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IT enabled CRM IT enabled CRM

CRM is … any application or initiative designed to help
an organization optimize interactions with customers,
prospects via one or more touch points – such as a
CRM DEFINITION
prospects via one or more touch points – such as a
call center, salesperson, distributor, store, branch
office, Web, or email – for the purpose of acquiring,
retaining, or cross-selling customers.
(TDWI 2000)
Who is Customer????
A transaction?
purchases made with cash are anonymous
most Web surfing is anonymous
we, therefore, know little about the consumer
An account?
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An account?
An individual?
A household?
A Customer is an Account
More often, a customer is an account
Retail banking
checking account, mortgage, auto loan, …
Telecommunications
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Telecommunications
Mobile, long distance, local, ISP,, …
Insurance
auto policy, homeowners, life insurance, …
The account-level view of a customer also
misses the boat since each customer can have
multiple accounts
Customers Play Different Roles
Parents buy school clothes for teenage
children
children decide what to purchase
parents pay for the clothes
parents “own” the transaction
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parents “own” the transaction
Parents give college-age children cellular phones or
credit cards
parents may make the purchase decision
children use the product
It is not always easy to identify the customer
The Customer’s Lifecycle
Childhood
birth, school, graduation, …
Young Adulthood
choose career, move away from parents, …
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choose career, move away from parents, …
Family Life
marriage, buy house, children,, …
Retirement
Home, travel, hobbies, …
Customers Evolve Over Time
Customers begin as prospects
Prospects indicate interest
fill out credit card applications
apply for insurance
visit your website
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visit your website
They become new customers
After repeated purchases or usage, they become
established customers
Eventually, they become former customers
either voluntarily or involuntarily
Business Processes Organize Around the Customer Lifecycle
Acquisition Activation Relationship Management
Winback
Former
Customer
High
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Prospect
Established
Customer
New
Customer
Low
Value
High
Potential
High
Value
Voluntary
Churn
Forced
Churn
• A method of interaction with a customer
•telephone,
•e-mail,
•customer service desk,
Touch points to CRM systems Touch points to CRM systems
•customer service desk,
•conventional mail,
•Web site,
•retail store
Information about customers
Needed to nurture strong + long lasting relationship with
customer
Who are the actual customers?
Howto contact them ?
Whether they are costly to service or sell? Whether they are costly to service or sell?
What products/services are they interested in ?
How much money they spend on your company ?
Objective: Make your customer feel special
Every Company’s Big Unknown ... Customer Value
Full Potential
Current
Current
Current
Customer
Value
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Relationship Duration
E-CRM – a definition
E-CRM is:
Applying…
Internet and other digital technology…
(web, e-mail, wireless, iTV, databases)
to… to…
acquire and retain customers
(through a multi-channel buying process
and customer lifecycle)
by…
improving customer-knowledge, targeting,
service delivery and satisfaction
Assumptions of CRM
Customers act according to habit
Current customer information is always
correct
Customers want individual, differentiated Customers want individual, differentiated
treatment
Customers with the greatest profitability
should receive the best service
Marketing – 75 years ago
• You can have
any color as long any color as long
as it’s black –
Ford Motor Co.
Marketing - today
Add the
spice of
flexibility,
courtesy of
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courtesy of
robotics,
computers …
New approach to Customer Relationship
TO: Finding products that are right for each customer
TURN the process
through 90 degrees
Products: 1 2 3 4 5 …..
FROM: Finding customers that are right for each product
“Mass Customization” – B. Joseph Pine
• Mass production
– Cheap to produce
– Efficient to produce
– Uniform features/quality
– ‘one size fits all’ approach
– Optimize production cost
• Customization
– Expensive to produce
– Inefficient to produce
– Customized features
– ‘tailor made’ approach
– customer satisfaction
– Optimize production cost
– customer satisfaction
Mass customization
Cheap & efficient to produce
Customized features
‘tailor made’ approach
Optimize production cost & customer satisfaction
Drivers of CRM
Pareto’s principle: 80/20 rule
8 to 10 calls to make a sale to new customers,
2 to 3 to existing customers
5-10 times more expensive to sell to new 5-10 times more expensive to sell to new
rather than repeat customers
Revenue & Cost Goals
Increase revenue growth through customer
satisfaction
Reduce costs of sales and distribution Reduce costs of sales and distribution
Minimize customer support costs
Customer Relationship Management
“Process of creating and maintaining relationships with
business customers or consumers”
“A holistic process of identifying, attracting, differentiating, and
retaining customers”
4.Expansion
(Cross-Selling)
3.Retention
2.Acquisition
1.Selection/
Targeting
CRM
Phases of CRM
Targeting
Acquisition Retention Expansion
Phases of CRM
Duration of Customer Relationship
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Customer Relationship Management can be simply defined as everything involved
with managing the customer relationship.
