Presentation on theme: "Customer Relationship Management A Databased Approach"— Presentation transcript:
1Customer Relationship Management A Databased Approach V. KumarWerner J. ReinartzInstructor’s Presentation Slides
2Customer Relationship Management A Databased Approach V. KumarWerner J. ReinartzInstructor’s Presentation Slides
3Implementing the CRM Strategy Chapter FourImplementing the CRM StrategyCRM
4Topics Discussed Elements of a CRM System CRM Applications CRM Costs Stages of ROI EstimationCRM ImplementationCase Study: Capital One
5Elements of a CRM System Customer Interface/Touch pointsSales PersonContactsWeb based ContactsWebsitesDirect mailCouponsTelesalesKiosksCRMApplicationsSalesManagementFunctionsMarketing FunctionsCampaign ManagementSegmentationPersonalization andCustomizationCustomer Service FunctionsHelpdeskCustomer Care
6CRM Applications Sales and Sales Management Function Contact and quote management, account management, pipeline analysisInteraction of sales force with prospect, turning prospect into customer, maintaining mutually profitable relationshipMarketing functionMulti-channel campaign management, opportunity management, web-based encyclopedia, market segmentation, and lead generations / enhancement / trackingPersonalizationContent management
7CRM Applications (contd.) Customer service function:Incident assignment, escalation, field personnel tracking, reporting, problem management, resolution, order management, and warranty/contract managementKey to a company’s ability to maintain proactive relations with customers and hence retain satisfied loyal customersCRM systems assist in managing help desk and providing customer care
8ROI (Return on Investment) of CRM Formula: Profits/Investment X 100% = ROI (%)Questions on what can be counted as investment in CRM?How much will consulting for the project cost ?To what degree is business process re-design necessary?What new software and hardware must be purchased to accommodatethe new system?Does the system need to be customized or will it work “out of the box”?How much customization is required and at what cost?
9ROI of CRM (contd.)Questions on what can be counted as investment in CRM? (contd.)Can the system be easily configured and maintained by internal IT staff or is continuous external assistance required?What is the cost of training the company’s staff to use the CRM system?What is the timeframe for implementation and what will happen to the current system processes during that time?What are recurrent costs?
11IT Costs One-fifth to one-third of total cost Investment in IT infrastructure, database development and softwareSoftware componentsSales force automationSales management automationCall-center automationMarketing automationCustomer-service automationKnowledge and operations managementE-commerce functions
12People and Process Costs People costsRecruitment, redeployment and training costsProcess costsMarket segmentation process, selling process and campaign management process
13Stages of ROI Estimation Setting the targetReaching the targetBuilding consensus and commitment
14Setting the Target Content Questions to raise Determine ROI goal of CRM project based on benchmarking, similarprojects, external and internal knowledgeQuestions to raiseIs the goal sufficient?Is this goal achievable?
15Reaching the Target Content Questions to raise Generate ideas of how to reach target through internal bottom-upparticipation, external views, consultants, benchmarks, etcQuestions to raiseWhat factors have to change and by how much?Does it work from a technical perspective?Are the proposed benefits clear?Will customers and/or staff accept these measures?
16Building Consensus and Commitment ContentHave executives and line staff agree on proposed ROI goalsand ensure commitment on both sidesQuestions to raiseAre we collectively prepared to sign them off?
