CRM Before and Beyond…

The first: Targeting, Database Marketing and EDM The last: Loyalty and Retention Programs The everything: CRM … And beyond Agenda

The first: Targeting, Database Marketing and EDM

The last: Loyalty and Retention Programs

The everything: CRM

… And beyond

In the Beginning there was… “ A means of marketing where a company -unlike in mass marketing- addresses a specific identifiable target group. Targeted Marketing is closely related to segmentation .” Targeted Marketing

“ A means of marketing where a company -unlike in mass marketing- addresses a specific identifiable target group. Targeted Marketing is closely related to segmentation .”

Segmentation is Based Upon…

Segmentation Based Upon RFM Analysis Recency , Frequency , and Monetary calculations are used extensively in retail for customer segmentation

Or Mosaic-like Typecasting

Tesco’s Segmentation Shopping Habits Share of Shopping, Recency & Frequency Primary Channel Preferred Format (Supermarket, Express, On-line, Petrol) Brand Advocacy Participation in Extensions (Tesco.com, TPF, Baby Club, Win club) Promotional Promiscuity Cherry picking deals, bulk buying to larder fill Life Stage Application Form, What They Buy Basket Typology Vegetarian, Organic,You Are What You Eat! Profitability Brand Choice, Packaging Preference, Weight of Purchase

Tesco’s Targeted Communication Organics Finer Foods Healthy Living Price Sensitive

Then there was Database Marketing “ Database Marketing is a form of direct marketing using databases of customers or potential customers to generate personalized offers and communication in order to promote a product or service for marketing purposes.”

400 Million Euros Down The Drain

Database Marketing at ZARA

Fast-Fashion -strategy ZARA ‘creates’ her collection through (real-time) database tracking of the supply-chain and ‘fashionata trend watching’ Using ‘shared situation awareness’: analyze data  finding sales patterns  develop hypotheses  prototyping (25,000 a year)  instore testing  sell More then half of the collection is made in home-markets Sales went up 20%. Margins are 16% (versus 7% in traditional fashion retail) Database Marketing at ZARA

Fast-Fashion -strategy

ZARA ‘creates’ her collection through (real-time) database tracking of the supply-chain and ‘fashionata trend watching’

Using ‘shared situation awareness’: analyze data  finding sales patterns  develop hypotheses  prototyping (25,000 a year)  instore testing  sell

More then half of the collection is made in home-markets

Sales went up 20%. Margins are 16% (versus 7% in traditional fashion retail)

DBM was Followed by EDM “ Event Driven Marketing is based upon the identification of changes in the situation or needs of customers and acting upon these changes by predefined campaigns that come into action if these events occur.”

“ Event Driven Marketing is based upon the identification of changes in the situation or needs of customers and acting upon these changes by predefined campaigns that come into action if these events occur.”

Event Driven Marketing Needs Client Needs Client(Segments) Product Centric Client Centric Needs Client(Segments) Event Driven Event 1 Event 2 Event 3 Event 4 Event 5

Static Moments which are the same for all clients: e.g. start of season sale, new product Variable Moments varied by client: e.g. birthday, wedding, firstborn, end of contract Database Predicted Moments based upon client behavior and look-a-like analyses Different Kinds of Events

Static Moments which are the same for all clients: e.g. start of season sale, new product

Variable Moments varied by client: e.g. birthday, wedding, firstborn, end of contract

Database Predicted Moments based upon client behavior and look-a-like analyses

Static Moments: Pre-Sale

Variable Moments: Newly Borns

Variable Moments: Concepts

Database Predicted Moments ‘ Kraamkamer’ In the first 5 months the potential value of new customers is set: “We’ve got them in, let’s move them up” Profile, behavior, the 5 golden questions, service enquires etc. are the bases for data-modeling Data models serve as cross-sell tools for voicemail, SMS, roaming etc. with ‘on the shelf’ communication Churn and win back are actively managed both ways

‘ Kraamkamer’

In the first 5 months the potential value of new customers is set: “We’ve got them in, let’s move them up”

Profile, behavior, the 5 golden questions, service enquires etc. are the bases for data-modeling

Data models serve as cross-sell tools for voicemail, SMS, roaming etc. with ‘on the shelf’ communication

Churn and win back are actively managed both ways

Continuous Cycle Deliver Message Understand Customer Behavior Insight Gather Data, Results Analysis Strategy Right message to the right person at the right time through the right channels Communications Plan, Creative Materials

Or… EDM for Dummies Listening to guinea pigs

Loyalty and Retention Programs “ Differential Marketing teaches us that in all categories 20% of clients bring 80% of the business . So it is important to differentiate clients on their value and treasure your most valuable clients .” 20%

“ Differential Marketing teaches us that in all categories 20% of clients bring 80% of the business . So it is important to differentiate clients on their value and treasure your most valuable clients .”

