Customer Relationship Management (CRM) Made Simple

The CRM package has landed?some would say crash-landed. A Bain & Co. study in June showed that 19 percent of customer relationship management users decided to pull the plug on their investments rather than pour money into them. Two out of five respondents (41 percent) said their CRM projects are either "experiencing

difficulty" or are "potential flops," according to a Data Warehousing Institute survey released in May. These points echo a warning from experts such as Berkeley Enterprise Partners that, in spite of their popularity, most CRM projects don’t result in measurable benefits (see "The Truth About CRM," May 1, 2001).

But there is hope. A number of companies are getting CRM right. They are treating the applications as more than a new set of sales-force automation tools or a new call center system. They’re focused intently on the returns: increasing the chances their customers will remain repeat buyers and identifying new prospects, whom they can then sell to.

What you’ll find in this article are three businesses?high-tech company Hewlett-Packard, online marketer Student Advantage and old-line manufacturer Tipper Tie?that avoided some of the common CRM pitfalls. First, they made sure they understood their customers’ needs before tackling a CRM application. They limited the scope of their rollout. They won buy-in from in-house users. They kept consultants, when they used them, on a short leash. And they measured the benefits of their projects. (See "Customer Focus," Page 106.)

By keeping their focus on the bottom line, these companies have achieved significant payback?an HP division counted an estimated $144 million in increased revenues, Tipper Tie’s CRM system should pay for itself in two years, and Student Advantage has leveraged its data insights of college students to sign up 15,000 business partners.

TIES THAT BIND TIPPER TIE

Apex, North Carolina

Tipper tie, a $94-million-a-year division of Dover Corp., is the world’s leading manufacturer of aluminum clips and wire machines for the food-processing industry. The Apex, N.C.-based company’s typical customer uses costly machines that wrap and seal its products?everything from a summer sausage the size of your pinkie finger to 8-inch-diameter Italian mortadella meats. (If you check out the meat aisle in your local supermarket, those small metal clips that seal the plastic casings on chickens, hams and sausages are likely made by Tipper Tie.) The meat packers’ machines need service, new parts, and plenty of wire and clips. Tipper Tie’s field sales reps and service technicians make in-person visits to customers, and a call center fields their questions, requests and complaints.

Competition in this quiet market began heating up two years ago when overseas competitors entered the United States and alternative packaging methods began making inroads with Tipper Tie’s customer base. Executives sought to beat back that challenge by responding earlier and more often to their clients. To do that, the company needed to change the way its customer-facing staff worked, including the eight call center operators, 16-member field sales force and eight repair technicians.

Kendra Bender, Tipper Tie’s IT manager, says the company recognized that it needed to provide easy access to up-to-date customer data to its sales team, technicians and customer call center. The former setup left sales reps blind to customer concerns. "We didn’t have a way to get any complaints or special needs out to [the sales reps] in a timely way. They might spend three-quarters of their sales call dealing with old complaints instead of selling [new products]," Bender adds.

By linking its sales reps in the field and call center into the same continually updated customer data view, Tipper Tie could trim the time sales reps had to spend listening to customer complaints, for example. The reps would be able to prep themselves prior to their sales calls by reading up on technical service problems the customer had logged, machine repairs, parts sales histories and any gripes their call center had entered into the company’s centralized system.

Tipper Tie anticipated that providing sales reps with the same customer view as call center operators and service technicians would increase the time sales reps could actually sell products. Such a system could also trim the cost of generating sales leads and produce more sales from its best customers by providing better service and better communications between its service channels.

Last fall, Tipper Tie began implementing Siebel Systems’ standalone call center and sales-force CRM modules. Since December, when the system was put in place, Tipper Tie estimates that each sales rep has approximately 18 more days per year in face-time selling that they would have spent generating reports or dealing with peripheral issues. The company has also been able to increase its sales territory without increasing its number of sales reps and has trimmed a sales support IT job with the automated system in place. Bender estimates that Tipper Tie’s Siebel system will pay for itself in a little over two years (though she declines to cite the cost of the investment).

Even though Bender can project a real benefit for Tipper Tie’s project, she says that during the planning stages she made sure that she didn’t oversell what the CRM applications could do. "In our initial presentation to our executive board we said, ’No software package will increase our sales. What this [software] will do will allow us to understand our customers better, track things better and look more professional in front of customers,’" she says.

And in another key move, Bender says her staff didn’t force the new applications on her users. In the planning stages of the project, call center and sales reps were interviewed about how they did their jobs, what processes they used and what customer data they needed. Bender’s group found a need for precise sales data, including dollars spent, number of units bought, parts purchased, and current and prior year sales.

