1. E-Marketing 5/E Judy Strauss and Raymond Frost
Chapter 15: Customer Relationship Management
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2. Chapter 15 Objectives 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.
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3. The Cisco Story
Cisco, a $34.9 billion B2B marketer, provides internet networking systems for corporate, government, and education clients.
The internet plays a major role in acquiring, retaining, and growing customer business.
3 million users log on to the Cisco site each month.
Cisco has become adept at online customer relationship management (CRM).
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4. The Cisco Story, cont.
Cisco set a goal to migrate customers to the online channel.
In 1996, 5% of their customers placed orders on the Web site.
Today 92.2% of their orders come through the internet.
Site user satisfaction is 4.7 on a 5.0 scale.
Can you think of other B2B marketers that utilize the internet as successfully as Cisco?
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5. Relationship Marketing Defined
Relationship marketing is about establishing, maintaining, enhancing, and commercializing customer relationships through promise fulfillment.
Today it also means two-way communication with individual stakeholders, one at a time.
Business 2.0 calls relationship capital the most important asset a firm can have.
A firm using relationship marketing focuses more on wallet share than on market share.
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6. Continuum from Mass Marketing to Relationship Marketing
Discrete transactions
Continuing transactions
Short-term emphasis
Long-term emphasis
One-way communication
Two-way communication
and collaboration
Acquisition focus
Retention focus
Share of market
Wallet share
Product differentiation
Customer differentiation
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7. Stakeholders
Firms can establish and maintain relationships with different stakeholder groups through internet technologies:
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.
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8. Customer Relationship Management
CRM is the process of acquiring, servicing, retaining, and building long-term relationships with customers.
The benefits of CRM include:
Increased revenue from better targeting.
Increased wallet share with current customers.
Retention of customers for longer time periods.
The cost of acquiring a new customer is typically 5 times higher than the cost of retaining a current customer.
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9. CRM’s Facets CRM has 3 facets:
Sales force automation (SFA).
Marketing automation.
Customer service.
Used primarily in the B2B market, SFA helps salespeople to:
Build, maintain, and access customer records.
Manage leads and accounts.
Manage their schedules.
©2009 Pearson Education, Inc. Publishing as Prentice Hall

10. Marketing Automation & Customer Service
Marketing automation software aids marketers in effective targeting, marketing communication, and monitoring of customer and market trends.
Marketing automation software takes data from Web sites and databases and turns it into reports for CRM efforts.
Customer service is critical to building long-term customer relationships.
Most customer service occurs post purchase when customers have questions or complaints.
Key tools include , online live chat, Web self-service, and package tracking using PDAs.
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11. 8 Building Blocks for Successful CRM
The Gartner Group model of CRM covers 8 building blocks:
CRM vision
CRM strategy
Valued customer experience
Organizational collaboration
CRM processes
CRM information
CRM technology
CRM metrics
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12. 1. CRM Vision
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 Web site meeting its privacy philosophies.
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13. TRUSTe Builds User Trust
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14. 2. CRM Strategy
E-marketers must determine their objectives and strategies before buying CRM technology.
Many CRM goals refer to customer loyalty.
An important CRM strategy is to move customers up the relationship intensity pyramid (as discussed in Chapter 10).
Another CRM goal involves building bonds with customers on 3 levels:
Financial
Social
Structural
©2009 Pearson Education, Inc. Publishing as Prentice Hall

15. Three Levels of Relationship Marketing
15-15
Level
Primary Bond
Potential for Sustained Competitive Advantage
Main Element of Marketing Mix
Web Example
One
Financial
Low
Price
Two
Social
Build 1:1 relationships
Build community
Medium
Personal
communications
Three
Structural
High
Service delivery
my.yahoo.com
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16. 3. Valued Customer Experience
Consumers are constantly bombarded by marketing communications and unlimited product choices.
According to Jagdish 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 services that solve customer problems.
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17. Relationships Over Multiple Communication Channels
15-17
Automated
Human
Synchronous
Web 1:1 self-service
Online transactions
Telephone routing
Telephone
Online chat
Collaboration tools
Asynchronous
Automated
Short message services (SMS)
Web forms
Fax on demand
response
Postal mail
Blog posts/comments
Micromedia sites (e.g. Twitter)
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18. 4. Organizational Collaboration
Marketers collaborate within and outside the organization to focus on customer satisfaction.
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).
CRM-SCM integration allows immediate inventory checking at the wholesaler or manufacturer.
Extranets, two or more intranet networks that share information, allow CRM-SCM integration.
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19. CRM-SCM Integration Ex. 15.9
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20. 5. CRM Processes
Firms use specific processes to move customers through the customer care life cycle.
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21. CRM Processes, cont. CRM processes are used to: Identify customers.
Differentiate customers.
Customize the marketing mix.
Interact with customers.
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22. 6. CRM Information
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.
©2009 Pearson Education, Inc. Publishing as Prentice Hall

