McGraw-Hill/I rwin

2008 The McGraw-Hill Companies, All Rights Reserved

CHAPTER 9
CUSTOMER
RELATIONSHIP
MANAGEMENT
9-2
Chapter Nine Overview
SECTION 9.1 CUSTOMER RELATIONSHIP
MANAGEMENT
Business Benefits of CRM
Using Information Technology to Drive Operational CRM
Using Information Technology to Driver Analytical CRM

SECTION 9.2 CUSTOEMR RELATINSHIP
MANAGEMENT STRATEGIES
Customer Relationship Managements Explosive Growth
Customer Relationship Management Success Factors
Current Trends: SRM, PRM, ERM
Future CRM Trends
McGraw-Hill/I rwin
2008 The McGraw-Hill Companies, All Rights Reserved
SECTION 9.1
CUSTOMER
RELATIONSHIP
MANAGEMENT
9-4
LEARNING OUTCOMES
1. Compare operational and analytical customer
relationship management

2. Explain the formula an organization can use to find
its most valuable customers

3. Describe and differentiate the CRM technologies
used by sales departments and customer service
departments

4. Describe and differentiate the CRM technologies
used by marketing departments and sales
departments
9-5
BUSINESS BENEFITS OF CRM
CRM enables an organization to:
Provide better customer service
Make call centers more efficient
Cross sell products more effectively
Help sales staff close deals faster
Simplify marketing and sales processes
Discover new customers
Increase customer revenues
9-6
CRM BASICS
Organizations can find their most valuable
customers through RFM - Recency,
Frequency, and Monetary value
How recently a customer purchased items
(Recency)
How frequently a customer purchased items
(Frequency)
How much a customer spends on each
purchase (Monetary Value)
9-7
The Evolution of CRM
CRM reporting technology help organizations
identify their customers across other applications

CRM analysis technologies help organization
segment their customers into categories such as
best and worst customers

CRM predicting technologies help
organizations make predictions regarding
customer behavior such as which customers are
at risk of leaving

9-8
The Evolution of CRM
Three phases in the evolution of CRM
include reporting, analyzing, and
predicting
9-9
The Evolution of CRM
9-10
Operational and Analytical CRM
Operational CRM supports traditional
transactional processing for day-to-day
front-office operations or systems that
deal directly with the customers

Analytical CRM supports back-office
operations and strategic analysis and
includes all systems that do not deal
directly with the customers
9-11
Operational and Analytical CRM
9-12
Using IT to Drive Operational CRM
9-13
Marketing and Operational CRM
Three marketing operational CRM
technologies:
1. List generator compiles customer
information from a variety of sources and
segment the information for different
marketing campaigns
2. Campaign management system guides
users through marketing campaigns
3. Cross-selling and up-selling
Cross-selling selling additional products or
services
Up-selling increasing the value of the sale
9-14
Sales and Operational CRM
The sales department was the first to begin
developing CRM systems with sales force
automation a system that automatically tracks
all of the steps in the sales process


9-15
Sales and Operational CRM
Sales and operational CRM technologies
1. Sales management CRM system
automates each phase of the sales process,
helping individual sales representatives
coordinate and organize all of their accounts
2. Contact management CRM system
maintains customer contact information and
identifies prospective customers for future
sales
3. Opportunity management CRM system
targets sales opportunities by finding new
customers or companies for future sales

9-16
Sales and Operational CRM
CRM Pointers for Gaining Prospective
Customer
1. Get their attention
2. Value their time
3. Overdeliver
4. Contact frequently
5. Generate a trustworthy mailing list
6. Follow up
9-17
Customer Service and
Operational CRM
Three customer service operational CRM
technologies:
1. Contact center (call center)
2. Web-based self-service system
Click-to-talk
3. Call scripting system
9-18
Customer Service and
Operational CRM
9-19
USING IT TO DRIVE
ANALYTICAL CRM
Personalization when a Web site knows enough
about a persons likes and dislikes that it can fashion
offers that are more likely to appeal to that person

Analytical CRM relies heavily on data warehousing
technologies and business intelligence to glean insights
into customer behavior

These systems quickly aggregate, analyze, and
disseminate customer information throughout an
organization

9-20
USING IT TO DRIVE
ANALYTICAL CRM
Analytical CRM information examples
1. Give customers more of what they want
2. Value their time
3. Overdeliver
4. Contact frequently
5. Generate a trustworthy mailing list
6. Follow up
9-21
OPENING CASE QUESTIONS
Customer First Awards
1. Summarize the evolution of CRM and provide
an example of a reporting, analyzing, and
predicting question Progressive might ask its
customers

2. How could Progressives marketing
department use CRM technology to improve
its operations?

3. How could Minis sales department use CRM
technology to improve its operations?



9-22
OPENING CASE QUESTIONS
Customer First Awards
4. How could Progressive and Minis
customer service departments use CRM
technology to improve their operations?

