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Customer Relationship Management

Touch Points
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What can CRM do?


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What Can CRM do?


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Processing Transactions

Enterprise Collaboration
Reporting Dashboard Decision Support

Expert System

Critical Factors of Relationship Management


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Why CRM Systems are Being Used


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Identifying prospects Acquiring customers Developing customers Cross-selling and up-selling Managing migration Servicing Retaining Increasing loyalty

Winning back defectors

Four Basic Steps in CRM


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ID your customers in detail.

Differentiate the most and least profitable.

Interact.

Customize your offerings to fit each customers needs.

The Objectives of CRM


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ID potential customers Understand needs

Improve campaign management Increase referrals Win back lost customers Move customers up relationship

Differentiate dollars and


cents Decrease attrition Increase usage Increase cross usage Increase usage of more prestigious items Increase satisfaction Integrate marketing and sales throughout channels

hierarchy

Strangers Acquaintances Friends Partners

Which Companies Benefit Most from CRM?


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Companies serving large numbers of customers

through complex and frequent interactions:


Communications companies Retail banks Insurance companies Healthcare organizations Utilities

Companies with a steep skew Companies in lost for good markets

Six Key Aspects of a Successful Relationship Marketing Strategy


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STRATEGIC ISSUES
Service business orientation Process management perspective Partnership/network formation

TACTICAL ISSUES
Direct customer contacts Customer databases Customer-oriented service system

TYPES OF CRM technology


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Operational CRM

Analytical CRM Collaborative CRM

Types of CRM technology


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CRM TECHNOLOGY FRAMEWORK

Operational CRM
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Most identifiable part of CRM


Covers customer facing transactions Includes Sales Force Automation, Enterprise

Marketing Automation, Front Office Suites Includes typical business functions like customer service, order management etc. Eg. SAP CRM-On Demand, PeopleSoft

Operational CRM
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Involves 3 general areas SFA-Sales Force Automation


CSS-Customer Service and support EMA-Enterprise Marketing Automation

Analytical CRM
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Includes capture, storage, extraction, processing,

interpretation, reporting of customer data to user. Customers data is taken from multiple sources and stored in customer data repository Algorithms are used to analyze and interpret data as needed. Uses data mining Eg. Micro Strategy

CRM Decisions
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CRM Decisions
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Business Model
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Business Model
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SG and SAM
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Choosing CRM
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Sixth Sense

Business Model
Process Design Parameter identifying

http://crm-software-review.toptenreviews.com/

Customer Life Cycle Management


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Customer life cycle


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The stages a customer goes through from the time

before deciding to do business with an organization until he/she decides to stop being a customer. The progression of steps a customer goes through when considering, purchasing, using, and maintaining loyalty to a product or service. The goal of effective CRM is to get the customer to move through the cycle again and again.

Customer life cycle


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ACQUISITION
suspect

RETENTION
Loyal advocate

WINBACK
Inactive customer

prospect Customers 1st transaction

Repeat customer

Lost customer

Steps in CRM cycle


Understand customers needs Differentiate based on their needs characteristics and behaviour

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Develop products,services,channels to meet customers needs Customize based on customer segments

Understand and Differentiate

Develop and customize

Acquire and Retain


Acquire customers and prospective customers Retain valuable customers

Interact and Deliver


Interact with customers and prospective customers Deliver increased value to customers

Customer Life Time Value


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Amount of money a customer spends while doing

business with a firm in his entire lifetime as the firms customer. It may also include money spent by his referrals. CLTV in quantitative terms is defined as the net present value(NPV) of the future profits to be received from a given no. of newly acquired or existing customers during a specified time frame. Some customers have low LTV so org. may not want to reestablish relationships with those who demand too much service without corresponding amt of revenue.

CRM and Sales Strategy


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CRM and Sales


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A salespersons principle responsibility is to improve

his or her business and relationship with his or her customer continually.

Todays sales forces must record customer needs. The single greatest impediment to effective CRM is the lack of sales force participation.

CRM and Sales Strategies


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There are several different selling strategies

currently used based on the strengths of organizations.


Transactional selling Consultive selling Strategic selling Partnership selling

Information Empowerment
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CRM is providing sales forces with the capability to monitor

their business better.

The foundation for these capabilities is the acquisition of better information collected from a variety of customer touch points. Sales collects and inputs the following buyer organization data:

objectives motivations purchase cycles available budgets (open to buy) purchase authority buying-committee involvement

Information Empowerment
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In addition, the salesperson is responsible for inputting:


sales forecasts sales probabilities delivery specifics expected sale timing

Using CRM for Selling


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We evaluate the impact of CRM with the following analytics ROI Sales opportunities closed Prediction accuracy The capability to track major sales events It is easy to see how sales leaders are using CRM and gaining prominence in their organizations

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The R in CRM

A Question of Value
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How does CRM help to increase customer

satisfaction?

More timely response to needs An improved and smoother sales process Better forecasting and performance Providing the correct solutions at the right time

PERFORMANCE / TRUST CONTINUUM


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Unfamiliarity

Trust

PERFORMANCE
Negotiation Dialogue

TIME
Transactional Selling Relationship Selling

The CRM Sales Cycle


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Sales Force Automation


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The Ever-Evolving SFA


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Early 1990s companies with field sales forces were

faced with tremendous amounts of customer information. Software vendors realized this unmet and unrecognized need. Info about customers was kept in little black books that left with the sales reps.

The Promise of SFA


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Putting account information directly in the hands of

field sales staff. Making them responsible for it with the promise of.. Making them more productive. Synchronize information with the corporate client/server database.

Scenario One
You are on your way to a meeting with one of your best customer. 43 Jim is not only one of your best customers hes one of the companys best. His firm accounts for 2 percent of this years revenues. Soon, you hope it will be 3. You arrive early at the customers building, show your badge at the desk and take the elevator to Jims office. He is in a meeting with a member of his staff, but quickly dismisses them when he realizes you are there. He is always willing to listen to a sales pitch. However, he is not placing an order today, in fact he may never place another order again. His entire firm has been at a standstill for the past 48 hours because of your product. Your product is still on the fritz and Jim and his people have been on the phone to your customer support center for the past day and a half. Your face displays surprise. No one told me about it, Jim, you stammer as you strive to recall any voice-mail messages you might have prematurely erased. Jim stands up from behind his desk, a wordless acknowledgement that hes far too busy to hear about your communication breakdown. After all, hes got a big one all his own to worry about. You think about how to make up for the 2 percent in revenue you and your company are about to lose.

Scenario Two
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Jim is still the customer being discussed. En route to your

customers site, you turn on your PDA which begins to beep. Priority one alert! Customer Impacted! Flashed on the screen. You pull to the side of the road and read more, according to the message the customer you are about to see has experienced a major outage. A field service rep has been contacted and is now working on the problem. Instead of going upstairs when entering the building, you walk to the back and find the service rep repairing equipment. When you find out that hes working to repair the problem and will have it fixed in the next thirty minutes. You feel relieved and walk upstairs to meet with Jim. Upon entering his office, Jim smiles and says he knew it would be taken care of. Then he asks when the company can get an upgrade. The revenue contribution also increases to 4 percent during the conversation.

Sales Force Automation Tools


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Sales Process/Activity Management Include a sequence of sales activities Guide sales reps through each discrete step in the sales process

Sales process

Opport Opportunity Generated unity Genera ted

Lead allocated

Prospect contacted

Prospect qualified

Solution identified

Order placed

Sales activity

Sales Force Automation Tools


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Sales Process/Activity Management (cont) Offer calendars to assist in the planning of key customer events
Proposal presentations Product demonstrations

Alarm Reminders
Signal important tasks Generate documents as they are needed Make decisions based on the users input Generate a mailing suggestions

Sales Force Automation Tools


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Sales and Territory Management Tools that enable sales managers and executives on-demand access to sales activities

Before, during and after the order

Enables managers to set up sales teams and link individual accounts, regions and industries. Allows tracing of territory assignments and monitor pipelines and leads for individual territories. Allows optimization of individual teams

Sales Force Automation Tools


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Contact Management Deals with organizing and managing data across and within a companys client and prospect organizations.

