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Chapter 1.1 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
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Chapter 1.2 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
Introduction &Introduction &
ConceptsConcepts
Introduction &Introduction &
ConceptsConcepts
Chapter 1: Making Sense of CRM
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Chapter 1.3 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
CRM is a business strategy that aims to understand,
anticipate and manage the needs of an organisations
current and potential customers. CRM is a shift from traditional marketing as it focuses
on the retention of customers in addition to the
acquisition of new customers.
The expression Customer Relationship Management(CRM) is becoming standard terminology, replacing
what is widely perceived to be a misleadingly narrow
term, relationship marketing (RM).
Why CRM?Why CRM?
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Chapter 1.5 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
1. CRM is database marketing CRM is much wider in scope
2. CRM is a marketing process
CRM is also about company culture, new product developmentpartnerships with other companies etc.
3. CRM is an IT issue IT is the enabler but CRM is much more than just IT
4. CRM is about loyalty schemes
Loyalty schemes may play a role in CRM systems - generatingcustomer data and serving as an exit barrier
5. CRM can be implemented by any company Good quality customer data is required for analytical and
operational CRM
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Chapter 1.6 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
Strategy, Process, Software, Philosophy, Project???
a) CRM is about Strategy
CRM is about creating a competitive advantage by being the best at
understanding, communicating, delivering and developing existingcustomer relationships, in addition to creating and keeping new
customers (Strategic CRM)
b) CRM the customer thread
Whether the customers are current / potential / selected CRM is aboutacquiring, retaining, partnering, personalizing relationships with them.
CRM helps businesses use technology and human resources to gain
insight into the behavior of customers and the value of these
customers.
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Chapter 1.7 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
CRM is concerned with the creation,
development and enhancement ofindividualised customer relationships with
carefully targeted customers and customer
groups resulting in maximizing their total
customer life-time value.
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Chapter 1.8 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
` The focus [of CRM] is on creating value forthe customer and the company over thelonger term.
` When customers value the customerservice that they receive from suppliers,they are less likely to look to alternativesuppliers for their needs.
` CRM enables organisations to gaincompetitive advantage over competitorsthat supply similar products or services.
The Purpose ofThe Purpose of CRMCRM
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Chapter 1.9 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
Focuses, automates and improves customer-facing and
customer-supporting business processes.
Marketing automation: applies technology to marketing
processes - segmentation, multi-channel communication,event-based marketing.
Sale-force automation: applies technology to selling
activities.
Service automation: allows companies to manage theirservice operation whether delivered through call centre,
contact centre, web or face-to-face.
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Chapter 1.10 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
Analytical CRM is concerned with capturing, storing,extracting, integrating, processing, interpreting,distributing, using and reporting customer-related data toenhance both customer and company value.
An essential part of many CRM implementations.
leading companies to decide that selling approaches should differbetween customer group.
Customer perspective - delivers better, more timely,
personalized customized solutions.Company perspective - enables cross-selling and up-selling
programs, and more effective customer retention andacquisition.
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Chapter 1.12 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
Focuses upon the development of a customer-centric business culture. This culture is dedicated towinning and keeping customers by creating anddelivering value better than competitors.
Many business claim to be customer-centric, customer-led,customer-focused or customer oriented, but few are.
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Chapter 1.13 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
Product-oriented business: best quality, performance, designor features.
Production-oriented business: low-price products.Consequently, these business strive to keep operating costs low, and
develop low-cost routes to market.
Sale-oriented business: invest in advertising, selling, publicrelations (PR) and sales promotion.
A customerormarket-oriented business: put the customer
first.It collects, disseminates and uses customer and competitiveinformation to develop better value propositions for customers.
