Slide 9.1 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Customer relationship management Chapter 9

Slide 9.2 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Learning outcomes Outline different methods of acquiring customers via electronic media Evaluate different buyer behaviour amongst online customers Describe techniques for retaining customers and cross- and up-selling using new media.

Slide 9.3 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Management issues What are the practical success factors digital media need to make customer acquisition more effective? What technologies can be used to build and maintain the online relationship? How do we deliver superior service quality to build and maintain relationships?

Slide 9.4 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Work Left From Last Class Read the Econsultancy interview on pp and visit Answer these questions 1.What did Warner Breaks (WB) found about the online marketing? 2.What did they do to attract and retain customers? 3.What special about the older generation regarding online transactions? 4.Do you feel that their website is well-designed for the targeted audience?

Slide 9.5 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 What is CRM? You have a job interview for a company such as Future Shop or Staples working in the CRM team How would you explain the terms: –CRM –E-CRM Why does the company have a CRM function? –Why is CRM different? –What are benefits of this approach?

Slide 9.6 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 What is CRM? It is a strategy used to learn more about customers' needs and behaviors in order to develop stronger relationships with them. An approach to building and sustaining long- term business with customers

Slide 9.7 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.1 The four classic marketing activities of customer relationship management

Slide 9.8 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Marketing applications of CRM A CRM system supports the following marketing applications: Sales force automation (SFA). Sales representatives are supported in their account management through tools to arrange and record customer visits 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 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)

Slide 9.9 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Marketing applications of CRM (Continued) Campaign management. Managing ad, direct mail, e- mail and other campaigns 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 behaviour and campaigns can be analysed in order to optimize the marketing mix

Slide 9.10 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 E-CRM – a definition E-CRM is: Applying… Internet and other digital technology… (web, , 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

Slide 9.11 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 E-CRM – Benefits What benefits can e-CRM produce? Ref. p. 487 What’s Wikinomics and how can a company take advantage of it to enhance CRM? Ref. p. 488 Box 9.1 What is permission marketing? Ref. p.488 What is customer profiling? Ref. p.490 What is IDIC? Identification, differentiation, interactions, and customization

Slide 9.12 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.2 A summary of an effective process of online relationship building

Slide 9.13 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Conversion Marketing Using marketing communications to change the potential customers to actual and existing customers to repeating customers Many companies invest primarily in customer acquisition but not enough in conversion. What can be done to improve the conversion rate?

Slide 9.14 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Online Buying Process What is the typical online and offline purchase process? How can online marketing communications support the purchase process? Searching behaviors Directed info seeker Undirected info seeker Directed buyer Bargain hunters Entertainment seeker

Slide 9.15 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.3 A summary of how the Internet can impact on the buying process for a new purchaser

Slide 9.16 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Online Buying Process Differences btw B2C and B2B Buyer Behavior –Market structure –Nature of the buyer unit –Type of purchase –Importance of Trust

Slide 9.17 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.4 A model of the relationship between different aspects of trust and consumer response based on the categories of Bart et al. (2005)

Slide 9.18 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Online Buying Process What is net promoter score? Ref. p.495 How to support online advocacy? Ref. p.497 How to manage online detractors?

Slide 9.19 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.5 Percentage who consider the different information sources as important when researching/considering a product or service Source: BrandNewWorld: AOL UK/Anne Molen (Cranfield School of Management)/Henley Centre, 2004

Slide 9.20 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Customer Acquisition Management The characteristics of interactive Marketing Comm 1.From push to pull 2.From monolog to dialog 3.From 1:M to 1 to some and 1:1 4.From 1:M to M:M 5.From lean-back to lean-forward 6.The medium changes the nature of the standard marketing communication tools 7.Increase in communication intermediaries 8.Integration remains important

Slide 9.21 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.6 Online and offline communications techniques for e-commerce

Slide 9.22 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Assessing Market Comm Effectiveness Acquisition cost –Per visitor –Per lead –Per sale Bounce rate –% of visitors entered the site but left immediately after viewed one page only

