Customer Relationship Management

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Customer Relationship Management

• Week 9

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CRM Framework
Source Andersen Consulting
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Customer Relationship Management
Technology
Marketing
Direct, Interactive Dialog, Real time
Warehousing Online data store User tools
Analytics
Business Customer Financial
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Buzzword Alert

• CRM Often used to describe any business or
  marketing approach that claims to target
  customers, not transactions. Sometimes confused
  with Customer service, account management, sales
  force automation, e-commerce, predictive
  modeling, data mining, data warehousing, database
  management, database marketing, direct marketing,
  and wide variety of marketing activity. Used here
  to describe a systematic business approach using
  information and on-going dialogue to build long
  lasting mutually beneficial customer
  relationships.
• Customer centric Sometimes used to refer to any
  awareness that a business has of its customers.
  Used here to describe an approach to business
  that uses the customer (not the transaction) as
  the building block of data management, reporting,
  goal setting and measurement as well as business
  and marketing strategy organization and technical
  infrastructure, and corporate culture and values
  over time and across sales, marketing, IT,
  analysis, service, management and support
  business units.

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CRM working definition

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

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Systematic Use of Information

• Database of customer information
• The customer is the base level of data for
  storage,reporting,analysis and measurement
• Analysis of customer data to predict likely
  future behavior
• Modeling uses past behavior to predict future
  behavior and identifies other predictors as well.
  
• Identifying and evaluating each relationship
• CR are identified, evaluated reevaluated and
  continually managed according to current
  information

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To attract and keep customers

• Cost efficient customer acquisition
• Profiles used to select likely new customers and
  offers for specific customer segments
• Retention efforts focused on most profitable and
  at risk customers
• Continuous process of solidifying relationship
  with profitable customers, converting less
  profitable customers to more profitable and
  attempting to convert at risk customers before
  they are lost.
• Shared information across channels for consistent
  communications
• Customer receives consistent offers, service and
  messages across sales and service channels

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With or Without

• Without CRM
• Customer re-enters information about music
  preferences every time at log-in
• Customer re-identifies CI every time at CS
• Call center and stores have different pricing
  from web site
• Customer must return defective CD through the
  delivery channel-cannot switch between electronic
  channels and stores.

• CRM in practice
• Customer logs onto the Internet and finds
  information on favorite music group,
  advertisements featuring specials on new CDs and
  dates with ticket offers to next concerts in
  local area, plus emails telling them about new
  groups with a similar style or from the same
  record company.
• Customer reads about CDs on the Internet, orders
  through the CS,exchanges at a local record store
  if CD is defective.

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Through on-going dialogue

• Continuous interaction with customers based on
  analysis
• Interactions,offers and messages are
  planned,personalized and delivered according to
  analytic insights
• Real time response on the Internet
• Immediate changes in advertising, information,
  recommendations, product features and even
  pricing based on web or email behavior
• Listening to create a sense of intimacy with the
  customer
• 11 dialogue through appropriate responses
  delivered real time

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Web Telephony Integration
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Email Integration Capability
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To build long-lasting mutually beneficial
relationships

• Success measured in customers and customer value
• Goals, results even incentives measured in terms
  of customers and customer value,not transactions
• Continual reevaluation of customer relationships
• On-going measurement to identify profitable, at
  risk and underserved customers
• Continual learning about customer needs
• Satisfied customers make good business sense

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Customer Strategy should be defined and driven by
Customer needs
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At its simplest

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

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The Learning Loop
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At it is most complex CRM comprises an
interconnected web of sophisticated, high tech
hardware software, strategies and processes
designed to help business quickly, efficiently
and voluminously determine how to treat each
customer in order to create a valued experience
for both the business and the customer.
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Sales Force Automation
Analytics
Operations
Distribution Partner
Campaign Management
Call behavior analysis
Customer Valuation
Monitoring
Integrated Customer View
Quality of Service Analysis
Segmentation And profiling
Customer Service
Risk Analysis
Behavioral Modeling
Profitability analysis
Web Intelligence
Needs analysis
Sales analysis
Call Center
E-commerce Web
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A data warehouse builds a strong foundation for
CRM infrastructure
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Web Applications
Sales Force Automation
Call Center
Profitability
Legacy Systems
Prospect Lists
Data transformed and loaded in MD Information
from legacy sources normalized Into member and
household tables. Time series information kept
for historical analysis
Profiling/Segmentation Opportunity
Identification Campaign management Performance
measurement Predictive modeling Adhoc and DSS
reporting
Marketing Database
Real-time Database
Real time data feeds
Business Intelligence
Results from P, S DM, M loaded into MD and RT
DB To enable real time personalization and
decisioning. Single repository for Contact
History
Staging area for data Daily batch reporting Real
time campaign management Newsletters Personalizati
onDecisioning
Campaign Management
Real time data feeds
Site
Tracking Reporting
Log Files
Data Mining
Example of warehouse processes architected for CRM
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Customer data should be moved into the warehouse
in an consistent and efficient manner
Extract, Transfer, Load (ETL)
Extract data from legacy systems, other sources
Sources Surveys,response history,online behavior
Transform data into consistent, clean,
customer-level, knowledge according to
pre-set data definitions
Data dictionary designed during warehouse design
through enterprise-wide participation and made
available enterprise-wide
Load and manage data efficiently
Batch processing during off- hours,predefined
queries
Examples Standardize addresses set aside an
untouchable control group
Condition Data
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What Customers Want

• Treat me as an individual (not a number)
• Demonstrate that you can use information about
  me in a way that makes working with you valuable
• ( dont abuse my information)
• Show me that you really know me no matter
  where I talk to you.
• Care about my needs/try to anticipate them.

