CRM: Is it Technology or

Culture
V Chandrasekhar
Chief Technology Officer
Bank of Baroda

CRM Failures

Customer Relationship Management is often

confused with technology implementations.
Accounting and MIS can be automated using
machines but not relationships.
Business from early days to this date has been
based on emotions and relationships.
Business can never be pure play with
technologies alone.
Early CRM implementations met with failures
precisely for these reasons.

CRM - What is it?

The goal of CRM has remained the same throughout

the centuries:
ATTRACT AND RETAIN CUSTOMERS!

80/20 Rule:
20% OF THE CUSTOMERS
CONTRIBUTE 80% OF THE REVENUES

The CRM Value Formula:

RETENTION REPUTATIONATTRACTION

Why CRM

It costs six times more to sell to new customer than to sell

to an existing one.
A typical dissatisfied customer will tell 8-10 people
By increasing the customer retention rate by 5%, profits
could increase by 85%
Odds of selling to new customers = 15%, as compared
to those for existing customers (50%)
70% of the complaining customers will remain loyal if
problem is solved
90% of companies do not have the sales and service
integration to support e-commerce

Importance of service

Consumers return to their sales channel for service

$1 spent of service yields 12 times more revenue than
advertising
5% increase in loyalty yields up to 85% increase in profit
35% of online shoppers would buy more if they could
interact in real-time with a sales person
13.7% of Internet users who have not purchased said they
would buy online if they could speak with a customer
service representative

Source: Gartner Group

Forrester Research

Drivers of CRM

Globalisation Deregulated, proliferation

of competition - Hyper competition
Product Proliferation
Erosion of Monopoly Low Profits
Technology - Channel Proliferation
Shifting Customer Loyalties
Sophistication of Customer
Information Clutter
Getting customer attention

Drivers of CRM

Volumes
Anywhere Anytime

Transactions take place without knowledge of

humans or at non banking hours

Channel Evolution

1960s
1970s
1980s
1990s
2000s

- Letters
- Phones
- Fax
- ATM, e-Mail, Call Centers
- Internet Banking, Contact Centers

Channel Costs
Delivery Mechanism
In- Branch teller

Transaction Costs $
1.20

ATM

0.40

Telephone

0.30

PC Banking

0.20

Internet Banking

0.01

Driving Down Transaction Costs Using Technology

was at the Cost of Loss Direct Customer Contact

CRM Objectives

Cross-selling and up-selling to existing

customers
Reducing the cost of acquiring new
customers
Closing more sales
Targeting more lucrative markets
Creating conditions to make those goals
more obtainable
CRM is all about changing to new
processes with new technologies rather
than just automating existing processes

CRM Objectives

Maximize the value of the business to each

customer
Maximize the value of the customer to the
business

The Objective Is To Focus On

Customer Relevance To
Business

Another View of CRM

Evolution

Automating Existing processes Silo

Approach
Cross Functional Integration
Process Driven Removing redundant
processes that doesnot add value to ( or
impede) customer service
Customer Driven Model

One more View

Interaction Management = Attract,

Transact, Support, Enhance
Business Management = Strategy, Plan,
Action, Revisit

It is all about value

" the customer never buys what the
supplier sells. What is value to the
customer is always something quite
different from what is value or quality to
the supplier."
Peter Drucker
"Management Challenges for the 21st Century"

Value

Business Value = Growth, Revenue,

Efficiency, Innovation
Customer Value = Service, Price, Quality

Human Value Chain = Manufacturer ,

Distributor, Customer

CRM & Marketing

Metrics

Traditional
Marketing

CRM

Increase Sales

Maximize Loyalty

Customer
Acquisition

Customer Life Cycle

Management

Evaluation

Market Share

Mind Share

Customer
Information

Surveys,
Interviews

Behavioral
Information
Data Base

Communication

One Way.
Promotion
Oriented

Two Way.
Interaction Oriented

Purpose
Focus

CRM in Banking

CRM is for Mass Mkt

Relationship Banking is for HNI Rs.1 to 2
Lacs/month income individuals
Old generation was satisfied with conservative returns
Generation after generation banked with same bank
New generation knows its options
Double Income Families
Increase in HNI in Asia
KYC, AML, Treasury Siloed
Bank must be customer centric not CRM centric

