How to turn intelligent use of customer data, analytics, and customer relationship management into competitive edge

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© Mika Raulas 2015 1

How to turn intelligent use of customer

data, analytics, and customer relationship

management into competitive edge

Database Marketing Fall 2015

Intelligent Customer Management International Oy

Mika Raulas

Aalto University, Helsinki Business School, Departments of Information and Service Economy & Marketing and Management

Partner, Steeri Oy (ICMI Oy)

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© Mika Raulas 2015 3

”Top Management Tools in 2006”

Lähde: Harvard Business Review, December 2007

”Top Management Tools in 2006”

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© M ika Raulas 2014 http://www.youtube.com/watch?v=a XV-yaFmQNk 6 Steeri Oy 22/9/15

The Digital Customer

Customer informationCustomer information Leadership ManagementLeadership Management Reporting & Analytics Reporting & Analytics Operations Operations Customers Customers Results

Results Business and Processes

Technologies and Tools

Strategy and deployment, consulting Goals and budget

Innovation and new business Budget and Results tracking,

Business planning, KPI’s

Analytical tools, Big Data, Business Intelligence

Sales, Marketing, Digital Services, Customer service, Field Service Digital Competence Development CRM, Marketing Automation,

Contact Center, e-Commerce, Service Management Customer Data Mastering, System Integration

Customer Information Management, Privacy and Legislation Customer Analytics

Customer Experience Management Business Goal Deployment

Market Market

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7 Steeri Oy 22/9/15 Customer informationCustomer information Leadership ManagementLeadership Management Reporting & Analytics Reporting & Analytics Operations Operations Results

Results Business and Processes

Technologies and Tools

Budget and Results tracking, Business planning, KPI’s Analytical tools, Big Data, Business Intelligence

Strategy and deployment Goals and budget Innovation and new business

Sales, Marketing, Digital Services, Customer service, Field Service CRM, Marketing Automation,

Contact Center, e-Commerce, Service Management Customer Data Mastering, System Integration

Customer Information Management, Privacy and Legislation Customer Analytics Customer Experience Management Business Goal Deployment Customer Insight: Improving Results by utilising Customer Information Management by knowledge: Fact-based decision-making and “Customer 360°” Results-driven Customer Experience Production Agile & Lean:

Continuous learning and development Customers Customers Market Market

Palvelujen tarjoajien viesti

• Event based Marketing

• Trigger based Marketing

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© ICMI Oy, STEERI Oy 2014

Today and tomorrow….

So the marketing world as we know it has ended – unfortunately

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Yesterday…. *

Right brain marketing Left brain marketing

Left Brain Marketing is a term for the emergence of analytical marketing strategies – skills and processes that are centered on audience knowledge, not the creative media.

* Don Draper from the TV series Mad Men

© M ika Raulas 2014

Marketing is in a state of transition, driven by changes in technology, demographic and society

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© M ika Raulas 2014

© Mika Raulas 2015 14

”Every contact is a sales contact”

”Inbound marketing”

Active sales on the phone and

Internet service front-end

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© Mika Raulas 2015 15

“We have an offer for you…”

Tarjous

Outbound

“Lets find the best target group to offer it to”

“Lets find the best offer to this customers”

tarjous tarjous tarjous tarjous

“Here we have a contact with the customer” …”

Inbound

Customer contact to us

Ibound marketing

The offering tool gets info of the response and uses it to learn to select offers in the future

Agent receives a phone call, the customer is identified

Customer’s id is given to the inbound-solution, which creates the best offer (likelihood, value, prohibiting)

Offer is presented to the agent

Once the matter is taken care of, the agent presents the offer

Agent saves customer’s response (”not presented” ... ”approved” Information is stored into database/DW and other necessary systems

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© Mika Raulas 2015

Case – Helsingin Sanomat

• B2C

– 17% accepted the presented offer • 35% in best cases

– 17% said they were interested – 1% already have the product – 65% did not approve

• B2B

– 53% accepted the presented offer • 55% pull in best case

– 13% received infrmation and were interested

– 7% already have the product – 27% did not approve

”+ 600%”

”1/5”

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© Mika Raulas 2015 19

Simple but difficult?

Offer winter tyres when in October?

