Chapter 5 DIGITAL MARKETING

CHAPTER 5RELATIONSHIP MARKETING USING DIGITAL PLATFORMS

NUR AQILAH BINTI ZAINUDINBM2403B

LEARNING OBJECTIVES

• Assess the relevance and alternative approaches for using digital platforms for customer relationship management

• Evaluate the potential of the Internet to support one-to-one marketing, and the range of techniques and systems available to support dialogue with the customer through digital media

• Assess how to integrate social and mobile interactions to develop social CRM capabilities

INTRODUCTION

Customer Relationship Management (CRM)

=======>>A marketing led approach

to building and sustaining long-term business with

customer>>Is essential for any sustainable business this applies equally to online elements of a business.>>Failure to build relationship with visitors and sales largely caused the failure of many dot-coms following huge expected on customer acquisition

One-to-One marketing=======

>> A unique dialogue occurs between a company and individual customers(or group of customers with

similar need)>> so many companies

apply CRM by using approaches which automate

the tailoring of services to develop relationship with

particular customer segment, group and

individuals.

ELECTRONIC CUSTOMER RELATIONSHIP

MANAGEMENT (E-CRM)

Involve s creating strategies and plan for how digital

technology and digital data can support CRM

# Using the website and online social presences for customer

development # Managing customer profile

information from other database # Managing customer contact option through mobile, e-mail,

and social networkData mining to improve targetingProvide online customer service

facilitiesManaging online service quality

Managing multichannel customer experience

FROM E-CRM TO SOCIAL CRM

1. Marketing monitoring 2. Sales

3. Service and support

4. Innovation 5. Collaboration

6. Customer experience

E-CRM====

Using digital communication techno. to maximize sales to

existing customerSOCIAL CRM

====Managing C2C conversation to engage existing customer,

prospect and other stakeholder

The scope of Social CRM across business functions.

THE CHALLENGE OF CUSTOMER ENGAGEMENT

Customer engagement as marketing new key metric, given then rapidly increasing online media fragmentation and the challenges of keeping customers engaged with brands given the proliferation of

choice.

Customer engagement : repeated interactions that strengthen the emotional , psychological or physical investment a customer has in

a brand.

media fragmentation : describes a trend to increasing choice and consumption of a range of media in terms of different channels such

as web and mobile and also within channel such as TV, radio stations, magazines and more website.

FOUR PARTS : Involvement, interaction, intimacy, influence

BENEFITS OF USING E-CRM TO SUPPORT CUSTOMER ENGAGEMENT

TARGETING MORE COST EFFECTIVELY

MASS CUSTOMISATION OF THE MARKETING MESSAGE

INCREASED DEPTH AND BREADTH OF INFORMATION AND IMPROVE THE NATURE

OF RELATIONSHIP

DEEPERCUSTOMER UNDERSTANDING AND MORE RELEVANT COMMUNICATION

CAN BE DELIVERED

LOWEST COSTDELIVERING LOYALTY

PROGRAMMES

OPPORTUNITIES FOR GAMIFICATION

Marketing applications of e- crm

Sales force automation: sales representatives are supported in their account

management through tools to arrange and

record customer visit.

Customer services management :

representatives in contact centers respond to

customer request for information by using intranet to access.

Managing the sales process : can be achieved through e-commerce sites

Customer communications

management : managing communications

integrated across different channels like direct mail,

e- mail, social network

Analysis : through technologies such as data

warehouse and approaches such as data

mining

Crm technologies and data

Database technology is at the heart of delivering these CRM applications. The database is accessible through an intranet website accessed by employees or an extranet

accessed by customers or partners providing an interface on to the entire customer relationship management

system.

3 main types of customer data ==========================

Personal and profile data : include contact details and characteristic for profiling customers such as age and

sex,business size.Transaction data : record of each purchase transaction

including specific product purchased, quantities, category, location, date, time and channel where purchase

Communication data : record of which customers have been targeted by campaign and their response to them.

