Customer Relationship

Management
By,
Mukti Prakash Behera
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 Menti-based Discussion

What according to you is Customer

Relationship Management ?

GO TO:
www.menti.com
TYPE CODE:
3781 2002 2
Why CRM…?

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 Interpreting Customer Centricity
Customer Relationship Management (CRM) is a strategy that
companies use to manage interactions with customers and
potential customers.

QUERY REQUEST COMPLAINT

LIKES DISLIKES MOTIVATIONS

CUSTOMER
DELIGHT
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 Why CRM…?
Transactional Approach
Concentrates on single, “point of
sale” transactions.
Relationship Approach
Focuses on customer loyalty
and long-term customer
engagement.

Build emotion-centric
More emphasis on maximizing customer connections
the volume of individual sales.
To enable free word-of-mouth
promotion & feedback from
customers capable of
generating leads

Emerging Experience Economy – Firms have to respond to the

Customers want long-term, need of an “Experience Economy”
relational experiences. to stay relevant.
Design services and offerings to make an
emotional connection with the customers. 5
 CRM - Screen Grab

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Traditional Marketing Vs CRM

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 Meaning of CRM
CRM includes methodologies, software and usually Internet
capabilities that help an enterprise manage customer
relationships.

CRM is the process of managing all aspects of interaction a

company has with its customers, including prospecting,
sales and service.

CRM is an integrated approach to identifying, acquiring and

retaining customers.

CRM is an integrated information system that is used to

plan, schedule and control the pre-sales and post-sales
activities in an organization.

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 SOCIAL CRM
A Social CRM is a software integrating with social media
channels, allowing organisations to :

https://www.coroflot.com/ Leverage (use) social information

lara_alexander/KFC-Facebook-Store
Understand and engage customers
gain market insight

Delight customers

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 Social CRM
People who like your brand will sign up as fans creating
a venue for communication and networking

A business can quickly get information to customers.

The company can follow customer conversations and get

a real-time feedback on the brand/product.

Customers can immediately share their experiences

The company can respond quickly to issues.

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Social CRM

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CRM TYPES

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 STRATEGIC CRM
Focuses on the development of a customer-centric business
culture dedicated to winning and keeping customers by
creating and delivering value better than competitors.

Product-oriented Production-oriented
businesses businesses

Sales-oriented customer or market-

businesses oriented business

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 Case : Strategic CRM at HONDA
Honda manufactures and markets a successful range of motorcycle, power
equipment and marine products. The Honda brand has a reputation for quality,
technology and performance

Honda realized that consolidating and freeing up the flow of data could have a
huge positive impact on the effectiveness and efficiency of the business. Honda
developed a strategy themed Customers For Life, based on data integration and
a whole-of-customer view

An integrated view of the customer has allowed Honda to stop

different operating units from bombarding customers with
multiple communications. Instead, Honda now consolidates
outbound customer contact into meaningful and relevant
communications, and accurately measures communications
effectiveness. Honda has built workflows into customer touch-
points, for example customer satisfaction surveys, guaranteeing
follow-up of any negative comments.

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 OPERATONAL CRM
Operational CRM automates customer-facing business processes. It enables
the marketing, selling and service functions to be automated and
integrated.

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 ANALYTICAL CRM
Analytical CRM, is concerned with capturing, storing, extracting, integrating,
processing, interpreting, distributing, using and reporting customer-related
data to enhance both customer and company value.

Customer related data may be found in enterprise-wide repositories:

sales data (purchase history),

financial data (payment history, credit score),
marketing data (campaign response, loyalty scheme data)
and service data

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 Marketing Automation
Integration of communication and offer strategies, and evaluation of
performance, requires a substantial amount of technology-aided coordination
across these channels.

Event-based, or trigger, marketing is used for messaging and offer

development to customers at particular points in time.

An event triggers the communication and offer.

Event-based campaigns can be initiated by customer behaviours, or
contextual conditions.

EXAMPLE
When a credit-card customer calls a contact centre to enquire about the current
rate of interest, this can be taken as indication that the customer is comparing
alternatives, and may switch to a different provider.
This event may trigger an offer designed to retain the customer.
Such activities indicate potential changes in buyer behaviour,
initiating a marketing response. 17
 Marketing Automation
Marketing Automation (MA) applies technology to marketing processes.

Campaign management helps to develop, execute and evaluate

targeted communications and offers.
WHY ?
Customer segmentation helps for campaigning purposes and
enables unique communications to be designed.

PHYSICAL
STORES

ONLINE ENGAGEMENT
CUSTOMERS
STORE

AMAZON
https://www.salesforce.com/in/form/conf/
demo-pardot/ 18
 Sales Force Automation
Sales force automation (SFA) was the original form of operational CRM.
SFA systems are now widely adopted in business and are seen as “a competitive
imperative” that offers “competitive parity”.

SFA applies technology to the management of a company’s selling activities.

LEAD GENERATION

LEAD QUALIFICATION

LEAD NURTURING SFA software can be

configured so that it is
NEED IDENTIFICATION modelled on the selling
process of any industry
DEVELOPMENT OF SPECIFICATIONS or organization
PROPOSAL GENERATION
OPPURTUNITY MANAGEMENT
HANDLING OBJECTIONS
CLOSING THE SALE LEAD MANAGEMENT
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Caselet

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 Service Automation
Service automation is the application of technology to customer service
operations.
It helps manage the service operations, delivered through a call centre, contact
centre, field service, the Web or face-to-face interactions.

Companies becoming efficient & effective

Reduces service cost

It Improving service quality
helps
Enhancing productivity
in
Enhancing customer experience

Enhancing customer satisfaction

QRC MANAGEMENT VIA : IVR RESPONSE SOCIAL MEDIA

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Caselet

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 Caselet
Empathetic banks are using technology such as voice
recognition, speech analytics and text analytics to understand
customers’ emotions at all touch points.

CUSTOMER DELIGHT
THROUGH VOICE
BIOMETRIC
AUTHENTICATION

“This is really about making banking joyful and delighting our

customers. Customers do not have to worry about
remembering their PIN or speaking about personal
information in public now.” 23
 Caselet
https://www.youtube.com/watch?v=DsmhLHxjmy0

Creating Customer Centre of the Future

DBS Contact Centre has also Enables callers to enjoy shorter call
incorporated Voice Biometrics. times.

Voice Biometrics verifies customers’ identities through a system that digitises a

person’s speech. This is possible as the human voice is as unique as the fingerprint.

This allows CSOs to automatically verify customers when

they call in.
Customers no longer need to reveal personal information
RESULT when they are out in public.
Automatic verification through voice biometrics reduces the
time taken to verify customers by up to 50 seconds.
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 SOCIAL CRM
The data that fuelled CRM were largely generated and held within organizations’
operational systems: sales, call centres, service requests.

Now, data about customers are as likely to be found in their Facebook or Twitter
activities and user-generated content posted to YouTube.

There is, therefore, a desire to integrate organization ‘owned’ data with that
generated socially to create a more comprehensive view of the customer

Where consumers use social media (e.g. Facebook) to make

purchases, social media become part of operational CRM. Social
media also feature heavily in crowd-sourced customer service.

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Just a Thought…!!!

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MISUNDERSTANDINGS ABOUT CRM

CRM is merely database marketing

CRM is a marketing process

CRM is an IT issue

CRM is about loyalty schemes

CRM can be implemented by any company

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 CRM
CRM is a core business strategy that integrates internal processes and
functions, and external networks, to create and deliver value to targeted
customers at a profit.
It is grounded on high-quality customer-related data and enabled by
information technology.

BEFORE NOW

companies have
Companies were grown larger,
located close to the they have become
markets they served more remote from
 knew their the customers they
customers intimately serve.
Geographic &
cultural remoteness
Failure of Disney in
France 28
 CRM CONSTITUENCIES
COMPANIES

CUSTOMERS & PARTNERS

VENDORS OF CRM SYSTEMS

CRM Cloud Solutions Providers

Social Media Players.

Vendors of CRM hardware and infrastructure

Management consultants.

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COMMERCIAL CONTEXT OF CRM

AUTO
BANKS
MANUFACTURERS

TECHNOLOGY
CONSUMER GOODS
SOLUTIONS
MANUFACTURER
VENDORS

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 GOALS OF CRM
Lasting Customer Relationship

Improved Customer Satisfaction

Improved Efficiency

Support to Sales and Marketing Team

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 IDIC MODEL
The IDIC model was developed by Don Peppers and Martha Rogers, of the
Peppers & Rogers Group.

The suggests that companies should take four actions in order to build
closer one-to-one relationships with customers:

IDENTIFY who your customers are and build a deep

understanding of them

your customers to identify which customers have most

DIFFERENTIATE
value now and which offer most for the future.

with customers to understand customer expectations

INTERACT
and their relationships with other suppliers or brands

the offer and communications to ensure that the

CUSTOMISE
expectations of customers are met

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 IDIC MODEL

https://www.projectguru.in/customer-
relationship-management/ 33
 CRM VALUE CHAIN
Francis Buttle’s model consists of five primary stages and four supporting
conditions leading towards the end goal of enhanced customer
profitability.

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CRM VALUE CHAIN
Locate customers,
understand habits, interact
to develop relationship to
provide customer service

Managing SUPPLIERS,
CUSTOMERS, OWNERS,
PARTNERS, EMPLOYEES

Provides a structure and

helps the business to
perform its primary
function

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 RELATIONSHIP FUNDAMENTALS
A relationship is composed of a series of interactive
episodes between dyadic parties over time.

Enquiring about a product

Purchase

Making a sales call

INTERACTION
Negotiating terms
ACTION
Dealing with complaints
RESPONSE
Resolving an invoice issue

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 RELATIONSHIP FUNDAMENTALS
There needs to be some emotional content to the
interaction.
This implies some type of affective connection,
attachment or bond.
A relationship exist only when the parties move from a state of
independence to dependence or interdependence.

when a supplier is investing in building a

higher-level partnership with the customer,
ZONE OF DELUSION but the customer is merely interested in the
basic transaction

It is where the buyer would like to partner

but the supplier is focused only on the next
ZONE OF FRUSTRATION transaction

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CHANGE IN RELATIONSHIP

AWARENESS

EXPLORATION

EXPANSION

COMMITMENT

DISSOLUTION

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 TRUST
Trust is focused.
Although there may be a generalized sense of confidence and
security, these feelings are directed.
One party may trust the other party’s:

BENEVOLENCE

HONESTY

COMPETENCE

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 COMMITMENT
Commitment is shown by ‘a partner believing that an ongoing
relationship with another is so important as to warrant
maximum effort to maintain it; that is, the committed party
believes the relationship is worth working on to ensure that it
endures indefinitely’.

Commitment arises from trust, shared values and the belief that partners
will be difficult to replace.

Commitment motivates partners to cooperate in order to preserve

relationship investments.

Commitment means partners forgo short-term alternatives in favour of

more stable, long-term benefits associated with current partners.

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 WHY CUSTOMERS WANT COMMITMENT ?
The fundamental reason that companies want to build relationships with
customers is economic.

Companies generate better results when they manage their customer base
in order to identify, acquire, satisfy and retain profitable customers.

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 EXAMPLE
Churn rates vary considerably.
Energy utilities supplying electricity and gas typically
have enjoyed very low churn levels because of their
monopoly positions.

However, industry deregulation changed that. In the

UK about 25 per cent of utility customers changed
suppliers within two years of industry deregulation.
The industry had been expecting 5–10 per cent
churn, and were surprised at the actual levels.

Most switchers were looking for better prices and to

achieve a dual-fuel (gas and electricity) discount. 42
 RELATIONSHIP MANAGEMENT
There is little merit in growing the customer base aimlessly.

The goal must be to retain existing customers, and recruit new

customers, who have future profit potential.

Not all customers are of equal importance.

Some customers may not be worth recruiting or retaining at

all, for example those who have a high cost-to-serve, are
debtors, late payers or promiscuous in the sense that they
switch frequently between suppliers.

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Caselet

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 WHY COMPANIES WANT RELATIONSHIPS?
REDUCED MARKETING COSTS

Improving customer retention reduces a company’s marketing costs.

In addition to reducing the costs of customer acquisition, costs-to-

serve existing customers also tend to fall over time.

BETTER CUSTOMER INSIGHT

As customer tenure lengthens, suppliers are able to develop a better
understanding of customer requirements and expectations.

Customers also come to understand what a supplier can do for them.

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 WHY COMPANIES WANT RELATIONSHIPS?
Consequently, suppliers are better placed to identify & satisfy customer
requirements profitably, selling more product & service to the retained customer.

As relationships deepen, trust & commitment between the parties is likely to grow.

Under these circumstances, revenue and profit streams from customers become
more secure.

One study, for example, shows that the average online clothing
customer spends 67% more, and grocery customers spend 23%
more, in months 31–36 of a relationship than in months 0–6.

McKinsey has found that retained customers are

significantly less likely to shop around for a new auto
insurance policy than newly recruited customers.
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THE CUSTOMER JOURNEY

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 THE CUSTOMER JOURNEY
2. AWARENESS
Message to be consistent
across the channel.
Discrepancy will lead to
customer confusion and
dissatisfaction.
This is the result of
Prevent customers from the overall customer
abandoning the buying experience.
process and provide a
great experience. 6. LOYALTY
4. EXPERIENCE

5. ENGAGEMENT
1. NEED A two-way interaction leads
3. INTERACTION to a long-term relationship.
Create a need and align
product and services. Make conversations
Organisations should fruitful. Customers need to
make it a seamless feel important.
process. 48
Caselet

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 CLV

Number of Average length of

Average value times the the customer
CLV of a purchase customer will relationship
buy each year (in years)

A regular runner who regularly buys shoes from a store might be worth:

$100 per pair of shoes X 4 pairs per year X 8 years = $100x4x8=$3,200

And a Mother who buys shoes for her kid might be worth:

$20 per pair X 5 pairs per year X 3 years = $20x5x3 = $300

So, Who is more important to the store owner?

(Source: www.shopify.com.ph)
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 RELEVANCE OF CLV
Helps in measuring the Helps change the way we think about
financial impact marketing in terms of creating loyalty
of marketing campaigns. objectives.

Helps find balance in Encourages better decision making by

terms of short-term and teaching marketers to spend less time
long-term marketing goals. acquiring customers with lower value.

Effective management of your customers relationships, which

leads to increased profitability

INDICATIONS
•Average monthly transactions
•Average amount spent per transaction
•Average number of months your customers remain loyal
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 THE VALUE OF KNOWING CLV

1. How much you can spend to acquire a similar customer and still
have a profitable relationship ?
2. What kinds of products customers with the highest CLV want ?
3. Which products have the highest profitability ?
4. Who your most profitable types of clients are ?

Together, these types of decisions can significantly boost your

business’ profitability.

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 IMPROVING CUSTOMER LIFETIME VALUE
Make it easy for customers to return items or get instant refund.
Set expectations regarding delivery dates, aiming to under-promise
and over-deliver.

Create a rewards program to encourage repeat purchases.

Use up-selling/cross-selling to increase the average value of a
customer transaction, such as McDonald’s asking, “Do you want
fries with that?”

Stay in touch. Long-time customers want to know you haven’t

forgotten them.

Make it easy for customers to reach out as well.

