Supply Chain - Chapter 11: Customer Relationship Management
Customer Lifetime Value (CLV)
*a prediction of net profit attributed to the relationship with a particular customer* -CLV is an important metric for determining how much money a company is willing to spend on acquiring new customers
Churn Reduction
*and the efforts companies develop to stop losing customers to the competition*
Customer Service Elements: Post-transaction elements
*occur after the sale* includes warrant repair capabilities, complain resolution, product returns, etc.
Customer Service Elements: Transaction Elements
*occur during the sale* includes the order lead time, the order processing capabilities, the distribution system accuracy
Customer Service Elements: Pre-Transaction Elements
*precede the sale* includes customer service policies, the mission statement, the org structure, system flexibility
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
Goals and Benefits of CRM
1. Customer Satisfaction 2. Customer loyalty & retention 3. Faster responses 4. Increased Revenue 5. Cost effective marketing 6. Growth of customer base 7. Increased sales effectiveness 8. Increased sales thru cross/up selling 9. Updated customer info & personalized interactions 10. Automation of repetitive tasks
Performance measurement of Customer service can be broken into 7 Rs
1. Right Product 2. Right Quantity 3. Right Quality 4. Right Place 5. Right Time 6. Right Customer 7. Right Costs
Relationships should be built with strategically significant customers because:
1. They have high life-time value (customers that will constantly buy the products and services in the long-term) 2. Serve as role models 3. Inspire change *CRM is not for every customer*
CRM philosophy
putting the customer first
Sales Territory Management
sales managers obtain information on each sales rep's activities
Lead Management
sales reps can follow prescribed tactics when dealing with prospects to aid in closing the deal
Relationship Marketing or Permission Marketing
selling products where a customer agrees in advance to receive marketing info (customers self-select the type/time of communication they want)
Customer Defection Analysis
the process of analyzing the customers who have stopped buying and determine why *"Finding a new customer costs 5-10 times as much as keeping an existing customer"*
Churn
the process of customers changing their buying preferences bc they find better products elsewhere
Sales Activity Management
tool offering sales reps a guided sequence of sales activities
Sales Force Automation (SFA)
used for documenting/measuring sales team activities
Knowledge Management
enables quick decision making, better customer service, and a better-equipped and happy sales staff
Event Based Marketing
form of marketing that identifies key events in the customer and business lifecycle ex: memorial day, 4th of july, Halloween
Up Selling
involves persuading a customer to buy a more expensive item or upgrade a product/service to make the sale more profitable
Field Service Management
involves setting up the company operations to allow customers to interact directly with the company's service personnel (customers communicate directly with product specialists)
Cross Selling
occurs when a company sells an additional related or complementary product/service to an existing customer after initial purchase
Personalizing Customer Communications
-*customize communications aimed at specific groups* -can *use the customer's "language" and communication in a meaningful way* (personalized messages)
Customer Data Privacy
-Important issue is to assure privacy & data protection -It is a legal and ethical responsibility of companies
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. -Customers can edit and modify the information accordingly. -Customer can opt into or out of future sales, subscriptions, corporate information, emails and other information if desired. -Must be optimized for mobile applications
Cloud Computing
-ala carte and on demand offerings accessed via web browser -Changing the cost structure of CRM applications
Customer Relationship Management
-aligning the people, process, and technology of a company to be a customer-centric organization, focusing on customer requirements, rather than internal company goals. -It involves acquiring, retaining and partnering with 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.
Trends in CRM
-customer data privacy -social media -cloud computing
Call Centers
-links an org and its customers together -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.
Segmenting Customers
dividing a customer base into groups relevant to marketing (by demographics, income, gender, etc)
Achieving a good Customer Relationship by (5)
BY: -focusing on *customer requirements* -delivery products in ways for high customer satisfaction VIA: -communicating with customers -understanding the customer -building a system that satisfies those requirements
Social Media
Creating and cultivating virtual communities around product or brand to engage consumers and develop loyalty
Why do companies need CRM?
Repeat Customers - No acquisition costs, understand company products and services Profitable Revenue - Reduced TCO Marketing - Source of business opportunities Testimonials - Validation for new customers Service - Lower service costs as develop knowledge, support for other customers
What constitutes the perfect order
The right documentation + the 7 Rs
Target Marketing
a segment of customers a company has decided to aim its products/services towards - email/direct mail *SAVES LABOR, postage, and REDUCES the chances of being a NUISANCE*
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
Predicting Customer Behaviors
collecting info about customer buying history to create more accurate forecasts and more effective marketing strategies/budgets