1. Customer Relationship Management
CRM and external relationships

2. Focus of CRM
Importance for organisation to focus on needs, wants, preferences and values of customer
Use of IT and Internet to cause major transformation in ways organisations interact with customers

3. Electronic Business: Scope
B2C EC
企業價值
企業策略 KM
SCM
ERP
CRM
Supplier
Customer BI
B2B EC

4. Significance of CRM $23b in 2000
Estimates of $76b in 2005
Median annual investment ~ $1m, implementation over 4 years
Large companies spend ~ $15m – $30m /year, and between $60m – $130m to full implementation
(Gartner Group 2001)
But, ~ 30% CRM projects never get finished
55% to 75% fail to deliver anticipated benefits
60% of managers view CRM as failures
(Morphy 2001, Kiely 2001)

5. CRM and Its Relationship with EC
Customer relationship management (CRM): A customer service approach that focuses on building long-term and sustainable customer relationships that add value both for the customer and the company

6. Who is the BOSS…
‘There is only one boss. The customer. And he can fire everybody in the company, from the chairman on down, simply by spending his money somewhere else.’
(Sam Walton, WalMart)

7. Notions about customers
Every 5 yrs, av. US organisation lose 50% of customers
Cutting these by 5% double profits
(Morphy 2001)
5% in customer retention av. lifetime value of customer of between 35-95%
(Reichheld 1996)
Retaining more customers can have significant impact
on organisational performance.

8. Twice the normal turnover
Why CRM ?
Twice the normal turnover
Top 20% contributed to 150% profit, while the worst 40% results in 50% profit reduction
50% profit reduction
Profit 1 2 3 4 5 6 7 8 9 10
Customer segments
Source: Manhattan Consulting Group

9. Customer focus ‘Present a single face to the customer’
Customer focus win and retain loyal
and profitable customers

10. Advantages of customer focus
Accurate view of internal operations
Service to customers
Information
Across product lines
Across geographic locations
Across subsidiaries, business units
Across multiple channels
Major challenge for most organisations
– cross-functional, complex

11. Why are loyal customers more profitable?
Potential
customer
Customer
Loyal
Former
Costs
Benefits

12. Why are loyal customers more profitable?
Acquisition costs incurred once only
Benefits accrue from
Loyal customers referring other new customers
Loyal customers tend to purchase more over time
Loyal customers are less price sensitive
Loyal customers incur fewer administrative costs over time
Note also: damage from dissatisfied customers can escalate
(Cash 1999)

13. Customer dissatisfaction escalates
Dissatisfied
customers
Share bad
experiences
with others
Loss of
customer
loyalty
Dollars lost
compound
over time

14. Concept of demand chain
Supplier
Retailer
Distributor
Manufacturer
Product / service flows
Customer demand flows
Consumer
Supply chain
perspective
Demand chain

15. Customer Relationship
Advertisement, Brand image
Focal Company
Customer
Low visibility
Channel
Focal Company
Customer
Very low visibility
Focal
Company
Salesmen
Channel
Customer No
visibility

16. Changes in Relationship
Focal
Sales/
Channels
Customer
As is
Focal
Sales/
Channels
Customer
To Be

17. CRM and Its Relationship with EC (cont.)
Classification of CRM programs
Loyalty program
Prospecting
Save or win back
Cross-sell/up-sell
eCRM: Customer relationship management conducted electronically

18. CRM and Its Relationship with EC (cont.)
Scope of CRM
Foundation of service
Customer-centered services
Value-added services
CRM

19. CRM and Its Relationship with EC (cont.)
Extent of service
Customer acquisition (prepurchase support)
Customer support during purchase
Customer fulfillment (purchase dispatch)
Customer continuance support (postpurchase)

20. Components of CRM Customer and Product centric services
Differential Marketing
Mass marketing
Focused marketing
One-to-one marketing
Customers are not born equal
Sales Managment
Marketing Management
Customer Management
Database Marketing
Service Management

21. CRM and Its Relationship with EC (cont.)
Benefits of CRM
Provides:
choices of products and services
fast problem resolution and response
easy and quick access to information
Limitations of CRM
Requires integration with a company’s other information systems which is costly
Difficult to support mobile employees

22. CRM and Its Relationship with EC (cont.)
CRM implementation issues
Steps in building EC strategy focused on customer:
focus on the end customer
systems and business processes that are designed for ease of use and from the end customer’s point of view
efforts to foster customer loyalty

23. CRM and Its Relationship with EC (cont.)
Five factors required to implement a CRM program effectively:
Customer-centric strategy
Commitments from people
Improved or redesigned processes
Software technology
Infrastructure

24. CRM and Its Relationship with EC (cont.)
Justifying customer service and CRM programs
Metrics: Standards of performance; may be quantitative or qualitative

25. CRM and Its Relationship with EC (cont.)
Web-related metrics a company uses to determine the appropriate level of customer support:
Response time
Site availability
Download time
Timeliness
Security and privacy
On-time order fulfillment
Return policy
Navigability

26. CRM Applications and Tools: Delivering Customer Service in Cyberspace
CRM applications improve upon traditional customer service by means of easier communications and speedier resolution of customer problems
Customer service adds value to products and services
It is an integral part of a successful business

27. CRM Applications and Tools (cont.)
Classifications of CRM applications
Customer-facing applications
Customer-touching applications
Customer-centric intelligence applications
Online networking and other applications

