Evolution Initially, there were Door-to-Door sales forces to approach the customers. Then, Mass marketing replaced the intimacy of a direct sales force. Later, Targeted marketing evolved. Use of direct mail and telemarketing. Latest is Customer Relationship Management (CRM), the next step in Evolution. A concept supported by latest technologies.
EVOLUTION OF CRM DATABASE 1980’S MARKETING •Focus on Data Mining and Direct Marketing was the outcome RELATIONSHIP 1990’S MARKETING •Focus on loyalty programs CUSTOMER 2000’S+ RELATIONSHIP MARKETING
Defining CRM… CRM is about how you attract, develop and retain customer. Customer Focus; Customer acquisition, Customer research, Customer loyalty, Customer development, Customer satisfaction, Customer value,
What is CRM all about….. CRM promises to help companies to get to know their customers. CRM helps an organization to understand which customer to retain and which ones they should be willing to lose- and why? Overall helps in targeting, spending money wisely, saving time & customer satisfaction.CRM is how to differentiate customer treatment according to individual preferences.
Why CRM….. Customers are fickle and becoming more cynical. We no longer believe what we read and see. Convergence of markets. Competition- leader or follower? Customer loyalty at any cost.
GOALS OF CRM Provide better customer service Cross sell products more effectively Helps sales staff Simplify marketing and sales processes Discover new customers and new customer needs Increase customer revenue
Defining CRM Dr. Robert Shaw (as cited in Customer Relationship Management, 2001) provides a more thorough definition of CRM. Customer relationship management is an interactive process for achieving the optimum balance between corporate investments and the satisfaction of customer needs to generate the maximum profit. firstname.lastname@example.org NIFT Bangalore
Defining CRM Measuring both inputs across all functions including marketing, sales and service costs and outputs in terms of customer revenue, profit and value. Acquiring and continuously updating knowledge and customer needs, motivation and behavior over the lifetime of the relationship. email@example.com NIFT Bangalore
Defining CRM Applying customer knowledge to continuously improve performance through a process of learning from successes and failures. Integrating the activities of marketing, sales and service to achieve a common goal. firstname.lastname@example.org NIFT Bangalore
CRM: A Customer-centric business strategy A Customer-centric business strategy which Focuses on Managing and optimizing entire customer life cycle. Demand re-engineering of work processes with customer in focus. It consists of 3 phases Planning Phase Assessment Phase Execution Phase
In-depth analysis of customer behavior and attributes. Applying of the achieved knowledge in the formulation of marketing campaigns, strategies and treatment plans. More than just a set of technologies – it is a process. email@example.com NIFT Bangalore
Benefits of CRM Company existence – quest for profit. Three ways to increase the profitability of the customer base Acquire more customers Optimize the value of the existing customers Retain the right customers longer Acquiring new customer cost 5-10 times more that retaining the existing one Loyal customers will will buy more and are willing to pay premium prices 20/80 rule – 20% of the customers generate 80% of the revenue
Continued….. Service leaders enjoy the following advantage over their low- service competitors: They grow twice as fast. They experience a 6% annual growth vs. a 1% share loss (they take customers away from their competitors). They can charge 10% more from their products and still take customers away. They enjoy 12% vs. 1% average return on sales. Industry statistics show that 68% of customers walk away because of poor customer service. firstname.lastname@example.org NIFT Bangalore
Evolution of CRM Mass Marketing Target Marketing CRM
Mass Marketing Replaced the intimacy of direct sales One way communication Wide geographic distribution Lost is the personal touch with the customer Mass marketing was enabled trough the technological improvements in TV, radio, printed press
Target Marketing Direct mail, telemarketing Receiving customer response Lack of specific data, average response rate Islands of information
CRM Next evolutionary step, back to intimacy Customer loyalty build on: Understanding of customers wants, needs and values Interactivity with the customer in the way customer prefer
Evolution of Customer Relationover time Customer relationship management is an attempt to modify customer behavior over time and strengthen the bond between the customer and the company. The key to CRM is identifying what creates value for the customer and then delivering it (Newell, 2000).
Evolution of customer relation over time 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
CRM Cycle Assess Who are the customers – demographics and lifestyle? Where do they live? What are they worth? What is their lifetime value potential? What and how do they buy? How can they be reached? How have they responded to promotions in the past and trough which channels they prefer to be reached? Plan Execute Execution and management of the marketing campaigns and customer treatment plans. Data gathering.
CRM Critical Success Factors Architecture Data warehouse Data structure and architecture – 80% of the service cost Analysis, Analysis, Customer Interaction Customer Interaction Profiling Profiling Sales force automation system. Sales force automation system. Call center Call center The Internet The Internet
Planning Phase Plan to approach the customers Plan for making new campaigns This phase includes Marketing tools Various Softwares Marketing & Sales personnel are involved in this phase
Assessment Phase Select customer base for analysis Analyze customer requirements This phase includes technologies like Data warehousing Data Mining Online analytical processing (OLAP) A certified personnel sets up the CRM package while a business analyst analyzes the data
Execution Phase Customer interaction Executes campaigns Track customer feedback This phase uses Internet Call centers Direct mails etc.
Technology behind Assessment Phase Integrates with Data Warehouse & Data OLAP to implement intelligent Mining algorithms to discover patterns. Data WarehouseWarehousecontaining OLAPCustomer data. Server User analyzes these patterns to take decisions Multidimensional Structures suitable for his business. to facilitate better and fast analysis of data.
DATA WAREHOUSING A data warehouse is a copy of transactional data. Data is specifically structured for querying and reporting A data warehouse can be a relational, multidimensional hierarchical database or a flat file.DISTINGUISHABLE FEATURES • Contains historical data • No frequent updates • Data stored is subject oriented TERMINOLOGY Data Mart- Contains data about a specific subject. Metadata- Describes the data stored in data warehouse. Data Cleansing- The process of ensuring that all values in a dataset are consistent and correctly recorded ETL- Extraction, Transformation and Loading of Data.
A Typical Data Warehouse Data Warehouse Summarized Data Data about data. Meta Data Facilitates in firing queries on detailed data. Detailed Data Data marts contain Data Data Data data specific to a Mart Mart Mart subject. customer campaign sales email@example.com NIFT Bangalore
OLAP•Online analytical processing is the name given to database anduser interface tools that allow to quickly navigate within data.•Provides a mechanism to store the data in multidimensionalcubes.DISTINGUISHABLE FEATURES•Multidimensional Cubes- To store data which are multidimensional in nature.•Calculation Intensive- Allows complex calculations on database. firstname.lastname@example.org NIFT Bangalore