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CRM Measurement Implementation: Dr. Suresh Malodia

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46 views

CRM Measurement Implementation: Dr. Suresh Malodia

Uploaded by

aakash9090
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Unit IX

CRM MEASUREMENT
IMPLEMENTATION
Dr. Suresh Malodia
Companies implement CRM measurement very
differently based on their internal decision
making styles. These styles break down into five
categories:

Hard ROI approach


Intangible benefits/assets
Competitive assessments
Value-driven
Instinct and experience
Manage the Total Communications Environment with
Analytical CRM
E-Mail/Fax
Direct
Store /Branch
Mail

Analytical CRM
ATM/Kiosk

Call Center

Agent

Copyright@2001 Teradata, a division


of NCR, All Rights Reserved
Lead With Analytical CRM
For Mission-Critical Intelligence

Relevant Offers
Analytics and Modeling
Insight Communication Planning
Action
Personalize Communication
Customer Optimization
Communication Delivery
Timely Messages
Timely Messages
Intelligence Inter-
Action

Operational CRM Systems

All Channels All Touchpoints


Capture Data

Data
Warehouse Internet E-Mail/
Sales/
Direct Agent/Call
Disk array ATM
Extranet Fax
Store /
Mail
Kiosk
Center
Branch
Copyright@2001 Teradata, a division
of NCR, All Rights Reserved
Lifetime
Value
What is lifetime value?

Net present value of the profit to be realized on


the average new customer during a given
number of years.
To compute it, you must be able to track
customers from year to year.
Main use: To evaluate strategy.
Let us take the example of Rosewood
Hotels
Rosewood is considering to adopt corporate
branding strategy
The main issue that Rosewoods executives
face in the case is to assess if the potential
economic benefits from increased guest
retention can outweigh the $1,000,000
marketing investment needed to implement
the corporate branding strategy.
Without With Rosewood
Rosewood Corporate
Branding (2003) Branding
Total Number of Unique Guests 115,000 115,000
Average Daily Spend $750.00 $750.00 growing at 6%
Number of Days Average Guest Stays 2.0
per Stay 2.0
Average Gross Margin per Room 32% 32%
Average Number of Visits per Year 1.2
per Guest 1.3
Average Marketing Expense per $130.00
Guest (system-wide) $138.70 growing at 3%
Average New Guest Acquisition $150.00
Expense (system-wide) $150.00
Total Number of Repeat Guests 19,169 24,919
of which: Total Number of Multi- 5,750
property Stay Guests 11500
Additional Costs Required per annum $1,000,000
Discount Rate 8% 8%
Average Guest Retention Rate 16.67% 21.67%
Using lifetime value to get budget
approval
Database marketing budgets are usually carved from
somewhere else
You have to prove that you will make better use of the
funds than the others
Lifetime value can supply testable numbers that CFOs can
understand
Base your budget on solid numbers backed up by valid
tests
Customer Equity
CE: customer equity is the sum of the CLV of all
current and future customers.
There is no doubt however that the two concepts
are distinct; CLV computes the value of a
customer to the firm while CE measures the value
of all present and future customers given a firms
marketing actions (e.g., acquisition policy,
marketing mix).
when valuing a firm one should use CE as a
metric rather than CLV.
when optimizing marketing decisions, are CLV
and CE interchangeable
Thank You

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