Customer Relationship Management E-M ARKETING /6E C HAPTER 15

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 15-2 C HAPTER 15 O BJECTIVES  After reading Chapter 15, you will be able to:  Define customer relationship management and identify the major benefits to e-marketers.  Outline the three legs of CRM for e-marketing.  Discuss the eight major components needed for effective and efficient CRM in e-marketing.  Differentiate between relationship intensity and relationship levels.  Highlight some of the company-side and client- side tools that e-marketers use to enhance their CRM processes

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 15-3  Cisco Systems, a $36.1 billion marketer, provides Internet networking systems for corporate, government, and education clients.  The Internet plays a major role in acquiring, retaining, and growing customer business.  Over 3 million users log onto the Cisco site each month.  Cisco has become adept at online customer relationship management (CRM). T HE C ISCO S TORY

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 15-4  Cisco set a goal to migrate customers to the online channel.  In 1996, 5% of their customers placed orders on the website in 2008, 92.2% of their orders came through the Internet.  Site user satisfaction is 4.6 on a 5.0 scale.  Can you think of other B2B marketers that utilize the Internet as successfully as Cisco? T HE C ISCO S TORY, CONT.

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 15-5 R ELATIONSHIP M ARKETING D EFINED  Relationship marketing is about establishing, maintaining, enhancing, and commercializing customer relationships through promise fulfillment.  A firm using relationship marketing focuses more on wallet share than on market share. 15-5

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 15-6 FROM MASS MARKETING TO RELATIONSHIP MARKETING

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 15-7 S TAKEHOLDERS  The four stakeholders most affected by Internet technologies include:  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.

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL PILLARS OF RELATIONSHIP MARKETING

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 15-9 C USTOMER R ELATIONSHIP M ANAGEMENT  CRM is a philosophy, strategy, and process that includes all 3 pillars.  The benefits of CRM include:  Increased revenue from better targeting.  Increased wallet share with current customers.  Longer retention of customers.  The cost of acquiring a new customer is typically 5 times higher than the cost of retaining a current customer.

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL B UILDING B LOCKS FOR S UCCESSFUL CRM 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

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL CRM V ISION  To be successful, the CRM vision must start at the top and filter throughout the company to keep the firm customer focused.  One key aspect of CRM vision is how to guard customer privacy.  The benefits of using customer data must be balanced by the need to satisfy customers and not anger them.  TRUSTe provides its seal and logo to any website meeting its privacy philosophies.

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL TRUST E B UILDS U SER T RUST

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL  E-marketers must determine their objectives and strategies for initiating CRM programs and buying technology.  Many CRM goals refer to customer loyalty.  An important CRM strategy is to move customers up the relationship intensity pyramid.  Another CRM goal involves building bonds with customers on 3 levels: financial, social and structural. 2. CRM S TRATEGY

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL T HREE L EVELS OF R ELATIONSHIP M ARKETING

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL C USTOMER E XPERIENCE M ANAGEMENT  Consumers are constantly bombarded by marketing communications and unlimited product choices.  According to Sheth (1995), the basic tenet of CRM is choice reduction.  Many consumers are “loyalty prone,” and will stick with the right product as long as its promises are fulfilled.  Synchronous and asynchronous technologies can provide automated and human communications that solve customer problems.

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL RELATIONSHIPS OVER MULTIPLE COMMUNICATION CHANNELS

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL  CCM is content, people, and interaction driven, while traditional CRM is data- driven.  CCM is about managing customer relationships and experiences by creating and monitoring online content.  Listening is more important than talking when a company is selling. 4. C USTOMER C OLLABORATION M ANAGEMENT /M ARKETING (CCM)

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL  Marketers collaborate within and outside the organization to focus on customer satisfaction to create a CRM culture.  Online retailers can seamlessly link the “back-end” (e.g., inventory and payment) with the “front-end” CRM system and the entire supply chain management system (SCM).  Extranets, two or more intranet networks that share information, allow CRM-SCM integration. 5. O RGANIZATIONAL C OLLABORATION

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL CRM-SCM I NTEGRATION

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL CRM P ROCESSES  Firms use specific processes to move customers through the customer care life cycle.

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL CRM C HURN R EDUCTION C YCLE

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL S ALES F ORCE A UTOMATION  Sales force automation allows salespeople to build, maintain, and access customer records, manage leads, and manage their schedules.  Up-to-date customer and prospect records help build customer relationships.

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL M ARKETING A UTOMATION  Marketing automation activities help provide:  Effective targeting.  Efficient marketing communication.  Real-time monitoring of customer and market trends.  SAS, a business intelligence and predictive analytics software provider, offers automation to aid marketers.

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL CRM I NFORMATION  The more information a firm has, the better value it can provide to each current or prospective customer.  Firms gain much information by tracking behavior electronically.  Bar code scanner data.  Software that tracks online movement, time spent per page, and purchase behavior.

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL CRM T ECHNOLOGY  The Internet forms the centerpiece of a firm’s CRM abilities.  Cookies, web logs, bar code scanners help to collect information about consumers and their behaviors.  Firms use company-side tools to push customized information to users.  Client-side tools allow the customer to pull information that initiates the customized response from the firm.

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL C OMPANY -S IDE T OOLS ( PUSH )

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL C LIENT -S IDE T OOLS ( PULL )

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL T OP T YPES OF CRM- R ELATED S OFTWARE

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL CRM M ETRICS  E-marketers use numerous metrics to assess the Internet’s value in delivering CRM performance.  ROI  Cost savings  Revenues  Customer satisfaction  Customer Lifetime Value (LTV)  Contribution of each CRM tactic to these measures

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL RULES FOR CRM SUCCESS 1.Recognize the customer’s role. 2.Build a business case. 3.Gain buy-in from end users to executives. 4.Make every contact count. 5.Drive sales effectiveness. 6.Measure and manage the marketing return. 7.Leverage the loyalty effect. 8.Choose the right tools and approach. 9.Build the team. 10.Seek outside help.

15-31 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2012 Pearson Education, Inc. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall