Chapter 1

5 Key Processes that Help Define CRM

1. Strategy development at both business and customer level, with the latter
involving decisions regarding the appropriateness of segmentation
approaches: mass segmented, and one-to-one.
2. Value Creation what product/service do customers value and which
customers are valuable to the company. CRM enables companies to build
relationships with high CLV customers.
3. Multichannel Integration involves efforts to provide the “perfect customer
experience.”
4. Information Management using customer data from all touch points in order
to learn more about customers and generate marketing response,
5. Performance Assessment measuring the success of CRM efforts through
metrics on customer acquisition, retention, win-back, satisfaction, loyalty,
profits

Tangible Components
1. Data warehouses central element in the CRM system, contain the collected
information
2. Customer Touch Points any point of contact that the customer has with the
company
3. Customer Call Centers where customer communications occur
4. Sales Force Automation important subset of CRM systems because they
provide management of: sequence of sales activities, sales territories, data,
leads and opportunities etc.
5. 360 degree view of Customer companies should treat customers throughout
the business cycle based on their lifetime profitability.
(basic architecture of a CRM system) The ecosystem shows how the back and front
office are integrated with each other, and produces knowledge about the consumer,
continuously growing all the time.

Larry Freed Video (will be a q on this)

- Digital and CRM have not yet merged, as digital does not know customer by
identity.
- You cannot manage what you do not measure.
- Consumers today have very loud voices, and will spread their opinion very
quickly. They also have big ears, there are no secrets.
- Consumers are now in control like they are never before.
- Feedback is good, but we need measurement.
- To succeed in analytics, you need to look at multiple channels
- Move from explaining the past to understanding the future
- Biggest challenge in industry is single channel metrics.
- Satisfaction is going to determine what the customer does next.
- Every company uses internal metrics, but you need to compliment that with
customer info.
Chapter 2
Reasons For Unsatisfactory Outcomes When CRM Solutions are used.
- Inadequate support from top management.
- Inadequate financial commitment.
- No specification on who “owns” the data.
- Poor data quality
- Technology is the focus instead of the customer
- CRM efforts didn’t create enough new value for customer

Chapter 3

- Star Customers get high value from the products; provide high value by way
of margins, loyalty, and retention time. Mutually beneficial relationship.
Firms should build this type of customer.
 - Lost Customers do not get much value. If the company can not migrate them
to higher levels of profitability, it should either reduce investment or even
dropping them.
- Vulnerable Customers provide high value to firm but do not get a lot of value
out of company. (bad experiences etc) Customers are vulnerable and prone
to competitors unless corrective action is taken. Company can invest in these
customers. May require better service than others.
- Free Riders opposite of vulnerable. Get superior value from products but are
not valuable to firm. Either reduce service level or increase price for free
riders.

- Butterflies the mistake companies make is investing too much money over
too long of a time period in relationship marketing. Key is to maximize
transactional profit through short term promotional blitzes and don’t
attempt a long-term relationship.
- True Friends offer the greatest profit over the longest time period;
companies must foster this relationship the most with constant
communication.
- Strangers no investment should be made, loyal to low price and that will
never change.
- Barnacles may be low profit either due to small wallet size or small share of
wallet. Try to increase profits by cross-selling and trading up. If this fails,
assume wallets are small and minimize expenses.

Butterflies and Barnacles vs Loyalty Strategy. How do they relate to one another. 10
point q.

5 ROI Benefits of Customer Experience Management

1. Reduce at-risk Revenue and Recover Potentially Lost Customers

Identifying customers who are at risk for leaving and pull them back in. Aka
offering a free meal when they have a bad experience with waitress to
restore loyalty.
2. Engage Existing Customers as Sustainable Engine for Growth
 Fans of the business will spend more and buy more often, so use Customer
Experience Management (CEM) programs to engage and market specifically
towards them to further increase ROI.
3. Reduce the Cost of New Customer Acquisition
Create positive buzz, track ‘likelihood to recommend’ metrics, and also
identify trends behind these numbers. Facilitate fan WOM by social media
sites.
4. Reduce Staff Turnover and the Cost of Hiring
Use CEM programs to measure satisfaction among employees. (satisfaction
score or churn rate) engaged employees less likely to quit, more likely to
refer friends to work for company. (Reduces cost of training new)
5. Reduce the Cost of Customer and Employee Feedback Structure
The best CEM surveys are short and to the point, require little support.
Businesses can run their own analysis using this platform.

Chapter 4

ERP (Enterprise Resource Planning) is a business management software, usually a

suite of integrated applications, that a company can use to collect, store, manage and
interpret data from many business activities.

Value Chain + ERP

- The firms that optimize the benefits of ERP by reducing operational costs and
keeping prices low are better placed to withstand the threats posed by
substitute products and new market entrants.
- A firm must be able to find the right balance between creating standardized
ERP measures while retaining the diversity that secures customer loyalty,
- Firms will be able to secure maximum growth and profit realization through
complete integration of the primary and support activities, which comprise
the value chain model.
- The company’s position and role in its value chain present opportunities and
risks.
Chapter 5

Draw and Explain. 10 Marks.

