Chapter 10- Customer Relationship Management

Key Tools and Components of CRM Target marketing efforts

addressing specific customer segments avoids becoming a nuisance to other customers

More simply - CRM is

building & maintaining profitable, long-term customer relationships

Key Tools and Components of CRM Customer Value Determination

calculating the customer lifetime value for firms

CRM refers to

automated transaction and communication applications—a suite of software modules or a portion of the larger enterprise resource planning system

Call Centers

can categorize calls, determine average resolution time, forecast future demand, and improve the overall productivity of the staff, increasing customer satisfaction levels

Key Tools and Components of CRM Relationship marketing or permission marketing

customers select the type & time of communication (opting-in or opting-out)

Key Tools and Components of CRM Predicting Customer Behaviors

firms forecast likelihood of customers' future purchases

CRM means- "Finding a new customer costs five times as much as keeping an old customer"

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

Customer Relationship Management Defined-2

managing the relationships among people within an organization and between customers and the company's customer service representatives in order to improve the bottom line

Posttransaction elements

occur after the sale & include warranty repair capabilities, complaint resolution, product returns, & operating information

Transaction elements

occur during the sale & include the order lead time, the order processing capabilities & the distribution system accuracy

Key Tools and Components of CRM Event based Marketing

offer the right products & services to customers at the right time

Step 2---

Involve CRM Users from the Outset - Employees should understand how it affects their jobs -Create a project team with members from all affected organizational areas. -The team should be heavily involved in evaluating and selecting the CRM applications. -During implementation, closely monitoring system performance will keep users convinced of the value of the initiative.

Step 6---

Training for CRM Users - -Provide & require training for all of the initial users -Provide training on an ongoing basis as applications are added -Training can also help convince key users like sales, call center, & marketing personnel of the benefits & uses of CRM applications

Call Center (pt 3)

Viewed as a source of revenue - staff are expected to pursue cross-sell and up-sell opportunities

Call center (pt 2)

Virtual queuing allows callers to request a callback from an agent without losing their place in the phone queue

Perfect order

When the seven Rs are all satisfied.

Key Tools and Components of CRM Customer Defection Analysis

- finding methods to retain customers

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

Pretransaction elements

precede the sale (e.g., customer service policies, the mission statement, org. structure, & system flexibility)

Key Tools and Components of CRM Churn reduction

reducing customer defections

CRM must

still include talking to customers, understanding their behavior and their requirements, and then building a system to satisfy those requirements

Key Tools and Components of CRM QR codes

using the camera function on a smartphone and downloading a QR code reader app

Key Tools and Components of CRM Personalizing Customer Communications

- Understanding customer behaviors & preferences, firms customize communications Clickstream- how a customer navigates a Web site

Successful CRM programs require:

-cultural change -effective CRM project management -employee engagement -strategies that cultivate long-term relationships with customers -information gathered from CRM software applications -treating customers right & making them feel valued

Key Tools and Components of CRM Cross selling

Additional products are sold as the result of an initial purchase (e.g., e-mails from Amazon.com describing other books the customer might like). If successful, customers perceive this as individualized attention, and it results in more satisfied and loyal customers

Small data

Data that was around prior to big data Meaningful insights about one customer's next purchase Provide demographic analyses of customers

Trends in CRM Ease of Use

Easy CRM interfaces eliminate much of the training Empowers users and enhances CRM adoption

Knowledge Management System (KMS)

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

Step 5---

Establish Performance Measures - This allows the firm to monitor progression of the system -Determine if objectives have been met -Identify implementation or usage problems as they occur -Compare actual to planned variance -Metrics should be transparent and easy to measure

Key Tools and Components of CRM

Facebook, LinkedIn, and Instagram users create their own customized Web pages that potential consumers can choose to visit

Key Tools and Components of CRM Segmenting Customers

Grouping customers to create specialized communications about products

Step 4---

Integrate Existing CRM Applications - CRM is a collection of various applications implemented over time. -Customer contact mechanisms need to be coordinated so that every CRM user in the firm knows about all of the activity associated with each customer. -Centralized database or data warehouse contains all customer information. -Big data analytics - analyzing large volumes of data to make quick decisions

Continuous Connectivity

Integrated CRM anytime, anyplace, for quick decision-making Cloud CRM applications CRM on smart phones/tablets

Designing & Implementing a Successful CRM Program Step 1---

Step 1. Creating the CRM Plan: -Objectives of the CRM program -CRM's fit with corporate strategy -New applications to be purchased or developed -Integration or replacement of existing legacy systems -Personnel Requirements- personnel, training, policies, upgrades, & maintenance -Costs & time frame for implementation

What does customer service actually mean?

The "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. Performance measures are often designed around satisfying the seven Rs. These kinds of services can come at a cost.

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, & retrieving sales history

Key Tools and Components of CRM Mobile marketing

placing advertising messages on mobile phones

Customer Service Elements

Pretransaction elements Transaction elements Posttransaction elements

Sales Territory Management

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

Lead Management

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

Step 3---

Select the Right Application & Provider - Find an appropriate application & determine the extent of customization -Visit trade shows, read trade literature, hire consultant -Use the knowledge of internal IT personnel -Search CRM supplier directories and websites -Consider extent of support available from each application provider -Carefully consider cost and contract negotiations

Seven 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

Trends in CRM Personal Value Creation

Brings useful information and insights to users In many cases, basic platform is free

Customer Relationship Management Defined

The infrastructure that enables the delineation of and increase in customer value, and the correct means by which to motivate valuable customers to remain loyal—indeed to buy again."

Customer Relationship Management Defined-3

a core business strategy for managing and optimizing all customer interactions across an organization's traditional and electronic interfaces."