CRM in Banking

Optimise Customer Interaction

Plan Multi Channel Delivery

Uniform Experience across channels

Alerts across channels
Have Single View of Customer
Campaign Mgt
DWH

Financial Logical Data Model

CIF Customer Information File

Clean and Comprehensive Customer Data

CRM Types

Operational CRM Things that touch the

customer, traditional, tactical, sales and
service, real-time system, what one sees
also known as front office CRM
Analytic CRM Things that deal with
internal data generated by operational
CRM/ external data, marketing and
customer
intelligence,
segmentation,
matrices, predominantly batch system, not
seen, runs in background, also known as
back office CRM

Data

Customer Reference Data - Descriptive

data
Relationship data Transaction and other
interaction Data
Contextual data Unstructured data,
Difficult to implement like regulatory,
political, economic impacts
Profitability Data

Data Management

Planning and data acquisition

Disparate data sources

Multiple platforms
Disparate architectures

Maintenance of data update to

prevent from information decay
Deletion or disposal of stale data
Applying data

Issues of Customer Centric

Technologies

Information Clutter
Information Overload
Channel Conflicts
Privacy
Confidentiality

CRM Complexity

Dynamic complexity
Business, Customer
Fragmentation
Business, Customer
Uncertainty
Market, Loyalties , Technologies, Business

CRM
Unification: One face to customer
Synchronization: Consistent customer
response
Coordination: Coordinated service
delivery

CRM Assets

IT: Technology and Information assets

constitute at most 25% CRM
competence
People & Process: Other assets include
brands, messages, staff knowledge,
policies, processes and rules
Organisational behavior : How you
engage with people at all levels is
crucial for CRM success

Organizational Issues

Most company are organized around products or

service rather than customers
Most companies distribute through intermediaries,
rather than direct to end users
Most companies are organized for functional
competence

For selling products, not cultivating customers

Going in the customer direction requires an

integrated approach

Functional integration, and

Divisional integration

CRM Implementations

The rate of successful CRM implementations is

around 30%. That's an astonishing 70% failure
rate
In most of the cases the failure is not because
the requirements were not captured in the
RIGHT manner, but because RIGHT
Requirements were not captured.
The real reasons for the difficulty can be
grouped into three categories - dynamic
complexity, fragmentation, and uncertainty

Key Factors

Tighter definitions and measurement

of business objectives
Examination of CRM processes
Effective measurement of ROI

Build or Buy

There is a consensus that a blended approach is

emerging, i.e., buy and integrate the systems that will
meet 50-70% of the business requirements, and build
the rest.

Some of the factors to help you decide whether to

build or buy include:

Technical skill
Application domain knowledge
How much time is needed to go to market?
Organizational maturity - what is your culture, risk tolerance,
tolerance for new technology, degree of structure,
standardization
Flexibility - platform and operating system volatility,
business unit flexibility/adaptability, application integration,
volatility requirements

CRM in Banking

CRM is Relationship Management

Internal
External

Economic upturn favors self service

channels
Its downturn the branch channels

CRM in Banking

Historically Most organisations were internally

focussed
As communication and mobility and loyalties
decreased focus shifted to customer relationship
retaining and enhancing relationship
Increase efficiency of a relationship multiple
relationships per customer
Cost of relationship channel migration issues
Listening company quiet performer

Value

LTV Long term value of customer

MVC Most valued customer

Value = Revenue from Customers

Cost of Relationship

CUSTOMER PROFITABILITY MEASURE

Value
FINANCIAL
METRICS

CUSTOMER
METRICS

OPERATIONAL
INITIATIVES

Revenue Per
Customer

CrossSelling

Scheduled
Call-Backs for
Customers

Retention
Probability

Retention
Costs

Acquisition
Costs

Customer
Satisfaction

Service
Efficiency

Customer
Referrals

Servicebased
Initiatives

Channel
Consolida
tion

Incentive
Referral
Programs

Why CRM Fails

Lack of management vision and commitment.

