Download MARKETING STRATEGY

MARK2038
Data Base Marketing Strategies II
Week 10
Instructor: Santo Ligotti
Email: [email protected]
CRM-Customer Relationship
Management
This week
Assignment 4 due
Effective Internet Advertising
Effective E-mail marketing in DM
Viral Marketing and Wireless
applications
Objectives
Understand the importance of CRM as
an overall marketing strategy and not
just a technology solution
How CIBC has incorporated CRM as its
basis for 1:1 Marketing
Database Marketing Strategy
Customer Database
Customer Database: A
house list to which the
marketer has added
additional information in
a systematic fashion.
The cornerstone of
database marketing.
Customer Databases
Provide a repository of customer information
on which to base strategy
Allow marketers to contact individual
customers or prospects with offers and
messages that are relevant to their situations,
lifestyles, preferences, etc.
Provide additional opportunity to revise and
enhance the information on customers with
every interaction.
Considerations
Hardware and software can be expensive to
establish and maintain
Source data (customer records) need to be
kept current, which can be difficult and timeconsuming
Requires deep technical and conceptual skills
A company-wide commitment!
Common Database Schema
1.
Flat file: a simple database composed
of fields and records that is sorted in
one sequential order.
2.
Relational database: flat files are
linked with a common field and placed
within a larger database structure.
Technical Strategies – 80’s vs.
Today
Databases are flat files located on
a mainframe computer
Databases are relational,
designed using Oracle/SQL
Technical Strategies – 80’s vs.
Today
Databases are flat files located on
a mainframe computer
Databases are relational,
designed using Oracle/SQL
DB maintained by IT, outside
suppliers = no direct access by
marketers
Marketers access customer data
directly
Customers can also update their
own profiles using the Internet
Technical Strategies – 80’s vs.
Today
Databases are flat files located on
a mainframe computer
Databases are relational,
designed using Oracle/SQL
DB maintained by IT, outside
suppliers = no direct access by
marketers
Marketers access customer data
directly
Customers can also update their
own profiles using the Internet
Lists are output using detailed
reports and programming
Marketers export customer lists
directly
Technical Strategies – 80’s vs.
Today
Databases are flat files located on
a mainframe computer
Databases are relational,
designed using Oracle/SQL
DB maintained by IT, outside
suppliers = no direct access by
marketers
Marketers access customer data
directly
Customers can also update their
own profiles using the Internet
Lists are output using detailed
reports and programming
Marketers export customer lists
directly
Data appending was rare (adding
additional info to a customer’s file)
Many third parties will append
descriptive data such as
demographics, lifestyle
Technical Strategies – 80’s vs.
Today
Response channels were: mailorder and phone
Customer can contact using any
one of many response channels
Technical Strategies – 80’s vs.
Today
Response channels were: mailorder and phone
Customer can contact using any
one of many response channels
Communication with customers
was less frequent due to high cost
involved
Communication with customers is
far more frequent due to variety of
affordable channels
Technical Strategies – 80’s vs.
Today
Response channels were: mailorder and phone
Customer can contact using any
one of many response channels
Communication with customers
was less frequent due to high cost
involved
Communication with customers is
far more frequent due to variety of
affordable channels
Segmentation was rare
Complex segmentation strategies
Technical Strategies – 80’s vs.
Today
Response channels were: mailorder and phone
Customer can contact using any
one of many response channels
Communication with customers
was less frequent due to high cost
involved
Communication with customers is
far more frequent due to variety of
affordable channels
Segmentation was rare
Complex segmentation strategies
Survey data used for research
alone
Survey data used for research +
personalize communications
Two categories of databases
2. The CRM database

Often a packaged software application e.g. Siebel,
PeopleSoft, SAP
Contains basic customer data, plus:
 Records of prior interactions and purchases
 Demographic/psychographic values
 Customer self-selection preferences
 Active sales opportunities
 RFM scores
 Other assessments (e.g. credit ratings)
Two categories of databases
1. Transactional database




