Week 8 Customer Relationship Management PDF

ADM 2372 Management Information Systems Mayur Joshi, PhD Assistant Professor of Information Systems [email protected] © Copyright. Mayur Joshi. 2024. and © 2024 John Wiley &...

ADM 2372 Management Information Systems Mayur Joshi, PhD Assistant Professor of Information Systems [email protected] © Copyright. Mayur Joshi. 2024. and © 2024 John Wiley & Sons Canada, Ltd. or the authors All Rights Reserved. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or b y any means, electronic, mechanical, photocopying, recording or otherwise without prior written permission from the professor. Shar ing course materials without permission or uploading course materials to a content sharing website may be treated as an instance of acad emic fraud as well as copyright infringement. 1  Week 8 Customer Relationship Management (Chapter 11) 2 Agenda 1. Why CRM? 2. Defining CRM 3. Operational CRM 4. Analytical CRM 5. Examples 6. Role of AI in CRM 3 ERP: new generation The new generation ERP systems (the textbook calls them ERP II but we will simply call them ERP) are accessible by customers, suppliers, and other partners through web-enabled links (e.g., through VPN connections) ERP Customers (internal Suppliers system) Partners ERP II (new generation ERP) 4 ERP: Core and Extended Modules 5  ERP: Modules and Other Systems ERP: Enterprise Resource Planning CRM: Customer Relationship Management CRM SCM: Supply Chain Management (Inter- organizational IS) Customers Business to Consumer ERP SCM e-commerce (B2C) Your Organization Exchange of information, Supplier Organizations payment, materials, physical Buyer Organizations Business to Business e-commerce (B2B) products, digital products Business to Business e-commerce (B2B) 6 The customer is KING! Before the supermarket, the mall, and the automobile, people purchased goods at their neighbourhood store – Store owners recognized customers by name and knew their needs and wants – Customers remained loyal to the store and made repeated purchases Today, organizations use CRM to try to replicate that by collecting and leveraging customer data https://njmonthly.com/articles/jersey-living/down-on-the-corner- neighborhood-pharmacy/ 7 The customer is KING! “Our vision is that if we have 20 million customers, then we should have 20 million stores” [Jeff Bezos, CEO of Amazon] How? Why? Jeff Bezos 8 The customer is KING! How? – (1) build and keep customer profiles; – (2) use those profiles to personalize the website and the services Why? – 20% of customers generate 80% of the profits – It takes 8-10 calls to sell to a new customer; 2-3 calls to sell to an existing customer – It is 5-10 times more expensive to acquire new customers than to obtain repeat business from existing customers – A typical dissatisfied customer tells 8-10 people 9 The customer is KING! A customer-focused organization (as opposed to a sales- focused organization) aims to achieve the following – Customer identification: “know your customers” – Customer differentiation: “each customer’s value is different” – Customer interaction: “keep learning about your customers” – Customization: “treat each customer uniquely” [ Source: Paul Gray, Manager’s Guide to Making Decisions about Information Systems, John Wiley & Sons, 2006 ] 10 Defining CRM Customer relationship management (CRM) is a customer-focused and customer-driven organizational strategy (it is not just about software) – Enables personal marketing where businesses market to each customer individually – Enables customer intimacy where businesses offer individualized products/services to customers – Manages customer relationships by helping businesses acquire new customers, retain existing customers, and grow relationships with existing customers (P. 328-329) 11 Defining CRM Sales: CRM used to help sales Collaborative CRM: representatives manage the sales process (e.g., using Sales integrates communications Force Automation) Marketing: between the organization CRM used to manage Customer marketing campaigns, and its customers in all establish and develop relationships with data Service: aspects of marketing, sales, customers, cross sell, up sell, etc. CRM used by customer service and service representatives to provide efficient & personalized service to customers Cross selling: aims to sell additional related products to customers based on a previous purchase Bundling (a form of cross selling): selling a group of products or services together at a price lower than their combined individual prices Up selling: aims to increase the value of the sale by moving purchases to premium levels, increasing volume, etc. (P. 334) 12 M1 B3 e n y o Defining CRM u c e f | Organizations can find their most valuable customers A D through “RFM” - Recency, Frequency, and Monetary M 2 value 3 7 – How recently a customer purchased items (Recency) 2 | u – How frequently a customer purchased items O t (Frequency) t a – How much a customer spends on each purchase w a (Monetary Value). c a These values can be extracted from customer data 13  CRM process The organization solicits prospects from a target population of potential customers Some prospects purchase and become customers The organization segments repeat customers into low- and high- value repeat customers Some customers are lost over time (churn) Goal: use CRM to maximize the number of high-value repeat customers and minimize churn (P. 330) 14 CRM: Strategy versus System So far what we have discussed is the CRM strategy CRM systems are information systems designed to support an organization’s CRM strategy. 