By the end of this lecture you will be able to: Define customer
relationship management and identify the major benefits to
e-marketers. Outline the types of CRM for e-marketing. Discuss the
eight major components needed for effective and efficient CRM in
e-marketing. Objectives
Slide 3
The Cisco Story 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).
Slide 4
The Cisco Story, 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?
Slide 5
Relationship Marketing Defined 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.
A firm using relationship marketing focuses more on wallet share
than on market share.
Slide 6
Relationship marketing involves more than just customers, were
focusing on customers CRM-Customer Relationship Management. True
CRM involves treating each customer differently according to their
characteristics as described in the e-marketing insight box below.
Relationship marketing shifts marketing away from short-term
transactional marketing (with its one-off sales) towards developing
longer lasting relationships which, ideally, develop into lifetime
customers. This obviously generates more profitable repeat business
as well as increased share of wallet or customer share.
Relationship Marketing Defined
Slide 7
Slide 8
Continuum from Mass Marketing to Relationship Marketing Mass
marketingRelationship marketing Discrete transactionsContinuing
transactions Short-term emphasisLong-term emphasis One-way
communication Two-way communication and collaboration Acquisition
focusRetention focus Share of marketWallet share Product
differentiationCustomer differentiation
Slide 9
Stakeholders 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.
Slide 10
Customer Relationship Management 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.
Slide 11
Permission Marketing Building relationships is a delicate
affair. Marketers have to gain permission firstly, then trust and
ultimately, loyalty. It s all common sense stuff. Stick to basic
marketing tenets of identifying, anticipating and satisfying
customer needs relentlessly helps to build relationships. But how
do you do this? Firstly, adopt a permission based marketing ,
approach as developed by the now classic Permission Marketing by
Seth Godin ( Godin 1999 ). There are several steps towards
permission marketing. Relationship Marketing
Slide 12
Several steps towards permission marketing: 1 Gaining
Permission. The first step is to get customer s permission to give
them information. Winning this permission, in the customer s
time-compressed world, is a valuable asset, so a range of offers
will be more powerful. 2 Collaboration. Marketing is a
collaborative activity where marketers help customers to buy and
customers help marketers to sell. 3 Dialogue-trialogue. A dialogue
emerges whether via web site e- mails, discussion rooms, real
conversations in focus groups or even real meetings between
customers and sales reps, as well as amongst customers themselves
(trialogue). Relationship Marketing
Slide 13
Permission marketers develop the relationship and win further
permission to talk on a regular basis. Some excellent
permission-based marketers actually get permission to place orders
on the customer s behalf. Other permission-based marketers even
deliver right into the customers buildings without the customer
opening the door! They become part of the customer s systems. The
concept of permission marketing is best summarized by three magic
words. Seth Godin said: Permission marketing is... anticipated,
relevant and personal Relationship Marketing
Slide 14
The essential concepts of permission marketing as: 1 Offer the
prospect an incentive to volunteer [Achieve opt-in] 2 Using the
attention offered by the prospect, offer a curriculum over time,
teaching the consumer about your product or service [Enable the
customer to learn more] 3 Reinforce the incentive to guarantee that
the prospect maintains the permission [Offer opt-out, but minimize
the likelihood for this] Relationship Marketing
Slide 15
4 Offer additional incentives to get even more permission from
the consumer [Learn more about the customer through time] 5 Over
time, leverage the permission to change consumer behavior towards
profits [Deepen the relationship through converting from prospect
to customer and trialist to loyalist]. Relationship Marketing
Slide 16
Managing the Dialogue Through Contact Strategies Too much
contact can wear out the relationship. The key to building the best
relationship is to have the right number of contacts of the right
type at the right time for specific customers. This is a contact
strategy. Determining which kinds of customers and enquirers get
which sequence of contacts. Relationship Marketing
Slide 17
Example template for e-mail contact strategy
Slide 18
An automated e-mail sent by a business-to-business supplier two
weeks after a customer has registered initial interest in the
company. Such e-mails can help companies educate customers about
their offering and engage them through digital assets such as a
calculator which fits the permission marketing model of learning
more through time. Relationship Marketing
Slide 19
Renault is a good B2C example of a welcome strategy. Over the
initial six month period of purchase consideration, they use a
container or content pod within their e-newsletter to deliver
personalized information about the brand and model of car the
prospect is interested in. This is updated each month as the
customer gets to know the brand better and the brand gets to know
the customer better! Relationship Marketing
Slide 20
Database Marketing The database and database marketing is at
the heart of e-CRM. By the end of this section you will understand
what a database is, the complications that can arise, the types of
data fields and the importance of linking it all to a clear
marketing programme. It has been said that The driving force
underlying modern CRM systems is the customer database . The
repository of information on customers and prospects from all
sources and channels whether web sites, interactive TV, sales reps
or customer service staff.
