Chapter 11

post-transaction elements

occur after the sale includes warranty repair capabilities, complaint resolution, product returns, operating info

transactional 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 p/s to an existing customer after the initial purchase

pre-transaction elements

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

focus on strategically significant customers

relationships should be built w/ strategically significant customers that are likely to provide the most value for the effort - customers w/ high life-time value, (customers that will constantly buy the products and services in 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 CRM is not for every customer. some customers don't warrant the higher level of support and relationship

customer defection analysis

the process of analyzing the customers who have stopped buying to determine why - churn reduction - the process of customers changing their buying preferences because they find it better or cheaper products and services elsewhere + is all of the efforts companies develop to stop losing customers to the competition - customer defection analysis leads to churn reduction by determining why customers leave and finding ways to retain them

customer life value (CLV)

- a prediction of the net profit attributed to the entire future relationship w/ a particular customer - some customers are worth more than other. identifying your key customers is key to aligning your customers support resources - is an important metric for determining how much support to provide existing customers vs. money to spend on acquiring new customers - it is determined by forecasting the expected revenue generation for each strategic customer, understanding the margin structure and cost to support each

target marketing

- a segment of customers a company has decided to aim its marketing efforts. a well-defined target market is the first element of any marketing strategy - usually more cost effective than mass marketing, as it allows the company to focus efforts on marketing to those customers most likely to respond - it is a more efficient and effective use of the company's resources avoiding customers who do not the targeted criteria.

field service

- allows customers to interact directly w/ the company's service personnel - customers make an appointment to have the service person come out to install or service the product. customers are communicating directly w/ company representatives so knowledge, training and appearance are all important

call centers - effectiveness

- average resolution time - staff productivity - customer satisfaction rating - industry ranking - cost as % revenue - revenue generated

predicting customer behaviors

- collect and analyze customer buying history, preference, and trend info which could then be used to predict customer buying behaviors going foward - this info could also be used to determine how effective marketing, advertising and promotions have been in the past and determine whether these practices should be continued or altered - this predictive info could be used to create a more accurate forecast and a more effective marketing and sales budget

call centers - efficiency

- cost per contact/call - average wait time - abandon call % - average resolution time - staff productivity - self service vs. agent supported

event based marketing

- event based marketing is a form of marketing that identifies key events in the customers and business lifecycle - customer specific marketing activity is undertaken for the event - an event can be something basic and predicted, like then end of a contract, a holiday, a season or something more detailed and personal, like a birthday, a marriage, or graduation

call centers

- links an organization to its customers - it is a facility housing personnel who respond to customer queries, whether general, specific or technical support - it's entire focus is handling current or potential customer inquiries - there are many KPI's used to measure efficiency and effectiveness

website self-service

- portals for customers to access their account info, check operating hours, ask questions, see product info, find contact info, check on orders, get shipping info - customers can put their own info 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 info accordingly - customer can opt into or out of future sales, subscriptions, corporate info, emails and other info if deisred

segmenting customers

- practice of dividing a customer base into group of individuals that are similar in specific ways relevant to marketing - in simple terms, grouping customers to create specialized communications about products - there are many different ways to group customers, (income, demographics, geography buying preferences, etc.) - segmenting customers allows a company to focus on a particular population of customers to sell a specific product - 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

key tools and components of CRM

- predicting customer behaviors - segmenting customers - target marketing - event based marketing - cross selling and up-selling - personalizing customer communications - relationship or permission marketing - analyzing customer defection - customer lifetime value (CLV)

Why do companies need CRM

- repeat customers - no acquisition costs, understand company products and serivces - profitable revenue - reduced TCO - marketing - source of business opportunities - testimonials - validation for new customers - services - lower service costs as development knowledge, support for other customers

personalizing customer communications

- underestimating customer beahviors and preferences, allows a firm to customize communications aimed at specific groups of customers that the compnay cares about them and the relationship is more then a transaction - it is a way to differentiate the company from its competitors and it helps to build customer loyalty

trends in CRM

1. customer data privacy - important issue is to assure privacy & data protection - it is legal and ethical responsibility of companies 2. social media - creating and cultivating virtual communities around product or brand to encourage cosumers and develop loyalty 3. increasing customer expectations - access to product info, pricing, reviews - intense/global competition for each customer

call centers - tools to improve efficiency and effectiveness

1. eliminate the call - web self service - chat - social media - voice response system 2. reduce the call time/cost - multi level agent training - standard response scripts - agent incentives - charge for support

customer loyalty

1. raving fan - insists that others use your business and does your selling for you 2. advocate - introduces other people to your business 3. member - has a sense of belonging 4. customer - has bought from you a second time 5. shopper - someone who has bought from you once 6. prospect - someone who has taken action and you have their details 7. suspect - fits your target market

sales force automation tools (SFA)

a core component of CRM systems used to document and measure sales team activities - sales activity managment - tool offerings sales reps a guided sequence of sales activities - sales territory managment - sales managers obtain info on each sales rep's activities - lead management - prescribed tactics to convert prospect into customers - knowledge managment - establish data repository that can be used by all areas of the company to improve sales and supply chain performance

goals and benefits

a successful CRM program can provide many benefits: - increased customer satisfaction - increased 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 update customer info and personalized interactions - automation of repetitive tasks

relationship or permission marketing

an approach to selling products and services in which a customer explicitly agrees in advance to recieve marketing info. cutomers self-select the type and time of communication they want - "opt-in" e-mail, where a potential customer signs up in advance for info about certain products or services. the customer is giving permission to the company to provide them w/ marketing and sales info

up-selling

involves persuading a customer to buy a more expensive item or upgrade a p/s 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

customer relationship management

is aligning the people, process, and tech of a company to be a customer-centric organization, focusing on customer requirements, rather than internal company goals - it involves acquiring and partnering w/ selective customers to create superior value for both the company and the customer - it provides a means and a method to enhance the experience of individual customers so that they will remain, loyal customers - by: + focusing on customer requirements + providing products and services in a manner resulting in high levels of customers satisfaction - via: + open communication w/ customers + understanding their history, behavior and requirements + establishing an infrastructure to satisfy those requirements