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Report on Chapter 14: CRM in E-Marketing [Elegant (VI)]
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Report on Chapter 14: CRM in E-Marketing [Elegant (VI)]

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Report on Chapter 14: Customer Relationship Management ...

Report on Chapter 14: Customer Relationship Management
(Based on the study of E-Marketing)
It is based on the Chapter: 14 Customer Relationship Management from E-Marketing book by Strauss, Ansary & Frost 4th edition.
It includes Background of CRM, CRM, CRM Benefits, CRM Building Blocks, CRM Strategy, CRM Technology & CRM Metrics in perspective of E-Marketing...

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Report on Chapter 14: CRM in E-Marketing [Elegant (VI)] Report on Chapter 14: CRM in E-Marketing [Elegant (VI)] Document Transcript

  • .Report OnChapter 14: Customer RelationshipManagement(Based on the study of E-Marketing) “Elegant (VI)”
  • Report On E-Marketing Course: 525 Topic: “Chapter 14: Customer Relationship Management”Prepared for:Md. Moktar AliAssociate ProfessorDepartment of MarketingFaculty of Business of StudiesUniversity of Dhaka Prepared by: “Elegant (VI)” Section: A Department of Marketing (14th) MBA Faculty of Business Studies University of Dhaka Date of Submission: 7th April, 2013 eng. [1]
  • Group Profile: “Elegant (VI)” No. Name MBA Designation Roll 1 Md. Abdur Rakib 375 Member 2 Rumana 427 Member 3 Md. Al Amin 419 Member 4 Anjuman Ara 215 Member 5 Md. Moben Ahmed 526 Member 6 Chowdhury Omor Faruque 377 Leader [2]
  • Table of Contents:No. Particulars Page No. 1 Background of CRM 4-5 2 CRM 6-12 3 CRM Building Blocks 13-44 4 CRM Metrics 45-46 5 References 47 [3]
  • Chapter 14: Customer Relationship ManagementBackground of CRMCustomer relationship management is a concept that became very popular during the 1990s. Itoffered long term changes and benefits to businesses that chose to use it. The reason for this isbecause it allowed companies to interact with their customers on a whole new level. While CRMis excellent in the long term, those who are looking for short term results may not see muchprogress.One of the reasons for this is because it was difficult to effectively track customers and theirpurchases. It is also important to realize that large companies were responsible for processingtremendous amounts of data. This data needed to be updated on a consistent basis.In the last few years, a number of changes have been made to Customer relationshipmanagement that has allowed it to advance. These capabilities have allowed CRM to become thesystem that was once envisioned by those who created it. However, the biggest problem withthese newer systems is the price. A number of personalized Internet tools have been introducedto the market, and this has driven down the cost of competition. While this may be a bane forvendors who are selling expensive systems, it is a bonanza for small companies that wouldotherwise not be able to afford CRM programs. The foundation for CRM was laid during the1980s.During this time, it was referred to as being database marketing. The term "database marketing"was used to refer to the procedure of creating customer focus groups that could be used to sp2eakto some of the customers of the company. The clients who were extremely valued were pivotal incommunicating with the firm, but the process became quite repetitive, and the information thatwas collected via surveys did not give the company a great of information. Even though thecompany could collect data through surveys, they did not have efficient methods of processingand analyzing the information. [4]
  • As time went on, companies begin to realize that all they really needed was basic information.They needed to know what their customer purchased, how much they spent, and what did withthe products they purchased.The 1990s saw the introduction of a number of advances in this system. It was during this timethat term Customer relationship management was introduced. Unlike previous customerrelationship systems, CRM was a dual system. Instead of merely gathering information for thepurpose of using for their own benefit, companies started giving back to the customers theyserved. Many companies would begin giving their customers gifts in the form of discounts,perks, or even money. The companies believed that doing this would allow them to build a senseof loyalty in those who brought their products. [5]
  • CRMCRM (customer relationship management) is an information industry term for methodologies,software, and usually Internet capabilities that help an enterprise manage customer relationshipsin an organized way. For example, an enterprise might build a database about its customers thatdescribed relationships in sufficient detail so that management, salespeople, people providingservice, and perhaps the customer directly could access information, match customer needs withproduct plans and offerings, remind customers of service requirements, know what otherproducts a customer had purchased, and so forth Margarat Rouse – definition.Customer Relationship Management (CRM) is a model for managing a company‘s interactionswith current and future customers. It involves using technology to organize, automate, andsynchronize sales, marketing, customer service, and technical support. [6]
  • •Run Campaigns •Assign Leads •Generate Leads •Qualify Leads •Form a Database •Convert Leads •Track Opportunities Marketing Sales Support Orders •Manage Cases •Deliver Products •Conduct Trainings •Produce Invoices •provide Service •Develop Knowledge BaseAccording to Margarat Rouse ―CRM is the abbreviation for customer relationshipmanagement‖. It entails all aspects of interaction that a company has with its customer, whetherit is sales or service-related. CRM is often thought of as a business strategy that enablesbusinesses to:  Understand the customer  Retain customers through better customer experience  Attract new customer  Win new clients and contracts  Increase profitably  Decrease customer management costs [7]
  • Benefits of CRM:1. Save Time:A CRM automates a lot of the usual time-devouring tasks, giving salespeople more time to dowhat they are actually paid to do: namely, sell to prospects. More time spent in2. Look Professional:Which do you think looks better to a prospect: a salesperson who keeps all their information in acomputer database and can pull up vital details immediately, or one who keeps their informationon Post-It notes and has to scramble for ten minutes just to find the scheduled appointment time?3. Save Money:Sure, the more impressively arrayed CRMs can cost a lot of money. But if you dont need quitethat much technology working for you, its easy to find less expensive or even free alternatives.And just think how much youll save on Post-It notes if youre putting all that information intothe computer instead. [8]
  • 4. Convenient:If the whole sales team is using the same CRM, then its easy to share that information as needed.Most CRMs allow you to develop templates for phone scripts or frequently used emails, and theteam can share these templates. Many CRMs even support mobile devices, so you can access allthat information from your iPhone or enter a few quick notes right from the prospects office.5. Secure:What happens when the nightly cleaning crew accidentally throws out someones Post-Itarchive? With a CRM, information is usually stored either in a central database or in the CRMproviders system. At the very least each salesperson can back up copies of their individualdatabases to another computer.6. Faster Lead Generation:A good CRM can help immensely with lead generation. For instance, many CRMs can integratewith website and social media campaigns, sending leads from these sources directly to theappropriate salesperson. That means the sales team is spending less time cold calling and moretime working warm leads, which tend to be far more fruitful. And by tracking each salespersonsactivities, it can keep lead lists up to date – so that you dont have five different salespeoplecalling the same lead.7. Simplified Goal-Setting:By pulling all the data together into one place, CRMs make it easy to track performance bothwithin and across the team. CRMs can also bring all this information together into reports thathelp with forecasting. Having this level of analysis available makes setting the next periodsgoals much easier... and makes it more likely that these goals will align with reality.8. Centralization and Sharing of Data:With Customer Relationship Management (CRM) systems, data is stored in one centralizedlocation, making it readily accessible to all members of an business or organization. This enablesthe companys staff to more easily communicate with and market to their customers. If one salesperson is on vacation, for instance, the information about his customers is available to the entire [9]
