crm overview
DESCRIPTION
Presented to undergraduate business class at University of DaytonTRANSCRIPT
CRM Overview Kevin M. Messer, Accenture Senior Manager
University of Dayton 2 November 2001
2
Accenture Facts Accenture is an $11.4 billion global management and technology consulting organization working to bring innovation and to improve the way the world works and lives.
Over $11.4 Billion in Revenue, an increase of 17% in revenue from 2000
10% Reinvestment in Training 110 Offices in 46 Countries Over 75,000 Professionals Serve over 75% of Fortune 100 companies Industry Expertise:
Communications & High Tech, Financial Services,
Products, Resources, Government
Growth in Professionals
Growth in Revenues
3
“I know half the money I spend on advertising is wasted…
I just don’t know which half.”
– John Wanamaker Retail and Advertising Innovator
Pioneer of the Modern Day Department Store (1810-1891)
4
Capability Investments
Financial Performance Product
Development
Marketing Planning
Sales Force
Customer Service
Human Performance
Alliances
Customer Knowledge Advertising
Channel Strategy
Limited Resources Force Executives to Choose
Where to Invest
5
The Challenges for Our Clients
" Consumers are becoming inherently less loyal
" Use many new sources of information to build impressions and make decisions
" Expectations for consistent treatment are rising
" Much greater intolerance for failing to get the basics right
" Over 3,000 one-way messages besiege the average consumer every day!
" Data and analytical capabilities " More data, more ways to
analyze " Potential for closed loop,
real-time, and segment of one
" Limited impact to date on driving effectiveness of $400B spend
" Misapplication of technology " Consumers bombarded by
high-tech, often at expense of high touch interaction
Consumer Behavior is Changing Technology Role is Evolving
6
Customer Acquisition and Retention Costs
Source: BAI Global, Inc., U.S. Census Bureau
Banking: Acquisition Costs are Increasing Percent Response to Credit Card Direct Mail Offers
Source: Accenture research based cross-industry sources.
Per Subscriber Economics
Telco: Time to Break Even is Lengthening
1998 6.8
1999 6.7
2000 6.6
2001 6.8
2002 6.9
2003 7.2
Dol
lars
per
Cus
tom
er
Six-Month Revenues
Acquisition Costs
1.2%
-2.3%
Months to Breakeven
0
150
200
250
300
350
400
7
Customer Relationship Management (CRM)
• Who are your best customers?
• How do you serve them?
• How do you measure success?
• How do you prioritize investments?
8
CRM according to Accenture
CRM is about acquiring, developing and retaining satisfied, loyal customers; achieving profitable growth; and, creating economic value in the client’s brand.
" At the heart of CRM is the objective to deliver a consistently differentiated, and personalized, customer experience, regardless of the interaction channel chosen by the customer.
" CRM brings together a company's efforts in marketing, sales, and service that would traditionally have been pursued in separate, ad hoc ways.
" It constitutes a more comprehensive, methodical approach to identifying, attracting, and retaining the most valuable customers.
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Which CRM Investment?
Implication: Could be expensive and resource intensive to support multiple channels.
32%
48%
17%
3% *Percent of CIOs who ranked channel as most important (Source: Siebel/FCW Survey of Public Sector CIOs, Fall 1999)
10
Accenture’s Customer Capabilities Research
• First study to: – Quantify the impact of
CRM on financial performance
– Identify the capabilities that have the greatest financial impact*
* As measured by Return on Sales (ROS) which is defined as Earnings Before Interest, Taxes, Depreciation and Amortization, divided by Sales.
