BOOK REVIEW :

Dave Chaffey-Digital Business & E-Commerce Management

CUSTOMER RELATIONSHIP MANAGEMENT

Mata Kuliah : E-Business (D)

Kelompok 8
PROGRAM STUDI
MAGISTER MANAJEMEN TEKNOLOGI
1. Aski Yuniar Rosadi (6032202094)
FAKULTAS DESAIN KREATIF DAN BISNIS DIGITAL
2. Ivan Widiyanto (6032202004)
INSTITUT TEKNOLOGI SEPULUH NOPEMBER
3. Aulia Arif Wardana (6032202205) SURABAYA

www.its.ac.id INSTITUT TEKNOLOGI SEPULUH NOPEMBER, Surabaya - Indonesia

 Outline Presentation

• Introduction
• What is e-CRM
• Conversion Marketing
• The Online Buying Process
• Customer acquisition management
• Social media and social CRM strategy
• Customer retention management
• Excelling in e-commerce service quality
• Customer extension
• Technology solutions for CRM

www.its.ac.id INSTITUT TEKNOLOGI SEPULUH NOPEMBER, Surabaya - Indonesia

 Introduction
Customer Relationship Management (CRM) : an approach to building and sustaining long‑term business with customers.

4 Marketing Activities that Comprise CRM

Marketing Applications of CRM
1. Salesforce automation (SFA). Sales representatives are
supported in their account management and phone-based
sales through tools to arrange & record customer enquiries
and visits.
2. Customer service management. Respond to customer
requests for information by using an intranet to access
databases containing information on the customer, products
& previous queries.
3. Managing the sales process. E‑commerce sites or in a B2B
context by supporting sales representatives and recording
Customer Extension Techniques for CRM the sales process (SFA).
1. Re‑sell. Selling similar products to existing customers (in some B2B contexts as 4. Campaign management. Managing ad, direct mail, email
re‑buys or modified re‑buys). and other campaigns.
2. Cross-​sell. Sell additional products which may be closely related to the
5. Analysis. Through technologies such as data warehouses &
original purchase.
3. Up‑sell. A subset of cross-selling or selling more expensive products. data mining, explained the customers’ characteristics,
4. Reactivation. Encouraging Customers who have not purchased for some time or have purchase behaviour & campaigns, in order to optimise the
lapsed marketing mix.
5. Referrals. Generating sales from recommendations from existing customers.

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 What is e-CRM?
Electronic CRM) : Using digital communications technologies to maximise sales to existing customers & encourage continued usage

Digital Marketing Activities

(within The Scope of e-CRM)
1. Using website and online social presences for customer
development
2. Managing & Integrating customer profile and email list quality
3. Managing customer contact options (mobile, email & social
networks)
4. Data mining to improve targeting
5. Providing online personalisation/ mass customisation facilities to
automatically recommend the ‘next- best product’
6. Providing online customer service facilities (such as frequently 1.
asked questions, call- back and chat support).
7. Managing online service quality to ensure that first- time buyers
have a great customer experience that encourages them to buy 2.
again. 3.
8. Managing the multi channel customer experience as they use
4.
different media as part of the buying process and customer life
cycle.
Benefits of e‑CRM
1. Targeting more cost- effectively.
2. Achieve mass customisation of the marketing messages
3. Increase depth, breadth and nature of relationship.
4. A learning relationship can be achieved using different tools
5. Lower cost
IDIC Approach as a Framework for Using the Web Effectively
(to form and build relationships)
Identification. This stresses the need to identify each customer on their first
visit & subsequent visits. Common methods for identification are use of
cookies/asking the customer to log on to a site.
Differentiation. This refers to building a profile to help segment customers.
Interactions. These are interactions provided on-site, such as customer
service questions or creating a tailored product.
Customisation. This refers to personalisation or mass customisation of
content or emails according to the segmentation achieved at the acquisition
stage.

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 Conversion Marketing
Conversion Marketing : Using marketing communications to maximise conversion of potential customers to actual customers & existing
customers to repeat customers.
In an online context, this assesses how effective marketing communications are in
converting:
● web browsers or offline audiences to site visitors;
● site visitors to engaged site visitors (stay on the site & progress beyond the home
page;)
● engaged site visitors to prospects (who are profi led for their characteristics and
needs);
● prospects into customers;
● customers into repeat customers.

