Implementation of Lean Customer Relationship Management at Toyota Motor Europe - Case Study Example

Managing Change in Organization: a case study of Implementation of lean customer relationship management (CRM) at Toyota Motor Europe Introduction Toyota has been a major player in the global motor industry for over seventy years. The firm has enormous information from its customers around the globe (Toyota, 2011). This information is collected at various touch points in the lifecycle of the firm’s customers. Toyota wanted to be able to monitor the behaviour of its customers and be able to respond appropriately and in timely manner to the concerns of their customers in order to increase retention rates of their loyal customers (Toyota, 2011). In addition, the wanted to be able to manage manufacturing in away that could boost its relation with the customers since the global business environment was more of customer centric. These factors drove Toyota Motor Europe to implement CRM. Implementation of CRM at Toyota Different firms are unique in their own way and so is Toyota. According to Lambert, Garcia-Dastugue, and Croxton (2008) customer relationship implemented at one firm successful cannot be successful implemented at another firm in similar way and be successful due to differences that exists among firms. This is because there is no single CRM solution that is standard for all firms. In order to successful implement a CRM solution in a firm, Sahoo, Singh, Shankar, & Tiwari, (2008) says it ought to be tailored to the needs of that particular firm irrespective of the industry. Successful implementation of CRM solution ought to start with definition of objectives of the firm for implementing it (Panicker and Sridharan, 2011). This need to be followed by clear understanding of the three dimensions of CRM. Once this is done, the management of CRM solution ought to be done using a structured approach. Since the CRM is aimed at resolving certain corporate and customer needs, these needs should be identified at this stage (Becker, Greve and Albers, 2009). The business process should then be re-engineered using the customer needs identified (Lambert, Garcia-Dastugue, and Croxton, 2008). Once the business process has been re-engineered, the management need to choose a CRM solution based on the functionality and the needs of the business. The development of the system should then be led by the business objectives (Sahoo et al. 2008). The actionable measures of the performance of customers should then be managed appropriately. The management of the firm need to manage the change and the culture of the firm in win buy-in manner (Arlbjørn, Freytag, and Henning de Haas, 2011). The implementation of CRM at Toyota arose from the growing amount of information collected from the firm’s customers at various touch points during the course of customer lifecycle (Panicker and Sridharan, 2011). Prompted by this challenge the firm set out its objectives to acquire a CRM solution to manage the customers of the firm effectively. Initially, the firm carried out an audit of how it managed customer processes in Europe in 2003 (Toyota, 2011). The firm consulted its dealers first before re-engineering its project. The dealers were seen as internal customers who interact with customers on daily basis and were seen as the best starting point development of IT solution that can effectively manage customer processes Lambert, Garcia-Dastugue, and Croxton, 2008). About twenty dealers worked closely with an advisory board. Various workshops, discussions and onsite visits were conducted to aid in identification of ways, which could radically bring about improvements in the customer processes. The ideas that were identified formed the basis of the development of a lean CRM, which allowed the firm to monitor the behaviour of its customers and respond in a manner that could help it retain its existing customers (Sahoo et al. 2008). At the time, Toyota had three main departments: sales, marketing and service in addition to smaller departments. All the departments were involved in the development of a lean CRM system. The program was sponsored by marketing department, which identified the problem, its origins, the solution that it had chosen and how it anticipated it to be implemented. All this was summarized in a single sheet of A3 paper. All affected departments were involved in the discussion concerning the chosen lean CRM (Sahoo et al. 2008). This allowed program sponsors to explain the problem in detail and each party was committed to support the program by appending a signature on the A3 paper, which had the summary of the program (Lambert, Garcia-Dastugue, and Croxton, 2008). Thus, it was agreed that each department would loosely coordinate their own activities of managing customers with the program. Since big bang implementation of CRM solution does not work, Toyota implemented its CRM solution using a stem by step approach (Toyota, 2011). This involved a series of pilot projects, which were developed in conjunction with dealers. Steps, which were found to be successful, were industrialized for general use. The industrialized steps were used as a foundation for developing subsequent steps (Panicker and Sridharan, 2011). The program was thus able to iteratively use what was already in existence to create value without having to incur additional expenses. In addition, this allowed the firm to carry out marketing campaigns expeditiously to create revenue (Sahoo et al. 2008). This iterative approach also allowed the project to alter its implementation process when certain technology was found to be expensive and was thus cancelled (Lambert, Garcia-Dastugue, and Croxton, 2008). The lean CRM integrated