Chapter # 1.

Introduction to CRM

1.1 Evolution of CRM

Customer Relationship Management (CRM) is one of those magnificent concepts that swept the
business world in the 1990’s with the promise of forever changing the way businesses small and
large interacted with their customer bases. In the short term, however, it proved to be an
unwieldy process that was better in theory than in practice for a variety of reasons. First among
these was that it was simply so difficult and expensive to track and keep the high volume of
records needed accurately and constantly update them.
In the last several years, however, newer software systems and advanced tracking features have
vastly improved CRM capabilities and the real promise of CRM is becoming a reality. As the
price of newer, more customizable Internet solutions have hit the marketplace; competition has
driven the prices down so that even relatively small businesses are reaping the benefits of some
custom CRM programs.

1.2 In the beginning…

The 1980’s saw the emergence of database marketing, which was simply a catch phrase to define
the practice of setting up customer service groups to speak individually to all of a company’s
customers.
In the case of larger, key clients it was a valuable tool for keeping the lines of communication
open and tailoring service to the clients needs. In the case of smaller clients, however, it tended
to provide repetitive, survey-like information that cluttered databases and didn’t provide much
insight. As companies began tracking database information, they realized that the bare bones
were all that was needed in most cases: what they buy regularly, what they spend, what they do.

HTTP://PAKISTANMBA.JIMDO.COM
 FOR DOWNLOADING THIS REPORT AND FOR MORE PROJECTS,
ASSIGNMENTS, REPORTS ON

MARKETING,

MANAGEMENT,

ECONOMICS

MARKETING MANAGEMENT,

ACCOUNTING,

HUMAN RESOURCE,

ORGANIZATIONAL BEHAVIOR,

FINANCIAL MANAGEMENT

COST ACCOUNTING

VISIT

HTTP://PAKISTANMBA.JIMDO.COM
1.3 Advances in the 1990’s

In the 1990’s companies began to improve on Customer Relationship Management by making it

more of a two-way street. Instead of simply gathering data for their own use, they began giving
back to their customers not only in terms of the obvious goal of improved customer service, but
in incentives, gifts and other perks for customer loyalty.
This was the beginning of the now familiar frequent flyer programs, bonus points on credit cards
and a host of other resources that are based on CRM tracking of customer activity and spending
patterns. CRM was now being used as a way to increase sales passively as well as through active
improvement of customer service.

1.4 Introduction
Customer Relationship Management - CRM
The generally accepted purpose of Customer Relationship Management (CRM) is to enable
organizations to better serve its customers through the introduction of reliable processes and
procedures for interacting with those customers.

In today's competitive business environment, a successful CRM strategy cannot be implemented

by only installing and integrating a software package designed to support CRM processes. A
holistic approach to CRM is vital for an effective and efficient CRM policy. This approach
includes training of employees, a modification of business processes based on customers' needs
and an adoption of relevant IT-systems (including soft- and maybe hardware) and/or usage of IT-
Services that enable the organization or company to follow its CRM strategy. CRM-Services can
even redundantize the acquisition of additional hardware or CRM software-licences.

The term CRM is used to describe either the software or the whole business strategy oriented on
customer needs. The second one is the description which is correct. The main misconception of
CRM is that it is only software, instead of whole business strategy.

Major areas of CRM focus on service automated processes, personal information gathering and
processing, and self-service. It attempts to integrate and automate the various customer serving
processes within a company.

There are three parts of application architecture of CRM:

• operational - automation to the basic business processes (marketing, sales, service)

• analytical - support to analyse customer behaviour, implements business intelligence alike

technology

• cooperational - ensures the contact with customers (phone, email, fax, web...)

Operational part of CRM typically involves three general areas of business. They are (according
to Gartner Group) a Enterprise marketing automation (EMA), Sales force automation (SFA) and
a Customer service and support (CSS). The marketing information part provides information
about the business environment, including competitors, industry trends, and macroenviromental
variables. The sales force management part automates some of the company's sales and sales
force management functions. It keeps track of customer preferences, buying habits, and
demographics, and also sales staff performance. The customer service part automates some
service requests, complaints, product returns, and information requests.

Integrated CRM software is often also known as "front office solutions." This is because they
deal directly with the customer.
Many call centers use CRM software to store all of their customer's details. When a customer
calls, the system can be used to retrieve and store information relevant to the customer. By
serving the customer quickly and efficiently, and also keeping all information on a customer in
one place, a company aims to make cost savings, and also encourage new customers.

CRM solutions can also be used to allow customers to perform their own service via a variety of
communication channels. For example, you might be able to check your bank balance via your
WAP phone without ever having to talk to a person, saving money for the company, and saving
you time.

