Customer Relationship Management

Week 9

CRM Framework

Source : Andersen Consulting

Customer Relationship Management

Technology Marketing

Analytics

WarehousingOnline data store

User tools

Direct, InteractiveDialog, Real time

BusinessCustomer Financial

Buzzword Alert

• CRM: Often used to describe any business or marketing approach that claims to target customers, not transactions. Sometimes confused with Customer service, account management, sales force automation, e-commerce, predictive modeling, data mining, data warehousing, database management, database marketing, direct marketing, and wide variety of marketing activity. Used here to describe a systematic business approach using information and on-going dialogue to build long lasting mutually beneficial customer relationships.

• Customer centric: Sometimes used to refer to any awareness that a business has of its customers. Used here to describe an approach to business that uses the customer (not the transaction) as the building block of data management, reporting, goal setting and measurement as well as business and marketing strategy organization and technical infrastructure, and corporate culture and values over time and across sales, marketing, IT, analysis, service, management and support business units.

CRM working definition

• CRM is the – Systematic use of information– To attract and keep customers– Through on-going dialogue– To build long lasting mutually beneficial

relationships

Systematic Use of Information

• Database of customer information– The customer is the base level of data for

storage,reporting,analysis and measurement

• Analysis of customer data to predict likely future behavior– Modeling uses past behavior to predict future behavior

and identifies other predictors as well.

• Identifying and evaluating each relationship– CR are identified, evaluated reevaluated and

continually managed according to current information

To attract and keep customers

• Cost efficient customer acquisition– Profiles used to select likely new customers and offers for

specific customer segments

• Retention efforts focused on most profitable and at risk customers– Continuous process of solidifying relationship with profitable

customers, converting less profitable customers to more profitable and attempting to convert at risk customers before they are lost.

• Shared information across channels for consistent communications– Customer receives consistent offers, service and messages across

sales and service channels

With or Without

• Without CRM– Customer re-enters information

about music preferences every time at log-in

– Customer re-identifies CI every time at CS

– Call center and stores have different pricing from web site

– Customer must return defective CD through the delivery channel-cannot switch between electronic channels and stores.

• CRM in practice– Customer logs onto the Internet

and finds information on favorite music group, advertisements featuring specials on new CDs and dates with ticket offers to next concerts in local area, plus emails telling them about new groups with a similar style or from the same record company.

– Customer reads about CD’s on the Internet, orders through the CS,exchanges at a local record store if CD is defective.

Through on-going dialogue

• Continuous interaction with customers based on analysis– Interactions,offers and messages are

planned,personalized and delivered according to analytic insights

• Real time response on the Internet– Immediate changes in advertising, information,

recommendations, product features and even pricing based on web or email behavior

• Listening to create a sense of intimacy with the customer– 1:1 dialogue through appropriate responses delivered

real time

Web Telephony Integration

Email Integration Capability

To build long-lasting mutually beneficial relationships

• Success measured in customers and customer value– Goals, results even incentives measured in terms of

customers and customer value,not transactions

• Continual reevaluation of customer relationships– On-going measurement to identify profitable, at risk

and underserved customers

• Continual learning about customer needs– Satisfied customers make good business sense

Customer Strategy should be defined and driven by Customer needs

Shopping Buying Using Repeat

Purchasing Evangelizing Complaining

Is it easy to find what I am

looking for?

Do I want to come back

here?

Did I learn anything

new?

Do I trust this Company?

What made them

different from everyone

else?

Was the offer just right for

Me?

Did they addvalue to the product withinformation?

Did theyfollow up?

What should I expect afterthis sale?

Is it safe to buy here?

If I tell themabout myself

will theymake their

product better?

Was the information I

gave them last time used with integrity?

Did it add value?

Was it easy to buy?

Do they remember

me?

Did I have to answer the same

questions again?

Did they useinformationmade duringthe sale tomake theafter-sale

experiencepleasant?

Can I trustthem to

provide aconsistent

experience?

Do they knowwhen I have

made areferral?

Do they care?

Was my complaint satisfied?

Did they remember

that I complained

when I called next?

