The Role of Multichannel Strategy 192 Understanding the Customer Relationship Lifecycle 193 Understanding the Customer Experience 195 Customer Experience and Emotional Goodwill 196. The Intra-Channel Customer Experience 198 The Cross-Channel Customer Experience 198 Enhancing the Customer Experience – The Role of Technology 199.
RE-INVENTING CRM
For CRM to be successful, there must be benefits for both parties. The story is told clearly and powerfully in the pages that follow. CRM is based on the principles of relationship marketing, so a brief overview of the development of marketing is helpful in understanding the evolution of CRM.
An emphasis on retention of profitable customers
A third characteristic of relationship marketing is that marketing is viewed as the responsibility of the entire company or of multiple functions, rather than just the concern of the marketing department.
An emphasis on multiple markets
These are customer markets, influencer markets (including shareholders), recruitment markets, referral markets, internal markets and suppliers. Relationship marketing recognizes that multiple marketing domains can directly or indirectly affect a firm's ability to acquire and retain profitable customers.
An emphasis on a cross-functional approach to marketing
Developing a strategic framework for CRM
The strategy development process
The value creation process
Furthermore, the proven link between customer retention and profitability means that customer relationships must be managed based on the economics of acquisition and retention at the segment, or better yet, at the micro-segment or individual level. In many cases, customer acquisition and retention can be improved through insights gleaned from value proposition and value assessment.
The multi-channel integration process
The information management process
These front office and back office applications cover a wide range of organizational tasks, such as sales automation, call center management, human resources, purchasing, warehouse management, logistics software and certain financial processes. The overriding concern about front and back office systems is that they are sufficiently connected and coordinated to optimize customer relationships and workflow.
The performance assessment process
In relation to an organization's CRM technologies, the ability to expand existing systems or plan to transition to larger systems without disrupting business is critical.
Organizing for CRM Implementation
How important are the following relationship issues to my organization? a) retaining profitable customers. The first part of the CRM strategy development process is to review the organization's business strategy.
Goldman Sachs
A strong and appropriate vision and values enable companies to develop a distinctive culture and focus for their employees. To assist in the development of a business vision and values, Davidson has identified seven best practices to make the vision and values work (Exhibit 2.1).
The new competitive landscape
The volume and speed at which information can be exchanged between companies and customers allows for an individualized dialogue, allowing the company to adapt to the specific needs and profiles of its customers. A company should take advantage of the speed at which volumes of market intelligence data can be collected from customer interactions to guide ongoing assessment and adjustment of the services it offers, to ensure the company continues to meet its chosen customers. meeting consumer needs better than any alternative organization open to them.
Putting the new economy in context
DnB NOR Bank – Case study overview
With the increasing sophistication of customers and the intensity of competition in the Norwegian market, the bank realized that it had to move away from a product orientation to a focus on customers and events in order to improve margins and increase profitability. The bank needed a means of identifying and leveraging customer satisfaction and loyalty drivers in a real-time operational environment.
Changes in industry structure and evolution
We'll cover this in more detail when we examine the multi-channel integration process in Chapter 4.
Analysing the industry and competitive environment
If the threat of entry is low, the profitability of the industry is high. A complete and balanced analysis of the competitive environment in which the company operates should lead to a good understanding of the key factors for success in this industry and the key tasks to be addressed in the company.
Definition of the relevant market
Criteria for market segment viability
Considering the alternative bases for segmentation
Benefit segmentation groups customers together based on the benefits they seek from a product. Occasion segmentation recognizes that customers may use a product or brand in different ways depending on the situation.
Choosing specific segments
We examine the economics that determine both segment focus and segment granularity in the next chapter. Segment granularity refers to the decision whether to use a macro-segmentation, micro-segmentation, or a "one-to-one" approach to segmentation.
One-to-one’ markets and permission marketing
In some cases, especially in an e-commerce environment, a migration to a "one-to-one" or a "one-to-few" can be undertaken relatively easily. Peppers and Rogers emphasize this in their work, however, it is sometimes not considered when a one-to-one marketing discussion is taking place.
