OMIS 320 - Chapter 10

Customer Relationship Management (CRM)

"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."

CRM must include...

1. talking to customers 2. understanding their behavior and their requirements 3. building a system to satisfy those requirements

Step 1

Creating the CRM Plan

Step 5

Establish Performance Measures

Segmenting Customers-

Grouping customers to create specialized communications about products

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.

Step 6

Providing CRM Training for All Users

Step 3

Select the Right Application & Provider

Sales Force Automation (SFA)-

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

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)

Customer Value Determination-

verify the customer lifetime value for individuals or segments.

Application Service Providers (ASPs)-

Fifty 50 percent of all CRM programs are now designed & maintained for clients by ASPs.

Step 4

Integrate Existing CRM Applications

Step 2

Involve CRM users from Outset

Pre-transaction elements-

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

New Privacy Regulations-

Rules & laws regarding invasion of privacy are springing up. Solution: develop a privacy policy & post it on their Web site.

Personalizing Customer Communications-

Understanding customer behaviors & preferences, firms customize communications

Relationship marketing or permission marketing-

customers select the type & time of communication. Requires software & customer participation

Target marketing efforts-

e-mail or direct mail saves labor & postage, reduces chances of being a nuisance

Customer Defection Analysis-

finding methods to retain customers.

Predicting Customer Behaviors-

firms forecast likelihood of customers' purchases.

Finding a new customer costs

five times as much as keeping an old customer.

Clickstream,

how a customer navigates a Web site

Adapting CRM for global uses is increasing-

increasing-New Markets out side of traditional industrialized countries require adaptation to local needs, language, & culture

Event-Based Marketing -

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

Churn reduction-

reducing customer defections.