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• 430 Questions: • Marketing • Sales • Service • Technology
• Quantitative Analysis: • Correlation • Derived importance
(multiple regression) • Qualitative Analysis:
• In-depth interviews with 50 senior executives
• 537 Surveys
• 264 Companies
• North America
• Communications
• Chemicals
• Pharmaceuticals
• Retail
• Electronics/High Tech
• Forest Products
• Cross-Industry View of All 6
Research Overview Survey Scope/
Methodology Survey
Response Industry Segments
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Key Findings
• Many CRM investments lack focus or metrics • When focused, CRM has a major impact on financial
performance, yielding large returns • 21 capabilities drive the most value • Almost 1/3 of the total impact stems from people
capabilities • Customer insight is a valuable asset and key
differentiator • Technology plays a critical role, directly driving 40% of
total impact • Having a good strategy is important, but the key is in
execution
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Brand Management
Motivating and Rewarding People Customer Service
Turning Customer Info into Insight Attracting and Retaining People
Building Selling and Service Skills Strong Value Propositions
Partner and Alliance Management eCRM
Sales Planning Key Account Management
Advertising Customer Retention and Acquisition
Managing Product and Service Mix Promotion
Ability to Change the Organization Measuring Profitability
New Products and Services
Segmentation Building Service Culture
Channel Management
1.5
13.0 13.0
12.0 10.0
9.5 9.0 9.0
8.0 7.5
6.0 5.5 5.5
5.0 5.0 5.0
4.5 3.5
2.5 2.0
3.0
Impact of moving from average to high
performance ($M for a $1B company.,
USD)
21 Profitable Capabilities
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$40-50
$120-150
By improving all 21 CRM capabilities, companies can yield significant pre-tax profits:
Average to High Performance
(30% Improvement)
10% Improvement
($US millions for a $1 billion company)
Skill Improvement Yields Large Returns
15
Top Five CRM Capabilities Across
Industries
$9.5
$10
$12
$13
$13
$0 $2 $4 $6 $8 $10 $12 $14
Building Selling/Service Skills
Attracting/Retaining People
Turning Customer Information into Insight
Customer Service
Incenting/Rewarding People
$ Millions
16 Brand Management
Motivating and Rewarding People Customer Service
Turning Customer Info into Insight Attracting and Retaining People
Building Selling and Service Skills Strong Value Propositions
Partner and Alliance Management eCRM
Sales Planning Key Account Management
Advertising Customer Retention and Acquisition
Managing Product and Service Mix Promotion
Ability to Change the Organization Measuring Profitability
New Products and Services
Segmentation Building Service Culture
Channel Management
1.5
13.0 13.0
12.0 10.0
9.5 9.0 9.0
8.0 7.5
6.0 5.5 5.5
5.0 5.0 5.0
4.5 3.5
2.5 2.0
3.0
Impact of moving from average to high
performance ($M for a $1B co., USD)
= people impact
People Capabilities Provide Almost 1/3rd of Impact
17 Brand Management
Motivating and Rewarding People Customer Service
Turning Customer Info into Insight Attracting and Retaining People
Building Selling and Service Skills Strong Value Propositions
Partner and Alliance Management eCRM
Sales Planning Key Account Management
Advertising Customer Retention and Acquisition
Managing Product and Service Mix Promotion
Ability to Change the Organization Measuring Profitability
New Products and Services
Segmentation Building Service Culture
Channel Management
1.5
13.0 13.0
12.0 10.0
9.5 9.0 9.0
8.0 7.5
6.0 5.5 5.5
5.0 5.0 5.0
4.5 3.5
2.5 2.0
3.0
Impact of moving from average to high
performance ($M for a $1B co., USD)
= technology impact
Technology Drives 40% of Impact
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Technology-related Skills Lead in Impact on
Profitability
Several of the highest-potential skills in each of the industries also depend on powerful systems and high-quality data:
– Communications: Pricing and billing-related skills – Chemicals: Technology-enabled customer contact – High tech: Proactively identifying problems and
communicating resolution options – Pharmaceuticals: Measuring and analyzing customer
acquisition, retention and switching costs – Retail: Managing details of product and customer
profitability – Forest Products: Influencing industry price levels
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Physical Interaction: • Walk-in/Face-to-Face • Mail • Paper-based
Branches/Offices &
Field Sales/Service
Telephone-Centric: • Telephone, Fax • Mainly real-time
human-to-human • Self-Service capable (IVR) • Voice Messaging • Call-specific reporting
Call Centers
Multiple Interaction: • Multiple channels
Web, Voice (Phone, IVR), email, Fax, TV, MMP, PDA, WAP…
• Not necessarily real-time • Self-Service focused • Speech recognition • Business-based reporting
Contact Centers
Vision: Evolving Interaction
Models
20
CRM Technologies for Customer Insight:
Data Mining
“Data Mining is the
process of applying
sophisticated analytical
and computational
techniques to discover
exploitable patterns in
complex data”
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Sources of Customer Data
• Pervasive collection of electronic data – Credit Cards, ATMs, Debit – Phone Records, Check Scans
• Exchange of electronic data – Insurance, medical diagnosis, employment
verification, tax collections • Archived electronic records
– Credit History, Criminal Records, Property Transactions, Licenses & Permits
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The Data Challenge
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Data Warehouses consolidate vast amounts
of data
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Customer Segmentation and Profiling
Who are our customers?