Personalized offers (inbound marketing)?

www.ruukki.com | Aleksis Moisio, Digital campaign manager

Activate customers into a

dialogue

• Questoons to experts

• Quick response

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© Mika Raulas 2015 Ruukin myyjät Ruukin asiakaspalvelu tai asiantuntija Mahdollinen soittopyyntö Soitto asiakkaalle Asiakkaan etsimä tieto löytyy sivuilta! Liidit jakoon ja seurantaan! Ruukin Backend www.ruukkikatot.fi - Tarjouspyyntö - Kohteen perustiedot A Reijo Rakentajan kohde Oikea-aikainen yhteydenotto Onnistunut kauppa © Mika Raulas 2015 22

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© Mika Raulas 2015 23

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Learnings from Direct Marketing

New? ”1-to-1”, ”direct response”, ”dialogue”, ...

“CRM”

• “I recognize, know and remember you”

• “Tell me what you want”

• “I’ll do it for you”

> Information - database

> Communiction - dialogue,

2-way, intercative channels (today communities)

> Production and logistics –

mass customiztion Use technology!

Peppers, Don ja Martha Rogers, 1997, Enterprise One to One. Tools for Competing in the Interactive Age, Currency Doubleday

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• Offers based on customers’ prior purchases

& preferences & what other similarily

behaving/interested customers buy

• Has created loyalty, customers value this as

service

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Other customers’s interests and behavior

Customers’ interests

Use of customer information

(Purchasing) history

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Case Lensmart

Dear Mika,

Based on your order history, we have noticed that you will likely be ready for your next order of contact lenses in about 14 days.

We’ve made it easy for you to reorder – simply click on the link below or cut and paste it into your browser, login to your account, and you’ll find that all of your information is already on file.

You can access your reorder basket at https://www.lensmart.com/scripts/Login.asp Should you have any questions or concerns, please do not hesitate to contact one of our professional customer service representatives. You can do so either by replying to this message or by calling us at one of the numbers listed below. We’ll be more than happy to help you out!

Sincerely,

Your friends at lensmart.com Email: service@lensmart.com Phone: 1-800-693-8246 (USA/Canada) Phone: 1-800-693-8246(International) Fax: 1-800-796-2111(USA/Canada) Fax: 1-800-796-2111 (International) lensmart.com. Great Service. Great Value.

Case Lensmart – simple but effective

• Why is the Lensmart’s message good?

– personalized: perfect timing, matching the real need of a customer – service-oriented: reminds the customer about the need of new

contact lenses, gives clear intsructions how to reorder easily – easy, clear, happy, and friendly (”your friends”)

– gives alternative contact channels (direct reply, call center, web site)

• Is it difficult?

– text-based, techinally easy, cheap

– customer data needed: which customer, when ordered last time and which products

– integration: customer service, web site, email

– making sure the basic drivers of satisfaction are ok: products, logistics and delivery

àSO, MOSTLY THIS IS ONLY COMMON SENSE!?àWhy aren’t

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© Mika Raulas 2015 37

Tesco customer newsletter

The heart of loyalty marketing is a personalized letter to customers

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Lindex

• Use of Lindex Club, 420 000 customers

• Members receive mail and offers

• Club members make a large share of buying

customers

• This has significantly lowered marketing costs

• Profits are up

• Success factors

– Targeted marketing to own customer base – Chain like operation/stores

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Customer Life Cycle,

Marketer’s Processes and Actions

New customer acquisition Starting of a new customer relationship Deepening relationships Retention of relationships • Lead management • Qualification • Defining desired target customers • Offer • Customer responsibilities • Welcoming • Agreenments • Customer satisfaction • Rewards • Dialogue • Additional sales (up selling) • Cross selling • Offers, Rewards • On-going communication • Reclamation management • Customer information

• Stoppin customers from passifying

• Activating passive customers

• Winning customers back • Ending with grace

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© Mika Raulas 2015

Age of

Spam?

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© Mika Raulas 2015

Is your CRM, that is

your customer data and processes

in tiptop shape?

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© Mika Raulas 2015

Customer expectations

• ME-MAIL > E-MAIL

• E-MAIL = JUNK MAIL?

– Will otherwise be banned like telephone sales?

• Play PAR

– Personal

– Anticipated

– Relevant

• More than PERMISSION BASED MARKETING

• MIKA: Measure unsubscribe rate !!!

• Event based Marketing, (Behavioral-Based) Trigger

Marketing, Dialogue Marketing, ...

