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C R M
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Business Challenges
Businesses in many industries may lose up 50% of theircustomers over a five year period.
Studies have shown its 6 to 7 times more expensive to acquire
a new customer than it is to retain a current customer.
As little as a 5% increase in customer retention can increase
profits by 25 to 95%.
Yet many businesses are still focused only on customer
acquisition and see customers from the fragmented view ofindividual transactions
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Customer Relationship
Management
Fortune 500 companies will lose
50% of customers in 5 years
(Peppers & Rogers Group)
Only 4% of unsatisfied customercomplain. 65~90% do not repurchase(Anderson Consulting)
82% of customers whose complaintsresolved repurchased
Cost of new customer acquisition 7-8 times of retaining currentcustomers(Yankee Research)
98% coupon are scrapped.
50% current customers do not
contribute to profit
(AMR Research)
Top 20% customers contribute 60%of revenue and 70% of profit
20 : 80 rule
Customer is important
Analysis on Customers essential
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Customer is
When products become so similar and technologies arecommonly available , CUSTOMER EXPIRIANCE is the
only true differentiator
There is only one boss. The customer!
He can fire everybody in the company, from the chairman
on down, simply by spending his money somewhere else.
Sam Walton, founder of Wal-Mart
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Todays customer is
Smarter
leaner
more price conscious
has lower morale overwhelmed by competitors
more demanding
less forgiving
harder to satisfy
less loyal
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Core Marketing Concepts
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What's In
A fundamental paradigm shift is occurring
in how company market to customers.
One-to-One Marketing
Customized Products
Share of WalletLife Time Value
Event Driven Marketing
Know Your Customers
Manage Your Customers
Differentiate CustomersCross-sell / Retention
l0% of Market, l00% of
Customer
Mass Marketing
Standardized Products
Market SharePresent Value
Program Driven Marketing
Know Your Products
Manage Your Products
Differentiate ProductsAcquisition
100% of Market, 10% of
Customer
What's Out
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What CRM means?What CRM means?
Customer ?
Relationship ?
Channels of interaction, segmentations
Management?
organization of customer related information
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Relationships with whom?
All stakeholders including
Customer
Employees
Suppliers
Government
Citizens
I focus on Customers here.
The Customer Relationship Management (CRM).
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The Meaning of Relationships
Continuity
Mutuality
Interdependence
Understanding
Trust
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Evolution of customer relation over time
Valueo
fcustomerrela
tion
Three simple business goals of CRM
CustomerAcquisition
Acquire the right
customers with
high potential
value
CustomerDevelopment
Cross- and up-
sell by offeringthe right products
at the right time
Customer
Retention
Retain profitable
customers andincrease their
long-term value
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The process of
Targeting
Acquiring
Servicing
Retaining
and
Building long-term relationships with customers
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CRM Versus Mass Marketing
TraditionalTraditional
MassMass
MarketingMarketing
CRMCRM
Shotgun ApproachShotgun Approach
Rifle ApproachRifle Approach
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Define customerrelationship management
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1. a technology.
CRM is just a new system to install, new code to write.
1. sales force automation (SFA). CRM is just a business development process for our salespeople.
1. customer loyalty. CRM is a synonym for customer loyalty.
1. database marketing. CRM just allows us to leverage our customer data better.
1. call center technology. CRM is just a way to cut costs in the call center.
1. a project. We can install CRM in 30 days with this team of three!
1. a producer of intangible benefits. You just cant measure relationship management concretely.
1. a business panacea. Just install the software apparently it solves problems.
CRM is NOT
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CRM is a customer-focused
business philosophy designed to
effectively create experiencesthat attract, acquire and retain
customers.
To realize the benefits,
enterprises must implement collaborative processes
and technologies that support customer interactions throughout all
channels.
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CRM ?
A company-wide business strategy
designed to optimize profitability,
revenue, and customer satisfaction by
focusing on highly defined and precise
customer groups.
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Customer Relationship Management
..an enterprise approach to understandingand influencing communications in order
to improve customer acquisition, customer
retention, customer loyalty, and customerprofitability.
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Customer-centric
Under this philosophy, the company
customizes its products and service
offering based on data generated throughinteractions between the customer and the
company
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An data-driven approach that
enables companies to assess each
customers current needs and potential
profitability and tailor sales offers and
service. It often involves using multiple
channels to improve effectiveness and
efficiency. (Goff et al. 1998 Mckinsey
Quarterly, No3)
An enterprise approach to
understanding and influencing
customer behaviorthrough
continuous relevantcommunication to
improve customer acquisition,customer retention, and customer
profitability. (NCR corps.,1999)
A management discipline utilizingspecialized tools, technologies, andtechniques to facilitate the operationand improvement of front-office
business functions with the intent ofoptimizing the total value derivedthrough customer relationship. (Pivotalsoftware Inc. 1999)
An enterprise wide businessstrategy designed to optimize
profitability, revenue and customer
satisfaction by organizing the
enterprise around customer segments,
fostering customer-satisfying behaviors
and linking processes from customers
through supplies. (Gartner Group)
CRM Definitions
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What is CRM?
