Customer Relationship

Management

Instructor: Diamond Tai

 Diamond Tai

[email protected]
86-13801210001
852-93845407
 Course Objectives
• Develop understanding of what is CRM
• Introduce CPM concepts
• On completion of the course, you should be
able to-
– identify who are the valuable customers
– formulate strategy to build, grow and retain them
– develop basic loyalty strategy and manage a CPM
campaign
 What is CRM
&
Why it is so Important
WHAT is

CRM?
 Let’s consider - 5 mins
Pair up with your classmate
Share with your classmate your most favorite
brand (or shop) that you have patronized for a
long time
– What is the brand/shop?
– What do you specifically like about it? Why?
– Is there any special incident that has impressed you?
– Have you ever switched to other brands?
– What makes you so loyal to this brand / shop?
Is CRM a Promotion Program?
Is CRM a Bonus Point Program?

• HSBC Credit Card

• HSBC Rewards Program
 Is CRM a Rebate Program>
• Octopus Rewards Program
• Email to Member
 CRM is….

The Philosophy and

Process of Winning,
Growing and Retaining
Profitable Customers
 What is CRM ?
CRM is an enterprise-wide, on-going approach to seeking best answers to the following
questions
• How can we identify profitable customers?
• What types of differentiated services are required to satisfy their needs?
• How shall we enhance their loyalty and retain them as long as possible?

Traditional
Marketing CRM
Purpose
Purpose Sales Increase Loyalty Maximization

Focus
Focus Customer Acquisition Lifecycle Management

Evaluation
Evaluation Market Share Mind Share (Loyalty)

Customer
CustomerInfo
Info Survey, Interview Behavioral Information
based on Database
Communication
Communication １ Way, promotion-oriented 2 Way, Interaction-oriented
 Because….
• It costs up to 10 Times as Much to Win
a Customer as it does to Keep One…
 Isn’t CRM just about computers &
software?
• Yes & No!!!
• Computers made holding and
understanding data possible
• Modern computer and software allow
the concept of one-to-one to be a reality
• But CRM is more than just processing
speed & capacity
 WHAT
Is the Desired Outcome

of CRM?
 Key Benefits from
Successful CRM ?
Successful CRM should have a comprehensive, far-fetched impact on the corporation
in terms of: its customers, organizational composition, and competitiveness in the
market

Enhanced Customer Organizational

Loyalty efficiencies
•Effective lifecycle management •Inter-departmental synergy via
•Increased retention information & program sharing
•Maximum customer satisfaction CRM •Efficient change management
Key
Benefits

Maximized Revenues Strengthened leadership

and Profits in the market
•Reduced acquisition, operational costs •CRM Leaders’ roles
•Productivity enhancement via cross-sell, referral •Reduced competition & favorable
•Overall volume increase image
 Objective of CRM
• To build a new kind of brand loyalty
that leads to growth and increased
profits without incremental marketing
investment.
• By owning the hearts and minds of the
profitable few, CRM aims to create a
sustainable competitive advantage for
the company
WHY is CRM
So Important?
 Then Why CRM ?
With the intensive global competition and rapidly changing technological environments,
meeting customers’ various needs and maximizing the value of profitable customers are
becoming the only viable option for many contemporary companies

1. Global Competition 2. Low Profitability

• M&A Proliferation of Erosion of • Matured Industry

• International Alliances Competition Monopoly • Supply exceeding
• Dramatic Global Shift Demand

