E-Commerce Customer Relationship Management

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Transcript E-Commerce Customer Relationship Management

Pe s e w a Pr e s e n t a t i o n s
E-Commerce Customer Relationship Management
Learning Objectives
• Identify the key features of the Internet audience
• Discuss the basic concepts of consumer behaviour and
purchasing decisions
• Understand how consumers behave online
• Describe the basic marketing concepts needed to
understand Internet marketing
• Identify and describe the main technologies that
support online marketing
• Identify and describe basic e-commerce marketing and
branding strategies
• Explain how online market research is conducted
• Consider the function and practice of effective CRM
Online Activities
What drives consumer behaviour?
• Five stages in the consumer decision process:
– awareness of need
– search for more information
– evaluation of alternatives
– the actual purchase decision
– post-purchase contact with the firm
– How do we use this information?
Decision-Making Process
e-Business: drivers and inhibitors
• Drivers and Inhibitors toward e-business
• Drivers:
• Inhibitors:
Life-Cycle (SDLC) Approach
Phase 1:
Business Planning
Phase 2:
Phase 6:
Phase 3:
Phase 5:
Phase 4:
Website and marketing
“What criteria
determine who will be our
most profitable
“How can we increase the
loyalty and profitability of
this customer?”
“How can we acquire this
customer in the most
efficient / effective way?
“How can we keep this
customer for as long as
Gartner’s Model of Customer Interaction: http://www.gartner.com
Understand your customers
• Lewis & Lewis (1997) identify 5 basic types of Internet
1. Directed information seekers: searching for timely,
relevant, accurate information on a topic or topics
2. Undirected information seekers: classic “web surfer”
user who follows a random interest-driven path
through the web following links at random or where
their interest is captured briefly
3. Bargain hunters: seeking free items, trial samples and
4. Entertainment seekers: browsing online entertainment,
games, music, streaming audio or video
5. Directed buyers: hard-core shoppers online; they know
what they want and where to find it and buy it
Online Retailing: 8 Cs
1. Content: Is it a compelling offering to the Customer?
2. Convenience: How easy is the site to navigate and use?
3. Customer Care: Extent to which the organization shows a commitment to
Customers (Terms & Conditions, Privacy, etc)
4. Community: Cybercommunity as integral part of Customer experience (e.g
5. Communication: Where Customer can opt into a conversation with the
organization, and expect to receive a useful exchange of information
6. Connectivity: Site-to-site connectivity (useful and meaningful links) and User-tosite connectivity (speed of access, navigability, site design, etc)
7. Customisation: Basic form of relationship marketing where site recalls previous
transactions and Customer may be able to control what (s)he sees
8. Concern for Customers (and Customer concerns): Relates to understanding
Customer fears, inhibitors and distractions (e.g. security, trust, 128-bit data
encryption, etc)
Jones et al, 2001
Customers’ Characteristics
How can you segment them?
What do they want from your site?
Return to consumer decision-making process:
How do they behave online?
What do they do / look for?
What do they buy?
How do they find you?
What entices them to buy?
What do we need to offer?
What do we need to offer?
In my opinion: Customer Service
Not Products, but BRANDS
Customer Relationship Management
CRM: Customer Relationship Management.
Strategy used to learn more about customers' needs and
behaviours in order to develop stronger relationships with them.
Good customer relationships are at the heart of e-business success.
There are many technological components to CRM, but it is wrong to think of
CRM in primarily technological terms.
CRM is a strategic process that helps firms understand their customers’ needs
Indicates how those needs can be best met, and improve profitability
Strategy depends on bringing together information about customers and market
trends so that products and services can be marketed and sold more effectively.
CRM seeks to build long-term relationship with customers
CRM Tools
• Many software companies offer CRM solutions,
– IBM [IBM.com]
– SAP [sap.com]
– NetSuite [NetSuite.co.uk]
• Goals of CRM:
providing services and products that are exactly what
customers want (need?)
offering better customer service
cross selling and upselling products more effectively
helping sales staff close deals faster
retaining existing customers and discovering new ones
– Derived from cio.com
CRM Strategy
For effective CRM, an organization must first understand who its customers are and what
their value is over a lifetime.
Company must then determine what the needs of its customers are and how best to meet
those needs.
For example, many financial institutions keep track of customers' life stages in order to market
appropriate banking products like mortgages or Investment Trusts to them at the right time to fit
their needs.
