CRM

Customer Relationship Management

Defining CRM
 Customer relationship management in
its broadest sense simply means
managing all customer interactions. In
practice, this requires using information
about your customers and prospects to
more effectively interact with your
customers in all stages of your
relationship with them. We refer to
these stages as the customer life cycle.
HOW IT HELPS
 Customer relationship management
(CRM) helps companies improve the
profitability of their interactions with
customers while at the same time
making the interactions appear friendlier
through individualization. To succeed
with CRM, companies need to match
products and campaigns to prospects and
customers — in other words, to
intelligently manage the customer life
cycle.
Areas of importance
 Operations
 Marketing
 Information Technology
 Customer Service
 Support
 Sales
Order of importance
 The customer life cycle has three stages:
 Acquiring customers
 Increasing the value of the customer
 Retaining good customers

Data mining can improve your profitability in

each of these stages through integration
with operational CRM systems or as
independent applications.
AREAS OF APPLICATION
Capitalizing on moments of
truth

 Building meaningful experiences can be

daunting, but there are three guidelines that
apply to every customer interaction:
 1. Delight customers when it makes sense
 2. Fix where the company fails on its
promise
 3. Right-size delivery when an interaction
doesn’t matter.
 Companies who excel in the customer
experience arena operate as customer
focused enterprises (CFEs).
The CFE model
 The CFE model embodies six key
characteristics, applying innovative approaches
and resources as it grows and improves:
 Customer authority
 Customer dialogue
 Integrated execution
 Solution experience
 Human performance
 Customer focused organization.
 Companies ready to move forward with improving
their customer experiences have significant challenges
ahead of them, but they also stand to make
significant gains. The first step for most organizations
will be a careful assessment of their current customer
bases and customer operations. Some key questions
for companies to explore include:
 • Do we need to do things differently?
 • What should we be doing?
 • How should we be doing it?
 • When should we be doing it?
 SIA started off as Malayan Airlines in 1947. The airline
operated services in Singapore, Kuala Lampur, Ipoh
and Penang (on the western shore of the Malay
Peninsula).

After the Second World War, Malayan Airlines grew

rapidly, and by 1955 it flew nearly 200,000
passengers a year. When the Federation of Malaysia
was created in 1963, the airline was renamed
"Malaysian Airways" and in 1966, as
 "Malaysia-Singapore Airlines" (MAS) to reflect the
carrier's joint shareholders, the governments of
Malaysia and Singapore...


The launch of SIA and its progress in

becoming the most customer-friendly
airline in the world.
 how SIA differentiated itself from
other airlines based on superior
customer service, both in-flight and
on the ground. SIA's efforts to
develop consumer perception as the
world's most preferred airline.
EDM- excellence in Disaster
management
 On October 31, 2000, a Singapore Airlines (SIA)'s SQ-006
Boeing 747 crashed in Taiwan. This was the first major
accident in more than 28 years of the airline's operations.
81 passengers, of the 179 on board, were killed. The
following day, SIA announced $25,000 in compensation to
the families of those who had died, to help them cover
immediate expenses.
When SIA's management discovered that it was pilot error
that had caused the mishap, the airline offered an additional
$400,000 per family - a figure almost five times the amount
the company was liable to pay
 The Deputy Chairman and Chief Executive Officer, Cheong
Choong Kong, said that the company took “full
responsibility” for the accident. No airline had ever before
accepted full responsibility or been so generous in
compensation in the case of an accident.
"Singapore Girl"- An Icon of Customer
Service
 

 When SIA took to the skies, it looked

for a differentiation strategy. It
created a marketing icon -the
Singapore Girl. in 1973. The image of
the female flight stewardess was used
to differentiate its services based on
in-flight services and ground
services...
CRM -
 In-Flight Service

SIA's differentiation strategy was

based on in-flight service. On board
the airline provided some of the best
food, and most importantly, served it
with warm smiles...
SIA -Service Excellence Contd...

 Over the years, SIA has become a role model for "service" in the airline
industry. From the very beginning, it had focused on customer satisfaction as
its highest priority. It constantly brought about innovations in its
service to retain its existing clients and to attract new customers.
SIA tried not just to satisfy its customers, but to "delight" them. SIA won
many awards for its continuous efforts to maintain service standards, both in-
flight and on the ground.
 In the preceding years it won awards in several categories such as "Best
Long-haul Airline," "Best First Class," "Best Economy Class," "Best Foreign
Airline," and "Best Crisis Management". SIA was the airline that initiated the
focus on customer service in the airline industry.
 In 2000, in a study on airline reputation by the Reputational Institute (a
private organization researching corporate reputations) and Harris Interactive
(a global Internet research firm), SIA topped the list of international airlines
in the categories of safety and trust, customer service and food.
 Analysts felt that SIA's superior customer service has been the primary
reason for its profitability over the years . SIA was profitable right from its
inception. Though its fares were higher than that of its competitors,
passengers did not mind paying a premium because of its exceptional
customer service...
 http://www.youtube.com/watch?
v=pM7ZaamZzDA
EXTERNAL CUSTOMER
WHO IS THE CUSTOMER