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 COMPONENTS OF CLV

The acquisition cost of Total promotional spend/No of

customer new customers
The annual profit of revenue generated by a
customer customer over a year minus
the cost of serving the
customer
Lifetime of the customer to the average length of customer’s
firm relationship with the firm or
brand

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HOW CLV HELPS ?

VND = VIETNAMESE DONG

Caselet

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WHEN MIGHT COMPANIES NOT WANT RELATIONSHIPS WITH
CUSTOMERS?

LOSS OF CONTROL

EXIT COSTS

RESOURCE COMMITMENT

OPPURTUNITY COSTS

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 Relationship in Marketing

“Marketing is a set of process for creating, communicating and delivering

value to customers and for managing customer relationships to benefit the
organization and its stakeholders”

“Relationship marketing is a strategy designed to foster customer loyalty,

interaction and long-term engagement.

It is designed to develop strong connections with customers by providing

them with information suited to their needs and interests”

It emphasizes customer retention and satisfaction rather than sales transactions.

It builds customers' loyalty for the long-term, rather than the short-
term marketing of a particular product or service.
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 Prior Considerations for Relationship Marketing

PRIOR CONSIDERATIONS DESCRIPTION EXAMPLE

Increase in Digital
Consumers
Relationship Identify the Customer Segment
likely to benefit from a RM Penetration of 4G and
Potential programme reduction in Smartphone
(Company)
price

Valid reason for the customer for

engagement.
Interest in Relationship The firm needs to analyze the
(Customer) “value factors” to enhance
relationship.

Not mandatory to be created for
Scope & Content of all customer segments.
Relationship Understand segment preference
& gain greater loyalty.
Rise of Millennials
Capturing the Digital
Lifestyle Ecosystem
SBI Rewardz
59
 CSAT, CUSTOMER LOYALTY AND BUSINESS PERFORMANCE

Satisfaction increases
As customer satisfaction This in turn influences actual
because customer insight
rises, so does customer purchasing behaviour that
allows companies to
intention to repurchase and has an impact on business
understand their customers
loyalty. performance.
better.

An important rationale for CRM is that it improves business

performance by enhancing customer satisfaction and driving up
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customer loyalty.
 CUSTOMER SATISFACTION

It is the customer’s fulfilment response to a customer

experience, or some part thereof.

Customer satisfaction is a Dissatisfaction is an

pleasurable fulfilment unpleasurable fulfilment
response. response.

The ‘experience, or some PRODUCT

part of it’ suggests that the
satisfaction evaluation SERVICE
can be directed at any or all PROCESS
elements of the
customer’s experience, such as; EXPERIENCE
MANAGEMENT

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 CUSTOMER SATISFACTION

The most common way of operationalizing satisfaction is to compare the

customer’s perception of an experience, with their expectations.
This is known as the expectations–disconfirmation model of customer
satisfaction.

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 THE SERVICE RECOVERY PARADOX

It is a situation where a customer thinks

more highly of a company after the
company has corrected a problem with
their service.
…compared to how they
would regard the company
if non-faulty service had
been provided.

63
 FACTORS CONTRIBUTING TO CUSTOMER SATISFACTION

Quality of Experience understand the customer personas and then cater to them
accordingly. By tracking all identity and behavioural
data, CRM helps understand the customer better.

Omni-channel It helps improve the communication experience of the

customer. Identifying and communicating via different
communication channels seamlessly is important.

Personalization There is no better way to personalize communication than

using a CRM for understanding and segmenting
customer records based on their preferences.

Customer Service With better customer service, you can also cross-sell and
improve the CLV (customer lifetime value).

Better management of With CRM, businesses can have better visibility into
demands and can forecast sales accordingly.
purchases

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 EXAMPLE

The Tesco Clubcard is Tesco’s way of rewarding its most loyal customers. For
every pound you spend online or in-store, you’ll get a point. These points,
when accumulated, can be traded in for Tesco Clubcard ‘vouchers’ (for
instance, 150 points gets you a £1.50 voucher).

A voucher can then be traded in for rewards, such as an afternoon at

Cineworld with the kids (a timeless experience), or an evening at Pizza
Express (enjoy it while you can).

Clubcard holders can also collect points at Tesco fuel stations, and by filling
out feedback surveys online.

What’s in it for Tesco? Returning customers that are invested in the brand, and
whose opinion Tesco can leverage to continue improving its growing basket of
offerings. 65
 CUSTOMER LOYALTY

There are two major approaches to defining and measuring loyalty, one
based on behaviour, the other on attitude
Behavioural loyalty is measured by Attitudinal loyalty is measured by reference
reference to customer purchasing to attitude such as beliefs, feelings and
behaviour. purchasing intention. Those customers who
Loyalty is expressed in continued have a stronger preference for, involvement
patronage and buying in or commitment to a supplier are the more
loyal in attitudinal terms.

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 EXAMPLE

If you’ve ever used iTunes (Apple’s online music streaming service), you’ll
have an Apple ID – and if you’ve ever used an Apple device, you’ll have had to
register it using an Apple ID, too.

These unique IDs synchronise across devices, remember music and film
selections, and provide personalised recommendations based on what’s
you've been watching or listening to.

For the user, it offers convenience. And for Apple, it’s a constantly updating
data set, telling the company exactly what its customers like and allowing for
effortless, targeted marketing.

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 DBS – Creating SPARKS…!!!
2006
“Living, Breathing Asia”
Comprising 10 episodes,
inspired by true customer
stories
SPARKS allowed DBS to go
beyond the functional aspects
of financial services
The episodes humanized both
bankers and banking.
OBJECTIVE – To reinvent
Marketing, to put customers
back at the heart of what we do
https://www.dbs.com/livemore/sparks/index.html
2019
“Live More, Bank Less”
Average cost per view for episodes
across platform: 0.57 INR!
(advertising cost/No of video views)
11% of queries on SME product & 10%
on wealth products came from people
who had watched the Sparks Story
Various Digital platforms used for the
mini-series were YouTube, Facebook,
WeChat, and the DBS website.
The videos amassed over 250 million
views & 24 million digital engagements
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 MANAGING CUSTOMER LIFE CYCLE
CLC is a representation of the stages that customers go through
in their relationship with a company, as seen from the
company’s perspective.

CUSTOMER Companies develop

ACQUISITION strategies and
processes for moving
CUSTOMER customers through
RETENTION these three stages,
often but not always
CUSTOMER with the help of CRM.
DEVELOPMENT

69
 MANAGING CUSTOMER LIFE CYCLE

trying to keep the

customers and
trying to sell them
when customers have more
relationship with, but
decide to buy
something from us.
attracting and bringing
the reached person into
the influence sphere of
our organization.

trying to get the

attention of the people
we want to reach.

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 SIGNIFICANCE OF CUSTOMER ACQUISITION
New customers have to Even in well-managed companies
be acquired to build there can be a significant level of
companies. customer attrition
The first task in managing Customer acquisition is always
the customer lifecycle is to the most important goal
acquire customers. during new product launches.

Customer acquisition is always the most important goal during

new product launches.

For small businesses with ambitions to grow, customer

acquisition is often as important as customer retention.

Acquiring profitable customers, as measured by customer

lifetime value (CLV), should be the goal of CRM strategy.
71
 SIGNIFICANCE OF CUSTOMER ACQUISITION
A number of important questions have to be answered when a company puts
together a customer acquisition plan.

1. Which prospects (potential new customers) will be targeted?

2. How will these prospects be approached?
3. What offer will be made?

iD Fresh Food has invested in a lean manufacturing and supply process and
designed a unique distribution model that ensures freshness all along the
value chain, thus, refusing to rely on preservatives or chemicals to increase
shelf life.
It is this value chain that competitors have failed to replicate.
Their marketing campaign has a strong brand value that resonates with
millions and relies primarily on word of mouth. They have made conscious
efforts to hire young talent from remote villages and small towns and trained
them in manufacturing and sales, ensuring social responsibility.
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 WHO IS A NEW CUSTOMER ?
A customer can be new in one of two senses:
1. New to the product category
2. New to the company

NEW TO THE PRODUCT CATEGORY

New-to-category customers are customers who have either identified a new

need or have found a new category of solution for an existing need.

EXAMPLE
When a couple have their first child, they have a completely new set of needs
connected to the growth and nurturing of their child. This includes baby clothes,
food, toys, for example. As the child grows, the parents are faced with additional
new-to-category decisions, such as pre-school and elementary education.

Sometimes, customers also become new-to-category because they find a new

category to replace an existing solution.
Such as Organic Vegetables, Electric cars or for that matter iOS
73
 WHO IS A NEW CUSTOMER ?
Sometimes, customers surprise marketers by adopting established products for
new uses. Marketers then catch on and begin to promote that use.

Arm and Hammer baking soda was used by

customers to deodorize fridges and trash cans,
and as a mild abrasive for whitening teeth.
The manufacturer, Church and Dwight,
responded to this revelation and began
promoting a variety of different applications.
It is now an ingredient in toothpaste.
Their website (www.armhammer.com) provides
visitors with about 100 other tips for baking
soda applications including cleaning,
deodorizing, personal care and baking.

The website encourages visitors to write in

describing novel applications for the product.
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On a lighter note...!!!

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 NEW TO COMPANY
NEW TO COMPANY

New-to-company customers are won from competitors.

They might switch to your company because they feel you offer a better
solution or because they value variety.

EXAMPLE
In developed economies, new players in grocery retail can only succeed by
winning customers from established operators.

They would not expect to convert those customers completely but to win a share
of their spending by offering better customer-perceived value in one or more of
important categories.

Once the customer is in-store, the retailer will use merchandising techniques such
as point-of-sale signs and displays to increase spending.

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 NEW TO COMPANY
NEW TO COMPANY

EXAMPLE
New-to-category customers are sometimes expensive to recruit; sometimes they
are not. For example, when children leave home for university, banks compete
vigorously for their patronage.

They advertise heavily in media used by students, communicate direct-to-student,

offer free gifts and low-or zero-cost banking for the duration of the studentship.

On the other hand, supermarket retailers incur no direct costs in attracting these
same students to their local stores.
New-to-company customers can be very expensive to acquire, particularly if
they are strongly committed to their current supplier.
Commitment is reflected in a strong positive attitude to, or high levels of
investment in, the current supplier.
These both represent high switching costs. 77
 PORTFOLIO PURCHASING
New customers can be difficult to identify in markets where customers
exhibit portfolio purchasing behaviours.
Customers buy on a portfolio basis when they buy from a choice set of
several more or less equivalent alternatives.
A customer who has not bought from one of the portfolio suppliers for a
matter of months or even years, may still regard the unchosen supplier as
part of the portfolio.
The supplier, on the other hand, may have a business rule that says: ‘If a
customer has not bought for three months, mail out a special offer’.

EXAMPLE
In the UK, many grocery customers shop at both Tesco and Sainsbury’s, two of the
major supermarket chains. These retailers do not simply compete to acquire and
retain customers. Instead they compete for a larger share of the customer’s
spending; that is, to grow share-of-wallet (SOW).
78
 THE CONVERSION MODEL
Jan Hofmeyr has developed The Conversion Model.
This contains a series of questions designed to assess whether a customer is
likely to switch.
The basic premise of the model is that customers who are not committed are
more likely to be available to switch to another provider.
Commitment, in turn, is a function of satisfaction with the brand or offer, the
attractiveness of alternatives and involvement in the brand or offer.
Involvement is low if the product or its usage context is relatively
unimportant to customers.
The Conversion Model allows customers to be segmented into four subsets
according to their level of commitment.

COMMITTED CUSTOMERS UNCOMMITTED CUSTOMERS

Entrenched Shallow
Average Convertible 79
 THE CONVERSION MODEL
COMMITTED CUSTOMERS

Entrenched are unlikely to switch in the foreseeable future

Average are unlikely to change in the short term but may

switch in the medium term.

UNCOMMITTED CUSTOMERS
have a lower commitment than average customers,
Shallow and some of them are already considering
alternatives.
Convertible are most likely to defect.

Hofmeyr suggests that companies can measure customer commitment by

asking just four questions:
1. How happy are you with < whatever it is > ?
2. Is this relationship something that you care about?
3. Is there any other < whatever it is > that appeals to you?
80
4. If so, how different is the one < whatever > from the other?
 EXAMPLE

Salesforce helps Uber extract data from people engaging with its brand on
social media. With this system in place, Uber can reply to customer
complaints, and track all its interactions with the public from an intuitive
dashboard.

And, it runs its own loyalty program. Uber Rewards lets you earn points every
time you ride or eat with Uber, and redeem them across its increasing range of
services. It’s a great example of how Uber is incentivising customers to keep
relying on its brand,

81
 PROSPECTING
In CRM, it means searching for opportunities that might generate additional
value for the company.

Prospecting is an outcome of the market segmentation and targeting process.

Prospecting is the process of initiating and developing new business by

searching for potential customers, clients, or buyers for products or services.

B2B B2C
PROSPECTING PROSPECTING

82
STAGES OF THE SALES PROSPECTING PROCESS

3
2

83
 B2B PROSPECTING
In the B2B environment, it is very often the task of marketers to generate
leads, and for the salesperson to follow up allocated leads.

Leads are individuals or companies that might be worth approaching.

The lead needs to be qualified so that sales and other resources are used
wisely to nurture a relationship with higher value prospects.

Once leads are qualified, companies need to decide the best channels for
initiating contact.

Direct-to-Customer Indirect
Channel Channel

salespeople, direct mail, Using

email and telemarketing. partners/stakeholders or
using time and space in
media.
84
 Good to Know – The Buying Centre
people within the organization who first see the
need for the product

people who may or may not use

the product, but have experience people and groups within the
or expertise that can help improve organization that actually use
the buying decision. the product.

People (personal assistants) who will

the person who makes the final decide if and when you get access to
purchasing decision. members of the buying centre.

85
B2B PROSPECTING

Canvassing is a technique in sales where

you try to sell to potential customers who
have little or no experience with the
brand before you contact them.

It may be used to increase sales, improve

brand awareness and grow their customer
base

86
 B2C PROSPECTING
In B2C contexts, the distribution of customer acquisition effort is different.

More emphasis is put on advertising, sales promotion, buzz or word-of-mouth,

social media and merchandising.

Advertising
Advertising is the creation and delivery of messages to targeted audiences
through the purchase of time or space in media owned by others.

Advertising can also evoke powerful

Cognitive advertising
objectives include: raising
awareness, developing
understanding and
generating knowledge.
emotional responses in audiences.
The type of response that advertisers
seek in prospects is ‘I like the look of
that. I really must try it.’ This is an
affective response linked to a buying
intention.
87
 VIDEOS

https://www.youtube.com/watch?v=S_NlSSNGQvE

https://www.youtube.com/watch?v=GlzdVVthPUY
 B2C PROSPECTING

Message Media
• Recall.
Print
How much of the ad can the sample
Web
recall?
Electronic
• Comprehension.
Does the sample understand the ad?
• Credibility.
Is the message believable?
• Feelings evoked.
How does the sample feel about the ad?
• Intention-to-buy.
How likely is it that the sample will buy?

89
 SALES PROMOTION
A sales promotion is a marketing strategy in which a business uses a
temporary campaign or offer to increase interest or demand in its
product or service.

