Chapter 11 Flashcards
1
Q
What recent event has made the customer relationship more impersonal?
A
rapid growth of the Internet
2
Q
Why are customers increasingly powerful now?
A
hyper-competitive market where another option is one click away
3
Q
def. customer relationship management
A
a customer-focused and customer-driven organizational strategy that concentrates on addressing customers’ requirements for products and services, and then providing high-quality, responsive services
4
Q
How does customer relationship management work?
A
businesses use info about each customer (ex. previous purchases, needs and wants) to create highly individualized offers that customers are more likely to accept
–Creates customer intimacy
5
Q
what is the CRM approach designed to achieve?
A
customer intimacy
6
Q
T or F: CRM is a process that uses technology
A
F: CRM is not a process or a technology per se; rather, it is a customer-centric way of thinking and acting
7
Q
the focus of modern organizations has shifted from ______ to _______
A
from conducting business transactions to managing customer relationships
8
Q
How is CRM enabled by IT?
A
in the form of various systems and applications
9
Q
What is sometimes the problem with managing relationships?
A
time and information
–e.g. if a process takes too long, companies have less time to spend with their customers
10
Q
What do moidern CRM strategies and systems build?
A
sustainainle long-term customer relationships that create value for the company as well as for the customer
11
Q
What does CRM help companies do?
A
- acquire new customers
- retain ad expand existing relationships with profitable existing customers
12
Q
Why is retaining customers important?
A
repeat customers are the largest generator of revenue for an enterprise
-it is also cheaper to keep an existing customer than it is to win one back or find a new one
13
Q
Where does the CRM process begin?
A
-with marketing efforts (org solicits prospects from a target population of potential customers)
14
Q
Describe the CRM process
A
- Marketing efforts solicit customers
- some of this target population becomes customers
- some of these customers continue to purchase and become repeat customers
- the org segments repeat customers into low-and high-value repeat customers
15
Q
What is an Org’s goal with customers?
A
to maximize the lifetime value of a customer
ie a customers potential revenue stream over a number of years
16
Q
what is the process of orgs losing customers over a period of time called?
A
customer churn
17
Q
what is the optimal result of an org’s CRM efforts?
A
- maximize number of high-value repeat customers
- minimize customer churn
18
Q
CRM is a fundamentally simple concept: ____________
A
Treat different customers differently, because their needs differ, and their value to the company may also differ
19
Q
A successful CRM strategy not only improves customer satisfaction but also ___________, which in turn ________________
A
makes the company’s sales and service employees more productive, which in turn generates increased profits
20
Q
def. market capitalization
A
the number of a company’s shares outstanding multiplied by the price per share
21
Q
What are CRM systems?
A
information systems designed to support an organization’s CRM strategy
22
Q
For organizations to pursue excellent relationships with their customers, they need to employ CRM systems that provide ____________
A
the infrastructure needed to support those relationships.
23
Q
T or F: Orgs can choose to focus on CRM strategy or CRM systems
A
F: they need to put emphasis on both because customer service and support are essential to a successful business
24
Q
what are low-end CRM systems designed for?
A
enterprises with many small customers
ex. Amazon
25
what are high-end CRM systems designed for?
enterprises with a few large customers
| ex. Boeing
26
What are the two basic elements successful CRM policies share?
1. identify the many types of customer touch points
| 2. Consolidate data about each customer
27
def. customer touch points
any interaction between a customer and an organization
28
What are some traditional customer touch points?
- telephone contact
- direct mailings
- actual physical interactions with customers in stores
29
What are some customer tough points that occur through personal tech?
- email
- websites
- communications via smart phones
30
data consolidation and the 360° view of the customer enable the organization's functional areas to _______________
readily share information about customers
31
def. collaborative CRM system
A CRM system where communications between the organization and its customers are integrated across all aspects of marketing, sales, and customer support processes.
32
what do collaborative CRM systems do?
provide effective and efficient interactive communication with the customer throughout the entire org
- integrate communications between the org and customers
- enable customers to provide direct feedback to the org
33
What are an org's CRM system's two major compenents?
- operational CRM systems
| - analytical CRM systems
34
def. operational CRM system
The component of CRM that supports the front-office business processes that directly interact with customers (i.e., sales, marketing, and service).
