Overview of Customer Relationship Management

1. Overview of CRM
E-Customer Relationship Management
CHAPTER 1

2. Objectives
 Defines CRM as a process and as a
hub of learning for the organization
 Outlines costs and benefits of the
CRM system for organizations and
customers

3. Old VS. New Marketing
 OLD MARKETING
 Transaction oriented (no
future/end of relationship)
 All customers are equal
 4P marketing
(+preferences)
 Mass marketing
 Focus on new customers
 Broadcast oriented
 Transaction profit
 NEW MARKETING
 Relationship oriented
(beginning of relationship)
 Share of wallet oriented
(cross-selling, up-selling)
 All customers are not equal
 Relationship marketing
 Individual marketing
 Focus on existing customers
 Dialogue oriented (one-to-
one dialogue with each
customer)
 Customer lifetime value
Source: Baran, Galka, Strunk (2008), Principles of Customer Relationship Management

4. Transaction vs. Relationship Oriented
 Transactions are one-shot exchanges without any
concern for the future
 Transaction marketing views the sale as the end
of the relationship, whereas relationship
marketing views the sale as the beginning of
the relationship
 Relationships require two-way communications
between customers and the organization.
 Further, information from these communications,
when integrated, recorded, and managed enable
relationships to be developed and maintained
Source: Baran, Galka, Strunk (2008), Principles of Customer
Relationship Management

5. Relationship Marketing
 The origins of CRM are in the concept of
Relationship Marketing
 Relationship marketing focuses on
 maintaining a continuous relationship with
customers and
 building long-term bonds
 Over time, a company learns more and
more about the customer’s needs and wants
and is therefore able to provide more
personalized and relevant one-to-one
service Source: Baran, Galka, Strunk (2008), Principles of Customer
Relationship Management

6. Customer Lifetime Value
 The present value of the future profits to be
received from a given number of newly
acquired or existing customers during a
specified period of years
 It should be mentioned that it is not the
customer’s lifetime that is being estimated;
 rather it is the period of time that a company
can reasonably expect them to be a customer
Source: Baran, Galka, Strunk (2008), Principles of Customer
Relationship Management

7. CRM: Why Now?
 The increasing number of high-quality
competitors and products:
 Consumers today can choose from a large number
of high quality items in every product category.
 When a company does innovate, its improvements
are quickly copied
 Companies are creating bonds between themselves
and their customers in order to better retain them;
 bonds created through CRM strategies foster
loyalty. Loyalty cannot be quickly copied by
competitors
Source: Baran, Galka, Strunk (2008), Principles of Customer
Relationship Management

8.  Changes in the pace of life:
 Consumers are demanding quicker and better
service since there are more sources vying for
their scarce time
 Families in which both spouses work and
increasing hours on the job have led to less time
available for shopping
 Companies who have CRM systems that can
help the hurried consumer have a differential
advantage
Source: Baran, Galka, Strunk (2008), Principles of Customer
Relationship Management
CRM: Why Now?

9.  Internet and Multi-channel Usage:
 Multi-channel customer contact is the key to CRM
strategy
 The more environments a company can provide, the
richer its customers’ experiences are likely to be.
 Companies are developing multi-channel contact
centers (not simply call centers) to provide
customers with meaningful interactions
 Companies need to maintain contact with customers
in both synchronous and asynchronous manners in
both live and automated formats
Source: Baran, Galka, Strunk (2008), Principles of Customer
Relationship Management
CRM: Why Now?

