Download An introduction to Customer Relationship Management

C u s to m er
R elatio n s h ip
Man ag em en t
Annie POSTIC - Program Manager
SAS Institute Europe
Agenda
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Customer Relationship Management
The SAS Solution for CRM
The SAS CRM Methodology
Real-Life Examples
The Route to Successful CRM
Copyright 1998 by SAS Institute
Agenda
➪ Customer Relationship Management
• The SAS Solution for CRM
• The SAS CRM Methodology
• Real-Life Examples
• The Route to Successful CRM
Copyright 1998 by SAS Institute
What is the goal of CRM ?
• Build long term and profitable
relationships with chosen customers
• Get closer to those customers at every
point of contact with them
Copyright 1998 by SAS Institute
Where does CRM come from ?
• First generation of Database Marketing (70-80s)
– Direct marketing activities
– Predict response rate / reduce cost, generate target flat files
➪ Tactical
• Second generation of Database Marketing (90s)
– All marketing activities
– Reduce acquisition cost and improve retention
– Technology : Relational database, analytical tools, data
warehousing
➪ Strategic
Copyright 1998 by SAS Institute
Source: Modified from Gartner group
Where does CRM come from ?
• Customer relationship Management (y2000)
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–
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Touch the entire organization
Ensure customer profitability
Additional technology : Scalable hardware, Data Mining
Data used : All customer interactions (all operational data)
➪Competitive advantage
Source: Modified from Gartner group
Copyright 1998 by SAS Institute
Business situation
• Market
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reaching saturation
increasing competition
deregulation, diversification, worldwide market
new communication / distribution channels
decreasing product life cycles
• Customer
– decreasing natural loyalty
– better informed
– increased expectations/needs
• Resources
– increasing costs
– decreasing resources available
Copyright 1998 by SAS Institute
What is CRM ?
• Customer Relationship Management is
an automated and continuous process of better
understanding and anticipating customer needs, behavior
and profitability to :
– define your customer strategy
– optimize resources
– provide a superior service at every point of contact with
the customer
➪ A re-engineering of the business to focus all its
resources on chosen customers.
Copyright 1998 by SAS Institute
The need :
Customer Oriented Strategy
Differentiated
Customer strategy
Customer oriented
business process
Technology /
implementation
Goal : Define the differentiated customers strategies
Need : Understand and optimize a customer oriented business process
Mean : Technology implementation
Copyright 1998 by SAS Institute
Differentiated Customer
Strategy
Prospects
Winback
Retention
Churn
Acquisition
Customer
Loyalty
Lifetime
profitability
Aim :
Select the right strategy for chosen customers
Copyright 1998 by SAS Institute
Differentiated Customer
Strategy
Profitability
Customer
expectations
Risk
identify
optimum
balance
Why is understanding customer
profitability important?
Studies by First Manhattan Group have indicated that :
while 20% of a bank’s customers contribute 150% of the
profits,
40-50% of customers eliminate 50% of the profits
Source: First Manhattan Consulting Group
Copyright 1998 by SAS Institute
Why is customer retention and
loyalty important ?
Annual customer profit
Price premium
Referrals
Cost savings
Revenue growth
Base profit
Acquisition cost
0
1
2
3
4
5
Year
Copyright 1998 by SAS Institute
Adapted from “The Loyalty Effect” Frederick F. Reichheld 1996
Customer Oriented Business
Process
Marketing
CUSTOMER KNOWLEDGE
Management
Marketing
TARGET
MEASURE
MONITOR
Call centers
Direct marketing
Customer
Customer
service
ACTIVATE
AFTER SALES SUPPORT
Logistics
DELIVERY
Call centers, Sales
QUALIFY / SELL
Aim : Manage and optimize this process !
Copyright 1998 by SAS Institute
Customer Oriented
Business Process
Manage and optimize this process !
• Ensure consistency between different points of
contact
• Increase communication between departments
• Facilitate flows of information
• Deliver complete view of the customer
Copyright 1998 by SAS Institute
Agenda
• Customer Relationship Management
➪ The SAS Solution for CRM
• The SAS CRM Methodology
• Real-Life Examples
• The Route to Successful CRM
Copyright 1998 by SAS Institute
The SAS solution for CRM
The SAS CRM Solution delivers a
process for identifying,
targeting, and responding to the
needs of your most profitable
customers.
Customer Oriented Business
Process
Manage and optimize this process !
