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CUSTOMER RELATIONSHIP MANAGEMENTCUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIESCONCEPTS AND TECHNOLOGIES
Chapter 1: Introduction to CRMChapter 1: Introduction to CRMModule 1Module 1
Chapter Objectives
• Explain the four major perspectives on CRM: strategic, operational, analytical and collaborative.
• Identify the common misunderstandings about CRM.
De elop a definition of CRM• Develop a definition of CRM.
• Describe the six constituencies or parties that have a vested interest in CRM.
• Describe how CRM issues vary across industries, and
• Explain five generic models of CRM, particularly the IDIC and the Gartner Group models.
Taking a very neededvacation in the Bahamas
B i h
Imagine These Scenarios
Buying a home computer for the first time
MAR 4860 Lecture Worksheet Chapter 1 Module 1
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Selected Definitions of CRM 1
CRM is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way.
CRM i th f i ll t f CRM is the process of managing all aspects of interaction a company has with its customers, including prospecting, sales, and service. CRM applications attempt to provide insight into and improve the company/customer relationship by combining all these views of customer interaction into one picture.
Selected Definitions of CRM 2
CRM is an integrated approach to identifying, acquiring, and retaining customers. By enabling organizations to manage and coordinate customer interactions across multiple channels, departments, lines of business, and geographies, CRM helps organizations maximize the value of every customer interaction and drive superior corporate performance.
Selected Definitions of CRM 3
CRM is an integrated information system that is used to plan, schedule and control the pre-sales and post-sales activities in an organization. CRM embraces all aspects of dealing with prospects and customers, including the call center, sales force, marketing, technical support and field service. The primary goal of CRM is to improve long-term growth and profitability through a better understanding of customer behaviour. CRM aims to provide more effective feedback and improved integration to better gauge the return on investment (ROI) in these areas.
MAR 4860 Lecture Worksheet Chapter 1 Module 1
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Selected Definitions of CRM 4
CRM is a business strategy that maximizes profitability, revenue and customer satisfaction by organizing around customer segments, fostering behaviour that satisfies customers, and implementing customer-centric processes.
Core Definition of CRM
CRM is the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit. It is grounded on high quality customer-related data and enabled by information technology.
This is the best definition for CRM and the one you will This is the best definition for CRM and the one you will use in this class!use in this class!
Misunderstandings About CRM
1. CRM is database marketing - NO
2. CRM is a marketing process - NO
3. CRM is an IT issue - NO
4. CRM is about loyalty schemes - NO
5. CRM can be implemented by any company - NO
MAR 4860 Lecture Worksheet Chapter 1 Module 1
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CUSTOMER RELATIONSHIP MANAGEMENTCUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIESCONCEPTS AND TECHNOLOGIES
Chapter 1: Introduction to CRMChapter 1: Introduction to CRMModule 2Module 2
Type of CRMType of CRM Dominant Dominant CharacteristicCharacteristic
1 Strategic
Strategic CRM is a core customer-centric business strategy that aims at winning and keeping profitable customers.
Operational CRM focuses on the automation of customer-
Four Types of CRM
2 Operational
pfacing processes such as selling, marketing and customer service.
3 Analytical
Analytical CRM focuses on the intelligent mining of customer-related data for strategic or tactical purposes.
4 Collaborative
Collaborative CRM applies technology across organizational boundaries with a view to optimizing company, partner and customer value.
Business Orientations
1. Product-oriented businesses believe that customers choose products with the best quality, performance, design or features.
2. Production-oriented businesses believe that customers choose low-price products.
3. Sales-oriented businesses make the assumption that if they invest
1
enough in advertising, selling, public relations (PR) and sales promotion, customers will be persuaded to buy.
4. A customer or market-oriented company shares a set of beliefs about putting the customer first. It collects, disseminates and uses customer and competitive information to develop better value propositions for customers. A customer-centric firm is a learning firm that constantly adapts to customer requirements and competitive conditions.
MAR 4860 Lecture Worksheet Chapter 1 Module 2
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STRATEGIC: Customer-Centric Orientation
Voice of CustomerVoice of Customer
C t C t i
Customer Requirements
Value Propositions
1
Market ResearchMarket
Research
Competitor Analysis
Competitor Analysis
Customer-Centric Management
Systems
Structure Rewards & Compensation
Operational CRM
Marketing automationMarket segmentationCampaign managementEvent-based (trigger) marketing
Sales force automationAccount managementLead management
2EXAMPLE
The Limited
• Operates over 2,700 specialty stores.
• Had a database of over 25 million buyers and wanted to better understand customers and tailor marketing campaigns for all brandsLead management
Opportunity managementPipeline managementContact managementQuotation and proposal generationProduct configuration
Service automationCase ( incident or issue) managementInbound communications managementQueuing and routingService level management
campaigns for all brands.
• Installed CRM software & now differentiates and segments customers based on interests, prior to campaigns.
• Believes that key to successful CRM lies in applying analytics to a single, customer-centric database, allowing a 360o
view of customer.
Analytical CRM
Concerned with capturing, storing, extracting, integrating, processing, interpreting, distributing using and reporting customer-related data . WOW! Think about what each bolded word means.
Internal sources of customer data
3
Sales data (purchase history), financial data (payment history, credit score), marketing data (campaign response, loyalty scheme data) and service data.
External sources of customer data
Geo-demographic and life-style data from business intelligence organizations.
MAR 4860 Lecture Worksheet Chapter 1 Module 2
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Examples of Operational & Analytical CRM
Operational CRM Analytical CRM
A telephone customer service representative needs to access a customer record when she receives a customer request.
The telephone company wants to know which customers are signalingan intention to switch to a different supplier.
A hotel receptionist needs access to a guest’s history so that she can reserve the preferred type of room –smoking or non-smoking, standard or deluxe.
The hotel company wants to promote a weekend getaway to customers who have indicated their complete delight in previous customer satisfaction surveys.
A sales rep needs to check a customer’s payment history to find out whether the account has reached the maximum credit limit.
The sales rep wants to compute his customer’s profitability, given the level of service that is being provided.
Beneficiaries of Analytical CRM
The Customer
Analytical CRM can deliver timely, customized, solutions to the customer’s problems, thereby enhancing customer satisfaction.
The Company The Company
Analytical CRM offers the possibility of more powerful cross-selling and up-selling programs, and more effective customer retention and customer acquisition programs.
Here’s what some companies had to say:
http://www.youtube.com/watch?v=vAADrN9NUAQ&feature=related
http://www.youtube.com/watch?v=1iMOrAXk70o&feature=related
http://www.youtube.com/watch?v=pYIcz4a0evc&feature=related
CRM Constituencies
1. Companies implementing CRM
2. Customers and partners of those companies
3. Vendors of CRM software
4. CRM application service providers (ASPs)
5. Vendors of CRM hardware and infrastructure
6. Management consultants
We will also refer to this as the We will also refer to this as the CRM EcosystemCRM Ecosystem
MAR 4860 Lecture Worksheet Chapter 1 Module 2
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The IDIC Model
Identify who your customers are and build a deep understanding of them
Differentiate your customers to identify which customers have most value now and which offer most for the future.
Interact with customers to ensure that you understand customer expectations and their relationships with other suppliers or brands
Customize the offer and communications to ensure that the expectations of customers are met.
The Qci Model
The CRM Value Chain
The CRM Value Chain
CustomerPortfolioA l i
CustomerIntimacy
NetworkDevelopment
ValueProposition
ManageThe
Primary Analysis (SCOPE) Development CustomerLifecycle
Leadership and culture
Data and information technology
People
Processes
Primarystages
Supportingconditions
MAR 4860 Lecture Worksheet Chapter 1 Module 2
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Payne’s Five-Process Model
The Gartner Competency Model
1. CRM Vision: Leadership, Social Worth, Value Proposition
2. CRM Strategy: Objectives, Segments, Effective Interaction
Culture and StructureCustomer Understanding
People: Skills,Competencies
4. Organizational Collaboration3. Valued Customer Experience
Understand RequirementsMonitor Expectations S ti f ti C titi
8. CRM Metrics: Cost to Serve, Satisfaction, Loyalty, Social Costs
7. CRM Technology: Applications, Architecture, Infrastructure
6. CRM Information: Data, Analysis, One View Across Channels
5. CRM Processes: Customer Life Cycle, Knowledge Management
Incentives and CompensationEmployee Communications
Partners and Suppliers
Satisfaction vs.Competition Collaboration and Feedback
This is an important model. Be sure to read other material in Blackboard
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CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES
Chapter 2: Understanding RelationshipsChapter 2: Understanding RelationshipsModule 1
Chapter Objectives
Recognize a relationship.
Describe the attributes of successful relationships.
Explain the importance of trust and commitment within a relationship.
Explain why companies and customers are sometimes Explain why companies and customers are sometimes motivated to establish and maintain relationships with each other, and sometimes not.
Explain the meaning and importance of quantitative methods of value and perform simple calculations for LTV.
Explain all of the components of the satisfaction-profit chain – Figure 2.6.
How would you define a relationship?
Think about the BEST relationship you have.Think about the BEST relationship you have.
Answer these questions.Answer these questions.
What is a Relationship?
What are the elements of a great relationship?
What are the main interactions or activities involved in building and maintaining a strong customer relationship?
MAR 4860 Lecture Worksheet Chapter 2 Module 1
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What is a Relationship?
A relationship is composed of a series of interactive episodes between parties over time.
Episodes are time bound (they have a beginning and an end) and are nameable.
Episodes are composed of a series of interactions. An p sodes a e co posed o a se es o e ac o sinteraction consists of action, and the response to that action.
Is a relationship more than interaction-over-time?
What about emotional content ?
Do relationships have some type of connection, attachment or bond?
Relationships as Social Constructs
There are five general phases that customer-supplier relationships go through:
1. Awareness
2. Exploration
3. Expansion
4. Commitment
5. Dissolution
A Core Attribute: TRUST
Some things to keep in mind…
Benevolence. A belief that one party acts in the interests of the other.
Honesty. A belief that the other party’s word is reliable or credible.
Competence. A belief that the other party has the necessary expertise to perform as required.
Trust emerges as parties share experiences, and interpret and assess each other’s motives.
As they learn more about each other, risk and doubt are reduced.
MAR 4860 Lecture Worksheet Chapter 2 Module 1
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Another Core Attribute: COMMITMENT
Commitment arises from trust, shared values, and the belief that partners will be difficult to replace.
Commitment motivates partners to cooperate in order to preserve relationship investments.
Commitment means partners forgo short-term Commitment means partners forgo short term alternatives in favour of more stable, long-term benefits associated with current partners.
Commitment entails vulnerability, leaving partners open to opportunism.
MAR 4860 Lecture Worksheet Chapter 2 Module 1
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CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES
Chapter 2: Understanding RelationshipsModule 2
CRM Goals –Increasing Value
• To get more customers• To acquire profitable ones
• To keep them longer – retain them• To win back profitable ones
T li i t fit bl
Why are Companies Interested?
• To eliminate unprofitable ones
• To grow them into bigger & more profitable ones• To upsell additional products• To cross-sell other products and bundle them• To obtain referrals and word-of mouth benefits• To reduce service and operational costs
Source: Peppers & Rogers (2004). Managing Customer Relationships, P. 5
What Happens When A Customer Leaves?
Year
Company A (5% churn rate) Company B (10% churn rate)
Existing customers
New customers
Total customer
base
Existing customers
New customers
Total customer
base
2001 1000 100 1100 1000 100 1100
2002 1045 100 1145 990 100 1090
2003 1088 100 1188 981 100 1081
2004 1129 100 1229 973 100 1073
2005 1168 100 1268 966 100 1066
1,100 * 0.95 (5% churn rate) = 1,045
MAR 4860 Lecture Worksheet Chapter 2 Module 2
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Benefits from Managing Customer Retention
Reduced marketing costs
Fewer dollars need to be spent replacing churned customers
Better customer insight
Suppliers are able to develop a better understanding of customer requirements and expectations Customers also comecustomer requirements and expectations. Customers also come to understand what a supplier can do for them.
Consequently, suppliers become better placed to identify and satisfy customer requirements profitably, selling more product and service to the retained customer.
Over time, as relationships deepen, trust and commitment between the parties is likely to grow, and revenue and profit streams from customers become more secure.
The Customer Journey
SuspectDoes the potential customer fit your target market profile? (Also called lead)
ProspectThe customer fits the target market profile and is being approached for the first time.
First-time customer The customer makes a first purchase.
R t tThe customer makes additional purchases. Your
M j it
Advocates
Loyal Customers
Repeat customerp
offer plays a minor role in the customer’s portfolio.
Majority customerThe customer selects your company as supplier of choice. You occupy a significant place in the customer’s portfolio.
Loyal customerThe customer is resistant to switching suppliers, and has a strong positive attitude to your company or offer.
AdvocateThe customer generates additional referral dollars through positive word-of-mouth.
Suspects
Prospects
First-Time Customers
Repeat Customers
Majority Customers
MAR 4860 Lecture Worksheet Chapter 2 Module 2
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rofi
t
Price Prem ium
Referrals
Cost Savings
Revenue G row th
Base Profit
Acquis ition
Customer Retention: Link to Profitability
Com
pan
y Pr
Year
Source: Reichheld (1996)
Customer Value: The economic value of the customer relationship to the firm – expressed on the basis of contribution margin or net profit
How are Customer Value & CRM Linked?Why are Companies Interested?
CRM is the practice of determining corporate practices and methods that will maximize the lifetime value of each individual customer to the firm
Lifetime Value Defined
Lifetime value (LTV) is the present day value of all net margins earned from a relationship with a customer, customer segment or cohort.
To compute LTV, all historic net margins are compounded up to today’s value and all future net margins are discounted back t t d ’ lto today’s value.
Estimates of LTV potential look to the future only, and ignore the past.
A customer that appears to be valuable on the basis of the gross margins generated will most likely be less profitable once cost-to-serve the customer is taken into account.
MAR 4860 Lecture Worksheet Chapter 2 Module 2
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Lifetime Value (LTV)
PER UNIT EXPECTATIONS
Price
Cost of goods
Contribution margin
Direct expenses
All t d t
$100
-10
$90
-10
10Allocated costs
Expected net profit
X number of units purchased per time frame (year)
X number of time frames
Unadjusted lifetime profit expectations
-10
$70
x12
x 5
$4,200
Value of money over hasn’t been taken into consideration
Effect of Discounting on LTV
Undiscounted profit over 5 years
Year 0 -$50
1 +$30
2 +$40
3 +$55
Year 0 -$50.00
1 +$30/1.15 = +$26.092 +$40/1.152= +$30.253 +$55/1.153= +$36.16
Discounted profit over 5 years (15% discount rate)
3 +$55
4 +$72
5 +$88
$235
3 $55/1.15 $36.164 +$72/1.154= +$41.175 +$88/1.155= +$43.76
$127.43
The net present value of 5 years of profit earned from this customer is $127.43
Cohort Value: Impact of Customer Retention Rate
Year Profit per Customer
($)
NPV at 15% Discount
($)
Customer Retention Rate (%)
# of Customers
Total Annual Profit ($)
0 -100 100,000 -10,000,000
1 50 43.48 60 60,000 2,608,800
2 70 52.93 70 42,000 2,223,062
3 100 65.75 75 31,500 2,071,125
4 140 80.00 80 25,200 2,016,000
5 190 94.53 85 21,420 2,024,776
6 250 108.23 90 19,278 2,086,364
7 320 120.30 92 17,736 2,133,654
8 400 130.72 94 16,672, 2,179,346
9 450 127.84 95 15,838 2,024,744
10 500 123.15 96 15,204 1,872,372
MAR 4860 Lecture Worksheet Chapter 2 Module 2
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KEY Points About LTV
So why is LTV so important? To properly target our sales and retention efforts
To separate those that are profitable from those hurting profits.
To understand: o where to put retention dollars
o the value of each retention strategy
o where to put acquisition dollars
o how much to spend on acquisition
What do you need to calculate the LTV? Insight into future buying behavior
Probabilities of buying products 1-n over the next X time periods
Margins earned from those products
Periodic costs of customer management
Plus, for new customers - costs of customer acquisition
And finally - Discount rate
Why Companies DON’T Want Relationships?
1. When they fear loss of control. Relationships are bi-lateral arrangements, which involve giving up unilateral control over resources.
2. When exits costs are high. Not all relationships survive. It is not necessarily easy or cost-effective to exit a
l ti hirelationship.
3. Resource commitment. Relationships require the commitment of scarce resources such as people, time and money.
4. When opportunity costs are high. If resources are committed to one customer relationship, they cannot be used for another
Why Business Customers Want Relationships?
1. When the product or its applications are complex, for example, networking infrastructure.
2. When the product is strategically important or mission-critical, for example, core raw materials supply for a manufacturer.
3 Wh th d t i i t f3. When there are down-stream service requirements, for example, for machine tools.
4. When the financial risk is high, for example, in buying large pieces of capital equipment.
5. When reciprocity is expected. A financial audit practice may want a close relationship with a management consultancy, so that each party may benefit from referrals by the other.
MAR 4860 Lecture Worksheet Chapter 2 Module 2
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Why Consumers Want Relationships?
1. Recognition. Customers may feel more valued when recognised and addressed by name.
2. Personalization. Products or services can be customized.
3. Power. Relationships with suppliers can be empowering.
4 Risk reduction A relationship can reduce or even perhaps4. Risk reduction. A relationship can reduce, or even perhaps, eliminate perceived risk.
5. Status. Customers may feel that their status is enhanced by a relationship with a supplier.
6. Affiliation. People’s social needs can be met through commercially based, or non-commercially based, relationships.
Why Business Customers DON’T?
