CUSTOMER FOCUSED CONCEPTS IN SCM

MKIS & CRM

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WHAT IS MODERN SELLING?

Evolution of the selling concept: It is more integrated with Marketing Management today Focus on Relationship selling: To a collaborative/ partnership form of selling Give the customers exactly what they want Relationship entails creating customer loyalty This involves a trade-off: Separating the wheat from the chaff
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COMMON JARGON
CRM: Customer Relationship Management CRM: Continuous Relationship Marketing (McKinsey) eCRM: Electronic CRM

mCRM: Mobile CRM

ERM: Enterprise Relationship Management PRM: Partner Relationship Management SRM: Supplier Relationship Management CEM: Customer Experience Management
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COMMON JARGON
SRM: Supplier Relationship Management CFM: Customer Focussed Marketing (??) RM: Relationship Marketing (Regis McKenna) TERM: Technology Enabled Relationship Marketing (Gartner Group) Interactive Marketing (John Deighton, HBS) Database Marketing (Direct Marketers)

1 to 1 Marketing (Don Peppers & Martha Rogers)

Customer Intimacy (Fred Wieserma) XRM: Extended Relationship Management
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PERSPECTIVES OF CRM

THE IT PERSPECTIVE
Oracle

Enterprise data analysis systems

Entities & Relations

Siebel CRM suite

RDBMS

I-Miner

Thin client
Users & Permissions

DATA MINING
OLAP
Data Warehouse Seagate Crystal Reports

Application Server

Open architecture approach to

Data
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THE MATHS-BASED PESPECTIVE

Standard

Deviation

Statistical

Significance
Factor Analysis

Modeling

Multivariate Analysis CHAID: Automatic Interaction Detector

Clustering

Regression
Discriminant Analysis

Exploratory Data

Analysis
Confidence

ANOVA

Neural Networks
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THE SALES MANAGERS PERS

Channel design and effectiveness
Time-of-day, Day-of-week

RFM
Scenario analysis

Program Scoring Customer Lifetime Value

Early Warning Systems

ROI
Catchment Area analysis

Loyalty Modeling
Market Basket Analysis

Predictive Modeling
Campaign analysis
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Propensity Models
Customer Satisfaction Index

THE MODERN SALES CONCEPT

Selling and Promotion Profits through Sales Volume

Old

Factory

Products

Classical

Target Market

Customer needs

Integrated Marketing

Profits through customer satisfaction

Modern

Individual Customer

Customer Experience

CRM

Profits through Customer loyalty

SO WHAT IS CRM?

To recognize and treat each customer individually to optimize customer experience by serving their unspoken needs and make him buy the product again & again.

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WHAT EXACTLY IS LOYALTY?

A psychological and emotional bond between the customer (or any other stakeholder) and the corporate conducing to a long-term relationship

Manifested through:
Repeating purchase Purchasing premium products Referring to friends Becoming an advocate Wanting to give opinion and have it heard
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WHY IS LOYALTY IMPORTANT?

Retaining customers is much profitable than acquiring new customers

Reduction of 5% of defective customers may result in 80% increase in profitability (Reichheld & Sasser, 1990)

60% to 80% of lost customers were satisfied (King, 1996)

90% of customers who love a company will repeat but only 30% of customers who like the company will repeat (Opinion Research Corp.)
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ZERO DEFECTION
Ranging from Goods to Services selling
Extending from Inventories to Intellectual Capital Scrap heap (Low value customers) to Lost Valuable customers Zero-defect to Zero-defection

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WHY CRM?
For relationship building. Technological Progress
Continuous communication Understanding Get Personal Interactivity

Technology: Database, Internet & Mass Customization Cherry Picking - 80:20s rule

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THE CRM PROCESS

Interactions

Learning about Customers Knowledge Acquisition Customer Differentiation

Customization of Marketing Mix Product Price Place Promotion

Interactions

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CRM & MKIS

Traditional MKIS relies only on data collection, data warehousing, data mining and information retrieval. MKIS systems can give a large scale consolidation of customer behavior, but is unsuitable for identifying individual customer needs. CRM goes beyond MKIS in collecting those key customer specific data that is then used to serve individual customers Eg. Right from salutation, needs, preferences along with time, duration and complexity of sale and service
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IMPLICATIONS OF CRM
Modern day CRM has pan-management reach
Has a close interlink with technology- Innovation is key

CRM and innovation produce product and service innovations

CRM helps in attracting, maintaining and enhancing customer relationships Relationships are key to understanding customers- retaining customers helps in building performance

Customers have a big role is idea generation and product conceptualization

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AREAS OF CRM
Widespread reach in Management related fields. Technology Management Business Process Re-engineering Organizational Learning

Relationship quality and organizational performance improvement

Balanced score card design
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CRM STANDPOINT FOR SALES

Does the CRM implementation enable the company to identify and focus on its key customers?

Does the use of multi-channels enhance customer relationships while reducing the cost of transactions with low-profit yielding customers?

Does sales force automation enable the sales people to enhance share of wallet with key customers?

Does the analysis of the data gathered through customer interactions enable cross-selling and up-selling opportunities?
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NEXT CLASS:

DISTRIBUTION SYSTEMS
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