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...

1. .
Report On
Chapter 14: Customer Relationship
Management
(Based on the study of E-Marketing)
“Elegant (VI)”

2. Report
On
E-Marketing
Course: 525
Topic: “Chapter 14: Customer Relationship Management”
Prepared for:
Md. Moktar Ali
Associate Professor
Department of Marketing
Faculty of Business of Studies
University 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]

3. 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
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4. 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
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5. Chapter 14: Customer Relationship Management
Background of CRM
Customer relationship management is a concept that became very popular during the 1990s. It
offered long term changes and benefits to businesses that chose to use it. The reason for this is
because it allowed companies to interact with their customers on a whole new level. While CRM
is excellent in the long term, those who are looking for short term results may not see much
progress.
One of the reasons for this is because it was difficult to effectively track customers and their
purchases. It is also important to realize that large companies were responsible for processing
tremendous 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 relationship
management that has allowed it to advance. These capabilities have allowed CRM to become the
system that was once envisioned by those who created it. However, the biggest problem with
these newer systems is the price. A number of personalized Internet tools have been introduced
to the market, and this has driven down the cost of competition. While this may be a bane for
vendors who are selling expensive systems, it is a bonanza for small companies that would
otherwise not be able to afford CRM programs. The foundation for CRM was laid during the
1980s.
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 sp2eak
to some of the customers of the company. The clients who were extremely valued were pivotal in
communicating with the firm, but the process became quite repetitive, and the information that
was collected via surveys did not give the company a great of information. Even though the
company could collect data through surveys, they did not have efficient methods of processing
and analyzing the information.
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6. 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 with
the products they purchased.
The 1990s saw the introduction of a number of advances in this system. It was during this time
that term Customer relationship management was introduced. Unlike previous customer
relationship systems, CRM was a dual system. Instead of merely gathering information for the
purpose of using for their own benefit, companies started giving back to the customers they
served. 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 sense
of loyalty in those who brought their products.
[5]

