Customer Touchpoints

Managing Touchpoints and the Customer Journey

• The course is about understanding why and how the marketing model has changed significantly, treating different customers differently, and evaluating and performing marketing tasks associated with customer relationship management, customer experience, and touchpoint management.
• The central premise is that an enterprise should seek to engage its customers one at a time, in long-lasting, mutually valuable relationships, based on trust.
• An enterprise must understand each customer's perspective and experience.
• It must continuously take steps improve the customer experience over the lifetime of that customer's relationship with the business.
• CRM is not simply painting a car any color the customer wants, as long as it's black.
• Customer lifetime value (CLTV) is the measure of the total revenue or profit a business is expected to generate from a customer relationship over the customer's lifetime.

What is CRM?

• CRM (Customer Relationship Management) is a business strategy designed to improve a firm’s relationships with its current and potential customers.
• This involves identifying which customers to serve and developing specific strategies to interact with these different types of customers.
• CRM is not simply a customer-centric business model, but an important component that helps firms learn about customers, recognize their needs, and improve their experiences.

CRM – Is it maybe?

• "Customer is king."
• "Customer is always right.”
• "We place the customer at the core of all we do".
• Customer lifetime value (CLTV) is a metric used to capture the long-term profit from a customer relationship.

CRM – Is it maybe?

• A customer is defined as the "most important person" with companies being dependent on them.
• A customer is not an interruption to work; they are the purpose.
• A customer isn't someone to argue with.
• A customer brings unique needs that the company aims to handle profitably.

So, What is CRM?

• Companies should reward their most profitable customers and incentivize those that are not yet profitable.
• CRM is a strategic process of selecting customers profitably and shaping interactions with them.
• The goal is to optimize current and future customer value.
• Managing customer relationships optimizes customer value by understanding customer perspective and making the experience useful.

CRMSo, what is CRM?

• An important part of CRM is to identify different types of customers and develop specific strategies to interact with them, such as better relationships with profitable customers, locating and enticing new customers, and dealing with unprofitable customers and closing unprofitable relationships.
• An important part of CRM includes identifying different types of customers and developing strategies to interact with profitable, new customers, handling unprofitable customers, and creating ways to identify and reactivate dormant customers.

Evolution of CRM

• Henry Ford (around 1920) said, "Any customer can have a car painted any color he wants, as long as it is black."
• Donald Petersen (1985-1989) said, "If we are not customer driven, our cars won't be either."
• This shows a transition in perspective from product-centric to customer-centric.

Life before the Industrial Revolution

• Banks used to have teller windows with metal bars and ornate designs.
• Stores had walls of shelves stocked with consumer goods such as spices, food and drinks.

Customer-centricism: So old that it's "new"

• The concept of being customer-centric is nothing new.

For most of the 20th Century, marketing was "one to many"

• Products were mass-produced and distributed.
• Mass media (TV, radio, print) was used to advertise products to everyone, regardless of individual preferences.

Customer-centric vs. product-centric:

• New technologies have changed the dimension of competition
• Share of customer is higher with a product-centric model.
• Customer relationship management (CRM) is the driving metric for a customer-centric model
• The dimension of competition has changed with customer focus vs. product focus.

Increasing the value of the customer base

• Actions to increase customer value: • Acquire more customers • Retain profitable customers longer; win back profitable customers. • Eliminate unprofitable customers; up-sell additional products in a solution, cross-sell other products. • Referral and word-of-mouth benefits; reduce the cost to serve customers.

A marketing continuum

• Organizations should be structured around product portfolios.
• The best possible product/market offering should be available to serve customer needs.
• Organizations should be aligned to serve the needs of selected consumers.
• The customer does not exist: every customer is different; celebrate the differences.

Driving forces in favor of relationship orientation

• Recent changes concerning: • Consumers (e.g., growing diversity, time scarcity, value consciousness, information availability, and decrease in loyalty.) • Technology (e.g., storage technology, information technology, and marketing functions.) • Marketplace (e.g., increase in competition, fragmented markets, and diminishing product-quality differentiation.) • Marketing function (e.g., media dilution and channel multiplication, decreasing marketing efficiency and effectiveness).

