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CRM Power Tools for Business Results

Intelligence-Based Marketing
Peter Heffring
President CRM Division

Intelligence-based marketing The company knows who you are, what you prefer, and communicates with relevant, timely messages, using the power of analytical intelligence to detect patterns, decode strands of information and create meaningful offers and value

Schizophrenic marketing The company has delusions about who you are, forgets what you prefer, and tries to reach you with offtarget communications that alienate you based on fragmented data & inadequate faculties, resulting in confusing, chaotic multiple personalities

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

How Do Your Customers Experience Your Business?

 2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

I cant believe it. Ive been a good customer for ten years. And they still dont get me and the things that interest me.
Copyright@2001 Teradata, a division of NCR, All Rights Reserved

 2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Hey! Just because we bought Dad a tool set last year does not mean we want to see every drill bit in your inventory.
Copyright@2001 Teradata, a division of NCR, All Rights Reserved

 2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

I have 2 million frequent flyers with your airline and still do not get respect
Copyright@2001 Teradata, a division of NCR, All Rights Reserved

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Remember the bad times?

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

I need personal attention - help me!

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Give me convenience!

Make it easy! Convenience!

Dont embarrass me! Help me asap! Service now! Respect me!

Quality of life!

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

The Marketers Task: Understand and Communicate Successfully With a Multitude of Individual Customers Every Day
Marketers need the technology power tools to gather, analyze and interpret thousands or millions of data strands of customer interaction detail from countless touch points, channels and data sources cracking the DNA code of each customer and learning over time to communicate and build meaningful relationships

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

acquire

Todays marketers have a lot to manage!

Do you know what constitutes a good customer? Are you using customer lifestyle/lifestage data to find prospects? Can you match customers to the right products and services? Can you use the above knowledge with your current prospect lists to target your marketing efforts?

reward loyalty

Who are my most loyal customers and what promotions are most effective? Do you treat your loyal customers differently than your others? When a customer touches your business, do you have the capability to engage them with targeted messages? How do you determine the level of personalization you give?

grow the relationship

retain customers

Who are your most valuable customers and what are their attributes? What products do my customers purchase and what do they crossover purchase? What will my customers want next? What product promotions increased sales, transaction size, frequency and crossover?
Copyright@2001 Teradata, a division of NCR, All Rights Reserved

Which of your profitable customers are at risk of leaving? What are the buying habits of my best customers? Are you matching products and services to the right channels? Can you detect behavioral events and provide timely and relevant customer communications?

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Customer Relationships & CRM More Complex Than Ever Before

The Challenge: Find Patterns, Decode Messages, Turn It All To Business Advantage
How can a marketer
Make sense of a tidal wave of interaction detail? Serve and satisfy a million individual customers? Deliver profitable returns on so many relationships? Help the business meet its goals and objectives?

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Business Needs & Expectations

Todays executives must justify: Every dollar spent Every initiative And must show: The link between dollars spent, these initiatives and return on customer relationships

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Capitalize on CRM Technology

45% of companies are considering CRM projects1 37% have installations under way or complete1 CRM budgets are not being slashed despite slow economy2

2Source: 1Source:

Interactive Week, Aug 20, 2001

Forrester Research, 2001

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Capabilities that Companies Must Have

Broad range of actionable analysis and predictive modeling capabilities Holistic view of customer interactions to understand the whole customer Means to understand and automate the event rules that drive the business and communicate with individual customers

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Analytical CRM Power Tools

Store /Branch

Call Center

Agent

Analytical CRM

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Manage the Total Communications Environment with Analytical CRM

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

Direct Mail E-Mail/Fax

ATM/Kiosk

What is CRM really trying to do?

