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Target’s Differentiation Strategy
James OldroydKellogg Graduate School of ManagementNorthwestern University
[email protected] TNRB
2
To Date
Dual Advantage
Willingness to Pay
Supplier opportunity
cost
Differentiation
Goldman Sachs
Merrill Lynch
McDonald’sBurger King
Low Cost
Wal-mart
K-mart
Mom and Pop
Store
3
Dimensions of Value
Value
Price
Differentiation
Product
Service
Bottom Line Value
Top Line Value
Willingness to Pay
Cost
Price
Value Captured by Customer
Value Captured by Firm
Value Captured by Supplier
Supplier Opportunity Costs
Achieving Differentiation Advantage
How one goes about obtaining a differentiation advantage depends upon the nature of the product/service:
• Observable Goods: the buyer can easily form accurate judgements about the quality of a product.
• Experience Goods: the buyer finds it difficult and/or costly to determine the quality of the product prior to purchase and use.
• Communication/Network Goods: the value to the buyer rises as the number of buyers and users increases.
And it embraces the whole relationship between supplier and customer
5
Differentiating Observable Goods
By differentiating an observable good the producer acts to reduce the total cost of use to the buyer. Very often this requires an increase in product price. But in successful differentiation the price increase is more than offset by a reduction in the costs experienced by the buyer. The aim is not be the low cost producer but TO BE THE LOW COST PROVIDER.
Manufacturer's Value Added
EngineeringLaborMarketingDistributionAdministration
Product Price
Raw Materials
Buyer’s Costs
SearchLearningSwitchingRisk/lossPerformanceService
Total Cost of Use to Buyer
6
Differentiation-Based Strategy
User’s Total Cost of New Software
Product
Price
Search
Evaluation
Learning Risk
Adaptation
Utility Software
Resources
7
Firm A:
Firm B:
Price
Price
Total cost to buyer Producer’s cost Producer’s margin Buyer’s cost
Firm A has a cost advantage
Value Chains for Cost Advantage and Differentiation Advantage
Firm C:
Firm B:
Price
Firm C has a differentiation advantage
Price
8
Strategic Positioning
The essence of strategic positioning is to make choices that are different from those
of rivalsStrategy is not a race to one ideal position ---
it is the creation of a different positionDifferences in positioning are necessary but
not sufficient for sustainable competitive advantage
• Sustainable advantage depends on barriers to imitation
• Advantage is magnified by mutual reinforcement across activities
9
Road Map
CRM= Customer + Relationship + ManagementThe Rise and Fall of CRMStrategic Framework for CRM
Why CRM Fails Lock-in vs. LoyaltyThe Dark Side of Market Focus Target’s Market Focused Strategy and the
Challenges of ImplementationConclusion
10
Multiple Data Sources
People have typically sought an understanding of their customer by using one or two of these sources…independently
Customer Research
Market Data
InternalData
Observation Data
What is purchased,
not whyBehavioral not
attitudinal
Attitudinal
not behavioral
or fact-based
Market conditions,
not customer
preferences
GAP
Source: Arthur Anderson, 2002
11
Customer Relationship Management
v To deepen customer relationships.
v To build customer loyalty
v To increase profitability
Purpose of CRM
The Proliferation of CRM 161 CRM companies funded since 1998 $1.3 billion raised by CRM companies
Source: Red Herring May 2002 p. 27
12
Sources of Expense:Sources of Expense:• Typically $5,000 a seat and $2 million to $5
million per deployment.• CRM systems required data conversion when
consolidating data from multiple legacy systems. •At the enterprise level, CRM software is just
plain difficult. •Additional Investments of $100,000 to $1
million. •Need to hard-wire and hard-code the two
systems together to connect the Siebel suite to the mainframe.
•Time and money running data reconciliations. Custom coding to pay for, too. Source:
Computerworld Inc. Dec 3, 2001
And FallSurveys show 55 per cent of North American executives don't believe they've seen a return on their CRM
investments.
