1 Lecture 8 Ch.3 Customer Relationship Management.

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Lecture 8

Ch.3 Customer Relationship Management

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Agenda

• 1. Customer Relationship Management• 2. Conflict vs. Cooperation• 3. Consumer-Centric• 4. Data Mining and CRM• 5. CRM Technology• 6. System Integration• 7. ERP and CRM• 8. Dell Direct• 9. Questions to Ponder

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1. Customer Relationship Management

• General concept • Customer management addresses a whole range of whole range of

issuesissues including customer information management, customer value management, customer care, and customer-centric management.

• CRM can therefore, be defined as a business strategy that helps the organization to better understand and manage the needs of its present and potentialpresent and potential customers.

• Goal of CRM is then ….

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CRM

The goal is to achieveto achieve customer satisfaction through deployment of knowledge and and information about the customer across the different functional units and the supply chain network of the company.

Requirement & functions

CRM has become a core part of e-strategye-strategy.

CRM in practice: Case 1Case 2

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mySAP CRM

Internet Assignment: Visit and explore the mySAP CRM Web site and see if you can identify its key features.

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The Ritz Carlton Hotel

Internet Assignment: Visit and explore the Internet site for the Ritz-Carlton Company (http:// www.ritzcarlton.com). Review the Ritz-Carlton’s CRM initiatives.

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2. Conflict vs. Cooperation

• Challenge 1: With the advent of the Internet, there is a possibility that channel partners such as dealers may be in direct competition with manufacturers. Some of the manufacturers that once sold their products solely through dealerships are now maintaining online shops where customers can make purchases directly.

• Challenge 2: Yet, the expectations of customers remain high that once such purchases are made, they could go to nearby dealers if they wish for required services.

• Solution: Channel partners need to understandneed to understand that their main goal is to achieve customer satisfaction by providing quality goods and services to customers. – How to achieve it ….

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3. Consumer-Centric• The only way to satisfy the needs of the customer is to

understand exactlyunderstand exactly what the customer wants by listening to the voice of the customer.

• That is why information is keyis key to effective customer relationship management.

• An online customer may want: – (1) the expediency that is provided by the Internet, – (2) the availability of information, – (3) the security of transactions, – (4) quality products, and – (5) quality customer service at their fingertips.

• The main objective here is to achieve– Gaining trust of present customers & attract potential cusotmers

How to determine the criteria of consumer-centric? (to p9)(to p2)

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4. Data Mining and CRM

• Data acquisition and management are often associated with the traditional practices of statistics.

• Data mining is a new way of looking at information to serve and guide an organization’s decision-making process.

• Example 1 : items sell in drug store (grouping lip stick, new pro, and eye shadow)

• Example 2: items sold in supermarket (grouping beef, pork & sausages)

• Example 2 : group technology (one technique provides solutions for DM)

• How to plan it…. (to p10)

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StrategicStrategic data mining must be:

1. Process-oriented (how things work in business transactions)

2. Driven by business objectives to deliver high-value return-on-investment

3. Integrated into larger (business) process

4. Deliver actionable knowledge enabling decision-makers to make smarter, more profitable decisions

• Where these data comes from? (to p11)

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Data Mining: Sources of Information

All parties involved surrounding to an organization:1. Employees2. Customers3. Society4. Supplier5. Vendors6. Regulators7. Competitors

The usefulness of CRM? (to p12)

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Data Mining in CRM

Three notable contributions of data mining to CRM:

Reduced churn rate (r esulted from royalty, obtain by profiling customers and

getting value customers & retain them in such it reduces the change of royalty)

Increased turnover per customer (enrich cross sell of your

products eg grouping new products to good sell products …)

Reduced costs (reduce marketing cost because we now focus our Present customers more than

New customers…)

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5. CRM Technology

• Customer Interaction Management

• Customer Decision Support

• Customer Information Management

• Workflow Management

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6. System Integration

• CRM is not just about software but about theabout the customer, the people and the business processes that are used to achieve customer satisfaction.

