The Customer Managem ent Scorecard: Managing CRM for Profit by Neil Woodcock, Merlin Stone and Bryan Foss ISBN:0749438959 Kogan Page © 2003 (428 pages) Based on a unique global survey conducted by QCi that aimed to reveal the true relationship between effective customer management and business performance. Table of Contents The Customer Management Scorecard—Managing CRM for Profit Foreword Introduction Part I - The Scorecard Results and Conclusions Chapter 1 - What is CMAT? Chapter 2 - Overall Analysis Chapter 3 - Customer Management Around the World Chapter 4 - Where Companies Can Create and Destroy Value Chapter 5 - Analysis and Planning Chapter 6 - Proposition Chapter 7 - Customer Management Activity Chapter 8 - People and Organization Chapter 9 - Information and Technology Chapter 10 - Process Management Chapter 11 - Measurement Chapter 12 - The Customer Experience Chapter 13 - The Role of Customer Information Management and Usage in Best Practice Customer Management Chapter 14 - The Dutch Insurance Industry CMAT Study Chapter 15 - Trends in Customer Management Chapter 16 - The Business Case for Customer Management Chapter 17 - Guidelines for Successful CRM Implementation Part I I - Measurement, System s and Data Chapter 18 - Return on Investment on e-CRM Chapter 19 - UK Data Warehousing and Business Intelligence Implementation: General and Retail Chapter 20 - Using Advanced Data Analytics to Improve Customer Management Chapter 21 - Applying IT in Customer Management Chapter 22 - CRM's Achilles Heel: Understanding the Customer Part I I I - The Sectoral View Chapter 23 - Managing Public Sector Customers Chapter 24 - CRM Strategy and Implementation in Telecommunications Chapter 25 - Business-to-Business CRM Part I V - Channels and Media Chapter 26 - Multi-Channel Customer Management Chapter 27 - Permission-Based E-Mail Chapter 28 - The Data Lessons of E-mail in CRM Chapter 29 - Measuring and Improving the Usability of New Media Part V - I mplem entation and the Future Chapter 30 - Customer and Employee Loyalty The Customer Managem ent Scorecard: Managing CRM for Profit by Neil Woodcock, Merlin Stone and Bryan Foss ISBN:0749438959 Kogan Page © 2003 (428 pages) Based on a unique global survey conducted by QCi that aimed to reveal the true relationship between effective customer management and business performance. Table of Contents The Customer Management Scorecard—Managing CRM for Profit Foreword Introduction Part I - The Scorecard Results and Conclusions Chapter 1 - What is CMAT? Chapter 2 - Overall Analysis Chapter 3 - Customer Management Around the World Chapter 4 - Where Companies Can Create and Destroy Value Chapter 5 - Analysis and Planning Chapter 6 - Proposition Chapter 7 - Customer Management Activity Chapter 8 - People and Organization Chapter 9 - Information and Technology Chapter 10 - Process Management Chapter 11 - Measurement Chapter 12 - The Customer Experience Chapter 13 - The Role of Customer Information Management and Usage in Best Practice Customer Management Chapter 14 - The Dutch Insurance Industry CMAT Study Chapter 15 - Trends in Customer Management Chapter 16 - The Business Case for Customer Management Chapter 17 - Guidelines for Successful CRM Implementation Part I I - Measurement, System s and Data Chapter 18 - Return on Investment on e-CRM Chapter 19 - UK Data Warehousing and Business Intelligence Implementation: General and Retail Chapter 20 - Using Advanced Data Analytics to Improve Customer Management Chapter 21 - Applying IT in Customer Management Chapter 22 - CRM's Achilles Heel: Understanding the Customer Part I I I - The Sectoral View Chapter 23 - Managing Public Sector Customers Chapter 24 - CRM Strategy and Implementation in Telecommunications Chapter 25 - Business-to-Business CRM Part I V - Channels and Media Chapter 26 - Multi-Channel Customer Management Chapter 27 - Permission-Based E-Mail Chapter 28 - The Data Lessons of E-mail in CRM Chapter 29 - Measuring and Improving the Usability of New Media Part V - I mplem entation and the Future Chapter 30 - Customer and Employee Loyalty Chapter 31 - Declining UK Customer Service Standards Chapter 32 - Governance and Executive Sponsorship in CRM Programmes Chapter 33 - Managing Customers: Challenges for the Future Index List of Figures List of Tables Back Cover The Customer Management Scorecard is based on a unique global survey conducted by QCi that aimed to reveal the true relationship between effective customer management and business performance. Over 300 global assessments of blue chip companies in 22 countries, across all sectors, were conducted using QCi’s Customer Management Assessment Tool (CMAT) diagnostic process. CMAT is recognized as the world’s leading customer relationship management (CRM) best- practice benchmark. With contributions from 25 international experts, in-depth cases and drawing on the leading-edge research findings, this book is the most comprehensive source of data ever published on CM global practice. The authors first present a detailed analysis of how the survey was conducted and its findings. They then go on to provide essentially practical insights and advice that will help any company to: re-examine their current approach to CM; learn from the world’s best performing companies; make use of data about customer experience for CM; understand