MAR 4860 Lecture Worksheet

Chapter 1 Module 1

CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES

Chapter 1: Introduction to CRM Module 1

Chapter Objectives

• Explain the four major perspectives on CRM: strategic, operational, analytical and collaborative. • Identify the common misunderstandings about CRM. • De elop a definition of CRM. Develop CRM • Describe the six constituencies or parties that have a vested interest in CRM. • Describe how CRM issues vary across industries, and • Explain five generic models of CRM, particularly the IDIC and the Gartner Group models.

Imagine These Scenarios

Taking a very needed vacation in the Bahamas Buying home computer B i a h for the first time

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Selected Definitions of CRM 1
 CRM is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way.  CRM i th process of managing all aspects of is the f i ll t f interaction a company has with its customers, including prospecting, sales, and service. CRM applications attempt to provide insight into and improve the company/customer relationship by combining all these views of customer interaction into one picture.

Selected Definitions of CRM 2
 CRM is an integrated approach to identifying, acquiring, and retaining customers. By enabling organizations to manage and coordinate customer interactions across multiple channels, departments, lines of business, and geographies, CRM helps organizations maximize the value of every customer interaction and drive superior corporate performance.

Selected Definitions of CRM 3
 CRM is an integrated information system that is used to plan, schedule and control the pre-sales and post-sales activities in an organization. CRM embraces all aspects of dealing with prospects and customers, including the call center, sales force, marketing, technical support and field service. The primary goal of CRM is to improve long-term growth and profitability through a better understanding of customer behaviour. CRM aims to provide more effective feedback and improved integration to better gauge the return on investment (ROI) in these areas.

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Selected Definitions of CRM 4
 CRM is a business strategy that maximizes profitability, revenue and customer satisfaction by organizing around customer segments, fostering behaviour that satisfies customers, and implementing customer-centric processes.

Core Definition of CRM
 CRM is the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit. It is grounded on high quality customer-related data and enabled by information technology. This is the best definition for CRM and the one you will use in this class!

Misunderstandings About CRM
1. CRM is database marketing - NO 2. CRM is a marketing process - NO 3. CRM is an IT issue - NO 4. CRM is about loyalty schemes - NO 5. CRM can be implemented by any company - NO

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MAR 4860 Lecture Worksheet

Chapter 1 Module 2

CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES

Chapter 1: Introduction to CRM Module 2

Four Types of CRM
Type of CRM Dominant Characteristic Strategic CRM is a core customer-centric business strategy that aims at winning and keeping profitable customers. Operational CRM focuses on the automation of customerp facing processes such as selling, marketing and customer service. Analytical CRM focuses on the intelligent mining of customer-related data for strategic or tactical purposes. Collaborative CRM applies technology across organizational boundaries with a view to optimizing company, partner and customer value.

1 Strategic 2 Operational 3 Analytical 4 Collaborative

Business Orientations
1. Product-oriented businesses believe that customers choose products with the best quality, performance, design or features.

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2. Production-oriented businesses believe that customers choose low-price products. 3. Sales-oriented businesses make the assumption that if they invest enough in advertising, selling, public relations (PR) and sales promotion, customers will be persuaded to buy. 4. A customer or market-oriented company shares a set of beliefs about putting the customer first. It collects, disseminates and uses customer and competitive information to develop better value propositions for customers. A customer-centric firm is a learning firm that constantly adapts to customer requirements and competitive conditions.

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STRATEGIC: Customer-Centric Orientation
Customer Requirements Voice of Customer Market Research Competitor Analysis Customer-Centric C t C ti Management Systems

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Value Propositions

Structure

Rewards & Compensation

Operational CRM
EXAMPLE Marketing automation Market segmentation Campaign management Event-based (trigger) marketing Sales force automation Account management Lead management Opportunity management Pipeline management Contact management Quotation and proposal generation Product configuration Service automation Case ( incident or issue) management Inbound communications management Queuing and routing Service level management

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The Limited
• • Operates over 2,700 specialty stores. Had a database of over 25 million buyers and wanted to better understand customers and tailor marketing campaigns for all brands brands. Installed CRM software & now differentiates and segments customers based on interests, prior to campaigns. Believes that key to successful CRM lies in applying analytics to a single, customer-centric database, allowing a 360o view of customer.

Analytical CRM
 Concerned with capturing, storing, extracting, integrating, processing, interpreting, distributing using and reporting customer-related data . WOW! Think about what each bolded word means.  Internal sources of customer data Sales data (purchase history), financial data (payment history, credit score), marketing data (campaign response, loyalty scheme data) and service data.  External sources of customer data Geo-demographic and life-style data from business intelligence organizations.

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Chapter 1 Module 2

Examples of Operational & Analytical CRM
Analytical CRM

Operational CRM

The telephone company wants to A telephone customer service know which customers are signaling representative needs to access a customer record when she receives a an intention to switch to a different supplier. customer request. A hotel receptionist needs access to a guest’s history so that she can reserve the preferred type of room – smoking or non-smoking, standard or deluxe. A sales rep needs to check a customer’s payment history to find out whether the account has reached the maximum credit limit. The hotel company wants to promote a weekend getaway to customers who have indicated their complete delight in previous customer satisfaction surveys. The sales rep wants to compute his customer’s profitability, given the level of service that is being provided.

Beneficiaries of Analytical CRM
 The Customer Analytical CRM can deliver timely, customized, solutions to the customer’s problems, thereby enhancing customer satisfaction.  The Company Analytical CRM offers the possibility of more powerful cross-selling and up-selling programs, and more effective customer retention and customer acquisition programs.  Here’s what some companies had to say:
http://www.youtube.com/watch?v=vAADrN9NUAQ&feature=related http://www.youtube.com/watch?v=1iMOrAXk70o&feature=related http://www.youtube.com/watch?v=pYIcz4a0evc&feature=related

CRM Constituencies
1. Companies implementing CRM 2. Customers and partners of those companies 3. Vendors of CRM software 4. CRM application service providers (ASPs) 5. Vendors of CRM hardware and infrastructure 6. Management consultants

We will also refer to this as the CRM Ecosystem

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Chapter 1 Module 2

The IDIC Model
 Identify who your customers are and build a deep understanding of them  Differentiate your customers to identify which customers have most value now and which offer most for the future.  Interact with customers to ensure that you understand customer expectations and their relationships with other suppliers or brands  Customize the offer and communications to ensure that the expectations of customers are met.

The Qci Model

The CRM Value Chain

The CRM Value Chain

Primary stages

Customer Customer Network Value Manage Portfolio Intimacy Development Proposition The Analysis A l i (SCOPE) Development Customer Lifecycle

Leadership and culture Supporting conditions Data and information technology People Processes

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Payne’s Five-Process Model

The Gartner Competency Model
1. CRM Vision: Leadership, Social Worth, Value Proposition 2. CRM Strategy: Objectives, Segments, Effective Interaction 3. Valued Customer Experience
Understand Requirements Monitor Expectations Satisfaction C S ti f ti vs.Competition titi Collaboration and Feedback

4. Organizational Collaboration
Culture and Structure Customer Understanding People: Skills,Competencies Incentives and Compensation Employee Communications Partners and Suppliers

5. CRM Processes: Customer Life Cycle, Knowledge Management 6. CRM Information: Data, Analysis, One View Across Channels 7. CRM Technology: Applications, Architecture, Infrastructure 8. CRM Metrics: Cost to Serve, Satisfaction, Loyalty, Social Costs

This is an important model. Be sure to read other material in Blackboard

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MAR 4860 Lecture Worksheet

Chapter 2 Module 1

CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES

Chapter 2: Understanding Relationships Module 1

Chapter Objectives
 Recognize a relationship.  Describe the attributes of successful relationships.  Explain the importance of trust and commitment within a relationship.  Explain why companies and customers are sometimes motivated to establish and maintain relationships with each other, and sometimes not.  Explain the meaning and importance of quantitative methods of value and perform simple calculations for LTV.  Explain all of the components of the satisfaction-profit chain – Figure 2.6.

What is a Relationship?
Think about the BEST relationship you have. Answer these questions.  How would you define a relationship?

 What are the elements of a great relationship?

 What are the main interactions or activities involved in building and maintaining a strong customer relationship?

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What is a Relationship?
 A relationship is composed of a series of interactive episodes between parties over time.  Episodes are time bound (they have a beginning and an end) and are nameable.  Episodes a e co posed o a se es o interactions. An p sodes are composed of series of e ac o s interaction consists of action, and the response to that action.  Is a relationship more than interaction-over-time?
 What about emotional content ?  Do relationships have some type of connection, attachment or bond?

Relationships as Social Constructs
 There are five general phases that customer-supplier relationships go through: 1. Awareness 2. Exploration 3. Expansion 4. Commitment 5. Dissolution

A Core Attribute: TRUST
Some things to keep in mind…  Benevolence. A belief that one party acts in the interests of the other.  Honesty. A belief that the other party’s word is reliable or credible.  Competence. A belief that the other party has the necessary expertise to perform as required.  Trust emerges as parties share experiences, and interpret and assess each other’s motives.  As they learn more about each other, risk and doubt are reduced.

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Another Core Attribute: COMMITMENT
 Commitment arises from trust, shared values, and the belief that partners will be difficult to replace.  Commitment motivates partners to cooperate in order to preserve relationship investments.  Commitment means partners forgo short-term short term alternatives in favour of more stable, long-term benefits associated with current partners.  Commitment entails vulnerability, leaving partners open to opportunism.

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MAR 4860 Lecture Worksheet

Chapter 2 Module 2

CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES

Chapter 2: Understanding Relationships Module 2

CRM Goals – Increasing Value Why are Companies Interested?
• To get more customers • To acquire profitable ones • To keep them longer – retain them • To win back profitable ones • T eliminate unprofitable ones To li i t fit bl • To grow them into bigger & more profitable ones • To upsell additional products • To cross-sell other products and bundle them • To obtain referrals and word-of mouth benefits • To reduce service and operational costs

Source: Peppers & Rogers (2004). Managing Customer Relationships, P. 5

What Happens When A Customer Leaves?
Company A (5% churn rate) Company B (10% churn rate) Year
Existing customers New customers Total customer base Existing customers New customers Total customer base

2001 2002 2003 2004 2005

1000 1045 1088 1129 1168

100 100 100 100 100

1100 1145 1188 1229 1268

1000 990 981 973 966

100 100 100 100 100

1100 1090 1081 1073 1066

1,100 * 0.95 (5% churn rate) = 1,045

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Benefits from Managing Customer Retention
 Reduced marketing costs
 Fewer dollars need to be spent replacing churned customers

 Better customer insight
 Suppliers are able to develop a better understanding of customer requirements and expectations Customers also come expectations. to understand what a supplier can do for them.  Consequently, suppliers become better placed to identify and satisfy customer requirements profitably, selling more product and service to the retained customer.  Over time, as relationships deepen, trust and commitment between the parties is likely to grow, and revenue and profit streams from customers become more secure.

The Customer Journey
Suspect Prospect Does the potential customer fit your target market profile? (Also called lead) The customer fits the target market profile and is being approached for the first time.

Advocates Loyal Customers Majority M j it Customers Repeat Customers First-Time Customers Prospects

First-time customer The customer makes a first purchase. Repeat customer R t t The customer makes additional purchases. Your p offer plays a minor role in the customer’s portfolio. The customer selects your company as supplier of choice. You occupy a significant place in the customer’s portfolio. The customer is resistant to switching suppliers, and has a strong positive attitude to your company or offer. The customer generates additional referral dollars through positive word-of-mouth.

Majority customer

Loyal customer

Advocate
Suspects

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Customer Retention: Link to Profitability
P rice P rem ium R eferrals C ost S avings R evenue G row th B ase P rofit

Company Pr rofit

A cquisition

Year
Source: Reichheld (1996)

How are Customer Value & CRM Linked?Companies Interested? Why are
Customer Value: The economic value of the customer relationship to the firm – expressed on the basis of contribution margin or net profit

CRM is the practice of determining corporate practices and methods that will maximize the lifetime value of each individual customer to the firm

Lifetime Value Defined
 Lifetime value (LTV) is the present day value of all net margins earned from a relationship with a customer, customer segment or cohort.
 To compute LTV, all historic net margins are compounded up to today’s value and all future net margins are discounted back to t d ’ t today’s value. l  Estimates of LTV potential look to the future only, and ignore the past.  A customer that appears to be valuable on the basis of the gross margins generated will most likely be less profitable once cost-to-serve the customer is taken into account.

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Lifetime Value (LTV)
PER UNIT EXPECTATIONS Price Cost of goods Contribution margin Direct expenses Allocated costs All t d t Expected net profit X number of units purchased per time frame (year) X number of time frames Unadjusted lifetime profit expectations $100 -10 $90 -10 10 -10 $70 x12 x5 $4,200

Value of money over hasn’t been taken into consideration

Effect of Discounting on LTV
Undiscounted profit over 5 years Year 0 1 2 3 4 5 -$50 +$30 +$40 +$55 +$72 +$88 $235 Discounted profit over 5 years (15% discount rate) Year 0 1 2 3 4 5 -$50.00 +$26.09 +$30.25 +$36.16 $36.16 +$41.17 +$43.76 $127.43

+$30/1.15 = +$40/1.152= +$55/1.153= $55/1.15 +$72/1.154= +$88/1.155=

The net present value of 5 years of profit earned from this customer is $127.43

Cohort Value: Impact of Customer Retention Rate
Year Profit per Customer ($) -100 50 70 100 140 190 250 320 400 450 500 43.48 52.93 65.75 80.00 94.53 108.23 120.30 130.72 127.84 123.15 60 70 75 80 85 90 92 94 95 96 NPV at 15% Discount ($) Customer Retention Rate (%) # of Customers 100,000 60,000 42,000 31,500 25,200 21,420 19,278 17,736 16,672, 15,838 15,204 Total Annual Profit ($) -10,000,000 2,608,800 2,223,062 2,071,125 2,016,000 2,024,776 2,086,364 2,133,654 2,179,346 2,024,744 1,872,372

0 1 2 3 4 5 6 7 8 9 10

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KEY Points About LTV
 So why is LTV so important?
 To properly target our sales and retention efforts  To separate those that are profitable from those hurting profits.  To understand:
o o o o where to put retention dollars the value of each retention strategy where to put acquisition dollars how much to spend on acquisition

 What do you need to calculate the LTV?

    

Insight into future buying behavior Probabilities of buying products 1-n over the next X time periods Margins earned from those products Periodic costs of customer management Plus, for new customers - costs of customer acquisition And finally - Discount rate

Why Companies DON’T Want Relationships?
1. When they fear loss of control. Relationships are bilateral arrangements, which involve giving up unilateral control over resources. 2. When exits costs are high. Not all relationships survive. It is not necessarily easy or cost-effective to exit a relationship. l ti hi 3. Resource commitment. Relationships require the commitment of scarce resources such as people, time and money. 4. When opportunity costs are high. If resources are committed to one customer relationship, they cannot be used for another

Why Business Customers Want Relationships?
1. When the product or its applications are complex, for example, networking infrastructure. 2. When the product is strategically important or missioncritical, for example, core raw materials supply for a manufacturer. 3. When there are down-stream service requirements, f 3 Wh th d t i i t for example, for machine tools. 4. When the financial risk is high, for example, in buying large pieces of capital equipment. 5. When reciprocity is expected. A financial audit practice may want a close relationship with a management consultancy, so that each party may benefit from referrals by the other.

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Why Consumers Want Relationships?
1. Recognition. Customers may feel more valued when recognised and addressed by name. 2. Personalization. Products or services can be customized. 3. Power. Relationships with suppliers can be empowering. 4. 4 Risk reduction A relationship can reduce, or even perhaps reduction. reduce perhaps, eliminate perceived risk. 5. Status. Customers may feel that their status is enhanced by a relationship with a supplier. 6. Affiliation. People’s social needs can be met through commercially based, or non-commercially based, relationships.

