03 December 2010

The Customer Relationship Management (CRM) elective offered the MBA Participants an opportunity to understand how CRM has evolved in various companies with the demands of various stakeholders such as customers, clients, and the society at large. The elective also offered an opportunity for MBA Participants to volunteer to present a Book Review that delves on the latest in the field of Customer Relationship Management. There were 11 students who undertook to present a Book Review on a broad range of books such as Customer-Centered Enterprise (Harvey Thompson), The Ultimate Question (Frederick Reichheld) and Accountable Marketing (Peter Rosenwald). As an MBA participant who has a keen interest in CRM and Business to Business Marketing (B2B), I volunteered to present the book report on ‘One to One B2B (Don Peppers and Martha Rogers)’, a book that highlights the application of CRM in a B2B setting. The book discusses 5 cases studies: Dell, Bentley Systems, Convergys, Novartis CP, and Lifeway.

The basic objective of the book is to discuss how to develop effective CRM strategies. The process of developing an effective CRM strategy can be graphically in stepwise manner, see right:

One of the common messages across the cases is that organizations are increasingly moving towards identifying the Customer Strategic Value by looking at the clients from a larger perspective than just current value (revenues generated). In-fact, the case of Convergys specifically talks about how Convergys needs to identify growable clients and then adopt proactive strategies in influencing client’s future behaviour. The proactive strategies include strategies such as taking over business that currently goes to competitors, introducing and selling new services, etc. Such a change in strategy was necessitated by the fact that the organization had mainly experienced inorganic growth, i.e. growth by acquisition, a strategy that did not augur well for the future sustainability of the business.

The book also talks about the need for organizations to move from business centric business model to a customer centric business model. For example, the case of Novartis CP discusses how the organization that sold more than 30 chemicals (crop protection products such as herbicides, fungicides, seed treatment and insecticides) for 100s of different crop configurations by reaching out to more than 100000 farmers. Novartis CP identified the growable clients by identifying 20000 of the 100000 farmers with the help of the typical 80/20 pyramid. Novartis CP then went onto categorizing these from the most important to the least important customers, see right.

The book emphasizes upon the need of sales force re-organization. Continuing from our above example, Novartis CP allocated its 100 best customers (PEP) to the most experienced salespersons who maintained a regular contact with them and offered individual customized solutions. Similarly as we approach the lower segments of Important Farmers, these customers were offered lesser importance as they were offered mass customized solutions through the marketing team.

The book highlights the importance of customer data collection. Again, going back to the Novartis CP case, unlike its competition Novartis CP was prudent to have worked with the dealers rather than bypass them. This approach helped Novartis to gain an edge over its competitors and to collect important and reliable customer data.

According to me, the most important aspect that the book talks about is the need of pervasive dissemination of information. For example, when Dell launched an online platform called Premier Dell.com, the idea was to aggregate information (specific to each clients need) from a deluge of information. Premier Dell.com is an online platform where end users within an organization can shop for desktops, notebooks, servers, storage, and related services. With Premier Dell.com, customers could gather specific data without having to make numerous phone calls or send regular emails to its Dell. Such an online service helped Dell to increase customer satisfaction and reduce the costs associated with servicing customers. The Bentley case talks about a similar program that Bentley calls SELECT Program.

The book also talks about two very interesting models: Lifetime Value Model (LVM) of Convergys. LVM focuses on focus on metrics rather than guesswork, emphasizing the need to include non-revenue measures and assign weights to them based on their relative importance. For example, Average Revenue Score (current spending & projected spending), Revenue Change Score (year to year actual spending), Current Relationship (signed contracts & total length of contracts), and Technology Engagement (system integration, reporting, tele-web, & email) have been assigned 20%, 25%, 15%, and 20% weight respectively.
There are several takeaways from this book report and indeed from book reports presented by other MBA Participants. Such practical examples from book reports, theoretical knowledge and experience sharing of Professor Alain Philippe, and the experience sharing by prominent speakers such as Stéphanie Demay are aspects that are some of the major takeaways from the Customer Relationship Marketing elective.

Avishek Sarkar, Full-time MBA 2011

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