other groups as various steps were industrialized. Some of these included marketing agencies and Toyota experience program (Toyota, 2011). The management of Toyota created a customer management forum in addition to the dealer advisory board, which provided a framework that helped in the management of collaboration on large scale (Toyota, 2011). The success of each step encouraged more departments to employ the program in managing customer activities. Today the program manages all contacts with customers. Why the CRM was implemented The main driving force behind implementation of a CRM system at Toyota was the need to integrate external sources of information and back office systems in relation to vehicle data Lambert, Garcia-Dastugue, and Croxton, 2008). The firm was in need of providing its customers with a buying experience of a superior quality. This informed by the fact that the firm had a lot of customer information from various touch points that was making it difficult for the firm to mange customer information appropriately (Sahoo et al. 2008). The firm realized that implementation of a lean CRM system would enable it to mange all customer processes effectively. Key management objectives for implementing CRM at Toyota For any change in a firm to be successful, the management must initiate change with clearly specified objectives against which results ought to be measured (Lambert, Garcia-Dastugue, and Croxton, 2008). The objectives act as a map for accomplishing the intended change (Arlbjørn, Freytag, and Henning de Haas, 2011). The main management objectives for implementation of a lean CRM at Toyota were: 1. To monitor individual behaviour of Toyota’s customers in and all it to respond appropriately in a way that improves the satisfaction of the customer 2. To help the firm to increase its vehicle sales within a short span of time and ensure an increase repurchase rates at costs, which are significantly lower. The two objectives ensured that the firm carries out a survey that enabled them to know an average period of vehicle ownership by its target customers prior to purchasing a new one to replace the old one (Panicker and Sridharan, 2011). This allowed the firm to know when to initiate marketing directed at certain customer to direct him/her to the firm’s website to learn more or request information. A customer who requests information from the firm allows the firm to deal with customer in a personalized manner (Sahoo et al. 2008). This allows the firm’s employees to guide the prospective buyer in the purchase process. The firm employs information stored about the customer to provide him/her with the right information, which the firm thinks, would be helpful to the customer. How the implementation was planned to attain the objectives A look at how Toyota implemented change indicates that it employed in part Kotter’s 8-step change model. Kotter’s 8-step change model include creation of urgency, formation of a powerful coalition, creation of a vision for change, communication of the vision, removal of obstacles, creation of short term wins, building on the change, and anchoring the changes in corporate culture. Creation of urgency requires that a firm develops a sense of urgency around the need for change. This enables the firm to spark the basic motivation needed to get started. At Toyota urgency for change was sparked by marketing department which was the sponsor of the CRM system program. Under Kotter’s model, creation of urgency requires an honest and convincing dialogue about what is happening in the market. In order to create urgency the firm sort to find out what was valued most by their customers and held an honest and convincing discussion with other departments including sales and service departments. Formation of powerful coalition requires convincing people that change is necessary. For this to happen strong leadership and visible is required. In the case of Toyota, the marketing department took the leadership mantle for implementation of CRM and convinced other departments to collaborate in the program. This was assured by having some of these departments commit themselves to the success of the program by signing an agreement. The department also tried to convince dealers to be part of the program since they were essential source of customer information. Thus a change coalition was formed by three main departments at Toyota and its dealers which were instrumental for the successful implementation of the program. Creation of a vision for change requires that great ideas and solutions anticipated when change is implemented is linked to an overall vision that can be easily grasped by people. The vision for implementation of CRM at Toyota was to improve service delivery to the customer and hence improving the returns of the firm at a lower cost. This vision saw many departments within Toyota promise to collaborate in the implementation process. Communication of the vision requires that it be communicated strongly and in a powerful manner and be embedded in everything that the firm does. The marketing department communicated its vision to other departments: sales and service departments. It also communicated it to dealers. The department walked the talk. They explained the advantages of implementing the program to the target users. Removal of obstacles requires that implementation of change puts in place the structure for change and check for barrier continually. For the case of Toyota main resistence came from dealers who were initially suscipicious of the program. The firm decided to use workshops and seminars to convince them to participate in the program. This yielded some good response among some dealers who were recruited as pilot dealers in