Mass customization
An obvious but important point is that 'one-to-one' marketing does not imply adopting a 'one-to-one' approach with every single customer. The twin logics of mass customization and one-to-one marketing bind producer and consumer.
Communities or segments?
The customized service the customer receives is the result of them 'learning' the company about themselves over the lifetime of their relationship. Sports club community member: always travels on the cheapest economy fare with his football club (exceptions: none. The club never chooses a place where cheap tickets cannot be bought for travel to him).
The Leisure Group
RS Components: Case study overview
For CRM to be individualized, the company must develop IT systems that "know" the customer. The process of developing a CRM strategy involves a detailed investigation of both the business strategy and the company's customer strategy.
DnB Nor Bank
The strategic importance of maintaining and growing existing customer relationships was evident from a significant bias in the bank's customer portfolio: 20 percent of customers generated 80 percent of profits. The bank wanted a tool to identify and leverage the drivers of customer satisfaction and loyalty in a real-time operating environment.
The solution
RS Components: towards individualized CRM with
The website design responded to the different needs of the two communities of potential site users: purchasing departments and 'user selectors'. Since launching the website, RS has seen customer retention and campaign efficiency improve.
How the core and augmented offer add value
Expected. This consists of the generic product along with the minimum purchase conditions that must be met. Service diagrams or flow diagrams are useful here to identify the actual service activities which will consist of a combination of core product elements and additional services.
How relationships add value
In a business-to-business context, a lawyer may eventually develop into a 'partner' who is closely linked in a trusting and strategic relationship with the supplier. The client tier can be "mercenaries" who exhibit little loyalty and are often expensive to acquire and prone to defects; others may be.
The GE Answer Centre
Research by Tom Jones and Earl Sasser of Harvard Business School has found that, except in rare cases, total or complete customer satisfaction is the key to securing customer loyalty, and that there is a tremendous difference between customer loyalty simply satisfied and completely satisfied. They cite Xerox research that found fully satisfied customers were six times more likely than satisfied customers to repurchase Xerox products and services over the next 18 months.
The Harvard Business School view on loyalty
Television programs such as Watchdog in the UK (www.bbc.co.uk/watchdog), consumer advocate columns in Sunday newspapers and many websites on the Internet provide enormous opportunities for "terrorist" activities. Websites such as www.Grumbletext.com, shown in Figure 3.4, provide a structured environment in which individuals can express their dissatisfaction.
How brands add value
As a result of such experiences, the image of the brand in the eyes of the customer increases or decreases. By 1935, approximately 50 percent of Procter & Gamble's total media budget was devoted to radio.
The value delivery system
Building the value proposition
BT: creating new customer value propositions – Case study overview
Zurich Financial Services Group is a leading provider of financial protection and wealth accumulation products and solutions to approximately 35 million customers in more than 60 countries.
Value propositions at Zurich Financial Services – Case study overview
A valuation based on subjective judgment about the features and benefits that are important to the customer can fall prey to the assumption that the supplier and customer attach the same importance to the different product features - rarely. Managers who want to build customer-centric offerings need to know which specific combination of product and service features, relationships, and branding are most important to the organization's key customer segments.
Traditional means of customers’
Experienced and knowledgeable managers may have a reasonably accurate perspective regarding the product and service features and benefits that are most important to their customers, especially when these views are supported by other evidence. Experience shows that even when an organization correctly identifies most of the attributes most relevant to the customer, the relative ranking of these by the customer and the supplier often varies considerably.
However, a common mistake companies make is to assume that customers place the same importance on these attributes as company leaders. A much better way is to evaluate the offer from the customer's point of view and take into account the differences in customer perception by market segment.
Improving value assessment using trade-off analysis
The Robotic Components example (see box) demonstrates the use of the pairwise trade-off analysis. Having completed our discussion of “the value the customer receives,” including its two key components – the value proposition and the value assessment – we now turn our attention to “the value the organization receives.”
