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CRM

VIEWS: 224 PAGES: 30

									A Customer - Centric Organization
              As A
    Socio -Technical System
                            Overview

CRM is not a product or service


“A strategy used to learn more about customers'
needs and behaviors in order to develop stronger
relationships with them”


It provides an integrated view of a company’s
customers to everyone in the organization.
An overall business strategy that:
 enables companies to effectively manage
relationships with their customers.
 which dictate re-designing of functional
activities
 which drive re-engineering of work processes
 which require CRM technology to implement

CRM is a "chain reaction"
Why is CRM Necessary?
Gather & access information about customers'
buying histories, preferences, complaints, and other
data so they can better anticipate what customers
will want.

The goal is to instill greater customer loyalty
CRM helps businesses use technology and human
resources to gain insight into the behavior of
customers and the value of those customers.

Identifying the most profitable customers
(Pareto’ s Principle 80:20)
CRM at the forefront - Reasons

Global competition & products harder to
differentiate,
Product-centric view to a customer-centric view


Technology has ripened to the point where it's
possible to put customer information from all over
the enterprise into a single system
Types of CRM /Areas of Application
 Traditional CRM -transaction level data about
 individuals and products-sales force automation,
 marketing automation and call center systems

 Operational CRM -tracking customer activity-
 analytics - strategic planning support tool

 Collaborative CRM -provides a point of
 interaction between customers; staff and business
 partners, through a portal

 eCRM - online components of CRM
Market Movement
The Indian CRM Market - Rs. 50-100 Crores
CRM Market - segmented

    Software                  Services

Services segment      Out-Sourced CRM Services

               Integration         Training

                         Consultancy

CRM Services Market   > Market for CRM Software
Indian Market for CRM Software and Services would grow
to about Rs. 100 Crore by 2002
CRM Market Segments
Global CRM Market
Forecast by Vertical Industry

•communications/telecom
•financial services/ banking/insurance
•discrete manufacturing/technology
•retail/consumer goods and services
•81% of the total market opportunity for CRM
services
Trends in the Market
Elements of Integrated Customer
Management
Benefits
 Customer Advocacy
   Loyal customers = Profitability@  cost
   continual revenue stream
   opportunities for cross sell and up sell
   a rich source of referrals
   A customer-centric organization ensures that
    customers have a consistent, satisfying, and
    personalized experience
   ROI
    Bottom Line -biz has to sell more and service
     that demand without increasing the resources
     to do so
    increase revenues or reduce costs
    Top-line growth
    3 sources only
                      Better Customer Management


Targeted Selling Efforts             Focused Customer Retention
Case Study - Innovative Company

 $100 million in annual profits and 1 million
  customers
 Baseline plans -grow customer base by 5% in
  the next year (with a 15%in customer growth
  and a 10% reduction due to customer attrition)
 Performing well
 Average profits are $100 per customer
 what steps they should take to improve
  overall profitability??
Detailed customer profitability for
each of its 1 million customers

 segmented their customers into 10 profitability
  buckets
 Top 1% of customers - highest profitability
 Bottom segment - 10% of customers with the
  worst profitability results
 profitability ranges from an average $1,150 in
  the top segment to an average $300 loss in the
  their bottom segment.
Profitability % of        Number of   % of      Average    Total Profits
Segment       Customers   Customers   Profits   Customer   $Millions
                                                Profits
1            10%          100,000     115%      $1,150     $115.0
2            10%          100,000     25%       $250       $25.0
3            10%          100,000     10%       $100       $10.0
4            10%          100,000     5%        $50        $5.0
5            10%          100,000     0%        $0         $0.0
6            10%          100,000     -2%       -$20       -$2.0
7            10%          100,000     -5%       -$50       -$5.0
8            10%          100,000     -8%       -$80       -$8.0
9            10%          100,000     -10%      -$100      -$10.0
10           10%          100,000     -30%      -$300      -$30.0
TOTAL        100%         1,000,000   100%      $100       $100.0
3 initiatives to improve overall profitability

