The Future of Customer Relationship Management

or how IT changes the way you engage with customers

Nathan Garrett, PhDCreative Commons by-sa 2.0.

Do people wait in line for the latest release of your product?

http://www.flickr.com/photos/naotori/2657010927/sizes/o/in/photostream/

Do you inspire brand loyalty?

The problem is that brand loyalty is declining

Mature markets have reduced loyalty (E&Y, ’13)– Cars are currently an exception (E&Y, ’13) – But, only 40% of car buyers buy same make or model (McMullen ‘13)– Young buyers have 2/3rds of older customer’s brand loyalty (Edgl,

’13)

The sales funnel is changing

“Buyers don’t follow a linear path”(Kelly 2013)

Generation X & Y Engagement

Pattern

(McMullen ‘13)Learing On-

lineFriends/Family

Dealer Pre-existing Knowledge

0%

10%

20%

30%

40%

50%

60%49%

21%17%

13%

Biggest Influence on Specific Vehicle Purchased

Do CRM systems improve brand

loyalty?

Studies of CRM failure rates

2001 2002 2005 2006 2007 2007 20090%

10%

20%

30%

40%

50%

60%

70%

80%

Around 50% of CRM systems failed to reach expectations

(Krigsman, 2009)

Social CRM?

Social CRM isn’t enough of a response

“…[Social CRM] needs to start with an

outside-in view. The focus should be on the

needs of the customer, … the outcome

they want and their experience – it is

about the customer, not the company…

- Lieberman 2012

What separates successful projects from failures?

Measurable goal

Reshape your businessDoes it work?

Establish require-ments

Buy system

Plan installation

Install system

Build an organization’s

customer focus

Don’t just buya system

Company Mission

What marks successful approaches?

1. Sell experiences2. Measure rigorously3. Reward appropriately

Rent a Car Approach

• Largest rental car company in US: 18b rev., 68k people

• Awards– 7th on Business Week top 25 customer service

companies– 7x JD Powers highest customer satisfaction

• 1994 ESQi Approach1. Satisfaction retention. (completely =

somewhat/3)2. Data

2. Quantitative: monthly, %, and granular data3. Qualitative: what drives the %

3. Tied to promotion & salary increases

Img: http://www.businessweek.com/magazine/content/10_02/b4162057120453.htm

How do you run a call center?80% time talking to customer (1 or 100)

Happiness Experience Form“Did the agent try twice to make a personal emotional connection (PEC)?“Did they keep the rapport going after the customer responded to their attempt?“Did they address unstated needs?“Did they provide a “wow experience?”

Net Promoter Score“On a scale of 0-10, 10 being the highest score, how likely are you to recommend Zappos to a friend or a family member?  If you had to name one thing that we could improve upon what could that be?”

Internal NPS (5 second happiness survey)

How do we record good data?

• Goals– Accurate– Available– Reduce costs

• Types–Quantitative ($, #)–Qualitative (preferences)

How do we record good data?

• Survey– Formal sampling– Informal sampling– Automated follow-up / analysis– Not trivial!

• Micro-Experiments• Usability groups / task oriented• Focus group• Estimated metrics for competitors

How do we analyze data?

• Sales automation– Emails– Self-service portal– Notecards– Targeted marketing materials– Service reminders

• Personalized Relationships– Sales staff follow-up– Service information

• Value-added Events– Event invitations– Clubs– Up-sell / cross-sell

How do we analyze data?

• Average• Separate by groups• Excel

A/B Testing

Source: http://www.optimizely.com/static/img/whatisabtesting/howitworks.jpg

Regression Analysis

Decision Tree

Cook Hospital

How can you reliably

predict heart attacks?

http://www.e-reading-lib.org/chapter.php/85953/25/Gladwell_-_Blink__The_Power_of_Thinking_Without_Thinking.htmlhttp://requirements.seilevel.com/blog/2013/01/visual-models-save-lives-how-a-decision-tree-revolutionized-heart-attack-diagnosis-2.html

MD: 75-90% accuracyChart: 95% accuracy

Neural Network

Fashion Design

InterdisciplinaryArchitecture

History

Art HistoryFilm

Writing

Graphic DesignAnimation

BusinessPsychology

MarketingPolitical Sci.

Comm. Theory

Library Science

MathNatural Sci.

Comp. Sci.

Economics

Interior Arch.