7. CRM
CRM (customer relationship management) is an information industry term for methodologies,
software, and usually Internet capabilities that help an enterprise manage customer relationships
in an organized way. For example, an enterprise might build a database about its customers that
described relationships in sufficient detail so that management, salespeople, people providing
service, and perhaps the customer directly could access information, match customer needs with
product plans and offerings, remind customers of service requirements, know what other
products a customer had purchased, and so forth Margarat Rouse – definition.
Customer Relationship Management (CRM) is a model for managing a company‘s interactions
with current and future customers. It involves using technology to organize, automate, and
synchronize sales, marketing, customer service, and technical support.
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8. •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 Base
According to Margarat Rouse ―CRM is the abbreviation for customer relationship
management‖. It entails all aspects of interaction that a company has with its customer, whether
it is sales or service-related. CRM is often thought of as a business strategy that enables
businesses to:
 Understand the customer
 Retain customers through better customer experience
 Attract new customer
 Win new clients and contracts
 Increase profitably
 Decrease customer management costs
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9. Benefits of CRM:
1. Save Time:
A CRM automates a lot of the usual time-devouring tasks, giving salespeople more time to do
what they are actually paid to do: namely, sell to prospects. More time spent in
2. Look Professional:
Which do you think looks better to a prospect: a salesperson who keeps all their information in a
computer database and can pull up vital details immediately, or one who keeps their information
on 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 don't need quite
that much technology working for you, it's easy to find less expensive or even free alternatives.
And just think how much you'll save on Post-It notes if you're putting all that information into
the computer instead.
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10. 4. Convenient:
If the whole sales team is using the same CRM, then it's easy to share that information as needed.
Most CRMs allow you to develop templates for phone scripts or frequently used emails, and the
team can share these templates. Many CRMs even support mobile devices, so you can access all
that information from your iPhone or enter a few quick notes right from the prospect's office.
5. Secure:
What happens when the nightly cleaning crew accidentally throws out someone's Post-It
archive? With a CRM, information is usually stored either in a central database or in the CRM
provider's system. At the very least each salesperson can back up copies of their individual
databases to another computer.
6. Faster Lead Generation:
A good CRM can help immensely with lead generation. For instance, many CRMs can integrate
with website and social media campaigns, sending leads from these sources directly to the
appropriate salesperson. That means the sales team is spending less time cold calling and more
time working warm leads, which tend to be far more fruitful. And by tracking each salesperson's
activities, it can keep lead lists up to date – so that you don't have five different salespeople
calling the same lead.
7. Simplified Goal-Setting:
By pulling all the data together into one place, CRMs make it easy to track performance both
within and across the team. CRMs can also bring all this information together into reports that
help with forecasting. Having this level of analysis available makes setting the next period's
goals 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 centralized
location, making it readily accessible to all members of an business or organization. This enables
the company's staff to more easily communicate with and market to their customers. If one sales
person is on vacation, for instance, the information about his customers is available to the entire
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11. sales team, and they are able to pick up where he left off without jeopardizing a customer
relationship.
9. Better Customer Service:
Customer Relationship Management (CRM) systems are capable of storing detailed information
about each customer, such as their history of orders, correspondence, survey responses, and
marketing emails. Having such information easily accessible can significantly improve the speed
and 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 part
of a team than merely a sales statistic. This sense of partnership often makes for a happier
customer 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 analyzed
in order to more effectively market to each individual in a company's database. Customer
demographics, order histories, and survey results may be studied in order to determine which
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12. group(s) is best to target in each specific marketing campaign. Also, details about a customer's
previous orders can be used to predict when he is likely to place his next order, and what type of
products he is interested in ordering. Cross-selling and up-selling can also be more effective
when companies are equipped with this information.
12. More Profit:
The combination of more efficient customer service, more effective marketing, happier
customers, and more sales translates to a more profitable business.
In short there are many benefits that a Customer Relationship Management (CRM) system can
deliver. They are Centralization and Sharing of Data, Better Customer Service, Higher Customer
Satisfaction, and Improved Marketing Efforts which in the end allows a business to achieve more
profit!
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efficiently. 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 and
improving services. Customer profiles provide the best source of information, whether in sales or
customer service. Multidimensional analysis highlights correlations and is used to identify
potential for further development.
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13. 14. Communicative measures depend on customer value:
Demands and potential vary from customer to customer and they therefore require personalized
interaction. This interaction depends on the customer's value to the company. Customers are
segmented according to their value and the appropriate marketing and service measures are then