Did they annoy me

withadditional marketing

after I complained?

At its simplest

• CRM refers to the use of information about a customer to make decisions about how to treat the customer.

The Learning Loop

Customer Strategy

Collect and Distribute CI

Analyze and mine CI

Dialogue and Personalized

Campaign

Track and Learn

Making the Business Case

Building the CRM Organization

At it is most complex CRM comprises an interconnected web of sophisticated, high tech

hardware software, strategies and processes designed to help business quickly, efficiently and

voluminously determine how to treat each customer in order to create a valued experience for both the

business and the customer.

Operations Analytics

Call Center

Customer Service

E-commerce Web

Sales Force Automation Distribution

PartnerCall

behavior analysis Customer

Valuation

RiskAnalysis

Profitability analysis

Needs analysis

Behavioral Modeling

Web Intelligence

Sales analysis

Campaign Management

SegmentationAnd profiling

Quality ofService

Analysis

MonitoringIntegrated

Customer View

A data warehouse builds a strong foundation for CRM infrastructure

Call Center Web Applications

Sales Force Automation

Business Intelligence

CampaignManagement

TrackingReporting

Data Mining

Profitability

Prospect ListsLegacySystems

MarketingDatabase

Real-timeDatabase

Site

LogFiles

Example of warehouse processes architected for CRM

Real time data feeds

Real time data feeds

Staging area for dataDaily batch reportingReal time campaign managementNewslettersPersonalization&Decisioning

Profiling/SegmentationOpportunity IdentificationCampaign managementPerformance measurementPredictive modelingAdhoc and DSS reporting

Results from P, SDM, M loaded into MD and RT DBTo enable real time personalization and decisioning. Single repository for

Contact History

Data transformed and loaded in MD Information from legacy sources normalized Into member and household tables.Time series information kept for historical analysis

Extract data from legacy systems, other sources

Transform data into consistent,clean, customer-level,

knowledge according to pre-setdata definitions

Load and manage dataefficiently

Condition Data

Sources: Surveys,responsehistory,online behavior

Data dictionary designed duringwarehouse design through

enterprise-wide participation andmade available enterprise-wide

Batch processing during off-hours,predefined queries

Examples: Standardize addresses set aside an untouchable control group

Extract, Transfer, Load (ETL)

Customer data should be moved into the warehouse in an consistent and efficient manner

• Treat me as an individual (not a number)

• Demonstrate that you can use information about me in a way that makes working with you valuable

( don’t abuse my information)

• Show me that you really know me no matter where I talk to you.

• Care about my needs/try to anticipate them.

What Customers Want

Creating the CRM organization

Buzzword Alert• Politics

– The result of opposing business priorities across different units that compete for a finite pool of resources

• Change Management– Guiding an organization and its members through significant

alterations in organizational direction and individual responsibilities as quickly and effectively possible

• Organizational design– Managing human systems and hierarchies, with supporting

technical and process infrastructure, in order to most effectively deliver on the mission of the enterprise

Organizing around the Customer

Competing Business Units

Competing Distribution

Competing Products

Competing Channels

Competing Sales Territories

•Who thinks about the customer?

•Who advocates the customer?

•Who doesn’t think about the customer?

• Everyone in an organization needs to think about the customer. To achieve this, an organization must encourage change by providing the tools to make the changes steadily and surely

Changing how an organization thinks Customer centric metrics

Changing organizational processes Pilots,business rules and business case

Changing organizational structure Evolutionary not revolutionary

Changing culture Short term and long term success

Customer Centric Metrics

• Call Duration– Encourages TSRs to make

calls as short as possible, keep costs low

– Creates dissatisfaction

• Customer Retention– Encourages TSRs to satisfy

customers

– Creates loyalty

• Sales Volume– Encourages cannibalization

– Encourages short term product pushes instead of long term CR

• Customer Value Impact– Increases customer value

following interaction– Includes additional

information gathered which is useful for future campaigns

Volume Metrics Customer Centric Metrics

Changing Processes

• There are several ways to change processes without creating fear within an organization– Pilot projects: Enable teams to test processes in an

atmosphere that fosters innovation and resourcefulness.– Business rules:

• Privacy: Do not share names with third parties• Fatigue: Do not call customers more frequently than “n” times.• Channel preference: Do not force a customer to a channel• Dialogue: Record every question that a customer answers and do not

ask the same question more than once every two years

– The business case• Through questions and expectations, it is possible to drive existing

organizational units to use customer data in decision making

Evolutionary Not Revolutionary

• Why not just reorganize everyone from Marketing, IT and other teams contributing resources to the CRM effort?– Why the evolutionary small step approach? – Why not revolution?

• Power may continue to reside in areas without the data, without the metrics or even without the C

• Focus on bureaucratic issues detracts from C focus

– Gives time to build infrastructure for:

• Centralized data• Tools that make data easy to access• Skilled analysts who can mine the data• Metrics that validate C centric programs• Training to bring staff up to speed• Setting senior management expectations and educating

them• Winning kudos for early successes• Creating external enthusiasm rather than resistance.

Changing Structure

• To maintain the momentum of a CRM initiative:– Continually demonstrate value to all

stakeholders– Create a hunger among senior managers for

customer centric and customer value information

– Use input from anyone thinking about the customer.

Forms follows Function

Let structure experts worry about structure which CRM specialists focus on cross functional initiatives.

• Constructing data centers from pilot databases to an enterprise-wide data warehouse• The data warehouse is accessible and easy to use across organization• Fielding campaigns that includes tests and data mining• Sharing results across channels,units and levels of management• Creating more and more complex campaigns involving more and more areas of the enterprise. • Monitoring and reporting results all along the way.

E-channels

• E-channels both complicate and simplify CRM execution:

- Stability- Maintenance- Real time- Personalization- Collaborative filtering- B&M to the web- Branding- E-strategy- Competing channels- Privacy- Security

- Loyalty- Information- Real time- Cost saving- Interactive- Profit driver- Convenience- Customer tracking- Services- Transaction/sales tracking

Complicate Simplify

Are we there yet?

• You know you have a CRM culture when:– Everyone in the organization thinks about the

C– Everyone in the organization listens to the

customer– Reliable service is delivered to C consistently

across all channels– Success is measured in terms of C relationships

( Value, duration, acquisition )

Where Are You on the Road to CRM?

• Think like a customer

• Be a customer

• Build infrastructure to centralize data

• Analyze customer data

• Determine C centric program goals and strategies

• Educate senior management and set expectations

• Identify bottlenecks

• Have owners over customers

• Have centralized customer centric business rules

• Listen to the customer

• Track C behavior across all channels

• Show consistent reliable service across all channels

• Assign value to each customer

• Create loyalty programs

• Have established C centric incentives

• Think like a C

• Listen to the C

• Provide consistent reliable service across all channels

• Track C behavior across all channels

• Assign value to each C relationship

• Create loyalty programs

• Reduce bottlenecks

• Have owners over customers

• Real-time personalized dialogue with customers

• Anticipate customer needs

• Measure success of each relationship

• Share C information with all areas of the enterprise

• Build and maintain long term profitable relationships with C

OrganizationsWith existing CRM culture

OrganizationsTransitioning to CRM culture

Short term goals Long term goals

Summary

• Organizational change is an evolutionary process, not a revolution.

• Choose the parts of the organization that can be changed to focus on first.

• Implementing CRM program also means changing thinking, processes, structure and engraining a customer centric culture in an organization.

• Depending on where your organization stands, there are short and long term steps to take to transition to a CRM company.

Long Term Planning

• Develop a two year plan for making your company more customer centric.

• Include measurable deliverables every three to six months.

• Change from product centric to customer centric metrics.

• Create cross functional teams to develop and manage customer strategy.

• Implement tools that allow people from all areas to access the same CI.

Obstacles

• Getting participation from all areas• Technical problems centralizing data in a

data warehouse• Inter-unit conflict (Marketing-IT)• Managing anxiety and resistance in an

environment change• Focusing resources on new developments

and existing responsibilities.