Let There Be CRM

Let There Be CRM

The Company: Holophane

Founded 1898

Revenues $US215 million in 1998

Location Columbus, Ohio

Employees 2200 total, including 225 field sales reps worldwide and 135 central support staff at corporate office and manufacturing locationsMission Selling custom industrial, commercial and roadway lighting productsCustomers Building owners or architects, consulting engineers, contractors, developersURL www.holophane.comIn the children's party game called Telephone, one person whispers a phrase to the next person, who then passes it on, and so on down the line. When the game stops, the phrase usually has become garbled and confused - "My dog has a bone" turns into "My clog answered the phone".

At Holophane Corporation, a division of National Service Industries in Columbus, Ohio, things weren't quite that bad. But the manufacturer of customised lighting for industrial, commercial and roadway settings found that the faster it tried to grow the business, the more frequently orders got mixed up as they travelled from the sales rep to the rest of the company. The 102-year-old company knew that its system of keeping all the information about a project in the hands of the sales representatives would no longer cut it. That's when Holophane turned to a customer relationship management (CRM) system that tied sales-force automation to departments at headquarters like product engineering, customer service and pricing approval.

The Curse of the Manila Folder

Manufacturing industrial-strength lighting products is tricky business - not every roadway or park is the same. So rather than mass producing a few products, Holophane has to build to the exact specifications of each order. Because sales reps are as much consultants as they are order takers, the company's success depends on a knowledgeable group of reps out in the field who follow a project from beginning to end, dealing with the earlier participants - the owners or architects of a building or space - as well as the contractors and distributors who take over after winning the bid for a project.

Holophane has had sales reps for more than 90 years, and the process for keeping track of a project has been decidedly non-technical the entire time. For each project, reps kept a manila folder in which they collected such information as the customer's history, products the customer was interested in and quotes the sales rep had given. If reps passed any of that information on to the order entry, customer service and billing departments prior to the order placement (and usually they didn't), they faxed handwritten copies. When the order came in from the customer, any department with a question about a project had to track down the sales rep - a difficult proposition with most of them on the road much of the time - or ferret out the answer in someone else's files. "The system was so archaic that you'd go to a filing cabinet, pull [a file] out, make copies and give it to the next person. That can be a pretty tedious process," says Steve Ying, a senior sales rep in Houston. Picture trying to get dressed when you have to call different people to find out where each of your socks is.

Without a unified system for tracking what a customer wanted, mix-ups in orders were common. Orders that require human intervention before they can be entered are called dirty orders - and before Holophane implemented CRM more than 50 per cent had some speck on them. Maybe an order would say "B" for colour. When it arrived at the desk of the order entry people they couldn't be sure if the customer wanted black or blue. They'd have to track down the sales rep and clarify. And if the sales rep had quoted a 10-day lead time, a dirty order might add a day or two to the process. Either Holophane had to eat the cost of expediting the order, or the rep would have to explain to the customer that the order promised in 10 days wouldn't arrive for 11 or 12 days - not exactly the best method of endearing customers to Holophane. In addition, if a rep left the company before completing a project, the project inevitably ran into snags. "We did not have a very effective way to centralise it so that internal departments knew what was happening on projects," says Doug Stang, director of corporate IT for Holophane. That meant that ultimately both the project and the customer suffered.

In late 1996, Holophane executives realised that plans for extensive growth depended on streamlining the ordering process, reducing dirty orders and producing an overall view of the company's activities. They created an evaluation task force made up of middle managers from customer service, engineering, manufacturing, R&D and sales to look into ways to do just that.

A Virtual, Shareable Folder

The task force determined that Holophane needed to revamp its processes and invest in three areas: CRM, sales-based product configuration and the corporate computing infrastructure. To lay the groundwork for CRM and product configuration, the IT department tackled infrastructure first, moving network systems and hardware into a Microsoft NT environment and increasing e-mail access throughout the company. After examining the offerings of a slew of vendors, the task force settled on a combination of CRM software and product configuration software it dubbed Fusion Business System (see "CRM at Holophane"). According to Stang, the chosen vendors won Holophane over for three reasons: each offered a strong customisable component with out-of-the-box functionality, a scalable solid architecture and a corporate vision that matched Holophane's. "We looked to see if they were trying to take the products where we were trying to take the company," says Stang.

The two components of Fusion work together in a push and pull model. The CRM software, which Stang's group installed on sales reps' laptops in February 1998, replaces the manila folders of yore. Now sales reps enter all the information about a specific project - the name and history of the customer, the project information and product quotes - into their laptops as soon as they meet with the first contact on a project. It's up to reps to synchronise that information with the main database at headquarters. When they do, the customer service department can see it immediately. If the customer asks a question about the project or decides to place an order later, the information is safely in the database, accessible to all departments - as well as to the reps themselves, should they work with the same customers on future jobs.

In addition to pulling information from the field with greater efficiency and accuracy, Fusion also pushes information about products and prices out to the sales reps. The product configurator, installed in July 1998 and integrated with Holophane's manufacturing system five months later, functions as an electronic catalogue. Reps use it to select different parts of an order for the customer, putting together a fixture with the appropriate bulb and cord. In the past, sales people depended on a combination of their own knowledge and the contents of a paper catalogue for details about Holophane products. If a customer wanted fixture X in a voltage or colour Holophane didn't make, and the rep didn't catch the discrepancy, the order often went through and eventually turned dirty. Now the configurator checks orders against Holophane's offerings and halts impossible orders before they even leave the field.