Slide 9.23 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.7 Measures used for setting campaign objectives or assessing campaign success increasing in sophistication from bottom to top

Slide 9.24 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Online Marketing Communication Search engine marketing Assessing the effectiveness of a web campaign Ref. p. 504, Fig. 9.8 How does Google work? Crawling  indexing  ranking  query request and result serving Keyphrase analysis Search-engine optimization—review

Slide 9.25 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.8 An example of effectiveness measures for an online ad campaign

Slide 9.26 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.10 Stages in producing natural search engine listings

Slide 9.27 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Which are the ranking factors affecting position In Google SERPs? On-page optimization –Document meta data –Document content –Creation of new pages Off-page optimization –Link-building External links –‘Links In’ –‘Backlinks’ –‘Inbound links’ AND Internal links Behavioural –Popularity of sites from toolbar Google’s search spam filters

Slide 9.28 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Which SEO ranking factors should I focus on? On page optimization: tag = 4.9/5 Keyword frequency and density = 3.7/5 Keyword in headings = = 3.1, = 2.8 Keyword in document name = 2.8 Meta name description = 2/5 Meta name keywords = 1/5 Off-page optimization: More backlinks (higher PageRank)= 4/5 Link anchor text contains keyword = 4.4/5 Page assessed as a hub = 3.5/5 Page assessed as an authority = 3.5/5 Link velocity (rate at which changes) = 3.5/5 See

Slide 9.29 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Online Marketing Com-Paid Search Factors affect returns Distribution of daily budget Amount bid (Max CPC) * Clickthrough rate * Creative quality including creative testing * Match types especially negative matches Use of content network Time-of-day (day parting) Landing page quality Click fraud! * In Google AdWords, Live Search and Yahoo! Quality Score especially important

Slide 9.30 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.9 Search engine results page showing the two main methods for achieving visibility Source: Screenshot reprinted by permission of Google, Inc

Slide 9.31 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Online Marketing Communication Online PR Maximizing favorable mentions of an organization, its brands, products, to web sites on 3 rd -party web sites 1.Communication with media online 2.Link building 3.Blogs, podcasting and RSS 4.Online community and social networks 5.Marketing how your brand is presented on 3 rd party sites 6.Creating a buzz-online viral marketing

Slide 9.32 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.11 Online PR categories and activities

Slide 9.33 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Online Marketing Communication Online Partnership Affiliate marketing Read the mini Case Study 8.4 on p Explain why companies have scaled back e-communication spending. What is online-sponsorship? marketing-Insights/Internet-advertising-online/Online-sponsorship marketing-Insights/Internet-advertising-online/Online-sponsorship What’s the differences between online sponsorship and affiliate marketing?

Slide 9.34 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.12 The affiliate marketing model (note that the tracking software and fee payment may be managed through an independent affiliate network manager)

Slide 9.35 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Online Marketing Communication Interactive Advertising What is media multiplier/halo effect? Purpose of Interactive Advertising –Delivering content –Enabling transactions –Shaping attitudes –Soliciting response –Encouraging retention

Slide 9.36 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Online Marketing Communication Interactive Advertising Interactive ad target options –On a particular type of site –To target a registered user’s profile –At a particular time of day/week –Online behavior—dynamically serving relevant content or ad that matches the interest of a site visitor. Interactive ad formats –Banner size, message length, promotional incentive, animation, action phrase, company brand/logo

Slide 9.37 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Online Marketing Communication Media planning –What’s the optimum mix of online/offline advertising? Ref. p.520, table 9.2 marketing Read the Mini Case Study 9.5 What are the major challenges of marketing? What’s opt-in options for marketing? Viral marketing –achieve marketing objectives through self-replicating viral processes, analogous to the spread of pathological and computer viruses. –Three important factors Creative Material Seeding—Find the starting point Tracking

Slide 9.38 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure response figures Source: Provided by SmartFOCUS Digital ( an service provider that send s to UK and European organizations such as publishers and retailers

