Background

Commonwealth Bank is having some success deploying its company-wide customer

relationship management (CRM) strategy. It has set up centres of excellence in a bid to
create a 'customer-centric' organisation, including a customer group, product
manufacture, customer service, distribution and processing. The customer group, for
example, has been given the job of analysing the bank's four core customer segments -
complex needs, mainstream, transactors and youth - and designing strategies that the
bank's product-development staff then work on. The customer service centre promotes
the finished product.
Hugh Harley, the bank's general manager, personal customers, says: 'We are certainly
mindful that this is about changing the customer experience rather than some sort of
technology fix. If you look across the industry at the examples of where CRM has fallen
over, it has almost always been around looking for a technology solution rather than
understanding the end-to-end process. Like all things, change doesn't happen overnight,
but we feel it has been very effective in allowing us to manage the overall customer
relationship.
'For us, CRM is about closing the loop. It is about taking the learnings from any
particular exercise and, if you like, returning to the database so we can learn from that
again next time. It's an area we recognise we haven't been strong enough in the past.'
Harley says Personal Add-Vantage, which was launched earlier this year, is a good
example of a CRM-based new product from the bank. Pitched at affluent customers in the
complex needs segment, Personal Add-Vantage is a bundled lending, deposit, share
trading and managed funds product that comes with a single annual fee. Harley will not
discuss sales, but he says its performance is consistent with expectations.

Why we are doing this study:

Most companies researched in our exploratory study had begun their CRM strategy a few
years ago, well before today’s current market awareness and level of understanding of
CRM was clear. Today’s CRM market has gained momentum, and as companies are
becoming more familiar with the ways in which they can maximize the value of their
CRM initiative more efforts must be made to enhance the ability to better understand
CRM deployment in order to be able to compete. Additionally, the types of CRM
products and services have shown clear signs of improvement with which a future study
must be made to research changes in the CRM market.
(diagram)
Theoretical Background

Ensuring successful deployment of CRM systems: The Case of Robeco Corporate

Banking
Deploying a successful CRM strategy: A practice model for Australian Banks - The Case
of Robeco Corporate Banking.

In today's digital world, organizations are beginning to realize the benefits of having
strong customer relationships and CRM solutions are becoming recognized as important
tools for retaining customers and attracting new clients. This new technology has been
designed to enhance an organization's ability to interact, attract and build one-to-one
relationships with its customers. However, the change in the mindset of many
organizations will be a key driver in the CRM market.

As engagements in CRM and ebusiness become more complex, so too have the issues
governing the organizational acceptance of these projects. That complexity is in part the
result of the increasing overlap and integration of people and IT issues. It is also due to
clients expanding their operations abroad and transforming themselves into multinational
or global companies. Organizations are facing a growing need to transform themselves as
they confront an increasing number of market forces, particularly significant are changes
such as privatization, globalization, new technology and mergers and acquisitions. The
growing emphasis on transformational change, which affects the entire organization, has
led to engagements that are longer in duration and larger in scope.

Apart from the issues of change, one of the many challenges that organizations face today
is the fact that they have more initiatives than they have capital or resources with which
to implement them. Many of these initiatives are disparate across the organization with
no single or universal view. While there is much confusion surrounding the best practice
methodologies for measuring CRM initiatives, some of the more common themes to
consider include better customer service, customer retention, number of referrals and
customer acquisition and how these have a direct impact on the bottom line and increase
shareholder value.

? Research by IDC examined five real-life case studies and identified the types of
concerns companies are facing in deploying a CRM initiative: ?

CRITICAL SUCCCESS FACTORS FOR SUCCESSFUL CRM DEPLOYMENT:

1) Managing Performance Benefits

For most of the companies, identifying the right types of metrics to track and measure
whether a CRM project had reached the desired goal, whether financially or through
better service to its customers, seemed to be a task that was not easily definable.
Calculating an exact monetary value for relationships or customer retention is not an easy
task. However recognizing the key attributes that help retain customers and focusing on
proactive and segmented client management is of critical importance.
In many cases identifying the right types of metrics to track and measure whether the
CRM project had met the desired goal, financially or through better service to its
customers, seemed to be a task that was not easily definable. The main issue is to ensure
that appropriate tracking and measuring techniques are in place so that the impact of any
change to the business process can be assessed and translated into measurable gains.

