CRM

CRM Strategy

Dr. Elijah EzenduFIMC, FCIM, FIIAN, FBDI, FAAFM, FCCM, MIMIS, MITD, ACIArb, ACIPM,

PhD, DocM, MBA, CWM, CBDA, CMA, MPM, PME, CMC

Learning Objectives

At the end of this course, participants should be able to do the following:

i. Explain importance of CRM Strategyii. Explain CRM development and implementation iii.Identify methods for aligning CRM Strategy to

business modeliv.Explain Customer Value Added and Customer Loyaltyv. Conduct proper enterprise-wide implementation of

customer-centricity

“70% of CRM initiatives fail”Source: Cap Gemini Ernst & Young

“90% of enterprises cannot show a positive return on CRM”

Source: META Group

“75% of CRM initiatives fail to substantially impact the customer experience”

Source: Gartner

A CRM Strategy shows the intent of a firm concerning its customer base, pointing out how it shall acquire, maintain and retain customers through improvement in customer value deliverables as the way to enhance corporate performance.

CRM Strategy & Implementation Model

CRM Readiness Assessment

Process 1: Strategy Development

ENABLING PROCESSES

Employee Engagement

Process 5: Performance Assessment

Process 2:Value Creation

Process 3:Multi-Channel

Integration

Process 4:Information

Management

CRM

Pro

ject

Man

agem

ent

CRM

Cha

nge

Man

agem

ent

Source: Adrian Payne & Pennie Frow, Customer Relationship Management

Strategy Development

This involves development of CRM strategic options for achieving established CRM objectives for every targeted segment, thereafter the best option shall be adopted as the CRM strategy and the right measures for performance shall be established.

Strategy Development Process

Source: Elijah Ezendu, CRM Strategy

Review

Customer Asset Audit

Protect Position

Invest to Protect

Invest to Win Damage Limitation

Counter Competition

Invest to Build

Win the Opportunity

Careful Management

Manage Profitability

Build Selectively

Manage the Revenue

Manage for Revenue

Manage Profitability

Manage for Profitability

Manage the Revenue

Consider Divesting

Key

Large Share

of Wallet

Some potential

Transactional

HighlySecure

Secure Vulnerable Fragile

Strength of Relationship(Value to Customer)

Customer Potential(Value to Company)

Source: Gartner

CRM Investment Framework

Real Relevance

Clai

med

Impo

rtan

ce

Low High

Low

HighInvest

Study/ Invest

Maintain Efficiently

Trim

Adapted from Gartner

Interoperability of CRM Strategy

The CRM Strategy must have a high level of interoperability with the Corporate Strategy and Competitive Strategy of the Business Portfolio.

Using McKinsey 7S Framework for Testing CRM Strategy

Style

Staff

Shared Values/Subordinate Goals

StructureSystems

Strategy

Skills

Action Points for Testing CRM Strategy

• Examine each of the 7S.• Identify the key success factors of each ‘S’.• Ascertain the gap between the elements and

the strategic fit.• Solution should be either to amend the

elements accordingly or to alter the CRM strategy.

Aligning CRM Strategy to Business Model

It’s imperative to align CRM Strategy to a firm’s Business Model due to its role. Business Model is the logic behind value generation. The Business Model binds Business Strategy and Business Process together and functions as link between them. The focus of strategy is determination of position and codification of aims and objectives, while business process captures and implements the strategy.

Business Strategy

Business Model

Business Process

Planning Level

Architectural Level

Implementation Level

Business Logic Triangle

Customer Value Added

“Customer value added approach is based on providing products and services to customers that are a greater value than they could expect from purchases from competitive companies in similar markets.”

Source: John McKean, Customers Are People

The CVA Approach

Customer value added facilitates proper customer relationship management through identification the suitable value proposition which is superior to the whole bundle of offering from competitors, and ensuring effective communication of the standard to customers.

CVA = Perceived worth of a business’s offerPerceived worth of a competitive offer

Steps for Implementing CVA• Identify customer values• Identify competitors’ offers• Build customer values into firm’s offer to obtain

firm’s interim offer• Compare firm’s interim offer to competitors offer• Identify value gaps• Use problem analysis tools to identify root causes• Use quality improvement tools for quality

enhancement in order to set new standard of value proposition

Source: Elijah Ezendu, CRM Strategy

Branding to Breed Customer Value Proposition

Source: Elijah Ezendu, CRM Strategy

Customer Loyalty

Customer loyalty is aggregation of attitudes and emotional disposition developed in the course of interaction with value proposition either directly or indirectly, such that a customer would tend to purchase a particular product/service over and over again.

