Exam 3: Chapter 11 - Customer Relationship Management

Focus on Strategically Significant Customers

- 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.

A successful CRM program is both simple and complex:

- It is simple in that it involves training users within the company to make customers feel valued. - It is complex in that it also means finding affordable ways to identify potentially thousands, if not millions, of customers and their needs, and then designing customer contact strategies geared toward creating customer satisfaction and loyalty among your segments of 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.

Churn Reduction

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

Automated Sales Force TOols

1) Sales Force Automation (SFA) 2) Sales Activity Management 3) Sales Territory Management 4) Lead Management 5) Knowledge Management

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.

Seven R's Rule

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 + the RIGHT documentation = THE PERFECT ORDER

Why Do Companies Need CRM:

1.) Acquire New Customers 2.) Retain their Existing Customers. 3.) Meet the Changing Expectations of Customers.

Customer Services as a Philosophy

A company-wide commitment to providing customer satisfaction by emphasizing quantity and quality management.

Social Media

Creating and cultivating virtual communities around product or brand is a powerful way to engage consumers.

Trends in CRM

Customer Data Privacy Social Media Cloud Computing

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

Up-selling

Persuading a customer to buy a more expensive item or upgrade a product or service to make the sale more profitable.

Customer Service Elements

Pre-transaction Elements Transaction Elements Post-transaction Elements

CRM involves:

Retaining and partnering with selective customers to create superior value for both the company and the customer.

A company that can identify different segments of customers can potentially be more efficient and effective by using:

Tailoring programs and initiatives.

Sales Force Automation

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

Cloud Computing

ala carte and on demand offerings accessed via web browser. Changing the cost structure of CRM applications.

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.

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

companies must create methods for becoming and staying good suppliers themselves.

Purpose of Call Centers

- Can categorize calls. - Determine average resolution time. - Increase customer satisfaction levels. - Provide input to forecast future demand. - Improve the productivity of the overall staff. - Maybe in-house or outsourced.

Customer Service as a Performance Measure

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.

Call Centers

A facility housing personnel who respond to customer queries. These personnel may provide customer service or technical support. It gives customers quick access to the information they want and enhances the customer-to-business relationship.

CRM provides:

A means and a method to enhance the experience of individual customers so they will remain customers for life.

Customer Service as an Activity

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.

Customer lifetime Value (CLV)

A prediction of the net profit attributed to the entire future relationship with a particular customer.

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.

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. Permission marketing is about building an ongoing relationship of increasing depth with customers.

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.

Measuring Customer Satisfaction

Customers being given opportunities to provide feedback about product(s), service(s), the organization, etc. - This can be done through surveys, questionnaires and direct phone calls to customers asking them their opinions. - Decisions have to be made regarding how to capture the data, and how to analyze the information so you can use it productively going forward. - It is of very little value until it can be analyzed and acted upon. - Most companies will need some type of a database to manage the data.

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

Knowledge Management

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

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.

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.

Goals and Benefits of CRM:

Increase customer satisfaction Increase customer loyalty and retention Faster responses to customer inquiries 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

Field Service Management

Involves setting up the company operations to allow customers to interact directly with the company's service personnel.

Cross Selling

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

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, etc. Customers can put their own information into the system which avoids having the company take the time to do it, and also potentially eliminates errors.

Customer Data Privacy

Rules and laws regarding invasion of privacy include Patriot Act in the US and Internet Privacy Law in the EU.

Sales Territory Management

Sales managers obtain information on each sales rep's activities.

Lead Management

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

CRM is not for every customer.

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

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, and take action to correct issues.

Event Based Marketing

a form of marketing that identifies key events in the customer and business life-cycle. A more personalized form of marketing which can help to form personal connections with the customers.

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.

CRM is about

building and maintaining profitable long-term customer relationships beyond the one-off buy and sell transaction. By: 1.) Focusing on customer requirements 2.) Delivering products and services in a manner resulting in high levels of customer satisfaction. How: 1.) Communicating with customers 2.) Understanding their behavior and their requirements 3.) Building a system to satisfy those requirements.

Post Transaction Elements

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

Transaction elements

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

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.

Pre-Transaction Elements

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

Customer Relationship Management (CRM)

the transformation of the people, process, and technology required to become a customer-centric organization.

Sales Activity Management

tool offering sales rep a guided sequence of sales activities.