Customer Relationship Management can be simply defined as everything involved
with managing the customer relationship.
•Who do we target?
•What segments are most profitable ?
•What segments match our Value Proposition ?
•What is the best segmentation strategy for us / our industry ?
Targeting
Acquisition Retention Expansion
Phases of CRM
Duration of Customer Relationship
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•What is the best channel for each segment ?
•What is the acquisition cost for a channel / segment ?
•Do certain channels deliver certain types of customers ?
•Cost effective acquisition
Targeting
Acquisition Retention Expansion
Phases of CRM
Duration of Customer Relationship
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•How can we improve retention ?
•What is our average customer relationship length ?
•How can we hold customer for as long as possible?
•What is the most cost effective method of retention ?
Targeting
Acquisition Retention Expansion
Phases of CRM
Duration of Customer Relationship
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•How many products does our average customer buy ?
•How can we induce our current base to buy more products?
•Who are the prime targets for expansion ?
•What is the cost of expansion ?
Cross-selling : marketing of complementary products to
customers.
Up-selling : marketing of higher-value products or
services to the customers.
Cross-selling/Up -selling/Bundling (Expansion)
services to the customers.
Bundling: cross-selling in which a combination of
products is sold as a bundle at a price lower than the
total cost of the individual products.
CRM Tasks / IDIC Process
IDIC Process:
Customer Identification
Customer Differentiation
Customer Interaction Customer Interaction
Customization and Cross-sell
CRM Components/Application
1) Contact and Account Management
helps sales, marketing, and
service professionals
Capture and
track relevant data
about every past and planned about every past and planned
contact with
prospects and customers,
as well as other business and life
cycle events of customers
2) Sales
provides sales reps
with tools and company data
sources
needed to support and manage
sales activities, sales activities,
optimize cross-selling and up-
selling
3). Marketing Fulfillment
help marketing professionals
accomplish direct marketing
campaigns
by automating such tasks as by automating such tasks as
qualifying leads for targeted
marketing,
and scheduling and tracking
direct marketing mailings
4). Customer Service and Support
provides service reps with
software tools
and real-time access to the
common customer database common customer database
shared by sales and marketing
professionals
5).Retention and Loyalty Programs
help a company
identify,
reward, and reward, and
market
to their most loyal and
profitable customers
How does technology play a role?
Enabler ….
Managing all touch points with the customer
to develop knowledge so that the
‘relationship’ part of the interaction becomes ‘relationship’ part of the interaction becomes
meaningful.
Note, technology is only an enabler, people
and organizational design play critical roles in
CRM success
How? Track and Analyze Data
Customer registration
Requiring visitors to fill out a form with personal
information that is then used to create a profile
Only works when it will provide a benefit to the customer
When customers log on using usernames and passwords, When customers log on using usernames and passwords,
their actions can be tracked and stored in a database
Need to give customers an incentive to register
Personalize each visitor’s experience
Find trends in customer use
ID cards
Tracking: Web Bugs
Web Bugs, or clear GIFs
A type of image file embedded in web site
Site owners allow companies, especially
advertising companies, to hide these information- advertising companies, to hide these information-
collecting programs on various parts of their sites
Every time a user requests a page with a Web bug
on it, the Web bug sends a request to the Web
bug’s company’s server, which then tracks where
the user goes on the Web.
Tracking: Log-File Analysis
When visiting a site, you are submitting a request
and this is recorded in a log file
Log files consist of data generated by site visits, including
each visitor’s location, IP address, time of visit, frequency
of visits, etc. of visits, etc.
Log-file analysis organizes and summarizes the information
contained in the log files
Can be used to determine the number of unique visitors
Can show the Web-site traffic effects of changing a Web site
or advertising campaign
E.g. WebTrends.com, ClicTracks, Webalyzer
Tracking: Customers
Click-through banner advertisements
Click-through ads enable visitors to view a service or
product by clicking the ad
Advertisers can learn what sites generate sales
Business value of CRM
Business Value of CRM Systems Business Value of CRM Systems
• Increased customer satisfaction
• More effective marketing and reduced direct marketing • More effective marketing and reduced direct marketing
costs
• Lower costs for customer acquisition and retention
• identifying most profitable customers
• segments for marketing,
• cross-selling,
Increase revenue
• up-selling
• Number of repeat customers
• Reduction of churn
CRM Performance Measurement CRM Performance Measurement
• Customer Lifetime Value (CLTV):
CLTV = (Revenues – Expenses)-the cost of promotional
marketing used to retain an account
CRM vendors
• CRM application apps vendor:
• Siebel ( acquired by Oracle)
• Clarify
• Salesforce.com
• Others:
• SAP
Can any organization afford bad
customer support?
Concept of switching Cost
Unique benefits
! THANK YOU !