BRINGING BACK THE VALUE IN CRM

Synopsis

Data is the core asset of any industry that is customer oriented, because it is the asset that companies have and use to increase the value of their customer base. The quality of data has to be of high standard to maintain and increase the customer base and also to improve all the key departments’ efficiency that are linked together and feed on this data. CRM systems allowed for the convergence of various legacy systems to create a single customer interface whereby the users of the system and the companies have a single point of access to all various and important customer data. Data changes at a very fast rate and if the CRM systems do not have any means of checking the data online then the investments that were made in these investments cannot be fructified properly. Hence data has to be clean at all times to allow the systems to function properly and to deliver the right information at the right time.

CRM

Today’s enterprises irrelevant of their size have made fundamental investments in customer relationship management systems. The main reasons why these companies invested in CRM systems, apart from the fact that CRM creates a single central customer interface when used properly, were:

• Emerging new technology that promised a single customer interface,
• Changing market place,
• The emerging internet technologies threatened their existing revenue base,
• Customer demands for more speed and efficiency,
• Requirement of a flexible and more information based delivery system,
• No access to rich uniform customer information across all channels of the value chain,
• Huge administrative costs in cross selling and up selling new opportunities,
• To reduce data entry and maintenance costs by integrating all their customer data into one main integrated database,
• To be more customer focused and innovative by improving corporate brand equity,
• To create benchmarks against the best in the world,
• To eliminate duplicate billing and have a single customer number within contract management,
• To reduce time and costs incurred from reworking orders reentry errors and wrong shipment,
• To reduce front end transaction costs impacting their bottom lines by approximately 25%, and
• To reduce the people factor that was used for creating and maintaining customer accounts by approximately 80%.

ROI

After evaluating and looking at a variety of CRM providers and their costs the normal ROI on a CRM system is in about 2 years. The maximum returns are from the savings in transaction costs that impacted the bottom line directly. Other costs that impacted the investment were inventory working capital and receivables improvements from this investment. The more effective the CRM system the more effective is the customer lifetime value creating more revenues for the organisation. Elimination of revenue leakage, margins from additional sales activity, labor and non labor cost reductions and accurate contract and customer monitoring are the most important financial benefits that are taken into account to create the return on investment.

From various surveys it is seen that when a CRM initiative is implemented properly and maintained properly companies had a ROI which translated into:

• 51% revenue increase per salesperson,
• margins improvements of 2%+
• error removal from the ordering process of 23%
• customer satisfaction of over 20%.

On the other hand 31.7% of the companies reported no improvements at all.

CRM failure

CRM projects that have cost some companies millions and other hundreds of thousands of dollars fail or under perform because of a lot of reasons but there is only one reason that is avoidable but often ignored till the last moment. Data quality.

A recent Gartner Group reported that bad data is the number one reason that CRM projects fail. In our experience the value of your data affects your overall total cost of ownership and actually lowers your ROI by about 20% if left unheeded.

The only way of maintaining high quality data is to check the data at the source of its entry. Ensuring that the customer data is accurate is another issue that needs to be addressed as well. Customers are like nomads they roam in search of the best from the best. They move from place to place, marrying, getting divorced just like the companies themselves who are customers of other companies getting merged and often spun off or acquired. Customers are as dynamic as their information. Customers also have changing product and service needs throughout their lifetimes. Today’s customer expects the provider to deliver personalized information, services and offerings at all times.

When these changes are not registered properly in the central address management systems the CRM cannot function properly.

Data quality

To state an example; the US department of commerce in 2000 did a survey whereby 58 million US customers made purchases online creating 28 billion in sales. The Web presents a special challenge to data quality maintenance because the responsibility for data input lies more with the e-customer and less with the organization.

Can you imagine the quality of data these individuals submitted over the internet to various CRM systems? Incomplete data, spelling errors and phonetic errors to name a few are the reasons why data in a central address management gets polluted. The average user, according to various sources, errs in data entry once in every four entries that they make.