Gartner Group
Major Players:
Siebel Systems 26%
Oracle and Broadvision
6% share
Despite the troubles CRM software sales are expected to rise 10% to $4 billion in
2002 and to rise 33% to $29.4 billion in 2003
13
Road Map
CRM= Customer + Relationship + ManagementThe Rise and Fall of CRMStrategic Framework for CRM
Why CRM Fails Lock-in vs. LoyaltyThe Dark Side of Market Focus Target’s Market Focused Strategy and the
Challenges of ImplementationConclusion
14
Customer Management Loop
Respond
Identify
Dialogue
Interpret
1. Decide what you will do with the information. Make it a part of your overall customer plan.
2. Establish customers as the information pivot in your organization. Gather the right Customer Information (Who what when where and WHY) from the right customers through the right means (not the most expensive).
3. Make this information useable, available and actionable throughout the organization where it is needed.
4. Add context to the information. Interact with customers and understand their needs.
15
Case Study: Harrah’sCreated a Total Rewards program to track players at
electronic gaming machines. These machines account for 80% of operating profits
Links 40,000 machines in 12 states
The goal is to create brand loyal customers
Comps (comps) good toward shows, meals or hotel
rooms.
Identify
16
Customers Are Not Created EqualFre
qu
en
cy:
Nu
mb
er
of
Cu
sto
mers
at
Each
Valu
e
Level
Value Per Customer
MeanStandard Deviation
Why are they unprofitable?Can behavior or cost be changed?Should we disengage?
Unprofitable
Modestly profitable or break even
Modestly profitable
What can be done to develop the profitability of these customers?
Who are these customers? How do we keep them, attract more like them?
Very profitab
le
Identify
17
Tuft’s PlanAs the pie
shrinks the table manners get
worse.
A prominent physician on the current state of physician satisfaction
.01% = $7,880 PMPM
5% = $1,191 PMPM
95% = $22 Per Member Per Month (PMPM)
The Problem
Information Solution - CRM•Patient Identification and Treatment Recommendation•Workflow Standardization •Multi-disciplinary Collaboration •Alerts care managers enables them to intervene early •Persistently reminds and motivates patients, families and providers to comply with proven health management care plans
Information Solution - CRM•Patient Identification and Treatment Recommendation•Workflow Standardization •Multi-disciplinary Collaboration •Alerts care managers enables them to intervene early •Persistently reminds and motivates patients, families and providers to comply with proven health management care plans
Results from similar programs:• 44% reduction in
readmission• 36% reduction in hospital days for
patients with congestive heart
failure• 400% ROI for
pediatric asthma program
• 12% annual cost savings for diabetes
management
Results from similar programs:• 44% reduction in
readmission• 36% reduction in hospital days for
patients with congestive heart
failure• 400% ROI for
pediatric asthma program
• 12% annual cost savings for diabetes
management
Identify
18
Pharmaceutical Health Care
Physicians
Patients
Insurance/Gov.
Pharmacies
Defining your customersIdentify
19
Tribune’s Customers
The Reader
The Advertiser
The Brick Wall
The Division Between “Church and State”
20% of Revenues 80% of Revenues
Identify
20
General Electric Medical System’s Customers
Hospital Purchasing
Department
The Lab Technician
s
Doctors
Hospital Administrati
on
Patients
Identify
21
Guidant’s Customers
Electro- Physiologists
ImplantingCardiologists
CardiologistsPrimary Care
Physicians
Patients
Primary Relationship
Secondary Relationships
Referral Chain
Identify
22
Customer Management Loop
Respond
Identify
Dialogue
Interpret
1. Decide what you will do with the information. Make it a part of your overall customer plan.
2. Establish customers as the information pivot in your organization. Gather the right Customer Information (Who what when where and WHY) from the right customers through the right means (not the most expensive).
