The view that CRM is an application or a business process methodology for engaging customers in contact centers in customer service functional domains within an organization has long since ceased to exist. In fact, as this book goes to press, a large number of CRM application vendors are competing in the market to provide technology solutions for companies that will integrate and use these social networks as part of a company's core ERP and CRM solutions.
Preface
Indeed, the book identifies a number of holistic models that offer different and competing summaries of CRM. The book contains many examples of CRM technologies and their application in marketing, sales or service functions.
Acknowledgements
A number of PhD students whom I have supervised or advised have made important contributions to the book. A number of chapters were read and critiqued by PhD students Sergio Biggemann, Martin Williams, Reiny Iriana and Chris Baumann.
About the author
He has been Professor of Customer Relationship Management, Professor of Marketing, Professor of Relationship Marketing and Professor of Management at a number of leading graduate schools of management, including Manchester Business School (UK), Cranfield School of Management (UK) and Macquarie Graduate School of Management (Australia). He was appointed the world's first professor of CRM in 1995 and remains an adjunct professor at MGSM.
Introduction to
Strategic Strategic CRM is a customer-oriented business strategy aimed at winning and retaining profitable customers. CRM applications attempt to understand and improve the relationship between company and customer by combining all these views of customer interaction into one view.4 CRM is an integrated approach to identifying, acquiring and retaining customers.
Marketing automation
Sales-force automation
Contact management applications often have features such as automated customer dialing, the salesperson's personal calendar, and email functionality. The seller enters details such as product codes, volumes, customer name and delivery requirements, and the software automatically generates a price quote.
Service automation
- CRM is database marketing
- CRM is a marketing process
- CRM is an IT issue
- CRM is about loyalty schemes
- CRM can be implemented by any company
They are then used for marketing purposes such as market segmentation, targeting, offering development and customer communications. Additionally, back-office functions such as operations and finance can learn from and contribute to customer-related data.
The IDIC model
The QCi model
The CRM value chain
Payne’s fi ve-process model
The Gartner competency model
Culture and structure Customer understanding People: Skills, competencies Incentives and compensation Employee communication partners and suppliers 4. Understand requirements Monitor expectation satisfaction vs. 1999) Customer Relationship Marketing: Up Close and Personal. Journal of Strategic Marketing, Vol. 2004) Exploring Direct Marketing and Customer Relationship Marketing. http://onlinebusiness.about.com/cs/marketing/g/CRM.htm. http://www.siebel.com/what-is-crm/software-solutions.shtm. http://computing-dictionary.thefreedictionary.com/CRM. http://www.destinationcrm.com/articles/default.asp.
Understanding relationships
- how to recognize a relationship 2. attributes of successful relationships
- the importance of trust and commitment within a relationship
- why companies and customers are sometimes motivated to establish and maintain relationships with each other, and sometimes not
- the meaning and importance of customer lifetime value
- the fi ve different schools of thought that contribute to our understanding of relationships and relationship management
Some authorities believe that defining a relationship as interaction over time is inadequate, even naive. This suggests that the parties in the dyad may have very different ideas about whether they are in a relationship.
Change within relationships
Similarly, it has been said that a relationship exists only when the parties move from a state of independence to dependence or interdependence. It is also obvious that relationships can be one-sided or reciprocal; one or both parties may believe they are in a relationship.
Trust
Customers can leave relationships for many reasons, such as repeated service failures or changing product requirements. This model of relationship development emphasizes two characteristics of highly developed relationships: trust and commitment.
Commitment
Sprint Nextel, the third largest wireless telecommunications firm in the US, is reducing its workforce by 4,000 jobs and closing 125 stores in the first half of 2008. The moves are part of cost-cutting measures caused by expected declines in subscriber base, revenue and profitability in the fourth quarter of 2007.
Reduced marketing costs
Better customer insight
The prospect matches the profile of the target market and contacts them for the first time. Loyal customer The customer is resistant to switching suppliers and has a strong positive attitude towards your company or offer.
