Download b) The Firm and Customer Relationship Customer`s Value

CUSTOMER RELATIONSHIP
MANAGEMENT FOR HIGH
TECHNOLOGY COMPANIES
Trainer:
Jesus Belle M.Sc. MBA PhD Candidate
Supporting condtions
Primary stages
THE CUSTOMER RELATIONSHIP MGMT VALUE CHAIN
Customer
analysis
Customer
information
Network
Development
Value
Proposition
development
Leadership and culture
Data and information technology
People
Processes
Manager
the
customer
lifecycle
THE CUSTOMER RELATIONSHIP MGMT VALUE CHAIN
Customer
analysis
Customer
information
• Market
• Customer
segmentation
database
development
• Customer Costs
• Lifetime value
• Customer
analysis toolkit
• Internal data
• Data
enhancement
Network
Value
Proposition
Development
development
(SCOPE)
• Network
management
• Internal
networks
•External network
–suppliers/investors/
• Sources of
customer value
• Customer
experience
• Process reengineering
• Data warehousing partners
• People issues
- SWOT/ PESTE/5
•
Data
mining
• Network position • Technology
forces/ BCG martix
enablement
• Benchmarking
• E-Commence
• Privacy
• Database
technology and
software
- EDI / Extranets/
portals
Manage
The
customer
lifecycle
• Customer acquisition
– who/how/what?
• Customer retention
– who/ how?
– exceed experiences/add value/social and
structural bonds/commitment
• Customer development
- who/what/how?
 Organisation design
- physical/ virtual?
- cross-Functional teams
 Metrics
Adapted from Buttle (2004)
1. CUSTOMER ANALYSIS
• Which activities are being carried out at your company in
order to gather critical customer information?
Level of Implementation
Segmentation
Sales forecasting
Customer Costing
Customer Metrics
Other ??
Other ??
Intuitive
Medium
Professional
1. CUSTOMER ANALYSIS
Customer types: Loyalty
through the consumer relationship life
1.
2.
3.
4.
5.
6.
7.
Suspect:
Prospect:
First-time customer:
Repeat customer:
Majority customer:
Loyal customer:
Advocate:
Could the customer fit our desired profile?
Consumer fits profile and is being approached
First purchase is made
Customer makes additional purchases
We are the customer’s company of choice
Customer is resistant to switching suppliers
Customer generates additional referrals and orders
1. CUSTOMER ANALYSIS
•
What is your overall consumer portfolio loyalty
(in customer amount percentage)?
Current %
Ideal %
SUSPECT
PROSPECT
FIRST-TIME
REPEAT
MAJORITY
LOYAL
ADVOCATE
Total: 100%
Total: 100%
1. CUSTOMER ANALYSIS
•
What is your overall consumer portfolio loyalty
(in sales percentage)?
Current %
Ideal %
SUSPECT
PROSPECT
FIRST-TIME
REPEAT
MAJORITY
LOYAL
ADVOCATE
Total: 100%
Total: 100%
Customer Loyalty Matrix
REPEAT PURCHASE
Strong
Weak
RELATIVE ATTITUDE
High
Low
Loyals
Latent
loyalty
Occasional
loyalty
No
loyalty
2. CUSTOMER PROFITABILITY
• Customer Profitability = Revenues per
Customer (or customer group) per year minus
Cost of Customer Related Activities
Cost of Activity E
Revenues per
Customer XX
Cost of Activity F
minus
In year 200X
Cost of Activity G
=
Profit per
Customer XX
In year 200X
2. CUSTOMER PROFITABILITY
Required Customer Intimacy
• CUSTOMER INTIMACY CLUSTERS
ELIMINATE
OR PROVIDE
MINIMUM
SERVICE
KEEP!
