MIS 301 Chapter 11

Customer Relationship Management (CRM)

-Lifetime value -Customer churn -CRM strategy versus CRM systems -Low-end CRM systems versus high-end CRM systems

EDI disadvantages

-business processes sometimes must be restructured to fit EDI requirements -many EDI standards in use today

Two major components of operational CRM

-customer-facing applications -customer-touching applications

Interorganizational Information Systems enable the partners to perform the following:

-reduce the costs of routine business transactions -improve the quality of the information flow by reducing or eliminating errors -compress the cycle time involved in fulfilling business transactions -eliminate paper processing and its associated inefficiencies and costs -make the transfer and processing of information easier for users

Benefits of open-source CRM

-source code is available to developers and users -provide the same features or functions as other CRM -implemented either on premise or on demand -favorable pricing -wide variety of applications -easy to customize -updates and bug fixes rapidly distributed -extensive support information available for free

Two main sources of problems with SCM:

-uncertainties -the need to coordinate multiple activities, internal units, and business partners

Potential Problems with On-demand CRM:

-unreliable vendors -hosted software difficult to modify -upgrades only available through the vendor -difficult to integrate with organization's existing software -information security and privacy risks

Upstream

Where sourcing or procurement from external suppliers occurs

Call Center

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

Electronic Data Interchange (EDI)

a communication standard that enables business partners to exchange routine documents, such as purchasing orders, electronically

Product knowledge System

a comprehensive source of information regarding products and services

Sales Forecasting System

a mathematical technique for estimating future sales

Industry Extranet

a network used for mission-critical business transactions by leading international organizations in aerospace, automotive, chemical, electronics, financial services, healthcare logistics, manufacturing, transportation, and related industries

Mass customization

a process in which customers can configure their own products

Return

a responsive and flexible network for receiving defective, returned, or excess products back from their customers, as well as for supporting customers who have problems with delivered products

FAQs

a simple tool for answering repetitive customer queries when customers find the information they need by using FAQs the need to communicate with an actual person is eliminated

Upselling

a strategy in which the salesperson provides customers with the opportunity to purchase related products or services of gender value in place of, or along with, the consumer's initial product or service selection

Just-In-Time Inventory

a strategy to minimize inventories deliver the precise number of parts, called work-in-process inventory, to be assembled into a finished product at precisely the right time

live chat

allows customers to connect to a company representative and conduct an instant messaging session enabling the participants to share documents and photos

Mobile CRM Systems

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

Configurator

an online product-building feature that enables customers to model the product to meet their specific needs

Campaign management

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

Data Mining

develops a purchasing profile or snapshot of a consumer's buying habits that may lead to additional sales through cross-selling, upselling, and bundling

Bullwhip Effect

erratic shifts in orders up and down the supply chain

Information Sharing

facilitated by electronic data interchange and extranets, it helps to improve demand forecasts

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

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

Customized Products and Services

offering customers the ability to customize products, view account balances, check shipping status of an order, etc.

Plan

planning is the strategic component of SCM that involves developing a set of metrics 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

Reverse Flow (Reverse logistics)

returned products that are damaged, unwanted, or in need of recycling

Search and Comparison Capabilities

search and comparison capabilities offered to customers by online stores, online malls, and independent comparison Web sites

Customer service and support

systems that automate service requests, complaints, product returns, and requests for information

Operational CRM

systems that support front-office business processes

Outbound Telesales

the CIC generates a call list for the sales team, whose members contact sales prospects

Supply Chain Visibility

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

Sales Force Automation (SFA)

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

Supply Chain

the flow of materials, information, money, and services from raw material suppliers, through factories and warehouses, to the end customers

Email and Automated Response

the most popular tool for customer service, inexpensive, fast, and companies use e-mail not only to answer customer inquiries, but also to disseminate information, send alerts and product information, and conduct correspondence on any topic

Customer Touch Points

the numerous and diverse interactions organizations have with their customers including traditional touch points such as telephone contact, direct mailings, and actual physical interactions with customers during their visits to a store and the additional touch points that occur through organizational CRM systems such as e-mail, web sites, and communications via smartphones

Data Consolidation

the organization's CRM systems must manage customer data effectively with modern interconnected systems built around a data warehouse to make all customer-related data available to every unit of the business

