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1
Customer Relationship Management
Customer Actions Taken After Site Unresponsiveness
Action Percent Shopped elsewhere 74% Sent another e-mail 45 Called a store representative 32 Other 8 Asked elsewhere, bought at store 3
Source: Apr. 2000 Jupiter Media Metrix
2
Customer Relationship Management
Who provides CRM?
Traditional giants such as IBM, Oracle and PeopleSoft Siebel Systems, which now has a 21% share of the CRM
market E.piphany e-mail specialist Kana Communications, NetGenesis instant chat provider LivePerson.com, Broadbase, Quintus and
Firepond plus many others.
3
Customer Relationship Management
Acquisition cost
Quarter Average CustomerAcquisition Cost
Q3 1999 $35 Q4 1999 $71 Q1 2000 $45** Q2 2000 $40
Source: Aug. 2000 Boston Consulting Group/shop.org
** Shift from expensive TV advertising to more economical online campaigns
4
Customer Relationship Management
direct customer interaction
Jupiter reports that 76% of respondents say e-mail is an indispensable part of
customer service. a listed phone number (65%) and a FAQ section (53%).
But those e-mails must be answered promptly.
5
Customer Relationship Management
That's why IDC believes the worldwide market for CRM products and services will explode to $125 billion by 2004, from $34 billion last year.
This summer, the Federal Trade Commission fined Toysrus.com, Macys.com and five other online retailers $1.5 million for making promises they couldn't keep during the 1999 holiday season.
6
Customer Relationship Management
Expectations Results Within 1 hr 15% 8% 1-6 hrs 40% 12% 2hrs and I week 50% 51% More than 1 week 0% 29%
Source: Jun. 2000 Jupiter Media Metrix
7
Customer Relationship Management
customer retention
The average online marketer needs three purchases to break even after acquiring a new customer, according to the survey.
8
Customer Relationship Management
Evolution of Information Requirements
Materials Requirements Planning (MRP)
Manufacturing Resource Planning (MRP II)
Enterprise Resource Planning (ERP)
Supply Chain Management (SCM)
Customer Relationship Management (CRM)
9
Customer Relationship Management
Current
Current
Every Company’s Big Unknown ... Customer Value
Full Potential
Current Customer
Value
Relat
ions
hip
Profit
abili
ty
Nu
mb
er o
f R
elat
ion
ship
s
Relationship Duration
10
Customer Relationship Management
Targeting Acquisition Retention Expansion
Customer Relationship Management can be simply defined as everything involved with managing the customer relationship.
Customer Relationship Management can be simply defined as everything involved with managing the customer relationship.
The Value of the Relationship
• Who Do we target• What segments are most
profitable• What segments match our Value
Proposition• What is the best segmentation
strategy for us / our industry
• What is the best channel for each segment
• What is the acquisition cost for a channel / segment
• Do certain channels deliver certain types of customers
• Cost effective acquisition
• How can we improve retention
• What is our average customer relationship length
• How can we hold customer for as long as possible
• What is the most cost effective method of retention
• How many products does our average customer buy
• How can we induce our current base to buy more products
• Who are the prime targets for expansion
• What is the cost of expansion
Customer Relationship Management Definition
Duration of Customer Relationship
Va
lue
( $
)
11
Customer Relationship Management
Islands of Automation Need To Be Bridged
Over time, channels & operational systems are added to cater to changing customer demands. The result…several functional groups are interacting with customers independently.
$
Sales Force
Customer Service
Direct Mail
Web
Branches
12
Customer Relationship Management
Why CRM?
It costs six times more to sell to new customer than to sell to an existing one.
A typical dissatisfied customer will tell 8-10 people By increasing the customer retention rate by 5%, profits
could increase by by 85% Odds of selling to new customers = 15%, as compared to
those for existing customers (50%) 70% of the complaining customers will remain loyal if
problem is solved 90% of companies do not have the sales and service
integration to support e-commerce
13
Customer Relationship Management
Marketing Selling ServicingCustomer Management Process Threads
BroadcastBroadcast
MailMail
Field PersonnelField Personnel
Agents/DistributorsAgents/Distributors
Call CenterCall Center
RetailRetail
InternetInternet
Back Office Process/Systems
Cus
tom
er In
tera
ctio
n C
hann
els
Are we making the right level and type of marketing, sales, and service investments in each of our customer segments?
Customer Relationship Customer Relationship
StrategiesStrategies
Are we taking a holistic approach to our customers across processes and channels?
Customer Relationship Customer Relationship
StructureStructure
Have we implemented best practices and technology in process/channel?
