MIB605- Lecture 6 CRM in eCommerce and Social Media · The scope of E-CRM: • Using the website and online social presences for customer development from generating leads through

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MIB605- Lecture 6CRM in eCommerce and Social Media

Prof. Cui

Introduction

� What is CRM (Consumer Relationship Management)

An approach to building and sustaining long-term business with customers.

� Why do we use CRM?

The application of technology to support customer relationship management is a key element of digital business.

Building long-term relationship with customers is essential for any sustainable business.

� The contents of this chapter

• Evaluates different digital Communications

• Structured around the different stages of the classic customer life cycle

• Emphasizes the importance of integrating customer relationship management activities across the

appropriate channels

IntroductionIntroduction

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• Who do we target?• What is their value?

• What is their life cycle?• Where do we reach them?

Customer selection

• Understand individual needs• Relevant offers for continued usage

of online service

• Maximise service quality• Use the right channels

Customer retention

• Target the right segments • Minimise acquisition costs

• Optimise service quality• Use the right channels

Customer acquisition

• “sense and respond”• Cross-selling and up-selling

• Optimise service quality• Use the right channels

Customer extension

The four classic marketing activities of customer relationship management

To increase the customer lifetime value (CLV) across their lifecycle stages

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What is eCRME-CRM, using digital communications technologies to maximize sales to existing customers and encourage continued usage of online service.

The scope of E-CRM:• Using the website and online social presences for customer development from generating

leads through to conversion to an online or offline sale using email and web-based content to encourage purchase.

• Managing customer profile information and email list quality.• Managing customer contact options through mobile , email and social networks to support

up-sell and cross-sell.• Data mining to improve targeting.• Providing online personalization or customization to automatically recommend the “next-

best product”.• Providing online customer service.

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Benefit of eCRM

Using the internet for relationship marketing involves integrating the customer database with websites to make the relationship targeted and personalized. Though doing this marketing can be improved as follows:

• Targeting more cost-effectively.

• Achieve mass customization of the marketing messages(and possibly the product).

• Increase depth, breadth and nature of relationship.

• A learning relationship can be achieved using different tools throughout the customers life cycle.

• Lower cost.

Different levels of eCRM

� Foundational services: includes the minimum necessary services such as web site effectiveness，responsiveness and order fullfilment.

� Customer-centered services: includes order tracking, product configuration and customization as well as security/trust.

� recommendations

� Value-added services: These are extra services such as online auctions and online training and education

� (Cathay Pacific, online checkin, seat selection, order food,,, select newsapers).p

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Key applications of eCRM

� A successful e-CRM solution is the challenge of consolidating all customer-related information into a single view. e-CRM can enable companies of all sizes and across all industries to offer one-to-one relationships to customers.

� The conceptual relationship among five key e-CRM applications.

� Information integration application

� Customer analysis application

� Campaign management application

� Real-time decision application

� Personalized messaging application

Examples of eCRM

� When tickets are purchased online via Lastminute.com, the website retains the customers details and their purchase history. The website regularly send emails to previous customers to inform them of similar upcoming events or special discounts. This helps to ensure that customers will continue to purchase tickets from Lastminute.com in the future.

� Amazon requires customers to register with the service when they purchase items. By using “cookie”, they are ‘greeted’ with a welcome message which uses their name (for e.g. “Hello John”). In addition, their previous purchases are highlighted and a list of similar items that the customer may wish to purchase are also highlighted.

� The supermarket chain, Tesco, offers loyalty cards to its customers. When customers use the loyalty cards during pay transactions for goods, details of the purchases are stored in a database which enables Tesco's to keep track of all the purchases that their customers make. At regular intervals, Tesco sends its customers money saving coupons by post for the products that the customers have bought in the past. The aim of this is to encourage customers to continually return to Tesco to do their shopping

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Steps to eCRMSuccess

� Developing customer-centric strategies, Acquisition of information about the customer

� Redesigning workflow management systems, Re-engineering the business process around the customer. All interactions with customers recorded in one place

� Re-engineering work processes, Integration of Channels and Systems: Respond to customers through their channel of choice, E-mail, phone, chat line, etc.

� Contact different customers via different channels! Such as banks!

� Supporting with the right technologies, Organization and scalability of technology must be able to handle increased volume of customers

� More than a change in technology is required. Change in attitude and philosophy is the key

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Social CRM Definition

� Social CRM is use of social media services, techniques and technology to enable organizations to engage with their customers

� Social CRM has applications in marketing, customer service and sales, including:

� Social Engagement with prospects: SocialCRM tools allow businesses to better engage with their customers by, for example, listening to sentiments about their products and services.

