Managing Customer Relationships

For printing company managers, the business practice known as "customer relationship management" or CRM holds out the promise of a means both to better serve clients with existing products and services and develop new offerings for existing and new customers.

At the core of CRM, as its name implies, is the customer. By using nearly every tool and resource at their disposal, companies that practice CRM strive to build unbreakable relationships with their clientele. These relationships are forged by anticipating and learning customer needs, then serving them in the best possible way.

A large and important component of CRM is software and technology products used to build customer data collection and analysis infrastructures that help manage relationships with customers. Given the highly visible role of technology, CRM has become synonymous with database/data mining collection and analysis type systems. However, the foundation of CRM is not technology, but the underlying business strategies and objectives.

"To become CRM-focused, a company needs technology tools, but that's really secondary to what has to happen within that company. Companies that succeed at CRM make changes in their culture, organization, metrics [the way they measure success], and compensation. Without changes in those four areas, managers can acquire all the software they want but it is just a waste of time," explains Martha Rogers, Ph.D., a partner of Peppers and Rogers Group, Norwalk, Conn., a consulting firm that specializes in one-to-one marketing.

Indeed, the CRM landscape is littered with very expensive failures. In fact, computer industry analysts estimate that anywhere from 50% to 75% of all CRM initiatives have failed.

"The focus on technology is understandable because it is a very visible and expensive part of the process," Rogers continues. "But CRM is taking a beating because there have been many failed efforts resulting from companies investing in technology, but making no other changes in their organization."

Rogers says that, to succeed with CRM, companies must first recognize that the heart of any business is not its products, facility locations, or sales territories, but customers. "Simply speaking, we say that the most important thing a business can make is customers," says Rogers.

By extension, retaining customers is a task that requires constant vigilance.

Adds John Fechino, "Just as our businesses are constantly evolving, so are our customers' businesses. This means we must constantly work to assure that our relationships grow in harmony. If we don't pay attention to relationships with customers, our chances of staying together are minimal at best." Fechino is business development manager for Worth Digital, the digital printing division of Worth Higgins & Associates, Inc., a Richmond, Va.-based sheetfed printer with $11 million in annual sales and 100 employees.

He says, "We view all interaction with our clients, from the time of order placement through job production to billing and even payment collection, as aspects that will directly affect our client/vendor relationship."

Launching a CRM initiative begins with identifying what the effort will accomplish and the systems and processes currently in place to execute the plan.

"Don't start by investing in a massive CRM software application; rather, make sure you really understand your operations. First, map all of your sales and services processes, then assign a value to activities that relate to your primary business objectives," explains Randy Harris, managing partner of Executive Intelligence, Inc., Boulder, Colo., a research and consulting firm that specializes in customer decision analysis.

The objective of Harris's exercise is to identify the four or five functions in the sales and service process that are crucial to achieving goals, then to assess how well these functions are working and fix those that are broken.

"It is critical to seek advice from the people in the organization who actually perform the crucial functions," advises Harris.

According to a new report from The Conference Board in New York City, more firms are adopting customer relationship management programs. Some 52% of the 96 global firms surveyed by The Conference Board have implemented a CRM system or solution. Among these, the top three strategic rationales for implementing CRM were:

–increase customer retention/loyalty (94%),

–respond effectively to competitive pressures (77%), and

–differentiate competitively based on customer service superiority (73%).

"Customer relationship management is a way to link customer needs with organizational capabilities so that organizations can optimize their marketing investments," explains Thomas Bodenberg, senior research associate in The Conference Board's performance excellence and operations management research group and author of the report. "Our study revealed that the most successfully managed CRM organizations are those that can realign themselves culturally, improve their technologies and internal operations, and continue their dialog with their customers."

Bodenberg says that CRM has its roots in several trends:

–enterprise-level sharing, computing, and control of data;

–rise of direct-response, data-based marketing, and integrated marketing communications;

–emergence of powerful data-mining, analysis, and storage tools; and

–a new awareness that marketing is relationship-oriented rather than transaction-driven.

According to the study, CRM often requires a firm to adopt a customer-centric philosophy and to change its corporate culture where needed. Findings show that, when introducing CRM, three areas most affected by change include the attitudes of customer-facing employees (67%), corporate culture (60%), and the attitudes of non-customer-facing employees (59%).

For printing companies, the popularity of CRM-type approaches presents new business opportunities to serve customers. One activity with the most potential is digital printing, specifically devices that accommodate variable-data printing.

"In our view, consumers are drowning in information they don't need. But digital printing allows companies to offer customers timely, personally relevant information that they want and need to make a decision," observes John Todor, managing partner of Whetstone Group, a CRM consultancy in Pleasant Hill, Calif., and vice president of the Association for the Advancement of Relationship Marketing (AARM).