Customer Relationship Customer Relationship
PerformancePerformance
ScopeScope DepthDepth
Importance of CRM
14
Customer Relationship Management
Customer Life Time Value (LTV) is defined by a customer’s Life Time worth to the firm and is measured by the net present value (NPV) of the cash flows generated over the Life Time of the relationship.
Cost of Service
AcquisitionCost
Duration of Relationship
An
nu
al
Ca
sh
Flo
w
Service/Usage Revenue
Successful Customer Relationship Management can generate positive shareholder value.Successful Customer Relationship Management can generate positive shareholder value.
Customer Relationship Management and Shareholder Value
15
Customer Relationship Management
The Benefits of Customer Relationship Management
RetentionRetention Lift/upsellLift/upsellAcquisitionAcquisitionLikelihood toRecommend
Total PerceivedValue
Impa
ct o
n Se
rvice
Qua
lity
Courteous
Know. About Account
Available at Convenient Times
Ownership of Problems
Know. Product/Svcs.
Easy to Reach
Access to Live Agents Right Tel. ## of Rings
Resolution Time
Current PerformanceLow High
High
Low
The customer value analysis should be performed for each segment individually. The perceived importance of price and service drivers can differ significantly by segment.The customer value analysis should be performed for each segment individually. The perceived importance of price and service drivers can differ significantly by segment.
In addition to LTV of the customer, likelihood to recommend is another important benefit of CRM.
16
Customer Relationship Management
Customer Relationship Management is about making every customer as valuable as possible over the lifetime of the relationship
Customer Relationship Management is about making every customer as valuable as possible over the lifetime of the relationship
The Five Key Drivers of the Lifetime Value of a Customer
Cost of Targeting; Cost of Acquisition; Service and Usage Revenue; Cost of service; and Duration of relationship.
17
Customer Relationship Management
Capture Customer Data and Measure
Results
The Customer
Capture Customer Data and Measure
Results
Take Action to Enrich the Customer
Relationship Capture Customer Data and Measure
Results
Build and Manage Customer Value
Capture Customer Data and Measure
Results
Capture Customer Data and Measure
Results
Capture Customer Data and Measure
Results
Store Data, Mine and Make
Information Accessible
The CRM The CRM DynamicDynamic
Customer Relationship Management is a ongoing, dynamic learning process for an organizationCustomer Relationship Management is a ongoing, dynamic learning process for an organization
Customer Relationship Management Process
The building blocks of CRM allow an organization to manage this cycle and use the knowledge on customers to enhance the Life Time value of the customer portfolio.
No organization has perfect information on its customers. Knowledge of customers is continuously enhanced through the CRM dynamic.
18
Customer Relationship Management
Implementing CRM must be approached from an Integrated Perspective
All areas must be implemented, to some degree, to effectively manage the customer relationship. When pieces are implemented in isolation, the benefits are less than
overwhelming.
All areas must be implemented, to some degree, to effectively manage the customer relationship. When pieces are implemented in isolation, the benefits are less than
overwhelming.
Capture Customer Data and Measure
Results
The Customer
Capture Customer Data and Measure
Results
Take Action to Enrich the Customer
Relationship Capture Customer Data and Measure
Results
Build and Manage Customer Value
Capture Customer Data and Measure
Results
Capture Customer Data and Measure
Results
Capture Customer Data and Measure
Results
Store Data, Mine and Make
information Accessible
CRM CRM without an without an Integrated Integrated ApproachApproach
A data warehouse full of data without the tools to extract knowledge is nothing more than expensive inventory.Sophisticated mining tools only produce results only as good as the data they mine.
Developing insights on how to improve the value of the customer relationship without having the infrastructure to take action has no impact on the bottom line. In addition, there is no opportunity to test the ‘theoretical’ analysis.
Implementing new technologies without the knowledge on how to enrich the relationship is likely to yield a return below the cost of the capital expenditure.
Taking action to improve the relationship without measuring the results provides no evidence of success or failure and limits the opportunity for learning.
Capturing gigabytes of customer data in disparate operational systems that are next to impossible to access may render the data useless.
