Chapter 11Customer Relationship Development and Retention Marketing

Learning Objectives:

By the time students complete this chapter they should be able to: Explain the importance of customer retention. Describe the difference between relationship and transactional marketing. Discuss the concept of CRM and the marketing functions on which it is based. Explain the elements of CRM strategy. Discuss operational and analytical CRM and why the customer database is essential to

both. Describe tools for targeting customers. Explain the importance of apps in the CRM process. Understand why CRM is an ongoing process. Discuss the nature and importance of social CRM. Understand what is necessary to make CRM work.

Chapter Perspective

The activities and strategies that make up CRM, which we encourage you to translate as “Customer Relationship Marketing,” constitute arguably the most important marketing contribution to enterprise profitability. After two chapters that concentrate on essential Internet marketing techniques this chapter is strategic in nature. It begins with a strong reminder about the importance of CRM and the role of CLV, which is a follow-on to the material in Chapter 4 on direct-response foundations. CRM is one of the “journey without an end” aspects of strategy. Like many of its quality management counterparts, it is also susceptible to failure from lack of organizational commitment and management disregard. Although the chapter does not delve into software solutions, you may want to discuss the difficulties of implementing large, integrated solutions and the growing trend to modular installations. Students should recognize that doing good CRM is hard, that not many firms do it well, that doing so takes a long time, and, as a result of all these issues, achieving “seamless CRM” is a sustainable competitive advantage. If you are looking for additional material on the subject, a good reference is Customer Equity Management, by Roland T. Rust, Katherine N. Lemon and Das Narayandas (Pearson/Prentice Hall, 2005). CRM at the Speed of Light, Fourth Edition: Social CRM 2.0 Strategies, Tools, and Techniques for Engaging Your Customers (McGraw Hill, 2010) is an updated look at including social media in CRM efforts

Introduction Slides 2-3

The introduction is a brief review of the research that demonstrates the importance of CRM to the profitability of the firm. It emphasizes the fact that, although customer satisfaction is important, alone it is not sufficient to guarantee retention. Dissatisfaction is, however, usually sufficient to guarantee negative word of month. I like to ask students if their loyalty is for sale to the highest bidder. Most of us are open to better offers in all except a few highly-valued brands.

The Importance of CLV Slide 4

In chapter 4 we looked at the mechanics of computing CLV using several examples. The chart in this section (Figure 11.1) is based on research about the apparel industry. It also emphasizes the components of CLV, base (without value-enhancing programs) spending, spending growth as a result of loyalty, and referral of other customers. Both spending growth and referrals increase over time, creating the increase in CLV that marketers are trying to achieve.

Strategic CRM: Semantics Slide 5

This slide can spark discussion as to whether the CRM is customer relationship management or customer relationship marketing. You can ask the students to think about their most important relationship: spouse, significant other, parent, friend or child and whether that can be “managed.” Customer Relationship Management indicates that marketers act as the great puppeteer in the sky producing actions that solicit predictable responses from customers, their willing puppets. In reality, social media has put the customer in control of the relationship, or at least on equal footing. Hence our suggestion to use Customer Relationship Marketing to describe this relationship.

The Elements of CRM Slide 6

CRM includes a strategic process, operations or tactics and analytical components. All three aspects are discussed in the chapter. As always, we emphasize the importance of developing a solid strategy before implementing tactics and analyzing the results.

The Transactional versus the Relationship Perspective Slides 7-8

Current basic marketing texts do a good job of pointing out the importance of relationship marketing, but there is so much to do in the introductory course that the emphasis tends to get lost. Consequently, it is worthwhile to emphasize the difference between the transactional approach, primarily executed in mass media, with the relational approach, which can take place in any medium but which thrives in interactive media. Some academic research indicates that collection and use of relational data is directly related to CRM-based outcomes such as CLV, retention and share of wallet. The difference between transactional (Product-Centric) and relational (Customer-Centric) marketing are outlined in Figure 11.2 and you might ask students for examples of companies that exemplify these approaches.

