crm a customer marketing case. 2 example: “eurotech” a customer marketing case 2,126 active...
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Example: “EuroTech” Example: “EuroTech” a customer marketing a customer marketing
casecase 2,126 active customers2,126 active customers $ 9,956,000 Revenues$ 9,956,000 Revenues $ 850,000 Profit$ 850,000 Profit Goal: 50% more Profit (without Goal: 50% more Profit (without
increase in marketing and sales costs)increase in marketing and sales costs)
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Segment customers in a Segment customers in a Customer PyramidCustomer Pyramid
“Top”
“Big”
“Medium”
“Small”
“Inactives”
Prospects
Suspects
“Top”
“Big”
“Medium”
“Small”
“Inactives”
Prospects
Suspects
Copyright © 2004 Customer Marketing International
1% of Customers1% of Customers
15% of Customers15% of Customers
4% of Customers4% of Customers
80% of Customers80% of Customers
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10% Revenues 10% Revenues
Observation – Observation – II
90% Revenues 90% Revenues
21Top
>58,900
85Big
19,000-58,900319
Medium4,820-19,000
1,701Small
1-4,820
154 Inactive
250 Prospects
1,000 Suspects
Copyright © 2004 Customer Marketing International
Existing customers deliver ± 90% of revenues
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21Top
>58,900
85Big
19,000-58,900319
Medium4,820-19,000
1,701Small
1-4,820
154 Inactive
250 Prospects
1,000 Suspects
Observation – Observation – IIII
20% of the customers deliver 80% of revenues
Copyright © 2004 Customer Marketing International
1% of Customers24% Revenues
1% of Customers24% Revenues
15% of Customers29% Revenues
15% of Customers29% Revenues
4% of Customers27% Revenues4% of Customers27% Revenues
80% of Customers20% Revenues80% of Customers20% Revenues
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21Top
>58,900
85Big
19,000-58,900319
Medium4,820-19,000
1,701Small
1-4,820
154 Inactive
250 Prospects
1,000 Suspects
Observation – Observation – IIIIII
. . .and more than 100% of profits
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114,000 Rev/Cust45,600 Profit/Cust114% Profit
114,000 Rev/Cust45,600 Profit/Cust114% Profit
9,100 Rev/Cust1,820 Profit/Cust74% Profit
9,100 Rev/Cust1,820 Profit/Cust74% Profit
31,600 Rev/Cust9,480 Profit/Cust139% Profit
31,600 Rev/Cust9,480 Profit/Cust139% Profit
1,160 Rev/Cust-522 Profit/Cust-53% Profit
1,160 Rev/Cust-522 Profit/Cust-53% Profit
2,126 Customers4,680 Rev/Customer399 Profit/Customer9% Profit
2,126 Customers4,680 Rev/Customer399 Profit/Customer9% Profit
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21Top
>58,900
85Big
19,000-58,900319
Medium4,820-19,000
1,701Small
1-4,820
154 Inactive
250 Prospects
1,000 Suspects
Observation – Observation – IVIV
5-30% of the SMB customers can move
immediately to the top of the pyramid as share
of customer is low
Copyright © 2004 Customer Marketing International
5-30% arehigh potentials5-30% arehigh potentials
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21Top
>58,900
85Big
19,000-58,900319
Medium4,820-19,000
1,701Small
1-4,820
154 Inactive
250 Prospects
1,000 Suspects
Copyright © 2004 Customer Marketing International
+ 10+ 10
Observation – Observation – VV
A 2% net upwards migration of customers can deliver . . .
- 36- 36
2,126 CustomersNo Change2,126 CustomersNo Change
+ 8+ 8
+ 18+ 18
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. . .+/- 10% more revenues, . . .+/- 10% more revenues, a lot more profit, and a a lot more profit, and a
much higher ROImuch higher ROI
Copyright © 2004 Customer Marketing International
BeforeAfterDifference%
Revenues9,956,00011,306,1001,350,040 +13.6%
Profit850,0001,367,308 +517 ,308 +60.9%
ROI on CRM19%35%16% +84%
Active Customers
2,1262,12600%
Bingo!Bingo!
The CRM Strategy to The CRM Strategy to Increase Profits and ROI Increase Profits and ROI
Copyright © 2004 Customer Marketing International
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1) Get 'em 1) Get 'em in…in…
“Top”
“Big”
“Medium”
“Small”
“Inactives”
Prospects
Suspects
“Top”
“Big”
“Medium”
“Small”
“Inactives”
Prospects
Suspects
Copyright © 2004 Customer Marketing International
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2) …move 'em up…2) …move 'em up…
“Top”
“Big”
“Medium”
“Small”
“Inactives”
Prospects
Suspects
“Top”
“Big”
“Medium”
“Small”
“Inactives”
Prospects
Suspects
Copyright © 2004 Customer Marketing International
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3) …and 3) …and keep them keep them
in!in!
