CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

1. CUSTOMER RELATIONSHIPMANAGEMENT (CRM) Holly Pund Jamia Seifert Nakia Sharp Olga Skiridova

2. “CRM is the process of predicting customer behavior and selecting actions to influence that behavior to benefit the company usually leveraging on information technology and database-related tools.” Koh Hian Chye & Chan Kin Leong Gerry, “Data mining and customer relationship marketing in the banking industry.” Singapore Management Review, Vol. 24, Issue 2, 2002, pp. 1-27.

3. Benefits of CRM • Provide better customer service • Make call centers more efficient • Cross sell products more effectively • Help sales staff close deals faster • Simplify marketing and sales processes • Discover new customers • Increase customer revenues It costs 10 times more to get a new customer than it does to keep an existing one. Moreover, evidence suggests that companies focused on their customers are achieving higher growth rates than competitors who aren't. “What is CRM?” Ehttp://www.cio.com/research/crm/edit/crmabc.html. “Keeping Customers is Smart and Profitable” http://www.businessweeek.com/adsections/care/relationship/crm_keeping.htm. Viewed April 12, 2003 Chettayar, Krishna “Using customer information effectively.” Financial Executive, Morristown, Vol. 18, May 2002, pp.42-43.

4. 5 Elements Required to Implement CRM • Strategy Channel Marketing Branding Advertising Pricing • Segmentation • Technology • Process • Organization Brown, Stanley A. “Customer Relationship Management: A Strategic Imperative in the World of e-Business”. Toronto, New York: John Wiley & Sons, 2000.

5. Defining Needs of CRM • Define customer strategy • Create a channel and product strategy • Understand the importance of an integrated infrastructure strategy “The key is for the CRM effort to move beyond sales, marketing, customer services and assisting customers to include operations and the "Office of the CEO" or strategic planning. It's critical, for example, to integrate sales-force automation with demand planning efforts that then feed supply-chain systems.” - Larry Yu Brown, Stanley A. “Customer Relationship Management: A Strategic Imperative in the World of e-Business”. Toronto, New York: John Wiley & Sons, 2000. Yu, Larry. “Successful customer-relationship management.” MIT Sloan Management Review, Cambridge, Vol. 42, Issue 4, 2001, pp.18-19.

6. Corporate Structure Before CRM “What is CRM? A White Paper by TBC Reasearch.” IT Toollbox http://crm.ittoolbox.com/browse.asp?c=CRMPeerPublishing&r=http%3A%2F%2Fwww%2Esabresys%2Ecom%2Fpdf%2FWhat%5Fis%5FCRM%2Epdf. Viewed April 18, 2003

7. Corporate Structure After CRM “What is CRM? A White Paper by TBC Reasearch.” IT Toollbox http://crm.ittoolbox.com/browse.asp?c=CRMPeerPublishing&r=http%3A%2F%2Fwww%2Esabresys%2Ecom%2Fpdf%2FWhat%5Fis%5FCRM%2Epdf. Viewed April 18, 2003

8. Founded in 1993 2002 Revenue: Over $1.6B Industry-specific best practices, CRM applications, and business processes Founded in 1998 2002 Revenue: Over $2.3B Customer care and billing software and services that add value to the relationships between clients and customers Siebel web page. http://www.siebel.com/about/index.shtm. Convergys web page.http://www.convergys.com/company_overview.html Viewed April 22, 2003

9. Founded in 1977 • 2001 Revenue: Over $10.8B • Internet-enabled enterprise software • New software license sales weredown 23% in 2002 “Oracle is the first software company to develop and deploy 100 percent Internet-enabled enterprise software across its entire product line: database, server, enterprise business applications, and application development and decision support tools.” - Oracle 2001 Annual Report Oracle Annual Report, http://www.oracle.com/corporate/annual_report/2001/index.html?intro.html. Viewed April 22, 2003. Seewald, Nancy & D'Amico, Esther. “CRM and SCM vendors post mixed results.” Chemical Week, New York, New York, October 2002, Vol. 164, Issue 43, pp. 23-24.

10. So What is the Cost of CRM? • Despite dropping by 5.4% in 2002, the CRM market is expected to expand from a projected $42.8 billion in 2002 to $73.8 billion by 2007. -Forrester Research • CRM is expected to grow more than $20 billion by 2004 -AMR Research Siebel web page, http://www.siebel.com/about/index.shtm. Veiwed April 22, 2003 “CRM Overview” http://www.ittoolbox.com/help/crmoverview.asp. Viewed March 20, 2003 “Customer Relationship Management” http://advisor.aol.com/what_you_can_do_online/goals/main.adp?article=crm. Viewed April 12, 2003Anonymous, “CRM bounces back.” Chicago, Illinois: Marketing Management, Vol. 11, Issue 5, Sept/Oct 2002, p. 4. Patron, Mark, “If database marketing was so good, why is CRM so bad?”Journal of Database Marketing, London, Vol. 10, Issue 2, December 2002, pp. 102-104.

