MAR 4860 - Chapter Slides

MAR 4860 Lecture Worksheet
Chapter 1 Module 1
CUSTOMER RELATIONSHIP MANAGEMENT

CONCEPTS AND TECHNOLOGIES
Chapter 1: Introduction to CRM Module 1
Chapter Objectives
Explain the four major perspectives on CRM: strategic, operational, analytical and collaborative. Identify the common misunderstandings about CRM. De elop a definition of CRM. Develop CRM Describe the six constituencies or parties that have a vested interest in CRM. Describe how CRM issues vary across industries, and Explain five generic models of CRM, particularly the IDIC and the Gartner Group models.
Imagine These Scenarios
Taking a very needed vacation in the Bahamas Buying home computer B i a h for the first time
Chapter 1 Module 1
Selected Definitions of CRM 1

CRM is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way. CRM i th process of managing all aspects of is the f i ll t f interaction a company has with its customers, including prospecting, sales, and service. CRM applications attempt to provide insight into and improve the company/customer relationship by combining all these views of customer interaction into one picture.

CRM is an integrated approach to identifying, acquiring, and retaining customers. By enabling organizations to manage and coordinate customer interactions across multiple channels, departments, lines of business, and geographies, CRM helps organizations maximize the value of every customer interaction and drive superior corporate performance.

CRM is an integrated information system that is used to plan, schedule and control the pre-sales and post-sales activities in an organization. CRM embraces all aspects of dealing with prospects and customers, including the call center, sales force, marketing, technical support and field service. The primary goal of CRM is to improve long-term growth and profitability through a better understanding of customer behaviour. CRM aims to provide more effective feedback and improved integration to better gauge the return on investment (ROI) in these areas.
Chapter 1 Module 1

CRM is a business strategy that maximizes profitability, revenue and customer satisfaction by organizing around customer segments, fostering behaviour that satisfies customers, and implementing customer-centric processes.
Core Definition of CRM

CRM is the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit. It is grounded on high quality customer-related data and enabled by information technology. This is the best definition for CRM and the one you will use in this class!
Misunderstandings About CRM

1. CRM is database marketing - NO 2. CRM is a marketing process - NO 3. CRM is an IT issue - NO 4. CRM is about loyalty schemes - NO 5. CRM can be implemented by any company - NO
Chapter 1 Module 2

Chapter 1: Introduction to CRM Module 2
Four Types of CRM

Type of CRM Dominant Characteristic Strategic CRM is a core customer-centric business strategy that aims at winning and keeping profitable customers. Operational CRM focuses on the automation of customerp facing processes such as selling, marketing and customer service. Analytical CRM focuses on the intelligent mining of customer-related data for strategic or tactical purposes. Collaborative CRM applies technology across organizational boundaries with a view to optimizing company, partner and customer value.
1 Strategic 2 Operational 3 Analytical 4 Collaborative
Business Orientations
1. Product-oriented businesses believe that customers choose products with the best quality, performance, design or features.
2. Production-oriented businesses believe that customers choose low-price products. 3. Sales-oriented businesses make the assumption that if they invest enough in advertising, selling, public relations (PR) and sales promotion, customers will be persuaded to buy. 4. A customer or market-oriented company shares a set of beliefs about putting the customer first. It collects, disseminates and uses customer and competitive information to develop better value propositions for customers. A customer-centric firm is a learning firm that constantly adapts to customer requirements and competitive conditions.
Chapter 1 Module 2
STRATEGIC: Customer-Centric Orientation

Customer Requirements Voice of Customer Market Research Competitor Analysis Customer-Centric C t C ti Management Systems
Value Propositions
Structure
Rewards & Compensation
Operational CRM
EXAMPLE Marketing automation Market segmentation Campaign management Event-based (trigger) marketing Sales force automation Account management Lead management Opportunity management Pipeline management Contact management Quotation and proposal generation Product configuration Service automation Case ( incident or issue) management Inbound communications management Queuing and routing Service level management
2
The Limited
Operates over 2,700 specialty stores. Had a database of over 25 million buyers and wanted to better understand customers and tailor marketing campaigns for all brands brands. Installed CRM software & now differentiates and segments customers based on interests, prior to campaigns. Believes that key to successful CRM lies in applying analytics to a single, customer-centric database, allowing a 360o view of customer.
Analytical CRM
Concerned with capturing, storing, extracting, integrating, processing, interpreting, distributing using and reporting customer-related data . WOW! Think about what each bolded word means. Internal sources of customer data Sales data (purchase history), financial data (payment history, credit score), marketing data (campaign response, loyalty scheme data) and service data. External sources of customer data Geo-demographic and life-style data from business intelligence organizations.
Chapter 1 Module 2
Examples of Operational & Analytical CRM

Analytical CRM
Operational CRM
The telephone company wants to A telephone customer service know which customers are signaling representative needs to access a customer record when she receives a an intention to switch to a different supplier. customer request. A hotel receptionist needs access to a guests history so that she can reserve the preferred type of room smoking or non-smoking, standard or deluxe. A sales rep needs to check a customers payment history to find out whether the account has reached the maximum credit limit. The hotel company wants to promote a weekend getaway to customers who have indicated their complete delight in previous customer satisfaction surveys. The sales rep wants to compute his customers profitability, given the level of service that is being provided.
Beneficiaries of Analytical CRM

The Customer Analytical CRM can deliver timely, customized, solutions to the customers problems, thereby enhancing customer satisfaction. The Company Analytical CRM offers the possibility of more powerful cross-selling and up-selling programs, and more effective customer retention and customer acquisition programs. Heres what some companies had to say:
http://www.youtube.com/watch?v=vAADrN9NUAQ&feature=related http://www.youtube.com/watch?v=1iMOrAXk70o&feature=related http://www.youtube.com/watch?v=pYIcz4a0evc&feature=related
CRM Constituencies
1. Companies implementing CRM 2. Customers and partners of those companies 3. Vendors of CRM software 4. CRM application service providers (ASPs) 5. Vendors of CRM hardware and infrastructure 6. Management consultants
We will also refer to this as the CRM Ecosystem
Chapter 1 Module 2
The IDIC Model

Identify who your customers are and build a deep understanding of them Differentiate your customers to identify which customers have most value now and which offer most for the future. Interact with customers to ensure that you understand customer expectations and their relationships with other suppliers or brands Customize the offer and communications to ensure that the expectations of customers are met.
The Qci Model
The CRM Value Chain
The CRM Value Chain
Primary stages
Customer Customer Network Value Manage Portfolio Intimacy Development Proposition The Analysis A l i (SCOPE) Development Customer Lifecycle
Leadership and culture Supporting conditions Data and information technology People Processes
Chapter 1 Module 2
Paynes Five-Process Model
The Gartner Competency Model

1. CRM Vision: Leadership, Social Worth, Value Proposition 2. CRM Strategy: Objectives, Segments, Effective Interaction 3. Valued Customer Experience
Understand Requirements Monitor Expectations Satisfaction C S ti f ti vs.Competition titi Collaboration and Feedback
4. Organizational Collaboration
Culture and Structure Customer Understanding People: Skills,Competencies Incentives and Compensation Employee Communications Partners and Suppliers
5. CRM Processes: Customer Life Cycle, Knowledge Management 6. CRM Information: Data, Analysis, One View Across Channels 7. CRM Technology: Applications, Architecture, Infrastructure 8. CRM Metrics: Cost to Serve, Satisfaction, Loyalty, Social Costs
This is an important model. Be sure to read other material in Blackboard
Chapter 2 Module 1

Chapter 2: Understanding Relationships Module 1
Chapter Objectives
Recognize a relationship. Describe the attributes of successful relationships. Explain the importance of trust and commitment within a relationship. Explain why companies and customers are sometimes motivated to establish and maintain relationships with each other, and sometimes not. Explain the meaning and importance of quantitative methods of value and perform simple calculations for LTV. Explain all of the components of the satisfaction-profit chain Figure 2.6.
What is a Relationship?
Think about the BEST relationship you have. Answer these questions. How would you define a relationship?
What are the elements of a great relationship?
What are the main interactions or activities involved in building and maintaining a strong customer relationship?
Chapter 2 Module 1
What is a Relationship?
A relationship is composed of a series of interactive episodes between parties over time. Episodes are time bound (they have a beginning and an end) and are nameable. Episodes a e co posed o a se es o interactions. An p sodes are composed of series of e ac o s interaction consists of action, and the response to that action. Is a relationship more than interaction-over-time?
What about emotional content ? Do relationships have some type of connection, attachment or bond?
Relationships as Social Constructs

There are five general phases that customer-supplier relationships go through: 1. Awareness 2. Exploration 3. Expansion 4. Commitment 5. Dissolution
A Core Attribute: TRUST

Some things to keep in mind Benevolence. A belief that one party acts in the interests of the other. Honesty. A belief that the other partys word is reliable or credible. Competence. A belief that the other party has the necessary expertise to perform as required. Trust emerges as parties share experiences, and interpret and assess each others motives. As they learn more about each other, risk and doubt are reduced.
Chapter 2 Module 1
Another Core Attribute: COMMITMENT

Commitment arises from trust, shared values, and the belief that partners will be difficult to replace. Commitment motivates partners to cooperate in order to preserve relationship investments. Commitment means partners forgo short-term short term alternatives in favour of more stable, long-term benefits associated with current partners. Commitment entails vulnerability, leaving partners open to opportunism.
Chapter 2 Module 2

CRM Goals Increasing Value Why are Companies Interested?

To get more customers To acquire profitable ones To keep them longer retain them To win back profitable ones T eliminate unprofitable ones To li i t fit bl To grow them into bigger & more profitable ones To upsell additional products To cross-sell other products and bundle them To obtain referrals and word-of mouth benefits To reduce service and operational costs
Source: Peppers & Rogers (2004). Managing Customer Relationships, P. 5
What Happens When A Customer Leaves?

Company A (5% churn rate) Company B (10% churn rate) Year
Existing customers New customers Total customer base Existing customers New customers Total customer base
2001 2002 2003 2004 2005
1000 1045 1088 1129 1168
100 100 100 100 100
1100 1145 1188 1229 1268
1000 990 981 973 966
100 100 100 100 100
1100 1090 1081 1073 1066
1,100 * 0.95 (5% churn rate) = 1,045
Chapter 2 Module 2
Benefits from Managing Customer Retention

Reduced marketing costs
Fewer dollars need to be spent replacing churned customers
Better customer insight

Suppliers are able to develop a better understanding of customer requirements and expectations Customers also come expectations. to understand what a supplier can do for them. Consequently, suppliers become better placed to identify and satisfy customer requirements profitably, selling more product and service to the retained customer. Over time, as relationships deepen, trust and commitment between the parties is likely to grow, and revenue and profit streams from customers become more secure.
The Customer Journey

Suspect Prospect Does the potential customer fit your target market profile? (Also called lead) The customer fits the target market profile and is being approached for the first time.
Advocates Loyal Customers Majority M j it Customers Repeat Customers First-Time Customers Prospects
First-time customer The customer makes a first purchase. Repeat customer R t t The customer makes additional purchases. Your p offer plays a minor role in the customers portfolio. The customer selects your company as supplier of choice. You occupy a significant place in the customers portfolio. The customer is resistant to switching suppliers, and has a strong positive attitude to your company or offer. The customer generates additional referral dollars through positive word-of-mouth.
Majority customer
Loyal customer
Advocate
Suspects
Chapter 2 Module 2
Customer Retention: Link to Profitability

P rice P rem ium R eferrals C ost S avings R evenue G row th B ase P rofit
Company Pr rofit
A cquisition
Year
Source: Reichheld (1996)
How are Customer Value & CRM Linked?Companies Interested? Why are
Customer Value: The economic value of the customer relationship to the firm expressed on the basis of contribution margin or net profit
CRM is the practice of determining corporate practices and methods that will maximize the lifetime value of each individual customer to the firm
Lifetime Value Defined

Lifetime value (LTV) is the present day value of all net margins earned from a relationship with a customer, customer segment or cohort.
To compute LTV, all historic net margins are compounded up to todays value and all future net margins are discounted back to t d t todays value. l Estimates of LTV potential look to the future only, and ignore the past. A customer that appears to be valuable on the basis of the gross margins generated will most likely be less profitable once cost-to-serve the customer is taken into account.
Chapter 2 Module 2
Lifetime Value (LTV)

PER UNIT EXPECTATIONS Price Cost of goods Contribution margin Direct expenses Allocated costs All t d t Expected net profit X number of units purchased per time frame (year) X number of time frames Unadjusted lifetime profit expectations $100 -10 $90 -10 10 -10 $70 x12 x5 $4,200
Value of money over hasnt been taken into consideration
Effect of Discounting on LTV

Undiscounted profit over 5 years Year 0 1 2 3 4 5 -$50 +$30 +$40 +$55 +$72 +$88 $235 Discounted profit over 5 years (15% discount rate) Year 0 1 2 3 4 5 -$50.00 +$26.09 +$30.25 +$36.16 $36.16 +$41.17 +$43.76 $127.43
+$30/1.15 = +$40/1.152= +$55/1.153= $55/1.15 +$72/1.154= +$88/1.155=
The net present value of 5 years of profit earned from this customer is $127.43
Cohort Value: Impact of Customer Retention Rate

Year Profit per Customer ($) -100 50 70 100 140 190 250 320 400 450 500 43.48 52.93 65.75 80.00 94.53 108.23 120.30 130.72 127.84 123.15 60 70 75 80 85 90 92 94 95 96 NPV at 15% Discount ($) Customer Retention Rate (%) # of Customers 100,000 60,000 42,000 31,500 25,200 21,420 19,278 17,736 16,672, 15,838 15,204 Total Annual Profit ($) -10,000,000 2,608,800 2,223,062 2,071,125 2,016,000 2,024,776 2,086,364 2,133,654 2,179,346 2,024,744 1,872,372
0 1 2 3 4 5 6 7 8 9 10
Chapter 2 Module 2
KEY Points About LTV

So why is LTV so important?
To properly target our sales and retention efforts To separate those that are profitable from those hurting profits. To understand:
o o o o where to put retention dollars the value of each retention strategy where to put acquisition dollars how much to spend on acquisition
What do you need to calculate the LTV?
Insight into future buying behavior Probabilities of buying products 1-n over the next X time periods Margins earned from those products Periodic costs of customer management Plus, for new customers - costs of customer acquisition And finally - Discount rate
Why Companies DONT Want Relationships?

1. When they fear loss of control. Relationships are bilateral arrangements, which involve giving up unilateral control over resources. 2. When exits costs are high. Not all relationships survive. It is not necessarily easy or cost-effective to exit a relationship. l ti hi 3. Resource commitment. Relationships require the commitment of scarce resources such as people, time and money. 4. When opportunity costs are high. If resources are committed to one customer relationship, they cannot be used for another
Why Business Customers Want Relationships?

1. When the product or its applications are complex, for example, networking infrastructure. 2. When the product is strategically important or missioncritical, for example, core raw materials supply for a manufacturer. 3. When there are down-stream service requirements, f 3 Wh th d t i i t for example, for machine tools. 4. When the financial risk is high, for example, in buying large pieces of capital equipment. 5. When reciprocity is expected. A financial audit practice may want a close relationship with a management consultancy, so that each party may benefit from referrals by the other.
Chapter 2 Module 2
Why Consumers Want Relationships?

1. Recognition. Customers may feel more valued when recognised and addressed by name. 2. Personalization. Products or services can be customized. 3. Power. Relationships with suppliers can be empowering. 4. 4 Risk reduction A relationship can reduce, or even perhaps reduction. reduce perhaps, eliminate perceived risk. 5. Status. Customers may feel that their status is enhanced by a relationship with a supplier. 6. Affiliation. Peoples social needs can be met through commercially based, or non-commercially based, relationships.
Why Business Customers DONT?