3. Make this information useable, available and actionable throughout the organization where it is needed.
4. Add context to the information. Interact with customers and understand their needs.
23
Using Customer Information to Initiate Dialogue
Customized Web Interface
Customer Service and Support
EmailPop-up ads
Sales Force CallsBulk Mailers
Broadcast ads
Internet Physical
Push
Pull
Dialogue
24
Response Rates ForMarketing Communications
Differential Marketing
6-15% range depending on quality of
marketing lists/segments defined
Relationship (1:1) Mktg.
18-30% range when using highly targeted,
‘one-to-one’ type marketing campaigns
Traditional Marketing
2-5% range for traditional types of mass media type
campaigns
Informational Marketing
1-3% range for customer passively collecting
information
Passive
Interactive
Company Initiated(Outbound)
Customer Initiated(Inbound)
Dialogue
25
Customer Management Loop
Respond
Identify
Dialogue
Interpret
1. Decide what you will do with the information. Make it a part of your overall customer plan.
2. Establish customers as the information pivot in your organization. Gather the right Customer Information (Who what when where and WHY) from the right customers through the right means (not the most expensive).
3. Make this information useable, available and actionable throughout the organization where it is needed.
4. Add context to the information. Interact with customers and understand their needs.
26
The potential of segmentation has vastly increased in the new world
In the old world, segmentation was mostly static using demo- and socio-graphics, attitudes and customer value. In the new world, segmentation is behavior based, real-time and dynamic
Is there no value in static segmentations anymore and does every segmentation have to be real-time?
Is behavioral segmentation the means to all ends and how do you integrate it with existing (mostly offline) segmentation methods?
Can multiple segmentations methods be used simultaneously for different value creation purposes?
Interpret
Segmentation of Customers
27
The Customer Pyramid
PlatinumPlatinum
GoldGold
IronIron
LeadLeadLeast Profitable
Most Profitable
Differentiate Customers
Depending on the Level of
Involvement
Source: the Customer Pyramid, Zeithaml, Rust, and Lemon. Cal. Management Review, Summer 2001
Interpret Prediction to Optimize
28
Customer Break Even Analysis
Cost to Serve
Price
High
Low
Low High
Goal is to move
Customers from below
the line above the line or to lower the
line
Break
Eve
n Poin
t
InterpretUnderstanding Customer’s patterns
29
Customer Management Loop
Respond
Identify
Dialogue
Interpret
1. Decide what you will do with the information. Make it a part of your overall customer plan.
2. Establish customers as the information pivot in your organization. Gather the right Customer Information (Who what when where and WHY) from the right customers through the right means (not the most expensive).
3. Make this information useable, available and actionable throughout the organization where it is needed.
4. Add context to the information. Interact with customers and understand their needs.
30
Target right customersTarget right customers
Cross-sellingCross-selling
Reduce lapse rateReduce lapse rate
Attractmore effective acquisition
Attractmore effective acquisition
DevelopMore sales per customer per year
DevelopMore sales per customer per year
RetainIncrease customer lifetime
RetainIncrease customer lifetime
Source ofimpactSource ofimpact Typical leverTypical lever
Stages ofcustomerrelationshiplifecycle
Stages ofcustomerrelationshiplifecycle
Churn
Market capitalisation ($ bn)
Market cap./customer ($)
Churn
Market capitalisation ($ bn)
Market cap./customer ($)
5.4%
7.0
3,721
5.4%
7.0
3,721
1.4%
35.3
5,883
1.4%
35.3
5,883
CRM Creates Value by Improving Attraction, Development, and Retention of Customers
Average revenue percustomer per year ($)Average assets per account ($)
Average revenue percustomer per year ($)Average assets per account ($)
130
21,000
130
21,000
170
102,000
170
102,000
Number of accountsNew accounts (Q4 1999)Average acquisition costs ($)
Number of accountsNew accounts (Q4 1999)Average acquisition costs ($)
E-trade
1,881,000413,500
360
E-trade
1,881,000413,500
360
CharlesSchwab
6,000,000390,000
200
CharlesSchwab
6,000,000390,000
200
Respond
31
SegmentationSegmentation
Victoria’s Secret places all visitors on its slower servers but once a customer places something in
the shopping cart they are switched to a faster server.
