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Chapter 11

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

  2. Learning Outcomes • Compare operational and analyticalcustomer 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. 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, e-mail, the Web) and provides analytical tools for answering questions Customer Relationship Management (CRM)- overview Customer Relationship Management Systems (CRM)

  4. CRM : Customer Relationship Management Systems

  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

  6. CRM Demos 1 • SAP CRM Deliver Superior Customer Service SAP.com is the major producer of CRM systems

  7. 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)

  8. 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

  9. The Evolution of CRM • Three phases in the evolution of CRM include reporting, analyzing, and predicting

  10. The Evolution of CRM

  11. 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.

  12. CRM Demos 2 SAP CRM Enabling Customer-Loyalty Management

  13. Customer Relationship Management’s Explosive Growth CRM Business Drivers

  14. Customer Relationship Management’s Explosive Growth CRM Spending (in billions)

  15. 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

  16. 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

  17. 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;

  18. 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

  19. 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

  20. CRM Demos 3 SAP CRM Improving Order Management

  21. 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)

  22. More CRM Demos • Microsoft CRM Demo (Fun) (video- 3 min.) • Microsoft CRM Business Solutions - Product Demo - Case Study (video – 3 min.) • Microsoft CRM - What can it do for you? (video - 3 min.)