While it seems only logical that a company should be able to quantify its investment in
projects based on solid financial gains or other tangible returns, many organizations seem
to embark upon large CRM projects without careful consideration about what it should be
measuring. However, when considering investment in relationship management it is a
challenge by any standard to measure whether the investment is paying off. Many
companies including X,Y,Z have found it difficult to provide specific monetary values in
terms of new customers identified, increased sales, faster time to market, or faster
response to business conditions. This implies the greater need to continue investigating
the correlation between ROI, relationship management and the business outcome of these
CRM investments.

Calculating an exact monetary value on relationships or customer retention is not an easy

task. However, return-on-investment (ROI) calculations can become viable when users
have a good knowledge of their customer base. They can document situations where
specific customer information has helped to align business processes, discover new
business opportunities, or respond to competitive threats more quickly and cost-
effectively.

Efficient business processes, through which the level of customer knowledge can be used
to gain new business revenue or provide cost savings to avoid business risks, are
quantifiable values and provide returns to the business.

There are several reasons why it is a challenge to calculate ROI in CRM investments:
• Relationships are an intangible entity. It is not always easy to determine the link
between a relationship and ROI.
• Communication across the enterprise on specific CRM goals has not been shared
and users often do not have any idea of the cost/investment in customer information
in relation to outcome of their work.
• "Soft" benefits -- such as increased communication or greater service to customers
are difficult to measure in financial terms.
• Developing tools that allow for easier tracking and management of ROI results are
often not outlined at the start of a project and users who are not accustomed to this
activity lose sight of the real objective.

Because of these challenges the roles of service providers in projects need to go beyond
operational issues and include assisting clients to deploy effective performance indicators
that determine the value-proposition of the CRM initiative.
2) Managing Organizational Discipline
In today's digital world it is becoming increasingly critical for organizations to be able to
learn to adapt quickly to the changes taking place in the new economy. Organizations that
are able to mobilize all their resources and the knowledge that exists within the
organization are in a better position to enhance their performance. These organizations
are able to pursue goals in a changing environment, based on the ability to create, acquire
and share knowledge and manage business processes, then apply these activities to shape
the organization. However, in order to be able to achieve this level of discipline, an
organization requires a high degree of understanding, communication and commitment
from the entire organization. This entails a fundamental change in the culture, mindset
and operations of an organization.

Service providers with skill sets in helping companies deploy CRM or ebusiness
initiatives need to have the ability to educate and consult in the area of business changes
and ensure that a level of trust and discipline is gained across the entire organization.
Often the problem with these projects is not on the technology front, but more in the
"soft" skills of dealing with people and processes.

In developing CRM solutions the service provider plays a major role in delivering change
management skills during the course of the project. The major issue for many of the
client companies related to employee acceptance and discipline and initial resistance to
using the new system. The key in avoiding the great divide is to ensure that employees
who would use the system are involved at the design phase of the project. However, this
goes beyond involvement solely in the shaping of the system, and encompasses an
understanding of the business implications and how to maximize the value of the
information that is being collected. A case study of an anonymous German bank is a good
example, in which the CRM initiative was launched at the marketing level and learning to
deal with the mentality of IT people was considered a difficult task. Gaining business
value from the technology seemed to be a challenge to address at the IT level.

Today, many service providers claim to offer consulting services that encompass the
broader scope of business strategy, change management, organizational redesign, human
performance and cultural change required when deploying CRM or ebusiness strategies.
However, in reality a level of depth and knowledge can only be attributed to a select few,
mainly the large consulting firms that have established themselves as credible strategic
consultants and that continue to expand in this area. It can be acknowledged that other
pure play CRM and ebusiness providers have some capabilities in consulting, but most of
these offerings, in reality, are limited. Developing partnerships with providers with
different skill sets and core competencies is important in moving forward in the creation
of new business paradigms.

3) The Appropriate Customer Care Solution

To date, many CRM initiatives have focused largely on the operational aspects of CRM,
such as deploying a call center or sales force automation as documented by
[article/paper on ways of CRM]. The real challenge lies in the way CRM is used by
organizations. Automating the front office is only one step towards building a true
customer-centric organization. The one important aspect of CRM that until now has often
been overlooked is the analytical side, that is, using the information as a proactive tool to
sharpen and build on customer relations and making forward looking analysis available
throughout the organization.
However, one of the concerns of ‘smart’ CRM is finding professional people in the
marketplace who have the right skills to address business problems, develop predictive
modeling skills and analyze customer information in real time. IDC believes that service
providers will need to develop training or offer analytical services or partner with niche
players that have specialized in this area.

