Professional Documents
Culture Documents
Chapter 15 Objectives
After reading Chapter 15, you will be able to:
Define customer relationship management (CRM) and
identify the major benefits to e-marketers.
Outline the three pillars of CRM for e-marketing.
Describe social CRM and how it relates to traditional
CRM.
Discuss the nine major components needed for
effective and efficient CRM in e-marketing.
Highlight some of the company-side and client-side
tools that e-marketers use to enhance their CRM
processes.
Differentiate CRM metrics by customer life cycle stage.
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The Best Buy Story
Best Buy is the 11th largest U.S. e-commerce retailer
with 1B online visitors and a multichannel strategy.
In 2008 Best Buy initiated the Best Buy Community
online.
600,000 customers a quarter post 20,000
messages and view over 22 million pages of
content.
The community has yielded $5M in benefits to
Best Buy.
Best Buy also uses Twitter to engage customers
(@twelpforce).
http://www.youtube.com/watch?v=RbkS8AnqNGU
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Customer Relationship Management
http://www.youtube.com/watch?v=IdmtJIlkHzw
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Relationship Marketing Defined
Marketers named customer focus relationship
marketing (also 1:1 marketing)
Relationship Marketing is about “establishing,
maintaining, enhancing, and commercializing customer
relationships through promise fulfillment” (Gronroos, 1990)
Promise Fulfillment is making offers in their marketing
communications programs; customer expectations would be
met through actual brand experiences.
A firm using relationship marketing focuses more on
wallet share than on market share.
Wallet share is the amount of sales a firm can generate from
one customer over time, rather than on market share.
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Stakeholders
Relationship marketing can be used to build
mutually supportive bonds with stakeholders other
than consumers, such as employees and suppliers.
The four stakeholders most affected by Internet
technologies are:
Employees.
It is difficult for a firm to persuade buyers when
employees are not happy
Employees who need training and access to data and
systems used for relationship management.
Many relationship management programs fail due to
lack of employee training and commitment
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Stakeholders, Cont.
Business customers in the supply chain.
With partners relationship management (PRM), firms
build and maintain relationships with those
companies upstream and downstream
Both business customers and suppliers are extremely
important
Lateral partners.
Such as other businesses, not-for-profit organizations,
or governments join with the firm for some common
goals but not for transactions with other.
Consumers.
Consumers who are end users of products & services.
Marketers must differentiate between business
customers and final customers
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3 Pillars of Relationship Marketing
Relationship Marketing is more than promising
fulfillment
Two-way communication is vital to the success of this
relationship.
Experts believe that relationship marketing has
three pillars that support customer relationships
with the company’s products and services:
Customer Relationship Management (CRM)
Customer experience management (CEM)
Customer collaboration management (CCM)
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CRM Benefits, Cont.
More customer leads to more sales
Word-of-mouth communication among
customers is the heart of CRM
Cost Saving
US businesses saved $155 billion between 1998 and
2000 by using CRM
A 5% increase in customer retention translates to 25%
to 125% profitability in the B2B market
MEDIA
CRM 1.0 Blogs
Social networks
MEDIA Microblogs
Phone Photo sharing
E-mail Forums
In-person Wikis
SMS Reviews/Ratings
Website Interactive Web sites
Paper mail Customer Other social media
Company
Traditional media Live chat
employee Company All CRM 1.0 media
employees
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9 Building Blocks for Successful CRM
Businesses understand that CRM is necessary to be successful, but
nearly all firms are currently losing money on the investment of
CRM software. Businesses want to use CRM technology, but want
to know how to use it effectively and efficiently.
1. CRM vision
2. CRM strategy
3. Customer experience management (CEM)
4. Customer collaboration marketing (CCM)
5. Organizational collaboration
6. CRM processes
7. CRM information
8. CRM technology
9. CRM metrics
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2. CRM Strategy
E-marketers must determine their objectives and strategies
for initiating CRM programs and buying technology or
setting up social media accounts.
Relationship Intensity
Many CRM goals refer to customer loyalty (e.g. Harley
Davidson and Apple computers)
An important CRM strategy is to move to move
customers up the relationship intensity pyramid to
advocacy (awareness, identity, connection, community,
and advocacy, Ch. 9).
Another CRM goal involves building bonds with
customers on 3 levels: financial, social and structural.
Externally
Companies join forces to create results that would
type collaboration
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5. Organizational Collaboration, Cont.
CRM-SCM Integration
CRM refers to front-end operations (e.g. emails,
telephone calls…)
Working to create satisfying experiences at all customer
levels
Can be challenging due to different employees and
computer systems
SCM refers to back-end operations (e.g. inventory &
payment)
Usually includes the entire supply chain
Goal is to seamlessly link all involved
Extranet
Two or more intranet networks joined for the purpose of
sharing information (allow CRM-SCM integration).
Proprietary to the organizations involved.
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6. CRM Processes
force”
Allows salespeople to build, maintain, and access
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Company-Side Tools (push), Cont.
5. Collaborative Filtering : software that gathers the
recommendations of an entire group of people and
presents the results to like-minded customers
6. Outgoing E-Mail: E-mail is used to communicate with
individuals in an effort to increase their purchases,
satisfaction, and loyalty
7. Social Media: Companies build community and learn
about customers and products through blogs, social
networks, and bulletin board/newsgroup e-mail postings
all over the Web
8. iPOS Terminals: credit card technology used to create
instant sales promotions and coupons
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Client-Side Tools (pull)
1. Agents: shopping agents and search engines match user
input to databases and return customized information
2. Individualized Web Portals: customizable websites –
My Yahoo! or My AOL
3. Wireless Data Services: most wireless users only want
text due to slow connection speeds and small displays
4. Web Forms: can be used for site registrations or survey
research
5. Fax-on-Demand: for documents that are not in digital
format
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Client-Side Tools (pull), Cont.
6. Incoming E-Mail: post transaction customer service.
Companies are careful to adequately staff email
addresses, since customers expect a response in a
reasonable amount of time
7. RSS Feeds: Really simple syndication (RSS) allows users
to subscribe to blogs and Web sites
8. CRM Software: Technology and software are what
grease the CRM wheel, allowing companies to gather,
interpret, and use masses of customer and prospect data
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9. CRM Metrics
E-marketers use numerous metrics to assess the Internet’s
value in delivering CRM performance.
Experts believe the three most important metrics to CRM are
customer retention rates, ROI, and customer lift
(increased response or transaction rates).
ROI
Cost savings
Revenues
Customer satisfaction
Customer Lifetime Value (LTV)
LTV is the expected profit that you will realize from
sales to a particular customer in the future