Managing Operations in the Digital Enterprise (BUSI1061) Lecture Week 5 PDF
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Nottingham
EB28
Dr Kenny Wong Meng Seng
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Summary
This lecture covers topics in managing operations in the digital enterprise, specifically focusing on customer relationship management (CRM) and social media. The lecture details the key concepts of B2C e-commerce, transactional and relational marketing, and CRM strategies. Intangible and tangible benefits of CRM are discussed, as well as reasons companies implement CRM, encompassing both offensive and defensive strategies. The lecture also expounds on the effects of CRM, customer loyalty and what it entails, including case studies and practical examples.
Full Transcript
2 Managing Operations in the Digital Enterprise (BUSI1061): Buying products/services today: customer relationship management (CRM) and the social media Dr Kenny Wong Meng Seng Week 5 [email protected] du.my...
2 Managing Operations in the Digital Enterprise (BUSI1061): Buying products/services today: customer relationship management (CRM) and the social media Dr Kenny Wong Meng Seng Week 5 [email protected] du.my EB28 1 2 Agenda B2C E-Commerce Transactional Marketing to Relational Marketing Cutomer Relationship Management (CRM) Benefits of CRM & Implementing CRM Social Media and CRM 2 2 B2C E-Commerce USA is still the marketplace in which online purchasing is at its most advanced. (eg. No 1 online retailer, Amazon.com) eMarketer (2024) projects that global e-commerce sales will grow approximately 14% year-over-year, reaching around $6.3 trillion. This growth is driven by factors such as the increasing adoption of online shopping, advancements in payment technologies, and the expansion of internet accessibility globally. Categories that dominate consumer spending are travel, books and computer hardware and software. Media products – books, music, videos and software –account for nearly 25% of online sales. There is a need for a better way to manage customer relationships. 3 Marketing Paradigm Shift: 2 Transaction Marketing Vs Relationship Marketing The strategy Transaction Relationship continuum Marketing Marketing Time Perspective Short term focus Long term focus Dominating Marketing mix Interactive marketing marketing (supported by function marketing mix activities) Price elasticity Customers tend to be Customers tend to be more sensitive to less sensitive to price price Customer Ad hoc customer Real time customer information satisfaction feedback system system surveys 4 2 What is CRM? “capability that dramatically improves organization’s relationship with its customers by reorganizing services around actual customer needs” (Accenture 2003). “ customer oriented business philosophy that involves analyzing, planning and controlling customer relationships by means of modern information and communication technologies ”(Kraeuter, Sonja. 2002) Contemporary researchers have shifted their emphasis from ROI (tangible benefits) to ROR (intangible benefits) in CRM (Caruso 2000; Reary Springer 2001; Zingale 1999) 5 2 Types of Benefits Return on Return on Investment (ROI) Relationship (ROR) Tangible Intangible Objective Subjective Quantity Quality Metric Units / Currency: Metric Units / Currency: Hard Dollars Soft Dollars Hard Numbers Soft Numbers Emotions Return on investment (ROI) can be used to measure Customer’s satisfaction and analyze projects that produce cost benefits such as lower cost per transaction, lower inventory levels, lower Mello (2001) describes return on relationship headcount and decreased customer’s queuing time (ROR) as an intangible benefits which can be (Mello 2001; PeopleSoft 2002) measured by “measuring whether relationships produce direct or indirect returns to a company”. 6 2 Why do companies implement CRM? Offensive Reasons – Improve profitability – Increase revenue Defensive Reason – Seeing leading competitors have adopted CRM successfully and fears losing customers and revenue creating value for the customer and the company over the longer term When customers value the customer service that they receive from suppliers, they are less likely to look to alternative suppliers for their needs. CRM enables organisations to gain ‘competitive advantage’ over competitors that supply similar products or services. 7 2 Effect of CRM repurchase Loyal customization Satisfaction Increase revenue Good word Creating new of mouth customer Service/ Product Brand switch Losing customer Decrease dissatisfaction Revenue Bad word losing potential Of mouth customer CS Guarantees Company’s Revenue? 8 2 What is Loyalty? In a business context loyalty has come to describe a customer’s commitment to do business with a particular organization, purchasing their goods and services repeatedly, and recommending the services and products to friends and associates. (Barnett, 2000) The key to the successful adoption of relationship marketing lies in the building of client loyalty in dynamic business environments. (Morris, 1999) Loyal Customer can mean a consistent source of revenue over a period of many years. However, this loyalty cannot be taken for granted. It will continue only as long as the customer feels they are receiving better value than they would obtain from another supplier. 9 2 Case Study: Amazon.co.uk Customer Strategy Suggest and find what customers wants positively Remind customers of relationship and be concerned about customers continuously Never forget customers who visit before 10 2 Understanding Your Customers with CRM Analytics Frequently Asked Questions Who are our Customers? – Who are our best customers? – Are our customer relationships improving or getting worse? Where are our Opportunities? – Are we pursuing them effectively? – Where should we invest our time and resources? Are we providing good Service? – Is our Customer Service getting better or worse? – Where can we improve Service? How can we reduce the cost of Service without sacrificing quality of Service? 11 2 Customer Portfolio Analysis @ TESCO Undertook CPA to examine its customer base. Findings: 25% of customers represented only 2% of sales; Top 5% of customers were responsible for 20% of sales. 