CHAPTER 11 Building a Customer-Centric Organization—Customer Relationship Management

LEARNING OUTCOMES 11.1 Compare operational and analytical customer relationship management 11.2 Identify the primary forces driving the explosive growth of customer relationship management 11.3 Define the relationship between decision making and analytical customer relationship management 11.4 Summarize the best practices for implementing a successful customer relationship management system

CUSTOMER RELATIONSHIP MANAGEMENT (CRM) CRM enables an organization to: Provide better customer service Make call centers more efficient Cross sell products more effectively Help sales staff close deals faster Simplify marketing and sales processes Discover new customers Increase customer revenues

RECENCY, FREQUENCY, AND MONETARY VALUE An organization can find its most valuable customers by using a formula that industry insiders call RFM: How recently a customer purchased items (recency) How frequently a customer purchases items (frequency) How much a customer spends on each purchase (monetary value)

THE EVOLUTION OF CRM

THE UGLY SIDE OF CRM: WHY CRM MATTERS MORE NOW THAN EVER BEFORE

THE UGLY SIDE OF CRM: WHY CRM MATTERS MORE NOW THAN EVER BEFORE

CUSTOMER RELATIONSHIP MANAGEMENT’S EXPLOSIVE GROWTH CRM Business Drivers

USING ANALYTICAL CRM TO ENHANCE DECISIONS Operational CRM – supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customers Analytical CRM – supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers

USING ANALYTICAL CRM TO ENHANCE DECISIONS Operational CRM and analytical CRM

CUSTOMER RELATIONSHIP MANAGEMENT SUCCESS FACTORS CRM success factors include: Clearly communicate the CRM strategy Define information needs and flows Build an integrated view of the customer Implement in iterations Scalability for organizational growth

OPENING CASE STUDY QUESTIONS SecondLife Why is it important for any company to use CRM strategies to manage customer information? How are CRM strategies in Second Life different from CRM strategies in the real world? If the virtual world is the first point of contact between a company and its customers, how might that transform the entire shopping experience? How could companies use Second Life to connect with customers that would be difficult or too expensive in the real world?

CHAPTER ELEVEN CASE Can You Find Your Customers? Entrepreneurship is all about finding niche markets, an untapped potential in a corner of an existing market ignored by major companies Finding customers for a specialized or niche business is no longer an arduous manual task Somewhere there is a list of names that will allow a business, no matter how niche, to locate its specific target customers

CHAPTER ELEVEN CASE QUESTIONS Explain how technology has dramatically impacted the efficiency and effectiveness of finding customers Explain the two different types of CRM systems and explain how a company can use infoUSA’s database for creating a CRM strategy

CHAPTER ELEVEN CASE QUESTIONS Describe three ways a new small business can extend its customer reach by performing CRM functions from an infoUSA database infoUSA discussed three distinct steps company owners must take to use databases effectively. Rank these steps in order of importance to a CRM strategy