PRESENTED BY VARSHA RANA PG-06-095 VISHAL WADEKAR PG-06-119 Successful Customer Relationship Marketing IBM
It is a Comprehensive Strategy and Process of Acquiring , Retaining, and Partnering with “Selective Customers” to create Superior Value for the Company and Customer . Defining CRM
( Customer Management Assessment Tool )
The model encompasses all the essential elements of practical management.
It assumes you know what market you are in and where do you want to be.
This Model defines the scope of customer management.
Analysis and Planning
Customer management starts with understanding the:
process People and Organization Technology Measuring the effect CM Activity Targeting Enquire management Welcoming Know customers Customer development Managing problems Win back The customer Experience competitors The Proposition Analysis and planning
Analysis and planning- understanding the value, behaviour and attitude of different customers
The preposition- the understanding derived in the above step will help identify groups of segments of customers who should be managed
Customer management activity- Delivery of customer management
People and organization-People deliver the activity
Measuring the effect-Measurement of people, profitability, proposition delivery, channel performance
Understanding customer experience- ratings, room of improvement, ratings given to the competitors
Information Technology-Integrated CRM strategies require integrated systems
Integrating customer data into CRM Strategy
This section describes the results of a recent empirical study designed to reveal the level of deployment of customer data in CRM strategies.
Today technologies such as data warehousing and data mining allow companies to collect, store, analyze and manipulate enormous volumes of data.
The Quantitative Study
Marketing Department Information
Brand or Customer Management
Budgets and Targets
Marketing Tools used
Strategic data analysis for CRM
Many Companies have not determined how to deal with the rapidly increasing volumes of data about customers now being recorded in and about their business, through research, operations or external data suppliers.
Consumer goods retailers,
Utilities, financial services and industrial marketing companies.
The product Dimension
Those retailers do not know the identity of their final customers., while applying customer management disciplines to their immediate direct customers, must use product management to get best results.
This is called “Product Optimizer”.
The data is organized along the product dimension, and the key analysis task is to make sense of the possibly daily millions of transactions in which their products are involved.
The Customer Dimension
Which customer do I want to market to, and which not?
How do I want to manage my customers?
Which products and services would I like to sell to particular kinds of customers?
At what price would I like to sell, through which channels of distributions, and when?
The Customer Optimizer
Delivered Loyalty Segmentation
Data mining and warehousing
Definition - Data mining is extraction of previous unknown, comprehensive and actionable information from large positories of data, and using it to make a crutial business decisions and their support implementation, including formulating tactical and strategic marketing initiatives and measuring their successes
Aspects of Data Mining
Extraction of Information
Large Data Repositories
Why use data mining in marketing
The companies seek answers for the following questions:
Customer based questions
Product or price
Distribution and communication
Customer gain and loss analysis
For new data mining users
First question “how can I get the data to solve my business problem”.
Three types of customers- Average customers, High value customers and defaulters
Discovery Led Work
It says, how does a group of factor relate to
some other group of factors
This involves defining classes and assigning
individuals to a particular class based on one or
This is a extension of either correlation or segmentation. Given
certain types of things what can be expected for the remainder
When to use a particular technique
Does the problem involve sequencing or time dependencies Does the problem involve summarizing variation in the data USE CORRELATION USE SEGMENTATION Is the main interest in broad class or usual class Look for deviation . USE DEVIATION ANALYSIS USE PROPENSITY ANALYSIS Does the problem involve predicting Behaviour Look for classes Yes Yes Yes Yes No No
Data mining interactive analysis Marketing and sales application Data mining application Data mining analysis function Data warehouse External databases Other databases Operational database RELATIONSHIP BETWEEN DATA MINING AND DATA WAREHOUSING
Provides a basis for discussion of:
What the value of the analysis or reporting is.
What actions might be taken as a result of what might be found.
What business benefits would arise from those actions.
A conclusion as to whether the analysis or reporting is therefore worth undertaking.