1. Fear of dependency 2. Lack of perceived value in the relationship 3. Lack of confidence in the supplier. 4. Customer lacks relational orientation 5. Rapid technological changes
Chapter 2 Module 3

The Satisfaction-Profit Chain
Customer Satisfaction
Customer Loyalty
Business Performance
Understand customer requirements Meet customer expectations Deliver customer value
Behavioral loyalty Attitudinal loyalty
Revenue growth Share of customer Customer tenure (retention)
Customer Behavior
Before Purchase
EXPECTATIONS
Purchase
x
EXPERIENCE
Post-Purchase
EVALUATION
Spoken Promises Perceived Alternatives Unspoken Promises Past Experiences Personal Values Personal Needs Word of Mouth
Outcomes Processes Judgments
Expectations E t ti Exceeded Expectations Met Expectations Not Met
Chapter 2 Module 3
Drivers of Customer Loyalty

Product Quality Relatively easy for competitors to imitate Price
CUSTOMER SATISFACTION
Service Quality
Perceived Value
CUSTOMER DELIGHT
CUSTOMER LOYALTY
Reliability Responsiveness Assurance Tangibles Empathy
Commitment or attachment to a brand, store, manufacturer, service provider, or other
Measuring Customer Loyalty

Behavioral/Functional Commitment (objective & measurable) Is the customer active? How much time is spent? Whats the proportion of visits/purchase frequency? How does the customer cooperate? Word of mouth (referrals)? RFM KEY MEASURE stands for Recency, Frequency and Monetary Value Attitudinal/Emotional Commitment (subjective & difficult to capture & measure) Trust Beliefs and psychological commitment - predisposition Preferences and intent to buy (called propensity) Emotional bonding Switching cost is too high too much has been invested Behavioral outcomes satisfaction and service quality
Levels of Customer Loyalty
Level of Loyalty Undivided Loyalty Occasional Switcher Switched Loyalty Divided Loyalty Indifference
Purchases Over Time 1 1 1 1 1 1 1 1 1 2 1 1 1 1 3 1 2 1 2 4 1 1 1 2 2 1 1 1 2 1 1 3 2 1 3 1 1 2 1 4 1 1 2 1 3
Source: Zikmund, McLeod, and Gilbert (2003).
Chapter 2 Module 3
Business Performance
high
CRM
share of customer spend
Traditional marketing
low few Number of customers many
American Customer Satisfaction Index
Source: http://www.theacsi.org/
Source: http://www.theacsi.org/
Chapter 2 Module 3
Examples of Loyalty Measures

Reichheld (2001) developed a tool to measure loyalty called the Loyalty Acid Test. This tool was designed to monitor and diagnose the health of key relationships. You can view a sample of it at: http://www.loyaltyrules.com/loyaltyrules/acid_test_customer.html Reichheld expanded on one of the questions from the Loyalty Acid Test. In his book The Ultimate Question, Reichheld (2006) explains how a customers likelihood of recommending a company to a friend is a key indicator of loyalty. The metric, called Net Promoter Score or NPS, categorizes your customers into three groups: promoters, passives, and detractors. NPS is considered a predictor of good profits and true growth. For more, visit: http://www.netpromoter.com/np/index.jsp Looking for Loyalty? CRM Magazine http://www.destinationcrm.com/Articles/PrintArticle.aspx?ArticleID=55703
Chapter 3 Module 1

Chapter 3: Planning & Implementing CRM Projects
Module 1
Chapter Objectives To identify the five major phases in a CRM implementation Recognize a number of tools and processes that can be applied in each phase of an implementation. Explain the importance of project management and change management throughout the implementation process.
Five Major Phases of a CRM Project
1
Strategy
2
Foundation
3
Needs & Partner
4
Implement
5
Evaluate
Chapter 3 Module 1
Develop the CRM Strategy

Situation analysis Commence CRM education Develop the CRM vision Set priorities Establish goals and objectives
Strategy
Identify people, process and technology requirements Develop the business case
Gartner Outlines 3 Steps to a Successful CRM Strategy: The economic upswing spawns a return of the $100 million CRM project, according to a Gartner analyst. By Juan Martinez - Posted Apr 21, 2010 http://www.destinationcrm.com/Articles/PrintArticle.aspx?ArticleID=66669
The CRM Strategic Plan & Business Case

The deliverable of this phase of CRM planning is a CRM Business Case and Proposal. You can also refer to this as the CRM Strategic Plan or Strategy. The key components of a CRM Strategic Plan are: Summary of Current Situation (where we are today) Mission statement (who we are and what we do) Vision statement (where we are going) Summary of Desired State (what we are going to look like) Gaps and opportunities (what we must change) Goals and objectives (what we want to accomplish and why) Critical success factors (how we will measure our success) Strategies (how we are going to achieve our goals) Resources and requirements (what we need to get there) Costs and Benefits (what will it cost us and what will we gain)
The Eight Building Blocks of Customer-Centricity

1. Customer Vision 2. Customer-Centric Strategy
3. Valued Customer Experience 5. Customer Processes 6. Customer Information 7. Technology, Including CRM 8. Metrics
4. Organizational Collaboration
Source: Gartner Group
Chapter 3 Module 1
Situation Analysis: Customer Strategy Cube

C Channels A O4 Offers O3 O2 O1 1 2 3 4 5 Customers or segments B
Situation Analysis: The One-to-One Gap Tool

Customer Relationship Management
Source: Is Your Company Ready for One-to-One Marketing? By Don Peppers, Martha Rogers & BobDorf, Harvard Business Review. January-February 1999. Instructions: 1) This exercise is to be administered to employees at various levels and in various functions in your company. It is designed to capture a robust analysis of how your company sees itself both culturally and organizationally. 2) It should also be given to a representative group of customers, with the language tailored appropriately, in order to expose the gap between internal and external perceptions. For each question listed below, select the statement that most closely reflects your opinion of the company as you view it today not as you think it should be or it might be in the future.
T h e O n e -t o - O n e G a p T o o l
EXPERT OPINION
3)
CUSTOMER RELATIONSHIPS
Question 1. How effectively does the company differentiate its customers? 1. 2. 3. 4. W e do not differentiate among customers. W e try to differentiate among customers. W e collect and use information gleaned from interactions with customers to differentiate each customer and to evaluate the importance of each relationship. W e have a continuously updated customer knowledge database that provides all the critical business information about our relationships with individual customers.
The One-to-One Gap Tool rates the company culturally and organizationally based on the following criteria:
Question 2. What steps has the company taken to improve the total experience of its customers? 1. 2. 3. 4. W e pay little or no attention to the total experience of customers. W e know all the points where customers are in contact with the business, and we manage these areas effectively. W e conduct frequent surveys with selected customers and make improvements based on their feedback. W e have a continual dialogue with each customer and use well-developed methods to improve our relationships.
Question 3. How effectively does the company measure and react to customers expectations? 1. 2. 3. 4. W e make no effort to understand our customers expectations. W e have some idea of our customers expectations and use them in building relationships. W e periodically solicit customers input about expectations and take actions to improve the relationships where possible. W e work as a team with our customers to ensure that their expectations are met or exceeded.
Customer Relationships Partnerships Knowledge Strategy Employee Management Processes Technology Competitive Strategy
Source: Peppers, Rogers, & Dorf (1999)

Question 4. How effectively does the company understand and anticipate customers behavior? 1. 2. 3. 4. W e pay little or no attention to the behavior of our customers. W e understand the trends and buying patterns of our customers and consider them when making critical decisions. W e collect data on our customers preferences and other behaviors and use that information in our business planning. W e maintain a profile of each customer and refer to it when dealing with customers.
CRM Education
The Institute of Direct Marketing - http://www.theidm.com/ American Marketing Association - http://www.marketingpower.com/ Websites and online communities http://www.1to1media.com/Home.aspx This is one of the most used websites in this course. In order to search for articles and access them, you will need to register. Please be sure to SIGN IN at the top right hand corner and register, using your FIU email. http://www.destinationcrm.com/ http://www.customerthink.com/ http://www.crm2day.com/ http://searchcrm.techtarget.com/
Chapter 3 Module 1
CRM Vision
A vision must focus on the future and serve as a concrete foundation for the organization. Unlike goals and objectives, a vision does not fluctuate from year to year but serves as an enduring promise A CRM promise. vision should paint a clear picture of what your company will look like to your customers when you have achieved your CRM objectives. A vision must give the people the feeling that their lives and work are intertwined and moving toward recognizable, legitimate goals.
A CRM vision is a powerful means of creating shared values and a customer focusin a sense, these shared values are the glue glue that holds the organization together.
Source: Payne (2006)
Paint the picture
Examples of CRM Visions

Ritz-Carlton Hotels The Ritz-Carlton is a place where the genuine care and comfort of our guests is our highest mission. We pledge to provide the finest personal service and facilities for our guests who will always enjoy a warm, relaxed, y refined ambience. y j y , , yet The Ritz-Carlton experience enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests.
Ritz-Carlton Gold Standards Check out the companys site & read the Gold Standards: http://www.ritzcarlton.com/corporate/about_us/gold_standards.asp
Examples of CRM Visions

Harrahs Entertainment
"Each of our brands will be the overwhelming first choice for casino entertainment of its targeted customers.
Harrahs Code of Commitment http://www.harrahs.com/images/PDFs/Harrahs_Code_of_Commit_2006_English.pdf **Watch the video interview with the CIO of Harrahs posted under Supplemental Materials
Chapter 3 Module 1
More CRM Vision Statements

We will work with our members in a trust-based relationship to represent their interests, and to satisfy their needs for high value, security, and peace of mind in motoring, travel, and home. Nurturing relationships one cup at a time. Deliver a customer experience that consistently develops enthusiastically satisfied customers in every market in which we do business. Build and maintain long-term relationships with valuable customers by creating personalized experiences across all touch-points and by anticipating customer needs and providing customized offers. Nothing is more important than making every user successful.
Setting Priorities
Prioritization Matrix
High Quick Hits Strategic
6 4
Benefits
1 2 3 7
Low Easy
Considerations Implementation
No Go Difficult
Strategic Goals for CRM Projects

Increase customer satisfaction Enhance cross/up-sell opportunities Increase customer retention Increase customer loyalty Increase sales revenues Increase profit per customer Acquire new customers Increase marketing campaign response rates Increase acquisition of new customers Reduce costs of sales Improve lead quality and conversion Increase profit margins Increase partner loyalty Reduce cost of marketing Other
Loyalty, Satisfaction Revenue Enhancement
Cost Reduction
20
40
60
80
Source: Gartner Group
Chapter 3 Module 1
Examples of CRM Goals & Objectives

Growth in Revenues Retain existing customers Obtain new customers Increase customer profitability Reduction in Expenses Realize sales efficiencies Realize service efficiencies Realize marketing efficiencies Recognize operational efficiencies Increased Loyalty Enhance cross-sell opportunities Increase customer tenure Increase referrals
Objective Retain existing customers Obtain new customers Increase customer profitability
Metric Retention rate
Target Performance 89%
New customer acquisition rate New profit per customer
10%
$16,000
Objectives must be stated in quantifiable, or measurable, terms and must include a deadline for completion. They should spell out how much of what kind of performance by when.
Example of CRM Business Case Worksheet

CRM Objectives
Retain existing customers
Strategies
Provide 24-7 service Implement a 360o view
of customer
Business Requirements
Accurately measure the CLV
each customer can potentially create for the company
Resources
Marketing Department
(note specific people) (note specific people) process reengineering
Enablers
CRM technology data
warehouse
Operations Department Operational CRM Business consultant for Technology consultant Human Resources
representative representative
Develop consistent
customer experiences across all channels offerings
Capture accurate and
Analytical CRM Process analysis Experience mapping Customer Inventory Assessment Employee training on customer
facing processes and formal process improvement procedures customer touch point
Create customized
relevant customer information in one central place customer facing processes where they are and how they should be handled
Clearly understand our
Financial Department
Shorten service processes Use predictive modeling to

enable customized product offerings and messages customer-facing processes
CRM metrics for each critical Employee performance
Retain quality staff for
evaluation & compensation program based on customer metrics
Understanding CRM Project Costs

CRM software licence fees Systems integration Infrastructure costs, new desktop, desktop laptop or handheld devices Software configuration Data modelling Beta-testing Helpdesk support Change management Project management Process reengineering Software upgrades Training Consulting services Opportunity costs
Chapter 3 Module 1
Projecting Incremental Costs: An Example

Cost Component Laptop Hardware & Accessories for 100 Sales Reps Travel for Laptop Deployment & Training for 100 Sales Reps Sunk Costs Unit cost = $1,100 Accessories/unit = $300 Total cost = $140,000 Average airfare = $500 3 nights @ $100 = $300 Meals & miscellaneous = $100 Total cost = $90,000 250 licenses @ $500 = $125,000 Customization = $250,000 Technical training = $15,000 Total cost = $390,000 One developer/analyst = $50,000 Ongoing Annual Costs Repairs/new hires = $15,000
New hires/turnover = $5,000
SFA Software
Upgrades = $3,000
IT Department Support
Two programmers = $170,000 $193,000
TOTAL
$670,000
Projecting Benefits: An Example

Benefit Component From Productivity Gains Savings/Growth Preparing Proposals = 200 hrs/year Preparing monthly reports = 100 hrs/year Updating files manually = 50 hrs/year Researching prospect information = 100 hrs/year Sending documentation = 80 hrs/year Total hours = 530 hours for 80 Sales Reps = 42,400 hours Forecasted Revenues per hour = $25 Projected Revenue Increase = $1,060,000 Forecasted Revenues = $15,000,000 Incremental revenue increase = 10% Projected Revenue Increase = $1,500,000
From Revenue Growth (Better quality proposals, faster sales cycle times, improved quality of leads) From Reduction in Operating Expenses
Word Processing Center = $120,000 Travel Expenses = $100,000 Sales Centers Rent & Overhead = $500,00
Business Case Summary Data

CRM Business Case
Benefit - Cost Summary Total Bottom Line Benefits Per Year Cumulative Benefits, Present Value Weighted Average Total Costs Per Year Cumulative Costs, Present Value Net Cash Flow Cumulative Net Present Value Cash Flow Internal Rate of Return Net Present Value, 5 Years Return on Investment, Present Value, 5 Years Payback P i d Years P b k Period, Y Year 1 $150,000 $150,000 $1,500,000 $1,500,000 -$750,000 -$750,000 129% $3,100,000 107% 2.0 20 Year 2 $2,500,000 $2,500,000 $1,100,000 $2,550,000 $700,000 -$25,000
Prepared by: Customer Connect Australia

Year 3 $2,900,000 $4,950,000 $90,000 $2,600,000 $1,400,000 $1,100,000 Year 4 $3,100,000 $7,100,000 $250,000 $2,800,000 $1,450,000 $2,200,000 Year 5 $3,100,000 $9,100,000 $110,000 $2,900,000 $1,500,000 $3,100,000
Cumulative Net Present Value Cash Flow $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 -$500,000 -$1,000,000 Year 1 Year 2 Year 3 Year 4 Year 5
Chapter 3 Module 1
Best Buy: An Example
Strategy
Best Buy (2006) strives to make life fun and easy for millions of people across North America. Our mission is to give our customers great experiences whether they are shopping for consumer electronics, home-office products, entertainment software and appliances, or using those products and relatedservices in their homes and offices. Best Buy is growing its business by (goals): Converting more stores to the customer-centric operating model.
Adding new stores to better serve existing and new markets. Expanding and strengthening service offerings. Boosting employee retention in order to deliver better customer experiences while increasing productivity. Adding individualized marketing capabilities to our skills in mass marketing. Simplifying our internal processes so they respond better to changing customers needs.
MAR 4860 Worksheet
Chapter 3 Module 2

