Customer Relationship Management

1. Customer Relationship Management CRM: Part of Chapter 4

2. Electronic Business: Scope 企業價值 B2C EC 企業策略 KM SCM ERP CRM Supplier Customer BI B2B EC

3. CRM and Its Relationship with EC • Customer relationship management (CRM):A customer service approach that focuses on building long-term and sustainable customer relationships that add value both for the customer and the company

4. Top 20% contributed to 150% profit, while the worst 40% results in 50% profit reduction 1 2 3 4 5 6 7 8 9 10 Why CRM ? Twice the normal turnover 50% profit reduction Profit Customer segments Source: Manhattan Consulting Group

5. Advertisement, Brand image Low visibility Advertisement, Brand image Very low visibility Advertisement, Brand image No visibility Customer Relationship Focal Company Customer Channel Focal Company Customer Salesmen Channel Focal Company Customer

6. As is Focal Customer Sales/ Channels To Be Focal Customer Sales/ Channels Changes in Relationship

7. CRM and Its Relationship with EC (cont.) • Classification of CRM programs • Loyalty program • Prospecting • Save or win back • Cross-sell/up-sell • eCRM:Customer relationship management conducted electronically

8. CRM and Its Relationship with EC (cont.) • Scope of CRM • Foundation of service • Customer-centered services • Value-added services CRM

9. CRM and Its Relationship with EC (cont.) • Extent of service • Customer acquisition (prepurchase support) • Customer support during purchase • Customer fulfillment (purchase dispatch) • Customer continuance support (postpurchase)

10. Components of CRM • Customer and Product centric services • Differential Marketing • Mass marketing • Focused marketing • One-to-one marketing • Customers are not born equal Sales Managment Marketing Management Customer Management Database Marketing Service Management

11. CRM and Its Relationship with EC (cont.) • Benefits of CRM • Provides: • choices of products and services • fast problem resolution and response • easy and quick access to information • Limitations of CRM • Requires integration with a company’s other information systems which is costly • Difficult to support mobile employees

12. CRM and Its Relationship with EC (cont.) • CRM implementation issues • Steps in building EC strategy focused on customer: • focus on the end customer • systems and business processes that are designed for ease of use and from the end customer’s point of view • efforts to foster customer loyalty

13. CRM and Its Relationship with EC (cont.) • Five factors required to implement a CRM program effectively: • Customer-centric strategy • Commitments from people • Improved or redesigned processes • Software technology • Infrastructure

14. CRM and Its Relationship with EC (cont.) • Justifying customer service and CRM programs • Metrics:Standards of performance; may be quantitative or qualitative

15. CRM and Its Relationship with EC (cont.) • Web-related metrics a company uses to determine the appropriate level of customer support: • Response time • Site availability • Download time • Timeliness • Security and privacy • On-time order fulfillment • Return policy • Navigability

16. CRM Applications and Tools:Delivering Customer Service in Cyberspace • CRM applications improve upon traditional customer service by means of easier communications and speedier resolution of customer problems • Customer service adds value to products and services • It is an integral part of a successful business

17. CRM Applications and Tools (cont.) • Classifications of CRM applications • Customer-facing applications • Customer-touching applications • Customer-centric intelligence applications • Online networking and other applications

18. Front-end Communication CRM Core Operational CRM Back-end Analytical CRM • CTI • Net Banking • B2C e-Commerce • Data Mining • OLAP • EIS • Customer Mgt • Marketing Mgt • Sales Mgt • Service Mgt Extraction Transformation Loading Database Data Mart Data Warehouse Demographic Data Transaction Data Operational Database Formation of CRM

19. CRM Applications and Tools (cont.) • Customer-facing applications Customer interaction center (CIC):A comprehensive service entity in which EC vendors address customer service issues communicated through various contact channels • Intelligent agents in customer service and call centers

20. CRM Applications and Tools (cont.)

21. CRM Applications and Tools (cont.)

22. CRM Applications and Tools (cont.) • Autoresponders:Automated e-mail reply systems (text files returned via e-mail), which provide answers to commonly asked questions • Sales force automation (SFA):Software that automates the tasks performed by sales people in the field, such as data collection and its transmission

23. CRM Applications and Tools (cont.) • Customer-touching applications • Personalized Web Pages • E-Commerce Applications • Campaign Management

24. CRM Applications and Tools (cont.) • Web Self-Service Activities conducted by users on the Web to provide answers to their questions (e.g., tracking) or for product configuration • Self-tracking • Self-configuration and customization

