Customer-Centricity Delivers Revenue Gains to BNSF Railway
A railway, a computer company, a health insurance provider, and an online bank all have very different business models, but all grow revenue and customer value through customer strategy.
Six Sigma Opens Doors for AVC In this 1to1 on the run podcast excerpt, AVC Corp. President Dan Benbenek discusses how his company's Six Sigma-based process improvements helped open doors to new customers.
Inside Access: Reporter's Notebook Attention to your Web site is important to the customer experience and long-term loyalty.
Taking care of customers takes care of the bottom line. That's the takeaway from this year's Gartner CRM Excellence Awards. This week we reveal the winner's profit-building customer strategy, and give insight into other finalists' successes. What's your opinion on the link between customer centricity and bottom-line gains?
Email me your opinion or join the conversation on our blog.
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Enjoy,
Ginger Conlon
CUSTOMER-CENTRICITY DELIVERS REVENUE GAINS TO
BNSF RAILWAY
By Ginger Conlon, Editor-in-Chief
Faced with heady competition in the eighth annual Gartner CRM Excellence Awards, BNSF Railway took top honors in the Excellence in Enterprise CRM category for its customer strategy. The $13 billion company invested about $15.5 million to implement an enterprisewide customer strategy supported by a Siebel CRM system, according to Elizabeth Obermiller, the railway's director of enterprise relationship management systems. That investment contributed to 41 percent revenue growth from 2001 to 2006.
Presenting at the recent Gartner CRM Summit, Obermiller said the secrets to BNSF's success were executive sponsorship, employee involvement, and a phased implementation through an initiative called Zephyr, named after the first diesel-powered train. Then CMO Chuck Schultz (who has since retired) mandated the initiative, which included creating the Zephyr leadership team to drive the changes throughout the organization.
The first step of the Zephyr initiative was to create a centralized sales and marketing organization to serve the freight railroad company's four business units: agriculture, coal, consumer products, and industrial products. However, "centralization does not lead to integration," Obermiller noted. So the organization began the work of improving communications by eliminating silos, boosting productivity, and aligning and standardizing processes. Gathering feedback from employees was integral to these efforts. "You should let front-line people drive requests so they have skin in the game," Obermiller said.
Also integral to the success of Zephyr was hiring a change management consulting firm to help guide the process. "It was some of the best money we spent on this initiative," she said.
The customer connection
Zephyr also included improving customer knowledge by introducing a 360-degree scorecard, tailoring the customer experience using segmentation, and strengthening relationships by delivering consistent experiences to each customer. "We moved from simple contacts and opportunities to enhanced customer segmentation and account and market scorecards," Obermiller said. BNSF also streamlined its touchpoints to improve the customer experience, created department-specific analytics, improved its workflow and knowledge tools, and began tracking loyalty score and other KPIs through detailed reporting.
All of these changes were introduced in phases. Phase one focused on sales; phase two on the call center, including introducing call routing and PIN and activity capture. Phase three focused on the enhanced analytics; and phase four completed the enterprisewide deployment. Today there are 615 Siebel users throughout the organization. The company has seen a 28 percent increase in call volume (from 2002-2005) with no need to increase headcount, and has a CAGR that at 5.3 percent (from 2001-2005) is twice the industry average.
Efficiency and value creation
Although the initial driver of Zephyr was an internal focus on improving productivity, it quickly moved to an external focus on customers. According to Obermiller, as changes were considered or introduced, the question was, how does this impact the customer? "We balanced the value to the customer with the internal benefits," she said.
BNSF wasn't alone in that approach. The two other finalists in the Excellence in Enterprise CRM category, Advanced Info Services and Hewlett-Packard, also took a phased approach that balances customer benefits with corporate needs. Advanced Info Services, the largest mobile operator in Thailand (with a 50 percent market share), garnered such results from its customer strategy as 50 percent revenue growth over three years and a churn rate 50 percent lower than the industry average. Hewlett- Packard's gains include a 160 percent improvement in its pipeline health, a $200 million decrease in the cost to serve customers, and a lead-to-revenue improvement of $1 billion.
Gartner analysts selected finalists in the Excellence in Enterprise CRM category on "how well a CRM initiative spanning multiple functions of the organization demonstrated excellence," according to a Gartner spokesperson. Finalists in the Excellence in Sales, Marketing, or Customer Service category were selected "based on the qualities and results of an initiative or project that targeted a specific business function."
Uniprise, a UnitedHealth Group company, took the Excellence in Sales, Marketing or Customer Service for its customer care initiative, which focused on using behavioral analytics to speak more relevantly to customers calling in. Results include a reduction in average handle time in the range of 18 to 21 percent, and a decrease in customer distress during calls of 20 to 30 percent, according to senior vice president John Reinke. Customer retention and satisfaction have increased as a result.