Slide 21
Achieve the dynamic dialogue of permission marketing which : o
recognizes and remembers each customer by name and need o answers
questions often automatically and, ideally, personally o asks
questions, collects information and builds a better profile,
particularly of those ideal lifetime customers o delivers
communications which are instantaneous, relevant and value adding.
Database Marketing
Slide 22
What is Stored in the Database? A database is more than a list
of names. A database is distinguished by the amount and quality of
relevant marketing data held on each customer or prospect. It
should identify best (ideal) customers and worst customers. The
worst customers have negative value these are customers who claim
early on insurance, are bad debtors, or just an intensive user of
free services. Database Marketing
Slide 23
For example, RFM analysis can be applied for targeting using e-
mail according to how a customer interacts with an e-commerce site.
Values could be assigned to each customer as follows: - Recency: 1
Over 12 months 2 Within last 12 months 3 Within last 6 months 4
Within last 3 months 5 Within last 1 month Database Marketing
Slide 24
- Frequency: 1 More than once every 6 months 2 Every 6 months 3
Every 3 months 4 Every 2 months 5 Monthly - Monetary value: 1 Less
than 10 2 1050 3 50100 4 100200 5 More than 200 Database
Marketing
Slide 25
Customers can be combined in different categories and then
appropriate message treatments sent to encourage purchase.
Simplified versions of this analysis can be created to make it more
manageable, Database Marketing
Slide 26
There is a lot of other useful data worth collecting, such as
promotions history (responses to specific promotions), share of
wallet or customer share (potential spend), timing of spend and
more. In B2B, we are interested in business type (SIC codes), size
of business, holding companies and subsidiaries, competitive
products bought, etc. You can segment customers by their activity
or responsiveness levels and then develop strategies to engage
them. Database Marketing
Slide 27
Rohner (2001) says Without a corresponding marketing programme,
database marketing should not be introduced . You must be clear
what you want to do with the database. Database Marketing
Slide 28
E-CRM e ADD TO CRM Relationship Marketing is about building
relationships with all external parties involved in marketing. CRM
focuses specifically on the relationship with customers and e-CRM
focuses even further on the electronic relationship with customers.
CRM software is used to manage these electronic relationships.
Ebner et al. (2002) define this software as the systems that allow
companies to plan and analyze marketing campaigns, to identify
sales leads, and to manage their customer contacts and call
centres.
Slide 29
CRM and e-CRM are not just about technology and databases, its
not just a process or a way of doing things, it requires, in fact,
a complete customer culture. In many ways there s nothing new here
since good marketers have been taking care of their customers for
many decades now. What is new is the lack of CRM in the fast moving
online world: A world where customer expectations are often higher
than those of the offline world. A world where customers raised
expectations are regularly crushed by previously successful offline
companies.
Slide 30
E-CRM enables digital marketers to create a multi-channel
marketing process of: Monitoring customer actions or behaviours
(clicks on specific e- mails or website offers) and then...
