Supply Chain: Customer Relationship Management

Managing Customer Service Capabilities by using:

"Seven R's Rule"

Customer Lifetime Value (CLV)

*a prediction of net profit attributed to the relationship with a particular customer* -CLV is an important metric for determining how much money a company is willing to spend on acquiring new customers

Churn Reduction

*and the efforts companies develop to stop losing customers to the competition*

Customer Service Elements: Post-transaction elements

*occur after the sale* includes warrant repair capabilities, complain resolution, product returns, etc.

Customer Service Elements: Transaction Elements

*occur during the sale* includes the order lead time, the order processing capabilities, the distribution system accuracy

Customer Service Elements: Pre-Transaction Elements

*precede the sale* includes customer service policies, the mission statement, the org structure, system flexibility

Customer Relationship Management

*transformation of people, process, and technology needed* to become a CUSTOMER DRIVE ORGANIZATION

Website Self-Service

PORTALS for customers to access their account info, check operating hours, ask questions, see product info, etc.

Step 1: Creating the CRM Plan

-Objectives -make sure CRM fit with corporate strategy -new apps to be purchased or developed -personnel requirements -costs and time frame for implementation

6 Steps to a Successful CRM Program

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

Call Center Benefits

- can categorize calls - determine average resolution time -increase customer satisfaction levels - provide input to forecast future demand -improve productivity of the overall staff -may be in-house or outscourced

Goals and Benefits of CRM

1. Customer Satisfaction 2. Customer loyalty & retention 3. Faster responses 4. Increased Revenue 5. Cost effective marketing 6. Growth of customer base 7. Increased sales effectiveness 8. Increased sales thru cross/up selling 9. Updated customer info & personalized interactions 10. Automation of repetitive tasks

Customer service is a .... (3)

1. Philosophy (emphasis on quality and quality management) 2. Activity (order processing, billing/invoicing, product returns) 3. Performance Measures( i.e. number of orders processed)

Relationships should be built with strategically significant customers because:

1. They have high life-time value 2. Serve as role models 3. Inspire change *CRM is not for every customer*

Why do companies need CRM?

1. acquire new customers 2. retain their existing customers 3. help meet the changing expectations of customers *loyal customers are the source of most profits*

Seven R's Rule

1. right product 2. right quantity 3. right quality 4. right place 5. right time 6. right customer 7. right costs + THE RIGHT DOCUMENTATION = PERFECT ORDER

CRM philosophy

putting the customer first (so that they *remain customers for life*

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

Relationship Marketing or Permission Marketing

selling products where a customer agrees in advance to receive marketing info (customers self-select the type/time of communication they want)

Customer Defection Analysis

the process of analyzing the customers who have stopped buying and determine why *"Finding a new customer costs 5-10 times as much as keeping an existing customer"*

Churn

the process of customers changing their buying preferences bc they find better products elsewhere

Sales Activity Management

tool offering sales reps a guided sequence of sales activities

Clickstream

tracking how a customer navigates a website can help tailor a website's images/ads

Sales Force Automation (SFA)

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

Step 2: Involve CRM users from Outset

employees should understand how it affects their jobs -create project teams -test pilot application

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, hire consultant, etc. -compare based on performance, security, reporting capabilities, etc.

A CRM program is COMPLEX by

finding affordable ways to *identify potentially thousands of customers and their needs* THEN, designing *customer contact strategies towards creating customer satisfaction and loyalty*

Event Based Marketing

form of marketing that identifies key events in the customer and business lifecycle ex: memorial day, 4th of july, Halloween

Up Selling

involves persuading a customer to buy a more expensive item or upgrade a product/service to make the sale more profitable

Field Service Management

involves setting up the company operations to allow customers to interact directly with the company's service personnel (customers communicate directly with product specialists)

A CRM program is SIMPLE by

involving training persons within the company to make customers feel valued

Call Centers

links an org and its customers together

Cross Selling

occurs when a company sells an additional related or complementary product/service to an existing customer after initial purchase

Measuring Customer Satisfaction

-through surveys, questionnaires, direct phone calls -it is of very little value unless it is analyzed and acted upon

Step 5: Establish Performance Measures

-to determine if objectives are met -compare actual to planned variance

Step 6: Providing CRM Training for All Users

- provide and require training for all users -training can convince users (sales, call centers, marketing ppl) of the benefits and uses of CRM applications

CRM's Role in Supply Chain Management is to

-*a company must find ways to meet customer's needs or the customer will go elsewhere* -*companies must create methods to be good suppliers themselves* -*companies must train and certify intermediate customers to represent their products*

Personalizing Customer Communications

-*customize communications aimed at specific groups* -can *use the customer's "language" and communication in a meaningful way* (personalized messages)

Achieving a good Customer Relationship by (5)

-focusing on *customer requirements* -delivery products in ways for high customer satisfaction -communicating with customers -understanding the customer -building a system that satisfies those requirements

Step 4: Integrate Existing CRM Applications

CRM is a collection of various applications implemented over time -customer contact mechanisms need to be coordinated -centralized *data warehouse* containing all customer info

Trends in CRM

Customer Data Privacy (Patriot Act) Social Media Cloud Computing

Segmenting Customers

dividing a customer base into groups relevant to marketing (by demographics, income, gender, etc)

Predicting Customer Behaviors

collecting info about customer buying history to create more accurate forecasts and more effective marketing strategies/budgets

Target Marketing

a segment of customers a company has decided to aim its products/services towards - email/direct mail *SAVES LABOR, postage, and REDUCES the chances of being a NUISANCE*

Customer Service

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