Introduction: Customer Centric Strategies Details

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A 90 minute more detailed description of the Customer Centric Profit Optimization approach giving more details. This applies to ANY industry

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By: stevepinchuk (119 month(s) ago)

Thanks. Do you think it will work? WIll companies see the value in changing these fundamental perspectives?

By: ssrikanth (119 month(s) ago)

Interesting analysis...

Presentation Transcript

PowerPoint Presentation:

**Copyright Pending & Portions (*) are Patent Pending All Rights Reserved 1 Steven Pinchuk Profit Optimi z ation Strategies www.profitoptimi z ation.com steve@profitoptimi z ation.com 1 561 623 9677 Customer Centric Profit Optimization ** An Introduction

Preface:

2 Preface The concept of a company being “customer centric” is not new. There are a lot of theories. The key is creating a system that incorporate all other existing areas of a company & predicts customer actions for each individual customer A method to systematically accomplish this is new. I have a US/International patent pending on an organizational method. ** Copyrighted & Portions ( * ) Patent Pending All Rights Reserved Companies and customers will benefit from learning the way a progressive company should treat their most valuable asset – their customers! Today’s customer is savvy and understands what is possible. Companies need to improve their relationships with customers – the savvy companies will win.

Agenda :

Results 3 Agenda Introduction, Questions, Goals & Focus Concept Methodology Concepts Components Lifecycles – Predictive Lifecycles – Core Of A New System C 3 I*** – Perspective, Protection and Integration – Automated Alarms & Exceptions Concept Overview *** C 3 I = Command, Control, Communication & Intelligence ** Copyrighted & Portions ( * ) Patent Pending All Rights Reserved

Introduction :

Top Secret DOD & Intelligence Agency clearances working on future systems projects for Martin Marietta Aerospace 4 Introduction These ideas are a fusion of things learned in some of my past positions Economics advisor to Sr US Senator who ran for President Corporate Vice President Revenue Management and Distribution for Harrah’s Entertainment ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved Vice President Profit Optimization for SAS Software Institute These concepts are from real world experiences and developed to work in the real world in any industry that can track individual customers

Introduction, Goals & Focus:

5 Introduction, Goals & Focus ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Introduction :

This briefing & its concepts are the property of Profit Optimization Strategies & cannot be used without references 6 Introduction This briefing and it’s concepts are intellectual property – All Right Are Reserved Portions are patent pending in the US & Internationally. 1 ½ years of documented IP with the US Patent Office & in published articles This briefing is for suppliers to learn how to become customer centric. Customers can learn why they should welcome this change ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Introduction: A New Approach is Needed…:

Focused on each customer, where possible, as an individual 7 Introduction: A New Approach is Needed… CRM, Pricing, Marketing, Product Development Distribution Functions must form a new foundation… They must become 100% integrated towards a common new goal Everyone must optimize strategic profits NOT tactical revenues ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved The process must use predictive analytics/automated systems See & control things from each customer’s perspective

Are Customers Treated Like A Part of a Segment & Not Like An Individual?:

Are Customers Treated Like A Part of a Segment & Not Like An Individual? 8 Are customers tired of companies taking their loyalty and purchases for granted? Do companies know or care about individuals? Or are they just part of a segment? Companies that invest in technology can predict & respond. They stop sending junk mail, paying to lose loyalty, and send offers that make loyalty worthwhile Soon customers will ignore or send back coupons & demand you learn about them, become customer centric, not segment centric. You must value each customer’s lifetime needs/loyalty & stop using them as targets when you need their $. It’s a matter of time….. How do they deserve to be treated? How do you want to be treated? Do you want to learn more..? Do customers buy a HD TV & you send them a coupon for a dryer - when what they will want next is a DVD player? If they stop buying, do you notice? Do you contact them? ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Why Be Customer Centric?:

9 Why Be Customer Centric? Nothing is more important to a company than its customers. All profits come from customers Pricing shouldn’t focus on how much profit can be made from their next purchase. Profit is optimized by optimizing each individual customer’s own lifetime value Pricing must focus on the long term loyalty & value of a customer. Commodities? Accomplishing this requires stepping out of existing boxes. The market leaders who get this will be rewarded with loyalty and truly optimized strategic profits Copyrighted & Portions ( * ) Patent Pending All Rights Reserved Not all customers are loyal enough to become “known” individuals by companies Segment and commodity pricing will still exist. However, customer centric pricing for loyal customers should be used in place of or with other tactics whenever possible. This assures that long term strategic profits are optimized. Instead of saying it can’t be done/apply, serious out of the box thinking is needed. Coupons (cash or upgrades), individual customer web pages with offers, rebates…a few ideas that can allow companies out of their existing boxes…. Today’s customers are learning, tomorrow’s will demand. Companies have record amounts of cash – from customers – but no real plans to spend any real disproportionate % of this on customer centric systems. Your silence is complicity.

