CRM and external relationships Customer Relationship Management.
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Transcript of CRM and external relationships Customer Relationship Management.
CRM and external relationships
Customer Relationship Management
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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
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企業策略企業策略企業價值企業價值
B2B ECB2B EC
B2C ECB2C ECB2C ECB2C EC
BIBI
KMKM
SCMSCM ERPERP CRMCRM
CustomerCustomerSupplierSupplier
Electronic Business: Scope
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Significance of CRM
$23b in 2000Estimates 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 finished55% to 75% fail to deliver anticipated benefits
60% of managers view CRM as failures
(Morphy 2001, Kiely 2001)
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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
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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)
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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 impacton organisational performance.
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Top 20% contributed to 150% profit, while the worst 40% results in 50% profit reduction
Customer segments
Pro
fit
1 2 3 4 5 6 7 8 9 10
Twice the normal
turnover
50% profit reduction
Source: Manhattan Consulting Group
Why CRM ?
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‘Present a single face
to the customer’
Customer focus
Customer focus win and retain loyal and profitable customers
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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
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Why are loyal customers more profitable?
Potentialcustomer Customer
Loyalcustomer
Formercustomer
Costs
Benefits
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Acquisition costs incurred once only
Benefits accrue fromLoyal 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
Why are loyal customers more profitable?
(Cash 1999)
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Customer dissatisfaction escalates
Dissatisfiedcustomers
Share badexperiences with others
Loss ofcustomer
loyalty
Dollars lost compoundover time
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Supplier RetailerDistributorManufacturer
Product / service flows
Customer demand flows
Consumer
Supply chain perspective
Demand chain perspective
Concept of demand chain
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No visibility
Customer Relationship
Advertisement, Brand image
Advertisement, Brand image
Advertisement, Brand image
Low visibility
Very low visibility
Focal Company
Focal Company
Focal Company
Customer
Customer
CustomerChannel
ChannelSalesmen
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Changes in Relationship
Focal
Sales/ Channels
Customer
As is
Focal
Sales/ Channels
Customer
To Be
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CRM and Its Relationship with EC (cont.)
Classification of CRM programsLoyalty program
Prospecting
Save or win back
Cross-sell/up-sell
eCRM: Customer relationship management conducted electronically
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CRM and Its Relationship with EC (cont.)
Scope of CRM1. Foundation of service
2. Customer-centered services
3. Value-added services
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CRM and Its Relationship with EC (cont.)
Extent of service1. Customer acquisition (prepurchase support)
2. Customer support during purchase
3. Customer fulfillment (purchase dispatch)
4. Customer continuance support (postpurchase)
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Components of CRM
Customer and Product centric services
Differential MarketingMass marketing
Focused marketing
One-to-one marketing
Customers are not born equal
Sales Managment
Database Marketing
Marketing Management
Service Management
Customer Management
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CRM and Its Relationship with EC (cont.)
Benefits of CRMProvides:
choices of products and servicesfast problem resolution and responseeasy and quick access to information
Limitations of CRMRequires integration with a company’s other information systems which is costlyDifficult to support mobile employees
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CRM and Its Relationship with EC (cont.)
CRM implementation issuesSteps 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
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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
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CRM and Its Relationship with EC (cont.)
Justifying customer service and CRM programs
Metrics: Standards of performance; may be quantitative or qualitative
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CRM and Its Relationship with EC (cont.)
Web-related metrics a company uses to determine the appropriate level of customer support:
Response timeSite availabilityDownload timeTimelinessSecurity and privacyOn-time order fulfillmentReturn policyNavigability
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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
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CRM Applications and Tools (cont.)
Classifications of CRM applicationsCustomer-facing applications
Customer-touching applications
Customer-centric intelligence applications
Online networking and other applications
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Formation of CRM
Front-endCommunication
CRM
Back-endAnalytical
CRM
CoreOperational
CRM
• CTI• Net Banking• B2C e-Commerce
• Data Mining• OLAP• EIS
• Customer Mgt• Marketing Mgt• Sales Mgt• Service Mgt
Database
Data Mart
Data WarehouseDemographic Data
Transaction Data
Extraction
Transformation
Loading
Operational
Database
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CRM Applications and Tools (cont.)
Customer-facing applicationsCustomer 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
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Customer Management
Know your customer
ProblemsCustomer relates to channel/salesmen, not company
Lost of valuable customer data upon departure of sales personnel
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Cases
OnlineMembership
One-to-one relationship
Traditional channelMembership
Data collection and usage
Closer tie to customer
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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
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CRM Applications and Tools (cont.)
Customer-touching applicationsPersonalized Web Pages
E-Commerce Applications
Campaign Management
DM: Direct MailFor traditional market
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CRM Applications and Tools (cont.)
Web Self-ServiceActivities 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
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CRM Applications and Tools (cont.)
Customer-centric applicationsData reports
Data warehouseA single, server-based data repository that allows centralized analysis, security, and control over the data
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CRM Applications and Tools (cont.)
Data analysis and miningAnalytic 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
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CRM Applications and Tools (cont.)
Online networking and other applicationsForums
Chat rooms
Usenet groups
E-mail newsletters
Discussion lists
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CRM Applications and Tools (cont.)
Mobile CRMthe delivery of CRM applications to any user, whenever and wherever needed
Voice communicationpeople 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
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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
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CRM Applications and Tools (cont.)
Role of knowledge management and intelligent agents in CRM
Automating inquiry routing and answering queries requires knowledgeGenerated from historical data and from human expertise and stored in knowledge bases for use whenever neededIntelligent agents support the mechanics of inquiry routing, autoresponders, and so on
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Internet Marketing in B2B
Organizational buyer behaviornumber 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
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Internet Marketing in B2B (cont.)
Methods for B2B online marketingTargeting customers
contact all of its targeted customers individually when they are part of a well-defined groupaffiliation serviceadvertising
Electronic wholesalersintermediary sells directly to businesses, but does so exclusively online
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Internet Marketing in B2B (cont.)
Affiliate programsPlacing 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
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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
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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
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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
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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
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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 filteringInvasion-of-privacy issues
Permission-based personalization tools to request customer permission
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One-to-One Marketing and Personalization in EC (cont.)
Customer loyaltyCustomer 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
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One-to-One Marketing and Personalization in EC (cont.)
Trust in ECTrust: The psychological status of involved parties who are willing to pursue further interaction to achieve a planned goal
Trust is influenced by many variables
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One-to-One Marketing and Personalization in EC (cont.)
How to increase EC trustbetween buyers and sellers trust is determined by:
degree of initial success that each party experienced with EC and with each otherwell-defined roles and procedures for all parties involvedrealistic expectations as to outcomes from EC
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One-to-One Marketing and Personalization in EC (cont.)
Issues in personalizationbrand recognitionsecurity mechanisms help solidify trustdisclose and update latest business status and practices to potential customers and to build transaction integrity into the systemguarantee information and protection privacy through various communication channels