The CRM Value Chain Essay Example for Free

The CRM Value Chain Essay The meaning of those three letters, CRM, is hotly contested. For some, CRM is simply a bridge between marketing and IT: CRM is therefore an IT-enabled sales and service function. For others it’s little more than precisely targeted 1to-1 communications. But both of these views deny CRM its great potential contribution. Because CRM, at its most advanced, answers questions like ‘who should we serve?’ and ‘what should we serve to them?’ and ‘how should we serve them?’ it could, and often should, be positioned as the fundamental strategic process around which the business is organised. CRM decisions impact on marketing, certainly, but also on operations, sales, customer service, HR, RD and finance, as well as IT. CRM is fundamentally cross-functional, customerfocussed business strategy. The CRM value chain The CRM value chain (figure 1) is a proven model which businesses can follow when developing and implementing their CRM strategies. It has been five years in development and has been piloted in a number of business-tobusiness and business-to-consumer settings, with both large companies and SMEs: IT, software, telecoms, financial services, retail, media, manufacturing, and construction. The model is grounded on strong theoretical principles and the practical requirements of business. The ultimate purpose of the CRM value chain process is to ensure that the company builds long-term mutually-beneficial relationships with its strategically-significant customers. Not all customers are strategically significant. Indeed some customers are simply too expensive to acquire and service. They buy little and infrequently; they pay late or default; they make extraordinary demands on customer service and sales resources; they demand expensive, short-run, customised output; and then they defect to competitors. What is a strategically significant customer? We’ve identified four types of strategically significant customer (SSC). Selfevidently, the high life-time value customer is a key SSC. These must be the focus of customer retention efforts. Life-time value potential is the presentday value of all future margins that might be earned in a relationship. Tempting as it may be to believe, not all high volume customers have high LTV. If they demand JIT, customised delivery, or are in other ways costly to serve, their value may be significantly reduced. We know of one company that applied activity-based costing disciplines in order to trace process costs to its customer base. They found that 2 of their 3 biggest customers were in fact unprofitable. As a consequence the company re-engineered its manufacturing and logistics processes, and salespeople negotiated price increases. A second group of strategically significant customers we call ‘benchmarks’. These are customers that other customers copy. A manufacturer of vending machine equipment is prepared to do business with Coca Cola at breakeven. Why? Because they can tell other customers that they are supplying to the world’s biggest vending operation. The third group of SSCs are ‘inspirations’, customers who inspire change in the supplying company. These may be customers who find new applications, come up with new product ideas, find ways of improving quality or reducing cost. They may be the most demanding of customers, or frequent complainers, and, though their own LTV potential is low, they offer other significant sources of value. One insurance company modified its claims process to satisfy one particular car fleet operator; this process eventually became the company’s default standard. The final group of strategically significant customers we call ‘cost magnets’. There are customers who absorb a disproportionately high volume of fixed cost, thus enabling other, smaller customers to become profitable. One oilseed processor, for example, has two major customers, a manufacturer of snack foods which buys oil in bulk and a retail multiple which buys consumer packs. Although they account for 60% of oil-seed processing time, they absorb 85% of fixed costs between them. Five steps to profitable relationships The five steps in the CRM value chain are customer portfolio analysis, customer intimacy, network development, value proposition development and managing the relationship. Although we don’t discuss them here, at each stage of the value chain there are concepts, tools and processes to help create and implement successful strategy. Very briefly, the CPA step analyses the customer base to identify customers to target with different value propositions. The second step involves the business in getting to know the selected customers as segments or individuals and building a customer data-base which is accessible to all those whose decisions or activities impact upon customer attitude and behaviour. Step three involves building a strong network of relationships with employees, suppliers, partners and investors who understand the requirements of the chosen customers. Step four involves developing, with the network’s compliance, propositions which create value jointly for the customer and company. The fifth and final stage is to manage the customer relationship. The focus here is on both structure and process. From observation of failure it is clear that CRM solutions cannot be transplanted into any organisation in the absolute certainty that the business will flourish. For success to happen, CRM needs a supportive culture: it’s unlikely to yield dividends in companies which only pay lip service to customer focus. Neither will it succeed in organisations wedded to product-based structures or reward systems based on sales volume. Similarly, if IT, human resources and procurement processes are not aligned with the CRM agenda, it’s unlikely to flourish. For example, we know one IT company which is trying to implement CRM strategy whilst still recruiting up-and-at-‘em salespeople who are quota driven. Another company is in the throes of a cost-reduction programme and procures least cost inputs to its manufacturing process without due regard to the impact on customer satisfaction and buying behaviour. Customer Portfolio Analysis CPA, the first step in the CRM value chain acknowledges that not all customers have equal value to the company. CPA asks the question: ‘who are our SSCs?’ The answer can be pitched at sector (e.g. food retailing), segment (e.g. food retail multiples) or individual (e.g. Tesco) levels. Companies which have no customer history on which to base their analysis can use segmentation approaches to identify potential SSCs. When CPA has sorted the actual or potential customer base into different groups, they can be taegeted with different value propositions. An important consideration is to analyse and sort by profit potential, not by volume, whether that is by sector, segment or individual. One CPA tool sorts customers into 4 strategic groups: sack, re-engineer, nurture and invest. Sackable customers are those who have no present or future profit potential or life-time value. The ‘invest’ group contains customers who are both valuable currently and have significant future potential. The ‘reengineer’ group contains customers who are not presently profitable but who could become so if the relationship were re-engineered. Options may include reducing the level of customer service, disintermediation, or telesales, rather than face-to-face sales representation. The final segment ‘nurture’ contains those customers who are currently profitable but have little future potential. The task here is to address, possibly in consultation with those customers the reasons for pessimism. It may be that they can jointly find solutions which suggest a more profitable future relationship. Customer intimacy Choosing customers to serve is one thing. Get ting to know them well is altogether different. Most companies collect customer data. Some industries are overwhelmed with information – scanner data, loyalty card data, complaints files, market research, geodemographic data. The challenge is to use the data to better understand the who, what, why, where, when and how of customer behaviour. Mining data intelligently is, of course, a source of huge competitive advantage, and it enables a more refined CPA to be undertaken. Develop the Network Company does not compete against company. Network competes against network. For example, Sainsbury does not compete against Tesco. Their respective networks compete. Tesco’s network, which includes partners such as Royal Bank of Scotland (for its retail banking offer) and Privilege Insurance (for its insurance offer) currently seems to be performing better than Sainsbury’s. A company’s network position i.e. its connectedness to other parties who co-operate in delivering value to the chosen customer, is a source of great competitive advantage. An innovative software house partnering with IBM, for example, enhances its network position. IBM also benefits, as well as their joint customers. Networks consist of partners like these, employees, suppliers and owners/investors. CRM is not a quick fix; it requires owners and investors who will commit to the long-term investment in the people, processes and technology to implement CRM strategies. Employees will probably need reorienting and reskilling, if not redeployment. There is clear evidence that employee performance in moments of truth with customers influences customer satisfaction and purchasing intention. It only takes a short leap of faith to link employee satisfaction to customer satisfaction to business performance. Suppliers also need to understand who the customer is trying to serve. According to the consultants A T Kearney, companies are going to continue vendor reduction programmes over the next several years, as they try to build closer relationships with fewer partner vendors. CRM is becoming twinned with SRM, supplier relationship management. Kearney reckons 20% of current in-suppliers will be de-listed by 2003. For CRM to succeed, the network of suppliers, employees, owners/investors and partners must be aligned and managed to meet the needs of the chosen customers. Value proposition development By the fourth step of the CRM value chain, you will know who you want to serve and will have built, or be in the process of building, the network. Now the network has to work together to create and deliver the chosen value(s) to the selected customers. Great value is found more effective and more efficient solutions of customer problems. Although it is traditional to focus on the product as the main source of value, many companies are finding that people, process and service offer more competitive advantage as products become more commoditised. How things are done with and for customers process is particularly important. There may be small processes, such as how complaints are handled; or big processes, such as how new products are jointly developed with customers. The value star (figure 2) illustrates sources of customer value in a retailing context. Price Managing the relationship For relationships to succeed with strategically significant customers, companies are having to re-invent structures and process. On the way out are hierarchical structures and product managers. Replacing them are flatter organisations with empowered front-lines and customer or market managers. We encourage companies to replace their single marketing strategy with a trio made up of a Customer Acquisition Plan, Customer Retention Plan and Customer Development Plan. Each of these has different metrics from those found in run-of-the-mill marketing strategies. New measures include customer acquisition costs, customer retention rates, share-of-customer and customer development targets alongside more conventional measures such as customer satisfaction and sales volume, and additional measures relating to the performance of network members.. Final thoughts CRM is widely misunderstood by marketing management and seriously misrepresented by software houses. Companies are being sold front-office and back-office solutions, but are missing out on the fundamental, strategic benefits that CRM can provide. CRM at its most sophisticated has the potential to integrate all business processes around the requirements of strategically significant customers, a fact that most IT solutions fail to acknowledge.

