Tài liệu The ROI Report pdf

Brother sells its information and document products predominantly thought retailers, resellers, and distributors, but takes sole responsibility for all after sale customer contacts.. The

V o l u m e S i x , N u m b e r 3 J u n e 2 0 0 2

ROI

Case Studies Analyzing the Return On Investment of

Customer Relationship Management (CRM) Initiatives

Brother Pursues Fully Integrated

CRM Strategy to Develop Customer

Loyalty, Projected 129% ROI

Benefits

Reduce Returns

Each 0.25% reduction in returns

Saves More than $1.6 Million Per Year

Consider Customer’s Lifetime Value (LTV)

not just transaction value.

Anticipate Customer Needs

for new product or software upgrades

Maximize Customer Experience:

increase accessory sales & revenue growth.

Reduce Servicing Time

for end users, 40%; & dealers, 50%

Consistently Improve Quality of Service.

Share knowledge across the organization through

the Solution Database.

Campaign to

Tightly Focused Target Groups The ROI Report is published by Hill|Holliday,

Introduction and

Company Profile 4

Business Context, Mission and Driver, Strategy, Business Case 6

Business Transformation 8

Proceeding with SAP CRM 11

CRM: Strategy, Defining Key Performance Indicators 13

Implementation . 15

Implementation Costs 16

Benefits 17

ROI 19

The Future 19

Lessons Learned 21

About the ROI Report 22

At Peppers and Rogers Group, we believe that the goal of Customer

Relationship Management (CRM) initiatives is the development of Learning

Relationships with customers CRM practitioners leverage deep understanding of

individual customers to make their products or services increasingly smarter over

time relative to each customer’s needs Customers are hesitant to reinvent this

relationship with another firm

Building these types of relationships require a company to make difficult

changes in their firms So why invest in CRM at all?

Dr Martha Rogers and I have always considered CRM to be, first and most, a solid financial concept CRM builds on the axiom that it is more cost-effective

fore-to keep and grow an existing cusfore-tomer than fore-to acquire a new one

We were honored to be asked by SAP and Hill Holliday to review the designand execution of this ROI Report Our firm is often asked to conduct similar studies forclients And we are pleased to report that the processes used to uncover the financialbenefits and derive the financial formula for Brother’s CRM initiative were fully-consis-tent with our own rigorous approach to measuring ROI

In fact, we think the final ROI calculation is probably conservative This is due

to the fact that most companies don’t yet measure baseline customer lifetime value

(LTV)—the sum total of expected future profit flows from a customer Effective CRMincreases LTV But without a baseline measure of LTV, we can’t compare the changesfrom CRM to the baseline So, we use existing metrics to measure the short-term

impact of CRM Despite this conservatism, Brother still reports ROI in excess of 100%

After learning about the Brother initiative, we are not surprised by this result.Brother addresses customer needs that extend beyond the product itself, assisting cus-tomers on issues of interoperability with other devices In combination with the compa-ny’s intelligent approach to collecting and storing the right customer data, Brother ispositioning itself to be able to deliver "smarter" service than its competitors over time

Now that Brother has increased the percentage of the Kings that they can

identify, they might gain further benefit from ranking customers according to their

growth potential This would help Brother allocate more resources to invest in such

accounts, perhaps providing even more proactive and regular support—ensuring thatthese customers continue to choose Brother as they grow

Brother is making huge steps towards becoming a trusted advisor to their tomers Many customers are willing to pay a premium for products and services wherethey can count on a company to "pick up the conversation where it last left off." As

cus-Brother continues to turn customer data into powerful business strategies, they assurethemselves of continued CRM success!