Improving customer service

CRMs are claimed to improve customer service. Proponents say they can improve customer
service by facilitating communication in several ways:

• Provide product information, product use information, and technical assistance on web sites
that are accessible 24 / 7

• Help to identify potential problems quickly, before they occur

• Provide a user-friendly mechanism for registering customer complaints (complaints that are
not registered with the company cannot be resolved, and are a major source of customer
dissatisfaction)

• Provide a fast mechanism for handling problems and complaints (complaints that are
resolved quickly can increase customer satisfaction)

• Provide a fast mechanism for correcting service deficiencies (correct the problem before
other customers experience the same dissatisfaction)
• Identify how each individual customer defines quality, and then design a service strategy for
each customer based on these individual requirements and expectations

• use internet cookies to track customer interests and personalize product offerings accordingly

• use the internet to engage in collaborative customization or real-time customization

• Provide a fast mechanism for managing and scheduling followup sales calls to assess post-
purchase cognitive dissonance, repurchase probabilities, repurchase times, and repurchase
frequencies

• Provide a fast mechanism for managing and scheduling maintenance, repair, and on-going
support (improve efficiency and effectiveness)

• Provide a mechanism to track all points of contact between a customer and the company, and
do it in an integrated way so that all sources and types of contact are included, and all users of
the system see the same view of the customer (reduces confusion)

• The CRM can be integrated into other cross-functional systems and thereby provide
accounting and production information to customers when they want it

Improving customer relationships

CRMs are also claimed to be able to improve customer relationships . Proponents say this can be
done by:
• CRM technology can track customer interests, needs, and buying habits as they progress
through their life cycles, and tailor the marketing effort accordingly. This way customers get
exactly what they want as they change.

• The technology can track customer product use as the product progresses through its life
cycle, and tailor the service strategy accordingly. This way customers get what they need as the
product ages.

• In industrial markets, the technology can be used to micro-segment the buying centre and
help coordinate the conflicting and changing purchase criteria of its members

• When any of the technology driven improvements in customer service (mentioned above)
contribute to long-term customer satisfaction, they can ensure repeat purchases, improve
customer relationships, increase customer loyalty, decrease customer turnover, decrease
marketing costs (associated with customer acquisition and customer ?training?), increase sales
revenue, and thereby increase profit margins.

Technical functionality

A CRM solution is characterised by the following functionality:

• scalability - the ability to be used on a large scale, and to be reliably expanded to what ever
scale is necessary.

• multiple communication channels - the ability to interface with users via many different
devices (phone, WAP, internet, etc)

• workflow - the ability to automatically route work through the system to different people
based on a set of rules.

• database - the centralised storage (in a data warehouse) of all information relevant to
customer interaction

• customer privacy considerations, e.g. data encryption and the destruction of records to ensure
that they are not stolen or abused

Privacy and ethical concerns

CRMs are not however considered universally good - some feel it invades customer privacy and
enable coercive sales techniques due to the information companies now have on customers - see
persuasion technology. However, CRM does not necessarily imply gathering new data, it can be
used merely to make "better use" of data the corporation already has. But in most cases they are
used to collect new data.
 Chapter # 2. CRM Planning

2.1 CRM Planning: Keys for Project Success

Whether you're updating, upgrading, jump-starting, or restarting your CRM efforts, some basic
steps will help keep you on the path to a positive ROI.
Thinking about the potential ROI of your customer relationship management (CRM) project
should start during the selection process. Before you write an RFP or start talking to vendors,
you need to do some homework to ensure that you're on the right track to maximize ROI.

2.2 Identify the Problem — and the Solution

Before you start thinking about vendors, you should define your problem in clear business terms.
Do you need to improve management visibility into the sales pipeline? Reduce customer support
costs or improve customer support? Reduce customer-related administrative overhead? Making
your CRM challenges specific will help you determine which technologies or components are
most likely to deliver ROI and how you can prioritize your development and deployment plans.
Most companies' CRM goals fall into a couple of main categories:
• Improved sales performance
• Improved management visibility
• Improved customer support
• Improved marketing
• Reduced costs

If your CRM goals fall into more than two of these categories, you'll likely want to prioritize one
over the other and plan a phased deployment. It's also a good idea to know at this point what
your likely budget is, how flexible it is, and what your procurement officer or CFO will be
looking for in terms of business justification. If you know walking into the project that you'll
need to show a six-month payback period, for example, you can plan accordingly.

2.3 Make the Short List

Regardless of your relationship with existing vendors, previous experience, and technology
environment, you should make a short list of potential vendors and give them a fair evaluation
before you make a decision. Your short list should be easy to define based on these factors:
• Your CRM goals. The vendors whose functionality meets your needs will depend on
whether you're looking for improved sales, improved reporting and forecasting, improved
support, improved marketing, or a combination of different customer-related technology.
• Your existing environment and IT philosophy. Do you have existing databases, order
systems, or contact lists that will need to be integrated or migrated into your CRM solution? Do
you expect to do your own development or use consultants or systems integrators? Are you
comfortable outsourcing your sales and marketing data in its entirety - or in part? Answering
these questions will help you determine whether a large-scale CRM infrastructure, a hosted
solution, a point solution, or a broad solution is likely to deliver maximized ROI.
• Your user dynamics. Are the employees you expect to use the solution technology savvy
and open to change, or are they the ones still using pencils and paper to track leads? The greater
the magnitude of the change you expect them to make, the greater the risk that adoption will
slow the ROI of your project.
• Your budget. CRM solutions such as Siebel and SAP can cost millions of dollars to
deploy and require a team for ongoing support and maintenance. On the other end of the
spectrum, Microsoft CRM and FrontRange (for example) can cost considerably less. You can
expect a hosted solution to have a minimal upfront investment and from $500 to $1,500 per user
per year.
Clearly defining your requirements and characteristics in each of these key areas will prepare
you for the next step - evaluating each individual solution's ability to deliver returns based on the
costs and benefits associated with a deployment.

