MAR 4860 - Chapter Slides

CUSTOMER RELATIONSHIP MANAGEMENTCUSTOMER RELATIONSHIP MANAGEMENT

CONCEPTS AND TECHNOLOGIESCONCEPTS AND TECHNOLOGIES

Chapter 1: Introduction to CRMChapter 1: Introduction to CRMModule 1Module 1

Chapter Objectives

• Explain the four major perspectives on CRM: strategic, operational, analytical and collaborative.

• Identify the common misunderstandings about CRM.

De elop a definition of CRM• Develop a definition of CRM.

• Describe the six constituencies or parties that have a vested interest in CRM.

• Describe how CRM issues vary across industries, and

• Explain five generic models of CRM, particularly the IDIC and the Gartner Group models.

Taking a very neededvacation in the Bahamas

B i h

Imagine These Scenarios

Buying a home computer for the first time

MAR 4860 Lecture Worksheet Chapter 1 Module 1

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Selected Definitions of CRM 1

CRM is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way.

CRM i th f i ll t f CRM is the process of managing all aspects of interaction a company has with its customers, including prospecting, sales, and service. CRM applications attempt to provide insight into and improve the company/customer relationship by combining all these views of customer interaction into one picture.


CRM is an integrated approach to identifying, acquiring, and retaining customers. By enabling organizations to manage and coordinate customer interactions across multiple channels, departments, lines of business, and geographies, CRM helps organizations maximize the value of every customer interaction and drive superior corporate performance.


CRM is an integrated information system that is used to plan, schedule and control the pre-sales and post-sales activities in an organization. CRM embraces all aspects of dealing with prospects and customers, including the call center, sales force, marketing, technical support and field service. The primary goal of CRM is to improve long-term growth and profitability through a better understanding of customer behaviour. CRM aims to provide more effective feedback and improved integration to better gauge the return on investment (ROI) in these areas.


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CRM is a business strategy that maximizes profitability, revenue and customer satisfaction by organizing around customer segments, fostering behaviour that satisfies customers, and implementing customer-centric processes.

Core Definition of CRM

CRM is the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit. It is grounded on high quality customer-related data and enabled by information technology.

This is the best definition for CRM and the one you will This is the best definition for CRM and the one you will use in this class!use in this class!

Misunderstandings About CRM

1. CRM is database marketing - NO

2. CRM is a marketing process - NO

3. CRM is an IT issue - NO

4. CRM is about loyalty schemes - NO

5. CRM can be implemented by any company - NO


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Chapter 1: Introduction to CRMChapter 1: Introduction to CRMModule 2Module 2

Type of CRMType of CRM Dominant Dominant CharacteristicCharacteristic

1 Strategic

Strategic CRM is a core customer-centric business strategy that aims at winning and keeping profitable customers.

Operational CRM focuses on the automation of customer-

Four Types of CRM

2 Operational

pfacing processes such as selling, marketing and customer service.

3 Analytical

Analytical CRM focuses on the intelligent mining of customer-related data for strategic or tactical purposes.

4 Collaborative

Collaborative CRM applies technology across organizational boundaries with a view to optimizing company, partner and customer value.

Business Orientations

1. Product-oriented businesses believe that customers choose products with the best quality, performance, design or features.

2. Production-oriented businesses believe that customers choose low-price products.

3. Sales-oriented businesses make the assumption that if they invest

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enough in advertising, selling, public relations (PR) and sales promotion, customers will be persuaded to buy.

4. A customer or market-oriented company shares a set of beliefs about putting the customer first. It collects, disseminates and uses customer and competitive information to develop better value propositions for customers. A customer-centric firm is a learning firm that constantly adapts to customer requirements and competitive conditions.


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STRATEGIC: Customer-Centric Orientation

Voice of CustomerVoice of Customer

C t C t i

Customer Requirements

Value Propositions

1

Market ResearchMarket

Research

Competitor Analysis

Competitor Analysis

Customer-Centric Management

Systems

Structure Rewards & Compensation

Operational CRM

Marketing automationMarket segmentationCampaign managementEvent-based (trigger) marketing

Sales force automationAccount managementLead management

2EXAMPLE

The Limited

• Operates over 2,700 specialty stores.

• Had a database of over 25 million buyers and wanted to better understand customers and tailor marketing campaigns for all brandsLead management

Opportunity managementPipeline managementContact managementQuotation and proposal generationProduct configuration

Service automationCase ( incident or issue) managementInbound communications managementQueuing and routingService level management

campaigns for all brands.

• Installed CRM software & now differentiates and segments customers based on interests, prior to campaigns.

• Believes that key to successful CRM lies in applying analytics to a single, customer-centric database, allowing a 360o

view of customer.

Analytical CRM

Concerned with capturing, storing, extracting, integrating, processing, interpreting, distributing using and reporting customer-related data . WOW! Think about what each bolded word means.

Internal sources of customer data

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Sales data (purchase history), financial data (payment history, credit score), marketing data (campaign response, loyalty scheme data) and service data.

External sources of customer data

Geo-demographic and life-style data from business intelligence organizations.


2

Examples of Operational & Analytical CRM

Operational CRM Analytical CRM

A telephone customer service representative needs to access a customer record when she receives a customer request.

The telephone company wants to know which customers are signalingan intention to switch to a different supplier.

A hotel receptionist needs access to a guest’s history so that she can reserve the preferred type of room –smoking or non-smoking, standard or deluxe.

The hotel company wants to promote a weekend getaway to customers who have indicated their complete delight in previous customer satisfaction surveys.

A sales rep needs to check a customer’s payment history to find out whether the account has reached the maximum credit limit.

The sales rep wants to compute his customer’s profitability, given the level of service that is being provided.

Beneficiaries of Analytical CRM

The Customer

Analytical CRM can deliver timely, customized, solutions to the customer’s problems, thereby enhancing customer satisfaction.

The Company The Company

Analytical CRM offers the possibility of more powerful cross-selling and up-selling programs, and more effective customer retention and customer acquisition programs.

Here’s what some companies had to say:

http://www.youtube.com/watch?v=vAADrN9NUAQ&feature=related

http://www.youtube.com/watch?v=1iMOrAXk70o&feature=related

http://www.youtube.com/watch?v=pYIcz4a0evc&feature=related

CRM Constituencies

1. Companies implementing CRM

2. Customers and partners of those companies

3. Vendors of CRM software

4. CRM application service providers (ASPs)

5. Vendors of CRM hardware and infrastructure

6. Management consultants

We will also refer to this as the We will also refer to this as the CRM EcosystemCRM Ecosystem


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The IDIC Model

Identify who your customers are and build a deep understanding of them

Differentiate your customers to identify which customers have most value now and which offer most for the future.

Interact with customers to ensure that you understand customer expectations and their relationships with other suppliers or brands

Customize the offer and communications to ensure that the expectations of customers are met.

The Qci Model

The CRM Value Chain

The CRM Value Chain

CustomerPortfolioA l i

CustomerIntimacy

NetworkDevelopment

ValueProposition

ManageThe

Primary Analysis (SCOPE) Development CustomerLifecycle

Leadership and culture

Data and information technology

People

Processes

Primarystages

Supportingconditions


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Payne’s Five-Process Model

The Gartner Competency Model

1. CRM Vision: Leadership, Social Worth, Value Proposition

2. CRM Strategy: Objectives, Segments, Effective Interaction

Culture and StructureCustomer Understanding

People: Skills,Competencies

4. Organizational Collaboration3. Valued Customer Experience

Understand RequirementsMonitor Expectations S ti f ti C titi

8. CRM Metrics: Cost to Serve, Satisfaction, Loyalty, Social Costs

7. CRM Technology: Applications, Architecture, Infrastructure

6. CRM Information: Data, Analysis, One View Across Channels

5. CRM Processes: Customer Life Cycle, Knowledge Management

Incentives and CompensationEmployee Communications

Partners and Suppliers

Satisfaction vs.Competition Collaboration and Feedback

This is an important model. Be sure to read other material in Blackboard


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CUSTOMER RELATIONSHIP MANAGEMENT

CONCEPTS AND TECHNOLOGIES

Chapter 2: Understanding RelationshipsChapter 2: Understanding RelationshipsModule 1

Chapter Objectives

Recognize a relationship.

Describe the attributes of successful relationships.

Explain the importance of trust and commitment within a relationship.

Explain why companies and customers are sometimes Explain why companies and customers are sometimes motivated to establish and maintain relationships with each other, and sometimes not.

Explain the meaning and importance of quantitative methods of value and perform simple calculations for LTV.

Explain all of the components of the satisfaction-profit chain – Figure 2.6.

How would you define a relationship?

Think about the BEST relationship you have.Think about the BEST relationship you have.

Answer these questions.Answer these questions.

What is a Relationship?

What are the elements of a great relationship?

What are the main interactions or activities involved in building and maintaining a strong customer relationship?


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What is a Relationship?

A relationship is composed of a series of interactive episodes between parties over time.

Episodes are time bound (they have a beginning and an end) and are nameable.

Episodes are composed of a series of interactions. An p sodes a e co posed o a se es o e ac o sinteraction consists of action, and the response to that action.

Is a relationship more than interaction-over-time?

What about emotional content ?

Do relationships have some type of connection, attachment or bond?

Relationships as Social Constructs

There are five general phases that customer-supplier relationships go through:

1. Awareness

2. Exploration

3. Expansion

4. Commitment

5. Dissolution

A Core Attribute: TRUST

Some things to keep in mind…

Benevolence. A belief that one party acts in the interests of the other.

Honesty. A belief that the other party’s word is reliable or credible.

Competence. A belief that the other party has the necessary expertise to perform as required.

Trust emerges as parties share experiences, and interpret and assess each other’s motives.

As they learn more about each other, risk and doubt are reduced.


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Another Core Attribute: COMMITMENT

Commitment arises from trust, shared values, and the belief that partners will be difficult to replace.

Commitment motivates partners to cooperate in order to preserve relationship investments.

Commitment means partners forgo short-term Commitment means partners forgo short term alternatives in favour of more stable, long-term benefits associated with current partners.

Commitment entails vulnerability, leaving partners open to opportunism.


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Chapter 2: Understanding RelationshipsModule 2

CRM Goals –Increasing Value

• To get more customers• To acquire profitable ones

• To keep them longer – retain them• To win back profitable ones

T li i t fit bl

Why are Companies Interested?

• To eliminate unprofitable ones

• To grow them into bigger & more profitable ones• To upsell additional products• To cross-sell other products and bundle them• To obtain referrals and word-of mouth benefits• To reduce service and operational costs

Source: Peppers & Rogers (2004). Managing Customer Relationships, P. 5

What Happens When A Customer Leaves?

Year

Company A (5% churn rate) Company B (10% churn rate)

Existing customers

New customers

Total customer

base

Existing customers

New customers

Total customer

base

2001 1000 100 1100 1000 100 1100

2002 1045 100 1145 990 100 1090

2003 1088 100 1188 981 100 1081

2004 1129 100 1229 973 100 1073

2005 1168 100 1268 966 100 1066

1,100 * 0.95 (5% churn rate) = 1,045


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Benefits from Managing Customer Retention

Reduced marketing costs

Fewer dollars need to be spent replacing churned customers

Better customer insight

Suppliers are able to develop a better understanding of customer requirements and expectations Customers also comecustomer requirements and expectations. Customers also come to understand what a supplier can do for them.

Consequently, suppliers become better placed to identify and satisfy customer requirements profitably, selling more product and service to the retained customer.

Over time, as relationships deepen, trust and commitment between the parties is likely to grow, and revenue and profit streams from customers become more secure.

The Customer Journey

SuspectDoes the potential customer fit your target market profile? (Also called lead)

ProspectThe customer fits the target market profile and is being approached for the first time.

First-time customer The customer makes a first purchase.

R t tThe customer makes additional purchases. Your

M j it

Advocates

Loyal Customers

Repeat customerp

offer plays a minor role in the customer’s portfolio.

Majority customerThe customer selects your company as supplier of choice. You occupy a significant place in the customer’s portfolio.

Loyal customerThe customer is resistant to switching suppliers, and has a strong positive attitude to your company or offer.

AdvocateThe customer generates additional referral dollars through positive word-of-mouth.

Suspects

Prospects

First-Time Customers

Repeat Customers

Majority Customers


2

rofi

t

Price Prem ium

Referrals

Cost Savings

Revenue G row th

Base Profit

Acquis ition

Customer Retention: Link to Profitability

Com

pan

y Pr

Year

Source: Reichheld (1996)

Customer Value: The economic value of the customer relationship to the firm – expressed on the basis of contribution margin or net profit

How are Customer Value & CRM Linked?Why are Companies Interested?

CRM is the practice of determining corporate practices and methods that will maximize the lifetime value of each individual customer to the firm

Lifetime Value Defined

Lifetime value (LTV) is the present day value of all net margins earned from a relationship with a customer, customer segment or cohort.

To compute LTV, all historic net margins are compounded up to today’s value and all future net margins are discounted back t t d ’ lto today’s value.

Estimates of LTV potential look to the future only, and ignore the past.

A customer that appears to be valuable on the basis of the gross margins generated will most likely be less profitable once cost-to-serve the customer is taken into account.


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Lifetime Value (LTV)

PER UNIT EXPECTATIONS

Price

Cost of goods

Contribution margin

Direct expenses

All t d t

$100

-10

$90

-10

10Allocated costs

Expected net profit

X number of units purchased per time frame (year)

X number of time frames

Unadjusted lifetime profit expectations

-10

$70

x12

x 5

$4,200

Value of money over hasn’t been taken into consideration

Effect of Discounting on LTV

Undiscounted profit over 5 years

Year 0 -$50

1 +$30

2 +$40

3 +$55

Year 0 -$50.00

1 +$30/1.15 = +$26.092 +$40/1.152= +$30.253 +$55/1.153= +$36.16

Discounted profit over 5 years (15% discount rate)

3 +$55

4 +$72

5 +$88

$235

3 $55/1.15 $36.164 +$72/1.154= +$41.175 +$88/1.155= +$43.76

$127.43

The net present value of 5 years of profit earned from this customer is $127.43

Cohort Value: Impact of Customer Retention Rate

Year Profit per Customer

($)

NPV at 15% Discount

($)

Customer Retention Rate (%)

# of Customers

Total Annual Profit ($)

0 -100 100,000 -10,000,000

1 50 43.48 60 60,000 2,608,800

2 70 52.93 70 42,000 2,223,062

3 100 65.75 75 31,500 2,071,125

4 140 80.00 80 25,200 2,016,000

5 190 94.53 85 21,420 2,024,776

6 250 108.23 90 19,278 2,086,364

7 320 120.30 92 17,736 2,133,654

8 400 130.72 94 16,672, 2,179,346

9 450 127.84 95 15,838 2,024,744

10 500 123.15 96 15,204 1,872,372


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KEY Points About LTV

So why is LTV so important? To properly target our sales and retention efforts

To separate those that are profitable from those hurting profits.

To understand: o where to put retention dollars

o the value of each retention strategy

o where to put acquisition dollars

o how much to spend on acquisition

What do you need to calculate the LTV? Insight into future buying behavior

Probabilities of buying products 1-n over the next X time periods

Margins earned from those products

Periodic costs of customer management

Plus, for new customers - costs of customer acquisition

And finally - Discount rate

Why Companies DON’T Want Relationships?

1. When they fear loss of control. Relationships are bi-lateral arrangements, which involve giving up unilateral control over resources.

2. When exits costs are high. Not all relationships survive. It is not necessarily easy or cost-effective to exit a

l ti hirelationship.

3. Resource commitment. Relationships require the commitment of scarce resources such as people, time and money.

4. When opportunity costs are high. If resources are committed to one customer relationship, they cannot be used for another

Why Business Customers Want Relationships?

1. When the product or its applications are complex, for example, networking infrastructure.

2. When the product is strategically important or mission-critical, for example, core raw materials supply for a manufacturer.

3 Wh th d t i i t f3. When there are down-stream service requirements, for example, for machine tools.

4. When the financial risk is high, for example, in buying large pieces of capital equipment.

5. When reciprocity is expected. A financial audit practice may want a close relationship with a management consultancy, so that each party may benefit from referrals by the other.


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Why Consumers Want Relationships?

1. Recognition. Customers may feel more valued when recognised and addressed by name.

2. Personalization. Products or services can be customized.

3. Power. Relationships with suppliers can be empowering.

4 Risk reduction A relationship can reduce or even perhaps4. Risk reduction. A relationship can reduce, or even perhaps, eliminate perceived risk.

5. Status. Customers may feel that their status is enhanced by a relationship with a supplier.

6. Affiliation. People’s social needs can be met through commercially based, or non-commercially based, relationships.

Why Business Customers DON’T?