Sincerely

Don Peppers

Founding Partner, Peppers and Rogers Group

Brother is a growing global brand, recognized worldwide for providing high quality

value added products in the office and home With the growth of the Small office and

Home Office (SOHO) market as well as corporate cost cuttings, Brother has established

itself as the value supplier Brother International Corporation of USA (BIC, hereinafter

referred to as Brother) generated approximately $1 billion in revenues for 2001, more

than 70% coming from its Business Machine Group which sells office equipment such

as printers, fax machines, Multi-function Devices (MFDs), and Ptouch Electronic

Labeling Systems Other businesses of Brother are personal and home products, and

industrial machinery and solutions The Business Machine Group operates in a

hyper-competitive market with fragile margins It is extremely sensitive to customer loyalty,

and is therefore a major focus for CRM Brother sells its information and document

products predominantly thought retailers, resellers, and distributors, but takes sole

responsibility for all after sale customer contacts The National Service Division of

Brother is organized to provide service to its Customers, and resellers as well as manage

Brother’s Parts Distribution, Return Center, and Customer Contact Centers

Information and document products nowadays have to offer a dazzling array of features,

as well as interoperate with complementary products such as personal computers Users who

become frustrated with products that don’t operate with their personal computers right out

of the box will either call for help and/or return the product The vulnerability is manifested

by a high percentage of product returns in excess of 12% throughout the information and

document products industry

E X E C U T I V E S U M M A RY

Brother Pursues Fully Integrated

CRM Strategy to Develop Customer

Loyalty, Projected 129% ROI

V o l u m e S i x , N u m b e r 3 J u n e 2 0 0 2

ROI

Case Studies Analyzing the Return On Investment of

Customer Relationship Management (CRM) Initiatives

The ROI Report is published by Hill|Holliday,

Introduction and

Company Profile 4

Business Context, Mission and Driver, Strategy, Business Case 6

Business Transformation 8

Proceeding with SAP CRM 11

CRM: Strategy, Defining Key Performance Indicators 13

Implementation . 15

Implementation Costs 16

Benefits 17

ROI 19

The Future 19

Lessons Learned 21

About the ROI Report 22

Introduction and Company Profile

Brother is a continually growing globalbrand, recognized worldwide for providinghigh quality value added products in theoffice and home

Brother International Corporation ofUSA (BIC, hereinafter referred to as Brother)the subject of this study, was established in

1954 and is the fully owned US subsidiary

of Brother Industries, Ltd of Nagoya, Japan.Brother in turn has several subsidiariesincluding those in Canada, Mexico, Brazil,Chile and Argentina Brother recorded $1 bil-lion in revenues, constituting 37% of BrotherIndustries’ total revenues of $2.7 billion for

2001 Brother Industries, Ltd as a groupconsists of close to 60 subsidiaries world-wide Hence Brother’s top-level vision issummed by the “Four Gs” of Group, Global,Growth, and Green

Brother Industries started in 1928 bymanufacturing sewing machines and is a worldleader in sewing machines for home and indus-try, however sewing machines constitute a rel-atively small portion of the business nowadays.Brother Industries is now concentrated in fourmajor areas consisting of the information anddocument business, the personal and homebusiness, the machinery and solution busi-ness, and the retail and real estate business

 Reduce returns Each 0.25% reduction in returns saves

more than $1.6 million per year

 Enable viewing the lifetime value rather than just one time

transaction value of a customer

 Identify customers when they come close to needing a new

product or need software upgrades

 Maximize customer experience during each call, increasing

accessory sales, revenue growth

 Reduce time for servicing end users by 40%, $1.8 per

customer call

 Reduce times for servicing dealers by 50%, $3.5 per work

order, and up to $10 per swap

 Achieve consistent improved quality of service by spreading

the knowledge that was in the customer service reps’ mind

through the Solution Database

 Lower database maintenance costs by business users as well

as by MIS

 Campaign to tightly focused target groups within hours

 Eliminate multiple systems; use one common software

solution to support the growth of the business and its

processes Identify and disseminate best practices

Brother had chosen SAP in 1994 as its ERP system to replace all other

mis-sion critical legacy systems In 2000 Brother proceeded with mySAP.com as its

CRM solution to continue with a fully integrated strategy The new measure of

business success going forward would be the “Return on Relationship” requiring

the ability to turn customer data into business strategies and thereby customer

rela-tionships into equity The National Service Division’s service center solution would

be the gateway for realizing the strategy Further reduction in returns and increased

sales would be the end games The ROI Report has projected the internal rate of return

