Customer Relationship Management Week 9

CRM Framework Source : Andersen Consulting

Customer Relationship Management Technology Marketing Direct, Interactive Dialog, Real time Warehousing Online data store User tools Analytics Business Customer Financial

Buzzword Alert CRM: Often used to describe any business or marketing approach that claims to target customers, not transactions. Sometimes confused with Customer service, account management, sales force automation, e-commerce, predictive modeling, data mining, data warehousing, database management, database marketing, direct marketing, and wide variety of marketing activity. Used here to describe a systematic business approach using information and on-going dialogue to build long lasting mutually beneficial customer relationships. Customer centric: Sometimes used to refer to any awareness that a business has of its customers. Used here to describe an approach to business that uses the customer (not the transaction) as the building block of data management, reporting, goal setting and measurement as well as business and marketing strategy organization and technical infrastructure, and corporate culture and values over time and across sales, marketing, IT, analysis, service, management and support business units.

CRM working definition CRM is the Systematic use of information To attract and keep customers Through on-going dialogue To build long lasting mutually beneficial relationships

Systematic Use of Information Database of customer information The customer is the base level of data for storage,reporting,analysis and measurement Analysis of customer data to predict likely future behavior Modeling uses past behavior to predict future behavior and identifies other predictors as well. Identifying and evaluating each relationship CR are identified, evaluated reevaluated and continually managed according to current information

To attract and keep customers Cost efficient customer acquisition Profiles used to select likely new customers and offers for specific customer segments Retention efforts focused on most profitable and at risk customers Continuous process of solidifying relationship with profitable customers, converting less profitable customers to more profitable and attempting to convert at risk customers before they are lost. Shared information across channels for consistent communications Customer receives consistent offers, service and messages across sales and service channels

With or Without Without CRM CRM in practice Customer re-enters information about music preferences every time at log-in Customer re-identifies CI every time at CS Call center and stores have different pricing from web site Customer must return defective CD through the delivery channel-cannot switch between electronic channels and stores. CRM in practice Customer logs onto the Internet and finds information on favorite music group, advertisements featuring specials on new CDs and dates with ticket offers to next concerts in local area, plus emails telling them about new groups with a similar style or from the same record company. Customer reads about CD’s on the Internet, orders through the CS,exchanges at a local record store if CD is defective.

Through on-going dialogue Continuous interaction with customers based on analysis Interactions,offers and messages are planned,personalized and delivered according to analytic insights Real time response on the Internet Immediate changes in advertising, information, recommendations, product features and even pricing based on web or email behavior Listening to create a sense of intimacy with the customer 1:1 dialogue through appropriate responses delivered real time

Web Telephony Integration

Email Integration Capability

To build long-lasting mutually beneficial relationships Success measured in customers and customer value Goals, results even incentives measured in terms of customers and customer value,not transactions Continual reevaluation of customer relationships On-going measurement to identify profitable, at risk and underserved customers Continual learning about customer needs Satisfied customers make good business sense

Customer Strategy should be defined and driven by Customer needs Shopping Buying Using Repeat Purchasing Evangelizing Complaining Is it easy to find what I am looking for? Do I want to come back here? Did I learn anything new? Do I trust this Company? What made them different from everyone else? Was the offer just right for Me? Did they add value to the product with information? Did they follow up? What should I expect after this sale? Is it safe to buy here? If I tell them about myself will they make their product better? Was the information I gave them last time used with integrity? Did it add value? Was it easy to buy? Do they remember me? Did I have to answer the same questions again? Did they use information made during the sale to make the after-sale experience pleasant? Can I trust them to provide a consistent experience? Do they know when I have made a referral? Do they care? Was my complaint satisfied? that I complained when I called next? annoy me with additional marketing after I complained?

At its simplest CRM refers to the use of information about a customer to make decisions about how to treat the customer.

Personalized Campaign The Learning Loop Customer Strategy Collect and Distribute CI Analyze and mine Dialogue and Personalized Campaign Track and Learn Making the Business Case Building the CRM Organization

At it is most complex CRM comprises an interconnected web of sophisticated, high tech hardware software, strategies and processes designed to help business quickly, efficiently and voluminously determine how to treat each customer in order to create a valued experience for both the business and the customer.

Analytics Operations Distribution Partner Sales Force Automation Call behavior analysis Campaign Management Customer Valuation Monitoring Integrated Customer View Quality of Service Analysis Segmentation And profiling Customer Service Risk Analysis Behavioral Modeling Profitability analysis Web Intelligence Needs analysis Sales analysis Call Center E-commerce Web

A data warehouse builds a strong foundation for CRM infrastructure

Example of warehouse processes architected for CRM Sales Force Automation Web Applications Call Center Profitability Legacy Systems Prospect Lists Data transformed and loaded in MD Information from legacy sources normalized Into member and household tables. Time series information kept for historical analysis Profiling/Segmentation Opportunity Identification Campaign management Performance measurement Predictive modeling Adhoc and DSS reporting Marketing Database Real time data feeds Real-time Database Business Intelligence Results from P, S DM, M loaded into MD and RT DB To enable real time personalization and decisioning. Single repository for Contact History Staging area for data Daily batch reporting Real time campaign management Newsletters Personalization&Decisioning Campaign Management Real time data feeds Site Tracking Reporting Log Files Data Mining Example of warehouse processes architected for CRM

Extract, Transfer, Load (ETL) Customer data should be moved into the warehouse in an consistent and efficient manner Extract, Transfer, Load (ETL) Extract data from legacy systems, other sources Sources: Surveys,response history,online behavior Transform data into consistent, clean, customer-level, knowledge according to pre-set data definitions Data dictionary designed during warehouse design through enterprise-wide participation and made available enterprise-wide Load and manage data efficiently Batch processing during off- hours,predefined queries Examples: Standardize addresses set aside an untouchable control group Condition Data

What Customers Want Treat me as an individual (not a number) Demonstrate that you can use information about me in a way that makes working with you valuable ( don’t abuse my information) Show me that you really know me no matter where I talk to you. Care about my needs/try to anticipate them.

