1 Customer Relationship Management Customer Actions Taken After Site Unresponsiveness Action Percent Shopped elsewhere74% Sent another e-mail45 Called

1

Customer Relationship Management

Customer Actions Taken After Site Unresponsiveness

Action Percent Shopped elsewhere 74% Sent another e-mail 45 Called a store representative 32 Other 8 Asked elsewhere, bought at store 3

Source: Apr. 2000 Jupiter Media Metrix

2


Who provides CRM?

Traditional giants such as IBM, Oracle and PeopleSoft Siebel Systems, which now has a 21% share of the CRM

market E.piphany e-mail specialist Kana Communications, NetGenesis instant chat provider LivePerson.com, Broadbase, Quintus and

Firepond plus many others.

3


Acquisition cost

Quarter Average CustomerAcquisition Cost

Q3 1999 $35 Q4 1999 $71 Q1 2000 $45** Q2 2000 $40

Source: Aug. 2000 Boston Consulting Group/shop.org

** Shift from expensive TV advertising to more economical online campaigns

4


direct customer interaction

Jupiter reports that 76% of respondents say e-mail is an indispensable part of

customer service. a listed phone number (65%) and a FAQ section (53%).

But those e-mails must be answered promptly.

5


That's why IDC believes the worldwide market for CRM products and services will explode to $125 billion by 2004, from $34 billion last year.

This summer, the Federal Trade Commission fined Toysrus.com, Macys.com and five other online retailers $1.5 million for making promises they couldn't keep during the 1999 holiday season.

6


Expectations Results Within 1 hr 15% 8% 1-6 hrs 40% 12% 2hrs and I week 50% 51% More than 1 week 0% 29%

Source: Jun. 2000 Jupiter Media Metrix

7


customer retention

The average online marketer needs three purchases to break even after acquiring a new customer, according to the survey.

8


Evolution of Information Requirements

Materials Requirements Planning (MRP)

Manufacturing Resource Planning (MRP II)

Enterprise Resource Planning (ERP)

Supply Chain Management (SCM)

Customer Relationship Management (CRM)

9


Current

Current

Every Company’s Big Unknown ... Customer Value

Full Potential

Current Customer

Value

Relat

ions

hip

Profit

abili

ty

Nu

mb

er o

f R

elat

ion

ship

s

Relationship Duration

10


Targeting Acquisition Retention Expansion

Customer Relationship Management can be simply defined as everything involved with managing the customer relationship.

Customer Relationship Management can be simply defined as everything involved with managing the customer relationship.

The Value of the Relationship

• Who Do we target• What segments are most

profitable• What segments match our Value

Proposition• What is the best segmentation

strategy for us / our industry

• What is the best channel for each segment

• What is the acquisition cost for a channel / segment

• Do certain channels deliver certain types of customers

• Cost effective acquisition

• How can we improve retention

• What is our average customer relationship length

• How can we hold customer for as long as possible

• What is the most cost effective method of retention

• How many products does our average customer buy

• How can we induce our current base to buy more products

• Who are the prime targets for expansion

• What is the cost of expansion

Customer Relationship Management Definition

Duration of Customer Relationship

Va

lue

( $

)

11


Islands of Automation Need To Be Bridged

Over time, channels & operational systems are added to cater to changing customer demands. The result…several functional groups are interacting with customers independently.

$

Sales Force

Customer Service

Direct Mail

Web

Branches

12


Why CRM?

It costs six times more to sell to new customer than to sell to an existing one.

A typical dissatisfied customer will tell 8-10 people By increasing the customer retention rate by 5%, profits

could increase by by 85% Odds of selling to new customers = 15%, as compared to

those for existing customers (50%) 70% of the complaining customers will remain loyal if

problem is solved 90% of companies do not have the sales and service

integration to support e-commerce

13


Marketing Selling ServicingCustomer Management Process Threads

BroadcastBroadcast

MailMail

Field PersonnelField Personnel

Agents/DistributorsAgents/Distributors

Call CenterCall Center

RetailRetail

InternetInternet

Back Office Process/Systems

Cus

tom

er In

tera

ctio

n C

hann

els

Are we making the right level and type of marketing, sales, and service investments in each of our customer segments?

Customer Relationship Customer Relationship

StrategiesStrategies

Are we taking a holistic approach to our customers across processes and channels?


StructureStructure

Have we implemented best practices and technology in process/channel?


