Customer Relationship Management (CRM) Basics

Transcription

1 Customer Relationship Management (CRM) Basics Dr. Ulaş Akküçük AMA Definition A discipline in marketing combining database and computer technology with customer service and marketing communications. Customer relationship management (or CRM) seeks to create more meaningful one-on-one communications with the customer by applying customer data (demographic, industry, buying history, etc.) to every communications vehicle. At the simplest level, this would include personalizing or other communications with customer names. At a more complex level, CRM enables a company to produce a consistent, personalized marketing communication whether the customer sees an ad, visits a Web site, or calls customer service. Bank Call Center You call your bank you think your statement contains an unauthorized charge Bank has an IVR (Interactive Voice Response) system you enter your 16 digit card number and pin CSR (customer sales represantative answers your question and also offers you a platinum card with some extra benefits Nu Pera Night Club Not everybody is admitted Some customers who will not spend much are admitted but allowed to sit at the bar (with the excuse all tables are reserved!) Main aim: to separate the profitable customers from the unprofitable ones Türk Telekom Sends personalized mail to a customer which reads: If you had switched to DSL this month you would have saved 17.1 TL In the early days of DSL they tried to promote people to switch from Dial Up to DSL Turkcell Sends you a message: If you promise to stay with us for 6 months you will get 600 extra minutes Try to reduce churn rate (explained next) 1

2 Losing Customers Customer attrition, also known as customer churn, customer turnover, or customer defection, is a business term used to describe loss of clients or customers. Banks, telephone service companies, Internet services, paytv companies, insurance firm, and alarm monitoring services, often use customer attrition analysis Types of Markets Permanent Capture: Trust Fund Simple Retention: Telecommunications, banks Customer Migration: Most household products CRM most suitable for simple retention markets Types of Loyalty Cost of Acquisition vs. Keeping Existing Customers It costs a company six times (some sources say 5, but generally between 3-13) more to sell a product to a new customer than it does to sell to an existing one This has motivated businesses to try to maximize existing customer relationships through knowing who the best customers are and motivate them to stay that way. Estimating Lifetime Value Annual customer revenue: $500 Average number of loyal years: 20 Company profit margin: 10 Customer lifetime value: $1000 Customer Retention Acquisition of customers can cost 5 times more than retaining current customers. Defection rates for some industries: Newspaper subscriptions 66%, US long distance 30%, German mobile phone 25%, ISP 22%. A 5% reduction to the customer defection rate can increase profits by 25% to 85%. 2

3 CRM Goals Reduce rate of defection Winback lost customers Increase longevity Enhance share of wallet Increase referrals(aerobilet example) Terminate low-profit customers Focus more effort on high-profit customers Identify opportunities for cross-selling* and up selling* Cross Seling and Up Selling Cross Selling: A consumer sales promotion technique in which the manufacturer attempts to sell the consumer, products related to a product the consumer already uses or which the marketer has available.example H&R Block sells insurance policies, Garanti bank sells personal retirement funds Upselling: sales technique whereby a seller induces the customer to purchase more expensive items, upgrades, or other add-ons in an attempt to make a more profitable sale. Example Garanti asking customers to switch from bonus premium to platinum A CRM System Contains Four Components Data warehouse Analytical tools Campaign management tools Interfaces to maintain databases Data Warehouse The repository of all current and prospective customer information Anything related to marketing activity can be included in the data Example: For Turkcell what would the data warehouse contain? Data Mart: A subset of the data warehouse for easy access/speed and more efficient analysis by business function Privacy As the companies capture growing amounts of data consumers are worried about privacy Some companies have appointed chief privacy officers Permission marketing: A popular method in which consumers permission is asked before they are taken into some marketing programs 3

4 Privacy cont d Opt-in agreements: Companies ask permission to open communication Double opt-in: Confirmation is asked (can you think of an example from you wireless carrier) Opt-out agreements: Consumers are given the permission to leave the program (you unsubscribe from an list) Some Acronyms and Definitions B2B: Business to business commerce B2C: Business to consumer commerce CCC: Customer contact center, generally a call center CSR: Customer service representative Touch point: Any point of contact with a customer (could be outbound or inbound) see figure next slide Definitions cont d IVR: Interactive voice response, is a technology that allows a computer to interact with humans through the use of voice and keypad inputs Customization: Designing a product according to the comsumer s needs Personalization: Capability to customize consumer communication based on knowledge of preferences/behavior* 4

5 It Reads... We have recently improved and advanced our range of services, as one of our best customers you deserve the best that we have to offer. For a limited time only we offer you two free online transactions. The blue part is taken from the accout balance of teh customer, if balance between 1000 and 2000$ then two offers. Other definitions Mobile CRM: Provision of data to customers, partners or suppliers with wireless technologies PRM: Partner relationship management, allows a company to manage its alliance partner and reseller relationships (referral to other sites) E-CRM: CRM that is web based (checking shipment of your orders from Hepsiburada.com) Operational or front office CRM involves the areas where direct customer contact occurs. The majority of self described CRM software systems on the market fall into the operational category Analytical or back-office or strategic CRM involves analyzing the vast amounts of data collected in the front office to redesign business processes, to increase profitability and loyalty 5

6 Choosing a CRM Solution Hosted CRM: All hardware and software maintained by third party, employees only need to connect through the web On Premise CRM: CRM application is managed by the client and maintained by the IT staff Some Companies Netsuite, SAP, Microsoft Dynamics, salesforce.com, sage, Oracle CRM (offer specific CRM software packages) Veripark (from Turkey next slide some examples from their web site) Also consulting companies without a specific software product: peppers and rogers, accenture, value partners Veripark Product Sales Force Automation (SFA) The cradle of CRM Most of the CRM software is meant for SFA Before automation, salespeople had various personal means of recording this customer information and communicating critical account news back to the home office. Those who left took their little black books along with them, forcing the company to locate and re-collect customer data. SFA provides tools to help salespeople manage their accounts, track opportunities, establish and monitor the sales pipeline, and organize their contact lists. Before and After SFA Customer Relationship Management (CRM) Lecture II Dr. Ulaş Akküçük 6