Sales Force Automation Tools


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Lead Management Also known as opportunity management and pipeline management Track customer account history Monitor leads Generate next steps and Refine selling efforts online Allows sales management to automatically distribute client leads to a field or telemarketing rep based on the res product knowledge or territory

Why are SFA Tools Important?


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1 Rep X 50 Contacts X 12 month = 600/Year X 15 Years = 5000 Contacts

50 Contacts

600 Contacts 5000 Contacts

Figure 9.1

Wireless Networks
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Figure 9.2

Dashboards
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The dashboard also provides management with key performance

metrics to evaluate a salespersons performance individually, within their peer group, and across the company. Some important measurement metrics can be seen on the example of a CRM dashboard posted on salesforce.coms web site.

Those analytical measures exposed are


Sales volume, which can be expressed in units, dollars (or local currency) Open Deals- Top Five sales opportunities (for example) Sales Leads - Source of prospect by quantity Key Account A review of sales by key account Open Cases A review of customer service issues and resolutions Pipeline A forecast of upcoming sales by type, by month Sales Activity a review of sales activity by source

Pipeline
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The pipeline graphic utilizes data input into the forecasting

module of CRM.

Best estimate Each sale is assigned a probability-estimated closing date. The net forecast results from committed cases Individual forecasts combine to comprise a regional forecast and then regions for national pipeline estimates.

Key Account Management (KAM)


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Terminology: major account; national account; global account management; key account; strategic account; corporate account etc What is KAM?

Important account Prioritise resource allocation

Buyer Perspectives on KAM

Supplier Benefits
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Develop closer relationships: trust, align products/services closer to business requirements or strategic goals Customer base stability buyers not switching between suppliers Profit / sales volume increases Word of mouth promotion Personal relationship development Problem solving ability

Buyer Benefits
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Closer Relationships: trust; understanding

business issues Resource reduction in transactions Single point of reference for problem solving Priority access to production/ staff services Customisation of products/ services offered Lower prices / costs of doing transactions

Differences between KA and others


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Complexity of account: geographical; function;

operational Centralisation of purchasing processes Volume of sales

7 Factors Buying firms consider


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Importance of the suppliers service/ product to


the buyer Degree of knowledge & experience the buyer has with KAM Position of the account within the supply portfolio Type of purchasing decision process undertaken Environmental consequences Buyer strategic decisions Open-mindedness of the customer to something new

Campaign Management
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Campaign management helps sales professionals plan,

develop, and deliver major account promotional programs and informational e-mail efforts.

CRM and Marketing Strategy


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What we Know about Customer Satisfaction


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Satisfied customers may not remain loyal Dissatisfied customers tell more people than

satisfied customers Only a small percent of customers ever complain Relationships based on satisfaction are, in fact, weak

There are three Types of Relationships Companies Have with Customers 62


Acquaintance: Based on satisfaction
Friendly: Based on trust Partner: Based on commitment

Factors Intervening between Satisfaction and Loyalty


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Shear number of competitors

offerings Novelty seeking Lack of personal attachment with brand Lack of consistency in performance New competitors offering better value or a greater variety of ancillary services Customer expectation of future use Customers may not want a relationship with your firm

Developing a Loyalty Profile of Your 64 Customers


Customer loyalty is based on favorable attitudes and

behavioral responses such as repeat purchase. It is both

Behavioral Attitudinal

Customers may be emotive loyalists or deliberative

loyalists.

Are Loyal Customers Always More Profitable?


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Five reasons many say yes:


1.
2. 3. 4. 5.