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Creating the CRM organization
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Buzzword Alert

• Politics
• The result of opposing business priorities across
  different units that compete for a finite pool of
  resources
• Change Management
• Guiding an organization and its members through
  significant alterations in organizational
  direction and individual responsibilities as
  quickly and effectively possible
• Organizational design
• Managing human systems and hierarchies, with
  supporting technical and process infrastructure,
  in order to most effectively deliver on the
  mission of the enterprise

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Organizing around the Customer

• Who thinks about the customer?
• Who advocates the customer?
• Who doesnt think about the customer?

Competing Distribution
Competing Products
Competing Sales Territories
Competing Channels
Competing Business Units
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• Everyone in an organization needs to think about
  the customer. To achieve this, an organization
  must encourage change by providing the tools to
  make the changes steadily and surely

Changing how an organization thinks Customer centric metrics
Changing organizational processes Pilots,business rules and business case
Changing organizational structure Evolutionary not revolutionary
Changing culture Short term and long term success
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Customer Centric Metrics
Volume Metrics
Customer Centric Metrics

• Call Duration
• Encourages TSRs to make calls as short as
  possible, keep costs low
• Creates dissatisfaction

• Customer Retention
• Encourages TSRs to satisfy customers
• Creates loyalty

• Sales Volume
• Encourages cannibalization
• Encourages short term product pushes instead of
  long term CR

• Customer Value Impact
• Increases customer value following interaction
• Includes additional information gathered which is
  useful for future campaigns

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Changing Processes

• There are several ways to change processes
  without creating fear within an organization
• Pilot projects Enable teams to test processes in
  an atmosphere that fosters innovation and
  resourcefulness.
• Business rules
• Privacy Do not share names with third parties
• Fatigue Do not call customers more frequently
  than n times.
• Channel preference Do not force a customer to a
  channel
• Dialogue Record every question that a customer
  answers and do not ask the same question more
  than once every two years
• The business case
• Through questions and expectations, it is
  possible to drive existing organizational units
  to use customer data in decision making

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Evolutionary Not Revolutionary

• Why not just reorganize everyone from Marketing,
  IT and other teams contributing resources to the
  CRM effort?
• Why the evolutionary small step approach?
• Why not revolution?
• Power may continue to reside in areas without the
  data, without the metrics or even without the C
• Focus on bureaucratic issues detracts from C focus

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• Gives time to build infrastructure for
• Centralized data
• Tools that make data easy to access
• Skilled analysts who can mine the data
• Metrics that validate C centric programs
• Training to bring staff up to speed
• Setting senior management expectations and
  educating them
• Winning kudos for early successes
• Creating external enthusiasm rather than
  resistance.

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Changing Structure

• To maintain the momentum of a CRM initiative
• Continually demonstrate value to all stakeholders
• Create a hunger among senior managers for
  customer centric and customer value information
• Use input from anyone thinking about the
  customer.

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Forms follows Function

• Let structure experts worry about structure which
  CRM specialists focus on cross functional
  initiatives.
• Constructing data centers from pilot databases
  to an enterprise-wide data warehouse
• The data warehouse is accessible and easy to
  use across organization
• Fielding campaigns that includes tests and data
  mining
• Sharing results across channels,units and
  levels of management
• Creating more and more complex campaigns
  involving more and more areas of the enterprise.
• Monitoring and reporting results all along the
  way.

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E-channels

• E-channels both complicate and simplify CRM
  execution

Complicate
Simplify

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

- Stability - Maintenance - Real time -
Personalization - Collaborative filtering - BM
to the web - Branding - E-strategy - Competing
channels - Privacy - Security
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Are we there yet?

• You know you have a CRM culture when
• Everyone in the organization thinks about the C
• Everyone in the organization listens to the
  customer
• Reliable service is delivered to C consistently
  across all channels
• Success is measured in terms of C relationships (
  Value, duration, acquisition )

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Where Are You on the Road to CRM?
Short term goals
Long term goals

• Think like a customer
• Be a customer
• Build infrastructure to centralize data
• Analyze customer data
• Determine C centric program goals and strategies
• Educate senior management and set expectations
• Identify bottlenecks
• Have owners over customers
• Have centralized customer centric business rules

• Listen to the customer
• Track C behavior across all channels
• Show consistent reliable service across all
  channels
• Assign value to each customer
• Create loyalty programs
• Have established C centric incentives

Organizations Transitioning to CRM culture

• Think like a C
• Listen to the C
• Provide consistent reliable service across all
  channels
• Track C behavior across all channels
• Assign value to each C relationship
• Create loyalty programs
• Reduce bottlenecks
• Have owners over customers

• Real-time personalized dialogue with customers
• Anticipate customer needs
• Measure success of each relationship
• Share C information with all areas of the
  enterprise
• Build and maintain long term profitable
  relationships with C

Organizations With existing CRM culture
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Summary

• Organizational change is an evolutionary process,
  not a revolution.
• Choose the parts of the organization that can be
  changed to focus on first.
• Implementing CRM program also means changing
  thinking, processes, structure and engraining a
  customer centric culture in an organization.
• Depending on where your organization stands,
  there are short and long term steps to take to
  transition to a CRM company.

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Long Term Planning

• Develop a two year plan for making your company
  more customer centric.
• Include measurable deliverables every three to
  six months.
• Change from product centric to customer centric
  metrics.
• Create cross functional teams to develop and
  manage customer strategy.
• Implement tools that allow people from all areas
  to access the same CI.

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Obstacles

• Getting participation from all areas
• Technical problems centralizing data in a data
  warehouse
• Inter-unit conflict (Marketing-IT)
• Managing anxiety and resistance in an environment
  change
• Focusing resources on new developments and
  existing responsibilities.