Customer Relationship Management

(MKT-8708)
MBA SEM- III Assignment

“CRM of Audi & Mercedes Benz”

Submitted To: Dr Syed Jamal Mahmood

Submitted By: Baid Dishank Kamal

Shashwat Sharma
Introduction

Customer relationship management (CRM) is the combination of practices, strategies and

technologies that companies use to manage and analyze customer interactions and data
throughout the customer lifecycle. The goal is to improve customer service relationships and
assist in customer retention and drive sales growth. CRM systems compile customer data across
different channels, or points of contact, between the customer and the company, which could
include the company's website, telephone, live chat, direct mail, marketing materials and social
networks. CRM systems can also give customer-facing staff members detailed information on
customers' personal information, purchase history, buying preferences and concerns.

Contact center: Traditionally, data intake practices for CRM systems have been the responsibility
of sales and marketing departments, as well as contact center agents. Sales and marketing teams
procure leads and update the system with information throughout the customer lifecycle, and
contact centers gather data and revise customer history records through service calls and
technical support interactions. So from this we can generate more leads for sales.
Mercedes Company profile:
Mercedes-Benz commonly referred to as Mercedes, is a German luxury automotive marque.
Mercedes-Benz and subsidiary Mercedes-Benz AG – of Daimler AG – are headquartered in
Stuttgart, Baden-Württemberg, Germany. Mercedes-Benz produces consumer luxury vehicles
and commercial vehicles. Their first Mercedes-Benz badged vehicles were produced in 1926. In
2018, Mercedes-Benz was the largest seller of premium vehicles in the world, having sold 2.31
million passenger cars.

Mercedes-Benz has developed multi-concept cars with alternative propulsion, such as hybrid-
electric, fully electric, and fuel-cell power trains. At the 2007 Frankfurt motor show, Mercedes-
Benz showed seven hybrid models, including the F700 concept car, powered by a hybrid-electric
drive train featuring the DiesOtto engine. In 2009, Mercedes-Benz displayed three BlueZERO
concepts at the North American International Auto Show. Each car features a different power
train - battery-electric, fuel-cell electric and gasoline-electric hybrid. In the same year, Mercedes
also showed the Vision S500 PHEV concept with a 19 miles (31 km) all-electric range and CO2
emissions of 74 grams/km in the New European Driving Cycle.

Since 2002, Mercedes-Benz has developed the F-Cell fuel cell vehicle. The current version,
based on the B-Class, has a 250-mile range and is available for lease, with volume production
scheduled to begin in 2014. Mercedes has also announced the SLS AMG E-Cell, a fully electric
version of the SLS sports car, with deliveries expected in 2013. The Mercedes-Benz S400
BlueHYBRID was launched in 2009 and is the first production automotive hybrid in the world to
use a lithium-ion battery. In mid-2010, production commenced on the Vito E-Cell all-electric
van. Mercedes-Benz normally has a strong reputation for quality and durability. Their objective
measures looking at passenger vehicles, such as J. D. Power surveys, demonstrated a downturn
in reputation in these criteria in the late 1990s and early 2000s. By mid-2005, Mercedes
temporarily returned to the industry average for initial quality, a measure of problems after the
first 90 days of ownership, according to J. D. Power. In J. D. Power's Initial Quality Study for
the first quarter of 2007, Mercedes showed dramatic improvement by climbing from 25th to 5th
place and earning several awards for its newer models. For 2008, Mercedes-Benz's initial quality
rating improved by yet another mark, to 4th place. On top of this accolade, it also received the
Platinum Plant Quality Award for its Mercedes branded Sindelfingen, Germany body assembly
plant. J. D. Power's 2011 US Initial Quality and Vehicle Dependability Studies both ranked
Mercedes-Benz vehicles above average in build quality and reliability. In J. D. Power's United
Kingdom Survey in 2011, Mercedes cars were rated above average. Additionally, iSeeCars.com
study for Reuters in 2014 found Mercedes to have the lowest vehicle recall rate out of
competitors.
CRM strategy and practices of Mercedes
The late 1990s and early 2000s saw major changes in the competitive structure of the European
car market. After a long history of reigning over a seller's market, Mercedes-Benz experienced
increased competition. Other premium brands such as BMW, Lexus and Jaguar were competing
fiercely in the luxury car market where Mercedes was traditionally very strong. Also, many of
these brands were expanding into new market segments. For example, the Mercedes A-Class
focused on a new market segment that was more price-sensitive than those in which the brand
traditionally competed. Along with this increase in the competition was a new threat changes in
legislation, known as Block Exemption. These new EU laws changed the exclusivity of dealers
to operate within the re-seller market, allowing freedom for companies to potentially sell or
service any car that they might wish. The first step was to benchmark Mercedes-Benz against
other leading marques as well as best in class organizations. This research suggested that there
were several areas where greater value could be delivered to the customer during both the sales
process as well as during the ownership experience. Under the new retail agreements entered into
by the MAs, DCUK gained closer control of the valuable Mercedes-Benz brand, whilst
providing greater support and guidance to the MAs on delivering the best experience to the
customer. A new retail concept was devised, which required dealers to improve their showrooms
and service areas. A new approach to the marketing structure within each MA was set out, which
involved a centralized CRM and marketing team one for each MA. Each team was given the
responsibility of database management, customer support and regional marketing. DCUK,
working closely with one MA on a pilot programme, mapped out each of the critical customer
processes.

