Customer relationship management (CRM) organization structure at frieslandcampina vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

LE THI THANH TAM

CUSTOMER RELATIONSHIP
MANAGEMENT (CRM)
ORGANIZATION STRUCTURE AT
FRIESLANDCAMPINA VIETNAM
MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – 2017
UNIVERSITY OF ECONOMICS HO CHI MINH CITY


International School of Business
------------------------------

Le Thi Thanh Tam

CUSTOMER RELATIONSHIP
MANAGEMENT (CRM)
ORGANIZATION STRUCTURE AT
FRIESLANDCAMPINA VIETNAM

MASTER OF BUSINESS ADMINISTRATION
SUPERVISOR: Le Thi Thanh Xuan

Ho Chi Minh City – 2017

SUPERVISOR’S REPORT ON THE FINAL THESIS SUBMITTED
FOR THE DEGREE OF MASTER of BUSINESS ADMINISTRATION

Final thesis title: Customer Relationship Management (CRM) Organization Structure at
FrieslandCampina Vietnam
Student name: Le Thi Thanh Tam
Supervisor name: Ms. Le Thi Thanh Xuan
1. General comments:


Remarks on the student’s attitude:
………………………………………………………………………………………
………………………………………………………………………………………
……



Remarks on the assignment’s academic quality:
………………………………………………………………………………………
………………………………………………………………………………………
……

2. Overall assessment:
Meet requirement for submitting
Not meet requirement for submitting

3. Other remarks:
-

Did the student follow the report schedule?
a. Yes
b. No
c. Other:……………………………………………………………………………
…

-

The Turnitin plagiarism percentage:

Supervisor’s signature


EXECUTIVE SUMMARY
This

thesis

of “Customer Relationship Management (CRM)

Organization

Structure at FrieslandCampina Vietnam” has been composed and completed in
four

main

parts:

problem

context,

solution

recommendation,

conclusion

and

supporting documents.
Chapter I included company background starting from industry overview, company
history and business size as well as the vision, mission and organization structure of
FrieslandCampina Vietnam. In addition, in this chapter, the thesis has shown the
issues, problems which are concerns from stakeholders of the company based on a
wide variety of in-depth interview and secondary data regarding business results and
performance tracking of CRM team. A problem mess had been created to show all
symptoms, organization outcomes and problems as a general picture. Specifically, a
central problem of ineffective CRM organization structure was selected to be
solved as a core problem of company with the justification of its existence and
importance.
After validating and selecting the central problem of organization, three causes of
central problem listed as departmental structure design which is not in line with
business

strategy/model;

excess

headcount

number

and

overlapped

roles

and

responsibilities among Telesales team were investigated to verify and determine so as
to give out alternative solutions which were presented in chapter II.
In this thesis, the long-term solution is proposed to define appropriate number of
headcounts at the change moment of business in the future. In the meanwhile, there
are two proposals for short-term to tackle problem with CRM personnel cost
optimization and redesign departmental structure to be in line with new IFT business
acquisition model.
The last part was named as the supporting chapter to support all information and
information sources for the above four chapters. It composed sections of in-depth
interview transcript to justify central problem and selected solution.


ACKNOWLEDGEMENT
I would like to express my deepest appreciation to my supervisor, Dr. Le Thi Thanh
Xuan, who always stands by me and motivates me to complete this study. Without her
support, this master thesis cannot be fulfilled. Needless to say, her guidance helped me
in all the time of researching and writing this thesis. In addition to that, I want to show
my sincere gratitude to Prof. Tran Ha Minh Quan, Prof. Nguyen Dinh Tho and Dr.

Nguyen Thi Mai Trang, who are the ones to set strong foundation for me in
organization problem solving and data analysis so that I can conduct this study.
Beside my advisors, I would like to thank my business partners for discussing, sharing
information and coordinating with me make this project happen.


In-depth interviews

were

widely used at different levels from many related

departments of FrieslandCampina Vietnam to collect data and to diagnose various
aspects of the problem with the methodology of design-oriented and theory-informed
from a wide variety of fields such as human resources, industry, management etc.
After collecting data and information to analyze, it was believed that pushing sales
performance had been greatly affected by many factors such as nature of work,
compensation and

benefits,

motivation, capabilities building etc. However, this

research illustrated that factor of ineffective CRM organization structure had been
mostly influenced which led to the very alarming consequences such as headcounts in
excess, unclear roles and responsibilities, not stretching enough KPI setting, under
company business expectation.


TABLE OF CONTENTS

1.

COMPANY BACKGROUND ..........................................................................1

1.1.

