Internet Marketing (MM 3841)

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Internet Marketing (MM 3841)

• Week 6 7
• Customer Relationship Management

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Contents
Building Customer Relationships Relationship
Marketing Defined CRM Building Blocks 1. CRM
Vision 2. CRM Strategy 3. Valued Customer
Experience 4. Organizational Collaboration 5.
CRM Processes 6. CRM Information 7. CRM
Technology
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Building Customer Relationships

• Relationship capital A firms ability to build
  and maintain relationships with customers,
  suppliers, and partners may be more important
  than a firms land, property, and financial
  assets.
• A major shift in marketing practice
• from mass marketing to individualized marketing,
• from focusing on acquiring lots of new customers
  to retaining old ones and building more business
• from a whole market of customers to a smaller
  base of loyal high-value customers.

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Building Customer Relationships

• Consumer services market and consumer packaged
  goods are now considering how to build long-term
  customer relationships.
• Relationship marketing is about establishing,
  maintaining, enhancing, and commercializing
  customer relationships through promise
  fulfillment.

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Relationship Marketing Defined

• Relationship marketing
• Involves two-way communication with individual
  customers, one at a time (11).
• Firm focuses on share of customer, rather than
  share of market.
• Firm differentiates individual customers based on
  need rather than differentiating products for
  target groups.

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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 /collaboration
Acquisition focus Retention focus
Share of market Share of customer
Product Differentiation Customer Differentiation
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Contents
Building Customer Relationships Relationship
Marketing Defined CRM Building Blocks 1. CRM
Vision 2. CRM Strategy 3. Valued Customer
Experience 4. Organizational Collaboration 5.
CRM Processes 6. CRM Information 7. CRM
Technology
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1. CRM Vision

• Start With a vision that fits the company
  culture and makes sense for the firms brands and
  value propositions.
• Integrate data from the Web site and
  brick-and-mortar retail operations.
• Success The CRM vision start at the top and
  filter throughout the company to keep the firm
  completely customer focused.

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1. CRM Vision

• CRM is based on trust
• The information customers give companies on Web
  forms, in e-mail, or in other ways will be used
  responsibly.
• Information is used to improve the relationship
  by tailoring goods, services, and marketing
  communications to meet individual needs.
• It means allowing consumers to request removal of
  their information from databases, to opt-out of
  e-mail lists, not sharing information with
  other companies unless permission is granted.

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1. CRM Vision

• TRUSTe
• To help Web sites earn the trust of their users,
  an independent, nonprofit privacy initiative
  named TRUSTe provides its seal and logo to any
  Web site meeting its philosophies
• Adopting and implementing a privacy policy that
  factors in the goals of your individual Web site
  consumer anxiety over sharing personal
  information online.
• Posting notice and disclosure of collection and
  use practices regarding personally identifiable
  information via a posted privacy statement.
• Giving users choice and consent over how their
  personal information is used and shared.
• Putting data security and quality, and access
  measures in place to safeguard, update, and
  correct personally identifiable information.

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TRUSTe Builds User Trust Source www.truste.org
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1. CRM Vision

• TRUSTe
• In addition, sites must publish the following
  information on their sites to gain the TRUSTe
  seal
• What personal information is being gathered by
  your site.
• Who is collecting the information.
• How the information will be used.
• With whom the information will be shared.
• The choices available to users regarding
  collection, use, and distribution of their
  information.
• The security procedures in place to protect
  users collected information from loss, misuse,
  or alteration.
• How users can update or correct inaccuracies in
  their pertinent information.

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2. CRM Strategy

• E-marketers must determine what they want to
  accomplish before buying CRM technology.
• Goals for CRM projects
• Increase order size more effectively targeted
  cross sell promotions.
• Build customer loyalty and repeat sales
  relevant and compelling offers.
• Increase the variety of products and categories
  that customers buy from you.

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2. CRM Strategy

• Goals for CRM projects
• Move overstocks by knowing which customers will
  buy them at list price to avoid deep discounting.
  
• Reduce costly returns by promoting products you
  know your customers want.
• Enable multi-channel coordination of field sales,
  inside sales, e-commerce and direct mail through
  consistent and relevant product recommendations
  for each customer interaction.

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2. CRM Strategy

• Relationship marketing is practiced on 3 levels
• Build a financial bond with customers by using
  pricing strategies. Price promotions are used to
  build share of customer BUT easily imitated.
• Stimulate social interaction with customers. This
  involves ongoing personal communication with
  individual customers and may include aggressive
  pricing strategies as well.
• Relies on creating structural solutions to
  customer problems. Structural bonds are formed
  when firms add value by making structural changes
  that facilitate the relationship.

