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Ch 8.2

customer relationship management (CRM)
a means of managing all aspects of a customer’s relationship with an organization to increase customer loyalty and retention and an organization’s profitability
-allows an organization to gain insights into customers’ shopping and buying behaviors
CRM metrics
-sales metrics
-customer service metrics
-marketing metrics
sales metrics
-number of prospective customers
-number of new customers
-number of retained customers
-number of open leads
-number of sales calls
-number of sales calls per lead
-amount of recurring revenue
-number of proposals given
customer service metrics
-cases closed same day
-number of cases handled by agent
-number of service calls
-average number of service requests by type
-average time to resolution
-average number of service calls per day
-percentage compliance with service-level agreement
-percentage of service renewals
-customer satisfaction
marketing metrics
-number of marketing campaigns
-new customer retention rates
-number of responses by marketing campaign
-number of purchases by marketing campaign
-revenue generated by marketing campaign
-cost per interaction by marketing campaign
-number of new customers acquired by marketing campaign
-customer retention rate
-number of new leads by product
RFM formula
-finding company’s most valuable customers: recency, frequency, and monetary value
-how recent a customer purchased items
how frequently a customer purchases items
monetary value
the monetary value of each customer purchase
three phases in the evolution of CRM
1. reporting
2. analyzing
3. predicting
CRM reporting technologies
help organizations identify their customers across other applications
-asks what happened
-What is the total revenue by customer
-How many units did we make
-What were total sales by product
-How many customers do we have
-What are the current inventory levels
CRM analysis technologies
help organizations segment their customers into categories such as best and worst customers
-asks why it happened
-Why did sales not meet forecasts
-Why was production so low
-Why did we not sell as many units as previous years
-Who are our customers
-Why was revenue so high
-Why are inventory levels so low
CRM predicting technologies
help organizations predict customer behavior, such as which customers are at risk of leaving
-asking what will happen
-What customers are at risk of leaving
-Which products will our customers buy
-Who are the best customers for a marketing campaign
-How do we reach our customers
-What will sales be this year
-How much inventory do we need to preorder
two primary components of a CRM strategy are…
operational CRM and analytical CRM
operational CRM
supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customers
analytical CRM
supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers
operational CRM technologies
-Marketing operational CRM technology
-Sales operational CRM technology
-Customer Service operational CRM technology
three primary marketing operational CRM technologies to increase customer satisfaction
-list generator
-campaign management
-cross-selling and up-selling
three primary sales operational CRM technologies
-sales management
-contact management
-opportunity management
three primary customer service operational CRM technologies
-contact center
-web-based self-service
-call scripting
list generator
compiles customer information from a variety of sources and segment it for different marketing campaigns
-ex: surveys, questionnaires
campaign management
-guide users through marketing campaigns by performing such tasks as campaign definition, planning, scheduling, segmentation, and success analysis
selling additional products or services to an existing customer
-ex: asking the customer if they wanted to by the soundtrack after buying the movie
increasing the value of the sale
-ex: asking customers whether they would like to super-size meals for an extra cost
customer service and support (CSS)
a part of operational CRM that automates service requests, complaints, product returns, and information requests
sales force automation (SFA)
automatically tracks all the steps in the sales process
sales management CRM systems
automate each phase of the sales process, helping individual sales representative coordinate and organize all their accounts
-ex: calendars, reminders
contact management CRM system
maintains customer contact information and identifies prospective customers for future sales, using tools such as organizational charts, detailed customer notes, and supplemental sales information
-ex: telephone number can display with customer name and what product they purchased
opportunity management CRM system
target sales opportunities by finding new customers or companies for future sales
contact center/call center
where customer service representatives answer customer inquiries and solve problems, usually by email, chat, or phone
-one of the best assets a customer-driven organization can have because maintaining a high level of customer support is critical to obtaining and retaining customers
web-based self-service
allows customers to use the web to find answers to their questions or solutions to their problems
allow customers to click a button and talk with a representative via the Internet
call scripting systems
gather product details and issue resolution information that can be automatically generated into a script for the representative to read to the customer
uplifting modeling
a form of predictive analytics for marketing campaigns that attempts to identify target markets or people who could be convinced to buy products
-uplift refers to the increased sales that can follow after this form of analytical CRM analysis
customer segmentation
divides the market into categories that share similar attributes such as age, location, gender, habits, and so on
website personalization
occurs when a website has stored enough data about a person’s likes and dislikes to fashion offers more likely to appeal to that person
extending customer relationship management
-supplier relationship management (SRM)
-partner relationship management (PRM)
-employee relationship management (ERM)
supplier relationship management (SRM)
focuses on keeping suppliers satisfied by evaluating and categorizing suppliers for different projects
