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All rights are reserved. Members of MSI and academic researchers may make limited copies of this presentation, electronically or in print, solely for their internal, non-commercial use. Any other use of this presentation—including reproduction for purposes other than those noted above, modification, distribution, or republication—without prior written permission of the Author is strictly prohibited. CRM Power Tools for Business Results Intelligence-Based Marketing Peter Heffring President CRM Division Intelligence-based marketing The company knows who you are, what you prefer, and communicates with relevant, timely messages, using the power of analytical intelligence to detect patterns, decode strands of information and create meaningful offers and value Copyright@2001 Teradata, a division of NCR, All Rights Reserved © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. How Do Your Customers ‘Experience’ Your Business? ‘Schizophrenic’ marketing The company has delusions about who you are, forgets what you prefer, and tries to reach you with offtarget communications that alienate you – based on fragmented data & inadequate faculties, resulting in confusing, chaotic ‘multiple personalities’ Copyright@2001 Teradata, a division of NCR, All Rights Reserved © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. I can’t believe it. I’ve been a good customer for ten years. And they still don’t ‘get’ me and the things that interest me. Copyright@2001 Teradata, a division of NCR, All Rights Reserved © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Hey! Just because we bought Dad a tool set last year does not mean we want to see every drill bit in your inventory. Copyright@2001 Teradata, a division of NCR, All Rights Reserved © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. I have 2 million frequent flyers with your airline and still do not get respect Copyright@2001 Teradata, a division of NCR, All Rights Reserved © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Remember … … the bad times? Copyright@2001 Teradata, a division of NCR, All Rights Reserved © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. I need personal attention - help me! Copyright@2001 Teradata, a division of NCR, All Rights Reserved © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Give me convenience! Service – now! Convenience! Respect me! Make it easy! Help me – asap! Don’t embarrass me! Copyright@2001 Teradata, a division of NCR, All Rights Reserved © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Quality of life! © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. The Marketer’s Task: Understand and Communicate Successfully With a Multitude of Individual Customers Every Day Marketers need the technology ‘power tools’ to gather, analyze and interpret thousands or millions of data strands of customer interaction detail from countless touch points, channels and data sources – cracking the DNA code of each customer and learning over time to communicate and build meaningful relationships Copyright@2001 Teradata, a division of NCR, All Rights Reserved Today’s marketers have a lot to manage! acquire reward loyalty grow the relationship retain customers Do you know what constitutes a good customer? Are you using customer lifestyle/lifestage data to find prospects? Can you match customers to the right products and services? Can you use the above knowledge with your current prospect lists to target your marketing efforts? © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Customer Relationships & CRM More Complex Than Ever Before Who are my most loyal customers and what promotions are most effective? Do you treat your loyal customers differently than your others? When a customer touches your business, do you have the capability to engage them with targeted messages? How do you determine the level of personalization you give? Who are your most valuable customers and what are their attributes? What products do my customers purchase and what do they crossover purchase? What will my customers want next? What product promotions increased sales, transaction size, frequency and crossover? Copyright@2001 Teradata, a division of NCR, All Rights Reserved Which of your profitable customers are at risk of leaving? What are the buying habits of my best customers? Are you matching products and services to the right channels? Can you detect behavioral events and provide timely and relevant customer communications? © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. The Challenge: Find Patterns, Decode Messages, Turn It All To Business Advantage How can a marketer … • Make sense of a tidal wave of interaction detail? • Serve and satisfy a million individual customers? • Deliver profitable returns on so many relationships? • Help the business meet its goals and objectives? Copyright@2001 Teradata, a division of NCR, All Rights Reserved © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Business Needs & Expectations Today’s executives must justify: Every dollar spent Every initiative And must show: The link between dollars spent, these initiatives and return on customer relationships Copyright@2001 Teradata, a division of NCR, All Rights Reserved 45% of companies are considering CRM projects1 • 37% have installations under way or complete1 • CRM budgets are not being slashed despite slow economy2 • 2Source: 1Source: Copyright@2001 Teradata, a division of NCR, All Rights Reserved © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Capitalize on CRM Technology Interactive Week, Aug 20, 2001 Forrester Research, 2001 Capabilities that Companies Must Have • Broad range of actionable analysis and predictive modeling capabilities • Holistic view of customer interactions to understand the whole customer • Means to understand and automate the event rules that drive the business and communicate with individual customers Copyright@2001 Teradata, a division of NCR, All Rights Reserved © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Analytical CRM ‘Power Tools’ Store /Branch Direct Mail Call Center Agent Copyright@2001 Teradata, a division of NCR, All Rights Reserved E-Mail/Fax Analytical CRM ATM/Kiosk © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Manage the Total Communications Environment with Analytical CRM Tactical cultivation of customer relationships based on strategic vision and objectives © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. What is CRM really trying to do? – Achieved as a company analyzes and prioritizes opportunities, then communicates with intelligence and relevance to individual customers – in preferred channels Copyright@2001 Teradata, a division of NCR, All Rights Reserved Relevant Offers Analytics and Modeling Insight Action