1/NN

1
prof dr Veljko Milutinovic
2
Remember This!!!

• CEO Chief Executive Officer
• CFO Chief Financial Officer
• CIO Chief Information Officer
• CMO Chief Marketing Officer
• CPO Chief Privacy Officer
• CRO Chief Relationship Officer

3
Managing Customer Relationship

• Don Peppers
• Martha Rogers

4
Contents

• Part One
• Principles of Managing Customer Relationships
• Part Two
• IDIC Implementation Process A Model for
  Managing Customer Relationships
• Part Three
• Measuring and Managing to Build Customer Value

5
Part One

• Principles of Managing Customer Relationships

6
Evolution of Relationships with Customers
7
Evolution of Relationships with Customers

• We have only two sources of competitive
  advantage
• The ability to learn more about our customers
  faster than the competition.
• The ability to turn that learning into action
  faster than the competition
• Jack Welch, former CEO, General Electric
• Bloomberg News Service, 2000

8
Evolution of Relationships with Customers
9
Roots of Customer Relationship Management

• The goal of every enterprise is simply to

Acquire profitable customers.
GET
Retain profitable customers longer. Win back profitable customers. Eliminate unprofitable customers.
KEEP
Upsell additional products in a solution. Cross-sell other products to customers. Referral and word-of-mouth benefits. Reduce service and operational costs.
GROW
10
Process of Becoming an Enterprise

• Focus Building its value by building customer
  value
• Begins with

11
Process of Becoming an Enterprise

• Focus Building its value by building customer
  value
• Begins with

12
What is CRM?

• CRM is not a software package.
• It is not a database.
• It is not a call center or a Web site.
• It is not a loyalty program or a win-back
  program.
• CRM is entire philosophy.
• Steve Silver

13
What is CRM?

• It is an enetrprisewide business strategy for
  achieving customer-specific actions.

It cant be assigned to marketing if it is to
have any hope of success
The goal is to increase the value of each
customer
14
What is CRM?
15
In Essence

• CRM involves treating different customers
  differently.

16
A Good Example - PC Banking Services

• Consumer spends several hours,
• usually spread over several session

setting up an online account and inputting
payee addresses and account numbers
17
A Good Example - PC Banking Services
in order to be able to pay his bills
electronically each month.
18
A Good Example - PC Banking Services

• If a competitor opens a branch in town
• offering lower checking fees or higher saving
  rates
• this consumer is ________ to switch banks.

?
likely
unlikely
19
A Good Example - PC Banking Services

• He has invested time and energy in a
  relationship with the first bank, and it is
  simply more convenient to remain loyal to the
  first bank than to teach the second bank how to
  serve himin the same way.

20
CRM Synonyms

• Integrated marketing communications (Don
  Schultz)
• One-to-one relationship management (Don Peppers
  and Martha Rogers)
• Real-time marketing(Regis McKenna)
• Customer intimacy(Michael Treacy and Fred
  Wiersema)
• and a variety of other terms

21
Operational and Analytical Process
affecting the
focuses on the
22
Operational and Analytical Process
needed to build
focuses on the
23
Computer Technologies

• New computer technologies and applications have
  spawned enterprisewide information systems that
  help to harness information about customers,
  analyze the information, and use the data to
  serve customers better.

24
Computer Technologies

• Enterprise resource planning (ERP) systems
• Supply chain management software (SCM)
• Enterprise application integration software (EAI)
• Data warehousing
• Sales force automation (SFA)
• and other enterprise software

25
The Four Ps

• Traditional marketing efforts have centered on
  the four Ps.
• In essence, the four Ps are all about the get
  part of get, keep and grow customers.
• The customers needed to believe that the
  enterprises offerings would be superiorin
  delivering the four Cs customer value, lower
  costs, better convenience, and better
  communication.

26
The Four Ps
27
The Four Ps

• Product is defined in terms of the average
  customer what most members of the aggregate
  market want to need.

28
The Four Ps

• Promotion has also worked in a fundamentally
  nonaddressable, noninteractive way. The various
  customers in a market are all passive recipients
  of the promotional message, whether it is
  delivered through mass media or interpersonally,
  through salespeople.

29
The Four Ps

• Place is a distribution systems or sales channel.