Check Resumes
Once you've identified the likely vendors to deliver the best solution for you, you'll want to
check their references - and this doesn't mean just reading case studies on their Web sites. Look
to independently developed case studies and your own interviews with references to learn about
their decision process, project successes and challenges, and whether or not their spending - and
benefits - met expectations.

Find a Partner (Check Resumes, 2)

In the CRM world, few companies will deploy a solution without some help from external
consultants or systems integrators. Selecting and planning how you work with consultants is just
as important to your project's success as the technology you choose.

Justify Your Investment

Once you've identified your goals and selected a short list of vendors, you can use a structured
evaluation of costs and benefits to determine the best solution in terms of ROI and build the
business case for moving forward. On the costs side, you'll want to consider the initial and
ongoing software, hardware, consulting, internal personnel, and training costs associated with the
project.
Here are a few guidelines to keep the ROI from your CRM project on track:
• You should spend less on software and consulting than 70 percent of expected annual
direct benefits.
• You should be able to deploy and achieve some returns in fewer than six months (even if
it's only a pilot).
• For a hosted solution, you should see benefits in fewer than 60 days.
• Consulting costs should not be more than twice your initial software investment.
• Training users should take fewer than four hours.
On the benefits side, you'll want to consider both direct and indirect benefits. Prioritize your
expected benefits from most direct to most indirect, and then work on your estimates, using
internal surveys, case study data, and reliable benchmarking information as a starting point for
quantifying expected benefits for your company.

Key Decision Factors

By and large, there's no such thing as a bad CRM solution. Most solutions deliver value when
they're chosen based on clear business needs and deployed correctly. Once you've identified your
CRM needs and your short list, there are a number of factors to consider to help you make the
right solution decision.

User Adoption
In evaluating the type of CRM solution that will be best for your organization in terms of user
adoption, you'll want to consider two key factors:
• The willingness of users to adopt the application. Adoption can often be as much about
politics and culture as it is about technology. Successful adoption will also depend on how much
users will have to change their normal way of doing work to use the solution.
• The technology ability of potential users. Many CRM solutions are complex and difficult
to use; others have a more intuitive look and feel. Choose a solution that fits the abilities of your
users.

Once you've determined where your organization fits, you'll want to consider both the
complexity of the solution and ease (or difficulty) involved in adding and evolving functionality
over time as your needs change and your users become more comfortable with the solution. Here
are some red flags you should look out for in evaluating solutions in terms of user adoption:
• Plans for extensive customization
• Multiple components that will be integrated to meet your needs
• Lack of a track record supporting "your kind" of sales reps
• Functionality planned "for the next release"
• An extensive training program
• Ongoing consulting requirements for any changes or updates

Cost
In CRM, "you get what you pay for" isn't always true. In fact, many companies in the past have
overspent on CRM components and features that never delivered value to their users - if they
even made it out of the box. You'll have the most success with a measured approach that doesn't
have to include a hefty initial license fee.

Existing Environment
What other solutions and data sources do your sales or customer support representatives use
today, what solutions are they most comfortable using, and what will need to be integrated in
some way into the CRM solution you choose to deliver value? How you integrate existing
resources and applications into a CRM project should not be an afterthought. In selecting a
vendor, you'll want to explore how it can integrate with your existing environment. Demand to
see a track record with reference customers in a similar situation.

Best Practice: Make a Match

One company chose Microsoft CRM because it would easily integrate with back-end office
applications, because the sales force was already familiar with the Microsoft interface look and
feel, and because the design of the application closely matched its existing business processes. It
achieved a payback of five months.

Flexibility
In addition to the initial development, integration, and deployment, when selecting a solution,
you should consider how easy it will be to make changes over time as your needs change. In all
likelihood, the way you use CRM will change over time - and the flexibility of the application to
enable you to support those changes can have a significant impact on the ongoing cost of the
solution.

Best Practices
Once you've determined which solution is right for you and built the business case, you'll want to
make sure you have the key checkpoints in place so that the project delivers on your ROI
expectations.
Pricing and Purchasing
Before you sign on the dotted line, make sure you've done due diligence on your contract with
the vendor. Double-check the following:
• Is the initial license price per user in line with industry benchmarks?
• Are you paying less, more, or the average annual industry maintenance? If you decide to
stop paying maintenance in the future, does your contact support that?
• If you're purchasing multiple modules at the same time, do you have a clear view of the
cost of each item? Are you sure you should be buying them all now, or would a phased approach
be better?
• What commitment has the vendor made to your deployment time line? If a third party is
involved, how are the deployment risk and responsibility being shared?