Customer
Convergence of Increased
Focused Sophistication
Technologies

3. Technology Improvement 4. Customers Needs Change

• Value for the Money
• Internet & e-Commerce
• Customer Needs
• Supply Channel
Diversification
Interaction
• Demand for better
• New Business Model
service capabilitiesa
 Because
• Companies that Retain their Most
valuable Customers WIN
• Emotionally Bonded Customers are a
Company’s Most Valuable Asset
 Four Pillars of CPM
• Strategy
• Experience
• Technology
• Measurement
 Strategy
• Develop customer strategies aligned to the
needs and behaviors of targeted customer
segments.
• Customer Analysis and Segmentation
• Value Proposition and Go to Market Strategy
• Brand Promise
 Experience
Design, execute & integrate marketing-leading
customer interaction programs, campaigns
and processes across channels to deliver the
experience.
• Marketing communications, programs and
processes
• User Interface development
• Sales, Service and Fulfillment processes
 Technology
Build the technology foundation for delivering a
seamless, personalized view of the customer.
• Application development & intergration
• Infrastructure Development
• Data Architecture
 Measurement
Build & execute measurement approaches to
address the dynamic nature of customer
relationships.
• Customer Relationship Equity
• Operations and Performance
• Financial
 From Product to Consumer Centric

• Consumers know what they want-

SERVICE
• Lack of product differentiation
• The speed to market
• Loyalty is more important
• Satisfied, Dissatisfied & Delighted
Customers
 How Much Choice? –
Customers want tailored solutions
 Class discussion
• Luxurious car market in Hong Kong
• Consider – Lexus, BMW and Mercedes
– How do the 3 car companies tailor to the
need of their customers?
– How can Lexus switch the brand loyalty
from Mercedes?
– What can the car companies do to deepen
the loyalty from their existing customers?
Targeting
 The Power of a Few
• An amazingly small number of
customers make or break a brand
– Every Brand
– In every category
– Everywhere
 The Power of a Few (con’t)
• Today’s customers are tough:
– They have high expectation from a brand
– They want a relationship with a brand on
their terms
– They know their value and expect you to
appreciate it
 The Power of a Few (con’t)
• Word of Mouth:
– Satisfied customers might tell one or two
people of their positive experience
– Dissatisfied customers will tell ten or more
people when they have had a negative
experience
 Marketing has evolved
Push-out Model
Where a product is sold to a broad
consumer base

A NEW Model
Where the consumer is able to decide
from a bundle of options which best suit
their stage and lifestyle
All Consumers are not
Created Equal
 80/20 Rule
• It is a common Phenomenon that a
small percentage of your customers
make up most of your profits
• In many case, 70-80% of profits come
from 20-30% of all your customers
 The Power of a Few
• Your customers
are, and always
will be, your most
valuable assets

8% of all
households
consume

84% of Classic
Coke Volume
 What about Levi’s Jeans?
• 5% of customers buy

• 85% of Levi’s volume

Essence of the CRM Promise
To manage this differential value of
your customer base effectively to
establish a real, and difficult to
break, competitive advantage
Differential Marketing Analysis
Differential Marketing Analysis (DFM)
The top quintile of
% Sales households
52% accounts for more
than 50% of health
supplement sales
28%

12% The Principle tht shows

the value of a bonded
heavy category buyer is
6% 10 to 15 times more
than the average
2% customer
 Who are the Right
Customers?
• Identify these customers, understanding
who they are, where they come from,
what makes them loyal to the brand and
how the bonds were created is key to
acquiring more of them – more of the
right customers
 Behaviors and attitudes reinforce each
other to grow loyalty
 Ad prompts a visit
 VISIT
Well-designed sales process create  TRUST
positive experience

Customer believes that product/service

will be delivered in a timely fashion  ACT
Increased patronage leads to  PERSONAL
personalization, making it harder to defect INVESTMENT
Customer feels other would benefit from  REFER
a similarily positive experience

