3e779 Module I

1. Module I Conceptual Foundation of CRM Evolution of CRM Benefits of CRM Schools of thought on CRM Different Definitions of CRM

2. Product marketing Direct Marketing Target Marketing Relationship Marketing MASS MARKET RELATIONSHIP MARKETING SEGMENTATION MARKETING ONE TO ONE MARKETING CUSTOMER RELATIONSHIP MANAGEMENT 3. Customer Relationship Management (CRM)

CRM is thestrategic useofinformation, processes, technology and peopleto manage thecustomers relationshipwith your company ( Marketing, Sales, Services and Support) across thewhole customer life cycle.

CRM is the process ofstoring and analyzing the vast amounts of data produced by sales calls, customer-service centers and actual purchases,supposedly yielding greater insight into customer behavior. CRM also allows businesses totreat different types of customers differently in some cases, for instance, by responding more slowly to those who spend less or charging more to those who require more expensive handholding.

Wall Street Journal, 21 May2006.

4. More definition of CRM Process of creating and maintaining relationships with business customers or consumers. A holistic process of identifying, attracting, differentiating, and retaining customers. Integrating the firms value chain to create enhanced customer value at every step. An integrated cross-functional focus on improving customer retention and profitability for the company. 5. Online insurance company view on CRM: Motivating customers to initiate revenue generating contacts with us. A catalog retailer on CRM : Increasing the likelihood of the right response by a customer segment. A mid market financial institutions view on CRM: We want to attract customers both old and new through more personalized communications. 6.

CRM , the termoften referred to marketing. This is because CRM can be considered from a number of perspectives.

Information Technology (IT) perspective

The Customer Life Cycle (CLC) perspective

Business Strategy perspective

7. Business Strategy and CRM 8.

Three key phases:

Customer Acquisition

Customer Retention

Customer Extension

Three contextual factors:

Marketing Orientation.

Value Creation.

Innovative IT.

9. Information Technology (IT) perspective

CRM is more than just software. For the purposes of this introduction - Information Technology (IT) and CRM have three key elements,

Customer Touch Points,

Applications, and

Data Stores.

10. 11. The Customer Life Cycle (CLC) perspective

The Customer Life Cycle (CLC) has obvious similarities with the Product Life Cycle (PLC).

CLC focuses upon the creation of and delivery of lifetime value to the customer.

CLC is a summary of the key stages in a customer's relationship with an organization.

12. 13. Objectives of CRM

Identification of potential customers.

Understanding of customer needs, Both current and latent.

Differentiating profitable from unprofitable customers and segments.

Decreasing attrition by increasing value and satisfaction.

Increasing usage of current products and services.

Increasing referrals.

Winning back lost customers.

Moving customers up the relationship hierarchy from strangers to acquaintances to friends to partners.

Integrating marketing and sales efforts throughout the various channels used by the company.

14. GOALS OF CRM

DIFFERENTIATING CUSTOMER

All the customers are not equal, recognize and reward the best customer. For this the CRM needs to understand.

Sensitivity, tastes, preference and personalities.

Life style and age

Culture background and education

Physical and psychological characteristics.

DIFFERENTIATING OFFERING

A CRM solution needs to differentiate between low value customer and a high value customer.

High Value customer requiring high value customer offerings.

Low Value customer with potential to become high value in near future.

High Value customer requiring high value service.

KEEPING EXISTING CUSTOMER

Grading customer from satisfied to very dissatisfied shall help the organization in always improving its customer satisfaction level and scores. As satisfaction level of each improves so shall the customer retention with the organization.

Attempts to own the lion share of customer spending and/or share of mind in a particular product category

Building brand equity, maintaining vigilant customer contact, keeping current with the market trends is critical

5% points increase in customer retention=20-125% increase in profit

CUSTOMER LIFE TIME VALUE

By identifying life stage and life event trigger the points by customer ,marketers can maximize share of purchase potential .

Refers to the net present value of the potential revenue stream for any particular customer over a # of years

Starts with current purchase activity then extrapolates to include potential additions from cross-selling, upgrades, total ownership, etc.

16. Goal of CRM Increased Customer Loyalty = Increased Profits Integrated and personalized interactionthat increases value to customers Data Enabled processes Integrated Customer Knowledge Customer Transaction Data Silos 17.

Lifetime Value (LTV)

Refers to the net present value of the potential revenue stream for any particular customer over a # of years

Starts with current purchase activity then extrapolates to include potential additions from cross-selling, upgrades, total ownership, etc.

Customer Ownership

Attempts to own the lionshare of customer spending and/or share of mind in a particular product category

Building brand equity, maintaining vigilant customer contact, keeping current with the market trends is critical

5% points increase in customer retention=20-125% increase in profit

18. THE CRM VALUE CHAIN Customer data Customer informationCustomer Knowledge Customer wisdom 19. CRM BUSINESS CYCLE 8. Retain valuable customers . 7. Acquire customers and prospective customers. 6. Deliver increased value to the customer . 5. Interact with customers and prospective customers . 4. Customize by customer segment. 3. Develop product services Channels to meet customers needs. 2. Differentiate based on customer needs, characteristics and behavior . 1. Understand customers needs CRM 20. CRM Concepts Customer Life Cycle The total time that the customer is engaged with your company from the customers experience and view point. Consider Purchase Set up Use Customer Asset Loyal customers continue to buy more as they perceive value in the relationship. Customer Information: It is a tangible company asset that can be inventoried and managed. Critical element for building loyalty. Customer Value: It is calculated on the basis of purchases made by an individual. 21. Information Technology Process People Components of CRM 22. The components of CRM

1.Information: Information is the raw material of CRM. These types of information are useful to CRM.

