Customer relationship management (CRM) organization structure at frieslandcampina vietnam

Figure #5: Consumer Marketing IFT structure of FrieslandCampina Vietnam In this marketing team, there are 3 teams including Brand team, Medical Sales and Marketing team and CRM team with

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

LE THI THANH TAM

CUSTOMER RELATIONSHIP

MANAGEMENT (CRM) ORGANIZATION STRUCTURE AT FRIESLANDCAMPINA VIETNAM

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – 2017

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Le Thi Thanh Tam

CUSTOMER RELATIONSHIP

MANAGEMENT (CRM) ORGANIZATION STRUCTURE AT FRIESLANDCAMPINA VIETNAM

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: Le Thi Thanh Xuan

Ho Chi Minh City – 2017

SUPERVISOR’S REPORT ON THE FINAL THESIS SUBMITTED

FOR THE DEGREE OF MASTER of BUSINESS ADMINISTRATION

Final thesis title: Customer Relationship Management (CRM) Organization Structure at FrieslandCampina Vietnam

Student name: Le Thi Thanh Tam

Supervisor name: Ms Le Thi Thanh Xuan

Meet requirement for submitting

Not meet requirement for submitting

EXECUTIVE SUMMARY

This thesis of “Customer Relationship Management (CRM) Organization

Structure at FrieslandCampina Vietnam” has been composed and completed in

four main parts: problem context, solution recommendation, conclusion and supporting documents

Chapter I included company background starting from industry overview, company history and business size as well as the vision, mission and organization structure of FrieslandCampina Vietnam In addition, in this chapter, the thesis has shown the issues, problems which are concerns from stakeholders of the company based on a wide variety of in-depth interview and secondary data regarding business results and performance tracking of CRM team A problem mess had been created to show all symptoms, organization outcomes and problems as a general picture Specifically, a

central problem of ineffective CRM organization structure was selected to be

solved as a core problem of company with the justification of its existence and importance

After validating and selecting the central problem of organization, three causes of central problem listed as departmental structure design which is not in line with business strategy/model; excess headcount number and overlapped roles and responsibilities among Telesales team were investigated to verify and determine so as

to give out alternative solutions which were presented in chapter II

In this thesis, the long-term solution is proposed to define appropriate number of headcounts at the change moment of business in the future In the meanwhile, there are two proposals for short-term to tackle problem with CRM personnel cost optimization and redesign departmental structure to be in line with new IFT business acquisition model

The last part was named as the supporting chapter to support all information and information sources for the above four chapters It composed sections of in-depth interview transcript to justify central problem and selected solution

ACKNOWLED GEMENT

I would like to express my deepest appreciation to my supervisor, Dr Le Thi Thanh Xuan, who always stands by me and motivates me to complete this study Without her support, this master thesis cannot be fulfilled Needless to say, her guidance helped me

in all the time of researching and writing this thesis In addition to that, I want to show

my sincere gratitude to Prof Tran Ha Minh Quan, Prof Nguyen Dinh Tho and Dr Nguyen Thi Mai Trang, who are the ones to set strong foundation for me in organization problem solving and data analysis so that I can conduct this study

Beside my advisors, I would like to thank my business partners for discussing, sharing information and coordinating with me make this project happen

In-depth interviews were widely used at different levels from many related departments of FrieslandCampina Vietnam to collect data and to diagnose various aspects of the problem with the methodology of design-oriented and theory-informed from a wide variety of fields such as human resources, industry, management etc After collecting data and information to analyze, it was believed that pushing sales performance had been greatly affected by many factors such as nature of work, compensation and benefits, motivation, capabilities building etc However, this research illustrated that factor of ineffective CRM organization structure had been mostly influenced which led to the very alarming consequences such as headcounts in excess, unclear roles and responsibilities, not stretching enough KPI setting, under company business expectation