SAMPLING FREE TRIAL

DISCOUNTS COUPONS
CASH BACK BONUS PACK
BANDED PACKS FREE PREMIUMS
CROSS PROMOTIONS COMPETITIONS

BUZZ/WORD-OF-MOUTH
90
 USING SOCIAL MEDIA
It is in the B2C context that social media are more widely used.
Social media are Internet-based applications that allow the creation and
exchange of user-generated content.

Companies can develop a page or create a channel that prospective customers

can visit.

Engaging, interactive content may motivate visitors to spend time on the page,
eventually leading to trial purchase.

Companies can also use social media as an advertising medium.

Technology, in the form of social CRM applications, can be used to search social
media for references to competitors’ brands, and then join the conversation.

Established customers may become fans and benefit from receiving up-to-date
news feeds about the company and its products, passing on their enthusiasm
in ‘likes’ and ‘shares’ to friends in their social network, thereby generating new
customers for the brand. 91
USING SOCIAL MEDIA

92
 THE POWER OF INFLUENCERS
It is also suggested that encouraging influencers in social media to promote a
brand message into their social networks can be extremely powerful.

The objective is to identify & build relationships with influential people who
have a following of hundreds of thousands who in turn influence millions.
Influencer marketing is increasingly more popular among businesses these
days because traditional advertising has become less effective in
attracting leads and customers.

93
 BRAND INFLUENCERS/BRAND AMBASSADORS

A brand influencer is someone who has A brand ambassador is hired by a business to

a following within a specific segment
that they engage with regularly.
They have the power to impact their
purchase decisions.
work under contract to help them achieve
specific goals:
increase brand awareness and boost
conversions and sales.
94
 MERCHANDISING
Merchandising is designed to influence behaviour in store or at other points-
of-sale such as restaurants, banks or retail outlets.

These include retail floor plans, shelf-space positioning, special displays,

window displays and point-of-sale print.

Eye-level positions on shelves are generally more productive than ‘reach’ or

‘stoop’ positions.

If merchandisers can position new products in these preferred positions sales

will be positively influenced.

A study by Deloitte has found that a growing

percentage of shoppers use their smart
phones in store, particularly for research,
product reviews and price comparisons of
big-ticket items 95
 OTHER TOOLS FOR B2C CUSTOMER ACQUISITION
Some companies believe that delighted customers will
always speak well of the company.
Eismann, the German frozen food manufacturer, estimates
that 30% of its new customers are recruited by referrals
from satisfied customers

Despite high levels of naturally occurring referral, companies may still choose
to develop a Customer Referral Scheme (CRS)/ Member-Get-Member (MGM)/
Recommend-A-Friend (RAF) schemes.
These work by inviting existing customers to recommend a friend and
rewarding the recommender with a gift.

Lexus invites up to 300 potential buyers to stylish events

such as dinner-and-concert performances. The Lexus
vehicles are on display. Also invited are current Lexus
owners who sit among the prospects and talk to them.
Lexus knows from customer satisfaction surveys which
customers to invite. 96
 Good to Know...!!!

Julian Villanueva and colleagues have researched the effects of

marketing-induced vs. word-of-mouth customer acquisition on firm
performance.

Using data from an Internet firm that provided free Web hosting to
registered users during a 70-week-long observation period, they found
that customers acquired through WOM were themselves productive
at generating new customers through their own WOM.

They also generated more word-of-mouth activity than those acquired

by marketing-induced channels.

Each customer acquired through marketing is expected to bring around

1.59 new customers throughout his or her lifetime, while a customer
acquired through WOM is expected to bring 3.23 customers.
97
 KPI’S OF CUSTOMER ACQUISITION PROGRAMMES
CRM practitioners are concerned with the following three key
performance indicators (KPIs) for customer acquisition activities:

1. How many customers are acquired?

2. What is the cost per acquired customer?
3. What is the value of the acquired customer over the longer term?

Companies can compare the relative costs of customer acquisition per channel
before deciding how to spend their acquisition budget.

For example, a motoring membership organization knows that its member-

get-member scheme has a direct cost per new customer of $22 compared to
$100 for Direct Response TV and $70 for door drops. The average is $35.

To acquire new customers through relatively

costly but fast-acting marketing investments or
through slower but low- or zero-cost WOM
processes....? 98
OPERATIONAL CRM TOOLS THAT HELP CUSTOMER
ACQUISITION

LEAD MANAGEMENT

CAMPAIGN MANAGEMENT

EVENT-BASED MARKETING

99
 OPERATIONAL CRM TOOLS THAT HELP CUSTOMER
ACQUISITION
LEAD MANAGEMENT
Lead Qualification Prioritize leads so that a company can invest its selling and
marketing resources where they generate the best returns.

Lead Allocation Processes ensure that leads are routed to the right
salesperson.

Lead Nurturing Ensure that leads receive levels of service & support that
help build trust and confidence prior to becoming buyers.

Lead Tracking Trace the conversion of prospects into customers

100
 OPERATIONAL CRM TOOLS THAT HELP CUSTOMER
ACQUISITION
CAMPAIGN MANAGEMENT
Campaign management software is widely deployed in B2C environments and
increasingly in B2B environments for new customer acquisition.

Campaign managers design, execute and measure marketing campaigns with the
support of CRM technologies.

101
 OPERATIONAL CRM TOOLS THAT HELP CUSTOMER
ACQUISITION
EVENT-BASED MARKETING

Event-based marketing (EBM/EDM) is also used to generate new customers.

EBM provides companies with opportunities to approach prospects at times that

have a higher probability of leading to a sale.

EXAMPLE – RETAIL BANKING

In retail banking, an event such as :
A large deposit into a savings account might trigger an approach from the
bank’s investment division.
A name-change might trigger an approach from a financial planner.
A call from a customer enquiring about rates of interest on a credit card
might trigger a call from a customer retention specialist.
102
 OPERATIONAL CRM TOOLS THAT HELP CUSTOMER
ACQUISITION
EVENT-BASED MARKETING
Many B2C companies can link purchasing to life-stage events.

Example : Finance companies target mortgages at newlyweds

Example : Clothing retailers target different offerings at customers as they age:

branded fashion clothing at single employed females, baby clothes for new
mothers

If we can associate purchasing with particular life-stage events we will be

well placed to target our customer acquisition efforts.

Turning Life Stages into

Products 103
 Turning Life Stages into Products

TEENS COLLEGE STUDENTS EARLY ADULTHOOD

CARE-GIVERS PARENTS SENIORS

The program is part of the bank’s broader effort to deepen its customer relationships.

Back in October, 2018, Bank of America launched an employee training curriculum called “Lifestage
Navigation” – a training program designed to focus on customers’ key life stages
(Source: https://www.medialogic.com/blog/financial-services-
marketing/customer-life-cycle-marketing-strategy/) 104
 Good to Know…!!!
Whether it’s friendship or even a relationship with a Brand, all relationship move in 3 Stages…

Can this Product or Service help me Survive….?

Customer will KEEP or DISCARD AirPods can detect when they’re in your
Relationship Stages ear and not. Taking out one or both
AirPods from your ear pauses media
playback.

For two years, Apple's AirPods
were a bizarre curiosity. They were
clever, but they looked odd
CURIOSITY They are smart enough to detect when
you start talking & turns on beam-forming
microphones. The BFM reduce actively
eliminate background noise and focus on
your speech.

Enlighten Customers…How the

Brand Works ?
COMMITMENT ELIGHTENMENT It invites Customers for a
Gradually enlightening customers Relationship
reduces risk With broad adoption, Apple has
managed to re-architect what is
Enlightenment leads to Commitment socially acceptable and desirable.
105
Source: Marketing Made Simple, Donald Miller, JJ Peterson
106

Caselet
 NEED FOR CUSTOMER RETENTION

Acquiring a new customer can be 5

to 25 times more expensive than
holding on to an existing one…

107
 CUSTOMER RETENTION
Customer retention refers to a company’s ability to turn customers
into repeat buyers & prevent them from switching to a competitor.

Customer retention strategies are the processes firm put in place

to build customer loyalty and improve customer lifetime value.

Retaining customers is about more than

just transactions, it’s about relationships.

Research shows that customers view

their relationships with brands
similarly to their relationships with
friends.

Customers like brands that are reliable,

authentic, and aware of what matters to them. 108
 BENEFITS OF CUSTOMER RETENTION

Cost Savings: Customer retention is generally more

cost-effective than acquiring first-time customers

Positive word of mouth marketing: Loyal customers

are more likely to tell their friends and family about
your brand

A better bottom line: Increasing retention rates by

just 5% can increase revenue by 25% to 95%

109
SIGNIFICANCE OF CUSTOMER RETENTION

110
 BENEFITS OF CUSTOMER RETENTION
A customer retention strategy aims to keep a high proportion
of valuable customers by reducing customer defections (CHURN).

A customer development strategy aims to increase the value of

those retained customers to the company.

Customer acquisition focuses on particular prospects, retention

focuses on particular customers.

Focus is necessary because not all

customers are worth retaining and
not all customers have potential for
development. 111
 PRIOR TO CUSTOMER RETENTION
Which customers will be targeted for retention?

What customer retention strategies will be used?

How will the customer retention performance be measured?

43.6%

950 623 750

112
 HOW SILOS AFFECT RETENTION

Sometimes companies are not clear about whether

an individual customer has defected.

PRODUCT SILOS

CHANNEL SILOS

FUNCTIONAL SILOS

113
 Just a Thought…?
If you have 100 customers and lose 10 in the course
of a year, the defection rate is 10%.
What happens if the 10% of
But what if these customers
customers lost buy very little
account for 25% of your company’s
and/or have a high cost-to-serve?
sales? Is the true defection rate
25%?
It could be that the 10% contributes
less than 5% of sales and actually
Consideration of profit makes the
generates a negative profit; that is,
computation even more complex.
they cost more to serve than they
generate in margin.
If the 10% of customers that
defected produce 50% of your
The loss of some customers might
company’s profits, is the true
enhance the company’s profit
defection rate 50%?
performance.

114
 MEASURES OF RETENTION
RAW CUSTOMER RETENTION RATE
This is the number of customers doing business with a firm at
the end of a trading period expressed as a percentage of those
who were active customers at the beginning of the period.

SALES-ADJUSTED RETENTION RATE

This is the value of sales achieved from the retained customers,
expressed as a percentage of the sales achieved from all
customers who were active at the beginning of the period.

PROFIT-ADJUSTED RETENTION RATE

This is the profit earned from the retained customers,
expressed as a percentage of the profit earned from all customers
who were active at the beginning of the period.
115
 Examples
Consider a corporate customer purchasing office equipment. The
customer's business is expanding fast.

It purchased 30 personal computers (PCs) last year, 20 of which were

sourced from Apex Office Supplies. This year it bought 50 PCs, of which
30 were from Apex.

From Apex's point of view it has grown customer value by 50% (from
20 to 30 machines), which it might regard as an excellent achievement.

However, in a relative sense, Apex's share of customer has fallen from

67 % (20/30) to 60% (30/50).

How should Apex regard this customer?

The customer is clearly a retained customer in a “raw” sense, has grown

in absolute value, but has fallen in relative value. 116
 MANAGING CUSTOMER RETENTION
Companies should focus on retaining customers that contribute value
on as-well-as retention of share-of-wallet.

Many customers simply change their buying behaviour rather than

defect.

Changes in buying behaviour may be responsible for greater changes

in customer value than defection.

EXAMPLE
One bank, for example, lost 3% of its total balances when 5% of savings
account customers defected in a year.
But lost 24% of its total balances when 35% of customers reduced the
amounts deposited in their checking accounts.
The need to manage migration rather than defection is particularly
true when customers engage in portfolio purchasing by transacting
with more than one supplier. 117
MANAGING CUSTOMER RETENTION

How can we become the To turn the commercial strategy into a

destination bank for savings? winning customer proposition.

Rigorously analyzed the bank’s existing customer

RBS knew that its existing segments
customers held £50BN+ in savings
with other banks & the strategy Analyzed two profitable segments
was to secure £7.5BN of this.
Used in-depth qualitative research to uncover the
triggers and barriers to increasing their savings
Created a Proposition:
“Transforming Customer’s Lives
Through The Power Of Saving”
Double-digit % increase (average) in savings
balances held by two key target segments with
Created a pipeline of new
product ideas including a
RBS within 3 years.
coaching tool.

118
ECONOMICS OF CUSTOMER RETENTION

INCREASING PURCHASES AS TENURE GROWS

LOWER CUSTOMER MANAGEMENT COSTS OVER

TIME.

CUSTOMER REFERRALS.

PREMIUM PRICES

119
 WHICH CUSTOMERS TO RETAIN ?
Customers who have greatest strategic value to the company are
prime candidates for your retention efforts.

Customers who have high CLV

The level of commitment between the customer and the company will
figure in the decision about which customers to retain.

Some companies prefer to focus their retention efforts on their

recently acquired customers. They often have greater future
lifetime value potential than longer tenure customers.

There is some evidence that retention rates rise over time, so if

defections can be prevented in the early stages of a relationship, that
will enhance future revenue streams and profitability.

120
 MANAGING UNPROFITABLE CUSTOMERS
Sprint Nextel sent out letters to about 1,000 customers on June 29,
2007, to inform them that they had been summarily dismissed—but
the recipients were Sprint customers, not employees.

For about a year, the wireless-service provider had been tracking

the number and frequency of support calls made by a group of high-
maintenance end users.

As a Sprint spokeswoman told Reuters in July, “In some cases, they

were calling customer care hundreds of times a month…on the same
issues, even after we felt those issues had been resolved.”

Ultimately, the company determined it could not meet the

billing and service needs of this tiny subset of subscribers and,
therefore, waived their termination fees and cut off their
service.
121
 MANAGING UNPROFITABLE CUSTOMERS
TXU, a large power provider in Texas, in 2005 implemented a tough
marketing strategy in response to the competitive pressures.

It stopped services to late-paying customers then charged them

expensive reconnect fees, and it offered perks to those who paid on
time.

As a result, it reduced its “bad debt” from non-paying customers and

enjoyed productivity increases among employees who had
previously spent a lot of time fielding calls from scofflaws.

As one senior TXU financial executive says “A customer who calls

you every day is less profitable than one who pays on time and
never calls you.”

122
STRATEGIES FOR CUSTOMER RETENTION

NEGATIVE RETENTION POSITIVE RETENTION

STRATEGIES STRATEGIES

High switching costs Customer Delight

Exit penalties understand customer

requirements
Service related charges exceeding customer
expectations.
The danger for CRM
practitioners is that
negative customer CD = P > E
retention strategies CD = Customer Delight,
P = Perception of Performance
produce customers who E = Expectation
feel trapped
123
KANO’S CUSTOMER DELIGHT MODEL

124
 KANO’S CUSOTMER DELIGHT MODEL
Some efforts to delight customers can go wrong.

A number of companies across industries have explicitly adopted ‘Customer

Delight’ as their mission.

It is in the interaction with customers that employees have the opportunity

to understand and exceed their expectations.

The service quality attributes of empathy and responsiveness successfully

delight customers.

The service quality attributes of empathy and responsiveness successfully

delight customers.

