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eCRM: 1 to 1 Marketing

Jason C.H. Chen Professor of MIS School of Business Administration Gonzaga University, Washington, U.S.A. Senior Consultant, Taskco.com chen@gonzaga.edu

Presentation topics
Why are companies moving to CRM ? What’s in it for you? 1 to 1principles and best practices Other challenges Where do you go from here?

eBusiness Key Concepts

eBusiness

The strategy of how to automate old business models with the aid of technology to maximize customer value The process of buying and selling over digital media

eCommerce

eCRM (eCustomer Relationship Management)

The process of building, sustaining, and improving eBusiness relationships with existing and potential customers through digital media

eBusiness Processes
WHY Customer Relationship

WHAT

Redesign Business Processes (Outside-In)

HOW

Applying Technology

CRM has become the #1 priority for CEOs …
Customer Relationships Have Become the top priority for CEOs Worldwide
1. Relationship with Customers 2. Cost Competitiveness 3. Effective Use of Information Technology 4. Managing Change 5. Shareholder Value 6. Revenue Growth 7. Industry Restructuring 8. Globalization 9. Value-Added Supplier Relaationships
Source:A.T. Keamey,1994 Executive issues Survey; A.T. Keamey,1997 CEO Global Business Study

Figure 1:Top Executive Priorities Ranked By Percent Citing Issue As “Critically Important”

CRM has become the #1 priority for CEOs … Senior Executives Expect Current Customers to Drive Future Revenue Growth Alliances 7% New Customers 19% Acquisitions 6% Deeper Penetration 46% New Products 22% Source:The Alexander Group.1996 .Incorporated.

Why the shift in focus to CRM? Most companies have already attained operating efficiencies and optimum productivity through past efforts of :     Downsizing Strategically outsourcing non-value added actives Business Process Reengineering Implementation of FRP System Products in many industries have become commoditized forcing companies to sacrifice margins for sales volume .

Presentation topics Why are companies moving to CRM ? What’s in it for you? 1 to 1 principles and best practices Other challenges Where do you go from here? .

the average business is losing between 15-35% of its customers annually** 69% of these defections are due to a poor sales or service interaction with the customer** *Harvard Business Review **Forum Corporation . check these numbers… Cutting customer defections by just 5% has the effect of boosting profit between 25% and 85%.* Today .And oh.

1998 .Investment in CRM capabilities can provide significant financial benefits 50% 40% 30% 20% 10% 0% 2% 42% 35% 25% 20% ts ns gs ue se s ve n e c r e a du c t i o ve m e n R a t i n Re D o e n h R o st m pr s f a c t i o s C L e n gt r gi n I e tati Sa l e Ma er S y cl t om es C Sa l C us Source:Insight Technology Group.

Other reasons why you need 1 to 1 Increase customer loyalty Get more business per customer Become less dependent on price Increase customer satisfaction Save time Speed up your sales cycle .

Our Objectives    1. Keep customers 3. Get customers 2. Grow customers The only difference is how firms do this .

Share of market vs. share of customer Customer Needs Satisfied Share of Market Mass Marketing Customers Reached .

Share of market vs. The higher unit Margins will be Share of Customer to Marketing 1 Share of Market Customers Reached . share of customer Customer Needs Satisfied 1 Mass The longer the bar.

In four words …  Treat different customers differently .

This information has to come from the customer. Going to a competitor = Reinventing the relationship .A lasting competitive advantage The only true competitive advantage comes from the understanding you have of your customer that your competitors don’t.the grater their stake in making relationship work. The more effort customer invests.

Presentation topics Why are companies moving to CRM ? What’s in it for you? 1to1 principles and best practices Other challenges Where do you go from here? .

Summary of 1to1 strategies Identify Customer: -Identities -Contact info -Transactions -Interactions -Give the right people access when they need it One view of the customer: Integrated customer data Differentiate Value: -Actual (current profits) -Strategic (potential value) Needs: -Individual -Segment All customers are not created equal Interact Learn more: -Needs -Value -Preferences -Behaviors Customize Customer Need Set: -Product -Service -Delivery -Bundles Never make a customer tell us the same thing twice Use your knowledge about customers to customize .

Choice of communication channel .transactions Customer needs .Identify–What information do you need? Goal: obtain more and better information about a greater number of your customers… and use it to build relationships Name.Lifecycle stage Source:Insight Technology Group.Business objectives .Potential value . serial number.Complaints . email History. fax. LTV .Habits and preferences Revenues. phone. rank.1998 . profitability.

Where is the customer data? Where is it? Who has access? Who manages it ? Who owns it? Sales Customer Service Marketing Collections Department Operations Other Providers Internet Call Center .

across all divisions Give the right people access to this info at the right times Figure out who “the customer” is when the “customer” is an enterprise .How do you manage it ? Make sure individuals are recognized at all contact points Link customer interactions over time.

com is an online office supply retailer that offers customers a master agreement that covers all employees .+  Recognize Company/Family Linkages (BEST OF BREED)  Works.

