of 41
8/7/2019 Chapter14-Example1 crm km
1/41
1
Customer Relationship Management
Customer Actions Taken After Site Unresponsiveness
Action Percent
Shopped elsewhere 74%
Sent another e-mail 45
Called a store representative 32
Other 8
Asked elsewhere, bought at store 3
Source: Apr. 2000 Jupiter Media Metrix
8/7/2019 Chapter14-Example1 crm km
2/41
2
Customer Relationship Management
Who provides CRM?
Traditional giants such as IBM, Oracle and PeopleSoft
Siebel Systems, which now has a 21% share of the CRMmarket
E.piphany
e-mail specialist Kana Communications, NetGenesis
instant chat provider LivePerson.com, Broadbase, Quintus andFirepond
plus many others.
8/7/2019 Chapter14-Example1 crm km
3/41
3
Customer Relationship Management
Acquisition cost
Quarter Average CustomerAcquisition Cost
Q3 1999 $35
Q4 1999 $71
Q1 2000 $45**
Q2 2000 $40
Source: Aug. 2000 Boston Consulting Group/shop.org
** Shift from expensive TV advertising to more economical online campaigns
8/7/2019 Chapter14-Example1 crm km
4/41
4
Customer Relationship Management
direct customer interaction
Jupiter reports that
76% of respondents say e-mail is an indispensable part ofcustomer service.
a listed phone number (65%) and
a FAQ section (53%).
But those e-mails must be answered promptly.
8/7/2019 Chapter14-Example1 crm km
5/41
5
Customer Relationship Management
That's why IDC believes the worldwide market for CRMproducts and services will explode to $125 billion by 2004,from $34 billion last year.
This summer, the Federal Trade Commission fined
Toysrus.com, Macys.com and five other online retailers $1.5million for making promises they couldn't keep during the1999 holiday season.
8/7/2019 Chapter14-Example1 crm km
6/41
6
Customer Relationship Management
Expectations Results
Within 1 hr 15% 8%
1-6 hrs 40% 12%
2hrs and I week 50% 51% More than 1 week 0% 29%
Source: Jun. 2000 Jupiter Media Metrix
8/7/2019 Chapter14-Example1 crm km
7/417
Customer Relationship Management
customer retention
The average online marketer needs three purchases to breakeven after acquiring a new customer, according to the survey.
8/7/2019 Chapter14-Example1 crm km
8/418
Customer Relationship Management
Evolution of Information Requirements
Materials Requirements Planning
(MRP)
Manufacturing Resource Planning
(MRP II)
Enterprise Resource Planning
(ERP)
Supply Chain Management(SCM)
Customer Relationship Management (CRM)
8/7/2019 Chapter14-Example1 crm km
9/419
Customer Relationship Management
Current
Current
Every Companys Big Unknown ... Customer Value
FullPotential
Current
CustomerValue
Relatio
nship
Profit
ability
Num
berofRela
tionship
s
Relationship Duration
8/7/2019 Chapter14-Example1 crm km
10/4110
Customer Relationship Management
Targeting Acquisition Retention Expansion
Customer Relationship Management can be simply defined as everything involved with
managing the customer relationship.
Customer Relationship Management can be simply defined as everything involved with
managing the customer relationship.
TheVal
ueofthe
Relations
hip
Who Do we target What segments are most
profitable What segments match our Value
Proposition What is the best segmentation
strategy for us / our industry
What is the best channel foreach segment
What is the acquisition cost fora channel / segment
Do certain channels delivercertain types of customers
Cost effective acquisition
How can we improveretention
What is our averagecustomer relationship length
How can we hold customerfor as long as possible
What is the most costeffective method of retention
How many products does ouraverage customer buy
How can we induce ourcurrent base to buy moreproducts
Who are the prime targets for
expansion What is the cost of expansion
Customer Relationship Management Definition
Duration of Customer Relationship
Valu
e($)
8/7/2019 Chapter14-Example1 crm km
11/4111
Customer Relationship Management
Islands of Automation Need To Be Bridged
Over time, channels & operational systems are added to cater to changing customerdemands. The resultseveral functional groups are interacting with customersindependently.