According to the KANO Model, what used to be an attractive attribute

becomes a linear or basic attribute. It no longer delights.
Delight decays into normal expectation, and companies have to look for new
ways to pleasantly surprise customers.
125
 DEALING WITH CUSTOMER EXPECTATION

Cross-industry benchmarking has the potential to provide “innovative”126and

“adoptable” ideas from companies across the industries.
 ADDING CUSTOMER PERCEIVED VALUE
Companies can explore ways for customers to experience additional value
as they buy and use products and services.

The ideal is to enable additional value to be experienced by customers

without creating additional costs.

If costs are incurred then customers may be expected to contribute towards

cost recovery.

LOYALTY SCHEMES

CUSTOMER CLUBS

SALES
PROMOTION
127
 ADDING CUSTOMER PERCEOVED VALUE
LOYALTY SCHEMES
Loyalty schemes reward customers for their patronage/loyalty.

DEFINITION
A loyalty scheme is a customer management programme that offers delayed or
immediate incremental rewards to customers for their cumulative patronage.

A loyalty scheme provides It also demonstrates that the

psychological benefits to
customers, such as a sense of
belonging and of being valued, and
an enjoyable anticipation of
desirable future events.
company appreciates its customers.
The reward acts to positively
reinforce purchase behaviour.

During loyalty redemption, This sense of being recognized as

customers receive both valued & important enhances
psychological and material overall sense of well-being and
benefits. emotional attachment to the firm.
128
Total Relationship Loyalty – Citi’s “Thank You”

In 2010, it won the Master of Enterprise Loyalty Award by LoyaltyOne

Ideally, a Loyalty Program should be a competitive advantage & hard for competition
129to
replicate
Banking - Exemplifying Total Relationship Loyalty

India’s Premier Loyalty and Consumer Engagement

Company

Best Loyalty Program in

Financial Sector 2019

130
https://www.loylty.com/awards.html
Caselet

131
 CUSTOMER CLUBS
A customer club is a company-run membership organization that offers a
range of value-adding benefits exclusively to members.

IKEA FAMILY, the home furnishing retailer’s club,

offers members discounts on selected IKEA
products, restaurant and service offers, a free home
furnishing magazine quarterly, free product
insurance and news updates via email.

There are over a million paid-up members of the

Harley Owners Group that was established in 1983.
They choose from four types of membership, and a
variable membership length from one year to lifetime.
Among the many benefits are roadside assistance, a
membership manual, a touring handbook, a dedicated
website and magazines.

https://www.harley-davidson.com/in/en/content/hog/membership-benefits.html132
 SALES PROMOTION
In pack or On-pack Customers buy the product and receive a voucher entitling
Voucher them to a discount off one or more additional purchases.

Rebate or Cash-back Rebates are refunds that the customer receives after
purchase.

Patronage Awards Customers collect proofs of purchase, such as store

receipts or bar codes from packaging, that are surrendered
for cash or gifts. The greater the volume purchased, the
bigger the award.
Free premium for The customer collects several proofs of purchase and mails
continuous purchase. them or surrenders them at outlet to obtain a free gift.

Collection Schemes These are long-running schemes in which the customer

collects items with every purchase

Kellogg’s ran a promotion in which they inserted picture cards of

carefully chosen sports stars into packets of cereals. Customers
didn’t know what card they had until they bought and opened the
pack. These became collectible items 133
 SALES PROMOTION

“Collecting 300 Runs and 30

Wickets would get you a calendar
with cricketers photo and
autograph”

The brand has a strong recall

value, not because of the flavours,
https://www.youtube.com/watch? but because of the collectables134
...
v=_JaWLC6BNgY
 SALES PROMOTION

https://www.youtube.com/watch?
v=_JaWLC6BNgY
 BONDING
Researchers have identified many different forms of bond between
customers and suppliers.

FINANCIAL BONDS

SOCIAL BONDS

STRUCTURAL BONDS

CUSTOMISATION BONDS

https://www.businessmanagementideas.com/service-marketing/customer-retention-
strategies/customer-retention-strategies-in-service-marketing-top-4-stages/17681
136
 BONDING
FINANCIAL BONDS
The customer is tied to the firm through financial incentives; lower prices for greater
volume purchases or lower prices for customers who have been with the firm long
time.

In Airlines, Frequent Flyer programs provide financial incentives and car rental
companies do the same.

Unfortunately, financial incentive does not generally provide long-term advantages to a

firm because, unless combined with another relationship strategy, they don’t
differentiate the firm from its competitors in the long run.

137
 BONDING
SOCIAL BONDS
In this stage, strategies bind customers to the firm through more than financial
incentives.
Although price is still assumed to be important, here marketers build long-term
relationship through social and interpersonal as well financial bonds.
Customers are viewed as “clients” or “partners” not nameless faces, and becomes
individuals whose needs and wants the firm seeks to understand.
Social, interpersonal bonds are common among professional service providers
(lawyers, accountants, and teachers) and their clients as well as among personal
care providers (hair-dressers, counsellors, health­care providers) and their clients.

138
 BONDING
CUSTOMISATION BONDS
In this stage, strategies involve more than social ties and financial incentives.
Segment based customisation is the aim.
Two commonly used terms fit within the customisation bonds approach – mass
communication and customer intimacy.

Both of these strategies suggest that customer loyalty can be encouraged through
intimate knowledge of individual customers and through the development of “one-
to-one” solutions that fit the individual customers’ needs.

Caterpillar dealers are relied on not just to form strong personal commitments
to customers. They are also relied on to feed information back into the system
to help Caterpillar customise services to fit developing customer needs.
139
 BUILDING CUSTOMER ENGAGEMENT
The final positive strategy for improving customer retention is to build customer
engagement.

Various studies have indicated that customer satisfaction is not enough to ensure
customer longevity.

Reports that 65 per cent to 85 per cent of recently

churned customers claimed to be satisfied with
their previous suppliers.
RESEARCH
STUDY Another study reports that one in ten customers
who said they were completely satisfied, scoring 10
out of 10 on a customer satisfaction scale, defected
to a rival brand the following year.

Having satisfied customers is increasingly no more than a basic requirement.

Today, many commentators are stressing the need for companies to lift levels of
customer engagement instead of just focusing on customer satisfaction.140
 THE POWER OF ENGAGED CUSTOMER
Engaged consumers are generally thought to have a higher intensity of
participation in and connection to a brand or organization
Engaged Customers feel a strong sense of connection to the organization or brand
based on their experiences of the firm’s offerings, activities and reputation.

ELEMENTS OF CUSTOMER ENGAGEMENT

COGNITIVE
ENGAGEMENT The cognitive and affective elements reflect
the experiences and feelings of customers.
AFFECTIVE
ENGAGEMENT

BEHAVIOURAL The behavioural and social elements capture

ENGAGEMENT brand or organizational participation by
consumers, beyond merely buying the firms’
SOCIAL offerings.
ENGAGEMENT 141
 THE POWER OF ENGAGED CUSTOMER
Consumers who are engaged do more than just buy.
They may perform acts of ‘corporate citizenship’, such as being an unpaid
advocate by uttering positive word-of-mouth, providing frequent feedback on their
experiences, participating in company research, contributing to a new product or
service development.
Preliminary research indicates that engaged consumers can exhibit greater
loyalty to brands than unengaged consumers.
Engaged customers develop a close affinity to the brand and become highly
resistant to competitive influence.

CUSTOMER ENGAGEMENT IN BANKS

Relevant research indicates that the rate of account closure

at a bank was 37% lower for emotionally engaged
customers than for rationally satisfied customers.
142
 RELATIONAL ATTACHMENT
Customers can become highly attached to a company’s people.
An emotional tie may be formed with an individual person, a work group or the
generalized company as a whole
Customers who talk about ‘my banker’ or ‘my mechanic’ or ‘my builder’ are
expressing this attachment. They feel a sense of personal identification with that
individual.
Often, these are employees who ‘break the rules’ or ‘go the extra mile’.
They are reliable, competent, empathic and responsive.

American Express tells the story of a customer service

agent (CSA) who responded to a call from a customer who
had been robbed, by arranging to have replacement
travellers cheques delivered personally to the customer.
The CSA also confirmed the customer’s hotel reservation,
arranged for a car to collect the customer from the phone
booth and notified the police. All of this was above and
beyond the CSA’s call of duty. 143
 VALUE-BASED ATTACHMENT
Customers may develop a strong sense of emotional attachment when their
personal values are aligned with those of the company.

Values are core beliefs that transcend context and serve

to organize and direct attitudes and behaviours.

Customers have many and varied core beliefs such as sustainability, honesty, child
protection, independence, family-centredness and so on.
Where these values coincide with those of an organization, the customer may
develop a strong sense of emotional attachment to the organization.

144
Refer to Page 106, CRM, Francis Butle
THE POWER OF ENGAGED CUSTOMER

145
 KPI’s – CUSTOMER RETENTION PROGRAMME
CRM practitioners may focus on a number of key performance indicators (KPIs) as
they measure the impact of their customer retention strategies and tactics, among
them the following:

1. Raw customer retention rate in each customer segment.

2. Sales-adjusted retention rate in each customer segment.
3. Profit-adjusted retention rate in each customer segment.
4. Cost of customer retention.
5. Share-of-wallet of the retained customers.
6. Customer churn rate per product category, sales region or channel.
7. Cost-effectiveness of customer retention tactics.

146
 THE ROLE OF RESEARCH
Companies can reduce levels of customer churn by researching a
number of questions:
1. Why are customers churning? (REASONS)
2. Are there any lead indicators of impending defection?
(CLUES)
3. What can be done to address the root causes? (ACTIONS)

The first question can be answered by contacting and

investigating a sample of former customers to find out why
they took their business elsewhere.

Customers defect for different reasons, not all of which can be

foreseen, prevented or managed by a company.

147
 CUSTOMER DEFECTION SIGNALS
The second question attempts to find out if customers give any early
warning signals of impending defection. If these were identified the
company could take pre-emptive action.

Signals might include the following:

1. Reduced RFM Scores (Recency–frequency–monetary Value)

2. Non-response To A Carefully Targeted Offer
3. Reduced Levels Of Customer Satisfaction
4. Dissatisfaction With Complaint Handling
5. Reduced Share Of Customer Wallet
6. Inbound Calls For Technical Or Product-related Information
7. Late Payment Of An Invoice
8. Querying an invoice

148
 THE ROLE OF RESEARCH
Identified eight causes of switching behaviours in the service
industries :
PRICE INCONVENIENCE
CORE SERVICE
FAILURES
FAILED EMPLOYEE RESPONSE

ETHICAL PROBLEMS INVOLUNTARY FACTORS

COMPETITIVE ISSUES SERVICE ENCOUNTER FAILURES

Another industry-specific study found that between 20% and 25%

of supermarket shoppers changed their primary store in a 12-
month period. 24% of switchers changed loyalty because a new
competitive store had opened, 14% because they had moved
house, 11% for better quality and 10% for better choice.
149
 STRATEGIES FOR CUSTOMER DEVELOPMENT
Customer development is the process of growing the value of
retained customers.

Companies generally attempt to cross-sell and up-sell products

into the customer base whilst still having regard for the
satisfaction of the customer.

CROSS-SELLING UP-SELLING

Cross-selling is selling Up-selling is selling higher

additional products and priced or higher margin
services to an existing products and services to an
customer. existing customer.
150
 STRATEGIES FOR CUSTOMER DEVELOPMENT

Campaign Management Event-based Marketing

Data Mining Customisation

Integrated Customer
Channel Integration
Communication

Marketing Optimisation

151
STRATEGIES FOR TERMINATING CUSTOMER RELATIONSHIPS
A review of customer value might identify customers that are candidates for
dismissal, including customers who will never be profitable or who serve no
other useful strategic purpose.

More specifically, these include fraudsters, persistent late payers, serial

complainants, those who change their minds with cost consequences for the
supplier, and switchers who are in constant search for a better deal.

Nypro, a plastic injection moulder, had 800 customers and sales of

$50 million when it decided to move out of low value-added
manufacturing. Many of these customers served no useful strategic
purpose.
Ten years later the company had only 65 customers, all of whom
were large, and required value-added solutions rather than cheap
moulded products. However, sales revenue had reached $450
million. 152
STRATEGIES FOR TERMINATING CUSTOMER RELATIONSHIPS
Sacking customers, sometimes called ‘de-marketing’, needs to be conducted
with sensitivity.

Customers may be well connected and spread negative word-of-mouth about

their treatment.

UK banks began a programme of branch closures in

geographic areas that were unprofitable.

Effectively, they were shedding low value customers in

working-class and rural areas.

There was considerable bad publicity, government

intervened and the closure strategy was reviewed.
153
Caselet

154
STRATEGIES FOR SHEDDING UNPROFITABLE CUSTOMERS

Make them profitable by raising prices or cutting

the cost-to-serve.

Un-bundle the offer.

Respecify the product.

Reorganize sales, marketing and service

departments.

Introduce ABC class service.

155
 STRATEGIES FOR SHEDDING UNPROFITABLE CUSTOMERS

HARDLINERS
Take an active & rigorous stance in terminating unprofitable
relationships, as they do a regular evaluation of their customer portfolio.
Factors such as a potential loss of trust in relationships or negative word-
of-mouth do not hinder their willingness to sack unprofitable customers.

APPEASERS
Take a more cautious approach concerning the termination of unprofitable
relationships, due to strategic considerations such as not playing customers
into competitors’ hands.

UNDECIDED
Are reluctant to terminate unprofitable relationships, mainly because
they fear the costs of attracting new customers.
156
 STRATEGIC CRM

STRATEGIC CRM

157
 CUSTOMER PORTFOLIO
A customer portfolio is the collection of mutually exclusive customer groups
that comprise a business’s entire customer base.

In other words, the customer portfolio is made up of customers clustered on

the basis of one or more strategically important variables.

1. Price-Sensitive 2. Experience 3. Ready-To-

Shoppers Shoppers Purchase Shoppers
4. Latest Product 5. Research
Shoppers Shoppers

At one end, all customers are assigned to a single cluster and offered the
same value proposition; at the other, each customer is a unique ‘cluster-
of-one” and offered a unique value proposition.
https://brandlock.io/blog/5-types-of-online-shoppers-and-why-sites-fail-to-convert-them/
158
 CUSTOMER VALUE PROPOSITION

“Client Value Proposition is a PROMISE that

EXPLAINS what BENEFIT we provide for
whom and how we do it UNIQUELY well”

It describes our target client, the PAIN POINT we

SOLVE, and why we are DISTINCTLY BETTER than
the alternatives.”
159
 CUSTOMER VALUE PROPOSITION
A value proposition is a company’s promise that customers will experience a
specified bundle of benefits from their use or consumption of a company offering.

Strategic CRM’s principles is that not all customers can, or should, be

managed in the same way – unless it makes strategic sense to do so.

Customers not only have different needs, preferences and expectations,

but also different revenue and cost profiles, and therefore should be
managed in different ways.

In the B2B context, some customers might be offered customized

product and face-to-face account management; others might be
offered standardized product and web-based self-service.
If the second group were to be offered the same product options
and service levels as the first, they might end up being
unprofitable customers for the company. 160
Caselet

161
 BASIC DISCIPLINES FOR CPM
Market segmentation is the process of dividing up a market into more-or-less
homogenous subsets for which it is possible to create different value
propositions.