Reacting with appropriate messages either online, for example
through an e-mail followup, or offline, for example, a phone or
direct mail follow-up to encourage response Monitoring response to
these messages and continuing with additional reminder
communications and monitoring. CRM and E-CRM
Slide 31
The secret is to put the time into defining rules and testing
automated follow-up communications which match the context. For
example, an online shopper who has purchased a product can be sent
a series of welcome e-mails in the context of their purchase to
encourage future purchases CRM and E-CRM
Slide 32
Some E-CRM Benefits and Challenges There is e-CRM software
which enhances our ability to understand customers and enquirers,
their needs, names, interests and a lot more. We can get closer to
them. Speak with them. One of the 5Ss the five fundamental benefits
of e-marketing. - A dynamic dialogue that is instantaneous,
relevant, value adding and information gleaning: o recognizes and
remembers each customer by name and need CRM and E-CRM
Slide 33
o answers questions often automatically and ideally, personally
o asks questions, collects information and builds a better profile,
particularly of those, ideal, lifetime customers. The real
potential advantage of online marketing lies in its potential to
build relationships and create long-term value. Companies who have
risen to the challenge of E-CRM have a 360 degree view of their
customers . This in turn generates real loyalty from lifetime
customers who readily share valuable data with you. CRM and
E-CRM
Slide 34
Slide 35
Slide 36
Managing an E-CRM Checklist Using the web site for customer
development from generating leads through to conversion to an
online or offline sale using e-mail and web-based information to
encourage purchase. Managing e-mail list quality (coverage of
e-mail addresses and integration of customer profile information
from other databases to enable targeting). Applying automated
triggered e-mail marketing to support contact strategies aimed at
customer development (welcome, purchase, upsell, cross-sell and
after sales). Data mining to identify new segments and improve
targeting. E-CRM
Slide 37
Providing online personalization or mass customization
facilities to automatically recommend the Next-best product .
Providing online customer service facilities (such as Frequently
Asked Questions, Call-back and Chat support). Managing online
service quality to ensure that first time buyers have a great
customer experience that encourages them to buy again. Managing the
multi-channel customer experience as they use different media as
part of the buying process and customer lifecycle, i.e. providing
clear linkages and seamless transition between online and offline
channels or touch points as part of the relationship. E-CRM
Slide 38
Keeping the Relationship Alive web site needs to be updated and
kept fresh and tailored your offerings need to be more attractive
than the competition. How can you keep the relationship alive
without changing so much that you are no longer the organization
they wanted to have a relationship with in the first place?
E-CRM
Slide 39
Approach to the CRM cycle 1 Attract! Obviously this is where
traditional off-line communication as well as on-line communication
about your offering is being designed to bring customers to your
site. From TV advertising to banner ads and hot-spots, getting them
to your site will only be possible if (a) they know what you are
offering and are interested (b) they know where you are and how to
get to you. 2 Capture Data. The Internet is a splendid mechanism
for capturing data the prospect has the keyboard and screen in
front of them and you can incentivize the giving of data.
E-CRM
Slide 40
3 Get Closer. Get to know them better. It is not surprising
that there is reluctance on the part of many individuals to give
personal data away to an Internet screen. So it is often better to
gather more information about a person slowly and over time, as the
trust builds between you and them. 4 Embrace Them. Make your
customer feel loved! Approach them with offers, prizes, rewards,
incentives and information as well as experiences that show them
you are thinking about THEM. E-CRM
Slide 41
5 Golden Handcuffs. Once you get them to show some loyalty,
build a system whereby things are too good for them to leave!
Tailored information or services to suit them specifically. Or
services that integrate with the customers own systems or
lifestyle. These switching costs make leaving less likely.
E-CRM
Slide 42
CRMs Facets 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.
Slide 43
Marketing Automation & Customer Service 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.
Slide 44
8 Building Blocks for Successful CRM The Gartner Group model of
CRM covers 8 building blocks: 1. CRM vision 2. CRM strategy 3.