Why Business Customers DON’T?
1. Fear of dependency 2. Lack of perceived value in the relationship 3. Lack of confidence in the supplier. 4. Customer lacks relational orientation 5. Rapid technological changes

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MAR 4860 Lecture Worksheet

Chapter 2 Module 3

CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES

Chapter 2: Understanding Relationships Module 3

The Satisfaction-Profit Chain

Customer Satisfaction

Customer Loyalty

Business Performance

 Understand customer requirements  Meet customer expectations  Deliver customer value

 Behavioral loyalty  Attitudinal loyalty

 Revenue growth  Share of customer  Customer tenure (retention)

Customer Behavior
Before Purchase
EXPECTATIONS

Purchase
x
EXPERIENCE

Post-Purchase

=

EVALUATION

• Spoken Promises • Perceived Alternatives • Unspoken Promises • Past Experiences • Personal Values • Personal Needs • Word of Mouth

• Outcomes • Processes • Judgments

Expectations E t ti Exceeded Expectations Met Expectations Not Met

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Drivers of Customer Loyalty
Product Quality Relatively easy for competitors to imitate Price

CUSTOMER SATISFACTION

Service Quality

Perceived Value

CUSTOMER DELIGHT

CUSTOMER LOYALTY

Reliability Responsiveness Assurance Tangibles Empathy

Commitment or attachment to a brand, store, manufacturer, service provider, or other

Measuring Customer Loyalty
Behavioral/Functional Commitment (objective & measurable)  Is the customer active? How much time is spent?  What’s the proportion of visits/purchase frequency?  How does the customer cooperate?  Word of mouth (referrals)? RFM – KEY MEASURE – stands for Recency, Frequency and Monetary Value Attitudinal/Emotional Commitment (subjective & difficult to capture & measure)  Trust  Beliefs and psychological commitment - predisposition Preferences and intent to buy (called propensity)  Emotional bonding  Switching cost is too high – too much has been invested  Behavioral outcomes – satisfaction and service quality

Levels of Customer Loyalty

Level of Loyalty Undivided Loyalty Occasional Switcher Switched Loyalty Divided Loyalty Indifference

Purchases Over Time 1 1 1 1 1 1 1 1 1 2 1 1 1 1 3 1 2 1 2 4 1 1 1 2 2 1 1 1 2 1 1 3 2 1 3 1 1 2 1 4 1 1 2 1 3

Source: Zikmund, McLeod, and Gilbert (2003).

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Business Performance

high

CRM

share of customer spend

Traditional marketing

low few Number of customers many

American Customer Satisfaction Index

Source: http://www.theacsi.org/

American Customer Satisfaction Index

Source: http://www.theacsi.org/

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American Customer Satisfaction Index

Examples of Loyalty Measures
Reichheld (2001) developed a tool to measure loyalty called the Loyalty Acid Test. This tool was designed to monitor and diagnose the health of key relationships. You can view a sample of it at: http://www.loyaltyrules.com/loyaltyrules/acid_test_customer.html Reichheld expanded on one of the questions from the Loyalty Acid Test. In his book The Ultimate Question, Reichheld (2006) explains how a customer’s likelihood of recommending a company to a friend is a key indicator of loyalty. The metric, called Net Promoter Score or NPS, categorizes your customers into three groups: promoters, passives, and detractors. NPS is considered a predictor of good profits and true growth. For more, visit: http://www.netpromoter.com/np/index.jsp Looking for Loyalty? CRM Magazine http://www.destinationcrm.com/Articles/PrintArticle.aspx?ArticleID=55703

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MAR 4860 Lecture Worksheet

Chapter 3 Module 1

CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES

Chapter 3: Planning & Implementing CRM Projects

Module 1

Chapter Objectives To identify the five major phases in a CRM implementation Recognize a number of tools and processes that can be applied in each phase of an implementation. Explain the importance of project management and change management throughout the implementation process.

Five Major Phases of a CRM Project

1
Strategy

2
Foundation

3
Needs & Partner

4
Implement

5
Evaluate

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MAR 4860 Lecture Worksheet

Chapter 3 Module 1

Develop the CRM Strategy
 Situation analysis  Commence CRM education  Develop the CRM vision  Set priorities  Establish goals and objectives

Strategy

 Identify people, process and technology requirements  Develop the business case
Gartner Outlines 3 Steps to a Successful CRM Strategy: The economic upswing spawns a return of the $100 million CRM project, according to a Gartner analyst. By Juan Martinez - Posted Apr 21, 2010 http://www.destinationcrm.com/Articles/PrintArticle.aspx?ArticleID=66669

The CRM Strategic Plan & Business Case
The deliverable of this phase of CRM planning is a CRM Business Case and Proposal. You can also refer to this as the CRM Strategic Plan or Strategy. The key components of a CRM Strategic Plan are:  Summary of Current Situation (where we are today)  Mission statement (who we are and what we do)  Vision statement (where we are going)  Summary of Desired State (what we are going to look like)  Gaps and opportunities (what we must change)  Goals and objectives (what we want to accomplish and why)  Critical success factors (how we will measure our success)  Strategies (how we are going to achieve our goals)  Resources and requirements (what we need to get there)  Costs and Benefits (what will it cost us and what will we gain)

The Eight Building Blocks of Customer-Centricity
1. Customer Vision 2. Customer-Centric Strategy

3. Valued Customer Experience 5. Customer Processes 6. Customer Information 7. Technology, Including CRM 8. Metrics

4. Organizational Collaboration

Source: Gartner Group

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Situation Analysis: Customer Strategy Cube
C Channels A O4 Offers O3 O2 O1 1 2 3 4 5 Customers or segments B

Situation Analysis: The One-to-One Gap Tool
Customer Relationship Management
Source: Is Your Company Ready for One-to-One Marketing? By Don Peppers, Martha Rogers & BobDorf, Harvard Business Review. January-February 1999. Instructions: 1) This exercise is to be administered to employees at various levels and in various functions in your company. It is designed to capture a robust analysis of how your company sees itself both culturally and organizationally. 2) It should also be given to a representative group of customers, with the language tailored appropriately, in order to expose the gap between internal and external perceptions. For each question listed below, select the statement that most closely reflects your opinion of the company as you view it today – not as you think it should be or it might be in the future.

T h e O n e -t o - O n e G a p T o o l

EXPERT OPINION

3)

CUSTOMER RELATIONSHIPS
Question 1. How effectively does the company differentiate its customers? 1. 2. 3. 4. W e do not differentiate among customers. W e try to differentiate among customers. W e collect and use information gleaned from interactions with customers to differentiate each customer and to evaluate the importance of each relationship. W e have a continuously updated customer knowledge database that provides all the critical business information about our relationships with individual customers.

The One-to-One Gap Tool rates the company culturally and organizationally based on the following criteria:

Question 2. What steps has the company taken to improve the total experience of its customers? 1. 2. 3. 4. W e pay little or no attention to the total experience of customers. W e know all the points where customers are in contact with the business, and we manage these areas effectively. W e conduct frequent surveys with selected customers and make improvements based on their feedback. W e have a continual dialogue with each customer and use well-developed methods to improve our relationships.

Question 3. How effectively does the company measure and react to customers’ expectations? 1. 2. 3. 4. W e make no effort to understand our customers’ expectations. W e have some idea of our customers’ expectations and use them in building relationships. W e periodically solicit customers’ input about expectations and take actions to improve the relationships where possible. W e work as a team with our customers to ensure that their expectations are met or exceeded.

      

Customer Relationships Partnerships Knowledge Strategy Employee Management Processes Technology Competitive Strategy

Source: Peppers, Rogers, & Dorf (1999)
Question 4. How effectively does the company understand and anticipate customers’ behavior? 1. 2. 3. 4. W e pay little or no attention to the behavior of our customers. W e understand the trends and buying patterns of our customers and consider them when making critical decisions. W e collect data on our customers’ preferences and other behaviors and use that information in our business planning. W e maintain a profile of each customer and refer to it when dealing with customers.

CRM Education
 The Institute of Direct Marketing - http://www.theidm.com/  American Marketing Association - http://www.marketingpower.com/  Websites and online communities ● http://www.1to1media.com/Home.aspx This is one of the most used websites in this course. In order to search for articles and access them, you will need to register. Please be sure to SIGN IN at the top right hand corner and register, using your FIU email. ● http://www.destinationcrm.com/ ● http://www.customerthink.com/ ● http://www.crm2day.com/ ● http://searchcrm.techtarget.com/

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CRM Vision

A vision must focus on the future and serve as a concrete foundation for the organization. Unlike goals and objectives, a vision does not fluctuate from year to year but serves as an enduring promise A CRM promise. vision should paint a clear picture of what your company will look like to your customers when you have achieved your CRM objectives. A vision must give the people the feeling that their lives and work are intertwined and moving toward recognizable, legitimate goals.

“A CRM vision is a powerful means of creating shared values and a customer focus…in a sense, these shared values are the ‘glue’ glue that holds the organization together.”
Source: Payne (2006)

Paint the picture…

Examples of CRM Visions
Ritz-Carlton Hotels The Ritz-Carlton is a place where the genuine care and comfort of our guests is our highest mission. We pledge to provide the finest personal service and facilities for our guests who will always enjoy a warm, relaxed, y refined ambience. y j y , , yet The Ritz-Carlton experience enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests.

Ritz-Carlton Gold Standards Check out the company’s site & read the Gold Standards: http://www.ritzcarlton.com/corporate/about_us/gold_standards.asp

Examples of CRM Visions
Harrah’s Entertainment
"Each of our brands will be the overwhelming first choice for casino entertainment of its targeted customers.“

Harrah’s Code of Commitment http://www.harrahs.com/images/PDFs/Harrahs_Code_of_Commit_2006_English.pdf **Watch the video interview with the CIO of Harrah’s posted under Supplemental Materials

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More CRM Vision Statements
 We will work with our members in a trust-based relationship to represent their interests, and to satisfy their needs for high value, security, and peace of mind in motoring, travel, and home.  Nurturing relationships one cup at a time. Deliver a customer experience that consistently develops enthusiastically satisfied customers in every market in which we do business.  Build and maintain long-term relationships with valuable customers by creating personalized experiences across all touch-points and by anticipating customer needs and providing customized offers.  Nothing is more important than making every user successful.

Setting Priorities
Prioritization Matrix
High Quick Hits Strategic

5

6 4

Benefits

1 2 3 7

Low Easy

Considerations Implementation

No Go Difficult

Strategic Goals for CRM Projects
Increase customer satisfaction Enhance cross/up-sell opportunities Increase customer retention Increase customer loyalty Increase sales revenues Increase profit per customer Acquire new customers Increase marketing campaign response rates Increase acquisition of new customers Reduce costs of sales Improve lead quality and conversion Increase profit margins Increase partner loyalty Reduce cost of marketing Other

Loyalty, Satisfaction Revenue Enhancement

Cost Reduction

0

20

40

60

80

Source: Gartner Group

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Examples of CRM Goals & Objectives
Growth in Revenues  Retain existing customers  Obtain new customers  Increase customer profitability Reduction in Expenses  Realize sales efficiencies  Realize service efficiencies  Realize marketing efficiencies  Recognize operational efficiencies Increased Loyalty  Enhance cross-sell opportunities  Increase customer tenure  Increase referrals

Objective Retain existing customers Obtain new customers Increase customer profitability

Metric Retention rate

Target Performance 89%

New customer acquisition rate New profit per customer

10%

$16,000

Objectives must be stated in quantifiable, or measurable, terms and must include a deadline for completion. They should spell out how much of what kind of performance by when.

Example of CRM Business Case Worksheet
CRM Objectives
Retain existing customers

Strategies
 Provide 24-7 service  Implement a 360o view
of customer

Business Requirements
 Accurately measure the CLV
each customer can potentially create for the company

Resources
 Marketing Department
(note specific people) (note specific people) process reengineering

Enablers
 CRM technology – data
warehouse

 Operations Department  Operational CRM  Business consultant for  Technology consultant  Human Resources
representative representative

 Develop consistent

customer experiences across all channels offerings

 Capture accurate and

 Analytical CRM  Process analysis  Experience mapping  Customer Inventory Assessment  Employee training on customer
facing processes and formal process improvement procedures customer touch point

 Create customized

relevant customer information in one central place customer facing processes – where they are and how they should be handled

 Clearly understand our

 Financial Department

 Shorten service processes  Use predictive modeling to
enable customized product offerings and messages customer-facing processes

 CRM metrics for each critical  Employee performance

 Retain quality staff for

evaluation & compensation program based on customer metrics

Understanding CRM Project Costs
 CRM software licence fees  Systems integration  Infrastructure costs, new desktop, desktop laptop or handheld devices  Software configuration  Data modelling  Beta-testing  Helpdesk support  Change management  Project management  Process reengineering  Software upgrades  Training  Consulting services  Opportunity costs

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Chapter 3 Module 1

Projecting Incremental Costs: An Example
Cost Component Laptop Hardware & Accessories for 100 Sales Reps Travel for Laptop Deployment & Training for 100 Sales Reps Sunk Costs Unit cost = $1,100 Accessories/unit = $300 Total cost = $140,000 Average airfare = $500 3 nights @ $100 = $300 Meals & miscellaneous = $100 Total cost = $90,000 250 licenses @ $500 = $125,000 Customization = $250,000 Technical training = $15,000 Total cost = $390,000 One developer/analyst = $50,000 Ongoing Annual Costs Repairs/new hires = $15,000

New hires/turnover = $5,000

SFA Software

Upgrades = $3,000

IT Department Support

Two programmers = $170,000 $193,000

TOTAL

$670,000

Projecting Benefits: An Example
Benefit Component From Productivity Gains Savings/Growth Preparing Proposals = 200 hrs/year Preparing monthly reports = 100 hrs/year Updating files manually = 50 hrs/year Researching prospect information = 100 hrs/year Sending documentation = 80 hrs/year Total hours = 530 hours for 80 Sales Reps = 42,400 hours Forecasted Revenues per hour = $25 Projected Revenue Increase = $1,060,000 Forecasted Revenues = $15,000,000 Incremental revenue increase = 10% Projected Revenue Increase = $1,500,000

From Revenue Growth (Better quality proposals, faster sales cycle times, improved quality of leads) From Reduction in Operating Expenses

Word Processing Center = $120,000 Travel Expenses = $100,000 Sales Centers – Rent & Overhead = $500,00

Business Case Summary Data
CRM Business Case
Benefit - Cost Summary Total Bottom Line Benefits Per Year Cumulative Benefits, Present Value Weighted Average Total Costs Per Year Cumulative Costs, Present Value Net Cash Flow Cumulative Net Present Value Cash Flow Internal Rate of Return Net Present Value, 5 Years Return on Investment, Present Value, 5 Years Payback P i d Years P b k Period, Y Year 1 $150,000 $150,000 $1,500,000 $1,500,000 -$750,000 -$750,000 129% $3,100,000 107% 2.0 20 Year 2 $2,500,000 $2,500,000 $1,100,000 $2,550,000 $700,000 -$25,000

Prepared by: Customer Connect Australia
Year 3 $2,900,000 $4,950,000 $90,000 $2,600,000 $1,400,000 $1,100,000 Year 4 $3,100,000 $7,100,000 $250,000 $2,800,000 $1,450,000 $2,200,000 Year 5 $3,100,000 $9,100,000 $110,000 $2,900,000 $1,500,000 $3,100,000

Cumulative Net Present Value Cash Flow $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 -$500,000 -$1,000,000 Year 1 Year 2 Year 3 Year 4 Year 5

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Chapter 3 Module 1

Best Buy: An Example

Strategy

Best Buy (2006) strives to make life fun and easy for millions of people across North America. Our mission is to give our customers great experiences – whether they are shopping for consumer electronics, home-office products, entertainment software and appliances, or using those products and relatedservices in their homes and offices. Best Buy is growing its business by (goals):  Converting more stores to the customer-centric operating model.

    

Adding new stores to better serve existing and new markets. Expanding and strengthening service offerings. Boosting employee retention in order to deliver better customer experiences while increasing productivity. Adding individualized marketing capabilities to our skills in mass marketing. Simplifying our internal processes so they respond better to changing customers’ needs.

