Customer Relationship Management (CRM) Systems
MIS 4133 Software Systems Outline
CRM and CRM System Phases Applications CRM Software Capabilities Aspects of CRM Market Segments Business Value Performance Metrics Success Stories Challenges CRM, ERP, and SCM Systems Integration CRM
Used to maximize the benefits of a company’s customer assets. Used as a technology and business discipline. Seeks to optimize revenue, profitability, customer satisfaction, and customer retention. CRM System
CRM system – provides integrated approach to all aspects of company-customer interaction
Marketing Sales Support / Service CRM Phases
1. Technology Automate existing processes 2. Integration Cross functional integration to create a customized view of the customer 3. Process Eliminate unnecessary activities, improve outdated processes, and redesign activities 4. Customer-driven Focus on understanding customer first and then move to inward operations CRM Applications
Partner relationship management (PRM) Manage relationships with company partners
Employee relationship management (ERM) Setting objectives, employee performance management, employee training, and performance-based compensation
CRM Software Capabilities
Sales force automation (SFA) Focus on most profitable customers Reduce cost per sale Reduce cost of acquiring new customer and retaining old ones Customer service Increase efficiency of call centers, help desks, and customer support staff Assign and manage customer service requests Marketing Capture customer data Provide product/service information Qualify leads for target marketing Schedule and track mailings and email Identify profitable and unprofitable customers Design products/services to satisfy specific consumer needs Identify opportunities for cross-selling, up-selling, and bundling
CRM Software Capabilities Example
Customer Data
Sales Marketing Service
Account Mgmt Campaign Mgmt Service Delivery
Channel Promotions Customer Satisfaction Lead Mgmt Mgmt Mgmt
Order Mgmt Events Mgmt Returns Mgmt
Sales Planning Market Planning Service Planning
Call Center & Help Field Sales Marketing Operations Desk
Sales Analytics Marketing Analytics Service Analytics Aspects of CRM
Operational CRM Includes customer-facing applications (SFA, call center, customer service support, and marketing automation)
Analytical CRM Includes applications that analyze customer data generated by operational CRM applications Operational vs. Analytical CRM Examples
Operational CRM Analytical CRM
Campaign mgmt Develop customer segmentation strategies
E-marketing Develop customer profiles
Account and contact mgmt Analyze customer profitability
Lead mgmt Analyze product profitability
Telemarketing Identify cross-selling/up-selling opportunities
Teleselling Select the best marketing, service, and sales channels for each customer group E-selling Identify trends in sales cycle length, win rate, and average deal size
Field sales Analyze service resolution times, service levels based on communication channel, and service activity by product line and account Field service dispatch Analyze leads generated and conversion rates
Customer care and help Analyze sales representative and customer service representative desk productivity Contract mgmt Identify churn problems Analytical CRM Data Warehouse
Customer Data Channels •Call center •Web site •Wireless •Profitable customers •Field sales Customer •Market segments •Customer profiles •Direct mail data •Churn rates •E-mail warehouse •Retail store •Partner
Other sources •Legacy systems •Demographic data •Third-party data •OLAP •Marketing •Data mining campaign data •Other data analysis tools CRM Market Segments
Traditional out-of-the-box CRM Traditional CRM with templates for specific vertical industries Traditional out-of-the-box CRM with application development hooks Industry-specific vertical CRM packages Custom solutions from vertical systems integrators CRM Systems Business Value
Increased customer satisfaction Reduced direct marketing costs More effective marketing Lower costs for customer acquisition and retention Increased sales revenue Reduced churn rate CRM Performance Metrics
Cost per lead Cost per sale Number of repeat customers Reduction of churn Sales closing rate Customer lifetime value (CLTV) Cost Cutters and Revenue Enhancers from a CRM System
Cost Cutters Revenue Enhancers Decrease cost of sales Increase sales effectiveness More time to sell; less time Add new customers at a on administration higher rate Decrease cost of service Offer new products/services Cost per service Provide a better customer interaction experience Transition to more self- Increase revenue per service customer Sell more of current products/services Improve customer retention CRM Success Stories
Best Buy Launched a “customer-centricity” effort Trained store-level employees to recognize five types of highly valued customers American Cancer Society Used CRM system to better target members in its donor base CRM System Challenges
Broad company goals Generic strategies Software-centric implementations Poor communication which can lead to no “buy-in” from sales force Inadequate training of sales force Competition between sales force leads to political issues Integrating CRM with ERP and SCM Systems CRM’s goal: to find the best customers and concentrate efforts on serving them better CRM and ERP integration ERP to CRM – access information such as credit ratings, payment status, sales volumes, and so forth CRM to ERP – better able to prioritize work processes for the best customers, etc. CRM and SCM integration SCM to CRM – access information regarding supply status, assembly process, delivery status, product configuration, and so forth CRM to SCM – better able to schedule delivery of raw materials, prioritize work flow, etc. References
Greenberg, P. (2002). CRM: Capturing and Keeping Customers in Internet Real Time at the Speed of Light, 2nd edition, McGraw-Hill Companies, Berkeley, California. Haag, S., Cummings, M. and McCubbrey, D.J. (2013). Management Information Systems for the Information Age, 9th edition, McGraw-Hill Companies, Inc., New York. Huang, A., Yen, D.C., Chou, D.C. and Xu, Y. (2003). “Corporate applications integration: challenges, opportunities, and implementation strategies,” Journal of Business and Management (9:2), Spring, pp. 137-150. Laudon, K.C. and Laudon, J.P. (2006). Management Information Systems: Managing the Digital Firm, Pearson Education, Inc., Upper Saddle River, New Jersey. Martin, E.W., Brown, C.V., DeHayes, D.W., Hoffer, J.A. and Perkins, W.C. (2005). Managing Information Technology, 5th edition, Pearson Education, Inc., Upper Saddle River, New Jersey. McNurlin, B.C. and Sprague, Jr., R.H. (2006). Information Systems Management in Practice, 7th edition, Pearson Education, Inc., Upper Saddle River, New Jersey. References
Motiwalla, L.F. and Thompson, J. (2009). Enterprise Systems for Management, Pearson Education, Inc., Upper Saddle River, New Jersey. Peppers, D. and Rogers, M. (2005). “Best Buy Counts Customers,” CIO Magazine, July, http://www.cio.com/archive/070105/circuit_sidebar_three.html [accessed: 19 October 2005]. Rigby, D.K. and Ledingham, D. (2004). “CRM done right,” Harvard Business Review, pp. 118-129. Ross, D.F. (2005). “E-CRM from a supply chain management perspective,” Information Systems Management, Winter, pp. 37-44. Taber, D. (2011). “Implementing Territories in CRM Systems,” http://www.cio.com/article/2406846/customer-relationship- management/implementing-territories-in-crm-systems.html [accessed: 15 September 2015]. Taber, D. (2012). “Why CRM Implementation is so Political,” http://www.cio.com/article/2393601/customer-relationship-management/why-crm- implementation-is-so-political.html [accessed: 15 September 2015]. Wailgum, T. (2007). “CRM Definition and Solutions,” http://www.cio.com/article/2439505/customer-relationship-management/crm- definition-and-solutions.html [accessed: 15 September 2015].