads from protein bars to same4se5 fragrances to sport utility vehicles has created a veritable buying fren'y $ut consumers are fickle, and more cynical than ever before We no longer believe what we read and see, and for large purchases we,re more inclined to do our own research 9our company has #ust announced another strategic allianceM 9ou,ve got a cool new animated logoM 9ou,re on your fourth round of venture fundingM 3o what, so what, and so whatM

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # (

(onsumers are also busier than ever and have conseAuently placed a premium on their leisure time After all, why tramp through aisle upon aisle of merchandise when ! can order groceries off the Web and spend more time with the kidsM And pi''aM And dog foodM And even that sport utility vehicleM !n a recent Information Week survey[3] , of the companies actively implementing (2*, GI percent claimed increased loyalty and customer satisfaction would #ustify their (2* investment "he second4highest percentage, EI percent, stated the need to demonstrate increased revenue "he implied mandate for most of these early adopters seems to be Bcustomer loyalty at any cost6even if we don,t see a return on investment C
[3]

3weat, Jeff, B%ots of (ompanies Are "hinking About (ustomer 2elationship *anagement, $ut Progress (an $e &ery 3low6(2* 0nder 3crutiny,C Information Week via (/*"-N online, 3eptember F@, =>>>

!t certainly doesn,t take much for a consumer to turn her head to a competing product or vendor A #a'' buff has a mental list of the (Ds she wants to buy When (D 1ow e4mails her a discount code for the new Dave $rubek recording, she goes to the site and buys it despite her hefty Bwish listC on Ama'on com $ut #ust as loyalty is becoming the mantra on every e5ecutive,s lips, customer satisfaction rates are plummeting !t,s practically routine these days for consumers to vow never to do business with a particular merchant 2egardless of their frenetic embrace of the customer, companies seem to be angering customers at a faster pace than they are serving them !n June =>>>, (ortune columnist 3tewart Alsop wrote a scathing piece on 3print P(3 and its poor service "he column, titled BDear 3print: 9ou "icked /ff the Wrong 8uy,C provoked hallelu#ahs from 3print P(3 customers, one of whom responded: ! hate 3print and spend way too much time fantasi'ing about its demise ! have friends who have 3print too, and we talk to one another like members of a support group Whenever !,m in line at 3print stores, ! feel it is my duty to reach out to and dissuade as many prospective customers as ! can Another reader weighed in with this: "o list all my horrifying e5periences would render this letter too long for publication And another <with graphic metaphor?: !,m sure you,re getting a million thank4you letters from the rest of us who have been lied to, hung up on, over4billed, underserviced, and treated like cattle on the way to the slaughterhouse "reating customers like cattle is the antithesis of (2*, the goal of which is to recognize an) treat each cu"tomer a" an in)ivi)ual* "hat said, if one individual is dissatisfied, odds are he,ll tell a collection of other individuals6one widely accepted marketing rule4of4thumb claims the average unhappy customer tells eight other potential customers about his negative e5perience 3uch spreading of consumer disapproval turns the world of viral marketing, which depends on word4of4mouth from true believers, upside down <+iral marketing6a phenomenon in which consumer bu'' trumps advertising as the means of a product,s adoption6accounts for the popularity of such products as 2a'or scooters, The Blair Witch 'ro,ect, and *A( 3pice lip liner, to name a few ? Web sites such as www planetfeedback com and www downside com are e5panding the reach of these Bviral complainersC and even speculating on the demise of companies that proffer poor service "he influence of such groups could in fact impact whether a product, indeed an entire company, succeeds or fails

1to 2ptimi3ing the Customer 4 perience

(ompanies are spending millions of dollars trying to prevent acerbic customer testimonials like the ones we,ve been talking about and to figure out tactics that will not only help them keep customers, but keep their customers coming back "hroughout the book, scenarios such as the following will illustrate such tactics from customer4focused companies around the world:

+cenario
9ou,ve spent two grueling weeks of nonstop business in %ondon and are ready to head home &irgin Atlantic Airways sends a driver to fetch you at your hotel and bring you to the airport 0pon arrival at +eathrow, the driver stops at an outdoor kiosk 9our window magically rolls down to reveal a uniformed &irgin associate, who politely reAuests your ticket As the associate checks you in, the driver retrieves your luggage from the trunk6the Bboot,C in the local vernacular6tags it, and deposits it on the baggage conveyor belt "he &irgin associate smiles and hands you your boarding pass

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # )

"he driver then proceeds to the terminal, pointing the way to the entrance of the 0pper (lass lounge, which features sleek dcor, laptop hookups, and a beauty salon As you enter and stow your carry4on bag, a waiter asks for your drink order *idway through your haircut, Peter 7rampton walks by on his way to the bar and gives you a little wave /nce in flight, you are offered a pair of fleece pa#amas and a free massage -veryone,s been super friendly !n fact, you,ve made no special reAuests since you left the hotel, have barely lifted a finger, and still have the cash you left the hotel with <Declaring this a far cry from your typical airport e5perience would be an understatement ? As you take the last sip of your complimentary cosmopolitan and prepare for preferred boarding, you make a mental note: 9ou,ll be flying &irgin Atlantic again 1otice that this particular customer e5perience involved no !nternet access !ndeed, as much as (2* technologies tend to usurp its other components, customer relationship management can be as simple as saying, B"hanks for your business C Although some customers reAuire a level of personali'ed service and customi'ed products that make them feel special, others simply appreciate good manners And this is the cru5 of (2*: how to differentiate customer treatment according to individual preferences "he &irgin Atlantic scenario e5emplifies the ultimate goal of (2* When you recall your trip home from %ondon, your knee4#erk recollection isn,t your aisle seat or the cost of your ticket 9ou remember the entire e5perience, from what the airline did <the limo, the massage? to that serendipitous e5tra6in this case, Peter 7rampton acknowledging your e5istence !ndeed, a recent &irgin advertisement wondered aloud to a fed4up traveling public: B1ever hear of anyone cursing out the on4board masseuse, now do youMC !n fact, many companies have recently appended their (2* or customer care initiatives with the goal of Bowning the customer e5perience C "he implication is less about controlling what happens during a customer interaction than it is about the ability to influence how a customer perceives her contact with the company, be it through an advertisement, ordering a product, or calling customer support with a problem (2* can allow the company to surmise a customer,s un"%oken nee)"* !nciting a chance encounter with a ,J>s rock star is probably not in most companies, marketing plans $ut there are subtler ways to give customers an e5perience they will remember and look for again "he most visionary businesses understand that singular customer e5periences will drive loyalty to levels unknown "hose who have already adopted a customer4focused culture understand that (2* done well influences customer emotion !t makes customers feel good, personally connected !t humanize" their purchase or service reAuest or complaint "hese companies define the truly loyal customer as someone who feels such good will toward the company that he BsellsC its products to others, in effect acting as a voluntary <albeit unpaid? company agent *oreover, he takes pleasure in proselyti'ing the company and its products, thus repeating his own positive customer e5perience each time he relates his story +arley4Davidson has mastered the use of its customers as company agents +arley owners, who consider their BhogsC less a means of transportation than a way of life, are more than happy to proselyti'e the company,s brand6and their loyalty to it6on everything from embossed leather #ackets to tattoos bearing the company logo !n their book The E-%erience Econom&$ Work i" Theatre . Ever& Bu"ine"" a /tage , $ Joseph Pine and James 8ilmore argue that providing customers with a memorable e5perience, along with a useful product at a reasonable price, will become a key differentiator for companies striving to avoid the commoditi'ation of their services Pine and 8ilmore cite 1ike"own and +ard 2ock (afe as two successful establishments that lure customers for reasons beyond their mere product offerings "he authors assert that the evolution from a service4based to an e5perience4based economy is not only natural but also inevitable 1o wonder companies have embraced (2* as a strategic imperative: it helps serve customers, un"%oken nee)"*

How the Internet Changed the Rules

"alk to a marketing e5ecutive for a large bank or credit card company and she might claim to have been doing (2* long before the term was invented !ndeed, large financial institutions were at the forefront of relationship marketing, which6as we,ll discuss in Chapter 26is a subset of (2* "he emergence of the !nternet heralded a new opportunity for customer relationship building 7or one thing, search engines made it easier for customers to find online merchants and interact with them And, once found, those merchants offered customers more streamlined ways of ordering and receiving products and services *oreover, the !nternet simplified bidirectional communication, for the first time offering a better way for consumers to relay personal information to the merchant !nstead of waiting to be mailed a form to open an account or order a phone line, a prospective customer needed only to send an application through

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # *

cyberspace, resulting in shorter delivery time, improved accuracy, and Auite often a higher positive perception [4] !n fact, the !nternet is an environment of 'ero latency, offering real4time information and often on4demand product delivery
[4]

!n FGGG, JJ percent of customer Auestions were handled online and customer satisfaction levels increased by => percent over FGG@, according to u"tomer /ervice on the Internet by Jim 3terne <Wiley, =>>>?

!nternet users appreciate not having to go out of their way to buy what they want, and the simpler the process, the higher the potential for customer satisfaction !ndeed, the Web offered customers options they hadn,t had with other delivery channels, namely: =H4hour access 0p4to4the4minute information <on, for e5ample, stock levels, product features, and prices? "he ability to research a product or merchant )uring a shopping trip /nline customer support /nline self4service Personali'ed content

(onsider the old way A customer needs a new set of window blinds +e goes to the kitchen, finds the yellow pages, and calls his local blind company "he representative e5plains they can have someone come out and measure for the blinds a week from "hursday "he rep arrives from the blind company, measures, and shows the customer photos of various blind styles and colors "hen the rep takes another two days to write up an estimate Almost two weeks later the customer has the pricing information he needs 1ow he must decide whether to get another estimate or take his chances with the only vendor he,s contacted (ompare that to the Web version "he customer enters Bmini blindsC in his favorite search engine, which returns the Web sites for several catalog window treatment firms +e chooses a company, which displays a series of blind designs and prices4per4inch "he customer chooses a design he likes, enters his window measurements, and receives a price online, including ta5 and shipping $efore purchasing, he browses a couple of other window4ware Web sites for additional blind designs and prices, eventually placing his order in less than an hour Although basic, the above e5amples illustrate why the Web has made doing business easier than ever 7or the customer, the time savings6even if he has to measure the window himself6is improved by orders of magnitude Plus, while he awaits delivery he can revisit the Web site to validate measurements or refresh his memory on his chosen style 7or the blind retailer, the order arrives electronically, decreasing sales time while reducing the chance of error <"he measurements, after all, are now the customer,s responsibility ? 7urthermore, the company has captured other information6the customer,s preferred blind style, his neighborhood, his interior color scheme 6for potential use in follow4up communications At the =>>> (omde5 conference in %as &egas, (isco (-/ John (hambers put a new spin on leveraging customer loyalty with the !nternet (hambers demonstrated a Web4connected gas pump that allowed a customer to swipe a Bloyalty card C 3wiping the card not only starts the gas flowing, it also illuminates a digital screen displaying personali'ed messages such as traffic reports while the customer pumps her gas A customer,s initial reluctance to subscribe to such services can be more than offset by the value they provide

5hat's In a *ame6
$eing the )e rigueur bu''4term of the moment, (2* was bound to spawn similar acronyms 7ollowing are some (2*4related terms you will come across in this book and elsewhere in your (2* readings: e RM 0alternativel&1 e# RM2* e(2* refers to BelectronicC customer relationship management or, more simply, (2* that is Web4based 7or instance, when you log on to golf retailer chipshot com to see if they,ve shipped your new titanium driver, that,s e(2* E RM 3omewhat confusingly, many e5perts and publications are using -(2*, alternatively coined B-2*,C to refer to BenterpriseC (2*, meaning a (2* program that spans an enterprise4wide view of a customer <We,ll spell out enterprise (2* to avoid any confusion with electronic (2* ? 'RM BPartner relationship managementC allows a company to manage its alliance partner and reseller relationships to provide customers with the optimal sales channel while streamlining the

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sales process Determining incentives for various Web referral sites based on the profitability of the customers they send your way is one P2* tactic c RM B(ollaborative (2*C denotes situations in which customers can interact directly with the organi'ation, usually through the Web Dell, for instance, allows customers to choose their own workstation components, essentially designing their own P(s /RM B3upplier relationship managementC resembles P2* in that it focuses on keeping e5ternal vendors happy, but 32* limits its focus to actual suppliers /ften operationally focused, 32* helps companies evaluate and categori'e suppliers for given pro#ects to optimi'e supplier Aualification and selection, thereby streamlining the supply chain m(2*: B*obile (2*C suggests the provision of data to customers, suppliers, and business partners via wireless technologies 5(2*: 9ou,re bound to see other letters preceding the (2* acronym, and the B5C is simply used as a placeholder for other (2* hybrids to come

!rrespective of the type of (2* a company is looking into, the common denominator is motivating the right customers to continue doing business with you We,ll see the various types of (2* at work in the ne5t several chapters Another important (2* distinction is BoperationalC versus BanalyticalC (2* "he distinction is an important one, because it speaks to the tactics a company is taking in implementing its (2* strategy As we,ll see in Part II of the +andbook, there is no one right answer to (2* implementation as long as business reAuirements drive the initiative O%erational RM1 also known as Bfront4officeC (2*, involves the areas where direct customer contact occurs We,ll refer to these interactions as customer Btouchpoints C A touch%oint can be an inbound contact 6e g , a call to a company,s customer support hotline6or an outbound contact6e g , an in4person sales call or an e4mail promotion "he ma#ority of self4described (2* products on the market today fall into the operational category Figure 1-1 illustrates the various levels of operational (2* 0igure 1-1. 2perational CR#& Touching the customer

/perational (2* enables and streamlines communications to and from customers, but this doesn,t necessarily mean optimi'ing service Just because a banking customer checks her balance on your Web site won,t conclusively establish that she doesn,t prefer to perform her transactions in the branch $ut how do you know for sureM Anal&tical RM1 also known as Bback4officeC or BstrategicC (2*, involves understanding the customer activities that occurred in the front office Analytical (2* reAuires technology <to compile and process the mountains of customer data to facilitate analysis? and new business processes <to refine customer4facing practices to increase loyalty and profitability? 0nder pressure from analysts and industry e5perts, most of today,s (2* vendors are either creating analytical (2* capabilities or partnering with business intelligence <$!? vendors to incorporate analysis into their offerings Figure 1-2 shows how the data and processes combine to refine business actions

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0igure 1-7. Anal!tical CR#& 8nderstanding the customer

As we,ll see throughout the +andbook, the refined4business4actions piece of the pu''le is the most difficult of all to put in place "he greater the number of missing pieces, the harder it is to construct a meaningful (2* picture Put another way, if enhanced customer loyalty is the door, integration is the key

CR# and Business Intelligence

Analytical (2*, when done right, involves large amounts of cross4functional data "his data is often stored on a )ata warehou"e1 a repository of corporate data from various sources intended to facilitate business analysis <We,ll talk more about data warehouses in Chapter 6 ? Data warehouses continue to deliver critical knowledge in a range of industries, generating returns on investment in the hundreds of millions of dollars <*y first book was about how data warehouses are providing businesses with information about their customers and products that was previously impossible to locate, let alone provide to business users, and the resulting tremendous payback ? "he practice of using data warehouses to analy'e business performance is known as !u"ine"" intelligence* Data warehousing is not (2*, and neither is business intelligence Although this might seem obvious, even heretical to some, read a maga'ine article or attend a conference presentation on (2* and you,ll likely hear at least one of the following claims: We,re using data mining to e5ecute our corporate4wide (2* initiative !t allows us to predict what customers might buy ne5t: /ur new (2* system allows us to analy'e customer behaviors and to give our salespeople global customer information, rather than select bits and pieces like they had before /nce we started doing (2*, we could access all of our customers from one system (ustomer relationship management allows the company to analy'e claims data to better understand which types of claims are most prevalent for a given customer segment +allelu#ah: We finally know which customers are buying which products:

&aluable as they are, none of these capabilities reAuires a (2* product !n fact, companies from brokerage houses to pharmaceutical firms were performing these duties long before the (2* acronym came along "he combination of data warehouses and analytical toolsets has given companies the ability to drill down into integrated data to reveal interesting6even competitively differentiating6findings 2ather than e5trapolating what types of promotions to launch and guessing who would respond, companies have begun relying on business intelligence analysis to provide them with hard facts that help them make better, more informed decisions and reap unforeseen rewards

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$ut even the e5perts are confused about the differences between business intelligence and (2*, and the media often e5acerbates the misunderstanding Publications and conference presentations routinely confuse the two terms Data warehouse vendors whose markets are waning6most large companies already have at least one data warehouse6are hanging out the (2* shingle without refashioning the message %ikewise, (2* vendors who reali'ed too late that data analysis capabilities were vital are now pitching (2* data marts along with their core products /ne popular (2* book concentrates the ma#ority of its te5t and all its case studies on decision support analysis !n August =>>>, a high4profile management #ournal dedicated an entire issue to (2*, featuring a do'en Bbest practices,C most of which involved analy'ing customer data rather than focusing on deployed (2* applications And there was the well4attended (2* conference presentation offering the Bnine types of (2*,C four of which6database, decision support, analysis and data mining, and Brules repositoryC[5] 6 smacked more of business intelligence than of the overarching business strategy of (2*
[5]

B2ules repositoryC refers to the storage of business rules that describe data and how it,s used 7or instance, a business rule that ensures a discount for a high4value customer could be e5ecuted at the time the customer places an order or could simply define that the term BrevenueC refers to booked revenue rather than billed revenue

Although often misrepresented, the differences between business intelligence and (2* are distinct 9es, they both involve critical business decisions and both rely on information technology to deliver value "he e5amples in Table 1-1 illustrate the distinction 9our first impression might be that (2* is more comple5 than business intelligence !n fact, at most companies the number of true (2* users is a mere subset of the business population using business intelligence +owever, business intelligence, when not e5ploited to its full potential, can result in analysis for analysis, sake "he ma#or difference between $! and (2* is that RM integrate" information with !u"ine"" action* !n each of our e5amples, the (2* action will be tested and further refined (2* combines data analysis with the deployment of specific business actions "he ability to access data is, by itself, immensely powerful, but many business intelligence environments simply use data to confirm already held hypotheses "he mandate of (2* is the ability to act on that data and to change fundamental business processes to become more customer4centric Table 1-1. Business Intelligence 9ersus CR# Business Intelligence CRM CRM Rationale Display the name and address Display "ech(o,s most recent inbound contact 3alespeople become aware of business customer "ech(o on my personal digital assistant <PDA?, along of e5isting or in progress with their current corporate address issues before meeting with the customer Display customers who visit one of the video stores in our chain on a weekly basis /nce a month for the ne5t si5 months, send a (onvert casual visitors to direct4mail solicitation to customers most likely freAuent visitors to rent ne5t month,s new features who are not weekly visitors to the store 7ocus on retaining high4 value customers

Display a list of customers who (ontact all high4value customers who have have lodged a complaint within lodged a complaint 8enerate retention the past I> days recommendations for each customer <using (2* product feature? Analy'e the top five most popular office supplies and com4pare approved vendors, prices to prices of other potential suppliers

!dentify the top five purchased office sup4plies !ncrease the likelihood of and trial4run an automated Web reAuest4for4 price improvements on Auote <27O? system for limited Auantities to test commodity purchases price improvements 2eward repeat customers who are profitable and gather valuable prospect behavior data

%ist the e4mail addresses for 3end profitable registered customers a D@ registered customers who online discount if they fill in a form e5plaining abandoned their shopping carts why they abandoned their shop4ping carts during their last Web visit 3end F> percent off to unknown visitors if they complete the form

The #anager's Bottom ,ine

/perational aspects aside, (2* is first and foremost a business strategy, one that helps a company tighten its business practices across organi'ations while forging an ironclad connection with its customers !t is not only a response to competitive pressures facing every industry6from deregulation to supply4chain

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1$

efficiencies to the massive demand for Web4based customer interaction6it is also considered a strategic imperative, garnering e5ecutive4level attention and eAually lofty budgets !n the business4to4consumer <$=(? space, (2* means keeping pace with a savvy and increasingly impatient consumer base that is closer than ever to finding your main competitor and more willing than ever to share their bad e5periences with your prospects As for the business4to4business <$=$? segment, as we,ll see in Chapter 5, optimi'ing supplier and partner communications is more critical than ever *aking it all work together and seamlessly involves nothing short of organi'ational choreography "hat (2* is a business strategy is now a well4worn ma5im "hat it involves much more than information technology is sometimes disheartening news to many a manager gunning for that elusive Auick win "he (2* best4practice company is the one that understands how to improve business practices and customer relationships by using (2* technology and customer data as part of an overarching program that also involves process and organi'ational changes, with the ultimate aim of differentiating itself through superior customer relationships As we,ll see throughout the +andbook, defending customers and profits while inspiring loyalty takes more than #ust (2* vendor tools !t takes understanding which type of (2* can best foster high4impact relationship improvements "he following four chapters present the various types of (2* and their components so you can decide on the best definition of (2* for your organi'ation

Chapter 7. CR# in #arketing

!n the FGK>s, the practice of motivational research sought to understand what made people tick "he hope was that company researchers could discover how to better market their products *otivational research involved everything from scientists showing volunteers a series of advertisements and measuring the subtle physical responses to administering 2orschach tests and e5trapolating visceral reactions to conducting traditional focus groups, a practice that endures today in the consumer packaged goods and entertainment industries "he scope of these efforts remained unwavering in its product focus, however, with the customer acting as an ancillary component of the purchase cycle $rand was king, as the saying went, and it would take many iterations of the marketing lifecycle for companies to understand the importance of a customer4focused business strategy

0rom %roduct to Customer& A #arketing Retrospecti9e

!n fact, product marketing became a study unto itself, its students testing the waters with a variety of gimmicks and promotional ideas Part research, part guessing game, and part leap of faith, the practice of product marketing evolved into a formali'ed organi'ation in most companies, and the process, as shown in Figure 2-1, was predictable 0igure 7-1. The process o" product marketing

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Product marketing campaigns were designed to reach as many people as possible *ass marketing campaigns not only treated all customers as if they had the same needs and wants, but also focused on the product being pitched, not on its potential buyer *ass marketing a product means stocking the same shelves across all stores with the same product and alerting potential customers in the same way "he underlying assumption was that the availability and choice of products a company offered consumers was the principal determinant of its success A product focus nevertheless does not imply a lack of market understanding /n the contrary, as companies launched and re4launched their products, they began analy'ing the responses to determine the success of marketing campaigns $usiness #ournals wa5ed poetic on product distribution strategies, and statisticians were suddenly in demand as companies began institutionali'ing such data analysis practices as product revenue analysis and price4elasticity modeling "he FGK>s introduced the phenomenon of Bdirect marketing C Direct marketing involved communicating with large numbers of consumers6usually through promotional mailings or maga'ine advertisements6and inviting them to respond to the promotion <B3end check or money orderPC? by ordering the product through the mail $ased on the principles of mass marketing, direct marketing usually focused on selling a mass4 produced product, be it E4track tapes, porcelain plates, or glass4encased stamp collections, to as many consumers as possible $ut direct marketers were pioneers in one respect: they monitored responses to their ads, often creating several versions of the same campaign and launching it in different areas of the country "hey then analy'ed relative response rates, whittling away the marketing messages that didn,t work and refining other campaigns based on those learnings Direct marketing stood the world of conventional advertising on its head, for the first time suggesting that messages could be tailored and consumers had preferences Despite its sophistication relative to the more general mass marketing campaigns, a direct marketing promotion was considered a smash if it generated a = percent response rate !n fact, according to the Direct *arketing Association, if a company,s direct mail campaign touches F>>,>>> customers and costs DGE,>>>, the company nets a significant loss [1]
[1]

As reported in

IO *aga'ine, August F@, =>>>

Target #arketing
As consumers began purchasing and using products, more data became available about them Data analysts began associating products to the customers who were buying them And it was through these analysis activities6as well as rising temperatures in the competitive climate and a few timely maga'ine articles6that companies began to understand that their <usually inert? customer data could be as valuable as the product data they were busy probing "hus evolved the term Btarget marketing,C the practice of promoting a product or service to a subset of customers and prospects

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"echnically, the si'e of a target market can range from the sum of all customers to a single individual, but during the early days of target marketing when companies began using information technologies in creative new ways, market segmentation was the most widely adopted approach Although many data points across the organi'ation from products to sales channels might be segmented, segmentation is most often associated with dividing customers into categories based on their demographics: age, gender, and other personal information [2] -ven => years after customer segmentation had been embraced by marketing departments, many still divided their customers on the basis of whether they were business or residential
[2]

!n *arch of FGKH, author Daniel 9ankelovich wrote about B1ew (riteria for *arket 3egmentationC in the 3arvar) Bu"ine"" Review1 arguing that demographic segmentation, while valuable, was not the only way a company could categori'e its customers

*odern companies assign a variety of segments to their customers, often dynamically defining segments and temporarily regrouping customers for specific campaigns *arketing departments routinely group customers into the following categories: 8eography or regionality Psychographics[3]
[3]

BPsychographicC segments define groups of customers with similar interests, opinions, and preferences

7irmographics[4]
[4]

B7irmographicsC characteri'e a business and are used especially often in business4to4business <$=$? communications

!nfographics[5]
[5]

B!nfographicC segments delineate customers according to how they want to be communicated with <via e4 mailM direct salesM a proprietary Web siteM?, as well as how they prefer to interact with the company

Preferred sales channel Profitability 1umber of products 3ales territory "enure %ifetime value +ousehold demographics 2isk score %ife stage Privacy preferences

$y segmenting customers, companies could begin more speciali'ed communications about their products *uch of this relies on the company,s understanding its business strategies to the e5tent that it knows its most desirable segments 7or instance, if a bank has set its sights on deriving most of its profits from fee4 income products offered in its investment services line, customers of this organi'ation will likely have different preferences and characteristics from those opening savings accounts 3egmenting customers based on their preferred line of business or desired product features can reveal interesting facts about their different preferences and behaviors 7or instance, $oots, a 0 . retailer, segments customers who respond to promotions based on whether they are Bdeal seekers,C BstockpilersC <who buy in bulk when an item goes on sale and then don,t visit the store until they need to stock up again?, loyal e5isting buyers <whose purchase patterns increase for sale items?, or new market customers <who buy a sale item and continue to buy it after it reverts to its regular price? [6]
[6]

According to B"aking Advantage,C 4$4 Direct magazine1 3eptember =>>>

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1'

*any companies with the ability to analy'e detailed customer data tend to segment customers on the basis of how likely they are to purchase a new product or service /ne of my clients, a leader in cable television, segments its customers based on their Bpropensity to buy,C as illustrated in Table 2-1 $ased on this segmentation, the cable company trying to up4sell customers to digital "& service offers customers in its 3keptics segment digital cable for the price of standard cable service for a three4month period "he net cost is only si5ty dollars6twenty dollars more per month6and there is a high likelihood of retention "he -arly Adopters receive an e4mail offer6B7or a limited time only:C6for digital cable plus @>> minutes of free long distance per month for si5 months "he value of this service is D@> per month to the consumer6the cost to the cable company is negligible "he -arly Adopters end up keeping the digital cable and will most likely remain long distance customers as well Table 7-1. %ropensit!-to-Bu! +egments Segment: Description: Early Adopters Pragmatists S eptics !aggards *ost likely to buy Will purchase new newly offered products products after value is and services well understood *ight -specially attracted to need to see the product technology innovation in action HK /nly purchase if value Await mass4 is proven (hances acceptance of product increase with rebates prior to purchase 1ot or money4back likely to respond to guarantees new promotions =E F@

Percentage of FF customer base:

"he advantage of target marketing is that, if the company has @> million customers, only FH million or so6 =E percent6will receive the promotional mailing for digital service At a bulk rate of eight cents per mailing, target marketing saves the company almost DI million in postage alone <"he company might incur labor and mail service costs, which would also be sharply reduced ? "his allows the cable company to steer clear of disinterested prospects and avoid the all too common practice of over4communicating to customers !t fosters the customer,s perception that marketing is a tailored service, not an annoyance "hrough the significant cost savings and increased response rates, target marketing #ustified increased e5penditures for information technology !n fact, the better companies became at analy'ing data about their customers, the more effective their campaigns became, creating the closed4loop effect illustrated in Figure 2-2 0igure 7-7. Re"ining marketing campaigns

Figure 2-2 illustrates that the more a company knows about its customers, the more detailed its marketing messages can be 2efined marketing campaigns, targeted to customer segments rather than to the mass populace, became the marketing +oly 8rail

Relationship #arketing and 2ne-to-2ne

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1(

"hat is until relationship marketing came along Populari'ed by 2egis *c.enna in his FGGI book, Relation"hi% Marketing$ /ucce""ful /trategie" for the Age of the u"tomer1 relationship marketing was embraced as a way for marketing departments to get to know their customers more intimately by understanding their preferences and thus increasing the odds of retaining them "arget marketing, cross4 selling, and customer loyalty programs evolved from one4off pilot pro#ects and became formali'ed as part of core marketing and sales processes Also in FGGI, Don Peppers and *artha 2ogers predicted the demise of the mass marketing tactic of relying on economies of scale to churn out huge Auantities of standardi'ed products "hey declared the need to focus less on products and more on customer relationships !n their watershed book The One to One (uture1 Peppers and 2ogers argued that in coming years Pyou will not be trying to sell a single product to as many customers as possible !nstead, you,ll be trying to sell a single customer as many products as possible6over a long period of time, and across different product lines "o do this, you will need to concentrate on building uniAue relationships with individual customers, on a F:F basis [7]
[7]

Peppers, Don and *artha 2ogers, Ph D , The One to One (uture$ Buil)ing Relation"hi%" One u"tomer At a Time 1ew 9ork: Doubleday, FGGI

Peppers and 2ogers rounded out marketing,s evolution from mass4marketing standard products to segmenting customers to true relationship marketing, or one4to4one Figure 2-3 shows the stages and their differences 0igure 7-:. #arketing e9ol9ing

/ne4to4one means not only communicating with customers as individuals, but also developing custom products and tailored messages based on customers, unspoken needs !t relies on a two4way dialog between a company and its customers to foster a true relationship and allow customers to truly e5press the desires the company can help fulfill !t relies as heavily on the customer,s e5perience of the company as it does on the specific marketing messages he receives "he concept of Bpermission marketingC goes hand4in4hand with one4to4one: customers not only need to be communicated with as individuals, they themselves should be able to stipulate how and when After all, as 3eth 8odin says, B9ou can,t build a one4to4one relationship with a customer unless the customer e5plicitly agrees to the process C[8] Permission marketing implies that the customer will decide when and for what reason she will accept to be interrupted with a marketing message *ost of the time, it,s when the customer perceives there is value to her in such an interruption A current e5ample is Ama'on com,s notification of /prah,s new $ook (lub selection to subscribers who have opted in
[8]

8odin, 3eth, 'ermi""ion Marketing$ Turning /tranger" into (rien)"1 an) (rien)" into u"tomer" 1ew 9ork: 3imon and 3chuster, FGGG, K@

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"he vision of one4to4one and permission marketing relies even more heavily on information technology to track individual customers, understand their differences, and acknowledge their interaction preferences "he purveyors of these visions often stop short of discussing how e5actly a company can not only differentiate each discrete customer, but also put the business processes and organi'ational structures and technologies in place to treat them differently <see the definition of (2* in Chapter 1? 7ortunately, companies had begun analy'ing customer data even before the advent of relationship marketing, and thus the possibility of managing individual customer interactions based on the reAuirements of those individuals is becoming ever more realistic "he trouble has been that they,ve underestimated the e5tent of the work necessary to reali'e the promise

Campaign #anagement
!f traditional marketing is, as the saying goes, part art and part science, the marketing of the future is pure science with a bit of flourish "he success of corporate marketing programs has become directly proportional to a company,s ability to capture and analy'e the right data !n days of mass marketing with its Bbatch and blastC mentality, most companies would decide on a marketing campaign based on someone,s interesting idea A team of product managers would plan the campaign, coming up with hit4or4miss media guesses and sound bites "hen they,d pull the ripcord and pray !t could take months to figure out whether a campaign was working, and months more to repair and re4launch it Why the throw4it4at4the4wall4and4see4if4it4sticks approachM 7or one thing, finding, entering, storing, and tracking individual customer data records was beyond most companies, capabilities, not to mention their budgets Parado5ically, the larger the company, the greater the number of customers and thus the more cumbersome and e5pensive managing customer data became %arge companies began undergoing the +erculean task of collecting and storing customer data in primitive databases !n the FGE>s, the advent of relational databases and data warehouses <databases e5pressly designed to hold large amounts of corporate data? promised to ease the pain of amassing detailed customer records and availing them to business users Chapter 6 discusses how data warehouses have gone from a large4company lu5ury to a (2* necessity Another challenge was the sheer labor involved in launching new marketing campaigns, rendered all the more difficult with the increasing freAuency of smaller, more targeted promotions *arketing departments needed to conceive of and plan the campaign, define the targeted consumers, determine the channel6how the campaign would be communicated6and then launch the promotion, as shown in Figure 2-4 0igure 7-;. A linear campaign management process

$ut only those with the necessary data can really monitor the results of that campaign, and use those results to refine future campaigns, a process known as Bclosed loopC campaign management "his means the ability not only to analy'e and understand whether a campaign is a success and why !t means using that new knowledge as the basis for future campaigns, in effect closing the loop with evolving customer information, as in Figure 2-5 0igure 7-<. Closed-loop campaign management

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1*

!t could be months or even years before companies understood whether a marketing campaign was successful 1o wonder the practice of campaign management mandated large marketing organi'ations and even larger marketing budgets: *any companies relegated the cumbersome work to marketing service bureaus or direct marketing agencies, whose turnaround time was less than stellar *any stayed in their marketing comfort 'ones, e5ecuting ad4hoc, point4in4time campaigns that generated short4term revenues but did nothing to reveal customer preferences or improve customer relationships "he time and cost being spent on these campaigns and the opportunity cost associated with ad hoc or e5perimental promotions were noted by technology vendors, many of them database product companies, who began devising ways of automating key pieces of the campaign management process "he initial developments in campaign management software were list generators %everaging current customer information in e5isting databases, list4generation software dynamically segmented customers for certain campaigns, using standard database Aueries "he result was a list of customer names and addresses that fit the specified boundaries 7or e5ample, a marketing department at a bank wants to offer freAuent depositors with large balances access to low4interest lines of credit "he specification BDisplay the names and addresses of all customers with checking account balances of over D=@,>>> who have an average deposit amount of D@>>> or higherC could easily be translated into a Auery and submitted to the bank,s customer database "he resulting list would become the basis for a mailing offer to those customers "he bank saves money not only by applying the principles of target marketing and segmentation6communicating to a proscribed and thus smaller group of customers6but also by avoiding the cost and time involved in searching out those customers manually As campaign management software became more popular, its features became more robust "he richer a company,s customer database, the more it could leverage that data to actually understand customer behaviors and institute true one4to4one marketing Products such as Nchange and Prime 2esponse began addressing components of the full campaign lifecycle, including (ampaign definition Planning (ustomer segmentation 3cheduling 2esponse management

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 20

/pt4in versus opt4out processing

*ost campaign management products aid the user in defining a workflow, including a schedule for the campaign "his allows a marketing department to delineate discrete tasks, specify costs and e5pected returns, and test various scenarios on different customer segments, campaign schedules, and product offers 3uch products not only shortened the marketing lifecycle, they enabled companies to dedicate more time to customers and less on managing the marketing process 7reeing up time in turn allowed campaigns to be launched in parallel instead of serially 7or instance, a telephone company,s single, monolithic custom4calling campaign could become several more4targeted campaigns featuring voicemail, caller4id, call waiting, or packages combining these and other products to specific customer segments *ultiple simultaneous promotions resulted in an increase in overall response rates, often in the double digits $y increasing not only the Auality but also the volume of their marketing campaigns through marketing automation, companies were increasing their revenues (2* products offering campaign management present savings of time, labor, and cost and often demonstrate Auantifiable returns on investment, as they have to the following companies: An outdoor products catalog company that customi'ed catalogs for specific customer segments <segments include BDay4trippers,C B(lotheshorses,C and B2oughnecksC? has boosted its average purchase by segment to =I percent, thereby increasing its overall catalog revenues by a staggering @>> percent An online brokerage firm,s cross4selling of its new checking account offering to holders of .eogh retirement accounts generated a I= percent response rate from its targeted base of customers, versus H percent from a control group An e4tailer speciali'ing in lifestyle products saw sales of its languishing line of house4brand women,s clothing nearly double when the company promoted select casual outfits with a well4known brand of baby products favored by new mothers

When mastered, automated campaign management is like a good wine: it gets better with age With marketing campaigns targeting increasingly smaller customer segments, companies can increase the number of campaigns simply to ensure that they continue interacting with as many customers as possible And by tracking the success of campaigns over time, companies can refine them, resulting in even higher response rates and thus greater corresponding revenues "he practice of closed4loop campaign management6using the results of campaigns to refine future campaigns6has become an acknowledged (2* best practice

CR# #arketing Initiati9es

(ompanies simply don,t purchase (2* products to automate campaign management without a clear view of what they want to do After all, companies devoid of a marketing vision rarely have sufficient budget for (2* software "hose who do, have a variety of tactics in mind for increasing customer value and loyalty

Cross-+elling and 8p-+elling

(ross4selling is the act of selling a product or service to a customer as a result of another purchase "he e5ample of new mothers purchasing products for their babies at the same time they buy clothes for themselves is an e5ample of cross4selling (ross4selling is all the rage nowadays, because selling more services to an e5isting customer increases revenue from that customer and costs less than acAuiring a new one %ikewise, companies are frantically looking for opportunities to up4sell, or motivate their e5isting customers to trade up to more profitable products "he youthful voice at the drive4thru window predictably asking, B9ou wanna supersi'e thatMC is the best Auotidian e5ample of up4selling "he art of cross4selling and up4selling is understanding which products will increase, rather than decrease, a customer,s overall profitability 3imply cross4selling a customer an unprofitable product might actually render that customer less profitable than he was prior to the sale (ross4selling done correctly means selling the right product to the right customer !t also means understanding that not every customer is a good candidate for cross4selling 7or instance, credit card customers have proven to be poor cross4selling candidates because favorable interest rates and low fees6 not the card itself or even the issuer6are the dominant determinant of consumer response to credit card offers 0nderstanding the ways by which customers evaluate how and whether to respond to such

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 21

promotions is critical 1ot surprisingly, the desire to improve cross4selling business practices accounts for much of the popularity of (2* marketing automation technologies

Customer Retention
!n FGGK, author 7rederick 2eichheld wrote that 0 3 corporations lose half their customers every five years [9] !ndeed, banks and telephone companies were already in the throes of analy'ing customer attrition to understand why customers were leaving for competitors
[9]

2eichheld, 7rederick 7 , B%earning from (ustomer Defections,C 3arvar) Bu"ine"" Review1 *arch4April FGGK

0nderstanding that customers have left, and knowing specifically who, is non4trivial 0nderstanding why they have left is even more difficult +arder yet is stemming the tide of customer attrition by applying this knowledge to business tactics that encourage customers to stay Analy'ing customer attrition operates on the aphorism established in Chapter 1 that keeping an e5isting customer is far more cost effective than acAuiring a new one After all, the more customers leave, the greater the loss of revenue, loss of the initial acAuisition investment, and loss of a stable market base for selling new products Although this business tenet hasn,t arrested the fren'y to acAuire new customers, it has resulted in millions of dollars being spent to analy'e not only why customers leave, but also which customers are the most desirable and thus worth keeping !n the FGE>s, companies began focusing on who had left !n the FGG>s, they began applying characteristics of customers who had left to e5isting customers, thereby pinpointing those customers who might be leaving ne5t 2educing customer defections by even a fraction has been proven to increase profits e5ponentially (urrently, companies are using sophisticated predictive technologies that compare like attributes of similar customers to delineate customers who are Blikely to churn,C and they,re simultaneously personali'ing tailored marketing interactions designed to motivate those customers to stay "he trouble with customer retention strategies is that, once you,ve identified customers who might leave, how do you keep themM Despite sophisticated churn prediction products, most companies still don,t really know whether product giveaways and add4on perks6whose initial cost outlay often e5ceed the resulting revenue contribution6really result in profitability Will the cost of the free mobile phone be recouped in the customer,s service spendingM +ow often are customers continuing their digital cable subscriptions after the first I <free? monthsM Will that first4class upgrade ensure that a given customer will fly with you againM While they figure out the best way to keep customers who are on the brink of leaving, companies are working on designing marketing campaigns to bump low4value customers to a higher value band rather than allowing them to churn by default (hurn prediction is one of several uses of technology and data that aid marketing in predicting customer behavior

Beha9ior %rediction
Although not so much a marketing practice as a marketing enabler, behavior prediction helps marketing departments determine what customers are likely to do in the future 0sing sophisticated modeling and data mining techniAues6we,ll discuss some of these in more detail in Chapter 66behavior prediction uses historical customer behavior to foresee future behaviors "his analysis includes several variations: 'ro%en"it&#to#!u& anal&"i"* 0nderstanding which products a particular customer is likely to purchase 5e-t "e6uential %urcha"e* Predicting what product or service a customer is likely to buy ne5t 'ro)uct affinit& anal&"i"* 0nderstanding which products will be purchased with other products Also known as Bmarket basket analysis,C it can be viewed as e5amining products in a shopper,s basket to understand possible product associations 'rice ela"ticit& mo)eling an) )&namic %ricing* Determining the optimal price for a given product, often for a given customer or customer segment

$y understanding how a customer is likely to behave, a company can make a host of marketing decisions based on this knowledge, including these: Preemptively offering discounts or fee waivers to e5isting customers who are at risk of churning 2efining target marketing campaigns to smaller customer segments or specific products

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 22

Packaging certain products together and fi5ed4pricing them to sell more products and increase their profitability (ross4selling products likely to be purchased with other products

"he key to all this analysis, and especially to the actions that result, is knowing who your best customers are

Customer %ro"itabilit! and =alue #odeling

(alculating overall customer profitability was nirvana for financial institutions in the late =>th century $ut it wasn,t easy "hese businesses first had to understand the costs of their various products, then roll those products up to the account level, and then associate a single customer with multiple accounts and perhaps with a household "he e5tensive processing and detailed data reAuired to calculate customer profitability combined with the high cost of speciali'ed profitability4modeling products kept it out of reach for even mid4 market banks until recently 7or the first time companies could Auantify that price4sensitive customers6 those who bring in paper4thin margins6might never recoup their value, irrespective of their purchase volume, yet certain low4volume customers were nevertheless highly profitable $ut profitability is only a piece of the revenue pu''le A customer can be unprofitable but could have referred three high4value customers to your firm, thereby rendering himself very valuable Despite not being currently profitable, a recent college graduate shows several signs of emerging profitability and thus might be considered valuable over her lifetime Different companies in different industries will have different value metrics (ustomer value is a pregnant phrase, variously referring to a customer,s lifetime value <%"&?, potential value, or competitive value <also known as wallet share? *any firms have formali'ed the practice of value modeling, allowing them to score a customer based on her relative worth to the company over time "he score is then used in a variety of ways to tune communications with that customer 7or instance, a brick4and4mortar retailer recogni'es a shopper with a freAuent4buyer card who nevertheless visits the store only during advertised sales "he customer has been assigned a low value score "he retailer sends the customer a preapproved credit card to increase his value and thus his corresponding revenue contribution "he credit card might result in raising the number of monthly shopping trips, as well as boosting the customer,s average purchase amount !rrespective of the level of customer value being modeled, customer value measurement is data4intensive "he challenge of value modeling is that it is only as accurate as the customer data is rich6and the analysis statistically robust +istorical customer behaviors, product costs, support costs, customer profitability, and channel usage should all figure into the overall value of a customer $asing customer value on only a single metric puts companies at risk of making erroneous decisions about how to communicate with customers and what to say, which could ultimately decrease customer satisfaction and increase attrition As we,ll see in Chapter 3, companies can use the result of customer value analysis to differentiate customer service

Channel 2ptimi3ation
"he goal of marketing automation is to offer the right message to the right customer at the right time With the advent of the !nternet, many firms are appending Bthrough the right channel,C to this ma5im <denoted by BDetermine +owC in Figure 2-4? as customers, interaction preferences evolve 7or instance, a new customer whose use of online banking services has steadily increased might prefer to be e4mailed a new offer along with her regular statement, whereas a retiree who en#oys visiting the neighborhood branch might be delighted when the branch manager offers her a cup of coffee and a brochure on a new annuity product !ndeed, banking customers have a range of choices when it comes to their preferred channels, as Figure 2-6 illustrates 0igure 7->. =arious banking ser9ice channels

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 2$

0nderstanding the channels through which specific customers prefer to interact with your company is only a slice of the pie 9our company must also decide how best to communicate with your customers Just because a valuable customer prefers making his deposits in the branch doesn,t mean he won,t demand comprehensive online statements (hannel management means optimi'ing a company,s BinboundC channels with its BoutboundC means of customer interaction and knowing how to choose the best approach for each

%ersonali3ation
Practically all of us have purchased something over the !nternet, be it books, large appliances, or a pi''a $ut have you ever noticed that sometimes one of those Web sites seems to be talking right to youM Personali'ation is the capability to customi'e customer communication based on knowledge preferences and behaviors at the time of interaction !t can take any of the following forms: 9ou log on to your favorite music Web site "he site greets you with B+i, Jill, welcome back: We have some new picks for you:C 9ou scroll down and see a variety of new (Ds you,ve had your eye on but have been too busy to browse through at the record store 9ou double4click on the cover of the new $eastie $oys anthology and listen to one of the cuts While channel4surfing, you come across a hedge trimmer being featured on a home shopping station 9ou know your wife would love it 9ou call to order it and the operator greets you by name and asks for the item number After confirming that the hedge trimmer can be sent overnight, she asks you whether you,d like to use your &isa card 3he already has the number 9ou say yes </bviously, your wife has shopped here before ?

