How to Hug Your Customers and Get Value

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How to Hug Your Customers… and …Get Value with Every Squeeze! SMART CRM Conference San Francisco June 16, 2004 Bob Thompson CEO, Customer. Think Corporation Founder, CRMGuru. com Copyright 2004 Customer. Think Corporation. All Rights Reserved.

“This is the aircraft “This is divert your “Please the captain of a Radio conversation between a US U. S. Navy degrees to course 15 ship. Divert carrier USS Nimitz, naval ship by a your course the north to avoid three accompanied and Canadian authorities “Recommend you immediately!” demand Newfoundland, collision. ” off the coast of divert YOUR course 15 destroyers. I that you change your “No, I say again, divert October degrees to the south. ” 1995. YOUR is a lighthouse. “This course to the course 15 degrees south. ” call. ” It’s your north or counter measures will be taken. ” How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Competing for (Relatively) Scarce Customers l Maturing markets l Global trade l Efficient manufacturing l The Internet How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

J. D. Power 2004 Initial Quality Study Top 10 Manufacturers– Problems per 100 Cars How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

“Be Distinct or Be Extinct” Tom Peters Customer Intimacy Product Leadership Operational Excellence Source: The Discipline of Market Leaders, Treacy & Wiersema How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Beyond Product and Price Aren’t Enough “It’s incredibly arrogant for a company to believe it can deliver the same sort of product that its rivals do and actually do better for very long. That’s especially true today, when the flow of information and capital is incredibly fast. ” Michael Porter How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Competitive pressures are increasing… Major Increase 32% Some Increase 42% No Change 20% Some Decline 3% Major Decline 1% No Opinion 74% 4% 2% Source: CRMGuru Online Survey, 1300 Responses, July 2003 How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

…as product lines get more complex Major Increase 14% Some Increase 51% No Change 26% Some Decline 5% Major Decline 1% No Opinion 65% 6% 3% Source: CRMGuru Online Survey, 1300 Responses, July 2003 How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

CRM Vision Acquire, grow, and retain profitable customer relationships to create a sustainable competitive advantage. How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

CRM is Not New…Or is It? What is CRM? l 360 -degree view of the customer l Improving quality of customer interaction "The true business of every company is to make and keep customers. ” -- Peter Drucker l New software tools and technologies l Getting right data to right employee l Shift from product to customer orientation “CRM means creating mutual wins for customers and all company stakeholders. ” -- Bob Thompson l Management fad! Source: META Group/IMT Strategies How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

CRMGuru Study: What is CRM? “Automation of customer business processes” 9% 7% “Relationship marketing supported by technology” 16% 15% “Business strategy to increase customer profitability” 16% 19% “Putting customers at the heart of business” 36% 34% “Creating win/win relationships with customers & stakeholders” 23% Sources: CRMGuru Online Surveys: July 2003 and June 2004 How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

How Do Customers Define a Great Relationship? “Easy to do business with” “Expertise” “Win/Win” “Personal” “A history of working together” “A good deal for the money” “Responsive and proactive” “Asks questions” “Service and value just for me” “Quality, consistent performance over time” Source: CRMGuru. com How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Why Customers Leave Service Matters! Source: Cooley Identifying At-Risk Customers Ø Analyze purchase data Ø Use frontline staff to gather feedback Ø Conduct customer research surveys Ø Analyze A/R problems Ø Use churn models / technology Ø Monitor milestones / events Source: Griffin How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

We tend to focus on conscious processes… Consumers Marketers Conscious Processes How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

…but 95% of thought, emotion, and learning occur in the unconscious mind Consumers Marketers Conscious Processes Unconscious Processes Source: “How Customers Think” by Zaltman How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