  • sales team, and they are able to pick up where he left off without jeopardizing a customerrelationship.9. Better Customer Service:Customer Relationship Management (CRM) systems are capable of storing detailed informationabout each customer, such as their history of orders, correspondence, survey responses, andmarketing emails. Having such information easily accessible can significantly improve the speedand quality of customer service. This in turn gives employees more time to focus on sales,marketing, and other priorities.10. Higher Customer Satisfaction:Customer Relationship Management (CRM) systems make customers feel more like they are partof a team than merely a sales statistic. This sense of partnership often makes for a happiercustomer who is more likely to do repeat business and refer a potential new customer.11. Improved Marketing Efforts:Records contained within a Customer Relationship Management (CRM) system may be analyzedin order to more effectively market to each individual in a companys database. Customerdemographics, order histories, and survey results may be studied in order to determine which [10]
  • group(s) is best to target in each specific marketing campaign. Also, details about a customersprevious orders can be used to predict when he is likely to place his next order, and what type ofproducts he is interested in ordering. Cross-selling and up-selling can also be more effectivewhen companies are equipped with this information.12. More Profit:The combination of more efficient customer service, more effective marketing, happiercustomers, and more sales translates to a more profitable business.In short there are many benefits that a Customer Relationship Management (CRM) system candeliver. They are Centralization and Sharing of Data, Better Customer Service, Higher CustomerSatisfaction, and Improved Marketing Efforts which in the end allows a business to achieve moreprofit!Cool Life Systems provides trusted solutions that allow your business to operate moreefficiently. Contact us today to find out more.13. Customer Knowledge Reveals Potential for Development:Knowing what customers and the market want is essential for further developing products andimproving services. Customer profiles provide the best source of information, whether in sales orcustomer service. Multidimensional analysis highlights correlations and is used to identifypotential for further development. [11]
  • 14. Communicative measures depend on customer value:Demands and potential vary from customer to customer and they therefore require personalizedinteraction. This interaction depends on the customers value to the company. Customers aresegmented according to their value and the appropriate marketing and service measures are thenagreed on. This enables your sales force to operate more efficiently, recommend the rightproduct at the right time, and up- and cross-sell, thereby achieving better results. This way nosales opportunities are missed.15. Increasing Customer Retention Reduces Long-Term Costs:It is worthwhile investing in CRM early on, since deploying a CRM system achieves greatresults quickly in just a few small steps. Whether renting or buying – with cheap finance, youcan install and use a CRM system immediately without having to invest your capital. This leadsto better organized business processes and saves employees valuable work time, therebyreducing costs on the long term.16. CRM Brings Together Existing Applications:A modern CRM system integrates existing applications – such as MS Office and ERP, archivingand communications solutions – and consolidates all information on each customer on oneplatform. The solution is able to grow with the company and can be customized to it needs: at theorganizational level, at each workstation, across several locations and national boundaries. Allemployees within a company can access the information directly, enabling them to work moreefficiently. [12]
  • CRM Building BlocksAchieving the long-term value of customer relationship management (CRM) require a strategyinvolving the whole business and should be approached at an enterprise level. Only a small, butgrowing, number of enterprises are tackling CRM at this level, with most CRM initiativesconsisting of departmental projects or attempts to integrate the work of multiple projects.Executing enterprise-level CRM is not easy. It requires board-level vision and leadership to drivea focus on the customer. It involves learning new customer management skills, potentiallydifficult changes to processes, culture and organization, and grappling with the technologychallenges of multi-channel alignment, systems integration and data quality. Even if the boardaccepts the need for enterprise-level CRM, the quarterly demands of revenue and profit targets,especially in delicate economic conditions, often mean that, although CRM is the most importantchallenge facing an enterprise, it is not seen as the most urgent.Besides lack of leadership, the main reasons that enterprises are not approaching CRM at anenterprise level are:  An inability to see the big picture and understand the extent of transformation that is necessary.  Lack of a strategic framework to provide the context for the CRM journey.The framework emphasizes the need to create a balance between the requirements of theenterprise and the customer. Too many CRM initiatives suffer from an inward focus on theenterprise, whereas the point of CRM is to achieve a balance between value to shareholders orstakeholders and value to customers for mutually beneficial relationships. (CRM buildingblocks)1. CRM Vision:Gene Alvarez outlines how companies should go about crafting their vision for CRM. Someenterprises are often caught up in daily operational battles and view the creation of a CRM visionas a ‗nice to have‘ accomplishment, while others view it as a critical factor to their success. [13]
  • However, enterprises that take the former position are often caught off guard and lose customersto enterprises that adopt the latter position.The creation of a CRM vision should not be dismissed. It is essential to successfully practicingCRM principles that deliver increased market share, wallet share, revenue, margins, andcustomer retention and loyalty.Creating a CRM vision involves a customer-focused experience that is delivered to an individualor organization. The experience should provide the customer with value, satisfy their needs, andfoster a tighter relationship between the enterprise and the customer.A CRM vision must span the customer life cycle and all points of interaction, and it must use thecustomer experience as the impetus for the vision. A lack of vision will result in limitedimprovements that are often isolated within a business process. The vision needs to lookholistically across the customer life cycle, from selection and acquisition to retention and cross-sell, and bring about decisive change. For example, improvements made to selling a cellularservice may increase sales, while poor customer service during the life of the subscription canlead to the loss of customers.Gartner has defined five components that are critical to an enterprises CRM vision:Create strong leadership:A CRM vision begins with a strong leadership team that understands how future trends willaffect the market. This team understands how customers experiences with the enterprise drivesales and create repeat business.Individuals that comprise the leadership team should be innovative and flexible, as well asresourceful and creative. Key members should include a sponsor (providing the board-levelbacking), a program manager (capable of managing multiple initiatives at the same time, with arecord of on-time, on-budget activities) and a popular advocate (with a significant background inthe organization who is well-connected and well-liked; this individual should be at an executivelevel position and should not be politically threatening to the board). The advocate would be asolid choice for chairing the leadership team. [14]
