With more than 5 billion end consumers in more than 160 countries, Procter & Gamble has long had an enviable global reach. The Cincinnati-based packaged goods manufacturer literally makes products with brand names from A to Z, and sells them all around the world in stores that range from giants like Wal-Mart to Mom-and-Pop outfits operating off the back of a truck.
But such reach, while a blessing for brand recognition, has often presented a challenge when it comes to interacting with retailers. Until recently, P&G kept track of its diverse customer base through an equally diverse array of local (often homegrown) systems. That lack of integration meant a retailer such as Wal-Mart might receive conflicting product and promotion information about Crest toothpaste from a legacy trade funds system in Cincinnati and a homegrown shipment reporting system in Guangzhou, China. If the two systems had different SKUs for the same product, it would lead to confusion and extra work for Wal-Mart if the retailer attempted to roll up its data on worldwide Crest sales. And for P&G, the more variety in its systems, the harder it was for the company to dispense consistent information to its retailers about its nearly 300 brands, not to mention plan promotions and execute a sales strategy.
“As customers become more global, our ability to understand, interact and manage our business is limited by a nonintegrated platform,” says Robert Scott, vice president of IT for P&G’s Global Market Development Organization (MDO). “Fundamentally, we knew we wanted to change that.” Faced with aging IT systems in the late 1990s, P&G decided to take the plunge and launch a worldwide customer relationship management initiative.
CRM is not a term to be tossed around lightly in a company as vast as P&G—especially since its global offices operate with varying degrees of technological sophistication. In a developing market like China, for example, retailers are much more likely to sell small packets of Tide than the 100-ounce containers that dominate the shelves in North America. The cost of business therefore has to be lower, leaving less money for swanky technology initiatives. So P&G had to figure out how to manage CRM technology on a global level, making it broad enough to traverse the world but flexible enough to help get products on the shelves in far-flung places. By choosing a single platform that could be scaled down for the smaller markets, P&G was for the first time trying to treat its retail customers consistently, whether those customers were selling Folgers in Fort Worth or Downy in Dublin.
Scott says three factors drove P&G’s CRM efforts (which began in 2000 and will take until at least 2005 to implement). First, P&G needed integrated systems to eliminate inconsistencies in product data and simplify the process of synchronizing internal data with customers’ systems. Second, P&G spends hundreds of millions of dollars annually on customer incentives to encourage retailers to stock and sell P&G products. Without a reliable way of managing those promotion dollars in all countries, it was tough to track which incentives were successful and which were bombs. Third, the company had streamlined its field sales force in the 1990s yet still wanted to make sure that retail plans formulated at the company’s headquarters reached stores quickly.
Enter CRM. P&G decided to use Siebel because, according to Scott, Siebel made it possible for P&G to build a global integrated platform that was also configurable for specific markets. Typically, P&G IT systems developed in North America or Western Europe didn’t work in Asia or Latin America, says Tim Butler, North American MDO CIO. The systems proved too expensive and unwieldy for P&G offices in those parts of the globe, so local offices created their own homegrown systems. P&G wanted a bare-bones version of Siebel’s system with the functionality not necessary for smaller markets stripped out. At first Siebel balked, but eventually the companies agreed on a scaled-down version that would enable P&G to implement one platform globally.
Although Scott made Siebel P&G’s standard global CRM platform in order to pave the way for worldwide data rollup, he did not attempt to mandate any global CRM projects; all initiatives would come from the ground up, driven (and justified) locally. “We started the effort not as a global system we needed to sell in but as global help for key countries to meet their local business needs,” says Scott. P&G provided those key countries—France, Japan, the United Kingdom and the United States—with resources to help implement Siebel. “The result was that we actually built local suction for the platform, rather than having to push it,” he says.
CRM in Action
So far, P&G’s CRM efforts fall into three categories: retail execution, trade funds management and product management.
Retail execution. Historically, P&G has relied on a traditional sales force whose broad in-store presence let the company keep abreast of retail conditions such as pricing and out-of-stock updates, work with retailers to ensure proper placement of P&G products on the shelves and introduce new products. In the past decade, P&G has begun to use multifunctional customer teams at headquarters—which rely on data gathered by a lean team of sales reps—to care for key accounts. Reps who visit stores relay information such as product placement and out-of-stock situations to the customer teams.
Reps—or third-party temps—used to collect data ad hoc: writing it down, faxing, rewriting it. “Accuracy became kind of a problem,” says Butler. “It wasn’t consistently collected, and it wasn’t uniform,” says Scott. “You were getting indicators as opposed to regularly collected information on these fundamental points of data.”
The Siebel system now lets P&G’s sales force gather that data in North America and parts of Western Europe with laptops, handhelds or tablet PCs and send it electronically back to P&G’s databases. “In near real-time we can assess whether or not we’re having problems with key sales fundamentals that ultimately will impact sales,” says Scott. Now, adds Butler, P&G can collect data such as what items are out of stock in a particular retailer and get that data into the hands of those responsible for filling the shelves.
The new system helps reps collect information faster so that they can visit more stores, and more store visits translates into higher sales. In fact, Scott attributes a 3 percent to 5 percent sales volume increase to the Siebel efforts. And because cost controls mean that P&G is learning to do more with fewer people—the company says it reduced its sales force “substantially” when it introduced the customer teams—the more efficiently those people can work, the better. The CRM efforts have saved the company 10 percent to 15 percent on retail selling costs and allowed P&G to increase sales coverage by 15 percent to 20 percent.
