National Institute Of Fashion

Technolog Patna

A Report on

Customer Relationship Management (CRM)

Initiatives of Hero Honda Limited

Subject: Customer Relationship Management

Submitted to:
Ms. Jaya Matthews

Submitted By:
Naveen Jaiswal

Master of Fashion Managment

Sem III, NIFT- Patna

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 Hero Honda -CRM Initiatives:

Introduction:

Customer relationship management (CRM) is a term applied to processes

implemented by a company to handle its contact with its customers. CRM
software is used to support these processes, storing information on
current and prospective customers. Information in the system can be
accessed and entered by employees in different departments, such as
sales, marketing, customer service, training, professional development,
performance management, human resource development, and
compensation. Details on any customer contacts can also be stored in the
system. The rationale behind this approach is to improve services
provided directly to customers and to use the information in the system
for targeted marketing and sales purposes.

From the outside, customers interacting with a company perceive the

business as a single entity, despite often interacting with a variety of
employees in different roles and departments. CRM is a combination of
policies, processes, and strategies implemented by a company that unify
its customer interaction and provides a mechanism for tracking customer
information.

But CRM is not limited only to software and its applications, the scope is
vast and so is the application of CRM.Different companies use different
strategies to maintain relationships with customers.

Here we are taking up the case of Hero Honda Motors Ltd. , as to how they
implemented their CRM programmes and what success they got from
them.

Company profile:

“Hero” is the brand name used by the

Munjal brothers in the year 1956 with the
flagship company Hero Cycles. The joint
venture between India's Hero Group and
Honda Motor Company, Japan.

During the 80s, Hero Honda became the first company in India to prove
that it was possible to drive a vehicle without polluting the roads. The
company introduced new generation motorcycles that set industry
benchmarks for fuel thrift and low emission. A legendary 'Fill it - Shut it -
Forget it' campaign captured the imagination of commuters across India,

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and Hero Honda sold millions of bikes purely on the commitment of
increased mileage.

Hero Honda has consistently grown at double digits since inception; and
today, every second motorcycle sold in the country is a Hero Honda. Every
30 seconds, someone in India buys Hero Honda's top -selling motorcycle -
Splendor.

Hero Honda bikes currently roll out from two globally benchmarked
manufacturing facilities based at Dharuhera and Gurgaon in Haryana.
These plants together are capable of churning out 3.9 million bikes per
year. A third state of the art manufacturing facility at Hardwar in
Uttranchal will soon be commissioned to cope with sustained customer
demand.

Hero Honda's extensive sales and service network now spans over 3000
customer touch points. These comprise a mix of dealerships, service and
spare points, spare parts stockists and authorized representatives of
dealers located across different geographies.

Hero Honda values its relationship with customers. Its unique CRM
initiative - Hero Honda Passport Program, one of the largest programs of
this kind in the world, has over 3 million members on its roster. The
program has not only helped Hero Honda understand its customers and
deliver value at different price points, but has also created a loyal
community of brand ambassadors.

The success of Hero Honda has not been smooth sailing through calm
waters. The company has been through a lot storms and rough weather.
Over dependence on the Japanese partner Honda for R&D paralyzed the
company more than once. Many a times HHML had to sit on the sidelines
while its competitors roared past. Thus, the lack of R&D make the
company a cripple, especially when the competition began to intensify in
the late 90s and other foreign joint ventures (like Kawasaki and Yamaha)
helped their local companies mount a credible assault on Hero Honda.

Growth

Hero Honda experienced great growth throughout its early days. The
Munjal family started a modest business of bicycle components. By 2002
Hero Group had sold 86 million bicycles producing 16000 bicycles a day.
Today Hero Honda has an assembly line of nine different models of
motorcycles available. It holds the record for most popular bike in the
world by sales for Its Splendor model. Hero Honda Motors Limited was
established in joint venture with Honda Motors of Japan in 1984, to

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manufacture motorcycles. It is currently the largest producer of Two
Wheelers in the world. It sold 3 million bikes in the year 2005-2006.
Recently it has also entered in scooter manufacturing, with its model
PLEASURE mainly aimed at girls. HUNK is the latest offering from the
HHML stable.