Deployment
Piloting a CRM solution can be a great way to judge both whether or not the solution will work
for you and how flexible and agile the solution (and vendor) is in responding to specific needs.
Most hosted solution vendors offer a free or nearly free pilot option today; depending on the
level of customization and integration needed, a pilot of an internal solution before you buy may
or may not be possible.

Best Practice: Pilot First

One company deploying an ePeople CRM solution used an initial pilot at one location to
evaluate the application and get valuable feedback on how and when the software should be
expanded to other locations.
Even after you've made the commitment, piloting to a select group of users before you complete
customization is a good way to determine whether or not the solution works - and to gain
valuable feedback on how and with what changes the solution should be rolled out to the broader
population.

Best Practice: Phase In Functionality

One company deploying a JD Edwards CRM solution found that while it achieved a positive
ROI, it could have accelerated user adoption and thus shortened its payback period by
introducing functionality to users in phases. A phased approach would have reduced initial
customization costs and the need to train users, who were somewhat overwhelmed by the
features of the solution.

Fine-Tuning Your ROI

If you've picked the right vendor, planned a deployment with clear milestones, and gotten users
on board, you've probably received 70 percent of the ROI you can expect. The trick to really
successful CRM is continuing to evaluate and evolve your solution to deliver greater value.
You'll also want to keep track of potential upgrade opportunities and take a close look at the
business case - both the benefits of upgrading and the time and pain associated with the upgrade
- before you make a change.
 Chapter # 3. CRM in Business

3.1 Introduction

In this day and age the use of internet sites and specifically e-mail, in particular, are touted as less
expensive communication methods, compared to traditional methods like telephone calls. This
revolutionary type of service can be very helpful, but it is completely useless if you are having
trouble reaching your customers. It has been determined by some major companies that the
majority of clients trust other means of communication, like telephone, more than they trust e-
mail. Clients, however, are not the ones to blame because it is often the manner of connecting
with consumers on a personal level making them feel as though they are cherished as customers.
It is up to the companies to focus on reaching every customer and developing a relationship.

CRM software can run your entire business. From prospect and client contact tools to billing
history and bulk email management. The CRM system allows you to maintain all customer
records in one centralized location that is accessible to your entire organization through password
administration. Front office systems are set up to collect data from the customers for processing
into the data warehouse. The data warehouse is a back office system used to fulfill and support
customer orders. All customer information is stored in the data warehouse. Back office CRM
makes it possible for a company to follow sales, orders, and cancellations. Special regressions of
this data can be very beneficial for the marketing division of a firm.

3.2 CRM Software: A key to scalability and efficiency

CRM Software provides added strength to your existing plan. CRM software is not a "cure-all"
for the CRM program in your business. Successful launch of a CRM software campaign requires
a strong CRM plan for your business, with complete objectives and clear priorities. CRM
software can offer incredible accuracy, track-ability and detailed follow-up capabilities.

3.3 How do you choose CRM Software?

• Does the emphasis of the CRM software package match the emphasis of your CRM
objectives? Identify your specific objectives and verify your CRM software can meet those
needs.

• Is your software user friendly? If you can't effectively use the software why use it? CRM
software training is usually available by contacting the vendor and asking for recommended
referrals.
• How do other companies feel about the software? Call the provider company and ask for a
number of preferrals, (preferably three or four companies in similar size and scope).

3.4 What are some key components of CRM software?

History and Trend Management

• History Tracking - get instant perspective into all customer interactions

• Trend Management- see the status of all pending sales and potential revenue of entire
pipeline

CRM Software Automated Processes

• Remote Web Synchronization- automatically follow-up with leads generated from your site

• Automated Process Management - allows consistent communication with customer based on

user-defined criteria

CRM software Data-base Information

• Centralized Information - centralize, manage and simplify access to critical business

information

• Industry Templates and Form s- allows access to a database of industry specific CRM forms

CRM Software Sales and Marketing Analysis

• Sales & Quota Analyses - view forecasted sales, closed sales, and comparisons between sales
and quota

• Leads Analysis - track responses to identify effective campaigns

CRM Software Mobil Technology Capabilities

• Synchronization Wizard - keep calendar and contact information up-to-date on your PDA or
laptop while you travel

• Remote Access Capabilities - access your CRM software through the internet.
Not all CRM software packages are the same. They will greatly range in price and capabilities.
CRM Advisor suggests a thorough evaluation is done comparing multiple CRM software
packages.
 Chapter # 4. Analytic CRM

4.1 Analytic CRM for Retailers: An ROI Perspective

The Retailers Data Challenge

Today’s retail environment includes increased competition among stores, a general economic
downturn, rising interest rates and higher gas and heating oil prices. All of these factors have
reduced the disposable income available to many retailers, core customers. In this economic
environment, retailers must learn to generate more business from their existing customers. To do
this they must first mine the data they have collected on customer purchases and loyalty
programs. Still, retailers are drowning in customer data.

