CRM Crunch Time at Mail Boxes Etc.

Raymond S. Causey started dreaming about this Christmas during the summer of 1999. Causey isn't a 10-year-old boy with a burning desire for a model train or a pony. In fact, he's the father of three young boys who themselves probably won't even start thinking about Christmas until Thanksgiving.

As the vice president of technology and CIO of Mail Boxes Etc. USA Inc. (MBE), Causey began thinking about how a new system would come together during this year's holiday season. During that summer, San Diego-based MBE began rolling out the first phase of a US$10 million technology program that would link its 3,400 U.S. franchises for the first time using a Very Small Aperture Terminal (VSAT) satellite communications system. This virtual, private network would provide individual stores with high-speed communications and Internet connectivity, and give the company a central viewpoint of transaction data. What really gave Causey and other MBE executives visions of sugarplums was the realization that this was the foundation on which they could build a system to change the way their business operated.

Just getting the network and data-collection elements in place would take close to a year, so Causey began planning for their busiest season. If MBE's IT and marketing departments focused on the project, they could get enough technology in place to collect and organize the avalanche of data they would receive during the Christmas mailing crunch. Careful analysis of this data would help MBE establish a worldwide customer relationship management (CRM) program.

"Our business revolves around large numbers," Causey says. "We have 4,200 Mail Boxes Etc. locations worldwide and more than 240 million customer contacts per year. And yet we realized we didn't have a good idea who our customers were, so we began looking at how we could best use this new network to gain better collective insights."

Causey and his marketing cohorts quickly realized they would be collecting and storing not just transaction data but customer-level data as well. They knew if they worked quickly, they could determine who their customers were, how they interacted with the business and what they wanted. With this information in hand, MBE could change the way it did business.

"It's an overall business strategy issue, not just a technology issue, because our goal is to use this to become customer-centric," says Daren Hildebrand, executive director of strategic marketing at MBE. The goal of implementing a new CRM system, she says, isn't just reviewing data and developing processes but supporting a philosophical business overhaul. Implementing a CRM plan will help the company change everything--from the way it markets its services to the way it supports each franchise.

This may sound a bit too wide-eyed and hopeful, but that's the way such an undertaking should be approached. Bringing in small pieces of a CRM system to learn more about customer behavior and tweak direct-mailing results is often a waste of effort and money. "Too many companies think CRM is a point solution to solve today's pain," says Peggy Menconi, research director for CRM at Boston-based AMR Research. "But that's tragically short-sighted. Viewing customer relationships as a totality and CRM as an entire change of strategic thinking is key to a successful project."

MBE began this project with a well-focused plan and the proper business mind-set, but Causey, Hildebrand and Senior Vice President of Marketing Kurt Schusterman knew there was a larger hurdle to clear before everything would come together: convincing the franchises and the franchise owners. Because MBE is organized as a collection of franchises, large-scale decisions like implementing new systems and refocusing business procedures need acceptance from the franchise owners or they won't even get off the ground.

In a more typical corporate setting, selling the idea of a CRM project comes down to two golden words: customer retention. When the IT staff starts passing around graphs showing how CRM improves customer retention, contracts are signed and deals are sealed. However, telling franchise owners they need to help pay for a system to keep more customers coming back isn't a very sexy sales tactic. "Retention isn't the selling point to franchisees," Schusterman says. "What resonates with them is new revenue generation."

Causey agrees with Schusterman on the franchisees' perspective. "Yes, they're less likely to accept the warm and fuzzy value of customer retention as bringing them any sort of value," he says. "So we have had to come up with a business model that would drive revenue directly into each [franchise] center so that the owner would say, 'Oh, I see. If I spend $200, I'll make X dollars per month in return because of business I can now do based on the new technology.'" Causey and Schusterman started with the idea of building a small data warehousing project--the building blocks of a larger CRM program. That concept was in place from the planning stages of the VSAT satellite network even before Causey and Schusterman joined MBE, but it was viewed only as a concept that could benefit the company in some vague way. They brought the idea into sharper focus. The data collection pieces are in place. Transaction data is collected by an online transaction processing engine and filed in a Microsoft SQL Server 7.0 database running on IBM Netfinity servers. The table schema to sort both the demographic and individual transaction data is in place as well.