Company bacground ..........................................................................................1

1.1.2 Market share and key players in the dairy market ............................................1
1.1.3 FrieslandCampina Vietnam – Company history and organization structure....4
1.2.

Background of problem .....................................................................................6

1.2.1 Symptoms...........................................................................................................6
1.2.2 Problem justification ........................................................................................15
1.3.

Identification of central potential problem ......................................................26

1.4

Literature review ..............................................................................................28

2.

SOLUTION RECOMMENDATION ..............................................................31

2.1.

Solution recommendation ................................................................................31

2.2.

Proposal implication ........................................................................................37

2.3.

Selected solution and action plan ....................................................................39

3.4.

Change management and counter measures....................................................43

CONCLUSION ...........................................................................................................45
SUPPORTING DOCUMENTS ..................................................................................46
REFERENCE LIST.....................................................................................................69


LIST OF FIGURES

Figure 1. Vietnam Dairy Market share in 2015 ............................................................3
Figure 2. Powder milk key players ...............................................................................3
Figure 3. Drinking milk key players ............................................................................4
Figure 4. Organization structure of FrieslandCampina Vietnam .................................5
Figure 5. Consumer Marketing IFT structure of FrieslandCampina Vietnam ...........7
Figure 6. Current business model of IFT team .............................................................8
Figure 7. Current Acquisition business model of CRM team ......................................9

Figure 8. The comparison between personnel investment for one CRM officer

versus the average revenue of each acquired new customer ......................................11
Figure 9. The comparison between current number of data officers and ideal number
of data officers after deploying data validation automation model...........................18
Figure 10. Expected validated data of CRM team in 2017 ........................................19
Figure 11. Expected validated data of one Data officer in 2017................................20
Figure 12. Ambitious automatic acquisition business model of CRM team .............21
Figure 13. The comparison between current number of telesales staff and KPI
setting in getting new users .........................................................................................22
Figure 14. Expected telesales staff for driving CRM business goals in 2017 ...........23

Figure 15. Initial cause-effect map .............................................................................26
Figure 16. Final cause-effect map...............................................................................28
Figure 17. Estimated number of data officers from October to December 2017 ......32
Figure 18. Proposal new working process for Telesales staff ....................................33
Figure 19. Proposal new CRM organization structure ..............................................34
Figure 20. Proposal new working process for Acquisition officer ............................34
Figure 21.Proposal new working process for Retention officer.................................35
Figure 22. Short-term plan to optimize FTE number October - December 2017 .....35
Figure 23. Short-term plan to optimize Retention FTE number from October to
December 2017............................................................................................................36


Figure 24. CRM organization structure from October to December 2017 – proposal
A……………… ..........................................................................................................36
Figure 25. CRM organization structure from October to December 2017 – proposal
B…………….. ...........................................................................................................37
Figure 26. Comparison between proposal A and proposal B.....................................39
Figure 27. Roles and responsibilities

of stakeholders in project CRM department

structure improvement ...............................................................................................42
Figure 28. The detailed plan .......................................................................................43





CHAPTER I: PROBLEM CONTEXT
1.1 Company background
1.1.1 Industry overview
The Fast Moving Consumer Goods (FMCG) industry covers the products that are
essential items we use day in and day out. “Fast moving” implies that the items
are quick to leave the shelves and also tend to be high in volume but low in cost
items. According to Kantar Worldpanel (2017) 1 – one of the most prestigious
agencies in the field of Market Research, both urban and rural FMCG market post
slightly stronger growth rate in Vietnam in 2016. However, 2016 was also a tough
year for Rural which faced economic difficulties. In the meanwhile, Dairy,
Beverages and Home Care are most suffering in Rural. It is predicted that both
urban 4 cities and rural markets will reach a growth rate of 5-6% in 2017.
1.1.2 Market share and key players in the dairy market
a. The overview of dairy market
2