Although both of these e5amples are leveraging personali'ation, the first e5ample is personali'ation as most people know it: online messages tailored to a particular customer or customer segment 3uch tailored messages can involve anything from inserting the Web shopper,s name into the message6 known as Bvariable insertionC6to using detailed customer data to personali'e Web site content 7or instance, a cosmetics e4tailer might want to promote de4fri''ing shampoo to shoppers in the humid southeast and a conditioner with 3P7 protection to shoppers in Palm 3prings *ore specifically, personali'ation technologies can tailor messages to individual customers, accessing current personal data each time the customer visits the site and using it to create custom content "hese technologies enable analysis of each customer over time and across all channels, using customer profile data, past purchases, clickstream data, and Web survey responses to determine, for instance, what product the customer is most likely to purchase ne5t or whether the customer is at4risk and thus deserving of a

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 2%

discount offer to lure him back A personali'ed message reflecting the results of that analysis is then delivered in real time when the customer visits the Web site "he following two screens illustrate personali'ation functionality from the "eradata (2* product "he screen in Figure 2-7 depicts the te5t from a pending e4mail marketing campaign, along with a range of possible account balances !nstead of sending the same offer to all the bank,s prospects for this campaign, the campaign administrator can scale the offer according to the customer,s current account balance 0igure 7-?. Appl!ing %ersonali3ation .Courtes! o" Teradata CR#/

Figure 2-8 shows the first screen as it would be seen by the prospect, having been Bfilled in,C with the actual offer "he prospect is proffered additional high4margin products, allowing the bank to ma5imi'e the opportunity for cross4selling 0igure 7-@. A personali3ed marketing message .Courtes! o" Teradata CR#/

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 2&

Personali'ation technologies can apply their learnings6if the customer responded to a discount on skis, it,s likely she,ll be interested in cold4weather apparel6to future personali'ed messages, having proven improved response rates over time as the customer,s behavior data becomes ever more enriched "his removes the guesswork, resulting in a creeping understanding of customers and their preferences over that customer,s relationship with your company .nown as Badaptive personali'ation,C it,s a critical factor in making it as difficult as possible for your customer to switch to a competitor 7or e5ample, Wine com uses personali'ation to tailor uniAue e4mail newsletters to certain customers based on past purchases Personali'ation in the $=( space is largely based on the analysis of a customer,s clickstreams, his navigation path through a company,s Web site $y monitoring a customer,s clickstream, a company can see not only what a customer purchased but how the customer reached the site in the first place <a partner Web siteM A banner adM?, how he traveled through the site after he got there, how much time he spent on each page, and which products might have stimulated purchases of other products !n short, clickstreams can shed light on a customer,s Web e5perience 7or now, it,s important to note that analy'ing clickstreams can trigger do'ens of new tactics, including (hanges to Web impressions <images on the Web site? according to a customer,s navigation patterns and past purchases (ustom promotions or discounts based on past purchases or research (ustomi'ed Web pages according to the visitor,s use of the site

Chapter 6 features a real4world scenario of clickstream analysis at a specialty e4tailer and how it presented a choice of business actions

49ent-Based #arketing
"he best definition of event4based marketing is a time4sensitive marketing or sales communication reacting to a customer4specific event -vent4based marketing6also called event4driven marketing6can apply to a segment of customers or to individual customers 7or instance, mailing an application for an increase in collision damage insurance to all customers who,ve recently had traffic accidents is an e5ample of event4 based marketing to a largely undifferentiated segment of the e5isting customer base

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 2'

$ut it,s individual event4based marketing that companies adopting (2* are striving for "hey want to move beyond traditional, painstakingly choreographed and scheduled marketing campaigns to more reactive, real4 time customer communications highly focused on the individual customer,s profile !n our previous e5ample, the insurance company would suggest to each individual customer how much collision damage insurance would be appropriate, given specific factors such as the customer,s current coverage, claims history, and demographics 3uch event4based marketing tactics combine personali'ation techniAues with process design to ensure that the right action targets the right customer at the right time *ost companies developing event4based marketing are doing so based on a clearly defined set of high4 profile events that call for straightforward action 7or instance, a credit card company calls a customer who has made a purchase transaction far from home for the first time, confirming the purchase6a common fraud4avoidance tactic During the phone call, the credit card agent offers to overnight the customer free traveler,s checks "he ideal goal of event4based marketing is to be able to react to customer events in near real4time, soon after the actual event occurs A simple e5ample of this is the grocery store receipt featuring coupons on the back for merchandise you,re likely to be interested in, but might not readily buy if unprompted 3uch real4 time, event4based marketing means detecting and responding to events Auickly, often using comple5 data4 mining capabilities <see Chapter 6?, and reAuires an intimate understanding of possible events and their desired outcomes Dynamic event4based marketing means reacting to a customer event in the optimal time frame6which could differ from one event to another -vent4based marketing reAuires solid process automation and a well4calibrated workflow to be effective 7or instance, a communications company wants to formali'e a Bpreemptive strikeC strategy for all high4value customers6FE percent of the total customer population6when they e5perience dropped calls or mobile phone outages "he company has set the following success metric: the customer who e5periences the outage must be contacted within one hour of the event, giving the company a shot at service recovery while it,s still fresh in the customer,s mind As a manual process, this would be virtually impossible Automation is reAuired to detect the dropped call, route the information <including the cause? to a Aualified customer service representative, and suggest the appropriate compensation for that customer "o effectively automate this process, the wireless provider must first understand the process as well as its desired outcomes After all, for one customer the ob#ective of the call could be customer retention, but for another it might be the chance to up4sell newer eAuipment "he term Bevent4based marketingC is often used erroneously to replace Blife stageC or Blife eventC marketing, in which a company determines where a customer is in the continuum of her life span in order to deliver the appropriate marketing message 7or instance, a newly married couple won,t respond to a promotion for a home4eAuity line of credit if they aren,t yet homeowners) however, the couple might be interested in a #oint interest4bearing checking account "racking such life events can enrich your customers, profiles over time, providing better and better clues about how to effectively market to them 1o matter what type of customer communication a company sends for marketing purposes, the ultimate goal is to get the customer to visit the store, catalog, or Web site) to buy products they,re happy with) and to return often Preeminent companies that have e5celled at this strategy have actually succeeded in convincing customers to %a& them for the privilege of being loyal customers Disney,s new Disney (lub program charges its members a membership fee plus an annual payment for access to new Disney products and promotions "he company,s chief strategic officer told The Wall /treet Journal he e5pects to have at least a million members by =>>= [10]
[10]

B(ustomer Affinity (lub "argets 7irm,s %oyalists,C The Wall /treet Journal1 1ovember F@, =>>>

Customer %ri9ac!$2ne-to-2ne's +aboteur6

Although we,ll talk more about the privacy issue,s potential to foil customer relationship management initiatives in Chapter 10, the sub#ect of privacy deserves mention in the conte5t of customer marketing After all, the success of the marketing programs this chapter discusses hinges on the availability of customer data, and privacy is becoming an increasing concern for both consumers and the companies who market to them !f the indiscriminate use of individual consumer information is at the heart of the privacy debate, the speed of change is its lifeblood (2* technologies such as data4mining engines and personali'ation tools enable their users to not only understand a consumer,s behavior history and preferences, but to predict what she might do ne5t and to share this information without the consumer,s having a say "he increasing sophistication of such technologies and incendiary reports on identity theft, villainous Web crawlers and Web bugs, and so4called "ro#an horses <software programs that purport to be innocuous but in reality are scanning your hard drive or turning on your P( camera? fan the flame of consumer paranoia Witness the

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 2(

title of the book, &!ercrime7 &!erterrori"m7 &!erwarfare7Averting an Electronic Waterloo "he scare tactics are working Aside from the growing practice of posting privacy policies on their Web sites, companies are doing little to assuage consumer fears %atanya 3weeney, assistant professor of computer science and public policy at (arnegie *ellon 0niversity, recently told 5ew"week that BEJ percent of the population of the 0 3 can be uniAuely identified QonlyR by their date of birth, gender, and five4digit S!P code C[11] Although this was a backhanded compliment to the developing prowess of database marketing, it was nevertheless a battle call to consumer privacy advocates
[11]

3herman, -rik, B"inker, "ailor, 3oftware, 3py,C 5ew"week1 /ctober FK, =>>>

And companies who blow the privacy issue are getting unwanted attention for often4innocent errors !t,s not only the ubiAuitous consumer protection agencies vying for more privacy restrictions, but government regulators as well "he 8ramm4%each4$liley Act in the 0nited 3tates established mandatory measures for 0 3 financial institutions and their use of data, and many consumer advocates believe it,s the harbinger of privacy legislation for other industries Almost all -uropean countries now have federal agencies dedicated to protecting privacy, with the -uropean -conomic 0nion guaranteeing individual compensation in instances of privacy abuse B(onsumers shouldn,t have to reveal their life story every time they surf the Web,C said (alifornia congresswoman Anna -shoo in a press release announcing her proposed legislation [12] reAuiring companies to adopt Bopt inC policies "he 3helby Act recently barred state motor vehicle agencies from sharing driver registration information without e5plicit consent, reversing the previous opt4out policy (orporations fear such legislation because it will reAuire them to receive e5plicit customer permission to solicit and use their personal data 1ot only will such opt4in policies thwart many e5tensive and intricately planned marketing strategies, they will result in millions of dollars being spent on process and technology modifications to support it
[12]

"he bill, co4sponsored by 2eps (hris (annon of 0tah and Anna -shoo of (alifornia, was introduced in January =>>>

Add to all this the fact that consumers are feeling harassed !t,s no longer enough to post a privacy policy on a Web site6companies are being blacklisted by consumer organi'ations for contacting customers more freAuently than they,re comfortable with, or for simply sending duplicate mailings "he point to incorporating privacy measures into a (2* initiative is this: the customer doesn,t care about your company,s intent6it,s the !ehavior that counts A duplicate mailing or unwanted phone call can be the innocent result of an incomplete customer profile or simple data error $ut from the customer,s perspective, it could mean all your outbound communications are suspect 0sing a customer,s data without her permission need occur only once before that customer is lost (ompanies are increasingly limiting the number of messages they send to their customers in an effort to maintain good will $ut if your company believes every customer is indeed an individual, contact preferences will be different too 0nderstanding the type of marketing message and its optimal channel aren,t enough6 you must understand each customer,s preferred interaction fre6uenc& as well 3imply put: -ach customer,s privacy preference should be solicited and incorporated into his customer profile and should then be uneAuivocally honored As we mentioned earlier in this chapter, customers have unspoken needs, some of which you,ll have to infer from their past interactions with you Aside from the numerous marketing possibilities offered by (2* and its accompanying customer understanding, the ongoing privacy controversy alone makes integrating detailed customer behavior and preference data worth the time and effort

A #arketing Automation Checklist "or +uccess

"he goal of campaign management products, whose vendors inevitably lay claim to the more pervasive rubric of (2*, is to automate marketing processes, not to replace them "his raises three important points about how an organi'ation conducts its marketing: F "he marketing processes themselves should be sound As with other technologies, speeding up a broken or inefficient process simply means faster mistakes, otherwise known as Bpaving the cowpath C *arketing practices are very industry specific A bank usually has enough information about its customers to send a specific message to an individual customer based on her e5isting product set A general merchandise retailer, however, doesn,t necessarily know who,s shopping and thus relies

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 2)

more on mass marketing techniAues and encouraging customers to sign up for loyalty cards so it can gather more personal information -ach of these companies will have different service channels, different strategies, and very different ways of communicating I "he greater the variety of campaigns and the more robust the analysis, the greater the choices for future campaigns As companies run more campaigns and increase their e5pertise at analy'ing the results, recurring findings will result in even more creative campaigns to other sets of customers, not to mention providing the company the capability to increase its number of campaigns while at the same time decreasing the audience si'e of each one in an effort to move toward true one4to4one marketing

8iven these three factors, selecting a (2* tool to automate campaign management is easier said than done A good campaign management tool is fle5ible enough to support e5isting marketing processes and not enforce its own !t should also be able to sustain current campaigns, yet support the evolution of the business and its customer knowledge while at the same time leveraging other campaign details such as the campaign,s chosen media, its manager, or its seasonality 3ome of the more advanced products even include so4called decisioning capabilities that support the translation of customer profitability, value, or future behavior scores into automated actions <for e5ample, suggesting the waiver of a service fee for a particular customer? (ompanies in the midst of planning or using (2* technologies to automate marketing are nevertheless still struggling with basic Auestions about how to optimi'e their marketing e5penditures -ven those in the heat of implementing (2* are still asking themselves these Auestions: +ow do we focus our marketing campaigns on customers with whom we,d like repeat businessM +ow do we migrate customers to lower4cost channelsM +ow do other organi'ations in the company see customers differently than we do and how does that influence our campaign messagesM +ow can we anticipate which products and services a customer might wantM What is the best means of communicating with customers on an ongoing basisM What tactics do we use to entice prospects to become customersM +ow do we tie what we,ve learned about customers to improving overall customer satisfactionM What keeps our most loyal customers coming backM

(2* technologies alone can,t help companies answer these Auestions As we,ll see in later chapters, companies implementing (2* must make staffing and technology decisions that transcend (2*

Case +tud!& 4ddie Bauer

3ummary: (ustomer relationships are important to any retailer $ut for a member of the e5clusive group of retailers who have successfully integrated their brick4and4mortar, Web, and catalog channels, customer relationships are about more than #ust understanding behaviors: "hey,re about making them happen $ack in FG=> when the first -ddie $auer store opened its doors, personali'ed customer service was one of the company,s trademarks /ne can imagine 3eattle shoppers being greeted by name and offered suggestions by helpful sales staff who understood their tastes and remembered their past purchases "he company has certainly changed since then6-ddie $auer has grown to over @>> stores in HG states, with a catalog circulation of F>@ million across the 0nited 3tates and (anada6but its service mentality is surprisingly consistent: understanding the merchandise customers want and providing it to them in the optimal way !ndeed, the company6now a division of the 3piegel 8roup6is one of a tiny handful of retailers who can lay claim to a bona fide channel triumvirate that includes brick4and4mortar stores, a catalog business, and an acclaimed !nternet site for Web shoppers Although most brick4and4mortar retailers are still struggling to find their !nternet sweet spots, -ddie $auer,s three channels are thriving and, as the company,s data suggests, complementing one another

5hat The! 'id&

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 2*

+arry -gler, &ice President of (2* for -ddie $auer, e5plains the company,s (2* strategy as being centered on a two4way dialog with its customers B/ur customers are coming to us with certain needs and wants,C -gler e5plains, Bso we have to provide relevance, as well as be able to have an intelligent dialog with them 2etailers aren,t usually set up to accommodate this type of interaction C !n the mid4FGG>s, the company began to reali'e its knowledge of its customers was rudimentary, as was its ability to respond to customer reAuests B!t was like pulling teeth for a brick4and4mortar customer to get one of our catalogs,C -gler recalls !nitial research suggested opportunities were falling through the cracks due to a lack of an integrated view of the customer !ndeed, customer data was dispersed across the company and not easy to find, let alone gather and analy'e -ddie $auer began e5ploring what it would take to attain the IK>4degree customer view As the company began developing new metrics for understanding customer behavior, it also invested in the technologies that would enable the inevitable customer analysis considered by e5ecutives to be a critical ne5t step "he company began building a strategic infrastructure to deliver sophisticated analytics, including a powerful 3un platform and an !$* D$= data warehouse, along with analytical technologies that included 3A3 and its accompanying decision4support and data4mining capabilities "he new business intelligence environment enabled -ddie $auer not only to e5amine customer behavior but also to apply the findings to predict future behaviors through what the company calls its rapid modeling environment "he company now has a complete view of its customers and their shopping behavior and has reached the proverbial retailing brass ring: channel integration -ddie $auer recogni'es a customer regardless of whether she orders from a catalog, in a store, or over the !nternet *oreover, -ddie $auer can segment that customer,s spending to determine her most profitable channel, in turn helping optimi'e customer profitability across all channels 1ot putting too fine a point on it, -gler adds that this gives -ddie $auer the fle5ibility to manage each channel autonomously and still gain an overarching view of total cross4channel profitability 3uch newfound knowledge has crossed the transom from research to tactics *arketing can choose which of the company,s HH catalogs best fit a customer,s profile and likely needs "he company can also analy'e data to determine how freAuently it can and should communicate with its customers Although -ddie $auer bases most of these decisions on the goal of communicating to the customer through the right channel at the right time, there,s also the very real issue of cost BWe can afford to send our most valuable customers a broader assortment of products,C e5plains -gler, referring to the company,s diverse offerings of not only men,s and women,s apparel but an assortment of home soft4good and furnishing products "he company,s ability to score customers based on their propensity to respond to campaigns gives it the intelligence it needs to get customer interaction decisions down to a science

The Challenges&
Despite being ahead of the curve, -ddie $auer is a testament to (2*,s comple5ity With its lofty multichannel and one4to4one goals6goals, the company would point out, that are being achieved6-gler admits they might have been a little too ambitious BWe wanted to get to *ecca right away,C he says +e cites three different (2* tactics: evolutionary, where each step is logical) revolutionary, which involves significant business change) and interdisciplinary, leveraging (2* to a diverse set of decision4makers B-veryone wants to get to ,interdisciplinary, immediately,C -gler e5plains, Bbut there are incremental steps across (2* development We probably tried biting off more than we could chew early on C -ddie $auer has also had its share of business process issues as a result of its (2* strategy, but the resulting changes ultimately contributed to a greater degree of customer4centricity !f he had it to do over again, -gler says he would have made sure organi'ational and business processes were considered earlier in the (2* lifecycle

)ood Ad9ice&
-ddie $auer is intimately aware that the rules of retailing are changing !n these days of hypercompetition, market fragmentation, and !nternet speed, +arry -gler considers a learning relationship with customers to be a cornerstone of the company,s competitive advantage 3uch a relationship begins with the ob#ective of building overall customer value <see Figure 2-9? 0igure 7-A. The learning relationship .Courtes! o" 4ddie Bauer( Inc./

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # $0

%ike the (2* program itself, such a learning relationship is a never4ending #ourney: "he fact that -ddie $auer has replaced disparate customer data and outdated legacy systems with over a terabyte of online customer information6from names and addresses to itemi'ed past purchases to channel preferences6 makes that #ourney a lot easier

The )olden *ugget&

3ince it began practicing the learning relationship model, -ddie $auer has discovered that customers who shop across all three of its channels can spend up to five times more than customers who shop through only one channel "he company can then understand which of its three channels contributes the highest profit for each customer, driving tailored content to its catalogs and more personali'ed offers to its shoppers %ike other (2* best practices, -ddie $auer has institutionali'ed its conviction that (2* is about more than mere technology6it,s about business strategy B(2* has fundamentally changed the way we market,C says +arry -gler, who insists the strongest marketing strategies fuse (2* with the company,s brand As the self4 described custodian for customer focus, -gler credits the mi5 of technology, business process and organi'ational change, and data with helping -ddie $auer get (2* right BWe now reali'e what we don,t know,C says -gler, citing what could be -ddie $auer,s most powerful (2* finding so far

The #anager's Bottom ,ine

Despite the foreseeable payback of (2* in marketing, a recent survey of FJ@ companies with immediate (2* plans in place indicates marketing automation lags behind other (2* initiatives such as customer support [13] Why the slow startM
[13]

B%ots of (ompanies are "hinking About (ustomer 2elationship *anagement, $ut Progress (an $e &ery 3low6(2* 0nder 3crutiny,C Information Week1 3eptember F@, =>>>

*oney, for one thing According to the same survey, J= percent of the large companies responding planned on spending DF million or more on their (2* initiatives 2elationship marketing tactics such as customer segmentation and automated campaign management pay off only if a company is ready to use the results to improve customer interactions And if a company isn,t clear about its business processes, (2* can back fire Differentiating customer treatment based on partial customer data can result in the wrong message to a customer, ultimately doing more harm than no interaction at all 3uccessful marketing tactics use the results from customer interactions to improve future interactions, paving the way for high4impact decisions such as these: 3hifting marketing dollars toward campaigns more likely to generate high responses 0nderstanding the characteristics of high4value customers, finding such characteristics in customers who have a high value %otential1 and changing interactions accordingly !mproving the effectiveness of high4cost channels <such as face4to4face sales? to ma5imi'e their revenue streams

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # $1

!nstitutionali'ing personali'ed communications for specific customer segments 0nderstanding research and purchase patterns and further delineating segmentation criteria to improve future interactions or stimulate one4to4one marketing

"he goal of (2* in marketing is to move (4level customers up to $4level customers and $4level customers up to A4level customers and to motivate A4level customers to stay that way6indeed, to buy more !t is to ensure the optimal type and freAuency of communication, regardless of how BstickyC the Web site, the number of free giveaways, or the cost of the advertising campaign !t is to ensure that the company is the customer,s first choice "o succeed on this distinguished mission, a company,s marketing process must be well defined !t must institutionali'e the practice of customer differentiation !t must act on the information it analy'es *oreover, it must not e5ist in a vacuum, but must support the other business processes that surround it, including the customer support and sales processes described in the ne5t two chapters

Chapter :. CR# and Customer +er9ice +cenario

%ast *ay you subscribed to an online consumer product evaluation service so you could evaluate different brands of dishwashers "he monthly subscription cost was automatically billed to your credit card "rouble is, it,s now 1ovember and you haven,t used the service since, though the DI G@ fee shows up on your monthly credit card bills $ecause you have no plans to evaluate other products, you decide to cancel the subscription 9ou log on to the site and navigate to the (ustomer 3upport screen, which reAuests your username and password 9ou haven,t used the service lately, so you don,t remember your password and you,re not sure whether the username is even right 9ou try a couple of variations but reali'e it,s not going well when your dog,s name doesn,t do the trick Why haven,t they put some sort of BcookieC on your workstation like everyone elseM 9ou #ump to several screens that promise to e5plain how to change or cancel service, only to be greeted by a reAuest for your username and password 1ot even the 7AOs <7reAuently Asked Ouestions? page is accessible without a password 9ou decide to phone the company and reAuest cancellation, but no phone number is displayed on the site "o contact the company via e4mail, the site reAuires your user !D and password "here would be no easy way to cancel the service "he toll4free operator has no listing for the online service 9ou are condemned to online hell And6irony of ironies6it,s with a consumer advocacy company: "he above scenario is a good e5ample of a well4meaning company failing to put itself in its customers, shoes And it,s not the only one (ompanies who trip up on customer service do so at their peril, because they risk alienating the very constituencies they want to attract Despite the (2* fren'y, good customer service is harder to come by than ever before -verybody seems to have a service horror story and, as we discussed in Chapter 1, everybody,s more than happy to share it 1o wonder most companies planning (2* pro#ects begin with the goal of improving customer support !f anything can affect a customer,s e5perience, it,s the service6or lack thereof

The Call Center and Customer Care

%eading (2* vendor 3iebel 3ystems parodies the nightmare of poor customer service in their recent "& spot, in which a concerned operator listens attentively as a frantic customer shrieks about the company,s failure to respond to her problem When the operator politely asks the customer to describe her problem, the customer becomes so hysterical she hangs up, leaving the dismayed operator wondering what has #ust happened 1ot so humorous are the anecdotes scattered across the Web and print media bemoaning the decline in customer service %ast July, the 5ew 8ork Time" asked the Auestion B!s the (ustomer -ver 2ightMC in an article profiling the service nightmares of disconsolate consumers who had dedicated a disproportionate amount of their lives to resolving disputes "he article pointed its editorial finger at corner4cutting companies guilty of hiring unAualified +elp Desk staff, portraying the telephone and Web support infrastructures of several companies as Binfuriating ma'es C[1] !n /ctober, a (or!e" cover article lamenting outrageous wait

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # $2

times in lines and on hold asked readers, B3houldn,t profits and customer service go hand in handM +ow did we get to the point where a company thinks it can improve its prospects by wasting customers, timeMC[2] Withholding its diplomacy that same month, Bu"ine"" Week proclaimed on its cover, BWhy 3ervice 3tinks C
[1]

+afner, .atie, B!s the (ustomer -ver 2ightM 3ervice,s Decline and 7all,C The 5ew 8ork Time"1 July =>, =>>> $arron, .elly, B+urry 0p and Wait,C (or!e"1 /ctober FK, =>>>, p F@E

[2]

"wenty years ago, most consumers complained by writing letters, mailing them, and awaiting a response whose arrival was hit4or4miss "he E>> number sparked a revolution in customer service, offering consumers real4time dispute resolution and the accountability of a company representative 1ow e4business has upped the ante "o its dismay, Dell (omputer recently uncovered the fact that customers who ordered their P(s from the company,s Web site made an average of two and a half calls to the company,s support center [3] <3o much for the Web,s efficiency ? And scathing news reports began citing shoddy customer service as ground 'ero for why online retailers had lost a combined DK F billion in FGGG -4tailers were accused of intentionally omitting contact phone numbers from their Web sites and print ads to avoid costly telephone calls, in effect, forcing customers to interact with a company via its lower4cost Web channel "he fact is that with the !nternet, the call center often represents the customer,s only opportunity to interact with a real human being
[3]

According to /ale" an) Marketing Management, June =>>>

(all centers, increasingly known as contact centers, customer interaction centers, or6somewhat optimistically6customer care centers or even knowledge centers, were around long before customer databases, and friendly service was the hallmark of such companies as the Walt Disney (ompany and 3tate 7arm !nsurance even before the Web made its mark (ompanies have long known that customer support is critical to both keeping e5isting customers and acAuiring new ones What they haven,t always known is how to perform it effectively 0ntil recently, e5ecutives considered their companies, contact centers a necessary cost of doing business and treated them as if they served the sole purpose of weighing down corporate profitability (all center hiring involved merely testing how fast a #ob candidate could type (all center operators had been responding to each call as if it were uniAue, in effect, proving their e5ecutives partially right "he reality is that up to @> percent of call center contacts are duplicates (all center effectiveness was measured by how Auickly the operator could get the customer off the phone When the customer,s call reAuired research, tracking down a product specialist who could work on the problem could take days or even weeks $ecause calls were rarely monitored, some operators took liberties in inventing their own ersat' solutions to turn over as many calls as possible (all center technologies entered the marketplace to effectively alleviate some of the repeat work and increase efficiencies, allowing companies to handle escalating call volumes (all center products offered the creation of trouble tickets for customer complaints and provided tracking of trouble tickets from the seminal call through its resolution (32s <customer service representatives? could look up similar calls and resolutions while a customer was on the phone without having to repeat research Products such as 2emedy and (larify enable companies to run statistics on their calls, categori'ing them by call type, time4to4 resolution, escalation percentages, and average call duration 3uch products also provide forecasting of call volumes to ensure adeAuate call center staffing 3uch vendors legitimately aid their clients in increasing agent productivity and turnover rates, e5pediting training, gauging the effectiveness of solutions offered, and6ideally6shortening problem4resolution times and reducing costs </ne popular ma5im advises that any customer interested in bankrupting a company need merely phone the call center on a regular basis ? *ost companies use statistics from their call center products to track (32 performance, compensating them according to the volume of calls they can support 1otwithstanding consistent improvements in call center software, business processes have still played a larger role than customers do !n Figure 3-1, the customer is not happy "he airline had promised to mail him a ticket, which never came "he (32 is authori'ed to reissue the ticket and log the customer,s complaint %ucky for the customer, the fare hasn,t changed And lucky for the airline, the customer accepts his new ticket +owever, the focus here is not on the customer,s happiness but on the process of ensuring that the complaint is recorded, with the goal of post facto analysis and comparison 3oothing the customer is up to the call center agent6standard operating procedure in most of today,s call centers !ndeed, the customer hasn,t figured into the call center infrastructure at all until very recently

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # $$

0igure :-1. The t!pical call center process

The Contact Center )ets Automated

(ontact centers have evolved Auickly from a group of local workers answering phones during business hours to a dedicated organi'ation providing on4demand global support and sales through several different channels (ompanies are reali'ing increasingly that their customer relationships are only as good as the Auality of their support and are adopting computer telephony integration <("!? features that automate various communication processes

Call Routing
A company,s customer support Bhelp deskC might actually be made up of several6or many6geographically dispersed contact centers "hese contact centers might be segregated based on "he location of the company,s regional offices 3taff e5pertise or product speciali'ation Pro5imity to key research and development <2LD? activities "he location of the firm outsourcing the company,s contact center &arious escalation levels for trouble tickets

$ecause performance remains the central metric of contact center success, minimi'ing the time a customer waits on hold for a (32 stays a top priority "he concept of Bfollow the sunC customer care emerged, meaning call centers were either geographically placed or open around the clock to accommodate customers in different time 'ones (all centers have become like all4night convenience stores: they offer a range of services and are open =H hours "o further minimi'e customer wait times, Bload balancingC <the ability of the network to automatically route a customer,s call to the first available operator? is a critical operational ob#ective 1etwork routers monitor operator availability while keeping track of the incoming calls in the Aueue, using switch technology to allocate calls appropriately "his automatic call distribution not only reduces the time a customer stays on hold by efficiently routing calls to available agents, but it can also apply intelligence about the customer to its decision about where to route a call 7or instance, by using caller identification, a call center system can route a call from a multicultural city such as %os Angeles to a bilingual (32 /f course, companies were routing incoming calls long before ("! technologies automated the process +owever, in these cases, it was freAuently the customer who had to navigate the often comple5 alleyways of a company,s organi'ation *any companies6most notably the airlines6still routinely provide their best customers with a separate E>> number that guarantees they,ll reach specially trained service agents

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # $%

*ore sophisticated automatic call distribution, also known as precision call distribution, facilitates calls to be routed to agents who have access to specific information or with particular areas of e5pertise !t can delineate a company,s valuable customers by mapping the incoming phone number to the customer profile, thus prioriti'ing customer calls to favor repeat customers or routing customers to specialty agents who are instructed in ways to differentiate treatment based on the customer,s assigned segment 3aks 7ifth Avenue,s parent company 3aks !ncorporated bases its call routing on (32 skill sets, ensuring that customer support staffers receive calls on the sub#ects they know well 3aks ensures that its high4value customers6 those who spend over D=>>> annually6reach an operator in one second or less !nteractive voice response <!&2? systems provide round4the4clock routing based on a customer,s response to Auestions typed on her telephone keypad "he now4pervasive instructions <BPress F if you would like your account balance) Press = if you are responding to our ad) Press IPC? delay contact with a human being, allowing (32s to dispense with Aualifying a caller before helping her Automated speech recognition features can offer customers even more options by allowing callers to communicate their troubles without having to navigate an often4cumbersome, multilayered phone menu 3peech recognition technologies deconstruct the words in a sentence string to provide a call center with more choices offered through the digits and ByesTnoC options available from a numeric keypad 7or instance, 0nited Airlines has adopted speech recognition technology to support higher call volumes from customers inAuiring about flight availability, improving throughput for these freAuent calls while easing the burden for reservations agents ("! features such as !&2 and call routing, although considered technical, can nevertheless play a key role in an overall (2* strategy Providing multimodal access to customers is great, but understanding which mode a customer prefers is even better BA fundamental flaw is that companies apply speech recognition everywhere, instead of where it will provide the most value,C says John -arle, president of (hant, a leading provider of speech technology development tools and services -arle stresses the importance of knowing a customer,s preferred mode of interaction, be it via a telephone operator, e4mail, fa5, or handheld device B!n theory, a customer should be able to customi'e his own interface: *aybe he prefers voice response when using his cell phone on the freeway because of bad reception or because his hands are on the wheel At such times he prefers saying ,one, to pressing ,F,6and that preference should be part of his customer profile C -arle adds that such automated services haven,t reached their full potential because they,re being implemented to emulate humans rather than to drive further efficiencies

Contact Center +ales +upport

9our customer has #ust purchased a diamond solitaire necklace and would like to know if there are matching earrings 3uch an interaction could be #ust another customer inAuiry or an opportunity to generate additional revenue With the right information6often displayed via a little window called a Bscreen popC on the customer service rep,s workstation6a rep can gauge an incoming call to determine whether the customer on the other end of the phone line is a good candidate for another product or service "he call center as a point4of4sale is a relatively new practice that reAuires a combination of robust customer data and (32 finesse, because the (32 needs to transcend his traditional role of answering Auestions, landing smack in the middle of revenue generation "his type of sales support not only saves the company money by preempting an in4person sales visit, but it can also provide more information to the customer than a direct sales call6after all, the (32 has product information at his fingertips6and can even push through an in4progress sales activity 9ou have probably been at the receiving end of such an effort yourself +ow often have you heard one of the followingM B"hat,s a great pair of shoes Would you like a belt to matchMC B3orry you,re having problems sending e4mail, *s 3mith 7or only DHG G@ per month, we can get you D3% and it,s always on Plus, this month we,re offering free installation !nterestedMC BWhile !,m confirming your trade, *r 2ankell, can ! tell you about our new precious metals sector fundMC /r seen during your Web visit: (lick here to learn more about today,s savings4of4the4day:

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # $&

!f you,d like someone to contact you about converting from the individual to the family plan, enter the information in the bo5es provided, as well as your preferred contact method, and someone will be in touch shortly "he (32 or Web site acting as ad#unct salesperson frees up the bona fide sales staff to concentrate on opportunities more likely to be won based on face4to4face interaction <2emember BinfographicsC in Chapter 2M? "he idea is to use (32s to focus on the e5isting customer base6where they already have e5perience 6and free up more sales time for prospects -ven if a customer chooses not to respond to a contact4center cross4sell or Web promotion offer, the simple act of mentioning a complementary product or service is a way to provide product information to customers who might not have otherwise known about it, thereby establishing Bmind share C 3ometime in the future, the customer might decide she needs a new pair of bindings to go with those brand new skis, and she,s likely to call the company that initially suggested a complementary brand "o optimi'e the customer,s e5perience with call center sales support, companies must have the right information about a customer 3imply suggesting the latest commodity product over the telephone or aggressively pitching a new service while the customer is complaining can actually backfire more often than not !t is for this reason that (32s must be well trained on when to engage a customer in a cross4selling dialog and when to refrain entirely

5eb-based +el"-+er9ice
(ustomers are both refreshed and annoyed by company Web sites re4intermediating the support process After all, the shortest distance between two points is a straight line6shouldn,t you be able to talk to a human being when you wantM "he previously mentioned redundancy of calls to customer support centers has initiated the automation of customer support processes, not only increasing support efficiencies but also allowing customers a greater degree of access to important information via the Web, any time of day, for a variety of Auestions 7or instance, sites such as 7ed-5 com allow customers to track recently called the 7ed-5 support center to track a package "he seconds $y comparison, the 7ed-5 Web site took FJ seconds improvement by the number of people every day who want to know to see why 7ed-5 automated their package tracking their shipments "esting this theory, ! time from initial call to answer was GI from the time of access *ultiply the where their packages are, and it,s easy

$ut customer self4service has as much to do with obtaining general information as it does with tracking specific orders *ost Web sites have made 7AOs67reAuently Asked Ouestions6a site staple 7AOs answer Auestions such as these: Where is the company headAuarteredM +ow do ! return an itemM !,ve moved6how do ! update my profileM +ow do ! review my accountM +ow do ! change my passwordM ! have a Auestion about my bill) what do ! doM

"he more choices customers have in how they can deal with the company, the more likely they will be satisfied with that company,s service "his can mean something as simple as a company e4mail address provided on the Web site so customers can provide the company with details on a Auestion or problem !t can also mean the inclusion of a B(all meC button that allows the customer to reAuest an in4person conversation with a company representative, on the company,s nickel !ndeed, many companies have taken person4to4person electronic support[4] one better by offering customers the ability to chat online with a customer care representative %ands, -nd is famous for this !ts %ands, -nd %iveU service offers customers the capability to ask Auestions of a company rep either by telephone6a %ands, -nd agent will call the customer after she enters her phone number6or by live te5t chat6the customer can engage in an e4mail dialog with a representative <%ands, -nd reps have even been known to ask whether your child has grown a si'e since you ordered those overalls last *arch ?
[4]

!n Chapter 1 we introduced the term Be(2*,C usually meaning the capability to contact a customer service rep through the Web6by e4mail, live chat, or high4speed Web telephone line

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # $'

(2* application services provider "ouch3cape customi'es self4service screens for its customers "he 7AO screen in Figure 3-2 not only displays the most freAuently asked Auestions) it also categori'es the top five most freAuent Auestions so visitors can more easily scan Auestions similar to their own 0igure :-7. 0re-uentl! Asked Buestions

B%ive person chatC features bring customer support to real time) customers with a single phone line need not log off the Web site to call an E>> number %ikewise, (32s staffing live chats can service more than one customer simultaneously %ive chat helps ensure that the customer stays on the site and takes his online shopping cart through checkout rather than abandoning it "his increases the likelihood not only of sales, and thus revenues, but of customer satisfaction as well /f course, breakthrough technological capabilities alone won,t ensure stellar customer service 3tudies show many companies still can,t handle the volumes of phone calls they receive A 3outhwest Airlines spokesperson told The Dalla" Morning 5ew" the company would not move toward e4mail support until it could guarantee the same level of service it could provide to its telephone customers <(ustomers calling the airline,s (ustomer 3ervice Department rarely wait more than K> seconds before speaking to a human being, and the company,s Web site is e5emplary for its ease of use ? /ther companies, such as $altimore,s All 7irst $ank, only allow customers in top segments to use live chat features on their Web sites !ndeed, with limited human resources a fact of life for most call centers, companies are constantly evaluating new ways to mitigate customers, need for human contact A recent survey showed that @K percent of all financial services companies either failed to respond to customer e4mails in a timely fashion or never responded at all [5] <"he moral: Don,t introduce new products and features until you,re serious about supporting them ? %ike their telephone counterparts, online customer service reps must have e5cellent communication skills and must be good at multitasking to do the #ob well
[5]

3tudy done by (elent (ommunications, reported by Bri)ge 5ew", August =H, =>>>

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # $(

Customer +atis"action #easurement

"he days of the independent survey company calling you at dinnertime and asking you to Banswer a few Auestions about your recent purchaseC with its client company are mercifully coming to an end Although the demise of customer surveys has been greatly e5aggerated, companies are using more innovative ways to gather information about customers, impressions and leveraging the findings to improve service 3urvey mailings endure as the principal way for companies to monitor customer satisfaction !n the old days, a company or e5ternal survey firm mailed the customer a Auestionnaire which, when remitted, was analy'ed and its responses compared to gauge overall customer opinion !n the past, such surveys have been innocuous and geared toward a general audience *ost often they would solicit information about whether the company representative was friendly and whether the customer would remain loyal "hese days such survey forms not only monitor customer satisfaction, but detailed Auestions are often personali'ed to specific customers or customer segments 2esponses are input into customer databases and included as part of individual customer profiles 3uch tracking of customer satisfaction over time enables a company to fine4tune how it communicates with its customers according to their preferences (ompanies who have detailed customer databases can also map survey responses to customer value, thus prioriti'ing reAuested product improvements based on the customer segments they will affect $ut with the advent of e4business, paper4based surveys are ceding ground to electronic customer communications With increasing freAuency, visitors e5iting a Web site are being greeted with pop4up screens inAuiring about their e5perience on the site 3ome companies design online surveys to solicit customer feedback that can directly affect how a company improves its customer communications 3uch surveys are designed, distributed, and analy'ed to discover What will make customers return to a company,s Web site +ow customers found the site Why customers did or didn,t make a purchase during the visit Why customers did or didn,t register on the site Which features the customers found particularly useful onsite +ow the customers, impressions about the company or the brand was affected by this visit +ow customers would rate the site in comparison to the Web sites of the company,s competitors

3uch electronic surveys are becoming increasingly sophisticated, serving as the technical eAuivalent of the focus group, albeit with more science and sans the overhead (ompanies can randomi'e their surveys and achieve detailed response reports *any companies who might have developed their own Web sites and the accompanying infrastructures have nevertheless chosen to outsource their customer surveys to firms that speciali'e in designing custom Auestionnaires, tallying responses, and mapping survey results to the client company,s overall strategic goals

Call-+cripting
As customer contact centers become more automated, the infrastructure improves (ustomer databases become richer, and customer behavior and preferences can actually be predicted by comparing them to the behaviors of similar customers over time $ecause of this increased customer intelligence, the capability to provide (32s with situational scripts is emerging as a must4have for many contact centers 3uch scripts eliminate agent guesswork by providing the (32 with a logical series of talking points and guiding her through a dialog with the customer based on such factors as "he reason for the contact "he customer,s value (ross4selling opportunities and propensity4to4buy data (urrent product promotions or discounts Past4due bills or accounts payable issues

3ome products actually provide natural language support, meaning the agent can enter a sentence or phrase <B(ustomer needs laundry instructions for flannel sheetsC? and be supplied with the appropriate response <B(old water, tumble dry on lowC? /thers feature logging of transcripts, allowing a company to

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # $)

retain a running te5t log of each customer,s chat 3aving such information allows call center reps to e4mail transcripts of customer conversations to sub#ect matter e5perts or even call up past chats in real time while the customer is online -ven vendors of (2* products designed to support scripting admit there,s no such thing as a BcannedC response, and their software can,t possibly make up for a (32 with deep product knowledge and a good disposition +owever, scripting helps a company,s contact center present a uniform image of the company by ensuring that the company responds in a consistent way to common problems so two different customers don,t get two different answers "he flip side to this, of course, is that your high4value customers might deserve different answers than the customer population at large (onsider the illustration from Figure 3-1 as revised in Figure 3-3 to accommodate a high4value customer 0igure :-:. Adding customer intelligence to customer support

!n this e5ample, the angry customer,s profile is maintained on a (2* server or, more likely, on an enterprise data warehouse that contains a superset of information about that customer, not simply his calls to the contact center 3uch a database might include information about the marketing promotions the customer has received, his travel history, how he books his tickets, his seating and meal preferences, and his use of partner products and services !n this case, the customer,s profile indicates most of his ticket purchases are B9C fares, he has flown over K> segments in the past seven months, and he belongs in the top I percent of the airline,s freAuent fliers "his information in turn dictates a script that guides the (32 in offering the customer a free upgrade along with his overdue tickets "he customer is more likely to remain loyal and consider the airline,s error an anomaly rather than a reason to churn "he ability to differentiate treatment of different customers based on their value is not only the +oly 8rail for contact centers) it is the cru5 of (2*

C!beragents
3ome (2* vendors are taking the concept of self4service one better by introducing cyberagents, lifelike BrepresentativesC normally depicted on a company,s Web site as a real person6(omp03A,s BJillC being one of the archetypes (yberagents attempt to pull together the best of both personali'ation and advanced technology /n the one hand, the cyberagent is given a personality6complete with voice and facial e5pressions6often

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # $*

communicating with the Web visitor by her first name /n the other hand, the cyberagent can draw from a wealth of detailed information to answer basic 7AOs as well as guide a customer to the appropriate screen for making a purchase or checking an order Although still relegated to rudimentary customer support functions, the vision for the cyberagent is to go from providing information to actually making decisions based on a combination of the customer,s reAuest, heterogeneous and detailed information about the customer, and comple5 rules4based logic to guide the cyberagent in making recommendations "he anthropomorphic Aualities of a particularly effective cyberagent could one day further retention and loyalty initiatives by providing the customer with a personal company representative all his own 0ntil then, cyberagents are emerging as a viable means of providing basic customer support

5ork"orce #anagement
3taffing the contact center has traditionally been a matter of determining who can work when "he contact center with three people dedicated to the "op F>> customers, si5 more covering the ne5t tier of @>>, and so on, is bound to fall short of customers, e5pectations, not to mention employees, !t,s great that the best customers are getting better service, but is it good enoughM Workforce management tools speciali'e in staff planning and optimi'ation, and several products are specific to contact center staffing /ptimi'ing staff around high call volumes, different communication channels, and customer types is the surest means of guaranteeing that the right customers receive the appropriate levels of support 3uch products can combine operational contact center tasks, such as call routing, with planning functions including Ability to forecast contact volumes to predict busy periods 2ecommendations for the optimal number of (32s for certain peak periods

Performance tracking by customer value, customer satisfaction, priority level, or other metrics -mployee scheduling based on skills, tenure, or preferred work hours 8lobal monitoring of multiple contact centers, with the ability to combine findings into single reports for staff or performance fine4tuning

With staffing issues claiming up to J> percent of a contact center,s operating budget, the ability to track performance against customer satisfaction levels and fine4tune staffing choices accordingly is the goal of

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # %0

customer support e5ecutives worldwide, many of whom are now being compensated based on such measurements !ndeed, increasing customer satisfaction should be the overarching goal of every contact center employee

A Customer +er9ice Checklist "or +uccess

World4class customer service is more than a practice) it,s a series of corporate policies that should be defined, refined, and repeated across the organi'ation As the following scenario illustrates, listening to the customer is more important than ever

+cenario
!t,s 7riday morning and you,re at home waiting for the D3% rep to install a third line, so you,re teleconferencing into your biweekly staff meeting -ach of the eleven team members gives a brief status about his or her department Just as you,re about to report on profitability for OH, your second phone line rings "hinking it,s the D3% rep6finally you can nail down a time:6you beg forgiveness, put your waiting teammates on hold, press line =, and hear a friendly voice B+i there::: !t,s (olleen:C says the voice (olleen is warm and enthusiastic, and it takes you a minute to reali'e you don,t know a (olleen $y this time, (olleen is gushing about the fantastic prices on gemstone #ewelry that will be featured this weekend on home shopping television 9ou hang up and return to your meeting BWho was thatMC an indiscreet staff member asks B(olleen,C you say in spite of yourself, unknowingly raising more Auestions than you,ve answered When the conference call wraps up, you call the home shopping channel and reAuest to have your phone number removed from their automatic telemarketing list "he operator is pleasant and helpful and promises he,ll remove your name from the mailing list +e reAuests your e4mail address, and you decline 9ou,re cleaning up your life, getting rid of unsolicited marketing messages from companies you don,t care about 9our call to the home shopping company eliminated one more unwanted phone call 9ou hang up, feeling you,ve accomplished something A few hours later, the D3% rep calls +e,ll be showing up atP "he second line rings 9ou interrupt the D3% rep and take the call !t,s (olleen again 3he,s perky as ever, this time flogging an upcoming kitchen appliance show, and you now hate her guts !t,s no surprise that, in spite of revolutionary advances in call center software functionality, established industry best practices have nevertheless failed to promote the infrastructure necessary to support evolving customer needs !ndeed, according to one recent survey, not even technology companies are immune: *any dot4coms also actively avoid the considerable investment necessary to build an adeAuate customer service center to answer phones and e4mails from disgruntled customers [6]
[6]

/lsen, 3tefanie, B(ustomer Disservice: -4tailers Dodge (alls to (ut (osts,C (1-"1ews com, 3eptember FH, =>>> <www !"et"ew# !$%?

3o what can your company do to ensure your call centers are able to respond to customers in the optimal way, recogni'ing who they are and providing a consistent level of serviceM 7ollowing is a checklist for customer support success: hoo"e &our technologie" carefull&* 0nderstand your business needs before you invest in an e5pensive and comple5 call center system and all its e5tensions 7or instance, if your company,s Web site isn,t tied to inventory yet, it makes no sense to offer customers Web4based self4service and risk unmet e5pectations %ikewise, if your company,s most valuable customers land in voice4 mail hell at every contact attempt, something,s wrong +ave the call center evolve with the business, which might mean a building4block approach to implementing your call center infrastructure Just be sure your call center technology is a step or two ahead of your business, evolution so there are no awkward surprises 'rovi)e /R" with ever&thing the& nee) to know a!out cu"tomer"* Although this metric implies the integrated customer data from a variety of contact points <see Chapter 6 for more on this?, it also mandates that a company be aware of what various call centers might reAuire so they can provide the best service 7or instance, if past4due customers are routed to a collections operator, that

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # %1

operator should have easy access to the customer,s payment history, including the date and amount of the most recent payment %ikewise, if a company e5pects its call center (32s to cross4 sell products while customers are on the phone, agents should see a prominent product recommendation displayed on their screens E"ta!li"h %roce""e" for call center "taff* 8iven the fast4paced increase in service e5pectations, companies can,t afford to let (32s e5periment with customers Providing two different customers with two different answers to the same Auestion should be a studied practice based on data analysis of those customers and their differences, not on a (32,s best guess +ave escalation procedures in place for cases when a (32 needs additional information to answer a customer,s Auestion And have a process in place with which the (32 can get back to the waiting customer with that answer Agree on "ucce"" metric"* *any companies use (2* to provide call center agents with easier data access, the goal being increased call efficiency +owever, ! know a large automaker with two different sets of success criteria 7or its traditional car brand, (32s are compensated for keeping phone calls brief and directing customers to information on the Web or to their local dealer 7or lu5ury car models, (32s are actually encourage) to "ta& on the %hone with the customer for however long the call takes !t,s not surprising that in the former case the average call duration is H minutes but in the latter case the typical call lasts =@ minutes 1or is it a shocker to learn that customer satisfaction among drivers of the high4end brand is significantly higher (ompanies should be clear about their metrics for customer support interactions, and policies should be established to address acceptable time on hold, optimal call lengths, desired call outcomes, customer follow4up procedures, and information provision 9n)er"tan) the i""ue of "ervice recover&* /nce in a while, a customer on the brink of churning gives a company one last try, usually through the contact center 3ervice recovery means the company must do what it can to make things right with that customer, whether he,s having a service problem or #ust having a bad day (ontact center staff must be able to identify these service recovery opportunities and understand the procedures necessary to win over those customers !deally, this involves the ability to e5amine customer value information so the (32 knows #ust how far to go to retain a customer who,s at risk "he fact is, sometimes fi5ing a problem does more to cement a customer relationship than never having goofed up in the first place En"ure that &our contact center re%" are %ro%erl& traine)* What was once a routine telephone call for your (32 is now a series of often4comple5 computer screens and data drill4down "echnology is allowing customer support staff to communicate with multiple customers simultaneously and availing more information about those customers *ake sure your (32s are comfortable with the tools the company is asking them to use, as well as knowledgeable about the products it offers <"he (ontainer 3tore provides =I@ hours of training to its (32s, and was6not coincidentally6voted one of 7ortune,s BF>> $est (ompanies to Work 7or C[7] ? Also ensure that employees are given incentives, financial or otherwise, to provide customers with consistently e5cellent service
[7]

According to 4 to 4 Direct, JanuaryT7ebruary, =>>F

/taff the contact center at a%%ro%riate level"* Web shoppers reAuesting live customer support routinely receive messages that say something like this: B"here are currently no agents available to assist you (lick on the Auestion mark below to send us an e4mail C !f your company is going through the e5pense of providing multichannel customer support, it should be willing to optimi'e support resources for individual channels 0se e5isting call center software to monitor and track call volumes according to time of day and channel and then plan staff accordingly 7or more comple5 environments, find a workforce management tool that can help you take the guesswork out of staffing your call centers /hare ke& learning"* After all, customers don,t call the marketing department when they need help 3haring contact center activity reports with other areas of the company can aid the company not only in better understanding its customer base, but in improving its products as well 7orward4 thinking companies with centrali'ed customer data actually enter important facts learned from customer interactions into those customers, profiles, ren dering the information available to the company at large When the right processes are in place, redundant trouble tickets and freAuently logged complaints can make their way into 2LD, resulting in product improvements and differentiation6Bclosing the loopC on high4profile problems Im%rove /R com%en"ation* After all, how much can someone earning a low hourly wage realistically care about an unhappy customer, particularly if she,s #ust been trained to cross4sell products and survey customers in addition to solving their problemsM (ustomer service is stressful, rarely rewarding, and e5tremely visible $alance (32 compensation with realistic business

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # %2

development opportunities !f the company wants its contact center reps to go the e5tra mile, so should the company :a"t !ut not lea"t1 if &our com%an& ha"n;t alrea)& )etermine) it" cor%orate %er"onalit&1 it;" time* !f you,re a securities company, you,ll probably want to encourage your contact center agents to be professional and courteous $ut if you,re selling video games, you might consider being a bit more casual "here are countless moves afoot by corporations seeking to Bhumani'eC their call centers, and the payoff matters ! once placed an order with a delightfully irreverent (32 at "he Pottery $arn,s baby catalog 1ot only was he funny, he complimented my choice of crib sheets <B8ood going:C? and ended with the great line, B1ow, !,ll #ust read you back your order, Jill, and then we,ll part friends C $ut he6and, by e5tension, "he Pottery $arn6had me at Bhello C

Case +tud!& Cuniper Bank

3ummary: !t,s one thing to take an e5isting enterprise from a product focus to a customer focus !t,s another thing to start a brand new company around an entire customer4focused culture Juniper $ank,s employees don,t concentrate on how to deliver customer relationship management 6they #ust go about their everyday customer4centric business Walk into the main offices of Juniper $ank and the first thing you notice is the posters "he artwork decorating the walls of the company,s headAuarters in Wilmington, Delaware, doesn,t depict the reAuisite sunsets or the abstract brushstrokes of local artists %ike the company it adorns, the artwork focuses on customers, posters in hallways and break rooms instilling such messages as B.eeping the (ustomer 7irst:C and B!mproving the (ustomer -5perience C !t,s a testimonial not only to the company,s culture of customer commitment but to the very tenets on which the company was founded

5hat The! 'id&

2ichard &ague has always been known as an industry thought leader &ague was the former (hairman and (hief -5ecutive /fficer of 7irst 03A, the market leader in affinity credit cards that was purchased by $ank /ne in FGGG !n co4founding Juniper $ank, &ague envisioned combining an online bank with a mission to simplify consumer banking and provide stellar service !ndeed, the company,s flagship product is its futuristic transparent credit card, a product its founder declares is the best vehicle for obtaining rich customer information &ague has described his vision for Juniper as being Bgenuinely fair to consumers, easy to access, and simple to use C All this even before the company had opened its virtual doors 1ow that it has6Juniper $ank was launched in /ctober =>>>6it faces the same customer service challenges faced by most online businesses $ut building a company from scratch presents some uniAue opportunities, as 2egina Wallace, Juniper,s Director of (ustomer 3ervice and /perations, can testify Wallace, who before #oining Juniper was instrumental in constructing the !nternet bank at Wells 7argo, is responsible for Juniper,s entire service culture, from establishing the company,s call center to directing the selection of its support technology infrastructure After #oining Juniper in June =>>>, Wallace made crafting customer4focused business processes one of her first priorities B1ot many companies can establish the ideal business processes before they,re deployed,C says Wallace, who acknowledges that such work is much more difficult to accomplish after a bank is already in business Wallace and her team designed business rules and processes from the customer,s viewpoint "he organi'ation then automated them for customer service reps6known as relationship managers, or B2*sC6through a high4touch, integrated customer desktop "he word BintegrationC was key for Wallace After all, unlike typical financial service call center reps, Juniper,s 2*s are trained on all Juniper products, from the core credit card to electronic billing and payment to the company,s new wireless banking service *oreover, an 2* is reAuired to know how to communicate with a customer regardless of whether the preferred channel was the telephone, !nternet chat, or e4mail !n fact, E@ percent of calls to Juniper customer support can be handled by a single 2*, resulting in faster turnaround and more satisfied customers !n addition, Juniper,s preliminary customer behavior analysis indicates that the typical customer contacts the company three to four times a year BWe don,t have branches,C Wallace e5plains, Bso we have very few opportunities to actually leave an impression on our customers C Wallace made the decision not to outsource Juniper,s call center for the same reason BWe definitely feel that our competitive advantage is to have our service in4house "here,s a lot of customer intelligence that originates in (ustomer 3ervice C "aking the service culture one step further, Wallace empowers her 2*s to resolve issues in what they believe is the optimal way for each individual customer, embracing the practice of one4to4one dialog 7or

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # %$

instance, an 2* can decide to waive a service fee in an e5tenuating circumstance for a valuable customer !n addition to maintaining an online database that provides 2*s with customer profiles, the company tracks service outcome statistics to determine whether 2*s are making the best decisions possible

The Challenges&
"he lu5ury of being able to build a company,s support infrastructure from scratch is also its difficulty "rue, Juniper has no neighborhood branches with lines of impatient customers spilling out the door 1or is there an easy way for Juniper to provide its customers with an intimate human e5perience "here are no unwieldy legacy systems to grapple with, but that means little established data to direct the best decisions BWe were always tempted to revert to our past e5perience,C Wallace reflects, Band sometimes we had to guess $ut our products are different, and so are our customers C All things being eAual, Wallace estimates Juniper is between F= and FE months ahead of the industry curve simply because she didn,t have to undo e5isting business processes to establish effective ones 3he plans on tackling the organi'ational issues ne5t: BWe,re moving toward organi'ing more around the customer so that we can continue to evolve our customer focus C

)ood Ad9ice&
Wallace also credits her success to the tight relationship between customer support and marketing "he classically tense relationship often sees service reps accusing marketing of being unrealistic about its promotions, and marketing accusing customer service of being unresponsive and foiling its campaigns 1ot so at Juniper, where product managers in marketing can regularly monitor how their campaigns affect inbound customer contacts, and 2*s can openly provide feedback to marketing about campaign improvements "he two organi'ations meet regularly and maintain a weekly performance scorecard "he organi'ational missions of both Juniper,s (ustomer 3upport department and its *arketing department are centered on the customer e5perience As Juniper understands more about its customers, behaviors and preferences, 2*s can influence them 7or instance, if a customer purchases a Juniper credit card through a direct4mail promotion, an 2* would highlight the benefits of !nternet banking in his welcome call to that customer, potentially steering her toward a more profitable channel and evolving her toward online bill payment !ndeed, when Juniper communicates with a customer on his palmtop, reminding him that his telephone bill is due and offering to pay it for him, the line between marketing and service becomes refreshingly blurred

The )olden *ugget&

3ince its launch, Juniper $ank has begun receiving unsolicited customer feedback B! can,t tell you how many times in the past four months that our customer contacts have resulted in a ,wow, response,C says Wallace "he resulting word4of4mouth has been rewarding for both Wallace and Juniper "he company recently received the 1umber F spot in 8ome' Advisors, !nternet (redit (ard 3corecard for providing Baccurate and timely responses via phone and e4mail C American $anker reported a 3peer L Associates !nternet survey that rated Juniper Bthe best financial Web site, beating out American -5press (orp and (itigroup !nc C 1ot bad for a company so customer focused it doesn,t need a formal (2* program B(2* is more of an assumption,C e5plains 2egina Wallace BWe don,t really talk about it) it,s a behavior we,re trying to instill into our culture 9ou know, ,Are we pleasing the customer from the customer,s viewpointM,C Judging from the industry praise and hearty consumer response, the answer is an absolute 9es

The #anager's Bottom ,ine

(ustomer service is a set of business processes aided by new technologies but fundamentally practiced by human beings 1otwithstanding all the new (2* tools on the market that support call centers, companies can retain their customers by simply giving them an unforgettable service e5perience *y friend Drew, a professor of psychology who personifies the term Beven4keeled,C flushes noticeably when telling the story of returning a faulty automatic tie rack to a high4end gadget store, only to be told he was merely eligible for store credit +is voice hardens as he relates the failure of the second tie rack +e gets positively irate when he gets to the part about the cashier not accepting the second return, this time for a refund When he finishes the story6he and his wife finally located a district manager who grudgingly agreed

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # %%

to the return Bdespite company policyC6Drew looks utterly defeated !n more ways than one, Drew has churned !n their book Emotional +alue$ reating /trong Bon)" with 8our u"tomer", authors Janelle $arlow and Dianna *aul contend that people are driven by their emotions, thus companies can do a better #ob at retaining and satisfying customers by using this knowledge when providing customer service "he authors e5plain companies should develop an emotional bond with their customers, one that transcends products or pricing <"he company ! work for, for instance, advertises the charities it funds annually in its proposals and on its Web site ? (ustomer service strategies, they argue, should be receptive to emotion and involve not only efficiency but also friendliness and empathy, two terms that play a larger role in (2* than they,re given credit for and that even the most cutting4edge (2* technologies will never provide

Chapter ;. +ales 0orce Automation

(2*,s metamorphosis from a focused application into an enterprise4wide business initiative has everything to do with its beginnings in sales force automation <37A?, so why not discuss 37A up frontM $ecause in many ways, the various customer4focused pro#ects in marketing and customer support act as input into an 37A pro#ect After all, a company that can collect and understand customer touchpoints from its marketing and contact center organi'ations can feed this new knowledge to its sales group, fostering relationship and revenue improvements 37A products were originally meant to improve sales force productivity and encourage salespeople to document and communicate their field activities +owever, sales force automation products are becoming increasingly focused on cultivating customer relationships and improving customer satisfaction, as the following two scenarios illustrate

+cenario *umber 2ne

9ou,re on your way to a meeting with one of your best customers 3hoot, Jim,s not only one of your best customers6he,s one of the com%an&;" best "his guy and his firm account for = percent of this year,s revenues +opefully, after this meeting it,ll be I percent 9ou arrive at the customer,s building early6you,re always a few minutes early6show your badge, and take the elevator to Jim,s office Jim is talking with a member of his staff, but when he sees you he dismisses his employee and motions to you to sit down 8ood old Jim Always has time to hear a pitch and place an order $ut Jim isn,t placing an order today !n fact, he might never place another one As he e5plains it to you, his entire firm has been at a standstill for the past HE hours because of !our product Dour product is still on the frit', and Jim and his people have been on the phone to !our customer support center for the past day and a half 9our face betrays your surprise B1o one told me about it, Jim,C you stammer as you strive to recall any voice4mail messages you might have prematurely erased Jim stands up from behind his desk, a wordless acknowledgement that he,s far too busy to hear about !our communication breakdown After all, he,s got a big one all his own to worry about As you stride across the hot parking lot, you begin thinking about how to make up for the = percent in revenue you and your company are about to lose

