university/faculty regulations minimum attendance in class : 75% no plagiarism in report/academic...
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University/Faculty Regulations
Minimum attendance in class : 75% No plagiarism in report/academic work and
writing (Merriam-Webster’s Collegiate Dictionary, Eleventh Edition, USA, 2003) to steal and pass off (the ideas or words of another) as one’s
own to use (another’s production) without crediting the source to commit literary theft to present as new and original an idea or product derived from
an existing source No cheating in examination Please come on time!
Semester Ganjil 2013/2014
Introduction to Customer Relationship Management
(CRM)
Learning Objectives
Understand the basic concept of CRM Identify the four major perspectives on CRM Define several common misunderstandings
about CRM Understand five generic models of CRM Overview of history and development of CRM
Sales Cycle
(2) Estimate Sales Potential
(3) Manage Leads
(1) Identify Prospect
(4) Forecasting Sales
(5) Initiate and Maintain Customer Relationship
CRM Stands for?
Customer Relationship Management
OR
Customer Relationship Marketing
OR
Continuous Relationship Marketing
Selected definitions of CRM [1]
CRM is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way
CRM is the process of managing all aspects of interaction a company has with its customers, including prospecting, sales, and service CRM applications attempt to provide insight into and
improve the company/customer relationship by combining all these views of customer interaction into one picture
Selected definitions of CRM [2]
CRM is an integrated approach to identifying, acquiring, and retaining customers By enabling organizations to manage and
coordinate customer interactions across multiple channels, departments, lines of business, and geographies, CRM helps organizations maximize the value of every customer interaction and drive superior corporate performance
Selected definitions of CRM [3]
CRM is an integrated information system that is used to plan, schedule and control the pre-sales and post-sales activities in an organization CRM embraces all aspects of dealing with prospects
and customers, including the call center, sales force, marketing, technical support and field service
The primary goal of CRM is to improve long-term growth and profitability through a better understanding of customer behaviour
CRM aims to provide more effective feedback and improved integration to better gauge the return on investment (ROI) in these areas
Selected definitions of CRM [4]
CRM is a business strategy that maximizes profitability, revenue and customer satisfaction by organizing around customer segments, fostering behaviour that satisfies customers, and implementing customer-centric processes
Core Definition of CRM
CRM is the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit It is grounded on high quality customer-
related data and enabled by information technology
CRM is Founded on Four Tenets
1. Customers should be managed as important assets
2. Not all customers are equally desirable3. Customers vary in their needs, preferences, and
buying behavior4. By better understanding their customers,
companies can tailor their offerings to maximize their overall value
The CRM Advantages
Increases Market Share
Increases Market Share
Quicker Cash Flow Quicker Cash Flow
BetterCustomer
Knowledge
BetterCustomer
Knowledge
Creates Up and Cross-Selling
Opportunities
Creates Up and Cross-Selling
Opportunities
Increased Product
Acceptance
Increased Product
Acceptance
Why CRM Systems are Being Used ?
Identifying prospectsAcquiring customersDeveloping customersCross-selling and up-sellingServicingRetainingIncreasing loyaltyWinning back defectors
CRM’s Benefits for Retail Banks (Example)
Increase in average products sold per customer over one year from 4.6 to 6.2
3-5 percent decrease in administrative costs 200 percent return on technology investment
through cost reduction over one year 96 percent reduction in average time for a CCC
agent to refer a customer to a branch loan office 83 percent decrease in average customer info
retrieval time 15 percent increase in product revenue in one year
Lowell Alcorn and Anton Wiryawan, Mortgage Banking (Feb 2004): 74-78
A Customer Focus Can Aid Retention
Annual Defection Rates
Newspaper subscriptions 66 percent Residential tree and lawn care 32 percent U.S. long distance telephone 30 percent Clothing catalogues 25 percent Internet service providers 22 percent
Griffen and Lowenstein 2001
Customer Retention and Profits
Increase retention 5 percent and improve profitability in net present value from 20-85 percent
It costs five to ten times more to obtain a new customer than it does to keep an existing one
Which Companies Benefit Most from CRM?
Companies serving large numbers of customers through complex and frequent interactions: Communications companies Retail banks Insurance companies Healthcare organizations Utilities
Companies with a steep skewCompanies in “lost for good” markets
Which Companies Benefit the Least from CRM Today?
