eCRM:
1 to 1 Marketing
Jason C.H. Chen (陳周宏教授), Ph.D.
Professor of MIS
Graduate School of Business
Gonzaga University
Spokane, WA 99258, USA
[email protected]
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Presentation Outlines
Why are companies moving to CRM ?
What’s in it for you?
1 to 1principles and best practices
Other challenges
Where do you go from here?
2
BUSINESS FOCUS
E-BUSINESS
•SCM
•CRM
•BPR
•ERP
Customer
centric
Who are the customers?
______
_______are
the customers?
Where
Their purchasing
__________ habits.
Demands
Products
What they need/want?
How many they need/want?
When they need/want?
How to reach them?
eBusiness Key Concepts

eBusiness


eCommerce


The strategy of how to automate old business
models with the aid of technology to maximize
customer value
The process of buying and selling over digital
media
eCRM (eCustomer Relationship Management)

The process of building, sustaining, and improving
eBusiness relationships with existing and potential
customers through digital media
4
eBusiness Processes
WHY
Customer Relationship
WHAT
Redesign Business
Processes (Outside-In)
HOW
Applying Technology
5
Formula for Customer Benefit



Customer Benefit (cb)=
+ v(value of market offering)
+ b(value of brand)
+ r(value of relationship)
- c(cost of market offering)
- t(cost of time)
The v, b, r, c, and t vary across customer
segments and individual customers.
How to maximize cb?


eCRM is one of the strategies to maximize cb and
Mobilization
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CRM has become the #1 priority for
CEOs …
Customer Relationships Have
Become the top priority for CEOs Worldwide
1. Relationship with Customers
2. Cost Competitiveness
3. Effective Use of Information Technology
4. Managing Change
5. Shareholder Value
6. Revenue Growth
7. Industry Restructuring
8. Globalization
9. Value-Added Supplier Relaationships
Figure 1:Top Executive Priorities Ranked By Percent Citing Issue As “Critically Important”
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CRM has become the #1 priority for
CEOs …
Senior Executives Expect Current Customers to
Drive Future Revenue Growth
Alliances
7%
New Customers
19%
Acquisitions
6%
Deeper Penetration
46%
New Products
22%
Source:The Alexander Group,Incorporated
8
Why the shift in focus to CRM?
Most companies have already attained
operating efficiencies and optimum
productivity through past efforts of :




Downsizing
Strategically outsourcing non-value added actives
Business Process Reengineering
Implementation of FRP System
Products in many industries have become
commoditized forcing companies to sacrifice
margins for sales volume
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Presentation Outlines
Why are companies moving to CRM ?
What’s in it for you?
1 to 1 principles and best practices
Other challenges
Where do you go from here?
10
And oh, check these numbers…
Cutting customer defections by just 5% has
the effect of boosting profit between 25% and
85%.*
Today ,the average business is losing between
15-35% of its customers annually**
69% of these defections are due to a poor
sales or service interaction with the
customer**
*Harvard Business Review
**Forum Corporation
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USA Companies …
Every (Years)
------------------- 5
 4
 1

Lost
---------------½ _________
Customers
Employees
½ __________
Investors
½ __________
Other reasons why you need 1
to 1
Increase customer loyalty
Get more business per customer
Become less dependent on price
Increase customer satisfaction
Save time
Speed up your sales cycle
13
Business (Our) Objectives



1. Get customers
2. Keep customers
3. Grow customers
The only difference is how firms do this
14
Share of Market vs. Share of Customer
Customer
Needs Satisfied
Share of Market
Mass
Marketing
Customers
Reached
15
Share of Market vs. Share of Customer
The longer the bar,
The higher unit
Margins will be
Customer
Needs Satisfied
1
Mass
Share of Customer
to Marketing
1
Share of Market
Customers
Reached
16
In Four Words …


