VIETNAM NATIONAL UNIVERSITY, HANOI HANOI SCHOOL OF BUSINESS Le Do Tuan KEY SUCCESSFUL FACTORS IN CUSTOMER RELATIONSHIP MANAGEMENT FPT SOFTWARE CASE STUDY Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS SUPERVISORS: DR TA NGOC CAU MEGH SHETTY, MBA Hanoi - 2007 i TABLE OF CONTENTS TABLE OF CONTENTS ii LIST OF TABLES iv LIST OF FIGURES v LIST OF ILLUSTRATIONS vi LIST OF ABBREVIATIONS vii INTRODUCTION 1 Necessity of the thesis Purpose Key Research Area Methodology Contribution of Thesis Outline LITERATURE REVIEW 1.1 What is CRM 1.2 Why we need Customer Relationship Management 1.3 Benefits in implement CRM for organization 14 1.4 Customer Analysis 18 1.4.1 Customer Satisfaction 20 1.4.2 Customer Retention 21 1.4.3 Customer Loyalty 22 1.4.4 Relationship between CS and CR in term of industry 24 1.4.5 Consumer Customers versus Business Customers 26 1.5 CRM Model 30 1.6 Technology application in CRM 34 1.7 Key Successful Factors in CRM implementation 41 CASE STUDY OF FPT SOFTWARE 45 2.1 FPT Software Introduction 45 2.2 Methodology 46 2.2.1 Research problem 46 2.2.2 Research objectives 46 2.2.3 Research method 47 2.2.4 Research strategy 47 2.2.5 Sample collection 48 2.2.6 Data collection 48 2.2.7 Data analysis 49 2.3 Empirical data presentation 50 2.4 Data analysis 56 FINDINGS AND RECOMMENDATIONS 66 3.1 Research findings 66 3.1.1 Customer Relationship Management 66 3.1.2 Research Question One 67 3.1.3 Research Question Two 69 3.1.4 Research Question Three 70 3.2 Recommendations 70 3.2.1 Recommendations for FPT Software 71 CONCLUSION 75 APPENDIX A 76 ii APPENDIX B 78 APPENDIX C 80 APPENDIX D 84 APPENDIX E 85 APPENDIX F 88 GLOSSARY 89 REFERENCES 91 iii LIST OF TABLES Table 2.3-1: How important you think is Relationship with current customers? 52 Table 2.3-2: Which level does your customer demand and quality driven? 54 Table – Appendix E: Relationship between Customer Lifetime and largest Customer’s revenue (Percentage based on the column total) 85 Table – Appendix E: Relationship between Customer Lifetime and largest Customer’s revenue (Percentage based on the overall total) 85 Table – Appendix E: Relationship between Customer Response Time and Customer Satisfaction Level (Percentage based on row total) 85 Table – Appendix E: Relationship between Customer Response Time and Customer Satisfaction Level (Percentage based on overall total) 85 Table – Appendix E: Statistic figures in term of customer complaints 86 Table – Appendix E: Statistic figures in term of ways to approach new customers 86 Table – Appendix E: CRM Perception 87 Table – Appendix E: Statistics of KSFs in CRM implementation 87 iv LIST OF FIGURES Figure 1.1-1: Three waves of CRM Figure 1.2-1: Causes of CRM Implementation Figure 1.2-2: Cost of Acquisition 14 Figure 1.3-1: Way to improve CRM Return on Investment 15 Figure 1.4-1: Customer Satisfaction Influent Factors 20 Figure 1.4-2: Customer Retention Tree 22 Figure 1.4-3: Relationship between CS and CR 25 Figure 1.4-4: Fundamental Forces Influence Consumer Market 26 Figure 1.4-5: Fundamental Forces Influence Business Market 29 Figure 1.5-1: Traditional Structure 31 Figure 1.5-2: Modern Structure 31 Figure 1.5-3: Customer Interaction Model 32 Figure 2.3-1: Respondents Proportion 50 Figure 2.3-2: Respondents in term of Groups 50 Figure 2.3-3: Respondents in aspect of positions 51 Figure 2.3-4: Number of Clients managed by Team 51 Figure 2.3-5: Customer Lifetime Expectancy and Customer Retention 52 Figure 2.3-6: Customer Lifetime 53 Figure 2.3-7: Customer Retention Rate 53 Figure 2.3-8: Relationship between Customer Lifetime and Largest Customer’s revenue (Percentage based on the column total) 54 Figure 2.3-9: How managers decide to allocate the best resources to largest customers? 55 Figure 2.4-1: Relationship between Customer Response Time and Customer Satisfaction Level (Percentage based on row total) 56 Figure 2.4-2: Relationship between Customer Response Time and Customer Satisfaction Level (Percentage based on overall total) 57 Figure 2.4-3: Software Life-Cycle Model 58 Figure 2.4-4: Main complaints of FPT Software Customers 58 Figure 2.4-5: Ways to develop Relationship with new customers 60 Figure 2.4-6: Which channels does the company keep in touch with current Customers? 61 Figure 2.4-7: Will software tools provide greater customer management resources than human inter-face? 62 Figure 2.4-8: CRM Perceptions of FPT Software Managers 62 Figure 2.4-9: CRM Benefits 64 Figure 2.4-10: Key Successful Factors in CRM implementation 65 Figure 3.1-1: Main points to persuade existing Customers (Cross-selling) 67 Figure 3.2-1: Japan vs Vietnam Testing Defections Model 73 v LIST OF ILLUSTRATIONS Illustration 1.3-1: Ritz-Carlton Customer Relationship Management 16 Illustration 1.3-2: Value creating at Taco Bell 18 Illustration 1.7-1: Sony Reorganization 43 vi LIST OF ABBREVIATIONS B2C: Business to Consumer B2B: Business to Business CRM: Customer Relationship Management CR: Customer Retention CS: Customer Satisfaction CLI: Customer Loyalty Index CMS Contact Management System FCRM: FPT Customer Relationship Management Software FWB: FPT Worldwide Business IT: Information Technology IVR: Interact voice response system KSFs: Key Successful Factors VoIP: Voice over Internet Protocol vii INTRODUCTION Necessity of the thesis The need in order to understand customer behavior and the interest of many managers to focus on those customers who can deliver long-term profits has changed how marketers view the world The questions were imposed such as how we define the most profitable customers Which channel we interact