1. 9 Customer relationship management

2. About CRM
You have a job interview for a company such as Future Shop or Staples working in the CRM team
How would you explain the terms:
CRM, E-CRM
Why does the company have a CRM function?
Why is CRM different?
What are benefits of this approach?
What is CRM?
It is a strategy used to learn more about customers' needs and behaviors in order to develop stronger relationships with them.
An approach to building and sustaining long-term business with customers

3. Figure 9.1 The four classic marketing activities of customer relationship management

4. Customer extension techniques for online retailers
(a) Re-sell
Selling similar products to existing customers–particularly important in some B2B contexts as re-buys or modified re-buys.
(b) Cross-sell
Sell additional products which may be closely related to the original purchase, but not necessarily so. Example ?
(c) Up-sell
A subset of cross-selling, but in this case, selling more expensive products
(d) Reactivation
Customers who have not purchased for some time, or have lapsed, can be encouraged to purchase again.
(e) Referrals
Generating sales from recommendations from existing customers, for example member-get- member deals.

5. Marketing applications of CRM
A CRM system supports the following marketing applications:
Sales force automation (SFA). Sales representatives are supported in their account management through tools to arrange and record customer visits
Customer service management. Representatives in contact centres respond to customer requests for information by using an intranet to access databases containing information on the customer, products and previous queries
Managing the sales process. This can be achieved through e-commerce sites, or in a B2B context by supporting sales representatives by recording the sales process (SFA)
Campaign management. Managing ad, direct mail, and other campaigns
Analysis. Through technologies such as data warehouses and approaches such as data mining, which are explained further later in the chapter, customers characteristics, their purchase behaviour and campaigns can be analysed in order to optimize the marketing mix

6. E-CRM
Applying… Internet and other digital technolog (web, , wireless, iTV, databases)
to… acquire and retain customers (through a multi-channel buying process and customer lifecycle)
by… improving customer knowledge, targeting, service delivery and satisfaction

7. E-CRM – Benefits Targeting more cost-effectively.
Achieve mass customization of the marketing messages
Increase depth, breadth and nature of relationship
A learning relationship can be achieved using different tools throughout the customer lifecycle
Lower cost

8. Figure 9.2 A summary of an effective process of online relationship building
Customer profiling (IDIC framework- build relationships)
1 Customer identification
2 Customer differentiation
3 Customer interactions
4 Customization

9. Conversion Marketing
Using marketing communications to change the potential customers to actual and existing customers to repeating customers
Many companies invest primarily in customer acquisition but not enough in conversion.
What can be done to improve the conversion rate?
Web browsers or offline audiences to site visitors;
Site visitors to engaged site visitors
Engaged site visitors to prospects
Prospects into customers
Customers into repeat customers
Web browsers or offline audiences to site visitors;
Site visitors to engaged site visitors who stay on the site and progress beyond the homepage;
Engaged site visitors to prospects (who are profiled for their characteristics and needs)
Prospects into customers
Customers into repeat customers

10. Online Buying Process
What is the typical online and offline purchase process?
How can online marketing communications support the purchase process?
Searching behaviors
Directed info seeker
Undirected info seeker
Directed buyer
Bargain hunters
Entertainment seeker

11. Figure 9.3 A summary of how the Internet can impact on the buying process for a new purchaser

12. Online Buying Process Differences btw B2C and B2B Buyer Behavior
Market structure
Nature of the buyer unit
Type of purchase
Importance of Trust
Online Buying Process
What is net promoter score? Ref. p.495
How to support online advocacy? Ref. p.497
How to manage online detractors?