18Operational Projects Objectives: Construct infrastructure meeting technical and functional requirements of CRMMaximize profitabilityReduce support costsIncrease sales and customer loyalty
19Components of CRM Infrastructure Description1. Information Delivery/Online CatalogsCapability to display and list company's products and services online2. Customer DatabaseCapture, organize, present, and analyze customer-specific data3. Personalization and Content ManagementUtilizing results of data analysis to create an individualized experience for customersEnhance/modify service delivery vehicles to match specific needs of customers
20Components of CRM Infrastructure (contd.) 4. Sales force AutomationDeployment and use of tools and services designed to automate sales and marketing lifecycle5. Partner Channel AutomationFor integration of a company's service vehicles with those of its provider and third-party partners6. Customer ServicesUse of technology and business processes to successfully support a company's products and services
21Analytical Projects Also Called Data Analytics Leverages resources created by operational projectsAdds value by enabling firms to understand their customersHelps determine customer strategy and development of on-going CRM strategyMajor activities:Customer data transformation- data warehousing, data integrationCustomer knowledge discovery-data analysis, prediction based on results
22Analytical CRM Capturing all relevant customer information Data integration and standardizationReal-time updating of customer informationIncorporation of external sources of informationEvaluation of customer-related back office data
23Analytical CRM (contd.) Customer demographic analysis and customer behavior modelingDefine customer segments to form basis for differential marketing decisionsAnalysis of customer transaction historyAnalysis of customer service recordsPrediction of future purchase behaviorCustomer value assessmentFocus resources on most valuable customer relationships
24Deploying Operational and Analytical Outputs IssuesResistance from employeesMotivation and TrainingAvailability of information
25CRM Practices at Capital One Segmentation StrategyTargeting all types of risk profiles, offering different prices and productsCustomer database distinguishes high-risk ‘revolvers’ and low-risk ‘transactors’Retention StrategyHelp retain customers when introductory rate expires or risk of ‘dormancy’ existsOperations aligned with customer requirementsPersonalized and flexible handling of customersCalculation of profitability on an individual basis to improve product offer to customerIT infrastructure
26CRM Practices at Capital One (contd.) CollectionsPayment assistance, recoveries and fraudSalesSales system (SALSA) enables targeting cross-sell offers to specific customersUses accumulated data on customers to suggest how to react to specific customer requestsCo-operation between Marketing and Analysis (M & A) and operationsPartnership to review risk perspective of present and future strategies enabled through IT
27CRM at Capital One (contd.) Information TechnologyInteraction with company in terms of prospect pool management and solicitation, account acquisition, account servicing and call-center technologies, core systemsHuman ResourcesManaging associate selection and development of company culture
29Capital One: Systems Infrastructure Different systems working togetherSERVICE VIEWScreen of front end associatesVECTUSBASSSALSAData from customer applicationsAccount servicing dataSolicitation and marketing dataMISData warehouse
30Use of Data Customer data Segmentation Online decision of associate Static customer data(Identity)Transaction dataProducts soldCampaigns received•Expected NPV = Expectedresponse X product NPVFor every customerFor all sales activitiesMonthly recalculated-Rank order of what to Offer/cross sellWhich productsValue per productProducts already offered= (barred from sale)Decision captured and fed into data warehouse
31Growth of Capital One’s Revenues (Worldwide Operations)
32Capital One: SummaryIllustrates successful implementation of a CRM strategyBusiness model founded on the crucial premise that each customer requires a different product and service from a credit card providerAdopted an Information Based Strategy (IBS), to collect information on customers“Test & Learn” tests customer related activity in a controlled condition before it is introduced in the marketCRM is viewed as a key strategic process in Capital One; different depts. work in an integrated fashion towards understanding and satisfying customersCapital One was named 3rd ‘Best Place to Work in the UK’ by The Sunday Times. Capital One named in Forbes 400 list -Best Big Companies in America
33Minicases : Challenges in Implementing CRM CRM in FMCG Industry: Henkel (Dial)To define, conceptualize, and implement a suitable CRMapproachB-to-B CRM Implementation: Deutsche Post World Net (international logistics service provider (Euro Express, DHL)To create transparency across customer relationshipsTo design cooperation processes across the three companiesTo develop sales support tools
34SummaryThe key elements of CRM are touch points and CRM applications that span sales, marketing and service functionsOnce the elements of CRM are identified it is important to calculate the ROI of CRM to see whether investment in CRM is worthwhileBuilding a complete customer database incorporating all the relevant customer information from different departments and external sources is very crucial for a successful analytical CRM project