CRM in virtual business

Dr Amit Mitra
Bristol Business School
Agenda
• Nature of CRM
• Customer profiling
• CRM implementation issues
• Metrics in customer service and CRM

2
CRM concepts
• Customer centric philosophy
• Data interoperability
• Customer intelligence
• End to end approach
• Customised and personalised
marketing
• Customer behavioural analysis
• Blogging tweeting and microblogging
3
CRM - definition
CRM is a business strategy attempting to enhance customer capture
and retention through leveraging technologies and interoperable
processual architectures.

CRM as a process aims to bring together diverse pieces of information

about customers, sales, marketing effectiveness, and responsive- ness
and market trends.
Finnegan and Currie(2010)

CRM is a business strategy attempting to first understand the

customer then move inward to operations for align and realignment.
Finnegan and Willcocks (2006)

4
 Making a case for CRM
• Over time channels and process are added without much attention towards an
end-to-end business process integration leveraging synergies

• CRM has been treated as a software and not as a coherent overarching strategy
that brings people, processes, technology and relationships together

• Greater gains can be achieved through an in-depth understanding of synergy

touch points across departments

• Considerable cost savings can be made through the enhancement of business

development leveraging synergies of people, processes and technologies,
eliminating waste and enhancing utilization of resources more effectively

• Greater overarching customer focus, a better understanding of relationship

needs and henceforth a tighter internal partnership will result in bridging of the
departmental gaps

5
CRM systems
• A customer relationship management system
is a repository of customer information that
records all of the contacts that a customer
has with a firm (including Web sites) and
generates a customer profile available to
everyone in the firm with a need to ‘know the
customer’. (Laudon and Traver 2014, Pg no.
426)

6
CRM and customer lifecycle

Target

Renew Acquire

Retain Nurture

7
 Elements of customer profile
• Map of the customer’s relationship with the
institution
• Product and usage summary data
• Demographic and psychographic data
• Profitability measures
• Contact history summarising the customer’s
contacts with institutions across most delivery
channels
• Marketing and sales information containing
programs received by the customer and the
customer’s responses
8
Alternative RACE model for CRM development
• Reach: Build awareness on other sites and offline media to drive web presence
– KPIs:
• Unique visitors and fans
• Audience share
• Revenue or goal value/visit
• Act: Engage audience with brand on its website or other online presence
– KPIs:
• Bounce rate
• Pages/visit
• Product page conversion
• Convert: Achieve conversion to marketing goals such as fans, leads or sales on web presence
and offline
– KPIs:
• Conversion rates
• Leads and sales
• Revenue and margin
• Engage: Build customer and fan relationships through time to achieve retention goals
– KPIs:
• % active hurdle rates
• Fan engagement
• Repeat conversion

9
 Goal is to develop an end to end CRM strategy as Context

part of the Organizational Strategy

CRM Definition
Value (£ )

ns hip
atio
Rel
o f the
e
Valu Duration of Customer Relationship
The

Targeting Acquisition Retention Expansion

• Who Do we target
• What segments are most
profitable
• What segments match our
Value Proposition
• What is the best
segmentation strategy for
us / our industry
• What is the best channel • How can we improve • How many products
for each segment retention does our average
• What is the acquisition • What is our average customer buy
cost for a channel / customer relationship • How can we induce our
segment length current base to buy
• Do certain channels • How can we hold more products
deliver certain types of customer for as long as • Who are the prime
customers possible targets for expansion
• Cost effective acquisition • What is the most cost • What is the cost of
effective method of expansion
retention

CRM
CRM can
can be
be simply
simply defined
defined as
as everything
everything involved
involved with
with10managing
managing the
the customer
customer
RELATIONSHIP
RELATIONSHIP leveraging
leveraging internal
internal synergies.
synergies. 10
 Hype Cycle of CRM
Peak of Inflated
Expectations

Increased
Visibility &
Expectations
Plateau of
Packaged Productivity
CRM
Disillusionment Increasing
Realism

Time
11
 IT and Customer Knowledge
Customer Company
Level 1:
Utilize customers
explicit knowledge

Explicit Knowledge Level 1

Level 2:
Support customers to
externalise their
tacit knowledge

Level 3:
Level 2 Level 3
Tacit Knowledge Externalise shared
tacit knowledge

Nonaka et al. (2000)