Valued customer experience 4. Organizational collaboration 5. CRM
processes 6. CRM information 7. CRM technology 8. CRM metrics
Slide 45
CRM-SCM Integration Building Blocks for Successful CRM
Slide 46
H Abid - CRM Week 01
Slide 47
CRM Relationship Initiation Relationship Maintenance
Relationship Termination Acquiring customers Retaining and growing
customer base Firing customers (A)(B)(C)
Slide 48
CRM Processes Firms use specific processes to move customers
through the customer care life cycle. Building Blocks for
Successful CRM
Slide 49
CRM Metrics E-marketers use numerous metrics to assess the
internets 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. 8 Building Blocks for Successful
CRM
Slide 50
Rules for CRM Success 1.Recognize the customers 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.
Slide 51
Profiling Profiling helps you to know your customers better.
The better the profiling the better the results because the more
accurately you target your marketing efforts on particular profiles
or segments, the less your efforts will be wasted. Different
customers have different needs. It is actually easier to satisfy
them if you divide them into groups sharing similar needs
(segments) and then treat each segment differently.
Slide 52
The more you know about customers the better. It s as simple as
that. Therefore a well used database as part of a CRM system can
create a competitive advantage as you grow your own mini monopoly
(customers on your database). Profiling
Slide 53
Today, we can build sophisticated consumer profiles based on
previous purchasing decisions and even identify the consumer
hierarchy of criteria, whether quality, speed of delivery, level of
service, etc. This enables us to target tailored offers that match
the specific needs of segments on our database. Get this right and
this virtuous cycle delivers superior service and simultaneously
creates competitive advantage that protects our customers from the
inevit-able, new, competitive offers looming on the horizon.
Profiling
Slide 54
A customer profile can take everything you know about the
customer and everything you know about people who are like that
customer. It can then be layered with all the psychological and
sociological theory that suggests how that person will react to a
specific offer or promotion. This helps you to tailor offers that
work better for both your customers and your business.
Profiling
Slide 55
Approaches To Profiling Profiling is a continuous activity.
Continually collecting customer information, mining it and using it
to profile and target more successfully. It is crucial to know what
fields or data should be collected. Profile data can be gathered
from several sources: internally from the customer s own input on a
web form, tracking mechanisms and questionnaires or externally from
research companies and data bureaux. Data can be complex and of
massive volume it might be that you have to hire a computer bureau
to crunch the data to turn it into useful information.
Profiling
Slide 56
One of the toughest jobs is to know which data matters most
especially where there is conflicting data. Some customers will
give you incorrect information consciously or unconsciously. You
have to come up with ways to: 1- acquire the information in the
first place, and 2 - then make it useful to your organization
validation. The issue of the invasion of privacy is a difficult
one. Laws, ethics and codes of practice come into play. Ethics have
a role but the main arbiters of how much contact is too much
contact , are the customers themselves. They will show you how
ready they are to be communicated with by their response. You have
to gain their permission. Profiling
Slide 57
Asking for information is a delicate affair. You cannot be too
greedy. Beyond the basic information, you may need to offer
incentives for more information or simply wait for the relationship
to develop and permission to ask for more. But remember customers
value their privacy. Let your customers see your privacy policy
posted clearly on your web site and any other access point
customers may have with you. Profiling
Slide 58
Slide 59
Personalization Specialized software combined with an
up-to-date and well- cleaned database allows marketers to
personalize communications such as e-mails, voice mails (voice
activated e- mails), snail mails (traditional direct mail), SMS
text messages (for mobiles) and most interestingly, web sites
personalized web sites.
Slide 60
Personalization Why Personalization? The most important sound
in the world is... your own name! We all appreciate it when people
remember our names. It s personal. It s a compliment an expression
of respect. By the end of this section youll know how
personalization helps to build relationships and the issues that
arise. Some call it affectionately the personal touch , when a
restaurant remembers your favorite wine or preferred table. The
database enhances the marketers memory of customer names, needs,
interests and preferences.
