Chapter 8 Customer Relationship Management Revised Date: 2/8/2012.

Chapter 8

Customer Relationship Management

Revised Date: 2/8/2012

Learning Outcomes

• Define CRM.• Describe the role of CRM.• Describe the importance of having CRM functions.• Evaluate different buyer behaviour amongst online customers• Describe techniques for acquiring, retaining customers and

cross-and up-selling using new e-Business tools.• Identify technology solutions for CRM.

A scenario….

Another scenario…

Online CRM scenario…

What is CRM?

• An approach to building and sustaining long-term business with customers

• A key element in e-Business. Why???• CRM comprises of four marketing activities:

– Customer selection– Customer acquisition– Customer retention– Customer extension

What is CRM?

Figure 9.1 The four classic marketing activities of customer relationship management (source: Chaffey, 2009)

Marketing applications of CRMA CRM system supports the following marketing applications:

• Sales force automation (SFA). Sales representatives are supported in their account management through tools to arrange and record customer visits.

• Customer service management. Representatives in contact centers respond to customer requests for information by using an intranet to access databases containing information on the customer, products and previous queries.

• Managing the sales process. This can be achieved through e-commerce sites, or in a B2B context by supporting sales representatives by recording the sales process (SFA).

• Campaign management. Managing ad, direct mail, e-mail and other campaigns.

• Analysis. Through technologies such as data warehouses and approaches such as data mining, which are explained later in the chapter, customers’ characteristics, their purchase behavior and campaigns can be analyzed in order to optimize the marketing mix.

What is E-CRM?Definition by Chaffey (2009):

• What to manage?– Web site for customer development and to encourage purchase.– Managing email list– Applying email marketing– Data mining– Using personalization and mass customization facilities– Online customer service such as FAQ, Chat, Call center etc.– Online service quality to encourage repeating buyers– Managing multi-channel customer experience

Using digital communication technologies to maximize sales to existing customers and encourage continued usage of online services

Benefits of e-CRM

• Targeting more cost-effectively• Achieve mass customization of the marketing

messages• Increase depth, breadth and nature of relationship• A learning relationship can be achieved• Lower cost

Permission marketing

• Customers agree to be involved in an organization’s marketing activities, usually as a result of an incentive

• Godin (1999) suggests that dating the customer involves:– Offering the prospect an incentive– Using the attention to teach – Reinforce the incentive– Offer additional incentive– Use the permission to change customer behavior towards profit

• Opt-in and Opt out.

Figure 9.2 A summary of an effective process of online relationship building

Customer Profiling

• Information that can be used to segment a customer.• Type of information such as:

– Product interest– Demographics– Role in buying decision

• Pepper and Roger (1999) proposed IDCC framework1. Customer identification – using cookies or log on 2. Customer differentiation 3. Customer interaction4. Customization

Conversion Marketing

• Using marketing communications to maximize conversion of potential customers to actual customers and existing customers to repeat customers

• Agrawal et al. (2001) scorecard:– Attraction– Conversion– Retention

Figure 9.3 Multi-channel conversion model

The Online Buying Process

• Five different types of web users– Directed information-seekers– Undirected information seekers– Directed buyers– Bargain hunters– Entertainment seekers

Differences between B2B and B2C buyers

• Market structure• Nature of the buying unit• Type of purchase

– Services: low-volume, high-value– Product : high-volume, low-value

• Type of buying decision• Communication difference

Marketing Communications for Customer Acquisitions

• Characteristics:– From push to pull– From monologue to dialogue– From one-to-many to one-to-some or one-to-one– From one-to-many to many-to-many – From ‘lean-back’ to ‘lean-forward’– The medium changes– Increase in communication intermediaries– Integration remains important

Figure 9.4 Online and offline communications techniques for e-commerce

Figure 9.5 Variation in UK media consumption in hours (bars) compared topercentage media expenditure (squares)Source: Compiled from EIAA (2005) and IAB (2005)

Figure 9.7 An example of effectiveness measures for an online ad campaign

Figure 9.8 Percentage who consider the different information sources as important when researching/considering a product or serviceSource: BrandNewWorld: AOL UK/Anne Molen (Cranfield School of Management)/Henley Centre, 2004

Online marketing communications

1. Search-engine marketing (SEM)

• Search-engine optimization Frequency of occurrence

in body copy Number of inbound links Title HTML tag Meta-tag Alternative graphic text

• Paid search marketing


2. Online PR• Communicating with media online• Link building• Blogs, podcasting and Really Simple Syndication (RSS)• Managing brand on third-party sides ex. Google alert.• Creating a buzz or viral marketing ex. Generating word of mouth or

link.

Figure 9.9 Search engine results page showing the two main methods for achieving visibilitySource: Screenshot reprinted by permission of Google, Inc


Figure 9.10 The affiliate marketing model(note that the tracking software and fee payment may be managed through an independent affiliate network manager)



3. Online partnerships• Affiliate marketing• Online sponsorship

Figure 9.10 The affiliate marketing model(note that the tracking software and fee payment may be managed through an independent affiliate network manager)


4. Interactive advertising5. E-mail marketing ex. E-newsletter, opt-in email.6. Viral marketing ex. Email, blogs, facebook.

Figure 9.11 E-mail response figuresSource: Epsilon Interactive

Customer retention management

• Has two distinct goals– To retain customers of the organization– To keep customers using the online channel

Personalization & Mass Customization

• Both can be used to tailor information• Use opt-in email to deliver information , add value to the

product and remind customer about it.• Use dynamic variables such as:

– Customer preferences– The date or time– Particular events– The location

Online Communities

• A customer-to-customer interaction delivered via e-mail groups, web-based discussion forums or chat

• Choices of developing community for B2C– Purpose– Position– Interest– Profession

Customer extension

• Deepening the relationship with the customer through increased interaction and product transactions

Customer extension

• Advanced online segmentation

– Identify customer lifecycle groups– Identify customer profile characteristics– Identify behavior in response and purchase– Identify multi-channel behavior– Tone and style preference

Figure 9.16 Customer lifecycle segmentation

Types of CRM applications

• Ideal CRM system will support multi-channel communications or the customer preferred channel

Figure 9.18 An overview of the components of CRM technologies

Summary

• The objective is to increase customer loyalty in order to increase profitability.

• CRM aimed to improve customer service at every level.• Marketing communication focuses on acquisition-retention-

extension customers. This include the use of traditional mass-media technique and specialized online techniques.

Tutorial 8

1. Define e-CRM.2. Describe the concepts of personalization and mass

customization. How these two concepts can benefit an online enterprise.

3. Describe a technique that can be used to retain customers.4. Why customer loyalty is importance to online businesses?

References

• Google Image, http://www.google.com accessed on 13 April 2011.

• Chaffey, D., (2007, 2009), E-Business and e-Commerce Management, 3rd and 4th Edition, Prentice Hall.

Chapter 8 Customer Relationship Management Revised Date: 2/8/2012.

Documents

Transcript of Chapter 8 Customer Relationship Management Revised Date: 2/8/2012.