Why customers differ in their real profitability
The problem is that traditional accounting systems make it difficult, if not impossible, to identify the true costs of serving individual customers. A useful test to apply when looking at these costs is to ask, "What costs would I avoid if I did not do business with this customer?" The advantage of using the principle of avoidability is that many Customer service costs are actually divided among several or more customers.
Understanding future profit potential
The role and relative importance of customer acquisition varies considerably depending on a company's specific situation. The starting point in understanding customer value from the perspective of the supplier organization is to determine the existing customer acquisition costs within the main channels used by the company and to identify how these costs vary within different customer segments.
Customer acquisition at United Electricity plc
When customer acquisition costs are divided by profit per customer per year, the number of years needed to reach breakeven is determined. Annual profit per customer in segment 1 (the 'struggling empty nest super loyal') was £6, giving a breakeven of 18.3 years.
Acquisition within different channels
This segment appears very attractive in terms of acquisition economics, especially if CRM strategies are successfully implemented to retain customers. We found that many B2C organizations do not differentiate their CRM activities at the segment level.
Improving acquisition activities
While many companies recognize that customer retention is important, relatively few understand the economics of customer retention within their own firm. Since the beginning of the 1990s, research has identified the financial benefits of customer acquisition versus customer retention.
Customer retention at United Electricity plc
Organizations should first consider reallocating existing spend so that more emphasis is placed on those segments that have the greatest potential to increase net current profitability. The organization can then determine where to selectively make additional expenditures for the most relevant market segments.
Why retention improvement impacts profitability
It involves two major tasks - measuring customer retention rates and profitability analysis by segment. These include measuring customer retention rates over time, by market segment and in relation to the product/service offered.
Measuring retention rates for existing customers is the first step in improving customer loyalty and profitability. The outcome of this first step should be a clear definition of customer retention, a measurement of current customer retention rates and an understanding of the existing and future profit potential for each market segment.
He was very reliable as he also dealt with issues that were problematic. The Executive Director was pleased to speak at these seminars as, as he said, it meant he had to reflect on certain issues, but perhaps he was also pleased to receive the recognition. being an expert in his field.39. However, this will only be achieved by providing a superior customer experience within and across all channels in which the company interacts with its customers – the subject of the next chapter.
BT – creating new customer value propositions
BT's presentation project works to unify the value system, by integrating three core elements of the organisation: the customer (sell side); the Enterprise itself (In-side); and Suppliers and Partners (purchase side). BT's approach to customer value creation has two main components: the value proposition and the value proposition.
Building new value propositions at Zurich Financial Services
The initial process is concerned with the detailed specification of the proposal to be developed. The next process includes the cross-functional activities involved in actually creating the deliverables of the planned value proposition.
A promising approach
This chapter reviews the multi-channel integration process with the aim of providing an understanding of integrated channel management and the role of the six channel categories in the CRM strategy framework. Although this review is typically performed as part of the strategy development process discussed in Chapter 2, it now needs to be considered at a more detailed level within the multi-channel integration process.
Disintermediation
Such teams will manage changes in channel mix based on resulting shifts in margins as products move through their lifecycle. Thus, managers responsible for channel strategy need to understand both the nature of their industry's channel structure now and how it is likely to change in the future.
Reintermediation
By focusing on individuals with low insurance risk, the company was able to offer them even lower premiums by enabling customers to deal directly with the company, thus eliminating the need to factor in costly brokerage commissions (and expenses general related to the support of an intermediary network) in policy prices. For example, Autobytel.com, an Internet-based car dealership, began by providing customers with general information about cars, which helped them identify their search criteria and the ability to research dealers from who could buy the specified. the vehicle.
Benchmarking structural change
This can take the form of simple so-called shopping engines where the customer enters their specific purchase criteria and the agent searches for the offers available from different suppliers that meet those criteria. Some information intermediaries develop additional services, such as providing general information about a specific product category or products that meet a range of different needs based on common life events.
Orientation of intermediaries
Amazon.com: disintermediation or
The market map identifies the volumes of products and services sold and the sales values associated with them. Where possible changes in volumes and values over time should be identified in the market map so that channel dynamics are better understood.