Customer Relationship Management

gabonesedestructionSoftware and s/w Development

Feb 17, 2014 (3 years and 7 months ago)

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Customer Relationship Management

Dr Sherif Kamel

The American University in Cairo

Outline


Overview


Why CRM?


CRM basics


Defining CRM


Managing the customer life cycle


5 key drivers of the customer value


4 stages of a customer relationship


Interactivity v individualization


Challenges to understanding customers


Remarks


Conclusions

Bits and bytes



CRM


the hottest buzz word in business today


Developing a personal and a professional profile about
each customer


Basic and historical information


Personal preferences


Trends and habits


Demographical information


Building a CRM culture


The power of integration


Using emerging technology to get closer to the
customer

Current facts…


Today customers are in charge


they make the rules


Putting technology at the center stage


Business intelligence is one of the most growing segment in the
marketplace


Customer loyalty is very difficult to maintain due to competition


Customers want an excellent service and they want to feel special


Most companies think they are customer
-
focused however in reality
they are product
-
centric


There is a need to formulate customer
-
focused firms which needs:


CRM strategy


Organizational change


Corporate culture

Economics of customer retention

“Winning back a lost customer can cost up to 50
-
100 times as much as keeping a
current one satisfied.”





Rob Yanker, Partner, McKinsey & Company

Understanding your customer is key to retention…..


Market size


CRM market grew 66% in 1999


34 Billion US dollars by 2003 and probably around 125
billion US dollars by 2004


60% of the CRM software license market is controlled
by 3 vendors


Siebel


Trilogy


Baan/Aurum


Why CRM?


It costs 6 times more to sell to a new customer than to
sell to an existing one


A typically dissatisfied customer will tell 8 to 10 people
about his/her experience (mainly related to poor
customer service)


The odds of selling to a new customer is 15% versus
50% to an existing customer


70% of the customers complaining will do business
again with the company if the complaints are quickly
addressed


90% of existing companies do not have integrated CRM
tools and platforms

Customer Relationships Today


Product



Pricing


Community

Distribution

Communication


Branding



Customer

Relationships


Building a customer
-
centric
approach to Internet
marketing by focusing on
customers

CRM Basics


CRM is the timely delivery of excellent service
“customer relationship management”


CRM is a combination of business process and
technology that seeks to understand a company’s
customers from a number of perspectives including:


Who they are?


What they do?


What do they like?

Age of the never
-
satisfied customer…


CRM becomes a support tool in a time characterized
by:


Increased competition


Globalization


Growing cost of customer acquisition


High customer turnover


CRM is all about creating a better value proposition to
customers


Information and communication technology is now
acting as a catalyst for CRM


Extended enterprise


World wide web and the Internet

Defining CRM


CRM is an integrated sales, marketing and service
strategy that is based on a timely and accurate
information infrastructure and that depends on
coordinated enterprise
-
wide activities


Example: tracking customers interactions with the firm


Customer tracking includes steps in the selling and customer
service cycles


CRM steps include


Targeting


Acquisition


Retention


Expansion


Defining CRM


Targeting


Who do we target?


What segments are most profitable?


What segments match our value proposition?


What is the best segmentation strategy for us/our industry?


Acquisition


What is the best channel for each segment?


What is the acquisition cost for a channel/segment?


Do certain channels deliver certain types of customers?


Cost effective acquisition?

Defining CRM


Retention


How can we improve retention?


What is our average customer relationship length?


How can we hold customer for as long as possible?


What is the most cost effective method of retention?


Expansion


How many products does our average customer buy?


How can we induce our current base to buy more products?


Who are the prime targets for expansion?


What is the cost of expansion?

Goals of CRM


Using existing relationship to grow revenue


Using integrated information for excellent service


Introducing consistent, replicable channel processes
and procedures

CRM…


CRM is a business strategy and not a product


Putting CRM into practice requires developing a set of
integrated applications to address all aspects related to
the front
-
office needs


CRM could be a major support platform for small and
medium
-
sized enterprises


Cost of the information and communication technology
applications and infrastructure should be calculated as
opposed to the return
-
on
-
investment

Evolution of information requirements


Materials requirements planning (MRP)


Manufacturing resource planning (MRP II)


Enterprise resource planning (ERP)


Supply chain management (SCM)


Customer relationship management (CRM)

Managing the customer life cycle

Acquiring

new customers


Enhancing

profitability of existing

customers

Retaining

profitable customers

for life

Acquiring
new customers


Promoting the company’s product and service
leadership


Redefine the companies competitive edge and
innovations


Offer a superior product backed by an excellent service


Example: Browsing on the net, submitting a request, receiving
a phone call


Model for a sales and service strategy


Encouraging cross
-
selling and up
-
selling


Cross selling is used by suggesting alternative products or up
-
selling by rendering the customer more informed with the new
products and services.


