Lecture 31 E-Marketing. CRM Instructor: Hanniya Abid. Objectives. By the end of this lecture you will be able to: Define customer relationship management and identify the major benefits to e-marketers. Outline the types of CRM for e-marketing.
Objectives By the end of this lecture you will be able to: Define customer relationship management and identify the major benefits to e-marketers. Outline the types of CRM for e-marketing. Discuss the eight major components needed for effective and efficient CRM in e-marketing.
The Cisco Story Cisco, a $34.9 billion B2B marketer, provides internet networking systems for corporate, government, and education clients. The internet plays a major role in acquiring, retaining, and growing customer business. 3 million users log on to the Cisco site each month. Cisco has become adept at online customer relationship management (CRM).
The Cisco Story, Cisco set a goal to migrate customers to the online channel. In 1996, 5% of their customers placed orders on the Web site. Today 92.2% of their orders come through the internet. Site user satisfaction is 4.7 on a 5.0 scale. Can you think of other B2B marketers that utilize the internet as successfully as Cisco?
Relationship Marketing Defined Relationship marketing is about establishing, maintaining, enhancing, and commercializing customer relationships through promise fulfillment. Today it also means two-way communication with individual stakeholders, one at a time. A firm using relationship marketing focuses more on wallet share than on market share.
Relationship Marketing Defined Relationship marketing involves more than just customers, we’re focusing on customers – CRM-Customer Relationship Management. True CRM involves treating each customer differently according to their characteristics as described in the e-marketing insight box below. Relationship marketing shifts marketing away from short-term transactional marketing (with its one-off sales) towards developing longer lasting relationships which, ideally, develop into lifetime customers. This obviously generates more profitable repeat business as well as increased share of wallet or customer share.
Continuum from Mass Marketing to Relationship Marketing
Stakeholders Firms can establish and maintain relationships with different stakeholder groups through internet technologies: Employees who need training and access to data and systems used for relationship management. Business customers in the supply chain. Lateral partners, such as other businesses, not-for-profit organizations, or governments. Consumers who are end users of products and services.
Customer Relationship Management CRM is the process of acquiring, servicing, retaining, and building long-term relationships with customers. The benefits of CRM include: Increased revenue from better targeting. Increased wallet share with current customers. Retention of customers for longer time periods. The cost of acquiring a new customer is typically 5 times higher than the cost of retaining a current customer.
Relationship Marketing Permission Marketing Building relationships is a delicate affair. Marketers have to gain permission firstly, then trust and ultimately, loyalty. It ’s all common sense stuff. Stick to basic marketing tenets of identifying, anticipating and satisfying customer needs relentlessly helps to build relationships. But how do you do this? Firstly, adopt a ‘permission based marketing ’, approach as developed by the now classic Permission Marketing by Seth Godin ( Godin 1999 ). There are several steps towards permission marketing.
Relationship Marketing Several steps towards permission marketing: 1 Gaining Permission. The first step is to get customer ’s permission to give them information. Winning this permission, in the customer ’s time-compressed world, is a valuable asset, so a range of offers will be more powerful. 2 Collaboration. Marketing is a collaborative activity – where marketers help customers to buy and customers help marketers to sell. 3 Dialogue-trialogue. A dialogue emerges whether via web site e-mails, discussion rooms, real conversations in focus groups or even real meetings between customers and sales reps, as well as amongst customers themselves (trialogue).
Relationship Marketing Permission marketers develop the relationship and win further permission to talk on a regular basis. Some excellent permission-based marketers actually get permission to place orders on the customer ’s behalf. Other permission-based marketers even deliver right into the customers buildings without the customer opening the door! They become part of the customer ’ s systems. The concept of permission marketing is best summarized by three magic words. Seth Godin said: ‘ Permission marketing is . . . anticipated, relevant and personal ’
Relationship Marketing The essential concepts of permission marketing as: 1 Offer the prospect an incentive to volunteer [Achieve opt-in] 2 Using the attention offered by the prospect, offer a curriculum over time, teaching the consumer about your product or service [Enable the customer to learn more] 3 Reinforce the incentive to guarantee that the prospect maintains the permission [Offer opt-out, but minimize the likelihood for this]
Relationship Marketing 4 Offer additional incentives to get even more permission from the consumer [Learn more about the customer through time] 5 Over time, leverage the permission to change consumer behavior towards profits [Deepen the relationship through converting from prospect to customer and trialist to loyalist].