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Chapter 3 Module 2

CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES

Chapter 3: Planning & Implementing CRM Projects

Module 2

Build Project Foundations
 Identify stakeholders  Establish governance structures  Identify change management needs  Identify project management needs  Identify critical success factors  Develop risk management plan

Build

Stakeholders in CRM Projects
 Stakeholders include any party that will be impacted by the adoption of CRM
● senior management ● users of any new system, process or technology ● marketing staff ● sales people ● customer service agents and representatives ● channel partners ● customers ● IT specialists

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Chapter 3 Module 2

CRM Project Governance Structure

CEO

E x ec S pons or

C R M C ons ult ant S ales E x ec M ark eting E x ec P rogram D irec t or E x ternal R es ourc es S t eering C om m itt ee I S Lead L d S y s tem s N am e I m plem enter T itle

K ey N am e U s ers T itle

S ales Lead

K ey N am e U s ers T itle

M ark eting Lead

Customer Advocate

K ey N am e U s ers T itle

S upport Lead

P rogram T eam

Change Management Ingredients
Changing people's behavior brings the biggest return on investment for CRM. The five ingredients for successful CRM change management are: 1. Leadership and Sponsorship 2. Skills and Competencies 3. Knowledge 4. Organization 5. Incentives

EXPERT OPINION

All CRM initiatives and employee engagement in them must run into parallel with change management and project management. Change management is concerned with people, systems and organizational change. Source: Payne (2006)

The Four Stages of Change
1. 2. 3. 4.
DENIAL EXPLORATION RESISTANCE ACCEPTANCE EXPERT OPINION

Change Introduction

Managed Change

Managing change doesn’t always guarantee success. But ignoring the need to manage change guarantees failure. Peter Drucker Management Guru

Morale/ Productivity/ Commitment Time

Unmanaged Change

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Chapter 3 Module 2

Internal Marketing Plan
1. Identify your segments, target audiences or user groups 2. For each group, define: ● Needs, expectations and benefits associated with CRM – ‘what’s in it for them?’ Marketing objective The target message The 7Ps
Marketers need to keep all employees aware of current promotions and campaigns, as well as educate them on the company's vision and desired brand image.
Source: McMaster (2002)

EXPERT OPINION

● ● ●

3. Develop a roll-out marketing plan over the lifetime of the CRM initiative

7

The Buy-In Matrix

EXPERT OPINION

Intellect tual Buy-In

Yes

Bystanders

Champions

No

Weak Links

Loose Cannons Yes

A CRM Initiative's Bermuda Triangle Two best practice p suggestions for preventing-permanently--user-adoption disappearance.

No
Emotional Buy-In

http://www.destinationcrm.co m/print/default.asp?ArticleID =6824

8

Identify Project Management Needs
 Role of CRM Program Director or Project leader  Sets out steps of journey from situation analysis to achievement of CRM vision, goals and objectives  Tool kit: Gantt charts, Critical Path Analysis (CPA), charts (CPA) Program Evaluation and Review Technique (PERT) or network diagrams .

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Chapter 3 Module 2

Gantt Chart Example

Critical Success Factors
People Process Technology

Critical Success Factor
1. Senior management commitment 2. Creation of a multi-disciplinary team 3. Objectives definition 4. Interdepartmental integration 5. Communication of the CRM strategy to staff 6. Staff commitment 7. Customer information management 8. Customer service 9. Sales automation 10. Marketing automation 11. Support for operational management 12. Customer contact management 13. Information systems integration

X X X X X X X X X X X X X X X X X X X X X X

Risk Management Plan
 Gartner has identified a number of risks that threaten project success
● management that has little customer understanding or involvement ● rewards and incentives that are tied to old, non-customer objectives ● organizational culture that is not customer-focussed ● limited or no input from the customers ● thinking that technology is the solution ● lack of specifically designed, mutually reinforcing processes; ● poor-quality customer data and information ● little coordination between departmental initiatives and projects ● creation of the CRM team happens last, and the team lacks business staff ● no measures or monitoring of benefits and lack of testing

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Chapter 3 Module 3

CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES

Chapter 3: Planning & Implementing CRM Projects

Module 3

Needs Specs & Partner Selection
 Process engineering  Data review and gap analysis

Needs & Partner

 Initial technology needs specification, and research alternative solutions  Write request for proposals (RFP)  Call for proposals  Revised technology needs identification  Assessment and partner selection

Process Defined
A process is made up of INPUTS and a series of activities that create an expected result or value-added OUTPUT. EXPERT OPINION

Value added

INPUTS

Process

OUTPUT

Knowledge Materials Machines Labor Management Capital

Customer Feedback

Goods or Services

To get a good feel for how ambitious your CRM plans should be first take a be, serious look at your existing CRM processes—the way in which you market to, sell to, and service customers. The better defined your processes are, the greater your chances of success in leveraging CRM technology.
Source: Dickie (2002)

3

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Chapter 3 Module 3

An Example - Getting to Work/School
INPUTS PROCESS OUTPUTS

Go to the bus station

Get on the right bus

Give driver correct change

Take a seat, if available Follow the bus route Get off at 650 Park Avenue Enter office building

©2006 Nancy A. Rauseo

Making Spicy Hot Chocolate

CUSTOMER’S EXPECTED RESULT

SPICY HOT CHOCOLATE 1 cup (8 oz.) milk 1 cup (8 oz.) strong coffee 1 oz. sweetened baker’s chocolate ½ t. cinnamon ACTIONS

EXPERT OPINION

INPUTS

4 drops of Tabasco sauce In a saucepan, combine the first three ingredients. Heat over a low flame, stirring, until the chocolate is melted. Do not allow mix to boil. Remove from heat; add cinnamon and Tabasco. Serve immediately.

“The common denominator of CRM-related business processes is that they should be designed around the customer’s perspective with the ultimate goal of improving the customer’s experience.”

Source: Dyché (2002)

Types of Processes 1
Vertical Process

    

Located entirely within a department or business function One department is involved or affected by the process An example is the ‘facilities maintenance’ process within a company

Horizontal or Cross-Functional Process Crosses over several departments of the company An example is the ‘new product development’ process – almost all functions need to be involved in it

Primary Process

 

Part of core business - has major implications for the customers and company An example is the ‘logistics’ process in a courier company

Secondary Process

Has minor cost or revenue implications

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Chapter 3 Module 3

Types of Processes 2
Front-Office Process

   

Also called customer-facing processes, i.e. those encountered by the customers Example are the ‘complaint management’ or the ‘sales’ processes Usually cross-functional in nature Critical because they directly impact the customer’s perception of service

Back Office Back-Office Process

   

Located behind the scenes or sight of customers Examples are a ‘data quality’ process or ‘management approval’ process Indirectly can impact the customer’s perception of the company May be INPUTS to front-office processes

An Example of Sales Business Processes
Define Segmentation and Coverage Plans
Review Corporate Objectives Determine Segmentation Approach Establish Target Segments Analyse Profitability by Segment Determine Channel Strategy by Segment Map Segments to Territories Determine Resource Requirements by Channel and Territory

Define Territories and Assignment Rules
Define Corporate Territories Define Corporate Assignment Rules Validate Territory Assignment Rules Approve Territories and Assignment Rules Publish Territories and Assignment Rules Realign Sales Force Define Regional Assignment Rules

Manage Pipeline
Review Pipeline Status Prioritise Critical Opportunities Build Action Plan Deploy Resources Monitor and Adjust Plan Coach Team Members

Conduct Sales Financial Planning
Review Corporate Objectives Establish Growth Targets Establish Profit Targets Establish Cost Targets Establish Budget Establish Annual Headcount Plan Plan Sales Force Quotas (Call BP)

Establish Consensus Forecast
Export Forecast Data Perform Demand Planning Conduct Sales and Operations Planning Meeting "Disaggregate" Consensus Forecast Publish Consensus Forecast

Establish Sales Force Policy and Procedures
Establish Pricing Guidelines Establish Contract Guidelines Establish Approval Matrices Establish Documentation Guidelines Audit and Enforce

Order Fulfilment Process

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MAR 4860 Worksheet

Chapter 3 Module 3

Campaign Management Process
Customer phones in Check scores Buy product

No interest

Offer product to high scores 2 Send application form f 7 Out bound phone follow-up 7 Mail follow-up

Open account on phone

42

Check account balance

Do nothing

(numbers are days)

Process Ratings

Best practice (superiority)

The process is substantially defect-free and contributes to CRM performance. Process is superior to comparable competitors and other benchmarks A good process which largely contributes to CRM performance An average process which meets expectations with no major problems but which presents opportunities for improvement The process has identified weaknesses which are being addressed An ineffective and/or inefficient process in need of immediate remedial attention

Parity

Stability

Recoverability

Criticality

Data Review and Gap Analysis
 Customer-related data is used for strategic, operational, analytical and collaborative CRM purposes  Identify the information needed  Identify the information available  Identify the gap  Consider data quality issues

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Chapter 3 Module 3

Initial Technology Needs Specification and Research Alternative Solutions
 Identify applications and functionality that meets business case requirements
● Visit vendor websites ● Join online communities and learn from members ● Visit online CRM exhibitions ● Read case studies ● Join benchmarking group

 Consider build, buy or rent decision
● Consider total cost of ownership

 Most users opt for an on-premise (installed) CRM system or a hosted (online) system.

Segmentation Campaign Mgmt. E-marketing Lead Mgmt. Loyalty Mgmt. Marketing Resource Mgmt. Enterprise Marketing Mgmt. Marketing Performance Mgmt. Partner Marketing Data Mining Performance Mgmt. Dashboards/KPIs Personal Productivity Customer Value Analysis Sales, S i S l Service, W b Web Field Service Analytics In-Line, Event Driven Field Force Optimization Wireless Mobility Parts Planning Contract/Warranty Remote Monitoring Fleet Management Dispatch and Repair Web Storefront Catalog, Pricing Inventory Sales Partner Mgmt.

Marketing

Sales

Sales Force Automation Lead Management Sales Configuration Order Management Pricing Management Sales Compensation Sales Performance Mgmt.

Analytics

CRM Application Mind Map p

Customer Service Field Service Information/ Infrastructure
Customer Data Integration: CDI Product Information Mgmt.: PIM Business Process Mgmt. Business Process Mgmt.

Community Management Service Analytics Desktop Productivity Contact Center/Call Center Workforce Optimization W kf O ti i ti •E-Learning •Workforce Mgmt. •Q/A, Monitoring Self-Service/E-Service •Knowledge Mgmt. •E-Mail Response •Surveys Unified Communications Trouble Ticketing/Case Mgmt. Enterprise Feedback Mgmt.

E-Commerce

Master Data Mgmt.: MDM Enterprise Information Mgmt.

Benefits Claimed for Hosted Solutions
 Costs are fixed and known.
● Companies pay a per-seat monthly fee. If you have 50 users, and the monthly fee is $100 per user, you can expect annual user fees of $60,000.

 Upgrades are performed by the vendor away from the users’ premises.  On-premise implementations, in contrast, can impose significant burdens on in-house IT staff and budgets. g
● There can be upfront investments in IT hardware and infrastructure, software purchase and customization, and training. Implementation costs can be significant.

 User support and software upgrade costs are additional to initial software licence costs.  Essentially, the hosted model converts capital expenditure and fixed costs into variable costs.

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Chapter 3 Module 3

Comparing Costs: On-premise vs. Hosted CRM
Cost item Number of users Application licence/subscription Implementation and customization Training IT infrastructure/hardware IT personnel Support/upgrade costs Year one expenditure On-premise CRM 500 $1,250,000 $6,250,000 $150,000 $500,000 $500,000 $225,000 $8,875,000 Hosted CRM 500 $750,000 $187,000 $75,000 $0 $0 $0 $1,012,500

Sources: Triple Tree; Software & Information Industry Association (SIAA); salesforce.com; Yankee Group. Table originally appeared in eMarketer 2005.

A Request for Proposal (RFP)
 Standards used to evaluate vendors  Typical content listed on pages 87-88  Call for proposals  Revised technology needs identification  Assessment and partner selection

Vendor Evaluation Worksheet
Customer Relationship Management©

CRM Vendor Evaluation Worksheet
Importance is the priority placed on this criteria for the company evaluating the vendor. Use a scale from 1 to 5, with 5 being critical to the company. Vendor Capability is the degree to which the vendor can meet the decision criteria. Use a scale from 1 to 5, 5 being that the vendor fully meets the criteria. Total Points for each vendor are calculated by multiplying the importance of each decision criteria with the vendor capability. These points go in the shaded area. To get the TOTAL POINTS by vendor, add all points in the shaded areas.

Decision Criteria About the Vendor Years of experience with CRM Industry experience Investment in research & strategic technology direction Training & documentation Technical support Management team & project managers TOTAL

Importance

Vendor A

Vendor B

Vendor C

5 4 5 3 5 3

5 4 4 4 3 5

25 16 20 12 15 15 103

5 4 5 5 5 5

25 16 25 15 25 15 121

3 3 3 3 4 2

15 12 15 9 20 6 77

About the Software Price Functional requirements Customizability & flexibility User friendliness Scalability Source code TOTAL

5 5 4 5 4 4

3 3 2 3 4 3

15 15 8 15 16 12 81

5 3 5 5 5 5

25 15 20 25 20 20 125

3 2 2 3 3 4

15 10 8 15 12 16 76

©2007 Nancy A. Rauseo

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MAR 4860 Worksheet

Chapter 3 Module 3

Product Evaluation Worksheet
Customer Relationship Management©

CRM Product Evaluation Worksheet
Importance is the priority placed on this criteria for the company evaluating the vendor. Use a scale from 1 to 5, with 5 being critical to the company. Vendor Capability is the degree to which the vendor can meet the functional requirement. On a scale from 1 to 5, with 5 being that the vendor fully meets the requirement. Total Points for each product are calculated by multiplying the importance of each decision criteria with the product capability. These points go in the shaded area. To get the TOTAL POINTS by product, add all points in the shaded areas.

Functional Requirement Category Contact management Account management Time management Lead management g Sales management Customer contact Customer service Field service Telemarketing/Telesales Marketing Knowledge management Business intelligence Partner relationship management E-Commerce Supply chain management Workflow management Reporting Integration Help functions

Importance 5 5 4 5 5 2 2 2 2 4 5 5 3 3 4 5 4 5 3 4 4 4 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 4

Product A 20 20 16 20 20 8 8 8 8 16 25 25 15 15 20 25 20 25 12 3 4 3 4 3 4 5 3 4 3 3 3 4 4 4 4 3 3 3

Product B 15 20 12 20 15 8 10 6 8 12 15 15 12 12 16 20 12 15 9

Product C 2 3 2 5 4 3 5 4 4 4 3 3 3 2 3 2 3 3 3 10 15 8 25 20 6 10 8 8 16 15 15 9 6 12 10 12 15 9

TOTAL POINTS

326

252

229

©2007 Nancy A. Rauseo

Project Implementation
 Refine project plan
● Consider needs and availability of partner

Implement

 Identify technology customisation needs
● Out-of-the-box rarely fits perfectly O t f th b l fit f tl

 Prototype design, test, modify and roll out
● Risk reduction ● Refinement ● Pilot on a small group of users or customers

Performance Evaluation Project outcomes

Evaluate

● Was the project delivered on time and to budget?

Business outcomes
● Have business goals and specific CRM objectives been achieved? ● Consider time-frame for CRM objectives ● What about the CSFs?

This is a continuous process

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MAR 4860 Lecture Worksheet

Chapter 4 Module 1

CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES

Chapter 4 Developing, Managing and Using CustomerRelated Databases

What are customer-related data?
 Customer-related data is anything pertinent to development and maintenance of customer relationships.  Customer-related data can have a current, past or future perspective, focused on current opportunities, opportunities historic sales o potential opportunities.  Customer-related data might be about individual customers, customer cohorts, customer segments, market segments or entire markets.  Customer-related data might also contain product information, competitor information, or regulatory data. the

What are customer-related data?
Customer Touch Points

Sales

Retail

Direct Mail

Call Center

E-m ail/ Fax

Internet

ATM

Business Processes B i P

Custom er Data
Sales Billing Accounts Receivable Product

Data Data Warehouse Warehouse
©2007 Nancy A. Rauseo

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MAR 4860 Lecture Worksheet

Chapter 4 Module 1

CRM Integration
Global Customers Customer Touch Points      Front Office Functions Marketing Management Order Processing Sales Management Pricing Service & Support       Back Office Functions Receivables Payables Production Planning Inventory Management Shipping & Receiving Payroll

Consumers Businesses Partners Suppliers

Electronic Touch Points  Internet  E-mail  Call center  Voice Response Systems  Kiosks

Traditional Touch Points  Retail stores  Mail  Service departments
©2007 Nancy A. Rauseo

CRM Software

ERP/ Data Warehouse

Database structures 1

Department

Offers

Course

EXPERT OPINION

Belongs to

Has

Teaches Professor Section

Is registered in Student

Has

Office

Possible Data Attributes: Student ID Name Address Birth date Phone Gender Social security number

Entity-relationship diagrams are used to identify the entity types in a situation and t visually it ti d to i ll display the relationships between them. They help create a shared understanding of the basic structure of a system.
Source: Alter (2002)

©2007 Nancy A. Rauseo

Database structures 2

©2007 Nancy A. Rauseo

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Chapter 4 Module 1

Steps to building a customer –related database
1. Define the database functions

2. Define the information requirements

3. Identify the information sources 3 4. Select the database technology and hardware platform

5. Populate the database

6. Maintain the database

Database functions
 Database functions are defined by the CRM-related purposes for which data are acquired, enhanced, stored, distributed and used.  Databases support all types of CRM: Strategic, Operational, Analytical and Collaborative.  Operational CRM uses customer-related data to help in the everyday management of customers.  Analytical CRM uses customer-related data to support sales, marketing, and service decisions.

