Moore Medical Corporation: An Overview on Customer Relationship Management Strategies

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Introduction
Moore Medical is a medium-sized distributor of medical supplies to practitioners (such as podiatrists and emergency medical technicians) At the time of the case, they were relying on traditional customer channels such as catalogs and phone to communicate product offerings, promotions and also to take orders They are now attempting to shift to a "bricks and clicks" distributor with a strong Internet presence. It has already made substantial investments in an e-commerce Web site and in "back office" Enterprise Resource Planning (ERP) software to improve the actual performance of its four distribution centers. The ERP software has not lived up to expectations in all areas (bids and quotes, marketing, order entry and new account setup, and the company must decide whether to invest in more modules for this system. It must also decide whether to make a significant additional investment in customer relationship management software, if the company has "enough" of the "right kind" of IT. The decision is complicated by the fact that the company has recently made substantial IT investments that have impacted financial performance and caused organizational disruption. In addition, it is not clear that all of Moore's known issues related to customer retention and satisfaction will be addressed by the Customer Relationship Management (CRM) Problems faced

Its share of wallet of current customers was not close to 100% (percentage of an existing customer’s total medical supply purchases) was 45% for podiatry, 37% for EMS, and much lower for some other segments Because the company has a relatively smaller product range as compared to the larger competitors (ex: if a customer wanted a single source for all of its medical purchases but found that Moore was unable to meet this need over time Churn rate for customers as high as 35% in some categories and 30% on an average whereas the industry standard was 25%. It was estimated that it was largely due to low customer loyalty and very high price sensitivity (customers only buy from Moore when their prices were the cheapest ones) Split shipments were an issue due to excess cost ($2.82) and wasted time. As a policy Moore Corp. absorbed the incremental shipping cost and did not pass it on to the customers. Current ERP system, that was recently installed, was not being fully utilized and lacked important functionality that was key to customer satisfaction. ERP Issues Does not offer a total marketing campaign solution such as sending trade show materials, catalogs, or promotional flyers Representatives had to use many function keys to access information during order entry, so the process of order entry became longer. Creating and Retrieving quotes became cumbersome (There was not an efficient or easy mechanism within the new system to retrieve quotes attached to customers) New account setup adds much time to customer calls, so that new accounts can’t be reviewed against existing ones Recent investment of $1.5M in website development which is compounded by the fact that the operating income and net income are in negative figures for the current year.If we assume website income of $554,732 per month (as it was in the last full month) and 13% of new customers added through website (rest 87% are old customers) then the investment has a payback period of 20 months (0,13x554,732x12) (without considering the new hires and possible attraction of new customers through website) if we consider any new hires we need to add costs per person between $75,000 and $100,000 Perfect Orders are 68%; remaining 32% included 17% of split shipments, 10% back orders, and 5% late shipments; everything but late shipments can be resolved by better demand planning and if that is achieved they will have surpassed their perfect order goal of 90%. OPTION #1

Purchase and implement a new CRM (Customer Relationship Management) System. The list price for the product is $500,000.00
In addition, Moore would have to...
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