Broadening the relationship between the company and
the customers


Providing a value proposition represented by offering a
greater convenience at low cost (one
-
stop
-
shopping)


Example: “Best Buy” an electronic retailer with more than 300
stores capitalizes on committed relationships with customers


3000 calls a day with more than 50% having computer
-
based
answers and solutions

Enhancing

profitability of existing
customers

Retaining

profitable customers for life


Retention focused on service adaptability


Delivering not what the
market

wants but what the
customer
wants


Providing a value proposition that offers a proactive
relationship that works on the best interest of the
customer


Example: customer retention is becoming a key competitive
strategy for many companies

Integrated CRM

Integrated CRM Applications

Sales Force Automation

Customer Support

Direct Marketing

Cross
-
sell and Up
-
sell

Proactive Service

Acquire

Enhance

Retain

Customer

Life cycle

Partial

Functional

Solutions

Complete

Integrated

Solutions

Core CRM process competencies

Marketing and

Fulfillment

Sales

Cross
-
sell

Up
-
sell

Telesales

Field Sales

and Service

Loyalty

and Retention

Programs

Customer

Service and

Billing

Prospect

Or

Customer

Fax

eMail

WWW

Phone

Content Management

Technical Infrastructure

How to build a CRM infrastructure

1.
Involve top management

2.
Decide on a vision of an integrated CRM

3.
Establish a CRM strategy and specify its objectives

4.
Understand the customer

5.
Review cultural changes that will need to occur

6.
Develop a business case

7.
Evaluate current readiness

8.
Evaluate appropriate applications to do a better business

9.
Identify and target quick wins

10.
Have one manager to own the end
-
to
-
end project

11.
Implement in stages

12.
Be sure to create a close
-
loop CRM environment

13.
Create concrete measurement goals

Relationship depth and profitability

Magnitude of
Purchases

$

$$

$$$

Frequency of
Purchases

Long
-
Term
Profitability

Evaluating Relationship Depth

Relationship depth,
as measured by the
frequency and
magnitude of
purchases, is a
critical component
of customer
profitability

Length of customer tenure and
profitability

Short

Long

Lifetime

Low

High

Lifetime
Profit

5 key drivers of the customer value


Cost of Targeting


Cost of Acquisition


Service and Usage Revenue


Cost of service


Duration of relationship

4 stages of a customer relationship

Commitment

Dissolution

Exploration /
Expansion

Awareness


Customer
recognizes
the firm but
has not
initiated any
transactions


Customer
gathers
information
about the
firm which
determines
whether
repeated
transactions
will occur


Customer
and firm feel
a sense of
obligation or
responsibility
to one
another


Total loss of
commitment
and
relationship

Interactivity v individualization


Interactivity is the occurrence of two
-
way communication between
the firm and the customer


Retail store personnel handle Internet customer service


Chat rooms are set up to discuss product
-
related issues


Customers subscribe to customized versions of firm newsletters


Technology has made it possible to customize each interaction to
the individual user


Consumers have privacy concerns about sharing too much
information


For individualization to be attractive, consumers must have unmet
needs


Costs and complexity for the firm increase with greater personalization
while service speeds often decline

Challenges to understanding customers


Identify the customer


Learn from customers


Know the customers’ value


Determine best resources


Access complete customer profile and history

Remarks


World is moving rapidly to a customer centric business
model


It is a prerequisite for survival and growth in the
marketplace


Integration of disparate customer data sources is a
primary technical challenge


CRM is becoming invaluable as a differentiation tool


The world is becoming extremely customer centric,
even cultures that have been customer
-
averse


Technology is just a platform


an enabler

Conclusions


A firm is better able to serve customers needs if they
understand them well


Provision of the products customers want, at the right
time through a consistent service leads to their retention


CRM gives the complete and rich view of the customer,
enabling tactical and strategic actions to be taken to
meet customer needs


CRM enables consistent customer communication
regardless of channel, location, time