developing a crm strategy

Jennifer Kirby Developing a CRM Strategy These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval. Key Issues • What is a customer relationship management (CRM) strategy? • How does a CRM strategy fit in with other business strategies? • Only 10 percent to 15 percent of companies know the value of their customer base — yet, this is an important intangible asset and drives the detailed tactics of the CRM strategy. • The benefits of CRM come through increased service and communication; to build real loyalty, how is this managed effectively? These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval. What Is a CRM Strategy? • “It boldly states the ideal customer base and how an organization intends to get and keep it. I’ve never yet seen one that does this to any depth.” — CRM Consultant • “…It’s the decision about which customers are to be managed, via which channels for which products and services: It means revisiting the marketing strategy.” — CRM Guru • “A CRM strategy is not an infrastructure road map.” — CRM Program Manager • “We need to understand what customers we have, and who we want, then we can put in place a strategy for developing the value of each segment” — CEO These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval. How do we develop the customers’ loyalty and value to us by developing our value to the customer? How do we acquire valuable customers who will value us? How can we retain or win back customers of value? How do we create awareness of what we offer to potential customers of value? How do we do this efficiently? MarketingSales Service Develop Retain Acquire Target Customer Life Cycle Enquire Welcome Manage Problems Win Back A CRM Strategy: Developing the Customer Asset Base These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval. CRM Strategy: Top Ranking Objectives 27 26 47 16 37 47 B2B B2C Annual loss in a typical company Customer loss: 10% to 30% Employee loss: 15% to 20% Investor loss: 50% Reduces annual profit by 20-50% Percent of Companies Ranking as Top Priority Retention Development Acquisition These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval. CRM Strategy: Case Study No. 1 • Segment the customer base in deciles of value. • Develop customer profitability. The most-valuable segment by 3 percent, the next three segments by 20 percent, and decrease the losses on the rest — develop services used, lower distribution cost, increase prices and discount according to potential value. • Acquire new customers of the most-valuable type with targeted selling. • Implement retention programs for the most-profitable customers. Household Deciles Ranked by Profit ($1,000) ($2,500) 0 $5,000 $10,000 $15,000 1 2 3 4 5 6 7 8 9 10 These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval. CRM Strategy: Case Study No. 2 • Understand and segment the customer base . • Retain the most-valuable customers after finding out why they defect. • Win back valuable ex-customers. • Develop the loyalty of current customer segments — use differentiated service according to need. • Improve the profitability of unprofitable customers. Brand Value Value-tailoring Value-added Communication These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval. OPERATIONAL STRATEGY BUSINESS STRATEGY BUSINESS MODEL CUSTOMER STRATEGY MARKETING STRATEGY MARKETING STRATEGY BRAND PROPOSITION: The Company DNA IT STRATEGY PRODUCTION STRATEGY FINANCE STRATEGY FINANCE STRATEGY R&D STRATEGY HR STRATEGY CRM Strategy Is an Element of Business Strategy These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval. BRAND PROPOSITION Promised Customer Experience Step No. 1: Define the Vision What and who are you? What value will you deliver? Unifies Internal Delivery Step No. 2: State the Culture: What internal capabilities are needed to deliver the value? Step No. 3: Express the Image How will the the value of the brand be communicated? The Brand Is the Company DNA These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval. Corporate DNA Example: Mickey’s Signature [...]... Vendor Relations Please e-mail your usage request to quote.requests@gartner.com for approval Tactics for Retention and Building Loyalty Loyalty Scheme CRM Strategy Attitude and Behavior Behavior • • • • Rational value Creates stickiness Makes sales Retention, attraction, increased sales • Real loyalty? RReward schemes RIncentives RCross-selling RProduct bundling RProduct & price • • • • Rational and emotional... writing by Gartner Vendor Relations Please e-mail your usage request to quote.requests@gartner.com for approval CRM Strategy: Capabilities Marketing Strategy Support Customer Strategy Support • Human resources • IT • Knowledge — research • • • • • • Skills and competencies Internal communications Organization IT infrastructure IT architecture Research, analysis and planning • Knowledge management •... Please e-mail your usage request to quote.requests@gartner.com for approval Corporate DNA Consistency These slides are for internal use only External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations Please e-mail your usage request to quote.requests@gartner.com for approval Interweaving the Marketing and Customer Strategy Marketing Strategy How do we take advantage... Opportunity Careful Management Some potential Manage for Profitability Build Selectively Manage for Revenue Manage for Revenue Manage for Manage for Profitability Profitability Manage for Revenue Consider Divesting Highly Secure Vulnerable Key Transactional Secure Fragile Strength of Relationship (Value to Customer) These slides are for internal use only External use of Gartner copyrighted material must be approved... One:One Key Account Teams One:Many < 10% Company Share of Wallet • Upward movement of wallet share is a trigger for additional resource • Greater customer spend rewarded with greater levels of account management Relationship Manager One:Few Low Medium Dedicated Hunters High Market Value of Customer These slides are for internal use only External use of Gartner copyrighted material must be approved in... emotional value Creates loyalty Creates relationships Retention, attraction, customer share, recommendations, lower costs and wider margin h Brand values h Contact h Customer care h Contracts h Products & price These slides are for internal use only External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations Please e-mail your usage request to quote.requests@gartner.com... advantage of market opportunities and mitigate competitive threats? Customer Strategy How do we get closer to the customer to deliver value to them and create value for us? • Vision: Market Position • Market Definition and Audit • SWOT Analysis • Vision: CVP • Customer Definition and Audit • Capability Analysis • Target market segments • Objective for each market segment: Penetration, Development, Maintenance... of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations Please e-mail your usage request to quote.requests@gartner.com for approval Relationship Investment Guide Hygiene Factors Maintain Efficiently Claimed Importance High Well above average 2 5 Above average 22 3 Average 19 Overspending Low Trim Invest 4 9 Low Motivators 12 Below average Hidden Opportunities Real Relevance... Strategic Example Operational Example Infrastructure Example Market Share Profit Growth Cost Ratios Revenue Growth Margin Growth Customer Loyalty Key measures to support corporate financial and market goals Lifetime Value Acquisition Risk Profile Customer Profitability Development Staff Satisfaction Retention Cost to Serve Key measures for monitoring the customer strategy Response Levels RFM Measures... be approved in writing by Gartner Vendor Relations Please e-mail your usage request to quote.requests@gartner.com for approval CRM Strategy — Tactics Marketing Strategy • CVP • Product • Price • Communication: public relations, advertising, sales, promotion, merchandising and direct marketing/messaging • Channel Customer Strategy • CVP by segment • How customized for each segment • How differentiated . for approval. OPERATIONAL STRATEGY BUSINESS STRATEGY BUSINESS MODEL CUSTOMER STRATEGY MARKETING STRATEGY MARKETING STRATEGY BRAND PROPOSITION: The Company DNA IT STRATEGY PRODUCTION STRATEGY FINANCE. STRATEGY PRODUCTION STRATEGY FINANCE STRATEGY FINANCE STRATEGY R&D STRATEGY HR STRATEGY CRM Strategy Is an Element of Business Strategy These slides are for internal use only. External use of Gartner copyrighted material. It means revisiting the marketing strategy. ” — CRM Guru • A CRM strategy is not an infrastructure road map.” — CRM Program Manager • “We need to understand what customers we have, and who