According to Deloitte report on Global Dairy Sector – Trends and Opportunities ,
it is well documented that the global dairy sector is going through a period of
turbulence. The consumption demand in China, Russia’s trade embargo and the
removal of EU milk quotas, all of these is the consequence of a period of excess
supply and low prices. However, in the long run, this sector still keeps positive
signal. This is due to the fact that rising populations and diet trend are increasing

demand of dairy. It is expected that global dairy demand increases by 2.5 percent
per annum to 2020, especially impacted by urbanization and higher living
standard in emerging markets.
In the movement of global dairy market, according to Dairy in Vietnam posted on
Euromonitor International 3, the rising trend towards health and wellness
continued to impact positively the production and supply of drinking milk.
Moreover, many launches of new products, which contain vitamins and nutrition
1


such as: calcium, DHA, immunity.., has been released in the local market. Another
point could be mentioned here is that due to increase in local consumption of
milk, there are more dairy companies operated in Vietnam, beside of many longyear dairy companies such as: Vinamilk, FrieslandCampina (known as Dutch Lady
Vietnam) or Abbott… Hence, it can be said that the competitiveness of Vietnam
dairy market is much higher and higher with the appearance of new key players
and the significant innovation of current companies.
b. Market share and key players of dairy market in Vietnam
According to the annual report of dairy product of Vietnam, it can be said that
Vinamilk is the biggest dairy company in Vietnam. Vinamilk is currently the largest
fresh milk collector, purchasing more than 60% of fresh milk from farmers across
the country, while the second largest fresh milk collector is FrieslandCampina
Vietnam. In addition, Vinamilk has purchased nearly 82,000 tons of fresh milk
from local farms in 2015, accounting for about 20% of total domestic fresh milk
production. These two companies dominate the local market with 46% and 20%
of market share respectively.
With the advantages of worldwide large-scale farming of cow herbs, big
production capacity and modern technologies, foreign players firmly control the
local powdered milk market with 53.1% of market share in 2015. Conversely, local
players dominate the drinking milk market which is led by Vinamilk with 45.5% of
market share in 2015.

In 2015, Vinamilk continued to lead the yogurt market with 73% value share, as
well as to dominate the condensed milk market (approximately 80% of the total
sale value). Today, Vinamilk and FrieslandCampina Vietnam also faces up to other
potential competitors such as Nestle, Johnson as well as new entrant milk
competitors like TH Milk, Loveinfarm milk, Mocchaumilk…

2


34%

Vinamilk

46%

FrieslandCampina Vietnam
Others

20%

Figure #1: Vietnam Dairy market share in 2015 (FrieslandCampina internal
report)
100%
90%

80%
70%

Others

60%

FCV
50%

Mead Johnson

40%

Vinamilk

30%

Abott

20%
10%

0%
2013

2014

2015

Figure #2: Powder milk key players (FrieslandCampina internal report)

3

120

100
80

Other
Nestle Vietnam

60

FCV
Vinamilk

40
20
0
2013

2014

2015

Figure #3: Drinking milk key players (FrieslandCampina Internal Report)
1.1.3 FrieslandCampina Vietnam – Company history and organization structure
FrieslandCampina Vietnam (FCV) is a joint-stock company which established in
1995 between Binh Duong Im-Export Company and Royal FrieslandCampina as
the leading company of dairy products in Netherlands with 135 global
experiences. These days, almost all products are produced in Vietnam and Dutch
Lady is one of the six legendary brands of FCV. This company is famous for leading
brand in Vietnam dairy market, such as: Friso, Yomost, Fristi, Active 20+…. There

are two factories, one in Binh Duong and one in Hanam as well as three local
warehouses in which there are 1,487 employees working. Production of more
than 1.5 billion cartons per year and this volume is growing with an average rate
of 15% per year. The yearly average turnover in Vietnam is US$350 million. FCV’s
products can be subdivided into three categories: powder milk, sweetened
condensed milk and ready-to-drink dairy (so-called liquid milk).

4


About company structure, it can be summarized via below organization chart. Like
many other multinational companies, FCV divided into specialized divisions to
optimize production capabilities in all aspects.

Figure #4: Organization structure of FrieslandCampina Vietnam
Along with the strategic organization structure, FCV also established the
mechanism of performance evaluation for employee based on individual key
performance indicators (KPI), annual development priorities and behavior
improvement in line with corporate guidelines (AAA – Alignment, Accountability,
Action). With this management method, it is believed that each employee of FCV
is fully responsible for the job in charge; especially it is consistent with business

5


objectives. Moreover, building a transparent and fair working environment,
performance evaluation is also highlighted as the result of this mechanism.
1.2 Background of problem
1.2.1 Symptoms
1.2.1.1 Introduction about powder milk category of Consumer Marketing team

(IFT)
For an FMCG company, Commercial group including Sales and Marketing team
plays a critical role in creating ideas for accelerating brand awareness of products
and increasing penetration rate as well as market share for company. Like other
dairy companies in Vietnam, FrieslandCampina Vietnam has designed Consumer
Marketing team based on the key business categories of company. They are liquid
milk (also called Ready-to-drink-Milk – RTDM) and powder milk (also named IFT).
In which, according to Commercial Finance team’s report, powder milk, including
two main brands: Friso – premium product and Dutch Lady – mainstream
product, is the category creating the highest value for business as well as
contributing around 60% in the total net sales of FCV. Understanding the value
and the importance of IFT category, a strategic organization chart has been built
as follows.