Next, the organization must look into all of the different ways information about customers
comes into a business, where and how this data is stored and how it is currently used.
One company, for instance, may interact with customers in a number of different ways:
• mail campaigns,
• Web sites,
• brick-and-mortar stores,
• call centres,
• mobile sales force staff and
• marketing and advertising efforts.
CRM systems link up each of these. Data flows between operational systems (like sales and inventory
systems) and analytical systems that look for patterns.
Analysts then comb through the data to obtain a holistic view of each customer and pinpoint areas
where better services are needed.
Basic Marketing Strategies
Marketing: The strategies and actions firms take to establish a relationship with a
consumer and encourage purchases of products and services
Internet marketing: Using the Web, as well as traditional channels, to develop a
positive, long-term relationship with customers, thereby creating competitive
advantage for the firm by allowing it to charge a higher price for products or services
than its competitors can charge
Firms within an industry compete with one another on four dimensions:
Marketing seeks to create unique, highly differentiated products or services
that are produced or supplied by one trusted firm (“little monopolies”)
Internet Marketing Technologies
• Web transaction logs [http://www.netmechanic.com/news/vol4/promo_no11.htm]
• Search Engine Submission (absolutely essential): Need to tell the world
that you exist!
• Cookies and Web bugs [http://www.eff.org/Privacy/Marketing/web_bug.html]
• Databases, data warehouses, and data mining
• Collaborative Filtering (e.g. Amazon.com)
• Advertising networks
• Customer relationship management (CRM) systems
[but remember that it is not just about technology]
• Organizational Resources:
• http://hk.solutions.yahoo.com/emarketing/whyyahoo_main.htm
• http://searchenginewatch.com/
Revolution in Internet Marketing
• Three broad impacts:
 Internet has broadened the scope of marketing communications
 Internet has increased the richness of marketing communications
 Internet has greatly expanded the information intensity of the
Unique Aspects of e-Marketing
Web Transaction Logs
Built into Web server software
Records user activity at a Web site
WebTrends a leading log analysis tool
Can provide treasure trove of marketing information, particularly
when combined with:
 Registration forms – used to gather personal data
 Shopping cart database – captures all item selection, purchase and
payment data
Example Web Logfile (4 seconds)
Marketing Use of Log Data
• Cookies: small text file that Web sites place on a visitor’s client
computer every time they visit, and during the visit as specific pages
are accessed.
• Cookies provide Web marketers with a very quick means of
identifying the customer and understanding his or her prior behavior
• Location of cookie files on computer depends on browser version
Typical Cookie File (Netscape)
Web Bug
• Tiny (1 pixel) graphic files embedded in e-mail messages and on Web
• Used to automatically transmit information about the user and the
page being viewed to a monitoring server
Often included with freeware and shareware.
Contains executable files (programs) that can obtain passwords, credit card
data and other private material from client computers on networks
Some also include aspects of Trojan Horse software
Social Issue: Should Web Bugs be
Marketers claim Web bugs are innocuous; privacy advocates say, if so, why
are they hidden
Different types include clear GIF, executable bugs and script-based executable
Privacy Foundation guidelines for Web bug usage:
Should be visible and labelled to indicate function
Should identify name of company that placed it
Should display disclosure statement if clicked
Should be able to opt-out
Network Advertising Initiative (NAI) calls them Web beacons, and have issued
their own guidelines
Currently, no government regulation
Databases and Data Warehouses
Database: Software that stores records and attributes
Database management system (DBMS): Software used to create, maintain and
access databases
SQL (Structured Query Language): Industry-standard database query and
manipulation language used in a relational databases
Relational database: Represents data as two-dimensional tables with records
organized in rows and attributes in columns; data within different tables can be
flexibly related as long as the tables share a common data element
Data warehouse: Database that collects a firm’s transactional and customer
data in a single location for offline analysis by marketers and site managers
Relational DB View of Customers
Data Mining
Set of analytical techniques that look for patterns in data of a database or
data warehouse, or seek to model the behaviour of customers
Types include:
Query-driven – based on specific queries
Model-driven – involves use of a model that analyses key variables of interest to
decision makers
Rule-based – examines demographic and transactional data of groups and
individuals at a Web site and attempts to derive general rules of behaviour for
Collaborative filtering – behavioural approach; site visitors classify themselves
into affinity groups based on common interests; products are then recommended
based on what other people in the group have recently purchased
Data Mining & Personalisation
