3.09 Understand the nature of customer relationship management to show its
3.09 Understand the nature of customer relationship management to show its contributions to a company 3.00 Understand product/service management, emotional intelligence, financial analysis, selling and customer relations. Define Customer Relationship Management (CRM) - Strategies, processes, and policies used by businesses to build, maintain, and maximize the long-term value of customer relationships Customer Experience Management (CEM) – Managing the customer's experience with a supplier of goods or services, over the duration of their relationship with that supplier Customer-Centric Strategy – Focusing on the customer’s needs and wants (think marketing concept). “Creating a positive consumer experience at the point of sale and post-sale. A customer-centric approach can add value to a company by enabling it to differentiate itself from competitors who do not offer the same experience.” http://www.businessdictionary.com/definition/customercentric.html#ixzz20QZoF11e Define Touch Points – is the interface with customers, noncustomers, employees and others – before, during and after a transaction. Seeing or hearing an ad, walking by the product on a shelf, hearing someone talk about it, etc. Continuous Improvement – Focus on improving the production, sales or other process of a business with the aim to better satisfy customers Business Process Management (BPM) – Activities undertaken by businesses to identify, evaluate, and improve business processes. http://www.businessdictionary.com/definition/business-process-management-BPM.html#ixzz20Qc2sYbh Define the term customer relationship management (CRM) Strategies, processes, and policies used by businesses to build, maintain, and maximize the long-term value of customer relationships Helps businesses to understand the respond to customers’ changing needs Emphasizes positive meaningful, and long-term communication and interaction with customers. Involves the collection of customer information to draw conclusions about the customer’s needs and wants as well as predict the customer’s loyalty and value in the future Define the term customer relationship management (CRM) Cont. CRM is a strategic tool firms can use to leverage proprietary information to identify cross-selling opportunities, new prospects, and potential conflicts of interest or independence issues. By developing a deeper understanding of your clients--their industries, markets and relationships--through CRM, your firm can gain a sustainable competitive advantage in challenging times http://www.allbusiness.com/company-activities-management/operations/11477600-1.html#ixzz1c5DbnOf1 Define the term customer relationship management (CRM) Cont. CRM is a strategic tool firms can use to leverage proprietary information to identify cross-selling opportunities, new prospects, and potential conflicts of interest or independence issues. By developing a deeper understanding of your clients--their industries, markets and relationships-through CRM, your firm can gain a sustainable competitive advantage in challenging times http://www.allbusiness.com/company-activities-management/operations/11477600-1.html#ixzz1c5DbnOf1 Describe the nature of customer relationships in today’s society Because customers now have so many different choices in the marketplace, they have become more selective about whom they do business with. When given the choice to do business with one of two businesses that sell nearly identical products at similar prices, customers often choose to purchase from the business that offers better customer service. As a result, customers’ expectations for customer service are higher. Explain goals of CRM To build better relationships with existing customers To build customer loyalty To attract new customers CRM tracks important information about the customer: Demographics Interests Previous orders Preferences Contact information To increase “touch points” CRM Goals continued To gather and track information about customer for use in business decision-making To understand customers and their needs so that these needs can be fulfilled in a manner satisfactory to customers and businesses To develop products that meet or exceed customer expectations (PSM) To increase business profit To develop a competitive advantage The importance of formulating a CRM strategy prior to implementing CRM processes and tools Each company should design a unique CRM strategy that directly addresses its needs, its organization, and its customers An important step in developing a CRM strategy is identifying the objectives/goals of the CRM program (e.g., to increase customer retention, to improve product offerings, etc.) Before implementing CRM processes and tools, each company must determine which members of its organization will be involved in CRM so that these individuals can be trained CRM technology and tools should be selected after determining the company’s CRM strategy, objectives, and program participants Describe Common CRM Processes Campaign management (usually conducted by the marketing dept.) Targeting prospective customers Distributing promotional materials to targeted prospects Tracking response to promotional materials Generating leads for sales Sales management (sometimes divided into lead management, offer management, and contract management) Recording lead information Qualifying leads Prioritizing leads Contacting leads Making sales Common CRM Processes cont. Service management Providing after-sales services, such as: Maintenance and repair services Warranties and guarantees Retaining customers Complaint management Receiving customer complaints Resolving customer problems Communicating customer complaints