How do your customers feel about the solution and services you provide? LEFT BRAIN RIGHT BRAIN Thinking Feeling uses logic detail oriented facts rule words and language present and past math and science can comprehend knowing acknowledges order/pattern perception knows object name reality based forms strategies practical safe uses feeling "big picture" oriented imagination rules symbols and images present and future philosophy & religion can "get it" (i. e. meaning) believing appreciates spatial perception knows object function fantasy based presents possibilities impetuous risk taking How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Relationship Health Indicator Small Professional Services Firm LEFT BRAIN RIGHT BRAIN Thinking Feeling Breadth of services used Asks for advice Tenure as customer Freely gives input and complaints Financial health Face-to-face meetings Average contract size Invited to customer events Uses custom services Gives an endorsement Pays on time Friendly How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Southwest’s Performance is Not Accidental Global Study of Customer Relationship Quality Source: Preliminary Findings from Bristol Group and CRMGuru study of Customer Relationship Quality, October 2003 How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Customer Satisfaction Trends -- Airlines Source: American Customer Satisfaction Index How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Enterprise Rent-A-Car Superior Service, Superior Profits “At Enterprise, loyalty is everything. If we don’t satisfy customers so that they come back, we can’t build the business. ” Satisfaction Trends 88 89 90 90 92 75 68 Andy Taylor, CEO Enterprise Rent-A-Car 69 72 55 77 93 77 72 70 65 93 71 71 65 58 Source: Reichheld How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Tesco: “You are what you eat” Main grocery shop ? Daily top up ? Eat now ? Eat later ? Fill up the car ? Buy a TV ? © Copyright, dunnhumby 2004 — confidential How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Shopping data leads to greater insight of key customer groups I love exotic and adventurous food The microwave is a godsend for me! I have to stick to a budget I love baking on a Sunday afternoon © Copyright, dunnhumby 2004 How to Hug dunnhumby 2004 — Get Value with Every Squeeze ©© Copyright, Your Customers, andconfidential Copyright, dunnhumby 2003 I care about the environment Copyright 2004 Customer. Think Corporation. All Rights Reserved.

At Tesco, the “R” in CRM stands for RELEVANCE Data & systems management Personal Relationships Media Effectiveness Pricing/ promotion Strategy Format Development Customer Insight Shopping Analysis Better Ranging Local Store Research Customer Acquisition Targeted Communication © Copyright, dunnhumby 2004 How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Listen! Profitable CRM Projects Start by Understanding Customer Needs “Businesses survive or decline based on their employees’ ability to listen. Hire the smartest, best people you can get, orient them to customer satisfaction at the expense of all else, then get out of their way and let them work. ” Doug Allred, SVP Customer Advocacy for Cisco Systems “If you’re constantly getting feedback from your customers …and you’re willing to listen, you can make the most of the opportunities implicit in those needs. ” Michael Dell, in Direct From Dell How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Does CRM Really Work? l What is the CRM success rate? l Which factors drive success? l What is a realistic payback period? l Do actual benefits meet expectations? l Which applications generate the best ROI? How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Global study of CRM projects Benefits (Pct of Projects) 33% -- less than $50 K l 28% -- $250 K to $2. 5 M l 15% -- over $2. 5 M Increase customer acquisition rate (50%) l Increase share of customer (48%) Decrease customer defection rate (37%) Decrease front office staffing costs (33%) 24% -- $50 K - $250 K l l Increase customer satisfaction (51%) l Investment l Source: CRMGuru Study of 448 CRM Projects, 2002 How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Two-Thirds of CRM Projects Deliver ROI (www. crmguru. com/blueprint) Metrics l Churn Rate l Share of Wallet l Customer Satisfaction l Customer Acquisition Rate l Front Office Staffing Costs Source: CRMGuru Study of 448 CRM Projects, 2002 How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

51% Achieved Payback in 18 Months or Less Don’t Know More than 24 months 19 to 24 Months Less than 6 months 13 to 18 months 6 to 12 months Source: CRMGuru Study of 448 CRM Projects, 2002 How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Four Factors Drive 72% of Success l Customer-centric strategy: using customer satisfaction and attrition data, getting customers involved in planning l Frontline training and support: explaining value of CRM, providing new skills training l Organizational change: workflow design, changing roles and responsibilities l Goals measured statistically: current performance and CRM goals measured Source: CRMGuru Study of 448 CRM Projects, 2002 How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Potential CRM benefits are strategic… Source: CRMGuru Study of CRM projects, 2004 How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

…but actual benefits are more tactical Source: CRMGuru Study of CRM projects, 2004 How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