Companies that engage in minimal interactions with each customer Auto dealers Government agencies
Companies with simple transaction Movie theater Retail stores
Type of CRM Dominant characteristic
Strategica core customer-centric business strategy that aims at winning and keeping profitable customers
Operationalfocuses on the automation of customer-facing processes such as selling, marketing and customer service
Analyticalfocuses on the intelligent mining of customer-related data for strategic or tactical purposes
Collaborativeapplies technology across organizational boundaries with a view to optimizing company, partner and customer value
Types of CRM
Strategic CRM
Focus upon the development of a customer-centric business culture that is dedicated to winning and keeping the customers
Customer-centricity competes with other business logics E.g. Philip Kotler identifies three other major
business orientations: product, production and selling
Customer Centricity & Other Business Logics [1]
1. Product-oriented businesses believe that customers choose products with the best quality, performance, design or features
2. Production-oriented businesses believe that customers choose low-price products
3. Sales-oriented businesses make the assumption that if they invest enough in advertising, selling, public relations (PR) and sales promotion, customers will be persuaded to buy
Customer Centricity & Other Business Logics [2]
4. A customer or market-oriented company shares a set of beliefs about putting the customer first
It collects, disseminates and uses customer and competitive information to develop better value propositions for customers
A customer-centric firm is a learning firm that constantly adapts to customer requirements and competitive conditions
Operational CRM
Marketing automationMarket segmentationCampaign managementEvent-based (trigger) marketing
Sales force automationAccount managementLead managementOpportunity managementPipeline managementContact managementQuotation and proposal generationProduct configuration
Service automation Case (incident or issue) managementInbound communications managementQueuing and routingService level management
Marketing Automation
Applies technology to marketing processes Market segmentation Campaign management
• Allow marketers to use customer-related data in order to develop, execute and evaluate targeted communications and offers
Event-based (trigger) marketing• Describe messaging and offer presentation to customers at
particular points in time• Event-based campaigns can be initiated by customer
behaviours or contextual conditions• Ex. A call to contact center is an example of a customer
Sales-force Automation
The original form of operational CRM Applies technology to the management of a company’s
selling activities Improve and standardize the selling process
Consist of: Account management Lead management: enable users to qualify leads and assign
them to the appropriate salesperson Opportunity management Pipeline management Contact management: manage their communications
programme with customers Quotation and proposal generation: allow the salesperson to
automate the production of prices and proposals for customers Product configuration: enable salespeople or the customer
themselves, automatically to design and price customized products, services or solutions to problems
Service Automation
Allow companies to manage their service operations, whether deliverd through call centre, contact centre, web or face-to-face
Consists of: Case (incident or issue) management Inbound communications management Queuing and routing Service level management
Sources of Customer-related Data for Analytical CRM
Internal sources● Sales data (purchase history), financial data (payment
history, credit score), marketing data (campaign response, loyalty scheme data) and service data.
External sources● Geo-demographic and life-style data from business
intelligence organisations, for example.
Beneficiaries of Analytical CRM
Customer● Analytical CRM can deliver timely,
customized, solutions to the customer’s problems, thereby enhancing customer satisfaction.
Company● Analytical CRM offers the prospect of more
powerful cross-selling and up-selling programs, and more effective customer retention and customer acquisition programs.
Misunderstandings about CRM
1. CRM is database marketing2. CRM is a marketing process3. CRM is an IT issue4. CRM is about loyalty schemes5. CRM can be implemented by any
company
CRM Constituencies
1. Companies implementing CRM2. Customers and partners of those companies3. Vendors of CRM software4. CRM application service providers (ASPs)5. Vendors of CRM hardware and infrastructure6. Management consultants
CRM Challenges Vary Across Context
1. Banks2. Auto manufacturers3. High tech companies4. Consumer goods manufacturers5. Not-for-profits
The IDIC Model of CRM
Identify who your customers are and build a deep understanding of them
Differentiate your customers to identify which customers have most value now and which offer most for the future.
Interact with customers to ensure that you understand customer expectations and their relationships with other suppliers or brands
Customize the offer and communications to ensure that the expectations of customers are met.
The QCi Model of CRM
The CRM Value Chain
The CRM Value Chain
CustomerPortfolioAnalysis
CustomerIntimacy
NetworkDevelopment (SCOPE)
ValuePropositionDevelopment
ManageTheCustomerLifecycle
Leadership and culture
Data and information technology
People
Processes
Primarystages
Supportingconditions
Payne’s 5-process Model of CRM
Gartner’s Competency Model of CRM
1. CRM Vision: Leadership, Social Worth, Value Proposition
2. CRM Strategy: Objectives, Segments, Effective Interaction
8. CRM Metrics: Cost to Serve, Satisfaction, Loyalty, Social Costs
7. CRM Technology: Applications, Architecture, Infrastructure
6. CRM Information: Data, Analysis, One View Across Channels
5. CRM Processes: Customer Life Cycle, Knowledge Management
Culture and StructureCustomer Understanding
People: Skills,CompetenciesIncentives and Compensation
Employee CommunicationsPartners and Suppliers
4. Organizational Collaboration3. Valued Customer Experience
Understand RequirementsMonitor Expectations Satisfaction vs.Competition Collaboration and Feedback
References
Francis Buttle, Customer Relationship Management: Concepts and Technologies, 2e, Elsevier Ltd., 2009
Baran, Galka and Strunk, Principles of Customer Relationship Management, South-Western, 2008