Download Customer Relationship Management

CUSTOMER RELATIONSHIP MANAGEMENT ANSWERS
NOVEMBER 2011
Question one
(a) How internet can be used to improve customer service
I.
The internet helps the organization to disseminate more information to the its
customers
II. The internet improves the speed at which the customers can access information
about the organizations products and services.
III. The internet helps the organization to serve customers across the boarders
IV. The internet helps gives customers the opportunity to do business when and how
they want to do it and not when the organization want to be open for business.
V. The internet helps to integrate the various customer service processes and
systems and therefore improving customer service of the organization.
[8 marks]
(b) Importance of managers keeping up to date with technology
o Competitive advantage can be gained by the application of advanced technology.
Managers should be aware of technological advances to help their organizations
gain competitive advantage.
o Some of the developments in business related computer technology allow the
marketing managers to be much more customer focused and marketing oriented
with, for example, much faster and flexible responses to customer needs.
o Advances in technology enable managers to be more effective and efficient in
various organizational activities. Advances in technology allow the marketing
professional to do more things and to do tasks better.
o New technology increasingly facilitates the ease with which information can be
collected, analyzed and used to aid in decision making. Data mining and data
fusion are techniques, which allow marketing research professionals to collect
information from a wide variety of sources.
o Managers can use advances in technology to address growth objectives.
Developments in business related technology often contributes to the growth of
businesses
[7 marks]
Question two
(a) Customer retention refers to the process of developing marketing programs aimed at
building customer loyalty so that they continually want and use the organizations
products and services
[2 marks]
(b) Methods to be used by MNB to retain customers
I.
Customer’s portfolio analysis – classifying MNB customers into meaningful
categories in order to target them efficiently and effectively. The categories can
include new purchasers, repeat buyers, current customers, brand switchers, trial
users e.t.c.
II. Use of appropriate marketing mix for [MNB]
III. Database marketing
[6 marks]
(c) Potential Marketing mix for MNB
I.
Product extras - This involves providing extra related benefits provided by other
related items in the product line.
II. Reinforcing promotions
III. Sales force connections
IV. Specialized distribution
V. Post-purchase communication
[7 marks]
Question three
 CRM is a business and technology discipline that helps firms in the acquisition and
retention of their most important and profitable customers. Ideally, CRM systems help
organizations to provide start to finish customer care, from the time the customer is
acquired, right through to product delivery and after-care service.
 Many businesses are moving to Web-based CRM, but this does not prevent the
personal interaction that is so crucial.
 Active CRM technology means that customers contacting a Web site for information can
be followed up immediately by telephone or some other form of communication.
 A mixture of communications can be used including the Internet, telephone, direct mail
and personal contact.
 Face to face interaction between sales person and the prospective customer is the most
effective means of communication and persuasion
 Personal contact can help customer service staff to fully understand the needs and
wants of customers
 Personal contact can help customer service staff to demonstrate a product to customers
, explain its operations, convince the customer to buy it, install it and provide after sales
service
 Personal contact can help to understand motives and attitudes of individual customers
by observing customers reaction to certain customer service approach.
 Personal contact helps to understand tastes, habits and attitudes of prospective
customers.
 Firms need to consider ways in which Web-based CRM will enhance relationships with
their customers. Internet based CRM are important but organizations should also
appreciate the important of personal contact when designing CRM systems
.[15 marks]
Question four
I.
Customer loyalty refers to the customer behavior built on positive experiences and
value such that the customer continues to buy/rely on the products and services.
[3 marks]
II.
e-CRM refers to the web centered approach to manage customers relationships across
communication channels, business functions and audiences
[3 marks]
III.
Database marketing refers to an interactive marketing approach which uses
individually addressable marketing media and channels to a company’s targeted
audiences, stimulate their demand and stay close to them by recording and keeping a
database of the customer, communication and commercial contacts to help them
improve future contacts and ensure realistic planning of all marketing
[3 marks]
IV.
On –line customer care
Online customer care provides an infrastructure in which customers can be assisted by
using the internet. Customer care staff can use websites, email, and online
conferencing. In addition, the service can connect customers with an almost unlimited
number of third-party information providers. Subscribers can get up-to-date information
about the organization’s products and services, e.t.c.
[3 marks]
V.
Customer value
The difference between what the customer gets from a product and what he/she has
given in order to get that product. Customer value can also be defined as the difference
between customer realization and sacrifice. Realization is what the customer receives
e.g. quality of the product or features. Sacrifice includes what the customer gives such
as money or time.
[3 marks]
Question five
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
X.
Upgrade customer interaction
Understand customer segments
Understand service processes
Define the role
Decide technology
Deal with the tidal wave
Create incentives
Decide on channel choices
Exploit the internet
Implementation
[20 marks]
Question six
Prospects
[4 marks]
Prospects are not yet customers, but the present a potential value. During the prospect stage,
the customer develops an initial set of expectations about a product or a service. If these
expectations exceed the customer’s product quality cut off, the customer will make the first
purchase. The quality of the products that the customer already uses, along with the
information about the new product provided by the company through its marketing
communications, determine his or her product quality cut off. Consumers also consider price;
the product or service must meet a value cut off as well.
