1. Customer Relationship Management in Information Age Dr. Mohammad T. Isaai Sharif University of Technology Graduate School of Management & Economics

2. 2 Contents New Approach to Commerce & Business Consumer Behavior CRM – Definitions and basic concepts – Programs – Applications & tools

3. 3 Fundamental Changes in …. The Internet as a major, eventually the major, worldwide distribution channel for goods, services, managerial and professional jobs This is profoundly changing economics, markets and industry structure, products and services and their flow, consumer segmentation, consumer values, consumer behavior, jobs, and labor markets

4. 4 What can we learn … Traditional companies face increasing pressures in a competitive marketing environment – A possible response is to introduce a variety of e- commerce initiatives that can improve supply chain operation information money from raw materials through factories increase customer service open up markets to more customers

5. 5 New Paradigm: Electronic Commerce Process of selling, buying, transferring, or exchange of Goods, services, information via computer networks, including internet

6. 6 Computer environments – Internet: global networked environment – Intranet: a corporate or government network that uses Internet tools, such as Web browsers, and Internet protocols – Extranet: a network that uses the Internet to link multiple intranets

7. 7 Electronic Commerce: Concepts Pure vs. Partial EC depends upon the degree of digitization (the transformation from physical to digital) of: 1. the product (service) sold; 2. the process; and for 3. the delivery agent (or digital intermediary) Brick-and-Mortar organizations are old- economy organizations (corporations) that perform most of their business off- line, selling physical products by means of physical agents

8. 8 The Dimensions of Electronic Commerce

9. 9 Electronic Commerce: Definitions and Concepts (cont.) Virtual (pure-play) organizations conduct their business activities solely online Click-and-mortar organizations conduct some EC activities, but do their primary business in the physical world Electronic market (e- marketplace) online marketplace where buyers and sellers meet to exchange goods, services, money, or information

10. 10 Learning about Consumer Behavior Online Model of consumer behavior online – independent (or uncontrollable) variables – intervening or moderating variables – decision-making process – dependent variables

11. 11 Learning about Consumer Behavior Online (cont.)

12. 12 Learning about Consumer Behavior Online (cont.) Independent variables – Personal characteristics – Environmental variables Social variables Cultural/community variables Other environmental variables

13. 13 Learning about Consumer Behavior Online (cont.) Intervening (moderating) variables variables are those that can be controlled by vendors Dependent variables: the buying decisions – customer makes several decisions – “to buy or not to buy?” – “what to buy?” – “where, when, and how much to buy?”

14. 14 Consumer Decision Making Process Roles people play in the decision making process – Initiator – Influencer – Decider – Buyer – User

15. 15 Consumer Decision Making Process (cont.) Product brokering: Deciding what product to buy Merchant brokering: Deciding from whom (from what merchant) to buy a product

16. 16 Consumer Decision Making Process (cont.)

17. 17 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

18. 18 Personalization in EC (cont.)

19. 19 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

20. 20 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

21. 21 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

22. 22 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

23. 23 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

24. 24 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

25. 25 Trust in EC 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

26. 26 Satisfaction in EC – Satisfaction is one of the most important consumer reactions in the B2C online environment – Recent statistics show: 80% of highly satisfied online consumers would shop again within 2 months 90% would recommend the Internet retailers to others However, 87% of dissatisfied consumers would permanently leave their Internet retailers without any complaints

27. 27 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

28. 28 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

29. 29 CRM and Its Relationship with EC (cont.) Extent of service 1. Customer acquisition (prepurchase support) 2. Customer support during purchase 3. Customer fulfillment (purchase dispatch) 4. Customer continuance support (postpurchase)

30. 30 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

31. 31 CRM and Its Relationship with EC (cont.) CRM implementation issues – Steps in building EC strategy focused on customer: 1. focus on the end customer 2. systems and business processes that are designed for ease of use and from the end customer’s point of view 3. efforts to foster customer loyalty

32. 32 CRM and Its Relationship with EC (cont.) Five factors required to implement a CRM program effectively: 1. Customer-centric strategy 2. Commitments from people 3. Improved or redesigned processes 4. Software technology 5. Infrastructure

33. 33 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

34. 34 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

35. 35 CRM Applications and Tools (cont.) Classifications of CRM applications – Customer-facing applications – Customer-touching applications – Customer-centric intelligence applications – Online networking and other applications

36. 36 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

37. 37 CRM Applications and Tools (cont.)

38. 38 CRM Applications and Tools (cont.) Autoresponders: Automated e-mail reply systems (text files returned via e-mail), 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

39. 39 CRM Applications and Tools (cont.) Customer-touching applications – Personalized Web Pages – E-Commerce Applications – Campaign Management

40. 40 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

41. 41 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

42. 42 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

43. 43 CRM Applications and Tools (cont.) Online networking and other applications – Forums – Chat rooms – Usenet groups – E-mail newsletters – Discussion lists

44. 44 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

45. 45 CRM Applications and Tools (cont.)

46. 46 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