1. Fear of dependency

2. Lack of perceived value in the relationship

3. Lack of confidence in the supplier.

4. Customer lacks relational orientation

5. Rapid technological changes


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Chapter 2: Understanding RelationshipsChapter 2: Understanding RelationshipsModule 3

The Satisfaction-Profit Chain

Customer Customer SatisfactionSatisfaction

Customer Customer LoyaltyLoyalty

Business Business PerformancePerformance

Understand customer requirements

Meet customer expectations

Deliver customer value

Behavioral loyalty

Attitudinal loyalty

Revenue growth

Share of customer

Customer tenure (retention)

Customer Behavior

E t ti

EXPECTATIONS EXPERIENCE = EVALUATIONx

Before Purchase Purchase Post-Purchase

Expectations Exceeded

Expectations Met

Expectations Not Met

• Spoken Promises

• Perceived Alternatives

• Unspoken Promises

• Past Experiences

• Personal Values

• Personal Needs

• Word of Mouth

• Outcomes

• Processes

• Judgments


1

Product Quality

Price CUSTOMER SATISFACTION

Relatively easy for competitors to imitate

Drivers of Customer Loyalty

CUSTOMER LOYALTY

Service Quality

Perceived Value

ReliabilityResponsivenessAssuranceTangiblesEmpathy

CUSTOMER DELIGHT

Commitment or attachment to a brand,

store, manufacturer, service provider, or other

Behavioral/Functional Commitment (objective & measurable)

Is the customer active?

How much time is spent?

What’s the proportion of visits/purchase frequency?

How does the customer cooperate?

Word of mouth (referrals)?

Measuring Customer Loyalty

RFM – KEY MEASURE – stands for Recency, Frequency and Monetary Value

Attitudinal/Emotional Commitment (subjective & difficult to capture & measure)

Trust

Beliefs and psychological commitment - predisposition

Preferences and intent to buy (called propensity)

Emotional bonding

Switching cost is too high – too much has been invested

Behavioral outcomes – satisfaction and service quality

Levels of Customer Loyalty

Level of Loyalty Purchases Over Time

Undivided Loyalty 1 1 1 1 1 1 1 1 1

Occasional Switcher 1 1 1 2 1 1 3 1 1

Switched Loyalty 1 1 1 1 1 1 2 2 2

Divided Loyalty 1 1 1 2 2 2 1 1 1

Indifference 1 2 3 4 2 1 3 4 3

Source: Zikmund, McLeod, and Gilbert (2003).


2

highCRM

Business Performance

share of customer

spend

few

low

manyNumber of customers

Traditional marketing

American Customer Satisfaction IndexAmerican Customer Satisfaction Index

Source: http://www.theacsi.org/


Source: http://www.theacsi.org/


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Reichheld (2001) developed a tool to measure loyalty called the Loyalty Acid Test. This tool was designed to monitor and diagnose the health of key relationships. You can view a sample of it at:

http://www.loyaltyrules.com/loyaltyrules/acid_test_customer.html

Reichheld expanded on one of the questions from the Loyalty Acid Test. In his book The Ultimate Question, Reichheld (2006) explains how a customer’s

Examples of Loyalty Measures

likelihood of recommending a company to a friend is a key indicator of loyalty. The metric, called Net Promoter Score or NPS, categorizes your customers into three groups: promoters, passives, and detractors. NPS is considered a predictor of good profits and true growth. For more, visit:

http://www.netpromoter.com/np/index.jsp

http://www.destinationcrm.com/Articles/PrintArticle.aspx?ArticleID=55703

Looking for Loyalty?CRM Magazine


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Chapter 3: Planning & Implementing CRM Chapter 3: Planning & Implementing CRM ProjectsProjects

Module 1Module 1

Chapter Objectives

To identify the five major phases in a CRM implementation

Recognize a number of tools and processes that can be applied in each phase of ancan be applied in each phase of an implementation.

Explain the importance of project management and change management throughout the implementation process.

Five Major Phases of a CRM Project

Strategy Foundation Needs & Partner

Implement Evaluate

11 22 33 44 55


1

Develop the CRM Strategy

Situation analysis

Commence CRM education

Develop the CRM vision

Set priorities

Strategy

Establish goals and objectives

Identify people, process and technology requirements

Develop the business case

Gartner Outlines 3 Steps to a Successful CRM Strategy: The economic upswing spawns a return of the $100 million CRM project, according to a Gartner analyst. By Juan Martinez - Posted Apr 21, 2010http://www.destinationcrm.com/Articles/PrintArticle.aspx?ArticleID=66669

The deliverable of this phase of CRM planning is a CRM Business Case and Proposal. You can also refer to this as the CRM Strategic Plan or Strategy. The key components of a CRM Strategic Plan are:

Summary of Current Situation (where we are today)

Mission statement (who we are and what we do)

Vision statement (where we are going)

The CRM Strategic Plan & Business Case

Vision statement (where we are going)

Summary of Desired State (what we are going to look like)

Gaps and opportunities (what we must change)

Goals and objectives (what we want to accomplish and why)

Critical success factors (how we will measure our success)

Strategies (how we are going to achieve our goals)

Resources and requirements (what we need to get there)

Costs and Benefits (what will it cost us and what will we gain)

The Eight Building Blocks of Customer-Centricity

1. Customer Vision

3. ValuedCustomer

4. OrganizationalCollaboration

2. Customer-Centric Strategy

Source: Gartner Group

8. Metrics

CustomerExperience

Collaboration

5. Customer Processes

7. Technology, Including CRM

6. Customer Information


2

Situation Analysis: Customer Strategy Cube

Channels

O4

AB

C

Customers or segments

Offers

1 2 3 4 5

O1

O2

O3

Situation Analysis: The One-to-One Gap Tool

The One-to-One Gap Tool rates the company culturally and organizationally based on the

Customer Relationship Management

TThhee OOnnee--ttoo--OOnnee GGaapp TTooooll Source: Is Your Company Ready for One-to-One Marketing? By Don Peppers, Martha Rogers & BobDorf, Harvard Business Review. January-February 1999.

Instructions: 1) This exercise is to be administered to employees at various levels and in various functions in your

company. It is designed to capture a robust analysis of how your company sees itself both culturally and organizationally.

2) It should also be given to a representative group of customers, with the language tailored

appropriately, in order to expose the gap between internal and external perceptions.

3) For each question listed below, select the statement that most closely reflects your opinion of the company as you view it today – not as you think it should be or it might be in the future.

CUSTOMER RELATIONSHIPS Question 1. How effectively does the company differentiate its customers?

1. We do not differentiate among customers.

2. We try to differentiate among customers.

3. We collect and use information gleaned from interactions with customers to differentiate each customer and


TThhee OOnnee--ttoo--OOnnee GGaapp TTooooll Source: Is Your Company Ready for One-to-One Marketing? By Don Peppers, Martha Rogers & BobDorf, Harvard Business Review. January-February 1999.

Instructions: 1) This exercise is to be administered to employees at various levels and in various functions in your

company. It is designed to capture a robust analysis of how your company sees itself both culturally and organizationally.

2) It should also be given to a representative group of customers, with the language tailored

appropriately, in order to expose the gap between internal and external perceptions.

3) For each question listed below, select the statement that most closely reflects your opinion of the company as you view it today – not as you think it should be or it might be in the future.

CUSTOMER RELATIONSHIPS Question 1. How effectively does the company differentiate its customers?

1. We do not differentiate among customers.

2. We try to differentiate among customers.

3. We collect and use information gleaned from interactions with customers to differentiate each customer and

EXPERT OPINION

Source: Peppers, Rogers, & Dorf (1999)

following criteria:to evaluate the importance of each relationship.

4. We have a continuously updated customer knowledge database that provides all the critical business information about our relationships with individual customers.

Question 2. What steps has the company taken to improve the total experience of its customers?

1. We pay little or no attention to the total experience of customers.

2. We know all the points where customers are in contact with the business, and we manage these areas effectively.

3. We conduct frequent surveys with selected customers and make improvements based on their feedback.

4. We have a continual dialogue with each customer and use well-developed methods to improve our relationships.

Question 3. How effectively does the company measure and react to customers’ expectations?

1. We make no effort to understand our customers’ expectations.

2. We have some idea of our customers’ expectations and use them in building relationships.

3. We periodically solicit customers’ input about expectations and take actions to improve the relationships where possible.

4. We work as a team with our customers to ensure that their expectations are met or exceeded.

Question 4. How effectively does the company understand and anticipate customers’ behavior?

1. We pay little or no attention to the behavior of our customers.

2. We understand the trends and buying patterns of our customers and consider them when making critical decisions.

3. We collect data on our customers’ preferences and other behaviors and use that information in our business planning.

4. We maintain a profile of each customer and refer to it when dealing with customers.

to evaluate the importance of each relationship.

4. We have a continuously updated customer knowledge database that provides all the critical business information about our relationships with individual customers.

Question 2. What steps has the company taken to improve the total experience of its customers?

1. We pay little or no attention to the total experience of customers.

2. We know all the points where customers are in contact with the business, and we manage these areas effectively.

3. We conduct frequent surveys with selected customers and make improvements based on their feedback.

4. We have a continual dialogue with each customer and use well-developed methods to improve our relationships.

Question 3. How effectively does the company measure and react to customers’ expectations?

1. We make no effort to understand our customers’ expectations.

2. We have some idea of our customers’ expectations and use them in building relationships.

3. We periodically solicit customers’ input about expectations and take actions to improve the relationships where possible.

4. We work as a team with our customers to ensure that their expectations are met or exceeded.

Question 4. How effectively does the company understand and anticipate customers’ behavior?

1. We pay little or no attention to the behavior of our customers.

2. We understand the trends and buying patterns of our customers and consider them when making critical decisions.

3. We collect data on our customers’ preferences and other behaviors and use that information in our business planning.

4. We maintain a profile of each customer and refer to it when dealing with customers.

Customer Relationships Partnerships Knowledge Strategy Employee Management Processes Technology Competitive Strategy

CRM Education

The Institute of Direct Marketing - http://www.theidm.com/

American Marketing Association - http://www.marketingpower.com/

Websites and online communities

● http://www.1to1media.com/Home.aspx

This is one of the most used websites in this course. In order toThis is one of the most used websites in this course. In order to search for articles and access them, you will need to register. Please be sure to SIGN IN at the top right hand corner and register, using your FIU email.

● http://www.destinationcrm.com/

● http://www.customerthink.com/

● http://www.crm2day.com/

● http://searchcrm.techtarget.com/


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A vision must focus on the future and serve as a concrete foundation for the organization. Unlike goals and objectives, a vision does not fluctuate from year to year but serves as an enduring promise A CRM

“A CRM vision is a powerful means of creating shared values and a customer focus…in a sense, these shared values are the ‘glue’

CRM Vision

but serves as an enduring promise. A CRM vision should paint a clear picture of what your company will look like to your customers when you have achieved your CRM objectives. A vision must give the people the feeling that their lives and work are intertwined and moving toward recognizable, legitimate goals.

shared values are the glue that holds the organization together.”

Paint the picture…

Source: Payne (2006)

The Ritz-Carlton is a place where the genuine care and comfort of our guests is our highest mission.

We pledge to provide the finest personal service and facilities for our guests who will always enjoy a warm, relaxed, yet refined ambience.

Ritz-Carlton Hotels

Examples of CRM Visions

y j y , , y

The Ritz-Carlton experience enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests.

Ritz-Carlton Gold Standards

Check out the company’s site & read the Gold Standards:

http://www.ritzcarlton.com/corporate/about_us/gold_standards.asp

Examples of CRM Visions

Harrah’s Entertainment

"Each of our brands will be the overwhelming first choice for casino entertainment of its targeted customers.“

Harrah’s Code of Commitment

http://www.harrahs.com/images/PDFs/Harrahs_Code_of_Commit_2006_English.pdf

**Watch the video interview with the CIO of Harrah’s posted under Supplemental Materials


4

More CRM Vision Statements

We will work with our members in a trust-based relationship to represent their interests, and to satisfy their needs for high value, security, and peace of mind in motoring, travel, and home.

Nurturing relationships one cup at a time. Deliver a customer experience that consistently developscustomer experience that consistently develops enthusiastically satisfied customers in every market in which we do business.

Build and maintain long-term relationships with valuable customers by creating personalized experiences across all touch-points and by anticipating customer needs and providing customized offers.

Nothing is more important than making every user successful.

Setting Priorities

Quick Hits StrategicHigh

4

56

Prioritization Matrix

Considerations No Go

Benefits

ImplementationEasy Difficult

Low

2 3

4

1

7

Strategic Goals for CRM Projects

Acquire new customers

Increase profit per customerIncrease sales revenues

Increase customer loyalty

Increase customer retention

Increase customer satisfactionEnhance cross/up-sell opportunities

Loyalty,Satisfaction

0 20 40 60 80

OtherReduce cost of marketing

Increase partner loyalty

Increase profit marginsImprove lead quality and conversion

Reduce costs of sales

Increase acquisition of new customers

Increase marketing campaign response ratesAcquire new customers

Cost Reduction

Revenue Enhancement

Source: Gartner Group


5

Examples of CRM Goals & Objectives

Growth in RevenuesRetain existing customersObtain new customersIncrease customer profitability

Reduction in ExpensesRealize sales efficienciesRealize service efficienciesRealize marketing efficiencies

Objective Metric Target Performance

Retain existing

customers

Retention rate 89%

Recognize operational efficiencies

Increased LoyaltyEnhance cross-sell opportunitiesIncrease customer tenureIncrease referrals

Obtain new customers

Increase customer

profitability

New customer acquisition rate

New profit per customer

10%

$16,000

Objectives must be stated in quantifiable, or measurable, terms and must include a deadline for completion. They should spell out how much of what kind of performance by when.

Example of CRM Business Case Worksheet

CRM Objectives

Strategies Business Requirements Resources Enablers

Retain existing customers

Provide 24-7 service

Implement a 360o view of customer

Develop consistent customer experiences across all channels

Accurately measure the CLV each customer can potentially create for the company

Capture accurate and relevant customer information in one central

Marketing Department (note specific people)

Operations Department (note specific people)

Business consultant for process reengineering

CRM technology – data warehouse

Operational CRM

Analytical CRM

Process analysis

Create customized offerings

place

Clearly understand our customer facing processes – where they are and how they should be handled

Shorten service processes

Use predictive modeling to enable customized product offerings and messages

Retain quality staff for customer-facing processes

Technology consultant

Human Resources representative

Financial Department representative

Experience mapping

Customer Inventory Assessment

Employee training on customer facing processes and formal process improvement procedures

CRM metrics for each critical customer touch point

Employee performance evaluation & compensation program based on customer metrics

Understanding CRM Project Costs

CRM software licence fees

Systems integration

Infrastructure costs, new desktop laptop or

Helpdesk support

Change management

Project management

Process reengineeringdesktop, laptop or handheld devices

Software configuration

Data modelling

Beta-testing

Software upgrades

Training

Consulting services

Opportunity costs


6

Projecting Incremental Costs: An Example

Cost Component Sunk Costs Ongoing Annual Costs

Laptop Hardware & Accessories for 100 Sales Reps

Unit cost = $1,100

Accessories/unit = $300

Total cost = $140,000

Repairs/new hires = $15,000

Travel for Laptop Deployment & Training for 100 Sales Reps

Average airfare = $500

3 nights @ $100 = $300

Meals & miscellaneous = $100

New hires/turnover = $5,000


SFA Software 250 licenses @ $500 = $125,000

Customization = $250,000

Technical training = $15,000


Upgrades = $3,000

IT Department Support One developer/analyst = $50,000 Two programmers = $170,000

TOTAL $670,000 $193,000

Projecting Benefits: An Example

Benefit Component Savings/Growth

From Productivity Gains Preparing Proposals = 200 hrs/year

Preparing monthly reports = 100 hrs/year

Updating files manually = 50 hrs/year

Researching prospect information = 100 hrs/year

Sending documentation = 80 hrs/year

Total hours = 530 hours for 80 Sales Reps = 42,400 hours

Forecasted Revenues per hour = $25

Projected Revenue Increase = $1,060,000

From Revenue Growth

(Better quality proposals, faster sales cycle times, improved quality of leads)

Forecasted Revenues = $15,000,000

Incremental revenue increase = 10%

Projected Revenue Increase = $1,500,000

From Reduction in Operating Expenses

Word Processing Center = $120,000

Travel Expenses = $100,000

Sales Centers – Rent & Overhead = $500,00

Business Case Summary Data

CRM Business Case Prepared by: Customer Connect Australia

Benefit - Cost Summary Year 1 Year 2 Year 3 Year 4 Year 5Total Bottom Line Benefits Per Year $150,000 $2,500,000 $2,900,000 $3,100,000 $3,100,000Cumulative Benefits, Present Value $150,000 $2,500,000 $4,950,000 $7,100,000 $9,100,000Weighted Average Total Costs Per Year $1,500,000 $1,100,000 $90,000 $250,000 $110,000Cumulative Costs, Present Value $1,500,000 $2,550,000 $2,600,000 $2,800,000 $2,900,000Net Cash Flow -$750,000 $700,000 $1,400,000 $1,450,000 $1,500,000Cumulative Net Present Value Cash Flow -$750,000 -$25,000 $1,100,000 $2,200,000 $3,100,000

Internal Rate of Return 129%Net Present Value, 5 Years $3,100,000Return on Investment, Present Value, 5 Years 107%P b k P i d Y 2 0Payback Period, Years 2.0

Cumulative Net Present Value Cash Flow

-$1,000,000

-$500,000

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

Year 1 Year 2 Year 3 Year 4 Year 5


7

Best Buy: An Example

Best Buy (2006) strives to make life fun and easy for millions of people across North America. Our mission is to give our customers great experiences –whether they are shopping for consumer electronics, home-office products, entertainment software and appliances, or using those products and related-services in their homes and offices.

