Chapter 11

It involves acquiring, retaining and partnering with

selective customers to create superior value for both the company and the customer

This information could also be used to determine how effective marketing, advertising and promotions have been in the past, and whether these practices

should be continued or altered

Segmenting customers

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

Customer Defection Analysis

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

Step 5 - Establish Performance Measures

This allows the firm to: Determine if objectives have been met Compare actual to planned variance (take action to correct issues)

Transaction elements

occur during the sale Includes the order lead time, the order processing capabilities, the distribution system accuracy, etc.

Cross-selling

occurs when a company sells an additional related or complementary product or service to an existing customer after the initial purchase. Example: "Would you like fries with that?" Example: If you're buying an item on Amazon.com, you may be shown other similar items to the one you are looking at, or companion products to the item that you are considering.

Pre-transaction elements

precede the sale Includes customer service policies, the mission statement, the organizational structure, system flexibility, etc.

Permission marketing does not typically create immediate sales, but rather grabs a customer's attention and

preserves a business relationship.

Website Self-Service customers can

put their own information into the system edit and modify opt into or out of future sales, subscriptions, corporate information, emails a

Customer service

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.

"Seven R's Rule"

the right product the right quantity the right quality the right place the right time the right customer the right costs + the right documentation = the Perfect Order

Customer Relationship Management

the transformation of the people, process, and technology required to become a customer-centric organization A philosophy of putting the customer first

CRM is not for every customer.

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

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.

A successful well-designed CRM program can provide companies with many improvements and benefits. Some of the most important are:

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.

Customer Lifetime Value (CLV)

A prediction of the net profit attributed to the entire future relationship with a particular customer. Some customers are worth a lot more than others, and identifying your key or top tier customers can be extremely valuable to your business.

Target Marketing

A segment of customers a company has decided to aim its marketing efforts and ultimately its products and/or services towards. A well-defined target market is the first element of any marketing strategy

ompanies need a Customer Relationship Management program in order to:

Acquire new customers Retain their existing customers Help meet the changing expectations of customers -Due to things like as social and demographic factors, economics, competitor's products and marketing efforts, and other market experiences.

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. Example: An "opt-in" e-mail, where a potential customer signs up in advance for information about certain products or services. The customer is giving permission to the company to provide them with marketing and sales information.

CRM's Role in Supply Chain Management part3

Because many companies do not sell their products directly to end-product consumers, companies may also need to train and certify that their intermediate customers are able to adequately represent their company's products.

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.

How does CRM do this

Communicating with customers Understanding their behavior and their requirements Building a system to satisfy those requirements

Customer Service as a Performance Measure

Customer service is a category of performance measures, such as the percentage of orders delivered on time and complete, the number of orders processed within acceptable time limits, etc.

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 examples of the customer service activity.

strategically significant customers are:

Customers with high life-time value, i.e., customers that will constantly buy the product(s) or use the service(s) in the long-term. Customers who serve as role models or benchmarks for other customers. Customers who inspire change in the supplier and/or the supply chain.

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

Event Based Marketing

Event based marketing is 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.

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, etc. Compare based on performance, security, reporting capabilities, system availability, etc.

CRM does this by

Focusing on customer requirements Delivering products and services in a manner resulting in high levels of customer satisfaction

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 could then be used to predict customer buying behaviors going forward.

CRM's Role in Supply Chain Management part 2

Just as companies must create methods for finding and developing good suppliers, companies must create methods for becoming and staying good suppliers themselves

Focus on Strategically Significant Customers

Not all markets and customers are equally important. Building relationships with customers that provide little value can be counterproductive.

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 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

CRM's Role in Supply Chain Management

To be successful, a company must find ways to meet its customers needs; otherwise, just as any firm would react with a non-performing supplier, the customer goes elsewhere and takes years worth of future purchases with them.

Personalizing Customer Communications

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.

It is a powerful way to differentiate the company from its competitors and it helps to

build customer loyalty.

Permission marketing

building an ongoing relationship of increasing depth with customers

CRM is about

building and maintaining profitable long-term customer relationships beyond the one-off buy and sell transaction.

There are many different ways to group customers

by demographics, income, geography, buying preferences, etc.

An event can be something basic and predicted, like the end of a contract, a holiday, a season, e.g., Memorial Day, 4th of July, Halloween, "Black Friday", "Cyber Monday", Christmas, etc., or something more

detailed and personal, like a birthday, a marriage, or a graduation.

Measuring Customer Satisfaction

done through surveys, focus groups, and phone calls to customers asking them their opinions slide 23

If a company can identify different segments of customers, they can potentially be more

efficient and effective in the use of their resources by tailoring programs and initiatives for each segment.

Target Marketing is usually much more effective than mass marketing, as it allows the company to

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

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.

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. Example: "Would you like to super-size your order?"

Churn Reduction

is all of the efforts companies develop to stop losing customers to the competition the process of customers changing their buying preferences because they find better or cheaper products and services elsewhere.

Customer Defection Analysis and Churn Reduction go hand-in-hand to determine why customers

leave and finding ways to retain them

Call Centers

links an organization and its customers together. It involves in-house or outsourced personnel responding to customer queries, providing customer service or technical support slide 20/21

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.

Post-transaction elements

occur after the sale Includes warranty repair capabilities, complaint resolution, product returns, operating information, etc.

Event-based marketing is a more personalized form of marketing

which can help to form personal connections with the customers.

Segmenting customers allows a company to ___________ on a particular population of customers to sell a specific product, or to define a specific product(s) for a particular segment of customers

zero in

Communication that is personalized sends a message to the customer that the company

cares about them.

This predictive information could be used to

create a more accurate forecast and a more effective marketing and sales budget.

CLV is an 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.

It provides a means and a method to enhance the experience of individual customers so that they will

remain customers for life.

Relationships should be built with

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