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Contents
One-to-One
CRM
Mass Marketing
Reach every
Personalize customer
Design
Facilitate
where
for each
relevant
Information interactions customer
appropriate interaction Transaction
Marketing Approach
Traditional
Marketing
One Size Fits All
eCRM
Custom-Made
Product Characteristics
Customer Centric
Information Store
Information
Analysis &
Segmentation Engine
Personalization
Engine
Design relevant
interactions
Personalize for
each customer
Broadcast
Engine
Transaction
Engine
Facilitate interaction
Transaction
Source: *The Creative Good. **Business Week. *** The Boston Consulting Group
eCRM M EGATRENDS
Information
Merchandise
Merchandise
1995
2002
Current Focus
Future Direction
89%
Mass-Media
Marketing
20%
Direct
Marketing
80%
11%
Autom
ated
Call
Web
Page
Direc
t Ma
il
Telem
arketi
ng
Rep
Sales Store
Perso
n
Frequency
of Contact
Cost Per
Contact
Tra
Sales veling
Perso
n
Clickstream
Data
(e.g., Accrue,
NetGenesis)
ERP Data
(e.g., SAP,
JD Edwards,
Peoplesoft,
Baan)
Sales Force
Automation
(e.g., Siebel)
3rd Party
Data
(e.g., Acxiom,
Polk)
Transactional
Data
Call Center
Data
INTEGRATED
3rd Party
Content Feeds
(e.g., Weather,
News, Finance,
etc..)
CUSTOMER CENTRIC
INFORMATION STORE
Legacy
System Data
(e.g.,Oracle)
SCENARIO
ACTION
PROBLEM
SOLUTION
APPLICATION TYPE
QUERY EXAMPLES
Customer Loyalty
Wireless Channel
Effectivness
Top five additional items purchased in the same transaction as the top ten products
Customer percentage owning product Y who responded to marketing campaign
Top three items that are most likely purchased in the same transaction
Customer Service
Performance
Customer Satisfaction
Campaign Management
QUESTION
1
2
3
4
5
TECHNICAL APPLICATION
Query the database, applying statistical
functions to determine the top 20% of
frequent shoppers
Frequent Shoppers
??
? ?
? ?
Attributes of
Frequent Shoppers
Frequent Customers
living near physical
store
Verification of 3
customer segments
Integration of
segment details
Campaign A
Frequent Customers
Cross-sell and up-sell, ensuring continuing brand
loyalty
Anticipate additional products that customer values
Campaign B
Frequent and Convenience-Based Customers
Offer coupons for products with affinities to
products bought by this segment
Offer incentive promotions to reward frequent
shoppers
Campaign C
Convenience-Based Customers
Promote simpler ways for customer to shop
Leverage geographic advantage and market
basket analysis to increase each transaction
value
E NGINE 3:
T HE P ERSONALIZATION E NGINE
Personalization through technology
New technology makes it possible to personalize
products and services for large numbers of customers
in a cost-effective manner, by lowering the marginal
cost of personalization. Until now, personalized attention
and service were labor intensive and not scalable to
serve a large customer base without high costs.
Naturally, most companies provide personalized attention
to a small group of selected clients who are worth it.
Today, every Amazon.com customer gets personal
recommendations for books - in large part due to
Amazons personalization technology. The addition of
thousands of customers to Amazons base has a minimal
marginal effect on their cost to sustain this high level of
service. This scalable personalization is unprecedented
in business history.
Achieving this level of one-to-one service requires a
robust Personalization Engine. Engine 3 identifies
appropriate messages and offers necessary to create
valued one-to-one customer relationships with millions
PERSONALIZATION TECHNIQUE
DESCRIPTION
EXAMPLE
LIMITATIONS
Rules-based
Collaborative
Filtering
Automatically compares
attributes of one set of
customer data with other
customers and provides
ideas for personalization
Inference Models
Web-content personalization is necessary, but not sufficient, for CEP. A customer who responds positively to
a cleverly worded email may prefer brevity and clarity
in voice mail messages. True personalization demands
that each customer experience is rich and appropriately
tailored by the type of device. This provides greater
degrees of freedom to an eCRM initiative. Armed with a
powerful Personalization Engine, a company can provide
unique experiences to the same customer on different
devices. An added benefit of this is formulation of an
increasingly richer picture of customer preferences for
presentation and promotion.