Module 2
Build Project Foundations

Identify stakeholders Establish governance structures Identify change management needs Identify project management needs Identify critical success factors Develop risk management plan
Build
Stakeholders in CRM Projects

Stakeholders include any party that will be impacted by the adoption of CRM
senior management users of any new system, process or technology marketing staff sales people customer service agents and representatives channel partners customers IT specialists
MAR 4860 Worksheet
Chapter 3 Module 2
CRM Project Governance Structure
CEO
E x ec S pons or
C R M C ons ult ant S ales E x ec M ark eting E x ec P rogram D irec t or E x ternal R es ourc es S t eering C om m itt ee I S Lead L d S y s tem s N am e I m plem enter T itle
K ey N am e U s ers T itle
S ales Lead
M ark eting Lead
Customer Advocate
S upport Lead
P rogram T eam
Change Management Ingredients

Changing people's behavior brings the biggest return on investment for CRM. The five ingredients for successful CRM change management are: 1. Leadership and Sponsorship 2. Skills and Competencies 3. Knowledge 4. Organization 5. Incentives
EXPERT OPINION
All CRM initiatives and employee engagement in them must run into parallel with change management and project management. Change management is concerned with people, systems and organizational change. Source: Payne (2006)
The Four Stages of Change

1. 2. 3. 4.
DENIAL EXPLORATION RESISTANCE ACCEPTANCE EXPERT OPINION
Change Introduction
Managed Change
Managing change doesnt always guarantee success. But ignoring the need to manage change guarantees failure. Peter Drucker Management Guru
Morale/ Productivity/ Commitment Time
Unmanaged Change
MAR 4860 Worksheet
Chapter 3 Module 2
Internal Marketing Plan

1. Identify your segments, target audiences or user groups 2. For each group, define: Needs, expectations and benefits associated with CRM whats in it for them? Marketing objective The target message The 7Ps
Marketers need to keep all employees aware of current promotions and campaigns, as well as educate them on the company's vision and desired brand image.
Source: McMaster (2002)
EXPERT OPINION
3. Develop a roll-out marketing plan over the lifetime of the CRM initiative
The Buy-In Matrix
EXPERT OPINION
Intellect tual Buy-In
Yes
Bystanders
Champions
No
Weak Links
Loose Cannons Yes
A CRM Initiative's Bermuda Triangle Two best practice p suggestions for preventing-permanently--user-adoption disappearance.
No
Emotional Buy-In
http://www.destinationcrm.co m/print/default.asp?ArticleID =6824
Identify Project Management Needs

Role of CRM Program Director or Project leader Sets out steps of journey from situation analysis to achievement of CRM vision, goals and objectives Tool kit: Gantt charts, Critical Path Analysis (CPA), charts (CPA) Program Evaluation and Review Technique (PERT) or network diagrams .
MAR 4860 Worksheet
Chapter 3 Module 2
Gantt Chart Example
Critical Success Factors

People Process Technology
Critical Success Factor

1. Senior management commitment 2. Creation of a multi-disciplinary team 3. Objectives definition 4. Interdepartmental integration 5. Communication of the CRM strategy to staff 6. Staff commitment 7. Customer information management 8. Customer service 9. Sales automation 10. Marketing automation 11. Support for operational management 12. Customer contact management 13. Information systems integration
X X X X X X X X X X X X X X X X X X X X X X
Risk Management Plan

Gartner has identified a number of risks that threaten project success
management that has little customer understanding or involvement rewards and incentives that are tied to old, non-customer objectives organizational culture that is not customer-focussed limited or no input from the customers thinking that technology is the solution lack of specifically designed, mutually reinforcing processes; poor-quality customer data and information little coordination between departmental initiatives and projects creation of the CRM team happens last, and the team lacks business staff no measures or monitoring of benefits and lack of testing
MAR 4860 Worksheet
Chapter 3 Module 3

Module 3
Needs Specs & Partner Selection

Process engineering Data review and gap analysis
Needs & Partner
Initial technology needs specification, and research alternative solutions Write request for proposals (RFP) Call for proposals Revised technology needs identification Assessment and partner selection
Process Defined
A process is made up of INPUTS and a series of activities that create an expected result or value-added OUTPUT. EXPERT OPINION
Value added
INPUTS
Process
OUTPUT
Knowledge Materials Machines Labor Management Capital
Customer Feedback
Goods or Services
To get a good feel for how ambitious your CRM plans should be first take a be, serious look at your existing CRM processesthe way in which you market to, sell to, and service customers. The better defined your processes are, the greater your chances of success in leveraging CRM technology.
Source: Dickie (2002)
MAR 4860 Worksheet
Chapter 3 Module 3
An Example - Getting to Work/School

INPUTS PROCESS OUTPUTS
Go to the bus station
Get on the right bus
Give driver correct change
Take a seat, if available Follow the bus route Get off at 650 Park Avenue Enter office building
2006 Nancy A. Rauseo
Making Spicy Hot Chocolate
CUSTOMERS EXPECTED RESULT
SPICY HOT CHOCOLATE 1 cup (8 oz.) milk 1 cup (8 oz.) strong coffee 1 oz. sweetened bakers chocolate t. cinnamon ACTIONS
EXPERT OPINION
INPUTS
4 drops of Tabasco sauce In a saucepan, combine the first three ingredients. Heat over a low flame, stirring, until the chocolate is melted. Do not allow mix to boil. Remove from heat; add cinnamon and Tabasco. Serve immediately.
The common denominator of CRM-related business processes is that they should be designed around the customers perspective with the ultimate goal of improving the customers experience.
Source: Dych (2002)
Types of Processes 1
Vertical Process
Located entirely within a department or business function One department is involved or affected by the process An example is the facilities maintenance process within a company
Horizontal or Cross-Functional Process Crosses over several departments of the company An example is the new product development process almost all functions need to be involved in it
Primary Process
Part of core business - has major implications for the customers and company An example is the logistics process in a courier company
Secondary Process
Has minor cost or revenue implications
MAR 4860 Worksheet
Chapter 3 Module 3
Types of Processes 2
Front-Office Process
Also called customer-facing processes, i.e. those encountered by the customers Example are the complaint management or the sales processes Usually cross-functional in nature Critical because they directly impact the customers perception of service
Back Office Back-Office Process
Located behind the scenes or sight of customers Examples are a data quality process or management approval process Indirectly can impact the customers perception of the company May be INPUTS to front-office processes
An Example of Sales Business Processes

Define Segmentation and Coverage Plans
Review Corporate Objectives Determine Segmentation Approach Establish Target Segments Analyse Profitability by Segment Determine Channel Strategy by Segment Map Segments to Territories Determine Resource Requirements by Channel and Territory
Define Territories and Assignment Rules

Define Corporate Territories Define Corporate Assignment Rules Validate Territory Assignment Rules Approve Territories and Assignment Rules Publish Territories and Assignment Rules Realign Sales Force Define Regional Assignment Rules
Manage Pipeline
Review Pipeline Status Prioritise Critical Opportunities Build Action Plan Deploy Resources Monitor and Adjust Plan Coach Team Members
Conduct Sales Financial Planning

Review Corporate Objectives Establish Growth Targets Establish Profit Targets Establish Cost Targets Establish Budget Establish Annual Headcount Plan Plan Sales Force Quotas (Call BP)
Establish Consensus Forecast

Export Forecast Data Perform Demand Planning Conduct Sales and Operations Planning Meeting "Disaggregate" Consensus Forecast Publish Consensus Forecast
Establish Sales Force Policy and Procedures

Establish Pricing Guidelines Establish Contract Guidelines Establish Approval Matrices Establish Documentation Guidelines Audit and Enforce
Order Fulfilment Process
MAR 4860 Worksheet
Chapter 3 Module 3
Campaign Management Process

Customer phones in Check scores Buy product
No interest
Offer product to high scores 2 Send application form f 7 Out bound phone follow-up 7 Mail follow-up
Open account on phone
42
Check account balance
Do nothing
(numbers are days)
Process Ratings
Best practice (superiority)
The process is substantially defect-free and contributes to CRM performance. Process is superior to comparable competitors and other benchmarks A good process which largely contributes to CRM performance An average process which meets expectations with no major problems but which presents opportunities for improvement The process has identified weaknesses which are being addressed An ineffective and/or inefficient process in need of immediate remedial attention
Parity
Stability
Recoverability
Criticality
Data Review and Gap Analysis

Customer-related data is used for strategic, operational, analytical and collaborative CRM purposes Identify the information needed Identify the information available Identify the gap Consider data quality issues
MAR 4860 Worksheet
Chapter 3 Module 3
Initial Technology Needs Specification and Research Alternative Solutions

Identify applications and functionality that meets business case requirements
Visit vendor websites Join online communities and learn from members Visit online CRM exhibitions Read case studies Join benchmarking group
Consider build, buy or rent decision

Consider total cost of ownership
Most users opt for an on-premise (installed) CRM system or a hosted (online) system.
Segmentation Campaign Mgmt. E-marketing Lead Mgmt. Loyalty Mgmt. Marketing Resource Mgmt. Enterprise Marketing Mgmt. Marketing Performance Mgmt. Partner Marketing Data Mining Performance Mgmt. Dashboards/KPIs Personal Productivity Customer Value Analysis Sales, S i S l Service, W b Web Field Service Analytics In-Line, Event Driven Field Force Optimization Wireless Mobility Parts Planning Contract/Warranty Remote Monitoring Fleet Management Dispatch and Repair Web Storefront Catalog, Pricing Inventory Sales Partner Mgmt.
Marketing
Sales
Sales Force Automation Lead Management Sales Configuration Order Management Pricing Management Sales Compensation Sales Performance Mgmt.
Analytics
CRM Application Mind Map p
Customer Service Field Service Information/ Infrastructure

Customer Data Integration: CDI Product Information Mgmt.: PIM Business Process Mgmt. Business Process Mgmt.
Community Management Service Analytics Desktop Productivity Contact Center/Call Center Workforce Optimization W kf O ti i ti E-Learning Workforce Mgmt. Q/A, Monitoring Self-Service/E-Service Knowledge Mgmt. E-Mail Response Surveys Unified Communications Trouble Ticketing/Case Mgmt. Enterprise Feedback Mgmt.
E-Commerce
Master Data Mgmt.: MDM Enterprise Information Mgmt.
Benefits Claimed for Hosted Solutions

Costs are fixed and known.
Companies pay a per-seat monthly fee. If you have 50 users, and the monthly fee is $100 per user, you can expect annual user fees of $60,000.
Upgrades are performed by the vendor away from the users premises. On-premise implementations, in contrast, can impose significant burdens on in-house IT staff and budgets. g
There can be upfront investments in IT hardware and infrastructure, software purchase and customization, and training. Implementation costs can be significant.
User support and software upgrade costs are additional to initial software licence costs. Essentially, the hosted model converts capital expenditure and fixed costs into variable costs.
MAR 4860 Worksheet
Chapter 3 Module 3
Comparing Costs: On-premise vs. Hosted CRM

Cost item Number of users Application licence/subscription Implementation and customization Training IT infrastructure/hardware IT personnel Support/upgrade costs Year one expenditure On-premise CRM 500 $1,250,000 $6,250,000 $150,000 $500,000 $500,000 $225,000 $8,875,000 Hosted CRM 500 $750,000 $187,000 $75,000 $0 $0 $0 $1,012,500
Sources: Triple Tree; Software & Information Industry Association (SIAA); salesforce.com; Yankee Group. Table originally appeared in eMarketer 2005.
A Request for Proposal (RFP)

Standards used to evaluate vendors Typical content listed on pages 87-88 Call for proposals Revised technology needs identification Assessment and partner selection
Vendor Evaluation Worksheet

CRM Vendor Evaluation Worksheet

Importance is the priority placed on this criteria for the company evaluating the vendor. Use a scale from 1 to 5, with 5 being critical to the company. Vendor Capability is the degree to which the vendor can meet the decision criteria. Use a scale from 1 to 5, 5 being that the vendor fully meets the criteria. Total Points for each vendor are calculated by multiplying the importance of each decision criteria with the vendor capability. These points go in the shaded area. To get the TOTAL POINTS by vendor, add all points in the shaded areas.
Decision Criteria About the Vendor Years of experience with CRM Industry experience Investment in research & strategic technology direction Training & documentation Technical support Management team & project managers TOTAL
Importance
Vendor A
Vendor B
Vendor C
5 4 5 3 5 3
5 4 4 4 3 5
25 16 20 12 15 15 103
5 4 5 5 5 5
25 16 25 15 25 15 121
3 3 3 3 4 2
15 12 15 9 20 6 77
About the Software Price Functional requirements Customizability & flexibility User friendliness Scalability Source code TOTAL
5 5 4 5 4 4
3 3 2 3 4 3
15 15 8 15 16 12 81
5 3 5 5 5 5
25 15 20 25 20 20 125
3 2 2 3 3 4
15 10 8 15 12 16 76
MAR 4860 Worksheet
Chapter 3 Module 3
Product Evaluation Worksheet

CRM Product Evaluation Worksheet

Importance is the priority placed on this criteria for the company evaluating the vendor. Use a scale from 1 to 5, with 5 being critical to the company. Vendor Capability is the degree to which the vendor can meet the functional requirement. On a scale from 1 to 5, with 5 being that the vendor fully meets the requirement. Total Points for each product are calculated by multiplying the importance of each decision criteria with the product capability. These points go in the shaded area. To get the TOTAL POINTS by product, add all points in the shaded areas.
Functional Requirement Category Contact management Account management Time management Lead management g Sales management Customer contact Customer service Field service Telemarketing/Telesales Marketing Knowledge management Business intelligence Partner relationship management E-Commerce Supply chain management Workflow management Reporting Integration Help functions
Importance 5 5 4 5 5 2 2 2 2 4 5 5 3 3 4 5 4 5 3 4 4 4 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 4
Product A 20 20 16 20 20 8 8 8 8 16 25 25 15 15 20 25 20 25 12 3 4 3 4 3 4 5 3 4 3 3 3 4 4 4 4 3 3 3
Product B 15 20 12 20 15 8 10 6 8 12 15 15 12 12 16 20 12 15 9
Product C 2 3 2 5 4 3 5 4 4 4 3 3 3 2 3 2 3 3 3 10 15 8 25 20 6 10 8 8 16 15 15 9 6 12 10 12 15 9
TOTAL POINTS
326
252
229
Project Implementation
Refine project plan
Consider needs and availability of partner
Implement
Identify technology customisation needs

Out-of-the-box rarely fits perfectly O t f th b l fit f tl
Prototype design, test, modify and roll out

Risk reduction Refinement Pilot on a small group of users or customers
Performance Evaluation Project outcomes
Evaluate
Was the project delivered on time and to budget?
Business outcomes
Have business goals and specific CRM objectives been achieved? Consider time-frame for CRM objectives What about the CSFs?
This is a continuous process
Chapter 4 Module 1

Chapter 4 Developing, Managing and Using CustomerRelated Databases
What are customer-related data?

Customer-related data is anything pertinent to development and maintenance of customer relationships. Customer-related data can have a current, past or future perspective, focused on current opportunities, opportunities historic sales o potential opportunities. Customer-related data might be about individual customers, customer cohorts, customer segments, market segments or entire markets. Customer-related data might also contain product information, competitor information, or regulatory data. the
What are customer-related data?