The Physics of an AM Radio :: Physics Radio Papers

The Physics of an AM Radio It’s was a beautiful sunny morning and Bill just kissed his wife goodbye and headed out the door on his way to work. As Bill got into his car he realized that he missed the Utah Jazz game the night before because of a late business meeting and fell asleep before the news came on so he couldn’t catch the highlights or even the score. He remembered that he could catch the rundown on AM frequency 930 (Sports News Radio). Many people enjoy listening to AM radio because of how convenient it is to listen and catch up on the sports, weather or just enjoy the entertainment of listen to Rush or Dr. Laura, but are much like Bill and don’t have any idea how the signal that carries these programs is sent or even received. In an attempt to understand this process, Bill confronts a part time employee who is currently studying electronics and has a basic knowledge of how the AM radio found his car or even his home works. Almost all AM radios work under the same basic design. There are two very simple yet very important things that make AM radio possible. What are these things? A transmitter(the station) and a receiver(the radio). THE TRANSMITTER Each radio station that desires to have a frequency(signal) on AM radio must notify the FCC and are assigned a frequency that they can use to send their information out on. The very first part of the transmitter is a quartz crystal. This is used because it is very stable and efficient which is important because there are certain laws and guidelines that the stations must abide by. They cannot go over or below the assigned frequency by more than 5K hertz, making a bandwidth of 10K hertz. After the quartz crystal, is an oscillator where the actual physics of the transmitter comes in. The oscillator is made up of a variety of electronics components including an operational amplifier and a combination of resistors and capacitors. Resistors are defined as-The impedance to the flow of electric current. The resistance is equal to the voltage across the object divided by the current through it. Measured in volts per ampere, or ohms.(Physics, A World View 513) Current is defined as-A flow of electric charge. Measured in amperes. (Physics, A World View 513) A combination of a resistor and capacitor in series or parallel is called a filter.

