CUSTOMER RELATIONSHIP MANAGEMENT

RABIA MEHMOOD
LECTURER - UOL
INTRODUCTION

 Strategic CRM - Focuses on winning & keeping profitable customers, relies on customer-related data to identify
which customers to target, win & keep
 Operational CRM - Focuses on the automation of customer-facing processes such as selling, marketing and
customer service, needs customer-related data to be able to deliver excellent service, run successful marketing
campaigns and track sales opportunities
 Analytical CRM - Mines customer-related data for strategic or tactical purposes
 Collaborative CRM - Shares customer related data with organizational partners, with a view to enhancing
company, partner and customer value
 Customer-related databases are the foundation for the execution of CRM strategy
WHAT IS CUSTOMER-RELATED DATABASE

 Capture customer-related data from a number of different perspectives

 Customer-related data database might be maintained in number of functional areas each serving different
operational purposes
 Customer-related data can have a current, past or future perspective, focusing upon current opportunities,
historic sales or potential customers
 Customer related data might be about individual customers, customer cohorts, customer segments market
segments or entire markets
DEVELOPING A CUSTOMER-RELATED DATABASE

 Most common databases share a common structure of:

 Files (tables) – hold information on a single topic
 Tables contain records (rows)
 Each record contains fields (columns) across the table
o Fields are elements of data
DEVELOPING A CUSTOMER-RELATED DATABASE…

 Six major steps in building customer-related database include:

i. Define the database functions
ii. Define the information requirements
iii. Identify the information sources
iv. Select the database technology & h/w platform
v. Populate the database
vi. Maintain the database
DEFINE THE DATABASE FUNCTIONS

 Databases support 4 forms of CRM:

 Strategic CRM – Needs data about markets, market offerings, customers, channels, competitors, performance & potential to
be able to identify which customers to target for customer acquisition, retention & development, and what to offer them
 Operational CRM - Uses customer-related data to help in the everyday running of the business
 Analytical CRM - Uses customer-related data to support the marketing, sales and service decisions that aim to enhance the
value created for and from customers
 Collaborative CRM - Use the operational and analytical data as described below, so that partners in distribution channels
can align their efforts to serve end-customers
DEFINE THE DATABASE FUNCTIONS…

 Operational data resides in an OLTP (online transaction processing) database

 Analytical data resides in an OLAP (online analytical processing) database
 Information in the OLAP database is normally a summarized, restructured, extract of the OLTP database,
sufficient to perform the analytical tasks
 The analytical database might also draw in data from a number of internal and external sources
 OLTP data needs to be very accurate and up to date
 OLAP databases can perform well with less current data
DEFINE THE INFORMATION REQUIREMENTS

 Answer the question “what information is needed?”

 People who interact with customers for sales, marketing & service purposes & those who’ve to make strategic CRM
decisions answer this question
 Senior managers reviewing your company’s strategic CRM decisions will require a completely different set of
information
 How is the market segmented? Who are our current customers? What do they buy? Who else do they buy from? What are
our customers ’ requirements, expectations and preferences across all components of the value proposition, including
product, service, channel and communication?
DEFINE THE INFORMATION REQUIREMENTS…

 With the advent of packaged CRM applications, much of the database design work has been done by the software
vendors
 The availability of industry-specific CRM applications, with their corresponding industry specific data models,
allows for a much closer fit with a company’s data needs
DEFINE THE INFORMATION REQUIREMENTS…

 Most CRM software has pre-defined fields in different modules

 Sales application contains following information about customers:
 Contact data
 Contact history
 Transactional history
 Current pipeline
 Opportunities
 Products
 Communication preferences
IDENTIFY THE INFORMATION SOURCES

 Information sources for customer-related database can be internal or external

 Internal data are the foundation of most CRM programs
 Internal data can be found in various functional areas:
 Marketing
Data on market size, market segmentation, customer profiles, customer acquisition channels, marketing campaign records, product
registrations and requests for product information
IDENTIFY THE INFORMATION SOURCES…

 Sales
Customer purchasing history, buyer’s name & contact, potential customers, competitor products & pricing, customer requirements &
preferences

 Customer Service
Records of service histories, service requirements, customer complaints, resolved & unresolved issues