PerformancePerformance

ScopeScope DepthDepth

Importance of CRM

14


Customer Life Time Value (LTV) is defined by a customer’s Life Time worth to the firm and is measured by the net present value (NPV) of the cash flows generated over the Life Time of the relationship.

Cost of Service

AcquisitionCost

Duration of Relationship

An

nu

al

Ca

sh

Flo

w

Service/Usage Revenue

Successful Customer Relationship Management can generate positive shareholder value.Successful Customer Relationship Management can generate positive shareholder value.

Customer Relationship Management and Shareholder Value

15


The Benefits of Customer Relationship Management

RetentionRetention Lift/upsellLift/upsellAcquisitionAcquisitionLikelihood toRecommend

Total PerceivedValue

Impa

ct o

n Se

rvice

Qua

lity

Courteous

Know. About Account

Available at Convenient Times

Ownership of Problems

Know. Product/Svcs.

Easy to Reach

Access to Live Agents Right Tel. ## of Rings

Resolution Time

Current PerformanceLow High

High

Low

The customer value analysis should be performed for each segment individually. The perceived importance of price and service drivers can differ significantly by segment.The customer value analysis should be performed for each segment individually. The perceived importance of price and service drivers can differ significantly by segment.

In addition to LTV of the customer, likelihood to recommend is another important benefit of CRM.

16


Customer Relationship Management is about making every customer as valuable as possible over the lifetime of the relationship

Customer Relationship Management is about making every customer as valuable as possible over the lifetime of the relationship

The Five Key Drivers of the Lifetime Value of a Customer

Cost of Targeting; Cost of Acquisition; Service and Usage Revenue; Cost of service; and Duration of relationship.

17


Capture Customer Data and Measure

Results

The Customer


Results

Take Action to Enrich the Customer

Relationship Capture Customer Data and Measure

Results

Build and Manage Customer Value


Results


Results


Results

Store Data, Mine and Make

Information Accessible

The CRM The CRM DynamicDynamic

Customer Relationship Management is a ongoing, dynamic learning process for an organizationCustomer Relationship Management is a ongoing, dynamic learning process for an organization

Customer Relationship Management Process

The building blocks of CRM allow an organization to manage this cycle and use the knowledge on customers to enhance the Life Time value of the customer portfolio.

No organization has perfect information on its customers. Knowledge of customers is continuously enhanced through the CRM dynamic.

18


Implementing CRM must be approached from an Integrated Perspective

All areas must be implemented, to some degree, to effectively manage the customer relationship. When pieces are implemented in isolation, the benefits are less than

overwhelming.

All areas must be implemented, to some degree, to effectively manage the customer relationship. When pieces are implemented in isolation, the benefits are less than

overwhelming.


Results

The Customer


Results

Take Action to Enrich the Customer

Relationship Capture Customer Data and Measure

Results

Build and Manage Customer Value


Results


Results


Results

Store Data, Mine and Make

information Accessible

CRM CRM without an without an Integrated Integrated ApproachApproach

A data warehouse full of data without the tools to extract knowledge is nothing more than expensive inventory.Sophisticated mining tools only produce results only as good as the data they mine.

Developing insights on how to improve the value of the customer relationship without having the infrastructure to take action has no impact on the bottom line. In addition, there is no opportunity to test the ‘theoretical’ analysis.

Implementing new technologies without the knowledge on how to enrich the relationship is likely to yield a return below the cost of the capital expenditure.

Taking action to improve the relationship without measuring the results provides no evidence of success or failure and limits the opportunity for learning.

Capturing gigabytes of customer data in disparate operational systems that are next to impossible to access may render the data useless.

19


Deployment and Support

The Building Blocks of CRM

e-Business

Sales Process Automation

Call Centres

EnablingTechnologies

DataWarehousing

MetaData

Data Cleansing

OLAP

EIS

DataCapture

ExternalDatabases

MarketResearch

Customer Touch Point Integration

People

Organization

KnowledgeManagement

Statistical Modeling

Data Mining

Customer Profitability

Segmentation

The building blocks of CRM are the things that need to be in place for an effective Customer Relationship management program

The building blocks of CRM are the things that need to be in place for an effective Customer Relationship management program

20


Data Capture and Warehouse

Customer Behaviour

Product Portfolio Householding

Usa

ge P

rofil

e

Mig

ratio

n in

U

sage

Loya

lty /

Sw

itchi

ng

Customer Interactions

Acq

uisi

tion

Info

rmat

ion

Inbo

und

Con

tact

Out

boun

d C

onta

ct

Base Data

Segments Profitability Life Time Value

Customer Profile

Dem

ogra

phic

s /

Firm

grap

hics

Atti

tude

s

Pro

duct

/ S

ervi

ce

Pre

fere

nces

Intentions

External Data

Geo

-de

mog

raph

ics

Cam

paig

n H

isto

ry

Derived Data

The Customer Data Model

Cen

sus

What Data do we capture on Customers?