From this configuration, MBE can start to learn more about its customer base. The company can then offer franchisees new products and marketing services to fit these demographics and bring in new customers, bring back existing customers and generate more revenue. Then, Causey says, "we'll be able to say to franchisees, 'Here's what we can do for you with just basic transaction and demographic information. Now let us tell you about our bigger CRM plans.'" At the same time they're selling the CRM concept to franchisees, Causey, Schusterman and Hildebrand will be demonstrating the possibilities of the data they're collecting while talking to, listening to and sitting down with their own business analysts to better understand what specific types of data will be most useful for analysis purposes. "The first six to 10 months of this project will be spent collecting data, gathering information from our user community and from the [franchise] centers themselves, and evangelizing what a customer-centric focus can mean," explains Causey. "Then we'll put some meat on the bones of all this data and start showing some prototypes of interesting findings and statistical groupings of what we have collected so far."

Then comes the tricky part: taking the suggestions and ideas from their business division analysts and determining how to capture the data necessary to fulfill those suggestions. For example, if the operations department analysts decide they could significantly benefit from studying demographic product affinity data, Causey's team would have to develop a process for capturing that information.

For a CRM project to have true benefit, it has to dig beneath the topsoil of customer names, addresses, phone numbers and transaction histories. Lynne Harvey, senior analyst at the Patricia Seybold Group in Boston, says it's more than just call-log histories and marketing demographics. "Information such as product affinity model data, site product registration information, customer service history, transactional history, interactive survey data and data from interactive online personalization tools are also key [to successful CRM implementations]."

Another critical factor is taking the time to carefully map out processes and strategic planning before putting too much technology in place. Causey recognizes this and has tried to hold off on making too many technology purchases until some of this is sorted out, but with Christmas just a couple of pages away on the calendar, he also knows he can't wait too long. If enough data collection processes are established in time to gather the torrent of transactions and other data that comes during its busiest mailing season, then MBE will have a rich storehouse of customer and sales information to sort through. If it doesn't make this deadline, to gather an equal amount of data will take months at the normal rate MBE does business, a mere trickle compared to Christmastime.

"The theoretical academic view would have us put the company on hold for a year to define each process, implement procedures and come back and start working under a new set of rules," Causey says. "But if that was ever possible, it certainly isn't in the Internet Age because things are happening way too fast. Those process management methodologies to implement these kinds of projects sound nice, but it sure wouldn't work in today's atmosphere."

Schusterman acknowledges he would have preferred more time for strategic planning as well. "I would like to have the full-blown strategic plan all laid out with timetables and all that before we start doing anything else, but we don't have that luxury because we're moving so quickly on this," he says. "Starting to build the system first and then doing a strategic overlay is reality, but in a perfect world I would have liked it another way. But really, it's not mission-critical, and we'll do fine."

If he had the chance to start this project over, Causey agrees he would start evangelizing the idea sooner and educating divisions and departments about the scope of the project and what it could do for them. Doing so may have accelerated buy-in from other divisions. "But frankly," he says, "there was nobody here with the knowledge to launch those processes when it all began."

When they look farther down the road, Schusterman, Causey and Hildebrand almost turn giddy at the possibilities facing them. "Our No. 1 strategic mission is to develop customer intimacy," says Hildebrand, "which for us means designing processes and systems so that customers don't have to do the same things twice."

Schusterman foresees opportunities to start fitting customers into categories of similar segmented characteristics. "We'll be able to see what patterns they fit and how we can segment them. Then our [business analysts] can mine customer segment data and put together products, services and advertising that will resonate with those particular segments," he says.

"If you are trying to build sustainable relationships with your customers, you need to go beyond the practice of using customer data to segment your customer base and providing personalized offers to these groupings of customers," says analyst Harvey. "You need to be able to show the customer that you recognize and value each of them, and let the customer tell you what she wants, what she needs and how she should get it."

That's just what Mail Boxes Etc. has in mind for the long haul. "It won't happen overnight," says Schusterman, "but we're trying to keep our long-range goals in mind. We're completely shifting the business's focus from products to customers."

"We're fortunate in that we aren't doing this out of some kind of desperation," adds Causey. "We've been growing well over the last several years, so we're not counting on CRM to save us--even though we're pushing to have some significant pieces of this in place before Christmas." Having these pieces in place could send Causey off dreaming again--this time of Christmas 2001.

Stewart Deck wouldn't mind getting a model train for Christmas this year or reading about your own long-range projects. E-mail him at

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