One problem facing the CRM initiative was that the new dealer network included dealers at
different stages along the road to CRM. Some MAs had undergone massive structural
reorganization, including buying and selling of dealerships as well as many changes in staffing
and roles. Another Mashad has less experience with applying technology to understanding their
customers. At the other end of the spectrum, some MAs had undergone little reorganization and
were relatively sophisticated in their use of the customer database to build customer
relationships. An immediate task was to determine the state of readiness to adopt CRM within
each MA so that CRM processes could be implemented smoothly. These workshops were
designed specifically for the senior management teams within each MA, as well as Directors
within DCUK with direct responsibility for the MAs. Each workshop aimed to build awareness
of the benefits of CRM as well as educate how to implement successful CRM through case
studies of best practices in CRM. The three-day workshops entailed a mix of presentations and
visits to companies where successful CRM was evident. The outcome would be a practical plan
drawn up by each MA, that the senior management could use to help change themindset within
MAs and successfully implement the CRM strategy.
CRM tools used by Mercedes
Achieving Excellence in Customer Management required comprehensive training on the new
Kerridge CRM software. The training involved two steps. First was basic training on the system,
its benefits and capabilities. The second was specific training within the MA, to provide practical
experience of operating the system. Soft Skills: The fourth module of training involved specific
soft skills training. An analysis of training needs would identify specific requirements and then
groups of staff would attend appropriate courses. These skills are related to building relationships
with customers, including telephone skills, communication skills, customer complaint handling
and customer service. The Results To win the hearts and minds of leaders and employees, it was
critical that there would be some quick wins from CRM. These results could be broadcast
through the dealer network to encourage others. One MA was chosen to test out processes and to
confirm the benefits. Quickly the financial benefits to the MA were established as well as steady
improvements in key measures of customer satisfaction and customer loyalty. Cross-selling and
up selling opportunities were used to advantage and the MA reported that relationships with
customers were extended and deepened. The MA could justify the significant expenditure on
CRM systems and processes by the impressive financial returns as well as improvements in
critical customer measures. For example, the additional volume of business generated by CRM
activities was achieved in the following areas: services booked, extra work booked, sales leads,
test drives, finance deals, and annual safety checks booked. Importantly, customers reported that
they liked the new consistent approach in the way their relationship was handled.
Communicating these results to other MAs reinforced the business case for adopting CRM.
Every opportunity was used by DCUK to share the experiences of dealers in implementing
CRM. For example, the Best Practice training program incorporated a session reporting progress
on implementing CRM within the retail network. Individual dealers were invited to report their
success with CRM as well as highlight any problems and concerns. Winning the CRM margin
has become highly important for dealers and is ensuring that the CRM initiative stays at the
forefront of people s minds. The staff are aware of how their individual efforts contribute to the
success of CRM. For example, capturing complete and accurate information about customers is
now a priority for all salespeople. Despite widespread acceptance of the benefits of CRM,
continual ongoing efforts need to be made to support attitudes to this new approach to the
customer. Dealers have responded to this opportunity in different ways. For example, one dealer
recognized the importance of nurturing a team.
Shortcomings of Mercedes’ CRM strategy
 Improve Customer Services – independent poll suggested Mercedes Finance was the
worst automotive finance service in the survey
 Reduce time taken to integrate with SAP
 Overcome some fundamental problems with their business processes to improve
communication with dealers
 Drive CRM adoption beyond the credit control team
 Provide customer services with accurate information on vehicle finance quickly
 Effective CRM support

