Session-2

Winds of Customer Revolution

Wind
Wind Of
Of Services
Competition

Wind
24*7*365
Of
& Accountability
&
IT GROWTH
Transparency
A dissatisfied customer will tell seven
to 20 people about his negative
experience. A satisfied customer will
only tell three to five people about his
positive experience (Kan 1995).
CRM in most organizations……………..

But Grandma says …..Give the Customer what they want?

 Misunderstandings about CRM

CRM is database marketing

CRM is a marketing process
CRM is an IT issue
CRM is about loyalty schemes
CRM can be implemented by any company
 DO WE THINK IN THE SAME
WAY?

I BELIEVE CUSTOMER IS……………….

Anyone whose actions affect your results.

 Why companies fail?

1. Lack of vision and focus

2. Lack of cash flow
3. People problems

……base for CRM focus & research

 The Cog Wheel Process

PEOPLE

STRATEGY Technology
PROCESS
 Video case

CRM as a philosophy of any business

whose goal is to learn more about
customers and serve them better every
time it communicates with them.

Source: David Daniels, an analyst from market research firm Jupiter Media Matrix
Is a satisfied customer a loyal customer?
CRM HIRERCHY :

CUSTOMER
LOYALTY=
INCREASED
PROFITS

VALUE TO CUSTOMERS
CUSTOMIZATION

DATA ENABLED PROCESSES/

TOOLS

INTEGRATED CUSTOMER KNOWLEDGE

CUSTOMER TRANSACTION DATA

CASE MODELS
 & RFM MODEL
https://www.crossengage.io/rfm-model-dynamic-targeting-with-marketing-automation/
What would be the strategic option?
CRM PROCESS FOR
A
HOTEL
 Video case

Technology adoption
 Defining 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-related data and enabled
by information technology.
 Segmentation
Sales Force Automation
Campaign Mgmt.
E-marketing
Marketing Sales Lead Management
Sales Configuration
Lead Mgmt.
Order Management
Loyalty Mgmt.
Pricing Management
Marketing Resource Mgmt.
Sales Compensation
Enterprise Marketing Mgmt.
Sales Performance Mgmt.
Marketing Performance Mgmt.
Partner Marketing

Data Mining
Performance Mgmt. Community Management
Dashboards/KPIs Service Analytics
Analytics CRM
Personal Productivity Desktop Productivity
Application
Customer Value Analysis Contact Center/Call Center
Mind Map
Sales, Service, Web Workforce Optimization
Field Service Analytics Customer • E-Learning
In-Line, Event Driven Service • Workforce Mgmt.
• Q/A, Monitoring
Field Force Optimization
Field Self-Service/E-Service
Wireless Mobility Service Information/ • Knowledge Mgmt.
Parts Planning Infrastructure • E-Mail Response
Contract/Warranty Customer Data Integration: CDI • Surveys
Remote Monitoring Unified Communications
Product Information Mgmt.: PIM
Fleet Management Trouble Ticketing/Case Mgmt.
Business Process Mgmt. Enterprise Feedback Mgmt.
Dispatch and Repair
Business Process Mgmt.
Web Storefront E-Commerce Master Data Mgmt.: MDM
Catalog, Pricing
Enterprise Information Mgmt.
Inventory
Sales Partner Mgmt.
 Gartner’s competency model of CRM
1. CRM Vision: Leadership, Social Worth, Value Proposition
2. CRM Strategy: Objectives, Segments, Effective Interaction

3. Valued Customer Experience 4. Organizational Collaboration

Culture and Structure
Understand Requirements Customer Understanding
Monitor Expectations People: Skills,Competencies
Satisfaction vs.Competition Incentives and Compensation
Collaboration and Feedback Employee Communications
Partners and Suppliers

5. CRM Processes: Customer Life Cycle, Knowledge Management

6. CRM Information: Data, Analysis, One View Across Channels
7. CRM Technology: Applications, Architecture, Infrastructure
8. CRM Metrics: Cost to Serve, Satisfaction, Loyalty, Social Costs
 The CRM Value Chain
The CRM Value Chain

