ch09-CRM
Content
Slide 9.1
CHAPTER 9 CUSTOMER RELATIONSHIP MANAGEMENT
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.2
Learning outcomes
Outline different methods of acquiring customers via electronic media Evaluate different buyer behaviour amongst online customers Describe techniques for retaining customers and cross-and up-selling using new media.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.3
Management issues
What is the balance between online and offline investment for customer acquisition? What technologies can be used to build and maintain the online relationship? How do we deliver superior service quality to build and maintain relationships?
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.4
What is CRM?
An approach to building and sustaining long-term business with customers CRM comprises of four marketing activities:
Customer selection Customer acquisition Customer retention Customer extension
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.1
The four classic marketing activities of customer relationship management
Slide 9.6
Marketing applications of CRM
A CRM system supports the following marketing applications:
Sales force automation (SFA). Sales representatives are supported in their account management through tools to arrange and record customer visits. Customer service management. Representatives in contact centres respond to customer requests for information by using an intranet to access databases containing information on the customer, products and previous queries. Managing the sales process. This can be achieved through ecommerce sites, or in a B2B context by supporting sales representatives by recording the sales process (SFA). Campaign management. Managing ad, direct mail, e-mail and other campaigns. Analysis. Through technologies such as data warehouses and approaches such as data mining, which are explained later in the chapter, customers’ characteristics, their purchase behaviour and campaigns can be analysed in order to optimize the marketing mix.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.7
E-CRM – a definition
E-CRM is:
Applying –
Internet and other digital technology… (web, e-mail, wireless, iTV, databases)
To – acquire and retain customers (through a multi-channel buying process and customer lifecycle)
By – Improving customer knowledge, targeting, service delivery and satisfaction.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.8
Benefits of e-CRM
Targeting more cost-effectively
Target
customer: Who visit web site and register
Achieve mass customization of the marketing messages
Tailered
e-mail at much lower cost than direct
mail
Increase depth, breadth and nature of relationship
More
information is supplied to customers as required by them
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.9
Benefits of e-CRM
A learning relationship can be achieved
Tools
summarizes product purchased, searching behaviors, feedback form about site and product
Lower cost
E-
mail or viewing web pages cost less than using physical mail Information need to be sent to those customers who have expressed a preference for it, resulting in fewer mail-out.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.10
Permission marketing
Permission marketing is about seeking the customers permission before engaging them in a relationship and providing some thing in exchange Customers agree to be involved in an organization’s marketing activities, usually as a result of an incentive Godin (1999) suggests that dating the customer involves: Offering the prospect an incentive Using the attention to teach Reinforce the incentive Offer additional incentive
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.2
A summary of an effective process of online relationship building
Slide 9.12
Customer profiling
To engage a customer in an online relationship, the minimum information that need to be collected in an online form is an e-mail address Customer profile details each customers product interest, his role in the buying decision For the customer to give this information a company will have to offer an incentive, establish trust and credibility.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.13
Customer profiling
Customer profile: Information that can be used to segment a customer Details each customer’s product interest Identify potential customer
IDIC approach as a framework for using the web effectively to form and built relationships
Customer identification: identify customer who visit to site Customer differention: build profile to segment customers Customer iteraction: customer service questions Customization: according to the segmentation achieved
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.14
Conversion Marketing
Using marketing communications to maximize conversion of potential customers to actual customers and existing customers to repeat customers In an online context, convert--- Offline audiences to site visitors Site visitors to engaged site visitors (to progress beyond the home page) Engaged site visitors to prospects Prospects into customers Customers into repeat customers
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.15
Conversion Marketing
Agrawal et al. (2001) scorecard: Attraction Conversion Retention
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.3
Multi-channel conversion model
Slide 9.17
The Online Buying Process
Five different types of web users
Directed
information-seekers:
information seekers
search required product information in detail (experts)
Undirected
Browse
and change sites by hyperlinks (surfers)
Directed
Product
buyers
and price comparison sites are target
Bargain
Use
hunters seekers
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
offers like free samples or prizes with web for enjoyment
Entertainment
Interact
Slide 9.18
Simple model of the buying process
Stages: Problem recognition Information( or supplier) search Evaluation Decision making Purchase Post-purchase
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
1) 2) 3) 4) 5) 6)
Slide 9.19
Differences between B2B and B2C buyers
Market structure Nature of the buying unit Type of purchase
