July 2006

Thursday, July 27, 2006

Why Wont My Camera Work For Chat Rouletee

The great effect of CRM Business to Business

Let's talk about CRM in Business-to-Business (BtoB), with a new article by A. Hughes ( mailto: Dbmarkets@aol.com ) on a CRM strategy and on the calculation of the Lifetime Value (LTV) for a hypothetical, but realistic industrial company.

The first interesting item and 'the use of a website to reduce costs of sales - direct sales or through distributors - and personalize customer service, thus building loyalty.' The costs of the website (and other instruments such as the Integrated Account Management, and a communications program), are counted in the LTV. The other interesting element

and 'the customer segmentation by type of industry: the example shows that a high turnover, they can pay low LTV. Segmentation is also proposed more 'classic customers Platinum, Gold Lead up to the customers, who are losing money.

Finally, for those of you interested in most aspects of 'technical CRM, there' calculating the discount rate (used to calculate the LTV) in the BtoB, and 'more' complex must solito.Infatti take into account the terms of payment (more than 'close new customers, more' customer acquired deferred), the resulting risk factor (which tends to fall on the customers acquired) and possibly re-purchase multi-year cycle. Reference to Article for detailed explanation.

But, of course, the most 'interesting are the results: in this example, the company invests $ 7 million over three years to get 56 of the profits generated by activities' of CRM!

REFERENCE
Using Lifetime Value in Business to Business Marketing Strategy

Sunday, July 23, 2006

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The king of CRM and 'naked? It depends on how you look

analyze here the reasons for which, very often, the CRM does not work.
E 'should make a point: today, the activities' relationship marketing are generically referred to as "CRM". So, I will continue 'to use "CRM" without distinction.

In two articles (which has taken in his later books), Hughes explains why ', in his opinion, the premises upon which the CRM are wrong.

recording enough data, the company will be able to 'do the right offer, to the right person at the right time
Hughes says that you will not have enough data to know what the customer wants it, because' choices' s acquisition change for reasons that are not recorded in a database.E 'objection to the right, albeit on Amazon.com, 1to1 marketing works. But it is' unthinkable generalize this example?
Companies must move from product-centric to customer-centric
Hughes says that companies never change their whole organization, because it 's good that there are marketing and product manager.Anche and this' objection right,' cause the work positioning brand and the acquisition of new customers to be done. But it 's also true that without a customer manager who gets paid to retain customers, CRM is the son of nobody.
The operation 'success, but the customer and' dead
The "traditional" methods of CRM (large data warehouse for billionaires and investment management and data analysis) the cost of the solution exceeds the profits Add taken from the solution.

A simple simulation that compares a CRM system with a more 'limited' marketing database (archive that contains only the best customers and less information than the data warehouse) shows that - assuming similar results - the CRM system reduces profits, both with respect to the marketing database, which compared to the same business activities without any 'of CRM!

The problem, according to Hughes, and 'that the CRM industry tends to be unnecessarily complicated (and expensive). In our view, that 'comes from the fact that the CRM and' became a hot topic "putting in the wake of the Internet and the business with the suffix" e ", which has inherited business objectives often non-existent or ridiculous, unjustifiable investments by the rules of proper management, jargon and abstruse prose.

Do not confuse the means with the end. Ask yourself how could the CRM increase your profits and give yourself clear and measurable responses. Only if you can find answers soddifacenti you can think of technological solutions, and there will be 'spoiled for choice.

And if you can not find it? Well, the CRM is not for you.

REFERENCE
Why CRM is failing
The Failure of CRM Mathematics

Tuesday, July 18, 2006

Drip Vs Bubble Hydroponics

CRM, the basic questions

What 'CRM?
Why 'do CRM?
What is the difference 'between CRM and SFA?
CRM and 'just for large companies?

are questions to which you can find many different answers. Often - because 'in CRM there' a lot of hot air - replies are useless or, worse, wrong. The king of CRM and 'naked sometimes.

my part - I hope you know now - I always look for clarity and are convinced that you can 'simply explain everything, including CRM.

And then you do 'my own answers to initial questions:

What 'CRM?
Activities' that the company is to retain customers and make them more 'profitable
Why' do CRM?
To make money with their clients, more 'convenient acquire a new
What is the difference' between CRM and SFA?
The SFA (Sales Force Automation) and 'a subset of CRM sales force dedicated to
CRM and' just for large companies?
Absolutely not, but 'most of the technological solutions to make CRM is too expensive for SMEs

If you want to explain a bit' more 'articulate, I recommend The Customer Relationship Management Primer , a white paper (updated periodically), in which experts from CRM Guru seek to respond in a clear and comprehensive to basic questions about CRM.Anche if some chapters are of little importance, in general, this white paper, CRM Guru achieves its purpose.

