MANAGING CUSTOMER RELATIONSHIPS

Dr. Vandana Khanna

Managing Customer Relationships

Sales Channels Marketing Customers Customer Service Customer Data Service is the One Differentiator a Business Can Provide its 3/10/2012 Customers. CRM at the Core Can Support this Goal. 2

Managing Customer Relationships

What Does it Entail?
D E F I N I T I O N

CRM data warehouses customer information and historical buying patterns to understand buying behavior to provide enhanced services that drive revenue CRM is a critical component in building customer loyalty and customer retention strategies CRM is a tool that can drive high-value, loyal returns from customers that continue to purchase and do business with the company CRM provides opportunities for the organization to create a competitive differentiation with differentiated customer services targeted specific to high-value, longterm customers
Why is CRM critical to customer loyalty and retention?
Dr. Vandana Khanna 3/10/2012 3

Challenges and Problems Solved by CRM

S O L U T I O N S

Managing Customer Relationships

Lowers costs of recruiting customers through strengthened customer loyalty and retention strategies Can focus attention on high-value customers and provide preferred and customized services (e.g., highvalue customers deserve high-value customer service) Reduced cost of sales (e.g., push marketing, selling to existing customer base, inside sales/telemarketing, etc.) Provides the foundation for long-term customer profitability Increases customer retention and loyalty through customized services
How does CRM Increase Shareholder Value?
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Who are the Customers? Customer Types

Business to Business (B2B) customers who purchase a product or service and resale a finished product to other customers or businesses B2B process flow Consumer (B2C) customers who buy the final product or service (e.g., individuals, families, etc.) B2C process flow Channel/Distributor a person or organization that resells or provides a value-added service around the product or service for resale and distribution to their customers and Channels Internal Customer a person or business unit within the organization that requires your product or service
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Managing Customer Relationships

Managing Customer Relationships

Customer Service as a Competitive Advantage

Routed to Preferred Agents Who Respond Directly Real-Time Access to Customer Data

IM

Voice

E-Mail

High-Value Customers

Web SMS Chat

Fax Video

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Service is the One Differentiator a Business Can Use to Build a Competitive Advantage. Dr. Vandana Khanna

Managing Customer Relationships

Acquisition, Retention, Customer Lifetime Value

Customer Acquisition

Customer Retention

Customer Lifetime Value

The Value of a Customer is Based on the Amount of Revenue and Purchases that the Customer Makes over the Lifetime of the Relationship.

3/10/2012

Dr. Vandana Khanna

Acquisition Vs Retention
Retention
Nurturing Relationships

Acquisition
Acquiring Potential Relationships

Internal Analysis
Demographic History Actual Needs Given

Internal Research
Demographic Profile Projected Needs Given

Contact Must be Personal

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Contact can be less personal

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Acquisition Vs Retention
Retention
Accuracy Required
Other Relationships Given Relatively High Response Supports Reactivating Synergistic With Acquisition
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Acquisition
Inaccuracy Tolerated
Offers Can Be Event Relatively Low Response Supports Assimilation Synergistic with Retention
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Dr. Vandana Khanna

Six Stage Model of Relationship

Contact

Involvement
Intimacy

Exit
Deterioration

Repair
Dissolution
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Adapted from DeVito, Joseph A. (1993)

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Customer Life Cycle

Customer Need Assessment & Acquisition

Customer Retention and referrals for new customers

Customer Development through personalization and customization

Customer Equity Leverage through Cross Selling and Up selling

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CRM Process Framework

Formation
Purpose Increase Effectiveness Improve Efficiency

Management & Governance Performance Team Structure

Role Specification
Planning Process Process Alignment
Relationship Performance Strategic Financial Marketing Retention Satisfaction Loyalty

Programs Account Management Retention Marketing Co-op Agreements Strategic Partnerships

Monitoring Process Communication

Employee Motivation

Partners Criteria Improve Efficiency

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Employee Training
Evolution Enhancement improvement

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CRM Process Cycle

Learning
4. ANALYSIS & REFINEMENT 1. KNOWLEDGE DISCOVERY

3. CUSTOMER INTERACTION

2. MARKET PLANNING

Action CRM Process Cycle Links Customer-Centric Data With a Continuous Learning and Action Cycle.
Dr. Vandana Khanna

3/10/2012

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CRM Process Cycle

Knowledge Discovery: this is the process of analyzing customer information to identify specific market opportunities and strategies. Market Planning: this process defines specific customer offers, delivery channels, schedules, dependencies. A market plan or campaign that drives revenue to existing customers. Customer Interaction: this process aligns the customer offers directly to the customer. This is typically done from the Contact Center or where Customer Service is performed. Analysis & Refinement: this process conducts Q&A and analysis of customer interactions, such that messages and future dialogue can be refined.
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Tactical Integration of CRM Process

Interact Connect

Relate
3/10/2012 Dr. Vandana Khanna

Know
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Tactical Integration of CRM Process

Interact: A series of transactions or interactions
that make up a dialog between the customer and the organization (e.g., IM Chat messages, recordings of customer service calls, e-mail dialog, etc.)

Connect: The mapping and management of

interaction points between the customer and the organization.
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Tactical Integration of CRM Process

Know: The insight gained through capture and
analysis of detailed customer information to create a continuous learning cycle from the data warehouse. Relate: The application of insight to create relevant interactions or communications with consumers, customers, channels, suppliers, and partners that build value relationships.
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Key Goals and Benefits of CRM

Impacts Top Line Revenue Value Drivers

Customer Acquisition

Customer Retention

Cost Control

(Market share) (Customer share) (Scaling)

Increase shareholder Value

Increase Lower Operational Retention Ratio Costs CRM Can be Directly Linked to Measurable Revenue and Lower 18 Costs Associated with Marketing, Sales, Customer Service, etc. Obtain More Cost

Key Goals and Benefits of CRM

CRM Can Drive Revenue through creation and execution of a targeted customer retention strategy CRM Can Enhance Customer Loyalty by data mining and creating customized service delivery capabilities for high-value customers CRM Can Lower Costs by creating, simplifying, and targeting smaller marketing plans and campaigns based on data mining intelligence and customer buying analyses

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Dr. Vandana Khanna

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Key Goals and Benefits of CRM

CRM Can Provide Real-Time Access to Customer Data by forcing a mapping and work flow analysis of customer data and where it goes and where it resides CRM is a Critical Component when Delivering a Customer Service Strategy Customer Service without CRM is merely that, 1-dimensional

Real-Time Access to Customer Data Regardless of its Location must be Retrievable by the CRM Application.
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Integrating CRM
Preferred Customer Service Agents can access CRM system to gather specific information about the customer as well as to service the customers call in real-time. Access to customer information in realtime via the CRM application is critical in order to provide enhanced customer service and support. Use of a CRM tool or application is critical to consolidating customer data and for providing realtime responsiveness to customer inquiries. Integration of CRM with process flow and Customer Service functions is part of the overall solution and enhancement to Customer Service.
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Real-Time Access to Customer Data

Manufacturing Database

Call Centre

Preferred Agents

Field Engineering Database

Customer Database Customer Address Information

IVR System

Customers
Self Serve Website
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CRM
3/10/2012

Dr. Vandana Khanna