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3. Valued Customer Experience

• Being a consumer is difficult because of constant
  bombardment by marketing communications and
  unlimited product choices.
• From a consumers perspective, the basic
  principle of CRM is choice reduction.
• Consumers want to patronize the same Web site,
  mall, and service providers because doing so is
  efficient.
• Consumers are loyalty prone, searching for the
  right product or service and then sticking with
  it as long as the promises are more or less
  fulfilled.

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3. Valued Customer Experience

• Customer Preferences Vary
• Customers might want
• To call and speak with a live representative
  about an account problem,
• To go to a Web site to research product
  information,
• To use e-mail to complain about a service
  problem, and so forth.
• These options cover many technologies, using both
  automated and human intervention for both
  synchronous (simultaneous) and asynchronous
  communication.
• The Internet must create valued customer
  experiences and firms must put the focus on
  customers and their preferences, not the
  companys capabilities.

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Relationships Over Multiple Communication Channels
Automated Human
Synchronous Web self service Online transactions Telephone routing Telephone Online Chat Collaboration tools
Asynchronous Automated e-mail Short Message Services (SMS) Web forms FAX on demand E-mail response Snail mail (mail delivered by a postal system)
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3. Valued Customer Experience

• Community-Building Principles
• An important way to forge relationships
  strengthen loyalty.
• Building a successful online community is not as
  simple as putting a link on a Web site and hoping
  folks will drop by.
• As with most e-business strategies, research and
  planning precede success.
• 9 critical success factors following good CRM
  principles.

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Define the communitys purpose Construct a mission statement, identify the target market, and create a strong site personality Organize and promote cyclic events Hold regular, hosted, themed events, conduct community surveys, and hold contests that reinforce the purpose
Create extensible gathering places Provide a good system overview or map, include rich communications features, and allow members to extend the environment Provide a range of roles Offer newcomers a controlled experience, offer increased privileges to regulars, and recruit leaders and mentors from within
Create evolving member profiles Communicate the benefits of membership, make profile creation as easy and fun as possible, and keep the profiles up-to-date and evolving Facilitate member-created subgroups Provide features that facilitate small groups and create events and contests for groups
Promote effective leadership and hosting Set up your program to grow, build some flexibility into the house rules, and set reasonable expectations for online support Integrate with the real world Celebrate events that reinforce social identity, acknowledge important personal events, and encourage real-life meetings (when appropriate)
Define a clear yet flexible code of conduct Create and enforce your code of conduct and dont try to stifle all conflict
9 Community-Building Design Principles Source
Adapted from Kim (2000) at www.naima.com/articles/
webtechniques.html
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4. Organizational Collaboration

• E-marketers collaborate both within and outside
  of the organization
• Within the firm Cross functional teams focus on
  customer satisfaction.
• Outside the firm When 2 or more companies join
  forces, the results often exceed what each firm
  might have accomplished alone.
• This is true in the distribution channel or a
  non-transactional type collaboration.
• Todays marketplace consists of supply chain
  competition, not individual firm competition.

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4. Organizational Collaboration

• CRM-SCM Integration
• CRM usually refers to front-end operations
  firms work to create satisfying experiences at
  all customer touch points in-person visits to
  stores, e-mail contact, and so forth.
• This is challenging because different employees /
  computer systems collect various information, and
  it must be integrated into appropriate customer
  records.
• The entire supply chain can work together to
  single-mindedly focus on meeting consumer needs
  and make higher profits in the process.

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4. Organizational Collaboration

• Imagine that a customer orders a particular shirt
  from a clothing retailers Web site
• If the shirt is out of stock, the customer might
  see a Web screen with that message.
• With an integrated CRM-SCM system, the system can
  instantly check inventory levels at the retailer,
  the wholesaler or manufacturer to determine
  availability.
• Then the system notify the customer and offer
  options. Wait two weeks for delivery from the
  manufacturer or consider a similar shirt
  currently in stock.

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CRMSCM Integration
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4. Organizational Collaboration

• Connecting customers with supply chain businesses
  provides several advantages
• All firms will share transaction data
  inventories can be kept low. Producers /
  wholesalers receive data about consumer orders
  can produce goods in a timely manner.
• Upstream firms can use the data to design
  products that better meet consumer needs.
• If customer service representatives have
  up-to-the-minute information about product
  inventories, they will be able to better help
  consumers immediately.