Lifetime value
Companies that do not have processes in place to allocate costs to customers cannot use net margin data. This is partly because they are not offered the discounts often used to win new customers, and partly because they are less sensitive to price offers from other potential suppliers because they are satisfied with their experience.
Computing LTV
As part of the bank's CRM strategy, it undertook customer portfolio analysis to identify which retail segments were most strategically important. Companies must decide whether it is better to allocate resources to customer management or another area of the business, such as operations or research and development.
B2B context
B2C context
While companies generally desire long-term relationships with customers for the economic reasons described above, it is much less clear that customers generally desire relationships with their suppliers. While consumers may want a relationship with their financial services advisor or their doctor, they often can't find a good reason to develop a closer relationship with the manufacturer of their household detergent, snacks or toothpaste.
Customer satisfaction
26 This in turn influences actual purchasing behavior, which has an impact on business performance. First, we will define the key variables of customer satisfaction, customer loyalty and business performance.
Customer loyalty
The most loyal are those who have high scores on the three behavioral variables: recent purchases (R), frequency of purchases (F) and monetary value of purchases (M). Those customers who have a stronger preference for, involvement with, or commitment to a supplier are the more loyal in attitudinal terms.
Business performance
Banking: Another study found that customer satisfaction in retail banking was highly correlated with branch profitability. For example, a shift of one scale point in customer satisfaction (e.g., from three to four on a five-point scale) may not have a comparable impact on customer retention as a downward shift of one scale point (e.g., from three to four on a five-point scale). . two on the same five-point scale).
The Industrial Marketing and Purchasing school
There are five major schools of thought that provide different perspectives on customer-supplier relationships. The main schools of thought are the Industrial Marketing and Purchasing (IMP) school, the Scandinavian school, the Anglo-Australian school, the North American school and the Asian (guanxi) school.
Actor bonds
Resource ties
The Nordic school
Interaction
Dialogue
Value
The Anglo–Australian school
The North American school
The Asian (Guanxi) school
Journal of Marketing Management, Vol. communication, interaction and value.The Marketing Review, Vol. 2000b) Relationship Marketing: The Nordic School Perspective. 2004). Journal of Services Marketing, Vol. 1997) Value-driven relational marketing: from products to resources and competencies.
Planning and implementing
- fi ve major phases in a CRM implementation
- a number of tools and processes that can be applied in each phase of an implementation
- the importance of project management and change management throughout the implementation process
- Develop the CRM strategy
A small CRM project might involve rolling out an off-the-shelf contact management system like GoldMine or SAGE to a sales team. The remainder of this chapter will add further details to the CRM project design and planning process.
Situation analysis
In fact, most companies do not operate in all potential business units of their customer strategy cube. In the situation analysis, the three dimensions of the customer strategy cube are examined separately and together.
Customers or segments
Each square in this cube (there are some of them) can be a potential business unit that will be subject to a situational analysis.
Market offerings
Channels
The audit serves as a starting point for thinking about what you want to achieve with a CRM implementation.
Commence CRM education
4 Some of the richest resources can be found in online CRM communities – self-help groups organized around a common interest in CRM. Some of the better sites are www.customerthink.com (formerly www.crmguru. com), www.mycustomer.com (formerly www.insightexec.com, and before that www.crm-forum.com), www.sharedinsights.com, www.eccs.uk.com , searchcrm.techtarget.com, www.crm2day.com , www.crmdirectory.com and www.intelligententerprise.com.
Develop the CRM vision
Set priorities
Establish goals and objectives
Identify people, process and technology requirements
Develop the business case
Build CRM project foundations
After creating the CRM strategy, the next phase involves building the foundations for the CRM implementation.
Identify stakeholders
Establish governance structures
Other senior managers can sit on the steering committee to ensure that the project remains business-oriented and does not drift into an IT-dominated project. Finally, the governance diagram shows that the customer's voice must be heard in the project team.