to the organization Retaining customers Describe the role of Customer Experience Management (CEM) in CRM The goal of customer experience management (CEM) is to move customers from satisfied to loyal and then from loyal to advocate. Traditionally, managing the customer relationship has been the domain of Customer Relationship Management (CRM). However, CRM strategies and solutions are designed to focus on product, price and enterprise process, with minimal or no focus on customer need and desire. Where CRM is enterprise-focused and designed to manage customers for maximum efficiency, CEM is a strategy that focuses the operations and processes of a business around the needs of the individual customer. Jeananne Rae notes, “building great consumer experiences is a complex enterprise, involving strategy, integration of technology, orchestrating business models, brand management and CEO commitment.” http://en.wikipedia.org/wiki/Customer_experience Discuss the use of customer information in CRM By gathering and organizing customer information, a business can better determine and fulfill its customers’ needs and wants Customer information is also used to identify the most profitable, loyal customers. After identifying these customers, the business may provide higher, better service to these customers to maintain their loyalty and increase their profitability Role of Corporate culture in CRM Corporate culture is what makes one business in an industry different from another in the same industry How has the company decided to approach its customers? What kinds of people does it hire? What are the priorities of that company? CRM helps the company build strong relationships aimed at making the customer happy For CRM be effective, the culture of the company must place customer satisfaction as its top priority Role of corporate culture in CRM Cont. For CRM to be successful, it must be supported by the corporate culture (i.e., the values, beliefs, and encouraged behaviors in an organization) Sr. Executives must believe and demonstrate that building and maintaining customer relationships is a corporate priority Corporate values must be understood and embraced by all employees Employee incentives, such as prizes and bonuses, can help ensure that employees embrace CRM strategies and processes Also, employees must be given leeway (authority) to do what is necessary to satisfy customers Explain the impact of organizational structure on CRM The organization should be structured so that customers have “seamless,” easy interactions with the company. To ensure that customer have “seamless” interactions with the company all customer information must be easily available to all employees who require it (usually using CRM technology) Companies with superior CRM processes are much more likely to be organized according to customer segments or groups. Employees are assigned into teams to support specific types of customers (B2B, retail, online, etc). Describe the relationship of CRM and continuous improvement Continuous improvement: The activity of regularly updating one’s processes for better efficiency and service After developing a CRM strategy and implementing CRM processes, continuous improvement must occur to ensure that: Company values remain in line with the CRM strategy CRM processes remain effective The relationship of CRM and business process management CRM and business process management (BPM) work together to satisfy customers BPM: A type of management that focuses on the design and improvement of business processes to make them as efficient and effective as possible; strives to align business processes with customers’ needs and wants BPM ensures that CRM processes meet the needs, wants, and expectations of customers, while CRM processes can gather customer information that can be used to ensure that business processes are designed with the end user – the customer-in mind Explain ways in which CRM can benefit a business Increased customer satisfaction and loyalty More customers and customer referrals Reduced costs Fewer complaints Lower employee stress levels Increased access to customer information (for use in business decision-making) Long-term profitability Performance Indicator: Explain the role of ethics in CRM Definitions Consent: (v) to be of the same mind or opinion (n) acceptance or approval of what is planned or done by another; acquiescence Agree Integrity: the quality of following rules, even if no one is around to enforce them. Integrity includes treating people fairly, applying rules consistently, and being unbiased and unprejudiced. Can be counted on to do the right thing Describe the importance of trust in customer/business relationships Building Trust is the Key to Avoiding Ethical Dilemmas Adapted Aesop’s Fable: two buddies (insurance salesperson and client) are traveling together in the woods, when a bear rushes out in front of them. On instinct, the salesperson grabs a tree branch and climbs a tree, stranding the client. Ever resourceful, the client feigns death, knowing the bear won’t eat dead meat. (NOT true.) After the bear sniffs close to the clients ear, it eventually leaves the area. As the sales person climbs down the tree, he laughingly asks the client: What did that big bad bear whisper? The client glares, then offers: He said, never trust a friend who deserts you in a pinch. http://ezinearticles.com/?Presenting-ETHICS---Elevating-Trust-HasInspired-Customer-Satisfaction&id=2307463 Describe the importance of trust in customer/business relationships Customers won’t (or won’t continue to) buy from someone they don’t trust Employees will leave a company where management can’t be trusted Trust is the currency of adult interactions Lack of trust leads to wasted