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Manufacturing Builds On Customer Relationships
CRM software is becoming as important as nuts and bolts.
For the rest of the May 2005 issue of CRM magazine please click here
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The word manufacturing brings to mind large machinery, factories, and mechanical processes. But manufacturers are discovering that to maximize their sales and profits they need to rely on CRM software as much as they do on the nuts and bolts of the manufacturing process. Unlike B2C companies manufacturers rely on CRM practices and technologies to help sell to customers both directly and indirectly (through dealers and retail outlets). Motorcycle manufacturers, for example, rely not only on profit from the sales of the bikes themselves, but also on income from the sales of aftermarket goods, including bolt-on accessories like fenders and back rests, as well as soft goods like jackets. A lucrative business, aftermarket sales exceed $1 billion per year in the United States. Kawasaki Motors, in Irvine, CA, entered the current century with a 10 percent share of that aftermarket, according to Roger Peterson, Kawasaki vice president of information systems. Some companies were starting to have success with electronic commerce initiatives via the Internet, so naturally Kawasaki officials saw this as a potential way to boost the company's aftermarket business. Motorcycle dealers are a different breed from their automotive industry counterparts, according to Peterson. Whereas auto dealers tend to be "captive," representing only one brand like Ford or Toyota, motorcycle dealers tend to carry several different brands. So different manufacturers need to compete on a variety of factors, including customer service--the dealers tend to be the manufacturers' primary customers--to vie for showroom space. Manufacturers need different features and functionality on e-commerce Web sites, depending on the customer manufacturers are targeting, according to Nancy Koenig, vice president of product operations for ClickCommerce, which developed Kawasaki's consumer and dealer Web sites. "Indirect channels need different functionality from direct channels. You need to have partnership relationship-management capabilities and marketing co-op programs." Similarly, whereas auto dealers may not bat an eye at spending $700,000 for an IT system and associated IT infrastructure, motorcycle dealers tend to run a much smaller operation. They don't have the financial wherewithal to set up and maintain e-commerce Web sites or other expensive IT infrastructure.
So Kawasaki decided to simultaneously develop a dealer Web site. The uptake on the dealer Web site was slow at first, according to Peterson. The site, initially launched in the spring of 2000, had only a couple of hundred hits per month from dealers in the first two years. Store owners continued their traditional way of doing business, using print catalogs and the telephone for most of their communications with Kawasaki USA. The first step to moving more dealers to the Internet for parts and accessory ordering and other service needs was to start putting all the necessary information on the Internet, including ordering details, parts information, and invoicing, according to Peterson. By the end of 2002 the number of unique dealer visits to the dealer Web site jumped to 4,400 per month, and in 2003 the number more than tripled to 15,000 per month. Growth continued last year, though at a slower pace, as the number of monthly, unique dealer visits grew to 16,000. The consumer Web site also helped drive more usage of the dealer Web site. Kawasaki is still one of only two (Harley-Davidson is the other) motorcycle manufacturers to offer an e-commerce site for consumers, according to Peterson. The site enables customers to not only offer aftermarket products, but also to "associate themselves" with a dealer for parts installation and service. So the dealer gets the service work, plus a commission on the sale. The e-commerce engine automatically associates the customer with a dealer if the customer doesn't do it himself. So the consumer site is helping dealers to earn extra commissions without having to stock a lot of parts and other aftermarket products (e.g., jackets), eliminating the cost of carrying inventory, which many dealers have little room for anyway. Peterson says that dealers "live and die with their parts-and-services business." That business has been increasing 6 percent per year for the past two years, largely due to the CRM deployment; Peterson says different workflow procedures are another contributing factor. Building on Current Systems Sometimes a company needs a way to use current applications, rather than a full CRM system, to better manage its customer relationships. Such was the case with Brandrud Furniture, in Auburn, WA, which started as a family owned-and-operated furniture manufacturer in 1955. New owners acquired it in 2000, and figured they could profit from the acquisition, in part, from applying professional business processes to the company. "We had no CRM," says Bobby Holt, copresident. "We wanted to create a system that would allow us to grow. Without systems and processes, you can only grow to a certain point, then the wheels fall off." Chief among those new business processes was a better way to track sales to furniture stores. As with Kawasaki, the retail stores, rather than the consumer, represent the primary customer. Brandrud sells through 50 independent dealers. Salespeople contact dealers via the phone and personal visits, but the sales take as many as six to 24 months to come to fruition, and may need attention from the company so they don't fall through during that time span, according to Holt. "Sometimes the only time we saw anything was when we saw the actual order," Holt says. "By the time we got the quote it was actually fairly late in the process. We figured that by getting more visibility of the entire sales process, we could focus and target our efforts [from the corporate level] and close more sales." Brandrud, a small company with 150 employees, opted to track its sales through Microsoft Outlook, which many