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11CRM-Introduction 吳明泉博士 2007
I. IntroductionI. Introduction
22CRM-Introduction 吳明泉博士 2009
OutlineOutline
• CRM Definition • Why learning CRM?• Evolution of CRM• CRM Major Components • Benefits and Costs
33CRM-Introduction 吳明泉博士 2009
CustomersCustomers
• Individual or Organization • Internal vs. External• Non customers and Prospect customers• Evolution of Customers
Question: What kind of customers does CRM deal with?
44CRM-Introduction 吳明泉博士 2009
RelationshipRelationship
• 君臣、父子、夫妻、師生、同學• What else?
– Customer• Strangers• Acquaintances• Friends• Partners
55CRM-Introduction 吳明泉博士 2009
CRM DefinitionCRM Definition• The use of IT to create a cross-functional enterpr
ise system that integrates and automates many of the customer-serving processes in sales, marketing, and customer services that interact with a company’s customers
利用資訊科技來建立一個跨功能的企業資訊系統，整合許多顧客服務程序，如銷售、行銷，以及與顧客互動之自動化服務
“The initiation, enhancement, and maintenance of mutually beneficial customer and partner long-term relationships through business intelligence-generated strategies based on the capture, storing, and analysis of information gathered from all customer and partner touch points and transaction processing systems.”
Baran, Galka, Strunk
66CRM-Introduction 吳明泉博士 2009
Why Study Customer Why Study Customer Relationship Management?Relationship Management?
Q: 科技進歩（如 Internet) 使得 Switching Costs增加或是降低？
• It is easier than ever for customers to compare shops and, with a click of the mouse, to switch companies. As a result, customer relationships have become a company’s most valued asset.
77CRM-Introduction 吳明泉博士 2009
Relevance of CRMRelevance of CRM
• Firms are facing changes with respect to:
– Consumers
– Marketplaces
– Technology
– Marketing functions
CRM is a response to these changes
88CRM-Introduction 吳明泉博士 2009
Changes with respect to ConsumersChanges with respect to Consumers
• Growing consumer diversity- due to demographic and behavioral trends– Ageing of the population in developed countries- “de-yo
uthing”– Increased diversity in ethnicity of population– Increasing individualization
• Time scarcity
– Activities compete for customers’ time
• Value consciousness and intolerance for low service levels• Rise in customer expectations – Decline in consumer satisfaction level
99CRM-Introduction 吳明泉博士 2009
Time Scarcity and Value Consciousness- Time Scarcity and Value Consciousness- ExampleExample
51.3
42.5
55
45
30
35
40
45
50
55
60
Se
co
nd
s
UK Worldwide
1998 1999
Average waiting time (in seconds) after which calls are abandoned by customers
Source: : Merchants International Call Center Report
Customers are less and less satisfied with the treatment they get from corporate call centers. The average time after which calls are abandoned fell by about 19% in just one year.
1010CRM-Introduction 吳明泉博士 2009
Declining Customer Satisfaction- ExampleDeclining Customer Satisfaction- Example
Household Appliances
60
65
70
75
80
85
90
1994 1996 1998 2000 2002
-3.5%
Scheduled Airlines
60
65
70
75
80
85
90
1994 1996 1998 2000 2002
-8.4%
Commercial Banks
60
65
70
75
80
85
90
1994 1996 1998 2000 2002
-2.7%
Parcel Delivery
60
65
70
75
80
85
90
1994 1996 1998 2000 2002
-2.5%
Personal Computers
60
65
70
75
80
85
90
1994 1996 1998 2000 2002
-9.0%
Publishing/ Newspapers
60
65
70
75
80
85
90
1994 1996 1998 2000 2002
-12.5%
(American Customer Satisfaction Index) with products and services
Source: http://www.theacsi.org, University of Michigan
1111CRM-Introduction 吳明泉博士 2009
Changes with respect to Consumers (cont’d.)Changes with respect to Consumers (cont’d.)
