CRM

Business Challenges
 Businesses in many industries may lose up 50% of their
customers over a five year period.

 Studies have shown it’s 6 to 7 times more expensive to acquire

a new customer than it is to retain a current customer.

 As little as a 5% increase in customer retention can increase

profits by 25 to 95%.

 Yet many businesses are still focused only on customer

acquisition and see customers from the fragmented view of
individual transactions
Cost of new customer acquisition
≈ 7-8 times of retaining current Customer Relationship
customers
(Yankee Research) Management
50% current customers do not
contribute to profit
(AMR Research)
Top 20% customers contribute 60%
of revenue and 70% of profit
 20 : 80 rule
Fortune 500 companies will lose
50% of customers in 5 years
(Peppers & Rogers Group)
Only 4% of unsatisfied customer
complain. 65~90% do not repurchase
(Anderson Consulting)

82% of customers whose complaints Customer is important

resolved repurchased
98% coupon are scrapped. Analysis on Customers essential
Customer is

There is only one boss. The customer!

He can fire everybody in the company, from the chairman
on down, simply by spending his money somewhere else.
Sam Walton, founder of Wal-Mart

When products become so similar and technologies are

commonly available , CUSTOMER EXPIRIANCE is the
only true differentiator
Today’s customer is …

• Smarter
• leaner
• more price conscious
• has lower morale
• overwhelmed by competitors
• more demanding
• less forgiving
• harder to satisfy
• less loyal
Core Marketing Concepts
 A fundamental paradigm shift is occurring
in how company market to customers.

What's In What's Out

One-to-One Marketing Mass Marketing
Customized Products Standardized Products
Share of Wallet Market Share
Life Time Value Present Value
Event Driven Marketing Program Driven Marketing
Know Your Customers Know Your Products
Manage Your Customers Manage Your Products
Differentiate Customers Differentiate Products
Cross-sell / Retention Acquisition
l0% of Market, l00% of 100% of Market, 10% of
Customer Customer
What CRM means?

 Customer ?
 Relationship ?

Channels of interaction, segmentations

 Management?

organization of customer related information

 Relationships with whom?

All stakeholders including

 Customer
 Employees
 Suppliers
 Government
 Citizens
I focus on Customers here.
The Customer Relationship Management (CRM).
 The Meaning of Relationships

 Continuity
 Mutuality
 Interdependence
 Understanding
 Trust
 Three simple business goals of CRM

Acquire the „right“

Customer
Value of customer relation

customers with
high potential Retention
value
Customer
Development

Cross- and up- Retain profitable

Customer sell by offering customers and
Acquisition the right products increase their
at the right time long-term value

Evolution of customer relation over time

The process of

 Targeting
 Acquiring
 Servicing
 Retaining
and
 Building long-term relationships with customers
CRM Versus Mass Marketing

Traditional
Mass “Shotgun” Approach
Marketing

CRM “Rifle” Approach

Define customer
relationship management
CRM is NOT…
1. …a technology.”
• “CRM is just a new system to install, new code to write.”

1. …sales force automation (SFA).”

• “CRM is just a business development process for our salespeople.”

1. …customer loyalty.”
• “CRM is a synonym for customer loyalty.”

1. …database marketing.”
• “CRM just allows us to leverage our customer data better.”

1. …call center technology.”

• “CRM is just a way to cut costs in the call center.”

1. …a project.”
• “We can install CRM in 30 days with this team of three!”

1. …a producer of intangible benefits.”

• “You just can’t measure relationship management concretely.”

1. …a business panacea.”
• “Just install the software … apparently it solves problems.”
 CRM is a customer-focused
business philosophy designed to
effectively create experiences
that attract, acquire and retain
customers.

To realize the benefits,

enterprises must implement collaborative processes
and technologies that support customer interactions throughout all
channels.
CRM ?

A company-wide business strategy

designed to optimize profitability,
revenue, and customer satisfaction by
focusing on highly defined and precise
customer groups.
 Customer Relationship Management

“..an enterprise approach to understanding

and influencing communications in order
to improve customer acquisition, customer
retention, customer loyalty, and customer
profitability.”
 Customer-centric

Under this philosophy, the company

customizes its products and service
offering based on data generated through
interactions between the customer and the
company
CRM Definitions
An enterprise wide business
strategy designed to optimize
profitability, revenue and customer
satisfaction by organizing the
enterprise around customer segments,
fostering customer-satisfying behaviors
and linking processes from customers
through supplies. (Gartner Group)
A management discipline utilizing
specialized tools, technologies, and
techniques to facilitate the operation
and improvement of front-office
business functions with the intent of
optimizing the total value derived
through customer relationship. (Pivotal
software Inc. 1999)
An data-driven approach that
enables companies to assess each
customer’s current needs and potential
profitability and tailor sales offers and
service. It often involves using multiple
channels to improve effectiveness and
efficiency. (Goff et al. 1998 Mckinsey
Quarterly, No3)
An enterprise approach to
understanding and influencing
customer behavior through
continuous relevant communication to
improve customer acquisition,
customer retention, and customer
profitability. (NCR corps.,1999)
What is CRM?

