Sumner, M' 2005 Enterprise Resource Planning, Pearson Prentice Hall

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Sumner, M. (2005) Enterprise Resource Planning,
Pearson Prentice Hall
Chapter 4Enterprise Information Systems
Sales Marketing / Customer Relationship
Management (CRM)
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Sales Marketing Processes

• Operational-level processes
• Daily activities prospecting, tele-marketing,
  direct mail
• Contact management databases, lists
• Support
• Sales order processing system
• Point-of-sale (POS) systems

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Sales Marketing Processes

• Sales Management
• Objective is to allocate resources so as to
  maximise revenues
• Decisions made on analysis and comparison of
  sales against benchmarks
• Listing of most profitable products, sorted by
  territory and salesperson
• Software often used
• Allows for quicker analysis
• Able to identify trends
• Analyse salesperson performance
• Identify strong and weak products
• Flag potential shortfalls or excesses in stock
  levels

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Sales Marketing Processes

• Sales forecasting
• Predicts sales trends
• Determine customers needs in different market
  segments
• Based on sales history, customer demands,
  demographic patterns, economic forecasts,
  competitor information
• Advertising
• Identifies channels that will be most effective
• Product pricing
• Decision supported by pricing models (market
  economics, cost accounting)
• Examines critical performance indicators (CPI),
  expected consumer disposable income, production
  volumes, labour costs, costs of raw materials

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Enterprise Information Systems Sales Marketing
Processes
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Enterprise Information Systems Sales Marketing
Processes

• There may be up to six events for a sales order
• Pre-sales activity
• Sales order processing
• Inventory Sourcing
• Delivery
• Billing
• Payment

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Enterprise Information Systems Sales Marketing
Processes
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Pre-Sales Activity

• Provide customer pricing information via
• Inquiry statement of prices for a particular
  customer for a particular quantity of product
• Quotation a binding statement of prices for a
  particular customer for a particular quantity of
  product
• Pre-sales activities can also include marketing
  activities such as sales calls, visits and
  mailings
• Customer and sales data stored in the ERP system
  helps in preparing targeted marketing activities

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Sales Order Processing

• Process can start by pulling data from inquiry or
  quotation
• Taking data directly from inquiry/quotation that
  customer has approved minimises errors
• Process includes
• Retrieving customer contact data
• Recording items to be purchased
• Determining pricing
• Quantity discounts
• Customer-specific discounts
• Done automatically by system based on
  configuration settings
• Automatic credit check

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Inventory Sourcing

• Inventory records and production plans can be
  checked to determine whether sufficient material
  will be available to deliver customers order on
  time
• This available-to-promise (ATP) check includes
  shipping times and considers weekend and holiday
  shutdowns
• System can recommend increased production based
  on higher than expected sales
• Sales orders place a reservation on material so
  that the material cant be sold to another
  customer

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Delivery

• Delivery in many ERP/CRM systems (e.g. SAP)
  means creating an electronic document that
  directs the warehouse to pick, pack and ship the
  customers order
• Deliveries can be grouped and released to make
  warehouse operations more efficient

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Billing and Payment

• The system creates an invoice by copying data
  from the sales order
• The invoice can be printed and mailed to the
  customer, faxed, or transmitted electronically by
  EDI (electronic data interchange) or the Internet
  (e.g. XML)
• The accounts receivable account is debited
  (increased) and sales account is credited
  automatically
• The customer can make a payment by mailing a
  cheque or electronically transmitting funds
• Timely recording of payments is important for
  properly managing a customers credit limit

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Integration of Sales and Accounting

• A major advantage of an ERP system is integration
  of accounting with other functions like sales
  distribution
• Whenever a sales order is processed, the
  appropriate accounts are updated
• Because sales transactions create the appropriate
  accounting transactions in real-time, accounting
  has up-to-date sales information

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Customer Relationship Management (CRM)

• Customer Relationship Management (CRM) helps a
  company streamline interactions with customers
  and make them consistent
• Goal is to provide a single face to the
  customer
• Any employee in contact with a customer should
  have access to all information on past
  interactions
• Information about a customer should reside in the
  ERP system, not on scraps of paper on individual
  employees desks
• CRM also provides a company with tools to analyse
  the vast quantities of sales data available from
  the ERP system

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CRM Systems

• Enterprise approach integrated with SCM / MRP,
  Financial Accounting, Human Resources, Quality
  Management, etc.
• Evolved from sales force automation software
• Focused on
• Customer acquisition
• Customer retention
• Customer loyalty
• Customer profitability
• Empowers employees
• Enables one-to-one marketing
• Allows for efficient / proper allocation of
  resources to each customer class

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CRM A World of Relationships
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CRM Components
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The Business Case for CRM

• CRM is often incorrectly viewed as a technology
  implementation driven by the IT department
• but CRM should be viewed as a business strategy
• CRM tools can help identify the most profitable
  customers
• Volvo Cars of North America is using predictive
  modeling to find new customers
• Tesco have successfully used CRM analysis to
  enhance their customer service
• Financial companies are using CRM to move from
  being one-time sellers to selling a range of
  financial products

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CRM Functionality Application
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CRM Functionality Application