Copyright © 2004 Customer Marketing International
“Top”
“Big”
“Medium”
“Small”
“Inactives”
Prospects
Suspects
“Top”
“Big”
“Medium”
“Small”
“Inactives”
Prospects
Suspects
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Observation – Observation – VIVI
An upward migration only happens when customers
are very satisfied…2121TopTop
>58,900>58,900
8585BigBig
19,000-58,90019,000-58,900319319
MediumMedium4,820-19,0004,820-19,000
1,7011,701SmallSmall
1-4,8201-4,820
154154 InactiveInactive
250250 ProspectsProspects
1,0001,000 Suspects Suspects
Copyright © 2004 Customer Marketing International
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Observation – Observation – VIIVII
…even reasonably satisfied customers sometimes defect
2121TopTop
>58,900>58,900
8585BigBig
19,000-58,90019,000-58,900319319
MediumMedium4,820-19,0004,820-19,000
1,7011,701SmallSmall
1-4,8201-4,820
154154 InactiveInactive
250250 ProspectsProspects
1,0001,000 Suspects Suspects
Copyright © 2004 Customer Marketing International
Product Dissatisfaction Product Dissatisfaction 14%14%
PricePrice 9 %9 %
New personal relationNew personal relation 5 %5 %
MovingMoving 3 %3 %
DeathDeath 1 %1 %
IndifferenceIndifference 68 %68 %
Product Dissatisfaction Product Dissatisfaction 14%14%
PricePrice 9 %9 %
New personal relationNew personal relation 5 %5 %
MovingMoving 3 %3 %
DeathDeath 1 %1 %
IndifferenceIndifference 68 %68 %
Why industrial Why industrial customers defectcustomers defect
Source: McKinsey Quarterly
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Observation - Observation - VIIIVIII
Marketing, sales and service are charged with influencing
customer behaviour…
Copyright © 2004 Customer Marketing International
21Top
>58,900
85Big
19,000-58,900319
Medium4,820-19,000
1,701Small
1-4,820
154 Inactive
250 Prospects
1,000 Suspects
MarketingSales
Service
MarketingSales
Service
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Observation – Observation – IVIV
…but other departments involved with customer
processes often have more influence
on customers
21Top
>58,900
85Big
19,000-58,900319
Medium4,820-19,000
1,701Small
1-4,820
154 Inactive
250 Prospects
1,000 Suspects
MarketingSales
Service
MarketingSales
Service
ReceptionServiceAccountsProductionLogisticsChauffeurs“Back Office”
ReceptionServiceAccountsProductionLogisticsChauffeurs“Back Office”
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ConclusiConclusionon
Profits come from positive customer performance...
ProfitsProfits
Customer Customer PerformancePerformance
Customer ProfitabilityCustomer Profitability
Customer BehaviourCustomer Behaviour
Customer SatisfactionCustomer Satisfaction
ProfitsProfits
Customer Customer PerformancePerformance
Customer ProfitabilityCustomer Profitability
Customer BehaviourCustomer Behaviour
Customer SatisfactionCustomer Satisfaction
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...but the whole company ...but the whole company needs Customer Focus to needs Customer Focus to
make it happen!make it happen!
Customer FocusCustomer Focus
Organization * Information * CommunicationOrganization * Information * Communication
Customer FocusCustomer Focus
Organization * Information * CommunicationOrganization * Information * Communication
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ProfitsProfits
Customer Customer PerformancePerformance
Customer ProfitabilityCustomer Profitability
Customer BehaviourCustomer Behaviour
Customer SatisfactionCustomer Satisfaction
ProfitsProfits
Customer Customer PerformancePerformance
Customer ProfitabilityCustomer Profitability
Customer BehaviourCustomer Behaviour
Customer SatisfactionCustomer Satisfaction
Customer FocusCustomer Focus
Organization * Information * CommunicationOrganization * Information * Communication
Customer FocusCustomer Focus
Organization * Information * CommunicationOrganization * Information * Communication
……the right thingsthe right thingshappen here!happen here!
……the right thingsthe right thingshappen here!happen here!
If you do things If you do things right here…right here… If you do things If you do things right here…right here…
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But if you can't measure it, you can’t plan But if you can't measure it, you can’t plan and manage it!and manage it!
ProfitsProfits
Customer Customer PerformancePerformance
Customer ProfitabilityCustomer Profitability
Customer BehaviourCustomer Behaviour
Customer SatisfactionCustomer Satisfaction
ProfitsProfits
Customer Customer PerformancePerformance
Customer ProfitabilityCustomer Profitability
Customer BehaviourCustomer Behaviour
Customer SatisfactionCustomer Satisfaction
Customer FocusCustomer Focus
Organization * Information * CommunicationOrganization * Information * Communication
Customer FocusCustomer Focus
Organization * Information * CommunicationOrganization * Information * Communication
AccountantsAccountantsAccountantsAccountants
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