Customer Customer Network Value Manage

Portfolio Intimacy Development Proposition The
Primary Analysis (SCOPE) Development Customer
stages Lifecycle

Leadership and culture

Supporting Data and information technology

conditions
People

Processes

Network Development (SCOPE)

Major Forms of Network are Supplier Networks and Distribution Networks. But
actually, SCOPE consist of Supplier, Customer (belong to the focal firms), Owner
and Investor, Partners, Employee. Management in networks is both about managing
individual relationships and managing clusters of relationships. Partner in value
delivery are agents, brokers, management contractors, consortia, franchisees,
licensees
https://kasusmanajemen.wordpress.com/tag/crm/
 Social CRM Strategy- Altimeter Report
The 5Ms are another useful framework for reviewing
strategy implementation, they are:
1. Monitoring. Reviewing the method of social listening and
deriving insights from these.
2. Mapping. Finding relationships between an individual
customer or grouped segments using different social
platforms, e.g. Facebook and Twitter or email marketing.
3. Management. Processes for implementing and reviewing
strategy. More detail on campaign management would be
helpful here.
4. Middleware. The software tools and APIs used to monitor
and gather insight.
5. Measurement. The measures used to assess social
marketing effectiveness and ROI.
https://www.smartinsights.com/customer-relationship-management/social-
crm/social-crm-strategy/
Session-7
 The Customer Journey
Suspect Does the potential customer fit your target market
profile?
Prospect The customer fits the target market profile and is
being approached for the first time.
First-time The customer makes a first purchase.
customer
Repeat The customer makes additional purchases. Your
Defectors
customer offer plays a minor role in the customer’s portfolio.
Majority (Core)The customer selects your company as supplier of
customer choice. You occupy a significant place in the
customer’s portfolio.
Loyal customer The customer is resistant to switching suppliers,
and has a strong positive attitude to your company
or offer.
Advocate The customer generates additional referral dollars
through positive word-of-mouth.
 Life-time value defined

• Life-time value is the present day value of all net margins

earned from a relationship with a customer, customer
segment or cohort.
– To compute LTV, all historic net margins are
compounded up to today’s value and all future net
margins are discounted back to today’s value.
– Estimates of LTV potential look to the future only,
and ignore the past.
– A customer that appears to be valuable on the basis
of the gross margins generated will most likely be less
profitable once cost-to-serve the customer is taken
into account.
 Computing LTV
 Insight into future buying behaviour
– probabilities of buying products 1-n over the next x time
periods
 Margins earned from those products
 Periodic costs of customer management

Plus, for new customers

 costs of customer acquisition

And finally,
 Discount rate
 Cohort value: the impact of customer retention rate

Year Profit per NPV at Customer No. of Total annual

customer 15% discount retention rate(%) Customers profit

0 -100 100,000 -10,000,000

1 50 43.48 60 60,000 2,608,800
2 70 52.93 70 42,000 2,223,062
3 100 65.75 75 31,500 2,071,125
4 140 80.00 80 25,200 2,016,000
5 190 94.53 85 21,420 2,024,776
6 250 108.23 90 19,278 2,086,364
7 320 120.30 92 17,736 2,133,654
8 400 130.72 94 16,672 2,179,346
9 450 127.84 95 15,838 2,024,744
10 500 123.15 96 15,204 1,872,372
 Several pieces of information are required for CLV.
For an existing customer, you need to know:
1. what is the probability that the customer will buy products
and services from the company in the future, period-by-period?
2. what will the gross margins on those purchases be, period-
by-period?
3. what will the cost of serving the customer be, period-by-
period?
For new customers an additional piece of information is
needed:
4. what is the cost of acquiring the customer?
Finally, to bring future margins back to today’s value, another
question needs to be answered for both existing and new
customers:
5. what discount rate should be applied to future net margins?
Four causes of profit margin growth over time

1. Revenues grow over time, as customers buy more.

2. Cost-to-serve is lower for existing customers, because

both supplier and customer understand the other.

3. Referrals are generated by existing, satisfied

customers through their unpaid advocacy.