Customer lifecycle management

CUSTOMER LIFECYCLE

Stages each customer will pass through in a long term relationship through acquisition, retention and extensionCUSTOMER SELECTION

defining the types of customers that a company will market to. It means identifying different groups of customers for which to develop offerings and to target during acquisition, retention and extension.CUSTOMER ACQUISITION

refer to the marketing activities to form relationship with new customers while minimizing acquisition costs and targeting high value customers.CUSTOMER RETENTION

refer to the marketing activities taken by an organization to keep its existing customers.CUSTOMER EXTENSION

refer to increasing the depth or range of products that a customer purchase from a company.

The four classic marketing activities of customer relationship management

CUSTOMER EXTENSION TECHNIQUES THAT ARE PARTICULARLY IMPORTANT TO RETAILER

RE-SELL

UP-SELL

REACTIVATION

REFERRALS

CROSS-SELL

5 IS

IDENTIFICATION – can the

customer be recognised for

different channel contacts?

INDIVIDUALISATION

– can communications and products be

tailored?

INTEGRATION – is there a 360 degree view of the customer?

INTEGRITY – is the

relationship built on trust?

INTERACTION – are

communications two-way?

PERMISSION MARKETING

>Is a significant concept that underpins online CRM in management of the customer lifecycle.

>Permission marketing is a term coined by Seth Godin (1999) it is the best characteristics with just three or four words.

Stage of the customer lifecycle

STAGE 1 = ATTRACT NEW AND EXISTING CUSTOMER TO

ONLINE PRESENCE

STAGE 2a = INCENTIVES VISITORS TO

ACTION

STAGE 3 = MAINTAIN

DIALOGUE USING ONLINE

COMMUNICATION

STAGE 4 = MAINTAIN

DIALOGUE USING OFFLINE

COMMUNICATION

STAGE 2b = CAPTURE

CUSTOMER INFORMATIO

N TO MAINTAIN RELATIONS

HIP.

A summary of an effective process of permission-based online relationship building

E-MAIL MARKETING AND SOCIAL CRM COMMUNICATION STRATEGY

PRINCIPLE 1<> CONSIDER SELECTIVE OPT-IN TO COMMUNICATION

<>Communication preferences to the customer to ensure more

relevant communication.

PRINCIPLE 3<> OFFER A RANGE OF OPT-IN INCENTIVES

<>many websites now have free win save incentives to encourage

opt-in, but often it is one incentive fits all visitors.

PRINCIPLES 6<> CREATE AN OUTBOUND CONTACT STRATEGY<> Online permission marketers

need a plan for number, frequency and type of online and

offline communications and offers.

PRINCIPLE 2<> CREATE A COMMON CUSTOMER PROFILE. <>A structured approach data capture is needed otherwise

some data will be missed, as is the case will be company that

collected 80,000 e-mail address.

PRINCIPLE 4<> DON’ T MAKE OPT-OUT TOO EASY

<>often marketers make it too easy to unsubscribe.

PRINCIPLE 5<> WATCH, DON’T ASK OR SENSE AND RESPOND

<>The need to ask interruptive questions can be reduce through

the use of monitoring clicks to better understand customer need

and to trigger follow up communications.

RIGHT TOUCHING THROUGH DEVELOPING ONLINE CONTACT STRATEGIES

increase in media fragmentation and the development of high

attention media such as social network, the need for developing

a structured approach to communicating with customer

across the lifecycle has become more urgent.

THE CONTACT STRATEGY SHOULD INDICATE :

1 FREQUENCY 2 INTERVAL

3 CONTENT AND OFFERS 4 LINKS

5 A CONTROL STRATEGY

THE EMOTIONALLY UNSUBSCRIBED E-MAIL LIST MEMBERS

Measure the level of activity in e-mail response at a more granular

level.

Test different frequencies

Develop automated customer lifecycle e-mails which are part of

the contact strategy.

Ensure the field that are used to customize messages

Use offline communications.

PERSONALISATION AND MASS CUSTOMISATION

Personalization and mass customization

can be used to tailor information

content, website or within an opt-in e-

mail.

PERSONALISATION=====

Refer to customization information requested by a site customer at

an individual level

MASS CUSTOMISATION

====providing tailored content to a group or individuals with similar interests.

COLLABORATIVE FILTERING

====Customer are openly asked what them are, by checking boxes corresponding to their

interest.

USING DIGITAL MEDIA TO INCREASE CUSTOMER LOYALTY AND VALUE

The ultimated commercial aim of relationship marketing

approaches such as e-CRM and social CRM is to increase engagement with customers leading to increase customer

loyalty and direct sales.