15  Customer touch points Customer touch points: different ways an organization interacts with customers traditional >telephone contact, direct mailings, and actual physical interactions with customers during their visits to a store Digital > occur through organizational CRM systems such as e-mail, Web sites, and communications via smartphones. 16 Data Consolidation All customer data must be accessible to every unit or employee who interacts with customers CRM offers a 360-degree view https://www.youtube.com/watch?v=XmnPlfJh7zM 17 CRM evolution Three phases in the evolution of CRM – Reporting: asking “what happened” e.g., what is the total revenue Predicting Business Value of CRM per customer?, where did we sell the most products? – Analysis: asking “why it happened” Analysis e.g., why did sales not meet forecasts? – Predicting: asking “what will Reporting happen” e.g., what customers are at risk of leaving?, what products Time will the customer buy? (evolution) 18 Operational CRM System Supports transactional processes for day-to- day front-office operations Deals directly with customers Automates call centers, marketing campaigns, and sales processes 19 Operational CRM Systems Operational CRM systems provide the following benefits: o Efficient, personalized marketing, sales, and service o A 360-degree view of each customer o The ability of sales and service employees to access a complete history of customer interaction with the organization, regardless of the touch point 20 Operational CRM Operational CRM (front-office) Customer-facing CRM systems: Customer facing used by an organization’s employees to interact directly with Sales Systems customers Marketing Systems Customer-touching CRM systems: Service customers interact directly with Systems technologies and applications Customer touching (email, FAQ, Loyalty Programs, etc.) - Email - FAQ - Loyalty program - etc. 21 Customer-Facing Applications Customer service and support Sales Force Automation (SFA) Marketing Campaign management 22 Customer Service and Support Automate service requests, complaints, product returns, and requests for information, etc. Customer interaction centres (CIC): where organizational representatives use multiple channels such as the Web, telephone, fax, and face-to-face interactions to communicate with customers. o Call centre: a centralized office set up to receive and transmit a large volume of requests by telephone. o Outbound telesales: the CIC generates a call list for the sales team, whose members contact sales prospects. o Inbound teleservice: customers communicate directly with the CIC to initiate a sales order, inquire about products and services before placing an order, and obtain information about a transaction they have already made. 23 Sales Force Automation Manage all the steps in a sales transaction Contact management system o tracks all contacts that have been made with a customer, the purpose of each contact, and any necessary follow-up Sales lead tracking system o lists potential customers or customers who have purchased related products; that is, products similar to those that the salesperson is trying to sell to the customer. Sales forecasting system o a mathematical technique for estimating future sales. Product knowledge system o a comprehensive source of information regarding products and services. Configurators o an online product-building feature that enables customers to model the product to meet their specific needs. 24 Marketing Enable marketers to identify and target their best customers, manage marketing campaigns, generate quality leads for the sales teams, etc. Cross selling: marketing of additional related products to customers based on a previous purchase. Upselling: a strategy in which the salesperson provides customers with the opportunity to purchase related products or services of greater value in place of, or along with, the consumer’s initial product or service selection. Bundling: a form of cross-selling in which a business sells a group of products or services together at a lower price than their combined individual prices. 25 Customer-Touching Applications e-CRM: customer self-help applications. Search and comparison capabilities o offered to customers by online stores, online malls, and independent comparison Web sites. Technical and other information and services o allowing customers to download product manuals; providing detailed technical information, maintenance information, and replacement parts to customers Customized products and services o offering customers the ability to customize products, view account balances, check the shipping status of an order, etc. 26 Customer-Touching Applications Personalized Web pages o permit customers to create personalized Web pages used to record purchases and preferences, as well as problems and requests. FAQs (read chatbots) o a simple tool for answering repetitive customer queries and when customers find the information they need by using FAQs the need to communicate with an actual person is eliminated. E-mail and automated response o the most popular tool for customer service, inexpensive, fast, and companies use e-mail not only to answer customer inquiries but also to disseminate information, send alerts and product information, and conduct correspondence on any topic. Loyalty programs 27 Operational CRM: Example in marketing Email marketing system from Oracle Siebel CRM: guides marketers through marketing campaigns (designing the campaign, launching it, tracking it, evaluating its results, etc.) System for creating and launching email campaigns 28 Operational CRM: Example in sales SFA (sales force automation) system from www.SugarCRM.com: tracks the steps in the sales process 29 Operational CRM: Example in sales Contact Management system from www.SugarCRM.com: maintains customer contact information and identifies prospective customers for future sales 30 Operational CRM: Example in sales Opportunity Management system from www.SugarCRM.com: targets sales opportunities by finding new customers or companies for future sales 31 Operational CRM: Example in customer service Call Center from Oracle Siebel CRM: used by customer service representatives (CSRs) to answer customer inquiries and respond to problems through different touch points 32 Analytical CRM Analytical CRM Analytical CRM systems: provide business (back-office) intelligence (BI) tools to analyze customer data Examples 1: find new customers similar to Customer your best customers Data Warehouse or – Analytical CRM can help you determine that you do a lot of Data Mart business with women 35 to 45 years old who drive SUVs and live within 30 miles of a certain location – You can then find a mailing list that highlights this type of customer for potential new sales BI Tools Examples 2: Reactivate inactive customers – Analytical CRM can highlight customers who have not done any business with you in a while – You can then send them a personalized letter along with a discount coupon Analyst (P. 336-337) 33 Analytical CRM: Example in marketing Marketing Analytics from www.SugarCRM.com: helps in measuring the effectiveness of marketing campaigns 34 Analytical CRM: Example in sales Sales analytics from www.siebel.com: provides key performance indicators (KPIs) and customizable dashboards; improves the effectiveness of salespeople by providing real time insights into sales opportunities 35 Operational vs. Analytical CRM Operational CRM Analytical CRM (front-office) (back-office) Customer facing Sales Systems Customer Data Warehouse or Marketing Data Mart Systems Service Systems BI Tools Customer touching - Email - FAQ - Loyalty program - etc. Analyst 36 Examples of new CRM products Microsoft Dynamics CRM in Sales, Marketing, and Service – https://www.microsoft.com/en-us/dynamics- 365 37 CRM & Privacy Most people are wary of the data collection required for CRM and feel that it's an invasion of privacy (see Chapter 3) But some would tell you “It does not bother me; I have nothing to hide” – Watch this: https://www.youtube.com/watch?v=vc7_TKN0kfw 38 CRM Metrics Sales Cycle Revenue per customer Sales Average order size Revenue per sales rep Operating costs Customer Acquisition costs Marketing Customer Data Campaign response rates Customer profitability Marketing driven revenue Response times Service costs Service CSR productivity Customer retention Adapted from www.siebel.com 39 What you can do with CRM https://www.salesforce.com/ca/crm/what-is- crm/#:~:text=CRM%20stands%20for%20cust omer%20relationship,relationships%20to%20 grow%20your%20business. 40 Role of AI in CRM A podcast generated based on various use-cases of AI in CRM: 41 Role of AI in CRM Customer insights and predictions: o AI analyzes customer data to generate insights into behavior, preferences, and buying patterns. By predicting customer needs, it enables personalized experiences that boost satisfaction and loyalty. Automated Customer Support: o AI-powered chatbots and virtual assistants provide instant support, answering common questions and resolving issues around the clock. This reduces response times and frees up human agents to handle complex cases. 42 Role of AI in CRM Personalized Marketing and Sales: : o AI helps segment audiences and tailor marketing efforts by analyzing past interactions, demographics, and behavior. This allows companies to send relevant recommendations, improving conversion rates and customer satisfaction. Lead Scoring and Forecasting: o AI algorithms evaluate leads based on various attributes and predict the likelihood of conversion. Sales teams can focus on high-potential leads, optimizing their time and improving the effectiveness of sales strategies. 43 Role of AI in CRM Automating Routine Tasks: o AI automates repetitive tasks like data entry, updating customer information, and scheduling follow-ups, improving CRM efficiency and reducing human error. Sentiment Analysis: o AI can analyze customer feedback from emails, social media, and support tickets to gauge sentiment, helping companies address concerns proactively and enhance customer experience. 44