Transcript Lecture 31x

Lecture 31
E-Marketing
CRM
Instructor: Hanniya Abid
Objectives
By the end of this lecture you will be able to:
 Define customer relationship management and identify the
major benefits to e-marketers.
 Outline the types of CRM for e-marketing.
 Discuss the eight major components needed for effective and
efficient CRM in e-marketing.
The Cisco Story
 Cisco, a $34.9 billion B2B marketer, provides internet
networking systems for corporate, government, and education
clients.
 The internet plays a major role in acquiring, retaining, and
growing customer business.
 3 million users log on to the Cisco site each month.
 Cisco has become adept at online customer relationship
management (CRM).
The Cisco Story,
 Cisco set a goal to migrate customers to the online channel.
 In 1996, 5% of their customers placed orders on the Web site.
 Today 92.2% of their orders come through the internet.
 Site user satisfaction is 4.7 on a 5.0 scale.
 Can you think of other B2B marketers that utilize the
internet as successfully as Cisco?
Relationship Marketing Defined
 Relationship marketing is about establishing, maintaining,
enhancing, and commercializing customer relationships
through promise fulfillment.
 Today it also means two-way communication with individual
stakeholders, one at a time.
 A firm using relationship marketing focuses more on wallet
share than on market share.
Relationship Marketing Defined
 Relationship marketing involves more than just customers,
we’re focusing on customers – CRM-Customer Relationship
Management. True CRM involves treating each customer
differently according to their characteristics as described in the
e-marketing insight box below.
 Relationship marketing shifts marketing away from short-term
transactional marketing (with its one-off sales) towards
developing longer lasting relationships which, ideally, develop
into lifetime customers. This obviously generates more
profitable repeat business as well as increased share of wallet or
customer share.
Continuum from Mass Marketing to
Relationship Marketing
Mass marketing
Relationship marketing
Discrete transactions
Continuing transactions
Short-term emphasis
Long-term emphasis
One-way
communication
Two-way
communication
and collaboration
Acquisition focus
Retention focus
Share of market
Wallet share
Product differentiation
Customer differentiation
Stakeholders
 Firms can establish and maintain relationships with different
stakeholder groups through internet technologies:
 Employees who need training and access to data and systems
used for relationship management.
 Business customers in the supply chain.
 Lateral partners, such as other businesses, not-for-profit
organizations, or governments.
 Consumers who are end users of products and services.
Customer Relationship Management
 CRM is the process of acquiring, servicing, retaining, and
building long-term relationships with customers.
 The benefits of CRM include:
 Increased revenue from better targeting.
 Increased wallet share with current customers.
 Retention of customers for longer time periods.
 The cost of acquiring a new customer is typically 5 times
higher than the cost of retaining a current customer.
Relationship Marketing
 Permission Marketing
 Building relationships is a delicate affair. Marketers have to gain
permission firstly, then trust and ultimately, loyalty. It ’s all
common sense stuff. Stick to basic marketing tenets of
identifying, anticipating and satisfying customer needs relentlessly
helps to build relationships.
 But how do you do this? Firstly, adopt a ‘permission based
marketing ’, approach as developed by the now classic Permission
Marketing by Seth Godin ( Godin 1999 ). There are several steps
towards permission marketing.
Relationship Marketing
Several steps towards permission marketing:
1 Gaining Permission. The first step is to get customer ’s
permission to give them information. Winning this
permission, in the customer ’s time-compressed world, is a
valuable asset, so a range of offers will be more powerful.
2 Collaboration. Marketing is a collaborative activity – where
marketers help customers to buy and customers help
marketers to sell.
3 Dialogue-trialogue. A dialogue emerges whether via web site emails, discussion rooms, real conversations in focus groups or
even real meetings between customers and sales reps, as well
as amongst customers themselves (trialogue).
Relationship Marketing
 Permission marketers develop the relationship and win further
permission to talk on a regular basis. Some excellent
permission-based marketers actually get permission to place
orders on the customer ’s behalf. Other permission-based
marketers even deliver right into the customers buildings
without the customer opening the door! They become part of
the customer ’ s systems.