 A PERSON WITH DESIRE, NEEDS

THAT ARE TO BE SATSIFIED WITH
THE COMPANIES PRODUCT OR
SERVICES
CRM INITIATIVE
 A successful CRM initiatives start with
a business philosophy that aligns
company activities around customer
needs. The level of professionalism,
listening skills, availability,
responsiveness, reliability, etc form
an important part of the client
relationship management.
HOW IT HELPS THE COMPANIES
 Most importantly, it helps the company to build and
maintain a loyal customer base.
 It can have more volume of sales by selling more to
the group of those customers with whom it has
maintained a good relationship and are satisfied with
the firm and its quality of services.
 It overtime incurs lower costs in serving those
customers because of their Increasing confidence and
lesser doubts or questions about the product.
 It can resort to lesser promotional campaigns in order
to attract those customers.
 It also enjoys the benefit of retaining its employees if
it has a stable base of satisfied customers.
THE CRM PROCESS
 . The process of CRM includes :-
 Identifying the factors important to clients
 Promoting a client-oriented philosophy
 Adopting client based measures
 Developing end-to-end processes to serve
the clients
 Providing successful client support
 Handling client complaints
TWO LEVELS OF CRM

Operational CRM :- also known as “front office”
CRM, provides support to basic business processes
such as sales,marketing,services,etc. It involves areas
where the customer is directly in contact with the
company. These contacts are classified into two:- (i)
Inbound contact are the ones in which a customer
accesses the company support center or website or
meets the company employees. (ii) Outbound contact
are the ones in which a sales representative of the
firm makes direct sales to the customers or makes a
sales call or e-mails a marketing message. These
direct interactions are referred to as customer's
"touchpoints". Each interaction with a customer is
generally added to a customer's history and company
can retrieve such information from the database as
and when needed.

Analytical CRM :- also known as “back-
office” or “strategic” CRM, involves
understanding the customer activities that
occurred in the front office. It involves
retaining existing customers and providing
timely and regular information to them. It
uses the technology to compile customer
data to facilitate analysis and develop new
business processes to refine business
decisions.
DELIVER ON YOUR PROMISES

 If the business cannot deliver on the product or

services offered any other efforts made are useless.
This simply means be sure you can follow through on
your promises or claims or do not bother making
them. When the focus is on the customer instead of
on the products or services, a business can lose
customers due to not keeping the most basic
promises on products and services offered. To keep
customers loyal, it is necessary to nurture them first
by making sure that you deliver what you promise.
TREAT YOUR CUSTOMERS WELL

 It is important that you treat

customers with the respect they
deserve from the start. Building
strong customer relationships
requires that businesses treat their
customers as long-term prospects
from the very first transaction.
Treating customers respectfully from
the beginning can engender long-
term customer loyalty.
GO BEYOND
 An ideal way to keep a customer for life is
by consistently exceeding expectations and
providing services that are always above
par. Establishing criteria for what your
customers can expect from your business
gives a base from which to start and
enables the business to find ways to
improve upon its customer service.
Customers are attracted to businesses that
have a great product or services and treats
them like royalty.
PAY MORE ATTENTION TO YOUR CLIENTS THAN
YOUR BOTTOM LINE

 Businesses need to pay less attention

to profits and more to their clients'
needs. Of course profits are
important, but clients are more so
because without the customers there
would be no profits. Remember to
ask for customer feedback to make
the customer feel like a valued part of
your business.
NURTURE YOUR EMPLOYEES

 Treating your employees well is an effective

strategy for winning long-term customers.
A happy employee can generate customer
loyalty as it results in a work environment
that is both supportive and responsive to
customers. Providing customers with a
helpful employee makes customers feel
confident that they will be taken care of
and results in long-term client
relationships.
Make attractive offers

 If you want customers to keep

returning to your business, offer
discounts and rebates for customers
who return or make referrals that
result in more business. This will keep
customers coming back for better
discounts over again, repeat
business, which creates customers for
life.
CONTD
 Guarantee your products and services
 Businesses that offer guarantees on their products
and services attract customers who want to shop at a
place that is reliable, dependable and trustworthy. By
guaranteeing a product or service you assure the
customer that what you are providing them with is
your word, as well as your product.
 Reward your clients
 Rewarding customers makes them feel special, which
increases sales and boosts client loyalty. It also shows
a customer that you care about their business and
creates a more personal relationship. Sending the
customer a token of appreciation for their business
encourages a customer to come back and makes the
customer feel important.
IMPORTANT
 Thank customers and keep in touch
 Something as simple as sending a thank
you card and keeping in touch with your
clients regularly (by email, direct mail or
newsletters) shows your customers that
you appreciate their business. This boosts
customer loyalty and helps develop long-
term relationships.
Customer the king

 Customers sit at the heart of every

business, and understanding them is
vital for any organisation’s survival.
 If want to develop long-term
profitable customer relationships and
gain an edge with an advantage,
need a clear knowledge of
 who r customers are ?
 what they do ?
 how they interact with r products
and services.?
WHAT WE NEED
 Information and analysis of customers’
lifestyles and behaviours, combined with the
company own transactional data from
customers, will help to:
 generate in-depth insight into r customers
 identify the characteristics that make r
customers unique
 help manage r customer relationships
efficiently
 increase sales
 improve the profitability of r business
First touch point
 understand how to reach r customers through
insight into their lifestyles and preferences
 define a communications strategy that
optimises the mix of media should use to
manage r customer relationships and to target
prospects
 optimise r communications by tailoring the
style and content of r touch points to suit r
target customer group
 determine response and conversion rates for r
communications through post-campaign
analysis.
lifestyle and behavioral data and
analysis can help to:

 identify opportunities for growth among r

existing customer base
 determine customers’ current share of spend
 identify the drivers of customer value
 predict the likelihood of customers buying
additional products
 determine customers’ ability to pay
 identify customers’ preferred payment
method
 identify which products to target to
customers for cross-sell and up-sell
How to do it?

