Volume Six, Number 3 June 2002
the
ROI
Report
the
ROI
Report
Featured Organization:
Brother International
Corporation
Case Studies Analyzing
the Return On Investment of
Customer Relationship
Management (CRM) Initiatives
Brother Pursues Fully Integrated
CRM Strategy to Develop Customer
Loyalty, Projected 129% ROI.
Benefits
Reduce Returns.
Each 0.25% reduction in returns
Saves More than $1.6 Million Per Year
Consider Customer’s Lifetime Value (LTV)
not just transaction value.
Anticipate Customer Needs
for new product or software upgrades.
Maximize Customer Experience:
increase accessory sales & revenue growth.
Reduce Servicing Time
for end users, 40%; & dealers, 50%.
Consistently Improve Quality of Service.
Share knowledge across the organization through

16
Benefits . . . . . . . . . . . .
17
ROI . . . . . . . . . . . . . . . .
19
The Future . . . . . . . . . .
19
Lessons Learned . . . . .
21
About the ROI Report . .
22
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At Peppers and Rogers Group, we believe that the goal of Customer
Relationship Management (CRM) initiatives is the development of Learning
Relationships with customers. CRM practitioners leverage deep understanding of
individual customers to make their products or services increasingly smarter over
time relative to each customer’s needs. Customers are hesitant to reinvent this
relationship with another firm.
Building these types of relationships require a company to make difficult
changes in their firms. So why invest in CRM at all?
Dr. Martha Rogers and I have always considered CRM to be, first and fore-
most, a solid financial concept. CRM builds on the axiom that it is more cost-effective
to keep and grow an existing customer than to acquire a new one.
We were honored to be asked by SAP and Hill Holliday to review the design
and execution of this ROI Report. Our firm is often asked to conduct similar studies for
clients. And we are pleased to report that the processes used to uncover the financial
benefits and derive the financial formula for Brother’s CRM initiative were fully-consis-
tent with our own rigorous approach to measuring ROI.

than 70% coming from its Business Machine Group which sells office equipment such
as printers, fax machines, Multi-function Devices (MFDs), and Ptouch Electronic
Labeling Systems. Other businesses of Brother are personal and home products, and
industrial machinery and solutions. The Business Machine Group operates in a hyper-
competitive market with fragile margins. It is extremely sensitive to customer loyalty,
and is therefore a major focus for CRM. Brother sells its information and document
products predominantly thought retailers, resellers, and distributors, but takes sole
responsibility for all after sale customer contacts. The National Service Division of
Brother is organized to provide service to its Customers, and resellers as well as manage
Brother’s Parts Distribution, Return Center, and Customer Contact Centers.
Information and document products nowadays have to offer a dazzling array of features,
as well as interoperate with complementary products such as personal computers. Users who
become frustrated with products that don’t operate with their personal computers right out
of the box will either call for help and/or return the product. The vulnerability is manifested
by a high percentage of product returns in excess of 12% throughout the information and
document products industry.
EXECUTIVE SUMMARY
Brother Pursues Fully Integrated
CRM Strategy to Develop Customer
Loyalty, Projected 129% ROI.
Volume Six, Number 3 June 2002
the
ROI
Report
the
ROI
Report
Featured Organization:
Brother International
Corporation

16
Benefits . . . . . . . . . . . .
17
ROI . . . . . . . . . . . . . . . .
19
The Future . . . . . . . . . .
19
Lessons Learned . . . . .
21
About the ROI Report . .
22
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Introduction and
Company Profile
Brother is a continually growing global
brand, recognized worldwide for providing
high quality value added products in the
office and home.
Brother International Corporation of
USA (BIC, hereinafter referred to as Brother)
the subject of this study, was established in
1954 and is the fully owned US subsidiary
of Brother Industries, Ltd. of Nagoya, Japan.
Brother in turn has several subsidiaries
including those in Canada, Mexico, Brazil,
Chile and Argentina. Brother recorded $1 bil-
lion in revenues, constituting 37% of Brother
Industries’ total revenues of $2.7 billion for
2001. Brother Industries, Ltd. as a group
consists of close to 60 subsidiaries world-

accessory sales, revenue growth.
Ⅲ Reduce time for servicing end users by 40%, $1.8 per
customer call.
Ⅲ Reduce times for servicing dealers by 50%, $3.5 per work
order, and up to $10 per swap.
Ⅲ Achieve consistent improved quality of service by spreading
the knowledge that was in the customer service reps’ mind
through the Solution Database.
Ⅲ Lower database maintenance costs by business users as well
as by MIS.
Ⅲ Campaign to tightly focused target groups within hours.
Ⅲ Eliminate multiple systems; use one common software
solution to support the growth of the business and its
processes. Identify and disseminate best practices.
Brother had chosen SAP in 1994 as its ERP system to replace all other mis-
sion critical legacy systems. In 2000 Brother proceeded with mySAP.com as its
CRM solution to continue with a fully integrated strategy. The new measure of
business success going forward would be the “Return on Relationship” requiring
the ability to turn customer data into business strategies and thereby customer rela-
tionships into equity. The National Service Division’s service center solution would
be the gateway for realizing the strategy. Further reduction in returns and increased
sales would be the end games. The ROI Report has projected the internal rate of return
on the investment of $1.7 million by Brother International Corp. into CRM to gen-
erate an estimated ROI of 129%.
EXECUTIVE SUMMARY
continued
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Over 70% of all revenue is generated
from the Business Machine Group which
produces office equipment such as print-

trial customers in the appar-
el, automotive and IT
industries among others. In
line with the general trend in
manufacturing industries
this business has redefined
itself as a solutions business
focusing on the customers’
production line and productivity. More recent-
ly with reduced product cycle times of the cus-
tomers, the machine tools have evolved from
being specialized to being general purpose and
configurable in order to support flexible pro-
duction cells and lines.
Brother sells its product line through
various dealers, resellers, retailers, office
superstores, and distributors.
Reproduction Prohibited. Copyright 2002, The ROI Report.
5
Brother International
Corporation
the
ROI
Report
the
ROI
Report
BROTHER INTERNATIONAL CORP. USA AT A GLANCE
Fig. 1
Sales:

CRM Project Leader
Dennis Upton, Chief Information Officer
Tony Serignese, Director, MIS
CRM Project Leader
Terry Koike, President, Brother International Corporation
“
It’s critical to have an end game
for implementing CRM.
One has to think ahead and ask
‘How will we know
we did better with CRM?’
”
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6
Reproduction Prohibited. Copyright 2002, The ROI Report.
Brother International
Corporation
the
ROI
Report
the
ROI
Report
Business Context,
Mission and Driver,
Strategy, Business
Case
The National Service Division of Brother
USA was formed in 1980 and has more than
200 employees most of whom are customer

the recession and corporate downsizing in
1991 created a boom of formerly employed
workers who now became self-employed.
Having a home office or being a consultant
was no longer a stigma. Brother was per-
fectly positioned for this market segment
and further established itself as the value
supplier. Dean Shulman, Sr. Vice President
explains, “During difficult times even the
CUSTOMER CALLS
Fig. 2
0
500
1000
1500
2000
1996 1997 1998 1999 2000
800
1400
1545
1770
1844
Telephone Calls Answered
0.1
0.3
0.5
.28 .43 .48 .48 .48
Calls Per Units Sold
Calls per unit sold are stable.
Source: Brother International

to and to develop all these customers. It
would be necessary to somehow view the
lifetime value rather than just one time
transaction value of a customer. Everybody
knew that it was far less costly to keep an
existing customer and sell them something
else, but it wasn’t clear who these cus-
tomers actually were, or how they would
continue to be “Brother customers.” The
first step would have to be collect all the
important information about the customers
in one place.
At the time it was very difficult and
expensive to do the required type of data
collection and database management. Brother
struggled for several years with the tradi-
tional “warranty cards in the box” approach,
which yielded only marginal results. It was
apparent that the customer information was
in the hands of the Queen, the dealers, so
Brother opted for a strategy strongly sup-
porting the Queen. Brother assumed most
of the burden from the retailers by taking
responsibility for after sales related activi-
ties and calls. This worked well enough but
still did not close the loop and answer the
burning question for Brother, who was the
King and what did the King think?
In addition to the long-standing strate-
gic marketing requirements above, additional

bottom line without sacrificing
quality. Brother thrives in this
environment.
”
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operating systems, and application programs.
Brother’s products had become highly inter-
dependent with, and indeed vulnerable to
weaknesses in complementary products such
as personal computers and applications.
Users were becoming frustrated with
products that wouldn’t operate with their
personal computers without significant con-
figuring and troubleshooting effort on their
part, even when Brother was not really at
fault. In addition to heavy usage of auto-
matic fax-back and e-mail systems, calls
were avalanching into Brother’s five cus-
tomer contact centers. Brother was spend-
ing millions annually on customer service
and was not able to keep up with all the
calls. The vulnerability was manifesting
itself very painfully, in a high percentage
of product returns, typically in excess of
12% throughout the information and doc-
ument products industry.
Business
Transformation
The immediately identified need was to
do something to reduce the product returns.

Measurable
Performance Indicator:
Orders with
Deliveries On Time (%)
Measurable
Performance Indicator:
Orders with
Correct Volumes (%)
General Performance
Indicator:
Volume accuracy
General Performance
Indicator:
Sales order cycle time
Measurable
Performance Indicator:
Cycle Time Goods Issue
Measurable
Performance Indicator:
Cycle Time Invoicing
General Performance
Indicator:
Return Rate
Measurable
Performance Indicator:
Returns Among
Sales Order Lines (%)
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cation was unable to keep up with the grow-
ing customer base, unable to refer to the ser-

was then formulated as a continuous infor-
mation process as depicted in fig. 3, starting
with information on who purchased what
and when, continuing with how the prod-
uct was being used, and whether the cus-
tomer had contacted Brother and if so, what
the issues or service requests were. Only after
coming full-circle as many times as necessary,
would there be complete knowledge of the
customer and total customer satisfaction,
with any hope of keeping and growing a cus-
tomer with Brother forever.
Supporting the total customer satisfac-
tion information loop would require a
Business Warehouse. This could be partial-
ly populated by converting some of the exist-
ing data, however the final content
requirements would not be known until at
least some of the CRM processes were in
place and generating data. Capturing irrele-
vant information would be worthless.
Five process areas were identified as
critical for generating data as well as pro-
viding service. These were, answering of a call
through CRM, logging the call and retriev-
ing the customer information, accessing and
populating the solution database on an ongo-
ing basis for consistent answers, e-mailing or
faxing solutions, and finally maximizing cus-
tomer experience to be able to sell acces-

would be the foundation for
customer satisfaction.
”
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