PowerPoint Presentation:

10 Crawl Walk RUN NOT A straight line where you have a long range target and crawl, then walk then run towards that target. NOT a curving path where short term goals are added together to reach a recently defined long term goal Long Term Visions Can Increase Efficiency… ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Focus:

11 Focus This is not just about traditional CRM. Traditional CRM is a database with customer information, some analytics and today little or no predictive analytics Customer Relationship Optimization ** is the goal of a Customer Centric Profit Optimization ** system Traditional CRM is used by other areas, hopefully…, it does not coordinate and control the actions of all the company’s areas in order to protect the customer ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved This is about Customer Relationship Optimization (CRO) ** Customer Relationship Optimization ** is best accomplished by predicting & leveraging future behavior patterns of customers

Questions –How Well Do You Really Know Your Customers? Applying Customer Centric Strategies..:

12 Questions –How Well Do You Really Know Your Customers? Applying Customer Centric Strategies.. Do you know what your customers will want or will do over their expected lifetimes? Do you have a clue what their lifetime patterns will be? Do you have confidence intervals? How do you spot changes in these patterns ? How fast can you tell if a customer is diverging from the pattern , whether good or bad? Not just the probability of them accepting “the next” offer? Do you know the patterns you want to see? Do you know the different patterns taken by a poor, average and good customer? Would it help to see this graphically and not just as a dump of numbers? Do you differentiate pricing, marketing, etc. based on lifetime customer value and where they are on their lifetime relationship with you? Do you still think you know your customers? Close enough…. ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Questions –Do You Know & Control All Your Customer Centric Strategies for Each Customer – in Real Time, Afterwards, or Not At All? :

13 Questions –Do You Know & Control All Your Customer Centric Strategies for Each Customer – in Real Time, Afterwards, or Not At All? Do you know what you look like to your customers given all the interactions/influences that you have with/on them? Can you select a future date, product, etc & see all the information about it, from multiple systems, in one screen? Or do you have to search through systems (marketing, RM, CRM, distribution, etc.) one at a time, remembering data from each screen/system, to see what you are doing & what the market sees you doing? Do you know how to gain this perspective & what to do with it? Do you have a way to systematically see & control all the influences that you send to one of your customers – from their perspective? Is it based on their individual behavior – past & future? If you could see, integrate & control (make inputs into each system) from 1 screen – could you better control all your corporate actions? Command, Control, Communication & Intelligence (C3I)… Do we need a system to control all these actions? Sr Management needs this tool to achieve their goals. Yet we build up our silos. Why? ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Goals :

14 Goals Systematize customer centric strategies to optimize profits – creating a Customer Centric Profit Optimization (CCPO) ** Long term multi step strategic goals not short term tactical fixes Goals that change fundamental business models – achieved one step at a time – with a long term target. An integrated system basing all demand influencing functions on results of predictive customer lifecycles – not the traditional functional silo approach of traditional CRM, Marketing, Pricing, Distribution, etc. ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Concept Overview:

15 Concept Overview ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

PowerPoint Presentation:

16 RM PRICING . MARKETING, CRM & LOYALTY DISTRIBUTION Channel Manager Demand Mgt C 3 I Interface Distribution Channels Reservations Customer Centric Profit Optimization 16 Customer Lifecycle Core CCPO Inputs We will see this diagram several times and describe its pieces. For now, just notice that the customer lifecycle models/predictions are the core of the system All FUNCTIONAL areas of the company that impact demand use inputs from the customer centric core and are controlled by a C 3 I interface that is part of the customer centric core. ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved CRM

Preface:

Preface 17 This is just an introduction. Please ask if something seems wrong before assuming your question cannot be answered. Your questions may have answers. Beware of “instant experts”, who have never talked about this before and now suddenly know all about this. They will learn enough to convince you & then go back to their old ways. These ideas were born out of frustration with today’s environment & systems. They are from the trenches – and the needs derived from working in the real world. ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Concept Overview :

