Lesson 24

Case Study- The ICICI Experience

CONTENT CRM Solution: CRM Roadmap, Business Transformation, and CRM Business Cycle

OBJECTIVES

• ICICI has transformed itself into a technology intensive financial services group

in the /as: decade. To achieve its long-term goal of being in a position to practice one to one marketing, ICICI has taken a series of initiatives. As part of the plans, it is implementing various projects to establish world-class CRM practices, which would provide an integrated view of its customers to everyone in the organization. The paper discusses some of the lessons learnt while implementing these projects.

INTRODUCTION ICICI, set up as a Development Bank over four decades ago to provide products and services for the corporate segment, diversified into the retail segment of the financial markets in the early 1990s. In the last decade it has transformed itself to a technology intensive financial services group. . The first such’ move came in the mid-nineties when ICICI raised debt from the retail market. Since then, ICICI has been increasing its reach to this segment in terms of re-sources mobilization, and by offering quality investor service through ICICI Infotech Services, its subsidiary. In 1994, it established ICICI Bank as a commercial bank that is flexible. Innovative and prompt in meeting customer requirements. In addition to the bank, the retail initiatives include—

• Prudential ICICI AMC-a tie up with the Prudential Group of UK for its foray into the

mutual funds business, • ICICI Personal Financial Services (PFS)-to offer retail asset products like home

finance, automobile finance, durables finance, etc • ICICI Capital Services-to service retail liability products like bonds and deposits • ICICI Web trade-to facilitate end-to-end integrated web based trading service

through the web site www.icicidirect.com • Prudential ICICl Life Insurance-to offer life insurance services, and • ICICI Lombard General Insurance-the latest venture to offer non-life insurance

services This apart the retail initiatives of ICICI also include a plethora of web-based businesses including city portals and various other utility sites such as bill junction. com, icicimoneymanager.com, magiccart.com, among others.

All these group companies are jointly spearheading ICICI Group's foray into the retail market.

THE RETAIL STRATEGY ICICI has ambitious plans for its retail business initiatives. The retail strategy revolves around intensive deployment of technology. Information technology will help reduce cost service, increase customer retention, help in cross selling and up selling while improving the process efficiencies. Electronic channels including Internet, ATMs, call centers, contact _enters, desktops, kiosks, mobiles and other hand held devices would perform financial activities while ensuring that customer has multiple options for access and

transactions The group has adopted a 'click and brick' strategy to leverage the power of electronic channels and physical presence to ensure rapid product delivery, fulfillment of financial deals and documentation. As part of the plans, it is implementing various projects to establish world-class CRM practices, which would provide an integrated view of its customers to everyone in the organization. CRM at ICICI involves increased communication between the virtual universal bank and its customers and prospects, as well as within the group itself. The underlying idea is to enhance every instance of contact with the customer. ICICI believes that a true customer-centric relationship can only be accomplished by considering the unique perspectives of every single customer of the organization. Hence the pressing need to put in place a technology enabled CRM solution. THE CRM ROADMAP CRM, at ICICI, is viewed as a discipline as well as a set of discrete software technologies, which will focus on automating and improving the business processes associated with managing customer relationships in the areas of sales, marketing, customer service and support. The organization aims to achieve the end goal of one-to-one marketing. The CRM software applications will not only facilitate the coordination of multiple business functions but also coordinate multiple channels of communication with the customer-face to face, call center, ATM, web, telephone, kiosk, bank, branch, sales associates, etc—so as to enable ICICI carry out cradle-to-grave customer management more efficiently. It should allow ICICI to engage in one-to-one marketing by tracking complete customer life-cycle history. To begin with, it will automate process-flow tracking in the product sales process, and be able to generate customized reports and promote cross selling. It will also enable efficient campaign management by providing a software interface for definition, tracking, execution and analysis of campaigns. From an architecture perspective, the enterprise-wide CRM solution should seamlessly integrate non-transactional related customer information housed in the front office with the transactional information housed in the Back Office. Creating the enterprise CRM strategies required the combination of nine distinct steps as shown below.

