Supply Chain Management Final Part 2
Differentiation
Unique service created based on customer input and feedback. Examples: Sunday car servicing at Hyundai, Ford, etc. Being different from another local dealer. This may be helpful in selling a car to someone who can't take off work on a Monday-thru-Friday when their car needs repair.
Quality
# defects # product returns # warranty claims # suppliers used time from defect detection to correction # work centers using stat process control # of suppliers who are quality certified # of quality awards applied for and won
Single channel, multiple phase, multiple servers queuing system
Single channel, multiple phase, multiple servers acting in series. Example: customer, to hostess, to wait staff, to chef.
Pre-transaction Customer Service elements
precede the sale Includes customer service policies, the mission statement, the organizational structure, system flexibility, etc.
Service Capacity - Examples
Airline Capacity = number of seats and number of planes Restaurant Capacity = number of tables How many servers will I need? Maître d's / Hostesses? Chefs / Kitchen staff? "Bus-boys" / Dish-washers? Hotel Capacity = number of rooms How many people will I need to : Check-in / Check-out the customers Tend the bar Clean the rooms Handle the luggage Provide room service
Key Tools and Components of CRM: Relationship 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. Permission marketing is about building an ongoing relationship of increasing depth with customers Permission marketing does not typically create immediate sales, but rather grabs a customer's attention and preserves a business relationship.
Bundle of Service Attributes (Example: Banking Industry)
Bundling services can deliver more than expected and enhance customer satisfaction. Supporting Facility: location, decoration, layout, architectural appropriateness, equipment. (e.g., drive-up tellers, ATM's, etc.) Facilitating Goods: tangible elements that are used or consumed by the customer or the service provider along with the service provided. (e.g., deposit forms, statements, etc.) Explicit Services: availability and access to the service, consistency of service performance, comprehensiveness of the service, and training of service personnel. (e.g., vault, safe deposit boxes, loans, etc.). Implicit Services: attitude of the tellers, atmosphere, waiting time, privacy and security, and convenience.
Trends in CRM
Customer Data Privacy Rules and laws regarding invasion of privacy include Patriot Act in the US and Internet Privacy Law in the EU Social Media Creating and cultivating virtual communities around product or brand is a powerful way to engage consumers Cloud Computing (Software as a Service) ala carte and on demand offerings accessed via web browser Changing the cost structure of CRM applications
Customer Defection Analysis and Churn Reduction
Customer Defection Analysis and Churn Reduction go hand-in-hand to determine why customers leave and finding ways to retain them. 5% improvement in customer retention can result in a 75% increase in profits
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.
Customer Service
Flexibility: avg number of labor skills, avg production lot size, # customized services available, # days to process special orders Dependability: avg service response time, % delivery promises kept, avg # shipment days , #days to process warranty claim, avg number of hours spent with customers by engineers Innovation: annual R&D investment, % of automated processes, # new product or service introductions, # process steps required per product
Service Productivity
Improving service productivity is challenging due to: High labor content Individual customized services Difficulty of automating services Problem of assessing service quality
Service Strategies
Lowest Cost Leadership Differentiation Niche
Single Channel, single phase, single server Queuing System
Single channel, single phase, single server. Example: customer, to service representative.
Transaction Customer service elements
occur during the sale Includes the order lead time, the order processing capabilities, the distribution system accuracy, etc.
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.
Level Demand Strategy
Capacity remains constant regardless of demand. When demand exceeds capacity, queue management tactics deal with excess customers. One line instead of many lines at a Bank or at McDonald's so its 1st come 1st serve. Numbers at the deli in the grocery store. Note: This technique does not work well in a Hospital Emergency Room.
Knowledge Management
Enables quick decision making, better customer service, and a better-equipped and happy sales staff.
Field Service Management
Field Service Management involves setting up the company operations to allow customers to interact directly with the company's service personnel. Customers can call the service people directly, and make an appointment with the service person to come out to service the product. Since customers are communicating directly with product specialists for service issues, it is more likely that the right diagnosis can be made quickly, which will help to ensure customer satisfaction.
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.