 The concept of permission marketing is best summarized by
three magic words. Seth Godin said:
‘ Permission marketing is . . . anticipated, relevant and
personal ’
Relationship Marketing
 The essential concepts of permission marketing as:
1 Offer the prospect an incentive to volunteer [Achieve opt-in]
2 Using the attention offered by the prospect, offer a
curriculum over time, teaching the consumer about your
product or service [Enable the customer to learn more]
3 Reinforce the incentive to guarantee that the prospect
maintains the permission [Offer opt-out, but minimize the
likelihood for this]
Relationship Marketing
4 Offer additional incentives to get even more permission
from the consumer [Learn more about the customer
through time]
5 Over time, leverage the permission to change consumer
behavior towards profits [Deepen the relationship through
converting from prospect to customer and trialist to
loyalist].
Relationship Marketing
Managing the Dialogue Through Contact Strategies
 Too much contact can wear out the relationship.
 The key to building the best relationship is to have the right
number of contacts of the right type at the right time for
specific customers.This is a contact strategy.
 Determining which kinds of customers and enquirers get
which sequence of contacts.
Example template for e-mail contact strategy
Relationship Marketing
 An automated e-mail sent by a business-to-business supplier
two weeks after a customer has registered initial interest in
the company. Such e-mails can help companies educate
customers about their offering and engage them through
digital assets such as a calculator – which fits the permission
marketing model of ‘learning more through time’.
Relationship Marketing
 Renault is a good B2C example of a welcome strategy. Over
the initial six month period of purchase consideration, they
use a container or content pod within their e-newsletter to
deliver personalized information about the brand and model
of car the prospect is interested in. This is updated each
month as the customer gets to know the brand better and
the brand gets to know the customer better!
Database Marketing
 The database and database marketing is at the heart of e-CRM.
By the end of this section you will understand what a database
is, the complications that can arise, the types of data fields and
the importance of linking it all to a clear marketing
programme.
 It has been said that ‘The driving force underlying modern
CRM systems is the customer database ’ . The repository of
information on customers and prospects from all sources and
channels – whether web sites, interactive TV, sales reps or
customer service staff.
Database Marketing
 Achieve the dynamic dialogue of permission marketing which :
o recognizes and remembers each customer by name and need
o answers questions often automatically and, ideally, personally
o asks questions, collects information and builds a better profile,
particularly of those ideal lifetime customers
o delivers communications which are instantaneous, relevant
and value adding.
Database Marketing
What is Stored in the Database?
 A database is more than a list of names. A database is
distinguished by the amount and quality of relevant marketing
data held on each customer or prospect. It should identify best
(‘ideal’) customers and worst customers. The worst customers
have ‘negative value’ these are customers who claim early on
insurance, are bad debtors, or just an intensive user of free
services.
Database Marketing
 For example, RFM analysis can be applied for targeting using e-
mail according to how a customer interacts with an e-commerce
site. Values could be assigned to each customer as follows:
- Recency:
1 – Over 12 months
2 –Within last 12 months
3 –Within last 6 months
4 –Within last 3 months
5 –Within last 1 month
Database Marketing
- Frequency:
1 – More than once every 6 months
2 – Every 6 months
3 – Every 3 months
4 – Every 2 months
5 – Monthly
- Monetary value:
1 – Less than £10
2 – £10–50
3 – £50–£100
4 – £100–£200
5 – More than £200
Database Marketing
 Customers can be combined in different categories and then
appropriate message treatments sent to encourage purchase.
Simplified versions of this analysis can be created to make it
more manageable,
Database Marketing
 There is a lot of other useful data worth collecting, such as
promotions history (responses to specific promotions), share of
wallet or customer share (potential spend), timing of spend and
more.
 In B2B, we are interested in business type (SIC codes), size of
business, holding companies and subsidiaries, competitive
products bought, etc. You can segment customers by their
activity or responsiveness levels and then develop strategies to
engage them.
Database Marketing
 Rohner (2001) says
‘Without a corresponding marketing programme,
database marketing should not be introduced ’. You
must be clear what you want to do with the database.
E-CRM
 ‘ e ’ ADD TO CRM
 Relationship Marketing is about building relationships with all
external parties involved in marketing. CRM focuses
specifically on the relationship with customers and e-CRM
focuses even further on the electronic relationship with
customers.
 CRM software is used to manage these electronic
relationships. Ebner et al. (2002) define this software as ‘the
systems that allow companies to plan and analyze marketing
campaigns, to identify sales leads, and to manage their
customer contacts and call centres’.
CRM and e-CRM are not just about technology and databases,
it’s not just a process or a way of doing things, it requires, in fact,
a complete customer culture. In many ways there ’s nothing new
here since good marketers have been taking care of their
customers for many decades now.
