p o s m i s soyoung moon posmis lab. postech chapter 3 customer relationship management sep. 10,...
TRANSCRIPT
P O S P O S M I SM I S
Soyoung MoonPOSMIS Lab.POSTECH
Chapter 3Customer Relationship Mana
gementSep. 10, 2002
Advanced MIS
P O S P O S M I SM I S
Why CRM?
Companies must spend far more money to get a new customer than to retain an existing customer.
It is far more expensive to win back a customer after they left than it is to keep them satisfied in the first place.
It is far easier to sell a new product to an existing customer than it is to a new customer.
Some customers are vastly more profitable than other customers. Some customers are unprofitable, and some customers are unprofitable and will never be profitable.
Find the most profitable customer!
P O S P O S M I SM I S
Customer Relationship Management
To extract valid, previously unknown, and comprehensible information from large databases and use it for profit
Capture and integrate both the internal and external(purchased) data into a comprehensive view that encompasses the whole organization
“Mine” the integrated data for information Organize and present the information and knowledge in ways
that expedite complex decision-making
P O S P O S M I SM I S
Entire CRM Framework
Operational CRM The automation of horizontally integrated business processe
s, including customer touch-points, channels, and front-back office integration
Analytical CRM The analysis of data created by the Operational CRM Collaborative CRM
Application of collaborative services including e-mail, personalized publishing, e-communities, and similar vehicles designed to facilitate interactions between customers and organizations
P O S P O S M I SM I S
CRM Architecture
Business Rules and Metadata Management
Workflow Management
Marketing Data mart
Campaignmanagement
Analytics DataMart
Reporting DataMart
Campaign management
Data Mining/Analytics
Ad Hoc Query andReporting
Direct Mail
ContactManagement
Call Centers
Sales Force
Customer Service Centers
Internet
Other
ContactHistory
TransactionHistory
CustomerProfile and
AccountData
Warehouse
External data
ETL Tools
Data Source
Marketing Data Source
Decision Support Applications
Communication Channels
P O S P O S M I SM I S
Managing Campaigns
Campaign management systems To help marketing professionals manage and execute campai
gns To require as complete a view of the customer as possible To manage interactions between the company and the custo
mer
P O S P O S M I SM I S
Managing Campaigns
Required functions in campain management systems Marketing insights from data mining about what new promotio
ns to create Accommodation of many new touchpoints besides direct mail Focus on profitability Optimization of the sequenc of promotion delivery Tools for constructing experiments that allow the marketing pr
ofessional to test out the effectiveness of new promotions and new segmentation techniques
Accommodation by the system of predictive modeling The transition from just defining and deploying a direct mail campaign to supporting all customer touchpoints Customer profitability across all touchpoints
P O S P O S M I SM I S
Evolution of Marketing
The Dark Ages
The Renaissance
The Industrial Revolution
The Information Age
The Age of Optimization
Artistry and Alchemy
Craftmanship
Mass Marketing
Database Marketing
Customer Relationship Management
None
Focus groups, telephone interviews
Computers store mailing lists
Flat File MCIFs
Data Warehousing, Data Mining, Analysis Tools (OLAP)
Marketing Age Techniques Technology
P O S P O S M I SM I S
Closed Loop Marketing
CRM systems not only execute marketing campaigns, but also “close the loop” and mesure the results of the campaigns.
Once marketing’s effectiveness can be measured, it can be improved the next time around.
P O S P O S M I SM I S
Closed Loop Marketing
Three basic steps of closed loop marketing Measure
Measure the results of the marketing effort, based on customer profitability.
Use Web-based tools to access the customer data warehouse and perform enterprise-level ROI analysis.
Predict Use data mining technology to predict consumer behavior and l
earn from past experiments. Use the results of the data mining system to focus and refine fut
ure campaign. Act
Use campaign management systems to be sure that the campaigns are executed in an understandable and measurable customer data warehouse or data mart.
P O S P O S M I SM I S
CRM Architecure
The customer touchpoints are the bedrock. Data warehousing is the foundation. Customer profitability is the cornerstone. Data mining is the architechtural blueprint. Web applications are the capstone.
These technologies are all used together to build a complete CRM system that can execute closed loop marketing to disply continuous improvement over time.