Relationship Marketing Managing the Dialogue Through Contact Strategies Too much contact can wear out the relationship. The key to building the best relationship is to have the right number of contacts of the right type at the right time for specific customers. This is a contact strategy. Determining which kinds of customers and enquirers get which sequence of contacts.
Example template for e-mail contact strategy
Relationship Marketing An automated e-mail sent by a business-to-business supplier two weeks after a customer has registered initial interest in the company. Such e-mails can help companies educate customers about their offering and engage them through digital assets such as a calculator – which fits the permission marketing model of ‘learning more through time’.
Relationship Marketing Renault is a good B2C example of a welcome strategy. Over the initial six month period of purchase consideration, they use a container or content pod within their e-newsletter to deliver personalized information about the brand and model of car the prospect is interested in. This is updated each month as the customer gets to know the brand better and the brand gets to know the customer better!
Database Marketing The database and database marketing is at the heart of e-CRM. By the end of this section you will understand what a database is, the complications that can arise, the types of data fields and the importance of linking it all to a clear marketing programme. It has been said that ‘The driving force underlying modern CRM systems is the customer database ’ . The repository of information on customers and prospects from all sources and channels – whether web sites, interactive TV, sales reps or customer service staff.
Database Marketing Achieve the dynamic dialogue of permission marketing which : recognizes and remembers each customer by name and need answers questions often automatically and, ideally, personally asks questions, collects information and builds a better profile, particularly of those ideal lifetime customers delivers communications which are instantaneous, relevant and value adding.
Database Marketing What is Stored in the Database? A database is more than a list of names. A database is distinguished by the amount and quality of relevant marketing data held on each customer or prospect. It should identify best (‘ideal’) customers and worst customers. The worst customers have ‘negative value’ these are customers who claim early on insurance, are bad debtors, or just an intensive user of free services.
Database Marketing For example, RFM analysis can be applied for targeting using e-mail according to how a customer interacts with an e-commerce site. Values could be assigned to each customer as follows: - Recency: 1 – Over 12 months 2 – Within last 12 months 3 – Within last 6 months 4 – Within last 3 months 5 – Within last 1 month
Database Marketing - Frequency: 1 – More than once every 6 months 2 – Every 6 months 3 – Every 3 months 4 – Every 2 months 5 – Monthly - Monetary value: 1 – Less than £10 2 – £10–50 3 – £50–£100 4 – £100–£200 5 – More than £200
Database Marketing Customers can be combined in different categories and then appropriate message treatments sent to encourage purchase. Simplified versions of this analysis can be created to make it more manageable,
Database Marketing There is a lot of other useful data worth collecting, such as promotions history (responses to specific promotions), share of wallet or customer share (potential spend), timing of spend and more. In B2B, we are interested in business type (SIC codes), size of business, holding companies and subsidiaries, competitive products bought, etc. You can segment customers by their activity or responsiveness levels and then develop strategies to engage them.
Database Marketing Rohner (2001) says ‘Without a corresponding marketing programme, database marketing should not be introduced ’. You must be clear what you want to do with the database.
E-CRM ‘ e ’ ADD TO CRM Relationship Marketing is about building relationships with all external parties involved in marketing. CRM focuses specifically on the relationship with customers and e-CRM focuses even further on the electronic relationship with customers. CRM software is used to manage these electronic relationships. Ebneret al. (2002) define this software as ‘the systems that allow companies to plan and analyze marketing campaigns, to identify sales leads, and to manage their customer contacts and call centres’.