1. Fear of dependency
2. Lack of perceived value in the relationship
3. Lack of confidence in the supplier.
4. Customer lacks relational orientation
5. Rapid technological changes
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CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES
Chapter 2: Understanding RelationshipsChapter 2: Understanding RelationshipsModule 3
The Satisfaction-Profit Chain
Customer Customer SatisfactionSatisfaction
Customer Customer LoyaltyLoyalty
Business Business PerformancePerformance
Understand customer requirements
Meet customer expectations
Deliver customer value
Behavioral loyalty
Attitudinal loyalty
Revenue growth
Share of customer
Customer tenure (retention)
Customer Behavior
E t ti
EXPECTATIONS EXPERIENCE = EVALUATIONx
Before Purchase Purchase Post-Purchase
Expectations Exceeded
Expectations Met
Expectations Not Met
• Spoken Promises
• Perceived Alternatives
• Unspoken Promises
• Past Experiences
• Personal Values
• Personal Needs
• Word of Mouth
• Outcomes
• Processes
• Judgments
MAR 4860 Lecture Worksheet Chapter 2 Module 3
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Product Quality
Price CUSTOMER SATISFACTION
Relatively easy for competitors to imitate
Drivers of Customer Loyalty
CUSTOMER LOYALTY
Service Quality
Perceived Value
ReliabilityResponsivenessAssuranceTangiblesEmpathy
CUSTOMER DELIGHT
Commitment or attachment to a brand,
store, manufacturer, service provider, or other
Behavioral/Functional Commitment (objective & measurable)
Is the customer active?
How much time is spent?
What’s the proportion of visits/purchase frequency?
How does the customer cooperate?
Word of mouth (referrals)?
Measuring Customer Loyalty
RFM – KEY MEASURE – stands for Recency, Frequency and Monetary Value
Attitudinal/Emotional Commitment (subjective & difficult to capture & measure)
Trust
Beliefs and psychological commitment - predisposition
Preferences and intent to buy (called propensity)
Emotional bonding
Switching cost is too high – too much has been invested
Behavioral outcomes – satisfaction and service quality
Levels of Customer Loyalty
Level of Loyalty Purchases Over Time
Undivided Loyalty 1 1 1 1 1 1 1 1 1
Occasional Switcher 1 1 1 2 1 1 3 1 1
Switched Loyalty 1 1 1 1 1 1 2 2 2
Divided Loyalty 1 1 1 2 2 2 1 1 1
Indifference 1 2 3 4 2 1 3 4 3
Source: Zikmund, McLeod, and Gilbert (2003).
MAR 4860 Lecture Worksheet Chapter 2 Module 3
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highCRM
Business Performance
share of customer
spend
few
low
manyNumber of customers
Traditional marketing
American Customer Satisfaction IndexAmerican Customer Satisfaction Index
Source: http://www.theacsi.org/
American Customer Satisfaction IndexAmerican Customer Satisfaction Index
Source: http://www.theacsi.org/
MAR 4860 Lecture Worksheet Chapter 2 Module 3
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American Customer Satisfaction IndexAmerican Customer Satisfaction Index
Reichheld (2001) developed a tool to measure loyalty called the Loyalty Acid Test. This tool was designed to monitor and diagnose the health of key relationships. You can view a sample of it at:
http://www.loyaltyrules.com/loyaltyrules/acid_test_customer.html
Reichheld expanded on one of the questions from the Loyalty Acid Test. In his book The Ultimate Question, Reichheld (2006) explains how a customer’s
Examples of Loyalty Measures
likelihood of recommending a company to a friend is a key indicator of loyalty. The metric, called Net Promoter Score or NPS, categorizes your customers into three groups: promoters, passives, and detractors. NPS is considered a predictor of good profits and true growth. For more, visit:
http://www.netpromoter.com/np/index.jsp
http://www.destinationcrm.com/Articles/PrintArticle.aspx?ArticleID=55703
Looking for Loyalty?CRM Magazine
MAR 4860 Lecture Worksheet Chapter 2 Module 3
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CUSTOMER RELATIONSHIP MANAGEMENTCUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIESCONCEPTS AND TECHNOLOGIES
Chapter 3: Planning & Implementing CRM Chapter 3: Planning & Implementing CRM ProjectsProjects
Module 1Module 1
Chapter Objectives
To identify the five major phases in a CRM implementation
Recognize a number of tools and processes that can be applied in each phase of ancan be applied in each phase of an implementation.
Explain the importance of project management and change management throughout the implementation process.
Five Major Phases of a CRM Project
Strategy Foundation Needs & Partner
Implement Evaluate
11 22 33 44 55
MAR 4860 Lecture Worksheet Chapter 3 Module 1
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Develop the CRM Strategy
Situation analysis
Commence CRM education
Develop the CRM vision
Set priorities
Strategy
Establish goals and objectives
Identify people, process and technology requirements
Develop the business case
Gartner Outlines 3 Steps to a Successful CRM Strategy: The economic upswing spawns a return of the $100 million CRM project, according to a Gartner analyst. By Juan Martinez - Posted Apr 21, 2010http://www.destinationcrm.com/Articles/PrintArticle.aspx?ArticleID=66669
The deliverable of this phase of CRM planning is a CRM Business Case and Proposal. You can also refer to this as the CRM Strategic Plan or Strategy. The key components of a CRM Strategic Plan are:
Summary of Current Situation (where we are today)
Mission statement (who we are and what we do)
Vision statement (where we are going)
The CRM Strategic Plan & Business Case
Vision statement (where we are going)
Summary of Desired State (what we are going to look like)
Gaps and opportunities (what we must change)
Goals and objectives (what we want to accomplish and why)
Critical success factors (how we will measure our success)
Strategies (how we are going to achieve our goals)
Resources and requirements (what we need to get there)
Costs and Benefits (what will it cost us and what will we gain)
The Eight Building Blocks of Customer-Centricity
1. Customer Vision
3. ValuedCustomer
4. OrganizationalCollaboration
2. Customer-Centric Strategy
Source: Gartner Group
8. Metrics
CustomerExperience
Collaboration
5. Customer Processes
7. Technology, Including CRM
6. Customer Information
MAR 4860 Lecture Worksheet Chapter 3 Module 1
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Situation Analysis: Customer Strategy Cube
Channels
O4
AB
C
Customers or segments
Offers
1 2 3 4 5
O1
O2
O3
Situation Analysis: The One-to-One Gap Tool
The One-to-One Gap Tool rates the company culturally and organizationally based on the
Customer Relationship Management
TThhee OOnnee--ttoo--OOnnee GGaapp TTooooll Source: Is Your Company Ready for One-to-One Marketing? By Don Peppers, Martha Rogers & BobDorf, Harvard Business Review. January-February 1999.
Instructions: 1) This exercise is to be administered to employees at various levels and in various functions in your
company. It is designed to capture a robust analysis of how your company sees itself both culturally and organizationally.
2) It should also be given to a representative group of customers, with the language tailored
appropriately, in order to expose the gap between internal and external perceptions.
3) For each question listed below, select the statement that most closely reflects your opinion of the company as you view it today – not as you think it should be or it might be in the future.
CUSTOMER RELATIONSHIPS Question 1. How effectively does the company differentiate its customers?
1. We do not differentiate among customers.
2. We try to differentiate among customers.
3. We collect and use information gleaned from interactions with customers to differentiate each customer and
Customer Relationship Management
TThhee OOnnee--ttoo--OOnnee GGaapp TTooooll Source: Is Your Company Ready for One-to-One Marketing? By Don Peppers, Martha Rogers & BobDorf, Harvard Business Review. January-February 1999.
Instructions: 1) This exercise is to be administered to employees at various levels and in various functions in your
company. It is designed to capture a robust analysis of how your company sees itself both culturally and organizationally.
2) It should also be given to a representative group of customers, with the language tailored
appropriately, in order to expose the gap between internal and external perceptions.
3) For each question listed below, select the statement that most closely reflects your opinion of the company as you view it today – not as you think it should be or it might be in the future.
CUSTOMER RELATIONSHIPS Question 1. How effectively does the company differentiate its customers?
1. We do not differentiate among customers.
2. We try to differentiate among customers.
3. We collect and use information gleaned from interactions with customers to differentiate each customer and
EXPERT OPINION
Source: Peppers, Rogers, & Dorf (1999)
following criteria:to evaluate the importance of each relationship.
4. We have a continuously updated customer knowledge database that provides all the critical business information about our relationships with individual customers.
Question 2. What steps has the company taken to improve the total experience of its customers?
1. We pay little or no attention to the total experience of customers.
2. We know all the points where customers are in contact with the business, and we manage these areas effectively.
3. We conduct frequent surveys with selected customers and make improvements based on their feedback.
4. We have a continual dialogue with each customer and use well-developed methods to improve our relationships.
Question 3. How effectively does the company measure and react to customers’ expectations?
1. We make no effort to understand our customers’ expectations.
2. We have some idea of our customers’ expectations and use them in building relationships.
3. We periodically solicit customers’ input about expectations and take actions to improve the relationships where possible.
4. We work as a team with our customers to ensure that their expectations are met or exceeded.
Question 4. How effectively does the company understand and anticipate customers’ behavior?
1. We pay little or no attention to the behavior of our customers.
2. We understand the trends and buying patterns of our customers and consider them when making critical decisions.
3. We collect data on our customers’ preferences and other behaviors and use that information in our business planning.
4. We maintain a profile of each customer and refer to it when dealing with customers.
to evaluate the importance of each relationship.
4. We have a continuously updated customer knowledge database that provides all the critical business information about our relationships with individual customers.
Question 2. What steps has the company taken to improve the total experience of its customers?
1. We pay little or no attention to the total experience of customers.
2. We know all the points where customers are in contact with the business, and we manage these areas effectively.
3. We conduct frequent surveys with selected customers and make improvements based on their feedback.
4. We have a continual dialogue with each customer and use well-developed methods to improve our relationships.
Question 3. How effectively does the company measure and react to customers’ expectations?
1. We make no effort to understand our customers’ expectations.
2. We have some idea of our customers’ expectations and use them in building relationships.
3. We periodically solicit customers’ input about expectations and take actions to improve the relationships where possible.
4. We work as a team with our customers to ensure that their expectations are met or exceeded.
Question 4. How effectively does the company understand and anticipate customers’ behavior?
1. We pay little or no attention to the behavior of our customers.
2. We understand the trends and buying patterns of our customers and consider them when making critical decisions.
3. We collect data on our customers’ preferences and other behaviors and use that information in our business planning.
4. We maintain a profile of each customer and refer to it when dealing with customers.
Customer Relationships Partnerships Knowledge Strategy Employee Management Processes Technology Competitive Strategy
CRM Education
The Institute of Direct Marketing - http://www.theidm.com/
American Marketing Association - http://www.marketingpower.com/
Websites and online communities
● http://www.1to1media.com/Home.aspx
This is one of the most used websites in this course. In order toThis is one of the most used websites in this course. In order to search for articles and access them, you will need to register. Please be sure to SIGN IN at the top right hand corner and register, using your FIU email.
● http://www.destinationcrm.com/
● http://www.customerthink.com/
● http://www.crm2day.com/
● http://searchcrm.techtarget.com/
MAR 4860 Lecture Worksheet Chapter 3 Module 1
3
A vision must focus on the future and serve as a concrete foundation for the organization. Unlike goals and objectives, a vision does not fluctuate from year to year but serves as an enduring promise A CRM
“A CRM vision is a powerful means of creating shared values and a customer focus…in a sense, these shared values are the ‘glue’
CRM Vision
but serves as an enduring promise. A CRM vision should paint a clear picture of what your company will look like to your customers when you have achieved your CRM objectives. A vision must give the people the feeling that their lives and work are intertwined and moving toward recognizable, legitimate goals.
shared values are the glue that holds the organization together.”
Paint the picture…
Source: Payne (2006)
The Ritz-Carlton is a place where the genuine care and comfort of our guests is our highest mission.
We pledge to provide the finest personal service and facilities for our guests who will always enjoy a warm, relaxed, yet refined ambience.
Ritz-Carlton Hotels
Examples of CRM Visions
y j y , , y
The Ritz-Carlton experience enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests.
Ritz-Carlton Gold Standards
Check out the company’s site & read the Gold Standards:
http://www.ritzcarlton.com/corporate/about_us/gold_standards.asp
Examples of CRM Visions
Harrah’s Entertainment
"Each of our brands will be the overwhelming first choice for casino entertainment of its targeted customers.“
Harrah’s Code of Commitment
http://www.harrahs.com/images/PDFs/Harrahs_Code_of_Commit_2006_English.pdf
**Watch the video interview with the CIO of Harrah’s posted under Supplemental Materials
MAR 4860 Lecture Worksheet Chapter 3 Module 1
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More CRM Vision Statements
We will work with our members in a trust-based relationship to represent their interests, and to satisfy their needs for high value, security, and peace of mind in motoring, travel, and home.
Nurturing relationships one cup at a time. Deliver a customer experience that consistently developscustomer experience that consistently develops enthusiastically satisfied customers in every market in which we do business.
Build and maintain long-term relationships with valuable customers by creating personalized experiences across all touch-points and by anticipating customer needs and providing customized offers.
Nothing is more important than making every user successful.
Setting Priorities
Quick Hits StrategicHigh
4
56
Prioritization Matrix
Considerations No Go
Benefits
ImplementationEasy Difficult
Low
2 3
4
1
7
Strategic Goals for CRM Projects
Acquire new customers
Increase profit per customerIncrease sales revenues
Increase customer loyalty
Increase customer retention
Increase customer satisfactionEnhance cross/up-sell opportunities
Loyalty,Satisfaction
0 20 40 60 80
OtherReduce cost of marketing
Increase partner loyalty
Increase profit marginsImprove lead quality and conversion
Reduce costs of sales
Increase acquisition of new customers
Increase marketing campaign response ratesAcquire new customers
Cost Reduction
Revenue Enhancement
Source: Gartner Group
MAR 4860 Lecture Worksheet Chapter 3 Module 1
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Examples of CRM Goals & Objectives
Growth in RevenuesRetain existing customersObtain new customersIncrease customer profitability
Reduction in ExpensesRealize sales efficienciesRealize service efficienciesRealize marketing efficiencies
Objective Metric Target Performance
Retain existing
customers
Retention rate 89%
Recognize operational efficiencies
Increased LoyaltyEnhance cross-sell opportunitiesIncrease customer tenureIncrease referrals
Obtain new customers
Increase customer
profitability
New customer acquisition rate
New profit per customer
10%
$16,000
Objectives must be stated in quantifiable, or measurable, terms and must include a deadline for completion. They should spell out how much of what kind of performance by when.
Example of CRM Business Case Worksheet
CRM Objectives
Strategies Business Requirements Resources Enablers
Retain existing customers
Provide 24-7 service
Implement a 360o view of customer
Develop consistent customer experiences across all channels
Accurately measure the CLV each customer can potentially create for the company
Capture accurate and relevant customer information in one central
Marketing Department (note specific people)
Operations Department (note specific people)
Business consultant for process reengineering
CRM technology – data warehouse
Operational CRM
Analytical CRM
Process analysis
Create customized offerings
place
Clearly understand our customer facing processes – where they are and how they should be handled
Shorten service processes
Use predictive modeling to enable customized product offerings and messages
Retain quality staff for customer-facing processes
Technology consultant
Human Resources representative
Financial Department representative
Experience mapping
Customer Inventory Assessment
Employee training on customer facing processes and formal process improvement procedures
CRM metrics for each critical customer touch point
Employee performance evaluation & compensation program based on customer metrics
Understanding CRM Project Costs
CRM software licence fees
Systems integration
Infrastructure costs, new desktop laptop or
Helpdesk support
Change management
Project management
Process reengineeringdesktop, laptop or handheld devices
Software configuration
Data modelling
Beta-testing
Software upgrades
Training
Consulting services
Opportunity costs
MAR 4860 Lecture Worksheet Chapter 3 Module 1
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Projecting Incremental Costs: An Example
Cost Component Sunk Costs Ongoing Annual Costs
Laptop Hardware & Accessories for 100 Sales Reps
Unit cost = $1,100
Accessories/unit = $300
Total cost = $140,000
Repairs/new hires = $15,000
Travel for Laptop Deployment & Training for 100 Sales Reps
Average airfare = $500
3 nights @ $100 = $300
Meals & miscellaneous = $100
New hires/turnover = $5,000
Total cost = $90,000
SFA Software 250 licenses @ $500 = $125,000
Customization = $250,000
Technical training = $15,000
Total cost = $390,000
Upgrades = $3,000
IT Department Support One developer/analyst = $50,000 Two programmers = $170,000
TOTAL $670,000 $193,000
Projecting Benefits: An Example
Benefit Component Savings/Growth
From Productivity Gains Preparing Proposals = 200 hrs/year
Preparing monthly reports = 100 hrs/year
Updating files manually = 50 hrs/year
Researching prospect information = 100 hrs/year
Sending documentation = 80 hrs/year
Total hours = 530 hours for 80 Sales Reps = 42,400 hours
Forecasted Revenues per hour = $25
Projected Revenue Increase = $1,060,000
From Revenue Growth
(Better quality proposals, faster sales cycle times, improved quality of leads)
Forecasted Revenues = $15,000,000
Incremental revenue increase = 10%
Projected Revenue Increase = $1,500,000
From Reduction in Operating Expenses
Word Processing Center = $120,000
Travel Expenses = $100,000
Sales Centers – Rent & Overhead = $500,00
Business Case Summary Data
CRM Business Case Prepared by: Customer Connect Australia
Benefit - Cost Summary Year 1 Year 2 Year 3 Year 4 Year 5Total Bottom Line Benefits Per Year $150,000 $2,500,000 $2,900,000 $3,100,000 $3,100,000Cumulative Benefits, Present Value $150,000 $2,500,000 $4,950,000 $7,100,000 $9,100,000Weighted Average Total Costs Per Year $1,500,000 $1,100,000 $90,000 $250,000 $110,000Cumulative Costs, Present Value $1,500,000 $2,550,000 $2,600,000 $2,800,000 $2,900,000Net Cash Flow -$750,000 $700,000 $1,400,000 $1,450,000 $1,500,000Cumulative Net Present Value Cash Flow -$750,000 -$25,000 $1,100,000 $2,200,000 $3,100,000
Internal Rate of Return 129%Net Present Value, 5 Years $3,100,000Return on Investment, Present Value, 5 Years 107%P b k P i d Y 2 0Payback Period, Years 2.0
Cumulative Net Present Value Cash Flow
-$1,000,000
-$500,000
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
Year 1 Year 2 Year 3 Year 4 Year 5
MAR 4860 Lecture Worksheet Chapter 3 Module 1
7
Best Buy: An Example
Best Buy (2006) strives to make life fun and easy for millions of people across North America. Our mission is to give our customers great experiences –whether they are shopping for consumer electronics, home-office products, entertainment software and appliances, or using those products and related-services in their homes and offices.
