BGS Customer Relationship Management Chapter 11 CRM Marketing

BGS Customer Relationship Management Chapter 11 CRM, Marketing Automation, and Communication Thomson Publishing 2007 All Rights Reserved

New Marketing and Sales Challenges

New Marketing and Sales Challenges • Internal marketing and sales organizational challenges – Multiple customer touch points – Overlapping department responsibilities – Customer relationships involve marketing and sales interaction with • • • Customer service Manufacturing Logistics Finance Accounting

New Marketing and Sales Challenges • Adding value, saving time, delivering convenience, and providing flexibility for customers • Today marketing and sales must cope with the most complex communications environment in history

New Marketing Challenges • New technology is a blessing and a curse to marketing and sales. – New media options include • • The Internet E-mail Web portals Satellite television Satellite radio Cell phones Voice mail A host of new print media

New Marketing Challenges • Marketing now has the ability to reach very specific audiences – While minimizing media waste – Learning from past campaigns • The curse of the new media is – More-fragmented audiences – Zipping, zapping etc.

New Marketing Challenges • The keys to communications in the contemporary media environment are – Speed – Accuracy – Immediate customer feedback • The ability to learn quickly from campaigns is critical to improving advertising and promotion campaign performance over time.

New Media Options • E-mail, for example, has become a staple of customer communication in CRM campaign management systems. – Unfortunately, e-mail has become a complex environment with significant problems • In-boxes are full of spam, • Filters screen messages eliminating some messages of value • Sheer volume of e-mail is overwhelming

New Media Options • One interesting new alternative is the development of companies that host on-demand web portals. • These portals are substitutes for company-developed sites. – Can be developed by non-java professionals in a matter of minutes – Data from e-mail campaigns is automatically added to CRM systems – These portals use outbound e-mail to attract customers to a variety of information – A premier provider of these services is www. icentera. com

Customer Centricity and Marketing Automation

A Customer-Centric View • A customer-centric view involves placing the customer and their needs at the center of a company’s business activity and – Must be company wide and influence all company operations – Recognize the customer as the most important part of any business

Is Customer Centricity New? • Hardly! – Through technology, we have come full circle in marketing and selling effectively. – In the early 1900 s, retailers had relatively small trading areas and new customer • • • Personal preferences Size profiles Family history Ordering patterns Payment history Credit requirements – These retailers were practicing a brand of CRM with the technology of their day.

How Did the Process Change? • The evolution: – – Growth was a mandated objective Companies focused on expanding geography Scale was employed as a competitive strategy Technology continually introduced new products • National manufacturers emerged utilizing mass marketing through broad-scale communications tools.

The Result • The current scale of businesses is unprecedented; manufacturers have become corporate behemoths, such as – Kraft and Microsoft • Even these giants, however, acquiesce to demands made by huge retail customers like – Wal-Mart – Safeway – CDW

The Result • Today’s distribution channels have become retailer dominated as major retailers control increasing shares of national volume. • This shifting of channel control has prompted the manufacturers to adopt new technology at an increasing rate.

The Result • Many progressive grocery manufacturers use more sophisticated segmentation technology like ACNielsen and Spectra to – Maximize consumer understanding – Utilize consumer and category knowledge to leverage media and trade campaign performance – Use CRM systems to manage their businesses more effectively and improve relationships with their customers

The Result • New customer leverage in distribution channels places tremendous pressure on competing marketing and sales organizations to perform through – – Product development Precise consumer promotion programming Effective communication Superior customer service • CRM is the basis for improved customer performance – Providing an information support base empowering marketing and sales to better serve customers – CRM system requires compliance and participation from each company area, or a 360 -degree customer view

The Result, Marketing Automation • Technology changed the old business paradigm built on personal customer knowledge to mass marketing. • Technology has now come full circle to enable business to – Target consumers individually via • E-mail • Direct mail • Web portals – Collect data on individual homes – Store the data for efficient and immediate retrieval – Revise and re-field campaigns

Customer Touch Points

Customer Touch Points • Points within an organization where seller and buyer interaction occurs – Happen daily in the sales and customer service functions of a business – Happen less frequently in accounting, R&D, supply chain management, and marketing – This activity is essential to record within a CRM system for the customer management purposes

Customer Touch Points - B 2 C • Information exchanged tells us how to satisfy customer needs. – The customer service group for Lands’ End learns and records individuals’ • Sizes • Color and styles preferences • Shipping requirements – This information translates to better future assortment, pricing, and promotion decisions to maximize sales and improve customer retention

Customer Touch Points - B 2 B • Customer service for Con. Agra Foods interacts with – – Logistics Accounting Procurement Operations • Information exchanged concerns – Shipments – Credit issues – Scheduling and delivery needs • Customer service mobilizes company resources and continually updates the customer database

How Is the Data Used? • Performance improves credibility, relationships, and increases customer volume in the future. • Proper information flow to CRM systems allows companies the ability to serve customers with a variety of automated communication solutions.

Campaign Management • Campaign management recognizes that not all customers are of equal profitability or volume importance. – Marketing and promotion should be directed to particular customer basis to improve the ROI to the extent of the law. – There is a significant shift in focus from product sales and profitability to customer profitability and customer retention. – Media vehicles should be evaluated on efficiency of response generated, not lowest cost.

