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Customer Relationship Management

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    Customer Relationship Management Customer Relationship Management Presentation Transcript

    • Workshop : CUSTOMER RELATIONSHIP MANAGEMENT
    • CONCEPT AND THINKING BEHIND CRM
    • THERE ARE ONLY 3 MARKETING FUNCTIONS
      • Acquiring customers
      • Retaining or reactivating them
      • Selling them more products
      • Everything else is a modification of one of these three functions
      • Increasing the value of customer base :
    • DISCUSS Identify the percentage of your company’s current and future effort to grow :
    • PROFIT IMPACT OF 5% INCREASE IN RETENTION RATE
    • A LOYAL CUSTOMER IS ONE WHO … 1. Shows Behavioral Commitment : ~ Buys from only one supplier, even though other options exist ~ Increasingly buys more and more from a particular supplier ~ Provides constructive feedback/suggestions 2. Exhibits Psychological Commitment : ~ Wouldn’t consider terminating the relationship ~ Has a positive attitude about the provider ~ Says good things about the provider
    • CUSTOMER RETENTION (LOYALTY) PAYS OFF
      • Retaining old customer costs less money
      • Customers spend more, increased “share of wallet”
      • They get comfortable dealing with us
      • They spread positive word of mouth
      • They cost less to serve
      • They are less price sensitive
      • They are more forgiving when something goes wrong
      • They make our marketing program more efficient
    • MARKET SHARE VS. SHARE OF CUSTOMER
    • SATISFACTION VS. LOYALTY Satisfied Customers Loyal Customers Churn/Defector Customers SATISFIED NOT SATISFIED
      • Reason :
      • Variety seeking behavior
      • Low attachment
      • Low exit barrier
      • Alternative access
      • Competitors create churn
      • event
    • CRM REVOLUTION/EVOLUTION IN INDONESIA
      • Priority customer in banking industry
      • Increased call – center
      • Frequent flier programs
      • Community / clubbing development
      • Point reward offering
      • Membership program
      • Increased below the line activities
    • LOYALTY IN THE CRM PROCESS Transaction Product Relation Share of Wallet Dialog Share of Life Customer Acquisition (1) Customer Retention (2) Customer Relationship (3)
    • QUOTES FOR CRM
      • CRM is not a software package . It is not a database . It is not a call center . It is not a loyalty program , a customer service program. CRM is a philosophy in its entirety .
      • CRM is more than just an out growth of direct marketing and the event of new technology.
      • The objective of CRM is to focus more on customer retention and growth faster than pursue all types of customers at great expense only to lose them.
    • CRM DEFINITION, ITS FACTS & OTHER LABELS
      • Customer Relationship Management is an enterprise strategy in understanding and influencing customer behavior through meaningful communication in order to improve customer acquisition, customer retention, customer loyalty, and customer profitability .
      • CRM facts :
      • CRM is easy for small companies
      • CRM is not easy for large companies
      • CRM is a process not a project
      • CRM & other labels :
      • One–to–one relationship management
      • Customer intimacy
      • Integrated Marketing Communication (IMC)
    • EVOLUTION OF CUSTOMER METRICS CRM Metrics Improve Market & Campaign Metrics Companies Mature into CRM Metrics
    • STRATEGIC AND TACTICAL GOALS OF CRM
      • CRM’s goal is to increase the opportunity by improving the process to communicate with the right customer , providing the right offer (product and price), through the right channel , at the right time .