� Social Customer Service: Ownership of social media is shifting away from Marketing and Communication as engagement increasingly relates to inbound customer service-based topics. Rather than social being seen purely as a space for companies to deliver outbound marketing messages, it is the inbound customer queries that allow for meaningful points of engagement and the building of brand advocacy.

� Personalized Marketing Strategy: The ability to create custom content is increasingly dependent on access to reliable, qualitative social user data to facilitate precise audience segmentation. Furthermore, dynamic audience segments, built on both social data and demographic data, allow for more accurate measurement of campaign KPIs.

Because the Customer is going social (App sign-in through FB)

� Consumes information and learns about breaking news through sites like Twitter and Facebook

� Learns about new products through social channels and networks !

� Discusses about products and services on web and Social Media

� Desires a conversation with the brand rather than one-way ad messages. Wants brands to listen, engage and respond quickly

� Expects brands to be active in the same social media site that he participates in

� Brands are recognizing that whilst social media holds value as a broadcast medium, it is also, more importantly, a rich data source and 1:1 communication channel which can be integrated into their CRM and personalisation strategies

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Why Social CRM is valuable?

� Used effectively, social CRM can deliver:� Improved customer service

� Customers now expect to be able to engage with brands on social media, which has led to organisations from retail through to banking setting up dedicated social media customer service channels.

� The business case for introducing social media customer service is supported by consumer research studies which show that customers prefer using social media for its ease and speed of response when compared to traditional phone and email channels.

� Personalised marketing communications and online experiences.

� Brands are increasingly focusing on how they can use social media data to fuel personalised marketing communications and online experiences for their customers.

� Many organisations are currently at the stage of testing the value of capturing and integrating social media data, including:

� Privacy compliant social media data sourced from public profiles and interactions. Username, bio and location are examples of profile data points from Twitter that are often public.

� Permissions-based social media data, collected through apps and social logins, which typically include additional customer data points such as email, profile, connections and interests.

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Marketing

Monitoring, analysis and

response of

customer conversations

through social listening tools

Sales

Understanding where prospects are discussing

selection of products and

services offered by you and competitors and

determining the best way to get involved in the

conversation to influence

sales and generate leads

Service and support

Customer self-help through

forums

provided by you and

neutral sites

Innovation

Using conversations to foster new product

development or

enhance online offerings

Collaboration

Digital business collaboration within an

organization through an

internet and other software tools to

encourage all forms of collaboration which

support business

processes

Customer experience

The use of social CRM to enhance the customer

experience and add value

to a brand which is implied by many of the

other aspects above.

(VIP)

The scope of social CRM

The BODYSHOP case

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In-store and Website

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The BODYSHOP Facebook

Email

� Subscription form should contain additional information

� Distinguish offline type of customer

� Personalized the channel based on the answers in registration form

� Provide form filling in Facebook and special offers via Twitter

� Involve digital designers to optimize the email’s structure and its attractiveness to the customer

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Blog

� An interactive blog that creates a continuous dialogue with a customer. There will be several categories and Q&A section.

� The Categories

• Facial care

• Tutorials Make-up

• Beauty at work

• Your day with The Body Shop

• Men’s products

• Travelling suggestion

� Spreading Share the blog through social networks (Facebook, Twitter), main website link, email updates

My Little Cabinet

� A virtual cabinet will have a record of the products they have purchased in the customer profile account.

� An email will be sent to the customer near the date the products will near end of use according to the standard usage statistic, to remember them to visit

� The Body Shop and refill their cabinet with new ones.

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Crowdsourcing Idea

� Customers will create and share their best home tips for beauty. After they post their ideas, other customers will rate them at the end of each month and the most effective, could be considered for the creation of new products that will be sold on The Body Shop stores.

www.menglu.com

Consultant Network

� Consultants will do more than sell. We will train them to offer expert advice and to demonstrate specific treatments. Once they undertake the course, The Body Shop certificate will qualify them to engage customers.

� Create a consultant’s network available via website and via mobile phone.

� Create a public directory of consultants in London.

� Google Maps will form the base of the CONSULTANT FINDER.

� Customers that are looking for services to be delivered at home can find the appropriate and nearest Consultant.

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Join the Panel

� Loyal customers will be invited to rate products before they even get to the market.

� Get customer´s insight for product development and communications

� Build a group of brand advocates that would spread the word of the products

� Get trials of the product that will finally impact in the product sale..

The Reward SPA

� You don’t pick a package, you will create it. You choose between all the options of products and services we have. It is your chance to try them all

� The customer is invited to the Spa:

� a) By accumulating points with the loyalty card.

� b) By creating and buying your package / gift vouchers

� Segmentation by customer needs and wants

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Selling on the move - the next generation of mCRM

� Mobile CRM, or mobile customer relationship management, enables those working in the field or remote employees to use mobile devices such as smartphones and tablets to access customer data and customer accounts wherever they are.