- You cannot manage what you do not measure
- Operational CRM is the automation of processes, such as campaign
management. Top half of diagram. CRM Strategies and up.
- Analytical CRM includes predictive analysis and segmentation applications.
Customers are sources of Info. Bottom half of diagram. CRM Strategies and
down.
- End to End CRM includes both of these, the right mix of technology and
services. Benefits include: process maturity developed with years of
experience, flexible models, track geographically spread data and IS. Retain
loyal customers by identifying and rewarding.
- Silos aka isolated data structures. Can be bad, longer time to fix problem.
Break down silos between sales and marketing. Silos exist in Marketing,
Sales, Customer Service. Inefficient, frustrating,
- How does this diagram achieve a 360 degree view of the customer?
- How does this demonstrate integrated touch points? You want to stay in all
of the touch points as a company. Give an example of a company that has 2+
integrated touch points. (Banks, Shoppers)

Big Data
- Any collection of data sets so large and complex that it usually becomes
difficult to process and infer. There has been exponential growth and
availability of data, both structured and unstructured.
- It doesn’t matter the amount of data, its what you do with it.
- How does Big Data fit into the End to End structure above?

Customer Data Integration Problem

- Data capture and storage process variances
- Disparate databases
- Real time customer interaction
 - Data Latency (amount of time for data to move from one point to another, go
through the data)
- Lack of standards
- Data inaccuracy

Gartner Magic Quadrants 5 point question. How are they measured, how does it
work, what does it mean to be each type?

(sample)
Evaluates vendors based on their completeness of vision and ability to execute. 15
weighted criteria that plot vendors based on their relative strengths in the market.
- Leaders execute well against their current vision and are well positioned for
tomorrow.
- Visionaries understand where the market is going or have a vision for
changing market rules but do not yet execute well.
- Niche Players focus successfully on a small segment or are unfocused and do
not outperform others.
- Challengers execute well today or may dominate a large segment, but do not
demonstrate an understanding of market direction.

Sales Force Article 5 or 10 point question from this article

- Founded in 1999, “The End of Software” meaning traditional software. 10
employees, started with $2 million, grew to be one of the largest in 4 yrs.
- Redefined CRM as a web-delivered solution
- 2010 had over 87thous customers, revenues at 1.3billion, 4 th on fastest
growing companies.
- What was unique in the strategic logic that allowed SF to break away from
the competition? No software licenses needed, cost and time associated with
running and using the software dropped significantly. Customers were able
to access from anywhere. Offered monthly membership, (later changed to
yearly) Appealing to small and medium sized companies. Simple user
interface, made very easy to use.
 - How was SF able to sustain leadership position? Many companies who
straddled the idea found that the on-demand CRM solution was not
necessarily compatible with their existing software. SF launched Force.com
and AppExchange to encourage customers to build custom programs, but in a
different way than their competitors. This took much less time than creating
apps in the traditional way. Launched a private social network service,
Chatter. Allowed salespeople to colab on work related items in real time.

Chapter 7

Data > Information > Knowledge

- Once data is transformed into information, it can then be analyzed, or
“mined”, to determine if there is value. The information may then be used to
support a CRM effort.
- No matter the industry, detailed transaction histories that are more than
several years old may be irrelevant. But they can be used to track trends,
needed for warranties etc. Determining what info to keep or discard, what
info is missing, and what info needs to be aggregated is vital.
- PC cycles relevant, washer and dryer every 10 yrs, PC every 3 years so keep
data.

Types of Data
- Primary direct from source
- Secondary acquired from party other than party it is about
- Derived info created from other data. Inferred or implied.
- Individual attributed to a specific person
- Household view of data from a household perspective

Data Mining Methodologies

1. Decision Support Systems
Support a tactical operation.
Lists current inventory predict sales of products to be promoted, inventory
requirements by store. (Ex. Campaign Management Tools)
2. Exclusive Information Systems
Summarized Info for high level decision makers
Uses Dashboards
3. Enterprise Resource Planning
Integrates most if not all business functions
Requires enterprise wide integration
4. Data Mining
Catalyst for turning information into knowledge
Uses any of the above sources
Chapter 12

Steep Skew
Companies with a steep skew will benefit most from a customer-centric or
relationship marketing orientation. Top customers account for the vast majority of
the business. Once identified, the company can treat its high-value customers to
superior service. Cost to serve should be equal to value of customers.

Top 10 Mistakes
1. Off in a Corner
2. Not Enough Leadership Support
3. Too much Data
4. No Clearly Defined Strategy
5. Knowing is Not Enough
6. Stale as Seven-Day-Old Bread
7. Death by 1,000 Dashboards
8. Failure to Benchmark
9. Failure to Recognize the Impact of Corporate Inertia
10.Failure to Measure Outcomes

Larry Freed- Satisfaction

Make sure that you are creating the consumer experience that is meeting the needs
of the customer.

RFM- Recency, Frequency, Monetary

- Recency is the date of the most recent customer transaction.
- Frequency is the number of customer transactions with the organization
within a specific period of time.
- Monetary is the amount spent within the same time period.
- Customers are ranked on a scale 1-5. Best customers are 555, worst are 111.
(20%)
- The customers in cells 112 and 111 do not appear to be responsive.

Share of Wallet
CRM Metrics
What it means and how to apply.
1. Conversion rate – Number of prospects converted into company customers
2. Share of Wallet - % of the total expenditures in a category that an individual
store or brand satisfies. Company must gather info on consumers purchase
from competitors.
3. Perception of Value – Benefits / costs
4. Customer Response rate – the number of customer initiated contacts vs the
company initiated contacts.

Case Analysis
Chapter 9 – Satisfaction and Loyalty