Pres:Basics of Ecommerce - Loyalty & CRM

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Basics of Ecommerce - Loyalty & CRM

Basics of Ecommerce - Loyalty & CRM

Title Basics of Ecommerce - Loyalty & CRM
Target group Students, Beginners
Topics Ecommerce Basics, Loyalty Management
Go to slideshow Go to print version

Public summary

Learning objective: The student can describe the importance of customer loyalty within the customer journey using CRM. The student is able to advise how customer loyalty can be build and maintained.

Lesson goals:

  • The student kan explain concepts as loyalty, retention, churn.
  • The student can interact on a basic level with a CRM system (search, edit, create action, determine customer attributes, etcetera).

The lesson is divided into 4 parts:

  • Loyalty: How do you create loyalty and foster retention? How do you prevent churn. How can you create a loyalty program (including examples).
  • An assignment to create a loyalty program for the school/university.
  • CRM: What is CRM? Where can you use a CRM system for? How can you use a CRM system to forecast sales.
  • CRM system in class practice exercise. Perfectview is originally Dutch. However the system is multilangual (English is supported).

The course can be offered in one and two hours (skip the loyalty program assignment and CRM practices).

The slide : Video: How to use perfectview is in Dutch and can be skipped if so desired.

Slides

  • Customer Service
  • Social Media & Webmonitoring
Question Mark.jpg
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  • Loyalty
  • Loyalty programs
  • CRM
  • CRM Systems
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How would you define customer loyalty?

Vraagtekenpop.png
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Goal of customer loyalty.png
Logo Ecommerce Foundation1.png Source: Slideshare: The Loyalty Program: A Recipe for Success, Stuart Kiefer, First Data Corporation 8


  • Customer retention & churn
  • Share of Wallet
  • RFM Model
  • Customer Lifetime Value (CLTV)
Logo Ecommerce Foundation1.png 9


Notes

Customer retention and churn are closely related. Customer retention is the activity that a selling organization undertakes in order to reduce customer defections.  Customer churn, also known as customer attrition, customer turnover, or customer defection, is the loss of clients or customers. When companies are measuring their customer turnover, they typically make the distinction between gross attrition and net attrition. Gross attrition is the loss of existing customers and their associated recurring revenue for contracted goods or services during a particular period. Net attrition is gross attrition plus the addition or recruitment of similar customers at the original location. 


Notes

Share of Wallet is the percentage ("share") of a customer's expenses ("of wallet") for a product that goes to the firm selling the product. Different firms fight over the share they have of a customer's wallet, all trying to get as much as possible. Typically, these different firms don't sell the same but rather ancillary or complementary product.


Notes

Customer lifetime value (CLV) (or often CLTV), lifetime customer value (LCV), or life-time value (LTV) is a prediction of the net profit attributed to the entire future relationship with a customer. The prediction model can have varying levels of sophistication and accuracy, ranging from a crude heuristic to the use of complex predictive analytics techniques. Customer lifetime value can also be defined as the dollar value of a customer relationship, based on the present value of the projected future cash flows from the customer relationship.[1] Customer lifetime value is an important concept in that it encourages firms to shift their focus from quarterly profits to the long-term health of their customer relationships. Customer lifetime value is an important number because it represents an upper limit on spending to acquire new customers.

Teacher note: The infographic is rather long. Just focus on the simple way to calculate CLTV for starters.


  • Target profitable Customer behaviour
  • Reward for Loyal Customers
  • Differentiate particular customers
  • Increase purchase of frequent customers
  • Regain lost customers
  • Attract new customers
  • Understand need of customers
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  • Identify your best customers
  • Learn from your (best/worse) customers
  • Create a loyalty program
  • Monitor & improve
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Notes

Not all customers were created equal. Some customers may generate a lot of turnover but not profit. Analyzing the existing customer base using methods like RFM and LTCV will reveal which customer segments (or individual companies) can best be served and how. The picture shows the RFM matrix where customers are plotted in a matrics with the best customers at the bottom right (on which you should focus) and the worsed on the top left. You can also define campaigns to move customers from one cell to another cell by increasing the value they buy, the recency and frequency.


Notes

Customers and the company have to share values, interests. Otherwise there is no click. If your values focus on service and quality you may not want to focus on the ‘calculating shopper’ for example.


Customer segment loyalty framework.png
Logo Ecommerce Foundation1.png Source: Source: Shopping2020, Customer Loyalty Expertgroup, 21st of January 2015 20

Notes

It is an illusion that any consumer can be made loyal. There has to be:

  • Motivation: The degree of a person’s interest in showing loyal behaviour. Typically driven by sensation (pleasure, pain), expectations (hope, fear) & social pressure (accepted, rejected).
  • Ability: The degree to which is actually able to show loyal behaviour. Depends on time, money (resources), physical & mental effort required, values & habits
  • Activation: The degree to which a trigger works (assuming enough motivation a/o ability) to activate loyal behaviour


Notes

Focusing on your best customers allows you to better understand his needs. A strong focus allows you to do in depth research, have personal interviews and further customize your proposition to those customers you can serve best increasing their loyalty. You can spend time developing personas for example.


