CRM and ERP have a collaborative relationship. Imagine that CRM is the point of a large V that faces outward to your customer base, where it is used to track and predict sales. To back up that effort, information coordination with the sales department's sister organizations - finance, manufacturing, product development and marketing - smooth the way. But how do these teams communicate with each other effectively? That's where ERP comes in. ERP is an internal system that coordinates information between various departments and ensures the lifeblood flows through your enterprise to help profitability. Oracle, SAP AG, IBM Corp., Microsoft Corp. and others are creating integrated software for CRM and ERP that can be specific to everything from HR to manufacturing to e-commerce. ERP can be implemented in stages, and a lot of software is now Web-based or open source
Integrating CRM with the ERP:
Strategic Goals of CRM have to be well defined; best fit comes from knowing, as well as on how these goals fit with the drivers of competition within your industry. Companies looking for efficiency and integration of demand and supply may find the CRM proposal of their Enterprise Resource Planning (ERP) vendor attractive.
When properly integrated, ERP and CRM technologies can provide an infrastructure that enables operational effectiveness (This talks of CRM module of ERP helping the business) How CRM-ERP integration Impacts the value Chain
CRM
According to the Gartner group CRM software revenue worldwide stood at $8.1 billion in 2007 which was 23.1% increase from 2006 revenue of 6.6 billion(gartner.com)
It costs more in acquisition new customers than to retain old ones. In fact, among financial-services companies, there is reliable evidence that it costs five times more to acquire a new customer than to retain an existing one.
The key differentiator or competitive advantage for business stems from recognizing that customers have individual preferences, providing customized services to them ,not only meet but anticipating their needs (when you have information of prior transactions, buying tastes like AMAZON does it for its clients),flexibility in conduct of the business transactions . In short all these activities aim at enhancing the customer experience and encourage retention. A repeat customer is much more important than a new acquisition as cost associated with learning and trust are not there. Also life time value of repeat customer increases over the time.
Having said why retention is important, for this to happen access to key information about the existing customers as well as ability to use those information to satisfy customer is important.
The process of personalization, individualization, anticipation, and even prediction of the
Successful outcome of the customers' interactions with the business require companies to have as much up-to-date information as possible.
Customer information in order to enhance their experience should be maintained as the valuable corporate asset.
Three questions that needed to be answered are:
How to identify the customer who is unlikely to leave and how much to invest in such a customer.
How much to invest in the customer who is currently profitable and to convert him into a loyal customer in future(expected repeat business)
Then looking at those who are unprofitable now but can become profitable in future.
In order to maximize value from the overall customer portfolio, companies should customer's drivers and profitability
Important components that a CRM should possess:
A Data storage centre/warehouse where the customer's transaction data , contract data or channel data is maintained
To identify the customer behavior pattern and through examination of the database we need a analysis tool
Tools helping the services and marketing department to define their communication and facilitating automatic generation of these communications.(Campaigning management tools)
Interface with operational environment, financial environment, human resource environment for maintenance of database and channel to deliver messages.
This is an excerpt from Newell and Ryalset paper in 2001
"The main concern that organizations need to consider in CRM approach is 4Ps, i.e., Product, Price, Place, and Promotion. However, CRM focuses on functional integration so that it can help organizations maintain customer satisfaction. In other words, the new marketing approach in CRM is founded on customer retention, rather than customer requisition as per the old approach"
"By obtaining precise information on targets or market segments and the microsegments
within them, CRM enables organizations to reach high levels of profitability, by using databases, data warehouses, data mining, one-to-one marketing, automated call centers and sales
force automation. Having implemented these features relating to effective marketing, organizations expand the knowledge they accumulate, helping them to know more about the customers so that they can fulfill the requests of discerning customers, thereby enabling them to raisethe customers' loyalty (Newell, 2000; Ryalset al., 2001)"
Define each part (later)
Customer Relationship Management (CRM) architecture and properties
Basically CRM aims at creating Dynamic behavior model for each customer
Three layers of CRM technologies(Dean,2001)
Outer /Operating CRM layer : Face of the organization , maintains POS contact with the customers i.e. servicing , selling ,marketing
Collaborative CRM layer: Provides customer with the overall view of the organization enables the customer to complete certain tasks, to maintain communications with the organization and to receive information and updates via a number of channels provided by the organization
Analytical CRM layer: contains tools and technologies that help in analyzing the customer data acquired from the customer interactions for purpose of enhancing customer experience by catering to his/her latent and unmet needs. Basically this helps in finding patterns, important cross selling as well as up selling opportunities, delighting customers with niche to their taste offerings.
