CUSTOMER RELATIONSHIP MANAGEMENT FOR HIGH TECHNOLOGY COMPANIES

1. CUSTOMER RELATIONSHIP MANAGEMENT FOR HIGH TECHNOLOGY COMPANIES Trainer: Jesus Belle M.Sc. MBA PhD Candidate

2. Customer analysis Customer information Network Development Value Proposition development Manager the customer lifecycle Leadership and culture Data and information technology People Processes THE CUSTOMER RELATIONSHIP MGMT VALUE CHAIN Primary stages Customer Profitability Supporting condtions

3. THE CUSTOMER RELATIONSHIP MGMT VALUE CHAIN Manage The customer lifecycle Network Development (SCOPE) Customer analysis Value Proposition development Customer information • Network management • Internal networks • External network –suppliers/investors/ • partners • Network position • E-Commence • - EDI / Extranets/ portals • Customer database development • Internal data • Data enhancement • Data warehousing • Data mining • Benchmarking • Privacy • Database technology and software • Market segmentation • Customer Costs • Lifetime value • Customer analysis toolkit • - SWOT/ PESTE/5 forces/ BCG martix • Sources of customer value • Customer experience • Process re-engineering • People issues • Technology enablement • Customer acquisition • – who/how/what? • Customer retention • – who/ how? • – exceed experiences/add value/social and structural bonds/commitment • Customer development • who/what/how? • Organisation design • physical/ virtual? • cross-Functional teams • Metrics Adapted from Buttle (2004)

4. 1. CUSTOMER ANALYSIS • Which activities are being carried out at your company in order to gather critical customer information? Level of Implementation Intuitive Medium Professional Segmentation Sales forecasting Customer Costing Customer Metrics Other ?? Other ??

5. 1. CUSTOMER ANALYSIS Customer types: Loyalty through the consumer relationship life • Suspect: Could the customer fit our desired profile? • Prospect: Consumer fits profile and is being approached • First-time customer: First purchase is made • Repeat customer: Customer makes additional purchases • Majority customer: We are the customer’s company of choice • Loyal customer: Customer is resistant to switching suppliers • Advocate: Customer generates additional referrals and orders

6. 1. CUSTOMER ANALYSIS • What is your overall consumer portfolio loyalty (in customer amount percentage)? Current % Ideal % SUSPECT PROSPECT FIRST-TIME REPEAT MAJORITY LOYAL ADVOCATE Total: 100% Total: 100%

7. 1. CUSTOMER ANALYSIS • What is your overall consumer portfolio loyalty (in sales percentage)? Current % Ideal % SUSPECT PROSPECT FIRST-TIME REPEAT MAJORITY LOYAL ADVOCATE Total: 100% Total: 100%

8. Loyals Latent loyalty Occasional loyalty No loyalty Customer Loyalty Matrix REPEAT PURCHASE High Low Strong RELATIVE ATTITUDE Weak

9. 2. CUSTOMER PROFITABILITY • Customer Profitability = Revenues per Customer (or customer group) per year minus Cost of Customer Related Activities Cost of Activity E Revenues per Customer XX In year 200X Cost of Activity F minus = Cost of Activity G Profit per Customer XX In year 200X

10. 2. CUSTOMER PROFITABILITY • CUSTOMER INTIMACY CLUSTERS ELIMINATE OR PROVIDE MINIMUM SERVICE KEEP! OPTIMIZE INTIMACY PROCESSES Required Customer Intimacy IDEAL: NURTURE AND GROW Customer Profitability

11. 2. CUSTOMER PROFITABILITY TRANSACTION-ORIENTED CUSTOMER FULL-INTIMACY CUSTOMER Key Actions “Transaction cost” Market mechanism Serving through the whole customer process Objective Serve and satisfy through minimum service Maximum long-term profits through a long-term relationship Competitive Advantage Price General Product Attributes High Customer Value Price and Process Intimacy Organization Product Managers Purchasing Customer Teams Effectiveness Economy of Scale Process Differentiation for Segmented Customer Groups Strategic Metrics Sales Volume Market Share Customer Profitability % of Customer Expense Customer Orientation Satisfy through basic needs Relationship Strength New cooperation opportunities

12. 2. CUSTOMER PROFITABILITY • Most of the customers are somewhere between transaction-based and full-intimacy • Early customers have great potential (long-time to reap benefits) • Mature markets are less loyal and more price-based

13. 2. CUSTOMER PROFITABILITY • Customer Lifetime Value Gross Margin from Customer A during the lifetime - Year 2005 + 2006 + 2007 + 2008 + 2009 (discounted to a certain rate, beyond the scope of this training) Minus: - Customer acquisition cost - Customer maintenance activities cost

14. Households Organizations Organization structure individuals Contacts Roles Profiles relationship addresses History Partners Customer products Opportunities Contact plans Sales orders Service request Promotions Claims 3. SAMPLES OF CUSTOMER DATABASE STRUCTURES B2C B2B

15. Customers Special pricing/ Promotion Pricing Competing Products Products Quotes and orders Catalogues Components Known issues Inventory Structures and configuration rules 3. SAMPLES OF CUSTOMER DATABASE STRUCTURES

16. History Customers Attributes personalistion Segments Lists Campaigns Leads/ opportunities plans Budgets Marketing funds Responses Activites Partners 3. SAMPLES OF MARKETING DATABASE STRUCTURES

17. Customers Buying process Competitors Products Configuration Leads Opportunities Quotes, proposals, presentation Sales orders Customers products Activities Sales team Sales methodology Territory Forecast Incentives Partners Oblectives and tactics 3. SAMPLES OF SALES AUTOMATION DATABASES

