Chapter 2 The CRM Value Chain

Customer Relationship Management: Concepts and Tools
CUSTOMER RELATIONSHIP MANAGEMENT: CONCEPTS AND TOOLS Chapter 2 The Customer Relationship Management Value Chain
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 data and enabled by information technology.
CRM value chain the basics
5 primary stages
Customer portfolio analysis; Customer intimacy; Network development; Value proposition development; Manage the customer lifecycle
4 supporting conditions
Leadership and culture; Data and IT; People; Processes
The output of successful value chain implementation is customer profitability, achieved through
Removing cost from the relationship Increasing the revenue earned from the relationship
CRM value chain I
Primary stages
Supporting conditions
CRM value chain I
Primary stages
Customer Portfolio Analysis
CRM value chain I
Primary stages
Customer Customer Portfolio Intimacy Analysis
CRM value chain I
Primary stages
Customer Customer Network Portfolio Intimacy Development Analysis (SCOPE)
CRM value chain I
Primary stages
Customer Customer Network Value Portfolio Intimacy Development Proposition Analysis (SCOPE) Development
CRM value chain I
Primary stages
Customer Customer Network Value Manage Portfolio Intimacy Development Proposition The Analysis (SCOPE) Development Customer Lifecycle
CRM value chain I
Primary stages
Leadership and culture

Role of leadership in CRM strategy
Sets the level of CRM implementation: strategic, operational or analytical Provides access to resources and funding Prioritises the CRM project amongst other projects within the organization Provides project oversight Breaks down silo walls to ensures crossfunctional buy-in
Features of a customer centric culture

1. identifying which customers to serve 2. understanding customers current and current and future requirements 3. obtaining and sharing customer knowledge across the company 4. measuring customer results: satisfaction, retention, future buying intention, referral behaviours (word-ofmouth), share of wallet 5. designing products and services which meet customers requirements better than competitors 6. acquiring and deploying resources (information, materials, people, technology) that create the products and services that satisfy customers 7. developing the strategies, processes and structure that enable the company to meet customer requirements
Model of a customer centric culture
Customer-centric organisational culture leadership
formal systems
employee employee experience behaviour
customer experience
Internal relationships
CRM value chain I
Primary stages

Supporting conditions Data and information technology
The role of data in CRM Data are needed for 2 applications

Business operations
Order processing; Enquiry handling; Invoicing
Analysis
Customer portfolio analysis; Churn analysis
Data are used across all 5 stages of the CRM Value Chain Data for CRM need to be of appropriately high quality, i.e higher for operational CRM applications than analytical CRM applications
CRM value chain I
Primary stages

Supporting conditions Data and information technology People
People are important for CRM success
People develop the CRM strategy People select the IT solution(s) People implement the IT solution People need to coordinate with each other across functions to make CRM work People create and maintain the customer database People design the marketing, selling and service processes People may resist changing established work practices People contribute importantly to customer satisfaction and retention when they interact with customers
CRM value chain I
Primary stages

Supporting conditions Data and information technology People Processes
Understanding business processes
Processes are how things are done Processes can be classified as

Vertical and horizontal Front-office and back-office Primary and secondary
CRM processes include all customer-facing (front-office) processes within sales, marketing and service functions
Typical analytical CRM processes
customer profiling process opportunity management process campaign management process
Campaign management process

Customer phones in Check scores Buy product
No interest
Offer product to high scores 2 Send application form 7 Out bound phone follow-up 7
Open account on phone
42
Mail follow-up
Check account balance
Do nothing
(numbers are days)
Questions about CRM processes
What are the important processes from a CRM point of view? How is the present process designed? What does it contribute to the achievement of CRM objectives? What do its customers, internal and/or external, receive from and think about the process? What process performance measures are in place?
Cost, time, accuracy, satisfaction
Can the process and its outcomes be improved?
Order fulfillment: cross-functional process flowchart
Process evaluation
Process rating Best practice (superiority) The process is substantially defectfree 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 has major 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
CRM value chain II