13. Figure 9.4 A model of the relationship between different aspects of trust and consumer response based on the categories of Bart et al. (2005)

14. Figure 9.5 Percentage who consider the different information sources as important when researching/considering a product or service Source: BrandNewWorld: AOL UK/Anne Molen (Cranfield School of Management)/Henley Centre, 2004

15. Customer Acquisition Management
The characteristics of interactive Marketing Comm
From push to pull
From monolog to dialog
From 1:M to 1 to some and 1:1
From 1:M to M:M
From lean-back to lean-forward
The medium changes the nature of the standard marketing communication tools
Increase in communication intermediaries
Integration remains important

16. Figure 9.6 Online and offline communications techniques for e-commerce

17. Assessing Market Comm Effectiveness
Acquisition cost
Per visitor
Per lead
Per sale
Bounce rate
% of visitors entered the site but left immediately after viewed one page only

18. Figure 9.7 Measures used for setting campaign objectives or assessing campaign success increasing in sophistication from bottom to top

19. Online Marketing Communication
Search engine marketing
Assessing the effectiveness of a web campaign Ref. p. 504, Fig. 9.8
How does Google work?
Crawlingindexingrankingquery request and result serving
Keyphrase analysis
Search-engine optimization—review

20. Figure 9.8 An example of effectiveness measures for an online ad campaign

21. Figure 9.10 Stages in producing natural search engine listings

22. Which are the ranking factors affecting position In Google SERPs?
On-page optimization
Document meta data
Document content
Creation of new pages
Off-page optimization
Link-building
External links
‘Links In’
‘Backlinks’
‘Inbound links’
AND Internal links
Behavioural
Popularity of sites from toolbar
Google’s search spam filters
How many search ranking factors?
Today is all about practical tips with examples. No theory – assuming you know – if not, see this slide.
Which sectors represented. 22

23. Online Marketing Com-Paid Search
Factors affect returns
Distribution of daily budget
Amount bid (Max CPC)
* Clickthrough rate
* Creative quality including creative testing
* Match types especially negative matches
Use of content network
Time-of-day (day parting)
Landing page quality
Click fraud!
* In Google AdWords, Live Search and Yahoo! Quality Score especially important

24. Online Marketing Communication
Online PR
Maximizing favorable mentions of an organization, its brands, products, to web sites on 3rd-party web sites
Communication with media online
Link building
Blogs, podcasting and RSS
Online community and social networks
Marketing how your brand is presented on 3rd party sites
Creating a buzz-online viral marketing

25. Figure 9.11 Online PR categories and activities

26. Affiliate marketing Online Marketing Communication
Read the mini Case Study 8.4 on p Explain why companies have scaled back e-communication spending.
What is online-sponsorship?
What’s the differences between online sponsorship and affiliate marketing?
Figure The affiliate marketing model (note that the tracking software and fee payment may be managed through an independent affiliate network manager)
Online Marketing Communication

27. Interactive Advertising
What is media multiplier/halo effect?
Purpose of Interactive Advertising
Delivering content
Enabling transactions
Shaping attitudes
Soliciting response
Encouraging retention
Online Marketing Communication

28. Interactive Advertising
Interactive ad target options
On a particular type of site
To target a registered user’s profile
At a particular time of day/week
Online behavior—dynamically serving relevant content or ad that matches the interest of a site visitor.
Interactive ad formats
Banner size, message length, promotional incentive, animation, action phrase, company brand/logo
Online Marketing Communication

29. Online Marketing Communication
Media planning
What’s the optimum mix of online/offline advertising? Ref. p.520, table 9.2
marketing
Read the Mini Case Study 9.5
What are the major challenges of marketing?
What’s opt-in options for marketing?
Viral marketing
achieve marketing objectives through self-replicating viral processes, analogous to the spread of pathological and computer viruses.
Three important factors
Creative Material
Seeding—Find the starting point
Tracking
Online Marketing Communication

30. Figure response figures Source: Provided by SmartFOCUS Digital ( an service provider that send s to UK and European organizations such as publishers and retailers

31. Figure 9.14 TopTable (www.toptable.co.uk)

33. Customer Retention Management
Goals of Customer Retention
Retain customers
Keep customers using online channel
Satisfaction  loyalty  profitability
How to keep customers satisfied?
Experience from Dell—ref. table 9.4 on p. 528
Personalization and mass customization
Mass customization—deliver customized content to groups of users through web or
Collaborative filtering—deliver specific info and offers based on the interests of similar customers

34. Figure Schematic of the relationship between satisfaction and loyalty Source: Adapted and reprinted by permission of Harvard Business Review from graph on p. 167 from ‘Putting the service-profit chain to work,’ by Heskett, J., Jones, T., Loveman, G., Sasser, W. and Schlesinger, E., in Harvard Business Review, March–April Copyright © 1994 by the Harvard Business School Publishing Corporation, all rights reserved

