Evecrmf 4

Customer Relationship Management (CRM)
Scott Hopper Monica Brooks Jessica Jetton
Case Studies: United Parcel Service (UPS) Royal Bank of Canada (RBC) Financial Group
Agenda
CRM Background & Industry Information CRM In Action: Case Studies
United Parcel Service (UPS) Royal Bank of Canada (RBC) Financial Group
Lessons Learned
Presentation Focus
Present overview information on Customer Relationship Management (CRM) and its impact on the way people conduct business Discuss real-life CRM implementations
Discuss Successes Discuss Areas of Opportunity for Improvement
Discuss industry leading CRM best practices
What Is CRM?
CRM, or Customer Relationship Management is a company wide business strategy designed to reduce costs and increase profitability by solidifying customer loyalty. At its core, CRM is a simple, intuitively appealing concept: attract new customers, know them well, give them outstanding service, and anticipate their wants and needs.
Source: Goodhue, Dale L., Wixom, Barbara H., and Watson, Hugh., Realizing Business Benefits Through CRM: Hitting the Right Target in the Right Way MIS Quarterly Executive Vol. 1, 2, 2002, pp.79-94. www.destinationcrm.com/articles/, What is CRM?, viewed October 12 th, 2004.
History
Mass Marketing
All customers treated as if they had same needs and preferences
Target Marketing
Focused on market segments
Relationship Marketing
Each customers individual needs are targeted by building relationships
Source: Goodhue, Dale L., Wixom, Barbara H., and Watson, Hugh., Realizing Business Benefits Through CRM: Hitting the Right Target in the Right Way MIS Quarterly Executive Vol. 1, 2, 2002, pp.79-94.
What Does CRM Do?

Sales
Up-sell and cross sell products more effectively Help sales staff close deals faster
Marketing
Simplify marketing and sales processes Discover new customers
Customer Service
Provide better customer service Make call centers more efficient
Why Use CRM?
Customers
Enterprises
Satisfaction Revenues Loyalty Costs Volume
Goals
Make it easy for customers to do business Focus on the end customer Redesign front office and examine information flows between the front and back office Foster customer loyalty by becoming proactive with customers Build in measurable checks and balances to continuously improve
Source: Chen, Injazz J., and Popovich, Karen, Understanding customer relationship management (CRM) People, process and technology Business Process Management Journal, Vol. 9, 5, 2003; ABI/INFORM Global, pages 672-688.
Who Uses CRM?

One survey of more than 1,500 companies by The Data Warehousing Institute (TDWI) in 2000 found that 91 percent either have or plan to deploy a CRM solution in the near future.
78 percent of companies said they were using

some form of CRM Bain & Company survey of 708 corporate executives 2002
Source: Goodhue, Dale L., Wixom, Barbara H., and Watson, Hugh., Realizing Business Benefits Through CRM: Hitting the Right Target in the Right Way MIS Quarterly Executive Vol. 1, 2, 2002, pp.79-94. www2.cio.com/metrics/2003/metric544.html, The Right Tool, viewed November 1st, 2004.
Who uses CRM?

Cingular Wireless
Improved sales productivity by providing a comprehensive view of the customer, improving lead generation, and providing a full-functional wireless solution to sales force.
Honeywell
Improved customer service by increasing aftermarket spare parts revenue by 100%, improving service request closure rate from 45% to 83%, and improved customer satisfaction by 38%.
DHL
By providing a transparent view of the customer, Siebel will help DHL to achieve an estimated 1% increase in revenue by the end of 2005 Ulrik Topp Global Sales Development Director DHL
Source:
www.siebel.com, customer case studies, viewed 11/9/04
CRM Budget Change for 2003
Companies surveyed by Aberdeen Group in January 2003
Stay the Same 31%
Increase 53%
Decrease 16%
Source: Aberdeen Group, CRM Spending and Satisfaction Report, February 2003, pages 1 -18.
Increase Decrease Stay the Same
CRM Market
AMR Research estimates that the Customer Relationship Management (CRM) market will grow to $10.8B in 2004, a $1B leap from 2003.
Source:
Preslan, Laura, Investment Priorities for CRM in 2004, AMR Research, Thursday, Jan. 8, 2004.
CRM Market
$18,000 $17,000 $16,000 $15,000 $14,000 $13,000 $12,000 $11,000 $10,000 2001 2002 2003 2004 2005 2006
US$ million
Source: Aberdeen Group, Worldwide CRM Spending, Market Analysis Service, June 2003, pages 1-57.
CRM Spending by Region
$10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 2001 2002 2003 2004 2005 2006
US$ million
North America Europe Latin America Asia/Pacific Rim Middle East/Africa
US CRM Spending by Industry
$2,500 $2,000
Manufacturing Financial Services Retail and Distribution Business Services Government and Education
2001 2002 2003 2004 2005 2006
US$ million
$1,500 $1,000 $500 $0
Reasons for CRMs Increased Popularity