Best Buy is growing its business by (goals):
Strategy
Best Buy is growing its business by (goals): Converting more stores to the customer-centric operating model.
Adding new stores to better serve existing and new markets.
Expanding and strengthening service offerings.
Boosting employee retention in order to deliver better customer experiences while increasing productivity.
Adding individualized marketing capabilities to our skills in mass marketing.
Simplifying our internal processes so they respond better to changing customers’ needs.
MAR 4860 Lecture Worksheet Chapter 3 Module 1
8
CUSTOMER RELATIONSHIP MANAGEMENTCUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIESCONCEPTS AND TECHNOLOGIES
Chapter 3: Planning & Implementing CRM Chapter 3: Planning & Implementing CRM ProjectsProjects
Module 2Module 2
Build Project Foundations
Identify stakeholders
Establish governance structures
Identify change management needs
Identify project management needs
Build
Identify project management needs
Identify critical success factors
Develop risk management plan
Stakeholders in CRM Projects
Stakeholders include any party that will be impacted by the adoption of CRM
● senior management
● users of any new system, process or technology
● marketing staff● marketing staff
● sales people
● customer service agents and representatives
● channel partners
● customers
● IT specialists
MAR 4860 Worksheet Chapter 3 Module 2
1
CRM Project Governance Structure
Exec Sponsor
S teering C om m ittee
C EO
Sales Exec M arketing Ex ec Program D irec tor
IS L d
C R M C onsultant
S ys tem s
External R es ources
ProgramTeam
Sales Lead
M arketing Lead
IS Lead
Support Lead
N am eTitle
S ys tem sImplem enter
N am eTitle
Key U s ers
N am eTitle
Key U s ers
N am eTitle
Key U s ers
CustomerAdvocate
Change Management Ingredients
Changing people's behavior brings the biggest return on investment for CRM. The five ingredients for successful CRM change management are:
1. Leadership and Sponsorship
2. Skills and Competencies
EXPERT OPINION
All CRM initiatives and employee engagement in them must run into
3. Knowledge
4. Organization
5. Incentives
parallel with change management and project management. Change management is concerned with people, systems and organizational change.
Source: Payne (2006)
1. DENIAL
2. EXPLORATION
3. RESISTANCE
4. ACCEPTANCE
Managing change doesn’t always guarantee success.
The Four Stages of Change
EXPERT OPINION
Morale/ Productivity/ Commitment
Time
Unmanaged Change
Managed Change
Change Introduction
But ignoring the need to manage change guarantees failure.
Peter DruckerManagement Guru
MAR 4860 Worksheet Chapter 3 Module 2
2
Internal Marketing Plan
1. Identify your segments, target audiences or user groups
2. For each group, define:
● Needs, expectations and benefits associated with CRM – ‘what’s in it for them?’
EXPERT OPINION
Marketers need to keep all employees aware of current promotions and campaigns,
● Marketing objective
● The target message
● The 7Ps
3. Develop a roll-out marketing plan over the lifetime of the CRM initiative
as well as educate them on the company's vision and desired brand image.
Source: McMaster (2002)
7
The Buy-In Matrix
tual
Buy
-In
Bystanders ChampionsYes
EXPERT OPINION
A CRM Initiative's Bermuda TriangleTwo best practice
Inte
llec
t
Emotional Buy-In
Weak Links Loose CannonsNo
No Yes
psuggestions for preventing--permanently--user-adoption disappearance.
http://www.destinationcrm.com/print/default.asp?ArticleID=6824
8
Identify Project Management Needs
Role of CRM Program Director or Project leader
Sets out steps of journey from situation analysis to achievement of CRM vision, goals and objectives
Tool kit: Gantt charts Critical Path Analysis (CPA) Tool kit: Gantt charts, Critical Path Analysis (CPA), Program Evaluation and Review Technique (PERT) or network diagrams .
MAR 4860 Worksheet Chapter 3 Module 2
3
Gantt Chart Example
Critical Success Factors
Critical Success Factor People Process Technology
1. Senior management commitment X
2. Creation of a multi-disciplinary team X X
3. Objectives definition X
4. Interdepartmental integration X X
5. Communication of the CRM strategy to staff X X
6. Staff commitment X
7. Customer information management X
8. Customer service X X
9. Sales automation X X
10. Marketing automation X X
11. Support for operational management X X X
12. Customer contact management X X
13. Information systems integration X
Risk Management Plan
Gartner has identified a number of risks that threaten project success● management that has little customer understanding or involvement
● rewards and incentives that are tied to old, non-customer objectives
● organizational culture that is not customer-focussed
● limited or no input from the customers
● thinking that technology is the solution
● lack of specifically designed, mutually reinforcing processes;
● poor-quality customer data and information
● little coordination between departmental initiatives and projects
● creation of the CRM team happens last, and the team lacks business staff
● no measures or monitoring of benefits and lack of testing
MAR 4860 Worksheet Chapter 3 Module 2
4
CUSTOMER RELATIONSHIP MANAGEMENTCUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIESCONCEPTS AND TECHNOLOGIES
Chapter 3: Planning & Implementing CRM Chapter 3: Planning & Implementing CRM ProjectsProjects
Module 3Module 3
Needs Specs & Partner Selection
Process engineering
Data review and gap analysis
Initial technology needs specification, and research alternative solutions
Needs & Partner
Write request for proposals (RFP)
Call for proposals
Revised technology needs identification
Assessment and partner selection
EXPERT OPINION
Process Defined
A process is made up of INPUTS and a series of activities that create an expected result or value-added OUTPUT.
Value addedTo get a good feel for how ambitious your CRM plans should be first take a
OUTPUT
KnowledgeMaterialsMachinesLaborManagementCapital
Goods or Services
INPUTS Process
CustomerFeedback
should be, first take a serious look at your existing CRM processes—the way in which you market to, sell to, and service customers. The better defined your processes are, the greater your chances of success in leveraging CRM technology.
Source: Dickie (2002)
3
MAR 4860 Worksheet Chapter 3 Module 3
1
An Example - Getting to Work/School
INPUTS PROCESS OUTPUTS
Go to the bus station
Get on the right bus
©2006 Nancy A. Rauseo
Give driver correct change
Take a seat, if available
Follow the bus route
Get off at 650 Park Avenue
Enter office building
EXPERT OPINION
Making Spicy Hot ChocolateMaking Spicy Hot Chocolate
“The common denominator of CRM-related business processes is that they should
SPICY HOT CHOCOLATE
1 cup (8 oz.) milk
1 cup (8 oz.) strong coffee
1 oz. sweetened baker’s chocolate
½ t. cinnamon
CUSTOMER’S EXPECTED
RESULT
INPUTS
ACTIONS
processes is that they should be designed around the customer’s perspective with the ultimate goal of improving the customer’s experience.”
Source: Dyché (2002)
4 drops of Tabasco sauce
In a saucepan, combine the first three ingredients. Heat over a low flame, stirring, until the chocolate is melted. Do not allow mix to boil. Remove from heat; add cinnamon and Tabasco. Serve immediately.
INPUTS
Types of Processes 1Types of Processes 1
Vertical Process
Located entirely within a department or business function
One department is involved or affected by the process
An example is the ‘facilities maintenance’ process within a company
Horizontal or Cross-Functional Process
Crosses over several departments of the company
An example is the ‘new product development’ process – almost all functions need to be involved in it
Primary Process
Part of core business - has major implications for the customers and company
An example is the ‘logistics’ process in a courier company
Secondary Process
Has minor cost or revenue implications
MAR 4860 Worksheet Chapter 3 Module 3
2
Types of Processes 2Types of Processes 2
Front-Office Process
Also called customer-facing processes, i.e. those encountered by the customers
Example are the ‘complaint management’ or the ‘sales’ processes
Usually cross-functional in nature
Critical because they directly impact the customer’s perception of service
Back-Office ProcessBack Office Process
Located behind the scenes or sight of customers
Examples are a ‘data quality’ process or ‘management approval’ process
Indirectly can impact the customer’s perception of the company
May be INPUTS to front-office processes
An Example of Sales Business Processes
Define Segmentationand Coverage Plans
Review Corporate Objectives
Determine Segmentation Approach
Establish Target Segments
Analyse Profitability by Segment
Determine Channel Strategy by Segment
Map Segments to Territories
Determine Resource Requirements by Channel and Territory
Conduct Sales Financial Planning
Define Territories and Assignment Rules
Define Corporate Territories
Define Corporate Assignment Rules
Validate Territory Assignment Rules
Approve Territories and Assignment Rules
Publish Territories and Assignment Rules
Realign Sales Force
Define Regional Assignment Rules
Manage PipelineConduct Sales Financial Planning
Review Corporate Objectives
Establish Growth Targets
Establish Profit Targets
Establish Cost Targets
Establish Budget
Establish Annual Headcount Plan
Plan Sales Force Quotas (Call BP)
Establish Sales Force Policy and Procedures
Establish Pricing Guidelines
Establish Contract Guidelines
Establish Approval Matrices
Establish Documentation Guidelines
Audit and Enforce
Review Pipeline Status
Prioritise Critical Opportunities
Build Action Plan
Deploy Resources
Monitor and Adjust Plan
Coach Team Members
Establish Consensus Forecast
Export Forecast Data
Perform Demand Planning
Conduct Sales and Operations Planning Meeting
"Disaggregate" Consensus Forecast
Publish Consensus Forecast
Order Fulfilment Process
MAR 4860 Worksheet Chapter 3 Module 3
3
Campaign Management Process
Customer phones in Check scores
Offer product to high scores
Send application f
Open account on phone
No interest
Buy product
2
form
Out bound phone follow-up
Mail follow-up
Do nothing
Check account balance
(numbers are days)
427
7
Process Ratings
Best practice (superiority)
The process is substantially defect-free and contributes to CRM performance. Process is superior to comparable competitors and other benchmarks
ParityA good process which largely contributes to CRM performance
StabilityAn average process which meets expectations with no major problems but which presents opportunities for improvement
RecoverabilityThe process has identified weaknesses which are being addressed
CriticalityAn ineffective and/or inefficient process in need of immediate remedial attention
Data Review and Gap Analysis
Customer-related data is used for strategic, operational, analytical and collaborative CRM purposes
Identify the information needed
Identify the information available
Identify the gap
Consider data quality issues
MAR 4860 Worksheet Chapter 3 Module 3
4
Initial Technology Needs Specification and Research Alternative Solutions
Identify applications and functionality that meets business case requirements
● Visit vendor websites
● Join online communities and learn from members
● Visit online CRM exhibitions
● Read case studies
● Join benchmarking group
Consider build, buy or rent decision
● Consider total cost of ownership
Most users opt for an on-premise (installed) CRM system or a hosted (online) system.
Sales Force AutomationLead ManagementSales ConfigurationOrder ManagementPricing ManagementSales CompensationSales Performance Mgmt.
Sales
Analytics
Segmentation
Lead Mgmt.Loyalty Mgmt.
Marketing Resource Mgmt.Enterprise Marketing Mgmt.
Marketing Performance Mgmt.Partner Marketing
Data MiningPerformance Mgmt.
Dashboards/KPIsPersonal Productivity
Customer Value AnalysisS l S i W b
Marketing
Community ManagementService AnalyticsDesktop ProductivityContact Center/Call CenterW kf O ti i ti
E-marketingCampaign Mgmt.
CRMApplicationMind Map
Field Service Information/
Infrastructure
CustomerService
E-CommerceWeb StorefrontCatalog, Pricing
InventorySales Partner Mgmt.
Sales, Service, WebField Service Analytics
In-Line, Event Driven
Workforce Optimization•E-Learning•Workforce Mgmt.•Q/A, Monitoring
Self-Service/E-Service•Knowledge Mgmt.
•SurveysUnified CommunicationsTrouble Ticketing/Case Mgmt.Enterprise Feedback Mgmt.
Field Force OptimizationWireless Mobility
Parts PlanningContract/Warranty
Remote MonitoringFleet Management
Dispatch and RepairBusiness Process Mgmt.
•E-Mail Response
Customer Data Integration: CDI
Product Information Mgmt.: PIM
Business Process Mgmt.
Master Data Mgmt.: MDM
Enterprise Information Mgmt.
p
Benefits Claimed for Hosted Solutions
Costs are fixed and known.
● Companies pay a per-seat monthly fee. If you have 50 users, and the monthly fee is $100 per user, you can expect annual user fees of $60,000.
Upgrades are performed by the vendor away from the users’ premises.
On-premise implementations, in contrast, can impose significant burdens on in-house IT staff and budgets. g
● There can be upfront investments in IT hardware and infrastructure, software purchase and customization, and training. Implementation costs can be significant.
User support and software upgrade costs are additional to initial software licence costs.
Essentially, the hosted model converts capital expenditure and fixed costs into variable costs.
MAR 4860 Worksheet Chapter 3 Module 3
5
Comparing Costs: On-premise vs. Hosted CRM
Cost item On-premise CRM Hosted CRM
Number of users 500 500
Application licence/subscription $1,250,000 $750,000
Implementation and customization $6,250,000 $187,000
Training $150,000 $75,000
IT infrastructure/hardware $500,000 $0
IT personnel $500,000 $0
Support/upgrade costs $225,000 $0
Year one expenditure $8,875,000 $1,012,500
Sources: Triple Tree; Software & Information Industry Association (SIAA); salesforce.com; Yankee Group. Table originally appeared in eMarketer 2005.
A Request for Proposal (RFP)
Standards used to evaluate vendors
Typical content listed on pages 87-88
Call for proposals
Revised technology needs identification Revised technology needs identification
Assessment and partner selection
Vendor Evaluation Worksheet
Customer Relationship Management©
CRM Vendor Evaluation Worksheet
Importance is the priority placed on this criteria for the company evaluating the vendor. Use a scale from 1 to 5, with 5 being critical to the company.
Vendor Capability is the degree to which the vendor can meet the decision criteria. Use a scale from 1 to 5, 5 being that the vendor fully meets the criteria.
Total Points for each vendor are calculated by multiplying the importance of each decision criteria with the vendor capability.
These points go in the shaded area. To get the TOTAL POINTS by vendor, add all points in the shaded areas.
Decision Criteria Importance
Years of experience with CRM 5 5 25 5 25 3 15Industry experience
4 4 16 4 16 3 12
Vendor A Vendor B Vendor C
About the Vendor
Customer Relationship Management©
CRM Vendor Evaluation Worksheet
Importance is the priority placed on this criteria for the company evaluating the vendor. Use a scale from 1 to 5, with 5 being critical to the company.
Vendor Capability is the degree to which the vendor can meet the decision criteria. Use a scale from 1 to 5, 5 being that the vendor fully meets the criteria.
Total Points for each vendor are calculated by multiplying the importance of each decision criteria with the vendor capability.
These points go in the shaded area. To get the TOTAL POINTS by vendor, add all points in the shaded areas.
Decision Criteria Importance
Years of experience with CRM 5 5 25 5 25 3 15Industry experience
4 4 16 4 16 3 12
Vendor A Vendor B Vendor C
About the Vendor
©2007 Nancy A. Rauseo
Investment in research & strategic technology direction5 4 20 5 25 3 15
Training & documentation3 4 12 5 15 3 9
Technical support 5 3 15 5 25 4 20Management team & project managers 3 5 15 5 15 2 6TOTAL 103 121 77
Price5 3 15 5 25 3 15
Functional requirements 5 3 15 3 15 2 10Customizability & flexibility
4 2 8 5 20 2 8User friendliness
5 3 15 5 25 3 15Scalability
4 4 16 5 20 3 12Source code
4 3 12 5 20 4 16TOTAL
81 125 76
About the Software
Investment in research & strategic technology direction5 4 20 5 25 3 15
Training & documentation3 4 12 5 15 3 9
Technical support 5 3 15 5 25 4 20Management team & project managers 3 5 15 5 15 2 6TOTAL 103 121 77
Price5 3 15 5 25 3 15
Functional requirements 5 3 15 3 15 2 10Customizability & flexibility
4 2 8 5 20 2 8User friendliness
5 3 15 5 25 3 15Scalability
4 4 16 5 20 3 12Source code
4 3 12 5 20 4 16TOTAL
81 125 76
About the Software
MAR 4860 Worksheet Chapter 3 Module 3
6
Product Evaluation Worksheet
Customer Relationship Management©
CRM Product Evaluation Worksheet
Importance is the priority placed on this criteria for the company evaluating the vendor. Use a scale from 1 to 5, with 5 being critical to the company.
Vendor Capability is the degree to which the vendor can meet the functional requirement. On a scale from 1 to 5, with 5 being that the vendor fully meets the requirement.
Total Points for each product are calculated by multiplying the importance of each decision criteria with the product capability.
These points go in the shaded area. To get the TOTAL POINTS by product, add all points in the shaded areas.
Functional Requirement Category Importance
Contact management 5 4 20 3 15 2 10
Account management 5 4 20 4 20 3 15
Time management 4 4 16 3 12 2 8
Lead management 5 4 20 4 20 5 25
Product A Product B Product C
Customer Relationship Management©
CRM Product Evaluation Worksheet
Importance is the priority placed on this criteria for the company evaluating the vendor. Use a scale from 1 to 5, with 5 being critical to the company.
Vendor Capability is the degree to which the vendor can meet the functional requirement. On a scale from 1 to 5, with 5 being that the vendor fully meets the requirement.
Total Points for each product are calculated by multiplying the importance of each decision criteria with the product capability.
These points go in the shaded area. To get the TOTAL POINTS by product, add all points in the shaded areas.