Charles Schwab creates links Broker access to complete customer account(s) including business and personal links    Broker sees account the way the customer sees the account Picks up where last action/interaction left off Integration across all channels .

“One Customer” view is key Integrate customer information across the value chain Customer A Customer A Customer A Customer A Customer A Marketing Call Center The Web Sales Force .

not market Customers have different needs from the enterprise .Differentiate Customers have different values to the enterprise   Actual value Strategic value=share of customer.

Tiering by actual value First: Determine Actual Customer LTV First Tier Second Tier Third Tier Fourth Tier Fifth Tier .

Tiering by strategic value Use dialogue to determine Customer‟s potential First Tier Second Tier Third Tier Fourth Tier Fifth Tier .

Naming the tiers Keep These Customers Grow These Customers Actual Strategic Servicing Costs Fire Them? MVCs MGCs Migrators Migrators BZs .

Call Center Example     Inbound queries through a call center MVC  Routes to Designated Call Request for  Center Agent directly Caller A service after VRU identifies MVC and their need MGC Request for Caller B service  Routes to general „split‟ agent after VRU Migrator or BZ Request for Caller C service  VRU prompts to go to web site for info access 8% APR 11% APR 18% APR .

not what you want to sell Some needs are apparent through transactional records .Basis of customer differentiation Differentiate them by their NEEDS What the customer needs.

information Decision in how to configure Preferences – color. design. complaints Next purchase . shapes. delivery Usage – purpose. size. added services Pricing. patterns Errors. financing Pick-up. billing.How to think about NEEDS Initial learning about product Marking initial contact Decision in what to buy–style. frequency. nature.

GuestNet CEO .” Patrick Kennedy.Engage your customers in an ongoing dialogue that enables you to learn more and more about their particular needs.Identify all contact points “We identified all guest contact points. and the employees most likely to be involved.Interact – Interaction strategy Goal:Generate more customer feedback less expensively … and use it as a competitive advantage .From expensive sales people to call center … to the even less expensive Web site . It was eye-opening. No one realized how many opportunities we were missing.Generate feedback. not just messages . priorities. and interests … .

Rules of interaction 1. 4. 3. 5. Conversation is a consensual act Neither party in control Feedback results in behavior changes by everyone in your organization Each interaction picks up where last left off – across al channels Don‟t ask too much: use “drip irrigation” . 2.

Benefits of Interaction Uncovers     Needs (so you can sell more) (Dis)Satisfaction Risk of defection Complaints Makes you smarter about the customer each time Helps build barriers to exit .

Touch point integration Integration of all customer contact points is becoming increasingly important as customer information migrates to the Web … Beyond the Phone .

Interaction Using Call Centers Measuring the efficiency of call centers:  Hold times and call abandonment rates Ratio of complaints handled on first call Percentage of inquiries generating leads Share-of-customer data gathered Review the metrics list – which metrics are efficient vs. effective? Which ones support Learning Relationships? Measuring their effectiveness:    What are the implications when you off load support the web? How does the call center change .

Capital One – The customer call •Analyze data on 7M households Customize Identify Interact Differentiate •Also analyze related data on millions of Capital One customers •Pick from 50 options on whom to notify •Remember and pass along 25 pieces of info related to this particular customer •Prepare service rep to make customized product offer at end •Predict what this of call individual may want .

Temp(L:L ) .poss ABC value a service.g.e.M:M) Wait Time: <30secs Trade Wait Time: Almost None CSA: Average(M:M.Customer Interaction Worksheet (premier On-line Invetment Firm) Tier IVR&Routing Wait Time: None Trade Wait Time: None CSA: Best(H:H) and dedicated team Contact Call Time: Unlimited Loyalty Offer: Yes CO-Browse Education: Xsell..M:M) Call Time: Not limited Loyalty Offer: Situational Education: Advanced Site features product upsell Response type: Customers desired channel E-mail Response Time: 4 hours Resolution Cost: <$150 with no escalation Response type: e-mail or web E-mail Response Time: 12 hours Resolution Cost: <$30 with no escalation(Behavioral incentives) Response type: e-mail or web E-mail Response Time: 18 hours Resolution Cost: Avoid monetary resolution Pearl Call Time: <4minutes Loyalty Offer: Situational Education: New product/Services or self sufficiency Trade: More $ for broker assisted Call Time: <3 minutes Loyalty Offer: No Education: Self-sufficiency Other: Pay for service Trade more $ for broker assisted Wait Time: <2-3min Trade Wait Time: Very Low CSA: New Hire.Advice Resolution Response type: Customers desired channel E-mail Response Time: Immediate Resolution Cost: open-ended Diamond (1-2%) RETAIN GROW UP or OUT Cubic Zirconium Sapphire (ca 5%) Wait Time: <10secs Trade Wait Time: Virtual None CSA: Best Available high skill(H:M.

fees. terms.Customize Reward customers for collaborating with you by tailoring whatever you possibly can for them: service.Low cost .Based on individual customer preferences . billing.High efficiency . delivery. product… .

