Transcript Document 7116164

Customer Relationship Management
CRM and external relationships
Focus of CRM
Importance for organisation to focus on
needs, wants, preferences and values of
customer
Use of IT and Internet to cause major
transformation in ways organisations
interact with customers
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Electronic Business: Scope
企業價值
B2C
EC
企業策略
KM
SCM
ERP
Supplier
CRM
Customer
BI
B2B EC
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Significance of CRM
$23b in 2000
Estimates of $76b in 2005
Median annual investment ~ $1m, implementation
over 4 years
Large companies spend ~ $15m – $30m /year, and
between $60m – $130m to full implementation
(Gartner Group 2001)
But, ~ 30% CRM projects never get finished
55% to 75% fail to deliver anticipated benefits
60% of managers view CRM as failures
(Morphy 2001, Kiely 2001)
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CRM and Its
Relationship with EC
Customer relationship management (CRM):
A customer service approach that focuses
on building long-term and sustainable
customer relationships that add value both
for the customer and the company
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Who is the BOSS…
‘There is only one boss. The customer.
And he can fire everybody in the
company, from the chairman on down,
simply by spending his money
somewhere else.’
(Sam Walton, WalMart)
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Notions about customers
Every 5 yrs, av. US organisation lose 50%
of customers
Cutting these by 5%
double profits
(Morphy 2001)
5% in customer retention
av.
lifetime value of customer of between 3595%
(Reichheld 1996)
Retaining more customers can have significant impact
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on organisational performance.
Why CRM ?
Twice the normal
turnover
Top 20% contributed to 150% profit, while the
worst 40% results in 50% profit reduction
Profit
50% profit reduction
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Customer segments
Source: Manhattan Consulting Group
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Customer focus
‘Present a single face
to the customer’
Customer focus
win and retain loyal
and profitable customers
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Advantages of customer focus
Accurate view of internal operations
Service to customers
Information
Across product lines
Across geographic locations
Across subsidiaries, business units
Across multiple channels
Major challenge for most organisations
– cross-functional, complex
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Why are loyal customers more
profitable?
Potential
customer
Customer
Loyal
customer
Former
customer
Costs
Benefits
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Why are loyal customers more
profitable?
Acquisition costs incurred once only
Benefits accrue from
Loyal customers referring other new customers
Loyal customers tend to purchase more over time
Loyal customers are less price sensitive
Loyal customers incur fewer administrative costs over
time
Note also: damage from dissatisfied customers can
escalate
(Cash 1999)
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Customer dissatisfaction
escalates
Dissatisfied
customers
Share bad
experiences
with others
Loss of
customer
loyalty
Dollars lost
compound
over time
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Concept of demand chain
Supply chain
perspective
Product / service flows
Supplier
Manufacturer
Distributor
Retailer
Consumer
Customer demand flows
Demand chain
perspective
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Customer Relationship
Advertisement, Brand image
Focal Company
Customer
Low visibility
Advertisement, Brand image
Focal Company
Channel
Customer
Very low visibility
Advertisement, Brand image
Focal
Company
Salesmen
Channel
Customer
No
visibility
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Changes in Relationship
As is
Focal
Customer
Sales/
Channels
To Be
Focal
Customer
Sales/
Channels
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CRM and Its
Relationship with EC (cont.)
Classification of CRM programs
Loyalty program
Prospecting
Save or win back
Cross-sell/up-sell
eCRM: Customer relationship management
conducted electronically
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CRM and Its
Relationship with EC (cont.)
Scope of CRM
1. Foundation of service
2. Customer-centered services
3. Value-added services
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CRM and Its
Relationship with EC (cont.)
Extent of service
1. Customer acquisition (prepurchase support)
2. Customer support during purchase
3. Customer fulfillment (purchase dispatch)
4. Customer continuance support (postpurchase)
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Components of CRM
Customer and Product
centric services
Differential Marketing
Mass marketing
Focused marketing
One-to-one marketing
Customers are not
born equal
Customer
Management
Sales
Managment
Marketing
Management
Service
Management
Database
Marketing
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CRM and Its
Relationship with EC (cont.)
