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Customer Relationship Management (CRM)
• Northern State University • 12th June, 2007
Dr. Nasim Z. Hosein
Office: Lincoln Hall Rm.#216
Phone: 605-626-7724
What Is “CRM”
Customer Relationship Management Becoming a common and important concept in
many industries Beyond mere ‘Contact Management’ Knowing the customer and the Touch points Single undertaking view of customers Most industries have CRM software to help sales
process, on-going service, and even accounting
The Value of CRM
Gain more control in interaction with customers Manage expectations better Increase trust Competitive advantage Provide products that better serve customers Understand what customers really want Understand the nature of customer service
Customer Definitions
External Customers - Customers we do business with outside our organization.
Internal Customers- The people we work with throughout our organization.
Customer Attributes- Characteristics that allow customers to be categorized according to demographic, psychographic, or firmographic information.
Demographic Information
age income marital status education stage in the family life-cycle home ownership
sex ZIP code occupation household size mobility patterns ethnic background religion
Characteristics such as:
Psychographic Information
lifestyles modes of living needs motives attitudes reference groups
culture social class family influences hobbies political affiliation etc.
Firmographic Information
Characteristics about a company such as: how many employees they have; the kind of business they are in; whether they are retail, wholesale, or a service
provider; their hours of operation
Why Is Excellent Customer Service so Rare?
Customer service is rare because it requires two things that the average person and organization are unwilling to commit to: Spending money Taking action
The Five Needs of Every Customer
1. Service
2. Price
3. Quality
4. Action
5. Appreciation
From the Customer’s Perspective
What Is Customer Service?- Anything we do for the customer that enhances the customer experience.
What is Customer Satisfaction?- The customer’s overall feeling of contentment with an interaction.
What is Customer Expectations?- Customer’s personal vision of the result that is based on their experience.
What is Customer Perceptions?- The way customer’s see something based on their experience
Levels of Expectations
Primary expectations: the customer’s most basic requirements of an interaction.
Secondary expectations: expectations based on our previous experiences that are enhancements to our primary expectations.
Reputation Management
The process of identifying how a company is perceived and establishing an action plan to correct, maintain, or enhance the company’s reputation.
A Company with a Good Reputation
Is very responsive to customers Is a company you can trust Delivers on its promises to customers Provides excellent value to customers Has excellent communications Is ethical and honest Conducts business in a human/caring way Has excellent top management Is able to adapt to changes in the industry Is a technological leader in the industry Is committed to the environment
Techniques for Exceeding Customers’ Expectations
Become familiar with your customers. Ask your customers what their expectations
are. Tell your customers what they can expect. Live up to their expectations. Maintain consistency.
Credibility
Made up of the combination of our current knowledge, reputation, and professionalism.
Tips for Cultivating Credibility
Practice consistency Keep your word Develop your expertise Become a teammate with your co-workers Show your dedication to customers Treat all of your customers and co-workers with the
same high level of respect Apologize if you are wrong Remember that credibility is much harder to regain
than it is to keep
Discussion
What are some examples of customer service?
What are some issues about customer service?
New Trends in Customer Service
Accessibility for the customer Immediacy of response Feedback from customer to customer service
provider Outsourcing of all or part of customer
service functions Nontraditional examples of customer service
Cost of Losing a Customer
We lose the current dollars that our business relationship created.
We lose the jobs that our clients provide. We may suffer from a loss of reputation. We may lose the intangible variable of
future business.
Customer Intelligence
The process of gathering information; building a historical database; and developing an understanding of current, potential, and lapsed customers.
Sources of Customer Intelligence
Method by which customers choose to conduct business
Time of day that customers have questions Depth of their expected interactions Purchasing patterns Expectations
Methods of Communication
Listening: The ability to hear and understand what the speaker is saying.
Writing: Communicating by using the written word so that others can understand the intended message.
Talking: Speaking, using words and terminology that others can comprehend.
