Ch 11 - CIS 3700

Customer relationship management is not only about the software

. ometimes the problem with managing relationships is simply time and information

Describe the three components and the three flows of a supply chain.

A supply chain is the flow of materials, information, money, and services from raw material suppliers, tfirough factories ana warehouses, to the end customers. A supply chain involves three segments: upstream, where sourcing or procurement from external suppliers occurs; internal, where packaging, assembly, or manufacturing takes place; and downstream, where distribution takes place, frequently by external distributors. There are three flows in the supply chain: material flows, which are the physical products, raw materials, supplies, and so forth; information flows, which consist of data related to demand, shipments, orders, returns, and schedules, as well as changes in any of these data; and financial flows, which involve money transfers, payments, credit card information and authorization, payment schedules, e-payments, and credit-related data.

Discuss the benefits of analytical CRM systems to businesses.

Analytical CRM systems analyze customer behavior and perceptions in order to provide business intelligence. Organizations use analytical systems for many purposes, including designing and executing targeted marketing campaigns; increasing customer acquisition, cross selling, and up selling; providing input into decisions relating to products and services (e.g., pricing, and product development); and providing financial forecasting and customer profitability analysis.

Identify the primary functions of both customer relationship management (CRM) and collaborative CRM.

Customer relationship management (CRM) is an organizational strategy that is customer focused and customer driven. That is, organizations concentrate on assessing customers' requirements for products and services and then providing high-quality, responsive service. CRM functions include acquiring new customers, retaining existing customers, and growing relationships with existing customers. Collaborative CRM is an organizational CRM strategy where data consolidation and the 360-degree view of the customer enable the organization's functional areas to readily share information about customers. The functions of collaborative CRM include integrating communications between the organization and its customers in all aspects of marketing, sales, and customer support processes, and enabling customers to provide direct feedback to the organization.

Explain the utility of each of the three major technologies that supports supply chain management

Electronic data interchange (EDI) is a communication standard that enables the electronic transfer of routine documents, such as purchasing orders, between business partners. Extranets are networks that link business partners over the Internet by providing them access to certain areas of each other's corporate intranets. The main goal of extranets is to foster collaboration among business partners. Corporate portals offer a single point of access through a Web browser to critical business information in an organization. In the context of business-to-business supply chain management, these portals enable companies and their suppliers to collaborate very closely.

all successful CRM policies share two basic elements

First, the company must identify the many types of customer touch points. Second, it needs to consolidate data about each customer.

Front-office processes

Front-office processes are those that directly interact with customers; that is, sales, marketing, and service. The two major components of operational CRM systems are customer-facing applications and customer touching applications (discussed below).

Identify popular strategies to solving different challenges of supply chains.

Identify popular strategies to solving different challenges of supply chains. Two major challenges in setting accurate inventory levels throughout a supply chain are the demand forecast and the bullwhip effect. Demand for a product can be influenced by numerous factors such as competition, prices, weather conditions, technological developments, economic conditions, and customers' general confidence. The bullwhip effect refers to erratic shifts in orders up and clown the supply chain. The most common solution to supply chain problems is building inventories as insurance against SC uncertainties. Another solution is the j-ust-in-time (JIT) inventory system, which delivers the precise number of parts, called work-in-process inventory, to be assembled into a finished product at precisely the right time. The third possible solution is vendor-managed inventory (VMI), which occurs when the vendor, rather than the retailer, manages the entire inventory process for a particular product or group of products.

The focus of modern organizations has shifted from conducting business transactions to managing customer relationships

In general, organizations recognize that customers are the core of a successful enterprise, and the success of the enterprise depends on effectively managing relationships with them.

the push model

In this model, also known as make-to-stock, the production process begins with a forecast, which is simply an educated guess as to customer demand. The forecast must predict which products customers will want as well as the desired quantity of each product. The company then produces the amount of products in the forecast, typically by using mass production, and sells, or "pushes," those products to consumers.

Note that the supply chain involves three segments:

Note that the supply chain involves three segments: 1. Upstream, where sourcing or procurement from external suppliers occurs. In this segment, supply chain (SC) managers select suppliers to deliver the goods and services the company needs to produce its product or service. Further, SC managers develop the pricing, delivery, and payment processes between a company and its suppliers. Included here are processes for managing invent my, receiving and verifying shipments, transferring goods to manufacturing facilities, and authorizing payments to suppliers. 2. Internal, where packaging, assembly, or manufacturing takes place. SC managers schedule the activities necessary for production, testing, packaging, and preparing goods for delivery. SC managers also monitor quality levels, production output, and worker productivity. 3. Downstream, where distribution takes place, frequently by external distributors. In this segment, SC managers coordinate the receipt of orders from customers, develop a network of warehouses, select carriers to deliver products to customers, and develop invoicing systems to receive payments from customers.

