Similartothestructureofthethesis5 CRM 2.0 – A DEFINITION 6 BUSINESS IMPLICATIONS 7 IMPLEMENTING CUSTOMER RELATIONSHIP MODEL 2.0
Customer Relationship Model 2.0 (CRM 2.0) is the advancement of traditional Customer Relationship Management (CRM) caused by the rise of the Social Web (Web 2.0) and the resulting empowerment of consumers. CRM 2.0 will establish a meaningful conversation with customers and thus profoundly change the level of trust on both sides. The result is a fruitful collaboration, co-creation and knowledge sharing community. Customers are becoming real advocates for a product or brand. NEXT: Status Quo - Traditional CRM
ComponentsSupportContact ManagementSales Force AutomationAccount ManagementCampaign ManagementOrderingBusiness Process ManagementChannelsCall CenterSales Force (Direct Sales)InternetEmailPoint of Sales (Shop)Buzzwords360° View of the customerCustomer Segmentation (for campaigns)Rating (Gold-Silver-Bronce customers)Agent Guidance (Scripting, Process Automation)Next: Version 1 of CRM
Not 100% customer centric - INSIDE OUT view (company – customer) – All about managing the customerNext: CRM 2.0 Definition
Model insteadof Management – conflictingwith CRM 2.0 - newhierarchy, end of COMAND AND CONTROLWeb 2.0 as technological catalystEmpowerment of customers through GLOBAL and INSTANT COLLABORATION and EASY ACCESS to dataLEVERAGE customers knowledge and innovation powerCustomers become Advocates and SPREAD THE WORD for a product or brand (VIRAL MARKETING)NEXT: CRM 2.0 Ingredients
Traditional CRM plus Web 2.0 and Enterprise 2.0 – Even more a strategyandmindsetthanbefore!Web 2.0 Technology is a catalystfor a global change in businessbehaviorEnterprise 2.0 - Web 2.0 inspiredapplicationsfor large enterprises (Intranet) – Instant Messaging, Social Networks, Wiki-Webs, etc.NEXT: New Components to CRM 2.0
Enterprise 2.0Web 2.0 inspired applications for large enterprises (Intranet) – Instant Messaging, Social Networks, Wiki-Webs, etc.CollaborationBlogsPodcastsIT survey: Innovation moved from #10 to #3 (2007 -> 2008)Collaborate on new products, new features, new services and productenhancements, business process enhancement, etcListen to customer feedbackKnowledge SharingMore than Knowledge ManagementREALTIME !Share development/product ideas and progress with customers, suppliers ( -> changes in Supply Change Management, SCM)Retrieve and utilize customer feedbackNext: Customer Empowerment
Build relationships with customersPrerquisite: 360 degree view (all data available)`NEXT: WHY should I care?
Simple Answer – Wearecurrentlygoingthrough a Business Revolution! (Agriculturalrevolution -> First and Second Industrial Revolution -> Information society / knowledgeeconomy )Web 2.0 has (and will..) changedhowwe do businessHardtorecognizewhenyouare in themiddleof such a revolution (seeexamples)Next: Business Revolution
Simple Answer – Wearecurrentlygoingthrough a Business Revolution! Deep SOCIETY CHANGES (Agriculturalrevolution -> First and Second Industrial Revolution -> Information society / KNOWLEDGE ECONOMY )Web 2.0 has (and will..) changedhowwe do businessHardtorecognizewhenyouare in themiddleof such a revolution (seeexamples)Best istovisualizetheimpactwithhistoricaldevelopmentsthat DRAMATICALLY CHANGED THE WAY WE LIVE AND DO BUSINESSNext: ®Evolution (Mobility & Communications)
Get mobilecarriage (Romans 200 a.c.) - automobile (Gottlieb Daimler) – Airplane (The first commercial flights took place between the United States and Canada in 1919 )
CommunicateThe first documented use of an organized courier service for the diffusion of written documents is in Egypt, where Pharaohs used couriers for the diffusion of their decrees in the territory of the State (2400 BC). 10 March 1876 — The first successful telephone transmission of clear speech using a liquid transmitter when Bell spoke into his device, “Mr. Watson, come here, I want to see you.” and Watson heard each word distinctly.
