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How to Hug Your Customers…and
…Get Value with Every Squeeze!
Bob ThompsonCEO, CustomerThink Corporation
Founder, CRMGuru.com
Copyright 2004 CustomerThink Corporation. All Rights Reserved.
SMART CRM Conference
San FranciscoJune 16, 2004
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Topics
Strategy
Hugging
Squeezing
Technology
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
When did CRM really begin?
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
“Please divert your course 15 degrees to the north to avoid a collision.”
“This is the captain of a U.S. Navy ship. Divert your course immediately!”
“This is the aircraft carrier USS Nimitz, accompanied by three destroyers. I demand that you change your course 15 degrees north or counter measures will be taken.”
“This is a lighthouse. It’s your call.”
“Recommend you divert YOUR course 15 degrees to the south.”“No, I say again, divert YOUR course to the south.”
Radio conversation between a US naval ship and Canadian authorities
off the coast of Newfoundland, October 1995.
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Strategy
Power Shift to Customers
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Maturing markets
Global trade
Efficient manufacturing
The Internet
Competing for (Relatively) Scarce Customers
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
J.D. Power 2004 Initial Quality Study
Top 10 Manufacturers– Problems per 100 Cars
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
“Be Distinct or Be Extinct”Tom Peters
Source: The Discipline of Market Leaders, Treacy & Wiersema
Product Leadership
Operational Excellence
Customer Intimacy
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
“It’s incredibly arrogant for a company to believe it can deliver the same sort of product that its rivals do and actually do better for very long. That’s especially true today, when the flow of information and capital is incredibly fast.”
Michael Porter
Beyond Product and PriceProduct and Price Aren’t Enough
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Major Increase 32%
Some Increase 42%
No Change 20%
Some Decline 3%
Major Decline 1%
No Opinion 2%
Source: CRMGuru Online Survey, 1300 Responses, July 2003
74%
4%
Competitive pressures are increasing…
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Major Increase 14%
Some Increase 51%
No Change 26%
Some Decline 5%
Major Decline 1%
No Opinion 3%
Source: CRMGuru Online Survey, 1300 Responses, July 2003
65%
6%
…as product lines get more complex
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Acquire, grow, and retain profitable customer relationships to create a
sustainable competitive advantage.
CRM Vision
CRM Vision
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
CRM is Not New…Or is It?
"The true business of every company is to make and keep
customers.” -- Peter Drucker
What is CRM? 360-degree view of the
customer
Improving quality of customer interaction
New software tools and technologies
Getting right data to right employee
Shift from product to customer orientation
Management fad!
Source: META Group/IMT Strategies
“CRM means creating mutual wins for customers and all company stakeholders.” -- Bob Thompson
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
CRMGuru Study: What is CRM?
“Putting customers at the heart of business”
36% 34%
Sources: CRMGuru Online Surveys: July 2003 and June 2004
“Relationship marketing supported by technology”
16% 15%
“Business strategy to increase customer profitability”
16% 19%“Creating win/win relationships with customers & stakeholders”
23% 23%
“Automation of customer business processes”
9% 7%
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Hugging
What Value Are You Delivering to Your
Customers?
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Video: The Birth of the Modern Consumer
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
How Do Customers Define a Great Relationship?
“Service and value just for me”
“Personal”
“Responsive and proactive”
“Win/Win”
“Asks questions”
“A good deal for the money”
“Quality, consistent performance over time”
“Expertise”
“A history of working together”
“Easy to do business with”
Source: CRMGuru.com
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Service Matters! Identifying At-Risk Customers Analyze purchase data Use frontline staff to gather
feedback Conduct customer research
surveys Analyze A/R problems Use churn models / technology Monitor milestones / events
Source: Griffin
Product Problem
14%
Other9%Competition
9%
Service problems
68%
Why Customers Leave
Source: Cooley
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
We tend to focus on conscious processes…
Consumers Marketers
Conscious Processes
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Unconscious Processes
…but 95% of thought, emotion, and learning occur in the unconscious mind
Consumers Marketers
Conscious Processes
Source: “How Customers Think” by Zaltman
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
LEFT BRAIN
Thinking
uses logic
detail oriented
facts rule
words and language
present and past
math and science
can comprehend
knowing
acknowledges
order/pattern perception
knows object name
reality based
forms strategies
practical
safe
RIGHT BRAIN
Feelinguses feeling
"big picture" oriented
imagination rules
symbols and images
present and future
philosophy & religion
can "get it" (i.e. meaning)
believing
appreciates
spatial perception
knows object function
fantasy based
presents possibilities
impetuous
risk taking
How do your customers feel about the solution and services you provide?