Identify change management needs
It is not uncommon for CRM projects to import resources and talent to help deliver the project. A systems integrator may also be needed to align disparate systems into a cohesive whole to support project goals.
Organizational culture
To bring about change, it is not only necessary to show people the need for change, but also to feel so emotionally involved that they want to change.
Buy-in
The CRM project must be marketed to each of these groups in different ways. If efforts to win them over fail, weak links may need to be reassigned to work where the client has no influence.
Identify project management needs
It has been said that it takes many years to gain a customer's trust and confidence, but only one incident to break it. As the project progresses, there will be periodic 'milestone' reviews to ensure it is on time and on budget.
Identify critical success factors
A CRM project that aims to improve the productivity of marketing campaigns can consist of a number of tasks or mini-projects, each with its own outcome, including the following: market segmentation project, database development project, creation of a new campaign management process, management reports project, technology search and selection project and a staff training project.
Develop a risk management plan
Needs specifi cation and partner selection
Process mapping and refi nement
It can also identify the people (or roles) who contribute to the process and the standards against which the process is measured, such as time, accuracy or cost. The flow chart shows that the process is cross-functional and is completed by a series of internal supplier-customer relationships.
Data review and gap analysis
Initial technology needs specifi cation and research alternative solutions
Your options are to build your CRM applications from scratch, purchase an on-premises license, or pay a monthly per-user fee for an on-demand solution. The final alternative is to pay a monthly cost per user for an on-demand solution that typically includes implementation, maintenance, training, support, and application management services provided directly by the application vendor.
Hosted or on-premise CRM
On-premise deployments, on the other hand, can impose significant burdens on internal IT staff and budgets. Additional research from the Meta Group shows that hosted CRM provides a cost advantage for the first three years, but after that the annual costs make on-premise solutions more attractive.
Write request for proposals (RFP)
You may want it to integrate with other third-party systems that provide added functionality for sales, marketing, and service staff. For example, your marketing people may want integration with a mapping system, while salespeople may want integration with a global positioning system.
Call for proposals
Revised technology needs identifi cation
Assessment and partner selection
Project implementation
Refi ne project plan
Identify technology customization needs
The required business process is forwarded to the vendor, who (after some preparation) presents how this process is supported in the software. The resulting gap register is then assessed, priorities are set, and adaptation of their software and/or business process modification begins.
Prototype design, test, modify and roll-out
Evaluate performance
Significant contributions are made by John Turnbull, Managing Director of Customer Connect (www.customerconnect.com.au) and Gartner Inc. See http://www.marketingpower.com/content24634.php. http://blogs.salesforce.com/ask_wendy/files/how_to_create_.
Developing,
- the central role of customer-related databases to the successful delivery of CRM outcomes
- the importance of high quality data to CRM performance
- the issues that need to be considered in developing a customer-related database 4. what data integration contributes to CRM performance
- the purpose of a data warehouse and data mart 6. how data access can be obtained by CRM users
Skills in acquiring, improving, storing, distributing, and using customer-related data are critical to CRM performance. These databases can respectively record very different customer-related data: opportunities, campaigns, questions, deliveries and invoicing.
Defi ne the database functions
Defi ne the information requirements
Customer information fi elds
Contact data
Contact history
Transactional history
Current pipeline
Opportunities
Products
Communication preferences
Identify the information sources
Marketing may have data on market size, market segmentation, customer profiles, customer purchase channels, marketing campaign data, product registrations and product information requests. Customer Service may have records of service histories, service requests, customer satisfaction levels, customer complaints, resolved and unresolved issues, inquiries and loyalty program membership and status.
Enhancing the data
Sales may have records about customers' purchase history, including recency, frequency and monetary value, buyers' names and contact details, account number, SIC code, important purchase criteria, terms of trade such as discounts and payment periods, potential customers (prospects), responses to proposals, competitor products and prices , and customer requirements and preferences.