The B2B Foundations of CRM Slides 9-11

“The three-legged stool of CRM” is an activity-based approach to CRM that complements the conceptual/strategic model of Peppers and Rogers. It may have come from the software industry’s approach to serving the CRM needs of marketers. Since we are talking about marketing throughout the course and will devote an entire chapter to customer service later, these two sub-disciplines are not discussed at this point. However, there is no real opportunity to return to the subject of sales force productivity, so there is brief discussion at this point.

The fact that the authoritative article was published in 1989 (Moriarty and Schwartz, “Automation to Boost Sales and Marketing,” HBR, January-February 1989) tells a great deal about conceptual development in the field. It doesn’t, however, indicate that software development has not been active. That includes current efforts to mobilize the sales force and include social media elements in these products. You might look at the sites for salesforce.com and sugarcrm.com to get an idea of the current offerings.

Moriarty and Schwartz list the relevant tools, which include but are not limited to, software as:

Sales force productivity tools such as call reporting and checking order and inventory status (note: this is the area that derives most effectiveness from mobilization, especially when it includes remote access to the customer database.)

Direct mail sales lead generation campaigns that included mail fulfillment of product information.

Telemarketing, often to follow up the sales leads generated by direct mail. Sales and marketing management tools including sales forecasting and reporting

Once again, students should notice that some of this harkens back to the direct-response foundations. Lead generation is one of the generic objectives that are relevant to direct marketing. I would look at salesforce.com and sugarcrm.com as examples of salesforce automation/contact management software as noted in Table 11.1. These tools have attempted to incorporate social media and mobile into their approaches. Salesforce allows for social media chatter about the account in salesforce and Sugar has sophisticated mobile access, including tablets.

Developing CRM Strategy/The Customer Lifecycle Slides 12-15

Consultants Don Peppers and Martha Rogers have created a small industry around their exceptional work in database marketing and CRM. The model presented in Figure 11.4, Slide 12 is the basis of their CRM approach and you might want to point out the similarity to the email application in Figure 7.8). The four steps—identify, differentiate, interact, and customize—constitute a model that is simple in concept and remarkably demanding and difficult in operation. Peppers and Rogers have many CRM resources, including case studies, on their websites http://www.peppersandrogers.com and http://www.1to1.com as well as offering a free enewsletter. I have often had students sign up for the newsletter. International Speedway is a case study of using data to create different experiences at different racetracks. In reality, one-to-one marketing is often implemented with segments, so here is a good example of how one consulting firm CAC-Group uses data to form marketing segments and market to each segment differently: http://www.cac-group.com/Segmentology_Overview.pdf.

The Customer Lifecycle shown in Figure 11.5 is one of many that could be used to illustrate the principle of identifying your customers, learning about them and marketing to them in the way they desire, or interactive marketing! There are lots of other examples of the customer lifecycle and you might ask students to find one and compare.

Mass customization, rather than true customization, is also an economic reality of 1-to1 marketing. Nobody does it better than M&M’s, shown in Figure 11.6; this site, as well as Nikeid, make a good lab exercise in mass customization.

Land’s End’s history as a catalog (database) marketer seems to have a lot to do with its strong CRM program as well as good customer service, which is an absolute necessity for retaining customers. It is well worth the time to go live to the site http://landsend.com. It’s fun to play with the virtual model feature. The students will be thoroughly entertained by that. They will be informed by looking at the customer service page and seeing how many ways a customer can interact with Land’s End. Their custom products initiative is also interesting and it appears to be successful since they are gradually adding additional products.

Yellow Transportation does a good job in the B2B market, continuing to improve and add to its CRM/customer service features. Leaving this one at the level of a screen shot may be sufficient, because the site is functional, but not exciting.

The Process of CRM—Operational and Analytical Slides 16-17

CRM is a process not a project, and that can’t be emphasized too strongly. It is hard to do because it changes the whole approach to marketing in most firms, which tend to focus on acquisition and programs, not ongoing dialog and a process of continuous improvement. It also requires a long-term perspective, not a quarter-by-quarter view. Figure 11.7 is important, both in setting forth the process and in pointing out that there is an operational aspect and an analytical aspect. Analysis of the database is key to learning and better programs. Operational refers to devising and executing those programs based on variables or analytical products housed in the database. The chapter also describes the difficulties of integrating social media data into these databases (social CRM).

