Chapter 11 - Customer Relationship Management

Call Centers Can

- Categorize Calls - Determine average resolution time - Increase customer satisfaction levels - Provide input to forecast future demand - Improve productivity of the overall staff

Segmenting Customers

- the practice of dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing

Customer Service as a Philosophy

Customer service is a company-wide commitment to providing customer satisfaction by placing emphasis on quality and quality management

Customer Service as an Activity

Customer service is a particular task that a firm must accomplish to satisfy the customer's needs. Order processing, billing and invoicing, product returns, and claims handling are all typical example

Measuring Customer Satisfaction

Customers should be given opportunities to provide feedback about product(s), service(s), & the organization

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

Step 3. Select the Right Application and Provider

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

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

Event Based Marketing

Form of marketing that identifies key events in the customer and business lifecycle - More personalized form of marketing which can help to form personal connections with the customers

Up-Selling

Involves persuading a customer to buy a more expensive item or upgrade a product or service to make the sale more profitable. It also involves selling the customer extra features or add-ons to the product they are already buying or considering

Different ways to group customers

Demographics Income Geography Buying preferences

Buying history, preferences, and trend information could be used to

- Determine how effective marketing, advertising and promotions have been in the past, and whether these practices should be continued or altered. - Create a mor accurate forecast a more effective marketing and sales budget

Step 5. Establish Performance Measures

- Determine if objectives have been met - Compare actual to planned variance

Predicting Customer Behaviors

- If a company is selling products and services to customers, they can also collect customers buying history, preferences, and trend information.

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

Customer Lifetime Value (CLV)

- Prediction of the net profit attributed to the entire future relationship with a particular customer - Important metric for determining how much money a company is willing to spend on acquiring new customers and how much repeat business a company can expect from particular customers.

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

Portals allow customers to

- 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 - Customers can opt into or out of future sales, subscriptions, corporate information, emails and other information if desired

Companies need a Customer Relationship Management (CRM) program in order to

1. Acquire new customers 2. Retain their existing customers 3. Help meet the changing expectations of customers

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

Strategically significant customers are

1. Customers with high life-time value 2. Customers who serve as role models or benchmarks for other customers 3. Customers who inspire change in the supplier and/or the supply chain

Goals and Benefits of CRM

1. Increased customer satisfaction 2. Increased customer loyalty and retention 3. Faster responses to customer inquiries 4. Increased revenue 5. Growth of the customer base through referrals 6. A simplified and more cost effective marketing & sales process 7. Increase sales effectiveness. Closing sales faster. 8. Increased sales through cross-selling and/or up-selling 9. Access to updated customer information and personalized interactions 10. Automation of repetitive tasks

Relationship Marketing or Permission Marketing

An 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 want

Target Marketing is

A more efficient use of the company's resources and it reduces the chances of being a nuisance to those potential customers who do not fit the targeted criteria.

Target Marketing

A segment of customers a company has decided to aim its marketing efforts and ultimately its products and/or services towards

Customer Relationship Management involves

Acquiring, retaining and partnering with selective customers to create superior value for both the company and the customer

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.

Churn Reduction

All of the efforts companies develop to stop losing customers to the competition

Understanding customer behaviors and preferences

Allows a firm to customize communications aimed as specific groups of customers and is likely to result in greater levels of sales

Permission marketing is about

Building an ongoing relationship of increasing depth with customers - Does not typically create immediate sales, but rather grabs a customer's attention and preserves a business relationship.

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

Call Center

Links an organization and its customers together. It involves in-house or outsourced personnel responding to customer queries, providing customer service or technical support

Post-Transaction Elements

Occur after the sale, Includes warranty repair capabilities, complain resolution, product returns, operating information

Transaction Elements

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

Cross-Selling

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

Customer Service Elements

Pre-Transaction Elements Transaction Elements Post-transaction Elements

Pre-Transaction Elements

Precede the sale, includes customer service policies, the mission statement, the organizational structure, system flexibility

Churn

Process of customers changing their buying preferences because they find better or cheaper products and services elsewhere

Personalized Communication

Sends a message to the customer that the company cares about them - Powerful way to differentiate the company from its competitors and it helps to build customer loyalty

1. The right PRODUCT 2. The right QUANTITY 3. The right QUALITY 4. The right PLACE 5. The right TIME 6. The right CUSTOMER 7. The right COSTS

Seven R's Rule

Customer Relationship Management is not for every customer

Some customers don't want to be committed to every brand and/or relationship

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

Relationships should be built with

Strategically significant customers that are likely to provide the most value for the effort

Customer Service as a Performance Measure

The percentage of orders delivered on time and complete, the number of orders processed within acceptable time limits

Customer Defection Analysis

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

Customer Relationship Management (CRM)

The transformation of the people, process, and technology required to become a customer-centric organization - A philosophy of putting the customer first - Provides a means and a method to enhance the experience of individual customers so that they will remain customers for life

If a company can identify different segments of customers

They can be more efficient and effective in the use of their resources by tailoring programs and initiatives for each segment

Target Marketing allows the company

To focus efforts on marketing to those customers most likely to respond

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.

When a company communicates with their customers they need to

Use the customer's "language" and communicate with them in a meaningful way

Segmenting customers allows a company to

Zero in on a particular population of customers to sell a specific product, or to define a specific product(s) for a particular segment of customers