OPTIMIZE
INTIMACY
PROCESSES
IDEAL:
NURTURE AND GROW
Customer Profitability
2. CUSTOMER PROFITABILITY
TRANSACTION-ORIENTED
CUSTOMER
FULL-INTIMACY
CUSTOMER
Key Actions
“Transaction cost”
Market mechanism
Serving through the whole
customer process
Objective
Serve and satisfy
through minimum service
Maximum long-term profits
through a long-term relationship
Competitive
Advantage
Price
General Product Attributes
High Customer Value
Price and Process Intimacy
Organization
Product Managers
Purchasing
Customer Teams
Effectiveness
Economy of Scale
Process Differentiation
for Segmented Customer Groups
Strategic Metrics
Sales Volume
Market Share
Customer Profitability
% of Customer Expense
Customer
Orientation
Satisfy through basic needs
Relationship Strength
New cooperation opportunities
2. CUSTOMER PROFITABILITY
• Most of the customers are somewhere
between transaction-based and fullintimacy
• Early customers have great potential
(long-time to reap benefits)
• Mature markets are less loyal and more
price-based
2. CUSTOMER PROFITABILITY
• Customer Lifetime Value
Gross Margin from Customer A during the lifetime
- Year 2005 + 2006 + 2007 + 2008 + 2009
(discounted to a certain rate, beyond the scope
of this training)
Minus:
- Customer acquisition cost
- Customer maintenance activities cost
3. SAMPLES OF CUSTOMER DATABASE STRUCTURES
B2C
B2B
Households
Organizations
Organization
structure
individuals
Contacts
Roles
Profiles
relationship
addresses
History
Partners
Customer products
Opportunities
Contact plans
Promotions
Claims
Sales orders
Service request
3. SAMPLES OF CUSTOMER DATABASE STRUCTURES
Customers
Special pricing/
Promotion
Pricing
Competing
Products
Catalogues
Components
Structures and
configuration rules
Products
Known issues
Quotes
and orders
Inventory
3. SAMPLES OF MARKETING DATABASE STRUCTURES
History
plans
Customers
Attributes
personalistion
Segments
Lists
Campaigns
Leads/
opportunities
Budgets
Marketing funds
Responses
Activites
Partners
3. SAMPLES OF SALES AUTOMATION DATABASES
Customers
Buying process
Competitors
Leads
Opportunities
Quotes,
proposals,
presentation
Activities
Sales team
Sales methodology
Incentives
Partners
Oblectives and
tactics
Products
Configuration
Sales orders
Customers
products
Territory
Forecast
3. SAMPLES OF SERVICE AND SUPPORT
DATABASE STRUCTURES
Agreements
and warranties
Customer
products
Maintenance
parts
customers
Activities
Service team
Inventory
Dialogue
scripts
Service
requests
Service orders and
return material
automation
Rosolutions
Products
Known
issues
Manuals
Defects
Solutions
4. CUSTOMER VALUE
Negative
Differentiation Value
Positive
Differentiation
Value
Total Economic Value
Reference
Value
4. CUSTOMER VALUE
• The Customer Experience: Value = Benefits
minus Sacrifices
– Benefits: Which are the key benefits that the
customer is getting from your product or service
experience?
• Some commonly identified ones (SERVQUAL model):
– Reliability: the product performs dependably and accurately
– Assurance: Ability of suppliers personnel to convey trust and
confidence
– Tangibles: equipment and materials
– Empathy: Individualized attention to customers
– Responsiveness: willingness to provide prompt service when
needed
– Others???
4. CUSTOMER VALUE
• The Customer Experience: Value = Benefits minus
Sacrifices
– Sacrifices: What is the customer pain in acquiring your product
or service?
• Some commonly identified ones:
–
–
–
–
–
–
Money
Searching costs (looking for different alternatives)
Physical purchase experience: traveling abroad, negotiating…
Installation costs
Learning and adaptation costs
Psychic costs:
» Performance risk: when the user is not fully sure that the product
will do as required
» Financial risk: customer doubts the financial gain from the
purchase
» Social risk: company reputation is at risk when purchasing the
product
4. CUSTOMER VALUE
• How do consumers typically reduce the risk and
sacrifice?
–
–
–
–
–
–
–
–
–
Purchase delay
Seek word-of-mouth references
Negotiate service contracts
Seek additional information
Buy known brands
Deal with reputable suppliers
Seek performance guarantees
Negotiate discounts
Demand pre-purchase trial
• How ready is your company to minimize the
customer sacrifice?
