Avon pulls plug on global CRM plan

Direct-sell cosmetics business Avon has been forced to ditch a major global CRM initiative – backed by software giant SAP – due to a disastrous return on investment during a trial of the new scheme.
The company – still best known for its classic “Ding, dong, Avon calling” ad campaign – has been forced to admit the programme was not suitable for its operation following a Canadian test run.
Part of a service model transformation (SMT) project, it was meant to underpin the largest transformation the organisation has undertaken over the last 50 years.
It included a shake-up of campaign management, order capture, order fulfilment, field management and finance, designed to improve efficiency, and provide greater flexibility for Avon representatives.
However, its latest trading update says the move will now result in job losses and will cost $125m as a result of the software charges associated with the deployment.
In the statement Avon said: “Earlier in 2013, SMT was piloted in Canada, causing significant business disruption in that market, and did not show a clear return on investment. The decision was made in light of the potential risk of further disruption. The company’s focus is on stabilising and growing the business and improving operating capability, which includes updating IT infrastructure in a way that delivers clear return on investment.”
Avon chief executive Sheri McCoy stated: “When I look at our experience in Canada, it’s clear that our business model has difficulty adjusting to these big-bang initiatives. The nature of direct selling, where our 6 million representatives are independent entrepreneurs, is one of personal relationships and connections. It’s about influencing and incentivising behaviour. It requires spacing change and thoughtfully and strategically not mandating abrupt changes.”
Avon has global with annual revenues of nearly $11bn. It products are available in over 100 countries, and the product line includes color cosmetics, skincare, fragrance, fashion and home products. In the UK, Avon claims to reach one in three women, with 6 million women seeing an Avon brochure every three weeks.