RACE is a practical framework designed to :

● Help marketers manage & improve the commercial value that their organisations
gain from digital marketing.
● Create a simplified approach to reviewing the performance of online marketing
and taking actions to improve its effectiveness
● Highlight the importance of on-site marketing communications & the quality of
service (converting browsers to buyers & buyers into repeat buyers)
● Highlight the need to balance investment between customer acquisition &
retention. Many start-up companies invest primarily in customer acquisition.

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 Online Buying Process (1)
How the Internet can Impact on The Buying Process
5 Types of Web Users (for a new purchaser)
(who Exhibit different searching behaviours )
1. Directed information-seekers. Will be looking for product, market
or leisure information. This type of user tends to be experienced in
using the web & is proficient in using search engines and directories.
2. Undirected information-seekers. These are the users usually
referred to as ‘surfers’, who like to browse & change sites by
following hyperlinks. This group tends to be new users & they may
be more likely to click on banner advertisements. This behaviour is
now less common.
3. Directed buyers. These buyers are online to purchase specific
products. For such users, brokers or intermediaries who compare
product features & prices will be important locations to visit.
4. Bargain hunters. These users want to use the offers available from
sales promotions such as free samples or prizes.
5. Entertainment seekers. Users looking to interact with the web for
enjoyment through entering contests such as quizzes.

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 Online Buying Process (2)
Net Promoter Score (NPS) : A measure of the number of advocates a company (or website)
Relationship Model Based On The Categories
has who would recommend it compared to the number of detractors.
(Different Aspects Of Trust & Consumer Response)
The main process for NPS:
1. Systematically categorize customers into promoters, passives, or detractors. If you prefer, you can call
them loyal advocates, fair- weather friends, and adversaries.
2. Creating closed-loop processes so that the right employees will directly investigate the root causes that
drive customers into these categories.
3. Making the creation of more promoters and fewer detractors a top priority so employees up and
down the organisation take actions based on their findings from these root- cause investigations.

Some specific approaches to help manage NPS in the online environment

Facilitating online advocacy:
1. Page template contains ‘forward/recommend to a friend’ options.
2. Email templates contain ‘forward to a friend option’.
3. Facilitate customer feedback through a structured programme of emailing customers for
their opinions & making it easy for site owners to comment.
4. Showcase positive experiences, for example, e-retail sites often contain options for rating & commenting on
products.
5. Involve customers more in shaping your web services and core product offerings.
Managing online detractors:
6. Use online reputation management tools for notification of negative (and positive) comments.
7. Develop a process and identify resource for rapidly responding to negative comments using a natural and open
approach.
8. Assess and manage the influence of negative comments within the natural listings of search engines.
9. Practise fundamental marketing principles of listening to customer comments about products and services and
aim to rectify them to win back the situation!

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 Customer Acquisition Management (1)
In online context, Customer acquisition can have two meanings :
● It may mean the use of the website to acquire new customers as qualified leads that can hopefully be converted into sales.
● It may mean encouraging existing customers to migrate to using online for purchase or service.

Marketing communications for customer acquisition, including search engine marketing, online PR, online partnerships, interactive advertising,
email marketing and social media marketing
● E-commerce managers constantly strive to deliver the most effective mix of communications to drive traffic to their e-commerce sites.
● The different techniques can be characterised as traditional offline marketing communications or rapidly evolving online marketing
communications which are also referred to as digital media channels
● The objective of these techniques is often to acquire new visitors or ‘build traffic’ using the diverse marketing communications techniques

Characteristics of Interactive Marketing Communications

1. From push to pull
2. From monologue to dialogue
3. From one‑to‑many to one‑to‑some and one‑to‑one
4. From one‑to‑many to many‑to‑many communications
5. From ‘lean-​back’ to ‘lean-​forward’
6. The medium changes the nature of standard marketing communications tools such as advertising
7. Increase in communications intermediaries
8. Integration remains important