30
The Four Ps

• Price refers not only to the ultimate retail
  price a product brings, but also to intermediate
  prices, beginning with wholesale and it takes
  account of the availability of credit to a
  customer and the prevailing interest rate.

31
Direction of Success

• For a traditional aggregate-market enterpriseis
  to acquire more customers.

For the customer-driven enterprise is to keep
customers longer and grow them bigger.
32
Example Kelloggs

• Kelloggs can either sell as many boxes of
  cornflakes as possible to whomever will buy
  them, even though sometimes cornflakes will
  cannibalize raisin brain sales,

OR
33
Example Kelloggs

• Kelloggs can concentrate on making sure its
  product are on Mrs. Smiths breakfast table
  every day for the rest of her life, and thus
  represent a steady or growing percentage of that
  breakfast tables offerings.

34
Example Ford

• Ford can try to sell as many Tauruses as
  possible, for any price, to anyone who will buy,

OR
35
Example Ford

• It can, by knowing Mrs. Smith better, make sure
  that all cars in Mrs. Smiths garage are Ford
  brands, including the used car she buys for her
  teenaged son, and that Mrs. Smith uses Ford
  financing and credit cards, and gets her
  service, maintenance and repairs at Ford
  dealerships throughout her driving lifetime.

36
Tasks

• for growing market share
• are different from
• for building share of customer
• but the two strategies are not antithetical
• A company can simultaneously focus on getting
  new customers as well as growing the value of
  and keeping the customers it already has.

37
Overview

• Customer-strategy enterprises are required to
  interact with a customer and use that customers
  feedback from this interaction to deliver a
  customized product or service.

38
Overview
39
Overview

• Market-driven efforts can be strategically
  effective and even more efficient at meeting
  individual customer needs when a
  customer-specific philosophy is conducted on top
  of it.

40
Overview

• The customer-driven process is time-dependant
  and evolutionary, as the product or service is
  continuously fine-tuned and the customer is
  increasingly differentiated from other customers.

41
Overview

• The aggregate-market enterprise competes by
  differentiating products, whereas the customer
  driven enterprise competes by differentiating
  customers.

42
The Traditional Marketing

• The traditional marketing company, no matter how
  friendly, ultimately sees customers as
  adversaries, and vice versa.
• The company and the customer play a zero-sum
  game
• If the customer gets a discount, the company
  loses profit margin.

43
The Traditional Marketing - Interests

• The customer wants to buy as much product as
  possible for the lowest price.

• The company wants to sell the least product
  possible for the highest price.

44
The Customer-based Enterprise

• Aligns customer collaboration with profitability.
• For starters, a one-to-one enterprise would
  likely be willing to fix a problem raised by a
  single transaction at a loss if the relationship
  with the customer was profitable long term.

45
The Central Purpose

• of managing customer relationships is for the
  enterprise to focus on increasing the overall
  value of its customer base - and customer
  retention is critical to its success.
• Increasing the value of the customer base
  through
• Cross-selling
• Upselling
• Customer refferals

46
Market Share versus Share of Customer
MARKET-SHARE STRATEGY SHARE-OF-CUSTOMER STRATEGY
Product (or brand) managers sell one product at a time to as many customers as possible. Customer manager sells as many products as possible to one customer at a time.
Differentiate products from competitors. Differentiate customers from each other.
Sell to customers. Collaborative with customers.
Find a constant stream of new customers. Find a constant stream of new business from established customers.
Use mass media to build brand and announce products. Use interactive communication to determine individual needs and communicate with each individual.
47
Technology Accelerates

• To effectuate customer-focused business
  relationships, an enterprise must integrate
• The disparate information systems
• Databases
• Business units
• Customer touch points
• And many other facets
• to ensure that all employees who interact with
  customers have real-time access to current
  customer information.

48
Technology Accelerates

• The objective is to optimize each customer
  interaction and ensure that the dialogue is
  seamless that each conversation picks up
  from where the last one ended.

49
Technology Accelerates

• Technology has made possible the mass
  customization of products and services, enabling
  business to treat different customers
  differently, in a cost-efficient way.
• Implementing an effective customer strategy can
  be challenging and costly because of the
  sophisticated technology and skill set needed by
  relationship managers to execute the
  customer-driven business model.

50
What is a Relationship?

• What does it mean for an enterprise and a
  customer to have a relationship with each other?
• Do customers have relationships with enterprises
  that do not know them?
• Can the enterprise be said to have a relationship
  with a customer it does not know?
• Is it possible for a customer to have a
  relationship with a brand?