Often called a “BackOffice”
Typically run by IT, often legacy technology
Contains basic customer data (tombstone) plus
transactions (purchases)
Example: A transactional database at a bank
processes cheques and deposits, and outputs
monthly statements.
Two categories of databases
Often “pulls” basic
customer data
from the
transactional
databases.
Transactional
Used to process
transactions and
provide reports
on customer
activity
CRM
Used to track
interactions with
customers via
advertising, direct
mail, promotion,
sales, call centers, Email and the Internet.
Two categories of databases
Transactional
CRM
Sometimes customer data is
passed back to the transactional
source with updates on customer
preferences that will influence
operational decisions.
A Typical Data Warehouse
Web logs
Leads
Accounting
Data
Mart
extranets
Campaign
Automation
Sales Force
automation
Knowledgebase
Customer
Service
CRM(CUSTOMER RELATIONSHIP
MANAGEMENT)
The use of relational database systems to integrate marketing,
sales and customer service and facilitate relationship-building
with customers.
CRM uses databases in part to aggregate customers with
common needs into segments, and predict the customers’ value
(LTV) to the firm.
Customer relationship management (CRM) solutions provide
customer-oriented services for planning, developing, maintaining,
and expanding customer relationships, with special attention paid
to the new possibilities offered by the Internet, mobile devices,
and multi-channel interaction.
CRM enables a company to capture a consolidated customer view
through multi-channel interactions in a data warehouse solution.
CRM(CUSTOMER RELATIONSHIP
MANAGEMENT)
Sophisticated analytical techniques are then
applied to this customer information to better
understand and predict customer behaviour.
CRM can then be used to strategically implement
acquired customer knowledge in every area of the
company, from the highest management level to all
employees who come into direct contact with
customers.
CRM thus enables an organization to address its
customers’ preferences and priorities much more
effectively and efficiently.
CRM is a tool that can help organizations to
profitably meet the lifetime needs of customers
better than their competitors.
What does CRM involve?
Automating processes
in sales, marketing, and
service functions
Increasing the efficiency
of these processes to
improve customer
satisfaction
Conducting interactions
with customers on a
more informed basis
Individually tailoring
interactions to suit the
specific customer’s needs
Compiling information that
increases understanding of
customer behaviour, then
analyzing the acquired
information to generate
customer intelligence that
can be capitalized on to
increase share of wallet
through customer
acquisition and retention
So What, what are the objectives
of CRM
•Extending/widening customer
requires the following:
Products/services of
interest to the potential
customers that can be
supplied by the
company
Type of customers that
will contribute to the
profitability and longterm growth of the
company
Lengthening
relationships with
existing customers
relationships, which
Customers that might
leave because they are not
satisfied with the
company’s
products/services
The emphasis used to be
on pre-selling rather
than caring for the
customer afterward
Objectives continued
Deepening customer relationships-transforming
unimportant customers into highly profitable, long-term
partners
Need to know whose share of wallet can be and should
be increased
The opportunities for up-selling/cross-selling additional
products and services that would be of interest to the
customer
Keep customer information consistent throughout the
organization and makes it available across all touch
points where the company interacts with the customer
THUS, CRM can be described as:
A web-enabled sales marketing tool that synergetically
combines the functionalities of:



Database Marketing
One-to-one Marketing
Sales Force Automation (LEAD GENERATION/SALES TOOLS)
CRM enables companies to provide excellent real-time
customer service by developing a relationship with each
valued customer through the effective use of account
information
CRM holds that a major driver of company profitability is
the aggregate lifetime value of the company’s customer
base (EACH CUSTOMER)
HOW DOES CRM WORK:
CRM employs the following steps of
database and 1:1 marketing:





Identify prospects and customers
Differentiate customers in terms of their
requirements and their lifetime value to the company
Interact with individual customers to improve
learning about their individual needs to build
stronger relationships
Customize products and services and personalize all
communications with each individual customer
Should also incorporate enhanced sales force
automation functionality. Account information is put
directly in the hands of the sales force, making them
responsible for maintaining it. Helps cultivate client
relationships, thus improving customer satisfaction
Potential Benefits and Cost of CRM to
an Organization and Customers
Organization Benefits:


Increased revenue
Reduced Costs
Organization Costs:


Requires significant IT
investments
Process Change, and
convincing employees to
approach customer
relationships differently
(from transaction to
interaction)
Customer Benefits:



Continuity of a steady
relationship
Provides more avenues for a
customer to communicate
Increased satisfaction for
the customer
Customer Costs:


Possible or inevitable loss of
privacy
Opportunity cost associated
with ignoring other offersCustomer becomes LAZY
CRM Packaged Applications –
Vendor Examples
Enterprise






SAP
Siebel Systems
E.piphany
Unica
PeopleSoft
SAS
www.sap.com
www.siebel.com
www.epiphany.com
www.unica.com
www.peoplesoft.com
www.sas.com
Mid-market



Microsoft
Pivotal
FrontRange
www.microsoft.com
www.pivotal.com
www.frontrange.com
OR YOU CAN CREATE AN IN-HOUSE SOLUTION
Next Week
Testing Metrics and Post Analysis
Review for Test