E-Marketing 5/E Judy Strauss and Raymond Frost

1. E-Marketing 5/EJudy Strauss and Raymond Frost Chapter 15: Customer Relationship Management

2. 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.

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).

4. 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 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?

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. • Business 2.0 callsrelationship capital the most important asset a firm can have. • A firm using relationship marketing focuses more on wallet share than on market share.

6. Continuum from Mass Marketing to Relationship Marketing

7. 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.

8. 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.

9. CRM’s 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.

10. 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.

11. 8 Building Blocks for Successful CRM • The Gartner Group model of CRM covers 8 building blocks: • CRM vision • CRM strategy • Valued customer experience • Organizational collaboration • CRM processes • CRM information • CRM technology • CRM metrics

12. 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 Web site meeting its privacy philosophies.

13. TRUSTe Builds User Trust

14. 2. CRM Strategy • 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

15. Three Levels of Relationship Marketing 15-15

16. 3. Valued Customer Experience • 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.

17. Relationships Over Multiple Communication Channels 15-17

18. 4. Organizational Collaboration • 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.

19. CRM-SCM Integration • Ex. 15.9

20. 5. CRM Processes • Firms use specific processes to move customers through the customer care life cycle.

21. CRM Processes, cont. • CRM processes are used to: • Identify customers. • Differentiate customers. • Customize the marketing mix. • Interact with customers.

22. 6. CRM Information • 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.

23. 7. CRM Technology • 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.

24. Company-Side Tools 15-24

25. Client-Side Tools 15-25

26. CRM Software • The leading software firms in the large enterprise B2B market include: • Siebel Systems • SAP • Oracle • Onyx Software

27. 8. CRM Metrics • 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.

28. CRM Metrics, cont. • 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.

29. 10 Rules for CRM Success • 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.