Recommendations
Customization: Vehicle-centric contact records using key fields to identify finance contracts and
Mercedes dealer relationships – CRM-UK modified CRM to enable Mercedes Finance to e-mail
the vehicle’s supplying dealer and record the history against the vehicle instead of the customer.

Integration: Custom fields are used to store information from SAP including information about
the current status of the contract and information relating to settlements

Integration: Global calendar using a “pool” where customer service issues are located. Customer
service agents take ownership of issues from the pool until the issue is resolved. This could
include a customer requesting an early settlement.

Mercedes Finance implemented Inaport, a powerful data import utility from Inaplex CRM
Integration. Inaport was initially developed for customers requiring complex import routines
from many different sources including, in this case, SAP. Some advantages of using Inaport are:

 Large range of connectors including SAP ODBC

 The ability to create profiles that can be scheduled as tasks with Windows Task
Scheduler
 Complex indexing for field matching against very large tables
Audi Company profile:
Audi AG is a German automotive manufacturer of luxury vehicles headquartered in Ingolstadt,
Bavaria, Germany. As a subsidiary of its parent company, the Volkswagen Group, Audi
produces vehicles in nine production facilities worldwide. The origins of the company are
complex, going back to the early 20th century and the initial enterprises (Horch and the
Audiwerke) founded by engineer August Horch; and two other manufacturers (DKW and
Wanderer), leading to the foundation of Auto Union in 1932. The modern era of Audi essentially
began in the 1960s when Auto Union was acquired by Volkswagen from Daimler-Benz. After
relaunching the Audi brand with the 1965 introduction of the Audi F103 series, Volkswagen
merged Auto Union with NSU Motorenwerke in 1969, thus creating the present-day form of the
company. The company name is based on the Latin translation of the surname of the founder,
August Horch. Horch, meaning "listen" in German, becomes Audi in Latin. The four rings of the
Audi logo each represent one of four car companies that banded together to create Audi's
predecessor company, Auto Union. Audi's slogan is Vorsprung Durch Technik, meaning "Being
Ahead through Technology". Along with fellow German marques BMW and Mercedes-Benz,
Audi is among the best-selling luxury automobile brands in the world.