the program. Creation of short term wins enables a firm to motivate participation and collaboration in the implementation of change (Northcote, 2008). The implementation of change should have short term results that staff members can see in order to avoid critics and negative thinkers from hurting progress made. Toyota initially analysed information obtained from dealers about customers and utilised useful information in its CRM program (Northcote, 2008). Subsequent steps were developed based on the industrialized knowledge, experience and infrastructure. Thus implementation process was step by step based on the success of previous step. Following success of few steps of the program many of Toyota’s departments became interested in the program. Building on the change requires that a firm builds on quick wins in order to attain long term change. Following success and interest developed toward the program by other departments, the program sponsors included other departments in the program (Northcote, 2008). This ensured that all processes at the firm addressed the needs of the firm’s customers efficiently. Thus, all departments ended up integrating their customer management activities into the CRM program. Finally, anchoring changes in corporate culture enables change to stick. This requires that efforts be directed toward ensuring that the implemented change is seen in every aspect of the firm. Leaders of the firm also need to continue supporting the change (Northcote, 2008). Toyota was able to successful anchor the change (implemented CRM) into the firm’s culture. It became widespread throughout the firm’s global subsidiaries in monitoring and delivering quality services to Toyota customers. Additional techniques that might have been used Even though the CRM implemented at Toyota is touted to be one of the best that has ever been implemented in any firm, the firm did not match this with the quality of product that it offered to its customers. Toyota brand was almost synonymous with safety of a car for decades. However, during the 2009-2010, the firm was forced to recall many of its brands, which were by then very popular in the market over concerns of safety. The news revealed that the firm was aware of the problem for over a decade prior to making recalls (Talib, Rahman, and Qureshi, 2011). This news made customers who were loyal to the firm to feel that in spite personalized attention that the firm offered its customers it did not care about customer’s safety. This saw the brand equity of Toyota drop drastically. Thus, the firm could have implemented the CRM solution alongside ensuring high quality product with best safety possible to the customer (Talib, Rahman, and Qureshi, 2011). This would have helped the firm to avoid the situation the firm found it in after recalls. It seems the sponsors of the CRM program overlooked the importance of product quality in satisfaction of the customer. Given that the firm took long to act on the problem, this implies that the firm was not responsive to customer concerns and even a comprehensive CRM solution could not mend dissatisfaction of the customer arising from this. How the process of implementing the change was managed (including resistance) Change management entails approaches, which are systematic, that deals with change at individual level and at the level of the firm (Sahoo et al. 2008). It has three aspects: adapting to change, controlli9ng change and effecting change. An organization, which successful adapts to change, is likely to have competitive edge over one, which does not. Such adaptation may require implementing structural methods to respond to changes within business environment (Toyota, 2011). Change management in computer system environment entails an approach, which is systematic, that help to keep track of the system’s details. For change to be managed effectively there is need for a prior thoughtful planning and implementation, which is sensitive. It also requires involvement and consultation of all stakeholders concerned especially those who will be affected by the change in the firm. Forcing change on individual will often result in resistance to the intended change and hence such change will be unsuccessful (Arlbjørn, Freytag, and Henning de Haas, 2011). Prior to change the objectives of the change must be well outlined and such they ought to be realistic, attainable and measurable. During implementation stage of change, program sponsors ought to ensure that the change being implemented is understandable to all stakeholders to enable them to cope effectively with it (Sahoo et al. 2008). There is need to hold workshops, group meetings and any other form of communication to aid in understanding of the benefits of implementing change and understanding the concerns of the stakeholders (Talib, Rahman, and Qureshi, 2011). Apart from involving people in change process, the program sponsors ought to know where the firm is at the moment. They also need to know where they intend to be once change has been implemented (Toyota, 2011). These needs to be compounded with a nice plan to ensure that achieve the set goals. Prior to initiating change, the marketing department at Toyota set out measurable objectives for implementing CRM at the firm (Sahoo et al. 2008). They involved two other departments, sales and service departments who were the main departments that would be affected by the change. They discussed the details of the program with these two departments and they agreed to collaborate in the implementation of the program through signing an agreement. This ensured that no resistance would be wielded from within during the implementation process. Since dealers are essential component of Toyota who deals with