• Marketing Automation

– Wikipedia: The name given to software platforms designed for marketing departments and organizations to automate repetitive tasks is Marketing Automation. Marketing departments,

consultants and part-time marketing employees benefit by specifying criteria and outcomes for tasks and processes which are then interpreted, stored and executed by software, which increases efficiency and reduces human error. It was originally called email marketing automation. The use of a marketing automation platform is to streamline sales and marketing organizations by replacing high-touch, repetitive manual processes with automated solutions.

Tools are availabe

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© Mika Raulas 2015

Event based Marketing

Trigger Marketing

Dialogue Marketing

Tools are availabe

An

Event-driven Process Chain

(EPC) is a type of flowchart used

for business process modelling

Models from literature

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© Mika Raulas 2015 65.

Wombat

(waste of money, brains and time)

© Mika Raulas 2015

Dialogi 1: Annin Pyörän syyshuolto

Hei! Syksy tekee tuloaa ja on aika tehdä pyörään

syyshuolto. Oletko kiinnostunut syyshuollosta ja talvirenkaista yhteishintaan 85 euroa? Tarjous on voimassa 29.9.2012. Ole hyvä ja vastaa tähän viestiin esim. A) Kyllä, olen kiinnostunut huollosta ja renkaista B) Kiitos, nyt en tarvitse huoltoa mutta haluan saada 20% alennuskupongin talvipyörien ostoa

varten Yst. Terv. Annin Pyörä

1. Kampanjaviesti:

Asiakas-vastaus 2. Kuittausviestit per asiakasvastaus:

A

Muu vastaus

Kiitos viestistä. Mikäli halusit antaa meille palautetta, ole hyvä ja vastaa alkuperäiseen kyselyviestiin pelkällä valintasi mukaisella

kirjaimella, esim. A Yst.terv. Annin Pyörä Kiitos viestistä. Asiakaspalvelumme ottaa sinuun yhteyttä heti seuraavana arkipäivänä.

Lähimmän huoltopisteen löydät osoitteesta

www.anninpyora.fi/huolto

Mukavaa syksyä. Yst.terv. Annin Pyörä

Hei! Lähestyimme sinua aikaisemmin syyshuollon ja talvirenkaiden merkeissä. Kampanja-aika on nyt ohi,

mutta liikkeeseemme on saapunut uusia pyöräilykypäriä, joihin pääset tutustumaan ensimmäisten joukossa liikkeessämme 20.11. klo 18-20. Ilmoittaudu mukaan vastaamalla tähän viestiin A.

Mukavaa syksyä ja pyöräretkiä. Yst.terv. Annin Pyörä

3. Kampanjan jälkeen lähetettävä ajastettu viesti niille, jotka eivät

vastanneet mitään:

B

Kiitos viestistä. Henkilökohtainen koodisi 1234567, jota näyttämällä tai liittämällä tilaukseesi verkkokaupassa kohtaan “Kampanjakoodi”, saat vapaavalintaisista talvipyöristä 20 % alennuksen. Tarjous tulee

käyttää 15.11.2012 mennessä. Lähimmän myymälän löydät osoitteesta

www.anninpyora.fi

Mukavaa syksyä! Yst.terv. Annin Pyörä

Ei reaktiota

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Integrate into CRM interface!

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© Steeri Oy 2013 ConfidentialConfidential 6969

Customer Inform-ation Build KNOWLEDGE on customer potential Plan GOALS, ACTIVITIES AND TASKS

for customers and customer segments

Optimize

INTERACTION

with customers

How to transform

customer potential

into sales?

© Steeri Oy 2013 ConfidentialConfidential 7070

How to transform

customer potential

into sales?

KNOWL-EDGE GOALS, ACTIONS, AND TASKS INTERACTION Customer Inform-mation Collect and manage customer data Enrich customer information Detect customer potential Convert business objectives into goals Plan customer or segment-related care models Create task lists and work queues for customer activities Manage customers through different channels Enhance efficient customer interaction using tasks and

work queues Monitor

customer interaction

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External sources

Tools are needed

Invoicing ERP CRM Targeting Campaigns Goal setting Designing

Dialogue TaskTaskTask_Tasks Task_Task Task Messages Describing the business model DW Integration Duplicates Reporting Analyzing Measures Model Customer Channel Distributor Sales date Responsible sales person Sales team Work model Branch Product Colour Tender/ Campaign Eur Count Profit iSTEER Connect iSTEER Connect e business & service 71