Components of a loyalty program:

  • Proposition:
    • Rewards/benefits
    • payout levels (when, how, how long can you get the rewards)
  • Communicatie: roll-out plan, promotion plan
  • Systems:
    • registration of behavior/transactions: loyalty card, mobile app
    • central storage of customer data, transactions, point/value collected, etcetera
  • Processes:
    • customer service (help desk)
    • fulfilment of awards including returns

Always test the program with a select number of existing customers and/or focus groups to remove potential bugs.

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  • Points: to buy products, services, access to events
  • Discount: cash back, product discounts, rebates
  • Privilege: unique products, events, additional services

The rewards however have to add value whatever they may be.

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Which loyalty program do you follow?

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  • U.S. consumers hold 3.3 billion memberships in customer loyalty programs in the 2015
  • a 26% increase over the number of memberships reported in 2013.
  • Most popular markets are in order of size:
    • Retail (surpassing airlines)
    • Airlines & Travel
    • Credit cards & financial services
  • American households hold memberships in 29 loyalty programs
  • but are active in just 12 of them.
  • Compared to 2013 a decline from 44% to 42% (or 4.5%).
Loyalty1.png
Logo Ecommerce Foundation1.png Source: https://www.colloquy.com/latest-news/2015-colloquy-loyalty-census/ 27


Airlines.png
Logo Ecommerce Foundation1.png Source: Slideshare: Customer Loyalty, Manju A. Thomas, Blesson M. Thomas 28


Amazon prime1.png
Logo Ecommerce Foundation1.png Source: Source: Statista: Most popular reasons for users in the United States to join Amazon Prime as of April 2014, 2015

http://time.com/money/3686039/amazon-prime-increased-spending/

31

Notes

Most popular reasons for users in the United States to join Amazon Prime is still free shipping.


Prime members.png
Logo Ecommerce Foundation1.png Source: Source: Statista: Average amount spent on Amazon according to U.S. Amazon Prime and non-Prime members as September 2014, 2015 https://www.internetretailer.com/2015/07/30/loyal-and-growing-amazon-prime-has-44-million-us-customers 32


  • Credit card
  • Point saving on every purchase
  • Personalized offers

Access to:

    • Special events
    • Fashion shows
    • First access to sales events
Bijenkorf2.jpg
Logo Ecommerce Foundation1.png Source: http://www.debijenkorf.nl/card 34


  • The mobile app offers:
    • Personalized deals
    • Payment
    • Insight into number of stars
  • Welcome level
    • Birthday drink or treat on us
    • Birthday coupon for 15% off a purchase at Starbucks Store online
  • Green level (5 stars in 12 months)
    • Free in-store refills on hot or iced brewed coffee and tea
  • Gold level (30 Stars in 12 months)
    • A free food or drink item after another 12 Stars earned
    • Personalized Gold Card
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Logo Ecommerce Foundation1.png Source: http://mystarbucksidea.force.com/ 35


Notes

The program offers lessons how to ride, roadside assistance, access to events, a magazine, touring handbook and to find other Harley drivers to drive together. Events and local memberships


  • AT&T Wireless: 18%* on qualified monthly service charges for qualified wireless rate plans.
  • Best Western Ride Rewards: receive 15% bonus points, upgrades, and 10% off room rates when joining
  • Harley-Davidson® Insurance Money saving discounts for H.O.G. ® members.
  • Motorcycle Shipping: Ship your motorcycle to other parts of the country or the world at members-only rates.
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MyMagic Band allows customers to:

  • unlock their Disney hotel room
  • buy food and merchandise
  • Have FastPass+ access

Disney stores & analyses a.o.:

  • Which attractions are visited
  • The waiting time
  • How you walk through the park
  • The products you buy
  • What you eat, when
  • Make special offers by email
  • Further data analysis
Disney.jpg
Logo Ecommerce Foundation1.png Source: https://disneyworld.disney.go.com/faq/my-disney-experience/my-magic-plus-privacy/ 38