Customer Touch Points
Sales
Retail
Direct Mail
Call Center
E-m ail/ Fax
Internet
ATM
Business Processes B i P
Custom er Data
Sales Billing Accounts Receivable Product
Data Data Warehouse Warehouse

Chapter 4 Module 1
CRM Integration
Global Customers Customer Touch Points Front Office Functions Marketing Management Order Processing Sales Management Pricing Service & Support Back Office Functions Receivables Payables Production Planning Inventory Management Shipping & Receiving Payroll
Consumers Businesses Partners Suppliers
Electronic Touch Points Internet E-mail Call center Voice Response Systems Kiosks
Traditional Touch Points Retail stores Mail Service departments

CRM Software
ERP/ Data Warehouse
Database structures 1
Department
Offers
Course
EXPERT OPINION
Belongs to
Has
Teaches Professor Section
Is registered in Student
Has
Office
Possible Data Attributes: Student ID Name Address Birth date Phone Gender Social security number
Entity-relationship diagrams are used to identify the entity types in a situation and t visually it ti d to i ll display the relationships between them. They help create a shared understanding of the basic structure of a system.
Source: Alter (2002)
Database structures 2
Chapter 4 Module 1
Steps to building a customer related database

1. Define the database functions
2. Define the information requirements
3. Identify the information sources 3 4. Select the database technology and hardware platform
5. Populate the database
6. Maintain the database
Database functions
Database functions are defined by the CRM-related purposes for which data are acquired, enhanced, stored, distributed and used. Databases support all types of CRM: Strategic, Operational, Analytical and Collaborative. Operational CRM uses customer-related data to help in the everyday management of customers. Analytical CRM uses customer-related data to support sales, marketing, and service decisions.
OLTP and OLAP databases

Operational data resides in an OLTP (online transaction processing) database. OLTP data needs to be very accurate and up-to-date. Analytical data resides in an OLAP (online analytical processing) database. The information in the OLAP database is normally a summarised extract of the OLTP database, enough to perform the analytical tasks. The analytical database might also draw in data from a number of internal and external sources.
Chapter 4 Module 1
Define the information requirements

Based on CRM vision Answers the question: what information do I need about the customer? Best people to answer the question are those who interact with, or communicate with, customers for sales, marketing and service purposes, and those who have to make strategic CRM decisions. Many packaged CRM software applications come with industry-specific data models.
Define the information requirements

Customer information fields Contact data Contact history Transactional history Current pipeline Opportunities Products Communication preferences Service history
Customer identification
This unique identifier is a MUST! Allows linkages to be made between several customer-related
databases (e.g. transactional, product and service databases)
Customer records can be linked in 3 ways: One-to-one. Each record in one database can be linked to
one other record in another database.
One-to-many. Each record in one database can be linked to

many records in another database
Many-to-many. Each record in one database can be linked

to many records in another database, and each record in that database can, in turn, be linked to many records in the first.
Chapter 4 Module 1
Identify internal information sources
Data Sources
Data Collection System
Data Warehouse System
Internal Sources
External Sources Customer Touch Points
3 Information Delivery Systems Information Usage
Identify external information sources
Data Sources
Internal Sources
External Sources
Customer Touch Points
Information Delivery Systems
Information Usage
Data collection system

1
Data Sources
Hardware & Software Applications
2 Data Warehouse System
Information Usage
Module 6 Unit 1: Basics of CRM Technology
15
Chapter 4 Module 1
Data warehouse system

1 Data Sources
Information Usage
Data management
1 Data Sources
DBMS Data Clean-Up & Transformation Data Mining Data Accessibility
2
Information Usage
Understanding analytical data
CRM Transactions (OLTP)
Data from other systems CRM Analytics (OLAP) Other Data
Differentiation by customer value Customer satisfaction Next purchase Propensity to buy Partner contribution Web activity
Differentiation by needs Supplier evaluation Campaign success Sales activity Segmentation Customer profiling
Risk scoring Prospecting Propensity to buy Revenue Sales volumes Brands Profitability
Chapter 4 Module 1
Data warehousing & reporting
Data Warehousing
Analytical Applications
Information I f ti Delivery & Reporting
Data Mining Clustering Knowledge Discovery
19
Analytical applications
Data Warehousing
Chapter 5, Module 1

Chapter 5: Customer Portfolio Management
Module 1
Chapter Objectives
Understand the benefits that result from differentiating customers and managing them as a portfolio. Explain a number of disciplines that contribute to customer portfolio management:
market segmentation, sales forecasting, life-time value estimation, and data-mining.
Be familiar with some portfolio management tools. Explain how customer portfolio management differs between B2C and B2B contexts. Apply the range of customer management strategies that can be deployed across a customer portfolio
Why Differentiate Customers?

To treat each customer differently is the essence of CRM Different customers have different needs Different customers represent different values to the company Customer value is future oriented Actual value what the customer is worth today Potential value what the customer could be worth Customer differentiation helps an enterprise increase customers actual value and realize customers potential value Differentiation goes beyond traditional marketing segmentation
Chapter 5, Module 1
Customer Portfolio Management

A customer portfolio is a classification of customers different groups that are then managed on a portfolio, or collective, basis. It is the collection of mutually exclusive customer groups that comprise a businesss entire customer base. C t Customer P tf li Management (CPM) aims t optimize Portfolio M t i to ti i business performance whether that means sales growth, enhanced customer profitability, or something else - across the entire customer base. CPM does this by offering differentiated value propositions to different segments of customers. Basic CPM disciplines are: market segmentation, sales forecasting, activity-based costing, customer life-time value estimation, and data-mining. into
Segmentation & Clustering

No Segmentation Mass Marketing Market Segmentation Custom Marketing
Standard Offering Low Cost per Customer
1 to 1 Marketing Tailored Offering Higher Cost per Customer
Segmentation Processes
Intuitive Brain-storm segmentation variables
Age, gender, life-style SIC, size, location
Data-based Obtain customer data

Internal and external
Analyze customer data Identify high/medium/low value customer segments Profile customers within segments
age, gender, life-style SIC, size, location
Produce word profiles word-profiles Compute sizes of segments Assess company/segment fit Make targeting decision
one/several/all segments?
Assess company/segment fit Make targeting decision

one/several/all segments?
Chapter 5, Module 1
Five Step Process of Market Segmentation

1. Identify the business you are in (Module 1) 2. Identify relevant segmentation variables (Module 1) 3. Analyze the market using these variables (Module 1) 4. Assess the value of the market segments (Module 2) 5. Select target market(s) to serve (Module 2)
Criteria for Consumer Segmentation

Geographic Domestic/foreign/global, regions, zip codes, population density, country, region, TV region, city, city size, post-code, residential neighborhood Age, gender, occupational status, household size, marital status, terminal educational age, household income, stage of family lifecycle, religion, ethnic origin, nationality
Demographic
Lifestyles/ Psychographics Behavioral Patterns Transactional Data Analytically Derived
Activities/ sports, values, opinions, views Benefits sought, service required, loyalty, permission granted Interaction information, likelihood of certain behaviors, propensity to buy, Data mining
Criteria for Business Market Segmentation
Type of Business SIC Size
Manufacturer, service provider, government agency, nonprofit, wholesaler, distributor, merchant, retailer Standard Industry Classification for categorizing goods and services produced Large, medium or small; Based on number of employees, number of customers and/or profit or revenues Sealed bidding, centralized, decentralized, vendor analysis, negotiated contracts, internet auctions Product quality, price, customizations, just-in-time, service support pre- and post-sales World region, climate zone, trading block, country, country regions, state, province, county, city, suburb, city block, town, village
Buying Process Buying Criteria
Geographic
Chapter 5, Module 1
Segmentation Basics
EXPERT OPINION
WHO
Demographic Customer Information
WHAT
Behavioral and Transactional Customer Information
The value of demographics has begun to wear out. Demographic data must be combined with behavioral and attitudinal data to get the most accurate view of consumers, but it is still a necessary foundation for marketers to build on. Check out the link below for an article on segmentation using population generations: Y Me, X Ways, Wild & Crazy and Elder Effect.
http://www.destinationcrm.com/print/d efault.asp?ArticleID=6463
WHY
Attitudinal and Motivational Customer Information
Source: Bailor, Beasty, Lager & Sebor (2006)
Bivariate Segmentation Example
Gifts Family sharing Take home Eat now

Hunger
Source: Mintel 1998
Functional 40% Later sharing 30%
Planned 10%
Usage
Emotional need 20%
Light snacking
Indulgence
Satisfaction
Benefits/Feature Segmentation
2006 Dickson & Rauseo
Chapter 5, Module 1
Channel Segmentation 1
Channel Segmentation 2
EXPERT OPINION
The value of segments matters. Every company needs a process to modify it t ti as customers dif its tactics t move within and across segments. Segment 1 Segment 2 For more, read this article:
http://www.destinationcrm.com/print/d efault.asp?ArticleID=6101
Segment 3
Segment 4
Segment 5
Source: Collins, Dahlstrom, and Singer (2006)
Chapter 5, Module 2

Chapter 5: Customer Portfolio Management Module 2
The 3-D Customer Focus Approach

2
Customer Choice
Drivers & Desired Features How is the product or service used? What features influence choice? Differentiators What features should be focused on to distinguish products?
Customer Profitability
Actual value What is the customer worth today? Potential value What could the customer be worth?
Customer Contact
Preferences What are the desired contact, communication, selling, financial and distribution channels?
Stages of 3-D Customer Focus
Step 1. Capture customer purchase histories Step 2. Analyze customer profitability Step 3 Profile benefit segment customers 3. Step 4. Understand customer usage Step 5. Analyze contact channel sub segmentation
EXPERT OPINION
As a business strategy, market segmentation is organizing a business around t b i d targeted t d segments and their product, service and purchase method preferences. The goal is to develop private information that creates a customer focus competitive advantage.
Source: Dickson (2006)
Chapter 5, Module 2
Segmentation Based on Loyalty & Profitability
H High Profitability
Butterflies
Good fit between companys offerings and customers needs Profitable but disloyal High profit potential
True Friends
Good fit between companys offerings and customers needs Highest profit potential
EXPERT OPINION
Low Profitability
Strangers
Little fit between companys offerings and customers needs Lowest profit potential Short-Term Customers
Barnacles
Limited fit between companys offerings and customers needs Low profit potential Long-Term Customers
When profitability and loyalty are considered at the y y same time, it is clear that different customers require different interactions.
Source: Reinartz & Kumar (2002)
Segmentation Based on Value

Most Valuable Customers (MVC)
Highest actual value to the company Yield the highest profit margins and most willing to cooperate Objective is retention The most growth potential Growth can be realized through cross-selling, increasing length of relationship changing customer behaviors and/or operating relationship, behaviors, more cost effectively Objective is growth Generate less revenue than cost-to-serve Highly unlikely to show positive net value Objective is motivation or churning them out Linger between being profitable and having some growth Objective is to shift to MGC and get them to show their true colors
EXPERT OPINION
Most Growable Customers (MGC) The goal of value differentiation is not a historical d t di hi t i l understanding, b t a but predictive plan of action.
Source: Peppers & Rogers (2004)
Below-Zero Customers (BZ)
Migrators
Ladder of Loyalty
Partners Take responsibility for the continuing success of the relationship. High profitability. Apostles Exhibit a high degree of loyalty while convincing prospects to do business with your Company. High profitability. Sponsors Demonstrate loyalty while telling others of ti f ti d ti Company. Hi h High satisfaction and supporting your C profitability. Loyalists Devote a large share of wallet to repeat business. Mid- to high profitability. Butterflies Get as much as, or more than, what was expected. Mid- to low profitability. Adversaries Not getting what was expected. Low profitability.
High
Prisoners
Partners
Apostles
Level of Loy yalty
p Sponsors Loyalists
Butterflies
Low Adversaries Low High
Level of Satisfaction
Chapter 5, Module 2
Step 1 Capture Customer Purchase Histories 1
Centura Banks Inc. (now owned by Royal Bank of Canada) rates its customers
on a profitability scale from 1 to 5. The real moneymakers get calls from service reps several times a year for what the controller calls a friendly chat and even an annual call from the CEO to wish them happy holidays. No wonder attrition in this group is down by 50% since 1996, while the percentage of unprofitable customers has slipped to 21% from 27%.
Source: Brady (2000)
Step 1 Capture Customer Purchase Histories 2
For the last decade, has identified the 10% of its customers who are its top buyers. These Gold Crown customers are provided with a special toll-free number, are sent elaborate, premium mailings, free cards that introduce new lines. These 10% make up 45% of total store sales and have helped Hallmark grow its sales, profits and shareholder value. Source: Newell (2000)
Hallmark
Step 2 Analyze Customer Profitability 1
Key Capabilities
Most Profitable Customers More Resources RESOURCE ALLOCATION CUSTOMER PROFITABILITY
Least Profitable Customers
Less Resources
Chapter 5, Module 2
By being one of the first in the industry to use data mining to enhance its y g y g relationships with its customers, Harrahs has been able to keep ahead of its competitors and this has definitely improved its bottom line. As one data mining tools provider says: imagine being able to project a customer's likely future activity on the day they sign up for membership. This allows you to market to them based on their potential (as opposed to their history) - an important aspect of gaining "wallet share" from the best customers. This concept is fundamental to the success of Harrah's customer marketing efforts. They even offer tools to answer questions such as who are their customers. Where do they come from? How often do they visit? What is the true value of their customers? What contribution did a recent star headliner in their theatre make? What was the true effectiveness of their last mail campaign? The list is as big as the imagination of the organization asking the questions.
Source: Meltzer (2004) http://www.dmreview.com/editorial/dmreview/print_action.cfm?articleId=1011392
Closed Loop Marketing

PREDICT
Step 1
EXPERT OPINION
STEP 1 Harrahs tracks guest behavior and make predictions about the value of the guest. STEP 2 Harrahs uses predictions to segment offerings.
Ste p5
2 Step
ANALYZE
SEGMENT
CLOSED LOOP MARKETING
STEP 3 - Harrahs markets to guests based on expected value. STEP 4 Guest reacts to offer.
ACT/REACT
ep St
MARKET
STEP 5 Harrahs analyzes the guest reactions and uses that analysis and new observed behavior to make new predictions.
Source: Pashko (2005)
Grouping Profitable and Unprofitable Customers

EXPERT OPINION 1. 2. Select a major customer based on wisdom. Determine annual contributions, both quantitative (sales) and qualitative (referrals, leads, etc.). ( f l l d t ) Collect transaction and financial history on products purchased, number and nature of contacts, sales calls, service calls, consulting, special discounts, payment terms, etc. Cost each activity based on allocation of resources. Compute actual profitability or value. In the late 1990s, Fidelity Investments contacted 25,000 high cost serial callers who were told they must use the company website or the automated call system for account and price information. When they called in the future, they were routed to a special representative who directed them back to the automated system.
Source: Brady (2000)
3.
4. 5.
St ep 4
Chapter 5, Module 2
Step 3 Profile Benefit Segment Customers 1