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 Customer Acquisition Management (2)
Assessing Marketing Communications Effectiveness
● A campaign will not be successful if it meets its objectives of
acquiring site visitors and customers but the cost of achieving this
is too high.
● This constraint is usually imposed simply by having a campaign
budget.
● it is also essential to have specific objectives for the cost of getting
the visitor to the site using different referrers combined with the
cost of achieving the outcomes during their visit.
Measures Used for Setting Campaign Objectives
(Assessing Campaign Success Increasing in Sophistication )
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0 Volume or number of visitors. This is usually measured as thousands of unique visitors. It is preferable to
using page views or hits as a measure of effectiveness, since it is opportunities to communicate with individuals.
A more sophisticated measure is reach (%) or online audience share. Example: An online bank has 1 million
unique visitors per month.
1 Quality or conversion rates to action. This shows what proportion of visitors from different sources take
specific marketing outcomes on the web such as lead, sale or subscription. Bounce rates can also be used to assess
the relevance and appeal of the page that the visitor arrives on. Example: Of these visitors 10% convert to an
outcome such as logging in to their account or asking for a quote for a product.
2 Cost (cost per click). The cost of visitor acquisition is usually measured specific to a particular online
marketing tool such as paid search- engine marketing since it is difficult to estimate for an entire site with many
visitors referred from different sources. Example: £2 CPC.
3 Cost (cost per action or acquisition). When cost of visitor acquisition is combined with conversion to
outcomes this is the cost of (customer) acquisition. Example: £20 CPA (since only one in ten visitors take an
action).
4 Return on investment (ROI). Return on investment is used to assess the profitability of any marketing activity
or indeed any investment. There are different forms of ROI, depending on how profitability is calculated. Here we
will assume it is just based on sales value or profitability based on the cost per click and conversion rate.
5 Branding metrics. These tend to be only relevant to interactive advertising or sponsorship. They are the
equivalent of offline advertising metrics, i.e. brand awareness (aided and unaided), ad recall, brand favourability
and purchase intent.
6 Lifetime-​value-​based. Here the value of gaining the customer is not just based on the initial purchase, but the
lifetime value (and costs) associated with the customer. This requires more sophisticated models which can be
most readily developed for online retailers and online financial services providers. Example: A bank uses a net
present value model for insurance products which looks at the value over 10 years but the main focus is on a
5‑year result and takes into account:
INSTITUT TEKNOLOGI SEPULUH NOPEMBER, Surabaya - Indonesia
 Customer Acquisition Management (3)
Search Engine Marketing (SEM) Online PR

Search engines are a primary way of finding information about a company and its products
● How does Google work? ● Search engine optimisation (SEO) ● Communicating with media (journalists) online
○ Crawling ○ Frequency of occurrence in body copy ● Link‑ building
○ Indexing ○ Number of inbound links (page rank) ● Blogs, podcasting and RSS
○ Ranking or scoring (SERP/Search Engine ○ Title HTML tag ● Online communities and social networks
Result Page) ○ Meta‑ tags ● Managing how your brand is presented on 3rd party
○ Query request and results serving ○ Alternative graphic text sites
● ● Paid search marketing ●
Keyphrase analysis Creating a buzz – online viral marketing
○ Facebook pay‑ per‑ click advertising
● Beware of the fake clicks!

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 Social Media & Social CRM Strategy (1)
Cluetrain Manifesto is a call to action, encouraging managers to change their culture and provide processes and tools to enable
employees of an organization to interact with and listen to customer needs in a responsible way

Developing a social media strategy

● POST is a framework to help develop a social media strategy
○ People
○ Objectives
○ Strategy
○ Technology

Social CRM strategy

● The scope of social CRM ● The scope of social CRM
○ Marketing ○ Monitoring
○ Sales ○ Mapping
○ Service and support ○ Management
○ Innovation ○ Middleware
○ Collaboration ○ Measurement
○ Customer Experience

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 Social Media & Social CRM Strategy (2)

Community: A customer‑to‑customer interaction delivered via email groups, web ‑ based discussion forums or chat.

Type communities for B2B: Tactics organisations use to foster community (Parker - 2000):
○ Purpose ○ What interests, needs or passions do many of your customers have in common?
○ Position ○ What topics or concerns might your customers like to share with each other?
○ Interest ○ What information is likely to appeal to your customers’ friends or colleagues?
○ Profession ○ What other types of business in your area appeal to buyers of your products and
services?
○ How can you create packages or offers based on combining offers from two or
more affinity partners?
Typical problems while building community: ○ What price, delivery, financing or incentives can you afford to offer to friends
○ Empty communities (or colleagues) which your current customers recommend?
○ Silent communities ○ What types of incentives or rewards can you afford to provide customers who
■ Seed the community recommend friends (or colleagues) who make a purchase?
■ Make it select ○ How can you best track purchases resulting from word-of-mouth
○ Critical communities recommendations from friends?