OLTP and OLAP databases
 Operational data resides in an OLTP (online transaction processing) database.  OLTP data needs to be very accurate and up-to-date.  Analytical data resides in an OLAP (online analytical processing) database.  The information in the OLAP database is normally a summarised extract of the OLTP database, enough to perform the analytical tasks. The analytical database might also draw in data from a number of internal and external sources.

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MAR 4860 Lecture Worksheet

Chapter 4 Module 1

Define the information requirements
 Based on CRM vision  Answers the question: ‘what information do I need about the customer?’  Best people to answer the question are those who interact with, or communicate with, customers for sales, marketing and service purposes, and those who have to make strategic CRM decisions.  Many packaged CRM software applications come with industry-specific data models.

Define the information requirements
 Customer information fields  Contact data  Contact history  Transactional history  Current pipeline  Opportunities  Products  Communication preferences  Service history

Customer identification
 This unique identifier is a MUST!  Allows linkages to be made between several customer-related
databases (e.g. transactional, product and service databases)

 Customer records can be linked in 3 ways: One-to-one. Each record in one database can be linked to
one other record in another database.

One-to-many. Each record in one database can be linked to
many records in another database

Many-to-many. Each record in one database can be linked
to many records in another database, and each record in that database can, in turn, be linked to many records in the first.

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MAR 4860 Lecture Worksheet

Chapter 4 Module 1

Identify internal information sources

Data Sources

1

Data Collection System

2

Data Warehouse System

Internal Sources
External Sources Customer Touch Points
3 Information Delivery Systems Information Usage

Identify external information sources

Data Sources

1

Data Collection System

2

Data Warehouse System

Internal Sources

External Sources
Customer Touch Points

3

Information Delivery Systems

Information Usage

Data collection system
1
Data Sources

Data Collection System

Hardware & Software Applications

2 Data Warehouse System

3

Information Delivery Systems

Information Usage

©2007 Nancy A. Rauseo

Module 6 Unit 1: Basics of CRM Technology

15

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MAR 4860 Lecture Worksheet

Chapter 4 Module 1

Data warehouse system
1 Data Sources

Data Collection System

Hardware & Software Applications

2

Data Warehouse System

3

Information Delivery Systems

Information Usage

Data management
1 Data Sources

Data Collection System

Hardware & Software Applications

   

DBMS Data Clean-Up & Transformation Data Mining Data Accessibility

2
Data Warehouse System

3

Information Delivery Systems

Information Usage

Understanding analytical data

CRM Transactions (OLTP)

Data from other systems CRM Analytics (OLAP) Other Data

     

Differentiation by customer value Customer satisfaction Next purchase Propensity to buy Partner contribution Web activity

     

Differentiation by needs Supplier evaluation Campaign success Sales activity Segmentation Customer profiling

      

Risk scoring Prospecting Propensity to buy Revenue Sales volumes Brands Profitability

©2007 Nancy A. Rauseo

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MAR 4860 Lecture Worksheet

Chapter 4 Module 1

Data warehousing & reporting

Data Warehousing

Analytical Applications

Information I f ti Delivery & Reporting

Data Mining Clustering Knowledge Discovery

©2007 Nancy A. Rauseo

19

Analytical applications

Data Warehousing

Analytical Applications

Information I f ti Delivery & Reporting

Data Mining Clustering Knowledge Discovery

©2007 Nancy A. Rauseo

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MAR 4860 Lecture Worksheet

Chapter 5, Module 1

CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES

Chapter 5: Customer Portfolio Management

Module 1

Chapter Objectives
 Understand the benefits that result from differentiating customers and managing them as a portfolio.  Explain a number of disciplines that contribute to customer portfolio management:
    market segmentation, sales forecasting, life-time value estimation, and data-mining.

 Be familiar with some portfolio management tools.  Explain how customer portfolio management differs between B2C and B2B contexts.  Apply the range of customer management strategies that can be deployed across a customer portfolio

Why Differentiate Customers?
 To treat each customer differently is the essence of CRM  Different customers have different needs  Different customers represent different values to the company  Customer value is future oriented  Actual value – what the customer is worth today  Potential value – what the customer could be worth  Customer differentiation helps an enterprise increase customers’ actual value and realize customers’ potential value  Differentiation goes beyond traditional marketing segmentation

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MAR 4860 Lecture Worksheet

Chapter 5, Module 1

Customer Portfolio Management
 A customer portfolio is a classification of customers different groups that are then managed on a portfolio, or collective, basis.  It is the collection of mutually exclusive customer groups that comprise a business’s entire customer base.  C t Customer P tf li Management (CPM) aims t optimize Portfolio M t i to ti i business performance – whether that means sales growth, enhanced customer profitability, or something else - across the entire customer base.  CPM does this by offering differentiated value propositions to different segments of customers.  Basic CPM disciplines are: market segmentation, sales forecasting, activity-based costing, customer life-time value estimation, and data-mining. into

Segmentation & Clustering
No Segmentation Mass Marketing Market Segmentation Custom Marketing

Standard Offering Low Cost per Customer

1 to 1 Marketing Tailored Offering Higher Cost per Customer

Segmentation Processes
Intuitive • Brain-storm segmentation variables
 Age, gender, life-style  SIC, size, location

Data-based • Obtain customer data
 Internal and external

• Analyze customer data • Identify high/medium/low value customer segments • Profile customers within segments
 age, gender, life-style  SIC, size, location

• Produce word profiles word-profiles • Compute sizes of segments • Assess company/segment fit • Make targeting decision
 one/several/all segments?

• Assess company/segment fit • Make targeting decision
 one/several/all segments?

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MAR 4860 Lecture Worksheet

Chapter 5, Module 1

Five Step Process of Market Segmentation
1. Identify the business you are in (Module 1) 2. Identify relevant segmentation variables (Module 1) 3. Analyze the market using these variables (Module 1) 4. Assess the value of the market segments (Module 2) 5. Select target market(s) to serve (Module 2)

Criteria for Consumer Segmentation
Geographic Domestic/foreign/global, regions, zip codes, population density, country, region, TV region, city, city size, post-code, residential neighborhood Age, gender, occupational status, household size, marital status, terminal educational age, household income, stage of family lifecycle, religion, ethnic origin, nationality

Demographic

Lifestyles/ Psychographics Behavioral Patterns Transactional Data Analytically Derived

Activities/ sports, values, opinions, views Benefits sought, service required, loyalty, permission granted Interaction information, likelihood of certain behaviors, propensity to buy, Data mining

Criteria for Business Market Segmentation

Type of Business SIC Size

Manufacturer, service provider, government agency, nonprofit, wholesaler, distributor, merchant, retailer Standard Industry Classification for categorizing goods and services produced Large, medium or small; Based on number of employees, number of customers and/or profit or revenues Sealed bidding, centralized, decentralized, vendor analysis, negotiated contracts, internet auctions Product quality, price, customizations, just-in-time, service support pre- and post-sales World region, climate zone, trading block, country, country regions, state, province, county, city, suburb, city block, town, village

Buying Process Buying Criteria

Geographic

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MAR 4860 Lecture Worksheet

Chapter 5, Module 1

Segmentation Basics
EXPERT OPINION

WHO

Demographic Customer Information

WHAT

Behavioral and Transactional Customer Information

The value of demographics has begun to wear out. Demographic data must be combined with behavioral and attitudinal data to get the most accurate view of consumers, but it is still a necessary foundation for marketers to build on. Check out the link below for an article on segmentation using population generations: Y Me, X Ways, Wild & Crazy and Elder Effect.
http://www.destinationcrm.com/print/d efault.asp?ArticleID=6463

WHY

Attitudinal and Motivational Customer Information

Source: Bailor, Beasty, Lager & Sebor (2006)

Bivariate Segmentation Example

Gifts Family sharing Take home Eat now
Hunger
Source: Mintel 1998
Functional 40% Later sharing 30%

Planned 10%

Usage

Emotional need 20%

Light snacking

Indulgence

Satisfaction

Benefits/Feature Segmentation

©2006 Dickson & Rauseo

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MAR 4860 Lecture Worksheet

Chapter 5, Module 1

Channel Segmentation 1

©2006 Dickson & Rauseo

Channel Segmentation 2

EXPERT OPINION

The value of segments matters. Every company needs a process to modify it t ti as customers dif its tactics t move within and across segments. Segment 1 Segment 2 For more, read this article:
http://www.destinationcrm.com/print/d efault.asp?ArticleID=6101

Segment 3

Segment 4

Segment 5

Source: Collins, Dahlstrom, and Singer (2006)

©2006 Dickson & Rauseo

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MAR 4860 Lecture Worksheet

Chapter 5, Module 2

CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES

Chapter 5: Customer Portfolio Management Module 2

The 3-D Customer Focus Approach
2
Customer Choice

Drivers & Desired Features How is the product or service used? What features influence choice? Differentiators What features should be focused on to distinguish products?

1

Customer Profitability

Actual value What is the customer worth today? Potential value What could the customer be worth?

3

Customer Contact

Preferences What are the desired contact, communication, selling, financial and distribution channels?

Stages of 3-D Customer Focus

Step 1. Capture customer purchase histories Step 2. Analyze customer profitability Step 3 Profile benefit segment customers 3. Step 4. Understand customer usage Step 5. Analyze contact channel sub segmentation

EXPERT OPINION

As a business strategy, market segmentation is organizing a business around t b i d targeted t d segments and their product, service and purchase method preferences. The goal is to develop private information that creates a customer focus competitive advantage.
Source: Dickson (2006)

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MAR 4860 Lecture Worksheet

Chapter 5, Module 2

Segmentation Based on Loyalty & Profitability

H High Profitability

Butterflies
 Good fit between company’s offerings and customer’s needs  Profitable but disloyal  High profit potential

True Friends
 Good fit between company’s offerings and customer’s needs  Highest profit potential

EXPERT OPINION

Low Profitability

Strangers
 Little fit between company’s offerings and customer’s needs  Lowest profit potential Short-Term Customers

Barnacles
 Limited fit between company’s offerings and customer’s needs  Low profit potential Long-Term Customers

“When profitability and loyalty are considered at the y y same time, it is clear that different customers require different interactions.”
Source: Reinartz & Kumar (2002)

Segmentation Based on Value
Most Valuable Customers (MVC)

          

Highest actual value to the company Yield the highest profit margins and most willing to cooperate Objective is retention The most growth potential Growth can be realized through cross-selling, increasing length of relationship changing customer behaviors and/or operating relationship, behaviors, more cost effectively Objective is growth Generate less revenue than cost-to-serve Highly unlikely to show positive net value Objective is motivation or churning them out Linger between being profitable and having some growth Objective is to shift to MGC and get them to show their “true colors”

EXPERT OPINION

Most Growable Customers (MGC) “The goal of value differentiation is not a historical d t di hi t i l understanding, b t a but predictive plan of action.”
Source: Peppers & Rogers (2004)

Below-Zero Customers (BZ)

Migrators

Ladder of Loyalty
Partners Take responsibility for the continuing success of the relationship. High profitability. Apostles Exhibit a high degree of loyalty while convincing prospects to do business with your Company. High profitability. Sponsors Demonstrate loyalty while telling others of ti f ti d ti Company. Hi h High satisfaction and supporting your C profitability. Loyalists Devote a large “share of wallet” to repeat business. Mid- to high profitability. Butterflies Get as much as, or more than, what was expected. Mid- to low profitability. Adversaries Not getting what was expected. Low profitability.

High

Prisoners

Partners

Apostles

Level of Loy yalty

p Sponsors Loyalists

Butterflies

Low Adversaries Low High

Level of Satisfaction

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MAR 4860 Lecture Worksheet

Chapter 5, Module 2

Step 1 – Capture Customer Purchase Histories 1

Centura Banks Inc. (now owned by Royal Bank of Canada) rates its customers
on a profitability scale from 1 to 5. The real moneymakers get calls from service reps several times a year for what the controller calls “a friendly chat” and even an annual call from the CEO to wish them happy holidays. No wonder attrition in this group is down by 50% since 1996, while the percentage of unprofitable customers has slipped to 21% from 27%.
Source: Brady (2000)

Step 1 – Capture Customer Purchase Histories 2

For the last decade, has identified the 10% of its customers who are its top buyers. These “Gold Crown” customers are provided with a special toll-free number, are sent elaborate, premium mailings, free cards that introduce new lines. These 10% make up 45% of total store sales and have helped Hallmark grow its sales, profits and shareholder value.  Source: Newell (2000)

Hallmark

Step 2 – Analyze Customer Profitability 1

Key Capabilities
Most Profitable Customers More Resources RESOURCE ALLOCATION CUSTOMER PROFITABILITY

Least Profitable Customers

Less Resources

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MAR 4860 Lecture Worksheet

Chapter 5, Module 2

Step 2 – Analyze Customer Profitability 2

“By being one of the first in the industry to use data mining to enhance its y g y g relationships with its customers, Harrah’s has been able to keep ahead of its competitors and this has definitely improved its bottom line. As one data mining tools provider says: imagine being able to project a customer's likely future activity on the day they sign up for membership. This allows you to market to them based on their potential (as opposed to their history) - an important aspect of gaining "wallet share" from the best customers. This concept is fundamental to the success of Harrah's customer marketing efforts. They even offer tools to answer questions such as who are their customers. Where do they come from? How often do they visit? What is the true value of their customers? What contribution did a recent star headliner in their theatre make? What was the true effectiveness of their last mail campaign? The list is as big as the imagination of the organization asking the questions.”
Source: Meltzer (2004) http://www.dmreview.com/editorial/dmreview/print_action.cfm?articleId=1011392

Step 2 – Analyze Customer Profitability 3

Closed Loop Marketing
PREDICT
Step 1

EXPERT OPINION
STEP 1 – Harrah’s tracks guest behavior and make predictions about the value of the guest. STEP 2 – Harrah’s uses predictions to segment offerings.

Ste p5

2 Step

ANALYZE

SEGMENT

CLOSED LOOP MARKETING

STEP 3 - Harrah’s markets to guests based on expected value. STEP 4 – Guest reacts to offer.

ACT/REACT

ep St

3

MARKET

STEP 5 – Harrah’s analyzes the guest reactions and uses that analysis and new observed behavior to make new predictions.
Source: Pashko (2005)

Step 2 – Analyze Customer Profitability 4

Grouping Profitable and Unprofitable Customers
EXPERT OPINION 1. 2. Select a major customer based on wisdom. Determine annual contributions, both quantitative (sales) and qualitative (referrals, leads, etc.). ( f l l d t ) Collect transaction and financial history on products purchased, number and nature of contacts, sales calls, service calls, consulting, special discounts, payment terms, etc. Cost each activity based on allocation of resources. Compute actual profitability or value. In the late 1990s, Fidelity Investments contacted 25,000 high cost “serial” callers who were told they must use the company website or the automated call system for account and price information. When they called in the future, they were routed to a special representative who directed them back to the automated system.
Source: Brady (2000)

3.

4. 5.

St ep 4

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MAR 4860 Lecture Worksheet

Chapter 5, Module 2

Step 3 – Profile Benefit Segment Customers 1
Who are our customers?  Unique customer identifier  Customer name  Name of organization for which the customer works  Title, role in organization, or other designation Where can the customer be reached?  Home address  Business address  Phone number  E-mail address  Fax number What is the history of interactions?  Outbound marketing promotions  Outbound sales contact history  Inbound customer-initiated queries How do customers prefer to interact?  Media preference  Channel preference  Opt-in or opt-out for any media or specific communications

EXPERT OPINION
The deeper the customer profiling, the more you know your customers and (potentially) the more you will understand them to create a very important competitive capability and advantage over rivals who do not understand their customers as well. Superior information about your customers and their profit potential, and how to trade with them is vital private information that earns economic rents to the possessor.