19
Customer Relationship Management
Deployment and Support
The Building Blocks of CRM
e-Business
Sales Process Automation
Call Centres
EnablingTechnologies
DataWarehousing
MetaData
Data Cleansing
OLAP
EIS
DataCapture
ExternalDatabases
MarketResearch
Customer Touch Point Integration
People
Organization
KnowledgeManagement
Statistical Modeling
Data Mining
Customer Profitability
Segmentation
The building blocks of CRM are the things that need to be in place for an effective Customer Relationship management program
The building blocks of CRM are the things that need to be in place for an effective Customer Relationship management program
20
Customer Relationship Management
Data Capture and Warehouse
Customer Behaviour
Product Portfolio Householding
Usa
ge P
rofil
e
Mig
ratio
n in
U
sage
Loya
lty /
Sw
itchi
ng
Customer Interactions
Acq
uisi
tion
Info
rmat
ion
Inbo
und
Con
tact
Out
boun
d C
onta
ct
Base Data
Segments Profitability Life Time Value
Customer Profile
Dem
ogra
phic
s /
Firm
grap
hics
Atti
tude
s
Pro
duct
/ S
ervi
ce
Pre
fere
nces
Intentions
External Data
Geo
-de
mog
raph
ics
Cam
paig
n H
isto
ry
Derived Data
The Customer Data Model
Cen
sus
What Data do we capture on Customers?
22
Customer Relationship Management
Sales Force AutomationC
all C
entr
e
Ele
ctro
nic
Bu
sin
ess• Automatic Call Distribution (ACD)
• Incoming Call Queuing• Performance Statistics• Integrated Voice Response (IVR)• Automated Inquiry & Transactions• Automated screen “pop” on agent’s
screen• Integration with company legacy
platforms• Billing & Meter Reading• Direct Access to Customer Data
CRMTechnologies
Techniques: ACD, IVR, CTI Techniques: WEB based application, e-mail processing
• Automated product and service information
• WEB based sales and support through standard menus and automated help screens.
• WEB based training • Reaching the global market
Techniques: Relationship marketing, automated packaging and pricing, knowledge-based selling• Increase revenue from your customer base • Customer satisfaction measure
• Consultative selling• Responsiveness to market conditions
The Enabling Technologies Call Centre Sales Force Automation e-Business
23
Customer Relationship Management
CRM Technologies on the Rise
““The overall use of technology for selling is The overall use of technology for selling is growing by more than 50% annually.”growing by more than 50% annually.”
– – Gartner GroupGartner Group
““Sales Force Automation is the fastest Sales Force Automation is the fastest growing segment of the high-growth growing segment of the high-growth Client/server market, estimated to represent Client/server market, estimated to represent $3 billion in revenues by 1997.”$3 billion in revenues by 1997.”
– – Market Intelligence Research Corp.Market Intelligence Research Corp.
““Sales Force Automation will become a major Sales Force Automation will become a major driver behind enterprise-wide BPR driver behind enterprise-wide BPR (inexorably linked to development of the (inexorably linked to development of the customer-focused organization)”customer-focused organization)”
– – META GroupMETA Group
““Customer Management is a major initiative at Customer Management is a major initiative at nearly 80% of Fortune 500 companies and nearly 80% of Fortune 500 companies and will grow to a $4.8 billion market by 1999.”will grow to a $4.8 billion market by 1999.”
– – Aberdeen Group, Aberdeen Group, Inc.Inc.
Source: IDC 1996
(Do
llars
In M
illio
ns)
CRM Revenue
The implementation of CRM technologies is projected to accelerate over the next few years
1996 1997 1998 1999
$1,000
$1,400
$1,960
$2,744
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
1996 1997 1998 1999
24
Customer Relationship Management
People Process
External customer Internal customer Sales Force Support team Back-office Technical staff
Data Warehouse
Marketing / up-selling Technical support Product support Service support 7 x 24 support
IVR ACD
CTI
• Customer history, billing, purchases, value, profile
• Product & service information, packages, prices
• Marketing hints, reports, promotions
• Customer data updates, purchase information
• Leads tracking update, customer tracking updates
• Call statistics, inquiries, etc.
Info
rmat
ion
Call Centres - DefinitionCall centres are a key enabling arm of Customer Relationship Management. A well designed call centre will integrate people, process, and technology to improve operational efficiency and maximize the value of the customer relationship for both inbound and outbound contact.
Call CentreTechnologies
25
Customer Relationship Management
• Customized Agent Desktop Applications by Customer & Call Type
• Automated Scripting of Call Handling & Wrap-up
• Flexibility to Add New Products, Services, and Customer Service Opportunities
• Scripted Cross-Selling• Legacy Integration• Billing & Meter Reading• Direct Access
Data Warehouse
Call Centres - Architecture
26
Customer Relationship Management
There is a major transition to integrated delivery channels and to provide “one face” to the customer.
