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

1. 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

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

3. Marketing Stages • Mass marketing • Target marketing • Relationship marketing • Customer relationship marketing

4. 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)

6. 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

7. 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

8. 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

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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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 createbusiness value

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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

25. Harrahs • WINet’s 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 TDWI’s Leadership Award in 2000

26. 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

27. Characteristics of Organizational Transformation • An expensive, risky undertaking, but with the potential for great increases in revenues and profits

28. Lesson #1 • Sponsorship may vary across targets

29. Lesson #2 • The incremental approach is always best: move as quickly as possible to deliver benefits

30. Lesson #3 • Prepare to get your hands dirty when working with CRM data, especially when building enterprise-wide CRM infrastructure

31. Lesson #4 • Ensure that the CRM architecture will scale to future needs

32. Lesson #5 • You can teach an old dog new tricks… sometimes

33. Lesson #6 • Make sure to plan for knowledge transfer

34. Lesson #7 • Effective and perceptive communication between IS and the business side of the organization is critical

35. 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

36. 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/MISQE_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).

37. Questions