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Customer Relationship Management (Chapter 11)

Customer Relationship Management
Building and maintaining profitable long-term customer relationships
What to do to maintain the customer relationship..
-Focusing on customer requirements
-Delivering products and services in a manner resulting in high levels of customer satisfaction
How to maintain customer relationships
-Talking to customers
-Understanding their behavior and their requirements
-Building a system to satisfy those requirements
A successful CRM program is both
simple and complex
CRM is simple that it…
involves training users and treating customers right, to make them feel valued.
CRM is complex that it…
it also means finding affordable ways to identify (potentially millions of) customers and their needs, and then designing customer contact strategies geared toward creating customer satisfaction and loyalty among your segments of customers.
(EX: Customer service help desks)
For CRM to be successful…
a company must find ways to meet its customers needs; otherwise, just as any firm would react with a non-performing supplier, the customer goes elsewhere and takes years worth of future purchases with them.
Just as companies must create methods for finding and developing good suppliers,…
companies must create methods for becoming and staying good suppliers themselves
**Supply relationship and Customer relationship management is essentially the same, except you are on either side**
Because many companies do not sell their products directly to end-product consumers, …
companies may also need to train and certify that their intermediate customers are able to adequately represent their company’s products.
EX: CVS said they didn’t have prescription for mclaury, however, it was their wholesaler that did not have the product which is mclaury’s pharm. company’s customer. (the wholesaler made the pharm. company look bad through CVS and end customers)
Key Tools and Components of CRM
Following slides w/ definitions
Segmenting Customers
Grouping customers to create specialized communications about products
Target Marketing Efforts
e-mail or direct mail saves labor and postage, reduces chances of being a nuisance –> different generations don’t like the same things; EX: video games
Relationship Marketing or Permission Marketing
Customers self-select the type and time of communication they want. Requires software and active customer participation. [Mobile marketing and QR Codes.] EX: Subscribe to our newsletter or our partner’s newsletter
Cross Selling
Selling additional products as the result of an initial purchase (e.g., e-mails from Amazon.com describing other products bought by people who purchased one or more of the items you just purchased.) EX: Stores: Pancake mix, syrup, etc. are placed within the same aisle
Predicting Customer Behaviors
Facilitates forecasting the likelihood of customers’ purchases
Customer Defection Analysis
Finding methods to retain customers.
“Finding a new customer costs fives times as much as keeping an old customer”
Churn Reduction
Reducing customer defections
(5% improvement in customer retention can result in a 75% increase in profits)
Customer Value Determination
Determine customer lifetime value so that appropriate communications, benefits, services or policies can be established for each customer segment.
Personalizing Customer Communications
Understanding customer behaviors and preferences, allows a firm to customize communications aimed as specific groups of customers and is likely to result in greater levels of sales.
–Clickstream: tracking how a customer navigates a website can help tailor a website’s images, ads or discounts based on past usage of the site.
Event Based Marketing
Offer the right products and services to customers at the right time. Offer individual promotions tied to specific events.
(EX: Thanksgiving, Black Friday, Christmas)
Automated Sales Force Tools
Following Slides
Sales Force Automation
(SFA) Used for documenting field activities, communications with the home office, and retrieving sales history in the field.
Sales Activity Management
Tool offering sales reps a guided sequence of sales activities
Sales Territory Management
Sales managers obtain information on each sales rep’s activities
Lead Management
Sales reps can follow prescribed tactics when dealing with prospects to aid in closing the deal. EX: discounts or financing, free delivery, etc.
Knowledge Management
Enables quick decision making, better customer service, and a better-equipped and happy sales staff.
What does Customer Service actually mean?
Performance measures are often designed around satisfying the Seven R’s. These kinds of services can come at a cost.

“Seven R’s Rule”
the right product
the right quantity
the right quality
the right place
the right time
the right customer
the right costs
IN ADDITION –> + the right documentation
= the Perfect Order

Customer Service Elements
Next slides + definitions
Pre-transaction elements
precede the sale and include customer service policies, the mission statement, organizational structure, and system flexibility
Transaction elements
occur during the sale and include the order lead time, the order processing capabilities and the distribution system accuracy
Post-transaction elements
occur after the sale and include warranty repair capabilities, complaint resolution, product returns, and operating information
Call Centers (or Customer Contact Centers)
-Can categorize calls
-Determine average resolution time
-Increasing customer satisfaction levels
-Provide input to forecast future demand
-Improve the productivity of the overall staff

“There’s nothing worse than calling your service provider and finding out that you know more than the person on the other end of the line”
Neil Armstrong, Marketing Director at UK broadband service provider PlusNet

Website Self-Service
Web sites act as support mechanisms for call centers. Customers can access their account information and operating hours, contact information, etc.
Field Service Management
Customers can communicate directly with product specialists using wireless devices and the right diagnosis can be made quickly EX: Direct TV installation
Measuring Customer Satisfaction
Customers are frequently given opportunities to provide feedback about a product, service, or organization
6 Steps to a Successful CRM Program
Step 1. Creating the CRM Plan:
– Objectives of the CRM program
– CRM’s fit with corporate strategy
– New applications to be purchased or developed
– Integration or replacement of existing legacy systems
– Personnel Requirements – personnel, training, policies, upgrades, and maintenance
– The costs and time frame for implementation
Step 2 – Involve CRM users from Outset
Employees should understand how it affects their jobs
– Create a project team with members from all affected organizational areas.
– Test with a pilot application
(involve CRM users so they don’t feel threatened)
Step 3 – Select the Right Application and Provider
Find an appropriate application and determine the extent of customization
– Visit trade shows, read trade literature, hire consultant, etc.
– Compare based on performance, security, reporting capabilities, system availability, etc.
Step 4 – Integrate Existing CRM Applications
CRM is a collection of various applications implemented over time.
– Customer contact mechanisms need to be coordinated so that every CRM user in the firm knows about all of the activity associated with each customer.
– Centralized database or data warehouse containing all customer information.
Step 5 – Establish Performance Measures
This allows the firm to:
– Determine if objectives have been met
– Compare actual to planned variance (take action to correct issues)
Step 6 – Providing CRM Training for All Users
– Provide and require training for all of the initial users and then provide training on an ongoing basis as applications are added
– Training can also help convince key users like sales, call center, and marketing personnel of the benefits and uses of CRM applications
–> training shows value of the system to those who were previously opposed
Trends in CRM
Customer Data Privacy
Rules and laws regarding invasion of privacy include Patriot Act in the US and Internet Privacy Law in the EU
Social Media
Creating and cultivating virtual communities around product or brand is a powerful way to engage consumers
Cloud Computing (Software as a Service)
– ala carte and on demand offerings accessed via web browser
– Changing the cost structure of CRM applications
EX: get service without buying software; no need to take of updates; company’s start out doing this to make sure the software works for you and you don’t have to commit

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