Explain the advantages and disadvantages of mobile CRM systems, on-demand CRM systems, and open-source CRM systems.

On-demand CRM systems are those hosted by an external vendor in the vendor's data center. Advantages of on-demand CRM systems include lower costs and a need for employees to know only how to access and utilize the software. Drawbacks include possibly unreliable vendors, difficulty in modifying the software, and difficulty in integrating vendor-hosted CRM software with the organization's existing software. Mobile CRM systems are interactive systems where communications related to sales, marketing, and customer service activities are conducted through a mobile medium for the purpose of building and maintaining customer relationships between an organization and its customers. Advantages of mobile CRM systems include convenience for customers and the chance to build a truly personal relationship with customers. A drawback could be difficulty in maintaining customer expectations; that is, the company must be extremely responsive to customer needs in a mobile, near-real-time environment. Open-source CRM systems are those whose source code is available to developers and users. The benefits of open-source CRM systems include favorable pricing, a wide variety of applications, easy customization, rapid updates and bug (software error) fixes, and extensive free support information. The major drawback of open-source CRM systems is quality control.

Operational CRM systems provide the following benefits:

Operational CRM systems provide the following benefits: • Efficient, personalized marketing, sales, and service; • A 360-degree view of each customer; • The ability of sales and service employees to access a complete history of customer interaction with the organization, regardless of the touch point.

Describe how businesses might use applications of each of the two major components of operational CRM systems

Operational CRM systems support the front-office business processes tl1at interact directly with customers (i .e ., sales, marketing, and service). The two major components of operational CRM systems are customer-facing applications and customer-touching applications. Customer-facing CRM applications include customer service and support, sales force automation, marketing, and campaign management. Customer-touching applications include search and comparison capabilities, technical and other information and services, customized products and services, personalized Web pages, FAQs, e-mail and automated response, and loyalty programs.

Extranets link business partners over the Internet by providing them access to certain areas of each other's corporate intranets

The primary goal of extranets is to foster collaboration between and among business partners.

CRM Process

The process begins with marketing efforts, where the organization solicits prospects from a target population of potential customers. A certain number of these prospects will make a purchase and thus become customers. A certain number of these customers will become repeat customers. The organization then segments its repeat customers into low-value and high-value repeat customers. An organization's overall goal is to maximize the lifetime value of a customer, which is that customer's potential revenue stream over a number of years.

Organizational CRNI systems, however, must manage many additional customer touch points that occur through the use of popular personal technologies

These touch points include e-mail, Web sites, and communications via smartphones

CRM is basically a simple idea

Treat different customers differently, because their needsdiffer, and their value to the company also may differ.

SFA systems include

a contact management system, which tracks all contacts that have been made wiili a customer, the purpose of each contact, and any follow-up that might be necessary.

as more and more customers shop on the Web

an enterprise does not even have the opportunity to make a good first impression in person.

customer-facing CRM applications

an organization's sales, field service, and customer interaction center representatives interact directly with customers. These applications include customer service and support, sales force automation, marketing, and campaign management.

CRM systems

are information systems designed to support an organization's CRM strategy

Procurement portals

automate the business processes involved in purchasing or procuring products between a single buyer and multiple suppliers

Distribution portals

automate the business processes involved in selling or distributing products from a single supplier to multiple buyers

One of the most well-known customer interaction centers is the

call center, a centralized office set up to receive and transmit a large volume of requests by telephone

lost customer

churn

Information flows

consist of data related to demand, shipments, orders, returns, and schedules, as well as changes in any of these data.

Over time all organizations inevitably lose a certain percentage of customers, a process called

customer churn

Why should I learn about CRM and SCM?

customers and suppliers are supremely important to all organizations. Regardless of the job you perform, you will have an impact, whether direct or indirect, on managing your firm's customers and suppliers

Operational CRM systems support

front-office business processes.

Campaign management applications h

help organizations plan campaigns that send the right messages to the right people through the right channels.

Financial flows

involve money transfers, payments, credit card information and authorization, payment schedules, e-payments, and credit-related data.

Vertical integration

is a business strategy in which a company purchases its upstream suppliers to ensure that its essential supplies are available as soon as they are needed.

Electronic data interchange (EDI) i

is a communication standard that enables business partnersto exchange routine documents, such as purchasing orders, electronically. EDI formats these documents according to agreed-upon standards (e.g., data formats). It then transmits messages over the Internet using a converter, called a translator.

Customer relationship management (CRM)

is a customer-focused and customer-driven organizational strategy. that is, organizations concentrate on assessing customers' requirements for products and services and then providing high-quality, responsive service.

bundling

is a form of cross selling in which a business sells a group of products or services together at a lower price than their combined individual prices.

