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Customer Relationship Management (CRM)

Customer Relationship Management (CRM). Nancy Prives Julien Couilloud Eric Meyer Jon Stegen April 22, 2004. Agenda. Introduction of CRM Discussion of CRM Components Critical Success Factors for CRM Implementation of CRM Case Study of Nexstar Conclusion. What is CRM?.

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Customer Relationship Management (CRM)

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  1. Customer Relationship Management(CRM) Nancy Prives Julien Couilloud Eric Meyer Jon Stegen April 22, 2004

  2. Agenda Introduction of CRM Discussion of CRM Components Critical Success Factors for CRM Implementation of CRM Case Study of Nexstar Conclusion

  3. What is CRM? “CRM is…a long-term commitment, best when initiated in a well-defined scope and with clear objectives, and then slowly grown and expanded as successes and failures are realized.” Kay Mandati, Relationship Manager for BMW North America McKim, Bob, “The differences between CRM and database marketing” Journal of Database Management, Vol. 9, 4, July 2002, pp. 371 – 375.

  4. What is CRM? “CRM is not a tool or a technology; it is a business practice that utilizes technology and requires organizational evolution.” Joe Rapolla, CRM Manager for Venvidi Universal Music Group McKim, Bob, “The differences between CRM and database marketing” Journal of Database Management, Vol. 9, 4, July 2002, pp. 371 – 375.

  5. CRM Defined “CRM, or Customer Relationship Management, is a company-wide business strategy designed to reduce costs and increase profitability by solidifying customer loyalty. True CRM brings together information from all data sources within an organization (and where appropriate, from outside the organization) to give one, holistic view of each customer in real time.” “What is CRM?” from www.destinationcrm.com/articles/default.asp?ArticleID=1747 , viewed 3/11/04

  6. What CRM is Not • A Database Marketing System • A Software Package • A Pure Marketing Strategy • A Pure IT Strategy “What is CRM?” from www.destinationcrm.com/articles/default.asp?ArticleID=1747 , viewed 3/11/04 and Howlett, Dennis, and Keith Rodgers, “What is CRM?” from http://www.destinationcrm.com/articles/default.asp?ArticleID=3293 , viewed 3/11/04

  7. Why CRM? • Higher costs associated with getting new customers • Five to one • Industrial sales: 8-10 calls vs. 2-3 calls • Marketing for Web customers: $34 vs. $6.80 • Better to retain customers & build loyalty • Up-sell • Cross sell Howlett, Dennis, and Keith Rodgers, “What is CRM?” from http://www.destinationcrm.com/articles/default.asp?ArticleID=3293 , viewed 3/11/04 and Byun, Jongbok and Paul Gray, “Customer Relationship Management” from http://crm.ittoolbox.com/documents/document.asp?i=2629 , viewed 3/11/04

  8. Size of CRM Market

  9. Size of CRM Market • Hewson Group reported $8.8 billion in 2003 • Aberdeen Group projects $17.7 billion in 2006 • Key point to remember: market is in the billions http://www.crm2day.com/library/EpZZEEuEluLDzGsHRc.php , viewed4/10/04 and http://www.destinationcrm.com/articles/default.asp?ArticleID=3293 , viewed 4/15/04

  10. CRM Vendors • Siebel Systems • PeopleSoft • Oracle • Nortel Networks (Clarify) • SalesLogix • E.piphany http://www.crm2day.com/library/EpZZEEuEluLDzGsHRc.php , viewed 4/10/04 and http://www.destinationcrm.com/articles/default.asp?ArticleID=3293 , viewed 4/15/04

  11. Dealing with Channels

  12. End to End CRM Infrastructure Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002

  13. Scope of CRM • CRM modules: • Sales Force Automation • Marketing Automation • Call center • Analytics/Datamining

  14. Sales Force Automation • Contact management • Name, address, phone number … • Organization charts, behavior characteristics • Account Management • Multiple links to other information • Opportunity Management • Specific opportunities • Sales rep working on case • Assigned revenue credit • Potential for closing • Competition • …

  15. Cont’d • Example: Contact Management Saleslogix.com

  16. Cont’d • Sales forecasting Saleslogix.com

  17. SFA Benefits • $$ • Increase revenue/reduce costs • Customer retention • Through relationship • Synchronization • Up to date info everywhere