Lack of complete business process analysis.
Selecting the software before the analysis is completed.
Implementing a system without changing the way
you do business.
Managing expectations
Becoming locked into a system that does not support
the CRM initiative (Agile Adaptability)
Business acumen, interpersonal relationships and top
technology
Efficient Back Office Functions and its integration
with front office and customer service delivery is
critical

Reasons for CRM Failures

Thinking that technology is CRM

Management has little understanding of or
involvement with the customer
Rewards and incentives are tied to old, noncustomer objectives
Staff culture doesn't relentlessly focus on the
customer satisfaction

42% Dont Respond To Email

Within 24 Hours
19% Dont Respond At All

Reasons for CRM Failures

Forgetting that the architecture and integration issues

are bigger and more expensive
Lack of mutually reinforcing processes
Little coordination of multiple departmental
initiatives and projects
Poor-quality customer data
Creating the CRM team happens last
The team lacks business staff
No measures or monitoring of benefits
Lack of testing and Feedback mechanism
Customer not in the loop - customer feedback is
not part of change

CRM Technology

Enterprise Architecture
Comprehensive Touchpoint Automation
Rich Platform Capabilities
Unified Delivery Architecture
Enterprise Application Integration

CRM Technology

Front-office Automation
Unified Customer Repository
Seamless Business Processes
Synchronize Business Functions
Synchronize User Constituencies
Synchronize Business Channels
Deliver Multi-dimensional Experiences
Enterprise Application Integration
Synchronized Demand & Supply Chain

CRM Implementations

Data Collection and Management:

Customer Experience

It is the customer experience that ultimately differentiates a brand.

Customer facing activities are served better by humans.
It may turn out to be cheaper to have a human in long run in the
CRM value chain

Change Management

It is the critical component to delivering CRM. However it is given

least importance

CRM is a culture and not technology

Process Alignment and Integration

Every Activity of the organisation must be aligned to customer

focus and seamlessly integrated to corporate CRM goals

CRM Implementation

Choose one CRM Goal and Go for it

The CRM Team

Extend breadth and depth of customer relationships

Use CRM to lower costs
Leverage and enhance brand equity
Focus on customer value and satisfaction

To ensure success, have the right people on the team

including vendor teams with a third party integrator /
consultant.

IT Business Benefit

Always deliver a business benefit every six months.

Integration

Channel Integration
Department / Business / Organisation
Integration
Service Integration Marketing, Sales,
Service

Success

Scarcest resource is customer attention

Brand is organisational behavior
Best form of Mktg is by maintaining
persistent presence
Discover and focus on your strengths not
weaknesses
Resonate with your employees
Success of Strategy lies in its timely
implementation

CRM Project Management

Define your business objectives and goals against which results can
be measured.
Give each CRM project three dimensions: people, processes
and technology.
Establish a systematic approach to project management including
team development, IT, marketing, services, sales and management,
as well as software.
Clearly identify corporate and customer needs. Research
requirements, behavior and how to engage and deliver
effectively.
Manage organisational change effectively. The human factor is
imperative to a projects success.
Invest in training more essential than any piece of software.
Focus on proactive selling, management and relationship building to
effectively upsell and cross-sell.

Success Factors

Close a sale before competition: Plan and

manage field sales, Automate the call center,
Create and manage quotes, Configure complex
products, Drive web sales, Optimize mobile sales
Integrate Your Service Center: expand your
customers base, build customer loyalty and
improve service efficiency
Interaction Center integrates with Service , Sales,
Contracts , and Marketing applications to reduce
the cost of customer contact center operations.

Relationships &
Organisational Success

Great organisations are built on great

relationships
No company with poor internal relationship
can create and deliver quality and innovation
for long time
It can provide bursty performance but cannot
sustain its competitive advantage
Success hinges successful management of
both internal and external relationships

TRM Total Relationship Mgt

Govt Relationship
Regulator Relationship
Employee Relationship
Customer Relationship
Supplier Relationship

Getting to the Heart of CRM

We have only two sources of competitive

advantage:

The ability to learn more about our

customers faster than the competition and
The ability to turn that learning into action
faster than the competition

-Jack Welch

Thank You