6


Figure #5: Consumer Marketing IFT structure of FrieslandCampina Vietnam
In this marketing team, there are 3 teams including Brand team, Medical Sales
and Marketing team and CRM team with different roles and responsibilities.
However all of them are in the line with category strategy with key focus:
increasing brand awareness, especially for Friso via leveraging the penetration
rate and market share; leading sales volumes among other brands of company via
increasing the number of new users and the repurchasing rate of current
consumers (customer loyalty). In which, brand team is in charge of building the
strategy via above-the-line activities (digital channels, TV clips, radio…) and
below-the-line activities (promotion programs at points of sales, customer
workshops…). Moreover, Medical and CRM teams are the two groups designed
for IFT only because the target consumers of IT is mom and babies who have a
7

specific journey from pregnant period to the point of time. Hence, the business
model of IFT team is totally built based on the consumer journey.

Figure #6: Current business model of IFT team
This target consumer group allocates mainly at many hospitals nationwide. Due to
this reason, Medical Sales and Marketing team is set up with the aim of increasing
the sales coverage at hospital.
1.2.1.2 Introduction about Customer Relationship Management – CRM team
CRM is the customer relationship management team which is dedicated for taking
care of consumers of powder milk category which includes two brands of
FrieslandCampina Vietnam: Friso – premium brand and Dutch Lady – mainstream
brand. Currently, Friso is the focal brand of IFT category as well as the company.
Because according to Commercial Finance Analyst, Friso contribute the highest
value in sales contribution which creates huge business impact.
Due to the characteristics of this product, the product portfolio consists of many
products which are relevant to growing-up development of pregnant woman and
baby. For example, starting with pregnancy, pregnant woman is convinced to use
Frisomum to be provided essential nutrition. After delivering baby, breast feeding
is encouraged until baby is two years old. Hence, based on this reason and current
governmental law, milk commercializing for babies under 2 years old is prohibited
8


via media, digital, promotion and advertisement. Dairy companies call the period
of babies under 2 years old is dark product because of reason. However, to
support moms who cannot produce milk after delivering babies, Friso 1 & Friso 2
are still allowed to penetrate into the market with the limitation of brand
activation. Besides, Friso 3, 4, 5 are generated to sell to babies who are in the high

demand of milk for fast track of growing up. In short, it can be said that product
development and sales strategy are totally based on the life cycle of consumers,
so-called consumer journey.
Understanding consumer insight, CRM team of FCV also builds the IFT Acquisition
Model and Customer Loyalty in accordance with the consumer journey. The
current model is illustrated via the below chart:

Figure #7: Current Acquisition business model of CRM team
In terms of CRM team, it can be said that this is the strategic team in driving
business results of IFT category by acquiring new users and retaining customers
via telephone. In 2017, CRM target to get 600,000 new customers (higher than
25% vs 2016) and improve repurchasing rate from 10% in 2016 to 30% in 2017. To
9


meet business requirements, CRM structure has been categorized into three
teams:
 Data team is in charge of verifying the raw data from many sources including
information collected by Medical Sales Force team, nutrition advisors, digital
and media channels. This team must ensure the raw data, before transferring
to telesales team, is precisely verified about name, age, the pregnant date and
the date mom delivering babies… So it is time-saving for telesales team to
focus on acquiring new users and convincing current users to buy powder milk
products more and more.
 Telesales team is responsible for accelerating the sales coverage via
telephone. Based on customer period on the consumer journey, telesales
officers make call to get new users emerging in the market segment or using
products of competitors. Moreover, this team also takes over the job of
persuading current new user to repurchase products more and more. It can be
said that telesales team play critical roles in sales volume and value