 Finance
data on credit ratings, accounts receivable and payment histories
IDENTIFY THE INFORMATION SOURCES…

 Internal data can be enhanced using external data

 External data can be classified into three groups:
i. Compiled list data
ii. Census data
iii. Modelled data
IDENTIFY THE INFORMATION SOURCES…

 Customer-related data are either secondary or primary

 Secondary data - Data that have already been collected, perhaps for a purpose that is very different from your
CRM requirement
 Primary data - Collected for the first time, either for CRM or other purposes
 Collected through traditional means, such as surveys, can be very expensive
IDENTIFY THE INFORMATION SOURCES…

 Data-building schemes:
 Competition entries
o Customers are invited to enter competitions of skill or lotteries
o Personal data is surrendered in the entry forms

 Subscriptions
o Customers may be invited to subscribe to a newsletter or magazine, again surrendering personal details

 Registrations
o Customers are invited to register their purchase
SELECT THE DATABASE TECHNOLOGY & H/W PLATFORM

 Hierarchical & network were the old ways in which customer-related data used to be stored
 Relational databases
 Store data in two dimensional tables comprised of rows & columns
 Primary key - Have one or more fields that provide a unique identification form for each record
SELECT THE DATABASE TECHNOLOGY & H/W PLATFORM…

 Choice of hardware platform is influenced by several conditions:

 Size of the database
 Existing technology
 Number of users
POPULATE THE DATABASE

 CRM applications need data that are appropriately accurate

 Operational CRM need more accurate & contemporary data that analytical CRM
 One of the biggest issues with customer data is not so much incorrect data as missing data
POPULATE THE DATABASE…

 Main steps in ensuring that database is populated with accurate data are as follows:
 Source the data
o Organizations must develop explicit processes to obtain information from customers, such as on initial sign-up or when concluding a
service call
o Data must be collected whenever interaction occurs

 Verify the data

o Ensures that the data has been entered exactly as found in the original source

 Validation
o Concerned with checking the accuracy of the entered data
o Range validation, missing values & check against external sources are some of the processes that can improve the data accuracy
POPULATE THE DATABASE…

 De-duplication
o Customers become aware that their details appear more than once on a database when they receive identical communications from a
company
o Occur when external data is not cross-checked against internal data, when two or more internal lists are used for the mailing or when customers have
more than one address on a database

o Associated possible errors are:

o Removing a record that should be retained
o Retaining a record that should be removed
POPULATE THE DATABASE…

 Merge and purge data from two or more sources

 Performed when two or more databases are merged
 Happens when an external database is merged to an internal database, when two internal databases are merged (e.g. marketing and
customer service databases), or when two external lists are bought and merged for a particular purpose such as a campaign
 There can be significant costs savings for marketing campaigns when duplications are eliminated from the combined lists
MAINTAIN THE DATABASE

 Companies can maintain data integrity in a number of ways:

 Ensure that data from all new transactions, campaigns and communications is inserted into the database immediately
 Regularly de-duplicate databases
 Check a subset of the files every year. Measure the amount of degradation.
 Purge customers who have been inactive for a certain period of time
 Drip-feed the database. Every time there is a customer contact there is an opportunity to add new or verify existing data
 Get customers to update their own records
 Remove customers ’ records when they request this
MAINTAIN THE DATABASE…

 Desirable attributes for maintaining database are:

 Shareable
o Data need to be shareable because several users may require access to the same data at the same time

 Transportable
o Data need to be transportable from storage location to user
o Data need to be made available wherever and whenever users require
MAINTAIN THE DATABASE…

 Accuracy
o Keystroke mistakes can cause errors at the point of data entry
o Data inaccuracy lead to undue waste in marketing campaigns

 Relevant
 Timely
o Data is available as and when needed
o Data that is retrieved after a decision is made is not helpful

 Security
DATA INTEGRATION

 There are several customer-related databases, maintained by different functions or channels

 External data from suppliers, business partners, franchises & others may need to be integrated
 Failure to integrate databases may lead to inefficiency & duplication in customer related databases
 Software are needed that allow company to integrate databases on different legacy systems
 Middleware has to be written to integrate data from diverse sources
 Connects different parts of system that would not be otherwise be able to communicate to each other
 Referred as a kind of glue that holds a network together
DATA WAREHOUSING