$
SalesForce
CustomerService
DirectMail
Web
Branches
8/7/2019 Chapter14-Example1 crm km
12/4112
Customer Relationship Management
Why CRM?
It costs six times more to sell to new customer than to sellto an existing one.
A typical dissatisfied customer will tell 8-10 people
By increasing the customer retention rate by 5%, profitscould increase by by 85%
Odds of selling to new customers = 15%, as compared tothose for existing customers (50%)
70% of the complaining customers will remain loyal ifproblem is solved
90% of companies do not have the sales and serviceintegration to support e-commerce
8/7/2019 Chapter14-Example1 crm km
13/4113
Customer Relationship Management
Marketing Selling ServicingCustomer Management Process
Threads
BroadcastBroadcast
MailMail
Field PersonnelField Personnel
Agents/DistributorsAgents/Distributors
Call CenterCall Center
RetailRetail
InternetInternet
Back Office Process/Systems
Custom e
rInteraction
Ch
annels Are we making the
right level and typeof marketing, sales,
and serviceinvestments in eachof our customersegments?
Customer RelationshipCustomer Relationship
StrategiesStrategies
Are we taking aholistic approach toour customersacross processesand channels?
Customer RelationshipCustomer Relationship
StructureStructure
Have weimplemented bestpractices andtechnology inprocess/channel?
Customer RelationshipCustomer Relationship
PerformancePerformance
ScopeScope DepthDepth
Importance of CRM
8/7/2019 Chapter14-Example1 crm km
14/4114
Customer Relationship Management
Customer Life Time Value (LTV) is defined by a customers Life Time worthto the firm and is measured by the net present value (NPV) of the cash flowsgenerated over the Life Time of the relationship.
Cost of Service
AcquisitionCost
Duration ofRelationship
A
nnualCa
shFlow
Service/Usage Revenue
Successful Customer Relationship Management can generate positive shareholder value.Successful Customer Relationship Management can generate positive shareholder value.
Customer Relationship Management and Shareholder Value
8/7/2019 Chapter14-Example1 crm km
15/4115
Customer Relationship Management
The Benefits of Customer Relationship Management
RetentionRetention Lift/upsellLift/upsellAcquisitionAcquisitionLikelihood toRecommend
Total PerceivedValue
Impacto
nServic
eQuality
Courteous
Know. About Account
Available atConvenient Times
Ownership of Problems
Know. Product/Svcs.
Easy to Reach
Access toLive AgentsRight Tel. ## of Rings
Resolution Time
Current PerformanceLow High
High
Low
The customer value analysis should be performed for each segment individually. The
perceived importance of price and service drivers can differ significantly by segment.
The customer value analysis should be performed for each segment individually. The
perceived importance of price and service drivers can differ significantly by segment.
In addition to LTV of the customer, likelihood to recommend is another
important benefit of CRM.
8/7/2019 Chapter14-Example1 crm km
16/4116
Customer Relationship Management
Customer Relationship Management is about making every customer as valuable as
possible over the lifetime of the relationship
Customer Relationship Management is about making every customer as valuable as
possible over the lifetime of the relationship
The Five Key Drivers of the Lifetime Value of a Customer
Cost of Targeting;
Cost of Acquisition;
Service and Usage Revenue;
Cost of service; and Duration of relationship.
8/7/2019 Chapter14-Example1 crm km
17/4117
Customer Relationship Management
Capture CustomerData and Measure
Results
The Customer
Capture CustomerData and Measure
Results
Take Action toEnrich the Customer
Relationship Capture CustomerData and Measure
Results
Build and ManageCustomer Value
Capture CustomerData and Measure
Results
Capture CustomerData and Measure
Results
CaptureCustomer Dataand Measure
Results
Store Data, Mineand Make
InformationAccessible
The CRMThe CRMDynamicDynamic
Customer Relationship Management is a ongoing, dynamic learning process for an organizationCustomer Relationship Management is a ongoing, dynamic learning process for an organization
Customer Relationship Management Process
The building blocks of CRM allow an organization to manage this cycle and use the
knowledge on customers to enhance the Life Time value of the customer portfolio. No organization has perfect information on its customers. Knowledge of customers is
continuously enhanced through the CRM dynamic.
