Further Thoughts on CRM

8/2/2019 Further Thoughts on CRM

1/34

Click to edit Master subtitle style

4/29/12

FURTHER THOUGHTS ON

CRM:STRATEGICALLYEMBEDDING CUSTOMER

RELATIONSHIPMANAGEMENT IN

ORGANIZATIONS


2/34

4/29/12

INTRODUCTION

Businesses today are generatingmore interest in CustomerRelationship Management (CRM)

Instead of focusing on the acquisition

of new customers, marketers aremoving their attention to retention ofcustomers and the maximization ofthe customer lifetime value


3/34

4/29/12

INTRODUCTION

The rate of success of CRM projectsvaries between 30% and 70%

Most managers are not aware of thefact that CRM does not always have a

positive impact on customerperformance and thus are oftendisappointed with the results


4/34

4/29/12

CUSTOMER RELATIONSHIPMANAGEMENT

It is based on three aspects ofmarketing management:

Customer orientation

Relationship marketing

Database marketing

Dowling distinguishes between two

types of CRM practices:


5/34

4/29/12

CUSTOMER RELATIONSHIPMANAGEMENT

It focuses on satisfying customers andfulfilling customers needs and hence itis expected that the resulting increase in

customer loyalty will enhance profits

ii. Practices that use data-mining

techniques to improve targeting,cross selling and market research

It focuses on a more efficient and

effective use of marketing tools


6/34

4/29/12

STRATEGIC EMBEDDEDNESSOF CRM

CRM implementations differ withrespect to their embeddedness inbusiness strategy and organization

structure

Strategic embeddedness of CRMmeans that the business strategydetermines what type of CRMprogram is implemented, how this

program is implemented, and what


7/34

4/29/12

STRATEGIC EMBEDDEDNESSOF CRM

CRM can be strategically embeddedin the following two disciplines:

Operational excellence: Firms aim tohave lean and mean processes. Theresulting delivered values to customers

are low prices and convenience

Customer intimacy: Firms focus on

knowing the customer and building


8/34


9/34

4/29/12

A Generic Classification Scheme of CRMimplementation Strategies

FIGURE 1


10/34


4/29/12

CASE 1: OPERATIONAL

EXCELLENCE AND CRM


11/34

4/29/12

The insurance provider already

had experience with direct customercontacts and direct marketingprinciples

The firm chose a strategy ofoperational excellence, aims to

outperform competitors on thecombination of price, convenienceand speed


12/34

4/29/12

CRM should

reduce marketing costs improve the firms value proposition in

the market

Improve the interaction process with thecustomer in such a way that thecustomers convenience is enhanced

In line with their CRM-approach themanagement developed a CRMinfrastructure


13/34

4/29/12

CRM-efforts were driven by thecustomer database. The database

has a number of functions

Customer profitability and saleslevels, is used as input for themanagement information system(MIS)

Data-mining tools are used to

improve the targeting of directm r tin ti n


14/34

4/29/12

Analytical CRM mainly concernscustomer segmentation. This

segmentation is behavioural basedand customer needs are notconsidered

For each segment specific marketingstrategies have been formulated

The database is used to personalizecommunication in the case of direct

contacts with the customer


15/34

4/29/12

The insurance provider was aproduct management

organization

A major disadvantage of thisorganization is the absence ofcoordination between productmanagers. This led to customer

irritation

The database-marketing departmentm t in in in tw n t


16/34

4/29/12

Employees felt that they havefewer opportunities to seek

creative solutions due to thefocus on standardization in theCRM-process to achieve

consistency with the strategy ofoperational excellence

Consideration of efficiency andeffectiveness of CRM-instruments


17/34


4/29/12

Case 2:Customer Intimacy and

CRM


18/34

4/29/12

Facts

The private investment banker is oneof the largest in Europe

market share substantially decreased


19/34

4/29/12

Challenges Faced:

The firm was product-oriented andfunctionally organized;

All customers were treated in thesame way;

customer database information wasnot used;

more attention for new customersthan for current

assortment of investment products


20/34

4/29/12

Transformation Program Steps


21/34

4/29/12

Repositioning - strategy ofcustomer intimacy

Shift from traditionally focused onproduct leadership

the development of customerrelationships

development of an appropriate CRM-system


22/34

4/29/12

Expert

Interview

Focus Group

Questionnair

es

Segmentati

on

Profitability

Analysis

Tiers within

segments

. For each tiersdifferent serviceconcepts weredeveloped andimplemented


23/34

4/29/12


24/34

4/29/12

Reorganise Structure

For each segment a client team wasformed

Each client team developed acustomer strategy based oncustomer needs, received its ownbudget and was made accountable

for the resulting profit.


25/34


4/29/12

Case 3: Tactical CRM

European Holiday ResortProviders


26/34

4/29/12

They assumed customers favourresorts that offer most quality andperformance

Hence they Invested heavily for facilities- swimming pools, restaurants,kindergartens and shops

They wanted that resort should befully occupied in all seasons


27/34

4/29/12

In response (to improve efficiencyand effectiveness of the direct

mailings)

CRM department

Loyalty Program

CRM Dept

(1) Developing and applying data

mining techniques


28/34

4/29/12

SERVER

CUSTOMER

DATABASE

DATA MINING

CONTACTMANAGEMEN

T

CAMPAIGN

MANAGEMENT

focus onresponseoptimization ofthe directmailings sent tocustomers to

raise occupancylevels

TACTICAL CRM at the HOLIDAY RESORTPROVIDER

RESULT

S


29/34

4/29/12

RESULTS for CRM Dept set up:

Achieved a substantial reduction inmarketing costs (improved targeting)

A reduced waste

Higher rates of occupancy


30/34

4/29/12

Loyalty Program

It was an expensive affair

On evaluation by the managementit was found:

Program did not affect customersdecisions to return to the holidayresort


31/34

4/29/12

Discussion of CRM-strategies

Characteristic

s:

Operational

excellence CRM

Customer intimate

CRM

Tactical CRM

StrategicOrientation

Process Customer Product/Sales

Organization

Structure AndCulture

Process Teams

Market-Oriented

Customer Teams

Customer Oriented

Functional

Transaction-Oriented

CRM Focus Repeatedtransactions

Relationships Selling

CRM ToolsDirect mail,reward programs,Internet

Affinity programs,customer contacts

Direct mail,telemarketing

CRM Metrics Customerperceived value,

customerprofitability

Commitment,customer share

customer life-timevalue

Direct mailresponse (incl.

profit)


32/34

4/29/12

CRM Implementation Issues

Type of CRM depends on ChosenStrategy

CRM embedded strategically /tactically

CRM results in New OrganizationStructure and culture


33/34

4/29/12

CRM implementation requires top

management support

Firms should hold realistic

expectations from CRM

Myopic focus on s/w should beavoided


34/34

4/29/12

Further Thoughts on CRM

Documents