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Relationship Health IndicatorSmall Professional Services Firm
LEFT BRAIN
Thinking
Breadth of services used
Tenure as customer
Financial health
Average contract size
Uses custom services
Pays on time
RIGHT BRAIN
Feeling
Asks for advice
Freely gives input and complaints
Face-to-face meetings
Invited to customer events
Gives an endorsement
Friendly
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Loyalty Leaders Grow Faster, Spend Less
Average LoyaltyLeader
100%85%
0
50
100
150
200
250%
Costs
Average LoyaltyLeader
100%
220%
0
50
100
150
200
250%
Growth
Source: Reichheld
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Southwest’s Performance is Not Accidental
Source: Preliminary Findings from Bristol Group and CRMGuru study of Customer Relationship Quality, October 2003
Global Study of Customer Relationship Quality
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Customer Satisfaction Trends -- Airlines
Source: American Customer Satisfaction Index
50
55
60
65
70
75
80
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Southwest
Continental
Delta
Industry Average
American
Northwest
United
US Air
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Satisfaction matters…sort of
Source: American Customer Satisfaction Index
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Metrics: Keep it simple…
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Would you recommend your airline?
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Why does AOL need to do this?
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
To fill the leaky customer bucket!
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Enterprise Rent-A-CarSuperior Service, Superior Profits
LowestRegionTop Box
CorporateTop Box
CorporateTop 2 Box
FY 95 FY96 FY97 FY98 FY99 FY00 FY 0150
60
70
80
90
100%
8889 90 90
92 93 93
68 6972 72
7577 77
5558
65 65
70 71 71
“At Enterprise, loyalty is everything. If we don’t satisfy customers so that they come back, we can’t build the business.”
Andy Taylor, CEO Enterprise Rent-A-Car
Satisfaction Trends
Source: Reichheld
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Main grocery shop ?
Daily top up ?
Eat now ?
Eat later ?
Fill up the car ?
Buy a TV ?
© Copyright, dunnhumby 2004 — confidential
Tesco: “You are what you eat”
© Copyright, dunnhumby 2004
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
I have to stick to a budget
The microwave is a godsend for me!
I love baking on a Sunday afternoon
I love exotic and adventurous food
I care about the environment
© Copyright,dunnhumby 2003© Copyright, dunnhumby 2004 — confidential
Shopping data leads to greater insight of key customer groups
© Copyright, dunnhumby 2004
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
... making data make sense ...
Pricing/ promotion Strategy
Format Development
Local Store Research
Customer Acquisition
Shopping Analysis
Targeted Communication
Personal Relationships
Better RangingMedia Effectiveness
Data & systems management
Customer Insight
© Copyright, dunnhumby 2004
At Tesco, the “R” in CRM stands forRELEVANCE
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Listen! Profitable CRM Projects Start by Understanding Customer Needs
“If you’re constantly getting feedback from your customers …and you’re willing to listen, you can make the most of the opportunities implicit in those needs.”
Michael Dell, in Direct From Dell
“Businesses survive or decline based on their employees’ ability to listen. Hire the smartest, best people you can get, orient them to customer satisfaction at the expense of all else, then get out of their way and let them work.”
Doug Allred, SVP Customer Advocacy for Cisco Systems
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Squeezing
What’s the Return on Your Customers?
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Does CRM Really Work?
