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CHAPTER 11

Customer Relationship Management (CRM)

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Learning Outcomes

Compare operational and analytical customer relationship management

Identify the primary forces driving the explosive growth of customer relationship management

Define the relationship between decision making and analytical customer relationship management

Summarize the best practices for implementing a successful customer relationship management system

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Overview

CRM is a business philosophy based on the premise that those organizations that understand the needs of individual customers are best positioned to achieve sustainable competitive advantages in the future

This chapter discusses The reasons for CRM’s explosive growth Using CRM to enhance decision making CRM success factors

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Overview

CRM enables an organization to: Provide better customer service Make call centers more efficient Cross sell products more effectively Help sales staff close deals faster Simplify marketing and sales processes Discover new customers Increase customer revenues

Brother International experienced skyrocketing growth in its sales of multifunction printers

A tremendous increase in customer service calls

After Brother deployed SAP’s CRM solution,

the 1.8 million calls in 2003, dropped to 1.57 million

The CRM system has also reduced call duration

by an average of one minute

When Brother failed to answer the phone fast enough,product returns started to increase

CRM Business Drivers

Forecasts for CRM Spending (in billions)

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Using Analytical CRM toEnhancing Decisions Operational CRM – supports traditional

transactional processing for day-to-day front-office operations or systems that deal directly with the customers

Analytical CRM – supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers

Operational CRM and analytical CRM

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CRM Success Factors

Clearly communicate the CRM strategy Define information needs and flows Build an integrated view of the customer Implement in iterations Scalability for organizational growth

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Gearing Up at REI

REI deserves recognition as an industry leader for its “best practice” multichannel CRM strategy, which allows customers to seamlessly purchase products at the company’s 70 retail stores as well as by telephone, mail order, and on the Internet

REI’s CRM system benefits: Minimizes maintenance costs Scales easily as company grows Provides sophisticated data warehouse for business

intelligence Provides high availability

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Case Questions

1. Summarize why it is important for REI to use CRM strategies to consolidate its customer information

2. Determine two pieces of customer information that REI could extrapolate from its CRM system that would help it manage its business more effectively

3. Explain how REI could use personalization to give its customers a more satisfying shopping experience