Supply Chain - Chapter 11: Customer Relationship Management

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

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

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

Performance measurement of Customer service can be broken into 7 Rs

1. Right Product 2. Right Quantity 3. Right Quality 4. Right Place 5. Right Time 6. Right Customer 7. Right Costs

Relationships should be built with strategically significant customers because:

1. They have high life-time value (customers that will constantly buy the products and services in the long-term) 2. Serve as role models 3. Inspire change *CRM is not for every customer*

CRM philosophy

putting the customer first

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

Sales Force Automation (SFA)

used for documenting/measuring sales team activities

Knowledge Management

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

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)

Cross Selling

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

Personalizing Customer Communications

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

Customer Data Privacy

-Important issue is to assure privacy & data protection -It is a legal and ethical responsibility of companies

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. -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. -Customers can edit and modify the information accordingly. -Customer can opt into or out of future sales, subscriptions, corporate information, emails and other information if desired. -Must be optimized for mobile applications

Cloud Computing

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

Customer Relationship Management

-aligning the people, process, and technology of a company to be a customer-centric organization, focusing on customer requirements, rather than internal company goals. -It involves acquiring, retaining and partnering with selective customers to create superior value for both the company and the customer. -It provides a means and a method to enhance the experience of individual customers so that they will remain loyal customers.

Trends in CRM

-customer data privacy -social media -cloud computing

Call Centers

-links an org and its customers together -It is a facility housing personnel who respond to customer queries, whether general, specific or technical support. -It's entire focus is handling current or potential customer inquiries. -There are many KPI's used to measure efficiency and effectiveness.

Segmenting Customers

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

Achieving a good Customer Relationship by (5)

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

Social Media

Creating and cultivating virtual communities around product or brand to engage consumers and develop loyalty

Why do companies need CRM?

Repeat Customers - No acquisition costs, understand company products and services Profitable Revenue - Reduced TCO Marketing - Source of business opportunities Testimonials - Validation for new customers Service - Lower service costs as develop knowledge, support for other customers

What constitutes the perfect order

The right documentation + the 7 Rs

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

Predicting Customer Behaviors

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