Ch. 11 Customer Relationship Management & Supply Chain Management

Customer Relationship Management
Businesses market to each customer individually. Use past purchases to determine future needs and wants. Designed to achieve customer intimacy.
Customer focused and driven organizational strategy. Helps retain existing customers and grow new ones.
Makes employees more productive, which increases profits.
Overall goal is to maximize the lifetime value of a customer
CRM systems
lie on a continuum from low-end (designed for enterprises with many small customers) to high-end (for enterprises with a few large customers)
Customer Touch Points
the numerous and diverse interactions that they have with their customers. (smart phone, world wide web, computer, physical store, sales rep, direct mail, field service technician, e-mail, service center, and call center)
360 Degree View
Modern, interconnected systems built around a data warehouse, making all customer related data available to every unit of the business.
Enable the organization’s functional areas to readily share information about customers.
By enhancing this view, a company can enhance its relationship with its customers and ultimately make more productive and profitable decisions.
Collaborative CRM systems
Provide effective and efficient interactive communication with the customer throughout the entire organization.
1) operational and 2) analytical CRM systems.
Operational CRM systems
support front-office business processes
1) Contains customer-facing and 2)
customer-touching applications.
Customer-facing CRM applications
Interact directly with customers through customer service and support, marketing, and campaign management and sales.
Sales Force Automation (SFA)
is the component of an operational CRM system that automatically records all of the components in a sales transaction process.
Includes a contact management system which tracks all contacts that have been made with a customer and a sales leading tracking system, which lists potential customers or customers who have purchased related products.
Cross Selling
is the marketing of additional related products to customers based on previous purchases
Up Selling
is a sales strategy in which the business person provides to customers the opportunity to purchase higher-value related products or services in place of, or along with the customers initial product.
Bundling
is a form of cross selling in which a business sells a group of products and services together at a price lower than their combined individual prices
Customer-touching applications
Use these applications to help themselves.
(Ex. search and comparison capabilities, technical services, customized products and services, personalized web pages, e-mail and automated response, loyalty programs)
Loyalty Programs
Recognize customers who repeatedly use a vendor’s products or services. Loyalty programs are appropriate when two conditions are met: a high frequency of repeat purchases, and little product customization for each customer.
The purpose is not to reward past behavior but influence future behavior.
Analytical CRM Systems
Provide business intelligence by analyzing customer behavior and perceptions. Important technologies include data mining, data warehouses, and decision support. After these systems have completed their analysis, they supply information to organizations in the form of reports and digital dashboards.
Mobile CRM
is an interactive system that enables an organization to conduct communications related to sales, marketing, and customer service activities through a mobile medium for the purpose of building and maintaining customer relations.
On-Demand CRM
Hosted by an external vendor in the vendor’s data center. The vendor maintains and creates the system.
Open-Source CRM
a system whose source code is available to developers and users. They include favorable pricing and a wide variety of applications and are easy to customize for specific needs.
Upstream
where sourcing or procurement from external suppliers occurs. Supply chain managers select suppliers to deliver the goods and services the company needs to product their product or service. (Orders, information, payments, and returns)
Internal
Where packaging, assembly, or manufacturing takes place. Monitor quality levels, production output, and productivity.
Downstream
Where distribution takes place frequently by external distributors. Coordination of receipt of orders from customers, develop network of warehouses, select carriers to deliver products to customers (products, services, information)
Push Model
also known as make-to-stock; the production process begins with a forecast of customer demand. The company makes these products and pushes them to consumers.
Pull Model
also known as make-to-order; the production process begins with a customer order, therefore companies make only what the customer wants.
Bullwhip effect
Refers to the erratic shifts in orders up and down the supply chain. The variables that affect customer demand can become magnified when viewed through the eyes of managers at each link in the supply chain
Electronic Data Interchange (EDI)
is a communication standard that enables business partners to exchange routine documents electronically. Transmits messages over the Internet using a converter called a translator.
Minimizes data entry errors, messages are secured and shorter, enhances productivity
Extranets
internal database is assessable to anyone outside the organization. They link business partners over the Internet by providing them access to certain areas of each other’s corporate intranets.
Foster collaboration