25. CRM Applications and Tools (cont.) • Customer-centric applications • Data reports • Data warehouse A single, server-based data repository that allows centralized analysis, security, and control over the data

26. CRM Applications and Tools (cont.) • Data analysis and mining • Analytic applications automate the processing and analysis of CRM data can be used to analyze the performance, efficiency, and effectiveness of an operation’s CRM applications • Data mining involves sifting through an immense amount of data to discover previously unknown patterns

27. CRM Applications and Tools (cont.) • Online networking and other applications • Forums • Chat rooms • Usenet groups • E-mail newsletters • Discussion lists

28. CRM Applications and Tools (cont.) • Mobile CRM the delivery of CRM applications to any user, whenever and wherever needed • Voice communication people are more comfortable talking with a person, even a virtual one, than they are interacting with machines. The smile and the clear pronunciation of the agent’s voice increases shoppers’ confidence and trust

29. CRM Applications and Tools (cont.)

30. CRM Applications and Tools (cont.) • Role of knowledge management and intelligent agents in CRM • Automating inquiry routing and answering queries requires knowledge • Generated from historical data and from human expertise and stored in knowledge bases for use whenever needed • Intelligent agents support the mechanics of inquiry routing, autoresponders, and so on

31. Internet Marketing in B2B • Organizational buyer behavior • number of organizational buyers is much smaller than the number of individual buyers • transaction volumes are far larger • terms of negotiations and purchasing are more complex

32. Internet Marketing in B2B(cont.)

33. Internet Marketing in B2B(cont.) • Methods for B2B online marketing • Targeting customers • contact all of its targeted customers individually when they are part of a well-defined group • affiliation service • advertising • Electronic wholesalers intermediary sells directly to businesses, but does so exclusively online

34. Internet Marketing in B2B(cont.) • Affiliate programs • Placing banners on another vendor’s Web site • Content alliance program in which content is exchanged so that all can obtain some free content • Infomediaries • Online data mining services

35. One-to-One Marketing and Personalization in EC • One-to-one marketing:Marketing that treats each customer in a unique way • Personalization:The matching of services, products, and advertising content to individual consumers • User profile:The requirements, preferences, behaviors, and demographic traits of a particular customer

36. One-to-One Marketing and Personalization in EC (cont.)

37. One-to-One Marketing and Personalization in EC (cont.) • Major strategies used to compile user profiles • Solicit information directly from the user • Observe what people are doing online • Build from previous purchase patterns • Perform marketing research

38. One-to-One Marketing and Personalization in EC (cont.) • Cookie:A data file that is placed on a user’s hard drive by a Web server, frequently without disclosure or the user’s consent, that collects information about the user’s activities at a site

39. One-to-One Marketing and Personalization in EC (cont.) • Collaborative filtering:A personalization method that uses customer data to predict, based on formulas derived from behavioral sciences, what other products or services a customer may enjoy; predictions can be extended to other customers with similar profiles

40. One-to-One Marketing and Personalization in EC (cont.) • Variations of collaborative filtering: • Rule-based filtering • Content-based filtering • Activity-based filtering • Legal and ethical issues in collaborative filtering • Invasion-of-privacy issues • Permission-based personalization tools to request customer permission

41. One-to-One Marketing and Personalization in EC (cont.) • Customer loyalty • Customer loyalty: Degree to which a customer will stay with a specific vendor or brand • Increased customer loyalty produces cost savings through: • lower marketing costs • lower transaction costs • lower customer turnover expenses • lower failure costs • E-loyalty: Customer loyalty to an e-tailer

42. One-to-One Marketing and Personalization in EC (cont.) • Trust in EC • Trust:The psychological status of involved parties who are willing to pursue further interaction to achieve a planned goal • Trust is influenced by many variables

43. One-to-One Marketing and Personalization in EC (cont.)

44. One-to-One Marketing and Personalization in EC (cont.) • How to increase EC trust • between buyers and sellers trust is determined by: • degree of initial success that each party experienced with EC and with each other • well-defined roles and procedures for all parties involved • realistic expectations as to outcomes from EC

45. One-to-One Marketing and Personalization in EC (cont.) • Issues in personalization • brand recognition • security mechanisms help solidify trust • disclose and update latest business status and practices to potential customers and to build transaction integrity into the system • guarantee information and protection privacy through various communication channels