Chapter 6.docx

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University of Toronto Mississauga
Communication, Culture and Technology
Mariam Munawar

Chapter 6 – CRM • Customer relationship management (CRM) involves managing all aspects of a customer's relationship with an organization to increase customer loyalty and retention, and an organization's profitability • In an age when product differentiation is difficult, CRM is one of the most valuable assets a company can acquire • Today, most competitors are simply a mouse-click away. The intense competition in today's marketplace forces organizations to switch from sales-focused strategies to customer-focused strategies. • CRM allows an organization to gain insights into customers' shopping and buying behaviours • The CRM system tracks every communication between the customer and the organization and provides access to CRM data across different systems, from accounting to order fulfillment CRM as a Business Strategy • CRM is not just a type of information system, but also a strategy that an organization must embrace on an enterprise level • Businesses with CRM can target their campaigns to the right customer with the right product. • With each campaign, the companies would spend their marketing budget more effectively, gain new customer insights, and don’t contact the same customer repeatedly. Business Benefits of CRM • CRM is a business philosophy based on the premise that organizations that understand the needs of individual customers are best positioned to achieve sustainable competitive advantage in the future. Many aspects of CRM are not new to organizations; CRM is simply performing current business better. Placing customers at the forefront of all thinking and decision making requires significant operational and technology changes. • Most organizations recognize that treating existing customers well is the best source of profitable and sustainable revenue growth. In the age of e-business, however, an organization is challenged more than ever before to satisfy its customers • An organization can find its most valuable customers by using a formula that industry insiders call RFM—Recency, Frequency, and Monetary value. In other words, an organization must track: o How recently a customer purchased items (recency). o How frequently a customer purchases items (frequency). o How much a customer spends on each purchase (monetary value). • Once a company has gathered this initial CRM data, it can compile the data to identify patterns and create marketing campaigns, sales promotions, and services to increase business. For example, if Ms. Smith buys only at the height of the season, then the company should send her a special offer during the off-season. If Mr. Jones always buys software but never computers, then the company should offer him free software with the purchase of a new computer. The Evolution of CRM • There are three phases in the evolution of CRM: (1) reporting, (2) analyzing, and (3) predicting. o CRM reporting systems help organizations identify their customers across other applications o CRM analysis systems help organizations segment their customers into categories such as best and worst customers o CRM predicting systems help organizations make predictions regarding customer behaviour, such as which customers are at risk of leaving • Both operational and analytical CRM systems can assist in customer reporting (identification), customer analysis (segmentation), and customer prediction • Operational and Analytical CRM • Operational CRM supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with customers • Analytical CRM supports back-office operations and strategic analysis, and includes all systems that do not deal directly with the customers. • The primary difference between operational CRM and analytical CRM is the direct interaction between the organization and its customers Marketing and Operational CRM • Companies are no longer trying to sell one product to as many customers as possible; instead, they are trying to sell one customer as many products as possible. Marketing departments are able to adapt to this new way of doing business by using CRM systems that allow them to gather and analyze customer data to deploy successful marketing campaigns • The three primary operational CRM systems a marketing department can implement to increase customer satisfaction are: o List generators o Campaign management systems o Cross-selling and up-selling strategies • List Generators - compile customer data from a variety of sources and segment the data for different marketing campaigns. Data sources include Web site visits, Web site questionnaires, online and off-line surveys, flyers, toll-free numbers, current customer lists, and so on. After compiling the customer list, an organization can use criteria to filter and sort the list for potential customers. Filter and sort criteria can include such things as household income, education level, and age. List generators provide the marketing department with a solid understanding of the type of customer it needs to target for marketing campaigns. • Campaign management systems guide users through marketing campaigns performing such tasks as campaign definition, planning, scheduling, segmentation, and success analysis. These advanced systems can even calculate quantifiable ROI results for each campaign, and track the results to analyze and understand how the company can fine-tune future campaigns. • Cross-selling is selling additional products or services to a customer • Up-selling is increasing the value of the sale. For example, McDonald's performs cross-selling by asking customers if they would like an apple pie with their meal. It performs up-selling by asking customers if they would like to super-size their meals. CRM systems offer marketing departments all kinds of data about their customers and their products, which can help those departments identify cross-selling and up-selling marketing campaigns. Sales and Operational CRM • Sales departments were the first to begin developing CRM systems. Sales departments had two primary reasons to track customer sales data electronically. First, sales representatives were struggling with the overwhelming amount of customer account data they were required to maintain and track. Second, companies were struggling with the issue that much of their vital customer and sales data remained in the heads of their sales representatives • Sales force automation (SFA) is a system that automatically tracks all of the steps in the sales process. SFA products focus on increasing customer satisfaction, building customer relationships, and improving product sales by tracking all sales data • The three primary operational CRM technologies a sales department can implement to increase customer satisfaction are: o Sales management CRM systems o Contact management CRM systems o Opportunity management CRM systems • Sales management CRM systems automate each phase of the sales process, helping individual sales representatives coordinate and organize all of their accounts. Features include calendars to help plan customer meetings, alarm reminders signalling important tasks, customizable multimedia presentations, and document generation. These systems even have the ability to provide an analysis of the sales cycle and calculate how each individual sales representative is performing during the sales process • contact management CRM system maintains customer contact information and identifies prospective customers for future sales. Contact management systems include such features as maintaining organizational charts, detailed customer notes, and supplemental sales information. • Opportunity management CRM systems target sales opportunities by finding new customers or companies for future sales. Opportunity management systems determine potential customers and competitors and define selling efforts, including budgets and schedules. Advanced opportunity management systems can even calculate the probability of a sale, which can save sales representatives significant time and money when attempting to find new customers. • THINGS YOU NEED TO DO TO GAIN PROSPECTIVE CUSTOMERS • Customer Service and Operational CRM • Sales and marketing are the primary departments that interact directly with customers before a sale. Most companies recognize the importance of building strong relationships during marketing and sales efforts; however, many fail to realize the importance of continuing to build these relationships after the sale is complete. It is actually more important to build post-sale relationships if the company wants to ensure customer loyalty and satisfaction. The best way to implement post-sale CRM strategies is through the customer service department. • One of the primary reasons a company loses customers is bad customer service experiences. Providing outstanding customer service is a difficult task, and many CRM systems are available to assist organizations with this important activity • The three primary operational CRM systems a customer service department can implement to increase customer satisfaction are: o Contact centres o Web-based self-service systems o Call scripting systems • contact centre (call centre) is where customer service representatives (CSRs) answer customer inquiries and respond to problems through a number of different customer touchpoints. A contact centre is one of the best assets a customer-driven organization can have because maintaining a high level of customer support is critical to obtaining and retaining customers • Web-based self-service systems allow customers to use the Web to find answers to their questions or solutions to their problems. • Call-scripting systems access organizational databases that track similar issues or questions and automatically generate the details for the CSR, who can then relay them to the customer. The system can even provide a list of questions that the CSR can ask the customer to determine the potential problem and
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