(dramatically) Increasing number of usersUser numbersincreasefasterandfaster…NEXT: Business Velocity
As of June 30, 2008, 1.463 billion people use the Internet according to Internet World Stats.On August 6, 1991, CERN publicized the new World Wide Web project. The Web was invented by English scientist Tim Berners-Lee in 1989.
MySpace is a social networkingwebsite with an interactive, user-submitted network of friends, personal profiles, blogs, groups, photos, music and videos for teenagers and adults internationally. Its headquarters are in Beverly Hills, California, USA, where it shares an office building with its immediate owner, Fox Interactive Media; which is owned by News Corporation, which has its headquarters in New York City. In June 2006, MySpace was the most popular social networking site in the United States. According to comScore, MySpace was overtaken internationally by main competitor Facebook in April 2008, based on monthly unique visitors. The company employs 300 staff and does not disclose revenues or profits separately from News Corporation. The 100 millionth account was created on August 6, 2006 in the Netherlands and the site counted approximately 106 million accounts on September 8, 2006,. MySpace.com attracts 230,000 new users per day.
Hardtotellthe real usernumbersfortwitter
Visitornumberquadrupled in onlytwomonth (liitlebithype – not all registered users on twitterareactive…)
There will bemoreplatformsrisinglikeFacebookandTwitter in thefuture…andit will beevenfasterthanbeforeNEXT: Customer Expectationshavechangedas well…
Customer takescontrolCustomers activelycollaborateandshareinformationwithmillionsofother potential customerstakesthe „Word ofMouth“ to a wholenewlevelAffectsthebusiness!!NEXT: Customer in control
Music Industry (EMI, Sony, Universal Music Group, Warner)
Encyclopedias like Brockhaus, Encyclopædia Britannica
NewspapersNEXT: Microbloggingexample: Barak Obama
US Electioncampaign in 2008Notethat Obama isfollowingasmanypplasarefollowinghimNEXT: Hillary Clinton (followingno-one!)
Sum-UpBusiness aspects to CRM 2.0 De-Commodify possible... Not necessary to buy luxury – but need to feel luxuryGlobalization: on business side AND customer sideBuying behaviour: Personalization, Customer Experience, Opinion influencersSales Channels: Social Networks, Blogs, Wikis, Mobile DevicesAlternatives: Why Brockhaus when able to browse Wikipedia?Loyal Customers: twice the cost to attract new customers instead of retaining existing customersNext: Customer in Control
FollowingtheempowermentofcustomersAcceptthatthecustomeris in controlNext: Howcan I achieveit?
Next: History – Components of Customer Relationship Management
Few things pay so handsomely as a great experience. 2 companies stand out as harnessing the customer experience for the better. Starbucks and Apple have not only profited from their unique customer-focused brands, but have also set the pace for their respective industries.Starbucks proved that, by providing customers freedom to personalize their coffee order—e.g., a non-fat, decaf, venti mocha latte—by actually calling them by name when said order was ready, and providing a consistent, Wi-Fi connected and practically ubiquitous environment to order & enjoy their beverage in, customers—& profits—would follow. In fact, the company took a cup of coffee from commonplace commodity to a premium luxury item that customers today will pay as much as 500% more for. Similarly, Apple started its ascent from virtual extinction by designing its iPod (& other products) from the customer perspective, making it easy for the device to become a centerpiece of personal expression. But then the company went one step farther. It bucked established storefront sales & merchandizing conventions & built its own stores from the ground up, featuring open space, spare product displays, free product support & roving payment-takers. The result? The most profitable storefront in the world. According to Fortune magazine, Apple stores generate $4,032 in sales per square foot each year, while jewelry giant Tiffany & Company sells nearly half that—$2,666 per square foot per year.When we think about SPs, they are in an even better position than companies like Starbucks and Apple to profit from delivering a great experience. SPs are unique in that they have the potential to tap into what their customers want, where their customers are, what they need & how they would like it delivered. But if SPs have this invaluable customer knowledge & insight, why do most struggle to retain their high value customers & grow their market share? What is stopping them from delivering the experiences their customers seek?... Next: Strategy Shift
Put Customer in control / Accept that customers ARE in Control
Traditionally Innovation happens in a dedicated R&D department – disconnectedfromthe outside worldandconsumerdemandInnovation hastobeextendedthroughoutthecompanyandthecustomerbasePROSUMERSCustomers become “prosumers” by co-creating goods and services rather than simply consuming the end product‖ (Tapscott & Williams 2006) Innovation is ALIGNED with DEMAND
CRM 2.0 expands the source for innovation from the R&D department to the whole enterprise and further to the whole customer base!Alignedwiththe Customer DemandNEXT: Kumbaya Zone
Up to date IdeaStorm has delivered 12,197 ideas, 85,461 comments and Dell has implemented 355 ideas that originated out of this community (data from July 29, 2009).