Just-in-Time Manufacturing

The Hero Group through the Hero Cycles Division was the first to
introduce the concept of just-in-time manufacturing. The Group boasts of
superb operational efficiencies. Every assembly line worker operates two
machines simultaneously to save time and improve productivity. The fact
that most of the machines are either developed or fabricated in-house,
has resulted in low inventory levels.

In Hero Cycles Limited, the just-in-time inventory principle has been

working since the beginning of production in the unit. This is the Japanese
style of production. In India, Hero is probably the only company to have
mastered the art of the just-in-time inventory principle.

Supplier Relationship Management

With the Indian motorcycle market opening up to overseas competitors

and more fierce domestic competition, HHML decided to create a single
integrated IT system to integrate business operations such as product
planning, materials resource planning, financials and sales and
distribution. It was also looking to automate its internal supply chain,
reduce overall costs, and create a transparent information system that
would help managers make decisions more quickly. To do all this it
teamed up with SAP in 2000 to implement the system, and went live in
February 2001. HHMLs IT team along with SAP technicians implemented
an entire Supplier Relationship Management (SRM) system for a better
connected and transparent business process. HHML was among the first in
India to setup the MySAP SRM version 3.0 and ended up with a Computer
Associates Intelligent Enterprise Award in the manufacturing vertical
category.

Dealer Relationship Management

At the same time, for effective dealer relationship management, HHML

has brought innovation through application of progressive technology into
its authorized dealerships. To reduce the amount of manual labour

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involved in repairs and maintenance, it has introduced pneumatic tools to
replace hand tools, while hydraulic ramps now position bikes for easy
inspection. It has also installed automatic ventilation systems in repair
shops to remove engine exhaust fumes.

Labour Relationship Management

A striking feature within HHML in particular and the Hero Group in general
is the commitment and dedication of the workers. Efficient labour
relationship management is evident since there is no organized labour
union and family members of employees find ready employment within
Hero. The philosophy with regard to labour management is Hero is
growing, grow with Hero.¡¨ When it comes to workers benefits, the Hero
Group is known for providing facilities, further ahead of the industry
norms. Long before other companies did so, Hero was giving its
employees a uniform allowance, as well as House Rent Allowance (HRA)
and Leave Travel Allowance (LTA). Extra benefits took the form of medical
check-ups, not just for workers, but also for the immediate family
members. An enlightened labour policy and a keen sense of fair play have
contributed to the tremendous sense of dedication and commitment on
the part of everyone associated with Hero.

Employee Relationship Management

Effective employee relationship management is also evident. The vice

president of Information Systems at HHML believes in exposing people to
IT for personal benefit to heighten its acceptance. To this end, he has set
up a touch-screen kiosk at HHML that addresses HR queries for employees
on matters such as salary and leaves. Clearly, the importance behind
understanding employee needs and creating a user-friendly environment
is taken into account. Such strategic decisions are crucial in retaining and
attracting talent at HHML.

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Customer Relationship Management:

Some of the CRM initiatives of the Hero Honda Motorcycles Ltd. are:

• The Hero Honda passport programme.

• SBI-Hero Honda Credit Card.

• Implementation of mySAP CRM.

The Hero Honda passport programme:

The Hero Honda passport programme is one of the first of its kind
in India.

The company has secured over 1 million members in the last three years
with the Passport Programme, which involves offering members a small
card/booklet that looks like the Indian passport, complete with ''visa''
stamps for points, similar to those offered by credit card companies and
airlines. The only difference in this programme is that the member need
not always spend money to obtain points.

With the passport programme, each time a Hero Honda customer visits a
service centre, he gets points and depending on the profile submitted by
the customer, he gets benefits like free passes to a cricket match
sponsored by the company.

