Download Chapter 15 - Fazli Yildirim

15-1
E-MARKETING 5/E
JUDY STRAUSS AND RAYMOND FROST
Chapter 15: Customer Relationship Management
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Chapter 15 Objectives
15-2

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
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
Cisco, a $34.9 billion B2B marketer, provides
internet networking systems for corporate,
government, and education clients.
The internet plays a major role in acquiring,
retaining, and growing customer business.
3
million users log on to the Cisco site each month.
 Cisco has become adept at online customer relationship
management (CRM).
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The Cisco Story, cont.
15-4

Cisco set a goal to migrate customers to the online
channel.
 In
1996, 5% of their customers placed orders on the
Web site.
 Today 92.2% of their orders come through the internet.


Site user satisfaction is 4.7 on a 5.0 scale.
Can you think of other B2B marketers that utilize the
internet as successfully as Cisco?
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Relationship Marketing Defined
15-5
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
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Relationship marketing is about establishing,
maintaining, enhancing, and commercializing customer
relationships through promise fulfillment.
Today it also means two-way communication with
individual stakeholders, one at a time.
Business 2.0 calls relationship capital the most
important asset a firm can have.
A firm using relationship marketing focuses more on
wallet share than on market share.
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Continuum from Mass Marketing to
Relationship Marketing
15-6
Mass marketing
Relationship marketing
Discrete transactions
Continuing transactions
Short-term emphasis
Long-term emphasis
One-way
communication
Two-way
communication
and collaboration
Acquisition focus
Retention focus
Share of market
Wallet share
Product differentiation
Customer differentiation
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Stakeholders
15-7

Firms can establish and maintain relationships with
different stakeholder groups through internet
technologies:
 Employees
who need training and access to data and
systems used for relationship management.
 Business customers in the supply chain.
 Lateral partners, such as other businesses, not-for-profit
organizations, or governments.
 Consumers who are end users of products and services.
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Customer Relationship Management
15-8


CRM is the process of acquiring, servicing, retaining,
and building long-term relationships with customers.
The benefits of CRM include:
 Increased
revenue from better targeting.
 Increased wallet share with current customers.
 Retention of customers for longer time periods.

The cost of acquiring a new customer is typically 5
times higher than the cost of retaining a current
customer.
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CRM’s Facets
15-9

CRM has 3 facets:
 Sales
force automation (SFA).
 Marketing automation.
 Customer service.

Used primarily in the B2B market, SFA helps
salespeople to:
 Build,
maintain, and access customer records.
 Manage leads and accounts.
 Manage their schedules.
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Marketing Automation & Customer Service
15-10
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
Marketing automation software aids marketers in effective
targeting, marketing communication, and monitoring of
customer and market trends.
 Marketing automation software takes data from Web sites and
databases and turns it into reports for CRM efforts.
Customer service is critical to building long-term customer
relationships.
 Most customer service occurs post purchase when customers
have questions or complaints.
 Key tools include e-mail, online live chat, Web self-service, and
package tracking using PDAs.
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8 Building Blocks for Successful CRM
15-11

The Gartner Group model of CRM covers 8
building blocks:
1.
2.
3.
4.
5.
6.
7.
8.
CRM vision
CRM strategy
Valued customer experience
Organizational collaboration
CRM processes
CRM information
CRM technology
CRM metrics
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1. CRM Vision
15-12
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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 Web site
meeting its privacy philosophies.
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TRUSTe Builds User Trust
15-13
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2. CRM Strategy
15-14


E-marketers must determine their objectives and
strategies before buying CRM technology.
Many CRM goals refer to customer loyalty.
 An
important CRM strategy is to move customers up the
relationship intensity pyramid (as discussed in Chapter
10).

Another CRM goal involves building bonds with
customers on 3 levels:
 Financial
 Social
 Structural
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Three Levels of Relationship Marketing
15-15
Potential for
Sustained
Competitive Main Element of
Advantage
Marketing Mix Web Example
Level
Primary Bond
One
Financial
Low
Price
www.southwest.com
Two
Social
Build 1:1
relationships
Build community
Medium
Personal
communications
www.MySpace.com
Three
Structural
High
Service delivery
my.yahoo.com
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3. Valued Customer Experience
15-16

Consumers are constantly bombarded by marketing
communications and unlimited product choices.
 According
to Jagdish Sheth (1995), the basic tenet 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 services that solve
customer problems.
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Relationships Over Multiple Communication
Channels
15-17
Automated
Human
Synchronous
Web 1:1 self-service
Online transactions
Telephone routing
Telephone
Online chat
Collaboration tools
Asynchronous
Automated e-mail
Short message services (SMS)
Web forms
Fax on demand
E-mail response
Postal mail
Blog posts/comments
Micromedia sites (e.g. Twitter)
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4. Organizational Collaboration
15-18


Marketers collaborate within and outside the
organization to focus on customer satisfaction.
Online retailers can seamlessly link the “back-end”
(e.g., inventory and payment) with the “front-end”
CRM system and the entire supply chain
management system (SCM).
 CRM-SCM
integration allows immediate inventory
checking at the wholesaler or manufacturer.

