eCRM:1 to 1 Marketing

Jason C.H. ChenProfessor of MIS

School of Business AdministrationGonzaga University, Washington,

U.S.A.Senior Consultant, Taskco.com

chen@gonzaga.edu

Presentation topics

Why are companies moving to CRM ?What’s in it for you?1 to 1principles and best practicesOther challengesWhere do you go from here?

eBusiness Key Concepts eBusiness

The strategy of how to automate old business models with the aid of technology to maximize customer value

eCommerce The process of buying and selling over

digital media eCRM (eCustomer Relationship

Management) The process of building, sustaining, and

improving eBusiness relationships with existing and potential customers through digital media

eBusiness Processes

WHY Customer Relationship

Redesign Business Processes (Outside-In)

Applying Technology

WHAT

HOW

CRM has become the #1 priority for CEOs …

1. Relationship with Customers 2. Cost Competitiveness 3. Effective Use of Information Technology 4. Managing Change 5. Shareholder Value 6. Revenue Growth 7. Industry Restructuring 8. Globalization 9. Value-Added Supplier Relaationships Source:A.T. Keamey,1994 Executive issues Survey; A.T. Keamey,1997 CEO Global Business Study

Customer Relationships Have Become the top priority for CEOs

Worldwide

Figure 1:Top Executive Priorities Ranked By Percent Citing Issue As “Critically Important”

CRM has become the #1 priority for CEOs …

Senior Executives Expect Current Customers to Drive Future Revenue Growth

New Products 22%

Deeper Penetration 46%

Acquisitions 6%Alliances

7%

New Customers19%

Source:The Alexander Group,Incorporated,1996

Why the shift in focus to CRM? Most companies have already attained operating efficiencies and optimum productivity through past efforts of : Downsizing Strategically outsourcing non-value added actives Business Process Reengineering Implementation of FRP System

Products in many industries have become commoditized forcing companies to sacrifice margins for sales volume

Presentation topics

Why are companies moving to CRM ?What’s in it for you?1 to 1 principles and best practicesOther challengesWhere do you go from here?

And oh, check these numbers…

Cutting customer defections by just 5% has the effect of boosting profit between 25% and 85%.*Today ,the average business is losing between 15-35% of its customers annually**69% of these defections are due to a poor sales or service interaction with the customer**

*Harvard Business Review**Forum Corporation

Investment in CRM capabilities can provide significant financial benefits

42%35%

25%

2%

20%

0%

10%

20%

30%

40%

50%

Source:Insight Technology Group,1998

Other reasons why you need 1 to 1

Increase customer loyaltyGet more business per customer Become less dependent on priceIncrease customer satisfactionSave timeSpeed up your sales cycle

Our Objectives 1. Get customers 2. Keep customers 3. Grow customers

The only difference is how firms do this

Share of market vs. share of customer

Customer Needs Satisfied

Customers Reached

Mass Marketing

Share of Market

Share of market vs. share of customer

Customer Needs Satisfied

Customers Reached

Mass Marketing

Share of Customer1

to

1

Share of Market

The longer the bar,The higher unitMargins will be

In four words … Treat different customers

differently

A lasting competitive advantage

The only true competitive advantage comes from the understanding you have of your customer that your competitors don’t.

This information has to come from the customer.The more effort customer invests,the grater

their stake in making relationship work.Going to a competitor = Reinventing the relationship

Presentation topics

Why are companies moving to CRM ?What’s in it for you?1to1 principles and best practicesOther challengesWhere do you go from here?

Summary of 1to1 strategies

Identify Differentiate Interact CustomizeCustomer:-Identities-Contact info-Transactions-Interactions-Give the right people access when they need it

One view of the customer:Integrated customer data

Value:-Actual(current profits)-Strategic(potential value)

Needs:-Individual-Segment

All customers arenot created equal

Learn more:-Needs-Value-Preferences-Behaviors

Never make a customer tell us the same thing twice

Customer Need Set:-Product-Service-Delivery-Bundles

Use yourknowledge aboutcustomers to customize

Identify–What information do you need?

Source:Insight Technology Group,1998

Goal: obtain more and better information about a greater number of your customers… and use it to build relationships

Name, rank, serial number, phone, fax, email History,transactions Customer needs - Business objectives - Complaints - Choice of communication channel - Habits and preferences Revenues, profitability, LTV - Potential value - Lifecycle stage

Where is the customer data?Where is it? Who has access?Who manages it ? Who owns it?