What is the CRM success rate?
Which factors drive success?
What is a realistic payback period?
Do actual benefits meet expectations?
Which applications generate the best
ROI?
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Global study of CRM projects Benefits (Pct of Projects)
Increase customer
satisfaction (51%)
Increase customer
acquisition rate (50%)
Increase share of
customer (48%)
Decrease customer
defection rate (37%)
Decrease front office
staffing costs (33%)
Investment 33% -- less than $50K
24% -- $50K - $250K
28% -- $250K to $2.5M
15% -- over $2.5M
Source: CRMGuru Study of 448 CRM Projects, 2002
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Two-Thirds of CRM Projects Deliver ROI(www.crmguru.com/blueprint)
Metrics Churn Rate
Share of Wallet
Customer Satisfaction
Customer Acquisition Rate
Front Office Staffing Costs
Source: CRMGuru Study of 448 CRM Projects, 2002
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
51% Achieved Payback in 18 Months or Less
Don’t KnowMore than 24
months
Less than 6 months
6 to 12 months
13 to 18 months
19 to 24 Months
Source: CRMGuru Study of 448 CRM Projects, 2002
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Four Factors Drive 72% of Success Customer-centric strategy: using
customer satisfaction and
attrition data, getting customers
involved in planning
Frontline training and support:
explaining value of CRM,
providing new skills training
Organizational change: workflow
design, changing roles and
responsibilities
Goals measured statistically: current
performance and CRM goals
measured
Source: CRMGuru Study of 448 CRM Projects, 2002
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Potential CRM benefits are strategic…
0 20 40 60 80 100 120 140 160 180 200
Decrease costs andexpenses
Enhance executivedecision making
Improve internalproductivity
Increase customersegment profitability
Increase salesrevenue
Gain competitiveadvantage
Improve loyalty /reduce churn
#1 Benefit #2 Benefit #3 Benefit
Source: CRMGuru Study of CRM projects, 2004
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
…but actual benefits are more tactical
- 50 100 150 200 250 300
Increased customersegment profitability
Improved loyalty /reduced churn
Gained competitiveadvantage
Decreased costsand expenses
Increased salesrevenue
Enhanced executivedecision making
Improved internalproductivity
Major Moderate Minor
Source: CRMGuru Study of CRM projects, 2004
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
CRM underperforms on strategic benefits
0 5 10 15 20 25
Percentage of Total Responses
Decrease costs andexpenses
Enhance executivedecision making
Improve internalproductivity
Increase customersegment profitability
Increase salesrevenue
Gain competitiveadvantage
Improve loyalty /reduce churn
Potential
Actual
Source: CRMGuru Study of CRM projects, 2004
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Success is in the Eye of the Beholder
Yes67%
No17%
Don’t Know16%
17% 26% 19%
14% 34% 29%
17% 46% 33%
19% 42% 36%
0% 20% 40% 60% 80% 100%
Percent of Responses (Exclude Don't Know or N/A)
Partners
Customers
Employees
Management
Failure (0-4) Troubled (5-7) Success (8-10)
Is your CRM project a Success?
Source: CRMGuru Study of CRM projects, 2004
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Sales applications drive a higher percentage of “major” performance improvements
13%
10%
23%
9%
14%
13%
14%
15%
21%
27%
12%
20%
11%
10%
19%
2%
28%
12%
21%
16%
9%
Marketing Sales Service
Increased CustomerSegment Profitability
Improved Loyalty /Reduced Churn
Enhanced ExecutiveDecision Making
Decreased Costs andExpenses
Improved InternalProductivity
Increased SalesRevenue
Gained CompetitveAdvantage
Source: CRMGuru Study of CRM projects, 2004
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
ConclusionsBased on ROI and perceptions, the overall CRM
success rate is about 70%
To improve ROI, focus on customer needs,
organization issues, and appropriate metrics
Strategic gains (loyalty, growth, profitability) lag
behind tactical benefits (productivity, cost)
Sustainable competitive advantage probably comes
with larger or riskier projects
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Technology
Does CRM IT Matter?