Objectives: To determine what are the main variables by which relationship types are to be defined.
Positioning of Relationship
Buying Behaviour, as measured by FRAC
Estimated Lifetime Value
Continuing Relationship Management
To determine whether the quantitative and qualitative boundaries between customer types remain the optimum.
To determine whether the relationship offered remains the optimum.
To identify which types of sales initiative and promotion work best for different customer types.
To identify opportunity area for achieving customer migration to higher-spend types
Customer Recruitment, Retention and Competitive Defence
To provide clear definition of which customers who are not currently in a relationship with the supplier should be targeted for recruitment taking into account their quality, creditworthiness, likely persistence etc.
To identify which customers are most at risk of or actually experiencing declining spend or completely inactive relationship with the supplier and the reason for this.
To identify which actions are most likely to prevent these customers from reducing or canceling their commitment to the supplier and which actions are most likely to regenerate their commitment.
To identify number and type of non-spending customers and evaluate the results of campaigns designed to stimulate them into use.
To evaluate the requirement for actions to stimulate cusomers who only buy rarely or customers gained from competition into continued purchasing activity
Sharing customer data in the Value Chain
The ways company can share Customer knowledge are influenced by:
The type of data,
Data protection legislation and industry conduct guidelines.
Arguments for sharing customer knowledge
Improved targeting of marketing strategy.
Improved targeting of marketing communications.
Improved/more relevant content of marketing communications.
Improved product planning.
Reduced costs of data acquisition.
Reduced costs of data processing.
Reduced media advertising.
Reduced direct mail expenditure.
Arguments Against sharing customer knowledge
Increased complexity of the marketing process.
Increased marketing costs.
Increased problems with data management.
General conflicts of interest.
Conflict of interest over customer ownership.
Conflict of interest over data ownership.
Reasons for sharing of customer knowledge
Sector specific issues.
Relative strengths and weakness of different partners.
Perceived costs and benefits of sharing.
Availability of trusted independent intermediaries to help.
Relationship between prospective Partners
Integrating customer management system
Three types of CRM:
Data Cycle Campaign Optimization Campaign Execution Results Measurements Learning & Feedback Data Provision Data analysis or mining Common Data
The intelligent supply Chain
Redescribing Models of customer Management:
One to One
Personalized Communication and Targeting
Pure spot Selling/buying
Spot selling/buying within a managed roster
“e Value Chain Processes” ERP SCM eCom CRM PDM Integrated Transaction Store Optimize Business Process Engage Business Partners Nurture & Sustain Relationship Products to Market Faster
Offload excess or obsolete inventory and excess capacity.
Market maker value proposition
Time to liquidity.
Multiple revenue streams
Customer Value Management (CVM)
A methodical approach for achieving the Strategic, profitable and Competitive positioning and alignment of a Company’s essential capabilities – its processes, organization and infrastructure.
Analyzing the company’s current capabilities,
Comparing it with the capabilities required to meet target customer's high-value needs,
Identifying any gap between desired and current capabilities,
Identifying the enablers required to close the gap,
Closing the gap.
Wireless customer management
“ The way in which technologies and service are developing, and from emerging applications, that the mobile phone and other wireless devices will revolutionize our thinking about customer management.”
It will also open many new opportunities for companies to use mobile technology to differentiate their services and gain a competitive advantage.
Pervasive Wireless Devices
Mobile phone are just one kind of wireless devices that can be used in customer management.
Combined with an appropriate smart card, the mobile phone adds remote functionality to the smart card, enabling the customer to execute all kinds of transactions that would have required insertion of the card into a reader.
Coming from another direction is the personal digital assistant (PDA). With opertaing system desgined to optimize use of limited display and battery life.
Principles of Mobile Customer Management
In many sectors, companies need to:
Get to know their customers, and keep renewing their knowledge of customers.
Stay in touch with the customers, with timely and relevant communications, ranging from promotions to useful information.
