Jennifer Kirby Developing a CRM Strategy
Jan 01, 2016
Jennifer Kirby
Developing a CRM Strategy
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Key Issues
• What is a customer relationship management (CRM) strategy?
• How does a CRM strategy fit in with other business strategies?
• Only 10 percent to 15 percent of companies know the value of their customer base — yet, this is an important intangible asset and drives the detailed tactics of the CRM strategy.
• The benefits of CRM come through increased service and communication; to build real loyalty, how is this managed effectively?
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What Is a CRM Strategy?
• “It boldly states the ideal customer base and how an organization intends to get and keep it. I’ve never yet seen one that does this to any depth.” — CRM Consultant
• “…It’s the decision about which customers are to be managed, via which channels for which products and services: It means revisiting the marketing strategy.” — CRM Guru
• “A CRM strategy is not an infrastructure road map.” — CRM Program Manager
• “We need to understand what customers we have, and who we want, then we can put in place a strategy for developing the value of each segment” — CEO
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How do we develop the customers’ loyalty and value
to us by developing our value to the customer?
How do we acquire valuable
customers who will
value us?
How can we retain or win
back customers of value?
How do we create awareness of what we
offer to potential customers of value?
How do we do this efficiently?
MarketingSales Service
Develop
Retain Acquire
Target
CustomerLife Cycle
Enquire
WelcomeManage
Problems
Win Back
A CRM Strategy: Developing the Customer Asset Base
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CRM Strategy:Top Ranking Objectives
27
26
47
16
37
47
B2B
B2C
Annual loss in a typical company Customer loss: 10% to 30%Employee loss: 15% to 20%Investor loss: 50%
Reduces annual profit by 20-50%
Percent of Companies Ranking as Top Priority
Retention
Development
Acquisition
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CRM Strategy: Case Study No. 1
• Segment the customer base in deciles of value.• Develop customer profitability. The most-valuable segment by 3
percent, the next three segments by 20 percent, and decrease the losses on the rest — develop services used, lower distribution cost, increase prices and discount according to potential value.
• Acquire new customers of the most-valuable type with targeted selling.
• Implement retention programs for the most-profitable customers.
Household Deciles Ranked by Profit
($1,000)($2,500)
0$5,000
$10,000$15,000
1 2 3 4 5 6 7 8 9 10
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CRM Strategy: Case Study No. 2
• Understand and segment the customer base .• Retain the most-valuable customers after finding out why they
defect.• Win back valuable ex-customers.• Develop the loyalty of current customer segments — use
differentiated service according to need.• Improve the profitability of unprofitable customers.
BrandValue
Value-tailoring
Value-added
Communication
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OPERATIONAL STRATEGY
BUSINESS STRATEGY
BUSINESS MODEL
CUSTOMER STRATEGY
MARKETING STRATEGY
MARKETING STRATEGY
BRAND PROPOSITION: The Company DNA
IT STRATEGY
PRODUCTIONSTRATEGY
FINANCE STRATEGYFINANCE STRATEGY
R&D STRATEGY
HR STRATEGY
CRM Strategy Is an Element of Business Strategy
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BRANDPROPOSITION
Promised Customer
Experience
Step No. 1: Define the Vision
What and who are you? What value will you deliver?
Unifies Internal Delivery
Step No. 2: State the Culture:
What internal capabilities are needed to deliver the value?
Step No. 3: Express the Image
How will the the value of the brand be communicated?
The Brand Is the Company DNA
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Corporate DNA Example: Mickey’s Signature
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Mickey’s Signature No. 2
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One Mouse, Different Signatures
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Corporate DNA Consistency
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• Vision: Market Position • Market Definition and Audit • SWOT Analysis
• Target market segments • Objective for each market
segment: Penetration, Development, Maintenance and Productivity
• Measures: Market share, brand equity and market penetration
Based on product life cycle
• Vision: CVP • Customer Definition and Audit• Capability Analysis
• Target customer segments by value • Objective for each customer
segment: Acquisition, DevelopmentRetention and Efficiency
• Measures: Satisfaction, loyalty, cost to serve and employee satisfaction
Based on the customer life cycle
How do we take advantage ofmarket opportunities and
mitigate competitive threats?
Marketing StrategyHow do we get closer to thecustomer to deliver value to
them and create value for us?
