CustomerRelationshipManagement

--AWinningCustomerStrategySeminarpresentationApril2004AgendaCustomerRelationshipManagementPresentation8:00-9:15Break9:15-9::30Case1––SanFabianSupplyCompany9:30-10:30Case2––SoloMobilePhoneCompany10::30--12::002Author//DivisionWhatisCRMinyourmind??Whatiscustomerrelationshipmanagement?WhatdoesCRMbringtocompanies?AsurveyonseniormarketingexecutivesatFortune1000companiesindicatesawidespreadfrustrationaboutthereturnonCRMinvestmentsCRMinnotatechnologyterm,butinstead,astrategydrivenholisticmanagementapproachSource::BoozAllenHamiltonSurvey,,20013Author//DivisionCRMisacustomer-andvalue-basedmanagementapproachtoincreasethecompanyvalueCustomerRelationshipManagementisacustomer-andvalue-basedcompanyorientationwiththegoalofbuildingupandfullybenefitingfromlastingandprofitablecustomerrelationshipsthroughholisticandindividualizedmarketing,,salesandserviceconceptsusingstate-of-the--arttechnologiesCRMdefinitionIdentifyingthetopcustomersandexploitingthemaximumshareoftheirexpensebudgetsRaisingtheefficiencyofcustomermanagementEstablishingcustomerloyaltyand"lifetime""relationshipsFullyexploitingthepotentialcustomersegmentsbyacquiringnewcustomersTherebyincreasingthecompanyvalueCRMobjectives4Author//DivisionCustomerRelationshipManagementdiffersfromclassicalmarketinginmanywaysTraditionalmarketingCustomerrelationshipmanagementObjectivesGeneratesalesCreatealoyalcustomerFocusAcquisitionphaseTotalcustomerlife-cycleTimeframeShorttermMediumtolongtermPerformanceindicatorsMarketshare,,salesShareofwallet,,customerprofitability,,customervalueCustomerknowledgeDemandsfromcustomersegmentsIndividualpreferencesandneedsProductStand-aloneproductIntegrationofproductsandservicesPriceGeneraldiscountsPricedifferentiationonthebasisofcustomerloyaltySaleschannelsTraditionalsaleschannels((multi--level))"Disintermediation"",multichannelmanagementCommunicationUnidirectionalcommunicationInteractivedialogwithcustomersandcommunities,24hrs../7dayavailability5Author//DivisionCRMistheholisticapproachtoacustomer--valuebasedcompanyorientation––fourenablerssetuptheframe....CreateGainUnderstandRetainORGANIZATIONSTRATEGYCULTURECRM--StrategyHolisticapproach/top--managementissueDefinitionoftargetsegmentsandcustomersValue-basedprioritizationOrganizationandprocessesCustomer-orientedstructuresandprocessesCustomerprocess/touchpointinnovationOrganizationalanchoringoftheCRMresponsibilityTECHNOLOGYTechnologySystemintegrationUseofe-technologiesSelectionofsystem/technologypartnersCultureandchangemanagementConsolidatingthecustomervalueorientationManagementprocessesandincentivesystemsContinuouschangemanagementandimprovementprocessesCustomervalueCRMenablers6Author//DivisionCRMcreateslastingstrategiccompetitiveadvantages"Understand"marketsandcustomers"Create"superiorcustomeroffers"Retain"profitablecustomers"Gain"profitablecustomersBuildingupsuperiorcustomerknowledgeIdentifyingtargetsegmentsanddevelopingtargetcustomerspecificmarketing,salesandserviceconceptsFocusingonthehighest-valuecustomersRaisingtheentrybarriersforcompetitorsbybuildinguplastingrelationshipswiththecustomersDevelopinga""learningrelationship"inlong-termcustomerrelationshipsRaisingtheentrybarriersforcompetitorsthroughspecificproductandserviceoffersHighercompetitivebarriersbycoveringallsaleschannelsLoweringconflictpotentialthroughtheproactiveintegrationofthevariouschannelsRaisingcustomers'costsofchangingsuppliersbycoveringallneedsCreateGainUnderstandRetainORGANIZATIONSTRATEGYCULTURETECHNOLOGYCustomervalue7Author//DivisionMarketing--MixarecoreelementsofcustomerrelationshipstrategyMarketing--MixTargetMarketproductplacepricepromotionMarketing--Mixprovidesadecision--makingmethodfordecidinghowtomanagethecustomerrelationshipDifferentiatedproducttargetingdifferentcustomersegmentProductcustomization::design,function,,packagingServicelevelPricestrategy:e.g.chargepricepremiumforvaluablecustomersegmentPaymenttermsSpecialdiscountsSelectofMarketingCommunicationvehicletobetterreachtargetcustomer:TVads,,PR,SponsorshipEventsforvaluablecustomersVIPclubEffectivechannelstrategy:one-to-onevisit,callcenter,,stores…Variouschannelcombinationtomoreefficientlyservetargetcustomers8Author//DivisionThethreemainapplicationareasofCRMOperationalCRMAnalyticalCRMCRMcomponentsCollaborativeCRMcampaignmanagementAutomaticallydistributionERP-integrationCustomerserviceDataMining/DataWarehousePurchaseprobabilityForecastingCustomersegmentationCross-selling-potentialRegional-purchase-behaviorChannel-managementFace-to-FaceCall-CenterBrief/FaxWeb/Mail9Author//DivisionTherearequiteafewobstaclestoeffectivelyapplyCRMLackofmarketingfundamentalsLackofclearvaluepropositionandfailuretotargetcustomersTechnologyisintroducedbeforecompaniesmastermarketingfundamentalsRelianceonmassmarketingPoordataqualityIncompleteinformationInaccurateinformationInadequatedatacollectionsystemsLimitedexternalsourcesofdata((e.g.,noorfewlist--rentalcompanies)PoordirectmarketingskillsLackofexperiencedstatisticiansandmarketingprogramdevelopersLackofoutsourcingresources,suchasdirect--mailortelemarketingagenciesHeavyemphasisonacademicandoverlysophisticatedanalysesOrganizationalweaknessesNostrongcentralizedmarketingorproductgroupstodriveCRMCRMregardedasasmall,low-prioritymarketingareaFlawedperformancemeasurements;limitedsupportresources,e.g..,callcenteroperators;;littleornocross-functionaleffort10Author//DivisionAbilitytodifferentiateproductBuyingtransactionfrequencyAccesstocustomerinformationAppropriateprogramDifferentindustrieshavedifferentdemandonCRMprogramExampleindustriesValueofcustomerLowHighNoneProgramchoiceWeakStrongNoYesNoYesDatacaptureChangebehaviorDifferentiationDatacapture,,differentiationDatacaptureNoneRealestateCommoditytrading,non-brandedgoodsNewspapersThemeparks,museums,playhousesAirlines,hotels,creditcards,,telecoms,bankingMembershipservices(e.g..,travel)),mail-orderclubsDepartmentstores,retailersGrocery,gasstationsHighLowHighLow11MainobjectivesofCRMinGermantopcompanies[%%]1)Increasesalesforexistingproduct/servicerangeVeryimportant/importantEmpiricalresultsconfirmthemainobjectiveforpursuingaCRMstrategyistoincreasecustomerloyaltyMediumLessimportant/notimportantIncreasesalesbycross-//up--sellingWinnewcustomersIncreasecustomerretention//loyaltyIncreaseefficiency/reducecostsinmarketingIncreaseefficiency/reducecostinsalesIncreaseefficiency/reducecostsinserviceIncreaseefficiency/reducecostsinITutilization1)Cross-industrystudy,200topcompaniesinGermanySource::RolandBergerResearch200177149582517592021934354291758271554311543352212Author//DivisionCRMapplicationexamplesHotelAirlineTelecomLoyaltyclubmembership:PointscollectionandrewardCustomerdatabasetosupportquickcheck-inandcustomizedservice((Newspaperintheroom,fruitsandwelcomenotes…)Proactivelydrivesalesleadsbycombiningupcomingtradeshowandconferenceinformationwithconsolicatedcustomerdatatobetterservehighvaluecustomers:corporateaccountandbusinesstravelerMileagecard::mileagecollectionandrewardAirportspecialloungeforvaluablecustomersDifferentiatedservicefordifferentvaluecustomersVIPclub:VIPcustomercangetfastandpersonalizedserviceUsemulti--channeltoapproachcustomersandtofulfillcustomerservice:callcenter,,VIPcustomerrepresentatives,,Stores,website,etc.Leveragecustomerdatabasetodoup-sellandcross-sell,andmoreimportantly,toreducechurnIndustry((B2B)GlobalAccountmanagement:accountprofilingKeyaccountmanagerfor‘‘A-class’customersDifferentiatedpaymentpractice:e.g..extendedtermofpayment13Author//DivisionUp-sellandcross-sellCustomerFeedbackDatacollectionChannelmixtoapproachpotentialcustomersFriendlycustomerinterfaceMulti-channelserviceVIPcustomervalue--addedserviceInformationontheBillNewsLetterCallcentertocollectfeedbackUnderstandreasonstochurnLeveragecustomerdatabasetobuildchurnwarningsystemProactivepromotetocustomerswithinclinationtochurnLoyaltyprogramAcquisitionChurnreductionCustomerServiceVisitourshop!!!!GreatdealonMMSCallcenterproductrecommendationProduct/servicedemonstrationatstoreProductinformationonthebillExample:MobileOperatorappliesCRMleversineachcustomerlifecyclestageMobileOperatorExample14Author//DivisionForconsumergoodscompanies,channelpartnersaswellasconsumersareboththeircustomersMobilePhoneCompanyExampleMobilePhoneCompanyChannel:wholesaler/retailerOperatorServiceEnd--user(consumer)SellHandsetsubsidySellSellUnderstandcustomerneedsisthebasisforasuccessfulcustomerrelationshipmanagementEnd--user/consumeristhemaincustomer,whosedemandmustbeanalyzedindepthandbewell--segmentedAtthesametime,CRMalsoneedstobeusedtofosterrelationshipswithchannelpartners15Author//DivisionConsumergoodscompaniesshouldapplydifferentCRMstrategyandactionstodifferentcustomertypesChannel:wholesaler/retailerOperatorEnd--user((consumer))MobilePhoneCompanyDisguisedExampleCustomerDemandsCRMleversHighdistributionmarginandlargevolumeIn-timedeliveryandlowstockcostGoodtechnologyandservicesupportHighcustomersatisfactionrateGolden--channelaward:offerawardtobestperformancewholesaler/retailerBetterproductofferingsTechnologycallcentertotimelysupportchannel’’srequestontechsupportIncorporatechannel’ssupplychainsystemtoMobilePhoneCompany’ssupplychainsystemtorealizejust-in-timesupplyHighARPUMorenewsubscriberandlowerchurnrateHighercustomersatisfactionrateIncorporatespecialmobileoperatorfunctions//programsintoproductdesignCarryoperatorlogoontheproductTechnologycallcentertooffertimelytechsupportOfferspecialdiscountstoMobileVIPcustomersHighpriceperformanceratioBetterqualityguaranteeandcustomerserviceFeelingofownershipandcarebymobilephonecompanyBetterproductdesigntoserveaspecificcustomersegmentCustomerdatabaseandtargetedpromotionConsumerclub–morevalue-addedfunctionstoclubmembersServicenetworkandcallcenter16Author//DivisionCaseStudiesWewilldotwocasesinthenexthours.Oneisanindustrialgoodscompany,andtheotherisconsumergoodscompanyLet’’sseehowcustomerrelationshipcanworkinthesecompanies17Author//DivisionCaseStudy&Exercises–SanFabianSupplyCompanyBriefIntroductionSituationComplicationResolutionDemandforconstructionmaterialhasdecreasedsinceMacDowellexpandeditsproductioncapacityPhilippineisstillarelationshipdrivenbusinessworldandthewaytodobusinessisdifferentWealthisconcentratedinPhilmarketOneofthelargestsuppliersofbuildingmaterialsinPhilippineTheexclusivedistributorofMacDowellproductsinPhilippineHasgoodreputationforwell-trainedandaggressivesalesforceAmanufacturerofnoncombustible,chemically-resistantmaterialIscurrentlyplaguedbyplantovercapacityandeagertoboostsalesMarketSanFabianMacDowell((MD)MacDowell((MD)WishtoincreasesalesbyhavingmoredealerscarryingtheirproductsWanttotakeuponitselfthewholesaledistributionroleSanFabianhadbeenfillingTherefore,,itwantstoterminateexclusivedistributoragreementwithSanFabianWon’’ttakeanon-exclusivecontractButMDproductscontributesalottoSanFabiansalesandnetincomeItisnoteasytogetexclusiveagreementwithothersupplierSanFabianWhatwillMacDowelldowithcustomerrelationshipwithSanFabian??HowwillSanFabianreactfacingthechangefromMacDowell19Author//DivisionCaseexerciseTask:Afterreadingthroughthecase,,youarerequiredtoanswerfollowingquestionsWhatdoesSanFabiandoforMacDowell?WhatdoesMacDowelldoforSanFabian?WhatchangeisMacDowellproposingandwhy?WhatbenefitsandrisksMacDowellwillgetfromthischange?IfyouarethemanagementofMacDowell,howwillyoutreatthisexclusivedistributorrelationship??WhatareSanFabian’salternativesifyouareinvitedtogiveadvicetoSanFabian?HowcanSanFabiancometoanagreeablesolutionwithMacDowell?20minutesreadinganddiscussion20Author//DivisionKeytakeawaysItisalwaysaharddecisionrelatedtochannelmodels:exclusivevs.selectivevs.massdistribution,whichwecanoftenseeindailybusinessoperationThereisaninevitablelove/haterelationshipbetweenchannelmembers.Bothwantproducttobesold,buteachwantsmoreofthesalesmarginChannelprofitsaremaximizedwhencooperationovercomesconflict.Therefore,howtoachievewin-winbecomesthecriticaltopicDistributorsprovideavarietyofactivitiesonbehalfoftheirmanufacturers.Exclusivedistributionmodelcanstimulatedistributortomakegreatefforttopushthesales21Author//DivisionCaseStudy&Exercises–SoloMobilePhoneCompanyCasebackground**SoloisaEuropeanmobilephonecompanywhoseproductareallGSMmobilephones.Itisamongthetopthreelargestmobilephonemanufacturerintheworld..SolohasenteredChinamarketin1995andperformedquitewellinChinabeforeyear2000.ItisthethirdlargestplayeronChinamarket,onlyaftertheglobalmobilegiantAAandBB.Soloenjoysgoodreputationofhighqualityandbusinesspeopletargeteddesign.IthadquitesoundcustomerbaseinChinaanditsbrandawarenessishigh.*Disguisedcase,alldataandcompanynameinthiscasearedisguisedSoloMobileSuccessin1990sChallengeandthreatsince2001Chinamobilephonemarketisstillgrowingquickly,butmoreandmoredominatedbyyoungandtrendyproducts..Youngpeopletendtochangetheirmobilephonesmorefrequently.Therefore,Solodecidedtochangeitsfocusandbrandimagesince2001,puttingmoreemphasisonyoungpeopleButtheeffortofchangingbrandpositioningseemstoweakenSolo’sbrandimage.Inarecentmarketsurvey,consumersresponsesshowtheirconfusionofthebrandimageofSoloFastgrowthoflocalbrand––TL,BD,AM,,KK,etc..