Session 2 Evolution of Crm

CRMCRM

EvolutionEvolution Initially, there were Door-to-Door sales forces to approach the

customers.

Then, Mass marketing replaced the intimacy of a direct sales

force.

Later, Targeted marketing evolved. Use of direct mail and

telemarketing.

Latest is Customer Relationship Management (CRM), the next

step in Evolution. A concept supported by latest technologies.

EVOLUTION OF CRMEVOLUTION OF CRM

1980’S

•Focus on Data Mining and Direct Marketing was the outcome

1990’S

•Focus on loyalty programs

2000’S+

DATABASE MARKETING

RELATIONSHIPMARKETING

CUSTOMERRELATIONSHIP

MARKETING

Defining CRM…Defining CRM… CRM is about how you attract, develop and retain

customer.

Customer Focus; Customer acquisition, Customer research, Customer loyalty, Customer development, Customer satisfaction, Customer value,

What is CRM all about…..What is CRM all about….. CRM promises to help companies to get to know their

customers.

CRM helps an organization to understand which customer to retain and which ones they should be willing to lose- and why?

Overall helps in targeting, spending money wisely, saving time & customer satisfaction.

CRM is how to differentiate customer treatment according to individual preferences.

Why CRM…..Why CRM….. Customers are fickle and becoming more cynical.

We no longer believe what we read and see.

Convergence of markets.

Competition- leader or follower?

Customer loyalty at any cost.

GOALS OF CRMGOALS OF CRM Provide better customer service Cross sell products more effectively Helps sales staff Simplify marketing and sales processes Discover new customers and new customer needs Increase customer revenue

Defining CRMDefining CRM Dr. Robert Shaw (as cited in Customer

Relationship Management, 2001) provides a more thorough definition of CRM.

Customer relationship management is an interactive process for achieving the optimum balance between corporate investments and the satisfaction of customer needs to generate the maximum profit.

[email protected] NIFT Bangalore

Defining CRMDefining CRM Measuring both inputs across all functions

including marketing, sales and service costs and outputs in terms of customer revenue, profit and value.

Acquiring and continuously updating knowledge and customer needs, motivation and behavior over the lifetime of the relationship.


Defining CRMDefining CRM Applying customer knowledge to continuously

improve performance through a process of learning from successes and failures.

Integrating the activities of marketing, sales and service to achieve a common goal.


CRM: A Customer-centric A Customer-centric business strategybusiness strategy

A Customer-centric business strategy which Focuses on Managing and optimizing entire customer life cycle. Demand re-engineering of work processes with customer in

focus. It consists of 3 phases

Planning Phase Assessment Phase Execution Phase

In-depth analysis of customer behavior and attributes.

Applying of the achieved knowledge in the formulation of marketing campaigns, strategies and treatment plans.

More than just a set of technologies – it is a process.


Benefits of CRMBenefits of CRM Company existence – quest for profit.

Three ways to increase the profitability of the customer base Acquire more customers Optimize the value of the existing customers Retain the right customers longer

Acquiring new customer cost 5-10 times more that retaining the existing one

Loyal customers will will buy more and are willing to pay premium prices

20/80 rule – 20% of the customers generate 80% of the revenue

Continued….. Service leaders enjoy the following advantage over their low-

service competitors: They grow twice as fast. They experience a 6% annual growth vs. a 1% share loss (they

take customers away from their competitors). They can charge 10% more from their products and still take

customers away. They enjoy 12% vs. 1% average return on sales. Industry statistics show that 68% of customers walk away because

of poor customer service.


Evolution of CRMEvolution of CRM Mass Marketing

Target Marketing

CRM

Mass MarketingMass Marketing Replaced the intimacy of direct sales One way communication Wide geographic distribution Lost is the personal touch with the

customer Mass marketing was enabled trough the

technological improvements in TV, radio, printed press

Target MarketingTarget Marketing Direct mail, telemarketing Receiving customer response Lack of specific data, average response rate Islands of information

CRMCRM Next evolutionary step, back to intimacy Customer loyalty build on:

Understanding of customers wants, needs and values Interactivity with the customer in the way customer prefer

Evolution of Customer Evolution of Customer Relation over timeRelation over time Customer relationship management is an

attempt to modify customer behavior over time and strengthen the bond between the customer and the company.