Communication Planning Personalize Communication Customer Optimization Communication Delivery Timely Messages Timely Messages Intelligence InterAction © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Lead With Analytical CRM For Mission-Critical Intelligence Operational CRM Systems Data Warehouse Disk array All Channels All Touchpoints Capture Data ATM Internet Extranet E-Mail/ Fax Copyright@2001 Teradata, a division of NCR, All Rights Reserved Sales/ Store / Branch Direct Mail Kiosk Agent/Call Center Analysis • Analyze customer profiles & behavior • Target customers • Evaluate response • Event Analysis Modeling • Build and analyze predictive models • Score customers Personalization • Generate personalized offers by customer • Build personalization Rules Communication • Plan continuous communication dialogues • Define batch and real-time event rules and trigger Optimization Interaction • Prioritize and limit communications by channel • Regulate frequency and quantity of contacts by channel • Optimize customer communications through contact modeling • Deploy outbound or manage pending inbound/eventdriven communications • Manage workflow of interactions • Personalization Merge • Real-time personalization Industry LDM Data Warehouse ALL CUSTOMER INTERACTION DATA Copyright@2001 Teradata, a division of NCR, All Rights Reserved © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. How Analytical CRM Functions Benefits © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Percentile Analysis – Rank and group customers on any key measure – Understand relative customer differences based on deciles – Actively target customers directly from charts & immediately include them in campaigns Copyright@2001 Teradata, a division of NCR, All Rights Reserved Key Benefits – Identify key characteristics of intersections between customer groups – Ability to target and save customer intersections – Represent and analyze relationships between segments & attributes Copyright@2001 Teradata, a division of NCR, All Rights Reserved © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Cross-Segment Analysis Key Benefits – Analyzes data patterns to offer predictive insight, e.g. ‘what products do customers typically purchase with other products over time?’ – Extends market basket analysis across purchases over periods of time – Predicts activity leading up to & after a significant purchase Copyright@2001 Teradata, a division of NCR, All Rights Reserved © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Pattern Detection Benefits © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Response Modeling – Automatically models most likely responders for a communication – Eliminates guesswork by identifying significant variables that affect response behavior – Actively target customer directly from charts – Leverages Analytic Datasets Copyright@2001 Teradata, a division of NCR, All Rights Reserved Benefits © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Personalization Rules – Build offer, message, discount, and optimization rules – Evaluate each customer individually to determine the best content to deliver – Capture and automate marketing IP. – Deliver offers tailored to each individual customer. Copyright@2001 Teradata, a division of NCR, All Rights Reserved Benefits © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Communication Manager – Relevant Communication through right Channel at right Time – Flexible campaign definition, one-to-one or mass campaigns – Multi step, multi channel communication – Closed loop communications Copyright@2001 Teradata, a division of NCR, All Rights Reserved Enterprise Rules Copyright@2001 Teradata, a division of NCR, All Rights Reserved © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Key Benefit – Provides a framework to define rules across the enterprise that trigger marketing opportunities (Q1 2002) Customer Life Time Value Campaign Analysis 3.) Create segments according to an LTV campaign model propensities and needs 11.) LTV Campaign Results Available for Analysis via OLAP Reporting by Marketing or LOB Modeling 1.) LTV Campaign model created and run to calculate campaign scores 2.) Model Customer Behavior to identify life cycle events 10.) LTV Campaign Responses modeled to improve campaign targeting and profitability Personalization Optimization 5.) Set personalization rules to format communications appropriately for each customer. 6.) Prioritize and Optimize mix of communications deployed to channels, may use profitability scores Communication 4.) Communication plan created. Communications approach and offers linked to LTV campaign. 9.) Costs of LTV Campaign calculated based on actual channel activity Copyright@2001 Teradata, a division of NCR, All Rights Reserved Interaction © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Analytical CRM in Action 7.) Communication Plan handed off to channel systems (e.g. Siebel Broadvision) for execution 8.) Action, Response and Results captured and handed back to Communication Manager for campaign analysis. CRM is an ongoing, scientific process … …not an isolated campaign or marketing plan – Must create a process for achieving the intended ROI – Note the difference between database marketing, sales force automation, and CRM – To measure CRM success, measure the impact of the entire process Copyright@2001 Teradata, a division of NCR, All Rights Reserved © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Achieve Positive Business Results … Over Time • • • • 570,000 leads, 100 campaigns in 6 mos $4.4 billion of new business in six months • Four continents – 15 countries • $250 BB Australian in assets Retention rates of 98.4% • 9 million customers 28.7% increase in profit in six months • Triple digit ROI on total DW + CRM investment after 4 months = 265% • High double-digit campaign responses • Named 2000 NCDM winner for best results • 600 home improvement stores • $15 BB annual sales • 40,000 products on the shelves • Generated $1 M in one district in one week • 6,000 leads in 5 weeks – and 40% • Largest retail bank in the world generated a sale or service opportunity • 4,500 consumer banking centers • 9 or 10 customer sat – on 10pt scale • Serving 28 million households Copyright@2001 Teradata, a division of NCR, All Rights Reserved © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Market leaders taking the first steps have proven the CRM business case Quality of Customer Experiences Copyright@2001 Teradata, a division of NCR, All Rights Reserved Achieve Positive Business Results © 2002 presented by Peter Heffring at the Marketing Science Institute’s Conference on Customer Relationship Management: Customer Behavior, Organizational Challenges, and Econometric Models on January 31 – February 1, 2002. Your CRM Process Must Balance