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3.07 Understand the nature of customer relationship management to show its contributions to a company. Performance Indicator: Discuss the nature of customer relationship management. Define the term customer relationship management (CRM).
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3.07 Understand the nature of customer relationship management to show its contributions to a company Performance Indicator: Discuss the nature of customer relationship management
Define the term customer relationship management (CRM) • It is a strategic tool firms can use to leverage proprietary information to identify cross-selling opportunities, new prospects, and potential conflicts of interest or independence issues. By developing a deeper understanding of your clients--their industries, markets and relationships--through CRM, your firm can gain a sustainable competitive advantage in challenging timesSource: http://www.allbusiness.com/company-activities-management/operations/11477600-1.html#ixzz1c5DbnOf1 • Strategies, processes, and policies used by businesses to build, maintain, and maximize the long-term value of customer relationships • Helps businesses to understand the respond to customers’ changing needs • Emphasizes positive meaningful, and long-term communication and interaction with customers. • Involves the collection of customer information to draw conclusions about the customer’s needs and wants as well as predict the customer’s loyalty and value in the future
Explain goals of CRM • To maximize the value and effectiveness of all customer touch points (all the opportunities that businesses have to connect with customers and reinforce their brand value) • To provide outstanding service to customers • To maximize customer satisfaction • To attract and retain loyal customers • To cultivate and maintain positive, profitable relationships with customers • To develop individualized relationships with customers
CRM Goals continued • To gather and tract information about customer for use in business decision-making • To understand customers and their needs so that these needs can be fulfilled in a manner satisfactory to customers and businesses • To develop products that meet or exceed customer expectations • To increase business profit • To develop a competitive advantage
Describe common CRM processes • Campaign management (usually conducted by the marketing dept.) • Targeting prospective customers • Distributing promotional materials to targeted prospects • Tracking response to promotional materials • Generating leads for sales • Sales management (sometimes divided into lead management, offer management, and contract management) • Recording lead information • Qualifying leads • Prioritizing leads • Contacting leads • Making sales
Common processes continued • Service management • Providing after-sales services, such as: • Maintenance and repair services • Warranties and guarantees • Retaining customers • Complaint management • Receiving customer complaints • Resolving customer problems • Communicating customer complaints to the organization • Retaining customers
Discuss the use of customer information in CRM • By gathering and organizing customer information, a business can better determine and fulfill its customers’ needs and wants • Customer information is also used to identify the most profitable, loyal customers. After identifying these customers, the business may provide higher, better service to these customers to maintain their loyalty and increase their profitability
Describe the nature of customer relationships in today’s society • Because customers now have so many different choices in the marketplace, they have become more selective about them they do business with. When given the choice to do business with one of two businesses that sell nearly identical products at similar prices, customers often choose to purchase from the business that offers better customer service. As a result, customers’ expectations for customer service are highter
Describe the role of customer experience management (CEM) in CRM • The business world has become increasingly focused on the customer versus the product • Many businesses have adopted customer-centric attitudes and strategies • Customer-centric strategy: a plan of action used by businesses that shifts the focus from businesses and their products to customers and their needs • An important component of CRM is customer experience management (CEM) • CEM: strategies, processes, and policies used by businesses to meet or exceed customer expectation for service and to provide customers with outstanding experiences/interaction at every touch point throughout their business transactions
Explain the impact of organizational structure on CRM • The organization should be structured so that customers have “seamless”, easy interactions with the company. • To ensure that customer have “seamless” interactions with the company all customer information must be available in one location to all employees who require it (usually CRM technology) • Companies with superior CRM processes are much more likely to be organized according to customer segment or group.
Role of corporate culture in CRM • For CRM to be successful, it must be supported by the corporate culture (i.e., the values, beliefs, and encouraged behaviors in an organization) • Sr. Executives must believe and demonstrate that building and maintaining customer relationships is a corporate priority • Corporate values must be understood and embraced by all employees • Employee incentives, such as prizes and bonuses, can help ensure that employees embrace CRM strategies and processes • Also, employees must be given leeway to do what is necessary to satisfy customers
The importance of formulating a CRM strategy prior to implementing CRM processes and tools • Each company should design a unique CRM strategy that directly addresses its needs, organization, and customers • An important step in developing a CRM strategy is identifying the objectives/goals of the CRM program (e.g., to increase customer retention, to improve product offerings, etc.) • Before implementing CRM processes and tools, each company must determine which members of its organization will be involved in CRM so that these individuals can be trained • CRM technology and tools should be selected after determining the company’s CRM strategy, objectives, and program participants
The relationship of CRM and business process management • CRM and business process management (BPM) work together to satisfy customers • BPM: A type of management that focuses on the design and improvement of business processes (including FRM processes) to make them as efficient and effective as possible; strives to align business processes with customers’ needs and wants • BPM ensures that CRM processes meet the needs, wants, and expectations of customers, while CRM processes can gather customer information that can be used to ensure that business processes are designed with the end user – the customer-in mind
Describe the relationship of CRM and continuous improvement • Continuous improvement: The activity of regularly updating one’s processes for better efficiency • After developing a CRM strategy and implementing CRM processes, continuous improvement must occur to ensure that: • Company values remain in line with the CRM strategy • CRM processes remain effective
Explain ways in which CRM can benefit a business • Increased customer satisfaction and loyalty • More customers and customer referrals • Reduced costs • Fewer complaints • Lower employee stress levels • Increased access to customer information (for use in business decision-making) • Long-term profitability
Definitions • Consent: (v) to be of the same mind or opinion (n) acceptance or approval of what is planned or done by another; acquiescence • Integrity: the quality of following rules, even if no one is around to enforce them. Integrity includes treating people fairly, applying rules consistently, and being unbiased and unprejudiced.