      • Right Customer :
      • Manage customer relationships throughout their life cycle
      • Realize customer potential by increasing “Share of Wallet”
      • Right Offer :
      • Efficiently introduce customer and prospects to your company and its products
      • and services
      • Customize your offering for each customer
      • Right Channel :
      • Coordinate communications across every customer touch point
      • Ability to communicate to customer’s channel preference
      • Capture and analyze channel information for continuous learning
      • Right Time :
      • Efficiently communicate to customers based on time relevance
      • Ability to communicate with real/near-real time or traditional marketing
    • CRM DIMENSIONS (1)
    • CRM DIMENSIONS (2)
      • Strategic CRM :
      • Customer value
      • Competitive differentiation
      • Market segmentation and targeting
      • Strategic positioning
      • Operational CRM :
      • Customer service
      • Customer data capture
      • Customer database
      • Analytical CRM :
      • Software and hardware for CRM
      • Pareto analysis, profitability analysis, etc
      • Data mining and statistical analysis
    • Steps of Managing CRM : CUSTOMER PROFILING IDENTIFICATION
    • FOUR CRITICAL TASKS FOR CRM Identify customers Differentiate customers Interact with customers Customize treatment Analysis Strategy Implementation Implementation
    • IDENTIFYING CUSTOMER (1)
      • STEP 1 – How Much Customer Identification …
      • Take any inventory of all of the customer data already available in any kind of
      • electronic format
      • Find customer identifying info that is “on file” but not electronically compiled
      • STEP 2 – Get Customers To Identify Themselves …
      • Define : Decide what information will comprise the actual customer’s identity
      • (Is it name and address? Home phone number? Account number?)
      • Collect : Arrange to collect these customer identities
      • Link : Once a customer’s identity is fixed, it must be linked to all transactions
      • and interactions with that customer, at all point of contact, and within all the
      • enterprise’s different operating units and divisions
      • Integrate : The customer’s identity must be integrated into the information
      • system the enterprise uses to run its business
      • Recognize : The customer who returns to a different part of the organization
      • needs to be recognized as the same customer
      • Store : Identifying information about individual customers must be stored and
      • maintained in one or several electronic databases
    • IDENTIFYING CUSTOMER (2)
      • STEP 2 – Get Customers To Identify Themselves … (Cont’d)
      • Update : All customer data is subject to change and must be regularly
      • verified, updated, improved, or revised
      • Analyze : Customer identity must serve as the key inputs for analyzing
      • individual customer difference
      • Make available : The customers data must be made available to people
      • and functions within the enterprise that need access to it
      • Secure : Because individual customer identities are both competitively
      • sensitive and threatening to individual customer privacy, it is critical to
      • secure this information to prevent its unauthorized use
    • THREE TYPES OF DATA
    • Steps of Managing CRM : DIFFERENTIATION & SEGMENTATION
    • THE LOGIC OF SEGMENTATION STRATEGY
      • Not all buyers are a like
      • Sub groups of people with similar behavior, value, and backgrounds
      • may be identified
      • The sub groups will be smaller and more homogeneous than the market
      • as a whole
      • It should be easier to deal with smaller group of similar customers than
      • with large groups of dissimilar customers.
      • Segmentation alternatives :
      • 1. Segmentation by customer needs :
      • ~ Geographic
      • ~ Demographic
      • ~ Psychographic
      • ~ Behavioral
      • 2. Segmentation by economic perspectives :
      • Customer Lifetime Value (CLV)
    • SEGMENTATION ALTERNATIVES (1) CUSTOMER NEEDS Bases for Segmentation of Consumer Markets Geographic : 1. Political boundaries 2. Climatic regions 3. Population boundaries Demographic : 1. Age 2. Sex 3. Race 4. Marital status 3. Family size 4. Family life cycle Socio – economic : 1. Occupation 2. Education 3. Income 4. Social class Psycho – graphic / Lifestyle : 1. Activities 2. Interest 3. Opinion 4. Values Behavior Patterns : 1. Type of store 2. Time of purchase 3. Number of units purchased 4. Shopping frequency 5. Media habit Consumption Patterns : 1.Heavy usage vs light usage 2. Occasion 3. Loyalty to brand 4. Ownership of other product
    • SEGMENTATION ALTERNATIVES (2)
      • Differentiating based on Needs :
      • Customer needs are dynamic
      • Customer needs often correlate with customer value
      • There is not single best way to differentiate customers by their needs
      • Psychological is more important than demographic in determining
      • customer needs.