What is the customer’s purchase behavior?  Purchase dates  Number of transactions  Items  Prices  Channels utilized  Sales versus non-sale purchases  Returns  Exchanges

Step 3 – Profile Benefit Segment Customers 2

What are our customers’ key characteristics? Consumer (B2C)  Gender  Age  Household size  Estimated income P Presence of children f hild  Segment classifications Business (B2B)  Industry classification  Number of employees  Annual revenues  Number of locations  Role of individual in purchase process

What is the customer’s value to our organization?  Revenue to date  Profitability to date  Estimated lifetime value  Estimated share of wallet  Estimated probability of response to specific promotions ifi ti  Estimated probability of specific purchases  Estimated probability of attrition  Estimated probability of nonpayment or bad debt Benchmarks  Standards  Industry performance  Points of comparison

What are your customers’ needs? needs?  Reasons for buying  Impulse purchases  ‘In order to’ purchases  Problem information  Experiences sought What are is the customer’s expectations? expectations?  Customer’s predictions  What is ideal?  What is desired?  What is deserved?  What is needed?  What is the minimum tolerance level?  Zone of indifference  Influences

Step 3 – Profile Benefit Segment Customers 3
Profitable Cluster 3 • Profit history • Purchase mix • Primary channelCluster 2 Profitable • Feature focus • Service focus • Profit history • Income • Purchase • Age/gender mix • Primary channel • InterestsProfitable Cluster 1 & goals • Feature focus • Situation drivers • Service focus • Profit history • Income • Purchase mix • Age/gender • Primary channel • Interests & goals • Feature focus • Situation drivers • Service focus • Income • Age/gender • Interests & goals • Situation drivers

Unprofitable Cluster 3 • Profit history • Purchase mix • Primary channel Unprofitable Cluster 2 • Feature focus • Service focus • Profit history • Income • Purchase mix • Age/gender channel • Primary • InterestsUnprofitable Cluster 1 & goals • Feature focus • Situation drivers • Service focus • Profit history • Income • Purchase mix • Age/gender • Primary channel • Interests & goals • Feature focus • Situation drivers • Service focus • Income • Age/gender • Interests & goals • Situation drivers

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MAR 4860 Lecture Worksheet

Chapter 5, Module 2

Step 3 – Profile Benefit Segment Customers 4
Nokia’s Clusters or Segments APPLICATION 1. Basic low-income consumers: want a no frills and a very inexpensive phone. 2. Expression consumers: young consumers who want to customize their phone. 3. 3 Active consumers: want a rugged, tough phone with rugged outdoor features. 4. Classic consumers: want a traditional phone with some features. 5. Fashion consumers: want ever thinner, ever small, ever more stylish phones. 6. Premium consumers: want all the latest features and services. Nokia
Nokia’s future success depends on delivering great experiences to our customers by creating y g products and solutions that work seamlessly and are appealing. Our strategy contains the core elements required to accomplish this, and is optimized for tapping into the mobile industry’s global growth potential as it unfolds.
http://www.nokia.com/A4126317

Step 4 – Understand Customer Usage 1

APPLICATION

Applebee’s
Usage linked to geographical g g g p area and community characteristics.

http://www.applebees.com/

Step 4 – Understand Customer Usage 2

APPLICATION

P&G
Usage of Tide laundry detergent linked to cleaning power and the needs of working and you ng families.

http://www.pg.com/

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MAR 4860 Lecture Worksheet

Chapter 5, Module 2

Step 4 – Understand Customer Usage 3
Customer Profitability Analysis

Analysis of Product Features Purchased & Benefits Desired

Usage Observation

User Differences Income Life cycle stages Lifestyle & interests

Situation Differences Physical surroundings Social context Psychological view

Step 5 - Analyze Contact Channel Sub-Segmentation

Product Features/ Benefits Product Line Product Models Product

Needs Motivation Experience Convenience Influences

Customer Data Demographic Behavioral Attitudinal

External Competitive information Industry analysis Legal & regulatory Technology

Customer Profitability
CHANNEL #1 CHANNEL #2

SubSegment #1

SubSegment #2

SubSegment #3

SubSegment #1

SubSegment #2

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MAR 4860 CRM Lecture Worksheet

Chapter 6 Module 1

Customer Relationship Management Customer Experience Management
Customer experience management (CEM) is emerging as a means of leveraging CRM in order to create and manage interactions that improve the customer’s experience with the company. The impact of not managing customer experiences can result in significant revenue losses for any company. CEM is not separate or distinct from CRM; it is part of a CRM strategy. In this chapter, we will start off by defining CEM, the key components of a customer experience and the financial impact of not addressing CEM. We will p g also look at techniques and tools for mapping and analyzing experiences and then identifying improvements. The goal is to put systems in place to continuously capture customer information and use it to make experiences more valuable to customers.
©2010 Nancy A. Rauseo CRM and the Customer Experience

EXPERT OPINION
According to the most recent research by IBM, decision makers stated that ensuring promises and improving the total customer experience was the top concern. To drive sustainable, profitable organic growth and competitive differentiation, organizations must better integrate and align the way they treat customers with their go-to-market strategy and branding at each touch point of the relationship.
Source: Heffernan & LaValle (2006)

1

Customer Relationship Management Industry Definitions of CEM
CEM means managing customer interactions to build brand equity and long-term profitability.
Bob Thompson

APPLICATION Companies are beginning to realize what CRM really means. It’s becoming obvious that no matter what technologies are at work, transforming transactions to experiences is the key to strengthen relationships.
Source: Glagowski (2006) Starbuck, Mercedes, P&G Reveal Secret Sauce http://www.1to1media.com/Print View.aspx?DocID=29500

Customer experience is what the customer receives at every touch point through processes, products and people.
Shaun Smith

The provisional disposition a person has about your company based on all the information in his or her environment, and their interactions with you and your competitors, plus their reflections on what this means to them.
Paul Ward

It’s a matter of understanding and living our customer’s reality which is usually quite different from ours, and adapting ours to theirs.
Rafael Rodriguez

©2010 Nancy A. Rauseo

CRM and the Customer Experience

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MAR 4860 CRM Lecture Worksheet

Chapter 6 Module 1

Customer Relationship Management CRM and CEM: What’s the Connection?
In math, the term subset is used to describe the relation, called inclusion, of one set being contained i id another set. I f i d inside h Informally, every ll element belonging to subset A also belongs to superset B, but there may be elements belonging to B that do not belong to A.
EXPERT OPINION

The Human Touch

CRM CEM

Managing customer experiences is an integral part of what CRM should be – a win-win value exchange between a company and its customers. Loyal customer relationships are built on what the customer perceives and feels about the product/service purchased and interactions with the organization.
Source: Thompson (2006)

©2010 Nancy A. Rauseo

CRM and the Customer Experience

3

Customer Relationship Management CRM and CEM: What’s the Connection?
Left Brain Right Brain

CRM
Value of Customer to Company Focus on Systems & Transaction Functional Value

CEM
Value of Company to Customer Focus on People & Interactions Emotional Value

EXPERT OPINION

For details, read the article by Bob Thompson titled Customer Experience Management: Accelerating Business Performance, found under the Tools link.

Adapted from Customer Experience Management: Accelerating Business Performance by Bob Thompson

©2010 Nancy A. Rauseo

CRM and the Customer Experience

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MAR 4860 CRM Lecture Worksheet

Chapter 6 Module 1

Customer Relationship Management The Customer Experience Model

Sales

Retail

Phone

Call Center

E-mail/ Fax/ Mail

Internet

ATM

Customer Experiences
Customer Intelligence Customer Information
Company Contacts

Process Improvement

CRM Data Warehouse
Billing

Accounts Receivable

Product

Customer Feedback
©2010 Nancy A. Rauseo 5

Customer Relationship Management Three States of an Experience
EXPECTATIONS

+

EXPERIENCE

=

EXPERIENCE EVALUATION

• Spoken Promises • Perceived Alternatives • Unspoken Promises • Past Experiences • Personal Values • Personal Needs • Word of Mouth

• Outcomes • Processes

Expectations Exceeded Expectations Met Expectations Not Met

WOW! OK AWFUL

©2010 Nancy A. Rauseo

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MAR 4860 CRM Lecture Worksheet

Chapter 6 Module 1

Customer Relationship Management Marketing’s Roles in CEM
From the Traditional 4Ps of Marketing~  Product or Service    Price Place Promotion
EXPERT OPINION

To the 5Cs of Relationship Marketing~      Customer Needs Cost to Customer Convenience Communication

+

  

Processes People Physical Environment

According to recent surveys, 85% of senior business leaders agree that traditional differentiators alone are no longer a sustainable business strategy. About 71% believe that customer experience is the next corporate battlefield. battlefield
Source: Shaw & Ivens (2005)

Connection (Interactions)

©2010 Nancy A. Rauseo

CRM and the Customer Experience

7

Customer Relationship Management Economic Impact of Negative Customer Experience
Source: Hasan (2005)

©2010 Nancy A. Rauseo

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MAR 4860 CRM Lecture Worksheet

Chapter 6 Module 1

Customer Relationship Management CEM Versus CRM Revisited
CEM
What It Does Captures & distributes what the customer thinks about the company At customer interactions or touch points Surveys, observations, VOC studies & analyses t di l

CRM
Captures & distributes what the company knows about the customer After record of the customer interaction

EXPERT OPINION Having spent millions of dollars on CRM software, many CEOs consider their problem to be not a lack of customer information but a superfluity of it. Before investing more time and money, executives justifiably want to know how customer experience data are different and what their value is.
Source: Meyer and Schwager (2007)

When It’s Used

How It’s Monitored

Transactional data, market research, automated t ki of t t d tracking f sales, service & support data Owners of customerfacing processes

Who Uses It

Business/functional leaders

©2010 Nancy A. Rauseo

CRM and the Customer Experience

9

Customer Relationship Management Voice of Customer Revisited
REFLECTION

Definition f

 Disciplined approach  Aids in identifying,

understanding and prioritizing customer needs communication with customers for CRM

 Improves

 Serves as foundation

©2010 Nancy A. Rauseo

CRM and the Customer Experience

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MAR 4860 CRM Lecture Worksheet

Chapter 6 Module 1

Customer Relationship Management Experience Analysis Process
1. Make a list of all your customer voices or customer
groups APPLICATION

2. Find the sources of customer feedback per group 3. Design the actual VOC strategy: survey, interviews, etc. 4. Implement the VOC strategy 5. Organize the results of the VOC: your interview notes,
requirements documents, market research, survey results, etc. opportunities. opportunities Krispy Kreme captures data from a number of sources. ‘Instead of looking just at quantitative sales measures, we established measures through mystery shoppers and our own internal inspections as well as li it ti f ff i solicitation of off-premises customers through surveys.’
Source: Smith & Wheeler (2002)

6. Identify unstated or unspoken customer needs or 7. Prioritize your customer experience improvement
opportunities using the Customer Experience Segmentation matrix

8. Use process mapping & other techniques to blueprint

desired CRM experiences or improvement opportunities.

©2010 Nancy A. Rauseo

CRM and the Customer Experience

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Customer Relationship Management Application of Experience Analysis Process
APPLICATION

UPS Ranks #1 on Reputational Attributes In the annual survey conducted by Harris Interactive®, UPS ranks #1 for people's "trust in the company to do the right thing, excellent customer service, and sincerity of communications." To learn more about the survey results, results click below:
http://www.pressroom.ups.com/mediak its/factsheet/0,1889,1388,00.htm

©2010 Nancy A. Rauseo

CRM and the Customer Experience

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MAR 4860 CRM Lecture Worksheet

Chapter 6 Module 1

Customer Relationship Management Organizing the Voice of Customer Results
Affinity Diagram

For more tools and techniques, visit: http://www.asq.org/learn-about-quality/idea-creation-tools/overview/affinity.html
©2010 Nancy A. Rauseo 13

Customer Relationship Management Customer Experience Segmentation

©2010 Nancy A. Rauseo

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MAR 4860 CRM Lecture Worksheet

Chapter 6 Module 1

Customer Relationship Management Customer Experience Blueprint

©2010 Nancy A. Rauseo

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Customer Relationship Management Touch Point Mapping
 Experience from the customer’s eyes  C t Captures th f li the feelings, actions, and ti d
expectations of customers
Tangibles Support Systems Back-End Processes
Customer Relationship Management©

Customer Touch Point Map
Customer Group Internal Function/ Process Customers Using Door-to-Door Services Delivery Opportunity Category Responsiveness Pick-Up Request

Touch Points

What are customers seeing, feeling, and doing?

What do customers want to see, feel, and do?

Florida International University

CERTIFICATE PROGRAM

©2010 Nancy A. Rauseo

Touch Points

Custom mer Proces sses

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MAR 4860 CRM Lecture Worksheet

Chapter 6 Module 1

Customer Relationship Management Touch Point Map
Customer Group Internal Function/ Process Customers Using Door-to-Door Services Delivery Opportunity Category Responsiveness Pick-Up Request

Touch Points
Calls 1-800 service number

What are customers seeing, feeling, and doing?
Pick up the phone, dial the toll free number and wait for a live person to answer

What do customers want to see, feel, feel and do?
Get a live person on the first try

Gets placed in automated voice response system

Gets frustrated when he/she receives an automated system and has to wait so long

Get a live person on the first try

Waits up to 3 minutes before service rep answers

Gets frustrated and sometimes hangs up

Provides destination information

Greets service rep and feels pressured to talk quickly. Has to repeat information. Feels like rep is not listening.

p greeting and apology for g p gy Expects a nice g long wait. Say information only once.

Provides timeline for delivery

Tells service rep when package needs to be picked up (availability) and when it needs to arrive at final destination

Wants pick-up to be convenient. Doesn’t want to ask for time off at work. Can’t leave outside.

Makes note of service request # and hangs up

Writes down service number, confirms pick-up & delivery information

Expects a nice greeting and thank you for service. Wants assurance that timelines will be adhered to.

©2010 Nancy A. Rauseo

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Customer Relationship Management Customer Experience Map

OPPORTUNITY FOR DELIGHT - Eliminate this customer action COMPANY Core Actions (Improvements) •Identify first time vs. repeat customers •Eliminate automated voice response for new customers •Answer within 3 rings •Friendly and courteous greeting – “Thanks g py for waiting. How can I help you?”

• Capture information in central database • Confirm information • Electronically route request to drivers

• Asks if there is anything more the company can do • Provides customer with a tracking number and a tollfree # or website for status follow-up • Thanks customer for business • CRM operational system • Fully integrated with other channels

COMPANY Enablers

• Modifications to automated system • Staff for volume • Trained/skilled staff

• CRM operational system • Trained/skilled staff

©2010 Nancy A. Rauseo

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MAR 4860 CRM Lecture Worksheet

Chapter 6 Module 1

Customer Relationship Management Example of Experience Maps

http://engage.comms.gov.uk/knowledge-bank/insight/customer-journey-mapping/mapping-customer-experience.html

©2010 Nancy A. Rauseo

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Customer Relationship Management

©2010 Nancy A. Rauseo

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MAR 4860 - Chapter 7 Module 1

10/15/2010

MAR 4860
Customer Relationship Management CHAPTER 7: Creating Value for Customers Module 1: Value Concepts

©2010 Dr. Nancy A. Rauseo

1

Chapter Objectives
       The meaning of the term ‘value’ How customers weigh up ‘benefits’ and ‘sacrifices’ in the value equation Three major forms of value delivery strategy adopted by successful companies What is meant by the term ‘value proposition’ How marketers create customer value by mixing together a number of variables known as the 7Ps. The importance of customization in creating value How the Internet is changing the way that customers receive value from communication and distribution.

©2010 Dr. Nancy A. Rauseo

2

Customer Value Defined
Value is the customer’s perception of the balance between benefits received and sacrifices (or costs) made to experience those benefits. Value is the achievement of a customer’s requirements at the lowest total cost of acquisition, ownership and use. Perceived Value = Perceived Benefits / Perceived Costs* * Also use ‘Sacrifices’
 For some customers, value equates to low price  For others, it is having their particular requirements met  For another group, quality is the dominant concern.