Reading: The ability to look at and comprehend the written word.
Nonverbal communication: Tone and inflection of voice, facial expressions, posture, and eye contact. Nonverbal communication can contradict the message conveyed through another method of communication.
Challenging Customers
Those customers with problems, questions, fears, and personalities that require us to work to achieve true communication.
Discussion Question
What are some characteristics of challenging customers?
How do avoid creating challenging customers?
Respect
To give someone special recognition or regard.
Empathy
The ability to understand what someone is experiencing and to take action to assist in resolving the situation.
Responsibility Check
Assessing a situation and determining who should have responsibility and who really does have the responsibility.
What to do When You Are Wrong
Review the situation. Observe the customer’s reaction. Admit the mistake. Apologize for your actions or error. Find a solution and implement it.
Six Super Ways to Cope with Challenging Customers
1. Listen
2. Ask questions
3. Show empathy
4. Solve the problem
5. Follow up
6. End on a positive note
Payoffs of Coping with Challenging Customers
By learning to cope with challenging customers, we become more effective and efficient assets to our company and the job that we were hired to perform!
Relationship Marketing
Cultivating a lasting and mutually beneficial connection with customers.
Customer Retention
The continuous attempt to satisfy and keep current customers actively involved in conducting business.
Churn (or Churn Rate)
The number of customers who leave a business in a year’s time divided by the number of new customers in the same period.
Defection Rate
The percentage of customers who leave a business in one year.
Customer Lifetime Value
The net present value of the profits a customer generates over the average customer life.
Determining the Need for Customer Relationship Program
Is customer retention your primary management objective? Is customer satisfaction measured and assessed regularly? Is there a constant effort to enhance customer satisfaction? Do you measure quality standards and communicate results with
your employees? Do you train and retrain your customer service providers? Do you have employee turnover problems? How much do you spend to keep current customers? What is your current cost for acquiring a customer? What is your average annual customer dollar value? What is your current customer defection rate? How do you get lost customers back? Do you constantly deliver what you promise to your customers?
Guidelines for Establishing a Customer-Relationship Program
1. Examine who your customers are and what specific needs they have.
2. Identify specific objectives to be realized by the program.
3. Create a manageable program of customer retention.
4. Create a culture that stimulates customer interest.5. Determine a timetable for evaluation.
Sources of Information to Measure Customer Satisfaction
Informal surveys Comment cards Verbal comments Historical data (point of sale) Sales Corporate generated surveys Discussions with internal customers Focus groups Toll-free phone numbers Customer intelligence information
What Measurement of Satisfaction Means to Your Business
Customer relationships are deepened Customers know that we are interested in
them and their wants Improved product and service offerings Customer retention
What Today’s Customers Expect
Availability: Services designed to meet the customer’s schedule.
Accessibility: When the customer needs to talk, the provider can be reached.
Accountability: Customers prefer quick and accurate answers to service questions.
Steps for Introducing New Technologies
Prepare your staff. Train supervisors and team leaders first and get
them to buy in. Develop a group of “change champions.” Sell your vision. Praise successful use of the new technology. Resist the temptation to complain. Celebrate small successes. Avoid the “shelfware syndrome.”
A Working Definition…
“The Plan and Practice of managing the lifetime relationship with your customer.” “The Plan”: Every successful endeavor requires
proper planning. Successful CRM rarely happens by chance. Many organizations jump to implementation w/o proper planning.
“The Practice”: Systematic implementation of your plans. Should produce measurable results. Should be evaluated and refined over time.
A Few Basic CRM Concepts…
Touch Points Each time your company interacts with a
customer is a touch point. Can we name a few Guest Touch Points?
Guest Touch Points
First Call/Internet Visit Pre-arrival Check-In/Check-Out Post stay thank you Newsletters, Interest Lists All marketing materials
Touch Points
Are they planned? Managed? Documented? Are all “touchers” properly trained? Enroll
your complete staff in the vision. Any way to increase the effectiveness of the
touch? Any way to increase the number of touches?