Figure 11 illustrates how CEP achieves integrated
personlization across five important dimensions: who,
what, where, when and how.
Trading Service
School Service
Complaint Service
WHO:
STOCK BROKER:
PARENT:
SALES ACCOUNT
Trading Service
School Service
EXECUTIVE:
Complaint Service
segmentation engine coupled with subscriptionbased information generate a target list for
interaction.
Summary of detailed portfolio analysis
by industry sector
response menu
WHAT:
What content should be included in these
customer information services?
WHERE:
Where should the customer information service
be delivered? This involves effectively utilizing
knowledge of customer contactpoints (e.g.,
email, phone, WAP phone, pager).
WHEN:
HOW:
How should the information be incorporated into
the customer information service? CEP will
dynamically alter content and format information
to effectively deliver it though the appropriate
customer communication device.
via. pager
10
Percent of Companies
40%
35%
30%
25%
20%
15%
10%
5%
0%
1999 2000 2001 2002 2003
Source META Group 1999
Number of Devices
per Customer
4
3.5
3
2.5
1.5
1
0.5
0
1999 2000 2001 2002 2003
Source META Group 1999
11
12
E NGINE 5:
T HE T RANSACTION E NGINE
Interactions lead to trusted relationships
An effective Transaction Engine promotes information
exchange between every customer and the enterprise.
Like the small town shopkeeper who often conversed
Information
Gathering
CUSTOMER ACTIVITY
DATA
SOURCES
Manufacturer
Website
Consumer
Reports
Automobile
Magazines
Dealer
Database
2
3
4
Transaction
Negotiation
Dealer
John wants to review Dealer Invoice price
and Manufacturer's Suggested Retail prices. Database
Dealer
Website
Insurance
Portal
Manufacturer
Website
Dealer
Database
10
Manufacturer
Website
Travel Site
Dealer/
Manufacturer
Database
7
Transaction
Closure
PostTransaction
Service
BACK-END TRANSACTION
ENGINE ACTIVITY
11
12
13
Avoiding Inundation
Companies will have billions of interactive customer
contacts a year. They have to avoid inundating customers
with unwanted information and services. Through the
utilization of subscription methods (via web, wireless
or voice) customers can sign up for unique interactive
information services based on their own preferences.
The Transaction Engine performs this function, keeps
track of the customer subscriptions and uses this
information to initiate interactions with individual
customers (see figure 16).
DEVICE
Web
Phones
Set-top TV box
14
Importance of Permission
Without the customers permission, a company is
locked out of a potentially lucrative relationship. As part
of the value exchange, customers grant companies the
permission to interrupt the flow of their daily life with
interactions. This is of significant value to the company
as it represents the customers trust and loyalty. These
translate directly to superior economics for campaigns
in terms of higher response rates and lower conversion
costs (see figure 17). Permissioning capabilities are a
core characteristic of The Interaction Engine.
Learning Relationships
Permission-based interaction allows enterprises to
engage in learning relationships with customers. With
every interaction with the customer, corporations learn
more about particular customers product, service, and
contact preferences. In order for customers to receive
comparable service from competitors they would have
to re-teach the competitor their preferences. This
represents a switching cost for customers which serves
to enhance customer retention. Figure 18 represents the
mutual benefits of a learning relationship.
CUSTOMER
COMPANY
Higher value
Increased
profitability
Higher trust
Better service
Timely, useful
information
Customer loyalty
More customer
knowledge
Effective
campaigns
Purchase
Response
Rate
Permissionbased
Email
1.5%
Direct Mail
Web Banner
0.01%
$2
$25-45
TV
Newspaper
$100
15
Customer Centric
Information Store
Analysis &
Segmentation Engine
Personalization
Engine
Broadcast
Engine
Transaction
Engine
16
C ONCLUSIONS
The eCRM tsunami has begun and executives in every
major company will have to formulate and execute
an eCRM strategy rapidly in order to keep up with
competition. Since eCRM is an enterprise-wide
phenomenon, senior executives and general mangers
drive these activities in most companies. This white
paper was created to clarify critical technology issues
on eCRM in understandable terms without compromising
accuracy. The principal thesis can be underscored by
the following:
9:00 AM
Trigger Event:
A tanker runs aground
offshore causing a major
spill in an ecologically
sensitive area.