The ASPCA (http://www.aspca.org) does a wonderful job in the nonprofit marketspace. Its website changes frequently with new programs and new opportunities to be involved, whether by adopting a pet, by donating to shelters, or purchasing products. It is worth looking at for both what it does and how it does it. Its registration page is a best practice example and worth looking at. Among other things, they collect the pet information necessary for the personalized email described in the text. It is also worth pointing out that this is an example of visitor conversion—getting the visitor to register and provide an email address so ASPCA can conduct further membership or fundraising solicitations.

Targeting, Personalization, and Customization Slides 14–23

Three concepts that are key to successful CRM are targeting, personalization, and customization. Figure 11.10 lays out the concepts. Customer profiles, because they are made up of individual data items, are a reasonable first step leading to targeting. Land’s End, for example, is good at targeting people who purchase men’s or women’s apparel or both. ASPCA gets registration data that allows them to target owners of cats versus dogs. The case history used shows how they carry that the next step, to personalizing communications with the two groups, as identified by their profiles. Both sales and registration produce identified users. CoolSavings offers a program

of continuing incentives, personalized to the registration information of the identified registrants as opposed to the more generalized approach of Groupon, where the deal must “go” to be usable.

Cookies produce data on anonymous users. That simple statement is important; students tend to believe that cookies may identify users. The fact is that they can, but only if the cookie is linked to other data, which can happen without the knowledge of the visitor. Cookies, by themselves, however, only identify the computer as the source of the visit. The duration varies by whether they are session cookies, not stored for future use, or enduring, usually for a period of 12 months. Most users seem to be more comfortable with site cookies than with third-party cookies, which are set by services like ad serving. They are necessary for behavioral tracking and behaviorally-targeted advertising, but they arouse suspicion.

The discussion of cookies can be extensive if you let it. If you want to pursue the subject, Cookie Central (http://www.cookiecentral.com) takes a consumerist point of view. Wikipedia has a rather technical, but objective, discussion: http://en.wikipedia.org/wiki/HTTP_cookie.

All this feeds into a description of how individual websites can personalize pages for users and how email can be personalized and used to update databases so critical to CRM (Figure 11.7). The Cisco example should spark some conversation about personalization. Again you can expand on the discussion in the text by going to Choice Stream (http://www.choicestream.com), which has products for personalizing TV menus and mobile devices as well as web pages. Most email providers offer extensive opportunities to personalize emails, since targeting and personalization is a key benefit of using email. If your school uses an email services provider, you might want to look it up and see if students can identify personalization techniques they have seen in use. ExactTarget, which is used in Chapter 7, has a good discussion of email personalization: http://www.exacttarget.com/products/email/features.aspx.

Customer Loyalty Programs at Tesco Slide 24

You can see a lot of what is described in the text by going live to the website. It’s not visually stunning, but it is effective. The text has information on Tesco and additional articles that come up in a search give more. There is even a book, Scoring Points: How Tesco is Winning Customer Loyalty, by Clive Humby and Terry Hunt with Tim Phillips, published in the U.S. by Kogan Page Ltd., Sterling, VA.

Tesco’s program demonstrates many of Arthur Hughes’s criteria for good loyalty programs:

Be easy to use Provide immediate rewards Have value to customer Be targeted to behavior change Be affordable Have a published exit strategy

The exception appears to be an exit strategy; Tesco seems to keep expanding its program, and as long as their profitability appears to grow as a direct result, they will probably continue to do so.

In the U.S. Kroger is a DunnHumby client with a program that seems to mimic what Tesco does although most U.S. grocers are not engaged with their customers at this level.

Emerging Issues—Apps and Social CRM Slides 25-27

Apps allow consumers to interact with companies and brands from anywhere and social networking tops the list. Social CRM data, collected with permission, can provide valuable customer insights. The Best Buy example illustrates how social CRM can provide a seamless experience between the store and the web. Figure 11.3 a and b illustrate how the data can work together to see the social media activity that leads to website traffic, leads, or sales conversions.