A Few Basic CRM Concepts…
Market Segmentation Do you treat all of your guests the same? Are they? Consider the difference between a guest that stays once
ever in a 2 bedroom cottage and a guest that has stayed each of the last 10 years in a 6 bedroom home We shouldn’t treat the one-timer badly, they may come back
many more times We should realize that the higher value guest deserves the best
that we can offer.
Market Segmentation Examples
Saks Fifth Avenue High value customers ($2000/yr) are routed to
special CSR’s. The calls are routed such that a high value
customer is connected to a CSR in one second or less.
Could we coin a new acronym here: HVG – High Value Guest?
General Statistics
The average business never hears from 96% of its unhappy customers, 91% never come back Those people will tell a minimum of 4 other people, Getting a repeat customer from this group is 1 in 11, Dissatisfied customers may tell 9-10 people about their experience, For every positive they tell 4-5 people, For every complaint received the average business in fact has 26 customers
with the similar concern,
General Statistics…
Of the customers who register a complaint, as many as 70% will do business again with your organization if the complaint is resolved effectively,
This figure goes up to 95% if the complaint has been resolved quickly,
40% of complaints are the result from customer mistakes or incorrect expectations,
A complaint that is handled efficiently is actually better than no complaint at all,
Customers who complain and get satisfactory results are 8% more loyal than if no complaint at all,
Why customers quit-how to win customers and keep them for life
1% die 3% move away 5% develop other friendships 9% leave for competitive reasons 14% are dissatisfied 68% quit because of an attitude of
indifference
Operational and Analytical CRM
Operational CRM: effective and efficient use and management of people, process and technology
Analytical CRM: the measurement of people, process and technology
People, Process and Technology
Start with People
Add Customer Attrition
Customer Dissatisfaction is Expensive
Customer Disloyalty vs. Service
Customer Relationships
Thinking Outside the Box:
Role Models Like Einstein
Changing the Paradigm From
To
CRM means Dealing with the People Aspect of the Project
Customer’s Are People, Too!They Have Needs
Reactive vs. Proactive Thinkers
Customer Differentiation
Customer Lifetime Value
R = annual revenue received from a loyal customer i = the relevant interest rate or opportunity cost of money per periodN = the number of periods in which a customer makes purchases
Customer Lifetime Value
Go www.benchmarkportal.com to download the excel spreadsheetto calculate Customer Life time Value
Process of Performance Enhancement
CRM Misconceptions
CRM is the solution that will solve a company’s customer problems
CRM is the Internet CRM means scoring and measuring
customer value CRM is a sales person productivity tool
CRM Summary
CRM is the strategic use of information, processes, technology and people to manage the customer’s relationship with a company’s (marketing, sales, services and support) across the entire customer cycle.
The Plan and Practice of managing the lifetime relationship with your customer
CRM Summary
CRM focuses on strategic impact rather than operational impact
CRM is a total discipline CRM includes all functions that directly
touch the customer throughout their entire lifetime with a company
G-Commerce
G-Commerce addresses the conception, standardization and development of services for authorization, payment, accounting, audit, security, uniform access, resource management, scheduling, application composition and computational economy.
G-commerce refers to grid commerce or grid computing
G-Commerce Objectives
• Long term: A Resource Economy which achieves resource allocation…
Requirements: • Grid-wide Price Stability
» They don’t change wildly, allowing rational scheduling and planning • Market Equilibrium
» Price fairness • Application Efficiency
» Applications can get things done (translate resource consumption into progress
Resource efficiency » High Utilization
G-Commerce Requirements
• Grid-wide Price Stability » They don’t change wildly, allowing rational scheduling and planning • Market Equilibrium
» Price fairness • Application Efficiency
» Applications can get things done (translate resource consumption into progress)
• Resource Efficiency» High Utilization