  • The leadership team is also responsible for creating and communicating the company personalityto employees. If this is not done, employees will use their own perceived company personality astheir guide during customer interactions. Additionally, the leadership team is responsible forestablishing and maintaining all the other components of the vision. The team cannot simplycommunicate the vision to the lower levels of the organization without championing andclarifying it; this could lead to fragmented, decentralized implementations of the CRM vision atindividual business units, disconnected CRM strategies and initiatives, and poor customertreatment overall.The leadership teams composition is as important to successful CRM as the teams tasks indeveloping a CRM vision. Often, only one leader from sales, marketing or customer service isdeemed as ‗knowing all‘ about the customer. However, without representation from all threeorganizations, the vision will not capture the complete life cycle and customer treatment. Theleadership team should also include:  A representative from operations to ensure that the company can deliver the vision  The CEO to oversee the team and cast the tie-breaking vote as the fifth memberCreate a corporate personality:Customers interact with enterprises every day and expect certain types of behavior fromenterprises based on past interactions, peer information and perspectives that have shaped thecorporations image. Therefore, the leadership of an enterprise must take control of its corporatepersonality instead of letting it become a de facto process driven by customers reactions totreatment.An enterprises CRM vision must clearly establish and communicate the model companypersonality to all employees at all levels, not just to those who interact directly with customers.Additionally, direct channels, such as the Web, must support this by leveraging branding anddelivering matching functionality that supports the company personality. [15]
  • Create a model customer experience:The customer experience is the most important piece of the CRM initiative. Therefore, anenterprise should have a model of what the customer experience is, and consistently monitor itfor updates to reflect changing market trends. For example, fast-food chains regularly monitorservice times and introduce improvements to those service times because ‗fast‘ is what ispromised as a customer experience. However, other promised aspects of the customerexperience, such as quality, must not be sacrificed for the objective of speed. Instead,organizations must take a holistic approach to creating their model customer experience.Communicate the guiding principles for a customer-centric enterprise:When creating a CRM vision, there are four guiding principles for successful customer-centricstrategies:  Extend the depth and breadth of relationships to achieve a larger share of the customer relationship  Reduce delivery channel costs and create barriers to entry for competition  Reinforce the brand  Create customer satisfaction and loyaltyEstablish a supportive corporate culture:Employees often save customer relationships when business processes and technology fail tomeet customer expectations (for example, blocking a credit card accidentally because the datamining technology discovered a risk from someone shopping for clothes outside the customershome state).Employees often discover the flaws in a companys CRM implementation and can take correctiveactions. Therefore, no CRM vision is complete without a vision for rewarding, educating andmobilizing employees to support and execute on all these CRM principles.Employees should be rewarded for delivering the model customer experience and for reportingproblems to the enterprise that occur with customers at any point of interaction. By creating a [16]
  • culture that rewards and promotes employees, enterprises can correct business processes, policiesand systems to continually improve the overall customer experience.Most failed CRM visions do not include or minimize employees contributions to the customerexperience. Enterprises leadership must actively work to create a culture that is customerfocused and in line with the above components. Creating this culture can be extremely difficultfor low-cost (commodity) providers because their relationships with customers are based onhaving the lowest prices, not on customer service. Conversely, customer-intimate organizationsmay already be executing on this component. However, no organization should leave a customercentric attitude out of its company culture, regardless of its business model.1. CRM Vision, Leadership, Market Position & Value Proposition2.CRM Strategy, Objectives, Segments & Effective Interaction3.Valued Customer Experience: 4. Organizational Collaboration  Understanding requirements  Culture & Structure  Monitor Expectations  Customer Understanding  Satisfaction vs. Competition  People, Skills & Competencies  Collaboration & Feedback  Incentives & Compensation  Customer Communication  Employee Communications  Partners & Suppliers5. CRM Processes: Customer Life Cycle & Knowledge Management6. CRM Information, Data, Analysis & One View Across Channels7. CRM Technology, Applications, Architecture & Infrastructure8.CRM Metrics, Value, Retention, Satisfaction, Loyalty & Cost to Serve Figure: Eight Building Blocks for successful CRM [17]
  • Guarding Customer Privacy:Using customer data is very tempting to marketers, yet this temptation must be balanced by theneed to satisfy customers and not anger them. The burden is on marketers to use customer andprospect information responsibly, both for their own business health and for the image of theprofession.CRM is based on trust. Customers must believe that the information they give companies on webforms, in e-mail or in other ways will be used responsibly. This means using the information toimprove the relationship by tailoring goods, services, and marketing communications to meetindividual needs. It means allowing consumers to request removal of their information fromdatabases, to opt out of e-mail list and not sharing information with other companies unlesspermission is granted.Another important privacy issue concerns intrusions into people‘s lives. Junk mail, spam,repeated telephone calls requesting a switch of long distance provider are all examples ofmarketing messages that can upset consumers. Even the community classified ad newspaper thatarrives on the doorstep each week is an assault on the privacy of some residents.Trust e:To help websites earn the trust of their users, an independent, nonprofit privacy initiative namedtrust e was created. TRUSTe provides its seal and logo to any website meeting its philosophies,as stated on the site. There are some factors are described in near below: [18]
  •  Adopting and implementing a privacy policy that factors in the goals of your individual website as well as consumer anxiety over sharing personal information online.  Posting notice and disclosure of collection and use practices regarding personally identifiable information via a posted privacy statement.  Giving users choice and consent over how their personal information is used and shared.  Putting data security and quality and access measures in place to safeguard, update, and correct personally identifiable information.In addition sites must publish the following information on their sites to gain the TRUSTe seal:  What personal information is being gathered by your site?  Who is collecting the information?  How the information will be used.  With whom the information will be shared.  The choices available to users regarding collection, use, and distribution of their information.  The security procedures in place to protect users collected information from loss, or attention.  How users can update or correct inaccuracies in their pertinent information. [19]
  • 2. CRM Strategy:CRM strategy should be aligned to the organization‘s mission and purpose in order to harnessthe power of CRM software and bring about a sustained achievement of business objectives andprofitable customer relationships. CRM strategies vary; however, the most successful strategieshave several things in common.  Clear alignment between the organization‘s purpose and the CRM strategy; a strong strategy is a direct reflection of the companys purpose and supports the company vision in direct and easy to understand terms.  CRM strategies must be customer focused; they should articulate the positioning, evolvement and objectives of the customer relationship.  CRM strategies must have senior executive sponsorship and complete buy in from across the organization. Both staff and management take their queues from the executive team so it is imperative that the executives are visible, vocal and active in their sponsorship of the CRM strategy.  CRM strategies, just like other business strategies, are iterative processes; as the the organization advances so to will the CRM strategy.CRM can be defined as the ongoing process of identifying and creating new value withindividual customers, and sharing the benefits over a lifetime association. It involves theunderstanding and managing of ongoing collaboration between suppliers and selected customersfor mutual value creation and sharing. [20]