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 Social Media & Social CRM Strategy (3)
Online Partnerships
● Affiliate marketing
○ A commission‑ based arrangement where an e‑retailer
pays sites that link to it for sales leads (CPA‑based) or, less
commonly, visitors (CPC‑based)
● Online sponsorship
○ For the advertiser, online sponsorship has the benefit that
their name is associated with an online brand that the site
visitor is already familiar with

Interactive Advertising
● Fundamentals of online advertising ● Interactive ad targeting options
○ Advertising on the web takes place when an advertiser pays to ○ On a particular type of site (or part of site)
place advertising content on another website ○ To target a registered user’s profile
● The purpose of interactive advertising ○ At a particular time of day or week.
○ Delivering content ○ Online behaviour
○ Enabling transaction ● Interactive ad formats
○ Shaping attitudes ○ Banner size
○ Soliciting response ○ Message length
○ Encouraging retention ○ Promotional incentive
○ Animation
○ Action phrase (commonly referred to as a call to action)
○ Company brand/logo

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 Social Media & Social CRM Strategy (4)
Media Planning – deciding on the online/offline mix for advertising

The reasons for using and increasing the significance of online in the
media mix by Sissors and Baron (2002):
○ Extend reach (adding prospects not exposed by a single medium or
other media)
○ Flatten frequency distribution (if audience viewing TV ads is
exposed too many times, there is a law of diminishing returns and
it may be better to reallocate that budget to other media).
○ To reach different kinds of audiences.
○ To provide unique advantages in stressing different benefits based
on the different characteristics of each medium.
○ To allow different creative executions to be implemented.
○ To add gross impressions if the other media are cost- efficient.
○ Reinforce message by using different creative stimuli.

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 Social Media & Social CRM Strategy (5)
Email Marketing
Outbound email marketing, where email campaigns are used as a form of direct marketing to
encourage trial and purchases and as part of a CRM dialogue;
Inbound email marketing, where emails from customers such as support enquiries are managed.
These are often managed today in conjunction with chat and co-browsing sessions.
● The main measures for evaluating email marketing are:
○ Delivery rate
○ Open rate
○ Click-through rate
● Opt‑in email options for customer acquisition
○ From the point of view of the recipient email marketing:
■ Cold email campaign
■ Co‑branded email
■ Third‑ party e‑newsletter

Social Media Marketing

To make a viral campaign effective (Kirby, 2003):
○ Creative material – the ‘viral agent’
○ Seeding
○ Tracking

Offline communications will never disappear – they are effective at reaching an

audience to encourage them to visit a site, but are also useful as a way of having an
impact or explaining a complex proposition

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 Customer Retention Management (1)

For an e-commerce site, customer retention has two distinct goals:

● To retain customers of the organisation (repeat customers).
● To keep customers using the online channel (repeat visits).

To create long-term online customer relationships that build on acquisition, to retain and extend, we need to analyse the drivers
of satisfaction amongst these e-customers, since satisfaction drives loyalty and loyalty drives profitability.

Personalisation and mass customisation

Personalisation: Delivering individualised content through web pages or email.
Mass customisation: Delivering customised content to groups of users through web pages or email.

● Personalisation and mass customisation can be used to tailor information and opt-in email can be used to deliver it to add
value and at the same time remind the customer about a product.
● ‘Personalisation’ and ‘mass customisation’ are terms that are often used interchangeably.
● In the strict sense, personalisation refers to customisation of information requested by a site customer at an individual level.

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 Customer Retention Management (2)
Techniques for managing customer activity and value
The importance of retention rate metrics was highlighted by Agrawal et al. (2001). The main retention metrics they mention and
show the impact on profitability are:
● Repeat-customer conversion rate – how many first-time customers purchase a second product?
● Repeat-customer base – the proportion of the customer base who have made repeat purchases.
● Number of transactions per repeat customer – this indicates the stage of development of the customer in the relationship
(another similar measure is number of product categories purchased).
● Revenue per transaction of repeat customer – this is a proxy for lifetime value since it gives average order value.

Lifetime‑value modelling
Lifetime value is the total net benefit that a customer or group of customers will provide a company over their total relationship
with the company. Lifetime-value analysis enables marketers to:
● Plan and measure investment in customer acquisition programmes
● Identify and compare critical target segments
● Measure the effectiveness of alternative customer retention strategies
● Establish the true value of a company’s customer base
● Make decisions about products and offers
● Make decisions about the value of introducing new e-CRM technologies.

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 Excelling in E-commerce Service Quality

Research across industry sectors suggests that the quality of service is a key determinant of loyalty. Feinberg et al. (2000)
report that if reasons why customers leave a company are considered, over 68% leave because of ‘poor service
experience’, with other factors such as price (10%) and product issues (17%) less significant.