4. Higher prices are paid by existing customers than new

customers.
 Returns from investments in customer
satisfaction
High
repeat purchase rates

Low

1 2 3 4 5 6 7
not at all
customer satisfaction level very satisfied
satisfied
 Customer satisfaction defined

• Customer satisfaction is the customer’s

fulfilment response to a customer experience,
or some part thereof.
 The satisfaction-profit chain

Customer Customer Business

satisfaction loyalty performance

Understand customer requirements Revenue growth

Meet customer expectations Share of customer
Deliver customer value Customer tenure
 Two dimensions of customer loyalty

• Behavioral loyalty • Attitudinal loyalty

• Is the customer active? • Beliefs
• What is our share of customer • Commitment
spend • Preference
• RFM variables • Intention to buy
• Recency
• Frequency
• Monetary value
 Loyalty squares

Repeat purchase
High Low

true latent
Strong
loyalty loyalty

Attitude

spurious no
Weak loyalty loyalty
 Share of market vs. share of customer

high
CRM

Share of
customer
spend Traditional
marketing

low
few many
Number of customers
Session-9
 Customer Portfolio definition

• A customer portfolio is the collection of mutually

exclusive customer groups that comprise a
business’s entire customer base.
Objectives of Customer Portfolio Management
(CPM)
• CPM aims to optimise business performance –
whether that means sales growth, enhanced
customer profitability, or something else - across
the entire customer base.
• It does this by offering differentiated value
propositions to different segments of customers.
 Basic disciplines for CPM

• Market segmentation
• Sales forecasting
• Activity-based costing
• Customer life-time value estimation
• Data-mining
Criteria for segmenting consumer markets

User Demographic attributes: age, gender, occupational

attributes status, household size, marital status, terminal
educational age, household income, stage of family
life-cycle, religion, ethnic origin, nationality
Geographic attributes: country, region, TV region,
city, city size, post-code, residential neighbourhood
Psychographic attributes: life-style, personality

Usage Benefits sought, volume consumed, share of

attributes category spend
Bivariate segmentation of the chocolate market

Gifts Planned
10%

Family
sharing
Usage

Later
sharing
30%
Take
home Emotion
Functional al need
40% 20%
Eat now
Hunger Light snacking Indulgence

Source: Mintel 1998 Satisfaction

 Criteria for segmenting business markets
Business market Illustration
segmentation criteria
International Standard Industrial An internationally agreed standard for classifying
Classification goods and service producers
Dispersion Geographically concentrated or dispersed
Size Large, medium, small businesses: classified by
number of employees, number of customers, profit
or turnover
Account status Global account, National account, Regional
account, A or B or C class accounts
Account value <$50,000, <$100,000, <$200,000, <$500,000
Buying processes Open tender, sealed bid, internet auction,
centralized, decentralized
Buying criteria Continuity of supply (reliability), product quality,
price, customisation, just-in-time, service support
before or after sale
Propensity to switch Satisfied with current suppliers, Dissatisfied
Share of customer spend in the Sole supplier, majority supplier, minority supplier,
category non-supplier
Geography City, region, country, trading bloc (ASEAN, EU)
Buying style Risk averse, innovator
The 80:20 rule or Pareto principle
Shapiro et al’s customer classification matrix

High

Carriage
Passive trade

Received
price

Bargain
basement Aggressive

Low
Low High
Cost-to-serve
 How costs vary between customers?
Pre-sale costs Production Distribution costs Post-sale
costs costs
Geographic Order size Shipment Training
location: close v. consolidation
distant
Prospecting Set-up time Preferred Installation
transportation mode

Sampling Scrap rate Back-haul Technical

opportunity support
Human resource: Customization Location: close v. Repairs and
management v. distant maintenance
reps
Service: design Order timing Logistics support
support, e.g. field inventory
applications
engineering
Renato Fiocca created an advance customer portfolio modelling
when he introduced his 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:

● the value/volume of the customer’s purchases
● the potential and prestige of the customer
● customer market leadership
● 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.
The difficulty of managing the customer relationship is related to:

● product characteristics, such as novelty and complexity

● 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

● competition for the account, which is assessed by considering

the number of competitors, the strength and weaknesses of
competitors and the competitors ’ position vis à vis the
customer.

