Chapter 6 Flashcards
What is Customer Relationship Management (CRM)?
CRM involves managing all aspects of a customer’s relationship with an organization to increase customer loyalty and retention, and an organization’s profitability.
~ a strategy for understanding your customers and their needs in order to optimize interactions with them.
FUNDAMENTALS OF CRM:
- CRM as a business strategy
o Helps organizations identify customers and design specific marketing campaigns tailored to each customer, thereby increasing customer spending
o CRM system helps organizations treat customers as individuals, gain insights in their buying preferences and behaviors which helps increase sales, greater profitability, and higher rates of customer loyalty
o E.g: casino uses loyalty card to make guests feel special (birthday? Machine greets happy bday, person gets perks like free tickets to a show) - Business benefits of CRM
o BENEFITS: better customer service, improved call centre efficiency, cross-sell products more effectively, help sales staff close deals faster, simplify marketing and sales processes, discover new customers, increase customer revenues
o CRM performs current business better
o Cost advantage, since there is no capital outlay required for a hosted CRM solution and payment comes from operational budgets . ROI is seen within six months. E.g: using products like Telus’ Managed CRM
o Customer strategy-> understand who customers are and how company can meet strategic goals. E.g. use only one web-based system that pull client data into one central repository to deliver much faster customer service and improve customer experience. This empowers front-line staff with easy and quick access to all data needed to know and help a customer out
o RFM – Recency, Frequency, and Monetary value formula helps organizations find its most valuable customers
• Recency: How recently a customer purchased items
• Frequency: How frequently a customer purchases items
• Monetary value: How much a customer spends on each purchase - The Evolution of CRM
o 3 phases in evolution of CRM: (1) reporting -customer identification (2) analyzing – customer segmentation (3) predicting –customer prediction
o CRM reporting systems help organizations identify their customers across other applications. CRM analyzing systems help organizations segment their customers into categories such as best and worst customers. CRM predicting systems help organizations make predictions regarding customer behaviour, such as which customers are at risk of leaving
o Reporting, analyzing and prediction questions:
• Reporting – Asking what happened: what is the total revenue by customer? How many units did we manufacture?
• Analyzing- asking why it happened: why did sales not meet forecasts? Why was production so low?
• Predicting: Asking what will happen: what customers are at risk of leaving? What products will the customer buy? - Operational and analytical CRM
o Operational CRM supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with customers.
o Analytical CRM supports back-office operations and strategic analysis, and includes all systems that do not deal directly with the customers.
CRM future trends include:
– CRM applications will continue to evolve and be used by a wide variety of partners
– CRM will continue to be a major strategic focus for companies
– CRM applications will continue to adapt wireless capabilities supporting mobile sales and mobile customers
– CRM suites will incorporate SRM, PRM and ERM modules
CRM industry best practices include:
C.D.B.I.S
- Clearly communicate the CRM strategy.
• To ensure all departments and employees understood exactly what CRM meant and how it adds value to the organization was critical. Set goals for what CRM should achieve, match CRM strategies with corporate objectives, and tie the measurement process to both goals and strategies - Define data needs and flows.
• To perform successful CRM implementations, there needs to be a clear understanding of how data flow in and out of their organizations since data come into an organization in different forms and different touch points. - Build an integrated view of the customer.
• Choose correct CRM system that can support organizational requirements with functional breadth and depth to support strategic goals - Implement in iterations.
• Implement CRM system in manageable pieces as it is easier to manage, measure, and track the design, building, and deployment of the CRM systems when it is delivered in pieces - Scalability for organizational growth
• Be sure CRM system meets organization’s future needs as well as current needs
Fundamentals (continued) Operational CRM:
MARKETING AND OPERATIONAL CRM
- 3 primary operational CRM systems a marketing department can implement to increase customer satisfaction are:
o list generators compile customer data from a variety of sources and segment the data for different marketing campaigns.
o campaign management systems guide campaign planners through key tasks, can calculate campaign ROI and track results for future fine tuning.
o Cross-selling and up-selling strategies identify customers that would have interest in additional, related products or might respond to increasing the value of their purchase.
SALES AND OPERATIONAL CRM
- 3 primary operational CRM technologies a sales department can implement to increase customer satisfaction are:
o Sales management CRM systems: automates each phase of the sales process, helping individual sales representatives coordinate and organize all of their accounts
o Contact management CRM systems: maintains customer contact information and identifies prospective customers for future sales
o Opportunity management CRM systems: targets sales opportunities by finding new customers or companies for future sales
CUSTOMER SERVICE AND OPERATIONAL CRM
- 3 primary operational CRM systems customer departments can implement to increase customer satisfaction are:
o contact centres: where customer service representatives (CSRs) answer customer inquiries and respond to problems through a number of different customer touch-points.
o web-based self-service systems: allow customers to use the Web to find answers to their questions or solutions to their problems
o call scripting systems: access organizational databases that track similar issues or questions and automatically generate the details for the CSR, who can then relay them to the customer. The system can even provide a list of questions that the CSR can ask the customer to determine the potential problem and resolution. This feature helps CSRs answer difficult questions quickly while also presenting a uniform image so that two different customers do not receive two different answers.
What are the benefits of a CRM system?
Better customer service, improved call centre efficiency, cross-sell products more effectively, help sales staff close deals faster, simplify marketing and sales processes, discover new customers, increase customer revenues.
Explain why information systems are not CRM.
All benefits CRM systems offer an organization can be easily undone by a thoughtless employee, partner, or supplier, who may, by some action or word, demonstrate that the organization does not care about or understand its customers. Information systems can help organizations implement better and effective CRM, but at the end of the day, how a company’s employees, partners, and suppliers interact with a customer, either directly or indirectly, is the real test of a company’s ability to foster and promote healthy customer relations.