Steps for Developing World Class Performance Measures
Identify the firm's strategic objectives. Develop an understanding of each functional area's set of requirements for achieving the strategic objectives. Design and document performance measures for each functional area that adequately track each required capability. Assure the compatibility and strategic focus of the performance measures to be used. Implement the new performance monitoring system. Identify internal and external trends likely to affect firm and functional area performance over time. Periodically re-evaluate the firm's performance measurement system as these trends and other environmental changes occur.
The Balanced Scorecard
Kaplan and Norton created BSC to align an organization's performance measures with its strategic plan and goals. The BSC framework consists of four perspectives - Financial perspective Internal business process perspective Customer perspective Learning and growth perspective
Waiting Time Management Techniques
Keep customers occupied Start the service quickly Relieve customer anxiety Keep customers informed Examples: "The wait time from this point is..." "The ride is stopped but will resume in 4 minutes" Group customers together (they often talk to pass the time) Design a fair waiting system
Layout Strategy:
Layouts designed to reduce distance traveled within the store. Departmental layouts to maximize closeness desirability. e.g., Doctors office waiting room e.g., Service center at the car dealership, pet grooming, car wash
Location Strategy:
Make it easy for customers to find the facility / store. Once they arrive, make it easy to find what they want, or to find what you want them to find. e.g., Drop off / pick up your clothes at dry cleaners on the way to work.
PSE&G - MATERIALS & LOGISTICS MANAGEMENT SCORECARD
People - Safe, Motivated, Productive Operations - Reliable, Low Cost Customer Care - Internal Clients Financial - Highly Profitable
Managing Customer Service Capabilities
Performance measures are often designed around satisfying the Seven R's. These kinds of services can come at a cost.
The Five Dimensions of Service Quality
Reliability - consistently performing the service correctly and dependably Responsiveness - promptly and timely service Assurance - ability to convey trust and confidence to customers Empathy - providing caring attention to customers Tangibles - the physical characteristics of the service including, facilities, servers, equipment, associated goods, and other customers
Sales Territory Management
Sales managers obtain information on each sales rep's activities
Transportation and Warehousing in Services
Services may require the use of facilitating goods which are tangible elements that are used or consumed by the customer or the service provider along with the service provided. (e.g., computers, furniture, office supplies, medical supplies, repair parts, equipment, etc.) These items need to be transported and warehoused in order to provide the service activity. Generally these transportation and warehousing activities occur behind the scenes (i.e., out of view of the service customer) Customers have no idea how they actually get to the destination but they sure notice if they are not available as expected!
6 Steps to a Successful CRM Program
Step 1. Creating the CRM Plan Step 2 - Involve CRM users from Outset Step 3 - Select the Right Application and Provider Step 4 - Integrate Existing CRM Applications Step 5 - Establish Performance Measures Step 6 - Providing CRM Training for All Users
Adjusting Supply Chain Member Capabilities
Supply chain members audit their capabilities and partners' to determine consistency with needs of end customers. Firms and their partners must continually reassess performance with respect to requirements. The best supply chain performers are more responsive to customer needs, quicker to anticipate changes in the markets, and control costs much better.
Supply Chain Management in the Service Industry
The tangibility of the end product. Services are generally not tangible (you can't hold them in your hand). The involvement of the customer in the service process. Customers and internal clients are much more directly involved in the service industry. The assessment of quality. Quality is assessed differently in the service industry than in manufacturing. The labor content. There is a much higher ratio of labor to materials in the service industry. The facility location considerations. Services are largely provided very near to where the customers are located.
Web-Based Scorecards and Dashboards
Web-based software applications used to design scorecards, which also link via the Web to a firm's enterprise software system. Provide managers a way to see real-time progress toward organizational milestones and help to ensure that decisions remain in sync with the firm's overall strategies.
Post-transaction Customer service elements
occur after the sale Includes warranty repair capabilities, complaint resolution, product returns, operating information, etc.
7 R's Rule
the right product the right quantity the right quality the right place the right time the right customer the right costs
Call Centers (or Customer Contact Centers)
A Call Center links an organization and its customers together. It is 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. Help continuously monitor customer service parameters in an effort to gauge performance and improve quality and efficiency. By utilizing a Call Center, the company's internal resources can be freed up to focus on the company's core competencies Can categorize calls Determine average resolution time Increase customer satisfaction levels Provide input to forecast future demand Improve the productivity of the overall staff May be in-house or outsourced
Key Tools and Components of CRM: 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. 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.
