Customer Relationship Management (CRM) Dr A. Albadvi Asst. Prof. Of IT Tarbiat Modarres University Information Technology Engineering Dept. Affiliate of Sharif University of Technology School of Management & Economics Sept. 2003 WWW.albadvi.net
Session#1: Agenda Introduction (Importance of CRM) What is CRM? Our definition of CRM and What it is Not? Key Benefits of CRM CRM Channels CRM market size CRM related terms
Meeting Increasing Customer Customer Needs Personalized Service Meet Commitments Needs Enterprise Objectives Personalized Experience Delivery & Fulfillment - Maximize information assets Know My History Reach a Knowledgeable Resource Source: Avaya Customer Hierarchy of Needs TM Customer Reach & Revenue Efficiency & Cost Savings TM Leverage human assets
Quote There is only one boss: the customer.. He can fire everybody in the company, from the Chairman on down, simply by spending his money somewhere else. Sam Walton Founder, Wal Mart
Quotes All your products are ephemeral. Only your customers are real. Don Peppers & Martha Rogers, The One-To To-One Future "Your Your most unhappy customers are your greatest source of learning. Bill Gates Business @ the Speed of Thought
Quotes TOWARDS ONE-TO-ONE MARKETING In the 1980s, we saw in every individual a customer. In the 1990s and beyond, we ought to see in every customer an individual. Jack Welch, CEO, General Electric
Loss of Customers If a company loses 10% of its inventory to theft swift action would be taken to stop the loss But If a company loses 10% of its customers no one might even notice it not many things could be done to stop it!
The Importance of CRM 80/20 rule 20% of the customers contribute 80% of the revenue CRM value formula: Retention => Reputation => Attraction
The Development of Lifetime Value 1500 1000 500 0-500 -1000-1500 -2000-2500 1999 2000 2001 2002 2003 1999 2000 2001 2002 2003 Costs of servicing customers is reduced over time Costs of acquiring new customers falls over time Cost Profit
Retaining Customers Equals Profitability 15% 10% 5% 0% Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Customer Profit -5% Individual customer s s profitability increases each year that the customer is retained Source: PricewaterhouseCoopers research
United States Long Distance Telephone Profit DISTRIBUTION OF CUSTOMERS ESTIMATED PROFIT DISTRIBUTION Dollars Spent Per Month Segment IV $100+ Segment III $50-100 Segment II $25-50 Segment I 14% 22% 24% 40% 53% 36% 89% 36% 10% 1% Under $25 Small percentage of customers accounting for a large percentage of profits Source: PricewaterhouseCoopers research
What is CRM? It is a comprehensive set of processes and technologies for managing the relationships with potential and current customers and business partners across marketing, sales, and service regardless of the communication channel. Brent Frei,, President and CEO, Onyx Software Customer Relationship Management is the commitment of the company to place the customer experience at the center of its priorities and to ensure that incentive systems, processes, and information resources leverage the relationship by enhancing the experience. Peter Keen, Chairman, Keen Innovations
What is CRM? CRM is an enterprise-wide mindset, dogma, and set of business processes and policies that are designed to acquire, retain, and service customers. Scott Fletcher, President and COO, epipeline CRM is a disciplined business strategy to create and sustain long-term, profitable customer relationships. Robert Thompson, President, Front Line Solutions, Inc. Customer Relationship Management (CRM) is a business strategy to select and manage customers to optimize long-term value. CRMGuru.com
Other Definitions of CRM A Methodology A Strategy A Concept A System Automation of Business Processes growing business by effectively managing the relationship with future, past, and present customers achieving business goals by defining objectives, implementing a plan, and then measuring results via a system the infrastructure that enables the delineation of and increase in customer value, and the correct means by which to motivate valuable customers to remain loyal software, hardware, process, and workflow Marketing, Sales, Support, etc.
Our Definitions of CRM CRM = Customer Relationship Management Attracting, developing and maintaining successful customer relationships over time A strategy for identifying, satisfying, retaining and maximizing the value of a company s s best customers All processes and technologies that organizations use to identify, select, acquire, develop, retain, and better serve customers
360º View of the Customer Department 1 Department 5 Department 2 Customer Department 4 Department 3
Interchangeable Terms for CRM Customer Relationship Management Customer Relationship Marketing Database Marketing Micro-marketing 1 to 1 Marketing Information Driven Marketing Technology Enabled Marketing
What CRM is Not CRM Click stream analysis CRM is NOT watching the customer behind his back and recording what he does in his browser CRM Clustering CRM is NOT grouping a bunch of customers together and assuming their wants and needs are the same for every member of the group CRM Statistical model CRM is NOT statisticals models that help to develop marketing strategy CRM Database applications CRM is NOT a DB application that records all customer information
What CRM is Not CRM Sales management CRM is NOT part of the human resources issues involving salespeople CRM Contact management CRM is NOT managing contacts means of customers CRM Audio call recording CRM is NOT a tool for agent assessment which allows the call centre to provide a better service CRM Voice over IP (VoIP) CRM is NOT a technology to access customers through different channels
Why CRM is important? CRM helps to answer some questions: What is the value of a customer? What is the value of the household? What is the value of a customer's children and family over a lifetime? How do we avoid communicating in correctly with our customers? The cost of not doing CRM can be huge.
Key Benefits of CRM Achieve a usable understanding of suspects and prospects Better understand and address customer needs and issues Measure the effectiveness of marketing campaigns over time Relate customer needs and issues to your businesses products and services Improve the customer s experience by providing self-service help, and by providing a fast and reliable support process Acquire new customers faster and more efficiently Customer Retention Understand and monitor a customer s buying trends in order to pro-actively sell
CRM Estimated Market Size (US$ Billion) Source: Gray and Byun (2001)
CRM Market Size Source: Gray and Byun (2001)
CRM Related Terms PRM (Partner Relationship Management) to manage relationships with strategic partners (e.g. resellers) provide customers with the optimal sales channel while streamlining the sales process SRM (Supplier Relationship Management) similar to PRM but focus on actual supplies ERM (Employee Relationship Management) enables organizations to bridge the gap between strategic ambitions and operational reality
CRM Related Terms ecrm (Electronic CRM) CRM that is Web-based based e.g., when you log on to a Amazon.com to see if they ve shipped your new books mcrm (Mobile CRM) provision of data to customers, suppliers, and business partners via wireless technologies ccrm (Collaborative CRM) denotes situations in which customers can interact directly with the organization, usually through the Web ECRM (Enterprise CRM) CRM that spans an enterprise-side side view of a customer