Rules of Engagement

1. Rules of Engagement Tools and Technologies for Managing the Customer Relationship Stephen Shaw December 18, 2001

3. Agenda • Overview • What does CRM mean? Why is it a corporate priority? • Guiding Principles • What are the main principles of CRM? • Core Requirements • What are the business requirements of a CRM solution? • Solution Components • What are the main components of a CRM architecture? • Tools of the Trade • What are the various categories of tools? • Trends and Trepidation • How is CRM technology likely to evolve?

4. Overview

5. “What is CRM?”

6. “We ignore the entire discipline of CRM.”

7. Customer Disservice

8. They have turned a simple order into a month long ordeal. All these people had to do was ship my order and apply a $20.00 coupon. Not only was my $20.00 coupon not applied … Not only was my credit card billed for the full amount of $45.48 …Not only was my first order rejected … Not only did I find this DVD at Future Shop for $5.00 less minus shipping …Not only was my order over 2 weeks arriving and your cue times for support over 20 minutes, BUT the DVD was defective! This is not the end of my problem with chapters. After a total of 4 calls to customer service and 6 or 7 emails, I managed to have 14.90 credited back and then 9.80 recharged to my card. All together my experience with chapters online has been one of disgust.

11. OLD MODEL • INTRUSIVE … heavy reliance on print and broadcast media • INFERENTIAL… generic messaging based on “best guess” • INCONSISTENT … no memory of past customer interactions NEW MODEL • COLLABORATIVE… customers given a greater voice through interactive channels • CONSENSUAL … customers shape terms of relationship • CONSISTENT … customers treated with the respect due them. A New Marketing Model

12. DRIVERS CONSTRAINTS • Recognition of customers at all touchpoints • Consistent application of treatment rules • Personalization of interactions • Instantaneous response to events • Reciprocal exchange of information • Cost and pain of integration • Lean marketing staffs • Complexity of managing interactions across multiple channels • Lack of infrastructure • Cultural barriers • No experience base No Pain No Gain

13. Guiding Principles

14. Establish trust Exchange learning Anticipate needs Recognize preferences Improve satisfaction The Value Equation Cultivate relationships... ... Enhance profitability • Buy more products • Buy more often • Buy more easily • Buy at a higher margin • Buy over a longer period VALUE

15. Interaction Product Delivery Service • Personalized • Consistent • Current • Functional • Flexible • Customizable • Ubiquitous • Convenient • Fast • Courteous • Proactive • Empathetic The Value Chain Value Proposition What value is provided in interactions with customers? What value is provided in product features? How easy is it to obtain products and information? How responsive is customer service?

16. VALUE INTENSITY Dynamic Segmentation ADVOCATES VULNERABLE UP AND COMING NEWBIES LOYALISTS DORMANT

17. Virtuous Cycle Information Analysis Develop Customer Base Track and Measure Results Define Customer Segments Solicit Feedback Develop Investment Strategy Engage Customer Create Business Rules Develop Management Plan Interaction Planning

18. Core Requirements

19. How much should you invest in the relationship? INVESTMENT STRATEGY BEHAVIOUR CONTACT STRATEGY How often do you contact customers? LIFECYCLE What is the appropriate channel mix? CHANNEL STRATEGY LIFESTAGE Campaign Management BROADCAST PRINT WEB DIRECT MAIL E-MAIL PHONE CHANNELS MASS DIRECT Customer Value Management SEGMENTS

20. Treatment Rules If… TREND SEGMENT STATUS EVENT REWARD RULES ACTION RESPONSE MESSAGE CHANNEL OFFER then… else…

21. Campaign Management • Even Split • Absolute Count CONTROL OFFER TEST OFFER SORT RECORDS • Nth Selection • Percentage • Absolute Count SAVE AS NEW LISTS SUB-GROUP DEFINE OUTPUT MEDIA SPLIT INTO OFFER CELLS LIST LIBRARY SELECT LIST(S) SPLIT LIST SPECIFY OUTPUT FIELDS SPECIFY DESTINATION DESCRIBE OFFERS SUB-GROUP PRODUCE FILE(S) CAMPAIGN DEFINITION LOG ASSIGN CELL CODES

22. EVENT TRIGGER ACTION DECISION Yes No WAIT EVENT Event Triggers Send e-mail requesting registration Receive e-mail (POP3) NO Create new database record with e-mail address and text Check database YES High value customer? NO Send e-mail to Contact Centre YES Re-route e-mail to Priority Service