time and decreased sales Trust is needed for businesses to work together Discuss loyalty issues in customer/business relationships Developing and nurturing loyalty should be the marketer's primary, day-to-day concern. Doing so increases the likelihood their brand can withstand economic turmoil, competitive threats, and reasonable price increases. Through in-store temporary price reductions or couponing, consumers are told "we'll reduce your risk if you give us a try." The problem is that, just like the price relief itself, the consumers' commitment to the brand is temporary. Another popular strategy among marketers with significant budgets is the development of catchy marketing phrases like "Just Do It" or "Oops, I could have had a V8". This approach can be effective, until budgets are cut because another brand in the division is underperforming. See the rest of the article @ http://chiefmarketer.com/crm/0106-customer-loyalty/ Describe ethical issues related to the collection of customer information Customer information is personal information and must be protected The company has a moral obligation to safeguard personal information collected from the customer The company often is legally culpable if information is mishandled or not properly protected Some customer information could be used to steal from the customer or impersonate him/her Children’s information often has legal restrictions concerning what can be collected and stored Describe ethical issues related to the collection of customer information Security measures when handling credit card payments and information Customer data is stored in a secured manner that monitors when and who accesses the information There are secure levels of access so those that should not be able to see certain information can’t Data is properly deleted when a customer leaves the CRM program Read about ethics in CRM at http://www.ehow.com/info_8384284_ethical-issues-crm.html Situations in which employees/departments involved in CRM may be reluctant to share customer information Information was expensive to collect Customers are sensitive to being contacted Data won’t be properly controlled Person requesting the information has not been vetted and is not confirmed as being allowed access Ethical issues related to the sale of customer information to 3rd parties Data that can be purchased or rented from third party vendors may include names, addresses, telephone numbers, mailing addresses, social security numbers, age information, health and medical data, and other personal or proprietary information information obtained for one purpose may be lawful, but if utilized for another purpose, may be illegal. Consumer advocates want to give consumers the option to have to affirmatively "opt-in", i.e., sign a consent form, to permit information to be conveyed to a third party Considered automatically to have opted-out http://www.mmmlaw.com/media-room/publications/articles/legal-and-ethical-issues-in-obtaining-and-sharing-information1 FEDERAL TRADE COMMISSION FAIR INFORMATION PRACTICE (FIP) PRINCIPLES 1. Notice/awareness (core principle).Web sites must disclose their information practices before collecting data. Includes identification of collector; 2. Choice/consent (core principle).There must be a choice regime in place allowing consumers to choose how their information will be used for uses of data; other recipients of data; nature of collection (active/inactive); voluntary or required status; consequences of refusal; and steps taken to protect confidentiality, integrity, and quality of the data. secondary purposes other than supporting the transaction, including internal use and transfer to third parties. 3. Access/participation. Consumers should be able to review and contest the accuracy and completeness of data collected about them in a timely, inexpensive process. 4. Security. Data collectors must take responsible steps to assure that consumer information is accurate and secure from unauthorized use. 5. Enforcement. There must be in place a mechanism to enforce FIP principles.This can involve self-regulation, legislation giving consumers legal remedies for violations, or federal statutes and regulations. http://www.prenhall.com/behindthebook/0132304619/pdf/laudon%20MIS10_CH-04%20FINAL.pdf The impact of poor/unethical privacy practices on customer relationships Company reputation is ruined Customers get angry and won’t do business anymore Customers will call and complain about the poor control of their information Lawsuits Regulators may intervene Have the database destroyed Levy fines Other businesses will no longer share data Performance Indicator: Describe the use of technology in CRM Definitions Client intelligence – Research done during the Preapproach phase of selling or while working with the customer Cross-selling – encouraging a customer who buys one product to buy a related or complementary product (i.e. tie, shirt, shoes with a suit) Up-selling – the seller will provide opportunities for the customer to buy more products or services, often at a reduced price. BOGO Relationship mapping - A methodology that describes a relationship between two or more objects. http://www.agiledata.org/essays/mappingObjects.html Definitions continued Personalization – Creation of custom tailored services(such as news pages on the web or specialized newsletters) that meet the individual customer’s particular needs or preferences (RSS feeds) Segmentation – Subdivision of a population into segments with similar characteristics, such as age, education, income (Market segmentation) Clustering - A group of the same or similar elements gathered or occurring closely together, helpful indata collection and in selling Difference between CRM technology