With statistics suggesting a 70 to 80 per cent failure rate for customer relationship management (CRM) projects, most people might think implementing CRM for one company at a time challenging enough. Not the management of Inchcape Motors Australia (IMA), the importer and distributor of Jaguar, Peugeot, SEAT, Subaru and Volkswagen. Against a backdrop of plunging unit prices and fierce competition, Inchcape last year accepted the need to help its five Australian franchises transform themselves from product-centric to customer-centric organisations. Now it is in the second phase of a project that has already transformed both it and its franchises' business culture and which should soon starting achieving serious ROI.
Balancing the needs of those competing franchises, which operate as separate companies in their own right, was a bit like walking a tightrope while juggling. It certainly created some special challenges for both Inchcape Motors and Onyx, supplier of the Onyx Customer Centre (OCC) product chosen to do the job.
For one thing it meant setting up separate databases for each company, something Onyx had never done before. Then there was the fact that each company collated its information differently and required different types of information for its individual customer target markets. There was the need to ensure none of the competing franchises got an unfair advantage by getting access to the information held by its competitors. And if all that wasn't headache enough, for project sponsor Paul Morris it also meant negotiating with each of the five businesses separately on exact requirements and business needs.
Inchcape Motors Australia is a subsidiary of Inchcape Motors International (IMI), which in turn is a subsidiary of UK-based international distribution group Inchcape PLC. The world's largest independent importer and distributor of motor vehicles, Inchcape represents 39 of the world's motor manufacturers and 12 industrial/agricultural manufacturers in 36 countries. The Australian company acts as a service provider for the five Australian franchises -- Volkswagen, Peugeot (Australia), Jaguar, Subaru (Australia) and SEAT -- each of which operates as an entirely separate company.
According to Morris, the CRM project arose out of an IMI strategy meeting of senior managers held more than a year ago. "One thing we believed should be on everybody's agenda was e-commerce, electronic marketing, marketing relationships -- what we ended up calling customer relationship management. So it started as a group thing internationally; something we, being a distributor, had to be able to offer to our suppliers. We wanted to become more consumer-focused."With the role of television advertising in selling cars declining rapidly, IMI knew e-commerce would soon be vital to the motor industry. The organisation has distribution rights for Auto-By-Tel (an American leader in selling cars over the Internet); is launching a similar company in the UK; and is looking for the same opportunity in Australia. But it also knew a successful e-commerce strategy would be grounded in the ability of each franchise to communicate with its customers.
In Morris' eyes, a successful CRM strategy involved much more than just adopting a relationship marketing approach to doing business. "A lot of people think relationship marketing is customer relationship management. It is not," Morris says. "People think customer relationship management is part of the marketing role. I totally disagree. Marketing has a part to play in it, but customer relationship management is all about a culture, it's all about a process, it's all about a business within a business, where relationship marketing is all about a function with a business.
"Marketing [has] input into it, but they do not own it. Everybody owns that customer. And our vision is that anybody on a PC will have access to this. Our telephone systems will be upgraded next year to where if a person has a note it will come up on their screen. That will be from the MD down to a person in a warehouse."Inchcape initiated the CRM project on October 7, 1998. Among its key business objectives was providing the technical infrastructure to let Inchcape and its franchisees move from product- to customer-centricity. It wanted a system that would provide total knowledge about a lead, prospect or customer and all contacts associated with that customer to everyone on staff. And it aspired to capture, manage, monitor and report on all contact and customer information in a structured but intuitive format and support best-practice processes in customer management. Users were to be provided with the tools to manage their time, contacts and customers more effectively and efficiently.
Knowing the complexity of most CRM projects, Inchcape implemented a risk management plan which recognised from the outset that user-initiated changes to functionality could expand the project scope, costs and time frames. The plan therefore called for a formal change control process that could accept changes to the project schedule as a natural outcome of functional changes.
The company also accepted there was real risk a lack of input from the businesses could cause project failure through delays, overruns, or rejection of the new technology. To minimise this risk the steering committee became project sponsor and accepted responsibility for obtaining necessary business input, with exact requirements to be agreed at the start of each project phase.
The committee was also responsible for facilitating management and strategic decision making and for prioritising resources based on business needs, another measure designed to reduce project risk.
Phase one involved delivery of a technical platform capable of being leveraged for future phases of the CRM project and migrating all existing customer-related information.
Inchcape made and accepted a business case for adopting OCC to provide the underlying functionality. It also decided to make the initial implementation an "out-of-the-box" solution with minimal configuration, done with the assistance of Onyx and its business partner FPS. "We knew what we didn't know, so we went for a partner who understood customer relationship management, not just as a product but as a company," Morris says.
Inchcape's approach sought to transform data into information, information into knowledge, and then knowledge into wisdom. The first stage, known at Inchcape as "operational excellence", saw the capture of customer data and the checking of its integrity.
Migrating existing customer-related information to CRM involved a combination of data cleansing, merging, de-duping and manual verification and manipulation.
The managing director of each franchise had to agree upon and sign-off on data requirements. "First, we had to persuade these people that what they had that they thought was great wasn't so good after all. That was done with soft gloves, and common sense prevailed," Morris says.
Agreeing upon data input requirements with the franchises was a matter of detailed discussion, which Morris drove through the IS steering committee.