Best Buy is growing its business by (goals):

Strategy

Best Buy is growing its business by (goals): Converting more stores to the customer-centric operating model.

Adding new stores to better serve existing and new markets.

Expanding and strengthening service offerings.

Boosting employee retention in order to deliver better customer experiences while increasing productivity.

Adding individualized marketing capabilities to our skills in mass marketing.

Simplifying our internal processes so they respond better to changing customers’ needs.


8




Module 2Module 2

Build Project Foundations

Identify stakeholders

Establish governance structures

Identify change management needs

Identify project management needs

Build

Identify project management needs

Identify critical success factors

Develop risk management plan

Stakeholders in CRM Projects

Stakeholders include any party that will be impacted by the adoption of CRM

● senior management

● users of any new system, process or technology

● marketing staff● marketing staff

● sales people

● customer service agents and representatives

● channel partners

● customers

● IT specialists

MAR 4860 Worksheet Chapter 3 Module 2

1

CRM Project Governance Structure

Exec Sponsor

S teering C om m ittee

C EO

Sales Exec M arketing Ex ec Program D irec tor

IS L d

C R M C onsultant

S ys tem s

External R es ources

ProgramTeam

Sales Lead

M arketing Lead

IS Lead

Support Lead

N am eTitle

S ys tem sImplem enter

N am eTitle

Key U s ers

N am eTitle

Key U s ers

N am eTitle

Key U s ers

CustomerAdvocate

Change Management Ingredients

Changing people's behavior brings the biggest return on investment for CRM. The five ingredients for successful CRM change management are:

1. Leadership and Sponsorship

2. Skills and Competencies

EXPERT OPINION

All CRM initiatives and employee engagement in them must run into

3. Knowledge

4. Organization

5. Incentives

parallel with change management and project management. Change management is concerned with people, systems and organizational change.

Source: Payne (2006)

1. DENIAL

2. EXPLORATION

3. RESISTANCE

4. ACCEPTANCE

Managing change doesn’t always guarantee success.

The Four Stages of Change

EXPERT OPINION

Morale/ Productivity/ Commitment

Time

Unmanaged Change

Managed Change

Change Introduction

But ignoring the need to manage change guarantees failure.

Peter DruckerManagement Guru


2

Internal Marketing Plan

1. Identify your segments, target audiences or user groups

2. For each group, define:

● Needs, expectations and benefits associated with CRM – ‘what’s in it for them?’

EXPERT OPINION

Marketers need to keep all employees aware of current promotions and campaigns,

● Marketing objective

● The target message

● The 7Ps

3. Develop a roll-out marketing plan over the lifetime of the CRM initiative

as well as educate them on the company's vision and desired brand image.

Source: McMaster (2002)

7

The Buy-In Matrix

tual

Buy

-In

Bystanders ChampionsYes

EXPERT OPINION

A CRM Initiative's Bermuda TriangleTwo best practice

Inte

llec

t

Emotional Buy-In

Weak Links Loose CannonsNo

No Yes

psuggestions for preventing--permanently--user-adoption disappearance.

http://www.destinationcrm.com/print/default.asp?ArticleID=6824

8

Identify Project Management Needs

Role of CRM Program Director or Project leader

Sets out steps of journey from situation analysis to achievement of CRM vision, goals and objectives

Tool kit: Gantt charts Critical Path Analysis (CPA) Tool kit: Gantt charts, Critical Path Analysis (CPA), Program Evaluation and Review Technique (PERT) or network diagrams .


3

Gantt Chart Example

Critical Success Factors

Critical Success Factor People Process Technology

1. Senior management commitment X

2. Creation of a multi-disciplinary team X X

3. Objectives definition X

4. Interdepartmental integration X X

5. Communication of the CRM strategy to staff X X

6. Staff commitment X

7. Customer information management X

8. Customer service X X

9. Sales automation X X

10. Marketing automation X X

11. Support for operational management X X X

12. Customer contact management X X

13. Information systems integration X

Risk Management Plan

Gartner has identified a number of risks that threaten project success● management that has little customer understanding or involvement

● rewards and incentives that are tied to old, non-customer objectives

● organizational culture that is not customer-focussed

● limited or no input from the customers

● thinking that technology is the solution

● lack of specifically designed, mutually reinforcing processes;

● poor-quality customer data and information

● little coordination between departmental initiatives and projects

● creation of the CRM team happens last, and the team lacks business staff

● no measures or monitoring of benefits and lack of testing


4




Module 3Module 3

Needs Specs & Partner Selection

Process engineering

Data review and gap analysis

Initial technology needs specification, and research alternative solutions

Needs & Partner

Write request for proposals (RFP)

Call for proposals

Revised technology needs identification

Assessment and partner selection

EXPERT OPINION

Process Defined

A process is made up of INPUTS and a series of activities that create an expected result or value-added OUTPUT.

Value addedTo get a good feel for how ambitious your CRM plans should be first take a

OUTPUT

KnowledgeMaterialsMachinesLaborManagementCapital

Goods or Services

INPUTS Process

CustomerFeedback

should be, first take a serious look at your existing CRM processes—the way in which you market to, sell to, and service customers. The better defined your processes are, the greater your chances of success in leveraging CRM technology.

Source: Dickie (2002)

3


1

An Example - Getting to Work/School

INPUTS PROCESS OUTPUTS

Go to the bus station

Get on the right bus

©2006 Nancy A. Rauseo

Give driver correct change

Take a seat, if available

Follow the bus route

Get off at 650 Park Avenue

Enter office building

EXPERT OPINION

Making Spicy Hot ChocolateMaking Spicy Hot Chocolate

“The common denominator of CRM-related business processes is that they should

SPICY HOT CHOCOLATE

1 cup (8 oz.) milk

1 cup (8 oz.) strong coffee

1 oz. sweetened baker’s chocolate

½ t. cinnamon

CUSTOMER’S EXPECTED

RESULT

INPUTS

ACTIONS

processes is that they should be designed around the customer’s perspective with the ultimate goal of improving the customer’s experience.”

Source: Dyché (2002)

4 drops of Tabasco sauce

In a saucepan, combine the first three ingredients. Heat over a low flame, stirring, until the chocolate is melted. Do not allow mix to boil. Remove from heat; add cinnamon and Tabasco. Serve immediately.

INPUTS

Types of Processes 1Types of Processes 1

Vertical Process

Located entirely within a department or business function

One department is involved or affected by the process

An example is the ‘facilities maintenance’ process within a company

Horizontal or Cross-Functional Process

Crosses over several departments of the company

An example is the ‘new product development’ process – almost all functions need to be involved in it

Primary Process

Part of core business - has major implications for the customers and company

An example is the ‘logistics’ process in a courier company

Secondary Process

Has minor cost or revenue implications


2

Types of Processes 2Types of Processes 2

Front-Office Process

Also called customer-facing processes, i.e. those encountered by the customers

Example are the ‘complaint management’ or the ‘sales’ processes

Usually cross-functional in nature

Critical because they directly impact the customer’s perception of service

Back-Office ProcessBack Office Process

Located behind the scenes or sight of customers

Examples are a ‘data quality’ process or ‘management approval’ process

Indirectly can impact the customer’s perception of the company

May be INPUTS to front-office processes

An Example of Sales Business Processes

Define Segmentationand Coverage Plans

Review Corporate Objectives

Determine Segmentation Approach

Establish Target Segments

Analyse Profitability by Segment

Determine Channel Strategy by Segment

Map Segments to Territories

Determine Resource Requirements by Channel and Territory

Conduct Sales Financial Planning

Define Territories and Assignment Rules

Define Corporate Territories

Define Corporate Assignment Rules

Validate Territory Assignment Rules

Approve Territories and Assignment Rules

Publish Territories and Assignment Rules

Realign Sales Force

Define Regional Assignment Rules

Manage PipelineConduct Sales Financial Planning

Review Corporate Objectives

Establish Growth Targets

Establish Profit Targets

Establish Cost Targets

Establish Budget

Establish Annual Headcount Plan

Plan Sales Force Quotas (Call BP)

Establish Sales Force Policy and Procedures

Establish Pricing Guidelines

Establish Contract Guidelines

Establish Approval Matrices

Establish Documentation Guidelines

Audit and Enforce

Review Pipeline Status

Prioritise Critical Opportunities

Build Action Plan

Deploy Resources

Monitor and Adjust Plan

Coach Team Members

Establish Consensus Forecast

Export Forecast Data

Perform Demand Planning

Conduct Sales and Operations Planning Meeting

"Disaggregate" Consensus Forecast

Publish Consensus Forecast

Order Fulfilment Process


3

Campaign Management Process

Customer phones in Check scores

Offer product to high scores

Send application f

Open account on phone

No interest

Buy product

2

form

Out bound phone follow-up

Mail follow-up

Do nothing

Check account balance

(numbers are days)

427

7

Process Ratings

Best practice (superiority)

The process is substantially defect-free and contributes to CRM performance. Process is superior to comparable competitors and other benchmarks

ParityA good process which largely contributes to CRM performance

StabilityAn average process which meets expectations with no major problems but which presents opportunities for improvement

RecoverabilityThe process has identified weaknesses which are being addressed

CriticalityAn ineffective and/or inefficient process in need of immediate remedial attention

Data Review and Gap Analysis

Customer-related data is used for strategic, operational, analytical and collaborative CRM purposes

Identify the information needed

Identify the information available

Identify the gap

Consider data quality issues


4

Initial Technology Needs Specification and Research Alternative Solutions

Identify applications and functionality that meets business case requirements

● Visit vendor websites

● Join online communities and learn from members

● Visit online CRM exhibitions

● Read case studies

● Join benchmarking group

Consider build, buy or rent decision

● Consider total cost of ownership

Most users opt for an on-premise (installed) CRM system or a hosted (online) system.

Sales Force AutomationLead ManagementSales ConfigurationOrder ManagementPricing ManagementSales CompensationSales Performance Mgmt.

Sales

Analytics

Segmentation

Lead Mgmt.Loyalty Mgmt.

Marketing Resource Mgmt.Enterprise Marketing Mgmt.

Marketing Performance Mgmt.Partner Marketing

Data MiningPerformance Mgmt.

Dashboards/KPIsPersonal Productivity

Customer Value AnalysisS l S i W b

Marketing

Community ManagementService AnalyticsDesktop ProductivityContact Center/Call CenterW kf O ti i ti

E-marketingCampaign Mgmt.

CRMApplicationMind Map

Field Service Information/

Infrastructure

CustomerService

E-CommerceWeb StorefrontCatalog, Pricing

InventorySales Partner Mgmt.

Sales, Service, WebField Service Analytics

In-Line, Event Driven

Workforce Optimization•E-Learning•Workforce Mgmt.•Q/A, Monitoring

Self-Service/E-Service•Knowledge Mgmt.

•SurveysUnified CommunicationsTrouble Ticketing/Case Mgmt.Enterprise Feedback Mgmt.

Field Force OptimizationWireless Mobility

Parts PlanningContract/Warranty

Remote MonitoringFleet Management

Dispatch and RepairBusiness Process Mgmt.

•E-Mail Response

Customer Data Integration: CDI

Product Information Mgmt.: PIM

Business Process Mgmt.

Master Data Mgmt.: MDM

Enterprise Information Mgmt.

p

Benefits Claimed for Hosted Solutions

Costs are fixed and known.

● Companies pay a per-seat monthly fee. If you have 50 users, and the monthly fee is $100 per user, you can expect annual user fees of $60,000.

Upgrades are performed by the vendor away from the users’ premises.

On-premise implementations, in contrast, can impose significant burdens on in-house IT staff and budgets. g

● There can be upfront investments in IT hardware and infrastructure, software purchase and customization, and training. Implementation costs can be significant.

User support and software upgrade costs are additional to initial software licence costs.

Essentially, the hosted model converts capital expenditure and fixed costs into variable costs.


5

Comparing Costs: On-premise vs. Hosted CRM

Cost item On-premise CRM Hosted CRM

Number of users 500 500

Application licence/subscription $1,250,000 $750,000

Implementation and customization $6,250,000 $187,000

Training $150,000 $75,000

IT infrastructure/hardware $500,000 $0

IT personnel $500,000 $0

Support/upgrade costs $225,000 $0

Year one expenditure $8,875,000 $1,012,500

Sources: Triple Tree; Software & Information Industry Association (SIAA); salesforce.com; Yankee Group. Table originally appeared in eMarketer 2005.

A Request for Proposal (RFP)

Standards used to evaluate vendors

Typical content listed on pages 87-88

Call for proposals

Revised technology needs identification Revised technology needs identification

Assessment and partner selection

Vendor Evaluation Worksheet

Customer Relationship Management©

CRM Vendor Evaluation Worksheet

Importance is the priority placed on this criteria for the company evaluating the vendor. Use a scale from 1 to 5, with 5 being critical to the company.

Vendor Capability is the degree to which the vendor can meet the decision criteria. Use a scale from 1 to 5, 5 being that the vendor fully meets the criteria.

Total Points for each vendor are calculated by multiplying the importance of each decision criteria with the vendor capability.

These points go in the shaded area. To get the TOTAL POINTS by vendor, add all points in the shaded areas.

Decision Criteria Importance

Years of experience with CRM 5 5 25 5 25 3 15Industry experience

4 4 16 4 16 3 12

Vendor A Vendor B Vendor C

About the Vendor


CRM Vendor Evaluation Worksheet


Vendor Capability is the degree to which the vendor can meet the decision criteria. Use a scale from 1 to 5, 5 being that the vendor fully meets the criteria.

Total Points for each vendor are calculated by multiplying the importance of each decision criteria with the vendor capability.

These points go in the shaded area. To get the TOTAL POINTS by vendor, add all points in the shaded areas.

Decision Criteria Importance

Years of experience with CRM 5 5 25 5 25 3 15Industry experience

4 4 16 4 16 3 12

Vendor A Vendor B Vendor C

About the Vendor


Investment in research & strategic technology direction5 4 20 5 25 3 15

Training & documentation3 4 12 5 15 3 9

Technical support 5 3 15 5 25 4 20Management team & project managers 3 5 15 5 15 2 6TOTAL 103 121 77

Price5 3 15 5 25 3 15

Functional requirements 5 3 15 3 15 2 10Customizability & flexibility

4 2 8 5 20 2 8User friendliness

5 3 15 5 25 3 15Scalability

4 4 16 5 20 3 12Source code

4 3 12 5 20 4 16TOTAL

81 125 76

About the Software

Investment in research & strategic technology direction5 4 20 5 25 3 15

Training & documentation3 4 12 5 15 3 9

Technical support 5 3 15 5 25 4 20Management team & project managers 3 5 15 5 15 2 6TOTAL 103 121 77

Price5 3 15 5 25 3 15

Functional requirements 5 3 15 3 15 2 10Customizability & flexibility

4 2 8 5 20 2 8User friendliness

5 3 15 5 25 3 15Scalability

4 4 16 5 20 3 12Source code

4 3 12 5 20 4 16TOTAL

81 125 76

About the Software


6

Product Evaluation Worksheet


CRM Product Evaluation Worksheet


Vendor Capability is the degree to which the vendor can meet the functional requirement. On a scale from 1 to 5, with 5 being that the vendor fully meets the requirement.

Total Points for each product are calculated by multiplying the importance of each decision criteria with the product capability.

These points go in the shaded area. To get the TOTAL POINTS by product, add all points in the shaded areas.