So What is Loyalty? Loyalty has an emotional component Loyalty is proved by the resistance to the offers of other brands Loyalty is an attachment to a brand that goes beyond convenience or short-term gain Loyalty makes up- and cross selling easier Loyalty inspires active advocacy amongst peers

Loyalty has an emotional component

Loyalty is proved by the resistance to the offers of other brands

Loyalty is an attachment to a brand that goes beyond convenience or short-term gain

Loyalty makes up- and cross selling easier

Loyalty inspires active advocacy amongst peers

Understanding Loyalty Components Rational What we think Price Quality Service Location etc. Emotional What we feel Trust Confidence Affinity Behavioral How we act Repurchase Rates Recommendation Rates Share of Spend Component Meaning Key Issues

What Loyal Customers Deliver You are their first choice They look to you to solve their needs / problems They share information with you They ask you for guidance They discuss your offer – not your prices They allow you to make the occasional mistake They positively suggest how you can improve They want you to succeed They have emotional equity in your brand They advocate ‘their’ brand to others

You are their first choice

They look to you to solve their needs / problems

They share information with you

They ask you for guidance

They discuss your offer – not your prices

They allow you to make the occasional mistake

They positively suggest how you can improve

They want you to succeed

They have emotional equity in your brand

They advocate ‘their’ brand to others

How to Build Loyalty Perhaps by doing the antithesis of conventional advertising Advertising battles to get customers to listen… which makes for a very noisy marketplace Loyalty communications: Aims to make your customers resistant to the shouting of others Take them away from the marketplace to somewhere nicer, quieter and more private

Perhaps by doing the antithesis of conventional advertising

Advertising battles to get customers to listen… which makes for a very noisy marketplace

Loyalty communications:

Aims to make your customers resistant to the shouting of others

Take them away from the marketplace to somewhere nicer, quieter and more private

When you’re close to your customers you don’t have to shout

“ Customer loyalty is not about how customers demonstrate their loyalty to us, it is about how we demonstrate our loyalty to them.” Sir Ian MacLaurin Chairman, Tesco

“ Customer loyalty is not about how customers demonstrate their loyalty to us, it is about how we demonstrate our loyalty to them.”

Sir Ian MacLaurin Chairman, Tesco

British Airways - Executive Club Loyalty Executive Club has 5 million members worldwide Collect British Airways Miles which can be used for reward flights or upgrades Benefits include priority on waiting lists, seating preferences, meal preferences, priority check-in/boarding and lounge access for gold members Three Tier Membership : Blue, Silver, Gold Account balance available via phone or web site

Executive Club has 5 million members worldwide

Collect British Airways Miles which can be used for reward flights or upgrades

Benefits include priority on waiting lists, seating preferences, meal preferences, priority check-in/boarding and lounge access for gold members

Three Tier Membership : Blue, Silver, Gold

Account balance available via phone or web site

British Airways - Executive Club Loyalty

KLM Wings Loyalty

Boots Loyalty 15 million Advantage Card holders, with 10.7 million active members. 4 points per pound that can be redeemed on up to 10,000 products in store The program allows Boots to introduce new products and services, by which Boots has, for example, successfully launched health and travel insurance products All stores have touch-screens where members can swipe their card and receive a printout of special personalized offers, information, tips and current point balances Periodic targeted offers via mail Web site includes all program details and terms, account balances, special offers, member profile etc.

15 million Advantage Card holders, with 10.7 million active members. 4 points per pound that can be redeemed on up to 10,000 products in store

The program allows Boots to introduce new products and services, by which Boots has, for example, successfully launched health and travel insurance products

All stores have touch-screens where members can swipe their card and receive a printout of special personalized offers, information, tips and current point balances

Periodic targeted offers via mail

Web site includes all program details and terms, account balances, special offers, member profile etc.

Boots Loyalty

Tesco Clubcard Loyalty 1 point per pound spent . For every 150 points members receive a coupon for £ 1 .50 to spend in store H as more than 10 million members Generates more than £ 1 00 million incremental sales every year A ccess to other Tesco clubs such as Baby and Toddler Club, Wine Club, Food Club and Healthy Living Club

1 point per pound spent . For every 150 points members receive a coupon for £ 1 .50 to spend in store

H as more than 10 million members

Generates more than £ 1 00 million incremental sales every year

A ccess to other Tesco clubs such as Baby and Toddler Club, Wine Club, Food Club and Healthy Living Club

Contact Directly at the Till We see specific shopping behaviour at the point of purchase… … and can respond by sending a message to the till to print a coupon … this is then handed to the customer by the checkout operator The customer returns to store to redeem the coupon Not just product coupons, but a wide range of options and offers Clubcard data used to understand purchasing behaviour and profile our customers

How many Loyalty Cards do you have?!

Barbie Loyalty On http://barbie.everythinggirl.com over 6 million young girls have subscribed 50 Million individual contacts with the core target group: girls aged 4-12 A virtual loyalty system where ‘B’ points can be earned and burned on dolls, accessories, clothes, CD ROMs etc. Every $ spent on the Club has the same effect on sales as 5 $ spent on promotions Club vs. Non-Club Members: buy 50% more dolls, buy 100% more clothes, buy 100% more accessories

On http://barbie.everythinggirl.com over 6 million young girls have subscribed

50 Million individual contacts with the core target group: girls aged 4-12

A virtual loyalty system where ‘B’ points can be earned and burned on dolls, accessories, clothes, CD ROMs etc.

Every $ spent on the Club has the same effect on sales as 5 $ spent on promotions

Club vs. Non-Club Members: buy 50% more dolls, buy 100% more clothes, buy 100% more accessories

Club Nokia Loyalty

NRC Handelsblad Loyalty

What the F*CK is CRM then? “ Customer Relationship Management (CRM) is a business strategy to acquire , grow and retain profitable customer relationships. It is a customer-centric way of doing business that includes policies and processes, partners, employees, marketing, systems and IT.” www.customerthink.com

How is CRM Different from…? Direct Mail is a key channel for personalised, one-to-one communication for brands to engage with its consumers Direct Marketing / Relationship Marketing essentially focuses on communications between a brand and its consumers A Loyalty Program builds on a mutually beneficial relationship between a brand and its consumers, usually using purchase-based points redemption to ‘buy’ brand loyalty A System is the technology that enables all of the above, but without human intelligence, becomes a very expensive piece of software Direct Marketing / Relationship Marketing Loyalty Programs Direct Mail A System Direct Mail is a key channel for personalised, one-to-one communication for brands to engage with its consumers Direct Marketing / Relationship Marketing essentially focuses on communications between a brand and its consumers A Loyalty Program builds on a mutually beneficial relationship between a brand and its consumers, usually using purchase-based points redemption to ‘buy’ brand loyalty A System is the technology that enables all of the above, but without human intelligence, becomes a very expensive piece of software

Direct Mail is a key channel for personalised, one-to-one communication for brands to engage with its consumers

Direct Marketing / Relationship Marketing essentially focuses on communications between a brand and its consumers

A Loyalty Program builds on a mutually beneficial relationship between a brand and its consumers, usually using purchase-based points redemption to ‘buy’ brand loyalty

A System is the technology that enables all of the above, but without human intelligence, becomes a very expensive piece of software

Direct Mail is a key channel for personalised, one-to-one communication for brands to engage with its consumers

Direct Marketing / Relationship Marketing essentially focuses on communications between a brand and its consumers

A Loyalty Program builds on a mutually beneficial relationship between a brand and its consumers, usually using purchase-based points redemption to ‘buy’ brand loyalty

A System is the technology that enables all of the above, but without human intelligence, becomes a very expensive piece of software

So…. Not just a Marketing Activity CRM Product & Packaging POS Promotions Mass Marketing Web

But CRM Encompasses all of these Relationship Marketing Product & Packaging POS Promotions Mass Marketing Web CRM In-and External Processes Internal Stakeholders Systems & Technology Partners / Suppliers

A Successful CRM Program Delivers… Higher operating efficiency Lower cost of service Loyal customers Increased brand relevance Increased sales Real-time single customer experience across multiple channels