      • Profitability Measures :
      • Short Term :
      • ~ Profit per transaction
      • ~ Periodical profit per customer
      • Long Term :
      • ~ Customer Lifetime Value (CLV)
      • ~ Proxy – based variables
      • ~ RFM (Recency Frequency Monetary)
    • SEGMENTATION ALTERNATIVES (3)
      • Differentiating based on CLV :
      • CLV is a measure of the net profit that a firm will receive from a given customer
      • during his/her future lifetime as the firm’s customer.
      • As a general rule, the highest customer lifetime value are those :
      • Spend the most each year
      • Use product/service most frequently each month
      • Have lower processing cost
      • Have the lowest rates defection
      • The value of customer :
      • CLV = Customer Lifetime Value
      • m = Margin per customer per period
      • r = Retention rate
      • i = Discount rate
    • Steps of Managing CRM : INTERACTION
    • INTERACTING WITH CUSTOMER
    • A-PLUS INFORMATION
      • Definition :
      • Information is needed by people to get the full benefit of virtually all products or services.
      • The special demands of E-Commerce :
      • A-plus information is more timely, clearer, or more useful than the customer anticipates.
      • How to produce A-plus information?
      • Provide informational hand holding
      • Select informational media carefully
      • Constantly strive for message clarity :
      • ~ Consider an audit of your company’s writing
      • ~ Use repetition
    • Steps of Managing CRM : CUSTOMIZATION
    • CRM BONDING LEVEL 1
      • The customer is tied to the firm primarily through financial incentives, lower prices for greater volume purchases or lower prices for customers who have been with the company a long time.
      • Examples :
      • Volume and frequency reward
      • Bundling or cross-selling
      • Fair pricing
      FINANCIAL BOND
    • CRM BONDING LEVEL 2
      • The customer is bound through long-term relationship.
      • Social bond includes :
      • Continuous relationship
      • Personal relationship
      • Social bonds among customers
      SOCIAL BOND
    • CRM BONDING LEVEL 3
      • The customer is tied by providing business solution.
      • Business bond includes :
      • Customization
      • Innovation & anticipation
      • Customer intimacy
      BUSINESS BOND
    • CRM BONDING LEVEL 4
      • The customer is tied by providing customized services that are designed right into the service delivery system for that client.
      • In most cases, customized services are technology based and make the customer more productive.
      • Examples are :
      • Integrated information system
      • Shared processed & equipment
      STRUCTURAL BOND
    • LOYALTY PROGRAM WITH POINT REWARD
      • Customers are not equal
      • Behavior follow reward
      • Response varies with the degree of reward attractiveness
      • Key success factor of point reward :
      • 1. Commitment
      • 2. Differentiation
      • 3. Flexibility
      • 4. Simplicity
      • 5. Appropriateness of reward
    • Steps of Managing CRM : TOOLS & ANALYSIS
    • DATA MINING
      • Known as Knowledge Discovery in Databases (KDD).
      • Receiving increasing attention in the business, has been growing more than 20% every year over the last five years.
      • Definition :
      • Data mining is a process of extracting & presenting actionable, implicit, and novel information from data to solve a business problem.
      • Process : is not just a technique, but a series of interrelated steps
      • Extracting : some effort in finding information that may be hidden and can also
      • be used to confirm known or suspected information
      • Presenting : outputting the discovered information in forms such as reports,
      • models, or rules
      • Actionable : information is of the form that decisions and actions can be taken
      • Implicit : information can be discovered using various data mining techniques
      • Novel : information will be new and useful
      • Information is distinct from data in that it embodies knowledge of a pattern that give meaning to the data.
      • (R. SWIFT)
    • THE ROLE OF DATA MINING
      • Convert data into information and knowledge, such that the right
      • decisions can be made.
      • Provide the mechanisms to deploy knowledge into operational
      • systems, such that the right actions occur.
      Data Information Knowledge Decisions & Actions
    • TECHNOLOGY AND TOOL Campaign Management Software Customer Service & Support Solution Contact Center Management Reporting & Analytical Tool
    • THANK YOU