Easier to retain customers than attract new customers CRM has become more affordable and the technology is more advanced The definition of CRM is being expanded to include initiatives like loyalty programs
Source: www2.cio.com/metrics/2003/metric544.html, The Right Tool, viewed November 1st, 2004.
CRM Software Leaders
Top CRM Software Suppliers in 2002 Siebel 21.6% SAP 12.4% Oracle 5.7% PeopleSoft 4.9% Peregrine Systems 3.0% Others 52.4%
Siebel
Market Cap - $4.86B Revenue - $1.31B NASDAQ: SEBL - $9.56 (11-13-04) 5000 employees Founded: 1993 2.8 million employees at more than 4,000 organizations use Siebel products Siebel Systems is the worlds leading provider of customer relationship management (CRM) solutions and a leading provider of applications for business intelligence and standards-based integration.
Source:
www.siebel.com, viewed 11/9/04
SAP
Market Cap - $56.32B Revenue - $9.28B NYSE: SAP - $45.23 (11-13-04) 30,942 employees Founded: 1972 mySAP Customer Relationship Management is the only CRM solution that connects your employees, partners, processes, and technology in a closed-loop customer interaction cycle.
Source:
www.sap.com, viewed 11/9/04
Oracle
Market Cap 68.67B Revenue 10.30B NASDAQ: ORCL 13.39 (11-13-04) 41,658 employees Founded: 1977 Oracle's integrated CRM applications give you information-driven sales, service, and marketing because they're built on an open, standards-based architecture that streamlines business processes, improves data quality, and allows all your key divisions to draw from the same source of data.
Source:
www.oracle.com, viewed 11/9/04
Benefits Summary
CRM creates value through three key levers: Acquire increase number of profitable customers Develop increase profit from existing customers Retain extend duration of customer relationship
Existing Customers #1 Priority

Cheaper to retain customers than to add new customers Retain customers mean sales volumes increase per customer Up-sell and cross-sell
It costs about five times more to gain a customer than to keep one. And it is estimated to cost 10 times more to get customers back if they are dissatisfied.
Source: Massnick, Forler, Customer Service Can Kill You... Management Review, Mar 1997; 86, 3; ABI/INFORM Global pages 33-35.
Difficult to Acquire New Customers

Annual Credit Card Acquisition Mail Volume (in Billions)
Percent Response to Credit Card Direct Mail Offers

4.0%
3.0%
2.8%
2.0%
2.2%
1.6%
1.0%
1.4%
1.4%
1.3%
1.2% 1.0% 0.6%
0.0% 1992 1993 1994 1995 1996 1997 1998 1999 2000
Source: BAI Global, Inc., Mail Monitor, $Q02, Synovate.
Keys to Success
Top Management Commitment Project Teams with representatives from all departments Project Champion Company data must be shared enterprise-wide Vision and communication
Reasons for Failure

Not understanding the needs of the end user Considered an IT project rather than a business strategy Accessibility - Not training users to effectively use the solution Inability to integrate different data sources in to a single system Understanding expectations
Success and Failure Rate of CRM Projects

Some 80% of the responding marketing, customer-service and sales execs at 96 companies characterize their organizations CRM efforts as very successful or somewhat successful. Fifty-five percent of all customer relationship management (CRM) programs fail, according to Stamford, Conn.-based Gartner Inc.
Source: Yu, Larry, Successful Customer-Relationship Management MIT Sloan Management Review, Vol. 42, No. 4, pp18-19.
Melymuka, Kathleen, You Can Avoid CRMs Pitfalls Computerworld, Feb 11, 2002; 36, 7; ABI/INFORM, page 30.
CRM In Action: Case Studies
United Parcel Service (UPS)
UPS
Worlds Largest Package Delivery Company Leading global provider of specialized transportation and logistics services Founded in 1907 in Washington $33.5 billion in revenue in 2003 357,000 employees worldwide
Source: http://www.ups.com/content/us/en/about/history/index.html, viewed 10/28/04
UPS Products and Services