TABLE OF CONTENTS

1 COMPANY BACKGRO UND 1

1.1 Company bacground 1

1.1.2 Market share and key players in the dairy market 1

1.1.3 FrieslandCampina Vietnam – Company history and organization structure 4

1.2 Background of problem 6

1.2.1 Symptoms 6

1.2.2 Problem justification 15

1.3 Identification of central potential problem 26

1.4 Literature review 28

2 SOLUTION RECOMMEN DATION 31

2.1 Solution recommendation 31

2.2 Proposal implication 37

2.3 Selected solution and action plan 39

3.4 Change management and counter measures 43

CONCLUSION 45

SUPPORTING DOCUMENTS 46

REFERENCE LIST 69

LIST OF FIGURES

Figure 1 Vietnam Dairy Market share in 2015 3

Figure 2 Powder milk key players 3

Figure 3 Drinking milk key players .4

Figure 4 Organization structure of FrieslandCampina Vietnam 5

Figure 5 Consumer Marketing IFT structure of FrieslandCampina Vietnam .7

Figure 6 Current business model of IFT team 8

Figure 7 Current Acquisition business model of CRM team 9

Figure 8 The comparison between personnel investment for one CRM officer versus the average revenue of each acquired new customer 11

Figure 9 The comparison between current number of data officers and ideal number of data officers after deploying data validation automation model 18

Figure 10 Expected validated data of CRM team in 2017 19

Figure 11 Expected validated data of one Data officer in 2017 20

Figure 12 Ambitious automatic acquisition business model of CRM team 21

Figure 13 The comparison between current number of telesales staff and KPI setting in getting new users 22

Figure 14 Expected telesales staff for driving CRM business goals in 2017 .23

Figure 15 Initial cause-effect map 26

Figure 16 Final cause-effect map 28

Figure 17 Estimated number of data officers from October to December 2017 32

Figure 18 Proposal new working process for Telesales staff 33

Figure 19 Proposal new CRM organization structure 34

Figure 20 Proposal new working process for Acquisition officer 34

Figure 21.Proposal new working process for Retention officer 35

Figure 22 Short-term plan to optimize FTE number October - December 2017 35

Figure 23 Short-term plan to optimize Retention FTE number from October to December 2017 36

Figure 24 CRM organization structure from October to December 2017 – proposal A……… 36 Figure 25 CRM organization structure from October to December 2017 – proposal B……… .37 Figure 26 Comparison between proposal A and proposal B 39 Figure 27 Roles and responsibilities of stakeholders in project CRM department structure improvement .42 Figure 28 The detailed plan 43

CHAPTER I: PROBLEM CONTEXT

1.1 Company background

1.1.1 Industry overview

The Fast Moving Consumer Goods (FMCG) industry covers the products that are essential items we use day in and day out “Fast moving” implies that the items are quick to leave the shelves and also tend to be high in volume but low in cost items According to Kantar Worldpanel (2017)1 – one of the most prestigious agencies in the field of Market Research, both urban and rural FMCG market post slightly stronger growth rate in Vietnam in 2016 However, 2016 was also a tough year for Rural which faced economic difficulties In the meanwhile, Dairy, Beverages and Home Care are most suffering in Rural It is predicted that both urban 4 cities and rural markets will reach a growth rate of 5-6% in 2017

1.1.2 Market share and key players in the dairy market

a The overview of dairy market

According to Deloitte report on Global Dairy Sector – Trends and Opportunities2,

it is well documented that the global dairy sector is going through a period of turbulence The consumption demand in China, Russia’s trade embargo and the removal of EU milk quotas, all of these is the consequence of a period of excess supply and low prices However, in the long run, this sector still keeps positive signal This is due to the fact that rising populations and diet trend are increasing demand of dairy It is expected that global dairy demand increases by 2.5 percent per annum to 2020, especially impacted by urbanization and higher living standard in emerging markets

In the movement of global dairy market, according to Dairy in Vietnam posted on Euromonitor International3, the rising trend towards health and wellness continued to impact positively the production and supply of drinking milk Moreover, many launches of new products, which contain vitamins and nutrition

such as: calcium, DHA, immunity , has been released in the local market Another point could be mentioned here is that due to increase in local consumption of milk, there are more dairy companies operated in Vietnam, beside of many long-year dairy companies such as: Vinamilk, FrieslandCampina (known as Dutch Lady Vietnam) or Abbott… Hence, it can be said that the competitiveness of Vietnam dairy market is much higher and higher with the appearance of new key players and the significant innovation of current companies

b Market share and key players of dairy market in Vietnam

According to the annual report of dairy product of Vietnam, it can be said that Vinamilk is the biggest dairy company in Vietnam Vinamilk is currently the largest fresh milk collector, purchasing more than 60% of fresh milk from farmers across the country, while the second largest fresh milk collector is FrieslandCampina Vietnam In addition, Vinamilk has purchased nearly 82,000 tons of fresh milk from local farms in 2015, accounting for about 20% of total domestic fresh milk production These two companies dominate the local market with 46% and 20%

of market share respectively

With the advantages of worldwide large-scale farming of cow herbs, big production capacity and modern technologies, foreign players firmly control the local powdered milk market with 53.1% of market share in 2015 Conversely, local players dominate the drinking milk market which is led by Vinamilk with 45.5% of market share in 2015