©2010 Dr. Nancy A. Rauseo

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MAR 4860 - Chapter 7 Module 1

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How Do Customers Reduce Perceived Risk?
 Delay purchase  Seek word-of-mouth endorsement  Negotiate service contracts  Seek additional information from advertising copy  Buy known brands  Deal with reputable suppliers  Seek performance guarantees  Buy with credit card (protection if product fails)  Negotiate discounts  Take out insurance  Demand pre-purchase trial

©2010 Dr. Nancy A. Rauseo

Total Cost of Ownership (TCO)
TCO looks not only at the costs of acquiring products, but also the full costs of using, and servicing the product throughout its life, and ultimately disposing of the product.  Cost are incurred in the following p processes: search, p , purchase, ownership, , p, use, consumption, disposal.  TCO is an attempt to come up with meaningful estimates of lifetime costs across all these processes Suppliers can respond to TCO purchasing processes by applying Economic Value to the Customer (EVC) pricing.
©2010 Dr. Nancy A. Rauseo

Sources of Customer Value
The Best Product
Product Leadership

The Best Total Cost
Operational Excellence

The Best Total Solution
Customer Intimacy

Source: Treacy and Wiersema (1995)

©2010 Dr. Nancy A. Rauseo

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MAR 4860 - Chapter 7 Module 1

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Sources of Customer Value: Marketing Mix
The sources of customer value are based on the marketing mix or 4Ps. A key component of CRM is also the services that accompany any product. Therefore, there are 7 sources of value for services marketing are:

• Product or Services • Price • Promotion • Place • People (or participants) • Physical evidence • Process (or interaction)

©2010 Dr. Nancy A. Rauseo

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Components of CEM

©2010 Dr. Nancy A. Rauseo

8

Customization
EXPERT OPINION
Component A

Base Product/ Service

Component B

+
Component C

=

Mass customization is the use of flexible processes and organizational structures to create varied and even individually tailored value propositions, at the same cost as mass-produced, standardized offers. Custom Configuration
Source: Peppers & Rogers (2004)

Component D

©2010 Dr. Nancy A. Rauseo

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MAR 4860 - Chapter 7 Module 1

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Mass Production vs. Mass Customization
Mass Production
Supply Chain Focus Goal: Economies of Scale Production to Sales Forecast Speculative Shipping Costs Inventory Carrying Costs

Mass Customization
Demand Chain Focus Goal: Economies of Scope Production to Order Goods Pre-sold Before Shipping Just-in-Time Inventory

©2010 Dr. Nancy A. Rauseo

10

Mass Customization – How It Works

1 MODULES
Interest Rates Annual Fees Card Designs

2 OPTIONS

10

5

20

3 CUSTOMER SEGMENTS 4 OFFERINGS
Configuration #1 Configuration #1 Configuration #1

©2010 Dr. Nancy A. Rauseo

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Mass Customization Examples

©2010 Dr. Nancy A. Rauseo

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MAR 4860 - Chapter 7 Module 1

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Customer Turnoffs
 Value  System or Process  People

©2010 Dr. Nancy A. Rauseo

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MAR 4860 Chapter 7, Module 2

10/15/2010

MAR 4860
Customer Relationship Management CHAPTER 7 - Creating Value for Customers Module 2: Value From Products & Services

©2010 Dr. Nancy A. Rauseo

Value From Products & Services

 Product innovation  Additional benefits  Product-service bundling  Branding  Product synergies

©2010 Dr. Nancy A. Rauseo

Dimensions of Service Quality (SERVQUAL)
Also called the RRATE ~ Reliability • Ability to perform the promised service dependably and accurately Assurance • Knowledge and courtesy of employees and their ability to convey trust and confidence Tangibles • Appearance of physical facilities, equipment, personnel and communication materials Empathy • Provision of caring, individualised attention to customers Responsiveness • Willingness to help customers and to provide prompt service
©2010 Dr. Nancy A. Rauseo

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The SERVQUAL GAPS Model
Word of Mouth Communications Personal Needs Past Experiences

Expected Service The Customer Gap GAP 5 Perceived Service

GAP 1 GAP 3

Service Delivery GAP 4

External Communications to Customers

Translation of Perceptions Into Service Quality Specifications GAP 2 Management Perceptions of Customer Expectations

©2010 Dr. Nancy A. Rauseo

Factors Leading to GAP 1
Customer Expectations

GAP 1

   

Inadequate or lack of marketing research and customer focus q g Lack of upward communications Insufficient relationship focus Inadequate experience recovery

Management Perceptions of Customer Expectations
©2010 Dr. Nancy A. Rauseo

Closing GAP 1
Reason for GAP 1 Inadequate or lack of marketing research and customer focus Lack of upward communication Ways to Eliminate GAP 1

        

Add marketing research strategies that include ones that focus on experience quality. Make sure that marketing research is used in the organization. Increase interaction between management and customers. Remove layers between contact personnel and top management – flatten hierarchical structure Use differentiation to identify different groups of customers. Focus on relationships rather than transactions. Capture expectations data in customer records. Develop systems for handling experiences when reliability failures happen. Recognize that experience recovery keeps customers, and that lack of recovery loses customers.

Insufficient relationship focus

Inadequate experience recovery

©2010 Dr. Nancy A. Rauseo

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Factors Leading to GAP 2
Translation of Perceptions Into Service Quality Specifications

GAP 2

  

Poor experience design p g Absence of customer-driven standards Inappropriate physical evidence and experience environment

Management Perceptions of Customer Expectations
©2010 Dr. Nancy A. Rauseo

Closing GAP 2
Reason for GAP 2 Poor experience design Ways to Eliminate GAP 2

 

Use customer experience blueprinting to create a systematic new experience process. Refine vague designs using the help of employees and customers. Replace company-designed standards with customerdesigned standards. g Create process management that focuses on customer requirements. Develop standard processes for setting quality goals and communicating them with the affected parties. Commit to customer-defined standards. Conduct customer and employee research to understand the appropriate environment. Create a experience environment in accordance with customer and employee expectations.

Absence of customerdesigned standards g

  

Inappropriate physical evidence & environment

  

©2010 Dr. Nancy A. Rauseo

Factors Leading to GAP 3
Service Delivery

GAP 3

   

Deficiencies in human resource policies Failure to match supply with demand Customers not fulfilling roles Problems with experience intermediaries

Translation of Perceptions Into Service Quality Specifications
©2010 Dr. Nancy A. Rauseo

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Closing GAP 3
Reason for GAP 3 Deficiencies in human resource policies Ways to Eliminate GAP 3

      

Create more effective recruitment policies that select employees with customer-oriented capabilities. Reduce role ambiguity and role conflict with clear communications and job descriptions. Create evaluation and compensation systems that reward employees for service rather than just productivity. Empower employees. Encourage self-organized teams. Use marketing strategies to smooth peaks and valleys in demand. Adjust the customer mix to use service capacity at non-peak times.

APPLICATION

Framing the Customer Experience Innovation, multichannel interaction, and employee engagement outline the approach to picture-perfect strategy.
http://www.1to1media.com/View .aspx?DocID=29930 Source: Gaffney (2006)

Failure to match supply and demand

©2010 Dr. Nancy A. Rauseo

Closing GAP 3
Reason for GAP 3 Customers not fulfilling roles Ways to Eliminate GAP 3

 

APPLICATION Inform customers of their roles and responsibilities. Create clear instructions and communications. Be sure that customers are not negatively affecting each other. Use U control, partnering or t l t i empowerment strategies to eliminate channel conflict over objectives and performance. Eliminate channel conflict over costs and rewards. Use experience standards and incentives to control quality and consistency. Balance the tension between empowerment and control. The Customer Experience Disconnect Many companies focus on customer experience—and some have even produced successful results from their efforts. However, recent research shows a huge disconnect between how companies perceive customers' experience and how customers actually live it.
http://www.1to1media.com/PrintV iew.aspx?DocID=29932 Source: CRM Magazine

Problems with P bl ith experience intermediaries

  

©2010 Dr. Nancy A. Rauseo

Factors Leading to GAP 4
External Communications to Customers

GAP 4

   

Lack of integrated CRM and marketing communications g g Ineffective management of customer expectations Over-promising to customers Inadequate cross-functional communications

Service Delivery

©2010 Dr. Nancy A. Rauseo

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Closing GAP 4

Reason for GAP 4 Lack of integrated CRM & marketing communications

Ways to Eliminate GAP 4

APPLICATION


Ineffective management of customer expectations

View external communications as one part of an overall strategy that also includes interactive marketing communication and internal marketing communication. communication Develop a strong internal marketing program. Educate customers. Make realistic promises. Negotiate unrealistic promises. Reset customer expectations when necessary.

   

The NFL Wins the Battle for Fans Forget the Colts. The NFL’s integrated marketing strategy was this season’s big winner.
http://www.1to1media.com/Prin tView.aspx?DocID=30051 Source: Gaffney (2007)

©2010 Dr. Nancy A. Rauseo

Closing GAP 4
Reason for GAP 4 Overpromising Ways to Eliminate GAP 4

       

Assure that advertising makes accurate promises. Assure that personal selling matches what will be delivered. Assure that physical evidence cues match the quality of what will be provided. Penalize employees who over-promise. P li l h i Set up cross-functional teams to work on designing experience blueprints and maps. Open the channels of communication between sales and operations. Open the channels of communication between advertising and operations. Assure that policies and procedures across branches or units are the same.

APPLICATION

Inadequate horizontal communications

The Urgent Need for Integrated Marketing Mass media s disintegration media’s has customers looking for different brand relationships
http://www.1to1media.com/Prin tView.aspx?DocID=29829 Source: Wright (2006)

©2010 Dr. Nancy A. Rauseo

Service Guarantees & Service Level Agreements

100% Hampton Satisfaction Guarantee

We deliver in 30 minutes or it’s free!

©2010 Dr. Nancy A. Rauseo

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Service Recovery
 When companies resolve problems quickly and effectively, there are positive consequences for

• Customer satisfaction • Customer retention • Word-of-mouth or referrals to other potential customers
,  Customers who have been let down, then well recovered, are more satisfied than customers who have not been let down at all. Recovery strategies include:

• • • • •

Do it right the first time! Welcome and encourage complaints Act quickly Learn from recovery experiences -- correct the root causes of problems Learn from lost customers -- correct the root causes of problems

©2010 Dr. Nancy A. Rauseo

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MAR 4860 Chapter 7, Module 3

10/15/2010

MAR 4860
Customer Relationship Management CHAPTER 7 - Creating Value for Customers Module 3: Value From Processes, People, Physical Evidence, Customer Communication, and Channels

©2010 Dr. Nancy A. Rauseo

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Value From Processes

First Direct, a bank in the UK, started out as a telephone bank with no branch network. Customer management was entirely IT-enabled, with customer service being delivered from several call centers. The Bank’s customer satisfaction ratings have been consistently higher than competitors’ branch operations. The bank’s slogan is “We’ve built our service to revolve around you.” http://www.firstdirect.com/ Since 1983, Dell has been the world's fastest growing major computer company. Michael Dell's goal is to keep the smallest inventory possible by having a direct link with th manufacturer. When a customer places an order, the custom parts requested ith the f t Wh t l d th t t t d by the customer are automatically sent to the manufacturer for shipment. This reduces the cost for inventory tracking and warehouse maintenance.

©2010 Dr. Nancy A. Rauseo

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Experiences Using People

EXPERT OPINION The Five CEM Steps for Aligning Employee Behavior 1. Recruiting the right g g employees 2. Training for experience delivery 3. Providing incentives & rewards 4. Measuring behavior against experience standards 5. Providing the right employee experience
Source: Schmitt (2003)

©2010 Dr. Nancy A. Rauseo

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Value From Physical Evidence
 Physical evidence is made up of the tangible facilities, equipment and materials that companies use to communicate value to customers.  Banks generally occupy traditional buildings with columns, portico, steps and large, heavy doors.

• Designed to communicate conservative values, security and probity.
 McDonald’s uses primary colors, bright lights and the ubiquitous golden arches in the form of the letter M.  Hospitals convey impressions of hygiene and care through white uniforms, immaculately clean premises and well-maintained gardens.  Funeral service organizations use traditional conservative clothing, colors, and vehicles.

©2010 Dr. Nancy A. Rauseo

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Value From Customer Communication

EXPERT OPINION

Golden questions can help enterprises to better d t d b tt understand customers using the drip irrigation dialogue or smart dialogue. Source: Peppers & Rogers (2005)

©2010 Dr. Nancy A. Rauseo

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Value from Communication  Three processes are responsible for the enhanced power of communication to create value for customers:

1. disintermediation, 1 disintermediation 2. personalization (customizations) and 3. interactivity.

©2010 Dr. Nancy A. Rauseo

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Drip Irrigation Method & Golden Questions

APPLICATION
Peppers & Rogers uses the golden questions strategy to assign customers into needs groups. Golden questions are the key five or six questions that discriminate the customer base with a high degree of accuracy (75% and above). Knowing that asking thousands of customers these golden questions can be very resource intensive, PRG has been able to predict needs groups…To learn more, click below:
http://www.1to1media.com/PrintV iew.aspx?DocID=28594

©2010 Dr. Nancy A. Rauseo

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Value From Channels
CHARACTERISTICS CHANNEL
Web Regular Mail Email Telephone Personal Selling Cost Speed Ability to Touch, Feel, & Reference
Medium High Medium

Ability to Track Interactions
High Medium High

Opportunity to Customize
High Varies High

Low Medium Low

Extremely High Low Extremely High Medium

High

Low

Medium

Medium-High

Very High

Medium

Varies

Medium

High

Source: Peppers & Rogers (2005)

©2010 Dr. Nancy A. Rauseo

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Experiences Using Price

EXPERT OPINION

To broaden their customer relationships, firms need to simplify customers’ lives and be transparent about rates and fees…USAA does so through efficient call center experiences. Many large banks, on the other hand, are on the opposite side of the spectrum because many of their customers feel nickel-and-dimed.
Source: Peppers & Rogers (2005)

©2010 Dr. Nancy A. Rauseo

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CUSTOMER RELATIONSHIP MANAGEMENT

CONCEPTS AND TECHNOLOGIES
Chapter 13, Module 1 Information Technology for CRM

Learning Objectives
 Be aware of the range of CRM technologies  Understand the role that technology plays in the achievement of CRM outcomes  Explain the structure of the CRM ecosystem  Explain the main application areas of CRM  Understand the role that analytics play in CRM technology  The importance of integration, knowledge management and workflow to CRM outcomes

Evolution of CRM Technology
Customer Relationship Management

Demand

Supply Chain Management

Supply

Manufacturer

Wholesaler

Retailer

Consumer

$

$

$

Purchase

Produce

Distribute

Sell
Customer Relationship Management

Consume

Enterprise Resources Planning

Source: Buttle (2004)

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Evolution of CRM Technology
FRONT-OFFICE USERS
Customer File

Sales Reps (laptops)
Service Records

Accounting System
Product File

Marketing (telemarketing center)

Service Reps (Mobile equipment)

Purchasing System

Sales History

Sales Note s

Management (decision support) Channel Partners (team selling)

Call Activity

Purchasing Agents (economies of scale)

Inventory System

©2007 Nancy A. Rauseo

Today’s Environment
Channel Partner Marketing Warehouse Sales S l Finance

Service

Customer

A 360o View of the Customer

Marketing Warehouse Channel Partner Sales

Finance

Service

Customer

©2007 Nancy A. Rauseo

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Source: Buttle (2004)

CRM Technology Needs Vary
Financial Services & Banks • Churn • Share of wallet • Call centers • Data mining • Dealer networks • Service and maintenance • Customer knowledge • Portals • Complex selling • Channels • Product configurations • Partner portal • Retail trade • Trade spend and promos • Store audits • Complex customer structures

Automotive Manufacturers

CRM
High Technology

Consumer Goods

©2007 Nancy A. Rauseo

The Role of Technology
 To collect customer information from all touch points  To put to use this information to build accurate profiles on each
customer

 To organize and deploy customer information in a systematic and
orderly fashion to those that serve the customer

 To use customer information in an intelligent way and make
decisions about CRM-related sales and marketing strategies

 To create and maintain a unique customer experience

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CRM Technology Architecture
Data Sources

1

Data Collection System

Hardware & Software Applications

2
Internal Sources External Sources Customer Touch Points Data D Warehouse System
Source: S

Business Processes, Hardware, & Software Applications

3

Information Delivery Systems

Information Usage

©2007 Nancy A. Rauseo

Data Collection System
1
Data Sources

Data Collection System

Hardware & Software Applications

2 Data Warehouse System

3

Information Delivery Systems

Information Usage

©2007 Nancy A. Rauseo

Data Collection System
Web Client (Customer/partner) Internal Department Client Service Client (Synchronized) Sales Client (Wireless or Sync)

`

Local dB

CRM Software Application and Web Servers Web Server 1 Web Server 1 Web Server 1 Web Server 1

Back Office Systems such as: Accounting Purchasing Inventory Finance

CRM Transactional Database

CRM Analytics Database

CRM Metadata

©2007 Nancy A. Rauseo

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MAR 4860 - Customer Relationship Management Chapter 13, Module 2

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CUSTOMER RELATIONSHIP MANAGEMENT