Market segmentation processes can be used during CPM for two main
purposes:

They can be used to To cluster current customers

segment potential markets
to identify which customers
to acquire.
with a view to offering
differentiated value propositions
supported by different
relationship management
strategies.

162
 BASIC DISCIPLINES FOR CPM
The market segmentation process can be broken down into a
number of steps:
1. Identify the business you are in.
2. Identify relevant segmentation variables.
3. Analyze the market using these variables.
4. Assess the value of the market segments.
5. Select target market(s) to serve.

Before Haagen-Dazs, it was known that ice-

cream was a seasonally sold product aimed
primarily at children. Haagen-Dazs upset this
logic by targeting an adult consumer group with
a different, luxurious product, and all-year round
purchasing potential.
163
 ANALYSING CONSUMER MARKETS
Consumers can be clustered according to a number of shared
characteristics. These can be grouped into user attributes and
usage attributes.

164
 ANALYSING CONSUMER MARKETS
VARIABLES DEFINING CUSTOMER SEGMENTS

Occupational status is widely used to classify people into social

grades. Systems vary around the world.

In the UK, the Joint Industry Committee for National Readership

Surveys (JICNARS) social grading system is employed.

This allocates households to one of six categories (A, B, C1, C2, D and
E) depending upon the job of the head of household.

Higher managerial occupations are ranked A; casual, unskilled

workers are ranked E.

Media owners often use the JICNARS scale to profile their audiences.
165
 ANALYSING CONSUMER MARKETS
VARIABLES DEFINING CUSTOMER SEGMENTS
The two other usage attributes :
VOLUME CONSUMED and SHARE OF CATEGORY SPEND are also
useful from a CRM perspective. Many companies classify their
customers according to the volume of business they produce.

McDonald’s in the USA have found that 77% of their sales

are to males aged 18 to 34 who eat at McDonald’s three to
five times per week, this despite the company’s mission to
be the world’s favourite family restaurant.
Assuming that they contribute in equal proportion to the
bottom line, these are customers that the company must
not lose. The volume they provide allows the company to
operate very cost-effectively, keeping unit costs low

166
 ANALYSING CONSUMER MARKETS

Bivariate segmentation of the chocolate market (Source: Mintel 1998) 167

Caselet

168
 DATA MINING FOR CLUSTERING
It is valuable when you are trying to find patterns or relationships
in large volumes of data, as found in B2C contexts such as retailing,
mobile telephony, financial services and Internet-based activities.

WHY ?
Customer portfolio management needs intelligent answers to questions such
as these:
1. How can we segment the market to identify potential customers?
2. How can we cluster our current customers?
3. Which customers offer the greatest potential for the future?

The company has 16 million “Clubcard” members in the UK. Not only does the
company have the demographic data that the customer provided on becoming
a club member, but also the customer’s transactional data. If ten million club
members use Tesco in a week and buy an average basket of 30 items, Tesco’s
database grows by 300 million pieces of data per week. This is certainly a huge
cost, but potentially a major benefit.
169
Caselet

170
 BIVARIATE MODELS
Benson Shapiro and his colleagues developed a customer portfolio model that
incorporated the idea of cost-to-serve into the assessment of customer value.

In this model, customers are classified according to the price they pay and
the costs incurred by the company to acquire and serve them. Four classes
of customer are identified: carriage trade (often newly acquired customers
who are costly to serve but pay a relatively high price), passive customers,
aggressive customers and bargain basement customers. 171
 BIVARIATE MODELS
Renato Fiocca improved this customer portfolio modelling by introducing a two-
step approach. At the first step customers are classified according to:
1. The strategic importance of the customer.
2. The difficulty of managing the relationship with the customer.

The strategic importance of a customer is determined by:

1. the value or volume of the customer’s purchases
2. the potential and prestige of the customer
3. market leadership
4. general desirability in terms of diversification of the supplier’s markets,
providing access to new markets, improving technological expertise, and the
impact on other relationships.

172
 BIVARIATE MODELS
The difficulty of managing the customer relationship is related to:
1. Product characteristics such as novelty and complexity.
2. Account characteristics such as the customer’s needs and requirements,
customer’s buying behaviour, customer’s power, customer’s technical and
commercial competence and the customer’s preference to do business with a
number of suppliers.
3. Competition for the account that is assessed by considering the number of
competitors, and the strengths and weaknesses of those competitors.

173
 TRIVARIATE CPM MODEL
Peter Turnbull and Judy Zolkiewski have developed the three-dimensional CPM
framework. The dimensions they propose are cost-to-serve, net price and
relationship value.

Relationship value is ‘softer’ or more judgemental than the other two

dimensions. Among the questions considered when forming a judgement on
relationship value are the following:

• Are the goods or services critical to the customer?

• Is the customer a major generator of volume for the company?
• Would the customer be hard to replace if they switched to competitor?
• Does the customer generate cost savings for the supplier?

174
 OPERATIONAL CRM

OPERATIONAL CRM

175
 OPERATIONAL CRM
Operational benefits are the first returns from IT-enabled CRM
programmes.
Customer-facing processes in selling, marketing and customer service
become more efficient as they are formalized and standardized and
generate operational cost savings.
It is important to realize that an organization’s CRM strategy options are
limited by its operational capabilities.

Typically, a firm moving towards a customer-centric strategy invests first

in building a single view of the customer (SVOC).

The SVOC integrates data from all operational units that touch customers,
including sales, marketing, customer service and accounts, to create a
coherent picture of the customer’s interactions with the business.
Once the SVOC is created CRM users can interact with customers on a one-
to-one basis, in full knowledge of their history with the business, thereby
enhancing customer experience throughout the customer’s relationship
with the firm. 176
 OPERATIONAL CRM
Appropriate customer management actions can only be taken if the insight
is delivered to the customer-facing employees who use the firm’s selling,
marketing and service operational processes.

Without well-designed and applied operational processes, there is little

possibility of implementing the CRM strategy.

Achieving this capability requires IT investment in the following solutions:

SALES FORCE AUTOMATION
MARKETING AUTOMATION
SERVICE AUTOMATION

Many firms stop their CRM drive once technology-supported operational

capability is in place, such as call centre operations and online self-service.

Hence, CRM is often misconstrued in organizations as a ‘technology

solution’ rather than a strategic initiative.
177
 SALES FORCE AUTOMATION
Reports suggests that, on average, two-thirds of a sales rep's
time is spent on non-revenue generating tasks.

178
 SALES FORCE AUTOMATION
Sales Force Automation (SFA) is when parts of the sales
process are automated by software tools.
The automation usually focuses on repetitive, administrative
tasks that, while important, can be time-consuming for sales
teams to perform.

By letting a SFA software take care of these tasks, sales reps

can spend their time on more productive parts of their job:
SELLING.

SFA software is designed so that companies can collect, store,

analyze, distribute and use customer-related data for sales
purposes.
Customer-related data are key to customer orientation and the
development of long-term mutually beneficial relationships with
customers. 179
 SALES FORCE AUTOMATION

The SFA software will usually automate tasks based on certain inputs.

For example, leads can be sent follow up emails based on a pre-

designated template if they don’t respond to an initial email after a certain
number of days.

SFA software can also include reporting and analytics tools.

This makes it easier for sales managers to see metrics such as the
performance of sales team members or predicted revenue over a
certain time period.

180
PURPOSE OF SALES FORCE AUTOMATION

ALLOW SALES TEAMS TO FOCUS ON

THE MOST IMPORTANT TASKS

STREAMLINE THE SALES PROCESS SO

THE MOST EFFECTIVE STRATEGY IS
ALWAYS USED

ALLOW MANAGERS TO GET INSIGHT

INTO THE EFFECTIVENESS OF THE
SALES PROCESS
181
COMPONENTS OF SALES FORCE AUTOMATION

1 ACTIVITY TRACKING AND ALERTS

2 AUTOMATE THE SALES PROCESS

3 MANAGE THE SALES PIPELINE

TAKE THE HASSLE OUT OF SCHEDULING

4
APPOINTMENTS

5 AUTOMATICALLY ASSIGN LEADS

6 PRODUCE UP-TO-DATE REPORTS

7 FOCUS ON THE RIGHT LEADS

182
COMPONENTS OF SALES FORCE AUTOMATION

183
 SFA ECO-SYSTEM
The SFA eco-system is made up of three components:
SFA SOLUTIONS PROVIDERS
HARDWARE AND INFRASTRUCTURE VENDORS
ASSOCIATED SERVICE PROVIDERS

SFA solutions providers can be classified in a number of ways. Some are SFA
specialists. They compete against enterprise and mid-market CRM suites that
include SFA modules, and enterprise suite vendors that offer a full range of IT
solutions to support business, including supply chain management (SCM) and
customer relationship management (CRM)

184
SFA ECO-SYSTEM

185
 SFA ECO-SYSTEM
ACCESSIBILITY
SFA solutions, like other CRM technologies, are accessed in
one of two ways.

The solution can be installed on the user company’s own

servers and it is known as on-premise, offline or installed
SFA.

It can be accessed on another party’s servers via the

Internet. It is hosted, online or on-demand SFA, web-
service, the ASP (Application Service Provider) model, or
the Software as a Service (SaaS) model.

186
 SFA ECO-SYSTEM
SERVICES – TRAINING/LEARNING & USABILITY
When a SFA project is undertaken, service costs may add significantly to
overall project expenditure.

In addition to paying for software and hardware, SFA project leaders

might buy services from providers that :

RE-ENGINEER SELLING MANAGE TRAIN

PROCESSES PROJECTS SALESPEOPLE

CONSULT ON SALES FORCE CONDUCT CUSTOMER PORTFOLIO

ORGANIZATIONAL STRUCTURE ANALYSIS

Service providers can contribute significantly both to SFA

project costs and the probability of success.

187
 SFA ECO-SYSTEM
HARDWARE & INFRASTRUCTURE
The performance requirements of SFA applications can create significant
challenges for both hardware and technology infrastructure.
Whereas office-bound salespeople and sales managers might be happy to
use desktops or laptops, field sales staff mostly prefer to use mobile data
devices: smart phones or tablets.
Where companies have geographically dispersed external salespeople,
SFA systems have to operate 24/7 in real time, allowing organizations to
manage opportunities as quickly as possible.
SFA applications often need to integrate with back-office systems so that
field sales has visibility of outstanding service issues or order progress
in advance of a client meeting.

188
 SFA ECO-SYSTEM

It has been suggested that the average implementation period

of SFA is 21 months and that users need over 100 hours
experience with new technologies before they could claim to
have mastered it.

During the implementation period, salespeople will need to

populate the SFA system with data from operational databases
and then learn how to analyze and leverage the data.

This can take much longer than the purely technical

implementation of a software system. 189
FUNCTIONALITIES OFFERED BY SFA

190
 BENEFITS OFFERED BY SFA
For shorter sales cycles leading
higher win rates
Salespeople to faster inventory turnover

more closing opportunities

For accurate management improved salesperson

Sales Manager reports productivity

improved customer
reduced cost-of-sales
relationships

For Senior improved profitability. market share growth

Management

increased sales revenue accelerated cash flow

191
Caselet

192
 HOW SFA CHANGES SALES PERFORMANCE
There have been a number of independent assessments of the effects of SFA on
sales performance.

193
 CONDITIONS TO DERIVE SF BENEFITS
Salespeople find that the SFA application is easy to use.

Salespeople find the technology useful because it fits their roles well.

Availabilityofofappropriate-to-task
Availability appropriate-to-task SFA
SFAtraining.
training.

Users
Users have
have accurateexpectations
accurate expectations about
aboutwhat
whatSFA
SFAwill
willdeliver.
deliver.

Users
Users have
have a apositive
positiveattitude
attitude towards
towardsinnovation.
innovation.
Users
Users havea apositive
have positiveattitude
attitude towards
towardstechnology
technology
Availability
Availability of of usersupport
user support after
after roll-out,
roll-out,for example,
for a help
example, desk.
a help desk.
Involvement
Involvementof user groups
of user including
groups sales reps
including and
sales managers
reps during SFAduring
and managers project
planning
SFA project and technology
planning selection.
and technology selection.
Deployment of a multidisciplinary team in the SFA project planning
phases.
Senior management support for SFA. 194
 MARKETING AUTOMATION
Marketing automation is the application of computerized
technologies to support marketers and marketing
management in the achievement of their work-related
objectives.

Marketing practices have historically been very ad hoc.

Some of the major companies, particularly fast-moving
consumer goods companies such as Unilever and Procter and
Gamble, have bucked the trend and developed marketing
processes that brand managers, segment managers, market
managers and marketing managers are obliged to follow.

195
Caselet

196
 WHAT MARKETING AUTOMATION DOES ?
Personalized Workflows
Prospects' actions are added data point for marketing strategy, telling you what
customers are looking for, immediately in the moment but manually tracking these
behaviours is impossible. With MA, businesses can use these inputs across multiple
channels to deeply understand their customers’ needs and deliver the right content at the
right time.

Streamlined Processes
Organisations can build streamlined processes that keep customers at the
center of it all.. Break through silos and work together to provide a unified
customer experience right from the very first touch, all the way beyond the
customer purchase.

Integrated Data & Analytics

Organisations can continue to engage customers with personalized workflows

that lead to loyal, repeat customers who refer their friends and family.
197
 BENEFITS OF MA

Enhanced marketing Greater marketing

efficiency productivity

More effective marketing Improved accountability

Improved marketing
Enhanced responsiveness
intelligence

Improved customer Improved customer

experience engagement
198
FUNCTIONALITY OFFERED BY MA

199
 CAMPAIGN MANAGEMENT
A digital marketing campaign involves the execution of a
marketing strategy across all the digital channels where
consumers engage with a brand, usually for the purpose of
improving a company's conversion rate.

To start a campaign, marketers need to understand who their customer is

and where to reach them and anticipate what action the customer will take
next.

Customers approach brands though an omni-channel lens. So to effectively

reach a customer, marketers should connect digital marketing campaigns
across all channels.

Digital marketing campaigns can be less expensive than other marketing

campaigns and can engage with customer behaviour in real time.

Companies can use a digital campaign for a variety of uses, from raising
brand awareness to telling loyal customers about a new product. 200
 CAMPAIGN MANAGEMENT

Communicate compelling Thank Them.

Value to make them choose If a customer drops out
Generate Value-Based you. Go of the journey, find out
Content (text, audio, for product/service why that happened…
visual) to attract comparisons, and
Prospects. customer reviews. Retain the customer
and make them loyal by
Get an idea of your delivering value.
intended audience – know
who they are, where they
come from, and how they
found out about you

CONVERSION
VALUE
CREATION
CONSIDERATION

DISCOVERY
UNAWARENESS

201
ELEMENTS OF CAMPAIGN MANAGEMENT
Workflow

Segmentation and Targeting

Personalization

Execution

Measurement

Modelling

Reporting
202
ELEMENTS OF CAMPAIGN MANAGEMENT

203
ELEMENTS OF CAMPAIGN MANAGEMENT

204
ELEMENTS OF CAMPAIGN MANAGEMENT

205
ELEMENTS OF CAMPAIGN MANAGEMENT

206
Caselet

207
Snapshot

208
E-MAIL MARKETING CAMPAIGN

209
 E-MAIL MARKETING CAMPAIGN

Source : www.thefinancialbrand.com Source : www.thefinancialbrand.com

210
 E-Mail & the Customer Journey
What is E-Mail Marketing ?
It is the use of email to promote
products or services. But it’s not just
limited to that.
E-mail
marketing develop relations
is used to: with current customers

to reach out to potential customers

Functions
Allows firms to keep customers informed, and to customize their marketing
messages accordingly.
Most cost-effective and conversion-rich forms of digital marketing.
Potent & Persuasive
 Drip Marketing
Drip Marketing is a communication strategy that sends, or “drips”
a pre-written set of messages to customers or prospects over time.