 Segmentation
 Profiling
 Local area analysis/visualisation
 Online competitive intelligence
Segmentation

 Classifying customers and allocating

them into manageable groups is an
important business discipline. It
allows to identify customers with
similar characteristics and
communicate with  them more
efficiently to develop sales.
Profiling

 Profiling looks at the characteristics of

customers. Using consumer classifications it
is possible to segment and identify the key
characteristics of r customers. Comparing
the profile or r customers to the total
population or can understand the size of r
audience, and total number of potential
customers. This allows to develop strategies
for allocating resources and engaging with r
audience. Through Demographics
Local area analysis
 Analysing and mapping of the
characteristics of local markets
enables to understand the demand
for the products and services. From
this one can benchmark performance,
forecast sales and target
communications.
Online competitive intelligence

 Daily insights into online customer

behaviour, helping marketers plan,
implement and report on a range of
activities, from online branding and
search marketing, to content
strategies and online partnerships.
Profiling

 Profiling looks at the characteristics of

customer segments and compares
them with existing or potential
customers.
through   Demographic data
Customer value analysis

 Segmenting and profiling customers by what

products they buy and how much they spend
enables to understand their value to r
business. If then match this to the
frequency at which they purchase and the
length of r relationship with them, can
start to understand each customer’s value.
Linking Experian’s demographic and lifestyle
information to customer transaction data
helps understand lifetime customer value.
Cross-sell modelling

 Identifying the relationships between

the demographics and lifestyles of
customers and the products and
services they buy helps identify
opportunities for cross-selling
complementary products and
services, and so increase the value of
each customer to r organisation.
Basket analysis

 Linking customer transactions to demographic and lifestyle information

helps identify which products and services have the greatest appeal and
are bought most frequently by which customers. This enables to identify
patterns in customer behaviour and amount spent by shopping visit.
 Weak customers is a costly business. The most successful organisations
are those that retain their most profitable and loyal customers.
 A key part of customer retention is understanding and dealing with churn.
If one knows which customers are at risk of taking their business
elsewhere and why, one can build strategies that focus on keeping loyal
and profitable customers, and address the reasons for churn with other
customers.
 This type of targeted activity enables to maximise sales and return on
investment.
 sophisticated predictive modelling techniques can identify customers at
risk of churn by estimating how profitable a customer is likely to be over
time (lifetime value).
 Our lifestyle and behavioural data and insight into purchasing behaviours
and attitudes also play a part in understanding and quantifying customer
churn.
Response and conversion
analysis

 Robust and periodic evaluation of your

marketing is essential of your organisation is
understand the performance of your
marketing and identify the best methods for
improving response and increasing customer
conversion. Analysing the levels of response
amongst different customer segments helps
you understand which types of
communication appeals to which customers
to deliver the greatest return on your spend.
 http://www.youtube.com/watch?v=vr3x_RRJdd4

 U N T
Customer relationship management
(CRM)
Helps companies improve the profitability of their
interactions with customers.
Helps to make the interactions appear friendlier
through individualization
Helps to cut down costs

To succeed with CRM, companies need to match

products and campaigns to prospects and
customers — in other words, to intelligently
manage the customer
life cycle.
OPERATIONAL CRM
 . Such software, called operational CRM,
has focused on creating a customer
database that presents a consistent
picture of the customer's relationship
with the company, and providing that
information in specific applications such
as sales force automation and customer
service in which the company "touches"
the customer.
DATA MINING-analytic CRM.
 Data mining is a process that uses a variety of data analysis
and modeling techniques to discover patterns and
relationships .
 1. in data that may be used to make accurate predictions.
 2.It can help you select the right prospects on whom to focus,
 3.Offer the right additional products to your existing
customers,
 4. Identify good customers who may be about to leave you.
 The result
 improved revenue because of a greatly improved ability to
respond to each individual contact in the best way,
 reduced costs due to properly allocating your resources.

