chapter14-example1 crm km

8/7/2019 Chapter14-Example1 crm km

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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


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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.


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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


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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.


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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.


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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


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customer retention

The average online marketer needs three purchases to breakeven after acquiring a new customer, according to the survey.


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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)


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Current

Current

Every Companys Big Unknown ... Customer Value

FullPotential

Current

CustomerValue

Relatio

nship

Profit

ability

Num

berofRela

tionship

s

Relationship Duration


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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($)


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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


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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


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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?


StructureStructure

Have weimplemented bestpractices andtechnology inprocess/channel?


PerformancePerformance

ScopeScope DepthDepth

Importance of CRM


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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


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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.


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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.


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Capture CustomerData and Measure

Results

The Customer


Results

Take Action toEnrich the Customer

Relationship Capture CustomerData and Measure

Results

Build and ManageCustomer Value


Results


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.


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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


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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?


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Enabling Technologies


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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


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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


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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


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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


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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


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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.


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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


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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


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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


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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


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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


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The CRM Market


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$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


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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


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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


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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


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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


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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


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Siebel Industry Solutions

Siebel Finance

Siebel Insurance

Siebel Communications

Siebel Consumer Goods

Siebel Pharma

Siebel Utilities

Siebel Public Sector

Siebel High Technology


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Siebel 99 Product

More than 600 Person Years of Engineering

1100 Screens

1300 Business Objects/Components

110 Reports 900 Database Tables

144 Interface Tables

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