CRM software applications:
Integrated front office: Complete picture of customer needs is provided. Characterized by the use of IT technologies like call centers, internet, sales force automation etc. equips organization with improved marketing, sales and servicing capability.
The Business intelligence system :Based on the data obtained by the customers , some externally relevant information(competition analysis , market and industry watch , stock prices, government regulatory changes etc) BIS learns about the customers(their needs of personalization , how various external events affect them singularly and together). This application consists of Data warehousing systems, Data mining systems and Data analysis systems. Warehousing-related technologies serve as information factories via gathering and preparing the information for organizational use
Workflow and business rules: It's a link between the integrated front office and BIS. It helps to transfer business intelligence to the integrated front office. Employees of the front office are empowered by giving them powerful insight at the point of customer contact based on learning and analysis at the BIS. The front office employees, by using these guidelines and rules, are not able to solve customer-related problems at the point of contact. It is the Inner organizational and cultural factors which affect this particular element of the CRM.
Physical Link to back office: This helps in connecting the front office to the back office. Front office can access the back office data /system on real time basis. The back office attempts to manage organizational resources such as stock , role material, employees, and finance by centralizing the internal process.
Depending on the nature of processes involved, CRM systems can be classified into three broad categories [10]
CRM delivery process - These include the management of those activities which involve the customer process and in which there is a direct interaction with the customer. Some areas that come under this are
Campaign management - The planning, realization, control, and monitoring of marketing activities aimed at known recipients
Sales management - This covers the customer process phases of need articulation, evaluation, and buying. The needs of customers are understood to offer them the most favorable deal
Service management - This includes the planning, realization and control of measures for the provision of services. Examples include contract management and information services in the after-sales phase.
Complaint management - This deals with capturing and resolving the dissatisfaction expressed by customers. The main objective is to address the complaints in the most objective manner and work towards reducing the causes thus continuously improving the process
CRM support process - This concerns with those activities that do not involve a customer process but there is a direct interaction with the customer. These include
Market research which involves collecting, analyzing and reporting data about the consumers / market
Loyalty management - Taking steps to ensure that the duration and intensity of relationship with the customer is maintained
CRM analysis process - These systems process and analyze the data about customers that have been collected from various other CRM modules. The results of these analyses then help in improving the effectiveness of the products and services. Some of the results include
Customer scoring - Preparing a list of current customers who may be interested in a new product or service
Lead management - The process of generating a consolidated and prioritized list of prospective clients that will help in sales management
Customer profiling - Analyzing the knowledge about current customers in order to classify and characterize them based on their preferences regarding products, communication channels, etc.
Segmentation - Generating homogenous segments of customers who can then be the basis of product innovation
Feedback and knowledge management - This involves collecting and managing inputs from the customer and then utilizing this knowledge to identify and rectify problem areas if any
CSF's of CRM To be written
ERP
"Innovative enerprise resource planning or ERP software solutions implemented in your organization can make this happen by helping to consolidating customer data, feedback and other relevant information for your customer representative department in a accurate, fast and cost effective manner. The more information a service rep has about the customer the better the service."
The opportunities to improve customer service levels and reduce customer defect rates are huge. By implementing ERP module that focus on customer relationships studies show that there is a well over a sixty percent success factor that a customer save can be achieved if a rep can intercept the customer and offer support in advance. The majority of customers are lost due to a lack of company support and a perception that they are not valued. This is a statistic that most vendors are not aware of, including ERP vendors. Customers are lost from behavior by the vendor, not the product.
There are a lot of ERP software applications to choose from in today's market ranging from enterprise systems focused on any size and industry. Make sure the enterprise systems you are looking at will provide you a comprehensive, 360 degree view of your customers from every possible angle. If you improve your insight, you will improve your results and the profits will surely follow. "
Newspaper cuttings:
Aiming at complete view of customers by drawing data from sales, customer service records, inventory and even factory floor.
Vantive will reach out from its roots in sales force automation with its release of Vantive Enterprise Version 8 which introduces modules geared towards customer service and help desk applications. The expanded suite contains browser based self service application that will let users and distributors communicate with their vendors
JD Edwards launched an entire suite: Customer service management system as part of supply chain product line called Score X. The new application would link customer service applications with the factory or warehouse information so call centre operators can provide better answers to business partners such as explanations in delay for manufacturing or delivery
Supply chain soft ware vendor i2 added customer service and product management features to line up in next release of its flagship Rhythm suite -"e-BPO" or e-business process optimization, will let companies configure products as per buyers specifications, ensure that the exact features specified are available ,verify when products can be delivered , and place the order
Trends that lead to this: "what if u are dealing with a customer service query and u don't know whether they have paid their bills or not. Holistic approach to customer in the data base knowing what ordered , when ordered , how much ordered , when it was delivered , what help or support did the customer asked for etc
Tracking of the shipment or cargo (look into this)
Mass customization to differentiate according to customers' needs, vendors wanted to sell more seat license with in their installed base.
