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Session 1
Friday, February 18, 2011
CRM
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Today!!!y Introduction & Course Structure
yRules of the Game
yLets go to the Future 1
st
The SocialNetwork (Class Exercise)
yConcept of Customer Value
y& Anecdotes(Share stories)
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Introduction
Re-Introduction
Course Structure
Rules of the Game
RM 2 CRM
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Everything & everyone has an
expiry date So does he
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Lets go to the future
1styThe Social Network (Class Exercise)
y
Part I Avatars & Passion Tags
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LessonsyWho is most connected?
yNetwork around average interests
y
Who had the pen for the longest timeyLeast connected Why?
y Star, Flower Power? Pets?
yBrands? Marketers should be happy orworrisome
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Lets go to the future
1styThe Social Network (Class Exercise)
y
Part II Brand TagsyWhere did you discuss this, what was the
trigger?
y
Clusters Can you cluster them someway?
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LessonsyThe most common clustering technique
yWhy?
yWhat is there in for a marketer?
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Lets go to the future
1styThe Social Network (Class Exercise)
y
Part III Let us make a small brand strategyyBrand Values (passions/nouns), Brand
persona (adjectives Our brand is ____ ) &
Evangelist passion tags Find the linkyFuture is Social CRM
yNow let us go back to the Kotler era
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Anecdotes Share
your CRM StoriesyHow are you Mr. Singh? Or Mrs. Kapoor?
Or whatever CRM is beyond thatyLet us learn from our experiences
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ValueMarketing
It is no longer enough to satisfycustomers
You must delight them
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Our goal as a company [Wal-Mart] is to have customer service that is not just
the best, but legendary.
Sam Walton
The only job security anybody has in this company [Chrysler] comes from
quality, productivity, and satisfied customers.
Lee Iacocca
Look at our balance sheet. On the asset side, you can see so-and-so many
aircraft worth so-and-so many billions. But its wrong; we are fooling
ourselves.What we should put on the asset side is, last year SAS carried
so-and-so many happy passengers. Because thats the only assetweve got-people who are happy with our service and willing
to come back and pay for it again.
Jan Carlzon, SAS Arlines
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Then Vs NowEarlier
yHow companies
can outperformcompetition if they
can move from a
product and sale tomarketing
philosophy
Now
yHow companies go
about winningcustomers and
outperforming
competition
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McDonalds Way
y38 mn people visit its 23,500 outlets in 109
countries
yEven when there are better tastinghamburgers elsewhere
yValue Proposition
yQSCV Quality, Service, Cleanliness andValue
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Value: Benefit vs. Cost
Benefit
Bundle of benefitscustomers expect from
a given product or
services/offerings
Cost
Bundle of cost customers
expect to incur in
evaluating, obtaining and
using the product,
service/offerings
Value =B
enefit-Cost
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Product value
Services value
Personnel valueTotal Customer Value
Image value
Monetary cost
Time cost
Energy cost
Total Customer
Cost
Psychic cost
Determinants of Customer Delivered Value
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Customer Satisfaction
Satisfaction of a persons feelings of pleasure or
disappointment resulting from comparing products
perceived performance (outcome) in relation to his or
her expectations
Ciga
We will never be 100% satisfied until you are too.
Honda
One reason our customers are so satisfied is that we are
not
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Customers Satisfaction:Tools
for Measuring & Tracking
Complaints &Suggestion
Systems
System Illustration
Jet Airways mid-air
Customer
Satisfaction System
Periodic Surveys
Ghost Shopping
Lost Customer
Analysis
Retail Trade
Mobile
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Product Performance: Customer Response
CustomerP
roductP
erformance
Satisfaction
Loyalty-Switch
Marketing Effect
Short Matches Surpasses Not Expected
Dissatisfied Satisfied Full Delighted
None Low High Very High
Negative Good
Opinion
Word of
Mouth
Recommends
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ValueCreatingActivities
5Prime
y Inbound Logistics
y Outbound Logistics
y Operations
y Marketing
y Servicing
4 Supporting
y Infrastructure
y HR
y Technology
y Procurement
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Levi Strauss
ValueDelivery Network
Du Pont
(Fibres)
Milken
(Fabric)
Levis
Apparel
Sears
Retail
Customer
`
Competition is between value networks not companies
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Core Business Processes
y New Product Realization
y Inventory Management
y Order to remittances
y Customer Service Process
y Researching, Developing andlaunching within budget andquickly
y All activities related so that
optimal supplies are availableand costs of overstocks arelow
y Receiving and processing andapproving on time and
collecting payment on timey Translating order in to sales
and making it easy forcustomers to get satisfactoryservice
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Cost
Retention vs. Acquisition
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Acquisition vs. Retention
yAcquisition
yRetention
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Customer Acquisition Cost
yCost of an average call
(including salary, commission, benefits and
expenses, advertising and promotion) = Rs.5000/-
yAverage no of calls to convert an average
prospect in to a customer= 4yCost of acquiring a new customer= Rs.
20,000/-
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Customer LifetimeValue
yAnnual average customer revenue= Rs.
10,000/-
yAverage no of yrs a customer remainsloyal= 2 yrs
yTotal revenue earned in 2 yrs.=Rs.20,000/-
yCompanys profit margin= 10%yCustomer life time value=Rs.2000/-
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InternalAssessment
y Do customers defect at different rates during the year
y Does retention vary by office, region, specific channel,sales representation
y What is the relationship between price change andretention rates
y What happens to a lost customers and where do theyusually go and why
y What are the retention rates in a sectory Which company has longest and highest retention rates
and why
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Retention ResearchInternal
y Pricing
y Sales
y Territoryy Sales Representatives
External
y Industry association
y Competitor Pricing
y Competitor Market Share
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When customers leave- Analysis
y Definition of Retention Rate
y Distinguishing causes ofattrition
y Measurability of Retention
Ratey Estimation of how much
profit is lost due to customerattrition
y Estimate how much it wouldcost to reduce the defectionrate
y Publication-Renewal Rate
y Poor Service,High Price
y
Time value- PV of Lost profitduring life time of a customer
(had it not been lost)
y Cost of reducing defection
rate should be lower than the
lost profit
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Cost ofLost Sales-Computation
y Bank has 50,000 accountsy Bank lost 5% of its accounts last year due to poor
service
y No of lost a/cs= 2500 (=5% x 50,000)y The average a/c = Lost Revenue= Rs.5000/- per
a/c
y
Lost sales Rs.125 lacsy Profit Margin=10%
y Profit lost=Rs.12.5 lacs
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Marketing Strategy for
Retention
High Switch Barriers
y High Capital cost
y Loss of discount
y Loss of after sales service
contract
y Warranties
High Customer
Satisfaction
y Lower Price
y
Lower Costy Value for Money
y Relationship Marketing
High Customer
Satisfaction
y Lower Price
y
Lower Costy Value for Money
y Relationship Marketing
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Irrespective ofWhat I said Today,
You will have to read
K.O.T.L.E.R.anyways!!!
Thank You!!!