Sales Marketing Operations

Internet

Customer Service

Collections

Department

OtherProviders

CallCenter

How do you manage it ?Make sure individuals are recognized at all contact pointsLink customer interactions over time, across all divisionsGive the right people access to this info at the right timesFigure out who “the customer” is when the “customer” is an enterprise

+ Recognize Company/Family

Linkages (BEST OF BREED) Works.com is an online office supply

retailer that offers customers a master agreement that covers all employees

Charles Schwab creates links

Broker access to complete customer account(s) including business and personal links Broker sees account the way the

customer sees the account Picks up where last action/interaction

left off Integration across all channels

“One Customer” view is key

Integrate customer information across the value chain

Customer A

Customer ACustomer A

Customer A

Customer A

Marketing Call Center The Web Sales

Force

DifferentiateCustomers have different values to the enterprise

Actual value Strategic value=share of customer,not market Customers have different needs from the enterprise

Tiering by actual valueFirst: Determine

Actual Customer LTV

FirstTier

SecondTier

ThirdTier

FourthTier

FifthTier

Tiering by strategic valueUse dialogue to determine

Customer’s potential

FirstTier

SecondTier

ThirdTier

FourthTier

FifthTier

Naming the tiersKeep These Customers

Grow These Customers Actual Strategic Servicing Costs

MVCs MGCs Migrators Migrators BZs

Fire Them?

Call Center Example Inbound queries through a call center MVC

Routes to Designated Call Center Agent directly after VRU identifies MVC and their need

MGC Routes to general ‘split’ agent after VRU

Migrator or BZ VRU prompts to go to web site for info access

Request for service

Request for service

Request for service

Caller A

Caller B

Caller C

8%APR

11%APR

18%APR

Basis of customer differentiation

Differentiate them by their NEEDSWhat the customer needs, not what you want to sellSome needs are apparent through transactional records

How to think about NEEDSInitial learning about productMarking initial contactDecision in what to buy–style, design, informationDecision in how to configurePreferences – color, size, shapes, added servicesPricing, billing, financingPick-up, deliveryUsage – purpose, frequency, nature, patternsErrors, complaintsNext purchase

Interact – Interaction strategy

Goal:Generate more customer feedback less expensively … and use it as a competitive advantage- From expensive sales people to call center … to the even less

expensive Web site- Identify all contact points “We identified all guest contact points, and the employees

most likely to be involved. It was eye-opening. No one

realized how many opportunities we were missing.” Patrick Kennedy, GuestNet

CEO- Generate feedback, not just messages- Engage your customers in an ongoing dialogue that enables

you to learn more and more about their particular needs,

priorities, and interests …

Rules of interaction1. Conversation is a consensual act2. Neither party in control3. Feedback results in behavior

changes by everyone in your organization

4. Each interaction picks up where last left off – across al channels

5. Don’t ask too much: use “drip irrigation”

Benefits of InteractionUncovers Needs (so you can sell more) (Dis)Satisfaction Risk of defection ComplaintsMakes you smarter about the customer each timeHelps build barriers to exit

Touch point integrationIntegration of all customer contact points is becoming increasingly important as customer information migrates to the Web

… Beyond the Phone

Interaction Using Call Centers

Measuring the efficiency of call centers: Hold times and call abandonment ratesMeasuring their effectiveness: Ratio of complaints handled on first call Percentage of inquiries generating

leads Share-of-customer data gathered

What are the implications when you off load support the web? How does the call center change Review the metrics list – which metrics are

efficient vs. effective?Which ones support Learning Relationships?

Capital One – The customer call

• Pick from 50 optionson whom to notify

• Also analyze relateddata on millions of

Capital One customers• Analyze data on 7M households

• Remember and pass along 25 pieces of info related to this

particular customer• Predict what this individual may want

• Prepare service rep to make customized product offer at end of call

Customize Identify

Interact Differentiate

Customer Interaction Worksheet(premier On-line Invetment Firm)

Tier IVR&Routing Contact Resolution

Diamond

(1-2%)

Wait Time: NoneTrade Wait Time: NoneCSA: Best(H:H) and dedicated team

Call Time: UnlimitedLoyalty Offer: YesCO-Browse Education: X-sell,poss ABC value a service,e.g.,Advice

Response type: Customers desired channelE-mail Response Time: ImmediateResolution Cost: open-ended

Sapphire

(ca 5%)

Wait Time: <10secsTrade Wait Time: Virtual NoneCSA: Best Availablehigh skill(H:M;M:M)

Call Time: Not limitedLoyalty Offer: SituationalEducation: Advanced Site features product upsell

Response type: Customers desired channelE-mail Response Time: 4 hoursResolution Cost: <$150 with no escalation

Pearl

Wait Time: <30secsTrade Wait Time: Almost NoneCSA: Average(M:M;M:M)

Call Time: <4minutesLoyalty Offer: Situational Education: New product/Services or self sufficiencyTrade: More $ for broker assisted

Response type: e-mail or webE-mail Response Time: 12 hoursResolution Cost: <$30 with no escalation(Behavioral incentives)

CubicZirconiu

m

Wait Time: <2-3minTrade Wait Time: Very LowCSA: New Hire, Temp(L:L )

Call Time: <3 minutesLoyalty Offer: NoEducation: Self-sufficiencyOther: Pay for serviceTrade more $ for broker assisted

Response type: e-mail or webE-mail Response Time: 18 hoursResolution Cost: Avoid monetary resolution

UP or OUT

GROW

RETAIN

CustomizeReward customers for collaborating with you by tailoring whatever you possibly can for them: service, fees, billing, delivery, terms, product…- Low cost- High efficiency- Based on individual customer preferences

How mass customization works

Production and service delivery processes are modularizedComponent elements or services are mass producedConfiguration is digitally controlledFiner granularity of modules leads to larger number of possible “fits”

Mass customization of a credit card offering

Golf Nature NASCAR Art SportsTeam School

None $10 $15 $25 $35 $50

8% 10% 12% 14% 16% 18%

Weekly Bi-Weekly Monthly Bi-

MonthlyOrg. by

DateOrg. by

CategoryTravelClub

DiningClub

CardReg.