Customer PatternsCustomer Patterns
Amazon monitors browsing and makes suggestions. Customer who bought this book also
purchased a book by….
Businesses that use Differential Treatment Respond
32
Road Map
CRM= Customer + Relationship + ManagementThe Rise and Fall of CRMStrategic Framework for CRM
Why CRM Fails Lock-in vs. LoyaltyThe Dark Side of Market Focus Target’s Market Focused Strategy and the
Challenges of ImplementationConclusion
33
Organizational Barriers to Customer Information
1. Information Flow
2. Channel Obstacles
3. Company Barriers to Entering the Data
1. Information Flow
2. Channel Obstacles
3. Company Barriers to Entering the Data
34
Why CRM Fails: Strategy & Organization
What CRM is:
•A strategy
•A cross functional and cross divisional initiative
•Difficult both costly and time consuming
What CRM is not:
• a technology
•A software package
•A marketing department initiative
•Easy
55% of CRM implementations don’t produce results (Gartner Group)
20% Damage long standing customer relationships (Bain Report)
Implement a CRM without a strategy
Implement CRM before readying the organization
The perception that more is better
Staking not wooing customers
Source: Avoid the four perils of CRM by Rigby, Reichheld and Schefter. HBR, February 2002.
35
Road Map
CRM= Customer + Relationship + ManagementThe Rise and Fall of CRMStrategic Framework for CRM
Why CRM Fails Lock-in vs. LoyaltyThe Dark Side of Market Focus Target’s Market Focused Strategy and the
Challenges of ImplementationConclusion
36
10% beneficial change in … 10% beneficial change in …
… increases NPV by %… increases NPV by %
Target’s Differentiation Strategy: Loyalty
New customer acquisition costNew customer acquisition cost
New customer conversion rateNew customer conversion rate
New customer revenue changeNew customer revenue change
Cost of repeat customerCost of repeat customer
ConversionConversion 0.84
2.32
4.64
0.69
Repeat customer revenue changeRepeat customer revenue change
Repeat customer conversion rateRepeat customer conversion rate
Customer churn rateCustomer churn rate
RetentionRetention 5.78
9.49
6.65
Visitor acquisition costVisitor acquisition cost
Visitor growthVisitor growth
AttractionAttraction 0.74
3.09
37Source: Frederick Reichheld and W. Earl Sasser, “Customer Retention: A New Star to Steer By,” Working Paper, Bain & Company, November 1999.
10
20
30
40
50
60
Auto ServiceChain
BusinessBanking
CreditCard
CreditInsurance
InsuranceBrokerage
IndustrialDistrib.
IndustrialLaundry
OfficeBuilding
Management
Software
Perc
en
t In
cre
ase in
Pro
fit
28%
35%
125%
25%
50%45%
55%
40%
35%
And Profits
Profit Impact of 5% Increase in Retention
38
Loyalty…
Loyalty has been hijacked and tortured by opportunistic
marketeers. Your search will reveal more than 100,000
(1,620,000 actual) loyalty related pages overwhelmingly dominated by loyalty cards, loyalty marketing, loyalty programs, and my personal favorite loyalty schemes. It seems that loyalty has been reduced to a potpourri of marketing gimmicks
designed to manipulate customer behavior with cheap bribes.
Frederich Reichheld, Loyalty Rules!
Loyalty obviously demands superior profits, but it demands
more. It requires that those profits be earned through the
success of partners, not at their expense. Loyalty can be earned only when leaders put the welfare of their customers
and their partners ahead of their own self-serving interests.
