Intro to Supply Chain Management Chapter 11: Customer Relationship Management

When a company communicates with their customers they need to use the customer's

"language" and communicate with them in a meaningful way.

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 containing all customer information.

Step 2 - Involve CRM users from Outset

Employees should understand how it affects their jobs -Create a project team with members from all affected organizational areas. -Test with a pilot application

improvements and benefits of A successful well-designed CRM program

-Increased customer satisfaction. -Increased customer loyalty and retention -Faster responses to customer inquiries. -Increased revenue. -Growth of the customer base through referrals. -A simplified and more cost effective marketing & sales process. -Increase sales effectiveness. Closing sales faster. -Increased sales through cross-selling and/or up-selling. -Access to updated customer information and personalized interactions. -Automation of repetitive tasks.

Companies need a Customer Relationship Management program in order to:

1. Acquire new customers 2. Retain their existing customers 3. Help meet the changing expectations of customers

Performance measures are often designed around satisfying the "Seven R's Rule":

1. product 2. quantity 3. quality 4. place 5. time 6. customer 7. costs + the right documentation = the Perfect Order

5% improvement in customer retention can result in a

75% increase in profits

Website Self-Service

Portals for customers to: -access their account information -check operating hours, ask questions -see product information -find contact information, check on orders -get shipping information, etc.

Segmenting Customers

The practice of dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing. -grouping customers to create specialized communications about products.

Event-based marketing is a more

personalized form of marketing which can help to form personal connections with the customers.

Pre-transaction elements

precede the sale Includes customer service policies, the mission statement, the organizational structure, system flexibility, etc.

Relationships should be built with strategically significant customers that are likely to

provide the most value for the effort.

Cross-selling occurs when a company

sells an additional related or complementary product or service to an existing customer after the initial purchase. Example: "Would you like fries with that?"

Communication that is personalized

sends a message to the customer that the company cares about them.

Field Service Management involves

setting up the company operations to allow customers to interact directly with the company's service personnel.

An event can be

something basic and predicted, like the end of a contract, a holiday, a season, e.g., Memorial Day, 4th of July, Halloween, "Black Friday", "Cyber Monday", Christmas, etc., or something more detailed and personal, like a birthday, a marriage, or a graduation.

Churn Reduction is all of the efforts companies develop to

stop losing customers to the competition

Measuring Customer Satisfaction can be done through

surveys, questionnaires and direct phone calls to customers asking them their opinions.

To be successful, a company must find ways to meet its customers needs; otherwise

the customer goes elsewhere and takes years worth of future purchases with them.

Since customers are communicating directly with product specialists for service issues, it is more likely that

the right diagnosis can be made quickly, which will help to ensure customer satisfaction.

Customer Defection Analysis and Churn Reduction go hand-in-hand to determine

why customers leave and finding ways to retain them.

Segmenting customers allows a company to

zero in on a particular population of customers to sell a specific product, or to define a specific product(s) for a particular segment of customers.

Using e-mail or direct mail

saves labor and postage, and reduces the chances of being a nuisance

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, and maintenance -The costs and time frame for implementation

Customers can put their own information into the system which avoids having the company

take the time to do it, and also potentially eliminates errors.

Customer service is the act of

taking care of the customer's needs by providing and delivering professional, high quality service before, during, and after the customer's requirements are met.

A Call Center gives customers quick access to

the information they want and enhances the customer-to-business relationship.

Customer Relationship Management (CRM) is

the transformation of the people, process, and technology required to become a customer-centric organization;.

If a company can identify different segments of customers,

they can potentially be more efficient and effective in the use of their resources by tailoring programs and initiatives for each segment.

Clickstream

tracking how a customer navigates a website can help tailor a website's images, ads or discounts based on past usage of the site.

identifying your key or top tier customers can be

extremely valuable to your business.

Factors that change expectations of customers:

-social and demographic factors -economics -competitor's products and marketing efforts -other market experiences

Functions of a Call center:

-Can categorize calls -Determine average resolution time -Increase customer satisfaction levels -Provide input to forecast future demand -Improve the productivity of the overall staff -May be in-house or outsourced

How does CRM reach its goals?

-Communicating with customers -Understanding their behavior and their requirements -Building a system to satisfy those requirements

Strategically significant customers are:

-Customers with high life-time value, i.e., customers that will constantly buy the product(s) or use the service(s) in the long-term. -Customers who serve as role models or benchmarks for other customers. -Customers who inspire change in the supplier and/or the supply chain.

CRM is about building and maintaining profitable long-term customer relationships beyond the one-off buy and sell transaction By:

-Focusing on customer requirements -Delivering products and services in a manner resulting in high levels of customer satisfaction

Step 6 - Providing CRM Training for All Users

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

Cloud Computing (Software as a Service)

-ala carte and on demand offerings accessed via web browser -Changing the cost structure of CRM applications

Customer buying history, preferences, and trend information can be used to determine

-how effective marketing, advertising and promotions have been in the past, and whether these practices should be continued or altered. -Also to create a more accurate forecast and a more effective marketing and sales budget.

Relationship Marketing or Permission Marketing

An approach to selling products and services in which a customer explicitly agrees in advance to receive marketing information. Customers self-select the type and time of communication they want.

