Customer Relationship (CRM) Systems

MIS 4133 Software Systems Outline

 CRM and CRM System  Phases  Applications  CRM Software Capabilities  Aspects of CRM  Market Segments  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 Process  Eliminate unnecessary activities, improve outdated processes, and redesign activities 4.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 , 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 , 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 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].