Customer Relationship Management (CRM)

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Customer RelationshipManagement (CRM)


As You Build Your Businesses Think About …

How will you know who your most valuable customers are? Can your customers talk to you? Have you created mechanisms for

a dialogue? Will you ever ask your customers questions and if so how will you

remember their answer? What will you do differently because of what you learn from your

customers?


Put Yourself In Your Customer’s Shoes

We end up ‘shouting’ at our customers…

…who are becoming more adept at “ignoring”


Mass Marketing

CRM Is A Distinct Type Of Marketing

Direct Marketing Customer RelationshipMarketing

Target Marketing

Cus

tom

er N

eeds

Quite Similar

Highly Differentiated

Customer Value Highly Disparate

Little If AnyDifference


What is Customer Relationship Management?

Systematic Use of Information

Customer Data Warehouse

Data analysis and gathering

Predictive modeling

Through On-Going Dialogue

Real-time response Listening to customer Personalized, customized

offers and messages

To Attract and Keep Customers

• Cost-efficient acquisition• Retention focused on

profitable and at-risk customers

• Across channels

For Long-Lasting Mutually Beneficial Relationships

• Customer-based measurements

• Continuous customer evaluation


Why CRM is Important?

Customer Business

• To build customer loyalty• To ensure customer value• To use technology to

foster more personalized and relevant communications

• To reach customers who now have easy access to more information

• To make effective use of every contact with a customer who can initiate or end contact with a click of a button

• To meet higher customer demand for speed, service, convenience and value

“Statistics indicate that profits can be increased by 25 – 125 percent just by retaining 5 percent more customers. … it’s no wonder that loyalty, guest, and personalized programs are becoming big business.” – The Value of Friendships, Melody Vargas

Business

Customer


Why Are Companies Focusing On CRM Now?

1. Most companies have already attained operating efficiencies and optimum productivity through: Downsizing, outsourcing, process reengineering

2. Products are becoming commoditized 3. Customer’s were temporarily replaced by efficiency4. Enabling technology has become much more cost effective5. Proliferation of channels & customer segments that use multiple channels 6. High expectations among customers that “you should know I just applied for

a loan on your website”7. Downside risk of attrition if not done properly8. Upside potential of cross sell, retention, up-sell when done right


Company Benefits

Understanding of cause and effect across all TOUCHPOINTS “Right offer to the right customer at the right time through the right

channel” Consistent messaging, branding and positioning

Provides a customer-centric point-of-view within a product-centric business

Significant improvement in cost efficiencies Creates platform for on-going customer DIALOGUE Ability to estimate “Return on Marketing Investment” (ROMI) Manages customer value – Lifetime Value (LTV)


Customer Benefits

An objective partner that really understands my needs Listens to me, has my best interests at heart, understands my needs

Increased/improved responsiveness Treat me as an individual (not a number) Use my information to add value

An ongoing dialog that picks up where it left off; “learning relationship” Reduced cost-of-doing business Selectively communicates with me about solutions which are relevant to me


What’s More, Is That CRM Is Highly Profitable…

Cutting customer defections by just 5% has the effect of boosting profits between 25% and 85%.*

Today, the average business is losing between 15-35% of its customers annually** 69% of these defections are due to a poor sales or service interaction with the

customer** And The ROI is tremendous***

Revenue increases of 42% Sales costs decreases of 35% Sales cycle length reductions of 25% Margin improvements of 2% Service/support cost reductions of 40% Customer satisfaction rating increases > 25%

* Harvard Business Review ** Forum Corporation ***Insight Technology Group


…And The Benefits Compound Over Time

Benefits of CRM

-$50

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

Year 1 Year 2 Year 3 Year 4 Year 5

Duration of Customer Relationship

Annu

al R

even

ue p

er C

usto

mer

Sales (less sales costs) Improved Margins Referral Revenue Acquisition Savings

Creating ‘intimate’ customer relationships results in lower acquisition costs, more referrals, improved margins and increased sales


The 7 Habits of Highly Effective CRM

1. A complete, real-time understanding of the customer2. Two-way mutually beneficial dialogues with customers3. Sharing customer information across the organization4. Coordination of messages across all points of contact5. Aligned incentives based on customer value6. Organization structured around customers 7. Anticipate customer needs and proactively respond to them


