What is CRM?
Created August 5, 2004
Core Principles
Clients are focusing on the top line by focusing on their
customers.
Revenue
-Expense
$Profit$
Revenue
-Expense
$Profit$
Why CRM?
Three ways to increase profitability of
customer base:
1.Acquire more customers
2.Optimize value of existing customers
3.Retain right customers longer
Core Principles
Evolution of CRM in the Marketplace.
Product Centric
Customer Centric
Offering
Products
Solutions
Measurement
Cost
Profitability
Process Focus
Internal
Customer
Segmentation
Broad
Granular
Outcome
Customer Acquisition
Customer Retention
Selling Model
Formula
Consultative
Service Model
Reactive
Proactive
Interactive
Core Principles
Customer Relationship Management (CRM) places greater
emphasis on the customer during the lifecycle of a business
relationship. There are three central components to CRM, all of
which work in concert:
Market
Serve
Sell
Key Questions
Each component of the CRM Triad comes with key questions:
•Marketing
•What are my customers buying?
•How do I need to change my products to convince my
customers to buy them?
•Sales
•How do I learn more about my customers to facilitate selling?
•How do I sell more efficiently (better, faster, more)?
•How well am I selling compared to my goal? Others?
Competition?
•Service
•How can I better serve my customers to foster loyalty and
retention?
Customer Lifecycle
A strategy is needed to guide how customers are managed over
the course of the customer lifecycle
Four Phases of the Customer Relationship
Target
Customers
Who do we want to target?
What segments are the most
profitable?
 How do we leverage
customer relationships to
build brand?
 How do we reach our
customers?
 What to we spend on
targeting customers?
 How do we improve our hit
rate?


Acquire
Customers
 What
is the best channel for
each segment?
 What channels do our
customers want to use?
When? Why?
 What is the acquisition cost
for a channel / segment?
 Should we be worrying
about retaining existing
customers more than getting
new ones?
 What channel approach is
most effective?
Retain
Customers
 What
service levels are
required by each customer
segment
 What is the best way to
provide service to each
segment?
 What is the impact of
service on retention and
expansion?
 What does it cost to service
our customers? Is it
justified by their value?
 How can we improve
retention?
Expand
Customers
 How
many products
does our average
customer buy ?
 How can we induce our
current base to buy
more products?
 How have customers
changed their usage
over time?
 How can we get
referrals from our
customers?
CRM and Technology
Three reasons why CRM’s adoption has
been so rapid:
1. Fierce competitive economic environment
2. Economics of customer retention is proven
3. Technology allows organizations to do this
more effectively and profitably
Core Principles
Becoming a customer focused organization is an evolution.
The CRM Evolution
CRM Diagnostic
Internalize the
Determine the
Imperative
State
to be customerfocused
of CRM
evolution your
company is in
Develop a Strategy
for customer investments
Design the Operations
required by the strategy
Create a
Execute
Roadmap
Build
based on
program
prioritization
programs
Develop a Mindset
for your organization
Continual Evaluation and Renewal Capability
Process
Organization
Technology
Knowledge
Uses/Goals
Customer Relationship Management tries to accomplish much
and means different things to organizations. Deloitte Consulting
clients that have adopted a Customer Relationship Management
philosophy have done so for some of the following reasons:
Improve Sales Effectiveness
Improve Customer Service/Loyalty
Improve Communications
Improve Forecasts
Provide Current Information
Increase Revenues
Support Team Selling
Increase Selling Time
Improve Sales Management
Improve Marketing Effectiveness
Increase Margins
Decrease Sales Costs
0%
10%
20%
30%
40%
50%
60%
70%
Enablers
In order to adopt a
customer-centric strategy,
businesses implement
CRM enablers.
Opportunity Manager
Contact Manager
Office Suite
E-mail
Lead Tracking
Call Reporting
Again, of organizations we
surveyed, the top
enablers used were:
Sales Analysis
Forecasting
Internet Access
Proposal Generators
Marketing Encyclopedia
Customer Support
Presentations
Order Entry
Back Office Link
Telemarket
Training
Configurator
0%
10% 20%
30%
40% 50%
60%
70% 80%
90%
Users
There are also a variety of end-users for Customer Relationship
Management systems:
Field Sales
Sales Management
Marketing
Customer Support
TeleBusiness
Senior Management
Channel Partners
Finance
Other
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Functional Architecture – Core Principle
The core principle which any comprehensive CRM strategy is built
on is customer insight. Knowing one’s customers brings many
benefits:
• Increased quality of customer interaction
• Ability to segment customer base ($$$$$ - pricing!)