on the investment of $1.7 million by Brother International Corp into CRM to

gen-erate an estimated ROI of 129%

E X E C U T I V E S U M M A RY c o n t i n u e d

Over 70% of all revenue is generated

from the Business Machine Group which

produces office equipment such as

print-ers, fax machines, Multi-Function Devices,

and Ptouch Electronic Labeling Systems,

based on Brother’s deep competency in

printing technologies The Business

Machine Group operates in a

hyper-com-petitive market with relatively fragile

mar-gins, and is extremely dependent on

technological innovation in electronics for

remaining competitive Steady sale of

sup-plies provides some stability for ongoing

profits Hyper-competition also means that

the information and document business

is extremely sensitive to fickle customer

loyalty, and is therefore a major focus forCRM and this study

Personal and home products includeembroidery and sewing machines Personaland home products share some similaritieswith the information and document business

in terms of customer relationships and service

These products too have become more ticated and interdependent with advances ininformation technology

sophis-The machinery and solutions businessmay perhaps be considered as being thedirect descendent of Brother’s original sewingmachine business This business consists of

highly sophisticated trial sewing machines andmachine tools serving indus-trial customers in the appar-

indus-el, automotive and ITindustries among others Inline with the general trend inmanufacturing industriesthis business has redefineditself as a solutions businessfocusing on the customers’

production line and productivity More

recent-ly with reduced product cycle times of the

cus-tomers, the machine tools have evolved frombeing specialized to being general purpose andconfigurable in order to support flexible pro-duction cells and lines

Brother sells its product line throughvarious dealers, resellers, retailers, officesuperstores, and distributors

Sales:

$1 billion in 2001.

Employees:

1,200 in Americas, of which approximately

200+ in National Service Organization.

Headquarters:

Bridgewater, New Jersey

Operations:

American subsidiaries in Canada, Mexico,

Brazil, Chile and Argentina US R&D center in

Tennessee US Distribution Centers in

California and Tennessee, US Customer

Contact Centers in California and Tennessee.

Businesses and products:

Information and document business producing office equipment including printers, fax machines, Multi-Function Devices (MFDs), and Ptouch Electronic Labeling Systems.

Manufacture and sale of supplies for same;

Personal and home products business producing sewing and embroidery machines; Machinery and solutions business producing industrial sewing machines and machine tool solutions serving chiefly apparel, automotive and IT industries

Key Executives in CRM Initiative:

Terry Koike, President Dean Shulman, Sr Vice President Charles H Stadler, Vice President National Service

Joy Applebaum, Director, National Service CRM Project Leader

Dennis Upton, Chief Information Officer Tony Serignese, Director, MIS CRM Project Leader

Terry Koike, President, Brother International Corporation

“

It’s critical to have an end game for implementing CRM One has to think ahead and ask

‘How will we know

we did better with CRM?’

”

Business Context,

Mission and Driver,

Strategy, Business

Case

The National Service Division of Brother

USA was formed in 1980 and has more than

200 employees most of whom are customer

service agents working at customer contact

centers The charter of the division can be

summarized as Customer Satisfaction

Deceptively simple as it may sound,

defin-ing customer satisfaction and defindefin-ing the

customer relationship took many years, and

is a never-ending quest for Brother The

National Service Division is organized into

four g roups These g roups are King

(Customer Service,) Queen (Technical

Support,) Parts Distribution, and Returns

The King is the ultimate end user and is

extremely demanding and must be serviced

at all times The Queen is the dealer/reseller

who sells the ultimate end user Brother

products and also needs to be supported

Having a Queen sell the end user meant

that Brother had to consistently produce

value-oriented product with high functionality

Brother was committed to serving the rightfeatures to the right customers by providing therichest set of features when compared againstcompetitors at every critical price point Brotherwas always well known for being the best valueprovider in the information and documentsector, especially appealing to small office andhome office (SOHO) users, because theseusers tended to be more value conscious thancorporate purchasing bureaucracies

The SOHO market was a niche untilthe recession and corporate downsizing in

1991 created a boom of formerly employedworkers who now became self-employed.Having a home office or being a consultantwas no longer a stigma Brother was per-fectly positioned for this market segmentand further established itself as the valuesupplier Dean Shulman, Sr Vice Presidentexplains, “During difficult times even the

0 500 1000 1500 2000

0.1 0.3 0.5

.28 43 48 48 48

Calls Per Units Sold

Calls per unit sold are stable.