The other two finalists in this category include NetBank (see "Cashing in on the Customer Experience") and Harry Rosen Inc. (see "Tailoring an Old-Fashioned Service Ethic for the 21st Century"). NetBank, which aimed to foster loyalty through acting as a trusted partner instead of a "product pusher," has decreased attrition to less than 8 percent and began transforming its customer care operation into a sales generator that now contributes roughly 3 percent of revenue for new products and services sold.
Toronto-based men's clothier Harry Rosen Inc. aimed to differentiate itself through service and customer knowledge. To do so it invests $1 million annually in employee training on fitting, tailoring, selling, CRM software, and on coaching and development skills for managers. Sales associates use SalesLogix to gain quick access to the customer insight necessary to move customers from occasional shoppers to what the clothier calls profiled clients. "Our system helps us behave more consistently with respect to our clients," CEO Larry Rosen said. "That's real CRM."
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SIX SIGMA OPENS DOORS FOR AVC
By Mila D'Antonio, Managing Editor
The office equipment supplier was looking for improved efficiency in its parts distribution, and gained a competitive advantage along the way. Benbenek spoke with Managing Editor Mila D'Antonio about the two-day training session in our latest 1to1 on the run podcast, Know Yourself to Know Your Customers." Here's an excerpt:
Q: Did you have any naysayers [among your staff]?
A: We certainly did. I would say for the most part a good 50 percent of them…. They just thought, 'well, come on, we
know. We've talked about this before and we know what the issues are.' And of course my response is, 'Yeah, well we're not improving it. So we've engaged some outside help and they think they have a better process or way to help us, and so do I, so let's give it a shot.'"
Q: Can you explain how you drilled down to every step?
A: Every person involved in the meeting relayed what they do when it comes to parts and parts distribution, which includes purchasing, bringing it into the system, shipping it to the technicians, shipping it to the customer, leaving it in for pick-up, everything.
And so we measured them. We measured the time that it takes right now to do this, how many people, and how many steps were involved in this process.
What we did on day two was look at how we can streamline the process, make it more efficient, make everyone involved more efficient, and reduce the chaos through this process. And with everyone involved, we came up with some good plans.
Q: What was that plan to reduce the chaos?
A: Some of the things we did were very simple: calling UPS and requesting a later pick-up time. A later pick-up
time meant we could get more orders processed and out for overnight delivery the next day. That was very helpful.
We moved our parts manager to our dispatch service facility so that he literally sits there in dispatch so he sees and
hears and feels the pain.
We have a central depot now in downtown Los Angeles where a lot of the parts are sent, so that any technician, if the part is available, can go pick it up. Before, we could only send it to a specific technician. Now anyone who is available can work on that job. That has helped tremendously.
Q: How has this led to competitive advantage?
A: When we go back out today, we talk about Six Sigma. We talk about how we've implemented this within AVC.
There's a certain percentage, generally higher up the ladder, who we're meeting with in that organization, who
are more likely to be familiar with Six Sigma. And it has gotten us into doors that we may or may not have gotten
into before, and increased revenue.
If they are familiar with Six Sigma, that's a tremendous competitive advantage for us because we're not the typical copier goose trying to go in there and sell features and functions. We're in, really trying to define with that company what it is they're doing now and how we can improve that through our equipment, through our service, and through our program in general. Can we truly have an impact operationally? And we do.
Listen to Dan Benbenek as he discusses in more detail AVC's Six Sigma initiative in our latest 1to1 on the run podcast, "Know Yourself to Know Your Customers."
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Inside Access: Reporter's Notebook
CIO Priorities
VoIP Customer Service
Spotlight on CRM Software
Now more than ever, CIOs are focused on helping their organizations to drive growth. According to Gartner's Scott Nelson, the top five strategic management priorities for CIOs in 2006 are:
-- Ginger Conlon
Is Skype the next customer service application? Gartner research vice president Bern Elliott says that today's technologies have made "virtualization" much more possible and much easier to deploy. Something to think about: Using Skype for customer service.
-- Ginger Conlon
CRM total software revenue (including maintenance) was $5.7 billion in 2005, up nearly 14 percent over 2004, according to Gartner research director Sharon Merzt. The drivers are business confidence, focus on revenue growth, a strong demand for industry-specific solutions, analytics, and business process optimization, she said. SAP and Oracle share about half the market; the next 25 companies total about 31 percent of the market; about 20 percent are focused solutions and niche players.
-- Ginger Conlon
Online experience deserves a second look
Richard T. Litofsky, president and CEO of cyScape, the developer of analytical browser tool BrowserHawk, says
that online problems like broken Web pages, formatting errors, incompatible browsers, and disabled cookies can
alienate potential customers who enter through a company's Web site. "The experience is much different for them than
the operators of the site believe they are delivering," he says. "What happens now is that you just potentially lost
a prospect or customer who had value to your business and the impact is tremendous."
-- Mila D'Antonio
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