Transcript CRM Framework - Prof. Tim Richardson

CRM Framework
Terry James
© 2006
Party
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No. Not a beach party. No beer. No dancing.
CIF, or customer information file, lists just
customers.
When a CIF includes all people with all
relationships and roles to our firm, then it’s
called an Involved Party database.
Involved Party: a generic term meaning
party (anyone) who is involved with your
company; employees, suppliers, clients,…
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How we got here.
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Each LOB (line of business) would keep
track of its own clients.
The LOB would usually use an account
number to track its clients.
Example: Toronto Hardware
Account number: Client name : Amount spent:etc.
0000150
: Wendy’s
: $50000.00
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LOB Account number
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The LOB has a lot of shortcomings.
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It does not know anything about
customers outside the division.
It has no role information.
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If an employee buys a product, his data looks
like simply another customer, no employee
discount or number.
If a supplier buys a product, again the CIF
likely won’t show it.
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CIF files
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Common for the CIF file to be copied
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different groups for different purposes
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perhaps to merge with other CIF files
If you have 2 copies, which is the
authoritative source
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The authoritative source is the trusted file you use
if it is not clear which is correct
Always update the authoritative source first, then
copy from it, never update the copied file or you
will lose track of changes to many copied files.
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Trusted data
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How long does it take for a copied CIF
to be different than the original?
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Probably a few nanoseconds if you do
millions of transactions a day
As soon as your copy is not current, you
are working with dirty data
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Dirty data is simply poor quality data,
lacking in accuracy, consistency, or
integrity.
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Analysis Patterns
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Martin Fowler wrote ‘Analysis Patterns’
which are best-of-breed, proven
business analysis solutions.
For CIF, he provided the Party concept.
Address
Person
Organization
Phone
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Leading Edge Data Model
INVOLVED PARTY
Person
Organization
Products
Relationships
and Roles
Demographics, contacts, security,
products, accounting, relationships
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Involved party (IP) model
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You can ask what organization a client
belongs to, what role he has there, and what
relationship he and his organization has with
your company.
You can reverse questions and ask which
customers are in an organization that your
have sold products to, and which customers
are not in an organization as customers.
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Example
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What people have I sold computers to at
Honda?
What group were they in? Sales, Service?
Are there any groups at Honda I have not
sold computers to? Can I get an introduction
from existing clients?
Are any Honda employees members of my
Board of Trade team?
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Prospects and Suspects
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Prospects are potential clients, but have not
bought anything?
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Suspects are customer lists you bought from
another company
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They may have asked for pricing, asked for a
demo, but not paid any money yet.
Suspects in particular are known for poor data
quality in general.
The data could be old, out-of-date, captured
incorrectly, deliberately wrong (client fraud), etc.
Be careful about dumping poor data into your
authoritative customer database.
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CRM Basics
Customer reaches for service
E-mail
IVR
Web
Branch
Master Party file
Multi-channel offering- but ONE customer file!
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One customer file
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Many functions but one party file
Accounting
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Sales
Operations
Many divisions – but ONE party file.
USA division
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HR
Asia Division
Many departments – but ONE party file
Auto dept.
Motorcycles
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Lawnmowers
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What is a Framework?
Rather than build one
element at a time, build a
framework within which new
elements will fit as you add
them. Good framework
removes duplication, ensures
integration.
Create a framework for future client services
without duplicating client code
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What’s in the Framework?
1) Single sign-on
Demographics
SSO
EAI
Data conversion
2) Channel independent
middleware (e.g. EAI)
3) Dispatcher –route
transactions to proper
legacy system.
The framework will have infrastructure
services to permit a fully integrated CRM
solution.
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SSO
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What is single sign-on?
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It is one logon and password to all your systems
Makes it look like you have one company where
everyone helps and works together
Why do you want it, what does it provide?
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Easier for customers, easier for employees
toremember one password and logon
Consistent rules, and less expensive if you use one
security system
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SSO
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Where do you place the security?
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In the front end device, in the legacy application?
Rule is put as much security as reasonable as far
away from your central operation as possible.