Extranets, two or more intranet networks that share
information, allow CRM-SCM integration.
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CRM-SCM Integration
15-19

Ex. 15.9
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5. CRM Processes
15-20

Firms use specific processes to move customers
through the customer care life cycle.
Target
Acquire
Partners
Transact
Internet
Extranet
Service
Retain
Grow
Customer
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CRM Processes, cont.
15-21

CRM processes are used to:
 Identify
customers.
 Differentiate customers.
 Customize the marketing mix.
 Interact with customers.
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6. CRM Information
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The more information a firm has, the better value 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 Technology
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Technology, such as toll-free numbers, electronic kiosks, and
voice mail, greatly enhance CRM processes.
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
15-24
Company-Side Tools
(push)
Description
Cookies
Cookies are small files written to the user’s hard drive after visiting a Web site. When the user
returns to the site, the company’s server looks for the cookie file and uses it to personalize the site.
Web log analysis
Every time a user accesses a Web site, the visit is recorded in the Web server’s log file. This file
keeps track of which pages the user visits, how long he stays, and whether he purchases.
Data mining
Data mining involves the extraction of hidden predictive information in large databases through
statistical analysis.
Behavioral targeting
Behavioral targeting occurs when software tracks a user’s movements through a Web site, then
sends appropriate Web content at a moment’s notice.
Collaborative filtering
Collaborative filtering software gathers opinions of like-minded users and returns those opinions to
the individual in real time.
Outgoing e-mail/
Distributed e-mail
Marketers use e-mail databases to build relationships by keeping in touch with useful and timely
information. E-mail can be sent to individuals or sent en masse using a distributed e-mail list.
Chats
Bulletin boards
A firm may listen to users and build community by providing a space for user conversation on the
Web site.
iPOS terminals
Interactive point-of-sale terminals are located on a retailer’s counter and used to capture data and
present targeted communication.
©2009 Pearson Education, Inc. Publishing as Prentice Hall
Client-Side Tools
15-25
Client-Side Tools
(pull)
AAgents
Individualized Web
portals
Wireless data services
Description
Agents are programs that perform functions on behalf of the user, such as search engines and shopping agents.
Personalized Web pages users easily configure at Web sites such as MyYahoo! and many others.
Wireless Web portals send data to customer cell phones, pagers, and PDAs, such as the Palm Pilot.
Web forms
Web form (or HTML form) is the technical term for a form on a Web page that has designated places for
the user to type information for submission.
Fax-on-demand
With fax-on-demand, customers telephone a firm, listen to an automated voice menu, and select options to
request a fax be sent on a particular topic.
Incoming e-mail
E-mail queries, complaints, or compliments initiated by customers or prospects comprise incoming e-mail,
and is the fodder for customer service.
RSS Feeds
Really Simple Syndication feeds are an XML format designed for sharing headlines and other Web content.
©2009 Pearson Education, Inc. Publishing as Prentice25Hall
CRM Software
15-26

The leading software firms in the large enterprise
B2B market include:
 Siebel
Systems
 SAP
 Oracle
 Onyx
Software
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8. CRM Metrics
15-27

E-marketers use numerous metrics to assess the
internet’s value in delivering CRM performance.
 ROI
 Cost
savings
 Revenues
 Customer satisfaction

One study named customer retention, ROI, and
customer lift (increased response or transaction rates)
as the most important metrics.
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CRM Metrics, cont.
15-28

One very important CRM metric is customer lifetime
value (LTV).
 The
LTV calculation demonstrates the benefits of
retaining customers over time and the need for building
wallet share.
 LTV also illustrates that no matter how good customer
retention is, the firm must still focus on customer
acquisition activities.

Exhibit 15.21 illustrates customer LTV.
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10 Rules for CRM Success
15-29
1. Recognize the customer’s role.
2. Build a business case.
3. Gain buy-in from end users to executives.
4. Make every contact count.
5. Drive sales effectiveness.
6. Measure and manage the marketing return.
7. Leverage the loyalty effect.
8. Choose the right tools and approach.
9. Build the team.
10. Seek outside help.
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retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
©2009 Pearson Education, Inc.
Publishing as Prentice Hall