 CRM applications that use data mining are called

Applying Data Mining to
CRM
 In order to build good models for your CRM system,
there are a number of steps you must follow. Keep in
mind data mining process is not linear.. For example,
what you learn in the "explore data" step may require
you to add new data to the data mining database.
 The basic steps of data mining for effective CRM are:
 1. Define business problem
 2. Build marketing database
 3. Explore data
 4. Prepare data for modeling
 5. Build model
 6. Evaluate model
 7. Deploy model and results
Define the business
problem..
Each CRM application will have one or
more business objectives for which
you will need to build the appropriate
model. Depending on your specific
goal, such as "increasing the
response rate" or "increasing the
value of a response," you will build a
very different model.
Build a marketing database
 You will need to build a marketing database because
your operational databases and corporate data
warehouse will often not contain the data you need in
the form you need it.
 The data you need may reside in multiple databases
such as the customer database, product database,
and transaction databases. This means you will need
to integrate and consolidate the data into a single
marketing database and reconcile differences in data
values from the various sources. There are often large
differences in the way data is defined and used in
different databases. different addresses for the same
customer. Making it more difficult to resolve these
problems is that they are often subtle. For example,
the same customer may have different names or —
worse — multiple customer identification numbers.
Explore the data
 . Before you can build good predictive
models, you must understand your data.
Start by gathering a variety of numerical
summaries (including descriptive
statistics such as averages, standard
deviations and so forth) and looking at
the distribution of the data. You may
want to produce cross tabulations (pivot
tables) for multi-dimensional data.
. Prepare data for
modeling.
 The next step is to construct new
predictors derived from the raw data.
For example, forecasting credit risk
using a debt-to-income ratio rather
than just debt and income as
predictor variables may yield more
accurate results that are also easier
to understand.
Data mining model building.
 What you learn in searching for a good model may
lead you to go back and make some changes to the
data you are using or even modify your problem
statement. Most CRM applications are based on a
protocol called supervised learning. You start with
customer information for which the desired outcome
is already known. For example, you may have
historical data because you previously mailed to a list
very similar to the one you are using. Or you may
have to conduct a test mailing to determine how
people will respond to an offer. You then split this
data into two groups. On the first group you train or
estimate your model. You then test it on the
remainder of the data. A model is built when the cycle
of training and testing is completed.
Evaluate your results
 . Perhaps the most overrated metric for evaluating
your results is accuracy. Suppose you have an offer to
which only 1% of the people will respond. A model
that predicts "nobody will respond" is 99% accurate
and 100% useless. Another measure that is
frequently used is lift. Lift measures the improvement
achieved by a predictive model. However, lift does not
take into account cost and revenue, so it is often
preferable to look at profit or ROI. Depending on
whether you choose to maximize lift, profit, or ROI,
you will choose a different percentage of your mailing
list to whom you will send solicitations.
Incorporating data mining in
your CRM solution
 In building a CRM application, data mining is often
only a small, albeit critical, part of the final product.
For example, predictive patterns through data mining
may be combined with the knowledge of domain
experts and incorporated in a large application used
by many different kinds of people. The way data
mining is actually built into the application is
determined by the nature of the customer interaction.
There are two main ways you interact with your
customers: they contact you (inbound) or you contact
them (outbound). The deployment requirements are
quite different.
Intercations
 Outbound interactions are characterized by your
company originating the contact such as in a direct
mail campaign. Thus you will be selecting the people
to whom you mail by applying the model to your
customer database. Another type of outbound
campaign is an advertising campaign. In this case you
would match the profiles of good prospects shown by
your model to the profile of the people your
advertisement would reach. Inbound transactions,
such as a telephone order, an Internet order, or a
customer service call, the application must respond in
real time. Therefore the data mining model is
embedded in the application and actively recommends
an action.
Clustering
 Clustering divides a database into different groups. The goal
of clustering is to find groups that are very different from
each other, and whose members are very similar to each
other. Unlike classification, you don't know what the
clusters will be when you start, or by which attributes the
data will be clustered. Consequently, someone who is
knowledgeable in the business must interpret the clusters.
After you have found clusters that reasonably segment your
database, these clusters may then be used to classify new
data.
 Don't confuse clustering with segmentation. Segmentation
refers to the general problem of identifying groups that
have common characteristics. Clustering is a way to
segment data into groups that are not previously defined,
whereas classification is a way to segment data by
assigning it to groups that are already defined.
Patterns of behavior seen repeatedly in
customer marketing, use to increase profits.

 1. Always advertise where the behavior A company

want to create is.  If A company want clicks, advertise
where people are clicking.  If A company want buyers,
advertise where people buy.
 2. The media and method used to acquire a customer
has a very large effect on the potential value of the
customer. 
 3. 50 percent to 60 percent of A company customer
base will be one-time buyers or visitors.   
 4. The only chance A company have at getting a first-
time buyer to purchase again is to contact them
quickly after the first purchase.
 5. One-time buyers who return their only purchase CAN be
better marketing targets than those who don't return their
purchase - IF the customer service experience they have in
dealing with the return is outstanding.
 6. One Rs.1000 1st purchase customer is worth more than
two Rs.500 of 2 1st purchase customers. 
 7. Customers on average will buy down in price over their
LifeCycle; unless A company take specific action to
influence this behavior, the average order price falls over
time.  For this reason, buyers who "go cheap" on the first
purchase usually have lousy future value.
 8. Resend a promotion to the same people.  A company
can often get 50% of the first response rate if the original
promotion was a targeted one.  It's OK to send exactly the
same promotion, can be better to send slightly different
copy, like "2nd chance!"
Customer loyalty
 Customer loyalty describes the tendency of a
customer to choose one business or product over
another for a particular need.