Demographic Changes and Increasing Consumer Diversity

• Demographic changes impacting consumers: • Aging populations, particularly in developed countries • Falling birth rates and strong differences in median ages between developed and undeveloped countries • Increasing diversity in terms of ethnicity • Closer integration facilitates immigration (that may affect segments) • Increasing individualization • Increasing number of working women • Increasing number of single households/single parents

Consumers: Behavioral Changes

• Increased use of social media, apps, real-time data allows for faster pace in consumer lives.
• Need for convenience and rise of self-service • Companies must offer self-service to enable consumers to do minor tasks themselves. Still, companies need to be available for when problems arise. • Increased demand for experiences and authenticity. • Consumers need to feel valued and companies need to engage in the customer's experience • Increased health and sustainability consciousness: Consumers demand more healthy and organic products.

Changes with respect to the Marketplace

• Firms are competing for customers
• Markets are becoming more fragmented
• Product quality differentiation is becoming less pronounced

Changes with respect to the Marketing Function

• Marketing costs are increasing, while effectiveness is decreasing
• There's a decrease in marketing efficiency and effectiveness, due to •prior focus on price, short-term transactions •proliferation of new contact channels •increase or flat cost of contact •decreased customer response Marketing is in danger of being restricted to advertising and media planning.

Implications of Changes in the Business Environment

• Companies must change from their product-centric focus to a customer-centric approach and focus on understanding customer heterogeneity (diversity.)
• Firms should consider customer data to improve marketing accountability and practices.
• Companies need to recognize customer profitability as a key objective.

Customer Value

• A customer relationship's economic value to the firm
• A practice of analyzing and utilizing marketing databases and leveraging communication technologies enables firms to maximize customer lifetime value

Benefits of the Customer Value Management Approach

• Integrate and consolidate customer information across all channels.
• Personalization of operations and management.
• Automate and manually generate new opportunities that help grow existing and new customers.
• Manage customer campaigns effectively.
• Generate and manage campaigns accurately.
• Provide accurate follow-up, and give management a holistic view of all customer data.
• Instantly react to changing market environments.

CRM Perspectives

• Functional Level: Set of processes to execute marketing.
• Customer-Facing Level: Set of activities to provide a single-view of the customer.
• Company-Wide Level: Strategic implementation of customer-centricity within the firm and value creation for shareholders.

Strategic CRM

• Strategic CRM is a complex set of activities creating a sustainable, hard-to-imitate competitive advantage
• It shapes interactions between the firm and customers, leading to higher lifetime value maximization.
• It recognizes the differences between customers based on their economic value and customer expectations.

Elements of CRM Strategy

• A company's vision for its customer relationship management
• Culture of Customer Orientation
• Alignment of Organizational Processes
• Data and Technology Support

CRM Vision

• Company needs a clear vision for its customer relationship management efforts.
• CRM vision should be to build an organization whose activities are geared towards maximizing the lifetime value of each customer.
• The activities should focus on acquiring and retaining important customers for the organization.
• Communication, and value propositions should exceed customer expectations.

Culture of Customer Orientation

• This is the set of organizational values, beliefs, and strategic actions enabling customer management principles
• Characterized by top management belief and commitment in putting customers at the core of activity.
• This belief must be reflected in the organizational structure and reward system to be credible

Integration and Alignment of Organizational Processes

• Organization-wide creation and synchronization of processes—system integration to enable customer management principles
• Integration of customer needs and goals of the firm into product and service delivery.
• Strategic CRM works best for firms organized around cross-functional processes rather than functional silos.
• Processes are characterized by understanding how to attract and retain customers.
• Customer management incentives align with employee and organizational goals.
• Processes are designed to automate customer feedback

Data and Technology Support

• Collecting and analyzing complex customer information is crucial for CRM.
• Data and technology support enables effective CRM.
• Customer management process becomes more efficient and effective.
• New processes and channels emerge based on online and mobile applications.
• Firms that effectively leverage data gain a competitive advantage.

Characteristics of Marketing-Driven CRM Implementation

• Activities and processes that constitute analytical and operational CRM.
• The firm's ability to understand customer value and the variety of customer needs.
• An acquisition and retention process continuously aligning offerings with customer needs and values
• Continuously improve offerings by learning from customers.