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In 2001, HHML was the first two-wheeler company to initiate a customer
relationship programme, christened the Hero Honda Passport Programme.
It was a massive success, signing up over half a million customers within
eight months. Under the programme, a customer gets a passport booklet
at a nominal fee. This entitles owners to all the benefits, such as free
insurance cover, prizes, and tickets for events sponsored by the company
and other discounts for three years. More than that, a Passport member
can accumulate points for each transaction at the company’s retail
outlets. Every referral that they generate earns bonus points which can be
redeemed at regular intervals for gifts or discounts. Today, Passport is the
largest CRM initiative in India with close to 3 million members. In tune
with effective management of relationships, it has given HHML a huge
connects with consumers and a opportunity to peep into their minds.
HHML has fine-tuned its process for finding out just what a diversified
customer base across the length and breadth of India wants. It does this
by regularly conducting vast market surveys that question up to 70,000
people at a time. Then the specific customer requirements and
preferences are translated by the marketing and R&D teams into basic
specifications, which are sent on to Honda`s R&D group in Japan. Honda
comes up with a prototype design and HHML takes this back into the
market to sound out customers for possible further refinement, until a
winning design is eventually arrived at for HHML to build. Through such
effective management of customer relationships, confidence and trust are
the two enduring values associated with the brand of Hero Honda. These
values define the bond that Hero Honda establishes with customers
cutting across geographic locations, income levels and market segments.
The reliability and durability of this relationship has resulted in positive
word-of-mouth from satisfied customers, working to the brands
advantage.

More Value added services:

In tune with effective customer relationship management,
HHML has come up with the fresh idea of mobile service
workshops: a complete workshop incorporated into trucks that travel
predetermined routes, visiting small towns and villages where existing
customers reside. Customers are informed that a workshop will be
coming, so that they don’t have to travel hundreds of kilometres to an
authorized workshop for servicing or repairs. These mobile workshops also
double as sales outlets and spare-part distributors.

The concept has been so successful that some of HHMLs largest

distributors have adopted the idea and send out their own workshops to
supplement HHMLs efforts.

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Another notable improvement on the customer front is that customers can
wait in air-conditioned waiting rooms where TVs and water coolers have
been installed, while in a few key dealerships, they can enjoy a cup of tea
and surf the Internet in Hero cyber cafes. In certain larger dealerships,
customers can actually watch ongoing repairs through glass-fronted
workshops. This gives customers more confidence in HHMLs service and
support.

After the emphasis paid by Hero Honda on the factors called 3S (Sales,
Service and Spares), the company has now a fourth added to the list:
Safety. At select dealerships, a safety corner has been created, where the
customer, who has come to take delivery of his bike, is explained the
nuances of safe riding. The company plans to extend this concept to its
entire dealer network.

Benefits of Passport Program to customers:

• 4 Winners of the Month

Each Month, 4 Hero Honda Passport Programme Members

get a chance to win 1 Hero Honda Splendor+ or Rs 40,000
each.

• SPECIAL PRIVILEGES …ALL THE WAY

Special discounts on spares and free services for Hero Honda motorcycle
along with attractive gifts at various milestones. This is companies way of
making sure that every time customer come to showroom for servicing

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the motorcycle, they take away more than just the benefit of
world class servicing in their automated workshops.

• KEEPING IN TOUCH…ALL YEAR THROUGH

An effort to be in constant touch with the customers through

quarterly newsletter, "Suhana Safar" .The newsletter gives an
insider's view to the company, Hero Honda Motors Ltd. along
with the latest happenings in the HHPP family.

• SPECIAL OFFERS:

From time to time exclusive offers for customers

with the best brands in the country.

• SPECIAL INVITATIONS:

For active members of the Hero Honda Passport Program the chance of
being invited to special events like Musical nights, Movie screenings,
Award shows, etc.