Slide 9.39 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.14 TopTable (

Slide 9.40 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Channel Comparison Summary Ref. p. 526 table 9.3 for details

Slide 9.41 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Customer Retention Management Goals of Customer Retention –Retain customers –Keep customers using online channel –Satisfaction  loyalty  profitability –How to keep customers satisfied? –Experience from Dell—ref. table 9.4 on p. 528 Personalization and mass customization –Mass customization—deliver customized content to groups of users through web or –Collaborative filtering—deliver specific info and offers based on the interests of similar customers

Slide 9.42 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.15 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 Copyright © 1994 by the Harvard Business School Publishing Corporation, all rights reserved

Slide 9.43 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Customer Retention Management Online Community Online Community becomes important to the success of the business Various 3 rd party online communities and cooperation sponsored communities have been established in the recent years. B2B, in many cases B2C, communities are commonly built based on –purpose-people who do the similar jobs or achieve a similar objectives –Position –Interest –Profession

Slide 9.44 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.16 UTalkMarketing example of a professional online community Source: the UK’s leading community website for client side marketers

Slide 9.45 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Customer Retention Management Online Community Do we need an online community? How to build one? Questions to be asked before start a community Typical problems –Empty community –Silent community –Critical community

Slide 9.46 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Customer Retention Management Managing Customer activity and value –Increase # of new users –Increase % of active users –Decrease % of dormant users –Decrease % of non-activated users Retention metrics are often used –Repeat-customer conversion rate –Repeat customer base –# of transaction per repeat customer –Revenue per transaction of repeat customer

Slide 9.47 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.17 Activity segmentation of a site requiring registration

Slide 9.48 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Customer Retention Management Lifetime Value Modeling Total net benefit that a customer or a group of customers will provide over their total relationship with the company What can LTV be used for? –Ref. p. 535

Slide 9.49 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.18 Different representations of lifetime value calculation

Slide 9.50 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.19 An example of an LTV-based segmentation plan

Slide 9.51 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Excelling in E-Commerce Service Quality Improving online service quality –Tangible—easy of use and visual appeal of the site –Reliability—availability of the site –Responsiveness—speed of page load, speed of responses to questions, if any –Assurance—quality of response, privacy and security, etc. –Empathy—personalized interaction, context, task relevant help and assistance, e.g., during the purchase process

Slide 9.52 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Customer Extension The goal is to increase the lifetime value of the customer What does “ Focus on share of customer, not market share” mean ? ( ref. p. 540, 2 nd paragraph ) Advanced online segmentation and target techniques –Identify lifetime group –Identify profile characteristics –Identify behavior in response and purchase –Identify multi-channel behavior –Tone and style preference

Slide 9.53 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.20 Customer lifecycle segmentation

Slide 9.54 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Customer Extension Advanced online segmentation and target techniques –Sense, respond, and adjust Monitor customer actions or behaviour React with appropriate messages and offers Monitor response to the messages and act accordingly –(RFM) value analysis Recency—how recent was the customer’s action? Frequency—How often did the customer act? Monetary—How much did the customer spent? Hurdle rate—% of customers in a group who completed an action; it can be used to compare different groups or set an objective for the group

Slide 9.55 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Technology Solution for CRM Technologies in use –Database is the core of the CRM –Web interface becomes the main stream – s and workflow systems are commonplace –Customer self-service is the trend Types of CRM Applications –Find more info about products/service –Place an order –Receive post-sales service Integration with back-office systems –How to link with the backend legacy system is a big challenge

Slide 9.56 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Figure 9.22 An overview of the components of CRM technologies

Slide 9.57 Dave Chaffey, E-Business and E-Commerce Management, 4 th Edition, © Marketing Insights Limited 2009 Technology Solution for CRM Single vendor solution or multiple vendors? –Why the question? –What’s your opinion? Data Quality CRM systems depend on the currency, completeness, and accuracy of their database Guidelines must be followed to achieve the goal Ref. p. 549 Case Study –Read the case study on pp and answer the question: –What made Tesco so successful?