These messages often take the form of email marketing.

Drip Marketing
 Drip Marketing

Drip Marketing is all about giving people the right information at the right time.

If someone just
Or if a potential customer has
subscribed to your
been hovering around your
blog newsletter
"premium upgrade" page for a
few weeks

Send a welcome
DAY 1 DAY 7
email right away
email the customer five reasons
to purchase the premium plan.
an email that shows
DAY 3 some of your most-
read content
When to Use Drip Marketing

Nurturing Leads
Welcoming
Onboarding
Abandoned Shopping Carts
Recommendations
Confirmations
Engagement
When to Use Drip Marketing

Nurturing Leads
When to Use Drip Marketing

Welcoming
When to Use Drip Marketing

Onboarding
When to Use Drip Marketing

Abandoned Shopping Carts

When to Use Drip Marketing

Recommendations
When to Use Drip Marketing

Confirmations
When to Use Drip Marketing

Engagement
 Event Based Marketing
Event based marketing (also called trigger marketing and event initiated
marketing) is a form of marketing that identifies key events in the customer
and business lifecycle.

When an event occurs a customer specific marketing activity is undertaken.

It is an extremely targeted form of marketing and has good action rates

because it is initiated when a customer is more likely to be active in a decision
process.

The number of triggers or events that an organisation uses might range form
just a few to several hundred.
 Event Based Marketing
There are two components: managing identity and recording behaviour.
 Event Based Marketing
Identity

When a user visits a website or mobile app they are automatically assigned an
anonymous identity.

The anonymous identity is used to store the record of their behaviour until, and
if, the user becomes ‘identified’.

Identified users are known users who already have a record in the user database.

At this point, the anonymous identity and the known identity are joined
together so that all past behaviour recorded against the anonymous user is now
stored directly against the known user.

Without a user’s identity we would not be able to assign the stored behaviour to
a particular person.

This would limit our ability to communicate with the user (we can’t send them an
email or push notification if we don’t know who they are).
 Event Based Marketing
Behaviour
Behaviour is information that describes how the user interacts with the website or
app. It is recorded as an ‘event’.
An event is a single instance of measured behaviour; a single event in the journey
of the customer. The
The event could describe a users explicit action such as ‘Clicked on Playlist’ or an
implicit action such as ‘Moused Over Playlist’.

This approach helps us send the user a much more contextual message or prompt when
trying to engage them.
Event Based Marketing
Marketing Optimization
Marketing Optimization
 Customer Service & Delight
Focuses on providing a positive customer experience both
at the point of sale and after the sale in order to drive profit
and gain competitive advantage.
 Customer Service & Delight
If we rely on self-service technology, excellent service is experienced when the
technology works as expected – for example, the bank’s automatic tellers are
operational, and the website provides all necessary help and information in a
couple of clicks.

Equally we can all recognize poor customer service, delivered by surly,

unapproachable, peremptory, inflexible staff working with poor information
and hampered by outdated technology.

Customer service has always been a necessary preoccupation of service-

producing organizations, because they have understood that customers are
responsive to the quality of the service they experience.

Customer service can be experienced at any stage of the customer purchase

cycle: before, during or after purchase.
 Is it the same as Customer Service?

Outcome
Situational focused &
and reactive intentional

An objective A mindset & behavior that

or mandate create a culture
Transaction The responsibility of the
focused entire organization
Focused on the
unspoken
expectations of
the customer
 Comprehending the Service Gaps
We live in a globalized world, the markets are very competitive, and the customers
are better-informed, so achieving and maintaining a high degree of customer delight
is more challenging than ever.

Model of SERVICE QUALITY and SERVICE GAP developed by

Parasuraman, Zeithml and Berry

Not knowing what customers expect (KNOWLEDGE GAP)

Improper service quality standards (POLICY GAP)

The service performance gap (DELIVERY GAP)

Whether promises match delivery? (COMMUNICATION GAP)

Difference between consumer’s expectation and perceived

service (CUSTOMER GAP)
 Service Failure – Reason & Approach
WHAT IS SERVICE FAILURE ? WHY SERVICE FAILURE OCCURS ?
When the perceptions of the customer fall
A gap that exists between customer
below their expectations in the delivery
expectations and service performance.
of service.

6 7 8 9
Customer Focus via Service Quality
Tangibility

Reliability

Responsiveness

Assurance

Empathy
 Service Quality Parameters
Appearance of physical
Appearance of Physical Facilities
properties, equipment,
Appearance of Service Personnel
Tangibility personnel, and
Appearance of Tools/ Equipments
communication materials
used for Service

Ability to perform the

Accuracy of record keeping
promised service
Reliability dependably and
Performing services when promised
Dependable & Accurate Performance
accurately

Providing prompt service

Willingness to help
Readiness to Serve
Responsiveness customers and provide
Handling urgent Request
prompt service
Promptness & Helpfulness
 Service Quality Parameters

Knowledge and courtesy

Competence & Knowledge
of employees and their
Assurance ability to convey trust and
Courtesy
Credibility of Service
confidence

Caring, individualized Listening to Customer needs

Empathy attention the firm Caring about Customer needs
provides its customers Providing Personalised Attention
 Service Quality Parameters
The Customer Experience
Process
Design Connect TAT
Branch Courtesy
Atmospherics Emotions

Tangibility Reliability Responsiveness Assurance Empathy

The “Underlying” Factors

 Attributes of Excellent Customer Service
Customer service is pervasive. It is everyone’s responsibility; it is neither
delegated nor relegated to a single department or function.

Their operations run smoothly with minimal product and service defect rates,
allowing them to focus on pleasing customers.

They are always looking for ways to improve

Customer service lies at the heart of the value proposition. Customer service
is the main selling point.

They build personal relationships with customers.

They employ the latest technologies that allow their customers to interact
with them more conveniently, help them develop a profound understanding
of what customers need and want, and enable them to track activities and
processes that influence customer experience.
 Customer Service Excellence
The Customer Service Excellence® standard has been developed by the UK
government with a view to providing guidance to public and private sector
organizations that want to make a significant difference to the quality of their
customer service. The standard identifies five criteria that need to be satisfied
for excellent customer service to be delivered.

Customer Insight The culture of the organization

Information and access Delivery

Timeliness and quality of service

Much of the language in this standard is compatible with CRM principles –

using customer insight to improve customer experience, applying that insight
to build a customer-focused organization.
International Customer Service Standard
 SERVICE AUTOMATION

Service Automation – in its very essence – is the delivery of a service, but than
completely automated manner.

Key examples of companies who became very successful with Service Automation
are Uber and Netflix.
They took a traditional service (getting from A to B or watching a TV series), and
completely automated every step of that service experience. From selection,
booking and ordering, to automated payments and automated customer services.
The primary interface for their users is a single app, and every other step off their
service is completely automated.
 SERVICE AUTOMATION

Service automation is the application of computerized technologies to

support service staff and management in the achievement of their work-
related objectives.

Service automation is used in four major contexts:

CONTACT CENTRES

CALL CENTRES

HELP DESKS

FIELD SERVICE
 BENEFITS OF SERVICE AUTOMATION
Enhanced Service Effectiveness
Service requests can be completed more quickly to the customer’s
satisfaction by ensuring that requests are handled at the first point of
contact or routed to the right service engineer or customer service agent,
who is able to draw on an up-to-date knowledge base to resolve the issue.

Enhanced Service Efficiency

Costs are taken out of service delivery when customers use self-service
instead of interacting with an agent. High levels of first contact resolution
mean that companies only deal once with a customer issue.
Right first time means reduced levels of rework.

Greater Service Agent Productivity

Call and contact centre management systems ensure that the optimal
number of agents is scheduled and that their time is used productively.
Skills-based routing ensures that service enquiries are routed to the most
appropriate agent/department.
 BENEFITS OF SERVICE AUTOMATION
Better Agent Work Experience
Agents have the right tools to do their jobs well, leading to more enjoyable
work experience.

Improved Customer Experience

Agents have full visibility into the customer history and service requests
and can therefore ensure that service delivery is appropriate to customer
status or agreed service levels, and satisfies the customer.

Improved customer engagement

Rather than sending or receiving one-way communications, customer
contact centres are now repositioning themselves as customer
engagement centres, particularly if they participate in a lot of interactive
communications with customers in social media.
 BENEFITS OF SERVICE AUTOMATION
Improved Customer Retention
Higher quality service and better customer experience means that
customers are less likely to churn to alternative suppliers.
Service quality drives customer retention.
Caselet
Functionality offered by Service Automation Software
 Case

Datamatics implemented its Robotic Process Automation

solution, TruBot, along with Artificial Intelligence algorithms.
Functionality offered by Service Automation Software
Activity Management
Enables employees to review their workload, to-do list and priorities as
directed by their manager or scheduler, to coordinate activities with
other service staff, and to report back on progress, results and issue
resolution.
Alerts can be set so that appointments are not missed, or to notify agents
and their managers that issues are unresolved.

Agent Management
Is a high priority for call and contact centre managers. Managers want to
employ the lowest head-count compatible with the desired level of
customer service. Too few agents and customers will be dissatisfied with
wait-times; too many agents and payroll costs will be unnecessarily high.
Customers and managers both want issues to be resolved quickly by
agents. A large number of key performance indicators are used in call
and contact centre environments such as : CALL VOLUMES RECIEVED,
AVG QUEUING TIME, AHT, ATT, ABANDON RATE, FTR.
Functionality offered by Service Automation Software
Case Assignment
It ensures that each enquiry or issue gets routed to the right agent or
technician for resolution. Customer service agents might, for example, be
organized according to language skills. When an email enquiry is
received in Urdu it is assigned to the agent competent in that language.
Field technicians might be organized according to product category.

Case Management
It covers the full cycle of activities involved, from receiving initial
notification of a matter of concern to a customer to its final resolution
and the case file being closed. Case management is also known as
incident management and issue management. Case management
applications enable case handlers to manage simple incidents, customer
complaints and complex cases and investigations.
Screen Shots
Functionality offered by Service Automation Software
Contract Management
The functionality enables service engineers and managers to create,
track, progress, accelerate, monitor and control service contracts with
customers. Contract management software offers a range of
functionalities: document management, contract authoring, workflow,
email or SMS alerts (about contract expiry, for example).

Customer Communication Management

Such applications aim to ‘improve an organization’s creation, delivery,
storage, and retrieval of outbound and interactive communications with
its customers’.
CCM applications help users compose, personalize, format and deliver
content acquired from various sources in the form of targeted electronic
and physical communications.
Screen Shots
Functionality offered by Service Automation Software
Customer Self Service
Web Self-Service, IVR, KIOSKS, Self-checkout is available in supermarkets
and hotels. In the supermarket customers can scan, bag and pay for
purchases at checkout. Self-checkout is available in supermarkets and
hotels. In the supermarket customers can scan, bag and pay for purchases
at checkout.

https://youtu.be/NrmMk1Myrxc

Inbound Communication Management

(ICM) applications are widely deployed in contact (or call) centre

contexts. The technology allows companies to receive, acknowledge,
route, queue and distribute incoming communications from any channel
– voice telephony, email, chat, instant message, SMS, fax, social media,
web form – to agents in any location including contact centre, in the field
or at home.
Functionality offered by Service Automation Software
Functionality offered by Service Automation Software
Predictive Dialling
It is a telephony technology widely used in contact and call centres.
It automatically dials groups of telephone numbers, and then passes
calls to available agents once the call is connected.
Predictive diallers measure the number of available agents, available
lines, average handling time and other factors to adjust outbound calls
accordingly.

Scheduling
Scheduling involves planning and organizing a service technician’s
activity plan for a day, week or other period.
A technician’s schedule contains details on the customer, location, time,
product and issue. Some scheduling applications take into account a
range of considerations to ensure that the right technician is sent to
service the customer.
 Analytical CRM
WHAT ?
It is a subset of CRM in which a company collects data about its customer
interactions, to increase customer satisfaction and customer retention
rates.

Analytical CRM is a behind-the-scenes process; the client is not aware of

the capture and analysis of their actions and interactions with the
company.

WHY ?
Companies may forecast consumer behaviour and recommend goods to
which they are more likely to respond better based on the information
collected about customer behaviours, experiences, and the end effects of
these experiences.
 Analytical CRM
Analytical CRM is an essential part of managing customer relations. It
accumulates and analyzes consumer data of various kinds, including:

Sales Data: purchase and return history, brand preferences, etc.

Financial Data: payment and credit history, including payment

type, credit scores.

Marketing Data: Customer response rates to marketing

campaigns, customer satisfaction data, retention data.
 Key Features of Analytical CRM
Account-Based Marketing : When you know a user or organization's
preferences, you can meet their needs in a particular way. Email segmentation
is one example of what account-based marketing can do, so it is necessary to
monitor touch-points.
Buyer Persona Builder : Once the CRM collects and analyzes new pieces of
customer data, you can create a clearer picture of a customer’s identity
regarding your business model. Understanding your customer's needs and
behaviours will help you to improve your marketing.
When you customize the customer experience for people, your customers
know that you understand them. That is the result that will make a huge
difference.

Data Mining - Analytical CRMs use Data Mining techniques to map consumer-
related information and data trends, as we mentioned above. This provides a
more in-depth insight into a company's consumer journey: a cycle that involves
customer recognition, interest, retention, and growth.
 Key Features of Analytical CRM
Knowledge of what motivates prospects to become customers
When you combine demographic details of prospects with a database of their
preferences and marketing experiences, you will start to get an idea of what
motivates them to become customers.

Online Analytical Processing

It is a group of methods used in the study of databases. The Tool is used for
evaluating highly complex data. Also, companies can see how customers
interact with their website speedily over specific timescales.

New Sales Opportunities

You can see opportunities for up-selling and cross-selling when you understand
how your customers connect, and what motivates each target segment. Plus,
these predictive CRM methods make it more timely and essential.

For example, if a customer is prompted by an email to view additional items on

your site, you may be notified to reach that person and contact him.
 Benefits of using Analytical CRM

Better lead conversation rate

Improved market analysis before running a marketing campaign
Boost customer loyalty and satisfaction
More accurate financial forecasting and planning
Automatic processes allow analytical CRM to conclude future customer
behaviour, customer buying power or customer needs
Understand the customers better, and boost sales performance
Better focus your sales efforts by using precisely those products and
communication strategies that suit the audience you want to sell to.
 Role of Data in CRM
Customer databases are the foundation for the execution of CRM strategy.

Proficiency at acquiring, enhancing, storing, analyzing, distributing and using

customer-related data is critical to CRM performance.