21


Enabling Technologies

22


Sales Force AutomationC

all C

entr

e

Ele

ctro

nic

Bu

sin

ess• Automatic Call Distribution (ACD)

• Incoming Call Queuing• Performance Statistics• Integrated Voice Response (IVR)• Automated Inquiry & Transactions• Automated screen “pop” on agent’s

screen• Integration with company legacy

platforms• Billing & Meter Reading• Direct Access to Customer Data

CRMTechnologies

Techniques: ACD, IVR, CTI Techniques: WEB based application, e-mail processing

• Automated product and service information

• WEB based sales and support through standard menus and automated help screens.

• WEB based training • Reaching the global market

Techniques: Relationship marketing, automated packaging and pricing, knowledge-based selling• Increase revenue from your customer base • Customer satisfaction measure

• Consultative selling• Responsiveness to market conditions

The Enabling Technologies Call Centre Sales Force Automation e-Business

23


CRM Technologies on the Rise

““The overall use of technology for selling is The overall use of technology for selling is growing by more than 50% annually.”growing by more than 50% annually.”

– – Gartner GroupGartner Group

““Sales Force Automation is the fastest Sales Force Automation is the fastest growing segment of the high-growth growing segment of the high-growth Client/server market, estimated to represent Client/server market, estimated to represent $3 billion in revenues by 1997.”$3 billion in revenues by 1997.”

– – Market Intelligence Research Corp.Market Intelligence Research Corp.

““Sales Force Automation will become a major Sales Force Automation will become a major driver behind enterprise-wide BPR driver behind enterprise-wide BPR (inexorably linked to development of the (inexorably linked to development of the customer-focused organization)”customer-focused organization)”

– – META GroupMETA Group

““Customer Management is a major initiative at Customer Management is a major initiative at nearly 80% of Fortune 500 companies and nearly 80% of Fortune 500 companies and will grow to a $4.8 billion market by 1999.”will grow to a $4.8 billion market by 1999.”

– – Aberdeen Group, Aberdeen Group, Inc.Inc.

Source: IDC 1996

(Do

llars

In M

illio

ns)

CRM Revenue

The implementation of CRM technologies is projected to accelerate over the next few years

1996 1997 1998 1999

$1,000

$1,400

$1,960

$2,744

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

1996 1997 1998 1999

24


People Process

External customer Internal customer Sales Force Support team Back-office Technical staff

Data Warehouse

Marketing / up-selling Technical support Product support Service support 7 x 24 support

IVR ACD

CTI

• Customer history, billing, purchases, value, profile

• Product & service information, packages, prices

• Marketing hints, reports, promotions

• Customer data updates, purchase information

• Leads tracking update, customer tracking updates

• Call statistics, inquiries, etc.

Info

rmat

ion

Call Centres - DefinitionCall centres are a key enabling arm of Customer Relationship Management. A well designed call centre will integrate people, process, and technology to improve operational efficiency and maximize the value of the customer relationship for both inbound and outbound contact.

Call CentreTechnologies

25


• Customized Agent Desktop Applications by Customer & Call Type

• Automated Scripting of Call Handling & Wrap-up

• Flexibility to Add New Products, Services, and Customer Service Opportunities

• Scripted Cross-Selling• Legacy Integration• Billing & Meter Reading• Direct Access

Data Warehouse

Call Centres - Architecture

26


There is a major transition to integrated delivery channels and to provide “one face” to the customer.

