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Internet Marketing (MM 3841)


Internet Marketing (MM 3841) Week 6 & 7 Customer Relationship Management Contents Building Customer Relationships Relationship capital: A firm s ability to build ... – PowerPoint PPT presentation

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Title: Internet Marketing (MM 3841)

Internet Marketing (MM 3841)
  • Week 6 7
  • Customer Relationship Management

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
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
  • 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.

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

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.

Continuum from Mass Marketing to Relationship
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
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
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.

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
  • 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.

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.

TRUSTe Builds User Trust Source
1. CRM Vision
  • TRUSTe
  • In addition, sites must publish the following
    information on their sites to gain the TRUSTe
  • 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
  • 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.

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.

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.

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.

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
  • 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

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
  • 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
  • The Internet must create valued customer
    experiences and firms must put the focus on
    customers and their preferences, not the
    companys capabilities.

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)
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

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
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.

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
  • The entire supply chain can work together to
    single-mindedly focus on meeting consumer needs
    and make higher profits in the process.

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
  • 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.

CRMSCM Integration
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.

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

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
  • Beginning
  • When companies select target markets in the
    e-marketing plan.
  • When opportunities often arise when a new target
    group appears.

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
  • Best highest value, longest loyalty, highest
    frequency of purchase, and so on.

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
  • Technology allows firms to identify high-value
    customers respond with offers in real time over
    the Internet.

5. CRM Processes
  • Differentiating Customers
  • How can firms identify their high-value
  • By mining and profiling in customer databases,
    using real-time / real-space data collection
  • 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

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
  • 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

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
  • Information technology allows companies to move
    beyond the traditional segment profiling to
    detailed profiles of individuals.

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

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

6. CRM Information
  • 8 critical success factors for building
    successful e-business relationships with
  • 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.

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

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.

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.
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
  • Cookies
  • Cookie files are the reason that customers
    returning to 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.

7. CRM Technology
  • Web Site Log
  • By performing Web log analysis, firms can do many
    things, (customize Web pages based on visitor
  • 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

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.
  •, 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
  • notes that it realized increased revenues
    from using this software, and achieved a positive
    ROI within months.

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
  • 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
  • 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.

MyPoints Rewards Members for Time Spent
Online Source
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.

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.

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.
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
  • Agents
  • Shopping agents and search engines match user
    input to databases and return customized
  • Agent software often relies on more than one
  • A user might type in computer on the Dell site
    and then be presented with either laptop or
    desktop options to narrow the search.

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

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.

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.

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 allow Internet users to
    send and receive FAX transmissions at their Web
  • 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.

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
  • 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
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