On the basis of this information a two dimensional matrix is

constructed-
 Fiocca Step 1

High Key Non-key

difficult difficult
Difficulty in
managing account
Low Key easy Non-key
easy

High Low

Strategic importance of account

The second step involves further analysis of the key accounts,
shown in the left-hand cells of the above Figure.

They are classified according to:

● the customer’s business attractiveness
● the relative strength of the buyer/seller relationship.

The attractiveness of the customer’s business is strongly

influenced by conditions in the customer’s served market.
Fiocca identifies these as market factors, competition, financial
and economic factors, technological factors and socio-political
factors, as detailed in Table below.
 Fiocca step 2: customer attractiveness
Market factors Financial and economic factors
Size of key segments served by Customer’s margins
customer
Customer’s share of key segments Customer’s scale and experience
Customer’s growth rate Barriers to customer’s entry or exit
Customer’s influence on the market Customer’s capacity utilisation

Competition in the customer’s Technological factors

market
Customer’s position and strength Customer’s ability to cope with
change
Customer’s vulnerability to Depth of customer’s skills
substitutes
Customer’s level of integration Types of technological know-how
Level of customer patent protection
Socio-political factors
Customer’s ability to adapt and fit
 Fiocca step 2: strength of relationship
• the length of relationship
• the volume or dollar value of purchases
• the importance of the customer (percentage of
customer’s purchases on supplier’s sales)
• personal friendships
• co-operation in product development
• management distance (language and culture)
• geographical distance
Fiocca step 2: strategic options
Seven core customer management strategies
1. Protect the relationship
2. Re-engineer the relationship
3. Enhance the relationship
4. Harvest the relationship
5. End the relationship
6. Win-back the customer
7. Start a relationship
 Session-11

Managing the customer life-cycle:

customer value, retention and development
 Value proposition definition

• A value proposition is the explicit or

implicit promise made by a company to its
customers that it will deliver a particular
bundle of value-creating benefits.
 Value delivery strategies

• Operational excellence
• Product leadership
• Customer intimacy
Three value disciplines
 3 stages of the customer lifecycle

1. Customer acquisition
2. Customer retention
aims to keep a high proportion of current
customers by reducing customer defections
3. Customer development
aims to increase the value of those retained
customers to the company
 Contents of a customer retention plan

1. Which customers should be targeted for

retention?
2. What customer retention objectives
should be set?
3. What customer retention strategies will be
used?
4. How will the performance of the retention
plan be measured?
 Simple customer retention definition

• Customer retention is the number of

customers doing business with a firm at
the end of a financial year expressed as
percentage of those who were active
customers at the beginning of the year.
 The appropriate time frame

• Depends on re-purchase cycle found in

the industry.
● Insurance policies are renewed annually
● If the normal replacement cycle is four years,
then retention rate is more meaningful if it is
measured over four years instead of twelve
months
 Can you tell if a customer has defected?

• May not be able to measure retention and

defection if you have
● Product-based views of customers
● Channel-based views of customers
● Separate customer records in sales,
marketing and service
 Three measures of customer retention
• Raw customer retention rate.
● the number of customers doing business with a firm at
the end of a trading period expressed as percentage of
those who were active customers at the beginning of
the period.
• Sales-adjusted retention rate.
● 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.
● 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.
 Retention issues

• Retention measures should be made with an understanding of

customer profitability issues
• The fundamental purpose of focussing CRM efforts on customer
retention is to ensure that the company maintains relationships with
strategically significant customers.
• It may not be beneficial to maintain relationships with all customers.
Some are
● too costly to serve
● strategic switchers constantly in search of a better deal
● not strategically significant in roles such as benchmark, door opener,
inspiration or technology partner
 Customer retention vs. value retention
• Companies should focus on retaining customers
that contribute value.
• Sometimes this will mean that the focus is not on
retention of customers, per se, but on retention
of share of wallet.
– In the banking industry, for example, it may be
more important for companies to focus on
managing the overall downward migration of
customer spending than customer retention.
Many customers simply change their buying
behavior rather than defect.
The economic argument for customer retention