Who are our customers? Unique customer identifier Customer name Name of organization for which the customer works Title, role in organization, or other designation Where can the customer be reached? Home address Business address Phone number E-mail address Fax number What is the history of interactions? Outbound marketing promotions Outbound sales contact history Inbound customer-initiated queries How do customers prefer to interact? Media preference Channel preference Opt-in or opt-out for any media or specific communications
EXPERT OPINION
The deeper the customer profiling, the more you know your customers and (potentially) the more you will understand them to create a very important competitive capability and advantage over rivals who do not understand their customers as well. Superior information about your customers and their profit potential, and how to trade with them is vital private information that earns economic rents to the possessor.
What is the customers purchase behavior? Purchase dates Number of transactions Items Prices Channels utilized Sales versus non-sale purchases Returns Exchanges
What are our customers key characteristics? Consumer (B2C) Gender Age Household size Estimated income P Presence of children f hild Segment classifications Business (B2B) Industry classification Number of employees Annual revenues Number of locations Role of individual in purchase process
What is the customers value to our organization? Revenue to date Profitability to date Estimated lifetime value Estimated share of wallet Estimated probability of response to specific promotions ifi ti Estimated probability of specific purchases Estimated probability of attrition Estimated probability of nonpayment or bad debt Benchmarks Standards Industry performance Points of comparison
What are your customers needs? needs? Reasons for buying Impulse purchases In order to purchases Problem information Experiences sought What are is the customers expectations? expectations? Customers predictions What is ideal? What is desired? What is deserved? What is needed? What is the minimum tolerance level? Zone of indifference Influences

Profitable Cluster 3 Profit history Purchase mix Primary channelCluster 2 Profitable Feature focus Service focus Profit history Income Purchase Age/gender mix Primary channel InterestsProfitable Cluster 1 & goals Feature focus Situation drivers Service focus Profit history Income Purchase mix Age/gender Primary channel Interests & goals Feature focus Situation drivers Service focus Income Age/gender Interests & goals Situation drivers
Unprofitable Cluster 3 Profit history Purchase mix Primary channel Unprofitable Cluster 2 Feature focus Service focus Profit history Income Purchase mix Age/gender channel Primary InterestsUnprofitable Cluster 1 & goals Feature focus Situation drivers Service focus Profit history Income Purchase mix Age/gender Primary channel Interests & goals Feature focus Situation drivers Service focus Income Age/gender Interests & goals Situation drivers
Chapter 5, Module 2

Nokias Clusters or Segments APPLICATION 1. Basic low-income consumers: want a no frills and a very inexpensive phone. 2. Expression consumers: young consumers who want to customize their phone. 3. 3 Active consumers: want a rugged, tough phone with rugged outdoor features. 4. Classic consumers: want a traditional phone with some features. 5. Fashion consumers: want ever thinner, ever small, ever more stylish phones. 6. Premium consumers: want all the latest features and services. Nokia
Nokias future success depends on delivering great experiences to our customers by creating y g products and solutions that work seamlessly and are appealing. Our strategy contains the core elements required to accomplish this, and is optimized for tapping into the mobile industrys global growth potential as it unfolds.
http://www.nokia.com/A4126317
Step 4 Understand Customer Usage 1
APPLICATION
Applebees
Usage linked to geographical g g g p area and community characteristics.
http://www.applebees.com/
APPLICATION
P&G
Usage of Tide laundry detergent linked to cleaning power and the needs of working and you ng families.
http://www.pg.com/
Chapter 5, Module 2

Customer Profitability Analysis
Analysis of Product Features Purchased & Benefits Desired
Usage Observation
User Differences Income Life cycle stages Lifestyle & interests
Situation Differences Physical surroundings Social context Psychological view
Step 5 - Analyze Contact Channel Sub-Segmentation
Product Features/ Benefits Product Line Product Models Product
Needs Motivation Experience Convenience Influences
Customer Data Demographic Behavioral Attitudinal
External Competitive information Industry analysis Legal & regulatory Technology
Customer Profitability
CHANNEL #1 CHANNEL #2
SubSegment #1
SubSegment #2
SubSegment #3
SubSegment #1
SubSegment #2
MAR 4860 CRM Lecture Worksheet
Chapter 6 Module 1
Customer Relationship Management Customer Experience Management

Customer experience management (CEM) is emerging as a means of leveraging CRM in order to create and manage interactions that improve the customers experience with the company. The impact of not managing customer experiences can result in significant revenue losses for any company. CEM is not separate or distinct from CRM; it is part of a CRM strategy. In this chapter, we will start off by defining CEM, the key components of a customer experience and the financial impact of not addressing CEM. We will p g also look at techniques and tools for mapping and analyzing experiences and then identifying improvements. The goal is to put systems in place to continuously capture customer information and use it to make experiences more valuable to customers.
2010 Nancy A. Rauseo CRM and the Customer Experience
EXPERT OPINION
According to the most recent research by IBM, decision makers stated that ensuring promises and improving the total customer experience was the top concern. To drive sustainable, profitable organic growth and competitive differentiation, organizations must better integrate and align the way they treat customers with their go-to-market strategy and branding at each touch point of the relationship.
Source: Heffernan & LaValle (2006)
Customer Relationship Management Industry Definitions of CEM

CEM means managing customer interactions to build brand equity and long-term profitability.
Bob Thompson
APPLICATION Companies are beginning to realize what CRM really means. Its becoming obvious that no matter what technologies are at work, transforming transactions to experiences is the key to strengthen relationships.
Source: Glagowski (2006) Starbuck, Mercedes, P&G Reveal Secret Sauce http://www.1to1media.com/Print View.aspx?DocID=29500
Customer experience is what the customer receives at every touch point through processes, products and people.
Shaun Smith
The provisional disposition a person has about your company based on all the information in his or her environment, and their interactions with you and your competitors, plus their reflections on what this means to them.
Paul Ward
Its a matter of understanding and living our customers reality which is usually quite different from ours, and adapting ours to theirs.
Rafael Rodriguez
CRM and the Customer Experience
Chapter 6 Module 1
Customer Relationship Management CRM and CEM: Whats the Connection?

In math, the term subset is used to describe the relation, called inclusion, of one set being contained i id another set. I f i d inside h Informally, every ll element belonging to subset A also belongs to superset B, but there may be elements belonging to B that do not belong to A.
EXPERT OPINION
The Human Touch
CRM CEM
Managing customer experiences is an integral part of what CRM should be a win-win value exchange between a company and its customers. Loyal customer relationships are built on what the customer perceives and feels about the product/service purchased and interactions with the organization.
Source: Thompson (2006)
Customer Relationship Management CRM and CEM: Whats the Connection?

Left Brain Right Brain
CRM
Value of Customer to Company Focus on Systems & Transaction Functional Value
CEM
Value of Company to Customer Focus on People & Interactions Emotional Value
EXPERT OPINION
For details, read the article by Bob Thompson titled Customer Experience Management: Accelerating Business Performance, found under the Tools link.
Adapted from Customer Experience Management: Accelerating Business Performance by Bob Thompson
Chapter 6 Module 1
Customer Relationship Management The Customer Experience Model
Sales
Retail
Phone
Call Center
E-mail/ Fax/ Mail
Internet
ATM
Customer Experiences
Customer Intelligence Customer Information
Company Contacts
Process Improvement
CRM Data Warehouse

Billing
Accounts Receivable
Product
Customer Feedback
2010 Nancy A. Rauseo 5
Customer Relationship Management Three States of an Experience

EXPECTATIONS
EXPERIENCE
EXPERIENCE EVALUATION
Spoken Promises Perceived Alternatives Unspoken Promises Past Experiences Personal Values Personal Needs Word of Mouth
Outcomes Processes
Expectations Exceeded Expectations Met Expectations Not Met
WOW! OK AWFUL
Chapter 6 Module 1
Customer Relationship Management Marketings Roles in CEM

From the Traditional 4Ps of Marketing~ Product or Service Price Place Promotion
EXPERT OPINION
To the 5Cs of Relationship Marketing~ Customer Needs Cost to Customer Convenience Communication
Processes People Physical Environment
According to recent surveys, 85% of senior business leaders agree that traditional differentiators alone are no longer a sustainable business strategy. About 71% believe that customer experience is the next corporate battlefield. battlefield
Source: Shaw & Ivens (2005)
Connection (Interactions)
Customer Relationship Management Economic Impact of Negative Customer Experience

Source: Hasan (2005)
Chapter 6 Module 1
Customer Relationship Management CEM Versus CRM Revisited

CEM
What It Does Captures & distributes what the customer thinks about the company At customer interactions or touch points Surveys, observations, VOC studies & analyses t di l
CRM
Captures & distributes what the company knows about the customer After record of the customer interaction
EXPERT OPINION Having spent millions of dollars on CRM software, many CEOs consider their problem to be not a lack of customer information but a superfluity of it. Before investing more time and money, executives justifiably want to know how customer experience data are different and what their value is.
Source: Meyer and Schwager (2007)
When Its Used
How Its Monitored
Transactional data, market research, automated t ki of t t d tracking f sales, service & support data Owners of customerfacing processes
Who Uses It
Business/functional leaders
Customer Relationship Management Voice of Customer Revisited

REFLECTION
Definition f
Disciplined approach Aids in identifying,
understanding and prioritizing customer needs communication with customers for CRM
Improves
Serves as foundation
10
Chapter 6 Module 1
Customer Relationship Management Experience Analysis Process

1. Make a list of all your customer voices or customer
groups APPLICATION
2. Find the sources of customer feedback per group 3. Design the actual VOC strategy: survey, interviews, etc. 4. Implement the VOC strategy 5. Organize the results of the VOC: your interview notes,
requirements documents, market research, survey results, etc. opportunities. opportunities Krispy Kreme captures data from a number of sources. Instead of looking just at quantitative sales measures, we established measures through mystery shoppers and our own internal inspections as well as li it ti f ff i solicitation of off-premises customers through surveys.
Source: Smith & Wheeler (2002)
6. Identify unstated or unspoken customer needs or 7. Prioritize your customer experience improvement
opportunities using the Customer Experience Segmentation matrix
8. Use process mapping & other techniques to blueprint
desired CRM experiences or improvement opportunities.
11
Customer Relationship Management Application of Experience Analysis Process

APPLICATION
UPS Ranks #1 on Reputational Attributes In the annual survey conducted by Harris Interactive, UPS ranks #1 for people's "trust in the company to do the right thing, excellent customer service, and sincerity of communications." To learn more about the survey results, results click below:
http://www.pressroom.ups.com/mediak its/factsheet/0,1889,1388,00.htm
12
Chapter 6 Module 1
Customer Relationship Management Organizing the Voice of Customer Results

Affinity Diagram
For more tools and techniques, visit: http://www.asq.org/learn-about-quality/idea-creation-tools/overview/affinity.html

Customer Relationship Management Customer Experience Segmentation
14
Chapter 6 Module 1
Customer Relationship Management Customer Experience Blueprint
15
Customer Relationship Management Touch Point Mapping

Experience from the customers eyes C t Captures th f li the feelings, actions, and ti d
expectations of customers
Tangibles Support Systems Back-End Processes
Customer Touch Point Map

Customer Group Internal Function/ Process Customers Using Door-to-Door Services Delivery Opportunity Category Responsiveness Pick-Up Request
Touch Points
What are customers seeing, feeling, and doing?
What do customers want to see, feel, and do?
Florida International University
CERTIFICATE PROGRAM
Touch Points
Custom mer Proces sses
16
Chapter 6 Module 1
Customer Relationship Management Touch Point Map

Customer Group Internal Function/ Process Customers Using Door-to-Door Services Delivery Opportunity Category Responsiveness Pick-Up Request
Touch Points
Calls 1-800 service number
What are customers seeing, feeling, and doing?

Pick up the phone, dial the toll free number and wait for a live person to answer
What do customers want to see, feel, feel and do?

Get a live person on the first try
Gets placed in automated voice response system
Gets frustrated when he/she receives an automated system and has to wait so long
Get a live person on the first try
Waits up to 3 minutes before service rep answers
Gets frustrated and sometimes hangs up
Provides destination information
Greets service rep and feels pressured to talk quickly. Has to repeat information. Feels like rep is not listening.
p greeting and apology for g p gy Expects a nice g long wait. Say information only once.
Provides timeline for delivery
Tells service rep when package needs to be picked up (availability) and when it needs to arrive at final destination
Wants pick-up to be convenient. Doesnt want to ask for time off at work. Cant leave outside.
Makes note of service request # and hangs up
Writes down service number, confirms pick-up & delivery information
Expects a nice greeting and thank you for service. Wants assurance that timelines will be adhered to.
17
Customer Relationship Management Customer Experience Map
OPPORTUNITY FOR DELIGHT - Eliminate this customer action COMPANY Core Actions (Improvements) Identify first time vs. repeat customers Eliminate automated voice response for new customers Answer within 3 rings Friendly and courteous greeting Thanks g py for waiting. How can I help you?
Capture information in central database Confirm information Electronically route request to drivers
Asks if there is anything more the company can do Provides customer with a tracking number and a tollfree # or website for status follow-up Thanks customer for business CRM operational system Fully integrated with other channels
COMPANY Enablers
Modifications to automated system Staff for volume Trained/skilled staff
CRM operational system Trained/skilled staff
18
Chapter 6 Module 1
Customer Relationship Management Example of Experience Maps
http://engage.comms.gov.uk/knowledge-bank/insight/customer-journey-mapping/mapping-customer-experience.html
19
20
10
MAR 4860 - Chapter 7 Module 1
10/15/2010
MAR 4860
Customer Relationship Management CHAPTER 7: Creating Value for Customers Module 1: Value Concepts
2010 Dr. Nancy A. Rauseo
Chapter Objectives
The meaning of the term value How customers weigh up benefits and sacrifices in the value equation Three major forms of value delivery strategy adopted by successful companies What is meant by the term value proposition How marketers create customer value by mixing together a number of variables known as the 7Ps. The importance of customization in creating value How the Internet is changing the way that customers receive value from communication and distribution.
Customer Value Defined

Value is the customers perception of the balance between benefits received and sacrifices (or costs) made to experience those benefits. Value is the achievement of a customers requirements at the lowest total cost of acquisition, ownership and use. Perceived Value = Perceived Benefits / Perceived Costs* * Also use Sacrifices
For some customers, value equates to low price For others, it is having their particular requirements met For another group, quality is the dominant concern.
10/15/2010
How Do Customers Reduce Perceived Risk?