NEXT: SOME WORD OF CAUTION (Kumbaya Zone)
Yarmis, J., 2008. First Steps in Social Media and Networking: Avoiding the Kumbaya Zone AMR Research.
Three Tiers of “Noncustomers”Do not limit the sources for innovation or ideas to the existing customer baseRISK: Market of oneKim, W.C. and Mauborgne, R., 2005. Blue ocean strategy : how to create uncontested market space and make the competition irrelevant. Boston, Mass.: Harvard Business School Press.
SchusterbleibbeiDeinenLeistenHedgehog concept (“Good to Great”, Jim Collins)Customer centricity and innovation centricity – but keep business in mindDon’t bend yourself byhookorbycrook
Customer in center = Outside in View, Collaborate vs. ManageRecognize that the customer relationship encompasses information-seeking and information-contributing behavior current CRM: Customer strategy is part of corporate strategy - Contemporary CRM: Customer strategy IS corporate strategyNext: Operating „Outside IN“ (or Technology)
Nike iD (collaborate with customers to create new and custom sneakers)
Dell sells ‘old’ models via special deals announced only on Twitter – exclusive dealsGenerated >$1 Million in thefirst Holiday Sales
Frank EliasonHelpedComcast‘s Customer SatisfactionScores Jump 9% in Q1 – LargestGain in Cable!Frank has become the “Face” for Comcast on TwitterActively monitoring social media and engaging in customer conversations
Facebook channel of Adobe – 6% conversion rate
Traditional CRM consists of several Components:Service and SupportSales Force AutomationContact ManagementAccount ManagementCampaign ManagementOrderingBusiness Process ManagementReporting
Customer contacts can happen via different Channels:Call CentreSales Force (Direct Sales)InternetEmailPoint of Sales (Shop)
Web 2.0 creates new types of social behavior and connection between peopleSocial NetworksEnable users to easily create & share content and personal connections6% of north Americans use social networking sites regularly, up from 4% in 2004LinkedIn has >12M usersMySpace has >60M users. No. 1 growing web property in 2006 and no. 1 in site “stickiness”BlogsEasy to use tools enable users to create personal web presences, update frequently with textual & multimedia content and solicit reader community participation (comments, talkbacks)8% of north Americans regularly bog. 54% of those are under 30y. More than 2/3s of global bog action is in non-English languages; 15% is in Chinese. >60M bogs are tracked by Technocratic service on Internet“moblogging”: blogging directly from the mobile, often w/ picsMedia SharingServices enabling users to upload, tag & share photos, videos, music and graphic artYouTube serves more than 100M videos a day. (still, most viewed content is licensed e.g. CBS) Flickr has 100M photosNext: Adapt and enhance CRM to Customer Relationship Model 2.0
The hard part is establishing new business processes & change the corporate mindset.How is success measured – what are the matrices?
Schmitt, B. (2003). Customer experience management : a revolutionary approach to connecting with your customers. New York, Wiley.