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Chapter 1.14 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
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Chapter 1.15 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
>1990 >1996 >2002
Customer Service Support
Integrated customer facing Strategic CRM
ERP Integration
Customer analytics
Complete Web integrationScope:
Service function
Goals:
Improve service operations
Increase sales efficiency
Marketing function
Service function
Sales function
Reduce cost of interaction
Increase customer retention
Improve customer experience
CompetitiveAdvantage
Sales force Automation
1st generation 2nd generation 3rd generation
Call Center Management
Front-end ( marketing, sales, service)
Campaign Management
Sales function
Entire organization
Cost reduction & Revenue growth
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Chapter 1.16 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
` A relationship consists of episodes between dyadic parties
over time
` Episodes are time-bound and nameable
` Each episode is made up of a series of interactions
` Business relationships are made up of task and social
episodes
` Relations involve trustand commitment
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Chapter 1.17 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
` Calculus-Based Trust. This is present in early stages of the relationship and
related to economic calculations. The outcomes of creatingand sustaining the new relationship are weighed against
those of dissolving it` Knowledge-Based Trust.
This relies on the individual parties interactive history andknowledge of each other, allowing each to makepredictions about the other
` Identification-Based Trust. This happens when mutual understanding is such that
each can act as substitute for the other in interpersonalinteraction. This is found in the later stages of relationshipdevelopment.
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Chapter 1.18 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
`Commitment exists when an exchange partner believes that an ongoing relationship with another is
so important as to warrant maximum effort to maintaining it; that is, the
committed party believes the relationship is worth working on to ensure
that it endures indefinitely
`Relational consequences of commitment Commitment arises from trust, shared values, and the belief that partners
will be difficult to replace.
Commitment motivates partners to co-operate in order to preserverelationship investments.
Commitment means partners pass over short-term alternatives in favour
of more stable, long-term benefits associated with current partners.
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Chapter 1.19 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
` Suspect - could the customer fit the target market profile?
` Prospect - customer fits the profile and is beingapproached for the first time
` First-time customer- customer makes first purchase` Repeat customer- customer makes additional purchases
` Majority customer- customer selects your company assupplier of choice
` Loyal customer- customer is resistant to switchingsuppliers; strong positive attitude to your company
` Advocate - customer generates additional referral dollars
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Chapter 1.20 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
`The total present day value of a customer is the
sum of all past net margins compounded to todays value, and
all future net margins discounted to todays value
`The potential value of a customer is all future net margins discounted to todays value
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Chapter 1.21 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
615-644 Week 10 CRMSystems 21
` Companies generate better results when
they manage their customer base in order to
identify, satisfy and retain their mostprofitable customers
Marketing costs are reduced
Suppliers understand customer requirements better -
and sell more products and services
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Chapter 1.22 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
615-644 Week 10 CRMSystems 22
Customer
Satisfaction
Customer
Loyalty
Business
Performance
Understand customer requirements Meet customer expectations Deliver customer value
Behavioral loyaltyAttitudinal loyalty
Revenue growth Share of customer Customer tenure
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Chapter 1.23 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
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Chapter 1.24 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
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Chapter 1.25 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
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Chapter 1.26 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
` Banks and telecommunications companies Enhanced retention and cross-sell
` Auto manufacturers
More profitable relationships with distributors Better understanding of end-users
` FMCG manufacturers Better understanding of cost-to-serve and retail account
profitability
` Retailers Enhanced basket value
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Chapter 1.27 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
615-644 Week 10 CRMSystems 27
` CRM projects are expensive, complex and take
several years to complete
`CRM projects are risky - the CRM failure rate isestimated at 65% (it may escalate to 80%) -
Gartner Research
` Customer satisfaction with CRM is very low
indeed
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Chapter 1.28 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
` Companies that implement CRM
` Customers of companies that implement CRM
`Partners of companies that implement CRM
` Vendors of CRM software, for example Siebel,
PeopleSoft, Pivotal, Oracle, SalesLogix and
Salesforce.com
` vendors of CRM hardware and infrastructure
` consultancies offering strategy, business, CRM
application and technical consulting
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Chapter 1.29 N.Karami, CRM-Autumn 2010
Customer Relationship managementCustomer Relationship management
Introduction & ConceptsIntroduction & Concepts
CRM is a collective term for processes and
strategies regarding individualized
relationships between enterprises and
customers, prospects, and business partnersfor marketing, sales and service with the goal
of winning new customers, extending existing
customer relationships across the entire
customer life cycle, and improvingcompetitiveness and business success by
optimizing the profitability of individualized
customer relationships.