Organizing Around
Segments
Organizing AroundSegments Tracking Interactions
Tracking Interactions
Fostering SatisfactionFostering Satisfaction Linking ProcessesLinking Processes
Special Promotions
Targeting
Markets and Individuals
Special Promotions
Targeting
Markets and Individuals
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People- Belief that your customers and employees areyour most important asset and that long-term survivaldepends on these relationships.
Process- Structuring your organization and businessprocesses to support the culture.
Technology- Automating and integrating businessprocesses to capitalize on the culture.
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CRM is a Management Tool, encompassing all
functions, for focusing on the customer
Sales
Marketing
Service
Mfg
Purchasing
R&DSpares
ProductProduct
PlanningPlanning
CRM is a set of operating business processes built around
the customer
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CRM is the front end (customer facing) activity. It needs to be firmly
supported by all other back-end processes.
ERP
SCM MFG
FAST FWD
PURCHASING
R&D
CRM
All improvement initiatives under the CRM Umbrella
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Makes Four Marketing Dreams Come True
1. Dream to target and serve customers on an individualbasis ( prefer 1 to1 marketing to mass marketing.
2. Dream to enjoy log term relationships with them,
especially with the profitable customers (preferringcommitment to flirting).
3. Dream to get rid of barriers and distortions created by
the non-value adding intermediaries (preferringdisintermediarization and direct marketing)
4. Dream to reduce marketing cost progressively.
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Architecture of CRM
There are three parts of application architecture of CRM:
operational - automation to the basic business processes
(marketing, sales, service)
analytical - support to analyze customer behavior, implements
business intelligence alike technology
co-operational - ensures the contact with customers (phone,
email, fax, web, sms, post, in person)
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Operational CRM
Operational CRM means supporting the so-called "front office"business processes, which include customer contact (sales,
marketing and service)
Operational part of CRM typically involves three general areas of
business:
Sales force automation (SFA)
Customer service and support (CSS)
Enterprise marketing automation (EMA)
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Analytical CRM
Data gathered within operational CRM are analyzed to segmentcustomers or to identify cross- and up-selling potential.
Collaborative CRM
Collaborative CRM facilitates interactions with customers through
all channels (personal, letter, fax, phone, web, e-mail) and
supports co-ordination of employee teams and channel.
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Operational CRM
Business Operation Management
Analytical CRM
Business Performance Management
Collaborative CRM
Customer Interaction Management
SalesMarketing ServiceSales Data
AnalysisMarketing data
AnalysisCustomer Data
Analysis
Feed
Back
Planning/
Analysis
Action
CRM Components
Web
Personalization
Call Center
Automation
Web Sales
& Service
Closed Loop Processing
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Add Customer Attrition to the P&L Sheet
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Components of Operational and Analytical CRM
Operational CRM:effective and efficient use and management of people, process and technology
Analytical CRM:
the measurement of people, process and technology
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Bridge the divide.
Member
Value
Seg
men
ta
tio
n
Communication
R
et
ain
Customer
Value
Con
vers
ion
Segmen
ta
tio
n
Communication
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Bottom-line !!!!
Customer is
KING
Understand him !!!
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How to build Loyalty?
Framework of building Loyalty
CRM
(CR Strategy)Trust/
Intimacy
Reward Program
/Continuing Campaign
Repurchase
/ Cross-selling
Improving
Core Products/Service
Innovation of Channel Mgmt.
Customer
Satisfaction
Customer
Loyalty
Phased ElementsDriversDegree of
Relationship
Attitude,
not Action
Action, not Affinity
(Artificial Loyalty)
Recognition
of Relationship,
Referral
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A Brand-Infused Causal Model
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Loyalty-the customer-facing tip of the
CRM Iceberg
Loyalty
CRM
Customer Direct
Communications(email, postcards, etc.)
Encourage
Multi-channel
Buying
Increase
Cross-sell
Identify
Customers at
all Touchpoints
Encourage
WOM(word of mouth)
Increase Re-buyRates
Increase Email
Click-thru and
Open Rates
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Thats All There Is To It
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Organization
Customers
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Website
Retail
Call Center
POS
Traditional Mail
Field Sales
Fax
PDA
Touchpoints
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Website
Retail
Call Center
POS
Traditional Mail
Field Sales
Fax
PDA
Sales
Marketing
Service
Finance
Production
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Website
Retail
Call Center
POS
Traditional Mail
Field Sales
Fax
PDA
Sales
Marketing
Service
Finance
Production
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Website
Retail
Call Center
POS
Traditional Mail
Field Sales
Fax
PDA
Sales
Marketing
Service
Finance
Production
CRM
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Website
Retail
Call Center
POS
Traditional Mail
Field Sales
Fax
PDA
Sales
Marketing
Service
Finance
Production
CRM
Process, Technology, People
Selling Knowledge
Product Knowledge
Solutions Knowledge
Customer Knowledge
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