Chapter 11Chapter 11Building a Customer-Centric Building a Customer-Centric

Organization – Customer Organization – Customer Relationship ManagementRelationship Management

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Learning Outcomes

Compare operational and analytical customer relationship management

Identify the primary forces driving the explosive growth of customer relationship management

Define the relationship between decision making and analytical customer relationship management

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• Manages all of the ways used by firms to deal with Manages all of the ways used by firms to deal with existing and potential existing and potential new customersnew customers

• CRM is both a CRM is both a Business and TechnologyBusiness and Technology discipline discipline

• CRM Uses information system to CRM Uses information system to integrateintegrate entire business processes of a entire business processes of a firm’s interaction with its customers.firm’s interaction with its customers.

• Provides end-to-end customer care ( from order receipt through delivery Provides end-to-end customer care ( from order receipt through delivery and after sale service and support)and after sale service and support)

• Provides a unified view of customer across the companyProvides a unified view of customer across the company

• Consolidates customer data from multiple sources (retail stores, phone, Consolidates customer data from multiple sources (retail stores, phone, e-mail, the Web) and provides analytical tools for answering questionse-mail, the Web) and provides analytical tools for answering questions

Customer Relationship Management Systems (CRM)Customer Relationship Management (CRM)- overview

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CRM : Customer Relationship Management Systems

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Customer Relationship Management (CRM)

• CRM enables an organization to:– Provide better customer service– Make call centers more efficient– Help sales staff close deals faster– Simplify marketing and sales processes– Discover new customers– Increase customer revenues

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Recency, Frequency, and Monetary Value

• Organizations can find their most valuable customers through “RFM” - Recency, Frequency, and Monetary value– How recently a customer purchased items

(Recency)– How frequently a customer purchased items

(Frequency)– How much a customer spends on each

purchase (Monetary Value)

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The Evolution of CRM

There are 3 phases in the CRM evolution:

• CRM reporting technology – help organizations identify their customers across other applications

• CRM analysis technologies – help organization segment their customers into categories such as best and worst customers

• CRM predicting technologies – help organizations make predictions regarding customer behavior such as which customers are at risk of leaving

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The Evolution of CRM

• Three phases in the evolution of CRM include reporting, analyzing, and predicting

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The Evolution of CRM

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Good CRM systemsGood CRM systemsBy consolidating customer data, one should be By consolidating customer data, one should be able to answer questions such asable to answer questions such as

– What’s the value of particular customers over their lifetime?What’s the value of particular customers over their lifetime?

– Who are the most loyal customers? ( Who are the most loyal customers? ( costs 6 times more to sell to a costs 6 times more to sell to a new customer than an existing onenew customer than an existing one))

– Who are firm’s most profitable customers? (Who are firm’s most profitable customers? (80%-90% of the firm’s 80%-90% of the firm’s profit are generated by 10%-20% of its customersprofit are generated by 10%-20% of its customers))

– What do these profitable customers buy?What do these profitable customers buy?

Firms can then use the answers to these questions to acquire Firms can then use the answers to these questions to acquire new customers.new customers.

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CRM Demo- SAP

• SAP CRM

Enabling Customer-Loyalty Management

SAP.com is the major producer of CRM systems

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Customer Relationship Management’s Explosive Growth

CRM Business Drivers

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Customer Relationship Management’s Explosive Growth

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Operational vs. Analytical CRM

• Operational CRM – supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customers

• Analytical CRM – supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers

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Operational CRM

• Customer-facing applications, such as sales force automation, call center and customer service support, and marketing automation

• Examples: Campaign management, e-marketing, telemarketing, tele-selling, e-selling, field sales

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Analytical CRM

• Applications that analyze customer data generated by operational CRM applications to provide information for improving business performance

• Examples: Develop customer profiles; analyze customer or product profitability; identify trends in sales length cycle;

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Analytical CRM

• Personalization – when a Web site knows enough about a persons likes and dislikes that it can fashion offers that are more likely to appeal to that person

• Analytical CRM relies heavily on data warehousing technologies and business intelligence to collect insights into customer behavior

• These systems quickly aggregate, analyze, and disseminate customer information throughout an organization

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Using Analytical CRM to Enhance Decisions

A data warehouse is a repository of an organization's electronically stored data. Data warehouses are designed to facilitate reporting and analysis

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Summary

Business Value of Customer Relationship Management Systems

1. Increased customer satisfaction

2. More effective marketing and reduced direct marketing costs

3. Lower costs for customer acquisition

4. Increased revenue from identifying most profitable customers and segments for marketing

5. Reduced churn rate (Number of customers who stop using or purchasing products or services from a company)

More CRM DemosMore CRM Demos

Microsoft CRM Demo (Fun) (video- 3 min.) (video- 3 min.)

CRM Demo (video – 3 min.)(video – 3 min.)

Microsoft CRM - What can it do for you? (video - 3 min.)(video - 3 min.)