Queuing systems
A queue management system is used to help control the flow and prioritization of people expecting to receive a service. Queues can be utilized for almost any situation where large numbers of persons are gathering, or waiting in line to purchase tickets, enter a facility, etc. Queues are common in airports, amusement parks and retail stores.
Key Tools and Components of CRM: 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 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. It is a 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. Using e-mail or direct mail saves labor and postage, and reduces the chances of being a nuisance
Customer Relationship Management Program
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.
Goals And Benefits Of CRM
A successful well-designed CRM program can provide companies with many improvements and benefits. Some of the most important are: 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 updated customer information and personalized interactions. Automation of repetitive tasks.
Service Capacity Utilization
Capacity Utilization = Actual customers served per period/Capacity A hotel has 80 rooms booked out of a total of 100 rooms available. Utilization = 80%. This is pretty straight forward in that there are a fixed number of rooms and they are either booked or not booked. On average, a doctor can see X patients per hour. But, if the doctor takes longer with each patient than the average, the patients start to get backed-up and some patients wait longer. The doctor's office is not going to call in a temporary doctor for the rest of the day to catch up.
Chase Demand Strategy
Capacity varies with demand. So you can handle fluctuations but must take appropriate actions prior. Need to have options. Open up additional line(s) Call in additional off-shift workers to meet increased demand.
Key Tools and Components of CRM: Churn Reduction
Churn is the process of customers changing their buying preferences because they find better or cheaper products and services elsewhere. Churn Reduction is all of the efforts companies develop to stop losing customers to the competition
Why do companies need CRM?
Companies 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. 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.
Key Tools and Components of CRM: Cross-selling and Up-selling
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. 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?"
Customer Relationship Management
Customer Relationship Management (CRM) is the transformation of the people, process, and technology required to become a customer-centric organization;. A philosophy of putting the customer first. 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 customers for life. CRM is about building and maintaining profitable long-term customer relationships beyond the one-off buy and sell transaction. Focusing on customer requirements Delivering products and services in a manner resulting in high levels of customer satisfaction Communicating with customers Understanding their behavior and their requirements Building a system to satisfy those requirements
What is Customer Service?
Customer Service can have multiple meanings even within the same organization. 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. 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 is 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.
Managing Service Quality
Customer satisfaction with the service depends not only on the ability of the firm to deliver what customers want, but on the customers' perceptions of the quality of the service received. e.g., Was the car fixed properly? e.g., Was the client properly defended? e.g., Was the hired comedian funny? Service quality depends on the firm's employees to satisfy customers varying expectations. The key is to exceed the customers expectations . . . so you also need to help form their expectations. e.g., You promise 4 hour service, knowing that you can do it in 3.5 hours
Managing Distribution Channels
Eatertainment combines restaurant and entertainment elements (e.g., Medieval Times, Rainforest Café, Dave & Busters, etc.) Entertailing combines retail with entertainment elements (e.g., Mall of America has a ferrous wheel, rock climbing wall, fashion shows, play area, etc.) Edutainment (infotainment) combines learning with entertainment to appeal to customers looking for substance along with play (e.g., Epcot Center, Liberty Science Center. etc.)
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
Use of Performance Standards and Variances
Establishing standards for comparison purposes can be troublesome - Employees and managers do whatever it takes to reach the goal Shoddy work "Cooking the books"
Key Tools and Components of CRM: 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. 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. Event-based marketing is a more personalized form of marketing which can help to form personal connections with the customers.
Use of Organization Costs, Revenue, and Profitability Measures
Problems associated with using costs and profits to gauge performance - Uncontrollable environmental forces (e.g., windfall profits that occur when prices rise due to supply interruptions) Accurate attribution of cost, revenue, or profit contributions to the various functional or business units
Global Services
Global services are increasing all over the world and managing them involves a number of issues: Service providers must identify potential customers. Labor, facilities, and infrastructure support vary by country. Governmental, legal and political issues: Laws may restrict foreign competitors. Competitive forces vary by country: Managers must be aware of local competition and their environment.
Key Tools and Components of CRM: 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. 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. This predictive information could be used to create a more accurate forecast and a more effective marketing and sales budget.
