Part VIII: eCRM (Customer Relationship Management)

Learning Targets

• What are the objectives of CRM?

• How can we achieve customer acquisition and loyalty?
• What is the customer buying cycle?
• How does the architecture of CRM systems look like?
• How can we execute a customer satisfaction survey?

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 Definition of Customer Relationship Management

• Although the definition of Customer Relationship Management

(CRM) has not been standardized, CRM can be generally considered
to be a set of business applications that are responsible for the
simultaneous management of marketing, sales, and customer service:
- Customer Relationship Management (CRM) is a business
strategy to select and manage customers to optimize long-term
value.
- Customer Relationship Management requires a customer-centric
business philosophy and culture to support effective marketing,
sales, and service processes. CRM applications can enable
effective Customer Relationship Management, provided that an
enterprise has the right leadership, strategy, and culture.
- Customer Relationship Management is the implementation of
customer-centric business strategies; which drives redesigning of
functional activities; which demands re-engineering of work
processes; which is supported, not driven, by CRM technology.

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 Benefits of Customer Relationship Management

• CRM is the superset of business models, process methodologies

and interactive technologies for achieving and sustaining high
levels of retention and referrals within identified categories of
valuable and growable customers.
• CRM extends the concept of selling from a discrete act
performed by a salesperson to a continual process involving every
person in the company. It is the art/science of gathering and using
information about the customers to build customer loyalty and
increase customer value.
• CRM improves Return on Assets. The asset in this case is the
customer and potential customer base.

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 Entire Customer Life Cycle
• Customer Relationship Management refers to the management of
all interactions with the customer that an enterprise indulges in.
Its focus is on managing and optimizing the entire customer life
cycle.
• The stated objective and benefit of good CRM is to increase the
customer base by acquiring new customers and effectively serving
the needs of the existing customers.
• Customer Relationship Management is an information industry
term for methodologies, software, and usually Internet capabilities
that help an enterprise manage customer relationships in an
organized way. For example, an enterprise might build a database
about its customers that described relationships in sufficient
detail. Therefore, management, salespeople, people providing
service, and perhaps the customer directly could access
information, match customer needs with product plans and
offerings, remind customers of service requirements, and know
what other products a customer had purchased.

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 The Components of a CRM Architecture

After Sales
Marketing Sales
Services

Campaign
Management

Supply Management

Complaint Management

Service
Management

Customer Management

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 Significance of Customer Orientation

Integration of all
customer data
Customer Orientation
• CRM
• Multi Channel
Communication
Integration of Process Orientation
production and
distribution data • Sales Force Automation
• Computer Aided Selling

Quality Orientation
Integration of all • Quality circle
intra-corporate • Total Quality
production data Management
1980 1999 2000

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From Production Orientation to CRM

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 Personalization Cycle

Definition of
Personalized Goals
Feedback

Data
Acquisition

Matching

Profiling

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 Personalization Cycle
• Definition of Goals • Matching
- Customer life cycle - Preparation of the content
orientation
- Use of the customer profiles
- Business ratios
- Communication interface
‣ First Contact / Activating between customer and
‣ Conversion company
‣ Retention - Different Methods
• Data Acquisition ‣ Collaborative Filtering
- Different sources (www, call- ‣ Expert systems
center, external data, ...)
‣ Neuronal networks
- Data Warehouse (expensive
maintenance) • Personalized Feedback
• Profiling - E-mail
- Creating and maintaining - Webpages
customer profiles - Other media
- Data protection and security

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 Goals of CRM

Increase of the customer

profitability
Increase of
Potentials of customer efficiency of CRM
retention, selection and processes
acquisition

Customer acquisition: Reduction of Reduction of

Customer
Data Mining, transaction transaction Orientation to
retention: the customer
costs time
measuring the Low acquisition costs process:
customer specific design
satisfaction for the
information
Customer selection: systems

Identifying the profitable

customers, Segment
oriented offers

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 Components of a CRM Solution

Mailings

Operative CRM
WWW, E-Mail Telephone, W@P

Personal contact Customer

TV / Radio
Interaction Center

Front Marketing
Sales Automation
Service
Office Automation Automation

Data Mining OLAP

Analytical CRM
Closed Loop
Architecture Customer Data
Warehouse / Data Marts

Back Supply Chain Enterprise Resource Computer Integrated

Office Management Planning Manufacturing

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 Operative and Analytical CRM

Operative CRM Analytical CRM

• All applications which are in direct • Customer Data Warehouse for
contact to the customer (front the storage of customer contacts
office) and reactions
• The automations solutions support • Analysis of this data to optimize
the dialog between customer and the customer oriented business
company and its business processes
processes (Online Analytical
• Reliable information about delivery Processing, Data Mining)
time, availability etc.
• CRM is a learning system (Closed
• Support and synchronization of the
communication channels for a bi- Loop Architecture) in order to
directional communication between improve the customer satisfaction
customer and company

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 Marketing Automation

• Control and support of the customer oriented business

processes in marketing
• Main task: campaign management
- the right customer
- the right information and services
- the right form of communication
- the right communication channel
- at the right time
• Creation, design and administration of multimedia knowledge
catalogues (Marketing Encyclopedia Systems) about products,
markets, advertising material, ...

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 Sales Automation

• Scheduling and routing

• Account of charges
• Reporting
• Defining the range of offered goods
• Support for the definition of goals and budgeting
• Administration of the customer data
• Geographic information systems
• Sales overviews
• Product-configurators for the sales personal (expert system)

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 Service Automation

• Description of the customer’s complaint

• Description of the customer’s expectation and his proposition
• Description of the negotiated agreements
• A complete documentation, scheduling (deadline monitoring), and
the current status of the service process

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 Structure of the CRM Market

CRM Market

Solution the different business

Integrated Global Solutions Functional Partial Solutions
sectors
Autonomous CRM Operative CRM
Systems • Marketing Automation • Vertical standard solutions
• Biggest functional range • Sales Automation • Business specified adjusted
• Service Automation functional range
• Big effort for
customization necessary • Communication support
(Customer Interaction
• Expensive Center, eCRM)
Enhanced ERP Systems
• Optimal integration Analytical CRM
• Data Warehouse
• Focus on business
processes • Data Mining
• OLAP
• Expensive

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 Process Planning
Planning Project planning

Multi Channel Customer potential analysis

Pilot study Management
Channel vision planning Customer process analysis

Defining the measurement

CRP process development
categories

Organization
development
Conception Adjusting organizational Management system planning
structures

Developing processes System planning

Implementation Planning of the information System implementation

systems

Utilization System enhancement

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Eight critical Success Factors [Seybold 1998]

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Selected E-Marketing Customization Tools

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 CRM Benefit Portfolio
Company’s benefit

5 1
2
3 7
9
4
Validation after 6 months
10 6 8 Validation after 3 months
Benefit vs. costs?
Start with implementation
Customer’s benefit

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 Example: Pharma Market

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