contribution out of whole Consumer Marketing IFT team.
 Customer service is considered as the hotline team which is mainly
responsible for addressing customers’ concern, questions regarding to
nutrition or products via telephone and digital channels (Facebook, Instagram,
web page, forum…). Moreover questions addressed by this team are not
related to powder milk product only, but also liquid milk. Therefore, it is
required for this team to understand deeply about all of products, current
marketing programs of company to meeting customer requirements as fast as
possible.
In short, IFT Consumer Marketing in general and CRM in particularly are invested
a lot in human resources, way of working, KPI management to ensure job
fulfillment and transparent roles and responsibilities among teams.
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1.2.1.3 Symptoms of problem
Despite smooth operation of CRM team in 2016, Mr. Subir Dhawan – Finance
Director of FCV has still raised some of concerns regarding pushing sales
performance of CRM team. It has been reflected via following symptoms:
 Symptom 1: Much personnel investment but less gain from CRM officers
Firstly, “Sales revenue contribution of each CRM officer is in the trend of decrease
during the first half of 2017. Moreover it does not balance in the comparison with
the total personnel investment on each CRM officer.” – Mr. Subir said. Based on
the below chart, it is clear that for each CRM officer, the monthly sales revenue
contribution is less than the average monthly personnel inves tment from the
company. According to FCV Finance report, it is well noted that average revenue
of each acquired new customer was about 8-9 millions VND whereas the total
personnel investment for one CRM staff doing this task was about 14-15 millions
VND. The evidence supporting for Subir’s statement is illustrated via below chart:
16

14
12
10

Average sales revenue/new
customer

8

Personnel investment/CRM
officer

6
4
2
0
Jan '17

Feb '17

Mar '17 Apr '17 May '17

Jun '17

Figure #8: The comparison between personnel investment for one CRM officer
versus the average revenue of each acquired new customer
11


 Symptom 2: Inappropriate sales KPI setting for CRM officer

Secondly, Subir also commented that “With the CRM ambition of recruiting
600,000 new users, each telesales staff in charge of this task has to be successful
to get 382 new users every month, equivalent to 4,584 new users per year.
However, without monthly sales pressure, most of CRM staffs focus on completing
this KPI just around ending months of years. The number of new users getting
every month is not gradual month by month. This can lead into some of
consequences in accelerating failure of sales value and loss of potential customers.
Because company products are sold based on growing-up steps of pregnant
women and babies.”. Another complaint from Mr. Subir – Finance Director is
related to the sales number of CRM team, which is not pushed to complete by
every 20th of each month. This is totally different with current principles of
performance management for Sales Force team while CRM team is also
considered as one of the main parts of Sales Force. According to company
requirements, the more sales number is completed before 20

th

of each month,

the more efficiently finance reinvestment is optimized. In short, Mr. Subir is quite
disappointed to conclude that “From finance perspectives, I think sales
performance of CRM is not effective now. It should be reinforced as soon as
possible with more stretching monthly KPIs.”
 Symptom 3: No monthly sales incentives, no strict working process and no
third party with strong capabilities to manage and serve CRM team
To understand the problem, a discussion was conducted with Ms. Thai Minh Diem
Tu – IFT Business Unit Director who is in charge of powder milk category. She
confirmed that “This is also one of the unsolved problems of powder milk
category. It has been targeted to review and resolve in 2017”. And this is a part of
project “CRM cost optimization”. In the meanwhile, Ms. Tu shared that “It is clear

that salary structure of CRM officer was not effective in comparison with that of a
12


salesman who works in the channels: general trade and modern trade. CRM
officer has no monthly sales incentives entitlement. This may be the reasons why
there is no strong working motivation for them to complete KPIs regarding
recruiting new users every month.” And “As per my supervision, I think working
process should be reviewed. CRM staff virtually feels very relaxed in working
hours.” – she commented about working spirit of CRM team. Another point which
was also mentioned here is that Ms. Tu thinks we still do not utilize the
capabilities of the third party – the company is providing CRM officers for FCV in
executing this service. Ms. Tu said that Nestle – one of main competitors of FCV
own the third party which is very strong in managing sales performance of
telesales staff for driving business goals of that company in this segment. As
results of this interview session, it can be said that there are three problems
which should be taken into consideration: working motivation – monthly sales
incentives for CRM team, working process review and the capabilities of the third
party.
 Symptom 4: No motivation for CRM officers to push sales performance
Another initial interview was conducted with Ms. Bach Duong – CRM Marketing
Manager who is in charge of managing CRM team and building CRM development
strategy to understand the problem more. Ms. Duong said that “Failure in pushing
sales performance of CRM team is certain. In comparison with Sales team of other
channels, there is no monthly sales incentives scheme of the company for CRM
officers. So most of my staffs only try to meet 80% - 100% KPI of month to avoid
being fired. According to my team regulation, employee would be fired if he/she
fall KPI in two consecutive months… So you know, actually there is no reason for
them to go beyond expectation.” After sharing her view about this problem of
CRM team, Ms. Duong expected HR team would coordinate with her to build an

attractive sale incentives scheme to encourage employee to do more effectively
13