CreditIns.

AccidentInd.

Purchase Protectior

Design:

AnnualFee:

APR:

Billing:

AncillaryServices:

Standardized modules are combined into …

…custom configurations (7776 unique options)

The more modules,the greater your ability to customize.

NASCAR NoAnnual Fee

12% APR Billing Org.By Category

PurchaseProtection

Home office: mobile independent packageWireless 150 hoursLocal 30 hours freeLD 30 hours $.07

Internet $12/monthData(DSL)$59/month

Sample PackageBase

Product(full bundle)

50WirelessMinutes

Follow MeMessaging E-Payment

Yellow PageWeb Site

ProfessionalSvs 2 hr

50WirelessMinutes

50LD

minutes800

Number50

LocalMinutes

StandardMessaging

UnifiedMessaging

Follow meMessaging

ProfessionalService2 hours

ProfessionalService4 hours

ProfessionalService

continuous

Yellow PageBasic

Yellow PageAdvanced

Yellow PageWeb Site

StandardPayment E-Payment Custom

Billing

Product/Service Features• Communications bundle(wireless,LD,Local,Internet Access, High Speed Data)• Mobility package(Messaging,Professional Services,Yellow Pages)• Integration across all modes of communication Value proposition• A fully integrated,easy to use and manage package• Communications and related services that support your need to be mobile and accessiblePricing• Full-bundle discount(mobile magnet)• Add on’s for specific needs• Single billChannel• Web access with easy connection to toll-free specialized reps• Single point of contact

Mass customization musts1. Demonstration that you know the

customer (pre-filled out forms)2. Remembering transactions, history3. Remembering specific preferences4. Using knowledge to deliver individual

satisfaction5. Marking it EASY to be a customer6. Anticipating needs7. Delivering

Presentation topicsWhy are companies moving to CRM?What’s n it for you?1to1 Principles and best practicesOther challengesWhere do you go from here?

InfrastructureChange hurts …1. Start small2. Expand gradually, culture

changes take time3. Don’t forget about training4. Hold people accountable for the

right things5. Measure and reward the right

things!

SalesIdentify and track the right infor - Sales forces automationDifferentiate Spend the right time and effort on MVCs,

MGCs, and BZsInteract Drip irrigation, never asking the same thingCustomize Change behavior based on feedback

Call centerMove from cost center to profit centerSell more to customers (Increase SOC)Support for complicate productsAncillary services (Increase loyalty)Pre-qualify leadsLow-cost market researchImprove Complaint discovery and tracking Practice IDIC

1to1 web siteRequirements:- Identify and remember visitors- Differentiate visitors on each visit- Does this fast!- Tracks and interprets clickstreams- Remembers all this!- Customizes based on individual preferences

Top 5 Reasons CRM Efforts Failfrom the Home office in silicon valley5. There isn’t a wealth of experience in this

area. No one has got it down to a science.4. The inability to really effectively implement

strategy – even if you have the right strategy, process, and rules coding.

3. The company thinks they understand strategy and process well, but really don’t.

2. No strategy, tactics, business rules or processes in place.

1. The company has processes buy they are bad processes ( like any automation, CRM tools make good things better and bad things worse faster).

Presentation topicsWhy are companies moving to CRM?What’s in it for you?1to1 principles and best practicesOther challengesWhere do you go from here?

How you can make an impact1. Get senior management buy-in2. Encourage them to establish your multi-disciplinary

team3. Develop short and long term plans4. Help them start Small, “Light Campfires”5. Bring in Strategy/Change Management/Training

coaches6. Help ”decode” IT and marketing Needs and Languages7. Evaluate and prioritize projects. Look for a couple of

“Quick Wins”8. Document success, share across the company9. Start scaling the solution, Test, pilot, Test!10. Improve on plans and keep going!

Cost-effective 1to1

Below zeros

Most Growable Members

Most Valuable Members

Number of members

MemberValue

• Differentiate by value• Roll out 1 to 1 initiatives based on member value

1 to 1

What should you do real soon?1. Work on your database!2. Ask one question at each interaction3. Develop a strategy for your BZs4. Figure out who you really want to do business with 5. Find out why some customers who are buying less this

year6. Make those touch point improvements!7. Check out your VRU again8. Improve complaint handling9. Customize what you can, economically10. Ask your best customers what you can do

differently/better for them (DO IT)

What more help? www.1to1.com

Free weekly email newsletterDiscussion groups on different aspects of relationship marketingBest-practices databaseDownload tools, spreadsheets, from Enterprise One to One, The One to One FieldbookPartnersMwashington@1to1.com