CONCEPTS AND TECHNOLOGIES
Chapter 13, Module 2 Information Technology for CRM

Scope of CRM Technology
Sales (synchronized, field information) Customer Service/Field Service (orders, complaints) Management (decision support, performance)

Partners (promotions, funds, portals) Warehouse Data Knowledge Base
Web

CRM System
Marketing (analysis & campaigns/ promotions)

Consumers (web, clubs)

Other systems, email, telephone

©2007 Nancy A. Rauseo

The CRM Market Players
EXPERT OPINION

CRM Software Vendors

Hardware and Infrastructure Vendors

Software vendors are only a small portion of the overall CRM ecosystem. CRM software must run on ft t hardware and integrate with communications infrastructure such as telephony and email systems.
Source: Buttle (2004)

Professional Service Providers

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Applications by Solution & Market
Specialized Business Solutions

       

Proposal Generators Product & Marketing Encyclopedias Product Configurators Lead & Campaign Management Business Process Management

Matrix Technology Solutions http://www.mxtg.com/index.asp Chordiant http://www.chordiant.com

Basic Sales and d Marketing Solutions

Contact Management Sales Force Automation Marketing Automation

ACT http://www.act.com http://www act com Maximizer http://www.maximizer.com

Comprehensive Enterprise Business Solutions

  

Modular SFA, Marketing & Service Automation Enterprise, Mid-sized, and Small Business

Siebel Systems http://www.siebel.com Amdocs http://www.amdocs.com

©2007 Nancy A. Rauseo

CRM Software Applications
Customer facing applications Customer touch point applications Customer intelligence applications Applications by solution & market Vertical applications Workflow applications
EXPERT OPINION

Refer to the article The 2010 Market Leaders under Supplemental Materials A Materials. MUST READ!
http://www.nxtbook.com/nxtboo ks/crmmedia/crm1006/

Customer Facing Applications
Customer Interaction Center Telephone-based applications that support marketing, sales, and service business processes.
EXPERT OPINION

  

Telemarketing

Telephone sales

Telephone service

Customer interaction centers are moving from sweatshops to company flagships, handling everything from pre-sales inquiries to order processing to post-sale support. The successful callcenter-of-the-future organization won’t be treated as a poor secondcousin cost-center; it’ll be a strategic service offering.
Source: Cusack (2002)

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Customer Facing Applications
Sales Force Automation
EXPERT OPINION Sales and Marketing have always had a tug-of-war relationship. Technology didn’t solve this but did allow it to be played out in new and exciting ways…Sales and Marketing trying to leverage technology was termed the second or third—depending on who was counting—generation of SFA.
Source: Trailer (2002)

    

Contact & time management Opportunity & lead management Knowledge management Quoting & order configuration Analysis & reporting tools

Customer Facing Applications
Field Service Automation
EXPERT OPINION Service automation for large capital equipment is quite different. This normally involves diagnostic and corrective action to be taken in the field, at the location of the equipment. In this case, this automation involves providing technicians with diagnostics, repair manuals, inventory management and job information on a laptop or PDA.
Source: Buttle (2004)

    

Customer service requests Service orders Service contracts Service schedules Service calls

Customer Touch Point Applications
Campaign Management
EXPERT OPINION

Electronic Commerce

Increasingly, customer service and support software includes a Web-based, self-service capability th t customers can bilit that t easily access using a browser. Improvements in customer self-service and support have been significantly enhanced through the use of knowledge management engines.
Source: Goldenberg (2002)

Self-Service Customer Support

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CRM Components - Customers

CRM Components - Products

CRM Components – Marketing Automation

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CRM Components – Sales Automation

CRM Components – Service Automation

CRM Components - PMR

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MAR 4860 - Customer Relationship Management Chapter 13, Module 3

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CUSTOMER RELATIONSHIP MANAGEMENT

CONCEPTS AND TECHNOLOGIES
Chapter 13, Module 3 Information Technology for CRM

Customer Intelligence Applications

Data Warehousing

Analytical Applications

Information I f ti Delivery & Reporting

Data Mining Clustering Knowledge Discovery
©2007 Nancy A. Rauseo

Data Warehousing & Reporting

Data Warehousing

Analytical Applications

Information I f ti Delivery & Reporting

Data Mining Clustering Knowledge Discovery
©2007 Nancy A. Rauseo 3

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Analytical Applications

Data Warehousing

Analytical Applications

Information I f ti Delivery & Reporting

Data Mining Clustering Knowledge Discovery
©2007 Nancy A. Rauseo

Customer Relationship Management

Courtesy: Siebel

©2007 Nancy A. Rauseo

Module 6 Unit 1: Basics of CRM Technology

5

Customer Relationship Management

Courtesy: E.piphany
©2007 Nancy A. Rauseo Module 6 Unit 1: Basics of CRM Technology 6

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Vertical Solutions
DestinationCRM classifies these vertical software solutions into these industries: EXPERT OPINION

       

Consumer Packaged Goods Education Financial Services/Banking Government Healthcare Insurance Manufacturing/Automotive Non-profit

       

Pharmaceuticals Professional Services Retail Sports/Entertainment Technology Telecommunications Transportation Travel/Hospitality Software vendors specializing in each vertical p g market can be found at:
http://destinationcrm.com/

Workflow Applications

©2007 Nancy A. Rauseo

Workflow Applications
Functions of Workflow Automation

     

Process automation Escalation Assignment Integration Dialogue scripting Process navigation

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Business Process Management (BPM)
   
The definition, execution, and management of business processes. Not a synonym for workflow or Electronic Application Integration (EAI) Emphasis is on the process itself rather than an entity (i.e., document, data, or person) Gives process owners the ability to define what the process should be first and then determine how to effectively orchestrate interactions between the people, data, and documents that make up the steps within a process. Not married to a specific application For more information, visit:
http://www.destinationcrm.com/articles/default.asp?ArticleID=5219

APPLICATION

Take a look at how companies are applying BPM to their CRM strategies: You Talkin’ To Me?
http://www.1to1media.com/Pri ntView.aspx?DocID=29824

 

There’s a Process for That?
http://www.1to1media.com/Pri ntView.aspx?DocID=29595

Professional Service Providers
Strategy and Marketing Consultants
Peppers & Rogers http://www.1to1media.com McKinsey & Company http://www.mckinsey.com
APPLICATION

Business Consultants
Accenture http://www.accenture.com Go to Services for CRM BearingPoint http://www.bearingpoint.com Go to Solutions for CRM CAPGemini http://www.capgemini.com/services/consulting/crm/

Scroll through the Accenture site for client success stories in various disciplines and industries. Here’s one on Best Buy: Business Process Transformation and Reengineering with Accenture
http://www.accenture.com/Global/Ser vices/Client_Successes/By_Subject/Cus tomer_Relationship_Mgmt/BestBuyTran sformation.htm

4

SFA software solutions (sampling)

SFA specialists

CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES Chapter 14 Sales Force Automation

Selectica EzRoute Salesnet CallWizard Selltech CyberForms

SFA as part of CRM SFA as part of suite Enterprise suite Onyx Oracle Pivotal Salesforce.com SalesLogix ACCPAC NetCRM SAP Epicor Deltek Fourth Shift Intentia

Sales force automation definition & technologies  Sales Force Automation is the application of computerized technologies to support sales people and sales management in the achievement of their work-related objectives.  SFA hardware includes desktop, laptop and handheld devices, and contact/call centre t h l h dh ld d i d t t/ ll t technology.  SFA software comprises both ‘point’ solutions that are designed to assist in a single area of selling or sales management, and integrated solutions that offer a range of functionality.

SFA functionality
account management activity management contact management contract management document management event management incentive management lead management opportunity management order management Each of these is a high level PROCESS. “Managing accounts” is a process; Managing sales activities is a process; pipeline management product encyclopaedias product configuration product visualization proposal generation quotation management sales forecasting territory management work-flow engineering

Account management

Activity management

 Account management offers sales reps and managers a complete view of the customer relationship including contacts, contact history, completed transactions, current orders, shipments, p , , p , enquiries, service history, opportunities, and quotations. This allows sales reps and account managers to keep track of all their obligations in respect of every account for which they are responsible, whether this is an opportunity to be closed, an order or a service enquiry.

 Activity management keeps sales reps and managers aware of all activities, whether complete or pending, related to an account, contact, or opportunity, by establishing to-do lists, setting pp y, y g , g priorities, monitoring progress and programming alerts. Activities include preparation of quotations, scheduling of sales calls and following up enquiries, for example.

Account management screenshot

Contact management

 Contact management functionality includes tools for building, sharing and updating contact lists, making appointments, time setting, and task, event and contact tracking .Contact list data includes names, g , phone numbers, addresses, preference data, and email addresses for people and companies, as well as a history of in-bound and out-bound communications.

Contact management screenshot

Document management

 Companies generate and use many documents as they sell to customers - brochures, product specifications, price lists, competitive comparisons, and templates for p p p preparing q g quotations, for example. , p Document management software allows companies to manage these documents, keep them current and ensure that they are available to reps and managers when needed.

Contract management

Event management

 Contract management functionality enables reps and managers to create, track, progress, accelerate, monitor and control contracts with customers. Contract management helps manage a contract's g p g lifespan by shortening approval cycles for contracts, renewing contracts sooner, and reducing administrative costs. The software may use security controls to ensure only approved people have access to contracts.

 Event management enables reps and managers to plan, implement, control and evaluate events such as conferences, seminars, trade shows, exhibitions and webinars, whether run solo or jointly with customers , j y or other partners.

Event management screenshot

Lead management

 Lead management allows companies to create, assign and track sales leads. User-defined rules allow leads to be allocated to reps and account managers on the basis of role, territory, product g , y, p expertise or other variables.  Lead management allows for more equitable workload distribution across a sales team, and uses security controls to ensure that reps can only access their own leads.

Incentive management

Lead management screenshot

 Incentive management is an issue for sales managers who use commissions to lift, direct and reward sales reps’ efforts. In many companies, commissions are calculated using stand-alone g spreadsheets.

Opportunity management

Order management

 An opportunity is a record of a potential sale or any other type of revenue generation. Opportunity management software enables reps and managers to create an opportunity record in the database, and pp y , monitor progress against a predefined selling methodology.

 Order management functionality allows reps to convert quotations and estimates into orders once a customer has agreed to buy. If this is done in front of a customer, the order can be loaded into production, , p , or picked from a warehouse, more quickly.  Order management software may include a quotation engine, a pricing module, and a product configurator. With visibility through a portal, the customer, rep and manager has access to the same, up-to-date order information.

Opportunity management report

Pipeline management

 Pipeline management is the process of managing the entire sales cycle from identifying prospects, estimating sales potential, managing leads, forecasting sales, initiating and maintaining customer g , g g relationships, right through to closure. A well-defined sales pipeline helps minimize lost opportunities and breakdowns in the sales process.

Product encyclopaedia

Product visualization

 A product encyclopaedia is a searchable electronic product catalogue, that generally contains product names, stock numbers, images and specifications. These can be stored on reps computers’ and/or p p made available to customers online.

 Product visualization software enables sales reps and customers to produce realistic images of products before they are manufactured. This is a useful application when linked to a p pp product configurator. The image can take the form of a simulated photograph, 3-D model or technical drawing, and can include other related documentation such as specifications or prices.

Product configuration

Proposal generation

 Product configuration applications enable salespeople, or customer themselves, automatically to design and price customized products, services or solutions. Configurators are useful when the p g product is particularly complex or when customization is an important part of the value proposition.

 Proposal generation software allows users to create customized proposals for customers. Users draw from a database of information to create proposals which, typically, are composed of several p , yp y, p parts, some , of which are customized: cover page and letter, introduction, objectives, products, product features, services, prices, specifications, pictures, drawings, people, experience, resumes, references, approach, schedule, organization, scope of work, and appendices.

Quotation management

Territory management
 Territory management software allows sales managers to create, adjust and balance sales territories, so that sales reps have equivalent workloads and/or opportunities.  Some territory management applications come with a territory management methodology which users can follow when establishing sales territories.  Some applications link to geographic mapping, or geodemographic, software. The software enables companies to match sales coverage to market opportunity, create sales territory hierarchies (cities, states, regions) and reduce the cost of selling by reducing travel time.  Call cycle scheduling, calendaring and lead management is often enabled by the software.

 Quotation management software allows reps and managers to quote for opportunities. The software allows users to create, edit, approve, and produce costed, customized, proposals quickly and reliably. , ,p p q y y Some vendors enable users to create multimedia proposals with audio, animation and video.

Sales forecasting

Workflow engineering

 Sales forecasting applications offer sales reps and managers a number of qualitative and quantitative processes to help forecast sales revenues and close rates.

 Work-flow engineering software is useful for designing sales-related processes, such as the lead management process, and the event management p process. It can even be used to design the selling g g process itself – the series of steps that a sales rep must follow in shifting a prospect from initial awareness to the close.

Examples of SFA reports cost-to-serve customer profitability lead conversion pipeline progress quotation performance sales cycles share of market share of wallet sales person productivity win-loss rates

Motivations for implementing SFA

Motivation

% of sample reporting

Improve efficiencies Improve customer contact Increase sales Reduce costs Improve accuracy

72 44 33 26 21

Benefits for SFA stakeholders

SFA will enhance performance when…..
 Sales people find that SFA is easy to use  Sales people find the technology useful because it fits their roles well.  Availability of appropriate-to-task SFA training  Users have accurate expectations about what SFA will deliver  Users have a positive attitude towards innovation  Users have a positive attitude towards technology  Availability of user support after roll out; for example: help desk.  Involvement of user groups including sales reps and managers during project planning and technology selection.  Deployment of a multi-disciplinary team in the project planning phases  Senior management support for SFA.

 Salespeople: shorter sales cycles, more closing opportunities, higher win rates  Sales managers: improved salesperson productivity, improved customer relations accurate reporting relations, reporting, reduced cost-of-sales  Senior management: accelerated cash flow, increased sales revenue, market share growth, improved profitability

Marketing automation definition

CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES Chapter 15 Marketing Automation

 Marketing automation is the application of computerised technologies to support marketers and marketing management in the achievement of their work-related objectives. j

Benefits from marketing automation 1  Enhanced marketing efficiency
● The replication of marketing processes delivers greater control over costs. When marketers use manual systems and ad hoc processes, there can be considerable inefficiencies. MA enables companies to develop more streamlined, cost-efficient processes, that can be operated by any marketing incumbent, whether experienced or new-to-role.

Benefits from marketing automation 2  Enhanced responsiveness.
● Marketers have traditionally created and implemented annual marketing plans with campaigns and promotions planned and scheduled many months ahead. MA allows marketers to respond instantly to opportunities, even if not part of a plan. MA functionality enables companies to engage in real-time marketing, responding immediately to an identified opportunity.

 Greater marketing productivity
● MA enables companies to run dozens, even thousands of campaigns and events through multiple channels simultaneously.

 Improved marketing intelligence.
● MA’s embedded reporting and analytics functionality provides valuable management insights into markets, customers, campaigns, events and so on, leading to both enhanced efficiency and effectiveness.

 More effective marketing.
● MA allows marketers to employ what is known as closed-loop marketing (CLM). CLM is based on a Plan-Do-Measure-Learn cycle.

 Improved customer experience.
● Customers receive personalized, relevant communications and offers at appropriate times. MA means less Spam, from the customer’s perspective.

Closed-loop marketing

Functionality offered by MA software
Asset management Campaign management Customer segmentation Direct mail campaign management Document management Email campaign management Enterprise marketing management Event-based marketing Internet marketing Keyword marketing Lead generation Loyalty management Market segmentation Marketing analytics Marketing optimisation Marketing performance management Marketing resource management Partner marketing Product life-cycle management Search engine optimisation Tele-marketing Trigger marketing Web analytics Workflow engineering

These are examples of high-level processes.

Asset management

Campaign management

 Asset management enables companies to identify and track the assets that customers purchase, license, use, install, or download. Assets can be either tangible, intangible or blended. g , g

 Campaign management automates the processes involved in planning, implementing, measuring, and learning from communication programs targeted at p p prospects or customers. The key elements of y campaign management software are workflow, segmentation and targeting, personalization, execution, measurement, modelling and reporting.

Customer segmentation

Direct mail campaign management

 Customer segmentation is the practice of partitioning customers into homogenous subsets so that each subset can be addressed as a unique marketing audience. This is the foundation of g customer portfolio management.