Customer Experience Along the Customer Journey

• Customer experience is a multidimensional construct encompassing cognitive, emotional, behavioral, sensorial, and social components of a consumer interaction.
• It includes customer touchpoints throughout the lifecycle.
• The phases of the customer's relationship with the business are built up sequentially from awareness, through purchase and consumption, to future engagement and repurchase.

Process Model for Customer Journey and Experience

• Consumer experiences involve pre-purchase, purchase, and post-purchase touchpoints, which are both company- and customer-driven.

Customer Journey

• A customer journey refers to the full experience and interactions of a customer with a brand or service throughout their lifecycle.
• It encompasses touchpoints and phases of the customer's relationship.

Touchpoints

• Touchpoints are interactions between customers and businesses that happen before, during, and after a purchase.
• They can be physical or digital.
• Understanding touchpoints and managing them effectively is crucial to shaping the customer experience and driving customer loyalty.

Touchpoints by Buying Stage

• Touchpoints occur in the pre-purchase, purchase, and post-purchase phases of the customer journey
• These represent interactions with a brand or product before, during, or after a purchasing decision.

Touchpoints by Channels

• Touchpoints between people, products, or services can happen online (through use of devices) or offline (in physical locations).
• Some touchpoints involve multiple channels ("omni-channel").

Touchpoints by Creator

• Paid touchpoints: A company pays for advertisement, but consumers perceive it as coming from a third party.
• Owned touchpoints: A company actively manages the touchpoint and has higher control over it
• Earned touchpoints: Touchpoints created and managed by customers without compensation, customers trust other customers more than a company.

Touchpoints by Sentiment

• Touchpoints leave impressions that are associated with emotions.
• Positive touchpoints could be a pleasant sensory experience or efficient customer service
• Negative touchpoints: include transaction failures, delays, or experiencing inconsistencies with customer interactions
• The difference between the two, should be evaluated and addressed.

Communication Touchpoints along the Customer Journey

• Key steps firms should take involve all three phases (awareness, purchase and engagement).
• These stages are essential to the customer's journey with any company and how the company can add value throughout those stages.
• For example, some companies create communication touchpoints around holidays, which allows consumers to stay connected (and be aware) of the company brand throughout the year.

Customer Journey Analysis

• Firms focus on how customers interact with multiple touch points, moving from consideration to post-purchase consumption.
• The purpose is to understand and describe the customer journey with the firm.
• Customer journey analysis incorporates service management and multi-channel management.
• The goal is to map the customer journey from the customer perspective and incorporate customer input.

Customer Journey Mapping

• A visual map of all company touchpoints, from discovery to purchase, post-purchase, and retention.
• The process of mapping the customer journey involves gathering data, creating customer personas, mapping the journey, identifying touchpoints, analyzing the map, and developing an action plan to improve the customer experince.

Steps in Customer Journey Mapping

• Research, persona creation, mapping, touchpoints, emotions and pain points, analysis, action plan are all parts of the process.

Persona Creation

• Summarizing information about individuals who interact with a business, using details like demographics and behaviors.
• Personas can create a visual summary of the customer journey.

Benefits of Customer Journey Mapping

• Customer experience improvement
• Increased customer loyalty
• Enhanced marketing and sales strategies
• Streamlined operations leading to efficiency and cost reduction

Applications of Customer Journey Mapping

• Product development
• Customer support
• Marketing strategy development
• Website/App optimization

Format or style of journey maps

• Journey maps involve elements like persona, scenario, actions, motivations, and moments of truth.

Example of Touchpoints during a Customer Journey

• The diagram describes interactions during different stages of a shopper's journey from initial awareness and purchase to post-purchase support and future engagement.
• The example illustrates both physical and digital touchpoints as well as several different brands and products the customer uses

Touchpoints by Buying Stage

• Touchpoints occur throughout pre-purchase, purchase and post-purchase phases
• Touchpoints can occur during all three phases (before purchase, during purchase, and post-purchase) of the customer journey.
• Example touchpoints include advertisements, product displays in-store, online websites, and post-purchase support.

Touchpoints by Channels

• Touchpoints can occur in multiple channels
• There's a distinction between offline and online touchpoints, although many touchpoints can take place in more than one channel.