agreed on. This enables your sales force to operate more efficiently, recommend the right
product at the right time, and up- and cross-sell, thereby achieving better results. This way no
sales 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 great
results quickly in just a few small steps. Whether renting or buying – with cheap finance, you
can install and use a CRM system immediately without having to invest your capital. This leads
to better organized business processes and saves employees valuable work time, thereby
reducing costs on the long term.
16. CRM Brings Together Existing Applications:
A modern CRM system integrates existing applications – such as MS Office and ERP, archiving
and communications solutions – and consolidates all information on each customer on one
platform. The solution is able to grow with the company and can be customized to it needs: at the
organizational level, at each workstation, across several locations and national boundaries. All
employees within a company can access the information directly, enabling them to work more
efficiently.
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14. CRM Building Blocks
Achieving the long-term value of customer relationship management (CRM) require a strategy
involving the whole business and should be approached at an enterprise level. Only a small, but
growing, number of enterprises are tackling CRM at this level, with most CRM initiatives
consisting 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 drive
a focus on the customer. It involves learning new customer management skills, potentially
difficult changes to processes, culture and organization, and grappling with the technology
challenges of multi-channel alignment, systems integration and data quality. Even if the board
accepts 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 important
challenge 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 an
enterprise 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 the
enterprise and the customer. Too many CRM initiatives suffer from an inward focus on the
enterprise, whereas the point of CRM is to achieve a balance between value to shareholders or
stakeholders and value to customers for mutually beneficial relationships. (CRM building
blocks)
1. CRM Vision:
Gene Alvarez outlines how companies should go about crafting their vision for CRM. Some
enterprises are often caught up in daily operational battles and view the creation of a CRM vision
as a ‗nice to have‘ accomplishment, while others view it as a critical factor to their success.
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15. However, enterprises that take the former position are often caught off guard and lose customers
to enterprises that adopt the latter position.
The creation of a CRM vision should not be dismissed. It is essential to successfully practicing
CRM principles that deliver increased market share, wallet share, revenue, margins, and
customer retention and loyalty.
Creating a CRM vision involves a customer-focused experience that is delivered to an individual
or organization. The experience should provide the customer with value, satisfy their needs, and
foster 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 the
customer experience as the impetus for the vision. A lack of vision will result in limited
improvements that are often isolated within a business process. The vision needs to look
holistically 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 cellular
service may increase sales, while poor customer service during the life of the subscription can
lead to the loss of customers.
Gartner has defined five components that are critical to an enterprise's CRM vision:
Create strong leadership:
A CRM vision begins with a strong leadership team that understands how future trends will
affect the market. This team understands how customers' experiences with the enterprise drive
sales and create repeat business.
Individuals that comprise the leadership team should be innovative and flexible, as well as
resourceful and creative. Key members should include a sponsor (providing the board-level
backing), a program manager (capable of managing multiple initiatives at the same time, with a
record of on-time, on-budget activities) and a popular advocate (with a significant background in
the organization who is well-connected and well-liked; this individual should be at an executive
level position and should not be politically threatening to the board). The advocate would be a
solid choice for chairing the leadership team.
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16. The leadership team is also responsible for creating and communicating the company personality
to employees. If this is not done, employees will use their own perceived company personality as
their guide during customer interactions. Additionally, the leadership team is responsible for
establishing and maintaining all the other components of the vision. The team cannot simply
communicate the vision to the lower levels of the organization without championing and
clarifying it; this could lead to fragmented, decentralized implementations of the CRM vision at
individual business units, disconnected CRM strategies and initiatives, and poor customer
treatment overall.
The leadership team's composition is as important to successful CRM as the team's tasks in
developing a CRM vision. Often, only one leader from sales, marketing or customer service is
deemed as ‗knowing all‘ about the customer. However, without representation from all three
organizations, the vision will not capture the complete life cycle and customer treatment. The
leadership 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 member
Create a corporate personality:
Customers interact with enterprises every day and expect certain types of behavior from
enterprises based on past interactions, peer information and perspectives that have shaped the
corporation's image. Therefore, the leadership of an enterprise must take control of its corporate
personality instead of letting it become a de facto process driven by customers' reactions to
treatment.
An enterprise's CRM vision must clearly establish and communicate the model company
personality 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 and
delivering matching functionality that supports the company personality.
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17. Create a model customer experience:
The customer experience is the most important piece of the CRM initiative. Therefore, an
enterprise should have a model of what the customer experience is, and consistently monitor it
for updates to reflect changing market trends. For example, fast-food chains regularly monitor
