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Customer Relationship Management
Chapter 15 Objectives

After reading Chapter 15, you will be able to:
 Define customer relationship management and
identify the major benefits to e-marketers.
 Outline the three legs of CRM for e-marketing.
 Discuss the eight major components needed for
effective and efficient CRM in e-marketing.
 Differentiate between relationship intensity and
relationship levels.
 Highlight some of the company-side and client-side
tools that e-marketers use to enhance their CRM
processes
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The Cisco Story

http://on.aol.com/video/customer-relationship-management--software-review-193900134

http://www.youtube.com/watch?v=ieNGWTVfpeI

Cisco Systems, a $36.1 billion marketer, provides Internet
networking systems for corporate, government, and
education clients.

The Internet plays a major role in acquiring, retaining, and
growing customer business.

Over 3 million users log onto the Cisco site each month.

Cisco has become expert in online customer relationship
management (CRM).
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The Cisco Story, Cont.
 Cisco set a goal to migrate customers to the online
channel.
 In 1996, 5% of their customers placed orders on the
website in 2008, 92.2% of their orders came through
the Internet.
 Site user satisfaction is 4.6 on a 5.0 scale.
 Can you think of other B2B marketers that utilize the
Internet as successfully as Cisco?
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Customer Relationship Management
 http://www.youtube.com/watch?v=IdmtJIlkHzw
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Building Customer Relationships, 1:1

According to Harvard Business Review authors Jones and
Sasser, “Increased customer loyalty is the single most
important driver of long-term performance.”
 Many experts believe that relationship capital is the
most important asset a firm can have.
 Major shift in marketing practice


Old style was mass marketing
New style is individualized marketing

Focus on acquiring new customers

Retaining and building more business from loyal, high-value
customers 1:1
 Consumer Services Market


Internet technologies facilitate relationship marketing
One key is identifying key Internet tools
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Relationship Marketing Defined

Relationship Marketing is about establishing,
maintaining, enhancing, and commercializing customer
relationships through promise fulfillment.
 Promise Fulfillment is making offers in their marketing
communications programs; customer expectations would
be met through actual brand experiences.
 A firm using relationship marketing focuses more on
wallet share than on market share.

Wallet share is the amount of sales a firm can generate from one
customer

Word of mouth

Publicity
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FROM MASS MARKETING TO
RELATIONSHIP MARKETING
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Stakeholders

The four stakeholders most affected by Internet technologies
include:
 Employees who need training and access to data and
systems used for relationship management.
 Business customers in the supply chain.




Firms build and maintain relationships with those companies
upstream and downstream
Both business customers and suppliers are extremely
important
Lateral partners, such as other businesses, not-for-profit
organizations, or governments.
Consumers who are end users of products and services.

Marketers must differentiate between business customers
and final customers
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3 Pillars of Relationship Marketing
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3 Pillars of Relationship Marketing
 Relationship Marketing is more than promising
fulfillment


Two-way communication is vital to the success of this
relationship.
Cannot define customers without asking who they are
 Experts believe that relationship marketing has
three pillars that support customer relationships
with the company’s products and services:



Customer Relationship Management (CRM)
Customer experience management (CEM)
Customer collaboration management (CCM)
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3 Pillars of Relationship Marketing, Cont.

Customer Relationship Management (CRM)


Customer experience management (CEM)
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“The process of targeting, acquiring, transacting, servicing, retaining
and building relationships with customer”
“Represents the discipline, methodology and / or process used to
comprehensively manage a customer’s cross-channel exposure,
interaction and transaction with a company, product, brand or
service”
Customer collaboration management (CCM) Also called
CRM 2.0 and Social CRM

