bus188 chapter 09 nt

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McGraw-Hill/Irwin 2008 The McGraw-H il l Compani es, Al l Rights Reserved

CHAPTER 9

CUSTOMERRELATIONSHIPMANAGEMENT


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Chapter Nine Overview

SECTION 9.1CUSTOMER RELATIONSHIPMANAGEMENT Business Benefits of CRM

Using Information Technology to Drive Operational CRM Using Information Technology to Driver Analytical CRM

SECTION 9.2CUSTOEMR RELATINSHIPMANAGEMENT STRATEGIES

Customer Relationship Managements Explosive Growth Customer Relationship Management Success Factors

Current Trends: SRM, PRM, ERM

Future CRM Trends


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SECTION 9.1



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LEARNING OUTCOMES

1. Compare operational and analytical customerrelationship management

2. Explain the formula an organization can use to findits most valuable customers

3. Describe and differentiate the CRM technologies

used by sales departments and customer servicedepartments

4. Describe and differentiate the CRM technologiesused by marketing departments and salesdepartments


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BUSINESS BENEFITS OF CRM

CRM enables an organization to:

Provide better customer service

Make call centers more efficient Cross sell products more effectively

Help sales staff close deals faster

Simplify marketing and sales processes Discover new customers

Increase customer revenues


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CRM BASICS

Organizations can find their most valuable

customers through RFM - Recency,

Frequency, and Monetary value How recently a customer purchased items

(Recency)

How frequently a customer purchased items(Frequency)

How much a customer spends on each

purchase (Monetary Value)


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The Evolution of CRM

CRM report ing techno logyhelp organizationsidentify their customers across other applications

CRM analysis techno logieshelp organizationsegment their customers into categories such asbest and worst customers

CRM predict ing technologieshelporganizations make predictions regardingcustomer behavior such as which customers are

at risk of leaving


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Three phases in the evolution of CRM

include reporting, analyzing, and

predicting


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Operational and Analytical CRM

Operat ional CRMsupports traditionaltransactional processing for day-to-day

front-office operations or systems thatdeal directly with the customers

Analyt ical CRMsupports back-officeoperations and strategic analysis andincludes all systems that do not dealdirectly with the customers


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Operational and Analytical CRM


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Using IT to Drive Operational CRM


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Marketing and Operational CRM

Three marketing operational CRMtechnologies:

1. List generatorcompiles customer

information from a variety of sources andsegment the information for differentmarketing campaigns

2. Campaign management sys temguidesusers through marketing campaigns

3. Cross-selling and up-selling Cross-sel l ingselling additionalproducts or

services

Up-sel l ingincreasingthe value of the sale


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Sales and Operational CRM

The sales department was the first to begin

developing CRM systems with sales fo rce

automat ion a system that automatically tracks

all of the steps in the sales process


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Sales and operational CRM technologies

1. Sales management CRM systemautomates each phase of the sales process,

helping individual sales representativescoordinate and organize all of their accounts

2. Contact management CRM sys temmaintains customer contact information and

identifies prospective customers for futuresales

3. Opportuni ty management CRM sys temtargets sales opportunities by finding new

customers or companies for future sales


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CRM Pointers for Gaining Prospective

Customer

1. Get their attention2. Value their time

3. Overdeliver

4. Contact frequently5. Generate a trustworthy mailing list

6. Follow up


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Customer Service and

Operational CRM Three customer service operational CRM

technologies:

1. Contact center (call center)2. Web-based self-service system

Click-to-talk

3. Call scripting system


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Customer Service and

Operational CRM


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USING IT TO DRIVE

ANALYTICAL CRM Personalizationwhen a Web site knows enoughabout a persons likes and dislikes that it can fashionoffers that are more likely to appeal to that person

Analytical CRM relies heavily on data warehousingtechnologies and business intelligence to glean insightsinto customer behavior

These systems quickly aggregate, analyze, anddisseminate customer information throughout anorganization


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USING IT TO DRIVE

ANALYTICAL CRM Analytical CRM information examples

1. Give customers more of what they want

2. Value their time3. Overdeliver

4. Contact frequently

5. Generate a trustworthy mailing list6. Follow up


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OPENING CASE QUESTIONS

Customer First Awards1. Summarize the evolution of CRM and provide

an example of a reporting, analyzing, andpredicting question Progressive might ask its

customers

2. How could Progressives marketingdepartment use CRM technology to improveits operations?

3. How could Minis sales department use CRM

technology to improve its operations?