Creating the CRM organization

Buzzword Alert Politics Change Management Organizational design The result of opposing business priorities across different units that compete for a finite pool of resources Change Management Guiding an organization and its members through significant alterations in organizational direction and individual responsibilities as quickly and effectively possible Organizational design Managing human systems and hierarchies, with supporting technical and process infrastructure, in order to most effectively deliver on the mission of the enterprise

Organizing around the Customer Who thinks about the customer? Who advocates the customer? Who doesn’t think about the customer? Competing Distribution Competing Products Competing Sales Territories Competing Channels Competing Business Units

Everyone in an organization needs to think about the customer Everyone in an organization needs to think about the customer. To achieve this, an organization must encourage change by providing the tools to make the changes steadily and surely Changing how an organization thinks Customer centric metrics Changing organizational processes Pilots,business rules and business case Changing organizational structure Evolutionary not revolutionary Changing culture Short term and long term success

Customer Centric Metrics Volume Metrics Customer Centric Metrics Call Duration Encourages TSRs to make calls as short as possible, keep costs low Creates dissatisfaction Customer Retention Encourages TSRs to satisfy customers Creates loyalty Sales Volume Encourages cannibalization Encourages short term product pushes instead of long term CR Customer Value Impact Increases customer value following interaction Includes additional information gathered which is useful for future campaigns To persuade managers to think about customers, it helps to start with something they value – Customer profitabilty

Changing Processes There are several ways to change processes without creating fear within an organization Pilot projects: Enable teams to test processes in an atmosphere that fosters innovation and resourcefulness. Business rules: Privacy: Do not share names with third parties Fatigue: Do not call customers more frequently than “n” times. Channel preference: Do not force a customer to a channel Dialogue: Record every question that a customer answers and do not ask the same question more than once every two years The business case Through questions and expectations, it is possible to drive existing organizational units to use customer data in decision making Should you close unprofiateble stores? Should you market to selected customers?

Evolutionary Not Revolutionary Why not just reorganize everyone from Marketing, IT and other teams contributing resources to the CRM effort? Why the evolutionary small step approach? Why not revolution? Power may continue to reside in areas without the data, without the metrics or even without the C Focus on bureaucratic issues detracts from C focus

Tools that make data easy to access Gives time to build infrastructure for: Centralized data Tools that make data easy to access Skilled analysts who can mine the data Metrics that validate C centric programs Training to bring staff up to speed Setting senior management expectations and educating them Winning kudos for early successes Creating external enthusiasm rather than resistance.

Changing Structure To maintain the momentum of a CRM initiative: Continually demonstrate value to all stakeholders Create a hunger among senior managers for customer centric and customer value information Use input from anyone thinking about the customer.

Forms follows Function Let structure experts worry about structure which CRM specialists focus on cross functional initiatives. Constructing data centers from pilot databases to an enterprise-wide data warehouse The data warehouse is accessible and easy to use across organization Fielding campaigns that includes tests and data mining Sharing results across channels,units and levels of management Creating more and more complex campaigns involving more and more areas of the enterprise. Monitoring and reporting results all along the way.

E-channels Complicate Simplify E-channels both complicate and simplify CRM execution: Complicate Simplify - Stability - Maintenance - Real time - Personalization - Collaborative filtering - B&M to the web - Branding - E-strategy - Competing channels - Privacy - Security - Loyalty - Information - Real time - Cost saving - Interactive - Profit driver - Convenience - Customer tracking - Services - Transaction/sales tracking

Are we there yet? You know you have a CRM culture when: Everyone in the organization thinks about the C Everyone in the organization listens to the customer Reliable service is delivered to C consistently across all channels Success is measured in terms of C relationships ( Value, duration, acquisition )

Where Are You on the Road to CRM? Short term goals Long term goals Think like a customer Be a customer Build infrastructure to centralize data Analyze customer data Determine C centric program goals and strategies Educate senior management and set expectations Identify bottlenecks Have owners over customers Have centralized customer centric business rules Listen to the customer Track C behavior across all channels Show consistent reliable service across all channels Assign value to each customer Create loyalty programs Have established C centric incentives Organizations Transitioning to CRM culture Think like a C Listen to the C Provide consistent reliable service across all channels Track C behavior across all channels Assign value to each C relationship Create loyalty programs Reduce bottlenecks Have owners over customers Real-time personalized dialogue with customers Anticipate customer needs Measure success of each relationship Share C information with all areas of the enterprise Build and maintain long term profitable relationships with C Organizations With existing CRM culture

Summary Organizational change is an evolutionary process, not a revolution. Choose the parts of the organization that can be changed to focus on first. Implementing CRM program also means changing thinking, processes, structure and engraining a customer centric culture in an organization. Depending on where your organization stands, there are short and long term steps to take to transition to a CRM company.

Long Term Planning Develop a two year plan for making your company more customer centric. Include measurable deliverables every three to six months. Change from product centric to customer centric metrics. Create cross functional teams to develop and manage customer strategy. Implement tools that allow people from all areas to access the same CI.

Obstacles Getting participation from all areas Technical problems centralizing data in a data warehouse Inter-unit conflict (Marketing-IT) Managing anxiety and resistance in an environment change Focusing resources on new developments and existing responsibilities.