Services:
low-volume, high-value Stationary: high-volume, low-value
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.4
Online and offline communications techniques for e-commerce
Slide 9.21
Customer Acquisition management
Marketing Communications for Customer Acquisition inclides- Search
engine marketing Online PR Online partnerships Interactive advertising E-mail marketing Viral marketing
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.22
The characteristics of interactive Marketing Communications
From push to pull From monologue to dialogue From one-to-many to one-to-some From one-to-many to many-to-many From ‘lean-back’ to ‘lean-forward’ The medium changes Increase in communication intermediaries Integration remains important
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Variation in UK media consumption in hours (bars) compared to percentage media expenditure (squares)
Figure 9.5
Source: Compiled from EIAA (2005) and IAB (2005)
Slide 9.24
Assessing marketing communication effectiveness
0 1 2 3 4 5 6
Volume or number of visitors Quality or conversion rates to action Cost (cost per click) Cost (cost per action or acquisition) Return on investment Branding metrics Lifetime-value-based ROI
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Measures used for setting campaign objectives or assessing campaign success increasing in sophistication from bottom to top
Figure 9.6
Figure 9.7
An example of effectiveness measures for an online ad campaign
Percentage who consider the different information sources as important when researching/considering a product or service
Figure 9.8
Source: BrandNewWorld: AOL UK/Anne Molen (Cranfield School of Management)/Henley Centre, 2004
Slide 9.28
Online marketing communications
1.
•
• • • •
Search-engine marketing (SEM)
Search-engine optimization
Frequency of occurrence in body copy Number of inbound links Title HTML tag Meta-tag
•
Paid search marketing
2.
•
Online PR
•
• •
Communicating with media online Link building Blogs, podcasting and RSS Managing brand on third-party sides
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.29
Google Alert
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.9
Search engine results page showing the two main methods for achieving
visibility
Source: Screenshot reprinted by permission of Google, Inc
Figure 9.10
The affiliate marketing model
(note that the tracking software and fee payment may be managed through an independent affiliate network manager)
Slide 9.32
Online marketing communications
3.
Online partnerships
•
•
Affiliate marketing Online sponsorship
4.
5.
6.
Interactive advertising E-mail marketing Viral marketing
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.11
E-mail response figures
Source: Epsilon Interactive
Figure 9.12
Schematic of the relationship between satisfaction and loyalty
Source: Adapted and reprinted by permission of Harvard Business Review from graph on p. 167 from ‘Putting the service-profit chain to work,’ by Heskett, J., Jones, T., Loveman, G., Sasser, W. and Schlesinger, E., in Harvard Business Review, March–April 1994. Copyright © 1994 by the Harvard Business School Publishing Corporation, all rights reserved
Slide 9.35
Customer retention management
Has two distinct goals
To
retain customers of the organization (repeat customers) To keep customers using the online channel (repeat visits)
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.36
Personalization and mass customization
Creating personalization Extranets Opt-in e-mail
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.37
Online Communities
A customer-to-customer interaction delivered via e-mail groups, web-based discussion forums or chat Choices of developing community for B2C
Purpose
Position Interest
Profession
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Relationship between loyalty drivers and measures to assess their success at Dell Computer
Table 9.4
Source: Reprinted by permission of Harvard Business Review from information on pp. 105–13 from ‘Your secret weapon on the web’, by Reicheld, F. and Schefter, P., in Harvard Business Review, July–August 2000. Copyright © 2000 by the Harvard Business School Publishing Corporation, all rights reserved
Figure 9.13
Activity segmentation of a site requiring registration
Slide 9.40
Lifetime value modeling
Lifetime value analysis enables marketers:
Plan
and measure investment Identify and compare critical target segments Measure the effectiveness Establish the true value Make decisions about products and offers Make decisions about the value of e-CRM
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.14
Different representations of lifetime value calculation
Figure 9.15
An example of an LTV-based segmentation plan
Slide 9.43
Customer extension
Deepening the relationship with the customer through increased interaction and product transactions
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.44
Advanced online segmentation
Identify customer lifecycle groups Identify customer profile characteristics Identify behavior in response and purchase Identify multi-channel behavior Tone and style preference
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.16
Customer lifecycle segmentation
Figure 9.17
RFM analysis
Slide 9.47
Types of CRM applications
Ideal CRM system will support multi-channel communications or the customer preferred channel
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.18
An overview of the components of CRM technologies
CHAPTER 9 CUSTOMER RELATIONSHIP MANAGEMENT
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.2
Learning outcomes
Outline different methods of acquiring customers via electronic media Evaluate different buyer behaviour amongst online customers Describe techniques for retaining customers and cross-and up-selling using new media.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.3
Management issues
What is the balance between online and offline investment for customer acquisition? What technologies can be used to build and maintain the online relationship? How do we deliver superior service quality to build and maintain relationships?