Functional Requirement Category Importance
Contact management 5 4 20 3 15 2 10
Account management 5 4 20 4 20 3 15
Time management 4 4 16 3 12 2 8
Lead management 5 4 20 4 20 5 25
Product A Product B Product C
g 5 4 20 4 20 5 25
Sales management 5 4 20 3 15 4 20
Customer contact 2 4 8 4 8 3 6
Customer service 2 4 8 5 10 5 10
Field service 2 4 8 3 6 4 8
Telemarketing/Telesales 2 4 8 4 8 4 8
Marketing 4 4 16 3 12 4 16
Knowledge management 5 5 25 3 15 3 15
Business intelligence 5 5 25 3 15 3 15
Partner relationship management 3 5 15 4 12 3 9
E-Commerce 3 5 15 4 12 2 6
Supply chain management 4 5 20 4 16 3 12
Workflow management 5 5 25 4 20 2 10
Reporting 4 5 20 3 12 3 12
Integration 5 5 25 3 15 3 15
Help functions 3 4 12 3 9 3 9
326 252 229TOTAL POINTS
g 5 4 20 4 20 5 25
Sales management 5 4 20 3 15 4 20
Customer contact 2 4 8 4 8 3 6
Customer service 2 4 8 5 10 5 10
Field service 2 4 8 3 6 4 8
Telemarketing/Telesales 2 4 8 4 8 4 8
Marketing 4 4 16 3 12 4 16
Knowledge management 5 5 25 3 15 3 15
Business intelligence 5 5 25 3 15 3 15
Partner relationship management 3 5 15 4 12 3 9
E-Commerce 3 5 15 4 12 2 6
Supply chain management 4 5 20 4 16 3 12
Workflow management 5 5 25 4 20 2 10
Reporting 4 5 20 3 12 3 12
Integration 5 5 25 3 15 3 15
Help functions 3 4 12 3 9 3 9
326 252 229TOTAL POINTS
©2007 Nancy A. Rauseo
Project Implementation
Refine project plan
● Consider needs and availability of partner
Identify technology customisation needs
O t f th b l fit f tl
Implement
● Out-of-the-box rarely fits perfectly
Prototype design, test, modify and roll out
● Risk reduction
● Refinement
● Pilot on a small group of users or customers
Performance Evaluation
Project outcomes
● Was the project delivered on time and to budget?
Business outcomes
Evaluate
● Have business goals and specific CRM objectives been achieved?
● Consider time-frame for CRM objectives
● What about the CSFs?
This is a continuous process
MAR 4860 Worksheet Chapter 3 Module 3
7
CUSTOMER RELATIONSHIP MANAGEMENTCUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIESCONCEPTS AND TECHNOLOGIES
Chapter 4Chapter 4Developing, Managing and Using Customer-
Related Databases
What are customer-related data?
Customer-related data is anything pertinent to the development and maintenance of customer relationships.
Customer-related data can have a current, past or future perspective, focused on current opportunities historic sales o potentialopportunities, historic sales o potential opportunities.
Customer-related data might be about individual customers, customer cohorts, customer segments, market segments or entire markets.
Customer-related data might also contain product information, competitor information, or regulatory data.
What are customer-related data?
Customer Touch Points
Sales Retail Direct Mail Call
CenterE-mail/
FaxInternet ATM
B i PBusiness Processes
Data Warehouse
Data Data WarehouseWarehouse
Sales BillingAccounts
ReceivableProductSales Billing
AccountsReceivable
Product
Customer Data
©2007 Nancy A. Rauseo
MAR 4860 Lecture Worksheet Chapter 4 Module 1
1
CRM Integration
Global Customers
Customer Touch Points
Front Office Functions
Back Office Functions
Marketing Management
Order Processing Sales Management Pricing Service & Support
Receivables Payables Production Planning Inventory Management Shipping & Receiving Payroll
Electronic Touch Points Internet E-mail Call center Voice Response Systems Kiosks
Traditional Touch Points Retail stores Mail Service departments
ConsumersBusinessesPartnersSuppliers
CRM Software ERP/ Data Warehouse
©2007 Nancy A. Rauseo
Database structures 1
Entity-relationship diagrams are used to identify the entity types in it ti d t i ll
EXPERT OPINIONDepartment Course
SectionProfessor Student
Belongs to
Offers
Has
Is registered inTeaches
a situation and to visually display the relationships between them. They help create a shared understanding of the basic structure of a system.
Source: Alter (2002)
Office
Has
Possible Data Attributes:
Student IDNameAddressBirth datePhoneGenderSocial security number
©2007 Nancy A. Rauseo
Database structures 2
©2007 Nancy A. Rauseo
MAR 4860 Lecture Worksheet Chapter 4 Module 1
2
Steps to building a customer –related database
1. Define the database functions 1. Define the database functions
2. Define the information requirements2. Define the information requirements
3 Identify the information sources3 Identify the information sources3. Identify the information sources3. Identify the information sources
4. Select the database technology4. Select the database technologyand hardware platformand hardware platform
5. Populate the database5. Populate the database
6. Maintain the database6. Maintain the database
Database functions
Database functions are defined by the CRM-related purposes for which data are acquired, enhanced, stored, distributed and used.
Databases support all types of CRM: Strategic, Operational, Analytical and Collaborative.
Operational CRM uses customer-related data to help in the everyday management of customers.
Analytical CRM uses customer-related data to support sales, marketing, and service decisions.
OLTP and OLAP databases
Analytical data resides in an OLAP (online analytical processing) database.
The information in the OLAP database is normally a summarised extract of the
Operational data resides in an OLTP (online transaction processing) database.
OLTP data needs to be very accurate and up-to-date.
summarised extract of the OLTP database, enough to perform the analytical tasks. The analytical database might also draw in data from a number of internal and external sources.
MAR 4860 Lecture Worksheet Chapter 4 Module 1
3
Define the information requirements
Based on CRM vision
Answers the question: ‘what information do I need about the customer?’
Best people to answer the question are those who interact with, or communicate with, customers for sales, marketing and service purposes, and those who have to make strategic CRM decisions.
Many packaged CRM software applications come with industry-specific data models.
Define the information requirements
Customer information fields
Contact data
Contact history
Transactional history
Current pipeline
Opportunities
Products
Communication preferences
Service history
This unique identifier is a MUST!
Allows linkages to be made between several customer-related databases (e.g. transactional, product and service databases)
Customer records can be linked in 3 ways:
One-to-one. Each record in one database can be linked to
Customer identification
one other record in another database.
One-to-many. Each record in one database can be linked to many records in another database
Many-to-many. Each record in one database can be linked to many records in another database, and each record in that database can, in turn, be linked to many records in the first.
MAR 4860 Lecture Worksheet Chapter 4 Module 1
4
Identify internal information sources
Data Sources
Data Collection
System
1
Internal SourcesExternal Sources
Customer Touch Points
Data Warehouse
System
Information Information Delivery Systems
Information Usage
2
3
Identify external information sources
Data Sources
Data Collection
System
1
Internal SourcesExternal Sources
Customer Touch Points
Data Warehouse
System
Information Information Delivery Systems
Information Usage
2
3
Data collection system
Data Sources
Data Collection
System
Hardware & Software
Applications
1
Data Warehouse
System
Information Delivery Systems
Information Usage
2
3
15Module 6 Unit 1: Basics of CRM Technology©2007 Nancy A. Rauseo
MAR 4860 Lecture Worksheet Chapter 4 Module 1
5
Data warehouse system
Data Collection
System
Hardware & Software
Applications
1
Data Sources
Data Warehouse System
Information Delivery Systems
Information Usage
2
3
Data management
Data Collection
System
Hardware & Software
Applications
1
2
Data Sources
DBMS
Data Warehouse System
Information Delivery Systems
Information Usage
2
3
Data Clean-Up & Transformation
Data Mining
Data Accessibility
Understanding analytical data
CRMTransactions
(OLTP)
CRM Analytics(OLAP)
Data from other systems
Differentiation by customer value
Customer satisfaction
Next purchase
Propensity to buy
Partner contribution
Web activity
Other Data
Differentiation by needs
Supplier evaluation
Campaign success
Sales activity
Segmentation
Customer profiling
Risk scoring
Prospecting
Propensity to buy
Revenue
Sales volumes
Brands
Profitability
©2007 Nancy A. Rauseo
MAR 4860 Lecture Worksheet Chapter 4 Module 1
6
Data warehousing & reporting
I f ti
19
Data Warehousing
Information Delivery & Reporting
Analytical Applications
Data MiningClusteringKnowledge Discovery
©2007 Nancy A. Rauseo
Analytical applications
I f ti Data Warehousing
Information Delivery & Reporting
Analytical Applications
Data MiningClusteringKnowledge Discovery
©2007 Nancy A. Rauseo
MAR 4860 Lecture Worksheet Chapter 4 Module 1
7
CUSTOMER RELATIONSHIP MANAGEMENTCUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIESCONCEPTS AND TECHNOLOGIES
Chapter 5: Customer Portfolio ManagementChapter 5: Customer Portfolio Management
Module 1Module 1
Chapter Objectives
Understand the benefits that result from differentiating customers and managing them as a portfolio.
Explain a number of disciplines that contribute to customer portfolio management:
market segmentation,
sales forecasting,sales forecasting,
life-time value estimation, and
data-mining.
Be familiar with some portfolio management tools.
Explain how customer portfolio management differs between B2C and B2B contexts.
Apply the range of customer management strategies that can be deployed across a customer portfolio
Why Differentiate Customers?
To treat each customer differently is the essence of CRM
Different customers have different needs
Different customers represent different values to the company
Customer value is future oriented
Actual value – what the customer is worth today
Potential value – what the customer could be worth
Customer differentiation helps an enterprise increase customers’ actual value and realize customers’ potential value
Differentiation goes beyond traditional marketing segmentation
MAR 4860 Lecture Worksheet Chapter 5, Module 1
1
Customer Portfolio Management
A customer portfolio is a classification of customers into different groups that are then managed on a portfolio, or collective, basis.
It is the collection of mutually exclusive customer groups that comprise a business’s entire customer base.
C t P tf li M t (CPM) i t ti i Customer Portfolio Management (CPM) aims to optimize business performance – whether that means sales growth, enhanced customer profitability, or something else - across the entire customer base.
CPM does this by offering differentiated value propositions to different segments of customers.
Basic CPM disciplines are: market segmentation, sales forecasting, activity-based costing, customer life-time value estimation, and data-mining.
Segmentation & Clustering
No SegmentationMass Marketing
Market Segmentation
Custom Marketing
Standard Offering
Low Cost per Customer
1 to 1 Marketing
Tailored Offering
Higher Cost per Customer
Segmentation Processes
Intuitive
• Brain-storm segmentation variables
Age, gender, life-style
SIC, size, location
• Produce word-profiles
Data-based
• Obtain customer data
Internal and external
• Analyze customer data
• Identify high/medium/low valueProduce word profiles
• Compute sizes of segments
• Assess company/segment fit
• Make targeting decision
one/several/all segments?
• Identify high/medium/low value customer segments
• Profile customers within segments
age, gender, life-style
SIC, size, location
• Assess company/segment fit
• Make targeting decision
one/several/all segments?
MAR 4860 Lecture Worksheet Chapter 5, Module 1
2
Five Step Process of Market Segmentation
1. Identify the business you are in (Module 1)
2. Identify relevant segmentation variables (Module 1)
3. Analyze the market using these variables (Module 1)
4. Assess the value of the market segments (Module 2)
5. Select target market(s) to serve (Module 2)
Criteria for Consumer Segmentation
Geographic Domestic/foreign/global, regions, zip codes, population density, country, region, TV region, city, city size, post-code, residential neighborhood
Demographic Age, gender, occupational status, household size, marital status, terminal educational age, household income, stage of family life-cycle, religion, ethnic origin, nationality
Lifestyles/ Psychographics
Activities/ sports, values, opinions, views
Behavioral Patterns
Benefits sought, service required, loyalty, permission granted
Transactional Data Interaction information, likelihood of certain behaviors, propensity to buy,
Analytically Derived
Data mining
Criteria for Business Market Segmentation
Type of Business Manufacturer, service provider, government agency, nonprofit, wholesaler, distributor, merchant, retailer
SIC Standard Industry Classification for categorizing goods and services produced
Size Large, medium or small; Based on number of employees, number of customers and/or profit or revenuesnumber of customers and/or profit or revenues
Buying Process Sealed bidding, centralized, decentralized, vendor analysis, negotiated contracts, internet auctions
Buying Criteria Product quality, price, customizations, just-in-time, service support pre- and post-sales
Geographic World region, climate zone, trading block, country, country regions, state, province, county, city, suburb, city block, town, village
MAR 4860 Lecture Worksheet Chapter 5, Module 1
3
WHO Demographic Customer Information
Segmentation Basics
The value of demographics has begun to wear out. Demographic data must be combined with behavioral and attitudinal data to get the most accurate view of consumers, but it is still a necessary foundation for marketers
EXPERT OPINION
WHAT
WHY
Behavioral and Transactional Customer Information
Attitudinal and Motivational Customer Information
necessary foundation for marketers to build on. Check out the link below for an article on segmentation using population generations: Y Me, X Ways, Wild & Crazy and Elder Effect.http://www.destinationcrm.com/print/default.asp?ArticleID=6463
Source: Bailor, Beasty, Lager & Sebor (2006)
Planned 10%
Gifts
Bivariate Segmentation Example
Hunger Light snacking Indulgence
Emotional need 20%
Later sharing
30%
Functional 40%
Satisfaction
Usa
ge
Source: Mintel 1998
Familysharing
Takehome
Eat now
Benefits/Feature Segmentation
©2006 Dickson & Rauseo
MAR 4860 Lecture Worksheet Chapter 5, Module 1
4
Channel Segmentation 1
©2006 Dickson & Rauseo
Channel Segmentation 2
The value of segments matters. Every company needs a process to
dif it t ti t
EXPERT OPINION
©2006 Dickson & Rauseo
modify its tactics as customers move within and across segments.
For more, read this article:
http://www.destinationcrm.com/print/default.asp?ArticleID=6101
Source: Collins, Dahlstrom, and Singer (2006)
Segment 1 Segment 2
Segment 3 Segment 4 Segment 5
MAR 4860 Lecture Worksheet Chapter 5, Module 1
5
CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES
Chapter 5: Customer Portfolio ManagementModule 2
The 3-D Customer Focus Approach
2 Customer Choice
Drivers & Desired FeaturesHow is the product or service used? What features influence choice?
DifferentiatorsWhat features should be
1 Customer Profitability
Actual valueWhat is the customer worth today?
Potential valueWhat could the customer be worth?
What features should be focused on to distinguish products?
3 Customer Contact
PreferencesWhat are the desired contact, communication, selling, financial and distribution channels?
Step 1. Capture customer purchase histories
Step 2. Analyze customer profitability
Step 3 Profile benefit segment customers
Stages of 3-D Customer Focus
As a business strategy, market segmentation is organizing a b i d t t d
EXPERT OPINION
Step 3. Profile benefit segment customers
Step 4. Understand customer usage
Step 5. Analyze contact channel sub segmentation
business around targeted segments and their product, service and purchase method preferences. The goal is to develop private information that creates a customer focus competitive advantage.
Source: Dickson (2006)
MAR 4860 Lecture Worksheet Chapter 5, Module 2
1
Segmentation Based on Loyalty & Profitability
Butterflies
Good fit between company’s offerings and customer’s needs Profitable but disloyal
True Friends
Good fit between company’s offerings and customer’s needs Highest profit potential
Hig
h P
rofi
tabili
ty
“When profitability and loyalty are considered at the
EXPERT OPINION
High profit potential
Strangers
Little fit between company’s offerings and customer’s needs Lowest profit potential
Barnacles
Limited fit between company’s offerings and customer’s needs Low profit potential
Short-Term Customers Long-Term Customers
Low
Pro
fita
bili
tyH y y
same time, it is clear that different customers require different interactions.”
Source: Reinartz & Kumar(2002)
Segmentation Based on Value
“The goal of value differentiation is not a hi t i l d t di b t
EXPERT OPINION
Most Valuable Customers (MVC) Highest actual value to the company Yield the highest profit margins and most willing to cooperate Objective is retention
Most Growable Customers (MGC) The most growth potential Growth can be realized through cross-selling, increasing length
of relationship changing customer behaviors and/or operating historical understanding, but a predictive plan of action.”
Source: Peppers & Rogers (2004)
of relationship, changing customer behaviors, and/or operating more cost effectively
Objective is growth
Below-Zero Customers (BZ) Generate less revenue than cost-to-serve Highly unlikely to show positive net value Objective is motivation or churning them out
Migrators Linger between being profitable and having some growth Objective is to shift to MGC and get them to show their “true
colors”
Ladder of Loyalty
SponsorsDemonstrate loyalty while telling others of
ti f ti d ti C Hi h
ApostlesExhibit a high degree of loyalty while convincingprospects to do business with your Company. High profitability.
PartnersTake responsibility for the continuing success of the relationship. High profitability.
High
yalty
yalty
PartnersPrisoners
Apostles
Sponsors
AdversariesNot getting what was expected. Low profitability.
ButterfliesGet as much as, or more than, what was expected. Mid- to low profitability.
LoyalistsDevote a large “share of wallet” to repeat business. Mid- to high profitability.
satisfaction and supporting your Company. High profitability.
HighLow
Low
Leve
l of L
oyLe
vel o
f Loy
Level of SatisfactionLevel of Satisfaction
Butterflies
Adversaries
Loyalists
p
MAR 4860 Lecture Worksheet Chapter 5, Module 2
2
Step 1 – Capture Customer Purchase Histories 1
Centura Banks Inc. (now owned by Royal Bank of Canada) rates its customers on a profitability scale from 1 to 5. The real moneymakers get calls from service reps several times a year for what the controller calls “a friendly chat” and even an annual call from the CEO to wish them happy holidays. No wonder attrition in this group is down by 50% since 1996, while the percentage of unprofitable customers has slipped to 21% from 27%.
Source: Brady (2000)
Step 1 – Capture Customer Purchase Histories 2
For the last decade, Hallmark has identified the 10% of its customers who are its top buyers. These “Gold Crown” customers are provided with a special toll-free number, are sent
elaborate, premium mailings, free cards that introduce new lines. These 10% make up 45% of total store sales and have helped Hallmark grow its sales, profits and shareholder value.