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Customer First Awards4. How could Progressive and Minis

customer service departments use CRM

technology to improve their operations?

5. Define analytical CRM and its

importance to companies likeProgressive and Mini


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SECTION 9.2


STRATEGIES

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LEARNING OUTCOMES

5. Identify the primary forces driving the explosivegrowth of customer relationship management

6. Summarize the best practices for implementinga successful customer relationshipmanagement system

7. Compare customer relationship management,supplier relationship management, partnerrelationship management, and employee

relationship management

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CUSTOMER RELATIONSHIP

MANAGEMENTS EXPLOSIVE GROWTH

CRM Business Drivers

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MANAGEMENTS EXPLOSIVE GROWTH

Forecasts for CRM Spending (in billions)

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MANAGEMENTS SUCCESS FACTORS

CRM success factors include:

1. Clearly communicate the CRM strategy

2. Define information needs and flows3. Build an integrated view of the customer

4. Implement in iterations

5. Scalability for organizational growth

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CURRENT TRENDS: SRM, PRM,

AND ERM

Current trends include: Supp l ier relat ionsh ip management (SRM)

focuses on keeping suppliers satisfied by

evaluating and categorizing suppliers for differentprojects, which optimizes supplier selection

Partner relat ionsh ip management (PRM)focuses on keeping vendors satisfied by managingalliance partner and reseller relationship that

provide customers with the optimal sales channel Emp loyee relat ionsh ip management (ERM)

provides employees with a subset of CRMapplications available through a Web browser

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FUTURE CRM TRENDS

CRM future trends include:

CRM applications will change from employee-only

tools to tools used by suppliers, partners, and even

customers

CRM will continue to be a major strategic focus for

companies

CRM applications will continue to adapt wireless

capabilities supporting mobile sales and mobile

customers

CRM suites will incorporate PRM and SRM

modules

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Customer First Awards

6. How might Progressives business model

change if it decreased its investments in CRM

technologies?

7. How might Minis business model change if it

decreased its investments in CRM

technologies?

8. Describe the CRM industry best practices and

explain how Progressive is using each

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Customer First Awards

9. Explain SRM and how Mini could use it

to improve its business

10.Explain ERM and how Progressive could

use it to improve its business

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CLOSING CASE ONE

Fighting Cancer with Information

1. How could the ACSs marketing departmentuse operational CRM to strengthen itsrelationships with its customers?

2. How could the ACSs customer servicedepartment use operational CRM to strengthenits relationships with its customers?

3. Review all of the operational CRM technologiesand determine which one would add thegreatest value to ACSs business

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CLOSING CASE ONE

Fighting Cancer with Information

4. Describe the benefits ACS could gain

from using analytical CRM

5. Summarize SRM and describe how ACS

could use it to increase efficiency in its

business

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CLOSING CASE TWO

Calling All Canadians

1. What are the two different types of CRM andhow can they be used to help an organizationgain a competitive advantage?

2. Explain how a contact center (or call center)can help an organization achieve its CRMgoals

3. Describe three ways an organization canperform CRM functions over the Internet

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CLOSING CASE TWO

Calling All Canadians

4. How will outsourcing contact centers

(call centers) to Canada change as

future CRM technologies replace currentCRM technologies?

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CLOSING CASE THREE

The Ritz-Carlton1. What are the two different types of CRM and

how has the Ritz-Carlton used them tobecome a world-class customer-servicebusiness?

2. Determine which of Ritz-Carltons six steps ofcustomer service is the most important for itsbusiness

3. Rank Ritz-Carltons six steps of customerservice in order of greatest to least importancein a CRM strategy for an online book-selling

business such as Amazon.com

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CLOSING CASE THREE

The Ritz-Carlton

4. Describe three ways Ritz-Carlton canextend its customer reach by performingCRM functions over the Internet

5. What benefits could the Ritz-Carlton gainfrom using analytical CRM?

6. Explain ERM and describe how the Ritz-Carlton could use it to increase efficiency in

it b i

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