What is new is the lack of CRM in the fast moving online world:
 A world where customer expectations are often higher than
those of the offline world.
 A world where customers ’ raised expectations are regularly
crushed by previously successful offline companies.
CRM and E-CRM
 E-CRM enables digital marketers to create a multi-channel
marketing process of:
 Monitoring customer actions or behaviours (clicks on
specific e- mails or website offers) and then. . .
– Reacting with appropriate messages either online, for
example through an e-mail followup, or offline, for example,
a phone or direct mail follow-up to encourage response
– Monitoring response to these messages and continuing
with additional reminder communications and monitoring.
CRM and E-CRM
 The secret is to put the time into defining rules and testing
automated follow-up communications which match the
context. For example, an online shopper who has purchased a
product can be sent a series of welcome e-mails in the context
of their purchase to encourage future purchases
CRM and E-CRM
Some E-CRM Benefits and Challenges
There is e-CRM software which enhances our ability to
understand customers and enquirers, their needs, names,
interests and a lot more. We can get closer to them. Speak
with them. One of the 5Ss – the five fundamental benefits of
e-marketing.
- A dynamic dialogue that is instantaneous, relevant, value
adding and information gleaning:
o recognizes and remembers each customer by name and
need
CRM and E-CRM
o answers questions often automatically and ideally, personally
o asks questions, collects information and builds a better
profile, particularly of those, ideal, lifetime customers.
 The real potential advantage of online marketing lies in its
potential to build relationships and create long-term value.
Companies who have risen to the challenge of E-CRM have a ‘
360 degree view of their customers ’. This in turn generates real
loyalty from lifetime customers who readily share valuable data
with you.
E-CRM
Managing an E-CRM Checklist
 Using the web site for customer development from generating leads
through to conversion to an online or offline sale using e-mail
and web-based information to encourage purchase.
 Managing e-mail list quality (coverage of e-mail addresses and
integration of customer profile information from other databases
to enable targeting).
 Applying automated triggered e-mail marketing to support
contact strategies aimed at customer development (welcome,
purchase, upsell, cross-sell and after sales).
 Data mining to identify new segments and improve targeting.
E-CRM
 Providing online personalization or mass customization facilities
to automatically recommend the ‘ Next-best product ’ .
 Providing online customer service facilities (such as Frequently
Asked Questions, Call-back and Chat support) .
 Managing online service quality to ensure that first time buyers
have a great customer experience that encourages them to buy
again.
 Managing the multi-channel customer experience as they use
different media as part of the buying process and customer
lifecycle, i.e. providing clear linkages and seamless transition
between online and offline channels or touch points as part of
the relationship.
E-CRM
Keeping the Relationship Alive
 web site needs to be updated and kept fresh and tailored – your
offerings need to be more attractive than the competition. How
can you keep the relationship alive – without changing so much
that you are no longer the organization they wanted to have a
relationship with in the first place?
E-CRM
Approach to the CRM cycle
1 Attract! Obviously this is where traditional off-line
communication as well as on-line communication about
your offering is being designed to bring customers to your
site. From TV advertising to banner ads and hot-spots,
getting them to your site will only be possible if (a) they
know what you are offering and are interested (b) they know
where you are and how to get to you.
2 Capture Data. The Internet is a splendid mechanism for
capturing data – the prospect has the keyboard and screen in
front of them and you can incentivize the giving of data.
E-CRM
3 Get Closer. Get to know them better. It is not surprising that
there is reluctance on the part of many individuals to give
personal data away to an Internet screen. So it is often better
to gather more information about a person slowly and over
time, as the trust builds between you and them.
4 Embrace Them. Make your customer feel loved! Approach them
with offers, prizes, rewards, incentives and information as
well as experiences that show them you are thinking about
THEM.
E-CRM
5 Golden Handcuffs. Once you get them to show some loyalty,
build a system whereby things are too good for them to
leave! Tailored information or services to suit them
specifically. Or services that integrate with the customers
own systems or lifestyle. These switching costs make leaving
less likely.
CRM’s Facets
 CRM has 3 facets:
 Sales force automation (SFA).
 Marketing automation.
 Customer service.
 Used primarily in the B2B market, SFA helps salespeople to:
 Build, maintain, and access customer records.
 Manage leads and accounts.
 Manage their schedules.
Marketing Automation & Customer
Service
 Marketing automation software aids marketers in effective
targeting, marketing communication, and monitoring of
customer and market trends.
