Roadmap- Before Midterm

Customer
Relationship
Management

Identify Differentiate Interact Customize

Mass customization
FMP (frequency
(cosmetic,
marketing
Value Needs transparent,
program)- Loyalty
adaptive,
program
collaborative)
The IDIC Model

Identify Differentiate Interact Customize

customers as by value, more cost some aspect of

unique addressable behavior and -efficiently and the companys
individuals needs effectively behavior, offerings,
or communications

Analysis Actio
n
COPYRIGHT 2009. ALL RIGHTS PROTECTED AND RESERVED. 2
CHAPTER 1
Introduction to customer Relationship
management
Agenda
Definition of CRM: What is CRM
CRM tenets: Pull system, Company-wide, Mgt
commitment, Value, CRM & CEM
Strategy: Share of wallet, Starting cost, cross-selling &
up-selling
Advantages and purposes of CRM
Four basic steps in CRM
Multichannel marketing
Benefits of CRM: who does and who does not
Customer Relationship Management
CRM is a technology or software solution that helps track
data and information about customers to enables better
customer service

Other think CRM , as an elaborate marketing or customer

service discipline.

Some, described as personalized e-mail

Increasing the value of the Customer Base
What is value
of the customer?

Acquire Profitable Customers GET

KEEP
Retain Profitable Customer longer
Win Back Profitable Customers
Eliminate Unprofitable Customers
GROW

Upsell Additional products in a solution

Cross-sell other products to customers
Referral and word-of-mouth benefits
Reduce Service and operational costs
 Roots of Customer Relationship Management

Value of
Mass Database
Customer
Marketing Marketing
base
Focusing on Share of
Make money by Individualized marketing customers (SOC)
doing things efficient Customer intimacy Increasing their business with
at large-scale Technology enabled
marketing
each existing customer
manufacturing and
distribution Dialogue marketing Focus on customer retention,
Standard products Interactive marketing customer loyalty, and
and distribution Permission marketing customer satisfaction
One-to-one marketing CEM is a key management
objective
Value of the customer base
Customer value doesnt begin with installing technology,
but instead begins with;
A strategy or an ongoing process that helps transform the
enterprise from a focus on traditional selling or manufacturing to a
customer focus while increasing revenues and profits in the current
period and the long-term

The leadership and commitment necessary to cascade throughout

the organization the thinking and decision-making capability that
puts customer value and relationship first as the direct path to
increasing shareholder value
Becoming a Customer strategic enterprise

It is about using information to gain a competitive

advantage and deliver growth and profit

Generalized form of CRM, set of business practices

designed, simply to put an enterprise into closer and
closer touch with its customers, in order to learn more
about each one and to deliver greater and greater value to
each one
This is where software
takes place, to fasten
the process of
information collecting
CRM : defining (modern CRM)
It is an enterprise-wide business strategy for achieving
customer-specific objectives by taking customer-specific
actions.

Enterprise wide because- it cant merely be assigned to

marketing if it is to have any hope of success.

Objectives: customer-specific to create value of each

customer. required to treat different customers
differently
Reason for employing customer strategies
All customers , in all walks of life, in all industries, all over
the world, want to be individually and personally served

It is simply a more efficient way of doing business

Examples: how CRM works
Instead of mailing out the same offer to everyone, a firm
waits for specific trigger behavior from a customer and
increases response rate 25-fold
A car rental customer rents a car without having to
complete another reservation profile
An online customer buys a product without having to
reenter his credit card number and address and looks at
product reviews from other customers before ordering,
significantly reducing the returns rate
Examples (2):
A firms product-development people turn their attention to
a new service or product based on customer feedback
captured by the sales force
Fans of a product- band together on social networking
sites and provide service and recommendations to each
other
An insurance company not only handles a claim for
property damage but also connects the insured party with
a contractor in her area who can bypass the purchasing
department and do the repairs directly
Example (3):
A supervisor orders more computer components by going
to a Web page that displays his firms contract terms, his
own spending to date, and his departmental
authorizations
Sitting in the call center, a service rep sees a smart
dialogue suggestion pop onto a monitor during a call with
a customer, suggesting a question the company wants to
ask that customer (not the same question being asked of
all customers who call this week).
Summary