Organizing
Organizing Around
Around Tracking
Tracking Interactions
Interactions
Segments
Segments

Fostering
Fostering Satisfaction
Satisfaction Linking
Linking Processes
Processes

Special
Special Promotions
Promotions
Targeting
Targeting
Markets
Markets and
and Individuals
Individuals
People - Belief that your customers and employees are
your most important asset and that long-term survival
depends on these relationships.

Process - Structuring your organization and business

processes to support the culture.

Technology - Automating and integrating business

processes to capitalize on the culture.
 CRM is a Management Tool, encompassing all
functions, for focusing on the customer

Sales
Service
Marketing
Mfg
Product
Planning
Purchasing
Spares
R&D

CRM is a set of operating business processes built around

the customer
CRM is the front end (customer facing) activity. It needs to be firmly
supported by all other back-end processes.

CRM

ERP FAST FWD

SCM R&D
MFG
PURCHASING

All improvement initiatives under the CRM Umbrella

Makes Four Marketing Dreams Come True

1. Dream to target and serve customers on an individual

basis ( prefer 1 to1 marketing to mass marketing.
2. Dream to enjoy log term relationships with them,
especially with the profitable customers (preferring
commitment to flirting).
3. Dream to get rid of barriers and distortions created by
the non-value adding intermediaries (preferring
disintermediarization and direct marketing)
4. Dream to reduce marketing cost progressively.
Architecture of CRM

 There are three parts of application architecture of CRM:

 operational - automation to the basic business processes

(marketing, sales, service)

 analytical - support to analyze customer behavior, implements

business intelligence alike technology

 co-operational - ensures the contact with customers (phone,

email, fax, web, sms, post, in person)
Operational CRM

 Operational CRM means supporting the so-called "front office"

business processes, which include customer contact (sales,
marketing and service)

 Operational part of CRM typically involves three general areas of

business:
 Sales force automation (SFA)
 Customer service and support (CSS)
 Enterprise marketing automation (EMA)
Analytical CRM

 Data gathered within operational CRM are analyzed to segment

customers or to identify cross- and up-selling potential.

Collaborative CRM

 Collaborative CRM facilitates interactions with customers through

all channels (personal, letter, fax, phone, web, e-mail) and
supports co-ordination of employee teams and channel.
 CRM Components

Closed Loop Processing

Operational CRM Analytical CRM

Business Operation Management Planning/ Business Performance Management
Analysis
Action Marketing data Sales Data Customer Data
Marketing Sales Service
Analysis Analysis Analysis

Feed
Back

Collaborative CRM
Customer Interaction Management

Web Call Center Web Sales

Personalization Automation & Service
Add Customer Attrition to the P&L Sheet
 Components of Operational and Analytical CRM

 Operational CRM:
effective and efficient use and management of people, process and technology

 Analytical CRM:
the measurement of people, process and technology
 Value Value

Segmentation

Segmentation
Conversion
Member Customer
Retain

Communication Communication

Bridge the divide….

 Customer is

KING
Understand him !!!

Bottom-line !!!!
How to build Loyalty?

Framework of building Loyalty

Degree of
Drivers Phased Elements
Relationship

Improving
Customer Attitude,
Core Products/Service
Satisfaction not Action
Innovation of Channel Mgmt.

Reward Program Repurchase Action, not Affinity Customer

CRM /Continuing Campaign / Cross-selling (Artificial Loyalty)
Loyalty

Recognition
Trust/
(CR Strategy) of Relationship,
Intimacy
Referral
A Brand-Infused Causal Model
 Loyalty-the customer-facing tip of the
CRM Iceberg

Increase
Cross-sell Encourage
Loyalty Multi-channel
Buying

CRM
Encourage Identify
WOM Customers at
(word of mouth) Customer Direct all Touchpoints
Communications
Increase Email (email, postcards, etc.)
Click-thru and Increase Re-buy
Open Rates Rates
That’s All There Is To It…
 Organization
Customers
Touchpoints

Field Sales

Website

Email

Call Center

POS

Traditional Mail

Retail

Fax

PDA
Field Sales
Sales
Website

Email
Marketing
Call Center

POS
Service
Traditional Mail

Retail Finance

Fax
Production
PDA
Field Sales
Sales
Website

Email
Marketing
Call Center

POS
Service
Traditional Mail

Retail Finance

Fax
Production
PDA
Field Sales
Sales
Website

Email
Marketing
Call Center

POS
CRM Service
Traditional Mail

Retail Finance

Fax
Production
PDA
Process, Technology, People

Field Sales
Sales
Website Selling Knowledge
Product Knowledge
Email Solutions Knowledge
Customer Knowledge Marketing
Call Center

POS
CRM Service
Traditional Mail

Retail Finance

Fax
Production
PDA