 Marketing automation software takes data from Web sites
and databases and turns it into reports for CRM efforts.
 Customer service is critical to building long-term customer
relationships.
 Most customer service occurs post purchase when
customers have questions or complaints.
 Key tools include e-mail, online live chat, Web selfservice, and package tracking using PDAs.
8 Building Blocks for Successful CRM
The Gartner Group model of CRM covers 8 building
blocks:
1. CRM vision
2. CRM strategy
3. Valued customer experience
4. Organizational collaboration
5. CRM processes
6. CRM information
7. CRM technology
8. CRM metrics
Building Blocks for Successful CRM
• CRM-SCM Integration
H Abid - CRM Week 01
CRM
Relationship
(A)
Initiation
Relationship
(B)
Maintenance
Acquiring
customers
Retaining
and
growing
customer base
Relationship
(C)
Termination
“Firing”
customers
Building Blocks for Successful CRM
CRM Processes
 Firms use specific processes to move customers through the
customer care life cycle.
Target
Acquire
Partners
Transact
Internet
Extranet
Service
Retain
Grow
Customer
8 Building Blocks for Successful CRM
CRM Metrics
 E-marketers use numerous metrics to assess the internet’s
value in delivering CRM performance.
 ROI
 Cost savings
 Revenues
 Customer satisfaction
 One study named customer retention, ROI, and customer
lift (increased response or transaction rates) as the most
important metrics.
Rules for CRM Success
1. Recognize the customer’s role.
2. Build a business case.
3. Gain buy-in from end users to executives.
4. Make every contact count.
5. Drive sales effectiveness.
6. Measure and manage the marketing return.
7. Leverage the loyalty effect.
8. Choose the right tools and approach.
9. Build the team.
10.Seek outside help.
Profiling
 Profiling helps you to know your customers better. The
better the profiling the better the results because the more
accurately you target your marketing efforts on particular
profiles or segments, the less your efforts will be wasted.
 Different customers have different needs. It is actually easier
to satisfy them if you divide them into groups sharing similar
needs (segments) and then treat each segment differently.
Profiling
 The more you know about customers the better. It ’s as
simple as that. Therefore a well used database as part of a
CRM system can create a competitive advantage as you grow
your own mini monopoly (customers on your database).
Profiling
 Today, we can build sophisticated consumer profiles based on
previous purchasing decisions and even identify the
consumer hierarchy of criteria, whether quality, speed of
delivery, level of service, etc. This enables us to target
tailored offers that match the specific needs of segments on
our database. Get this right and this ‘virtuous cycle ’ delivers
superior service and simultaneously creates competitive
advantage that protects our customers from the inevit-able,
new, competitive offers looming on the horizon.
Profiling
 A customer profile can take everything you know about the
customer and everything you know about people who are like
that customer. It can then be layered with all the psychological
and sociological theory that suggests how that person will react
to a specific offer or promotion. This helps you to tailor offers
that work better for both your customers and your business.
Profiling
Approaches To Profiling
 Profiling is a continuous activity. Continually collecting
customer information, mining it and using it to profile and
target more successfully. It is crucial to know what fields or data
should be collected.
 Profile data can be gathered from several sources: internally
from the customer ’s own input on a web form, tracking
mechanisms and questionnaires or externally from research
companies and data bureaux. Data can be complex and of
massive volume – it might be that you have to hire a computer
bureau to crunch the data to turn it into useful information.
Profiling
One of the toughest jobs is to know which data matters most –
especially where there is conflicting data. Some customers will
give you incorrect information – consciously or unconsciously.
You have to come up with ways to:
1- acquire the information in the first place, and
2 - then make it useful to your organization validation.
The issue of the invasion of privacy is a difficult one. Laws,
ethics and codes of practice come into play. Ethics have a role
but the main arbiters of ‘how much contact is too much contact
’ , are the customers themselves. They will show you how ready
they are to be communicated with by their response. You have
to gain their permission.
Profiling
 Asking for information is a delicate affair. You cannot be too
greedy. Beyond the basic information, you may need to offer
incentives for more information or simply wait for the
relationship to develop and permission to ask for more. But
remember customers value their privacy. Let your customers
see your privacy policy posted clearly on your web site and any
other access point customers may have with you.