SonicAir Next Day Air 2nd Day Air 3 Day Select Ground Worldwide Express Worldwide Expedited Standard to Canada
Source: http://ups.com/content/us/en/resources/select/index.html , viewed 10/28/04
UPS IT Environment
Kenneth W Lacy- Senior Vice President and CIO $1 billion a year on technology infrastructure 4,700 technology employees 14 mainframes, 6100 servers, 120000 PCs 115 million hits and 9.1 million tracking requests per business day
Source: http://ups.com/content/us/en/about/facts/technology.html, viewed 10/28
UPS Technology Awards

Winters Corp. 2003 Top Ten Grand Prize Winner Computerworld 100 Best Places to Work in IT, 2003 CIO 20/20 Vision Award, 2002 CIO 100 Enterprise Integration Award, 2002 Computerworld Premier 100 IT Leaders, 2002
Source: http://.ups.com/pressroom/us/awards/ecommerce
UPS Financial Performance
Source: http://finance.yahoo.com/q?s=UPS, viewed 11/3/04/
UPS TEAMS - Seibel Implementation

Next generation in UPS sales force automation Total enterprise account management system Provides integrated tools to help the sales force do the job more effectively and efficiently Supports opportunity and account management with increased capabilities for planning and documenting sales calls
Source: UPS, Overview of UPS TEAMS, 2004
Why UPS Changed from Link to Teams

UPS deployed Link in 1999- technology has improved dramatically since then TEAMS can be used across the entire UPS sales enterprise Future phases of TEAMS will have increased flexibility to enable UPS to integrate the core UPS sales force with the sales forces from other business units in order to establish one coordinated sales effort TEAMS has the flexibility to support enhancements such as wireless capability
UPS Sales Enterprise
UPS Sales Enterprise
Domestic and International
Core UPS
Additional Business Units
Other Sales Business Units
Other Sales Business Units
E-Commerce
Supply Chain Solutions
UPS Capital
UPS TEAMS
Interacted with Michael Carey, Project Manager CRM Technology, October 14,2004 Time and Budget
Challenges
Advantages Lessons Learned
Time and Budget

Project was on time and on budget- not at liberty to share the specific budget Beta Test in Central Pennsylvania, Sweden and Austria, May 2004 Project Roll Out: June 15th September 17th, 2004 for US, Sweden and Austria employees Future releases will cover additional countries and the rest of the UPS sales force (i.e. ECommerce, Supply Chain Solutions, UPS Professional Services, etc.)
Challenges
Aligning the arrival of new Laptops, new Sales Applications, new Operating System, new wireless cards, and new training documents Seibel Application Training
Coordinating the trainers Gathering the right training resources (e.g. ability to speak multiple languages, etc.) Scheduling employees for training classes
Advantages of UPS TEAMS

Home Page Calendar Opportunities Queries Data Synchronization Team Selling

Home Page
Quick look at daily calendar, Slim leads and opportunities Helps prioritize the sales persons time and keep the focus on accounts that need attention

Calendar
Automatically integrated with activities Immediately populates events such as adding and/or updating activities, eliminating dual entry
Advantages to UPS TEAMS

Opportunities
Provides flexibility to create a single product opportunity or a multi-product (portfolio) opportunity Provides the ability to link an opportunity to more than one marketing initiative

Queries
Query Assistant allows for filtering data quickly and easily Provides capabilities for pre-defined queries and personalized queries

Data Synchronization
Occurs automatically and instantaneously each time the sales person accesses the system and is connected to the LAN No need to remember to exchange data daily in order to send changes from the sales persons laptop and receive up-to-date information from the UPS mainframe

Team Selling
Provides information for all of the sales people associated with a particular opportunity or account Enables a cohesive, unified sales effort and contributes to sales success
Areas of Improvement
Duplicate data entry still required on some screens (i.e. Time & date of activities, etc.) Non-optimal Account Name retrieval
Account search capability is exact match
Insufficient back-end integration

Appropriate databases not synched
UPS TEAMS Successful?