Example from the Telecommunications industry (optional)Not so long ago, SPs operated in well-defined industries & could set themselves apart with lower costs or higher-quality products & servicesBut these days of the communications utilities are now long goneTraditional services have become commoditized, while Web 2.0 & convergence are fundamentally changing the way people use communications. And in turn, have accelerated the move to the digital lifestyle where customers are constantly connected via multiple media - voice, video, text, chat, etc. and believe they should be able to go anywhere, do anything & have their communications & entertainment technologies follow them.In this new era, the value chain has become increasingly fragmented with new device & application vendors as well as web 2.0 environments entering the fold every day & forming equally strong, if not stronger relationships, with the end consumer As a result SPs run the risk of disintermediation in what used to be “their” value chainBut is has also put the consumer in the driver seat. Consumers today are more empowered then ever before & have unlimited choice as to who they form relationships with & where they spend their dollars. As a result of all of these factors, we are seeing an evolution in consumer expectations.Consumers no longer want services they want “experiences” that are uniquely personal to them, that are simple and intuitive, and deliver immediate value.As authority in the value chain shifts to the consumer and their expectations evolve, the value of the experience can not be underestimated…. (transition to next slide)Next: Customer Experience (or Strategy Shift)
Operating “Outside-In” Enables the Intentional Customer ExperienceHere we see business processes at the bottom from the service providers view – target & sell, order & fulfill, deliver & assure etc. and at the top the same processes from the customer’s perspective – discover, try and shop, purchase, use, interact create & share, etc. So when the SP is focused on capturing an order, the customer is concerned with having a purchase experience that is simple, convenient & best meets their personal needsThe SP does not measure the customer experience using the same parameters as the customer either. Where a SP in an ordering process is concerned with metrics such as time to order completion and order fallout rates; the customer is measuring her experience by whether or not she was provided purchase options that made her experience simple, personal & delivered immediate valueGiven these disconnects between the SP & customers’ perspectives, it is not surprising that the customer experience is an adhoc & unintended outcome of the SP’s operationsHowever, many SPs recognize the importance of the customer experience, and the need to change they way they operate to become more in-tune with their customers’ needs and expectations. In fact almost every major SP worldwide has initiated transformation plans to some degree that have increasing emphasis on the customer experience. Next: Technology
>1 billion users of WWWInitial slide from Metcalfe (1980) -> CRITICAL MASS -> high entry barrier for followers in Social Networking
Customers‘ personal (invisible) networks to friends, family, colleagues, etc. (from Anatomy of Buzz)
Howto implement CRM 2.0? – Technology can only support a CRM 2.0 strategy...Social Network Platforms -> OpenSocial (from Google)Data Silos -> Master Data management (MDM)Business Processes Management -> SOA, ESBUsability Improvements -> Ajax, Web clients, Single Sign-on (OpenID)Mobile devices -> iPhone, Mobile Phones, PDAs (also Xbox, PS3, Wii, etc)Next: Questions
CRM 2.0 By Guido Oswald
in 20 minutes<br />MBA Thesis Defense<br />Docent: Dr. Charles M. Savage and Prof. Dr. Thomas Städter<br />Author: Dipl. Ing. (FH) Guido Oswald - 178501<br />
Agenda<br /> What is CRM 2.0?<br /> Why should I care?<br /> How can I achieve it?<br />21.09.2009<br />Guido Oswald<br />2<br />
Agenda<br /> What is CRM 2.0?<br /> Why should I care?<br /> How can I achieve it?<br />21.09.2009<br />Guido Oswald<br />3<br />
CRM 2.0 – A Definition <br />Customer Relationship Model 2.0 (CRM 2.0) is the advancement of traditional Customer Relationship Management (CRM) caused by the rise of the Social Web (Web 2.0) and the resulting empowerment of consumers. CRM 2.0 will establish a meaningful conversation with customers and thus profoundly change the level of trust on both sides. The result is a fruitful collaboration, co-creation and knowledge sharing community. Customers are becoming real advocates for a product or brand. <br />21.09.2009<br />Guido Oswald<br />6<br />
21.09.2009<br />Guido Oswald<br />27<br />The Social Web<br />
The customer in Control<br />21.09.2009<br />Guido Oswald<br />28<br />