5. RELATIONSHIP PROCESS
• Components of the Customer Relation:
a) The Whole Product/Service Offering
Consulting Hardware
Complementary
Services
Post-sales
service
& support
Pre-sales
services
Software
Complementary
Products
The
Product
Peripherals
interfaces Connectivity
5. RELATIONSHIP PROCESS
• Components of the Customer Relation:
b) The Firm and Customer Relationship
Customer’s Value Process (generic example)
Strategy
Planning
Strategy
Planning
Product
Design/
Develop
Comp/service
Design/Devel.
Supplier
Search
Marketing
Purchasing
Sales
Integration
Productio
n
Delivery
Production
Delivery
Suppliers Value Process (generic example)
Service &
Support
After sales
Service
5. RELATIONSHIP PROCESS
CUSTOMER PROCESS
Strategy
Planning
Strategy
Planning
Product
Design/
Develop
Comp/service
Design/Devel.
Supplier
Search
Marketing
Purchasing
Sales
Integration
Productio
n
Delivery
Production
Delivery
Service &
Support
After sales
Service
SUPPLIER (OUR COMPANY) PROCESS
Concentration of traditional marketing
Is this enough for creating the customer loyalty and profitability in our business?
5. RELATIONSHIP PROCESS
CUSTOMER PROCESS
Strategy
Planning
Product
Design/
Develop
Supplier
Search
Purchasing
Integration
Productio
n
Delivery
Service &
Support
EMPTY SPACE!!!!!!
-Could our company design activities for each of these stages in order to:
- Develop the products and services together
- Maximize accuracy in delivering what the customer wants
- Accelerate product development
- Adapt quicker to technological changes
- Ensure lifetime loyalty
Strategy
Planning
Comp/service
Design/Devel.
Marketing
Sales
Production
Delivery
SUPPLIER (OUR COMPANY) PROCESS
After sales
Service
IDENTIFY YOUR COMPANY PROCESS AND
YOUR CUSTOMER PROCESS
CUSTOMER PROCESS
SUPPLIER (YOUR COMPANY) PROCESS
FROM THE PREVIOUS CUSTOMER PROCESSES,
RANK THEM IN STRATEGIC IMPORTANCE,
INDICATING THE REASONS
CUSTOMER PROCESS
Rank
Rank
Rank
Rank
Rank
Rank
Reasons
Reasons
Reasons
Reasons
Reasons
Reasons
FOR EACH STAGE OF THE CUSTOMER AND OUR PROCESS,
WHICH ACTIVITIES COULD WE IMPLEMENT IN ORDER TO BEST
SERVE OUR CUSTOMERS AND CREATE A LONGLASTING
RELATIONSHIP?
RELATIONSHIP ACTIVITIES FOR EACH STAGE
CREATING AN ACTIVITY SCORECARD:
FOR EACH ACTIVITY CHOSEN, SELECT A METRIC, TARGET,
OWNER, BUDGET AND TIMETABLE
CUSTOMER STAGE
Expected Result:
Budget:
ACTIVITY
METRIC
TARGET
OWNER
TIMETABLE
EXPECTED RESULT:
EXPECTED RESULT
•
•
•
•
•
•
•
Supplier and consumer learn to develop processes together
Product development is accelerated
Customer uncertainty reduced sharply
The costs of relationships are internalized in the organization
The cost of relationships diminished greatly over time
Loyalty is boosted
Huge switching cost: would customers be willing to start the whole
process from zero again?
• Forgiveness: Customer is more willing to forgive minor performance
flaws
• Customers will become active advocates, providing valuable
referrals
• Premium prices can be charged as a result of the huge customer
benefit
UNPROFITABLE CUSTOMERS WITH NO POTENTIAL
PROFIT OR RELATIONSHIP BENEFIT
• Solutions:
– A) Keep the product to the minimum standard
(minimum effort to create satisfaction without
damaging brand equity or reputation)
– B) Elegant “goodbye”
• Raise price
• Unbundle previous packages, sold as non-discounted
separate products
• Redesign the product, so it only appeals to profitable
customers
• Reorganize sales and marketing, so the effort is placed on
the profitable customers
• Invite low-profit customers to migrate to other lower valueadded channels