At this price (and 'free) can not' miss in your library of CRM. A word of warning ': you risk becoming the company CRM expert.

REFERENCE
CRM Guru - The Customer Relationship Management Primer

Sunday, July 16, 2006

Is The Rainbow Puffle Real 2010

Data Mining? Start dall'RFM

Data mining and ' One of the most 'fascinating - and misunderstood - of CRM. The idea of \u200b\u200bfinding "gems of information" hidden his information from 'data mining that taste of "technology is indistinguishable from magic" mentioned in the law of Clarke.

But, in fact, data mining requires expertise and related investimenti.Cosi 'today I wanted to start talking about the "mining of the poor": the RFM coding applied to CRM. Another simple and effective ideas of A. Hughes ( Dbmarkets@aol.com ).

RFM stands for Recency, Frequency, Monetary:

Recency: Date of last purchase
Frequency: number of purchases
Monetary: Total purchases

The RFM and 'index, added to each record of your customer database, which is created from three pieces of information.

Here's how:

Order database clients according Recency (more 'recent first)
Divide the database into 5 equal parts (quintiles) in the first quintile
enter "5" in a field "R "you added to the record. Write "4" in the second quintile and so 'the 3 steps to via.Ripetete Frequency (the "F") and Monetary (the "M"). At this point, each record in your customer database you will have an index of three digits, 555 to 111.

The RFM coding your customers 'sensitivity' to your offers. " They range from customers 555 (those that are better) apr 'and clients 111 (worst answer or do not respond). The response rate to an offer is distributed in a linear decreasing between these two extremes.

Why 'the RFM working? 'Cause based on past buying patterns and then, and' the best indicator of future purchases. The RFM

then allows you to predict what customers' profitable and also carry out promotional activities to measure the expected profit!

Here's how:

RFM coded your database on the current situation
extract a sample random representative
made a test mailing of your offer
measured the response rate to break even
measured the response rate for each RFM cell

now so that 'your promotional campaign a success, you have to send it only to cells RFM - this time around the database - which have a response rate greater than or equal to that of break even.

But the RFM is also used for marketing intelligence. Federal Express has used the "RFM Migration Analysis" to understand how clusters of customers moved over time between different RFM cells. This allowed easy identification of different behaviors that require different strategies.

Today with the Internet and email, the RFM method has lost a bit 'of validity'. Today you can still do all your emailing a database with very low costs. But that is another matter, the validity of theory and practice of the method remains.

Use it in your CRM and see.

REFERENCE
Making Your Database Pay Off Using Recency, Frequency and Monetary Analysis

Saturday, July 15, 2006

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IDIC, the operational strategy for the CRM

After 4P Kotler and AIDA's Direct Marketing, CRM also has its good sign: IDIC.
(Actually - and you know - there 's another acronym that we consider essential: LTV)

IDIC and' an acronym invented by Peppers & Rogers Group to remember what to do in an operational strategy of CRM .

I = Identify - Identify your customers. If you can not identify them, no CRM. Identify means to record who they are and what they do on a database. In the BtoB and 'relatively easy, in BtoC it takes a loyalty card or similar system

D = Difference - Differentiate between profitable customers and no. There are very profitable customers (20%), those profitable on average (20% more) that must be made "to grow" and the mass of customers that are profitable little or nothing ... abandoned! I =

Interact - Interact with your customers. By all means: email, web, advertising 'an interactive, call center, mail, events. And ask for feedback: CRM and 'a two-way street

C = Customize - Customize and communication products, according to the needs of your customers. The final phase, the real marketing 1to1.

But if you already 'put in place the first 3 steps, you are promoted (too many companies forget the step "D" and some even stop at the first stage!)

recommend reading the white paper that Peppers & Rogers Group IDIC and it is' a clear introduction CRM strategies. For those who want to deepen, there The One to One Fieldbook (also available in Italian), a real operating manual for the 1to1 marketing.

REFERENCE
The One to One Fieldbook

Friday, July 14, 2006

Witch Church Does Justing Bieber Attend

6 degrees of loyalty '

We all agree that the "customer retention" and 'The basic principle of CRM? Perhaps not 'so' simple.

