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CustomerRelationship Management g

Buzzwords:ConsultantBranded Versions
CRM: CustomerRelationshipManagement(ITIndustry: Siebel,Vantive,Scopus) CRM: ContinuousRelationshipMarketing(McKinsey) eCRM: ElectronicCRM(Silknet,ATG) mCRM: MobileCRM ERM: EnterpriseRelationshipManagement(Oracle,SAP, Peoplesoft) PRM: PartnerRelationshipManagement SRM: SupplierRelationshipManagement CEM:CustomerExperienceManagement

Buzzwords
SRM: SupplierRelationshipManagement CFM: CustomerFocussedMarketing(??) RM: RelationshipMarketing(RegisMcKenna) TERM: TechnologyEnabledRelationshipMarketing (GartnerGroup) InteractiveMarketing (JohnDeighton,HBS) DatabaseMarketing (DirectMarketers) 1to1Marketing (DonPeppers&MarthaRogers) CustomerIntimacy (FredWieserma) XRM:ExtendedRelationshipManagement

TheITPerspective
Oracle

TheMathematicalPerspective
Standard

Enterprise dataanalysissystems
Entities&Relations

Siebel CRMsuite
RDBMS

IMiner

Deviation

Statistical

Significance
Factor Analysis

Thinclient
Users&Permissions

Modeling

DATAMINING
OLAP
DataWarehouse SeagateCrystalReports

Multivariate Analysis

Regression
DiscriminantAnalysis

CHAID:AutomaticInteractionDetector
ExploratoryDataAnalysis

Application Server

Openarchitecture approachto

Data

Clustering

ANOVA

NeuralNetworks

Confidence

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TheMarketerPerspective
Channeldesignandeffectiveness
Timeofday,Dayofweek

RFM
Scenario analysis EarlyWarningSystems

ROI

ProgramScoring CustomerLifetimeValue

DirectMarketing

LoyaltyModeling
MarketBasketAnalysis

CatchmentArea analysis

Predictive Modeling
Propensity Models

CustomerSatisfaction Index

Campaignanalysis

Howpeoplereacttoanad
69% NotSeen 9% Passedby 17% Browsed 4% Listbuilders 1% Activeshopper

Massv/sDirect
AT&Tspent70%onadvertisingand30%ondirect mail.Thecostperleadwas$200,andthe marketingcostpersalewas$6,250. AT&Tthenspent10%onadvertising,25%ondirect mail,and65%ontelemarketing.Theaveragecost perleadwas$67andthemarketingcostpersale was$444.

Source:LoweHowardSpink,1990

ICICI ChildrensGrowthBond Program g

BeyondTraditionalCommunication Tools

AMeansToSecure YourChildsFuture
ICICIChildrensGrowthBond afixed returndebtinstrument Attractiverateofreturnandyield Putasideasmallsumtodayandwatchit growovertime Helpsplanforhugefutureexpenseslikea childseducationormarriage

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LookingBeyondMassMedia
Alotofmassmediaadvertisinghadbeen donefortheproductovertheyears Definiteopportunityexistedifthetarget audiencecouldbecontacted,madeto feeltheimpactratherthanbetold Listofconcernedfathers?

TheMarketingChallenge
Howtog gettheconcernedfathers attention(andofcoursehismoney!), withoutendingupinthedustbin?

NotAnotherAdInMyMailBox?
Itwasimperativetogetthemessage acrossinapersonalizedmanner tocreateastrongconnectandemotional bondbetween
Theproduct Thekid Theparent

GettingCreative WithTheDatabase
Apaintingcompetitionacrossthebetter schoolsinMumbaiandBangalore More M than th 20 20,000 000kid kids,b between t Std Std.IIIand d IV,participated
Wouldbe1819in10years justintocollege

Thetheme Whatyouwanttobewhen yougrowup?

ToTheHeart, ThroughTheMailBox
Apersonalisedmailerwasthensentto everyfather Themailerincludedaletterandthe paintingdonebyhisownkid Somedayyourkidwillgrowupandstart turningdreamstoreality.Areyou prepared?

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NoTwoMailers WereTheSame!

