logging in or signing up Overview of Effective CRM Implementation and Operation alanmcsweeney Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT lite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: Embed: Flash iPad Copy Does not support media & animations WordPress Embed Customize Embed URL: Copy Thumbnail: Copy The presentation is successfully added In Your Favorites. Views: 535 Category: Science & Tech.. License: Some Rights Reserved Like it (1) Dislike it (0) Added: January 11, 2011 This Presentation is Public Favorites: 2 Presentation Description No description available. Comments Posting comment... By: sunilkbansal (25 month(s) ago) Hi, This looks veru descriptive overview of CRM. I find it very useful. I would like to teach my fellow team members with changes in implemenation we have. Please allow me to download this presentation. Thanks, Sunil Saving..... Post Reply Close Saving..... Edit Comment Close By: hammadmuniir (28 month(s) ago) Hi , i would like 2 have the ability to download this presentation Saving..... Post Reply Close Saving..... Edit Comment Close Premium member Presentation Transcript Overview of Effective CRM Implementation and Operation: Overview of Effective CRM Implementation and Operation Alan McSweeneyObjectives: January 11, 2011 2 Objectives To provide an overview of effective CRM system implementation and operationAgenda: January 11, 2011 3 Agenda Introduction to CRM Customer Analysis and Segmentation CRM Implementation Approach Activity Based Costing for CRM Analysis Data Mining SummaryWhat is CRM?: January 11, 2011 4 What is CRM? End-to-end customer management Process enabled by set of technologies Process designed to integrate all customer interactions through all channels Like all processes organisational change is needed CRM systems need information and applications support CRM processes should be consistent and repeatableIllusion of Customer Relationship Management: January 11, 2011 5 Illusion of Customer Relationship Management Myth of CRM Customers are not outsiders We are all customers – of utilities, service providers, financial institutions, government agencies CRM is about how WE want to be treated by our service providers When we talk about customers ( THEM ), we mean us How do you want to be treated by your service providers? That is exactly how your customers want to be treated by youCustomer Service and Customer Satisfaction: January 11, 2011 6 Customer Service and Customer Satisfaction Poor customer service is still pervasive despite awareness of the need for and benefits of improved customer service Many organisations have not changed their business processes to deliver improved customer service and provide what customers want Improved customer service means optimising end-to-end processes from the customer viewpoint Involves linking multiple internal processes to get cross-functional view from customer perspectiveWhat Customers Really Want – More For Less: January 11, 2011 7 What Customers Really Want – More For Less More Of Value Responsiveness Involvement Consideration Dependability Flexibility Less Of Aggravation Time to Complete Transaction Rigidity Cost Bureaucracy Excuses Lack of IntegrationWhat Organisations Try to Do – More With Less: January 11, 2011 8 What Organisations Try to Do – More With Less More Of Work Customers Sales Revenue Margin Less Of Personnel Facilities CostBalance Between Internal and External: January 11, 2011 9 Balance Between Internal and External Need to balance management focus between “more with less” and “most for less” More with less focuses on internal reductions: cost, staff More for less focuses on external improvements Only a cross-functional customer-oriented view of business processes can achieve this balance Internal processes focus on operational functions Cross-functional view links internal processes to get end-to-end customer view of organisation Cross-functional processes are those that really affect customers – from start to endOverall CRM Solution Architecture: January 11, 2011 10 Overall CRM Solution Architecture Continuous dialogue across all customer channels/touch points Personalised products/services based on customer needs and expectations Consistent user experience across all contact points Real-time access to all customer information across the enterpriseTechnology and Application Components of a CRM Strategy: January 11, 2011 11 Technology and Application Components of a CRM Strategy CRM Strategy Sales Force Automation Campaign Management Document Management Call Centre Automation Workflow and Process Data Mining/ Modelling Telesales Automation