1. Lecturer, Department of Management Science and Technology Athens University of Economics and Business (AUEB) Electronic Customer Relationship Management (e-CRM): From Theory To Practice Adam Vrechopoulos, MBA, Ph.D. avrehop@aueb.gr ELTRUN Research Center www.eltrun.gr ELTRUN-IMES

2. Outline  Digital Marketing and eCRM  Perspectives of eCRM  eCRM Benefits and Opportunities  CRM Process  The role of Technology in eCRM  Manipulating and Measuring eCRM Effectiveness  Lessons Learned from Business Practice

3. Digital Marketing and eCRM Digital,Individualized, Relationship Marketing through Interactive Communication  Mass Marketing  STP Marketing  Digital, Individualized, Relationship Marketing through Interactive Communication acquiringretaining  Focus on acquiring lots of new customers  retaining and building more business with fewer loyal high-value customers customerneeds  Suggest solutions based on customer needs instead of “pushing” products long-term customer relationships “trust“loyalty”  Develop long-term customer relationships with mutual benefits, one at a time based on “trust” and “loyalty” promise fulfillment  Establishing, maintaining, enhancing, commercializing customer relationships through promise fulfillment

4. Digital Marketing and eCRM strategically significant  CRM Objective: The development and maintenance of mutually beneficial long-term relationships with strategically significant customers digitalintegrates  e-CRM, uses digital processes, data and applications and integrates customer information collected at every customer touch/interaction point in the context of Multichannel Retailing (i.e. Internet, Web, Mobile, Call Centers, Sales force, POS at the physical store, Digital Interactive TV, etc.)  CRM Levels/Perspectives: (a) Strategic, (b) Operational, (c) Analytical disproportionatelyprofitable  e-CRM allows firms to leverage their resources by applying them disproportionately to the most profitable customers. integrate  Need to integrate a firm’s entire supply chain to create consumer value

5. Perspectives of eCRM  Management:  Management: eCRM is more a business strategy than technology. Aims to manage customer life cycle, increase loyalty, profitability, retention  Information Systems:  Information Systems: Emphasis on technological aspects of eCRM Technology. Combination of software, hardware, processes and applications aligned with customer strategies  E-Business:  E-Business: eCRM is an application of e-business digital activities. Collect customer data at every “touch point”  Knowledge Management:  Knowledge Management: eCRM means learning customer better  Marketing:  Marketing: eCRM is the 5th “P” of marketing mix. Emphasis on long term relationships and one-to-one interactions through communication channels  Human Resource Management:  Human Resource Management: Adoption of a customer-oriented culture by both top management and employees within an organization

6. Perspectives of eCRM Where: EC = e-commerce BI = business intelligence CRM = customer relationship management SCM = supply chain management ERP = enterprise resource planning CRM [EB = EC + BI + CRM + SCM + ERP] Having solved their back-end problems through ERP, many companies are now focusing on solving their front-end ones through CRM

7. eCRM Benefits & Opportunities retainacquire  Less expensive to retain one customer than to acquire one:  reduced promotion costs  higher response rates to promotional efforts  sales teams are more effective when they know customers  loyal customers cost less to service  increase up and cross sell  from a consumer’s perspective the basic dogma of CRM is choice reduction - most customers desire brand loyalty as much as the firms they patronize  WOM is the heart of CRM The idea (i.e., focus on profitable customers) is not new. What is new is that ICT allows firms to identify high-value customers and respond with customized offers in realtime

8. eCRM Benefits & Opportunities CRM projects goals:  Some indicative CRM projects goals:  Increase order size through more effectively targeted cross-sell promotions  Expand wallet share by increasing the variety of products and categories customers buy from you  Move overstocks by knowing which customers will buy them at list price to avoid deep discounting  Enable mutlichannel coordination of field sales, inside sales, e-commerce and direct mail through relevant product recommendations for each customer interaction