Touchpoints by Creator

• Paid, Owned, and Earned touchpoints.
• These three types can be further classified and addressed to best meet customer needs.

Touchpoints by Sentiment

• Touchpoints that have positive impressions and experiences are called "Love Points".
• Touchpoints with negative impressions or experiences are called "Pain Points."
• Consumers associate feelings, and emotions, with touchpoints

Customer Journey Analysis

• Firms focus on how customers interact with multiple touch points.
• The purpose is to understand and describe the customer's journey with a firm and the customer's options and choices.

Analyzing Customer Journey Maps

• Firms should analyze journey maps to identify key strengths and weaknesses of their brand to better serve customers.

Outcomes of Customer Journey Maps

• Provide important insights on customer interactions, such as spending habits, and priorities.
• Provide suggestions on where to allocate resources.

Managing Relationships

• Shift from product sales transactions to relationship equity.
• Enterprises need to decide which customers to nurture and how to differentiate the levels of nurturing.
• The key to strategic relationships is recognizing the value of the individual to the company.

Learning Relationships

• Customer experience based on interaction with the customer
• The company needs to improve the customer relationship by consistently improving the experience for each customer.

Managing Customer Relationships

• Identify customers (uniquely addressable individuals)
• Differentiate customers based on value and needs
• Interact with customers more effectively
• Customize the firm's behavior and/or offerings to meet specific customer needs

Individual Information requires Customer Recognition

• Enterprises need a mechanism for tagging individual customers.
• This means that the company needs to know that the customer today is the same customer who interacted with the company in the past or in other ways.
• Remembering and knowing as much as possible about the customer is helpful in this process.
• Customers need to be identified, and their interactions, through all channels, need to be recorded.

What data do we need when we identify a customer?

• Descriptive, behavioral and attitudinal details about a customer.

Why is identification important?

• To develop closer, more profitable relationships with customers.
• Experiences are improved and interactions are easier and faster.
• Customers feel valued by the company.
• This is more efficient for the company to serve customers.

Value Creation

• All value is generated by customers.
• Businesses must serve their customers, create economic value, and determine the value of individual customer relationships.

Customer Value is a future-oriented Variable

• Knowing which customers are most valuable and least valuable allows the company to set priorities and allocate resources accordingly.

Different Customers have different Values

• The Pareto Principle (80/20 rule) states that 80% of a company's business comes from 20% of customers.
• Understanding the different values of customers allows for optimized, targeted efforts.

ABC Analysis to segment customers

• Divides customers into three categories: A, B, and C.
• Category A represents the most valuable customers; while Category C represents customers who contribute less to the company's overall goals.

Example of the ABC customer analysis

• A company identifies which customers should access certain services, such as a special hotline, based on their sales generated.
• Other ways of rewarding A-customers include discounts, faster delivery, and event invitations.
• Recognizes that B and C customers are still important.

Customer value categories

• Every customer has actual and potential value.
• Categorizing customers into value profiles helps firms optimize their resource allocation.
• The goal is to grow the share of customers while minimizing serving costs.

Differentiate customers by needs

• Customer needs are based on life and emotional factors.
• Needs must be understood to best serve customers.
• The company needs to identify and cater to different customer segmentations and motivations, and not just focus on the products themselves.

Needs Drive Behaviors

• Customer behaviors are driven by their underlying needs.

Categorizing customers by their needs

• Enterprises must segment customers into relevant groups for effective marketing.
• Product differentiation and mass customization are based on customer needs.

Understanding needs

• Needs can change over time, and be situational in nature
• Customer needs influence values (and are related to them).

Managing Customer Relationships

• The three principles are to understand the value of each customer, to optimize them, and create more value from different customer segments.

Interact to Learn and Collaborate

• Enterprises should actively interact and learn about customers.
• They need to shift from a transactional approach to a relationship-based approach.

Dialogue with the customer

• Enterprises need to actively engage in conversation and listen to customers, understanding needs.
• This can happen through inquiries, gathering background information, and conducting interesting conversations.
• Customers need to feel heard, understood, and valued to foster stronger relationships.

Golden questions to find out about needs

• Ideal questions (and interactions) to understand customer needs, goals, and desires
• Questions and insights must be collected across all customer touchpoints.