Slide 61
Personalization enhances the relationship. Personalized web
pages help to create a sense of ownership. Not of the customer by
the marketer, but of the site by the customer! When you make a
customer feel that their home page is truly theirs, that the offers
you make available to them are theirs, that the information they
access is put together just for them, then you allow the customer
to own you. Personalization
Slide 62
This enhanced service helps to sell while also providing the
platform for ongoing dialogue ( Speak ) and enhancing the brand
personality. So personalization delivers four of the 5Ss benefits
of e-marketing. Which S is missing? Save personalization software
does cost money. And the larger the customer base gets the more
complex the personalization becomes. For this reason many
organizations stick with a less sophisticated mass web site.
Personalization
Slide 63
Approaches to Personalization There are three distinct
approaches to personalization: o Customization is the easiest to
see in action: it allows the visitor to select and set up their
specific preferences. o Individualization goes beyond this fixed
setting and uses patterns of your own behavior (and not any other
user s they know it s you because of your login and password
choices) to deliver specific content to you that follows your
patterns of contact. o In group-characterization you receive a
recommendation based on the preferences of people like you, using
approaches based on collaborative filtering and case-based
reasoning. Personalization
Slide 64
Mass customization is where different products, services or
content is produced for different segments sometimes hundreds of
different segments. Personalization is different. It is truly
one-to-one, particularly when not only the web site and
communications are personalized but the product is personalized.
Personalization
Slide 65
E-mail marketing A coherent e-mail marketing programme which
helps build relationships needs to combine excellence both in
devising effective outbound e-mail campaigns and managing incoming
e-mails to satisfactorily resolve customers questions. E-mail is
most widely used as a prospect conversion and customer retention
tool using an opt-in house-list of prospects and customers who have
given permission to a company to contact them. Successful e-mail
marketers adopt a strategic approach to e- mail and develop a
contact or touch strategy that plans the frequency and content of
e-mail communications.
Slide 66
When choosing a CRM system you need to consider the current and
future scale; how it can now, and in the future, integrate with
other systems (like invoicing and debt collection) and of course
your budget which includes 3Ms men and women people who will be
involved in data capture, analysis and use; money budget required
for software license plus training and motivation schemes (to
ensure staff buy into the new system); minutes (time required to
specify the brief, source it, test it, modify it, train the team
and roll it out). Making it happen
Slide 67
Systems development should follow a structured approach, going
through several stages as shown in Figure. Note though that, just
as for web site development, prototyping is the most effective
approach since it enables the system to be tailored through users
experience of early versions of the system. Beware of scope creep .
Ultimately, CRM is an attitude as much as a system. Success depends
on a customer culture where all staff always ask how can we help
the customer? Making it happen
Slide 68
Managing The Database The database is the core of the CRM
system. The database administrator/manager (DBA) has many
responsibilities here: 1 Database Design. Ensuring the design is
effective in allowing customer data to be accessed rapidly and
queries performed. 2 Data Quality. Ensuring data is accurate,
relevant and timely. 3 Data Security. Ensuring data cannot be
compromised by attacks from inside or outside the organization. 4
Data Backup and Recovery. Ensuring that data can be restored if
there are system failures or attacks. Making it happen
Slide 69
5 User Coordination. This involves specifying who has access to
the information retrievaland who has access to information input.
Too many uncontrolled inputs mean files get changed and deleted by
too many different people. The database spins out of control. 6
Performance monitoring. Checking the system is coping with the
demand placed on it by users. There s one more part of the DBA s
job to communicate with clarity to the whole of the rest of the
organization the advantages of database marketing. Making it
happen
Slide 70
Summary Relationship Marketing CRM & E-CRM Building blocks
Customer life cycle
Slide 71
The last thing to do Visit www.cisco.com and find more about
their CRM activitieswww.cisco.com