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CRM Framework
Terry James© 2006
(c) 2006 Terry James
2
Party No. Not a beach party. No beer. No
dancing. CIF, or customer information file, lists just
customers. When a CIF includes all people with all
relationships and roles to our firm, then it’s called an Involved Party database.
Involved Party: a generic term meaning party (anyone) who is involved with your company; employees, suppliers, clients,…
(c) 2006 Terry James
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How we got here.
Each LOB (line of business) would keep track of its own clients.
The LOB would usually use an account number to track its clients.
Example: Toronto Hardware
Account number: Client name : Amount spent:etc.
0000150 : Wendy’s : $50000.00
(c) 2006 Terry James
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LOB Account number
The LOB has a lot of shortcomings. It does not know anything about
customers outside the division. It has no role information.
If an employee buys a product, his data looks like simply another customer, no employee discount or number.
If a supplier buys a product, again the CIF likely won’t show it.
(c) 2006 Terry James
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CIF files Common for the CIF file to be copied
different groups for different purposes perhaps to merge with other CIF files
If you have 2 copies, which is the authoritative source The authoritative source is the trusted file
you use if it is not clear which is correct Always update the authoritative source first,
then copy from it, never update the copied file or you will lose track of changes to many copied files.
(c) 2006 Terry James
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Trusted data How long does it take for a copied
CIF to be different than the original? Probably a few nanoseconds if you do
millions of transactions a day As soon as your copy is not current,
you are working with dirty data Dirty data is simply poor quality data,
lacking in accuracy, consistency, or integrity.
(c) 2006 Terry James
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Analysis Patterns
Martin Fowler wrote ‘Analysis Patterns’ which are best-of-breed, proven business analysis solutions.
For CIF, he provided the Party concept.
Person Organization
Address
Phone
(c) 2006 Terry James
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Leading Edge Data Model
INVOLVED PARTY
Person
Organization Products
Relationships and Roles
Demographics, contacts, security, products, accounting, relationships
(c) 2006 Terry James
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Involved party (IP) model You can ask what organization a client
belongs to, what role he has there, and what relationship he and his organization has with your company.
You can reverse questions and ask which customers are in an organization that your have sold products to, and which customers are not in an organization as customers.
(c) 2006 Terry James
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Example What people have I sold computers to at
Honda? What group were they in? Sales,
Service? Are there any groups at Honda I have
not sold computers to? Can I get an introduction from existing clients?
Are any Honda employees members of my Board of Trade team?
(c) 2006 Terry James
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Prospects and Suspects
Prospects are potential clients, but have not bought anything? They may have asked for pricing, asked for a
demo, but not paid any money yet. Suspects are customer lists you bought
from another company Suspects in particular are known for poor data
quality in general. The data could be old, out-of-date, captured
incorrectly, deliberately wrong (client fraud), etc.
Be careful about dumping poor data into your authoritative customer database.
(c) 2006 Terry James
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CRM Basics
Customer reaches for service
E-mail IVR Web Branch
Master Party file
Multi-channel offering- but ONE customer file!
(c) 2006 Terry James
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One customer file
Many functions but one party file
Many divisions – but ONE party file.
Many departments – but ONE party file
Accounting HR Sales Operations
USA division Asia Division
Auto dept. Motorcycles Lawnmowers
(c) 2006 Terry James
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What is a Framework?
Create a framework for future client services without duplicating client code
Rather than build one element at a time, build a framework within which new elements will fit as you add them. Good framework removes duplication, ensures integration.
(c) 2006 Terry James
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What’s in the Framework?
The framework will have infrastructure services to permit a fully integrated CRM solution.
1) Single sign-on
2) Channel independent middleware (e.g. EAI)
3) Dispatcher –route transactions to proper legacy system.
SSO
EAI
Data conversion
Demographics
(c) 2006 Terry James
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SSO What is single sign-on?
It is one logon and password to all your systems Makes it look like you have one company where
everyone helps and works together Why do you want it, what does it provide?
Easier for customers, easier for employees toremember one password and logon
Consistent rules, and less expensive if you use one security system
(c) 2006 Terry James
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SSO Where do you place the security?
In the front end device, in the legacy application?