35
def. front-office processes
Those processes that directly interact with customers; that is, sales, marketing, and service.
36
What are the two major components of OPERATIONAL CRM systems?
1. customer-facing applications
| 2. customer-touching applications
37
What benefits does Operational CRM provide?
* Efficient, personalized marketing, sales, and service.
* A 360° view of each customer.
* The ability of sales and service employees to access a complete history of customer interaction with the organization, regardless of the touch point.
38
An operational CRM system involves using CRM tools to accomplish what 5 objectives?
1. Improve sales and account management by optimizing the information shared by multiple employees and by streamlining existing processes (e.g., taking orders using mobile devices).
2. Form individualized relationships with customers, with the aim of improving customer satisfaction and maximizing profits.
3. Identify the most profitable customers, and provide them with the highest level of service.
4. Provide employees with the information and processes necessary to know their customers.
5. Understand and identify customer needs, and effectively build relationships among the company, its customer base, and its distribution partners.
39
def. customer-facing CRM applications
Areas where customers directly interact with the organization, including customer service and support, sales force automation, marketing, and campaign management.
40
Customer service and support are the systems that automate ________, ______, _____, and ______
service requests, complaints, product returns, and requests for information.
41
def. customer interaction centre (CIC)
A CRM operation where organizational representatives use multiple communication channels to interact with customers in functions such as inbound teleservice and outbound telesales.
42
what is an example of a CIC?
-call centre
43
what interactions involves orgs using the CIC to create a call list for the sales team, whose members contact sales prospects? What happens next?
outbound telesales
customer and the sales team collaborate in discussing products and services that can satisfy customers' needs and generate sales.
44
What kinds of interactions are referred to as inbound teleservice?
Customers communicate directly with the CIC to initiate a sales order, inquire about products and services before placing an order, and obtain information about a transaction they have already made
teleservice representatives then respond to these requests
45
What does the CIC Information help desk do?
- assists customers with their questions concerning products or services, and it also processes customer complaints
- Complaints generate follow-up activities such as quality control checks, delivery of replacement parts or products, service calls, generation of credit memos, and product returns.
46
def. sales force automation (SFA)
The component of an operational CRM system that automatically records all the aspects in a sales transaction process.
47
What kinds of systems can a SFA include?
- contact management system
- sales lead tracking system
- sales forecasting system
- product knowledge system
- configurators
48
role of contact management system
tracks all communications between the company and the customer, the purpose of each communication, and any necessary follow-up. This system eliminates duplicated contacts and redundancy, which in turn reduces the risk of irritating customers.
49
role of sales lead tracking system
lists potential customers or customers who have purchased related products; that is, products similar to those that the salesperson is trying to sell to the customer.
50
role of sales forecasting system
mathematical technique for estimating future sales
51
role of product knowledge system
comprehensive source of information regarding products and services
52
role of configurators
online product-building features that enable customers to model the product to meet their specific needs
53
def. purchasing profile
snapshot of a consumer's buying habits that may lead to additional sales through cross-selling, upselling, and bundling.
54
def. cross-selling
marketing of additional related products to customers based on a previous purchase
-used by banks
55
def. upselling
strategy in which the salesperson provides customers with the opportunity to purchase related products or services of greater value in place of, or along with, the consumer's initial product or service selection
ex. warranties on electronics
56
def. bundling
form of cross-selling in which a business sells a group of products or services together at a lower price than their combined individual prices
57
def. campaign management applications
CRM applications that help organizations plan marketing campaigns that send the right messages to the right people through the right channels.
-can also personalize individual messages
58
def. customer-touching CRM applications (electronic CRM applications)
Applications and technologies with which customers interact and typically help themselves.
59
What are some of the major e-CRM applications?
- search and comparison capabilities
- technical and other informations and services (orgs offer personalized experiences to induce customers to make purchase or stay loyal)
- customized products and services
- personalized web pages
- FAQs
- email and automated response
- loyalty programs
60
def. loyalty programs
Program that offers rewards to customers to influence future behaviour.
61
def. analytical CRM systems
CRM system that analyzes customer behaviour and perceptions in order to provide actionable business intelligence.
62
What are some important technologies in analytical CRM systems?