Source: Brother International

“

Brother recognized that it

was time to focus on

retaining and developing its

customer base.

”

richest King’s look to save money and

enhance their bottom line, but most refuse

to sacrifice quality Brother products thrive

in this type of market.” This scenario was

repeated after the Internet bubble burst in

2000, further strengthened by the trend for

businesses to increasingly make use of

flex-ible telecommuting type work practices

Brother, once again with its value philosophy

was best positioned to penetrate medium to

large businesses and corporations

As the economy recovered after 1991,Brother recognized it was time to hold on

to and to develop all these customers Itwould be necessary to somehow view thelifetime value rather than just one timetransaction value of a customer Everybodyknew that it was far less costly to keep anexisting customer and sell them somethingelse, but it wasn’t clear who these cus-tomers actually were, or how they wouldcontinue to be “Brother customers.” Thefirst step would have to be collect all the

important information about the customers

in one place

At the time it was very difficult andexpensive to do the required type of datacollection and database management Brother

struggled for several years with the tional “warranty cards in the box” approach,which yielded only marginal results It wasapparent that the customer information was

tradi-in the hands of the Queen, the dealers, soBrother opted for a strategy strongly sup-porting the Queen Brother assumed most

of the burden from the retailers by takingresponsibility for after sales related activi-ties and calls This worked well enough butstill did not close the loop and answer theburning question for Brother, who was theKing and what did the King think?

In addition to the long-standing gic marketing requirements above, additionalfactors conspired to make CRM a burningneed for Brother in the new millennium.Information technology had become ubiq-uitous among non-technical users such as inthe SOHO market Information and docu-ment products increasingly had to interoperatewith a great variety of personal computers,

Who is the Customer?

What has Customer Purchased?

When has Customer Purchased?

How is it Used?

Has Customer Called?

What were

the Issues?

Has Customer

had Service?

Customer satisfaction is a continuous feedback process.

Source: Brother International

“

During difficult times, customers work to enhance their bottom line without sacrificing quality Brother thrives in this

environment.

”

operating systems, and application programs.

Brother’s products had become highly

inter-dependent with, and indeed vulnerable to

weaknesses in complementary products such

as personal computers and applications

Users were becoming frustrated with

products that wouldn’t operate with their

personal computers without significant

con-figuring and troubleshooting effort on their

part, even when Brother was not really at

fault In addition to heavy usage of

auto-matic fax-back and e-mail systems, calls

were avalanching into Brother’s five

cus-tomer contact centers Brother was ing millions annually on customer serviceand was not able to keep up with all thecalls The vulnerability was manifestingitself very painfully, in a high percentage

spend-of product returns, typically in excess spend-of12% throughout the information and doc-ument products industry

Business Transformation

The immediately identified need was to

do something to reduce the product returns.Brother had determined as far back as 1996,that simply answering more calls from theapproximately 1.8 million distinct callerswould address a significant portion of theproduct returns Of the calls, only 46% werebeing answered, and those in turn were notbeing serviced using anything other than arudimentary database The database appli-

Source: Brother International

Critical Success Factor:

Error-free Order Processing

Critical Success Factor:

Speed of Order Processing

Orders with Correct Volumes (%)

General Performance Indicator:

Volume accuracy

General Performance Indicator:

Sales order cycle time

Measurable Performance Indicator:

Cycle Time Goods Issue

Measurable Performance Indicator:

Cycle Time Invoicing

General Performance Indicator:

Return Rate

Measurable Performance Indicator:

Returns Among Sales Order Lines (%)

cation was unable to keep up with the

grow-ing customer base, unable to refer to the

ser-vice history of a caller, unable to place

customer orders, and unable to provide

essen-tial information about inventory availability

or the status of an order

The number of telephone calls answered

was increased by 131% from 1996 to 2000,

resulting in a steady decline that more than

halved the total dollar value of returned

items In addition some information and a

FAQ system was made available on the

Internet The apparent calls per unit sold

went up from 0.28 in 1996 and stabilized at

0.48 from 1998 onward even though callvolume grew continuously throughout thistime period In other words, almost half of allunits sold intrinsically result in a customer ser-vice call from the customer (Fig.2)