• Critical customer information is inaccessible and underutilized.

• More decision-makers need more access to consistent corporate data about their customers.

• Loyalty program, POS, and demographic databases exist, yet are not integrated within a retail
corporation.

• Merchandisers and direct marketers lack expertise in the standard analysis applications sold
by business intelligence vendors today.

• Current retail data analysis systems require heavy IT resources to maintain and utilize.

According to The Marriage of Category Management & Customer Management, written by Gary
Robins and published in RIS, July 1999, .Category Management and promotion management
need to include analyses of loyal customers. Failure to consider the effects on loyal customers’
means resources spent on category management and promotion might be and probably is in
some or many cases harming your business. Combining category and loyalty data analysis has
been done before, but with great difficulty. The biggest hurdle now is getting robust, fast
databases to handle the huge amount of integrated data.
CustomerView was designed to address these retail data challenges. CustomerView supports the
retailers. Top marketing objectives to solve these problems:

Reward loyal shoppers and get them to buy more

• According to Robert Blattberg, director of the Center for Retail Management at

Northeastern.sKellogg Graduate School of Business, a study of a chain drug retailer showed a
30%/70% split, meaning the top 30% of their customers generated 70% of their revenues. It also
revealed which categories were more important to top and bottom level customers.

• In another example, a small regional chain with seven stores targeted 18,000 of their best
customers based on recencyand overall dollar amount spent. Of the 18,000 customers mailed,
921 responded, generating a 5.1% response rate. Total revenue brought in from this particular
promotion was in excess of $227,000 generating more than $22 for every dollar spent on the
promotion. The events average transaction was $24744 an almost $50 increase from their
normal average transaction.

Target top switchers

• If your firm is not the lowest cost producer in the category and your switchers are price
sensitive, the best marketing strategy for addressing price-sensitive purchasers is to attempt to
change their preference structure by raising their awareness of, and preference for, specific
brand/product attributes, whether they are tangible or intangible. Then try to persuade these Price
Sensitive Purchasers that your offering has the better value, all things considered. The goal is to
increase sales and market baskets of top switchers.

Optimize trade areas and improve assortments store-by-store

• A leading supermarket chain recently used data from loyalty programs to edit which products
to delist in a category. .It is not just sales, it is how it is affecting loyal customers,. wasthe
mantra from the chain. In a test of the carbonated beverage category, the chain did not lose
customers even after eliminating 26% of the category.sSKUs.
Cross-sell the most profitable products and increase the average basket size
• A leading beverage company, which has been working with over 40 retailers, says that use of
loyalty data does help retailers increase basket size. According to a senior category manager, .we
did a presentation with a small chain in Houston, Texas, and this company had a 6.5% increase in
dollars per basket and a 9.8% gain in total dollars among their best shoppers.

Maximize ROI for programs funded with manufacturer co-op funds

• A national retailer recently completed a targeted promotion with a leading CPG company.
350,000 pieces were mailed bringing the retailer an additional $124,000 of co-op dollars. The
piece featured 10 different products, received 16.4% response rate, and the market basket of the
responders was 40% greater than the non-responders.

4.2 Who can benefit by using CustomerView?

CustomerView is targeted at five key audiences within the retailer’s organization:

Financial
CustomerViewenables retailers to take existing customer data and use it to drive revenue,
increase market basket size, and build market share with no additional capital expenses and labor
costs. It enables the CFO to show increased margins on current capital and enables profitable
growth.

Merchandisers
CustomerViewenables merchandisers to improve the effectiveness of their staff. Using
CustomerView, merchandisers can quickly see how certain products can increase market basket
size. Using CustomerViewthey can see how merchandise mix affects customer loyalty and
adjust their assortment accordingly. CustomerViewcan help merchandisers measure and build
retention. It can show market basket value of loyal vs. non-loyal customers. CustomerView can
quickly help identify the value of a
consumer that shops in critical categories vs. the shopper that does not.

Operators
CustomerViewcan help Operations Executives make changes in an intelligent way. Using
CustomerViewa retailer can keep labor constant while increasing margins. CustomerView can
help increase the depth of category purchases by turning cherry pickers into buyers, increasing a
loyal customersshopping trips to a category and increasing overall market basket size.

Consultants
Loyalty and POS databases tend to be stand-alone systems not integrated with category
management systems. Most data is uncleansedand hosted in many locations. This leads to many
opportunities for consultants to create systems to clean the data, aggregate the data, de-duplicate
the data, household the data, etc. before the data enters the CustomerViewsystem. There are also
many opportunities for consultants to use CustomerView to help the retailers interpret, translate,
and develop strategies based on the information and provide business practice recommendations.