multi-channel CM; ensure both staff and customer loyalty; measure the return on investment; ensure that their CM programme is profitable; build an integrated IT capability for CM; implement an integrated CRM strategy; focus on future challenges and prepare for them. About the Authors Neil Woodcock is Chairman of QCi, an OgilvyOne company. He has led QCi’s research into the quality of customer management and the correlation between business performance and customer management. He has written five books and numerous articles on CRM and is on the editorial board of The International Journal of Customer Relationship Management and The Journal of Database Marketing. He is a founder member and Fellow of the Institute of Direct Marketing and co-founder of QCi. Professor Merlin Stone is one of the world’s leading CRM researchers and consultants. He is Business Research Leader with IBM and also the IBM Professor of Business Transformation at Surrey University, UK. He is a Director of QCi, Swallow Information Systems Ltd, The Database Group Ltd and ViewsCast Ltd. A prolific author with some 20 titles to his name, he is on the editorial advisory boards of numerous journals. Bryan Foss is Customer Centricity Solutions Executive within IBM Global Financial Services, and is currently leading an IBM business providing and integrating application-based CRM and wealth management solutions for financial services companies worldwide. Bryan works with retail banks, insurers and other financial services companies. Bryan is IT editor of the Journal of Financial Services Marketing and is a frequent presenter at conferences around the world. The Customer Management Scorecard—Managing CRM for Profit neil woodcock merlin stone bryan foss London and Sterling , VA First published in Great Britain and the United States in 2003 by Kogan Page Limited Reprinted in 2003 Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms of licences issued by the Copyright Licensing Agency. Enquiries concerning reproduction outside those terms should be sent to the publishers at the undermentioned addresses: 120 Pentonville Road London N1 9JN UK www.kogan-page.co.uk 22883 Quicksilver Drive Sterling VA 20166-2012 USA Copyright © Bryan Foss, Merlin Stone and Neil Woodcock, 2003 The right of Bryan Foss, Merlin Stone and Neil Woodcock to be identified as the authors of this work has been asserted by them in accordance with the Copyright, Designs and Patents Act 1998. ISBN 0 7494 3895 9 British Library Cataloguing-in-Publication Data A CIP record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Foss, Bryan. Customer management scorecard/Bryan Foss, Merlin Stone and Neil Woodcock. p. cm. Includes bibliographical refrences and index. ISBN 0-7494-3895-9 1. Customer relations-Management. I. Stone, Merlin, 1948- II. Woodcock, Neil. III. Title. HF5415.5 .F677 2003 658.8'12-dc 21 2002014807 CMAT TM is a registered trademark. Typeset by Saxon Graphics Ltd, Derby Printed and bound in Great Britain by Bell & Bain Limited, Glasgow To Doreen (Mum) and Stan, Josie and Edgar Bryan Foss To my wife Ofra and my daughters Maya and Talya, my principal customers Merlin Stone To Mum, Dad, Julia, Callum and Aliya - thanks, as always, for your support Neil Woodcock List of contributors Julie Abbott, IBM Alison Bond, ABA Associates Sarah Boussofiane, Ogilvy One Andy Brown, IBM Roland Bushoff, formerly IBM Netherlands, now Twijnstra Gudde Professor Clarke Caywood, Northwestern University Mark Cerasale, IBM Roger Clarkson, IBM Dave Cox, Swallow Information Systems Tony Dobbs, IBM Vanessa Donnelly, IBM Mike Faulkner, Customer Management Journal Genevieve Findlay, IBM (at time of writing) Peter Floyd, IBM (at time of writing) Bryan Foss, IBM Thorsten Gorchs, IBM Lada Gorlenko, IBM Peter Hayes, Quadrant Iain Henderson, QCi Matt Hobbs, IBM Dave Irwin, Acxiom Corporation Mahnaz Khaleeli, IBM Peter Lavers, QCi Colin Livingstone, IBM Antoine Martinez, University of Newcastle upon Tyne Rob Mattison, IBM Jane McCarthy, Detica Hans Neerken, IBM Raymond Pettit, ERP Associates Emma Reeves, IBM James Richie, IBM David Selby, IBM Michael Starkey, De Montfort University and QCi Professor Merlin Stone, IBM and QCi Clare Traynor, Spelthorne Borough Council Juergen Uhl, IBM Divya Verma, IBM (at time of writing) Teresa Waring, University of Newcastle upon Tyne David Williams, QCi Neil Woodcock, QCi Professor Len Tiu Wright, De Montfort University Neil Woodcock is Chairman of QCi, an OgilvyOne company. He has led QCi's research into the quality of customer management and the correlation between business performance and customer management. He has written five books and numerous articles on CRM and is on the editorial board of The International Journal of Customer Relationship Management and The Journal of Database Marketing. He is a founder member and Fellow of the Institute of Direct Marketing and co-founder of QCi. Professor Merlin Stone is one of the world's leading CRM researchers and consultants. He is Business Research Leader with IBM and also the IBM Professor of Business Transformation at Surrey University, UK. He is a Director of QCi, Swallow Information Systems Ltd. The Database Group Ltd and ViewsCast Ltd. A prolific author with some 20 titles to his name, he is on the editorial advisory boards of numerous journals. Bryan Foss is