and CRM CRM is a strategy (no, not software) to transform your business to be customer, not product, focused. The CRM software is just a tool that helps the company carry out this strategy. Depending on its implementation, it can help your business identify who your customers are, what they need and anticipate what could want. It allows businesses to tailor offers to their current customers, building closer relationships that make them feel valuable. Overall, CRM can make your company more efficient and customer-friendly to capture greater market share, increase customer loyalty, and attract more customers. http://www.businessknowhow.com/marketing/crm.htm Types of CRM tools CRM Applications – Email focus Social and collaborative focus Infusionsoft InTouch CRM Batchbook Kickapps Rapportive Gist Sales focus Smartsheet Sales Pipeline SalesForce.com Sugar CRM http://smallbiztrends.com/2011/01/9-crm-apps-small-business.html CRM tools continued Databases Uses Customer information Employee information Create reports on buying habits and trends Track sales and create goals for the sales team http://www.avidian.com/crm/crm-database.aspx Data Warehouses Data warehouse serves as the repository to collect and integrate the breadth of customer information found in operation systems as well as in external ones. The data warehouse supports a complete view of the customers, including customer data from typical sources such as: transactional data, interaction data (solicitations, call centers), demographic and behavioral data and selfprovided profile data Types of CRM software approaches Remember when we discussed thinking about your CRM program before buying your software? Operational CRM - provide support to front office business processes such as sales personnel, marketing and service staff Analytical CRM - Basically it evaluates the necessary customer data for a wide variety of reasons and purposes like: • Designing and accomplishing target marketing campaigns. • Designing and accomplish various campaigns i.e. cross selling, up selling and customer acquisition. • Identifying customer behaviors regarding products and services i.e. product development and pricing. • Management information system, i.e. financial forecasting Types of CRM software approaches continued Collaborative CRM - Collaborative data management tools make company information available across the web http://www.ehow.com/list_6707950_types-crm-tools.html#ixzz1c5lkeLYd Sales Intelligence CRM - It is known as a direct sales tool, which is similar to Analytical CRM. Usually it has a variety of features like: • Cross-selling/Up-selling opportunities • Customer drift • Sales performance • Customer trends Types of CRM software approaches continued Campaign Management – contains features of both Operational and Analytical, includes tracking, storing and analyzing campaign statistics Other tools include Customer Relationship CRM – identify the best current customers and segments Simple CRM Social CRM – can create online ads and Twitter updates http://www.crmscorecard.com/types-of-crm.htm Data commonly stored in a CRM system Contact data – ability to build stronger, longer lasting relationships with customers. Know what they “Like” on Facebook and who/what they’re following on Twitter in addition to their personal data Demographic data – income, zip code, etc. Transactional data - what, when, where, and how much a customer bought Relationship data - allows customer facing employees in such areas as sales, customer support, and marketing to make quick yet informed decisions on everything from cross-selling and upselling opportunities to target marketing strategies to competitive positioning tactics. CRM technology Benefits Data consolidation & analysis – allows sales and customer services professionals comprehensive data Customer identification & retention – providing personalized sales offerings Cross-selling opportunities - offer personally tailored product offerings during the service transaction Portability - resolve customer issues on site while using the information provided by CRM technology Improved Forecasting - can identify both short- and long-term trends in customer activity http://www.ehow.com/list_6529278_crm-technology-benefits.html Drawbacks Record loss - company does not have control of the data. If there is an outage, information will be lost Overhead – costs associated with running the software application Training – takes away time from productivity Increased vulnerability – if security is breached http://www.ehow.com/list_6178037_disadvantages-crm-systems.html How CRM technology can be used to create a “single view” of the customer Software can be programmed to collect and display customer information in a way the works best for the employee A “dashboard” summarizes information so that a manager or employee can get pertinent information at a glance Employees can be taught to read standardized summary pages that give them the information needed to best approach the customer CRM technology can present only the critical information for the particular customer and can be used to compare customers using like information Importance of upkeep in the CRM data warehouse Cleansing – removing discrepancies and inconsistencies in client/customer data. Helps to improve efficiency and accuracy of CRM data Also properly removing customer information for those customers that no longer participate Standardizing information about the customer by recognizing, comparing, matching, and reconciling customer data across disparate systems according to predefined rules Updating data – to view customer in “real-time” and ensure correct information is stored and being used
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