CRMBefore and Beyond…

• The first: Targeting, Database Marketing and EDM

• The last: Loyalty and Retention Programs

• The everything: CRM

• …And beyond

Agenda

In the Beginning there was…

“A means of marketing where a company -unlike in mass marketing- addresses a

specific identifiable target group. Targeted Marketing is closely related to segmentation.”

Targeted Marketing

Segmentation is Based Upon…

Segmentation Based Upon RFM Analysis

Recency, Frequency, and Monetary calculations are used extensively in retail for customer

segmentation

Or Mosaic-like Typecasting

Tesco’s Segmentation

Shopping HabitsShare of Shopping, Recency & Frequency

Primary ChannelPreferred Format (Supermarket, Express, On-line, Petrol)

Brand AdvocacyParticipation in Extensions (Tesco.com, TPF, Baby Club, Win club)

Promotional PromiscuityCherry picking deals, bulk buying to larder fill

Life StageApplication Form, What They Buy

Basket TypologyVegetarian, Organic,You Are What You Eat!

ProfitabilityBrand Choice, Packaging Preference, Weight of Purchase

Organics

Finer Foods

Healthy Living

Price Sensitive

Tesco’s Targeted Communication

Then there was Database Marketing

“Database Marketing is a form of direct marketing using databases of customers or potential customers to generate personalized offers and communication in

order to promote a product or service for marketing purposes.”

400 Million Euros Down The Drain

Database Marketing at ZARA

• Fast-Fashion-strategy

• ZARA ‘creates’ her collection through (real-time) database tracking of the supply-chain and ‘fashionata trend watching’

• Using ‘shared situation awareness’: analyze data finding sales patterns develop hypotheses prototyping (25,000 a year) instore testing sell

• More then half of the collection is made in home-markets

• Sales went up 20%. Margins are 16% (versus 7% in traditional fashion retail)

Database Marketing at ZARA

DBM was Followed by EDM

“Event Driven Marketing is based upon the identification of changes in the situation or needs of customers and acting upon these

changes by predefined campaigns that come into action if these events occur.”

Event Driven Marketing

Needs

Client

Needs

Client(Segments)

Product Centric Client Centric

Needs

Client(Segments)

Event Driven

Event 1

Event 2

Event 3

Event 4

Event 5

• Static Moments which are the same for all clients: e.g. start of season sale, new product

• Variable Moments varied by client: e.g. birthday, wedding, firstborn, end of contract

• Database Predicted Moments based upon client behavior and look-a-like analyses

Different Kinds of Events

Static Moments: Pre-Sale

Variable Moments: Newly Borns

Variable Moments: Concepts

Database Predicted Moments

‘Kraamkamer’• In the first 5 months the potential value of new

customers is set: “We’ve got them in, let’s move them up”

• Profile, behavior, the 5 golden questions, service enquires etc. are the bases for data-modeling

• Data models serve as cross-sell tools for voicemail, SMS, roaming etc. with ‘on the shelf’ communication

• Churn and win back are actively managed both ways

Continuous Cycle

Deliver Message

UnderstandCustomer Behavior

Insight

Gather Data,Results Analysis

Strategy

Right message to

the right person at the

right time through the

right channelsCommunications Plan,

Creative Materials

Or… EDM for Dummies

Listening to guinea pigs

Loyalty and Retention Programs

“Differential Marketing teaches us that in all categories 20% of clients bring 80% of

the business. So it is important to differentiate clients on their value and treasure your most valuable clients.”

20%

So What is Loyalty?

• Loyalty has an emotional component

• Loyalty is proved by the resistance to the offers of other brands

• Loyalty is an attachment to a brand that goes beyond convenience or short-term gain

• Loyalty makes up- and cross selling easier

• Loyalty inspires active advocacy amongst peers

What Loyal Customers Deliver

• You are their first choice• They look to you to solve their needs / problems• They share information with you• They ask you for guidance• They discuss your offer – not your prices• They allow you to make the occasional mistake• They positively suggest how you can improve• They want you to succeed• They have emotional equity in your brand • They advocate ‘their’ brand to others

How to Build Loyalty

•Perhaps by doing the antithesis of conventional advertising

•Advertising battles to get customers to listen… which makes for a very noisy marketplace

•Loyalty communications:•Aims to make your customers resistant to the shouting of others

•Take them away from the marketplace to somewhere nicer, quieter and more private

When you’re

close to your

customers you don’t have to shout

“Customer loyalty is not about how customers demonstrate their loyalty to us, it is about

how we demonstrate our loyalty to them.”

Sir Ian MacLaurin Chairman, Tesco

British Airways - Executive Club Loyalty

• Executive Club has 5 million members worldwide• Collect British Airways Miles which can be used for

reward flights or upgrades• Benefits include priority on waiting lists, seating

preferences, meal preferences, priority check-in/boarding and lounge access for gold members

• Three Tier Membership: Blue, Silver, Gold• Account balance available via phone or web site

British Airways - Executive Club Loyalty

KLM Wings Loyalty

Tesco Clubcard Loyalty

• 1 point per pound spent. For every 150 points members receive a coupon for £1.50 to spend in store

• Has more than 10 million members • Generates more than £100 million incremental

sales every year • Access to other Tesco clubs such as Baby and

Toddler Club, Wine Club, Food Club and Healthy Living Club

Contact Directly at the Till

We see specific shopping behaviour at the point of purchase…

… and can respond by sending a message to the till to print a coupon

…this is then handed to the customer bythe checkout operator

The customer returns to store to

redeem the coupon

Clubcard data used to understand purchasing behaviour and profile

our customers

Not just product coupons, but a wide range of options and offers

How many Loyalty Cards do you have?!