Functional Requirement Category Importance

Contact management 5 4 20 3 15 2 10

Account management 5 4 20 4 20 3 15

Time management 4 4 16 3 12 2 8

Lead management 5 4 20 4 20 5 25

Product A Product B Product C


CRM Product Evaluation Worksheet


Vendor Capability is the degree to which the vendor can meet the functional requirement. On a scale from 1 to 5, with 5 being that the vendor fully meets the requirement.

Total Points for each product are calculated by multiplying the importance of each decision criteria with the product capability.

These points go in the shaded area. To get the TOTAL POINTS by product, add all points in the shaded areas.

Functional Requirement Category Importance

Contact management 5 4 20 3 15 2 10

Account management 5 4 20 4 20 3 15

Time management 4 4 16 3 12 2 8

Lead management 5 4 20 4 20 5 25

Product A Product B Product C

g 5 4 20 4 20 5 25

Sales management 5 4 20 3 15 4 20

Customer contact 2 4 8 4 8 3 6

Customer service 2 4 8 5 10 5 10

Field service 2 4 8 3 6 4 8

Telemarketing/Telesales 2 4 8 4 8 4 8

Marketing 4 4 16 3 12 4 16

Knowledge management 5 5 25 3 15 3 15

Business intelligence 5 5 25 3 15 3 15

Partner relationship management 3 5 15 4 12 3 9

E-Commerce 3 5 15 4 12 2 6

Supply chain management 4 5 20 4 16 3 12

Workflow management 5 5 25 4 20 2 10

Reporting 4 5 20 3 12 3 12

Integration 5 5 25 3 15 3 15

Help functions 3 4 12 3 9 3 9

326 252 229TOTAL POINTS

g 5 4 20 4 20 5 25

Sales management 5 4 20 3 15 4 20

Customer contact 2 4 8 4 8 3 6

Customer service 2 4 8 5 10 5 10

Field service 2 4 8 3 6 4 8

Telemarketing/Telesales 2 4 8 4 8 4 8

Marketing 4 4 16 3 12 4 16

Knowledge management 5 5 25 3 15 3 15

Business intelligence 5 5 25 3 15 3 15

Partner relationship management 3 5 15 4 12 3 9

E-Commerce 3 5 15 4 12 2 6

Supply chain management 4 5 20 4 16 3 12

Workflow management 5 5 25 4 20 2 10

Reporting 4 5 20 3 12 3 12

Integration 5 5 25 3 15 3 15

Help functions 3 4 12 3 9 3 9

326 252 229TOTAL POINTS


Project Implementation

Refine project plan

● Consider needs and availability of partner

Identify technology customisation needs

O t f th b l fit f tl

Implement

● Out-of-the-box rarely fits perfectly

Prototype design, test, modify and roll out

● Risk reduction

● Refinement

● Pilot on a small group of users or customers

Performance Evaluation

Project outcomes

● Was the project delivered on time and to budget?

Business outcomes

Evaluate

● Have business goals and specific CRM objectives been achieved?

● Consider time-frame for CRM objectives

● What about the CSFs?

This is a continuous process


7



Chapter 4Chapter 4Developing, Managing and Using Customer-

Related Databases

What are customer-related data?

Customer-related data is anything pertinent to the development and maintenance of customer relationships.

Customer-related data can have a current, past or future perspective, focused on current opportunities historic sales o potentialopportunities, historic sales o potential opportunities.

Customer-related data might be about individual customers, customer cohorts, customer segments, market segments or entire markets.

Customer-related data might also contain product information, competitor information, or regulatory data.

What are customer-related data?

Customer Touch Points

Sales Retail Direct Mail Call

CenterE-mail/

FaxInternet ATM

B i PBusiness Processes

Data Warehouse

Data Data WarehouseWarehouse

Sales BillingAccounts

ReceivableProductSales Billing

AccountsReceivable

Product

Customer Data



1

CRM Integration

Global Customers


Front Office Functions

Back Office Functions

Marketing Management

Order Processing Sales Management Pricing Service & Support

Receivables Payables Production Planning Inventory Management Shipping & Receiving Payroll

Electronic Touch Points Internet E-mail Call center Voice Response Systems Kiosks

Traditional Touch Points Retail stores Mail Service departments

ConsumersBusinessesPartnersSuppliers

CRM Software ERP/ Data Warehouse


Database structures 1

Entity-relationship diagrams are used to identify the entity types in it ti d t i ll

EXPERT OPINIONDepartment Course

SectionProfessor Student

Belongs to

Offers

Has

Is registered inTeaches

a situation and to visually display the relationships between them. They help create a shared understanding of the basic structure of a system.

Source: Alter (2002)

Office

Has

Possible Data Attributes:

Student IDNameAddressBirth datePhoneGenderSocial security number


Database structures 2



2

Steps to building a customer –related database

1. Define the database functions 1. Define the database functions

2. Define the information requirements2. Define the information requirements

3 Identify the information sources3 Identify the information sources3. Identify the information sources3. Identify the information sources

4. Select the database technology4. Select the database technologyand hardware platformand hardware platform

5. Populate the database5. Populate the database

6. Maintain the database6. Maintain the database

Database functions

Database functions are defined by the CRM-related purposes for which data are acquired, enhanced, stored, distributed and used.

Databases support all types of CRM: Strategic, Operational, Analytical and Collaborative.

Operational CRM uses customer-related data to help in the everyday management of customers.

Analytical CRM uses customer-related data to support sales, marketing, and service decisions.

OLTP and OLAP databases

Analytical data resides in an OLAP (online analytical processing) database.

The information in the OLAP database is normally a summarised extract of the

Operational data resides in an OLTP (online transaction processing) database.

OLTP data needs to be very accurate and up-to-date.

summarised extract of the OLTP database, enough to perform the analytical tasks. The analytical database might also draw in data from a number of internal and external sources.


3

Define the information requirements

Based on CRM vision

Answers the question: ‘what information do I need about the customer?’

Best people to answer the question are those who interact with, or communicate with, customers for sales, marketing and service purposes, and those who have to make strategic CRM decisions.

Many packaged CRM software applications come with industry-specific data models.

Define the information requirements

Customer information fields

Contact data

Contact history

Transactional history

Current pipeline

Opportunities

Products

Communication preferences

Service history

This unique identifier is a MUST!

Allows linkages to be made between several customer-related databases (e.g. transactional, product and service databases)

Customer records can be linked in 3 ways:

One-to-one. Each record in one database can be linked to

Customer identification

one other record in another database.

One-to-many. Each record in one database can be linked to many records in another database

Many-to-many. Each record in one database can be linked to many records in another database, and each record in that database can, in turn, be linked to many records in the first.


4

Identify internal information sources

Data Sources

Data Collection

System

1

Internal SourcesExternal Sources


Data Warehouse

System

Information Information Delivery Systems

Information Usage

2

3

Identify external information sources

Data Sources

Data Collection

System

1



Data Warehouse

System

Information Information Delivery Systems

Information Usage

2

3

Data collection system

Data Sources

Data Collection

System

Hardware & Software

Applications

1

Data Warehouse

System

Information Delivery Systems

Information Usage

2

3

15Module 6 Unit 1: Basics of CRM Technology©2007 Nancy A. Rauseo


5

Data warehouse system

Data Collection

System

Hardware & Software

Applications

1

Data Sources

Data Warehouse System


Information Usage

2

3

Data management

Data Collection

System

Hardware & Software

Applications

1

2

Data Sources

DBMS

Data Warehouse System


Information Usage

2

3

Data Clean-Up & Transformation

Data Mining

Data Accessibility

Understanding analytical data

CRMTransactions

(OLTP)

CRM Analytics(OLAP)

Data from other systems

Differentiation by customer value

Customer satisfaction

Next purchase

Propensity to buy

Partner contribution

Web activity

Other Data

Differentiation by needs

Supplier evaluation

Campaign success

Sales activity

Segmentation

Customer profiling

Risk scoring

Prospecting

Propensity to buy

Revenue

Sales volumes

Brands

Profitability



6

Data warehousing & reporting

I f ti

19

Data Warehousing

Information Delivery & Reporting

Analytical Applications

Data MiningClusteringKnowledge Discovery


Analytical applications

I f ti Data Warehousing






7



Chapter 5: Customer Portfolio ManagementChapter 5: Customer Portfolio Management

Module 1Module 1

Chapter Objectives

Understand the benefits that result from differentiating customers and managing them as a portfolio.

Explain a number of disciplines that contribute to customer portfolio management:

market segmentation,

sales forecasting,sales forecasting,

life-time value estimation, and

data-mining.

Be familiar with some portfolio management tools.

Explain how customer portfolio management differs between B2C and B2B contexts.

Apply the range of customer management strategies that can be deployed across a customer portfolio

Why Differentiate Customers?

To treat each customer differently is the essence of CRM

Different customers have different needs

Different customers represent different values to the company

Customer value is future oriented

Actual value – what the customer is worth today

Potential value – what the customer could be worth

Customer differentiation helps an enterprise increase customers’ actual value and realize customers’ potential value

Differentiation goes beyond traditional marketing segmentation

MAR 4860 Lecture Worksheet Chapter 5, Module 1

1

Customer Portfolio Management

A customer portfolio is a classification of customers into different groups that are then managed on a portfolio, or collective, basis.

It is the collection of mutually exclusive customer groups that comprise a business’s entire customer base.

C t P tf li M t (CPM) i t ti i Customer Portfolio Management (CPM) aims to optimize business performance – whether that means sales growth, enhanced customer profitability, or something else - across the entire customer base.

CPM does this by offering differentiated value propositions to different segments of customers.

Basic CPM disciplines are: market segmentation, sales forecasting, activity-based costing, customer life-time value estimation, and data-mining.

Segmentation & Clustering

No SegmentationMass Marketing

Market Segmentation

Custom Marketing

Standard Offering

Low Cost per Customer

1 to 1 Marketing

Tailored Offering

Higher Cost per Customer

Segmentation Processes

Intuitive

• Brain-storm segmentation variables

Age, gender, life-style

SIC, size, location

• Produce word-profiles

Data-based

• Obtain customer data

Internal and external

• Analyze customer data

• Identify high/medium/low valueProduce word profiles

• Compute sizes of segments

• Assess company/segment fit

• Make targeting decision

one/several/all segments?

• Identify high/medium/low value customer segments

• Profile customers within segments

age, gender, life-style

SIC, size, location

• Assess company/segment fit

• Make targeting decision

one/several/all segments?


2

Five Step Process of Market Segmentation

1. Identify the business you are in (Module 1)

2. Identify relevant segmentation variables (Module 1)

3. Analyze the market using these variables (Module 1)

4. Assess the value of the market segments (Module 2)

5. Select target market(s) to serve (Module 2)

Criteria for Consumer Segmentation

Geographic Domestic/foreign/global, regions, zip codes, population density, country, region, TV region, city, city size, post-code, residential neighborhood

Demographic Age, gender, occupational status, household size, marital status, terminal educational age, household income, stage of family life-cycle, religion, ethnic origin, nationality

Lifestyles/ Psychographics

Activities/ sports, values, opinions, views

Behavioral Patterns

Benefits sought, service required, loyalty, permission granted

Transactional Data Interaction information, likelihood of certain behaviors, propensity to buy,

Analytically Derived

Data mining

Criteria for Business Market Segmentation

Type of Business Manufacturer, service provider, government agency, nonprofit, wholesaler, distributor, merchant, retailer

SIC Standard Industry Classification for categorizing goods and services produced

Size Large, medium or small; Based on number of employees, number of customers and/or profit or revenuesnumber of customers and/or profit or revenues

Buying Process Sealed bidding, centralized, decentralized, vendor analysis, negotiated contracts, internet auctions

Buying Criteria Product quality, price, customizations, just-in-time, service support pre- and post-sales

Geographic World region, climate zone, trading block, country, country regions, state, province, county, city, suburb, city block, town, village


3

WHO Demographic Customer Information

Segmentation Basics

The value of demographics has begun to wear out. Demographic data must be combined with behavioral and attitudinal data to get the most accurate view of consumers, but it is still a necessary foundation for marketers

EXPERT OPINION

WHAT

WHY

Behavioral and Transactional Customer Information

Attitudinal and Motivational Customer Information

necessary foundation for marketers to build on. Check out the link below for an article on segmentation using population generations: Y Me, X Ways, Wild & Crazy and Elder Effect.http://www.destinationcrm.com/print/default.asp?ArticleID=6463

Source: Bailor, Beasty, Lager & Sebor (2006)

Planned 10%

Gifts

Bivariate Segmentation Example

Hunger Light snacking Indulgence

Emotional need 20%

Later sharing

30%

Functional 40%

Satisfaction

Usa

ge

Source: Mintel 1998

Familysharing

Takehome

Eat now

Benefits/Feature Segmentation

©2006 Dickson & Rauseo


4

Channel Segmentation 1


Channel Segmentation 2

The value of segments matters. Every company needs a process to

dif it t ti t

EXPERT OPINION


modify its tactics as customers move within and across segments.

For more, read this article:

http://www.destinationcrm.com/print/default.asp?ArticleID=6101

Source: Collins, Dahlstrom, and Singer (2006)

Segment 1 Segment 2

Segment 3 Segment 4 Segment 5


5



Chapter 5: Customer Portfolio ManagementModule 2

The 3-D Customer Focus Approach

2 Customer Choice

Drivers & Desired FeaturesHow is the product or service used? What features influence choice?

DifferentiatorsWhat features should be

1 Customer Profitability

Actual valueWhat is the customer worth today?

Potential valueWhat could the customer be worth?

What features should be focused on to distinguish products?

3 Customer Contact

PreferencesWhat are the desired contact, communication, selling, financial and distribution channels?

Step 1. Capture customer purchase histories

Step 2. Analyze customer profitability

Step 3 Profile benefit segment customers

Stages of 3-D Customer Focus

As a business strategy, market segmentation is organizing a b i d t t d

EXPERT OPINION

Step 3. Profile benefit segment customers

Step 4. Understand customer usage

Step 5. Analyze contact channel sub segmentation

business around targeted segments and their product, service and purchase method preferences. The goal is to develop private information that creates a customer focus competitive advantage.

Source: Dickson (2006)


1

Segmentation Based on Loyalty & Profitability

Butterflies

Good fit between company’s offerings and customer’s needs Profitable but disloyal

True Friends

Good fit between company’s offerings and customer’s needs Highest profit potential

Hig

h P

rofi

tabili

ty

“When profitability and loyalty are considered at the

EXPERT OPINION

High profit potential

Strangers

Little fit between company’s offerings and customer’s needs Lowest profit potential

Barnacles

Limited fit between company’s offerings and customer’s needs Low profit potential

Short-Term Customers Long-Term Customers

Low

Pro

fita

bili

tyH y y

same time, it is clear that different customers require different interactions.”

Source: Reinartz & Kumar(2002)

Segmentation Based on Value

“The goal of value differentiation is not a hi t i l d t di b t

EXPERT OPINION

Most Valuable Customers (MVC) Highest actual value to the company Yield the highest profit margins and most willing to cooperate Objective is retention

Most Growable Customers (MGC) The most growth potential Growth can be realized through cross-selling, increasing length

of relationship changing customer behaviors and/or operating historical understanding, but a predictive plan of action.”

Source: Peppers & Rogers (2004)

of relationship, changing customer behaviors, and/or operating more cost effectively

Objective is growth

Below-Zero Customers (BZ) Generate less revenue than cost-to-serve Highly unlikely to show positive net value Objective is motivation or churning them out

Migrators Linger between being profitable and having some growth Objective is to shift to MGC and get them to show their “true

colors”

Ladder of Loyalty

SponsorsDemonstrate loyalty while telling others of

ti f ti d ti C Hi h

ApostlesExhibit a high degree of loyalty while convincingprospects to do business with your Company. High profitability.

PartnersTake responsibility for the continuing success of the relationship. High profitability.

High

yalty

yalty

PartnersPrisoners

Apostles

Sponsors

AdversariesNot getting what was expected. Low profitability.

ButterfliesGet as much as, or more than, what was expected. Mid- to low profitability.

LoyalistsDevote a large “share of wallet” to repeat business. Mid- to high profitability.

satisfaction and supporting your Company. High profitability.

HighLow

Low

Leve

l of L

oyLe

vel o

f Loy

Level of SatisfactionLevel of Satisfaction

Butterflies

Adversaries

Loyalists

p


2

Step 1 – Capture Customer Purchase Histories 1

Centura Banks Inc. (now owned by Royal Bank of Canada) rates its customers on a profitability scale from 1 to 5. The real moneymakers get calls from service reps several times a year for what the controller calls “a friendly chat” and even an annual call from the CEO to wish them happy holidays. No wonder attrition in this group is down by 50% since 1996, while the percentage of unprofitable customers has slipped to 21% from 27%.