11. So What is the Cost of CRM? • Spending on CRM applications and services, which totaled $23 billion in 2000, are projected to grow at a compound annual growth rate of 27% and exceed $75 billion in 2005. • CRM services revenue will increase 15% in 2002. The market is forecast to nearly double and reach $47B by 2006. • Worldwide, organizations spent nearly $25 billion on CRM software in 2002 Of that total, only $3.7 billion, or about 15%, was spent on packaged CRM applications. -Gartner Group Almquist, Eric & Carla, Heaton. “Making CRM make money.” Marketing Management, Vol. 11, Issue 3, May/Jun 2002, Chicago Illinois, pp. 16-21. Anonymous, “CRM bounces back.” Chicago, Illinois: Marketing Management, Vol. 11, Issue 5, Sept/Oct 2002, p. 4.

12. CRM Success & Failure Rates • 45% of the CRM projects are successes that are producing definite paybacks • 35% are likely to fail • 20% are generating some ROI but not in a timely fashion Panker, Jon, “Research finds CRM failure rate lower than widely reported” News Editor12 Dec 2002, SearchCRM.com http://searchcrm.techtarget.com/originalContent/0,289142,sid11_gci868891,00.html. Viewed April 22, 2003

14. Overview • Travelocity.com was launched in 1996 as part of Sabre Holdings On April 11, 2002, Travelocity became a wholly owned company of Sabre Holdings. For 2002: • Travelocity’s revenue was $308 million, an increase of 2.2 percent compared to $302 million for 2001 • Travelocity’s gross bookings reached $3.5 billion, an increase of 11.8 percent compared to $3.1 billion for 2001 • Since Travelocity is no longer a publicly traded company, information concerning IT’s budget was not available http://www.sabre.com/, viewed March 23 2003

15. Overview World’s leading travel internet site providing consumers with reservation and information access: • 700 airlines • 55,000 hotels • 50 car rental companies • 6,500 cruise and vacation packages Over 35 million members 1,000 customer service representatives Web site in 7 languages across 4 continents TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

16. Travelocity’s Business Objective “Develop long-term profitable relationships by providing exceptional service and highly relevant Travel offerings:” • Increase customer conversion • Increase customer retention • Increase revenue per member TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

17. CRM Focus at Travelocity Develop a “single view of the customer” • The most important focus of the CRM project Travelocity chose Teradata, a division of NCR, to assist with the CRM initiative “To achieve this vision requires having a single view of the customer - from when they begin looking to when they take their trip, and afterward. This requires segmenting customers by type (business, leisure, college, bereavement, etc.)” - Mamie Millard, Senior VP of Technology at Travelocity http://www.sabre.com/, viewed March 23 2003

18. Travelocity’s CRM Conversion Six months conversion – The maximum recommended time • Three people dedicated • Mapped a middle or metadata layer into their data warehouse for the CRM equation • Common problem of underestimated the amount of time required to cleanse the data during transfer • Duplicate records • The big OOPS! Williams C.C. “Just the Ticket: Travelocity.com books Teradata for virtually instant answers.”http://www.teradatamagazine.com/articles/archive/2Q_2001/just_the_ticket.htm, July 5th, 2001. Viewed March 23, 2003 Woodcock, Neil & Starkey, Michael. “’I wouldn't start from here': Finding a way in CRM projects.” Journal of Database Marketing, London, Vol. 9, Issue 1, 2001, pp.61-74.

19. Seven Steps to Implementation Important: • Selection of a specific business process that can be measured • The use of a system that did not require a re-build along the way Step 1: Created a team • Consisted of members from Travelocity and Teradata • Travelocity (from Marketing & IT) • Data warehouse developers • Marketing Director • Marketing Analysis • Marketing Managers • Teradata • Data Modeler • CRM Developer • Project Manager “The private sector’s CRM-ROI formula can work in agencies too.”http://www.gcn.com/research_results/crmgmt4.html Friday March 28, 2003. Viewed March 23, 2003

20. Seven Steps to Implementation Step 2: Prepared the data warehouse • Created new logical and physical data model (customer centric) • Focused on data quality • Added demographic data Step 3: Identified unique members • Customers with multiple accounts are now identified as one unique customer TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