A Streamlined Process

Fusion's greatest asset is that it gives Holophane a snapshot of the day-to-day operations. "We have a better idea of what our business is and where our business is," says Stang. And that, in turn, makes for happier customers. For starters, clients who call the customer service centre can get immediate answers to questions rather than waiting for a sales rep to call back. Sales reps spend less time tracking projects manually and returning calls from customers, which leaves them more time for personal service and drumming up new business. "Various customer requests can now be handled much faster since information that used to take days of long-distance phone tag is now at your fingertips at all times," says Ying. The company can monitor which sales relationships actually turn into business, so that reps can give more attention to repeat customers. "Now we can track projects that we've completed anywhere in the world and see what type of lighting equipment was used in each specific project or market," says Stang.

From 1997 to 1999, the company has seen a 15 per cent increase in order volume with the same staffing - a sure sign that sales people are spending more time selling and less time sorting out gaffes. And expedited orders are down about 12 per cent.

Implementation Challenges

But just because you throw a party and hand out invitations doesn't mean that everyone will come. Early on in Fusion's implementation, sales reps expressed initial reluctance to give up their customer information. "Many reps feared the Big Brother syndrome," says Ying. "There was apprehension about having all your files exposed to management and others throughout the company. And as with all new systems, Fusion's capabilities were limited at first. So there were several functions that were cumbersome or non-existent."

To combat the uncertainty, Stang initiated an internal PR campaign. Before the system went live, a PR company sent out short e-mails to the sales reps describing potential problems that Fusion would be able to fix. ("Has this ever happened to you? If you had this great new system it wouldn't!") Holophane also kept a constant newsletter going so that anyone who would be using the system would know how the project was progressing. In addition, Stang broke down the training into small bites - each session focused on only five things - so users didn't get frustrated or overwhelmed. Holophane made processing expense reports mandatory to let users warm up to the system, and after the implementation regional managers kept tabs on users' progress.

Even so, problems crop up. "As long as [the sales reps] dot their I's and cross their T's the system is wonderful," says Gale Ann Kelly, a customer service coordinator who processes orders for the 23 sales reps on the West Coast. But sometimes reps enter information but forget to sync their databases so that everyone can access them; other times they get frustrated and don't enter the information at all - especially older sales reps who may be reluctant to change the way they've been working for years. Kelly points out that despite the training efforts it's difficult for sales reps to get used to a new system because they work alone and have no one to turn to with questions.

Whatever the hurdles, so far Fusion has been doing itself proud, enabling employees to keep pace with an increase in orders as well as to minimise dirty orders and the costs associated with them. If things keep improving, CRM will likely remain a fixture at Holophane. And in the lighting business, there are worse things to be than a fixture.


Seeing the Light

Holophane understands that better customer relationships don't just happen because you answer the phone quicker in a call centre or because you give customers a self-serve Web site. Better customer relationships are achieved by the whole company working together to give customers what they really want. If customers want speedy delivery, both the fulfilment and customer service departments are responsible for satisfying customers. And if customers want orders filled correctly the first time and every time - a not unreasonable desire - then everybody in the chain (from salesperson through order fulfilment and delivery to after-sales customer care) must share information.

A central tenet of CRM is that having relationships with customers increases customer retention. It makes sense that Holophane's customers must be happier with a reduction in order errors and faster fulfilment. And we naturally assume that an increase in orders is partly due to happier customers reordering from Holophane, where once they might have chosen to go to another supplier.

But it's interesting that Holophane views the benefits in terms of productivity (that is, an increase in volume with the same staff) rather than customer profitability and retention. For example, Holophane has increased order volume; I wonder what per centage of increased orders are from existing customers. If Holophane is not currently measuring these factors then perhaps its next step might be to gather such data. By analysing customer-centric measurements, Holophane could learn more about customer preferences, which would feed into the product development process and inform its strategy for customer interaction policies and procedures.

Holophane has done well to attack the causes of its operational problems, and while improvements might still be made, has implemented processes and software that encourage better customer relationships, greater productivity and in turn, further growth and expansion. But Holophane cannot afford to bask in the glow of its success without considering strategic aspects that will ensure even greater success in the long term.

Cassandra Millhouse is a senior analyst at Ovum, a London-based consulting and analysis firm. A specialist in CRM, she is the primary author of Ovum's CRM Strategies: Technology Choices for the Customer-Focused Business (1999) and lead analyst of Ovum Evaluates: CRM in the Front Office (2000)CRM at HolophaneObjective: To reduce mistakes in order processing, increase efficiency in filling orders and allow sales people to spend more time selling Process changes: Sales reps are no longer sole keepers of customer information; all project information is now accessible to customer service, product engineering and pricing approval departments; customer service can answer questions at any point in a project without involving the sales rep Enabling technology: Fusion Business System, which consists of a Pivotal Corporation's Pivotal solutions CRM software, Commerce Logix's product configurator and a custom-designed connector technology Scope: 225 field users worldwide and 135 central support staff at corporate office and manufacturing locations Payoff: Handled 15 per cent increase in order volume with same staff; decreased rush orders by 12 per cent

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