35. Online Community
Online Community becomes important to the success of the business
Various 3rd party online communities and cooperation sponsored communities have been established in the recent years.
B2B, in many cases B2C, communities are commonly built based on
purpose-people who do the similar jobs or achieve a similar objectives
Position
Interest
Profession
Customer Retention Management

36. Figure UTalkMarketing example of a professional online community Source: the UK’s leading community website for client side marketers

37. Customer Retention Management
Online Community
Do we need an online community?
How to build one?
Questions to be asked before start a community
Typical problems
Empty community
Silent community
Critical community

38. Customer Retention Management
Managing Customer activity and value
Increase # of new users
Increase % of active users
Decrease % of dormant users
Decrease % of non-activated users
Retention metrics are often used
Repeat-customer conversion rate
Repeat customer base
# of transaction per repeat customer
Revenue per transaction of repeat customer

39. Figure 9.17 Activity segmentation of a site requiring registration

40. Customer Retention Management
Lifetime Value Modeling
Total net benefit that a customer or a group of customers will provide over their total relationship with the company
What can LTV be used for?
Ref. p. 535

41. Figure 9.18 Different representations of lifetime value calculation

42. Figure 9.19 An example of an LTV-based segmentation plan

43. Excelling in E-Commerce Service Quality
Improving online service quality
Tangible—easy of use and visual appeal of the site
Reliability—availability of the site
Responsiveness—speed of page load, speed of responses to questions, if any
Assurance—quality of response, privacy and security, etc.
Empathy—personalized interaction, context, task relevant help and assistance, e.g., during the purchase process

44. Customer Extension
The goal is to increase the lifetime value of the customer
What does “Focus on share of customer, not market share” mean ? (ref. p. 540, 2nd paragraph)
Advanced online segmentation and target techniques
Identify lifetime group
Identify profile characteristics
Identify behavior in response and purchase
Identify multi-channel behavior
Tone and style preference

45. Figure 9.20 Customer lifecycle segmentation

46. Customer Extension Advanced online segmentation and target techniques
Sense, respond, and adjust
Monitor customer actions or behaviour
React with appropriate messages and offers
Monitor response to the messages and act accordingly
(RFM) value analysis
Recency—how recent was the customer’s action?
Frequency—How often did the customer act?
Monetary—How much did the customer spent?
Hurdle rate—% of customers in a group who completed an action; it can be used to compare different groups or set an objective for the group

47. Technology Solution for CRM
Technologies in use
Database is the core of the CRM
Web interface becomes the main stream
s and workflow systems are commonplace
Customer self-service is the trend
Types of CRM Applications
Find more info about products/service
Place an order
Receive post-sales service
Integration with back-office systems
How to link with the backend legacy system is a big challenge

48. Figure 9.22 An overview of the components of CRM technologies

49. Technology Solution for CRM
Single vendor solution or multiple vendors?
Why the question?
What’s your opinion?
Data Quality
CRM systems depend on the currency, completeness, and accuracy of their database
Guidelines must be followed to achieve the goal
Ref. p. 549
Case Study
Read the case study on pp and answer the question:
What made Tesco so successful?

50. Learning outcomes
Outline different methods of acquiring customers via electronic media
Evaluate different buyer behaviour amongst online customers
Describe techniques for retaining customers and cross- and up-selling using new media.

51. Management issues
What are the practical success factors digital media need to make customer acquisition more effective?
What technologies can be used to build and maintain the online relationship?
How do we deliver superior service quality to build and maintain relationships?

52. Activity
Read the Econsultancy interview on pp and visit
Answer these questions
What did Warner Breaks (WB) found about the online marketing?
What did they do to attract and retain customers?
What special about the older generation regarding online transactions?
Do you feel that their website is well-designed for the targeted audience?

53. E-CRM – Activity What benefits can e-CRM produce? Ref. p. 487
What’s Wikinomics and how can a company take advantage of it to enhance CRM? Ref. p. 488 Box 9.1
What is permission marketing? Ref. p.488
What is customer profiling? Ref. p.490
What is IDIC?
Identification, differentiation, interactions, and customization