Marketing Automation

A Definition “Marketing automation is the use of software to automate marketing processes such as customer segmentation, customer data integration, and campaign management. ” – Marketing Automation: • • Replaces manual development of communication Is more efficient and effective Enables new communication Is an integral component of CRM

The Components of Marketing Automation • Segmentation - Differentiate and prioritization of customers • Data integration – Accurately understand customer status • Analytical evaluation - Data mining provides marketing with opportunities to improve the customer’s business • Campaign management communicates value effectively to customers; feedback provides for continuous performance improvement

Customer Centrism Means marketing, sales, customer service, manufacturing, and logistics resources of a business are being committed to serving a single customer’s needs. – Wal-Mart has changed the face of CPG marketing and sales.

Marketing Automation and Campaign Management • Automated marketing campaigns provide the data to improve successive customer communication continually. • According to SAS, Marketing Automation is really the marriage of business process and information technology.

The Campaign Management Cycle

Campaign Communication Planning • There a variety of considerations in planning, including – – – Campaign timing Audience Program delivery Program variables (promotion values) Results/program performance

Campaign Communication Planning • Customer communication planning identifies an opportunity via – Data mining – Segmentation analysis • Successful CRM campaigns establish Campaign Objectives Campaign Strategy Campaign Tactics • E-mail • Direct Mail • Web Based

Campaign Management Targeting • The process of matching offers to particular business targets is a matter of segmentation analysis and customer opportunity review. • In campaign management, we develop business decision rules to – Govern the distribution of offers – Create automated replies to customers reacting to promotion offers

The Campaign Management Process Figure 11. 3

Campaign Management Evaluation of a Campaign • The evaluation of campaign results is: – The most important part of the campaign management process – Fundamental to any successful CRM system – A means to improve subsequent program performance while engineering out cost – Campaign management has evolved from direct mail and direct marketing disciplines

Campaign Management Direct Marketing Roots • In direct marketing, campaigns are micromanaged to the smallest detail of the promotion. • This science of direct marketing is the correlation of campaign performance to variation in program characteristics. – The management of offer values – Different creative platforms – Changes in response mechanisms results in a wealth of information and experience to help in developing successful campaigns

Campaign Management Direct Marketing Roots • The direct marketing industry benefits by utilizing media where individual offers can be – Variably valued – Household coded – Creatively versioned • The evaluation of different response rates were then applied to promotion cost and ultimately to program ROI. This evolution of evaluation led to the development of the customer lifetime value concept.

B 2 B Campaign Management • In B 2 B channels, Marketing Automation and CRM systems facilitate the evaluation of campaigns. – Each program is evaluated individually based on • • Offer response rate Program objectives State of the relationship Performance of the account to the program terms

Campaign Management • The most important part of Campaign Management is program evaluation and addition of information to the CRM for future programming, reflecting a “closed loop” system that is inherent in all CRM systems.

Marketing Automation and Campaign Management • Automating customer support programs is a long-term blessing for marketing groups, but short term, it places tremendous pressure on human and financial resources. – Forcing adoption of a consistent and enduring customer positioning and support strategy – Creating a major shift in the marketing approach within a company – The organization is forced to embrace customer centrism and move beyond the 4 P’s to the 4 C’s of customer marketing

The 4 C’s of Customer Marketing • • Customer needs Customer competitive needs Customer cost dynamics Customer communication

Optimizing Marketing Automation

Customer Centrism, Technology, and System Optimization • “A choice of CRM technology should take place only after the objectives for the program are established, customer strategies are determined, and tactics for programming are carefully thought through. ” Kevin Turner, Principal, Model Metrics, Chicago, IL.

The Pyramid • In Turner’s opinion, while technology is the foundation for any successful CRM application, you address goals, customer strategy, measurement, and system and user interaction requirements before you choose the correct technology.

The Pyramid • Only after you evaluate your needs can you align a CRM systems features to your particular customer relationship service needs. • At this point, your ability to optimize CRM and Marketing Automation becomes a far simpler task because you are prepared to review your current system versus new technologies that may be better suited for use on a larger scale.

Marketing Automation, Campaign Management, and Business Control • Within CRM, Marketing Automation allows for improved productivity and reduced business risk. – Productivity improves because manual tasks are eliminated – Productivity improves because sales and marketing have an approved source of materials and a unified approach to market – Salespeople use standard follow-up with accounts – Marketing and sales identify and use only programs that demonstrate value continually

Marketing Automation, Campaign Management, and Business Control • Business risk associated is reduced as evaluation of successful customer programs is visible to management at all levels. – Program evaluation leads to continued performance improvement – Eventually, the performance of the basic business model becomes visible and is validated based on customer performance

Right Events at the Right Time • Right Events/Right Time – Data input must become a discipline across the organization for the data warehouse to serve for all marketing planning. • Information from trade shows, customer trips, and special customer events must be entered expeditiously • Evaluation of this information will establish new triggers, communications processes, and tools for future customer marketing – Evaluation of marketing programs affords better allocation of resources to support selling and future marketing.

Questions?