Source: Newell (2000)
Step 2 – Analyze Customer Profitability 1
Most Profitable Customers
More Resources
Key Capabilities
Least Profitable Customers
RESOURCE RESOURCE ALLOCATIONALLOCATION
Less Resources
CUSTOMERCUSTOMERPROFITABILITYPROFITABILITY
MAR 4860 Lecture Worksheet Chapter 5, Module 2
3
“By being one of the first in the industry to use data mining to enhance its
Step 2 – Analyze Customer Profitability 2
y g y grelationships with its customers, Harrah’s has been able to keep ahead of its competitors and this has definitely improved its bottom line. As one data mining tools provider says: imagine being able to project a customer's likely future activity on the day they sign up for membership. This allows you to market to them based on their potential (as opposed to their history) - an important aspect of gaining "wallet share" from the best customers. This concept is fundamental to the success of Harrah's customer marketing efforts. They even offer tools to answer questions such as who are their customers. Where do they come from? How often do they visit? What is the true value of their customers? What contribution did a recent star headliner in their theatre make? What was the true effectiveness of their last mail campaign? The list is as big as the imagination of the organization asking the questions.”
Source: Meltzer (2004)http://www.dmreview.com/editorial/dmreview/print_action.cfm?articleId=1011392
Step 2 – Analyze Customer Profitability 3
Step 1
EXPERT OPINION
STEP 1 – Harrah’s tracks guest behavior and make predictions about the value of the guest.
PREDICT
Closed Loop Marketing
Step
5
Step 4 Step 3
Step 2
CLOSED LOOP MARKETING
STEP 2 – Harrah’s uses predictions to segment offerings.
STEP 3 - Harrah’s markets to guests based on expected value.
STEP 4 – Guest reacts to offer.
STEP 5 – Harrah’s analyzes the guest reactions and uses that analysis and new observed behavior to make new predictions.
Source: Pashko (2005)
SEGMENT
MARKETACT/REACT
ANALYZE
Step 2 – Analyze Customer Profitability 4
In the late 1990s, Fidelity Investments contacted 25,000 high cost “serial” callers who
EXPERT OPINION
Grouping Profitable and Unprofitable Customers
1. Select a major customer based on wisdom.
2. Determine annual contributions, both quantitative (sales) and qualitative ( f l l d t ) were told they must use the
company website or the automated call system for account and price information. When they called in the future, they were routed to a special representative who directed them back to the automated system.
Source: Brady (2000)
(referrals, leads, etc.).
3. Collect transaction and financial history on products purchased, number and nature of contacts, sales calls, service calls, consulting, special discounts, payment terms, etc.
4. Cost each activity based on allocation of resources.
5. Compute actual profitability or value.
MAR 4860 Lecture Worksheet Chapter 5, Module 2
4
Step 3 – Profile Benefit Segment Customers 1
The deeper the customer profiling, the more you know your customers and (potentially) the more you will
EXPERT OPINION
Who are our customers?Who are our customers? Unique customer identifier Customer name Name of organization for which
the customer works Title, role in organization, or
other designation
How do customers prefer toHow do customers prefer tointeract? Media preference Channel preference Opt-in or opt-out for any media or
specific communications
Where can the customer be (potentially) the more you will understand them to create a very important competitive capability and advantage over rivals who do not understand their customers as well. Superior information about your customers and their profit potential, and how to trade with them is vital private information that earns economic rents to the possessor.
reached? Home address Business address Phone number E-mail address Fax number
What is the history of What is the history of interactions?interactions? Outbound marketing promotions Outbound sales contact history Inbound customer-initiated
queries
What is the customer’s purchase What is the customer’s purchase behavior?behavior? Purchase dates Number of transactions Items Prices Channels utilized Sales versus non-sale purchases Returns Exchanges
Step 3 – Profile Benefit Segment Customers 2
What are our customers’ key What are our customers’ key characteristics?characteristics?Consumer (B2C) Gender Age Household size Estimated income
P f hild
What is the customer’s What is the customer’s valuevalue to our to our organization?organization?
Revenue to date Profitability to date Estimated lifetime value Estimated share of wallet Estimated probability of response to
ifi ti
What are your customers’ What are your customers’ needsneeds?? Reasons for buying
Impulse purchases
‘In order to’ purchases
Problem information
Experiences sought Presence of children Segment classifications
Business (B2B)Business (B2B) Industry classification Number of employees Annual revenues Number of locations Role of individual in purchase
process
specific promotions Estimated probability of specific
purchases Estimated probability of attrition Estimated probability of nonpayment
or bad debt
BenchmarksBenchmarks
Standards
Industry performance
Points of comparison
What are is the customer’s What are is the customer’s expectationsexpectations?? Customer’s predictions
What is ideal?
What is desired?
What is deserved?
What is needed?
What is the minimum tolerance level?
Zone of indifference
Influences
Step 3 – Profile Benefit Segment Customers 3
Profitable Cluster 3
• Profit history• Purchase mix• Primary channel• Feature focus• Service focus• Income
Profitable Cluster 2
• Profit history
Unprofitable Cluster 3
• Profit history• Purchase mix• Primary channel• Feature focus• Service focus
Income
Unprofitable Cluster 2
• Profit historyIncome• Age/gender• Interests & goals• Situation drivers
• Purchase mix• Primary channel• Feature focus• Service focus• Income• Age/gender• Interests & goals• Situation drivers
Profitable Cluster 1
• Profit history• Purchase mix• Primary channel• Feature focus• Service focus• Income• Age/gender• Interests & goals• Situation drivers
• Income• Age/gender• Interests & goals• Situation drivers
• Purchase mix• Primary channel• Feature focus• Service focus• Income• Age/gender• Interests & goals• Situation drivers
Unprofitable Cluster 1
• Profit history• Purchase mix• Primary channel• Feature focus• Service focus• Income• Age/gender• Interests & goals• Situation drivers
MAR 4860 Lecture Worksheet Chapter 5, Module 2
5
Step 3 – Profile Benefit Segment Customers 4
Nokia’s future success depends on delivering great experiences to our customers by creating
APPLICATION
Nokia
1. Basic low-income consumers: want a no frills and a very inexpensive phone.
2. Expression consumers: young consumers who want to customize their phone.
3 Active consumers: want a rugged tough phone with
Nokia’s Clusters or Segments
y gproducts and solutions that work seamlessly and are appealing.
Our strategy contains the core elements required to accomplish this, and is optimized for tapping into the mobile industry’s global growth potential as it unfolds.
http://www.nokia.com/A4126317
3. Active consumers: want a rugged, tough phone with outdoor features.
4. Classic consumers: want a traditional phone with some features.
5. Fashion consumers: want ever thinner, ever small, ever more stylish phones.
6. Premium consumers: want all the latest features and services.
Step 4 – Understand Customer Usage 1
APPLICATION
Usage linked to geographical
Applebee’s
g g g parea and community characteristics.
http://www.applebees.com/
Step 4 – Understand Customer Usage 2
APPLICATION
Usage of Tide laundry
P & G
detergent linked to cleaning power and the needs of working and you ng families.
http://www.pg.com/
MAR 4860 Lecture Worksheet Chapter 5, Module 2
6
Step 4 – Understand Customer Usage 3
Customer Profitability Analysis
Analysis of Product Features Purchased & Benefits Desired
Usage Observation
User Differences Situation Differences
IncomeLife cycle stagesLifestyle & interests
Physical surroundingsSocial contextPsychological view
Step 5 - Analyze Contact Channel Sub-Segmentation
External
Competitive informationIndustry analysis
Legal & regulatoryTechnology
Customer Data
DemographicBehavioralAttitudinal
Needs
MotivationExperience
ConvenienceInfluences
CHANNEL #1 CHANNEL #2
Product Features/Benefits
Product LineProduct Models
Product
Customer Profitability
Sub-Segment
#1
Sub-Segment
#2
Sub-Segment
#3
Sub-Segment
#1
Sub-Segment
#2
MAR 4860 Lecture Worksheet Chapter 5, Module 2
7
Customer Relationship ManagementCustomer Relationship Management
Customer Experience ManagementCustomer Experience Management
EXPERT OPINIONCustomer experience management (CEM) is emerging as a means of leveraging CRM in order to
According to the most recent research by IBM, decision makers stated that ensuring promises and improving the total customer experience was the top concern. To drive sustainable, profitable organic growth and competitive differentiation, organizations must better integrate and align
create and manage interactions that improve the customer’s experience with the company. The impact of not managing customer experiences can result in significant revenue losses for any company. CEM is not separate or distinct from CRM; it is part of a CRM strategy.
In this chapter, we will start off by defining CEM, the key components of a customer experience and the financial impact of not addressing CEM. We will
©2010 Nancy A. Rauseo CRM and the Customer Experience
the way they treat customers with their go-to-market strategy and branding at each touch point of the relationship.
Source: Heffernan & LaValle (2006)
p galso look at techniques and tools for mapping and analyzing experiences and then identifying improvements. The goal is to put systems in place to continuously capture customer information and use it to make experiences more valuable to customers.
1
Customer Relationship ManagementCustomer Relationship Management
Industry Definitions of CEMIndustry Definitions of CEM
CEM means managing customer interactions to build brand equity and long-term profitability.
APPLICATION
Bob Thompson
Customer experience is what the customer receives at every touch point through processes, products and people.
Shaun Smith
The provisional disposition a person has about your company based on all the information in his or her environment,
and their interactions with you and your competitors, plus their reflections on what this means to them.
Companies are beginning to realize what CRM really means. It’s becoming obvious that no matter what technologies are at work, transforming transactions to experiences is the key to strengthen relationships.
Source: Glagowski (2006)
©2010 Nancy A. Rauseo CRM and the Customer Experience
Paul Ward
It’s a matter of understanding and living our customer’s reality which is usually quite different from ours, and
adapting ours to theirs.Rafael Rodriguez
Source: Glagowski (2006)
Starbuck, Mercedes, P&G Reveal Secret Sauce
http://www.1to1media.com/PrintView.aspx?DocID=29500
2
MAR 4860 CRM Lecture Worksheet Chapter 6 Module 1
1
Customer Relationship ManagementCustomer Relationship Management
CRM and CEM: What’s the Connection?CRM and CEM: What’s the Connection?
EXPERT OPINION
In math, the term subset is used to describe the relation, called inclusion, of one set being
i d i id h I f ll
Managing customer experiences is an integral part of what CRM should be –a win-win value exchange between a company and its customers. Loyal customer relationships are built on what the customer perceives and feels about the
contained inside another set. Informally, every element belonging to subset A also belongs to superset B, but there may be elements belonging to B that do not belong to A.
CRM
The Human Touch
©2010 Nancy A. Rauseo CRM and the Customer Experience
and feels about the product/service purchased and interactions with the organization.
Source: Thompson (2006)
CEM
3
Customer Relationship ManagementCustomer Relationship Management
CRM and CEM: What’s the Connection?CRM and CEM: What’s the Connection?
EXPERT OPINION
Left Brain Right Brain
CRM CEM
For details, read the article by Bob Thompson titled Customer Experience Management: Accelerating Business Performance, found under the Tools link.
CRM CEM
Value of Customer to Company
Focus on Systems & Transaction
Functional Value
Value of Company to Customer
Focus on People & Interactions
Emotional Value
©2010 Nancy A. Rauseo CRM and the Customer Experience 4
Adapted from Customer Experience Management: Accelerating Business Performance by Bob Thompson
MAR 4860 CRM Lecture Worksheet Chapter 6 Module 1
2
The Customer Experience ModelThe Customer Experience Model
Customer Relationship ManagementCustomer Relationship Management
Customer Experiences
Process Improvement
Customer Intelligence
Customer Customer InformationInformation
SalesRetail Phone Call Center E-mail/
Fax/ Mail Internet ATM
CRM Data CRM Data WarehouseWarehouse
CompanyContacts
Billing
AccountsReceivable
Product
Customer Feedback
©2010 Nancy A. Rauseo 5
EXPECTATIONS EXPERIENCE = EXPERIENCE EVALUATION+
Three States of an ExperienceThree States of an Experience
Customer Relationship ManagementCustomer Relationship Management
• Spoken Promises
• Perceived Alternatives
• Unspoken Promises
• Past Experiences
• Outcomes
• Processes
WOW!
OK
Expectations Exceeded
ExpectationsMet
• Personal Values
• Personal Needs
• Word of Mouth
©2010 Nancy A. Rauseo 6
AWFULExpectations Not Met
MAR 4860 CRM Lecture Worksheet Chapter 6 Module 1
3
Customer Relationship ManagementCustomer Relationship Management
Marketing’s Roles in CEMMarketing’s Roles in CEM
From the Traditional 4Ps of Marketing~From the Traditional 4Ps of Marketing~ EXPERT OPINION Product or Service
Price
Place
Promotion
To the 5Cs of Relationship Marketing~To the 5Cs of Relationship Marketing~
Customer Needs
Cost to Customer
According to recent surveys, 85% of senior business leaders agree that traditional differentiators alone are no longer a sustainable business strategy. About 71% believe that customer experience is the next corporate battlefield
©2010 Nancy A. Rauseo CRM and the Customer Experience
Cost to Customer
Convenience
Communication
Connection (Interactions)
++ Processes
People
Physical Environment
battlefield.
Source: Shaw & Ivens (2005)
7
Economic Impact of Negative Customer ExperienceEconomic Impact of Negative Customer Experience
Customer Relationship ManagementCustomer Relationship Management
Source: Hasan (2005)
8©2010 Nancy A. Rauseo
MAR 4860 CRM Lecture Worksheet Chapter 6 Module 1
4
Customer Relationship ManagementCustomer Relationship Management
CEM Versus CRM RevisitedCEM Versus CRM Revisited
CEM CRMEXPERT OPINION
What It Does
Captures & distributes what the
customer thinks about the company
Captures & distributes what the company knows about the
customer
When It’s Used
At customer interactions or touch
points
After record of the customer interaction
How It’s Monitored
Surveys, observations, VOC t di & l
Transactional data, market research, t t d t ki f
Having spent millions of dollars on CRM software, many CEOs consider their problem to be not a lack of customer information but a superfluity of it. Before investing more time and money, executives justifiably want to know how customer experience
©2010 Nancy A. Rauseo CRM and the Customer Experience 9
studies & analyses automated tracking of sales, service & support
data
Who Uses It Business/functional leaders
Owners of customer-facing processes
how customer experience data are different and what their value is.
Source: Meyer and Schwager (2007)
Customer Relationship ManagementCustomer Relationship Management
Voice of Customer RevisitedVoice of Customer Revisited
REFLECTIONDefinition
Disciplined approach
Aids in identifying, understanding and prioritizing customer needs
Improves communication with customers
Serves as foundation
f
©2010 Nancy A. Rauseo CRM and the Customer Experience 10
Serves as foundation for CRM
MAR 4860 CRM Lecture Worksheet Chapter 6 Module 1
5
Customer Relationship ManagementCustomer Relationship Management
Experience Analysis ProcessExperience Analysis Process
1. Make a list of all your customer voices or customer groups APPLICATION
2. Find the sources of customer feedback per group
3. Design the actual VOC strategy: survey, interviews, etc.
4. Implement the VOC strategy
5. Organize the results of the VOC: your interview notes, requirements documents, market research, survey results, etc.
6. Identify unstated or unspoken customer needs or opportunities
Krispy Kreme captures data from a number of sources. ‘Instead of looking just at quantitative sales measures, we established measures through mystery shoppers and our own internal inspections as well as
li it ti f ff i
©2010 Nancy A. Rauseo CRM and the Customer Experience 11
opportunities.
7. Prioritize your customer experience improvement opportunities using the Customer Experience Segmentation matrix
8. Use process mapping & other techniques to blueprint desired CRM experiences or improvement opportunities.
solicitation of off-premises customers through surveys.’
Source: Smith & Wheeler (2002)
Customer Relationship ManagementCustomer Relationship Management
Application of Experience Analysis ProcessApplication of Experience Analysis Process
APPLICATION
UPS Ranks #1 on Reputational Attributes
In the annual survey conducted by Harris Interactive®, UPS ranks #1 for people's "trust in the company to do the right thing, excellent customer service, and sincerity of communications."To learn more about the survey results click below:
©2010 Nancy A. Rauseo CRM and the Customer Experience 12
results, click below:
http://www.pressroom.ups.com/mediakits/factsheet/0,1889,1388,00.htm
MAR 4860 CRM Lecture Worksheet Chapter 6 Module 1
6
Organizing the Voice of Customer ResultsOrganizing the Voice of Customer Results
Customer Relationship ManagementCustomer Relationship Management
Affinity Diagram
13©2010 Nancy A. Rauseo
For more tools and techniques, visit:http://www.asq.org/learn-about-quality/idea-creation-tools/overview/affinity.html
Customer Experience SegmentationCustomer Experience Segmentation
Customer Relationship ManagementCustomer Relationship Management
14©2010 Nancy A. Rauseo
MAR 4860 CRM Lecture Worksheet Chapter 6 Module 1
7
Customer Experience BlueprintCustomer Experience Blueprint
Customer Relationship Management
©2010 Nancy A. Rauseo 15
Touch Point MappingTouch Point Mapping
mer
ss
esT
ang
ible
s
Customer Relationship Management
Experience from the customer’s eyes
C t th f li ti d
Cus
tom
Pro
ces
Tou
ch P
oint
sB
ack-
End
P
roce
sses
Su
ppo
rt S
yste
ms
Captures the feelings, actions, and expectations of customers
Customer Relationship Management©
Customer Touch Point MapCustomer Touch Point Map
Touch Points What are customers seeing, feeling, and doing?
Category
Opportunity
Delivery
Customers Using Door-to-Door Services
Pick-Up RequestInternal Function/ Process
ResponsivenessCustomer Group
Category
Opportunity
Delivery
Customers Using Door-to-Door Services
Pick-Up RequestInternal Function/ Process
ResponsivenessCustomer Group
What do customers want to see, feel, and do?
16
CERTIFICATE PROGRAMCERTIFICATE PROGRAMFlorida International University
©2010 Nancy A. Rauseo
MAR 4860 CRM Lecture Worksheet Chapter 6 Module 1
8
Touch Point MapTouch Point Map
Customer Relationship ManagementCustomer Relationship Management
Touch PointsWhat are customers seeing, feeling,
and doing?
Category
Opportunity
Delivery
Customers Using Door-to-Door Services
Pick-Up RequestInternal Function/ Process
ResponsivenessCustomer Group
Category
Opportunity
Delivery
Customers Using Door-to-Door Services
Pick-Up RequestInternal Function/ Process
ResponsivenessCustomer Group
What do customers want to see, feel and do?and doing? feel, and do?
Calls 1-800 service number
Gets placed in automated voice response system
Waits up to 3 minutes before service rep answers
Pick up the phone, dial the toll free number and wait for a live person to answer Get a live person on the first try
Gets frustrated when he/she receives an automated system and has to wait so long
Get a live person on the first try
Gets frustrated and sometimes hangs up
Greets service rep and feels pressured to talk Expects a nice greeting and apology for
17©2010 Nancy A. Rauseo
Provides destination information
Provides timeline for delivery
Makes note of service request # and hangs up
quickly. Has to repeat information. Feels like rep is not listening.
p g g p gylong wait. Say information only once.
Tells service rep when package needs to be picked up (availability) and when it needs to
arrive at final destination
Wants pick-up to be convenient. Doesn’t want to ask for time off at work. Can’t
leave outside.
Writes down service number, confirms pick-up & delivery information
Expects a nice greeting and thank you for service. Wants assurance that timelines
will be adhered to.
Customer Experience MapCustomer Experience Map
Customer Relationship Management
COMPANY Core Actions(Improvements)
OPPORTUNITY FOR DELIGHT - Eliminate this customer action
•Identify first time vs. repeat customers•Eliminate automated voice response for new customers•Answer within 3 rings•Friendly and courteous greeting – “Thanks for waiting. How can I help you?”
• Capture information in central database
• Confirm information
• Electronically route request to drivers
• Asks if there is anything more the company can do
• Provides customer with a tracking number and a toll-free # or website for status follow-up
• Thanks customer for business
©2010 Nancy A. Rauseo 18
g p y business
COMPANY Enablers
• Modifications to automated system• Staff for volume• Trained/skilled staff
• CRM operational system
• Trained/skilled staff
• CRM operational system
• Fully integrated with other channels
MAR 4860 CRM Lecture Worksheet Chapter 6 Module 1
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Example of Experience MapsExample of Experience Maps
Customer Relationship Management
©2010 Nancy A. Rauseo 19
http://engage.comms.gov.uk/knowledge-bank/insight/customer-journey-mapping/mapping-customer-experience.html
Customer Relationship Management
©2010 Nancy A. Rauseo 20
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MAR 4860MAR 4860Customer Relationship ManagementCustomer Relationship Management
CHAPTER 7: CHAPTER 7: Creating Value for CustomersCreating Value for Customers
Module 1: Value Concepts
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo 1
Chapter Objectives
The meaning of the term ‘value’
How customers weigh up ‘benefits’ and ‘sacrifices’ in the value equation
Three major forms of value delivery strategy adopted by successful companies
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
What is meant by the term ‘value proposition’
How marketers create customer value by mixing together a number of variables known as the 7Ps.
The importance of customization in creating value
How the Internet is changing the way that customers receive value from communication and distribution.
22
Value is the customer’s perception of the balance between benefits received and sacrifices (or costs) made to experience those benefits. Value is the achievement of a customer’s requirements at the lowest total cost of acquisition, ownership and use.
Customer Value Defined
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
Perceived Value = Perceived Benefits / Perceived Costs*Perceived Value = Perceived Benefits / Perceived Costs*
* Also use * Also use ‘Sacrifices’‘Sacrifices’
For some customers, value equates to low price
For others, it is having their particular requirements met
For another group, quality is the dominant concern.
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How Do Customers Reduce Perceived Risk?
Delay purchase
Seek word-of-mouth endorsement
Negotiate service contracts
Seek additional information from advertising copy
Buy known brands
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
Deal with reputable suppliers
Seek performance guarantees
Buy with credit card (protection if product fails)
Negotiate discounts
Take out insurance
Demand pre-purchase trial
Total Cost of Ownership (TCO)
TCO looks not only at the costs of acquiring products, but also the full costs of using, and servicing the product throughout its life, and ultimately disposing of the product.
Cost are incurred in the following processes: search, purchase, ownership,
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
p , p , p,use, consumption, disposal.
TCO is an attempt to come up with meaningful estimates of lifetime costsacross all these processes
Suppliers can respond to TCO purchasing processes by applying Economic Value to the Customer (EVC) pricing.
Sources of Customer Value
Product Leadership
The Best Product
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
Source: Treacy and Wiersema (1995)
CustomerIntimacy
Operational Excellence
The Best Total Cost The Best Total Solution
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Sources of Customer Value: Marketing Mix
The sources of customer value are based on the marketing mix or 4Ps. A key component of CRM is also the services that accompany any product. Therefore, there are 7 sources of value for services marketing are:
• Product or Services• Price
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo 77
• Promotion• Place• People (or participants)• Physical evidence• Process (or interaction)
Components of CEM
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo 8
Customization
Mass customization is the use of flexibleflexible processes and organizational structures to
EXPERT OPINION
Component A
Component A
Component B
Component B
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo 9
create varied and even individually tailored value propositions, at the same cost as mass-produced, standardized offers.
Source: Peppers & Rogers (2004)
Base Product/ Service
Base Product/ Service
+ =
Custom Configuration
BB
Component C
Component C
Component D
Component D
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Mass Production vs. Mass Customization
Supply Chain Focus
Goal: Economies of Scale
Mass Production
Demand Chain Focus
Goal: Economies of Scope
Mass Customization
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Production to Sales Forecast
Speculative Shipping Costs
Inventory Carrying Costs
Production to Order
Goods Pre-sold Before Shipping
Just-in-Time Inventory
Mass Customization – How It Works
Interest Rates Annual Fees Card Designs
1 MODULES
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo 11
10 5 20
3 CUSTOMER SEGMENTS
Configuration #1 Configuration #1 Configuration #1
2 OPTIONS
4 OFFERINGS
Mass Customization Examples
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo 12
MAR 4860 - Chapter 7 Module 1
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Customer Turnoffs
Value
System or Process
People
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
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MAR 4860MAR 4860Customer Relationship ManagementCustomer Relationship Management
CHAPTER 7 CHAPTER 7 -- Creating Value for CustomersCreating Value for Customers
Module 2: Value From Products & Services
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
Value From Products Value From Products & Services & Services
Product innovation
Additional benefits
Product-service bundling
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
Branding
Product synergies
Dimensions of Service Quality (SERVQUAL)(SERVQUAL)
Reliability• Ability to perform the promised service dependably and accurately
Assurance• Knowledge and courtesy of employees and their ability to convey trust and
confidence
Also called the RRATE ~Also called the RRATE ~
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
Tangibles• Appearance of physical facilities, equipment, personnel and communication
materials
Empathy• Provision of caring, individualised attention to customers
Responsiveness• Willingness to help customers and to provide prompt service
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The SERVQUAL GAPS Model
Word of Mouth Communications
Personal Needs Past Experiences
Expected Service
Perceived Service
GAP 5The
Customer Gap
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
Service Delivery
Translation of Perceptions Into Service Quality Specifications
Management Perceptions of
Customer Expectations
External Communications to
CustomersGAP 4GAP 1
GAP 3
GAP 2
Factors Leading to GAP 1
Customer Expectations
GAP Inadequate or lack of marketing research and customer focus Inadequate or lack of marketing research and customer focus
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
Management Perceptions of Customer Expectations
GAP1
q g Lack of upward communications Insufficient relationship focus Inadequate experience recovery
q g Lack of upward communications Insufficient relationship focus Inadequate experience recovery
Closing GAP 1
Reason for GAP 1 Ways to Eliminate GAP 1
Inadequate or lack of marketing research and customer focus
Add marketing research strategies that include ones that focus on experience quality.
Make sure that marketing research is used in the organization.
Lack of upward communication
Increase interaction between management and customers.
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
Remove layers between contact personnel and top management – flatten hierarchical structure
Insufficient relationship focus
Use differentiation to identify different groups of customers.
Focus on relationships rather than transactions. Capture expectations data in customer records.
Inadequate experience recovery
Develop systems for handling experiences when reliability failures happen.
Recognize that experience recovery keeps customers, and that lack of recovery loses customers.
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Factors Leading to GAP 2
Translation of Perceptions Into Service Quality Specifications
GAP Poor experience design Poor experience design
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
Management Perceptions of Customer Expectations
GAP2
p g Absence of customer-driven standards Inappropriate physical evidence and experience
environment
p g Absence of customer-driven standards Inappropriate physical evidence and experience
environment
Closing GAP 2
Reason for GAP 2 Ways to Eliminate GAP 2
Poor experience design Use customer experience blueprinting to create a systematic new experience process.
Refine vague designs using the help of employees and customers.
Absence of customer-designed standards
Replace company-designed standards with customer-designed standards.
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
g g Create process management that focuses on customer
requirements. Develop standard processes for setting quality goals and
communicating them with the affected parties. Commit to customer-defined standards.
Inappropriate physical evidence & environment
Conduct customer and employee research to understand the appropriate environment.
Create a experience environment in accordance with customer and employee expectations.
Factors Leading to GAP 3
Service Delivery
GAP Deficiencies in human resource policies Deficiencies in human resource policies
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
GAP3
Translation of Perceptions Into Service Quality Specifications
Deficiencies in human resource policies Failure to match supply with demand Customers not fulfilling roles Problems with experience intermediaries
Deficiencies in human resource policies Failure to match supply with demand Customers not fulfilling roles Problems with experience intermediaries
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Closing GAP 3
Reason for GAP 3 Ways to Eliminate GAP 3
Deficiencies in human resource policies
Create more effective recruitment policies that select employees with customer-oriented capabilities.
Reduce role ambiguity and role conflict with clear communications and job descriptions.
Create evaluation and compensation
APPLICATION
Framing the Customer Experience
Innovation, multichannel
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
Create evaluation and compensation systems that reward employees for service rather than just productivity.
Empower employees. Encourage self-organized teams.
Failure to match supply and demand
Use marketing strategies to smooth peaks and valleys in demand.
Adjust the customer mix to use service capacity at non-peak times.
Innovation, multichannel interaction, and employee engagement outline the approach to picture-perfect strategy.
http://www.1to1media.com/View.aspx?DocID=29930
Source: Gaffney (2006)
Closing GAP 3
Reason for GAP 3
Ways to Eliminate GAP 3
Customers not fulfilling roles
Inform customers of their roles and responsibilities. Create clear instructions and communications.
Be sure that customers are not negatively affecting each other.
P bl ith U t l t i
The Customer Experience DisconnectMany companies focus on customer experience—and some have even produced
APPLICATION
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
Problems with experience intermediaries
Use control, partnering or empowerment strategies to eliminate channel conflict over objectives and performance.
Eliminate channel conflict over costs and rewards.
Use experience standards and incentives to control quality and consistency.
Balance the tension between empowerment and control.
some have even produced successful results from their efforts. However, recent research shows a huge disconnect between how companies perceive customers' experience and how customers actually live it.
http://www.1to1media.com/PrintView.aspx?DocID=29932
Source: CRM Magazine
Factors Leading to GAP 4
External Communications to Customers
GAP Lack of integrated CRM and marketing communications Lack of integrated CRM and marketing communications
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
GAP4
Service Delivery
g g Ineffective management of customer expectations Over-promising to customers Inadequate cross-functional communications
g g Ineffective management of customer expectations Over-promising to customers Inadequate cross-functional communications
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Closing GAP 4
Reason for GAP 4 Ways to Eliminate GAP 4
Lack of integrated CRM & marketing communications
View external communications as one part of an overall strategy that also includes interactive marketing communication and internal marketing communication
APPLICATION
The NFL Wins the Battle for FansForget the Colts. The NFL’s
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
communication. Develop a strong internal marketing
program.
Ineffective management of customer expectations
Educate customers. Make realistic promises. Negotiate unrealistic promises. Reset customer expectations when
necessary.
integrated marketing strategy was this season’s big winner.
http://www.1to1media.com/PrintView.aspx?DocID=30051
Source: Gaffney (2007)
Closing GAP 4Reason for GAP 4 Ways to Eliminate GAP 4
Overpromising Assure that advertising makes accurate promises.
Assure that personal selling matches what will be delivered.
Assure that physical evidence cues match the quality of what will be provided.P li l h i
APPLICATION
The Urgent Need for Integrated MarketingMass media’s disintegration
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
Penalize employees who over-promise.
Inadequate horizontal communications
Set up cross-functional teams to work on designing experience blueprints and maps.
Open the channels of communication between sales and operations.
Open the channels of communication between advertising and operations.
Assure that policies and procedures across branches or units are the same.
Mass media s disintegration has customers looking for different brand relationships
http://www.1to1media.com/PrintView.aspx?DocID=29829
Source: Wright (2006)
Service Guarantees & Service Level AgreementsService Guarantees & Service Level Agreements
100% Hampton Satisfaction Guarantee
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
We deliver in 30 minutes or it’s free!
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Service Recovery
When companies resolve problems quickly and effectively, there are positive consequences for
• Customer satisfaction• Customer retention • Word-of-mouth or referrals to other potential customers
Customers who have been let down, then well
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
,recovered, are more satisfied than customers who have not been let down at all. Recovery strategies include:
• Do it right the first time!• Welcome and encourage complaints• Act quickly• Learn from recovery experiences -- correct the root causes of problems• Learn from lost customers -- correct the root causes of problems
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MAR 4860MAR 4860Customer Relationship ManagementCustomer Relationship Management
CHAPTER 7 CHAPTER 7 -- Creating Value for CustomersCreating Value for Customers
Module 3:Module 3: Value From Processes, People, Physical Value From Processes, People, Physical Evidence, Customer Communication, and Evidence, Customer Communication, and
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo 1
ChannelsChannels
Value From Value From ProcessesProcesses
First Direct, a bank in the UK, started out as a telephone bank with no branch network. Customer management was entirely IT-enabled, with customer service being delivered from several call centers. The Bank’s customer satisfaction ratings have been consistently higher than competitors’ branch operations. The bank’s slogan is “We’ve built our service to revolve around you.” http://www.firstdirect.com/
Since 1983, Dell has been the world's fastest growing major computer company. Michael Dell's goal is to keep the smallest inventory possible by having a direct link
ith th f t Wh t l d th t t t d
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
with the manufacturer. When a customer places an order, the custom parts requested by the customer are automatically sent to the manufacturer for shipment. This reduces the cost for inventory tracking and warehouse maintenance.
2
Experiences Using PeopleExperiences Using People
EXPERT OPINION
The Five CEM Steps for Aligning Employee Behavior
1. Recruiting the right
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo 3
g gemployees
2. Training for experience delivery
3. Providing incentives & rewards
4. Measuring behavior against experience standards
5. Providing the right employee experience
Source: Schmitt (2003)
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Value From Physical Evidence
Physical evidence is made up of the tangible facilities, equipment and materials that companies use to communicate value to customers.
Banks generally occupy traditional buildings with columns, portico, steps and large, heavy doors.
• Designed to communicate conservative values, security and probity.
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo 44
McDonald’s uses primary colors, bright lights and the ubiquitous golden arches in the form of the letter M.
Hospitals convey impressions of hygiene and care through white uniforms, immaculately clean premises and well-maintained gardens.
Funeral service organizations use traditional conservative clothing, colors, and vehicles.
Value From Customer Communication
Golden questions can help enterprises to b tt d t d
EXPERT OPINION
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo 5
better understand customers using the drip irrigation dialogue or smart dialogue.
Source: Peppers & Rogers (2005)
Value from Communication
Three processes are responsible for the enhanced power of communication to create value for customers:
1 disintermediation
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo 66
1. disintermediation,
2. personalization (customizations) and
3. interactivity.
MAR 4860 Chapter 7, Module 3
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Drip Irrigation Method & Golden QuestionsDrip Irrigation Method & Golden Questions
Peppers & Rogers uses the golden questions strategy to assign customers into needs groups. Golden questions are the key five or six questions that
APPLICATION
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo 7
key five or six questions that discriminate the customer base with a high degree of accuracy (75% and above). Knowing that asking thousands of customers these golden questions can be very resource intensive, PRG has been able to predict needs groups…To learn more, click below:
http://www.1to1media.com/PrintView.aspx?DocID=28594
Value From Channels
CHANNELCHANNEL
CHARACTERISTICSCHARACTERISTICS
Cost Speed Ability to Touch, Feel, & Reference
Ability to Track
Interactions
Opportunity to Customize
Web Low Extremely High
Medium High High
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
Regular Mail Medium Low High Medium Varies
Email Low Extremely High
Medium High High
Telephone High Medium Low Medium Medium-High
Personal Selling Very High Medium Varies Medium High
88
Source: Peppers & Rogers (2005)
Experiences Using PriceExperiences Using Price
EXPERT OPINION
To broaden their customer relationships, firms need to simplify customers’ lives and be transparent about rates
©2010 Dr. Nancy A. ©2010 Dr. Nancy A. RauseoRauseo
be transparent about rates and fees…USAA does so through efficient call center experiences. Many large banks, on the other hand, are on the opposite side of the spectrum because many of their customers feel nickel-and-dimed.