8/7/2019 Chapter14-Example1 crm km
18/41
8/7/2019 Chapter14-Example1 crm km
19/4119
Customer Relationship Management
Deployment and Support
The Building Blocks of CRM
e-Business
Sales ProcessAutomation
Call Centres
EnablingTechnologiesDataWarehousing
MetaData
Data Cleansing
OLAP
EIS
DataCapture
External
Databases
MarketResearch
Customer TouchPoint Integration
People
Organization
KnowledgeManagement
StatisticalModeling
Data Mining
CustomerProfitability
Segmentation
The building blocks of CRM are the things that need to be in place for an effective Customer
Relationship management program
The building blocks of CRM are the things that need to be in place for an effective Customer
Relationship management program
8/7/2019 Chapter14-Example1 crm km
20/4120
Customer Relationship Management
Data Capture and Warehouse
CustomerBehaviour
Product Portfolio Householding
UsageProfile
Migrationin
Usage
Loyalty/
Switching
CustomerInteractions
Acquisition
Information
InboundContact
Outbound
Contact
Base Data
Segments Profitability Life Time Value
CustomerProfile
Demographic
s/
Firmgraphics
Attitudes
Product/Ser v
ice
Preferences
Intentions
ExternalData
Geo-
demographic
s
Campaign
History
Derived Data
The Customer Data Model
Census
What Data do we capture on Customers?
8/7/2019 Chapter14-Example1 crm km
21/4121
Customer Relationship Management
Enabling Technologies
8/7/2019 Chapter14-Example1 crm km
22/41
22
Customer Relationship Management
Sales Force Automation
CallC
en
tre
Electron
ic
Business Automatic Call Distribution (ACD)
Incoming Call Queuing Performance Statistics Integrated Voice Response (IVR)
Automated Inquiry & Transactions Automated screen pop on agentsscreen
Integration with company legacyplatforms
Billing & Meter Reading Direct Access to Customer Data
CRMTechnologies
Techniques: ACD, IVR, CTI Techniques: WEB based
application, e-mail processing
Automated product and serviceinformation
WEB based sales and supportthrough standard menus andautomated help screens.
WEB based training Reaching the global market
Techniques: Relationship marketing, automated packaging and pricing, knowledge-based selling
Increase revenue from your customer base Customer satisfaction measure
Consultative selling Responsiveness to market conditions
The Enabling Technologies
Call Centre
Sales Force Automation
e-Business
8/7/2019 Chapter14-Example1 crm km
23/41
23
Customer Relationship Management
CRM Technologies on the Rise
The overall use of technology for selling isThe overall use of technology for selling isgrowing by more than 50% annually.growing by more than 50% annually.
Gartner GroupGartner Group
Sales Force Automation is the fastestSales Force Automation is the fastestgrowing segment of the high-growthgrowing segment of the high-growth
Client/server market, estimated to representClient/server market, estimated to represent$3 billion in revenues by 1997.$3 billion in revenues by 1997.
Market Intelligence Research Corp.Market Intelligence Research Corp.
Sales Force Automation will become a majorSales Force Automation will become a majordriver behind enterprise-wide BPRdriver behind enterprise-wide BPR(inexorably linked to development of the(inexorably linked to development of thecustomer-focused organization)customer-focused organization)
META GroupMETA Group
Customer Management is a major initiative atCustomer Management is a major initiative atnearly 80% of Fortune 500 companies andnearly 80% of Fortune 500 companies andwill grow to a $4.8 billion market by 1999.will grow to a $4.8 billion market by 1999.
Aberdeen Group,Aberdeen Group,Inc.Inc.