5. Define analytical CRM and its
importance to companies like
Progressive and Mini


McGraw-Hill/I rwin
2008 The McGraw-Hill Companies, All Rights Reserved
SECTION 9.2
CUSTOMER
RELATIONSHIP
MANAGEMENT
STRATEGIES
9-24
LEARNING OUTCOMES
5. Identify the primary forces driving the explosive
growth of customer relationship management

6. Summarize the best practices for implementing
a successful customer relationship
management system

7. Compare customer relationship management,
supplier relationship management, partner
relationship management, and employee
relationship management



9-25
CUSTOMER RELATIONSHIP
MANAGEMENTS EXPLOSIVE GROWTH
CRM Business Drivers

9-26
CUSTOMER RELATIONSHIP
MANAGEMENTS EXPLOSIVE GROWTH
Forecasts for CRM Spending (in billions)

9-27
CUSTOMER RELATIONSHIP
MANAGEMENTS SUCCESS FACTORS
CRM success factors include:
1. Clearly communicate the CRM strategy
2. Define information needs and flows
3. Build an integrated view of the customer
4. Implement in iterations
5. Scalability for organizational growth
9-28
CURRENT TRENDS: SRM, PRM,
AND ERM
Current trends include:
Supplier relationship management (SRM)
focuses on keeping suppliers satisfied by
evaluating and categorizing suppliers for different
projects, which optimizes supplier selection
Partner relationship management (PRM)
focuses on keeping vendors satisfied by managing
alliance partner and reseller relationship that
provide customers with the optimal sales channel
Employee relationship management (ERM)
provides employees with a subset of CRM
applications available through a Web browser
9-29
FUTURE CRM TRENDS
CRM future trends include:
CRM applications will change from employee-only
tools to tools used by suppliers, partners, and even
customers
CRM will continue to be a major strategic focus for
companies
CRM applications will continue to adapt wireless
capabilities supporting mobile sales and mobile
customers
CRM suites will incorporate PRM and SRM
modules
9-30
OPENING CASE QUESTIONS
Customer First Awards
6. How might Progressives business model
change if it decreased its investments in CRM
technologies?

7. How might Minis business model change if it
decreased its investments in CRM
technologies?

8. Describe the CRM industry best practices and
explain how Progressive is using each



9-31
OPENING CASE QUESTIONS
Customer First Awards
9. Explain SRM and how Mini could use it
to improve its business

10. Explain ERM and how Progressive could
use it to improve its business

9-32
CLOSING CASE ONE
Fighting Cancer with Information
1. How could the ACSs marketing department
use operational CRM to strengthen its
relationships with its customers?

2. How could the ACSs customer service
department use operational CRM to strengthen
its relationships with its customers?

3. Review all of the operational CRM technologies
and determine which one would add the
greatest value to ACSs business
9-33
CLOSING CASE ONE
Fighting Cancer with Information
4. Describe the benefits ACS could gain
from using analytical CRM

5. Summarize SRM and describe how ACS
could use it to increase efficiency in its
business
9-34
CLOSING CASE TWO
Calling All Canadians
1. What are the two different types of CRM and
how can they be used to help an organization
gain a competitive advantage?

2. Explain how a contact center (or call center)
can help an organization achieve its CRM
goals

3. Describe three ways an organization can
perform CRM functions over the Internet

9-35
CLOSING CASE TWO
Calling All Canadians
4. How will outsourcing contact centers
(call centers) to Canada change as
future CRM technologies replace current
CRM technologies?

9-36
CLOSING CASE THREE
The Ritz-Carlton
1. What are the two different types of CRM and
how has the Ritz-Carlton used them to
become a world-class customer-service
business?

2. Determine which of Ritz-Carltons six steps of
customer service is the most important for its
business

3. Rank Ritz-Carltons six steps of customer
service in order of greatest to least importance
in a CRM strategy for an online book-selling
business such as Amazon.com

9-37
CLOSING CASE THREE
The Ritz-Carlton
4. Describe three ways Ritz-Carlton can
extend its customer reach by performing
CRM functions over the Internet

5. What benefits could the Ritz-Carlton gain
from using analytical CRM?

6. Explain ERM and describe how the Ritz-
Carlton could use it to increase efficiency in
its business