• One-to-One Marketing
• Customers are categorised and products,
  promotions, and pricing are tailored accordingly
• Sales may be increased by cross-selling and
  upselling
• Sales Force Automation (SFA)
• New customers are automatically routed to the
  appropriate sales representative
• Customer needs are forecasted based on the
  customers history and transactions
• Sales Campaign Management
• Helps a company organise a marketing campaign and
  compile its results

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CRM Functionality Application

• Marketing Encyclopedias
• Database of promotional literature
• Material can be routed to sales representatives
  or customers as needed
• Call Centre Automation
• Customer support can be improved with the
  assistance of a knowledge management database
• New solutions to unique customer queries can be
  added to the knowledge-base, making it smarter

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SAP R/3 Contact Manager

• SAP R/3 contains some CRM functionality
• Contact management tool database of customer
  contact information

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SAP R/3 Sales Activity Manager
Sales activity manager supports a strategic
and organised approach to sales activity
planning, and helps ensure that follow-up
activities are accomplished
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CRM Information Technologies

• CRM systems are based on data warehouses and ERP
  systems (e.g. SAP, Oracle/Siebel)
• Business intelligence / business analytics
• Data mining
• Predictive analytics determine relationships
• On-line Analytical Processing (OLAP)
• Integrated with
• GIS geographical preferences
• Revenue management software optimised pricing
• Data mining workbench targeted sales promotions

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Cultivating a Customer Relationship

• Prospecting
• Potential new customers are evaluated and
  development activities (e-mails, sales calls,
  mailings, etc.) are planned
• Marketing tasks predominate in this phase
• Acquiring
• Salespeople develop business prospects into
  customers
• Sales tasks (processing inquiries, quotations,
  and sales orders) become increasingly important
  in this phase

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Cultivating a Customer Relationship

• Servicing
• Technical support, warrantee work, product
  returns, quality problems, complaint handling,
  etc. are critical to maintain satisfied customers
• Retention
• The rate at which a prospect becomes a customer
  is quite low thus, retention is critical as it
  is easier to retain good customers than to find
  new ones
• Timely delivery of quality products and services
  at a fair price is the focus
• Marketing must anticipate changes in customer
  requirements

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Marketing and Campaign Planning

• Companies spend significant sums on marketing
  campaigns
• Successful planning, execution and evaluation are
  necessary to achieve the maximum benefit
• mySAP CRM supports
• Marketing and Campaign Planning
• Target Group Selection
• Campaign Execution Activity Management
• Campaign Analysis

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Marketing and Campaign Planning

• Marketing and Campaign Planning
• Task scheduling, resource allocation and
  budgeting
• Target Group Selection
• Data from the ERP system is used to categorise
  the companys customers to offer more individual
  product and service promotions
• Campaign Execution Activity Management
• Manage the execution of the marketing campaign,
  including handling sales calls, mailings,
  personalised e-mailings and Web-based promotional
  activities
• Campaign Analysis
• Evaluate the success of the campaign via lead
  generation and response rates
• Plan improvements for the next marketing campaign
• Data Warehouse / Data Mining tools can support
  this analysis

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CRM Potential Benefits

• Integrated, unified view of enterprise data
• Audit trail of communications
• Improve customer service
• Increase customer satisfaction, and loyalty /
  retention
• Decrease expense of recruiting customer
• Reduce sales costs
• Better response times in call center operations
  and better use of sales force time lowers costs
• Better and more focused marketing campaigns
• Greater profitability through targeting and
  segmentation (more sales revenue)

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CRM Potential Benefits

• Improved productivity and employee satisfaction
• Better control of the sales pipeline and process
• Faster and easier development of new sales people
  
• Improved sales forecasting
• Improved strategy and performance measurement
• With CRM in place, management can think about
  different performance measures
• Should salespeople be rewarded for exceeding
  sales quotas? Should marketing people be rewarded
  for finding new customers?
• Should employees receive rewards that are based
  on some measure of customer satisfaction?
• CRM can lead to all employees thinking in terms
  of a company-wide effort to better satisfy
  customers

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CRM Potential Pitfalls

• Integration
• Adapting business processes
• Commitment from top management
• Organisational culture
• Training
• Allocation of time for deployment
• Retention of employees
• Failure to use software
• Expensive

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CRM Implementation Evaluation

• Success
• Intangible gains e.g. improved customer
  satisfaction
• Tangible gains
• Reduced reporting cycle
• Reduced expense of doing business
• Reduced sales cycle
• Increased productivity
• Increased sale
• Indications
• Systems used to meet key customer needs
• Make in-depth analysis of customer costs and
  potential profits
• Information linked from disparate business units
• Employees empowered to handle customers problems

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Additional Resources

• Sumner, M. (2005) Enterprise Resource Planning,
  Pearson Prentice Hall. ISBN 0-13-140343-5.
• Chapter 4 ERP Systems Sales and Marketing
• Monk, E. Wagner, B. (2006) Concepts in
  Enterprise Resource Planning, 2nd Edition,
  Boston Thomson Course Technology. ISBN
  0-619-21663-8.
• Chapter 3 Marketing Information Systems and the
  Sales Order Process