Up selling

is a sales strategy in which the business person provides to customers the opportunity to purchase related products or services of greater value in place of, or along with, the consumer's initial product or service selection

A mobile CRM system

is an interactive system that enables an organization to conduct communications related to sales, marketing, and customer service activities through a mobile medium for the purpose of building and maintaining relationships with its customers. Simply put, mobile CRM systems involve interacting directly with consumers through portable devices such as smartphones.

the CRM approach

is designed to achieve customer intimacy.

Supply chain

is the ability for all organizations in a supply chain to access or view relevant data on purchased materials as these materials move through their suppliers' production processes and transportation networks to their receiving docks

Sales force automation (SFA)

is the component of an operational CRM system that automatically records all of the components in a sales transaction process.

Cross selling

is the marketing of additional related products to customers based on a previous purchase.

supply chain management (SCM)

is to improve the way a company finds the raw materials it needs to produce a product or service and deliver it to its customers. That is, supply chain management is the process of planning, organizing, and optimizing the various activities performed along the supply chain

There are five basic components of SCM:

l. Plan: Planning is the strategic component of SCM. Organizations must have a strategy for managing all the resources that go toward meeting customer demand for their product or service. Planning involves the development of a set of metrics (measurable deliverables) to monitor the organization's supply chain to ensure that it is efficient and it delivers high quality and value to customers for the lowest cost. 2. Source: In the sourcing component, organizations choose suppliers to deliver the goods and services they need to create their product or service. Supply chain managers develop pricing, delivery, and payment processes with suppliers, and they create metrics to monitor and improve their relationships with their suppliers. They also develop processes for managing their goods and services inventory, including receiving and verifying shipments, transferring them to manufacturing facilities, and authorizing supplier payments. 3. Make: This is the manufacturing component. Supply chain managers schedule the activities necessary for production, testing, packaging, and preparation for delivery. This component is the most metric-intensive part of the supply chain, where organizations measure quality levels, production output, and worker productivity. 4. Deliver: This component, often referred to as logistics, is where organizations com·dinate the receipt of customer orders, develop a network of warehouses, select carriers to transport their products to their customers, and set up an invoicing system to receive payments. 5. Return: Supply chain managers must create a responsive and flexible network for receiving defective, returned, or excess products back from their customers, as well as supporting customers who have problems with delivered products.

supply chain

n is the flow of materials, information, money, and services from raw material suppliers, through factories and warehouses, to the end customers. A supply chain also includes the organizations and processes that create and deliver products, information, and services to end customers

Vendor-managed inventory (VMI)

occurs when the supplier, rather than the retailer, manages the entire inventory process for a particular product or group of products.

organization's CRM system contains two major components

operational CRM systems and analytical CRNI systems

analytical CRM

provide business intelligence by analyzing customer behavior and perceptions

CRM is not a process or a technology per se;

rather, it is a customer-centric way of thinking and acting.

Loyalty programs

recognize customers who repeatedly use a vendor's products or services. Loyalty programs are appropriate when two conditions are met: a high frequency of repeat purchases, and limited product customization for each customer.

Customer relationship management

returns to personal marketing. that is, rather than market to a mass of people or companies, businesses market to each customer individually

on-demand CRM system

system is one that is hosted by an external vendor in the vendor's data center. This arrangement spares the organization the costs associated with purchasing the system. In addition, because the vendor creates and maintains the system, the organization's employees need to know only how to access and utilize it. The concept of on-demand is also known as utility computing or software-as-a-service

Collaborative CRM s

systems provide effective and efficient interactive communication with the customer throughout the entire organization. That is, collaborative CRM systems integrate communications between the organization and its customers in all aspects of marketing, sales, and customer support. Collaborative CRM systems also enable customers to provide direct feedback to the organization.

Traditional customer touch points include

telephone contact, direct mailings, and actual physical interactions with customers during their visits to a store.

todevelop a purchasing profile

that is, a snapshot of a consumer's buying habits that may lead to additional sales through cross selling, up selling, and bundling.

Material flows-are "

the physical products, raw materials, supplies, and so forth that flow along the chain. Material flows also include the reverse flows discussed above. A supply chain thus involves a product life cycle approach, from "dirt to dust."

Open-source CRM systems

therefore, are CRM systems whose source code is available to developers and users. Open-source CRM systems provide the same features or functions as other CRM software, and they may be implemented either on-premise or on-demand. Leading open-source CRM vendors include SugarCRM (www.sugarcnn.com),Concursive(www.concursive.com), and vtiger (www.vtiger.com). The benefits of open-source CRM systems include favorable pricing and a wide variety of applications Like all software, however, open-source CRM systems have certain risks. The most serious risk involves quality control

customer interaction centers (CIC),

where organizational representatives use multiple channels such as the Web, telephone, fax, and face-to-face interactions to communicate with customers. The CIC manages several different types of customer interaction.