12
CRM – A multiple level relationship
Accounting Purchasing
Analytics HR

Marketing Service

eMail
eMail Relationshi Phone
Phone
Marketing
Marketing Service
Service
p
Web
Web Field
Field
Marketing
Marketing Service
Service

Tele-
Tele- Web
WebSelf
Self
Marketing
Marketing Service
Service

Partner
Partner Email
Email
Marketing
Marketing Service
Service

Direct
Direct Service
Marketing Service
Marketing Partners
Partners
Point
Pointof
of Direct
Direct Partner
Partner Web
Web
TeleSales
TeleSales
Sale
Sale Sales
Sales Sales
Sales Sales
Sales

Sales
13
Types of CRM
• Loyalty programs
• Prospecting
• Traditional vs social CRM
• Save or win back
• Cross-sell/up-sell

14
eCRM
• The term eCRM originated in the mid-
1990s when customers started using
Web browsers, the Internet and other
electronic touch point devices
• eCRM also includes online process
applications such as segmentation and
personalisation

15
Scope of CRM
• Foundation of service
• Customer centred services
• Value added services

16
Extent of service
• Customer acquisition (prepurchase
support)
• Customer support during purchasing
• Customer fulfilment (purchase dispatch)
• Customer continuance support (post
purchase)

17
Classifications of CRM applications
• Customer-facing applications
• Customer-touching applications
• Customer-centric intelligence
applications
• Online networking

18
CRM implementation issues
• Deliver personalised services
• Target the right customers
• Help the customers do their jobs
• Let customers help themselves
• Streamline business processes that impact
the customers
• ‘Own’ the customer’s total experience by
providing every possible customer contact
• Provide a 360 degree view of the customer
relationship

19
Benefits and limitations of CRM
• Provision of superior customer care through
the use of Internet and IT technologies
– CRM is capable of making customers happy by
providing
• choice of products and services,
• fast problem resolution and response,
• easy and quick access to info
• Major limitations of CRM are
– The need to integrate with a company’s other ISs
– Justifying expenses of CRM might not be easy
– Mobility of certain employees makes it difficult to
support them

20
Large scale CRM implementation
requires [Tan et al. 2002]
• Customer centric strategy
• Commitments from people
• Improved or redesigned processes
• Software technology
• Infrastructure

21
Customer life cycle segmentation
1
• First time visitor

2
• Return visitor

3
• Newly registered visitor

4
• Registered visitor

5
• Purchased once or n times

6
• Purchased inactive

7
• Purchased active: e-responsive

22
Metrics in Customer Service and CRM
• Response time
• Site availability
• Download time
• Timeliness
• Security and privacy
• On-time order fulfilment
• Returns policy
• Navigability

Cf. Jagannathan et al. (2001), Sterne (2002)

23
References:
• Chaffey, D. (2011). E-Business & E-Commerce Management: Strategy, Implementation and
Practice
• Laudon, K.C., and Traver, C.G. (2014). E-Commerce 2011: Business, Technology, Society
• Turban, E., King, D., and Lang, J. (2011). Introduction to Electronic Commerce
• Jagannathan, S. et al. (2001). Internet commerce metrics, Prentice Hall
• Seybold, P.B. and Marshak, R. (1998). Customer.Com: How to create a profitable business
strategy for the internet and beyond, Times Books
• Sterne, J. (2002). Web metrics: Proven methods for measuring website success, Wiley
• Tan, X., et al. (2002). ‘Internet integrated customer relationship management’, Journal of
Computer Information Systems
• Turban, E., King, D., Lee, J. and Viehland, D. (2004). Electronic Commerce: A managerial
perspective, Prentice Hall
• Timmers, P. (2000). Electronic Commerce: Strategies and models for Business to business
trading, Wiley
• Zeng, Y.E., Wen, H.J., and Yen, D.C. (2003). ‘Customer relationship management (CRM) in
business-to-business (B2B) e-commerce’, Information Management & Computer Security,
11(1), 39-44
• Gummesson, E. (2004). ‘Return on relationships (ROR): the value of relationship marketing
and CRM in business-to-business contexts’, Journal of Business & Industrial Marketing,
19(2), 136-148
• Taylor, S.A., and Hunter, G.L. (2002). ‘The impact of loyalty with e-CRM software and e-
services’, International Journal of Service Industry Management, 13(5), 452-474

24