Likely have many levels.
What goes in the security directory?
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Duplicate data with the Party file?
Yes, at least the name and contact as a pointer.
Smart to keep highly sensitive, encrypted
passwords in a very restricted separate file
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EAI
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What is EAI software?
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What does it do?
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EAI permits all your applications to talk to each
other and work as a unit
Translates data into needed formats
Provides correct communication methods and
protocols for each application
Where do you get it?
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Enterprise Application Integration
Many vendors, IBM, Tibco.
How much does it cost?
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Fairly expensive.
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CRM – Level 1
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Profitability analysis
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Client comments
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Personal, then business.
Fax, email, vacation address, cell phone,…
Segmentation
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Staff comments: (eg. deadbeat, high potential)
Demographics
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How much profit from each client?
Use profitability to segment clients into tiers,
top, middle, bottom.
Personalization
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Tailor to client needs, no mass mailings to all
regardless of need.
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CRM Level 2
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House-holding
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Client profile
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Expand profile with dealings outside your firm
Acquire credit and collections history
Channel management
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Include relationships starting at home, who is the
client living with, what are family needs?
Know and use your client favorite communication
channel (email, phone, face-to-face)
Roles and Relationships
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Add client organization and role (supplier,
competitor, employee, or partner,…?)
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CRM Level 3
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Client acquisition
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Opportunity
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Cross-sell, up-sell, add-on, deluxe model
Channel optimization – move to least costly
channel
Channel integration
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Have client provide referrals
Every client touch-point adds to the profile
Dynamics
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Not locked into fixed, yearly goals
Adjust sale goals by minute as client profile
expands
Right product, right client, right time, right place
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CRM Level 4
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Micro-segmentation
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Predictive modeling
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1 client = 1 segment
Every client has own strategy for next sale
Tracked roles and behavior
Use known client patterns to predict client
actions
Product development
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Tailor products to meet client needs based
on behavior and predictive analysis
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Profitability
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With improved micro-segmentation,
decision making, and dynamics, fine
tune the profitability goals, future sales
and share of wallet.
What is the balance between good
company profit and good client profit?
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Delinquent clients
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Treat the client appropriately when
delinquent.
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It could be our poor service – not their
fiscal irresponsibility
Prioritize the level of recovery so we don’t
spend more recovering the client than they
are worth
Be proactive in reducing or increasing fees.
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Optimization
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Channel Optimization
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Move clients to the least costly channel that
meets their needs.
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Example: Web $0.07, Phone - $0.35 Face - $1.00
Client may not want costly personal sales visits.
Sales delivery standards
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Match the value of service to the client value.
Be aggressive at moving low value clients to
low cost communication channels.
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Client
acquisition
Client retention
Product
development
Relationships
Client
management
Segmentation
IP database
Client service
Profitability
analysis
Client
channels
Cross sell
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Metrics
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Measure before CRM and after
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How many enquiries for a 1000 flyers
How many sales?
What is you add discount?
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How many lost clients did you recapture?
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Indicates cherry-picker clients
Number, total balance involved?
How much faster is service per call?
How many clients using cheaper channels?
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Client metrics
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Score the client on:
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Next product most likely to buy
Client risk
Client profitability
Propensity to buy
Client potential
Client vulnerability
Rank by the product most likely to buy and
the expected value of that product.
Marketing and campaigns are tailored
accordingly
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Metrics
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Some quantitative metrics on the sales
person
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Response rate – number of applications divided by number
of offers
Approval rate – approved applications divided by applications
Net present value – by campaign and account
Delinquent – number of accounts that are delinquent and
the balance involved.
Roll rate – number delinquent clients divided by number of
clients
Roll back rate – number of clients returning divided by
number of clients
Channel usage metrics – by average channel cost.
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Client Decision Profile
Value Proposition
Client management
Pricing: Preferred
Service guideline: Premium
Service: VIP
Account management: Agent
Channel: E-mail
Propensity to buy: Average
Current offer: Movie
Client prosperity: Promising
channel, no connect fee
Credit: Excellent
Response offer: basic
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