A study by McKinsey says that many customers do not leave the company, but maintain a "downward migration" by buying less. The incidence ROI of CRM and 'significant: up to 10 times compared to the effects deriving from customers who leave.

The study identified six levels of loyalty ':

Emotive Loyalist, the most' faithful, led by emotions
Inertial Loyalist, faithful to inertia
Deliberative Loyalist, as many critics and loyal by choice
Lifestyle Downward Migrators, buying less because 'change their lifestyle
Deliberative Downward Migrators as analogues Loyalist, often tend to analyze their purchasing decisions
Dissatisfied Downward Migrators, frustrated by problems of product or channel

The percentages for these six types of clients ranging from industry and industry. For example, in clothing the Deliberative Loyalist are dominant, while in the field of telephone services are in the minority.

What does that mean '? Do customers divided between believers and non believers and 'an over-simplification of reality'. It can 'lead to erroneous CRM strategies: for example, investing to increase customer satisfaction when the customer's problem and' a different way of life that led him to buy less.

in CRM and 'essential to understand their customers: who they are,' cause buying, how they change. For this is called "relationship".

REFERENCE
Customer retention is not Enough (registration required)

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Return on investment: ROI, Profitability and LTV

What is most 'important part of CRM? Certainly the return on investment: If you gain, 'cause it? I mentioned it in the first post of this blog, come back by showing the differences between ROI, Profitability and LTV.

ROI - The ROI measure the results of marketing campaigns. Investment X, Y, profit, ROI = (Y - X) / X. ROI and 'easy to measure, but in the CRM can' be misleading. Indeed activity 'customer acquisition will have' negative ROI easily, but then customers can be profitable in the medium term.
Profitability - typically used by banks, the profit that a customer brings in a period of time (eg year) compared to a "portfolio of products" defined. Compared to ROI, it helps more 'to think in terms of CRM, bringing the focus on the customer. The problem 'which measures the performance only "static" of the client, while the CRM aims to increase customer value over time.
LTV - To measure the increase in customer value over time, you have to use the Lifetime Value (LTV), the true indicator of the ROI of a CRM project. But it 's also tool to define the CRM strategy, simulating the results before you start. It 's a calculation more' complex, but you can 'do with Excel: try to calculate the Lifetime Value of your customers, with our tables LTV.

REFERENCE
ROI, Profitability and Lifetime Value

Thursday, July 13, 2006

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such as call centers have become strategic CRM

The modern tools of customer contact (call center, email, web) simplify or complicate the management of customer loyalty? Paradoxically, it seems that complicate. But there ' little to do: the world and 'changed with the Internet.

Internet and the opening of "dialogue" with customers has introduced two factors that complicate the life companies: a) customers expect to be able to contact the company when and how to think lorob) have multiplied the opportunities' of making fool.

Companies can not but 'return to close the channels of communication: Research shows that customer loyalty and' now directly linked to potential 'to interact with the company.
should instead realize that the management of customer contacts and 'a strategic element.

and staff our call center (preferably integrated telephone and Internet) is becoming the top advance of the troops in the war for the corporate customer loyalty.

This means giving them tools and training appropriate to the importance and difficulty 'of the task.

In particular, the management of the email (and contacts via web / chat) and 'set to double over the next year (Forrester). CRM systems are required with pre-and post knowledgebase business info with which to make quick and satisfactory answers. And the cross-channel customer interaction.

in CRM, customer service is not 'important. It 's all.

What Is A Service F For Mercedes

Micro manual: what and' how does it work

For those who do not have time, here is a micromanuale of CRM:

The CRM was created to treat different customers (and potential) different
CRM works best in customer loyalty, although many companies tend to use it only during the conquest (and targeted communication systems)
CRM allows you to earn more 'and spend less on marketing, equal to' customer
In a CRM project and 'fundamental test, with control groups (customers and clients treated in the usual way involved with the CRM)
In a CRM project and 'key segment customers and turn to those more' profitable
In CRM the report and 'an important element: it should be remembered because' companies are not accustomed to having a relationship with customers
Finally, in CRM, the key element, too often forgotten, are your people : If you are not trained and promoted properly, your project will fail CRM

REFERENCE
How to Measure CRM Success

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CRM in emerging markets: a model for Italy?

E 'quite logical that the CRM does not work in emerging markets, where there are no accurate database, advanced IT systems and trained people on this new marketing technique. Instead

not 'so': CRM works in emerging markets. In general, the response rate to CRM initiatives in these countries ranged from 10 to 60%.