Source: Peppers & Rogers (2005)
9
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1
CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIESCONCEPTS AND TECHNOLOGIES
Chapter Chapter 13, Module 113, Module 1Information Technology for CRM
Learning Objectives
Be aware of the range of CRM technologies
Understand the role that technology plays in the achievement of CRM outcomes
Explain the structure of the CRM ecosystem
Explain the main application areas of CRM
Understand the role that analytics play in CRM technology
The importance of integration, knowledge management and workflow to CRM outcomes
Evolution of CRM Technology
Manufacturer Retailer
Supply
Demand
Consumer
Supply Chain Management
Customer RelationshipManagement
Source: Buttle (2004)
ManufacturerWholesaler
Retailer
Distribute Sell
Consumer
ConsumeProduce
$ $$
Purchase
Customer RelationshipManagement
Enterprise Resources Planning
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Customer
File
Service
RecordsAccounting System
Product
FRONT-OFFICE USERS
Sales Reps(laptops)
Marketing(telemarketing center)
Service Reps
Evolution of CRM Technology
Sales
Notes
Purchasing System
Inventory System
Product
File
Sales
History
Call
Activity
Service Reps(Mobile equipment)
Management(decision support)
Channel Partners(team selling)
Purchasing Agents(economies of scale)
©2007 Nancy A. Rauseo
Today’s Environment
Marketing
S l
ChannelPartner
Warehouse
Sales
ServiceFinance
Customer
A 360o View of the Customer
Marketing
ChannelPartner
Warehouse
©2007 Nancy A. Rauseo
Sales
ServiceFinance Customer
MAR 4860 - Customer Relationship Management Chapter 13, Module 1
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Source: Buttle (2004)
Financial Services & Banks
AutomotiveManufacturers
• Churn• Share of wallet• Call centers• Data mining
• Dealer networks• Service and maintenance• Customer knowledge
CRM Technology Needs Vary
CRMHighTechnology
Consumer Goods
• Customer knowledge• Portals
• Complex selling• Channels• Product configurations• Partner portal
• Retail trade• Trade spend and promos• Store audits• Complex customer structures
©2007 Nancy A. Rauseo
To collect customer information from all touch points
To put to use this information to build accurate profiles on each customer
To organize and deploy customer information in a systematic and orderly fashion to those that serve the customer
The Role of Technology
To use customer information in an intelligent way and make decisions about CRM-related sales and marketing strategies
To create and maintain a unique customer experience
MAR 4860 - Customer Relationship Management Chapter 13, Module 1
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Data Sources
Data Collection
System
D
Hardware & Software
Applications
1
2S
CRM Technology Architecture
Internal SourcesExternal Sources
Customer Touch Points
Data Warehouse
System
Information Delivery Systems
Information Usage
BusinessProcesses, Hardware, &
Software Applications
3
Source:
©2007 Nancy A. Rauseo
Data Sources
Data Collection
System
Hardware & Software
Applications
1
Data Collection System
Data Warehouse
System
Information Delivery Systems
Information Usage
2
3
©2007 Nancy A. Rauseo
` Local dB
Web Client(Customer/partner)
Internal Department Client
Service Client(Synchronized)
Sales Client(Wireless or Sync)
Data Collection System
Web Server
1
Web Server
1
Web Server
1
Web Server
1
CRM Software Application and Web Servers
CRM Transactional
Database
CRM Analytics Database
CRM Metadata
Back Office Systemssuch as:
AccountingPurchasingInventoryFinance
©2007 Nancy A. Rauseo
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CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIESCONCEPTS AND TECHNOLOGIES
Chapter 13, Module 2Chapter 13, Module 2Information Technology for CRM
Scope of CRM Technology
Sales(synchronized,
field information)
Customer Service/Field Service(orders, complaints)
Management(decision support,
performance)Partners
(promotions,funds, portals)
©2007 Nancy A. Rauseo
DataKnowledge
BaseWarehouse
CRM System
Marketing(analysis & campaigns/ promotions)
Consumers(web, clubs)
Other systems, email, telephone
Web
EXPERT OPINIONCRM Software Vendors
Software vendors are only a small portion of the overall CRM ecosystem. CRM ft t
The CRM Market Players
Hardware and Infrastructure Vendors
Professional Service Providers
CRM software must run on hardware and integrate with communications infrastructure such as telephony and email systems.
Source: Buttle (2004)
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Specialized Business
Solutions
Proposal Generators Product & Marketing Encyclopedias Product Configurators Lead & Campaign Management Business Process Management
Matrix Technology Solutions http://www.mxtg.com/index.asp
Chordiant http://www.chordiant.com
Basic Sales d Contact Management
ACThttp://www act com
Applications by Solution & Market
and Marketing Solutions
Contact Management Sales Force Automation Marketing Automation
http://www.act.com
Maximizerhttp://www.maximizer.com
Comprehensive Enterprise
Business Solutions
Modular SFA, Marketing & Service Automation Enterprise, Mid-sized, and Small
Business
Siebel Systemshttp://www.siebel.com
Amdocshttp://www.amdocs.com
©2007 Nancy A. Rauseo
Customer facing applications
Customer touch point applications
EXPERT OPINION
Refer to the article The 2010 Market Leaders under Supplemental Materials A
CRM Software Applications
Customer intelligence applications
Applications by solution & market
Vertical applications
Workflow applications
Supplemental Materials. A MUST READ!
http://www.nxtbook.com/nxtbooks/crmmedia/crm1006/
EXPERT OPINIONCustomer Interaction Center
Telephone-based applications that support marketing, sales, and service business processes.
Telemarketing
Customer interaction centers are moving from sweatshops to company flagships, handling everything from
Customer Facing Applications
Telemarketing
Telephone sales
Telephone service
handling everything from pre-sales inquiries to order processing to post-sale support. The successful call-center-of-the-future organization won’t be treated as a poor second-cousin cost-center; it’ll be a strategic service offering.
Source: Cusack (2002)
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EXPERT OPINIONSales Force Automation
Contact & time management
Opportunity & lead management
Knowledge management
Sales and Marketing have always had a tug-of-war relationship. Technology didn’t solve this but did allow
Customer Facing Applications
Quoting & order configuration
Analysis & reporting tools
it to be played out in new and exciting ways…Sales and Marketing trying to leverage technology was termed the second or third—depending on who was counting—generation of SFA.
Source: Trailer (2002)
EXPERT OPINIONField Service Automation
Customer service requests
Service orders
Service contracts
Service automation for large capital equipment is quite different. This normally involves diagnostic and
Customer Facing Applications
Service schedules
Service calls
corrective action to be taken in the field, at the location of the equipment. In this case, this automation involves providing technicians with diagnostics, repair manuals, inventory management and job information on a laptop or PDA.
Source: Buttle (2004)
EXPERT OPINIONCampaign Management
Increasingly, customer service and support software includes a Web-based, self-service
bilit th t t
Customer Touch Point Applications
Electronic Commerce
Self-Service Customer Support
capability that customers can easily access using a browser. Improvements in customer self-service and support have been significantly enhanced through the use of knowledge management engines.
Source: Goldenberg (2002)
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CRM Components - Customers
CRM Components - Products
CRM Components – Marketing Automation
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CRM Components – Sales Automation
CRM Components – Service Automation
CRM Components - PMR
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CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIESCONCEPTS AND TECHNOLOGIES
Chapter 13, Module Chapter 13, Module 33Information Technology for CRM
I f ti
Customer Intelligence Applications
Data Warehousing
Information Delivery & Reporting
©2007 Nancy A. Rauseo
Analytical Applications
Data MiningClusteringKnowledge Discovery
I f ti
Data Warehousing & Reporting
3
Data Warehousing
Information Delivery & Reporting
Analytical Applications
Data MiningClusteringKnowledge Discovery
©2007 Nancy A. Rauseo
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I f ti
Analytical Applications
Data Warehousing
Information Delivery & Reporting
Analytical Applications
Data MiningClusteringKnowledge Discovery
©2007 Nancy A. Rauseo
Customer Relationship ManagementCustomer Relationship Management
Courtesy: Siebel
Module 6 Unit 1: Basics of CRM Technology©2007 Nancy A. Rauseo 5
Customer Relationship ManagementCustomer Relationship Management
Module 6 Unit 1: Basics of CRM Technology©2007 Nancy A. Rauseo
Courtesy: E.piphany
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Software vendors specializing in each vertical
Consumer Packaged Goods
Education
Financial Services/Banking
Pharmaceuticals
Professional Services
Retail
DestinationCRM classifies these vertical software solutions into these industries: EXPERT OPINION
Vertical Solutions
p gmarket can be found at:
http://destinationcrm.com/
Government
Healthcare
Insurance
Manufacturing/Automotive
Non-profit
Sports/Entertainment
Technology
Telecommunications
Transportation
Travel/Hospitality
Workflow Applications
©2007 Nancy A. Rauseo
Process automation
Escalation
Functions of Workflow Automation
Workflow Applications
Assignment
Integration
Dialogue scripting
Process navigation
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Take a look at how companies are applying BPM to their CRM strategies:
The definition, execution, and management of business processes.
Not a synonym for workflow or Electronic Application Integration (EAI)
Emphasis is on the process itself rather than an entity (i.e., document, data, or person)
APPLICATION
Business Process Management (BPM)
Gives process owners the ability to define what the process should be first and then determine how to effectively orchestrate interactions between the people, data, and documents that make up the steps within a process.
Not married to a specific application
For more information, visit:
http://www.destinationcrm.com/articles/default.asp?ArticleID=5219
You Talkin’ To Me?http://www.1to1media.com/PrintView.aspx?DocID=29824
There’s a Process for That?http://www.1to1media.com/PrintView.aspx?DocID=29595
Strategy and Marketing ConsultantsPeppers & Rogershttp://www.1to1media.com
McKinsey & Companyhttp://www.mckinsey.com
Business Consultants
Scroll through the Accenture site for client success stories in various
APPLICATION
Professional Service Providers
Accenturehttp://www.accenture.comGo to Services for CRM
BearingPointhttp://www.bearingpoint.comGo to Solutions for CRM
CAPGeminihttp://www.capgemini.com/services/consulting/crm/
disciplines and industries. Here’s one on Best Buy:
Business Process Transformation and Reengineering with Accenturehttp://www.accenture.com/Global/Services/Client_Successes/By_Subject/Customer_Relationship_Mgmt/BestBuyTransformation.htm
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CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES
Chapter 14
Sales Force Automation
Sales force automation definition & technologies
Sales Force Automation is the application of computerized technologies to support sales people and sales management in the achievement of their work-related objectives.
SFA hardware includes desktop, laptop and h dh ld d i d t t/ ll t t h lhandheld devices, and contact/call centre technology.
SFA software comprises both ‘point’ solutions that are designed to assist in a single area of selling or sales management, and integrated solutions that offer a range of functionality.
SFA software solutions (sampling)
SFA specialists SFA as part of CRM suite
SFA as part of Enterprise suite
Selectica Onyx Oracle
EzRoute Pivotal SAP
Salesnet Salesforce.com Epicor
CallWizard SalesLogix Deltek
Selltech ACCPAC Fourth Shift
CyberForms NetCRM Intentia
SFA functionality
account management pipeline management
activity management product encyclopaedias
contact management product configuration
contract management product visualization
document management proposal generation
event management quotation management
incentive management sales forecasting
lead management territory management
opportunity management work-flow engineering
order management
Each of these is a high level PROCESS. “Managing accounts” is a process; Managing sales activities is a process;
Account management
Account management offers sales reps and managers a complete view of the customer relationship including contacts, contact history, completed transactions, current orders, shipments, p , , p ,enquiries, service history, opportunities, and quotations. This allows sales reps and account managers to keep track of all their obligations in respect of every account for which they are responsible, whether this is an opportunity to be closed, an order or a service enquiry.
Account management screenshot
Activity management
Activity management keeps sales reps and managers aware of all activities, whether complete or pending, related to an account, contact, or opportunity, by establishing to-do lists, setting pp y, y g , gpriorities, monitoring progress and programming alerts. Activities include preparation of quotations, scheduling of sales calls and following up enquiries, for example.
Contact management
Contact management functionality includes tools for building, sharing and updating contact lists, making appointments, time setting, and task, event and contact tracking .Contact list data includes names, g ,phone numbers, addresses, preference data, and email addresses for people and companies, as well as a history of in-bound and out-bound communications.
Contact management screenshot
Contract management
Contract management functionality enables reps and managers to create, track, progress, accelerate, monitor and control contracts with customers. Contract management helps manage a contract's g p glifespan by shortening approval cycles for contracts, renewing contracts sooner, and reducing administrative costs. The software may use security controls to ensure only approved people have access to contracts.
Document management
Companies generate and use many documents as they sell to customers - brochures, product specifications, price lists, competitive comparisons, and templates for preparing quotations, for example. p p p g q , pDocument management software allows companies to manage these documents, keep them current and ensure that they are available to reps and managers when needed.
Event management
Event management enables reps and managers to plan, implement, control and evaluate events such as conferences, seminars, trade shows, exhibitions and webinars, whether run solo or jointly with customers , j yor other partners.
Event management screenshot
Incentive management
Incentive management is an issue for sales managers who use commissions to lift, direct and reward sales reps’ efforts. In many companies, commissions are calculated using stand-alone gspreadsheets.
Lead management
Lead management allows companies to create, assign and track sales leads. User-defined rules allow leads to be allocated to reps and account managers on the basis of role, territory, product g , y, pexpertise or other variables.
Lead management allows for more equitable workload distribution across a sales team, and uses security controls to ensure that reps can only access their own leads.
Lead management screenshot
Opportunity management
An opportunity is a record of a potential sale or any other type of revenue generation. Opportunity management software enables reps and managers to create an opportunity record in the database, and pp y ,monitor progress against a predefined selling methodology.
Opportunity management report
Order management
Order management functionality allows reps to convert quotations and estimates into orders once a customer has agreed to buy. If this is done in front of a customer, the order can be loaded into production, , p ,or picked from a warehouse, more quickly.
Order management software may include a quotation engine, a pricing module, and a product configurator. With visibility through a portal, the customer, rep and manager has access to the same, up-to-date order information.
Pipeline management
Pipeline management is the process of managing the entire sales cycle from identifying prospects, estimating sales potential, managing leads, forecasting sales, initiating and maintaining customer g , g grelationships, right through to closure. A well-defined sales pipeline helps minimize lost opportunities and breakdowns in the sales process.
Product encyclopaedia
A product encyclopaedia is a searchable electronic product catalogue, that generally contains product names, stock numbers, images and specifications. These can be stored on reps computers’ and/or p pmade available to customers online.
Product configuration
Product configuration applications enable salespeople, or customer themselves, automatically to design and price customized products, services or solutions. Configurators are useful when the product g pis particularly complex or when customization is an important part of the value proposition.
Product visualization
Product visualization software enables sales reps and customers to produce realistic images of products before they are manufactured. This is a useful application when linked to a product pp pconfigurator. The image can take the form of a simulated photograph, 3-D model or technical drawing, and can include other related documentation such as specifications or prices.
Proposal generation
Proposal generation software allows users to create customized proposals for customers. Users draw from a database of information to create proposals which, typically, are composed of several parts, some , yp y, p p ,of which are customized: cover page and letter, introduction, objectives, products, product features, services, prices, specifications, pictures, drawings, people, experience, resumes, references, approach, schedule, organization, scope of work, and appendices.
Quotation management
Quotation management software allows reps and managers to quote for opportunities. The software allows users to create, edit, approve, and produce costed, customized, proposals quickly and reliably. , , p p q y ySome vendors enable users to create multimedia proposals with audio, animation and video.
Sales forecasting
Sales forecasting applications offer sales reps and managers a number of qualitative and quantitative processes to help forecast sales revenues and close rates.
Territory management
Territory management software allows sales managers to create, adjust and balance sales territories, so that sales reps have equivalent workloads and/or opportunities.
Some territory management applications come with a territory management methodology which users can follow when establishing sales territories.establishing sales territories.
Some applications link to geographic mapping, or geo-demographic, software. The software enables companies to match sales coverage to market opportunity, create sales territory hierarchies (cities, states, regions) and reduce the cost of selling by reducing travel time.
Call cycle scheduling, calendaring and lead management is often enabled by the software.
Workflow engineering
Work-flow engineering software is useful for designing sales-related processes, such as the lead management process, and the event management process. It can even be used to design the selling p g gprocess itself – the series of steps that a sales rep must follow in shifting a prospect from initial awareness to the close.
Examples of SFA reports
cost-to-serve sales cycles
customer profitability share of market
lead conversion share of wallet
pipeline progress sales person productivity
quotation performance win-loss rates
Benefits for SFA stakeholders
Salespeople: shorter sales cycles, more closing opportunities, higher win rates
Sales managers: improved salesperson productivity, improved customer relations accurate reportingimproved customer relations, accurate reporting, reduced cost-of-sales
Senior management: accelerated cash flow, increased sales revenue, market share growth, improved profitability
Motivations for implementing SFA
Motivation % of sample reporting
Improve efficiencies 72
Improve customer contact 44Improve customer contact 44
Increase sales 33
Reduce costs 26
Improve accuracy 21
SFA will enhance performance when…..
Sales people find that SFA is easy to use
Sales people find the technology useful because it fits their roles well.
Availability of appropriate-to-task SFA training
Users have accurate expectations about what SFA will deliver
Users have a positive attitude towards innovation Users have a positive attitude towards innovation
Users have a positive attitude towards technology
Availability of user support after roll out; for example: help desk.
Involvement of user groups including sales reps and managers during project planning and technology selection.
Deployment of a multi-disciplinary team in the project planning phases
Senior management support for SFA.
CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES
Chapter 15
Marketing Automation
Marketing automation definition
Marketing automation is the application of computerised technologies to support marketers and marketing management in the achievement of their work-related objectives. j
Benefits from marketing automation 1
Enhanced marketing efficiency● The replication of marketing processes delivers greater control
over costs. When marketers use manual systems and ad hocprocesses, there can be considerable inefficiencies. MA enables companies to develop more streamlined, cost-efficient processes, that can be operated by any marketing incumbent, whether experienced or new-to-role.
Greater marketing productivity● MA enables companies to run dozens, even thousands of
campaigns and events through multiple channels simultaneously.
More effective marketing. ● MA allows marketers to employ what is known as closed-loop
marketing (CLM). CLM is based on a Plan-Do-Measure-Learn cycle.
Benefits from marketing automation 2
Enhanced responsiveness. ● Marketers have traditionally created and implemented annual
marketing plans with campaigns and promotions planned and scheduled many months ahead. MA allows marketers to respond instantly to opportunities, even if not part of a plan. MA functionality enables companies to engage in real-time marketing, responding immediately to an identified opportunity.
Improved marketing intelligence.● MA’s embedded reporting and analytics functionality provides valuable
management insights into markets, customers, campaigns, events and so on, leading to both enhanced efficiency and effectiveness.
Improved customer experience.● Customers receive personalized, relevant communications and offers
at appropriate times. MA means less Spam, from the customer’s perspective.