Paul Greenberg “Social CRM is a philosophy and a business strategy,
supported by a technology platform, business rules, workflow,
processes and social characteristics, designed to engage the
customer in a collaborative conversation in order to provide mutually
beneficial value in a trusted and transparent business environment.
It's the company's response to the customer's ownership of the
conversation”.
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Customer
Relationship
Management (CRM)
Customer experience
management
(CEM)
Customer
collaboration
management (CCM) /
CRM 2.0 / Social CRM
Definition
• The process of
targeting…
• Discipline,
methodology and / or
process...
• Social CRM is a
philosophy and a
business strategy
Focus
• Internal processes to
• More on the customer • Designed to make the
maximize customer
expectations and
company and the
value in the long term
touch point
customer
satisfaction /
collaborate to create
dissatisfaction
mutually beneficial
than company aspect
results.
Requires
•
•
•
•
•
Controlled
by
• Marketer
Requires much data
Information
Customer insight
Knowledge
Requires relationship
building skills
• Experience
• Collaboration
• Content, people &
interaction
• Marketer
• Customers
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Customer Relationship Management

CRM is a philosophy, strategy, and process that includes
all 3 pillars.
 The benefits of CRM include:
 Increased revenue from better targeting.
 Increased wallet share with current customers.
 Longer retention of customers.
 More customer leads to more sales
 Word-of-mouth communication among customers is the
heart of CRM
 Cost Saving
 The cost of acquiring a new customer is typically 5 times
higher than the cost of retaining a current customer.
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9 Building Blocks for Successful CRM
1.
2.
3.
4.
5.
6.
7.
8.
9.
CRM vision
CRM strategy
Customer experience management (CEM)
Customer collaboration marketing (CCM)
Organizational collaboration
CRM processes
CRM information
CRM technology
CRM metrics
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1. CRM Vision

To be successful, the CRM vision must start at the top and
filter throughout the company to keep the firm customer
focused.
 One key aspect of CRM vision is how to guard customer
privacy.
 The benefits of using customer data must be balanced by
the need to satisfy customers and not anger them.
 TRUSTe provides its seal and logo to any website meeting
its privacy philosophies.
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TRUSTe Builds User Trust
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2. CRM Strategy
 E-marketers must determine their objectives and
strategies for initiating CRM programs and
buying technology.
 Relationship Intensity
Many CRM goals refer to customer loyalty.
 Marketers want to move customers up the
relationship intensity pyramid (awareness, identity,
connection, community, and advocacy).

 Marketers want to move customers up the
relationship intensity pyramid.
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2. CRM Strategy, Cont.
 Relationship Levels



Marketers build a financial bond

Use pricing strategies

Price promotions are easily imitated
Marketers stimulate social interaction with customers

Ongoing personal communication

Aggressive pricing strategies

Customers are more loyal due to the social bond

Can also use community building
Marketing relies on creating structural solutions to
customer problems

Firms add value by making structural changes that
facilitate the relationship

Customizing web pages
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3. Customer Experience Management

Consumers are constantly attacked by marketing
communications and unlimited product choices.


According to Sheth (1995), the basic principle of CRM is choice
reduction.
Many consumers are “loyalty prone,” and will stick with the
right product as long as its promises are fulfilled.

Synchronous and asynchronous technologies can provide
automated and human communications that solve
customer problems.
 Customer Service



Permeates ever stage of customer acquisition, retention, and
development practices
Most often occurs post purchase
E-mail and web self-service are emerging trends
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Relationships Over Multiple Communication Channels
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4. Customer Collaboration Management /
Marketing (CCM)
 CCM is content, people, and interaction driven,
while traditional CRM is data-driven.
 CCM is about managing customer relationships
and experiences by creating and monitoring
online content.
 Listening is more important than talking
when a company is selling.
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5. Organizational Collaboration
 Marketers collaborate within and outside the
organization to focus on customer satisfaction to
create a CRM culture.