 Direct mail campaign management is a specific form of campaign management in which the communication medium is direct mail.  Direct mail has many applications including lead generation, lead conversion, building awareness, upselling and cross-selling, customer retention, database building or image enhancement. Important contributors to direct mail success are the list, the creative execution, the offer, and the timing.

Email campaign management

Email campaign management process

 Email campaign management is a specific form of campaign management in which the communication medium is email.  Email is cheap, easy to use and ubiquitous cheap ubiquitous.

Enterprise marketing management

Event-based marketing

 Enterprise marketing management encompasses the business strategy, process automation and technologies required to effectively operate a marketing department, align resources, execute g p , g , customer-centric strategies and improve marketing performance. It is best-suited for large organizations with 50 or more people in marketing.  This includes functionality for campaign management, lead management, MRM [marketing resource management] and analytics.

 Event-based marketing occurs when an event triggers a communication or offer. Event-based campaigns are usually initiated by customer behaviours or contextual conditions.

Internet marketing

Seven stage cycle of internet marketing

 Internet marketing is the process of creating value by building and maintaining online customer relationships.

Keyword marketing

Lead generation

 Keyword marketing is the practice of generating website traffic from internet users who have entered keywords into search engines such as Google, Yahoo!, AOL, Ask.com and Live search (formerly , , ( y MSN).

 Lead generation is an important marketing objective, particularly in business-to-business contexts. Sales people challenged to grow the numbers of customers served need to be presented with high q p g quality leads y for follow-up.  Marketers can deploy campaigns, events, seminars, Webinars and other tactics to generate the leads.

Loyalty management

 Loyalty management functionality allows organisations to develop and operate loyalty management programs.  The development of customer loyalty is a goal of many CRM programs. The availability of loyalty management applications is a direct response to this need. Loyalty, or frequency, programs are important to several constituencies – the brand owner who operates the program, the member who collects and redeems credits, and the channel partner who transacts with the member.

Market segmentation

Marketing analytics

 Market segmentation is the practice of partitioning markets into homogenous subsets so that each subset can be addressed as a unique marketing opportunity. pp y

 Marketing analytics is the application of mathematical and statistical processes to marketing problems. Marketing analytics can be used to explore, describe and explain. p , p

Marketing optimization

Marketing optimization screenshot

 Marketing optimization software allows companies to select an overall goal, such as sales or profit margin maximization, and specify all of the constraints of a marketing campaign strategy g p g gy  The software then determines which customers should get which offer through which channel to ensure the campaign objectives are met.

Marketing performance management

Marketing resource management  Marketing resource management applications consist of a range of automated tools that enable marketers to manage their marketing processes and assets more effectively, and to work at greater speed and with improved control. MRM t lkit may i l d d ith i d t l toolkits include modules for :
● Marketing planning and budgeting, New product launch, Marketing event calendaring, Event planning and registration, Project management, Campaign planning, Collateral production, proofing and approval, Digital asset management, including brands, trademarks, logos and collateral, Expense and budget management, Time management, Media buying, and Procurement

 Marketing performance management (MPM) software enables companies to measure their marketing performance though analysis and reports, and improve outcomes over time through closed-loop p g p marketing.  Senior management is progressively becoming more demanding that marketers be accountable for their expenditure, and MPM helps marketers meet that expectation. MPM, which is typically focussed on analysis of marketing tactics such as events and campaigns, is routinely built into most MA applications.

Patrner marketing

Microsoft Canada’s partner portal

 Partner marketing solutions enable companies to coordinate and work collaboratively with channel partners and others.  Partner marketing solutions are used to manage processes such as partner qualification and sign up, development of joint business plans and objectives, cooperative advertising and promotions, lead management, co-branding of collateral and point-ofsale materials, measuring partner performance, partner training, administration of marketing funds, and specialist partner incentive schemes.

Product life-cycle management

Search engine optimization

 Product life-cycle management (PLM) applications help marketers manage life cycle stages effectively and profitably.  PLM software solutions facilitate collaborative intraintra and extra-enterprise engineering, product development, and improved management of projects, product portfolios, documents, and quality. PLM applications can provide a single source of all product-related information to use in the innovation, design, engineering, feasibility, launch and market development processes.

 Search engine optimization (SEO) is the practice of improving the quantity and quality of website traffic generated by search engines.  Usually the higher ranking results that appear earlier Usually, in the listings generate more visitors. SEO aims, therefore, to achieve high rankings, preferably on the first or second pages.

Tele-marketing

Tele-marketing fucntionality

 Tele-marketing is the use of the telephone to identify and qualify prospects, and to sell and service the needs of customers.  Tele-marketing takes two forms: inbound (calls from Tele marketing customers) and outbound (calls to customers). Some call centres perform a blended function with agents both making and receiving calls.  Tele-marketing is widely employed in both B2C and B2B environments, but is subject to legislative control due to its intrusive nature.

 Auto-dialling  Predictive dialling  Automated voice-messaging  C t t li t management Contact list t  Agent management  Do Not Call compliance  Screen pop with caller ID  Scripting, including objection response  Computer Aided Telephone Interviewing (CATI)  Interactive Voice Response (IVR)

Trigger marketing

Web analytics

 Trigger marketing is the practice of responding to some customer-generated or customer-related event in a way that is designed to achieve some marketing g goal such as make a sale, identify a cross-sell , y opportunity, prevent negative word-of-mouth, or promote positive word-of-mouth. The event triggers the response.

 Web analytics report the behavior of website visitors. Routine reports generally detail web traffic data, but may also include performance data from campaigns and events that involve the web site, for p g , example the number of click-throughs from a web-link inserted in a campaign email.  Two main technologies collect data: logfile analysis and page-tagging.

Web analytics terminology

Web analytics report

 Building block terms: page, page view, visit/session, unique visitor, new visitor, repeat visitor, return visitor  Visit characterization terms: entry page, landing page, page exit page visit duration referrer internal page, referrer, referrer, external referrer, search referrer, visit referrer, original referrer, click-through, click-through rate/ratio, page views per visit  Content characterization terms: page exit ratio, single-page visit, single page view visits (bounces. Bounce rate  Conversion metrics terms: event, conversion

Work-flow engineering

Campaign work-flow screenshot

 Work-flow engineering software is useful for designing marketing-related processes, such as the campaigning process, event-based marketing p process, or the marketing p , g planning p g process.

About customer service 1

CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES Chapter 16 Service automation

 Customer service has been a necessary preoccupation of service organisations, because they have understood that customers are responsive to the quality of the service they experience. q y y p  The quality of customer service is just as important for agriculturalists, miners, and goods manufacturers. This is particularly so when there is product parity, and customers are unable to discern meaningful differences between alternative suppliers or brands.

About customer service 2

Integrative quality

 Customer service standards can be assessed by customers when a service is being performed, as well as after the service has been delivered.
● The service experience as perceived from the dentists chair during service delivery might be very different from the assessment a few days later.

 Integrative quality is determined by the way the various elements of the product and service delivery system work together.
● High integrative quality means that the processes, people and technology complement each other, working efficiently and effectively to deliver excellent customer service.

 Customer service can be experienced at any stage of the customer activity cycle: before, during, or after purchase.

 Customers who receive service from technologyenabled manufacturers or service providers, such as those with CRM systems in place, experience integrative quality.

Six attributes of companies renowned for excellent service 1

Six attributes of companies renowned for excellent service 2

1. Customer service is pervasive.
● It is everyone’s responsibility; it is neither delegated nor relegated to a single department or function.

4. Customer service lies at the heart of the value proposition.
● Customer service is the main selling point.

2. Their operations run smoothly with minimal product and service defect rates, allowing them to focus on pleasing customers. 3. They are always looking for ways to improve.

5. 5 They build personal relationships with customers customers. 6. They employ the latest IT to
● ● ● allow their customers to interact with them more conveniently develop a profound understanding of what customers need and want track activities and processes that influence customer experience.

Service automation definition

Where is service automation deployed 1?

 Service automation is the application of computerised technologies to support service staff and management in the achievement of their work-related objectives. j

 contact centres
● Contact centres are configured to communicate with customers across multiple channels including voice telephony, mail, email, SMS, instant messaging, web collaboration and fax.

 call-centres
● Call centres are generally dedicated to voice telephony communications, whether through a public switched telephone network, cell-phone network, or VoIP.

Where is service automation deployed 2?

Key technological elements of SA 1

 help-desk
● Help-desks are usually associated with IT environments where assistance is offered to IT users. SA applications such as case management, job management and service level management are used in this setting.

 Infrastructure
● When service is delivered through a central call-centre or contactcentre, in a multi-channel environment, there needs to be tight integration between various communication systems, including telephony, email, telephony email and web web.

 field service
● Field service is widespread in both B2C and B2B environments. Service automation applied to field service operations involves technologies such as job management, scheduling, mapping and spare parts management.

 Data
● Access to the right customer-related data, to enable the service agent to identify and fix the issue promptly is critical to the delivery of responsive customer service.

Key technological elements of SA 2

Benefits from service automation  Enhanced service effectiveness.

 Devices
● Where service is delivered by a distributed work-force, smaller, lighter, devices such as laptops, Windows-enabled hand-held devices, and smart phones or cell phones such as Blackberries, tend to be employed; these are typically not found in call- and contact-centres. Synchronisation is also an issue for a distributed service team. Periodic synchronisation with the central CRM database enables service engineers and others to ensure that they are fully apprised of their daily scheduled appointments.

● Service requests can be completed more quickly to the customer’s satisfaction by ensuring that requests are handled or the first point of contact or routed to the right service engineer or customer service agent, who is able to draw on an up-to-date knowledge base to resolve t e issue. eso e the ssue

 Greater service productivity.
● Call- and contact-centre management systems ensure that the optimal number of agents are scheduled and that their time is used productively. Field service applications ensure that workload is equitably and optimally distributed.

 Software.

 Improved customer experience.
● Agents have full visibility into the customer history and service request and can ensure that service delivery is appropriate to customer status or agreed service levels

Functionality offered by SA software

Activity management

Activity management Agent management Case assignment Case management Contract C t t management t Customer self-service Email response management Escalation Inbound communications mgmt Invoicing Job management

Mapping and driving directions Outbound communications mgmt Queuing and routing Scripting Scheduling S h d li Service analytics Service level management Spare parts management Web collaboration Workflow engineering

 Activity management enables service staff to review their workload, to-do list and priorities as directed by their manager or scheduler, and to report back on p g progress and issue resolution. Some applications pp allow activities to be updated in real-time by dispatchers and routed to the technician, so that work can be reprioritised. Alerts can be set so that appointments are not missed, or to notify agents and their managers that issues are unresolved or service levels are about to be, or have been, violated.

Agent management

Case assignment

 Agent management is a high priority for call- and contact-centre managers. Managers want to employ the lowest head-count compatible with the desired level of customer service. Too few agents and g customers will be dissatisfied with wait-times; too many agents and payroll costs will be unnecessarily high. Customers and managers both want issues to be resolved quickly by agents.  Technologies that contribute to this outcome include queuing, scripting, and knowledge management.

 Case assignment applications ensure that each enquiry or issue gets routed to the right agent or technician for resolution.  Customer service agents might for example, be might, example organised according to language skills, and field service agent by product category

Case management

Trouble ticket screenshot

 Case management covers the full cycle of activities involved from receiving initial notification of a matter of concern to a customer to its final resolution and the case file being closed. g
● Case management is also known as incident management and issue management.

 Cases, incidents or issues are initiated by the creation of a trouble ticket.
● Customers may be allowed to do this by web-form, or by emailing or calling a service or contact centre.

Contract management

Customer self-service

 Contract management functionality enables service engineers and managers to create, track, progress, accelerate, monitor and control service contracts with customers.  Many companies now sell extended service contracts to customers when warranty periods have expired.

 Customer self-service is an attractive option for companies because it transfers the responsibility and cost for service to the customer.  Customers who self-serve are much less likely to self serve place demands on contact-centre, call-centre, helpdesk or field service staff.  Customers are typically more competent at selfserving when transactions are involved (e.g. online banking or music downloads); however, they are less competent when problem-resolution is concerned.

Email response management systems

Escalation

 Email response management systems (ERMS) are not only useful for handling inbound emails but also for delivering outbound emails and SMS messages.  ERMS are designed up to manage the reception reception, interpretation, routing, response and storage of incoming email securely and effectively.

 Escalation ensures that issues get escalated according to internally determined rules. Higher levels of authority typically have greater discretion to resolve issues. For example, a front-line customer p , service agent might be required to escalate to higher levels of management issues that have a potentially high cost or reputational consequence.

Inbo8und communications management  Inbound communications management (ICM) applications allow companies to receive, route, queue and distribute incoming communications from any channel – voice telephony, email, fax, instant message, SMS, fax message SMS fax, web form – to agents in any location including contact centre, in the field or at home.  A unified queue, issue/content recognition, intelligent routing, and knowledge-base integration allow agents to deliver a consistent customer experience and to respond effectively to service requests whatever the communication channel.

Invoicing

 Invoicing is a useful application for service technicians who are called to site to provide out-ofwarranty service. Having completed the job to the customer’s satisfaction, and captured the customer’s , p signature electronically, the invoice can be raised on the spot, thereby accelerating cash flow.

Job management

Job management screenshot

 Job management applications offer a range of functionality including cost estimation, quotation generation, creation of trouble tickets, job planning, travel time and distance calculation, job clustering (to ,j g( reduce travel time), calendaring, scheduling, spare parts management, job progress tracking, invoicing, service level management, technician despatch, time management and product configuration.

Mapping and driving directions

Outbound communications management

 Solutions that provide mapping and driving directions are very useful for service engineers who need to visit customers’ homes or business premises. Taking into account the engineer’s p g g point-of-origin, g , service locations, job priorities, service level agreements and other variables, mapping solutions can minimize travel times and distances to ensure that service tasks are performed optimally.

 Outbound communications management software applications are used in a service environment to acknowledge service requests, make and confirm service appointments, advise on the p g pp , progress of a service task, invoice for out-of-warranty service, and follow-up after service to ensure that the customer is satisfied

Queuing and routing

Scheduling

 Queuing and routing applications allow issues to be routed to agents with particular expertise and positioned in that agent’s queue according to some criterion.  Routing is usually determined by case assignment rules and position in the queue is determined by customer value or some other metric.  The objective of queuing and routing is to ensure that every service issue is presented to the most appropriate agent for handling and resolution.

 Scheduling involves planning and organising a service technician’s activity plan for a day, week or other period.  A technician s schedule contains details on the technician’s customer, location, time, product and issue.  Some scheduling applications take into account a range of considerations to ensure that the right technician is sent to service the customer
● travel time and distance, technician availability, technician skills, customer access hours, service level agreement, availability of spare parts, and the technician’s hourly rates of pay.

Task schedule delivered to a Pocket PC

Scripting

 Scripting enables customer service agents to converse intelligently with customers to diagnose and resolve problems, even though they may be untrained as technicians. Scripts can be designed so p g that they flex dynamically according to customer response. Scripts also reduce agent training time.

Service analytics

Contact centre telephony dashboard

 Service analytics provide managers with information on how effectively and efficiently customer service generally, and individual agents or technicians specifically, are operating. Important metrics for p y, p g p managers of field service operations, for example, include technician utilization, parts inventory, travel time, first time fix rate (FTFR), mean time to resolve (MMTR), and job backlog.

Service level management

Spare parts management

 Service level management applications allow managers to control the level of service that is offered to customers, and technicians to deliver the level of service agreed. g  Service levels can be agreed for a number of variables including availability (the percentage of time that the service is available over an agreed time period), usage (the number of service users that can be served simultaneously) and responsiveness (the speed with which a demand for service is fulfilled).

 Spare parts management is an important application for field technicians. They can see what parts they have with them on the road, check the inventory levels held by other technicians and at y y regional and central warehouses, order new parts, transfer parts from colleagues, manage excess and defective parts, and check on the progress of orders thereby ensuring that when they turn up at a job, they are properly equipped

Web collaboration

Work-flow engineering

 Web collaboration between customer and service agent is enabled by technologies that use instant messaging (web chat), or allow both parties to cobrowse web-pages. This allows the agent to help the p g g p customer to resolve the issue in real time.  Customer service agents can collaborate with a number of customers simultaneously, or can prioritise based on customer value or some other metric.

 Work-flow engineering software is useful for designing service-related processes, such as problem diagnosis and issue escalation.  Work-flow for field service operations will define how Work flow service requests are validated, how service tickets are issued, how tickets are allocated, how problems will be diagnosed, how parts will be ordered, how problems will be fixed, how customers will be invoiced, and so on.

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