23. Web Registrant Contest Entry RSVP Response 1-800 Caller Prescribed Paths New? Heavy User? Profile Current? On-line? EVENT YES NO YES NO YES NO >3 Dosage? E-alert Survey YES NO No Action E-Mail? Heavy User? MAIL STREAM YES YES NO Survey Invitation to Create On-Line Profile E-MAIL

24. Content Repository Rules Engine Profile db Dynamic Content Delivery View-Based Navigation Subscribe CRM Tools Enroll • E-mail filtering • E-mail routing • Autoresponse • Rule creation • List creation • Response tracking Personalized E-mail Survey Deployment E-zines Online Relationship Building • FAQs • Knowledge Base • Online chat • Personal portal

25. CUSTOMER SEGMENT SUBSRIBER LIST PERMISSION GROUP Dynamic Content Versioning • Objective is to dynamically align content with defined customer groups and subscriber opt-in preferences. CUSTOMER DATABASE • Variable Substitutions • Name, email, etc. • Section Substitutions • Content variations (e.g. subject, product, etc.) • Template • Design variations (e.g. different newsletters)

26. CONSUMER Channel Management Interactions & Transactions ANALYSIS RICH E-MAIL RESEARCH HIGH-SPEED VARIABLE IMAGING Program Concepts PERSONALIZED CONTENT Database Strategy WEB SITE PAGE VIEWS RULES

27. Valuate Segment Aggregate Model UNDERSTAND Reinforce Evaluate Inform Calibrate MANAGE DEVELOP Promote Customize Reward Personalize INTERACT Anticipate Recognize Respond React A CRM Framework • Groups • Profiles • Metrics • Responses • Feedback • Transactions • Contacts • Issues • Complaints • Rules • Triggers • Campaigns

28. Solution Components

29. Real-time update • N-tier architecture • Daily cycle times • Web-based • Customer management • Customer focus • Batch update • Client/server • Monthly cycle times • Open systems • Relational databases • Campaign management • Segment focus • Batch update • Mainframe dependent • Quarterly cycle times • Proprietary databases • Inverted file structure • Direct mail management • List focus The Information Evolution TODAY 1990s 1980s

30. Interaction Management Customer Management RESPOND SERVICE PROMOTE SURVEY SELL INFORM REWARD EDUCATE SOLVE Predictive Analysis Descriptive Analysis ESTIMATE DEDUCE SUMMARIZE COMPARE FORECAST INFER GROUP RANK MEASURE TRANSFORM Functional Clustering CUSTOMER INTERACTIONS ACTIVITY PLANNING

31. BACK OFFICE Orders Inventory Distribution General Ledger FRONT OFFICE Extract / Transform / Load Enterprise Warehouse ORDER HISTORY CONTACT HISTORY CRM CUSTOMER PROFILE PROMOTION HISTORY Web Metadata CAMPAIGN MANAGEMENT SFA QUERY & REPORTING TOOL DATA MINING TOOLS EMAIL MARKETING • Campaign creation • List creation • Event scheduling • Task scheduling • Content Creation • Personalization • Merge/send engine • Response tracking • Survey Deployment ROLAP TOOL MAPPING TOOL Current Ecosystem

32. CUSTOMER ANALYTICS Used to analyze customer behavioural transactions as well as clickstream data. Used to create lists of customers for promotional campaigns delivered through multiple channels. CAMPAIGN MANAGEMENT INTERACTION MANAGEMENT Used to interpret, respond to and route e-mail communications from customers. SALES & SERVICE Used to support customer-facing functions such as contact management, sales and support. SITE PERSONALIZATION Used to tailor Web content to like-minded visitors based on explicit rules or inferences. Solution Spectrum

33. “Drag-and-drop” interfaces and component architectures compress development times and allow users to build applications without IT intervention. Embedded data mining functionality enables smoother integration of scoring models. Complex treatment rules can be graphically depicted using global logic that controls contact timing and intensity. Campaigns can span multiple channels and be executed in real-time through job scheduling and event triggers. Defining Attributes Component Applications “On the Fly” Scoring Workflow Rules “Always On” model

34. Tools of the Trade

35. Campaign Management • Supports the setup and execution of contact programs over multiple channels. • Campaign Definition – Set up standalone, continuous or wave campaigns with associated costs. • Campaign Scheduling – Specify start dates and event triggers. • List Creation – Define target lists and save stored values or selection criteria in a library. • List Scoring – Perform “on the fly” predictive scoring of eligible records. • List Splitting – Split lists into multiple cells using random and Nth selection. Assign keycodes. • Contact Rules – Specify promotional intensity rules governing message frequency and contact intervals.