The Costs and Failure Rate of CRM Systems Projects Slides 28-30

No discussion of CRM would be complete without a discussion of how easy it is—and how expensive it can be—to fail at CRM. The cost can be 7 or 8 figures and the failures rate estimates are about 50%: http://www.what-is-crm.com/crm-failures.php.

2001 Gartner: 50%+ CRM software failure rate 2002 Butler Group: 70% CRM software failure rate 2002 Selling Power and CSO Forum: 69.3% CRM software failure rate 2005 AMR Research: 18% CRM software failure rate 2006 AMR Research: 31% CRM software failure rate 2007 AMR Research: 29% CRM software failure rate 2007 Economist Intelligence Unit: 56% CRM software failure rate 2009 Forrester: 47% CRM software failure rate

Just one look at the variety of touchpoints and technology facilitators in Figure 11.14 indicates how difficult the process is to implement. It is also probably true that there is a great deal more sub-optimization than there is outright failure and discontinuation these days. The main reasons indicated over and over again from various sources are:

• Lack of strategy• Technical project instead of a business initiative• Lack of defined objectives and metrics• One-time event vs. ongoing process• Lack of a customer-centric culture• Lack of

Top management leadership Employee buy-in

CRM is, in fact, a process of organizational change and must be managed as such. The magnitude of the change required is that great.

The CRM Vision—Seamless Customer Experience Slide 31

That phrase seems to aptly summarize both the goal and the difficulty. Figure 11.14 shows the many possible touchpoints (channels) and the technologies that can be used to communicate or provide information to achieve customer satisfaction. The channels are well known, although listing them in a single place reinforces just how many there are in this era of multichannel marketing.

Some of the technologies may be unfamiliar. You may have pointed out the chat facility if you visited the Land’s End site. VoIP is familiar; eBay’s purchase of Skype made easier to do “Click to Call” to facilitate communication between sellers and prospective buyers. Push is fairly commonplace, although seemingly little noticed. Microsoft and the providers of pc security software are both major users of information and notices pushed to the desktop. Co-browsing is hard to see, so the idea may be unfamiliar. Customer service software provider has suite of products that explain the concept well: http://www.egain.com/products/chat.asp. Embedded modules are becoming more common and mobile platforms also, although the adoption rate for smartphones at this writing hovers around fifty percent.

The discussion should end on an upbeat note. CRM is difficult but possible, and successful CRM can measurably contribute to enterprise profitability (or nonprofit success). Managers should never forget that successful CRM programs require:

Good customer data Quality processes and systems Organizational resources and commitment Software is necessary, but not sufficient

There is, indeed, no “silver bullet.”

Summary Slide 32

Another trite but true commentary on CRM is that it is “a journey, not a destination”—a phrase that is reminiscent of sayings about TQM. Students have been oriented to relational marketing from their first exposure to marketing but they may not have previously been given a detailed introduction to actually doing it. The concepts of CLV, profiling, targeting, and personalization should be reinforced. The perspective of “seamless customer experience” is important and the focus of much managerial attention at present. Mobile and desktop apps as well as social CRM, represent future directions. The entire process should be integrated; if we acquire the right customers in the first place, it will be easier and more profitable to retain them.

Discussion Questions

1. Explain, in your own words, the importance of customer-focused relationship marketing and how it differs from transactional marketing.

Relationship marketing is the key to profitability for virtually all organizations—for-profit and nonprofit alike. The cost of customer acquisition is high and it seems only to increase in traditional channels, from television to direct mail. A continuing relationship with customers who become profitable within a reasonable period of time (between one and two years in many categories, although some data in the chapter suggests profitability within the first year) is essential. Those customers can then be made more valuable by cross selling and upselling. Once again, CLV is the key metric. Students need to be clear and vocal about the issue of profitability.