with customers? How we manage the customer service with different customer interactive channels in speedy shifting information technology era? How we sustain competitive advantage in fast changing of demand market? How we forecast and serve customer with better services? Etc… for that reason, it is necessary for us to understand deeply about customers, customer habit, customer preferences, know exactly way to interact with customers…and then the more you care customers, the more customers bring benefit to you Therefore, it is changing the tone of the conversation from customer acquisition to retention to customer loyalty This requires a different mindset and a different and new set of tools Purpose To understand about CRM and CRM implementation with respect to theory and practical, what are Key Successful Factors in implementation? Key Research Area As mentioned, Customer Relationship Management (CRM) has become a number one focus, as today’s competitive markets were getting more saturated and aggressive Now the marketing model is changing from the product-centered stage to the customer-centered stage Customers are demanding a different relationship with suppliers than the traditional sales model As customers become more and more sophisticated and products more and more commoditized, service becomes dominant Customer retention is critical and customer satisfaction is needed this lead to loyalty which is brought about by great service, trust and, to different degrees, personalization A completely new world of demands has risen and business rush into the CRM that is unavoidable trend This comes as an answer to a most competitive environment, availability of new technologies; therefore, the study of the elements that determine success factor becomes more valuable Even though the level of satisfaction with CRM implementation has not shown the best results, moreover, CRM is very new concept toward Vietnamese companies At that time, Vietnam is in sale era, and begin first step in marketing era Therefore, this research will focus on the little experience that service companies like FPT Software has done so far The research problem can then be stated as follows: To gain a better understanding of Key Successful Factors CRM implementation for organization, FPT Software is typical case study Methodology In the thesis, I use quantitative research through conducting the questionnaires survey (See in Appendix C) Moreover, in order to dig out the deep root of issues, I carry out the interview of some managers as Group Leader in FPT Software This methodology will be described fully in Section 3.2 Contribution of Thesis This thesis helps audience to have comprehensive view of Customer Relationship Management With understanding the Customers Satisfaction, Customer Retention and Customer Loyalty will facilitate viewers define the objective to manage customers in a better way Moreover, thesis distinguishes between kinds of customer as B2C or B2B market Furthermore, through FPT Software Case study, we will find out the KSFs of one Vietnamese IT Company, what has done and not done in CRM implementation Comparing with theory, this thesis will give out recommendations for FPT Software in particular and Vietnamese Companies in general Outline The outline of this thesis is as follows In Chapter 1, Introduction, It includes Necessity of the thesis, Purpose, Key Research Area, Methodology, and Contribution of thesis and Outline In Chapter 2, Literature Review, Theoretical view of Customer Relationship Management will be presented In Chapter 3, Case Study of FPT Software will be described and analyzed with specific methodology In Chapter 4, Research findings will be presented with three Research Questions And the recommendation will be done corresponding to previous part The last section is Conclusion APPENDIX B Area Marketing/ Management Information System Source CRM Definitions Increasing revenues and profitability by coordinating, consolidating and integrating Osterle (1998) all points of contact that enterprises have with their customers Activities a business performs to identify, qualify, acquire, develop and retain increasingly loyal and profitable customers by delivering the right products or services, to the right customer, through the right channel, at the right time and the right cost CRM integrates sales, marketing, service, Galbreath and enterprise resource planning and supplyRogers (1999) chain management functions through business process automation, technology solutions, and information resources to maximize each customer contact CRM facilitates relationships among enterprises, their customers, business partners, suppliers, and employees Identifying and Interacting with customers Reed (1999) for more profitable, long term involvement with the company CRM is a way of using existing customer information and of controlling further data as Fletcher it accumulates over time Customer (1999) relationship management also means ensuring that stag on the frontline have easy access to customer histories Adding value to the customer relationship in Newell (2000) the customer’s terms to create a win-win relationship for the customer’s benefit and the company’s profit A multiple channel strategy to provide both Greenberg technological and functional means of (2001) understanding, attracting, and keeping customers Customer Relationship Management involves attracting and keeping Romano “Economically Valuable” customers while (2000) repelling and eliminating “Economically Invaluable” ones Customer Relationship Management (CRM) is an IT