  18. Marketing Automation (EMA) • e-version of marketing campaigns • Execute • Monitor • Refine

  19. Traditional Marketing Campaign Greenberg, Paul, CRM at the speed of light, Mc Graw-Hill, California 2001.

  20. EMA Greenberg, Paul, CRM at the speed of light, Mc Graw-Hill, California 2001.

  21. EMA Benefits • Information gathering, extraction, and analysis reduced • Refinement of campaign in midstream • Free up labor

  22. Call Centers • Customer Service Counter • Helpdesk • Call Center

  23. Example Greenberg, Paul, CRM at the speed of light, Mc Graw-Hill, California 2001.

  24. Functionalities • Automated Intelligent Call Routing • Identify who is calling and why • Use caller history • Route the caller • Workforce Management Software • Call volume forecast • Agent scheduling

  25. Call Center Benefits • Service Consistency • Call-scripting • Monitoring • Feedback on service • CSR efficiency • Cost cutting • Time spent reduced

  26. Analytics/Data mining How to get a single version of the Customer Truth ? Greenberg, Paul, CRM at the speed of light, Mc Graw-Hill, California 2001.

  27. Need for integration • Risk of CRM “stovepipes” • Ex: Client receives cross sell promo after complain • Motivating customer to come back? • Preferred products • Consumption rate • Values • Lifestyle • Life stage • Behavior outside your company • Impossible with information “snapshots”! • Build central data warehouse Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002

  28. Need for analysis • Don’t let your data seat in a data warehouse! • Use software solution for analysis Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002.

  29. Implementation rate • 42% of CRM licenses not installed • Discounts • Implementation (5 times cost of license) • Maintenance costs (1/4 of license cost/seat) • Inadequate resources • Martin Schneider, Customer Relationship Management, 2004

  30. Success rate • 5 years ago • High failure rate (70% Tafti, 2002) • Reason: “Boil the ocean!” + Techno first • Today • Most projects see payback <1year • Secret? • Better methodology • Smaller projects and reasonable objective Martin Schneider, Customer Relationship Management, 2004 Tafti, 2004

  31. Critical Success Factors • Planning & setting the direction • CRM-focused vision • Reasonable & specific expectations • Reasonable & specific time table • Explain importance & relevance of CRM • Need support & involvement of management • Need support & involvement of staff Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002. Gordon, Ian. “Best Practices: Customer Relationship Management” Ivey Business Journal Online, 2002, pp. 1-6. Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship Technologies, Prentice Hall PTR, Upper Saddle River, 2001.

  32. Critical Success Factors • Planning & setting the direction (Cont.) • Resource allocation • Align individual goals with CRM goals Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002. Gordon, Ian. “Best Practices: Customer Relationship Management” Ivey Business Journal Online, 2002, pp. 1-6. Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship Technologies, Prentice Hall PTR, Upper Saddle River, 2001.

  33. Critical Success Factors • Service & communication management • High quality service for customers • High quality support for employees • Communication integration Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002. Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship Technologies, Prentice Hall PTR, Upper Saddle River, 2001.

  34. Critical Success Factors • Technology relationship strategies • Ensure proper integration of technology & business strategies • On-going technology training Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002. Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship Technologies, Prentice Hall PTR, Upper Saddle River, 2001.

  35. Critical Success Factors • Personnel development & enterprise management • Value your employees • Goals for improving each person’s productivity • Encourage cooperation Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002. Lacity, Mary, Management of IT Projects,” 2003. Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship Technologies, Prentice Hall PTR, Upper Saddle River, 2001.

  36. Critical Success Factors • Information protection • Customer info is an asset • Rules & policies • Accountability • Customer privacy Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002. Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship Technologies, Prentice Hall PTR, Upper Saddle River, 2001.

  37. Critical Success Factors • Resource investments & application strategies • Portfolio of technology investments • Information into knowledge for a sustainable competitive advantage • Process, not a project • Ongoing evaluation Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002. Gordon, Ian. “Best Practices: Customer Relationship Management” Ivey Business Journal Online, 2002, pp. 1-6. Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship Technologies, Prentice Hall PTR, Upper Saddle River, 2001.