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4. Organizational Collaboration

• Extranet
• Extranets are two or more intranet networks that
  are joined for the purpose of sharing
  information.
• Extranets are proprietary to the organizations
  involved.
• It is the use of extranets that allows CRM-SCM
  integration.
• Electronic Data Systems (EDS) a firm that
  provides enterprise-wide computer desktop
  services from procurement to network management
  for large clients.

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5. CRM Processes

• CRM involves an understanding of the customer
  care life cycle.
• Firms monitor and attract customers, both online
  and offline, as they progress through the stages
  target, acquire, transact, service, retain, and
  grow.
• Beginning
• When companies select target markets in the
  e-marketing plan.
• When opportunities often arise when a new target
  group appears.

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5. CRM Processes

• Identifying Customers
• Firms obtain prospect, business customer, and end
  consumer information through
• Personal disclosure,
• Automated tracking through the sales force,
• Customer service encounters,
• Bar code scanners at retailers,
• Web site activity.
• Every piece of user information goes into a
  database that helps firms identify the best
  customers.
• Best highest value, longest loyalty, highest
  frequency of purchase, and so on.

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5. CRM Processes

• Differentiating Customers
• Customers have different needs.
• With the Internet, firms can collect information
  to identify various benefit segments and
  individual similarities/differences use this
  information to increase profits.
• One very important way to differentiate is by
  customer value Not all customers have equal
  value to a firm.
• 20 of the customers provide 80 of the
  businesss profits.
• CRM allows marketers to leverage their resources
  by investing more in the most important
  customers.
• Technology allows firms to identify high-value
  customers respond with offers in real time over
  the Internet.

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5. CRM Processes

• Differentiating Customers
• How can firms identify their high-value
  customers?
• By mining and profiling in customer databases,
  using real-time / real-space data collection
  techniques.
• Firms use analysis (recency, frequency, monetary)
  to mine databases for customers who spend the
  most money, buy frequently and recently.
• Firms evaluate sales growth per customer over
  time and determine service costs for individual
  customers.

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5. CRM Processes

• Customizing the Marketing Mix
• When a firm has identified prospects
  differentiated customers according to
  characteristics, behavior, needs, or value,
• It can customize offerings to various segments or
  individuals.
• Customization occurs throughout the marketing
  mix, not just in the product offerings.
• Marketing communication messages can be tailored
  to individuals and delivered over the Internet in
  a timely manner.
• Through customization firms can satisfy the
  precise needs of each customer, and build
  long-term, profitable relationships.
• Personalization marketing Web pages that greet
  users by name or e-mail that is automatically
  sent to individuals with personal account
  information.

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5. CRM Processes

• Interaction
• Interaction with customers allows
• Firms to collect the data necessary for
  identification and differentiation,
• Firms to evaluate the resulting customization
  effectiveness on a continuous basis.
• The more information a firm has, the better value
  it can provide to each customer and prospect in
  terms of more accurate, timely, and relevant
  offerings.
• Information technology allows companies to move
  beyond the traditional segment profiling to
  detailed profiles of individuals.

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6. CRM Information

• Software tracks a users movement from page to
  page, indicating
• How much time was spent on each page,
• Whether the user made a purchase,
• The type of computer and operating system, and
  more.

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6. CRM Information

• Firms can track which sites users visited before
  and after theirs,
• They use this information to guess which
  competitive products are under consideration,
  learn what about users interests.
• Tracking user behavior is useful to both users
  and companies, but it has its critics because of
  privacy considerations.
• Retailers gather information from each channel
  filter it into a common database.
• A customer can telephone the customer service
  representative to discuss a product purchased in
  the brick-and-mortar store last week, and refer
  to an e-mail sent yesterday, because the data are
  all in the database under one customer record

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6. CRM Information

• 8 critical success factors for building
  successful e-business relationships with
  customers
• Target the right customers identify the best
  prospects and customers and learn as much about
  them as possible.
• Own the customers total experience the
  customer share of mind.
• Streamline business processes that impact the
  customer accomplished through CRM-SCM
  integration and customer focus.
• Provide a 360-degree view of the customer
  relationship this means that everyone in the
  firm who touches the customer should understand
  all aspects of her relationship with the company.