Old RuleOld Rule New RuleNew RuleParadigm ShiftsParadigm Shifts
Minimal technologyMinimal technology Leading edge and integrated technology
Leading edge and integrated technology
Single productSingle product Multiple productsand cross selling
Multiple productsand cross selling
ReactiveReactive ProactiveProactive
Low skilled CSR’sLow skilled CSR’s Multi-skilled CSR’sMulti-skilled CSR’s
Backroom operationBackroom operation Front Office operationFront Office operation
Stand-alone operation& information
Stand-alone operation& information
Distribution channel & information integrationDistribution channel & information integration
TacticalTactical StrategicStrategic
Customer InquiriesCustomer InquiriesCost of BusinessCost of Business
Enhanced Customer Satisfaction Enhanced Customer Satisfaction and Retention Revenue Growthand Retention Revenue GrowthLower Cost DistributionLower Cost Distribution
Call Centre Call Centre of the Future
27
Customer Relationship Management
• Intranet - as an alternative sales channel • Electronic catalog - On-line self served service
ordering• Commission - Effective tracking of performances
and accurate commissioning• Opportunity Management - tools such as
automated customer data analysis and pop-up screens will assist in up-selling
• Competitor Data - effective analysis of competitive data and automated access for sales force
• Contact Management - Effective tracking and follow-up of leads
• Customer Data - Sales people will have a complete analysis of the customer before their eyes when attending to a customer. No wait, no repeated questions, no frustrated customers
• News Service - Optional news sorting and reporting will result in informed sales people
• Order Entry Quoting - On the spot quoting will not give the client a chance to shop around and be hunted
• Proposal Development - Automated document creation based on corporate standards
• Pricing - Automated on-line prices based on company rules
• Product - On-line and easily accessed • Just-in-Time Training - Automated training, WEB
based training, and self training through information sharing
• Electronic Kiosk - WEB page shopping.
Basic Features Basic Features
Sales Process Automation - Definition Sales Process Automation (SPA) is the approach for helping organizations dramatically improve their
sales and marketing effectiveness through the reengineering and automation of their sales and marketing processes, with the ultimate goal of increasing revenues. SPA combines a working knowledge of the market’s best ideas, technologies, and vendors with a practical, relentless focus on implementation to deliver outstanding shareholder and customer value.
28
Customer Relationship Management
0% 10% 20% 30% 40% 50% 60% 70%
Current Information
Improve Forecasts
Increase Sell Time
Reduce Administration
Improve Margins
Decrease Costs
Team Selling
Improve Management Effectiveness
Improve Communications
Reduce Sell Cycle
Increase Revenues
Increase Customer Satisfaction
Improve Sales Effectiveness
Source: © Insight Technology Group
PERCEIVED BENEFITS OF SPA FIELD TECHNOLOGY
% of Survey Responses (N=295)
Sales Process Automation - Benefits
Improving sales force productivity and effectiveness by implementing field technology is a key goal for many organizations
Improving sales force productivity and effectiveness by implementing field technology is a key goal for many organizations
29
Customer Relationship Management
Business Processes
Profiles & Preferences
Business PartnerBusiness Partner
Business to CustomerBusiness to Customer
Business to BusinessBusiness to Business
The ValueThe ValueProposition Proposition
of of ElectronicElectronicBusinessBusinessSolutionsSolutions
Integrating more directly with the business processes of customers and partners
Tailoring products and services to customers needs and values
Business Processes
Extending key business applications to clients and business partners
Business PartnerBusiness Partner
e-Business is all about integrating the internal and external processes between business partners and customers.
e-Business is all about integrating the internal and external processes between business partners and customers.
e-Business - Definition
30
Customer Relationship Management
Internet technology can improve the level of customer care, while reducing the cost of maintaining the customer base.
Internet technology can improve the level of customer care, while reducing the cost of maintaining the customer base.
e-Business - Benefits
On average, it costs about $5 - $50 per query to support via phone On average, it costs about $1 - $3 per query to support via E-mail On average, it cost less than $1 per query to support via WWW
31
Customer Relationship Management
Internet and
World Wide Web
3. Payment Processing
5. Product Fulfillment
Order entry Tax calculation Validation Confirmation
Payment information
Security Link with
finance
Pick and pack Integration/configuration
of third party products Ship products or deliver services Inventory management Order tracking
Customer preferences Products and availability Pricing and promotions Adaptive selling Build/configure to order
1. AdaptiveProduct Offer
A B$X,XXX $X,XXX
Link with third parties Create pick list Consolidate orders
2. Order Capture and Validation 4. Order
Management
For both business-to-business and business-to-consumer sales, there are five key elements to e-Business — product offer, order capture and validation, payment processing, order
management, and product fulfillment.