In 2015, Vinamilk continued to lead the yogurt market with 73% value share, as well as to dominate the condensed milk market (approximately 80% of the total sale value) Today, Vinamilk and FrieslandCampina Vietnam also faces up to other potential competitors such as Nestle, Johnson as well as new entrant milk competitors like TH Milk, Loveinfarm milk, Mocchaumilk…

Figure #1: Vietnam Dairy market share in 2015 (FrieslandCampina internal

Figure #3: Drinking milk key players (FrieslandCampina Internal Report)

1.1.3 FrieslandCampina Vietnam – Company history and organization structure

FrieslandCampina Vietnam (FCV) is a joint-stock company which established in

1995 between Binh Duong Im-Export Company and Royal FrieslandCampina as the leading company of dairy products in Netherlands with 135 global experiences These days, almost all products are produced in Vietnam and Dutch Lady is one of the six legendary brands of FCV This company is famous for leading brand in Vietnam dairy market, such as: Friso, Yomost, Fristi, Active 20+… There are two factories, one in Binh Duong and one in Hanam as well as three local warehouses in which there are 1,487 employees working Production of more than 1.5 billion cartons per year and this volume is growing with an average rate

of 15% per year The yearly average turnover in Vietnam is US$350 million FCV’s products can be subdivided into three categories: powder milk, sweetened condensed milk and ready-to-drink dairy (so-called liquid milk)

Vinamilk

About company structure, it can be summarized via below organization chart Like many other multinational companies, FCV divided into specialized divisions to optimize production capabilities in all aspects

Figure #4: Organization structure of FrieslandCampina Vietnam

Along with the strategic organization structure, FCV also established the mechanism of performance evaluation for employee based on individual key performance indicators (KPI), annual development priorities and behavior improvement in line with corporate guidelines (AAA – Alignment, Accountability, Action) With this management method, it is believed that each employee of FCV

is fully responsible for the job in charge; especially it is consistent with business

objectives Moreover, building a transparent and fair working environment, performance evaluation is also highlighted as the result of this mechanism

In which, according to Commercial Finance team’s report, powder milk, including two main brands: Friso – premium product and Dutch Lady – mainstream product, is the category creating the highest value for business as well as contributing around 60% in the total net sales of FCV Understanding the value and the importance of IFT category, a strategic organization chart has been built

as follows

Figure #5: Consumer Marketing IFT structure of FrieslandCampina Vietnam

In this marketing team, there are 3 teams including Brand team, Medical Sales and Marketing team and CRM team with different roles and responsibilities However all of them are in the line with category strategy with key focus: increasing brand awareness, especially for Friso via leveraging the penetration rate and market share; leading sales volumes among other brands of company via increasing the number of new users and the repurchasing rate of current consumers (customer loyalty) In which, brand team is in charge of building the strategy via above-the-line activities (digital channels, TV clips, radio…) and below-the-line activities (promotion programs at points of sales, customer workshops…) Moreover, Medical and CRM teams are the two groups designed for IFT only because the target consumers of IT is mom and babies who have a

specific journey from pregnant period to the point of time Hence, the business

model of IFT team is totally built based on the consumer journey

Figure #6: Current business model of IFT team

This target consumer group allocates mainly at many hospitals nationwide Due to

this reason, Medical Sales and Marketing team is set up with the aim of increasing

the sales coverage at hospital

1.2.1.2 Introduction about Customer Relationship Management – CRM team

CRM is the customer relationship management team which is dedicated for taking

care of consumers of powder milk category which includes two brands of

FrieslandCampina Vietnam: Friso – premium brand and Dutch Lady – mainstream brand Currently, Friso is the focal brand of IFT category as well as the company