Complaining customers

• Complaining customers can be a valuable resource for firms.
• 96% of customers with complaints do not voice them directly.

Interaction via social media

• An enterprise needs to be mindful of how it conducts conversations with consumers on social media sites to garner positive relationships.
• This should primarily include direct conversations, frank communication, and honesty.
• Social media is a good source for learning what customers think of the brand.
• Transparency and honesty are important aspects of social interactions.

Influencer

• Influencers are very important in understanding how they see themselves and their value to followers regarding businesses or health topics.

Managing Customer Relationships

• Identifying uniquely addressable individuals is crucial.
• Differentiation should be based on value and their individual needs.

Managing Customer Relationships: Customize

• The average shopper is faced with thousands of unique options and products when shopping; however, they want what they want readily available to them.
• Standardization of the types of products and communication methods is likely to make a purchase experience faster and less confusing for typical consumers.

"Customize" Defined

• Firms should understand the uniqueness of each customer (rather than viewing all customers as a homogenous group).
• Data helps in tailoring specific treatment for individual customers (and not for the entire group).

Mass Customization

• Customization of products and services to fit the needs of individual customers.
• This mass customization allows the firm to produce higher sales through personalization, and customer satisfaction.

Demand Chain and Supply Chain

• Remembering customer specifications improves loyalty through the delivery of a product or service that meets the customer’s needs.
• The more complex the product or service, the more likely a customer will remain loyal.
• Enterprises must integrate back-end operations with front-end communications for this process to be effective.

Customization of Standardized Products and Services

• Companies can modify and customize offered products and services to better meet customer needs.

Data Opportunity vs. Data Strategy

• Short-term opportunism (e.g., maximizing existing products/services or data) versus long-term brand differentiation (creating better value through new products, services and experiences)
• Needs-based segmentation is more important than product-based segmentation, emphasizing that recognizing individual customer needs is more valuable.

Data Strategy for Brand Differentiation

• Data is a key differentiator for digitally intensive industries to improve customer experience, create new products and services, and understand customer needs.
• A company needs to define a strong brand core relevant to its target market and sustainable.

Case Discussion: TUI

• Understanding what assets make TUI unique and credible (brand core values).
• Analyzing the risks of being outdated in an ever-changing digital environment and what weaknesses arise from a non-digital customer journey.
• Recognizing which unique data and capabilities can leverage and create an experience or product(s) that differentiates TUI from its competitors in the market.

Your Group Presentation Challenge (Recap)

• Specific instructions regarding choosing a retailer, and gathering data on their customer journeys.

Managing Touchpoints and the Customer Journey: Big Data and Al

• Exploring how big data and AI shape the customer journey and influence brand differentiation.

Today's Agenda

• Topics that will be covered in the session on big data and AI
• The areas covered are big data, AI and its uses in marketing, and the ethical and theoretical considerations of these topics

9.1 BIG DATA

• Intro to Big Data

What is „Big Data"?

• The four Vs of Big Data (volume, variety, veracity and velocity).

The Fifth „V“ – Why we get Value from Big Data today

• Improvements in information technology (e.g., GPUs, TPUs, cloud computing).
• Improvements in data analytics (e.g., machine learning and deep learning).
• Business-user interface improvements (e.g., low/no-code analytics platforms).
• These factors allow firms to leverage big data more effectively.

9.2 Al 101

• Introduction to the topic of AI (artificial intelligence).

What is "Deep Learning"?

• Explanation of Deep Learning, a type of machine learning.
• Illustrative image (i.e., image of a human brain or neural network).

ML Pattern Detection: The Difficult Cases

• Illustrates the limitations of machine learning techniques when dealing with ambiguous data sets

Some Ethical Issues of Al

• Discusses bias in algorithms and ethical issues of different AI applications
• Companies need to be aware of how their AI tools may perpetuate existing inequalities or prejudices.

Interactive activities

• Engaging audience through short video demonstrations and interactive tasks regarding big data and Al topics.

Test your knowledge on the fundamentals of customer journey mapping. This quiz covers key elements, benefits, and applications of journey maps in enhancing customer experience. See how well you understand the concepts that drive successful customer interactions.