1. Chapter 11
Building a Customer-Centric Organization – Customer Relationship Management
11-1

2. Learning Outcomes
Compare operational and analytical customer relationship management
Identify the primary forces driving the explosive growth of customer relationship management
Define the relationship between decision making and analytical customer relationship management

3. Customer Relationship Management (CRM)- overview
Customer Relationship Management Systems (CRM)
Manages all of the ways used by firms to deal with existing and potential new customers
CRM is both a Business and Technology discipline
CRM Uses information system to integrate entire business processes of a firm’s interaction with its customers.
Provides end-to-end customer care ( from order receipt through delivery and after sale service and support)
Provides a unified view of customer across the company
Consolidates customer data from multiple sources (retail stores, phone, , the Web) and provides analytical tools for answering questions

4. CRM : Customer Relationship Management Systems4

5. Customer Relationship Management (CRM)
CRM enables an organization to:
Provide better customer service
Make call centers more efficient
Help sales staff close deals faster
Simplify marketing and sales processes
Discover new customers
Increase customer revenues
As the business world increasingly shifts from product-focus to customer-focus, most organizations recognize that treating existing customers well is the best source of profitable and sustainable revenue growth

6. Recency, Frequency, and Monetary Value
Organizations can find their most valuable customers through “RFM” - Recency, Frequency, and Monetary value
How recently a customer purchased items (Recency)
How frequently a customer purchased items (Frequency)
How much a customer spends on each purchase (Monetary Value)
Once a company knows this information, it can begin to strategize marketing campaigns, sales promotions, and other ways to increase business
For example: If Ms. Smith buys only at the height of the season, then the company should send her a special offer during the “off-season”

7. The Evolution of CRM There are 3 phases in the CRM evolution:
CRM reporting technology – help organizations identify their customers across other applications
CRM analysis technologies – help organization segment their customers into categories such as best and worst customers
CRM predicting technologies – help organizations make predictions regarding customer behavior such as which customers are at risk of leaving
Reporting
Help organizations identify their customers across applications
Analyzing
Help organizations segment their customers into categories such as best and worst customers
Predicting
Help organizations make predictions regarding customer behavior such as which customers are at risk of leaving

8. The Evolution of CRM
Three phases in the evolution of CRM include reporting, analyzing, and predicting
Reporting
Help organizations identify their customers across applications
Analyzing
Help organizations segment their customers into categories such as best and worst customers
Predicting
Help organizations make predictions regarding customer behavior such as which customers are at risk of leaving

9. The Evolution of CRM

10. Good CRM systems
By consolidating customer data, one should be able to answer questions such as
What’s the value of particular customers over their lifetime?
Who are the most loyal customers? ( costs 6 times more to sell to a new customer than an existing one)
Who are firm’s most profitable customers? (80%-90% of the firm’s profit are generated by 10%-20% of its customers)
What do these profitable customers buy?
Firms can then use the answers to these questions to acquire new customers.

11. CRM Demo- SAP SAP CRM Enabling Customer-Loyalty Management
SAP.com is the major producer of CRM systems 11

12. Customer Relationship Management’s Explosive Growth
CRM Business Drivers
Brother International experienced skyrocketing growth in its sales of multifunction printers
Along with skyrocketing sales growth came a tremendous increase in customer service calls
When Brother failed to answer the phone fast enough, product returns started to increase
Brother purchased, designed, developed, and deployed SAP’s CRM solution
The 1.8 million calls dropped to 1.57 million – reducing call center staff from 180 agents to 160 agents
The CRM system has also reduced call duration by an average of one minute, saving the company $600,000 per year

13. Customer Relationship Management’s Explosive Growth
Can you think of an industry or company that would not benefit from a CRM system?
Every business can benefit from CRM!
Business 2.0 magazine recently rated the top 50 important people for 2006
The number 1 person was “You, The Consumer”, due to the information age, personalization, and the growing importance of the consumer

14. Operational vs. Analytical CRM
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

15. Operational CRM
Customer-facing applications, such as sales force automation, call center and customer service support, and marketing automation
Examples: Campaign management, e-marketing, telemarketing, tele-selling, e-selling, field sales

16. Analytical CRM
Applications that analyze customer data generated by operational CRM applications to provide information for improving business performance
Examples: Develop customer profiles; analyze customer or product profitability; identify trends in sales length cycle;

17. Analytical CRM
Personalization – when a Web site knows enough about a persons likes and dislikes that it can fashion offers that are more likely to appeal to that person
Analytical CRM relies heavily on data warehousing technologies and business intelligence to collect insights into customer behavior
These systems quickly aggregate, analyze, and disseminate customer information throughout an organization
Analytical CRM has the ability to provide an organization with information about their customers that was previously impossible to locate, and the resulting payback can be tremendous. 17

18. Using Analytical CRM to Enhance Decisions
A data warehouse is a repository of an organization's electronically stored data. Data warehouses are designed to facilitate reporting and analysis

19. Summary Business Value of Customer Relationship Management Systems
Increased customer satisfaction
More effective marketing and reduced direct marketing costs
Lower costs for customer acquisition
Increased revenue from identifying most profitable customers and segments for marketing
Reduced churn rate (Number of customers who stop using or purchasing products or services from a company) 19

20. More CRM Demos Microsoft CRM Demo (Fun) (video- 3 min.)
CRM Demo (video – 3 min.)
Microsoft CRM - What can it do for you? (video - 3 min.)