  • We can use this definition as a basis for providing some direction for a CRM strategy:1. Identify the Best Customers and the Worst:A business relationship requires that we identify good customers, ones that likewise want arelationship with us—and collaborate with them to create new value that will benefit both partiesover the long term. First, then, who are the customers with whom we should form a meaningfulrelationship? Just the biggest? Or the most profitable? Or the ones that will be most profitabletomorrow? Or those that are most amenable to a relationship with us? Or perhaps even othercustomers? Deciding which customers to focus on and which ones to neglect is the first and mostimportant strategic decision. [21]
  • 2. Distribute Value Differently to Different Customers:A company should determine which are its best, average and worst customers and ensure thateach receives appropriate value. Absurd though it sounds, most companies reward the worstcustomers and penalize the best by giving both groups average value. This is sometimes theresult of not fully allocating all customer costs, including those that occur after gross margin,such as inventory carrying costs, late payments, customer communications and merchandisereturns.3. Compete on Scope:One way of discriminating among customers is to become more relevant to each one. For manycompanies, this means broadening the range of products, services or solutions, whether or not thecompany makes them. Firms can collaborate with third parties to ensure that the customerreceives the value each wants, rather than insisting that the customer buy what the companymakes. This is a major strategic departure from the old belief that growing larger would give thecompany the economies it needed to succeed. In a world of individual customers, unique valuemust be created for each one. Being larger may not offer the opportunity to be more relevant.Frequently, the opposite is true. Larger companies can be less able to cater to individual needs,especially where their technologies and processes have been engineered for efficiency rather thaneffectiveness.4. Focus on Strategic Capabilities:Managers sometimes do not want to plan because they fear that their plan will become rapidlyoutdated (it will), or that some of their strategies will be wrong (quite likely). Rather, in the eraof CRM, strategies should be framed in terms of strategic capabilities rather than strategies perse. Base a plan on the range of capabilities that the company should have, including process,technology, people and knowledge/insight. CRM initiatives could prove difficult if technology isthe only focus and people and their organizations receive insufficient attention. Stakeholderssuch as suppliers, employees and channel intermediaries form a chain of relationships, and theend-customer relationship can only be as strong as the weakest link. Plan to create durable bondswith these stakeholders, too. For example, when considering employees, pay attention to the link [22]
  • between relationship management and performance reviews, recruitment, training andcompensation.5. Win through Customer-Centric Innovation:Creating new and mutual customer value, the core of CRM, means that companies need to have aprocess for customer inclusion and collaborative innovation. Most firms continue to innovate inthe old style, using off-line research and product definition, rather than by involving thecustomer throughout the process. The challenge is to involve customers as the company workswith each one of them to define and create new value.Integrate the customer‘s technology, people and business processes with those of your owncompany. If you can tell where your firm ends and the customer‘s starts, you probably have notyet fully implemented relationship marketing. Amcan Castings makes castings for companiessuch as DaimlerChrysler. Their engineers work alongside those of their customers, and theywould probably have difficulty saying when the sale is made. Design and development iscollaborative. The purchase process is continuous; it is harder to tell when the sale starts andwhen it ends.6. Measure Customer Performance:Focus on customer profitability with the goal of improving it, rather than the tradition of onlymeasuring product, product line and divisional profitability, customer costs and customer valueperceptions. It is quite in order to sell products at a loss if the relationship is profitable and/orstrategic. Miss Mew cat food used to include the unprofitable tuna flavor, but the cats loved itand made the overall range of flavors quite profitable.7. Unlearn and Relearn:We need to unlearn the principles of ―mass‖ everything if the company is to realize the benefitsof CRM. The car industry, among the first to mass-produce, mass sell and mass market, is nowamong the first to go down the road to mass customization, building on the ability of thecollaborative Covisint electronic marketplace to design its own approaches to masscustomization. This is not a minute too soon. After a year-long examination of the Canadianautomotive retailing industry, we know that the customer interface needs to be considerably [23]
  • improved and that the main challenge is to put the word ―custom‖ back into ―customer.‖Unlearning is really needed if a company is to shed what made it successful in the past, butwhich now threatens its ability to adapt and rise to new heights. And unlearning may be hard todo, since it means changing entrenched attitudes throughout the chain of relationships to achievethe end result of a delighted customer.Inside most companies, there is tension between those who ―get‖ CRM and those who do not. IfCRM is to take root and move the company into new territory, the group that doesn‘t ―get‖ CRMwill need to learn or relearn what it is and the potential it has. In particular, the CFO shouldbecome involved in the visioning exercise; his or her commitment is most important if the plan isto work.8. Redefine the focus:Many leaders encourage their firms to ―focus,‖ by which they often mean focus on products orservices. The company using CRM should instead see ―focus‖ in terms of customers, notproducts or services, and should welcome the very significant changes that this redefinition willforce. In particular, the CRM Company will have to make significant change in its processes as itbegins to supply what customers want rather than what the company makes. This disruption canundermine the initiative in the early going, unless the changes have been anticipated and resoldto internal managers.9. The new competition:The old rules of marketing are mostly broken and ineffective, providing a poor basis for makingthe company a winner. After all, there are only so many good customers to go round and allcompetitors want them. The 4Ps of marketing made little or no provision for this reality, nor didthey create an opportunity for adjusting each aspect of product, price, promotion and distributionaccording to the unique preferences of the customer. In the era of CRM, customers targetcompanies even more than vice versa. The 4Ps do not address this much newer reality.In the era of CRM, competing has taken on a new meaning. Increasingly, companies will becompeting for six things: [24]
  • 1. Obtaining preferential access to the best customers. 2. Becoming the ―lowest-time‖ producer, or taking up as little as possible of the customer‘s most precious resource. 3. Winning the right new employees, especially those who ―get‖ CRM, whatever their functional job titles. 4. Aligning and collaborating with a selected group of companies, both competitors and non-competitors. 5. Developing more customer data, knowledge and insight than competitors, and moving faster than them down the ―customer‘s knowledge curve,‖ to position the company and its products when and where the customer is most likely to buy.Relationship Levels:Another CRM strategy involves building bonds with customers that transcend the productexperience itself. The strongest relationships are formed if all three levels are used and if theproduct itself actually satisfy buyers. At level one marketer build a financial bond withcustomers by using pricing strategies. This is the lowest levels of relationship because pricepromotions are easily imitated.At level two marketers stimulate social interactions with customers. This involves ongoingpersonal communication with individual customers and may include aggressive pricing strategiesas well. At level two customers are more loyal because of social bond with the company or thesalesperson.Level three relationship marketing relies on creating structural solutions to customer problems.Once customers invest the time and effort to customize this interface they will be reluctant toswitch to another portal. [25]