Because according to Commercial Finance Analyst, Friso contribute the highest

value in sales contribution which creates huge business impact

Due to the characteristics of this product, the product portfolio consists of many products which are relevant to growing-up development of pregnant woman and

baby For example, starting with pregnancy, pregnant woman is convinced to use

Frisomum to be provided essential nutrition After delivering baby, breast feeding

is encouraged until baby is two years old Hence, based on this reason and current

governmental law, milk commercializing for babies under 2 years old is prohibited

via media, digital, promotion and advertisement Dairy companies call the period

of babies under 2 years old is dark product because of reason However, to support moms who cannot produce milk after delivering babies, Friso 1 & Friso 2 are still allowed to penetrate into the market with the limitation of brand activation Besides, Friso 3, 4, 5 are generated to sell to babies who are in the high demand of milk for fast track of growing up In short, it can be said that product development and sales strategy are totally based on the life cycle of consumers, so-called consumer journey

Understanding consumer insight, CRM team of FCV also builds the IFT Acquisition Model and Customer Loyalty in accordance with the consumer journey The current model is illustrated via the below chart:

Figure #7: Current Acquisition business model of CRM team

In terms of CRM team, it can be said that this is the strategic team in driving

business results of IFT category by acquiring new users and retaining customers

via telephone In 2017, CRM target to get 600,000 new customers (higher than

25% vs 2016) and improve repurchasing rate from 10% in 2016 to 30% in 2017 To

meet business requirements, CRM structure has been categorized into three teams:

 Data team is in charge of verifying the raw data from many sources including information collected by Medical Sales Force team, nutrition advisors, digital and media channels This team must ensure the raw data, before transferring

to telesales team, is precisely verified about name, age, the pregnant date and the date mom delivering babies… So it is time-saving for telesales team to focus on acquiring new users and convincing current users to buy powder milk products more and more

 Telesales team is responsible for accelerating the sales coverage via

telephone Based on customer period on the consumer journey, telesales officers make call to get new users emerging in the market segment or using products of competitors Moreover, this team also takes over the job of

persuading current new user to repurchase products more and more It can be said that telesales team play critical roles in sales volume and value

contribution out of whole Consumer Marketing IFT team

 Customer service is considered as the hotline team which is mainly

responsible for addressing customers’ concern, questions regarding to

nutrition or products via telephone and digital channels (Facebook, Instagram, web page, forum…) Moreover questions addressed by this team are not

related to powder milk product only, but also liquid milk Therefore, it is

required for this team to understand deeply about all of products, current marketing programs of company to meeting customer requirements as fast as possible

In short, IFT Consumer Marketing in general and CRM in particularly are invested

a lot in human resources, way of working, KPI management to ensure job

fulfillment and transparent roles and responsibilities among teams

1.2.1.3 Symptoms of problem

Despite smooth operation of CRM team in 2016, Mr Subir Dhawan – Finance Director of FCV has still raised some of concerns regarding pushing sales performance of CRM team It has been reflected via following symptoms:

 Symptom 1: Much personnel investment but less gain from CRM officers

Firstly, “Sales revenue contribution of each CRM officer is in the trend of decrease

during the first half of 2017 Moreover it does not balance in the comparison with the total personnel investment on each CRM officer.” – Mr Subir said Based on

the below chart, it is clear that for each CRM officer, the monthly sales revenue contribution is less than the average monthly personnel inves tment from the company According to FCV Finance report, it is well noted that average revenue

of each acquired new customer was about 8-9 millions VND whereas the total personnel investment for one CRM staff doing this task was about 14-15 millions VND The evidence supporting for Subir’s statement is illustrated via below chart:

Figure #8: The comparison between personnel investment for one CRM officer

versus the average revenue of each acquired new customer

Jan '17 Feb '17 Mar '17 Apr '17 May '17 Jun '17

Average sales revenue/new customer

Personnel investment/CRM officer

 Symptom 2: Inappropriate sales KPI setting for CRM officer

Secondly, Subir also commented that “With the CRM ambition of recruiting

600,000 new users, each telesales staff in charge of this task has to be successful

to get 382 new users every month, equivalent to 4,584 new users per year However, without monthly sales pressure, most of CRM staffs focus on completing this KPI just around ending months of years The number of new users getting every month is not gradual month by month This can lead into some of consequences in accelerating failure of sales value and loss of potential customers Because company products are sold based on growing-up steps of pregnant women and babies.” Another complaint from Mr Subir – Finance Director is

related to the sales number of CRM team, which is not pushed to complete by every 20th of each month This is totally different with current principles of performance management for Sales Force team while CRM team is also considered as one of the main parts of Sales Force According to company requirements, the more sales number is completed before 20th of each month, the more efficiently finance reinvestment is optimized In short, Mr Subir is quite

disappointed to conclude that “From finance perspectives, I think sales

performance of CRM is not effective now It should be reinforced as soon as possible with more stretching monthly KPIs.”