Isn’t Is
Data = Satisfaction = LoyaltyData = Satisfaction = Loyalty
39
Lock-in vs. Loyalty
Truly Loyal Accessible
Locked-in High Risk
Attitude
BehaviorPositive Negative
High
Low
Source: Stakeholder Power, 2001 Steven Walker and Jeffrey W. Marr Perseus Publishing
Purchase Don’t Purchase
Enjoy
Despise
40
Loyalty Programs
American Stores Neiman MarcusJ.C. PenneyToys “R” UsOffice MaxStaplesKohl’sTargetSaksSearsCVSCitgoRite Aid Dayton’s NordstromFederatedMedicine Shoppe Amoco Conoco Exxon Phillips Shell Ultramar A&P Albertson’s
TJX KrogerZellersTalbots
Safeway Value CityFood Lion
Foot LockerVictoria’s Secret
Source: The Price of Loyalty by James Cigliano, Margaret Georgiadis, Darren Pleasance, and Susan Whalley. The McKinsey Quarterly 2000 number 4.
US Retailers with Loyalty Programs
Costs: $1.2 Billion tied up in annual customer discounts
Entitlement: The programs are nearly impossible to stop
Don’t work: most customers are looking for an alternativeNon-value Reward: If customer spends $500 per year most programs would only give $5.
Most Programs Fail Because:
1 – Dual Purpose programs. (Target’s Take Charge of Education donates 1% of Purchases)
2 – Built to provide customer information. (Grocery Stores use to obtain information)
3 – Align the Organization!!
Successful programs are:Successful programs are:
41
Road Map
CRM= Customer + Relationship + ManagementThe Rise and Fall of CRMStrategic Framework for CRM
Why CRM Fails Lock-in vs. LoyaltyThe Dark Side of Market Focus Target’s Market Focused Strategy and the
Challenges of ImplementationConclusion
42
The Perils of Market Focus
Listen to the wrong Listen to the wrong customers:customers:
Listen to the wrong Listen to the wrong customers:customers:
Too many Too many messages: messages: everyone is everyone is approaching approaching customers customers
with with “relationship”“relationship”
Too many Too many messages: messages: everyone is everyone is approaching approaching customers customers
with with “relationship”“relationship”
Companies Companies offer intimacy offer intimacy
but are not but are not able to able to
reciprocate reciprocate with custom with custom
offeringsofferings
Companies Companies offer intimacy offer intimacy
but are not but are not able to able to
reciprocate reciprocate with custom with custom
offeringsofferings
Focus on Focus on too small too small of a group of a group
while while alienating alienating
many many customerscustomers
Focus on Focus on too small too small of a group of a group
while while alienating alienating
many many customerscustomers
1111
2222
3333 4444
Data = Satisfaction = Loyalty = PaybackData = Satisfaction = Loyalty = Payback
Customers actually miss the days when a transaction was just a transaction, when purchasing a bar of soap didn’t
mean entering into a lifetime value relationship.
The Hotel asks me for detailed
information every time I
check in.
The rental car shuttle made
me walk because I
wasn’t “club member”. But I
was a loyal customer
Sony Walkman and Chrysler Minivan were both products that customers in focus groups said they did not
want.
Source: “Torment Your Customers (they’ll love it)” by Stephen Brown. Harvard Business Review, October 2001. And “Preventing the Premature Death of Relationship Marketing” by Susan Fournier, Susan Dobscha and David Glen Mick. HRB Jan-Feb1998.
43
Examples
“Sure they can call me at dinner, but I can’t reach them on the phone. They can send me 100 pieces of mail per year, but I can’t register
one meaningful response with them. Companies claim that they’re interested in the customer. But
the focus is on the company”
From “Preventing the Premature Death of Relationship Marketing” Fournier,
Dobscha, and Mick, HBR 1997.
44
Build to Order
Build to Replenish
Build to Forecast0%
10%20%30%40%50%60%70%80%90%
100%
1992 1994 1997 1999
From DealerStock
Via Dealer
Out ofDistributionCenters
Build to Order
McKinsey estimates that in auto
manufacturing alone BTO could save $80
Billion a year in reduced excesses
stock
Why the Clamor?Why the Clamor? Sales of mass market cars in BritainSales of mass market cars in Britain
While BTO has eluded many firms, others have made
significant progress by using
ChoiceBoards.