23. 7. CRM Technology
Technology, such as toll-free numbers, electronic kiosks, and voice mail, greatly enhance CRM processes.
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.
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24. Company-Side Tools Company-Side Tools (push) Description Cookies
15-24
Company-Side Tools
(push)
Description
Cookies
Cookies are small files written to the user’s hard drive after visiting a Web site. When the user returns to the site, the company’s server looks for the cookie file and uses it to personalize the site.
Web log analysis
Every time a user accesses a Web site, the visit is recorded in the Web server’s log file. This file keeps track of which pages the user visits, how long he stays, and whether he purchases.
Data mining
Data mining involves the extraction of hidden predictive information in large databases through statistical analysis.
Behavioral targeting
Behavioral targeting occurs when software tracks a user’s movements through a Web site, then sends appropriate Web content at a moment’s notice.
Collaborative filtering
Collaborative filtering software gathers opinions of like-minded users and returns those opinions to the individual in real time.
Outgoing /
Distributed
Marketers use databases to build relationships by keeping in touch with useful and timely information. can be sent to individuals or sent en masse using a distributed list.
Chats
Bulletin boards
A firm may listen to users and build community by providing a space for user conversation on the Web site.
iPOS terminals
Interactive point-of-sale terminals are located on a retailer’s counter and used to capture data and present targeted communication.
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25. Client-Side Tools Client-Side Tools (pull) Description AAgents
15-25
Client-Side Tools
(pull)
Description
AAgents
Agents are programs that perform functions on behalf of the user, such as search engines and shopping agents.
Individualized Web portals
Personalized Web pages users easily configure at Web sites such as MyYahoo! and many others.
Wireless data services
Wireless Web portals send data to customer cell phones, pagers, and PDAs, such as the Palm Pilot.
Web forms
Web form (or HTML form) is the technical term for a form on a Web page that has designated places for the user to type information for submission.
Fax-on-demand
With fax-on-demand, customers telephone a firm, listen to an automated voice menu, and select options to request a fax be sent on a particular topic.
Incoming
queries, complaints, or compliments initiated by customers or prospects comprise incoming , and is the fodder for customer service.
RSS Feeds
Really Simple Syndication feeds are an XML format designed for sharing headlines and other Web content.
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26. CRM Software
The leading software firms in the large enterprise B2B market include:
Siebel Systems
SAP
Oracle
Onyx Software
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27. 8. CRM Metrics
E-marketers use numerous metrics to assess the internet’s value in delivering CRM performance.
ROI
Cost savings
Revenues
Customer satisfaction
One study named customer retention, ROI, and customer lift (increased response or transaction rates) as the most important metrics.
©2009 Pearson Education, Inc. Publishing as Prentice Hall

28. CRM Metrics, cont.
One very important CRM metric is customer lifetime value (LTV).
The LTV calculation demonstrates the benefits of retaining customers over time and the need for building wallet share.
LTV also illustrates that no matter how good customer retention is, the firm must still focus on customer acquisition activities.
Exhibit illustrates customer LTV.
©2009 Pearson Education, Inc. Publishing as Prentice Hall

29. 10 Rules for CRM Success Recognize the customer’s role.
Build a business case.
Gain buy-in from end users to executives.
Make every contact count.
Drive sales effectiveness.
Measure and manage the marketing return.
Leverage the loyalty effect.
Choose the right tools and approach.
Build the team.
Seek outside help.
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30. ©2009 Pearson Education, Inc. Publishing as Prentice Hall