AARM is a not-for-profit organization that promotes the development, understanding, and communication of the principles and discipline of relationship marketing and management. For more information visit aarm.org on the Web.

Quebecor World, Inc., Montreal, found an opportunity to improve its customers' efforts to brand products and services via custom publications that utilize both digital and conventionally printed materials. These publications are produced by consumer products companies and include information on products and articles that are related to their products.

Quebecor World, a commercial printing giant with annual sales of $6.5 billion, offered these clients the opportunity to customize these publications to the interests of intended recipients, along with a method of tracking responses to sales offers contained in the publications.

"Our customers have cut costs to the breaking point and they're asking our help in increasing their business. This shift from reducing costs to increasing sales means we have to come up with products that increase response rates to our customers' offers," explains Mike Graham, senior vice president of marketing and strategic planning for Quebecor World's commercial/direct division, a $1 billion operation that offers direct-mail product and services.

Building relationships, says Graham, demands that printing company managers move further upstream in the customer's decision process. When printers are left out of the development stages and called upon only for printing services, he notes, they're just one of many firms bidding on job.

Graham says print customers are looking for printing companies that will take on more responsibility since corporations' cost-cutting efforts have resulted in leaner organizations that are looking for vendors to do more.

Two customers that have Quebecor World produce customized publications are DaimlerChrysler and Toyota Southeast Division.

These branding publications combine both digital printing and offset printing. A customized signature that accommodates 72" or up to 16 pages of personalized information is inserted between the front and back covers of the magazine. This section, produced via 16 Scitex Digital printing heads, can include variable-data copy as a letter, special offers, coupons, and surveys tailored to individual recipients and their local product dealer and/or store. The remaining sections consist of preprinted articles selectively inserted into the publication based in the recipients' interests.

"This product is the result of a custom application that we developed using Scitex Digital's core printer technology," explains Kip Duke, vice president of technology for Quebecor World's commercial/direct division. "It is a complete bitmap-based system that can image virtually anything. We've produced jobs that have as many as 800 or 1,000 different iterations of image and text."

Quebecor World was granted a patent on the process. "We invented a new process to marry selectively bound forms to highly personalized signatures," reports Duke.

The result, Graham says, is one of the company's fastest-growing product lines, adding, "We saw an opportunity to offer our customers a product that offered true one-to-one customer connectivity. Our clients wanted to use the customer data they collected to build loyalty and increase sales."

The product has yielded impressive results for Quebecor World customers; a program for Jeep generated a 40% response rate.

Sums up Duke, "The key enabler here is that Quebecor has and continues to demonstrate that as a huge company it really is very focused and desirous of being an innovator and a leader in technology."

R.R. Donnelley & Sons Company entered the CRM product arena when it formed its Customized Communications Solutions (CCS) unit, which is part of the company's Financial Services Division and is based in Boston.

CCS marketing offers clients the following:

• information and data management solutions that include data mining, data modeling, and database management services that identify, profile, and track customers to enable personal and targeted relationship marketing;
• content management solutions that create, manage, and repurpose content, text, and images to create messages that match the information needs of target customers;
• output solutions that include traditional and digital print for producing customized and on-demand communications;
• multiple media delivery solutions that include physical and electronic information delivery options that enable personalized, precise, and immediate responses to customer information requests delivered how the customer wants to receive them; and
• information effectiveness solutions that measure the return on a client's marketing dollar and helps build more effective communication programs based on past performance.

"We've focused our efforts on financial customers, including banks, healthcare companies, and mutual funds, but our goal is to go after the retail market as well," notes Jan Bowen, vice president of CCS marketing.

Still, there is potential for phenomenal growth in the financial and healthcare segment, reports Bowen. She says, "So far, we've targeted only five to seven of our strategic accounts for our CRM products and services. Print is our core, but the goal is to be able to help our customers communicate with their target customers in the way that they want to be communicated with, whether that be print, fax, the Web, or phone."

Bowen says the unit has a formal relationship with an ad agency that develops database marketing communications programs. She notes that CCS and the agency are working on major CRM-type communications program for a bank customer.

"The program will use both print and the Web to launch a new service, and we're working with our ad agency partners to develop the program based on the customer's goals. We'll collect salient information and generate reports to help a given customer reach its goals," explains Bowen.

To entice companies to invest in its CRM offerings, CCS bases its prices on the response rate a project achieves. "We believe that pricing based on performance is a way for us to put our money where our mouth is," notes Bowen.

She says the industry standard response rate to mass marketing offers ranges from 2% to 5%, compared to 25% to 70% for customized offers. "Our CCS business has just gone through the roof and will likely grow 30% this year," Bowen concludes.