28. Formation of CRM Front-end Communication CRM Back-end Analytical Core
Operational
CTI
Net Banking
B2C e-Commerce
Data Mining
OLAP
EIS
Customer Mgt
Marketing Mgt
Sales Mgt
Service Mgt
Database
Data Mart
Data Warehouse
Demographic Data
Transaction Data
Extraction
Transformation
Loading
Operational
Database

29. CRM Applications and Tools (cont.)
Customer-facing applications
Customer interaction center (CIC): A comprehensive service entity in which EC vendors address customer service issues communicated through various contact channels
Intelligent agents in customer service and call centers

30. Customer Management Know your customer Problems
Customer relates to channel/salesmen, not company
Lost of valuable customer data upon departure of sales personnel

31. Cases Online Traditional channel Membership One-to-one relationship
Data collection and usage
Closer tie to customer

32. CRM Applications and Tools (cont.)
Autoresponders: Automated reply systems (text files returned via ), which provide answers to commonly asked questions
Sales force automation (SFA): Software that automates the tasks performed by sales people in the field, such as data collection and its transmission

33. CRM Applications and Tools (cont.)
Customer-touching applications
Personalized Web Pages
E-Commerce Applications
Campaign Management
DM: Direct Mail
For traditional market

34. CRM Applications and Tools (cont.)
Web Self-Service
Activities conducted by users on the Web to provide answers to their questions (e.g., tracking) or for product configuration
Self-tracking
Self-configuration and customization

35. CRM Applications and Tools (cont.)
Customer-centric applications
Data reports
Data warehouse
A single, server-based data repository that allows centralized analysis, security, and control over the data

36. CRM Applications and Tools (cont.)
Data analysis and mining
Analytic applications automate the processing and analysis of CRM data
can be used to analyze the performance, efficiency, and effectiveness of an operation’s CRM applications
Data mining involves sifting through an immense amount of data to discover previously unknown patterns

37. CRM Applications and Tools (cont.)
Online networking and other applications
Forums
Chat rooms
Usenet groups
newsletters
Discussion lists

38. CRM Applications and Tools (cont.)
Mobile CRM
the delivery of CRM applications to any user, whenever and wherever needed
Voice communication
people are more comfortable talking with a person, even a virtual one, than they are interacting with machines. The smile and the clear pronunciation of the agent’s voice increases shoppers’ confidence and trust

39. Business intelligence, data warehousing
Internal and external data is gathered, stored and analysed to provide important information to support decision making of executives
Provide better forecasts of end consumer demand, improved understanding of changing consumer preferences and wants, and so on

40. CRM Applications and Tools (cont.)
Role of knowledge management and intelligent agents in CRM
Automating inquiry routing and answering queries requires knowledge
Generated from historical data and from human expertise and stored in knowledge bases for use whenever needed
Intelligent agents support the mechanics of inquiry routing, autoresponders, and so on

41. Internet Marketing in B2B
Organizational buyer behavior
number of organizational buyers is much smaller than the number of individual buyers
transaction volumes are far larger
terms of negotiations and purchasing are more complex

42. Internet Marketing in B2B (cont.)
Methods for B2B online marketing
Targeting customers
contact all of its targeted customers individually when they are part of a well-defined group
affiliation service
advertising
Electronic wholesalers
intermediary sells directly to businesses, but does so exclusively online

43. Internet Marketing in B2B (cont.)
Affiliate programs
Placing banners on another vendor’s Web site
Content alliance program in which content is exchanged so that all can obtain some free content
Infomediaries
Online data mining services

44. One-to-One Marketing and Personalization in EC
One-to-one marketing: Marketing that treats each customer in a unique way
Personalization: The matching of services, products, and advertising content to individual consumers
User profile: The requirements, preferences, behaviors, and demographic traits of a particular customer

45. One-to-One Marketing and Personalization in EC (cont.)
Major strategies used to compile user profiles
Solicit information directly from the user
Observe what people are doing online
Build from previous purchase patterns
Perform marketing research

46. One-to-One Marketing and Personalization in EC (cont.)
Cookie: A data file that is placed on a user’s hard drive by a Web server, frequently without disclosure or the user’s consent, that collects information about the user’s activities at a site

47. One-to-One Marketing and Personalization in EC (cont.)
Collaborative filtering: A personalization method that uses customer data to predict, based on formulas derived from behavioral sciences, what other products or services a customer may enjoy; predictions can be extended to other customers with similar profiles

48. One-to-One Marketing and Personalization in EC (cont.)
Variations of collaborative filtering:
Rule-based filtering
Content-based filtering
Activity-based filtering
Legal and ethical issues in collaborative filtering
Invasion-of-privacy issues
Permission-based personalization tools to request customer permission

49. One-to-One Marketing and Personalization in EC (cont.)
Customer loyalty
Customer loyalty: Degree to which a customer will stay with a specific vendor or brand
Increased customer loyalty produces cost savings through:
lower marketing costs
lower transaction costs
lower customer turnover expenses
lower failure costs
E-loyalty: Customer loyalty to an e-tailer

50. One-to-One Marketing and Personalization in EC (cont.)
Trust in EC
Trust: The psychological status of involved parties who are willing to pursue further interaction to achieve a planned goal
Trust is influenced by many variables

51. One-to-One Marketing and Personalization in EC (cont.)
How to increase EC trust
between buyers and sellers trust is determined by:
degree of initial success that each party experienced with EC and with each other
well-defined roles and procedures for all parties involved
realistic expectations as to outcomes from EC

52. One-to-One Marketing and Personalization in EC (cont.)
Issues in personalization
brand recognition
security mechanisms help solidify trust
disclose and update latest business status and practices to potential customers and to build transaction integrity into the system
guarantee information and protection privacy through various communication channels