Treat different customers differently
Personalization
17
A Lasting Competitive
Advantage
The only true competitive advantage
comes from the understanding you
have of your customer that your
competitors don’t.
This information has to come from the
Big Data !?)
customer (_________
The more effort customer invests, the grater
their stake in making relationship work.
Reinventing the relationship
Going to a competitor  ____________
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Presentation Outlines
Why are companies moving to CRM ?
What’s in it for you?
1to1 principles and best practices
Other challenges
Where do you go from here?
19
Summary of 1to1 Strategies
Identify
Differentiate
Interact
Customize
Customer:
-Identities
-Contact info
-Transactions
-Interactions
-Give the right
people access
when they
need it
Value:
-Actual
(current profits)
-Strategic
(potential value)
Learn more:
-Needs
-Value
-Preferences
-Behaviors
Customer Need
Set:
-Product
-Service
-Delivery
-Bundles
One view of the
customer:
Integrated
customer data
All customers are
not created equal
Never make a
customer tell us
the same thing
twice
Use your
knowledge about
customers to
customize
Needs:
-Individual
-Segment
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Identify–What information do you need?
Goal: obtain more and better information about a
greater number of your customers… and use it to
build relationships
Name, rank, serial number, phone, fax, email
History, transactions
Customer needs
- Business objectives
- Complaints
- Choice of communication channel
- Habits and preferences
Revenues, profitability, LTV (loan-to-value ratio)
- Potential value
- Lifecycle stage
Source:Insight Technology Group,1998
21
Where is the customer data?
Where is it? Who has access?
Who manages it ? Who owns it?
Sales
Marketing
Operations
Internet
Customer
Service
Collections
Department
Other
Providers
Call
Center
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How do you manage it ?
Make sure individuals are recognized at
all contact points
Link customer interactions over time,
across all divisions
Give the right people access to this info
at the right times
Figure out who “the customer” is when
the “customer” is an enterprise
23
Charles Schwab creates links
Broker access to complete customer
account(s) including business and
personal links



Broker sees account the way the customer
sees the account
Picks up where last action/interaction left
off
Integration across all channels
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“One Customer” view is key
Integrate customer information across the value chain
Customer A
Customer A
Customer A
Customer A
Customer A
Marketing
Call
Center
The Web
Sales
Force
What IT is needed to achieve this goal? Ans: Integrated database
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Differentiate
Customers have different values to the
enterprise


Actual value
Strategic value=share of customer, not market
Customers have different needs from the
enterprise
Strategy?


Market segmentation,
80/20 Rule
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Basis of customer differentiation
Differentiate them by their NEEDS
What the customer needs, not what you
want to sell
Some needs are apparent through
transactional records
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Interact – Interaction strategy
Goal: Generate more customer feedback less
expensively … and use it as a competitive
advantage
- From expensive sales people to call center … to the even less
expensive Web site
- Identify all contact points
“We identified all guest contact points, and the employees
most likely to be involved. It was eye-opening. No one
realized how many opportunities we were missing.”
Patrick Kennedy, GuestNet CEO
- Generate feedback, not just messages
- Engage your customers in an ongoing dialogue that enables
you to learn more and more about their particular needs,
priorities, and interests …
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Rules of interaction
1.
2.
3.
4.
5.
Conversation is a consensual act
Neither party in control
Feedback results in behavior changes
by everyone in your organization
Each interaction picks up where last left
off – across al channels
Don’t ask too much: use “drip irrigation”
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Benefits of Interaction
Uncovers




Needs (so you can sell more)
(Dis)Satisfaction
Risk of defection
Complaints
Makes you smarter about the customer
each time
Helps build barriers to exit
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Touch point integration
Integration of all customer contact
points is becoming increasingly
important as customer information
migrates to the Web
… Beyond the Phone
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Interaction Using Call Centers
Measuring the efficiency of call centers:

Hold times and call abandonment rates
Measuring their effectiveness:



Ratio of complaints handled on first call
Percentage of inquiries generating leads
Share-of-customer data gathered
What are the implications when you
off load support the web? How
does the call center change
Review the metrics list – which metrics are
efficient vs. effective?
Which ones support Learning Relationships?
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Capital One – The customer call
•Analyze data on
7M households
•Also analyze related
data on millions of
Capital One customers
Customize
Identify
•Pick from 50 options
on whom to notify
Interact
Differentiate
•Remember and pass
along 25 pieces of
info related to this
particular customer
•Prepare service rep
to make customized
product offer at end
•Predict what this
of call
individual may want
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Customize
Reward customers for collaborating
with you by tailoring whatever you
possibly can for them: service, fees,
billing, delivery, terms, product…
- Low cost
- High efficiency
- Based on individual customer
preferences
34
How mass customization works
Production and service delivery processes are
modularized
Component elements or services are mass
produced
Configuration is digitally controlled
Finer granularity of modules leads to larger
number of possible “fits”
What kind of strategic resource issue? Combinable
_________
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Mass customization of a credit
card offering
Design:
Golf
Nature
NASCAR
Art
Sports
Team
School
Annual
Fee:
None
$10
$15
$25
$35
$50
APR:
8%
10%
Billing:
Ancillary
Services:
12%
14%
16%
18%
Weekly
BiWeekly
Monthly
BiMonthly
Org. by
Date
Org. by
Category
Travel
Club
Dining
Club
Card
Reg.
Credit
Ins.
Accident
Ind.
Purchase
Protectior
Standardized modules
are combined into …
NASCAR
No
Annual Fee
12% APR
Billing Org.
By Category
Purchase
Protection
…custom configurations (7776
unique options)
The more modules,the greater
your ability to customize.
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Presentation outlines
Why are companies moving to CRM?
What’s n it for you?
1to1 Principles and best practices
Other challenges
Where do you go from here?
37
Infrastructure
Change hurts …
1.
2.
3.
4.
5.
Start small
Expand gradually, culture changes
take time
Don’t forget about training
Hold people accountable for the right
things
Measure and reward the right things!
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Sales
Identify and track the right infor

- Sales forces automation
Differentiate

Spend the right time and effort on MVCs, MGCs,
and BZs
Interact

Drip irrigation, never asking the same thing
Customize

Change behavior based on feedback
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Call center
Move from cost center to profit center
Sell more to customers (Increase SOC- "Servoce
Organization Controls")
Support for complicate products
Ancillary services (Increase loyalty)
Pre-qualify leads
Low-cost market research
Improve Complaint discovery and tracking Practice
IDIC ("Infinite Diversity in Infinite Combinations ")
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1to1 web site
Requirements:
- Identify and remember visitors
(Amazon.com)
- Differentiate visitors on each visit
- Does this fast!
- Tracks and interprets clickstreams
- Remembers all this!
- Customizes based on individual
preferences
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Top 5 Reasons CRM Efforts Fail
from the Home office in silicon valley
5. There isn’t a wealth of experience in this area. No
one has got it down to a science (WebVan)
4. The inability to really effectively implement strategy
- even if you have the right strategy, process, and
rules coding (formulation vs. implementation)
3. The company thinks they understand strategy and
process well, but really don’t.
2. No strategy, tactics, business rules or processes in
place.
1. The company has processes but they are bad
processes (like any automation, CRM tools make
good things better and bad things worse _______
faster ).
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Presentation outlines
Why are companies moving to CRM?
What’s in it for you?
1to1 principles and best practices
Other challenges
Where do you go from here?
43
How you can make an impact
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Get senior management buy-in
Encourage them to establish your multi-disciplinary team
Develop short and long term plans
Help them start Small, “Light Campfires”
Bring in Strategy/Change Management/Training coaches
Help ”decode” IT and marketing Needs and Languages
Evaluate and prioritize projects. Look for a couple of “Quick
Wins”
Document success, share across the company (best practices)
Start scaling the solution, Test, pilot, Test!
Improve on plans and keep going!
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Cost-effective 1to1
• Differentiate by value
• Roll out 1 to 1 initiatives
based on member value
• 80/20 Rule
Below
zeros
Number of
members
1 to 1
Most Growable
Members
Most Valuable Members
Member
Value
20% of (valuable)
members but they
generate 80% or
more of value
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What should you do real soon?
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Work on your database!
Ask one question at each interaction
Develop a strategy for your BZs
Figure out who you really want to do business with
Find out why some customers who are buying less this year
Make those touch point improvements!
Check out your VRU again
Improve complaint handling
Customize what you can, economically
Ask your best customers what you can do differently/better
for them (DO IT)
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Trend for Now and Future


Social Media Technology
Big Data and Data Mining




Market Basket
Target Market
Cloud computing
Others …
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