+cenario *umber Two

9ou,re on your way to a meeting with one of your best customers "ruth be told, Jim,s your very best customer "his guy and his firm account for = percent of your company,s revenues this year +opefully, after this meeting it,ll be H percent -n route to the customer,s site, you turn on your PDA computer, which begins beeping "he screen display reads: Priority " alert# Customer impacted# 9ou pull to the side of the road and press the Down Arrow key to read more According to the message, the customer you,re about to see has #ust e5perienced a ma#or outage A field service rep has been contacted and is now working on the problem "en minutes later you park your car at the customer,s building 9ou,re early, so instead of going upstairs to see Jim, you walk to the back of the building and find your service rep busily repairing eAuipment

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # %&

B$een here since yesterday,C he answers your unspoken Auestion B$roken part #ust showed up,C he smiles, patting the wireless PDA device hanging from a belt loop +e was able to order the part remotely and have it dispatched by courier "he device is currently displaying instructions that guide him through installation of the part B,3pect !,ll have it working in I> minutes or so C 2elieved, you take the stairs to Jim,s office +e asks you to wait for five minutes, during which time you power up your laptop and refresh your memory about Jim,s current product model and installation date Jim appears in the doorway and motions you in Preemptively, you begin: B! know all about it, Jim We should have everything working again within the hour C Jim looks at you and smiles B! knew you would,C he says BWe might #ust be overloading the system We,ll probably need an upgrade +ow soon can we put that togetherMC 7orty4five minutes later, you leave Jim,s office and head downstairs to confirm with your field rep that service has been restored As you e5it the building and walk across the parking lot, you reali'e you,re leaving behind a relieved customer6and, in the bargain, increasing his revenue contribution to H percent 1ot to put too fine a point on this e5ample, but guess which company is using (2* for sales force automationM

+ales 0orce Automation& The Cradle o" CR#

"he timeline goes something like this: !n the early FGG>s, a handful of software vendors reali'ed that companies6specifically those with field sales forces6needed help "he more business they closed, the more information they had to keep track of about their customers *eanwhile, salespeople had various means of recording this customer information and communicating critical account news back to the home office And those who left simply took their little black books along with them, forcing the company to locate and re4collect customer data, starting at ground 'ero %ikewise, salespeople needed better tools to help them manage their accounts, track opportunities, establish and monitor the sales pipeline, and organi'e their contact lists After all, the alternative involved a lot of manual effort for both the sales reps and their home office counterparts *ultiply the scenario in Figure 4-1 by the number of sales reps working for the company and you have an infrastructure nightmare on your hands 0igure ;-1. Be"ore sales "orce automation

*oreover, the scenario assumes that headAuarters possesses the necessary information and can communicate it Auickly6many didn,t and still can,t "he promise of sales force automation was in putting account information directly in the hands of field sales staff, making them responsible for it, and ultimately rendering them <and the rest of the company? more productive 37A likewise helped managers in both the front and back offices who, lacking timely sales forecasts, struggled to keep up with demand /rgani'ations needed a way to be sure that up4to4date sales data, including sales forecasts, could be communicated across the organi'ation from the manufacturing floor through to company e5ecutives *anagement considered the potential for sales force automation to increase productivity and provide consistent information as nothing short of a competitive weapon 3alespeople took a little more time to warm up to the idea "o be fair, some are still warming up 3ure, they could now keep track of product inventories, customers, names and addresses, org charts, and marketing

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # %'

plans And they now had slick new laptops, which they could use to dial in to headAuarters to synchroni'e their information with the corporate clientTserver database $ut salespeople need to be convinced of the value of 37A, which means having an acceptable answer to the Auestion, BWhat,s in it for meMC +ere,s how a salesman ! know describes his e5perience using an early 37A: 1o argument that it was more information than ! ever had before And ! loved that first laptop $ut ! was spending a lot of time downloading ! mean, how could ! be sure of current pricing plans or product updatesM ! had to have the latest and greatest information about my customer contacts or product release dates !efore ! walked through my customer,s door Plus, the application wasn,t really intuitive 3ometimes6okay, often6!,d #ust pick up the phone and call someone ! knew at the office who could answer my Auestion A lot of guys ! was working with didn,t even bother, which made me nervous because maybe their customers were getting better deals than mine were, and mine would find out Arguably, an even bigger problem e5isted: because of the clientTserver model, communications between the sales force <the front office? and the headAuarters customer database maintained by the !nformation "echnology <!"? department <the back office? was one4way "his meant that although salespeople were getting updated information from corporate databases, they weren,t necessarily providing their own information back to those databases to maintain current data and close the information loop "his phenomenon resulted in outdated corporate information that didn,t reflect the most recent customer contact activity After all, the salesperson in regular contact with the customer is more likely to know about a #ob change or office move than the !" administrators managing the customer database (ritical and useful account information was often being left on the table Although improving the sporadic and often seat4of4the4pants sales process for many companies, 37A still had flaws, including the fact that companies hadn,t enforced its use as a basic #ob reAuirement /f course, this is easier said than done, especially for salespeople who are above Auota Would you rather have your salespeople spend their time keying in data or closing the ne5t big dealM

Toda!'s +0A
37A product vendors set out to automate the answers to some basic sales rep Auestions that, when answered, could help them be more productive 3ales force automation products run the gamut from rudimentary calendar support and scheduling to real4time alerts about customer events !rrespective of the vendor or product, most sales force automation tools claiming the (2* moniker fall into one or more of the following categories

+ales %rocessEActi9it! #anagement

*any 37A products depict a sales methodology that can usually be customi'ed to the company,s specific sales policies and procedures .nown as "ale" %roce"" management1 such tools include a seAuence of sales activities that can guide sales reps through each discrete step in the sales process "his not only makes certain sales reps consider each step in the sales cycle, providing a unified sales process throughout the company, but also ensures that follow4up activities are performed6indeed are assigned and scheduled automatically <see Figure 4-2? 0igure ;-7. +ample sales process

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # %(

3ales process management tools by themselves aren,t that sophisticated When they,re deployed across the country or around the world, however, they can serve as an effective training aid, minimi'e human error, and ultimately result in greater productivity for both individuals and entire teams Activity management tools offer calendars <optionally visible to fellow team members? to assist in the planning of key customer events such as proposal presentations or product demonstrations Alarm reminders can signal important tasks as they become due, generate documents as they are needed, or make decisions based on the user,s input 7or instance, an 37A tool can generate a mailing suggestion for a customer who,s been inactive or hasn,t made a purchase for over si5 months "hese products also offer the ability to Bcheck offC activities after they,re complete "he ability to oversee activities within the sales process enables management staff to schedule and assign discrete tasks, in effect, automating both an individual and organi'ational to4do list "his streamlines team4 selling and ensures company4wide consistency of the sales cycle "eam collaboration tools let remote team members chat in real time, using a Web browser, further ensuring synchroni'ation of effort and rendering sales meetings and training updates more timely and practical *anagers can save chat sessions to a central server for absent team members or later reference Activity management tools can also provide valuable post facto analysis of a sales cycle, allowing the sales team to e5amine the duration and procedures involved in critical tasks "he sales organi'ation thus comes to understand the success factors that contribute to closing a sale, leading to refining of processes over time *ost salespeople will tell you #ust how differently their company does things %ike most 37A functionality, sales process and activity management tools are only as good as their ability to be tailored to the user company,s individual sales methods 7orcing the adoption of broad4brush processes and generic activities will fail to provide value to the salesperson or team chartered with using them And at worst, (2* products can impede the very sales processes they were meant to enhance

+ales and Territor! #anagement

Which salespeople are assigned to which accountsM Who,s already reached AuotaM What,s the pipeline look like in the 3outhwestM 3ales managers overseeing tens or hundreds of sales teams can,t possibly keep abreast of every active sales initiative, let alone the individuals in their organi'ations 3ales management tools enable them to do #ust that, offering data and reporting options to give sales managers and e5ecutives on4demand access to sales activities6before, during, and after the order 7rom a team management perspective, many sales force automation products enable managers to set up sales teams and link individuals to accounts, regions, and industries 3uch teams can include both field account teams and telesales organi'ations, and can even integrate Web sales data into the results for a robust view of the corporate sales environment "eams can also be linked to headAuarters specialists such as industry e5perts or product managers 3ome 37A tools support personal data about each individual to generate staff and team profiles %ikewise, sales managers can track territory assignments and monitor pipelines and leads for individual territories *ost 37A tools offering such territory management capabilities provide security features that limit an account manager,s activities to her own territory When necessary, however, sales management tools can provide a host of information on one account, or many, freeing geographically dispersed staff from having to reAuest or run cumbersome reports to understand account status or prior order history /verall, sales and territory management capabilities allow managers not only to understand sales activities as they occur, but also to optimi'e individual teams according to critical mass and skill sets appropriate for the client or prospect, increasing the odds of closing the deal

Contact #anagement
(ontact management is the subset of sales force automation that deals with organi'ing and managing data across and within a company,s client and prospect organi'ations (ontact management software can contain various modules for maintaining local client databases, displaying updated organi'ation charts, and allowing salespeople to maintain notes on specific clients or prospects *any also allow users to Auery remote databases for supplementary information or to synchroni'e laptop4local data with a corporate customer database With contact management tools, salespeople can answer the following types of Auestions: Who is our contact individual for (lient NM Who is the contact for each departmentM

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # %)

What is (lient N,s mailing addressM $illing addressM !n which office is the client,s Accounts Payable departmentM Who is the client,s purchasing agentM What is her phone numberM Which customers were included in the most recent promotion for Product NM Who already has a brochureM When is my ne5t sales callM When was the last time ! called on that customerM

*uch of the (2* software available today that falls under the contact4management rubric interfaces with *icrosoft /utlook or similar products "his linkage allows sales reps to supplement their phone lists and calendars with fulfillment features to track customer mailings or automated workflow programs that can assign and route appointments As part of a larger (2* product suite, many contact management tools enable salespeople to communicate their schedules to the organi'ation at large "he real value of contact management (2* is in its capability to track not only where customers are but also who they are in terms of their influence and decision4making clout *any contact management tools can interface with sales management functions to help optimi'e the number and skills of team members involved in high4profile sales efforts (2* suite products can then leverage these features to map sales activities back to resulting revenues

,ead #anagement
(2* vendors claim that the capabilities described in the previous section push sales prospects through the pipeline more Auickly $ut who,s in the pipeline, anyway, and how long will they be thereM %ead management <also known as Bopportunity managementC and Bpipeline managementC? aims to provide foolproof sales strategies so no sales task, document, or communication falls through the cracks "hus salespeople can follow a defined approach to turning opportunities into deals *any lead management products not only track customer account history but also monitor leads, generate ne5t steps, and refine selling efforts online 3ome sales force automation products enable a company,s marketing or sales management organi'ation to automatically distribute client leads to a field or telemarketing rep based on the rep,s product knowledge or territory $ecause the organi'ation has presumably already Aualified these leads through marketing campaigns or client referrals or via an internal customer support rep, this type of lead distribution can result in faster deals and higher close rates !n addition, 37A tools can track other prospect attributes such as known product interests, discretionary budget amounts, and likely competitors, providing a real4world view of each lead and its likelihood of becoming a full4fledged sale "his information can feed sales forecasting software and result in more accurate predictions than relying on traditional spreadsheets of past performance /ther 37A products bring the sales process full circle, tracking leads against orders to provide a view of close rates and salesperson productivity "his information can then be reported back to the marketing manager who originally designated the lead "his enables marketing to compare a campaign,s result to actual sales of that product and refine future campaigns over time [1]
[1]

"he ability to record campaign results and leverage them for future campaigns is one e5ample of Bclosed loopC campaign management

3uch capabilities can result in answers to Auestions that previously depended on guesswork or analysis of incomplete data, for e5ample: At which step in the sales cycle do we lose most of our prospectsM +ow many sales appointments did Adrianna have with "ech(oM +ow many were cancelledM What percentage of leads resulted in sales in the northwest region last monthM +ow long is the average sales cycle overallM +ow does that compare to the sales cycle for the health care industryM +ow did order amounts for the 3an 7rancisco branch office compare to those in 3eattle last yearM

/f course, lead management analysis is only as good as the data that feeds it, and different products provide different levels of sophistication Advanced lead management tools even calculate the probability of

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # %*

the sale based on the success factor information stored in the prospect,s profile, and others can alert the salesperson when a problem arises that thwarted a similar opportunity with another prospect

Con"iguration +upport
$ecause many of these tools allow a salesperson to input client and prospect information into an easy4to4 use tool, (2* products have evolved to leverage this information by providing product4specific configuration support to companies who must BbuildC products for their customers 3uch companies6computer technology vendors, appliance manufacturers, and telephone companies among them6no longer undergo the painstaking process of factoring in comple5 customer attributes and reAuirements to build a solution from scratch (2* vendors providing this type of functionality often use the graphical sales process like the one pictured in Figure 4-2 as a way to consider each step of the cycle After the BorderC stage has been reached, the tool can calculate a product configuration and price Auote automatically When this is finished, a configuration tool can provide forms that facilitate electronic communication of the information to other areas of the company 7or instance, an account manager can generate a configuration and price, e4mail his district manager the price Auote for approval, and check inventory for stock, all while "itting with the cu"tomer* 3iebel (onfigurator from (2* heavyweight 3iebel 3ystems also supports headAuarters marketing staff and product managers who might create new product bundles for the field !nstead of field salespeople combining products and selling them as ersat' units, marketing staff can use the (onfigurator tool to build uniAue product packages, brand them, and distribute them to field sales staff with a few mouse clicks After the product has been configured and a Auote calculated, the information can automatically populate a standard contract resident on the salesperson,s laptop 3uch automation dispenses with paper4based contract generation and validation steps so fraught with error they can bog down or even kill an order

Fnowledge #anagement
As field salespeople know all too well, a lot more than customer data is necessary for selling, and the more information available, the better /rgani'ations have a plethora of information an account rep can use sometime during the sales lifecycle Accessible internal documents can provide the sales force with the information it needs to understand a variety of components in the sales lifecycle 3uch information might include (orporate policy handbooks 3ales presentation slides (ompany phone list Proposal templates (ontract boilerplate -5pense report forms 2egulatory standards and recent compliance reports +istorical sales and revenue reports Partner and supplier profiles "ranscripts of sales meetings and e5ecutive briefings Digiti'ed video of sales presentations or e5ecutive briefings !ndustry and competitor data 1ews articles and press releases "rade show and promotional event schedules "hank you notes and other client correspondence

+ow effectively salespeople use this disparate information depends on how easily they can access it *ore and more companies are developing corporate intranets for headAuarters and field staff alike, facilitating the dissemination of critical corporate knowledge

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # &0

3ystems that can locate and store such information and provide users with a means of communicating about and adding to its contents from a single application are known as knowledge management <.*? systems *any (2* tools geared to 37A include functions specific to accessing and conversing on a range of corporate documentation to supplement sales efforts and provide fast data during the heat of the sale *ost knowledge management systems do all of this: !nclude a means of granting individuals control or editing rights over a document to avoid users working on the same material simultaneously Provide a history of who has modified material, and when /ffer a search engine, allowing users easy file lookup by keyword Allow users to view various files and documents via a portal that unifies materials that in fact e5ist in many different places

Although not e5clusive to sales organi'ations6knowledge management systems are increasingly popular with large companies such as consulting firms that have geographically dispersed employees6the e5istence of a consolidated view through which the field force can access a variety of information delivers increased efficiencies [2] 1o more mailing binders to the entire 1orth American sales team: %et,s give them access through the .* system: .nowledge management can mean the difference between losing and retaining key sales staff who are hungry for information but strapped for time
[2]

"he documentation and information resident in knowledge management systems are usually displayed via an enterprise portal, a type of BwindowC into the system that makes the information appear centrali'ed

+0A and #obile CR#

"he subte5t of the various sales force automation features discussed so far is that the information needs to be disseminated to the field sales rep in order for him to use his 37A tools $ut the days of not knowing whether the most current data is on the corporate server or your own laptop are thankfully behind us

0rom ClientE+er9er to the 5eb

7or one thing, the Web has simplified information availability !nstead of being resident on each salesperson,s laptop, 37A functionality now rests on a headAuarters Web server running (2* software, and the salesperson can access that server remotely !nformation local to a single server is consistent across geographical regions and multiperson teams (umbersome synchroni'ations between the client laptop,s data and the headAuarters database are a thing of the past "he intranet infrastructure also eliminates the traditional support costs of managing communications, instead delineating the work to the company,s chosen !nternet service provider <!3P? 2esource e5penses are dramatically less than those needed to support the old clientTserver model, which involved e5pensive modem banks, numerous dedicated phone lines, and the capacity planning that accompanied them "he Web simplifies access by allowing a company to outsource remote access to the !3P and focus instead on running the application and maintaining the data, arguably its core competencies %aptop configuration and support costs are also reduced 3alespeople no longer need act as systems programmers, setting up their communications options, modem settings, and the like *ost important, browser4based technology shields the company,s data asset6one of its key competitive weapons !nstead of the account rep having to ensure security, e5perienced !" staff now manage and protect critical customer data in a central location at headAuarters "he data is no longer propagated, but remains in one place "he risks of deleted files, smashed laptops, or lost sales reps are thus dramatically reduced

+0A )oes #obile

+aving reduced the responsibility of the laptop in sales force automation, (2* vendors intend to unburden it altogether "he time is coming when !" staff won,t have to provision and configure laptops, and nary a rotator cuff will be torn by a heavy briefcase hanging from an account rep,s shoulder Just about every (2* vendor is vowing to support access from a variety of handheld devices to the precious customer data in its database *any already do 3cenario = at the beginning of this chapter illustrates the 37A mission:

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # &1

"o provide data to headAuarters and field4based personnel <not only about customers but also about products, inventory, pricing, and other key company information? on4the4fly from a variety of eAuipment, thereby allowing them to Aualify and close opportunities faster and better than our competitors do [3]
[3]

"he (2* *ission 3tatement from a network eAuipment manufacturer

+andheld device technology is evolving at a fast clip According to the Aberdeen 8roup, JH million people will have access to the Web via wireless technology by the year =>>H Personal digital assistants <PDAs?, cell phones and Web phones, two4way pagers, tablet P(s, and any other device with a display screen and the appropriate communications features can support anytimeTanywhere access via wireless networking "he benefits are boundless Deals can be won or lost based on who can respond the fastest With wireless technology, configuring a product, pricing it, and creating the contract can all be done remotely and in much less time than by traditional fa5 and e4mail based processes 1ot only can field staff access important information, they can also enter updates to that information that are relayed back to a corporate server accessible by other organi'ations (ompanies get smarter about their customers as they witness the creeping customer intelligence that accompanies such a closed4loop information e5change As in 3cenario = at the beginning of this chapter, an account rep can be alerted about in4progress customer events in real time 3he can then send a message via a two4way pager or other device to a field service rep for an e5planation, to her boss for advice on how to handle a touchy client situation, or to her marketing contact for up4sell suggestions Wireless messaging can be invaluable when it comes to #ust4in4time personali'ed messages "hese BpushedC messages6meaning they are sent unbidden but nevertheless geared to the user,s stated interests, subscriptions to news services and other information providers, and even geographic location6can include broadcasting traffic bulletins en route to a client, automatic calendar updates, and daily company press releases Personali'ed messaging also mitigates the BnoiseC accompanying the ascent of handheld communications by limiting information to only those messages the user has reAuested %ast but not least, wireless !nternet access provides field staff with access to vast amounts of information, restricted only by the capacity of the device to display the data 1ot only can a sales rep view e5ternal Web pages on his PDA to glean data about clients, stock prices, and business news, he can also log on to his company,s intranet, thus accessing company4specific information in real time from wherever he is An account rep on the way to a sales meeting can check inventory for a product at an airport !nternet kiosk before boarding his flight -merging technologies such as the so4 called voice browsers even allow users to navigate the Web via vocal commands over the telephone "hus a sales rep can make a phone call during the seventh inning stretch to verify a client address, check on the status of his customers, orders, read his e4mail, and order flowers for 3ecretary,s Day

&arious technology developments are responsible for bringing information literally into the hands of disparate business organi'ations and communities that nevertheless must e5change information on the go +aving emerged to great fanfare in the early FGG>s, the Java programming language meant applications could run on different platforms N*% <e5tensible markup language? simplifies intersystem communications by encoding descriptive information about that data so it can be gathered and shared across applications and companies 7or e5ample, N*% can define information about a purchase order so when a salesperson transmits it, the company,s accounting system can recogni'e and process it 1ew wireless protocols such as WAP6a set of standards for the transmission of content to different handheld units6allow information to be conveyed to a variety of devices in real time "hus, a company,s lead management system can transmit sales leads to a salesperson,s cell phone for Auick turnaround $luetooth is the new standard for short4range wireless communications <it allows laptops to communicate with tiny printers no larger than a rib eye steak, and it,s the way those handheld computers buy sodas from vending machines? And emerging Web portal software provides your cell phone or PDA with a Windows4 like interface Palm recently launched its *yPalm portal, allowing users to wirelessly synchroni'e information on their Palm devices with information on their desktop P(s 7orgot what time the $ig *eeting starts and can,t get to your office to look at your online calendarM Access it right from your Palm &endors are providing a variety of choices for real4time access to their centrali'ed (2* servers with products designed for specific access devices *any (2* vendors offer complementary products for the Web, handheld devices, and thin clients alike !ndividual salespeople can select their preferred way of

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # &2

accessing and communicating information 7or e5ample, a salesperson might prefer accessing customer data and news reports on her cell phone while at the point of customer contact, but would rather configure products on her PDA Does this mean you should sell all your stock in laptop P( manufacturersM 1ot #ust yet (hallenges remain in the wireless world, such as various messaging formats, different screen si'es, assorted graphics capabilities, and emerging mobile portal options $andwidth limitations linger, and security issues are still <sometimes literally? up in the air, according to Anne "homas *anes, Director of *arket !nnovation for 3un *icrosystems:

"he software infrastructure reAuired to support mobile applications is #ust starting to become available 7or instance, many 37A tools don,t provide their own document management systems, so things like making contracts and other documents available to wireless clients within 37A systems can still be impractical "hankfully, there are tools6like 3un /1Web"op6that allow people to maintain various files and access them from any device !ndeed, mobile computing means new users, new devices, and new ways of doing business 0ntil companies get their arms around the mobile business model from both infrastructure and cultural perspectives, the laptop will live on

0ield 0orce Automation

7ield force automation, or 77A, is sort of a hybrid !t,s part customer service in that field service implies the service or repair of customer eAuipment on the customer,s premises %ikewise, it,s part sales force automation, leveraging the emerging mobile workforce management technologies being widely adopted by corporate sales organi'ations 7ield force automation <also known as Bfield service managementC? began in the FGE>s in manufacturing companies, who regularly dispatched technicians to remote sites to test and repair eAuipment "he classic process of dispatching a technician involved an unwieldy, paper4intensive set of instructions that took days or weeks as various staff members became involved to register, communicate, analy'e, diagnose, allocate, dispatch, monitor, close, and review the problem Figure 4-3 shows a simplified version of how field service technicians are enlisted 0igure ;-:. 4nlisting "ield ser9ices

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # &$

1ote that each communication involved in Figure 4-3 can be performed using wireless technology, from the customer reporting the problem via his cell phone to the field service rep closing out the trouble ticket via wireless laptop (onsidering that only five years ago most of these interactions took place on paper, these processes have become <and continue to become? e5ponentially more efficient, generating not only faster turnaround times but also higher customer satisfaction rates "he (32 can actually enlist the support of product specialists or field service engineers by sending a message to their wireless devices With the right analysis capabilities, the (32 can rate the severity of a customer problem and then determine whether a field service rep should be dispatched, based on either her particular skill set or her current distance from the customer,s site !n this way, the (32 can dispatch the technician most likely to fi5 the problem the fastest 7ield technicians not only receive dispatch orders via their PDAs, pagers, and cell phones) they can even make use of these devices during the actual repair "he ability to pop a (D into a (D42/* or insert a memory card containing installation instructions, repair guidelines, or eAuipment specifications provides the technician with the information he needs while at the customer site and frees him from lugging around bulky how4to manuals "he technician can use the device to order additional parts and supplies, as well (ommunication software can then alert the (32 handling the trouble ticket that additional eAuipment is needed Figure 4-4 illustrates some of the features inherent in the newest wireless devices, some of which look and work more like micro4laptops than like the pagers of old 0igure ;-;. A "ield ser9ice wireless terminal

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # &%

"he advanced features they provide sure beat the alternative: the technician trying to find a computer someplace so he can dial a corporate server or access the Web to order the part and enter the updated repair status6leaving the company and the customer at the mercy of a single field rep,s busy schedule !n real life, field engineers for my local telephone company send completion status of their fiber4optic installations to the company,s large customer database via *otorola =4way pagers, ensuring near real4time repair updates 1o more calling the home office with their whereabouts) no more syncing of databases *oreover, (32s and sales reps can interact with the same data in real time Although current (2* products remain more sales4oriented than service4oriented, customers, field service reAuirements are nevertheless more Auantifiable6and higher4profile6than their sales needs, and much more time4critical Additionally, 77A comprises a set of customer touchpoints that should be recorded as part of the customer,s profile, so when the account rep in 3cenario F prepares his ne5t pitch, he has timely information at his fingertips !t,s no wonder field force automation is the fastest4growing area of (2*

An +0A Checklist "or +uccess

"hat (2* programs benefit both internal and e5ternal customers is nowhere more apparent than with sales force automation 2endering salespeople better informed and more productive increases the likelihood that they,ll close more business And this type of productivity is bound to enhance the customer relationship, not to mention the corporate bottom line 9et a few high4profile BgotchasC have foiled many a well4meaning and badly4needed 37A program $e sure to avoid them by adhering to the following suggestions: 0nderstand how 37A will help, and enlist salesperson stakeholdership at the beginning "hroughout the (2* readiness assessments !,ve done, this problem recurs with stunning regularity across industries and organi'ations "he pro#ect team chooses a highly functional (2* tool with robust 37A features, customi'es it, and notifies the sales force that the new tool will be deployed %ike most new technologies, 37A reAuires its users to understand its benefits before they use it !nvolve sales staff at all these points: o o o Initial re6uirement" gathering* $y describing 37A and soliciting advice about how its capabilities would help or hinder account reps in performing their #obs 'ro)uct "election* $y including key salespeople and managers in product demo meetings and enlisting them for pilot evaluations Rollout of the tool* $y involving sales management in defining the rollout strategy, including when and where the new software will be deployed in each phase and to whom

(ommunicate the value proposition to the sales force up front *any6arguably most6first attempts at sales force automation fail because using the tools provides no apparent net benefit (ommunicate the benefits of automating key tasks, defining repeatable processes, integrating disparate data, and knowing customers better as they pertain not only to the sales force6as in, B9ou no longer have to run and mail in sales reports) management can now do it themselves:C6but to the entire company !f possible, Auantify the value of these benefits in terms of potential revenue

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # &&

uplift or increased market share (ommit to allocating the funds recouped from the e5pected productivity gains into additional marketing and advertising campaigns, rendering your company,s products and services more accessible !nvest in6and enforce6training "his is true when deploying any type of (2*, but salespeople are especially reluctant to take time out to be trained on something they aren,t convinced they need Although functionality training might be overkill for basic contact management, you should reAuire training before distributing integrated (2* suites with a variety of features that will ultimately affect the company,s customer knowledge base <(onsider combining (2* training with Auarterly regional sales meetings to ma5imi'e sales staff time ? "rain sales managers before training their employees, ensuring that their concerns are addressed first and separately from their staffs, Allocate logon !Ds and PDAs only upon completion of the formal training course $eware of inherent sales processes packaged into 37A tools Although standardi'ed sales processes have been shown to result in greater efficiencies, an out4of4the4bo5 process might not be the best one for your organi'ation "he more comple5 your current sales process, the more likely you,ll need to customi'e the default process defined by your (2* vendor $e prepared to invest the time and resources necessary to optimi'e current sales processes6ideally, before you select an 37A product 0nderstand the infrastructure necessary to support wireless technologies Adopt these technologies based on specific remote communications reAuired by your business And know what will work with what you have: "his means ensuring your wireless service provider supports your geography and can provide dependable service %et 37A use affect sales compensation "his tactic is controversial and somewhat doctrinaire, but don,t those salespeople who are delivering current and timely activity data back to the corporation for growing customer knowledge deserve a bit more money than those who aren,tM After all, customer data, a critical corporate asset, is at stake /ffering salespeople a bonus for maintaining customer data and sales managers further incentives for enforcing the practice is #ust good business And with technology evolving the way it is, remote communication of client activities becomes consistently easier and faster) thus the benefits are more obvious than ever (hange hiring practices and #ob role descriptions to include use of (2* !ntegrate (2* training with new4hire orientation 2eAuire new account reps to use 37A as part of their formal #ob responsibilities, outlining the discrete functions for which they are responsible <e g , B*aintain and transfer updated client information via product ,database update, function at least twice weeklyC? 2evise sales position interview guidelines and #ob description documentation to include 37A use as a core responsibility

"he range of customer touchpoints availed by a robust sales force automation infrastructure can mean the difference between sporadic name4and4address updates and an efficient flow of communication between account teams, their clients, and the company at large

Case +tud!& Hewlett %ackard

"hink of +ewlett Packard as an innovator and you probably think of Auality printers, high4end servers, and a crack management team $ut you,d better add (2* to that list because the company is intent on delivering an industry leading customer e5perience As if that weren,t enough of a challenge, +P,s doing it on a global scale %istening to *ike /verly talk about customer relationship management at +ewlett Packard is like listening to Alan 8reenspan talk about the 0 3 economy As (2* Program Director at +P, *ike not only knows his stuff, he articulates it with a blend of e5perience and authority that makes people go out and act And when it comes to (2*, +P is definitely taking action Although the company set out to improve a variety of business issues with (2*, its overarching goal is to provide an industry4leading customer e5perience With customers ranging from the largest companies in the world to small mom4and4pop operations, +P has a lot of customers to satisfy (ombine this with the fact that the company is rolling out its (2* program worldwide and the program,s magnitude only begins to hit home

5hat The! 'id&

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # &'

*ike /verly and his +P (2* team weren,t naive "hey knew that to deploy a global (2* solution, they needed to influence the entire organi'ation +aving the commitment and involvement of the President of +P,s $usiness (ustomer $usiness 0nit provided the team the necessary clout and visibility to gather consensus from a range of different corporate functions, from the sales organi'ation to marketing to the company,s myriad call centers "he mantra sung by each organi'ation is the same: "o manage the total customer e5perience +P,s initial (2* effort focused on the organi'ation that touches the customer most: the sales force !ts goal was to provide the company,s global sales force with an automated6and standard6way to perform contact management and account planning Although the initial functionality was classic sales force automation, the hurdles were high B-veryone had their own rules and guidelines about managing their customer activities,C says /verly B$ut what makes a customer happy is pretty universal C "he company chose a (2* solution from business partner /racle and has deployed the /racle 3ales /nline product to customer4facing employees in 1orth America and other countries around the world With customer activity data in an /racle Bcustomer masterC database, +P can provide a remote salesperson with the ability to track a customer,s activities across organi'ations 7or instance, a salesperson can find out which of his customers have contacted the company,s help desk or can call up information about the latest marketing campaign and its primary channels !ndeed, /verly,s (2* team has made the ability to share information about customer touchpoints across organi'ations a key (2* success measure +P is gunning for even bigger improvements, such as dynamic personali'ation for Web visitors and automatic lead routing from marketing to the internal sales staff and +P partners BWe,re in the solutions business,C says /verly BWe,re not #ust interested in solving today,s problems C /ver time, both headAuarters and field staff will have access to a range of customer information "he goal is to enable customers to control their relationships with +P 3tandardi'ing (2* corporate4wide has meant phasing out numerous legacy systems Data, business processes, and technologies that are customer4related will slowly be merged with the current (2* program, driving cost savings into the hundreds of millions of dollars Although /verly demurs from estimating revenue generation from (2* improvements, his optimism makes it clear he e5pects additional revenues of similar scale as a direct result of +P,s (2* solution

The Challenges&
/verly is frank about his biggest challenge so far, and it,s no surprise: deploying (2* worldwide has its trials 1o matter where they are in the world, sales reps share the goal of being as productive as possible) however, every salesperson has a preferred way of getting the #ob done /verly and his team have had to surmount habits and assumptions that are often not only organi'ationally entrenched but also cultural BWe,re no longer talking about every country,s having a uniAue personal productivity tool,C he says, Bbut about an +P solution C $ecause /racle,s (2* environment is based on portal technology, salespeople can customi'e their interfaces to include client information and contact activities as well as data from e5ternal news sources and the global financial markets "he company is delivering much of the training via the Web to educate staff on how to use the /racle (2* technology and apply it to their specific #ob functions Although most of the training is conducted in -nglish, the company offers locali'ed Web courses in native languages to several countries, including .orea and Japan Another challenge has been rendering ongoing management sponsorship and involvement as painless as possible for +P,s busy e5ecutives BWe reali'ed early on that we,d need to make it easy for e5ecutives to support us,C claims /verly, whose team includes a (2* (hange *anager $esides establishing ongoing (2* performance measures and training, the (hange *anager is chartered with developing and tracking all pro#ect communications, including internal communications across +P, such as guiding e5ecutives in communicating new customer4focused policies

)ood Ad9ice&
7rom the beginning of the (2* initiative, /verly,s team shrewdly steered away from the point4solution approach, preferring instead to e5pend the e5tra time, money, and internal education necessary to deploy enterprise4wide (2* "his meant organi'ing (2* development around so4called Bvertical silosC representing corporate functions such as internal sales, marketing, and customer service "he (2* team members for each vertical silo work with the e5ecutives in related business organi'ation to design the future4 state business processes !n addition, a hori'ontal design group is responsible for the cross4functional process design

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # &(

BWe didn,t want to build more stovepipe systems,C /verly e5plains B9ou,ve got to keep one eye on the big picture /therwise you,ll end up with ten different ,best in class, (2* solutions, not to mention a huge integration issue that would impede our ability to do on4the4fly process improvements C "his approach of uniting vertical design efforts with hori'ontal process standards not only avoids development in a vacuum) it also ensures that (2* business processes, technologies, data, and implementation methods are consistent across the company /verly advises others who might be deploying (2* on a similar global scale to be mindful of three success metrics: F F F /btain sustained e5ecutive presence, meaning that e5ecutive leadership must be engaged throughout the (2* lifecycle Always keep one eye on today,s problem, and the other on tomorrow,s problem -nsure change leadership, with emphasis on the word leader

3ays /verly, B-very day there,s a new challenge6you need someone who has a good understanding of the problem and the authority to fi5 it C

The )olden *ugget&

When asked how he,ll know when (2* is a success, *ike /verly Auotes one of +P,s co4founders, who once said, B9ou tell me how a person is measured, and !,ll tell you how they behave C !n keeping with this core cultural tenet, +P continues to establish and meet a series of (2* performance measures BWe,re putting measures in place to reinforce the behavior we,re looking for,C says /verly Although +P has committed to three primary measures6increased revenue, decreased costs, and industry4leading total customer e5perience6measurement, like the (2* program itself, is ongoing *easurement results might dictate a range of business changes, such as having a portion of +P e5ecutives, pay based on customer loyalty "he (2* team considers direct customer data to be a primary measurement source 7or a multidisciplinary technology conglomerate like +P, deploying a global and interdisciplinary (2* program could take years When asked about the duration, /verly e5presses his vision that (2* be adopted as a continual corporate practice with no end in sight With such a high4visibility commitment6not to mention the comple5ity, e5ecutive involvement, and process changes6it,s noteworthy that the initial 37A application took months, not years, to be released to its global business users +ow can a company of +P,s si'e be so nimble, yet so visionaryM /verly politely reiterates: BWe,re in the solutions business C

The #anager's Bottom ,ine

Although emerging technologies have taken sales force automation from a nice4to4have productivity tool to a competitive weapon, the company willing to establish simple and well4defined procedures for its field staff will be the big winner 3ales organi'ations are working better than ever with headAuarters, with their customers, with each other6and with their automation 2emote teams rely less on headAuarters to provide them with the information they need !t,s no longer about simply tracking account history or updating address lists "hrough sales force automation and its accompanying technologies, companies are proactively helping their salespeople manage the selling process and improve it "he early adopters are finally seeing returns, witnessing how these efficiencies result in lower costs and increasing profits And customers are e5periencing these improvements in faster turnaround times and in price breaks that reflect those cost reductions 7or companies, their sales staffs, and their customers, 37A has been a win4win4win

Chapter <. CR# in e-Business

*any of today,s <and now, yesterday,s? e4businesses have made the often fatal mistake of delaying customer4focused initiatives until their companies turned a profit With pressure to gain market share, these companies have adopted the Bcustomer at any costC credo: in their 'eal to capture market share, they assumed all customers are created eAual "his meant handing free goods and services to new customers who might not return, selling products at cost or below, and spending hundreds of thousands of dollars on mass marketing campaigns with no hope of recouping their investments

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # &)

Analysts didn,t help matters by proclaiming Bearly to marketC e4commerce companies the winners in their online categories, unless of course you were a customer e5pecting freebies and rock4bottom prices 1otwithstanding well4designed Web sites, slick product demos, and futuristic trade show booths, a number of e4commerce companies went belly up, and hundreds more saw their stock prices plunge at e5ponentially higher rates than those of their brick4and4mortar counterparts *any of these companies were focused more on their Web site traffic than on their profitability "hey soon learned the number of visitors didn,t necessarily correlate with the number of customers6those who made purchases at the site *arketing campaigns were focused at the former6visitors whose intentions were informational or who might have stumbled upon the site accidentally6and not the customers who would ultimately determine their profits &isitor4focused campaigns and number4of4hits reports would fail to recoup the hefty investments made in these companies .o'mo cancelled plans to go public after the home delivery service lost over twenty4si5 million dollars on only DI @ million in sales [1] "he problemM "he company,s average delivery costs often e5ceeded the costs of the products being delivered 7or delivery companies like .o'mo and Webvan, the customer craving a Dove bar and a disposable ra'or6not the one needing regular delivery of a month,s worth of groceries6 was the unfortunate rule "he per4delivery losses forced these companies to e5pand their product offerings and slap purchase minimums on their deliveries to protect their costs6though such measures still don,t guarantee profitability !n the case of Webvan, the cost4cutting and restructuring weren,t enough to prevent a management shakeup, including the (-/,s resignation <after constant press speculation and prolonged shareholder grumbling? 7or .o'mo, similar changes came too late: the company closed its doors in April =>>F
[1]

As reported in B+ow .o'mo is 8etting .illed by its (ustomers,C The 5ew 8orker1 3eptem ber H, =>>>

eCR# 49ol9ing
What about the loyal .o'mo customer who spent an average of DF>> per week and wanted that Dove bar without the surchargeM With the right (2* functionality, a delivery service would know when to waive the surcharge to keep the customer !n many such cases, F> percent of a company,s customers account for G> percent of the profit 0nfortunately, dot4com companies offering commodity4based products have been investing more in their basic infrastructures6warehousing and distribution, recruiting costs, and such6and less in analysis capabilities that would tell them who their good customers are 3ome would argue they have no choice /thers would maintain that without a clear view of the customers they want to attract and those they want to keep, the best logistics and the best procurement in the world won,t matter Pure4play dot4com retailers are getting a run for their <dwindling? money these days from traditional retailers who have parlayed their e5isting infrastructures into a competitive edge After all, brick4and4mortar businesses have mastered economies of scale, having learned the lesson early that a wider variety of well4 priced products will draw more customers, and they are e5pert at getting rid of nonproductive inventory !n leveraging the !nternet, these brick4and4 mortar firms find themselves firmly planted in the world of e4 commerce, with the systems and processes in place to support them

#ultichannel CR#
3ome predict that the brick4and4mortar companies will have the last laugh After all, for every futurist proclaiming the Web will revolutioni'e the world, there,s a pragmatist who pronounces it B#ust another channel C Although both might be right, it,s where the !nternet provides the most value that it incites the greatest change (ompanies such as high4end retailer "iffany <www tiffany com? simply use their Web sites as an additional means of luring people into their stores by providing add4on customer service and product4related information on, for instance, choosing a diamond 3imilarly, %evi 3trauss L (o includes a retail store locator on its %evi,s <www levi com? and Dockers <www dockers com? Web sites so customers know where to go shopping $loomingdale,s <www bloomingdales com?, with limited physical stores across the 0nited 3tates, has dramatically e5tended both its presence and its brand through its Web site, allowing its Web shoppers to purchase their items by referencing the product,s catalog item number "he Web has become a cost4 effective way of increasing the corporate footprint !ndeed, many acknowledged e4commerce best practices are retailers6like -ddie $auer, profiled in Chapter 26who combine powerful online features, including customer self4service such as order and shipment tracking, with an established brick4and4mortar presence, giving customers the e5perience they still want "he award4winning J (rew Web site <#crew com? offers more than #ust apparel: speciali'ed services uniAuely available in cyberspace J (rew Web shoppers often see promotions before they make it into the

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # &*

catalog, but they,re free to return items purchased on the Web to the company,s physical stores, ma5imi'ing the customer,s6not the retailer,s6convenience "he failures of 8arden com and cosmetics e4tailer -ve com have been partially blamed on the lack of the customer,s tactile e5perience !t,s no coincidence that when -ve com closed its virtual doors, the Web site directed customers to 3ephora com <www sephora com?, a company that combines its successful online business with a worldwide chain of stores Physical storefront or no, the service orientation of e4commerce leaders aims at giving customers as many choices as possible, and6as we discussed in Chapter 36puts more power in the customer,s hands Web4 enabled self4service allows customers to use vendor sites to change their own addresses and track their own orders, and many are providing powerful search engines and other features to keep customers on their sites and keep them coming back

Petco <www petco com? offers pet lovers a community center where they can chat with animal behavior e5perts and access a range of articles "he site also features an online Bpet yellow pages,C where visitors can find a range of pet4related services available near their homes, and even provides a way to donate money to the A3P(A online And drugstore com <www drugstore com? features the ability to analy'e the interactions of certain drugs, and the company,s e*edAlert program provides daily information about drug product warnings and recalls $ut such value4added features motivating customers to return to the Web site, catalog, or store don,t necessarily guarantee customers will buy more of a company,s products -ffective marketing means more than #ust a slick Web site and automated campaigns And the more companies know about how their customers prefer to interact with them, the better service they can provide

CR# in B7B
(ompanies that are actually communicating with online markets have flung the doors wide open "hey,re constantly searching for solid information they can share with customers and prospects via Web and 7"P sites, e4mail lists, phone calls, whatever it takes "hey,re not half as concerned with protecting their data as with how much information they can give away "hat,s how they stay in touch, stay competitive, keep market attention from drifting to competitors 3uch companies are creating a new kind of corporate identity, based not on the repetitive advertising needed to create Bbrand awareness,C but on substantive, personali'ed communications [2]
[2]

%evine, 2ick, et al , The luetrain Manife"to$ The En) of Bu"ine"" A" 9"ual Perseus $ooks, FGGG

"here,s no Auestion that the !nternet has streamlined business processes, providing efficiencies unmatched by traditional ways of doing business "he Web makes things happen faster $ut is speed enoughM

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # '0

!n the early days of e4business, companies built their Web sites implementing so4called storefront software that enabled them to accept a customer,s credit card information and automatically check inventory "hey then ensured that their systems were robust enough to allow customers =H4by4J access Dot4com companies had to build organi'ations to support inventory tracking, delivery, and returns processing, and traditional companies had to Auickly incorporate the Web channel into e5isting business practices "he ability to e5ploit multiple channels introduces a series of headaches for the !" e5ecutive charged with integrating legacy applications such as fulfillment and purchase4order systems with the Web "he better the organi'ation,s current computing power, the more effective will be integration of the new Web channel into e5isting operations Don,t get me wrong "he Web shouldn,t simply be shoehorned into a company,s e5isting business unless processes are already robust 3imply put, mere automation of business processes isn,t enough (ompanies will be e5pected to provide their customers and suppliers with even more information than ever before "o do that, they need the best databases, with the highest4Auality data, and the applications and processes necessary to deliver that data, not to mention a cultural willingness to share data with suppliers and customers Whether the company was a pure4play dot4com e4tailer or a traditional brick4and4mortar general merchandiser, key processes such as ordering, fulfillment, inventory management, and distribution all had to run at Web speed "he challenge of streamlining the supply chain to keep pace loomed ever more large As companies adopt the mantra of Bdifferentiate or die,C they reali'e that manufacturing, like customer service, is an area of opportunity

4nterprise Resource %lanning

-nterprise resource planning <-2P? systems have become the heart or, more accurately, the spine of many corporate technology initiatives, having been widely adopted in the late FGG>s by companies eager to streamline their operations 8oals for -2P ranged from reducing inventory levels to increas ing process efficiencies across the supply chain or even integrating core business systems -2P systems were the focal point of new work processes across these companies $ecause -2P products offer easier information4sharing across various organi'ations from purchasing to manufacturing to finance to human resources, corporate procedures were aligned with the way -2P products worked 8one were the archaic general ledger systems and warehouses brimming with file cabinets full of purchase orders -2P automated key corporate functions, and the companies buying these systems complied with their inherent business processes, including /rder processing and fulfillment Production planning and scheduling %ogistics management Accounting +uman resource allocation and planning

*a#or -2P vendors such as People3oft and 3AP not only automated these and other functions) they also linked them for companies who previously had disparate systems that had never been interrelated "hese companies replaced their outdated legacy systems and enabled integrated operations across the enterprise "he products themselves reAuired hefty investments, often into the millions of dollars, and -2P implementation resources usually doubled those budgets "he integration piece alone was a boon to companies With -2P, salespeople could access a single system to check inventory, a purchasing agent could look up a supplier,s pricing history, and a marketing product manager could track defects Despite war stories about underestimated budgets and overestimated consultants, -2P delivered across4the4board efficiencies "his integration had dramatic effects on downstream customer4facing business processes 2avi .alakota and *arcia 2obinson describe (olgate,s -2P success in their book e#Bu"ine""$ Roa)ma% for /ucce""$ $efore 3AP 2TIPdistribution planning and picking used to take up to four days) today it takes FH hours !n total, order4to4delivery time has been cut in half [3]
[3]

.alakota, 2avi and *arcia 2obinson, e#Bu"ine"" 2*<$ Roa)ma% for /ucce"" $oston: Addison4 Wesley, =>>>, FEI

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # '1

!n other words, (olgate,s customers6including heavy4hitter retailers such as Wal4*art and 2ite Aid6were getting products faster, which can in turn increase satisfaction rates (ompanies were also reducing out4of4 stock situations, an influential factor in enhancing customer loyalty "he marriage between -2P and (2* is stronger than ever 7or instance, a company,s accounts receivable staff might choose not to open collections on past4due customers who have in4process trouble tickets %ikewise, (2* business users can use accounting and supply chain information to decide how to treat customers who don,t meet provisioning deadlines -2P vendors have recog ni'ed the link between tighter, more integrated operations and business customer satisfaction and are now busy releasing (2* modules that tie into their core products, rendering the customer a key link in the supply chain

+uppl! Chain #anagement

*ichael Porter,s classic Bfive forces model,C a business4school staple since the early FGE>s, identified five key factors that dictate how companies fare competitively Porter argued that suppliers and other vendors wielded a certain amount of power in their ability to raise prices or compromise product Auality, and that this was a key factor in dictating how effectively a company remained competitive Porter contended that too much power in the hands of suppliers could erode corporate profits !ndeed, the classic supply chain itself involves costly and often manual processes that enable a company to go from raw materials to completed product to sale Depending on supply chain efficiency, the entire cycle can take months or even years6and can make or break an entire company !n the classic supply chain environment, each link in the supply chain operates in a vacuum At some points, production can,t keep pace with orders) in others, inventory levels inflate due to misunderstandings of, or no knowledge of, customer demand 7orrester 2esearch recently estimated that processing a single order costs a company an average of DF>J "he number of discrete people who BtouchedC a mortgage between the customer,s initial application and the decision to approve the mortgage was widely cited as the overarching reason for the failure of dot4com high4 flier *ortgage com !t,s no wonder that supply chain management <3(*?6the automation of much of the supply chain6is top4 of4mind for many e5ecutives 2eengineer ing the supply chain with 3(* technology is particularly promising when you consider that the traditional legacy supply chain systems managed mass4 production environments, not the increasingly customi'ed, one4to4one process companies are rapidly embracing +ere,s an e5ample: "o procure car parts, an automobile manufacturer would have to decide how much inventory it needed, analy'e which of its sup pliers carried a given part or find new suppliers who did, make I> or H> phone calls, and issue a reAuest for bids, all of which involved manual effort and paper documentation *oreover, scores of potential suppliers could be vying for the business, reAuiring the company to mail an eAual number of bid reAuests and await responses 1ever mind the rest of the supply chain, the procurement process alone could take months And as it turned out, the cost of ensuring the lowest cost could e5ceed the purchase: 7or companies selling commodity products, such cumbersome procurement procedures triggered the adoption of Bpreferred suppliers,C effectively limiting the number of contenders for a given bid, but at the same time decreasing competition and driving prices upward +ow do businesses anticipate inventoryM *anufacturers such as Dell build products according to demand, reAuiring a #ust4in4time inventory model 3uch a model was designed to prevent companies from having to anticipate customer demand by stocking huge warehouses full of parts and tying up funds in inventory rather than, say, marketing /ther manufacturers using the #ust4in4time model have seen the !nternet deliver business4to4business efficiencies that are improving their relationships with their customers, both directly and indirectly -5tranets6also known as private portals, accessible only to company4 sanctioned partners6and e4 procurement software have allowed companies to organi'e and monitor their purchasing processes by Aualifying and commu nicating with suppliers over the !nternet "he ability to submit purchase orders directly to the supplier,s inventory system over the Web6via an e5tranet that allows access only to selected outsiders such as approved suppliers6has dramatically minimi'ed waste, reduced costs, and improved supplier negotiations "ailoring product support to certain partner or customer segments, as well as to individual customers, is also an emerging benefit of e5tranets (ompanies, particularly those selling commodity products, are increas ingly doing away with their approved supplier lists and posting proposal reAuests directly on the Web, inviting all potential suppliers to bid and thereby increasing competition and lowering prices

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # '2

"his tactic also removes the comple5 2eAuest for Proposal <27P? review process and contractual and legal maneuverings necessary to establish long4term supplier contracts (ompanies can #ust post proposal reAuests on the Web to buy what they need at the lowest price, thus eliminating e5traneous human involvement through lower4cost automation 3ome forward4thinking companies have already eliminated their approved vendor lists and consider such free market bidding reAuests to be the beginning of the end for their corporate purchasing departments (ombining the !nternet with innovative business practices also levels the playing field by enabling smaller suppliers to bid on larger opportunities with prospective customers in a fast and ine5pensive way 3uppliers can receive proposal reAuests, communicate product specifications, and even collect payments, using the Web as the communications channel 3uppliers can compete more effectively than ever before, and their customers have access to a larger pool of potential partners

+upplier Relationship #anagement

-merging e5change models and e4marketplaces allow companies to further improve their supply chain management by establishing alliances with Bbest of breedC partners, pooling both buyers and sellers worldwide to facilitate timely and less costly e5change of goods Partners work together to streamline processes, outsource critical services, and apply automation to key areas, ultimately providing a range of products and services that might otherwise not be available "ighter supplier collaboration via trading e5changes increases the velocity of products through the production lifecycle and enables evident improvements in customer support 7or instance, an airline in short supply of peanuts might release an urgent order to its e5change, which would have the means to route the order to the supplier most capable of filling it in the allotted time Automating not only the order4routing but also the supplier Aualification can be essential to fulfillment and is increasingly occurring in real time Depending on the supplier,s pro5imity to the airline, the supplier might deliver the peanuts directly "his practice, known as collaborative commerce, or Bc4commerce,C involves a company,s sharing its valuable customer information with its suppliers so all of the partners in the supply chain have relevant data "he !nternet6e5tranets in particular6has been a boon in terms of process efficiencies, which over time can translate into customer satisfaction (ollaborative commerce and trading e5changes are not only resulting in reduced costs and faster time to market, but also in the ability to nimbly tailor products and services for specific types of customers, driving critical information through the supply chain, and improvements along with them After all, fulfilling an urgent order that might have previously been impossible to deliver can result in a satisfied airline customer, not to mention the satisfaction of its hungry customers Figure 5-1 illustrates the supply chain,s links to customers 0igure <-1. Customers& The "inal link in the suppl! chain

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # '$

"he supply chain increasingly relies on the communication of customer behavior data <purchase patterns, in particular? to render production scheduling more efficient and intelligent than ever $ut first, a company must culturally believe that sharing information with its suppliers is important !f it is fundamentally reluctant to reveal its sales prices to its suppliers, all the (2* in the world won,t matter After all, there might be sensitive competitive information "he company might be willing to let its supplier know how many product units have sold but nevertheless not want to give the supplier the specific sales price and risk that supplier,s reveal ing this price to the competition 3uch companies must consider that already a wealth of information is moving back and forth between themselves and their suppliers6additional information might be added over time as a means to further reduce costs and enhance productivity +ow do companies know which suppliers to selectM +ow do they Aualify the best choicesM 3upplier relationship management <32*? products help companies analy'e vendors based on whether they are considered strategic suppliers6those with which the company has established a mutually beneficial collaborative strategy6or commodity suppliers, which the company selects based on price (ompanies are leveraging the !nternet more than ever to Aualify, track, and monitor their supplier relationships 32* tools such as the one from 3A3 allow companies to assess the relative cost, value, Auality, reliability, and risk of individual suppliers, thus optimi'ing supplier Aualification and selection %ikewise, suppliers are motivated to improve their relationships with their business customers !n the world of e4commerce, the supplier intent on providing its customers with the eAuipment it needs, when it needs it, is the supplier who gets points for service as well as price "he ability to respond to6indeed, to predict6 product demand means being able to intermingle forecasted orders with actual orders *any companies have posted their current demand forecasts on private portals where suppliers can access them at will 3uppliers, too, are getting smarter $ased on their own abilities to forecast demand for eAuipment, they can participate in the growing number of reverse auctions6in which buyers hold online bidding wars in search of the supplier offering the best deal6with optimal pricing, often in real time *oreover, with newfound capabilities enabling them to analy'e both their own and their customers, data, their bids can be more precise 3uppliers are increasingly digiti'ing their product catalogs and establishing e4commerce infrastructures in line with their customers, improved supply chain management capabilities 3uch collaboration means easier and faster access to products both internally and e5ternally, as well as supplier differentiation in an increasingly commoditi'ed environment *any claim this type of $=$ interaction between suppliers and their commercial customers to be the precursor of the business4to4consumer (2* model that has claimed the lion,s share of the market thus far "he line between $=$ and $=( (2* is becoming increasingly fine As multichannel (2* takes shape, both

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # '%

businesses and consumers are able to interact directly with a company,s supply chain 7or instance, Wells 7argo bank allows key business customers direct !nternet access to its procurement system, and thus to its suppliers, while in the $=( space American7it com allows apparel shoppers to type in their measurements, which are relayed directly to the company,s inventory system <And, in a grand gesture of one4to4one marketing, they put the customer,s name on the label:?

