Gearing up for CRM: Antecedents to successful implementation
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Behram Hansotia is co-founder, president and CEO of InfoWorks, a member company of the Rapp Collins Marketing Services Network and the Omnicom Group. InfoWorks’ entire focus is on the design and implementation of customer-focused strategies and analytic tools and decision processes for enhancing customer value. Behram is a frequent guest lecturer at Northwestern University and has published extensively in major marketing and management science periodicals. He serves on the editorial boards of the Journal of Interactive Marketing and the Journal of Database Marketing. Behram has a PhD in Management Science from the University of Illinois at Urbana-Champaign and is a member of INFORMS, the Institute for Operations Research and Management Science.
Abstract The thesis of this paper is that customer relationship management (CRM) works best for certain types of businesses, products and organisational structures. Beyond the environmental and organisational factors, success depends on a customerfocused strategy that is implemented by often re-engineering current customer interaction processes and sometimes designing entirely new processes. The keys to profit enhancement however are processes that maximise the opportunity for increasing customer-generated cash flows at every customer contact. This is done by invoking decision rules that recommend specific customer treatments at each contact. Customer segmentation and customer value scorecards (CVS) are discussed as key tools in understanding customers and identifying opportunities for increasing customer-generated cash flows. An example that discusses how the introduction of a CVS in a company resulted in the company embracing CRM is also presented. CRM does require managing customer interactions, but more importantly, to be successful, it requires senior executives to be involved in creating the environment, culture and processes that will help it succeed. Organisational readiness, careful planning, the deployment of the right analytic tools and technology, as well as flawless execution are all needed for CRM to provide significant bottom-line results.
Dr Behram Hansotia President & CEO, InfoWorks, 10 South Riverside Plaza, Suite 1920, Chicago, Illinois 60606, USA. Tel: ⫹1 (312) 589 0261; Fax: ⫹1 (312) 559 1061; e-mail: [email protected]
INTRODUCTION A revolutionary new marketing paradigm, customer relationship management (CRM), is emerging in many large corporations. The CRM model first started being discussed less than a decade ago. Bits and pieces of it have been deployed in some organisations and considerable experimentation has occurred, mostly though, with mixed results. The CRM movement, however, has built a certain
䉷 Henry Stewart Publications 1479-182X (2002)
Vol. 10, 2, 121–132
momentum and because the ideas underpinning it are elegant and rational, in spite of the negative publicity, more and more companies are experimenting with it, or are seriously considering deploying it at some level. CRM is essentially a customer data intensive effort. A
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