service times and introduce improvements to those service times because ‗fast‘ is what is
promised as a customer experience. However, other promised aspects of the customer
experience, 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-centric
strategies:
 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 loyalty
Establish a supportive corporate culture:
Employees often save customer relationships when business processes and technology fail to
meet customer expectations (for example, blocking a credit card accidentally because the data
mining technology discovered a risk from someone shopping for clothes outside the customer's
home state).
Employees often discover the flaws in a company's CRM implementation and can take corrective
actions. Therefore, no CRM vision is complete without a vision for rewarding, educating and
mobilizing employees to support and execute on all these CRM principles.
Employees should be rewarded for delivering the model customer experience and for reporting
problems to the enterprise that occur with customers at any point of interaction. By creating a
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18. culture that rewards and promotes employees, enterprises can correct business processes, policies
and systems to continually improve the overall customer experience.
Most failed CRM visions do not include or minimize employees' contributions to the customer
experience. Enterprises' leadership must actively work to create a culture that is customer
focused and in line with the above components. Creating this culture can be extremely difficult
for low-cost (commodity) providers because their relationships with customers are based on
having the lowest prices, not on customer service. Conversely, customer-intimate organizations
may already be executing on this component. However, no organization should leave a customer
centric attitude out of its company culture, regardless of its business model.
1. CRM Vision, Leadership, Market Position & Value Proposition
2.CRM Strategy, Objectives, Segments & Effective Interaction
3.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 & Suppliers
5. CRM Processes: Customer Life Cycle & Knowledge Management
6. CRM Information, Data, Analysis & One View Across Channels
7. CRM Technology, Applications, Architecture & Infrastructure
8.CRM Metrics, Value, Retention, Satisfaction, Loyalty & Cost to Serve
Figure: Eight Building Blocks for successful CRM
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19. Guarding Customer Privacy:
Using customer data is very tempting to marketers, yet this temptation must be balanced by the
need to satisfy customers and not anger them. The burden is on marketers to use customer and
prospect information responsibly, both for their own business health and for the image of the
profession.
CRM is based on trust. Customers must believe that the information they give companies on web
forms, in e-mail or in other ways will be used responsibly. This means using the information to
improve the relationship by tailoring goods, services, and marketing communications to meet
individual needs. It means allowing consumers to request removal of their information from
databases, to opt out of e-mail list and not sharing information with other companies unless
permission 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 of
marketing messages that can upset consumers. Even the community classified ad newspaper that
arrives 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 named
trust 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:
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20.  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.
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21. 2. CRM Strategy:
CRM strategy should be aligned to the organization‘s mission and purpose in order to harness
the power of CRM software and bring about a sustained achievement of business objectives and
profitable customer relationships. CRM strategies vary; however, the most successful strategies
have several things in common.
 Clear alignment between the organization‘s purpose and the CRM strategy; a strong
strategy is a direct reflection of the company's 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 with
individual customers, and sharing the benefits over a lifetime association. It involves the
understanding and managing of ongoing collaboration between suppliers and selected customers
for mutual value creation and sharing.
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22. 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 a
relationship with us—and collaborate with them to create new value that will benefit both parties
over the long term. First, then, who are the customers with whom we should form a meaningful
relationship? Just the biggest? Or the most profitable? Or the ones that will be most profitable
tomorrow? Or those that are most amenable to a relationship with us? Or perhaps even other
customers? Deciding which customers to focus on and which ones to neglect is the first and most
important strategic decision.
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23. 2. Distribute Value Differently to Different Customers:
A company should determine which are its best, average and worst customers and ensure that
each receives appropriate value. Absurd though it sounds, most companies reward the worst
customers and penalize the best by giving both groups average value. This is sometimes the
result of not fully allocating all customer costs, including those that occur after gross margin,
such as inventory carrying costs, late payments, customer communications and merchandise
returns.
3. Compete on Scope:
One way of discriminating among customers is to become more relevant to each one. For many
companies, this means broadening the range of products, services or solutions, whether or not the
company makes them. Firms can collaborate with third parties to ensure that the customer
receives the value each wants, rather than insisting that the customer buy what the company
makes. This is a major strategic departure from the old belief that growing larger would give the
company the economies it needed to succeed. In a world of individual customers, unique value
must 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 than
effectiveness.
4. Focus on Strategic Capabilities:
Managers sometimes do not want to plan because they fear that their plan will become rapidly
outdated (it will), or that some of their strategies will be wrong (quite likely). Rather, in the era
of CRM, strategies should be framed in terms of strategic capabilities rather than strategies per
se. 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 is