–formedhugethreattoglobalplayersonthemarket.Underthecompetitionpressure,Solo’smarketsharedecreasedfrom15%in2001to5%%in2003WhatSoloshoulddotoregainthelostmarketshare??23Author//DivisionTheChinesemobilephonemarketisthefastestgrowingmobilephonemarket*ProjectionCAGR+18%ChinaMobilePhoneMarketSize((allstandards,,mio.units)GSMCDMA33’452’355’162’869’777’4***FY

7’59’810’812’24Author//DivisionTrendy,,FashionableandMulti-functionmobilephonesbecomethemainstreamincompetition

MorefashionabledesignColordisplayandPoly-phonicringtoneImbeddedcamera,,games,MP3CompeteontrendydesignandmorefunctionsVariousformfactors:Clamshell,block,slider,flip,rotateWhilepriceisgoingdownanddownSoloMobile25Author//DivisionNoonehadexpectedthefastgrowthoflocalmobilemanufacturersSoloMobileLocalmanufacturersgainmarketsharemuchfasterthanexpectedWinningfactorsoflocalmobilephonemanufacturersLocalbrandmarketshare%Channelcoverageandcontrol:localmanufacturerusemoresalespeopleandtendtobuildownchannelinsteadofusingagentsHighpenetrationin2nd-3rdTiercitiesandruralareas((whereinternationalplayersareweak)MoreaggressiveadvertisementBetterunderstandmostlocalconsumer’stastefordesignandofferluxurydesignandpackagephones((e..g.putdiamondonthecover)CheaperpriceLocalbrand’schannelcoverageandpenetrationismostdistinctivefrominternationalplayers26Author//DivisionChannelstructureischanging,whichgiveSolonewchallengesSoloMobileChangesinchannelstructureSolo(andotherinternationalplayers)useNationalDistributorfordistributionSoloNDCMCC(Operator))RDRetailerConsumerCurrentchannelstructureQuickdevelopmentofKRC((keyretailchains)inTier1cities,suchasGuoMei,SuNing,whoselldirectlytoconsumers.Mobileoperators(CMCCandUnicom))becomemoreaggressiveinhandsetbusinessbyheavilyusinghandsetsubsidyLocalmobilephonemanufacturer'ssuccessinownchannelbusinessmodelcallmarketattention..PeopletendtoawarethatNDmodelinvolvestoomanyleversinthechannelstructure,thusloweringdistributionefficiencyandmarketresponseandincreasingchannelcost.Internationalplayersarethinkingofusingprovincial//regionaldistributorsinsteadofNationaldistributorsinsomearea27Author//DivisionSoloisunderheavypressureoflosingmarketshareandloweringbrandawarenessandimageSoloSeniorManagerMobileOperatorNationalDistributorConsumerOurmarketsharedecreasedfrom15%threeyearsagoto5%lastyearandwestillsawadownwardtrendthisyearWeplantoputmoreemphasisonhandsetsubsidyandplaymoreroleinhandsetdistribution..MobilemanufacturerM,N,SareallapproachingusforcooperationWehavelaunchedsomegoodproductslastyearandweinvestinadvertisement,butourpresenceinretailstoresarelowandconsumerscannotseeourproductsinalotstoresSoloMarketingManagerWecarryquitealotbrands..Whatwecareiswhichbrandcangivemebestprofit.WearealsounderpressureoflowermarginandtheemergenceofKRCsIknowSolobrand,butIcannottellwhetherIlikethemornot..Idon’tseetheirnewproductsmuch.SoloMobile28Author//DivisionSoloisthinkingofacustomerrelationshipstrategytohelprecoverthebusinessWenoticedthatinthepastweputtoomuchemphasisonSell,SellandSell,butmisstherealcustomerrelationshipWearelaunchinganewphoneandwewanttoincorporatemorecustom