Customer value relationship so much

that he ignores competitor’s better price  WILLINGNESS to be
INCONVENIENCED
 Behaviors and attitudes
indicate loyalty
Behavior – Indictors, Examples
VISIT
ACT
REFER
TRUST
PERSONAL INVESTMENT
WILLINGNESS to be INCONVENIENCED
 Behaviors and attitudes
indicate loyalty
Behavior
VISIT - Customer returns to a company’s store or site
Comes back to shop again, accesses company through
mulitiple channels
ACT – Customer does something at the company’s store or
site
Purchases, registers, signs up for mails, personalize the site
REFER – Customer advocates a company
Tells others, forwards content or suggest purchases via
email
 Behaviors and attitudes
indicate loyalty
Attitudes
TRUST –customer places confidence in a company
Believes in company, feels transactions are protected
PERSONAL INVESTMENT – customer integrates
company into her life
Feels connected to company, Prefers company to
competitors
WILLINGNESS to be INCONVENIENCED – customer
pays or goes out of way to use the company
Would drive farther or pay more to use company
 Discussion
• Form a group of Four
• Discuss –
• In your knowledge, does your company
use DMA?
• Or do you know which company or
industry is using DMA?
• Please give a real-life example
Data, Database & Data
Strategy
 Terminology
• Information (data) is stored in a database
(software) which is held on a computer (hardware)
• A customer or prospect (record) is made up of
parts if information on that record (variables)
which is held on a database that allows the
storage, access, interrogation and analysis of
records and data variables
• Data is stored as code and the code is connected
by a common language
 Integrated Marketing Database
A Database can be at the centre of
an organization’s structure, Financial & Operational Systems
•Order entry
providing valuable information •Inventory control
about customers, efficiency, •Billing
product development & finance •Collections/Accounts Receivables etc

Marketing & Sales System

•Campaign planning, coordination &
management Company Planning
•Sales forecasting
•Market/competitor analysis Customers •Strategic Planning
•Research & Development
•Field sales support
•Telemarketing
Prospects •Product planning
•Direct Mail Suspects
•Sales force management
 Usage of Database for
Marketing Purposes
Many of the top companies who practice database marketing use
the data for:
• Advertising/messaging to mobile mobile devises
15%
• PR/communication strategy
• Search engine marketing
• Web display ads
• TV, radio/print program
• Corporate strategy
• Outbound telemarketing program
• Loyalty/rewards program
• Market Research
• Email program
• Direct Mail Program
98%
 Database Strategy
• By understanding which data variables
are more important per target group and
which combination may reveal an
insight, one can try and predict behavior
using information stored in the
database.
 An example
• All families with 3 children earning X may have a
high propensity for foreign travel. This could be
understood by determining the correlation of the
foreign travel variable against the other two. If its
occurrence is high, then the two variables
together are predictive
• This type of modeling is common but only
possible if the appropriate variables have been
collected and are appended to each record on the
database
 Better Data for Targeting
• Enhancing data for profiling, better targeting
and more relevant communications is
important
• How?
 Better Data for Targeting- How?
• Add more fields to the database that could include
attitudinal and behavioral data
• Many companies use questionnaires to complete this
information
• Only if recency, frequency and value information has
been collected, then it allows the marketer to
determine how hot the opportunity with that record is
• This date can also be used to help predict the annual
and lifetime value of customers and prospects
 Customers Profiling
• By collecting data on other interests and
purchases, it is possible to reach the
customer on prospects’ emotions in
order to be more relevant
 Customers Profiling
• A car manufacturer knows you are in the
market to buy a car, has your purchase
intention date on the datebase as well as the
category of your car you want to buy (you
have reported this in the questionnaire), and
then they send you a mailing focusing on
speed and performance as its main message.
But your priority is safety.
• You are less likely to be interested
 Customers Profiling
• Imagine if they mailed a list of high spending
credit card users who have purchased child
products and life insurance in the last year
with a message about the safety aspects of
the car. The likelihood is that you will be more
attuned to the message as it would hit your
emotional button
 Pitfalls in CRM

Successful CRM requires a high level of enterprise-wide transformation

in terms of Strategy, Process,Technology and Culture in order to
maximize value to the organization and its customers

Why CRM Fails?

Lack of Lack of Lack of

Strategy Transformation Process Transformation Technology Transformation
 Lack of accurate and  Difficulties in aligning and  Lack of accurate
shared understanding of tuning in channels customer data
CRM  Absence of seamless
 Rupture in linkage between
 Lack of of strategy to sales & marketing and service technology integration
realize and utilize the processes
‘enterprise customer
 Lack of integration between
vision’
front office operations and back
office operations