Metric System

The art of attracting and retaining customers is a sizeable challenge for the CG industry. Deploying and maintaining a robust customer relationship management (CRM) solution to monitor and manage the customer base is just as daunting. In response, consultants recommend CRM benchmarking as a means of evaluating and maintaining CRM efficiency.

"CRM finds its way to the strategic agenda of a business because of its potential to enhance profitability," says Tom Manning, vice president at Arthur D. Little, a management-consulting firm with 16,000 employees in 40 offices worldwide. "CRM benchmarking is important."

FORMAL WARE

CRM benchmarking can be "formal" with specific metrics, or "less formal" focusing on business practices. Manning suggests that companies benchmark CRM technology in terms of costs and ROI, and in terms of flexibility--that is, the capacity to move and use information throughout the company. Ideally a company's approach to CRM benchmarking will be three-fold, he says. First, it should be "a way to support a business case" for CRM. Second, it should evaluate information flow, including the way a company carries its message to consumers. Finally, CRM should involve specific metrics for customer retention and customer value.

Manning strongly recommends that companies use CRM solutions and benchmarking to help understand the value of particular customers. CRM should provide an "enterprise overview" of the company's customer base across all points of contact. This overview will enable the CRM user to differentiate and treat customers according to their value to the business, and interact with each customer "as a single voice," he observes.

According to Manning, knowledge of customer value enables the enterprise to take advantage of opportunities and to make effective decisions regarding new investments. "Business practices and decision-making should adjust to support technology in general and CRM and should support 'customer focus' as the company defines it," says Manning.

Companies should also pay attention to what the competition is doing in terms of CRM and other factors.

"Are our competitors easier to interact with than we are?" is a key question companies should ask, says Manning. "CRM should improve business performance and customer satisfaction as well as reduce channel costs."

MOTIVATED FOR CRM

Guthy-Renker, one of the world's largest direct-response television companies, with annual sales in excess of $700 million, understands the power of CRM. The company sells its beauty and skin care items, motivational and self-help tapes, and exercise-related merchandise to U.S. and international consumers through broadcast, cable and satellite TV, as well as telemarketing, direct mail and retail channels. With a massive customer base and abundance of worldwide orders, Guthy-Renker turned to EDS, a provider of enterprise CRM solutions, to gain a scalable CRM infrastructure and enhance its CRM knowledge.

EDS provides CRM for Guthy-Renker from its facilities in Des Moines, Iowa, and Tucson, Arizona--part of EDS's global CRM infrastructure that processes 2 billion customer interactions annually and manages 150 data warehouses with 180 terabytes of data on behalf of 300 clients in 30 countries.

"EDS's investment in its infrastructure has already driven shipping savings directly to our bottom line and helped drive revenue growth," reports Kevin Knee, COO for Guthy-Renker.

EDS solutions have enabled Guthy-Renker to enhance call-center performance and reporting, and to improve warehouse inventory management. Guthy-Renker leverages EDS's capability for virtual call routing across multiple locations. When a call comes in, for instance, the system looks at available call-receiving sites and routes calls to where they are answered most efficiently. As a result of this and other EDS services, Guthy-Renker has optimized its management and forecasting of product demand and inventory, ensuring that products are available when ordered.

To further enhance customer satisfaction, EDS processes orders and payments for the infomercial giant, and manages fulfillment, distribution and customer support for Guthy-Renker. In accordance with a new three-and-a-half year agreement signed with Guthy-Renker late last year, EDS is deploying a new sorting system, enabling packages for multiple clients to be processed on the same machine and delivered on the same trucks to mail centers, saving postage costs. EDS is also adding assembly services, putting together product kits as Guthy-Renker's customer orders are received. These services will save Guthy-Renker more money and time by eliminating the two-step process of shipping products to different locations for kit assembly and then shipping completed kits to key central distribution points.

Knee concludes, "We are gearing up to expand our marketing programs with new products that we hope will boost our growth, and EDS has already proven its abilities to scale to meet our growth demand."

STRATEGY FOR SUCCESS

"CRM success comes from having a strategy, an information plan, an adoption plan, the right metrics, the right culture and the right compensation plan," says Martha Rogers, Ph.D., a partner at Peppers and Rogers Group, a management-consulting firm whose global client list includes BMW, Bayer Corporation and Hewlett Packard.

When benchmarking CRM, Rogers suggests that companies use metrics to answer the following questions: How much customer business does the company get over time? What is the customer's profitability over a range of products? What is the present and potential customer value? What share of customer's business does the company have? What is the customer retention rate? And what are the customer's needs?

CRM programs fail, she says, when companies think in terms of solutions and not the aforementioned strategies. A successful CRM program can offer multiple short-term benefits, long-term benefits, increased revenues, as well as a multitude of cost savings.

Rogers believes CRM's most valuable assets include the following: superior knowledge about customers, optimized storage and availability of customer information and above all else, the ability to cater to customers in a profound manner in which the competition cannot.