12 2 How Do Your Customers ‘Experience’ Your Business? Intelligence-based ‘Schizophrenic’ marketing marketing The company knows who The company has delusions you are, what you about who you are, prefer, and forgets what you prefer, communicates with and tries to reach you with relevant, timely off-target communications messages, using the that alienate you – based on power of analytical fragmented data & intelligence to detect inadequate faculties, patterns, decode resulting in confusing, chaotic strands of information ‘multiple personalities’ and create meaningful offers and value 13 2 Customer Relationships & CRM - More Complex Than Ever Before Today’s marketers have a lot to manage! acquire Are you using customer lifestyle data reward loyalty Who are my most loyal customers and to find prospects? what promotions are most Do you know what constitutes a good effective? customer? Do you treat your loyal customers differently than your others? Can you match customers to the right When a customer touches your products and services? business, do you have the capability to engage them with Can you use the above knowledge with targeted messages? your current prospect lists to target How do you determine the level of your marketing efforts? personalization you give? grow the relationship Who are your most valuable retain customers customers and what are their Which of your profitable customers attributes? are at risk of leaving? What products do my customers What are the buying habits of my purchase and what do they best customers? crossover purchase? Are you matching products and What will my customers want next? services to the right channels? Can you detect behavioral events What product promotions increased and provide timely and relevant sales, transaction size, frequency and crossover? customer communications? 14 2 What does CRM involve? CRM involves the following: Organisations must become customer focused Organisations must be prepared to adapt so that it take customer needs into account and delivers them Market research must be undertaken to assess customer needs and satisfaction 15 2 “Strategically significant customers” “Customer relationship management focuses on strategically significant markets. Not all customers are equally important”. Therefore, relationships should be built with customers that are likely to provide value for services Building relationships with customers that will provide little value could result in a loss of time, staff and financial resources 16 2 Markers of strategically significant customers Strategically significant customers need to satisfy at least one of three conditions : 1. Customers with high life-time values (i.e. customers that will repeatedly use the service in the long-term) 2. Customers who serve as benchmarks for other customers 3. Customers who inspire change in the supplier (e.g. Continuous improvement) 17 2 Information Technology and CRM Technology plays a pivotal role in CRM. Technological approaches – databases, – data mining and – one-to-one marketing This type of technology can be used to keep a record of customers names and contact details in addition to their history of buying products or using services This information can be used to target customers in a personalised way and offer them services to meet their specific needs This personalised communication provides value for the customer and increases customers loyalty to the provider 18 Benefits of CRM 2 Benefits of CRM include: reduced costs, because the right things are being done (ie., effective and efficient operation) increased customer satisfaction, because they are getting exactly what they want (ie. meeting and exceeding expectations) growth in numbers of customers maximisation of opportunities (eg. increased services, referrals, etc.) increased access to a source of market and competitor information highlighting poor operational processes long term profitability 19 2 Implementing CRM When introducing or developing CRM, a strategic review of the organisation’s current position should be undertaken Organisations need to address four issues: 1. What is our core business and how will it evolve in the future? 2. What form of CRM is appropriate for our business now and in the future? 3. What IT infrastructure do we have and what do we need to support the future organisation needs? 4. What vendors and partners do we need to choose? 20 2 CRM Resources https://discovercrm.com/crm-news.html http://www.destinationcrm.com/ http://searchcrm.techtarget.com/ http://crm.ittoolbox.com/ http://www.crmguru.com/ 21 2 CRM helps to improve sales? 22 MEDIA: A BRIEF HISTORY 2 Sumerian cuneiform clay tablet – 3500 BCE 23 2 24 2 25 2 Which forms of social media do you use? Collaborative projects (e.g. Wikipedia) Blogs/microblogs (e.g. Twitter) Social news networking sites (e.g. digg) Content communities (e.g. Youtube) Social networking (e.g. Facebook, Linkedin) Virtual games (e.g. World of Warcraft) Virtual social worlds (e.g. Secondlife) 26 2 27 Reasons why I interact with 2 companies via social media Discounts Purchases Reviews/product rankings General information Exclusive information Learn about new products Submit opinion on products/services Customer service Event participation To feel connected Submit ideas for new products/services To feel part of a community 28 2 29 Create social media experience 2 30 2 31 Sign-up for your grouping via Moodle 2 Step1: Please sign up for your groupings (max 5 people in a group) via Moodle page before 8th October 2024 (Tuesday). Step 2: Please appoint a group leader for each of the group before 11th October 2024 (Friday). Step 3: Group leader is tasked to send me an email confirming that he/she has been appointed as GL, and copied all the members in the email. Please titled your email “ MODE groupings” and email me before 14th October (Monday). 32 MODE enrollment (as your optional 2 module) Dear Student, If you are planning to take this MODE module as your optional module, please make sure that the MODE timetable doesn’t clashed with your core modules timetable. Please make sure that you also complete the formal Online Course Enrollment (OCE) if you are taking this MODE module as your optional module (please check with your school for approval). If this module is your core module, then it should appear automatically in your Moodle page. 33