HANDBOOK OF CRM - Free

[Pages:459]HANDBOOK OF CRM:

Achieving Excellence in Customer Management

TLFeBOOK

To Penelope and Christopher

HANDBOOK OF CRM:

Achieving Excellence in Customer Management

Adrian Payne

AMSTERDAM ? BOSTON ? HEIDELBERG ? LONDON ? NEW YORK ? OXFORD PARIS ? SAN DIEGO ? SAN FRANCISCO ? SINGAPORE ? SYDNEY ? TOKYO

Butterworth-Heinemann is an imprint of Elsevier

Butterworth-Heinemann is an imprint of Elsevier Linacre House, Jordan Hill, Oxford OX2 8DP 30 Corporate Drive, Suite 400 Burlington, MA 01803

First published 2005

Copyright ? 2005, Adrian Payne. All rights reserved.

The right of Adrian Payne to be identified as the author of this work has been asserted in accordance with the Copyright, Designs and Patents Act 1988.

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British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library

Library of Congress Control Number: 2005922524 A catalogue record for this book is available from the Library of Congress

ISBN-13: 978-07506-6437-0 ISBN-10: 07506-6437-1

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Contents

Preface

xiii

About the Author

xvii

Acknowledgements

xix

Introduction

1

1 A strategic framework for CRM

4

The origins of CRM

6

The key principles of relationship marketing

9

An emphasis on retention of profitable customers

9

An emphasis on multiple markets

9

An emphasis on a cross-functional

approach to marketing

10

The rise of CRM

11

Marketing on the basis of relationships

11

Viewing customers as business assets

12

Organizing in terms of processes

12

From reactive to proactive use of information

13

Deploying IT to maximize the value of information

14

Balancing the value trade-off

15

Developing `one-to-one' marketing

16

The role of CRM

17

Varying definitions of CRM

18

The CRM continuum ? three perspectives of CRM

18

Use of CRM and its terminology

20

A definition of CRM

22

Types of CRM

23

The size and nature of the CRM market

24

Sector growth within the CRM market

25

CRM and software vendors

25

Five key cross-functional CRM processes

29

The need for a CRM strategic framework

30

Process 1: the strategy development process

32

Process 2: the value creation process

32

vi

Contents

Process 3: the multi-channel integration process

32

Process 4: the information management process

32

Process 5: the performance assessment process

33

The structure of the book

33

Chapter 1: Developing a strategic framework for CRM

33

Chapter 2: The strategy development process

34

Chapter 3: The value creation process

34

Chapter 4: The multi-channel integration process

35

Chapter 5: The information management process

35

Chapter 6: The performance assessment process

36

Chapter 7: Organizing for CRM implementation

37

Checklist for CRM leaders

38

2 The strategy development process

39

Business strategy

41

The role of business strategy

42

Business vision

43

Industry and competitive characteristics

47

The new competitive landscape

47

Putting the new economy in context

48

Changes in industry structure and evolution

50

Analysing the industry and competitive environment 51

Focusing on business strategy

60

Customer strategy

61

The role of customer strategy

61

Customer choice and characteristics: the role of

market segmentation

62

Who is the customer?

63

Market segmentation

64

Definition of the relevant market

65

Criteria for market segment viability

65

Considering the alternative bases for segmentation

66

Segment granularity: from mass marketing to

`one-to-one' marketing

69

`One-to-one' markets and permission marketing

69

Mass customization

71

Communities or segments?

73

Focusing on customer strategy

75

Aligning business strategy and customer strategy

78

CRM strategy development

78

Product-based selling

81

Managed service and support

82

Contents

vii

Customer-based marketing

83

Individualized CRM

84

Migration paths for CRM

87

Summary

88

Checklist for CRM leaders

90

Case 2.1 DnB Nor Bank pursues an enterprising

strategy with Teradata

92

Case 2.2 RS components: towards individualized

CRM with BroadVision

97

3 The value creation process

102

The value the customer receives

103

The nature of value ? what the customer buys

104

How the core and augmented offer add value

104

How relationships add value

111

How brands add value

117

The value proposition

123

Formulating the value proposition

124

The value delivery system

128

Building the value proposition

129

Value assessment

130

Traditional means of customers'

assessment of value

131

Improving value assessment using trade-off

analysis

132

The value the organization receives

135

Customer profitability

136

Why customers differ in their real profitability

137

Understanding future profit potential

139

Customer acquisition and its economics

140

Customer acquisition at United Electricity plc

140

Acquisition within different channels

142

Improving acquisition activities

142

Customer retention and its economics

143

Customer retention at United Electricity plc

144

Why retention improvement impacts profitability

145

Acquisition and retention activities in practice

146

A framework for customer retention improvement

148

Step 1: measurement of customer retention

148

Step 2: identification of causes of defection

and key service issues

148

Step 3: corrective action to improve retention

149

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