Scott Hopper Monica Brooks Jessica Jetton

Customer Relationship Management (CRM)

Scott HopperMonica BrooksJessica 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

“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 12th, 2004.

What Is CRM?

History

• Mass Marketing– All customers treated as if they had same

needs and preferences

• Target Marketing– Focused on market segments

• Relationship Marketing– Each customer’s individual needs are

targeted by building relationships

Source:


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?

EnterprisesEnterprises

RevenuesRevenues

CostsCosts

CustomersCustomers

SatisfactionSatisfaction

LoyaltyLoyalty

VolumeVolume

EnterprisesEnterprises

RevenuesRevenues

CostsCosts

RevenuesRevenues

CostsCosts

CustomersCustomers


LoyaltyLoyalty

VolumeVolume


LoyaltyLoyalty

VolumeVolume

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.

“One survey of more than 1,500 companies by The Data Warehousing Institute (TDWI) in 2000found 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:


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

Who Uses CRM?

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 after-

market 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

Increase53%

Decrease16%

Stay the Same31%

IncreaseDecreaseStay the Same

Source:

Aberdeen Group, “CRM Spending and Satisfaction Report”, February 2003, pages 1-18.

Companies surveyed by Aberdeen Group in January 2003

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

$10,000

$11,000

$12,000

$13,000

$14,000

$15,000

$16,000

$17,000

$18,000

US

$ m

illi

on

2001 2002 2003 2004 2005 2006

Source:

Aberdeen Group, “Worldwide CRM Spending”, Market Analysis Service, June 2003, pages 1-57.

CRM Spending by Region

$0$1,000

$2,000$3,000

$4,000

$5,000$6,000

$7,000

$8,000$9,000

$10,000

US

$ m

illi

on

2001 2002 2003 2004 2005 2006

NorthAmericaEurope

LatinAmericaAsia/PacificRimMiddleEast/Africa

Source:


US CRM Spending by Industry

$0

$500

$1,000

$1,500

$2,000

$2,500

US

$ m

illi

on

2001 2002 2003 2004 2005 2006

Manufacturing

FinancialServices

Retail andDistribution

BusinessServices

Governmentand Education

Source:


Reasons for CRM’s 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%

Source:


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 world’s 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

• 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

SAP

• 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

Oracle

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.

2.2%

1.6%1.4% 1.4% 1.3%

1.2%1.0%

0.6%

2.8%

0.0%

1.0%

2.0%

3.0%

4.0%

1992 1993 1994 1995 1996 1997 1998 1999 2000

Percent Response to Credit Card Direct Mail Offers

Source: BAI Global, Inc., Mail Monitor, $Q’02, Synovate.

Annual Credit Card Acquisition Mail Volume (in Billions)

Difficult to Acquire New Customers

• Top Management Commitment• Project Teams with representatives from all

departments• Project Champion• Company data must be shared enterprise-wide• Vision and communication

Keys to Success

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

“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 CRM’s Pitfalls” Computerworld, Feb 11, 2002; 36, 7; ABI/INFORM, page 30.

Success and Failure Rate of CRM Projects

CRM In Action: Case Studies

United Parcel Service (UPS)

UPS

• World’s 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

http://www.ups.com/content/us/en/index.jsx

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

Source:


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. E-

Commerce, 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 person’s time and keep the focus on accounts that need attention

Source:



• Calendar– Automatically

integrated with activities

– Immediately populates events such as adding and/or updating activities, eliminating dual entry

Source:


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

Source:



• Queries– Query Assistant allows

for filtering data quickly and easily

– Provides capabilities for pre-defined queries and personalized queries

Source:



• 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 person’s laptop and receive up-to-date information from the UPS mainframe

Source:



• 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

Source:


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

YES NO

Business Solutions Drive Technology Selection XSecure Top Management ACTIVE Support XInvolve Knowledgeable Users XBuy-in Outside Expertise to Transfer Learning XImplement Incrementally XDon’t Judge Success Solely Based on Time to Budget

X

Customer-Oriented Focus 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,” Harvard Business School Case #9-102-043. March 25, 2002.

• 54% of Net income

• 1300 branches• 4800 ABMs• 1.4 million

online customers

• 300 offices in 30 countries

• Greatest opportunity for improvement

Insurance8%

Investment15%

Capital Markets

17% Global Services

6%

Banking54%

Banking

Insurance

Investment

Capital Markets

Global Services


RBC Banking

Change in the Industry

• Pre-1990’s 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 FindingCUSTOMER 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


Importance to Client

Financial Institutions Proficiency at Delivering

HIGH

LOW HIGH

Mutual benefits Reciprocity Trust Reassurance Comfort Understanding Convenient Hours ATM access 1-800 Number Internet Banking Short Lines


1997 Study Results

• 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


Focus on Customer: CRM

• VP of Marketing and Info Management- Richard McLaughlin-Responsible for CRM infrastructure, info management, alliance banking, internet banking, and privacy


Reorganization Around CRM

Customer Segments

3 Primary Customer Segments & 9 Total Segments A. Key markets:

1. Youth2. Nexus 3. Small business 4. Farming and lifestyle agriculture

B. Growth markets: 5. Building6. Business7. Agriculture

C. Prime markets: 8. Accumulating9. Preserving

Lockie, Anne, “RBC Banking: The Customer Experience,” powerpoint slides at rbc.com

• Product– Structured to sell a

specific product to everyone

– Multiple people selling to same customer

• Segment– Structured to satisfy all

needs with all products- Employees concerned

with meeting needs not selling a specific product

CUSTOMERS

SEGMENT


PRODUCTS

C B D A

E

CUSTOMER

Product & Segment Management

1997 1998 1999 2000

McLaughlin hired as VP of Marketing and Info Management

Software selection to facilitate CRM

1997 study creates a platform for CRM

CRM software and practices continue to be modified based on internal & external customer feedback

Info changes focus to profitable/ potentially profitable customers


Timeline: CRM Capabilities

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


$2,898

$2,435$2,208

$1,725$1,772

1998 1999 2000 2002 2003

Source:www.rbc.com/investorrelations/ar_03.html

Net Income by Year(in millions)

RBC Financial Group Net Income

Creating Efficiencies

Better Customer IdentificationBefore CRM: “A”, “B”, or “C” customers

Vague and not beneficial

After CRM: Customers can both be profitable and have

the potential to be profitable


Centrally Generated Sales LeadsBefore CRM:

Every branch had a different way of generating sales leads Low quality, not consistent

After CRM:Generated centrallyAccessible to everyone Reminder to call and offer products


More Efficiencies

Future Plans for CRM

Preference and Choice: Use info about customer’s preferences to design

packages of services at certain points in their life


Life Stages and Segments

Getting Started Building Accumulating Preserving

Graduation

Saving to buy a home

Saving for Retirement

Buying a home

Retirement

Transfer of Wealth/Succession Planning Planning

KEY GROWTH PRIME

Source:Sutherland, Anne, “How RBC is taking its CRM strategy to the next level to accelerate profitable revenue growth,” presented to 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 center-

through process and implementation

• Manage change with communication and vision

• Integrate CRM into business strategy

• Continually reevaluate, test, learn, and improve strategies

Scott Hopper Monica Brooks Jessica Jetton

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