 .  "choose"; customer loyalty becomes evident when

choices are made and actions taken by customers. 
Customers may express high satisfaction levels
with a A company in a survey, but satisfaction
does not equal loyalty.  Loyalty is demonstrated
by the actions of the customer; customers can be
very satisfied and still not be loyal.
 Customer Loyalty has become a catch-all term for the
end result of many marketing approaches where
customer data is used.  A company can say Relation,
and what
 A company are really talking about is trying to increase
customer loyalty - getting customers to choose to buy  
Increased customer loyalty is the end result, the desired
benefit of these programs.  All of the above approaches
have two elements in common - they increase both
Customer Retention and the Life Time Value of
customers.
 Customer loyalty is the result of well-managed
Customer Retention programs; customers who are
targeted by a retention program demonstrate higher
loyalty to a business.  All customer retention programs
rely on communicating with customers, giving them
encouragement to remain active and choosing to do
business with a company.
 A company want customers to do something, to take
action, make a purchase, sign up for a newsletter. 
And once they do it for the first time, A company
want them to continue doing business., especially
since A company wants to create a "loyal" customer
who engages in profitable behavior.
 Customer data and models based on this data can tell
A company which customers are most likely to
respond and become loyal, no matter what kind of
front-end marketing program A company are running
or how A company "wrap it up" and present it to the
customer. 
 For example, let's say A company look at A company
most loyal customers and find on average they buy or
visit at least once every 30 days.  So A company
begin tracking these customers, and discover 20% of
them "skip" their 30 day activity.  In addition, 90% of
the 20% who skip never come back.  A company
are watching the erosion of customer loyalty right
before A company eyes.
 And it's too late to do anything about it, because
they're already gone.  A company will waste a
tremendous amount of money trying to get them
back.  A company have to develop a way to identify
high loyalty customers who are at risk, and take
action before they leave A company.
 This is accomplished by using the data customers
create through their interactions with A company to
build simple models or rules to follow.  These models
can be A company early warning system, and will
alert A company to situations like the "30 day skip"
example above in time for A company to do
something before the customer defects.  Behavior
models cause the data to speak to A company about
the loyalty status of the customer before it's too late.
 The following is not an attempt to dissect all the
nuances of each approach or all the sub-cultures
inside each of them.  There is some overlap and
similarity across all of them, and are listed in order of
increasing complexity.
 Past & Current customer behavior is the
best predictor of Future customer behavior. 
 when it comes to action-oriented activities like making purchases
Being a 35-year-old woman is not a behavior; it’s a demographic
characteristic.  :
 People who are a perfect demographic match for A company
product, but have never made a purchase.
 People who are outside the core demographics, but have purchased
repeatedly elsewhere

 If A company sent a 20% off promotion to each group, asking

them to visit and make a first purchase, response would be higher
from the buyers (second bullet above) than the demographically
targeted group (first bullet above).  This effect has been
demonstrated for years with many types of Direct Marketing.  It
works because actual behavior is better at predicting future
behavior than demographic characteristics are.  A company can tell
whether a customer is about to defect or not by watching their
behavior; once A company can predict defection, A company have
a shot at retaining the customer by taking action.
. Active customers are happy (retained)
customers; and they like to "win." 

 They like to feel they are in control and smart about

choices they make, and they like to feel good about
their behavior.  Marketers take advantage of this by
offering promotions of various kinds to get consumers
to engage in a behavior and feel good about doing it.  
 These promotions range from discounts and
sweepstakes to loyalty programs and higher concept
approaches such as thank-u notes A company notes
and birthday cards.  Promotions encourage behavior. 
If A company want customers to do something, A
company has to do something for them, and if it’s
something that makes them feel good (like they are
winning the consumer game) then they’re more likely
to do it.
 Retaining customers means keeping them
active with A company.  If A company don't,
they will slip away and eventually no longer
be customers.  Promotions encourage this
interaction of customers with A companyr A
company, even if A company are just
sending out a newsletter or birthday card.
 The truth is, almost all customers will leave
A company eventually.  The trick is to keep
them active and happy as long as possible,
and to make money doing it.
Retention Marketing is all about:
Action – Reaction – Feedback – Repeat. 
 Marketing is a conversation, as the
Permission Marketing have pointed out.  Marketing
with customer data is a highly evolved and valuable
conversation, but it has to be back and forth between
the marketer and the customer, and A company have
to LISTEN to what the customer is saying to A
company.
 For example, let's say A company look at some
average customer behavior.  A company look at every
customer who has made at least 2 purchases, and A
company calculate the number of days between the
first and second purchases.  This number is called
"latency" - the number of days between two customer
events.   Perhaps A company find it to be 30 days.
 Now, look at A companyr One-Time buyers.  If a
customer has not made a second purchase by 30 days
after the first purchase, the customer is not acting
like an "average" multi-purchase customer.  The
customer data is telling A company something is
wrong, and A company should react to it with a
promotion.  This is an example of the data speaking
for the customer; A company have to learn how to
listen.  
 The data is speaking for the customer, telling A
company by its very existence (or non-existence)
there has been an action (or non-action) waiting for a
reaction.
 Retention Marketing requires
allocating marketing resources.
   A company have to realize some marketing activities
and customers will generate higher profits than
others.  A company can keep A companyr budget flat
or shrink it while increasing sales and profits if A
company continuously allocate more of the budget to
highly profitable activities and away from lower profit
activities.  This doesn't mean A company should  "get
rid" of some customers or treat them poorly.  
 It means when A company have a choice, as A
company frequently do in marketing, instead of
spending the same amount of money on every
customer, A company spend more on some and less
on others. 
 Now, what if A company knew spending rs100 each
year on a certain 50% of customers would bring back
10 times the profit.  That's the ROI.  If A company
always migrate and reallocate marketing rupee
towards higher ROI efforts, profits will grow even as
the marketing budget stays flat. 
 A company have to develop a way to allocate
resources to the most profitable promotions, deliver
them to the right customer at the right time,   This is
accomplished by using the data customers create
through their interactions with A company to build
simple models or rules to follow. 
Direct Marketing

 Frequently used as a catch-all term, direct marketing

really is the big idea, the global reference to doing
business with customers directly.  It takes many forms
- catalogs, TV Shopping, DRTV, infomercials, direct
mail, cold-calling, the Internet, even matchbook
covers.  Anytime A company try to sell something
directly to the end user rather than going through
some third-party distribution arrangement A company
are doing direct marketing.  Direct does not necessarily
imply a customer database, although there are usually
some kind of transaction records around - perhaps not
actually in a "database."
Frequency Marketing

 "Punch card" marketing.  If A company buy 6 sandwiches,

A company get the 7th free.  Buy $100 worth of stuff and
we’ll send A company a $10 coupon.  Here A company are
using the database to figure out who isn’t buying enough and
try to get them to buy more.  OK, I get it.  It’s really a
crippled version of RFM, FM without the R, if A company
will.  Concepts like LTV and subsidy cost don’t matter as
much; A company just want them to buy more.  These
programs tend to generate HUGE subsidy costs, because A
company’re always giving the most discounts to A companyr
best customers.  They are very common in offline retail,
where the effects on customer valuation are difficult to
measure.  Yuck.
Database Marketing

 Using the customer database to market to customers. 