ActNow!
Everymailerhadauniquecustomercode Thefatherhadtocallupthecallcenter, quotethecodeandfixupano obligations bli ti meeting ti Attheappointedtime,thefathermetthe ICICIrepresentative,whohelpedhimplan forhischildsfuture

TheMath
No.ofmailerssent No.ofrespondents No.ofconversions 21,008 4387(20.88%) 2896(66%)

ARs.2.89crore mobilisation, against g aspend p ofRs.5.83 5 3lacs

ClassicalDM
HalfthemoneyIspendon advertisingiswasted;thetrouble isIdontknowwhichhalf
LordLeverHume DMasdirectdistribution
Nointermediaries 500yearsoldalternativetoClassical(STP)Marketing g marketers smallbusinesses, ,niche Catalogue products

DMasdirectcommunications

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DirectMarketingis...
Useofinteractivemedia(fax,mail, telephone,internet,etc.)tocommunicateto specificcustomersandprospectsto generateresponse. Advertisingmakesyouthink.DMmakeyou act Measurable

DMv/sOtherModesof Communications
BenefitsofbothNonpersonalandPersonal Communications CostEffective Precision i i Targetting i BuildsRelationships(onetoone communications allowspersonalization) ActionOriented Measurement

PlanningDMCampaign
TargetSegment Objectives ListsBuilding(Database) Offer Creative/Media Testing/Measurement

ElementsofDMCampaign
Importance of elements in DM (Ron Jacobs) Timing, 10%
L Layout, t 15% Copy, 15% Offer, 20% Li t 40% List,

Rightoffertotherightpeopleatrighttimeintherightway

DMObjectives
Generateleads Generatesales Generaterepeatsales Salenewproducts/otherproductsto existingcustomers Preventdefection/Reactivatelostaccounts

ManagingDatabaseandLists

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TypeofLists
HouseLists ResponseLists CompiledConsumerLists CompiledBusinessLists

ResponseLists
Buyerslist/Mailorderlists Namesofbuyers,subscribers,inquirers,donors,depositors Newcustomers,activecustomers,oldcustomers Demonstratedthattheyarewillingtobuybyrespondingto DMoffer yMagazine/ g /periodical p companies, p ,Retailers, , Providedby Cataloguers,Listbrokers,Creditcardcompanies Couldbemarketedasdifferentproducts
Babies Carowners Creditcardholders Giftbuyers Bookbuyers Women Etc.

Rentingthelists
Developsegmentationandpricingstructure Pricebasedonformofdatagiven single use,multipleuse Hard ddata d sheet h li listing, i l labels b l Softdata

Orderinglists
Listdescription
Exactspecifications singleormultiplecutseg.2005buyers only,maleonly. Quantity yfortestlists Nthnamesample p Selectivity Dates/periodofusage.+/ oneweek Seednames/dummies tocheckdeliverytimeofpostoffice Specifydeliverabilityguarantee generally9095%.Forallreturn mailrecoverthemailingcosts Mergepurgerateadjustments(foralldeletednamesfor deduplication) agreementofmailable%list

CooperativeMailing/PackageInsert
Sellofrighttoinsertoffersinpackage mailings Typicallycosts25%lessthansolomailing Moreuseful f lfor f impulse i l purchase h products d Festiveseasons

HowtoselectResponseLists
Principleofaffinity Eg.Cookbookbuyerscanbetargetfor cookwares Testthelist
Identifythepilotlist shouldberepresentative. about20% Mayusecontrolandtestlists Measuretheresponseandcompare
RateofResponse(#ofResponse/MailersSent)*100 CostofResponse(MoneySpent/#ofResponse)

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DirectMarketingTheory
Thosewhohaverecentlymadekeydecisionsin theirlives/haveundergonemajorlifechangeare morelikelytomakechangesthanothers Successfullistsareestablishedbyidentifyingnew parents,newlyweds,recentlymovedfamilies Lifestyleandpsychographicinfo eg.typeof vehicleowned

DirectMarketingMix

DMMedia
DirectMarketingMedia/ Tools

DirectSelling
Manufacturersellstodistributor/ customers noretailoutlets/massmedia
MassMedia

AddressableMedia

pull p
DirectMail Telephone Internet F2F Broadcast Newspaper Magazine Others

3formsofDS
Postal Outbound Email D2D TV NAtional Consumer Outdoor

SingleLevelMarketing[Avon] Network/Multi LevelMarketing[Amway&Oriflame] PartyPlanSelling[Tupperware

Non Postal

Inbound

WebClicks

P2P

Radio

Local

Business

PackageInserts

PartyPlan/Event

BillInserts

DStools(Creativeexecutions)
FlipCharts Presentations 'Leavebehind'leaflets Sampling Exhibition/tradeshows Types

DirectMailer
Launch,Persuasive,Reminder/Followup, Miscellaneous(Birthday cards/thankyounotes/invitations/Reportsetc.) Singleproduct/Multiproduct

Formats

singlesheet,letterfold,Frenchfold,gatefold,mapfold,accordion fold,broadsheet,booklet,Email,Creativemailings(objects)

Enclosures
Brochures,Cassettes,Floppies,CD,samples,others

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ElementsofMailingPackage
ResponseDevice
OuterEnvelope (Preselling,Curiosity,Personalization, Window, Transparentenvelopes) TheLetter (4Ps,imitatingtyping) ImpliedValue(GiftCertificates/Dummy cheques,Officiallooking layouts,Cutouts,Moneylike images) Involvement Devices/ /Selectionaids( (Stamps, p , Stickers/Label / transfers, , Punchedouttokens) Brochure(visuals,illustrations,explanations, faqs) Buckslip(inserttalkingaboutsuboffers,salesappeal atlastminute) Inquiry/OrderCard,Tearoffstub/flap TestimonialFlyers Replyenvelopes ApparentValueInserts(Calendars,Tools,Booklets,Howtoguides) Postage

OuterEnvelope

Letter

ImpliedValue

ImpliedValue+InvolvementDevices

Brochure

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BrochureInside

Buckslip

Buckslip

Letter2

ReplyEnvelope

DM Creativetactics
Conversationalcopy Notmorethanapage Handwrittennotesinmargin UseofGraphics Contentdivision/subhead teasersonenvelopes

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Telemarketing
Usestelecommunication&info.systems alongwithpersonalsellingskills Inbound
Incomingcallsfrom0800, 0800 freephones, phones localphones, phones self liquidating(premiumratephones)

WhyTM
Telemktg.seemedtobethebesttool:
providesimmediatefeedback providesflexibility providesamethodofbuilding&maintaining customerrelationshipsbetweensales highlypersonalizedservice providesincreasedproductivityandcost effectiveness

Outbound
telemarketingprofessionalscallingupprospects

Types
qualifyingprospect,appointment,information,actualsales

TM Creativetactics
Canned/Flexiblespiel Monitoring/immediatecorrections Answers s e stoQsa anticipated t c pated Computersupport

DirectResponse
MassMediaadvertisingtogenerate immediateresponse Useful f lespecially i ll when h li listsarenot available

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FormsofResponseAdvertising
Print
magazines newspapers inserts Television Radio Internet Doordrops

DR Creativetactics
DR Press
AbridgedDM/attentiongrabbing talkingtoaudience dedicatedlines/contactnames tollfree#/responsepanel

Internet creativetactics
DRTV
Demonstration/nosubtlety Showtestimonials/interviews advntg nomistakes Memorableph#s(alphanumeric/numeric) Infomercials 30minute sellthrice problemsolutionapproach

Hyperlinks/lessscrolling Keywords/searchresults sitemap Flashanimation keepupdating

ChoiceofMedia
OnthebasisofAIMRITE DMObjectives(Acquisition/Retention) Internet thebestin2waycommunications
Audience Impact

AIMRITE criteria
Howpreciselycanitbetargetted Abilitytostandout/Imageofthemedium

Message
TV demonstration, d t ti DMexplaination l i ti

Response
ease/promptness

InternalManagement TheEndresults effectiveness/efficiency

Rateofresponse/costofresponse

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EvaluationofDMmedia AIMRITE
DirectMail
Audience:Preciselytargeted.Database/ list Impact:Intrusive.Junk Message:Lotofinformation. Personalization. Privacyfromcompetition Response p :Goodresponse p fromexisting gcustomers.Relationship p building.Testing InternalManagement: Leadtime.Database management. Privacy. TheEndresults:12%

Telemarketing Inbound
Audience:anybodywithtelephone. Telephone nolongerluxury. Impact:positivelyperceived.carelines Message:Interactive. Intelligent responsesonthebasisofdatabase Response:tollfreephones.Usageofcreditcard.LOT. InternalManagement: Predictingcallvolumes. Training.. TheEndresults:100%

