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ELC 310

ELC 310. Day 14. Agenda. Schedule Oct 30 – Customer Relationship Management Nov 2 – eMarketing Plan Presentations 3 Days away! Email plan and PowerPoint to tonyg@maine.edu In class Presentations of your marketing plans Nov 6 – Quiz 3 Chap 10, 11, 12, 13 & 14

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ELC 310

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  1. ELC 310 Day 14

  2. Agenda • Schedule • Oct 30 – Customer Relationship Management • Nov 2 – eMarketing Plan Presentations • 3 Days away! • Email plan and PowerPoint to tonyg@maine.edu • In class Presentations of your marketing plans • Nov 6 – Quiz 3 Chap 10, 11, 12, 13 & 14 • Nov 9 - Change texts to Digital Marketing Strategy • Exam # 3 in on November 6 • Chap 10, 11, 12, 13 & 14, 6 essays (60 points), 10 M/C (40 Points). open books, open notes, 70 mins • Today we will be discussing CRM and Wrap-up of this textbook

  3. E-Marketing 4/EJudy Strauss, Adel I. El-Ansary, and Raymond Frost Chapter 14: Customer Relationship Management 14-1

  4. Chapter 14 Objectives • After reading Chapter 14 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. 14-2

  5. "A business absolutely devoted to Customer Service Excellence will have only one worry about profits. They will be embarrassingly large."-Sir Henry Ford "The cost of retention is $180 per customer," he says. "But most automotive dealerships are set up for customer acquisition - which is crazy when you consider the average cost of customer acquisition is $1,000 or more."-Arthur Hughes, author of several books on using databases to enhance CRM. "70 to 90 percent of decisions not to repeat a purchase of anything are not about product or price. They are about some dimension of service."-Barry Gibbons, former CEO, Burger King "The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency."-Bill Gates

  6. The Cisco Story • Cisco provides Internet networking systems for corporate, government and education clients. • The Internet plays a major role in acquiring, retaining and growing customer business. • 2.5 million users log onto the Cisco site each month. • Cisco has become adept at online customer relationship management (CRM). 14-3

  7. 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. • In 2001, 90% of their orders came through the Internet. • Cisco saves $340 million a year in customer service costs due to automation. • Can you think of other B2B marketers that utilize the Internet as successfully as Cisco? 14-4

  8. Relationship Marketing Defined • Relationship marketing is about establishing, maintaining, enhancing, and commercializing customer relationships through promise fulfillment. • Relationship capital may be the most important asset a firm can have. • A firm using relationship marketing focuses more on wallet share than on market share. • More $ from each customer instead of more customers 14-5

  9. Continuum from Mass Marketing to Relationship Marketing 14-6

  10. 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. 14-7

  11. 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. 14-8

  12. Maximizing Number of Customers Source: Adapted from Peppers and Rogers (1996)

  13. Customer Relationship Management, cont. • 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. 14-9

  14. Customer Relationship Management, cont. • Marketing automation software aids marketers in effective targeting, marketing communication, and monitoring of customer and market trends. • Software solutions include e-mail campaign management, database marketing, and market segmentation. • Most customer service occurs post purchase when customers have questions or complaints. • E-mail and Web self-service are often used. 14-10

  15. 8 Building Blocks for Successful CRM Exhibit 14 - 4 Eight Building Blocks for Successful CRM Source: Adapted from Gartner Group (www.gartner.com)

  16. 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. 14-12

  17. TRUSTe Builds User Trust 14-13

  18. 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 • Another CRM goal involves building bonds with customers on 3 levels: • Financial • Social • Structural 14-14

  19. Three Levels of Relationship Marketing 14-15

  20. 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. 14-16

  21. Relationships over Multiple Communication Channels 14-17

  22. 4. Organizational Collaboration • Marketers collaborate within and outside the organization to focus on customer satisfaction. • CRM, or “front-end” operations, can be linked with the entire supply chain management system (SCM), or “back-end” operations. • Customer service reps have access to inventories. • Producers and wholesalers constantly receive data that can be utilized for production and delivery. • The use of extranets, two or more intranet networks that share information, allows CRM-SCM integration. 14-18

  23. 5. CRM Processes • Firms use specific processes to move customers through the customer care life cycle. 14-19

  24. CRM Processes, cont. • CRM processes are used to: • Identify customers. • Differentiate customers. • Customize the marketing mix. • Interact with customers. • Firms can identify high-value customers by mining customer databases and profiling customers in terms of: (RFM analysis) • Recency of purchases. • Frequency of purchases. • Monetary value of purchases. 14-20

  25. 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. 14-21

  26. 7. CRM Technology • Technology greatly enhances CRM processes. • 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. 14-22

  27. Company-side Tools 14-23

  28. Client-side Tools 14-24

  29. 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. 14-25

  30. 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 14.21 illustrates Customer LTV. 14-26

  31. Customer Lifetime Value (LTV) Source: Adapted from Peppers and Rogers Group at www.1to1.com

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