By combining these nine steps can one really start listening to the customers, and understand what they are saying, maybe even in real time. Once that is achieved, profits begin to follow as optimization techniques are applied. Only then will the two crucial goals for a successful business-case driven project be achieved, viz.:

• Effective change management • Technology-enabled evolution

. CRM will essentially focus on providing optimal value to customers-through the way we communicate with them, how we sell to them, and how we service them-as well as through the traditional means of product, price, promotion and place of distribution. ICICI recognizes that customers make buying decisions based on more than just price… more than just product. Customers make buying decisions based on their overarching experience that includes product and price, and sales, service, recognition and support. If ICICI can get all of those factors right-consistently-we will be rewarded with ongoing customer loyalty and value.

IMPLEMENTING CRM A very detailed and comprehensive CRM Action Plan was developed based on the under-standing that CRM will require an enterprise wide transformation. The CRM Business Transformation Map below shows the various aspects of that change. There are five inter-related areas. These include: 1. Business Focus 2. Organizational Structure 3. Business Metrics 4. Marketing Focus 5. Technology

Five Core Areas of Business Transformation

BUSINESS FOCUS

ORGANIZATIONAL STRUC U.RE

BUSINESS METRICS

MARKETING FOCUS

TECHNOLOGY

The key to building the CRM action plan was in understanding where the organization stood relative to each of the five aspects of change. Interviews with key individuals throughout the organization helped identify different initiatives that have been launched, all focused on CRM. While all of these initiatives may have merit, failure to address the total business transformation requirements can lead to very short-lived success.

The next step in the planning process was a Gap Analysis. This analysis essentially compared current stage against optimal relative to the five aspects of business, to identify and specifically describe the gaps. In addition to the more obvious gaps, this analysis helped identify the CRM organizational holes:

• Marketing, sales and service practices • Collection, capture, processing and deployment of customer information • Distribution and operations effectiveness at customer touch points

Another key factor in identifying gaps is to understand how the organization functions relative to the CRM Business Cycle. There is a universal, underlying cycle of activity that should drive all CRM initiatives and infrastructure development. All initiatives and infra-structure development should somehow be tied to this core cycle of activity. Careful evaluation of the organization's ability to execute this cycle will pinpoint and qualify additional organizational gaps.

THE CRM BUSINESS CYCLE As shown in the diagram, for any organization, business starts with the acquisition of customers. However, any successful CRM initiative is highly dependent on a sound understanding of customers.

UNDERSTAND AND DIFFERENTIATE Organizations cannot have a relationship with customers unless they understand them...: what they value, what types of service are important to them, how and when they like ro: interact, and what they want to buy. True understanding is based on a combination sf detailed analysis and interaction. Several activities are important:

• Profiling to understand demographics, purchase patterns and channel preference.

• Segmentation to identify logical unique groups of customers that tend to look alike and behave in a similar fashion. While the promise of "one-to-one" marketing sound good, we have not seen many organizations that have mastered the art of treating each customer uniquely. Identification of actionable segments is a practical place to start.

• Primary research to capture needs and attitudes. • Customer valuation to understand profitability, as well as lifetime value or long

term potential. Value may also be based on the customer's ability or inclination to refer other profitable customers.

Analysis and research alone, however, are insufficient. To create and foster a relationship, organizations have to act on what they learn about customers. ICICI Group's customers need to see that the company is differentiating service and communications based both on what they've learned independently and on what the customer has told them. At the time, differentiation should be based on the value customers are expected to deliver.

DEVELOP & CUSTOMIZE In the product-oriented world of yesterday, companies developed products and services and expected customers to buy them. In a customer-focused world, product and channel development has to follow the customer's lead. Organizations are increasingly developing products and services, and even new channels based on customer needs and. service expectations. Most organizations today are not able to cost-effectively customize products for individuals’ customers. However, products, services, channels and media can be customized based on the needs of quantitative customer segments. ICICI believes that the extent of - customization should be based on the potential value delivered by the customer segment.