- data warehouses
- data mining
- decision support
- other business intelligence tech
63
What do analytical CRM systems do after completing their various analyses?
they supply information to the organization in the form of reports and digital dashboards
64
Why do analytical CRM systems analyze customer data?
1. Designing and executing targeted marketing campaigns.
2. Increasing customer acquisition, cross-selling, and upselling.
3. Providing input into decisions relating to products and services (e.g., pricing and product development).
4. Providing financial forecasting and customer profitability analysis.
65
In what two ways can customer relationship management systems be implemented?
- on-premise
| - on-demand
66
what does on-premise CRM systems mean?
orgs purchased systems from a vendor and then installed them on site
-expensive, time-consuming, inflexible
67
def. on-demand CRM system
CRM system that is hosted by an external vendor in the vendor's data centre.
-saves money
68
what is the best known on-demand CRM vendor? What is their goal
salesforce
goal is to provide a new business model that allows customers to rent the CRM software instead of buying it
69
What helps Salesforce succeed?
CRM has common requirements across many customers so Salesforce can meet demands without lots of customization
70
What are the on-demand CRM systems potential problems? (4)
1. vendor could be unreliable, meaning the client company would have no CRM functionality at all
2. hosted software is difficult or impossible to modify, and only the vendor can upgrade it
3. vendor-hosted CRM software may be difficult to integrate with the organization's existing software
4. security and privacy risks of giving strategic customer data to vendors
71
def. mobile CRM system
An interactive CRM system where communications related to sales, marketing, and customer service activities are conducted through a mobile medium for the purpose of building and maintaining customer relationships between an organization and its customers
-mobile CRM systems involve interacting directly with consumers through portable devices
72
def. open-source CRM system
CRM software whose source code is available to developers and users
73
T or F: open-source CRM systems provide the same features or functions as other CRM software, and can be implemented either on-premise or on-demand
true
74
benefits of open-source CRM systems:
- favourable pricing
- wide variety of applications
- easy to customize, therefore good for orgs with specific needs
- updates and bug fixes are rapidly distributed, and extensive support info is available free of charge
75
risks of open-source CRM
- quality control (since they are create by a large community of unpaid developers, sometimes there is no central authority who oversees the quality of the product)
- companies must have the same IT platform in place as the one on which the open-source CRM system was developed for best results
76
def. social CRM
The use of social media technology and services to enable organizations to engage their customers in a collaborative conversation in order to provide mutually beneficial value in a trusted and transparent manner
77
What do orgs do in social CRM?
they monitor services like Facebook, Twitter, Linkedin for relevant mentions of their products, services, and brand, then they respond accordingly
78
def. supply chain
The coordinated movement of resources from organizations through conversion to the end consumer.
-includes the organizations and processes that create and deliver products, info, and services to the end customers
79
supply chains enhance _________ to improve _____ and _____
enhance trust and collaboration among supply chain partners, thus improving supply chain visibility and inventory velocity.
80
def. supply chain visibility
The ability of all organizations in a supply chain to access or view relevant data on purchased materials as these materials move through their suppliers' production processes.
-orgs can also access or view relevant data on outbound goos as they are manufactured, assembled, or stored
81
the more quickly a company can deliver products and services after receiving the materials required to make the, the __________
the more satisfied the company's customers will be.
82
What is inventory velocity?
how fast a company can deliver products and services after receiving the material required to make them
83
What are some ways supply chain information is gathered now?
sensors, RFID tags, meters, GPS, and other devices and systems
84
How does moving from manual to generated supply chain info affect supply chain managers?
they now have real-time information on all products moving through their supply chains. Supply chains will therefore rely less on labour-based tracking and monitoring, because the new technology will allow shipping containers, trucks, products, and parts to report on their own status. The overall result is a vast improvement in supply chain visibility.
85
What is a critical component of the integration between a business and its suppliers, partners, distributors, and customers?
information systems as they facilitate the exchange of information among the participants in the supply chain
86
What are the 3 segments of a supply chain?
1. Upstream
2. Internal
3. Downstream
87
What happens in the upstream supply chain segment?
- where sourcing or procurement from external suppliers occurs
- supply chain managers select suppliers to deliver the goods and services the company needs to produce its product or service.