Hmm.  It can mean A company have a list of customers and
mail stuff to them, perhaps without doing any
customer profiling at all.  This approach is often referred to
as "direct marketing" - the blasting out of mass
communications to everyone on a list.  In reality, it is
nothing more than mass or broadcast communications using
a personal media channel.  True database marketing creates
a feedback loop where customer behavior is analyzed and
taken into account when designing the next communication. 
When no customization based on profiles is done, it's really
mass marketing.  Any marketing approach taking advantage
of customization is data-based marketing, so all the methods
below would be included under the database marketing
umbrella. 
Relationship Marketing

 Database marketing with a friendly, more intelligent face.  Many

database marketing types just use the database as a list and mail
things to it; relationship marketing implies a deeper knowledge of
the customer and some kind of give and take.  In relationship
marketing, there is acknowledgement of a customer LifeCycle, and
marketing is viewed as a process rather than a series of seemingly
unconnected events.
 The process is usually defined as a series of customer stages, and
there are many different names given to these stages, depending
on the marketer’s perspective and the type of business.  For
example, working from the beginning of the relationship to the end
of the relationship:
 Interaction > Communication > Valuation > Termination
 Awareness > Comparison > Transaction > Reinforcement >
Advocacy
 Suspect > Prospect > Customer > Partner > Advocate > Former
Customer
 During this process, A company try to customize
programs for individual customer groups and the
stage of the process they are going through; as
opposed to some forms of database marketing where
everybody would get virtually the same promotions,
with perhaps a change in offer. 
 The stage in customer LifeCycle determines the
approach used in marketing.  A simple example of this
would be sending new customers a "Welcome Kit." 
And in relationship marketing, A company listen to
the data and try to hear what it’s telling A company. 
OK, if A company follow the techniques in the book,
A company are doing relationship marketing, no
doubt about it.  
Loyalty Program Marketing

 Relationship marketing with a currency, a store of

value that tries to keep the customer "locked up" with
a A company.  In well run loyalty programs,
customer profiling is used extensively to promote to
customers, except points are used instead of
discounts as the incentive for activity.  Loyalty
programs are expensive and difficult to do right, but
can be effective, as long as these things are true:
 The rewards are desirable to the specific customer
base.  Generic loyalty programs with blah awards
almost always fail.  If A company’re doing a sports
loyalty program and A company offer tickets to great
games instead of over-priced cameras for rewards, A
company’ll do OK with the customers.
 The program is kept fresh and exciting, with a
constant variety of things to involve the customer
with, including refreshing of the rewards catalog,
point auctions, etc.
 The marketing does not focus on ideas creating
subsidy costs among best customers.  In the ideal
world, A company want to use points to generate
activity from low value customers, and A company
don’t want A companyr high value customers
spending down their points to zero all the time.  Some
marketers encourage the opposite and bankrupt their
programs.
One to One Marketing

 "Most businesses follow time-honored mass-marketing

rules of pitching their products to the greatest number
of people.  But selling more goods to fewer people is
more efficient — more profitable.  Welcome to a
radically different business paradigm of 1 to1
production, marketing, and communication."
 "The One to One Future" gives the best description
yet of life after mass marketing.  A "1 to 1" competitor
focuses on share of customer — one customer at a
time — rather than just share of market, which is the
Holy Grail of the mass marketer."
 The One to One approach, as in relationship
marketing, is looked at as a process with the
customer.  It follows their unique IDIC methodology
(Identify, Differentiate, Interact, Customize).
 Hmmm.  Selling more goods to fewer people is more efficient. 
Sounds like focusing A companyr resources on A companyr
highest potential customers, and customizing A companyr
approach based on their profiles.  Sort of like what we’ve talking
about in this book all along.
 Additionally, their idea is much bigger than just marketing; it is
about the entire business process.  They would like companies
to literally design products and service for specific customers,
instead of creating a product and then trying to find people who
want to buy it.  As a customer of a true 1 to 1 A company, A
company would let the A company know what A company need
and they would provide it.  This is the "share of customer" idea
in action.
 In practice, the concept at this time, for most companies, comes
down to understanding what people want and marketing to
them in a customized way.  Customer profiling is right up the 1-
to-1 alley, because it involves understanding behavior and
reacting to it as an exchange with the customer, back and forth.
Permission Marketing
 Relationship Marketing with a gentler hand on the
communications issues.  It’s a superb idea, and concerns the
protocol of communication between a business and their
customers over the LifeCycle.  Permission marketing states
when communicating with customers, A company should be
anticipated, be personal, and be relevant.  The customer’s
definition of these three ideas would naturally change over
time, so A company have to listen to the customer and
engage in dialogue.
 This has the effect of upgrading the quality of A companyr
customer base, because in theory, only the people who really
want something from A company grant permission.  This is
definitely solidly in the customer profiling camp, where the
focus is on improving the value of customers and not
spending money on customers who are not interested.  Other
than communication protocols, customer profiling techniques
would apply, as long as A company make sure A company
refresh and keep the permission.
 Campaign Summary

