1. Customer Relationship Management
Revised Date: 2/8/2012
Chapter 8
Customer Relationship Management

2. Learning Outcomes Define CRM. Describe the role of CRM.
Describe the importance of having CRM functions.
Evaluate different buyer behaviour amongst online customers
Describe techniques for acquiring, retaining customers and cross-and up-selling using new e-Business tools.
Identify technology solutions for CRM.

3. A scenario….

4. Another scenario…

5. Online CRM scenario…

6. What is CRM?
An approach to building and sustaining long-term business with customers
A key element in e-Business. Why???
CRM comprises of four marketing activities:
Customer selection
Customer acquisition
Customer retention
Customer extension

7. What is CRM?
Figure 9.1 The four classic marketing activities of customer relationship management (source: Chaffey, 2009)

8. 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 centers 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 later in the chapter, customers’ characteristics, their purchase behavior and campaigns can be analyzed in order to optimize the marketing mix.

9. What is E-CRM? Definition by Chaffey (2009): What to manage?
Web site for customer development and to encourage purchase.
Managing list
Applying marketing
Data mining
Using personalization and mass customization facilities
Online customer service such as FAQ, Chat, Call center etc.
Online service quality to encourage repeating buyers
Managing multi-channel customer experience
Using digital communication technologies to maximize sales to existing customers and encourage continued usage of online services

10. Benefits of e-CRM Targeting more cost-effectively
Achieve mass customization of the marketing messages
Increase depth, breadth and nature of relationship
A learning relationship can be achieved
Lower cost

11. Permission marketing
Customers agree to be involved in an organization’s marketing activities, usually as a result of an incentive
Godin (1999) suggests that dating the customer involves:
Offering the prospect an incentive
Using the attention to teach
Reinforce the incentive
Offer additional incentive
Use the permission to change customer behavior towards profit
Opt-in and Opt out.

12. Figure 9.2 A summary of an effective process of online relationship building

13. Customer Profiling Information that can be used to segment a customer.
Type of information such as:
Product interest
Demographics
Role in buying decision
Pepper and Roger (1999) proposed IDCC framework
Customer identification – using cookies or log on
Customer differentiation
Customer interaction
Customization

14. Conversion Marketing
Using marketing communications to maximize conversion of potential customers to actual customers and existing customers to repeat customers
Agrawal et al. (2001) scorecard:
Attraction
Conversion
Retention

15. Figure 9.3 Multi-channel conversion model

16. The Online Buying Process
Five different types of web users
Directed information-seekers
Undirected information seekers
Directed buyers
Bargain hunters
Entertainment seekers

17. Differences between B2B and B2C buyers
Market structure
Nature of the buying unit
Type of purchase
Services: low-volume, high-value
Product : high-volume, low-value
Type of buying decision
Communication difference

18. Marketing Communications for Customer Acquisitions
Characteristics:
From push to pull
From monologue to dialogue
From one-to-many to one-to-some or one-to-one
From one-to-many to many-to-many
From ‘lean-back’ to ‘lean-forward’
The medium changes
Increase in communication intermediaries
Integration remains important

19. Figure 9.4 Online and offline communications techniques for e-commerce

20. Figure 9.5 Variation in UK media consumption in hours (bars) compared to percentage media expenditure (squares)
Source: Compiled from EIAA (2005) and IAB (2005)

21. Figure 9.7 An example of effectiveness measures for an online ad campaign

22. Figure 9.8 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

23. Online marketing communications
Search-engine marketing (SEM)
Search-engine optimization
Frequency of occurrence in body copy
Number of inbound links
Title HTML tag
Meta-tag
Alternative graphic text
Paid search marketing

24. Online marketing communications
2. Online PR
Communicating with media online
Link building
Blogs, podcasting and Really Simple Syndication (RSS)
Managing brand on third-party sides ex. Google alert.
Creating a buzz or viral marketing ex. Generating word of mouth or link.

25. Online marketing communications

26. Online marketing communications
Figure 9.9 Search engine results page showing the two main methods for achieving visibility
Source: Screenshot reprinted by permission of Google, Inc

27. Online marketing communications
Figure The affiliate marketing model
(note that the tracking software and fee payment may be managed through an independent affiliate network manager)

28. Online marketing communications
Online partnerships
Affiliate marketing
Online sponsorship
Figure The affiliate marketing model
(note that the tracking software and fee payment may be managed through an independent affiliate network manager)

29. Online marketing communications
Interactive advertising
marketing ex. E-newsletter, opt-in .
Viral marketing ex. , blogs, facebook.

30. Figure 9.11 E-mail response figures
Source: Epsilon Interactive

31. Customer retention management
Has two distinct goals
To retain customers of the organization
To keep customers using the online channel

32. Personalization & Mass Customization
Both can be used to tailor information
Use opt-in to deliver information , add value to the product and remind customer about it.
Use dynamic variables such as:
Customer preferences
The date or time
Particular events
The location

33. Online Communities
A customer-to-customer interaction delivered via groups, web-based discussion forums or chat
Choices of developing community for B2C
Purpose
Position
Interest
Profession

34. Customer extension
Deepening the relationship with the customer through increased interaction and product transactions

35. Customer extension Advanced online segmentation
Identify customer lifecycle groups
Identify customer profile characteristics
Identify behavior in response and purchase
Identify multi-channel behavior
Tone and style preference

36. Figure 9.16 Customer lifecycle segmentation

37. Types of CRM applications
Ideal CRM system will support multi-channel communications or the customer preferred channel
Figure An overview of the components of CRM technologies

38. Summary
The objective is to increase customer loyalty in order to increase profitability.
CRM aimed to improve customer service at every level.
Marketing communication focuses on acquisition-retention-extension customers. This include the use of traditional mass-media technique and specialized online techniques.

39. Tutorial 8
Define e-CRM.
Describe the concepts of personalization and mass customization. How these two concepts can benefit an online enterprise.
Describe a technique that can be used to retain customers.
Why customer loyalty is importance to online businesses?

40. References
Google Image, accessed on 13 April 2011.
Chaffey, D., (2007, 2009), E-Business and e-Commerce Management, 3rd and 4th Edition, Prentice Hall.