  • Level Primary Bond Potential Main Element of Web example Sustained Marketing Mix competitive advantage One Financial Low Price www.cdnow.com Two Social Medium Personal www.palmpilot.com communications Build Relationships Build communityThree Structural High Service Delivery My.yahoo.com Figure: Three Levels of Relationship MarketingRelationship Intensity:Many of these CRM goals refer to customer loyalty. Most firms would be delighted if they hadcustomers who proudly wore their brand name on clothing and tried to talk others into buying thebrand like customers of Harley Davidson and Apple computer. Many people are advocatesbecause of positive experiences with their Macintosh computers or with eBay auctions. Thus animportant CRM strategy is trying to move customers upward in this pyramid [26]
  • High Intensity: Advocacy Tell others about the brand Community Communicate with each other Connection Communicate between company Identity Display the brand proudly Awareness Is on the list of possibility Figure: Level of Relationship Intensity3. Valued Customer Experience:It is often the little details that customers recall even more than the product they purchased or theservice they received. Little details that customers notice, and that makes them feel good aboutnot only making the purchase, but making the purchase from you, is a significant part of theoverall customer experience. Here are six ways to go above and beyond good customer serviceand boost customer loyalty.1. Attentiveness: New York restaurateur Danny Meyer is a master of detail, and his employees are trained to notice, and when appropriate act on, even the tiniest scraps of information they observe or discover about a guest. If you happen to mention when making a reservation that its a birthday dinner, the manager will make it a point to come to the table and extend Dannys birthday wishes to the appropriate person. If a staff member overhears a conversation in which one of the guests mentions they either like or dislike something, within minutes, [27]
  • everyone who might come into contact with that guest knows about it. And they tailor your food accordingly too. For those to whom attentiveness is important, the experience one has when dining at any of his restaurants is a pleasure that is second to none. Its no wonder that his restaurants regularly battle with each other for top ranking in the "Most Popular" list on the Zagat guide. His book, setting the Table, is a treasure trove of wonderful business lessons that all businesses could value model in one way or another, and its a great read to boot.2. Recognition: Greeting your customer by name is a very meaningful and treasured detail that adds greatly to the way they experience doing business with you. If your office works by appointment, the receptionist should make sure he knows just who will be walking in the door next, and immediately greet them with eye contact, a smile and "Good morning, are you Mr. Morgan?" if she isnt sure if its Mr. Morgan, or simply, "Good morning Mr. Morgan" if he is. One of the things a friend of mine always mentions when talking about her plastic surgeon is, "I love going there because they always know who I am and are happy to see me. There is nothing more flattering, there is nothing that makes someone feel more special than receiving a warm, friendly greeting by name when walking into a place of business.3. Personalization: Dont we all have a story about the coffee shop waitress who doesnt ever need to be told how we like our iced tea, or the diner where the cook starts to make the same thing you always order the minute he sees you walk in the door? The salesperson that sends gifts in pink because she remembers thats your favorite color. The florist who never puts a particular flower in an arrangement because they remember it makes you sneeze or the wine shop that calls you when a certain vintage comes in because they know youre partial to it. These experiences add value, and they also instill an enormous amount of loyalty. Is there anything you and your staff can do to ensure your customers know that you not only pay attention to their preferences, but remember them and cater to them for each and every transaction? [28]
  • 4. Consideration: Do you or your staff regularly walk customers to the door and open it for them as theyre leaving? Do you or your employees regularly help customers carry their purchases to their car, particularly "women of a certain age" or anyone who appears frail or a bit unsteady on their feet? If you have a waiting room and some of your clientele are older, do you have chairs that are a bit higher than usual and have arms on them so they are easier to get in & out of? When customers buy something that includes an outside component thats integral to its use or makes it more user-friendly, do you ask if they have that thing or if they still have enough of it left? For example, if you sell birthday cakes, do you have candles to go with it? If you have a pediatric dental practice, do you have a little stepstool in the bathroom so the child can reach the sink? If you have a business that makes keys, do you have something that could be put on the key to identify it so the customer will always remember what the key is for?5. Appreciation: What do you do to show your customers, your clients or your patients that you appreciate them? After all, there are probably several other businesses that do what you do. Do you show the customers who choose to patronize you that you value and appreciate their business? Feeling appreciated is an experience that is universally meaningful. You could invite special customers to a sale a day earlier than the general public or you could have an invitation-only event one evening and give "VIPs" an additional X percent discount. You could gift-wrap their packages or periodically give them that thing they often buy for free. If youre product is a service, offer a free check-up. Always be sure to let them know that you are extending this extra to them because they are a valued customer and you want to show them that you appreciate them. And one of the easiest and most overlooked ways to show them appreciation is to send a handwritten note on lovely stationary.6. Delight: Put a smile on their face and in their heart. You can do something special for their child, their parent, their pet. Make them laugh, thank them in a showy way for a major purchase, have a contest or a drawing for something fun that they could share with family and friends. Serve [29]
  • warm, freshly baked cookies in your office, give their child a bunch of balloons, and offer a nice snack mid-afternoon.4. Build a Collaborative Organization:Building a solid foundation for collaboration is not difficult; without it, collaboration willprobably not take hold and flourish. These seven steps will help you build the right foundation toget started with collaboration.Step 1: Connect to the real world:Over time, company results tend towards the average for their industries; the best and the worstcompanies all become more average. And even during times of rapid growth, a significantpercentage of companies are expected to go out of business. Coping with continuous changes inthe business environment is not easy. The winners are those that align their organization to themarket (PDF download). Effective collaboration starts with understanding how your marketworks, what your customers want, and what new trends could potentially disrupt your business.Step Two: Understand how work gets done:Companies exist to organize work better than either customers can do by themselves or marketscan do it for them. Ronald Coase won a Nobel Prize for Economics in 1991 for this insight.Collaboration helps work get done more effectively by bringing the right information, at the righttime, to the right people, to make better work decisions. To improve collaboration you must firstunderstand how work is actually done. And then re-engineer the work so that it can be done morecollaboratively in the future. As Michael Hammer said at the start of the re-engineeringrevolution, ―Don‘t automate, obliterate‖.Step 3: Design a collaborative organization:Collaboration isn‘t something you merely add to improve how work is done. It also requires thatyou look at how you should be organized to do work more effectively. Improving collaborationoften involves restructuring the organization. That might mean redeveloping work teams toimprove information flows, redesigning jobs to make better use of that information, orincentivizing collaborative behavior. Once you have thought through how work should be done [30]