Source: Brady (2000)

Step 1 – Capture Customer Purchase Histories 2

For the last decade, Hallmark has identified the 10% of its customers who are its top buyers. These “Gold Crown” customers are provided with a special toll-free number, are sent

elaborate, premium mailings, free cards that introduce new lines. These 10% make up 45% of total store sales and have helped Hallmark grow its sales, profits and shareholder value.

Source: Newell (2000)

Step 2 – Analyze Customer Profitability 1

Most Profitable Customers

More Resources

Key Capabilities

Least Profitable Customers

RESOURCE RESOURCE ALLOCATIONALLOCATION

Less Resources

CUSTOMERCUSTOMERPROFITABILITYPROFITABILITY


3

“By being one of the first in the industry to use data mining to enhance its


y g y grelationships with its customers, Harrah’s has been able to keep ahead of its competitors and this has definitely improved its bottom line. As one data mining tools provider says: imagine being able to project a customer's likely future activity on the day they sign up for membership. This allows you to market to them based on their potential (as opposed to their history) - an important aspect of gaining "wallet share" from the best customers. This concept is fundamental to the success of Harrah's customer marketing efforts. They even offer tools to answer questions such as who are their customers. Where do they come from? How often do they visit? What is the true value of their customers? What contribution did a recent star headliner in their theatre make? What was the true effectiveness of their last mail campaign? The list is as big as the imagination of the organization asking the questions.”

Source: Meltzer (2004)http://www.dmreview.com/editorial/dmreview/print_action.cfm?articleId=1011392


Step 1

EXPERT OPINION

STEP 1 – Harrah’s tracks guest behavior and make predictions about the value of the guest.

PREDICT

Closed Loop Marketing

Step

5

Step 4 Step 3

Step 2

CLOSED LOOP MARKETING

STEP 2 – Harrah’s uses predictions to segment offerings.

STEP 3 - Harrah’s markets to guests based on expected value.

STEP 4 – Guest reacts to offer.

STEP 5 – Harrah’s analyzes the guest reactions and uses that analysis and new observed behavior to make new predictions.

Source: Pashko (2005)

SEGMENT

MARKETACT/REACT

ANALYZE


In the late 1990s, Fidelity Investments contacted 25,000 high cost “serial” callers who

EXPERT OPINION

Grouping Profitable and Unprofitable Customers

1. Select a major customer based on wisdom.

2. Determine annual contributions, both quantitative (sales) and qualitative ( f l l d t ) were told they must use the

company website or the automated call system for account and price information. When they called in the future, they were routed to a special representative who directed them back to the automated system.

Source: Brady (2000)

(referrals, leads, etc.).

3. Collect transaction and financial history on products purchased, number and nature of contacts, sales calls, service calls, consulting, special discounts, payment terms, etc.

4. Cost each activity based on allocation of resources.

5. Compute actual profitability or value.


4

Step 3 – Profile Benefit Segment Customers 1

The deeper the customer profiling, the more you know your customers and (potentially) the more you will

EXPERT OPINION

Who are our customers?Who are our customers? Unique customer identifier Customer name Name of organization for which

the customer works Title, role in organization, or

other designation

How do customers prefer toHow do customers prefer tointeract? Media preference Channel preference Opt-in or opt-out for any media or

specific communications

Where can the customer be (potentially) the more you will understand them to create a very important competitive capability and advantage over rivals who do not understand their customers as well. Superior information about your customers and their profit potential, and how to trade with them is vital private information that earns economic rents to the possessor.

reached? Home address Business address Phone number E-mail address Fax number

What is the history of What is the history of interactions?interactions? Outbound marketing promotions Outbound sales contact history Inbound customer-initiated

queries

What is the customer’s purchase What is the customer’s purchase behavior?behavior? Purchase dates Number of transactions Items Prices Channels utilized Sales versus non-sale purchases Returns Exchanges


What are our customers’ key What are our customers’ key characteristics?characteristics?Consumer (B2C) Gender Age Household size Estimated income

P f hild

What is the customer’s What is the customer’s valuevalue to our to our organization?organization?

Revenue to date Profitability to date Estimated lifetime value Estimated share of wallet Estimated probability of response to

ifi ti

What are your customers’ What are your customers’ needsneeds?? Reasons for buying

Impulse purchases

‘In order to’ purchases

Problem information

Experiences sought Presence of children Segment classifications

Business (B2B)Business (B2B) Industry classification Number of employees Annual revenues Number of locations Role of individual in purchase

process

specific promotions Estimated probability of specific

purchases Estimated probability of attrition Estimated probability of nonpayment

or bad debt

BenchmarksBenchmarks

Standards

Industry performance

Points of comparison

What are is the customer’s What are is the customer’s expectationsexpectations?? Customer’s predictions

What is ideal?

What is desired?

What is deserved?

What is needed?

What is the minimum tolerance level?

Zone of indifference

Influences


Profitable Cluster 3

• Profit history• Purchase mix• Primary channel• Feature focus• Service focus• Income


• Profit history

Unprofitable Cluster 3

• Profit history• Purchase mix• Primary channel• Feature focus• Service focus

Income


• Profit historyIncome• Age/gender• Interests & goals• Situation drivers

• Purchase mix• Primary channel• Feature focus• Service focus• Income• Age/gender• Interests & goals• Situation drivers


• Profit history• Purchase mix• Primary channel• Feature focus• Service focus• Income• Age/gender• Interests & goals• Situation drivers

• Income• Age/gender• Interests & goals• Situation drivers

• Purchase mix• Primary channel• Feature focus• Service focus• Income• Age/gender• Interests & goals• Situation drivers


• Profit history• Purchase mix• Primary channel• Feature focus• Service focus• Income• Age/gender• Interests & goals• Situation drivers


5


Nokia’s future success depends on delivering great experiences to our customers by creating

APPLICATION

Nokia

1. Basic low-income consumers: want a no frills and a very inexpensive phone.

2. Expression consumers: young consumers who want to customize their phone.

3 Active consumers: want a rugged tough phone with

Nokia’s Clusters or Segments

y gproducts and solutions that work seamlessly and are appealing.

Our strategy contains the core elements required to accomplish this, and is optimized for tapping into the mobile industry’s global growth potential as it unfolds.

http://www.nokia.com/A4126317

3. Active consumers: want a rugged, tough phone with outdoor features.

4. Classic consumers: want a traditional phone with some features.

5. Fashion consumers: want ever thinner, ever small, ever more stylish phones.

6. Premium consumers: want all the latest features and services.

Step 4 – Understand Customer Usage 1

APPLICATION

Usage linked to geographical

Applebee’s

g g g parea and community characteristics.

http://www.applebees.com/


APPLICATION

Usage of Tide laundry

P & G

detergent linked to cleaning power and the needs of working and you ng families.

http://www.pg.com/


6


Customer Profitability Analysis

Analysis of Product Features Purchased & Benefits Desired

Usage Observation

User Differences Situation Differences

IncomeLife cycle stagesLifestyle & interests

Physical surroundingsSocial contextPsychological view

Step 5 - Analyze Contact Channel Sub-Segmentation

External

Competitive informationIndustry analysis

Legal & regulatoryTechnology

Customer Data

DemographicBehavioralAttitudinal

Needs

MotivationExperience

ConvenienceInfluences

CHANNEL #1 CHANNEL #2

Product Features/Benefits

Product LineProduct Models

Product

Customer Profitability

Sub-Segment

#1

Sub-Segment

#2

Sub-Segment

#3

Sub-Segment

#1

Sub-Segment

#2


7

Customer Relationship ManagementCustomer Relationship Management

Customer Experience ManagementCustomer Experience Management

EXPERT OPINIONCustomer experience management (CEM) is emerging as a means of leveraging CRM in order to

According to the most recent research by IBM, decision makers stated that ensuring promises and improving the total customer experience was the top concern. To drive sustainable, profitable organic growth and competitive differentiation, organizations must better integrate and align

create and manage interactions that improve the customer’s experience with the company. The impact of not managing customer experiences can result in significant revenue losses for any company. CEM is not separate or distinct from CRM; it is part of a CRM strategy.

In this chapter, we will start off by defining CEM, the key components of a customer experience and the financial impact of not addressing CEM. We will

©2010 Nancy A. Rauseo CRM and the Customer Experience

the way they treat customers with their go-to-market strategy and branding at each touch point of the relationship.

Source: Heffernan & LaValle (2006)

p galso look at techniques and tools for mapping and analyzing experiences and then identifying improvements. The goal is to put systems in place to continuously capture customer information and use it to make experiences more valuable to customers.

1


Industry Definitions of CEMIndustry Definitions of CEM

CEM means managing customer interactions to build brand equity and long-term profitability.

APPLICATION

Bob Thompson

Customer experience is what the customer receives at every touch point through processes, products and people.

Shaun Smith

The provisional disposition a person has about your company based on all the information in his or her environment,

and their interactions with you and your competitors, plus their reflections on what this means to them.

Companies are beginning to realize what CRM really means. It’s becoming obvious that no matter what technologies are at work, transforming transactions to experiences is the key to strengthen relationships.

Source: Glagowski (2006)


Paul Ward

It’s a matter of understanding and living our customer’s reality which is usually quite different from ours, and

adapting ours to theirs.Rafael Rodriguez

Source: Glagowski (2006)

Starbuck, Mercedes, P&G Reveal Secret Sauce

http://www.1to1media.com/PrintView.aspx?DocID=29500

2

MAR 4860 CRM Lecture Worksheet Chapter 6 Module 1

1


CRM and CEM: What’s the Connection?CRM and CEM: What’s the Connection?

EXPERT OPINION

In math, the term subset is used to describe the relation, called inclusion, of one set being

i d i id h I f ll

Managing customer experiences is an integral part of what CRM should be –a win-win value exchange between a company and its customers. Loyal customer relationships are built on what the customer perceives and feels about the

contained inside another set. Informally, every element belonging to subset A also belongs to superset B, but there may be elements belonging to B that do not belong to A.

CRM

The Human Touch


and feels about the product/service purchased and interactions with the organization.

Source: Thompson (2006)

CEM

3


CRM and CEM: What’s the Connection?CRM and CEM: What’s the Connection?

EXPERT OPINION

Left Brain Right Brain

CRM CEM

For details, read the article by Bob Thompson titled Customer Experience Management: Accelerating Business Performance, found under the Tools link.

CRM CEM

Value of Customer to Company

Focus on Systems & Transaction

Functional Value

Value of Company to Customer

Focus on People & Interactions

Emotional Value

©2010 Nancy A. Rauseo CRM and the Customer Experience 4

Adapted from Customer Experience Management: Accelerating Business Performance by Bob Thompson


2

The Customer Experience ModelThe Customer Experience Model


Customer Experiences

Process Improvement

Customer Intelligence

Customer Customer InformationInformation

SalesRetail Phone Call Center E-mail/

Fax/ Mail Internet ATM

CRM Data CRM Data WarehouseWarehouse

CompanyContacts

Billing

AccountsReceivable

Product

Customer Feedback

©2010 Nancy A. Rauseo 5

EXPECTATIONS EXPERIENCE = EXPERIENCE EVALUATION+

Three States of an ExperienceThree States of an Experience


• Spoken Promises

• Perceived Alternatives

• Unspoken Promises

• Past Experiences

• Outcomes

• Processes

WOW!

OK

Expectations Exceeded

ExpectationsMet

• Personal Values

• Personal Needs

• Word of Mouth


AWFULExpectations Not Met


3


Marketing’s Roles in CEMMarketing’s Roles in CEM

From the Traditional 4Ps of Marketing~From the Traditional 4Ps of Marketing~ EXPERT OPINION Product or Service

Price

Place

Promotion

To the 5Cs of Relationship Marketing~To the 5Cs of Relationship Marketing~

Customer Needs

Cost to Customer

According to recent surveys, 85% of senior business leaders agree that traditional differentiators alone are no longer a sustainable business strategy. About 71% believe that customer experience is the next corporate battlefield


Cost to Customer

Convenience

Communication

Connection (Interactions)

++ Processes

People

Physical Environment

battlefield.

Source: Shaw & Ivens (2005)

7

Economic Impact of Negative Customer ExperienceEconomic Impact of Negative Customer Experience


Source: Hasan (2005)

8©2010 Nancy A. Rauseo


4


CEM Versus CRM RevisitedCEM Versus CRM Revisited

CEM CRMEXPERT OPINION

What It Does

Captures & distributes what the

customer thinks about the company

Captures & distributes what the company knows about the

customer

When It’s Used

At customer interactions or touch

points

After record of the customer interaction

How It’s Monitored

Surveys, observations, VOC t di & l

Transactional data, market research, t t d t ki f

Having spent millions of dollars on CRM software, many CEOs consider their problem to be not a lack of customer information but a superfluity of it. Before investing more time and money, executives justifiably want to know how customer experience


studies & analyses automated tracking of sales, service & support

data

Who Uses It Business/functional leaders

Owners of customer-facing processes

how customer experience data are different and what their value is.

Source: Meyer and Schwager (2007)


Voice of Customer RevisitedVoice of Customer Revisited

REFLECTIONDefinition

Disciplined approach

Aids in identifying, understanding and prioritizing customer needs

Improves communication with customers

Serves as foundation

f


Serves as foundation for CRM


5


Experience Analysis ProcessExperience Analysis Process

1. Make a list of all your customer voices or customer groups APPLICATION

2. Find the sources of customer feedback per group

3. Design the actual VOC strategy: survey, interviews, etc.

4. Implement the VOC strategy

5. Organize the results of the VOC: your interview notes, requirements documents, market research, survey results, etc.

6. Identify unstated or unspoken customer needs or opportunities

Krispy Kreme captures data from a number of sources. ‘Instead of looking just at quantitative sales measures, we established measures through mystery shoppers and our own internal inspections as well as

li it ti f ff i


opportunities.

7. Prioritize your customer experience improvement opportunities using the Customer Experience Segmentation matrix

8. Use process mapping & other techniques to blueprint desired CRM experiences or improvement opportunities.

solicitation of off-premises customers through surveys.’

Source: Smith & Wheeler (2002)


Application of Experience Analysis ProcessApplication of Experience Analysis Process

APPLICATION

UPS Ranks #1 on Reputational Attributes

In the annual survey conducted by Harris Interactive®, UPS ranks #1 for people's "trust in the company to do the right thing, excellent customer service, and sincerity of communications."To learn more about the survey results click below:


results, click below:

http://www.pressroom.ups.com/mediakits/factsheet/0,1889,1388,00.htm


6

Organizing the Voice of Customer ResultsOrganizing the Voice of Customer Results


Affinity Diagram


For more tools and techniques, visit:http://www.asq.org/learn-about-quality/idea-creation-tools/overview/affinity.html

Customer Experience SegmentationCustomer Experience Segmentation




7

Customer Experience BlueprintCustomer Experience Blueprint



Touch Point MappingTouch Point Mapping

mer

ss

esT

ang

ible

s


Experience from the customer’s eyes

C t th f li ti d

Cus

tom

Pro

ces

Tou

ch P

oint

sB

ack-

End

P

roce

sses

Su

ppo

rt S

yste

ms

Captures the feelings, actions, and expectations of customers


Customer Touch Point MapCustomer Touch Point Map

Touch Points What are customers seeing, feeling, and doing?

Category

Opportunity

Delivery

Customers Using Door-to-Door Services

Pick-Up RequestInternal Function/ Process

ResponsivenessCustomer Group

Category

Opportunity

Delivery




What do customers want to see, feel, and do?

16

CERTIFICATE PROGRAMCERTIFICATE PROGRAMFlorida International University



8

Touch Point MapTouch Point Map


Touch PointsWhat are customers seeing, feeling,

and doing?

Category

Opportunity

Delivery




Category

Opportunity

Delivery




What do customers want to see, feel and do?and doing? feel, and do?

Calls 1-800 service number

Gets placed in automated voice response system

Waits up to 3 minutes before service rep answers

Pick up the phone, dial the toll free number and wait for a live person to answer Get a live person on the first try

Gets frustrated when he/she receives an automated system and has to wait so long

Get a live person on the first try

Gets frustrated and sometimes hangs up

Greets service rep and feels pressured to talk Expects a nice greeting and apology for


Provides destination information

Provides timeline for delivery

Makes note of service request # and hangs up

quickly. Has to repeat information. Feels like rep is not listening.

p g g p gylong wait. Say information only once.

Tells service rep when package needs to be picked up (availability) and when it needs to

arrive at final destination

Wants pick-up to be convenient. Doesn’t want to ask for time off at work. Can’t

leave outside.

Writes down service number, confirms pick-up & delivery information

Expects a nice greeting and thank you for service. Wants assurance that timelines

will be adhered to.

Customer Experience MapCustomer Experience Map


COMPANY Core Actions(Improvements)

OPPORTUNITY FOR DELIGHT - Eliminate this customer action

•Identify first time vs. repeat customers•Eliminate automated voice response for new customers•Answer within 3 rings•Friendly and courteous greeting – “Thanks for waiting. How can I help you?”