Ladder of Loyalty

Partner

Advocate

Supporter

Client

Purchaser

Prospect

Source: Christopher, Payne & Ballantyne, Relationship Marketing

Partner: Someone who has the relationship of partner with you.

Advocate: Someone who actively recommends you to others, who does your marketing for you.

Supporter: Someone who likes your organisation, but only supports you passively.

Client: Someone who has done business with you on a repeat basis but may be negative, or at best neutral, towards your organisation.

Purchaser: Someone who has done business just once with your organisation.

Prospect: Someone whom you believe may be persuaded to do business with you.

"There are ducks, and there are eagles. The ducks run around the ground quacking all the time, stating rules, following orders, doing what they are told and often pecking at other ducks. Eagles soar high above to get the best perspective and decide what is best for the customer."

- Ken Blanchard, Leading at a Higher Level

“Customer-centricity involves aligning organizational resources for effectively responding to the ever-changing needs of customers, while building mutually profitable relationships.”

- Craig Bailey & Kurt Jensen

What is Customer-Centricity?

Personnel Operating practices and procedures Systems (internal and external) Products and services

Aligning Organizational Resources

• Recognizing and rewarding customer-centric behaviour.

• Training every staff on customer-centricity. • Ensuring that decision-making hinges on

customers. • Using communication tools and techniques

for highlighting the firm’s progress in customer-centricity

Aligning Personnel

Customer-centricity can be embedded on organizational processes through adequate training and modeling of interdepartmental transactions as depiction of customer relationships that require optimization.

Entrenching Customer-Centricity via Training cum Internalization

• Communicating effectively and building rapport.

• Identifying and exploiting opportunities.

• Managing complex and taxing conversations.

• People and communication styles

Focus of Training

Ascertainment of customer’s requestEnsuring ProfitabilityFind out repeatability of transactionDetermination of feasible term of

relationship.

Requirements for Building Mutually Profitable Relationships

• Obtain customer’s pulse• Involve the customer• Analyze information• Socialize results• Implement customer-focused

changes• Respond to the Customer

Voice of The Customer Process

Survey the CustomerInterview the CustomerGet information from customer-facing

personnelObserve actions and behaviours of

customersEmbark on mystery shopping

How to Obtain Customer’s Pulse

• Business decision-maker• End-user of product or service• Procurement function

Three Different Faces of a Customer

Customer Survey

Transactional Surveys Relationship SurveysFocuses on measuring customer satisfaction with individual or collection of Interaction with firm.

Focuses on all aspects of the firm such as• Marketing• Product Management• Service and Support• Sales/Account Management• Engineering/Development• Professional Services• Training and Education• Accounting/FinanceSurvey on many individuals incustomer’s firm.

• Environment of trust • Establishing expectations with

personnel• Managing anecdotes

Factors that Aid Collection of Inputs from Customer-Facing Personnel

This can be done by means of the following:1. Focus Group: For obtaining information through

discussion with a group of participants, taking cognizance of commonality in demographics, attitudes or purchase patterns.

2. Customer Board of Advisors: For holding periodic meetings with selected number of senior executives from firm’s customer database. Factors that determine selection of customers include strategic importance, level of complexity/sophistication in use of products or service, diversity of industries which the firm represents.

Involving Customers

Analyzing information

Analyze customer feedback and information obtained

Output:i. Positive trendsii. Challenging trendsiii. Issues raised by customers

Compare to other information held by the firm

Such information include the following:

i. Customer demographicsii. Transactional history

This gives rise to development of customer segmentation strategy

Top-level reporting for general awareness

Comprehensivereport for sectional,

departmental and project

action-planning

Socialize Result

• Getting management commitment • Conducting cross-functional reviews• Voice of customer tracking and reviews• Forecasting

Steps for Implementing Customer-Focused Changes

• Customer Satisfaction• Customer Retention• Churn• Revenue and Profitability

-Overall -By Customer Segment -By Customer

• Product/Service Diversity By Customer

Key Performance Indicators Targeted for Improvement

1. Immediate Responsei. Establishment of criteria for ‘immediacy’.ii. Implementing ‘immediacy’ team.iii. Management reporting.