Customer specific action, treating customers

differently, building the value of the customer
base, creating and managing relationships
with individual customer that go on through
time to get better and deeper
Definitions in general
Software package, process, system or technology
Data storage and analysis
Change in corporate culture
Managing demand
Strategies focused on current customers
1. Definitions of CRM and CRM
applications

CRM as a Software, system and technology

It must gather data, warehouse them and deliver
useable information based on data
There are 4 components;
Data warehouse: containing relevant customer and
prospect information
Analytical tools: to identify customer behavior patterns
Campaign management tools: to evaluate advertising
and sales promotions
Interfaces to maintain the database
 Definitions of CRM and CRM applications

2. CRM is a data storage and analysis

The goal is to increase opportunity of buying again by improving
the process to communicate with the right customer at the right
time

3. CRM is as a change in corporate culture from

transaction focus to a customer centric
3. Transaction Based/Product Centric -
Customer Focus Business
OLD MARKETING
Transaction oriented
Market share oriented
All customers are equal NEW MARKETING
Marketers sell Relationship oriented
4P marketing Share of wallet oriented
Mass marketing All customers are not equal
Sell to the customer Marketers manage demand
Focus on new customers Relationship marketing
Offensive Individual marketing
Broadcast oriented Manage customer experience
Transaction profit Focus on existing customers
Defensive
Dialogue oriented
Customer lifetime value
Transaction Play Zero-Sum Game
Based- Customer wants to buy as
Product much product as possible for
Centric the lowest price
Business The company wants to sell the
least product possible for the
highest price

Increase overall value of its

Customer customers
Focused Customer retention is the key
By cross-sell and upsell
From transaction focus to customer centric/
relationship focus
It is one =shot exchanges without any concern for the
future.
It views the sales as the end of the relationship.
The key to successful relationship is communication
(dialogue)
Successful CRM is founded on engaging customers in a
dialogue that results in greater brand or organization
satisfaction.
Market Share

To increase market share, What activities needed?

SHARE OF WALLET
the percentage of a person's total spending dedicated to
buying products and services from a particular company.
For companies that want to increase revenue, there can
be advantages to focus on expanding spending among
existing customers rather than trying to attract new ones.
The more products and services a company offers, the
greater its share of wallet will be.
Companies compete with each other for share of wallet.
Many companies use tactics
such as becoming a one-stop shop for customers, making it easy
for people to get everything they need in one place. This can woo
customers away from competitors who offer a more limited range
of products.
Source: http://www.wisegeek.com/what-is-share-of-wallet.htm
Examples
Share of customers
Comparison of Share of wallet and market share
Market share
Product and brands as the
source of all company value
Product managers sell one
product at a time to as many
customers as possible
Differentiate products from
competitors
Sell to customers
Transaction profit
Use mass media
Share of wallet
Customers are source of
revenue
Sells as many products as
possible to one customer
Differentiate customer
Collaborate with customers
Find a constant stream of
new business
Each customer profitable
Interactive communication
Managing CRM: a different dimension of
Competition

Customer
needs satisfied Customer needs
satisfied Value created
per Customer
Value created per
Traditional
Traditional Marketing
Marketing Product or
Channel

Customer Strategies
Customer
Reached

Example: Logistics business

Or university Customer
Reached
Focusing on Customers is new to business
strategy

Operational CRM- focuses on the software installations

and the changes in process affecting the day-to-day
operations of a firm- operation that will produce and
deliver different treatments to different customers

Analytical CRM- focuses on the strategic planning

needed to build customer value as well as the cultural,
measurement, and organizational changes required to
implement that strategy successfully
Customer Experience Management (CEM)
the collection of processes a company uses to track,
oversee and organize every interaction between a
customer and the organization throughout the customer
lifecycle.
The goal of CEM is to optimize interactions from the
customer's perspective and, as a result, foster customer
loyalty.
the essence of CEM is treating customers as
individuals
CRM is Brand strategy
CRM integrates marketing, sales and service function
through business process automation, technology
solutions and information resources to maximize each
customer contact