Benefits of CRM
Provides:
choices of products and services
fast problem resolution and response
easy and quick access to information
Limitations of CRM
Requires integration with a company’s other
information systems which is costly
Difficult to support mobile employees
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CRM and Its
Relationship with EC (cont.)
CRM implementation issues
Steps in building EC strategy focused on
customer:
1.focus on the end customer
2.systems and business processes that are
designed for ease of use and from the end
customer’s point of view
3.efforts to foster customer loyalty
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CRM and Its
Relationship with EC (cont.)
Five factors required to implement a CRM
program effectively:
1. Customer-centric strategy
2. Commitments from people
3. Improved or redesigned processes
4. Software technology
5. Infrastructure
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CRM and Its
Relationship with EC (cont.)
Justifying customer service and CRM
programs
Metrics: Standards of performance; may be
quantitative or qualitative
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CRM and Its
Relationship with EC (cont.)
Web-related metrics a company uses to determine
the appropriate level of customer support:
Response time
Site availability
Download time
Timeliness
Security and privacy
On-time order fulfillment
Return policy
Navigability
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CRM Applications and Tools:
Delivering Customer Service in Cyberspace
CRM applications improve upon traditional
customer service by means of easier
communications and speedier resolution of
customer problems
Customer service adds value to products
and services
It is an integral part of a successful
business
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CRM Applications and Tools (cont.)
Classifications of CRM applications
Customer-facing applications
Customer-touching applications
Customer-centric intelligence applications
Online networking and other applications
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Formation of CRM
Front-end
Communication
CRM
Core
Operational
CRM
• CTI
• Net Banking
• B2C e-Commerce
• Customer Mgt
• Marketing Mgt
• Sales Mgt
• Service Mgt
Operational
Database
Extraction
Transformation
Loading
Back-end
Analytical
CRM
• Data Mining
• OLAP
• EIS
Database
Data Mart
Data Warehouse
Demographic Data
Transaction Data
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CRM Applications and Tools (cont.)
Customer-facing applications
Customer interaction center (CIC): A
comprehensive service entity in which EC
vendors address customer service issues
communicated through various contact
channels
Intelligent agents in customer service and
call centers
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Customer Management
Know your customer
Problems
Customer relates to channel/salesmen, not
company
Lost of valuable customer data upon
departure of sales personnel
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Cases
Online
Membership
One-to-one relationship
Traditional channel
Membership
Data collection and usage
Closer tie to customer
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CRM Applications and Tools (cont.)
Autoresponders: Automated e-mail reply
systems (text files returned via e-mail),
which provide answers to commonly asked
questions
Sales force automation (SFA): Software
that automates the tasks performed by sales
people in the field, such as data collection
and its transmission
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CRM Applications and Tools (cont.)
Customer-touching applications
Personalized Web Pages
E-Commerce Applications
Campaign Management
DM: Direct Mail
For traditional market
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CRM Applications and Tools (cont.)
Web Self-Service
Activities conducted by users on the Web to
provide answers to their questions (e.g.,
tracking) or for product configuration
Self-tracking
Self-configuration and customization
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CRM Applications and Tools (cont.)
Customer-centric applications
Data reports
Data warehouse
A single, server-based data repository that
allows centralized analysis, security, and
control over the data
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CRM Applications and Tools (cont.)
Data analysis and mining
Analytic applications automate the
processing and analysis of CRM data
can be used to analyze the performance,
efficiency, and effectiveness of an operation’s
CRM applications
Data mining involves sifting through an
immense amount of data to discover
previously unknown patterns
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CRM Applications and Tools (cont.)