%artner Relationship #anagement

As with suppliers, companies have reali'ed the need to foster more productive dialog between themselves and their channel partners, dealers, and resellers As with 32*, the Web provides these partners with automated access to centrali'ed information and support resources, enabling them to deliver more accurate product information and better services to their customers Partner relationship management <P2*? is a subset of (2* that allows companies to ensure partner satisfaction "his usually means providing sales partners and resellers with the tools and information they need to Access up4to4date product information, including release dates, defect data, and marketing materials (ommunicate with support resources and offer online assistance with products and services 2educe paperwork by obtaining online knowledge management resources such as pricing revisions and sales contracts Access a company,s supply chain network to check inventory, outstanding shipments, and other order details Download customi'able sales presentations and other product marketing literature

3ome P2* products also help companies Aualify and recruit new sales partners <Prior to P2*, Aualifying sales partners involved in4person meetings, philosophical discussions, and tons of paperwork ? Products like these help companies establish desirable partner attributes and allow them to assign partner categories that might limit partners to specific product assignments or sales strategies <see Figure 5-2? 0igure <-7. Channel5a9e's %R# %roduct

P2* tools also provide partner profiles that enable a company not only to understand a business partner,s characteristics6from their headAuarters address to which competitive products the partner might be selling

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # '&

6but also to track the partner,s overall successes and contribution (ompanies can use this information to further improve their partner relationships with additional training or #oint marketing activities Perhaps the highest4impact use of P2* is its facility for automating lead distribution to the best partner $y providing analysis and reporting capabilities, companies can match partners with key sales leads based on their skills, geography, or areas of specialty When a company,s marketing department receives a lead, it can use a P2* tool to score the lead, allocate the lead to the best partner, and subseAuently track that lead through to its close "he !nternet has rendered supply chain and sales partnerships less of a guessing game and less of a waiting game (ompanies and their vendors and distributors are evolving from an arm,s length relationship to one in which they are all intertwined by a network of collaborators who might simultaneously cooperate and compete "he resulting efficiencies lower costs, triggering downward pricing and higher customer profitability !n addition, faster time to market means a higher degree of customer satisfaction at the end of the line

An e-Business Checklist "or +uccess

As important as it is, e4business is only a small part of the overall (2* picture !ndeed, with the Auestionable future of the pure4play dot4com business model, even the purest of e(2* initiatives needs to include a focus outside the !nternet "his checklist can ensure that your e4business and (2* strategies are in synch: =ee% &our e&e on "ervice im%rovement"* "he most efficient supply chain in the world doesn,t matter if a customer can,t wrangle the status of his order "hat supply chain management technologies are decreasing production costs is practically a given in today,s business What,s not as apparent are the resulting improvements in service at the sales, marketing, and contact center levels 9our company,s disparate organi'ations should all be able to view each link in the supply chain and should be able to translate the resulting information into better customer service /u%%ort all channel"* "he demise of pure4play Web sites might be a lesson to those brick4and4 mortar companies who might be tempted to rela5 "he more available channels from which a customer can make a purchase or have a Auestion answered, the more visible your brand !n an effort to ensure that customers in their physical stores get the merchandise they came for, $arnes L 1oble is installing !nternet kiosks so in4store customers in search of an out4of4stock book or (D can order the item from the company,s Web site, thereby covering all potential bases Don;t count out the :u))ite"* "here are and will always be customers who simply don,t use the Web but nevertheless want to do business with you !n the flurry to integrate the Web and handheld technologies as ma#or purchasing channels, many companies put customers who want to call or fa5 in an order at the back of the line, despite their potentially high value (ustomers, overall data, including purchase history, revenues, profitability, and support costs6not their channel preferences alone6should dictate their value and thus their treatment /tart %rofiling &our %artner" now* -ven advanced technology companies suffer from the Bshoemaker,s childrenC scenario, storing sporadically gathered and often paper4based profiles of their alliance partners and resellers Don,t use the fact that you,re in the throes of building a data warehouse or (2* data mart as an e5cuse for not profiling and tracking attributes of your partners and suppliers When you have your customer data available, you,ll need that partner information more than ever Remem!er !u"ine"" %roce""e"> *ost business integration efforts involving (2* focus much more on technology than on process, an assumption that can lead to overspending or to solving the wrong problem <What good is building a system to provide order status to the sales staff when neither the contact center nor the customer is permitted to access itM?

$e it tighter supply chain integration, optimi'ation of alliance partner ships, or customer self4service, understand (2*,s ob#ectives before deciding on its mechanics <We,ll see a before4and4after business process scenario in Chapter 7 ?

The #anager's Bottom ,ine

Whatever a company,s reason for starting on the road to e(2*, the destination should be competitive advantage and enhanced customer perception "oo many companies have made customer relationship blunders by assuming the !nternet sales channel was the most critical, only to be confronted with new online competitors and renewed vigor from the brick4and4mortars

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # ''

%ikewise, make sure your company integrates its e4business initiatives while there,s still time "he flash4in4 the4pan dot4coms who failed to make the process improvements necessary to keep customers happy reali'ed their mistakes too late "he customer4at4any4cost strategy doesn,t work, nor does the assumption that every transaction must be profitable $oth strategies risk alienating the freAuent customer who occasionally makes small purchases but who is nevertheless valuable !n The luetrain Manife"to$ The En) of Bu"ine"" A" 9"ual1 the authors make the point that Bmarkets are conversations C +ow a company encourages and facilitates feedback from its customers, partners, and suppliers is a sound indicator of that company,s nimbleness and ability to innovate !ndeed, the innovative business plans and youthful e5ecutive teams of yesterday,s pure4play dot4coms were often overshadowed by infle5ible business practices and halfhearted technology integration efforts, and the results litter (alifornia,s 2oute F>F from *enlo Park to *arin .now your customers and partners, and differentiate them according to their value We,ll e5plore the means of understanding that value in the ne5t chapter

Chapter >. Anal!tical CR#

As customers become savvier shoppers, they will continue to blend their purchasing and service habits A busy e5ecutive who buys a video game for her child online while at the office might nevertheless check the status of her order from her +andspring palmtop while en route to the mall for a new set of golf clubs %ikewise, a customer support agent needs to understand who,s at the other end when he picks up the headset or initiates a live chat "he customer calling a toll4free E>> number to make a purchase doesn,t care that your systems aren,t integrated6she assumes your company knows she,s made past purchases on your Web site !n short, she e5pects you to know who she is

The Case "or Integrated 'ata

"ake the case illustrated in Figure 6-1, in which an e4tailer,s marketing group has implemented (2* to target more effective marketing campaigns $y tracking specific purchase patterns, *arketing can segment customers and then e4mail those customers a promotion targeted to that segment,s characteristics !n the case study, *arketing has already seen a J percent uplift in sales as a result of this strategy 0igure >-1. 2ne compan!( two CR# s!stems

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # '(

!n the meantime, the e4tailer,s customer service department is using another vendor,s (2* tool for call center automation !nformation about specific calls is loaded from the call center system into a database used by an analyst in the customer service department to evaluate trouble ticket resolutions "he analyst then gathers post facto customer feedback by sending customer satisfaction mailings to customers who have registered a certain type of complaint Although both (2* environments have resulted in improvements in their respective departments, the scenario as a whole is actually risky $oth *arketing and (ustomer 3upport are well intentioned in their efforts to improve one4to4one communications with their respective customers $ut what if the customer happens to be the same personM "he risk here is that the marketing department might not recogni'e when customers within its targeted segment have contacted the call center with problems about a popular product and whether those customers are currently unhappy with the company !n such a circumstance, cross4selling another product might do more harm than good (onversely, the (32 responding to a complaint might not recogni'e that the customer on the telephone has made several purchases in the past week and falls into the company,s B8olden (ircleC segment 7ailure to escalate this customer,s complaint could mean losing a high4value customer !ndeed, applying the same rules to each customer is not only risky) it will put this company behind its competitors, who are striving to differentiate customers and their treatment of them 0nderstanding the customer,s most recent interaction, or touchpoint, with the company6whether or not it was with the call center6can help the (32 determine how to best meet that customer,s needs -ven more important is the knowledge that the customer has a rich, multi4year purchase history <!ndeed, a detailed order history is critical for understanding when and how a customer buys products, whether she is regularly up4sold products, and if she responds to promotions ? Purchase history can combine with other information, such as whether the customer has recently moved, has college4age children, eats out often, and rates high on the customer value scale 3uch information can be summari'ed as a customer profile on the (32,s screen or displayed as a Bscreen popC as soon as the call center system recogni'es the customer,s incoming phone number "his scenario is a growing problem for companies deploying (2*, BeC or otherwise !n their haste to adopt customer loyalty programs and increase retention rates, marketing departments are acAuiring (2* tools without touching base with other areas of the company %ikewise, customer support centers6whose e5isting call center platforms might include supplementary (2* capabilities and who are likely to have already established customer communications procedures6might not account for the needs of their counterparts in sales or marketing before formali'ing their own (2* initiatives "his problem is often due to company politics but more often due to diverse logistical and infrastructure problems that mandate greater levels of customer knowledge, and fast "he flaw with such a BstovepipeC approach to (2* is that the relationship with the customer is understood to be based on a subset of the customer,s actual interactions with the company "he company deploys (2* and bases decisions on a subset of these interactions "he resulting decisions6for instance, *arketing sending out a satisfaction survey a few weeks after the customer support survey is released6could end up alienating the customer rather than instilling loyalty !n a recent survey by the 9ankee 8roup, JI percent of companies claimed to be collecting information about individual customers +owever, as shown in Table 6-1, how they collected that information varied widely !t,s clear that although companies might agree they need (2*, many don,t agree on the reasons why A (2* assessment my company recently conducted represented the problem brilliantly 3o we could gauge an !nternet service provider,s (2* readiness, we asked to meet with several of the e5ecutives who had e5pressed the need for a (2* strategy "he differences in their individual interpretations of (2*, as described in Table 6-2, proved profound "he alarming degree of disagreement in our conversations with these e5ecutives led us to believe that developing a detailed, enterprise4wide (2* strategy wouldn,t garner much support +owever, everyone agreed on one common denominator: the pressing need for more and better customer data

A +ingle =ersion o" the Customer Truth

"he scenario illustrated in Figure 6-1, in addition to being unwieldy, is hardly cost effective *ultiple overlapping tools within a single company involve duplicate effort in technology acAuisition, systems integration, installation, deployment, and training, not to mention multiple and often redundant investments %ikewise, the lack of a single (32 interface for customer data forces the (32 to access multiple systems to aggregate different information about the customer6sometimes while the customer waits Table >-1. How Customer In"ormation Is )athered"#$

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # ')

Direct 3ales !nteractions -4*ail (all (enter !nteractions Web 3ite &isits 3urveys 7ocus 8roups -ventsT"rade 3hows
[1]

K>V @>V HIV H>V =EV =EV =JV

<3ource: "he 9ankee 8roup, =>>>?

Table >-7. 0our CR# %erspecti9es( 0our 'i""erent 4 ecuti9es E$ecuti%e &'a e( on CRM &P of *arketing BWe desperately need a (2* system We don,t even know how many real customers we have: !,ll pay for the darn tool, but we need it fast !,m thinking of a customer profile dashboard 1ow, when can we get startedMC &P of 3ales B/f course we need it, but we,re not ready yet: !,ve #ust funded an effort to clean up all our contact data After all, what good is customer profiling if the data makes no senseMC

&P of (ustomer B(2*M Why, we,re already doing it: /ur call center system gives our service reps customer 3upport information automatically when the customer calls in We can even see a list of products for that customer: Who says we need anything elseMC &P of -ngineering B3ure, customers are important but it,s taking us K@ days to provision new services !f we don,t fi5 that first, we,re not gonna have any customers left: !f we only knew how to prioriti'e our installationsPC

After all, the ma#ority of (2* products started out as so4called point solutions, designed to solve a specific business function such as sales force automation -ach of these products typically used a local database to store current customer information, hardly a flawed architecture $ut the proliferation of these (2* tools around the enterprise begat assorted and mismatched customer files, all of which were critical to their respective systems, but none of which were linked: 1otice in Figure 6-2 that each database contains key customer information critical to the purpose and functionality of the (2* system "he customer data in each database is different, depending on the reAuirements of the organi'ation using its data $ut as in real life, some organi'ations need the same data about customers) thus the 37A and contact center databases both contain customer contact information as well as payment status, and the 37A and marketing databases each store sales revenue data "hough the names are the same, the contents and format of the data elements themselves are likely to be drastically different across systems 0igure >-7. 2ne Compan!( #ultiple Customer 'atabases

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # '*

Availing a complete customer profile to a range of different organi'ations often means storing data in a centrali'ed, cross4functional database known as a data warehouse /nce e5clusive to the realm of large companies who had a burning need for strategic decision4making as well as generous !" budgets, data warehouses have emerged over the past F@ years as the de facto platform on which companies store and analy'e comprehensive data "his analysis is performed using application tools specially designed to deliver business intelligence "hough data warehouses can be used to store a wide cross section of sub#ects from sales compensation data to product specifications to geographic mapping, they are particularly valuable for offering an integrated view of the customer or, in data warehousing parlance, Ba single version of the truth C !nformation stored on data warehouses originates from various systems across the company, providing a true IK>4view of activity, both current and historic 3uch source systems include any of the following: $illing systems /rder and provisioning systems -nterprise resource planning <-2P? systems +uman resource systems Point of sale <P/3? Web servers *arketing databases (all center systems (orporate financial packages -5ternal data providers[2]
[2]

B-5ternal dataC means data coming from outside the company "his can include anything from competitive data from a market research firm to consumer change4of4address data from national data service firms

"he greater the number of sub#ect sources for a data warehouse, the richer the information available to the business Figure 6-3 shows the type of data that typically moves to and from a data warehouse to provide an integrated view of the customer 0igure >-:. Integrated customer data on a data warehouse

/ne of the strengths of a data warehouse is in its ability to store large Auantities of historical data, enabling companies to compare customer behaviors over time 7or instance, by storing customer purchase history, a company can evaluate what might have attracted a customer to making a purchase or gauge whether that

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # (0

customer,s purchases are increasing or decreasing (omparing time4variant data can provide the company with the information it needs to deploy intelligent marketing and sales campaigns and offer customers appropriate levels of service 3toring historical customer data is the main reason for the enormous growth of data warehouses, both literally and figuratively 7ailure to integrate customer data across all touchpoints results in having only partial customer data, which can in turn cause poor decisions about how to treat customers "his is why data integration is an oft4stated goal of (2* stakeholders in survey after survey !t,s also one of the biggest challenges of today,s (2* initiatives !n the early days of (2*, industry e5perts were celebrating (2* products for their automation of previously manual tasks "oday, however, many of these systems have simply perpetuated the Bstovepipe syndromeC of proliferating databases that contain a mere snapshot of information and are available to a small subset of business users "hus most industry analysts have changed their tune, calling for integrated data as a (2* critical success factor, as in the following: 9ou need a single source of clean and consolidated customer information to do customer relationship management well WPatricia 3eybold 8roup Different applications have wildly different means of tracking and reporting on QcustomersR, leaving companies with islands of unrelated data "he result is a fragmented customer view that impairs a company,s ability to determine key metrics like overall customer profitability and lifetime value W7orrester 2esearch A panoramic view of the customer is only possible with an analytic view of the customer W *-"A 8roup !ndeed, in a recent research study, 7orrester reported that /nly IJ percent of those surveyed knew if they shared a customer with another division in their company /nly => percent could tell if a customer had visited the company,s Web site /nly =I percent of (32s could see a customer,s Web activity [3]
[3]

B"he (ustomer (onversation,C The (orre"ter Re%ort, June =>>>

(learly, integrated customer data is mandatory for a company to serve its customers well *otivating the customer to come back6remember our definition of (2* in Chapter 1M6means understanding more than a customer,s name, current address, and income level !t means knowing his preferred products, his consumption rates, values, lifestyle, life stage, and even a superset of his behaviors out"i)e of his relationship with your company And it works the other way: customers respond better with a unified view of the company "he scenario in Figure 6-1 can deliver disastrous conseAuences in the all4too4common instance in which the Web shopper and the customer reAuesting assistance are in fact the same person 2eceiving a cross4sell promotion a day after complaining about a product might irritate a customer on the brink of leaving B! #ust complained about the product and now they,re trying to sell me another onePdidn,t they hear meMC is the likely refrain from the customer who,s received dis#ointed communications from different organi'ations within one firm

CR# and the 'ata 5arehouse

"he best4intentioned companies often slip up when it comes to providing data warehousing and the accompanying business intelligence capabilities to their business users /n the one hand, the !" department understands that data cannot be divorced from (2* and that the corporate data warehouse is the ideal (2* source system /n the other hand, the business community is pushing for a Auick win and doesn,t care where the data comes from as long as they get it fast "he business begins using its (2* application without a vision for how to drive ongoing business4process improvements !" scrambles to provide enterprise data to the (2* application without understanding which data will support the actions and business processes the business wants to improve "he businesspeople keep asking when it will all be finished 3o begins the slippery slope of the (2* point solution As the data warehousing community saw with its stovepipe data marts that effectively served organi'ational needs but were tough to link together, stovepipe (2* systems like those in Figure 6-2 represent the burgeoning reality for many companies, even those

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # (1

with robust, enterprise4wide data infrastructures When the time comes to integrate disparate (2* systems, there is often more work6and more e5pense6than if (2* had been built around the data warehouse the first time At a recent conference, a well4known industry analyst proclaimed (2* to be the new data warehouse Bkiller app C "he analyst hailed (2* as the first practical application for vast amounts of customer data and claimed it would reinvigorate many a dormant data warehouse 3uch proclamations, although Auotable, aren,t necessarily right Data warehouses provide a rich source of analysis for a range of topics, customer4focused and otherwise "hey contain product defect data, welfare claims, criminal records, and human gene seAuences, among other information !ndeed, there are thousands of data warehouses that don,t involve managing customer relationships (2* is not a mandate for data warehouses) it,s not even a data warehousing best practice $ut the inverse is true: data warehousing availing rich customer information across the enterprise is definitely a (2* best practice -ven so, data warehousing6while necessary to a successful (2* program6isn,t sufficient in and of itself

4nterprise CR# Comes Home to Roost

(ompanies are Auickly discovering that their customer relationship management efforts aren,t worth much if they don,t include analysis WInformation Week As we discussed in Chapter 1, selling to e5isting customers is much easier and more cost effective And the better your company understands those customers, the better it can communicate with them "he ability to leverage the data from customer4facing systems for back4office analysis has proven to be directly proportional to a company,s success in enhancing customer loyalty Perhaps the most challenging problem posed by stovepipe (2* environments is that they prevent the company from knowing certain potentially critical facts 7rom the disconnected environments illustrated in Figure 6-2, it is clear that some important business Auestions cannot be easily answered A (32 scheduling a follow4up communication with a customer cannot discern that customer,s value score to determine the level of service that should be provided A segment manager can,t track a customer,s complaint history before trying to cross4sell a product "he campaign staff in marketing doesn,t want to solicit customers who are late paying their bills An account rep has no idea whether a key business customer has responded to certain key promotions A (32 can,t see the full list of products a customer might have so she can determine whether a given trouble ticket applies to more than one A customer support analyst tries in vain to measure complaint history against sales revenues for a given product A marketing data analyst lacks the data necessary to understand the role of the company,s key sales contact for customers in the segment with the highest sales revenues A customer support e5ecutive can,t obtain a regular report on average customer satisfaction survey scores for each customer segment

"he customer information that can provide answers to these and other business Auestions can drive key decisions about customer treatment, sales techniAues, and upcoming promotion strategies, among others $y integrating operational (2* data with information from around the enterprise, companies can begin performing analytic (2* and, with it, make truly customer4centric business decisions "he practice of data analysis predates even databases and transcends data warehousing and (2* Plus, it,s a varied discipline ranging from standard Aueries to statistical analysis to comple5 predictive modeling *any (2* vendors have incorporated analysis6thus the term Banalytical (2*C6into their products, thereby offering users the ability not only to perform key (2* business processes but also to apply business intelligence to these (2* functions to make them more accurate and more valuable 7or instance, - piphany has incorporated predictive modeling into its toolset to provide lists of customers most likely to respond to a given marketing campaign /ther (2* product vendors have incorporated purchase4pattern recognition into their offerings, enabling marketing and sales staff to compare customers with like behaviors so they can position new products to an optimal audience

"he main difference between operational and analytical (2*, as introduced in Chapter 1, is that analytical (2* is the only means by which a company can maintain a progressive relationship with a customer across that customer,s relationship with the company "his means being able to track a range of customer actions and events over time, using data from operational (2* systems as well as from other enterprise systems, as shown in Figure 6-4 0igure >-;. Anal!tical CR#& The sum o" its parts

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # (2

Analytical (2*,s IK>4degree view emphasi'es communicating with customers across channels based on the optimi'ation of relevant two4way and personali'ed interactions, be they through a new marketing campaign or from a caller,s complaint history "his offers the ability to transcend more broad4brush customer segmentation and deploy customer communications that are truly one4to4one (ompanies with both operational and analytical (2* capabilities are changing business strategies to 2eward customers with personali'ed discounts and perks for using lower4cost channels Proactively offer products and services that fit a given customer,s needs based on what the customer has already purchased !ncrease purchase rates by dynamically personali'ing content based on the Web visitor,s profile Ad#ust per4customer marketing e5penditures based on lifetime value scores Analy'e combinations of touchpoints across channels to predict a customer,s ne5t likely purchase 2elate high Web traffic to individual visitors and customer segments to better understand Web use and improve Web design "ailor commissions and incentive programs for sales partners based on the value of the customers they bring Prevent a customer from churning by offering incentives based on individual preferences

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # ($

Provide customers in the highest value tier with personal representatives who understand their history and preferences

"he advent of (2* suites has taken up a lot of the slack when it comes to data integration 0ntil recently, companies that didn,t already have established data warehouses were out of luck if they tried to integrate disparate (2* products, software, processes, and data "he #ob was #ust too difficult 3uites6single vendor solutions offering a range of functions6by their definition tie (2* functions together with a seamless user interface so (2* users can not only share data but can actually run the same (2* modules A marketing person can look at a customer,s contact data through the same application used by the sales force %ikewise, analysts within the company can access a centrali'ed (2* portal to view a range of customer4related data without having to change application tools *icro3trategy,s new e(2* product provides a central portal or BcockpitC through which marketers can create and view customer segments, monitor campaigns in real time, and generate a variety of customer reports "his vendor, long known for its business intelligence software, is combining powerful analysis capabilities to interrelate (2* functions such as Web traffic analysis and marketing automation Database powerhouse /racle continues to enhance its integrated suite of tools, which includes everything from Web site storefront customi'ation to customer self4service, and arch rival 3iebel 3ystems, in addition to offering a range of service, marketing, sales force automation, and analysis capabilities, recently unveiled its 3iebel +andheld organi'ation to further its multimodal capabilities

The #aGor T!pes o" 'ata Anal!sis

As we,ve discussed, the integration of operational and analytical (2* applies across channels !ndeed, it e5cels there $ut the Web is more than #ust a communications channel for most companies6it,s a rich source of data, offering customer behavior information that has no eAual in the brick4and4mortar world A few emerging analysis techniAues heavily leverage enterprise4wide data, and others rely particularly on Web4collected data

2,A%
Despite its varied interpretations, Bdata miningC has acAuired an almost mystical allure over the past decade Although its widespread interpretation is as an activity associated with Auerying increasingly detailed data 6Bdrill down,C as it,s called6in fact, data mining is a highly speciali'ed subcategory of analysis that has specific applications from both within and outside (2* !n fact, the term Bdrill downC is more appropriately applied to the practice of online analytical processing, known as /%AP /%AP has become the most popular type of decision4support analysis, allowing the average businessperson to e5plore data online with the aim of focusing on detailed data at a lower and lower level of the data hierarchy *ost often, this means generating an online report, analy'ing the results, and submitting a more detailed Auery in order to understand the result data /%AP generally focuses on providing a set of data attributes from a database organi'ed around certain dimensions, such as time and location "hus, a user can reAuest the company,s regional sales revenues for all baby care products by region or by store +e can reAuest a report detailing regional revenues for each month within a Auarter Although /%AP is generally lumped into the data4mining rubric6usually by software vendors eager to claim the data mining moniker6it normally relies on data that has been summari'ed according to particular dimensions Data mining involves the identification of meaningful patterns and rules from detailed data, usually from large amounts of data "hus, instead of analy'ing customer segments to determine who is likely to churn, as with /%AP, data mining would e5amine individual customers, touching each of the millions of records in a database /%AP analysis reAuires the analyst to have a Auery or hypothesis in mind, but data mining can generate information to show patterns and relationships without the analyst,s knowing about them Data mining can identify clusters of customers who buy similar products6for instance, home office workers who buy P(s, power supplies, toner, printer cables, wastepaper baskets, and coffee With an /%AP tool, the analyst would have to guess which products a home office worker would purchase and then identify customers making such a purchase /%AP analysis typically e5amines category groupings such as P(s, printer cables, and toner <computer4related products?, but might not recogni'e out4of4category purchases such as coffee and wastebaskets

5here Theor! #eets %ractice& 'ata #ining in CR#

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # (%

Data4mining tools identify patterns in data and deliver valuable new information that can increase a company,s understanding of itself and its customers Data mining is commonly used to help data analysts search for information they don,t yet know to look for, often involving no hypothesis !t has helped companies uncover a diverse set of new knowledge, from a customer,s ne5t purchase to optimal store layouts to the most favorable release date for a movie in preproduction "here are many different types of data mining algorithms, some esoteric and not easily applicable to business problems <multivariate adaptive regression splines, anyoneM? Although the specific algorithms themselves might vary6decision trees and neural networks are fundamentally different but can both be used to predict behavior6the following three types of data mining are particularly germane to (2*: F 're)iction* "he use of historical data to determine future behaviors Predictive modeling generates output that populates a BmodelC or structure to represent the results 7or instance, a predictive model can indicate the ne5t product a customer is most likely to purchase, based on historical purchases by that customer and other customers who have purchased the same products /e6uence* 3eAuential analysis identifies combinations of activities that occur in a particular order $usinesses use seAuential analysis to determine whether customers are doing things in a particular order !t can help a business distill behavior from events captured from various operational systems around a company to determine patterns 7or instance, a bank or telephone company can learn more about a given customer or customer segment by e5amining patterns in the slowdown of purchases or in service cancellations A""ociation* Association analysis detects groups of similar items or events !t can be used to detect items or events that occur together "he association algorithm is often applied to market4basket analysis to help businesses understand products being purchased together <peanut butter with #elly, for e5ample? $y understanding customer and product affinities, a company can make important decisions about which products to advertise or discount and which customers should be targeted for certain products

/ne central difference between data mining and other types of decision4support analysis is that data mining usually involves statisticians or product specialists intimate with the use of the correct algorithms and their application to business problems, as well as with the specific data mining software Although a businessperson rarely mines the data herself, she might use data4mining results6either represented graphically in a visuali'ation tool or deployed to a database for general Auery access6to help make important decisions about managing customer relationships "here are myriad uses for the three types of data mining #ust described, from targeting brand new customers by modeling e5isting customers, response patterns to avoiding high4risk prospects through risk prediction or forecasting a customer,s lifetime value *any companies have acAuired dedicated data mining servers, onto which they load customer data records to build models and e5plore various customer behavior patterns 3uch activities are usually processing4intensive so standalone data mining platforms avoid impacting processing on other systems "hese servers are usually linked to a company,s data warehouse, enabling data analysts to easily access customer data to e5periment with various pricing plans, for e5ample, or to create dynamic customer segments for testing new campaigns and performing what4if analysis -ach type of data mining can yield findings that result in high4impact business actions 7or e5ample, an electronics retailer in %ondon discovered that most prospects likely to buy a portable D&D player commute to work on the train, causing the retailer to reallocate much of its marketing budget from daytime television commercials to newspaper ads and billboards "he company saw sales of these players shoot up HI percent after changing its ad media 0nderstanding the impending behaviors of customers and prospects is the key to data mining, and where (2* is concerned, two data4mining applications in particular stand out: click"tream anal&"i" and %er"onalization*

Clickstream Anal!sis
!" departments have become giddy over capturing clickstreams6the data that illustrates a Web visitor,s footprint around the site (lickstreams connote how the user arrived at the site, how long he stayed, what he did during his visit, and when he returned "hey,re the eAuivalent of a camera in a department store recording a shopper,s every move (lickstream data6usually stored either as part of a company,s data warehouse or in a dedicated clickstream data store sometimes called a Bdata webhouseC[4] 6is growing hand4in4hand with corporate e4 commerce activities
[4]

9es, ideally a customer,s clickstream data should be integrated into the enterprise data warehouse along with other customer4related data +owever, much of the clickstream data collected by companies is anonymous data that needs to be mapped back to customer4specific information with the customer,s permission 7urthermore, clickstream data

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # (&

warehouses are growing at such a rate that it is often administratively impractical to store clickstreams on the same hardware platform with other corporate data

/ne client of mine, a general merchandise retailer who has #oined the e4tailing ranks, wants its Web site to be as BstickyC as possible and has begun analy'ing clickstream data to surmise why customers might leave the site prematurely "he company has sharpened its analysis to determine the value of abandoned shopping carts When a customer leaves the site in the midst of a shopping trip, whatever the reason, the company looks to see what products were in the cart "he data is then compared with similar data from other abandoned carts to e5amine +ow much revenue the abandoned carts represented <in other words, how much revenue was lost because of the customer,s early departure? Whether the products in the cart were high4profit items or loss leaders !f the same products were found in other abandoned carts "he volume of products and the number of different product categories in the cart Whether the total bill for the abandoned carts consistently fell within a certain dollar range At what point during the shopping trip the cart was actually abandoned <When the customer saw the shipping chargeM When the site reAuired a personal survey before confirming the purchaseM? +ow the average and total bills for abandoned carts compared with BunabandonedC carts6those that made it through the checkout process

"he result of this analysis can trigger some interesting theories 7or instance, perhaps none of the products in the cart was appealing enough to a particular customer to motivate her to continue shopping /r the customer was put off by freAuent inAuiries asking her whether she was ready to check out /r possibly, at a particular dollar total, the customer thought the better of the entire shopping trip and bailed 7inally, perhaps the number or mi5 of products in the cart reminded the customer of another site that offered a steeper discount for similar purchases Admittedly, some of these theories are mere guesses $ut when e5amined regularly and with consistent metrics, clickstreams can reveal some interesting patterns "he fact is, whatever the customer,s reason for leaving the site and a cart full of merchandise, the e4tailer can take a variety of actions based on both hard findings and less4then4certain e5trapolations "he e4tailer can use these results to tweak the design and content of its Web site and monitor resulting improvements Patterns might indicate product affinities, suggesting cross4selling or up4selling strategies And when combined with customer demographics, psychographics, and past behaviors, clickstream data can bring the understanding of customer behavior to a whole new level "he latter option is perhaps the most intriguing: rather than simply e5amining a customer,s navigation patterns and guessing about which actions to take, the retailer can combine those patterns with more specific customer data6his previous purchases in that product category, key demographic and psychographic data, or his lifetime value score, for e5ample6to provide a holistic view of that customer,s value and interests !t might have been a one4time4only shopper who was lost, but in other cases a high4 value customer might have left the site on multiple occasions A tailored e4mail message or electronic coupon6perhaps targeting one of the products left behind on a prior trip6could make all the difference the ne5t time that customer decides to log on "he following scenario, based on a real4life case study, illustrates how clickstream data, when integrated with other key data from around the enterprise, enhances opportunities to personali'e customer communications

+cenario
9ou,re a marketing manager at an up4and4coming eyewear Web site, www glasses4r4us com 9our company has #ust deployed a so4called data webhouse and for the past few days you,ve been looking over your data analyst,s shoulder6they,ve #ust begun gathering user clickstream data 9our data analyst, Jack, points out one session particular 9ou notice that the shopper arrived at your site through a banner ad posted on a partner,s Web site: www eyecare4youcare com After the shopper arrived at your site, he entered his prescription and began looking at various brands of glasses After browsing for glasses, the shopper started comparing brands of contact lenses +e finally selected a brand of contacts and placed the product in his shopping cart +e entered the order information, including his credit card number, but left the site rather than submitting his data and

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # ('

completing the purchase +ow do you entice this shopper to return to your site and buy somethingM *ost marketing managers won,t be looking over analysts, shoulders at individual clickstreams $ut understanding a customer,s navigation around a site can help a company decide how to lure him back 9ou have several choices 9our company,s usual tactic for all registered visitors who visit the site but don,t make a purchase is to mail them a coupon for D@ off a new pair of fashion eyewear +owever, this particular visitor was looking at contacts +e,d probably trash the glasses coupon as soon as it arrived in the mail A better choice might be to e4mail the visitor a discount code6a coupon is given a uniAue code so no one but the given customer can redeem it6for DF> off a new pair of hard contacts or three pairs of disposable lenses <a predictive model could confirm this as the best course of action? 9our profit on contact lenses is usually good, and the shopper seemed on the brink of making a purchase $esides, e4mailing the offer is a lower4cost option than the 0 3 postal service and would probably result in Auicker turnaround time

Along with this more personali'ed tactic, you could also monitor the referring Web site for other referred shoppers who have researched or purchased contact lenses !f contact lens activity is particularly high, you might consider placing a more customi'ed banner ad on the partner,s site and even provide better financial incentives for the partner when new contact lens customers click through With the e4mail strategy, the customer,s more likely to return to the site and you,re almost guaranteed a purchase Win4win, rightM Wrong "he problem with this scenario is that even though analysis is involved, it,s still dangerous "he fact that you,re looking at only a single customer touchpoint can mean big problems and bad decisions !f your clickstream database contained behavior history on this shopper, things might turn out differently 9ou would have more information about the customer, and you,d know the following: "his isn,t the customer,s first visit to your Web site +e has made three other purchases on three separate occasions "he products he has purchased have all been on sale

!n short, you would understand that your Web visitor is what,s known as a Bcherry picker,C someone who only purchases low4margin products when they,re being promoted 1o cross4selling, no up4selling, no true loyalty +e,ll be back again, too, when he finds the ne5t markdown

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # ((

!f you had this information, you would understand the optimal marketing tactic for this customer: Do nothing Any further marketing to him would be a bad investment /f course, you,re perfectly happy to have this customer return to your site of his own free will $ut you,ve already invested too much money in an unprofitable customer, and you can,t afford for the ne5t transaction not to be profitable -ach time a retailer price4subsidi'es products for cherry pickers, it is losing an opportunity to sell that product to a more valuable customer "he retailer is in fact investing in an undesirable customer relationship

%ersonali3ation and Collaborati9e 0iltering

Chapter 2 introduced personali'ation, the practice of tailoring communications directly to a customer segment or, increasingly, to an individual customer "he premise of personali'ation is that, by collecting sufficient customer data, a company can market to an individual,s uniAue needs, both now and in the future Personali'ed communications is the principal techniAue via which companies can convince customers they understand them and that their information6which the company often uses thanks to the customer,s e5plicit permission6is mutually beneficial "he goal is to deliver accurate product recommendations, content geared to individual preferences, and targeted promotions for individual Web visitors6and in real time When done right, personali'ation means not only maintaining customer loyalty, but also driving purchases higher !t leverages detailed information about individuals and can dictate some very tactical decisions "he following analysis topics from a drugstore e4tailer suggest the level of individual detail and resulting tactics personali'ation can provide: 7or people who have bought or e5pressed interest in vitamin supplements, which other products are they likely to buyM +ow likely is (ustomer N to buy prescription drugs onlineM What other items are likely to be in a shopper,s market basket if he buys, say, decongestantM Which products are most similar to the $rand N eyedrops the customer choseM

Personali'ation can take various forms !t can involve customi'ing actual Web pages, including a Web site,s look and feel, according to the features favored by an individual visitor *any Web sites allow the visitor to customi'e the site according to her preferences, eliminating format variations and allowing her a private window into the company 0se the search function oftenM *ove the search window to the top of the page %ike customi'ation, so4called locali'ation can focus site content to the visitor,s particular geographic area 1otice that the personali'ation e5amples from the drugstore e4tailer above hint at predictionM !ndeed, most personali'ation software involves specific data mining algorithms "he two main types of personali'ation are rules4based personali'ation and adaptive personali'ation 2ules4based personali'ation leverages established rules that dictate, for instance, which products might be purchased together or whether a certain Web page should precede or follow another When a visitor to a software Web site buys Ouicken, the site might suggest he buy ?uicken$ The Official @ui)e before going to the checkout screen 2ules4based personali'ation most often involves rules that have been hard4coded into the software 7or this reason, it,s often difficult to maintain and support "he other type of personali'ation, adaptive personali'ation, learns as it goes *ore commonly known as collaborative filtering, this type of personali'ation gets smarter as it observes customer behaviors and applies them to new circumstances 7or instance, if a gardening e4tailer using collaborative filtering observes that shoppers tend to buy low4cost perennial flowers at the same time they order gardening tools, the Web site might begin suggesting a flat of pansies to all customers who buy bulb planters (ollaborative filtering uses the behavior of other BlikeC visitors as the basis for its recommendations (ollaborative filtering tools are often more comple5, and thus more e5pensive, than rules4based personali'ation "he most celebrated e5ample of collaborative filtering is Ama'on com,s purchase circles, in which Ama'on factors in the buyer,s past purchases and geography to suggest what readers who live in her neighborhood and have similar interests might be reading "he more similar shoppers buy, the smarter Ama'on becomes about their preferences, and the more accurate are the site,s recommendations 3everal Ama'on com customers ! know are cherry pickers on other booksellers, Web sites during special promotions, but they always return to Ama'on because Bthey know me better C Perhaps the most telling delineation in personali'ation is in whether or not the user knows it,s happening !n the permission marketing scenario described in Chapter 2, Web visitors voluntarily provide personal information to Web sites where they believe there will be some sort of 6ui) %ro 6uo$ the company will use the information to provide a value4added service such as periodic discounts or special4interest newsletters 3ome sites can personali'e content without making the shopper aware that the products he,s seeing are different from those of fellow shoppers6who might have different profiles and preferences

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # ()

Web retailers who combine e(2* with detailed customer data and advanced personali'ation can customi'e content and screen layouts for individual visitors to increase the site,s stickiness and the shopper,s propensity to buy /n the other hand, companies such as %ands, -nd simply ask customers what they like, whether or not they make a purchase "he company,s *y Personal 3hopper feature shows Web visitors various product combinations and solicits their feedback "his practice is different from the BinferentialC personali'ation in which a company applies comple5 logic to infer a customer,s preferences6BreferentialC personali'ation simply stores a customer,s responses to Auestions or surveys, making those answers part of her profile so they can be used to cross4sell her additional products Although custom content seems innocuous enough6it,s tantamount to reorgani'ing a brick4and4mortar store,s layout according to the way the shopper likes to move around the store6it can also have more controversial uses Ama'on com was revealed to be selling the same D&D movie for different prices to different shoppers "his practice, known as dynamic pricing, turned the concept of consumer choice on its head "he Web, famous for offering shoppers the opportunity to find the best deal with a simple mouse click, was now allowing sellers the opportunity to differentiate consumers and their price sensitivity Dynamic pricing actually leverages (2* technology and detailed customer data to let a company, say, compare a shopper,s desire for the product with his perceived ability to pay for that product 7or the first time, consumers are the ones competing for the best deal Arguments for and against dynamic pricing raise issues of consumer privacy <see Chapter 10? as well as good will After all, the more a shopper buys on a company,s Web site, the more information the site has on that buyer and the weaker the buyer,s negotiating power !n the past several years, airlines were routinely accused of raising their online fares for freAuent fliers6their most loyal customers6who are more likely to fly a particular carrier because of the mileage perks And, in a now infamous public relations gaff, (oca (ola was alleged to have been considering a vending machine that raised the price of beverages when the temperature soared !n defending dynamic pricing, e4tailers point to their brick4and4mortar counterparts who have been engaging in the practice for years Drugstores have been known to price cold medicines higher in chillier climates, and the shortage of 3ony Playstation = units last (hristmas drove prices up sharply <.mart used the shortage as a way of rewarding loyal customers first, steering Playstation availability to loyal shoppers on the company,s $luelight com Web site ? !n the Web world, where consumer data can include a shopper,s home address, income level, number of children, and even his resolve to purchase a product, dynamic pricing6 along with a number of other personali'ation techniAues6can be implemented more Auickly and to a wider number of shoppers 8ood or bad, Ama'on,s dynamic pricing e5periment might have gone unnoticed altogether if it hadn,t been forPthe Web !n an ironic twist, participants in an !nternet chat room began comparing their movie receipts and discovered that prices seemed higher for regular customers Ama'on claimed the dynamic pricing was simply a test and denied plans to formali'e the practice $ut the e5ample proves the Web has affected both business and social communications to the point where even (2* can sometimes be a double4edged sword

An Anal!sis Checklist "or +uccess

!ntegrating data from around the company, let alone using that data to drive sophisticated analysis that can differentiate you from your competition, is a lofty (2* ob#ective -ven companies with billion4dollar !" budgets still grapple with the challenge %earning from their mistakes is a good first step, including considering some of the following suggestions: Don;t un)ere"timate )ata integration* 7rom this chapter we know integrated customer data can mean the difference between a decision that alienates a customer and one that triggers long4term loyalty $ut even the best (2* suite products don,t offer easy answers on how to integrate disparate data from around your company "alk to vendors about their databases and their processes for systematically locating, gathering, modeling, cleansing, and loading data into a database or data warehouse And remember: A flashy user interface is useless if the data is incorrect Beware of A)irt& )ata*B "hat means data in its natural state, prior to being cleansed and formatted for use by businesspeople 3avvy business users who need customer information might be wary of it if they understand the data,s origins ! once heard a user declare he would Bnever touch that data:C after he learned the data came from the company,s archaic billing system, known to have data problems 0nderstanding data definitions and business rules before implementing (2* is the surest way to guarantee users will use what they,re given (onduct data definition dialogs and

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # (*

terminology discussions with cross4functional user groups to ensure common terminology6ideally, before (2* development begins If &our com%an& ha" a )ata warehou"e1 reinve"t in it now* !n FGGG, one of the B$ig "hreeC 0 3 automakers reportedly invested D@> million in its data warehouse infrastructure in a prescient attempt to centrali'e its customer data and bolster data Auality before launching an enterprise (2* program Although they had little e5perience with institutionali'ed customer management processes, managers at the auto company nevertheless understood that6due to comple5 interrelationships with its dealers and its drivers6its newly formed e4commerce organi'ation would hit the wall without a single version of critical data =now who;" anal&zing the )ata* "here,s a vast divide between the occasional user who points and clicks to access revenue figures at month end and the statistician who spends days trolling through data to arrive at findings that can result in strategic business shifts 0nderstand which users are actually performing analytical (2*, the data they,re looking at, and what results from their work <see the ne5t bullet point? Avoid the all4too4common Binteresting4but4not4relevantC analysis, where users simply play in the customer4data sandbo5 with no identified goals or resulting actions (ategori'e the continuum of end users from basic business users to so4called power users to statisticians, and consider setting up policies to dictate privacy controls, system security constraints, and appropriate analysis tools for each group Tran"late anal&"i" into action* *any companies with really big databases and really neat end4user tools nevertheless ignore what their data tells them -ven though they have rich customer information, they continue to rely disproportionately on the appointment books of their salespeople to generate leads and on e5ecutive golf outings to nurture alliance partnerships .now your current customer4focused initiatives and which ones could be improved with analysis !nstitute ways in which that analysis can result in recommendations for improvement 3ometimes this simply means empowering the businesspeople performing the analysis to actually make decisions themselves And sometimes it means setting up new internal processes to ensure that important findings drive tactical business improvements on"i)er &our cu"tomer )ata a cor%orate a""et* "his means not only dedicating to data the same infrastructure and budget as to other corporate assets) it also means recogni'ing data management as an organi'ational core competency Ascertain if your company has a single architecture and standards in place to define and source the data and translate it into meaningful business knowledge 0nderstand the resources and budget you,ve dedicated to data management, not as a component of (2* but as an overarching competitive weapon Don;t forget !u"ine"" %roce""e"* !mprovements don,t start and end with the right data, and #ust being smart about customers isn,t enough -ffectively managing and enhancing customer relationships has as much to do with work process improvements as it does with data analysis Performing analytical (2* means understanding how your customers interact with you and using this to refine business processes to provide them with a better e5perience6be it on the Web or in your stores 3o beware the vendor or consultant who proposes analysis as the end game Analytical (2* should be used to improve business processes, streamline workflows, establish sound policies, and accelerate customer purchases As we,ll see in the following chapter, sound business processes are the fastest way to a (2* return on investment

Case +tud!& 8nion Bank o" *orwa!

3ummary: !n the early FGG>s, 0nion $ank of 1orway, 1orway,s largest savings bank, with over a million residential and commercial customers, reali'ed it was losing touch with its customers !t needed to act fast6and this meant more than #ust implementing customer relationship management !t meant changing the way I>>> bank employees did their #obs !t,s a scary thing when you reali'e you don,t know what your customers want anymore -specially when your business is growing and you,ve managed to avoid the substantial losses of your -uropean competitors in a market that, in the early FGG>s, was anything but stable "hat 0nion $ank of 1orway had managed to escape the debilitating losses sustained by some of its competitors was great news "he bank had succeeded in providing more automated ways for its customers to perform their banking "his automation led in turn to lower costs and helped the bank limit some of the losses other banks incurred As customers adopted this automation, starting with automated teller machines but gradually encompassing the telephone and then Web4based technologies, they grew less dependent on their local 0nion $ank of

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # )0

1orway branches for e5ecuting their transactions "his was good news: the bank had begun driving its customers to use lower4cost channels And yet, as customers refrained from in4branch banking, the in4 branch bank staff was also losing the opportunity for customer dialog 1o one knew what was on customers, minds and what customers wanted

5hat The! 'id&

/ne of the big problems was all the different systems that contained customer data *ost of this information was dispersed across multiple production systems "o obtain basic information on a customer, the bank needed to find, gather, and consolidate information from all these systems6a process that could take days /ne bank e5ecutive described this network of disconnected data as Ban information labyrinth C /fficials at the bank reasoned that to obtain6and more important, use6pertinent customer information, the bank would need a complete view of its customers across the various systems that contained their data !ndeed, the bank reali'ed this view e5tended across sales channels, customer demographics, and the bank,s various products as well !f the bank could track customer behaviors, e5ecutives reali'ed they,d have a better shot at understanding and predicting future behaviors and customer preferences "his new information could drive cross4selling and target4marketing initiatives that promised to boost revenues and further mitigate costs 0nion $ank of 1orway embarked on the acAuisition of a data warehouse to consolidate its disparate customer data and to provide the bank,s businesspeople with a centrali'ed analysis platform on which to determine who their customers were, what they were interested in, and what they were likely to buy !n addition to eliminating the costly, time4consuming, and pervasive practice of data gathering, the data warehouse would provide the so4 called IK>4degree view of the customer base that would allow the bank to get to know its customers .ari /pdal, +ead of (2* for 0nion $ank of 1orway, says the bank,s "eradata data warehouse has become Bthe heart of our organi'ation C !n addition to aiding marketing functions, the data warehouse has made data available to a cross4section of the bank,s organi'ations, from finance to accounting to auditing BAt first, only a few people were interested in using the data warehouse,C /pdal admits, Bbut now nearly three thousand people have access C *ost of the business users use the data to perform sales and financial reporting, as well as customer portfolio analysis $ut beyond the daily analysis, 0nion $ank of 1orway can directly relate its ability to react more Auickly to market opportunities with customer information to an increase in market share 7or instance, /pdal and the (2* team launched a customer loyalty program focusing on the bank,s most profitable customers (ustomers provide personal information through a permission4based marketing campaign "he bank then uses this information to determine the optimal type of communication it should subseAuently have with that customer /verall, this program alone has resulted in a mind4boggling J>4percent response rate from customers whom the bank has obviously engaged in a dialog B/ur customers were saying they were happy with our offerings,C /pdal e5plains, Bbut they didn,t feel that we had been interacting with them on a one4to4one basis C 0nion $ank of 1orway added (2* functionality to its data warehouse infrastructure, enabling it to supplement its classic marketing programs with event4 based marketing and optimi'e its customer communications based on relevant and timely occurrences through all its distribution channels (ustomer response rates have reached K> percent "he bank has also used its newly robust customer data to aid in channel optimi'ation 7or instance, customers who weren,t using the bill payment service best suited to them would be told, via customi'ed promotions, how much money they could save by switching to the best payment service 1ot only does this help the bank cut down on more costly services) it also instills the perception that the bank is acting as the customer,s advocate

The Challenges&
+aving begun the process of building a data warehouse back in FGG@, 0nion $ank of 1orway has witnessed its evolution, in terms of both the data and the applications that provide business users with critical information $ecause the bank took a reAuirements4driven approach to (2*, development has proved to be relatively problem4free "he challenge was in building the organi'ation around the data warehouse 1ot having had a centrali'ed location for key corporate data in the past, many of the skills reAuired to develop and support the data sub#ect areas, database, and applications were new to the bank Job roles such as database administrator, application designer, data modeler, and others uniAue to a data4centric organi'ation had to become institutionali'ed to support the bank,s newfound business intelligence environment

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # )1

As the data and applications that helped the bank manage its customer relationships continue to grow and evolve, other areas of the bank have taken notice *ore users have reAuested access, and more systems have been integrated to ensure the Bsingle version of the truthC about customers "his has meant continuing growth of the development and support staff for customer data and its usage

)ood Ad9ice&
.ari /pdal is uneAuivocal in her belief that (2* is more of a series of behaviors than it is an actual pro#ect BWe don,t actually use the term internally a lot because there,s so much hype these days,C she admits B(2* can be so easily misunderstood to be something that it,s not C /pdal and her team symbolically point to the FGG@WFGGK period in which the data warehouse was adopted as the hub of (2* /pdal,s advice to others beginning large4scale (2* pro#ects focuses on the clarity of the (2* vision B+ave a clear goal of where you want to go,C she counsels, Band then take it one step at a time C Almost as an afterthought, she adds what might be the best advice of all: B"hink big) act small C

The )olden *ugget&

1otwithstanding 0nion $ank of 1orway,s sophisticated customer4focused marketing strategies, /pdal insists that a two4way dialog between a company and its customers is an unending process "he bank continues to survey its customers about their products, their investment preferences, their financial goals and planning activities, and their overall satisfaction with the bank "he bank then stores the feedback in the data warehouse, maintaining ever4evolving profiles on each individual customer 7or a company who admits it was losing touch with its customers, 0nion $ank of 1orway has become very high4touch indeed

The #anager's Bottom ,ine

!n a recent survey of companies engaging in (2* programs, *-"A 8roup and !*" 3urveys found respondents intended to increase their investments in marketing analytics as a result of implementing operational (2* "rouble is, the term Bmarketing analyticsC could mean anything from simple list generation to dynamic product recommendations Will these companies be readyM After all, the diversity and richness of customer4related data is directly proportional to the range of choices a company has about e5tending its (2* program to include analysis "he well4worn term BIK>4degree viewC e5tends beyond customer data to your entire enterprise 0sing Web and non4Web data to drive improved relationships with customers and suppliers should result not only in cost savings but also in actual revenue generation "he key is in the range of data available from across your company about your customers, as well as in its accuracy "he differentiator is in how the data is used strategically 2eturning to our depictions of operational and analytic (2* in Chapter 1, we can begin to see how (2* can bring the front office together with the back office, resulting in what the analyst firms have coined a (2* BecosystemC like the one in Figure 6-5 0igure >-<. An end-to-end CR# in"rastructure

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # )2

"he integration so widely acclaimed as a (2* imperative has as much to do with systems and business processes as it does with data (ommunicating with customers not only needs to be effective and on4target, it must be seamless (ustomer perception is everything, and customers should perceive that your company applies intelligent service standards regardless of the customer,s preferred channel, desired product, or service reAuest /nly you know how that intelligence translates into initiating the right message to customers 1either 2ome nor an enterprise (2* infrastructure is built in a day !n Part II of the handbook, see how a series of implementation tactics and critical success factors play a critical role in (2* deployment

%art II& 'eli9ering CR# Chapter ?. %lanning Dour CR# %rogram

Planning a (2* program can be as simple as building consensus over a series of meetings with key stakeholders who all have a vested interest in keeping customers /r it can be as comple5 as launching a multi4month pro#ect to gather reAuirements from across the company, interview stakeholders, and draft a game plan6working with staff members who might not have ever heard of (2* Whatever its scope, planning a (2* program is rarely as straightforward as it first seems (2* engenders business change, and business change isn,t #ust a by4product of (2*6it,s one of the goals "rouble is, many managers consider change to be a simple signature on a statement of work or even a mere Byes C $ut change isn,t #ust a point4in4time approval or edict) it,s an ongoing sales #ob "here,s a lot more to (2* than throwing together a pro#ect plan Although good planning can make or break a (2* initiative, planning involves more than simply drafting a list of action items A (2* program reAuires a clear understanding of and commitment to the company,s customer focus, vigilant adherence to detailed goals, commitment from both e5ecutives and line workers,