Material Flow

the physical products, raw materials, supplies, and so forth that flow along the chain. Can also include reverse flows (or reverse logistics)

Open-source CRM Systems

the source code for open-source software is available at no cost

Inventory Velocity

the speed at which a company can deliver products and services after receiving the materials required to make them

Social CRM

the use of social media technology and services to enable organizations to engage their customers in a collaborative conversation in order to provide mutually beneficial value in a trusted and transparent manner

Customer Interaction Centers (CIC)

where organizational representatives use multiple channels such as web, telephone, fax, and face-to-face interactions to communicate with customers

Delivery

where organizations coordinate the receipt of customer orders, develop a network of warehouses, select carriers to transport their products to their customers, and crate an invoicing system to receive payments

Extranets

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

Sales Lead Tracking System

lists potential customers or customers who have purchased related products; that is, products similar to those that the salesperson is trying to sell to the customer

Source

organizations choose suppliers to deliver the goods and services they need to create their product or service

Personalized Web Pages

organizations permit their customers to create personalized web pages used to record purchases and preferences, as well as problems and requests

Technical and other Information Services

personalized experiences offered by organizations to induce customers to make purchases or to remain loyal

Loyalty Programs

programs that recognize customers who repeatedly use a vendor's products or services

Analytical CRM

provide business intelligence by analyzing customer behavior and perceptions providing information concerning customer requests and transactions, as well as customer responses to the organization's marketing, sales, and service initiatives

Collaborative CRM Systems

provide effective and efficient interactive communication in all aspects of marketing, sales, and customer support with the customer throughout the entire organization

On-Demand CRM Systems

systems hosted by an external vendor in the vendor's data center which spares the organization the costs associated with purchasing the system, maintenance, and employees need to know only how to access and utilize it

Make

the manufacturing component in which managers schedule the activities necessary for production, testing, packaging, and preparation for delivery

Cross-Selling

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

Front-office Processes

those processes that directly interact with customers

Contact management systems

tracks all communications between the company and the customer, the purpose of each communication, and any necessary follow-up which eliminates duplicated contacts and redundancy, which in turn reduces the risk of irritating customers

Downstream

where distribution takes places, frequently by external distributors

Internal

where packing, assembly, or manufacturing takes place

Analytical CRM systems analyze customer data for:

-designing and executing targeted marketing campaigns -increasing customer acquisition, cross-selling, and upselling -providing input into decisions relating to products and services -providing financial forecasting and customer profitability analysis

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

EDI benefits

-minimizes data entry errors -length of the message can be shorter -messages are secured -reduces cycle time -increases productivity -enhances customer service -minimizes paper usage and storage

Five Basic Components of SCM

-plan -source -make -deliver -return

Open-Source CRM disadvantages

-risk related to quality control -company IT platform must match development platform of open-source CRM system

Tiers of Suppliers

A supplier may have one or more subsuppliers, a subsupplier may have its own subsuppliers and so on

Marketing

CRM marketing applications use data mining to sift through volumes of customer data

Vertical Integration

a business strategy in which a company purchases its upstream suppliers to ensure that its essential are available as soon as the company needs them

Supply Chain Management Systems

a type of interorganizational information system in which information flows among two or more organizations

Customer-facing applications

allow an organization's sales, field service, and customer interaction center representatives interact directly with customers through customer service and support, sales force automation, marketing, and campaign management

Information help desk

assists customers with their questions concerning products or services, and it also processes customer complaints

360 Data View Customer

complete data set on each customer that allows a company to enhance its relationship with its customers and ultimately make more productive and profitable decisions

Customer-touching applications

customer self-help applications/technologies

Inbound Teleservice

customers communicate directly with the CIC to initiate a sales order, inquire about products and services before placing an order, and obtain information about a transaction they have already made

Information Flows

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

Demand Forecast

demand for a product can be influenced by numerous factors such as competition, price, weather conditions, technological developments, overall economic conditions, and customers' general confidence

Distribution Portal

for a company's customers automate the business processes involved in selling or distributing products from a single supplier to multiple buyers

Procurement Portal

for a company's suppliers this type of portal automates the business processes involved in purchasing or procuring products between a single buyer and multiple suppliers

Pull 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

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

Joint Ventures and Other Business Partnerships

in this type of extranet, business partners use the extranet as a vehicle for communication and collaboration

Financial Flows

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