  • in the future, you should develop the organization to support it. ‗Form follows function‘, asorganization developers say.Step 4: Help managers drive collaboration:Flat organizations are all the rage in collaboration circles, as companies hope to enable front-linestaff to ‗self-organize‘ their own work. That is fine for day-to-day activities, but not for thosethat require different people, work groups, or even departments to work closely together. Theseusually require the type of coordination and cooperation that managers provide. Mangers providean important role driving collaborative work, just as they do today. And let‘s not forget thatmanagers ultimately decide what work gets done and, critically, how employees are rewarded.As more information flows into the hands of front-line staff, we must help managers rethink theirrole, to help them support, mentor, and drive effective collaboration.Step 5: Empower staff:Just giving front-line staff more information, even the right information at the right time, doesn‘tautomatically make them more collaborative or the company more effective. This requires newknowledge, skills, and the opportunity to practice collaboration. To accomplish this goal it isimportant to train, support, and mentor staff to help them work more collaboratively. Staff mustalso practice their new collaboration skills back in the workplace so it becomes the new dailybusiness and not just the latest management fad.Step 6: Align support systems:One of the best ways to drive change is engaging front-line staff to redesign how their work willbe performed in the future. Another is to align their goals, rewards, and feedback mechanisms tomotivate and encourage collaborative work. Although it is a dirty word in some circles,providing the right incentives (and they don‘t have to be monetary ones!) can help the adoptionof a collaborative way of working. As Reeves & Reed show in the insightful book, TotalEngagement, ‗gamifying‘ the introduction and adoption of collaboration can also help. [31]
  • Step 7: Develop a culture of collaborative entrepreneurship:As we saw in the first step, collaboration is as much about sensing and responding to changes inthe business environment as achieving today‘s shared business goals. Leading collaborativecompanies, such as credit card issuer Capital One (PDF download), have developed acollaborative, entrepreneurial culture to help them spot opportunities in the market that mightonly be open for a couple of months and respond to them with brand new products in as little as acouple of weeks. As visionary computer scientist Alan Kay said, ―The best way to predict thefuture is to invent it‖. Select The Right Collaboration Technology:These seven steps provide a solid organizational foundation to get you started with collaboration.―But what about collaboration technology?‖ I hear you ask. A very good question.The right technology is undoubtedly a powerful enabler for collaboration. Once yourorganization starts to become more collaborative, then its time to undertake a thoroughrequirements analysis process to guide selection of the right collaboration tool.5. CRM Process:CRM involves an understanding of the customer care life cycle, as in this figure: Target Partners Acquire Transact Internet Extranet Service Retain Grow Customer Figure: Customer care lifecycle [32]
  • Firms monitors and attracts customers, both online and offline as they progress through thestages: target, acquire, transact service, retain, and grow. This begins with e-marketing planwhen companies select target markets. However opportunities often arises when a new a newtarget groups appears in the web- such as when Brooks Brothers noted a large number ofJapanese users in the web site. Thus the cycle is circular in nature: for example, while servicingcustomers in a new target may emerge. This important cycle is based on one important tenet ofCRM- it is better to attract remain and grow customers than to focus only one customeracquisition. Of course not all customers go through this process- some do less business with thefirm or leave to transact with a competitor. Main activities of CRM process involves:1. Identifying Customers:Firms obtain prospects, business customers, and end customer information through personaldisclosure, automated tracking through sales force, customer service encounters, bar codescanner through retailers, and Web activities. Every piece of user information will goes intodatabases that help firms identify the best customers.2. Differentiating the customers:Customers have different needs. The internet allow firm to collect information to identify variousbenefit segments and individuals similarities and differences and use this information to increaseprofits.One very important way to differentiate is by customer value: Not all customers has equal valueto the firm. One role of thumb states that 20% of the customers provide 80% of business profits.While this varies widely by industry and firms, CRM allows marketers to leverage theirresources by investing more in the most lucrative customers. The ideas are not new but what isnew is the technology allows firms to identify high value customers and respond with offers inreal time over the internet. [33]
  • Ways of identifying high value customers:1. By mining and profiling high value customer databases and using real time and real space datacollections techniques.2. RFM (Recency, Frequency and Monetary) to mine databases for customers who spend moneyand buy frequently and recently. They also evaluate sales growth per customer over time anddetermine service cost for individual customers.3. Some customers call more often with questions and inquiries, some return products morefrequently. Identify Interaction Customize DifferentiateCustomizing the marketing mix:Once a firm has identified prospects and differentiated customers according to characteristics,behavior, needs or value, it can consider customizing offering to various segments or individuals.Customization occurs through the marketing mix, not just in the products offering. Furthermarketing communication message can be tailored to individuals and delivered in a timelymanner, dynamic pricing is another options.Personalization marketing refers to such things as Web pages that greets users by name or e-mailthat is automatically sent to individuals with personal account information. [34]
  • Interaction:Learning relationship between a customer and an enterprise gets smarter and smarter with eachindividual interaction, defining in ever more detail the customers own individuals needs andwants as well as taste.6. CRM Information:Information is the lubricant of CRM. The more information a firm has, the better value it canprovide to each customer and prospect in terms of more accurate, timely and offerings. manyfirms entice customers to provide additional information over time. For example, Orbit.com firstrequest a sample e-mail address from those want information about discount offers andsubsequently asks about vacations preferences so as to provide more relevant e-mailings. When acustomer provides increasingly more information, she trusts the firms enough to invest in therelationship. Sometimes firms gather this type of information under the guise of entertainment.Firms gain much information from customers less intrusively by tracking their behaviorelectronically. Information technology allows companies to move beyond traditional segmentprofiling to detailed profiling of individuals. For example, when product bar code scanner datacollected at the checkout id combined with a shopping card, the company can identify individualcustomer purchases over time. On the internet software track an individual‘s movement frompage to page, indicating how much time was spent in each page, weather a user made a purchase,the type of computer and operating system, and more. Firms can track which site the user visitedbefore and after theirs, use this information to guess which competitive products are underconsideration, and learn what about user interests. Tracking user information is user and thecompanies but it has its critics because of privacy consideration.Retailer faces the daunting task of profiling information from each channel and filtering it intocustomer database. The sharper image does this brilliantly. Now a customer can telephone thecustomer service representative to discuss a products purchased in brick and mortal stores lastweek, and refer to sent e-mail sent yesterday, because the data is still in the database under onecustomer records. This is known as 360-degree customer view, or one view across the channels. [35]