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # )$

and a constant awareness of the customer,s viewpoint And it usually all hinges on a crystal4clear business case 0nfortunately, many managers in charge of (2* 'ero in on the solution before they really get the problem

+cenario
9ou,re a consultant at one of those ubiAuitous Web design and consulting firms 9our company,s stock price has plummeted <unlike staff attrition, which has skyrocketed? *anagement is frantically trying to re4brand the firm from a Web design boutiAue into a bona fide management consulting company A high4profile e4commerce client has recently decided to take on (2* and has come to you for help (het, your company,s retail partner, calls a meeting of the newly formed pro#ect team A debate ensues about what the client means by B(2* C B"hey obviously mean personali'ation,C says "had, a programmer with thick black glasses that label him a hip techno4geek BPersonali'ationMC says (het B"he site,s not even tracking its visitors yet We,ll have to assess their e4business technology infrastructure C BWhat kind of customer data do they have nowMC asks a pro#ect manager as she munches on a muffin B! think they have a marketing data mart,C says another programmer B"hey have to capture clickstreams, we know that much,C comments a database e5pert hovering near the door 9ou,re new and reluctant to weigh in, but your time management ethic overrules your shyness and you ask, BWhat does the client want to do with (2*MC All heads turn in your direction 1obody speaks "he retail partner looks at you as though you,ve #ust fallen off a charm bracelet 9ou sink down in your chair !t,s going to be a long pro#ect (an your company or department answer the Auestion: What !u"ine"" value )o we e-%ect from RMC And if so, is the answer one that will lead to Auantifiable improvements in customer retention and satisfactionM Will it generate profitsM As we,ve seen in Part I of the handbook, (2* isn,t a single product or technology !t,s not e5clusive to marketing or customer care And it ideally involves a cross4section of customer touchpoints !ndeed, (2*,s inherent comple5ity renders it a risky endeavor, even for the most mature companies

'e"ining CR# +uccess

/ne of the most difficult parts of launching a (2* program is defining success metrics After all, a lot has been written about enterprise (2* <aka, -(2*? and the ability to understand customers across their various interactions with the company, meaning that the organi'ational boundaries of (2* should be understood up front !ndeed, the entire company6from e5ecutives to programmers6should agree on a unified (2* vision "he pressure is on for those forward4thinking managers who can articulate that vision but lack the organi'ational buy4in to enact a truly corporate4wide program "he payoff of such foresight could be revolutionary6employees from across the company accessing common data about customers through a single enterprise portal and making better decisions based on that single view !magine: 1o more contradictory customer counts, interdepartmental sales revenue battles, or returned sales brochures stamped with B2-(!P!-1" +A3 */&-D C "he !" department with an acknowledged customer system of record and no longer taking months to reconcile customer data and delivering outdated information 9our entire company having finally reali'ed a Bsingle version of the customer truthC and using it to increase customer profitability "rouble is, proselyti'ing this ambitious ob#ective could span an entire career Do you really want to spend time bringing managers6many of whom have a vested interest in the status Auo6around to this ideal when you could instead launch a (2* pilot pro#ect for a single department to actually prove (2*,s benefits in a couple of monthsM

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # )%

And therein lies the dilemma for most (2* proponents: should a company try to sociali'e an enterprise4 wide vision, despite the inevitable politics and lofty education necessary, or should it try implementing a Auick, functional prototype and run the risk of lack of acceptance and wasted moneyM *any vendors and consultants eager to catch the brass ring and land huge (2* implementation pro#ects continue to advocate the B#ust add waterC approach to out4of4the4bo5 enterprise (2*, with the accompanying elevated budgets and e5ecutive4level e5posure !t,s certainly a laudable goal 1ot so the (2* initiative driven by the company,s !" department "echnology organi'ations spearheading (2* don,t usually have measurable business improvements in mind At best, they foresee implementation and process improvements that accompany centrali'ed data and Web access At worst, wily !" staffers envision the payoff of having the (2* acronym on their resumes Whatever the case, far too many companies begin their (2* initiatives in !" in the hopes that eventually the rest of the company will catch on *any of the pervasive statistics citing (2* failure rates in the K> to J> percent range reflect such !"4 initiated pro#ects "he ma#ority of successful (2* pro#ects !,ve come across have started out as BstovepipeC pro#ects in business units "hey begin in a single organi'ation6perhaps marketing6where a visionary manager recogni'es the benefits early and enlists the !" organi'ation in developing a standalone (2* system /nce deployed, the system generates efficiencies while delivering value People in other departments gradually take notice, either because the (2* users tout their success or because the benefits get noticed /ther organi'ations eventually reAuest access to the (2* system, which gradually grows hori'ontally with additional functionality, data, and users !ndeed, there are good ways and better ways to implement a (2* program Just because political or infrastructure (2* roadblocks e5ist6and every company has ,em6doesn,t mean you shouldn,t start putting the pieces in place Table 7-1 illustrates some of the inevitable factors to evaluate before you start sociali'ing a new (2* initiative Table 7-1 can assist you in gauging the relative e5pectations for (2* from within your company !s there a collection of line4of4business sAueaky4wheels who want (2* but can,t e5plain its valueM !s your !" department driving (2* for reasons unrelated to better customer relationshipsM Are there clear metrics with which to measure (2* successM "ake the test included at the conclusion of this chapter to determine your (2* readiness "he bottom line here is that, although you should be working toward eventual enterprise (2*, such a vision doesn,t happen overnight and trying to force it to happen could take a lifetime "he better your view of how a finite and clearly described (2* solution can help deliver long4term benefits to the company, the more likely you are to get the support you need A FGGG research study conducted by 9ancy /shita and Dr Jay Prasad at the 0niversity of Dayton[1] illustrates four overarching measurements for (2* success:
[1]

B(ritical 3uccess 7actors in Planning, !mplementing and Deploying (2* "echnologies,C working research paper, =>>>, 0niversity of Dayton 8raduate 3chool of $usiness, conducted by 9ancy /shita and sponsored by Dr Jay Prasad, Dept of *!3 and Decision 3ciences

(2*,s ability to impact corporate strategy <according to =@ percent of respondents? Table ?-1. )auging the 0actors o" CR# +uccess Ideal An e5ecutive or board member reads about (2* and understands how its benefits can result in competitive advantage A cross4functional e5ecutive team agrees that (2* is a competitive necessity Desira)le A customer support e5ec returns from an industry conference where a case study depicted uplift in e5isting sales via (2* A business visionary sees Auantifiable benefits for her organi'ation in the short term and for the company at4large soon after "o provide an organi'ation with a greater degree of customer knowledge and improved customer interactions *ndesira)le A product manager sees a vendor demo and returns to the office touting functions and features "he !" organi'ation decides to implement (2* because an e5isting vendor has #ust substantially discounted its (2* software "o automate e5isting processes6 especially if they aren,t costly to begin with /r to add (2* technology to the !" portfolio

Factor !nitial trigger

3ponsorship

/b#ective definition

!ncreased customer loyalty, better customer service, additional sales revenues, and an overall enhancement of e5ternal perception

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # )&

3olution selection Allowing corporate strategy and business drivers to dictate (2* functionality and letting reAuired functionality dictate tool selection <see Chapter 8? "ool delivers process efficiencies<e g , marketing list creation? while applying additional customer intelligence via integrated data 3election of (2* market leader or e5isting software vendor with minimal research

/perating environment

!ntegration of (2* product into !ntroduction of dedicated (2* 3tandalone (2* system e5isting !" infrastructure, environment linked to corporate including -2P and data network and key data sources warehouse systems -mployees across the $usiness people from one or corporation at all levels, using two departments leveraging (2* for different purposes but operational and analytical (2* basing their decisions on the same customer information Process efficiencies and integrated data combine to deliver strategic decisions, in turn leading to higher customer profitability, sales uplift, and customer satisfaction Automation leads to process efficiencies and new information that advance departmental goals and result in improved customer satisfaction !mproved perception among e5isting customer base and suspected improvements in marketing campaigns, closed sales, product Auality, and so on /perational (2* available to a select group of users who disperse findings from time to time to selected e5ecutives6on paper Automation leads to process efficiencies resulting in timesavings but failing to cover (2* program e5penses !" has successfully linked the (2* system to operational systems and has deployed (2* to F>> desktops

0ser community

-fficiencies

*easurement (lear sales uplift or decreased complaints and measurable improvement in customer response rates across touchpoints = I H

3uccessful technology integration <=I percent? -nhanced strategic partnerships <=> percent? Assimilation of (2*4related technologies <FE percent?

As Figure 7-1 illustrates, companies participating in the study cited other success factors: end4user desktop workstation configurations, user skill sets, and overall technology architecture 0igure ?-1. CR# +uccess 0actors .Courtes! o" 8ni9ersit! o" 'a!ton )raduate +chool o" Business/

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # )'

"he point here is that companies implementing (2* understand that the means to the end doesn,t matter6 it,s the program,s ultimate strategic impact and the usefulness of the resulting tool set that affect the perception of success !f the new customer profiling system provides new details about customer behavior but can,t be viewed by call center staff, it,s still a flop And even the happiest campaign managers won,t bolster the dashed hopes of e5ecutives who were e5pecting increased response rates corresponding to (2* deployment

0rom 2perational to 4nterprise& An Implementation +cenario

!ndeed, (2* can be both revolution and evolution A single department can adopt a (2* program that promises value to other organi'ations, which6averse to starting from scratch6grab the proverbial (2* ball and run with it "he wireless phone company described in Figure# 7-2 to 7-5 illustrates how (2* can evolve from a point solution to a corporate4wide program 0igure ?-7. The call center adopts CR#

0igure ?-:. #arketing adopts CR#

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # )(

0igure ?-;. +ales adopts CR#

0igure ?-<. 4nterprise CR#

$ecause the company,s customer support organi'ation reAuired basic information about customers and trouble tickets, it was the first department to recogni'e the value of combining operational (2*6the company was surveying customers at the conclusion of every Web4 or telephone4based contact and tracking customer satisfaction scores6with analytical (2* to streamline its call center processes "he call center,s goal was to use survey scores to analy'e customer complaints and foster product and service improvements while simultaneously putting in place a Web4based customer self4service infrastructure /ver time, the company,s customers would be able to reAuest service on the company,s Web site, mitigating the need for in4person assistance, in addition to being able to order new services and add4on features such as caller4id (ustomer support recogni'ed the promise of not only cost reduction but also higher customer retention rates

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # ))

3oon after launching the pro#ect, customer support got the attention of the company,s marketing department, which was interested in the satisfaction scores and their correlation to certain customer segments *arketing convinced the call center to share its data, which e5isted on a server accessible by the call center transaction system *arketing purchased an additional module from the company,s (2* vendor in order to perform dynamic customer segmentation and begin more targeted customer communications and campaigns "he advantage of this building4block approach was that marketing could leverage the (2* product, system resources, and data the call center was already using *oreover, by supplementing the call center,s database with additional data, marketing was providing call center employees richer customer information that they could in turn use to Aualify higher value customers at the time of contact As the call center and marketing organi'ations became more integrated, the two departments reali'ed they could be even more customer4focused with more data and processing power, and they lobbied upper management for budget money, citing the benefits already gained by cross4functional (2* BWe,re singing out of the same customer hymn book for the first time ever:C crowed the &ice President of *arketing *embers of the company,s !" governance council6an e5ecutive committee in charge of approving information technology e5penditures of over DF>>,>>>6recogni'ed similarities between the evolving (2* system and the sales organi'ation,s recent bid for a new sales force automation system $y leveraging a centrali'ed customer database, sales could deploy 37A across regions and territories, ensuring access to a richer base of customer data6data that already e5isted on what was now known as the (2* server "he company,s !" department ran a synchroni'ation program that reconciled customer data from each salesperson with the customer data on the (2* server Due to new sales data added to the (2* system, sales staff in the field could now not only access centrali'ed customer data but track outbound correspondence their customers might have received from the call center and marketing organi'ations 7or the first time, a salesperson truly understood how his entire company6not #ust himself or his office6was interacting with his clients and prospects and how they were responding *oreover, the call center could use the new sales data to track trouble tickets on recently placed orders and could tell whether the party calling was an e5isting customer, a prospect, or a lapsed customer (all center management implemented call center scripts according to the caller,s customer segment and status, guiding (32s in responding to customer contacts in a way that was tailored to each customer segment *arketing too was able to use the new sales information to close the loop, tracking campaign responses through to actual orders (ampaign managers could refine their campaigns now that they knew which customer segments ordered which products, and through which channels "his in turn allowed the marketing organi'ation to establish a Bsegment marketingC function, wherein specific customer segments were managed and communicated with separately With this information in hand, marketing could interact more effectively with sales and channel partners about the optimal sales plan, given a prospect,s profile and characteristics "he sales organi'ation went public with the improvements right away 3ales managers encouraged their colleagues in field services to use the (2* server,s data remotely to register and track field installations and repairs Accordingly, field services communicated their reAuirements: to track historical customer outages and repair histories 7or the first time, anyone with access to the system could log on and find out whether a longstanding order had finally been provisioned or whether a repair had been made at a key customer site 3alespeople in particular were grateful that field services employees were using handheld devices to communicate remotely to the (2* server) the fast turnaround time was key to their communications with their customers *arketing could analy'e how long repairs were taking by customer segment 3oon thereafter, marketing helped drive the modification of the field services dispatch system so high4value customer segments received higher priority for installation and repairs !n the meantime, the call center was able to correlate open trouble tickets to actual repairs, information they fed back to 2LD to foster product Auality improvements !n fact, as the wireless communications company moved Bup the pyramid,C its (2* infrastructure6and conseAuently, its customer relationships6became much more robust 1ot only were the planned improvements implemented successfully) there always seemed to be unforeseen uses for new (2* data and functionality "en months after the call center brought (2* online, the marketing department was able to demonstrate lower customer attrition directly attributable to preemptive targeted communications with at4risk customers *arketing had never planned on stemming customer attrition, let alone Auantifying the improvements "he wireless services provider continues to enrich its (2* capabilities, regularly measuring profitability gains as

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # )*

a result of increasing customer loyalty, and is now making information on the (2* server available to its financial and e5ecutive organi'ations 9our company doesn,t have to start its (2* program in the call center !ndeed, you might have an organi'ation badly in need of (2* that doesn,t appear in the above e5ample "he point of this e5ample is to illustrate that, far from being a Bbig bang,C (2* at this company relied on incremental delivery of functionality over time And with that incremental functionality came incremental value, the whole being worth way more than the sum of its parts

'etermining CR# Comple it!

0nfortunately for those of us searching for that anecdotal but ultimately undependable silver bullet, there is no single cookie4cutter approach to (2* "he truth is, the more comple5 your ultimate (2* vision, the more comple5 your implementation pro#ect will be "he key to planning your (2* initiative is in the ability to deconstruct it into manageable pieces And to do this, you must first understand how comple5 it is As Figure 7-6 illustrates, a (2* initiative,s comple5ity relies on two main metrics: 0igure ?->. 4stimating CR# comple it!

?uantit& of function"* !f your (2* ob#ective is simply to deliver customer profiling, you probably have a single function !f it,s to automate your campaign management, you,ll likely have at least a handful of functions to implement <We,ll discuss functionality in more detail in Chapter 8 ? Range of u"age* +ow many departments are slated to use the (2* system after it,s up and runningM !mplementing (2* for a single relatively small department is much less comple5 than deploying it to the entire enterprise

"he contrast among the four Auadrants in Figure 7-6 is stark and has significant impact on the development process, as illustrated here: A single4function (2* pro#ect to one department is nothing more than a customer4focused application !t is most likely driven by a handful of business people and managers, not corporate e5ecutives, and will be used by a single organi'ation 9ou,ll probably be able to leverage a series of in4house development processes and e5isting staff to deliver single4function (2* to the department that needs it A multifunction (2* pro#ect to a single department is another story !nstituting a customer4focused contact center dictates a range of new customer4oriented business processes, not to mention new policies and end4user training Defining and documenting business processes, as we,ll show in this chapter, will give you a good idea of the (2* system,s true comple5ity and the development resources it reAuires (onversely, a single (2* function to be deployed across the company represents a newly institutionali'ed business function !f the call center, marketing, risk management, and sales

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # *0

organi'ations have each reAuested customer lifetime value information, a simple function takes on additional comple5ity because it involves multiple departments, and thus varied business reAuirements "his additional comple5ity will likely reAuire additional development resources and longer up4front planning "he most comple5 type of (2* is multifunctional and multidepartmental or enterprise4wide "his means deploying a range of new business functions across the company to a variety of businesspeople for a variety of purposes 2eAuirements will be comple5, as will the technology to enable (2* "he comple5ity suggests a variety of development resources and a range of (2* technologies, from (2* product suites to !nternet access to data warehousing

"he differences among the four Auadrants can influence everything from e5ecutive level involvement6 unnecessary for single functionTsingle department, mandatory for multifunctionTenterprise4wide6to the range of reAuired technologies, development skills, and end4user involvement !ndeed, the top right Auadrant of Figure 7-5 points to the role of (2* as not #ust an application or pro#ect, but as a cor%orate a""et to be deployed and managed on behalf of the company "he nature of this approach is both information4centric and customer4focused !t suggests treating customers themselves as a corporate asset, given the same amount of money, infrastructure, and e5ecutive attention as other corporate assets, if not more While comple5ity should be the key metric in estimating the cost, resources, and development steps necessary to implement (2*, your company,s si'e is also a factor A large company, for instance, might have the skills and infrastructure to dedicate to a (2* pro#ect and is probably adept at handling large4scale enterprise systems development 3mall to mid4si'e companies, on the other hand, won,t have as many organi'ations or the same number of stakeholders as larger firms "hough this can streamline business planning and vendor selection6fewer players simplifies consensus4building6securing funding might be more challenging for a smaller firm 1ailing down the right e5ecutive sponsor for (2* is probably also more straightforward in smaller companies

%reparing the CR# Business %lan

Want funding for a new !" pro#ect this yearM *ake sure you have a really strong business case first "hat,s because concerns about an economic slowdown are making corporations far more selective than usual about how and where they allocate their !" budgetsPW om%uterworl), January F@, =>>F Whether your company is a multinational conglomerate with a structured governance process or a dot4com company with loose standards for pro#ect approval, you,ll likely need to #ustify your (2* program to management A (2* business plan includes several discrete components that, when combined, e5plain the value proposition and tactical implementation plan for (2* 0nderstanding the program4approval process in your company will take you a long way toward creating a solid and useful business plan As with the wireless company described earlier, many companies have governance committees made up of e5ecutives from various organi'ations "hese e5ecutives decide which programs to fund and how much money to allocate to each one, based on the content of the business plan as well as a formal pitch from the program,s sponsor 7unding is allocated according to a variety of factors, detailed in Table 7-2 "he business plan might also include: "he reAuirement for new technologies "he impact on e5isting technologies /ngoing support and maintenance reAuirements (2* alternatives

-ven if your company doesn,t have a structured program4approval process, including a discussion of each of the above considerations in your (2* business plan will ensure you,ve done your research and help bolster your arguments

'e"ining CR# Re-uirements

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # *1

"he e5tent to which you can align your (2* business ob#ectives to your company,s overall strategy is proportional to the amount of funding you,re likely to receive 0nfortunately, many companies don,t have a set of lucid corporate strategies to which a set of (2* initiatives can align "he days of large strategic alignment pro#ects replete with chart4building management consultants and binders overflowing with spreadsheets are mercifully behind us Defining the set of business reAuirements (2* will address is nevertheless crucial 7or (2* to work, its ob#ectives must be customer4focused and tactical in nature "he ob#ective to Bimprove the supply chain,C for e5ample, could be both customer4focused and tactical6or neither6depending on the envisioned improvements $y their very definition, business reAuirements are specific and granular 2eAuirements4gathering can be a long and comple5 process, but at its heart it involves listing what (2* can do for the business 7or each business area, ask this Auestion: AWhat nee)1 %ain1 or %ro!lem can RM hel% u" a))re""CB "he answer depends on the individual e5ecutive or the organi'ation in need of (2* $ut it also relies on understanding the comple5ity of the ultimate (2* initiative, as illustrated in Figure 7-6 !s (2* envisioned as a corporate4wide program that will touch various business areas or as a departmental pro#ect reAuiring a single function, such as brochure mailing, to be addressedM 9our ability to answer this Auestion is critical to not only planning your (2* program but also to choosing your (2* products and mapping out implementation activities Table ?-7. T!pical CR# Appro9al 0actors E%aluation Factor "he program,s long4term value E$planation Why the proposed (2* initiative will have long4term, sustainable value to the company E$amples *arketing,s (2* initiative is estimated to increase target marketing response rates by @> percent <resulting in a K percent average campaign response rate?, delivering annual net revenue gains of appro5imately DFH million An enterprise (2* program will allow us to achieve our ob#ective of e5ceeding H> percent market share through decreased attrition levels and more successful marketing campaigns

!ts adherence to +ow (2* pertains to the company company,s stated goals or ob#ectives overarching strategies !ts ability to deliver key business ob#ectives !ts cost

+ow specific business goals (2* will allow the company to adopt true one4to4one will be met with (2* relationships with our customers by delivering both personali'ation on our Web site and real4time customer profiling capabilities for our call center staff An estimate of the cost breakdown During the ne5t fiscalyear, the proposed (2* program is estimated to need DF @ million in technology funding <hardware, software, networking?, an additional DF million for permanent head count, DF @ million for consulting services, and a half million for e5ternal data acAuisition "he initial release of the e(2* program will include deployment of !&2 self4service, Web4enabled provisioning, and Web 7AO services to alleviate demands on the contact center !n addition to the current (2* 3WA" team, we estimate the need for A (2* development manager <7"? "wo (2* product specialists <7"? A (2* architect<consultant? An additional database administrator <7"?

!ts boundaries

An e5planation of the initial (2* pro#ect,s resulting deliverable A list of necessary staff for reAuirements gathering, technology acAuisition, development, and rollout of the (2* solution

3taffing reAuirements

2isk assessment A description of the potential We foresee the e4business organi'ation,s historical risks involved in launching a reluctance to share its data as a likely impediment to sales4 (2* program at this time department access to e5isting customers, Web purchase and self4service history, rendering customer history profiles incomplete and the resulting decisions potentially faulty (onsider the following two lists of (2* business Auestions taken from actual pro#ects "he first list, from the marketing department of a cable "& company, represents a list of departmental reAuirements: Product managers must be able to define their own campaigns

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # *2

We need to Auantify the impact of hitting a customer with multiple campaigns in a year <What is the optimal number of campaign BtouchesC for one individual customer versus anotherM? We need to test campaigns using purchase history /ur goal is to increase the number of current campaigns by H>>V We must begin supporting product sets across multiple campaigns We need to ensure that we don,t reuse targeted customers more than once every three months 0nderstanding which e5isting campaigns are most appropriate for a given customer is key We need to rank current campaigns by score for their applicability to a given customer We need to know which products to recommend when up4selling an e5isting customer We need to understand the best audience for this product package We need to understand the best customer for a brand new product where there is no sales history

"he ne5t list also originated from a marketing department, this time from a large communications company +owever, this list addresses cross4functional reAuirements: /ur campaign managers need to know if their recent campaigns have resulted in increased customer support reAuests /ur product planners are interested in whether e5isting product usage rates affect new campaigns We,d like to analy'e whether a campaign will be more successful with customers who already spend DF>> per month .nowledge of whether direct sales and reseller channels influence campaign success can help both sales and marketing optimi'e channels and direct sales staff We need to know which campaigns were more effective with resellers With the Web and e4mail marketing With direct sales <telemarketing? 3ales management would like to know if campaign effectiveness is related to the length of the reseller,s relationship with us 3ales management wants to relate the success of a given campaign with sales compensation and commission levels

1otice how the reAuirements in both lists pertain to marketing improvements, but the items in the first list are e5clusive to marketing and can thus be considered departmental "he cable company,s marketing department has identified the areas in which it can improve campaign effectiveness and optimi'e customer interactions, both worthy (2* ob#ectives (ampaign effectiveness is important in the second list, as well) however, the communications company,s reAuirements involve both a cross4section of users and a greater variety of data "he first reAuirement, for e5ample, involves analy'ing customer4support trouble tickets before launching a campaign, and the ne5t several involve data from other systems, such as the provisioning and billing systems "he last several reAuirements describe how (2* will aid the sales organi'ation 9our (2* business plan should not only list such customer4focused reAuirements, but should also map them to specific applicable (2* tactics, providing management with a reconciliation of which (2* features will address which business goals <And as we,ll see in the ne5t chapter, this also renders technology selection a whole lot easier ? Table 7-3 illustrates the mapping between a set of cross4functional business reAuirements and specific (2* tactics "he advantage of this type of matri5 is that it provides a visual clue to critical (2* capabilities6notice how prominently personali'ation plays a role with most of the business ob#ectives6while also presenting a good idea of what will be involved in reali'ing the business reAuirements 7or instance, the Bincreased service and repair effectivenessC reAuirement ultimately warrants a series of non4(2* features to be successfully implemented, meaning (2* in field services might reAuire more resources and take a bit longer to deliver "o ma5imi'e the success of the first proposed (2* program, the program needs business reAuirements that +ave defined boundaries +ave a high value4to4cost ratio

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # *$

*inimi'e the impact to e5isting systems Table ?-:. #apping CR# 0eatures to Business Re-uirements

!mprove work efficiencies for more than one person !nvolve process change

!t is the cost4to4value ratio that most confounds well4meaning managers who intuitively know (2* is the best weapon, but who need some ammunition

Cost-Custi"!ing CR#
When launching a visible and wide4ranging program such as (2*, it,s only a matter of time before a high4 ranking e5ecutive inAuires, B3o how much money have we spent on this (2* thing, and what have we gotten in returnMC "he degree to which your (2* program has been deliberately planned and e5ecuted is the degree to which you,ll have a slam4dunk answer to this Auestion Any (2* program has three possible financial outcomes: F = I !ncreased profits $reak4even %ost revenue

0nfortunately, Auantifying how much additional profit is generated or money saved via (2* is difficult 0nlike more straightforward operational systems that deliver both defined outcomes and Auantifiable improvements, (2* often fosters unprecedented business practices that are by their very nature not measurable (omparing new sales channels such as the Web to traditional channels invites apples4to4 oranges debates 7urthermore, unlike its more technology4specific counterparts, (2* often delivers 2/! that is both hard and soft 7rom a soft return standpoint, (2* can deliver significant payback that,s nevertheless difficult to Auantify -nhanced employee satisfaction, cultural and workplace improvements, perceived technology leadership, and amplified market reputation are e5amples -ven such concepts as customer loyalty and customer satisfaction, both crucial to business success, are difficult to measure A *arch =>>> (2* study conducted by *-"A 8roupT!*" revealed that G> percent of the fifty largest (2* user companies admitted being unable to Auantify a return on their (2* initiatives 7or some companies, simply knowing that, after deploying (2*, their sales figures e5ceeded the industry average is enough 7or others, the inevitable e5ecutive Auestions loom large6large enough to mandate tangible benefits

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # *%

7rom a hard 2/! perspective, (2* can result in revenue or cost savings via the following Auantifiable metrics: F = I *ore efficient customer4focused business processes Decreased customer attrition !ncreased sales

"ake the first item on the list as an e5ample "he Director of Product *arketing at a large regional bank described it in practice: 2ight now the bank can,t keep track of more than F> campaigns at a time We want to create product offerings that are uniAue to specific customer segments, which could increase the number of campaigns ten4 or even twenty4fold We desperately need to manage more campaigns in order to promote more distinct offerings 2eally, we,d like to move toward one4to4one, where instead of having one campaign for a million consumers, we have a hundred campaigns each focused on a group of F>,>>> consumers "his strategy will increase response rates for our marketing campaigns and generate additional revenues !n fact, every business ob#ective you define as part of your long4term (2* planning should inherently target one of the three metrics 7or e5ample, we could map each of the ob#ectives listed in Table 7-3 to one or more of these metrics, as we have done in Table 7-4 <where, again, BAC signifies business process efficiencies, B$C decreased customer attrition, and B(C increased sales? "he most straightforward way to calculate the financial promise of one of these business ob#ectives is to measure how it,s currently being done and what it,s costing 0nfortunately, because many of these initiatives involve new corporate paradigms, there is often nothing to measure /ne client of mine understood the degree to which its call center staff was spending time on unnecessary work "he company had hired a consulting firm to measure (32 activities and determined that (32s spent an average of =@ minutes on every trouble ticket simply gathering customer data "he company then determined that, of these =@ minutes, F@ were spent accessing and logging onto various source systems, searching for specific data, and consolidating the answer sets Table ?-;. Business 2bGecti9es and 0inancial #etrics F 8reater number of Web site return visitors = -4commerce efficiencies I !ncrease in market share for core products H +igher customer4satisfaction ratings @ !ncreased campaign response K !ncreased service and repair effectiveness A, ( A, ( ( $ A, $, ( A, $

We used the following form as a way of measuring this company,s (2* opportunity: %roblem +tatement& /ur call center staff productivity has decreased dramatically as the problems become more comple5 We need a means of increasing (32 productivity to improve the cost structure of the call center +ample problem -uanti"ication& -veryone knows the number of trouble tickets e5ceeds the e5isting staff,s ability to process them We,ve recently determined that the average (32 can handle F> tickets a day "he average amount of time spent in data4gathering <which includes accessing data from five different systems? is =@ minutes per ticket BA single (32 tool and screen should be able to reduce data4gathering time and allow our (32s to address more trouble tickets in a given day C <&ice President of (ustomer 3upport? 1umber of (32s X K> Average time to gather customer information X =@ minutes 1umber of tickets generated for each (32 per day X I>WH@ 0iscal premise& Average yearly burdened cost of (32 X DK>,>>> Average tickets per (32 per day X F> (ost per ticket X D=@

Impro9ement -uote&

2perational premise&

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # *&

CR# impro9ement assumptions& A (2* system that includes dynamic customer4 profile Bscreen popsC can reduce data4gathering time and present pertinent customer information at the point of interaction 2educing data4gathering time will impact the overall ticketing process <-very F@ minutes saved means a IFV improvement ? Productivity gains will reduce backlog Related applicationsEs!stems& Buanti"ied impact& (ustomer profiling Y of (32s F> I> K> +o"t Bene"its& 3taff cost per year F>> I>> K>> "ime gain "ickets DK>>,>>> DF,E>>,>>> DI,K>>,>>> IFV IFV IFV DFEK,>>> D@@E,>>> DF,FFK,>>> D !mpact

2educed trouble4ticket response times !mproved customer4satisfaction levels !mproved employee4satisfaction levels

!n a true enterprise (2* opportunity, several such forms are completed and then compared "he highest4 impact (2* opportunity inevitably rises to the top, becoming the first official (2* pro#ect within the (2* program +ere,s another (2* measurement form completed for the same company, this time for the marketing department: !n the event that several of these forms can be completed for each of your company,s (2* applications, they can be collected, prioriti'ed, and then published in a physical or online document to serve as a living (2* roadmap %roblem "he company,s marketing process is too darn long +tatement& +ample problem -uanti"ication& Impro9ement -uote& 2perational premise& 0iscal premise& !t takes up to K weeks to identify a campaign target audience6using e5perienced data analysts We,d like this to take days, or even hours, using marketing staff with minimal assistance from !" B$y reducing the time needed to identify a campaign,s target audience, we could double or even triple the number of campaigns we deploy, while further delimiting our target segments C <Director of 3egment *arketing? 2ight now, for every three marketing campaign managers, we need one data analyst and one !" Auery support staff member to run Aueries -ach campaign manager reAuires two support staff members: Average yearly cost of F data analyst X DFI>,>>> Average yearly cost of F !" resource X DFI>,>>> 1umber of campaign managers in marketing X I> CR# impro9ement assumptions& (ampaign managers will migrate to using desktop (2* analysis and will need to be educated on its use (ampaign managers will evolve from pro#ect managers to Bknowledge workersC "he pro#ected cost savings will occur via the reduction of data analysis and !" support staff Productivity gains will increase the number and effectiveness of campaigns by a minimum of => percent Y of support staff K FK =K Pro#ected staff savings<nZ DF@>.? DG>>,>>> D=,H>>,>>> DI,G>>,>>>

Buanti"ied impact& Y of campaign managers F> =@ H>

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # *'

+o"t Bene"its& "hrough the increased productivity, the company can increase the number of campaigns and thus the effectiveness of each individual campaign, in turn increasing revenues Alternatively, the company can simply decrease the number of campaign managers but deploy the same number of campaigns

A good e5ample of (2* 2/! is 3$( (ommunications According to IO maga'ine, 3$(,s -A3- <-asy Access 3ales -nvironment?, an online tool to help (32s and telemarketers, cost DIH = million "he tool helped sales reps access product information faster and pull in more comprehensive customer data, allowing an increase in call volume, a simultaneous decrease in call duration, and improved order accuracy All told, the estimated 2/! for -A3- was reported to be DHEI K million [2]
[2]

B3$( 8oes (oast to (oast with -A3-,C

IO maga'ine, 7ebruary F, =>>F

+ere,s an important note on 2/! financials if you,ll be asked to #ustify (2* to a (hief 7inancial /fficer or corporate accountant: ! had the pleasure of e5plaining (2* 2/! to a finance director who asked if (2* was worth more than the Btime value of money C "his manager,s Auestion implied that his company would either invest in (2* or put the money into some interest4bearing checking account6which wasn,t the case !n fact, cost4#ustifying a (2* program for most companies assumes that the allocated budget money will go either to (2* or to another proposed pro#ect of similar or higher priority "he goal is to make a case for the value of (2* versus other potential corporate programs Although e5amining the time value of money might be worthwhile if your choice is either to implement (2* or to purchase real estate for a new brick4and4 mortar store, the ma#ority of companies considering (2* are going to spend their money on a pro#ect "he issue is where to get the most bang for their budget buck Another cost to consider when #ustifying (2* is the cost of delaying the decision to move forward 7or instance, in one comprehensive (2* business case, one client of mine included a section citing the following opportunity costs of delaying (2*: "he cost of lost marketing opportunities, including o o o (ost of lost customers due to competitive marketing events 2educed effectiveness of new products due to lack of market understanding (ontinued increase of marketing costs due to poorly focused campaigns andTor oversi'ed target audiences

(osts of continuing the support of stovepipe database systems %oss of staff skills and e5perience due to staff redeployment %ost !" resource and sub#ect4matter e5pertise due to normal staff attrition rates 2educed customer loyalty and perception due to inability to enhance the customer,s relationship e5perience

!n fact, many companies that undertake (2* are measuring their successes based not on return on investment but on return on relation"hi% <2/2? 2eturn on relationship implies the ability to compare the before4and4after effects of (2* on customer value and loyalty +ave customers in the mid4tier sector migrated upward in valueM +ave customers we,ve been Bwilling to loseC actually become more profitable since (2* was establishedM +as a low4value customer referred high4value customers to the company, thus contributing even more revenue than if she had spent that money herselfM *easuring 2/2 can be sub#ective but can provide a company with the ability to identify which components of (2*6be they changes in business processes or more targeted communications6improve customer relationships and which customers seem most responsive to new customer4focused business actions "hen the company can formali'e what,s working and fine4tune what,s not A final word on (2* 2/!: !f your company is adopting (2* because of the cost savings it promises, beware With the escalating comple5ity and pricing of many (2* products, seeing return on investment might take a few years "he real #ustification for (2* goes back to improving your customers, e5perience with your company, humani'ing this e5perience, and making it easier to do business with you (2* is about managing and monitoring your customer relationships and increasing their value !t,s about motivating customers to tell their friends to buy your products 9es, these too can result in revenue down the line $ut when a good customer is #ust a mouse4click away, delaying (2* can be risky

8nderstanding Business %rocesses

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9ou probably already intuitively know the area in which (2* will generate the biggest return $ut do you want to automate or improve an e5isting processM !s there even a process to begin withM -very successful (2* program involves a process improvement of some kind What will yours beM (2* was initially designed to help solve tactical, customer4facing business problems </nly after the resulting data promised new strategic improvements did analytical (2* become the darling of analysts and futurists ? "he common denominator of (2*4related business processes is that they should be designed around the customer,s perspective with the ultimate goal of improving the customer,s e5perience

B%R Redu & #odeling Customer Interactions

/ne could argue that the days of business process reengineering <$P2?, when companies redesigned their core processes to drive new levels of efficiency, are back with (2* (2* usually begins with a definitive business Auestion such as this one: B+ow should we treat valuable customers when they reAuest a room at a hotel that,s fullMC "he business Auestion implies improved customer4focused processes that can in turn be automated with technology 3uch business Auestions were on the mind of a ma#or hotel chain,s (-/ in early =>>F "he (-/ had recently been given several competitive reports indicating that the ma#ority of the hotel,s BoverflowC guests were going to its chief competitor "rouble was, many of these guests had stayed F>> or more nights with this chain "hey were not only important) they were profitable A Auery to the hotel chain,s data warehouse indicated that these freAuent guests accounted for only E percent of the company,s customers but were responsible for H> percent of its profits "he hotel chain had heretofore been more Bproperty4centricC than customer4centric, but it now recogni'ed the value of ensuring that these high4value customers remained loyal !n the past this had meant giving generous room upgrades to high4value guests when they checked in and providing in4room Bwelcome kitsC of free snacks and toiletries +owever, these perks only worked when the customer had already secured a reservation "o understand how to treat its best customers better, the hotel chain first mapped out its e5isting customer interaction process, which looked like the illustration in Figure 7-7 0igure ?-?. The traditional customer-"acing process

"he good news was that the hotel company was already differentiating its high4value customers6one of the main tenets of (2* 7reAuent4guest card4holders had their own toll4free number directing them to call4 center agents trained to take their time when dealing with high4value guests "he bad news was that if the customer needed the room right away, he was normally unwilling to risk being wait4listed and would simply call a competing hotel chain "he company,s data warehouse verified that of all freAuent guests being refused reservations on their first attempt, only =H percent agreed to be placed on a wait4list, and a mere FF percent actually ended up staying at one of the chain,s properties

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With competition in the hospitality industry heating up, the hotel chain decided to take the concept of customer differentiation a few steps further "his meant adopting new policies such as these for freAuent4 guest reservations: 3upporting multichannel reservations, including telephone, fa5, and Web (reating a special reservations Web site for freAuent guests +aving the system track properties in pro5imity to one another, so (32s could suggest alternative hotels in the same chain BAdvance4blockingC a greater number of rooms for valuable customers at high4demand hotels

"he resulting freAuent4guest reservations policies dictated a more speciali'ed reservations process that looked like the one illustrated in Figure 7-8 0igure ?-@. The new customer-"ocused business process

1otice that the new process has not only been rendered more involved) much of it has been automated, making it easier for the customer to communicate with the company "he rule of modeling customer interactions is that every interaction, incoming or outgoing, should have the potential to improve the customer,s e5perience $y offering its best customers a choice of media for making reservations, the hotel effectively provided more value to the customer "he BagentC referred to in the e5ample might be either a human (32 in customer support or a cyberagent interacting with the hotel chain,s reservation system as well as those of its partner hotels <who reimburse the hotel chain with a referral fee? As we discussed in Chapter 2, the use of cyberagents to automate decision4making and accelerate previously manual processes is another effective way to speed up workflow !n fact, the term BworkflowC is used in (2* to refer to automated business processes *any (2* products feature Bworkflow managementC components automating processes such as campaign management or customer troubleshooting "his hotel chain knew it needed to implement both operational and analytical (2* "he chain,s customer support department understood the business need, and even knew where it wanted to begin (ustomer support specialists and business analysts mapped out the new reservations process, focusing on the various customer touchpoints to ensure that individual interactions represented an improvement over the traditional process $ut in this case the whole was greater than the sum of its parts !t was a BsoftC benefit of (2* that ultimately delivered the biggest payback: the hotel chain was also able to increase its brand loyalty +igh4value customers gradually reali'ed that when they called the chain,s freAuent4guest reservations line, their likelihood of getting a room, even if not in a first4choice property, was higher than before6and much higher than when calling a competing chain (ustomers no longer had to waste time calling around to different

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hotels, because the (32 had become more than #ust a reservation agent: she was now a customer advocate (ustomers were becoming more and more assured that, by the end of their contact with the chain, they would have a room in their reAuested city "he new (2* process had increased these high4 value customers, brand loyalty and their likelihood of calling again

Anal!3ing Dour Business %rocesses

!f you have documented internal processes already and these processes are customer4focused, you,re way ahead of the game *ore often than not, e5isting business processes need fine4tuning before they,re implemented as part of a (2* program, putting a new spin on $P2, as the hotel chain in the earlier e5ample did 3ometimes e5isting business processes should be entirely obliterated and a company should start from scratch Avoid clinging to your traditional customer interactions #ust because they,ve worked in the past <!n such cases, forget the term BreengineeringC) think invention*? !f you don,t have documented processes, or if your processes need overhauling, ask the following Auestions for each customer4facing business activity involved in each (2* reAuirement: !s the tangible result of the process <e g , a purchase order or return authori'ation number? seen or e5perienced by the customerM !s there an opportunity to gather more customer data at discrete touchpoints in the processM Does each interaction demonstrate value to the customerM Does any interaction waste the customer,s timeM Does this process improve our ability to see this customer as an individualM !s there an opportunity to impress the customer or personali'e the interaction at discrete customer touchpointsM (an we include e5ception4handling to ensure accurate service and personali'e interactionsM (an this process be improved or even eliminated for high4value customersM What about for the mid4 value tierM

!f you don,t know the answer to two or more of these Auestions, you would do well to take the time to map out new or e5isting processes and identify areas that can deliver an improved customer e5perience and tighter time frames !n addition, try looking at your business processes from an organi'ational perspective *ost process planning activities neglect this step, but answers to Auestions like those in the following list can result in even more highly refined processes and can pinpoint opportunities to improve your overall infrastructure: 7or a given customer4facing business process, how many departments are involvedM +ow many actual staff members touch in each processM What data is transferred between organi'ations, and how muchM Does the information being shared change as it goes through the processM +ow oftenM Do the organi'ations involved in each business process agree on business rules and common terminologyM

When designing and documenting new business processes, it,s helpful to understand not only the customer,s view of the process but its inherent comple5ity A customer,s potential delight at a new, Web4 based order process won,t matter much if the process itself is too cumbersome to program and integrate with e5isting systems *any process4design teams get caught up in modeling conventions and documentation tools !f you have such tools in4house and the e5pertise is handy, having an online process library enables the company to maintain a history of customer4focused improvements over time 3uch a library can be part of a corporate4 wide knowledge4management system and can be used for a variety of purposes $usiness analysts can access outdated processes to provide (2* stakeholders with graphical illustrations of before4and4after processes during reAuirements gathering Developers and programmers can use the models to ensure that the (2* system mirrors the process vision "he main goal of business process modeling for (2*, however, is to improve traditional or broken processes and thus enhance customer interactions !f you need to initially document processes on a whiteboard rather than waiting to install the latest graphical modeling tool, do so "he convention is not as

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important as the result With all process4modeling activities, the ob#ective should be to model and refine the optimal customer e5perience $usiness processes that span multiple departments will not only be more difficult to document) you,ll also need to build consensus, which adds time $ite the bullet: document business processes before or in parallel with the rest of your (2* planning so when it comes time to choose a (2* product, you,ll already know what tactical improvements you can e5pect 3peaking of technology selection, it,s important to note that the hotel chain we,ve been talking about had not yet chosen a (2* product !ndeed, understanding the reAuirements for (2* and making the business case for a comprehensive new program both need to occur before you choose any (2* product "his way, the technology is sure to match the reAuirements and not the other way around

Case +tud!& =eri3on

3ummary: !ntimidated by the thought of planning an ambitious enterprise (2* programM !magine planning it for two merging 7ortune =@ companies and enhancing your company,s customer focus 6as well as its new brand 7or someone in the throes of delivering enterprise (2*, $eth %eonard is awfully calm A former management consultant and a telephone industry veteran, %eonard has seen her share of corporate4wide programs slated to improve the bottom line 1ow &ice President of Database *arketing for &eri'on (ommunications, %eonard might have finally found the pro#ect that puts her formidable e5perience to the test 3tarting #ust another (2* pro#ect would have been too easy for %eonard, whose first challenge was to get a grasp of the (2*4related pro#ects already underway within the two merging companies and, moreover, to establish consensus on (2*,s purpose

5hat The! 'id&

Wisely, %eonard banished any hopes of the two companies, disparate systems seamlessly interconnecting around a common (2* strategy B$oth 8"- and $ell Atlantic had decent (2* visions, C she recalls, Band each company had done a lot of self4education 0nfortunately, 8"- was beholden to an outdated technology platform that wouldn,t perform for the long haul C $ell Atlantic had a different set of problems, namely its surfeit of single4purpose, application4centric systems Although most of these delivered value, there was no organi'ed way of connecting the dots *oreover, some e5ecutives were beginning to Auestion the long4term value of (2* initiatives, proclaiming (2* too costly and not sustainable %eonard reali'ed that for the newly formed company to launch a successful (2* program, it would have to begin at the beginning6and ground 'ero was the organi'ation "his meant not only shifting from a product focus to a customer focus) it also meant instilling a new sense of cultural urgency about (2*,s competitive promise 3he made up her mind to craft a (2* roadmap, consciously deciding to Bgo for brokeC and launch a bona fide, business4driven (2* program /ne of %eonard,s first steps was to establish a pilot program to, as she puts it, Bpractice and learn C $eginning with the organi'ation, she established a (2* 3teering (ommittee of e5ecutives from &eri'on,s various business units $uy4in was swift, as was the subseAuent assignment of a (2* (ore "eam, a cross4 functional group of managers who would help define (2* delivery capabilities B$y consciously crafting (2* #ob responsibilities, we were ensuring customer focus across all channels,C she e5plains, Bnot only so we,d have a single view of our customers, but so they,d have a single view of us C "he (2* (ore "eam,s first step was to understand customer interactions A series of scenarios was developed, depicting how customers move through the organi'ation When the customer4focused processes were well understood, the team stepped back and made the customer the design point "his triggered changes in customer interactions at various customer touchpoints and encouraged the team to consider improvements6for instance, providing a special level of service for high4value customers "he team also spent time ensuring that business users across the company became, as %eonard puts it, Bviolently alignedC around a common (2* vision B(2* is a strategy, not a technology,C %eonard maintains (ore "eam members and their staffs subseAuently began taking inventory of all (2*4related initiatives across &eri'on, correlating them and integrating them where appropriate BWe needed to stop wasting money on duplicate yet disconnected efforts that ultimately clouded the (2* landscape,C she e5plains B"hey were keeping us off4balance in terms of focus and assessing sustainable success And, more importantly, they were confusing our customers C

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$ut (2* planning didn,t only focus on processes %eonard and her team reali'ed (2* reAuired a building4 block approach to implementation, and this reAuired a solid technology foundation %eonard advocated the creation of a solid data foundation in the form of a corporate data warehouse, which would serve as the core (2* platform, as the evolution depicted in Figure 7-9 shows 0igure ?-A. CR# at =eri3on& Iterati9e( e9olutionar!( and multi-tiered. .Courtes! o" =eri3on Communications( Inc./

After the data warehouse was up and running, the company could periodically supplement its data with various data sub#ect areas from both internal and e5ternal data sources, at each stage delivering enhanced (2* functionality

The Challenges&
%eonard,s challenges were more cultural and organi'ational than tactical 3he cites the need for gathering consensus around (2*,s value as a ma#or hurdle6one she,s gratified to have overcome 3he also charges various product vendors and consultants with glibly promising unrealistic BAuick winsC at the e5pense of the planning and rigor ultimately crucial to instilling the corporate consciousness of (2* as a true enterprise program B(2*, if done right, is not simple,C %eonard declares /ther challenges, such as harnessing individual proclivities for building single4purpose, single4user systems, are ongoing *oreover, the comple5ity of erecting enterprise (2* in a high4profile public company means unremitting pressure from the financial community with its push for immediate 2/!