Vendors
CustomerViewcan help CPG manufacturers build category/brand sales by using real retail data.
CustomerViewcan help them build their share of market by identifying customers buying a
particular category of products, but not their brands. CustomerView can show the CPG
manufacturer how to increase multi-segment sales by identifying likely purchase behavior across
divisions, departments or categories.

4.3 Optimizing Customer Interactions and Marketing Analytics

Customer conversations and new analytical marketing techniques make dynamic customer
relationship optimization a new top priority. Business competence comes down to a
company’s ability to generate value by using meaningful propositions, relevant interactions,
messaging, information, and conversations that customers find compelling. The most important
thing that CRM can do for you today and tomorrow is help you create effective conversations
that are crafted with credible, holistic intelligence and delivered to the right customer on the right
channel at the right time. Businesses need to create economic value, which requires
understanding customers and then engaging them with value propositions. The single most
important event that happens in business is a customer conversation. The conversation is where
economic value begins – revenues, activity, paychecks, and shareholder value. Every company
should make the composition of those “value props” its highest priority. But are they doing so?
How well do businesses create conversations? How much do firms optimize opportunities? What
are some of the best firms driving new customer value? This latest management challenge is
being addressed by the best of- breed CRM analytical tools that provide marketers with the
intelligence to understand customers so that value propositions are relevant and arrive at the most
opportune time for the customer. The new analytics provide capabilities for companies that wish
to make it a business priority to create uniquely effective value propositions. The interesting
thing is that customers expect it. Yes, customers expect you to know them – and to treat them as
persons and remember every contact and transaction they’ve ever made. This idea has been in
existence for a decade, since database marketing began to grow in popularity and use. B2B or
B2C or B2B2C buyers now instinctively believe that their providers should know them.

“Initially flattered by being treated less as a number and more as an individual with distinct
requirements, consumers are now communicating their demands back to their suppliers. Where
once they would not consider the idea of bargaining, they now tell the managers of brand retail
chains what they are prepared to pay and specify how they want products sourced, designed,
styled, combined, assembled, delivered, and maintained.”

Accelerating Customer Relationships, Swift As Internet communities of practice have grown,

people have become more vocal about what they expect from providers in many consumer
serving industries. More than two years ago, the book The Cluetrain Manifesto: The End of
Business as Usual discussed the new realities of value propositioning and marketing techniques
for the new millennium.

Here are the pertinent highlights:

• Marketing is really various types of interaction or conversations.
• Technology is enabling conversations among human beings that were not possible in the era
of mass media.
• These networked conversations are enabling powerful new forms of social organization and
knowledge exchange.
• As a result, markets are getting smarter, more informed, and more organized.
• Already, companies that speak in the language of the pitch are no longer speaking to anyone.
• Companies can now communicate with their markets directly.

If they blow it, it could be their last chance. The opportunities for companies that leverage CRM
to interactively communicate with relevance and timeliness are enormous. Yet intelligence from
across the enterprise is required to understand and predict what customers will want to know
about and demand. The potential to generate dramatic ROI on such an investment is worth five to
10 to 100 times the investment.

“Focusing on and predicting customer demand and making decisions both proactively and
scientifically is an opportunity worth hundreds of millions, if not billions, of dollars of
incremental revenue… starting with segmentation and improved forecasting, then shifting to
integration and alignment of functions based on demand, and finally reaching optimization,
which is the application of advanced mathematics to dramatically improve decisions.”

4.4 Manage Your Value Propositions to Better Manage Your Brand and Your
Business
A value proposition may be articulated in text on a Web site, catalog, or direct mail piece, or in a
telephone conversation. This is where brand differentiation first appears: the proposition is the
first impression of the brand and its value to customers. Thus it is critical in initiating
conversations, transactions, and relationships. But a value proposition is so much more than a
message. The value proposition drives the organization’s core logic for creating value.
Although it’s true that value propositions will naturally evolve over time as markets and
competitive conditions change, the competitive advantage belongs to companies that can
proactively and quickly adapt their value propositions for optimal business results. Professor Ari
Ginsberg of New York University’s Stern School of Business insists that companies can better
invent and reinvent value propositions by analytical means that center on customer behavior, in
his words, “analyzing dimensions of value.” It is specifically in this area – exploring dimensions
of value – that customer analytics can make an enormous difference in understanding customers
well enough to generate more effective value propositions.

For managing value propositions effectively, companies need to first understand what customers
value – by using analytical tools integrated with marketing automation systems for creating and
acting on customer intelligence. And to take this a step further, the analytics and automation are
best supported by an enterprise view of the business and customers, driven in real-time for
capturing, managing, and delivering data to marketers and analysts for decisioning.
 Chapter # 5. Market Automation

5.1 Marketing Automation - The CRM Vendor Solutions

The components offered in a front- office application suite fall into three general categories:
• Customer Service and Support: These applications automate the service and support
functions, including analytics, and they provide workflow engines that facilitate efficient
problem and inquiry escalation, tracking and resolution. They provide customizable, dynamic
scripting capabilities for the customer service representatives as well as the capability to record
customer responses in a shared contact repository. In a call center environment, they also
integrate with (or provide) computer telephony integration (CTI) capabilities that allow
automatic call routing and automatic screen pop-ups containing customer and product
information to agents' workstations as they are answering or initiating calls.