Transactional marketing, in B2C or B2B, focuses on the single transaction. It is very clear in B2B, where the transactional customer who focuses primarily on price can be identified. Transactional customers probably exist in B2C also, but in that space mass media advertising clouds the issue. It is hard to do relationship building there; we rely on brand building instead. The lack of measurability of the mass media also contributes to the short term focus. So does the traditional brand management structure, which still seems to predominate in consumer packaged goods firms. Marketing research tends to be project-focused and it rarely is able to provide a complete picture of the customer’s behavior over an extended period of time—the 360° view of the customer that is a favorite topic of relationship marketers. Students should be equally clear that the transactional/mass media perspective is the norm in marketing. That may gradually be changing, but in many businesses it is not changing rapidly enough to permit them to take full advantage of the opportunities offered by the Internet.

The specific areas in which transactional and relationship marketing differ can be identified as:

Focus—individual transactions versus ongoing exchanges Time perspective—short versus long Communications channels—mass versus personal Customer feedback—marketing research versus dialog Market size (definition)—mass markets or segments versus individuals Success criterion—market share versus share of customer

2. What is the role of CLV in relationship marketing?

CLV is a metric for measuring the success of a relationship marketing program. CLV emphasizes the importance of caring for customers in a way that causes them to return, to concentrate more of their purchases with the marketer and to refer new customers. You may want to refer students back to Chapter 4 for a comparison of how CLV is treated in both chapters.

CLV is both a result of successful CRM programs and an analytic used to drive them. Students might approach it from either direction; they should understand that both are relevant and important.

CLV is a result in the sense that successful relationship marketing will increase the value of many customers as a result of longer persistence, higher average purchase, cross-sales and referrals.

There are, however, customers at the low end who may never become profitable. Marketers need to decide what to do about them. Some customers at the high end may already be giving all the business they can reasonably give and further marketing or incentives will produce little increase. This is one discovery that careful analytics may produce. There are many others.

3. Customer Relationship Marketing is generally considered to have its foundations in three B2B marketing functions. Explain what the functions are and what each contributes to a CRM program.

The three marketing disciplines that need to be brought together in order to develop a CRM program are:

Marketing Sales force automation Customer service

By this point in the course students should be getting a grasp on the concept of information-driven marketing that is targeted and personalized. That is essential to the building and maintenance of strong relationships. Customer service will be discussed in detail in Chapter 13.

Sales force automation is the subject with which they may not be familiar and this is its only coverage in the text. In order to illustrate the material in the book you may with to visit a website like that of SalesForce.com (www.salesforce.com), which has a moderate amount of information that is well organized and presented as well as a demonstration of their CRM software. There are many other sites, perhaps as many as 300, who sell similar software suites. A simple view of sales force automation can be provided by going to the Contact Manager in Microsoft Office. It has many of the features of the enterprise-level software suites and, if it is on your classroom computer, may be provide an easy illustration that will ensure that students understand the basics of sales force automation.

4. Explain the steps in the Peppers and Rogers model of CRM and the importance of the customer database in the process.

Figure 11.4 describes the IDIC model:

Identify your customers by individual or household name and address and/or address. This is the first step in developing the customer database.

Differentiate them according to their needs and their actual or potential value. Use available data to understand the customers and build segments.

Interact with customers based on their own needs. Each interaction should be used as an opportunity to increase the store of data about the individual or household.

Customize at least some aspects of the organization’s dealings with the customer. This could be things like tailored communications and specialized offers that allow the enterprise to recognize the customer as a valued supporter and that present opportunities for growing the value of the individual customer.

5. Explain what is meant by the customer lifecycle, and how CRM strategies and messages can be crafted for its various stages.

The customer lifecycle is used to establish the types of messages that will be most effective as the customer moves through relationship stages. The stages are customer response/acquisition, repeat purchase/lifetime value, attrition/renewal and reactivation/win-back. Cisco’s reactivation program is a good example of the last stage. Tesco’s loyalty program is about improving repeat purchase of existing customer and improving lifetime value to avoid attrition. Social media sites are good ways to attract new consumers if you ask for their information in a registration form and get permission to contact.

6. Discuss the differences between operational and analytical CRM and how they make use of the customer database.

The customer database is the focal point of both operational and analytical CRM. The database is developed and used to conduct segmentation analysis and to develop customer profiles that drive both outbound programs like email newsletters and inbound programs like display advertising. Analytical models include Customer Lifetime Value and response models that predict response to future marketing programs on the basis of past response to similar programs. As programs are developed and executed, additional data is captured to enrich the database, to allow performance measurement of individual programs or customers, and to continually refine critical marketing models.