CRM enhance brand value by

providing customers with information they require,
providing offers that add value to purchasing the brand,
and transparently facilitating the acquisition of information to
improve future CRM efforts
Relationship oriented
Relationship marketing is concerned with how
organization manage and improve their relationships
with customers for long-term profitability
CRM uses information technology to implement
relationship marketing strategies
It is a link between IT and strategies aimed at
identifying, acquiring, developing and retaining
customers
So, CRM is information intensive. (quality of
information is important to better understand
customers)
Relationship is the Crux of Customer-strategy
enterprise
Enterprise strive to get a customer:
Keep that customer for a lifetime, and grow the value of the
customer to the enterprise.
The learning Relationship
If you are my customer and I get you to talk to me
I remember what you tell me
Then I get smarter and smarter
I can do things for you my competitors cant do
You get something from me that you cant get elsewhere
At the very least, you d have to start all over somewhere else, but
starting over is more costly than staying with me
Definitions of CRM and CRM
applications
New
Skills
CRM system failure
When CRM systems
fail, it tends to be as a
result of cultural as
opposed to
technological issues Systems CRM Process

Employee
mind
mind sets
4. Definitions of CRM and CRM applications
CRM is an important concept of managing demand
When demand is weak, marketer develop the plans and programs
to increase it.
When demand exceeds, marketer uses the concept of de-
marketing. i.e. reducing unprofitable for the organization
5. Definitions of CRM and CRM applications
CRM is a strategy cycle focusing on customers
Identification
Selection
Acquiring
Developing (relationship)
Cross-selling and up-selling,
Managing migration
Win back
Cross sell and up sell
are established methods of improving sales and
increasing customer loyalty.

Cross selling items that are related or can

selling be integrated with the item being sold

Up selling the practice of offering customers an

upgraded or premium version of a
product
Example: Amazon and Expedia
have pioneered the use of cross-selling and up-selling.

Amazon.com was an early pioneer of cross-selling

complementary products if you bought product A, you
might also like products B and C.

Expedia.com, a leader in the online travel category, has

led the industry in bundling travel packages, which has
led to substantial revenue and profit gains since they first
implemented the concept.
Example: McDonalds
McDonalds is a perfect offline example. Asking you if
youd like the Meal Deal with your Quarter Pounder is a
cross-sell;

asking if youd like to SuperSize the meal is an up-sell.

 Definitions of CRM and CRM
applications
CRM :
developing appropriate relationships with customers
through communications to create long term
relationship
Process of storing and analyzing
Yielding greater insight into customer behavior
Allows business to treat different types of customers
differently
 CRM Tenets: Kutner and Cripps

Customers should be managed as important assets

Not all customers are equally desirable
Customers vary in their needs, preferences, and
buying behavior
By better understanding their customers, companies
can tailor their offering to maximize their overall
value.
CRM Advantages
1 2
Better Increases
Customer Market
Knowledge Share

5
Creates Up 3
Quicker Cash Flow and Cross-Selling
Opportunities/ increase Share of wallet

Increased
Product
Acceptance
4
The purposes and benefits of CRM
Do you want to keep this customers?
Do not buy frequently
Buy your products only when they are on sale
Frequently return your merchandise
Complain a lot
Recommend your company to others just like them
To retain the right customers, please them, and foster
them to repeat usage
CRM as defensive marketing

Offensive marketing
all activities aimed at increasing the size of customers based.

Defensive marketing
All activities aimed at existing customers
It becomes more profitable as it build long term relationship with
their customers
Example:

Source: http://www.quickmba.com/marketing/ries-trout/marketing-warfare/
Why CRM Systems are Being Used

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
(IDIC)
Identify your customers in detail
Demographics, psychographics, habits, and preferences.

Differentiate the most and least profitable.

Interact
Making this interaction more cost effective through automation
whenever possible

Customize your offerings to fit each

customers needs.
Through mass-communication or one by one
Identify customers
(Consumer Market)
Demographic User types
Regular, non-user, first-time,
Age
potential
Family size Consumption patterns
Marital status Low/medium/strong

Geographic Brand Loyalty

City, climate, rural vs. urban
Socioeconomic
Income, class, education
Lifestyle/personality
Attitudes/ opinions
Customer
interests characteristics
Loyal, satisfied/experimented,
unsatisfied/defectors.
Price sensitivity
Low-costs oriented/differentiation
focus
Perceived benefits
Performance
Quality
Image enhancement/ service
Product related
approach
CRM benefits:

Retention and profits

Increase retention 5 percent and improve

profitability in net present value from 20-85
percent.

