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&1CustomerRelationshipMarketing1-Aug-19&PhilipsBrandEquityBoard&3WhyRelationshipMarketing•Aconsumerperspective•CRMassustainablecompetitiveadvantage•Mediaeffectandmediaefficiency&4CRM:AconsumerperspectiveTheconsumer(inEurope)ischanging:•Feelunconfidentabouttheirfuture*•Needafeeloftrusttobuy*•Trustfromabrandwillgrowwhenthebrandismoreopenand‘onlevel’withtheconsumer*•Ifcustomerstrustyou,itwillbeeasiertosellandtheywillcomebackformore...*=source:TheHenleyCentre&5CRM:Competitiveadvantage•Whereproductsbecomemoreandmoresimilar,communicationbecomesthedifferentiatingfactor•Ineverycategory,veryfewhouseholdsmakeorbreakabrand(thehighspendingminority)•Themostsuccessfulbrandsarethosewiththemostloyalheavyusers(GarthHallberg)•CRMaimstobuildbetterbondswiththissegment•Theadvertiserwhofindsadirectwaytotheheartsandmindsofthesepeoplewins&6fromcountingthepeopleyoureachtoreachingthepeoplewhocountCRM:Competitiveadvantage&7CRM:Mediaperspective•Thenumberofbrandsisstillincreasinginalmosteverymarket(e.g.Koreanbrands)•Masscommunicationgetslessefficientduetomedia-fragmentation•Masscommunicationgetslesseffectiveduetoincreasingmassmediaandoutdoorinformation-pressure;outspendingthecompetitionisnotthesolution•Consumers‘zap’inTVandprintmorethanever&8CRM:MediaefficiencyFelixTVcommercialSplitruntestonusersdatabase:50%nomailing(control),50%receivedamailingthatannouncedanewTVcommercial.Announcementmailingwassent1weekbeforebroadcasting.&9ResultsFelix:(afterbroadcasting15spots)EFFECT:justTVDM+TVReach26%56%Spont.awareness44%77%&10frommassmediatointegratedmediaCRM:MediaPerspective&11WhatisCRMabout?•Reachingthepeoplewhocount•Profitingfrommultimediasynergies•Growingtherightrelationships•Morebangforthebuck•Requiresbuildingyourownmedia&12GrowingtherightrelationshipsAdialogue-aconcreteresultofarelationship-willonlybefruitfulifthetimingandthemessageisrightandrelevant.Wecallthiscommitment-andtheunderlyingprocess-tobuildprofitablerelationships:CustomerOwnership.Because,intheenditisaboutcreatingasenseofownershipinthecustomers’mind:Myshop,MyBMW,MyPhilips.&13FirstprincipleofaPhilipsCRMprogram:DFM(DifferentialMarketing).Focusonthebest(potential)customers.Growingtherightrelationships&14Allconsumersarenotcreatedequal:focusonbestcustomers•Intherelationship,we’reabletodeterminetheactualand/orthepotentialvalueofthecustomer•Thisvalueisthedeterminingvariableforinvestment•Everybrand,productandcategoryhaslowandhighprofitconsumers“Fishwherethebigfishare”&15HighMediumLowNo-VolumeSales&ProfitTotalMarketTheParetoprinciple&16DifferentialMarketing:creditcardspending%adultsTransactionsSpendperyear$5,090$1,080$100095%5%1%0%11%3%185%&17DifferentialMarketing:Audio(U.S.market,sourceMediamark)%adultsSpendlast12monthsTotalsales40.3%31.1%28.6%0$1.900$800$1500%0.6%1.1%6.491.9%HMLNon&18SecondprincipleofaPhilipsCRMprogram:Thesalescycle.FocusonthelowhangingfruitGrowingtherightrelationships&19SalescycleProspectBuyerAftermarketMarketLoyalCustomerInvestmentProfit&20ThethreeopportunitiesinthesalescycleTimeValueB.Salesgap:Sellingtoexistingcustomersisupto7timeslessexpensive.C.Retentiongap:A5%improvementinthedefectionrateboostsprofitsbyamultipleofupto10.A.Acquisitiongap:Winningnewcustomerscostsmoney.Customerequity&21FollowingthelowhangingfruitbestcustomersROIothercustomersinthedatabaseoutsidelistTargetedmassmediahighlowretailpartnerlists&22ThirdprincipleofaPhilipsCRMprogram:RepresenttheprivatefaceofthePhilipsbrand.Growingtherightrelationships&23Growingtherightrelationships•Createacommunicationplatform,thePhilipswaytospeakwithitsbestcustomers•UnderstandwhowearetalkingtoandhowclosetheyaretoPhilips&24Thereare3routes,inprinciple,tobondwithyourcustomers:Youcancreatefinancial,social,structuralbonds-oracombinationofthese.PrisonersHappymarriagesDistantloversStrangersEmotionalLoyaltyBehaviouralLoyaltyHighHighLowGrowingtherightrelationships&25GrowingtherightrelationshipsFourthprincipleofaPhilipsCRMprogram:Bridgesthatwork•Internet•Databases•CallCentres•Mail•Retail&26BrandCustomerCompanyGrowingtherightrelationshipsWedon’tknowyetwhichbridgesexistandhowwelltheyfunction.Webuild,repair,maintainaswegoalong.&27Valueaddedbygrowingtherightrelationships•Identifyingthemostprofitablecustomers;•Gettingahighershareoftheirbusiness;•Reducingboththeexpenseofcommunicatingtothewrongpeopleanddefectionsfromyourbrand;•Andturningloyalcustomersintobrandadvocates.&28(Why)CRMforPhilips4principlesbestcustomerslowhangingfruitprivatefacefunctioningbridgesFocusduringthefirst16monthsWillanalyse,developandfixRemember:It’sajourney&29II.HowtogetstartedThenext16months&30Howtogetstarted1.Testmatrix2.Evaluation3.Cost&Timing4.Year2000event&31Objectives•Improvemarketingefficiency•Increaseeffectivenessofcommunications•Improveloyaltydegree(retention)•Learnwhatworksandwhere&32Strategy•Testingcampaignsin6countries•EvaluationandrefiningCRMapproach•Exportationapproachtoothermarkets…learningwhileearning...&33TestmatrixBusinessUnitsInternational:TV(Renewal)Audio(CDR)Videq(VCR)Local:Audio(MP3)Videq(DVD)&34TestmatrixMomentsoftruth&targetgroupsTVRenewalo