Source: IDC 1996
(D
ollarsInMillio n
s)
CRM Revenue
The implementation of CRMtechnologies is projected toaccelerate over the next few years
1996 1997 1998 1999
$1,000
$1,400
$1,960
$2,744
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
1996 1997 1998 1999
8/7/2019 Chapter14-Example1 crm km
24/41
24
Customer Relationship Management
People Process
External customer Internal customerSales ForceSupport teamBack-officeTechnical staff
DataWarehouse
Marketing / up-sellingTechnical supportProduct supportService support7 x 24 support
IVR ACD
CTI
Customer history, billing, purchases, value, profile
Product & service information, packages, prices
Marketing hints, reports, promotions
Customer data updates, purchase information
Leads tracking update, customer tracking updates
Call statistics, inquiries, etc.Information
Call Centres - Definition
Call centres are a key enabling arm of Customer Relationship Management. A well designed call centre will
integrate people, process, and technology to improve operational efficiency and maximize the value of the customerrelationship for both inbound and outbound contact.
Call CentreTechnologies
8/7/2019 Chapter14-Example1 crm km
25/41
25
Customer Relationship Management
Customized Agent DesktopApplications by Customer &Call Type
Automated Scripting of CallHandling & Wrap-up
Flexibility to Add NewProducts, Services, andCustomer ServiceOpportunities
Scripted Cross-Selling Legacy Integration Billing & Meter Reading Direct Access
DataWarehous
e
Call Centres - Architecture
8/7/2019 Chapter14-Example1 crm km
26/41
26
Customer Relationship Management
There is a major transition to integrated delivery channels and toprovide one face to the customer.
Old RuleOld Rule New RuleNew RuleParadigm ShiftsParadigm Shifts
Minimal technologyMinimal technologyLeading edge and
integrated technology
Leading edge andintegrated technology
Single productSingle productMultiple productsand cross selling
Multiple productsand cross selling
ReactiveReactive ProactiveProactive
Low skilled CSRsLow skilled CSRs Multi-skilled CSRsMulti-skilled CSRs
Backroom operationBackroom operation Front Office operationFront Office operation
Stand-alone operation
& information
Stand-alone operation
& information
Distribution channel &
information integration
Distribution channel &
information integration
TacticalTactical StrategicStrategic
Customer InquiriesCustomer InquiriesCost of BusinessCost of Business
Enhanced Customer SatisfactionEnhanced Customer Satisfactionand Retention Revenue Growthand Retention Revenue Growth
Lower Cost DistributionLower Cost Distribution
Call Centre Call Centre of the Future
8/7/2019 Chapter14-Example1 crm km
27/41
27
Customer Relationship Management
Intranet - as an alternative sales channel Electronic catalog - On-line self served serviceordering
Commission - Effective tracking of performancesand accurate commissioning
Opportunity Management - tools such asautomated customer data analysis and pop-upscreens will assist in up-selling
Competitor Data - effective analysis of competitive
data and automated access for sales force Contact Management - Effective tracking andfollow-up of leads
Customer Data - Sales people will have acomplete analysis of the customer before theireyes when attending to a customer. No wait, norepeated questions, no frustrated customers
News Service - Optional news sorting and reportingwill result in informed sales people Order Entry Quoting - On the spot quoting will not
give the client a chance to shop around and behunted
Proposal Development - Automated documentcreation based on corporate standards
Pricing - Automated on-line prices based oncompany rules
Product - On-line and easily accessed Just-in-Time Training - Automated training, WEB
based training, and self training through informationsharing
Electronic Kiosk - WEB page shopping.
Basic FeaturesBasic Features
Sales Process Automation - Definition
Sales Process Automation (SPA) is the approach for helping organizations dramatically improve theirsales and marketing effectiveness through the reengineering and automation of their sales andmarketing processes, with the ultimate goal of increasing revenues. SPA combines a workingknowledge of the markets best ideas, technologies, and vendors with a practical, relentless focus onimplementation to deliver outstanding shareholder and customer value.
