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Chapter 9

Chapter 9. Customer relationship management

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York University
Administrative Studies
ADMS 2511
Anita Patel

CHAPTER 9. CUSTOMER RELATIONSHIP MANAGEMENT Organizations are emphasizing a customer-centric approach to their business practices because they know that sustainable value is found in long-term customer relationships that extend beyond today’s business transactions. This customer-centric approach is known in businesses as customer relationship management (CRM) • Internet and www makes suppliers easily accessible to customers. It’s just a mouse click away. • Lack of opportunity to make a first good impression on customers due to lack to personal contact. CRM refers to personal marketing that utilizes information about customers to create offers that customers are more likely to accept. It is designed to achieve customer intimacy and is enabled by Information technology. • Organizational strategy that is customer-focused and customer-driven. • Assessing customer’s requirements and then providing high-quality, responsive service. • Way of thinking and acting in a customer-centric fashion. • Builds sustainable long-term customer relationships that create value for the company and customer. • Helps acquire new customers, retain existing profitable customers, and grow the relationship with existing customers. • Division of customers: prospective customers -> customers -> repeat customer-> low- value and high-value repeat customers. • Customer churn: process of losing a certain percentage of customers. Main objective: maximize the number of high-value repeat customers while minimizing customer churn by treating customers differently, as they have different needs and different values. TWO BASIC ELEMENTS OF SUCCESSFUL CRM POLICIES  IDENTIFY MANY TYPES OF CUSTOMER TOUCH POINTS Organizations must recognize the numerous and diverse interactions that they have with their customers. These various types of interactions are referred to as customer touch points. Traditional CTP. Eg. Telephone contact, direct mailings, and actual physical interactions with customer in-store. Modern CTP. Eg. E-mail, websites, and communications via smart phones.  DATA CONSOLIDATION Problem:  Customer information are diversely located across functional areas of the business  Difficulty in sharing data across various functional areas. Interconnected systems built around a data warehouse makes customer-related data available to every unit of the business. This complete data set on each customer is called a 360-degree view of that customer. Data consolidation + 360-degree view = collaborative CRM Collaborative CRM systems provide effective and efficient interactive communication with the customer throughout the entire organizations by integrating communication s between organization and its customers in all aspects of marketing, sales, and customer support processes while enabling customer feedback. TWO MAJOR COMPONENTS OF CRM  OPERATIONAL CRM It supports the front-office business processes, which involves direct interaction with customers, in the form of sales, marketing and service. Two major components of operational CRM:  Customer-Facing Applications: those applications where an organization’s sales, field service and customer interaction centre representatives actually interact with the customers. Applications include- I. Customer service and support: systems that automate service requests, complaints, product returns and requests for information. Customer Interaction Centres (CIC) - where organizational representatives use multiple communication channels like web, telephone, fax, and face-to-face interactions to support communication preferences of customers. Outbound telesales- using CIC to create a call list for the sales team, whose members contact sales prospects. This is an interactive discussion between the customer and the sales team. Inbound telesales-customers can communicate directly with CIC if they wish to initiate a sales order, inquire about the product or services before placing an order, or obtain information about a transaction that they have already made. CIC’s Information help desk-assists customers with their questions concerning products or services and also processes customer complaints.-> follow-up activities such as quality- control checks, delivery of replacement parts or products, service calls, generation of credit memos, and product returns. Modern technology+ CIC= email, web interaction. Eg. Epicor’s software allowing emails and other information available to customer representatives. Live chat allows customer to connect to a company representative via instant messaging. II. Sales Force Automation (SFA): CRM system that automatically records all the aspects in a sales transaction process. Includes: - Contact management system- tracks all contact that has been made with a customer, purpose of contact and follow up .Eliminates duplicated contacts and redundancy -Sales lead tracking system-lists potential customers or customers who have purchased related products. -Sales forecasting system- mathematical technique for estimating future sales. -Product knowledge system- comprehensive source of information regarding products and services. Built in product-building features-called configurators: enable customers to model the product to meet their specific needs. Eg.NikeID custom shoes. III. Marketing :  enables marketers to identify and target their best customers  manage marketing campaigns and generate quality leads for the sales teams  provide opportunities to sift through volumes of customer data –data mining  develop purchasing profiles that will help in • Cross-selling: practice of marketing additional related products to customers based on previous purchase. Eg. Amazon. • Up-selling: sales strategy in which the business person will give customers the opportunity to purchase higher-value related products or services as opposed to or along w
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