INTERACT & DELIVER Interaction is also a critical component of a successful CRM initiative. It is important to remember that interaction doesn't just occur through marketing and sales channels and media, customers interact in many different ways with many different areas of the organization, including distribution and shipping, customer service and online. To foster relationships, organizations need to insure that:

• All areas of the organization have easy access to relevant, actionable customer information.

• All areas are trained how to use customer information to tailor interactions based on both customer needs potential customer value

With access to information and appropriate training, organizations will be prepared to steadily increase the value they deliver to customers. Delivering value is 'a cornerstone of the relationship. ICICI is strongly of the opinion that value is not just based on the price of the product or the discounts offered. In fact, customer perceptions of value are based on a number of factors including the quality of products and services, convenience, speed, ease of use, responsiveness, and service excellence. ACQUIRE & RETAIN

The more ICICI learns about customers, the easier it is to pinpoint those that are producing the greatest value for the organization. Those are the customers and customer segments a company will want to clone in its prospecting and acquisition. efforts. And, because they will continue to learn about what is valuable to each segment, they will be much more likely to score a "win" with the right channel, right media, right product, right offer, right timing and the most relevant message. Successful customer retention basically involves getting it "right" on an ongoing basis, and that is exactly what ICICI Group aims to achieve out of its CRM initiatives. Successful customer retention is based very simply on the organization's ability to constantly deliver on three principles:

• Maintain interaction; never stop listening. • Continue to deliver on the customer's definition of value. • Remember that customers change as they move through differing life stages; be

alert for the changes and be prepared to modify the service and value proposition as they change.

And so the cycle continues... As a cycle, the stages are interdependent and continuous. As one moves from one stage to the next, ICICI Group hopes to gains insight and uncle!' standing that enhance the subsequent efforts. The organization shall become increasing -sophisticated in the implementation of CRM processes, and over time shall become increasingly profitable by doing so.

PRIORITIZING THE CHANGES Because there might be many gaps, and therefore many changes that an organization will need to make, prioritization was critical. The evaluation of each of the strategies identified to resolve the gaps at ICICI were based on:

• Cost to implement-including initial one-time costs, as well as anticipated ongoing expenses.

• Overall benefit-some changes may have larger impacts on the organization's ability to increase customer value and loyalty.

• Feasibility-based on organization readiness, data and systems support, resource skill sets and a number of other factors.

• Time required-including the time necessary for training and addressing "cultural” change management issues related to a specific strategy.

CREATING AN ACTION PLAN The next step in the planning process was the development of a very detailed action, plan. While the complete plan might span three or more years, it was based on three-month -phases with clear deliverables that will demonstrate both progress and quick hits or measure of success. The plan identified interdependent activities and should

comprehensively detail the time and resources required for each activity. Another key factor for the planning process was the Leadership Action Plan. Advancing on the CRM Transformation Map required significant organization change. This part of the action plan helped assess the drivers and restraints of this change and the organization's readiness to embrace the change. It created additional strategies by identifying specific leadership actions necessary to lead the organizational change. As a result, executives were able to identify their roles and responsibilities, and the actions necessary to eliminate barriers and to nurture change.

SELECTING AND IMPLEMENTING A TECHNOLOGY BASED SOLUTION Technology The success of the CRM initiatives was contingent on various decisions pertaining to technology. Some of the key issues were: a) Make or Buy-The decision to buy was based on an evaluation of an identified set of criteria. The criteria set included the following:

• Functionality • Flexibility in incorporating changes • Scalability-with growth • Fit with existing architecture (legacy systems) • Fit with global best practices • Upgradability--which basically means that if the technology that enables CRM

advances tomorrow, the installed system should be able to take into its fold the in-creased functionalities

• Commercial impact-evaluated in terms of the life time of the solution Taking into account all the above factors, it was decided to purchase an off-the-shelf CRM solution and customize it to suit ICICl's requirements (b) From whom to buy - Once the decision to buy was made, the next step was to identify the product seller and the system integrator.

