Customer Relationship Management

• “Process of creating and maintaining relationships

with business customers or consumers”
• “A holistic process of identifying, attracting,
differentiating, and retaining customers”
• “Integrating the firm’s value chain to create
enhanced customer value at every step”
• “An integrated cross-functional focus on
improving customer retention and profitability for
the company.”
 Customer Relationship Management

Bottom-line:

The use of information-enabled systems

for enhancing individual customer
relationships to ensure long-term customer
loyalty and retention
 CRM Objectives
• Lifetime Value (LTV)
– Refers to the net present value of the potential revenue
stream for any particular customer over a # of years
– Starts with current purchase activity then extrapolates to
include potential additions from cross-selling, upgrades,
total ownership, etc.
• Customer Ownership
– Attempts to “own” the lionshare of customer spending
and/or “share of mind” in a particular product category
– Building brand equity, maintaining vigilant customer
contact, keeping current with the market trends is critical
– 5% points increase in customer retention=20-125%
increase in profit
 Is CRM New?
No! Yes!
• Simply an extension of • A shift in corporate
philosophy concerning the
relationship marketing approach to value delivery
• Builds on customer • Customer-centric
service and satisfaction approach to value chain
concepts • New and technology-
enhanced processes
• Just the latest buzzword
• Focus is not just on
for creating customer bottom-line, but on top-line
orientation • Goal is to create satisfying
• Bottom-line is still the experiences across all
same customer contact points
CRM Programs Can Potentially Improve
• Analytical CRM
– Customer Segmentation
– Trend Analysis
• Operational CRM
– Campaign Management
– Tele-Marketing/Tele-Sales
– Activity and Time Management
– Quotation and Order Processing
– Delivery and Order Fulfillment
– Customer Service and Support
– Remote Access
• Collaborative CRM
– Enterprise Portals
– Customer Access
– Supplier Access
– Personalization
 Areas of CRM Activity

• Sales Force Automation (SFA)

• Customer Service and Support (CSS)
• Help Desk
• Field Service
• Marketing Automation
 Areas of CRM Activity:
Sales Force Automation
• 35-40% of all CRM activity
• Manages lead generation, tracks movement of
leads through the pipeline, allows better usage of
customer data, integrates activities across sales
channels, simplifies relationship management,
forecasts for opportunities (SWOT)
• Goldmine and SalesLogix are examples of
prepackaged SFA solutions.
• Ex. Staples used SFA to integrate catalog, online,
in-store sales efforts directed at its best
customers
 Areas of CRM Activity:
Customer Service and Support (CSS)
• 20-25% of CRM
• Assign, escalate, and track trouble tickets,
inquiries, solution attempts through resolution
• Provides information to support customer call
center activity
• Gleans customer data from those interactions
and records it in SFA for later use
• Remedy, Siebel, Vantive, and Clarify are major
vendors
• Ex., 3M Adhesive Products division
 Areas of CRM Activity:
Help Desk
• 15-20% of all CRM
• Allows individuals to access network database
to solve their own problems or find information.
• Can be internal or external
• Offers many bottom-line savings
• Human Click, Tivoli, LivePerson, are providers
• Ex., Land’s End Live allows customers browse
FAQ’s but also click a link to talk directly with
live representative.
 Areas of CRM Activity:
Field Service CRM
• 3-5% of all CRM activity
• Mobile service technicians can log information
about work orders and service calls, as well as
access information from the remote site.
• Can feed information from customer problems
into SFA for salesperson leads.
• Market information can be gathered and logged
into central database.
• Ensures appropriate resource allocation by
matching available resources to job requirements
• Major vendors are RTS, Metrix, eDispatch
 Areas of CRM Activity:
Marketing Automation
• 3-5% of CRM, but growing 5X faster than all others
• Interfaces with data warehouses and data mining
activities to tailor page views, products, and
promotions, so that the right offer goes to the right
person at the right time.
• Can interact with SFA to support field sales efforts
• Provides customized customer interactions critical
to segment of one marketing, mass customization,
customerization, etc.
• www.webgroove.com, Epiphany, Oracle, Siebel,
and Personify are leaders
 New Frontiers in CRM
• Commercial E-Communities
– What are people loyal to?
• Families
• Football teams
• Schools
• Clubs
• Cultures
• Countries
• I.E.: Communities not Corporations
 Commercial E-Communities
 Goal is to create an environment where people
get meaningful interactions with the company and
other users so that they feel part of the
enterprise.
 Adds human component and engages customers.
 Creates more stickiness and “ownership”
 Ex. User Groups for software products (Oracle,
Intergraph)
 Ex. Dell / Sony technical support communities
 Can be run internally or by an external
organization such as Sift
Components of Commercial E-Communities

 Customer-focused transactions
 Ex. IKEA Stock Query, Amazon rare book finder
 Community Interactions
 User product ratings, User alerts/Newswires, Dell
technical support
 Access to Relevant Information
 Dell technical library, Customer chat rooms, Zero-
time search facility
 Value-added Services Based on Customer
Data
 New Frontiers in CRM
• Customerization
– Mass Customization – Using flexible processes and
organizational structures to produce varied and
individualized products and services at the price of
standard mass-produced offerings.
– Personalization – Customization of some features of a
product or services so that the customer enjoys more
convenience, lower costs, or some other benefit.
– Segment-of-One Marketing – Based on the idea of the
firm learning individual reactions to marketing strategies,
then treating this customer differently than other
customers.
– Customerization – Mass customization + personalization
+ segment-of-one, dependent on a web-based or
electronic interaction
 Distinctions in Customerization

Mass Marketing Customerization

Relationship Customer is passive Customer is active
with customers participant in co-producer,
process
Customer needs Researched and May not be
articulated articulated
Product and service Marketing and R&D Customized based
offering drive offering on customer
interactions
Price Fixed prices with Value based
discounting pricing; customer
determined
Communication Advertising and PR Integrated,
interactive
 Making CRM Happen
• Evaluate products and processes customers’ terms.
• Analyze the multiple channels through which the
company interacts with customers.
• Examine how the company understands its
customers. Does it keep good data? How does it
get that data? Does information flow between
functional areas?
• Provide fingertip access to all information.
• Analyze human resources and ensure that
everyone has an understanding of philosophy of
CRM