Compiled list data
Census data
Modelled data
If you want to use external data to enhance your internal data, you will need to send a copy of the data you want to enhance to the external data source. The source then attaches the relevant data to your files and returns it to you.
Secondary and primary data
The only way to access the lower levels is to start at the top and work your way down. When data is stored in a hierarchical format, you can end up working through multiple layers of higher-level data before you get to the data you need.
Relational databases
The hierarchical database is the oldest form and not well suited for most CRM applications. To extend the family tree metaphor, the network database allows for the possibility that children have one, none, or more than one parent.
Relational database management system (RDBMS)
It is actually possible to purchase an entire platform, consisting of integrated hardware, operating system (OS), database and CRM applications. The UNIX platform offers a variety of hardware/OS/database options, such as Hewlett-Packard hardware, Digital UNIX operating system, and Oracle database.
Populate the database
Developing, Managing, and Using Customer-Related Databases 105 Choosing a CRM database can be done in parallel with. Attached to the front end of the repository is a set of analytical procedures for making sense of the data.
Standard reports
According to Gartner Inc. 75 percent of data warehouse implementations will not meet their delivery goals. The company's data warehouse project was first implemented in April 1997, namely with a single area - sales.
Database queries
-relational databases must be designed with a very clear idea of the applications for which the data is needed. Attached to the front end of many databases are data mining systems that allow users to make sense of the data.
Customer portfolio management
- the benefi ts that fl ow from managing customers as a portfolio
- a number of disciplines that contribute to customer portfolio management: market segmentation, sales forecasting, activity-based costing, lifetime value estimation
- how customer portfolio management differs between business-to-consumer and business-to-business contexts
- how to use a number of business-to-business portfolio analysis tools
- the range of customer management strategies that can be deployed across a customer portfolio
The term portfolio is often used in the context of investments to describe the collection of assets owned by an individual or institution. Internal data from marketing, sales and financial data is often supplemented with additional data from external sources, such as marketing research agencies, partner organizations in the business network and data specialists (see Figure 5.2.
Identify the business you are in
Businesses will want to identify and target customers that can generate future profits: these will be those customers that the business and its network are in a better position to serve and satisfy than their competitors. Is a kitchen cabinet manufacturer in the woodworking industry or home improvement business.
Identify relevant segmentation variables and analyse the market
For example, is Blockbuster in the video rental business or another business, perhaps home entertainment or retail. A customer-oriented answer to the question will enable companies to move through the market segmentation process because it helps to identify the boundaries of the market served, it defines the benefits that customers are looking for, and it selects out the company's competitors .
Consumer markets
Let's look at some of the variables that can be used to define market segments. For example, in the B2C context, McDonald's USA found that 77 percent of its sales are to men aged 18 to 34, who eat at McDonald's three to five times a week, despite the company's mission to be the world's favorite family restaurant.
Business markets
First, how much would it cost to switch Jones from her current shoe retailer(s), and what would it cost to keep Smith's business. If Jones is very committed to her other provider, it may not be worth trying to change her.
Account value
Share of wallet (SOW)
Propensity-to-switch
Assess the value in a market segment and select which markets to serve
The fourth discipline that can be used for CPM is customer lifetime value (LTV) estimation, which was first introduced in Chapter 2. Data mining can be thought of as the creation of intelligence from large amounts of data.
Clustering
As new data is loaded into the data warehouse, further subsets can be extracted into the data mining data mart and the model can be subjected to further refinement. If you want to predict which customers are most likely to buy mortgage insurance, and you only have data on life policies, you can't answer the question.
Decision trees
The right-hand low-income box is no longer shared because both low-income parties are classified as poor credit risk. None of these split further because one unmarried party represents a bad credit risk and the remaining two married parties represent a good credit risk.
Neural networks
The chart shows that the top 20 percent of customers by volume are unprofitable, as are the bottom 20 percent by volume. When Kanthal, a Swedish manufacturer of electric resistance heating elements, introduced ABC, they found that only 40 percent of their customers were profitable.