the only focus and people and their organizations receive insufficient attention. Stakeholders
such as suppliers, employees and channel intermediaries form a chain of relationships, and the
end-customer relationship can only be as strong as the weakest link. Plan to create durable bonds
with these stakeholders, too. For example, when considering employees, pay attention to the link
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24. between relationship management and performance reviews, recruitment, training and
compensation.
5. Win through Customer-Centric Innovation:
Creating new and mutual customer value, the core of CRM, means that companies need to have a
process for customer inclusion and collaborative innovation. Most firms continue to innovate in
the old style, using off-line research and product definition, rather than by involving the
customer throughout the process. The challenge is to involve customers as the company works
with each one of them to define and create new value.
Integrate the customer‘s technology, people and business processes with those of your own
company. If you can tell where your firm ends and the customer‘s starts, you probably have not
yet fully implemented relationship marketing. Amcan Castings makes castings for companies
such as DaimlerChrysler. Their engineers work alongside those of their customers, and they
would probably have difficulty saying when the sale is made. Design and development is
collaborative. The purchase process is continuous; it is harder to tell when the sale starts and
when it ends.
6. Measure Customer Performance:
Focus on customer profitability with the goal of improving it, rather than the tradition of only
measuring product, product line and divisional profitability, customer costs and customer value
perceptions. It is quite in order to sell products at a loss if the relationship is profitable and/or
strategic. Miss Mew cat food used to include the unprofitable tuna flavor, but the cats loved it
and 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 benefits
of CRM. The car industry, among the first to mass-produce, mass sell and mass market, is now
among the first to go down the road to mass customization, building on the ability of the
collaborative Covisint electronic marketplace to design its own approaches to mass
customization. This is not a minute too soon. After a year-long examination of the Canadian
automotive retailing industry, we know that the customer interface needs to be considerably
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25. 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, but
which now threatens its ability to adapt and rise to new heights. And unlearning may be hard to
do, since it means changing entrenched attitudes throughout the chain of relationships to achieve
the end result of a delighted customer.
Inside most companies, there is tension between those who ―get‖ CRM and those who do not. If
CRM is to take root and move the company into new territory, the group that doesn‘t ―get‖ CRM
will need to learn or relearn what it is and the potential it has. In particular, the CFO should
become involved in the visioning exercise; his or her commitment is most important if the plan is
to work.
8. Redefine the focus:
Many leaders encourage their firms to ―focus,‖ by which they often mean focus on products or
services. The company using CRM should instead see ―focus‖ in terms of customers, not
products or services, and should welcome the very significant changes that this redefinition will
force. In particular, the CRM Company will have to make significant change in its processes as it
begins to supply what customers want rather than what the company makes. This disruption can
undermine the initiative in the early going, unless the changes have been anticipated and resold
to internal managers.
9. The new competition:
The old rules of marketing are mostly broken and ineffective, providing a poor basis for making
the company a winner. After all, there are only so many good customers to go round and all
competitors want them. The 4Ps of marketing made little or no provision for this reality, nor did
they create an opportunity for adjusting each aspect of product, price, promotion and distribution
according to the unique preferences of the customer. In the era of CRM, customers target
companies 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 be
competing for six things:
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26. 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 product
experience itself. The strongest relationships are formed if all three levels are used and if the
product itself actually satisfy buyers. At level one marketer build a financial bond with
customers by using pricing strategies. This is the lowest levels of relationship because price
promotions are easily imitated.
At level two marketers stimulate social interactions with customers. This involves ongoing
personal communication with individual customers and may include aggressive pricing strategies
as well. At level two customers are more loyal because of social bond with the company or the
salesperson.
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 to
switch to another portal.
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27. 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
community
Three Structural High Service Delivery My.yahoo.com
Figure: Three Levels of Relationship Marketing
Relationship Intensity:
Many of these CRM goals refer to customer loyalty. Most firms would be delighted if they had
customers who proudly wore their brand name on clothing and tried to talk others into buying the
brand like customers of Harley Davidson and Apple computer. Many people are advocates
because of positive experiences with their Macintosh computers or with eBay auctions. Thus an
important CRM strategy is trying to move customers upward in this pyramid
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28. 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 Intensity
3. Valued Customer Experience:
It is often the little details that customers recall even more than the product they purchased or the
service they received. Little details that customers notice, and that makes them feel good about
not only making the purchase, but making the purchase from you, is a significant part of the
overall customer experience. Here are six ways to go above and beyond good customer service
and 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 it's a
birthday dinner, the manager will make it a point to come to the table and extend Danny's
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]