• Sales Force Automation: These are tools that automate the collection and distribution
of all types of sales information. They allow for the design of sales teams based on defined
criteria. Calendar management, activity management, sales reporting and forecasting, lead
distribution, and tracking sales contacts with customers and prospects are some of the myriad of
capabilities offered within these solutions. Many also provide access to internal and competitive
product information as well as the automated collection and distribution over the Internet of
relevant external information such as breaking industry news and customer-specific events.
Sophisticated pricing and product configuration engines and third-party channel management
capabilities are also available.

• Marketing Automation: These applications provide the ability to create automated

marketing campaigns and track the results. Generating lists of customers to receive mailings or
telemarketing calls, scheduling automatic or manual follow-up activities and receiving third-
party lists for incorporation into the campaigns are all typical functions. Internet personalization
tools are offered here to track behavior on a Web site and allow tailoring of the contact
experience, or generation of specific cross-selling opportunities, based on this behavior. Inbound
and outbound e-mail management capabilities are also becoming popular components of the
marketing automation suites.
Let's take a closer look at the marketing automation component because it has been positioned as
the solution for all CRM analytics.

Campaign Management
Segmenting customers, generating targeted marketing campaigns for these segments and tracking
results are important parts of CRM analysis. Integrated MA tools provide these capabilities and
provide campaign offers and results directly to the customer sales and support processes.
Incorporating offers and solicitations into the common contact repository and prompting contact
agents to follow-up on campaigns can yield dramatic benefits. Some of the features provided are:
• Planning marketing activities and developing campaign hierarchies.

• Outlining marketing campaign objectives.

• Defining campaign success measurements.

• Coordinating multiple channels and event triggers to automate response actions.

• Building and testing sample campaigns on a subset of customers.

• Storing and reusing content from previous marketing campaigns.

• Measuring campaign effectiveness by linking directly to call center, front-line employees and
sales force.

• Importing third-party target lists.

• Tracking fulfillments supplied to the client via each channel to avoid duplication and
maximize effectiveness.

• Tracking customer inquiries related directly to campaigns.

• Tracking sales force closures related directly to campaigns.

Internet Personalization
Personalization is the ability to track and respond to customers in an individualized fashion based
upon their past contacts and behavior. The true value of personalization in CRM is when it
extends beyond the Internet to encompass all customer contacts across the organization. By
integrating personalization into the front-office applications, every contact with your customers
can be well planned and personalized. This is a good example of the acceleration of analytics
into action. Features of personalization tools include:

• Collecting information on Internet site visits.

• Addressing customers who visit the site by name and remembering their preferences.

• Allowing visitors to customize content to suit their purposes.

• Showing customers specific content based on who they are and past behaviors.

• Offering specific products (on the Internet or over the phone) based on past behaviors.

• Allowing for the possibility of self-adjusting campaigns and offerings based on customer
behavior.

• Integrating technologies and techniques for optimal customer understanding based on

transaction history, demographic analysis and collected information.

E-Mail Management
E-mail management capabilities are used in two ways in MA - inbound and outbound. Inbound
e-mail management capabilities assist organizations in handling inbound inquiries from
customers. While on the surface this would seem to be a purely service-oriented activity,
organizations are linking these facilities to their personalization technologies and thus tuning the
resulting communications on the basis of CRM analytics. Benefits of this can be quite high as it
offers a chance to extend personalization techniques to multiple communication types. Outbound
e-mail management capabilities provide the ability to construct and execute permission-based
marketing campaigns (where the dialog has been started with a customer via e-mail
communications) and are said to be up to 20 percent more successful than traditional direct
marketing at a fraction of the cost. Features include:
• Automation of the targeting and sending of mass e-mails.

• Automation of mass e-mail responses.

• Use of decision engines to parse information from incoming e-mail correspondence.

• Crafting responses to incoming e-mail without human intervention.

5.2 Closing the Loop - Adopting an Architected Solution

Now that we understand the CRM analytic capabilities offered with MA solutions, what's the
catch? When MA modules are implemented as an integrated, open part of an enterprise business
intelligence environment, there may be no catch. The catch is the temptation to implement these
front-office product suites and bypass the enterprise as a whole and the data warehouse
specifically. While this automates certain types of marketing activities and integrates these
activities to the front line, it lacks the depth, breadth and share ability of an architected data
warehouse solution. The organization is deprived of the more sophisticated forms of CRM
analytics, forming yet another departmental silo of analysis, furthering the very data mart chaos
and inconsistency that the data warehouse is designed to prevent.
Let's examine the Corporate Information Factory (CIF) architecture to determine where the MA
integration points should be. Figure 1 illustrates the CIF. As stated earlier, the CIF provides a
high-level technology road map for organizations wishing to develop CRM initiatives. The CIF
is a logical architecture whose purpose is to provide a framework for implementing integrated
technology across all areas, all departments and all functions of an organization. Building a
framework such as the CIF enables organizations to share customer information freely and
distribute analytical results to all individuals in the organization that need them. The CIF consists
of three primary types of CRM systems

Business Operations are the core operational systems (billing systems, product or policy
systems, call center and sales force automation systems, etc.) that run the day-to-day business
processes in an organization. Information originates in these systems and flows through a data
acquisition process into the rest of the CIF where it is consolidated and integrated for strategic
and tactical decision making. Front-office solutions generally reside here as they facilitate the
day-to-day sales and service processes.