• SECURITY FOR CUSTOMERS AND FAMILY:

The moment customers apply for Hero Honda Passport they are
automatically covered for a free Rs.100, 000 Personal Accident Insurance
policies for one year or for three years, as applicable.

Rewards and points:

All these amazing rewards and benefits come to the customer as they
earn points in the Hero Honda Passport Programme. Once become a
member, they earn points for a host of regular transactions that they
conduct at their local Hero Honda authorized Dealership or Service
Center. These include:

• Purchase of Hero Honda genuine spares

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 • Purchase of accessories

• Servicing of motorcycle

Bonus points on :

• Free Service

• Paid Service

• Referrals i.e. recommending a friend to purchase a Hero Honda

motorcycle

More Attractions:

• Star Club and Treasured Rewards

This unique club has been introduced for those members who get
their bikes serviced regularly from authorized Hero Honda Service
Centres.
The Star Club membership not only identifies the member as special for
the HHPP family, but also brings in some added benefits like:

 30% discount on labour

 7.5% discount on spares, till the validity of the Passport

• Treasured Reward:

For Passport Programme members who have crossed the 1 lakh point
mark in the Hero Honda Passport Programme. The HHPP Treasured
Rewards available at 8 prescribed milestones beginning from 1.25 lakh
points and ending at 3 lakh points, with each milestone at a gap of 25,000
points. In other words, the milestones are placed at 1.25 lakhs, 1.5 lakhs
and so on till 3 lakhs.

Each time a member reaches a milestone a Motorcycle Privilege Voucher

of Rs. 1250/- will be given to him. This voucher may be used to avail a
discount on the purchase of a new Hero Honda motorcycle. This voucher
is transferable and can be given to friends or relatives who may be
planning to buy a new Hero Honda motorcycle.

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Post CRM benefits:
After implementing the Passport Program across India the Hero Honda
Motorcycles Ltd achieved instantaneous success .Over half a million
customers signed up within eight months .

Some of benefits are summarized below:

• The company secured over 1 million members in the last three

years.

• Recorded a 25-per cent increase in its net profits to Rs 581 crore

and a 14-per cent higher turnover at Rs 5,195 crore within a year of
launch of the passport programme.

• More satisfied customers (58%) than any other motorcycle brand in

a survey conducted by Mckinsey in 2004.

• A clear and personalized record of customers which helped in

planning more CRM activities in future for the customers.

• 30 % Reduction in overall advertising and promotion budget as a

company target which was successfully achieved in 2005.

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SBI-Hero Honda Credit Card:
Another customer service initiative launched jointly by Hero Honda and
State Bank of India is a co-branded credit card. This time SBI Cards &
Payment Services (SBI Card) has teamed up with Hero Honda Motors to
offer the Hero Honda SBI Card, the first card for the two-wheeler industry
in India. SBI card is said to be India''s No 1 Visa card-issuer with over 11
lakh cards issued. The co-branded card is designed to strengthen Hero
Honda''s Passport Programme.

The co-branded initiative will allow SBI Card to reach out to Hero Honda
customers (a vast middle-class segment and possibly first-time users of
credit cards). In the first phase of rollout, the co-branded card team,
comprising executives from both Hero Honda and SBI Card, will target four
cities - Delhi, Kolkata, Chennai and Pune. In the second phase 66 cities will
be covered and in the third phase 100 cities.

Implementation of mySAP CRM:

In India’s highly competitive motorcycle manufacturing sector,
streamlined operations and effective business relations are essential. To
improve information exchange with its many partners, Hero Honda
decided to introduce leading-edge supplier and customer relationship
management capabilities. “We wanted to enable our dealers and suppliers
to perform online transactions, “explains S.R. Balasubramanian (Bala),
vice president of information systems at Hero Honda, “and this was
something that our legacy solution could not support.”