18 Concept Overview Predicting & leveraging customer ‘s future lifecycles - Used to assure that marketing, loyalty, pricing & other areas of the company all share & act upon the same predictions of a customer’s future lifetime value & forecasted areas of interests. System tracks how all these functions are interacting with the customer so the company sees the way the customer sees the company * . Powers dynamic customer centric pricing and true 1 to 1 marketing based on future values & predicted interests & not just on past values & segments * Lifecycles can also be used within algorithms for tactical analytics Can apply to any company that can track customers Allows knowing/predicted/utilizing ALL future nano behavioral habits for each customer & creating benchmark behavior patterns from all customer info * ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Concept Overview:

19 Concept Overview Making customer centric strategies the core of a predictive & coordinated corporate wide approach to 1 to 1 relationship (not just marketing) - This is a live system & not a tactical analysis process Concept is that the system would constantly be updating its customer data from numerous sources & adjusting its predicted lifecycles * for individual customers. Lifecycles would then trigger automated & suggested marketing, pricing, loyalty, distribution etc processes to enhance & optimize the customers lifetime value to the company & create a very proactive one to one bond with that customer. The process creates a customer centric core that generates lifecycle analytics which drives and directs all the corporate functions that impact demand Integrates all corporate areas to share/base actions on the same lifecycle generated predictions for each customer ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Concept Methodology:

20 Concept Methodology ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

CUSTOMER CENTRIC PROFIT OPTIMIZATION (CCPO):

21 CUSTOMER CENTRIC PROFIT OPTIMIZATION (CCPO) CCPO is a systematic engine comprised of these integrated main components: Predictive Lifecycles Customer Relationship Optimization (CRO) Command, Control, Communication & Intelligence (C 3) System Interfaces (C 3I SI) * ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

PowerPoint Presentation:

22 RM PRICING . MARKETING, CRM & LOYALTY DISTRIBUTION Channel Manager Demand Mgt C 3 I Interface Distribution Channels Reservations Customer Centric Profit Optimization 22 Customer Lifecycle Core CCPO Inputs This is a blueprint for combining lifecycles with Customer Relationship Optimization (CRO) to create Customer Centric Profit Optimization (CCPO) ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Concept Components – Lifecycles: Predictive Lifecycles:

23 Concept Components – Lifecycles: Predictive Lifecycles ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

PowerPoint Presentation:

24 Predicting all expected future behavior actions across all products for their entire lifetime allows better decisions – predicted at the smallest dimensional level and aggregated * . Known history Add predicted future behavior based on all expected future data points in the lifecycle A lifecycle must predict all future interactions w/ a customer & show them in a line graph. Determining probability or optimal use of individual interactions will not work for lifecycles * 24 Lifecycles are hierarchical and therefore can be used at aggregate or detailed levels depending on data availability and task being performed. Most segmentation is not hierarchical today ……. * Lifecycles examples ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Predictive Lifecycles – :

25 Predictive Lifecycles – Models that predict the future lifetime behavior of EACH dimension of a customer/supplier (entity). * Statistically combined & used as the core of a multifunction multi-departmental integrated system. not traditional algorithms determining probability of action(s) for one action or instance * Can be used to determine what to send, when to send, what to charge, what to expect, etc. Core of a CCPO where all actions rely on and are based from these predicted lifecycles and past data. A core model in the CCPO, not a batch job. Allow analysis of customer vs their expected actions, actual actions of “benchmark” derived from others, etc. * ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

PowerPoint Presentation:

26 26 Develop an analytically derived and continually updated understanding and explanation of nano level lifecycles for each customer * What are they * How do they differ * Which ones are desirable * Which ones are undesirable * How are they changing * Creating a Customer Centric Lifecycle Approach * ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Lifecycles examples:

Lifecycles examples 27 Predicting multiple future behavior actions allows better decisions * Future data points allows multiple types of customer valuations for pricing systems- tactical, strategic and lifetime * tactical Strategic Lifetime = total of all actions ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Advanced 1 to 1 Marketing Targets individual behavior versus acceptable deviations & automates marketing reactions * :

28 Advanced 1 to 1 Marketing Targets individual behavior versus acceptable deviations & automates marketing reactions * 28 Patent Pending All Rights Reserved Pa t ent Pend I ng ALL RIGHTS RESERVED ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