The global CRM product market space was scanned to shortlist about 15 large players from a very fragmented market comprising of over 150 players claiming to have some sort of CRM capability. Based on discussions with a , global technological analysis group, another set of criteria was drawn to shortlist the prospective product providers. This included:

• CRM expertise • Retail finance expertise, • Implementation worldwide especially in Asia Pacific • Company focus on CRM (specially important in the context of many large, ERP

providers having moved: into the CRM space in recent times)

• Credentials including financials, client list, life history, etc • Understanding of ICICl's pain points to gauge how well they have been able to

comprehend ICICl' s pressing needs and their views on whether the product con-cerned could provide a long-term solution

• Preferred implementation partners. A detailed Request for Information (RFls) was sent to each of the shortlisted companies After receiving the RFls, another round of evaluation was done on the basis of :

• CRM solution implementation experience • Clientele (specially in Asia Pacific), scope and scale of implementation • Understanding of ICICl's experience • Suggested solution including implementation time line • Technical handholding expected • Training and maintenance

A similar process was followed to shortlist the system integrators. Some of the criteria included

• CRM expertise & Retail finance expertise • Focus on CRM • Project team specifics including indicative CVs of project team • Product preferences

After short-listing two product vendors and system integrators, reference calls were made to several of the past clients of all the short listed companies. The. Reference calls followed a specific pattern, and were qualitatively adjudged. Some of the parameters included strengths and weaknesses of the vendor/system integrator, timeliness, cost and time overruns, commitment, training, quality control of customization and post-implementation support.

Processes

All processes were mapped on to product by understanding the details. During the course of the process mapping, several opportunities for improvement were identified and implemented. To illustrate, the buying process of a loan product involves the following steps --

• Prospect contacts the call center and leaves details. • Call center personnel passes on this lead to the DMA responsible for the area

from where the lead has come in • The DMA contacts the prospect and collects documents. The DMA also fires a

Field Investigation (FI) request from a FI agency. The FI agency is external to ICICI, and checks on the basic veracity of the statements submitted by the prospect (e.g. that he has his own house in New Delhi etc.)

• The documents collected by them are filed and forwarded to the Credit Processing

Agency (CPA). The CPA also receives the FI report. • The CPA checks for completion of the file, generates a credit scorecard, and

passes the document to the Credit Buyer. • The Credit Buyer (CB) is an ICICI personnel, and takes the final call on the loan

sanctioning. He in turn passes on the documents to the central operations team for processing. The central operations team is also internal to ICICl.

LESSONS SO FAR FROM THE ICICI EXPERIENCE If CRM involves optimizing product, price, place of distribution, promotion, sales and service, why are so many companies struggling? Hasn't anyone really mastered the art and science of CRM, and if not, why is it so difficult? CRM is difficult because it is an enterprise-wide initiative.

• CRM is not a technology initiative. Many have confused CRM as a technology initiative, and assigned the CRM implementation project to their information system or IT group. CRM conferences often equate to technology exhibits and demonstrations. Technology is needed in order to implement CRM-particularly the customization part-but technology is not the driver of CRM, or the solution to successful CRM implementation.

• CRM is not exclusively a marketing initiative. Many organizations have merely equated CRM with customer-focused marketing, or data-driven/database marketing.

CRM results in more effective, data-driven marketing efforts; CRM requires marketing expertise. But CRM is not strictly a marketing initiative.

• CRM is not exclusively a sales initiative. Similar to marketing, CRM is often lodged within the sales department. The sales-force, after all, is extremely close to their customers . . . understanding their needs and wants, and trying to fulfill them. Sales. However, is just one functional area that can benefit from CRM, and that is necessary for effective CRM.

• CRM is not exclusively a service initiative. As with sales and marketing, customer service is one functional aspect of successful CRM implementation. But customer service is not the sole driver of the process.

CRM involves marketing, sales, service and technology, as well as the other inner-workings of an organization. Thus, it is properly described as an enterprise-wide initiative. It involves all areas of the organization and all functions of the organization, and it requires all areas of the organization to be working together in harmony. CRM requires all areas of the organization too not only exist in harmony, but to be working toward the common goal of stronger customer relationships. Having even one "broken spoke in the wheel"... one area of the organization that is less than committed to CRM.. . can make the difference between success and failure.

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