CRM and e-CRM are not just about technology and databases, it’s not just a process or a way of doing things, it requires, in fact, a complete customer culture. In many ways there ’s nothing new here since good marketers have been taking care of their customers for many decades now. What is new is the lack of CRM in the fast moving online world: A world where customer expectations are often higher than those of the offline world. A world where customers ’ raised expectations are regularly crushed by previously successful offline companies.
CRM and E-CRM E-CRM enables digital marketers to create a multi-channel marketing process of: Monitoring customer actions or behaviours (clicks on specific e- mails or website offers) and then. . . – Reacting with appropriate messages either online, for example through an e-mail followup, or offline, for example, a phone or direct mail follow-up to encourage response – Monitoring response to these messages and continuing with additional reminder communications and monitoring.
CRM and E-CRM The secret is to put the time into defining rules and testing automated follow-up communications which match the context. For example, an online shopper who has purchased a product can be sent a series of welcome e-mails in the context of their purchase to encourage future purchases
CRM and E-CRM Some E-CRM Benefits and Challenges There is e-CRM software which enhances our ability to understand customers and enquirers, their needs, names, interests and a lot more. We can get closer to them. Speak with them. One of the 5Ss – the five fundamental benefits of e-marketing. A dynamic dialogue that is instantaneous, relevant, value adding and information gleaning: recognizes and remembers each customer by name and need
CRM and E-CRM answers questions often automatically and ideally, personally asks questions, collects information and builds a better profile, particularly of those, ideal, lifetime customers. The real potential advantage of online marketing lies in its potential to build relationships and create long-term value. Companies who have risen to the challenge of E-CRM have a ‘ 360 degree view of their customers ’. This in turn generates real loyalty from lifetime customers who readily share valuable data with you.
E-CRM Managing an E-CRM Checklist Using the web site for customer development from generating leads through to conversion to an online or offline sale using e-mail and web-based information to encourage purchase. Managing e-mail list quality (coverage of e-mail addresses and integration of customer profile information from other databases to enable targeting). Applying automated triggered e-mail marketing to support contact strategies aimed at customer development (welcome, purchase, upsell, cross-sell and after sales). Data mining to identify new segments and improve targeting.
E-CRM Providing online personalization or mass customization facilities to automatically recommend the ‘ Next-best product ’ . Providing online customer service facilities(such as Frequently Asked Questions, Call-back and Chat support) . Managing online service quality to ensure that first time buyers have a great customer experience that encourages them to buy again. Managing the multi-channel customer experienceas they use different media as part of the buying process and customer lifecycle, i.e. providing clear linkages and seamless transition between online and offline channels or touch points as part of the relationship.
E-CRM Keeping the Relationship Alive web site needs to be updated and kept fresh and tailored – your offerings need to be more attractive than the competition. How can you keep the relationship alive – without changing so much that you are no longer the organization they wanted to have a relationship with in the first place?
E-CRM Approach to the CRM cycle 1 Attract! Obviously this is where traditional off-line communication as well as on-line communication about your offering is being designed to bring customers to your site. From TV advertising to banner ads and hot-spots, getting them to your site will only be possible if (a) they know what you are offering and are interested (b) they know where you are and how to get to you. 2 Capture Data. The Internet is a splendid mechanism for capturing data – the prospect has the keyboard and screen in front of them and you can incentivize the giving of data.
E-CRM 3 Get Closer. Get to know them better. It is not surprising that there is reluctance on the part of many individuals to give personal data away to an Internet screen. So it is often better to gather more information about a person slowly and over time, as the trust builds between you and them. 4 Embrace Them. Make your customer feel loved! Approach them with offers, prizes, rewards, incentives and information as well as experiences that show them you are thinking about THEM.
E-CRM 5 Golden Handcuffs. Once you get them to show some loyalty, build a system whereby things are too good for them to leave! Tailored information or services to suit them specifically. Or services that integrate with the customers own systems or lifestyle. These switching costs make leaving less likely.