The customer in Control<br />21.09.2009<br />Guido Oswald<br />29<br />
The customer in Control<br />21.09.2009<br />Guido Oswald<br />30<br />
The customer in Control<br />21.09.2009<br />Guido Oswald<br />31<br />
Barak Obama on twitter<br />21.09.2009<br />Guido Oswald<br />32<br />
Hillary Clinton on twitter<br />21.09.2009<br />Guido Oswald<br />33<br />
Why care ?<br />Changing Business Climate and Economy<br />Shorter Product Cycles (TTM)<br />Technology Advances (Web 2.0) <br />Changing Buying Behavior <br />Increasing number of (Sales) Channels <br />Products and Services become Commodity <br />New (free) Alternatives for Buyers<br />Only loyal customers can ensure profits<br />21.09.2009<br />Guido Oswald<br />34<br />
The customer in Control<br />Customers take control of...<br />Whom they communicate with<br />What they communicate about<br />Their buying experience<br />The information they share<br />The channel they use<br />The technology they use<br />21.09.2009<br />Guido Oswald<br />35<br />
Agenda<br /> What is CRM 2.0?<br /> Why should I care?<br /> How can I achieve it?<br />21.09.2009<br />Guido Oswald<br />36<br />
the Customer Experience<br />21.09.2009<br />Guido Oswald<br />39<br />Price of Coffee<br />$5<br />$4<br />$3<br />$2<br />$1<br />$0<br />Commodity Good Service Experience<br />Products & ideas can be easily duplicated in the day and age of technology…<br />But experiences are hard to duplicate, <br />hence they are the <br />most powerful<br />sources of competitive advantage.<br />Economic Times<br />"Apple stores generate $4,032 in sales per square foot each year, while jewelry giant Tiffany & Co. sells nearly half that…” <br />Fortune, 2007<br />
Know who drives the conversation<br />21.09.2009<br />Guido Oswald<br />40<br />
Existing Platforms<br />Web 2.0 creates new opportunities for personalizing the customer experience<br />Enable multiple types of content creation, sharing & collaboration<br />Offer a highly interactive user-experience that is near-desktop in responsiveness and usability <br />Empower users to be the primary content generators and participate actively in its distribution, categorization (‘folksonomy’ or tagging vs. taxonomy) and rating<br />21.09.2009<br />Guido Oswald<br />60<br />
Understanding Social Networks<br />21.09.2009<br />Guido Oswald<br />61<br />
What is a „Conversation“?<br />21.09.2009<br />Guido Oswald<br />62<br />
(traditional) CRM 1.0<br />Starts with a (ready developed) product<br />Strong Focus on SFA<br />Gathers information about the customer<br />21.09.2009<br />Guido Oswald<br />67<br />
(traditional) CRM 1.0<br />Where is the Customer Relation?<br />Where is the value (+experience) for customers?<br />Process focused (Inside-Out view)<br />21.09.2009<br />Guido Oswald<br />68<br />
(Social) CRM 2.0<br />Provide content to engage consumers in a conversation<br />Collaborate on products and services<br />Listen to users and customers<br />21.09.2009<br />Guido Oswald<br />69<br />
(Social) CRM 2.0<br />The consumer engagement will lead to loyal customers<br />This will create a Meaningful Customer Relationship that brings value to both sides!<br />21.09.2009<br />Guido Oswald<br />70<br />
WHO should care?<br />21.09.2009<br />Guido Oswald<br />71<br />High VolumeLow Margin<br />Complex Sales<br />
Immediately Valuable</li></ul>“Developing strong partnership skills, focusing on customer user groups, embracing internet services & starting to talk the language of Web 2.0 will enable the carriers to thrive well into the future." <br />Gartner, 2007<br />
Business Intelligence<br />21.09.2009<br />Guido Oswald<br />74<br />Level of abstraction<br />Size of data<br />
Let go!<br />21.09.2009<br />Guido Oswald<br />75<br />
Network Evolution<br />Distribution Networks<br />Electricity Network<br />Telecommunication Networks<br />21.09.2009<br />Guido Oswald<br />88<br />The value of a <br />telecommunications network is <br />proportional to the square <br />of the number of <br />connected users of the system (n2) <br />Metcalfe's law<br />
Understand Networks<br />Customers‘ personal (invisible) networks<br />Important for purchasing decisions<br />Information Overflow (people need to filter)<br />Customers are Skeptical<br />Web 2.0 allows dramatically improved connectivity independent of location<br />Communities get global<br />Information (and opinion) Sharing gets easy<br />21.09.2009<br />Guido Oswald<br />91<br />
Technology<br />Wiki Webs<br />Blogs (internal and external)<br />Engage in Social Network Platforms<br />Further integrate data silos<br />Flexible Business Processes Management<br />Usability Improvements<br />Support of Mobile Devices<br />21.09.2009<br />Guido Oswald<br />92<br />