 Sudoku story
 Client : The Economist
Name of Agency : OgilvyOne Worldwide
Year : 2007
Category : Mobile
  The Economist took a clear approach to reach the
business-class in Asia through innovative Sudoku games on
mobile phones...
 Campaign Summary
In today's techno-savvy world, how do A company brand The
Economist as the most relevant source of answers – and at the
same time, use innovative technology to get subscriptions?
 A Sudoku mobile game was developed. At the time, Sudoku
was the hottest game among problem-solvers and
globetrotters.
This campaign included:
* A Sudoku mobile game (versions for all popular phone
models)
* An online banner that lets A company directly download
the game to A companyr phone
* A WAP site that lets A company download the game and
subscribe to The Economist
* A website that lets A company download the game, refer
friends and subscribe

The mobile game features one-click subscription to The
Economist (via WAP or phone call) – making full use of the
technology for measurable ROI.
The mobile game was a huge success:
* 1,200 downloads in just four weeks
* Average response was close to four per cent. The banner
alone pulled 26.8 per cent!
* 2.8 per cent conversion (i.e. subscriptions) from the
mobile game
* The game was seen in the hands of many execs in Central
business district, attesting to successful brand awareness
Marketing Challenge and Objective


For nearly five years The Economist had not invested in
brand advertising and in these five years Asia had
undergone staggering changes. These changes had
taken Asia through massive growth, fueling its
transformation from a backyard of global business to
the forefront of global commerce.
The changes were affecting everyone who plays in Asia.
In our target's mind The Economist had unfortunately
not kept up with this change, our research in Hong
Kong showed our awareness among readers of English
special interest magazines had dropped to its lowest
ever 23 per cent. The brand although revered not so
long back was definitely lacking relevance.
 The silver lining however was the growing
stature of our target audience – businessmen
stationed in Asia –their voices were being
heard, their contributions recognized globally.
The challenge was clear: Make the
businessperson in Asia understand with
complete clarity that The Economist shared
the same aspirations, ambitions and energy.
At the same time, make use of innovative
technology (i.e. relevance to today's techno-
savvy world) to get subscriptions?
Target Markets

The target group is the extremely successful, highly

ambitious Asian & Expatriate businessperson based in
Hong Kong but with regional and even global influence.
They are at a point in time where they could be
architects of the Asian renaissance. Their ambitions are
growing, the feeling of invincibility is palpable as A
company travel through Asia.
 “The challenge was to make the businessperson
in Asia understand that The Economist shared
the same aspirations, ambitions and energy (as
they had)”

The seamless world in which they operate has opened
up opportunities and has brought new challenges for
the Asian businessman/woman. The challenge is to be
in the know; the ability to think about the world as a
single market, and develop the skills to spot
opportunities in seemingly disconnected territories.
With the first taste of global success has also come
the self-realization that his/her opinions are being
heard worldwide.
Strategy

Asia is standing at a point in time when there is a

socio/economic trend (or should we say a
socio/economic 'energy'), and that is the Asian
businessperson is beginning to enjoy a bigger share of
voice, influence & respect on the global stage.
With this insight, we sought to ride this 'energy'. The
21st century is Asia's century and in these amazing
times, The Economist is the brand that will best
prepare the Asian businessperson – giving them a
more commanding voice.
Our creative idea was therefore: "With The Economist,
A company'll push all the right buttons".

Media planning for The Economist has never been an after
thought but an integral weapon in the brand's strategic
arsenal. The budget was low, but the impact had to be BIG
so media innovation had to further our creative strategy.
We developed a Sudoku game for A companyr mobile
phone. At the time, Sudoku was the hottest game among
problem-solvers and globetrotters.
When downloading through the banner or WAP site, the
system even auto-detects A companyr phone's make and
model –further branding The Economist as insightful.
Best of all, the mobile game features one-click subscription
to The Economist (via WAP or phone) – making full use of
the technology for measurable ROI.
Campaign Results and Measurement

The figures speak for themselves. A

557 per cent increase in conversion to
subscription was the end result. This
was based on the campaign being
averaged against other forms of touch
points like eDM's and Direct Mail.
CRM – Leadership