How mass customization works Production and service delivery processes are modularized Component elements or services are mass produced Configuration is digitally controlled Finer granularity of modules leads to larger number of possible “fits” .

By Category Purchase Protection 18% Org. Art $25 14% BiMonthly Credit Ins. by Date Accident Ind. Sports Team $35 16% Org. School $50 NASCAR No Annual Fee Billing Org.the greater your ability to customize. by Category Purchase Protectior 12% APR Standardized modules are combined into … …custom configurations (7776 unique options) The more modules.Mass customization of a credit card offering Design: Annual Fee: APR: Billing: Ancillary Services: Golf None 8% Weekly Travel Club Nature $10 10% BiWeekly Dining Club NASCAR $15 12% Monthly Card Reg. .

Professional Services.LD. High Speed Data) •Mobility package(Messaging.easy to use and manage package •Communications and related services that support your need to be mobile and accessible Pricing •Full-bundle discount(mobile magnet) •Add on‟s for specific needs •Single bill Channel •Web access with easy connection to toll-free specialized reps •Single point of contact .Internet Access.07 Internet $12/month Data(DSL)$59/month 50 Wireless Minutes Standard Messaging Professional Service 2 hours Yellow Page Basic Standard Payment 50 LD minutes Unified Messaging Professional Service 4 hours Yellow Page Advanced E-Payment 50 Local Minutes Follow me Messaging Professional Service continuous Yellow Page Web Site Custom Billing 800 Number Sample Package Base Product (full bundle) Follow Me Messaging Yellow Page Web Site 50 Wireless Minutes E-Payment Professional Svs 2 hr Product/Service Features •Communications bundle(wireless.Home office: mobile independent package Wireless 150 hours Local 30 hours free LD 30 hours $.Yellow Pages) •Integration across all modes of communication Value proposition •A fully integrated.Local.

7. history Remembering specific preferences Using knowledge to deliver individual satisfaction Marking it EASY to be a customer Anticipating needs Delivering .Mass customization musts 1. 2. 5. 4. 3. Demonstration that you know the customer (pre-filled out forms) Remembering transactions. 6.

Presentation topics Why are companies moving to CRM? What‟s n it for you? 1to1 Principles and best practices Other challenges Where do you go from here? .

5. culture changes take time Don‟t forget about training Hold people accountable for the right things Measure and reward the right things! . 4. 2. Start small Expand gradually. 3.Infrastructure Change hurts … 1.

MGCs.Sales forces automation Spend the right time and effort on MVCs. never asking the same thing Change behavior based on feedback Differentiate  Interact  Customize  . and BZs Drip irrigation.Sales Identify and track the right infor  .

Call center Move from cost center to profit center Sell more to customers (Increase SOC) Support for complicate products Ancillary services (Increase loyalty) Pre-qualify leads Low-cost market research Improve Complaint discovery and tracking Practice IDIC .

Tracks and interprets clickstreams .1to1 web site Requirements: .Remembers all this! .Differentiate visitors on each visit .Customizes based on individual preferences .Does this fast! .Identify and remember visitors .

business rules or processes in place. The company has processes buy they are bad processes ( like any automation.Top 5 Reasons CRM Efforts Fail from the Home office in silicon valley 5. The company thinks they understand strategy and process well. The inability to really effectively implement strategy – even if you have the right strategy. but really don‟t. 2. 4. process. . There isn‟t a wealth of experience in this area. CRM tools make good things better and bad things worse faster). No strategy. No one has got it down to a science. 3. tactics. 1. and rules coding.

Presentation topics Why are companies moving to CRM? What‟s in it for you? 1to1 principles and best practices Other challenges Where do you go from here? .

10.How you can make an impact 1. Look for a couple of “Quick Wins” Document success. 8. 6. Test. Get senior management buy-in Encourage them to establish your multi-disciplinary team Develop short and long term plans Help them start Small. pilot. share across the company Start scaling the solution. 4. 3. 7. 9. 5. “Light Campfires” Bring in Strategy/Change Management/Training coaches Help ”decode” IT and marketing Needs and Languages Evaluate and prioritize projects. Test! Improve on plans and keep going! . 2.

Cost-effective 1to1 Below zeros Number of members •Differentiate by value •Roll out 1 to 1 initiatives based on member value 1 to 1 Most Growable Members Most Valuable Members Member Value .

4. 10. 7. 9. 2. 3. 5. economically Ask your best customers what you can do differently/better for them (DO IT) . 6. Work on your database! Ask one question at each interaction Develop a strategy for your BZs Figure out who you really want to do business with Find out why some customers who are buying less this year Make those touch point improvements! Check out your VRU again Improve complaint handling Customize what you can. 8.What should you do real soon? 1.

com . The One to One Fieldbook Partners Mwashington@1to1. spreadsheets.com Free weekly email newsletter Discussion groups on different aspects of relationship marketing Best-practices database Download tools. from Enterprise One to One.What more help? www.1to1.