Customer Relationship Management

CRM Program

- A successful CRM program is both simple and complex: - Simple: involves training people within the company to make customers feel valued - Complex: finding affordable ways to identify potentially thousands of customers and their needs - then designing customer contact strategies toward creating customer satisfaction and loyalty

Key tools and Components of CRM: Cross Selling and Up-Selling

- Cross-selling: occurs when a company sells an additional related or complementary product or service to an existing customer after the initial purchase - up-selling: involves persuading a customer to buy a more expensive item or upgrade a product or service to make the sale more profitable

Customer Relationship Management (CRM)

Definition: transformation of people, process, and technology needed to become a customer driven organization - putting the customer first - a method to enhance the experience of individual customers so they will remain customers for life

Managing Customer Service Capabilities

Designed around satisfying the 7 R's: 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

Key Tools and Components of CRM: Segmenting Customers

- Dividing a customer base into groups that are similar in specific ways relevant to marketing - grouping customers to create specialized communications about products - group by demographics, income, geography, buying preferences, etc - segmenting customers allows a company to zero in on a particular population of customers to sell a specific product - if a company can identify different segments of customers, they can potentially be more efficient and effective in the use of their resources

Field Service Management

Involves setting up the company operations to allow customers to interact directly with the company's service personnel - customers call the service people directly and make an appointment

key Tools and components of CRM: Predicting Customer Behaviors

- If a company is selling products and services to customers, they can also collect customers' buying history, preferences, and trend information, which can be used to predict customer buying behaviors in the future - this info can also be used to see how effective marketing, advertising, and promotions have been in the past, and whether these practices should be continued or altered - this predictive info can be used to create a more accurate forecast and more effective marketing and sales budget

Step 6: Providing CRM Training For all 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

What is Customer Service?

has multiple meanings within an organization: 1. Philosophy: customer service is a company wide commitment to providing customer satisfaction by placing emphasis on quality and quality management 2. Activity: customer service are tasks a firm must accomplish to satisfy the customer's needs. Order processing, billing and invoicing, product returns, and claims handling. 3. Performance Measure: percentage of orders delivered on time and complete, the number of orders processed within acceptable time limits, etc

Focus on Strategically Significant Customers

- not all markets and customers are equally important: building relationships with customers that provide little value can be counterproductive - relationship should be built with strategically significant customers that are likely to provide the most value for the effort - strategically significant customers are: 1. customers with high life time value - customers that constantly buy the products or use the services long term 2. customers who serve as role models or benchmarks for others 3. customers who inspire change in the supplier and/or the supply chain - CRM is not for every customer: some customers do not want to be committed to every brand and/or relationship

Step 1: 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 - the costs and time frame for implementation

Step 5: Establish Performance measures

Allows the firm to: - determine if objectives have been met - compare actual to planned variance (take action to correct issues)

Step 4: 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

Customer Service Elements

CS is the 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 - Pretransaction elements: precede the sale: includes customer service policies, the mission statement, the organizational structure, system flexibility, etc - Transaction elements: occur during the sale: includes the order lead time, the order processing capabilities, the distribution system accuracy, etc - Post transaction elements: occur after the sale: includes warranty repair, complain resolution, product returns

Step 3: select the right application and providor

Find an appropriate application and determine the extent of customization - visit trade shows, read trade literature, hire consultant, etc - compare based on performance, security, reporting capabilities, system availability

Automated Sales Force Tools

Sales Force Automation: used for documenting field activities, communications with the home office, and retrieving sales history in the field - sales activity management: tool offering sales reps a guided sequence of sales activities - sales territory management: sales managers obtain info on each sales rep's activities - Lead Management: sales reps can follow prescribed tactics when dealing with prospects to aid in closing the deal - knowledge management: enables quick decision making, better customer service, and a better equipped and happy sales staff

Key Tools and Components of CRM: Customer Defection Analysis

The process of analyzing the customers who have stopped buying to determine why `

Key Tools and Components of CRM: Target Marketing

- A segment of customers a company has decided to aim its products and/or services towards. A defined target market is the first element of any marketing strategy - Target marketing is usually much more effective than mass marketing, it focuses on marketing to customers most likely to respond - it is a more efficient use of resources and reduces chances of being a nuisance to potential customers who don't fit the targeted criteria - email or direct mail saves labor, postage, and reduces the chances of being a nuisance