18. Agreements and warranties customers Activities Service team Inventory Dialogue scripts Service requests Service orders and return material automation Rosolutions Customer products Products Known issues Solutions Maintenance parts Manuals Defects 3. SAMPLES OF SERVICE AND SUPPORT DATABASE STRUCTURES

19. 4. CUSTOMER VALUE Negative Differentiation Value Positive Differentiation Value Total Economic Value Reference Value

20. 4. CUSTOMER VALUE • The Customer Experience: Value = Benefits minus Sacrifices • Benefits: Which are the key benefits that the customer is getting from your product or service experience? • Some commonly identified ones (SERVQUAL model): • Reliability: the product performs dependably and accurately • Assurance: Ability of suppliers personnel to convey trust and confidence • Tangibles: equipment and materials • Empathy: Individualized attention to customers • Responsiveness: willingness to provide prompt service when needed • Others???

21. 4. CUSTOMER VALUE • The Customer Experience: Value = Benefits minus Sacrifices • Sacrifices: What is the customer pain in acquiring your product or service? • Some commonly identified ones: • Money • Searching costs (looking for different alternatives) • Physical purchase experience: traveling abroad, negotiating… • Installation costs • Learning and adaptation costs • Psychic costs: • Performance risk: when the user is not fully sure that the product will do as required • Financial risk: customer doubts the financial gain from the purchase • Social risk: company reputation is at risk when purchasing the product

22. 4. CUSTOMER VALUE • How do consumers typically reduce the risk and sacrifice? • Purchase delay • Seek word-of-mouth references • Negotiate service contracts • Seek additional information • Buy known brands • Deal with reputable suppliers • Seek performance guarantees • Negotiate discounts • Demand pre-purchase trial • How ready is your company to minimize the customer sacrifice?

23. Post-sales service & support Pre-sales services interfaces 5. RELATIONSHIP PROCESS • Components of the Customer Relation: a) The Whole Product/Service Offering Consulting Hardware Software TheProduct ComplementaryServices ComplementaryProducts Peripherals Connectivity

24. 5. RELATIONSHIP PROCESS • Components of the Customer Relation: b) The Firm and Customer Relationship Customer’s Value Process (generic example) Product Design/ Develop Integration Production Delivery Service & Support Supplier Search Strategy Planning Purchasing Production Delivery Strategy Planning Comp/service Design/Devel. After sales Service Marketing Sales Suppliers Value Process (generic example)

25. 5. RELATIONSHIP PROCESS CUSTOMER PROCESS Product Design/ Develop Integration Production Delivery Service & Support Supplier Search Strategy Planning Purchasing Production Delivery Strategy Planning Comp/service Design/Devel. After sales Service Marketing Sales SUPPLIER (OUR COMPANY) PROCESS Concentration of traditional marketing Is this enough for creating the customer loyalty and profitability in our business?

26. 5. RELATIONSHIP PROCESS CUSTOMER PROCESS Product Design/ Develop Integration Production Delivery Service & Support Supplier Search Strategy Planning Purchasing • EMPTY SPACE!!!!!! • Could our company design activities for each of these stages in order to: • Develop the products and services together • Maximize accuracy in delivering what the customer wants • Accelerate product development • Adapt quicker to technological changes • Ensure lifetime loyalty Production Delivery Strategy Planning Comp/service Design/Devel. After sales Service Marketing Sales SUPPLIER (OUR COMPANY) PROCESS

27. IDENTIFY YOUR COMPANY PROCESS AND YOUR CUSTOMER PROCESS CUSTOMER PROCESS SUPPLIER (YOUR COMPANY) PROCESS

28. FROM THE PREVIOUS CUSTOMER PROCESSES, RANK THEM IN STRATEGIC IMPORTANCE, INDICATING THE REASONS CUSTOMER PROCESS Rank Reasons Rank Reasons Rank Reasons Rank Reasons Rank Reasons Rank Reasons

29. FOR EACH STAGE OF THE CUSTOMER AND OUR PROCESS, WHICH ACTIVITIES COULD WE IMPLEMENT IN ORDER TO BEST SERVE OUR CUSTOMERS AND CREATE A LONGLASTING RELATIONSHIP? RELATIONSHIP ACTIVITIES FOR EACH STAGE

30. CREATING AN ACTIVITY SCORECARD:FOR EACH ACTIVITY CHOSEN, SELECT A METRIC, TARGET, OWNER, BUDGET AND TIMETABLE CUSTOMER STAGE Expected Result: Budget: METRIC TARGET OWNER TIMETABLE ACTIVITY

31. EXPECTED RESULT:

32. EXPECTED RESULT • Supplier and consumer learn to develop processes together • Product development is accelerated • Customer uncertainty reduced sharply • The costs of relationships are internalized in the organization • The cost of relationships diminished greatly over time • Loyalty is boosted • Huge switching cost: would customers be willing to start the whole process from zero again? • Forgiveness: Customer is more willing to forgive minor performance flaws • Customers will become active advocates, providing valuable referrals • Premium prices can be charged as a result of the huge customer benefit

33. UNPROFITABLE CUSTOMERS WITH NO POTENTIAL PROFIT OR RELATIONSHIP BENEFIT • Solutions: • A) Keep the product to the minimum standard (minimum effort to create satisfaction without damaging brand equity or reputation) • B) Elegant “goodbye” • Raise price • Unbundle previous packages, sold as non-discounted separate products • Redesign the product, so it only appeals to profitable customers • Reorganize sales and marketing, so the effort is placed on the profitable customers • Invite low-profit customers to migrate to other lower value-added channels