Rule is put as much security as reasonable as far away from your central operation as possible. Likely have many levels.
What goes in the security directory? Duplicate data with the Party file? Yes, at least the name and contact as a pointer. Smart to keep highly sensitive, encrypted
passwords in a very restricted separate file
(c) 2006 Terry James
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EAI What is EAI software?
Enterprise Application Integration What does it do?
EAI permits all your applications to talk to each other and work as a unit
Translates data into needed formats Provides correct communication methods
and protocols for each application Where do you get it?
Many vendors, IBM, Tibco. How much does it cost?
Fairly expensive.
(c) 2006 Terry James
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CRM – Level 1 Profitability analysis
How much profit from each client? Client comments
Staff comments: (eg. deadbeat, high potential)
Demographics Personal, then business. Fax, email, vacation address, cell phone,…
Segmentation Use profitability to segment clients into tiers,
top, middle, bottom. Personalization
Tailor to client needs, no mass mailings to all regardless of need.
(c) 2006 Terry James
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CRM Level 2 House-holding
Include relationships starting at home, who is the client living with, what are family needs?
Client profile Expand profile with dealings outside your firm Acquire credit and collections history
Channel management Know and use your client favorite
communication channel (email, phone, face-to-face)
Roles and Relationships Add client organization and role (supplier,
competitor, employee, or partner,…?)
(c) 2006 Terry James
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CRM Level 3 Client acquisition
Have client provide referrals Opportunity
Cross-sell, up-sell, add-on, deluxe model Channel optimization – move to least costly
channel Channel integration
Every client touch-point adds to the profile Dynamics
Not locked into fixed, yearly goals Adjust sale goals by minute as client profile
expands Right product, right client, right time, right
place
(c) 2006 Terry James
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CRM Level 4 Micro-segmentation
1 client = 1 segment Every client has own strategy for next sale
Predictive modeling Tracked roles and behavior Use known client patterns to predict client
actions Product development
Tailor products to meet client needs based on behavior and predictive analysis
(c) 2006 Terry James
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Profitability With improved micro-
segmentation, decision making, and dynamics, fine tune the profitability goals, future sales and share of wallet.
What is the balance between good company profit and good client profit?
(c) 2006 Terry James
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Delinquent clients
Treat the client appropriately when delinquent. It could be our poor service – not their
fiscal irresponsibility Prioritize the level of recovery so we
don’t spend more recovering the client than they are worth
Be proactive in reducing or increasing fees.
(c) 2006 Terry James
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Optimization Channel Optimization
Move clients to the least costly channel that meets their needs.
Example: Web $0.07, Phone - $0.35 Face - $1.00 Client may not want costly personal sales
visits. Sales delivery standards
Match the value of service to the client value. Be aggressive at moving low value clients to
low cost communication channels.
(c) 2006 Terry James
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IP database
Segmentation
Client service
Profitability analysis
Cross sellClient channels
Client retentionClient acquisition
Product development
Relationships
Client management
(c) 2006 Terry James
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Metrics Measure before CRM and after
How many enquiries for a 1000 flyers How many sales? What is you add discount?
Indicates cherry-picker clients How many lost clients did you recapture?
Number, total balance involved? How much faster is service per call? How many clients using cheaper channels?
(c) 2006 Terry James
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Client metrics Score the client on:
Next product most likely to buy Client risk Client profitability Propensity to buy Client potential Client vulnerability
Rank by the product most likely to buy and the expected value of that product.
Marketing and campaigns are tailored accordingly
(c) 2006 Terry James
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Metrics Some quantitative metrics on the sales
person Response rate – number of applications divided by
number of offers Approval rate – approved applications divided by
applications Net present value – by campaign and account Delinquent – number of accounts that are delinquent
and the balance involved. Roll rate – number delinquent clients divided by
number of clients Roll back rate – number of clients returning divided
by number of clients Channel usage metrics – by average channel cost.
(c) 2006 Terry James
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Client Decision Profile
Value Proposition Client management
Pricing: Preferred
Service: VIP
Channel: E-mail
Current offer: Movie channel, no connect fee
Response offer: basic
Service guideline: Premium
Account management: Agent
Propensity to buy: Average
Client prosperity: Promising
Credit: Excellent