Describe the importance of trust in customer/business relationships • Building Trust is the Key to Avoiding Ethical Dilemmas • Aesops Fables, two buddies (insurance salesperson and client) are traveling together in the woods, when a bear rushes out in front of them. On instinct, the salesperson grabs a tree branch and climbs a tree, stranding the client. Ever resourceful, the client feigns death, knowing the bear won’t eat dead meat. After the bear sniffs close to the clients ear, it eventually leaves the area. As the sales person climbs down the tree, he laughingly asks the client: What did that big bad bear whisper? The client glares, then offers: He said, never trust a friend who deserts you in a pinch. http://ezinearticles.com/?Presenting-ETHICS---Elevating-Trust-Has-Inspired-Customer-Satisfaction&id=2307463
Discuss loyalty issues in customer/business relationships • Developing and nurturing loyalty should be the marketer's primary, day-to-day concern. Doing so increases the likelihood their brand can withstand economic turmoil, competitive threats, and reasonable price increases. • Through in-store temporary price reductions or couponing, consumers are told "we'll reduce your risk if you give us a try." The problem is that, just like the price relief itself, the consumers' commitment to the brand is temporary. • Another popular strategy among marketers with significant budgets is the development of catchy marketing phrases like "Just Do It" or "Oooops, I could have had a V8". This approach can be effective, until budgets are cut because another brand in the division is underperforming. • See the rest of the article @ http://chiefmarketer.com/crm/0106-customer-loyalty/
Describe ethical issues related to the collection of customer information • Read about ethics in CRM @ http://www.ehow.com/info_8384284_ethical-issues-crm.html • http://www.securitymagazine.com/articles/81720-consumer-loyalty-programs-what-are-your-real-statistics- Read the Role of Loss Prevention • Some areas of risk: • Employees scanning their own loyalty card • Cards activated at the Point of Sale and scanned more than 4 times a day • Cards activated with no customer information
Situations in which employees/departments involved in CRM may be reluctant to share customer information
Ethical issues related to the sale of customer information to 3rd parties • Data that can be purchased or rented from third party vendors may include names, addresses, telephone numbers, mailing addresses, social security numbers, age information, health and medical data, and other personal or proprietary information • information obtained for one purpose may be lawful, but if utilized for another purpose, may be illegal. • Consumer advocates want to give consumers the option to have to affirmatively "opt-in", i.e., sign a consent form, to permit information to be conveyed to a third party • http://www.mmmlaw.com/media-room/publications/articles/legal-and-ethical-issues-in-obtaining-and-sharing-information1
FEDERAL TRADE COMMISSION FAIR INFORMATION PRACTICE PRINCIPLES • TABLE 4-4 • 1. Notice/awareness (core principle).Web sites must disclose their information practices before collecting data. Includes identification of collector; • uses of data; other recipients of data; nature of collection (active/inactive); voluntary or required status; consequences of refusal; and steps taken to protect confidentiality, integrity, and quality of the data. • 2. Choice/consent (core principle). There must be a choice regime in place allowing consumers to choose how their information will be used for • secondary purposes other than supporting the transaction, including internal use and transfer to third parties. • 3. Access/participation. Consumers should be able to review and contest the accuracy and completeness of data collected about them in a timely, inexpensive process. • 4. Security. Data collectors must take responsible steps to assure that consumer information is accurate and secure from unauthorized use. • 5. Enforcement. There must be in place a mechanism to enforce FIP principles. This can involve self-regulation, legislation giving consumers legal remedies for violations, or federal statutes and regulations. • http://www.prenhall.com/behindthebook/0132304619/pdf/laudon%20MIS10_CH-04%20FINAL.pdf
Definitions • Client intelligence – • Cross-selling – encouraging a customer who buys one product to buy a related or complementary product • Up-selling – the seller will provide opportunities for the customer to buy related products or services. For example, “Would you like fries with that?” “How about a nice apple pie?” • Relationship mapping - A mapping that describes how to persist a relationship (association, aggregation, or composition) between two or more objects. http://www.agiledata.org/essays/mappingObjects.html
Definitions continued • Personalization – Creation of custom tailored services(such as news pages on the web or specialized newsletters) that meet the individual customer’s particular needs or preferences • Segmentation – Subdivision of a population into segments with similar characteristics, such as age, education, income • Clustering - A group of the same or similar elements gathered or occurring closely together; a bunch