• Capture information in central database

• Confirm information

• Electronically route request to drivers

• Asks if there is anything more the company can do

• Provides customer with a tracking number and a toll-free # or website for status follow-up

• Thanks customer for business


g p y business

COMPANY Enablers

• Modifications to automated system• Staff for volume• Trained/skilled staff

• CRM operational system

• Trained/skilled staff

• CRM operational system

• Fully integrated with other channels


9

Example of Experience MapsExample of Experience Maps



http://engage.comms.gov.uk/knowledge-bank/insight/customer-journey-mapping/mapping-customer-experience.html




10

10/15/2010

1

MAR 4860MAR 4860Customer Relationship ManagementCustomer Relationship Management

CHAPTER 7: CHAPTER 7: Creating Value for CustomersCreating Value for Customers

Module 1: Value Concepts

©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo 1

Chapter Objectives

The meaning of the term ‘value’

How customers weigh up ‘benefits’ and ‘sacrifices’ in the value equation

Three major forms of value delivery strategy adopted by successful companies

©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo

What is meant by the term ‘value proposition’

How marketers create customer value by mixing together a number of variables known as the 7Ps.

The importance of customization in creating value

How the Internet is changing the way that customers receive value from communication and distribution.

22

Value is the customer’s perception of the balance between benefits received and sacrifices (or costs) made to experience those benefits. Value is the achievement of a customer’s requirements at the lowest total cost of acquisition, ownership and use.

Customer Value Defined


Perceived Value = Perceived Benefits / Perceived Costs*Perceived Value = Perceived Benefits / Perceived Costs*

* Also use * Also use ‘Sacrifices’‘Sacrifices’

For some customers, value equates to low price

For others, it is having their particular requirements met

For another group, quality is the dominant concern.

MAR 4860 - Chapter 7 Module 1

10/15/2010

2

How Do Customers Reduce Perceived Risk?

Delay purchase

Seek word-of-mouth endorsement

Negotiate service contracts

Seek additional information from advertising copy

Buy known brands


Deal with reputable suppliers

Seek performance guarantees

Buy with credit card (protection if product fails)

Negotiate discounts

Take out insurance

Demand pre-purchase trial

Total Cost of Ownership (TCO)

TCO looks not only at the costs of acquiring products, but also the full costs of using, and servicing the product throughout its life, and ultimately disposing of the product.

Cost are incurred in the following processes: search, purchase, ownership,


p , p , p,use, consumption, disposal.

TCO is an attempt to come up with meaningful estimates of lifetime costsacross all these processes

Suppliers can respond to TCO purchasing processes by applying Economic Value to the Customer (EVC) pricing.

Sources of Customer Value

Product Leadership

The Best Product


Source: Treacy and Wiersema (1995)

CustomerIntimacy

Operational Excellence

The Best Total Cost The Best Total Solution


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3

Sources of Customer Value: Marketing Mix

The sources of customer value are based on the marketing mix or 4Ps. A key component of CRM is also the services that accompany any product. Therefore, there are 7 sources of value for services marketing are:

• Product or Services• Price


• Promotion• Place• People (or participants)• Physical evidence• Process (or interaction)

Components of CEM


Customization

Mass customization is the use of flexibleflexible processes and organizational structures to

EXPERT OPINION

Component A

Component A

Component B

Component B


create varied and even individually tailored value propositions, at the same cost as mass-produced, standardized offers.


Base Product/ Service

Base Product/ Service

+ =

Custom Configuration

BB

Component C

Component C

Component D

Component D


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4

Mass Production vs. Mass Customization

Supply Chain Focus

Goal: Economies of Scale

Mass Production

Demand Chain Focus

Goal: Economies of Scope

Mass Customization


Production to Sales Forecast

Speculative Shipping Costs

Inventory Carrying Costs

Production to Order

Goods Pre-sold Before Shipping

Just-in-Time Inventory

Mass Customization – How It Works

Interest Rates Annual Fees Card Designs

1 MODULES


10 5 20

3 CUSTOMER SEGMENTS

Configuration #1 Configuration #1 Configuration #1

2 OPTIONS

4 OFFERINGS

Mass Customization Examples



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Customer Turnoffs

Value

System or Process

People



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CHAPTER 7 CHAPTER 7 -- Creating Value for CustomersCreating Value for Customers

Module 2: Value From Products & Services


Value From Products Value From Products & Services & Services

Product innovation

Additional benefits

Product-service bundling


Branding

Product synergies

Dimensions of Service Quality (SERVQUAL)(SERVQUAL)

Reliability• Ability to perform the promised service dependably and accurately

Assurance• Knowledge and courtesy of employees and their ability to convey trust and

confidence

Also called the RRATE ~Also called the RRATE ~


Tangibles• Appearance of physical facilities, equipment, personnel and communication

materials

Empathy• Provision of caring, individualised attention to customers

Responsiveness• Willingness to help customers and to provide prompt service

MAR 4860 - Chapter 7, Module 2

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The SERVQUAL GAPS Model

Word of Mouth Communications

Personal Needs Past Experiences

Expected Service

Perceived Service

GAP 5The

Customer Gap


Service Delivery

Translation of Perceptions Into Service Quality Specifications

Management Perceptions of

Customer Expectations

External Communications to

CustomersGAP 4GAP 1

GAP 3

GAP 2

Factors Leading to GAP 1

Customer Expectations

GAP Inadequate or lack of marketing research and customer focus Inadequate or lack of marketing research and customer focus


Management Perceptions of Customer Expectations

GAP1

q g Lack of upward communications Insufficient relationship focus Inadequate experience recovery

q g Lack of upward communications Insufficient relationship focus Inadequate experience recovery

Closing GAP 1

Reason for GAP 1 Ways to Eliminate GAP 1

Inadequate or lack of marketing research and customer focus

Add marketing research strategies that include ones that focus on experience quality.

Make sure that marketing research is used in the organization.

Lack of upward communication

Increase interaction between management and customers.


Remove layers between contact personnel and top management – flatten hierarchical structure

Insufficient relationship focus

Use differentiation to identify different groups of customers.

Focus on relationships rather than transactions. Capture expectations data in customer records.

Inadequate experience recovery

Develop systems for handling experiences when reliability failures happen.

Recognize that experience recovery keeps customers, and that lack of recovery loses customers.


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GAP Poor experience design Poor experience design


Management Perceptions of Customer Expectations

GAP2

p g Absence of customer-driven standards Inappropriate physical evidence and experience

environment

p g Absence of customer-driven standards Inappropriate physical evidence and experience

environment

Closing GAP 2


Poor experience design Use customer experience blueprinting to create a systematic new experience process.

Refine vague designs using the help of employees and customers.

Absence of customer-designed standards

Replace company-designed standards with customer-designed standards.


g g Create process management that focuses on customer

requirements. Develop standard processes for setting quality goals and

communicating them with the affected parties. Commit to customer-defined standards.

Inappropriate physical evidence & environment

Conduct customer and employee research to understand the appropriate environment.

Create a experience environment in accordance with customer and employee expectations.


Service Delivery

GAP Deficiencies in human resource policies Deficiencies in human resource policies


GAP3


Deficiencies in human resource policies Failure to match supply with demand Customers not fulfilling roles Problems with experience intermediaries

Deficiencies in human resource policies Failure to match supply with demand Customers not fulfilling roles Problems with experience intermediaries


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Closing GAP 3


Deficiencies in human resource policies

Create more effective recruitment policies that select employees with customer-oriented capabilities.

Reduce role ambiguity and role conflict with clear communications and job descriptions.

Create evaluation and compensation

APPLICATION

Framing the Customer Experience

Innovation, multichannel


Create evaluation and compensation systems that reward employees for service rather than just productivity.

Empower employees. Encourage self-organized teams.

Failure to match supply and demand

Use marketing strategies to smooth peaks and valleys in demand.

Adjust the customer mix to use service capacity at non-peak times.

Innovation, multichannel interaction, and employee engagement outline the approach to picture-perfect strategy.

http://www.1to1media.com/View.aspx?DocID=29930

Source: Gaffney (2006)

Closing GAP 3

Reason for GAP 3

Ways to Eliminate GAP 3

Customers not fulfilling roles

Inform customers of their roles and responsibilities. Create clear instructions and communications.

Be sure that customers are not negatively affecting each other.

P bl ith U t l t i

The Customer Experience DisconnectMany companies focus on customer experience—and some have even produced

APPLICATION


Problems with experience intermediaries

Use control, partnering or empowerment strategies to eliminate channel conflict over objectives and performance.

Eliminate channel conflict over costs and rewards.

Use experience standards and incentives to control quality and consistency.

Balance the tension between empowerment and control.

some have even produced successful results from their efforts. However, recent research shows a huge disconnect between how companies perceive customers' experience and how customers actually live it.


Source: CRM Magazine


External Communications to Customers

GAP Lack of integrated CRM and marketing communications Lack of integrated CRM and marketing communications


GAP4

Service Delivery

g g Ineffective management of customer expectations Over-promising to customers Inadequate cross-functional communications

g g Ineffective management of customer expectations Over-promising to customers Inadequate cross-functional communications


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Closing GAP 4


Lack of integrated CRM & marketing communications

View external communications as one part of an overall strategy that also includes interactive marketing communication and internal marketing communication

APPLICATION

The NFL Wins the Battle for FansForget the Colts. The NFL’s


communication. Develop a strong internal marketing

program.

Ineffective management of customer expectations

Educate customers. Make realistic promises. Negotiate unrealistic promises. Reset customer expectations when

necessary.

integrated marketing strategy was this season’s big winner.


Source: Gaffney (2007)

Closing GAP 4Reason for GAP 4 Ways to Eliminate GAP 4

Overpromising Assure that advertising makes accurate promises.

Assure that personal selling matches what will be delivered.

Assure that physical evidence cues match the quality of what will be provided.P li l h i

APPLICATION

The Urgent Need for Integrated MarketingMass media’s disintegration


Penalize employees who over-promise.

Inadequate horizontal communications

Set up cross-functional teams to work on designing experience blueprints and maps.

Open the channels of communication between sales and operations.

Open the channels of communication between advertising and operations.

Assure that policies and procedures across branches or units are the same.

Mass media s disintegration has customers looking for different brand relationships


Source: Wright (2006)

Service Guarantees & Service Level AgreementsService Guarantees & Service Level Agreements

100% Hampton Satisfaction Guarantee


We deliver in 30 minutes or it’s free!


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Service Recovery

When companies resolve problems quickly and effectively, there are positive consequences for

• Customer satisfaction• Customer retention • Word-of-mouth or referrals to other potential customers

Customers who have been let down, then well


,recovered, are more satisfied than customers who have not been let down at all. Recovery strategies include:

• Do it right the first time!• Welcome and encourage complaints• Act quickly• Learn from recovery experiences -- correct the root causes of problems• Learn from lost customers -- correct the root causes of problems


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CHAPTER 7 CHAPTER 7 -- Creating Value for CustomersCreating Value for Customers

Module 3:Module 3: Value From Processes, People, Physical Value From Processes, People, Physical Evidence, Customer Communication, and Evidence, Customer Communication, and


ChannelsChannels

Value From Value From ProcessesProcesses

First Direct, a bank in the UK, started out as a telephone bank with no branch network. Customer management was entirely IT-enabled, with customer service being delivered from several call centers. The Bank’s customer satisfaction ratings have been consistently higher than competitors’ branch operations. The bank’s slogan is “We’ve built our service to revolve around you.” http://www.firstdirect.com/

Since 1983, Dell has been the world's fastest growing major computer company. Michael Dell's goal is to keep the smallest inventory possible by having a direct link

ith th f t Wh t l d th t t t d


with the manufacturer. When a customer places an order, the custom parts requested by the customer are automatically sent to the manufacturer for shipment. This reduces the cost for inventory tracking and warehouse maintenance.

2

Experiences Using PeopleExperiences Using People

EXPERT OPINION

The Five CEM Steps for Aligning Employee Behavior

1. Recruiting the right


g gemployees

2. Training for experience delivery

3. Providing incentives & rewards

4. Measuring behavior against experience standards

5. Providing the right employee experience

Source: Schmitt (2003)

MAR 4860 Chapter 7, Module 3

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Value From Physical Evidence

Physical evidence is made up of the tangible facilities, equipment and materials that companies use to communicate value to customers.

Banks generally occupy traditional buildings with columns, portico, steps and large, heavy doors.

• Designed to communicate conservative values, security and probity.


McDonald’s uses primary colors, bright lights and the ubiquitous golden arches in the form of the letter M.

Hospitals convey impressions of hygiene and care through white uniforms, immaculately clean premises and well-maintained gardens.

Funeral service organizations use traditional conservative clothing, colors, and vehicles.

Value From Customer Communication

Golden questions can help enterprises to b tt d t d

EXPERT OPINION


better understand customers using the drip irrigation dialogue or smart dialogue.


Value from Communication

Three processes are responsible for the enhanced power of communication to create value for customers:

1 disintermediation


1. disintermediation,

2. personalization (customizations) and

3. interactivity.


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Drip Irrigation Method & Golden QuestionsDrip Irrigation Method & Golden Questions

Peppers & Rogers uses the golden questions strategy to assign customers into needs groups. Golden questions are the key five or six questions that

APPLICATION


key five or six questions that discriminate the customer base with a high degree of accuracy (75% and above). Knowing that asking thousands of customers these golden questions can be very resource intensive, PRG has been able to predict needs groups…To learn more, click below:


Value From Channels

CHANNELCHANNEL

CHARACTERISTICSCHARACTERISTICS

Cost Speed Ability to Touch, Feel, & Reference

Ability to Track

Interactions

Opportunity to Customize

Web Low Extremely High

Medium High High


Regular Mail Medium Low High Medium Varies

Email Low Extremely High

Medium High High

Telephone High Medium Low Medium Medium-High

Personal Selling Very High Medium Varies Medium High

88


Experiences Using PriceExperiences Using Price

EXPERT OPINION

To broaden their customer relationships, firms need to simplify customers’ lives and be transparent about rates


be transparent about rates and fees…USAA does so through efficient call center experiences. Many large banks, on the other hand, are on the opposite side of the spectrum because many of their customers feel nickel-and-dimed.


9


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Chapter Chapter 13, Module 113, Module 1Information Technology for CRM

Learning Objectives

Be aware of the range of CRM technologies

Understand the role that technology plays in the achievement of CRM outcomes

Explain the structure of the CRM ecosystem

Explain the main application areas of CRM

Understand the role that analytics play in CRM technology

The importance of integration, knowledge management and workflow to CRM outcomes

Evolution of CRM Technology

Manufacturer Retailer

Supply

Demand

Consumer

Supply Chain Management

Customer RelationshipManagement

Source: Buttle (2004)

ManufacturerWholesaler

Retailer

Distribute Sell

Consumer

ConsumeProduce

$ $$

Purchase

Customer RelationshipManagement

Enterprise Resources Planning

MAR 4860 - Customer Relationship Management Chapter 13, Module 1

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Customer

File

Service

RecordsAccounting System

Product

FRONT-OFFICE USERS

Sales Reps(laptops)

Marketing(telemarketing center)

Service Reps

Evolution of CRM Technology

Sales

Notes

Purchasing System

Inventory System

Product

File

Sales

History

Call

Activity

Service Reps(Mobile equipment)

Management(decision support)

Channel Partners(team selling)

Purchasing Agents(economies of scale)


Today’s Environment

Marketing

S l

ChannelPartner

Warehouse

Sales

ServiceFinance

Customer

A 360o View of the Customer

Marketing

ChannelPartner

Warehouse


Sales

ServiceFinance Customer


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Financial Services & Banks

AutomotiveManufacturers

• Churn• Share of wallet• Call centers• Data mining

• Dealer networks• Service and maintenance• Customer knowledge

CRM Technology Needs Vary

CRMHighTechnology

Consumer Goods

• Customer knowledge• Portals

• Complex selling• Channels• Product configurations• Partner portal

• Retail trade• Trade spend and promos• Store audits• Complex customer structures


To collect customer information from all touch points

To put to use this information to build accurate profiles on each customer

To organize and deploy customer information in a systematic and orderly fashion to those that serve the customer

The Role of Technology

To use customer information in an intelligent way and make decisions about CRM-related sales and marketing strategies

To create and maintain a unique customer experience


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Data Sources

Data Collection

System

D

Hardware & Software

Applications

1

2S

CRM Technology Architecture



Data Warehouse

System


Information Usage

BusinessProcesses, Hardware, &

Software Applications

3

Source:


Data Sources

Data Collection

System

Hardware & Software

Applications

1

Data Collection System

Data Warehouse

System


Information Usage

2

3


` Local dB

Web Client(Customer/partner)

Internal Department Client

Service Client(Synchronized)

Sales Client(Wireless or Sync)

Data Collection System

Web Server

1

Web Server

1

Web Server

1

Web Server

1

CRM Software Application and Web Servers

CRM Transactional

Database

CRM Analytics Database

CRM Metadata

Back Office Systemssuch as:

AccountingPurchasingInventoryFinance



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Chapter 13, Module 2Chapter 13, Module 2Information Technology for CRM

Scope of CRM Technology

Sales(synchronized,

field information)

Customer Service/Field Service(orders, complaints)

Management(decision support,

performance)Partners

(promotions,funds, portals)


DataKnowledge

BaseWarehouse

CRM System

Marketing(analysis & campaigns/ promotions)

Consumers(web, clubs)

Other systems, email, telephone

Web

EXPERT OPINIONCRM Software Vendors

Software vendors are only a small portion of the overall CRM ecosystem. CRM ft t

The CRM Market Players

Hardware and Infrastructure Vendors

Professional Service Providers

CRM software must run on hardware and integrate with communications infrastructure such as telephony and email systems.