Brown V. Louisiana Essay

During the 1960’s, many African-Americans believed that civil rights should become a national priority. Young civil rights activists brought their cause to the national stage and demanded the federal government assist them and help resolve the issues that plagued them. Many of them challenged segregation in the South by protesting at stores and schools that practiced segregation. Despite the efforts of these groups and Supreme Court rulings that ordered the desegregation of buses and bus stations, violence and prejudice against African-Americans in the South continued Meyer, F. S. , 1968). In the 1960’s many things were off limits to African-Americans. They weren’t revered as equals and suffered greatly because of it. There’s an unfamiliar case to most that took place in Louisiana that helped shaped the use of public facilities for all people. This case is known as Brown v. Louisiana. The Audubon Regional Library in Clinton, Louisiana, Parish of East Feliciana did not serve blacks. Blacks, at that time, were expected to use one of two bookmobiles. The red bookmobile served whites and the blue bookmobile served blacks. On March 7, 1964, ive young African-American males entered the adult reading room and one of the men, Brown, requested a book called, â€Å"The Story of the Negro,† by Arna Bontemps. The assistant librarian checked the card catalogue and discovered that the library did not have the book. She told Brown that she would request it from the state library and he could either have it mailed to his home address or he could pick it up from the bookmobile. After the men had been given the news about the book they sat down quietly. After the men failed to leave the library, the assistant librarian requested that they go. They did not. Brown sat down while the others stood nearby. The assistant librarian then went to the head librarian who requested them to leave as well. Again, they did not. A few moments later, the sheriff arrived and requested that they leave again, and again, they did not. The sheriff arrested them and charged them with the intention to provoke a breach of peace and failure to leave a public building when ordered to do so (Coates, R. , 2005). The five men were tried and found guilty. Brown was sentenced to pay $150 for court costs or spend 90 days in Jail. The four other men were sentenced to $35 for court costs or 15 days in ail. Under Louisiana law, the convictions weren’t appealable therefore; their requests for discretionary reviews were denied. The Supreme Court granted certiorari. A certiorari is an extraordinary privilege injunction granted in cases that otherwise would not be entitled to review. In writing for the majority, Justice Fortas first examined whether the protesters could be convicted for refusing to leave the library. He concluded that they could not since their protest was peaceful and blacks could not be denied access since whites were allowed inside as well. He reviewed the onduct of the men and felt that this had no merit either. The state argued that the men were proving their intent to disturb the peace and upset the librarian. Justice Fortas concluded that the arrest was a violation of the men’s First and Fourteenth Amendment rights that guarantee freedom of speech and assembly and the right to opposed this opinion and took to issue with the majoritys reasoning. He disagreed that the Constitution prohibits any state from making â€Å"sit-ins† or â€Å"stand-ups† in public libraries illegal. Second, Black argued that the previous breach of the peace cases in Louisiana differed from Brown v. Louisiana. Previously there had been several other situations where there were peaceful demonstrations over discriminatory practices. Garner v. Louisiana (1961) involved a sit-in at a lunch counter to protest service for whites only. In Taylor v. Louisiana (1962) blacks again protested the presence of bus depot that was for white customers only. In Coxv. Louisiana (1965) a man led a demonstration near the courthouse and Jail to protest the arrest of other demonstrations. Each of the protests, along with Brown v. Louisiana, was all orderly and peaceful and was over discriminatory practices that denied the protesters’ rights hat were guaranteed to them under the Constitution. Justice Black opposition was joined by three other Justices. They argued that the First Amendment did not guarantee to any person the right to use someone else’s property even that owned by the government and dedicated to other purposes. On Wednesday, February 23, 1966 the decision was made; 5 votes for Brown and 4 against him (Coates, R. , 2005). The young men won! The Court’s ruling in this case, along with the others, proved vital to the Civil Rights struggles and also to the Vietnam War protests that would follow. Indeed, without these rulings the 1960’s and early 1970’s may have been a completely different period in time, especially when it comes to the Civil Rights movement. In the last line of Justice Blacks opinion in Brown v. Louisiana he wrote: â€Å"The holding in this case today makes it more necessary than ever that we stop and look more closely at where we are going† (Meyer, F. S. , 1968). In conclusion, had it not been for demonstrations of this kind, and the Supreme Court granting certiorari there is a strong possibility that none of this would have ever taken place. Oftentimes, it is in a ime of pain and suffering that the Just shall prevail, and I believe this is no different. There is more work to do but with the Supreme Court being behind you, at least you know it’s not in vain.

Keeping The Cycle Is An Innovative Bicycle Company Essay

Keeping the Cycle is an innovative bicycle company that has been in business for the past 18 years. The first 10 years of business, business was great, profits were on a steady incline and customers were well satisfied. Keeping the Cycle settled into a comfort zone rather than implementing strategic planning to stay ahead of the game. The bicycle company customer database consists of a 430,000 consumers. Only 30,000 new customers were acquired over the past five years. New consumer acquisition has plateaued greatly and with it the company’s profits. With the same overhead to account for in the manufacturing process, it is pivotal that the company conducts a 360 to evaluate the potential problem areas for improvement. Recently it has been identified that there have been several negative reviews of the company reported through the Better Business Bureau. It is evident that Keeping the Cycle is facing a serious dilemma if action is not taken soon. Customer acquisition and retenti on will pose a threat if the root cause for dissatisfaction isn’t identified. Statement of the Problem There is the need for our company to satisfy its customers through the production of goods that are designed as per market demands and standards. Reaching customer satisfaction is not very easy, and it is technically impossible in the event that the qualities of the services produced are below the standards the clients expect. Therefore, it is necessary for companies to investigate the importance ofShow MoreRelatedDescriptive Essay : Mba Trip Abroad1725 Words   |  7 Pagesstreet or they did not recognize the name of the hotel. Finally we found two young girls who were kind enough to show us the way. We finally made it to the hotel around 3:30pm, but, the journey to the hotel was amazing. 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