Higher operating efficiency

Lower cost of service

Loyal customers

Increased brand relevance

Increased sales

Real-time single customer experience across multiple channels

Some Numbers from Dutch Financials Spaarbeleg: Millions of extra revenue and profit FBTO: Over 10% growth on direct marketing conversion Postbank: Lowering ‘waste’ with tenths of percents. Big cost reductions Robeco: Repeated winner of The Dutch CRM Award

Spaarbeleg: Millions of extra revenue and profit

FBTO: Over 10% growth on direct marketing conversion

Postbank: Lowering ‘waste’ with tenths of percents. Big cost reductions

Robeco: Repeated winner of The Dutch CRM Award

CRM Transformation

CRM Transformation Business focus: het ontwikkelen van een visie en een missie met gerelateerde doelstellingen om zodoende CRM te implementeren. De klant wordt belangrijker dan het product.

CRM Transformation Organizational structure: omdat de klant centraal staat is het van belang dat de organisatiestructuur zodanig wordt ingericht dat geen sterke scheiding bestaat tussen beleidsbepalers en uitvoerders, waarin iedere medewerker wordt geacht mee te denken en waarin klantgroep-managers worden aangesteld die verantwoordelijk zijn voor acquisitie en klantbehoud.

CRM Transformation Business metrics: het meetbaar maken van de performance van de organisatie op basis van de customer lifetime value en loyalty. In plaats van op basis van product- of campagne-performance.

CRM Transformation Customer interactions: omslag in communicatie van massacommunicatie naar een interactieve dialoog.

CRM Transformation Technology transformation: omslag naar gebruik van technologie die de dialoog met de klant mogelijk maakt ‘at all points of contact’.

Impact on Organization Structure CROSS-SELL PROFILE PROBABILTY SCORING

Our Cup of Tea: Customer Interaction “ Managing client contacts and offering individual fitted value propositions based upon their (buying) behavior and client value throughout all media types .”

“ Managing client contacts and offering individual fitted value propositions based upon their (buying) behavior and client value throughout all media types .”

This Means: Connecting Media and People Using Data Data Warehouse A T M M O B I L E I N T E R N E T P. O. S. E – M A I L M A I L S A L E S C A L L C E N T R E

This Means: Thinking in Campaign Management Funnels

CRM is Easier for ‘Newbies’

Amazon.com: Background World’s largest bookstore provides online universe of commerce E arth’s biggest varied selection 30 million customers 4 international web sites Operates the Internet Movie Database. Including 250,000 film references. Over 1 million cast / crew references

World’s largest bookstore provides online universe of commerce

E arth’s biggest varied selection

30 million customers

4 international web sites

Operates the Internet Movie Database. Including 250,000 film references. Over 1 million cast / crew references

Amazon.com: The Website and Database

Amazon.com: Solutions and Results Algorithms (mathematical formula) to determine product and page presentation per customer Analyze results to improve personalization Remembers user’s name, items last bought, and items browsed Recommends titles of books, products the users can buy next Measures impact of innovation to customers and to the business based on 70 metrics

Algorithms (mathematical formula) to determine product and page presentation per customer

Analyze results to improve personalization

Remembers user’s name, items last bought, and items browsed

Recommends titles of books, products the users can buy next

Measures impact of innovation to customers and to the business based on 70 metrics

Amazon.com: Cross-Selling By Movie (by keyword) By Category By Director (By Artist)

Amazon.com: Price Bundling It suggests another movie and, at the same time, offers them together at a lower price

Amazon.com: Assortment Decisions What combination of items to have on the shelf at any time?! What items can be put side by side in portal?! How can we group together services according to sub profiles?! In a retail environment … In a web environment …

What combination of items to have on the shelf at any time?!

What items can be put side by side in portal?!

How can we group together services according to sub profiles?!

Amazon.com: The Closed Loop Amazon.com has a dopted a closed loop approach to track customer response and behaviour. Measuring effectiveness, success and failures in terms of ROI

Amazon.com has a dopted a closed loop approach to track customer response and behaviour. Measuring effectiveness, success and failures in terms of ROI

Beyond CRM “ And if we’ve managed all these ‘Looney Tunes’ for our clients, then let’s come back and take it a step further. With the latest stuff like, eCRM , Analytical CRM , VRM en Social CRM ”

But for now…..