Customer Strategy
Interweaving the Marketing and Customer Strategy
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Relationship Investment Guide
High
Low
Cla
imed
Imp
orta
nce
Hygiene Factors
OverspendingHidden
Opportunities
Motivators
Real Relevance
Well aboveaverage
Above average
Average
Below average
Poor9
19
22
12
5
3
24
TrimStudy/Invest
MaintainEfficiently
Invest
Low High
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ProtectPosition
Invest toProtect
Invest to WinOver
DamageLimitation
CounterCompetition
Invest toBuild
Win theOpportunity
CarefulManagement
Manage forProfitability
BuildSelectively
Manage forRevenue
Manage forRevenue
Manage forProfitability
Manage forProfitability
Manage forRevenue
ConsiderDivesting
Strength of Relationship(Value to Customer)
CustomerPotential(Value to Company)
FragileHighlySecure
Secure Vulnerable
Transactional
Some potential
Large shareof wallet
Key
Customer Asset Audit
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Real Examples of CRM Objectives
• Return retention to the industry average and then improve to 3%
• Measure the propensity to churn, expected lifetime value, and propensity to accept discounts and special marketing offers
• Empower CSRs to decide who to keep according to specified criteria
• Establish who end users are to build broker loyalty
• Build a customer information culture to increase customer advocacy
• Improve communication with customers/partners
• Reduce staff turnover in call center
• Introduce an effective global sales process
• Find CRM initiative with highest payback and use to fund others
• Retain our most valuable customers for revenue in the short term
• Establish our customers’ optimum potential for selective development
• Acquire strategically important customers in the new market
• Expand cross-selling opportunities with supporters
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CRM Metrics
CorporateMarket Share
Key measures to support corporate financial and market goals
CustomerStrategic
Key measures for monitoring the customer strategy
Operational
Key measures for monitoring the customer processes
Infrastructure
Key measures for monitoring efficiency and inputs
Revenue Growth
Profit Growth
Margin GrowthCost Ratios
Customer LoyaltyExample
Lifetime Value
Customer Profitability
Cost to Serve
Acquisition
Development
Retention
Risk Profile
Staff Satisfaction
Response Levels
RFM Measures
Conversion Ratios
Complaints
NPD Times
Staff Turnover
Cross-Sell Ratio
Recommendation Levels
Channel-Specific Measures
Call Answering Times
Customer Data Accuracy
Response Times
“Do Not Mail” Markers
Staff Qualifications
Staff Sickness
Example
Example
Example
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CRM Strategy — Tactics
• CVP • Product • Price
• Communication:public relations, advertising, sales, promotion, merchandising and direct marketing/messaging
• Channel
• CVP by segment• How customized for each
segment • How differentiated for each
segment • Service/customer care by
customer segment/life cycle• Contact by life cycle/segment• How media and content is
personalized in communication for each segment
• Which channel is used by which segments for what (touchpoints)
• Management by segment: who, where, how
Marketing Strategy Customer Strategy
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Tactics for Retention and Building Loyalty
Behavior Attitude and Behavior
• Rational value • Creates stickiness• Makes sales• Retention, attraction,
increased sales• Real loyalty?
• Rational and emotional value• Creates loyalty• Creates relationships• Retention, attraction, customer
share, recommendations,lower costs and wider margin
Loyalty Scheme CRM Strategy
Reward schemesIncentivesCross-sellingProduct bundlingProduct & price
Brand values Contact Customer care Contracts Products & price
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Build Communities
Customer Care:The Social Bond That Binds
• Improve perceived service and you improve loyalty.
• The customer does not care how much you know about them, until they know how much you care.
• Stop thinking you are servicing a product — service the customer.
• Feeling recognized, valued and cared about is the basis of the bond that is loyalty.
Advice &Information
Collaborate& Involve
Understand& Empathize
Anticipatethe Crisis
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• Upward movement of wallet share is a trigger for additional resource.• Greater customer spend rewarded with greater levels of account
management.
Low Medium High
< 1
0%10
- 5
0%>
50% One:One
toFew:One
One:Few
One:Many
One:Fewto
One:One
Key Account Teams
Market Value of Customer
Com
pany
Sha
re o
f W
alle
t
Contact
Center
DedicatedHunters
Relationship Manager Personalized Self-
Serve
Relationship Models:Resource Allocation by Segment
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CRM Strategy: Capabilities
Marketing StrategySupport
• Human resources• IT • Knowledge — research
Customer StrategySupport
• Skills and competencies • Internal communications • Organization • IT infrastructure • IT architecture • Research, analysis and
planning• Knowledge management• Customer data strategy • Business process
architecture
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Recommendations
• Establish your market position against requirements and competitors. Define a “value,” different, customer proposition
• Make the brand the company DNA to deliver the proposition
• Segment the market for share of wallet and lifetime value
• Establish the motivating factors for customer loyalty: Where do you need to excel and where can you cut cost? Any gems?
• Value your customer base potential — not just on current profit.
• Develop skills in the new areas of customer relationship building — service, contact strategies and relationship models. Understand what technology enables you to do.