  • Patricia Seabold identified eight critical success factors for building successful e-businessrelationships with customers. These factors are: 1. Target the right customers – identify the best prospects and customers and learn as much about them as possible. 2. Own the customers total experience— this refers to the customer share of mind or share of wallet previously discussed. 3. Streamline business process that impacts the customer—this can be accomplished through CRM-SCM integration and monomaniacal customer focus. 4. Provide 360 degree view of customer relationship—this means that everyone in the firm who touches the customer should understand all aspects of her relationship with the company. For example, customer service representatives should know all customer activity over time and understand which products and services might benefit that particular customer. 5. Let customer help themselves—provide web site and other electronic means for customers to find things they need quickly and conveniently. 6. Help customers do their jobs—this refers to B2B market, and the idea that if a firms provides products and services to help customers perform well in their business, they will be loyal and pay premium for the help. Many supply chain management electronic processes facilitate this factor. 7. Deliver personalized service—customer profiling, privacy safekeeping, and marketing mix customizing all aid in delivering personalized services electronically. 8. Foster community—enticing customers to join in communities of interest that relate to firms products is one important way to build loyalty. [36]
  • 7. CRM Technology:CRM processes are greatly enhanced by technology. Incoming toll-free numbers, electronickiosks, FAX-on-demand, voice mail, and automated telephone routing are examples oftechnology that assist in moving customers through the life cycle. The Internet is the first fullyinteractive and individually addressable low cost multimedia channel. Cookies, Web site logs,bar code scanners help to collect information about consumer behavior and characteristics.Databases and data warehouses store and distribute these data from online and offline touchpoints. These information allow to develop marketing mixes that better meet individual needs.Important tools that aid firms in customizing products to groups of customers or individualsinclude:  ―Push‖ strategies that reside on the company‘s Web and e-mail servers, and  ―Pull‖ strategies that are initiated by Internet users. Company-Side Tools(Push) Client-Side Tools(Pull) Cookies Agents Web log analysis Experiential marketing Data mining Individualized Web portals Real-time profiling Wireless data services Collaborative filtering Web forms Outgoing e-mail FAX-on-demand Chats and Bulletin Boards Incoming e-mail iPOS terminals [37]
  • Company-Side Tools:There are important e-marketing tools used by firms to push customized information to users.Users are unaware that marketers are collecting data and using these technologies to customizeofferings. These tools are shown in the following figure:Company-Side DescriptionTools(Push)Cookies Small files written to the user‘s hard drive after visiting a Web site.Web log analysis Every time a user accesses a Web site, the visit is recorded in the Web server‘s log file.Data mining The extraction of hidden predictive information in large databases through statistical analysis.Real-time profiling Special software tracks a user‘s movements through a Web site, then compiles and reports on the data at a moment‘s notice.Collaborating filtering Gathers opinions of like-minded users and returns those opinions to the individual in real-time.Outgoing e-mail Marketers use e-mail databases to build relationships by keeping in touch with useful and timely information. E-mail can be sent to individuals or sent en masse using a distributed e-mail list.Chats Listen to users and build community by providing a space for userBulletin board conversation on the Web siteiPOS terminals Located on a retailer‘s counter, and used to capture data and present targeted communication. Figure: Selected E-Marketing ―Push‖ Customization Tools [38]
  • Cookies:Cookies are small files written to the user‘s hard drive after visiting a Web site. When the userreturns to the site, the company‘s server looks for the cookie file and uses it to personalize thesite. Cookie files allow ad-server firms to see the path users take from site to site and, serveadvertising banners relevant to user interests. Cookies keep track of shopping baskets and othertasks so that users can quit in the middle and return to the task later.Web Site Log:Every time a user accesses a Web site, the visit is recorded in the Web server‘s log file. This filekeeps track of which pages the user visits, how long he stays, and whether he purchases or not.Softwares can also tell which sites the users visited immediately before arriving, what key wordsthey typed in at search engines to find the site, user domains, and much more.Data Mining:Data mining involves the extraction of hidden predictive information in large databases throughstatistical analysis. Marketers don‘t need a priori hypotheses to find value in databases, but usesoftware to find patterns of interest.Real-Time Profiling:Real-time profiling occurs when special software tracks a user‘s movements through a Web site,then compiles and reports on the data at a moment‘s notice. Customer profiling uses datawarehouse information to help marketers understand the characteristics and behavior of specifictarget groups. American Express has done this for years: It sends bill inserts to groups ofcustomers based on their previous purchasing behavior. What‘s new? This can all be done online inexpensively via e-mail and customized Web pages. Allows marketers to profile and make instantaneous and automatic adjustments to site promotional offers and Web pages. For example, the software could be set to use the following rule: If a customer orders a Dave Matthews Band CD, display a Web page offering a concert T-shirt. [39]
  • Collaborative Filtering:In the offline world, individuals often seek the advice of others before making decisions.Collaborative filtering software gathers the recommendations of an entire group of people andpresents the results to a like-minded individual. BOL.com, an international media andentertainment store uses collaborative filtering software to observe how users browse and buymusic, software, games, at its site. The more time a user spends at the site, the more it will learnabout her behavior/preferences and the better able it will be to present relevant products.BOL.com notes that it realized increased revenues from using this software, and achieved apositive ROI within months.Outgoing E-Mail:E-mail is used to communicate with individuals or lists of individuals (distributed e-mail) toincrease their purchases, satisfaction, and loyalty. Many companies maintain e-mail distributionlists for customers and other stakeholders. Permission marketing dictates that customers will bepleased to receive e-mail for which they have opted-in. MyPoints rewards consumers with pointsand gift certificates, all for reading targeted e-mail ads and shopping at selected sites. MyPointsclient companies pay a fee for these e-mails, some of which go directly to customers as points.MyPoints advertises ―responsible‖ e-mail messaging = consumers agree to receive commercialmessages within their e-mails.Outgoing E-Mail Spam does not build relationships but instead focuses on customer acquisition.The Internet provides the technology for marketers to send 500,000 or more e-mails at the clickof a mouse for less than the cost of 1 postage stamp. Relationship-building e-mail requires:Sending e-mails that are valuable to users, sending them as often as users require, offering usersthe chance to be taken off the list at any time. It means talking and listening to consumers as ifthey were friends.Chat and Bulletin Boards:Real-time chat and bulletin board/newsgroup e-mail postings at its Web site helps Firms buildcommunity and learn about customers and products. Analysis of these exchanges is used in the [40]