   Better Customer Management

   Targeted Selling Efforts

   Focused Retention Efforts
Better Customer Management
 Grow the top customers’ profits by only 3%
 The next 4 groupings of customers by 5%
 Decreases the losses on the less attractive
  customers by 10%
 Courses of Action
 Use more of existing products
 Increase fees, stop waiving fees or discounting
  revenues
 Migrate customers to less costly distribution
  channels
 Cut excess capacity and channel costs
Profitability   % of Profits   Average    % Change in    New Average
Segment                        Customer   Avg. Profits   Profits
                               Profits
1               115%           $1,150     3%             $1,185
2               25%            $250       5%             $263
3               10%            $100       5%             $105
4               5%             $50        5%             $53
5               0%             $0         0%             $0
6               -2%            -$20       -10%           -$18
7               -5%            - $50      -10%           -$45
8               -8%            -$80       -10%           -$72
9               -10%           - $100     -10%           -$90
10              -30%           -$300      -10%           -$270
TOTAL           100%           $100       11%            $111




    Average profits by 11% or $11 per customer
Targeted Selling Efforts
 Increase customer base by 15% or 150,000
  customers
 If IC can acquire a few more profitable customers
  and a somewhat fewer customers with an
  unprofitable profile???
 Without targeted selling - 150,000 customers with
  an average profitability of $125 =worth $15 million
 With targeted selling - 150,000 customers with an
  average profitability of $263 = worth more than
  $39 million
 Diff of more than $24 million & a 163%
  over the status quo scenario
Profitability Average    %              Status Quo   %              Targeted
Segment       Customer   Distribution   Selling      Distribution   Selling Total
              Profits    for Status     Total        for Targeted   Profits
                         Quo Selling    Profits      Selling        $Millions
                                        $Millions
1           $1,150       10%            $17.500      20%            $34.500
2           $250         10%            $3.750       15%            $5.625
3           $100         10%            $1.500       15%            $2.250
4           $50          10%            $0.750       15%            $1.125
5           $0           10%            $0.000       10%            $0.000
6           -$20         10%            ($0.300)     5%             ($0.150)
7           -$50         10%            ($0.750)     5%             ($0.375)
8           - $80        10%            ($1.200)     5%             ($0.600)
9           - $100       10%            ($1.500)     5%             ($0.750)
10          -$300        10%            ($4.500)     5%             ($2.250)
TOTAL       $100         100%           $15.000      100%           $39.375
Focused Retention Efforts
 Attrition - IC loses 10% of their customer base
  every year due to customers moving out of the
  service area, customer satisfaction issues and
  other reasons
 100,000 customers = $10 million in customer
  profits
 If they can lose fewer of their more valuable
  customers and more of their less valuable
  customers??
Profitability   Average    Status Quo     Status      Focused        Focused
Segment         Customer   Customer       Quo         Customer       Retentio
                Profits    Attrition      Retention   Retention      n Lost
                           Distribution   Lost        Distribution   Profits
                                          Profits                    $Millions
                                          $Millions
1               $1,150     10%            ($11.500)   5%             ($5.750)
2               $250       10%            ($2.500)    5%             ($1.250)
3               $100       10%            ($1.000)    5%             ($0.500)
4               $50        10%            ($0.500)    5%             ($0.250)
5               $0         10%            $0.000      5%             $0.000
6               - $20      10%            $0.200      15%            $0.300
7               - $50      10%            $0.500      15%            $0.750
8               - $80      10%            $0.800      15%            $1.200
9               - $100     10%            $1.000      15%            $1.500
10              -$300      10%            $3.000      15%            $4.500
TOTAL           $100       100%           ($10.000)   100%           $0.500




                Realize a $500,000 in profits
The Bottom Line
 Grow by 5% because the customer base grew by
  5% and their distribution of customer
  profitability remains unchanged
                         Vs
 Customer base by 5% but has the potential to
  grow total profits by 10 times.
 Even if IC can only achieve 50% of this goal -
  five-fold increase
Customer Satisfaction
Revenue Growth
Managing Costs
            CASE
SHOPPERS’ STOP’S “FIRST CITIZEN CLUB”
 Launched in 1994 (shoppers’ stop opened its first store in
  1991) 4000 + FCC members in 1994
 Three Tier system
Classic-Rs.2500 p.a/Silver-Rs.10000pa/Gold-Rs.40000p.a
 100000 FCC members in 2000
   Gold:2% , Silver:25% , Classic:73%
 15% of the walk-ins on any day are FCC members
 40% – 60% of sales come from FCC members
 FCC Programme integrated into in-store
   ERP package            Merchandise Management
Progress happens not when questions
are answered
But when answers are questions !

								
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