• Purchases grow as tenure grows

• Customer management costs fall over
time
• Customer referrals grow
• Premium prices
- Customers who are satisfied in their
relationship may reward their suppliers by
paying higher prices.
 Which customers to retain?
• Strategically significant customers
● High life-time value customers
● High volume customers
● Benchmarks
● Inspirations
● Door openers

• But… these may also be attractive to

your competitors
1. High future lifetime value customers : these customers
will contribute significantly to the company’s profitability in the
future.
2. High volume customers : these customers might not
generate much profit, but they are strategically significant
because of their absorption of fixed costs, and the economies
of scale they generate to keep unit costs low.
3. Benchmark customers : these are customers that other
customers follow. For example, Nippon Conlux supplies the
hardware and software for Coca Cola’s vending operation.
While they might not make much margin from that relationship,
it has allowed them to gain access to many other markets. ‘If
we are good enough for Coke, we are good enough for you’, is
the implied promise. Some IT companies create ‘reference
sites ’ at some of their more demanding customers.
4. Inspirations : these are customers who bring about
improvement in the supplier’s business. They may identify
new applications for a product, product improvements, or
opportunities for cost reductions. They may complain loudly
and make unreasonable demands, but in doing so, force
change for the better.

5. Door openers : these are customers that allow the

supplier to gain access to a new market. This may be done
for no initial profit, but with a view to proving credentials for
further expansion. This may be particularly important if
crossing cultural boundaries, say between west and east.
 Commitment and retention

• The level of commitment between your

customer and you will figure in the
decision about which customers to retain.
● If the customer is highly committed, i.e.
impervious to the appeals of competitors, you
do not need to invest so much in retention.
● If strategically significant customers are not
committed to you, you may want to invest
considerable sums in their retention
 Profiling committed and uncommitted customers

• Committed customers • Uncommitted customers

– Entrenched customers • Shallow customers have a
are unlikely to switch in lower commitment than
the foreseeable future average, and some of
– Average customers are them are already
unlikely to change in the considering alternatives
short term but may • Convertible customers are
switch in the medium most likely to defect
term
 Four questions to assess commitment

• How happy are you with <whatever it is>?

• Is this relationship something that you care
about?
• Is there any other <whatever it is> that
appeals to you?
• If so, how different is the one <whatever>
from the other?
Operational CRM tools that help customer acquisition
• lead management
– The lead management process includes a number of sub-
processes, including lead generation, lead qualification,
lead allocation and lead tracking
• campaign management
– Campaign managers design, execute and measure
marketing campaigns with the support of CRM
technologies. Sometimes these are multi-media campaigns
across direct mail, email, fax, outbound telephony, and
SMS platforms
• event-based marketing
– EBM provides companies with opportunities to approach
prospects at times which have a higher probability of
leading to a sale, e.g. important life-stage events
Two basic strategies for customer retention
Negative and positive customer retention strategies

• Create exit barriers • Delight customers

• Enforce the contract • Create customer-perceived
• Extract switching added value
penalties • Create social and structural
bonds
• Create customer engagement
 What is customer delight?

Customer delight = P > E

where
P = Perception
E = Expectation.
 What do customers really expect?
1. Expectations based on promises
“I expect to have my car serviced within 2 days of calling the
garage”
2. Expectations based on desires
“I want my car serviced the day I call the garage”
3. Expectations based on experience
“Most folks normally have to wait 3 days to have their car
serviced”
4. Expectations based on ideals
“My car should be serviced overnight and delivered to my
home the next morning”
 Customer delight through product quality

Customer delight Attractive qualities

(unexpected attributes)

Linear qualities
(wanted attributes)

Basic qualities
(expected attributes)

LOW HIGH
Level of achievement

Customer dissatisfaction
 Simple ways to delight customers

• provide information about the customer’s served

market.
● A packaging company could alert a fast-moving
consumer goods manufacturer customer to
competitive initiatives in the market.
• volunteer to collect and replace a faulty product from
a customer rather than issuing a credit note
• offer better, lower cost solutions to the customer,
even though that might reduce margin
3 ways to create customer-perceived added value

• loyalty schemes
• customer clubs
• sales promotions.
 Loyalty program definition