CRM underperforms on strategic benefits Source: CRMGuru Study of CRM projects, 2004 How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Success is in the Eye of the Beholder Is your CRM project a Success? Don’t Know 16% No 17% Yes 67% Source: CRMGuru Study of CRM projects, 2004 How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Sales applications drive a higher percentage of “major” performance improvements Source: CRMGuru Study of CRM projects, 2004 How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Conclusions l Based on ROI and perceptions, the overall CRM success rate is about 70% l To improve ROI, focus on customer needs, organization issues, and appropriate metrics l Strategic gains (loyalty, growth, profitability) lag behind tactical benefits (productivity, cost) l Sustainable competitive advantage probably comes with larger or riskier projects How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

…could you build these? Unity Temple Guggenheim Museum New York City Fallingwater Pennsylvania How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Information Technology: Necessary but Not Sufficient for CRM Success l Necessary: A condition which must hold for a result to be true, but which does not guarantee it to be true. l Sufficient: A condition which, if true, guarantees that a result is also true. (However, the result may also be true if the condition is not met. ) How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

CRM spending is trending up Major Increase 19% Some Increase 51% No Change 19% Some Decline 4% Major Decline 1% No Opinion 70% 5% 6% Source: CRMGuru Online Survey, 4400 Responses, July 2003 How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

For competitive advantage, be a first-mover to solve more complex problems Collaborative Network High Potential Competitive Advantage Collaborate Multi. Channel Innovate Single Channel Design different, more effective processes Automate Engage customers and partners for win/win Enable many-to-many relationship networks Use new channels and customer touch points Streamline internal sales and service processes. C-Biz Solutions e. CRM, PRM More of the same, done faster and cheaper. SFA, Call Center Low CRM Maturity High How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

$“The Internet as a sales channel represents only a fraction of its potential to$ “The Internet as a sales channel represents only a fraction of its potential to business. The real potential lies in its ability to transform relationships with the traditional supplier-vendor-customer chain. ” Michael Dell How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Transform your customers’ supply chain from linear point-to-point relationships… Manufacturer Supplier SCM CRM PRM CRM Partner SCM Customer SCM Relationship Management: “Sell-Side” Focus on Lifetime Value, Customer Experience, Revenue/Profit Growth Supplier Management: “Buy-Side” Focus on Cost, Cycle Time, Responsiveness How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

…to optimized value networks Manufacturer Global Competition Suppliers Power Shift to Customers Internet Adoption Customer Partners Internet Standards Web Services Collaborative Relationships: Focus on Mutual Value, Profit, Efficiency, Integrated Processes How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Virtual Extended Enterprise Cisco Systems l 87% of Orders Placed Online l 25% Increase in Customer Satisfaction l 70% reduction in order cycle time l $175 M savings in annual operating costs l 45% inventory reduction for Cisco and its partners Source: IBM How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

It’s a great time for CRM technology buyers! l CRM’s reputation is a mixture of hope, hype, and confusion l Executives are investing in smaller, more focused projects with clear ROI l Growing awareness of CRM fundamentals (software is an enabling tool) l CRM software industry is restructuring to meet the requirements of post-CRM boom How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Management and people issues outweigh technology challenges Management People Technology How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

When CRM Doesn’t Work, Why Not? l It’s not about Customers • Ensure customers will perceive value l It’s not about Relationships • Relationships are two-way streets l It’s not about Management • You can’t manage what you don’t measure How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

A “Smart” Way to Succeed with CRM Strategy for Customer Value Drivers Metrics to Guide Journey Alignment of Human Resources Enablers Redesign of Customer Processes Technology to Optimize Results How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

The Secret to Strategic CRM Success What’s the “One Thing” That is Distinctive about Your Customer Relationships? How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.

Thank You! Bob Thompson CEO, Customer. Think Corp Founder, CRMGuru. com 1261 Cortez Ave. Burlingame, California 94010 United States bob@crmguru. com 650 -343 -8529 How to Hug Your Customers, and Get Value with Every Squeeze Copyright 2004 Customer. Think Corporation. All Rights Reserved.