PhysicsBiology

Accounting

http://www.flickr.com/photos/ehktang/6298004648/sizes/o/in/photostream/

Reward staff

• Develop a company culture• Provide training• Give Rewards– Financial –Non-financial

• Last case, firing underperforming people

http://www.flickr.com/photos/ehktang/6298004648/sizes/o/in/photostream/

Lewin Cycle: UnfreezeBurning Platform: Expose or create a crisis.Challenge: Inspire them to achieve remarkable things.Command: Just tell them to move!Evidence: Cold, hard data is difficult to ignore.Destabilizing: Shaking people of their comfort zone.Education: Learn them to change.Management by Objectives (MBO): Tell people what to do, but not how.Restructuring: Redesign the organization to force behavior change.Rites of Passage: Hold a wake to help let go of the past.Setting Goals: Give them a formal objective.Visioning: Done well, visions work to create change.Whole-System Planning: Everyone planning together.

http://changingminds.org/disciplines/change_management/lewin_change/unfreezing.htm

http://www.flickr.com/photos/ehktang/6298004648/sizes/o/in/photostream/

Lewin Cycle: TransitionBoiling the Frog: Incremental changes may well not be noticed.Challenge: Inspire them to achieve remarkable things.Coaching: Psychological support for executives.Command: Tell them what to do.Education: Teach them, one step at a time.Facilitation: Use a facilitator to guide team meetings.First Steps: Make it easy to get going.Involvement: Give them an important role.Management by Objectives (MBO): Tell people what to do, but not how.Open Space: People talking about what concerns them.Re-education: Train the people you have in new knowledge/skills.Restructuring: Redesign the organization to force behavior change.Shift-and-Sync: Change a bit then pause restabilize.Spill and Fill: Incremental movement to a new organization.Stepwise Change: breaking things down into smaller packages.Whole-System Planning: Everyone planning together.

http://changingminds.org/disciplines/change_management/lewin_change/transitioning.htm

http://www.flickr.com/photos/ehktang/6298004648/sizes/o/in/photostream/

Lewin Cycle: RefreezeBurning Bridges: Ensure there is no way back.Evidence Stream: Show them time and again that the change is real.Golden Handcuffs: Put rewards in their middle-term future.Institutionalization: Building change into the formal systems and structures.New Challenge: Get them looking to the future.Rationalization Trap: Get them into action then help them explain their actions.Reward Alignment: Align rewards with desired behaviors.Rites of Passage: Use formal rituals to confirm change.Socializing: Build it into the social fabric.

http://changingminds.org/disciplines/change_management/lewin_change/refreezing.htm

Marketing is…

• Most valuable• Most expensiveThe right customer

• What do we offer?• How does it compare?

The right value proposition

• Unique value chain• Good linkagesThe best processes

• Resources and training• Compensation

Motivated employees

• Churn root causes• Metrics and learning

Learning to retain customers

and…. What separates successful CRM projects from failures?

Buy a System Build Capabilities

Leadership IT Departmental Managers

FocusLarge-scale

technological system implementation

Pain points. Understanding customer

needs and aligning organization

Visibility Highly visible large projects Small and tacit

Resources Capital Time

Time Once Repeatedly

References• Patrick McMullen, (2013) “Online Strategies for Capturing Gen X and Gen Y

Car Shoppers.” Automotive News Power Training Webinar, May 8, 2013• Earnest & Young. (2012)“This Time It’s Personal: From Consumer to Co-

creator” Retrieved from http://www.ey.com/Publication/vwLUAssets/This_time_it_is_personal_-_from_consumer_to_co-creator_2012/$File/Consumer%20barometer_V9a.pdf

• ConsumerGoods.Edgl.com, “US Customers Ditch Brand Loyalty for Personalized Service” 3/27/13, Retrieved from http://consumergoods.edgl.com/trends/U-S--Consumers-Ditch-Brand-Loyalty-for-Personalized-Service85518

• Kelly, N. (2013) “The Death of the Sales Funnel as We Know It.” Social Media Explorer, February 19, 2013. Retrieved from http://www.socialmediaexplorer.com/digital-marketing/the-death-of-the-sales-funnel-as-we-know-it/

• Krigsman, Michael. (2009) “CRM Failure Rate: 2001-2009.” ZDNet.com. August 3, 2009. Retrieved from http://www.zdnet.com/blog/projectfailures/crm-failure-rates-2001-2009/4967

• Lieberman, M (2012). “Gartner Social CRM MQ Missed Big.” Mitch Lieberman – A Title Would Limit My Thoughts. (Oct 1, 2012). Retrieved from http://mjayliebs.wordpress.com/2012/10/01/gartner-social-crm-mq-misses-big/