  • aggregate to design marketing mixes that meet user needs. Expedia send e-mail notes to userswho participate in the chats with offers of special tours.iPOS Terminals:iPOS or Interactive Point of Sale terminals are located on a retailer‘s counter, and used to capturedata and present targeted communication. Small customer facing machines near the brick-and-mortar cash register, used to record a buyer‘s signature for a credit card transaction. They cangather survey and other data as well as present individually targeted advertising and promotionsas well.Client-Side Tools:It comes into play Based on a user‘s action at her computer or handheld device. The customer―pull‖ that initiates the customized response. These are presented in the following figure: Client-Side Tools(Pull) DescriptionAgents Perform functions on behalf of the user.Experiential marketing Gets the consumer involved in the product to create a memorable experience, offline or online.Individualized Web portals Personalized Web pages users easily configure at Web sitesWireless data services Portals send data to customer cell phones, pagers, and pdas.Web forms Form on a Web page that has designated places for the user to type information for submission.FAX-on-demand Customers telephone a firm, listen to an automated voice menu, and select options to request a FAX be sent on a particular topic.Incoming e-mail E-mail queries, complaints, or compliments initiated by customers or prospects comprise incoming e-mail Figure: Selected E-Marketing ―Pull‖ Customization Tools [41]
  • Agents:Agents are programs that perform functions on behalf of the user, such as search engines andshopping agents. Shopping agents and search engines match user input to databases and returncustomized information. Agent software often relies on more than one interaction. A user mighttype in ―computer‖ on the Dell site and then be presented with either laptop or desktop options tonarrow the search.Experiential Marketing:Experiential marketing gets the consumer involved in the product to create a memorableexperience, offline or online. On the Internet, Calvin Klein developed an interactive, experience-based campaign to promote CK One, the unisex fragrance. The advertising included 3 characters,each with social dilemmas representative of those in the target market. The advertising invitedviewers to e-mail campaign characters, and each e-mail received standard replies that developedthe characters a bit more. This type of offline/online integration, when combined withcustomized experiences, builds positive relationships between customers and brands. The movieand sports industries are adept at creating online experiences.Individualized Web Portals:Personalized Web pages users easily configure at Web sites such as My Yahoo! and manyothers. The Wall Street Journal‘s online edition allows individual customers to create apersonalized Web page based on keywords of interest. It is helpful for business readers who wantto monitor stories about their competitors. A structural bond is created with individualcustomers, thereby boost loyalty. Individualized Web portals are more often used to buildrelationships in the B2B market than the B2C market. Allow supply chains access inventory andaccount information, and track various operations. Webridge sells partner and customerrelationship management software (PRM/CRM) that allows businesses to access all the data theyneed on demand, a huge improvement over the previous method, where buyers searched throughpiles of brochures, catalogs, and price lists that included many products not carried by channelpartners and were constantly out-of-date. [42]
  • Wireless Data Services:Wireless Web portals send data to customer cell phones, pagers, and PDAs, such as thePalmPilot. They are included as a separate tool because of their rapid growth and distinctivefeatures.Wireless users only want text data due to the screen size of wireless devices and download timefor graphics. Services such as AvantGo.com offer users news headlines, sports scores, stockquotes, weather in selected cities, and more to users on pagers. As users customize thisinformation, they give serving firms a better idea of how to better serve them and, buildrelationship.Web Forms:Web form (or HTML form) is the technical term for a form on a Web page that has designatedplaces for the user to type information for submission.Many corporate Web sites use Web forms for a multitude of purposes from site registration andsurvey research to product purchase. Many sites strive to build the number of registered users asa prelude to transactions.FAX-on-Demand:With FAX-on-demand, customers telephone a firm, listen to an automated voice menu, andselect options to request a FAX be sent on a particular topic. In the B2B market, firms often wantinformation sent via FAX machine.Services such as eFax.com allow Internet users to send and receive FAX transmissions at theirWeb sites. Why would a user use this service as opposed to an e-mail attachment? When thedocument is not in digital form, a signature is needed, or Internet access is not available so thedocument cannot be sent as an e-mail attachment. [43]
  • Incoming E-Mail:E-mail queries, complaints, or compliments initiated by customers or prospects compriseincoming e-mail, and is the fodder for customer service.Post-transaction customer service is an important part of the customer care life cycle. The Webonline channel consists of a feedback button or form that delivers an e-mail message to thecorporation. Often an automated customer service program acknowledges the message via e-mailand indicates that a representative will be responding shortly. Research shows that firms aregetting much better at responding to incoming e-mail. Companies should include feedbackoptions online only if they have staff in place to respond: E-mail addresses on a Web site imply apromise to reply. [44]
  • CRM Metrics:Metrics are used to assess the Internet‘s value in delivering CRM performance and especially thecontribution of each CRM tactic to ROI, cost savings, revenues, and customer satisfaction. All e-marketing performance measures assess specific tactics from different perspectives, the choice ofthe metrics depend on the firm‘s goals and strategies. Here we present a few of the commonmetrics used to track customer‘s progress through the customer life cycle in the following:Target: Recency, frequency, monetary analysis (RFM)—identifies high value customers. Share of customer spending—proportion of revenues from high-value customers as compared to low-value customers.Acquire:  New customer acquisition cost (CAC).  Number of new customers referred from partner sites.  Campaign response—click throughs, conversions, and more.  Rate of customer recovery—proportion of customers who drop away that the firm can lure back using various offers.Transact: Prospect conversion rate—percent of visitors to site that buy. Customer cross sell rate from online to offline, and the reverse. Services sold to partners. Sales of a firm‘s products on partner Web sites. Average order value (AOV)—dollar sales divided by the number of orders for any given period. Referral revenue—dollars in sales from customers referred to the firm by current customers Sales leads from Internet to closure ratio [45]
  • Service: Customer satisfaction ratings over time (see Cisco opening story). Time to answer incoming e-mail from customers. Number of complaints.Retain: Customer attrition rate—proportion who don‘t repurchase in a set time period. Percentage of customer retention—proportion of customers who repeat purchase.Grow: Lifetime value (LTV)—net present value of the revenue stream for any particular customer over a number of years. AOV over time—increase or decrease. Average annual sales growth for repeat customers over time. Loyalty program effectiveness—sales increase over time. Number of low value customer moved to high value.With the Information about what makes customers value the products, Firms attempt to Increaseconversion & retention rates, Reduce defection rates, Build AOV and profits per customer overtime (acquire, retain, and grow).Firms use some of these methods to identify the least profitable customers and minimizeinteractions with them. The point is to try to minimize the time invested in servicing low-profitcustomers. One very important metrics is customer lifetime value (LTV). This calculationdemonstrates the benefits of retaining customers over time and the need for building share ofwallet. It also shows that no matter how good a firm is at retaining customers, new customeracquisition is still an important activity. [46]
  • References:  E-Marketing, 3rd edition by Judy Strauss, Adel El-Ansary & Raymond Frost  www.google.com  www.wikipedia.org [47]