MIS 301 Chapter 11 Customer Relationship Management

primary function of customer relationship management (CRM)

Customer relationship management (CRM) is an organizational strategy that is customer focused and customer driven. That is, organizations concentrate on assessing customers' requirements for products and services and then on providing high quality, responsive services. CRM functions include acquiring new customers, retaining existing customers, and growing relationships with existing customers.

explain the utility of each of the three major technologies that support supply chain management.

Electronic data interchange (EDI) is a communication standard that enables the electronic transfer of routine documents, such as purchasing orders, between business partners. Extranets are networks that link business partners over the Internet by providing them access to certain areas of each other's corporate intranets. The main goal of extranets is to foster collaboration among business partners. Corporate portals offer a single point of access through a web browser to critical business information in an organization. In the context of business-to-business supply chain management, these portals enable companies and their suppliers to collaborate very closely.

bullwhip effect

Erratic shifts in orders up and down the supply chain.

chatbots (also known as bots)

Interactive software programs that can have simple conversations with customers or other bots.

identify popular strategies to solving different challenges of supply chains.

Two major challenges in setting accurate inventory levels throughout a supply chain are the demand forecast and the bullwhip effect. Demand for a product can be influenced by numerous factors such as competition, prices, weather conditions, technological developments, economic conditions, and customers' general confidence. The bullwhip effect refers to erratic shifts in orders up and down the supply chain. The most common solution to supply chain problems is building inventories as insurance against SC uncertainties. Another solution is the just-in-time (JIT) inventory system, which delivers the precise number of parts, called work-in-process inventory, to be assembled into a finished product at precisely the right time. The third possible solution is vendor-managed inventory (VMI), which occurs when the vendor, rather than the retailer, manages the entire inventory process for a particular product or group of products.

loyalty program

Programs that offer rewards to customers to influence future behavior.

electronic CRM (e-CRM)

See customer-touching CRM applications.

procurement portals

Corporate portals that automate the business processes involved in purchasing or procuring products between a single buyer and multiple suppliers.

customer interaction center (CIC)

A CRM operation in which organizational representatives use multiple communication channels to interact with customers in functions such as inbound teleservice and outbound telesales.

real-time CRM system

A CRM system enabling organizations to respond to customer product searches, requests, complaints, comments, ratings, reviews, and recommendations in near real time, 24/7/365.

collaborative CRM system

A CRM system in which communications between the organization and its customers are integrated across all aspects of marketing, sales, and customer support processes.

on-demand CRM system

A CRM system that is hosted by an external vendor in the vendor's data center.

pull model

A business model in which the production process begins with a customer order and companies make only what customers want, a process closely aligned with mass customization.

push model

A business model in which the production process begins with a forecast, which predicts the products that customers will want as well as the quantity of each product. The company then produces the amount of products in the forecast, typically by using mass production, and sells, or "pushes," those products to consumers.

electronic data interchange (EDI)

A communication standard that enables the electronic transfer of routine documents between business partners.

customer relationship management (CRM)

A customer-focused and customer-driven organizational strategy that concentrates on addressing customers' requirements for products and services, and then providing high quality, responsive services.

describe the three components and the three flows of a supply chain

A supply chain is the flow of materials, information, money, and services from raw material suppliers, through factories and warehouses, to the end customers. A supply chain involves three segments: upstream, where sourcing or procurement from external suppliers occurs; internal, where packaging, assembly, or manufacturing takes place; and downstream, where distribution takes place, frequently by external distributors. There are three flows in the supply chain: material flows, which are the physical products, raw materials, supplies, and so forth; information flows, which consist of data related to demand, shipments, orders, returns, and schedules, as well as changes in any of these data; and financial flows, which involve money transfers, payments, credit card information and authorization, payment schedules, e-payments, and credit-related data.

supply chain management (SCM)

An activity in which the leadership of an organization provides extensive oversight for the partnerships and processes that compose the supply chain and leverages these relationships to provide an operational advantage.

interorganizational information system (IOS)

An information system that supports information flow among two or more organizations.

mobile CRM system

An interactive CRM system in which communications related to sales, marketing and customer service activities are conducted through a mobile medium for the purpose of building and maintaining customer relationships between an organization and its customers.

vendor-managed inventory (VMI)

An inventory strategy where the supplier monitors a vendor's inventory for a product or group of products and replenishes products when needed.