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6. CRM Information

1. Let customers help themselves provide Web sites
   and other electronic means for customers to find
   things they need quickly and conveniently, 24/7.
2. Help customers do their jobs if a firm provides
   products and services to help customers perform
   well in their businesses, they will be loyal and
   pay a premium for the help.
3. Deliver personalized service customer
   profiling, privacy safekeeping, and marketing mix
   customizing all aid in delivering personalized
   services electronically.
4. Foster community encouraging customers to join
   in communities of interest that relate to a
   firms products is one important way to build
   loyalty.

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7. CRM Technology

• Important tools that aid firms in customizing
  products to groups of customers or individuals
  include push strategies that reside on the
  companys Web and e-mail servers, and pull
  strategies that are initiated by Internet users.

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Selected E-Marketing Push Customization Tools
Company-Side Tools (push) Description
Cookies Cookies are small files written to the users hard drive after visiting a Web site. When the user returns to the site, the companys server looks for the cookie file and uses it to personalize the site.
Web log analysis Every time a user accesses a Web site, the visit is recorded in the Web servers log file. This file keeps track of which pages the user visits, how long he stays, and whether he purchases or not.
Data mining Data mining involves the extraction of hidden predictive information in large databases through statistical analysis.
Real-time profiling Real-time profiling occurs when special software tracks a users movements through a Web site, then compiles and reports on the data at a moments notice.
Collaborative filtering Collaborative filtering software gathers opinions of like-minded users and returns those opinions to the individual in real-time.
Outgoing e-mail Distributed E-Mail Marketers use e-mail databases to build relationships by keeping in touch with useful and timely information. E-mail can be sent to individuals or sent en masse using a distributed e-mail list.
Chats Bulletin Boards A firm may listen to users and build community by providing a space for user conversation on the Web site
iPOS terminals Interactive Point of Sale terminals are located on a retailers counter, and used to capture data and present targeted communication.
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7. CRM Technology

• Company-Side Tools (PUSH)
• There are important e-marketing tools used by
  firms to push customized information to users.
• Users are unaware that marketers are collecting
  data using these technologies to customize
  offerings.
• Cookies
• Cookie files are the reason that customers
  returning to Amazon.com get a greeting by name
  users dont have to remember passwords to every
  site for which they are registered.
• Cookie files allow ad-server firms to see the
  path users take from site to site and, serve
  advertising banners relevant to user interests.
• Cookies keep track of shopping baskets and other
  tasks so that users can quit in the middle and
  return to the task later.

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7. CRM Technology

• Web Site Log
• By performing Web log analysis, firms can do many
  things, (customize Web pages based on visitor
  behavior).
• Software can also tell which sites the users
  visited immediately before arriving what key
  words they typed in at search engines to find the
  site user domains, and much more.
• Data Mining
• Marketers dont need a priori hypotheses to find
  value in databases, but use software to find
  patterns of interest.
• Real-Time Profiling
• Customer profiling uses data warehouse
  information to help marketers understand the
  characteristics and behavior of specific target
  groups.

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7. CRM Technology

• Collaborative Filtering
• In the offline world, individuals often seek the
  advice of others before making decisions.
• Collaborative filtering software gathers the
  recommendations of an entire group of people
  presents the results to a like-minded individual.
• BOL.com, an international media and entertainment
  store uses collaborative filtering software to
  observe how users browse and buy music, software,
  games, at its site.
• The more time a user spends at the site, the more
  it will learn about her behavior/preferences
  the better able it will be to present relevant
  products.
• BOL.com notes that it realized increased revenues
  from using this software, and achieved a positive
  ROI within months.

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7. CRM Technology

• Outgoing E-Mail
• E-mail is used to communicate with individuals or
  lists of individuals (distributed e-mail) to
  increase their purchases, satisfaction, and
  loyalty.
• Many companies maintain e-mail distribution lists
  for customers and other stakeholders.
• Permission marketing dictates that customers will
  be pleased to receive e-mail for which they have
  opted-in.
• MyPoints rewards consumers with points and gift
  certificates, all for reading targeted e-mail ads
  and shopping at selected sites.
• MyPoints client companies pay a fee for these
  e-mails, some of which go directly to customers
  as points.
• MyPoints advertises responsible e-mail
  messaging consumers agree to receive commercial
  messages within their e-mails.

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MyPoints Rewards Members for Time Spent
Online Source www.mypoints.com
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7. CRM Technology

• Outgoing E-Mail
• Spam does not build relationships but instead
  focuses on customer acquisition.
• The Internet provides the technology for
  marketers to send 500,000 or more e-mails at the
  click of a mouse for less than the cost of 1
  postage stamp.
• Relationship-building e-mail requires
• Sending e-mails that are valuable to users,
• Sending them as often as users require,
• Offering users the chance to be taken off the
  list at any time.