 Symptom 3: No monthly sales incentives, no strict working process and no

third party with strong capabilities to manage and serve CRM team

To understand the problem, a discussion was conducted with Ms Thai Minh Diem

Tu – IFT Business Unit Director who is in charge of powder milk category She

confirmed that “This is also one of the unsolved problems of powder milk

category It has been targeted to review and resolve in 2017” And this is a part of

project “CRM cost optimization” In the meanwhile, Ms Tu shared that “It is clear

that salary structure of CRM officer was not effective in comparison with that of a

salesman who works in the channels: general trade and modern trade CRM officer has no monthly sales incentives entitlement This may be the reasons why there is no strong working motivation for them to complete KPIs regarding recruiting new users every month.” And “As per my supervision, I think working process should be reviewed CRM staff virtually feels very relaxed in working hours.” – she commented about working spirit of CRM team Another point which

was also mentioned here is that Ms Tu thinks we still do not utilize the capabilities of the third party – the company is providing CRM officers for FCV in executing this service Ms Tu said that Nestle – one of main competitors of FCV own the third party which is very strong in managing sales performance of telesales staff for driving business goals of that company in this segment As results of this interview session, it can be said that there are three problems which should be taken into consideration: working motivation – monthly sales incentives for CRM team, working process review and the capabilities of the third party

 Symptom 4: No motivation for CRM officers to push sales performance

Another initial interview was conducted with Ms Bach Duong – CRM Marketing Manager who is in charge of managing CRM team and building CRM development

strategy to understand the problem more Ms Duong said that “Failure in pushing

sales performance of CRM team is certain In comparison with Sales team of other channels, there is no monthly sales incentives scheme of the company for CRM officers So most of my staffs only try to meet 80% - 100% KPI of month to avoid being fired According to my team regulation, employee would be fired if he/she fall KPI in two consecutive months… So you know, actually there is no reason for them to go beyond expectation.” After sharing her view about this problem of

CRM team, Ms Duong expected HR team would coordinate with her to build an attractive sale incentives scheme to encourage employee to do more effectively

and create an energetic working atmosphere for her team In general, building sales incentives scheme for CRM team is crucial thing to do in the eyes of CRM Marketing Manager Because in her point of view, monthly sales incentives is one

of the most effective ways to distinguish between outstanding staff and staff under performance

 Symptom 5: Inappropriate number of Data officers in CRM team

Discussing about these above-mentioned concerns with Ms Trinh Mai Phuong –

HR Director and Ms Pham Lan Anh – HR Business Partner Manager – Commercial (dedicated for powder milk category), both of them agreed that this was one of the most concerned problem we would have to explore an solve as soon as

possible Furthermore, Ms Mai Phuong emphasized that “CRM Restructure

should be taken into consideration as soon as possible, especially about team structure, working process and the number of staff According to new IFT Business Model, automatic data verification will help to filter raw data without involvement

of people This was already effective from February 2017 However the number of staff in Data verification team still remains unchanged It must be a problem which we always raise it with Tu Thai and Bach Duong.”

In general, all of relevant stakeholders confirmed that the effectiveness in pushing sales performance of CRM team should be taken into consideration There are many concerned symptoms regarding this problem: not stretching enough working process, no working motivation – monthly sales incentives, the number of CRM staff… To understand and identify the core problem, some related literature review and in-depth interview with those stakeholders will be carried out much more

in line with the company’s ending goals or business strategy This can lead into the result of not delivering the real business value as expected Secondly, motivating sales performance of employee can be struggled with unattractive

salary scheme or benefit framework This is due to the fact that “rewards are

extremely important in recognizing and promoting top performance, and to keep your employees engaged, motivated, and inspired about their future with the company” (Gregg Greenberg, 7 reasons performance management fails and how

to fix them, D!gitalist) Thirdly, the cause is resulted from lack of capabilities building, such as: weak in leadership skill of management team or insufficient about training programs for employee… Besides, Sebastian Bailey5 pointed out that failure in sales performance management can root from the KPI

measurement mechanism, “Everyone scores the same” This leads into the

consequence that performance evaluation of employee is not judged in the right way, that makes staff feel unfair and unrecognized Another reason could be mentioned here is that wrong selection in recruitment leads into the low productivity (Gil Cargill)6