Delay purchase Seek word-of-mouth endorsement Negotiate service contracts Seek additional information from advertising copy Buy known brands Deal with reputable suppliers Seek performance guarantees Buy with credit card (protection if product fails) Negotiate discounts Take out insurance Demand pre-purchase trial
Total Cost of Ownership (TCO)

TCO looks not only at the costs of acquiring products, but also the full costs of using, and servicing the product throughout its life, and ultimately disposing of the product. Cost are incurred in the following p processes: search, p , purchase, ownership, , p, use, consumption, disposal. TCO is an attempt to come up with meaningful estimates of lifetime costs across all these processes Suppliers can respond to TCO purchasing processes by applying Economic Value to the Customer (EVC) pricing.
Sources of Customer Value

The Best Product
Product Leadership
The Best Total Cost

Operational Excellence
The Best Total Solution

Customer Intimacy
Source: Treacy and Wiersema (1995)
10/15/2010
Sources of Customer Value: Marketing Mix

The sources of customer value are based on the marketing mix or 4Ps. A key component of CRM is also the services that accompany any product. Therefore, there are 7 sources of value for services marketing are:
Product or Services Price Promotion Place People (or participants) Physical evidence Process (or interaction)
Components of CEM
Customization
EXPERT OPINION
Component A
Base Product/ Service
Component B
+
Component C
Mass customization is the use of flexible processes and organizational structures to create varied and even individually tailored value propositions, at the same cost as mass-produced, standardized offers. Custom Configuration
Component D
10/15/2010
Mass Production vs. Mass Customization

Mass Production
Supply Chain Focus Goal: Economies of Scale Production to Sales Forecast Speculative Shipping Costs Inventory Carrying Costs
Mass Customization
Demand Chain Focus Goal: Economies of Scope Production to Order Goods Pre-sold Before Shipping Just-in-Time Inventory
10
Mass Customization How It Works
1 MODULES
Interest Rates Annual Fees Card Designs
2 OPTIONS
10
20
3 CUSTOMER SEGMENTS 4 OFFERINGS

Configuration #1 Configuration #1 Configuration #1
11
Mass Customization Examples
12
10/15/2010
Customer Turnoffs
Value System or Process People
MAR 4860 Chapter 7, Module 2
10/15/2010
MAR 4860
Customer Relationship Management CHAPTER 7 - Creating Value for Customers Module 2: Value From Products & Services
Value From Products & Services
Product innovation Additional benefits Product-service bundling Branding Product synergies
Dimensions of Service Quality (SERVQUAL)

Also called the RRATE ~ Reliability Ability to perform the promised service dependably and accurately Assurance Knowledge and courtesy of employees and their ability to convey trust and confidence Tangibles Appearance of physical facilities, equipment, personnel and communication materials Empathy Provision of caring, individualised attention to customers Responsiveness Willingness to help customers and to provide prompt service
10/15/2010
The SERVQUAL GAPS Model

Word of Mouth Communications Personal Needs Past Experiences
Expected Service The Customer Gap GAP 5 Perceived Service
GAP 1 GAP 3
Service Delivery GAP 4
External Communications to Customers
Translation of Perceptions Into Service Quality Specifications GAP 2 Management Perceptions of Customer Expectations
Factors Leading to GAP 1

Customer Expectations
GAP 1
Inadequate or lack of marketing research and customer focus q g Lack of upward communications Insufficient relationship focus Inadequate experience recovery
Management Perceptions of Customer Expectations

Closing GAP 1
Reason for GAP 1 Inadequate or lack of marketing research and customer focus Lack of upward communication Ways to Eliminate GAP 1
Add marketing research strategies that include ones that focus on experience quality. Make sure that marketing research is used in the organization. Increase interaction between management and customers. Remove layers between contact personnel and top management flatten hierarchical structure Use differentiation to identify different groups of customers. Focus on relationships rather than transactions. Capture expectations data in customer records. Develop systems for handling experiences when reliability failures happen. Recognize that experience recovery keeps customers, and that lack of recovery loses customers.
Insufficient relationship focus
Inadequate experience recovery
10/15/2010

Translation of Perceptions Into Service Quality Specifications
GAP 2
Poor experience design p g Absence of customer-driven standards Inappropriate physical evidence and experience environment
Management Perceptions of Customer Expectations

Closing GAP 2
Reason for GAP 2 Poor experience design Ways to Eliminate GAP 2
Use customer experience blueprinting to create a systematic new experience process. Refine vague designs using the help of employees and customers. Replace company-designed standards with customerdesigned standards. g Create process management that focuses on customer requirements. Develop standard processes for setting quality goals and communicating them with the affected parties. Commit to customer-defined standards. Conduct customer and employee research to understand the appropriate environment. Create a experience environment in accordance with customer and employee expectations.
Absence of customerdesigned standards g
Inappropriate physical evidence & environment

Service Delivery
GAP 3
Deficiencies in human resource policies Failure to match supply with demand Customers not fulfilling roles Problems with experience intermediaries
Translation of Perceptions Into Service Quality Specifications

10/15/2010
Closing GAP 3
Reason for GAP 3 Deficiencies in human resource policies Ways to Eliminate GAP 3
Create more effective recruitment policies that select employees with customer-oriented capabilities. Reduce role ambiguity and role conflict with clear communications and job descriptions. Create evaluation and compensation systems that reward employees for service rather than just productivity. Empower employees. Encourage self-organized teams. Use marketing strategies to smooth peaks and valleys in demand. Adjust the customer mix to use service capacity at non-peak times.
APPLICATION
Framing the Customer Experience Innovation, multichannel interaction, and employee engagement outline the approach to picture-perfect strategy.
http://www.1to1media.com/View .aspx?DocID=29930 Source: Gaffney (2006)
Failure to match supply and demand
Closing GAP 3
Reason for GAP 3 Customers not fulfilling roles Ways to Eliminate GAP 3
APPLICATION Inform customers of their roles and responsibilities. Create clear instructions and communications. Be sure that customers are not negatively affecting each other. Use U control, partnering or t l t i empowerment strategies to eliminate channel conflict over objectives and performance. Eliminate channel conflict over costs and rewards. Use experience standards and incentives to control quality and consistency. Balance the tension between empowerment and control. The Customer Experience Disconnect Many companies focus on customer experienceand some have even produced successful results from their efforts. However, recent research shows a huge disconnect between how companies perceive customers' experience and how customers actually live it.
http://www.1to1media.com/PrintV iew.aspx?DocID=29932 Source: CRM Magazine
Problems with P bl ith experience intermediaries

External Communications to Customers
GAP 4
Lack of integrated CRM and marketing communications g g Ineffective management of customer expectations Over-promising to customers Inadequate cross-functional communications
Service Delivery
10/15/2010
Closing GAP 4
Reason for GAP 4 Lack of integrated CRM & marketing communications
Ways to Eliminate GAP 4
APPLICATION
Ineffective management of customer expectations
View external communications as one part of an overall strategy that also includes interactive marketing communication and internal marketing communication. communication Develop a strong internal marketing program. Educate customers. Make realistic promises. Negotiate unrealistic promises. Reset customer expectations when necessary.
The NFL Wins the Battle for Fans Forget the Colts. The NFLs integrated marketing strategy was this seasons big winner.
http://www.1to1media.com/Prin tView.aspx?DocID=30051 Source: Gaffney (2007)
Closing GAP 4
Reason for GAP 4 Overpromising Ways to Eliminate GAP 4
Assure that advertising makes accurate promises. Assure that personal selling matches what will be delivered. Assure that physical evidence cues match the quality of what will be provided. Penalize employees who over-promise. P li l h i Set up cross-functional teams to work on designing experience blueprints and maps. Open the channels of communication between sales and operations. Open the channels of communication between advertising and operations. Assure that policies and procedures across branches or units are the same.
APPLICATION
Inadequate horizontal communications
The Urgent Need for Integrated Marketing Mass media s disintegration medias has customers looking for different brand relationships
http://www.1to1media.com/Prin tView.aspx?DocID=29829 Source: Wright (2006)
Service Guarantees & Service Level Agreements
100% Hampton Satisfaction Guarantee
We deliver in 30 minutes or its free!
10/15/2010
Service Recovery
When companies resolve problems quickly and effectively, there are positive consequences for
Customer satisfaction Customer retention Word-of-mouth or referrals to other potential customers

, Customers who have been let down, then well recovered, are more satisfied than customers who have not been let down at all. Recovery strategies include:
Do it right the first time! Welcome and encourage complaints Act quickly Learn from recovery experiences -- correct the root causes of problems Learn from lost customers -- correct the root causes of problems
10/15/2010
MAR 4860
Customer Relationship Management CHAPTER 7 - Creating Value for Customers Module 3: Value From Processes, People, Physical Evidence, Customer Communication, and Channels
Value From Processes
First Direct, a bank in the UK, started out as a telephone bank with no branch network. Customer management was entirely IT-enabled, with customer service being delivered from several call centers. The Banks customer satisfaction ratings have been consistently higher than competitors branch operations. The banks slogan is Weve built our service to revolve around you. http://www.firstdirect.com/ Since 1983, Dell has been the world's fastest growing major computer company. Michael Dell's goal is to keep the smallest inventory possible by having a direct link with th manufacturer. When a customer places an order, the custom parts requested ith the f t Wh t l d th t t t d by the customer are automatically sent to the manufacturer for shipment. This reduces the cost for inventory tracking and warehouse maintenance.
Experiences Using People
EXPERT OPINION The Five CEM Steps for Aligning Employee Behavior 1. Recruiting the right g g employees 2. Training for experience delivery 3. Providing incentives & rewards 4. Measuring behavior against experience standards 5. Providing the right employee experience
Source: Schmitt (2003)
10/15/2010
Value From Physical Evidence

Physical evidence is made up of the tangible facilities, equipment and materials that companies use to communicate value to customers. Banks generally occupy traditional buildings with columns, portico, steps and large, heavy doors.
Designed to communicate conservative values, security and probity.

McDonalds uses primary colors, bright lights and the ubiquitous golden arches in the form of the letter M. Hospitals convey impressions of hygiene and care through white uniforms, immaculately clean premises and well-maintained gardens. Funeral service organizations use traditional conservative clothing, colors, and vehicles.
Value From Customer Communication
EXPERT OPINION
Golden questions can help enterprises to better d t d b tt understand customers using the drip irrigation dialogue or smart dialogue. Source: Peppers & Rogers (2005)
Value from Communication Three processes are responsible for the enhanced power of communication to create value for customers:
1. disintermediation, 1 disintermediation 2. personalization (customizations) and 3. interactivity.
10/15/2010
Drip Irrigation Method & Golden Questions
APPLICATION
Peppers & Rogers uses the golden questions strategy to assign customers into needs groups. Golden questions are the key five or six questions that discriminate the customer base with a high degree of accuracy (75% and above). Knowing that asking thousands of customers these golden questions can be very resource intensive, PRG has been able to predict needs groupsTo learn more, click below:
http://www.1to1media.com/PrintV iew.aspx?DocID=28594
Value From Channels

CHARACTERISTICS CHANNEL
Web Regular Mail Email Telephone Personal Selling Cost Speed Ability to Touch, Feel, & Reference
Medium High Medium
Ability to Track Interactions

High Medium High
Opportunity to Customize
High Varies High
Low Medium Low
Extremely High Low Extremely High Medium
High
Low
Medium
Medium-High
Very High
Medium
Varies
Medium
High
Experiences Using Price
EXPERT OPINION
To broaden their customer relationships, firms need to simplify customers lives and be transparent about rates and feesUSAA does so through efficient call center experiences. Many large banks, on the other hand, are on the opposite side of the spectrum because many of their customers feel nickel-and-dimed.
MAR 4860 - Customer Relationship Management Chapter 13, Module 1
10/25/2010

Chapter 13, Module 1 Information Technology for CRM
Learning Objectives
Be aware of the range of CRM technologies Understand the role that technology plays in the achievement of CRM outcomes Explain the structure of the CRM ecosystem Explain the main application areas of CRM Understand the role that analytics play in CRM technology The importance of integration, knowledge management and workflow to CRM outcomes
Evolution of CRM Technology

Demand
Supply Chain Management
Supply
Manufacturer
Wholesaler
Retailer
Consumer
Purchase
Produce
Distribute
Sell
Consume
Enterprise Resources Planning
Source: Buttle (2004)
10/25/2010
Evolution of CRM Technology

FRONT-OFFICE USERS
Customer File
Sales Reps (laptops)

Service Records
Accounting System
Product File
Marketing (telemarketing center)
Service Reps (Mobile equipment)
Purchasing System
Sales History
Sales Note s
Management (decision support) Channel Partners (team selling)
Call Activity
Purchasing Agents (economies of scale)
Inventory System
Todays Environment
Channel Partner Marketing Warehouse Sales S l Finance
Service
Customer
A 360o View of the Customer
Marketing Warehouse Channel Partner Sales
Finance
Service
Customer
10/25/2010
CRM Technology Needs Vary

Financial Services & Banks Churn Share of wallet Call centers Data mining Dealer networks Service and maintenance Customer knowledge Portals Complex selling Channels Product configurations Partner portal Retail trade Trade spend and promos Store audits Complex customer structures
Automotive Manufacturers
CRM
High Technology
Consumer Goods
The Role of Technology

To collect customer information from all touch points To put to use this information to build accurate profiles on each
customer
To organize and deploy customer information in a systematic and

orderly fashion to those that serve the customer
To use customer information in an intelligent way and make

decisions about CRM-related sales and marketing strategies
To create and maintain a unique customer experience
10/25/2010
CRM Technology Architecture

Data Sources
2
Internal Sources External Sources Customer Touch Points Data D Warehouse System
Source: S
Business Processes, Hardware, & Software Applications
Information Usage

1
Data Sources
2 Data Warehouse System
Information Usage

Web Client (Customer/partner) Internal Department Client Service Client (Synchronized) Sales Client (Wireless or Sync)
Local dB
CRM Software Application and Web Servers Web Server 1 Web Server 1 Web Server 1 Web Server 1
Back Office Systems such as: Accounting Purchasing Inventory Finance
CRM Transactional Database
CRM Analytics Database
CRM Metadata
10/26/2010

Scope of CRM Technology

Sales (synchronized, field information) Customer Service/Field Service (orders, complaints) Management (decision support, performance)
Partners (promotions, funds, portals) Warehouse Data Knowledge Base

Web
CRM System
Marketing (analysis & campaigns/ promotions)
Consumers (web, clubs)
Other systems, email, telephone
The CRM Market Players

EXPERT OPINION
CRM Software Vendors
Hardware and Infrastructure Vendors
Software vendors are only a small portion of the overall CRM ecosystem. CRM software must run on ft t hardware and integrate with communications infrastructure such as telephony and email systems.
Professional Service Providers
10/26/2010
Applications by Solution & Market

Specialized Business Solutions
Proposal Generators Product & Marketing Encyclopedias Product Configurators Lead & Campaign Management Business Process Management
Matrix Technology Solutions http://www.mxtg.com/index.asp Chordiant http://www.chordiant.com
Basic Sales and d Marketing Solutions
Contact Management Sales Force Automation Marketing Automation
ACT http://www.act.com http://www act com Maximizer http://www.maximizer.com
Comprehensive Enterprise Business Solutions
Modular SFA, Marketing & Service Automation Enterprise, Mid-sized, and Small Business
Siebel Systems http://www.siebel.com Amdocs http://www.amdocs.com
CRM Software Applications

Customer facing applications Customer touch point applications Customer intelligence applications Applications by solution & market Vertical applications Workflow applications
EXPERT OPINION
Refer to the article The 2010 Market Leaders under Supplemental Materials A Materials. MUST READ!
http://www.nxtbook.com/nxtboo ks/crmmedia/crm1006/
Customer Facing Applications

Customer Interaction Center Telephone-based applications that support marketing, sales, and service business processes.
EXPERT OPINION
Telemarketing
Telephone sales
Telephone service
Customer interaction centers are moving from sweatshops to company flagships, handling everything from pre-sales inquiries to order processing to post-sale support. The successful callcenter-of-the-future organization wont be treated as a poor secondcousin cost-center; itll be a strategic service offering.
Source: Cusack (2002)
10/26/2010

Sales Force Automation
EXPERT OPINION Sales and Marketing have always had a tug-of-war relationship. Technology didnt solve this but did allow it to be played out in new and exciting waysSales and Marketing trying to leverage technology was termed the second or thirddepending on who was countinggeneration of SFA.
Source: Trailer (2002)
Contact & time management Opportunity & lead management Knowledge management Quoting & order configuration Analysis & reporting tools

Field Service Automation
EXPERT OPINION Service automation for large capital equipment is quite different. This normally involves diagnostic and corrective action to be taken in the field, at the location of the equipment. In this case, this automation involves providing technicians with diagnostics, repair manuals, inventory management and job information on a laptop or PDA.
Customer service requests Service orders Service contracts Service schedules Service calls
Customer Touch Point Applications

