Customer Relationship Management (CRM) for SME David Cheung, Albert Kwong Tung Hing Pacific Management Consulting Ltd 東興管理顧問有限公司
What is CRM? Is it a new concept or a rediscovery of an old concept?
Change in Fifty Years of Marketing In the fifties : Customers had to reply on manufacturers for information about their products and services. Manufactures decided which retailers would carry their products. Today: Consumers have enough information to make up their own minds about what they should buy. The big grocery chains have all the control
The use of brands has intensified considerably and the brand is now recognized as a powerful commercial tools. Globalization has led to worldwide brand recognition and brand owners enter new markets consumers benefit from greater choice. “Understanding the consumer became the role of the Marketer – and it remains our role today.” explained Dianne Thompson, CIM’s President
Data analysis became an increasingly practical operation as Marketers strived to understand their customers better than anyone else. The transformation of the past half-century have been immense in both direction and degree, and it is certain that continuing innovation will drive Marketing during the next fifty years as the needs of an ever-more sophisticated consumer become more difficult to satisfy.
Definition of CRM “CRM is the creation, development and enhancement of individualized relationships with carefully targeted customers… the desired result being to maximize total customer lifetime value.” Technology is one enabler, but success is down to people, process and strategy
Understanding CRM People Process Technology
Components of CRM
Marketing Sales Customer Services Others
Contact Management Data Analysis Data Mining and Business Intelligence Integration and Workflows
Business Focus
1) Before Financial Crisis/Storm
Survival
Profit
Growth
Business Focus 2) After Financial Crisis/Storm
Survival
Profit
Growth
Means for Survival Profit = Revenue – Cost • •
•
cost layoff (downsizing) salary cutting
revenue price 薄利多銷 (cut-throat pricing, price war)
Means for L-T Survival Firm’s Survival
Profit generating =
through
Or
Customer’s repeated
Profit
Purchase/loyalty
How can we increase a customer’s loyalty/repeated purchase?
Common Methods Adopted to Increase Customers’ Repeated Purchase
Loyalty program Price cutting Customer locking (captivity)
Why a customer loyal to a firm or a brand? (A Customer Perspective)
A Customer Survey on Banking Industry (N = 300) • 4Ps (reasonable price, good location, good quality, nice physical environment) • Perception of Service Provider (expertise, friendliness, caring, trust) • Feelings during firmcustomer interaction
• Propensity to Stay
+
• Future Purchase • Referral
Factors Accounting for Customer Loyalty Superior Value = Value from the product/service + Emotional Bond (Relationship with the firm)
Does CRM Support My Business Model? • CRM is not a universal panacea to solve all of a business’s ills. We believe in some cases that the attempt to apply CRM will potentially damage a company. • CRM does not support all business model. So before you plunge into CRM implementation, make sure you’ve asked the obvious question: • “Will CRM support my business model?” Or, in some cases: “What is my business model?”
To answer the question “Will CRM support my business model ?” there are 4 key points to consider. A. Size of transaction: Do your customers buy products or services that have a value where there is sufficient cash to support investing in CRM? B. Frequency of transaction: How often do they buy, once a week, a year, decade? C. Gross Margin: What is the gross margin 5%, 10%, 50%? D. When you combine those factors you start to see where in your downstream value chain these factors collide to make it viable to implement CRM.
How can we implement CRM?
Traditional Marketing vs. CRM Traditional Marketing
CRM
Transactional based
Relationship based
Manage products
Manage customer relationships Differentiate customers
Differentiate products Compete for market share Talks to customers – tell and sell Believes that customers must be treated equally
Compete for share of customers Engage in a dialogue with customers – listen and learn Believes that customers must be treated individually
The Four Dimensions of the CRM Orientation Organizing around CRM
Focusing On Key Customers
Knowledge Management
Technology-based CRM
Research Results on the Relationship Between CRM and Business Performance (N = 215 financial institutions) Financial Performance
Key Dimensions of CRM • Focusing on key customers • Organizing around CRM • Knowledge Management • Technology-based CRM
• Return on Investment • Return on Sales
+
• Sales Growth • Market share
Marketing Performance • Trust from customers
• Customer Satisfaction • Customer Retention
Checklist for Implementing CRM Focusing on Key Customers • • • •
My organization provides customized services and products to our key customers. Through ongoing dialogue, we work with individual key customer to customize our offerings. My organization makes an effort to find out what our key customer needs are. All people in my organization treat customers with great care.
Checklist for Implementing CRM Organizing around CRM • • • •
My organization commits time and resources in managing customer relationships. Employee performance is measured and rewarded based on meeting customer needs and on successfully serving the customer. Our employee training programs are designed to develop the skills required for acquiring and deepening customer relationships. Our organizational structure is meticulously designed around our customers.
Checklist for Implementing CRM Knowledge Management • • • •
My organization provides channels to enable ongoing, 2-way communication with our key customers and us. Customers can expect that my organization’s employees are not too busy to respond to customer requests promptly. My organization fully understands the needs of our key customers. Customers can expect prompt service from employees of my organization.
Checklist for Implementing CRM Technology-based CRM • • • •
My organization maintains a comprehensive database of our customers. My organization has the right hardware to serve our customers. My organization has the right software to serve our customers. My organization has the right technical personnel to provide technical support for the utilization of computer technology in building customer relationships.
eCRM defined It is a combination of hardware, software, processes, applications and management commitment.
Types of eCRM 1) Operational eCRM Concerned with customer touch points – a) inbound contacts – telephone call, letter to company’s customer service center b) outbound contacts – sales person selling to a customer or an e-mail promotion 2) Analytical eCRM Requires technology to process large amounts of customer data
Usability Principle Usability contributes to the overall system functionality by making it accessible to the users and, in turn, facilitating effective use of systems features and capabilities. 1) early focus on users and tasks 2) empirical measurement 3) iterative design
Usability engineering life cycle a) Pre-design stage – Understand the target population users and tasks i) Know the user ii) Competitive analysis iii) Set usability goals
Usability engineering life cycle b) Design stage – To arrive at a usable implementation that can be released i) Participatory design ii) Coordinated designs iii) Guidelines and heuristic analysis iv) Prototyping v) Empirical testing vi) Iterative incremental design
Usability engineering life cycle c) Post-design stage – To collect data for the next versions and for new future products i) Feedback from the users ii) Collect field data iii) Economic data
Basic rules of thumb to reduce resistance and improve usability 1) get top management support 2) have user involved in the design process 3) systems which respond flawlessly are more likely to be used than those that do not 4) people resist change – get them to buy in 5) bring systems in within budget and time
CRM software vendors Oracle SAP PeopleSoft Clarify SAS Siebel SFI Care
Demo SFI Care 5.0
Customer Relationship Management (CRM) for SME
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Customer Relationship Management (CRM) for SME
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