customers directly mostly, the firm decided to involve them in the program. However, some dealers were a little suspicious in the beginning. In spite this; the management was able to persuade 20 pilot dealers who worked closely with the firm’s advisory board. Several visits, discussions and workshops were contacted that enabled the firm’s management in the identification of ways that could radically improve customer management processes. Valuable information about customers was obtained from these dealers and this formed the basis of the CRM program that was implemented at Toyota. Since CRM cannot be implemented at once, the firm used the information obtained from dealers to create a CRM system. Subsequent steps were developed based on the industrialized knowledge, experience and infrastructure (Arlbjørn, Freytag, and Henning de Haas, 2011). Once this was created additional information about the customer was obtained from marketing agency, which used to run the Toyota Customer Contact program and Toyota Experience program. This ensured that all information about the customer was integrated in the lean CRM system (Sahoo et al. 2008). The firm also ran a customer management forum in addition to dealer advisory board. This provided the firm with a framework for managing collaboration on a wider scale (Toyota, 2011). Thus, dealers, marketing agencies, customers and the affected firm’s departments were involved in the development of the system (Talib, Rahman, and Qureshi, 2011). As the program became successful during integration of addition steps, other departments became interested in the program and were integrated too. A kaizen team was established to monitor the effectiveness of the system and remove any step that was found to be ineffective or costly. How successful was the change in meeting its objectives The lean CRM program was successful implemented within Toyota in spite initial resistance from some dealers. The firm was able to successful attain its initial objectives that were set prior to commissioning change (Talib, Rahman, and Qureshi, 2011). Chief among accomplishments of the program were increased efficiency and effectiveness of marketing activities at a lower cost and increased response rates to marketing campaigns. It is estimated that the implementation of the program enabled Toyota to reduce its marketing costs by over 80%. This was accomplished through customer pull, Toyota push and customer DNA enabled by the lean CRM system that was implemented. The change also enabled the firm start managing all of its outbound contacts with customers in addition to increased management of outbound contacts. The firm was able increase its repurchase rates and to sell more vehicles once it had implemented the system. In addition, the system enables the firm to currently monitor the behaviour of its customers and know when to direct marketing campaign to them in individualized manner (Arlbjørn, Freytag, and Henning de Haas, 2011). The successful implementation of the system was mainly due to clear objectives, which were set out prior to commissioning of the program, involvement of all stakeholders and systematic implementation of the program while having kaizen to check its effectiveness and efficiency as it progressed. Further related changes that need to be implemented Even though the lean CRM system implemented at Toyota was very successful, the set backs on the system arising from delayed action on production of unsafe vehicles has cost the system (Sahoo et al. 2008). The recalls during 2009/2010 impacted negatively on the success of the system. In order for the system to go back to being valued by customers, the firm needs to address the safety issues surrounding its vehicles fast (Toyota, 2011). Even though recalls are an indication of strong effort is being made by the firm, the system need to integrate the manufacturing sector and departments responsible for monitoring the quality of the products being offered by the firm. The firm need to higher independent testing groups to ensure that fixed cars are safe. This will ensure that the firm’s customers build trust in the safety of the cars manufactured by the firm (Talib, Rahman, and Qureshi, 2011). As the firm corrects the mistakes and independent groups attests to their safety the firm need to pay attention to what its customers are saying. This can be done through surveys and qualitative research by use of focus groups. This will enable the firm to gather vital information that will be instrumental in turning around its process to win public trust again (Arlbjørn, Freytag, and Henning de Haas, 2011). This will see the success initially attained by the firm’s lean CRM solution come back to glory. Conclusion Change management at Toyota during implementation of lean CRM was a success. This was because the firm set out its objectives well, involved all stakeholders and implemented the system in a systematic approach, which enabled it to remove steps, which were wasteful or ineffective. The system success has seen many additional groups at the firm want to be integrated in the program. This is an indication that change brought about by the system has been generally acceptable and successful. In spite this; failure of the firm to initially plan to integrate the production departments in the program has cost the firm greatly. The recalls necessitated by safety issues on the firm’s cars have impacted negatively on the system, which was a success. Fixing the safety issues, hiring independent firms to attest the safety of the cars and finding out what customers say can help to turn around the success of the system as the firm wins over the trust of customers. 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