Old RuleOld Rule New RuleNew RuleParadigm ShiftsParadigm Shifts

Minimal technologyMinimal technology Leading edge and integrated technology

Leading edge and integrated technology

Single productSingle product Multiple productsand cross selling

Multiple productsand cross selling

ReactiveReactive ProactiveProactive

Low skilled CSR’sLow skilled CSR’s Multi-skilled CSR’sMulti-skilled CSR’s

Backroom operationBackroom operation Front Office operationFront Office operation

Stand-alone operation& information

Stand-alone operation& information

Distribution channel & information integrationDistribution channel & information integration

TacticalTactical StrategicStrategic

Customer InquiriesCustomer InquiriesCost of BusinessCost of Business

Enhanced Customer Satisfaction Enhanced Customer Satisfaction and Retention Revenue Growthand Retention Revenue GrowthLower Cost DistributionLower Cost Distribution

Call Centre Call Centre of the Future

27


• Intranet - as an alternative sales channel • Electronic catalog - On-line self served service

ordering• Commission - Effective tracking of performances

and accurate commissioning• Opportunity Management - tools such as

automated customer data analysis and pop-up screens will assist in up-selling

• Competitor Data - effective analysis of competitive data and automated access for sales force

• Contact Management - Effective tracking and follow-up of leads

• Customer Data - Sales people will have a complete analysis of the customer before their eyes when attending to a customer. No wait, no repeated questions, no frustrated customers

• News Service - Optional news sorting and reporting will result in informed sales people

• Order Entry Quoting - On the spot quoting will not give the client a chance to shop around and be hunted

• Proposal Development - Automated document creation based on corporate standards

• Pricing - Automated on-line prices based on company rules

• Product - On-line and easily accessed • Just-in-Time Training - Automated training, WEB

based training, and self training through information sharing

• Electronic Kiosk - WEB page shopping.

Basic Features Basic Features

Sales Process Automation - Definition Sales Process Automation (SPA) is the approach for helping organizations dramatically improve their

sales and marketing effectiveness through the reengineering and automation of their sales and marketing processes, with the ultimate goal of increasing revenues. SPA combines a working knowledge of the market’s best ideas, technologies, and vendors with a practical, relentless focus on implementation to deliver outstanding shareholder and customer value.

28


0% 10% 20% 30% 40% 50% 60% 70%

Current Information

Improve Forecasts

Increase Sell Time

Reduce Administration

Improve Margins

Decrease Costs

Team Selling

Improve Management Effectiveness

Improve Communications

Reduce Sell Cycle

Increase Revenues

Increase Customer Satisfaction

Improve Sales Effectiveness

Source: © Insight Technology Group

PERCEIVED BENEFITS OF SPA FIELD TECHNOLOGY

% of Survey Responses (N=295)

Sales Process Automation - Benefits

Improving sales force productivity and effectiveness by implementing field technology is a key goal for many organizations

Improving sales force productivity and effectiveness by implementing field technology is a key goal for many organizations

29


Business Processes

Profiles & Preferences

Business PartnerBusiness Partner

Business to CustomerBusiness to Customer

Business to BusinessBusiness to Business

The ValueThe ValueProposition Proposition

of of ElectronicElectronicBusinessBusinessSolutionsSolutions

Integrating more directly with the business processes of customers and partners

Tailoring products and services to customers needs and values

Business Processes

Extending key business applications to clients and business partners

Business PartnerBusiness Partner

e-Business is all about integrating the internal and external processes between business partners and customers.

e-Business is all about integrating the internal and external processes between business partners and customers.

e-Business - Definition

30


Internet technology can improve the level of customer care, while reducing the cost of maintaining the customer base.

Internet technology can improve the level of customer care, while reducing the cost of maintaining the customer base.

e-Business - Benefits

On average, it costs about $5 - $50 per query to support via phone On average, it costs about $1 - $3 per query to support via E-mail On average, it cost less than $1 per query to support via WWW

31


Internet and

World Wide Web

3. Payment Processing

5. Product Fulfillment

Order entry Tax calculation Validation Confirmation

Payment information

Security Link with

finance

Pick and pack Integration/configuration

of third party products Ship products or deliver services Inventory management Order tracking

Customer preferences Products and availability Pricing and promotions Adaptive selling Build/configure to order

1. AdaptiveProduct Offer

A B$X,XXX $X,XXX

Link with third parties Create pick list Consolidate orders

2. Order Capture and Validation 4. Order

Management

For both business-to-business and business-to-consumer sales, there are five key elements to e-Business — product offer, order capture and validation, payment processing, order

management, and product fulfillment.

For both business-to-business and business-to-consumer sales, there are five key elements to e-Business — product offer, order capture and validation, payment processing, order

management, and product fulfillment.

e-Business - Architecture

32


Conclusion

Network Management

Systems

Enterprise Management

Systems

Service Management

Systems

Customer Management

Systems

Business Management

Systems

Call CentresCustomer Care SystemsSales Force Automation

IVR

Data Warehouse OSS

Billing System

SAP, PeopleSoft, Oracle, etc.