Customer Centricity Solutions Executive within IBM Global Financial Services, and is currently leading an IBM business providing and integrating application-based CRM and wealth management solutions for financial services companies worldwide. Bryan works with retail banks, insurers and other financial services companies globally. Bryan is IT editor of the Journal of Financial Services Marketing and is a frequent presenter at conferences around the world. Acknowledgements Bryan Foss My IBM experience with clients and colleagues worldwide has provided an enormous opportunity to expand my own knowledge of customer management and successful business transformation. This book is the most recent analysis and summary of years of results and shared experience in customer management diagnosis, benchmarking and implementation. Support and encouragement for these efforts has come from my IBM colleagues Richard Lowrie, Mark Chetwood and Mark Greene, with too many others to name individually. Strong and valuable mutual links now exist between QCi, Ogilvy and IBM. David Hicks, Paul Weston, David Williams and the other QCi directors have all been ready to network, sharing their knowledge and gaining from experiences with our colleagues, clients and other partners. Above all I have benefited enormously from working with Merlin and Neil for some years, through the evolving alliances of various companies, each concerned with the development of exceptional customer management capabilities. Merlin Stone This book is the culmination of a lot of hard work, not just by Neil, Bryan and myself, but by the many colleagues from IBM and other companies and organizations who have contributed to the book. So thanks are due to all the contributors, many of whom I had to hound so that they produced their contributions on time. However, all the experience that enabled us to produce this book has come from working with our clients all over the world. Naming individual clients would be inappropriate, and in some cases it would breach confidentiality agreements, so I hope those clients who read this book feel properly appreciated by us! My manager at IBM, Paul Clutterbuck, has given me the time to produce this book, but has unfortunately not benefited from the long periods of e-mail silence from me that he might have expected as a result - the book probably added to the volume of correspondence. My thanks are also due to the rest of our small business research team at IBM - Fola Komolafe, Abigail Tierney and Marina Parshikova. Strong support for our efforts has also come from IBM senior management. Finally, no acknowledgement would be complete with reference to Mike Wallbridge, who brought me into what was called 'database marketing' in the 1980s, and who has remained a staunch supporter - as client and friend - ever since. Neil Woodcock My 22 years of working life have provided a few challenges, but none so big as trying to understand how to make money from a seemingly obvious set of techniques such as CRM! It seems that in the stampede for efficiencies in companies, customer management has been downgraded to a drab and dreary set of processes, or even degraded to ugliness in some cases - we all have irresistible stories of appalling customer service! I have worked with a few people who strive for something different, who truly believe that the customer is at the heart of all successful companies. I'd like to thank the people I have worked with who have provided me with inspiration over the last few years: my colleagues at QCi, Paul Weston, Paul Rayfield, David Williams, David Hicks and Robin Mitchell to name five; Reimer Thedens and Nigel Howlett from Ogilvy One; Michael Starkey from De Montfort University; numerous clients and friends such as Dave Crawshaw from Britannia Building Society, David Bearman from Boots, Jon Furmston of BT, Anne Gowan from the Telegraph Group, Peter Georgeu from Direct Response SA, Richard Johnston from Schlumberger-Sema, Andrew Hartley from Kleinwort Capital, Derek Holder from the IDM and Richard Lees from The Database Group; my wife Julia, for her stunningly sensible reflections on consumer behaviour and insights into what works for consumers; and finally, Bryan and Merlin, always an inspiration, and great to work with too. I look forward to continued discussion and debate with you all! Foreword This book is one of the many outcomes of the strong cooperation between IBM and QCi, an OgilvyOne company, in the area of customer management. For several years, Neil Woodcock, Chairman and founder of QCi, Bryan Foss of IBM, and Professor Merlin Stone, of both IBM and QCi, have led a diverse and relatively informal team drawn from both companies and from among clients, universities and other suppliers of customer management systems and services. This extended team, which shares a common interest in raising the standards of customer management worldwide, has developed a comprehensive knowledge base showing how well companies throughout the world manage their customers. QCi has led this work by developing CMAT (the Customer Management Assessment Tool), the only truly independent standard for measuring how well companies manage their customers. IBM, one of the world's largest suppliers of systems and services relating to CRM implementation, has sponsored a number of