E-CRM

e-CRM

Customer relationship management

The process of: Targeting Acquiring Servicing Retaining and Building long-term relationships with customers

It is effectively relationship marketing, using customer data and facilitated by technology

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CRM benefits
Increased revenues from better prospect targeting Increased purchases per current customer Customers retained longer Cost savings

But need good databases which are properly maintained in order to retain customers and serve their particular needs And the costs of acquiring new customers far outweigh the costs of retaining existing customers

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CRM aspects: Sales force automation (primarily B2B markets) Marketing automation Customer service

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Sales force automation

Software such as that at www.salesforce.com:
Allows salespeople to build, maintain and access customer records while on the road Manage leads and accounts Send sales calls results and activity reports to the company data warehouse Allows salespeople to manage their schedules

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Benefits of such sales software:

Close more deals (allows teams across the organisation to work together to manage accounts etc) Seize all sales opportunities (every lead is recorded and automatically routed to the right person, and tracked through the pipeline in real time) Update opportunities, accounts and contacts offline Enables collaborative and consistent customer management See the big picture

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Marketing automation
Gives a disciplined approach to the capture, integration and analysis of customer data Helps effective targeting Ensures efficient marketing communications Real time monitoring of customer and market trends Takes data from web sites and databases and turns it into reports for the fine tuning of CRM efforts

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Customer service
Channel Live call centre % using 92 Channel Web-assisted centres % using 31

Email
Postal mail Fax Web self service Automated call centres

88
87 82 53 38

Customer briefings
Retail Other face to face other channels

27
12 58 10

Source: Conference Board Report (2003)

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It looks good but CRM systems often do not work as promised Indeed yet to see even one organisation getting CRM right

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Building blocks for successful CRM (according to the Gartner Group) CRM vision (leadership and value proposition) CRM strategy (objectives and target markets) Valued customer experience (understand requirements, monitor expectations, maintain satisfaction, privacy respected, interaction and feedback) Organisational collaboration and commitment (culture, structure, people, skills, competences, incentives, rewards, communication) CRM processes (customer life cycle, knowledge management) CRM information (data, analysis, a consistent view across functions) CRM technology (applications, architecture, infrastructure) CRM metrics (value, retention, satisfaction, loyalty, cost to serve)

Source: www.gartner.com

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CRM-supply chain management system integration

Employees

Partners

Information backbone

CRM staff

Suppliers

Customers and prospects and various touch points

Source: Strauss, El-Ansary & Frost (2006:373)

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CRM usually refers to front of house or front end operations (creating satisfying experiences at all customer touch/contact points: telephone calls to service reps, in-person visits to stores, email contact etc) Need consistent integrated operations and accurate updating of customer records Need to seamlessly integrate back of house systems (e.g. inventories and payment processes) with the front of house CRM system and the entire supply chain management system If this happens the entire supply chain can work together, focused on meeting customer needs profitably

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CRM processes

The processes begin with the marketing and e-marketing plans when target markets are determined Firms monitor and attract customers online and offline as they progress through the stages of targeting, acquiring, transacting, servicing, retaining and growing Customers are differentiated:

Customising the marketing mix and interaction with these customers

By highest value, longest loyalty, highest frequency of purchase etc (Pareto rule: 20% of customers provide 80% of the profits) By different needs By demographic, geographic, psychographic and usage segmentation Some customers are the customer from hell and are not wanted because they are too costly to maintain

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CRM information
Information is central to CRM The more information a business has the better value it can provide to each customer and prospective customer Gradually more information gathered over time less intrusively by electronically tracking behaviour IT allows firms to move beyond traditional segment profiling to detailed individual profiling Detailed tracking of online behaviour gives a wealth of information

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Critical success factors for building successful e-business relationships with customers Target the right customers (identify best prospects and customers and learn as much about them as possible) Own the customers total experience (the customer share of mind and wallet) Streamline business processes that impact on the customer (CRM-SCM integration and all-embracing customer focus) Provide a 360 degree view of the customer relationship (all contacts) Let customers help themselves (through websites etc) Help customers to do their jobs (especially in B2B markets, which generates loyalty) Deliver a personalised service (through customer profiling, privacy safekeeping and marketing mix customisation) Foster community (encouraging customers to join communities of interest that relate to the firms products)

Source: Seybold, P. (1998) Customers.com, New York: Random House

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E-marketing push customisation tools Company-side tools (push) Cookies small files written to a users PC hard drive after visiting a web site. When user returns to site the company server looks for the cookie file and uses it to personalise the site Web log analysis

every time a user accesses a web site the visit is recorded in the web servers log file (tracks pages visited, how long stays and whether they purchase) extraction of hidden predictive information in large databases through statistical analysis

Data mining

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E-marketing push customisation tools continued Real time profiling special software tracks a users movements through a web site, then compiles reports on the data software gathers opinions of like-minded users and returns these opinions to the individual in real time use email databases to build relationships by distributing useful and timely information, sent individually or en-masse listen to users and build community by provider space for these on the web site interactive point of sale terminals at the retail counter, used to capture data and present target communications

Collaborative filtering

Outgoing email Distributed email

Chat forums/ Bulletin boards iPOS terminals

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E-marketing pull customisation tools Agents programs that perform functions on behalf of the user (search engines, price scrapers, shopping agents)

Individualised web portals Web forms

users easily configure certain web sites (e.g. Amazon.com) designated parts of web pages for the user to seek information customers telephone a firm, listen to automated voice menu and select options to request a fax on a particular topic queries, complaints, compliments initiated by customers or prospects (essential for good customer service)

Fax-on-demand

Incoming email

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CRM metrics by customer life cycle stage

Target recent, frequency, monetary value (high value customers identified) share of customer spending (Pareto rule 20:80) new customer acquisition cost number of new customers referred from partner sites campaign response (click-throughs, conversions) rate of customer recovery (customers who have left who are attracted back) prospect conversion rate (% of web site visitors who buy) customer cross-sell rate from online to offline and vice versa services sold to partners sale of a firms products on partner web sites average order value (sales divided by order numbers for a given period) referral revenue (sales from customers referred to the firm by current customers) sales leads from internet to closure ratio

Acquire

Transact

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CRM metrics by customer life cycle stage continued Service customer satisfaction ratings over time time to answer incoming email from customers customer attrition rate (proportion who do not repurchase in a set time period) percentage of customer retention (proportion of customers who repeat purchase) lifetime value (net present value of the revenue stream of any particular customer over a period of time average order value over time: increasing, decreasing average annual sales growth for repeat customers over time loyalty programme effectiveness (sales increase over time) number of low value customers moved to high value

Retain

Grow