2. Responding with Account StrategiesThe six steps for implementing Account Strategies:i. Record account-specific resultsii. Involve senior management in customer experience.iii. Prepare for customer review meetingiv. Engage customer in meetingv. Inform the organization and respond resourcefully.vi. Continue the process

Responding to Customers

Newsletter E-mail Website E-zine Instituting the update as a component of firm’s

account management practices Using interactive sessions of forum or board of

advisors. Responding immediately to participants during

survey.

Other Methods of Updating Customers

Accepted as a technical instead of business problem Using a top-down approach Non-involvement of senior management Lack of focus on areas of high adoption Driven by IT department instead of Sales, Marketing

and Service. Absence of a cross-functional implementation team Biting more than one can chew Organizational unpreparedness

Common Pitfalls of CRM

Feature Product-Focused Customer-Centric

Customer Orientation Discrete transaction at a point in time Event-oriented marketing Narrow Focus

Customer life-cycle orientation Work with customer to solve both immediate and long term issuesBuild customer understanding at each interaction

Solution Mindset Narrow distribution of customer value proposition Off-the-shelf products Top-down design

Broad definition of customer value proposition Bundles that combines products, services and knowledge Bottom-up, designed on the front lines

Advice Orientation Perceived as outsider selling in Push product Transactional relationship Individual to individual

Working as an insider Solutions focus Advisory relationship Team-based selling

Customer Interface Centrally driven Limited decision-making power in field Incentives based on product economics and individual performance

Innovation and authority at the front line with customerIncentives based on customer economics and team performance

Business Processes “One size fits all” processes Customization adds complexity

Tailored business streams Balance between customization and complexityComplexity isolated within the system

Organizational Linkages & Metrics

Rigid organizational boundaries Organizational silos control resources Limited trust across organizational boundaries

Cross-organizational teaming Joint creditHigh degree of organizational trust

From Product-Focused to Customer Centric Firm

Source: Booz Allen Hamilton

Solutions Advance Customer Value Proposition

Source: Booz Allen Hamilton

Industry

Traditional

Traditional = Value

Product Proposition

Truck Manufacturing

Trucks “We sell and service trucks”

Aerospace Components

Aerospace Fasteners

“We sell high-performance fasteners”

Utilities Electricity “We provide electricity reliability”

Chemicals Lubricants “We sell a wide range of lubricants”

Pharmaceuticals Drugs “We sell pharmaceuticals”

Value-Added Customer-Centric

+ Services = Value Proposition

Financing Service

“We can help you reduce life-cycle transportation costs”

Application/Design support

“We can reduce your operational costs”

Energy asset maintenance

“We can help you reduce total energy costs”

Usage and application design Lubricant analysis

“We can increase your machine performance and up-time”

Product support Outcomes-driven information database

“We can help you better manage your patient base”

Put employees in the customers’ shoesPut employees in the shoes of a particular

colleagueReview your habits and attitudeBe evaluated in a 360-degree approach by

colleagues you frequently deal with (through a random selection).

Developing Customer-Centric Culture

It’s a cross-functional role empowered to marshal organizational resources to resolve troublesome customer issues and identify root cause while balancing the financial realities and strategic goals of the company.

What is Customer Advocacy?

To steer customers away from veiled gaps, inefficiencies and organizational complexities that perturb perception, thereby managing “customer experience” effectively.

The Need for Customer Advocacy Function

Straight-forward and honestInterpersonal management and

communicationGood business sense and judgmentOrganizational navigationExecutive PresenceTime managementProject management

Key Skills for Customer Advocates

Customer segmentationEngagement processEscalation processResponse planning, analysis and executionManaging customer experience through

resolutionInternal management review

Customer Advocacy Process Framework

Ensure your communication stands aloneConsider the audienceRead it “as if” you were the recipientAcknowledge the “bigger picture”Special handling procedures when

emotionally charged

Factors to Consider When Crafting Message

Do’s of Customer Centricity Don’ts of Customer Centricity1. Adjust your mission and vision statement Expect a brand new mission statement to make

you a customer-centric company

2. Segment your customer base Overcomplicate the segmentation

3. Align your organization structure with the segmented customer view

Reorganize too often and for the sake of it

4. Make good use of technology Expect technology to build customer relationships for you

5. Create new performance measures Throw out the old performance measures

6. Study the behaviours, attitudes and demographics of your customers

Confuse behaviours and attitudes with needs

7. Try to understand the true value of your customers

Rely on the customers past buying patterns

8. Empower employees, particularly customer-facing staff for proactive relationship-building

Allow anyone in the company to say (or think) “this is not my job/responsibility”