Marketing & main user: -Customer communication

planning using Combo -Reporting & analyzing

Customer Service -Mail-order sales -Customer data into Combo

Web shop

Portal Shops:

-Customer identification to cash register -Customer data into Combo

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One customer relationship

• Improved customer experience –

multichannel and customer identification management • Create brand loyalty • Get brand ambassadors • Deeper customer relationships;

visits more often, buys more/visit, recommends

• Understand buying and information search paths

• Help and educate customers • Internet the place with all

information, a place to plan purchases and share ideas and experiences

• Creation of a global communtity • Increase of number of active

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© Mika Raulas 2015 75

Benefits for Iittala

• Integrated and complete customer management – Savings in material costs

– Picture of customer relationship and behaviour containing all sources

– Integration of previously disconnected customer registers – Better quality of customer data

– Enhanced customer service • Targeting and channel management

– Make use of customer information in data warehouse – Personalized and relevant offers and messages to customer – More customers and sales through co-ordinated channel usage – More effective campaign realization

• Easy-to-use tools for campaign planning end execution • Analyzing and learning by using information collected

Marketing Automation

DiViA 16.1.2014

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Page © Vaisala Internal use

Vaisala Marketing Development

9/22/2015 Marketing 77 In the past §Sales enablement through printed brochures, magazine adverts and trade shows

Future marketing isNOW

§Sales enablement through offline and online channels §Online purchasing §Superior content

àLoyalty and advocacy àMultiple channels §Continuous measurement of effectiveness àOptimization and simplification

Page © Vaisala Internal use

Simplification Through

Automation & Measurement

9/22/2015 Marketing 78 Automation §Personalized customer engagement through utilization of data §Efficiently increased effectiveness Measurement §Ability to measure entire lifecycle §From single datapoints to customer insight §Focusing on what matters the most

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Page © Vaisala Internal use

Customer Journey

– Roads Customer in the US

9/22/2015 Marketing 79

RECEIVES KNOWLEDGE eNEWSLETTER

READS VAISALA ACROSS AMERICA BLOG

VISITS VAISALA.COM FILLS IN ONLINE FORM

PARTICIPATES LIVE WORKSHOP PURCHASES DSP310 RECEIVES INSTALLATION SERVICE RECEIVES FEEDBACK SURVEY ABOUT SERVICE RECEIVES SALES CALL

RECEIVES FEEDBACK SURVEY ABOUT

DELIVERY SHARES BLOG VIA

TWITTER

INVITED TO A WEBINAR SHARES WEBINAR RECORDING VIA EMAIL

NEW CONTACTS INTO FUNNEL

SHARES INVITATION VIA FACEBOOK NEW CONTACTS INTO

FUNNEL

SUBSCRIBES TO eNEWSLETTERS

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Knowledge eNewsletters

-

Continuous Communication

§ Started 2009

§ Establish Vaisala as a thought leader in the targeted markets § Permission marketing – readers

manage their own subscriptions § 10 topics

§ Sent bi-monthly

Page © Vaisala Internal use

Statistics –

Yes No –

buttons

§Including Yes & No

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Page © Vaisala Internal use

Some tactical measures

§A total of 73 Knowledge eNewsletters sent in 2012 §On average 1.4 eNewsletters out every week of the year §Latest issue delivered to 34 801 subscribers

§Meteorology issue in June 2013:

§Open rate: 48% §Click through rate: 12% §Unique open rate: 22% §Unique click through rate: 7% §Unsubscribes: 0.18% (7 pax)

§Strategic measureis how much these companies have generated revenue over the defined time.

§

Lead generation in a very fragmented

trade environment calls for marketing tactics

which are mainly

§

Digital

§

Online

§

Automated

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Page © Vaisala Internal use

Step 1: Ask Him to Dance with You

Page © Vaisala Internal use

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Bring 3: Bring Him Home

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Page © Vaisala Internal use

Wikipedia Definition

§

"

Lead scoring

is a method of assigning points to each

prospect you come across. Points are assigned based on

specific criteria you set—those attributes you've identified as

being most often associated with serious prospective

customers. The higher the score, the more likely they're the

right target prospect who is actively engaged in the buying

process, and should be routed to sales."