Identification Data

-Marketing Data

2.Process: Customer centered processes are the product of CRM. Some examples are:

-Customer Touch points

3.Technology: Technology is the machinery that enables CRM to work.

-Software Products

-Networking

-Databases

4.People:People are the power supply of CRM.

-Training and education

-Measurements and rewards

24. Customer Touch points

Touch points are the means (media) that we use to interact with our customers.

Toll-free-Number

Phone / fax

Internet

Kiosks

Broadcast

E-Mail

Personal

25. 26. Common myths about CRM

CRM is the solution that will solve all our customer problems, its all the software tools that make it easier for a customer to do business with us.

CRM is the internet.

CRM is just the latest name for Direct Marketing.

CRM means recognizing a customer wherever he interacts with our company, a 360 degree view of the customer.

CRM means scoring and measuring customer value.

CRM is sales rep productivity tools.

27. 28. Types of CRM

Operational CRM

Analytical CRM

Collaborative CRM

29. CRM Architecture 30. Operational CRM

The operational application of CRM enables effective interaction with

customers. For this purpose various tools are used.

Operational CRM provides support to Front Office" business processes,

including sales, marketing and service.

Each interaction with a customer is generally added to a customer's

Contact history, and staff can retrieve information on customers from the

Database when necessary.

Thesecontact management toolsaim to reduce costs by improved

Process efficiency and use of media based communication channels.

These are also aimed to provide customers with a consistent interface

Across all communication channels.

Banks are an exemplary implementation of CRM as customer contact

management.

Channel management toolsaim to understand how customer interacts

with the company. It aims to deliver products and services across

multiple channels in effective, efficient, and consistent manner.

31. Analytical CRM

The data collected in operational management is analyzed to segment customers. The valuable information thus obtained is used to satisfy customers. Analytical CRM is composed of:

Pattern discovery component

Product and customer analysis component

Multitude component

Sorting and customer fractionation component

Customer value evaluation component

Analytical solutions provided for most companies are integrated view of customer across all channels and applications, campaign performance analysis, customer profitability analysis, cross-selling and up selling. The analytical solutions help answer questions like:

Who are their best customers?

Whom they are likely to loose?

How to retain them?

How to attract new customers?

How to improve profitability of customers?

32. Analytical CRM analyzes customer data for a variety of purposes: Design and execution of targeted marketing campaigns to optimize marketing effectiveness. Design and execution of specific customer campaigns, including customer acquisition, cross-selling, up-selling, retention. Analysis of customer behavior to aid product and service decision making (e.g. pricing, new product development etc.)Management decisions, e.g. financial forecasting and customer profitability analysisPrediction of the probability of customer defection (churn analysis)Analytical CRM generally makes heavy use of data mining.. 33. Collaborative CRM

The various departments of company like the sales, technical support, and marketing, share the information they collect about customers. The objective is to improve the quality of customer service and increase customer loyalty.

It allows the company to synchronize and manage efficient, productive interaction with customers, prospects, partners, and internal associates across all communication channels. The customers' viewpoint is taken care of at every transaction level thus enabling better service to the customer. Collaborative CRM also reduces web service costs by enabling web collaboration.

Collaborative CRM covers the direct interaction with customers,for a variety of different purposes, including feedback and issue-reporting. Interaction can be through a variety of channels, such as web pages, email, automated phone (Automated Voice Response AVR) or SMS.

The objectives of collaborative CRM can be broad, including cost reduction and service improvements

34. 35. Integrated CRM Architecture 36. 37. TECHNOLOGICAL ARCHITECTURE 38. Case Study-Right Number The Say Cello not Hello promotional scheme for cello thermoware which ran in Mumbai in the week beginning 14, seems to be one of those crazy ideas that make greatmarketing sense. The brain child of ad agency Situations, the scheme involved trained teams of callers ringing up 33,000 randomly chosen Mumbai telephone numbers. If the person who picked up the phone at the other end sideCello instead of Hello he or she became eligible for a a free cello Thermaware water jug worth Rs.111 information about the scheme had been disseminated widely through a highly visible ad campaign using press also banners, stickers and leaflets. 39. Says anjan Chatterjee, Managing Director of situations, the idea was born in a hotel lounge in Bangalore. We were toying around with a headline that had proved rather popular :Say hello to Cello.Suddenly it struck us:why not call people at random all over Bangalore and tell them to say Cello instead of Hello?. First tried out in Bangalore the scheme was a big success, achieving its aim of creating top of mind awareness of the product. Chatterjee claims that in Mumbai the scheme took the city s residents by storm. According to him the message on the telephone answering machines in house had been changed for the week to cello, just in case the call came through when no one was around. Over the week the schemes leased prizes were delivered to more than 3800 winners.As the ad for these schemes says:Idea accha Hai.