• Information availability and technological aptitude– Customers more knowledgeable in making purchase decisions
– More comparisons across providers and transactions
• Decrease in loyalty– Diversification of holdings across service providers even within same
household
Consequences– Marketers should be wary of placing heavy time demands on consumers
– The major challenge facing companies has become meeting consumer
demands rather than cost reduction
1212CRM-Introduction 吳明泉博士 2009
Decreasing Customer Loyalty- ExampleDecreasing Customer Loyalty- Example
30.2 30.7
14.1
21.1
0
5
10
15
20
25
30
35
1 2 3 4+
% o
f c
on
su
me
rs
1996
Number of financial service providers
Source: Unidex Report
Number of different financial service providers that respondents are associated with
1313CRM-Introduction 吳明泉博士 2009
Changes with respect to the MarketplaceChanges with respect to the Marketplace
• More intense competition between firms for customers
• Fragmentation of markets• Diminishing product-quality differentiation
Consequences
− Value added to customers by offering customized product
and service propositions
– To maintain market share, need to realign business
strategy to become customer-centric
1414CRM-Introduction 吳明泉博士 2009
Changes with respect to Data Storage Changes with respect to Data Storage TechnologyTechnology
• Better technology, cheaper and larger storage units
• Huge increase in demand for data storage
• Increased popularity of data warehouses
Consequences
– Better information about customer behavior and attitudes
– Better prediction of customer buying behavior
– Too much data can lead to misapplication and wrong analysis
1515CRM-Introduction 吳明泉博士 2009
Link Between CRM and Database MarketingLink Between CRM and Database Marketing
• Database Marketing
– Identify and analyze customer population
– Group based on similarities
– Recommend separate marketing campaigns for different groups
• CRM
– Applies database marketing techniques at customer level
– Develops strong company-to-customer relationships
1616CRM-Introduction 吳明泉博士 2009
Changes with respect to Marketing FunctionChanges with respect to Marketing Function
• Media dilution and multiplication of channels
– Proliferation of communication media focused on the customer
• Direct-to-consumer channels - email, telephone
• Interactive media - internet, interactive TV etc
– Reduced need for techniques focused on price alone due to
• Availability of new data collection and communication tools
• Marketing processes such as loyalty programs
1717CRM-Introduction 吳明泉博士 2009
Changes with respect to Marketing Function Changes with respect to Marketing Function (contd.)(contd.)
• Decreasing market efficiency and effectiveness due to
– Focus on acquisition, price and short-term transactions
– Proliferation of new contact channels
– Increased or flat cost of contact
– Decreased customer response
– Reduced value for advertising in any medium
Consequences
– Pressure on the marketing function
– Marketing in danger of being restricted to advertising and
media planning
1818CRM-Introduction 吳明泉博士 2009
Implications of Changes in Business Implications of Changes in Business EnvironmentEnvironment
• Greater demand for learning about
– Customer preferences
– Product and service customization
• Focus on customer-centric instead of product-centric
strategies
1919CRM-Introduction 吳明泉博士 2009
CRM is Founded on Four TenetsCRM is Founded on Four Tenets
1. Customers should be managed as important assets.
2. Not all customers are equally desirable.
3. Customers vary in their needs, preferences, and buying behavior.
4. By better understanding their customers, companies can tailor their offerings to maximize their overall value.
2020CRM-Introduction 吳明泉博士 2009
Link Between CRM and Customer ValueLink Between CRM and Customer Value
• Customer Value: The economic value of the customer
relationship to the firm – expressed on the basis of contribution
margin or net profit
• CRM is the practice of analyzing and utilizing marketing
databases and leveraging communication technologies to
determine corporate practices and methods that will maximize
the lifetime value of each individual customer to the firm
2121CRM-Introduction 吳明泉博士 2009
Marketing-definitionMarketing-definition
• “The business as seen from the customer’s point of view.”—Peter Druc
ker
• “An organizational function and a set of processes for creating, commu
nicating and delivering value to customers and for managing customer r
elationships in ways that benefit the organization and its stakeholders.”
--American Marketing Association,2004
2222CRM-Introduction 吳明泉博士 2009
OLD VS. NEW MARKETINGOLD VS. NEW MARKETING
• OLD MARKETING– Transaction oriented– Market share oriented– All customers are equal– Marketers sell– 4P marketing– Mass marketing– Sell to the customer– Focus on new customers– Offensive– Broadcast oriented– Transaction profit
• NEW MARKETING– Relationship oriented– Share of wallet oriented– All customers are not equal– Marketers manage demand– Relationship marketing– Individual marketing– Manage customer experience– Focus on existing customers– Defensive– Dialogue oriented– Customer lifetime value
2323CRM-Introduction 吳明泉博士 2009
CRMCRM 特性特性
• Customer-centric Culture• IT Application• Consider contact points• Targeted customers• Customer satisfaction, retention, loyalty
2424CRM-Introduction 吳明泉博士 2009
Evolution of CRMEvolution of CRM
1980s
Contact Management
1980s
Database Marketing
1990s
Relationship Marketing
2000s
Customer Relationship Management
2525CRM-Introduction 吳明泉博士 2009
The Objectives of CRMThe Objectives of CRM
• ID potential customers• Understand needs• Differentiate dollars and
cents• Decrease attrition• Increase usage• Increase cross usage• Increase usage of more
prestigious items• Increase satisfaction• Integrate marketing and
sales throughout channels
• Improve campaign management
• Increase referrals• Win back lost customers• Move customers up relationship
hierarchy – Strangers– Acquaintances– Friends– Partners
2626CRM-Introduction 吳明泉博士 2009
Multichannel MarketingMultichannel Marketing
• Over half of all customers in certain industries (apparel and banking) are using multiple channels for shopping and purchasing: store, telephone, ATM/Kiosk, catalogue, online, etc.
• Multiple channel users have two to four times more to spend. In retail banking they are 25-50 percent more profitable.