CRM’s Facets CRM has 3 facets: Sales force automation (SFA). Marketing automation. Customer service. Used primarily in the B2B market, SFA helps salespeople to: Build, maintain, and access customer records. Manage leads and accounts. Manage their schedules.
Marketing Automation & Customer Service Marketing automation software aids marketers in effective targeting, marketing communication, and monitoring of customer and market trends. Marketing automation software takes data from Web sites and databases and turns it into reports for CRM efforts. Customer service is critical to building long-term customer relationships. Most customer service occurs post purchase when customers have questions or complaints. Key tools include e-mail, online live chat, Web self-service, and package tracking using PDAs.
8 Building Blocks for Successful CRM The Gartner Group model of CRM covers 8 building blocks: CRM vision CRM strategy Valued customer experience Organizational collaboration CRM processes CRM information CRM technology CRM metrics
Building Blocks for Successful CRM CRM-SCM Integration
H Abid - CRM Week 01
(A) (B) (C) “Firing” customers Acquiring customers Retaining and growing customer base
Building Blocks for Successful CRM CRM Processes Firms use specific processes to move customers through the customer care life cycle.
8 Building Blocks for Successful CRM CRM Metrics E-marketers use numerous metrics to assess the internet’s value in delivering CRM performance. ROI Cost savings Revenues Customer satisfaction One study named customer retention, ROI, and customer lift (increased response or transaction rates) as the most important metrics.
Rules for CRM Success Recognize the customer’s role. Build a business case. Gain buy-in from end users to executives. Make every contact count. Drive sales effectiveness. Measure and manage the marketing return. Leverage the loyalty effect. Choose the right tools and approach. Build the team. Seek outside help.
Profiling Profiling helps you to know your customers better. The better the profiling the better the results because the more accurately you target your marketing efforts on particular profiles or segments, the less your efforts will be wasted. Different customers have different needs. It is actually easier to satisfy them if you divide them into groups sharing similar needs (segments) and then treat each segment differently.
Profiling The more you know about customers the better. It ’s as simple as that. Therefore a well used database as part of a CRM system can create a competitive advantage as you grow your own mini monopoly (customers on your database).
Profiling Today, we can build sophisticated consumer profiles based on previous purchasing decisions and even identify the consumer hierarchy of criteria, whether quality, speed of delivery, level of service, etc. This enables us to target tailored offers that match the specific needs of segments on our database. Get this right and this ‘virtuous cycle ’ delivers superior service and simultaneously creates competitive advantage that protects our customers from the inevit-able, new, competitive offers looming on the horizon.
Profiling A customer profile can take everything you know about the customer and everything you know about people who are like that customer. It can then be layered with all the psychological and sociological theory that suggests how that person will react to a specific offer or promotion. This helps you to tailor offers that work better for both your customers and your business.
Profiling Approaches To Profiling Profiling is a continuous activity. Continually collecting customer information, mining it and using it to profile and target more successfully. It is crucial to know what fields or data should be collected. Profile data can be gathered from several sources: internally from the customer ’s own input on a web form, tracking mechanisms and questionnaires or externally from research companies and data bureaux. Data can be complex and of massive volume – it might be that you have to hire a computer bureau to crunch the data to turn it into useful information.
Profiling One of the toughest jobs is to know which data matters most – especially where there is conflicting data. Some customers will give you incorrect information – consciously or unconsciously. You have to come up with ways to: 1- acquire the information in the first place, and 2 - then make it useful to your organization validation. The issue of the invasion of privacy is a difficult one. Laws, ethics and codes of practice come into play. Ethics have a role but the main arbiters of ‘how much contact is too much contact ’ , are the customers themselves. They will show you how ready they are to be communicated with by their response. You have to gain their permission.
Personalization Specialized software combined with an up-to-date and well-cleaned database allows marketers to personalize communications such as e-mails, voice mails (voice activated e-mails), snail mails (traditional direct mail), SMS text messages (for mobiles) and most interestingly, web sites – personalized web sites.