Customer Relationship Management is an integral part of successful convergence

Customer Relationship Management is an integral part of successful convergence

33


The CRM Market

34


$2.00

$0.60

$1.60

TES TEM CSS

in billions

= $4.2b up 45% 55-45 Service to Software

Source: GartnerGroup

Worldwide Front-office Applications, 1998, US$bVendor Revenue (Software and Services)

0

4

8

12

16

20

1998 1999 2000 2001 2002 2003

Worldwide Front-office Applications, 1998, US$bVendor Revenue (Software and Services)

The software and service revenue fromCRM vendors will reach $19 billion by2003 (0.6 probability).

:

CRM Marketplace - Fast Growth To-Date with a Bright Future

35


Explosive Market Growth

CustomerManagement

Supply Chain

Manufacturing

Financials

265%

83%

66%

19%

172%

120%

% Change

Application License Revenue in Billions

53.9%

22.4%

18.5%

6.0%

39.5%

30.0%

$1.46

$2.02

$0.83

$2.02

$1.52

$1.83

$5.33

$5.49

$1.83

$3.70

$2.53

$2.18

Based on Forrester Research

1998 2001

Human Resources

Industry Specific

36


The CRM Market - No Clear Market Leader

60% of the $2.0B CRM software license market is controlled by 3 vendors

Siebel

Trilogy

Baan/Aurum

60% of the Top 3 share is controlled by Siebel

No vendor will have complete CRM functionality until 2003 (Gartner)

The 1998 consulting market for CRM is estimated to be $4.0B (2:1)

The consulting market for CRM is a large and growing high margin / high revenue opportunity in contrast to the shrinking ERP market

37


Tier 2: CSS Applications for Small to MidsizeEnterprises or Divisions of Large Enterprises

Tier 1: CSS Applications forLarge Enterprises

(1) CorePoint is a subsidiary of IBM, consistingof various IBM customer service applicationassets

(2) SCT Utilities: Large utilities only

(3) Broadway & Seymour: Banks only

(4) Chordiant: Large call centers only

(5) Internet-centric

(6) Siebel now includes Scopus

Challengers Leaders

Niche Players Visionaries

As of 1/99

Onyx•

Applix•

SalesLogix•

•

Royal Blue•

Platinum Software/Clientele •

Point Information •

Completeness of Vision

Challengers Leaders

Niche Players Visionaries

Ab

ility

to

Exe

cute

Completeness of Vision

As of 1/99

IMA •

Astea•

• Siebel (6)

Quintus•

SCT Utilities (2)•

Chordiant (4)•

IBM/CorePoint (1) •

Silknet (5)•

Broadway& Seymour (3)•

GWI (a)•CustomerSoft•

(7) Major ERP vendors currently have noncompetitive feature/function sets

(8) Pegasystems: Due to its broad product line, its direct CSSapplications license revenue and strategy is uncertain

(a) GWI: Lotus Notes platform

(b) Many mid-market ERP vendors express a vision of creatingfull-featured CSS applications, but have not executed yet

ERPVendors

(7)

Clarify •Vantive•

ERPVendors

(b)

Pegasystems (8)•

Oracle•

Remedy/Baystone

38


Vendor CRM Market Position

• Acknowledge leader• Very integrator focused

• Leader in their niches• Not integrator focused

• Excellent product• Number 2, but struggling

• Product continually delayed• Intimidation capacity lessening

• Bold announcements• Claim high strategic priority

®

TRILOGY

CRM Vendors

39


Siebel 99

Siebel Sales Enterprise™

Siebel Marketing Enterprise™

Siebel Service Enterprise™

Siebel Call Center™

Siebel Field Service™

Siebel Handheld™

Siebel InterActive ™

Siebel Product Configurator ™

Siebel Sales ™

The Most Complete ERM Solution

40


Siebel Industry Solutions

Siebel Finance™

Siebel Insurance™

Siebel Communications™

Siebel Consumer Goods™

Siebel Pharma™

Siebel Utilities™

Siebel Public Sector™

Siebel High Technology™

41


Siebel 99 Product

More than 600 Person Years of Engineering 1100 Screens 1300 Business Objects/Components 110 Reports 900 Database Tables 144 Interface Tables

Documents

1 Customer Relationship Management Customer Actions Taken After Site Unresponsiveness Action Percent Shopped elsewhere74% Sent another e-mail45 Called