MAR 4860 – Customer Relationship Management MODULE 6 UNIT 1
Introduction
CRM requires a fresh new approach to business processes. It requires re-thinking how they appear to the customer.
It means looking at the way a company does things and how its actions affect the customer. A new customer-
centric strategy forces companies to re-engineer their ways of doing business to exceed customers' expectations
and provide competitive differentiation, but working from the outside inward, not the other way around.
Think about yourself and some of your own processes and how they affect others involved. Let’s assume you rely
on someone to take you to school each day. If you don’t get up in time or take too long to get ready, you not only
affect your ride but also your performance in your classes for being late. In this module, we’ll look at why it’s
important for a company to re-think its processes, along with some basic "process concepts." We'll gain an
understanding of the primary CRM processes: sales, marketing and customer service. And lastly, we will focus on
methods and techniques that companies can use to re-engineer their processes.
CRM strategies initially target customer-facing processes in the sales, marketing, and service areas. These,
however, should be reviewed with the back-end processes in mind. According to recent studies, companies
that focus too much on the front-end without taking into account the impact of changes on the back-end will
fail in their CRM efforts.
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MAR 4860 – Customer Relationship Management MODULE 6 UNIT 1
Module 6 Learning Objectives
In the past, companies would re-engineer their processes with the goal to improve efficiency and reduce costs. The
beneficiary was the company, not its customers. The rise in CRM has led to a focus on reworking key business
processes that touch the customer, and asking customers which processes matter to them. This requires listening to
the voice of the customer.
Companies don’t realize that their functionally fragmented processes often mean that the customer has a poor
experience and receives less than the expected value. Successful process re-engineering efforts should create
processes that not only meet customers' expectations, but also support the customer value proposition, provide
competitive differentiation and contribute to the desired customer experience. In this module, we will focus on
giving you the basic knowledge so you can one day be able to create customer-focused business processes. By the
end of this module, you should be able to:
1. Identify the benefits associated with CRM process change done right.
2. Define a business process and examine how the inputs and sequence of tasks can impact the output of the
process.
3. Give examples of the types of business processes.
4. Recognize the key tasks of the core sales, marketing and service processes and determine the proper
sequence of tasks.
5. Determine the impact of resource decisions (people and technology) and business rules on performance
outcomes. EXAMPLE OF A STUDENT.
Business rules is a concept we will look at. A business rule is a guideline or a criteria that you follow within a
process.
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MAR 4860 – Customer Relationship Management MODULE 6 UNIT 1
Gartner 8 Building Blocks of CRM
Here we see our Eight Building Blocks of CRM again. The Processes block focuses on developing CRM
processes that will effectively manage not only customer life cycle processes (for example,
welcoming new customers, handling inquiries and complaints, and winning back lost customers), but
also analytical and planning processes that build knowledge of the customer.
Look at the internal processes too that relate to what we do with the data that we collect on the customer.
The question that needs to be answered here is "how will a company redesign its processes to be more
customer-centric?"
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MAR 4860 – Customer Relationship Management MODULE 6 UNIT 1
Customer Touch Points
One of the first steps in creating value for customers is to know the touch points or business processes associated
with these customers across the organization and all distribution channels. Although all companies use business
processes, most don’t really know what their processes are and where they are located within their organization.
Best practice companies are usually the ones that have well documented business processes; others have not
formally defined and documented their core processes.
In this module, we will review those basic process terms and concepts and then apply techniques for analyzing a
CRM process. Using examples, you will have a chance to identify opportunities to increase customer value in a
business process. Remember that technology is then used to facilitate and automate CRM processes. If you look
at this slide, you’ll see that the customer can come into contact with the company through many different touch
points.
In the diagram, you'll see that the different touch points are different interaction points when a customer comes in
contact with the company. The business processes are those activities and those tasks that the company performs;
those things they have in place in order to be able to interact with the customer at each of those touch points. For
example, if we have a retail store and you go into the retail store to purchase something, there are different
processes that the company has designed in order to be able to interact with you. There are standard operating
procedures that each cashier has to follow; a specific set of tasks every time they go ahead and bring up an order
with you.
If you go to a website and you want to buy something online, the screens themselves will actually guide you
through the buying process and the purchasing process. We’re all familiar with the fact that there's always a
contact screen; when you're done entering your contact information, you go into the billing screen and so on. All
of these are examples of processes that company has put in place in order for them to be able to communicate
with you as a customer.
In the diagram, you'll see that out of those business processes, we have outputs and those outputs are information
that the company gathers about you the customer. That information is then either used to be able to improve
processes, which is on the right-hand side, or it can go into a data warehouse so that there's a learning process
that's going on. We've talked about this before when we've discussed the IDIC model, where you identify
your customers and you differentiate them. You interact with them which is really what this diagram is saying to
us. Once you interact with them, you take what you learn and you use it to customize your future interactions
and your future offerings. Those future interactions and those future offerings is what this diagram shows as
intelligence - we take what we learned and then we turned that information into more intelligent
interactions with the customer. This is a big picture of how business processes play a role in the overall context of
CRM.