8/7/2019 Chapter14-Example1 crm km
28/41
28
Customer Relationship Management
0% 10% 20% 30% 40% 50% 60% 70%
Current Information
Improve Forecasts
Increase Sell Time
Reduce Administration
Improve Margins
Decrease Costs
TeamSelling
Improve Management Effectiveness
Improve Communications
Reduce Sell Cycle
Increase Revenues
Increase Customer Satisfaction
Improve Sales Effectiveness
Source: Insight Technology Group
PERCEIVED BENEFITS OF SPA FIELD TECHNOLOGY
% of Survey Responses (N=295)
Sales Process Automation - Benefits
Improving sales force productivity and effectiveness by implementing field technology is a
key goal for many organizations
Improving sales force productivity and effectiveness by implementing field technology is a
key goal for many organizations
8/7/2019 Chapter14-Example1 crm km
29/41
29
Customer Relationship Management
Business Processes
Profiles &Preferences
Business PartnerBusiness PartnerBusiness to CustomerBusiness to Customer
Business to BusinessBusiness to Business
The ValueThe Value
PropositionProposition
ofofElectronicElectronic
BusinessBusiness
SolutionsSolutions
Integratingmore directlywith thebusinessprocesses ofcustomers andpartners
Tailoringproducts andservices tocustomersneeds and
values
BusinessProcesses
Extending key businessapplications to clients andbusiness partners
Business PartnerBusiness Partner
e-Business is all about integrating the internal and external processes between business partners andcustomers.
e-Business is all about integrating the internal and external processes between business partners andcustomers.
e-Business - Definition
8/7/2019 Chapter14-Example1 crm km
30/41
30
Customer Relationship Management
Internet technology can improve the level of customer care, while reducing the cost of
maintaining the customer base.
Internet technology can improve the level of customer care, while reducing the cost of
maintaining the customer base.
e-Business - Benefits
On average, it costs about $5 - $50 per query to support via phone
On average, it costs about $1 - $3 per query to support via E-mail
On average, it cost less than $1 per query to support via WWW
8/7/2019 Chapter14-Example1 crm km
31/41
31
Customer Relationship Management
InternetandWorld
Wide Web
3. PaymentProcessing
5. ProductFulfillment
Order entry Tax calculation Validation Confirmation
Paymentinformation
Security Link withfinance
Pick and pack Integration/configuration
of third party products Ship products or deliver services Inventory management
Order tracking
Customer preferences Products and availability Pricing and promotions Adaptive selling
Build/configure to order
1. AdaptiveProduct Offer
A B$X,XXX $X,XXX
Link with third parties Create pick list Consolidate orders
2. Order Captureand Validation 4. Order
Management
For both business-to-business and business-to-consumer sales, there are five key elements toe-Business product offer, order capture and validation, payment processing, order
management, and product fulfillment.
For both business-to-business and business-to-consumer sales, there are five key elements toe-Business product offer, order capture and validation, payment processing, order
management, and product fulfillment.
e-Business - Architecture
8/7/2019 Chapter14-Example1 crm km
32/41
32
Customer Relationship Management
Conclusion
NetworkManagement
Systems
EnterpriseManagement
Systems
Service
ManagementSystems
Customer
ManagementSystems
BusinessManagement
Systems
Call CentresCustomer Care SystemsSales Force Automation
IVR
Data Warehouse OSS
Billing System
SAP, PeopleSoft, Oracle,
etc.
Customer Relationship Management is an integral part of successful convergence
Customer Relationship Management is an integral part of successful convergence
8/7/2019 Chapter14-Example1 crm km
33/41
33
Customer Relationship Management
The CRM Market
8/7/2019 Chapter14-Example1 crm km
34/41
34
Customer Relationship Management
$2.00
$0.60
$1.60
TES TEM CSS
in billions
= $4.2b up 45% 55-45
Service to Software
Source: GartnerGroup
Worldwide Front-office Applications, 1998, US$b
Vendor Revenue (Software and Services)
0
4
8
12
16
20
1998 1999 2000 2001 2002 2003
Worldwide Front-office Applications, 1998, US$b
Vendor Revenue (Software and Services)
The software and service revenue from
CRM vendors will reach $19 billion by
2003 (0.6 probability).