Case studies:
Asian paints
Travel Industry
Small examples from manufacturing related industries
Asian Paints:
Asian paints yearned for a fresh new approach towards managing its customer's experience. "Going where the customer is" is the mantra that puts customer at the core of each activity in the Asian Paints.
Problem Recognized: In 2001, although executives realized that the long term relationships with the customers will be drivers of future growth and profitability but they received complaints and class from customer saying that they wanted complete solution for their home painting needs. Customer demanded services on overall level. But because the company sold its products through a network of dealers, it lacked visibility into the entire painting process and the needs of the homeowner.
A service brand was launched:
Services /Customer orientation
Product Orientation
Asian paints Home solutions was launched (A range of Value added services included like in person colour recommendations to fengshui consultations etc) The goal was to deliver an Asian Paints "signature look" through the use of specific color combinations and themes.
They required a CRM system that could map the Asian paint home solutions Processes: It required to:
Provide visibility into all customer interactions
Call centre requirement : Capabilities that would include activity management for customer calls and activity scheduling, as well as a lead management system that could prioritize and route leads for proper handling
Financial controls needed to be established and sales delivery process was to be standardized.
Enabling leads from the help line to be forwarded to a home solutions service provider (independent home painting firm or interior designer, for example, in the Asian Paints network) for handling through a secure Web Interface.
Enabling solution provider to do all jobs related to the customer -
schedule appointments, record completion of site surveys,
submit job estimates, order paints through Asian Paints dealers,
record progress of jobs, invoice customers, and
Conduct customer satisfaction surveys.
Provide customer visibility real time to both provider and Asian paints
Marketing rewards program status updation
Generation of sales, lead and activity analysis reports also proving the customer satisfaction survey results in tabular form etc.
Asian paints applied SAP CRM. There was a custom solution also made , then Integration with the SAP NetWeaver : Business Intelligence (SAP NetWeaver BI) component ,data from both SAP CRM and the custom solution would be uploaded to SAP NetWeaver BI to generate various reports. This whole project was called Tantra.
The Tantra IT Landscape
After implementation the process were optimized in the following areas:
Financial Control: In all financial transactions from billing and collections
to contractor-dealer payments everything became transparent.
Sales delivery: Sales delivery process was mapped from start to finish despite being lengthy as it helped Asian Paints to maintain better control over the quality of services and experiences being provided to the customer.
Customer data management: Centralized system for data management available for campaign management, predictability modeling, Real Time Report Generation etc
This was the proper business flow that resulted after implementation of CRM and everything went smooth and became integrated.
Implementation best practices were used:
A pilot test was conducted first
Cross functional teams were formed spanning business to specific IT department
The end users(providers here) were provided with a training program
Institute ongoing User support
With customers always:
Customer acquisition process became faster, forwarding and following up of leads became easier , overall response time decreased
Retention increased as the whole process was to provide customer what they desire most "customizing at will" and follow up , servicing , color advice etc became esier to deliver
Revenue increased
Optimized visibility into customer needs - The new solution gives Asian Paints greater visibility into all customer interactions. As a result, the company has gained a deeper understanding of the needs of its end customers and has tailored its service business to meet these needs.
Scalable system
Critical processes were optimized:
Area
Process problems
After Implementing ERP(SAP)
Impact
Financial control
No mode to measure financial transaction between
Provider and customer
Provider and Contractor
Visibility into all transactions
Ordering and accounting system used by all providers.
Data and accounting Transparency
Sales delivery
No standardized process from lead and opportunity management to job scheduling.
Customer transactions were obscured.
Consistency through same kind of process being used by all service providers.
Improved customer service and satisfaction
Reduction in response time
A direct channel creation
Data management (of the customers)
No collection of customer data
No trend or customer need analysis for future
Centralized data management systems
Profiling of customers to discern future prospects for cross selling
Improved service
Improved retention
Improved long term profitability.
Future prospects of Leveraging CRM by Asian Paints:
Campaign management: With profiling of customers targeted campaigns can be carried out.
New Market Segments : Carrying forward CRM to interior designers , architects and other customer influencers
Complaints handling systems