Strategic CRM, which focuses on winning and keeping profitable customers,

relies on customer-related data to :

identify which customers to target, win and keep,

and which to allow to churn

Operational CRM, which focuses on the automation of selling, marketing and

customer service processes, needs customer-related data to be able to :

deliver excellent service track sales opportunities.

run successful marketing campaigns

 Role of Data in CRM
We use the expression ‘customer-related databases’ instead of ‘customer
databases’ deliberately.
The data that are employed for CRM purposes are not only about customers
(i.e. ‘customer databases’), but also for customers.

Data that are for customers include data about products and solutions to
service issues. These data are typically stored in a searchable knowledge base
and made available to customers and partners through portals.

Data about customers are available from third parties such as market research
firms and credit scoring agencies, and increasingly in social media such as
Facebook, Twitter and YouTube
 Corporate Customer Related Data
Companies typically do not have just one customer database. Instead, they have
a number of customer-related databases. These databases capture customer-
related data from a number of different functional perspectives, such as :

Sales

opportunities,
Marketing campaigns,
Record
Customer enquiries,
Services Data, such as : deliveries and
billing.

Logistics & Accounts

 The Role for a Strong Customer Journey
Tracking why individual visitors don’t become customers.

Identifying gaps in user experience.

Understanding why people connect with your brand the way they do.

Identifying similarities your long-term customers have.

Identifying similarities new visitors have.

Highlighting what messaging resonates most with your customers.

Identifying marketing channels responsible for the most conversions.

Pinpointing the best ways to communicate with your customers.

Showing which digital platforms they make the most use of.
Highlighting specific pain points, challenges, and problems common among
your customers.
The Role for a Strong Customer Journey

What problem or pain points do they have?

Precisely what would bring them to researching a solution?

How they’d choose your product as the solution?

How they’d choose your brand to purchase that product?

How do they make purchases in general?

How they’d potentially purchase your product?

How they’d receive your product and experience it?

How they’d ultimately become a loyal customer?

 Relational Database

Relational databases are now the standard architecture for CRM applications
that use structured data.

Relational databases store data in two-dimensional tables comprised of rows

and columns, like a spreadsheet.
Relational databases have one or more fields that provide a unique form of
identification for each record.

This is called the primary key.

For sales databases, each customer is generally assigned a unique number,

which appears in the first column, there being a unique number on each row.

Companies that have other databases for marketing, service, inventory,

payments and so on, use the customer’s unique identifying number to connect
the data held in the various databases.
Relational Database
Developing a Customer Related Database
Developing a Customer Related Database

Define the database functions

Define the information requirements

Identify the information sources

 Developing a Customer Related Database
Define the database functions
The first step is to answer the question “why do we need customer-
related data?”

This question means that the business has to revisit to the CRM vision,
strategy, goals, objectives and business case, to identify what is expected
from CRM.

Strategic CRM Analytical CRM

A customer service representative
(CSR) needs to access a customer
record and check the customer’s status
so she can prioritize the company’s
response to a service request.
A telecoms company’s marketers might
want to target a retention offer to
customers who are signalling an
intention to switch to a different
supplier.

A hotel receptionist needs access to a A resort might want to promote a

guest’s history so that she can reserve weekend break to customers who have
the preferred type of room – smoking indicated high levels of satisfaction in
or non-smoking, standard or deluxe. previous customer surveys.
 Developing a Customer Related Database
Define the information requirements
The people best placed to answer the question ‘what information is needed?’ are
those who interact with, or communicate with, customers for sales, marketing and
service purposes, and those who have to make strategic CRM decisions.

Analytical CRM Strategic CRM

A direct marketer planning an email Senior managers reviewing a company’s

campaign might want to know open and
click-through rates, and click-to-open
rates (CTOR) from previous campaigns,
broken down by target audience, offer
and execution.
strategic CRM decisions will require a
completely different set of information.
They may want to know the following.
How is the market segmented? Who are
our current customers? What do they
buy? Who else do they buy from? What
is our share-of-wallet? What are our
customers’ requirements, expectations
and preferences?
 Developing a Customer Related Database
Identify the information sources
Information for customer-related databases can be sourced internally or externally.

Internal data are found in various functional areas.

Marketing might have data on : Sales might have records on :

market size,
market segmentation,
customer profiles,
customer acquisition channels,
marketing campaigns,
product registrations
requests for product information.
External data can be imported from
a number of sources including
market research companies and
corporate database companies.
customer purchasing history
including recency, frequency and
monetary value,
buyers’ names and contact
details, account number, important
buying criteria,
terms of trade such as discounts
and payment period,
potential customers (prospects),
responses to proposals, competitor
products and pricing, and customer
requirements and preferences.
 Example
Nielsen has a customer classification scheme called PRIZM that helps marketers
segment customers and prospects so they can be reached with tailored messages
and offers.

PRIZM identifies 66 segments that vary according to socio-economic rank, as

indicated by characteristics such as income, education, occupation and home
value, 11 life-stage groups and 14 social groups.

The social groups are based on urbanization and socio-economic rank, and the
life-stage groups on age, socio-economic rank and the presence of children at
home.
Example
 Example
If you were a retailer considering diversifying from leisurewear into dancewear
and had little relevant customer data of your own, you might be interested in
buying or renting a compiled list from an external source. The list could be
compiled from a variety of sources, such as:

memberships of dance schools

student enrolments on dance courses at school and college
recent purchasers of dance equipment
lifestyle questionnaire respondents who cite dance as an interest
subscribers to dance magazines
purchasers of tickets for dance and musical theatre.
 Example

Due to the Pandemic, while the fashion industry as a whole is

facing a bleak outlook, demand for active wear has remained
comparatively robust.
The brand ranked among The Financial Times' top 100 companies
prospering in the pandemic. It has added roughly $10 billion to
its market capitalisation this year.
https://www.businessoffashion.com/case-studies/retail/case-study-lululemon-athleisure-brand-
activewear-sportswear/
 Secondary and Primary Data
Customer-related data are either secondary or primary.
Primary data collection through traditional means, such as surveys,
can be very expensive.
Companies have therefore had to find relatively low-cost ways to
generate primary customer data for CRM applications.
Selecting the Database Technology & Operating System
The database technology and operating system decisions are usually included into
the selection of CRM application software.

CRM application vendors usually support a specified list of database technologies,

for example, Oracle, MySQL, DB2 or SQL Server.

It is possible to buy an entire integrated platform, consisting of hardware,

operating system (OS), database technology and CRM applications.

Leading operating systems include UNIX and Microsoft.

CRM project managers and CRM users rarely have to consider

database technology and OS issues because modern CRM
applications are either bought packaged with database technology
and operating system, or support a number of specified database
and OS technologies.
 Populate the Database
The main steps in ensuring that the database is populated with
appropriately accurate data are as follows:
verify the data
validate the data
de-duplicate the data
merge and purge data from two or more sources.
 Populate the Database

Data Duplication

Data de-duplication is a process that eliminates excessive copies of data and

significantly decreases storage capacity requirements.

De-duplication can be run as an inline process as the data is being written into the
storage system and/or as a background process to eliminate duplicates after the
data is written to system.
Populate the Database
 Maintaining the Database
Customer-related databases need to be updated to keep them useful. Consider
these statistics:
One in five managing directors change jobs in any year.
Some 8% of businesses relocate in any year.
In the UK, 5% of postcodes change in an average year.
In Western economies about 1.2% of the population dies each year.
In the USA, over 40 million people change addresses each year.

Companies can maintain data integrity in a number of ways:

Ensure that data from all new transactions, campaigns and communications
are inserted into the database immediately.
Regularly de-duplicate databases.
Purge customers who have been inactive for a certain period of time.
Get customers to update their own records. Customers can be given access to
some parts of their record, and be allowed to edit the data.
Remove customers’ records on request.
 Desirable Data Attributes - STARTS

S Data need to be shareable because several users may require access to the
same data at the same time.

T Data need to be transportable from storage location

to user.

A Data accuracy is a troublesome issue.

It would be wonderful to have 100 per cent accurate Data

R Relevant data are pertinent for a given purpose.

T Timely data are data that are available as and when needed.

S Data security is a hugely important issue for most companies.

 Structured and Unstructured Data

A legacy system is outdated computing software or hardware that is still in use, but its older
technology won't allow it to interact with newer systems.
 Data Integration
In most companies there are several customer-related databases,
maintained by different functions or channels.

Companies often face the challenge of integrating data from several sources
into a coherent single view of the customer.

Sometimes, this becomes a significant challenge in a CRM project, and a

necessary hurdle to cross before implementing operational CRM
applications in marketing, sales or service environments.

Data integration requires the customer’s identity to be traceable

in all interactions with the firm, and that any anomalies between
the records in various databases are identified and resolved.
 Data Integration

Failure to integrate data may lead to costly operational

inefficiencies, duplication of work, poor customer experience
and damaged customer relationships.
 Example
Customers might experience the effects of poor integration
when they have bought an item online only to be later offered
the same item through a different channel of the same company.

Customer data integration relies on standardization of data across

databases.
An indicator of the magnitude of the problem is that when Dun &
Bradstreet was integrating data from several sources to create a
marketing database it found 113 different entries for the company
AT&T alone. These included ATT, A.T.T., AT and T, and so on.
Caselet
 DATA WAREHOUSING
As companies grow larger they become separated both geographically
& culturally from the markets and customers they serve.

Disney, an American corporation, has operations in

Europe, Asia-Pacific and Latin America as well as
in the USA.
Benetton, the Italy-based fashion brand, has
operations across five continents. In retailing
alone it operates over 6,000 stores and
concessions.

Companies like these generate a huge volume of data that needs to

be converted into information that can be used for strategic,
operational and analytical purposes.
 DATA WAREHOUSING
It is a technology that aggregates structured data from one or more
sources so that it can be compared and analyzed rather than transaction
processing.

A data warehouse is designed to support management decision-making

process by providing a platform for data cleaning, data integration &
data consolidation.

Data Extraction − Involves gathering data from multiple

heterogeneous sources.
Data Cleaning − Involves finding and correcting the errors in data.
Data Transformation − Involves converting the data from legacy
format to warehouse format.
Data Loading − Involves sorting, summarizing, consolidating, and
checking integrity,.
Refreshing − Involves updating from data sources to warehouse.
DATA WAREHOUSING PROCESS
 DATA MINING
It is the process of finding patterns and correlations within large
data sets to identify relationships between data. Data mining tools
allow a business organization to predict customer behaviour.
DATA WAREHOUSING & MINING
 BIG DATA
Put simply, big data is larger, more complex data sets, especially from new
data sources.

These data sets are so voluminous that traditional data processing software
just can't manage them.

But these massive volumes of data can be used to address business problems
you wouldn't have been able to tackle before.
 THE 3V’S OF BIG DATA

The volume of data that there currently is globally is practically

incomprehensible. According to a report from IBM Marketing
Cloud, 90% of the data in the world today has been created in
the last 2 years. With new technologies and devices emerging so
frequently, undeniably it’s undeniable that this growth rate will
continue and, likely, surge.

Velocity refers to the increasing rate at which data grows. The

way that people & businesses now utilise technology and consume
products is ever-increasing and, as a result, so is the rapid
acceleration of data. 80-90% of the data we generate today is
unstructured; this has led to 95% of businesses claiming that
the need to manage unstructured data is a problem for their
business.
 THE 3V’S OF BIG DATA

 Earlier, data was delivered and analysed in one, simple

format; typically database files such as Excel or CSV.
 Now, more modern types of data have come into fruition,
such as graphics, video, audio, and so on.
 The uniqueness and variety of modern data formats mean
that businesses and marketers need to find new ways of
storing, processing and analysing this valuable data.

https://blog.hurree.co/blog/explain-the-3-vs-of-big-data
THE POWER OF BIG DATA
BIG DATA & CRM
 BIG DATA & CRM

MANAGING
Managing the customer with structured data such as an address, contact
information and latest contact moments is only one part.
Managing the customer is primarily an inside-out approach where the
company ‘manages’ the customer by sending messages and storing basic
information about the customer.
In order to do that it uses predefined channels at set business hours.
This company-defined process lacks flexibility.
Nonetheless, it is important to have as it is the basis for understanding
your customer.
 BIG DATA & CRM

INTERACTING
Interacting with the customer with unstructured data such as emails,
tweets, Facebook posts, comments etc.
Interacting is customer-driven or outside-in.
There is a two-way communication process and the customer decides
when to have contact with the organisation and he/she expects to be
responded to fast, also outside business hours.
Everyone in the company should be involved and it involves customer-
driven channels such as social networks or communities.
 BIG DATA & CRM

ANALYSING
Analyzing the customers’ actions with structured data such as online
visits, click-throughs, bounce rates etc. is a company driven process,
primarily done by analysts.
These analysts generally perform an action when asked for insight or
deliver standardized reports to marketers on a regular basis.
With Big Data techniques involved, the role of the analyst will
significantly change as he/she will be required to more proactively deliver
results on a more regular, preferably real-time, basis.
 BIG DATA & CRM

KNOWING
Knowing the customer is where it really gets interesting.
Big data engineers a mixed data approach to perform analyses that
allow the organisation to understand each customer individually on
a real-time basis.
They can provide predictive recommendations in order to
develop/deliver the right product, for the right price, at the right
price and through the right channel.
The result will be an increased conversion rate.
 SENTIMENT ANALYSIS
WHAT ?
Sentiment analysis, also referred to as opinion mining, is an approach to
natural language processing (NLP) that identifies the emotional tone of text.

This is a popular way for organizations to determine and categorize opinions

about a product, service, or idea.

It involves the use of data mining, machine learning (ML) and artificial
intelligence (AI) to mine text for sentiment and subjective information.

WHY ?
Sentiment analysis systems help organizations gather insights from
unorganized and unstructured text that comes from online sources such as
emails, blog posts, support tickets, web chats, social media channels, forums
and comments.
 TYPES OF SENTIMENT ANALYSIS
FINE-GRAINED SENTIMENT ANALYSIS provides a more precise level of
polarity by breaking it down into further categories, usually very positive to very
negative. This can be considered the opinion equivalent of ratings on a 5-star
scale.

EMOTION DETECTION identifies specific emotions rather than positivity and

negativity. Examples could include happiness, frustration, shock, anger and
sadness.

INTENT-BASED ANALYSIS recognizes actions behind a text in addition to

opinion. For example, an online comment expressing frustration about changing
a battery could prompt customer service to reach out to resolve that specific
issue.

ASPECT-BASED ANALYSIS gathers the specific component being positively or

negatively mentioned. For example, a customer might leave a review on a product
saying the battery life was too short. Then, the system will return that the
negative sentiment is not about the product as a whole, but about the battery life.
 BENEFITS OF SENTIMENT ANALYSIS
Identifying brand awareness, reputation and popularity at a specific moment
or over time.

Tracking consumer reception of new products or features.

Evaluating the success of a marketing campaign.

Pinpointing the target audience or demographics.

Collecting customer feedback from social media, websites or online forms.

Conducting market research.

Categorizing customer service requests.

BENEFITS OF SENTIMENT ANALYSIS
BENEFITS OF SENTIMENT ANALYSIS
Caselet
APPLICATION OF DATA MINING
APPLICATION OF DATA MINING
 APPLICATION OF DATA MINING
FINANCIAL ANALYSIS
The banking and finance industry relies on high-quality, reliable data. In loan
markets, financial and user data can be used for a variety of purposes, like
predicting loan payments and determining credit ratings. And data mining
methods make such tasks more manageable.