)ood Ad9ice&
%eonard emphasi'es that amidst the cumbersome analyst reports and comple5 systems comparisons, her team remained mindful of the customer,s perception, as well as her company,s strategic direction B0nderstanding how we want to be perceived as a company has ma#or implications on how we approach (2*,C she says BWe built our (2* model to emphasi'e our brand and reinforce our image C !ndeed, the linkage between the company,s (2* direction and its brand is a top priority 7ar from hopping onto the crowded (2* bandwagon because of its current popularity, &eri'on (ommunications has embraced enterprise (2* for a series of captivating and overarching strategic reasons At &eri'on, (2*4thinking begins strategically and then subseAuently drives planning and development %eonard suggests obtaining solid answers to the following enduring Auestions:

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Who are we as a companyM Who are our customersM Which ones do we want to interact with individually, and with which ones can we mass4communicateM +ow do we want to structure our (2* portfolio around these customer groupingsM What are our delivery channels and touchpointsM +ow do we form a collaborative relationship with our customers so the benefits e5ceed the risk of leavingM

B! want a portfolio of tactics that ! can mi5 and match depending on the customer, event, situation, cost versus benefit, and availability of internal resources6as in the number of service reps who might be available to handle a new product rollout, C %eonard insists Although it supports the company,s brand image, the (2* mantra at &eri'on is refreshingly tactical: B!ntegration, reusability, and cross4functionality C Where should a company startM %eonard,s background in strategic planning has served her well, and she insists that building a (2* roadmap is an indispensable step and internal communication is crucial When positioning (2* to her management, %eonard admits, B! told them it wasn,t Auick, it wasn,t easy, and it wasn,t cheap ! told them they couldn,t go out and #ust ,buy (2* ,C

The )olden *ugget&

0nlike many of her e5ecutive counterparts at other communications firms, %eonard has foregone the operational (2* solutions offered by vendors who tend to focus on discrete functionality, favoring a more deliberate and structured approach of gradual and rigorous (2* deployment !n addition to being more sustainable, &eri'on,s (2* program is designed around improving the customer,s e5perience while bolstering the company,s brand image "he (2* team carefully aligned its program around a key strategic reAuirement: a consistent customer message BWe need to remember our brand,C %eonard e5plains B!s the e5perience we,re providing our customers consistent with that brandM With our imageMC %eonard cites one of &eri'on,s advertising slogans: A)vance) /im%licit&* BDo our tactics support this tag lineMC she asks, by way of e5plaining how the brand image comes full circle B/ur customers receiving a different piece of mail every week from a different business unit with a different offer is not simple C And that means more than #ust technology) it means a holistic approach to business change B"echnology,s #ust an enabler,C $eth %eonard asserts, adding, B"hose trite little diagrams that talk about ,people, process, and technology, are actually true (2* involves all three And it can absolutely reinvent the entire enterprise C

A CR# Readiness Checklist "or +uccess

/kay, so you have a vision And you,re well on your way with your (2* business plan, and you can even itemi'e the financial benefits (2* will deliver $ut how will you know when you,re readyM Table 7-5 represents a (2* 2eadiness (hecklist based on the one my company uses in its assessment pro#ects !t poses a number of important Auestions that will allow you to score your (2* readiness and make the necessary improvements so your pro#ect can hit the ground running 1otice that many of the considerations involve culture as well as e5isting infrastructure Table ?-<. CR# Readiness 49aluation #etrics Factor E$planation F "argeted business users display an Are the businesspeople slated to use (2* after it,s deployed understanding of (2* and accompanying aware of its intended improvementsM <A bonus: Are they benefits enthusiastic about themM? = *anagement displays an understanding of 1ot only must e5ecutives understand what (2* means) they (2* and accompanying benefits should also understand its value proposition and be able to articulate it consistently And they should understand which corporate ob#ectives depend on (2* I (2* application opportunities are identifiable H A business sponsor e5ists for each discrete (2* opportunity "he business areas most in need of (2* should be identified, along with the pro#ected deliverables 3taff members in the trenches, irrespective of their need for more customer intelligence, aren,t enough 3omeone in management should be lobbying for (2*, willing to tie his

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 10$

goals to (2*, and even willing to fund it @ /bvious stakeholdership <sub#ect matter e5pertise, targeted end4users? e5ists for each discrete (2* opportunity K (lient has e5pressed a need for market differentiation <or similar strategic ob#ective? Are there other people within each candidate business unit who will support or help deliver a (2* pro#ectM Are these people in the ma#orityM *anagement should be able to tie (2* and its benefits back to the company,s competitive goals and understand how (2* can help differentiate customers

J (ommunicated strategic initiatives can be !f the company has a list of strategic ob#ectives, those supported by (2* ob#ectives should be customer focused and thus supported by (2* E 3takeholders can articulate pro#ected (2* benefits for each discrete opportunity $usiness sponsors or management should be able to describe the tactical business improvements that can be delivered by (2*

G 3tated opportunities can be improved with "he (2* opportunities being discussed must be able to be customer4related data supported andTor improved with clear, consolidated customer data <!n other words, process improvements aren,t enough ? F> Pro#ected data sources are highly regarded for data accuracy and integrity Where will the customer profiles and segments originateM !f those systems aren,t trustworthy, no one will trust the ultimate (2* applications

FF (ross4functional customer data e5ists in a A data warehouse containing consolidated customer data warehouse or centrali'ed database information from around the company will #ump4start any (2* program and will decrease the infrastructure costs F= /rgani'ations currently share a cross4 section of information reAuirements FI "he client is already engaging in some sort of customer differentiation or segmentation FH Ouestions of data ownership across the company are either none5istent or easily resolved +as data sharing been institutionali'ed already with other systemsM "his is a positive sign, particularly if the initial (2* pro#ect evolves toward enterprise (2* !f customer segments are already being identified, there is an understanding of customer differentiation, which makes (2* much more culturally palatable !n addition, certain e5isting segmentation or analysis process might be leveragable Are specific organi'ations willing to share their data with the rest of the companyM !s management willing to enforce thisM *issing pieces of the customer pu''le could #eopardi'e an entire (2* program

F@ $usiness units and !" staff agree on (2* "he e5tent to which one organi'ation wants to BownC (2* is ownership boundaries the e5tent to which politics will get in the way of productivity "here should be firm boundaries for who does what FK -5ecutive management has an e5pressed -5ecutives should understand not only that (2* involves a commitment to fund (2*4related significant invest4 ment, but that additional funding dollars activities might also need to be reserved FJ (lient agrees to modify business processes as a result of (2* Access to complete customer data should trigger business efficiencies

FE "here is willingness to sustain the *anagement should be aware that, along with more data and organi'ational impact of (2*<for e5ample, process changes, #ob roles might change and new skills might reorgani'ation or additional staffing? be needed FG A general understanding of reAuirements4 3uccessful (2* pro#ects are Btop down,C meaning that they driven development e5ists among both are driven by business need /nce understood, business business and !" stakeholders reAuirements and their relative impact should drive (2* implementation priorities => *anagement is willing to empower key !f employees such as salespeople and (32s have more customer4 facing staff based on increased information, it follows that they can be more self4directed information and improved processes Accountability should be maintained as employees are given more freedom, the focus being on ultimate improvements in customer satisfaction and revenues =F *anagement is willing to implement incentives or modify employee compensation to encourage (2* adoption == 1o decisions have been made about 3taff members who readily adopt (2* technologies and processes, and who participate in their ongoing improvement, should be rewarded 3taff members who refuse to adopt these improvements can be considered Bsaboteurs C Penali'e them $eware the tail that wags the dog: are stakeholders

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potential (2* technology solutions communicating (2* reAuirements based on a product demo or sales pitchM Assumptions about specific technologies can risk overspending on (2* -ven the most astute managers lump (2* together with data warehousing and other key business solutions that involve information technology Although (2* technology might very well connect with these systems, (2* should be planned and funded separately from other initiatives Although (2* might leverage skill sets and knowledge from other !" areas, it should be planned as a discrete !" activity with dedicated implementation staff

=I $usiness sponsors and stakeholders have an understanding of the differences between (2* and other programs<such as business intelligence, -2P, or data warehousing? =H !" staffing infrastructure is in place to support (2*

=@ "here is consensus that (2* is a process %ike other large corporate initiatives, (2* is an ongoing and not a one4time4only activity process that grows and improves over time =K $usiness and !" stake4holders understand $ecause (2* is a process, it reAuires ongoing budget that (2* reAuires ongoing budget to $eware the lump sum (2* allocationPit probably won,t cover support continued development and all necessary (2* functionality maintenance Part of readiness assessment involves weighting to specific factors in the evaluation based on the results of the interviews conducted <7or e5ample, if upper management is advocating an enterprise (2* initiative, the e5istence of cross4functional customer data would receive a higher weighting ? 2egardless of weighting, you can gauge your (2* readiness with the following rating scale: H: "his statement is 9er! descripti9e of our environment I: "his statement is largel! descripti9e of our environment =: "his statement is partiall! descripti9e of our environment F: "his statement is not at all descripti9e of our environment

7or e5ample, Table 7-6 shows how a specialty retail client scored on the assessment, and how to interpret its score Table ?->. CR# Readiness +coring F "argeted business users display an understanding of (2* and accompanying benefits = *anagement displays an understanding of (2* and accompanying benefits I (2* application opportunities are identifiable H A business sponsor e5ists for each discrete (2* opportunity F7IH F=:H F=:H F7IH

@ /bvious stakeholdership <sub#ect matter e5pertise, targeted end4users? e5ists for each discrete F = : H (2* opportunity K (lient has e5pressed a need for market differentiation <or similar strategic ob#ective? J (ommunicated strategic initiatives can be supported by (2* E 3takeholders can articulate pro#ected (2* benefits for each discrete opportunity G 3tated opportunities can be improved with customer4related data F> Pro#ected data sources are highly regarded for data accuracy and integrity FF (ross4functional customer data e5ists in a data warehouse or centrali'ed database F= /rgani'ations currently share a cross4section of information reAuirements FI "he client is already engaging in some sort of customer differentiation or segmentation FH Ouestions of data ownership across the company are either none5istent or easily resolved F@ $usiness units and !" staff agree on (2* ownership boundaries FK -5ecutive management has an e5pressed commitment to fund (2*4related activities FJ (lient agrees to modify business processes as a result of (2* F=I; F=I; F=:H F=:H 1=IH F=:H F=I; F7IH 1=IH F=:H F7IH F=:H

FE "here is willingness to sustain the organi'ational impact of (2* <for e5ample, reorgani'ation or F = I ; additional staffing? FG A general understanding of reAuirements4driven development e5ists among both business and !" stakeholders => *anagement is willing to empower key customer4facing staff based on increased information F=:H F=:H

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 10&

and improved processes =F *anagement is willing to implement incentives or modify employee compensation to encourage F 7 I H (2* adoption == 1o decisions have been made about potential (2* technology solutions =I $usiness sponsors and stakeholders have an understanding of the differences between (2* and other programs <such as business intelligence, -2P, or data warehousing? =H !" staffing infrastructure is in place to support (2* =@ "here is consensus that (2* is a process and not a one4time4only activity F=I; F=:H F=:H F=I;

=K $usiness and !" stakeholders understand that (2* reAuires ongoing budget to support ongoing F = I ; development and maintenance "otal 2eadiness 3core: 9ou can now interpret the results, using the following scoring metrics: 1H;I@<& 3uggests your organi'ation is ready to begin implementing a (2* pro#ect with minimal infrastructure enhancement and confidence of a high degree of sponsorship @;I?:& 3uggests your organi'ation should solidify its infrastructure, skill sets, and e5pectations but should e5pect to launch a (2* pro#ect in the near future Planning should begin for a proof4of4 concept ?7I<H& 3uggests your organi'ation should refrain from embarking on (2* until the technology infrastructure, data ownership, or cultural and political issues are resolved 3ponsorship should be cemented and staffing enhanced at this time ;A or below& 9our organi'ation has not e5pressed a firm business #ustification for (2*, or must perform a ma#or overhaul of its staffing andTor systems Another readiness assessment should occur after the identified improvements have been made ?>

The #anager's Bottom ,ine

"he e5ecutive who e5pects (2* for its own sake to generate significant returns is the e5ecutive bargaining for disappointment6and most likely less budget money ne5t year A successful (2* program not only changes the way a company deals with its customers) it also changes the way customers deal with the company "he willingness to change processes and staff responsibilities is a key component of this success A triumphant (2* program isn,t so much )elivere) as it is earne)* (ompanies should be prepared for post facto organi'ational changes that supplement (2* As we discussed in this chapter, (2* done right means changes in business processes "his in turn touches people,s #ob functions and might even eliminate certain work as a result of accompanying efficiencies 7or instance, the (32 who can now cross4sell products and services while the customer is on the phone is no longer #ust an order4taker "he field service rep who returns to the office each night to complete manual reports of the day,s activities can now go directly home to dinner, having relayed that information from her handheld unit "he salesperson accustomed to darting from one meeting to another is now accountable for his customers, information As we discussed in Chapter 4, this often means changes to compensation and bonus plans as well as #ob descriptions -stablish the measurements now Do you e5pect (2* to result in an uplift in cross4selling ratesM Do you want to see a surge in positive customer feedbackM "he (2* goals you establish in the planning stage should become the (2* metrics you reevaluate after (2* has been deployed <as Chapter 9 will illus trate? 2egardless of the goal, establish clear metrics for how it can be achieved and know that business reAuirements can be refined over time, with conseAuent fluid measurements After you,ve established your (2* success metrics, e5pect to ad#ust and refine them as your business changes "he (2* business sponsor is a big part of the (2* eAuation After all, a lot of people will have ideas about what (2* should do, but far fewer can ensure that those ideas get e5ecuted 1ot only will the (2* e5ecutive sponsor establish clear success metrics, he,ll be responsible for keeping these metrics top4of4 mind during development 2egardless of whether the e5ecutive sponsor is funding the (2* program, he should have the authority and breadth to see that (2*,s ob#ectives are achieved Patricia 3eybold, author of the acclaimed books u"tomer"*com and The u"tomer Revolution, insists the single factor that best predicts the success of an e4business pro#ect is Ba high level e5ecutive who,s responsible for your branded customer e5perience C[3]
[3]

Patricia $ 3eybold interviewed in

IO maga'ine, 1ovember F@, =>>>

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 10'

+ave you noticed !,ve been using the term BprogramC instead of Bpro#ectMC "his could be a simple semantic shift in your company) then again, many companies differentiate the two A Bpro#ectC implies fi5ed activity with clear ob#ectives and established beginning and end dates A Bprogram,C on the other hand, is a comple5 set of goals and ob#ectives that is institutionali'ed and ongoing, involving several or many pro#ects within it <2emember the Apollo space programM? 3ometimes the differences are fu''y $ut more often than not, corporate BprogramsC receive a greater degree of e5ecutive support, better staff resources, larger budget allocations, and a higher level of visibility +ere,s hoping (2* is indeed a program at your company

Chapter @. Choosing Dour CR# Tool

-ver wander around the floor of a (2* trade showM 9ou go from booth to booth, chatting with attractive vendor reps and viewing demo after demo 9ou fill your plastic bag with foam pu''les, rubber stress balls, and more marketing collateral than you,ll ever read At the end of the day all the products seem to run together and the pitches are identical -veryone seems to have the same message $ut are intuitive user interfaces and rapid customi'ation features really enough to solve your (2* problemM "hat contrived sales pitches and slick product packaging can persuade people to buy a software product isn,t a recent phenomenon +aving adopted the -2P systems, data warehouses, and 9=. solutions of yesterday, many companies have already fallen prey to clever marketing, pervasive press releases, and the fluid bu'' about market ownership "here are many ways to make a bad (2* technology decision, but only a few ways to make a good one /f course, technology is only a small part of (2* *ost companies who undertake (2* technology selection aren,t yet ready to do so: they haven,t figured out how (2* aligns to their corporate ob#ectives, how it will impact their business processes, or how it will mandate organi'ational changes that will irk many a (2* stakeholder (hange is part of the (2* territory, and technology change is probably the easiest (2* change to accept6which is why many (2* business sponsors begin there </therwise, this would have been Chapter 2 ? !ndeed, this scenario, a true story, happens more than anyone would like to admit

+cenario
9ou,re an e5ecutive at a large multinational technology company 9ou,ve recently begun reading more about the use of customer relationship management to instill customer loyalty and discourage customers from doing business with your competitors And you,ve been hearing more about (2* than ever6your &P of *arketing mentions it in practically every e5ecutive staff briefing /ne day she strides into your office and takes a seat B!,ve #ust reviewed a (2* tool, and we need to get it,C she says preemptively as (heryl, your assistant, hovers at your doorway in a vain attempt to foil yet another unscheduled appointment BWhat was the productMC you ask "he *arketing &P states the name of a familiar4sounding company you suspect is owned by one of your mutual funds and begins rattling off bu''words as though she,s #ust learned a new language 9ou don,t know what a screen pop is, nor do you understand what she means by a Bcustomer knowledgebase,C but you let her finish When she does, you ask what any self4 respecting e5ecutive beholden to a bunch of impatient stockholders would ask: B+ow muchMC B"hree million,C she says As if it would e5plain everything, she adds, BA million for the base (2* platform, and another two to re4do our campaign processes and customi'e the code C 9ou,re still wondering why an innocent4sounding screen pop can cost three million dollars "here must be cheaper screen pops to be had B3houldn,t we look into some alternativesMC you ask B*aybe there,s a lower4cost package that does the same thingP C BWe can;t wait that long>C cries the &P B/ur customers are only a click away from one of our competitors: We have to start integrating our channels now: !t costs si5 times as much to get a new customer as it doesP C 9ou,ve seen it hundreds of times in your long career as a manager, and few things are as dangerous and as fearsome to behold: a businessperson who,s #ust returned from a trade show

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B+ave (heryl schedule a meeting with !",C you respond feebly, unsure of what else to suggest "he &P breaks into a wide grin, as if you,ve #ust handed her three million bucks to play with And in a way, you have 7alling prey to the vendor hype isn,t the only way to screw up (2* technology selection 7ollowing is a list of some of the responses !,ve heard to the Auestion, B+ow did you go about choosing your (2* productMC B"he salesman gave it away for free for the first year C B"he &P of Product Planning plays golf with the software company,s (7/ C B$ecause the competition is doing it C B/ur end users liked the user4interfacePand they,re footing the bill C B"hey asked us to be on their advisory committee6we,re helping them plan how to integrate campaign response modeling into their product C B"hey pretty much convinced us they were ,best4of4breedP ,C B"hey told us the whole thing could be done in three months C BWe already had their database product, so we thought, ,What the heckM,C

"hese reasons range from acceptable to dangerous After all, who could argue with impressed users willing to fund development <even though the tool,s functionality might not meet these users, needs?M And it,s certain that, after they,ve approved the (2* business plan, e5ecutives will want to know when you,ll be finished and three4month delivery could make you a hero As for competitive pressures, it,s a worthy e5cuse, but are you sure you know what your competitor means by (2*M Allowing technology to drive (2* is known as the Bbottom4upC approach 0sually this involves one organi'ation, or even an individual manager, who decides to go it alone, allowing a (2* software tool or a specific functional goal to define the (2* deliverable "he #ustification for bottom4up (2* is usually the time reAuired by more rigorous, reAuirements4driven planning "he risks inherent in bottom4up development, however, are far more serious than the rewards: %imited consensus about (2* goals risks spending of money on low4priority capabilities 3ub#ective interpretation of the importance of the given functionality invites rework and wasted resources %ack of integration with other technologies or (2* pro#ects results in either throwaway work or cumbersome after4the4fact integration Dependence on specific product features, which might or might not meet additional business or growth needs, #eopardi'es broader (2* adoption and growth

Although it might be tempting to espouse the well4worn aphorism B!f you build it, they will come,C the truth is that if you build it, they probably won,t even notice After all, how much of your company,s software products have ended up as shelfwareM $ottom4up (2* development means (2* in a vacuum, a pro#ect not reAuested by or sociali'ed to the business 2eAuirements4driven (2*, on the other hand, establishes a level of cross4functional consensus in which people participate from the beginning of the (2* program and thus feel they have a say "he fact is, when choosing your (2* technology, there,s simply no substitute for allowing structured reAuirements to dictate your technology decision 9es, it takes longer than the knee4#erk development with the tool du #our $ut the alternative is much riskier, and e5amples abound of (2* systems that never delivered the goods

#aintaining a Customer 0ocus& Re-uirements-'ri9en %roduct +election

Although reAuirements4driven technology selection is definitely a (2* best practice, the way to go about it differs, depending on the type of (2* you,re planning to do Purists would argue that (2* should always be aligned to corporate strategic ob#ectives, but rigorously planning a straightforward (2* point solution around corporate strategy might nevertheless be overkill After all, simply deploying sales force automation to your national salespeople need not map back to your (-/,s latest state4of4the4company address As we discussed in Chapter 7, having a vision for the breadth of your eventual (2* functionality is an important step in moving forward +ave a (2* strategy, and you,ll know the answer to key development Auestions, such as BWill this (2* system be cross4functional6touching more than one organi'ation6or will

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 10)

it be a point solution for a single department,s focused needsMC As with the business case, the answer to your Auestion will help you in understanding the right technology choice and what your company will need to do in order to implement it Although critical, simply having a list of business reAuirements is nevertheless not enough information to begin evaluating (2* technologies $usiness reAuirements should drive a series of functional reAuirements "he difference between the two is that although a business reAuirement describes the customer4focused Bneed, pain, or problemC (2* must solve, a functional reAuirement describes how to solve it And it is the definition of these functional reAuirements that will make your technology choices much clearer Figure 8-1 shows the progression 0igure @-1. Re-uirements dri9ing technolog!

A customer4focused business strategy drives a series of (2* reAuirements <e g , B"he ability to track success of target marketing campaignsC? "hese reAuirements in turn elicit specific functional capabilities <e g , Bcampaign response modelingC? And, as we,ll see, when the functionality is understood, a list of products can be mapped to each specific function

'e"ining CR# 0unctionalit!

As the reAuirements define the Bwhat,C functionality defines the Bhow C !nterestingly enough, so does your business process !ndeed, the best way to identify your functionality is to map out your business process and identify the functions within it -ach function should map back to a business reAuirement "he key Auestion to ask when defining necessary functionality is BWhat aspect of our customer4focused processes do we need to support with technologyMC "o illustrate how this works, consider the following e5ample A ma#or bank was discovering that many of its customers did business with other financial institutions and already had the product being marketed !f the bank,s customers didn,t opt for the first marketed alternative, telemarketers would have the option, depending on the customer,s interest level, to make subseAuent recommendations "he bank decided to use (2* to generate a list of five different product recommendations for each customer, based on that customer,s likelihood to buy them 7or this to work, the process had to involve these steps: F F F F Analy'e customer purchase history to understand the most freAuently purchased products by other BlikeC customers 3core the likelihood that a customer will buy an individual product (ommunicate resulting customer list and product scores to call center application system (ollect response rates [1]

[1]

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 10*

1ote that we aren,t launching a discrete campaign here, but rather simply providing the scoring information to the call center to refine customer telemarketing suggestions !n other words, as telemarketers use the new information in their customer conversations, marketing collects the data and validates that it has helped improve product sales

2efine scores based on campaign results

1otice in Figure 8-2 that the functionality dictated by the business reAuirement is also dictated by the envisioned marketing process !n other words, BAnaly'e customer purchase historyC is a function that supports the reAuirement) it,s also a step in the campaign process "his is the ideal way to define necessary functionality, ensuring that it not only maps back to the business reAuirement but is involved in a business process as well 0igure @-7. Re-uirements J process K 0unctionalit!

"here are many types of campaigns, and the product recommendation scenario described earlier is one of many e5amples "he point here is to define your own uniAue reAuirements After you,ve listed your business reAuirements, as described in Chapter 7, record the functionality for each one, asking, B+ow will we accomplish this reAuirementMC 9ou,ll eventually have a list of key functions for each reAuirement, and you,ll have finished the hard part

*arrowing 'own the Technolog! Choices

When you,ve identified the necessary functions, you,re ready to map the functions to the candidate technologies by answering the Auestion, B!s there a (2* tool that can perform each of these core functionsMC .nowing the answer to this Auestion is only part of the story !f indeed products offer all reAuired functionality, is the functionality available Bout of the bo5,C or does the product reAuire some level of customi'ationM Also, it,s likely that whatever products best map to the necessary functionality won,t all do so in the same way 7or instance, one (2* product might use affinity analysis to score product recommendations, and another might use a regression algorithm Although you might not have a preference about which data4 mining algorithms are used, scoring which functions are most important to your business reAuirement will be helpful "his way, as you evaluate different tools, you can map their strengths and weaknesses back to the most critical functionality needs Another reason to score different functions is that the (2* tool might not provide all the functions you have (an your reAuirement6and your process6do without a functionM Are you willing to custom4build the function into the (2* package <most (2* tools support custom functions? /r, are you prepared to change your process to match the tool,s e5plicit workflowM And what about the product,s overall usabilityM -ven if it meets all the functional reAuirements, business users should be willing to adopt it !n the past five years, companies have been grappling with similarly difficult give4and4take as they have evaluated their -2P systems and face similar dilemmas with (2* What,s the best way to find the (2* products that offer your reAuired functionalityM "he old standbys still apply here, namely: (2* conferences and trade shows Analyst firms speciali'ing in (2*, such as the 9ankee 8roup, 8artner 8roup, and *-"A 8roup

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(onsulting firms speciali'ing in (2* <be e5tra diligent about those that have partnerships with (2* vendors? "rade publications, particularly those that perform product reviews, such as Intelligent Enter%ri"e or RM maga'ine $usiness maga'ines, particularly those that review !" vendor companies 9our internal !" organi'ation <"hey might already be evaluating (2* technologies or might have access to additional research ? "rade shows or other industry events &endor seminars (2* Web site <7or a list of (2* publications and Web sites, see the 7urther 2eading section at the end of the +andbook ?

When you begin assembling a short list of (2* vendors, a good idea is to get your !" department involved if you haven,t already 1ot only will !" staff understand product technical features and standards, but they,ll also be able to offer guidance on how a given product fits into your company,s systems and data management environments And because !" provides corporate4level support, !" staff might have insight into whether products with similar capabilities have already been evaluated by another organi'ation within the company, or whether other pro#ects need similar (2* capabilities After you have finished narrowing down your product choices and have arrived at a short list of vendors, you should seriously consider formali'ing !",s involvement in the pro#ect 0p until now, you might have chosen to involve key !" players, or even the (!/ in (2* strategy development or planning activities !",s participation in vendor technology discussions is now imperative !f your choice comes down to two vendors, the one that most closely aligns with your e5isting technology infrastructure should be declared the winner

'e"ining Technical Re-uirements

Although functionality should be your paramount consideration in choosing a (2* tool, you should also list your technical reAuirements to ensure the product will work in your company,s specific environment 3uch reAuirements can be broken down into a variety of areas and even scored, based on the degree of alignment with your corporate !" infrastructure "he following areas include e5amples of corresponding technical reAuirements, along with sample reAuirements to illustrate the boundaries of each: Integration an) connection re6uirement"* Ability of the tool to integrate into the company,s uniAue technology infrastructure from a hardware, software, and networking perspective !ntegration reAuirements might include: o o o o o o o 3upport of Windows GE client /3 Ability of the (2* product to interact with your e5isting database systems </racle and D$=? (onformance to company4sanctioned open standards <N*% and (/2$A? Ability to interface with in4house computer telephony package to support (324specific call routing and Web4based live chat Ability to integrate with other applications <e g , 3AP? Product e5tensibility and customi'ations features !nclusion of a published data model that can be customi'ed and e5tended to meet business4specific data reAuirements

'roce""ing an) %erformance re6uirement"* !ndicate the product,s ability to support and control reAuired operations: o o o o o 1umber of transactions the product can support <upper limit? Data volumes the product can support 1umber of concurrent users that can be supported 3upport of data and system backups 3ynchroni'ation strategy and effort reAuired

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o Ability to send and receive data to and from the data warehouse <and whether during production or after hours? Provision of usage and access reporting on a per4user basis Provision of access restrictions on a per4user basis 0sage management at the individual, departmental, or (2* screen level Password encryption Ability to provide limited data access to non4company users <e g , customers and suppliers? "he product,s versatility to provide company and user4reAuested

/ecurit& re6uirement"* "he product,s ability to limit user access: o o o o o

Re%orting re6uirement"* information: o o o o

Ability to push pre4formatted reports to end users Ability for end users to perform ad hoc reporting Allowing for end4user creation of local <client4based? canned reports Ability for end users to e5tract data for local analysis

9"a!ilit& re6uirement"* -nabling end users to easily and intuitively accomplish reAuired tasks: o o o o o Ability for end users to have a custom home page <Bmy(2*C? Ability for end users to seamlessly access other corporate systems through a common (2* portal Ability to customi'e online help screens with application4specific information Ability to perform screen4prints Ability to display graphics, pictures, and photographs

(unction#ena!ling feature"* "he way in which the product provides certain reAuired functionality: o o o o A workflow management capability, including the support and automation of user4defined workflows An e4mail response engine able to route incoming e4mails to specific (32s Predictive modeling functionality <e g , to apply a customer,s propensity to buy to list4 generation activities? 3upport of wireless access to (2* server

'erformance re6uirement"* %aying out acceptable turnaround time for (2* activities or reporting response time: o o Ability to provide I>4second or less reporting4response time for !nternet users Ability to generate campaign lists, irrespective of attributes, within one hour or less

Availa!ilit& re6uirement"* !ndicating the acceptable level of system availability, for e5ample: o o o o Product and accompanying database both available from E a m to E p m seven days a week !nclusion of self4diagnostic tools that can alert system administrators to slow response or likely downtime Accommodation of different time 'ones if your company is geographically dispersed Web page availability =H4by4J

After you,ve covered the necessary bases in terms of both functional and technical reAuirements, you,ll be ready to have a substantive conversation with your prospective (2* vendors, not #ust about how great their tools are, but also about how well they correspond with your uniAue needs Talking to CR# =endors

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Anyone who has dealt with technology vendors understands that the e5perience can range from enlightening to embarrassing Although it,s rarely a waste of time to listen to a short vendor presentation, the time adds up when you,re intent on researching as many vendors as possible in an effort to choose the best4of4breed tool After you understand your reAuired (2* functionality and technical reAuirements, arriving at a short4list of vendors that can support them is relatively easy "he trick is to understand not only whether their (2* products can do what you need them to do, but also whether the vendor can support its toolset and advise you on the best ways to implement and deploy it "he interview Auestions listed in Table 8-1 represent the core areas to evaluate when talking to a vendor "he list features e5amples of critical Auestions you can customi'e or supplement according to the needs of your specific environment +aving a structured set of Auestions will help you gauge not only whether the vendor can deliver the software code, but also whether it can be a partner for the long haul When you,re certain the (2* product can deliver the reAuired functionality, two reality checks remain: price and contract negotiations and reference checks Assume that neither will be as easy as it seems *egotiating %rice As with a new car, few companies purchase a (2* product without a test drive 9our vendor should offer an evaluation copy of its software so your (2* team can install and use the product [2] 3uch trials usually last between three and si5 months to give the company considering the purchase time for the following:
[2]

Depending on the comple5ity of the software product and it implementation reAuirements, a vendor might be unwilling because of the consulting costs incurred 3ome vendors will be willing to offer a proof4of4concept that allows a prospective customer to try out the software with a limited scope 3uch a proof4of4concept has a price tag covering the vendor,s costs, but the charges can then be applied to the product,s purchase price if the proof4of4concept is successful

Table @-1. Buestions to Ask Dour CR# =endor 'he Domain &endor -5pertise 'he +uestion to As What ma#or (2* functions does your product suite provideM ,hy -ou Should As It "he vendor should be able to provide a good description of every product or module and its relative functionality !t should be clear whether the product represents a (2* suite that provides a range of functions or whether the product is a (2* point solution

!n cases where you don,t offer "he vendor,s strategic alliances can be important clues certain functionality, do you partner about areas where the product might be weak !f you with other companiesTproductsM pro#ect needing additional functions not offered by the vendor, make sure you understand the details of its alliances with other (2* vendors (an you describe how your product Although it probably won,t change things, has evolvedM understanding where the (2* vendor got its start is always helpful "his doesn,t mean the company that started as a call center software tool can,t provide robust sales4force automation functionality, but it does suggest where the company,s core competency might still lie "echnical 7unctionality !s your product Web4 based, and if so, howM As described in Chapter 4, Web4based (2* access means all relevant data is accessible via the !nternet 7or those with !nternet access, this is definitely the most fle5ible and secure choice +owever, for remote users who don,t always have Web access, a practical solution might be using applications on their local P(s and subseAuently submitting their changes to a central (2* server 9our reAuirements will tell you which is right for you All the functionality in the world and a really slick user interface don,t matter if you have @> million customers and the vendor,s biggest reference has @ million

+as your product dealt with customer data volumes similar to oursM

+as your product dealt with 9ou might not have pro#ected the number of daily transaction volumes similar to oursM transactions you e5pect your (2* product to handle,

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 11$

but ask the vendor to describe the upper limit Does your software work with our *any (2* products can still only access data one or e5isting relational database or data two database products 3ome even have their own warehouse productM proprietary databases, which means you might have to migrate data back and forth into their database +ow do you migrate data from your 0nderstand how the product interfaces with other product into other tools, and vice enterprise systems such as -2P or accounting versaM packages Does a custom program need to be written, or is a predefined utility availableM Does the vendor link to other systems <e g , 3AP, /racle, 2emedy, etc ?M !s it even possibleM Do you allow end users to e5tract data so they can use it locallyM Does the product let users manipulate data without being connected to the (2* serverM When this is a reAuirement, understand whether the product has synchroni'ation features 3ometimes product vendors keep their data models confidential, reAuiring you to purchase additional product licenses to access their (2* data Access to the product,s underlying data model will allow you to e5tract the data for other uses, using software you already have

(an you provide a published data model that e5plains all the dataM

!s there a development toolbo5 that Development templates speed up implementation by includes industry or functionally providing programmers with packaged software they oriented templatesM can customi'e rather than writing it from scratch Does the product provide data Although you might not need it now, the fact that the mining or other advanced analyticsM product offers data mining means its functionality goes deep and the vendor has spent time developing advanced functions <or money purchasing them? -ither way, data mining capabilities are a good safety net !mplementation What is your product,s average 3upport implementation timeM "he vendor might lowball this number, so beware Also, understand the difference in time estimates for out4of4the4bo5 configuration versus customi'ation

Does your company help, or do you 3ome (2* vendors are product companies, meaning rely on partners to perform the they partner with systems4integration or consulting partners to perform the workM companies who implement their software for customers /thers have in4house consulting organi'ations that perform implementation duties 0nderstand who will be doing the work !n cases where you rely on consulting partners, who are your partner companiesM *any (2* vendors have long lists of integration partners, allowing you to select the best4Aualified company 0nderstand the vendor,s product certification process and know the skills you,ll be reAuired to invest in And beware the vendor that has only one company e5perienced in customi'ing their product 9ou,ll be at their mercy With a third4party implementation company, knowing where the company,s resources originate will tell you whether you need to factor Btravel and e5pensesC into your development budget and will help you better estimate resource costs

!n cases where you rely on consulting partners, where are those companiesM Where would their staff originateM

After development begins, what do Does the vendor support the development process like you see as your ongoing role with it supports its productM !f the vendor recommends an our pro#ectM alliance partner to assist you in implementation, make sure everyone understands the vendor,s ongoing role 2eferences What percentage of your e5isting customers use the software out4of4 the4bo5 versus reAuiring it to be customi'edM $eyond understanding whether the vendor sees its product as a plug4and4play or highly customi'able, you should understand the relative usage environments between the two <Ask the actual references the same Auestion ?

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 11%

+ow many other installations of your Although its ability to meet your specific functionality is product are there in our industryM more important that its e5perience in your industry, the (an you name someM vendor,s penetration of your particular sector increases the likelihood its representatives understand your particular business problems6particularly valuable after implementation begins (an you provide us with the names and phone numbers of three references that have used your product and have deployed some level of functionalityM Don,t be shy, and don,t settle for the logos on the marketing glossies 8et three names and phone numbers of customer representatives who are either managing (2* pro#ects or using an in4production application

&erify that the promised functionality actually e5ists -nsure that the product works in the specific technical environment 8auge the product,s usability &erify that the product works with its data

A critical point here is that verifying that the functionality e5ists is one thing, but discovering how the product actually offers the functionality it claims to have is another "wo products might each claim to score campaigns, for e5ample, but one might involve significant end4user input while the other is more automated %ikewise, ensure that the tool can work with your data *any companies ignore this, but it can be a make4or4 break proposition for a (2* program "here might be data problems such as inconsistent formatting that preclude the (2* product from working correctly /r the product might reAuire certain data, such as cleansed address fields or access to customer support history, that your current systems simply can,t furnish Depending on the severity of these data problems, you might want to delay the purchase of any (2* tool until they are resolved -ven if you,re not comparing different (2* tools, actually using evaluation software is a good idea in order to determine whether the per4user cost of the tool is worth the value it provides 7or instance, say you,re a financial services firm that has #ust acAuired an !nternet bank 9ou,re evaluating a call center (2* product that allows seamless integration of customer data from across systems so your (32s have a complete customer profile at the time of the customer,s call "he product costs DF>>> per end4user seat /ne of your evaluation goals should be to verify that the product is able to truly deliver efficiencies that eAual or e5ceed its cost !n other words, if you have I>> (32s across the country, will the resulting productivity gains be worth DI>>,>>> to your companyM "he tool might reAuire a (32 to perform other tasks to get the correct data, mitigating the time saved %ikewise, poor performance might slow down a (32,s ability to resolve a problem /nly by installing the product and testing it can you truly know what to e5pect from it Plan a product evaluation !f you have the time, combine the evaluation with a proof4of4concept that can deliver sample functionality, and demo the functionality to stakeholders for approval (onsider the software evaluation a separate pro#ect with metrics that mirror your e5pectations for the tool after it,s in production Although you won,t be working with all of your data or submitting transactions on the scale you will after the tool is in use, your development team might be able to simulate workloads and e5trapolate performance numbers based on more limited testing At worst, the evaluation will save you time during the actual development pro#ect) at best, it could save you many hours and untold e5pense on a product that doesn,t cut the mustard Checking Re"erences "here,s always one vendor who cites nondisclosure agreements with its customers as a reason not to name names !ndeed, many (2* users consider (2* a strategic weapon and might be unwilling to go on record about what they,re doing !n cases where the vendor uses this as an e5cuse but has cited an anonymous client, ask to have a conversation with someone on the vendor,s account team who can describe the application in general terms Whatever the case, red4flag the (2* vendor who cannot provide you with at least three on4the4record references "he referenced customers should have e5perience developing a pro#ect with the tool, as well as in deploying the tool to end users !deally, they will be in a similar industry or be using the tool in the same capacity6for instance, specifically for e(2*6for which your company is considering it "he actual reference should be a development manager or e5ecutive who has seen the software product deliver what it promised <or not?

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 11&

When you reach a reference, you could probably talk all day about (2* !f there,s time, discuss what led to their decision to purchase the product in Auestion, and ask about how the reference uses the product,s key features +owever you frame the reference call, remember the following five BcoreC Auestions: F = I H @ What was the vendor,s original estimate of implementation time and did your e5perience reflect itM Were there any surprisesM +ow many people participated in implementation <total from both !" and the line of business?M What was the biggest unforeseen challenge of the implementationM <7or e5ample, data sourcing comple5ityM -nd4user trainingM $usiness processTtool conflictM? What has been the vendor,s <or integrator,s? ongoing involvementM What is your e5pectation for self4sufficiency with this productM

"hese Auestions are open4ended and safe "hey invite interpretation, which engages the reference and encourages further e5planation And if the answer to the final Auestion reflects a short4term e5pectation for self4sufficiency, you,re on the right track

2ther 'e9elopment Approaches

3o far this chapter has assumed you,ll be purchasing a software product to implement your (2* program in4house +owever, not all companies approach their (2* reAuirements this way *any of them choose alternative methods of developing and deploying (2* for a variety of reasons

Homegrown CR#
Although most (2* development efforts involve some level of software customi'ation, be it to integrate the call center (2* system with marketing,s campaign management software or to change data names, they begin with a core product that provides the foundation from which to customi'e +owever, some enterprising companies have decided to develop (2* software from scratch (ompanies develop their own homegrown (2* systems for the following four main reasons: F = I H "hey reAuire core (2* capabilities that didn,t e5ist at the time they were needed "hey perceive retail packages as being too e5pensive "he combination of core functions they reAuire is too speciali'ed for a single (2* product "hey want assurance of a uniAue solution6one competitors cannot use and vendors cannot reference

Although you might roll your eyes at the conference presenter who claims to have been Bdoing (2* before (2* was even invented,C many companies who have mature data warehouse and business intelligence environments have gradually evolved e5isting customer4focused applications into tailored (2* platforms 3uch capabilities as customer profiling, campaign planning, product affinity analysis, and product recommendation engines might have been deployed to a number of organi'ations across the company at different times $ut because all of the data is centrali'ed on a data warehouse, these companies have formali'ed their processes for integrating and deploying customer data to provide the business with a IK>4degree view of its customers An effective enterprise portal that allows businesspeople a common view of the applications and data means the applications themselves can be distributed and developed at separate times and no one need know !t,s rare, but some companies simply believe that6given (2*,s strategic importance6they have no choice but to build their own (2* environments to maintain their differentiation and their confidentiality A marketing product manager at a large wireless phone company recently e5plained why his company elected to build its own (2* system: "he moment we bring in a vendor to customi'e its software to support our campaigns is the moment that we release our secrets to the competition 3imply put, we sell a commodity product /ur company,s onl& differentiator is in our campaign strategies (all me paranoid, but !,ve seen it too many times ! can,t help but e5pect a (2* vendor to tell our competitors what we,re doing so they can sell to them too, and to use us as a reference "his defeats the entire purpose of automating campaign management, which we,re doing to thwart our competitors6not to clue them in

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9ou might not share this manager,s degree of paranoia, or your (2* initiative might not be as mission4 critical !f you don,t plan to build your (2* solution from scratch, at least gauge your vendor,s willingness to sign a nondisclosure agreement barring written and verbal discussion of your company,s activities without your permission And when your (2* program is a smashing success, be willing to serve as a reference yourself

8sing an A+%
0p until now, this chapter has assumed (2* at your company will be an Bon premiseC solution, that is, built and maintained in4house6as most (2* systems still are "his decision relies on the e5istence of core infrastructure components, including sufficient hardware and software, networking or !nternet capabilities, specific skill sets in both the business and technology areas, and a development process robust enough to deliver a reAuirements4driven program "his is easier said than done for many companies who lack the infrastructure but desperately need to support their customer loyalty or retention programs "hey need (2* fast, faster than the time it will take to hire the necessary staff and install the necessary technology And application services providers <A3Ps? are an increasingly popular alternative BA3PC is often used as a synonym for outsourcing, but A3Ps develop, deliver, and maintain packaged software applications on behalf of their client companies, using the Web as the primary deployment mechanism Although the traditional outsourcing companies speciali'ed in running their customers, BcommodityC systems6billing and human resources being two classically outsourced systems6nowadays A3Ps are bidding on more strategic technology solutions "here are two principal types of A3Ps: F = Web4hosting firms providing customers !nternet access plus a range of services, not to mention a robust technology infrastructure Application providers offering customers access to specific products and product packages

*any pioneering A3Ps began as small specialty shops focusing on specific technologies, most of which are comple5 enough to warrant speciali'ed support +owever, big guys like -D3 and /racle have #umped into the A3P game, offering everything from !nternet service to accounts receivable to campaign management *oreover, the (2* vendors are busy bolstering their own data centers so they can hang out the A3P shingle themselves Why the rush to become an A3PM Web delivery capabilities, for one, are making outsourcing a more realistic choice -nd users accessing (2* from a browser interface need not know whether the customer knowledge is originating downstairs in the data center or three states away at a company they,ve never heard of And (2* is the darling of the A3P community "he 8artner 8roup has forecast that A3Ps will deliver H> percent of all applications by =>>I %ikewise, 7orrester 2esearch has estimated that KH percent of all A3P revenues come from (2* applications With the (2* adoption rate growing e5ponentially, (2* outsourcing is here to stay "he reasons companies elect to outsource their (2* implementation to A3Ps include Ro!u"t technolog& infra"tructure$ (ompanies defining themselves as A3Ps must develop mature technology infrastructures that include robust servers, wide4area networking, operations and database software, application development technologies, and wireless client support for Auick and thorough delivery of multiple software packages /%ee) of im%lementation$ *ost (2* A3Ps usually speciali'e in one or a handful of product packages) thus delivery processes are repeatable across customers, and customi'ation occurs more Auickly E-%erti"e$ A3Ps hire and train their staffs to become e5perts on specific (2* products $ecause these staff members apply a (2* product to multiple user environments, they see the product,s strengths and weaknesses and thus possess an intimacy with the product set that your !" department would struggle to replicate /ervice#level agreement" 0/:A"2$ 3uch contractual agreements establish clear reliability and availability reAuirements to which the A3P must adhere <*any argue A3Ps are more likely to stick with 3%A terms than are internal !" organi'ations ? ritical ma""$ 1ot only is the product e5pertise more solid, but A3Ps also have bench strength, meaning the likelihood of (2* specialist availability is higher "his is especially valuable for

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 11(

application maintenance and support6no more months spent searching for maintenance programmers6freeing your internal technical resources /cala!ilit&$ 1eed to add another @> users to your (2* systemM What about another half million customers to the databaseM Any systems programmer understands the technology ramifications of increased workloads or growing data volumes Justifying, procuring, and installing new disk drives to a database server or new processors to your mainframe could take you weeks, or even months With an A3P, you simply let the company know of your new reAuirement and then work together to schedule the enhancements "he A3P does the hard work, which is what you pay them for Economie" of "cale$ *any small to mid4si'e firms have legitimate need for costly products provided by the (2* and -2P vendors but simply cannot afford to purchase these products "he A3P buys the software and licenses it out to its customers, who effectively become end users "he cost is a fraction of what the customer might otherwise pay in software license and upgrade fees (ompanies who could never fund a data center, let alone some of the key technologies necessary to enable (2*, allow A3Ps to fill the often significant void "he A3P absorbs the high cost of systems administration and maintenance as well as the staff resources and skills necessary to keep the technical environment humming om%le-it&$ "he best A3Ps are greater than the sum of their parts "hey transcend the collection of 01!N and 1" servers, database products, and (2* tools installed in their data centers and become solutions providers "hese companies not only deploy and maintain your (2* program, they also provide critical data maintenance, system security, end4user support, Web access, and a variety of other nuts4and4bolts services that, when added up, do more than solve your business problem: "hey save you money

$ut choosing an A3P is hardly a slam4dunk -ach A3P has its own technology specialty, rules of engagement, service levels, and risks Table 8-2 lists some Auestions you should be prepared to ask the A3Ps you,re considering for (2* Table @-7. Buestions to Ask Dour A+% 'he Domain A3P -5pertise 'he +uestion to As ,hy -ou Should As It Do you offer both packaged /ften, companies need a subset of (2* functionality *any (2* suites and standalone A3Ps reAuire their customers to adopt an entire (2* suite (2* modulesM /ther A3Ps, offering standalone customer support, sales force automation, and contract management modules, allow their customers menu4based services +ow many different (2* products do you offerM A3Ps speciali'ing in (2* might offer a myriad of choices, whereas more general Web4hosting firms might offer only one or two "his is a double4edged sword: /n the one hand, the more (2* products a company offers, the more choices you have +owever, the A3P offering a do'en different packages might also be e5pecting too much from its staff in terms of skill sets and availability "he A3P that under4 stands your business is the A3P that can understand customer data hierarchies, for instance, or customer4 focused business processes uniAue to your sector

What e5perience do you have in our specific industryM

What are the boundaries of *any A3Ps are simply nuts4and4bolts technology providers !f your servicesM the A3P offers professional services staff, it can provide you with the full system lifecycle, from reAuirements gathering to end4user support +ow solid is your company financiallyM "he financial health of an A3P is a lot more critical than that of your company,s other suppliers 7ind out how the A3P is funded and for how long

"echnical +ow will you integrate your 0nderstand not only how data propagation back and forth from 7unctionality (2* environment with our the legacy systems will happen and how timely it will be <DailyM legacy systemsM WeeklyM? Also understand the lag time between data provisioning and availability (an we e5tract certain data "he A3P might not have the tools or processes that allow the back to our local serverM manipulation or transfer of data outside of the services they provide What type of Auery and Although most A3Ps provide some sort of canned reports, fewer reporting functionality do you provide actual ad hoc reporting capabilities !f this is a

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 11)

provideM Are there data capacity limitationsM Application 3upport reAuirement, make sure the A3P understands that 7ind out the A3P,s data volume ma5imums !s data capacity limited to a certain number of customers or productsM !s there an upper limit to the amount of history the A3P can keepM

What measures do you have Although the risk of some4 one,s blatantly sharing customer data in place to ensure the with your rivals or other unauthori'ed parties is minimal, there security of our dataM should be written agreements in place to penali'e the A3P for doing so What type of reliability guarantee do you offerM 3ystem up4time is critical in (2* environments, where delays can spell missed opportunities and lost revenues Will the A3P provide =H4by4J supportM When the data is being loaded, will other data be available or will there be outages scheduledM

2eferences

(an we speak to a few "ry to talk to a few customers for whom the A3P has provided companies who have had customi'ation services to assess staff e5pertise as well as timely similar customi'ation needs delivery with the products we,re consideringM

Why build (2* yourself if an A3P can do it all for youM (ompanies foregoing the A3P route cite several valid reasons: (re6uentl& changing re6uirement"* *any companies who have deployed (2* are continually fine4 tuning it and have set up schemes for ongoing end4user input A constant stream of new reAuirements resulting in an updated system might be too much for an A3P who has defined certain standard functionality across its (2* systems and customer base om%le-it& an) timeline""* !ndeed, by the time a company can translate its specific needs to an A3P, it might have been able to customi'e its (2* tool and have it deployed 3o too, many companies insist on being able to test and run marketing campaigns Bon the fly,C whenever they want6a tall order for many resource4bound A3Ps Integration with e-i"ting "&"tem"* "he number and comple5ity of a company,s systems6both legacy systems and emerging technologies6can render data gathering and provision too comple5 and cumbersome for some A3Ps 3o"tage#taking* After a strategic (2* system is in the hands of an A3P, the balance of power shifts 3cary stories proliferate of outsourcers trying to change contract terms while in possession of mission4critical data /ne good BholeC in the contract, and both you and your customers could be at the mercy of an unscrupulous hosting service (ear* With all the efficiencies and speed that accompany the A3P model, some companies are still nervous about relinAuishing their precious customer data into the hands of an outside company, no matter how strident the security policy Plus, many companies who embraced A3Ps early fear training the A3P, who can then repeat the development process for a competitor at a lower cost

"he best A3Ps offer true solutions hosting, combining operational support, change management, and problem resolution for a range of software products gathered into an integrated technology architecture that aligns to your business needs "he problem resolution is so timely and end4user support so seamless your business can,t tell the difference between the (2* provider and your internal !" department "hey give you and your (!/ peace of mind And, most important, they free up your business to concentrate less on technology deployment issues and more on your customers

A CR# Tool +election Checklist "or +uccess

When deciding on your (2* product, here are several things to keep in mind to ensure you,re not wasting talent, money, and time: on"i)er the team "electing the %ro)uct* As we,ll discuss in Chapter 9, the diversity of the team evaluating (2* products against (2* reAuirements should be directly proportional to how cross4 functional the (2* program will be A group of managers choosing the tool based on its purchase price <versus its total cost of ownership? is as shortsighted as the programmers voting for one product over another because it uses Java beans -veryone has a bias *ake sure your product selection team represents a variety of business reAuirements and functional preferences

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 11*

Be cr&"tal clear a!out the re6uirement" &ou woul) e-%ect an A/' to fulfill an) the "ervice" &ou woul) e-%ect it to %rovi)e* Draft your ideal service4level agreement first, and compare it to those of the A3Ps you,re considering And don,t be shy about proposing an incentive4based contract 3o4 called value4based pricing means the A3P receives a competitive rate, plus an incentive for offering uniAue functionality or improving business processes !f such a pricing scheme isn,t established, the A3P,s prices will rise but service levels remain the same A pay4for4performance plan ensures the A3P will work hard to fulfill your reAuirements and be rewarded when they do If &ou are con"i)ering an A/'1 con"i)er wh& &ou;re unwilling to inve"t the mone& in"tea) into &our IT )e%artment* After all, although the A3P will surely provide business value, the money might be better spent shoring up a lagging !" infrastructure that can support (2* more cost effectively for the long4term hoo"e from the cu"tomer;" view%oint* As you consider various tools and how they,ll be used in the service of your customer4focused programs, e5amine particular product features and continually ask the Auestion, B+ow will this capability enhance the customer,s perception of usMC "he tool generates call center scriptsM The cu"tomer will think we reall& know her> !t can dynamically route a high4 priority trouble ticket to a field service agentM u"tomer" will a%%reciate our fa"t re"%on"e time> !f a series of answers emerges for one product above all others, you,ve probably found your solution Avoi) religion a!out con"ultant"1 either &our" or the ven)or;"* *any (2* vendors have established consulting partnerships, the advantage of which is that the consultants have likely been thoroughly trained on implementing the vendor,s product Don,t assume these partner firms are your only choice *any of the larger consulting firms train otherwise unAualified #unior staff on technology development without conte5t (onversely, boutiAue consulting firms might lack the critical mass you need for speed "he evaluation methods you used to choose your -2P or 9=. consulting firm will be different for (2*: "ake the time to interview a selection of firms based on a clear set of success metrics Don;t rel& on RM technologie" alone to a))re"" !u"ine"" im%rovement"* $y its very definition, (2* is a solution that includes processes, data, technologies, skill sets, and strategy !f any of these is shaky, your (2* program might be at risk After all, (2* is about changing business processes and ensuring happier customers, not about software -5pecting one product to solve all your problems can lead to failure

Case +tud!& Harrah's 4ntertainment

3ummary: 3ome people like gambling at those sprawling mega4casinos featuring frolicking dolphins, mile4high revolving restaurants, and pirates skirmishing outside the lobby /thers prefer doing their gaming where the staff greets them by name "here are no almost4e5tinct white tigers or rumbling volcanoes at +arrah,s casinos, but there,s something #ust as uniAue: true customer intimacy 9ou check into your favorite &egas hotel and decide to play a couple hands of black#ack before heading up to your room 9ou fish around in your wallet for fifty bucks and your freAuent4player card 9ou hand both to a friendly dealer 7ive minutes and a couple of good hands later, a BhostC appears and hands you another room key and a pair of tickets When you,re ready, the host e5plains, he,ll show you to your upgraded suite 6which, by the way, is on the house, along with the tickets to the hottest show in town and a comp dinner at 1apa, the restaurant with the best wine list in the state, if not the region A dream come trueM 1ot for elite members of +arrah,s "otal 2ewards program who gamble at the 2io $ut +arrah,s -ntertainment, !nc has gone beyond offering its high4value customers special perks and has institutionali'ed customer relationship management across its broad base of customers 2e#ecting the flashy lures of its gaming competitors, +arrah,s has instead embraced a customer loyalty program that,s made it the envy of the industry

5hat The! 'id&

!n the FGG>s +arrah,s began an e5pansion and acAuisition strategy that included the 3howboat casinos and the upscale 2io, e5panding its market offerings in both the hotel and gaming businesses and more than tripling the number of its properties As the company reached across different cities and markets6there are =F +arrah,s locations across the 0nited 3tates, from %as &egas to Atlantic (ity and from Joliet, !llinois, to "unica, *ississippi6it made the same assumption its competitors made: that each customer patroni'ed a

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single casino A little market research commissioned by senior management suggested +arrah,s might not know all it needed to know about its growing customer base !n FGGH, +arrah,s began building its Winners !nformation 1etwork <W!1et?, with a business portal providing Bseamless recognitionC of customers across all +arrah,s properties "he new technology initiative included the company,s online Patron database as well as its marketing workbench, a "eradata system from 1(2 that ultimately provided an analysis platform for over => million guest accounts "ools from (ognos and 3A3 provided a rich set of decision4support and data4mining capabilities A seminal customer relationship management application, /ffers, was built from scratch !ts W!1et system in place, +arrah,s subseAuently introduced a freAuent4player card, announcing its "otal 8old program in FGGJ !ndeed, the mi5 of database and application technologies earned +arrah,s several patents6not to mention an escalating industry bu'' "he gathered data revealed significant findings about customers and their preferences 7or one thing, +arrah,s confirmed the suspicion that its most valuable guests often freAuented several different properties, triggering the upgrade from "otal 8old6specific to the +arrah,s chain6to the "otal 2ewards program, encompassing 2io and 3howboat properties "otal 2ewards introduced Platinum and Diamond player levels, offering players incentives to consolidate their gaming and remain loyal customers +arrah,s now knew what property a guest last visited, what events he attended, and what games he preferred on the casino floor "he company was able to differentiate Bone4trip wondersC6gamblers who were valuable within a single casino visit6and conclude that guests who returned for a third visit were more likely to become loyal for life !n fact, the company found it was precisely the customers who visited multiple +arrah,s properties who were the most loyal of all 3ince the launch of "otal 8old in April FGGJ, the number of customers visiting more than one +arrah,s property has shot up J= percent 3uch detailed customer knowledge has helped +arrah,s refine its marketing processes "he company analy'es data in order to create special offers to discrete customer segments most likely to respond to them 6for instance: play slots for one hour and get a @ percent rebate !t can also predict a guest,s ad#usted trip value and pro#ect the profitability of her visits, allowing for more targeted mailings After the company began customi'ing its offers, it witnessed an increase in the average customer,s visit freAuency in their (entral Division from F = to F G times per month <see Figure 8-3? 0igure @-:. Increased "re-uenc! o" 9isits a"ter CR# .Courtes! o" Harrah's 4ntertainment( Inc./

"he company also uses its data to determine additional services customers might prefer, often deciding to promote their hotel offerings to so4called non4lodgers so customers who routinely %la& at +arrah,s might also "ta& at +arrah,s

The Challenges&
1otwithstanding a fortified !" infrastructure and advanced data analysis capabilities, +arrah,s biggest challenge was convincing individual properties to believe in the newfound customer information enough to

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use it At first they were reluctant After all, since FGIJ, property management and casino staff had worn as a badge of honor their ability to remember regular customers, names and treat them well +arrah,s corporate marketing department, however, convinced individual casinos that customer knowledge was in fact an e5tension of the customer service philosophy they were so proud of practicing /ver time, actual data proved to properties which of their customers were the most valuable and which product mi5es <including games on the casino floor as well as hotel stays, entertainment events such as 1ew 9ear,s -ve shows, and player events such as poker tournaments? generated the most activity, and even helped them track the uplift in same4store sales !n effect, receiving regular customer4activity reports let casino staff be more customer4focused than ever

)ood Ad9ice&
3ame4store salesM Product mi5M Profitability4per4visitM +arrah,s managers sound more like a bunch of retailers than gaming industry e5ecs !ndeed, +arrah,s has e5ploited the data in their data warehouse not only to better understand the company,s customers but also to understand overall corporate performance "he company has recently used customer4behavior and financial data from e5isting properties to plan product mi5es and property configurations for newly announced locations, from where to position the buffet to how many and which types of slot machines will be on the casino floor Among other new findings, +arrah,s has used data to determine specific configurations of new properties before they,re even constructed B"he data warehouse has changed the way +arrah,s considers its capital,C says *onica "yson, +arrah,s Director of !" Development for data warehousing BWe,re building a hotel twice as big as we,d planned, based on comparing current properties and their demographics C

The )olden *ugget&

BWe reali'ed our core competency was in the relationships we create with our customers, and we wanted to e5pand that competency using automated tools,C +arrah,s (-/ Phil 3atre told IO maga'ine by way of e5plaining technology as a strategic enabler +arrah,s continues to analy'e customer information to drive new levels of detail, helping deliver one4to4one customer interactions with casino and hotel customers alike "he company,s B3lotsC pro#ect will allow it to analy'e a player,s Bcard inC and Bcard outC transactions at a slot machine, helping it understand customer behaviors in more detail "he company,s 8old, Platinum, and Diamond player levels offer freAuent players additional rewards for their loyalty -volving customer behaviors6and the ability to continue analy'ing them6will help +arrah,s further refine its product mi5es, not to mention its customer interactions When a customer calls these days, a +arrah,s customer service rep can identify who that customer is, his relative segment value, his last visit, and the promotion he,s inAuiring about, all while helping him reserve a hotel room 1ot only has such (2* functionality increased customer loyalty and helped boost lower4tier customers, value, it has shortened the time the (32 spends on the phone with the customer, thus allowing the rep to handle a greater number of inAuiries !ndeed, +arrah,s6winner of "he Data Warehousing !nstitute,s (2* %eadership Award and (!/,s -nterprise &alue Award6has kept its focus not on the vicissitudes of the database or even on (2* markets, but on its customers B/ur (2* system is really a holistic approach to our business,C says *onica "yson BWe didn,t start out with the idea of building (2*6the business #ust drove the need for customer information C As we,ve mentioned, such customer differentiation is at the heart of customer relationship management, and +arrah,s had the foresight to harness best4of4breed technologies to make it happen "he catchM +arrah,s began building its B/ffersC (2* capability as part of its W!1et program back in FGGH, before the term even came into vogue "he company,s management e5plains its foresight with characteristic customer focus: B9es, it,s home4grown,C e5plains "yson, Bbut in FGGH there was nothing out there called (2* that we could really use We had no choice but to build it ourselves C A gamble, to be sure, but for +arrah,s, being a (2* pioneer has paid off big time

The #anager's Bottom ,ine

!t,s a tragedy in (2* when a company sanguine about its business reAuirements nevertheless skimps on (2* technology "he fact is, if your (2* program is a comple5 and multidepartmental customer4loyalty initiative, buying the cheapest (2* product on the market might not be the optimal choice *ore tragic, however, is the company that skipped the reAuirements piece altogether and went straight for the tool /ne of the biggest business missteps is technology for technology,s sake, and the tendency has become even greater to see everything through the rose4colored lens of the !nternet Although it,s easy to

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assume this won,t happen in your organi'ation6after all, you have a pressing business need for (2*6 technology4driven reAuirements are often the path of least resistance when it comes to demonstrating (2*,s benefits and nabbing that all4important development budget And wouldn,t it be easy to get the vendor to help define the needM (onduct individual interviews, hold informational luncheons, or get yourself on the agenda of the customer steering committee, but do what you must to encourage business people and sub#ect matter e5perts to tell you what they need *ake sure e5ecutives are on the same page, and if they,re not, be willing to educate them $eware of using (2* as the proverbial Bhammer looking for a nail,C and focus on the real need, pain, or problem (2* can help remedy *ost important, keep your customer as the selection point every step of the way, from reAuirements definition through detailed product functionality and the implementation process, which we,ll cover in the following chapter

Chapter A. #anaging Dour CR# %roGect

"hese days it,s practically routine to pick up an industry trade maga'ine featuring a (2* case study on page F 3omewhere amidst the paragraph about the company,s new customer loyalty program and the part about sales uplift increasing =>> percent, you,ll find a sentence or two describing implementation 1o, (2* development isn,t se5y, and yes, it,s fraught with ha'ards from technology glitches to hiring free'es, but it,s the hub in the (2* wheel when it comes to ensuring a smooth rollout "he sna''iest end4 user interface and most enthusiastic marketing staff will never compensate for the (2* system that doesn,t do what it,s supposed to 1ot to put too fine a point on it, the implementation pro#ect is a critical piece of the (2* pu''le

A %re-Implementation Checklist
! spend most of my time these days evaluating how pre pared companies are to launch their (2* programs, be they departmental or enterprise4wide, single or multifunction 3ometimes this occurs at the reAuirements definition stage, where there is uncertainty about the perceived need and its implementation viability /ther times it involves evaluating a company,s e5isting infrastructure #ust prior to implementation What ! do most is Aui' key (2* stakeholders about their e5isting environment from both business and technology perspectives *y company calls such evaluations (2* 2eadiness Assessment engagements, but ! like to consider them Bpremortems C After all, what,s more valuable than fi5ing problems before they occurM "he best way to do this is to envision possible outcomes based on current circumstances, using e5periences gleaned from successful (2* deployments !t,s good old risk management, come home to roost Table 9-1 lists a series of considerations to be aware of before moving forward with (2* development *ake sure each of these items has been at least considered at your company, and the more comple5 your intended (2* program, per Table 9-1, the more mandatory it is that you resolve the issue prior to beginning development Table A-1. CR# %re-Implementation Checklist E%aluation +uestion +ave you prepared a (2* business 2egard4 planM E$planation We discussed (2* business planning in Chapter 7 less of whether management reAuires such a document it,s a very good idea to have one that represents (2*,s baseline Considered.