 Huge volume of data that is generated by company needs to be converted into information that can be used for
operational & analytical purposes
 Data warehouses are no more than repositories of large amounts of operational, historical & customer-related
data
 Warehouse is a repository for data imported from other databases
 Attached to its front end is a set of analytical procedures for making sense out of data
DATA WAREHOUSING…

 Key characteristics include:

 Subject-oriented - Organized by subject rather than process; domains include suppliers, customers, sales, and
inventory
 Integrated – Integrated data from different systems
 Time-variant – Reporting over a period of time
 Non-volatile – Once stored, data is not changed except for a compelling reasons
DATA MARTS

 Scaled down version or subset of data warehouse customized for use in particular business function or
department
 Meeting the specific needs of a particular group of employees in terms of analysis, content, presentation, and ease
of use
 Marketing and sales may have their own data marts enabling them to conduct separate analyses and make strategic and
tactical decisions
DATA ACCESS & INTERROGATION

 CRM users want to interrogate data for analytical purposes

 Three ways for interrogating data include:
i. Standard Reports
 Generated automatically on a periodic basis by the CRM system

 E.g. monthly reports to sales management about sales representatives activity

ii. Database queries

 Different types of query languages are available for raising database query

 In graphical approach, users can click and drag the data they want, and then drill down until they reach the level of granularity they require

 Standard query language is SQL

DATA ACCESS & INTERROGATION…

iii. Data Mining

 Application of descriptive and predictive analytics to support the marketing, sales and service functions

 Statistical analysis of large pools of data to find hidden correlations & trends

 Seeks to find patterns & associations in data & summarize it into useful information that can be used to improve customer relationships
DATA ACCESS & INTERROGATION…

 Data mining answers following questions:

i. How can our market and customer base be segmented?
ii. Which customers are most valuable?
iii. Which customers offer most potential for the future?
iv. What types of customers are buying our products? Or not buying?
v. Are there any patterns of purchasing behavior in our customer base?
vi. Should we charge the same price to all these segments?
vii. What is the profile of customers who default on payment?
viii. What are the costs of customer acquisition?
ix. What sorts of customer should be targeted for acquisition?
x. What offers should be made to specific customer groups to increase their value?
xi. Which customers should be targeted for customer retention efforts?
xii. Which retention tactics work well?
DATA PRIVACY ISSUES

 Privacy and protection of data are major concerns to legislators around the world
 Two major responses to the privacy concerns:
i. Self-regulation by companies
 Have their own privacy policies.

 Professional bodies in fields e.g. marketing, advertising have adopted codes of practice that members must abide by.

ii. Legislation
 Set of principles that has served the foundation for personal data protection legislation around the world

 These principles are voluntary guidelines that member nations can use when framing laws to protect individuals against abuses by data
gathers
DATA PRIVACY ISSUES…

 Principles of legislation are as follows:

i. Purpose specification
 Consumer should be provided with clear purpose statement for which data is being collected

ii. Data collection processes

 Data should be collected only by fair & lawful means

iii. Data quality

 Personal data should be relevant for the purposes used and kept accurate, complete and up to date

iv. Limited application

 personal data should not be disclosed, sold, made available or otherwise used for purposes than as specified at the time of collection
DATA PRIVACY ISSUES…

v. Openness
 Consumers should be able to find out what data has been collected & the uses to which it has been put

vi. Access
 Consumers should be able to access their data

vii. Data security

 personal data should be protected against risks such as loss, unauthorized access, destruction, use, modification or disclosure

viii. Accountability
 Data controller should be accountable for compliance with these measures
DATA PRIVACY ISSUES…

 Data controllers are required to comply with certain obligations including:

 Only collect and process data for legitimate and explicit purposes
 Only collect personal data when individual consent has been granted, or is required to enter into or fulfil a contract, or is
required by law
 Ensure the data is accurate and up to date
 At the point of data collection, to advise the individual of the identity of the collector, the reason for data collection, the
recipients of the data, and the individual’s rights in respect of data access, correction and deletion
 Ensure that the data is kept secure and safe from unauthorized access and disclosure