7. Explain the difference between a customer profile and a model.

The customer database may be used to develop broadly-based customer profiles (similar to the personas used in Chapter 12) that describe the ideal customer or group of customers and drive both outbound programs like email newsletters and inbound programs like display advertising. Students will probably be familiar with the term from their other marketing classes. However, at the individual customer level, a profile may be created either anonymously or identified through specific customer data, usually gained through registration. Analytical models include CLV and response models that predict response to future marketing programs on the basis of past response to similar programs.

Predictive analytics or modeling are a more advanced approaches to personalization, but profiles generally are employed first and they may be sufficient for many applications. This is especially true where the user is identified and can specify content. Sites like Amazon use a combination of both. If students seem to be having trouble with this it might be helpful to do a quick profile of the “average student” in the class using basic demographics and lifestyles. That should clear up any confusion that still exists.

8. True or False: It is easy to include customer data from social networks in the database. Why or why not?

False. It is difficult to link consumer social network data to identified consumers without violating privacy restrictions. Consumers may mask their identity on social media and/or not wish that data to be shared. So even if you have permission form the social media site, using the data might not be well received by the consumer. On a small scale, however, there may be social data that is worth adding to consumer profiles. Marketers are always on the lookout for influentials (opinion leaders) who can influence others in social space. There is also identifiable data from sources like top blogs listings.

9. Targeting and personalization are different but related CRM concepts. Be prepared to define each, clearly explaining why they are different from one another and giving an example of each.

Targeting and personalization are all possible because of the customer database and the resulting ability to communicate with individuals or precisely defined segments. The concepts can be defined as:

Targeting is directing marketing communications to individuals or businesses that have been identified as good targets for the particular program.

Personalization is the process of preparing an individual communication for a specific person based on stated or implied preferences.

The text points out that the term “customization” is often used loosely when personalization is really appropriate. Mass customization may be the appropriate term when the customer simply picks components from a choiceboard. Dell is a good example of mass customization as is NIKEiD.

Targeting is exemplified both by chosen content on a website, a personalized page for example, and dynamic serving of content based on identified or anonymous profiles. A personalized page on, say, the Wall Street Journal site is a visible example of both. It is hard to see dynamic content based on anonymous profiles because the visitor usually doesn’t know what the content options are. Most definitions of customization would include the customized chinos and jeans on the Land’s End site.

10. True or False: Personalization is a simple process of including the recipient’s name in the subject line or body of the message. Why or why not?

False. Personalization should incorporate the customer’s preferences, i.e., dog or cat owner, transaction history, responses to past offer and other data on the marketing database to be effective and interactive. Students can generate a possible list of personalization items and rank them by how easy they are to obtain in the company. The ASPCA is a good example of personalization.

11. Why have apps become an important part of CRM programs for many companies? Do you believe that apps you use are helpful in building relationships with brands? Sales?

Figure 11.12b shows the types of apps used. Games, music, and entertainment are all popular. Practical services like maps and weather are also favored by many smartphone users. Social networking apps are near the top of the list. Apps allow companies to interface with their customers over many touchpoints; the relationship development and whether this translates into sales depends on how the brand uses the apps.

12. Explain your understanding of “social CRM.”

Social CRM involves adding social media data to the data already in CRM databases to understand the customer better. The attribution of sales to social media data is difficult, but it can be rewarding to a marketer to add social media likes and dislikes to a customer’s data record, provided the marketer can do so without violating the customer’s understanding of privacy. The text states social CRM enhances the customer’s experience and increases the marketer’s customer insight.

13. What are some of the major reasons that the implementation of large CRM systems may be prone to failure?

As stated in the text,” The simple answer is that CRM systems are not easy to implement. The data requirements and the technology can be daunting, but that is only a small part of the reason that many CRM projects fall short. The overriding reasons fall under the general heading of “organizational issues,” ranging from lack of strong and consistent leadership from top management to failure to achieve buy-in from people throughout the organization.” Just looking at the categories and judging for the Garner CRM awards helps the students to understand the complexity http://www.gartner.com/technology/summits/na/customer-360/excellence-awards.jsp.