First time buyers
[4 marks]
Customers move into this stage after making one purchase. These newly acquired customers
have the lowest retention rates within a company’s customer base. Although they have
signaled that the company’s products meet their expectations and specifications they are still
in the evaluation stage. They need to learn whether the products and customer service levels
meet their expectations.
Early repeat buyers
[4 marks]
Customers advance to this stage after making one repeat purchase. These customers are
more likely to buy again than first time buyers and sales per customer increase as they gain
confidence with the company. However, although two or three repeat purchases indicate
satisfaction with the product, these early repeat are still evaluating the relationship. If the
company provides poor service or the product does not meet the expectations, they may
defect to another organization.
Core customers
[4 marks]
Customers enter the core customer stage after they begin to repeat- purchase regularly. The
company’s products and services meet their specifications and value. Unless a major problem
arises with the purchase process they, the customer rarely re-evaluates the company’s
product. An occasional product failure will not automatically cause defection. Numerous
positive experiences serve as a basis for the customer’s expectations and carry him through
the disappointing experience. In fact, at this stage expectations change only slightly each time
the customer uses the product.
Core defectors
[4 marks]
At some point customers are willing to switch suppliers or brands. Several factors can cause
this, such as new competing products and services or customer service problem that was not
rectified properly [boredom]. Some customer defection is controllable, some is not. When
external events cause defection, company’s policy cannot influence the decision. Each
company must determine the extent to external events cause defection. A company can
reactivate a defector if the underlying problem is recognized and rectified.
Question seven
(a) Database & Database marketing
A database is a collection of structured data which can be integrated in the organizations
information systems.
[1 mark]
Database marketing can be defined as an interactive marketing approach which uses
individually addressable marketing media and channels to extend help to a company’s
targeted audience, stimulate their demand and stay close to them by recording and keeping
an electronic database memory of the customer, prospect and all communications and
commercial contacts, to help them improve all future contacts and ensure a more realistic
planning of all marketing.
[2 marks]
(b) Key methods for collecting data
[5 marks]
I.
Online and e-mail distributed questionnaires
II. Feedback forms
III. Surveys
IV. Message boards on the website to allow customers to communicate with the
organization
V. Face-to-face interviews
(c) Database marketing and adding value
[6 marks]
Database marketing can be used for targeted marketing communications i.e. targeting
customer’s in particular geographical areas with information about supplies, services
and events relevant to local area.
II. Helps to target customers with relevant offerings
III. Database marketing helps to the organization to develop personalized services for its
customers
I.
(d) Know your customer steps
I.
Getting down and dirty with data
II. Segmenting the customers
III. Selecting target segments
[6 marks]
Question eight
(a) Consumerism
[4 marks]
Refers to a social movement seeking to augment the rights and powers of buyers in
relation to sellers up to the point where the consumer is able to defend his interest
[Mann & Thornton]. In Malawi the consumer association of Malawi [CAMA] seeks to
protect the rights and powers of consumers. For instance if prices of products and
services are unreasonably high, CAMA can voice up against raising prices
unreasonably.
(b) Ethical responsibilities
[4 marks]
This is moral responsibility towards the way in which organizations deals with its
customers. The main point here is that organizations should deal with customers
honestly and fairly. Fair trading is one major concept that has gained prominence in the
business world. Organizations can establish a lot of opportunities if they are seen to fair.
United biscuits plc is good example of a company embracing ethical responsibilities
as expressed in the following policy “No employee
May give money or gift of significant value to a customer if it could reasonably be
viewed as being done to gain a business advantage. Winning an order by violating this
policy or by providing free or extra services, or unauthorized contract terms, this is
contrary to our trading policy”
(c) Corporate Social responsibility
[4 marks]
The term corporate social responsibility refers to the moral obligations placed on
organizations to act in ways which protect and improve the interests of the communities
with which they interact. This may be in respect of local, regional, national or
international communities, and relates both to social institutions and culture, and the
physical environment. Examples of corporate social responsibility include sponsoring
public events such as sporting events, helping to build schools and colleges e.t.c.
(d) Manager’s accountability
[4 marks]
Managers have an obligation to an account on how they are running the affairs of the
organization. For instance managers should be able to give an account of how they
have been able to satisfy the interest of various stakeholders in the organization such
as customers. The responsibility here is more absolute. It is the duty of individual
managers not to pursue their own interests (or the interests of others) where these are
not the interests of the organization and its shareholders, or where these offend against
the general moral norms of society.
(e) Privacy
[4marks]
Privacy is about an individual’s right to have his /her personally identifiable data
protected, at home and at work. Personal identifiable information includes all the data
that helps to identify or contact an individual, plus all additional facts that we store about
these individuals. It does not cover anonymous behavior that is not linked to an
identified individual or trend data that is just a summary of what lots of individuals have
done. Privacy applies to all the data you collect or have collected about your customers,
whether online or off.