Advertising Networks
• Best known for ability to present users with banner advertisements
based on a database of user behavioural data
• DoubleClick best-known example
• Ad server selects appropriate banner ad based on cookies, Web bugs,
backend user profile databases
How Advertising Network Works
CRM System
Repository of customer information that records all of the contacts that a
customer has with a firm and generates a customer profile available to
everyone in the firm with a
need to “know the customer”
Customer profiles can contain:
Map of the customer’s relationship with the firm
Product and usage summary data
Demographic and psychographic data
Profitability measures
Contact history
Marketing and sales information
Example of CRM System
Market Entry Strategies
• For new firms:
 Pure clicks/first mover
 Mixed “clicks and bricks”/alliances
• For existing firms:
 Pure clicks/fast follower
 Mixed “clicks and bricks”/brand extensions
Generic Entry Strategies
Establishing Customer Relationship
Permission marketing: Marketing strategy in which companies obtain
permission from consumers before sending them information or promotional
messages (example: opt-in e-mail)
Affiliate marketing: Marketing strategy that relies on referrals; Web site
agrees to pay another Web site a commission for new business opportunities
it refers to the site
Viral marketing: Process of getting customers to pass along a company’s
marketing message to friends, family, and colleagues
Brand leveraging: Process of using power of an existing brand to acquire new
customers for a new product or service
Customer Retention
Mass market-personalization continuum ranges from mass marketing to
direct marketing to micromarketing to personalized, one-to-one marketing
One-to-one marketing: Involves segmenting the market on a precise and
timely understanding of an individual’s needs, targeting specific marketing
messages to these individuals and then positioning the product vis-à-vis
competitors to be truly unique
Mass-Market Personalisation
Other Retention Techniques
Customization: Changing the product (not just the marketing message) according
to user preferences
Customer co-production: Allows the customer to interactively create the product
Transactive content: Results from the combination of traditional content with
dynamic information tailored to each user’s profile
Customer service tools include:
Frequently asked questions (FAQs) – text-based listing of common questions and
Real-time customer service chat systems – company’s service representatives
interactively exchange text messages with one or more customers on a real-time
Intelligent agent technology – bots
Automated response systems – send e-mail confirmations and acknowledgments
Net Pricing Strategies
Pricing (putting a value on goods and services) an integral part of marketing strategy
Traditionally, prices based on:
 Fixed cost (costs of building production facility
 Variable costs (costs involved in running production facility)
 Market’s demand curve (quantity of goods that can be sold at various prices)
Price discrimination: Selling products to different people and groups based on their
willingness to pay
Free products/services: Can be used to build market awareness
Versioning: Creating multiple versions of a good and selling essentially the same
product to different market segments at different prices
Bundling: Offers consumers two or more goods for one price
Dynamic pricing:
 Auctions – establish an instant market price for goods
 Yield management – Managers set prices in different markets, appealing to
different segments in order to sell excess capacity
Channel Management Strategies
• Channel: Refers to different methods by which goods can be
distributed and sold
• Channel conflict: Occurs when a new venue for selling products or
services threatens or destroys existing venues for selling goods
• Examples: online airline/travel services and traditional offline travel
• Some manufacturers are using partnership model to avoid channel
Online Market Research
Market research: Involves gathering information that will help a firm identify
potential products and customers
Two general types:
Primary research – involves gathering first-hand information using techniques
such as surveys, personal interviews and focus groups
Secondary research – relies on existing, published information as basis for
analysing market
Types of Survey Questions
Popular Research Tools
Marketing Communications
What is marketing communications?
Two aspects:
– Branding (statements of “quality, reliability, non-price factors”)
– Sales (promotion)
Promotional aspect : “buy NOW!”
Branding aspect: Focus on differentiated benefits of product
Online Brand Development and brand reinforcement
– CRITICAL to business success
• Develop and sustain competitive advantage
• Create a climate of TRUST (building guangxi)
• Create corporate “image” in mind of online visitor
Online Advertising
– A mixed blessing - permission marketing: OK; spam: BAD
– Try http://www.emarketer.com
Online marketing jargon
Banner ad
Rich media ad
Interstitial ad
Superstitial ad
Banner swapping
Banner exchanges
Search engine marketing
Paid listing
Affiliate marketing
Direct e-mail marketing
Please do some online searches
for these terms and concepts
and build a database (on cards,
or whatever), to ensure that
you understand the concepts
and their importance to
e-enabled business operation