• A loyalty program is a scheme that offers

delayed or immediate incremental rewards
to customers for their cumulative
patronage.
 Customer club definition

• A customer club is a company-run

membership organisation that offers a
range of value-adding benefits exclusively
to members.
Harley Owners Group
Sales promotions that build repeat purchase

• In pack or on-pack voucher

• Rebate or cash-back
• Patronage awards
• Free premium for continuous purchase
• Collection schemes
• Self-liquidating premium
Cash-back sales promotion
 Three forms of commitment
• Instrumental
● customers are convinced that no other offer or
company could do a better job of meeting
their needs.
• Relational
● customer develops an emotional tie may be
with an individual person, a work group or the
generalised company as a whole
• Values-based
● customers’ values are aligned with those of
the company
 Values definition

• Values are core beliefs that transcend

context and serve to organise and direct
attitudes and behaviours
 Context makes a difference to customer
retention strategies
• Number of competitors
• Corporate culture
• Channel configuration
• Purchasing practices
• Ownership expectations
• Ethical concerns
 KPIs for customer retention programs
1. Raw customer retention rate.
2. Raw customer retention rate in each customer segment.
3. Sales-adjusted retention rate.
4. Sales-adjusted retention rate in each customer segment.
5. Profit-adjusted retention rate.
6. Profit-adjusted retention rate in each customer segment.
7. Cost of customer retention
8. Share of wallet of the retained customers
9. Customer churn rate per product category, sales region or
channel.
10. Cost-effectiveness of customer retention tactics.
 The role of research

• Why are customers churning?

• Are there any lead indicators of impending
defection?
• What can be done to address the root
causes?
 Advance indicators of intention to churn
• Reduced RFM scores (Recency – Frequency – Monetary value)
• Non-response to a carefully targeted offer
• Reduced levels of customer satisfaction
• Dissatisfaction with complaint handling
• Reduced share of customer (e.g. customer only flies one leg of
an international flight on your airline)
• Inbound calls for technical or product-related information
• Late payment of an invoice
• Querying an invoice
• Customer touch points are changed e.g. store closes, change of
website address
• Customer change of address
 Two main strategies for customer development

• Cross-selling is selling additional products

and services to an existing customer.

• Up-selling is selling higher priced or higher

margin products and services to an
existing customer.
CRM technologies used for customer development

• Campaign management
• Event-based marketing
• Data mining
• Customization
• Channel integration
• Integrated customer communications
• Marketing optimization
 Strategies for terminating customers

• Raise prices
• Un-bundle the offer
• Respecify the product
• Reorganise sales, marketing and service
departments
• Introduce ABC class service
 A typology of companies’ termination behaviours
• Hardliners
– take an active and rigorous stance in
terminating unprofitable relationships, including
the regular clearance of their customer portfolio.
• Appeasers
– take a more cautious approach concerning the
termination of unprofitable relationships
• The undecided
– are reluctant to terminate unprofitable
relationships
Delivering Customer Centricity
The basic customer lifetime analysis formula is as follows:
CLV = m*L – AC

m is the contribution margin generated from a customer in a

year (or another time period),
L is the expected purchasing life of a customer (measured in
years if the annual contribution margin is being used),
AC is the upfront cost of acquiring a customer

https://www.crmnext.com/resource/whitepaper/profiting-from-customer-lifecycle-
https://www.slideshare.net/emcacademics/cloud-architect-do-you-have-what-
it-takes-to-lead-the-transformation
https://www.solix.com/solutions/solutions-by-business-issue/information-
lifecycle-management/
 CP & LTV

www.rosewoodhotels.com
Introduction to case facts

1. Characteristics of the company

2. Competitive environment
3. Rosewood Marketing/Branding Strategy
4. Rosewood Customer Base
www.candym.com
Overall, the most important factors for selling success
in this industry are:

• Building relationships,

• Maintaining relationships,

• Having a clear customer focus, and

• Making transactions as easy as possible for the customer

 Business Model Schema

VALUE PROPOSITION RESOURCES

Product or service that helps People, products, facilities,
customers to do more equipment, brands, cash,
effectively conveniently, and technology, that are required to
affordably a job they've been deliver this value proposition to
trying to do targeted customers

PROCESSES
PROFIT FORMULA Ways of working together to
Assets, and cost structure, address recurrent tasks in a
margins, scale, and velocity consistent way: training,
required to cover them development, manufacturing,
budgeting, planning, etc.