Most Common
Least Loyal
Most Loyal
Least Profitable Most
Profitable
Biggest Spenders Smallest
Spenders
Typical Questions Answered
25
Customer Segmentation and Profiling
What are their interests and values?
Attitudinal Analysis
Typical Questions Answered
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Where are our
customers?
Customer Segmentation and Profiling
Geographic Mapping
Typical Questions Answered
27
Most Common
Least Profitable
Basket Analysis
What are the typical purchase affinities?
Typical Questions Answered
Most Profitable
28
Who Buys What?
Customer Segmentation and Profiling
Basket Analysis
Typical Questions Answered
29
What is the impact of
promotions?
Customer Segmentation and Profiling
Promotions Analysis
Basket Analysis
Typical Questions Answered
30
Who is most likely
to respond to a marketing campaign?
Typical Questions Answered
Customer Segmentation and Profiling
Predictive Modeling
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Who is most likely to spend
most?
Typical Questions Answered
Customer Segmentation and Profiling
Predictive Modeling
32
Who is most likely to defect?
Typical Questions Answered
Customer Segmentation and Profiling
Predictive Modeling
33
Predictive Modeling
Descriptive Modeling
Who/where are our
customers and what do they need ?
What’s the most profitable way of communicating
with each individual ?
Two Main Types of Data Mining
Unsupervised Learning Supervised Learning
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Functions and Benefits • Segmentation — Identifies groups of customers with statistically
similar behavior – demographic – psychodemographic – behavioral – attitudinal
• Profiling — Provides an understanding of the size and characteristic profiles of major customer groups
• Classification — Identifies the likely profiles of new customers – Affinity and sensitivity analysis – Finds patterns of behavior – Identifies “unusual” individuals – e.g., fraud identification
35
Technical approaches
• K-Means clustering • Unsupervised learning neural networks
36
Age
Inco
me
K-means Clustering
• Identifies groups of customers with similar characteristics
– Decide the maximum number of clusters, K
– Randomly assign cluster ‘seeds’ across n-dimensional space (n = no of variables)
– For each customer, compute the Euclidean distance between the customer data point and each cluster mean
– Assign each customer to the nearest cluster
– Move each cluster center to the mean of the current cluster grouping.
– Repeat the process until convergence.
37
Age
Inco
me
Unsupervised Learning Neural Networks
• Similar to K-means clustering, but will find “important” specialist groupings
• Not as statistically rigorous as K-means clustering, but superior for pure “discovery” work
38
Descriptive Modeling Case Study
Behavioral Segmentation and Micromarketing Strategy Development
39
Business Context
• High street retailer • Launch of card-based loyalty scheme • Large quantity of data
– card registrations • demographics • interests
– transactions • Requirement for customer insight to drive
micro-marketing strategy
40
Male
Female
Children
No Children
Gender
Children
Age Profile
Boy Racers Declared Interests
Sport, cars, motorsport, computers, travel, films, music
Magazines Read
Very infrequently
Purchase Preferences
Videos and CDs, plus books, cards, stationery
Basket Size Small
Basket Value Good
Visit Frequency
Low
Total Spend Average
41
Mature Browsers
Male
Female
Children
No Children
Gender
Children
Age Profile
Declared Interests
Gardening, food and wine, reading, travel, films, music
Magazines Read
Occasional reader of popular titles
Purchase Preferences
Books, cards, stationery
Basket Size Average
Basket Value Low
Visit Frequency
Low
Total Spend Low
42
Bookworms
Male
Female
Children
No Children
Gender
Children
Age Profile
Declared Interests
Reading
Magazines Read
Frequent readers of a wide selection
Purchase Preferences
Books, + cards, artist materials and stationery
Basket Size Good
Basket Value High
Visit Frequency
Very Good
Total Spend Excellent
43
Couch Potatoes
Male
Female
Children
No Children
Gender
Children
Age Profile
Declared Interests
None
Magazines Read
Very infrequently
Purchase Preferences
Books, children’s books and cards
Basket Size Average
Basket Value Average
Visit Frequency
Low
Total Spend Low
44
Young Spenders
Male
Female
Children
No Children
Gender
Children
Age Profile
Declared Interests
Films and music, plus reading
Magazines Read
Very infrequently
Purchase Preferences
Videos, CDs, books and cards
Basket Size Small
Basket Value Low
Visit Frequency
Low
Total Spend Poor
45
Examples in Government
• Citizen service efficiencies – License renewals – Tax assessment and collection – Child-support enforcement
• Law enforcement & civil defense – Potential terrorist threats – Surveillance and Tracking
• Fraud detection • Supplier management
46
Questions
?