Identify quickly when customers are not being served well and react.
Identify the customers needs - often before customers realize them – and fulfill them quickly.
Create Smart wireless devices
It will allow customers to:
Check the e-mail.
Feed data in remotely.
Use the internet.
Express preferences to suppliers.
Have electronic purse loading and use.
Receive customized sales and service information and alerts from suppliers and content providers.
Control their households automations.
Major financial beneficiaries
Telecommunications companies, who have seen use of their fixed telephony systems grow very rapidly due to online time.
User companies who are able to give much better levels of services before and after the sale.
User companies who have re-engineered their entire business to make it a web business.
User companies who used the web to extend their reach nationally and globally, or to enter new markets, possibly at much lower costs – some of these companies were totally new.
Intermediaries who are bale to present product and service options more effectively to customers and manage relationships more effectively with suppliers.
Content providers, who have found new markets for their content.
The sectors affected
Financial services, where wireless technology is already being used for trading checking balances and the like, and where we expect it to be used in areas such as claims management and general customer service.
Travel and transport, where the prime use will be checking schedules, booking, delay alerts, tracking, locating facilities and the like.
Automotive, where use will be in marketing and sales, in locating new and used cars, managing the services cycle, and as an in-car device for all other purposes.
Utilities and telecommunications, where billing, switching and servicing will be the prime uses.
General business to business, where general use for communications within the supply chain will be supplemented by all other uses in this section for managing customers, suppliers and business partners.
Stages of Relationship
Getting to know
Problem Management: Intensive care through service failure.
Problem Management: Intensive care through customer change.
Problem Management: Pre-divorce
Problem Management: Divorce
Problem Management: Win-back
A technology that allows a single card to be ued for a variety of applications. These includes:
More accurate customer identification for marketing purpose.
More accurate customer identification for Validation purpose.
Local storage of customer data.
Global Customer Management
Amount & complexity of information that can be transferred cost-effectively Digital TV World Wide Web Mobile Fixed Telephony Diffusion level in the population
Changing Customer Management
The supply chain
The customer management model
Customer Management Through people
Critical factors, why customer management programmes succeed or fail:
Restructuring current teams to create the right environment can be extremely difficult.
Strong programme management is absolutely critical.
The management role needs to change.
Customer management cannot be owned by the IT or marketing department alone.
Knowledge management is at the heart of customer management.
New competencies developed by Organizations
Customer Strategy design
Contact strategy design and management.
Understanding business impact.
Managing, coaching and developing people.
Managing and interpreting customer information.
Innovating for the and with customer
Researching the market
Managing CRM in travel Industry include
Managing high value individuals
Managing corporate individuals
Managing customers for a limited duration
Data support requirements
DEFINITION OF SERVICES SERVICE TYPE NATIONAL Multinational International To whom Customers experience service in one country only Customers experience service in one country only from company supplying in several countries Customers experience service in more than one country Examples Many customers of small firms Customers of multinational consumer goods companies User of international travel and communication Main competitive issue Identify service needs of local customers monitor competitor’s service standards As for nationals, plus development competitive advantage by transferring best practice from other countries A for Multinationals, plus identify international service needs of customers monitor international service needs of customers and monitor international competitor’s service standards Focus of service delivery Full range of technique –systems standards, recruitments and training etc used to attune delivery to customer needs As for national, plus….. Head office may focus on whether methodology being followed and right infrastructure exist Very strong focus on how people from different cultures handle people from different culture
Managing CRM in Airlines
Reputation and recommendations
Ease in check in
Advance Check in
Safe, fast baggage handling
frequent flyer benefit
THE NEED OF FREQUENT FLYER
The frequent flyer behavior airlines want to manage
The small businessmen.
Managing the corporate business
Managing changes in traveling pattern
How airlines manage customers
General sales team
Corporate sales team
Trade sales team
Frequent flyer programmers
CRM in RETAILING
IF THE RETAILERS WANT THE CUSTOMERS TO STAY WITH THEM THEY SHOULD DO THE FOLLOWING:
Recognize which customers offer them the best potential.
Keep the customers informed of what they are doing for the customers to persuade them to continue to keep in touch with them and buy from them.
Give them the type and level of customer service which is appropriate for them.
Reward them for staying loyal
Strategies for managing loyal retail customers
Use data effectively
Specific product promotions
Having right product on shelf at right time
Maintain stock level
For small customers store magazines would be effective.
Short term schemes (even as little as three to six months) should would be advisable to preserve the shopping habits.
Very difficult to send direct mails for the high traffic mass market retailers
CRM in Automotive Example-students, employed person, housewife, retired person National fleets, car rentals, leasing companies, local and central government, other public organizations
Beyond the basic vehical
The product is not just the basic vehical, but may also include:
Car makers are increasingly bypassing dealers in the UK, especially in their relationship with fleet buyers.
Major trend- to buy smaller fleets to buy direct.
Buying are negotiable.
Direct selling experiments are widespread , and the web is used extensively to support selected dealers.
CRM applications of call centers Targeting Outbound telemarketing to prospect list generated from internet and coupon campaign Acquisition Booking test drive, perhaps ordering too Welcoming Welcome and introduce call for every purchase Account management-Retention Replacement cycle calling at timed intervals before expected replacements Account management-Development Campaigns to cross sell and up sell (eg. warranties, accessories, financial services) to the buyers and to family members Intensive care-Service Problem Ensure availability to handle complaints, allow easier complaint tracking Intensive care- customer change Regular calling cycle to collect data on an y changes in need Pre-divorce Extra careful ‘listening’ in call center; triggering urgent action; active calling to identify what else can be done to help customers Divorce Outbound call to protect brand and offer route back Win back Out bound telemarketing
Traditional automotive CRM
Timings determined by the suppliers.
It was one way.
It was transaction focused.
It involved target volumes from lists.
It results in little learning by the supplier
Customer timing is known.
It could involve a dialogue overtime.
It could be continuous.
It could be focused on prospects and customers.
It could use predictive algorithms to decide who to talk.
Strategic challenges in customer management
The ultimate aim is to deliver an approach score, predicting:
Whether customers are likely to buy.
When they are likely to buy.
What they are likely to buy.
How will they behave after buying
The modelling process
Hold group discussions to confirm key state of change
Built the sample database
Develop and implement questionnaire to gather missing present and past explanatory data
Profile brand, category and class acquirers non-acquirers of each, using hypothesis-based and discovery mining techniques
Identify key triggers for purchasing
Develop profiles of near acquires
Evaluate whether and how data triggers can be collected
Built the main database.
Identify current status
Market to them
Recalibrate the model
Extend to include the following two years
Utilities and telecommunication
Good customers have the following attributes:
They buy for value and not just for price.
They don’t switch suppliers for small price gains.
They complain reasonably.
They are responsive.
They are “not bad” ,i.e., not risky or fraudulent
The changing focus on customer service
Work done by one of the utilities has indicated that there are three contributors to reducing the propensity to switch, namely :
Satisfaction with the brand.
Satisfaction with the customer service- in all its forms.
Satisfaction with the category
Period to be measured- the average length of time between the real decision about which suppliers to use , eg three years for cars, five to six years for mortgages. But for a product like LPG , monthly retention Measurement is necessary.
Retention of all customers is not equally desirable.
Most utilities have very high fixed cost, so unlike other companies, they cannot afford to be too indifferent to loosing large number of lower value customers.
Systems for utility customer management
Managing millions of customers.
Managing customers over network.
Managing customers competitively.
Customer contact and customer service.
Regulatory and political factors.
The human factor and the “Utility Mindset”
Required business functionalities
Customer and agent data management
Consumption monitoring and billing
Sales and marketing
Customer dialogue management
Combining hardware and software to best technical effect