Internet/ Intranet/ Extranet Data Warehousing Customer Profile DatabaseCRM and Related Systems Architectural Elements: January 11, 2011 12 CRM and Related Systems Architectural Elements General User Acquisition General Use Interface Targeted User Content and Offers Fulfilment Management Customer Acquisition Systems Operational Systems Financial Systems Business Functions Call Centre Systems General Use Interface Order Entry, Tracking Financial Reporting Call Centres User Analysis Search Engines Targeted Mail/Email Advertising Call Centre Applications Web Applications Web Systems Business Activities Architectural Elements External Trends Call Centre Scripts Banner Ads Web ContentWhy CRM: January 11, 2011 13 Why CRM Greater competition Economics of customer retention Available technology Options to increase customer profitability: Get more customers Optimise value of existing customers Retain right customers longer Implement at lower cost Costs of options: Customer acquisition 5-10 greater than retention Loyal customers spend more and pay premium Loyal customers must like and trust companiesCustomer Management Trends: January 11, 2011 14 Customer Management Trends Recognise customer heterogenity Companies want to get “up close and personal” with their customers Transact with customers individually “Joined up” customer interactionCRM Process: January 11, 2011 15 CRM Process CRM is about: Integration of customer contact points Synchronisation of customer information and management assets Identification highest (and lowest) value customers Servicing those with greatest actual or potential value CRM enables: Reduction of marketing costs through effective targeted campaigns Increase in customer satisfaction and retention Increase in sales Improvement in profitability by customer and saleCharacteristics of Service Leaders: January 11, 2011 16 Characteristics of Service Leaders Grow twice as fast as competitors 6% annual market share growth vs. 1% market loss Charge 10% more 12% average return on sales vs. 1% Market changes - speed to react determines success or failure US - 60% in Fortune 500 in 1970 are no longer on listWhich Customers?: January 11, 2011 17 Which Customers? 20% of customers generate 80% of profit 5% increase in customer retention means 25%-95% increase in profitability New customers take 8-10 contacts before sale Existing customers take 2-3 contacts before saleCustomer Service: January 11, 2011 18 Customer Service 95% of customers who have had problems will continue to do business if problems are resolved For every complaint you receive there are another 20 potential complaints that have not been articulated but still represent Good customers tell about 3 others of their experience Bad customers tell about 8 of their experience 68% of former customers left because of poor customer serviceCustomer Earnings Over Time (Service Industry Example): January 11, 2011 19 Customer Earnings Over Time (Service Industry Example) Continually acquiring new customers and losing existing customers costs money Customer retention through increased customer satisfaction is financially worthwhile Better customer service makes long-term sense Need a balance between customer retention and new customer acquisitionCustomer Retention and Profitability: January 11, 2011 20 Customer Retention and Profitability Leaky Bucket Effect Acquire Customers Customers Defect to Other Suppliers (“Churn”) 50-60% (or More) Every Five YearsExample of Profit Contribution by Customer Type: January 11, 2011 21 Example of Profit Contribution by Customer Type Not all customers have the same value Can you identify your customers?Example of Profit Contribution by Customer Type for All Customers - 1: January 11, 2011 22 Example of Profit Contribution by Customer Type for All Customers - 1 Customer profile is balanced that results in net profitExample of Profit Contribution by Customer Type for All Customers - 2: January 11, 2011 23 Example of Profit Contribution by Customer Type for All Customers - 2 In this example, there is a high percentage of low value customers (perhaps due to high rates of customer churn and cost of new customer acquisition) Net result is an overall lossRole of Data Warehouse in CRM: January 11, 2011 24 Role of Data Warehouse in CRM Technology/infrastructure core of architecture Allow marketers to make decisions on customer segmentations and profiles and match products/offers Data Warehouse enables CRM processes CRM elements depend on quality of information in Data Warehouse and accuracy of derived results Central common repository or all relevant allows effective