Why do companies need CRM

- Acquire new customers - Retain their existing customers - help meet the changing expectations of customers from social and demographic factors, economics, competitor's products - loyal customers are the source of most profits, and a relatively small percentage of those customers may generate most of the profits for the company

Key tools and components of CRM: Event Based Marketing

- a form of marketing that identifies key events in the customer and business lifecycle - when an event occurs a customer specific marketing activity is undertaken - an event can be something basic and predicted like a holiday a season, etc (christmas) - more personalized form of marketing

Key Tools and components of CRM: Customer Lifetime Value (CLV)

- a prediction of net profit attributed to the relationship with a particular customer - some customers are worth a lot more than others - identifying key or top tier customers is extremely valuable to your business - CLB is a metric used to determine how much money a company is willing to spend on acquiring new customers

Key Tools and Components of CRM: relationship Marketing or Permission Marketing

- approach to selling products and services in which a customer explicitly agrees in advance to receive marketing information. customers self select the type and time of communication they wnat - permission marketing is all about building an ongoing relationship with customers - permission marketing does not typically create immediate sales

Call centers cont.

- categorize calls - determine customer satisfaction levels - provide input to forecast future demand - improve the productivity of the overall staff - may be in-house or outsourced

Measuring customer satisfaction

- customers being given opportunities to provide feedback about products, services, the organization, etc - surveys, questionnaires, phone calls - little value until it is analyzed and acted upon - need some type of database to manage data

Call center or customer contact centers

- links an organization and its customers together - facility housing personnel who respond to customer queries who provide customer services and tech support - gives customers quick access to info and enhances the customer to business relationship - help continuously monitor customer service parameters in an effort to gauge performance and improve quality and efficiency - by using a call center, the company's internal resources can be freed up to focus on the company's core competencies

CRM's Role in Supply Chain Management

- meet customer needs to be successful, otherwise customer goes to somewhere else and takes years of future purchases with them - companies must create methods for becoming and staying good suppliers themselves - many companies do not sell their products directly to end-product consumers: companies have to train and certify their intermediate customers to adequately represent their company's products

Key Tools and Components of CRM: Personalizing Customer Communications

- understanding customer behaviors and preferences, allows a firm to customize communications aimed at specific groups of customers and is likely to result in greater levels of sales - when a company communicates with their customers they need to use the customer's "language" and communicate in a meaningful way - Communication that is personalized sends a message to the customer that the company cares about them. - it is a powerful way to differentiate the company from its competitors and it helps to build customer loyalty - clickstream: tracking how a customer navigates a website can help tailor a website's images, ads or discounts based on past usage of the site

Trends in CRM

1. Customer Data Privacy: rules and laws regarding invasion of privacy include Patriot Act 2. Social Media; creating and cultivating virtual communities around product or brand is a powerful way to engage consumers 3. Cloud Computing (Software as a service): ala carte and on demand offerings accessed via web browser and changing the cost structure of CRM applications

Step 2: Involve CRM users from Outset

Employees should understand how it affects their jobs: - create a project team with members from all affected organizational areas - test with a pilot application

CRM Cont

Is about building and maintaining profitable long term customer relationships beyond the one buy and sell transaction By; - focusing on customer requirements - delivering products and services in a manner resulting in high levels of customer sanctification How: - Communicating with customers - understanding their behavior and their requirements - building a system to satisfy those requirements

Website self service

Portals for customers to access their account info, check operating hours, ask questions, see product info, check orders, etc - customers put own info into system, can edit and modify, can opt into or out of future sales, subscriptions, etc

Key Tools and Components of CRM: Churn Reduction

- finding a new customer costs 5-10 times as much as keeping an existing customer - Churn is the process of customers changing their buying preferences because they find better or cheaper products and services elsewhere - Churn reduction is the efforts companies develop to stop losing customers to the competition

Goals and Benefits of CRM

- increased customer satisfaction - increased customer loyalty and retention - faster responses to customer incquiries - increased revenue - growth of the customer base through referrals - a simplified and more cost effective marketing & sales process - increase sales effectiveness. closing sales faster - increased sales through cross-selling and/or up-selling - access to updated customer information and personalized interactions - automation of repetitive tasks