Chapter 10: Customer Relationship Management

Designing and Implementing a Successful CRM Program (steps)

1. Creating the CRM Plan 2. Involve CRM users from Outset - Employees should understand how it affects their jobs 3. Select the Right Application and Provider - Find an appropriate application and determine the extent of customization 4. Integrate Existing CRM Applications - CRM is a collection of various applications implemented over time 5. Establish Performance Measures - This allows the firm to monitor progression of the system 6. Training for CRM Users

Knowledge Management

Enables quick decision making, better customer service, and a better-equipped and happy sales staff

CRM (Customer Relationship Management)

Focusing on customer requirements, then delivering products and services in a manner resulting in high levels of customer satisfaction

Seven Rs Rule

Having the right product, in the right quantity, in the right condition, at the right place, at the right time, for the right customer, at the right costs

7 Deadly Sins of CRM Failure

1. Viewing CRM primarily from a technology perspective 2. Lack of customer-centric vision 3. Not understanding the concept of a customer's lifetime value 4. Insufficient top management support 5. Not reengineering business processes 6. Underestimating the challenges in integrating various sources of data 7. Underestimating the challenge in effecting change

Sales Territory Management

Sales managers obtain information of each sales rep's activities (e.g., total sales per sales rep)

Lead Management

Sales reps follow prescribed tactics when dealing with prospects to aid closing the deal

Sales Activity Management

Tool offering sales reps a guided sequence of sales activities

Sales Force Automation (SFA)

Used for documenting field activities, communications with the home office, and retrieving sales history

Successful CRM Programs Requirements

• Cultural change • Effective CRM project management • Employee engagement • Strategies that cultivate long-term relationships with customers • Information gathered from CRM applications • Treating customers right and make them feel valued

Tools and Components of CRM

• Customer Service Elements - Pre-transaction elements-- precede the sale (e.g., customer service policies, the mission statement, organization structure, and system flexibility) - Transaction elements - occur during the sale and include the order lead time, the order processing capabilities and the distribution system accuracy - Post-transaction elements - occur after the sale and include warranty repair capabilities, complaint resolution, product returns, and operating information • We've covered these elements previously • Call Centers - can categorize calls, determine average resolution time, forecast future demand, improve the overall productivity of the staff, increasing customer satisfaction levels • Virtual queuing allows callers to request a callback from an agent without losing their place in the phone queue • Viewed as a source of revenue - staff are expected to pursue cross-sell and up-sell opportunities • Measuring Customer Satisfaction - Customers are frequently given opportunities to provide feedback about a product, service, or organization - Customers communicate through surveys or feedback cards - Website surveys often don't ask the proper questions

Benefits of Data

• Customer knowledge • Sales projections • Industry trends • Customer complaints • Competitive issues

Data Management Tools

• Data warehouse - Central storage • Data mart - Department-specific data • Data mining - Search • Dashboard - Customized

What is CRM?

• Information / Data Management System - Data Capture - Data Distribution - Data Processing - Data Storage • Internal Organizational Processes - Customer Acquisition - Customer Retention - Customer Win-Back • Integrated Communications - Sales - Marketing - Customer Service • Strategy / Relationship Management Tool - Collaboration - Customer Experience - Customer Involvement

Trends in CRM

• Much of the investment in CRM is in banking and financial services, often because better understanding the customer can lead to cross-selling opportunities that await the lifelong customer • An Andersen Consulting study (March, 2000) "How Much Are Customer Relationship Management Capabilities Worth?" concluded that a typical $1 billion high-tech company could gain up to $130 million in profits by improving its ability to manage customer relationships • Ideally CRM should motivate customers to do more business with your company because they like how you take care of them • Proper CRM should cut costs, improve service, and encourage customers to communicate more of their desires for you to meet • In other words, CRM helps create win-win relationships! • Adapting CRM for global uses is increasing: New markets require adaptation to local needs, language, and culture • CRM has become the leading business strategy of the new millennium - and potentially one of the most costly • Customer Data Privacy - Rules and laws regarding invasion of privacy include Patriot Act in the US and Internet Privacy Law in the EU - Safeguarding customer information is a legal and ethical responsibility for any company dealing with sensitive customer data - Companies must reassure their customers that their information will be protected • Social CRM - Engaging the customer in a collaborative conversation - Leads to customer satisfaction and loyalty - Creating and cultivating virtual communities around product or brand • Some firms create user forums where technical support and other customer questions are answered by other customers • CRM Cloud Applications - Cloud computing and on-demand offerings accessed via web browser - Software as a Service (SaaS) model - providers offering cloud applications - Changing the cost structure of CRM applications - Beneficial for small companies with limited resources

Database Construction Considerations

• Number of people accessing the database concurrently • Speed of access and information display requirements • Export requirements for accessed data • Internal and external security requirements • Privacy requirements • Regulations, legislation • Database update requirements (adds, deletes, or changes) - Timing - Volume - Critical path • Data recovery requirements - Priority - Timing - Ownership of process • Contingency requirements - Which data and priority - Off-site redundancy - Cost issues

What Will CRM Solve?

• Planning and implementing a CRM program can be a real challenge - Requires an understanding of customers' changing requirements - Adherence to CRM goals - Knowledge of the tools available to facilitate CRM - Commitment from the firm's executives • Customer-focused CRM initiative - E.g., Increasing sales per customer, improving overall customer satisfaction, more closely integrating the firm's key customers with internal processes, or increasing supply chain responsiveness • By integrating CRM information obtained throughout the firm, decision makers in the firm can analyze the information and make much more customer-focused decisions

Data Warehouse

• Repository for - Customer - prospect - Product/service - Related marketing information - Depth and breadth of historical depends on organization, industry - Integrated with one or more operational data stores and data marts

Tools and Components of CRM

• Segmenting Customers - Grouping customers to create specialized communications about products • Target marketing efforts - addressing specific customer segments avoids becoming a nuisance to other customers • Relationship marketing or permission marketing - customers select the type and time of communication (opt-in or opt-out) - Mobile marketing - placing advertising on cellphones - QR codes - using the camera function on a smartphone and downloading a QR code reader app - Facebook or Web.com users create their own customized Web pages that potential consumers choose to visit • Cross selling - Additional products are sold as the result of an initial purchase (e.g., e-mails from Amazon.com describing other books bought by people) - If successful, customers perceive this as individualized attention, and it results in more satisfied and loyal customers • Predicting Customer Behaviors - firms forecast likelihood of customers' purchases • Customer Defection Analysis - finding methods to retain customers - Churn reduction - reducing customer defections • Customer Value Determination - calculating the customer lifetime value for firms • Personalizing Customer Communications - Understanding customer behaviors and preferences, enables firms to customize communications - Clickstream, how a customer navigates a Web site • Event based Marketing - offer the right products and services to customers at the right time

Data Marts

• Subsets of data warehouse • Designed to work efficiently with specific decision support software • Integrated with one or more operational data stores and data marts • Business-discipline-specific application