Then after the small but critical step of carefully checking consultants’ backgrounds and references, Bender brought in a pair of consultants to implement the system. "I didn’t just bring in consultants and turn them loose?our [IT] teams worked closely with them for knowledge transfer, and I asked for semiweekly updates to avoid surprises," she says. Her diligence paid off. At one point Bender discovered that a consultant had spent most of a day configuring the system to have the Tipper Tie logo appear on each of its screens. "She was about halfway through when I found out what she was doing," Bender recalls. "For $200 an hour I thought we could use her talents more sensibly."

Once the system was developed, Bender picked a small group of dynamic sales reps to be the test guinea pigs. "We chose people who had positive, upbeat personalities for our pilot project because we knew they would help us convince others once they saw how this would help them," she says. The team members actively used the software for one month and then made a presentation about their experience at Tipper Tie’s annual sales meeting last December. "Their presentation was so positive it galvanized everyone else?there wasn’t any way [sales]people could drag their feet after that," says Bender.

Bill Burkhardt, a Tipper Tie sales representative in the Northeast based in Pittsburgh, was one of those enthusiastic early testers. "I just told people how easy it was to use and how useful it was to have all of that information going into a sales call," he says. "When I first started as a sales guy, I was just given a printed out account list of clients and phone numbers and told, ’Go get ’em.’ The system now allows us to be much more responsive to customers by providing better communication between the customer and the company."

Cross-functional and pilot teams are keys to success, says Elizabeth Herrell, an analyst at Cambridge, Mass.-based Giga Information Group. By employing these teams early in the planning stages of CRM projects, "it saves a tremendous amount of time and effort later on by including their insight expertise and gaining their support," she says.

RETURN TO SPENDER HEWLETT-PACKARD

Palo Alto, Calif.

Paul horstmeier, a 14-year veteran of Hewlett-Packard who took on the position of e-marketing manager two years ago, quickly realized that the computer industry giant had made a mess of its attempts at e-mail marketing. The company’s typical customers include IT managers whose business division has purchased servers, printers and services from Hewlett-Packard. These customers also include managers in other parts of the business, and those managers request e-mail updates and newsletters that tell them when new printer drivers are available, when security updates are posted and when product updates come to market. Once in a blue moon they call a customer help line, but they’re much more likely to get most of their answers from online sources. Customers like these love getting news and updates by e-mail and are quite responsive to online marketing offers.

Even with that knowledge, HP, based in Palo Alto, Calif., wasn’t using its Web presence effectively, Horstmeier says. HP had been steadily collecting business customer data and e-mail addresses from all of its sales channels but didn’t have a central program or strategy for e-mail marketing. At times, as many as nine different marketing groups would blast out e-mail marketing campaigns to segments of the list, but each one was a single shot effort. "They weren’t coordinated, they weren’t leveraged in any way, and we didn’t learn from them," Horstmeier says. Instead of (by some fluke) promoting loyalty among its business customers, these efforts were more likely to promote irritation by inundating people with information they didn’t want or ask for, he says.Horstmeier recognized that in order to provide useful benefits to HP, his group needed to take control of e-mail campaigns from those nine different marketing groups. It also had to champion the customer-centric idea that marketing should be a long-term process that focuses on the life cycle of customers instead of looking at a sale as a singular occurrence. "We didn’t do this in a vacuum, though. We worked with HP’s larger CRM strategy groups to figure out what we could do with e-mail marketing that would fit into the larger CRM framework," Horstmeier says. That meant Horstmeier’s group had to focus on the e-mail marketing piece while coordinating its efforts with the larger corporate picture that included other customer-facing groups like call centers and customer service teams.

The reverse was true too. HP at large had to understand what Horstmeier’s group was up to, says Mike Overly, worldwide CRM manager for HP’s business customer organization. HP is in the process of rolling out a worldwide system that shows a single, unified view of customer contacts, says Overly. "We need to do this in order to provide a consistent customer experience, and [the e-marketing group’s] work is a rock solid piece that will be tightly integrated into that single-customer master."

To accomplish that goal, the e-marketing group brought in e-mail analysis, segmentation and personalization tools from San Mateo, Calif.-based Digital Impact. By analyzing its e-mail databases, HP found that its business customers fell into two groups?IT managers and end users. So instead of immediately churning out more e-mail campaigns, HP set out to learn what these groups wanted through small pilot tests. The company found that IT managers were willing to tell HP exactly what kinds of general product and support alerts and newsletters they’d like to receive (such as laptop support newsletters and discussion forums, print driver updates, and new product introductions) while end users wanted much more specific information about the exact product (network server, PC or printer model number) they’d purchased and how to use it.

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