developing a crm strategy

Marketing Sales Service Develop Target Customer Life Cycle Enquire Welcome Manage Problems Win Back A CRM Strategy: Developing the Customer Asset Base... OPERATIONAL STRATEGYBUSINESS ST

Jennifer Kirby

Developing a CRM Strategy

• Only 10 percent to 15 percent of companies know the value

of their customer base — yet, this is an important intangible asset and drives the detailed tactics of the CRM strategy.

• The benefits of CRM come through increased service and

communication; to build real loyalty, how is this managed effectively?

What Is a CRM Strategy?

• “It boldly states the ideal customer base and how an organization intends to get and keep it I’ve never yet seen one that does this to any depth.” — CRM

Consultant

• “…It’s the decision about which customers are to be managed, via which channels for which products and services: It means

revisiting the marketing strategy.”

— CRM Guru

• “A CRM strategy is not an infrastructure road map ” — CRM Program Manager

• “We need to understand what customers

we have, and who we want, then we can put in place a strategy for developing the value of each segment” — CEO

How do we develop the customers’ loyalty and value

to us by developing our value to the customer?

How do we acquire valuable customers who will value us?

How can we retain or win

back customers

of value?

How do we create awareness of what we offer to potential customers of value?

How do we do

this efficiently?

Marketing Sales Service

Develop

Target

Customer Life Cycle

Enquire

Welcome

Manage Problems Win Back

A CRM Strategy: Developing the Customer Asset Base

CRM Strategy:

Top Ranking Objectives

27 26

Annual loss in a typical company Customer loss: 10% to 30%

Employee loss: 15% to 20%

Investor loss: 50%

Reduces annual profit by 20-50%

Percent of Companies Ranking as Top Priority Retention

Development

Acquisition

CRM Strategy: Case Study No 1

• Segment the customer base in deciles of value.

• Develop customer profitability The most-valuable segment by 3

percent, the next three segments by 20 percent, and decrease the losses on the rest — develop services used, lower distribution cost, increase prices and discount according to potential value.

• Acquire new customers of the most-valuable type with targeted

selling.

• Implement retention programs for the most-profitable customers.

Household Deciles Ranked by Profit

CRM Strategy: Case Study No 2

• Understand and segment the customer base

• Retain the most-valuable customers after finding out why they

defect.

• Win back valuable ex-customers.

• Develop the loyalty of current customer segments — use

differentiated service according to need.

• Improve the profitability of unprofitable customers.

Brand Value

Value-tailoring Value-added Communication

OPERATIONAL STRATEGY

BUSINESS STRATEGY

BUSINESS MODEL

CUSTOMER STRATEGY

MARKETING STRATEGY

MARKETING STRATEGY

BRAND PROPOSITION: The Company DNA

IT STRATEGY

PRODUCTION STRATEGY

FINANCE STRATEGY

R&D STRATEGY

HR STRATEGY CRM Strategy Is an Element of Business Strategy

BRAND PROPOSITION

Promised Customer Experience

Step No 1: Define the Vision

What and who are you? What

value will you deliver?

Unifies Internal Delivery

Step No 2: State the Culture: What internal capabilities are needed to deliver the value?

Step No 3: Express the Image How will the the value of the brand be communicated?

The Brand Is the Company DNA

Corporate DNA Example:

Mickey’s Signature

Mickey’s Signature No 2

One Mouse, Different Signatures

Corporate DNA Consistency

• Vision: Market Position

• Market Definition and Audit

• SWOT Analysis

• Target market segments

• Objective for each market

segment: Penetration,

Development, Maintenance and

Productivity

• Measures: Market share, brand

equity and market penetration

Based on product life cycle

• Vision: CVP

• Customer Definition and Audit

• Capability Analysis

• Target customer segments by value

• Objective for each customer

segment: Acquisition, Development Retention and Efficiency

• Measures: Satisfaction, loyalty, cost

to serve and employee satisfaction

Based on the customer life cycle

How do we take advantage of

market opportunities and

mitigate competitive threats?

Marketing Strategy

How do we get closer to the customer to deliver value to them and create value for us?

Customer Strategy

Interweaving the Marketing and

Customer Strategy

Relationship Investment Guide

Overspending

Hidden Opportunities Motivators

Real Relevance

Well above average Above average Average

Below average Poor

Protect Position Invest to Protect Invest to Win Over

Damage Limitation

Counter Competition Invest to Build

Win the Opportunity Careful Management

Manage for Profitability Build Selectively Manage for Revenue

Manage for Revenue

Manage for Profitability Manage for Profitability Manage for Revenue Consider Divesting

Strength of Relationship (Value to Customer)

Some potential

Large share

of wallet

Key Customer Asset Audit

Real Examples of CRM Objectives

• Return retention to the industry average and then improve to 3%

• Measure the propensity to churn, expected lifetime value, and

propensity to accept discounts and special marketing offers

• Empower CSRs to decide who to keep according to specified criteria

• Establish who end users are to build broker loyalty

• Build a customer information culture to increase customer advocacy

• Improve communication with customers/partners

• Reduce staff turnover in call center

• Introduce an effective global sales process

• Find CRM initiative with highest payback and use to fund others

• Retain our most valuable customers for revenue in the short term

• Establish our customers’ optimum potential for selective development

• Acquire strategically important customers in the new market

• Expand cross-selling opportunities with supporters

CRM Metrics

Corporate Market Share

Key measures to support corporate financial and market goals

Cost Ratios Customer Loyalty

Example

Lifetime Value Customer Profitability Cost to Serve

Acquisition Development Retention

Risk Profile Staff Satisfaction

Response Levels RFM Measures

Conversion Ratios

Complaints NPD Times Staff Turnover

Cross-Sell Ratio Recommendation Levels Channel-Specific Measures

Call Answering Times Customer Data Accuracy

Response Times

“Do Not Mail” Markers

Staff Qualifications Staff Sickness

Example

Example

Example

customer segment/life cycle

• Contact by life cycle/segment

• How media and content is personalized in communication for each segment

• Which channel is used by which segments for what (touchpoints)

• Management by segment: who, where, how

Marketing Strategy Customer Strategy

Tactics for Retention and

lower costs and wider margin

Build Communities

Customer Care:

The Social Bond That Binds

• Improve perceived service and you improve loyalty.

• The customer does not care how much you know about

them, until they know how much you care.

• Stop thinking you are servicing a product — service the

customer.

• Feeling recognized, valued and cared about is the basis of

the bond that is loyalty.

• Upward movement of wallet share is a trigger for additional resource.

• Greater customer spend rewarded with greater levels of account

One:Few One:Many

One:Few to One:One

Key Account Teams

Market Value of Customer

Relationship Manager Personalized Self-

Serve

Relationship Models:

Resource Allocation by Segment

• Skills and competencies

• Establish your market position against requirements and

competitors Define a “value,” different, customer proposition

• Make the brand the company DNA to deliver the proposition

• Segment the market for share of wallet and lifetime value

• Establish the motivating factors for customer loyalty: Where do

you need to excel and where can you cut cost? Any gems?

• Value your customer base potential — not just on current

profit

• Develop skills in the new areas of customer relationship

building — service, contact strategies and relationship models Understand what technology enables you to do.