studies using the research version of the tool - CMAT-R, and has carried out a number of client engagements in which its consultants used CMAT. Raising the standards of customer management is an important task. Successful companies have shown that CRM brings benefits to shareholders, customers and employees. However, the task is not easy - there are many aspects of customer management where companies are clearly having difficulties and performance seems to be in decline. IBM and OgilvyOne (the world's largest relationship marketing agency) hope that through our commitment to the extensive publication of research, case studies and consulting reports, we will accelerate learning about customer management, thereby making progress easier for the many clients who rely on us for customer management systems and services. Reimer Thedens Chairman/CEO, OgilvyOne Worldwide Ginni Rometty General Manager, IBM Global Services [...]... for Successful CRM Implementation Chapter 1: What is CMAT? Overview Neil Woodcock, Michael Starkey and Merlin Stone CMAT is the leading customer relationship management (CRM) assessment approach for organizations that want to understand how well they are managing their customers and to compare this performance to a global benchmark Trained and accredited assessors, who are experienced CRM practitioners... technology then needs to deliver the current information to relevant people at the right time in order for them to fulfil their role in managing customers Of course, technology must be reviewed constantly against changing needs and development in the technology itself Information and technology includes: sourcing and understanding customer information; information planning and quality management; functions... unlikely this will be enough information on which to build a long and valuable relationship But new customers need to be convinced that there is something in it for them if they are to give more information about themselves When the information is collected it needs to be used and maintained Getting to know includes: information collection priorities; attitude and satisfaction information; understanding... planning for CRM investment It provides input to merger and acquisition strategies It can provide input to analysts and influencers on company assets and corporate competence Note 1 Woodcock, N (2000) Does CRM performance correlate with business performance? Journal of Interactive Marketing (UK), April Chapter 2: Overall Analysis Neil Woodcock, Michael Starkey and Merlin Stone Customer Management Performance... is being created or destroyed Creating the organization 43 38 Value being destroyed Managing your people 40 38 Some destroying of value Managing suppliers 38 40 Some creation of value Information and Technology 40 35 Value being destroyed Acquiring customer information 49 43 Value being destroyed Managing customer information 32 28 Value being destroyed Current system functions 32 36 Created Developing... customers and business that will be good for your company (convertible, profitable, retainable etc) Enquiry management Develop winback programmes for selected former customers Winback Early retention Welcoming Provide thanks - as a courtesy and reinforcement of purchasing decision Getting to know Ensure early relationship service-management works Monitor early transactions for indications of usage, higher... communication Information and technology Technology exists to help organizations acquire, manage and use the vast amount of information involved in managing customers It is an enabler [1] rather than a deliverable in its own right, but managed badly it can also be a stopper An organization needs to understand what information it has available, what it is missing and how to manage the information The... best practice For companies that are prepared to re-examine their approach to CM, the prize is large Although CM performance does differ between sectors and between geographies, the characteristics of companies that perform best in CM differ little From our work we have identified characteristics that define best performing companies This list of characteristics should be a key focus for senior managers... business intelligence in managing retail CRM Chapter 20 describes the use of advanced business intelligence analytics to improve the returns from CRM Chapter 21 ranges widely over systems aspects, not just measurement, but provides an overview of many of the issues faced by companies in choosing and integrating systems to support CRM, as well as a quick guide to the process of selecting CRM systems, and an... benchmarking N (2000) Does CRM performance correlate with business performance? Journal of Interactive Marketing (UK), April [1]Woodcock, How a CMAT Assessment is Carried Out Planning This starts with a half-day briefing session for the assessor from a senior team within the organization During this session the attendees establish the current 'perceived' stage of development in CRM, key business issues . customer management and business performance. Table of Contents The Customer Management Scorecard Managing CRM for Profit Foreword Introduction Part I - The. customer management and business performance. Table of Contents The Customer Management Scorecard Managing CRM for Profit Foreword Introduction Part I - The