Campaign Management
EXPERT OPINION
Electronic Commerce
Increasingly, customer service and support software includes a Web-based, self-service capability th t customers can bilit that t easily access using a browser. Improvements in customer self-service and support have been significantly enhanced through the use of knowledge management engines.
Source: Goldenberg (2002)
Self-Service Customer Support
10/26/2010
CRM Components - Customers
CRM Components - Products
CRM Components Marketing Automation
10/26/2010
CRM Components Sales Automation
CRM Components Service Automation
CRM Components - PMR
10/26/2010
10/25/2010

Customer Intelligence Applications
Data Warehousing

Data Warehousing & Reporting
Data Warehousing

10/25/2010
Data Warehousing

Courtesy: Siebel
Module 6 Unit 1: Basics of CRM Technology
Courtesy: E.piphany
2007 Nancy A. Rauseo Module 6 Unit 1: Basics of CRM Technology 6
10/25/2010
Vertical Solutions
DestinationCRM classifies these vertical software solutions into these industries: EXPERT OPINION
Consumer Packaged Goods Education Financial Services/Banking Government Healthcare Insurance Manufacturing/Automotive Non-profit
Pharmaceuticals Professional Services Retail Sports/Entertainment Technology Telecommunications Transportation Travel/Hospitality Software vendors specializing in each vertical p g market can be found at:
http://destinationcrm.com/
Workflow Applications
Workflow Applications
Functions of Workflow Automation
Process automation Escalation Assignment Integration Dialogue scripting Process navigation
10/25/2010
Business Process Management (BPM)

The definition, execution, and management of business processes. Not a synonym for workflow or Electronic Application Integration (EAI) Emphasis is on the process itself rather than an entity (i.e., document, data, or person) Gives process owners the ability to define what the process should be first and then determine how to effectively orchestrate interactions between the people, data, and documents that make up the steps within a process. Not married to a specific application For more information, visit:
http://www.destinationcrm.com/articles/default.asp?ArticleID=5219
APPLICATION
Take a look at how companies are applying BPM to their CRM strategies: You Talkin To Me?
http://www.1to1media.com/Pri ntView.aspx?DocID=29824
Theres a Process for That?

http://www.1to1media.com/Pri ntView.aspx?DocID=29595
Professional Service Providers

Strategy and Marketing Consultants
Peppers & Rogers http://www.1to1media.com McKinsey & Company http://www.mckinsey.com
APPLICATION
Business Consultants
Accenture http://www.accenture.com Go to Services for CRM BearingPoint http://www.bearingpoint.com Go to Solutions for CRM CAPGemini http://www.capgemini.com/services/consulting/crm/
Scroll through the Accenture site for client success stories in various disciplines and industries. Heres one on Best Buy: Business Process Transformation and Reengineering with Accenture
http://www.accenture.com/Global/Ser vices/Client_Successes/By_Subject/Cus tomer_Relationship_Mgmt/BestBuyTran sformation.htm
SFA software solutions (sampling)
SFA specialists

CONCEPTS AND TECHNOLOGIES Chapter 14 Sales Force Automation
Selectica EzRoute Salesnet CallWizard Selltech CyberForms
SFA as part of CRM SFA as part of suite Enterprise suite Onyx Oracle Pivotal Salesforce.com SalesLogix ACCPAC NetCRM SAP Epicor Deltek Fourth Shift Intentia
Sales force automation definition & technologies Sales Force Automation is the application of computerized technologies to support sales people and sales management in the achievement of their work-related objectives. SFA hardware includes desktop, laptop and handheld devices, and contact/call centre t h l h dh ld d i d t t/ ll t technology. SFA software comprises both point solutions that are designed to assist in a single area of selling or sales management, and integrated solutions that offer a range of functionality.
SFA functionality
account management activity management contact management contract management document management event management incentive management lead management opportunity management order management Each of these is a high level PROCESS. Managing accounts is a process; Managing sales activities is a process; pipeline management product encyclopaedias product configuration product visualization proposal generation quotation management sales forecasting territory management work-flow engineering
Account management
Activity management
Account management offers sales reps and managers a complete view of the customer relationship including contacts, contact history, completed transactions, current orders, shipments, p , , p , enquiries, service history, opportunities, and quotations. This allows sales reps and account managers to keep track of all their obligations in respect of every account for which they are responsible, whether this is an opportunity to be closed, an order or a service enquiry.
Activity management keeps sales reps and managers aware of all activities, whether complete or pending, related to an account, contact, or opportunity, by establishing to-do lists, setting pp y, y g , g priorities, monitoring progress and programming alerts. Activities include preparation of quotations, scheduling of sales calls and following up enquiries, for example.
Account management screenshot
Contact management
Contact management functionality includes tools for building, sharing and updating contact lists, making appointments, time setting, and task, event and contact tracking .Contact list data includes names, g , phone numbers, addresses, preference data, and email addresses for people and companies, as well as a history of in-bound and out-bound communications.
Contact management screenshot
Document management
Companies generate and use many documents as they sell to customers - brochures, product specifications, price lists, competitive comparisons, and templates for p p p preparing q g quotations, for example. , p Document management software allows companies to manage these documents, keep them current and ensure that they are available to reps and managers when needed.
Contract management
Event management
Contract management functionality enables reps and managers to create, track, progress, accelerate, monitor and control contracts with customers. Contract management helps manage a contract's g p g lifespan by shortening approval cycles for contracts, renewing contracts sooner, and reducing administrative costs. The software may use security controls to ensure only approved people have access to contracts.
Event management enables reps and managers to plan, implement, control and evaluate events such as conferences, seminars, trade shows, exhibitions and webinars, whether run solo or jointly with customers , j y or other partners.
Event management screenshot
Lead management
Lead management allows companies to create, assign and track sales leads. User-defined rules allow leads to be allocated to reps and account managers on the basis of role, territory, product g , y, p expertise or other variables. Lead management allows for more equitable workload distribution across a sales team, and uses security controls to ensure that reps can only access their own leads.
Incentive management
Lead management screenshot
Incentive management is an issue for sales managers who use commissions to lift, direct and reward sales reps efforts. In many companies, commissions are calculated using stand-alone g spreadsheets.
Opportunity management
Order management
An opportunity is a record of a potential sale or any other type of revenue generation. Opportunity management software enables reps and managers to create an opportunity record in the database, and pp y , monitor progress against a predefined selling methodology.
Order management functionality allows reps to convert quotations and estimates into orders once a customer has agreed to buy. If this is done in front of a customer, the order can be loaded into production, , p , or picked from a warehouse, more quickly. Order management software may include a quotation engine, a pricing module, and a product configurator. With visibility through a portal, the customer, rep and manager has access to the same, up-to-date order information.
Opportunity management report
Pipeline management
Pipeline management is the process of managing the entire sales cycle from identifying prospects, estimating sales potential, managing leads, forecasting sales, initiating and maintaining customer g , g g relationships, right through to closure. A well-defined sales pipeline helps minimize lost opportunities and breakdowns in the sales process.
Product encyclopaedia
Product visualization
A product encyclopaedia is a searchable electronic product catalogue, that generally contains product names, stock numbers, images and specifications. These can be stored on reps computers and/or p p made available to customers online.
Product visualization software enables sales reps and customers to produce realistic images of products before they are manufactured. This is a useful application when linked to a p pp product configurator. The image can take the form of a simulated photograph, 3-D model or technical drawing, and can include other related documentation such as specifications or prices.
Product configuration
Proposal generation
Product configuration applications enable salespeople, or customer themselves, automatically to design and price customized products, services or solutions. Configurators are useful when the p g product is particularly complex or when customization is an important part of the value proposition.
Proposal generation software allows users to create customized proposals for customers. Users draw from a database of information to create proposals which, typically, are composed of several p , yp y, p parts, some , of which are customized: cover page and letter, introduction, objectives, products, product features, services, prices, specifications, pictures, drawings, people, experience, resumes, references, approach, schedule, organization, scope of work, and appendices.
Quotation management
Territory management
Territory management software allows sales managers to create, adjust and balance sales territories, so that sales reps have equivalent workloads and/or opportunities. Some territory management applications come with a territory management methodology which users can follow when establishing sales territories. Some applications link to geographic mapping, or geodemographic, software. The software enables companies to match sales coverage to market opportunity, create sales territory hierarchies (cities, states, regions) and reduce the cost of selling by reducing travel time. Call cycle scheduling, calendaring and lead management is often enabled by the software.
Quotation management software allows reps and managers to quote for opportunities. The software allows users to create, edit, approve, and produce costed, customized, proposals quickly and reliably. , ,p p q y y Some vendors enable users to create multimedia proposals with audio, animation and video.
Sales forecasting
Workflow engineering
Sales forecasting applications offer sales reps and managers a number of qualitative and quantitative processes to help forecast sales revenues and close rates.
Work-flow engineering software is useful for designing sales-related processes, such as the lead management process, and the event management p process. It can even be used to design the selling g g process itself the series of steps that a sales rep must follow in shifting a prospect from initial awareness to the close.
Examples of SFA reports cost-to-serve customer profitability lead conversion pipeline progress quotation performance sales cycles share of market share of wallet sales person productivity win-loss rates
Motivations for implementing SFA
Motivation
% of sample reporting
Improve efficiencies Improve customer contact Increase sales Reduce costs Improve accuracy
72 44 33 26 21
Benefits for SFA stakeholders
SFA will enhance performance when..

Sales people find that SFA is easy to use Sales people find the technology useful because it fits their roles well. Availability of appropriate-to-task SFA training Users have accurate expectations about what SFA will deliver Users have a positive attitude towards innovation Users have a positive attitude towards technology Availability of user support after roll out; for example: help desk. Involvement of user groups including sales reps and managers during project planning and technology selection. Deployment of a multi-disciplinary team in the project planning phases Senior management support for SFA.
Salespeople: shorter sales cycles, more closing opportunities, higher win rates Sales managers: improved salesperson productivity, improved customer relations accurate reporting relations, reporting, reduced cost-of-sales Senior management: accelerated cash flow, increased sales revenue, market share growth, improved profitability
Marketing automation definition

CONCEPTS AND TECHNOLOGIES Chapter 15 Marketing Automation
Marketing automation is the application of computerised technologies to support marketers and marketing management in the achievement of their work-related objectives. j
Benefits from marketing automation 1 Enhanced marketing efficiency

The replication of marketing processes delivers greater control over costs. When marketers use manual systems and ad hoc processes, there can be considerable inefficiencies. MA enables companies to develop more streamlined, cost-efficient processes, that can be operated by any marketing incumbent, whether experienced or new-to-role.
Benefits from marketing automation 2 Enhanced responsiveness.

Marketers have traditionally created and implemented annual marketing plans with campaigns and promotions planned and scheduled many months ahead. MA allows marketers to respond instantly to opportunities, even if not part of a plan. MA functionality enables companies to engage in real-time marketing, responding immediately to an identified opportunity.
Greater marketing productivity

MA enables companies to run dozens, even thousands of campaigns and events through multiple channels simultaneously.
Improved marketing intelligence.

MAs embedded reporting and analytics functionality provides valuable management insights into markets, customers, campaigns, events and so on, leading to both enhanced efficiency and effectiveness.
More effective marketing.

MA allows marketers to employ what is known as closed-loop marketing (CLM). CLM is based on a Plan-Do-Measure-Learn cycle.
Improved customer experience.

Customers receive personalized, relevant communications and offers at appropriate times. MA means less Spam, from the customers perspective.
Closed-loop marketing
Functionality offered by MA software

Asset management Campaign management Customer segmentation Direct mail campaign management Document management Email campaign management Enterprise marketing management Event-based marketing Internet marketing Keyword marketing Lead generation Loyalty management Market segmentation Marketing analytics Marketing optimisation Marketing performance management Marketing resource management Partner marketing Product life-cycle management Search engine optimisation Tele-marketing Trigger marketing Web analytics Workflow engineering
These are examples of high-level processes.
Asset management
Campaign management
Asset management enables companies to identify and track the assets that customers purchase, license, use, install, or download. Assets can be either tangible, intangible or blended. g , g
Campaign management automates the processes involved in planning, implementing, measuring, and learning from communication programs targeted at p p prospects or customers. The key elements of y campaign management software are workflow, segmentation and targeting, personalization, execution, measurement, modelling and reporting.
Customer segmentation
Direct mail campaign management
Customer segmentation is the practice of partitioning customers into homogenous subsets so that each subset can be addressed as a unique marketing audience. This is the foundation of g customer portfolio management.
Direct mail campaign management is a specific form of campaign management in which the communication medium is direct mail. Direct mail has many applications including lead generation, lead conversion, building awareness, upselling and cross-selling, customer retention, database building or image enhancement. Important contributors to direct mail success are the list, the creative execution, the offer, and the timing.
Email campaign management
Email campaign management process
Email campaign management is a specific form of campaign management in which the communication medium is email. Email is cheap, easy to use and ubiquitous cheap ubiquitous.
Enterprise marketing management
Event-based marketing
Enterprise marketing management encompasses the business strategy, process automation and technologies required to effectively operate a marketing department, align resources, execute g p , g , customer-centric strategies and improve marketing performance. It is best-suited for large organizations with 50 or more people in marketing. This includes functionality for campaign management, lead management, MRM [marketing resource management] and analytics.
Event-based marketing occurs when an event triggers a communication or offer. Event-based campaigns are usually initiated by customer behaviours or contextual conditions.
Internet marketing
Seven stage cycle of internet marketing
Internet marketing is the process of creating value by building and maintaining online customer relationships.
Keyword marketing
Lead generation
Keyword marketing is the practice of generating website traffic from internet users who have entered keywords into search engines such as Google, Yahoo!, AOL, Ask.com and Live search (formerly , , ( y MSN).
Lead generation is an important marketing objective, particularly in business-to-business contexts. Sales people challenged to grow the numbers of customers served need to be presented with high q p g quality leads y for follow-up. Marketers can deploy campaigns, events, seminars, Webinars and other tactics to generate the leads.
Loyalty management
Loyalty management functionality allows organisations to develop and operate loyalty management programs. The development of customer loyalty is a goal of many CRM programs. The availability of loyalty management applications is a direct response to this need. Loyalty, or frequency, programs are important to several constituencies the brand owner who operates the program, the member who collects and redeems credits, and the channel partner who transacts with the member.
Market segmentation
Marketing analytics
Market segmentation is the practice of partitioning markets into homogenous subsets so that each subset can be addressed as a unique marketing opportunity. pp y
Marketing analytics is the application of mathematical and statistical processes to marketing problems. Marketing analytics can be used to explore, describe and explain. p , p
Marketing optimization
Marketing optimization screenshot
Marketing optimization software allows companies to select an overall goal, such as sales or profit margin maximization, and specify all of the constraints of a marketing campaign strategy g p g gy The software then determines which customers should get which offer through which channel to ensure the campaign objectives are met.
Marketing performance management
Marketing resource management Marketing resource management applications consist of a range of automated tools that enable marketers to manage their marketing processes and assets more effectively, and to work at greater speed and with improved control. MRM t lkit may i l d d ith i d t l toolkits include modules for :
Marketing planning and budgeting, New product launch, Marketing event calendaring, Event planning and registration, Project management, Campaign planning, Collateral production, proofing and approval, Digital asset management, including brands, trademarks, logos and collateral, Expense and budget management, Time management, Media buying, and Procurement
Marketing performance management (MPM) software enables companies to measure their marketing performance though analysis and reports, and improve outcomes over time through closed-loop p g p marketing. Senior management is progressively becoming more demanding that marketers be accountable for their expenditure, and MPM helps marketers meet that expectation. MPM, which is typically focussed on analysis of marketing tactics such as events and campaigns, is routinely built into most MA applications.
Patrner marketing
Microsoft Canadas partner portal
Partner marketing solutions enable companies to coordinate and work collaboratively with channel partners and others. Partner marketing solutions are used to manage processes such as partner qualification and sign up, development of joint business plans and objectives, cooperative advertising and promotions, lead management, co-branding of collateral and point-ofsale materials, measuring partner performance, partner training, administration of marketing funds, and specialist partner incentive schemes.
Product life-cycle management
Search engine optimization
Product life-cycle management (PLM) applications help marketers manage life cycle stages effectively and profitably. PLM software solutions facilitate collaborative intraintra and extra-enterprise engineering, product development, and improved management of projects, product portfolios, documents, and quality. PLM applications can provide a single source of all product-related information to use in the innovation, design, engineering, feasibility, launch and market development processes.
Search engine optimization (SEO) is the practice of improving the quantity and quality of website traffic generated by search engines. Usually the higher ranking results that appear earlier Usually, in the listings generate more visitors. SEO aims, therefore, to achieve high rankings, preferably on the first or second pages.
Tele-marketing
Tele-marketing fucntionality
Tele-marketing is the use of the telephone to identify and qualify prospects, and to sell and service the needs of customers. Tele-marketing takes two forms: inbound (calls from Tele marketing customers) and outbound (calls to customers). Some call centres perform a blended function with agents both making and receiving calls. Tele-marketing is widely employed in both B2C and B2B environments, but is subject to legislative control due to its intrusive nature.
Auto-dialling Predictive dialling Automated voice-messaging C t t li t management Contact list t Agent management Do Not Call compliance Screen pop with caller ID Scripting, including objection response Computer Aided Telephone Interviewing (CATI) Interactive Voice Response (IVR)
Trigger marketing
Web analytics
Trigger marketing is the practice of responding to some customer-generated or customer-related event in a way that is designed to achieve some marketing g goal such as make a sale, identify a cross-sell , y opportunity, prevent negative word-of-mouth, or promote positive word-of-mouth. The event triggers the response.
Web analytics report the behavior of website visitors. Routine reports generally detail web traffic data, but may also include performance data from campaigns and events that involve the web site, for p g , example the number of click-throughs from a web-link inserted in a campaign email. Two main technologies collect data: logfile analysis and page-tagging.
Web analytics terminology
Web analytics report
Building block terms: page, page view, visit/session, unique visitor, new visitor, repeat visitor, return visitor Visit characterization terms: entry page, landing page, page exit page visit duration referrer internal page, referrer, referrer, external referrer, search referrer, visit referrer, original referrer, click-through, click-through rate/ratio, page views per visit Content characterization terms: page exit ratio, single-page visit, single page view visits (bounces. Bounce rate Conversion metrics terms: event, conversion
Work-flow engineering
Campaign work-flow screenshot
Work-flow engineering software is useful for designing marketing-related processes, such as the campaigning process, event-based marketing p process, or the marketing p , g planning p g process.
About customer service 1