Social Media

Creating and cultivating virtual communities around product or brand is a powerful way to engage consumers

Customer Defection Analysis

The process of analyzing the customers who have stopped buying to determine why.

Step 5 - Establish Performance Measures

This allows the firm to: -Determine if objectives have been met -Compare actual to planned variance (take action to correct issues)

When an event occurs

a customer specific marketing activity is undertaken.

In order to measure Customer Satisfaction, Most companies will need

a database to manage the data.

Event Based Marketing is

a form of marketing that identifies key events in the customer and business lifecycle.

Customer Relationship Management (CRM) provides

a means and a method to enhance the experience of individual customers so that they will remain customers for life.

Target Marketing is

a more efficient use of the company's resources and it reduces the chances of being a nuisance to those potential customers who do not fit the targeted criteria.

Customer Service as an Activity

a particular task that a firm must accomplish to satisfy the customer's needs. Order processing, billing and invoicing, product returns, and claims handling are all typical examples of the customer service activity

Customer Relationship Management (CRM) involves

acquiring, retaining and partnering with selective customers to create superior value for both the company and the customer.

companies must create methods for

becoming and staying good suppliers

Customer Lifetime Value (CLV)

A prediction of the net profit attributed to the entire future relationship with a particular customer.

6 Steps to a Successful CRM Program:

1. Creating the CRM Plan 2. Involve CRM users from Outset 3. Select the Right Application and Provider 4. Integrate Existing CRM Applications 5. Establish Performance Measures 6. Providing CRM Training for All Users

Target Marketing

A segment of customers a company has decided to aim its marketing efforts and ultimately its products and/or services towards. A well-defined target market is the first element of any marketing strategy

Measuring Customer Satisfaction

Customers being given opportunities to provide feedback about product(s), service(s), the organization, etc.

Knowledge Management

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

Step 3 - Select the Right Application and Provider

Find an appropriate application and determine the extent of customization -Visit trade shows, read trade literature, hire consultant, etc. -Compare based on performance, security, reporting capabilities, system availability, etc.

Sales Territory Management

Sales managers obtain information on each sales rep's activities

Lead Management

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

Customer Service as a Philosophy

a company-wide commitment to providing customer satisfaction by placing emphasis on quality and quality management.

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 in the field.

Customer Service as a Performance Measure

a category of performance measures, such as the percentage of orders delivered on time and complete, the number of orders processed within acceptable time limits, etc.

Permission marketing is about

building an ongoing relationship of increasing depth with customers

Up-selling involves persuading a customer to

buy a more expensive item or upgrade a product or service to make the sale more profitable. It also involves selling the customer extra features or add-ons to the product they are already buying or considering. Example: "Would you like to super-size your order?"

ways to group customers

by demographics, income, geography, buying preferences, etc.

Building relationships with customers that provide little value

can be counterproductive. Not all markets and customers are equally important.

Measuring Customer Satisfaction Decisions have to be made regarding how to

capture the data, and how to analyze the information so you can use it productively going forward.

Churn Reduction is the process of

customers changing their buying preferences because they find better or cheaper products and services elsewhere.

Understanding customer behaviors and preferences, allows a firm to

customize communications aimed at specific groups of customers and is likely to result in greater levels of sales.

Personalizing Customer Communications is a powerful way to

differentiate the company from its competitors and it helps to build customer loyalty.

CRM is not for

every customer. Some customers don't want to be committed to every brand and/or relationship.

A successful CRM program is complex in that:

it also means finding affordable ways to identify potentially thousands, if not millions, of customers and their needs, and then designing customer contact strategies geared toward creating customer satisfaction and loyalty.

A successful CRM program is simple in that:

it involves training users within the company to make customers feel valued.

A Call Center

links an organization and its customers together. It is a facility housing personnel who respond to customer queries. These personnel may provide customer service or technical support.

Target Marketing is usually much more effective than

mass marketing, as it allows the company to focus efforts on marketing to those customers most likely to respond.

Call centers Help continuously

monitor customer service parameters in an effort to gauge performance and improve quality and efficiency.

Loyal customers are the source of

most profits, and a relatively small percentage of those customers may generate most of the profits for the company.

Post-transaction elements

occur after the sale Includes warranty repair capabilities, complaint resolution, product returns, operating information, etc.

Transaction elements

occur during the sale Includes the order lead time, the order processing capabilities, the distribution system accuracy, etc.

Finding a new customer costs

5 - 10 times as much as keeping an existing customer

Customer Data Privacy

Rules and laws regarding invasion of privacy include Patriot Act in the US and Internet Privacy Law in the EU

Permission marketing does not typically create immediate sales, but rather

grabs a customer's attention and preserves a business relationship.

CLV is an important metric for determining

how much money a company is willing to spend on acquiring new customers and how much repeat business a company can expect from particular customers.

Customer Relationship Management (CRM) is A philosophy of

putting the customer first

Because many companies do not sell their products directly to end-product consumers, companies may also need to

train and certify that their intermediate customers are able to adequately represent their company's products.

If a company is selling products and services to customers, it can predict customer buying behaviors going forward by

collecting customers: -buying history -preferences -trend information

By utilizing a Call Center, the company's

internal resources can be freed up to focus on the company's core competencies