Source: Clayton Christensen and Mark Johnson, “What Are Business

Models, and How Are They Built?”, HBS-2009
HubSpot: Inbound Marketing and Web 2.0
What does Digital Marketing Consist of?

Website Design/Blogs (User Experience)

Search Engine Optimization (SEO)
SEM/Pay per Click (PPC)
Social Media Marketing (SMM)
Email Marketing
Display Ads (Banner Ads)
Mobile Marketing
…..
New Trend: Participation
HubSpot : Steps of Inbound Marketing

Four Stages of the Inbound Methodology

Content Creation + Distribution
Lifecycle Marketing
Personalization
Multi-Channel
Integration
Source: www.hubspot.com/inbound-marketing
Ways To Measure
&
Hubspot-CHI
UNITED
BREAKS
GUITAR

https://www.youtube.com/watch?v=5YGc4zOqo
1. Attribute satisfaction: This is a granular way to assess
customer satisfaction based on singular features. Here’s an
example of Google asking customers how happy they are
with search results:
2. Expectation vs. perception: This simple question is
designed to help a company know if they’ve made good on
their promise to their customers. “Does X live up to your
expectations?”
3. Intent to return/repurchase: This is a common question
intended to capture return intent as a measure of
satisfaction.
4. Customer Happiness Index (CHI): HubSpot created this new way to
measure customer satisfaction. Jonah Lopin, HubSpot’s former VP of
Customer Success (now founder at Crayon), who created the CHI.
Basically it’s a three-part satisfaction question and gives the user an option
of a sad, neutral, or happy face. Each selection is followed by an open-
ended question so they can learn more.
5. Overall Satisfaction/Net Promoter: This is intended to be one
simple question that indicates loyalty and intent to renew. It often
only uses the company’s name instead of specific products.
Trended over time, an organization’s NPS can directly be linked to
the organization’s performance. As a widely recognized customer
satisfaction method, many organizations choose to market their
Net Promoter Score to show social proof that their customers are
happy.
https://conversionxl.com/blog/reduce-churn/
The Leaky Bucket Problem
https://www.statusquota.co/blog/business-innovation-churn/statusquota-hubspot-chi-business-model-innovation/
 The S.C.O.P.E. of CRM

Partners

Customers
Suppliers Employees

Owners/investors
 Network position definition

• A company’s network position is the sum

total of a company’s network relationships
and all the activity links, resource ties and
actor bonds that these relationships
contain.
 Networks and CRM

• Networks are important from a strategic CRM

perspective
• Network members supply the material inputs, services,
funding, people, technology and knowledge that are
used to create value propositions for the focal firm’s
customers.
• Network members also provide services such as
advertising, logistics, and distribution that help raise and
satisfy customer demand.
 Technology and business networks

• CRM systems now include applications for

managing
– Relationships with partners (PRM)
– Relationships with investors
– Relationships with employees (ERM), and
– Through integration with Enterprise Resource
Planning (ERP), the relationships with
suppliers.
How network members contribute to CRM performance

• Offering new customer insight.

– They may be able to improve the focal
company’s understanding of its customers

• Creating value-adds
– By better cost performance at meeting
specifications, improved product quality or
identifying new opportunities
Technology partners for CRM implementations

Infrastructure
Consultants vendors

CRM
Systems Client software
integrators
vendors

Process Data
engineers analytics
vendors
 Benchmarking definition

• Benchmarking is a business improvement

discipline involving the continuous, systematic
evaluation of products, services, and processes
against organizations that are recognized as
representing best practice.
The benchmarking process
Shareholder value through CRM
 ROI from different types of CRM
• A strategic CRM implementation that involves major
changes in corporate culture and restructuring of the
business around customer groups, and might take 3 to
5 years to make a return
• An operational CRM project such as sales force
automation might yield a return within 12 to 24 months.
• An analytical CRM implementation can show results
almost immediately as long as the right sort of
customer-related data is available to be able to run
campaigns.
• A collaborative CRM project might take 2 or more
years to reap benefits.
 The CRM eco-system