  38. Critical Success Factors • Contribution • Rewards & explanations • Various forms of measurement • Rewards improve customer service Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002. Gordon, Ian. “Best Practices: Customer Relationship Management” Ivey Business Journal Online, 2002, pp. 1-6. Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship Technologies, Prentice Hall PTR, Upper Saddle River, 2001.

  39. Implementation • Adequate time & resources for implementation • Implementation in small steps • Be flexible Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002. Gordon, Ian. “Best Practices: Customer Relationship Management” Ivey Business Journal Online, 2002, pp. 1-6. Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship Technologies, Prentice Hall PTR, Upper Saddle River, 2001.

  40. Customer Focus • Strategies focus on end-customer relationship • Sell what the customer wants • Measure customer attitudes • Keep track of competitors Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002. Gordon, Ian. “Best Practices: Customer Relationship Management” Ivey Business Journal Online, 2002, pp. 1-6. Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship Technologies, Prentice Hall PTR, Upper Saddle River, 2001.

  41. Best practices Summarized • High Level of Communication • Management Support • Strategy Drives Technology • Implement Incrementally • Hire outside experts if necessary • Involve Knowledgeable Users • Customer-Oriented Focus Dyche, Jill, The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002. Gordon, Ian. “Best Practices: Customer Relationship Management” Ivey Business Journal Online, 2002, pp. 1-6. Lacity, Mary, Management of IT Projects,” 2003. Swift, Ronald, Accelerating Customer Relationships: Using CRM and Relationship Technologies, Prentice Hall PTR, Upper Saddle River, 2001.

  42. A Closer Look at CRM in the Financial Services Industry

  43. Company Background • Founded on June 29, 1999 as a collaboration of a experienced mortgage management team and the investment firm, Kohlberg Kravis Roberts & Co. • Management Team with over 100 years of combined industry experience • Corporate Operations begins in 2000 as the company positions itself as a direct lender and mortgage processing BPO Source: www1.nexstar.com/servlet/nexstar.PressReleases, viewed 3/1/04

  44. Nexstar’s Business Model • Mortgage Processing Outsourcer: Balanced portfolio of large national lenders, medium-sized regional lenders, and small credit unions and community banks • BPO is largest portion of business (over 90%) • Direct Lender: Similar to traditional mortgage companies; Not the strategic focus (demand-driven)

  45. Nexstar’s Products / Services • Offers a variety of mortgage products to clients and direct consumers (Conventional, Jumbo, FHA, Fixed rate mortgages, Adjustable Rate Mortgages, Flex 97) • Customer service levels must higher than other lenders for Nexstar’s Business Model to succeed • Workflow managed in three distinct work channels: • Channel One: Lender Clients and Nexstar Direct • Channel Two: Washington Mutual • Channel Three: Chase Manhattan

  46. The IT Environment at Nexstar

  47. The IT environment at Nexstar • In-house IT staff (St. Louis, MO) • Approximately 15 full time IT staff • In-house functions includes: help desk, new workstation setup, strategic IT (mostly in web-based technologies), Eotek facilitation • Eotek IT staff (Evergreen, CO) • Over 30 full time IT staff • Web-development and web-methods technology • Implement new web-based rollouts • Other software maintenance (Siebel, Loanquest)

  48. Nexstar / Eotek Relationship • Upon incorporation, Eotek chosen as an independent consulting firm on web-based technologies • Nexstar purchases Eotek on August 26, 1999 • Currently, Eotek develops and manages 100% of the Nexstar’s web-based technology, as well as co-managing many of its other IT software, such as Siebel and Loanquest. Source: www1.nexstar.com/servlet/nexstar.PressReleases, viewed 3/1/04

  49. CRM in the Mortgage Industry • Volatility of the market hinders large investments in CRM • In-house CRM initiatives are rare; most use large CRM vendors and ASPs • Most market participants look at CRM as a technology, not as a strategy or process

  50. CRM at Nexstar • Mr. Christopher Hunter • Business Analyst • Business Process Manager • Technology Team Analyst • Professional Experience • Bachelor’s Degree in Computer Science • Business Analyst at Oracle CRM • Independent Consultant for Siebel

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