1 to 1 Marketing Targets behaviors in the lifecycle where known opportunities or losses occur due to actions or expected patterns * :

29 1 to 1 Marketing Targets behaviors in the lifecycle where known opportunities or losses occur due to actions or expected patterns * 29 Patent Pending All Rights Reserved Actions based on place in lifecycle * Patent Pending All Rights Reserved ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Concept Components – Lifecycles: Core of a New System:

30 Concept Components – Lifecycles: Core of a New System ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

PowerPoint Presentation:

31 RM PRICING . MARKETING, CRM & LOYALTY DISTRIBUTION Channel Manager Demand Mgt C 3 I Interface Distribution Channels Reservations Customer Centric Profit Optimization 31 Customer Lifecycle Core CCPO Inputs Let’s learn more about the customer centric core And what lifecycles are and how they enable this whole integrated demand optimization process ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Lifecycles as a Core :

32 Lifecycles as a Core Lifecycles are built/compared/updated 24/7 - A core model . Not a “batch job” or routine. Live, updated & available for anyone’s use as needed Allow analysis of customer versus their expected actions, actions of “benchmark” others, et al. * Values from the predictive lifecycle core models are used as live inputs for actions of other functional areas like pricing, marketing, distribution, loyalty * Assures all areas in a company share the same vision and value of a customer and all their actions are integrated based on the same predictive lifecycle(s) for each individual customer * ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

PowerPoint Presentation:

33 33 Incented in red , unincented in black, length = demand volume Forecast of unconstrained demand by customer segment Segment 0 Segment 1 Segment 2 Segment 3 Segment 4 0 0 1 1 $$$ $ 2 2 3 3 Optimization process and hurdle price line Hurdle price line . Optimization of unconstrained forecasted demand says to proactively not accept any bookings below this total profit (room + gaming*) amount Demand accepted with free room or discounts Demand accepted with variable room rates 4 CCPO &– Bid Price RM (Dynamic/Variable pricing) ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved Change Past value to future value

Creating a Customer Centric Lifecycle Approach Centered Around The Corporate Lifecycle Core *:

34 34 React immediately to their actions, so you can Immediately reinforce desired behavior patterns * Develop & respond with actions to keep undesired actions from occurring again * Determine at any given moment the best possible recipients for a promotion, offer or any other type of communication * The goal includes knowing when to send specific promotions to specific customers & when and/or what not to send to them *. Wrong contacts break the 1 to 1 bond & customers think they are on a mailing list and part of segment they ignore future contacts. Creating a Customer Centric Lifecycle Approach Centered Around The Corporate Lifecycle Core * ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Creating a Customer Centric Lifecycle Approach Centered Around The Corporate Lifecycle Core *:

35 Self learning system * Identifies similar customer behaviors trends * applies predicative analytics to develop predictive lifecycles * drives automated MA/MO.. * Interface for customer centric RM/pricing model & other functions * MA/MO Areas * Automates true 1 to 1 marketing based on predictive analytics from lifecycles creation * Tracks individuals and identifies behavioral variances in behavior & sends appropriate actions * Identifies optimum recipients for promotions * Lifecycles can be used to gain new insights into markets & customers * All Rights Reserved Creating a Customer Centric Lifecycle Approach Centered Around The Corporate Lifecycle Core * ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

How Can I Use Lifecycles?:

36 36 This can be used for 2 very different purposes… 1 to 1- Individual Nano Entity Lifecycles Focus on individual customers, their patterns & your actions PLUS 1 to many - Family Meta Individual Nano Entity Lifecycle Understand when to use a lifecycle as the target of an action How Can I Use Lifecycles? Used in algorithms…but adds predictive values and does not just use historical values like the models today… ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Concept Components – C3I: Perspective, Protection and Integration:

37 Concept Components – C 3 I: Perspective , Protection and Integration ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Concept Components – C3I: Perspective:

38 Concept Components – C 3 I: Perspective Today the customer’s perspective of the company is not seen - CRM’s traditionally served as databases that hold information that other corporate functions access as needed for their functional needs No one sees the perspective of the customer or is empowered to nourish and develop the customer as a lifetime corporate asset, even though they are the most valuable corporate asset. Need a system that sees everything impacting a customer from their perspective. 1 screen w/multiple independent windows each showing different sources/systems User uses one window to input the customer, date, product they are looking for * System finds information in multiple systems & shows each system in a window * User can enter each windows and have that system “live” to further query or input Can focus on a customer/date/product etc. & not have to go from 1 system to another remembering data trying to piece together a story across sources/systems ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Concept Components – C3I: Protection and Integration :