The Myth of Mass Customization
DELL’s ChoiceBoard Options
Source: “A long march” The Economist, July 14, 2001
45
Chaos
Conflict
Coordination Failure
Ownership and Accountability
From Matrix to Cubic Organization
CEO
North America Europe Asia
Production
Service
Sales
Marketing
Geography
Function
Customer
2X 3X
1
2
3
1
2
Matrix2
46
Road Map
CRM= Customer + Relationship + ManagementThe Rise and Fall of CRMStrategic Framework for CRM
Why CRM Fails Lock-in vs. LoyaltyThe Dark Side of Market Focus Target’s Market Focused Strategy and the
Challenges of ImplementationConclusion
47
The Duality of Market Driven Organizations
Accountability Coordination
Decentralized Centralized
Product Focused Market Focused
Vs.
Vs.
Vs.
48
Internal Challenges - InformationWall Street doesn’t care how much
product we sell to a particular customer.
A Corporate Executive
Getting the information from the business silos and combining it to see all interaction with a customer
CoordinatingMechanism
Unified View of the Customer
Aggregate the information
Business Silos
“We had 86 internal accounts for IBM”
We aggregated all IBM
information
One view of the “big picture” of IBM
49
Challenges - Coordination
Give and Take
AA BB CC A B C
Product Silos Solution
Clients don’t care if a certain business line is losing money. They view the account in its entirety.
Clients want accountability. They want you to run the relationship as business not a product
Clients don’t care if a certain business line is losing money. They view the account in its entirety.
Clients want accountability. They want you to run the relationship as business not a product
Account Manager
50
External Challenges
New Sales Methods Alignment
Economics Mega Aggregators
Channel Conflicts
51
Information Can Be Consolidated at a Any Level
No Segments The Organization
Level
Some SegmentsVarious Types of
Customers
1-2-1 DirectThe Individual
Customer
Customer Segmentation Continuum
Average Customer the “Soccer Mom”
Club Wed Lullaby Club
Target.direct
52
Target’s Vendor Club
6 Premium Charter 6 Premium Charter MembershipsMemberships
•Exclusive opportunity to partner
•Guest centric analytics
•Targeted offers
•Target Visa - electronic offers and marketing support
•Club Red – exclusive offers
•Now – September 2003
•$1.5 Million
10 Charter 10 Charter MembershipsMemberships
•Target Visa – electronic offers and marketing support
•Club Red – exclusive offers
•Now – September 2003
•$750,000 Million
Vendors input $16.5 million
Target will offer:
53
Other Benefits of the Vendor Club
Build a Competitive Advantage
18 month limited access
Guest Data Base
Analytics Suite
Focused Attention
New Channels
Vendor Opportunities
1. Offer a $ or % off one or more items bought in a single
transaction
2. Offer $ or % off one or more items bought
in multiple transactions
3. Offer “free” item with single or multi
purchaseAccess to Guest Specific Data
Who’s Buying What
Who Are Your Key Segments
Market Basket Analysis
Geographic Profile
54
Case Study: The Problem of Complexity- Who Owns Customer Loyalty?