CRM
solutions
providers

CRM
Ecosystem
Hardware
Service and
providers infrastructure
vendors
 Enterprise CRM suites
Enterprise CRM suites
Amdocs CRM
Chordiant Cx
Onyx CRM
Oracle’s E-Business Suite CRM
Oracle’s Siebel CRM
Oracle’s PeopleSoft CRM
Infor CRM E.piphany
Pegasystems Customer Process Manager
mySAP CRM
 Midmarket CRM suites
Midmarket CRM suites
Entellium
GoldMine Corporate Edition
Maximizer Enterprise
Microsoft Dynamics CRM
NetSuite
Oracle’s Siebel CRM Professional Edition
Oracle’s Siebel CRM On Demand
Pivotal CRM
RightNow
Sugar Enterprise
SageCRM
salesforce.com
Soffront CRM Suite
 CRM specialty tools
Analytics tools Customer service tools
SAS ATG
SPSS Applix
Teradata eGain
Graham Technologies
Customer data management tools KANA
Dun & Bradstreet KNOVA
Initiate Unipress
Purisma
Siperian Marketing automation tools
VisionWare Aprimo
Unica
Partner channel management and
collaboration
BlueRoads Sales force automation tools
Click Commerce Sage Saleslogix
Comergent (Sterling Commerce) Saratoga
 Three levels of CRM analytics

• Standard reporting
• Online analytical processing (OLAP)
• Data mining.
 Standard reporting
• Reporting can be standardised (pre-defined), or
query-based (ad-hoc).
– Standardised reports are typically integrated into
CRM software applications, but often need
customization to suit the needs of the
organisation. Some customization of the report
can be done when it is run, for example in
selecting options or filtering criteria, but the end
result is limited to what the report designers
envisaged
– Query-based reporting presents the user with a
selection of tools, which can then be used to
construct a specific report.
 OLAP

• OLAP technologies allow warehoused data to be

subjected to analysis and ad-hoc inquiry.
• Warehoused data is stored in one or more star
schema, allowing users to drill down into graphs and
tables to analyse how a certain figure or problem
may have arisen.
 Data mining
• The data mining process seeks to identify patterns
and relationships in the data, using selection,
exploration and modelling processes.
• The results include, for example, churn scoring
(likelihood that the customer will leave), fraud
detection, customer value scoring, and campaign
effectiveness scoring.
• A number of CRM vendors specialise in advanced
analytical and data-mining applications
 CRM architecture

• A key consideration in effective CRM is the way in

which the system is constructed, or the
“architecture”. Unlike purely internal systems, CRM
systems must be able to operate in the office, out of
the office, and over the web. They must tie together
multiple communication channels each using very
different technologies (web, email, telephone), and
they must perform well enough, and be flexible
enough, to suit a constantly changing, potentially
growing user community.
Event-based marketing occurs when an event triggers a communication or offer.
Event-based campaigns are usually initiated by customer behaviours or contextual
conditions.
Internet marketing is the process of creating value by building and maintaining online
customer relationships.
Keyword marketing is the practice of generating website traffic from internet users
who have entered keywords into search engines such as Google, Yahoo!
Lead generation is an important marketing objective, particularly in business-to-
business contexts. Sales people challenged to grow the numbers of customers served
need to be presented with high quality leads for follow-up. Marketers can deploy
campaigns, events, seminars, Webinars and other tactics to generate the leads.

Market segmentation is the practice of partitioning markets into homogenous

subsets so that each subset can be addressed as a unique marketing opportunity.
Marketing analytics is the application of mathematical and statistical processes to
marketing problems. Marketing analytics can be used to explore, describe and
explain.
Marketing optimization software allows companies to select an overall goal, such as
sales or profit margin maximization, and specify all of the constraints of a marketing
campaign strategy. The software then determines which customers should get which
offer through which channel to ensure the campaign objectives are met.
Search engine optimization (SEO) is the practice of improving the quantity and quality
of website traffic generated by search engines.