Capacity Exceeds Demand (Too Much Capacity)
If capacity exceeds demand, instead of disposing of excess capacity (e.g., laying off personnel), find other uses for the available capacity. Do other jobs when it's not busy. Example: in a restaurant you might have workers clean the bathrooms, prep for the dinner rush, polish silverware, etc. Perform remedial training. Use demand management techniques to shift demand from peak demand periods into non-peak periods by offing incentives like discounts and special sales. Example: early bird specials, 20% off from 9am to noon, etc.
Demand Exceeds Capacity (Not Enough Capacity)
If the demand exceeds capacity, and the provider does not currently have the capacity to serve all of the customers, there are three basic alternatives: Turn customers away and not service them Make them wait until service is available for them Increase service capacity, i.e., the number of service personnel and the associated infrastructure to provide the service. Hiring, training, supervising, and equipping personnel is costly (about 75% of operating costs). This situation makes forecasting service demand critically important particularly because services cannot be inventoried or carried out in advance. To minimize the cost of hiring and laying off employees, the following strategies deal with periods of high demand Cross-training and sharing employees so that they can help on the task that is busy at the moment (e.g., grocery staff) Using part-time employees (e.g., during peak holiday season) Using customers - "hidden employees" (e.g., self check out) Using technology (e.g., scanning documents in insurance industry for use in multiple departments as necessary) Using employee scheduling policies (e.g., nurses have to work alternating holidays)
Service Capacity Decisions
Long-Range: Capacity can be used as a preemptive strike where the market is too small for two competitors to co-exist (e.g., the first to build a luxury hotel in a mid-sized city may capture all the business) A strategy of building ahead of demand is often taken to avoid losing customers. Short-Range: The lack of short-term capacity planning can generate customers for the competition (e.g., if restaurant staffing is inadequate to handle the volume of customers arriving at the restaurant, customer will likely go elsewhere) Balance: Capacity decisions must be balanced against the costs of lost sales if capacity is inadequate . . . or against operating losses if demand does not reach expectations.
Managing Waiting Time
Managing waiting time involves managing both the actual waiting time and the perceived waiting time. Key questions to ask to determine waiting time strategy: What is the average arrival rate of the customers? In what order will customers be serviced? What is the average service rate of providers? How are customer arrival and service times distributed? How long will customers wait before they either leave or lower their perceptions of service quality? How can customers wait even longer without lowering their perceptions of service quality?
Multiple channel, multiple phase, multiple servers acting in parallel queuing syetem
Multiple channel, multiple phase, multiple servers acting in parallel. Example: customer, to one of multiple fast food order takers, to fast food cook.
Multiple channel, single phase, single server queuing system
Multiple channel, single phase, single server. Example customer, to one of multiple available service representatives.
Focus on Strategically Significant Customers
Not all markets and customers are equally important. Building relationships with customers that provide little value can be counterproductive. Relationships should be built with strategically significant customers that are likely to provide the most value for the effort. 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. CRM is not for every customer. Some customers don't want to be committed to every brand and/or relationship.
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
Managing Perceived Waiting Times
Often, demand exceeds expectations and capacity First and Second Rules of Service Rule 1: Satisfaction = customer perception ≥ customer expectation Rule 2: It is hard to play catch-up. You may only get one chance to get it right. No one likes to wait in line, however it is a reality, and even a necessary evil, for many service offerings. There are mathematical formulas used to help predict wait times. These formulas are based on certain predetermined assumptions and probabilities. There are also techniques for reducing the time spent waiting, and/or the perception of the time waiting, for the service to be delivered. Disney and other theme parks use these techniques. The answer is to try and keep the customer's mind off of waiting.
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.
Cost
Scrap losses Avg inventory turnover Avg setup time Employee turnover Avg safety stock levels # rush orders required to meet delivery dates downtime due to machine breakdowns
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
Managing Service Quality
Recovering from poor service quality Keeping customers loyal and coming back serves as good word of mouth advertising. Service recovery systems require: Developing recovery procedures that are thought out prior to the bad event happening. Training employees in these procedures prior to the event. Empowering employees to remedy customer problems and recognizing them when they do. (e.g., employee who rented a U-Haul to deliver a part to a customer on a weekend)
Lowest Cost Leadership
Requires large capital investment in state-of-the art equipment and significant efforts to control and reduce operating costs. Examples: Auto diagnostics software, route planning to reduce windshield time, UPS optimization, etc.