Telemarketing Outbound
Audience:List/Telephonedirectory. Impact:highlyintrusive/forcedanswer/cantfilter Message:forstraightforwardmessages.Validreasontocallincreases impact Response:100%response.Negative answerscanbeprobed. InternalManagement:Callcentremgmt.Followupcalling.training TheEndresults:1020%

IncreasingResponseTesting
DirectResponse
Audience:Massive audiencecoverage Impact:Abilitytogenerate WOMauthority andcredibility Message:Powerofpersuasion Response:Passive state I t Internal lmanagement t :Response R management t TheEndresult:0.01%.Excellentgrowthpotential

BMJ2002,Phil;Edwards,etal.
Personalizedlettersincreasedresponseratesby16% Useofcoloredink:39% yincentive100%, ,nonconsitionalincentive Monetary 70% StampedReturnenvelopes26% Contactingaudiencebeforesendingmailers54%, Followupcontact44% CredibilityandExcitement11to54%

MeasuringEffectiveness&Efficiency
EffectivenessIndicator
RateofResponse(%) =(#ofResponse/MailersSent)*100

ThankYou

EfficiencyIndicator
CostofResponse(Rs.) =MoneySpent/#ofResponse

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CharacteristicsoftheNew Economy

CRMConcept

Retailersaremorepowerfulthanbrandowners! (GettingCloser Directly) Valueisshiftingfromownershipoftangibleassetsto intangibleassets.Companiesareoutsourcingasset intensiveactivities.(Servicization) Valueisshiftingfromcompaniesthatprovidestandard productstocompaniesthatcanprovidehigh customizationatlowcost(MassCustomization)

TheModernMarketingConcept
Starting Point Focus Means Selling and Promotion End Profits through Sales Volume

WhatisCRM?
Torecognizeandtreateachcustomer individuallytooptimizecustomerexperience byservingtheirunspokenneedsandmake himbuytheproduct again&again.

Old

Factory

Products

Classical

Target Market

Customer needs

Integrated Marketing

Profits through customer satisfaction

Modern

Individual Customer

Customer Experience

CRM

Profits through Customer loyalty

Economicdistinctions
Economic Offering Economy Economic Function Nature of offering Key Attribute Method of Supply Seller Buyer Factors of demand Commodities Agrarian Extract Fungible Natural Stored in bulk Trader Market Characteristics Goods Industrial Make Tangible Standardized Inventoried after production Manufacturer User Features Services Service Deliver Intangible Customized Delivered on Demand Provider Client Benefits Experiences Experience Stage Memorable Personal Revealed over a duration Stager Guest Sensations

StewLeonardsDairy
DisneylandofDairyStores Foundedin1969withsevenemployeesnowhas3large stores 100,000sq.ft. with2000employeesintheUS Milkprocessingplant milkpackagedinfrontofcustomers FarmFreshFive Milkcartonrobotssingingmilksong Clover Cl wall llmounted dcowmakes k Moo! !sound dwhen h kids kid tugonarope Parkinglotispetzoo Inhousedairiesofferfreefoodsamplesthroughwowthe cow storesmascot. Celebrationsonfestivalsarecommon.

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CommerceBank
CommerceBancorpInc., Newjerseybasedbank foundedin1974byVernonHillwhohadnon bankingbackground g Experiencebasedonfastfoodfranchising principles Freelollipops,balloons,eventsfeaturing comedians,caricaturists Between1991and2001,itsstockpriceincreased 1463%comparedMicrosoft's1121%.

Whatbringsvalueinmodernmarketing environment
CustomerExperience ServiceisnotExperience Experience asustainablevalueproposition
Asitisuniqueeachtimeand Uniqueforeachone

Whatbringsvalueinmodernmarketing environment
CustomerExperience ServiceisnotExperience Experience asustainablevalueproposition
Asitisuniqueeachtimeand Uniqueforeachone

TheModernMarketingConcept
Starting Point Focus Means Selling and Promotion End Profits through Sales Volume

Old

Factory

Products

Classical

Target Market

Customer needs

Integrated Marketing

Profits through customer satisfaction

Modern

Individual Customer

Customer Experience

CRM

Profits through Customer loyalty

WhatisLoyalty?
Apsychologicalandemotionalbondbetweenthe customer(oranyotherstakeholder)andthe corporateconducingtoalongtermrelationship Manifested f dthrough: h h
Repeatingpurchase Purchasingpremiumproducts Referringtofriends Becominganadvocate Wantingtogiveopinionandhaveitheard

Whyloyaltyisimportant?
Retainingcustomersismuchprofitablethanacquiring new Reductionof5%ofdefectivecustomersmayresultin 80%increaseinp profitability y( (Reichheld&Sasser, ,1990) 99 ) 60%to80%oflostcustomersweresatisfied(King,1996) 90%ofcustomerswholove acompanywillrepeatbut only30%ofcustomerswholike thecompanywill repeat(OpinionResearchCorp.)