39 Concept Components – C 3 I: Protection and Integration Today the customer is not “owned,” “protected” or “developed” by any one function in the company – they are “open game” for any function Need to understand the “best” lifecycle for each customer and how to proactively guide customers along those lifecycles A corporate entity is needed to police customer interactions with the company & company interactions with each customer. Use lifecycles to guide customer development & to own customers & police corporate functions’ actions. Senior Management is supposed to do this today – but there are no tools to allow them to see this perspective and no corporate entity empowered to nurture and protect customers. Need to be 24/7 day to day and automated due to volume. Need to proactively & systematically optimize the lifetime value of each individual customer. Customer acquisition costs mean buying a competitor’s market share. Customer retention & optimization is far more stable and far less expensive ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Concept Components – C3I: Automated Alarms & Exceptions:

40 Concept Components – C 3 I: Automated Alarms & Exceptions ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Automated Alarms & Exceptions:

41 Automated Alarms & Exceptions The power of the C 3 I can be leveraged with automated alarms and exception reporting - 1 window in the screens (can be unlimited # windows per screen) is for user inputs Users input parameters to search/analyze and values to alert when found System performs 24/7 search and alerts user when conditions are found Shows user report of results & user can click on a result and system shows all the systems/sources they need to see in one window w/multiple screens This allows users to “police” what is happening using the power of a system to search and a new interface to show results & facilitate understanding & changing Users focus on solving the problems and not looking for them Allows relationship with customer to be maintained and allows users to also truly see all the actions by the company for a date, product, etc. ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Rewards:

42 Rewards ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

PowerPoint Presentation:

43 RM PRICING . MARKETING, CRM & LOYALTY DISTRIBUTION Channel Manager Demand Mgt C 3 I Interface Distribution Channels Reservations Customer Centric Profit Optimization 43 Customer Lifecycle Core CCPO Inputs 1) A new automated approach to assuring that we understand the potential of each customer and optimize it. 2) Assures that the company’s actions optimize & do not interfere with this process. 3) Places the customer in the middle & configures the actions of the company around the predicted future value/desires of the customer and not just their past actions/desires. 4) Proactive versus reactive fully integrated customer optimization ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

Further Applications:

44 Further Applications This same approach can apply… On the supply side of the company to optimize vendors Then the concept of C 3 I can be used to control and balance the demand against the supply sides of the company. In great detail with a fully automated system or in a manual less detailed application For large companies or for small businesses For companies or organizations ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved This concept is called Nano Entity Economics ** because it deals with all entities at their most detailed levels

Let the Journey Begin:

45 Let the Journey Begin You make a decision by not making a decision… This is an “expert system” which means it does what an expert would do..but it automates the process so it can be accomplished Uses the 90/10 rule…. 90% of the transactions and decisions can be automated using an expert system approach. That leaves 10% for users to handle. Today companies focus on tactical profits. Companies need to balance this with the strategic opportunities from customer centric profit optimization, which develop more loyal and longer term customers. Customers whose lifetime potential is nurtured and optimized. Customers should no longer be treated as “disposable” or “replaceable.” Customers awareness and intelligence will accelerate the need for these changes/journey. ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

PowerPoint Presentation:

46 RM PRICING . MARKETING, CRM & LOYALTY DISTRIBUTION Channel Manager Demand Mgt C 3 I Interface Distribution Channels Reservations Overview - Customer Centric Profit Optimization 46 Customer Lifecycle Core CCPO Inputs ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved This is a rare win-win for the: Company Customers

PowerPoint Presentation:

47 ** Copyright Pending & Portions ( * ) Patent Pending All Rights Reserved

PowerPoint Presentation:

**Copyright Pending & Portions (*) are Patent Pending All Rights Reserved 48 Steven Pinchuk Profit Optimi z ation Strategies www.profitoptimi z ation.com steve@profitoptimi z ation.com 1 561 623 9677 Customer Centric Profit Optimization ** A Summary A more detailed narrated PowerPoint is available as well as numerous papers on this topic. Please look on www.authorstream.com and search for the “ channel ” called “ customer centric ”.

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