29. 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. It's 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 it's 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 isn't sure if it's 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:
Don't we all have a story about the coffee shop waitress who doesn't 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 that's 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 you're 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]

30. 4. Consideration:
Do you or your staff regularly walk customers to the door and open it for them as they're
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 that's 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 you're 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]

31. 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 will
probably not take hold and flourish. These seven steps will help you build the right foundation to
get 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 worst
companies all become more average. And even during times of rapid growth, a significant
percentage of companies are expected to go out of business. Coping with continuous changes in
the business environment is not easy. The winners are those that align their organization to the
market (PDF download). Effective collaboration starts with understanding how your market
works, 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 markets
can 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 right
time, to the right people, to make better work decisions. To improve collaboration you must first
understand how work is actually done. And then re-engineer the work so that it can be done more
collaboratively in the future. As Michael Hammer said at the start of the re-engineering
revolution, ―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 that
you look at how you should be organized to do work more effectively. Improving collaboration
often involves restructuring the organization. That might mean redeveloping work teams to
improve information flows, redesigning jobs to make better use of that information, or
incentivizing collaborative behavior. Once you have thought through how work should be done
[30]

32. in the future, you should develop the organization to support it. ‗Form follows function‘, as
organization developers say.
Step 4: Help managers drive collaboration:
Flat organizations are all the rage in collaboration circles, as companies hope to enable front-line
staff to ‗self-organize‘ their own work. That is fine for day-to-day activities, but not for those
that require different people, work groups, or even departments to work closely together. These
usually require the type of coordination and cooperation that managers provide. Mangers provide
an important role driving collaborative work, just as they do today. And let‘s not forget that
managers 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 their
role, 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‘t
automatically make them more collaborative or the company more effective. This requires new
knowledge, skills, and the opportunity to practice collaboration. To accomplish this goal it is
important to train, support, and mentor staff to help them work more collaboratively. Staff must
also practice their new collaboration skills back in the workplace so it becomes the new daily
business 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 will
be performed in the future. Another is to align their goals, rewards, and feedback mechanisms to
motivate 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 adoption
of a collaborative way of working. As Reeves & Reed show in the insightful book, Total
Engagement, ‗gamifying‘ the introduction and adoption of collaboration can also help.
[31]

33. 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 in
the business environment as achieving today‘s shared business goals. Leading collaborative
companies, such as credit card issuer Capital One (PDF download), have developed a
collaborative, entrepreneurial culture to help them spot opportunities in the market that might
only be open for a couple of months and respond to them with brand new products in as little as a
couple of weeks. As visionary computer scientist Alan Kay said, ―The best way to predict the
future 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 your
organization starts to become more collaborative, then it's time to undertake a thorough
requirements 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]

34. Firms monitors and attracts customers, both online and offline as they progress through the
stages: target, acquire, transact service, retain, and grow. This begins with e-marketing plan
when companies select target markets. However opportunities often arises when a new a new
target groups appears in the web- such as when Brooks Brothers noted a large number of
Japanese users in the web site. Thus the cycle is circular in nature: for example, while servicing
customers in a new target may emerge. This important cycle is based on one important tenet of
CRM- it is better to attract remain and grow customers than to focus only one customer
acquisition. Of course not all customers go through this process- some do less business with the
firm 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 personal
disclosure, automated tracking through sales force, customer service encounters, bar code
scanner through retailers, and Web activities. Every piece of user information will goes into
databases that help firms identify the best customers.
2. Differentiating the customers:
Customers have different needs. The internet allow firm to collect information to identify various
benefit segments and individuals similarities and differences and use this information to increase
profits.
One very important way to differentiate is by customer value: Not all customers has equal value
to 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 their
resources by investing more in the most lucrative customers. The ideas are not new but what is
new is the technology allows firms to identify high value customers and respond with offers in
real time over the internet.
[33]

35. Ways of identifying high value customers:
1. By mining and profiling high value customer databases and using real time and real space data
collections techniques.
2. RFM (Recency, Frequency and Monetary) to mine databases for customers who spend money
and buy frequently and recently. They also evaluate sales growth per customer over time and
determine service cost for individual customers.
3. Some customers call more often with questions and inquiries, some return products more
frequently.
Identify
Interaction Customize
Differentiate
Customizing 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. Further
marketing communication message can be tailored to individuals and delivered in a timely
manner, dynamic pricing is another options.
Personalization marketing refers to such things as Web pages that greets users by name or e-mail
that is automatically sent to individuals with personal account information.
[34]