driven concept used to design the business and its processes around the Burghard and customers’ wants and needs, combining Galimi (2000) methodologies, software, and usually 78 Consultants Others Internet capabilities with a customer-focused strategy designed to optimize profitability, revenue and customer satisfaction Providing an organization with the ability to Firth and design or match the needs of the customer Swanson with a specific offering to provide for better (2001) service to the customer Hewson CRM is a business strategy focused on Consulting maximizing customer value by winning, Ltd growing and keeping the right customers’ www.hewson.c o.uk Gartner Group CRM is a business strategy focused on www.gartner.c maximizing customer value by winning, om growing and keeping the right customers’ CRM is the discipline to with the Peppers & generation, the retention and the growth of Rogers business by the management of accounts that Group are most likely to that for you CRM is a philosophy about how customers McKeen and will be treated by this organization (IT Smith (2000) Management Forum Participant) Thompson CRM is the overall process of marketing, (2000) sales, and service within any organization Peppers and CRM is a strategic process, not just a product Rogers (2001) or a technology 79 APPENDIX C FPT Software Survey The following survey is purely for academic purpose Any information you provide will be used for only academic research We assure you of complete confidentiality Thank You 1) Please indicate your department: Sales Marketing Accounting and Finance Admin Quality Assurance Management Operation Group Technical Support 2) If you belong to operation group, you are G1 G2 G3 G5 G6 G7 G8 G9 3) If you belong to operation group, and your title is Developer Division Manager Vice Group Manager Team Leader Group Manager Other,……… 4) Your contact with Client is Frequent Sometimes Infrequent Never 5) The number of your clients which your team manages is Client 2-3 Clients 4-5 Clients 6+ Clients 6) The total revenues towards the your team from your largest customer is 5-10% 10-15% 15-20% 20-25% 25% 7) How important you think is Relationships with current customers? 80 Other…… Very important Important Not very important Find new customers 8) Your partnership with your largest customer is < year 1-2 years 2-3 years 3-4 years 4-5 years years + 9) How often your largest customer is? Frequently demanding and quality driven Sometimes Not very often 10) Your response time to a customer request is generally < hour 1-6 hours – 12 hours 12 hours + Depend on the request 11) Do you think customer satisfied with your response time? Absolutely dissatisfy………………………Neutral…………………………Absolutely satisfy 12) Have you allocated the best resources to your largest customer? (Best resources: good infrastructure, skilled developers, good PL…etc) Full time dedicated Part time dedicated Ad hoc dedicated 13) How you develop Relationships with new customer? (1=Least; 2= Less; 3= Moderate; 4= More; 5=Most) Customer leads Reference from existing customers Exhibition and Event participation Business Associations Telemarketing department 14) Customers complaint to your services is (1=Least; 2= Less; 3= Moderate; 4= More; 5=Most) Customer complaints Quality of project Releasing time Project Team’s devotion Communication issue 81 15) How you keep in touch with your existing customer? (1=Least Important; 2= Significant; 3= Important; 4= Very Important; 5=Most important, and N/A=not applicable) Information from sources Call centers/Help desk N/A Conference telephone/VoIP Email/Website portal Postal mail Direct contact/Face-to-Face meeting 16) Do you think your customer will provide next project to your team? Yes No Main reason: ……………………………………………………………………………………… …………………………………………………………………………… …………………………………………………………………………… 17) Do you think software tools will provide greater customer management resources than human inter-face? Yes No I don't know 18) What is your perception of Customer Relationship Management (CRM)? (Please choose various options, if necessary) CRM is just software tool which restores customer database and helps manager in decision making CRM is a system that only sale, marketing and customer service used it to keep existing customers or acquire new customers for company CRM is a system that applied for every people in the organization in order to raise customer satisfaction CRM is a comprehensive approach for identifying, acquiring and maintaining customer relationships Your opinion: ……………………………………………………………………………… 82 19) Do you think that CRM helps you to? (1=Least Important; 2= Significant; 3= Important; 4= Very Important; 5=Most important) Benefits of CRM Increase profit bottom line Retain customer longer Reduce customer response time Increase co-ordination between groups effectively Communicate clearly, effectively with clients 20) Key Successful Factors in CRM implementation are (1=Least Important; 2= Significant; 3= Important; 4= Very Important; 5=Most important) Key Successful factors Top management commitment Align every people with CRM vision & objectives Redesign customer driven organization Using technology and software Maintain consistency in CRM implementation Additional Comments: ……………………………………… …………………………………………………………………………… …………………………………………………………………………… Thank you for your contribution 83 APPENDIX D FPT Software CRM Software 84 APPENDIX E Table 1: Relationship between Customer Lifetime and largest Customer’s revenue (Percentage based on the column total) Revenue 15 – 20% 20-25% 30-35% 45-50% 60-80% 80-100% Total