Trade funds. P&G won’t say exactly how much it spends annually on promotions and incentives that encourage retailers to stock and sell P&G products, but Scott estimates it to be hundreds of millions of dollars globally. That’s a significant chunk of change, but in P&G’s pre-CRM days there was no electronic tool to ensure adherence to global standards for managing that expense. Each country often had its own tools, ranging from simple Excel spreadsheets to complex legacy systems. “Some were very good; some were a disaster—but it was very local,” says Scott.
Now P&G has begun using Siebel tools to plan and execute promotions, set budgets, trigger payment requests and get payment status. The Siebel system also allows P&G to record a history of promotions. “When we start planning promotions, we do it with a smarter knowledge around what we’ve learned in the past,” says Erik J. Verrijssen, associate director of IT for the global MDO. “We found there was opportunity to get more bang for the buck and really make sure that we have more efficiency in spending that money by understanding what worked and what didn’t work.” Scott says P&G is already saving 10 percent to 20 percent in areas where the company has implemented trade funds applications. In addition, electronic trade funds management furthers P&G’s ultimate goal of consistency by making sure promotions are administered the same way to retailers around the world.
Product management. With a product list as extensive as P&G’s, getting consistent product data—sizes, descriptions, prices and images of new products—from headquarters to retailers around the world remains a perennial challenge. The more efficiently that happens, of course, the faster the products can get onto the shelves and into shopping baskets. But in P&G’s pre-CRM days, exchanges between P&G and its retailers were anything but seamless. “We would take all the product data we have in our systems, type it into a customer form and send it to the customer. They would then pull it out of their systems and retype it. You can imagine the slowness of the process and the number of errors,” says Butler. P&G is now calling on Siebel to help clean up and organize the product data to prepare it for automatic synchronization with customers’ systems.
By using Siebel eConsumer Goods to manage its data, P&G is able to more easily deliver product information in a standardized format to Transora, a consumer packaged goods industry exchange. Retailers using the same standards can plug into Transora and download product data. This standards-based data sharing lets P&G efficiently deliver precise product information uniformly to its retailers—no easy task given the U.S. market is home to seven varieties of Tide, at least 10 other P&G laundry products, and more than 20 other major categories, such as pet food and oral hygiene.
It’s hard to overstate the significance of this uniform delivery. “For global customers, rather than seeing four or five different faces of P&G, and different outputs from those systems, they’re getting consistent output no matter what country it’s coming from,” says Butler. Using industry standards reduces the time-consuming process of filling out forms for both P&G and retailers. It also reduces errors in the retailers’ data catalogs, each of which can cost up to $100 to fix. And Butler says that P&G can get a new item to the shelves days and even weeks faster than in the past. “That’s a big deal in a competitive environment,” he says.
One of the company’s biggest challenges, according to Verrijssen, will be accelerating CRM efforts at an appropriate speed while making sure P&G is implementing solutions that will work in all corners of the world. “There is a borderline—call it the ’golden road’—between complete standardization, which is easiest from an IT perspective, and having everybody do what they want,” says Verrijssen. “I think we’ve found a good balance.”
The key to P&G’s CRM implementation, and what makes it different from anything the company has tried in the past, is the fact that the local offices can do what they want with CRM as long as they use the basic Siebel platform. “We have a philosophy of adoption versus rollout,” says Butler. “Rollout is kind of a check-the-box mentality—Hey, the system’s out there, you’ve got it, go. Adoption is more of a philosophy of really understanding the business need and then adapting the tool to fit that business need so that people embrace the tools and start using them to drive their business.” The plan, then, isn’t to foist technology on places that don’t need it, but to address local business needs with a single platform whose combination of flexibility and standardization will eventually enable global data sharing. “Typically, anything that sounds global gets rejected,” says Butler. By helping local offices use CRM to speak to specific needs, P&G hopes to avoid that automatic rejection.
As P&G moves ahead with its CRM efforts, it plans more elaborate uses of the technology. For example, the company is working on an electronic dashboard, powered by Siebel’s eAnalytics technology, which Scott calls “the next level of capability.” The idea is to help P&G management keep tabs on the status of P&G initiatives around the globe. Having a single CRM platform, of course, makes it possible to roll up data from every market to create a truly big-picture management tool. If all is well, the dashboard will show green. Potential problem areas—if, for example, a promotion is underselling its objective or the company fails to reach target distribution in certain locales or for certain products—will show red on the dashboard and give managers access to details. “If one of your key indicators is out of whack, you want to be able to drill down and understand what’s out of whack and why, and what you can do to correct it,” says Scott. P&G hopes this window into the health of the business will allow the company to react more quickly to business changes. “Traditionally, that’s been a pain because we had different platforms and data wasn’t always available,” says Verrijssen.
P&G thinks of its upcoming efforts as “closing the loop” between sharing data with and gathering data from its customers, and using that information to make smarter, faster business decisions. Butler believes that CRM’s true power lies not merely in collecting and storing specific sales or promotional data but in capturing something less tangible but ultimately more important: conversations with customers about business strategies that will help P&G improve its business processes. Says Butler: “When you can use something like CRM to pull together the knowledge you have on a customer with the systemic transactional data, that’s where you really start to see the whole CRM picture coming into view.” Before, he says, business strategy plans were often captured “on napkins, in people’s heads, or not at all.”
P&G’s results with the North American and initial Western European Siebel implementations have been so positive that the company is looking to speed up expansion across Western Europe. This approach seems to be working so far; now other countries are clamoring for a piece of the action. That’s a call P&G hopes to be able to answer quickly. “This is a snowball that’s really growing for us,” says Scott. “Our single biggest challenge is to figure out how to accelerate this program broadly around the globe.” A formidable challenge that may be, but if P&G manages to meet it, the company and its retailers will be smiling bigger, whiter smiles than anyone.