Notes

The band uses an RFID chip to recognize the wearer. Disney store


  • Ask why the customer actually left
  • Try to win back the customer:
    • Solve the problem/issue
    • Offer a compensation
  • Even better:
    • Recognize signals
      • Customer no longer orders
      • Customer asks about cancellation period
    • And prevent the cancelleration
Left.jpg
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  • At a car wash you get a stamp each time you get your car washed.
  • With 8 stamps you receive a free car wash.
  • Two scenario’s:
    • The first group receives a loyalty card with eight slots.
    • The second group receives a loyalty card with 10 slots of which two are already stamped.
  • Which loyalty card scores best?
Logo Ecommerce Foundation1.png Source: http://www.slideshare.net/helpscout/creating-customer-loyalty-25036637?qid=795138a7-136c-4fb9-9c18-0d1c6d2acf67&v=default&b=&from_search=5 40


Peppermint test:

  • The first group had waiters giving mints along with the check, but making no mention of the mints themselves.
  • The second group had waiters bring out two mints per person by hand (separate from the check) and then mention to the table: “would anyone like some mints before they leave?”.
  • The third group had waiters bring out the check along with a few initial mints. A short time later the waiter came back with another set of mints, just in case they wanted more.

Which scenario resulted in the most tips?

Logo Ecommerce Foundation1.png Source: http://www.slideshare.net/helpscout/creating-customer-loyalty-25036637?qid=795138a7-136c-4fb9-9c18-0d1c6d2acf67&v=default&b=&from_search=5 41


Loyalty programs should be monitored continuously to:

  • Improve the program (add more value to the customer)
    • Customer satisfaction
    • Customer churn rate
    • New customer acquisition
    • etc.
  • Measure the impact it actually has (ROI):
    • For the targeted customer groups
    • For the targeted product/business lines
  • To learn more about customer preferences and spending habits in general
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  • Immediate discount:
    • Gives customer easy and instant satisfaction
    • No liability / long term financial burden
    • Discount has to be large (+10%)
    • Easy to copy - competitors just have to lower prices
    • No control over how much it is going to cost
  • Points:
    • Often cheaper as points are not redeemed
    • Offers control (value of points can be controlled)
    • Accrued liability / long term financial burden
  • Privileges:
    • Control: e.g. events can be served on a first come/register basis
    • Focus on something else than price, can strengthen brand relation
    • Often costly with few customers actually benefiting
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  • You form the marketing department of your University
  • You want to create a loyalty program for Alumni students in order to:
    • Entice them to join post-education programs
    • Support your school and new students financially (grands)
    • Share their knowledge with existing students (internships, guest speakers)
    • Etcetera
  • Assignment:
    • Create a loyalty program for Alumni
    • Do not cover only the proposition but also what else is needed
    • Explain your choices
    • Present your program in class
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CRM.png
Logo Ecommerce Foundation1.png Source: Source: Shopping2020, Customer Loyalty Expertgroup, 21st of January 2015 46

Notes

In the past Store owners knew their customers personally and could adapt their communication, products, services and prices accordingly.


Customer relationship management (CRM) is an approach to managing a company’s interaction with current and future customers. It often involves using technology to organize, automate, and synchronize sales, marketing, customer service, and technical support.

Logo Ecommerce Foundation1.png Source: https://en.wikipedia.org/wiki/Customer_relationship_management 47


  • Storage of all (potential) customer data
    • B2C: gender, name, address, interests, ..
    • B2B: jobtitle, organization, responsibilities, …
  • Storage of each interaction with the customer (across all channels)
    • Products bought
    • Online click behavior
    • Questions asked via phone
    • Emails send
    • Visits to stores
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  • Allowing analysis
  • to better understand and serve with the customer
  • know the sales status and even predict sales revenue
  • Allowing 1 to 1 marketing, sales and service:
    • Knowing when to contact the customer and via which channel
    • Knowing which products and service to offer (and which note)
  • Supporting internal and external processes:
    • Workflow to facilitate key processes as contracting
    • Automated marketing campaigns to follow up client actions
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Market leaders include:

  • Salesforce.com
  • SAP
  • Oracle
  • Microsoft

There are however many mid-end and low-end solutions which may serve all needs of a company as well.

CRM6.png
Logo Ecommerce Foundation1.png Source: https://www.salesforce.com/blog/2014/06/gartner-magic-quadrant.html 58


Strategic:

  • One system supporting all processes
  • Or many best of breed systems tied together
  • Or custom developed software

Technical:

  • Inhouse or SAAS
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  • Go to perfectview (http://www.perfectviewcrm.nl/)
  • Create a test account
    • Use your University email address (upon that the account can be removed after a week)
    • You have to confirm the account creation by clicking on a link in your email
  • Try to:
    • Create a new organizaton
    • Add a c ontact within that organization
    • Add an interaction with the customer
    • Add an action to call the customer back
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  • Project has to ambitious goals
    • As a result implementation takes to long
    • Or it disappoints users after going live
  • CRM system is not supported by all departments
    • due to lack of training/involvement
    • not being user friendly enough
  • Implementation partner lacks industry knowledge
  • Lack of top management support
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The End.jpg
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