On Line
Student Advantage
How does Student Advantage use its Web site in its CRM efforts? Do any of the available discounts appeal to you? Are you motivated to sign up (if you haven’t already)? Why or why not?
Notes:
Information is maintained about the customer groups, then the information is used to increase customer service and satisfaction.
Notes:
While CRM appears to be a simplistic customer service strategy, it is only a small part of an integrated, holistic approach to building customer relationships. CRM is described as a closed-looped system that builds relationships with customers. Exhibit 20.1 illustrates this closed-loop system, one that is continuous and circular with no defined starting or end point.
The CRM cycle is initiated by establishing customer relationships within the organization.
Once the company identifies its customers and its particular products, it then determines the level of interaction each customer has with the company.
Based on knowledge of the customer and his/her interaction with the company, the company can then acquire and capture all relevant information about the customer, including measures of satisfaction, response to targeted promotions, changes in account activity, and movement of assets.
Technology plays a critical part in a CRM system which uses technology to store and integrate customer data.
Not all customers are equally important to a business. Consequently, the company uses data mining to determine its profitable and unprofitable customer segments.
Once the customer data are analyzed, they are transformed into information and disseminated throughout the organization.
On Line
DaimlerChrysler
Is DaimlerChrysler using its PT Cruiser Web site to continue the CRM efforts it used when it launched the quirky car? If the company does not seem to be leveraging its Web site in its CRM system, make suggestions as to how it could do this.
Notes:
An understanding of these key assumptions has been shown by Charles Schwab. As stated by its vice chairman and CIO: “Our mission is to delight our most demanding customer in the busiest hour of the busiest day. The most demanding customers are great for our business. They’re like our toughest competitors. They push us to do things we haven’t thought about before.”
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A customer-centric company learns from customers about ways to enhance its product and service offerings.
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The success of CRM can be measured by the effectiveness of the interaction between the customer and the organization.
The more empowerment a company gives its representatives, the more likely the interaction will conclude in a way that satisfies the customer.
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Through interactions, organizations learn about the expectations of customers, generate and manage knowledge about them, negotiate mutually satisfying commitments, and build long-term relationships.
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Exhibit 20.2 illustrates the customer-centric approach for managing customer interactions.
An interaction can occur through a formal communication channel, through a previous relationship a customer has experienced, or through some current transaction by the customer.
Notes:
In a CRM system, touch points are those areas of a business where customer data are gathered and used to guide and direct the decision making within that business unit.
Touch points can be both external and internal.
On Line
Kroger
Does any part of Kroger’s Web site constitute a point-of-sale interaction/ Which part? In general, what elements of the CRM process are evident on Kroger.com?
Notes:
Web-based interactions are used to segment customers, refine marketing efforts, develop new products, and deliver a degree of individual customization to improve customer relationships.
Point-of-sale interactions allow customers to reveal information about themselves without feeling violated. The information is used in two ways: 1) for marketing and merchandising activities, and 2) for identifying the store’s best customers and the types of inventory they buy.
Transaction-based interactions focus on the exchange of information at the point of transaction. Optical scanning and bar coding provide information about which products and the quantity purchased. By using a credit card or bank check, the retailer can obtain information contained in the customer’s card/checking account file.
Notes:
In a CRM system, the issue is not how much data can be obtained, but rather what types of data should be acquired and how they can be used for relationship management.
Before discussing the types of data to collect, a company must understand how it will use the data.
Guidelines for using customer data are listed on this slide.
Notes:
Exhibit 20.3 illustrates how these guidelines operate regarding the collection of customer data.
External touch points for collecting data include the channel, the transaction, and the product or service purchased.
On Line; Geico Insurance
How comfortable are you completing the information form for an on-line rate quote at Geico Insurance? Would you be more comfortable talking with a representative on the phone? How effective is the Web as a channel for this type of customer interaction?
Notes:
Transactions present the opportunity to collect vast amounts of data including:
Contact information including name, address, phone number.
Customer’s current relationship with the organization, such as past purchase history, quantity and frequency of purchases, average amount spent on purchases, sensitivity to promotional activities.
Transactions can help determine the risk level of customers: The higher the investment required to retain a customer, the higher the risk.
Notes:
Key customer data that can be captured at the product and service external touch point are listed on this slide.
On Line
American Airlines
Build a customer profile at the American AirlinesWeb site, then build a second profile with a slight difference, such as using your campus address. Are the offers presented to you different depending on the profile you use to log on? What conclusions can you draw from the experience.
Notes:
The data warehouse contains three operational components, described on this slide.
American Airlines is an example of how data warehousing is being used in the airline industry. AA extracts customer information from multiple customer touch points. Its data warehouse maintains a complete historical information base about its customers. The use of the data warehouse information enabled American Airlines to move to a customer-centric, relationship-management carrier.
Notes:
The 80/20 Rule states that 80 percent of a company’s revenue is generated by 20 percent of its customers. The 20 percent are identified through data mining.
Notes:
Data mining builds models to answer questions by using existing information from a data warehouse to predict future customer behavior.
On Line
American Express
See the results of American Express’s CRM initiatives at the company’s Web site. Read about the various rewards programs the company offers. Do any appeal to you? Can you decide at which market the various programs are targeted?
Notes:
Data mining identifies the most profitable customers. Managers then design marketing strategies to best penetrate the identified segments. In CRM this is referred to as leveraging and disseminating customer information to facilitate development of enhanced relationships among customers.
One of the benefits of a CRM system is the capacity to share information throughout the organization.
On Line
KidsDadsMoms
Would you be comfortable building a profile about your child at KidsDadsMoms.com? Why or why not? What are the advantages of giving complete information? Are there any disadvantages? Can you use their highly customized site without building a learning profile for a child?