Parasuraman et al. (1985) suggested that these dimensions of service quality on which consumers judge expected and
delivered service-quality levels are:
● Tangibles – the physical appearance and visual appeal of facilities;
● Reliability – the ability to perform the service consistently and accurately;
● Responsiveness – a willingness to help customers and provide prompt service;
● Assurance – the knowledge & courtesy of employees and their ability to convey trust and confidence;
● Empathy – providing caring, individualised attention.

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 Customer Extension (1)
Customer extension: Deepening the relationship with the customer through increased interaction and product transactions.
Customer extension has the aim of increasing the lifetime value of the customer to the company by encouraging cross- sales.

Advanced online segmentation and targeting techniques

The segmentation and targeting approach used by e-retailers is based on five main elements which in effect are layered on top of
each other. The number of options used, and so the sophistication of the approach, will depend on resources available, technology
capabilities and opportunities afforded by the list:
1. Identify customer life cycle groups.
2. Identify customer profile characteristics.
3. Identify behaviour in response and purchase.
4. Identify multichannel behaviour (channel preference).
5. Tone and style preference.

Sense → Respond → Adjust

To be able to identify customers in the categories of value, growth, responsiveness or defection risk we need to characterise them
using information which indicates their purchase and campaign-response behaviour.

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 Customer Extension (2)
Digital marketing enables marketers to create a cycle of:
● Monitoring customer actions or behaviours and then . . .
● Reacting with appropriate messages and offers to encourage desired behaviours
● Monitoring response to these messages and continuing with additional communications and monitoring.

Propensity modelling: A name given to the approach of evaluating customer characteristics and behaviour and then making
recommendations for future products. The following recommendations are based on those in van Duyne et al. (2002):
1. Create automatic product relationships (i.e. next-best product). A low-tech approach to this is, for each product, to group together
products previously purchased together. Then for each product, rank product by number of times purchased together to find
relationships.
2. Cordon off and minimise the ‘real estate’ devoted to related products. An area of screen should be reserved for ‘next-best product
prompts’ for up-selling and cross-selling. However, if these can be made part of the current product they may be more effective.
3. Use familiar ‘trigger words’. This is familiar from using other sites such as Amazon. Such phrases include: ‘Related products’, ‘Your
recommendations’, ‘Similar’, ‘Customers who bought...’, ‘Top 3 related products’.
4. Editorialise about related products, i.e. within copy about a product.
5. Allow quick purchase of related products.
6. Sell related products during checkout. And also on post-transaction pages, i.e. after one item has been added to basket or purchased.

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 Technology Solutions for CRM (1)
Types of CRM Applications
● Database technology is at the heart of delivering CRM
applications.
● Email is used to manage many of the inbound, outbound and
internal communications managed by the e-CRM system.
● The three main types of customer data held as tables in
customer databases for CRM are typically:
○ Personal and profile data. These include contact
details and characteristics for profiling customers
such as age and sex (B2C) and business size, industry
sector and individual’s role in the buying decision
(B2B).
○ Transaction data. A record of each purchase
transaction including specific product purchased,
quantities, category, location, date and time, and
channel where purchased.
○ Communications data. A record of which customers
have been targeted by campaigns, and their response
to them (outbound communications). Also includes a
record of inbound enquiries and sales representative
visits and reports (B2B).

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 Technology Solutions for CRM (2)
All CRM systems are critically dependent on the currency, completeness and accuracy of their databases. One of the biggest
challenges after installation is maintaining data quality. However, the majority rated their data quality as falling short of their
objectives.

It can be suggested that for data quality to be managed successfully, the following are important:
● Establish a business owner. This issue is too important to be managed solely by technologists and it requires management
at customer contact points, which are part of the responsibility of marketing. All staff involved with managing customer data
should be made clear about their responsibilities.
● Optimise quality on capture. Validation checks can be built in at data entry to check that fields such as postcode are
complete and accurate.
● Continuously improve quality. Customer contact details constantly change. Changes of email address are even more
difficult to manage than changes of physical address. As a consequence, all contact points should be used to help maintain
data quality.
● Work towards a single view of customer. Many errors result because different data are stored in different databases so
unifying the data in a single database is the aim for many organisations.
● Adopt a data quality policy. Of the sample in the QAS (2002) survey 40% had no data quality policy, but this is essential
to help achieve the four steps above.

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