use as their primary contact manager, according to Holt and James Wong, CEO and president of Avidian Technologies, a contact management company and developer of Prophet 2004 software. Prophet 2004 users can continue to use Outlook features like email, calendar, appointments, and tasks, while also creating and managing sales opportunities associated with their Outlook contacts without constantly moving between two applications or synching databases, as with some other competing software. The application allows users to create reports detailing performance across a sales team based on any number of criteria. The software requires users to describe steps in the sales process. Brandrud salespeople record their sales calls and any other follow-up communication in Prophet 2004. Management gets reports on these contacts, and can now see where salespeople might need some extra help to close a sale. There are numerous opportunities during the sales process to answer customer questions or to otherwise facilitate the process. For example, sometimes involving top company executives may close a sale, but top executives can't be involved in every sale. With the tracking software Brandrud executives can decide which quotes might need their input to close the sale. The company is also using the software to help track progress with target customers, like 88 design firms that specialize in healthcare interiors. Conversion rates on quotes, which, according to Holt, are the best indicator of success, are up 20 percent to 40 percent since the implementation of Prophet 2004. Holt expects that conversion rate to continue to grow as dealers become more comfortable with the system. Veteran Users Prophet 2004 is a relatively new product and Brandrud is a relatively new adopter of CRM technology, but other manufacturers have been using CRM for several years. Milacron, a Cincinnati supplier of plastics-processing technologies and industrial fluids, is one such company. In 1999 Milacron started using Cincom's Synchrony hosted application, which combines call center and CRM functions. When Milacron first looked at Synchrony there wasn't a competing solution that met the plastics company's needs, according to Steve Hayden, manager of Milacron's Servtek Division. The application has cut call abandonment rates and improved customer service enough that the company hasn't looked at newer competing solutions. The service division uses Synchrony to provide call center agents with complete customer histories. Any agent handling a call gets a screen pop with information about any previous customer calls, or any earlier action on the current call. This enables much faster call resolution, which is critical for Milacron customers, many of which are in the auto industry and depend on just-in-time delivery. "The way calls were coming through before was really bad," Hayden says. "If someone had a particularly difficult problem and had to call back, he had to repeat everything. That meant double work for everyone." Since adding the hosted CRM service, the service division has seen call abandonment rates fall from 15 percent to 4 percent. The hosted application has worked well enough in the service division that in January Milacron rolled it out to its field services division. Though it's too early for any evidence of success, Jose Egred, field service manager, is confident his side of the business will continue to see increased benefits from the application. "One of the main reasons we've expanded our use of Synchrony is its ability to track how well we're servicing our customers," Egred says. "Being able to measure our call volumes and determine agent best practices will allow for more efficiency across our agents, and that allows us to better serve our customers in the field." A Beautiful Noise Digital music has become the standard not only with MP3 players, but also with much more traditional ways of playing music, including church organs. And while the digital music itself was a standard, the organs themselves were not and still aren't. Initially, that meant that any time there was a change to the underlying controls, the controls for each individual organ style had to be changed as well, according to Tony Williams, director of engineering for Rodgers Instruments, in Hillsboro, OR. Similarly, the software had to be tested for each organ model, Williams says. "We wanted to continue giving the customer what he wanted, but gain the efficiencies of model-oriented design. We wanted to reduce the cost of development." About half the design cost was in retesting and redocumenting controls for each model, Williams says. The process was too expensive and slow. "We needed one big [digital music] model that could be configured," Williams says. "It's like having 100 different puzzles. The dye is cut one time for the shapes, but there are 100 different pictures." So when Rodgers Instruments redesigned its electronics platform four years ago, the company also looked at back-end tools that would enable it to configure parameters once for all its organs, regardless of style. Similarly, any changes made to the template would carry through to all the organ styles. The company added SSA Global's interactive selling, product development management, and configuration extension products to the existing SSA ERP system, enabling Rodgers to make these changes, cutting time-to-market by about one half and thrilling Rodgers retail dealers. The product development management software creates and maintains a generic bill of materials and tracks the various control option choices for each organ. "The dealers were surprised about everything we had to offer, [and they] are ecstatic about what they're able to do now," Williams says. "Orders are up twice as high as what they were." Williams expects that growth to continue as the phased rollout of the SSA software continues, including ERP systems, workflow, accounting, and project management. Plans are also in the offing for three-dimensional modeling of the organs online: "We've had a big training program, now we're in the throes of delivering what we promised." Phillip Britt is a freelance writer based in Chicago
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