STRATEGIC CUSTOMER
RELATIONSHIP
MANAGEMENT
McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
PIVOTAL ROLE OF CUSTOMER RELATIONSHIP MANAGEMENT
DEVELOPING A CRM STRATEGY
CRM Levels
CRM Strategy Development
CRM Implementation
VALUE CREATION PROCESS
Customer Value
Value Received by the Organization
CRM and Value Chain Strategy
CRM AND STRATEGIC MARKETING
Implementation
Performance Metrics
Short-Term Versus Long-Term Value
Competitive Differentiation
4-2
CUSTOMER RELATIONSHIP MANAGEMENT
Customer relationship management (CRM) is the combination of
practices, strategies and technologies that companies use to
manage and analyze customer interactions and data throughout the
customer lifecycle. The goal is to improve customer service
relationships and assist in customer retention and drive sales
growth. CRM systems compile customer data across different
channels, or points of contact, between the customer and the
company, which could include the company's website, telephone,
live chat, direct mail, marketing materials and social networks. CRM
systems can also give customer-facing staff members detailed
information on customers' personal information, purchase history,
buying preferences and concerns.
4-3
Components of CRM
• Marketing automation. CRM tools with marketing automation capabilities can automate repetitive
tasks to enhance marketing efforts at different points in the lifecycle for lead generation. For example,
as sales prospects come into the system, it might automatically send email marketing content, with the
goal of turning a sales lead into a full-fledged customer.
• Sales force automation. Sales force automation tools track customer interactions and automate
certain business functions of the sales cycle that are necessary to follow leads, obtain new customers
and build customer loyalty.
• Contact center automation. Designed to reduce tedious aspects of a contact center agent's job,
contact center automation might include prerecorded audio that assists in customer problem-solving
and information dissemination. Various software tools that integrate with the agent's desktop tools can
handle customer requests in order to cut down on the length of calls and to simplify customer service
processes. Automated contact center tools, such as chatbots, can improve customer user experiences.
• Geolocation technology, or location-based services. Some CRM systems include technology that
can create geographic marketing campaigns based on customers' physical locations, sometimes
integrating with popular location-based GPS (global positioning system) apps.
4-4
• Workflow automation. CRM systems help businesses optimize processes by streamlining
mundane workloads, enabling employees to focus on creative and more high-level tasks.
• Lead management. Sales leads can be tracked through CRM, enabling sales teams to
input, track and analyze data for leads in one place.
• Human resource management (HRM). CRM systems help track employee information,
such as contact information, performance reviews and benefits within a company. This
enables the HR department to more effectively manage the internal workforce.
• Analytics. Analytics in CRM help create better customer satisfaction rates by analyzing
user data and helping create targeted marketing campaigns.
• Artificial intelligence. AI technologies, such as Salesforce Einstein, have been built
into CRM platforms to automate repetitive tasks, identify customer-buying patterns to
predict future customer behaviors and more.
• Project management. Some CRM systems include features to help users keep track of
client project details such as objectives, strategic alignment, processes, risk management
and progress.
• Integration with other software. Many CRM systems can integrate with other software,
such as call center and enterprise resource planning (ERP) systems.
4-5
4-3
CUSTOMER LIFETIME VALUE
Customer lifetime value (CLV) calculates past profit
produced by the customer for the firm – the sum
of all the margins of all the products purchased
over time, less the cost of reaching that customer
To this is added a forecast of margins on
future purchases (under different assumptions
for different customers), discounted back to
their present value.
This process provides an estimate of the
profitability of a customer during the time
span of the relationship.
The CLV calculation is a powerful tool for
focusing marketing and promotional efforts
where they will be most productive.
4-6
4-5
THE STEPS IN DEVELOPING A CRM STRATEGY
Gain enterprise commitment
Build a CRM project team
Business needs analysis
Define the CRM strategy
Source: V. Kumar and Werner J. Reinartz, Customer Relationship Management (Hoboken, NJ: John Wiley & Sons, Inc.), 2006, 39.
4-7
4-6
DEFINE THE CRM STRATEGY
Value
Proposition
1
5 2
Other Business
Stakeholders CRM Case
STRATEGY
Enterprise 4 3 Customer
Transformation Plan Strategy
https://go.forrester.com/blogs/top-crm-trends-for-2020/
4-8
4-7
IMPLEMENTATION DANGERS
Implementing Without Developing a
Customer Strategy
Failing to Initiate Necessary
Organizational Change
Allowing Technology to Dominate the
CRM Process
Focusing on the Wrong Customers
4-9
4-11
CRM AND STRATEGIC MARKETING
CRM STRATEGIC
MARKETING
From the perspective of strategic marketing, there are several
reasons why CRM is important and why there should be extensive
marketing involvement in decisions about CRM. Importantly, an
organizational perspective is needed in guiding the CRM strategy.
4-10
CRM examples in practice
* Contact center
* Social CRM
* Mobile CRM
4-11
CRM technology
* The four main vendors of CRM systems
are Salesforce, Microsoft, SAP and Oracl
e. Other providers are popular among
small to midsize businesses, but these
four tend to be the choice for large
corporations
4-12
Implementing the Plan
* Implementation process
* Improving implementation
* Internal marketing
* A comprehensive approach to improving
implementation
* Internal strategy-structure Fit
* Developing a market orientation
* The role of external organization
4-13
The Implementation Process
Activities
to be
implemented
How Responsibility
implementation for
will be done implementation
Time and
location of
implementation
4-14
Improving Implementation
Skilled
Implementers
Effective Organizational
Communications Design
Improving
Implementation
Internal Incentives
Marketing
4-15
Internal Marketing
Strategy
Plan
Internal External
Marketing Marketing
Program Program
Internal Marketing External Marketing
Program: Program
Targeted at key Targeted at key
groups in the customers, segments
company, alliance and niches, and other
partner companies, external influencers
and other influencers
4-16
Comprehensive Approach to Improving Implementation
Financial
Measures
BALANCED
Learning SCORECARD
and MANAGEMENT Customer
Innovation CONTROL Measures
Measures SYSTEM
Internal
Business
Process
Measures
4-17
