Realizing Business Benefits through CRM: Hitting the Right Target in the Right Way

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Realizing Business Benefits through CRM Hitting
the Right Target in the Right Way

• Hugh J. Watson
• Terry College of Business
• University of Georgia
• www.terry.uga.edu/hwatson/smu.ppt

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Outline

• The evolution to CRM
• CRM defined
• The CRM architecture
• The study
• The three targets of CRM
• Six CRM cases
• Lessons learned

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Marketing Stages

• Mass marketing
• Target marketing
• Relationship marketing
• Customer relationship marketing

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CRM is any application or initiative designed
to help an organization optimize interactions
with customers, suppliers, or prospects via one
or more touchpoints such as a call center,
salesperson, distributor, store, branch office,
Web, or email for the purpose of acquiring,
retaining, or cross-selling customers. (TDWI
2000)
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The Study

• case studies of 14 companies over the last four
  years
• a judgmental and purposeful sample -- all are
  leaders in some aspect of CRM
• sponsored by Teradata and The Data Warehousing
  Institute

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The Study

• One to three day on-site visits
• Interviews with multiple stakeholders (e.g.,
  senior executives, users)
• Supporting documents (e.g., annual reports,
  proposals) were provided

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The Targets of any CRM Initiative ...

• Building a single or a few CRM applications
• Building an infrastructure for CRM
• Bringing about organizational transformation
  through CRM

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Six CRM case studies

• SmarterKids.com and Sherwin-Williams --
  applications
• 3M and Radisson Hotels -- infrastructure
• First American Corporation and Harrahs --
  organizational transformation

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SmarterKids.com

• An Internet-based educational toy retailer
• Focused on applications that could be implemented
  quickly
• Easily sold at the departmental level
• Each application was successful in its own right

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SmarterKids.com

• Over time, the need for integrated data became
  apparent
• Maintaining a unique identifier across all
  applications was difficult
• Work began on an enterprise-wide data warehouse

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Sherwin-Williams

• A leading developer, manufacturer, and
  distributor of architectural coatings and related
  products
• 28 acquisitions between 1990-2000
• Disparate systems made it difficult to present
  one face to customers

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Sherwin-Williams

• Incrementally implemented data marts to support
  specific CRM initiatives
• The sales mart was followed by a raw materials
  mart .
• Over time, an enterprise data warehouse is
  emerging

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Characteristics of Individual Applications

• Often local in scope, with departmental
  sponsorship
• Data integration may be easy
• Impact on jobs and job skills is local
• Can provide quick hit benefits at the
  departmental level
• Can provide a proof of concept for a more
  comprehensive CRM initiative

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3M

• A producer of over 50,000 commercial and
  industrial products
• A tradition of autonomous divisions with IS
  groups in both the divisions and corporate
• A recognized need to be more customer and market
  focused
• A veteran IS manager began a crusade for a Global
  Enterprise Data Warehouse

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3M

• It took a year to garner support, change the
  corporate culture on sharing data, and develop
  enterprise-wide data definitions
• The cost of the initiative was covered by the
  consolidation of decision support platforms
• The divisions develop their own applications to
  create business value

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Radisson Hotels

• This major hotel chain was losing market share
• Two initiatives in the mid 1990s laid the
  groundwork for CRM -- a common suite of
  franchisee applications and an enterprise data
  model and data dictionary
• The new Director of CRM led a highly successful
  look to book program, a loyalty program aimed
  at travel agents

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Radisson Hotels

• Radisson could not track customers because of
  data quality problems
• Marketing and IT worked to develop the
  CustomerKARE data warehouse
• The Director of CRM is educating senior
  management on the potential of CRM and changing
  the mix of skills within marketing
• Radisson is now in position to capitalize on CRM

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Characteristics of Infrastructure

• Often sponsored by IT
• It is often difficult to integrate the data from
  disparate source systems
• Consultants may be hired to help IT
• Users must learn to work with the new decision
  support environment
• Normally developed with applications in mind

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Characteristics of Infrastructure