data sharing and reduces latency “Joined-up” approach to CRM CRM assumes good informationIntegrated CRM: January 11, 2011 25 Integrated CRM Service Calls Campaigns/ Special Offers Self Service Mailing Lists Sales Data Customer Data Warehouse Customer Interaction Database Customer Service Call Centre Internet Direct Mail Sales Force CustomerCustomer Lifetime Value: January 11, 2011 26 Customer Lifetime Value LTV = net present value of all future contributions to overhead and profit expected from a new customer How much a customer is worth to you today, given the expected profit in the futureCustomer Value: January 11, 2011 27 Customer Value Retail - lose one customer per day every day for a year (7 days per week) that spends €50 per week = annual loss of €482,000 Car manufacturer - increase customer retention by 1% for 4 years = €160 million increase in profit Fast food = each customer is worth €10,000 over lifetimeMarketing Objectives: January 11, 2011 28 Marketing Objectives Objectives: Acquire new customers Retain existing (profitable) customers How much money should be allocated to these? How will this affect long-term profitability? Does every customer deserve the same investment?LTV Answers: January 11, 2011 29 LTV Answers How much you can afford to spend to acquire a new customer? Which new customer sources generate the most profitable long-term customers? How much you can spend to retain/reactivate an existing customer?Sample Customer LTV Calculation: January 11, 2011 30 Sample Customer LTV Calculation This example shows the calculation of the long-term value of a customer This is just a simple example to illustrate the conceptSample Customer LTV Calculation: January 11, 2011 31 Sample Customer LTV Calculation A customer retained for five years is worth €136 expressed in current year money Increasing the retention rate and increasing the amount spent by customer by upselling and cross-selling will increase LTV Number of customers each year based on the customer retention rate Total revenue for all customers each year LTV of individual customer if retained for that number of years NPV of profit expressed in current year values, based on NPV rateSample Customer LTV Calculation With Increased Retention Rate: January 11, 2011 32 Sample Customer LTV Calculation With Increased Retention Rate An increased customer retention rate increases the LTV of customersMeasuring LTV: January 11, 2011 33 Measuring LTV Customer Transaction History What they have purchased (preferably item level detail) How much they have spent When they have purchased How many returned / cancelled items Where they have purchased Potential indicators of why they have purchased: special offers, holiday promotion, etc. Financial Measures Cost of Goods (preferably at the item level) Fixed, Variable and Fulfillment costs Gross/Net Sales Ratios Promotion History How many promotions/contacts they received When they received the promotions Special offers and other promotion characteristics Promotional costsCustomer Segments: January 11, 2011 34 Customer Segments Useful simple starting point Easy to match to campaigns Analyse movement between segments Sample segment types for a campaign: Cold prospect - no history Warm prospect - some response to previous campaigns New customer - bought item Confirmed customer - bought two items Regular, including last campaign - buys frequently including last campaign Regular but not last campaign Regular but not last two campaign Lapsed regularSegmentation: January 11, 2011 35 Segmentation Identifying and classifying groups based on buying characteristics and profile Telecommunications example: Tariff 1 Tariff 2 Tariff 3 Pre-Pay Migrate to Competitor 1 Migrate to Competitor 2 Migrate from Competitor 1 to Tariff 1 Migrate from Competitor 1 to Tariff 2Sales Campaign Effects on LTV: January 11, 2011 36 Sales Campaign Effects on LTV Customers move between segments “Regular but not last campaign” moves to “Regular, including last campaign” Migration changes customer value The campaign has costs Estimate net long-term benefit of campaign to organisationLTV and Campaign Example – Initial Status: January 11, 2011 37 LTV and Campaign Example – Initial StatusLTV and Campaign Example - Campaign Results: January 11, 2011 38 LTV and Campaign Example - Campaign ResultsLTV and Campaign Example - Changes to LTV: January 11, 2011 39 LTV and Campaign Example - Changes to LTVLTV and Campaign Example - Migration Between Segments: January 11, 2011 40 LTV and Campaign Example - Migration Between SegmentsCRM Solution Implementation Approach: January 11, 2011 41 CRM Solution