9. Set clear goals for achieving a defined state of customer centricity by a certain point in time

Assume that your project/ programme were completed, you ‘got there’

10. Encourage and seek to create customer loyalty

Think of loyalty as the tenure of a customer (duration of the relationship)

11. Communicate and engage all stakeholders in the process

Limit your change management efforts to the marketing, sales and customer service functions

The Seven Characteristics of Customer-Centric Companiesi. They conceive of themselves not as a group of products, services, territories, or

functions, but as a portfolio of customers.ii. They know how much money they make or lose with each of their customers or

customer segments, and they understand why.iii. They understand the different needs of different customers and group them into

operational customer segments and sub-segments based on common needs. They thrill their customers by delivering knockout value propositions that competitors cannot match.

iv. They continually innovate by evolving their customer segments and sub-segments, and improve their value propositions as customer needs change.

v. They organize their businesses into customer segment business units to establish clear ownership of the customer experience and accountability for the financial performance of each customer business unit.

vi. They create a competitively unassailable customer innovation advantage based on a customer R&D model grounded in continual experimentation at key customer touch points.

vii. They understand in precise analytic terms exactly how their different customer relationships contribute to or subtract from the total value of the firm; because they manage their customer portfolio on this basis, they know what to manage and where to invest in order to create sustainable, profitable growth and drive outstanding share price performance over time.

Source: Wharton Business School

Dr. Elijah Ezendu is a multidisciplinary professional whose business experience mounts through diverse fields. He is a Certified Management Consultant, licensed by International Council of Management Consulting Institutes which has a Special Consultative Status in United Nations Economic and Social Council. As a result of his strides in management consulting, he received Merit Award for Excellence in Consulting. He is concurrently Senior Partner, Shevach Consulting; Director of Strategy and Performance, Fortuna; Lead Assessor and Member of Governing Council, Institute of Management Consultants; Director of Training, International Council of Business Development Professionals; Member of Marketing Committee, International Council of Management Consulting Institutes; Honorary Global Advisor, International Project Management Commission; and Programme Coordinator (Nigeria), Regent Business School, South Africa. He holds a doctoral degree in Management from St. Clements University, British West Indies. He is a Chartered Manager certified by Canadian Institute of Management, Canada and holds numerous professional qualifications including Master Project Manager; Project Manager E-Business; Fellow, Institute of Management Consultants; Fellow, Certified Institute of Cost Management; Fellow, Institute of Business Development; Fellow, American Academy of Financial Management; Fellow, Institute of Internal Auditors; Member, Nigerian Institute of Training and Development; Member, Institute of Analytics Professionals; Associate, Chartered Institute of Personnel Management of Nigeria; Associate, Chartered Institute of Arbitrators (Nigeria). He is a Certified Business Development Analyst and Competitive Intelligence Professional. Additionally, he is an information technology management professional certified by Institute for the Management of Information Systems, UK along with Microsoft Corporation, USA and stands as a Member of International Association of Software Architects. He is an outstanding motivational speaker with a knack for recalibration of positive influence; and a world-class consultant, who has functioned as Speaker/Facilitator at myriad programmes of professional institutes, international development organisations, private and public firms including extra-governmental agencies and institutions. He is a prolific writer and author who had served as Editor-in-Chief, Cost Management Journal; Part-Time Lecturer & External Examiner (MBA Programme), Ladoke Akintola University of Technology; Director of MBA Programme (Nigerian Outreach), Management Institute of Canada; Chief Operating Officer, Rohan Marine; Second Vice President and Member of Governing Council, Certified Institute of Cost Management; Director of Programmes and Member of Governing Council, The Institute of Business Development; Director, Refined Shipping; and Examiner to various Professional Institutes.

Thank You

Dr. Elijah [email protected], 234 8033024596, 234 8058835237