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Specialized Business

Solutions

Proposal Generators Product & Marketing Encyclopedias Product Configurators Lead & Campaign Management Business Process Management

Matrix Technology Solutions http://www.mxtg.com/index.asp

Chordiant http://www.chordiant.com

Basic Sales d Contact Management

ACThttp://www act com

Applications by Solution & Market

and Marketing Solutions

Contact Management Sales Force Automation Marketing Automation

http://www.act.com

Maximizerhttp://www.maximizer.com

Comprehensive Enterprise

Business Solutions

Modular SFA, Marketing & Service Automation Enterprise, Mid-sized, and Small

Business

Siebel Systemshttp://www.siebel.com

Amdocshttp://www.amdocs.com


Customer facing applications

Customer touch point applications

EXPERT OPINION

Refer to the article The 2010 Market Leaders under Supplemental Materials A

CRM Software Applications

Customer intelligence applications

Applications by solution & market

Vertical applications

Workflow applications

Supplemental Materials. A MUST READ!

http://www.nxtbook.com/nxtbooks/crmmedia/crm1006/

EXPERT OPINIONCustomer Interaction Center

Telephone-based applications that support marketing, sales, and service business processes.

Telemarketing

Customer interaction centers are moving from sweatshops to company flagships, handling everything from

Customer Facing Applications

Telemarketing

Telephone sales

Telephone service

handling everything from pre-sales inquiries to order processing to post-sale support. The successful call-center-of-the-future organization won’t be treated as a poor second-cousin cost-center; it’ll be a strategic service offering.

Source: Cusack (2002)


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EXPERT OPINIONSales Force Automation

Contact & time management

Opportunity & lead management

Knowledge management

Sales and Marketing have always had a tug-of-war relationship. Technology didn’t solve this but did allow


Quoting & order configuration

Analysis & reporting tools

it to be played out in new and exciting ways…Sales and Marketing trying to leverage technology was termed the second or third—depending on who was counting—generation of SFA.

Source: Trailer (2002)

EXPERT OPINIONField Service Automation

Customer service requests

Service orders

Service contracts

Service automation for large capital equipment is quite different. This normally involves diagnostic and


Service schedules

Service calls

corrective action to be taken in the field, at the location of the equipment. In this case, this automation involves providing technicians with diagnostics, repair manuals, inventory management and job information on a laptop or PDA.


EXPERT OPINIONCampaign Management

Increasingly, customer service and support software includes a Web-based, self-service

bilit th t t

Customer Touch Point Applications

Electronic Commerce

Self-Service Customer Support

capability that customers can easily access using a browser. Improvements in customer self-service and support have been significantly enhanced through the use of knowledge management engines.

Source: Goldenberg (2002)


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CRM Components - Customers

CRM Components - Products

CRM Components – Marketing Automation


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CRM Components – Sales Automation

CRM Components – Service Automation

CRM Components - PMR


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10/25/2010

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Chapter 13, Module Chapter 13, Module 33Information Technology for CRM

I f ti

Customer Intelligence Applications

Data Warehousing





I f ti

Data Warehousing & Reporting

3

Data Warehousing






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2

I f ti


Data Warehousing






Courtesy: Siebel

Module 6 Unit 1: Basics of CRM Technology©2007 Nancy A. Rauseo 5


Module 6 Unit 1: Basics of CRM Technology©2007 Nancy A. Rauseo

Courtesy: E.piphany

6


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Software vendors specializing in each vertical

Consumer Packaged Goods

Education

Financial Services/Banking

Pharmaceuticals

Professional Services

Retail

DestinationCRM classifies these vertical software solutions into these industries: EXPERT OPINION

Vertical Solutions

p gmarket can be found at:

http://destinationcrm.com/

Government

Healthcare

Insurance

Manufacturing/Automotive

Non-profit

Sports/Entertainment

Technology

Telecommunications

Transportation

Travel/Hospitality

Workflow Applications


Process automation

Escalation

Functions of Workflow Automation

Workflow Applications

Assignment

Integration

Dialogue scripting

Process navigation


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Take a look at how companies are applying BPM to their CRM strategies:

The definition, execution, and management of business processes.

Not a synonym for workflow or Electronic Application Integration (EAI)

Emphasis is on the process itself rather than an entity (i.e., document, data, or person)

APPLICATION

Business Process Management (BPM)

Gives process owners the ability to define what the process should be first and then determine how to effectively orchestrate interactions between the people, data, and documents that make up the steps within a process.

Not married to a specific application

For more information, visit:

http://www.destinationcrm.com/articles/default.asp?ArticleID=5219

You Talkin’ To Me?http://www.1to1media.com/PrintView.aspx?DocID=29824

There’s a Process for That?http://www.1to1media.com/PrintView.aspx?DocID=29595

Strategy and Marketing ConsultantsPeppers & Rogershttp://www.1to1media.com

McKinsey & Companyhttp://www.mckinsey.com

Business Consultants

Scroll through the Accenture site for client success stories in various

APPLICATION

Professional Service Providers

Accenturehttp://www.accenture.comGo to Services for CRM

BearingPointhttp://www.bearingpoint.comGo to Solutions for CRM

CAPGeminihttp://www.capgemini.com/services/consulting/crm/

disciplines and industries. Here’s one on Best Buy:

Business Process Transformation and Reengineering with Accenturehttp://www.accenture.com/Global/Services/Client_Successes/By_Subject/Customer_Relationship_Mgmt/BestBuyTransformation.htm




Chapter 14

Sales Force Automation

Sales force automation definition & technologies

Sales Force Automation is the application of computerized technologies to support sales people and sales management in the achievement of their work-related objectives.

SFA hardware includes desktop, laptop and h dh ld d i d t t/ ll t t h lhandheld devices, and contact/call centre technology.

SFA software comprises both ‘point’ solutions that are designed to assist in a single area of selling or sales management, and integrated solutions that offer a range of functionality.

SFA software solutions (sampling)

SFA specialists SFA as part of CRM suite

SFA as part of Enterprise suite

Selectica Onyx Oracle

EzRoute Pivotal SAP

Salesnet Salesforce.com Epicor

CallWizard SalesLogix Deltek

Selltech ACCPAC Fourth Shift

CyberForms NetCRM Intentia

SFA functionality

account management pipeline management

activity management product encyclopaedias

contact management product configuration

contract management product visualization

document management proposal generation

event management quotation management

incentive management sales forecasting

lead management territory management

opportunity management work-flow engineering

order management

Each of these is a high level PROCESS. “Managing accounts” is a process; Managing sales activities is a process;

Account management

Account management offers sales reps and managers a complete view of the customer relationship including contacts, contact history, completed transactions, current orders, shipments, p , , p ,enquiries, service history, opportunities, and quotations. This allows sales reps and account managers to keep track of all their obligations in respect of every account for which they are responsible, whether this is an opportunity to be closed, an order or a service enquiry.

Account management screenshot

Activity management

Activity management keeps sales reps and managers aware of all activities, whether complete or pending, related to an account, contact, or opportunity, by establishing to-do lists, setting pp y, y g , gpriorities, monitoring progress and programming alerts. Activities include preparation of quotations, scheduling of sales calls and following up enquiries, for example.

Contact management

Contact management functionality includes tools for building, sharing and updating contact lists, making appointments, time setting, and task, event and contact tracking .Contact list data includes names, g ,phone numbers, addresses, preference data, and email addresses for people and companies, as well as a history of in-bound and out-bound communications.

Contact management screenshot

Contract management

Contract management functionality enables reps and managers to create, track, progress, accelerate, monitor and control contracts with customers. Contract management helps manage a contract's g p glifespan by shortening approval cycles for contracts, renewing contracts sooner, and reducing administrative costs. The software may use security controls to ensure only approved people have access to contracts.

Document management

Companies generate and use many documents as they sell to customers - brochures, product specifications, price lists, competitive comparisons, and templates for preparing quotations, for example. p p p g q , pDocument management software allows companies to manage these documents, keep them current and ensure that they are available to reps and managers when needed.

Event management

Event management enables reps and managers to plan, implement, control and evaluate events such as conferences, seminars, trade shows, exhibitions and webinars, whether run solo or jointly with customers , j yor other partners.

Event management screenshot

Incentive management

Incentive management is an issue for sales managers who use commissions to lift, direct and reward sales reps’ efforts. In many companies, commissions are calculated using stand-alone gspreadsheets.

Lead management

Lead management allows companies to create, assign and track sales leads. User-defined rules allow leads to be allocated to reps and account managers on the basis of role, territory, product g , y, pexpertise or other variables.

Lead management allows for more equitable workload distribution across a sales team, and uses security controls to ensure that reps can only access their own leads.

Lead management screenshot

Opportunity management

An opportunity is a record of a potential sale or any other type of revenue generation. Opportunity management software enables reps and managers to create an opportunity record in the database, and pp y ,monitor progress against a predefined selling methodology.

Opportunity management report

Order management

Order management functionality allows reps to convert quotations and estimates into orders once a customer has agreed to buy. If this is done in front of a customer, the order can be loaded into production, , p ,or picked from a warehouse, more quickly.

Order management software may include a quotation engine, a pricing module, and a product configurator. With visibility through a portal, the customer, rep and manager has access to the same, up-to-date order information.

Pipeline management

Pipeline management is the process of managing the entire sales cycle from identifying prospects, estimating sales potential, managing leads, forecasting sales, initiating and maintaining customer g , g grelationships, right through to closure. A well-defined sales pipeline helps minimize lost opportunities and breakdowns in the sales process.

Product encyclopaedia

A product encyclopaedia is a searchable electronic product catalogue, that generally contains product names, stock numbers, images and specifications. These can be stored on reps computers’ and/or p pmade available to customers online.

Product configuration

Product configuration applications enable salespeople, or customer themselves, automatically to design and price customized products, services or solutions. Configurators are useful when the product g pis particularly complex or when customization is an important part of the value proposition.

Product visualization

Product visualization software enables sales reps and customers to produce realistic images of products before they are manufactured. This is a useful application when linked to a product pp pconfigurator. The image can take the form of a simulated photograph, 3-D model or technical drawing, and can include other related documentation such as specifications or prices.

Proposal generation

Proposal generation software allows users to create customized proposals for customers. Users draw from a database of information to create proposals which, typically, are composed of several parts, some , yp y, p p ,of which are customized: cover page and letter, introduction, objectives, products, product features, services, prices, specifications, pictures, drawings, people, experience, resumes, references, approach, schedule, organization, scope of work, and appendices.

Quotation management

Quotation management software allows reps and managers to quote for opportunities. The software allows users to create, edit, approve, and produce costed, customized, proposals quickly and reliably. , , p p q y ySome vendors enable users to create multimedia proposals with audio, animation and video.

Sales forecasting

Sales forecasting applications offer sales reps and managers a number of qualitative and quantitative processes to help forecast sales revenues and close rates.

Territory management

Territory management software allows sales managers to create, adjust and balance sales territories, so that sales reps have equivalent workloads and/or opportunities.

Some territory management applications come with a territory management methodology which users can follow when establishing sales territories.establishing sales territories.

Some applications link to geographic mapping, or geo-demographic, software. The software enables companies to match sales coverage to market opportunity, create sales territory hierarchies (cities, states, regions) and reduce the cost of selling by reducing travel time.

Call cycle scheduling, calendaring and lead management is often enabled by the software.

Workflow engineering

Work-flow engineering software is useful for designing sales-related processes, such as the lead management process, and the event management process. It can even be used to design the selling p g gprocess itself – the series of steps that a sales rep must follow in shifting a prospect from initial awareness to the close.

Examples of SFA reports

cost-to-serve sales cycles

customer profitability share of market

lead conversion share of wallet

pipeline progress sales person productivity

quotation performance win-loss rates

Benefits for SFA stakeholders

Salespeople: shorter sales cycles, more closing opportunities, higher win rates

Sales managers: improved salesperson productivity, improved customer relations accurate reportingimproved customer relations, accurate reporting, reduced cost-of-sales

Senior management: accelerated cash flow, increased sales revenue, market share growth, improved profitability

Motivations for implementing SFA

Motivation % of sample reporting

Improve efficiencies 72

Improve customer contact 44Improve customer contact 44

Increase sales 33

Reduce costs 26

Improve accuracy 21

SFA will enhance performance when…..

Sales people find that SFA is easy to use

Sales people find the technology useful because it fits their roles well.

Availability of appropriate-to-task SFA training

Users have accurate expectations about what SFA will deliver

Users have a positive attitude towards innovation Users have a positive attitude towards innovation

Users have a positive attitude towards technology

Availability of user support after roll out; for example: help desk.

Involvement of user groups including sales reps and managers during project planning and technology selection.

Deployment of a multi-disciplinary team in the project planning phases

Senior management support for SFA.



Chapter 15

Marketing Automation

Marketing automation definition

Marketing automation is the application of computerised technologies to support marketers and marketing management in the achievement of their work-related objectives. j

Benefits from marketing automation 1

Enhanced marketing efficiency● The replication of marketing processes delivers greater control

over costs. When marketers use manual systems and ad hocprocesses, there can be considerable inefficiencies. MA enables companies to develop more streamlined, cost-efficient processes, that can be operated by any marketing incumbent, whether experienced or new-to-role.

Greater marketing productivity● MA enables companies to run dozens, even thousands of

campaigns and events through multiple channels simultaneously.

More effective marketing. ● MA allows marketers to employ what is known as closed-loop

marketing (CLM). CLM is based on a Plan-Do-Measure-Learn cycle.

Benefits from marketing automation 2

Enhanced responsiveness. ● Marketers have traditionally created and implemented annual

marketing plans with campaigns and promotions planned and scheduled many months ahead. MA allows marketers to respond instantly to opportunities, even if not part of a plan. MA functionality enables companies to engage in real-time marketing, responding immediately to an identified opportunity.

Improved marketing intelligence.● MA’s embedded reporting and analytics functionality provides valuable

management insights into markets, customers, campaigns, events and so on, leading to both enhanced efficiency and effectiveness.

Improved customer experience.● Customers receive personalized, relevant communications and offers

at appropriate times. MA means less Spam, from the customer’s perspective.

Closed-loop marketing Functionality offered by MA software

Asset management Market segmentationCampaign management Marketing analyticsCustomer segmentation Marketing optimisationDirect mail campaign management Marketing performance management

Document management Marketing resource management Email campaign management Partner marketingEmail campaign management Partner marketingEnterprise marketing management Product life-cycle management Event-based marketing Search engine optimisationInternet marketing Tele-marketing Keyword marketing Trigger marketingLead generation Web analyticsLoyalty management Workflow engineering

These are examples of high-level processes.

Asset management

Asset management enables companies to identify and track the assets that customers purchase, license, use, install, or download. Assets can be either tangible, intangible or blended.g , g

Campaign management

Campaign management automates the processes involved in planning, implementing, measuring, and learning from communication programs targeted at prospects or customers. The key elements of p p ycampaign management software are workflow, segmentation and targeting, personalization, execution, measurement, modelling and reporting.

Customer segmentation

Customer segmentation is the practice of partitioning customers into homogenous subsets so that each subset can be addressed as a unique marketing audience. This is the foundation of gcustomer portfolio management.

Direct mail campaign management

Direct mail campaign management is a specific form of campaign management in which the communication medium is direct mail.

Direct mail has many applications including lead Direct mail has many applications including lead generation, lead conversion, building awareness, up-selling and cross-selling, customer retention, database building or image enhancement. Important contributors to direct mail success are the list, the creative execution, the offer, and the timing.

Email campaign management

Email campaign management is a specific form of campaign management in which the communication medium is email.