Implementation Approach How to align organisation and customer objectives Audit of company business processes, technology, communications and structure Gaps between current and future Plan for change Vision Creation and Confirmation Enterprise Assessment Gap Analysis Roadmap for ChangeVision Creation and Confirmation: January 11, 2011 42 Vision Creation and Confirmation Company Objectives Who is our ideal customer How should we do business “value discipline” Customer Objectives Identify and understand expectations Marketing from customer rather than company perspectiveIdentifying the Ideal Customer(s): January 11, 2011 43 Identifying the Ideal Customer(s) Behaviour Spending habits - amounts, number and type of items Payment preferences - cash, cheque, credit/debit card Visit frequency - regular, need, promotion Incentives redeemed - avail of loyalty schemes Customer Value Total amount spent and profit Frequency Incentives redeemed - avail of loyalty schemes Channels Branches Call centre WebDefining Value Discipline: January 11, 2011 44 Defining Value Discipline Defines how to do business and why customer chooses Product/Service Leadership Best product or service available Operational Excellence Best value and convenience Customer Intimacy Pursue long-term relationship, customer attentive Reflects types of customers Different people like different ways of buyingEnterprise Assessment: January 11, 2011 45 Enterprise Assessment Purpose Audit of company business processes, technology, communications and structure Elements Identifying all customer interaction points Activity-based costing analysis Quantifying market trends and drivers Identifying and profiling competitors Identifying customer and company “pains”Activity Costs: January 11, 2011 46 Activity Costs Costs and revenue of interactions Fixed costs Cost per mail/e-mail item Costs of good/services sold Cost per order entry Infrastructure costs Variable costs Service call times Billing/collection Incentives Calculate customer value Generate insights into operation of organisationIdentify Company and Customer “Pains”: January 11, 2011 47 Identify Company and Customer “Pains” Pain = problem, business issue or missed opportunity Customer pains = annoyance, discontent, dissatisfaction Company pains = profit erosion, increases in costs, competition, errors, returns, employee turnover Results = lack of brand/company loyalty, customer defection, reduction in market share, reduction in profitsGap Analysis: January 11, 2011 48 Gap Analysis Barriers that must be overcome to allow organisation to evolve from current to future state Assess hazards and difficulties of transition Categories of gaps: People Process TechnologyPeople Gaps: January 11, 2011 49 People Gaps Impair ability to do job or reduce desire to work effectively Stringent policies mean inflexibility and slow response to urgent problems Change to customer-centric operation requires learning, training and management “I’m not in sales/marketing. Why are you talking to me?” “I’ve been here for 20 years and I don’t see why we should change now.” “I am willing to support the project 100% as long as it does not affect me.” “This is the way it’s always been done and it’s worked well up to now.” “I’ve got 15 minutes to talk to you. I’m very busy with important things.”Process Gaps: January 11, 2011 50 Process Gaps Breakdowns/bottlenecks in a process intended to produce a result Occur at handoffs between stages/sections, incorrectly routed requests Process should handle all (reasonable) eventualities and provide information at all stages Process can be rigid (rules for all events) or flexible (allow devolved decision making)Technology Gaps: January 11, 2011 51 Technology Gaps Limitations in technology infrastructure to support CRM process Examples: Campaign management Call Centre automation Sales Force automation Customer Data Warehouse/OLAP facility Sufficient Internet presence Data MiningGap Resolution: January 11, 2011 52 Gap Resolution “Gap map” shows number and severity of gaps between current and future states Overlapping gaps should get highest priority Address gaps in parallel May not be possible to identify all gapsRoadmap for Change: January 11, 2011 53 Roadmap for Change Customer value alignment Market positions and competitive directions Business model Success metrics and critical success factorsCustomer Value Alignment: January 11, 2011 54 Customer Value Alignment Customer: The Right Customer Who is your ideal customer and what are his/her needs? Cost: The Right Offer What is the value to the customer? Communication: The Right Time When is the right time