TELECOM
Expanding and growing at a fast pace, especially with the advent of the
internet. Data mining can enable key industry players to improve their service
quality to stay ahead in the game.

INTRUSTION DETECTION
Network resources can face threats and actions that intrude on their
confidentiality or integrity. Therefore, detection of intrusion has emerged as a
crucial data mining practice.

https://www.fireeye.com/cyber-map/threat-map.html
 APPLICATION OF DATA MINING
RETAIL INDUSTRY
The retail sector holds sizable quantities of data points of sales, purchasing history,
delivery of goods, consumption, and customer service. The databases have become
even larger with the arrival of e-commerce marketplaces.
Multidimensional data analysis analyses different types of customers, products,
regions, and time zones. Online retailers can also recommend products to drive
more sales revenue and analyze the effectiveness of their promotional campaigns.

EDUCATION
Institutions can use data mining to predict which students would enrol in a
particular program, who would require additional assistance to graduate, refining
enrolment management overall.

ENERGY INDUSTRY
Big Data is available even in the energy sector nowadays, which points to the need
for appropriate data mining techniques. Data mining can also achieve productive
gains by predicting power outputs and the clearing price of electricity.
 How Data Analytics is Solving Murders
One of the primary advantages of big data analytics software is that it can
evaluate huge quantities of data much faster than humans can, plus spot
trends they’d likely miss. So, from a crime-solving point of view, data
analytics could help catch criminals who are trying to evade arrest.

A Denver police chief who’s in favour of using the technology mentioned 70%
of all crimes committed involve vehicles.

Police in India are among those using data analytics. They incorporate
criminal behaviour patterns, crime anniversaries, parole dates and conditions
and more as they rely on data to help them detect useful patterns that could
keep people safer.

In a New Hampshire double murder case, a judge ordered Amazon to release

Amazon Echo records, saying that the speaker may have picked up parts of
the attack.
 DATA MINING PROCEDURES
DECISION TREE
Decision trees are so called because the graphical model output of decision
tree analysis has the appearance of an inverted root and branch structure.

Decision tree is the most powerful and popular tool for classification and
prediction.

The decision tree algorithm progressively partitions the dataset into groups
according to a decision rule that aims to maximize homogeneity or purity of
the response variable in each of the obtained groups.
DATA MINING PROCEDURES
 DATA MINING PROCEDURES
LOGISTIC REGRESSION
It measures the influence of one or more independent variables that are
usually continuous on a categorical dependent variable.

The output of linear regression modelling reports regression coefficients that

represent the effects of the predictor independent variables on the dependent
variable.

number of years the customer has been a

user of the previous model
Upgrade to income
a new
smart number of friends on Facebook
phone
model spending on data

Other brands
 ETHICS IN CRM
PRIVACY AND CONFIDENTIALITY
Privacy and confidentiality are at the heart of many ethical issues related to
CRM. Companies have a responsibility to collect their information from
legitimate sources without violating the privacy of the customer. In some
cases, sensitive data may be gathered, including credit card or bank details.
In these cases, the company must protect this information; poor data
security or sloppy procedures could result in harm to the customers that
CRM is intended to benefit.

CUSTOMER PARTICIPATION

One of the most important features of ethical CRM is that customer

participation is voluntary. Companies who collect data on customers or
potential customers without their knowledge or agreement are taking an
easy but potentially unethical options.
 ETHICS IN CRM

USING CRM DATA

In addition to obtaining and storing CRM data responsibly, companies have
an obligation to use it for the purpose for which it was obtained. Sharing
customer data with other companies, for instance, can be a useful part of
CRM, but selling on customer information or allowing other companies to
use it for their own purposes represents a violation of the relationship
between company and customer.

MIS-SELLING

Organisations sometimes also use their detailed knowledge of customers to

sell them products which were not the best for them but actually likely to
harm them financially.
BIGGEST DATA BREACHES

Date: October 2017

Impact: 3 billion accounts
Yahoo disclosed that a breach in August 2013 by a group
of hackers had compromised 1 billion accounts.

Date: March 2018

Impact: 1.1 billion people
In March of 2018, it became public that the personal
information of more than a billion citizens stored in the
world’s largest biometric database could be bought
online.

Date: June 2021

Impact: 700 million users
Data associated with 700 million LinkedIn users was
posted for sale in a Dark Web forum on June 2021. This
exposure impacted 92% of the total LinkedIn user base of
756 million users.
 CREATING CUSTOMER VALUE
Three processes are responsible for the enhanced power of communication to
create value for customers:
disintermediation,
Personalization
interactivity

DISINTERMEDIATION
Disintermediation refers to the removal of intermediaries such as broadcast
and print media from the company’s communication channels with
customers. Today, new technologies have led to the emergence of many
direct-to-customer (DTC) communication tools including email, direct mail,
and SMS and MMS messaging to cell phones. Companies are now able to get
their message direct to customers. Equally, customers can get their
messages direct to companies, and to other customers in the ways described
above.
 CREATING CUSTOMER VALUE

Forging a direct relationship with the customer

is nothing new. Dell Inc. being a pioneer in their
direct model in the PC space reached No. 1 in
sales using this business model. (They stopped
selling through retailers in 1994)

Customers were encouraged to go to the Dell

website, choose a configuration, pay for the
computer and then wait till Dell sourced the
machines from its factory.
CREATING CUSTOMER VALUE
 WHY D2C ?

There are many benefits to your brand from embracing the direct-to-
consumer model:

Direct ownership of the customer relationship.

Access to shopper data from ecommerce reporting.

Direct ownership of the customer life cycle.

Ability to offer customers exclusive products and marketing offers.

Increase in brand profitability through removal of retailer costs.

Test and range more products.

 CREATING CUSTOMER VALUE

PERSONALISATION
High-quality customer-related data, CRM technologies and DTC channels in
combination enable companies to tailor offers and communications to
individual customers.

Data on customers’ buying history and propensities-to-buy can be used to

develop offers that meet with a much higher response rate and conversion
rate than conventional mailings.

The content, timing and delivery channels for communications can be

based on customer preferences.

CRM technologies used in call and contact centres allow for personalized
interactions between customers and customer service agents.
 CREATING CUSTOMER VALUE

INTERACTIVITY
Interactive technologies have been around since the advent of the telephone.

However, the Internet has revolutionized the scope for interactivity through
three major technologies: email, instant messaging and the World Wide Web
(WWW).

Email enables customers and company to interact effectively though not

necessarily in real time.

Some excellent websites offer an experience similar to human dialogue.

Caselet
Caselet
 MASS CUSTOMISATION
It deals with making changes to a product or service to satisfy a given
consumer group.
The changes could be as small as a variety of different flavours or colors or
as complex as developing a completely new product for a particular client-
base.

Mass customization combines the personalization and flexibility of custom-

made business manufacturing and takes it to another level of mass production,
which offers a lower unit cost.

This concept is utilized in numerous business types for instance in software

that allow users to change or add certain functionalities according to their
requirement.

https://www.cleverism.com/mass-customization-what-why-how/
https://hbr.org/1997/01/the-four-faces-of-mass-customization
 APPROACHED TO MASS CUSTOMISATION

https://www.youtube.com/watch?v=9DE3DzoMSGg
 KNOWLEDGE MANAGEMENT FOR CRM
Creating and sharing information is an important part of any organization
or a business.

Not keeping a track of customer data can cause a lot of problems.

But organizing customer data and making the same data easily accessible
and available to employees for further use can be a time-consuming task.

And this is where knowledge management systems or

KMS become lifesavers for organizations and businesses
across the globe.

They make excellent customer relationship management

tools that cater to the needs of customers as well as
customer service agents.
KNOWLEDGE IN CRM PROCESS

Information related to the

requirements of customers in order to
address them, known as “knowledge
about customers”

Catering to the Information needs of

customers in their interactions with
the enterprise requires “knowledge
for customers.”

Customers possess knowledge about

the products and services they use
and also about how they perceive the
offerings they purchased. This is
“knowledge from customers” and
is as valuable as it can be used as
feedback.
 WHAT IS KNOWLEDGE MANAGEMENT?
Knowledge Management can be defined as the process of distributing,
organizing, creating, storing, and understanding knowledge about
organizational policies, processes, customers, and even products.

Knowledge Management systems are software

That helps And transfer

firms knowledge
organize and skills

that are a part of the organization’s history

 WHAT IS KNOWLEDGE MANAGEMENT?

facilitate Knowledge management systems

make excellent customer relationships tools as they allow businesses to

not just sell customers products and services, but also to access their
information and knowledge.

They help you categorize customer data related to purchase history,

transaction records, reviews, customer service tickets, and much more.

Knowledge
Management
systems are
software
 WHAT IS KNOWLEDGE MANAGEMENT?

Features of a Knowledge Management System

Helps you collect customer data

Makes the customer data collection process automatic and quick

Effectively organizes huge amounts of data

Creates a one-stop database solution that is easy to access

Enhances interdepartmental cooperation

 KNOWLEDGE MANAGEMENT IN CRM
Knowledge about customer behaviour, personal preferences, and customer
knowledge regarding product use or service quality.

Employee knowledge, such as sales practice and client care insight

Knowledge about business processes

Skills and competencies of employees

Product and Process Information

significance of knowledge management in CRM

 MEASURING SUCCESS OF CRM

1. Close rate
2. Up-sell rate
3. Net-new revenue
4. Length of each sales pipeline stage
5. Length of sales cycle
6. Customer lifetime value (CLV)
7. Customer acquisition cost (CAC)
8. Revenue generated by campaign
9. Email list growth rate
10. Net promoter score (NPS)
11. Churn rate
12. Average time to resolution
13. Average number of follow-ups per ticket
 MEASURING SUCCESS OF CRM
Close Rate

The close rate is the number of deals closed

compared to the number of leads in the pipeline.
If you have 100 leads in your pipeline and only 10 close, your close rate is
10%

Every sales team uses close rate as a measure of success — but close rate
alone doesn’t always tell the whole story. For Example...
1. Business 1 closes 75% of their deals.
2. Business 2 only closes 5% of their deals… but makes more money.
How?

Make sure to look at average deal size alongside close rate.

How much are your closed deals actually worth?
 MEASURING SUCCESS OF CRM
Upsell Rate

Convincing the customer to spend more than

they originally planned.
The up-sell rate is how many customers buy things that they weren’t
originally planning to buy.

For a home cleaning company, Upselling might involve selling customers:

A year’s worth of monthly cleaning, instead of purchasing month-by-
month
Deep cleaning services instead of the basic option
If you convince 1 out of every 5 customers to upgrade their purchase,
your upsell rate is 20%.

CRM can help increase the upsell rate by helping to predict which
leads are most likely to upgrade or buy other products.
 MEASURING SUCCESS OF CRM
Net-New Revenue

New revenue means spend from new customers.

If you sell yearly subscriptions, new revenue is the revenue generated
by customers within their first year.
If you sell one-time products, new revenue is the revenue generated
by customers’ first purchases.

Why measure net-new revenue?

It indicates how much money the sales team is making.
Tracking new revenue and close rate tells you how valuable your
newest batch of customers is.

What can you do with the right CRM in place?

You should be able to identify more high-value deals
You should be able to close more high-value deals
Your net-new revenue should steadily increase
 MEASURING SUCCESS OF CRM
Length of each sales pipeline stage
How long does the average lead stay in each stage of your pipeline?

Stages are the steps of your pipeline (prospecting, lead qualification,

demo, proposal, negotiation, post-purchase).
Tracking stages helps to find bottlenecks in your sales process (like if
deals tend to get stuck in a certain pipeline stage).

Let’s say leads stay in the proposal creation step 10x longer than any
other step. As creating proposals takes time, but how can firm's help the
sales team move these leads to the next step more quickly?

1. Is there a way to automate some of the proposal creation process?

2. Do you have proposal templates?
3. If so, are they easy to use (and is your team using them)?

The more effective your CRM system, the faster deals move through
each stage of your pipeline.
 MEASURING SUCCESS OF CRM
Length of Sales Cycle

It measures how long the average deal takes to close.

For Example...If a lead’s first conversation with the sales team is in early
January, and they make a purchase or sign a contract in early July, the
sales cycle is about six months long.

These two factors play a big role in length of sales cycle:

Number of decision makers involved
Cost of product or service

The more people involved in the decision to purchase, the longer it will
take to close. Same goes for price: the more expensive the product or
service, the longer the sales cycle.

With CRM, we can analyse the phases in the sales process and co-
ordinate the shorten the sales cycle.
 MEASURING SUCCESS OF CRM
Customer lifetime value (CLTV)

To calculate CLTV, we need 4 pieces of information:

1. Average purchase value: Your company’s total revenue over the course of
a year divided by the number of purchases that year.
2. Average purchase frequency rate: The number of purchases over the
course of a year divided by the number of unique customers who made
purchases that year. This tells you how many times per year the average
customer buys from you.
3. Average customer value: The average purchase value multiplied by the
average purchase frequency rate. This estimates how much money the
average customer spends with you per year.
4. Average customer lifespan: How long the average customer continues to
purchase from your business.

The right CRM helps you:

5. Increase the average customer lifespan by improving retention and
satisfaction
6. Target more high-value leads through your marketing
When your customers spend more and stay longer, your CLTV goes up.
 MEASURING SUCCESS OF CRM
Customer Acquisition Cost (CAC)

Fact: Every single marketing team wants to decrease CAC. Closing more deals while
spending less money?
Effective CRM helps you lower your CAC by:
1. Targeting more qualified leads
2. Automating sales and marketing tasks
When you target more qualified leads, you close more deals. Automation makes
your marketing team more efficient, which saves you time and money.
Combine the two? Your CAC will drop.
 MEASURING SUCCESS OF CRM
Email List Growth Rate

This metric measures how much your email list grows over a certain
time period.

Say you have 500 new subscribers and 50 unsubscribes. Your list has 5,000
contacts total. Here’s the math:
500 new subscribers – 50 unsubscribes = 450
450 / 5,000 = 0.09
0.09 x 100 = 9% email list growth rate

CRM helps your marketing team increase this metric with:

More opportunities for opt-in forms (pop-ups, gated content, etc.)

More targeted emails → fewer unsubscribes
 MEASURING SUCCESS OF CRM
Net Promoter Score (NPS)

How likely are your customers to recommend your business to

someone else?
To measure NPS, you need to send customers a survey with some
variation of these questions:
On a scale of 1 to 10, how likely are you to recommend our company to a
friend or colleague?
Respondents are broken into three categories:
1. Promoters (9-10): People who are really delighted about what your
business has done for them.
2. Passives (7-8): People who get what they want from your business,
but aren’t particularly excited about it
3. Detractors (0-6): People who had a less-than-great experience and
are likely to switch to a competitor
 MEASURING SUCCESS OF CRM
Net Promoter Score (NPS)

What does NPS have to do with CRM?

CRM helps personalize the customer experience, which makes people
happier (and more likely to give you a higher score!)
CRM keeps all customer info in one place, letting you see a customer’s
NPS and how it changes over time at a glance
CRM lets you automate sending out NPS surveys and reporting on the
findings.