2 Strategic
3 Tactical
Marketing
Marketing
Gain Customer
Knowledge
5 Measure
Monitor
Follow up
Management
Copyright 1998 by SAS Institute
Target
Optimize campaigns
1
Customer View
4 Operational
Campaigns management
Call centres
Sales
Logistics
Customer service
WEB
Enterprise wide Customer
view
Strategic
Tactical
Customer
Measure
Operation
Integrate data from many
sources
Transaction
Data
Loyalty
data
Market
research
Customer
service
Custome
r
View
Web
Sites
Surveys
Enterprise
Data Warehouse
Life style
data
Call
centres
Copyright 1998 by SAS Institute
Campaigns
data
Enterprise wide Customer
view
Strategic
Data Warehouse Composition
Tactical
Customer
Measure
Operation
Responses
2%
Segments
10%
Scores
20%
Transactions
35%
Contacts
10%
Accounts
3%
Copyright 1998 by SAS Institute
Demographics
20%
Source: Patricia Seybold Group
Enterprise wide Customer
view
Strategic
Ensure consistency
Add valuable information
Tactical
Customer
Measure
Operation
Loyalty
data
Transaction
Data
Customer
service
Web
Sites
Call
centres
Campaigns
data
Life style
data
Market
research
Surveys
Copyright 1998 by SAS Institute
Clean
Consistency
De-duplicate
Validate
Summarize
Quality
Profitability
factors
Householding
Predictive
Models
Custome
r
View
Enterprise
Data Warehouse
Enterprise wide Customer
view
Strategic
Get the complete picture of
the customer
Tactical
Customer
Measure
Operation
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Enabling technologies
➪ Data Warehousing
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Copyright 1998 by SAS Institute
Access to all types of data
Integrate data
Data cleaning
Data enhancement
Data calculation
Document data flows
Metadata management
...
SAS/Warehouse
Administrator
Strategic
Strategic
Tactical
Customer
Measure
Gain customer knowledge
Operation
• What are my key customer groups ?
• On which group should I concentrate my actions and
investments ?
• What is the profile of customer that have left ?
• Which product customer needs ?
• How can I optimize point of sales ?
• What the value of our products / services to our customers
compared to competition ?
Copyright 1998 by SAS Institute
Strategic
Strategic
Gain customer knowledge
Tactical
Customer
Measure
Operation
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Enabling technologies
➪ Reporting
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Standard reporting
WEB
➪ Data Mining
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Copyright 1998 by SAS Institute
Customer segmentation
Customer profiling
Profitability analysis
Market research
Competition analysis
Tactical
Strategic
Tactical
Predict customer behaviour
Customer
Measure
• Which customers are likely to leave ?
• Which customers are good candidates for cross or up selling
activities ?
• What is the customer potential ?
• How can I optimize campaigns ?
• Which customer are more likely to respond ?
• Which communication channel ?
• What’s the expected response rate ?
Copyright 1998 by SAS Institute
Tactical
Strategic
Tactical
Predict customer behaviour
Customer
Measure
●
Enabling technologies
➪ Data Mining
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Behavioral modeling
Potential analysis
Cross selling analysis
Retention / Churn analysis
➪ Queries
–
Copyright 1998 by SAS Institute
Target selections
Operational
Strategic
Tactical
Customer
Measure
Operation
Optimize operations /
channel to market efficiency
•
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•
•
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•
Copyright 1998 by SAS Institute
Campaigns management
Call centres
Sales
Logistics
Customer service
WEB
...
Operational
Strategic
Optimize operations /
channel to market efficiency
Tactical
Customer
Measure
Operation
• Operations / Channel to market
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How to increase business units efficiency ?
How to make the customer feel recognized ?
What is the optimal number of people ?
How to increase E-commerce performance ?
Which additional strategic information do they need to be
more efficient ?
Operational
Strategic
Optimize operations /
channel to market efficiency
Tactical
Customer
Measure
Operation
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Enabling technologies
➪ Queries/Reporting
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Performance indicators
Exception reporting
➪ WEB
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Deliver customer information to business units
➪ Data Mining
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Copyright 1998 by SAS Institute
Sales analysis
Web analysis
Call behavior analysis
Campaign analysis
Traffic analysis and prediction
Measure / Monitor
Strategic
Monitor performance
Tactical
Customer
Measure
Operation
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•
•
•
Copyright 1998 by SAS Institute
How satisfied are our customers our product/service?
What is the rate of customer defection?
What is the campaign’s impact ?
Is target reached ?
Measure / Monitor
Strategic
Monitor performance
Tactical
Customer
Measure
Operation
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Enabling technologies
➪ Reporting
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Copyright 1998 by SAS Institute
Performance monitoring
Key performance indicators
Exception reporting
Customer satisfaction measures
Service process monitoring
The SAS solution for CRM
Enables companies to :
À build a customer centric view
À define comprehensive and consistent customer
profiles to better understand customer needs,
behavior and profitability
À assess customer lifetime value
À predict selected customers’ behavior
À act on and share the relevant information through
your organization
Agenda
• Customer Relationship Management
• The SAS Solution for CRM
➪ The SAS CRM Methodology
• Real-Life Examples
• The Route to Successful CRM
Copyright 1998 by SAS Institute
SAS CRM Methodology
• What is it ?
➪ A structured process that defines how the SAS solution for CRM
can support definition, planning and execution of CRM
programs.