Increased number of purchases Tendency to Trade-Up Tendency to become less price sensitive because of focus on convenience and purchase efficiencies Word-of-mouth referrals Lower cost of servicing them

CRM Strategy Cycle The New Marketing Strategies

Acquisition

Retention

Winback

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Acquisition Strategies
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Necessary to fill the pipeline since companies lose

2-40 percent of their customers every year. Mass media advertising still useful here. Capture potential user IDs and gain permission to begin dialogue. Begin with defining your target and goals for the acquisition campaign.

How To Develop Effective Acquisition Strategies


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Qualitative and quantitative marketing

research Eliminate switching cost Present your offer at the appropriate times Encourage word-of-mouth referrals

Retention Strategies
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Can be based on: Rewarding Bonding Service structure strategy With two types of bonds Programmatic Humanistic

Types of Retention Strategies


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Preferential treatment

Conversion

Rewarding
Employ idiosyncratic-fit Personalization Customization Cross-selling Up-selling Managing migration

Profit driving
Brand building Providing and attaining Intimacy Online customer

management Data mining

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Customer Touch Points

Customer Touch Points


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Points within an organization where seller and buyer

interaction occurs

Happen daily in the sales and customer service functions of a business Happen less frequently in accounting, R&D, supply chain management, and marketing This activity is essential to record within a CRM system for the customer management purposes

IMC and CRM


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Campaign Communication Planning


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There are a variety of considerations in

planning, including

Campaign timing Audience Program delivery Program variables (promotion values) Results/program performance

Campaign Communication Planning


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Customer communication planning identifies

an opportunity via

Data mining Segmentation analysis


Objectives Strategy Tactics E-mail Direct Mail Web Based

Successful campaigns establish Campaign CRM Campaign Campaign

The 4 Cs of Customer Marketing


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Customer needs

Customer convenience
Customer cost dynamics Customer communication

Case Study and Basic Business Intelligence with RFM


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Look at the data and.


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Business customers constitute what proportion of customers in the database?

__________ Within the personal group, what is the ratio of male to female customers? __________ What proportion of customers purchased tickets in the most recent year? __________ What is the average number of seats per customer per game? __________ If we divided the database into customers that attended between 1-3 games, 4-6 games, 7-9 games and 10+ games, then, which group has the highest customers? __________ What proportion of customers are fan club members? __________ What proportion of personal customers have cars? __________ Create a new variable (in Column U), Price per Ticket by dividing Total Sales (K) by the product of Number of Games (I) * Average Number of Seats (J). What is the range (maximum and minimum) for Price per Ticket? __________ Most customers pay __________ per ticket.

What does RFM stand for?


RFM stands for Recency, Frequency & Monetary

Analysis Recency: When did the customer make their last purchase? Frequency: How often does the customer make a purchase? Monetary: How much money does the customer spend?

Collaboration Exercises #2, pg. 366

What is RFM Analysis?


RFM Analysis helps companies decide which customers

to give select offers and promotional items. It is a way for companies to find ways to increase customer spending. Companies can use it to target lost customers and give them incentives to purchase items RFM Analysis can help companies keep track of their customers and build a relationship that can increase sales and productivity. It also identifies minimal losses customers spend low dollar amounts in small quantities

Collaboration Exercises #2, pg. 366

How does RFM Analysis work?


First, customers are divided into 5 equal sized groups

(20% in each group) Customers are then given an R, F, & M score Using a score of 1 to 5, 20% of the most recent customers get an R score of 1. The second most recent get an R score of 2 and this continues until all 5 groups receive a score. The 5 groups are reorganized to repeat the procedure for the F & M scores.

(see spreadsheet Supplier Rankings)

Collaboration Exercises #2, pg. 366

CRM Done Right


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Is this strategic?

Where does it hurt?


Do we need perfect data? Where do we go from here?