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
If you had an unlimited budget to buy all this…
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
…could you build these?
Guggenheim MuseumNew York City
FallingwaterPennsylvania
Unity Temple
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Information Technology: Necessary but Not Sufficient for CRM Success
Necessary: A condition which must hold
for a result to be true, but which does
not guarantee it to be true.
Sufficient: A condition which, if true,
guarantees that a result is also true.
(However, the result may also be true if
the condition is not met.)
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
CRM spending is trending up
Major Increase 19%
Some Increase 51%
No Change 19%
Some Decline 4%
Major Decline 1%
No Opinion 6%
Source: CRMGuru Online Survey, 4400 Responses, July 2003
70%
5%
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
For competitive advantage, be a first-mover to solve more complex problems
CRM Maturity
Po
ten
tial
Co
mp
etit
ive
Ad
van
tag
e
Low High
Automate
Streamline internal sales and service processes.
More of the same, done faster and cheaper.
SFA, Call Center
Single Channel
Collaborate
Engage customers and partners for win/win/win
Enable many-to-many relationship networks
C-Biz Solutions
CollaborativeNetwork
Innovate
Design different, more effective processes
Use new channels and customer touch points
eCRM, PRM
Multi- Channel
High
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
“The Internet as a sales channel represents only a fraction of its potential to business. The real
potential lies in its ability to transform relationships with the traditional supplier-vendor-customer chain.”
Michael Dell
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Transform your customers’ supply chain from linear point-to-point relationships…
Supplier Partner CustomerManufacturer
CRM PRM CRM
Relationship Management: “Sell-Side” Focus on Lifetime Value, Customer Experience, Revenue/Profit Growth
SCMSCM SCM
Supplier Management: “Buy-Side” Focus on Cost, Cycle Time, Responsiveness
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
…to optimized value networks
Suppliers Customer
Manufacturer
Partners
Collaborative Relationships: Focus on Mutual Value, Profit, Efficiency, Integrated Processes
GlobalCompetition
Power Shift to Customers
InternetAdoption
Internet StandardsWeb Services
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Virtual Extended Enterprise
Cisco Systems 87% of Orders Placed
Online
25% Increase in Customer Satisfaction
70% reduction in order cycle time
$175M savings in annual operating costs
45% inventory reduction for Cisco and its partners
Source: IBM
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Closing Thoughts
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
It’s a great time for CRM technology buyers!
CRM’s reputation is a mixture of hope, hype,
and confusion
Executives are investing in smaller, more
focused projects with clear ROI
Growing awareness of CRM fundamentals
(software is an enabling tool)
CRM software industry is restructuring to meet
the requirements of post-CRM boom
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Management and people issues outweigh technology challenges
0% 10% 20% 30% 40% 50% 60%
Other
Selecting service providers
Selecting software vendors
Training end users
Executive buy-in
Understanding IT trends
Integration to legacy apps
Customer data bases
Process redesign
Customer-based metrics
Organization change
Strategy and planning
ManagementPeopleTechnology
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
When CRM Doesn’t Work, Why Not?
It’s not about Customers
• Ensure customers will perceive value
It’s not about Relationships
• Relationships are two-way streets
It’s not about Management
• You can’t manage what you don’t measure
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Pogo by Walt Kelly, from Earth Day 1971
We Have Met the Enemy and
He is Us
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
A “Smart” Way to Succeed with CRMStrategy for Customer Value
Metrics to Guide Journey
Alignment of Human Resources
Redesign of Customer Processes
Technology to Optimize Results
Drivers
En
ablers
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
What’s the “One Thing” That is Distinctive about Your Customer Relationships?
The Secret to Strategic CRM Success
How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 CustomerThink Corporation. All Rights Reserved.
Thank You!Bob Thompson
CEO, CustomerThink CorpFounder, CRMGuru.com
1261 Cortez Ave.Burlingame, California 94010
United [email protected]
650-343-8529