Personalization Why Personalization? The most important sound in the world is . . . your own name! We all appreciate it when people remember our names. It ’s personal. It ’s a compliment – an expression of respect. By the end of this section you’ll know how personalization helps to build relationships and the issues that arise. Some call it affectionately ‘the personal touch ’, when a restaurant remembers your favorite wine or preferred table. The database enhances the marketers memory of customer names, needs, interests and preferences.
Personalization Personalization enhances the relationship. Personalized web pages help to create a sense of ownership. Not of the customer by the marketer, but of the site by the customer! When you make a customer feel that their home page is truly theirs, that the offers you make available to them are theirs, that the information they access is put together just for them, then you allow the customer to own you.
Personalization This enhanced service helps to sell while also providing the platform for ongoing dialogue ( ‘ Speak ’ ) and enhancing the brand personality. So personalization delivers four of the 5Ss benefits of e-marketing. Which ‘ S ’ is missing? Save – personalization software does cost money. And the larger the customer base gets the more complex the personalization becomes. For this reason many organizations stick with a less sophisticated mass web site.
Personalization Approaches to Personalization There are three distinct approaches to personalization: Customization is the easiest to see in action: it allows the visitor to select and set up their specific preferences. Individualization goes beyond this fixed setting and uses patterns of your own behavior (and not any other user ’s – they know it ’s you because of your login and password choices) to deliver specific content to you that follows your patterns of contact. In group-characterization you receive a recommendation based on the preferences of people‘ like ’ you, using approaches based on collaborative filtering and case-based reasoning.
Personalization Mass customization is where different products, services or content is produced for different segments – sometimes hundreds of different segments. Personalization is different. It is truly one-to-one, particularly when not only the web site and communications are personalized but the product is personalized.
E-mail marketing A coherent e-mail marketing programme which helps build relationships needs to combine excellence both in devising effective outbound e-mail campaigns and managing incoming e-mails to satisfactorily resolve customers ’ questions. E-mail is most widely used as a prospect conversion and customer retention tool using an opt-in house-list of prospects and customers who have given permission to a company to contact them. Successful e-mail marketers adopt a strategic approach to e-mail and develop a contact or touch strategy that plans the frequency and content of e-mail communications.
Making it happen When choosing a CRM system you need to consider the current and future scale; how it can now, and in the future, integrate with other systems (like invoicing and debt collection) and of course your budget which includes 3Ms – men and women – people who will be involved in data capture, analysis and use; money – budget required for software license plus training and motivation schemes (to ensure staff buy into the new system); minutes (time required to specify the brief, source it, test it, modify it, train the team and roll it out).
Making it happen Systems development should follow a structured approach, going through several stages as shown in Figure. Note though that, just as for web site development, prototyping is the most effective approach since it enables the system to be tailored through users experience of early versions of the system. Beware of ‘scope creep ’. Ultimately, CRM is an attitude as much as a system. Success depends on a customer culture where all staff always ask ‘ how can we help the customer? ’
Making it happen Managing The Database The database is the core of the CRM system. The database administrator/manager (DBA) has many responsibilities here: 1 Database Design. Ensuring the design is effective in allowing customer data to be accessed rapidly and queries performed. 2 Data Quality .Ensuring data is accurate, relevant and timely. 3 Data Security. Ensuring data cannot be compromised by attacks from inside or outside the organization. 4 Data Backup and Recovery. Ensuring that data can be restored if there are system failures or attacks.
Making it happen 5 User Coordination. This involves specifying who has access to the information retrievaland who has access to information input. Too many uncontrolled inputs mean files get changed and deleted by too many different people. The database spins out of control. 6 Performance monitoring. Checking the system is coping with the demand placed on it by users. There ’ s one more part of the DBA ’s job – to communicate with clarity to the whole of the rest of the organization the advantages of database marketing.
Summary Relationship Marketing CRM & E-CRM Building blocks Customer life cycle
The last thing to do … Visit www.cisco.com and find more about their CRM activities