Where disagreements arose, Morris had the power of veto and final say. Being ultimately proven right on those occasions where he had to override managing directors gave him and the steering group a lot of much-needed credibility.
After much finger-crossing and holding of breath, the existing systems which provided the primary data source were terminated after migration to ensure data integrity and validity. Data feeds to external service providers now use an Onyx-generated customer number for integration in later phases.
"When we went over we were very hard on integrity," Morris says. "In the first instance when we brought the systems and information in, we would have problems; but we were found to be right every single time. The old data was wrong. So we would get them [Inchcape partners] to sign the new database, then we destroyed the old one.
"When we did the first one, our hearts were pulsating; but we proved our databases were right, to the point where our external partners said: 'Ours is rubbish. We want to use yours.' That was an endorsement of the project and project team and also endorsement of the product."To ensure continuing data integrity, data is now cleansed constantly. "We're getting to the point where Onyx has data cleansing, and we've got another company outside it to put a package on top of it again. At the moment, every night we bring information down from our mainframe and cleanse it every single day."The next stage was to collect information through surveys, warranty forms and other sources, and to ensure customer-related information was fully captured each time a sale was made. Morris says the plan was to transform all that information into knowledge, using data mining techniques, with each franchise requiring different sorts of information for their different customer target markets.
"That is now getting a little bit difficult, because it is pulling on a lot of resources that we don't have within the business," Morris says. "So we have drawn the line a little bit and say: 'Okay, how are we going to do this? We're getting this data. You can see we can get the information. You can see we can get the knowledge. But what do you want to do with all this?'"Because what happens is, it's like a continuous improvement approach: as you get more information, you get data, you get more knowledge, from the knowledge you get more wisdom. It's evolution."Phase one gave users the chance to familiarise themselves with the OCC functionality, with business process changes and additional requirements being incorporated into future phrases. Each franchise was given the same functionality, with information residing in separate databases and rollout occurring one franchise at a time. Inchcape then spent two months bedding down the system, and working with the franchises to customise according to their needs.
Now, with the franchises warmly embracing the new system, Morris says his main problem is to find out exactly how each franchise wants to use the system, knowing how easy it can be to sink large amounts of money into such systems without getting much benefit in return. He says Inchcape is planning to begin recruiting staff with CRM credentials. It will be up to each franchise to negotiate with the steering committee on how to use those resources.
For the managing directors of Peugeot (Australia) and Volkswagen that is likely to mean relying on those Inchcape-provided resources to help them behind the scenes. Subaru (Australia) is still deciding whether to do the work in-house or rely on Inchcape to help. The others are similarly undecided about the best approach.
Currently, Inchcape is working on phase two, which involves providing access to CRM to third parties. At the planning stage is phase three, which will see provision of a Web interface to deliver data to prospects and customers; and also phase four, which will involve extending the business process of CRM to the dealers. Business processes are being modified to support feedback from all external service providers in order to maintain the integrity of the new system as the definitive source of customer data.
While cleaning up the data went relatively smoothly and the end users are enthusiastic about the CRM system, Morris says there were a few unanticipated problems to be overcome in phase one. The biggest of these was managing the expectations of the users. "A lot of the franchises thought what they had was fantastic," he says. "And that was rubbish, because it wasn't maintained; there were no processes. I think a lot of that was because it was a part of their own job, so they weren't going to admit they had bad data. But the data was rubbish." The other big problem was managing the expectations of the users.
"Everyone thinks that you get a product and it's all there," Morris says. "At the end of the day, [a CRM package] is only a tool -- it's basically a big database with a lot of flexibility in it.
"I think a lot of them thought it would do everything. We had to say: 'To get this type of information you've got to do a lot of work.' And a lot of them thought if they corrected the information, then they would get it all. You've actually got to then go into knowledge: from this information, what do you want to do with it? And a lot of them hadn't even thought that."Morris says it was also difficult to resist the pressures that came with the decision to implement the system straight from the box, initially simply replacing the information and functionality users currently had. "It is a bit like a drug. The more you see it, the more you use it, the more you want out of it. That was a bit hard, because people wanted the world first. I kept the scope very tight and didn't go outside the scope. That got a lot of people upset, because they wanted more and more. It got up people's noses because they think on a project they can have whatever they want."As sponsor, Morris says he refused to resile from this position, however much it upset some people. At the time of writing he was preparing to meet with all the businesses to decide where they wanted to go next, and says he intends to make clear the money for further work would have to come from the franchises' own marketing budgets.
"These systems are monsters," he says. "With Subaru I think we started with 100,000 records, and we're going to end up with 250,000 without even trying. I brought a database and I'm now running out of space. So we're saying: 'Hang on guys, what are you going to do with it?'"Morris says the lesson for others looking to implement CRM is: that without cultural change, it is easy to waste a multimillion-dollar investment. "If you go in there thinking it's just relationship marketing, you'll waste your money.
If you don't take it as a cultural change in your business, don't invest in it, it will cost you too much. It becomes part of the way you're structured. It is about process management. Because if you take it under marketing, it becomes a function. This is a business in a business.
"When we did this it was a strategic move. It is difficult to try to get a payback on a culture. Now we have started to do that in the second phase. It was hard, because phase one was all strategic. Now the system is in place we can get in and do something with it."
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