21. Seven Steps to Implementation Step 4: Developed Customer Segments • Travelocity Member Groups: • New Members • Active Lookers • Short-time Inactive Members • 1st Time Booker • 2 + Booker • Best Customers • Long Term Inactive Members TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

22. Seven Steps to Implementation Step 5: Activated Channels • Aggregated data from all customer touch-points: • Web interactions • Inbound email • Call center interactions • Offline bookings • Activated customer touch-points to drive service levels and generate sales: • Targeted offers on the web site • Outbound targeted email • Cross sell/upsell opportunities at customer service TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

23. Seven Steps to Implementation Step 6: Implemented CRM Tool • Utilized Teradata’s CRM solution for campaign management: • New member conversion • Post booking cross sell • Pre-trip “Bon Voyage” message • Frequent looker • Toll-free reservation line message Step 7: Analyze Campaigns • Analysis and reporting processes are in place to measure campaign performance TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

24. Delivering Incremental Value CRM campaigns will be added incrementally, then measured for effectiveness Key drivers are: • Customer segment needs • Merchandising plan • Revenue management requirements Presently creating a position in Marketing: • Manage CRM initiatives • Link the IT and Marketing groups TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

25. Travelocity’s Business & IT Partnership Let each area focus on their expertise Data Warehouse group and Marketing partnered on major projects: • Selection of Teradata • Selection of Cognos tools for DB management • CRM initialization The project budget and timeline was not available TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

26. The Effects of CRM at Travelocity 500,000 automated communications sent monthly New member welcome/conversion series • Post booking cross sell • Bon voyage pre-trip • 20,000,000 targeted promotional emails sent monthly • 8,000,000 personalized newsletters sent weekly Travelocity’s ROI for the CRM project • The CRM efforts contribute a minimum of $2 million per month to Travelocity’s revenues TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

27. CRM Lessons Learned Build the foundation first, then add the bells and whistles Set scope of project and stick to it Dedicate resources to the project Set internal expectations and provide frequent updates CRM projects take more time than initially anticipated TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

28. CRM Lessons Learned CRM is never “finished” Focus on data quality first Determine agreement on service levels between different groups Talk to other companies utilizing CRM Williams C.C. “Just the Ticket: Travelocity.com books Teradata for virtually instant answers.”http://www.teradatamagazine.com/articles/archive/2Q_2001/just_the_ticket.htm, July 5th, 2001. Viewed March 23, 2003

29. Six Key Success Factors Corporate Buy-in Travelocity’s “CRM had significant senior management support, a factor agency IT and business managers also know to be critical to any e-commerce effort.” - Caroline Smith, Director of Business Intelligence - Travelocity A robust data warehouse Obtain the “single view of the customer” TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

30. Six Key Success Factors Flexible and scalable CRM tools • Define event and wait for it to occur • Event triggers a reaction • Record event in data warehouse Employ good communication channels Ongoing analysis and improvement • Establish control groups • Continuously monitor campaign performance • Maintain contact history • Develop and apply data modeling to improve customer targeting TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

31. Greatest CRM Challenge • Constantly implementing new features and functionality into the Web site • New sources of data • Web site traffic keeps increasing • Creates greater volumes of data Williams C.C. “Just the Ticket: Travelocity.com books Teradata for virtually instant answers.”http://www.teradatamagazine.com/articles/archive/2Q_2001/just_the_ticket.htm, July 5th, 2001. Viewed March 23, 2003

32. Best Practices & Leadership Award - 2002 TDWI determent Travelocity’s CRM initiatives as innovative and unique because: Travelocity is able to perform analyses and execute automated, personalized marketing campaigns. “Before their CRM initiative, customer information was available to only a few end users and that information was scattered. Now, all information for all travel categories—air, car, hotel, and cruise—is in one location and is available to anyone with a need to view the information.” - TDWI recognition statement “Best Practices and Leadership in Data Warehousing Award Winners 2002.” January 2003 http://www.dw-institute.com/research/display.asp?id=6511. Viewed March 23, 2003

34. Oracle Company Background • Founded 26 years ago by Larry Ellison, Bob Miner, and Ed Oates • First software company to develop and deploy 100% internet able enterprise software • The World leader in supplier software for information management • The World second largest independent software company • Producer of the World’s greatest database-Oracle 9i http://www.oracle.com/corporate. Viewed February 2, 2003

35. Oracle Company Profile • Headquarters Location: Redford Shores, California • Employees: 40,000+ • Revenues for 2001: $10.8 billion http://www.oracle.com/corporate. Viewed February 2, 2003

