Customer Relationship Management CRM is Any application or initiative designed to help an organization optimize interactions with customers, suppliers, or prospects via one or more touch points for the purpose of acquiring, retaining, or crossselling customers. 1
Management, not Marketing Improve the relationship with the customer Market to customers on an individual basis Requires organizational and technical resources that are customer centric E-CRM is: E-CRM a definition Applying Internet and other digital technology (web, e-mail, wireless, itv, databases) to acquire and retain customers (through a multi-channel buying process and customer lifecycle) by iimproving customer knowledge, targeting, service delivery and satisfaction 2
Marketing applications of CRM A CRM system supports the following marketing applications: Sales force automation (SFA). account management through tools to arrange and record customer visits. Customer service management. Representatives supported by intranet to access databases containing information on the customer, products and previous queries. Managing the sales process. through e-commerce sites, or in a B2B context by supporting sales representatives by recording the sales process (SFA). Campaign management. Managing ad, direct mail, e-mail and other campaigns. Analysis. Through technologies such as data warehouses and data mining, customers characteristics, their purchase behaviour and campaigns can be analysed in order to optimize Assumptions of CRM Customers act according to habit Current customer information is always correct Customers want individual, differentiated treatment Customers with the greatest profitability should receive the best service 3
Marketing 75 years ago Production a la Adam Smith You can have any color as long as it s black Ford Motor Co. Marketing - today Add the spice of flexibility, courtesy of robotics, computers 5 4
New approach to Customer Relationship TO: Finding products that are right for each customer TURN the process through 90 degrees FROM: Finding customers that are right for each product Products: 1 2 3 4 5.. Mass Customization B. Joseph Pine Mass production Cheap to produce Efficient to produce Uniform features/quality one size fits all approach Optimize production cost Customization Expensive to produce Inefficient to produce Customized features tailor made approach customer satisfaction Mass customization Cheap & efficient to produce Customized features tailor made approach Optimize production cost & customer satisfaction 5
Drivers of CRM Pareto s principle: 80/20 rule 8 to 10 calls to make a sale to new customers, 2 to 3 to existing customers 5-10 x more expensive to sell to new rather than repeat customers Revenue & Cost Goals Increase revenue growth through customer satisfaction Reduce costs of sales and distribution Minimize customer support costs 6
Customer Relationship Management Process of creating and maintaining relationships with business customers or consumers A holistic process of identifying, attracting, differentiating, and retaining customers Acquisition Customers Selection CRM Cross-Selling Retention Where are Models Used? 1. Selection Business trying to select prospective customers (Profitability) A model that predicts the LD usage based on credit history. 2. Acquisition Selection is who would you like to invite to a party. Acquisition is about getting them to agree. Putting together a plan that will make them say yes. Again a model. 3. Retention Keeping your flock together! Sensing it before they jump the ship. 4. Extension/Cross-Selling Extending services to existing customers. Cross-selling 7
Three phases of customer relationship management Customer Relationship Management Bottom-line: The use of information-enabled systems for enhancing individual customer relationships to ensure long-term customer loyalty and retention 8
CRM Tasks / IDIC Process IDIC Process: Customer Identification Customer Differentiation Customer Interaction Customization and Cross-sell ecrm ecrm is the application of CRM to an e-business strategy Personalization/customization of customers experiences and interactions with the e-business Recall: Relationship between merchant and customers is distant Less expensive to keep customers than to acquire new ones Repeat customers have higher lifetime value than one-time buyers 9
How? Track and Analyze Data Employ tracking devices Personalize each visitor s experience Find trends in customer use ID cards An ID card enables information to be sent to a Web site such as your IP address, your browser, or your operating system Click-through banner advertisements Click-through ads enable visitors to view a service or product by clicking the ad Advertisers can learn what sites generate sales Tracking: Web Bugs Web Bugs, or clear GIFs A type of image file embedded in an image on the screen Site owners allow companies, especially advertising companies, to hide these information-collecting programs on various parts of their sites Every time a user requests a page with a Web bug on it, the Web bug sends a request to the Web bug s company s server, which then tracks where the user goes on the Web. 10
Tracking: Log-File Analysis When visiting a site, you are submitting a request and this is recorded in a log file Log files consist of data generated by site visits, including each visitor s location, IP address, time of visit, frequency of visits, etc. Log-file analysis organizes and summarizes the information contained in the log files Can be used to determine the number of unique visitors Can show the Web-site traffic effects of changing a Web site or advertising campaign E.g. WebTrends.com, ClicTracks, Webalyzer Tracking: Customer Registration Customer registration Requiring visitors to fill out a form with personal information that is then used to create a profile Only works when it will provide a benefit to the customer When customers log on using usernames and passwords, their actions can be tracked and stored in a database Require only minimum information Need to give customers an incentive to register Cookies A text file stored by a Web site on an individual s personal computer that allows a site to track the actions of a customer 11
Cookies Pros and Cons Pros Record passwords for returning visitors Keep track of shopping-cart materials Register preferences Assist companies in address target markets with greater accuracy Cons Customer privacy Can be misleading to the site that places cookies on a computer Different people may use the same computer to surf the Web, and the cookie will not be able to differentiate the users Personalized experience in B2C e-commerce Amazon.com Bhasker s Store Bhasker s Gold Box Bharat Bhasker, like to read magazines? Like to receive $10--or $20? Visit Today's Deals. Use of Web mining cookies to identify user analysis of user s past behavior and peer group analysis for personalized messages category recommendations gold box offers Use of clustering, association analysis, temporal sequence analysis, etc. (If you're not Bharat Bhasker, click here.) Your Message Center You have 6 new messages. Your Shopping Cart You have 0 items in your Shopping Cart. More Categories Science Fiction & Fantasy History Computers & Internet 12