- supply chain managers develop the pricing, delivery, and payment processes between a company and its suppliers
Processes: managing inventory, transferring goods to manufacturing facilities and authorizing payments to suppliers
88
What happens in the internal supply chain segment?
- where packaging, assembly, or manufacturing takes place.
- Supply chain managers schedule the activities necessary for production, testing, packaging, and preparing goods for delivery.
- monitor quality levels, production output, and worker productivity.
89
What happens in the downstream supply chain segment?
- where distribution takes place, frequently by external distributors
- supply chain managers coordinate the receipt of orders from customers, develop a network of warehouses, select carriers to deliver products to customers, and implement invoicing systems to receive payments from customers.
90
What is the process for returning damaged or unwanted products called?
reverse flows or reverse logistics
91
Describe the tiers of suppliers for an automobile manufacturer
Tier 3: suppliers produce basic products such as glass, plastic, and rubber;
Tier 2: suppliers use these inputs to make windshields, tires, and plastic mouldings
Tier 1: suppliers produce integrated components such as dashboards and seat assemblies
92
What are the 3 typical flows in the supply chain?
Material, information, financial
93
What are material flows?
the physical products, raw materials, supplies, and so forth that flow along the chain.
-also include the reverse flows
94
What are information flows?
consist of data related to demand, shipments, orders, returns, and schedules, as well as changes in any of these data
95
What are financial flows?
involve money transfers, payments, credit card information and authorization, payment schedules, e-payments, and credit-related data
96
def. supply chain mangement (SCM)
An activity in which the leadership of an organization provides extensive oversight for the partnerships and processes that compose the supply chain and leverages these relationships to provide an operational advantage
97
What are the five basic components of SCM?
1. Plan
2. Source
3. Make
4. Deliver
5. Return
98
What is the Plan component of SCM?
- strategic component
- invovles developing a set of metrics (measurable deliverables) to monitor the organization's supply chain to ensure that it is efficient and it delivers high quality and value to customers for the lowest cost
99
What is the Source component of SCM?
- organizations choose suppliers to deliver the goods and services they need to create their product or service
- Supply chain managers develop pricing, delivery, and payment processes with suppliers, and they create metrics to monitor and improve their relationships with their suppliers
- also develop processes for managing their goods and services inventory, including receiving and verifying shipments, transferring the shipped materials to manufacturing facilities, and authorizing supplier payments.
100
What happens in the make component of SCM?
- manufacturing component
- Supply chain managers schedule the activities necessary for production, testing, packaging, and preparation for delivery
* *most metric-intensive of part of the supply chain, orgs measure quality levels, production output, and worker productivity
101
What happens in the deliver component of SCM?
- often referred to as logistics
- organizations coordinate the receipt of customer orders, develop a network of warehouses, select carriers to transport their products to their customers, and create an invoicing system to receive payments.
102
What happens in the return component of SCM?
Supply chain managers must create a responsive and flexible network for receiving defective, returned, or excess products back from their customers, as well as for supporting customers who have problems with delivered products.
103
What is the goal of SCM information systems?
to reduce the problems, or friction, along the supply chain, because friction can increase time, costs, and inventories and decrease customer satisfaction
104
What do SCM systems do?
reduce uncertainty and risks by decreasing inventory levels and cycle time while improving business processes and customer service, making the organization more profitable and competitive.
105
SCM systems are a type of ________ information system
interorganizational
106
def. interorganizational information system (IOS)
An information system that supports information flow among two or more organizations.
107
What do IOSs enable by connecting business partners?
* Reduce the costs of routine business transactions.
* Improve the quality of the information flow by reducing or eliminating errors.
* Compress the cycle time involved in fulfilling business transactions.
* Eliminate paper processing and its associated inefficiencies and costs.
* Make the transfer and processing of information easier for users.
108
What is one of the most important goals of SCM systems?
give organizational visibility into its supply chain
109
What is one of the most important goals of SCM systems?
is to give an organization visibility into its supply chain
110
What is the goal of supply chain visibility?
to improve the supply chain by making data readily available to all parties in the supply chain.
-it promotes quick responses to problems or changes along the supply chain by enabling companies to shift products where they are needed
111
def. push model (make-to-stock)
A business model in which the production process begins with a forecast, which predicts the products that customers will want as well as the quantity of each product. The company then produces the amount of products in the forecast, typically by using mass production, and sells, or “pushes,” those products to consumers
112
What is the problem with the push model?