Why '? According to an article in McKinsey Quarterly, for two reasons:

in advanced markets, consumers are all too accustomed to direct marketing, while in emerging markets receive personal attention from companies and 'for consumers, once news '
success in CRM depends more' to creative ideas - that are found when there are few resources - that have large investments in data warehouses and data Mining

But despite these successes, yet few companies in emerging markets do CRM. Why '? Even here, two reasons:

senior managers of companies they know little about CRM
in general, we believe that CRM requires large investments.

McKinsey Quarterly's article contains an interesting case histories (usually Asian) and data read and review it.

But what does all this' with Italy, advanced country and a member of the G8? Well, in terms of CRM, we are more 'similar to an emerging country, which in an advanced country. And so it 'probably more' useful to look at what they do in South Korea, rather than in the U.S..

Especially for the thousands of Italian SMEs who still see CRM as an 'unattainable dream.

REFERENCE
Emerging Marketing (requires registration, but worth the effort McKinsey Quarterly)

January Party Invite Templates

CRM and 'marketing to Donald

This article is a new concept of "philosophical" at the base of CRM: the difference between Transaction Buyer and Buyer Relationship.

The Transaction Buyer are not faithful and seek always and only the best deal possible, going seamlessly from one company to another. The Relationship Buyers looking for a supplier they can trust: good products, fair prices, after sales support.

company that will focus on CRM Buyer must focus on the relationship, of course. But it must do so since the acquisition: special offers by far the Transaction attract buyers and ultimately the return on investment and 'negative.

The good and unexpected news - according to research Mercer Consulting - and 'that, at least for hotels, service stations and grocery stores - between 70 and 85% of customers are relationship buyers.

Strange? Logical if you think about it: the Buyer and Relationship 'a customer lazy habit, he does not want spend too much time in his life to choose a supplier. If and 'satisfied with our offer, tend not to change. It is not 'so' most of us?

Well, around there are less and more than Uncle Scrooge 'Donald Duck than traditional marketing strategies will make you feel. CRM and E 'way of marketing a more' natural ', more' human 'ripetto traditional systems that assume a customer always tended to look for the best price.

to the success of your CRM, look for the lazy.

REFERENCE
Why Customer Leave And What You Can Do About It

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The beauty

Probably many of you know: 80% of profits come from 20% of customers.

These percentages may vary slightly (I have personal experience in the GDO, the percentages are more like 35% -65%), but they explain a completely real, practical terms: the majority of your customers and make sure there is a lot 'customer you are losing money (it is not easy to digest about a month ago I was saying these things in a big international retailers and saw faces staring and almost embarrassed.)

In his article, the teacher Arthur Hughes offers a crystal clear view, because invest in a CRM program on 100% of customers? Invest only on 20% of customers that brings you 80% of the profits. This saves the 4 / 5 of the investment, without significantly reducing the ROI. Indeed, this approach may be all the difference between a successful CRM program and a failure (bad for the company and careers).

But Hughes also suggests applying the rule to the contrary, you agree to obtain 80% of the results and you can make the difference between failure and success of your program CRM.Ancora once, Hughes shows that CRM is primarily pragmatic, common sense and concrete and measurable results.

Maybe that's why in Italy sluggish?

REFERENCE
The Beauty of 80%

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80% LTV, the most important symbol of CRM

How to assess if your CRM program can 'succeed? Answer: with the calculation of the Lifetime Value (LTV).

And the best and 'we can measure it, as a simulation, before you actually invest in the program. The LTV measure future profits of a group of customers, from their purchase behavior.

To calculate the LTV we need a customer database which contains the history of their purchases. Then, Excel, we can create a table LTV, using indicators derived from the customer database.

The most 'important' the Retention Rate (RR) indicates the percentage of customers who remain active from year to year. The total profit (equal to total revenue minus total variable costs) is multiplied by the "discount rate": in fact we are calculating a future profit. The discounted value is then divided by the number of initial customers: the value 'the LTV.

course, this calculation should be carried out for more 'of a period: in all you have to consider only customers left over from T1 (the RR in action!) And observe the variation of the LTV. Here's how to measure the results of our program CRM: - if the LTV increases, the program works - if the LTV goes down, we need to review your strategy.

REFERENCE
How Lifetime Value is Used to Evaluate Customer Relationship Management CRM