The key to CRM is identifying what creates value for the customer and then delivering it (Newell, 2000).

Evolution of customer relation over time

Val

ue o

f cus

tom

er re

latio

nEvolution of customer relation over time

CustomerAcquisition

Acquire the „right“ customers with high potential

valueCustomer

Development

Cross- and up-sell by offering

the right products at the right time

CustomerRetention

Retain profitable customers and increase their

long-term value

CRM CycleCRM Cycle Assess

Who are the customers – demographics and lifestyle? Where do they live? What are they worth? What is their lifetime value potential? What and how do they buy? How can they be reached? How have they responded to

promotions in the past and trough which channels they prefer to be reached?

Plan Execute

Execution and management of the marketing campaigns and customer treatment plans.

Data gathering.

CRM Critical Success CRM Critical Success FactorsFactors

Architecture Data warehouse Data structure and architecture – 80% of the service cost

Analysis, Analysis, ProfilingProfiling

Customer InteractionCustomer Interaction Sales force automation system.Sales force automation system. Call centerCall center The InternetThe Internet

Analysis, Profiling

Customer Interaction Sales force automation system. Call center The Internet

Planning PhasePlanning Phase Plan to approach the customers Plan for making new campaigns This phase includes

Marketing tools Various Softwares

Marketing & Sales personnel are involved in this phase

Assessment PhaseAssessment Phase Select customer base for analysis Analyze customer requirements This phase includes technologies like

Data warehousing Data Mining Online analytical processing (OLAP)

A certified personnel sets up the CRM package while a business analyst analyzes the data

Execution PhaseExecution Phase Customer interaction Executes campaigns Track customer feedback This phase uses

Internet Call centers Direct mails etc.

Technology behind Assessment PhaseData Mining

Data Warehouse

OLAP Server

Warehouse containing Customer data.

Multidimensional Structures to facilitate better and fast analysis of data.

Integrates with Data Warehouse & OLAP to implement intelligent algorithms to discover patterns.

User analyzes these patterns to take decisions suitable for his business.

DATA WAREHOUSING A data warehouse is a copy of transactional data. Data is specifically structured for querying and reporting A data warehouse can be a relational, multidimensional

hierarchical database or a flat file.

DISTINGUISHABLE FEATURES• Contains historical data• No frequent updates• Data stored is subject oriented

TERMINOLOGYData Mart- Contains data about a specific subject.Metadata- Describes the data stored in data warehouse.Data Cleansing- The process of ensuring that all values in a dataset are consistent and correctly recordedETL- Extraction, Transformation and Loading of Data.

A Typical Data Warehouse

Data Warehouse

Detailed Data

DataMart

DataMart

DataMart

Summarized DataMeta Data

Data about data.Facilitates in firing queries on detailed data.Data marts contain data specific to a subject.

customer campaign sales


OLAP•Online analytical processing is the name given to database and user interface tools that allow to quickly navigate within data.

•Provides a mechanism to store the data in multidimensional cubes.

DISTINGUISHABLE FEATURES•Multidimensional Cubes- To store data which are multidimensional in nature.

•Calculation Intensive- Allows complex calculations on database.


CRM-Related TermsCRM-Related Terms eCRM

CRM that is Web-based ECRM

Enterprise CRM PRM

Partner relationship management cCRM

Collaborative CRM SRM

Supplier relationship management [email protected]

NIFT Bangalore

Reference books CRM, Seth, Parvatiyar & Shainesh CRM Briefcase book; Kristen Anderson & Carol Kerr CRM; Paul Greenberg CRM; J.N.Seth

Thank youThank you

Session 2 Evolution of Crm

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