2727CRM-Introduction 吳明泉博士 2009
CRM Application ClustersCRM Application Clusters
2828CRM-Introduction 吳明泉博士 2009
CRM Application ComponentsCRM Application Components
• Contact and Account Management – helps sales, marketing, and service professionals capture and track relevant data about every past and planned contact with prospects and customers, as well as other business and life cycle events of customers 合約與帳戶管理─能協助銷售、行銷與服務的相關人員，取得並追蹤顧客（或潛在客戶）過去（或洽談中）合約的所有資料，亦能提供與顧客生命週期事件相關的資訊
• Sales – provides sales reps with tools and company data sources needed to support and manage sales activities, and optimize cross-selling and up-selling 銷售─提供業務員所需的軟體工具與公司的資料資源，以支援並管理他們的銷售活動，提升交叉行銷與向上行銷的活動效率
2929CRM-Introduction 吳明泉博士 2009
CRM Application ComponentsCRM Application Components
• Marketing Fulfillment 行銷與滿足顧客需求– help marketing professionals accomplish direct marketing campaigns by automating such tasks as qualifying leads for targeted marketing, and scheduling and tracking direct marketing mailings 找出目標行銷對象，排定、追蹤及完成直銷時程與活動
• Customer Service and Support 顧客服務與支援– provides service reps with software tools and real-time access to the common customer database shared by sales and marketing professionals
3030CRM-Introduction 吳明泉博士 2009
CRM Application ComponentsCRM Application Components
• Retention and Loyalty Programs 留住顧客與忠誠計畫– help a company identify, reward, and market to their most loyal and profitable customers 找出最有價值且最忠誠的顧客，提供他們獎勵並向他們銷售產品
• 吸收新顧客比較顧客成本高６倍• 不滿意的顧客平均轉告 8-10 人• 每年增加留住顧客比率 5% ，年盈餘增加 85%• 對新顧客銷售成功的機率 15% ，但老顧客是 50
%• 有抱怨的顧客快速給予處理問題後， 70% 還會回
來和你做生意。
3131CRM-Introduction 吳明泉博士 2009
Customers Transact Business through the Customers Transact Business through the Following ChannelsFollowing Channels
• Web application• Free form e-mail• Telephone with a live agent• Internet VOIP through a live agent• Text chat with a live agent• Telephone through an interactive VRS• Fax• ATM/Kiosk• Entering the store or branch
3232CRM-Introduction 吳明泉博士 2009
CRM Building BlocksCRM Building Blocks
• CRM Vision• CRM Strategy• Valued Customer Experience• Organizational Collaboration• CRM Process• CRM Information• CRM Technology• CRM Metrics
3333CRM-Introduction 吳明泉博士 2009
Metrics about CRMMetrics about CRM
• Customer Retention Rate 保留率• Customer Attrition Rate 流失率• Customer Loyalty 忠誠度• Customer Profitability 利潤• Customer Lifetime Value 終身價值• Customer Satisfaction 滿意度
3434CRM-Introduction 吳明泉博士 2009
THE CRM ADVANTAGETHE CRM ADVANTAGE
Increases Market Share
Increases Market Share
Quicker Cash Flow Quicker Cash Flow
BetterCustomer
Knowledge
BetterCustomer
Knowledge
Creates Up and Cross-Selling
Opportunities
Creates Up and Cross-Selling
Opportunities
Increased Product
Acceptance
Increased Product
Acceptance
3535CRM-Introduction 吳明泉博士 2009
Retail Banks Have Realized the Following Retail Banks Have Realized the Following Benefits from CRM Benefits Benefits from CRM Benefits
• Increase in average products sold per customer over one year from 4.6 to 6.2
• 3-5 percent decrease in administrative costs• 200 percent return on technology investment through cost
reduction over one year• 96 percent reduction in average time for a Customer
Contact Center agent to refer a customer to a branch loan office
• 83 percent decrease in average customer info retrieval time
• 15 percent increase in product revenue in one year
3636CRM-Introduction 吳明泉博士 2009
A Customer Focus Can Aid RetentionA Customer Focus Can Aid Retention
• Annual Defection Rates
– Newspaper subscriptions 66 percent– Residential tree and lawn care 32 percent– U.S. long distance telephone 30 percent– Clothing catalogues 25 percent– Internet service providers 22 percent
Griffen and Lowenstein 2001
3737CRM-Introduction 吳明泉博士 2009
Benefits Vs. CostsBenefits Vs. Costs
Organizations
Benefits:• Customer Focus• Customer Retention• Share of Customer• Long-term Profitability
Costs: • Infrastructure investment• Reactions to process
Customers
Benefits:• Continuity• Contact touch points• Personalized service• Enhanced Satisfaction and
safety
Costs:• Privacy • Opportunity
3838CRM-Introduction 吳明泉博士 2009
Which Companies Benefit Most from CRM?Which Companies Benefit Most from CRM?
• Companies serving large numbers of customers through complex and frequent interactions: – Communications companies– Retail banks– Insurance companies– Healthcare organizations– Utilities
• Companies with a steep skew• Companies in “lost for good” markets
3939CRM-Introduction 吳明泉博士 2009
Which Companies Benefit the Least from CRM Which Companies Benefit the Least from CRM Today?Today?
• Companies that engage in minimal interactions with each customer
– Auto dealers– Government agencies
• Companies with simple transactionsMovie theatersRetail stores
