The Eight Building Blocks of CRM: A Framework for Success

John Radcliffe

These materials can be reproduced only with Gartners official approval. Such approvals may be requested via e-mail -- quote.requests@gartner.com.

CRM Attitudes: Challenges May 2002

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Reduced expectations due to the number of CRM failures 0 CRM now has a bad name in some organizations

They hesitate to spend money because of: 0 0 0 0 Doubts about the economy Inadequate understanding of CRM The lack of agreed measures of success The difficulty of successful implementation

An emphasis on cost-reduction and short-term gain. 0 Companies are focusing on survival.

CRM Attitudes: Opportunities May 2002

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Users continue to express belief in the value of CRM and remain committed to it They know they need it and they know it will cost money. They also have realized that CRM is more than throwing money at software. 0 Attitudes and processes have to change.

Increased realism is leading to a renewed focus on strategic thinking. 0 The issues are complicated

The Eight Building Blocks of CRM

1. CRM Vision 2. CRM Strategy

3. Valued Customer Experience

4. Organizational Collaboration

5. CRM Processes 6. CRM Information 7. CRM Technology 8. CRM Metrics

Creating the CRM Vision

The CRM vision requires a leader to define CRM, set objectives and draw a picture of what the enterprise wants to be to target customers.

Customer Experience
Differentiating Brand Values

Core Value Proposition

The vision is the what and why; the strategy is the how.

A CRM Strategy: Developing the Customer Asset Base

How do we create awareness of what we offer to potential customers of value?
Target

How can we retain or win back customers of value?

How do we Win Back Enquire acquire Customer valuable Life Cycle Retain Acquire Sales Service Marketing customers
Manage Problems Develop Welcome

who will value us?

How do we do this efficiently?

How do we develop the customers loyalty and value to us by developing our value to the customer?

How is a CRM Strategy Developed ?

Where Are We Now...?
1. Audit the current market position and customer position 2. Segment both consumers and customers and identify target segments 3. Set customer objectives (i.e., acquisition, development and retention) and market objectives by target segment 4. Outline the strategy to create the CVP and desired customer experience by target segment 5. Define metrics for monitoring the execution of the strategy and evolving it 6. Specify the capabilities and infrastructure required (e.g., people, IT and data)

Where Do We Want To Be..?

How Do We Get There.?

Design the Customer Experience

You must design the customer experience, otherwise the customers will design it for you - Tom Peters

What picture of desired future experience would you want to give your customers ? Describe it in a story Fill in the details later

Evolving Toward a Customer-Centric Organization

Organized by Function and Product
Divisions Customer Segments Products
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Organize by Customer Segments

Hybrid Reality

Do Not Change the Structure Too Quickly Trial in One Division First: Prove It Start in the Front Office: But Go Beyond It Involve the Business Partners

Customer Process Re-Engineering Fundamentals

Welcoming Order Processing Design Quote to Cash Underwriting The Customer Life Cycle: TADR Death Winback Invoicing Campaign to Compensation Delivery Tracking Change Address Call Avoidance

The Impact of Back-end Processes on CRM Horizontal Customer-Centric Processes Vertical Industry Customer-Centric Processes Marketing, Sales, Customer Service Efficiency vs. Effectiveness

Balance Transfer Billing

Inquiry Handling

Process change must accompany any technology implementation Process change could have a greater effect/be an alternative place to start Optimized processes are an opportunity for competitive differentiation

Customer Information Is the Lifeblood of CRM

Data Quality Challenges ?
John Smith

?
Mr J. Smith

Data Fragmentation and Consistency Challenges

Data Quality Operational and Analytical Data Ownership Stewardship Challenges in enabling consistent, integrated customer Interactions
Single Customer View ?

Challenges in creating and applying customer insight Customer Profitability Propensity to Churn Lifetime Value

Sourcing Your CRM Applications

Integrated CRM and CRM ERP Suite CRM Suite Framework Freedom to Integrated MostEnterprise- functional control own CRM suite architecture level and Positioning application differentiate suite processes Integrated Integrated Re-express CRM your own Processes CRM & ERP processes. processes. processes. CRM Best of Breed Best functionality for your department Build It Yourself Freedom to control own architecture. Suites too expensive and don't fit. Re-express own processes at app. level Builds on existing data model(s) Software Infrastructure vendors (BEA, IBM, Microsoft, Oracle,Sun) and ESPs

Limited Process integration.

Data Model

Representative Vendors

Designed Mixture Imposed Imposed to fit imposed/ fit data model data to existing model existing covering data model. CRM and covering data model(s) ERP CRM Avaya, Intentia, E.piphany, Chordiant, NCR, Graham, Navision, Onyx, Oracle, Pivotal, Pegasystems Selectron, Unica PeopleSoft, Siebel SAP

Integrating Operational, Analytical and Partner Systems

Partner Systems Operational Systems External Data Analytical Systems

ERP

SCM

X ETL Data Cleansing Data Warehouse

Data Mart Data Mart

Enterprise Nervous System Guided Inbound Customer Interactions Interaction Multichannel Multifunction Customer Interaction Management Inbound/Outbound

EventTriggered Responses

Predictive Analysis

Historic Analysis Customer Insight

Market Analysis

Multichannel Campaign Management Outbound

A Hierarchy of CRM Performance Metrics

Bottom-line results

Shareholders

Corporate
Executives

Customer Strategic Operational and Process Infrastructure Input Level

Feedback on strategy Effectiveness

Management Employees

Efficiency

Stakeholder

Focus

Recommendations
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Vision: Define CRM, get a leader, answer why?, set the core value proposition. Strategy: Develop the customer base as an asset, Answer how?, set objectives. Customer Experience: Design, then constantly refine based on customer feedback. Organizational Collaboration: Change organizational structures, incentives, skills and the enterprise culture to deliver the customer experience. Processes: Re-engineer to meet customers' expectations, provide competitive differentiation and contribute to the customer experience.

Recommendations (contd)
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Information: Treat customer information as an asset and a "blood supply," focus on tighter integration between operational and analytical systems. Technology: Outline your CRM architecture first, consider CRM as one big integration exercise, assess the best style of CRM application for your enterprise. Metrics: Set CRM metrics at multiple levels. Consider this the most difficult block: Without performance management, a CRM strategy will fail.

The Eight Building Blocks of CRM

1. CRM Vision: Leadership, Market Position, Value Proposition 2. CRM Strategy: Objectives, Segments, Effective Interaction 3. Valued Customer Experience 4. Organizational Collaboration Culture and Structure Understand Requirements Customer Understanding Monitor Expectations People: Skills, Satisfaction vs. Competencies Competition Incentives and Compensation Collaboration and Feedback Employee Communications Partners and Suppliers 5. CRM Processes: Customer Life Cycle, Knowledge Management 6. CRM Information: Data, Analysis, One View Across Channels 7. CRM Technology: Applications, Architecture, Infrastructure 8. CRM Metrics: Value, Retention, Satisfaction, Loyalty,Cost to Serve

The Eight Building Blocks of CRM: A Framework for Success

John Radcliffe

These materials can be reproduced only with Gartners official approval. Such approvals may be requested via e-mail -- quote.requests@gartner.com.