- the forecasts are often incorrect
- if they overestimate, they have large costs of having unused inventory
- if they underestimate, they risk losing business if a product is unavailable or they an incur substantial overtime costs
113
def. pull-model (make-to-order)
A business model in which the production process begins with a customer order and companies make only what customers want, a process closely aligned with mass customization
114
What are the two sources where supply chain problems primarily arise?
(1) uncertainties
| (2) the need to coordinate multiple activities, internal units, and business partners
115
what is a major source of supply chain uncertainties?
demand forecast
116
What can demand be affected by?
competition, price, weather conditions, technological developments, overall economic conditions, and customers' general confidence.
(among others)
117
What is another big uncertainty for supply chains?
delivery times, which can be affected by numerous factors ranging from production machine failures to road construction and traffic jams.
In addition, quality problems in materials and parts can create production delays, which also generate supply chain problems
118
def. bullwhip effect
Erratic shifts in orders up and down the supply chain.
-variables that affect customer demand can become magnified when they are viewed through the yes of managers at each link in the supply chain(i.e each entity makes decisions that place its interests above those of the chain, causing stockpiling)
119
def. vertical integration
Strategy of integrating the upstream part of the supply chain with the internal part, typically by purchasing upstream suppliers, in order to ensure timely availability of supplies
120
what are some solutions to supply chain problems?
vertical integration, just-in-time inventory system, information sharing
121
What is the most common solution to supply chain problems? Is it a good solution?
building inventories as insurance against supply chain uncertainties
-it can be costly
122
def. just-in-time (JIT) inventory system
A system in which a supplier delivers the precise number of parts (work-in-progress inventory) to be assembled into a finished product at precisely the right time.
123
What are the drawbacks of JIT?
- suppliers are expected to respond instantaneously to requests. As a result, they have to carry more inventory than they otherwise would. In this sense, JIT does not eliminate excess inventory; rather it simply shifts it from the customer to the supplier
- not always possible to reduce the overall inventory size
- JIT replaces a few large supply shipments with a large number of smaller ones. In terms of transportation, then, the process is less efficient.
124
def. vendor-managed inventory
An inventory strategy where the supplier monitors a vendor's inventory for a product or group of products and replenishes products when needed.
125
def. electronic data interchange (EDI)
A communication standard that enables the electronic transfer of routine documents between business partners.
126
How does EDI work?
EDI format the documents to be transferred according to agreed-upon standards (e.g., data formats). It then transmits messages over the Internet using a converter, called translator.
127
What are the benefits of EDI?
- minimizes data entry errors, because each entry is checked by the computer
- length of the message can be shorter,
- the messages are secured
- reduces cycle time,
- increases productivity,
- enhances customer service,
- minimizes paper usage and storage
128
What are some disadvantages of EDI?
- Business processes sometimes must be restructured to fit EDI requirements
- here are many EDI standards in use today, so one company might have to use several standards in order to communicate with multiple business partners.
129
def. extranets
Networks that link business partners over the Internet by providing them access to certain areas of each other's corporate intranets
130
What is the primary goal of extranets?
foster collaboration between and among business partners
131
extranets use _____ to make communication over the internet more secure
virtual private network (VPN) technology
132
What are the major benefits of extranets?
faster processes and information flow,
- improved order entry and customer service
- lower costs (e.g., for communications, travel, and administrative overhead),
- overall improved business effectiveness.
133
What are the 3 major types of extranets?
1. A Company and Its Dealers, Customers, or Suppliers
- centres on a single company
2. An Industry's Extranet
- major players in an industry team up to create an extranet that will benefit all of them
3. Joint Ventures and Other Business Partnerships
- the partners in a joint venture use the extranet as a vehicle for communication and collaboration
134
What are the two basic types of corporate portals?
1. procurement (sourcing) portals for a company's suppliers (upstream in the supply chain)
2. distribution portals for a company's customers (downstream in the supply chain)
135
def. procurement portals
Corporate portals that automate the business processes involved in purchasing or procuring products between a single buyer and multiple suppliers.
136
def. distribution portals
Corporate portals that automate the business processes involved in selling or distributing products from a single supplier to multiple buyers.