• Infrastructure is costly to develop
• Departments must give up control of their data
• May be cost savings from infrastructure
  consolidation
• Possible quick hit returns from follow-on CRM
  applications

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First American Corporation

• FAC -- A bank in trouble in 1990
• Enter a new management team
• A CRM strategy, Tailored Client Solutions, was
  created
• A data warehouse called VISION was developed to
  support the strategy
• Applications using VISION were developed for
  every component of TCS

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First American Corporation

• A phased implementation strategy was followed,
  with short-term wins
• Only after early successes, was the strategy
  fully communicated throughout the bank
• Incentive and reward systems were changed
• The bank was transformed

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First American Corporation

• A shift from banking by intuition to banking
  by information and analysis
• A leader in the financial services industry by
  1998
• Won the 1999 Society for Information Management
  Award

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Harrahs

• A change in the gaming laws in the early 1990s
  opened up new gaming opportunities
• Senior management developed a new business
  strategy based on creating a brand identity
• The CIO/Director of Strategic Marketing developed
  WINet

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Harrahs

• WINets Patron Database and Marketing Workbench
  are used with customer facing applications, Total
  Rewards, and offers
• All casinos are operated in an integrated manner,
  supporting cross-casino play
• Specialized talent was needed
• Harrahs has become a leader in the gaming
  industry
• Won TDWIs Leadership Award in 2000

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Characteristics of Organizational Transformation

• Must be initiated by senior management and
  supported by business units and IT
• Requires a major shift in organizational culture
  and business practices to become customer
  centric
• Requires the building of CRM infrastructure
• Jobs and job skills are changed throughout the
  organization

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Characteristics of Organizational Transformation

• An expensive, risky undertaking, but with the
  potential for great increases in revenues and
  profits

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Lesson 1

• Sponsorship may vary across targets

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Lesson 2

• The incremental approach is always best move as
  quickly as possible to deliver benefits

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Lesson 3

• Prepare to get your hands dirty when working with
  CRM data, especially when building
  enterprise-wide CRM infrastructure

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Lesson 4

• Ensure that the CRM architecture will scale to
  future needs

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Lesson 5

• You can teach an old dog new tricks sometimes

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Lesson 6

• Make sure to plan for knowledge transfer

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Lesson 7

• Effective and perceptive communication between IS
  and the business side of the organization is
  critical

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Concluding Points

• Developing applications is easier than building
  infrastructure which is easier than
  organizational transformation
• Any CRM initiative requires hitting all three
  targets to some extent
• CRM targets are temporal in nature

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Articles

• Cooper, B.L., H.J. Watson, B.H. Wixom, and D.L.
  Goodhue, "Data Warehousing Supports Corporate
  Strategy at First American Corporation," MIS
  Quarterly, (December 2000).
• Eckerson, W. and H.J. Watson, Harnessing
  Customer Information for Strategic Advantage
  Technical Challenges and Business Solutions,
  (Seattle The Data Warehousing Institute, 2000).
• Goodhue, D.L., B.H. Wixom, and H.J. Watson,
  Realizing Business Benefits through CRM Hitting
  the Right Target the Right Way, under review at
  MISQ Executive. (http//terry.uga.edu/hwatson/MIS
  QE_CRM.doc)
• Watson, H.J., B.H. Wixom, J.D Buonamica, and J.R.
  Revak, Sherwin-Williams' Data Mart Strategy
  Creating Intelligence Across the Supply Chain,
  Communications of ACIS, (April 2001).
• Watson, H.J., D.L. Goodhue, and B.J. Wixom, The
  Benefits of Data Warehousing Why Some Companies
  Realize Exceptional Payoffs, Information and
  Management, (May 2002).
• Watson, H.J., D.L. Goodhue, and B.H Wixom, Data
  Warehousing The 3M Experience, in
  Organizational Data Mining Leveraging Enterprise
  Data Resources for Optimal Performance, H. Nemati
  (ed.), Idea Group Publishing, Herhsey, PA,
  (forthcoming).

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Questions