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Chapter 9Customer Relationship

Management

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Consumer Decision Making Process

5 phases of the generic purchase decision model:

1. need identification 2. information search 3. evaluation of alternatives 4. purchase and delivery5. after-purchase evaluation

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Consumer Decision Making Process (cont.)

Product brokering: Deciding what product to buyMerchant brokering: Deciding from whom (from

what merchant) to buy a product

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One-to-One Marketing and Personalization in EC

One-to-one marketing: Marketing that treats each customer in a unique way

Personalization: The matching of services, products, and advertising content to individual consumers

User profile: The requirements, preferences, behaviors, and demographic traits of a particular customer

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Major strategies used to compile user profiles

Solicit information directly from the userObserve what people are doing onlineBuild from previous purchase patternsPerform marketing research

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Cookie: A data file that is placed on a user’s hard drive by a Web server, frequently without disclosure or the user’s consent, that collects information about the user’s activities at a site

Customer loyaltyCustomer loyalty: Degree to which a customer will

stay with a specific vendor or brandIncreased customer loyalty produces cost savings

through: lower marketing costs lower transaction costs lower customer turnover expenses lower failure costs

E-loyalty: Customer loyalty to an e-tailer

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CRM and Its Relationship with EC

Customer relationship management (CRM): A customer service approach that focuses on building long-term and sustainable customer relationships that add value both for the customer and the company

E-CRM is:Applying…

Internet and other digital technology… (web, e-mail, wireless, iTV, databases)

to… acquire and retain customers (through a multi-channel buying process and customer lifecycle)

by…improving customer knowledge,

targeting,service delivery and satisfaction

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Marketing applications of CRMA CRM system supports the following marketing

applications:1. Sales force automation (SFA). Software that automates

the tasks performed by sales people in the field, such as data collection and its transmission

2. Customer service management. Representatives in contact centres respond to customer requests for information by using an intranet to access databases containing information on the customer, products and previous queries.

3. Managing the sales process. This can be achieved through e-commerce sites, or in a B2B context by supporting sales representatives by recording the sales process (SFA).

4. Campaign management. Managing ad, direct mail, e-mail and other campaigns.

5. Analysis. Through technologies such as data warehouses and approaches such as data mining, which are explained further later in the chapter, customers characteristics, their purchase behavior and campaigns can be analyzed in order to optimize the marketing mix.

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CRM and Its Relationship with EC

Extent of service1. Customer acquisition (prepurchase support)2. Customer support during purchase3. Customer fulfillment (purchase dispatch)4. Customer continuance support

(postpurchase)

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Three phases of customer relationship management

Figure 9.1  Three phases of customer relationship management

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CRM - Benefits & Limitations

Benefits of CRMProvides:

choices of products and services fast problem resolution and response easy and quick access to information

Limitations of CRMRequires integration with a company’s other

information systems which is costlyDifficult to support mobile employees

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Five factors required to implement a CRM program effectively:

1. Customer-centric strategy2. Commitments from people3. Improved or redesigned processes4. Software technology5. Infrastructure

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CRM and Its Relationship with EC

Web-related metrics a company uses to determine the appropriate level of customer support:Response timeSite availabilityDownload timeTimelinessSecurity and privacyOn-time order fulfillmentReturn policyNavigability

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The simple buying process

Figure 9.6  The simple buying process

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Online behavioursDirected information seekers. Will be looking for product,

market or leisure information such as details of their football club’s fixtures. This type of user tends to be experienced in using the web and they are proficient in using search engines and directories.

Undirected information seekers. These are the users usually referred to as surfers, who like to browse and change sites by following hyperlinks. This group tends to be novice users (but not exclusively so) and they may be more likely to click on banner advertisements.

Directed buyers. These buyers are online to purchase specific products. For such users, brokers or cybermediaries who compare product features and prices will be important locations to visit.

Bargain hunters. These users want to use the find offers available from sales promotions such as free samples or prizes.

Entertainment seekers. Users looking to interact with the web for enjoyment through entering contests such as quizzes.

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Schematic of the relationship between satisfaction and loyalty

Figure 9.9  Schematic of the relationship between satisfaction and loyalty

Source: Adapted and reprinted by permission of Harvard Business Review from graph on p. 167 from ‘Putting the service-profit chain to work,’ by Heskett, J., Jones, T., Loveman, G., Sasser, W., and Schlesinger, E., in Harvard Business Review, March–April 1994. Copyright © 1994 by the Harvard Business School Publishing Corporation, all rights reserved.

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IDIC

Source: Chaffey et al. (2003)

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Overview of the components of CRM technologies

Figure 9.13  An overview of the components of CRM technologies

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CRM Applications and Tools:

CRM applications improve upon traditional customer service by means of easier communications and speedier resolution of customer problems

Customer service adds value to products and servicesIt is an integral part of a successful businessClassifications of CRM applications

Customer-facing applicationsCustomer-touching applicationsCustomer-centric intelligence applicationsOnline networking and other applications

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CRM Applications and Tools (cont.)

Customer-facing applicationsCustomer interaction center (CIC): A comprehensive service entity in which EC vendors address customer service issues communicated through various contact channels

Intelligent agents in customer service and call centers

Autoresponders: Automated e-mail reply systems (text files returned via e-mail), which provide answers to commonly asked questions

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CRM Applications and Tools (cont.)

Customer-touching applicationsPersonalized Web PagesE-Commerce ApplicationsCampaign Management

Web Self-ServiceActivities conducted by users on the Web to provide answers to their questions (e.g., tracking) or for product configuration

Self-trackingSelf-configuration and customization

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CRM Applications and Tools (cont.)

Customer-centric applicationsData reportsData warehouse

A single, server-based data repository that allows centralized analysis, security, and control over the data

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CRM Applications and Tools (cont.)

Data analysis and miningAnalytic applications automate the

processing and analysis of CRM datacan be used to analyze the performance, efficiency, and effectiveness of an operation’s CRM applications

Data mining involves sifting through an immense amount of data to discover previously unknown patterns

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CRM Applications and Tools (cont.)

Online networking and other applicationsForumsChat roomsUsenet groupsE-mail newslettersDiscussion lists

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CRM Applications and Tools (cont.)

Mobile CRMthe delivery of CRM applications to any user, whenever and wherever needed

Voice communicationpeople are more comfortable talking with a person, even a virtual one, than they are interacting with machines. The smile and the clear pronunciation of the agent’s voice increases shoppers’ confidence and trust

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CRM Applications and Tools (cont.)

Role of knowledge management and intelligent agents in CRMAutomating inquiry routing and answering queries

requires knowledgeGenerated from historical data and from human

expertise and stored in knowledge bases for use whenever needed

Intelligent agents support the mechanics of inquiry routing, autoresponders, and so on

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Evaluate the effectiveness of the tools with AIMRITE

Audience: can the target audience be reached?

Impact: can message get through the clutter?

Message: is message communication effective?

Response: is responding easy (direct/indirect)?

Internal management: can the tools be managed readily by agency or internally?

The End Result: What are the response rates, costs and returns?