Page © Vaisala Internal use

Vaisala Lead Scoring Criteria

§Points are given to prospects based on their

A) Digital behaviour: if they fill in a form, visit web pages or click on our promotional emails

50-> 2 75->1 Implicit Lead Scoring

Category Weight Values Score Points Submitted form 35%

Filled in a form in past 7 days 100% 35 Filled in a form in past 30 days 70% 24,5 Filled in a form in past 6 months 40% 14

Visited Web Pages 35%

More than 4 times last 7 days 100% 35 at least 4 times within past 30 days 70% 24,5 at least 2 times witing last 30 days 15% 5,25 at least 1 time within last 7 days 10% 3,5

Clicked Email 30%

past 7 days 100% 30

past 30 days 60% 18

past 3 months 10% 3

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Page © Vaisala Internal use

Marketing measurements -results

9/22/2015 [Name] 91

Major Milestones

Dec 2008, Eloqua taken into use • Started as a pilot for the US e-newsletters • 34,000 contacts in the Americas region • 3 marketing users Jan 2009, Global marketing function established • Eloqua roll-out

started to cover all business areas globally • Knowledge

eNewsletters expanded to cover all market segments (opt-in, personalization) • 5 marketing users – centralized digital marketing team

Dec 2011, E10 major release • Transferred to E10, but

continued working in E9 mentality • Technical challenges &

bugs • 10 marketing users Feb 2012, CRM integration • Salesforce.com integration (leads, contacts, campaigns) • Naming convention &

folder structure • Lead nurturing • Lead scoring • 26 marketing users with

varying competence levels • 60+ sales users (reporting / prospect profiler) 2013à, Seeing the bigger picture and working smarter • 222,000+ contacts • 445+ active campaigns annually • 40,000+ form submissions annually • 932,000+ emails sent annually

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© Mika Raulas 2015 93

What is ”CRM”?

(Zikmund ja McLeod 2004)

•

Goal is to improve customer satisfaction and loyalty

•

Efficient tailored processes

•

Helps companies improve the profitability of their

customer contacts

•

while …

•

the contacts feel more friendly and personal

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AMA 2004

• For the first time in nearly 20 years, theAmerican Marketing Associationhas finally updated its definition of marketing to put stronger emphasis on the

power of building strong customer relationships. The shift left many

marketers, analysts and of course us with the same feeling: It's about time. • "This change should have happened 15 years ago," says Robert Passikoff,

president of Brand Keys, a research consultancy. "New marketing levels aren't cutting it to sustain levels of profitability. This [definition change]

acknowledges that consumer value drives the marketplace."

• The previous AMA definition of marketing, active since 1985, was: "Marketing is the process of planning and executing conception, pricing, promotion and distribution of goods, ideas and services to create exchanges that satisfy individual and organizational goals."

• The new definition of marketing, unveiled at the AMA's Summer Educator's Conference in August is: "Marketing is an organizational function and a

set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders."

• "Technology and marketing have been changing quite rapidly over the last five to 10 years. The 1985 definition was not encompassing enough. The new definition more clearly infuses the customer into marketing."

• "The new AMA definition of marketing is very appropriate for most brands, in that marketing should be customer-centric, and not brand-centric," he says. "This renewed focus on the customer, which successful brands have been doing anyway for years, puts the proper emphasis on the group that has

the real power in the sales equation -- those that buy the products, not the sellers."

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Gupta

and

Lehmann

2005

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Emphasis on Service and Customer

Relationship Management (CRM)

(course book)

• The CRM is increasingly important.

• More responsive service increases the probability of

developing long-term relationships

with customers,

which leads to

repeat purchases

.

• That is a major advantage to the marketer, because

retaining old customers is usually more profitable and

less costly than acquiring new customers.

• A database allows customers’ needs to be precisely

documented and tracked.

Customer profitability

-100 100 200 400 300 500 600 700 Higher prices References Lower costs Additional purcahses Base margin 0 0 1 2 3 4 5 6 7 Years Income

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Marketing Objectives (5-10-25)

1. Maintain loyalty of existing profitable customers

2. Increase share of wallet of existing partial

customers

3. Win lost customers back

– before you loose them

4. Win new customers

(Kotler 1996)

Customer profitability, customer base,

corporate performance

• Harvard Business School in the 1990’s ; most customers are not profitable (”70”%, 20/80 rule)

• Cooper ja Kaplan; ”20-225”, in some companies 20 % of customers bring 225% of profits

àthe rest 80% ”destroy” 125% of profits

• The structure of a company’s customer base has an effect on performance

• Small changes in customer profitability and customer base have big influences on corporate performance

• A company can improve its profits by creating, developing, nurturing, and managing long-term profitable customer relationships

(as opposed to focusing on selling and promoting products and services)

• Management rarely knows who are the profitable customers and how to improve this

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Why ”CRM”

(= loyalty management, one-to-one marketing, ...)

