Final Report Course- Customer Relationship Management Topic- Crm Activities Of Bmw Group.pdf

This movement is an approach to customer management that aims to understand and improve the experience of customers as they interact with business.. Classification of Customer Relationsh

VIETNAM_— KOREA UNIVERSITY OF INFORMATION AND

COMMUNICATION TECHNOLOGY FACULTY OF DIGITAL ECONOMY AND E-COMMERCE

VL

FINAL REPORT

COURSE: CUSTOMER RELATIONSHIP MANAGEMENT

TOPIC: CRM ACTIVITIES OF BMW GROUP

Instructor : Le Phuoc Cuu Long, Ph.D

Members : 1 Vo Ngoc Dan — 22DM012

2 Huynh Nguyen Khanh Vy — 22DM116

3 Nguyen Thi Khanh Vy — 22DM114

Da Nang - 1/2024

VIETNAM_— KOREA UNIVERSITY OF INFORMATION AND

COMMUNICATION TECHNOLOGY FACULTY OF DIGITAL ECONOMY AND E-COMMERCE

Members : 1 Vo Ngoc Dan — 22DM012

2 Huynh Nguyen Khanh Vy — 22DM116

3 Nguyen Thi Khanh Vy — 22DM114

Da Nang - 1/2024

5 1,A,2 ii Customer Journey vs Buyer Journey

6 1.5.Customer SerVÏC© mOd©I nu nu nu mm :i Three levels of service

9

2 Three Basics Customer Service Models

10 1.6.Measurement in customer relationship management 12 1.6.1 1 raditional Marketing Metrics

12

In n Market share

12

TT T — Sales Growth Measurement

13 I5 Share of Requirement

13 'rh mm Customer Activity Metrics

14 1.6.4, Strategic CRM Metrics

14 I5 RFM Analysis

14 I5 ad Past Customer Value - PVC

15

im mnn Lifetime Value - LTV

15 1,6, ẤT ch HH gu ưu Customer Equity - CE

16 2.CRM ACTIVITIES OF DOMESTIC OR FOREIGN ENTERPRISES

16

2.1.Overview Of BMVW cuc nh HN 16 2.2.The situation for CRM activities at BMW - 17 2.3.Customer relationship management at BMW 18 2.3.1 ci.e.e The strategic CRM at BMW

18 2.3.2 The operational CRM at BMW

19 V-P The analytical CRM at BMW

20

“nh m ,Ô Number of car sales

26 2.5.Advantages - DisadVantag©S uc na 26

26 P.2 Disadvantages

27 2.6.Lessons - SUQ0©StÏON cu con mm mg 27 2.6.1 Lessons from Case Studies

27 2.6.2 Lessons for other businesses

29 2.6.3 Lessons in improving the effectiveness of Customer Relationship Management activitieS ccccccceccceecessecereneeenes 31 3.CONCLUSION - - - cm nu mm ni mm 32 3.1.General aSS©SSImeRTIE cuc nu n nh 32 3.2.Lessons learned uc n nu nu nn nu nu n KH nh 32 4.REFERENCES nen nu n nh như 33

5.DUTIES AND CONTRIBUTIONS OF EACH MEMBER

UI>Ig <.is14!-I-aiaáaẳdaiả 30

e Nguyén Thi Khanh Vy - Member, market research expert

e Huynh Nguyễn Khánh Vy - Member, expert in data analysis

Mission: Deploy and carry out the work of evaluating customer relationship management activities of BMW enterprise in the UK Background: BMW is a multinational corporation specializing in manufacturing luxury cars The company is headquartered in Germany and operates worldwide

BMW always attaches great importance to customer relationship management (CRM) The company has implemented many CRM programs aimed at increasing customer satisfaction and loyalty

The CRM team was tasked with evaluating BMW's CRM performance This task aims to identify the strengths and weaknesses of current CRM _ operations and then make recommendations for improvement