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Whyloyalcustomersareprofitable
ProfitfromPricePremium Profitfromreferrals

HowMuchProfitCustomerGeneratesOverTime
$50 42 44 0 55 49 30 0 $(51) $300 144 166 192 222 256

Profitfromreduced operatingcosts $(50) 0 Profitfromincreased Purchaseandhigher balance $200 144 168 70 $25 0 35 $100 88 88 1 2 3 4 5 $(300) 1 2 3 4 5

123 Baseprofit 0 0 Customer acquisition cost 1 2 3 4 5 6 7 $(200) $45 99

$(100)

5%reduceddefectionsboostsprofits by25to85%
% increase in c customer Value NPV of f Profits
100 % 80% 85% 75% 60%

DefectionCurveofaCreditCard Company
600 $575 500

400

5%fewer defections i increases valueby 75%

$300

40%

50% 45% 45% 40% 35% 25%

300

20%

30%

200

Autoservice Chain

BranchDeposit CreditCard

Credit Insurance

Insurance brokerage

Industrial distribution

Industrial Officebldg. laundry management

Software

50% 50% 2 Years

40%

2.5

3.3

30%

20%

10

10%

20

5%

0%

Defection Rate Average Customer Life

ZeroDefection:TheCorporate ObjectiveToday
ManufacturingtoServices InventoriestoIntellectualCapital MachinestoHuman ScrapheaptoLostcustomers ZerodefecttoZerodefection

Satisfaction&Loyalty
Withincreasedcompetition,satisfactionand loyaltyrelationshiphaschanged Thereasonwhysatisfiedcustomersdefectis becausefalsebeliefsofcompaniessuchas:
Itissufficientmerelytosatisfyacustomer Investmentinchangingcustomersfromsatisfiedtocompletely satisfiedisnotwiseuseofresources Focusonbringingfewdissatisfiedcustomerstosatisfiedstatethan takingmoresatisfiedcustomerstocompletely satisfiedstate

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Competitionand SatisfactionLoyaltyRelationship
Noncompetitive Zone Regulated monopoly or few substitutes
High Local Telephone

STPMarketingtoInteractiveMarketing
FullyInteractive

Airlines Personal p computers

Loyalty

Dominant brand equity High cost of switching Powerful loyalty program Proprietary technology

2way
Highly Competitive Zone Commoditization or low differential
Activedatabase marketing

Hospitals Automobiles Low

Consumer indifference Many substitutes Low cost of switching

Communications

Tailoredto micro segments

Personalised

Completely dissatisfied

Completely satisfied

1way Mass Individuals

ValueProposition
Oneforall

Addressability

TransactionMarketingV/S RelationshipMarketing
Transaction Marketing
One-off Exchanges/ Brand Management Short-term focus Mass Communications/ Open Loop Isolated Market Research Mass Markets/ Market Segments Market share Focus Time perspective
Communications

EvolutionofMarketing
Primitive Marketing

Relationship Marketing
Ongoing Exchanges, Customer Management Long-term focus Personalized Communications/Closed Loop Ongoing dialogue Markets-of-one Share of Customer
Direct&Database Marketing OnetoOne Marketing

Mass Marketing

Customer Feedback Mechanism Market size Objective/ Success Criterion

STP Marketing

Howdoesonebuildlongterm relationship?
Continuouscommunication Understanding GetPersonal

CRMProcess

Interactivity

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HowtoPersonalize/Customize?
Technology:Database,Internet&Mass Customization CherryPicking 80:20s

CRMProcess
Interactions

CustomizationofMarketing Mix Learningabout Customers KnowledgeAcquisition CustomerDifferentiation Product Price Place Promotion

Interactions

CRMFunction
Identification

CRMfunction
Differentiation Customization Interaction

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