• ”The economic benefits of high customer loyalty are considerable and, in many industries, explain the differences in profitability among competitors” (Reichheld 1993)

• ”The cultivation of customer loyalty is an important, if not the most important, challenge for most businesses” (Gemler and Brown 1999)

• ”Building superior customer loyalty in no longer just one of many ways to boost profits. Today it is essential for survival” (Reichheld and Schefter 2000)

àProfitability

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CRM

New

Recognize Prospect Win

Retiring,exiting

Keep GEt rid of

Existing

CRM – two levels

What kind of customers/who do we have (Knowledge) How do we want to developour clientele/customer base (Goals and objectives) Who do we invest in? (Strategy, resourcing) Who are customer relationships and profitability developing? (Measurement, follow up)

Management

Objectives and guidelines to organization Operation models and processes Marketing automation

Ustomer analytics (CRM, segmentation, targeting, reporting, ...)

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What do we manage?

Company

Company Products/Products/_Services_Services CustomersCustomers

Company Company Products/ Services Products/ Services Customers Customers

c Kalevi Hellman Asiakastavoitteet ja –strategiat WSOY 2003

CRM in a nutshell

• Recognize, identify your customers

• Classify customers based on value

– Profitability – Volume – Potential

– Strategic value (references, learning,...) – Channel preferences

• Develop care programs for each

customer/customer segment

• Laern about their needs and likes

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Customer portfolio

# of customers

Profits

Advo-cates Committed

Friends, like the brand

Satisfied/haphazard

Switchers

Targeting contacts based on customer

value

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Use Analytics!

Koko asiakaskanta Arvo-luokka Luokan raja-arvot 2004 - 2005 Vuosimyynti per asiakas Kokonais-myynti (1000 €) Low 1 <= €50 153 355 35,0 € 5 367 € Medium - 2 €50 - €100 152 265 68,0 € 10 354 € Medium + 3 €100 - €200 153 123 122,0 € 18 681 € High 4 €200 - €500 152 897 325,0 € 49 692 € Super 5 €500 + 152 285 677,0 € 103 097 € 763 925 245,4 € 187 191 €

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© Mika Raulas 2015 113 Koko asiakaskanta Arvo-luokka Luokan raja-arvot 2004 - 2005 Vuosimyynti per asiakas Kokonais-myynti (1000 €) Low 1 <= €50 153 355 35 € 5 367 € Medium - 2 €50 - €200 305 388 95 € 29 012 € Medium + 3 €200 - €500 152 897 325 € 49 692 € High 4 €500 - €800 95 667 601 € 57 496 € Super 5 €800 + 56 618 806 € 45 624 € 763 925 187 191 € © Mika Raulas 2015 114

Customer Value Movements

Arvoluokka - Nykyinen jakso (To) Arvo-luokka 0 1 2 3 4 5 Total Edellinen 1 41 % 21 % 18 % 13 % 7 % 1 % 100 % Jakso 2 32 % 19 % 25 % 15 % 7 % 2 % 100 % (From) 3 16 % 13 % 13 % 37 % 17 % 4 % 100 % 4 6 % 5 % 6 % 13 % 51 % 18 % 100 % 5 2 % 1 % 3 % 5 % 10 % 78 % 100 % Total 19 % 12 % 13 % 17 % 18 % 21 % 100 %

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Add profitability

Arvoluokka Luokan raja-arvot Vuosi-myynti

Sales unit costs

Customer Service costs Sales margin Contacts Low 1 ß€50 35 € Medium - 2 €50 - €100 68 € Medium + 3 €100 - €200 122 € High 4 €200 - €500 325 € Super 5 €500 + 677 € P r o d u c t C a t e g o r y

1

2

3

4

≥

5

Loans Pay-ments Savings Invest-ments ? Communication & Service Program Communication & Service Program Communication & Service Program Communication & Service Program