Do you know who your $y the time you,re ready to launch development, the (2* e5ecutive sponsor is and what e5ecutive sponsor should be crystal clear *oreover, her role she e5pectsM in defining and validating reAuirements, managing e5ecutive e5pectations, and helping define success metrics should be well understood by all stakeholders +ave high4level business reAuirements been definedM !n (2* this activity should be separate from the formal development pro#ect for two reasons: business reAuirements will dictate whether the (2* program moves forward, and they reAuire involvement from stakeholders who might not be available during implementation +ow will you know if your (2* program has been a successM Although many companies don,t reAuire success metrics6like

+ave success metrics been establishedM

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those we discussed in Chapter 76 to be implemented, they,re an effective safety net for after the system is deployed +as the pro#ect been fundedM 1o use planning an entire (2* program if only a mere proof4 of4concept has been approved !s there agreement on desired customer behaviorsM Are the business functions slated to support these desired behaviors apparentM Depending on the scope of your (2* program, you might include a description of desired customer behavior in your (2* business plan -ither way, building consensus on how you want customers to behave differently is important 7or instance, if sales staff will be using (2* to manage the sales pipeline, it should establish the ideal response to an information mailing

Does each organi'ation agree "he marketing department of an automobile company might on a common definition consider a BcustomerC to be a dealer, but the call center might ofBcustomerCM consider it to be a driver +ave consensus it to be a driver +ave consensus on this and other key definitions before you begin (an you map the desired functionality to data reAuirementsM (ustomer data is comple5 more often than it,s straightforward "his usually means defining data reAuirements along with data reAuirements along with business reAuirements At some point you,ll need to know whether customer data is necessary and from what system it will originate A firm understanding of the level of customer data6account, house hold[1] 6is also critical Purchasing data from an e5ternal source such as Dun L $radstreet, A5ciom, Data Ouick, or -5perian might not initially be a high priority, but it can supplement customer profiles with such indicators as number of family members, estimated income, household4level psychographics, S!P code breakdowns, real estate information, and other attributes that can reveal customer behaviors and preferences What type of workstation con4 figurations does your (2* tool,s development environment reAuireM Additional development tools<e g , *icrosoft,s &isual 3tudio? or hardware <e g , database servers? might be necessary to correctly customi'e the (2* environment "here should be an up4front under4 standing of the impact of (2* on other corporate systems and of how the data will move between systems effectively !n addition, staff members whose systems will be touched by (2* should be notified of the pending integration reAuirements 9es, it,s a loaded Auestion <3ee the end of this chapter ? 1o, it,s not meant to point fingers, but to establish up4front what the tactics will be when Auestions of owner4 ship or disagreements about functional priorities rear their heads An influential e5ecutive sponsor might be able to resolve such issues before they arise 2egardless of whether your (2* program will be Web4based, under4 stand your company,s boundaries for using data about your customers (2* must not only adhere to a corporate privacy policy) it should also be the flagship e5ample of the company,s !ehavior around customer data 3ee Chapter 10 for more about handling privacy

Do you suspect that e5ternal data will be necessaryM

7or customi'ation, does the current workstation development environment support the support the (2* productM +ave you identified the other applications or systems with which the (2* product must integrateM +ave the organi'ational or political barriers to rolling out (2* been identifiedM +ave they been resolvedM

+ave you truly defined your privacy policyM

[1]

"he practice of BhouseholdingC organi'es individual consumers into the households in which they live Although the term normally applies to the residential market, business householding groups various organi'ations of a business customer into a common hierarchy "he challenge of householding is getting everyone to agree on the definition of a household

"he most valuable feature of a BpremortemC e5ercise is that it,s a lot easier to give bad news before disaster strikes than to say B! told you soC after the fact6and after the money has been spent (2* assessment findings can alert the business sponsor to potential roadblocks 3uch findings allow (2* team members to

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 12%

fi5 problems proactively rather than pointing fingers after the (2* pro#ect has failed, as J> percent of all (2* pro#ects allegedly do !deally, the answer to each of the above Auestions will be Byes,C with con sensus on how each issue will be handled when it,s encountered At the very least, the (2* team should be aware of each issue and prepared to deal with it when it inevitably comes up

The CR# 'e9elopment Team

(2* is big !t has captured the attention and imagination of corporate e5ecutives *arketing &Ps are betting their #obs on it, (!/s are asking their staffs to formulate (2* policies, and (-/s are creating #ob roles such as B(hief (ustomer /fficerC that not only embrace (2* but depend on it +opefully by now your company has adopted a customer4focused strategy and is putting in place the inevitable customer4focused programs and accompanying organi'ations "his often means organi'ational change: product managers have become Bsegment managers,Cspearheading customer segments irrespective of the products and services within them, and (32 #ob definitions are being continually modified as companies better understand customer channel usage and interaction preferences !n addition to the broader organi'ational and cultural changes that accompany an evolving customer focus, (2* calls for specific implementation roles and responsibilities !n many cases, these #ob roles are new) in others, e5isting functions play key parts in (2* development Table 9-2 lists the core #ob functions within a (2* development team *ake sure you,ve accounted for each of these roles before embarking on a development pro#ect, and understand the skills from both inside and outside the company might be necessary to fill these positions Table A-7. Core CR# 'e9elopment Roles /o) Role Description $usiness 3ponsor: "he business sponsor might serve across a single (2* pro#ect or across the entire program +is main role is to establish the vision, articulate overall goals and ob#ectives, set the tone for the pro#ect team, and serve as a tiebreaker for implementation issues "he business sponsor often funds the initial (2* application "he more departments (2* spans, the greater the level of authority the sponsor should have (2* 3teering (ommittee: 7or cross4functional or enterprise (2* initiatives where implementation must be prioriti'ed, a committee of decision4makers familiar with the Bpain pointsC (2* can address should convene on a regular basis to provide new reAuirements, prioriti'e proposed improvements, and communicate key corporate initiatives "his person,s #ob is to ensure that the reAuirements defined by the business sponsor and steering committee dictate the functionality to be implemented "he implementation pro#ect manager oversees the day4to4day implementation activities, tracks status, and updates the business sponsor on current issues "he lead developer should manage the technical development and customi'ation of the (2* product as it relates to the reAuirements 3he should participate in (2* technology selection <see Chapter 8? and hire the appropriate developers to implement the (2* toolset "he database developer should lead the necessary data integration, regardless of whether it is operational or analytical (2* /ften this means working with the company,s data warehouse and its development team !n other cases, an understanding of key company source systems and how to capture their data is mandatory, reAuiring a separate team of database administrators and data Be5tractionC e5perts Depending on the chosen (2* product, programming is needed to develop or customi'e the end4user interface (ritical to (2* success are sub#ect matter e5perts6usually businesspeople from the department slated to use the (2* system after it,s in production <for instance, a (32 or a sales manager? 3*-s usually have strong ideas of what (2* should and shouldn,t provide and should participate regularly in the development and testing of a (2* product

!mplementation Pro#ect *anager:

%ead Developer:

Database Developer <and team?:

7ront4end Developer <and team?: 3ub#ect matter e5perts <3*-s?:

Depending on the breadth and comple5ity of your (2* program, the #ob roles listed in Table 9-3 can also participate in (2* development Table A-:. 2ptional CR# 'e9elopment Roles

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0ptional /o) Role Director of e4 $usiness: Director of Data Warehousing: Description 9our company might have a separate division dedicated to e4business that6despite the goals of (2*6must be involved to ensure the integration of, for instance, Web4based customer services with new (2* functionality !f your company already has a data warehouse, you,re ahead of the game -5isting data, development processes, source system knowledge, and metadata can all be used to get a #ump4start on (2* development Development teams might consider sharing resources in order to integrate the data warehouse as the de facto (2* analysis platform Due to the strategic nature of many (2* initiatives, it,s politically if not technically wise to get approval and visibility from the (!/, who can usually facilitate activity with the !" department to ensure the appropriate systems and data resources "he (!/ can also help sociali'e (2* as a corporate information resource

(hief !nformation /fficer <(!/?:

&ice President of !n large companies, where this position e5ists, the &ice President of 3trategic Planning 3trategic Planning: should be able to share with the (2* team new business areas or product offerings the company e5pects to move toward, acAuisition and partnership strategies, or e5isting products and services the company e5pects to abandon (hief Privacy /fficer: A new position in most companies, the (hief Privacy /fficer should be able to provide details on corporate or regulatory policies regarding the use of customer data

-ach of these #ob roles can play an important part in (2* success, but simply understanding available skill sets can take you a long way in ensuring you can supplement your (2* team with outside help if necessary /f course, such responsibilities as e5ecutive sponsor and the (2* steering committee should be filled by staff members having history with the (2*4related need, pain, or problem, as well as the authority to make decisions "here are roles in (2*, however, particularly in technology implementation areas, where e5ternal e5perts should be leveraged (onsider the following Auestions as you decide whether to beef up your current staff with outside help: 3ow well )o we know the RM ven)or;" )evelo%ment environmentC !t might serve you well to bring in an e5pert from the vendor,s professional services staff or from a partner4integrator to provide knowledge transfer as development gets underway Are there critical one#time#onl& ta"k" that nee) com%letionC 7or work that isn,t likely to be repeated, such as configuring the data, a good consultant can shave days or even weeks off a pro#ect Are we comforta!le that our re6uirement" are well )efine)C 3ometimes an ob#ective third party can find the BholesC in your reAuirements definition "his can help you avoid false starts6which could be a bargain at twice the price an we get "tarte) with our e-i"ting "taffC !t,s often true that by the time you hire and train a full4 time resource, a consultant could have #ump4started a critical task and the entire pro#ect could be that much farther along -veryone would rather hire permanent staff members who have skin in the game, but don,t let principle usurp progress $e willing to focus on the value of time to the business, and invest accordingly "his might mean hiring consultants who can hit the ground running

Another important consideration in (2* staffing is the e5istence of a corporate program management office <P*/? 7irst made popular by the aerospace industry, where comple5 pro#ects were the norm, the P*/ deconstructed a multifaceted system into manageable chunks involving repeatable tasks such as reAuirements definition, software coding, design, testing, validation, and software packaging -ach pro#ect chunk had its own pro#ect manager, goals, budget, and deliverable 0sually stationed in the !" organi'ation, the P*/ is dedicated to running corporate programs such as (2* so pro#ect teams can concentrate on succinct deliverables while the P*/ ties them all together (2* programs are business integration pro#ects whose scope is often corporate4wide <similar to enterprise -2P or supply chain management initiatives? $ecause (2* is driven by business reAuirements and involves the integration of business processes with technology and data, its comple5ity and organi'ational reach is usually greater than the straightforward application "he P*/ formali'es tried4and4true practices that can be applied to (2* implementation "his not only ensures consistency across pro#ects in a program but can also provide consolidated status reporting, often to e5ecutives, affording a level of visibility (2* could never otherwise generate

CR# Implementation

As we discussed at the end of Chapter 7, (2* is usually a corporate program made up of many pro#ects 7or (2* point solutions that deliver finite functionality, one well4run pro#ect might be enough -ach (2* pro#ect should focus on implementing at least one defined reAuirement Whatever the comple5ity, (2* development should be evolutionary and multi4tiered Figure 9-1 describes a departmental (2* program and its associated reAuirements 0igure A-1. CR# program and re-uirements

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 12'

0nderstanding the comple5ity of your (2* program is critical to planning your (2* pro#ect 7or instance, if (2* is an enterprise initiative, there could be do'ens or even hundreds of discrete reAuirements across the corporation, rendering pro#ect4planning orders vastly more comple5 !f, as in Figure 9-1, the program is departmental, each reAuirement will eventually be deconstructed into a number of different functions, revealing its inherent comple5ity and the development resources it will reAuire

+coping and %rioriti3ing CR# %roGects

$iting off all the reAuirements listed in Figure 9-1 would not only be dangerous) it could sabotage a company,s entire (2* initiative After you list your (2* reAuirements and have a good idea of their reAuired functionality, the (2* business sponsor or steering committee can actually cast them into discrete pro#ects 3urprisingly, many (2* sponsors and pro#ect leaders forget this step and move straight toward trying to deliver the sum of all listed reAuirements in one fell swoop Without scoping and prioriti'ing (2* pro#ects, pro#ect managers lack overarching direction for prioriti'ing development activities, and application developers are free to arbitrarily add and change functionality during development "he results are usually disastrous A scoping activity ensures that (2* pro#ects are defined based on discrete reAuirements and are circumscribed around delivery e5pectations 2eAuirements can evolve into individual pro#ects based on demand urgency or perceived value or based on implementation comple5ity !n the case of demand urgency, the customer support department might be overburdened "hus the reAuirements pictured in Figure 9-1 might be prioriti'ed in the following way: F = I H @ K !mplement Web4based self4service and 7AOs /ffer Web live4chat service and support 3upport outbound message management Automate workforce management to optimi'e customer support Provide (32s with on4demand customer profiles using e5isting data Provide scripting for (32s and telesales staff

!f, on the other hand, implementation comple5ity is an issue, and the company needs a (2* BAuick win,C the following prioriti'ation might make more sense:

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F = I H @ K Provide (32s with on4demand customer profiles using e5isting data Automate workforce management to optimi'e customer support Provide scripting for (32s and telesales staff !mplement Web4based self4service and 7AOs 3upport outbound message management /ffer Web live4chat service and support

/f course, politics figures into the decision on how to prioriti'e (2* pro#ects After all, if your customer4 support vice president and call4center director are fighting over whether e5ternal data is necessary for really understanding customers, you might want to steer clear of providing (32s with customer profiles until the issue is resolved6no matter how happy it would make the (32s Although formally rating the political landmines of every pro#ect could be overkill6not to mention highly sub#ective6knowing the political baggage that accompanies each potential pro#ect can serve as a tiebreaker When prioriti'ed, a (2* reAuirement6or specific sets of related reAuirements6can be defined as an individual (2* pro#ect as shown in Figure 9-2 0igure A-7. 'elineating CR# proGects

1otice that in Figure 9-2 the Web4related development has been grouped into one pro#ect "his decision was based on practical reasons6specifically, the ongoing challenge of finding available Web4development staff within the company6as well as the estimated development comple5ity Pro#ects F, =, and I are all minimally related and can each leverage e5isting technologies and skill sets within the company Who should scope a (2* pro#ectM !deally, business representatives and development staff should discuss each reAuirement and estimate its value4to4comple5ity ratio6the higher the value and the lower the comple5ity, the better6with the goal of prioriti'ing delivery on an ongoing basis *ost (2* scoping activities focus on delivering initial applications in order to hand over a BAuick winC to the business Applications with a high value4to4comple5ity ratio should rise to the top, and others can be prioriti'ed accordingly "he comple5ity metrics will vary according to the availability of your company,s e5isting technology and staff resources 7or instance, companies that already have robust customer databases won,t rate customer profiling to be as comple5 as those who must start from scratch "o correctly scope a pro#ect, simply rating its functional comple5ity is not enough !deally, you should understand the following: 3pecific technologies that will be involved in implementation 1ecessary skills to implement the pro#ect 1umber of staff members pro#ected to work on the pro#ect 1umber of consultants needed to supplement in4house skills 2ealistic time frame necessary to deliver the first release

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 12)

/rgani'ational boundaries and potential political issues

3coping a (2* pro#ect prior to launching development mitigates the risks 7or one thing, it,s much easier to develop an accurate pro#ect plan that reflects realistic resource reAuirements, tasks, and time frames Justifying headcount reAuests to management based on the pro#ect,s true scope is also easier 7inally, hiring becomes more straightforward, because the true skills necessary to develop the (2* system are clearer than they would have been if you had simply gone straight to implementation !n fact, failure to thoroughly scope !" pro#ects is one of the principal reasons behind many of their failures

A CR# Implementation Roadmap

-ven with the most straightforward (2* products, there,s no such thing as cookie4cutter (2* Development approaches can differ according to a company,s approved development lifecycle, staff e5pertise, and !" standards Despite the possible differences in (2* implementation techniAues, the following proven (2* development success metrics should define every (2* development pro#ect: Incremental )evelo%ment* !ncremental or Bbuilding blockC development means the company receives a defined amount of new (2* functionality on a regular basis "his is due not only to the inherent comple5ity of most (2* pro#ects but also to the cultural issues surrounding its deployment <few organi'ations can absorb multiple ma#or functional and process changes at once? !ncremental (2* BreleasesC create a perception among business stakeholders and management of ongoing value "he alternative to incremental development is the Bbig4bangC approach of delivering a ma#or new system and accompanying business changes all at once "he big4bang scenario almost always includes unpleasant surprises Re6uirement"#)riven )evelo%ment* "his means developers who are creating or customi'ing (2* functionality have an understanding of the overarching business reAuirements driving (2*, as well as the necessary functionality Developing against reAuirements eliminates the notorious phenomenon of Bscope creepC and ensures that users get what they,re e5pecting ontinuou" u"er involvement* *any (2* teams fall into the trap of involving business users at the beginning and end of (2* but rarely in the middle6during its development6where it,s often critical "his means end users evaluating proofs of concept, validating data and business rules, weighing in on the contents of (2* training, and reviewing new screens or functionality prior to (2* deployment !t also means establishing regular communications between development, the business stakeholders, and the (2* business sponsor Im%lementation %roce"" rigor* -ven with other (2* best practices in place, such as comprehensive reAuirements and an enthusiastic business sponsor, (2* development must be planned and e5ecuted around a structured development process "his is to ensure that the P*/ and pro#ect managers can anticipate and accurately scope various development activities A sound development roadmap also ensures that programmers focus less on the implementation process and more on the actual delivery of valuable (2* functionality

Figure 9-3 illustrates a (2* development roadmap that applies some of this structure 0igure A-:. A CR# implementation roadmap

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 12*

Within the three main pro#ect phases6planning, construction, and deployment6the (2* roadmap features steps that contain a number of fi5ed and variable tasks: Business %lanning (2* business planning involves many of the steps we discussed in Chapter 7 "he most critical activity at the planning stage is defining (2*,s overall ob#ectives6be they at the department or enterprise level6and delineating the reAuirements of each one At the enterprise level, (2* business planning can involve the documentation of a corporate (2* strategy and the definition of the corresponding programs within it At the department level, it can simply mean establishing the boundaries of a new (2* application At minimum, the business4planning phase should include the documentation of high4level (2* business goals in the form of a strategy document or business plan "his document will be leveraged at (2*,s inception to gain e5ecutive consensus and sponsorship !t will be useful as a focal point for reAuirements4 driven development and6after the (2* pro#ect has deployed an application6as a way to measure its results As Chapter 7 illustrated in the hotel reservation system discussion, part of business planning should identify the critical customer4focused business processes (2* will impact Where they are straightforward, you might decide to redesign these processes as part of the planning activity *ore often than not, companies planning their (2* pro#ects reali'e that rather than simply auto mating e5isting business processes, they are defining those processes for the first time Depending on funding and sponsorship reAuirements, (2* business planning might optionally include 2/! estimation or cost4savings pro#ections Architecture and 'esign "he need to plan (2* architecture and to design an implementation strategy is what makes business sponsors and pro#ect leaders shudder and go straight to technology selection hoping for a miracle "he architecture and design step is painful, but it,s worth it "his step identifies the business processes the (2* product will support !t involves listing the specific functions that will need to be implemented6and how6ultimately giving you a good idea of (2*,s impact on the organi'ation and various technologies !nventorying the range of corporate areas (2* will affect, as well as those that will affect (2*, is a critical activity At the end of this step you should be able to answer the following two Auestions: F = What technologies and processes do we have in place that will be impacted by (2*M What do we need that we don,t have today in order for (2* to workM

2elative to e5isting technologies, try to pro#ect (2*,s impact on your current systems 9our !" organi'ation should be willing to do this6and in return it won,t be blindsided by (2* after it,s been developed !mpact analysis can mean listing current systems6for instance, you might need to know a bit about your company,s e5isting call center operational system before you can understand how candidate (2* technologies will link to it !ndeed, a range of e5isting technologies, from -2P systems to current marketing automation technologies to handheld computers, are likely to be touched by (2*

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1$0

After the system impact of (2* is well understood, an !" architect can draft a (2* architecture illustrating the appropriate linkages !ntegrating corporate systems that e5change data6even if the data isn,t formatted consistently6is known as enterprise application integration <-A!? !t,s a truism of business that different corporate systems store and use data in different formats "he term -A! denotes the integration of often disparate corporate systems that routinely e5change or share data "his means moving data between systems, as well as transforming that data so these systems can understand it "he letter depicted in Figure 9-4 is from an online retailer that is doing neither (2* nor -A! 0igure A-;. *either CR# nor 4AI

"his letter was included in a product delivery and represents a veritable smorgasbord of (2* don,ts "he first one is that the company,s online ordering system is obviously not linked to its inventory system <"he fact that the company happens to be a high4profile dot4com with an edgy Web site and slick e4mail marketing campaigns is not evident in its post4sales customer support ? "he customer should have been notified of the out4of4stock items at the time of the order, not upon delivery of the remaining items "he company might believe that, had the customer known that not all of the items she ordered would be in stock, she would not have placed the order at all Perhaps some of the out4of4stock items the customer wanted were in some way related to the items that showed up on her doorstep /r perhaps the company

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1$1

intends to link its various operational systems together but hasn,t had the time -ither way, this company has successfully achieved these detrimental outcomes: 3ending its Bvalued customerC a form letter and thus not differentiating her Putting the onus on the customer to follow up on the desired items 7ailing to provide similar levels of sales and service <1otice the company,s customer service hours !f the customer lives on the west coast, she only has around @ available hours to contact the company by phone6but she can still shop on the Web at any hour:? %osing a BvaluedC customer

-A! is important to (2* because, no matter how successful a new marketing campaign or how polite the <albeit mass? marketing message, if internal systems cannot share data, vital business knowledge could be lost and customer service undermined !f the company truly had -A!, its inventory system could alert its customer support system when the desired items came back in stock, allowing a (32 to notify the customer and make a sale !t is for this reason that many companies undertake -A! as a preparatory step toward (2* 7or new (2* functionality, you,ll also need to understand what data to consider 7or each business reAuirement, one or more data reAuirements will result 7or instance, if survey data is to be incorporated into customer profiles, which specific data elements should be collectedM Will you need to collect e5ternal data such as third4party householding information or competitive intelligence dataM /f the data collected, what should be displayed to (32sM "o marketing staffM And what systems will deliver that dataM A significant part of defining data reAuirements involves addressing the actual meaning of certain data definitions !s there consensus across the business that the term BrevenueC means booked revenue, or might it imply billed revenueM Does a Bnew customerC have the same attributes in the sales organi'ation as in customer supportM "o many in !", documenting data definitions smacks of cumbersome metadata management and documentation pro#ects +owever, it,s more about simply gathering consensus and enforcing consistent business terminology, whatever form that takes !f information is indeed a corporate asset, as we discussed in Chapter 7, consistent and sustainable data definitions are essential When you,ve completed an impact analysis, you can begin prioriti'ing pro#ects according to business reAuirements and staffing your development pro#ects, as we discussed earlier in this chapter Technolog! +election As Chapter 8 e5plained, (2* technology selection can be as simple as choosing an off4the4shelf product or as comple5 as a comprehensive evaluation of various (2* systems integrators or A3Ps !f you,ve bitten the bullet during architecture and implementation design, understanding (2*,s impact on e5isting systems and its reAuirements for new functionality, you should be in good shape to align any candidate (2* product to your e5isting !" environment 'e9elopment Development involves the construction and customi'ation of the (2* product, using specific product features $ut (2* development is more than programmers assuming center stage and writing code) it involves the integration of business processes with the chosen (2* product $y this time, you will have already identified the key (2* business processes Process integration means that (2* technology you,ve #ust selected integrates into these business processes <"he converse6 merging business processes into the (2* product,s features6forces the product to in effect define or change those processes, thereby diluting them until they are no longer optimi'ed ? Process integration involves ensuring that identified business processes are tested with users to ensure not only that the business processes work, but also that technology features can be leveraged in order to refine them !n other words, technological capabilities should improve, not compromise, customer4focused business processes 7or instance, a campaign management product allows segment managers the opportunity to refine a mailing list before the campaign is launched6something they,ve never been able to do6thus refining the e5isting process "he same product might also allow a campaign director to monitor a campaign,s success rate as it,s being e5ecuted !f the first thousand prospects have been unresponsive, the manager can cancel the campaign rather than allowing it to proceed, adding another valuable option to the campaign e5ecution process 2efining business processes during development means iterative proto typing: from time to time programmers demonstrate interim functionality to business users "hus business users can monitor product

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1$2

development and test (2* functionality during6not after6implementation -nd4user feedback about (2* functionality and desired changes can be flagged and incorporated into the (2* deliverable to ensure that resulting functionality conforms to reAuirements and meets user e5pectations /f course, development mostly involves technical work and thus might also include such tasks as database design, data cleansing and integration, and integration with other corporate systems "he integration step can easily be underestimated, because the (2* system might need to feed data to and pull data from other systems, such as call4routing systems or e5isting sales force automation <37A? tools 'eli9er! "he delivery step is often overlooked or lumped into development $asically it means leveraging the corporation,s !" infrastructure to dispatch the resulting (2* software to the business users who need it !n the case of a new Web4based sales4force automation tool, the application might be announced via an e4mail message that contains a link to the new (2* Web site !f the (2* system is client4server based, it will need to be installed on individual workstations /ften, new (2* functionality simply supplements an e5isting operational system and is not considered a new standalone system 7or instance, a contact center representative might now see a Bscreen popC displaying a customer profile when the customer calls in !n such cases, business users might not even be aware of the new feature before it appears !n both cases, user training is paramount $efore a salesperson begins using a new 37A package to schedule meetings or a (32 tries interpreting a customer,s profile, she should be trained not only in using the new functionality but also in changing the way they work so they can take ma5imum advantage of it /ften, a customer4facing representative having new or improved customer knowledge can alter the way she interacts with the customer 7or this reason, (2* training should incorporate introductions to new business processes as well as new technology (2* delivery can also include user guides, #ob aids, and other documentation, as well as online or Web4 based help to encourage users to make the most of the new (2* functionality 3ome companies go so far as having (2* sharing meetings to introduce the business at large to a new or pending system, and (2* business sponsors hold periodic update meetings, filling in various organi'ations and key staff members on (2*,s progress #easurement "he measurement step brings the (2* roadmap full4circle as it evaluates (2* usage in order to refine (2* reAuirements *any companies forego ongoing (2* measurement) such companies are confident they won,t have to answer for their (2* e5penditures $ut can you truly claim your (2* program is a success if no measurements are in place to prove itM !n most cases management e5pects regular updates on programs in which they,ve invested heavily, and (2* is e5pensive 3avvy business sponsors define (2* success metrics as a result of the initial #ustification of (2*, and measure the successes after (2* has been deployed 7or instance, if your new (2* system automates workflow to communicate widget defects to your 2LD department, you might consider tracking the decrease in product defects and a corresponding increase in customer satisfaction for customers who have widgets "his measurement can include value Auantification6such as lower support costs due to fewer support reAuests6and thus prove return on investment Another way to measure (2*,s success is to evaluate how well it has solved e5isting business problems !f you established success metrics when you created your (2* business plan, supplement them over time by correlating them to actual results Documenting success metrics along with their actual measured improvements is a valuable way to track and Auantify tangible (2* business benefits, as illustrated in Table 9-4 !mprovement is usually gradual as users become familiar with new technology and business processes An effective (2* program delivers on going improvements as it,s adopted more widely throughout the company "he F=4month measured improvement column represents the rate of improvement since the launch of the (2* program and illustrates this incremental gain Table A-;. CR# +uccess #easurement Measured Impro%ement12 months3 (ampaign list Measured Impro%ement 1"4 months3 (ampaign list

CRM Success Metric 2eduction in the time

Desired Impro%ement (ampaign list generation to

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1$$

reAuired to generate generate customer name4 and4address lists for targeted mailings Ability to make product recommendations to customers during support reAuest support reAuest<online or phone4 based? -lectronic distribution of customer sales reports sales reports to sales management 2eduction in time spent analy'ing data to correct contradictory customer data from sales and provisioning systems takeF day or less generation takes IW@ hours generation takes FWH hours

2ecommendations result in cross4selling improvement rates of E percent or higher

(ustomer support cross4 (ustomer support selling increase of K cross4selling increase percent of F> percent

-limination of sales staff responsibility to produce weekly and monthly reports, generating a productivity increase of @WF> percent -limination of need for data correlation by implementing centrali'ed customer database

FF percent increase in F= percent increase in sales productivity and sales productivity reduction of one full4time administrative position 1one6database pending -limination of data correlation, resulting in redeployment of two full4time data analysts

*easurement also includes the incorporation of user feedback to improve (2* usability and business effectiveness As the (2* implementation roadmap shown in Figure 9-3 illustrates, (2* measurement loops back around to further (2* business planning, allowing the company and its lines of business to continually refine (2* reAuirements and identify new (2* opportunities at the same time !f you incorporate measurement and feedback into the planning cycle, (2* will deliver new and better functionality, resulting in small victories that add up to improved customer value

%utting the %roGects Together

After you,ve identified your (2* pro#ects, your P*/ or pro#ect managers can agree on an overall (2* timeline that will be enhanced and supplemented as the business uses (2* and customers begin e5periencing the benefits "he pro#ects identified in Figure 9-2 can become components of an overall (2* program timeline, as shown in Figure 9-5 0igure A-<. CR# program timeline

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1$%

"he solid bo5es at the beginning of each pro#ect connote the fi5ed amount of time allotted for the business4 planning phase "his phase includes pro#ect scoping) thus pro#ect durations might change after business planning is completed -ach pro#ect will have its own development4pro#ect plan reflecting more specific tasks and resources A visual timeline like the one in Figure 9-5 is not only effective in managing e5pectations about each pro#ect,s forecasted delivery time frame) it can also become the basis for a (2* program document in which the pro#ect manager or development team leader can include individual pro#ect plans, reAuirements documentation, and specific (2* functions and features, either as a physical document or as part of your company,s web4based knowledge management infrastructure "hus managers and stakeholders can access up4to4date information about current (2* activities

A CR# Implementation Checklist1"or 0ailure

7rom the (2* pro#ects !,ve worked on, evaluated, proposed, and completed, !,ve seen a handful of common denominators for failure ! call these B"he 3even Deadly 3ins of (2* C (onsider the sins a checklist of what not to do if you want to enter the pearly gates of (2* nirvana /in 5um!er 4$ (ailure to )efine a RM "trateg&* 3imply defining what (2* means to your company is difficult enough without gathering consensus on a corporate4wide strategy (ompanies routinely misinterpret business reAuirements and thus underestimate the comple5ity of (2* <remember the four Auadrants in Figure 7-6M? -ven if gathering consensus on what (2* means to the business and what it should deliver takes longer than you would need to simply begin development, take the time !t,ll save you time and money in the end /in 5um!er 2$ (ailing to manage "taff e-%ectation"* *any firms apply rigor to planning and development but forget about deploying the (2* system to the business "he (2* rollout in which an !" liaison sends an e4mail to sales staff announcing training for the new sales4force automation package is doomed before it,s even delivered $usiness users must be stakeholders from the inception of the (2* pro#ect, from planning through development and through to deployment Anything else risks alienating potential end users, an irrevocable situation /in 5um!er D$ (ailure to )efine "ucce""* What is (2* success and how do we know when we,ve achieved itM -ven (2* business sponsors who understand the differences between (2*,s various applications don,t differentiate between increased cross4selling and improved profitability !,m always surprised when ! hear seasoned marketing e5ecs refer to customer loyalty, customer value, and customer profitability as synonyms, as if e5pecting to achieve all three of these ob#ectives with the first (2* release made sense Define discrete success metrics6they,ll be different for increasing customer profitability than for improving customer satisfaction6and then measure against them !f you don,t, there could actually be business successes that aren,t rightfully attributed to (2* /in 5um!er E$ 3a"t& A/' )eci"ion"* (ompanies haven,t yet sorted out the advantages and disadvantages of the A3P model %arge companies assume A3Ps serve only small markets and dot4coms that lack significant !" infrastructures 3mall to mid4si'e firms assume A3Ps are too costly, despite potential cost savings *any companies are even underestimating their in4house resources and skill sets and #umping blindly onto the A3P bandwagon Don,t be one of them 0nderstand the pros and cons of the A3P model, and make a decision based on your business and functional reAuirements /in 5um!er F$ (ailure to im%rove !u"ine"" %roce""e"* "he proverbial mistake of Bpaving the cowpathC applies here: (2* should not simply overlay archaic corporate policies !t should instead formali'e and automate nimble, customer4focused business processes $e willing to drastically modify and continue to refine your business processes, and make sure your (2* technology incorporates these process modifications And don,t fall into the trap of hoping your new (2* tool will do this work for you Processes should be defined from the customer,s perspective, not the technology,s /in 5um!er G$ :ack of )ata integration* Chapter 6 painted the picture of stovepipe (2* systems and the danger they can lead to if allowed to per petuate -ffective customer4focused decision4making means understanding each customer across her various touchpoints and beyond your immediate knowledge of her age, income, preferred channel, or sales territory "he difficult truth is that customer data e5ists in multiple systems on a variety of technology platforms across your company 7inding, gathering, and consolidating this data isn,t easy, but it,s absolutely crucial /in 5um!er H$ (ailure to continue "ocializing RM to the enter%ri"e at large* (ompanies who have delivered nothing less than revolutionary customer4facing improvements via (2* often rest on their laurels (2* is an ongoing process, and success breeds success (onsider establishing an Binternal P2C #ob function to communicate with e5ecutives and decision4makers who might determine ongoing funding, as well as to the various lines of business who might leverage the functionality and data to further their own

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1$&

customer focuses Proselyti'ing (2* successes should not only be practiced but should be formali'ed and updated via regular newsletters, status meetings, or an internal Web site Don,t be shy about initially promoting (2* !f your customers e5perience improved service and your sales and marketing staffs generate more effective leads, it won,t be long before (2* starts promoting itself

The #anager's Bottom ,ine

Just because you,ve bought the tool doesn,t mean the spending is over After you start adding up the time needed for customi'ation, the labor necessary to integrate (2* with your other corporate systems, the cost of e5ternal specialists needed to make it work, the time reAuired from business users, and the new staff you,ll have to hire to deliver the system on time, you,ll be tempted to reconsider reengineering those old legacy systems to become more customer4centric (2* development costs are routinely underestimated As is (2* comple5ity *ost (!/s are familiar with traditional waterfall development methodologies: pro#ects that are linear, with a defined beginning and ending "hey,re accustomed to measuring system success based on the new system,s number of transactions or number of users $ut (2* success revolves around staff efficiency gains and process improvements, so such advances as higher productivity and enhanced customer satisfaction will be more difficult to measure %ikewise, traditional systems development means laying out reAuirements in concrete terms once and for all 8iven that (2* stresses improving customer4 focused processes, reAuirements4gathering should be iterative !ndeed, gathering and refining business reAuirements is an ongoing process, much like the (2* program itself *oreover, depending on the skill sets of the customary in4house business analysts, they might need some e5tra help (2* business sponsors might find individuals trained in corporate Auality programs to be more effective in (2* reAuirements definition Ouality4knowledgeable individuals have learned to focus on how people do their #obs and how the inputs and outputs relate to the overall process 7or enterprise (2*, it,s essential for customer information to flow freely throughout your organi'ation !f you are to provide the proverbial IK>4degree customer view, users must be able to access that data whenever they need it "his often means staff members from elsewhere in the company need to be involved to connect important corporate systems with (2* 3uch involvement can render even the simplest (2* application an enterprise4wide effort Although the P*/ can ease the communications challenges of such potentially comple5 collaboration, strong management is a definite prereAuisite .now what you already have that you can leverage *any talented !" departments have short4changed themselves by not advertising the data warehouses and marketing databases they,ve so painstakingly built "he data source system inventories, e5traction and transformation processes, metadata repositories, and other infrastructure components of these databases are invaluable assets to any (2* system 7ind them, and use them +ead reeling yetM Do you wonder whether (2* development might be too comple5 or costlyM (onsider the alternative "he !nternet and the pressures of e4business have weakened the barriers to competition, and your customers are getting smarter !t,s not a Auestion of if you launch (2* but the scale to which you launch it Don,t be afraid to start small, implementing one reAuirement or one set of business functions at a time +ave a clear view of what,s ahead, and understand the potential impact (2* can have on your customers, their immediate satisfaction, and their long4term loyalty Where customer relationship management pro#ects are concerned, it could very well be now or never

Chapter 1H. Dour CR# 0uture

"he big news in business these days isn,t the !nternet, e4marketplaces, or even astronomical e5ecutive compensation packages !t,s that even at good companies with solid business plans and promising products, things can go terribly wrong "roubles at 7irestone6and by default, 7ord *otor (ompany6the late *ontgomery Ward, Daimler4(hrysler, and a slew of !nternet has4beens too numerous to mention have proven that bad things happen to good businesses and to their customers And not even the best (2* program in the world can prevent them $ut it can make a big difference !magine being in charge of 3outhern (alifornia -dison,s customer contact center during the (alifornia energy crisis, or in 7ord,s marketing department With the right customer response infrastructure in place and a bit of nimble employee training, such challenges can become opportunities

#aking the %itch& +elling CR# Internall!

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1$'

Perhaps you,ve read this book intent on gathering ammunition to help you pitch (2* to your management or board of directors *aybe you,re preparing a presentation that outlines why (2* is needed +ere are a few do,s and don,ts to prepare you for battle: 'o& Do gather high4level business reAuirements before you introduce (2* !deally these reAuirements will originate in different areas of the company, bolstering your #ustification argument Do run the content by your peers before presenting it Do discuss the Bneed, pain, or problem,C (2* will solve "he more visible the problem and the greater the e5tent to which upper management feels it too, the better Do communicate the business actions and changes (2* will drive Do make sure your presentation Auantifies the return on investment <or return on relationship? you e5pect from (2* !t,s an e5ecutive,s #ob to ask, BWhat will this buy usMC $e prepared with an answer Do discuss how (2* has helped another company in your industry Do have a realistic idea of budget reAuirements Don,t focus on specific products, diagram technology architecture, or bring a vendor Don,t evade discussions about Bwhat,s under the hood C 9ou need to appear educated and perfectly able to indulge the detailed Auestions of the (!/ or financial director who,s throwing you curve balls "ouch on some specific organi'ational, technology, or business process impacts of (2* Don,t be cynical when organi'ational or political issues are raised -5ecutive buy4in can preempt turf battles and gradually establish a customer4focused business culture 9our presentation might spark that seminal customer4focused moment with the right e5ecutive and change everything Don,t give the impression that (2* is a finite pro#ect with a beginning and ending Don,t dwell on cumbersome statistics or analyst reports Don,t Auote theory or e5plain philosophies Don,t sugarcoat the risks

'on't&

!t,s unlikely that any e5ecutive will be ready to sign on the bottom line after simply hearing about (2* for the first time As with everything else, selling (2* internally is a process, and the first step,s always the hardest $e prepared to educate people and, at worst, to begin chipping away at some closely held paradigms !n many companies, advocating a newfound customer focus is tantamount to heresy 3ome people will need time to evolve from roadblocks into hardcore (2* constituents

CR# Roadblocks
3peaking of roadblocks, there are lots of them on the #ourney to (2* success 3ome obstruct the beginning of the pro#ect during the business planning or reAuirements gathering that allows a (2* team time to set things right *ost (2* roadblocks aren,t single events, however, but processes that gradually erode a (2* effort until the ultimate system becomes a mere shadow of its intended vision

The 0our %s
A good (2* pro#ect can go bad for many reasons $ut the principal factors6! call them the 7our Ps6are Process, Perception, Privacy, and Politics %rocess /ne of the failures ! encounter most often in my (2* fieldwork is with companies that are slow or unwilling to modify their business processes to support better customer relationships 3ome are simply unwilling to acknowledge that their business processes warrant improvement As we discussed in Chapter 7, the weaknesses of e5isting business processes, such as accepting a hotel reservation from a freAuent guest, should be clearly understood and refined prior to implementing (2* technology

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1$(

*any companies make the mistake of purchasing a (2* tool that supports repeatable processes only to discover that their business processes aren,t defined well enough to be repeatable 3cribbling a back4of4the4 napkin process for each new campaign doesn,t mean it,s fit for (2* prime time Where business processes are concerned, internal processes6or the lack of them6can also #eopardi'e a (2* pro#ect "he (!/ for an automobile accessories company once gave me free reign to conduct interviews for a (2* assessment B-5cept,C he said, Bdon,t talk to the business users C <3ee P$liti!#, later in the chapter ? /ften the company won,t have generated the internal support it needs for new (2* processes to become established !n such cases, staff members will simply stay in their comfort 'ones, claiming to prefer Bthe old way of doing things C "entative or hands4off e5ecutive sponsorship results in few changes, and (2* eventually takes a back seat to more tactical pro#ects, such as new product development !t,s a slippery slope %erception !ndeed, end users need to see (2* as a #ob enabler, not as the latest in a series of doctrinaire corporate policies As we discussed in Chapter 4, (2* as corporate edict rarely works After (2* has been deployed, businesspeople should be able to accomplish the same work in less time or be able to perform new tasks that ultimately make their #obs easier and at the same time enhance customer relationships And customer perception After all, a customer,s perception of the company is the basis for whether she will return to your Web site or store (2* can either deliver or destroy a customer,s high opinion of your company and its offerings %ri9ac! %ately every 0 3 firm with a handful of customer records and a Web site seems to be steeling itself for the inevitability of !nternet regulation by the 7ederal "rade (ommission 3tories of unauthori'ed peddling of customer names and addresses6the late "oysmart com was cited by the 7"( after trying to cover debt by selling its customer lists, which included members, children,s names and ages6and the ubiAuitous cookies and spam pervading the hard drives of even infreAuent Web deni'ens are now commonplace A recent 5ew"week article asked, B!s !t 3oftware or 3pywareM,C declaring that BWhile engaging in seemingly benign !nternet activity, most users have no idea that they,re beaming out stuff they,d prefer to leave on their desktops C[1] "he press was almost gleeful in its account of "ravelocity,s slip4up in early =>>F, in which the names and e4mail addresses of HH,>>> people were inadvertently posted on the company,s live Web site 3uch instances, despite their often lackluster repercussions, are scaring regulators and consumer organi'ations alike
[1]

%evy, 3teven, B!s !t 3oftware or 3pywareMC 5ew"week, 7ebruary FG, =>>F

Whether or not they differentiate the overblown scare tactics from the legitimate threats, the vast ma#ority of Web surfers favor punishing companies6and even top e5ecutives6for privacy violations [2] While the debate rages, what can you do to ensure that pending privacy regulations don,t foil your (2* programM
[2]

According to a report in "he3tandard com <August =I, =>>>? citing a Pew !nternet and American %ife Pro#ect study, GH percent of Web surfers surveyed are proponents of punishing companies and their top e5ecutives for privacy violations

0nderstand the 6ui) %ro 6uo$ consumers are more likely to share their personal information with your company if they receive something valuable in return <7or instance, travelers reserving their flights on -5pedia com are e4mailed weather reports for their destinations a few days before they fly ? !ncorporate this into your (2* planning to ensure that customers are sufficiently motivated to continue interacting with you at every touchpoint Post your privacy policy conspicuously on your Web site, as well as in print ads and other customer communications 0nderstand permission marketing and the trade4offs between asking customers to opt in versus opt out Decide which approach is best for each discrete marketing channel and, if practical, for every customer (onsider giving your customers full access to all the information you have about them Although admittedly risky, this tack makes the customer a participant in managing his information, potentially enhancing his perception of your company as a partner 7or instance, Allstate customers can log on to a secure Web site and actually change their own profiles, benefiting both parties

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1$)

2eAuest every customer,s privacy preference -nsure that this preference becomes part of each customer,s profile *ake heeding these preferences part of the #ob descriptions of departmental e5ecutives *ake sure your business users are categori'ed based on their authority to view and use specific data 3upport a policy where the de facto rule is Baccess as neededC rather than Baccess for everyone C Appoint a (hief Privacy /fficer <(P/? or (hief (ustomer /fficer <((/? to enforce corporate privacy policies and communicate them both internally and e5ternally 7ollow the 7"(,s fair information practices of Bnotice, choice, access, and control C 3ee www &t! g$'(pri'a!) <And note the very conspicuous privacy policy on the commission,s home page ?