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MAR 4860 – Customer Relationship Management MODULE 6 UNIT 1
Before Customer-Facing Process
In this slide, you see the “before” process. On the next slide, you’ll see the “after” process.
The first step in CRM is for companies to map out their existing processes. In this example, the customer is only
given one option for making a reservation. The touch point is between the customer and the CSR. But what
happens if the CSR is busy and all phone lines are busy? How does that make the customer feel? This is one
area that could be improved, right?
If a customer needed a room right away and there were no rooms available, then a customer had the option of
being placed on a waiting list or trying back later. In most cases, customers are not willing to be placed on a
waiting list and call a competitor. This is another opportunity for improvement.
And what if you are a regular customer? Is there another opportunity to somehow block rooms for these
customers? Let’s take a look at an improved process on the next slide.
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MAR 4860 – Customer Relationship Management MODULE 6 UNIT 1
After Customer-Facing Process
In the improved process or the desired state, the following changes were made:
• Customers were given multiple options to contact and interact with the hotel. This is called a multi-channel
reservation system.
• Using a central database, the system can identify frequent customers and provide them with blocked rooms.
• The system can track rooms in nearby hotels, thus offering customers alternatives, preferably in hotels from the
same chain.
• By offering options, customers have a better experience which strengthens brand loyalty and the likelihood that
the customer will keep coming back and referring additional customers.
Here are some guidelines for redesigning business processes:
• There is a natural order to performing the steps of a process.
• Work should be performed where it makes the most sense.
• Technology should be used to enable new possibilities, not automate existing tasks.
• Develop an alternate path for complex cases rather than one path that fits all.
• Data should be entered only once, preferably by people who understand and care about the customer data or
information. This is usually the person on the front-end of the process.
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MAR 4860 – Customer Relationship Management MODULE 6 UNIT 1
Process Defined
Let’s define a business process. A business process is a set of activities performed by people and/or technology
in order to achieve a desired outcome. A business process is a collection of activities that achieve
a business result. They:
• Begin & end with customer
• Are on-going and continuous
• Are not based on organizational structures
• Are often unnamed and unrecognized
• Are typically 10 or less core processes in an enterprise
A business process is made up of three components: INPUTS, OUTPUTS and the PROCESS ACTIONS.
Different customers have different DESIRED OUTPUTS. Some may seek convenience. Others may seek
quality. Yet others may seek the lowest prices. An effective process starts by understanding the desired outputs
of your customers.
The PROCESS consists of the actual steps or actions taken to achieve the desired output. A process takes the
INPUTS and converts them into OUTPUTS through a series of actions. Processes describe HOW something is
going to be accomplished. Processes are not physical items; they are activity-oriented and are best described
using action verbs.
INPUTS are the physical resources and information needed to complete the steps of a process and achieve the
desired result. Depending on your DESIRED OUTPUT, you will choose different INPUTS. Some INPUTS may
not always contribute to the DESIRED OUTPUT.
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MAR 4860 – Customer Relationship Management MODULE 6 UNIT 1
Example of A Process - Getting to Work/School
Here’s a simple example of a process that someone might use to get to work in the morning. Assume this
person uses the bus as a means of transportation from home to his place of employment. We start by defining
the expected output, which, in this case, is arriving to work on time.
In order to use the bus, several inputs are needed. You need a bus driver, a defined route, a bus, a key to start
the bus, gasoline to fuel the bus, and correct change, among others. A requirement to meet the expected output
is for the person to be on time. It’s not shown in this diagram but there is another process before this one called
“Getting Ready for Work”, the output being to get to the bus station on time.
The process itself consists of several steps, as shown in the middle section. Notice that these steps don’t
elaborate on HOW they are completed; they simply state WHAT is being done.
If you were actually analyzing this business process, you would expand each individual step into more detail to
determine where the bus customer may have points of pain.
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MAR 4860 – Customer Relationship Management MODULE 6 UNIT 1
Example of A Process - Making Spicy Hot Chocolate
Let's look at another example. This recipe examples is a simple illustration of a process for making desired
OUTPUT ‘Spicy Hot Chocolate.’
The ingredients, the saucepan, the stove, and the spoon are all INPUTS. The customer’s request is also an
INPUT. Of course, you need someone to perform the process, like a cook. If any of the inputs to this process
are missing or altered, will the expected output be the same? For example, if you don’t have Tabasco sauce,
the chocolate isn’t going to be ‘hot’.
The ACTIONS or steps of the process are described in a particular sequence. If some steps are skipped,
missing, or taken out of sequence, will the expected output be the same? For example, if you don’t heat the
chocolate, the chocolate will be cold and the desired output will not be achieved.
Any company, any size, uses hundreds or thousands of processes each day, both internal and external. The key
to designing a value-added process is to find out what the customer wants in terms of time, convenience,
products, and benefits, etc. How does your customer perceive value? What is the customer’s DESIRED
OUTPUT?
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