Email is cheap easy to use and ubiquitous Email is cheap, easy to use and ubiquitous.

Email campaign management process

Enterprise marketing management

Enterprise marketing management encompasses the business strategy, process automation and technologies required to effectively operate a marketing department, align resources, execute g p , g ,customer-centric strategies and improve marketing performance. It is best-suited for large organizations with 50 or more people in marketing.

This includes functionality for campaign management, lead management, MRM [marketing resource management] and analytics.

Event-based marketing

Event-based marketing occurs when an event triggers a communication or offer. Event-based campaigns are usually initiated by customer behaviours or contextual conditions.

Internet marketing

Internet marketing is the process of creating value by building and maintaining online customer relationships.

Seven stage cycle of internet marketing

Keyword marketing

Keyword marketing is the practice of generating website traffic from internet users who have entered keywords into search engines such as Google, Yahoo!, AOL, Ask.com and Live search (formerly , , ( yMSN).

Lead generation

Lead generation is an important marketing objective, particularly in business-to-business contexts. Sales people challenged to grow the numbers of customers served need to be presented with high quality leads p g q yfor follow-up.

Marketers can deploy campaigns, events, seminars, Webinars and other tactics to generate the leads.

Loyalty management

Loyalty management functionality allows organisations to develop and operate loyalty management programs.

The development of customer loyalty is a goal of The development of customer loyalty is a goal of many CRM programs. The availability of loyalty management applications is a direct response to this need. Loyalty, or frequency, programs are important to several constituencies – the brand owner who operates the program, the member who collects and redeems credits, and the channel partner who transacts with the member.

Market segmentation

Market segmentation is the practice of partitioning markets into homogenous subsets so that each subset can be addressed as a unique marketing opportunity.pp y

Marketing analytics

Marketing analytics is the application of mathematical and statistical processes to marketing problems. Marketing analytics can be used to explore, describe and explain.p , p

Marketing optimization

Marketing optimization software allows companies to select an overall goal, such as sales or profit margin maximization, and specify all of the constraints of a marketing campaign strategyg p g gy

The software then determines which customers should get which offer through which channel to ensure the campaign objectives are met.

Marketing optimization screenshot

Marketing performance management

Marketing performance management (MPM) software enables companies to measure their marketing performance though analysis and reports, and improve outcomes over time through closed-loop p g pmarketing.

Senior management is progressively becoming more demanding that marketers be accountable for their expenditure, and MPM helps marketers meet that expectation. MPM, which is typically focussed on analysis of marketing tactics such as events and campaigns, is routinely built into most MA applications.

Marketing resource management

Marketing resource management applications consist of a range of automated tools that enable marketers to manage their marketing processes and assets more effectively, and to work at greater speed

d ith i d t l MRM t lkit i l dand with improved control. MRM toolkits may include modules for :● Marketing planning and budgeting, New product launch,

Marketing event calendaring, Event planning and registration, Project management, Campaign planning, Collateral production, proofing and approval, Digital asset management, including brands, trademarks, logos and collateral, Expense and budget management, Time management, Media buying, and Procurement

Patrner marketing

Partner marketing solutions enable companies to coordinate and work collaboratively with channel partners and others.

Partner marketing solutions are used to manage Partner marketing solutions are used to manage processes such as partner qualification and sign up, development of joint business plans and objectives, cooperative advertising and promotions, lead management, co-branding of collateral and point-of-sale materials, measuring partner performance, partner training, administration of marketing funds, and specialist partner incentive schemes.

Microsoft Canada’s partner portal

Product life-cycle management

Product life-cycle management (PLM) applications help marketers manage life cycle stages effectively and profitably.

PLM software solutions facilitate collaborative intra- PLM software solutions facilitate collaborative intraand extra-enterprise engineering, product development, and improved management of projects, product portfolios, documents, and quality. PLM applications can provide a single source of all product-related information to use in the innovation, design, engineering, feasibility, launch and market development processes.

Search engine optimization

Search engine optimization (SEO) is the practice of improving the quantity and quality of website traffic generated by search engines.

Usually the higher ranking results that appear earlier Usually, the higher ranking results that appear earlier in the listings generate more visitors. SEO aims, therefore, to achieve high rankings, preferably on the first or second pages.

Tele-marketing

Tele-marketing is the use of the telephone to identify and qualify prospects, and to sell and service the needs of customers.

Tele-marketing takes two forms: inbound (calls from Tele marketing takes two forms: inbound (calls from customers) and outbound (calls to customers). Some call centres perform a blended function with agents both making and receiving calls.

Tele-marketing is widely employed in both B2C and B2B environments, but is subject to legislative control due to its intrusive nature.

Tele-marketing fucntionality

Auto-dialling

Predictive dialling

Automated voice-messaging

C t t li t t Contact list management

Agent management

Do Not Call compliance

Screen pop with caller ID

Scripting, including objection response

Computer Aided Telephone Interviewing (CATI)

Interactive Voice Response (IVR)

Trigger marketing

Trigger marketing is the practice of responding to some customer-generated or customer-related event in a way that is designed to achieve some marketing goal such as make a sale, identify a cross-sell g , yopportunity, prevent negative word-of-mouth, or promote positive word-of-mouth. The event triggers the response.

Web analytics

Web analytics report the behavior of website visitors. Routine reports generally detail web traffic data, but may also include performance data from campaigns and events that involve the web site, for p g ,example the number of click-throughs from a web-link inserted in a campaign email.

Two main technologies collect data: logfile analysis and page-tagging.

Web analytics terminology

Building block terms: page, page view, visit/session, unique visitor, new visitor, repeat visitor, return visitor

Visit characterization terms: entry page, landing page exit page visit duration referrer internalpage, exit page, visit duration referrer, internal referrer, external referrer, search referrer, visit referrer, original referrer, click-through, click-through rate/ratio, page views per visit

Content characterization terms: page exit ratio, single-page visit, single page view visits (bounces. Bounce rate

Conversion metrics terms: event, conversion

Web analytics report

Work-flow engineering

Work-flow engineering software is useful for designing marketing-related processes, such as the campaigning process, event-based marketing process, or the marketing planning process. p , g p g p

Campaign work-flow screenshot



Chapter 16

Service automation

About customer service 1

Customer service has been a necessary preoccupation of service organisations, because they have understood that customers are responsive to the quality of the service they experience. q y y p

The quality of customer service is just as important for agriculturalists, miners, and goods manufacturers. This is particularly so when there is product parity, and customers are unable to discern meaningful differences between alternative suppliers or brands.

About customer service 2

Customer service standards can be assessed by customers when a service is being performed, as well as after the service has been delivered. ● The service experience as perceived from the dentists chairThe service experience as perceived from the dentists chair

during service delivery might be very different from the assessment a few days later.

Customer service can be experienced at any stage of the customer activity cycle: before, during, or after purchase.

Integrative quality

Integrative quality is determined by the way the various elements of the product and service delivery system work together. ● High integrative quality means that the processes, peopleHigh integrative quality means that the processes, people

and technology complement each other, working efficiently and effectively to deliver excellent customer service.

Customers who receive service from technology-enabled manufacturers or service providers, such as those with CRM systems in place, experience integrative quality.

Six attributes of companies renowned for excellent service 1

1. Customer service is pervasive. ● It is everyone’s responsibility; it is neither delegated nor

relegated to a single department or function.

2. Their operations run smoothly with minimal product2. Their operations run smoothly with minimal product and service defect rates, allowing them to focus on pleasing customers.

3. They are always looking for ways to improve.

Six attributes of companies renowned for excellent service 2

4. Customer service lies at the heart of the value proposition. ● Customer service is the main selling point.

5 They build personal relationships with customers5. They build personal relationships with customers.

6. They employ the latest IT to● allow their customers to interact with them more

conveniently

● develop a profound understanding of what customers need and want

● track activities and processes that influence customer experience.

Service automation definition

Service automation is the application of computerised technologies to support service staff and management in the achievement of their work-related objectives. j

Where is service automation deployed 1?

contact centres● Contact centres are configured to communicate with

customers across multiple channels including voice telephony, mail, email, SMS, instant messaging, web collaboration and fax.

call-centres● Call centres are generally dedicated to voice telephony

communications, whether through a public switched telephone network, cell-phone network, or VoIP.

Where is service automation deployed 2?

help-desk● Help-desks are usually associated with IT environments

where assistance is offered to IT users. SA applications such as case management, job management and service level management are used in this setting.

field service● Field service is widespread in both B2C and B2B

environments. Service automation applied to field service operations involves technologies such as job management, scheduling, mapping and spare parts management.

Key technological elements of SA 1

Infrastructure● When service is delivered through a central call-centre or contact-

centre, in a multi-channel environment, there needs to be tight integration between various communication systems, including telephony email and webtelephony, email, and web.

Data● Access to the right customer-related data, to enable the service

agent to identify and fix the issue promptly is critical to the delivery of responsive customer service.

Key technological elements of SA 2

Devices● Where service is delivered by a distributed work-force, smaller,

lighter, devices such as laptops, Windows-enabled hand-held devices, and smart phones or cell phones such as Blackberries, tend to be employed; these are typically not found in call- andtend to be employed; these are typically not found in call- and contact-centres. Synchronisation is also an issue for a distributed service team. Periodic synchronisation with the central CRM database enables service engineers and others to ensure that they are fully apprised of their daily scheduled appointments.

Software.

Benefits from service automation

Enhanced service effectiveness. ● Service requests can be completed more quickly to the customer’s

satisfaction by ensuring that requests are handled or the first point of contact or routed to the right service engineer or customer service agent, who is able to draw on an up-to-date knowledge base to resolve the issue.base to eso e t e ssue

Greater service productivity. ● Call- and contact-centre management systems ensure that the

optimal number of agents are scheduled and that their time is used productively. Field service applications ensure that workload is equitably and optimally distributed.

Improved customer experience. ● Agents have full visibility into the customer history and service

request and can ensure that service delivery is appropriate to customer status or agreed service levels

Functionality offered by SA software

Activity management Mapping and driving directions

Agent management Outbound communications mgmt

Case assignment Queuing and routing

Case management Scripting

C t t t S h d liContract management Scheduling

Customer self-service Service analytics

Email response management Service level management

Escalation Spare parts management

Inbound communications mgmt Web collaboration

Invoicing Workflow engineering

Job management

Activity management

Activity management enables service staff to review their workload, to-do list and priorities as directed by their manager or scheduler, and to report back on progress and issue resolution. Some applications p g ppallow activities to be updated in real-time by dispatchers and routed to the technician, so that work can be reprioritised. Alerts can be set so that appointments are not missed, or to notify agents and their managers that issues are unresolved or service levels are about to be, or have been, violated.

Agent management

Agent management is a high priority for call- and contact-centre managers. Managers want to employ the lowest head-count compatible with the desired level of customer service. Too few agents and gcustomers will be dissatisfied with wait-times; too many agents and payroll costs will be unnecessarily high. Customers and managers both want issues to be resolved quickly by agents.

Technologies that contribute to this outcome include queuing, scripting, and knowledge management.

Case assignment

Case assignment applications ensure that each enquiry or issue gets routed to the right agent or technician for resolution.

Customer service agents might for example be Customer service agents might, for example, be organised according to language skills, and field service agent by product category

Case management

Case management covers the full cycle of activities involved from receiving initial notification of a matter of concern to a customer to its final resolution and the case file being closed. g● Case management is also known as incident management

and issue management.

Cases, incidents or issues are initiated by the creation of a trouble ticket. ● Customers may be allowed to do this by web-form, or by

emailing or calling a service or contact centre.

Trouble ticket screenshot

Contract management

Contract management functionality enables service engineers and managers to create, track, progress, accelerate, monitor and control service contracts with customers.

Many companies now sell extended service contracts to customers when warranty periods have expired.

Customer self-service

Customer self-service is an attractive option for companies because it transfers the responsibility and cost for service to the customer.

Customers who self-serve are much less likely to Customers who self serve are much less likely to place demands on contact-centre, call-centre, help-desk or field service staff.

Customers are typically more competent at self-serving when transactions are involved (e.g. online banking or music downloads); however, they are less competent when problem-resolution is concerned.

Email response management systems

Email response management systems (ERMS) are not only useful for handling inbound emails but also for delivering outbound emails and SMS messages.

ERMS are designed up to manage the reception ERMS are designed up to manage the reception, interpretation, routing, response and storage of incoming email securely and effectively.

Escalation

Escalation ensures that issues get escalated according to internally determined rules. Higher levels of authority typically have greater discretion to resolve issues. For example, a front-line customer p ,service agent might be required to escalate to higher levels of management issues that have a potentially high cost or reputational consequence.

Inbo8und communications management

Inbound communications management (ICM) applications allow companies to receive, route, queue and distribute incoming communications from any channel – voice telephony, email, fax, instant message SMS fax web form to agents in anymessage, SMS, fax, web form – to agents in any location including contact centre, in the field or at home.

A unified queue, issue/content recognition, intelligent routing, and knowledge-base integration allow agents to deliver a consistent customer experience and to respond effectively to service requests whatever the communication channel.

Invoicing

Invoicing is a useful application for service technicians who are called to site to provide out-of-warranty service. Having completed the job to the customer’s satisfaction, and captured the customer’s , psignature electronically, the invoice can be raised on the spot, thereby accelerating cash flow.

Job management

Job management applications offer a range of functionality including cost estimation, quotation generation, creation of trouble tickets, job planning, travel time and distance calculation, job clustering (to , j g (reduce travel time), calendaring, scheduling, spare parts management, job progress tracking, invoicing, service level management, technician despatch, time management and product configuration.

Job management screenshot

Mapping and driving directions

Solutions that provide mapping and driving directions are very useful for service engineers who need to visit customers’ homes or business premises. Taking into account the engineer’s point-of-origin, g g p g ,service locations, job priorities, service level agreements and other variables, mapping solutions can minimize travel times and distances to ensure that service tasks are performed optimally.

Outbound communications management

Outbound communications management software applications are used in a service environment to acknowledge service requests, make and confirm service appointments, advise on the progress of a pp , p gservice task, invoice for out-of-warranty service, and follow-up after service to ensure that the customer is satisfied

Queuing and routing

Queuing and routing applications allow issues to be routed to agents with particular expertise and positioned in that agent’s queue according to some criterion.

Routing is usually determined by case assignment rules and position in the queue is determined by customer value or some other metric.

The objective of queuing and routing is to ensure that every service issue is presented to the most appropriate agent for handling and resolution.

Scheduling

Scheduling involves planning and organising a service technician’s activity plan for a day, week or other period.

A technician’s schedule contains details on the A technician s schedule contains details on the customer, location, time, product and issue.

Some scheduling applications take into account a range of considerations to ensure that the right technician is sent to service the customer● travel time and distance, technician availability, technician

skills, customer access hours, service level agreement, availability of spare parts, and the technician’s hourly rates of pay.

Task schedule delivered to a Pocket PC Scripting

Scripting enables customer service agents to converse intelligently with customers to diagnose and resolve problems, even though they may be untrained as technicians. Scripts can be designed so p gthat they flex dynamically according to customer response. Scripts also reduce agent training time.

Service analytics

Service analytics provide managers with information on how effectively and efficiently customer service generally, and individual agents or technicians specifically, are operating. Important metrics for p y, p g pmanagers of field service operations, for example, include technician utilization, parts inventory, travel time, first time fix rate (FTFR), mean time to resolve (MMTR), and job backlog.

Contact centre telephony dashboard

Service level management

Service level management applications allow managers to control the level of service that is offered to customers, and technicians to deliver the level of service agreed. g

Service levels can be agreed for a number of variables including availability (the percentage of time that the service is available over an agreed time period), usage (the number of service users that can be served simultaneously) and responsiveness (the speed with which a demand for service is fulfilled).

Spare parts management

Spare parts management is an important application for field technicians. They can see what parts they have with them on the road, check the inventory levels held by other technicians and at y yregional and central warehouses, order new parts, transfer parts from colleagues, manage excess and defective parts, and check on the progress of orders thereby ensuring that when they turn up at a job, they are properly equipped

Web collaboration

Web collaboration between customer and service agent is enabled by technologies that use instant messaging (web chat), or allow both parties to co-browse web-pages. This allows the agent to help the p g g pcustomer to resolve the issue in real time.

Customer service agents can collaborate with a number of customers simultaneously, or can prioritise based on customer value or some other metric.

Work-flow engineering

Work-flow engineering software is useful for designing service-related processes, such as problem diagnosis and issue escalation.

Work-flow for field service operations will define howWork flow for field service operations will define how service requests are validated, how service tickets are issued, how tickets are allocated, how problems will be diagnosed, how parts will be ordered, how problems will be fixed, how customers will be invoiced, and so on.

MAR 4860 - Chapter Slides

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