Companies have implemented their CRM systems. They have undergone the following processes prior to implementation:

• Discovery & Analysis

Consolidation data from various enterprise source systems and databases and mapping it to the target CRM system.

From various studies it is seen that organizations undertaking data migration rely on not so accurate metadata and out-of-date customer information which results in flawed design specifications. Data migration based on such data is only transferring polluted data into the main CRM system.

This whole process wastes precious time and resources.

It is obvious that the migration of data has to be done in a manner whereby the source master is cleaned in its entirety of duplicates and incomplete data. Batch process and online process using third party vendor products to clean the data prior to uploading the master clean data as initial load is the normal process.

This process allows the organisation to organise their customers in the correct order; individuals or organisations, account based or customer based and also to see if the various data records are mapped or linked to each other. This allows the organisation to move to the next level.

• Data Conversion & Cleansing

The company can now rectify all their errors ranging from the basic contact information to tax ID numbers and product numbers to any other information that the company may want to change. The cleansing can be done in two ways: batch cleansing and online cleansing.

In the batch and online mode, technology that is error tolerant and uses pattern matching search functionality to detect the duplicate data is used and most often recommended. Identifying each client is very important as the data can be related and is often mapped to each other to allow all the departments to work more efficiently.

Using the online mode the data quality is maintained and the data is checked for errors, duplicates prior to entering the clean database. The difference between a batch cleansed data base and a data base that is cleansed using the online version is of a linear nature. Clean data gets polluted relatively fast and the only solution is cleansing of the delta’s. Using the online process good data quality is maintained at all times.

• Data Quality Maintenance

Once your data is clean and has been uploaded into your CRM system maintaining the clean data can be a tricky task. Data that is entered into the CRM system can create duplicates. Statistics show that CRM systems that do not have an online data cleaning functionality have a pollution rate of 20 to 30%. Hence, CRM systems need to have a feature that allows them to prevent their clean data from becoming polluted with new data when it is being entered.

Online Data Cleaning

Ongoing data quality processing is necessary to maintain the best quality data. There are third party vendors that can check your data for duplicates in a batch process, clean your data, fix your data, fill in the missing fields. This process is good but expensive.

An even more effective and cheaper method is the online version of a data deduplication tool.
The cost efficiency in using this tool is that it finds all your duplicate data in your CRM system. Instead of send ing your complete master data to a third party vendor you would only send the duplicate data and incomplete data for post deduplication and postal validation to the third party vendor.

Take the mySAP R/3 system that is a back end ERP system that is used with different modules like CRM, SD (sales and distribution), HR, FI etc. This system has a central address management system that is its heart where all the customer information is stored. All the other modules use the address management for different purposes like sales and marketing, material management, sending out invoices etc. Prior to migration into a SAP R/3 system using such technology the vendor can clean the complete databases (from all the different legacy systems) using the batch and online method. In this manner clean data could be rewritten into the legacy systems and used by the employees without much disruption but with huge cost saving benefits. Then prior to migration into the mySAP system a second test of the corrected and validated data would be conducted using the batch method. Once the initial load has been completed an index pool would be created in the third party certified vendors server to cross check all new address entries to prevent pollution of the central address management system. After the deduplication check as the addresses are entered into the CAM the software would do an online check against the CAM databank for duplicates. This process would be an online functionality that would detect spelling errors and duplicate data. All new addresses are entered into the index creating and maintaining the quality of data.

What is important is that in using such technologies the customer saves money on the ROI calculation of the CRM system that he/she has purchased and is ensured clean data that multiplies into million of Euros that would have been spent if the data was dirty in the CRM system.

Bottom Line

Changes are constantly being made and new data is always being introduced into the system from various sales channels, including and especially the Web.

Companies that value their data and their customers must have a data quality check that is online connected to their systems to filter data at all customer interaction touch points, including the Web.

The most critical factor to the success of CRM initiatives is accurate customer data. Data entering the CRM application from every customer channel must be cleansed, initially and on an ongoing basis.

The value that is brought back to your CRM investment is the 20% that is initially lost due by pollution in your CRM system by duplicate and incorrect data.