:
CRM Marketplace - Fast Growth To-Date with a Bright Future
8/7/2019 Chapter14-Example1 crm km
35/41
35
Customer Relationship Management
Explosive Market Growth
CustomerManagement
Supply Chain
Manufacturing
Financials
265%
83%
66%
19%
172%
120%
% Change
Application License Revenue in Billions
53.9%
22.4%
18.5%
6.0%
39.5%
30.0%
$1.46
$2.02
$0.83
$2.02
$1.52
$1.83
$5.33
$5.49
$1.83
$3.70
$2.53
$2.18
Based on Forrester Research
1998 2001
Human Resources
Industry Specific
8/7/2019 Chapter14-Example1 crm km
36/41
36
Customer Relationship Management
The CRM Market - No Clear Market Leader
60% of the $2.0B CRM software license market is controlled by 3
vendors
Siebel
Trilogy
Baan/Aurum
60% of the Top 3 share is controlled by Siebel
No vendor will have complete CRM functionality until 2003 (Gartner)
The 1998 consulting market for CRM is estimated to be $4.0B (2:1)
The consulting market for CRM is a large and growing high margin /
high revenue opportunity in contrast to the shrinking ERP market
8/7/2019 Chapter14-Example1 crm km
37/41
37
Customer Relationship Management
Tier 2: CSS Applications for Small to Midsize
Enterprises or Divisions of Large Enterprises
Tier 1: CSS Applications for
Large Enterprises
(1) CorePoint is a subsidiary of IBM, consisting
of various IBM customer service application
assets
(2) SCT Utilities: Large utilities only
(3) Broadway & Seymour: Banks only
(4) Chordiant: Large call centers only
(5) Internet-centric
(6) Siebel now includes Scopus
Challengers Leaders
Niche Players Visionaries
As of 1/99
Onyx
Applix
SalesLogix
Royal Blue
Platinum Software/Clientele
Point Information
Completeness of Vision
Challengers Leaders
Niche Players Visionaries
AbilitytoExecute
Completeness of Vision
As of 1/99
IMA
Astea
Siebel (6)
Quintus
SCT Utilities (2)
Chordiant (4)
IBM/CorePoint (1)
Silknet (5)
Broadway
& Seymour (3)
GWI (a)
CustomerSoft
(7) Major ERP vendors currently have noncompetitive feature/
function sets
(8) Pegasystems: Due to its broad product line, its direct CSS
applications license revenue and strategy is uncertain
(a) GWI: Lotus Notes platform
(b) Many mid-market ERP vendors express a vision of creating
full-featured CSS applications, but have not executed yet
ERP
Vendors
(7)
Clarify Vantive
ERP
Vendors
(b)
Pegasystems (8)
Oracle
Remedy/Baystone
8/7/2019 Chapter14-Example1 crm km
38/41
38
Customer Relationship Management
Vendor CRM Market Position
Acknowledge leader Very integrator focused
Leader in their niches
Not integrator focused
Excellent product Number 2, but struggling
Product continually delayed Intimidation capacity lessening
Bold announcements Claim high strategic priority
TRILOGY
CRM Vendors
8/7/2019 Chapter14-Example1 crm km
39/41
39
Customer Relationship Management
Siebel 99
Siebel Sales Enterprise
Siebel Marketing Enterprise
Siebel Service Enterprise
Siebel Call Center
Siebel Field Service
Siebel Handheld
Siebel InterActive
Siebel Product Configurator
Siebel Sales
The Most Complete ERM Solution
8/7/2019 Chapter14-Example1 crm km
40/41
40
Customer Relationship Management
Siebel Industry Solutions
Siebel Finance
Siebel Insurance
Siebel Communications
Siebel Consumer Goods
Siebel Pharma
Siebel Utilities
Siebel Public Sector
Siebel High Technology
8/7/2019 Chapter14-Example1 crm km
41/41
Customer Relationship Management
Siebel 99 Product
More than 600 Person Years of Engineering
1100 Screens
1300 Business Objects/Components
110 Reports 900 Database Tables
144 Interface Tables