Best Project Management Practices
Business Solutions Drive Technology Selection Secure Top Management ACTIVE Support Involve Knowledgeable Users Buy-in Outside Expertise to Transfer Learning Implement Incrementally Dont Judge Success Solely Based on Time to Budget Customer-Oriented Focus
YES
NO
X X
X
X X
X
X
Source:
Lacity,M, Management of IT- Enabled Business Projects, 2004
Standish Group CHAOS Report IT Projects Classification Type I: Success: on time, on budget, promised functionality Type II: Challenged: over-budget, over-time and or missing functionality Type III: Failed: Severely impaired projects; cancelled projects
Source: Lacity,M, Management of IT Enabled Business Projects, 2004
Standish Group CHAOS Report IT Projects Classification
UPS TEAMS Project: Type I- Success On time On Budget Promised Functionality
CRM In Action: Case Studies
Royal Bank of Canada (RBC) Financial Group
RBC Financial Group

Largest Canadian financial institution 12 million clients worldwide 700 products 60,000 employees C$270 billion in assets 1.6 billion spent on IT in 2003 CIO: Marty Lippert
Source: www.rbc.com/aboutus/fastfacts.html
5 Major Business Lines

RBC Banking personal and commercial banking RBC Insurance insurance RBC Investments wealth management RBC Capital Markets corporate and investment banking RBC Global Services transaction processing
Source: Brem, Lisa, and Narayanan V.G., Customer Profitability and Customer Relationship Management at RBC Financial Group, Harvar d Business School Case #9-102-043. March 25, 2002.
RBC Banking
Capital Markets 17% Global S ervices 6%
Investment 15%
Insurance 8%
Banking Insurance Inve stme nt Capital Marke ts Global Se rvice s
Banking 54%
54% of Net income 1300 branches 4800 ABMs 1.4 million online customers 300 offices in 30 countries Greatest opportunity for improvement
Change in the Industry

Pre-1990s 6 largest Banks enjoyed friendly competition Internet banking Lowering of domestic protections Oligopoly ended increased competition How to stay competitive? 1997 study to determine image perceptions
1997 Study Major Finding

CUSTOMER INTIMACY -MOST important FACTOR to the customer. Definition - trust, reassurance, a feeling that the bank knows
them, understands their needs, recognizes who they are and value their business
This finding identified a whole new era for RBC - A shift to differentiation based on customer needs
1997 Study Results

HIGH
Mutual benefits Reciprocity Trust Reassurance Comfort Understanding
Importance to Client
Convenient Hours ATM access 1-800 Number Internet Banking Short Lines
LOW
Financial Institutions Proficiency at Delivering
HIGH
Focus on Customer: CRM

CRM Vision: Bring together in one place a view of all contacts, transactions, accounts, and interactions with each customer. CRM system would provide the following info to personal bankers (PBs):
-Address, age, account balances -Contacts customer has had with company -Level of service customer qualified for based on current and future profitability -What products customer was targeted and approved for -How customer responded to direct marketing
Reorganization Around CRM

VP of Marketing and Info ManagementRichard McLaughlin
-Responsible for CRM infrastructure, info
management, alliance banking, internet banking, and privacy
Customer Segments
3 Primary Customer Segments & 9 Total Segments
A. Key markets: 1. Youth 2. Nexus 3. Small business 4. Farming and lifestyle agriculture B. Growth markets: 5. Building 6. Business 7. Agriculture C. Prime markets: 8. Accumulating 9. Preserving
Lockie, Anne, RBC Banking: The Customer Experience, powerpoint slides at rbc.com
Product & Segment Management

Product
Structured to sell a specific product to everyone Multiple people selling to same customer
PRODUCTS C B D A E
Segment
Structured to satisfy all needs with all products - Employees concerned with meeting needs not selling a specific product
SEGMENT
CUSTOMER
CUSTOMERS
Timeline: CRM Capabilities

1997 1998 1999 2000
CRM software and practices continue to be modified based on internal & external customer feedback
McLaughlin hired as VP of Marketing and Info Management
1997 study creates a platform for CRM
Software selection to facilitate CRM
Info changes focus to profitable/ potentially profitable customers
CRM: The Results

Satisfying customer needs
Important to stay competitive and keep current customers
Creating efficiencies
Not only invest in satisfying customer needs but also save money while doing it
Satisfying Customer Needs