➪ Provide a best practice guide for Customer Relationship
• Target audience:
➪ CRM Project Managers
➪ CRM Solution Architects
SAS CRM methodology
topics
• Methodology contains :
➪ CRM overview
➪ Technology and architecture
➪ Project role descriptions
➪ For each step
➪ Activities
➪ Roles involved
➪ Techniques
➪ Inputs & Outputs
➪ Reference
➪ Templates and questionnaires
SAS CRM methodology
Process flow
Assessment
Establish
Goal
Review
Determine
Readiness
Develop
Project Plan
Awareness
Review
Create
Customer
View
Execute
Take
Corporate
Actions
Report on
Customers
Understanding
Feedback
The Results
Define
Strategy
Analyze
Results
Segment &
Profile
Design
Build
Build Business
Program
Components
Build
Predictive
Model
Build IT
Systems
Create
Business
Plan
Create
IT Plans
Design
Business
Program
Design IT
Systems
Gain
Additional
Understand
SAS CRM methodology
Phase deliverables
Phase
Assessment
Awareness
Understanding
Design
Build
Execution
Review
Deliverables
• Project proposal
• Customer view data warehouse
• Customer reports
• Customer segments
• Strategy definition
• Business plan
• IT plan
• Program and IT designs
• Predictive models
• IT systems
• Program components
• Test implementation
• Program execution and follow-up
• Return on investment analysis
• Strategy review
Agenda
• Customer Relationship Management
• The SAS Solution for CRM
• The SAS CRM Methodology
➪ Real-Life Examples
• The Route to Successful CRM
Copyright 1998 by SAS Institute
Stakis
Stakis, with over 2 million guests and members of 22 casinos,
55 hotels and more than 70 leisure clubs, has chosen the SAS
System to develop a data warehouse used as the basis for its
customer relationship management activities.
Mr Mike Ashton, Stakis marketing director explains :
”We have strengthened brand awareness and loyalty while
reaping fairly significant increases in productivity and
profitability within 12 months - through targeting of direct mail
and other promotional activities, areas which were already
highly effective”.
Copyright 1998 by SAS Institute
Statoil
Statoil use the SAS System for campaign management to help
sales and product managers design a campaign so that it
reaches the right people with the right message.
Mr Per Ostergaard Jacobsen, the database marketing manager
says :
”Managers now have the information they need to make
decision on new campaigns. This is all about effectively use of
marketing money. Previously, for example, if a mailshot was
sent to 100,000 people, we were satisfied with a response of
2% (2,000 customers). Now, we reduce the number of
mailshots sent out to 20,000, but we achieve a response rate of
20 % (4,000 customers).”
Copyright 1998 by SAS Institute
Generale de Bank
Yves Ronsse, Director of Marketing Support Systems:
"Access to information is not enough; you have to be able to use
it and transform it into actions which have an impact on profits. A
successful data warehouse questions the existing structures and
relationships and introduces a new dynamic into an organisation.
Every day, the SAS Data Warehouse enables our Marketing
specialists to augment the quality of their decisions."
Copyright 1998 by SAS Institute
Savacentre
“From the Managing Director down through the
organisation we are expecting many levels of user for
the system.
It will help us to develop customer loyalty, optimise our
product sales and, we hope to increase our market
penetration”
Copyright 1998 by SAS Institute
European SAS CRM
successes include :
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3 Suisses, Belgium
Generale de Banque, Belgium
Halifax, UK
Savacentre, UK
Royal Bank of Scotland, UK
Reader’s Digest, UK
Telia, Sweden
C_link, France
Postbank, Netherlands
Neckermann Versandhaus, Germany
UBS / Swiss Life, Switzerland
Mediapost, France
Mondadori, Italy
ABB & CERA, Belgium
Deutsche Sparkassenverlag, Germany
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Banca Popolare di Lodi, Italy
G.B., Belgium
L.C.M., Belgium
Fiat, Italy
Commercial Italia, Italy
Credit Italiano, Italy
Good Year, Belgium
Belgacom, Belgium
Luftansa, Germany
Sofinco, France
Valio, Finland
KLM, Holland
CACI, UK
Colruyt, Belgium
…
US SAS CRM successes
include :
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Fist union
MNBA
Williams Sonoma
Mellon Bank
First card
Sara Lee
US West
CitiBank
Revlon
Federal Express
Munich Reinsurance Company of Canada
Calgon
Philip Morris
...
Agenda
• Customer Relationship Management
• The SAS Solution for CRM
• The SAS CRM Methodology
• Real-Life Examples
➪ The Route to Successful CRM
Copyright 1998 by SAS Institute
Benefits of the
SAS solution for CRM
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Decision support integration
Scalability
Flexibility
Distributed processing
Data integration
Operational system feedback
Experience
Services / implementation
S uccess factors for C R M
projects
• Decision support
solution
– Build the customer
information database
– Enhance customer
knowledge
• Integrated software
– Increase communication
between departments
– Increase communication
between software
• Identify the priority
– Start focused
– Rapid return on investment
• Project team
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Business experts
IT experts
Data miners
Architects
• Company strategic
decision
– CEO implication
– increase communication
– potential re-engineering
Conclusion
• Managing relationships with customers is a key issue
for most business areas
• CRM is a strategic enterprise goal, not an individual
initiative
• SAS Institute and its partners are providing solutions
to make these customer relationships more effective
and profitable
• CRM is an area where close cooperation of the IT
and business units is key
Copyright 1998 by SAS Institute
Thank you for
your attention !
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