II REPORT CONTENT

1 THEORETICAL BASIS OF CUSTOMER RELATIONSHIP

MANAGEMENT

1.1 Concept of Customer Relationship Management

The term "CRM" has become a chameleon, taking on different meanings depending on who you ask Two main camps define CRM: the IT industry and those advocating a broader business perspective

The IT lens: IT companies have tended to use the term CRM

to describe the software tools that are used to support the marketing, selling, and service functions of businesses This equates CRM with technology

The Business Strategist's View: CRM is a _ disciplined approach to managing the customer journey from the _ initial acquisition of a customer, to that customer becoming a_ high-

spending, profitable advocate, and that technology may or may not have a role in journey managemert This equates CRM with

customer management strategy

The Customer Experience Connection: Closely associated with the customer experience (CX) movement This movement is

an approach to customer management that aims to understand and improve the experience of customers as they interact with business When a company introduces new technology, new processes, or new people into customer-facing roles, customer experience is often affected CRM technologies can fundamentally change CX for the better because they reinvent what happens at customer touchpoints

CRM is the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit It is grounded on high-quality customer-related data and enabled by information technology

1.2 Classification of Customer Relationship Management 12.1, Strategic CRM

Focuses on the development of a customer-centric business culture dedicated to winning, developing, and keeping profitable customers by creating and delivering better value propositions and customer experiences than competitors

The culture is reflected in:

e The leadership behaviors

e The design of formal systems of the company

e The myths and stories that are created within the company

e Customer Centricity and Other Business Logic Product-oriented businesses believe that customers choose products with the best quality, performance, design, or features

Production-oriented businesses believe that customers choose low-price products

Sales-oriented businesses assume that if they invest enough

in advertising, selling, public relations (PR), and sales promotion, customers will be persuaded to buy

A customer or market-oriented company shares a set of

beliefs about putting the customer first It collects, disseminates,

and uses customer and competitive information to develop better

value propositions for customers A customer-centric firm is a

learning firm that constantly adapts to customer requirements and

competitive conditions

1.2.2, Operational CRM

Operational CRM uses technologies to automate customer-

facing business processes

CRM software applications that automate marketing, selling,

and service processes result not only ¡in efficiency and

effectiveness gains but may also improve customer experience

and engagement

CRM software applications allow the marketing, selling, and

service functions to be automated and integrated

1.2.3 Analytical CRM

Analytical CRM _ involves capturing, storing, extracting,

integrating, processing, interpreting, distributing, using, and

reporting customer-related data to improve both customer and

company value

Analytical CRM depends on customer-related information

Customer-related data may be found in several enterprise-

wide repositories:

e Sales data (purchase history)

e Financial data (payment history, credit score)

e Marketing data (campaign response, loyalty scheme data)

e And service data

1.3 Customer relationship management models

* The IDIC model

The IDIC model was developed by Don Peppers and Martha

Rogers, of the Peppers & Rogers Group and has been featured ina

number of their books The IDIC model suggests that companies

should take four actions to build closer one-to-one relationships

with customers:

se Identify who the customers are and build a deep understanding of them

¢ Differentiate customers to identify which customers have the most value now and which offer the most for the future

e Interact with customers to ensure a deep understanding

of customer expectations and customers’ relationships with other suppliers or brands

e Customize the offer and communications to ensure that the expectations of customers are met

+ The CRM value chain

Francis Buttle’s model of CRM consists of five primary stages

and four supporting conditions leading toward the end goal of

enhanced customer profitability The primary stages of customer

portfolio analysis, customer intimacy, network development, value

proposition development, and managing the customer lifecycle,

are sequenced to ensure that a company, with the support of its

network of suppliers, partners, and employees, creates and

delivers value propositions that acquire and retain profitable

customers The supporting conditions of leadership and culture,

data and IT, people, and processes enable the CRM strategy to

function effectively and efficiently

+» The five-process model

Adrian Payne and Pennie Frow developed the five-process

model of CRM This model identifies five core processes in CRM:

the strategy development process, the value creation process, the

multi-channel integration process, the performance assessment

process, and the information management process The first two

represent strategic CRM; the multi-channel integration process

represents operational CRM; the information management process

is analytical CRM

« The SCHEMA model

The SCHffiiMA model is a commercial property developed as a

benchmarking tool by TCF (The Customer Framework,

www.thecustomerframework.com), which aims to help companies

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strike an optimal balance between customer engagement and

profitability The model proposes a key financial goal for customer

management - the achievement of sustainable incremental

profitability This goal is achieved when the identified foundations

enable the successful execution of strategies designed to win,

keep, and develop customers cost-effectively The model identifies

four key foundations that underpin successful customer

engagement: direction and leadership (e.g clarity of strategy,

cross-functional ownership, budgets, measurement); IT and data

management capabilities; organizational culture (ways of

working); and competencies of people The model identifies five

enablers of good customer management, including the deep

customer insight that is necessary for well-targeted marketing,

selling, and service; the alignment of brand positioning with

customer experience, and the integration of channels and media

and the way content is created and used The agility and workflow

required to support real-time engagement (including compliance

and decision-making) is a critical enabler as are the activities that

get measured, as they will drive action by management and front-

line staff

+» QCI model

Described as a customer management model rather than a

customer relationship model, the Quality Competitive Index model

focuses on three main activities: acquisition, retention, and

penetration

The QCI model starts with the customer’s’ external

environment at the top—their pain points, business goals, and

other factors will affect whether they are ready to buy or interact

with your sales team, impacting the customer experience The

customer experience then affects customer proposition (what you

offer the customer) and customer management activities As you

can see from the magnified version of the inner circle, many

activities are involved to acquire and retain customers

The QCI model also considers the people and technology

involved in keeping this whole system going Although QCI has

5

replaced the word “relationship” in CRM, this framework of CRM

still starts and ends with people

1.4 Customer Journey

The customer journey refers to the various stages a customer

traverses in their interaction with a company or brand It’s a

narrative about how a customer becomes aware of a brand, makes

their first purchase, ascends the Loyalty Ladder by making more

purchases, and influences others to become customers This

narrative includes the touchpoints the customer encounters, their

experiences at these touchpoints, and their reactions to these

experiences Touchpoints can include websites, social media,

service centers, warehouses, calls to and from contact centers,

events, seminars, emails, advertisements, sales calls, and retail

stores Customers also engage with others, such as experts,

friends, and colleagues, who can contribute to the overall brand or

company experience To fully comprehend the customer journey,

businesses need to conduct research This involves observing and

interviewing customers and customer-contact staff about their

experiences at various touchpoints and reviewing other data, such

as call center performance data and shopping cart abandonment

rates at online checkout The primary goal is to understand what

customers are trying to accomplish, what has been successful, and

what needs to be improved Astute businesses attempt to manage

what occurs at these touchpoints and influence the impressions

that customers form Software allows businesses to create a

visualization or map of the customer journey, either as it currently

is or as they would like it to be

1.4.1, The Five Stages of the Customer Journey

The process of transforming potential leads into dedicated

customers involves multiple stages The quality of the customer

experience at each stage can_ significantly influence their

likelihood of remaining loyal Here are the five stages of the

customer journey that your marketing, sales, and customer service

teams should strive to enhance:

« Awareness

At this stage, your target market is just starting to become

familiar with your brand and products They are in need of

information or a solution to a problem, leading them to conduct

searches via social media and search engines Prospective

customers discover your business through online content, social

media, influencers, and even word-of-mouth from friends and

family However, this is not the time for aggressive sales tactics

Customers are merely collecting information at this point, so your

primary focus should be on addressing their queries and

establishing trust

“ Consideration

During this stage, customers start viewing your brand as a

potential solution to their problem They are comparing your

offerings with those of other companies and alternative solutions,

so it’s crucial to give these shoppers compelling reasons to stay

Customers in the consideration stage are interested in product

features that are strongly aligned with problem-solving and

content that doesn’t necessarily push for a sale At this juncture,

businesses need to position their solution as a superior choice For

instance, a nutrition coaching app might produce content that

explains the differences between using the app and consulting

with an in-person nutritionist, subtly highlighting the advantages

of opting for the app

“ Acquisition

The acquisition phase, also known as the decision-making

phase, is when customers are prepared to make a purchase It’s

important to remember that they might choose a competitor's

solution, so not all customers at this stage will convert to your

brand As a company, your role is to convince customers to choose

you at this point You can do this by providing pricing details,

sharing comparison charts to highlight your advantages, and

implementing abandoned cart email sequences

* Retention

The customer journey doesn’t stop after a customer's initial

purchase Once a customer has been converted, the focus shifts to

ff

retaining them and encouraging repeat business Acquiring new

customers is often more costly than keeping existing ones, so this

approach can help reduce marketing expenses and boost profits

The retention phase is all about fostering positive, engaging

relationships with your customers Regular email communication,

discount codes, sales events, or exclusive member communities

can all help foster customer loyalty

“ Advocacy

At the advocacy phase, customers are so pleased with your

products and services that they recommend them to their friends

and family This is a step beyond retention as the customer is

actively promoting others to buy The customer journey doesn’t

have a clear endpoint because brands should always strive to

satisfy even their most loyal customers During the advocacy

phase of the customer journey, you can incentivize further

advocacy by offering referral rewards, loyalty schemes, and

exclusive offers for your most engaged customers

1.4.2 Customer Journey vs Buyer Journey

The stages of the customer journey differ from those of the

buyer's journey The buyer's journey traces the customer's

experience from the initial awareness of a brand to the purchase

of a product On the other hand, the customer journey goes

beyond the purchase, focusing on how customers engage with

your product and share their experiences with others Here’s a

table that highlights the main differences between the buyer's

journey and the customer's journey

Table 1 1 The main differences between the buyer’s

journey and the customer's journey”!

Focus is focused on making a | focused on building a

purchase decision long-term relationship

Goals To guide potential To ensure customer

customers from satisfaction, retention,

Names Consideration, Decision, | ffingagement, Support,

Purchase Loyalty, Advocacy

Content is often product-centric and Content is customer- Content geared towards centric, focusing on

showcasing features, support, education, benefits, and and adding value

comparisons

¬ Customer service, Advertising, SffiO, social

media, product reviews,

feedback loops, etc

, Longer, spanning the Typically shorter, 9 P g

Timelines ranging from minutes to | :

lifecycle, potentially months

years or more

ffimphasizes

- Focuses on driving a maintaining customer

Makin purchase decision and satisfaction, reducing

g closing the sale chum, and encouraging

repeat business

Customer satisfaction, Conversion rate, click- retention rate, Net Metrics through rate, lead generation, etc Customer Lifetime Promoter Score (NPS),

Value (CLV), etc

Customer Moves toward building

Relationsh | Generally transactional | a long-term

Ke Attracting and Retaining customers,

y converting prospects fostering loyalty, and

Challenges |

into customers preventing churn

1.5 Customer service model

A customer service model is a framework or strategy that a

company employs to deliver customer service These models are

tailored to each business, taking into account its services, values,

and objectives, with the overarching aim of enhancing customer

satisfaction Many businesses regularly revise their customer

service models based on customer feedback to better cater to

their needs

Key elements of this model often include strategies to:

e Address customer grievances

e Retain dissatisfied customers

e Gather customer feedback

e Utilize customer feedback

Implementing an effective customer service model can yield

numerous benefits for companies, departments, or teams It sets

standard procedures for customer service, contributing to a more

positive customer experience Additional advantages of this model

include:

e Customer Retention: A _ customer service model

concentrates on optimal ways to serve customers, aiding in customer retention

e Enhanced Reputation: Positive customer interactions

can help carve a unique reputation for an organization, setting it apart from competitors

¢ Boosted Efficiency: A customer service model can guide

employees on how to fulfill customers’ needs, enhancing their performance and efficiency

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¢ Employee Empowerment: This framework can support

employees by equipping them to independently resolve common complaints or issues

1.5.1 Three levels of service

There are three service/sales levels to the Customer Service/

Sales Profile model:

Figure 1.1 The three service/ sales levels?!