Focus on customer needs: ensures right products at right time More efficient use of customer data
-Customized marketing -Levels of service -Product design and pricing
Increased profitability
RBC Financial Group Net Income

Net Income by Year
(in millions)
$2,898 $2,208 $1,772 $1,725 $2,435
1998
1999
2000
2002
2003
Source: www.rbc.com/investorrelations/ar_03.html
Creating Efficiencies
Better Customer Identification
Before CRM: A, B, or C customers Vague and not beneficial
After CRM: Customers can both be profitable and have the potential to be profitable
More Efficiencies
Centrally Generated Sales Leads
Before CRM: Every branch had a different way of generating sales leads Low quality, not consistent After CRM: Generated centrally Accessible to everyone Reminder to call and offer products
Future Plans for CRM

Preference and Choice: Use info about customers preferences to design packages of services at certain points in their life
Life Stages and Segments

KEY
Getting Started Saving for Retirement Saving to buy a home Buying a home
GROWTH
Building
PRIME
Accumulating Retirement Preserving
Graduation
Transfer of Wealth/Succession Planning Planning
Source: Sutherland, Anne, How RBC is taking its CRM strategy to the next level to accelerate profitable revenue growth, presented t o American Bankers Association. 2004.
Summary of Lessons Learned
Identify the key stakeholders who touch the application directly and/or indirectly at the very beginning of the project Gain buy-in from these key stakeholders that that their input and support is critical to the overall success of the project More robust Beta Test
Always keep client front and centerthrough process and implementation Manage change with communication and vision Integrate CRM into business strategy Continually reevaluate, test, learn, and improve strategies

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Customer Relationship Management (CRM)

Scott Hopper Monica Brooks Jessica Jetton

Discuss industry leading CRM best practices

What Does CRM Do?

Why Use CRM?

Who Uses CRM?

78 percent of companies said they were using

Who uses CRM?

www.siebel.com, customer case studies, viewed 11/9/04

CRM Budget Change for 2003

Companies surveyed by Aberdeen Group in January 2003

Stay the Same 31%

Increase Decrease Stay the Same

CRM Spending by Region

North America Europe Latin America Asia/Pacific Rim Middle East/Africa

US CRM Spending by Industry

$1,500 $1,000 $500 $0

Reasons for CRMs Increased Popularity

Source: www2.cio.com/metrics/2003/metric544.html, The Right Tool, viewed November 1st, 2004.

CRM Software Leaders

www.siebel.com, viewed 11/9/04

www.sap.com, viewed 11/9/04

www.oracle.com, viewed 11/9/04

Existing Customers #1 Priority

Difficult to Acquire New Customers

Percent Response to Credit Card Direct Mail Offers

1.2% 1.0% 0.6%

Source: BAI Global, Inc., Mail Monitor, $Q02, Synovate.

Reasons for Failure

Success and Failure Rate of CRM Projects

CRM In Action: Case Studies

United Parcel Service (UPS)

Source: http://www.ups.com/content/us/en/about/history/index.html, viewed 10/28/04

UPS Products and Services

Source: http://ups.com/content/us/en/resources/select/index.html , viewed 10/28/04

Source: http://ups.com/content/us/en/about/facts/technology.html, viewed 10/28

UPS Technology Awards

UPS Financial Performance

Source: http://finance.yahoo.com/q?s=UPS, viewed 11/3/04/

UPS TEAMS - Seibel Implementation

Source: UPS, Overview of UPS TEAMS, 2004

Why UPS Changed from Link to Teams

Source: UPS, Overview of UPS TEAMS, 2004

UPS Sales Enterprise

UPS Sales Enterprise

Domestic and International

Additional Business Units

Other Sales Business Units

Other Sales Business Units

Supply Chain Solutions

Time and Budget

Advantages of UPS TEAMS

Advantages of UPS TEAMS

Source: UPS, Overview of UPS TEAMS, 2004

Advantages of UPS TEAMS

Source: UPS, Overview of UPS TEAMS, 2004

Advantages to UPS TEAMS

Source: UPS, Overview of UPS TEAMS, 2004

Advantages of UPS TEAMS

Source: UPS, Overview of UPS TEAMS, 2004

Advantages of UPS TEAMS

Source: UPS, Overview of UPS TEAMS, 2004