In short, the effectiveness of sales performance management is the consequence

of combining many elements in which sales execution plan including departmental structure, standard working process and KPI setting/mechanism must be in line with business strategy; and working motivation via compensation

and benefit framework is one of the strongest tools to support for this ambition

as well Besides, developing sales capabilities of related stakeholders is also one

of core elements which must be in the prioritized list of review

1.2.2.2 Potential problems leading to failure sales performance management of CRM team

Based on the initial information collected and supporting theoretical documents above, another in-depth interview sessions with key stakeholders including: Finance Director, Finance Business Partner of Powder Milk Category, CRM Manager, IFT Business Unit Director, HR Director and HRBPs were carried out to justify the problem and identify the central problem

As being showed the part of symptom problem, three main reasons leading to ineffective in pushing sales performance of CRM staff are mainly about not stretching enough working process, no working motivation – monthly sales incentives, the number of CRM staff However, according to above-mentioned relevant theoretical documents, there are main factors which should be taken in consideration when reviewing the effectiveness of sales performance management:

 Sales strategy/Business ambition of CRM team

2017 business ambition of CRM team is reflected via the following points:

+ Successfully launching automatic data verification but no change in number

of Data officers who validate data manually

As shown above, CRM Data team is currently collecting data from many digital and media sources With the first raw data source, data officer is responsible for verifying data to ensure: data collected has enough information or not (name of mom, expected date of baby delivery, phone number of mom, current milk product used by mom…), data collected is totally new or the same data stored in the database of company, customer is using company product

or used to consume company product and using product of competitor… All of information must be ensured to validate before sending to telesales team so that telesales staff can focus on calling to convince consumer to purchase or repurchase company product

In 2017, CRM team target to verify all of data automatically without involvement of people The application of data verification automation was officially launched since February 2017 Until September 2017, the automatic validation rate reached 73.5% whereas a number of Data officer (84 FTEs) still stay unchanged

+ Increase the number of new consumers up to 600,000 users in 2017

With this target, it is expected that each telesales staff get 382 new users every month However, according to CRM report, it is noted that 40% telesales staff reached 80% KPI only each month, the rest achieved around 70% KPI of month This led into the result that until end of September 2017, the actual number of accumulated new users is only 333,280 whereas it should be 450,000 users if everything is on good track

+ Increase the repurchasing rate from 10% to 30%

Before 2017, the repurchasing rate is not considered CRM team only focuses

on recruiting new consumers for brand Friso – powder milk of company in order to increase the market share as well as penetration rate Annual repurchasing rate of Friso users is only 10% This must be a problem that requires all of relevant stakeholders to start investigation, including: R&D, Marketing & Sales Because it is too cost-consuming for company if current consumers do not use product any more Therefore, in 2017, as requested by Management Board, repurchasing rate must be one of the compulsory KPIs of Sales Force team including CRM team For CRM team, it is target to increase this number up to 30% in 2017 However, the action to drive this business goal

is quite blurry in sales strategy of CRM team Talking about this perspective,

Ms Duong said that “Until September 2017, the repurchasing rate of CRM is

still 15-16% only We are still facing difficulties in deploying Reward Marketing Program which is designed for increasing customer loyalty However, due to complexity of internal alignment and budget constraint, this program has not been launched successfully We are trying to arrange workload for each telesales staff so that apart from getting new users, they can call current user after they use Friso product one week to convince them to purchase another tin – second tin.”