Hero Honda opted for the powerful self-service features of mySAP™

Supplier Relationship Management (mySAP SRM), plus the e-commerce
capabilities of mySAP Customer Relationship Management (mySAP CRM).

The project was completed in a record three months time in 2004.

End-to-End Process Integration

Hero Honda also implemented a customer portal, as a feature of mySAP

CRM. With the two portals now in place the company benefits from end-to-
end process integration. Dealers place their orders once a month; typically
a dealer might order several hundred motorcycles, as well as spare parts.

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So every Friday the company get orders in, consolidates them on
Saturday, and on Monday morning suppliers are all receiving delivery
schedules, directly from production planning system.”

Because the ordering process is now fully automated, Hero Honda saves
approximately three days over the time it used to take to complete this
process. That translates into an inventory savings of about 10%, which in
turn translates into a substantial cost savings.

And they know that the portal’s information is both accurate and up to the
minute. Since the advance shipping notification created by the supplier is
derived from the purchase order, the chance of a delivery mismatch with
the order is almost zero.

The Company is more responsive than ever before to the dealers and
other customers, thanks to mySAP SRM and mySAP CRM.

SAP implementation at a glance:

Summary

Faced with growing market demand and inefficiencies in its supplier and
dealer order processes, HeroHonda – the world’s largest two-wheeler
manufacturer –chose the mySAP™ Supplier Relationship Management
(mySAP SRM) solution to integrate and automate its large and complex
supply chain.

Key Challenges

• Supplier order processing not well synchronized with production

planning

• Proprietary supplier portal provided no transactions, only information.

Project Objectives

• Speed up and automate supplier order processing

• Synchronize customer orders with supplier schedules

Solutions and Services

• mySAP SRM

• mySAP Customer Relationship Management (mySAP CRM) solution

Implementation Highlights

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• Three-month initial rollout covered 15 of the top 125 strategic suppliers;
over 50 suppliers have since been covered

• Implementation included training Hero Honda suppliers as well as

buyers

Implementation Partner

SAP® Consulting

Existing Environment

mySAP ERP

Database

Oracle

Hardware

IBM

Operating System

AIX.

Key Benefits achieved after my SAP CRM implementation:

• Faster supply chain order processing – cut three days from old schedule

• Improved accuracy of deliveries from 98% to 100%

• Better responsiveness to customer changes

• Online communication with suppliers integrated and traceable

• Inventory planning improved –10% reductions in inventory carrying cost

• Transaction costs reduced because of fewer discrepancies to handle

• Overall lower process and transaction costs

AMBITIOUS PLANS FOR THE FUTURE:

Building on the success of the project, Hero Honda is now planning a

range of new SAP initiatives. These include adding additional mySAP SRM
and mySAP CRM functionality, implementing the SAP Strategic Enterprise

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Management application of mySAP ERP Financials and integrating it with
SAP Business Information Warehouse (SAP BW), and rolling out SAP
Enterprise Portal (SAP EP) to all users. The SAP BW component is provided
in SAP Business Intelligence (SAP BI). SAP BI and SAP EP are components
of the SAP NetWeaver™ platform.

Awards and Recognition for CRM:

• IndiaTimes Mindscape and Savile Row ( A Forbes Group Venture
) Loyalty Awards - “Customer and Brand Loyalty Award” in
Automobile (two-wheeler) sector,2008.

• Asian Retail Congress Award for Retail Excellence (Strategies

and Solutions of business innovation and transformation) - Best
Customer Loyalty Program in Automobile category, 2008.

• “Most Trusted Company” , by TNS Voice of the Customer Awards

2006.

• Best in its class awards for each category by TNS Total Customer
Satisfaction Awards 2006:

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Bibliography:

• Inputs from the Mr. Rohit Raj ,Deptt head Hero Honda Showroom ,Adchini,New
Delhi

• www.herohonda.com

• http://www.expresscomputeronline.com/20020701/ebiz.shtml

• www.sap.com

• www.doamin-b.com

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