It was recognized that while reducingreturns by answering more calls was crucial,and progress was being made, it was not nec-essarily the same as providing customer sat-isfaction Brother started from the premise that

a customer relationship supported by ically associated core processes would be thefoundation for customer satisfaction

specif-CRM was defined as having one face tothe customer regardless of the contact medi-

um, and providing a complete customer tory at the push of a button to everyone facingthe customer Total Customer Satisfactionwas then formulated as a continuous infor-mation process as depicted in fig 3, startingwith information on who purchased whatand when, continuing with how the prod-uct was being used, and whether the cus-tomer had contacted Brother and if so, what

his-the issues or service requests were Only aftercoming full-circle as many times as necessary,would there be complete knowledge of thecustomer and total customer satisfaction,with any hope of keeping and growing a cus-tomer with Brother forever

Supporting the total customer tion information loop would require aBusiness Warehouse This could be partial-

satisfac-ly populated by converting some of the ing data, however the final contentrequirements would not be known until atleast some of the CRM processes were inplace and generating data Capturing irrele-vant information would be worthless

exist-Five process areas were identified ascritical for generating data as well as pro-viding service These were, answering of a callthrough CRM, logging the call and retriev-ing the customer information, accessing andpopulating the solution database on an ongo-ing basis for consistent answers, e-mailing orfaxing solutions, and finally maximizing cus-tomer experience to be able to sell acces-

BROTHER ENJOYS NEAR-ZERO EMPLOYEE TURNOVER IN SERVICE CENTERS

Brother’s National Service Division has achieved what may be an unprecedented feat in the service center industry and has been doing so for many years since 1989 In the call center industry high employee turnover rates are the norm At Brother’s in-house customer contact centers the employee turnover rate is virtually nil even while growth has been moderate Employees attribute this to Brother being a good company to work for with genuine concern for employees as evidenced by their benefits and working environment and continuous training Furthermore the customer service job remains interesting with a wide variety of products being sup- ported allowing the development of expertise and associated pride by the employees over time Joy Applebaum, Director at National Service and the CRM Project Leader explains, that during the CRM project “we realized that it was important to let them know what was happening We did presentations and let our employees know that the management was not just ‘trying to do something to them’ but there were business drivers and achiev- ing total customer satisfaction was our common purpose CRM functionality was presented to each group which increased their feedback, their buy-in, and got their ideas integrated.”

Joy Applebaum, Director,

National Service CRM Project

Leader

“

Brother understood that a

customer relationship supported

by specific core processes

would be the foundation for

customer satisfaction.

”

BROTHER KEY PERFORMANCE INDICATORS Fig 5

King (customers) Service:

MEASURE CURRENT TARGET CHANGE

Queen (retailers) Service – Administrative:

MEASURE CURRENT TARGET CHANGE

Queen (retailers) Service – Tech Support:

MEASURE CURRENT TARGET CHANGE

Parts Department:

MEASURE CURRENT TARGET CHANGE

Consumer Sales:

MEASURE CURRENT TARGET CHANGE

sories The last of these was a distinct

oppor-tunity as Brother’s products had a wide

vari-ety of optional accessories and supplies not

being stocked by the retailers, and business

could be expanded without competing with

the retailers

Executing the identified processes well

would result in: Shortened call times and

efficiencies reducing call center costs;

Customer base accumulation in the

busi-ness information warehouse saving call time

used for re-keying basic information and;

Building a one-to-one relationship with the

customer using the collected information

together with email, fax, surveys, and

demo-graphic or other differentiating information

Based on an average 3-year product lifetime,

it would be possible to identify customers

when they came close to needing a new

prod-uct In Dean Shulman’s words, “There would

be an opportunity to retain the Brother

cus-tomer forever.”