It costs five to ten times more to obtain a new

customer than it does to keep an existing one.
Objectives of CRM

ID potential customers
Understand needs
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
Improve campaign management
Increase referrals
Tangible components of CRM
CRM Ecosystem
Multichannel Marketing
Database/data warehouse/data mart (ch.5-6)
Touch points
Call center
Sale force Automation (ch.8-9)
360 degree view
CRM system/ Ecosystem
Front office:
where information is collected from customers: includes marketing,
sales and customer service personnel.
By using internet, call centers, and sales force automation
Back office:
Other functions in organization, such as production units, logistics
units or accounting department
CRM Ecosystem

Front office

Work flow and business rules

Performance (transmit BI to front office, Physical links
metrics Business intelligence system (to back office)
(BI: DW, DM, D-mining)

Back office
Multichannel Marketing

Over half of all customers in certain industries

(apparel and banking) are using multiple channels
for shopping and purchasing: store, telephone,
ATM/Kiosk, catalogue, online, etc.

Multiple channel users have two to four times more

to spend. In retail banking they are 25-50 percent
more profitable.
Customers Transact Business through the Following
Channels

Web application
Free form e-mail
Telephone with a live agent
Internet VOIP through a live agent
Text chat with a live agent
Telephone through an interactive
VRS
Fax
ATM/Kiosk
Entering the store or branch
Touch points
It is any point of contact that a customer or prospect has
with the company
It can be an inquiry over the phone, in person, or via e-
mail or a purchase transaction over the internet, over the
telephone, at an ATM
Example of touch point in Bank
customer has vast possibilities to get in contact with a
bank
Touch points in banking can include client service
advisors, receipts, events, offerings, financial research
reports, sponsoring, world of mouth, e-banking, regional
office or contacts by phone with the client service advisor
Personalize and Customization

Personalization:
the process of providing relevant content based on
individual user preferences

Customization:
It is the process of allowing the customers to design
and have the product to their choice.
Example:
Example:
Example (cont):

FAX CALL

WEBSITE : www.coach.com
360 degree view

To provide everyone in the organization

standardized, consistent and complete view
of the customer based on the customers
data array from all touch points collected
across the business cycle.
a single view of all customer interactions.
It integrates all the customer information that is
available in separate departments of an
organization in to one repository.
Benefits of 360 degree Customer View.
Provides comprehensive view of customer across departments from
marketing to sales, operations, finance, and other business functions. This
helps your internal teams (marketing, sales and customer support) to
collaborate easily.
All the activities specific to a customer be it your marketing campaign emails,
phone calls, follow-ups, meetings, service requests, responses and updates
all of these activities gets tagged against that particular customer providing a
single view.
A 360-degree solution enables you to access consolidate customer data
helping your support agents to speed up response times without having to
switch between screens or await update responses from related teams.
With the 360-degree view, you can provide a consistent and satisfying
service experience for customers, as you have access to the right information
instantly in a single view. This also improves your customer interaction.
Your call quality increases, reduces call duration which eventually saves your
money.
Beneficial and non beneficial from
CRM
high
Airline and Banking and
hospitality telecommunic
ations
No. of
customers/cus
tomer
interaction Energy and Transportation,
natural Automotive
resources
low
low high

Interaction complexity
Which Companies Benefit Most from
CRM?

Companies serving large numbers of customers

through complex and frequent interactions:
Communications companies
Retail banks
Insurance companies
Healthcare organizations
Utilities
Which Companies Benefit Most from CRM?
Companies with a steep skew (80:20)

Companies in lost for good markets

Where is a firm on the customer-
strategy map?
Ability to interact with
customer individually

IV. 1 to1
III. Database
Learning
marketing
Relationship

Standard Tailored
products products

I. Mass II. Niche

Marketing Marketing

Customers addressed only in mass media

Enterprise Strategy Map

Mass Compete primarily on cost efficiencies based on

economies of scale and low price
Marketing (commoditization and price)

Focus on target markets, produce goods and

Niche services designed for those defined groups
Still offer same thing the same way to everyone

Database Utilize database to get better & more efficient use

of mailing list and other customer information
marketing

1 to 1 Learning Company use data about to treat different

customers differently and increase mutual value
relationship with customer
Enterprise Strategy Map
The goal is to move up and to the right on the Map

To move up, a firm needs to be able to recognize

individual customers names and addresses, to send
different message to different customers, and to
remember the responses to each

To move to the right on the map, a firm needs to be able

to increase its production and logistics flexibility.
Enable to deliver customized products to individuals
VOCABULARIES
SUMMARY