9:32 AM
John Smith's portfolio is
rebalanced and riskadjusted. The Smith
family's financial security
is protected.
17
A P P E N D I X : E N G I N E T E C H N I C A L S P E C I F I C AT I O N S
Engine 1: Customer-centric Information Store Engine Specifications
INTEGRATED CUSTOMER INFORMATION
Interfaces to multiple data sources and databases
Flexible database schemas to support multiple business models
and different types of customer information
DATA ACCESS
Online access to atomic level transaction information
Data mart capability to generate sub-sets of database for specific
applications or users
18
OPEN ARCHITECTURE
Adherence to Internet Protocols: XML, HTTP, SMTP, WAP, SMPP
COM/DCOM: programming techniques that allow for bundling
and application customization
Broad data source support via ODBC for Oracle, DB2, SQL
Server, Informix, Teradata, and all other DB types
Open API for acquiring personalized data and content from any
source
SCALABILITY
High throughput: Tens of millions of personalized e-mails per day
24/7 availability/fault tolerances in relation to DB, web server,
network and mail server
FLEXIBILITY
Clustered architecture
Integration with custom applications
RELIABILITY
Built-in fault tolerant features
19
MicroStrategy has more than 800 customers around the world doing business in every industry.
This is a sampling of these valued customers.
AT&T WIRELESS
ECKERD
MERCEDES BENZ
AIR CANADA
EDDIE BAUER
MERCK-MEDCO
RALSTON PURINA
ALLIED SIGNAL
FEDERAL-MOGUL
ALTAVISTA SHOPPING.COM
FEDERATED SYSTEMS
METROCALL
ROYAL TRUST
FIRST UNION
MIRROR GROUP
AMERITRADE
FOOD LION
MONSANTO
SHOPKO
AMICA MUTUAL
FOX ENTERTAINMENT
SMITHKLINE BEECHAM
BARCLAYS GLOBAL
NETRADIO.COM
SNAP.COM
BELK
GLAXO WELLCOME
SPIEGAL
BELL ATLANTIC
GTE MOBILNET
SPRINT
BELL SOUTH
HALLMARK
NIKE
STARKIST
BEST BUY
NINE WEST
TELEGLOBE CANADA
HARRIS TEETER
THE LIMITED
BLOCKBUSTER
HUD
BLOOMINGDALES
IBM
PAYLESS CASHWAYS
THOMSON FINANCIAL
PAYLESS SHOESOURCE
JD EDWARDS
PETCO
UNITED AIRLINES
CALVIN KLEIN
KMART
PETSMART
KOCH INDUSTRIES
PREMIER
UNUM INC.
CNET
KOHLS
PROVANTAGE
USAA
CONOCO
LA CAIXA
VICTORIAS SECRET
CONTINENTAL AIRLINES
VISA INTERNATIONAL
CVS PHARMACY
LEXIS-NEXIS
WARNACO
LEXMARK
EARTHLINK
LITTLEWOODS
WESTERN DIGITAL
20
Worldwide Headquarters
MicroStrategy Incorporated
8000 Towers Crescent Drive
Vienna,Virginia 22182
U.S.A.
703.848.8600
703.848.8610 Fax
info@microstrategy.com
www.microstrategy.com
European Headquarters
MicroStrategy Ltd.
St. Martins Place
51 Bath Road
Slough
Berkshire SL1 3UF
United Kingdom
44 (0)1753.826100
44 (0)1753.826101 Fax
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The material presented is based upon information that we consider reliable, but we do not represent that it is accurate
and complete. No person should consider our distribution of this material as making any representation or warranty
with respect to such material and should not rely upon it as such.
COPYRIGHT NOTICE. Copyright 1999 MicroStrategy Incorporated, 8000 Towers Crescent Drive, Vienna, Virginia
22182 U.S.A. All rights reserved
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