Chapter 10 – Customer Relationship Management (CRM)

Customer Relationship Management’s Role in Supply Chain
Just as companies must create methods for finding and developing good suppliers, companies must create methods for becoming and staying good suppliers themselves. Companies may also need to certify that their intermediate customers (i.e. Wholesalers/Distributors) are able to adequately represent their company’s products.
*Segmenting customers*
Grouping customers to create specialized communications about products
*Target marketing efforts*
e-mail or direct mail saves labor and postage, reduces chance of being a nuisance
*Relationship marketing* or *permission marketing*
customers select the type & time of communication. Requires software and customer participation
*Cross-selling*
selling additional products as the result of an initial purchase (e.g. e-mails from Amazon.com describing other books bought by people)
*Predicting customer behaviors*
facilitates forecasting the likelihood or customers’ purchases
*Customer defection analysis*
finding methods to retain customers (according to Harvard business school, a 5% improvement in customer retention can result in a 75% increase in profits)
*Churn reduction*
reducing customer defections
*Customer value determination*
verify the customer lifetime value for individuals or segments
*Personalizing customer communications*
understanding customer behaviors and preferences, firms customize communication. *Clickstream* – tracking how a customer navigates a website
*Event based marketing*
offer the right products and services to customers at the right time
Seven R’s Rule
1) the right product
2) the right quantity
3) the right quality
4) the right place
5) the right time
6) the right customer
7)the right costs
+ the right documentation = The Perfect Order
Performance measures are often designed round satisfying the Seven R’s. These kinds of services can come at a cost.
Performance measures are often designed round satisfying the Seven R’s. These kinds of services can come at a cost.
Pre-transaction elements
*precede the sale* and include customer service policies, the mission statement, organizational structure, and system flexibility
Transaction elements
*occur during the sale* and include the order lead time, the order processing capabilities and the distribution system accuracy
Post-transaction elements
*occur after the sale* and include warranty repair capabilities, complaint resolution, product returns, and operating information
Call Centers:
– can categorize calls
– determine average resolution time
– forecast future demand
– improve the overall productivity of the staff
– increasing customer satisfaction levels
Website Self Service
Websites can act as support mechanisms for call centers. Customers can access their account info & operating hours, contact information, etc…
Field Service Management
Customers can communicate directly with product specials using wireless devices & the right diagnosis can be made quickly
Measuring Customer Satisfaction
Customers are frequently given opportunities to provide feedback about a product, service, or organization
6 Steps to a Successful CRM Plan
1) Create the CRM Plan
2) Involve CRM users from Outset
3) Select the Right Application and Provider
4) Integrate Existing CRM Applications
5) Establish Performance Measures
6) Providing CRM Training for All Users
Step 1. Creating the CRM Plan
– objectives of the CRM program
– CRM’s fit with corporate strategy
– new applications to be purchased or developed
– integration or replacement of existing legacy systems
– Personnel Requirements = personnel, training, policies, upgrades, and maintenance
– the costs and time frame for implementation
Step 2. Involve CRM users from Outset
Employees should understand how it affects their jobs
– create a project team with members of all affected organizational areas
– test with a pilot application
Step 3. Select the Right Application and Provider
Find an appropriate application and determine the extent of customization
– visit trade shows. read trade literature, hire consultants, etc..
– compare based on performance, security, reporting, capabilities, system availability
Step 4. Integrate Existing CRM Applications
CRM is a collection of various applications implemented over time.
– customer contact mechanisms need to be coordinated so that every CRM user in the firm knows about all of the activity associated with each customer
– centralized database or data warehouse containing all customer information
Step 5. Establish Performance Measures
This allows the firms to:
– determine if objectives have been met
– compare actual to planned variance (take action to correct issues)
Step 6. Providing CRM Training for All Users
– provide and require training for all of the initial users and then provide training on an ongoing basis as applications are added
– training can also help convince key users like sales, call centers, and marketing personnel of the benefits & uses of CRM applications
CRM Trends
Customer Data Privacy: Rules and laws re-guarding invasion of privacy include Patriot Act in the US and internet Privacy Law in the EU
Social Media: Creating and cultivating virtual communities around product or brand is a powerful way to engage consumers
Cloud Computing : ala carte and on demand offerings accessed via web browser. Changing the cost structure of CRM applications.