Audi's sales grew strongly in the 2000s, with deliveries to customers increasing from 653,000 in
2000 to 1,003,000 in 2008. The largest sales increases came from Eastern Europe (+19.3%),
Africa (+17.2%) and the Middle East (+58.5%). China in particular has become a key market,
representing 108,000 out of 705,000 cars delivered in the first three quarters of 2009. One factor
for its popularity in China is that Audis have become the car of choice for purchase by the
Chinese government for officials, and purchases by the government are responsible for 20% of
its sales in China. As of late 2009, Audi's operating profit of €1.17 billion ($1.85 billion) made it
the biggest contributor to parent Volkswagen Group's nine-month operating profit of €1.5
billion, while the other marques in Group such as Bentley and SEAT had suffered considerable
losses. May 2011 saw record sales for Audi of America with the new Audi A7 and Audi A3 TDI
Clean Diesel. In May 2012, Audi reported a 10% increase in its sales—from 408 units to 480 in
the last year alone. The A1, A3, A4, A5, A6, TT, Q3 and Q5 models were implicated in the
scandal. Audi promised to quickly find a technical solution and upgrade the cars so they can
function within emissions regulations. The head of research and development at Audi, Ulrich
Hackenberg was suspended in relation to the scandal. Despite widespread media coverage about
the scandal through the month of September, Audi reported that U.S. sales for the month had
increased by 16.2%.

CRM strategy and practices of Audi

Audi takes reactive, proactive and selective approaches to customer relationship management. It
believes its three-step strategy will create lasting ties with customers. Core Topic Customer
Relationship Management: Creating Business Value for CRM Key Issue What is a CRM
strategy, and how does it relate to and integrate with other enterprise business strategies,
processes and operations? Audi is a leading manufacturer in the prestige automobile market. In
2002 it produced more than 735,000 cars, generating revenue of over 22.6 billion euros. Audi is
part of the Volkswagen (VW) Group and is headquartered in Germany. It has over 51,000
employees and sells through over 5,000 dealers across more than 100 countries. Problem: Audi's
customer relationship management (CRM) initiative started because of: Changes in customer
buying behavior. Customer relationship improvements in other industries, and competitor
pressure, exacerbated by impending block exemption rules in Europe. Audi identified CRM as a
required core competency for business success. CRM poses a number of challenges for an
automotive manufacturer. There are multiple customer "touchpoints" like direct marketing,
dealers and trade fairs. Customer contact is often infrequent, and the relationship is primarily
with the dealer, not directly with the manufacturer, which makes it difficult to ensure a consistent
customer experience. Contact between Audi Gartner Entire contents 2004 Gartner, Inc. All rights
reserved. Reproduction of this publication in any form without prior written permission is
forbidden. The information contained herein has been obtained from sources believed to be
reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such
information.

Behind Audi's vision for CRM was the idea that innovation, intensive dialogue and unique
customer orientation would convince customers to establish long-term partnerships with it. Audi
has analyzed key life stages to look for customer needs such as improved mobility, convenience
and more space. For example, parents with a new child may want more passenger space, and a
customer who has taken up golf may want more trunk space. Customers need to be heard and
made aware of what's available in the Audi product range; otherwise, they will look elsewhere.
In its vision of CRM, Audi decided to differentiate between the entire customer experience and a
subset of this, known as the "contact experience." Audi was aware that the customer experience
is affected by many factors, including car design, availability of spare parts, the test drive, and
the dealer's attitude. Audi chose to focus on the contact experience, where some immediate effect
could be felt.