Product activity/how many has bought/is using

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Share of customer, up and cross selling

1

2

3

4

≥

5

Car Service Financing + ? P r o d u c t c l a s s

Product activity/how many has bought/is using

Communication & Service Program Communication & Service Program Communication & Service Program Communication & Service Program © Mika Raulas 2015 118

Case Home appliances

> xxxxx 42 154 391 168 Pull-index: 462 173 Aver. purchase > xxxx 38 236 352 302 100 100 < xxxx 38 130 274 489 49 73 y yy yyy > yyy Number of purchases

+

All Purchases €

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Customer portfolio

-1 650’ 2 520’ 27 3.600’ 524 6.800’ 446 4.330’ 2 2.200’ 2 1.680’ 8 2.000’ 32 3.840’ 230 7.780’ 111 900’ 1 800’ 1 1.250’ 20 2.400’ 40 1.558’ 59 392’ 4 8.800’ 22 10.800’ 8 1.500’ 70 11.200’ 32 2.900’ 6 14.400’ 10 5.400’ 26 5.900’ 6 810

-1 4.200’

-1000 15.900’ 18.400’385 13.000’128 37.700’139 26.500’48 4.143’1 115.643’1701

Aktiivisuus eri tuoteryhmissä

0 1 2 3 4-6 7-12 >12 20 36.000’ 17 11.030’ 59 20.470’ 93 12.150 864 27.338 648 8.522’ Yht. 10’ 100’ 200’ 500’ 1.000’ Yht. € 7 6.600’ 3 2.500’

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© Mika Raulas 2015 121 Non-contactors 64% Contactors 36% Dissatisfied 8% Unsure 41% Fully Satisfied 51% 74% 49% 25% No question/problem experience 69% I Question/problem experience* Customer base Question/problem experience 31% III Contact handling IV Loyalty impact II Contact behavior % Definitely will continue using 64 % 48%

Keeping customers

Example: Churn definition

• If a car visits for regular servicing on day X and then does not come again in the next 27 months, then it is defined aschurnedon day X • But if it visits for regular servicing again at any time in the next 27

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Example: Modeling and Multivariate Analysis

• The multivariate analysis phase can be thought of as a segmentation excercice

– Customer segmentation in relation to a declared variable – x – In this case x = propensity to churn (based on churn definition 0 or 1)

• Multivariate analysis implented by decision tree

– Each endpoint contains a customer segment (churn profile) – Description of churn profile provided by variables (and splits) in

branch Projected mileage Gap in Mileage Skipped a Service Regular Service Location Turku - Low Mileage Helsinki – Low Mileage V a ry in g d e g re e s o f c h u rn V a ry in g d e g re e s o f c h u rn

Example: Suggested Business Actions

“Make it easier for really busy people to use our service. Consider add-ons like express service, bring and return car from place of work, courtesy car, Sunday opening, …”

“If needed, Phase 2 can include qual and quant research on high

mileage customers and what they want/need/expect from their car service, but we suspect some of this information already resides with the front-line staff at xxx.”

“Nail that second service! Even the 1-2 year churn is much too high at 38%. What will it take to get people back? Do we need some qualitative research to understand the reasons for churn better in this group?” “Understand through analysis how much of the >2 years churn is preventable.”

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Reinartz et al. 2005, JM

• Firms that own a greater share-of-wallet of their customers have a strategic advantage over their competitors.

– a larger share-of-wallet allows for (and requires) greater learning about customer requirements,

– allows for (and requires) more communication between the parties, and

– justifies greater relationship specific investments (Anderson and Narus 2003).

• The firm’s share-of-wallet with a particular customer captures the competitive aspect.

• Cross-buying, which is an indicator of stronger relationships (Kamakura et al. 2003), should have a potential impact on both relationship duration and customer profitability.

• Thus, a larger share-of-wallet should have an impact on relationship duration and customer profitability.

• As a customer allocates relatively more category purchases to a focal vendor, competitors have less access to the customer.

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Development of customer relationships

Purchases Profitability Time 22.9.2015 130 Kuvaileva analytiikka Kuvaileva analytiikka Monikanava-analytiikka Monikanava-analytiikka Ennustava analytiikka Ennustava analytiikka Segmen-tointi Profilointi Älykäs kohdenn us Poistuma Asiakas-kokemus Digitaalin en asiakkuus

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