10. The Concept of Relationship
Management
 The function of an enterprise’s marketing
activities is
 to bring buyers and sellers together, to create
customers
 While getting customers is fundamental to
business success,
 keeping customer is more important
 Major goal of organizations
 engage in interactions with customers over the
long-term

11. The Concept of Relationship
Management
 Consider the local butcher of years ago
 When a female customer walked into the
shop,
 the butcher said hello and called the customer
by name
 The butcher knew how the customer
wanted her steaks and chops trimmed

12. The Concept of Relationship
Management
 He knew her family always grilled
hamburgers on the weekend
 Although he specialized in meats,
 he also stocked hamburger buns
 so his customer needed to make only one stop
 She appreciated the personalized service
she received
 Both the butcher and the customer
profited from this loyalty relationship

13. The Concept of Relationship
Management
 Making a sale should not be viewed as the
end of the marketing process, but rather
as
 the start of the organization’s relationship with
a customer
 Successful small firms, such as the
traditional butcher, have to be relationship
oriented
 They know that their customers-buyers
who purchase promises of satisfaction
 prefer to do business repeatedly with people
and organizations they trust

14. The Concept of Relationship
Management
 They know that establishing
relationships with customers can
 increase long-run sales and
 reduce marketing costs
 In summary, a business enterprise
must focus on both getting and
keeping customers

15. Customer Relationship Management
 A customer relationship management
(CRM) system, by its simplest
definition,
 is a process to compile information
that
increase understanding of how to
manage an organization’s
relationships with its customers

16. Customer Relationship Management
 CRM, a business strategy that uses
information technology
 to provide the enterprise with a
comprehensive, reliable, and integrated
view of its customer base
 so that all processes and customer
interactions help maintain and expand
mutually beneficial relationships

17. Customer Relationship Management
 A CRM strategy should help
organizations
 improve the profitability of their
interactions with current and potential
customers
 while at the same time making those
interactions appear friendlier through
individualization and personalization

18. Customer Relationship Management
 The purposes of a CRM system are to
 enhance customer service,
 improve customer satisfaction, and
 ensure customer retention by aligning
business processes with technology
integration

19. Customer Relationship Management
 An effective CRM system describes
customer relationships in sufficient
detail
 so that all aspects of the organization
can
 access information,
 match customer needs with satisfying
product offerings,
 remind customers of service requirements,
 know what other products a customer has
purchased

20. Customer Relationship Management
 A bank’s CRM should give a service
representative in its telephone call center
 the ability to retrieve a compete record of a
customer’s company interactions seconds after
 the customer provide identification information
 Many CRM systems allow customers
themselves
 to directly access information about their
transactions with a company

21. The CRM System as a Hub of Applied
Learning
 Information technology within a CRM
system is a continuous process
 The firm recognizes its lack of knowledge
and
 begins to learn about customer segments and
 their distinct needs before the first sale is
made

22. The CRM System as a Hub of Applied
Learning
 From purchases databases, mailing lists,
e-mail referrals, and other sources
 organizations can acquire mountains of data
about potential customers and
 thus begin to tailor promotional messages,
product features and options

23. The CRM System as a Hub of Applied
Learning
 If satisfied with the first transaction,
 the customer learns to trust the organization
or
 to believe it will deliver on its promises
 The organization learns a bit about the
customer’s needs, and
 a circular process begins as the firm collects
and analyzes data about customer transactions
and preferences
 that is converted into information for different
functional areas

24. The CRM System as a Hub of Applied
Learning
 The basis for building effective CRM
systems and strategies is
 to build profitable relationships in the
long term that are mutually beneficial
and
 that fulfill promises as customer
experience the product or service
offering

25. The CRM System as a Hub of Applied
Learning
 However, many organizations experience
difficulties in building information and e-
commerce initiatives
 since implementing the new technology
requires a complex array of skills to capture
data from dynamic processes
 Further, organizations must balance the
need for security with the goal of
increasing personalization

26. The CRM Process as a Hub of Applied
Learning
Cultivate and
develop
interest, trust,
desire
Collect,
warehouse,
and analyze
data
Recognize
needs/wants
of defined
segments
Customize
channel
outlets,
locations
Customize
offers,
products, and
services
Acquire
customer and
establish a
relationship
Customize
promotion,
information,
interactions