For both business-to-business and business-to-consumer sales, there are five key elements to e-Business — product offer, order capture and validation, payment processing, order
management, and product fulfillment.
e-Business - Architecture
32
Customer Relationship Management
Conclusion
Network Management
Systems
Enterprise Management
Systems
Service Management
Systems
Customer Management
Systems
Business Management
Systems
Call CentresCustomer Care SystemsSales Force Automation
IVR
Data Warehouse OSS
Billing System
SAP, PeopleSoft, Oracle, etc.
Customer Relationship Management is an integral part of successful convergence
Customer Relationship Management is an integral part of successful convergence
34
Customer Relationship Management
$2.00
$0.60
$1.60
TES TEM CSS
in billions
= $4.2b up 45% 55-45 Service to Software
Source: GartnerGroup
Worldwide Front-office Applications, 1998, US$bVendor Revenue (Software and Services)
0
4
8
12
16
20
1998 1999 2000 2001 2002 2003
Worldwide Front-office Applications, 1998, US$bVendor Revenue (Software and Services)
The software and service revenue fromCRM vendors will reach $19 billion by2003 (0.6 probability).
:
CRM Marketplace - Fast Growth To-Date with a Bright Future
35
Customer Relationship Management
Explosive Market Growth
CustomerManagement
Supply Chain
Manufacturing
Financials
265%
83%
66%
19%
172%
120%
% Change
Application License Revenue in Billions
53.9%
22.4%
18.5%
6.0%
39.5%
30.0%
$1.46
$2.02
$0.83
$2.02
$1.52
$1.83
$5.33
$5.49
$1.83
$3.70
$2.53
$2.18
Based on Forrester Research
1998 2001
Human Resources
Industry Specific
36
Customer Relationship Management
The CRM Market - No Clear Market Leader
60% of the $2.0B CRM software license market is controlled by 3 vendors
Siebel
Trilogy
Baan/Aurum
60% of the Top 3 share is controlled by Siebel
No vendor will have complete CRM functionality until 2003 (Gartner)
The 1998 consulting market for CRM is estimated to be $4.0B (2:1)
The consulting market for CRM is a large and growing high margin / high revenue opportunity in contrast to the shrinking ERP market
37
Customer Relationship Management
Tier 2: CSS Applications for Small to MidsizeEnterprises or Divisions of Large Enterprises
Tier 1: CSS Applications forLarge Enterprises
(1) CorePoint is a subsidiary of IBM, consistingof various IBM customer service applicationassets
(2) SCT Utilities: Large utilities only
(3) Broadway & Seymour: Banks only
(4) Chordiant: Large call centers only
(5) Internet-centric
(6) Siebel now includes Scopus
Challengers Leaders
Niche Players Visionaries
As of 1/99
Onyx•
Applix•
SalesLogix•
•
Royal Blue•
Platinum Software/Clientele •
Point Information •
Completeness of Vision
Challengers Leaders
Niche Players Visionaries
Ab
ility
to
Exe
cute
Completeness of Vision
As of 1/99
IMA •
Astea•
• Siebel (6)
Quintus•
SCT Utilities (2)•
Chordiant (4)•
IBM/CorePoint (1) •
Silknet (5)•
Broadway& Seymour (3)•
GWI (a)•CustomerSoft•
(7) Major ERP vendors currently have noncompetitive feature/function sets
(8) Pegasystems: Due to its broad product line, its direct CSSapplications license revenue and strategy is uncertain
(a) GWI: Lotus Notes platform
(b) Many mid-market ERP vendors express a vision of creatingfull-featured CSS applications, but have not executed yet
ERPVendors
(7)
Clarify •Vantive•
ERPVendors
(b)
Pegasystems (8)•
Oracle•
Remedy/Baystone
38
Customer Relationship Management
Vendor CRM Market Position
• Acknowledge leader• Very integrator focused
• Leader in their niches• Not integrator focused
• Excellent product• Number 2, but struggling
• Product continually delayed• Intimidation capacity lessening
• Bold announcements• Claim high strategic priority
®
TRILOGY
CRM Vendors
39
Customer Relationship Management
Siebel 99
Siebel Sales Enterprise™
Siebel Marketing Enterprise™
Siebel Service Enterprise™
Siebel Call Center™
Siebel Field Service™
Siebel Handheld™
Siebel InterActive ™
Siebel Product Configurator ™
Siebel Sales ™
The Most Complete ERM Solution
40
Customer Relationship Management
Siebel Industry Solutions
Siebel Finance™
Siebel Insurance™
Siebel Communications™
Siebel Consumer Goods™
Siebel Pharma™
Siebel Utilities™
Siebel Public Sector™
Siebel High Technology™