Chapter 2 the Crm Value Chain

Customer Relationship Management: Customer Relationship Management: Concepts and ToolsConcepts and Tools

CUSTOMER RELATIONSHIP MANAGEMENT:CONCEPTS AND TOOLS

Chapter 2The Customer Relationship Management Value Chain


Definition of CRM

CRM is the 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 data and enabled by information technology.


CRM value chain – the basics

5 primary stages Customer portfolio analysis; Customer intimacy;

Network development; Value proposition development; Manage the customer lifecycle

4 supporting conditions Leadership and culture; Data and IT; People;

Processes The output of successful value chain

implementation is customer profitability, achieved through Removing cost from the relationship Increasing the revenue earned from the relationship


CRM value chain I

Customer

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Primary stages

Supporting conditions


CRM value chain I

Customer

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CustomerPortfolioAnalysisPrimary

stages



CRM value chain I

Customer

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CustomerPortfolioAnalysis

CustomerIntimacy

Primary stages



CRM value chain I

Customer

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CustomerIntimacy

NetworkDevelopment (SCOPE)Primary

stages



CRM value chain I

Customer

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CustomerIntimacy

NetworkDevelopment (SCOPE)

ValuePropositionDevelopment

Primary stages



CRM value chain I

Customer

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CustomerIntimacy



ManageTheCustomerLifecycle

Primary stages



CRM value chain I

Customer

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CustomerIntimacy




Leadership and culture

Primary stages



Role of leadership in CRM strategy

Sets the level of CRM implementation: strategic, operational or analytical

Provides access to resources and funding Prioritises the CRM project amongst other

projects within the organization Provides project oversight Breaks down silo walls to ensures cross-

functional buy-in


Features of a customer centric culture

1. identifying which customers to serve 2. understanding customers’ current and current and future

requirements 3. obtaining and sharing customer knowledge across the

company 4. measuring customer results: satisfaction, retention, future

buying intention, referral behaviours (word-of-mouth), share of wallet

5. designing products and services which meet customers’ requirements better than competitors

6. acquiring and deploying resources (information, materials, people, technology) that create the products and services that satisfy customers

7. developing the strategies, processes and structure that enable the company to meet customer requirements


Model of a customer centric culture

Customer-centric organisational culture

leadership

formal systems

Internalrelationships

employeeexperience

employeebehaviour

customerexperience


CRM value chain I

Customer

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CustomerIntimacy





Data and information technology

Primary stages



The role of data in CRM

Data are needed for 2 applications Business operations

Order processing; Enquiry handling; Invoicing Analysis

Customer portfolio analysis; Churn analysis

Data are used across all 5 stages of the CRM Value Chain

Data for CRM need to be of appropriately high quality, i.e higher for operational CRM applications than analytical CRM applications


CRM value chain I

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CustomerIntimacy






People

Primary stages



People are important for CRM success

People develop the CRM strategy People select the IT solution(s) People implement the IT solution People need to coordinate with each other across

functions to make CRM work People create and maintain the customer database People design the marketing, selling and service

processes People may resist changing established work practices People contribute importantly to customer satisfaction

and retention when they interact with customers


CRM value chain I

Customer

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CustomerIntimacy






People

Processes

Primary stages



Understanding business processes

Processes are ‘how things are done’ Processes can be classified as

Vertical and horizontal Front-office and back-office Primary and secondary

CRM processes include all customer-facing (front-office) processes within sales, marketing and service functions


Typical analytical CRM processes

customer profiling process opportunity management process campaign management process


Campaign management process

Customer phones in Check scores

Offer product to high scores

Send application form

Out bound phone follow-up

Mail follow-up

Do nothing

Open account on phone

Check account balance

(numbers are days)

No interest

Buy product

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Questions about CRM processes

What are the important processes from a CRM point of view?

How is the present process designed? What does it contribute to the achievement of CRM

objectives? What do its customers, internal and/or external, receive

from and think about the process? What process performance measures are in place?

Cost, time, accuracy, satisfaction Can the process and its outcomes be improved?


Order fulfillment: cross-functional process flowchart


Process evaluation

Process rating

Best practice (superiority) The process is substantially defect-free and contributes to CRM performance. Process is superior to comparable competitors and other benchmarks

Parity A good process which largely contributes to CRM performance

Stability An average process which meets expectations with no major problems but which has major opportunities for improvement

Recoverability The process has identified weaknesses which are being addressed

Criticality An ineffective and/or inefficient process in need of immediate remedial attention


CRM value chain II

Customer Customer Network Value Manage Portfolio Intimacy Development Proposition the Analysis (SCOPE) Development Customer Lifecycle

•Market segmentation

•Sales forecasting

•ABC

•Life-time value

•Customer analysis toolkit

-SWOT/ PESTE/ 5 forces/ BCG matrix

Customer

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CRM value chain II




•ABC

•Life-time value



Customer

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•Customer database development

• Internal data

•Data enhancement

•Data warehousing

•Data mining

•Benchmarking

•Privacy

•Database technology and software


CRM value chain II




•ABC

•Life-time value



Customer

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• Internal data

•Data enhancement

•Data warehousing

•Data mining

•Benchmarking

•Privacy


•Network management

•Internal buy-in

•External network-suppliers/ investors/ partners

•Network position

•E-commerce-EDI/Extranets/ portals

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CRM value chain II




•ABC

•Life-time value



Customer

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• Internal data

•Data enhancement

•Data warehousing

•Data mining

•Benchmarking

•Privacy



•Internal buy-in


•Network position


-

•Sources of customer value

-4Ps/7Ps -customisation

•Customer experience

•Process reengineering-self-manufacture -self-service

•People issues

•Technology enablement


CRM value chain II




•ABC

•Life-time value



Customer

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• Internal data

•Data enhancement

•Data warehousing

•Data mining

•Benchmarking

•Privacy



•Internal buy-in


•Network position


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•Sources of customer value

-4Ps/7Ps -customisation

•Customer experience

•Process reengineering-self-manufacture -self-service

•People issues

•Technology enablement

•Customer acquisition

-who/how/what? KPIs

•Customer retention-who/how? KPIs - exceed expectations/ add value/ social and structural bonds/ commitment

•Customer development

-who/what/how? KPIs

•Organisation design-physical/virtual? -KAM/cross- functional teams

•Metrics

Documents

Chapter 2 the Crm Value Chain