 CRM departmental structure is not in line with business ambition of CRM team

This point is reflected via the following points:

+ The number of staff

 Data verification team

As per CRM business strategy, data validation automation will reduce the number of CRM data officers from 84 FTEs to 0 FTE With current automatic rate – 73.5%, the number of CRM data officers should be less than 84 FTEs The following table provided by Ms Duong – CRM Marketing Manager shows the progress of deploying the automation data validation model

Automatic validation rate

Current data officer numbers

The ideal data officers

Data verification team is responsible for validating raw data which is collected from sources: CRM system, Medical Sales Forces, Nutrition Advisors at below-the-line activities and media and digital channels (eg Facebook, Instagram, web page, forum…) Each Data officer must ensure the precision of information before

transferring it to Telesales team to conduct sales call The expected raw data of above-mentioned sources is collected in 2017 as follows:

Sources The amount of date/year Percentage

Figure #10: Expected validated data of CRM team in 2017

With the expected verification rate is 80% per outbound calls, the ambition of validated data in 2017 equivalents to 1,360,000

Reviewing the current working process of one Data officer and comparing data between figure #10 and figure #11, it is found that only 79 data officers, instead

of current 84 FTEs, are needed to reach the business target which is getting

1,360,000 validated data per year

Calling time/working day 450 mins

Validation time/call (including typo

timing)

6 mins

Figure #11: Expected validated data of one Data officer in 2017

Furthermore, as mentioned above, one of the ambitions of IFT category in 2017 is deploying model of data verification automation Currently, this model is applied for data sources from CRM system and Media and Digital channels with target automatic verification rate 100% However, due to technical problem of

application launching, current verification rate is 73.5% only It also means the amount of raw data, which is validated by people – Data officers, is 912,815 data instead of 1,700,000 data

Figure #12: Ambitious Automatic Acquisition business model of CRM team

This leads into the result that the number of Data officers will reduce 84 FTEs to

42 FTEs In comparison with current situation, it is clear that there has till been no

action on resources reduction to optimize management cost

In brief, it can be concluded that the number of headcounts is the core problem

of Data verification team With manual or even automatic acquisition business

model, it is required less full-time staff than the current number

 Telesales team Telesales team is responsible for advising nutrition and providing product

information to target customers with the aim of persuading them to purchase and

repurchase Friso or Dutch Lady product And the number of telesales staff is also

needed to review According to information provided by Ms Duong, the number

of new users with current number of telesales staff and working process must be

much higher It should be 2,182,752 instead of 600,000 new users as current KPI setting:

Figure #13: The comparison between current number of telesales staff and KPI

setting in getting new users

In the other hand, as mentioned above, convincing current customers to

repurchase company product is not strongly focused on This may be partial

reason why there is no KPI dedicated for repurchasing rate per telesales staff Telesales staff makes a call to current users only when daily KPI – new user is achieved easily and still has enough working time to do In 1,360,000 validated data transferred from Data team to Telesales team, there are about 60% new users who have not purchased FCV product before and 40% current users who have not repurchased FCV product during one year With validated source and current working process of Telesales team, it could be figured out that:

Recruiting new user Convincing current user to

Number of call/day/officer 50 calls 64 calls

Target conversion rate/day 90% 30%

Successful cases/day/officer 45 cases 19 cases

Number of standard working

days/month

24 days 24 days

Figure #14: Expected full-time telesales staff for driving CRM business goals in

2017

+ There is no team dedicated for increase current customer loyalty

About business strategy, CRM is targeted to accelerate the percentage of current users purchasing the second tin after the first or two weeks using FCV products It is estimated that mom or baby takes about 1 week to consume 1 tin of powder milk With this ambition, FCV expects that CRM can help two brands of powder milk category: Friso – premium brand and Dutch Lady – mainstream brand to increase penetration rate via telephone, media and digital channels, as well as retaining customer loyalty According Finance Director, the repeating purchase rate of current CRM customers is very low,

“for ease of understanding, figure out that there are only 10/100 customers buying the second tin after the first use.” To verify information provided by Finance Director, another interview was taken with Ms Bach Duong – CRM

Marketing Manager She shared that “We are having difficulties in retaining

customer loyalty because under WHO Code and Vietnam Economics Law, we

are not entitled to contact mom having babies under 2 years old for selling milk products It is encouraged to use breastfeeding The target consumers we can reach to increase repurchasing rate are babies over 2 years old Furthermore, we need to review the workload as well as job allocation within telesales team to design a team which is dedicated for taking care of current users”

