eCRM ROI Showcase - Glossary of Terms

Strategic Interactive Marketing Framework
[Financial Services] [One to One Marketing] [Mass Customisation]
[Interactive Mediums] [Process Management] [Component Based Development]
One to One Marketing Stages
[Identify Customers] [Differentiate Customers] [Interact with Customers] [Customise Products/Services]

Strategic Interactive Marketing Framework

Financial Services

Banking, Insurance, Investment, Mortgages, Loans, Credit Cards, etc..

One to One Marketing

It is an approach that concentrates on selling as many services or products as one can, one customer at a time. It involves 4 customer activities as identified below:

• It involves identifying and then differentiating customers, usually based on their Life Time Value (LTV).
• With the selected customers, it involves the process of customer collaboration, seeking to engage and interact with customers in dialogue, inviting them to communicate their needs and aspirations, their problems and ideas. This interaction is increasing using the new interactive mediums.
• Customers become part of the NPD and manufacturing process (see mass customisation).

Mass Customisation

It is the marriage of mass production with individual customisation giving customers products and services that meet their individual needs yet manufactured at mass produced prices.

• It is more than mass personalisation. In mass personalisation the customer is involved at the later stages of manufacturing, typically selecting fixed additional options for a standard base product or service.
• Mass Customisation involves customers participating in the design. By allowing customers to become part of the design process, they can create a product or service that meets their particular needs. Customers may design themselves, or through an agent, often by using the new interactive mediums. Design can include simulation, allowing the customer to trial the product under varying situations. Design aspects can include the product or service, its packaging, delivery, value added services, and its ongoing servicing.
• By providing Mass Customisation as part of an ongoing customer relationship, it is allowing people to continually assess and amend their products and services as their life circumstances change.
• Mass Customisation will usually involve a component based approach to design and manufacturing and be part of a one to one marketing strategy.

Interactive Mediums

These are the communication channels that allow customers and other participants, like agents, to interact with an organisation.

• Traditionally they have been retail outlets and the postal system. Now the emphasis is on electronic communications channels that are speedier and more cost effective.
• They include the Internet, fixed and mobile telephones, interactive TVs, electronic kiosks, personal data assistants (PDAs), and in the future, house hold and other appliances including cars. Increasingly we will see devices have in-built electronic agents that will learn our preferences and act on our behalf.
• Many interactive mediums allow customers to design their own goods (mass customisation) and to continuously monitor and amend their products and services.

Process Management

Is the definition, creation, operation and management of all the activities allowing a business to deliver added value to its customers, provide a return to shareholders and meets its obligations to other stakeholders.

• Activities are the tasks undertaken by one or more persons. They consume resources and take time to execute.
• Processes consist of one or more linked activities. They are usually initiated by some event and can be internal to a company or extend across a whole industry, involving many parties, both commercial and non commercial.
• Processes should deliver value added to end customers or to third parties on behalf of customers. They may benefit or impact on other stakeholders. Increasingly, customers and other external parties are becoming active participants within the process activities.
• Processes should have a Process Owner who is responsible for monitoring the performance of a process and initiating improvements when cost effective, or is necessary to maintain competitiveness, or is required for some other reason (e.g. legislative).

Component Based Development

CBD is a building block approach to the design and manufacture of products and services. A classic metaphor is the children's building system called Lego (tm).

• The modern manufacturing example is the purchase of a Personal Computer from a company like Dell. A service example is a credit card where a user can select various options such as repayment date, minimum repayment, interest rates, etc..
• CBD implies that New Product Development concentrates on the design and pricing of the components and the rules for deciding which components can co-exist. Because users have similarities in their requirements, then pre-configure sets of components, known as patterns, may be made available.
• The design of the finished product or service is usually a co-operative affair with the customer. Increasingly this is accomplished using the new interactive mediums.
• Once a product or service has been acquired the principle can be applied throughout the life of the product or service. Components can be added, removed or substituted to meet the ever changing needs of the customer.
• CBD is often associated with Mass Customisation and supported by computer systems using Object Technology and Rules Based technology.

One to One Marketing Stages

Identify Customers

This is the first step of One to One Marketing. It involves building and using systems and processes, enabling a company to identify customers as individuals each time a contact is made.

• It involves taking an inventory of all customer data already available in electronic form as well as locating non electronic customer-identifying information. Then deciding on a unique identifier, if necessary across divisions, and deciding how customers can be linked to their identifier. It involves devising strategies for collecting further customer-identifying information, especially for Most Valuable Customers (MVCs).
• The aim is to identify customers and their behaviour as well as their needs, aspirations and roles.

Differentiate Customers

Implementation Step 2 first ranks customers by their value to your enterprise, then differentiates them by what they need from your enterprise.

• Key differentiators are what the customer wants and what the customer is worth. Worth (or value) is used to prioritise a company's efforts. Wants (or needs) is used to used to create a customer relationship and loyalty.
• Customer Value is their NPV over their whole life (Life Time Value or LTV). It consists of profit, value of referrals, value of collaborative assistance, etc.. It also includes Strategic Value - additional products and services if the company had a strategy to yield it.
• Customers can then be categorised: MVC: Most Valuable Customers - objective: retentionMGC: Most Growable Customers - objective: growBZ: Below Zero Customers - objective: make profitable or encourage to leave
• Customer Needs is based on a Learning Relationship. Every interaction is a learning opportunity and the more that is learnt about each customer then the closer their individual preferences can be met. Meeting their needs develops a long term relationship. Knowledge about your customer’s personal needs is difficult for competitors to replicate.

Interact with Customers

Implementation Step 3 Engage customers in an ongoing dialogue that enables you to learn more and more about their particular interests, needs and priorities.

• Customer dialogues use different forms of interaction and different mediums (which have different costs) according to the different values of each customer.
• Dialogues take place at every customer touch point using relevant customer data that is made available at these touch points. Interactions seek to capture unique customer information, both factual and behavioural.
• This information is combined with existing information to produce customer knowledge and is then made available to other authorised persons within the organisation so that they too can better meet the customer’s needs.
• Privacy Issues must be addressed and communicate to customers.

Customise Products / Services

Implementation Step 4 involves Acting on what has been learnt about customers using knowledge about the individuals to customise the way they are treated as well as customising the products and services they need.

• Customising means changing the organisation's behaviour. It doesn't necessarily mean customising the product/service - it could be customising the service delivery or after care service. Mass Customisation creates custom products/services at a mass produced price.
• Customising use a modular, or component, building approach. Modules are often pre-built (and possibly bought-in) and then the manufacturing is one of final assembly. Components allow bundling, configuring, packaging, flexible delivery and logistics. They may be provided as ancillary services or service enhancements.
• Components are usually assembled according to business rules. These ensure that compliance conditions are met, that physical constraints are taken into consideration, as well as marketing issues. Components may be self sourced or out-sourced and assembly may involve agents, distributors, partners and alliances.
• Over time, in order to gain greater share of customer, further components are offered to the customer to replace or supplement their existing products or services.
• During the customer interactions, that are necessary for customisation, new customer knowledge is obtained. This is used to enhance the next interaction and thereby gain further customer knowledge, loyalty and lock in.

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