to communicate an offer? Convenience: The Right Channel How does your customer prefer to interact with you?Customer Value Alignment: January 11, 2011 55 Customer Value Alignment Segmentation of customer base – identify types Implementation of customer marketing strategies Allow development of right time/offer/channel based on customer knowledge Improve customer service, reputation, loyaltyCRM Success Metrics: January 11, 2011 56 CRM Success Metrics Increase retention in top n% of customers by x% Increase bottom-line profitability by x% Reduce negative value customers by x% Increase customers in high value segment by x% Improve customer satisfaction index by n%Knowing Your Costs: Activity Based Costing for CRM Analysis: January 11, 2011 57 Knowing Your Costs: Activity Based Costing for CRM AnalysisWays to Determine Cost: January 11, 2011 58 Ways to Determine Cost Organisational Element Accounting Direct Costs Overhead Accounting SystemWays to Determine Cost: January 11, 2011 59 Ways to Determine Cost Budgetary Cost Distribution / Commitment Accounting Commitments and Obligations Accounting SystemWays to Determine Cost: January 11, 2011 60 Ways to Determine Cost Traditional Cost Accounting Direct Labour Direct Materials Activities Output Cost OverheadWays to Determine Cost: January 11, 2011 61 Ways to Determine Cost Activity Based Costing Direct Labour and Overhead Direct Materials Activities Output CostActivity Based Costing: January 11, 2011 62 Activity Based Costing Activity-based costing (ABC) is a costing model that identifies activities in an organisation and assigns the cost of each activity to all products and services according to the actual consumption of those activities by each products or services Used as a tool for understanding product and service and customer cost and profitability ABC supports strategic decisions such as pricing, investments, outsourcing and identification and measurement of process improvement initiatives Fallen out of favour but a very useful tool to understand costsActivity Based Costing: January 11, 2011 63 Activity Based Costing Establishing a cross-functional view of your organisation and understanding what drives your costs Pulling apart indirect or hidden costs and attributing them correctly to products and services Activities Resources Products and Customers Cost Drivers Performance MeasuresABC Relationship to CRM: January 11, 2011 64 ABC Relationship to CRM CRM is about retaining your most profitable customers In order to determine profit, you need to know a lot about your costs To work out your costs, you need to work out what your organisation actually does Which processes are consuming your resources?Benefits of ABC: January 11, 2011 65 Benefits of ABC Go beyond understanding your customers What drives costs? More informed macro and micro decision making Staff planning How your organisation interacts with customers - face-to-face, web, call centre and other channelsSteps to Implementing ABC: January 11, 2011 66 Steps to Implementing ABC General Ledger and Other Sources Departments Activities Cost Objects Calculate ProfitabilityDefining Activities: January 11, 2011 67 Defining Activities Most organisations use the cost centre structure Recast cost centre structure into activities Usually a hierarchy of activities Direct identification with product or service Process support Organisation and facility support Customer/market support Map from cost centre into activity hierarchyProcess Mapping: January 11, 2011 68 Process MappingCost Calculation: January 11, 2011 69 Cost Calculation Direct Costs + Overheads = Total CostTraditional Cost Accounting View - Direct Costs: January 11, 2011 70 Traditional Cost Accounting View - Direct Costs Product A 100 units 1 hour direct labour @ €20/hour €20/unit direct cost Product B 950 units 2 hours direct labour @ €20/hour €40/unit direct cost Total amount of effort for 100 units of Product A and 950 units of Product B is 2000 hours Assume the overheads total is €100,000Traditional Cost Accounting View - Overheads: January 11, 2011 71 Traditional Cost Accounting View - Overheads Traditional Cost Accounting Overhead Costs = €100,000 / 2000 hours = €50 per hour Product A = €50 x 1 hour = €50 Product B = €50 x 2 hours = €100Traditional Cost Accounting View - Total Cost: January 11, 2011 72 Traditional Cost Accounting View - Total Cost Product A Direct Costs = €20 + Overhead = €50 Total Cost = €70 Product B Direct Costs = €40 + Overhead = €100 Total Cost = €140ABC View - Overheads: January 11, 2011 73 ABC View - Overheads Activity Total Cost Cost Driver Setup €10,000 Number of setups