1. Customer Relationship Management
CHAPTER 9
Customer Relationship Management

2. CHAPTER OUTLINE 9.1 Defining Customer Relationship Management
9.2 Operational Customer Relationship Management
9.3 Analytical Customer Relationship Management
9.4 Other Types of Customer Relationship Management Applications

3. LEARNING OBJECTIVES
Define customer relationship management and discuss the objectives of CRM.
Describe operational CRM and its major components.
Describe analytical CRM.
Discuss mobile CRM, on-demand CRM, and open-source CRM.

4. Chapter Opening Case

5. From Neighborhood Stores…….
Personal

6. To Today…..
Mobile population
The Web
Giant malls
Impersonal

7. Customer Intimacy?
You
Your competition
Your customer
Your problem

8. The Need for CRM
It costs six times more to sell to a new customer than to sell to an existing one.
A typical dissatisfied customer will tell 8-10 people.
By increasing the customer retention rate by 5%, profits could increase by 85%.
Odds of selling to new customers = 15%, compared to the odds of selling to existing customers (50%)
70% of complaining customers will remain loyal if their problem is solved

9. 9.1 Defining Customer Relationship Management
Customer relationship management (CRM) is an organizational strategy that is customer-focused
and customer-driven.

10. Tenets of CRM One-to-one relationship between a customer and a seller.
“Treat different customers differently.”
Keep profitable customers and maximize
lifetime revenue from them.

11. Figure 9.1

12. Lifetime Customer Value
The value of a customer to a company depends on three dimensions: the duration of the
relationship, the number of relationships (e.g., the number of products from a
company that a customer purchases), and the profitability of the relationship.

13. “Miracle on the Hudson”
See IT’s About Business 9.1.

14. Customer Touch Points CUSTOMER Direct Web Computer Physical Store
Smart
Phone
Customer
Service
Sales
Representative
CUSTOMER
Service
Center
Field
Service
Technician
Direct
Mail

15. 360-Degree View of Customers

16. Data Consolidation
Accounting
POM
Finance HR
Customer
Marketing
MIS

17. 9.2 Operational CRM Two major components of operational CRM:
Customer-facing applications
Customer-touching applications
Operational CRM is the component of CRM that supports the front-office business processes.
That is, those processes that directly interact with customers; i.e., sales, marketing, and service.

18. Customer-Facing Applications
Customer service and support
Sales force automation
Marketing
Customer-facing applications are those applications where an organization’s sales, field service,
and customer interaction center representatives actually interact with customers.
Customer service and support refers to systems that automate requests, complaints, product returns,
and requests for information.
Sales force automation automatically records all the aspects in a sales transaction process.
Campaign management applications help organizations plan campaigns so that the right messages are
sent to the right people through the right channels.
Campaign management

19. Configurators A configurator is an online product-building feature.
If you click on the Nike logo above, you will go to Nike’s running shoe configurator.

20. Marketing Cross selling Up selling Bundling
Cross selling is the practice of marketing additional, related products to customers based on
their previous purchases.
Up selling is a sales strategy in which the sales person will provide customers the opportunity
to purchase higher-value related products or services as opposed to, or along with, the consumer’s
initial product or service selection.
Bundling is a form of cross selling in which a business sells a group of products or services
together at a price that is lower than the combined individual prices of the products.

21. Customer-Touching Applications
Search and comparison capabilities
Technical and other information and services
Customized products and services
In customer-touching applications, customers interact directly with online technologies and applications
rather than interact with a company representative.
Loyalty programs

22. Fraud at Subway New card program Old stamp program
See IT’s About Business 9.3.
New card program
Old stamp program

23. 9.3 Analytical CRM
Analytical CRM systems analyze customer behavior and perceptions in order to provide actionable business intelligence.

24. The Relationship Between Operational CRM and Analytical CRM
Sales
Marketing
Customer Service and Support
Campaign Management
Customer-facing Applications
Customer
Data
Warehouse
Search and Comparison
Customized Products
Technical Information
Personalized Web Pages
FAQ
/ Auto Response
Loyalty Programs
Customer-touching Applications
See Figure 9.3.
Data Mining
Decision Support
Business Intelligence
OLAP

25. 9.4 Other Types of CRM On-demand CRM Mobile CRM: Pal Mickey
at Disneyworld
On-demand CRM is a CRM system that is hosted by an external vendor in the vendor’s data center.
Mobile CRM is an interactive CRM system that enables an organization to conduct communications
related to sales, marketing, and customer service activities through a mobile medium for the purpose of building
and maintaining relationships with its customers.
Open-source CRM is CRM software whose source code is available to developers and users.
Open-source CRM

26. Chapter Closing Case
Clicking on the Tesco and dunnhumby logos will take you to their respective Web sites.