Median Age (female) in 2001
Median Income
% College Graduate +
% Professional/ Managerial
% with Children <18 at Home
Target Wal-mart Kmart44 46 47
$51 $44 $42
40
38
41
32 29
31 29
38 35
Guest
Location: The Store Managers own this Dimension
MULTIBRAND – Target, Mervyns, Marshall Fields
Item The Merchants Own the Item
Dimension
MULTICHANNEL- Store, Web, Mail
Transaction Need to introduce the guest dimension without losing the
Item and Location dimension
55
The Role of The Chief Guest Officer
Chief Guest Officer
Vendors
Information
Merchants
Store Managers
This
Relationship
is Easy to
Execute
Other relationships are much more difficult
This
Relationship
is Easy to
Execute
56
Trade Off’s
High
Low
Independent Integrated
Ability to Coordinate Activities
Accountability
57
Road Map
CRM= Customer + Relationship + ManagementThe Rise and Fall of CRMStrategic Framework for CRM
Why CRM Fails Lock-in vs. LoyaltyThe Dark Side of Market Focus Target’s Market Focused Strategy and the
Challenges of ImplementationConclusion
58
Differentiation Advantages
Differentiation allows a firm to command a premium price for its product or service.
Competitive advantage is realized if the value of the price premium is greater than the cost of differentiation.
Differentiation strategies require a deeper understanding of the customer’s needs (customer value chain) than cost-based strategies. This typically requires an in-depth customer segmentation analysis.
Differentiation strategies often require a different firm value chain with appropriate linkages between the value chain of the firm and that of the customer (e.g., Dell provides desired customization for each customer).
Differentiation may be more sustainable than cost leadership because it is build on features that are harder to imitate.
59
CRM and Loyalty
Respond
Identify
Dialogue
Interpret
Truly Loyal Accessible
Locked-in High Risk
Attitude
BehaviorPositive Negative
High
Low
Purchase Don’t Purchase
Enjoy
Despise
60
Challenges
Accountability Coordination
Decentralized Centralized
Product Focused Market Focused
Vs.
Vs.
Vs.
New Sales Methods Alignment
Economics Mega Aggregators
Channel Conflicts
Internal
External
61
Examples
62
CRM Best Practice: Williams - Sonoma
Source: Adapted from 2000 Annual Statement
Seek to own the home through multi-channel retailing
“Become the single most dominant force in home furnishings by selling great products in stores, through catalogs, and on the Internet.
Williams-Sonoms delivers on this vision through powerful brands, consumer
satisfaction, channel synergy, vertical integration, and operating efficiency.”
Williams-Sonoma knows their consumers, and understands how the marketing they do impacts their behavior. For example, they know
that mailing a new catalog boosts traffic in the retail stores. The stores in turn provide consumer data that is leveraged by the catalog, Internet, and merchandising groups to deliver better
solutions to consumers.
63
CRM Best Practice: Ford
Source: Accenture Consulting
The company began by building a data warehouse to provide a single, integrated view of each consumer.
The second step was analyzing the consolidated data to achieve superior consumer understanding as a basis for one-to-one marketing. The result: unprecedented ability to understand consumers and differentiate and target marketing messages.
The third step was leveraging the results of data analysis to create highly targeted marketing campaigns. They also developed metrics to gauge campaign effectiveness, as well as procedures to ensure that all data collected in campaigns are captured by the company's data warehouse for continual enrichment of consumer profiles.
The company now has a rich, constantly expanding data source for predicting consumers' long-term value and developing appropriate, targeted campaigns for every stage of its relationship with a consumer.
1
2
3
64
CRM Best Practice: DuPont Agricultural Products
DuPont project team that began by interviewing employees to gain insight into their needs for serving consumers and to help them understand the multi-level consumer base resulting from DuPont's acquisition of Pioneer. Then the team designed and built a data warehouse, seeing it as the strongest solution for gaining consumer insight and the best basis for building consumer offers.
The data warehouse consolidated and cleaned existing consumer information from all sources and was equipped to capture new data from transactions and to permit updates.
The next step: leveraging the warehouse with TruChoice, a marketing application with built-in incentives for farmers to encourage purchases and for dealers to encourage data sharing.
TruChoice launched at the end of 1999, and results have been outstanding. DuPont expects sales growth in their corn and soybean operations; dealers and distributors have overcome their distrust and begun providing consumer data; and farmers are so sold on TruChoice that in areas in which it's not offered they're demanding dealers make it available.
Source: Accenture Consulting