Reactive CRM: "Do ordinary things extraordinarily well" by providing excellent inbound
customer service processes for customer contacts. These processes cover everything from
inquiries about new vehicles to information on financing options. Proactive CRM: "Create as
many customer relationships as possible," and increase customer loyalty and market share
through improvements to outbound processes such as campaign management. Selective CRM:
"Select and treat customers by segment" to focus on customer profitability by creating loyalty
programs and integrating with dealers more tightly. These three steps are happening at different
speeds in different markets and are iterative. Audi recognizes that the steps overlap, but believes
the order is important, as there is no point investing in sophisticated propensity analysis if the
complaints management procedure is inadequate. CRM Processes Audi looked at what it does
for its customers (value), how it does it (processes), and then what tools could improve them.
CRM tools used by Audi
To coordinate CRM better, the pre-sales and after-sales customer service organizations were
merged. More recently, in 2003, the Internet and CRM activities were consolidated, so that CRM
is responsible for the Internet as a communications channel. Customer service agents now take
ownership and responsibility for ensuring customer satisfaction. Other departments, such as the
export and legal departments, have been given access to customer data and can add comments
directly into the system. A new group was established to handle requests from dealers,
registering all contacts related to customer requests. CRM Technology At the heart of Audi's
CRM technology is KuBa, its customer database. This gives users a complete picture of
customer information across the whole of Audi. KuBa displays technical details, interior
equipment data for each vehicle and dealer master data. KuBa was built on mysap CRM the
platform for CRM throughout the VW Group. The nonstop order management system was
integrated into KuBa, so that when an order is created for a new customer, a new vehicle record,
and new customer and dealer relationship details are automatically created. The Audi knowledge
base, where correspondence templates are stored, is fully integrated into the KuBa system. The
vehicle data warehouse has not yet been fully integrated, although some data is extracted from it
and fuller integration is planned. An e-service tool called "Ask" has been integrated into mysap
CRM. Audi started implementation in September 2001 and went live in Germany in April This
was followed by Italy in February 2003 and Brazil in March There are about 300 Audi users on
the system and roughly 500,000 of its 3 million customers in these markets have used the system.
A major challenge for the future will be a more complete integration with dealer management
systems. Transformation of Data Into Applied Insight Integration of customer data was a big
challenge for Audi. There were various customer databases in Germany, some of which were
more than 20 years old. Like all large automotive manufacturers, Audi has a "heterogeneous
landscape" of numerous dealer management systems. Its long-term vision is to standardize these
systems, but this can only be done over the next five to 10 years as the supplier contracts expire.
Meanwhile, Audi is taking a phased approach to data integration. KuBa contains master data and
interaction data and is used for day-to-day operations.

Audi is training its dealers more intensively in customer service. It is putting required service
standards in its dealer contracts and providing dealers with better tools and processes for
effectively managing customer relationships. Customer-Centred Metrics A balanced scorecard
approach is central to the CRM initiative. SAP BW provides valuable qualitative and quantitative
insights into Audi's market and the quality of customer interaction. This means Audi can quickly
identify market opportunities by analyzing the response to a marketing campaign from customers
and prospects. A recent personalized marketing campaign in Italy, aimed at A8 owners,
demonstrated response rates of 11%. This was four times the average rate from direct marketing.
Within the existing Audi customer segment, the response rate was nearly 15 times the average.
(An analysis of 14 January)
Transformation of Data Into Applied Insight: Integration of customer data was a big challenge
for Audi. There were various customer databases in Germany, some of which were more than 20
years old. Like all large automotive manufacturers, Audi has a "heterogeneous landscape" of
numerous dealer management systems. Its long-term vision is to standardize these systems, but
this can only be done over the next five to 10 years as the supplier contracts expire. Meanwhile,
Audi is taking a phased approach to data integration. KuBacontains master data and interaction
data and is used for day-to-day operations. It feeds the SAP Business Information Warehouse
(SAP BW), which is used for service analytics, campaign management and to help improve
product life-cycle analysis. SAP BW insights can then be used to optimize customer-facing
processes and to gather market intelligence that can then be fed back to product development.

Shortcomings of Audi’s CRM strategy

There is often difficulty in convincing dealers that it would be worth their while to give valuable
customer data back to the manufacturer. Audi sees CRM as a strategic marketing discipline for
systematically acquiring and retaining customers. It is taking a long-term approach to CRM in
that, at any one moment, it is involved with between 30 and 50 different projects around the
world. The problem with this approach is that the company often ignores the short-term and
immediate needs of the customers which leave them unsatisfied.

Recommendations
Customers need to be heard and made aware of what's available in the Audi product range;
otherwise, they will look elsewhere. In its vision of CRM, Audi decided to differentiate between
the entire customer experience and a subset of this, known as the "contact experience." Audi is
aware that the customer experience is affected by many factors, including car design, availability
of spare parts, the test drive, and the dealer's attitude.