CRM

Keeran Jamil

Customer Relationship Management
• 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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Customer Relationship Management
• Information stored on existing customers (and potential customers) is analysed and used to this end. • Automated CRM processes are often used to generate automatic personalised marketing based on the customer information stored in the system.

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Customer Relationship Management
• According to a 2007 series of IBM surveys that polled nearly 20,000 consumers showed that those retailers that integrate customer-focused initiatives throughout their businesses have a greater number of Advocates and often out-perform their competitors.

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• who would stay with their retailer even if another retailer offered a competitive product.Customer Relationship Management Advocates are 3 types of customers: • who recommend their retailer to their friends and family. • who would increase their purchase amount if their retailer offered products found at other stores. 5 .

• Acquiring online customers is 20-30% more expensive than for traditional businesses. • Building long-term relationships with customers is essential for any business. 6 . this explains why start-ups remain unprofitable for 23 years. their profitability accelerates much faster than in traditional businesses.coms.Customer Relationship Management • If you can keep customers loyal. Failure to do this caused failure of many dot.

Learning about Consumer Behavior Online • Model of consumer behavior online – independent (or uncontrollable) variables – intervening or moderating variables – decision-making process – dependent variables 7 .

) 8 © Prentice Hall 2004 .Learning about Consumer Behavior Online (cont.

Learning about Consumer Behavior Online (cont.) • Independent variables – Personal characteristics – Environmental variables • Social variables • Cultural/community variables • Other environmental variables 9 .

when.) • Intervening (moderating) variables variables are those that can be controlled by vendors • Dependent variables: the buying decisions – – – – customer makes several decisions “to buy or not to buy?” “what to buy?” “where. and how much to buy?” 10 .Learning about Consumer Behavior Online (cont.

• Customer behavioural data. allows the analytical techniques to segment and predict and ultimately lead to an increase in customer retention.Customer Relationship Management • Retailers can deliver a satisfying shopping experience by understanding who their core customers are and what customers expect from the brand experience. 11 .

Consumer Decision Making Process • 5 phases of the generic purchase decision model: 1. need identification information search evaluation of alternatives purchase and delivery after-purchase evaluation © Prentice Hall 2004 12 . 4. 5. 3. 2.

) 13 © Prentice Hall 2004 .Consumer Decision Making Process (cont.

2. 4. 3. Customer acquisition (prepurchase support) Customer support during purchase Customer fulfillment (purchase dispatch) Customer continuance support (postpurchase) © Prentice Hall 2004 14 .CRM and Its Relationship with EC • Extent of service 1.

CRM Approach A useful method of acquiring ‘repeat’ customers • Identification: building a customer profile usually during acquisition • Differentiation: segmenting and classifying customers usually during retention • Interaction: dealing with customers during the buying phase usually during retention • Communications: with customers for follow-on dealings usually during extension 15 .

THREE STAGES 3 Stages for Obtaining Repeat Visits • Magnetic: acquisition: obtaining visitors by promotion and attractive marketing • Sticky: retention: keeping customers onsite and engaging in revenue-generating activities • Elastic: extension: persuading customers to engage in further activities and to return 16 .

and whether they may be contacted again. why they visited. • From this it is important to glean as much information as possible on who the customer is.Stage 1 ACQUISITION • Marketing: a strategy for traffic building which results in first-time visits by potential customers. 17 .

products. behaviors.One-to-One Marketing and Personalisation in EC • One-to-one marketing: Marketing that treats each customer in a unique way • Personalization: The matching of services. preferences. and demographic traits of a particular customer © Prentice Hall 2004 18 . and advertising content to individual consumers • User profile: The requirements.

One-to-One Marketing and Personalisation 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 © Prentice Hall 2004 19 .

Stage 2 RETENTION • Stage two is primarily concerned with giving the customer a satisfactory experience whilst on the site such that they will wish to return. There are two goals : • retain as customers of the organisation and • retain as a community of loyal online customers 20 .

) • 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 (electronic retailer) © Prentice Hall 2004 21 .One-to-One Marketing and Personalisation in EC (cont.

) • Online networking and other applications – Forums – Chat rooms – Usenet groups – E-mail newsletters – Discussion lists © Prentice Hall 2004 22 .One-to-One Marketing and Personalisation in EC (cont.

Stage 3 • EXTENSION So how do we get customers to come back? 23 .

) • 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 © Prentice Hall 2004 24 .One-to-One Marketing and Personalisation in EC (cont.

© Prentice Hall 2004 25 .

) • 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 © Prentice Hall 2004 26 .One-to-One Marketing and Personalisation in EC (cont.

) • Issues in personalisation – 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 © Prentice Hall 2004 27 .One-to-One Marketing and Personalisation in EC (cont.