In short, it can be said that the departmental structure of CRM teams quite

ineffective in following business strategy (penetration rate, repeating purchase and automation); defining the number of FTEs to driving business target; not differentiating specific roles and responsibilities within telesales team (who is in charge of recruiting new users and who is in charge of taking care of current

users) Especially, it is clear that there are 3 things telesales team needs to take into consideration First, the number of headcounts to drive CRM business goals (including getting new customers and increasing repurchasing rate) is only 87 FTEs only, instead of 131 FTEs Second, with 87 FTEs, CRM can still go beyond the business expectation CRM team can reach 738,720 new users instead of 600,000 new users as objective setting Moreover, they can utilize capabilities of these 87 FTEs to fulfill target of increasing repurchasing rate from 10% to 30% Thirdly, monthly and yearly individual KPI of each telesales staff should be much higher and closer to above number to ensure KPI achievement commitment Hence, it can be said that the number of telesales staff should be reduced; clear roles and responsibilities among telesales team in which

 Inappropriate KPI Setting and Measurement

Currently, each telesales staff has three KPIs:

+ KPI #1: the number of outbound calls

+ KPI #2: the number of acquired customers

+ KPI #3: conversion rate (the number of acquired customers/the number of outbound calls)

It is clear that the KPI number 3 is just the certain result from KPI number 1 and number 2 And KPI 2 is absolute result while KPI 1 is relative number Another point is that, unlike with Sales teams in General and Trade channels, CRM officer is set KPI for the whole year, not for every month whereas the business results are reviewed month by month This might be unreasonable and the reason why sales performance of CRM team cannot optimize at the maximum level This factor combining with salary structure without monthly sales incentives lead to the fact that CRM is getting failure in pushing sales performance of staff

Furthermore, KPI setting for CRM officer is quite complex and irrelevant with business goals Specially, there is no KPIs related to repurchasing rate for each telesales staff

Hence, KPI setting is not close to business progress, not clear and relevant to business goals of each team and not simplified

 Capabilities building for CRM team

As shared by Ms Duong – CRM Marketing Manager, to advise nutrition & products, CRM officers have to be trained about product knowledge as well as other soft skills such as communication, negotiation skills that enable to

accelerate the efficiency of product calling and selling However, in fact, there

is no training course for CRM staff during 3 years CRM staffs are only coached

by team leaders or peers while doing the job It is called on the job training

In short, the initial cause and effect map could be updated as below:

Figure #15: Initial cause-effect map

1.3 Identification of central potential problem

As validated above, the problem of ineffectiveness in pushing sales performance

of CRM staff rooted from many reasons: departmental structure, KPI setting and measurement, reward scheme and capabilities building However in terms of the importance and priority of problem solving, it is required to identify the central potential cause to spend time on investigation and recommendation for prompt

improvement Discussing about this, Ms Bach Duong said that “Cost optimization

is the key objectives of CRM team in 2017 and it is expected to re-design salary structure to seek for opportunities on cost optimization and motivating performance of staff more” However, Ms Tu shared her point of view as follows:

“Personally, I am ambitious to solve the problem from the strategic side and solve

the problem from A to Z which starts with the root cause” For selecting the

strategic and key mission in solving this problem, the study sought for some relevant literature review to reinforce the central problem According to M&E studies, Bloisi7 highlights the importance of structure as a mean of getting people work towards common goals thus acting as facilitator in pursuit of organizational goals Besides, Mullins8 emphasizes that structure affects both productivity and economic efficiency and also morale and job satisfaction Important notion stemming from Mullins assertion is that good structure will not only have tangible effects i-e financial but in-tangible affects like motivation thus impacting organizations operational effectiveness as employees carry out operations/tasks

of organization To understand more about the organization structure in general and departmental structure in particular as well as how a departmental structure

is effective, some sources of related literature review was collected as follows Back to the current problem mentioned above, it is clear that improving the effectiveness of departmental structure of CRM teams is the first priority This is due to the fact that the operations process/working flow of CRM teams is currently not in line with company strategy Especially roles and responsibilities among Telesales team are overlapped in recruiting new customers and increasing repurchasing rate And the number of staff (especially data officer number) is one

of the most important concerns when digital/automatic mechanism has been applied for data verification

To put in a nutshell, final cause and effect map is presented as below:

Figure #16: Final cause-effect map

According to The Law Dictionary9, it is well documented that organizational

structure is “a typically hierarchical framework of authority, accountability,

communication, and allocation of responsibility Organizational structure should reflect the goals of the organization if they are to be successful” Another

definition is found on the Wikipedia’s article which summarizes based on reliable

sources: “An organizational structure defines how activities such as task

allocation, coordination and supervision are directed toward the achievement of