Machining €40,000 Number of hours Receiving €10,000 Number of receipts Packaging €10,000 Number of deliveries Engineering €30,000 Number of hours Total €100,000ABC View - Overheads: January 11, 2011 74 ABC View - Overheads Product A Cost Product B Cost Totals Setup 1 €2,500 3 €7,500 €10,000 Machining 100 €2,000 1,900 €38,000 €40,000 Receiving 1 €2,500 3 €7,500 €10,000 Packing 1 €2,500 3 €7,500 €10,000 Engineering 500 €15,000 500 €15,000 €30,000 Total €24,500 €75,500 €100,000ABC View - Overheads: January 11, 2011 75 ABC View - Overheads Apportioning total overheads for each product according to their demand Product A €24,500 / 100 = €245 Product B €75,500 / 950 = €79.47ABC - A Different Picture: January 11, 2011 76 ABC - A Different Picture Product A Direct Costs = €20 + ABC Overhead = €245 Total Cost = €265 Product B Direct Costs = €40 + ABC Overhead = €79.47 Total Cost = €119.47Comparison Between Traditional Cost Accounting and ABC: January 11, 2011 77 Comparison Between Traditional Cost Accounting and ABC Product A Product B TCA ABC TCA ABC Direct £20 £20 £40 £40 Overhead £50 £245 £100 £79.47 Total £70 £265 £140 £119.47Which is the Right Actual Cost?: January 11, 2011 78 Which is the Right Actual Cost? ABC provides a better understanding of consumption of resourcesProducts or Customers: January 11, 2011 79 Products or Customers Your least profitable customers might be caused by products that appear inexpensive but actually are not One bank in the US found that 100% of its profits came from only 20% of its customers Customer Needs, Customer Cost, Convenience, CommunicationThe CRM Challenge: January 11, 2011 80 The CRM Challenge If I know who the customers are, can someone tell me why they are profitable, can I then identify or profile others that could become profitable and tell me how I can actually do this ?The CRM Challenge: January 11, 2011 81 The CRM Challenge Who A data warehouse can identify customers Why Activity Based Costing will help show why some customers are more profitable than others How ABC, product design and development, campaign development and managementUnderstanding and Profiling your Customers: January 11, 2011 82 Understanding and Profiling your CustomersCRM Marketing Requires: January 11, 2011 83 CRM Marketing Requires The one to one enterprise forms learning relationships with its customers In a learning relationship, customers teach the organisation about themselves The organisation uses what it learns to make the customers’ lives easier Customers find it easier to do business with the one to one enterprise because of what they have taught it. Address, language, size, seat preference, allergies, taste in music, contact preferences - method, timeCRM Marketing Requires: January 11, 2011 84 CRM Marketing Requires To form a learning relationship with your customers Notice their needs On-Line Transaction Processing systems are the corporate eyes and ears Remember their activities and preferences A Decision Support Data Warehouse is the corporate memory Learn from past interactions how to serve them better in the future Data analysis tools provides the intelligence you need to turn memories into plansData and Information Gap: January 11, 2011 85 Data and Information Gap Within most organisations, there is a noticeable information gap Timely access to information Access to accurate and complete information Access to information at an appropriate level of detail Inconsistent and patchy information from various business systems and units Which of these statements apply to you? The data is there but getting access to it is complicated or not possible Finding and collating data across different information sources is often very difficult Performance data is not available quickly enough to act on it effectively There is excessive information that conceals what is really needed or important Some of the information required is simply not being capturedCustomer Data Problem: January 11, 2011 86 Customer Data Problem Today most companies have multiple repositories for customer data Inaccurate and incomplete view of the customer relationship Inability to understand the value of the customer Difficult to determine the correct product offer based on inaccurate customer data Inefficient customer serviceClosing the Information Gap: January 11, 2011 87 Closing the Information Gap Closing the information gap is an essential pre-requisite of implementing effective and usable business process management Responsibility of both the business and IT working collaboratively.Data, Information/Knowledge and Action: January 11, 2011 88 Data, Information/Knowledge