) • Collaborative filtering: A personalisation method that uses customer data to predict. based on formulas derived from behavioral sciences. predictions can be extended to other customers with similar profiles. • Legal and ethical issues in collaborative filtering – Invasion-of-privacy issues – Permission-based personalisation tools to request customer permission © Prentice Hall 2004 28 .One-to-One Marketing and Personalisation in EC (cont. what other products or services a customer may enjoy.

g FAQ’s. creating a personal product • FAQ’s : should be easy to submit a FAQ. rank FAQ’s by popularity Communications • Personalisation or customisation of email content according to customer profile.Interaction and Communications Interaction • Interaction: on-site interactions e. • Direct Email : Opt-in/Opt-out 29 .

an opt-in policy involves creating forms where services such as email newsletter subscriptions are unchecked by default. • In practise. is a more qualified potential customer. Also referred to as permission-based marketing.Customer Relationship Management opt-in policy/permission-based marketing • An opt-in policy requires a potential customer to self-select the services they wish to subscribe to. 30 . and how any information they provide may be used. • The benefit of this approach is that a user who has actively considered the offering before signing-up.

Customer Relationship Management opt-out policy • An opt-out policy is where an existing customer receives electronic communications—usually on the basis of a prior relationship— without providing express permission. and – the customer is provided with a means of opting-out of further communication. • The European Union Privacy and Electronics Communication Directive (introduced in 2003). makes provision for electronic communications (both email and text/SMS) to be initiated with existing customers on the conditions that: – the communication relates to products or services similar to those originally provided. 31 .

– 1.Privacy and Electronic Communications (EC Directive) Regulations 2003 • Opt-in: consent to receive marketing emails • Opt-out: ask not to receive marketing emails • All e-mail marketing messages regardless of recipient: – sender must not conceal their identity – sender must provide a valid address for opt-out requests. • For unsolicited e-mail marketing messages to individuals: – Can only send if:1. 3. Recipients email address collected during a sale or negotiations for a sale Sender only sends promotions relating to similar products and services When details collected. 2. recipient given option to opt-out which not taken OR Receiver has given prior consent 32 .

NB • records may need compliance with Data Protection law • asking customer to register too early can be detrimental. • EU is taking a negative view of the use of cookies.To engage a customer in an online relationship • A customer profile is needed showing a minimum of – how to contact customer. – their product interests – their demographics. • On subsequent visits customer can be identified as having visited before. 33 . Can be achieved by – a) asking customer to logon (register) to the site or – b) using cookies.

that collects information about the user’s activities at a site © Prentice Hall 2004 34 .Cookies • A data (text) file that is placed on a user’s hard drive by a Web server. frequently without disclosure or the user’s consent.

there is usually one file for each Web site you have visited . The most common place for them to reside could be in the c drive. • You can see all of the cookies that are stored on your machine. a Web site might generate a unique ID number for each visitor and store the ID number on each user's machine using a cookie file. • For example.Cookies • Each file is a text file. • You can see which Web site placed the file on your machine by looking at the file name (the information is also stored inside the file).the server of the website has placed cookies on your machine. 35 .

• 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 © Prentice Hall 2004 36 .

focus on the end customer 2.• CRM implementation issues – Steps in building EC strategy focused on customer: 1. efforts to foster customer loyalty © Prentice Hall 2004 37 . systems and business processes that are designed for ease of use and from the end customer’s point of view 3.

3. 5. Customer-centric strategy Commitments from people Improved or redesigned processes Software technology Infrastructure © Prentice Hall 2004 38 . 2. 4.• Five factors required to implement a CRM program effectively: 1.

• 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 © Prentice Hall 2004 39 .

ritcheylogic. is a relatively small designer and manufacturer of mountain bike components – Sells its products to distributors and/or retailers. Inc.com/ 40 .Ritchey Design Learns about Customers • The Problem – Ritchey Design. who then sell them to individual consumers – Its 2005 Web site was more a status symbol than a business tool http://www.

Ritchey Design Learns about Customers (cont.) – Visitors could get information where Ritchey products were sold – It did not give customers all the information they wanted – It did not enable the company to gain insight into its customers’ wants and needs 41 .

Ritchey reworked the Web site so that the company could hear from its customers directly • set up customer surveys on the site • offered visitors who answer the surveys a chance to win free Ritchey products • visitors enter their names and addresses and then answer questions about the company’s products 42 .Ritchey Design Learns about Customers (cont.) • The Solution – In late 2005.

000 on product development per year 43 .Ritchey Design Learns about Customers (cont.) – Web Trader software automatically organises and saves the answers in a database and is used to help make marketing and advertising decisions – Questions are changed to learn customers’ opinions about any new products Ritchey develops – Saves $100.

Ritchey Design Learns about Customers (cont.) – An online catalog educates retailers and consumers about the technological advantages of Ritchey’s high-end components over competitors’ parts – Visitors browse the product catalog that includes detailed descriptions and graphics of Ritchey’s products 44 .

com/ 45 . bags. water bottles.ritcheylogic.) • The Results – ritcheylogic. and other gear directly to individuals online – The company does not sell bike parts to individuals directly online because it wants to maintain its existing distribution system – Dealers can place orders on the site – http://www.com sells only team items such as t-shirts.Ritchey Design Learns about Customers (cont.

) – The site is basically used in B2C EC only for the basic activities in Internet marketing: • communicating with customers • conducting market research • delivering advertising 46 .Ritchey Design Learns about Customers (cont.

Ritchey Design Learns about Customers (cont.) • What we can learn … – Illustrates the benefits a company can derive from changing its Web site from a passive one to one with interactivity – Interactive Web site allows the company to: • learn more about its customers • educate customers • use the site for customer service 47 .

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