Closed-loop marketing Functionality offered by MA software
Asset management Market segmentationCampaign management Marketing analyticsCustomer segmentation Marketing optimisationDirect mail campaign management Marketing performance management
Document management Marketing resource management Email campaign management Partner marketingEmail campaign management Partner marketingEnterprise marketing management Product life-cycle management Event-based marketing Search engine optimisationInternet marketing Tele-marketing Keyword marketing Trigger marketingLead generation Web analyticsLoyalty management Workflow engineering
These are examples of high-level processes.
Asset management
Asset management enables companies to identify and track the assets that customers purchase, license, use, install, or download. Assets can be either tangible, intangible or blended.g , g
Campaign management
Campaign management automates the processes involved in planning, implementing, measuring, and learning from communication programs targeted at prospects or customers. The key elements of p p ycampaign management software are workflow, segmentation and targeting, personalization, execution, measurement, modelling and reporting.
Customer segmentation
Customer segmentation is the practice of partitioning customers into homogenous subsets so that each subset can be addressed as a unique marketing audience. This is the foundation of gcustomer portfolio management.
Direct mail campaign management
Direct mail campaign management is a specific form of campaign management in which the communication medium is direct mail.
Direct mail has many applications including lead Direct mail has many applications including lead generation, lead conversion, building awareness, up-selling and cross-selling, customer retention, database building or image enhancement. Important contributors to direct mail success are the list, the creative execution, the offer, and the timing.
Email campaign management
Email campaign management is a specific form of campaign management in which the communication medium is email.
Email is cheap easy to use and ubiquitous Email is cheap, easy to use and ubiquitous.
Email campaign management process
Enterprise marketing management
Enterprise marketing management encompasses the business strategy, process automation and technologies required to effectively operate a marketing department, align resources, execute g p , g ,customer-centric strategies and improve marketing performance. It is best-suited for large organizations with 50 or more people in marketing.
This includes functionality for campaign management, lead management, MRM [marketing resource management] and analytics.
Event-based marketing
Event-based marketing occurs when an event triggers a communication or offer. Event-based campaigns are usually initiated by customer behaviours or contextual conditions.
Internet marketing
Internet marketing is the process of creating value by building and maintaining online customer relationships.
Seven stage cycle of internet marketing
Keyword marketing
Keyword marketing is the practice of generating website traffic from internet users who have entered keywords into search engines such as Google, Yahoo!, AOL, Ask.com and Live search (formerly , , ( yMSN).
Lead generation
Lead generation is an important marketing objective, particularly in business-to-business contexts. Sales people challenged to grow the numbers of customers served need to be presented with high quality leads p g q yfor follow-up.
Marketers can deploy campaigns, events, seminars, Webinars and other tactics to generate the leads.
Loyalty management
Loyalty management functionality allows organisations to develop and operate loyalty management programs.
The development of customer loyalty is a goal of The development of customer loyalty is a goal of many CRM programs. The availability of loyalty management applications is a direct response to this need. Loyalty, or frequency, programs are important to several constituencies – the brand owner who operates the program, the member who collects and redeems credits, and the channel partner who transacts with the member.
Market segmentation
Market segmentation is the practice of partitioning markets into homogenous subsets so that each subset can be addressed as a unique marketing opportunity.pp y
Marketing analytics
Marketing analytics is the application of mathematical and statistical processes to marketing problems. Marketing analytics can be used to explore, describe and explain.p , p
Marketing optimization
Marketing optimization software allows companies to select an overall goal, such as sales or profit margin maximization, and specify all of the constraints of a marketing campaign strategyg p g gy
The software then determines which customers should get which offer through which channel to ensure the campaign objectives are met.
Marketing optimization screenshot
Marketing performance management
Marketing performance management (MPM) software enables companies to measure their marketing performance though analysis and reports, and improve outcomes over time through closed-loop p g pmarketing.
Senior management is progressively becoming more demanding that marketers be accountable for their expenditure, and MPM helps marketers meet that expectation. MPM, which is typically focussed on analysis of marketing tactics such as events and campaigns, is routinely built into most MA applications.
Marketing resource management
Marketing resource management applications consist of a range of automated tools that enable marketers to manage their marketing processes and assets more effectively, and to work at greater speed
d ith i d t l MRM t lkit i l dand with improved control. MRM toolkits may include modules for :● Marketing planning and budgeting, New product launch,
Marketing event calendaring, Event planning and registration, Project management, Campaign planning, Collateral production, proofing and approval, Digital asset management, including brands, trademarks, logos and collateral, Expense and budget management, Time management, Media buying, and Procurement
Patrner marketing
Partner marketing solutions enable companies to coordinate and work collaboratively with channel partners and others.
Partner marketing solutions are used to manage Partner marketing solutions are used to manage processes such as partner qualification and sign up, development of joint business plans and objectives, cooperative advertising and promotions, lead management, co-branding of collateral and point-of-sale materials, measuring partner performance, partner training, administration of marketing funds, and specialist partner incentive schemes.
Microsoft Canada’s partner portal
Product life-cycle management
Product life-cycle management (PLM) applications help marketers manage life cycle stages effectively and profitably.
PLM software solutions facilitate collaborative intra- PLM software solutions facilitate collaborative intraand extra-enterprise engineering, product development, and improved management of projects, product portfolios, documents, and quality. PLM applications can provide a single source of all product-related information to use in the innovation, design, engineering, feasibility, launch and market development processes.
Search engine optimization
Search engine optimization (SEO) is the practice of improving the quantity and quality of website traffic generated by search engines.
Usually the higher ranking results that appear earlier Usually, the higher ranking results that appear earlier in the listings generate more visitors. SEO aims, therefore, to achieve high rankings, preferably on the first or second pages.
Tele-marketing
Tele-marketing is the use of the telephone to identify and qualify prospects, and to sell and service the needs of customers.
Tele-marketing takes two forms: inbound (calls from Tele marketing takes two forms: inbound (calls from customers) and outbound (calls to customers). Some call centres perform a blended function with agents both making and receiving calls.
Tele-marketing is widely employed in both B2C and B2B environments, but is subject to legislative control due to its intrusive nature.
Tele-marketing fucntionality
Auto-dialling
Predictive dialling
Automated voice-messaging
C t t li t t Contact list management
Agent management
Do Not Call compliance
Screen pop with caller ID
Scripting, including objection response
Computer Aided Telephone Interviewing (CATI)
Interactive Voice Response (IVR)
Trigger marketing
Trigger marketing is the practice of responding to some customer-generated or customer-related event in a way that is designed to achieve some marketing goal such as make a sale, identify a cross-sell g , yopportunity, prevent negative word-of-mouth, or promote positive word-of-mouth. The event triggers the response.
Web analytics
Web analytics report the behavior of website visitors. Routine reports generally detail web traffic data, but may also include performance data from campaigns and events that involve the web site, for p g ,example the number of click-throughs from a web-link inserted in a campaign email.
Two main technologies collect data: logfile analysis and page-tagging.
Web analytics terminology
Building block terms: page, page view, visit/session, unique visitor, new visitor, repeat visitor, return visitor
Visit characterization terms: entry page, landing page exit page visit duration referrer internalpage, exit page, visit duration referrer, internal referrer, external referrer, search referrer, visit referrer, original referrer, click-through, click-through rate/ratio, page views per visit
Content characterization terms: page exit ratio, single-page visit, single page view visits (bounces. Bounce rate
Conversion metrics terms: event, conversion
Web analytics report
Work-flow engineering
Work-flow engineering software is useful for designing marketing-related processes, such as the campaigning process, event-based marketing process, or the marketing planning process. p , g p g p
Campaign work-flow screenshot
CUSTOMER RELATIONSHIP MANAGEMENT
CONCEPTS AND TECHNOLOGIES
Chapter 16
Service automation
About customer service 1
Customer service has been a necessary preoccupation of service organisations, because they have understood that customers are responsive to the quality of the service they experience. q y y p
The quality of customer service is just as important for agriculturalists, miners, and goods manufacturers. This is particularly so when there is product parity, and customers are unable to discern meaningful differences between alternative suppliers or brands.
About customer service 2
Customer service standards can be assessed by customers when a service is being performed, as well as after the service has been delivered. ● The service experience as perceived from the dentists chairThe service experience as perceived from the dentists chair
during service delivery might be very different from the assessment a few days later.
Customer service can be experienced at any stage of the customer activity cycle: before, during, or after purchase.
Integrative quality
Integrative quality is determined by the way the various elements of the product and service delivery system work together. ● High integrative quality means that the processes, peopleHigh integrative quality means that the processes, people
and technology complement each other, working efficiently and effectively to deliver excellent customer service.
Customers who receive service from technology-enabled manufacturers or service providers, such as those with CRM systems in place, experience integrative quality.
Six attributes of companies renowned for excellent service 1
1. Customer service is pervasive. ● It is everyone’s responsibility; it is neither delegated nor
relegated to a single department or function.
2. Their operations run smoothly with minimal product2. Their operations run smoothly with minimal product and service defect rates, allowing them to focus on pleasing customers.
3. They are always looking for ways to improve.
Six attributes of companies renowned for excellent service 2
4. Customer service lies at the heart of the value proposition. ● Customer service is the main selling point.
5 They build personal relationships with customers5. They build personal relationships with customers.
6. They employ the latest IT to● allow their customers to interact with them more
conveniently
● develop a profound understanding of what customers need and want
● track activities and processes that influence customer experience.
Service automation definition
Service automation is the application of computerised technologies to support service staff and management in the achievement of their work-related objectives. j
Where is service automation deployed 1?
contact centres● Contact centres are configured to communicate with
customers across multiple channels including voice telephony, mail, email, SMS, instant messaging, web collaboration and fax.
call-centres● Call centres are generally dedicated to voice telephony
communications, whether through a public switched telephone network, cell-phone network, or VoIP.
Where is service automation deployed 2?
help-desk● Help-desks are usually associated with IT environments
where assistance is offered to IT users. SA applications such as case management, job management and service level management are used in this setting.
field service● Field service is widespread in both B2C and B2B
environments. Service automation applied to field service operations involves technologies such as job management, scheduling, mapping and spare parts management.
Key technological elements of SA 1
Infrastructure● When service is delivered through a central call-centre or contact-
centre, in a multi-channel environment, there needs to be tight integration between various communication systems, including telephony email and webtelephony, email, and web.
Data● Access to the right customer-related data, to enable the service
agent to identify and fix the issue promptly is critical to the delivery of responsive customer service.
Key technological elements of SA 2
Devices● Where service is delivered by a distributed work-force, smaller,
lighter, devices such as laptops, Windows-enabled hand-held devices, and smart phones or cell phones such as Blackberries, tend to be employed; these are typically not found in call- andtend to be employed; these are typically not found in call- and contact-centres. Synchronisation is also an issue for a distributed service team. Periodic synchronisation with the central CRM database enables service engineers and others to ensure that they are fully apprised of their daily scheduled appointments.
Software.
Benefits from service automation
Enhanced service effectiveness. ● Service requests can be completed more quickly to the customer’s
satisfaction by ensuring that requests are handled or the first point of contact or routed to the right service engineer or customer service agent, who is able to draw on an up-to-date knowledge base to resolve the issue.base to eso e t e ssue
Greater service productivity. ● Call- and contact-centre management systems ensure that the
optimal number of agents are scheduled and that their time is used productively. Field service applications ensure that workload is equitably and optimally distributed.
Improved customer experience. ● Agents have full visibility into the customer history and service
request and can ensure that service delivery is appropriate to customer status or agreed service levels
Functionality offered by SA software
Activity management Mapping and driving directions
Agent management Outbound communications mgmt
Case assignment Queuing and routing
Case management Scripting
C t t t S h d liContract management Scheduling
Customer self-service Service analytics
Email response management Service level management
Escalation Spare parts management
Inbound communications mgmt Web collaboration
Invoicing Workflow engineering
Job management
Activity management
Activity management enables service staff to review their workload, to-do list and priorities as directed by their manager or scheduler, and to report back on progress and issue resolution. Some applications p g ppallow activities to be updated in real-time by dispatchers and routed to the technician, so that work can be reprioritised. Alerts can be set so that appointments are not missed, or to notify agents and their managers that issues are unresolved or service levels are about to be, or have been, violated.
Agent management
Agent management is a high priority for call- and contact-centre managers. Managers want to employ the lowest head-count compatible with the desired level of customer service. Too few agents and gcustomers will be dissatisfied with wait-times; too many agents and payroll costs will be unnecessarily high. Customers and managers both want issues to be resolved quickly by agents.
Technologies that contribute to this outcome include queuing, scripting, and knowledge management.
Case assignment
Case assignment applications ensure that each enquiry or issue gets routed to the right agent or technician for resolution.
Customer service agents might for example be Customer service agents might, for example, be organised according to language skills, and field service agent by product category
Case management
Case management covers the full cycle of activities involved from receiving initial notification of a matter of concern to a customer to its final resolution and the case file being closed. g● Case management is also known as incident management
and issue management.
Cases, incidents or issues are initiated by the creation of a trouble ticket. ● Customers may be allowed to do this by web-form, or by
emailing or calling a service or contact centre.
Trouble ticket screenshot
Contract management
Contract management functionality enables service engineers and managers to create, track, progress, accelerate, monitor and control service contracts with customers.
Many companies now sell extended service contracts to customers when warranty periods have expired.
Customer self-service
Customer self-service is an attractive option for companies because it transfers the responsibility and cost for service to the customer.
Customers who self-serve are much less likely to Customers who self serve are much less likely to place demands on contact-centre, call-centre, help-desk or field service staff.
Customers are typically more competent at self-serving when transactions are involved (e.g. online banking or music downloads); however, they are less competent when problem-resolution is concerned.
Email response management systems
Email response management systems (ERMS) are not only useful for handling inbound emails but also for delivering outbound emails and SMS messages.
ERMS are designed up to manage the reception ERMS are designed up to manage the reception, interpretation, routing, response and storage of incoming email securely and effectively.
Escalation
Escalation ensures that issues get escalated according to internally determined rules. Higher levels of authority typically have greater discretion to resolve issues. For example, a front-line customer p ,service agent might be required to escalate to higher levels of management issues that have a potentially high cost or reputational consequence.
Inbo8und communications management
Inbound communications management (ICM) applications allow companies to receive, route, queue and distribute incoming communications from any channel – voice telephony, email, fax, instant message SMS fax web form to agents in anymessage, SMS, fax, web form – to agents in any location including contact centre, in the field or at home.
A unified queue, issue/content recognition, intelligent routing, and knowledge-base integration allow agents to deliver a consistent customer experience and to respond effectively to service requests whatever the communication channel.
Invoicing
Invoicing is a useful application for service technicians who are called to site to provide out-of-warranty service. Having completed the job to the customer’s satisfaction, and captured the customer’s , psignature electronically, the invoice can be raised on the spot, thereby accelerating cash flow.
Job management
Job management applications offer a range of functionality including cost estimation, quotation generation, creation of trouble tickets, job planning, travel time and distance calculation, job clustering (to , j g (reduce travel time), calendaring, scheduling, spare parts management, job progress tracking, invoicing, service level management, technician despatch, time management and product configuration.
Job management screenshot
Mapping and driving directions
Solutions that provide mapping and driving directions are very useful for service engineers who need to visit customers’ homes or business premises. Taking into account the engineer’s point-of-origin, g g p g ,service locations, job priorities, service level agreements and other variables, mapping solutions can minimize travel times and distances to ensure that service tasks are performed optimally.
Outbound communications management
Outbound communications management software applications are used in a service environment to acknowledge service requests, make and confirm service appointments, advise on the progress of a pp , p gservice task, invoice for out-of-warranty service, and follow-up after service to ensure that the customer is satisfied
Queuing and routing
Queuing and routing applications allow issues to be routed to agents with particular expertise and positioned in that agent’s queue according to some criterion.
Routing is usually determined by case assignment rules and position in the queue is determined by customer value or some other metric.
The objective of queuing and routing is to ensure that every service issue is presented to the most appropriate agent for handling and resolution.
Scheduling
Scheduling involves planning and organising a service technician’s activity plan for a day, week or other period.
A technician’s schedule contains details on the A technician s schedule contains details on the customer, location, time, product and issue.
Some scheduling applications take into account a range of considerations to ensure that the right technician is sent to service the customer● travel time and distance, technician availability, technician
skills, customer access hours, service level agreement, availability of spare parts, and the technician’s hourly rates of pay.
Task schedule delivered to a Pocket PC Scripting
Scripting enables customer service agents to converse intelligently with customers to diagnose and resolve problems, even though they may be untrained as technicians. Scripts can be designed so p gthat they flex dynamically according to customer response. Scripts also reduce agent training time.
Service analytics
Service analytics provide managers with information on how effectively and efficiently customer service generally, and individual agents or technicians specifically, are operating. Important metrics for p y, p g pmanagers of field service operations, for example, include technician utilization, parts inventory, travel time, first time fix rate (FTFR), mean time to resolve (MMTR), and job backlog.
Contact centre telephony dashboard
Service level management
Service level management applications allow managers to control the level of service that is offered to customers, and technicians to deliver the level of service agreed. g
Service levels can be agreed for a number of variables including availability (the percentage of time that the service is available over an agreed time period), usage (the number of service users that can be served simultaneously) and responsiveness (the speed with which a demand for service is fulfilled).
Spare parts management
Spare parts management is an important application for field technicians. They can see what parts they have with them on the road, check the inventory levels held by other technicians and at y yregional and central warehouses, order new parts, transfer parts from colleagues, manage excess and defective parts, and check on the progress of orders thereby ensuring that when they turn up at a job, they are properly equipped
Web collaboration
Web collaboration between customer and service agent is enabled by technologies that use instant messaging (web chat), or allow both parties to co-browse web-pages. This allows the agent to help the p g g pcustomer to resolve the issue in real time.
Customer service agents can collaborate with a number of customers simultaneously, or can prioritise based on customer value or some other metric.
Work-flow engineering
Work-flow engineering software is useful for designing service-related processes, such as problem diagnosis and issue escalation.
Work-flow for field service operations will define howWork flow for field service operations will define how service requests are validated, how service tickets are issued, how tickets are allocated, how problems will be diagnosed, how parts will be ordered, how problems will be fixed, how customers will be invoiced, and so on.