Tactical cultivation of customer relationships based on strategic vision and objectives

Achieved as a company analyzes and prioritizes opportunities, then communicates with intelligence and relevance to individual customers in preferred channels

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Relevant Offers
Analytics and Modeling

Insight

Communication Planning Personalize Communication Customer Optimization Communication Delivery

Action

Intelligence

Timely Messages Timely Messages

InterAction

Operational CRM Systems

Data Warehouse Disk array

Capture Data
ATM

All Channels All Touchpoints

Internet Extranet

E-Mail/ Fax

Sales/ Store / Branch

Direct Mail

Kiosk

Agent/Call Center

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Lead With Analytical CRM For Mission-Critical Intelligence

Analysis
Analyze customer profiles & behavior Target customers Evaluate response Event Analysis

Modeling
Build and analyze predictive models Score customers

Personalization
Generate personalized offers by customer Build personalization Rules

Optimization
Prioritize and limit communications by channel Regulate frequency and quantity of contacts by channel Optimize customer communications through contact modeling

Interaction

Communication
Plan continuous communication dialogues Define batch and real-time event rules and trigger

Deploy outbound or manage pending inbound/eventdriven communications Manage workflow of interactions Personalization Merge Real-time personalization

Industry LDM

ALL CUSTOMER INTERACTION DATA

Data Warehouse

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

How Analytical CRM Functions

Benefits

Rank and group customers on any key measure Understand relative customer differences based on deciles Actively target customers directly from charts & immediately include them in campaigns

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Percentile Analysis

Cross-Segment Analysis
Key Benefits Identify key characteristics of intersections between customer groups Ability to target and save customer intersections Represent and analyze relationships between segments & attributes

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Key Benefits Analyzes data patterns to offer predictive insight, e.g. what products do customers typically purchase with other products over time? Extends market basket analysis across purchases over periods of time Predicts activity leading up to & after a significant purchase
Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Pattern Detection

Benefits

Automatically models most likely responders for a communication Eliminates guesswork by identifying significant variables that affect response behavior Actively target customer directly from charts Leverages Analytic Datasets

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Response Modeling

 Build offer, message, discount, and optimization rules Evaluate each customer individually to determine the best content to deliver Capture and automate marketing IP. Deliver offers tailored to each individual customer.
Copyright@2001 Teradata, a division of NCR, All Rights Reserved

Benefits

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Personalization Rules

Benefits

Relevant Communication through right Channel at right Time Flexible campaign definition, one-to-one or mass campaigns Multi step, multi channel communication Closed loop communications

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Communication Manager

Key Benefit Provides a framework to define rules across the enterprise that trigger marketing opportunities

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Enterprise Rules
(Q1 2002)

Customer Life Time Value Campaign

Analysis
3.) Create segments according to an LTV campaign model propensities and needs 11.) LTV Campaign Results Available for Analysis via OLAP Reporting by Marketing or LOB

Modeling
1.) LTV Campaign model created and run to calculate campaign scores

Personalization
5.) Set personalization rules to format communications appropriately for each customer.

Optimization
6.) Prioritize and Optimize mix of communications deployed to channels, may use profitability scores

Interaction

2.) Model Customer Behavior to identify life cycle events

7.) Communication Plan handed off to channel systems (e.g. Siebel Broadvision) for execution 8.) Action, Response and Results captured and handed back to Communication Manager for campaign analysis.

Communication
4.) Communication plan created. Communications approach and offers linked to LTV campaign. 9.) Costs of LTV Campaign calculated based on actual channel activity

10.) LTV Campaign Responses modeled to improve campaign targeting and profitability

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Analytical CRM in Action

CRM is an ongoing, scientific process

not an isolated campaign or marketing plan
Must create a process for achieving the intended ROI Note the difference between database marketing, sales force automation, and CRM

To measure CRM success, measure the impact of the entire process

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Achieve Positive Business Results Over Time

570,000 leads, 100 campaigns in 6 mos $4.4 billion of new business in six months Four continents 15 countries $250 BB Australian in assets Retention rates of 98.4% 9 million customers 28.7% increase in profit in six months

Triple digit ROI on total DW + CRM investment after 4 months = 265% High double-digit campaign responses Named 2000 NCDM winner for best results

600 home improvement stores $15 BB annual sales 40,000 products on the shelves

Generated $1 M in one district in one week 6,000 leads in 5 weeks and 40% Largest retail bank in the world generated a sale or service opportunity 4,500 consumer banking centers 9 or 10 customer sat on 10pt scale Serving 28 million households

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Market leaders taking the first steps have proven the CRM business case

Quality of Customer Experiences

2002 presented by Peter Heffring at the Marketing Science Institutes Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 February 1, 2002.

Your CRM Process Must Balance

Copyright@2001 Teradata, a division of NCR, All Rights Reserved

Achieve Positive Business Results