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7. CRM Technology

• Chat and Bulletin Boards
• Firms build community learn about customers and
  products through real-time chat and bulletin
  board/newsgroup e-mail postings at its Web site.
• Analysis of these exchanges is used in the
  aggregate to design marketing mixes that meet
  user needs.
• iPOS Terminals
• Small customer facing machines near the
  brick-and-mortar cash register, used to record a
  buyers signature for a credit card transaction.
• They can gather survey and other data present
  individually targeted advertising and promotions
  as well.

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Selected E-Marketing Pull Customization Tools
Client-Side Tools (pull) Description
Agents Agents are programs that perform functions on behalf of the user, such as search engines and shopping agents.
Experiential marketing Experiential marketing gets the consumer involved in the product to create a memorable experience, offline or online.
Individualized Web portals Personalized Web pages users easily configure at Web sites such as MyYahoo! and many others.
Wireless data services Wireless Web portals send data to customer cell phones, pagers, and PDAs, such as the PalmPilot.
Web forms Web form (or HTML form) is the technical term for a form on a Web page that has designated places for the user to type information for submission.
FAX-on-demand With FAX-on-demand, customers telephone a firm, listen to an automated voice menu, and select options to request a FAX be sent on a particular topic.
Incoming e-mail E-mail queries, complaints, or compliments initiated by customers or prospects comprise incoming e-mail, and is the fodder for customer service.
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7. CRM Technology

• Client-Side Tools (PULL)
• Based on a users action at her computer or
  handheld device.
• The customer pull that initiates the customized
  response.
• Agents
• Shopping agents and search engines match user
  input to databases and return customized
  information.
• Agent software often relies on more than one
  interaction.
• A user might type in computer on the Dell site
  and then be presented with either laptop or
  desktop options to narrow the search.

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7. CRM Technology

• Experiential Marketing
• On the Internet, Calvin Klein developed an
  interactive, experience-based campaign to promote
  CK One, the unisex fragrance.
• The advertising included 3 characters, each with
  social dilemmas representative of those in the
  target market.
• The advertising invited viewers to e-mail
  campaign characters, and each e-mail received
  standard replies that developed the characters a
  bit more.
• This type of offline/online integration, when
  combined with customized experiences, builds
  positive relationships between customers and
  brands.

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7. CRM Technology

• Individualized Web Portals
• The Wall Street Journals online edition allows
  individual customers to create a personalized Web
  page based on keywords of interest.
• Helpful for business readers who want to monitor
  stories about their competitors.
• A structural bond is created with individual
  customers boost loyalty.
• Individualized Web portals are more often used to
  build relationships in the B2B market than the
  B2C market.
• Allow supply chains access inventory and account
  information, and track various operations.
• A huge improvement over the previous method,
  where buyers searched through piles of brochures,
  catalogs, and price lists that included many
  products not carried by channel partners and were
  constantly out-of-date.

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7. CRM Technology

• Wireless Data Services
• They are included as a separate tool because of
  their rapid growth and distinctive features.
• Wireless users only want text data due to the
  screen size of wireless devices and download time
  for graphics.
• As users customize this information, they give
  serving firms a better idea of how to better
  serve them and, build relationship.

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7. CRM Technology

• Web Forms
• Many corporate Web sites use Web forms for a
  multitude of purposes from site registration and
  survey research to product purchase.
• Many sites strive to build the number of
  registered users as a prelude to transactions.
• FAX-on-Demand
• In the B2B market, firms often want information
  sent via FAX machine.
• Services such as eFax.com allow Internet users to
  send and receive FAX transmissions at their Web
  sites.
• Why would a user use this service as opposed to
  an e-mail attachment?
• When the document is not in digital form, a
  signature is needed, or Internet access is not
  available so the document cannot be sent as an
  e-mail attachment.

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7. CRM Technology

• Incoming E-Mail
• Post-transaction customer service is an important
  part of the customer care life cycle.
• The Web online channel a feedback button or
  form that delivers an e-mail message to the
  corporation.
• Often an automated customer service program
  acknowledges the message via e-mail and indicates
  that a representative will be responding shortly.
  
• Research shows that firms are getting much better
  at responding to incoming e-mail.
• Companies should include feedback options online
  only if they have staff in place to respond
  E-mail addresses on a Web site imply a promise to
  reply.