14. What do we mean by “seamless customer experience in multiple channels?”

Seamless service to customers means the customer has the same experience from channel to channel and the customer information is carried in one repository and available to all those applications and individuals that interact with that customer. Social media data can be a useful addition to that knowledge if it can be made visible to the service rep.

15. Explain why CRM is a process, not a journey with a final destination.

The process as described in Figure 11.7 begins with strategy development based on segmentation by CLV with value propositions crafted for each target segment. The center oval specifies the role of data in the process; first the development of a customer database that can be used for both marketing program operations and analytics. Programs are driven by the database, which identified the best targets for a given outbound program and provides data to service customers when they make inbound contacts. Marketing programs are tracked, providing additional data to be captured for the database. These data can be used to build predictive models and to make

models even more precise over time. Analytics based on model output can be useful in any facet of marketing program planning. The process is never ending with multiple feedback loops.

Internet Exercises

1. Internet Career Builder Exercise.

CRM jobs might be harder for the students to relate to; certainly the entry level call center jobs are available to them and a good place to start. It really depends on what is available in your area.

2. Visit one B2C, one B2B, and one nonprofit website. Examine each carefully, identifying as many relationship building techniques as possible. Do you find extensive differences between them? Be prepared to discuss your findings, and the similarities and differences between programs on the two sites, in class.

Students should come up with a list of several techniques used by each site they visit. If they have only one or two, they should be pushed to answer what other services the site offers, some of which may be relational techniques. If few or no relational techniques are used, it is interesting to speculate on why. Are they not needed? Doubtful. Are marketers unaware of or unable to implement technology-intensive relational techniques? Quite possible. One of the few good reasons for not using a set of carefully-chosen relational techniques is the inability of the organization to be responsive to them—to respond to emails in a timely fashion or to dedicate the resources to staff a chat room, for example. It is worse to raise customer expectations by offering techniques that are poorly executed than not to offer them at all. They should also note the increasing presence of customer-created content in many forms—product ratings, personal photographs, and links to relevant blogs are only a few.

Students may be surprised by the extent to which the same relational techniques are used on both B2C and B2B sites. The basic reason may well be that an individual customer is still an individual and a customer, whether representing him/herself, a household, or a corporation. What different techniques would you want to use? I am hard pressed to provide a meaningful answer to that. Techniques should be chosen based on customer requirements and the ability of the organization to execute. B2B versus B2C seems to make little difference.

3. By now you are probably receiving communications from at least one of the websites you are tracking. Are they doing it well or not? How would you assess the effectiveness of this part of their CRM program?

This should elicit a variety of responses in terms of both quality and quantity of communications. What various sites are doing and how well the recipient feels they are doing it is interesting. See if students can attribute any reasons for their assessments of effectiveness—relevant content, too much, too little—what are their reactions?

4. If you are not already, become a fan of a Facebook brand page and study the types of marketer-generated communications that appear there. What do you see in the way of customer contribution to the content on the page? What do you make of customer activity, or lack thereof, on the page?

This exercise is meant to turn the focus from a discussion of how customers react to the value marketers extract from their ongoing dialog with customers. Students should come up with many examples of what data is exchanged upon become a fan and how the marketer responds, whether there are incentives to join, whether purchases are encouraged and so forth. Chapter 7 gives some great examples of email and Facebook integration for CRM.

Key Terms

analytical CRM mining the customer database and developing programs or predictive models based on the resulting insights and data discovery.

customer lifecycle CRM stages in the development of the relationship between customer and brand.

hashtag a Twitter tools that uses the # symbol to define and group Tweets according to user-defined meanings.

operational CRM designing and executing tactical CRM programs on the basis of data items or customer profiles.

relational marketing focuses on developing long-term customer relationship and loyalty.

sales force automation business processes, and the software that supports them, that permit salespeople to work more effectively both in and out of their offices by providing electronic access to important documents, customer data, and support tools like calendars.

touchpoint marketing jargon for each channel available for customer interaction.

transactional marketing focuses on the individual sale of a product or service.