36. Opt-In E-Mail Campaigns • Supports the setup, execution and tracking of e-mail campaigns. • List Creation – Select opt-in groups based on targeting criteria. • Content Management – Import and merge e-mail content. • Personalization – Customize messaging with variable text substitutions based on individual characteristics and preferences. • Broadcast Execution – Distribute export files amongst multiple SMTP servers. • Automated Redirection – Track click-throughs to harvest customer data prior to routing. • Event Tracking – Monitor messages sent, bounced and opened as well as unsubscribes.

37. Inbound E-Mail Management • Supports efficient handling of large volumes of inbound e-mail. • Message Categorization - Analyzes message content todetermine subject. • Auto Respond – Sends automatic acknowledgement to customer with unique case tracking reference number. • Routing – Directs e-mail to appropriate agent based on content. • Ticket Escalation – Escalates message based on time in queue or other factors. • Message Templates – Suggests appropriate responses based on message category and content.

38. Contact Management • Supports integrated call centre management activity. • Screen Pops – Inbound calls are routed to agents with pre-populated customer information screens. • Consolidated View – All prior interaction and incident history is available for viewing . • Contextual Treatment – Agents are guided by prompts driven by treatment rules. • Incident Management – Service and support calls are tracked in an incident queue. • Co-Browsing – Web pages can be pushed out to callers for simultaneous browsing. • Text Chat – Agents can interact in real-time with Web visitors in a chat session.

39. Web Personalization • Supports the dynamic delivery of targeted content and offers to individualize the Web experience. • Service Portal – Provides customers with a profile page to register preferences and obtain relevant product and account information. • Offer Optimization – In response to a real-time interaction, selects and presents the optimal offer based on probability of acceptance. • Collaborative Filtering – Recommends appropriate products based on preference patterns of similar customers. • Scenario-Driven Rules –Targets content based on pre-defined business rules derived from user profiles or behavioural data.

40. Data Mining • Supports the analysis of customer transactional data to help explain or predict behaviour. • Classification – Classifies records into discrete groups . • Estimation – Estimates a continuous value. • Prediction – Calculates a probability score based on a set of input variables. • Affinity Analysis – Finds the most common associations between items. • Clustering – Segments records into distinct subgroups or clusters. • Decision Trees – Displays the variables that best explain the behaviour in the form of a decision tree.

41. Web Traffic Analysis • Supports the analysis of log file data to measure Web site performance. • Site Activity – Tracks number of visits, most requested pages, activity by time of day, errors and abandonments, length of visit, top entry pages, navigation paths, referring URLs. • Merchandising Analysis – Tracks products selected and removed from shopping carts. • Lead Generation – Tracks leads generated from registered visitors. • Banner Ad Analysis – Tracks clickthroughs to banner ads on third party sites.

42. Trends and Trepidation

43. The Major Players

44. Bridging the Gap RELATIONSHIP INTELLIGENCE DIALOGUE MANAGEMENT CONTEXTUAL SELLING CONTACT MANAGEMENT CHANNEL MANAGEMENT INTERACTION MANAGEMENT

45. Real-Time Interaction

46. CRM Trends • Expanding Domains • Vendors will continue to seek the strategic high ground of CRM in an effort to control all interaction channels. Best-of-breed solutions will be displaced by modular suites. Niche vendors will continue to be absorbed by larger competitors. SMEs will opt for ASP solutions. • Common Treatment Rules • Organizations will strive to develop common enterprise workflow methods and treatment rules that are consistent across interaction channels and tools. • Collaboration Push • Conventional market research methods will merge with transactional analysis to invite a reciprocal exchange with customers, bringing them into the product development process. • Consensual Dialogue • To overcome market attention deficit (MAD), all communications will need to be permission-based offering highly personalized content driven by explicit preferences and behaviour-derived rules.

47. Questions? STEPHEN SHAW 416-695-4286 stephen.shaw@sympatico.ca