Chapter 11

Building a Customer-Centric
Organization Customer
Relationship Management
11-1

Learning Outcomes
Compare operational and analytical customer
relationship management
Identify the primary forces driving the explosive
growth of customer relationship management
Define the relationship between decision
making and analytical customer relationship
management

11-2

Customer Relationship
Management (CRM)- overview

Customer Relationship Management Systems (CRM)

Manages all of the ways used by firms to deal with existing and potential
new customers

CRM is both a Business and Technology discipline

CRM Uses information system to integrate entire business processes of a

firms interaction with its customers.

Provides end-to-end customer care ( from order receipt through delivery

and after sale service and support)

Provides a unified view of customer across the company

Consolidates customer data from multiple sources (retail stores, phone,

e-mail, the Web) and provides analytical tools for answering questions

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CRM : Customer Relationship Management

Systems

11-4

Customer Relationship
Management (CRM)
CRM enables an organization to:
Provide better customer service
Make call centers more efficient
Help sales staff close deals faster
Simplify marketing and sales processes
Discover new customers
Increase customer revenues

11-5

Recency, Frequency, and Monetary

Value
Organizations can find their most valuable
customers through RFM - Recency,
Frequency, and Monetary value
How recently a customer purchased items
(Recency)
How frequently a customer purchased items
(Frequency)
How much a customer spends on each
purchase (Monetary Value)
11-6

The Evolution of CRM

There are 3 phases in the CRM evolution:
CRM reporting technology help organizations
identify their customers across other applications
CRM analysis technologies help organization
segment their customers into categories such as best
and worst customers
CRM predicting technologies help organizations
make predictions regarding customer behavior such as
which customers are at risk of leaving
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The Evolution of CRM

Three phases in the evolution of CRM
include reporting, analyzing, and
predicting

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The Evolution of CRM

11-9

Good CRM systems

By consolidating customer data, one should be able
to answer questions such as
Whats the value of particular customers over their lifetime?
Who are the most loyal customers? ( costs 6 times more to sell to a new
customer than an existing one)
Who are firms most profitable customers? ( 80%-90% of the firms profit
are generated by 10%-20% of its customers )
What do these profitable customers buy?
Firms can then use the answers to these questions to acquire new
customers.
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CRM Demo- SAP

SAP CRM
Enabling Customer-Loyalty Management
SAP.com is the major producer of CRM systems

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Customer Relationship
Managements Explosive Growth
CRM Business Drivers

11-12

Customer Relationship
Managements Explosive Growth

11-13

Operational vs. Analytical CRM

Operational CRM supports traditional
transactional processing for day-to-day
front-office operations or systems that
deal directly with the customers
Analytical CRM supports back-office
operations and strategic analysis and
includes all systems that do not deal
directly with the customers
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Operational CRM
Customer-facing applications, such as
sales force automation, call center and
customer service support, and marketing
automation
Examples: Campaign management, emarketing, telemarketing, tele-selling, eselling, field sales
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Analytical CRM
Applications that analyze customer data
generated by operational CRM
applications to provide information for
improving business performance
Examples: Develop customer profiles;
analyze customer or product profitability;
identify trends in sales length cycle;
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Analytical CRM

Personalization when a Web site knows enough

about a persons likes and dislikes that it can fashion
offers that are more likely to appeal to that person

Analytical CRM relies heavily on data warehousing

technologies and business intelligence to collect insights
into customer behavior

These systems quickly aggregate, analyze, and

disseminate customer information throughout an
organization

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Using Analytical CRM

to Enhance Decisions

A data warehouse is a repository of an organization's electronically stored data.

11-18
Data warehouses are designed to facilitate reporting and analysis

Summary
Business Value of Customer Relationship
Management Systems
1.
2.
3.
4.
5.

Increased customer satisfaction

More effective marketing and reduced direct
marketing costs
Lower costs for customer acquisition
Increased revenue from identifying most profitable
customers and segments for marketing
Reduced churn rate (Number of customers who stop
using or purchasing products or services from a
company)
11-19

More CRM Demos

Microsoft CRM Demo (Fun) (video- 3 min.)
CRM Demo (video 3 min.)
Microsoft CRM - What can it do for you? (video - 3 min.)