Business Intelligence provides the capabilities required for the strategic decision making in
the organization. Business intelligence consists of the data warehouse, data marts and associated
analysis tools, and can provide the technology infrastructure and information necessary to
manage the complex relationships and analytics required to understand CRM interactions.
Properly architected, the MA components of the front-office applications would reside here.

Business Management enables organizations to act on the analytical results generated

within business intelligence. Business management consists of the operational data store (ODS)
and its associated transaction interfaces as well as the associated oper marts. Business
management systems are subject-oriented, integrated, current-valued and supply a single point of
access for information across the enterprise. An enterprise customer profiling system is a good
example of a CRM business management function.

The primary integration point for the MA components is the data warehouse contained in the
business intelligence environment. The data warehouse is defined as a subject-oriented,
integrated, time-variant, cleansed and non-volatile collection of data for strategic analysis. You
can think of it as a big bucket of generic, detailed, enterprise-wide, static and historical data. The
data warehouse can serve as the source of data for data marts and for the MA components (which
are actually just another set of souped-up data marts). Unlike the data marts or MA components,
the data in the data warehouse is not set up for a particular application or department.
The data warehouse consists of standardized, consistent pieces of data. By constructing the data
warehouse in the most generic and flexible way possible, you can build just about any data mart
for CRM analysis. You are only limited by your technology and the data that you can acquire
from your operational systems.

• The data warehouse reflects the enterprise's view of data in terms of business rules and
strategic requirements. Because the data in the warehouse is to be used for multiple CRM
analytical purposes spanning multiple departments, it must accommodate and reinforce the
enterprise's vision of its CRM initiative.

• It is optimized for flexibility. The data must not display a bias or prejudice toward any one
kind of analytical processing. For example, if the data warehouse is designed using a data model
that is prejudiced toward known data relationships or certain business processes, then analytical
activities that search for unknown relationships are compromised or, in effect, eliminated.

• It provides detailed data for subsequent use by the data marts. Because the data warehouse
must be the source for data marts containing aggregated and summarized data, exploration
warehouses containing detailed data, data mining warehouses containing statistical samples of
data and MA components which fall somewhere in between in terms of detail and history
required, it must contain the proper level of detailed data to satisfy these very diverse
requirements. The goal is for the data warehouse to have the "least common denominator" level
of data for the data marts and the MA components. It must serve star schemas, cubes and flat
files for statistical analyses, and subsets of data for ad hoc querying.
The Information Feedback loop, running across the top of Figure 1, is the other key component
of the CIF for integrating MA components. This is the set of processes that transmit the
intelligence gained through usage of the strategic CIF components to appropriate data stores.
This is the mechanism by which we push BI "out to the masses." It is also the mechanism by
which we allow the MA components to receive information from the data warehouse and to feed
information back into the data warehouse or on to the operational systems or ODS.
Examples abound of storing the results of BI analyses in operational systems such as the front-
line applications. One such example is to store the results of a customer lifetime value (LTV)
analysis - that is, the actual score given to each customer based on their calculated LTV to the
enterprise. The numerical values generated from such an analysis can be stored in the front-office
system and accessed by the MA components during the generation of campaigns or scripts for
call center agents. Behavior toward each customer is altered based on the knowledge of the
customer's LTV score. Higher valued customers may receive different campaign solicitations
than those with a lower score.
Conversely, the solicitations generated by the MA components should also be transported via
Information Feedback into the data warehouse. This allows all analytic applications in the
organization to take advantage of the valuable information generated by MA components.
Beware of vendor sales pitches that contain phrases such as "our MA module can drive your
entire marketing process," or "MA provides a direct link between CRM analytics and your
customer contact points." While the capabilities embodied in the MA modules do provide
significant value, they do not provide sufficient sophisticated analysis capabilities to be your sole
vehicle for all CRM analytics. Instead, bypass the hype, implement MA capabilities that make
sense for your organization and ensure that MA modules use the information feedback
mechanism to feed information to and receive information from the data warehouse or
operational systems. Staying true to an architecture such as the CIF will provide you with the
guidelines necessary to build the integrated customer information environment required to drive
your CRM strategies.

FOR COMPLETE REPORT AND

DOWNLOADING

VISIT

HTTP://PAKISTANMBA.JIMDO.COM