36. Interaction:
Learning relationship between a customer and an enterprise gets smarter and smarter with each
individual interaction, defining in ever more detail the customers own individuals needs and
wants as well as taste.
6. CRM Information:
Information is the lubricant of CRM. The more information a firm has, the better value it can
provide to each customer and prospect in terms of more accurate, timely and offerings. many
firms entice customers to provide additional information over time. For example, Orbit.com first
request a sample e-mail address from those want information about discount offers and
subsequently asks about vacations preferences so as to provide more relevant e-mailings. When a
customer provides increasingly more information, she trusts the firms enough to invest in the
relationship. Sometimes firms gather this type of information under the guise of entertainment.
Firms gain much information from customers less intrusively by tracking their behavior
electronically. Information technology allows companies to move beyond traditional segment
profiling to detailed profiling of individuals. For example, when product bar code scanner data
collected at the checkout id combined with a shopping card, the company can identify individual
customer purchases over time. On the internet software track an individual‘s movement from
page 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 visited
before and after theirs, use this information to guess which competitive products are under
consideration, and learn what about user interests. Tracking user information is user and the
companies but it has its critics because of privacy consideration.
Retailer faces the daunting task of profiling information from each channel and filtering it into
customer database. The sharper image does this brilliantly. Now a customer can telephone the
customer service representative to discuss a products purchased in brick and mortal stores last
week, and refer to sent e-mail sent yesterday, because the data is still in the database under one
customer records. This is known as 360-degree customer view, or one view across the channels.
[35]

37. Patricia Seabold identified eight critical success factors for building successful e-business
relationships 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]

38. 7. CRM Technology:
CRM processes are greatly enhanced by technology. Incoming toll-free numbers, electronic
kiosks, FAX-on-demand, voice mail, and automated telephone routing are examples of
technology that assist in moving customers through the life cycle. The Internet is the first fully
interactive 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 touch
points. 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 individuals
include:
 ―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]

39. 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 customize
offerings. These tools are shown in the following figure:
Company-Side Description
Tools(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 user
Bulletin board conversation on the Web site
iPOS terminals Located on a retailer‘s counter, and used to capture data and
present targeted communication.
Figure: Selected E-Marketing ―Push‖ Customization Tools
[38]

40. Cookies:
Cookies are small files written to the user‘s hard drive after visiting a Web site. When the user
returns to the site, the company‘s server looks for the cookie file and uses it to personalize the
site. Cookie files allow ad-server firms to see the path users take from site to site and, serve
advertising banners relevant to user interests. Cookies keep track of shopping baskets and other
tasks 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 file
keeps 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 words
they 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 through
statistical analysis. Marketers don‘t need a priori hypotheses to find value in databases, but use
software 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 data
warehouse information to help marketers understand the characteristics and behavior of specific
target groups. American Express has done this for years: It sends bill inserts to groups of
customers 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]

41. 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 and
presents the results to a like-minded individual. BOL.com, an international media and
entertainment store uses collaborative filtering software to observe how users browse and buy
music, software, games, at its site. The more time a user spends at the site, the more it will learn
about 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 a
positive ROI within months.
Outgoing E-Mail:
E-mail is used to communicate with individuals or lists of individuals (distributed e-mail) to
increase their purchases, satisfaction, and loyalty. Many companies maintain e-mail distribution
lists for customers and other stakeholders. Permission marketing dictates that customers will be
pleased to receive e-mail for which they have opted-in. MyPoints rewards consumers with points
and gift certificates, all for reading targeted e-mail ads and shopping at selected sites. MyPoints
client 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 commercial
messages 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 click
of 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 users
the chance to be taken off the list at any time. It means talking and listening to consumers as if
they were friends.
Chat and Bulletin Boards:
Real-time chat and bulletin board/newsgroup e-mail postings at its Web site helps Firms build
community and learn about customers and products. Analysis of these exchanges is used in the
[40]