“* Level 1 is the stage of initial transactions

At this level, the focus is on individual, initial interactions or

one-off sales This forms the bedrock of every business or

organization However, the more resources you invest in attracting

customers initially, the more challenging it becomes to achieve

profitability at this level alone It’s not uncommon for customers to

cost you money during their first transaction with you, considering

the customer acquisition costs

* Level 2 is the stage of repeat customersF

This level concentrates on encouraging customers to return

for a second, third, or even fourth time Customers may also seek

a variety of products and services from you, like a car insurance

customer returning to her agent for homeowner's, disability, and

life insurance Repeat customers form stronger economic and

emotional bonds with you and expect you to value these

relationships For instance, a Caribou Coffee customer might

expect you to reserve the last Caribou cookie for him, and the

insurance customer might anticipate a discount for bundling car,

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home, and life insurance with the same provider Your CRM

strategy will guide your team on the significance of repeat

customers CRM tools will assist your team in identifying these

valuable customers and encourage team members to recognize

and appreciate their extended relationship with you The pinnacle

of the model is customer advocacy

« Level 3 is the stage of customer advocatesY

These customers are not only satisfied and willing to do

business with you again but also actively share their positive

experiences with others They become ambassadors of your

brand You might even view them as active members of your

marketing team As you can see, each level builds upon the

previous one Without high-quality initial transactions, customers

won't be inclined to do business with you again And it’s the

customer who perceives a positive relationship with you who can

offer the most potent advocacy for you and your products and

services

1.5.2 Three Basics Customer Service Models

The configuration of your Customer Service/Sales Profile is

indicative of the interplay among these three levels It’s influenced

by the type of product or service you provide, the anticipations of

your clientele, and the dynamics of market competition There are

three fundamental Customer Service/Sales Profiles - the Pyramid,

the Hourglass, and the Hexagon

“ The Pyramid Profile

The Pyramid is the conventional way to see the relationship

among the three levels It applies to the majority of businesses

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Level 3 Customer Advocates

/ Level 2 \

fi Repeat N / Customers \

Level | Initial Transactions

Figure 1.2 The Pyramid is the most traditional profile®!

As you might imagine, not every pyramid looks like a perfect

isosceles triangle For example, in some business models, there’s

a very strong emphasis on repeat customers but less on customer

advocates If you don’t trust your repeat customers to help you

“sell” a prospect, then you have a pyramid with a broad middle

and a small top

In a Pyramid Profile, customer advocates grow directly out of

exceptionally well-satisfied repeat customers

* The Hourglass Profile

The Hourglass Profile is less common In the Hourglass, you

have a broad base of initial transactions, only a few of which

become repeat customers However, you seek to the Hourglass

Profile is appropriate when the buying cycle is long or when your

product or service is a one-time purchase to create customer

advocates from as many of those initial transactions as possible

13

Level 1:

Initial Transactions

Figure 1.3 The Hourglass Profile”!

An Hourglass is most stable when it has a strong base of initial

transactions and those transactions are handled in such a superior

way that customers are eager to tell others about their

experience When this happens, the Profile creates its self-

renewing energy

“ The Hexagon Profile

The Hexagon Profile describes a business that is very stable It

has all the repeat business it can handle or wants, so it feels little

motivation to actively seek Level 3, customer advocates It also

feels no strong motivation to focus on initial transactions, since

there are already plenty of repeat customers

Level 2 Repeat Customers

Level 1 Initial Transactions

Figure 1.4 The Hexagon Profile”!

