CR! With CRM

Roger Blackwell www.rogerblackwell.com

How to Pinpoint, Acquire and Retain the most profitable customers in the long run

The Two Commandments

• Know Thy Customers

• Know Thy Data -- CRM

CRM: Also Known As

• Contact Management (CM)

• Sales Force Automation (SFA)

• Data Mining (DM)

• Automated Marketing Processes (AMP)

• Enterprise Marketing Automation (EMA) SAS

• Electronic Commerce Solution (USA Networks)

Where are business and e-commerce going and where does my firm fit in?

What is happening in the consumer marketplace?

Who is keeping track of these trends and developing tools to help me grow profits?

What is on the minds of your customers?

C.R.M.

C.R.M.

The Foundation is Consumer Behavior

CONSUMPTION CONSUMPTION PROCESS PROCESS ANALYSISANALYSIS

MODEL OF CONSUMER BEHAVIOR - PURCHASE AND OUTCOMES

INPUT INFORMATION PROCESSING

DECISION PROCESS VARIABLES INFLUENCING DECISION PROCESSES

Environmental Influences•Culture•Social Class•Personal Influence•Family•Situation

Individual Differences•Consumer Resources

•Motivation and Involvement

•Knowledge

•Attitudes

•Personality

•Lifestyle

•Demographics

Need Recognition

SearchInternal Search

Stimuli

•Marketer Dominated

•Other

Exposure

Attention

Comprehension

Acceptance

Retention

Memory

Beliefs

Attitude

Intention

Alternative Evaluation

SatisfactionDissatisfaction

Outcomes

Purchase

External Search

Problem Recognition

Search

Alternative Evaluation

Choice/Purchase/Consumption

Satisfaction/ Dissatisfaction

CONSUMER BEHAVIOR MODEL

PURPOSE OF CRMPURPOSE OF CRM

• 1. Identify all customers and the 1. Identify all customers and the nature of contacts with themnature of contacts with them

• 2. Identify which types of 2. Identify which types of customers are most profitablecustomers are most profitable–by salesby sales–by profit contributionby profit contribution

PURPOSE OF CRM PURPOSE OF CRM • 3. Identify and understand the behaviors of 3. Identify and understand the behaviors of

the most profitable customersthe most profitable customers– how to encourage behaviors of most how to encourage behaviors of most

profitable customersprofitable customers– how to encourage those behaviors among how to encourage those behaviors among

other segments of the customer baseother segments of the customer base– how to cross-sell other products to how to cross-sell other products to

customerscustomers

PURPOSE OF CRMPURPOSE OF CRM

• 4. Manage contacts with most 4. Manage contacts with most profitable customersprofitable customers

• 5. Manage activities of the firm that 5. Manage activities of the firm that will please most profitable customerswill please most profitable customers–strategiesstrategies

– tacticstactics

The Century of

How many customers will there be?

Will your markets be growing or slowing?

CRM

MARKETING IN THE CENTURY OF THE CUSTOMER

REQUIREMENTS FOR REQUIREMENTS FOR PROFITABLE PROFITABLE

MARKETSMARKETS

• People with needs and/or People with needs and/or problemsproblems

• People with ability to payPeople with ability to pay

• People willing to spend fundsPeople willing to spend funds

• People with authority to spendPeople with authority to spend

Targeting Segments For Increased Profits

Segmenting Individuals

Is e-tailing a Mass Market or Niche Market application?

Data Mining and CRM

GATHERING CONSUMER INFORMATION

1. Give them feedback as to how information has affected company

2. Don’t waste their time--make process easy and quick

3. People want to be able to access information about their preferences, etc.

IMPLEMENTING CRM

1. Shift from batch process environment to real-time environment

2. Shift from Product Centric Environment to Customer Centric Environment

3. Measures of: recency, frequency, volume of purchases.

The Implementation Triad

1. Functional knowledge of the data being analyzed

2. Programmer to manipulate data

3. Analyst/statistician (to build predictive algorithms

(80% data prep, 20% data analysis)

CHANGING LIFESTYLESCHANGING LIFESTYLES

DemographicsDemographics

PsychographicsPsychographics

Behavioral (Bayesian)Behavioral (Bayesian)

CRITERIA FOR SELECTING CRM SOLUTIONS

1. Improve productivity

2. Add sophisticated functionality

3. Ease of maintenance

4. Flexibility for growth

5. Scalable performance

6. Reliability (of provider, not just software)

ORGANIZATIONAL GOALS

1. Integration of multiple divisions

2. Integration of Multiple Channels

CASE EXAMPLE: USA NETWORKS

USA Entertainment

USA Electronic Retailing

USA Information and Services

USA Network (SciFi Channel)

USA Studios (Law & Order, etc)

Home Shopping Network

Ticket Master

Hotel Reservations

Styleclick.com (B2B Web Design for NASCAR, etc.)

Barry Diller, CEO

USA NETWORKS GOAL: Convert Sales into an IMC

Acxion (Little Rock) cleansing data and updating 45 million addresses (provides ID for every customer that never changes, regardless of address or name changes)

Precision Response Group (operates customer call centers)

PRC handles telephone sales, HSN handles fulfillment

TicketMaster handles NBA tickets, upsells Sports Illustrated

SAS Enterprise Miner (modelling, campaign planning execution--DM, catalogs, e-mail. Calculates lifetime value and cross selling opportunities (1 or 365 emails a year?)

Delano software (e-mail execution, HTML enabled, inbound marketing, Click through tracking --those who delete, read, go to web site, go to web site and buy

NASCAR-- from 100,000 names to a few million prospects

CASE EXAMPLE: U.S. MARINE CORPS

275,000 force, 14,253 leave MC each year without completing contract

Cost $35,000 to train each one; a 1%improvement saves $5 million/year

CRM identified factors causing people to leave: Billet MOS, Age, duty status leave

Don’t recruit the ones that will drop out

2,600 person years lost awaiting training (shipped to schools but not in them)

U.S. MARINE CORPS CRM RESULTS

Retain more, recruit less

Recruit less, train less

Train less, wait less, retain more

Continue upward spiral of career process: Career process better, money saved

Saved $10-12 million on first 3 data mining projects

Implemented by SAS (SAIC), nation’s largest employee owned r and d firm

ASSETS ASSETS VERSUS VERSUS

INFORMATIONINFORMATION

GLOBAL INFORMATION SOCIETY

Information/Mass Ratio

GLOBAL INFORMATION SOCIETY

+ Higher Value to Customer

Information/Mass Ratio

GLOBAL INFORMATION SOCIETY

+ Higher Value to Customer

- Lower Operations Costs

Information/Mass Ratio

GLOBAL INFORMATION SOCIETY

+ Higher Value to Customer

- Lower Operations Costs

MORE MARGINS

Information/Mass Ratio

CR! With CRM

Roger Blackwell www.rogerblackwell.com

How to Pinpoint, Acquire and Retain the most profitable customers in the long run