CONCEPTS AND TECHNOLOGIES Chapter 16 Service automation
Customer service has been a necessary preoccupation of service organisations, because they have understood that customers are responsive to the quality of the service they experience. q y y p The quality of customer service is just as important for agriculturalists, miners, and goods manufacturers. This is particularly so when there is product parity, and customers are unable to discern meaningful differences between alternative suppliers or brands.
About customer service 2
Integrative quality
Customer service standards can be assessed by customers when a service is being performed, as well as after the service has been delivered.
The service experience as perceived from the dentists chair during service delivery might be very different from the assessment a few days later.
Integrative quality is determined by the way the various elements of the product and service delivery system work together.
High integrative quality means that the processes, people and technology complement each other, working efficiently and effectively to deliver excellent customer service.
Customer service can be experienced at any stage of the customer activity cycle: before, during, or after purchase.
Customers who receive service from technologyenabled manufacturers or service providers, such as those with CRM systems in place, experience integrative quality.
Six attributes of companies renowned for excellent service 1
Six attributes of companies renowned for excellent service 2
1. Customer service is pervasive.

It is everyones responsibility; it is neither delegated nor relegated to a single department or function.
4. Customer service lies at the heart of the value proposition.

Customer service is the main selling point.
2. Their operations run smoothly with minimal product and service defect rates, allowing them to focus on pleasing customers. 3. They are always looking for ways to improve.
5. 5 They build personal relationships with customers customers. 6. They employ the latest IT to
allow their customers to interact with them more conveniently develop a profound understanding of what customers need and want track activities and processes that influence customer experience.
Service automation definition
Where is service automation deployed 1?
Service automation is the application of computerised technologies to support service staff and management in the achievement of their work-related objectives. j
contact centres
Contact centres are configured to communicate with customers across multiple channels including voice telephony, mail, email, SMS, instant messaging, web collaboration and fax.
call-centres
Call centres are generally dedicated to voice telephony communications, whether through a public switched telephone network, cell-phone network, or VoIP.
Where is service automation deployed 2?
Key technological elements of SA 1
help-desk
Help-desks are usually associated with IT environments where assistance is offered to IT users. SA applications such as case management, job management and service level management are used in this setting.
Infrastructure
When service is delivered through a central call-centre or contactcentre, in a multi-channel environment, there needs to be tight integration between various communication systems, including telephony, email, telephony email and web web.
field service
Field service is widespread in both B2C and B2B environments. Service automation applied to field service operations involves technologies such as job management, scheduling, mapping and spare parts management.
Data
Access to the right customer-related data, to enable the service agent to identify and fix the issue promptly is critical to the delivery of responsive customer service.
Key technological elements of SA 2
Benefits from service automation Enhanced service effectiveness.
Devices
Where service is delivered by a distributed work-force, smaller, lighter, devices such as laptops, Windows-enabled hand-held devices, and smart phones or cell phones such as Blackberries, tend to be employed; these are typically not found in call- and contact-centres. Synchronisation is also an issue for a distributed service team. Periodic synchronisation with the central CRM database enables service engineers and others to ensure that they are fully apprised of their daily scheduled appointments.
Service requests can be completed more quickly to the customers satisfaction by ensuring that requests are handled or the first point of contact or routed to the right service engineer or customer service agent, who is able to draw on an up-to-date knowledge base to resolve t e issue. eso e the ssue
Greater service productivity.

Call- and contact-centre management systems ensure that the optimal number of agents are scheduled and that their time is used productively. Field service applications ensure that workload is equitably and optimally distributed.
Software.
Improved customer experience.

Agents have full visibility into the customer history and service request and can ensure that service delivery is appropriate to customer status or agreed service levels
Functionality offered by SA software
Activity management
Activity management Agent management Case assignment Case management Contract C t t management t Customer self-service Email response management Escalation Inbound communications mgmt Invoicing Job management
Mapping and driving directions Outbound communications mgmt Queuing and routing Scripting Scheduling S h d li Service analytics Service level management Spare parts management Web collaboration Workflow engineering
Activity management enables service staff to review their workload, to-do list and priorities as directed by their manager or scheduler, and to report back on p g progress and issue resolution. Some applications pp allow activities to be updated in real-time by dispatchers and routed to the technician, so that work can be reprioritised. Alerts can be set so that appointments are not missed, or to notify agents and their managers that issues are unresolved or service levels are about to be, or have been, violated.
Agent management
Case assignment
Agent management is a high priority for call- and contact-centre managers. Managers want to employ the lowest head-count compatible with the desired level of customer service. Too few agents and g customers will be dissatisfied with wait-times; too many agents and payroll costs will be unnecessarily high. Customers and managers both want issues to be resolved quickly by agents. Technologies that contribute to this outcome include queuing, scripting, and knowledge management.
Case assignment applications ensure that each enquiry or issue gets routed to the right agent or technician for resolution. Customer service agents might for example, be might, example organised according to language skills, and field service agent by product category
Case management
Trouble ticket screenshot
Case management covers the full cycle of activities involved from receiving initial notification of a matter of concern to a customer to its final resolution and the case file being closed. g
Case management is also known as incident management and issue management.
Cases, incidents or issues are initiated by the creation of a trouble ticket.

Customers may be allowed to do this by web-form, or by emailing or calling a service or contact centre.
Contract management
Customer self-service
Contract management functionality enables service engineers and managers to create, track, progress, accelerate, monitor and control service contracts with customers. Many companies now sell extended service contracts to customers when warranty periods have expired.
Customer self-service is an attractive option for companies because it transfers the responsibility and cost for service to the customer. Customers who self-serve are much less likely to self serve place demands on contact-centre, call-centre, helpdesk or field service staff. Customers are typically more competent at selfserving when transactions are involved (e.g. online banking or music downloads); however, they are less competent when problem-resolution is concerned.
Email response management systems
Escalation
Email response management systems (ERMS) are not only useful for handling inbound emails but also for delivering outbound emails and SMS messages. ERMS are designed up to manage the reception reception, interpretation, routing, response and storage of incoming email securely and effectively.
Escalation ensures that issues get escalated according to internally determined rules. Higher levels of authority typically have greater discretion to resolve issues. For example, a front-line customer p , service agent might be required to escalate to higher levels of management issues that have a potentially high cost or reputational consequence.
Inbo8und communications management Inbound communications management (ICM) applications allow companies to receive, route, queue and distribute incoming communications from any channel voice telephony, email, fax, instant message, SMS, fax message SMS fax, web form to agents in any location including contact centre, in the field or at home. A unified queue, issue/content recognition, intelligent routing, and knowledge-base integration allow agents to deliver a consistent customer experience and to respond effectively to service requests whatever the communication channel.
Invoicing
Invoicing is a useful application for service technicians who are called to site to provide out-ofwarranty service. Having completed the job to the customers satisfaction, and captured the customers , p signature electronically, the invoice can be raised on the spot, thereby accelerating cash flow.
Job management
Job management screenshot
Job management applications offer a range of functionality including cost estimation, quotation generation, creation of trouble tickets, job planning, travel time and distance calculation, job clustering (to ,j g( reduce travel time), calendaring, scheduling, spare parts management, job progress tracking, invoicing, service level management, technician despatch, time management and product configuration.
Mapping and driving directions
Outbound communications management
Solutions that provide mapping and driving directions are very useful for service engineers who need to visit customers homes or business premises. Taking into account the engineers p g g point-of-origin, g , service locations, job priorities, service level agreements and other variables, mapping solutions can minimize travel times and distances to ensure that service tasks are performed optimally.
Outbound communications management software applications are used in a service environment to acknowledge service requests, make and confirm service appointments, advise on the p g pp , progress of a service task, invoice for out-of-warranty service, and follow-up after service to ensure that the customer is satisfied
Queuing and routing
Scheduling
Queuing and routing applications allow issues to be routed to agents with particular expertise and positioned in that agents queue according to some criterion. Routing is usually determined by case assignment rules and position in the queue is determined by customer value or some other metric. The objective of queuing and routing is to ensure that every service issue is presented to the most appropriate agent for handling and resolution.
Scheduling involves planning and organising a service technicians activity plan for a day, week or other period. A technician s schedule contains details on the technicians customer, location, time, product and issue. Some scheduling applications take into account a range of considerations to ensure that the right technician is sent to service the customer
travel time and distance, technician availability, technician skills, customer access hours, service level agreement, availability of spare parts, and the technicians hourly rates of pay.
Task schedule delivered to a Pocket PC
Scripting
Scripting enables customer service agents to converse intelligently with customers to diagnose and resolve problems, even though they may be untrained as technicians. Scripts can be designed so p g that they flex dynamically according to customer response. Scripts also reduce agent training time.
Service analytics
Contact centre telephony dashboard
Service analytics provide managers with information on how effectively and efficiently customer service generally, and individual agents or technicians specifically, are operating. Important metrics for p y, p g p managers of field service operations, for example, include technician utilization, parts inventory, travel time, first time fix rate (FTFR), mean time to resolve (MMTR), and job backlog.
Service level management
Spare parts management
Service level management applications allow managers to control the level of service that is offered to customers, and technicians to deliver the level of service agreed. g Service levels can be agreed for a number of variables including availability (the percentage of time that the service is available over an agreed time period), usage (the number of service users that can be served simultaneously) and responsiveness (the speed with which a demand for service is fulfilled).
Spare parts management is an important application for field technicians. They can see what parts they have with them on the road, check the inventory levels held by other technicians and at y y regional and central warehouses, order new parts, transfer parts from colleagues, manage excess and defective parts, and check on the progress of orders thereby ensuring that when they turn up at a job, they are properly equipped
Web collaboration
Work-flow engineering
Web collaboration between customer and service agent is enabled by technologies that use instant messaging (web chat), or allow both parties to cobrowse web-pages. This allows the agent to help the p g g p customer to resolve the issue in real time. Customer service agents can collaborate with a number of customers simultaneously, or can prioritise based on customer value or some other metric.
Work-flow engineering software is useful for designing service-related processes, such as problem diagnosis and issue escalation. Work-flow for field service operations will define how Work flow service requests are validated, how service tickets are issued, how tickets are allocated, how problems will be diagnosed, how parts will be ordered, how problems will be fixed, how customers will be invoiced, and so on.

MAR 4860 - Chapter Slides

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

MAR 4860 - Chapter Slides

Uploaded by

Copyright:

Available Formats

MAR 4860 Lecture Worksheet

CUSTOMER RELATIONSHIP MANAGEMENT

Chapter 1: Introduction to CRM Module 1

Imagine These Scenarios

MAR 4860 Lecture Worksheet

Selected Definitions of CRM 1

Selected Definitions of CRM 2

Selected Definitions of CRM 3

MAR 4860 Lecture Worksheet

Selected Definitions of CRM 4

Core Definition of CRM

Misunderstandings About CRM

MAR 4860 Lecture Worksheet

CUSTOMER RELATIONSHIP MANAGEMENT

Chapter 1: Introduction to CRM Module 2

Four Types of CRM

1 Strategic 2 Operational 3 Analytical 4 Collaborative

MAR 4860 Lecture Worksheet

STRATEGIC: Customer-Centric Orientation

Rewards & Compensation

MAR 4860 Lecture Worksheet

Examples of Operational & Analytical CRM

Beneficiaries of Analytical CRM

We will also refer to this as the CRM Ecosystem

MAR 4860 Lecture Worksheet

The IDIC Model

The Qci Model

The CRM Value Chain

The CRM Value Chain

MAR 4860 Lecture Worksheet

Paynes Five-Process Model

The Gartner Competency Model

This is an important model. Be sure to read other material in Blackboard

MAR 4860 Lecture Worksheet

CUSTOMER RELATIONSHIP MANAGEMENT

Chapter 2: Understanding Relationships Module 1

What are the elements of a great relationship?

MAR 4860 Lecture Worksheet

Relationships as Social Constructs

A Core Attribute: TRUST

MAR 4860 Lecture Worksheet

Another Core Attribute: COMMITMENT

MAR 4860 Lecture Worksheet

CUSTOMER RELATIONSHIP MANAGEMENT

Chapter 2: Understanding Relationships Module 2

CRM Goals Increasing Value Why are Companies Interested?

Source: Peppers & Rogers (2004). Managing Customer Relationships, P. 5

What Happens When A Customer Leaves?

2001 2002 2003 2004 2005

1000 1045 1088 1129 1168

100 100 100 100 100

1100 1145 1188 1229 1268

1000 990 981 973 966

100 100 100 100 100

1100 1090 1081 1073 1066

1,100 * 0.95 (5% churn rate) = 1,045

MAR 4860 Lecture Worksheet

Benefits from Managing Customer Retention

Better customer insight

The Customer Journey

MAR 4860 Lecture Worksheet

Customer Retention: Link to Profitability

Lifetime Value Defined

MAR 4860 Lecture Worksheet