and Action Information Action DataData, Information/Knowledge and Action Cycle: January 11, 2011 89 Data, Information/Knowledge and Action Cycle Data refers to the source figures and numbers. It is the raw material for analysis Data gap is the absence of the tools and operational processes to consistently collect, store, manage the data and make available tools to perform analyses. Information/Knowledge is the value extracted from the raw data Information gap is the absence of insight caused by the lack of defined metrics and indicators and their timely and accurate availability and usability. Action is the need for operational business processes to ensure that the information presented is used and acted upon The Data, Information/Knowledge, Action cycle means that there must be a continuum from collecting the raw data to using it effectively Process to achieve this must be embedded in the organisationKey Measures: January 11, 2011 90 Key Measures Overall financial performance Performance of partnerships and alliances Product and service line profitability Client profitability Client acquisition and retention Overall operational performance Performance relative to competition Delivery of profit and value to clients Client satisfaction Staff performanceData Mining: January 11, 2011 91 Data Mining Exploration and analysis, by automatic or semi-automatic means, of large quantities of data in order to discover meaningful patterns and rules In order to develop new products and services that are demanded by the customer, that can be delivered profitably by the organisation and to remove unwanted customers and/or productsData Mining Styles: January 11, 2011 92 Data Mining Styles Using the past to predict the future Prediction Classification Estimation Finding customer segments and other interesting things in the data Clustering Market basket DescriptionWhy Data Mining: January 11, 2011 93 Why Data Mining Segment customers into groups with similar buying patterns Increase response rate from campaigns Identify loyal customers Identify profitable customers Identify campaigns that will generate responses Understand why customers leave Understand purchasing patterns Identify fraud Predict customers who will leave Predict future outcomes Assess impact of changesThe Data Mining Spiral: January 11, 2011 94 The Data Mining Spiral Data Action Knowledge InformationData Mining Methodology: January 11, 2011 95 Data Mining Methodology Sample Identify and collect data. Sample or entire dataset. Sample size and sampling technique. Explore Look for inherent trends, clusters and groups. Look for and eliminate extreme values. Reduce number of important variables. Data visualisation and statistical techniques. Modify Change the data – combine, transform, derive variables. Model Construct models that explain patterns in data. Assess Assess usefulness, reliability and repeatability of models. Apply to another sample. Test against data with known results.Summary and Next Steps: January 11, 2011 96 Summary and Next StepsBusiness Drivers: January 11, 2011 97 Business Drivers Greater competition is the norm Difficult economic conditions Price cuts and reduced investment Customer have (and know they have) a choice - capture and retain customers Customer-services oriented Cost cutting by large/corporate users Flattening of price disparities New services/markets - customers outside current services Cross-sell to existing customers Disintermediation Understand customer behaviour React to changes quickly Become and stay competitiveCustomer Management Dilemma: January 11, 2011 98 Customer Management Dilemma Customer acquisition and retention against competition Improved customer service - loyalty bonus, privileges, affiliation programs, discounts Cost of programmes vs. benefits Good customers vs. bad Need to direct customer service investment Intelligent CRM investment can yield benefitsCRM Building Blocks: January 11, 2011 99 CRM Building Blocks Two fundamental pre-requisites to effective CRM implementation and operation Data warehouse that contains a unified view of customers for other applications to query and analyse Provides accurate and complete customer data to all operational business processes that require customer data Improved and differentiated customer service Increased revenue via improved cross-selling Cost analysis exercise Understand where your costs really ariseMore Information: January 11, 2011 100 More Information Alan McSweeney firstname.lastname@example.org You do not have the permission to view this presentation. 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