Seemingly stable, the Hexagon Profile is actually very

vulnerable, lacking a strong base of initial transactions for the

moment This is a vulnerable profile Should anything disrupt the

14

core of repeat customers, the business will be hard-pressed to

replace them The Hexagon Profile can self-destruct when supply

and demand are no longer in balance and no longer working in

your favor

1.6 Measurement in customer relationship management 1.6.1 Traditional Marketing Metrics

1.6.1.1 Market share

Market share refers to the percentage of an industry’s total

sales that is earned by a specific company It is determined by

dividing the company’s sales over a certain period by the total

sales of the industry during the same period This measure is used

to provide a rough estimate of a company’s size relative to its

market and competitors The company with the highest market

share in an industry is considered the market leader

Formula for Market Share

Market Share: The percentage of a market accounted for by

a specific entity

Unit Market Share: The units sold by a particular company

as a percentage of total market sales, measured in the same units

Unit Sales (#) Total Market Unit Sales (#)

Revenue Market Share: Revenue market share differs from

unit market share in that it reflects the prices at which goods are

sold In fact, a relatively simple way to calculate relative price is to

divide revenue market share by unit market share

Unit Market Share (%) =

Sales Revenue ($) Total Market Sales Revenue ($) Revenue Market Share (%) =

1.6.1.2 Sales Growth Measurement

A comparison of the increase/decrease in sales volume or

value in a specified period compared with the previous period (%)

Sales growth in period t (%)

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Consumer spending is the total money spent on final goods

and services by individuals and households for personal use and

The share of purchases for a specific brand within its category

is calculated exclusively among customers who have previously

bought from that brand This is also referred to as a share of

wallet

Objective: The aim is to comprehend the origin of market

share in terms of the scope and depth of the consumer base, as

well as the degree of relative category usage (heavy users/big

customers versus light users/small customers) When determining

the share of requirements, marketers might consider either

monetary value or quantity However, they must ensure that their

heavy usage index aligns with this selection

Brand Purchases (#) Unit Share of Requirements (%) =

Total Category Purchases by Brand Buyers (#)

Brand Purchases ($)

Revenue Share of Requirements (%) = —

Total Category Purchases by Brand Buyers ($)

1.6.3 Customer Activity Metrics

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number of potential customers achieve Achievement rate(%) = number of target potential customers x 100

The average ability to achieve the customer from a

population

Achieve rate is always calculated for a group of customers,

estimated on each campaign

the cost of achieving

Cost of Accomplishment ($) = — : ——————

numoer of potentiai customers reached

1 The distance from the 1st purchase to current time

Average Interpurchase Time (AIT) =

AIT is the average buying distance between 2 purchases

The difference in number of customers in period compared to period t—1

Retention Rate (%) =

The number of customer of period t—1

1 Average lifetime

Retention Rate is the ratio of the number of customers

retained to the number at risk

1

average customer loss rate

Average Retention Rate (%) =

1 1— Average retention rate

Average lifetime (%) =

Customer loss rate (%) = | - Average retention rate

Remaining rate period t (%) = 100 * retention rate * remaining rate of period t-1

1.6.4 Strategic CRM Metrics

1.6.4.1, RFM Analysis

RFM analysis is a marketing technique used to quantitatively

rank and group customers based on the recency, frequency, and

monetary total of their recent transactions to identify the best

customers and perform targeted marketing campaigns

The system assigns each customer numerical scores based on

these factors to provide an objective analysis

ff

RFM analysis is based on the marketing adage that "fi0% of

your business comes from 20% of your customers.” RFM analysis

ranks each customer on the following factors:

e Recency: How recent was the customer's last purchase?

Customers who recently made a purchase will still have the product on their minds and are more likely to purchase or use the product again Businesses often measure recency in days But, depending on the product, they may measure it

in years, weeks, or even hours

e Frequency: How often did this customer make a purchase in

a given period? Customers who purchase once are often more likely to purchase again Additionally, first-time customers may be good targets for follow-up advertising to convert them into more frequent customers

e Monetary: How much money did the customer spend in a

given period? Customers who spend a lot of money are more likely to spend money in the future and have a high value to a business

e ffistimating R, F, M by regression technique

e Relational quantity used to calculate the cumulative score

of each customer

e The higher the accumulated points, the more profitable

customers will be in the future

1.6.4.2 Past Customer Value — PVC

« R: applied discount rate

« n: Time from previous purchase to current purchase