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  hapter 11hapter 11

Building a Customer-CentricBuilding a Customer-CentricOrganization – CustomerOrganization – Customer

Relationship ManagementRelationship Management

11-1

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Learning Outcomes

Compare operational and analytical customerrelationship management

Identify the primary forces driving the explosivegrowth of customer relationship management

Define the relationship between decision

making and analytical customer relationshipmanagement

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• Manages all of the ways used by firms to deal withManages all of the ways used by firms to deal with existing and potentialexistin

g and potentialnew customersnew customers

• CRM is both aCRM is both a Business and Technology Business and Technolo

gy  disciplinediscipline

• CRM Uses information system toCRM Uses information system to integrateintegrate entire business processes of aentire business processes of afirms interaction with its customers!firms interaction with its customers!

• "rovides end#to#end customer care $ from order receipt through delivery"rovides end#to#end customer care $ from order receipt through delivery

and after sale service and support%and after sale service and support%

• "rovides a unified view of customer across the company"rovides a unified view of customer across the company

• Consolidates customer data from multiple sources $retail stores& phone&Consolidates customer data from multiple sources $retail stores& phone&

e#mail& the 'eb% and provides analytical tools for answering (uestionse#mail& the 'eb% and provides analytical tools for answering (uestions

Customer Relationship Management Systems CRM!

Customer Relationship

Management CRM!- o"er"ie#

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11-$

CRM ) Customer Relationship Management

*ystems

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Recency& .re(uency& and Monetary

/alue

• 0rgani+ations can find their most valuable

customers through 1R.M2 # Recency&

're(uency& and Monetary value

 , -ow recently a customer purchased items

$Recency%

 , -ow fre(uently a customer purchased items

$.re(uency% , -ow much a customer spends on each

purchase $Monetary /alue%

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11-(

3he 4volution of CRM

There are 3 phases in the CRM evolution:

• CRM reporting technology  , help organi+ationsidentify their customers across other applications

• CRM analysis technologies , help organi+ationsegment their customers into categories such as )est and #orst customers

• CRM predicting technologies , help organi+ationsmake predictions regarding customer behavior such aswhich customers are at risk of leaving

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3he 4volution of CRM

• 3hree phases in the evolution of CRM

include reporting& analy+ing& and

predicting

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3he 4volution of CRM

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5ood CRM systems5ood CRM systems

6y consolidating customer data& one should be able6y consolidating customer data& one should be ableto answer (uestions such asto answer (uestions such as

 , 'hats the value of particular customers over their lifetime7'hats the value of particular customers over their lifetime7

 , 'ho are the most loyal customers7 $'ho are the most loyal customers7 $ costs 6 times more to sell to a newcosts 6 times more to sell to a newcustomer than an existing onecustomer than an existing one%%

 , 'ho are firms most profitable customers7 $'ho are firms most profitable customers7 $80%-90% of the firm’s profit80%-90% of the firm’s profitare generated by 0%-!0% of its customersare generated by 0%-!0% of its customers %%

 , 'hat do these profitable customers buy7'hat do these profitable customers buy7

'irms can then use the ans#ers to these uestions to acuire ne#'irms can then use the ans#ers to these uestions to acuire ne#customers.customers.

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 CRM Demo# *8"

• *8" CRM 

4nabling Customer#9oyalty Management

*8"!com is the ma:or producer of CRM systems

http://www.youtube.com/watch?v=8YMLaDeEV_Ihttp://www.youtube.com/watch?v=8YMLaDeEV_I

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Customer Relationship

Management/s 0plosi"e ro#th

CRM 6usiness Drivers

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Customer Relationship

Management/s 0plosi"e ro#th

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Operational "s. nalytical CRM

• Operational CRM , supports traditionaltransactional processing for day#to#dayfront#office operations or systems that

deal directly with the customers

•  Analytical CRM , supports back#office

operations and strategic analysis andincludes all systems that do not dealdirectly with the customers

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0perational CRM

• Customer#facing applications& such as

sales force automation& call center and

customer service support& and marketing

automation

• 4xamples) Campaign management& e#

marketing& telemarketing& tele#selling& e#

selling& field sales

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 8nalytical CRM

•  8pplications that analy+e customer data

generated by operational CRM

applications to provide information for

improving business performance

• 4xamples) Develop customer profiles;

analy+e customer or product profitability;

identify trends in sales length cycle;

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 8nalytical CRM

• Personalization , when a 'eb site knows enoughabout a persons likes and dislikes that it can fashionoffers that are more likely to appeal to that person

•  8nalytical CRM relies heavily on data warehousingtechnologies and business intelligence to collect insightsinto customer behavior 

• 3hese systems (uickly aggregate& analy+e& anddisseminate customer information throughout anorgani+ation

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4sing nalytical CRM

 to 0nhance 5ecisions

 8 data #arehouse is a repository of an organi+ation

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*ummary

6usiness /alue of Customer Relationship

Management *ystems

=! Increased customer satisfaction

>! More effective marketing and reduced directmarketing costs

?! 9ower costs for customer ac(uisition

@! Increased revenue from identifying most profitable

customers and segments for marketingA! Reduced churn rate $Bumber of customers who stop

using or purchasing products or services from a

company%

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More CRM DemosMore CRM Demos

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CRM 5emo CRM 5emo "ideo – 3 min.!"ideo – 3 min.!

Microso6t CRM - 7hat can it do 6or you8 Microso6t CRM - 7hat can it do 6or you8 "ideo - 3 min.!"ideo - 3 min.!