• Up-sell and cross-sell capabilities (understanding internal customer
relationships)
• Competitive analysis
• Product customization
• Increased and personalized customer service
Functional Architecture – Components
The ideal CRM system combines Sales, Marketing, and
Customer Service Systems in one integrated architecture:
Marketing
Field Sales
Phone,
Internet,
Personal
Contact
Intranet
Tele Sales
Customer
Service
Customer
Technology is an Enabler for CRM
CRM links front-office strategies, operations, technologies, and people
with customer interaction channels to present “one face” to customers
BEST PRACTICES LIBRARY
Launch pad
CORE DESIGN
PRINCIPLES
Channels
Broadcast Media
Mail
Field Operations
Agents/Distributors
Call Center
Retail
Internet
Marketing
Value
Brand
Personalization
Seamless
Real-time
Dynamic
Sales
Service
TV, Radio, Newspaper
and Signage Advertising
Interactive TV Sales
Programs
Broadcast Informational
Spots
Direct Mail, Product
Teasers, Catalog
Direct Mail, Catalog
Spare Parts Fulfillment,
Product Info, Returns
Product Demos,
Conferences, Expos,
Education Events
Direct Sales,
Inside Sales
Field Service, Training
Customer Groups/Cubs,
VARs, Wholesalers
Wholesalers, VARs,
Resellers
Outsourced Product
Support and Repair
In/Outbound
Telemarketing, Info Cntrs
Inbound and Outbound
Telesales
In/Outbound Service Call
Center, IVR, Fax-back
Instore Signage,
Coupons, Info Kiosks
POS Brick and Mortar
Locations, In-store and
Distributed Kiosks
Brochureware,
Advice/Community Sites, eMail Marketing
Interactive Sales Sites,
Auction Sites, Market Sites,
Portals
Integration Best Practices
General CRM
Integration Areas
SBU to SBU
Integration
Business Partner
Integration
Service Centers
Information Sites, Interactive
Service Sites, e-Mail Folllowup
Back Office to Front
Office Integration
Conceptual CRM Architecture
Access Channels
In person
Telephone
IVR
Customer
Chooses the
channel
Telephone
Call
Center
Fax & E-Mail
Electronic
Web
Commerce/
self-service
Internal & External
Data Sources
Functionality
• Account/Contact
Mgmt
• Service Mgmt
• Workflow Mgmt
• Campaign Mgmt
Business
Objects
• Account
• Contact
• Policy
• Asset
• Opportunity
• Service Request
Business Integration Services (Middleware)
Sales
automation
Customer Interaction
Systems
Functional Architecture – Customer Information
Repository
The key to customer insight is a centralized (or centrally
organized) store of customer data. This will allow all business
entities to share a common view of what a customer is:
Marketing/Analytics
Customer
Information
Repository
Customer Service
Sales
Functional Architecture – Marketing Solution
The marketing solution will extract key interactions from the
sales/customer interaction database:
Customer Service
Application
•
•
•
•
•
Telemarketing
Telesales
Customer Care
Order Mgmt.
Help Desk
Customer Service
Middleware
•Billing
•Inventory
•Fulfillment
•Order Management
•Etc…
Database
Server
Application
and Web
Server(s)
SFA
Application
•
•
•
•
•
•
Accounts
Contacts
Activities
Opportunities
Product Config.
Reports
Sales
Legacy Systems
Data
Extraction
Data
Application
Server
Data
Warehouse
Marketing
Application
• Customer
Segmentation
• Campaigns
• Analytics (Sales,
Product, Service)
Marketing
Functional Architecture – Sales Solution
A sales solution consists of several key components:
Legacy Systems
Middleware
•Billing
•Inventory
•Fulfillment
•Order Management
•Etc…
Database
Application
and Web
Server(s)
SFA
Application
•
•
•
•
•
•
Accounts
Contacts
Activities
Opportunities
Product Config.
Reports
Sales
Functional Architecture – Customer Service Solution
The customer service solution will utilize the same core data
as the sales solution:
Customer Service
Application
•
•
•
•
•
Telemarketing
Telesales
Customer Care
Order Mgmt.
Help Desk
Customer Service
Legacy Systems
Middleware
•Billing
•Inventory
•Fulfillment
•Order Management
•Etc…
Database
Server
Application
and Web
Server(s)
SFA
Application
•
•
•
•
•
•
Accounts
Contacts
Activities
Opportunities
Product Config.
Reports
Sales
Summary
• Start with a clear vision of a customer-centric, versus a
product-focused approach.
• Retain business focus, do not get distracted by the
technology. Technology is an enabler, not the driver.
• Ensure that the technology infrastructure can support the
CRM strategy.
• Recognize that multiple steps may be required to move from
the current state to the ideal.
• A marketing warehouse infrastructure should exist for any
serious CRM initiative.
• Understand the business problem.
• Benefits should outweigh costs.
• KISS (Keep It Simple S_ _ _ _ _).