51
What is a Relationship?

• The critical business objective can no longer be
  limited to acquiring the most customers and
  gaining the greatest market share for a product
  or service.

52
What is a Relationship?

• Instead, to be successful in the era of
  interactivity, when it is possible to deal
  individually with separate customers, the
  business objective must include establishing
  meaningful and profitable relationships at least
  with the most valuable customers, and making the
  overall customer base more valuable.

53
Connecting
54
In Short

• The enterprise strives to get a customer, keep
  that customer for a lifetime, and grow the value
  of the customer to the enterprise.
• Relationships are the crux of the
  customer-strategy enterprise.
• Relationships between customers and enterprises
  provide the framework for everything else
  connected to the customer-value business model.

55
Learning Relationship

• The exchange between a customer and the
  enterprise becomes mutually beneficial, as
  customers give information in return for
  personalized service that meets their individual
  needs.
• This interaction forms the basis of the Learning
  Relationship, an intimate, collaborative
  dialogue between the enterprise and the customer
  that grows smarter and smarter with each
  successive interaction.

56
Learning Relationships The crux of managing
customer relationships

• The basic strategy behind Learning
  Relationshipsis that the enterprise give a
  customer the opportunity to teach the company
  what he wants, remember it, give it back to him,
  and keep his business.
• The more the customer teaches the company, the
  better the company can provide exactly what the
  customer wants and the more the customer has
  invested in the relationship.

57
How Does the Learning Relationship Work?

• If you are my customer,

and I get you to talk to me,
I remember what you tell me,
and I get smarter and smarter about you.
58
How Does the Learning Relationship Work?

• I know something about you that my competitors
  dont know

59
How Does the Learning Relationship Work?

• So I can do things for you my competitors cant
  do, because they dont know you as well as I do.

60
How Does the Learning Relationship Work?

• Before long, you can get something from me you
  can get anywhere else, for any price.

61
How Does the Learning Relationship Work?

• At the very least, youd have to start all over
  somewhere else, but starting over is more costly
  than staying with me.

62
How Does the Learning Relationship Work?

• This creates a significant switching cost for the
  customer, as the value of what the enterprise is
  providing continues to increase, partly as the
  result of the customers own time and effort.
• The result is that the customer becomes more
  loyal to the enterprise, because it is simply in
  the customers own interest to do so.

63
Benefits

• The customer learns more about his own
  preferences from each experience and from the
  firms feedback.

• The enterprise learns more about its own
  strengths and weaknesses from each interaction
  and from the customers feedback.

64
Not all customers are equal

• Some are not worth the time or financial
  investment of establishing Learning Relationship

Nor are all customers willing to devote the
effort required to sustain such a relationship.
65
Not all customers are equal

• Enterprises need to decide early
• on which customers they want to have relationship
  with,
• which they do not,
• and what type of relationship to nurture.

66
Teaching

• When a customer teaches an enterprise what he
  wants or how he wants it, the customer and the
  enterprise are collaborating on the scale of the
  product.

The more the customer teaches the enterprise,
the less likely the customer will want to leave.
67
Enterprise Strategy Map
Ability to interactwith customersindividually
Database Marketing
1 to 1 LearningRelationship
III
IV
Interacting
MassMarketing
NicheMarketing
I
II
Customersaddressed only inmass media
Standardproducts
Tailoredproducts
Tailoring
68
Quadrant I Traditional Mass Marketing

• Companies that compete primarily on cost
  efficiencies based on economies of scale and low
  price.

Companies in this quadrant are doomed to
commoditization and price competition.
69
Quadrant II Niche Marketing

• Companies that focus on target markets, or
  niches, and produce goods and services designed
  for those defined customer groups.

70
Quadrant II Database Marketing

• Companies utilize database management to get
  better.

71
Quadrant IV One-to-one Learning Relationship

• Companies use data about customers to predict
  what each one needs next, and then is able to
  treat different customers differently and
  increase mutual value with the customer.

72
CRM Structure
73
(No Transcript)
74
(No Transcript)
75
(No Transcript)
76
(No Transcript)
77
Part Two

• IDIC Implementation Process A Model for
  Managing Customer Relationships

78
Part Three

• Measuring and Managing to Build Customer Value