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Enhanced Function of mCRM

� Mobile CRM has been particularly beneficial for departments such as sales, where sales reps can now attend client meetings with CRM data about the client at the ready and in real time.

� Location-based marketing from GPS data

� Additionally, new analytics tools such as data visualization software have further enhanced the mobile customer relationship management experience by providing easy-to-access, digestible data that sales reps can access in real time to understand gaps in performance, territories where they are performing well and so on.

� Can provide big data for trend-spotting and forecasting!

Why mCRMMatters?

� The mass migration of internet users from desktop PCs to mobile devices is global and universal.

� Users and customers both expect information to be available and updated in real-time

� Sales teams need immediate access to the very latest business information from their colleagues around the world; customers expect a mobile-first experience; and IT department needs a way to get on top of its mobile strategy.

� The promise of mobile CRM is twofold, including not just mobile access to data but also – and more significantly – the possibility of using CRM as a platform on which to build the entire mobile strategy, from branded customer-facing apps to distributed customer service and support.

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Engaging Your Customers via Responding to Online Word-of-mouth

PhD Thesis Examination

Presenter: LI, ChunyuChief Supervisor: Prof. CUI, GengCo-Supervisor: Dr. PENG, Ling

Department of Marketing and International Business Lingnan University, Tuen Mun, Hong Kong

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Define the research problem

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Define the research problem

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Increasing pervasion of online responding

Year No. ofHotels

No. ofReviews

No. ofResponses

% ofRespondedreview

No. ofRespondingHotels

% ofRespondinghotels

2003 96 534 --- 0.00% --- ---2004 140 1378 16 1.16% 4 2.86%2005 159 1885 19 1.01% 2 1.26%2006 161 2212 37 1.67% 8 4.97%2007 173 2991 97 3.24% 17 9.83%2008 182 3555 223 6.27% 28 15.38%2009 183 4775 554 11.60% 61 33.33%2010 191 7014 1622 23.13% 90 47.12%2011 200 11990 3678 30.68% 125 62.50%2012 221 19142 7773 40.61% 157 71.04%2013 235 29709 13872 46.69% 196 83.40%

Source of the data: customer reviews crawled from Tripadvisor.com in 2014

Table 1 Responding rate between 2003 and 2013

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No. of Review No. of Responses % of responded review

Total 108451 40783 37.61%

Rating=5 46019 17106 37.17%

Rating=4 33777 11859 35.11%

Rating=3 15139 6255 41.32%

Rating=2 7459 3209 43.02%

Rating=1 6057 2354 38.86%

Source of the data: customer reviews crawled from Tripadvisor.com in 2014

Table 2 The distribution of responses across different valence

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Study 1: Online Responding as a New Communication

Channel

� Evolution of WOM practices and theories

� Explicitly utilize the power of WOM

� Online responding

� Marketers lose control of communication flow

� Consumers are empowered to share both positive and negative wom

Source: Winer (2009) in JIM

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Study 1: Communication Role Of

Responding In Customer Engagement

Figure 1 Research design for Study 1

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� Data collection

� Hotel reviews on TripAdvisor.com

� 40,783 responses to 108,451 reviews for 275 hotels in San Diego (27 without any review and 36 never respond)

� Two different sets of panel data

� The entire historical data for 248 hotels between 2nd week in 2004 and 35th week in 2014

� Weekly number of votes for helpful reviews from Jan 1st to Aug 27th 2014

Study 1: Empirical Findings

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Study 1: Empirical Findings

DV: Average�� Model 0 Model 1 Model 2

Intercept 1.72**

(.85)1.34(.92)

2.93(2.11)

��(��) .026**(.01)��(��) -.11(.17)

��(��) -.79(.86)��(��) -.39***(.15)

Control variablesInverse Mills ratio -.64(1.11) -.65(1.56) 4.59(3.03)Average valence of previous �� .10(.08) .08(.08) -.05(.14)Average volume of previous �� -.01(.02) -.01(.02) -.08*** (.03)Average dispersion of previous �� -.12(.22) -.09(.22) .49(.33)Average length of previous average �� -.87(2.71) -.30(2.80) -4.63(3.74)Average no. of reviews for previous �� -.00(.00) -.00(.00) -.00(.00)Average no. of votes previous �� received -3.70(4.24) -4.18*(4.24) -3.32(7.01)Average no. of cities previous �� visit .85(3.05) .70(3.09) 4.53(5.59)Average no. of previous ��(��) 4.25*** (1.27) 3.99*** (1.25) 5.26*** (1.86)Average speed of previous ��(��) 1.54** (.74) 1.97** (.83) .65(1.78)Average length of previous ��(��) .02(.37) .05(.37) .19(.70)Average no. of reviews for �� 4.11*** (1.59) 3.94** (1.56) 2.95*** (1.03)Average no. of votes �� received -.71** (.29) -.71** (.29) -.32(.42)Average no. of cities �� visit 1.38*** (.13) -.37*** (.13) -.37*(.20)year effect Yes Yes Yes