Supply Chain Operations Reference (SCOR) Model
SCOR model developed by the Supply Chain Council (now CSCMP) for SCM diagnostic benchmarking and process improvement. The SCOR model separates supply chain operations into 6 process functions - Plan Source Make Deliver Return Enable Companies generally use SCOR-based benchmarking to: Set reasonable performance goals based on the SCOR model Calculate performance gaps against a global database Develop company-specific roadmaps for supply chain competitive success
Automated Sales Force Tools
Sales Force Automation (SFA) Used for documenting field activities, communications with the home office, and retrieving sales history in the field.
Lead Management
Sales reps can follow prescribed tactics when dealing with prospects to aid in closing the deal.
Niche
Serve a narrow niche better than other firms. Examples: Grocery shopping for you, mechanic specializing in Volvo or Porsche repair, custom stereo in your house or car.
Managing Service Capacity
Service capacity can be expressed as the number of customers per day, per shift, per hour, per month, or per year, that the company's service system is designed to serve. Regardless of the specific breakdown, it is the number of customers that the service provider can service at any one time. The planned capacity for the service environment.
Service Capacity Planning Challenges
Service providers are 100% reliant on the customer to create the flow of demand, which has a direct impact on their ability to fully utilize capacity. Some of the challenges are: Customer arrivals fluctuate and service demands also vary. Customers are participants in the service and the level of congestion impacts on perceived quality. Idle capacity is a reality for services.
Differences Between Goods and Services
Services cannot be inventoried in most cases. Typically, services are produced and consumed simultaneously. Services are often unique to the customer. (e.g., insurance policies, legal services, tax preparation, etc.) Services have high customer interaction. Services are decentralized. Due to the inability to inventory or transport most services, they must be located near to the customer base.
Understanding Supply Chain Partner Requirements
Supply chain strategies must consider the potential trade-offs existing between: Cost Quality Sustainability Service
Understanding End Customers
Supply chains need to look at each segment of the market they serve and determine the needs of those customers. Variety of products required Quantity and delivery frequency needed Sustainability level desired Product quality desired Price of the products
Service Delivery System
The delivery of services can be expressed as a continuum with mass produced, low-customer contact systems at one end, and highly customized, high-customer-contact systems at the other end. Some service offerings blend these delivery systems together Example: Restaurant Front of the house staff tend to be customer centric Back of the house staff generally do not have contact with customers Service delivery systems may be designed to keep these separate in order to use various and different management techniques to maximize performance in each area.
Key Tools and Components of CRM: Segmenting Customers
The practice of dividing a customer base into groups 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, e.g., by demographics, income, geography, buying preferences, etc. Segmenting customers allows a company to zero in on a particular population of customers to sell a specific product, or to define a specific product(s) for a particular segment of customers. 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.
Service Response Logistics
The primary concern of Service Response Logistics is the management and coordination of the organization's service activities. The four primary activities of managing Service Response Logistics: A. Service Capacity B. Waiting Times C. Distribution Channels D. Service Quality
Key Tools and Components of CRM: Customer Defection Analysis
The process of analyzing the customers who have stopped buying to determine why. Finding a new customer costs 5 - 10 times as much as keeping an existing customer
Productivity and Utilization Measures
These measures are useful but have the same problems as revenues, costs and profits. Productivity decisions may actually increase costs and reduce quality Tendency to continue producing and adding to inventory to keep machines and people busy Less time is spent doing preventive maintenance and training for greater performance and profits in future Traditional measures favor the short-term
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)
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. Just as companies must create methods for finding and developing good suppliers, companies must create methods for becoming and staying good suppliers themselves 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.
Sales Activity Management
Tool offering sales reps a guided sequence of sales activities
Traditional Performance Measures
Traditional cost-based information does not reflect the underlying performance of an organization's productive systems; costs and profits can be hidden or manipulated. Decisions to maximize current stock prices do not necessarily reflect that the firm is performing well. Financial performance measures, while important, cannot adequately capture a firm's ability to excel in these areas.
Key Tools and Components of CRM: 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. When a company communicates with their customers they need to use the customer's "language" and communicate with them in a meaningful way. Communication that is personalized sends a message to the customer that the company cares about them. It is a powerful way to differentiate the company from its competitors and it helps to build customer loyalty. 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.