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.4
What is CRM?
An approach to building and sustaining long-term business with customers CRM comprises of four marketing activities:
Customer selection Customer acquisition Customer retention Customer extension
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.1
The four classic marketing activities of customer relationship management
Slide 9.6
Marketing applications of CRM
A CRM system supports the following marketing applications:
Sales force automation (SFA). Sales representatives are supported in their account management through tools to arrange and record customer visits. Customer service management. Representatives in contact centres respond to customer requests for information by using an intranet to access databases containing information on the customer, products and previous queries. Managing the sales process. This can be achieved through ecommerce sites, or in a B2B context by supporting sales representatives by recording the sales process (SFA). Campaign management. Managing ad, direct mail, e-mail and other campaigns. Analysis. Through technologies such as data warehouses and approaches such as data mining, which are explained later in the chapter, customers’ characteristics, their purchase behaviour and campaigns can be analysed in order to optimize the marketing mix.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.7
E-CRM – a definition
E-CRM is:
Applying –
Internet and other digital technology… (web, e-mail, wireless, iTV, databases)
To – acquire and retain customers (through a multi-channel buying process and customer lifecycle)
By – Improving customer knowledge, targeting, service delivery and satisfaction.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.8
Benefits of e-CRM
Targeting more cost-effectively
Target
customer: Who visit web site and register
Achieve mass customization of the marketing messages
Tailered
e-mail at much lower cost than direct
Increase depth, breadth and nature of relationship
More
information is supplied to customers as required by them
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.9
Benefits of e-CRM
A learning relationship can be achieved
Tools
summarizes product purchased, searching behaviors, feedback form about site and product
Lower cost
E-
mail or viewing web pages cost less than using physical mail Information need to be sent to those customers who have expressed a preference for it, resulting in fewer mail-out.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.10
Permission marketing
Permission marketing is about seeking the customers permission before engaging them in a relationship and providing some thing in exchange Customers agree to be involved in an organization’s marketing activities, usually as a result of an incentive Godin (1999) suggests that dating the customer involves: Offering the prospect an incentive Using the attention to teach Reinforce the incentive Offer additional incentive
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.2
A summary of an effective process of online relationship building
Slide 9.12
Customer profiling
To engage a customer in an online relationship, the minimum information that need to be collected in an online form is an e-mail address Customer profile details each customers product interest, his role in the buying decision For the customer to give this information a company will have to offer an incentive, establish trust and credibility.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.13
Customer profiling
Customer profile: Information that can be used to segment a customer Details each customer’s product interest Identify potential customer
IDIC approach as a framework for using the web effectively to form and built relationships
Customer identification: identify customer who visit to site Customer differention: build profile to segment customers Customer iteraction: customer service questions Customization: according to the segmentation achieved
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.14
Conversion Marketing
Using marketing communications to maximize conversion of potential customers to actual customers and existing customers to repeat customers In an online context, convert--- Offline audiences to site visitors Site visitors to engaged site visitors (to progress beyond the home page) Engaged site visitors to prospects Prospects into customers Customers into repeat customers
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.15
Conversion Marketing
Agrawal et al. (2001) scorecard: Attraction Conversion Retention
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.3
Multi-channel conversion model
Slide 9.17
The Online Buying Process
Five different types of web users
Directed
information-seekers:
information seekers
search required product information in detail (experts)
Undirected
Browse
and change sites by hyperlinks (surfers)
Directed
Product
buyers
and price comparison sites are target
Bargain
Use
hunters seekers
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
offers like free samples or prizes with web for enjoyment
Entertainment
Interact
Slide 9.18
Simple model of the buying process
Stages: Problem recognition Information( or supplier) search Evaluation Decision making Purchase Post-purchase
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
1) 2) 3) 4) 5) 6)
Slide 9.19
Differences between B2B and B2C buyers
Market structure Nature of the buying unit Type of purchase
Services:
low-volume, high-value Stationary: high-volume, low-value
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.4
Online and offline communications techniques for e-commerce
Slide 9.21
Customer Acquisition management
Marketing Communications for Customer Acquisition inclides- Search
engine marketing Online PR Online partnerships Interactive advertising E-mail marketing Viral marketing
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.22
The characteristics of interactive Marketing Communications
From push to pull From monologue to dialogue From one-to-many to one-to-some From one-to-many to many-to-many From ‘lean-back’ to ‘lean-forward’ The medium changes Increase in communication intermediaries Integration remains important
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Variation in UK media consumption in hours (bars) compared to percentage media expenditure (squares)
Figure 9.5
Source: Compiled from EIAA (2005) and IAB (2005)
Slide 9.24
Assessing marketing communication effectiveness
0 1 2 3 4 5 6
Volume or number of visitors Quality or conversion rates to action Cost (cost per click) Cost (cost per action or acquisition) Return on investment Branding metrics Lifetime-value-based ROI
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Measures used for setting campaign objectives or assessing campaign success increasing in sophistication from bottom to top
Figure 9.6
Figure 9.7
An example of effectiveness measures for an online ad campaign
Percentage who consider the different information sources as important when researching/considering a product or service
Figure 9.8
Source: BrandNewWorld: AOL UK/Anne Molen (Cranfield School of Management)/Henley Centre, 2004
Slide 9.28
Online marketing communications
1.
•
• • • •
Search-engine marketing (SEM)
Search-engine optimization
Frequency of occurrence in body copy Number of inbound links Title HTML tag Meta-tag
•
Paid search marketing
2.
•
Online PR
•
• •
Communicating with media online Link building Blogs, podcasting and RSS Managing brand on third-party sides
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.29
Google Alert
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.9
Search engine results page showing the two main methods for achieving
visibility
Source: Screenshot reprinted by permission of Google, Inc
Figure 9.10
The affiliate marketing model
(note that the tracking software and fee payment may be managed through an independent affiliate network manager)
Slide 9.32
Online marketing communications
3.
Online partnerships
•
•
Affiliate marketing Online sponsorship
4.
5.
6.
Interactive advertising E-mail marketing Viral marketing
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.11
E-mail response figures
Source: Epsilon Interactive
Figure 9.12
Schematic of the relationship between satisfaction and loyalty
Source: Adapted and reprinted by permission of Harvard Business Review from graph on p. 167 from ‘Putting the service-profit chain to work,’ by Heskett, J., Jones, T., Loveman, G., Sasser, W. and Schlesinger, E., in Harvard Business Review, March–April 1994. Copyright © 1994 by the Harvard Business School Publishing Corporation, all rights reserved
Slide 9.35
Customer retention management
Has two distinct goals
To
retain customers of the organization (repeat customers) To keep customers using the online channel (repeat visits)
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.36
Personalization and mass customization
Creating personalization Extranets Opt-in e-mail
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.37
Online Communities
A customer-to-customer interaction delivered via e-mail groups, web-based discussion forums or chat Choices of developing community for B2C
Purpose
Position Interest
Profession
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Relationship between loyalty drivers and measures to assess their success at Dell Computer
Table 9.4
Source: Reprinted by permission of Harvard Business Review from information on pp. 105–13 from ‘Your secret weapon on the web’, by Reicheld, F. and Schefter, P., in Harvard Business Review, July–August 2000. Copyright © 2000 by the Harvard Business School Publishing Corporation, all rights reserved
Figure 9.13
Activity segmentation of a site requiring registration
Slide 9.40
Lifetime value modeling
Lifetime value analysis enables marketers:
Plan
and measure investment Identify and compare critical target segments Measure the effectiveness Establish the true value Make decisions about products and offers Make decisions about the value of e-CRM
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.14
Different representations of lifetime value calculation
Figure 9.15
An example of an LTV-based segmentation plan
Slide 9.43
Customer extension
Deepening the relationship with the customer through increased interaction and product transactions
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 9.44
Advanced online segmentation
Identify customer lifecycle groups Identify customer profile characteristics Identify behavior in response and purchase Identify multi-channel behavior Tone and style preference
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.16
Customer lifecycle segmentation
Figure 9.17
RFM analysis
Slide 9.47
Types of CRM applications
Ideal CRM system will support multi-channel communications or the customer preferred channel
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Figure 9.18
An overview of the components of CRM technologies
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