Internally



Cross-functional teams focus on customer
satisfaction to create a CRM culture
Creates a better company culture as well
Externally


Companies join forces to create results that would
reach beyond what each could have done separately.
Can be in distribution channel or non-transactional
type collaboration
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5. Organizational Collaboration, Cont.
 CRM-SCM Integration
 Online retailers can seamlessly link the “backend” (SCM) (e.g., inventory and payment) with
the “front-end” CRM system and the entire supply
chain management system (SCM).
 Extranets, two or more intranet networks that
share information, allow CRM-SCM integration.
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CRM-SCM Integration
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6. CRM Processes
 Firms use specific processes to move customers
through the customer care life cycle.
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6. CRM Processes, Cont.
 Firms monitor and attract customers, both online
and offline and they progress through the stages
of customer care life cycle.
 Identifying Customers




Firms must obtain prospects
Business customers
Consumer information
Can be categorized as: Highest value,
Longest loyalty, Highest frequency of
purchase
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6. CRM Processes, Cont.

Differentiating Customers

The Internet allows firms to collect information
to identify various segments.

One important way to differentiate – Value

80/20 principle

Allows firms to leverage resources by
investing in most lucrative customers

Firms can identify customers through

Data mining

Profiling
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6. CRM Processes, Cont.

Customizing the Marketing Mix

Defined – when firms tailor their marketing mixes
to meet the needs of small target segments using
electronic marketing tools

Customer needs are supreme

Firms have data to make customized decisions

Firms can zero in on precise needs

Personalization – ways that marketers
individualize in an impersonal computer
networked environment
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6. CRM Processes, Cont.

Interaction

Allows firms to collect the data necessary for
identification and differentiation
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Allows firms to evaluate the resulting
customization effectiveness.

Both the firm and the customer learn from each
experience and interaction
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CRM Churn Reduction Cycle
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Sales Force Automation (SFA)
 Sales force automation allows salespeople to
build, maintain, and access customer records,
manage leads, and manage their schedules.
 Up-to-date customer and prospect records help
build customer relationships.
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Marketing Automation
 Marketing automation activities help provide:
 Effective targeting.
 Efficient marketing communication.
 Real-time monitoring of customer and market
trends.
 SAS, a business intelligence and predictive
analytics software provider, offers automation to
aid marketers.
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7. CRM Information
 The more information a firm has, the better value
(more accurate, timely, and relevant information)
it can provide to each current or prospective
customer.
 Firms gain much information by tracking
behavior electronically.
 Bar code scanner data.
 Software that tracks online movement, time
spent per page, and purchase behavior.
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7. CRM Information, Cont.
 Some factors in facilitating customer relationship
management are:
 Target the right customers
 Own the customer’s total experience
 Streamline business processes that impact the
customer
 Provide a 360 degree view of the customer
relationship
 Let customers help themselves
 Help customers do their jobs
 Deliver personalized service
 Foster community
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8. CRM Technology
 The Internet forms the centerpiece of a firm’s
CRM abilities.
 Cookies, web logs, bar code scanners help to
collect information about consumers and their
behaviors.
 Firms use company-side tools to push
customized information to users.
 Client-side tools allow the customer to pull
information; that initiates the customized
response; from the firm.
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Company-Side Tools (push)
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Client-Side Tools (pull)
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Top Types of CRM-Related Software
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9. CRM Metrics


E-marketers use numerous metrics to assess the Internet’s value
in delivering CRM performance.
Experts believe the three most important metrics to CRM are
customer retention rates, ROI, and customer lift
(increased response or transaction rates).






ROI
Cost savings
Revenues
Customer satisfaction
Customer Lifetime Value (LTV)
Contribution of each CRM tactic to these measures
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10 RULES FOR CRM SUCCESS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Recognize the customer’s role.
Build a business case.
Gain buy-in from end users to executives.
Make every contact count.
Drive sales effectiveness.
Measure and manage the marketing return.
Leverage the loyalty effect.
Choose the right tools and approach.
Build the team.
Seek outside help.
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photocopying, recording, or otherwise, without the prior written permission of the
publisher. Printed in the United States of America.
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall
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