 Leadership is the art and science of

influencing the activities of others
toward the achievement of goals
by providing purpose, direction
and motivation
 A leader charts a course and constantly looks over
the horizon.
 New technology, a volatile uncertain economy,
competition, Govt Policies, increasing diversity of the
workforce, and the threat of terrorism are factors
forcing organizations to adapt quickly to new
circumstances.
 Change in the business environment was at one time,
orderly and predictable.
 Peter Drucker "Every organization has to prepare for
the abandonment of everything it does." These factors
require leadership ability—the ability to lead not
manage.
Managers vs. Leaders
 Planning and budgeting –  Provide direction even
 Organizing and staffing when it is unpopular
 Follows orders  Provides guidance and
 Controls and solves counsel -
problems  People follow their
 Maintains control and example
order –  Motivates and inspires
 Protects status quo  Creates change -
 Writes memorandums  Builds relationships and
 Follows rules and trust –
regulations  Trains and teaches -
 Technical orientation  Questions rules and
regulations
 Strategic orientation
Define mission
 They have a clear mission-Good
leaders have a defining mission in
their life. This mission is called many
things...a purpose, an obsession or a
calling. But what is important is that
this mission, above all other traits,
separates managers from leaders.
Pvt Ryan mission- Tom Hanks
Create A Vision
 . A clear picture of a future goal will help its
achievement. Good leaders have big ideas
and dare others to be great. Billy Payne
ignited a vision in the hearts and minds of
the people of Georgia and the world. His
vision caught fire and brought the
Centennial Olympics to Atlanta in 1996.
Despite criticism and naysayers, it was one
of the best games ever. When the games
ended, Billy Payne said, "I am a
nondescript, regular old person" who had
an idea
Build Trust
 They trust their staff/employees. An
effective leader is not a micro-
manager. Responsibility is pushed
down through the ranks to rely on the
ideas and energies of all the
workforce. This delegation of
authority requires that employees
have a voice in the decision-making
process which magnifies the leaders'
ability to effectively lead others.
Crises management
 4) Leaders take a position and
defend it when things go wrong.
Being graceful and brave under fire is
the surest way to building credibility.
Risk Management
 They encourage risk-taking. If an organization does
not examine new ways of doing things, if it does not
push out its boundaries, if it never makes mistakes -
they may become roadkill. Herb Kelleher, former
CEO of Southwest Airlines, has a nonconformist
leadership philosophy. Herb feels everyone is a
leader and he empowers people to make decisions.
To fight bureaucratic rules and regulations, he pushes
decision making authority to the lowest possible level.
As Herb says it, "We tell our people that we value
inconsistency."
Know your business
 They are experts. Good leaders are
intimately familiar with their organization's
products and services. Nothing replaces
experience on the front-line. All
executives, managers and supervisors
should spend time on the front-line finding
out what is happening and what is in the
way of keeping the workforce from doing
their best. Again, it is a question of
establishing credibility. People know
immediately when a superior is 'winging it'
and they stop listening.
Know what is important
 They know what is essential. Leaders
have a remarkable ability to zero in
on what is important. They can
simplify complex problems elegantly
without taking the easy way out.
Teachers And Mentors.
 In this rapid changing environment,
organizations must create a learning
environment. The senior people must be
teaching and training those who may soon
replace them. We are not necessarily
talking about formal classroom training.
We need leaders talking to people In the
hallway, on the loading dock . . .
everywhere. Everyone should be
mentoring someone.
Case Study- A GREAT PLACE TO WORK

 Aside from the basics of ensuring the company

offers highly competitive wages and benefits,
they have focused on enhanced
communication and professional growth and
development. They also try to have fun in the
workplace.

 It’s a cumulative combination of initiatives

that keeps the associates happy.
Communication

 They conduct leadership rounds on all units and departments in the

organization. Senior Leaders pair up and visit departments on
a rotating basis.
They ask the employees questions such as:
-What is working well?
--What is not working?
--What are the daily frustrations?
--Who or what other department would they like to recognize that
has been especially helpful to you?
--Are their any safety issues They should know about?
The Senior Leaders ensure all issues get logged and are followed up.
They can’t do something They take the time to explain why. They
also encourage and respond to all employee suggestions received
through the suggestion program. Suggestions and responses and
are put out on the internal email system and in the company
employee newsletter.
Step 1
 They created an “Operations Council” which is a select group of
the Directors and Managers who meet every other month to
assist Senior
 Leaders with workplace issues. They hold the full manager
group meetings on the alternate month so all managers stay
informed and have a formal communication venue.
They hold quarterly Employee Roundtable discussions. About
10-15 employees from a cross-section of departments are
invited on a rotating basis to an intimate meeting with the COO
and me to discuss any thing that is on their minds.
They formally meet with the newly hired employees when they
reach six months of employment to just check in with them and
to make sure things are going well Their own managers, though
in contact on a daily basis, formally meet with them at 30 and
90 days from their start date.
Fun in the Workplace


They decided to hold a “Sock Hop Day” in lieu of the party
they missed due to financial constraints.
 . They had a costume contest for the best 50’s outfit,
 held a hula-hoop contest during the lunch period, and the
workplace cafeteria created a special menu including sliders,
fries and milkshakes with 50’s music playing in the back
ground.
 Members of senior management handed out free milkshakes to
employees and visitors.
 It was a low cost way to thank employees for understanding
the need to cancel the more expensive annual party and to
convey that despite the need to control expenses They are
committed to having fun in the workplace.
Professional Growth and Development
Company Cares

They provide generous tuition reimbursement for all job-related

degrees up to the doctorate level.
 They cover expenses for job-related certifications.
 They have a generous student loan forgiveness program for hard-
to-fill positions such as nursing, medical imaging, physical therapy,
etc.
They implemented a School-At-Work Program to allow the entry-
level associates to train and build a career path in health care.
 They are given paid time off from their regular job to get on-site
training and education in medical terminology, math and working
with computers.
 They have had two groups of six students go through the program.
All have successfully graduated and some have already been
placed in higher level positions within the system.
 They have financially supported managers to enroll in
local leadership programs offered in the community
and provide growth opportunities within the system
for them to gain new skills in areas outside their
normal responsibilities.

As a result, the employee turnover has decreased and

They have an 18% re-hire rate. (18% of the new
hires are employees who left and decided to come
back.) They focus on retention at all times, both in
periods of financial downturn as well as during
prosperous times.
Ref books
 Relationship Marketing (by) S.
Shajahan (TMH)
 Customer Relationship Management
(by) G. Shainesh & Jagdish N. Sheth
(Macmillan)