IDC's Recommendations for Service Providers:

IDC offers the following recommendations for eCRM service providers within the
context of this dynamically changing market:
• Focus on profitability and value creation of ROI: One approach is to divide the
project into phases in order to evaluate the impact in several increments and
demonstrate that the work is producing quick results, which is important to clients.
• Emphasize organizational effectiveness to enable change.
• Focus on core competencies and partnering strategies: It is this "core" that permits
you to maintain a competitive edge and maintain differentiating brands.
• Invest in customer data integration expertise.
• Continue investing in CRM training services or partnering.

The customer care solutions that have been implemented by the companies in this study
range from contact centers, sales and marketing solutions with elements of online
functionality, to data mining tools. The real challenge lies in the way CRM is used by
organizations. Automating the front office is only one step towards building a true
customer-centric organization. The one important aspect of CRM that until now has been
overlooked is the analytical side, i.e. using the information as a proactive tool to build on
customer relations and make forward-looking analysis available throughout the
organization. Many of the case study examples have been focused on the operational
aspects of CRM, such as deploying a call center or sales force automation, and some have
addressed the analytical part of CRM, either running in parallel or as disjointed additions
to the project at a later stage.
Figure 4-1 illustrates the operational elements of CRM (contact centers, sales force
automation and marketing automation) and identifies intelligent CRM as the focal point
of the operational activities.
(CRM at the heart diagram)

Contact Marketing
Centres Automation Sales
Force Force

Automation
Smart CRM

CRM Solutions

Today, the market has woken up to intelligent CRM, but there are no market leaders in
this space as yet. Software providers that are able to enrich and facilitate a company's
ability to consistently identify, profile, predict and turn customer information into a
strategic resource have the potential to secure themselves as early leaders in managing
customer data in real time. Partnering with such players will allow service providers to
deliver to their customers a CRM solution that has built-in real-time data intelligence
functionality. Companies that neglect this next phase of intelligent CRM could find
themselves becoming footnotes in the competitive landscape.
However, one of the concerns of intelligent CRM is to find professional people in the
marketplace with the right skills to address business problems, develop predictive
modeling skills and analyze customer information in real time. In the case study of the
German bank, CSC recognized the gap created by the shortage of skilled people and
placed two of its own consultants to help manage, mine and familiarize themselves with
the data pool. As the realization that the market in Europe has a shortage of these skill
sets increases, IDC believes that service providers will need to develop training or offer
analytical services in this region or partner with niche players specialized in the area.
4) Critical Milestones
The major concern for nearly all the client companies was the issue of user acceptance
and the changes that have been brought about by the CRM initiative. According to
Robeco the key is to keep the ongoing development as close to the users as possible and
keep them continuously involved. This way the company can avoid any
misunderstandings. Murphy's Brewery allowed the customer care people to be the first
line of support for the sales force when the project went live. The customer care staff and
the sales force work well together and have very strong and established relationships
which have proven to be a major advantage and went a long way towards the
management of the change through sales teams. The knowledge and skill transfer from
the service provider was critical in allowing the companies to be able to manage change-
initiatives in the future.
Being early adopters of CRM in the context of market maturity and knowledge of product
availability was another issue that both Robeco and Murphy's pointed out. Both
companies had taken on the CRM vision when CRM was in its infancy. Robeco was
unable to find a CRM solution that could address its private banking industry issues and
therefore had to customize an out-of-the-box solution. Murphy's realized that there was a
degree of risk involved in being the first customer to implement this sort of initiative as
they felt they had to train the consultants and were basically a test case for the providers.
On the one hand both companies wanted to lead in the adoption of new business models
in their respective industries, but on the other hand they faced the risk of failing, as they
were prototype samples.
ANALYSIS

Robeco Private Banking is a good example of an organization that was an early adopter
of CRM. The bank recognized the key attributes that would help it retain its customers,
focusing on proactive and segmented client management. By identifying the need for
change it addressed key aspects of the organization, processes, systems and staffing, it
aimed to provide a much more comprehensive service, increasing revenue and profit per
client. This initiative has since allowed the company to gain a deeper understanding of its
client base, and although the financial results looked positive, it has realized that payback
will not be apparent for another two to three years. IDC believes that this is the average
payback period for a large-scale CRM initiative. The main issue is to ensure that
appropriate tracking and measuring techniques are in place so that the impact of any
change to the business process can be assessed and translated into measurable gains.