Table 5 The influence of online responding on WOM valence (Stage Two)

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Study 1: Conclusions and Discussions

� Important findings:� Signaling role of responding

Higher review valence, larger volume, wider spread of communication, and greater voting

� Frequency of responding

Boosting the volume, horizontal spread of communication, and more active voting

� Immediate responding

Encourage more new reviews and more votes, but not effective in enhancing valence

� Insignificant role of the amount of information

Only exert negative impact on valence; it decreases valence

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Study 1: Conclusions and Discussions

� Discussion� Does it deserve to make a great effort in elaborating on

responses?

� Differential impact of information quantity and information quality (Keller and Staelin 1987)

Information quality improves decision effectiveness whereas information quantity hinders decision effectiveness

� Responding length information quantity

� Responding content information quality

� Different responding strategies may be important.

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Study 2 & 3: Responding to negative WOM

� Why negative WOM?

� Importance of WOM (i.e. Basuroy et al. 2003; Chevalier & Mayzlin 2006)

� Negativity bias (Skowronski & Carlston 1989)

� Accommodative versus defensive responding (Marcus & Goodman 1991)

� Accommodative responding involves full apologies and corrective actions

� Defensive responding provides justifications and explanations

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� Negative publicity

� Service failure recovery

� Interpersonal/inter-organizational apology

Less severe; narrow scope of audience

More severe; large scale of audience

Both defensive and accommodative responding can be effective

Directly affected consumers

Observing consumers

• Responding as coping to negative WOM

Directly involved parties; history with long interaction

� Online responding

Observing consumers; lack history of interaction

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� Hypotheses development� Both defensive and accommodative responding are double-edged

� Moderating role of the nature of negative WOM

� Regular negative review and product failure review (Sridhar & Srinivasan (2012))

� BenefitRaise the concerns about culpability in the future

Potential disconfirmation of guilt

Acknowledgement of guilt

Alleviate vulnerability in the future

� Cost

� Defensive responding

� Accommodative responding

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� Results in Study 2 � Both MANCOVA and separated ANCOVA show significant interaction effect

as well as main effects.

Table 8 Separated ANCOVA resultsDependent variables: Purchase intentionIndependent variables: df F Value P Value

Nature of NWOM 1 65.69 0.000**

Responding 2 8.55 0.000**

Nature of NWOM × Responding 2 6.12 0.003**

Control variables:Reliance on the product reviews 1 0.02 0.880experience in purchasing shoes 1 3.34 0.069#

online purchase experience 1 0.14 0.711Dependent variables: Attitude toward productIndependent variables:


Responding 2 10.24 0.000**

Nature of NWOM × Responding 2 4.42 0.013*

Control variables:Reliance on the product reviews 1 2.27 0.133experience in purchasing shoes 1 3.65 0.057#

online purchase experience 1 0.25 0.618Dependent variables: Attitude toward sellerIndependent variables:


Responding 2 53.51 0.000**

Nature of NWOM × Responding 2 5.10 0.007**

Control variables:Reliance on the product reviews 1 1.40 0.238experience in purchasing shoes 1 6.67 0.010**

online purchase experience 1 0.06 0.803

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� Conclusions and discussions� Online responding is effective only when the seller employs appropriate

responding strategies.� Regular negative reviews: defensive responding > accommodative responding� Product failure reviews: accommodative responding > defensive responding

� The literal content of responses should be tailored according to responded reviews

� Insignificant negative impact of responding to positive reviews� Approximately significant negative impact of irrelevant responding to negative

reviews

� Mediating role of attribution of negative WOM� Shift the causal attribution of negative WOM away from the seller

� Online responding in public has ramifications beyond simple responses

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Engage your customer via responding to WOM

� Managerial implications

� All firms should take action to intervene in the consumer-to-consumer communication

� Firms should allocate resources to different aspects for different purposes

� Importance of the elaboration of responding content

� Limitations and future research� Dynamic impact of online responding

� Temporal and sequential dynamics

� The intervening role of responding on the original dynamics of WOM

� Dichotomous categorization

� Other perspectives for conceptualizations

� Tailored responding vs. Superficial responding

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Break

� Followed by leading discussion group 3

MIB605- Lecture 6 CRM in eCommerce and Social Media · The scope of E-CRM: • Using the website and online social presences for customer development from generating leads through

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