Customer Portfolio Analysis Market segmentation Sales forecasting ABC Life-time value Customer analysis toolkit -SWOT/
PESTE/ 5 forces/ BCG matrix
Customer Intimacy
Network Value Development Proposition (SCOPE) Development
Manage the Customer Lifecycle
CRM value chain II

Customer Portfolio Analysis Customer Intimacy Network Value Development Proposition (SCOPE) Development Manage the Customer Lifecycle
Customer Market segmentation database development Sales forecasting Internal data Data ABC enhancement Life-time Data value warehousing Customer Data mining analysis toolkit Benchmarking -SWOT/ Privacy
Database technology and software
CRM value chain II

Customer Portfolio Analysis Customer Intimacy Network Value Development Proposition (SCOPE) Development Network management Internal buyin Manage the Customer Lifecycle
External network
-suppliers/ investors/ partners
Network position E-commerce

-EDI/Extranets/ portals
CRM value chain II

Customer Portfolio Analysis Customer Intimacy Network Value Development Proposition (SCOPE) Development Network Sources of management customer value Internal buy- -4Ps/7Ps in -customisation Manage the Customer Lifecycle
External network
Customer experience
Process reengineering
-self-manufacture -self-service
People issues
Technology
-EDI/Extranets/ enablement portals
CRM value chain II

Customer Portfolio Analysis Customer Intimacy Network Value Development Proposition (SCOPE) Development Manage the Customer Lifecycle
Network Sources of Customer acquisition management customer value -who/how/what? KPIs Internal buy- -4Ps/7Ps Customer retention in -customisation
External network
Customer experience
Process reengineering
-who/how? KPIs - exceed expectations/ add value/ social and structural bonds/ commitment
Customer development

portals
-self-manufacture -who/what/how? KPIs -self-service
People issues
Organisation design
-physical/virtual? -KAM/crossfunctional teams
Technology -EDI/Extranets/ enablement
Metrics

Chapter 2 The CRM Value Chain

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Chapter 2 The CRM Value Chain

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Customer Relationship Management: Concepts and Tools

Customer Relationship Management: Concepts and Tools

Customer Relationship Management: Concepts and Tools

CRM value chain the basics

Customer Relationship Management: Concepts and Tools

CRM value chain I

Customer Relationship Management: Concepts and Tools

CRM value chain I

Customer Portfolio Analysis

Customer Relationship Management: Concepts and Tools

CRM value chain I

Customer Customer Portfolio Intimacy Analysis

Customer Relationship Management: Concepts and Tools

CRM value chain I

Customer Customer Network Portfolio Intimacy Development Analysis (SCOPE)

Customer Relationship Management: Concepts and Tools

CRM value chain I

Customer Relationship Management: Concepts and Tools

CRM value chain I

Customer Relationship Management: Concepts and Tools

CRM value chain I

Leadership and culture

Customer Relationship Management: Concepts and Tools

Role of leadership in CRM strategy

Customer Relationship Management: Concepts and Tools

Features of a customer centric culture

Customer Relationship Management: Concepts and Tools

Model of a customer centric culture

Customer-centric organisational culture leadership

employee employee experience behaviour

Customer Relationship Management: Concepts and Tools

CRM value chain I

Leadership and culture

Customer Relationship Management: Concepts and Tools

The role of data in CRM Data are needed for 2 applications

Customer Relationship Management: Concepts and Tools

CRM value chain I

Leadership and culture

Customer Relationship Management: Concepts and Tools

People are important for CRM success

Customer Relationship Management: Concepts and Tools

CRM value chain I

Leadership and culture

Customer Relationship Management: Concepts and Tools

Understanding business processes

Processes are how things are done Processes can be classified as

Customer Relationship Management: Concepts and Tools

Typical analytical CRM processes

customer profiling process opportunity management process campaign management process

Customer Relationship Management: Concepts and Tools

Campaign management process

Open account on phone

Check account balance

(numbers are days)

Customer Relationship Management: Concepts and Tools

Questions about CRM processes

Can the process and its outcomes be improved?

Customer Relationship Management: Concepts and Tools

Order fulfillment: cross-functional process flowchart

Customer Relationship Management: Concepts and Tools

Customer Relationship Management: Concepts and Tools

CRM value chain II