%ike (2*, privacy is big business /nline marketing companies such as *atch%ogic and Double(lick <whose stock price tumbled when it revealed plans to identify individual consumers? base their operations on tracking anonymous clickstreams that have been cleansed of their consumer4specific data %arge consulting firms are offering privacy audits6often at hundreds of thousands of dollars a pop And a rash of legal firms speciali'ing in online privacy law have sprung up virtually overnight (onsumer watchdog groups such as the -lectronic Privacy !nformation (enter <www epic org? and Junkbusters <www #unkbusters com? aren,t letting up) they continue to publish consumer alerts and push for stricter regulatory measures And www privacy org, whose slogan reads BPrivacy is a 2ight, 1ot a Preference,C regularly features corporate privacy breaches in its headlines !n the meantime, businesses with a stake in consumer data are rapidly forming alliances to ease consumer fears while warding off the threat of governmental regulation "he 2esponsible -lectronic (ommunications Alliance <www responsibleemail org? recently created a set of self4regulatory guidelines for e4mailWbased marketing campaigns, and "he Personali'ation (onsortium <www personali'ation org? is a business advocacy group dedicated to illuminating the path toward responsible one4to4one marketing practices And not a second too soon6visionary companies who once proudly heralded their one4to4one marketing capabilities and detailed customer databases are increasingly clamming up for fear of another privacy backlash $ut marketing strategy in the back room instead of in the boardroom will do little to comfort wary consumers (ircumspect and deliberate planning of customer interactions and data4gathering will do a whole lot more %olitics *y company has a long4term relationship with a ma#or 0 3 financial institution, a client whom we,ve accompanied on the (2* #ourney from planning through e5ecution and measurement and back to planning ! know the struggles the company has had and how it has effectively worked through solutions to deliver (2* to a hungry group of private bankers whose compensation is based on a customer retention and satisfaction scorecard 7rom time to time ! attend conferences featuring presentations from representatives of this firm 3ome of the presenters ! know) others are strangers /ften they discuss (2* pro#ects !,ve never heard of, deployed to lines of business who weren,t involved in the sanctioned, corporate4wide (2* program our team helped deliver After sitting through diverse and often unrelated (2* presentations from various employees of this client, ! know one thing for sure: lurking in the farthest reaches of the headAuarters campus are BskunkworksC (2* pro#ects6pro#ects that are Auietly being developed, using leftover budget money or developers unaccounted for on other pro#ects 3kunkworks (2* pro#ects are usually a sign of urgent business needs combined with a high degree of cynicism about delivering (2* via the appropriate channels <e g , the !" department? "hey can also mean that certain organi'ations or individuals in need of (2* functionality might be unaware of (2* activities occurring elsewhere in the company *ore insidiously, skunkworks pro#ects can sometimes indicate nasty politics 7rom time to time a rogue manager, unhappy about the way the legitimate (2* program is playing out or disillusioned with the pro#ect team,s leadership, might decide to go it alone and build her own (2* environment 3he meets with (2* vendors, several of whom lost their bids for the sanctioned (2* activity, and hoards an e5clusive set of analyst research reports Although e5cuses range from B! need to use the budget money or !,ll lose it,C to B!t,s not really (2*) it #ust uses the same data,C the potential to dilute the value of the company4endorsed (2* program is real Another freAuent political scenario involves the development of a data warehouse or other (2*4related technology solution and labeling it (2* without defining a clear (2* strategy, planned process

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1$*

improvements, organi'ational changes, or business participation Declaring an activity or technology pro#ect to be (2* doesn,t make it so and risks tempering the high4impact business message of any bona fide (2* pro#ect awaiting approval (2* in a vacuum simply doesn,t work long4term and can actually delay or destroy an entire program <! once listened to a corporate e5ecutive admonish a handful of his managers to Bfigure out who owns this (2* pro#ect and get back to me:C 1o one did either ? !f you,re considering launching a (2* initiative, raise the flag and inAuire about related pro#ects elsewhere in the company 0nderstand that (2* is a team effort that reAuires participation from a range of players across the business -nsure that pro#ects aren,t already underway with technology, data, or business processes that fit your reAuirements6even if that means you have to follow rather than lead 2ebellion is an honorable course, but it,s also usually short4lived, and a truly effective (2* effort rarely involves revolution

2ther CR# +aboteurs

Although the 7our Ps remain the ma#or threats to (2* success, here are a few more barriers that can stall or thwart a (2* program ,ack o" CR# Integration !n a recent survey of 8lobal =>>> companies, *-"A 8roup found that few had tight communications between online and traditional (2* initiatives "he implication is that many companies are aware they have multiple (2* programs underway Perhaps establishing an enterprise4wide (2* vision proved too unwieldy Perhaps different organi'ations began pro#ects that evolved organically into (2* /r maybe there are valid departmental business goals that are minimally related Whatever the reason, the result is sporadic customer4interaction information, presumably impeding these companies from understanding a single customer,s range of possible behaviors and improving customer satisfaction in the bargain As we discussed in Chapter 6, this approach can deliver tactical improvements to specific organi'ations, but a true, single version of the customer truth will probably remain out of reach %oor 2rgani3ational %lanning !f you,ve launched a (2* pro#ect and staff members continue to ask Auestions about who,s doing what, something,s wrong $ecause (2* is relatively new, development roles aren,t often well understood *oreover, confusion about whether (2* is a business initiative or an !" effort e5acerbates confusion about ownership and authority 3ome of this can be chalked up to politics4as4usual, but Auestions about skill4set delineation and organi'ational boundaries often have comple5 answers "he (2* business sponsor should work with the pro#ect manager to define the necessary roles for the pro#ect <remember Table# 9-2 and 9-3 for a list of business and !" #ob roles? and then think in terms of What, +ow, and Who After you,ve gathered your (2* reAuirements and have scoped and prioriti'ed the pro#ects, delineate the tasks within them <the What? 1e5t, take time to understand the skills necessary to complete the tasks <the +ow?, and then6and only then6decide Who has the appropriate skills to perform them Also, if you,re the (2* pro#ect manager, be prepared to make some hard staffing decisions %ots of people step up to the (2* plate, but not everyone has the batting average necessary to play (all on the business sponsor for support in choosing the best people to participate in reAuirements definition, development, and rollout And don,t be afraid to hire consultants, particularly for those ma#or hurdles6strategy planning, reAuirements definition, and process refinement among them6that are best done by using structured methods and must be crossed before you can move forward !n my e5perience, these are the most freAuent staffing mistakes committed on (2* pro#ects: "he (2* pro#ect manager is viewed as an administrator rather than a liaison between !" and the business, tracking development progress against reAuirements and success metrics "his puts more work in the lap of the business sponsor, who can Auickly become disillusioned $usiness analysts <hired to define reAuirements? do their #obs and leave !nstead, they should participate in (2* development through implementation and deployment, ensuring conformance to reAuirements every step of the way "he business sponsor sees himself as a lead visionary, happy to preach the doctrine of customer loyalty but nevertheless reluctant to take charge Proselyti'ing a vision is usually accompanied by

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1%0

the less pleasant responsibilities of conflict resolution during development and tiebreaker duties for feature prioriti'ation and data Auestions "he business sponsor in the ivory tower will sooner or later fall out -verything,s relinAuished to the selected consulting firm or A3P !n their rush to deliver a (2* Auick win, many companies hand over the entire store to a consulting firm or A3P that develops the (2* system without the necessary business relationships or conversations, often from the bottom up -ven when (2* is outsourced, it mandates freAuent business participation and !" checkpoints by internal company staff

'emanding Customers !t,s not your fault 9ou were trying to capture market share 3o now your repeat customers have come to e5pect D=> off on every D@> purchase What do you do nowM !t might be too late, at least for that seminal group that first found your Web site and continues to respond to e4mail promotions and cherry4pick at every turn $ut it,s not too late for the ne5t batch, who might buy from you again because your site is easy to navigate and your customer support friendly and timely !f you,re considering offering great deals to rope in customers, reali'e that attracting them doesn,t mean keeping them 0nderstand how to identify your negative4value customers, and avoid enticing them with money4losing deals 0nderstand who they are when they do show up, and offer them opportunities to become profitable $ut also know your high4value customers and differentiate how you treat them, whether they,re entering your store or your storefront Customer +er9ice That's Reall! Bad /ne ornery call center rep who drones on about company policy and won,t try any workarounds on behalf of a flummo5ed customer can effectively eradicate, in G> seconds, the toil and cost of an entire (2* initiative Chapter 3 discussed the deservedly high profile of the customer contact center and its ability to make or break customer loyalty Poor customer service comes in many guises !t,s the employee at the home improvement warehouse whose answer is B1oC before you even finish your Auestion, the salesperson who is unable to take your order because of system problems, and the fourth consecutive B3erver is downC message displayed when you try to access an e4tailer,s Web site $ut poor customer service can also mean aggressive telesales staff, chronically late suppliers, or a sales rep too busy to take your call now that you,ve placed your order !t can also mean the well4meaning employee who has taken the customer relationship management strategy to heart, as in the cartoon

Whatever the problem, implement a series of new customer service guidelines for every customer4facing department in your company *ake these guidelines part of staff members, performance evaluations and compensation packages !n short, foster ownership of customer satisfaction !t,ll be money well spent

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1%1

,ooking Toward the 0uture

.eeping pace with today,s technology is difficult enough As most companies look forward to improving customer service and increasing sales uplift through better customer understanding, they,re also looking backward: retrofitting e5isting technologies, investing in new hardware and software, and hiring management consultants to bolster their strategies in preparation for a revolution in customer loyalty 3o, after you,ve deployed a successful (2* program comprising several pro#ects that have all delivered measurable improvements, what,s on the hori'onM A few predictions follow

The Customer as +#4

!t,s already happening, and it will happen more and more: (ompanies are asking their customers how to plan their (2* strategies, rendering these customers not mere (2* stakeholders but sub#ect matter e5perts Although the process isn,t that straightforward, company e5ecutives are reali'ing that for their companies to migrate from a product focus to a customer focus, customers should have a say in the improvements to be made and in what the priorities should be !t,s not unheard of for a (-/ or (hief (ustomer /fficer to pay customers periodic visits to discover where the company is e5celling and where it might be falling behind (ustomers are being asked to participate in strategic planning sessions to lay out (2* plans as well as new product proposals and customer support improvements 3ales managers from a D@>4billion telephone eAuipment firm recently spent a week with their customers to understand how they were actually using the high4end line of switches the company was selling When asked about this novel and somewhat risky approach to gathering customer feedback, the computer manufacturer,s &P of sales replied, B!t,s not enough anymore to simply understand your customer 9ou need to see your company through their eyes We,re working on thinking less like salespeople and more like our customers C (-/s like *ichael Dell and "om 3iebel spend a large part of their time visiting their customers in person (ontrary to replacing this high4profile contact between companies and their customers, (2* programs complement such relationship4building by leveraging customer input to improve business processes and recording the feedback of customers who have taken the time to participate "he customer 6ui) %ro 6uoC $etter products and services <and sometimes a few generous purchase credits thrown in?

The Rise o" Intermediaries

(onsumers are more connected than ever and busier than ever 3o they,re using the Web more than ever Web sites such as (1-" com, part of technology news provider (1-" 1etworks, and *y3imon com act as consumer clearinghouses for product purchase information Why browse a handful of well4known Web sites when you can go to an intermediary and e5amine a range of retailer and information sources that understand the product you have in mindM Web shops at 9ahoo and *31 com take the guesswork out of finding a toaster with thick bagel4supportable slots !ntermediaries act to simplify the purchase process by acting as one4stop information resources "he studies referenced in Chapter 3 about eroding customer service and plummeting customer satisfaction rates suggest that customers are complaining more than ever $ut not without help "here has been a steady rise in the use of customer service intermediaries6individuals and corporations who take on companies on behalf of unhappy customers 7or instance, "ravelproblems com charges a DI> fee for lodging a passenger,s complaint with an airline and tracking its resolution 3uch intermediaries work like class4action attorneys, representing both individuals and groups of people who are unhappy with a company, whatever the reason 3ome of these individuals might be looking for compensation /thers are content simply to contribute to the bad publicity the company is suffering because of its poor service And this is where the (2* waters get muddy As companies try to keep pace with their customers, purchases and feedback, intermediaries triangulate what might have been a two4way interaction between company and customer (ompanies must become diligent about how they receive and register customer complaints and should consider being able to identify the use of intermediaries for both purchases and feedback as part of a customer,s overall profile

'igital and Broadband Re9olutioni3e Ad9ertising

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1%2

-Z"rade,s clever "& ad during 3uperbowl IH concluded with the Auestion, BWe,ve #ust wasted = million bucks What are you doing with your moneyMC !ndeed, the astronomical advertising prices charged by the networks are the personification of spray4and4pray mass marketing that broadcasts a single message to millions of consumers "he combination of broadband, digital cable, and database technologies might soon change all that Digital cable and broadband will soon enable advertisers to send personali'ed commercials to households that fit a certain desired profile, allowing companies to target4market television audiences in real time "he consumer,s set4top bo5 is essentially a two4way device, allowing a consumer to communicate in real time with the advertiser and even order a product as it,s being pitched 7or e5ample, two different households are watching the same football game "hrough its database, a beer advertiser, knowing that one household contains a mother, father, and two adult sons, broadcasts a commercial for its most popular brand of beer !n the second household, a Auarter of a mile away from a college campus, are si5 adult residents, only two of whom are over =F !n this case, the beer company advertises its line of snack foods, including a contest for a free 17% video game "he point here is that companies are working on target4marketing straight into the living room of millions of households As these households respond to the advertisements, advertisers can refine their understanding of customer purchase preferences !f the first household doesn,t purchase the advertised brand of beer, the beer company might decide to market its premium beer the ne5t time around %ikewise, in markets where beer sales don,t increase, the cable company can reduce the company,s ad cost "he vision is custom advertising and immediate consumer feedback on a per4household basis, similar to the way banner4ad bidding occurs on the Web today Advertisers can develop custom commercials for households, based on household purchase histories and viewing trends "his mass customi'ation cultivates audiences for specific advertisers who are subsets of the television show,s audience but are nevertheless targeted for a specific message

The Threat and %romise o" Customer Communities

9ou,ve heard the analogy by now 9ou know, the one that compares the Web to the medieval street market or the corner coffee shopM -veryone meets there and people know each other "hey discuss current events and buy and sell things "hey might share a cup of coffee or, in the case of the medieval market, a flask of grog With the Web, the 'eitgeist can be formed in minutes and can last for years As we discussed in Chapter 1, viral marketing can either call attention to a fantastic new product or kill it before it ever hits the stores !n The luetrain Manife"to1 the authors submit that such consumer communities are not only here to stay) they also represent a fantastic opportunity for corporations to listen to their prospects and customers And they represent the potential undoing of company e5ecutives who,ve rested on their huge compensation packages and assumptions about traditional hierarchical organi'ations and marketing practices !n short, the Web has the power to tell companies how to change or die "he chat room has moved ne5t door to the boardroom "he same is true in the $=$ world After all, communities are about unrestricted access to different online parties A purchasing agent might decide to enter a vertical industry chat room before putting his opportunity out for bid on the Web, #ust to see who,s working with whom !n the same situation, a candidate supplier might ask other suppliers whether a manufacturer pays on time -5changes and e4marketplaces represent more than #ust streamlined supply chains) they are virtual meeting places where both buyers and sellers can come together, e5change information, and conduct business "o be community4oriented, your company should be customer4oriented 9our (2* initiative can incorporate community insight by regularly scanning various community Web sites for feedback 9ou might also consider having your Web site feature its own chat room, so customers can share no4holds4barred opinions about their e5periences with you "his not only provides you with first4hand feedback, but also gives you a forum for communicating improvements and fi5es And it will foster the notion that, far from being a passive observer, your company is enthusiastic about providing the medium for dialog <3ee Perception, earlier in this chapter ?

CR# )oes )lobal

0p until now, (2* vendors have concentrated on the 0nited 3tates and western -uropean markets, but this can,t last As mergers and acAuisitions continue, companies are more likely than ever to be multinational and to serve a growing base of international customers (2* vendors and users alike will need to account for the reAuirements of their international customers

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1%$

8lobal (2* usually doesn,t apply to sales4force automation or to marketing6these types of (2* are normally e5ecuted locally <A sales manager in Argentina probably doesn,t care about a 7rench salesman,s contact list ? !nstead, global (2* focuses on customer support processes "he technology considerations of global (2* can be positively daunting 7or instance, do your remote locations have access to your centrali'ed customer database, or does each country track its own customersM !s there worldwide access so that support and field personnel can monitor customer issuesM Does your (2* call center software offer multi4language supportM What about non4-nglish character setsM And is the vendor capable of supporting the product, irrespective of where it,s being usedM What about the wireless devices that are more pervasive abroadM "his introduces a number of new considerations that aren,t part of the typical country4specific (2* strategy 7or instance, -uropean privacy rules are more strident than in the 0nited 3tates and might differ from one country to another) thus, collecting customer data might be illegal 3ome countries actually forbid a company from giving incentives to consumers to do business with a partner company, as with car4rental freAuent flier miles !n some Asian countries, a direct4mail communication will be summarily discarded unless it has been preceded by a personal contact And many countries still shun credit cards in favor of cash (onsidering going global with your (2* initiativeM Don,t do it until you have a good grasp of the difference in business processes across countries and are certain that the need for data e5change outweighs the likely but potentially comple5 infrastructure reAuirements 3uch differences could render a (2* system unwieldy, e5pensive, and ultimately best left to the individual country office to deliver

The Coming CR# Backlash6

A =>>> study by (ap 8emini -rnst L 9oung asked a group of (-/s about their top priorities "he ma#ority6 H= percent6stated their top priority was to Blaunch new and e5tended QproductR offerings C "his response contrasted starkly with the =F percent who claimed Bimprove customer e5perienceC as a priority [3] Are these (-/s latecomers, new to the message that the customer e5perience is everythingM /r have they already soured on customer loyalty, preferring to differentiate themselves instead with marketing and selling new products in the traditional wayM
[3]

7rom B$usiness Defined: (onnecting (ontent, Applications, and (ustomers,C E.8 a% @emini1 =>>>

"he privacy debate has been partly responsible for a growing backlash against all forms of database marketing, however innocuous Privacy groups are admonishing consumers to enter wrong data each time they fill in an online profile or enter a direct4mail sweepstakes, thereby foiling companies, efforts to use their personal information <if for nothing more than to understand who they are? And because multiple family members usually share one household P( and your daughter has #ust bought her third *arilyn *anson (D from an online music retailer, #ust how accurate are the preferences being captured by those ubiAuitous cookiesM !f a (2* backlash happens, it probably won,t begin in the home offices of wary Web users but in the e5ecutive suites of ma#or corporations -5pectations for what (2* can deliver are ever more lofty as software vendors make grandiose claims and (2* press releases make news !n June of FGGG, 7orrester 2esearch published the provocatively titled research paper B"he Demise of (2*,C doubtless targeted at vulnerable e5ecutives who had begun Auestioning whether (2* was really worth it !ncreasing e5pectations for (2* invite the possibility that its cost could outweigh its ultimate value to an organi'ation $y the time you,ve reali'ed (2*,s promise, determined which organi'ations can benefit from it, convinced them to work together, determined the data reAuirements, loaded the database, integrated disparate applications, and customi'ed the software, (2* could be costing you millions And this is before it,s even been deployed A noted outdoor gear retailer with both an established brick4and4mortar presence and an acclaimed Web site recently told an !" #ournal that it has only two customer segments6one for Bprofessional shoppersC <people who like to shop for multiple items and coordinate outfits? and another for shoppers who know e5actly what they want to buy "he company maintained that understanding these two segments gave it the necessary information to craft effective marketing messages "his company is not an upstart but an established retail presence with a loyal customer base !t,s regularly lauded for offering the latest outdoor apparel at a fair price for a broad range of consumers !f ! were a (2* salesperson, ! wouldn,t want them in my territory !f your company sells a commodity4based product, the ability to gain additional market share through (2* might not be worth the investment "here might be better ways to acAuire customers, such as dropping prices, hiring additional salespeople, or adopting additional channels to gain market share 7or these types

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1%%

of businesses, (2* might not be able to deliver the process efficiencies necessary to drive increased customer satisfaction or revenues And if you work for a growth company that freAuently acAuires other companies and undergoes regular reorgani'ations, go easy on (2*, at least for now %et,s say your (anada sales territory has traditionally belonged to the Americas region but is now being combined with -urope to form a single international region Although the (anadian sales organi'ation has traditionally followed the sales and marketing processes set up in the 0nited 3tates, it must now conform to the international organi'ation,s business processes and pricing guidelines !f your (2* system can,t easily reflect these changes in short order, it could be rendered useless Although (2* successes are steadily increasing, statistics of its failure remain high -5ecutives continue to grill their staffs and vendors about (2*,s costTbenefit ratio and payback !t,s critical that you respond to such inAuiries6and they,ll continue6with either a promising vision or measurable proof

The #anager's Bottom ,ine

An old (hinese proverb says: 8ive a hundred4year lease on a desert, and it will become a garden) give a one4year lease on a garden, and it will become a desert "he point is that ownership and long4term commitment make a difference when it comes to undertaking important tasks, and building customer relationships is a big deal After all, look how far we,ve come: from product marketing to mass marketing to segment marketing and all the way to the total customer e5perience (ustomer relationship management promises a wave of change in worldwide business Are you readyM Are your company,s e5ecutives committed to shifting from a product focus to a customer focusM +ave you identified the process gains and customer perception improvements (2* can help deliverM (an you envision a way to drive product improvements from customer feedbackM Do you have a single, integrated view of your customersM Do you have what it takes to differentiate themM "o differentiate yourselfM "he worst insult in corporate America is to accuse a company of being Bmainstream C !f you have doubts about (2*, don,t invest until you,ve consulted some e5perts, assessed your current environment, and talked to managers about the viability of the organi'ational and process changes that accompany effective (2* .now whether you and your colleagues can agree on success metrics 0nderstand whether enterprise (2* is feasible, and consider the value a more tactical, departmental (2* pro#ect could deliver !f it,s delivered well, departmental (2* can light the fuse for a broader enterprise4 (2* strategy When discussing (2* with the e5perts, beware the emphasis on Auantitative methods over business value 8rill the marketing analyst whose only focus is profitability or customer lifetime value or customer loyalty Don,t trust the vendor promising a Bcomplete hardware and software solution C (heck the references of management consultants who claim to have implemented (2* Bat companies #ust like yours C "he best (2* system in the world won,t solve the problem of the airline flight attendant who behaves like an android, the record store clerk who sneers at someone,s (D selection, the barista who turns out a wimpy cappuccino and a bad attitude, or the bank A"* that denies a customer,s e5istence for the third time in as many days Automation or no automation, the customer,s e5perience is paramount +umans being the social animals we are, technology will never take us to the point where we never leave our homes "he human touch will continue to play a ma#or role in the customer e5perience Whether you,ve read this entire book or focused on certain chapters, you,ve probably concluded that (2* isn,t easy BJust follow the pi''a man mantra, and deliver:C advises a client who,s deployed (2*, his tongue firmly planted in his cheek "he good news and the bad news are the same: (2* failure rates are climbing at a slower rate than ever before At the time of this writing, (2* vendor stocks are in freefall -arnings reports for (2* and business intelligence firms are bleak, and testy (-/s interviewed on (1$( feebly attempt spin control AcAuisitions are going south 3everal representatives of vendors to be featured in this book have not returned phone calls amid organi'ational reshuffling or uncertainty about the future or facing the truth that their customers won,t back them up 3ome high4profile (2* products aren,t ready for prime time A book called 5o :ogoI subtitled Mone&1 Marketing1 an) the @rowing Anti# or%orate Movement6warns of the menacing tactics of corporate marketing organi'ations and is an international bestseller "he term Bservice recoveryC is getting as much airplay as the term Bcustomer service C And consumer advocacy groups, cries for privacy laws have reached a fever pitch as opt4in legislation looms ever larger $ut despite the continued Auestions about whether it,s Bdo4ableC or even worth it, (2* is here to stay As the case studies in this book testify, it,s driving revenues and profitability !t,s motivating customers to buy additional products and to spend more !t,s raising customer satisfaction scores and helping companies

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1%&

understand which customers they should focus on and which channels they should invest in What must underlie successful (2* in the end is the communal resolve that change is a continual campaign that heralds improvement !n short, despite the cost and risk, the uncertainty and the noise, (2* is valuable, viable, and real, and it,s not going back in the bo5

Appendi Bibliograph!
%urther Reading 0urther Reading
7ollowing is a list of resources for you to supplement your knowledge of (2* and its various components !,ve broken down the material into three categories: books, maga'ines and #ournals, and Web sites Books "hese books cover a range of (2* and (2*4related topics Adriaans, Pieter, Dolf Santinge Data Mining 2eading, *A: Addison4Wesley, FGGK $arlow, Janelle, Dianna *aul Emotional +alue$ reating /trong Bon)" with 8our u"tomer" 3an 7rancisco: $errett4.oehler, =>>> $erry, *ichael J A , 8ordon %inhoff Data Mining Techni6ue"$ (or Marketing1 /ale"1 an) u"tomer /u%%ort 1ew 9ork: John Wiley L 3ons, FGGJ $rown, 3tanley A u"tomer Relation"hi% Management$ A /trategic Im%erative in the Worl) of E#Bu"ine"" 1ew 9ork: John Wiley L 3ons, =>>> Dych, Jill e#Data$ Turning Data into Information with Data Warehou"ing $oston: Addison4Wesley, =>>> 8ladwell, *alcolm The Ti%%ing 'oint$ 3ow :ittle Thing" an Make a Big Difference $oston: %ittle, $rown, =>>> 8odin, 3eth 'ermi""ion Marketing$ Turning /tranger" into (rien)" an) (rien)" into u"tomer" 1ew 9ork: 3imon L 3chuster, FGGG 8ordon, !an Relation"hi% Marketing$ 5ew /trategie"1 Techni6ue"1 an) Technologie" to Win the u"tomer" 8ou Want an) =ee% Them (orever 1ew 9ork: John Wiley L 3ons, FGGE +ughes, Arthur /trategic Data!a"e Marketing* /econ) e)ition 1ew 9ork: *c8raw4+ill, =>>> !mhoff, (laudia, %isa %oftis, Jonathan 8 8eiger Buil)ing the u"tomer# entric Enter%ri"e$ Data Warehou"ing Techni6ue" for /u%%orting u"tomer Relation"hi% Management 1ew 9ork: John Wiley L 3ons, =>>F !nmon, William + Buil)ing the Data Warehou"e 1ew 9ork: John Wiley L 3ons, FGGK !nmon, William + , 2ichard D +ackathorn 9"ing the Data Warehou"e 1ew 9ork: John Wiley L 3ons, FGGH .alakota, 2avi, *arcia 2obinson E#Bu"ine"" 2*<$ Roa)ma% for /ucce"" $oston: Addison4Wesley, =>>F .imball, 2alph, %aura 2eeves, *argy 2oss, Warren "hornthwaite The Data Warehou"e :ifec&cle Toolkit$ E-%ert Metho)" for De"igning1 Develo%ing1 an) De%lo&ing Data Warehou"e" 1ew 9ork: John Wiley L 3ons, FGGE %evine, 2ick, (hristopher %ocke, Doc 3earls, David Weinberger The luetrain Manife"to$ The En) of Bu"ine"" A" 9"ual (ambridge, *A: Perseus Publishing, FGGG %inthicum, David 3 B2B A%%lication Inte gration$ e#Bu"ine""IEna!le 8our Enter %ri"e $oston: Addison4 Wesley, =>>F *artin, (huck 5et (uture$ The H &!er tren)" that Will Drive 8our Bu"ine""1 reate 5ew Wealth1 an) Define 8our (uture 1ew 9ork: *c8raw4+ill, FGGG 1ewell, 7rederick :o&alt&*com$ u"tomer Relation"hi% Management in the 5ew Era of Internet Marketing 1ew 9ork: *c8raw4+ill, =>>> Peppers, Don, *artha 2ogers The One to One (uture$ Buil)ing Relation "hi%" One u"tomer at a Time 1ew 9ork: (urrency Doubleday, FGGI [[[[[[[[[[ Enter%ri"e One to One$ Tool" for om%eting in the Interactive Age 1ew 9ork: (urrency Doubleday, FGGJ [[[[[[[[[[ The One to One Manager$ An E-ecutive;" @ui)e to u"tomer Relation"hi% Management* 1ew 9ork: 2andom +ouse, FGGG Pine, Joseph, James 8ilmore The E-%erience Econom& $oston: +arvard $usiness 3chool Press, FGGG 2eichheld, 7rederick 7 The :o&alt& Effect$ The 3i))en (orce Behin) @rowth1 'rofit"1 an) :a"ting +alue $oston: +arvard $usiness 3chool Press, FGGK 3eybold, Patricia $ u"tomer"*com$ 3ow to reate a 'rofita!le Bu"ine"" /trateg& for the Internet an) Be&on) 1ew 9ork: 2andom +ouse, FGGE 3eybold, Patricia $ The u"tomer Revolution$ 3ow to Thrive When u"tomer" Are in ontrol 1ew 9ork: (rown $usiness, =>>F

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1%'

3iebel, "homas * , Pat +ouse &!er Rule"$ /trategie" for E-celling at E#Bu"ine"" 1ew 9ork: (urrency Doubleday, FGGG 3indell, .athleen :o&alt& Marketing for the Internet Age (hicago: Dearborn "rade, =>>> 3terne, Jim u"tomer /ervice on the Internet$ Buil)ing Relation"hi%"1 Increa" ing :o&alt&1 an) /ta&ing om%etitive* /econ) e)ition 1ew 9ork: John Wiley L 3ons, =>>> 3terne, Jim, Anthony Priore Email Marketing$ 9"ing Email to Reach 8our Target Au)ience an) Buil) u"tomer Relation"hi%" 1ew 9ork: John Wiley L 3ons, =>>> 3viokla, John J , $enson P 3hapiro =ee%ing u"tomer" $oston: +arvard $usiness 3chool Press, FGGI 3wift, 2onald 3 Accelerating u"tomer Relation"hi%"$ 9"ing RM an) Relation"hi% Technologie" 0pper 3addle 2iver, 1J: Prentice +all P"2, =>>F "horp, John The Information 'ara)o-$ Realizing the Bu"ine"" Benefit" of Information Technolog& 1ew 9ork: *c8raw4+ill, FGGE "iwana, Amrit The E""ential @ui)e to =nowle)ge Management$ E#Bu"ine"" an) RM A%%lication" 0pper 3addle 2iver, 1J: Prentice +all P"2, =>>F "rout, Jack, 3teve 2ivkin Differentiate or Die$ /urvival in Our Era of =iller om%etition 1ew 9ork: John Wiley L 3ons, =>>> 0nruh, James A u"tomer" Mean Bu"ine""$ /i- /te%" to Buil)ing Relation"hi%" that :a"t 2eading, *A: Addison4Wesley, FGGK Wacker, Watts, Jim "aylor The +i"ionar&;" 3an)!ook$ 5ine 'ara)o-e" that Will /ha%e the (uture of 8our Bu"ine"" 1ew 9ork: +arper $usiness, =>>>

#aga3ines and Cournals

2ather than simply list a litany of business publications, !,ve chosen some that offer regular features on relationship marketing, customer service, data warehousing, and (2* Bu"ine"" 2*< <www bu#i"e##2 !$%?: Print maga'ine includes regular features on marketing, personali'ation, and e(2* /n4line version has an entire track dedicated to digital marketing om%uterWorl) <www !$%puterw$rl* !$%?: "imely stories about (2* failures as well as successes IO Magazine <www !i$ !$%?: 2egular coverage of (2* and its periphery, including supply chain management, knowledge management, data warehousing, and enterprise resource planning u"tomer Relation"hi% Management <www !r%%aga+i"e !$%?: &aluable overall (2* resource) contains several more4focused supplements throughout the year Particularly geared toward sales force automation and call center topics, but seems to be branching out to enterprise (2* Also covers (2* vendor alliances and acAuisitions DM Review <www *%re'iew !$%?: $oth the maga'ine and its Web site focus on the area of data management, but there are often (2*4related articles focusing on the design, administration, and use of customer data EWeek <www ewee, !$%?: 2egular (2* features and product reviews (a"t om%an& <www &a#t!$%pa") !$%?: 8eared toward so4called Bfree agents C An often4irreverent compendium of business trends and e5ecutive profiles 2egularly illustrates creative marketing approaches and features out4of4the4bo5 thinkers Information Week <www i"&$r%ati$"wee, !$%?: 7or !" managers) a staple in the areas of information management concepts and trends Intelligent Enter%ri"e <www i"tellige"te"terpri#e !$%?: *ore technical than the others here) offers insights into (2* and data warehouse management and implementation for practitioners 3ee also the maga'ine,s (2* Web page: www i"tellige"tC-. !$% 4to4 Magazine <www 1t$1 !$%?: Affiliated with Peppers and 2ogers 8roup, focuses on marketing trends /ffers articles on (2* development as well as case studies Publisher recently added a #ournal offering, BFtoF Ouarterly C

5eb +ites
*ore and more (2*4related Web sites are popping up every day ! focus here on those that are heavy on content and light on advertising and vendor sponsorships +owever, with any Web site that markets itself as a repository of information, especially with those that offer product reviews, you would always do well to note the sponsors who are footing the bill as you review products, read vendor case studies, and choose (2* conferences and workshops +aving said that, don,t dismiss the Web sites of (2* product vendors *any feature white papers and (2* news releases along with information on their specific (2* solutions www !r%!$%%u"it) !$%: /ffers a range of (2* resources Provides an especially thorough compendium of white papers on all topics "he Bconsultants cornerC that allows visitors to ask Auestions of (2* e5perts and a chat room are good places to monitor current (2* vendor and product bu''

www !r%2001$"li"e !$%: A virtual (2* conference, this clever site lets visitors attend seminars and wander through a virtual trade show $ooths feature vendor presentations and provide links to (2* vendor Web sites &isitors can even collect brochures in their virtual shopping bags C)beratla# i"ter"et !$%: 7or the latest news on e4commerce companies "he place to go when you want to see who,s bought whom www *e#ti"ati$"!r% !$%: (2* product reviews, analyst reports, and surveys (overs everything from A3P reviews to wireless technology trends to vendor coverage www *##tar !$%: 1ews and editorials about business intelligence, data warehousing, and data mining www *wi"&$!e"ter $rg: Provides information on a range of data warehousing and business intelligence topics /b#ectively lists data warehouse vendors and consultants, breaking them down according to their focus Also has links to various publications featuring data warehouse news and editorials www *w-i"#titute !$%: "he Data Ware housing !nstitute,s Web site, featuring articles, white papers, case studies, and resource guides, as well as updates about its conferences "DW! is the only conference that does not cull speakers from its list of e5hibitors, thus bestowing real4world e5periences in data warehousing and business intelligence www e!r%gui*e !$%: A repository for (2* news and vendor press releases, updated several times a day www epi! $rg: 8rassroots lobbying effort for 0 3 4based privacy legisla tion, this site has even proffered editorial viewpoints on various politicians, privacy track records Accompanying subscriber newsletter broadcasts regular briefings on privacy developments www itt$$lb$/ !$%: A knowledge center for all things !" /ffers a Btoolbo5C for both a (2* and $usiness !ntelligence <among other areas?, allowing visitors to review product features and read case studies about their applications "he site also offers subscriptions to free newsletters for managers and practitioners "he site,s (2* area does a particularly thorough #ob of deconstructing (2* into its various components ipw i"ter"et !$%: 2un by !nternet Product Watch, a comprehensive clearinghouse for e4business vendors and products www 0u",bu#ter# !$%: Web epicenter of privacy legislation and protection !ncludes freAuent updates on legisla tive measures in the 0nited 3tates and follows privacy4related lawsuits Provides downloadable software and e4mail addresses for blocking the use of cookies and other methods for data gathering www $pe"it/ !$%: B/pen !" -5changeC offers insight into a range of e4business areas, from knowledge management to operating systems to data management "he site also offers a weekly newsletter to subscribers www per#$"ali+ati$" $rg: "he name belies this site,s purpose, which is to discourage privacy legislation in favor of corporate responsibility Also offers news and press releases on the personali'ation and relationship marketing industries www pri'a!) $rg: /ffers articles, news releases, and links to other Web sites with the aim of pushing privacy legislation in the 0nited 3tates +as been known to publici'e companies selling or sharing customer data e5ternally www #ear!h!r% !$%: Presents a variety of (2* resources under one virtual roof !ncludes an introduction to (2* basics as well as a host of features for visitors looking for product comparisons, book reviews, current articles, and white papers <both original and gleaned from other publications and Web sites? !ncludes a (2* #ob board

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1%(

)lossar!
Abandoned shopping cart&
3et of products a customer intended to buy, but did not ultimately purchase Although possible in a brick4and4mortar store, the term more accurately applies to a Web site where a visitor collected one or more items in his virtual basket but never made it as far as checkout

A""init! anal!sis&
Detecting sets of products or services purchased together -5ample: "ortilla chips and salsa

Anal!tical CR#&
0se of data originating through front4office or operational (2* to enhance customer relationships (ombined with other organi'ational or e5ternal data to evaluate key business measures such as customer satisfaction, customer profitability, or customer loyalty to support business decisions

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1%)

Application ser9ices pro9ider .A+%/&

(ompany whose business is outsourcing application services for its client companies 3uch applications can include both tactical systems, such as billing systems, and strategic solutions, such as (2* <(2* A3Ps currently account for over half of the A3P market ?

Attrition&
(ustomer leaving to go do business with a competitor 3ee also [Churn:]

Automated work"low&
-nabling work processes to BflowC through a company without human intervention Workflow systems usually involve moving data through a process, such as order and fulfillment, that reaches across various systems and departments

Automatic call distribution&

Ability for call center telephony software to balance incoming calls across agents, thereby optimi'ing agent productivity and minimi'ing customer wait times

B7B&
(ommon abbreviation for Bbusiness4to4business C

B7C&
(ommon abbreviation for Bbusiness4to4consumer C

Back-o""ice CR#&
"he area of (2* that involves analysis to optimi'e customer4facing business processes and revenues 3ee also [Anal&ti'al CRM:]

Brick-and-mortar business&
A physical storefront or branch $rick4and4mortar can be a company,s core business or simply one of several sales channels

Business intelligence&
1ormally describes the result of in4depth analysis of detailed business data !ncludes database and application technologies, as well as analysis practices 3ometimes used synonymously with Bdecision support,C though business intelligence is technically much broader, potentially encompassing knowledge management, enterprise resource planning, and data mining, among other practices

Business process reengineering .B%R/&

2edesigning core business processes to drive organi'ational and technological efficiencies "erm made popular by *ichael +ammer and James (hampy in their FGGI book Reengineering the or%oration

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1%*

Business sponsor&
*anager or e5ecutive who acts as visionary for the (2* program and can articulate how (2* can drive business improvements "his person establishes the Bneed, pain, or problemC (2* will solve, serves as a tiebreaker for issues during the pro#ect, and might actually fund some or all of (2* development

Call center&
/rgani'ation in charge of direct customer support interactions "he term Bcall centerC refers to the classic telephone support infrastructure and is being replaced by Bcontact centerC or Bcustomer care center,C both of which imply more technological sophistication and multichannel support

Call center automation&

0se of technology to facilitate communications to, within, and out of a call center Automatic routing of calls to specific (32s is one e5ample of call center automation

Call routing&
Directing customer calls to a specific agent based on a specific parameter such as that agent,s e5pertise, geographical location, subsidiary affiliation, or other characteristic

Call scripting&
3ee [('ripting:]

Campaign management&
Analy'ing data for purposes of launching a marketing campaign and then monitoring that campaign and tracking its results to determine the campaign,s value (an also refer to the technology that automates the campaign manage ment function

C-commerce&
3ee [Collaborati!e 'ommer'e:]

Channel&
*eans and media by which a customer prefers to communicate with the company <the BinboundC channel? or to receive communications <the BoutboundC channel?

Channel optimi3ation&
Determining the best channels by which to communicate with and sell to customers, especially when they have not made these preferences clear, and making these channels available to the right customers 7or e5ample, a company might choose to use resellers to sell a product in order to minimi'e its costs

Churn&
(ustomers leaving your business to go to a competitor !mplies the customer might or might not return B(hurn reductionC is another way of saying customer retention and is a ma#or goal of (2* (hurn is most often used in con#unction with highly competitive commodity product businesses such as communications companies, utilities, and airlines

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1&0

Clickstream&
3eries of page visits and associated clicks e5ecuted by a Web site visitor while navigating through the site Analysis of clickstream data can help a company understand which products, Web site content, or screens were of most interest to a given customer

Closed-loop campaign management&

0sing the results of past campaigns to refine future campaigns, the goal of which is to hone customer knowledge while improving campaign response rates over time

Collaborati9e commerce&
.nown as Bc4commerce,C reflects the ability of various partners within a supply chain to share important data about products, inventory levels, and orders

Collaborati9e CR#&
3pecific functionality that enables a two4way dialog between a company and its customers, through a variety of channels, to facilitate and improve the Auality of customer interactions

Computer telephon! integration .CTI/&

(ombining telephone systems with computer technology such as software applications and databases to automate functions -5ample: 0sing caller4id to provide customer information when distributing calls to (32s

Con"iguration support&
0sually a com ponent of sales force automation Automates the estimation process for si'ing and pricing a product, using prospect or client data as input (ompanies selling comple5 custom products, such as computer eAuipment, are the main users of configuration support tools

Con"igurator&
(ommon name for tool that performs configuration support Also the brand name for 3iebel,s configuration support tool

Contact center&
A more sophisticated version of the classic call center, which was staffed by telephone operators (ontact center suggests a greater degree of technological sophistication, including multimodal customer support, outbound telemarketing, and customer self4service

Contact management&
Area of sales force automation that allows salespeople to record key customer information such as names and addresses, as well as organi'ation charts and account activities Prevents salespeople from having to remember who,s who at each of their accounts

Control group&
8roup of customers, usually randomly selected, whose responses to a campaign are compared to those of a specially selected customer group that is more systematically chosen -valuating customer responses to a specially designed communication with the responses of a control group can indicate the effectiveness of a target marketing campaign

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1&1

Cookie&
0nit of te5t placed on someone,s computer when he accesses a Web site, intended to serve as a permanent way for the site to recogni'e that customer when he returns Allows the site to track various pieces of information the customer submits to the site across multiple visits

Cross-"unctional&
Description for a technology that serves more than one business function <e g , financial analysis and sales analysis? or organi'ation <e g , +uman 2esources and Accounts 2eceivable? (2* point solutions, by their definition, are not cross4 functional, whereas (2* suites might be

Cross-selling&
3elling a customer a product or service based on her past behaviors or purchase history $est done when a company understands the relationship between two products and identifies which product might BpullC another

Customer interaction center .CIC/&

-volution of the operational call center into the locus of all inbound and outbound customer communications, with special focus on customer satisfaction and multimodal customer access

Customer relationship management .CR#/&

!nfrastructure that enables delineation of and increase in customer value and the correct means by which to increase customer value and motivate valuable customers to remain loyal6indeed, to buy again

Customer segmentation&
3ee [(egmentation:]

Customer ser9ice representati9e .C+R/&

*ember of the company,s customer support staff <or a third4party call center agency? who takes phone calls and participates in !nternet live4chat sessions to answer customer Auestions, lodge complaints, record trouble tickets, or instruct customers on product use

Customi3ation&
(ustomer,s ability to tailor Web site content to her specific needs, interests, and usage preferences 3ee also [Personali)ation:]

C!beragent&
3oftware program that can guide a user,s decisions and recommend potential action (yberagents can help customers navigate a Web site, answer freAuently asked Auestions, and suggest ne5t steps, and their capabilities are growing all the time 3ome cyberagents are animated to appear human

'ata mining&
Advanced analysis used to determine certain patterns within data *ost often associated with predictive analysis

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1&2

'ata mart&
0sually refers to a physical platform on which summari'ed data is stored for decision support Data marts are commonly used for specific analysis purposes by a single organi'ation or user group

'ata warehouse&
(ollection of integrated data used for decision4making 1ormally the system of record for detailed customer data from heterogeneous systems across the company to provide a consistent view of the business

'ecision support&
Data analysis with the purpose of fueling accurate and effective business decisions .nown by the abbreviation BD33,C for decision support systems, decision support usually involves accessing data on a data warehouse

'irect marketing&
(lassic marketing practice of communicating directly to consumers, normally via the postal service +as evolved to encompass a range of media, from e4mail to banner ads to wireless messaging services

4lectronic customer relationship management .eCR# or e-CR#/&

Activities to sell to, support, manage, and retain customers who do business through a company,s Web channel /nline personali'ation is an e5ample of e(2*

e-marketplace&
/nline e5change that enables buyers and sellers in a supply chain to come together, providing better information <better than they would have with classic human4 intensive supply chain processes? as well as automation of key business processes

4nterprise application integration .4AI/&

!ntegration of often disparate corporate systems that routinely e5change or share data 7acilitating this data interchange between systems increases the likelihood of consistent data

4nterprise CR#&
(ross4functional (2* system used across various organi'ations and departments A salesperson reviewing his customer,s most recent open trouble tickets before making a sales call is an e5ample of enterprise (2*

4nterprise portal&
0ser interface, usually Web4based, that provides a virtual window into different data sources and sub#ect areas Provides a common look and feel across the company for various business data, but can nevertheless be customi'ed to provide user4specific information at various levels and from various sources

4nterprise resource planning .4R%/&

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1&$

"ying together and automating of diverse components of a company,s operations, including ordering, fulfillment, staffing, and accounting "his integration is usually done using -2P software tools

e-tailer&
B!nternet retailer C 0sually refers to a company for whom the !nternet is the e5clusive sales channel

49ent-based marketing&
Detecting a key event that triggers a tailored marketing communication or business action designed to increase customer loyalty or profitability -5ample: 2esponding to a customer,s inordinately large bank deposit with an offer for a high4interest certificate of deposit

4 change&
(ompany partnership that leverages spending power and critical mass to negotiate more favorable deals with suppliers 0sually specific to a single industry and often involving companies that compete as well as cooperate with each other

4 ternal data&
Data acAuired outside of a company,s internal !" organi'ation 0sually entails consumer data that has been cleansed, formatted, and updated with current information, but might also include market research, demographic statistics, and business and industry information

4 tranet&
3ecure !nternet site available only to a company,s internal staff and approved third4party partners 7lourishing in $=$ environments where suppliers can have ready access to updated information from their business customers, and vice versa

0ield ser9ice management&

/ptimi'ing processes and information around support of a company,s product or service on the customer,s premises /ften involves a combination of (2* applications, wireless technology, and historical customer service data

0re-uentl! Asked Buestions .0ABs/&

0sually a Web page wherein the company answers basic Auestions for its customers, such as B+ow do ! change my name and address onlineMC or B+ow do ! make a returnMC 3aves live service agents from repeating the same information over and over, allowing them to focus their support efforts on more speciali'ed issues

0ront-o""ice CR#&
(ustomer4facing (2* capability 0sually pertains to sales force automation systems and other systems that involve direct customer inter actions that can be recorded for back4office analysis

Householding&
(onsolidating customer data to organi'e individuals into the households in which they live 8rouping customers within a household allows a company to be more prudent with its communications and at the same time to more accurately profile individuals in relation to one another

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1&%

Incremental de9elopment&
Deploying periodic releases of software such that end4users receive functionality Bin chunksC and not all at once

In"erential personali3ation&
0sing analysis and e5trapolation of customer behaviors and preferences, including performing collaborative filtering and other types of data mining, to tailor Web content and dictate the optimal marketing message

Interacti9e 9oice response .I=R/&

"elephony software that recogni'es human voice instructions or the pressing of numbers on a keypad to route customer calls to the appropriate call center or agent

Iterati9e de9elopment&
Desirable (2* approach of going through small, repeatable development steps to speed up software implementation and deliver small amounts of functionality more Auickly 2educes risk and allows for ad#ustments, enabling technical staff to refine the development plan as they go

Fnowledge management .F#/&

(entrali'ed management of a company,s corporate knowledge and information assets to provide this knowledge to as many company staff members as possible and thus encourage better and more consistent decision4making

Fnowledge management s!stem&

(entrali'es a company,s knowledge assets *uch of this documentation is widely dispersed both internally and e5ternally, enabling .* users not only to access information in the system but also to supplement it with new or additional information as it,s created

,ead management&
3ales force automation capability for tracking and monitoring sales prospects and a company,s interactions with them, as well as enforcing sales tactics and automating key tasks Also enables telemarketing staff to pass leads along to the appropriate sales channel

,i"e-stage marketing&
"argeting consumers based on where they are on their life continuum 7or instance, a bank might e4 mail a promotion for a new credit card to a recent college graduate, but might market a home eAuity line of credit to a recent home buyer or financial planning to a recent retiree

,i"etime 9alue .,T=/ modeling&

Applying historical customer behaviors and financial information to calculate a given customer,s value throughout her relationship with a company <as opposed to at a single point in time?

,ist generation&

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1&&

Automatically developing a list of customers for a marketing campaign, based on specific customer characteristics (ore feature of most (2* campaign management products

,oad balancing&
3ee [Automati' 'all distribution:]

#arket-basket anal!sis&
Analysis of items purchased together during a shopping trip 1eed not be retail specific but can also be applied to a bank,s or telephone company,s products (lassic e5ample: Peanut butter being purchased with #elly

#arketing ser9ice bureau&

"hird4party company to which marketing campaigns and mailings are outsourced for a fee *any companies have historically relied on marketing service bureaus due to the company,s lack of complete data or mailing infrastructures

#ass marketing&
"raditional practice of marketing a product to an undifferentiated group of consumers Also known as Bspray and prayC or Bbatch and blast C

mCR#&
*obile (2* (ommunicating key information to customers or internal customer support staff via wireless technologies

#etadata&
BData about data C 0sually refers to agreed4on definitions and business rules stored in a centrali'ed repository so business users6even those across departments and systems6use common terminology for key business terms (an include information about data,s currency, ownership, source system, derivation <e g , profit X revenues minus costs?, or usage rules Prevents data misinterpretation and poor decision4making due to a sketchy understanding of the true meaning and use of corporate data

#ultichannel&
3upport of more than one sales or service channel) for instance a retailer,s Web site and its catalog

#ultimodal&
1umerous ways a customer can interact with a company, and vice versa A call center that allows inbound customer interactions via fa5, voice, telephone keypad, or handheld device is providing multimodal access

2nline anal!tical processing .2,A%/&

BDrilling downC on various data dimensions to gain a more detailed view of the data 7or instance, a user might begin by looking at 1orth American sales and then drill down on regional sales, then sales by state, and then sales by ma#or metro area -nables a user to view different perspectives of the same data to facilitate decision4making

2perational CR#&

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1&'

!nvolves customer4 facing business functions 3ales force automation and customer service are two e5amples 3ee also [%ront*o i'e CRM:]

2pportunit! management&
3ee [+ead management:]

%artner relationship management .%R#/&

Oualifying, tracking, and allocating leads to third4party sales partners <e g , resellers? to understand how to price, market, and compensate channel partners !n effect, advocating to the partner relationship the customer differentiation inherent to (2*

%ermission marketing&
A customer,s implicit or e5plicit agreement to be communicated to or to communicate with a company 0sually implies customer perception of value in the relationship, suggesting a 6ui) %ro 6uo between the customer and the vendor

%ersonali3ation&
(ompany,s ability to recogni'e a customer or prospect as an individual and differentiate its inter actions with her Although personali'ation usually means individuali'ed content delivered on a Web site, it can also involve target marketing, tailored e4mail campaigns, or customi'ed banner ads

%ipeline #anagement&
3ee [+ead management:]

%ri9ate portal&
3ee [,-tranet:]

%roo" o" concept&

3oftware trial that allows a prospect to try out the product before buying it Delivers a realistic slice of functionality and is often used as the foundation for the first application

%oint solution&
Piece of software used for a specific business purpose -5 ample: A product that performs only automated campaign management *any companies decide to choose point solutions for discrete (2* functions to select the best4of4breed tool for each function <rather than relying on a (2* suite from a single vendor?

%ure pla! .n/( pure-pla! .adG/&

2efers to a dot4com company without a brick4and4mortar presence

Re"erential personali3ation&
0sing e5plicit customer data6such as survey responses, service reAuests, and satis faction feedback6to determine the best selling strategies and marketing messages for a customer

Relationship marketing&

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1&(

*arketing to customers based on your knowledge of their behaviors and their relationship with your company: what they do and don,t purchase, how often they buy, and how they use your support services

Retention&
(ompany,s ability to keep customers by offering products and services6and, by e5tension, the right messages6to keep the customers satisfied and avoid losing them to a competitor

Return on in9estment .R2I/&

*easuring (2*,s contribution to the bottom line versus its cost *ost accurately performed after (2* has been put in place and improvements can be measured B!ntangibleC 2/! such as increased customer satisfaction might be more difficult to measure but is nevertheless also a factor in (2* success

Return on relationship .R2R/&

Applies to overall value of a relationship and how it has paid off (an describe $=$ relationships, as in measuring the uplift in sales triggered by certain partnerships, or $=( relationships, as in the increase of customer satisfaction rates (an also imply a superset of a customer,s financial value to a company, specifically in cases where a customer might refer other customers to the company

Rules repositor!&
7ile or database con taining business rules to ensure they are tracked and understood -5ample: -ach time a customer opens an account online, e4mail him a welcome letter

Rules-based personali3ation&
!nvolves the coding of user4defined rules that are analy'ed by the specific personali'ation software tool and used to create tailored customer messages

+ales "orce automation .+0A/&

-lectronic tracking and management of account activities by individual salespeople 37A data is integrated at the corporate level to provide a company with a rich view of its customers and prospects

+creen pop&
3mall window that appears on a user,s workstation screen to provide conte5tual information (ould be a survey <B+ow do you like this Web site so farMC? or a response to a marketing analyst,s mouse click on a certain product, listing the product,s specifications

+cripting&
Automatic BscriptsC <prepared Auestions or comments? generated for customer service reps based on an individual customer,s segment andTor customer profile contents 3cripts remove the guesswork from determining how to respond to a customer Auery or complaint, guiding reps through a dialog with the customer and thus optimi'ing discrete customer interactions

+egmentation&

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1&)

8rouping customers <or products or other business metrics? to analy'e characteristics or behaviors with an aim toward target4marketing specific products and services to the group

+el"-ser9ice&
(ustomers can ask their own Auestions or resolve problems without the intervention of a live person 0sually performed over the Web

+er9ice-le9el agreement .+,A/&

(ontract with a service provider6be it an internal !" organi'ation, an A3P, or an outsourcer6 specifying discrete reliability and availability reAuirements for a given system *ight also include such reAuirements as support of certain technology standards or data volumes /utsourcer,s failure to adhere to the terms laid out in an 3%A could result in financial penalties

+kunkworks CR#&
Pro#ect being developed Bunder the radar,C apart from the sanctioned (2* pro#ect that might be underway 0sually the result of unhappy political situations, skunkworks pro#ects can #eopardi'e the reputation and funding of the authori'ed (2* pro#ect by raising Auestions about its value, time liness, or planned deliverables

+teering committee&
8roup of managers or e5ecutives charged with planning and prioriti'ing (2* functionality and allocating appropriate funds for (2* development, rollout, training, and usage (an also influence (2* adoption rates and accompanying business process changes

+tick!&
Web site that grabs and keeps a visitor /ften #u5taposed with the term Beyeballs,C implying that one,s eyes <figuratively? stick to an effective Web site

+upplier relationship management .+R#/&

/ffshoot of (2* that focuses on improving relationships with vendors and resellers 32* includes selecting the lowest4cost supplier and matching suppliers with their optimal sales channels and product sets

+uite&
2ange of functional software modules that interact with each other /ften combines marketing, sales force automation, and analytical functions Advantage: (2* suites eliminate integration comple5ity

+upplier relationship management .+R#/&

Ability of a company to optimi'e its choice of suppliers around the various attributes and historical performance of those suppliers /ften involves specific software that helps companies analy'e various characteristics to use in approving suppliers and granting contracts

+uppl! chain management .+C#/&

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1&*

!ntegration and optimi'ation of a company,s supply chain, usually involving automation of business processes that bring a product or service to market (an help to tighten integration and communication between a company and its suppliers and partners

Target marketing&
Dividing the sum of the customer base into discrete subsets that range from large <dividing customers based on whether or not they own a product? to small <even indi vidual Bsegments of oneC?

Touchpoint&
Point of interaction when the company communicates with a customer, or vice versa /ne interaction6a customer order, for instance6can involve several touchpoints: comparing products on the Web <touchpoint F?, checking inventory levels <touchpoint =?, and placing the order with the sales representative <touchpoint I?

Trouble ticket&
2ecord of a customer,s call into the call center 0sually contains identifying features such as the reason for the customer,s call, the status of the problem, and the ultimate resolution of the call "rouble tickets enable a company to track and monitor the superset of customer calls into the contact center to summari'e the main reasons for inbound customer contacts, whether problems, Auestions, or service reAuests

8p-selling&
*otivating a customer to trade up to a more e5pensive or profitable product "he logic is, now that ! know what this customer wants to buy, perhaps we can motivate him to buy a more profitable version or model -5ample: A #eweler might convince the buyer of a diamond tennis bracelet to go for larger diamonds, at a higher price

=ertical silo&
An organi'ation or system involving a specific and often narrow business function -5ample: A financial analysis system specific to a certain car model and not the automaker,s entire line "he opposite of a vertical silo is a cro""#functional system

=iral marketing&
Word4of4mouth on steroids (ould be positive or negative, but is definitely effective

5ater"all de9elopment&
*ethodical and linear approach to technical development Although rigorous, usually implies going through an entire development life cycle before deploy ing functionality to end users Possible only when e5haustive, detailed reAuirements are known up4front) has been known to take years "he opposite of the waterfall approach is iterative or incremental development, the ideal means of deploying regular (2* functionality

5ork"orce management&
0sually applied to staffing the customer support center Deals with optimi'ing staffing levels in terms of both numbers and skill sets Workforce management tools can analy'e historical call types and volumes and help suggest optimal call center staffing

CRM Handbook, The: A B siness ! ide to C sto"er Relationship Ma # 1'0