Chapter 10- Customer Relationship Management

Much of the investment in CRM is in banking and financial services, often because of what?

better understanding the customer can lead to cross-selling opportunities that await the lifelong customer

Customer Value Determination

calculating the customer lifetime value for firms

If successful Cross Selling

customers perceive this as individualized attention, and it results in more satisfied and loyal customers

Relationship marketing or permission marketing

customers select the type and time of communication (opt-in or opt-out)

Proper CRM should

cut costs, improve service, and encourage customers to communicate more of their desires for you to meet

CRM Means focusing on customer requirements, then what?

delivering products and services in a manner resulting in high levels of customer satisfaction

Customer Defection Analysis

finding methods to retain customers

Predicting Customer Behaviors

firms forecast likelihood of customers' purchases

Clickstream

how a customer navigates a Web site

Event based Marketing

offer the right products and services to customers at the right time

Mobile marketing

placing advertising on cellphones

Churn reduction

reducing customer defections

CRM must still include what?

talking to customers, understanding their behavior and their requirements, and then building a system to satisfy those requirements

By integrating CRM information obtained throughout the firm, decision makers in the firm can analyze

the information and make much more customer-focused decisions

QR codes

using the camera function on a smartphone and downloading a QR code reader app

Data marts are designed to what?

work efficiently with specific decision support software

Benefits of Data

• Customer knowledge • Sales projections • Industry trends • Customer complaints • Competitive issues

Step 1 in designing and Implementing a Successful CRM Program

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 - Costs and time frame for implementation)

Data Management Tools

Data warehouse, data mart, data mining, dashboard

Knowledgable Management

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

Step 5 in designing and Implementing a Successful CRM Program

Establish Performance Measures - This allows the firm to monitor progression of the system (- Determine if objectives have been met- Identify implementation or usage problems as they occur- Compare actual to planned variance- Metrics should be transparent and easy to measure)

Segmenting Customers

Grouping customers to create specialized communications about products

"Seven Rs Rule"

Having the right product, in the right quantity, in the right condition, at the right place, at the right time, for the right customer, at the right costs

Customer-focused CRM initiative

Increasing sales per customer, improving overall customer satisfaction, more closely integrating the firm's key customers with internal processes, or increasing supply chain responsiveness

Step 4 in designing and Implementing a Successful CRM Program

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 in designing and Implementing a Successful CRM Program

Involve CRM users from Outset - Employees should understand how it affects their jobs (- Create a project team with members from all affected organizational areas - The team should be heavily involved in evaluating and selecting the CRM applications- During implementation, closely monitoring system performance will keep users convinced of the value of the initiative)

Step 3 in designing and Implementing a Successful CRM Program

Select the Right Application and Provider and find an appropriate application and determine the extent of customization ( Visit trade show, read trade literature, hire consultant, etc.- Use the knowledge of internal IT personnel- Search CRM supplier directories and websites- Consider extent of support available from application provider- Carefully consider cost and contract negotiations)

2010-Present customer engagement focus of CRM

Social Media Products Service = Commodities Customer demand Self-service Pricing

Step 6 in designing and Implementing a Successful CRM Program

Training for CRM 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)

Personalizing Customer Communications

Understanding customer behaviors and preferences, enables firms to customize communications

Sales Force Automation (SFA)

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

CRM Cloud Applications

- Cloud computing and on-demand offerings accessed via web browser - Software as a Service (SaaS) model - providers offering cloud applications - Changing the cost structure of CRM applications - Beneficial for small companies with limited resources

Strategy / Relationship Management Tool

- Collaboration - Customer Experience - Customer Involvement

Data Warehouse repository for

- Customer - prospect - Product/service - Related marketing information- Depth and breadth of historical depends on organization, industry - Integrated with one or more operational data stores and data marts

Internal Organizational Processes

- Customer Acquisition - Customer Retention -Customer Win-Back

Measuring Customer Satisfaction

- Customers are frequently given opportunities to provide feedback about a product, service, or organization - Customers communicate through surveys or feedback cards - Website surveys often don't ask the proper questions

Information / Data Management System

- Data Capture - Data Distribution - Data Processing - Data Storage

Social CRM

- Engaging the customer in a collaborative conversation - Leads to customer satisfaction and loyalty - Creating and cultivating virtual communities around product or bran

Contingency requirements

- Which data and priority - Off-site redundancy - Cost issues

Planning and implementing a CRM program can be a real challenge and requires what?

-An understanding of customers' changing requirements - Adherence to CRM goals - Knowledge of the tools available to facilitate CRM - Commitment from the firm's executives

Data recovery requirements

-Priority - Timing - Ownership of process

Customer Data Privacy

-Rules and laws regarding invasion of privacy include Patriot Act in the US and Internet Privacy Law in the EU - Safeguarding customer information is a legal and ethical responsibility for any company dealing with sensitive customer data - Companies must reassure their customers that their information will be protected

Integrated Communications

-Sales -Marketing - Customer Service

Who Needs Access to Data?

...everybody associated with the customer!!

Pre-transaction elements

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

Sales territory management

Sales managers obtain information of each sales rep's activities

Sales Territory Management

Sales managers obtain information of each sales rep's activities (e.g. total sales per rep)

Lead Management

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

Virtual queuing

allows callers to request a callback from an agent without losing their place in the phone queue

7 Deadly Sins of CRM Failure

1. Viewing CRM primarily from a technology perspective 2. Lack of customer-centric vision 3. Not understanding the concept of a customer's lifetime value 4. Insufficient top management support 5. Not reengineering business processes 6. Underestimating the challenges in integrating various sources of data 7. Underestimating the challenge in effecting change

The study also found that CRM performance explained as much as what percent of the difference in return on sales between average and high-performing companies?

64%

CRM refers to automated transaction and communication applications

A suite of software modules or a portion of the larger enterprise resource planning

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)

Call center

Can categorize calls, determine average resolution time, forecast future demand, improve the overall productivity of the staff, increasing customer satisfaction levels

Customer Service elements

Pre-transaction elements, transaction elements, post-transaction elements

An Andersen Consulting study (March, 2000)

How Much Are Customer Relationship Management Capabilities Worth?" concluded that a typical $1 billion high-tech company could gain up to $130 million in profits by improving its ability to manage customer relationships

Adapting CRM for global uses is increasing

New markets require adaptation to local needs, language, and culture

Post-transaction elements

Occur after the sale and include warranty repair capabilities, complaint resolution, product returns, and operating information

Transaction elements

Occur during the sale and include order lead time, the order processing capabilities and the distribution system accuracy

Performance measures are often designed around satisfying what?

The 7rs

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

Sales Activity Management

Tool offering sales reps a guided sequence of sales activities

Target marketing efforts

addressing specific customer segments avoids becoming a nuisance to other customers

Successful CRM Programs Requirements

•Cultural change • Effective CRM project management • Employee engagement • Strategies that cultivate long-term relationships with customers • Information gathered from CRM applications • Treating customers right and make them feel valued

Data Marts

•Subsets of data warehouse