DETERMINING WHAT CUSTOMER VALUE

Consider the different forms of online interaction a

consumer can have with a brand that can determine

their perceptions of satisfaction and influence

loyalty

Emotional loyalty===

Demonstrated by favorable perception, options and

recommendation

Behavioral loyalty===

Demonstrated by repeat sales and response to marketing campaign

THE RELATIONSHIP BETWEEN SATISFACTION AND LOYALTY

Terms satisfaction and loyalty are sometimes used interchangeable seen that they do not necessarily respond.

CUSTOMER SATISFACTION>>Refer to the

customer is happy about the quality of

product and service.

>>A customer with product or service

increases, so should their behavioral and emotional together

with advocacy.

MEASURING THE VOICE OF THE CUSTOMER IN DIGITAL MEDIA

Online voice of customer (VoC)

=== Qualitative

assessments of the effectiveness of digital

presence based on direct customer feedback. They

answer ‘who and why’ questions about how customers interact with brands online

Net promoter score (NPS)

=== A measure of the

number of advocates a company or website

has who would recommend it

compared to the number of detractors.

Differentiating customers by value and engagement

A core approach to relationship marketing is to focus our limited resources and activities on the most valuable customers.

Within the online customer base of service and purchasing.

OBJECTIVES AND CORRESPONDING TACTICS

• Increase the number of new users per month and annually.

• Increase the percentage of active users• Decreasing the percentage of dormant

users• Decreasing the percentage of inactive

users.

Lifetime value modelling

Is a key to the theory and practice of

customer relationship management.

Digital technology has enabled

marketers to become more sophisticated in

how identify and target valuable

customers

Recency frequency monetary value (rfm) analysis

Recency

Frequency

Monetary value

Latency

Hurdle rate

Recency frequency monetary value ( RFM ) analysis

Recency : customer action such as

purchase , site visit, account access, e-

mail response

Frequency : is the number of times an action is completed

in a period of a customer action

such as purchase, visit, e-mail response

Hurdle rate : the proportion of customer that fall within a

particular level of activity for example, the percentage of

members of an e-mail list and click on the e-mail within 90 day

period.

Latency : the average length of time that different

activities such as log in, paying bills, first

and second purchase.

Monetary value : can be measured in different way .

Generally, customers with higher monetary values tend to have a

higher loyalty and potential future value

since they have purchased more items.

GROUPING CUSTOMERS INTO DIFFERENT RFM CATEGORIES

STATISTICAL RFM ANALYSIS=====

this involves placing an equal number of customers in each

RFM category using quintiles of 20% (10 deciles can also be used for larger databases)

ARBITRARY DIVISIONS OF CUSTPMER DATABASE

====This approach is also useful since the marketers can set thresholds

of value relevant to their understanding of their customers.

PRODUCT RECOMMENDATIONS AND PROPENSITY MODELING

====PROPENSITY MODELING

Is one name given to the approach of evaluating customistics and behavior

in particular previous product or services purchases and

recommendations for the next suitable product.

Applying virtual communities and social networks for crm

1. CREATING COMMUNITY THROUGH SOCIAL NETWORKS

FACEBOOK COMPANY PAGETWITTER PAGE

LINKED IN COMPANY PAGES AND GROUP

GOOGLE+ GOOGLE+YOUTUBE CHANNEL

2. CREATING YOUR OWN PRESENCEPURPOSEPOSITIONINTEREST

PROFESSION

SUMMARY

1. E-CRM enables ‘sense and respond’ communications where personalised e-mail or web based messages can be delivered based on disclosed or inferred customers preferences stored as customer profiles.

2. E-CRM also involves management of online services to deliver customer service which is aimed at improving brand loyalty.

3. The classic model for permission marketing to support E-CRM is :Step 1 – attract customers to website, partner microsite or social presence such as Facebook.Step 2a – incentive in order to gain contact and profile information.Step 2b – capture customer information to maintain the relationship and profile the customer.Step 3 – maintain dialogue through using online communications to achieve repeat site visits.Step 4 – maintain dialogue consistent with customer’s profile using e-mail, social media messaging or where cost- effective, direct mail or outbound phone contact.