36. Oracle Company Areas of CRM • Marketing • Sales • Service • Contracts http://www.oracle.com/applications/customermgmt/index.html?theme.html. Viewed February 5, 2003

37. Oracle Marketing Solutions • Problem: Company makes marketing decisions by instinct rather than by solid facts from data. • Solution: Oracle offers Oracle Marketing. A system that automates the entire marketing function and process. • Products: Oracle Marketing Oracle Trade Management http://www.oracle.com/applications/customermgmt/index.html?theme.html. Viewed February 8, 2003

38. Oracle Sales Solutions Problem: Ill preparation of a company’s sales staff leading to its inability to hit sales targets, reduce costs, and reduce sales cycles. Solution: Oracle provides the company with an automated business process for all sales and customer interactions. Products: Telesales Sales Online Sales Offline Incentive Compensation iStore Quoting Configuration iPayment http://www.oracle.com/applications/customermgmt/index.html?theme.html. Viewed February 23, 2003

39. Oracle Service Solutions Problem: A company’s inefficiency due to gaps in communication between service, field service and maintenance. Solution: Oracle’s automated and centralized process of tracking requests and dispatching. Products: iSupport Mobile Field Service Advanced Scheduler Field Service Wireless Option for Service Depot Repair http://www.oracle.com/applications/customermgmt/index.html?theme.html. Viewed February 23, 2003

40. Oracle Contract Solutions • Problem: A company’s use of manual contracts leads to omissions of important information which later results in a loss of revenue. • Solution: Oracle’s complete automation of multiple style contracts • Products: Service Contracts Project Contracts Lease Management http://www.oracle.com/applications/customermgmt/index.html?theme.html. Viewed March 13, 2003

41. The Oracle Strategy of Implementing CRM • Oracle’s focus of implementing CRM to their existing customers database • Single database instance • Suite of integrated applications • Software configuration, not customization http://www.oracle.com/applications/customermgmt/index.html?theme.html. Viewed March 13, 2003

42. Oracle Case Studies Case Study #1 McData Corporation

43. McData Corporation McDATA Corporation was founded in 1982. McDATA (Nasdaq: MCDT/MCDTA) is a global leader in open storage networking solutions and provides high performance enterprise directors and Storage Area Networks (SANs). The company manufactures and markets high-performance switching solutions — Fibre Channel for open systems environments and ESCON for IBM data centers. http://www.mcdata.com/about/profile/index.html. Viewed March 5, 203

44. Company Profile • Headquarters Location: Broomfield, CO • Industry: High technology • Annual income: $101 million to $500 million • Employees: 501 to 1999 • CRM Outsourcing Company: Oracle http://www.oracle.com/customers/profiles/PROFILE3441.HTML.. Viewed March 5, 2003

45. Discrete Manufacturing eMail Center Incentive Compensation Mobile Field Service iLearning TeleService Sales Online Depot Repair Oracle Support iSupplier Portal Oracle Products & Services http://www.oracle.com/customers/profiles/PROFILE3441.HTML. Viewed March 5, 2003

46. Project Goals for CRM • Implement a scaleable solution to support growth • Create a 360 degree view of the customer • Streamline processes • Lower total cost of ownership http://www.oracle.com/customers/profiles/PROFILE3441.HTML. Viewed March 5, 2003Crafton, Thomas W. “Do you really know your customers?” Strategic Finance, Vol. 84, Issue 4, October 2002, pp. 55-57.

47. Outcome from CRM Implementation • Avoided $5 million in cost in one year and saved $1 million • Reduced days of sales outstanding from 80 days to 50 days • Reduced quarterly close days from 21 days to 4 days • Inventory was reduced from $68 million to $43 million • Product quality was improved by 22% • On-time shipments were increased from 79% to 97% • Time necessary to create reports reduced by 95% http://www.oracle.com/customers/profiles/PROFILE3441.HTML. Viewed March 5, 2003

48. Oracle Case Study Case Study #2 Gevity HR

49. Gevity HR • As the nation's leading provider of outsourced HR solutions, Gevity HR helps businesses: • Find the right people • Manage the paperwork • Develop and manage your people • Protect your business • Retain your best employees    • Gevity HR services are provided through specific offerings, such as recruiting assistance, training, benefits administration, payroll processing and related paperwork management, and legal compliance. www.gevityhr.com. Viewed March 10, 2003

50. Customer Profile Headquarters Location: Bradenton, FL Industry: Professional Services Annual Income: More than $1.001 Billion Employees: 501 to 1999 http://www.oracle.com/customers/profiles/PROFILE3389.HTML. Viewed March 10, 2003