`just-in-time (JIT)

An inventory system in which a supplier delivers the precise number of parts to be assembled into a finished product at precisely the right time.

customer touch point

Any interaction between a customer and an organization.

customer-touching CRM applications (also called electronic CRM or e-CRM)

Applications and technologies with which customers interact and typically help themselves.

customer-facing CRM applications

Areas in which customers directly interact with the organization, including customer service and support, salesforce automation, marketing, and campaign management.

open-source CRM system

CRM software whose source code is available to developers and users.

analytical CRM system

CRM system that analyzes customer behavior and perceptions in order to provide actionable business intelligence.

primary function of collaborative CRM

Collaborative CRM is an organizational CRM strategy in which data consolidation and the 360° view of the customer enable the organization's functional areas to readily share information about customers. The functions of collaborative CRM include integrating communications between the organization and its customers in all aspects of marketing, sales, and customer support processes, and enabling customers to provide direct feedback to the organization.

distribution portals

Corporate portals that automate the business process involved in selling or distributing products form a single supplier to multiple buyers.

extranets

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

Explain the advantages and disadvantages of mobile CRM systems, on-demand CRM systems, open-source CRM systems, social CRM systems, and real-time CRM systems.

On-demand CRM systems are those hosted by an external vendor in the vendor's data center. Advantages of on-demand CRM systems include lower costs and a need for employees to know only how to access and use the software. Drawbacks include possibly unreliable vendors, difficulty in modifying the software, and difficulty in integrating vendor-hosted CRM software with the organization's existing software. Mobile CRM systems are interactive systems through which communications related to sales, marketing, and customer service activities are conducted through a mobile medium for the purpose of building and maintaining customer relationships between an organization and its customers. Advantages of mobile CRM systems include convenience for customers and the chance to build a truly personal relationship with customers. A drawback could be difficulty in maintaining customer expectations; that is, the company must be extremely responsive to customer needs in a mobile, near-real-time environment. Open-source CRM systems are those whose source code is available to developers and users. The benefits of open-source CRM systems include favorable pricing, a wide variety of applications, easy customization, rapid updates and bug (software error) fixes, and extensive free support information. The major drawback of open-source CRM systems is quality control. Social CRM is the use of social media technology and services to enable organizations to engage their customers in a collaborative conversation to provide mutually beneficial value in a trusted and transparent manner. "Real-time CRM means that organizations are able to respond to customer product searches, requests, complaints, comments, ratings, reviews, and recommendations in near real-time, 24/7/365."

Describe how businesses might use applications of each of the two major components of operational CRM systems.

Operational CRM systems support the front-office business processes that interact directly with customers (i.e., sales, marketing, and service). The two major components of operational CRM systems are customer-facing applications and customer-touching applications. Customer-facing CRM applications include customer service and support, sales force automation, marketing, and campaign management. Customer-touching applications include search and comparison capabilities, technical and other information and services, customized products and services, personalized web pages, FAQs, e-mail and automated response, and loyalty programs.

vertical integration

Strategy of integrating the upstream part of the supply chain with the internal part, typically by purchasing upstream suppliers, so as to ensure timely availability of supplies.

supply chain visibility

The ability of all organization in a supply chain to access or view relevant data on purchased materials as these materials move through their suppliers' production processes.

operational CRM system

The component of CRM that supports the front-office business processes that directly interact with customers (i.e., sales, marketing, and services).

slaesforce automation (SFA)

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

supply chain

The coordinated movement of resources from organizations through conversion to the end consumer.

social CRM

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

front-office processes

Those processes that directly interact with customers; that is, sales, marketing, and service.