9. eCRM Process 1. Identify 3. Customize 2. Differentiate Interaction Customize Marketing Mix Offerings to meet the needs of individual customers Research to gain insights to help identify current and potential customers Use that information (i.e., step 1) to differentiate among individual customers especially focusing on differences between high-value and low- value customers

10. The Role of Technology in eCRM  Technology greatly enhances CRM processes collect  Help to collect information about consumer behavior and characteristics (e.g., bar code scanners, cookies, online questionnaires, etc.) store  Help to store information (e.g., data warehouses) convert  Help to convert information to knowledge (e.g., data mining, OLAP techniques, etc.)  Result:  Result: Allow marketers to develop marketing mixes that better meet individual needs (i.e., individualized marketing mixes  mass customization)

11. The Role of Technology in eCRM  Customer Database:  Transactions  Customer Contacts  Customer Preferences  Descriptive information (e.g. demographic data)  Responses to Marketing activities

12. Manipulating and Measuring eCRM Effectiveness  Manipulated Variables/Attributes/Features/Applications & Tools:  Manipulated Variables/Attributes/Features/Applications & Tools: Those variables controlled by the retailer (e.g. customer service through call centers, personalized marketing campaigns, individualized selling proposals, loyalty scheme programs, time to answer incoming mails, integration with ERP systems, promotional programs, etc.).  Dependent Variables:  Dependent Variables: Those variables that refer to Consumer Behaviour (e.g. sales, revisit rate, RFM, share of wallet, number of new customers referred from partner sites, campaign response, rate of customer recovery, prospect conversion rate, customer up and cross-sell rate, average order value (AOV), satisfaction, loyalty, trust, perceived service quality, entertainment, time spend within the store, number of complaints, current customer retention cost, number of low-value customers move to high value, etc.) 

13. Manipulating and Measuring eCRM Effectiveness...... Manipulated Variables...... Dependent Variables

14. Lessons Learned from Business Practice (1/7)  Clear Vision & Commitment  Permission Marketing  Training and Education  Motives  Involvement of all stakeholders from the beginning of the project  Levit’s Diamond!

15. Lessons Learned from Business Practice (2/7)  eCRM must be part of the E-Marketing Plan  Effective Measurement & Evaluation Mechanisms and Contingency Plans  Expertise within the company also in the case of total outsourcing!  Exploit eCRM for new business models & opportunities  Adopt an interdisciplinary approach

16. Lessons Learned from Business Practice (3/7)  Customer centric strategy  Degree of improving or redesigning processes  Software  Technical Infrastructure  Enable multichannel coordination  Consider significant differences between cultures, markets, business sectors and size of the company

17. Lessons Learned from Business Practice (4/7)  No always need to buy an expensive eCRM software  eCRM is both Strategy and Tool  Need to clarify what is eCRM and what is not!!  Buy one eCRM software module or the total eBusiness solution?  Do not ignore other than e-mail communication channels (e.g. call-centers, salesforce, etc.)

18. Lessons Learned from Business Practice (5/7)  Opportunity  Low cost mass customization (e.g. individualized printed catalogues)  Target the right customers  Streamline business processes that impact the customer (CRM-ERP-SCM)  Provide a 360-degree view of the customer relationship  Let customers help themselves and do their jobs – Keep the control of the key manipulated variables

19. Lessons Learned from Business Practice (6/7)  Invest in Consumer Behaviour Surveys!  Guard Consumer Privacy  Get certifications  Foster community (e.g. blogs!!)  build loyalty  Differentiation by valuation is not profitable unless a firm can say that at least half of its profits come from 20% or fewer of its customers  Family business and eCRM

20. Lessons Learned from Business Practice (7/7)  CRM means different things to different people!  Debate: Is CRM an all or nothing process?  Avoid unrealistic expectations!  Use CRM consultants – Do not reinvent the wheel!  Seek for vertical solutions (i.e. sector based)  Measure Results form the first moment!