Customer portfolio models
Bivariate models
The attractiveness of the customer's business is strongly influenced by the conditions in the customer service market. Scale and customer experience Barriers to customer entry or exit Customer capacity utilization Technological factors.
Trivariate CPM model
This means that a CRM strategist would apply the tools to a specific customer to help assess that customer's future value. The tools include the SWOT analysis, the PESTE analysis, the five forces analysis and the BCG matrix analysis.
SWOT and PESTE
In addition to specifically designed CPM tools, there are a number of other tools commonly used for strategic planning. A CRM-oriented SWOT analysis would be to search for customers or potential customers that come out well from the analysis.
Five forces
These are customers with whom a supplier wants to build an exclusive and well-protected relationship. A CRM-oriented vendor would try to find ways to serve this customer more effectively, perhaps by removing elements of the value proposition that are not critical, or by adding elements that enable the customer to compete more strongly.
BCG matrix
Protect the relationship: this makes sense when the customer is strategically significant and attractive to competitors. However, when the client shows no sign of making a significant contribution in the future, this may be the best option.
Customer relationship management and
- a defi nition of customer experience
- the emergence and importance of the experience economy 3. the differences between goods, services and experiences
- three key concepts in customer experience management: touchpoint, moment of truth and engagement
- a number of methods for better understanding customer experience 6. a battery of experiential marketing strategies and tools
- how customer experience is changed by CRM, sometimes for better and sometimes for worse
It is the “total customer experience” (TCE) that influences customer perceptions of value and service quality, which in turn influences customer loyalty ’ .2. The idea of customer experience has its origins in the work of Joseph Pine and James Gilmore.
From service to experience
Many customer service centers now script their service agents' interactions with customers to eliminate unacceptable customer experience. Customers have always experienced services, but Pine and Gilmore suggest that the planned customer experience differs because management tries to engage the customer in a positive and memorable way.
The planned customer experience
Using stage performance as their metaphor, they write: 'The newly identified experience delivery occurs whenever a company intentionally uses services as a stage and goods as props to engage a (customer)'.4 This distinction leads us to two perspectives. customer experience: normative and positive. However, many marketers try to add value and differentiate their service by enhancing the customer experience.
Customer experience concepts
Customer Relationship Management and Customer Experience 171 Engagement is a term widely used in the. Although there is no agreed definition of the term, in the current context it can be thought of as the customer's emotional and rational response to a customer experience.
How to understand customer experience
Creating highly engaged customers – with strong levels of emotional or rational connection to a brand, experience or organization – presents a greater challenge than creating satisfied customers. It is therefore necessary to constantly refresh the customer experience, provoking the customer's surprise by doing the unexpected.
Mystery shopping
Traditional measures of satisfaction do not perform well as measures of engagement, so managers must develop new measures.
Experience mapping
Such involvement can be expressed in a sense of self-confidence, integrity, pride, joy or passion. Companies are well advised to focus on the critical episodes and encounters that make up customer experience.
Process mapping
The customer activity cycle (CAC)
Ethnographic methods
Customer Relationship Management and Customer Experience 173. happens, listening to what is said and asking questions. For example, Eric Arnould shows how a table can be much more than just a piece of furniture.
Participant observation
Non-participant observation
12 Ethnography is a naturalistic form of research that reveals customer experiences as they occur in everyday life. When customer relationship management and customer experience are observed or felt – or recognized by their absence – it is an experience.
Communications
Visual identity
Product presence
Brand characters such as Ronald McDonald (quick-service food retail), Johnnie Walker (Scotch whiskey) or Bertie Bassett (licorice), can become important brand icons in their own right, to which customers can become strongly protective when brand owners threaten change.
Co-branding
There is little doubt that a large part of Aston Martin's brand cachet is linked to the James Bond film franchise.
Spatial environments
Websites and electronic media
People