42. aggregate to design marketing mixes that meet user needs. Expedia send e-mail notes to users
who 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 capture
data 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 can
gather survey and other data as well as present individually targeted advertising and promotions
as 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) Description
Agents 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 sites
Wireless 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]

43. Agents:
Agents are programs that perform functions on behalf of the user, such as search engines and
shopping agents. Shopping agents and search engines match user input to databases and return
customized information. Agent software often relies on more than one interaction. A user might
type in ―computer‖ on the Dell site and then be presented with either laptop or desktop options to
narrow the search.
Experiential Marketing:
Experiential marketing gets the consumer involved in the product to create a memorable
experience, 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 invited
viewers to e-mail campaign characters, and each e-mail received standard replies that developed
the characters a bit more. This type of offline/online integration, when combined with
customized experiences, builds positive relationships between customers and brands. The movie
and 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 many
others. The Wall Street Journal‘s online edition allows individual customers to create a
personalized Web page based on keywords of interest. It is helpful for business readers who want
to monitor stories about their competitors. A structural bond is created with individual
customers, thereby boost loyalty. Individualized Web portals are more often used to build
relationships in the B2B market than the B2C market. Allow supply chains access inventory and
account information, and track various operations. Webridge sells partner and customer
relationship management software (PRM/CRM) that allows businesses to access all the data they
need on demand, a huge improvement over the previous method, where buyers searched through
piles of brochures, catalogs, and price lists that included many products not carried by channel
partners and were constantly out-of-date.
[42]

44. Wireless Data Services:
Wireless Web portals send data to customer cell phones, pagers, and PDAs, such as the
PalmPilot. They are included as a separate tool because of their rapid growth and distinctive
features.
Wireless users only want text data due to the screen size of wireless devices and download time
for graphics. Services such as AvantGo.com offer users news headlines, sports scores, stock
quotes, weather in selected cities, and more to users on pagers. As users customize this
information, they give serving firms a better idea of how to better serve them and, build
relationship.
Web Forms:
Web form (or HTML form) is the technical term for a form on a Web page that has designated
places for the user to type information for submission.
Many corporate Web sites use Web forms for a multitude of purposes from site registration and
survey research to product purchase. Many sites strive to build the number of registered users as
a prelude to transactions.
FAX-on-Demand:
With 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. In the B2B market, firms often want
information sent via FAX machine.
Services such as eFax.com allow Internet users to send and receive FAX transmissions at their
Web sites. Why would a user use this service as opposed to an e-mail attachment? When the
document is not in digital form, a signature is needed, or Internet access is not available so the
document cannot be sent as an e-mail attachment.
[43]

45. Incoming E-Mail:
E-mail queries, complaints, or compliments initiated by customers or prospects comprise
incoming e-mail, and is the fodder for customer service.
Post-transaction customer service is an important part of the customer care life cycle. The Web
online channel consists of a feedback button or form that delivers an e-mail message to the
corporation. Often an automated customer service program acknowledges the message via e-mail
and indicates that a representative will be responding shortly. Research shows that firms are
getting much better at responding to incoming e-mail. Companies should include feedback
options online only if they have staff in place to respond: E-mail addresses on a Web site imply a
promise to reply.
[44]

46. CRM Metrics:
Metrics are used to assess the Internet‘s value in delivering CRM performance and especially the
contribution 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 of
the metrics depend on the firm‘s goals and strategies. Here we present a few of the common
metrics 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]

47. 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 Increase
conversion & retention rates, Reduce defection rates, Build AOV and profits per customer over
time (acquire, retain, and grow).
Firms use some of these methods to identify the least profitable customers and minimize
interactions with them. The point is to try to minimize the time invested in servicing low-profit
customers. One very important metrics is customer lifetime value (LTV). This calculation
demonstrates the benefits of retaining customers over time and the need for building share of
wallet. It also shows that no matter how good a firm is at retaining customers, new customer
acquisition is still an important activity.
[46]

48. References:
 E-Marketing, 3rd edition by Judy Strauss, Adel El-Ansary & Raymond Frost
 www.google.com
 www.wikipedia.org
[47]