Data Management
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Data Capture
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Touch points What is being captured? What should be captured? Availability Timing Quality

Data Transformation
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Convert data into information

Information aging
Convert information into knowledge

Data Mining
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Location and access considerations Operational Data Store (ODS)


Dynamic data repository Tactical and decision report applications Data limited to current operational needs

Data Mining
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Location and access considerations Data warehouse (DW)


More static than ODS Large depth and breadth of information Data transformed into knowledge Analysis strategy and planning applications

Data Mining
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Location and access considerations Data marts (DM)


Receives data from DW or ODS, but usually the former Limited but concentrated information Data transformed into knowledge Analysis, strategy and planning applications Usually designed for use as a narrow application Data mining and statistics

Data Mining
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Techniques Recency, frequency, monetary (RFM)


Thirty-one permutations of sorting four variables (customer number, recency, frequency, monetary) Inexpensive; easy to perform

Decision trees
More complex than RFM Helps turn complex data representation into a much easier structure

Data Mining
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Other data mining techniques Artificial neural network, business intelligence (BI), data stream mining, fuzzy logic, nearest neighbor algorithm, pattern recognition, relational data mining, text mining, chiSquare, t-test, regression, correlation

Gartner Hype Cycle


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Contract management
Title Risk of loss Seller/Buyer Refusal Warranty Implied

Performance Measurement
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CRM Program Measurement Surprising Findings


90 PERCENT OF THE FIFTY LARGEST

C R M U S E R S W E R E93 UNABLE TO QUANTIFY A RETURN ON THEIR CRM INVESTMENT ONLY 30 PERCENT OF COMPANIES MEASURED BENEFITS OF CRM ONLY 37 PERCENT KNEW IF THEY SHARED A CUSTOMER WITH ANOTHER DIVISION IN THEIR COMPANY ONLY 20 PERCENT KNEW IF A CUSTOMER HAD EVER VISITED THE COMPANY WEB SITE

CRM Evaluation Model


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Cause and Effect


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BSC
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Process
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Top Ten Mistakes Companies Make When Measuring Their 98 CRM Effectiveness

Off in a corner Lack of leadership support Too much data No clearly defined strategy Knowing without acting Stale as seven-day old bread Death by 1,000 dashboards Failure to benchmark Culture of inertia Failure to measure outcomes

CUSTOMER RELATIONSHIP MANAGEMENT

Customer Relationship Management (CRM)

in supporting business operations


Benefits, challenges, and future of CRM

The Need for CRM


It costs six times more to sell to a new customer

than to sell to an existing one. A typical dissatisfied customer will tell 8-10 people. By increasing the customer retention rate by 5%, profits could increase by 85%. Odds of selling to new customers = 15%, compared to the odds of selling to existing customers (50%) 70% of complaining customers will remain loyal if their problem is solved

Tenets of CRM

One-to-one relationship between a customer and a seller. Treat different customers differently. Keep profitable customers and maximize lifetime revenue from them.

Customer Touch Points


Web Smart Phone Computer Physical Store

Customer Service

CUSTOMER
Service Center

Sales Representative

Email

Direct Mail

Field Service Technician

CUSTOMER RELATIONSHIP MANAGEMENT


Customer relationship management (CRM)

Involves managing all aspects of a customers relationship with an organization to increase customer loyalty and retention and an organization's profitability

Evolution of CRM

The Challenges of CRM


The customer is always right and now has more

power (buyer power) than ever thanks to the Internet: e-business, words of mouth via social network

Future
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A Changing CRM Landscape


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Differing CRM technologies are competing for

clients, and that competition should provide for


Differences in product pricing Improved system feature functionality Different CRM applications that support sales and marketing programs

A Changing CRM Landscape 108


In the next five years, we will see intense

competition of CRM technology platforms as

On-demand CRM seeks to expand its penetration in small to mid-size companies to effectively serve large enterprise customers Enterprise software companies like Oracle and SAP focus on the on-demand product model
SAP introduced SAP CRM on-demand solution But old habits die hard, as SAP has hedged its bet by introducing their product as a hybrid, offering the product as both software and an on-demand service Oracle/Siebel and Microsoft offer the same hybrid form

Privacy, Ethics and Deontology


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Consumer Privacy Concerns Touch Point Activity


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Quid pro quo

Unsolicited direct mail


Data : USE, MIS-USE and ABUSE Data Privacy- Maturity models Ethical situations Deontology- the final frontier

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