Difference between CRM technology and CRM • CRM is a strategy (no, not software) to transform your business to be customer, not product, focused. The CRM software is just a tool that helps the company carry out this strategy. Depending on its implementation, it can help your business identify who your customers are, what they need and anticipate what could want. It allows businesses to tailor offers to their current customers, building closer relationships that make them feel valuable. • Overall, CRM can make your company more efficient and customer-friendly to capture greater market share, increase customer loyalty, and attract more customers. • http://www.businessknowhow.com/marketing/crm.htm
Types of CRM tools • CRM Applications – • Email focus • Infusionsoft • InTouch CRM • Social and collaborative focus • Batchbook • Kickapps • Rapportive • Gist • Sales focus • Smartsheet Sales Pipeline • SalesForce.com • Sugar CRM http://smallbiztrends.com/2011/01/9-crm-apps-small-business.html
CRM tools continued Databases Data Warehouses • Uses • Customer information • Employee information • Create reports on buying habits and trends • Track sales and create goals for the sales team http://www.avidian.com/crm/crm-database.aspx • Data warehouse serves as the repository to collect and integrate the breadth of customer information found in operation systems as well as in external ones. • The data warehouse supports a complete view of the customers, including customer data from typical sources such as: transactional data, interaction data (solicitations, call centers), demographic and behavioral data and self-provided profile data
Data commonly stored in a CRM system • Contact data – ability to build stronger, longer lasting relationships with customers. Know what they “Like” on Facebook and who/what they’re following on Twitter in addition to their personal data • Demographic data – income, zip code, etc. • Transactional data - what, when, where, and how much a customer bought • Relationship data - allows customer facing employees in such areas as sales, customer support, and marketing to make quick yet informed decisions on everything from cross-selling and upselling opportunities to target marketing strategies to competitive positioning tactics.
Types of CRM software approaches • Operation CRM - provide support to front office business processes such as sales personnel, marketing and service staff • Analytical CRM - Basically it evaluates the necessary customer data for a wide variety of reasons and purposes like:• Designing and accomplishing target marketing campaigns.• Designing and accomplish various campaigns i.e. cross selling, up selling and customer acquisition.• Identifying customer behaviors regarding products and services i.e. product development and pricing.• Management information system i.e. financial forecasting
Types of CRM software approaches continued • Sales Intelligence CRM - It is known as a direct sales tool, which is similar to Analytical CRM. Usually it has a variety of features like:• Cross-selling/Up-selling opportunities• Customer drift• Sales performance• Customer trends • Campaign Management – contains features of both Operational and Analytical, includes tracking, storing and analyzing campaign statistics • Collaborative CRM - Collaborative data management tools make company information available across the webhttp://www.ehow.com/list_6707950_types-crm-tools.html#ixzz1c5lkeLYd • Other tools include • Customer Relationship CRM – identify the best current customers and segments • Simple CRM • Social CRM – can create online ads and Twitter updates http://www.crmscorecard.com/types-of-crm.htm
CRM technology Benefits Drawbacks • Data consolidation & analysis – allows sales and customer services professionals comprehensive data • Customer identification & retention – providing personalized sales offerings • Cross-selling opportunities - offer personally tailored product offerings during the service transaction • Portability - resolve customer issues on site while using the information provided by CRM technology • Improved Forecasting - can identify both short- and long-term trends in customer activity • http://www.ehow.com/list_6529278_crm-technology-benefits.html • Record loss - company does not have control of the data. If there is an outage, information will be lost • Overhead – costs associated with running the software application • Training – takes away time from productivity • Increased vulnerability – if security is breached • http://www.ehow.com/list_6178037_disadvantages-crm-systems.html
How CRM technology can be used to create a “single view” of the customer
Importance of • Cleansing – removing discrepancies and inconsistencies in client/customer data. Helps to improve CRM data • Standardizing - information about the customer by recognizing, comparing, matching, and reconciling customer data across disparate systems according to predefined rules • Updating data – to view customer in “real-time”