CRM-Profiting from

understanding customer
needs
Presentation by;
Maithili Kalelkar
Sachin Garg
Shubham Gaggar

9th Oct, 2017

Successful Implementation of CRM
Wells Fargo
Helped cross-sell products, number of accounts per customer increased from 3 to 6
Fidelity Investments
Generate demand for new mutual funds, Provide solutions as per customers
requirements
Lowes Home Improvement Warehouse
265% RoI on $11 million investment on CRM
Virgin Wines
Increase in customer conversion rate from 4% to 12%
Nordstrom
Rationalizing costs by setting up kiosks, Personalized services

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Failure in Implementation of CRM
Bank of America
Imposed monthly charges on debit cards, lost 650k customers
Netflix
Split video streaming and DVD subscription, increased prices by 62.5%, lost 800k
customers and stock dropped by 35%
Cigna
Drop in subscriptions from 13.3 mn to 12.5 mn, loss of revenue of approximately
$400 million
Hershey
$100 million loss in sales, stock price dipped by 8%

According to a study by Merkel Group, CRM initiatives have a 63% fail rate (2013)
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Whats wrong with CRM?

Customer needs ignored

Cost of collecting and

interpreting information

Intuitive, interpretative,
ambiguous information ignored

Focus on whats of customer behavior rather than

whys.
Incomplete understanding of customer needs hurts business 4
 Building Blocks of CRM
Difference between
knowing about and Integration of data
knowing customers from various sources
Emotional needs to Real time POS
predict behaviour Information decision making
Understanding
Customer processing Improved due to IT
Decision capability Technology rich but
making knowledge poor

Personal information Information about

Customer history customers
Profitability information
Customers deep-seated
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needs
 CRM Information requirements and value
added
Personal
Customer history Profitability info Customer needs
information
Segmentation Marketing Marketing Cross selling
Channel communication expenditure Up selling
selection Avoiding and efforts NPD
customer Customer LTV Customer
defection relationships
Service Customer LTV
recovery
Future
marketing

Focus of current CRM Ignored by current

CRM 6
 How customer needs help in
segmentation and targeting?
Understanding Segmentation Targeting
Customer needs

Functional Dividing the Creating

Emotional market on the appropriate
basis of needs value
proposition for
identified
target
segments

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Understanding customer needs through
right communication channels
Customer needs and
Communication Channels
information characteristics

Functional needs Lean Channels

Well-defined Transaction records

Explicit Clickstream data
Tangible Survey

Emotional needs Rich Channels

Latent Semi-structured
Fuzzy interviews
Sub-conscious Archetype research
Hard to articulate Story-telling 8

Intangible Picture drawing

Rich vs. Lean communication channels
Rich Channels Lean Channels
Multiple Modality
Verbal + non-verbal
communication
Body language, facial
expressions, tone of voice

Immediate Feedback
Instantaneous reaction
Reduces ambiguity
Emotional needs

Examples Face-to-face E-mail and

communication databases

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Choosing the right communication
channel Cost-benefit Tradeoff

E.g. Face to face

communication uncovers
emotional needs of customer
apart from the basic needs
but the tradeoff for the firm
is the high cost to obtain it

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Building a full spectrum information
portfolio to select the right channel
Complex or ill-defined situations, e.g.
o Obtaining data on new customers or new product
viability
o Eliciting feedback on complex products
o Understanding emotional needs
Rich Channels
Situations with high profit potential, e.g.
o Collecting information on potential lifetime customers
o Collecting information on users of high margin products

Lean Channels with To substitute for rich channels, e.g.

powerful modelling o Collaborative filtering (AMAZON)
techniques

o For simple and recurring problems, e.g.

Lean Channels o Eliciting functional needs
o Tracking changes in customer information
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