Customer Relationship Management (CRM) Systems MIS 4133 Software Systems
Outline CRM and CRM System Phases Applications CRM Software Capabilities Aspects of CRM Market Segments Business Value Performance Metrics Success Stories Challenges CRM, ERP, and SCM Systems Integration
CRM Used to maximize the benefits of a company s customer assets. Used as a technology and business discipline. Seeks to optimize revenue, profitability, customer satisfaction, and customer retention.
CRM System CRM system provides integrated approach to all aspects of company-customer interaction Marketing Sales Support / Service
CRM Phases 1. Technology Automate existing processes 2. Integration Cross functional integration to create a customized view of the customer 3. Process Eliminate unnecessary activities, improve outdated processes, and redesign activities 4. Customer-driven Focus on understanding customer first and then move to inward operations
CRM Applications Partner relationship management (PRM) Manage relationships with company partners Employee relationship management (ERM) Setting objectives, employee performance management, employee training, and performance-based compensation
CRM Software Capabilities Sales force automation (SFA) Focus on most profitable customers Reduce cost per sale Reduce cost of acquiring new customer and retaining old ones Customer service Increase efficiency of call centers, help desks, and customer support staff Assign and manage customer service requests Marketing Capture customer data Provide product/service information Qualify leads for target marketing Schedule and track mailings and email Identify profitable and unprofitable customers Design products/services to satisfy specific consumer needs Identify opportunities for cross-selling, up-selling, and bundling
CRM Software Capabilities Example Customer Data Sales Marketing Service Account Mgmt Lead Mgmt Order Mgmt Campaign Mgmt Channel Promotions Mgmt Events Mgmt Service Delivery Customer Satisfaction Mgmt Returns Mgmt Sales Planning Field Sales Sales Analytics Market Planning Marketing Operations Marketing Analytics Service Planning Call Center & Help Desk Service Analytics
Aspects of CRM Operational CRM Includes customer-facing applications (SFA, call center, customer service support, and marketing automation) Analytical CRM Includes applications that analyze customer data generated by operational CRM applications
Operational vs. Analytical CRM Examples Operational CRM Campaign mgmt E-marketing Account and contact mgmt Lead mgmt Telemarketing Teleselling E-selling Field sales Field service dispatch Customer care and help desk Contract mgmt Analytical CRM Develop customer segmentation strategies Develop customer profiles Analyze customer profitability Analyze product profitability Identify cross-selling/up-selling opportunities Select the best marketing, service, and sales channels for each customer group Identify trends in sales cycle length, win rate, and average deal size Analyze service resolution times, service levels based on communication channel, and service activity by product line and account Analyze leads generated and conversion rates Analyze sales representative and customer service representative productivity Identify churn problems
Analytical CRM Data Warehouse Customer Data Channels Call center Web site Wireless Field sales Direct mail E-mail Retail store Partner Other sources Legacy systems Demographic data Third-party data Marketing campaign data Customer data warehouse OLAP Data mining Other data analysis tools Profitable customers Market segments Customer profiles Churn rates
CRM Market Segments Traditional out-of-the-box CRM Traditional CRM with templates for specific vertical industries Traditional out-of-the-box CRM with application development hooks Industry-specific vertical CRM packages Custom solutions from vertical systems integrators
CRM Systems Business Value Increased customer satisfaction Reduced direct marketing costs More effective marketing Lower costs for customer acquisition and retention Increased sales revenue Reduced churn rate
CRM Performance Metrics Cost per lead Cost per sale Number of repeat customers Reduction of churn Sales closing rate Customer lifetime value (CLTV)
Cost Cutters and Revenue Enhancers from a CRM System Cost Cutters Decrease cost of sales More time to sell; less time on administration Decrease cost of service Cost per service interaction Transition to more selfservice Revenue Enhancers Increase sales effectiveness Add new customers at a higher rate Offer new products/services Provide a better customer experience Increase revenue per customer Sell more of current products/services Improve customer retention
CRM Success Stories Best Buy Launched a customer-centricity effort Trained store-level employees to recognize five types of highly valued customers American Cancer Society Used CRM system to better target members in its donor base
CRM System Challenges Broad company goals Generic strategies Software-centric implementations Poor communication which can lead to no buy-in from sales force Inadequate training of sales force Competition between sales force leads to political issues
Integrating CRM with ERP and SCM Systems CRM s goal: to find the best customers and concentrate efforts on serving them better CRM and ERP integration ERP to CRM access information such as credit ratings, payment status, sales volumes, and so forth CRM to ERP better able to prioritize work processes for the best customers, etc. CRM and SCM integration SCM to CRM access information regarding supply status, assembly process, delivery status, product configuration, and so forth CRM to SCM better able to schedule delivery of raw materials, prioritize work flow, etc.
References Greenberg, P. (2002). CRM: Capturing and Keeping Customers in Internet Real Time at the Speed of Light, 2 nd edition, McGraw-Hill Companies, Berkeley, California. Haag, S., Cummings, M. and McCubbrey, D.J. (2013). Management Information Systems for the Information Age, 9 th edition, McGraw-Hill Companies, Inc., New York. Huang, A., Yen, D.C., Chou, D.C. and Xu, Y. (2003). Corporate applications integration: challenges, opportunities, and implementation strategies, Journal of Business and Management (9:2), Spring, pp. 137-150. Laudon, K.C. and Laudon, J.P. (2006). Management Information Systems: Managing the Digital Firm, Pearson Education, Inc., Upper Saddle River, New Jersey. Martin, E.W., Brown, C.V., DeHayes, D.W., Hoffer, J.A. and Perkins, W.C. (2005). Managing Information Technology, 5 th edition, Pearson Education, Inc., Upper Saddle River, New Jersey. McNurlin, B.C. and Sprague, Jr., R.H. (2006). Information Systems Management in Practice, 7 th edition, Pearson Education, Inc., Upper Saddle River, New Jersey.
References Motiwalla, L.F. and Thompson, J. (2009). Enterprise Systems for Management, Pearson Education, Inc., Upper Saddle River, New Jersey. Peppers, D. and Rogers, M. (2005). Best Buy Counts Customers, CIO Magazine, July, http://www.cio.com/archive/070105/circuit_sidebar_three.html [accessed: 19 October 2005]. Rigby, D.K. and Ledingham, D. (2004). CRM done right, Harvard Business Review, pp. 118-129. Ross, D.F. (2005). E-CRM from a supply chain management perspective, Information Systems Management, Winter, pp. 37-44. Taber, D. (2011). Implementing Territories in CRM Systems, http://www.cio.com/article/2406846/customer-relationshipmanagement/implementing-territories-in-crm-systems.html [accessed: 15 September 2015]. Taber, D. (2012). Why CRM Implementation is so Political, http://www.cio.com/article/2393601/customer-relationship-management/why-crmimplementation-is-so-political.html [accessed: 15 September 2015]. Wailgum, T. (2007). CRM Definition and Solutions, http://www.cio.com/article/2439505/customer-relationship-management/crmdefinition-and-solutions.html [accessed: 15 September 2015].