Proceeding with SAP CRM

Brother had chosen SAP in

1994 as its ERP system toreplace all other legacy sys-tems for all its mission crit-ical processes After anarduous project lasting 25months and utilizing all theenergies of 10 Brother MISSAP staff, plus over 20 dif-ferent outside consultantsand project managers, a lessthan smooth Go-Live wasachieved for 600 R/3 users

in mid 1997 Despite this difficult start,Brother stayed with the vision to integrate allits departments into one system and to con-tinue to add any new functionality to theintegrated system rather than create dis-parate systems over time Brother was com-mitted to a single integrated system philosophyhaving implemented 16 SAP ‘bubbles’ tosupport the business

From 1998 to 2001, thesame core Brother MIS teamwas able to expand SAP tocover the consumer salesand parts operations, per-form a new SAP imple-mentation in Mexico, as well

as upgrading the versions

of R/3 being used at sidiaries in the US andCanada All of these projectswere achieved on time andunder budget By 2001 theBrother MIS team was con-

sub-fident it could take on any other SAP sions including CRM without difficulty Todaythis group supports over 900 SAP users, inexcess of 300 being within CRM

expan-Terry Koike, President of BrotherInternational Corporation, recalls, “In June

of 1997 we implemented SAP for our ness and the MIS staff, business people, and

busi-I spent many countless hours through theimplementation period making it a success.Our drive has always been to have our busi-ness people become owners of the systemand use it to continually improve the waythey do business To that end we are veryproud of the CRM implementation as anoth-

er example of our business people takingownership of the system and working withour MIS staff to ensure that our system effortsreflect what we need to run our business aseffectively as possible.”

Brother had been introduced to theCRM concept in 1998 but SAP CRM was notdeemed to have the required functionality atthe time The urgency of the need for CRMmotivated looking at other vendors’ solu-

tions however these wereall ‘bolt on’ and would undomany of the b enefitsobtained from having oneintegrated system Theywould also create new risksand be more costly to imple-ment because MIS wouldhave to re-learn much ofwhat had been learned dur-ing the SAP implementa-tions Dennis Upton, CIO,recalls having to be patient,

“with a disciplined

Dean Shulman,

Sr Vice President

BROTHER WINS CUSTOMER SERVICE AWARD

AND GETS CITED AMONG TOP 500 IT USERS

The National Service Division of Brother International

USA was awarded the 2001 Brother Industries President’s

Award for striving to achieve true customer satisfaction and

building long lasting customer relationships contributing to

increasing market share Brother was among the first to

implement such a sophisticated CRM solution and their

proactive strategy was recognized as being the potential

benchmark target for other Brother group companies Mr.

Charles Stadler, Vice President of the National Service

Division while accepting the award on behalf of the

employ-ees, stated “Service jobs can be very difficult and often

unrewarding, which makes me especially proud of the

excel-lent job that has been done.” Brother was also chosen as

one of top 500 users of IT by Infoweek

approach, future development could be done

more economically.”

The appearance of mySAP prompted

Brother to re-evaluate the feasibility of

real-izing its CRM needs along the originally

envisioned integrated strategy This time the

technology was deemed sufficient so the

decision was made in June 2000 to proceed

with an ambitious project Dean Shulman

sums it by saying “despite challenges,

con-ceptually mySAP is a fully integrated solution

to help you build a house with a solid

foun-dation from brick and mortar and not of

cards R/3 is a solid foundation.”

Having made some, even if painfulprogress in reducing product returns with-out using integrated CRM, Brother did notproceed with mySAP and CRM until man-agement was completely clear about thebusiness mandate and required process

transformations for doing so Dean Shulmanwarns, “Horror stories about CRM existbecause people do not honestly ask the ques-tion, ‘So what?’ Companies tend to imple-ment existing processes rather thanquestioning their value Its critical to have anend game for implementing CRM Are weimplementing CRM because its integratesthe customer information well? Capturingmore of the same unusable informationwould be worthless Is it because we want

to answer more customer calls? You can dothat with just adding phone lines How will

we k now that we provided better customersatisfaction with CRM?”

CRM Parts Operation (Dealers)

CRM Module Server

BIC SAP R/3 Production

Email Tech Support Fax Product Registration

Brother Mail

Interner Functionality www

SAP Business Warehouse

Reporting

CRM Call Center Operation (Consumers)

Source: Brother International

“

mySAP prompted Brother

to re-evaluate the feasibility of realizing its CRM goals.

”