Barbie Loyalty

• On http://barbie.everythinggirl.com over 6 million young girls have subscribed

• 50 Million individual contacts with the core target group: girls aged 4-12

• A virtual loyalty system where ‘B’ points can be earned and burned on dolls, accessories, clothes, CD ROMs etc.

• Every $ spent on the Club has the same effect on sales as 5 $ spent on promotions

• Club vs. Non-Club Members: buy 50% more dolls, buy 100% more clothes, buy 100% more accessories

What the F*CK is CRM then?

“Customer Relationship Management (CRM) is a business strategy to acquire, grow and retain profitable customer relationships. It is a customer-centric way of doing business that includes policies and processes, partners, employees, marketing, systems and IT.”

www.customerthink.com

How is CRM Different from…?

• Direct Mail is a key channel for personalised, one-to-one communication for brands to engage with its consumers

• Direct Marketing / Relationship Marketing essentially focuses on communications between a brand and its consumers

• A Loyalty Program builds on a mutually beneficial relationship between a brand and its consumers, usually using purchase-based points redemption to ‘buy’ brand loyalty

• A System is the technology that enables all of the above, but without human intelligence, becomes a very expensive piece of software

Direct Marketing / Relationship Marketing

Loyalty Programs

Direct Mail

A System

So…. Not just a Marketing Activity

CRMProduct

&Packaging

POS Promotions MassMarketing Web

CRM

But CRM Encompasses all of these

RelationshipMarketing

Product&

PackagingPOS Promotions Mass

Marketing Web

In-and External Processes

Internal Stakeholders

Systems & TechnologyPartners / Suppliers

A Successful CRM Program Delivers…

•Higher operating efficiency•Lower cost of service•Loyal customers•Increased brand relevance•Increased sales•Real-time single customer experience across multiple channels

Some Numbers from Dutch Financials

• Spaarbeleg: Millions of extra revenue and profit

• FBTO: Over 10% growth on direct marketing conversion

• Postbank: Lowering ‘waste’ with tenths of percents. Big cost reductions

• Robeco: Repeated winner of The Dutch CRM Award

CRM Transformation

CRM Transformation

Business focus: het ontwikkelen van een visie en een missie met gerelateerde doelstellingen om

zodoende CRM te implementeren. De klant wordt belangrijker dan het product.

CRM Transformation

Organizational structure: omdat de klant centraal staat is het van belang dat de organisatiestructuur zodanig wordt ingericht dat geen sterke scheiding

bestaat tussen beleidsbepalers en uitvoerders, waarin iedere medewerker wordt geacht mee te denken en waarin klantgroep-managers worden

aangesteld die verantwoordelijk zijn voor acquisitie en klantbehoud.

CRM Transformation

Business metrics: het meetbaar maken van de performance van de organisatie op basis van de

customer lifetime value en loyalty. In plaats van op basis van product- of campagne-performance.

CRM Transformation

Customer interactions: omslag in communicatie van massacommunicatie naar een interactieve dialoog.

CRM Transformation

Technology transformation: omslag naar gebruik van technologie die de dialoog met de klant

mogelijk maakt ‘at all points of contact’.

CROSS-SELL PROFILE PROBABILTY

SCORING

Impact on Organization Structure

Our Cup of Tea: Customer Interaction

“Managing client contacts and offering individual fitted value propositions based upon their

(buying) behavior and client value throughout all media types.”

Data Warehouse

This Means: Connecting Media and People Using Data

A T M

M O B I L EI N T E R N E T

P. O. S.E – M A I LM A I L

S A L E S

C A L L C E N T R E

This Means:Thinking in Campaign Management Funnels

CRM is Easier for ‘Newbies’

Amazon.com: Background

•World’s largest bookstore provides online universe of commerce

•Earth’s biggest varied selection

•30 million customers

•4 international web sites

•Operates the Internet Movie Database. Including 250,000 film references. Over 1 million cast / crew references

Amazon.com: The Website and Database

Amazon.com: Solutions and Results

• Algorithms (mathematical formula) to determine product and page presentation per customer

• Analyze results to improve personalization

• Remembers user’s name, items last bought, and items browsed

• Recommends titles of books, products the users can buy next

• Measures impact of innovation to customers and to the business based on 70 metrics

By Movie (by keyword)

By Category

By Director (By Artist)

Amazon.com: Cross-Selling

Amazon.com: Price Bundling

It suggests another movie and, at the same time, offers them together at a lower price

In a retail environment …

In a web environment …

Amazon.com: Assortment Decisions• What combination of items to have on the shelf at

any time?!

• What items can be put side by side in portal?!

• How can we group together services according to sub profiles?!

Amazon.com: The Closed Loop

Amazon.com has adopted a closed loop approach to track customer response and

behaviour. Measuring effectiveness, success and failures in terms of ROI

Beyond CRM

“And if we’ve managed all these ‘Looney Tunes’ for our clients, then let’s come back and take it a step further. With the latest stuff like,

eCRM, Analytical CRM, VRM en Social CRM”

But for now…..