Personalization
 Specialized software combined with an up-to-date and well-
cleaned database allows marketers to personalize
communications such as e-mails, voice mails (voice activated emails), snail mails (traditional direct mail), SMS text messages
(for mobiles) and most interestingly, web sites – personalized
web sites.
Personalization
 Why Personalization?
The most important sound in the world is . . . your own name!
We all appreciate it when people remember our names. It ’s
personal. It ’s a compliment – an expression of respect. By the
end of this section you’ll know how personalization helps to
build relationships and the issues that arise. Some call it
affectionately ‘the personal touch ’, when a restaurant
remembers your favorite wine or preferred table. The database
enhances the marketers memory of customer names, needs,
interests and preferences.
Personalization
 Personalization enhances the relationship. Personalized web pages
help to create a sense of ownership. Not of the customer by the
marketer, but of the site by the customer!
 When you make a customer feel that their home page is truly
theirs, that the offers you make available to them are theirs, that
the information they access is put together just for them, then you
allow the customer to own you.
Personalization
 This enhanced service helps to sell while also providing the
platform for ongoing dialogue ( ‘ Speak ’ ) and enhancing the
brand personality. So personalization delivers four of the 5Ss
benefits of e-marketing. Which ‘ S ’ is missing? Save –
personalization software does cost money. And the larger the
customer base gets the more complex the personalization
becomes. For this reason many organizations stick with a less
sophisticated mass web site.
Personalization
 Approaches to Personalization
There are three distinct approaches to personalization:
o Customization is the easiest to see in action: it allows the
visitor to select and set up their specific preferences.
o Individualization goes beyond this fixed setting and uses
patterns of your own behavior (and not any other user ’s –
they know it ’s you because of your login and password
choices) to deliver specific content to you that follows your
patterns of contact.
o In group-characterization you receive a recommendation
based on the preferences of people‘ like ’ you, using
approaches based on collaborative filtering and case-based
reasoning.
Personalization
 Mass customization is where different products, services or
content is produced for different segments – sometimes
hundreds of different segments.
 Personalization is different. It is truly one-to-one, particularly
when not only the web site and communications are
personalized but the product is personalized.
E-mail marketing
 A coherent e-mail marketing programme which helps build
relationships needs to combine excellence both in devising
effective outbound e-mail campaigns and managing incoming
e-mails to satisfactorily resolve customers ’ questions.
 E-mail is most widely used as a prospect conversion and
customer retention tool using an opt-in house-list of prospects
and customers who have given permission to a company to
contact them.
 Successful e-mail marketers adopt a strategic approach to email and develop a contact or touch strategy that plans the
frequency and content of e-mail communications.
Making it happen
 When choosing a CRM system you need to consider the
current and future scale; how it can now, and in the future,
integrate with other systems (like invoicing and debt
collection) and of course your budget which includes 3Ms –
men and women – people who will be involved in data
capture, analysis and use; money – budget required for
software license plus training and motivation schemes (to
ensure staff buy into the new system); minutes (time required
to specify the brief, source it, test it, modify it, train the team
and roll it out).
Making it happen
 Systems development should follow a structured approach,
going through several stages as shown in Figure. Note though
that, just as for web site development, prototyping is the most
effective approach since it enables the system to be tailored
through users experience of early versions of the system.
Beware of ‘scope creep ’. Ultimately, CRM is an attitude as
much as a system. Success depends on a customer culture
where all staff always ask ‘ how can we help the customer? ’
Making it happen
Managing The Database
The database is the core of the CRM system. The database
administrator/manager (DBA) has many responsibilities here:
1 Database Design. Ensuring the design is effective in allowing
customer data to be accessed rapidly and queries
performed.
2 Data Quality . Ensuring data is accurate, relevant and timely.
3 Data Security. Ensuring data cannot be compromised by
attacks from inside or outside the organization.
4 Data Backup and Recovery. Ensuring that data can be restored
if there are system failures or attacks.
Making it happen
5 User Coordination. This involves specifying who has access to
the information retrievaland who has access to information
input. Too many uncontrolled inputs mean files get changed
and deleted by too many different people. The database spins
out of control.
6 Performance monitoring. Checking the system is coping with
the demand placed on it by users.
There ’ s one more part of the DBA ’s job – to communicate
with clarity to the whole of the rest of the organization the
advantages of database marketing.
Summary
 Relationship Marketing
 CRM & E-CRM
 Building blocks
 Customer life cycle
The last thing to do …
 Visit www.cisco.com and find more about their CRM
activities