• CRM softwareCRM software should enhance the customer experience with the company by helping to offer value to the customer.

• System integrationSystem integration is therefore essential to accomplish this goal (e.g. MySAP).– 1) system compatibility with different vendors– 2) merging of CRM, ERP, and SC<

• The effectiveness of CRM dependent on … (to p15)

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CRM enhances customer experiences by relying on four key technologies:

technology-enabled selling (Internet-based with telecommunication appli.)

call centers (direct contact to customer, track down work requests form customers, and

identifying the common causes of complaints from customers)

e-business data warehousing/mining

The Role of CRM in SCM/ERP venture…(to p16)

Other Features of CRM

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7. ERP and CRM

Collaborative Applications

Fulfillment Production Replenishment

SAP Oracle

Siebel

EnterpriseBack-endBack-endERP

Front-endFront-endCRMSuppliers Customers

Employees

e.g. Knowledge Mgt.

MySAP ERP

Customer Relationship

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8. Dell Direct Case

• Dell Direct can be summarized to focus on effective customer support (strategic alliance with

Unisys, Wang and others), exceptional service (supply chain network and information systems), and segmentation of customer base (platinum and gold

accounts). • This approach is built on a customer strategy

that views customer as the essence of Dell's business and posits Dell as striving to satisfy its customers by understanding and meeting their unique needs. (to p2)

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9. Questions to Ponder

• What are the key capabilities of CRM software?

• What is the stakeholder looking for in the digital age, and how can we deliver it?

• If you were to implement CRM systems, what would be the most important factors to consider?

• What factors need to be taken into account when considering CRM vendors?

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Questions to Ponder

Consider the text’s view on Channel Conflicts: “CRM has gotten a bad name due to the abuse of customer information by vendors and their marketing affiliates.” Working in a team of three or four people, discuss the implications of this comment. Specifically, address the following: why should a firm be concerned with this practice? What is the customer looking for, and how can we deliver it?

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Objective of CRM

• To study the needs and requirements of customers

• To track down customer behavior– Eg customers’ registration to the product web

site via Internet, and ask their relevant information/data

• On-going process because– The change of business environment

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CRM

• Here, we are more moving from “product-centric” to “customer-centric”

• And also we are now progressing– Data to Information to Knowledge

• Input = quality of customer data

• Output = customer loyalty + satisfaction

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Requirement & Functions

• Requirements

• Functions

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Requirements

1. Customer engagement

2. Initial contact

3. Planning approach

4. Leads

5. Marketing

6. Sale strategy

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Functions

• Effective data collection

• Information management

• Data warehousing

• Techniques renders dataMining

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Customer Interaction Management

• Our focus here is to emphasize on how user using our system

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• Contact management tool– Eg contact by phone, email for communications between org and users

• Channel management tool– Eg. Online tracking system that will monitor how users using e-Banking in doing their

transactions, so that we could study their behavior

• Content management tool– Manage what the customer sees and information make available to them, such as

• IPO, application of credit cards online, e-trading etc.

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Customer decision support

• Statistical tools such as DM, OLAP• Objective

– Obtain Business Intelligent (BI) or customer intelligent (CI)

– Plan our customer intelligent strategy and focus on cultivating the most profitable customers relationship• Eg HSBC’s Premium customers

• How to achieve them:1. Understand the customers2. Optimize customer interaction3. Leverage the customer as an asset

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Customer Information Management

• Creating/establishing the understanding structure for IM to support CRM

• B that provides right time, right place, right information, right customers when making decisions

• Acquiring information about customers & achieve information quality

• Present customers data from different sources in an uniform formation to CIM

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Workflow management

• Use to specify and execute task, actions, policies that enhance customer services

• Examples:– Regular scheduling of tasks, such as reply customers’

email automatically – Time management, ie update client information– Automated e-mail retrieval, for say renewing

subscription of services– Automated tasks & schedule that focus to customers

than less important jobs– Schedule management using work calendar

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