All The CRM Hype In The Marketplace Has Led To A Number Of Misconceptions

1. CRM Is A One-Off Initiative or Project

2. CRM Is Really Direct Marketing On Steroids

3. CRM Is Marketing’s Job

4. We’re Customer Focused Because We’re Constantly Communicating With Our Customers

5. CRM Is Common Sense

6. CRM Is Something I Can Buy or Install

7. It’s Really Expensive

1. It’s An Operating Philosophy That Is Ongoing & Requires Continuous Imprv.

2. CRM Is Highly Targeted, But That Where The Similarities End – Mutually Beneficial & A Dialogue

3. It May Start With Marketing, But CRM MUST Be Enterprise Wide

4. Put Yourself In Your Customer’s Shoes; Barraging Customers With Self-Serving Messages Is Not CRM

5. Yes, It Is Common Sense, But It’s Very Difficult To Scale

6. Technology Is The Enabler That Should Follow A Well Conceived CRM Strategy

7. Absolutely NOT

vs.Myths Reality


Technology Is An Enabler Not A Driver

A Competitively Advantaged Strategy Will Drive Your Technology Choices…

StrategyTactics

Enablers

Technology

PrioritizeCustomers

UnderstandTheir Needs

LeverageInsights

Continuous Learning

CustomerRelationshipManagement

(CRM)

…otherwise you’d be assessing technology in a vacuum


Getting Started...

Customers Put your customers in control of their personal information Assign customers to value tiers Only ask customer for information if you KNOW what you are going to do with it Launch a customer contact team

Technology & Data Integrate customer touchpoints & data

Organization Centralize marketing funds Establish consistent success metrics – LT & ST Develop simple business rules Systematic Learning


Recommendations

Focus on achieving rapid, accumulated results through small incremental steps

Don’t try to “boil the ocean”… start small and grow Think about what the customer really wants Get business issues ironed out first Figure out the processes early Align incentives Be minimalist on the technology, don’t over-engineer Keep it simple


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CRM Case Studies


Bank example: Increase Profits $118 million in 3 years

Millions of Dollars

$32

$30$8

$48 $118

AddNew

Customers

IncreaseClosure

Rate

IncreaseRetention

DecreaseLosses fromUnprofitableCustomers

Sub-totalFrom

CurrentCustomers

Total

Current Customers

* Before project costs

$86


• Customer Data• Contact info (e-mail)

Wireless Telecom Case Study

CustomerRegistration

BillingSystem

OperationalSystem

MarketingDatabase

• Revenue Billing Errors • Connectivity Issues• Dropped call / Coverage

problems

• Outbound Campaigns- Welcome kits

/e-mails- Best Customer

Programs• Customer Profitability,

tenure

Operational Data Layer

Retail

Web Call Center

Results: Monthly churn reduced from 12% to 5%.

Triggers, Business Rules, Pop-up Screens, Recommendations


Success Story - Wireless

Client Top 3 Provider of Prepaid Wireless Services in US with a Customer Base of 1.5mm

Situation• Client had no formal Customer Retention Program in place and had MONTHLY churn

of 10-12%

Solution Developed & implemented 3 retention programs

Customer Reminder – email/outbound calling of soon to deactivate customers Win Back – email recently deactivated customers Welcome – Outbound call to new customers ensuring they had no phone problems

Outcome Within one year

Reducing churn by over 50% to a monthly rate of 4-6% Total impact is $60–$90 million in annual revenues


Wells Fargo Case Study

• Increase on-line Sales & Service dramatically

• Improve coordination of efforts between on-line and off-line channels

• Lack of integrated customer strategy- On-line behavioral insights

could not be translated into off-line marketing strategies

- Inconsistent offers across channels (e.g. consumer credit)

- Customer frustration increased due to lack of cross channel memory

• Lack of integrated customer information was a major cause of lack of coordination

• Create integrated customer information view (detailed transaction behavior across channels)

• Develop new strategies, marketing programs, and decision models to take advantage of this new information

• Implement new processes to execute these plans

• Organize Marketing around new processes

• Skills Inventory, Training and Recruiting to fill gaps

Situation DriversObjective


Wells Fargo Case Study

• More effective integration• Personalized, real-time

offers

• Click through and open rates increased 3x to 6x across product lines

• 80%-100% sales growth for past 2 years

• On-line share of total sales has increased to 17% of total (equivalent of 500 branches!)

• # of service calls fielded by call center is down by 20-25% despite rise in sales volume.

• True real-time service integration while maintaining sales momentum

Results Next StepsSolutions


Success Story - Pharmaceutical

Client Largest Pharmacy Benefits Manager in the U.S. with 60 million patients

Situation Client was marketing through corporate clients rather than directly to members and

patients. Wanted to shift focus to individuals and needed infrastructure, process and analytical help.

Solution Developed & implemented processes, models and tools for marketing direct to

consumers and trained client staff on basics and advanced direct marketing techniques.

Outcome Saved $4 million in first year; targeted calling, drug and channel shifting, infrastructure

savings Estimated NPV of entire project is $200 million

Documents

Customer Relationship Management (CRM)