P O S P O S M I SM I S
Next Generation CRM
Continuously expanding in functionality and in scope across the enterprise
Sales Force Automation (SFA) Enterprise Resource Planning (ERP) The force opposing the fusing of information and technology
Internal difficulties in getting various customer information form different customer touchpoints
External difficulties in keeping customer privacy
P O S P O S M I SM I S
Customer Relationship Management (CRM) in Financial Se
rvicesJoe Peppard
European Management Journal Vol 18 pp 312-327, 2000
P O S P O S M I SM I S
The new economics of information
The traditional economics of information Reach
Access, connection Richness
Depth, detail The new economics of information Connectivity
Relative easy and cheap to connect to global networks, resulting in the PC and mobile phone emerging as ubiquitous devices
Convergence Digital technology are converging : wireless application proto
col Interactivity
Human and technical communication Data gathering Collaborative problem-solving Negotiation
P O S P O S M I SM I S
ECRM
Ebusiness The integration of e-business activities within the framewor
k of all existing and future commercial activities Channel management
The channel of greatest impact or economy anytime, anywhere, and anyone
Integrated and interactive channels of access and distribution
Relationships Real commercial relationships built on service excellence,
value and convenience Management of the total enterprise
Total back-office/front-office process integration
P O S P O S M I SM I S
Ebusiness
Ebusiness Internal – use technology to reengineer business processe
s External – use technology in how the organization interfac
es with business partners whether they are customers or suppliers
New business models – innovative products and services
Establishing e-banks with no presence in the physical world
E-billing or electronics bill presentation Banks establishing online purchasing sites Issuing e-bonds Virtual wallets
P O S P O S M I SM I S
Internet banking
Electronic banking – Security First Network bank(1995,10) UK’s Barclays Bank, Germany’s Commerzbank, Bayerische b
anks, Norway’s Christiana bank, Credit suisse Meritanordbanken
Finland’s largest bank Telephone banking (1982) PC banking(1984) Mobile payment service(1992) E business network(1996) Internet banking, e-billing, internet TV(1998) Basic banking, stock trading, investment fund transaction
s, purchase and sales bonds, account opening, credit cards ordering…….
ATM, telephone, GSM mobile, PC, internet TV, WAP
P O S P O S M I SM I S
The new business Ecosystem
Reduce cost of business Transaction cost –In-branch
teller(1.20)>ATM(0.40)>telephone(0.20)>PC banking(0.20)>internet banking (0.01) < source data monitor 1999 >
Increase service levels Reposition existing products and services, devise new offerings,
increasing the quality of service : PC, mobile phone, pay bills, loan
Reduce entry barriers ‘pirates’ can infiltrate the value chain of traditional players
Extend global reach A financial institution with a presence on the internet is a global
player
P O S P O S M I SM I S
The new business Ecosystem
Challenge brands Strong brands instantly convey solid trust and trust is
integral to effective customer relationships Confidentiality and security
Bundling and unbundling products and services Cross-subsidization of products and services – unbundled,
competitive necessity, customer power Dislocation of location
The concept of location is irrelevant Returns power and control back to the customer
Rise in customer power
P O S P O S M I SM I S
Channel Management
P O S P O S M I SM I S
Channels and customer contact points
P O S P O S M I SM I S
Relationship management(1/2)
High levels of customer satisfaction are associated with increased retention of customers
Relationships builds more easily when there is two-way communication
By engaging in an interactive dialogue customer preferences can be determined
Retained customers are inevitably more profitable The challenge for an organization in to move to a
situation where the customer starts buying from you rather than being sold to
P O S P O S M I SM I S
Relationship management(2/2)
Financial services organizations Who best customers are How to keep them How to increase ‘share of wallet’ by knowing what other
service or product they can sell to them Have a customer-centric or one-to-one relationship Increase shareholder value
Require information that can help make the best decisions to create and manage the right relationships, risks, costs, markets
Redesign core product offerings Devise appropriate channel strategies
P O S P O S M I SM I S
Management of the Total enterprise
Imperative to have total-office/back-office integration Customer-facing functions
Sales, marketing, call centers and other on-line support Become organizationally integrated with back-office proce
sses Run on separate mainframes and must be accessed throu
gh widely varying interfaces Move from data centric point solutions to customer-centric
enterprise solutions
P O S P O S M I SM I S
An integrated Perspective of ECRM
Conclusion
P O S P O S M I SM I S
Definitions of CRM
CRM is a combination of business process and technology that seeks to understand a company’s customers from the perspective of who they are, what they do, and what they’re like. (Couldwell ,1998)
CRM is founded on four relationship-based tenets: (Kutner & Cripps, 1997)
Customers should be managed as important assets. Customer profitability varies; not all customers are equally desirable. Customers vary in their needs, preferences, buying behaviour and
price sensitivity. By understanding customer drivers and customer profitability, comp
anies can tailor their offerings to maximise the overall value of their customer portfolio.
P O S P O S M I SM I S
Definitions of CRM
Relationship marketing (Merlin Stone et al., 1996) The use of a wide range of marketing, sales, communication,
sevice and customer care approaches to: Identify a company’s named individual customers; Create a relationship between the company and its customers t
hat stretches over many transactions; Manage that relationships to the benefit of the customers and th
e company.
P O S P O S M I SM I S
Key Characteristics of CRM (Lynette Ryals & Simon Knox, 2001)
A customer relationship perspective aimed at the long-term retention of selected customers. Gathering and integrating information on customers. Use of dedicated software to analyse this information (often in real time). Segmentation by expected customer lifetime value. Micro-segmentation of markets according to customers’ needs and wants. Customer value creation through process management (Hammer & Champy, 1993; Hamel & Prahalad,1994) Customer value delivery through service tailored to micro-segments, facilitated by detailed, integrated customer profiles. A shift in emphasis from managing product protfolios to managing portfolios of customers, necessitating changes to working practices and sometimes to organisational structure.
P O S P O S M I SM I S
CRM in IT fields
www.crmguru.com www.siebel.com www.eaijournal.com
Beyond CRM Seperating CRM myths from Reality