Online networking and other applications
Forums
Chat rooms
Usenet groups
E-mail newsletters
Discussion lists
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CRM Applications and Tools (cont.)
Mobile CRM
the delivery of CRM applications to any
user, whenever and wherever needed
Voice communication
people are more comfortable talking with
a person, even a virtual one, than they are
interacting with machines. The smile and
the clear pronunciation of the agent’s voice
increases shoppers’ confidence and trust
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Business intelligence, data
warehousing
Internal and external data is gathered, stored
and analysed to provide important
information to support decision making of
executives
Provide better forecasts of end consumer
demand, improved understanding of
changing consumer preferences and wants,
and so on
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CRM Applications and Tools (cont.)
Role of knowledge management and
intelligent agents in CRM
Automating inquiry routing and
answering queries requires knowledge
Generated from historical data and from
human expertise and stored in knowledge
bases for use whenever needed
Intelligent agents support the mechanics of
inquiry routing, autoresponders, and so on
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Internet Marketing in B2B
Organizational buyer behavior
number of organizational buyers is much
smaller than the number of individual buyers
transaction volumes are far larger
terms of negotiations and purchasing are
more complex
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Internet Marketing in B2B
(cont.)
Methods for B2B online marketing
Targeting customers
contact all of its targeted customers
individually when they are part of a welldefined group
affiliation service
advertising
Electronic wholesalers
intermediary sells directly to businesses, but
does so exclusively online
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Internet Marketing in B2B
(cont.)
Affiliate programs
Placing banners on another vendor’s Web site
Content alliance program in which content is
exchanged so that all can obtain some free
content
Infomediaries
Online data mining services
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One-to-One Marketing and
Personalization in EC
One-to-one marketing: Marketing that treats
each customer in a unique way
Personalization: The matching of services,
products, and advertising content to
individual consumers
User profile: The requirements, preferences,
behaviors, and demographic traits of a
particular customer
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One-to-One Marketing and
Personalization in EC (cont.)
Major strategies used to compile user
profiles
Solicit information directly from the user
Observe what people are doing online
Build from previous purchase patterns
Perform marketing research
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One-to-One Marketing and
Personalization in EC (cont.)
Cookie: A data file that is placed on a
user’s hard drive by a Web server,
frequently without disclosure or the user’s
consent, that collects information about the
user’s activities at a site
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One-to-One Marketing and
Personalization in EC (cont.)
Collaborative filtering: A personalization
method that uses customer data to predict,
based on formulas derived from behavioral
sciences, what other products or services a
customer may enjoy; predictions can be
extended to other customers with similar
profiles
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One-to-One Marketing and
Personalization in EC (cont.)
Variations of collaborative filtering:
Rule-based filtering
Content-based filtering
Activity-based filtering
Legal and ethical issues in collaborative filtering
Invasion-of-privacy issues
Permission-based personalization tools to request
customer permission
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One-to-One Marketing and
Personalization in EC (cont.)
Customer loyalty
Customer loyalty: Degree to which a customer will
stay with a specific vendor or brand
Increased customer loyalty produces cost savings
through:
lower marketing costs
lower transaction costs
lower customer turnover expenses
lower failure costs
E-loyalty: Customer loyalty to an e-tailer
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One-to-One Marketing and
Personalization in EC (cont.)
Trust in EC
Trust: The psychological status of involved
parties who are willing to pursue further
interaction to achieve a planned goal
Trust is influenced by many variables
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One-to-One Marketing and
Personalization in EC (cont.)
How to increase EC trust
between buyers and sellers trust is
determined by:
degree of initial success that each party
experienced with EC and with each other
well-defined roles and procedures for all
parties involved
realistic expectations as to outcomes from EC
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One-to-One Marketing and
Personalization in EC (cont.)
Issues in personalization
brand recognition
security mechanisms help solidify trust
disclose and update latest business status and
practices to potential customers and to build
transaction integrity into the system
guarantee information and protection privacy
through various communication channels
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