partner relationship management (PRM)
discovers optimal sales channels by selecting the right partners and identifying mutual customers
employee relationship management (ERM)
provides web-based self-service tools that streamline and automate the human resource department
enterprise resource planning (ERP)
integrates all departments and functions throughout an organization into a single IT system (or integrated set of IT systems) so employees can make decisions by viewing enterprisewide information about all business operations
evolution of ERP
-extended erp
-erp II
ERP focus
improving the manufacturing process through automation, primarily addressing back-office business processes such as inventory ordering and product distribution
-materials planning
-order entry
-general ledger
-shop floor control
Extended ERP
second generation of ERP systems extended its reach into the front office and primarily addressed customer issues, including marketing and sales
-capacity planning
the third generation of ERP allows a company to compete on a functional level by adopting an enterprisewide approach using the Internet to connect all participants in the value chain
-project management
-knowledge management
-work flow management
-customer relationship management
-human resource management
-portal capability
-integrated financials
the current generation of ERP, ERP-II is composed of two primary components
-core and extended
Core ERP components
the traditional components included in most ERP systems and primarily focus on internal operations
extended ERP components
the extra components that meet organizational needs not covered by the core components and primarily focus on external operations
three most common core ERP components focusing on internal operations are
-accounting and finance
-production and materials management
-human resources
accounting and finance ERP components
manage accounting data and financial processes within the enterprise with functions such as general ledger, accounts payable, accounts receivable, budgeting, and asset management
production and materials management ERP components
handle production planning and execution tasks such as demand forecasting, production scheduling, job cost accounting, and quality control
human resources ERP components
track employee information, including payroll, benefits, compensation, and performance assessment and ensure compliance with all laws
four most common extended ERP components are
-business intelligence
-customer relationship management
-supply chain management
business intelligence components of ERP systems
collect information used throughout the organization (including data used in many other ERP components), organize it, and apply analytical tools to assist managers with decisions
customer relationship management ERP components
include contact centers, sales force automation, and advanced marketing functions
-the goal is to provide an integrated view of customer data, enabling a firm to manage customer relationships effectively by responding to customer needs and demands while identifying the most (and least) valuable customers so the firm can better allocate its marketing resources
supply chain management ERP components
allows firms to monitor and control all stages in the supply chain from the acquisition of raw materials to the receipt of finished goods by customers
Ebusiness ERP components
allow companies to establish an Internet presence and fulfill online orders
two of the primary features of ebusiness components
elogistics and eprocurement
manages the transportation and storage of goods
the business to business (B2B) online purchase and sale of supplies and services
software customization
modifies existing software according to the business’s or user’s requirements
ERP costs
-software costs
-consulting fees
-process rework
-data warehouse integration and data conversions
software costs
purchasing the software can cost millions of dollars for a large enterprise
hiring external experts to help implement the system correctly can cost millions of dollars
process rework
redefine processes to ensure that the company is using the most efficient and effective processes
if the software package does not meet all the company’s needs, customizing the software may be required
ensuring that all software products, including disparate systems not part of the ERP system, are working together or are integrated
testing that all functionality works correctly along with testing all integrations
training all new users and creating the training user manuals
data warehouse integration and data conversions
moving data from an old system into the ERP system
software customization examples
-business processes or workflows
-code modification
-reports, documents, forms
-user-interface changes
business processes or workflows
software can be customized to support the needs of business process work-flows unique to each business or department
code modification
the most expensive customization occurs when application code is changed and should only be done if the code changes provide specific competitive advantages
data integration is key for business process support that spans functional areas and legacy systems
reports, documents, forms
customization to reports, documents, and forms can consist of simple layout or design changes or complex logic programming rules for specific business requirements
user-interface changes
an ERP system can be customized to ensure that each user has the most efficient and effective view of the application
balanced scorecard
a management system as well as a measurement system that a firm uses to translate business strategies into executable tasks
four primary perspectives of the balanced scorecard
-the learning and growth perspective
-the internal business process perspective
-the customer perspective
-the financial perspective
two-tier ERP architecture
allows an organization to have an on-premises ERP system along with cloud ERP applications
ERP vendors by tier
-tier I
-tier II
-tier III
tier I
-enterprise size: large enterprise
-ERP vedor: SAP, Oracle, Microsoft
tier II
-enterprise size: midsize business
-ERP vendor: Infor, Lawson, Epicor, Sage
tier III
-enterprise size: small business
-ERP vendor: exact globe, syspro, netsuite, consona

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