Week Ten - Weekly Questions
Customer Relationship Management & Business Intelligence
What is your understanding of CRM?
CRM involves managing all aspects of a customers relationship with an organization to increase customer loyalty and retention as well as an organizations profitability. Through individualization organizations can interact with customers and increase their loyalty schemes, through catering for customer needs and preferences on an individualized base. Customers are then satisfied with the service or product and will be repeat buyers. Example, on the Nordstrom website, once a user accesses this shopping website and starts to browse or shop, the company identifies what the customer is looking for and tailors their next visit to their similar needs and wants. i.e if a customer is looking to buy a pair of black high heel boots, the next time the customer visits the website, there would be a section on the website where there would be promotions and latest arrivals of boots and other accessories to match this item eg a clutch. Thus, the company is tailoring the website to individual preferences and tastes. Organisations can increase customer loyalty also through emailing promotions and call centres.
This picture is available: http://misbridge.mccombs.utexas.edu/images/knowledge/en/crm.jpg. This image focuses on customer relationship management, what it is and what it focuses on. That is the primary focus is on customers, and the way organisations focus on customers is through sales, services and marketing. Front office is the interaction with customers on a daily basis, the back office is generating this information from front office i.e sales, profit and analysing it to make future strategic decisions.
Compare operational and analytical customer relationship management.
Operational CRM and analytical CRM are two components of a CRM strategy. Operational CRM is the day-to-day front office operations or systems that directly deal with a customer for example a customer service system or a sales system. i.e transactional.
Image available at: http://www.radisson.com/rad/images/hotels/CHNSGHNW/Shopping_450.jpg. This is a form of operational CRM, selling a product directly to a customer. This information of a sale is then analyzed. Refer to the picture below.
Analytical CRM supports strategic analysis and includes systems that do not directly deal with customers and are mainly used by managers and executives to make strategic decisions for the company over a long term. Moreover, analytical CRM is collating information from the operational CRM systems and using it for analysis and strategic decision-making. Analytical CRM is based around the concept of data mining, looking at customer trends, strategic goals and other organizational information from a database to generate new information about the business in order to make long term strategic decisions.
Available: http://static-p3.fotolia.com/jpg/00/09/15/76/400_F_9157677_e0r31JwPKhBanRyOFxWTwZ5u5Dgc4JJY.jpg. Analysing information to make strategic decisions.
Describe and differentiate the CRM technologies used by marketing departments and sales departments
Marketing Departments
1. List generators – compiles customer information from a variety of sources such as website questionnaires, flyers, website visits etc, and segments the information for different marketing campaigns. After the information is compiled, a company can sort and filter such as household income, education level, and age, and identifies potential and existing customers. Moreover a list generator enables an organization to make strategic decisions.
2. Campaign management systems – guides users through marketing campaigns performing tasks such as scheduling, segmentation and success analysis. Campaign management system looks at cost associated with campaigning, who an organization is going to target, determining costs of inventory, opportunity management, amount of sales customers, provide and suggest how there going to make sales, how they are going to spend money etc.
Image available at: http://www.exilant.com/images/fg_cms_overview.png. Campaign Management system.
3. Cross – selling and up- selling. Cross selling is selling additional products or services to a customer for example if a customer wants to buy shoes, the employee might also sell a bag to match the shoes. Up – selling – increasing the value of a sale. Eg McDonals will ask a customer if they would like to super-size their meal to increase the value of a sale.
Watch: http://www.youtube.com/watch?v=kJV_UZfX38o. This video provides what is cross selling and upselling and examples.
Sales Departments
Sales force automation (SFA) Automating - is a system that automatically tracks all of the steps in the sales process. SFA products focus on increasing customer satisfaction, building customer relationships and improving product sales by tracking all sales information.
4. Sales management – automate each phase of the sales process, helping individual sales representatives co-ordinate their jobs eg contact management and organize all of their accounts. E.g. calendars to help plan customer meetings and appointments.
5. Contact management – maintains customer contact information and identifies prospective customers for future sales. Contact management systems include such features as maintaining organizational charts. An example is a contact management system will display caller id, name, and notes of the contacts details, this allows the sales representative to go recall the previous conversation and follow up on the previous conversation with this customer. For example a sales representative will phone a customer, saying “Hello Bob, how was your holiday to Mexico?”. Bob feels valued since the sales representative knows his name and details from the last conversation. Furthermore, contact management deals with existing customers.
6. Opportunity management – target sales opportunities by finding new customers or companies for future sales. Opportunity management systems determine potential customers and competitors. Furthermore, opportunity management deals with new customers.
How could a sales department use operational CRM technologies?
CRM components that were built to help address these issues were the sales force automation component, which is a system that automatically tacks the steps in the sales process. This system focused on increasing customer satisfaction, building customer relationships and improving product sales by tracking all sales information.
Operational – day-to-day, transaction type jobs, e.g. list generator, providing information through sorted lists.
Campaign management – performing tasks like planning, scheduling, segmentation
Cross selling is selling additional products or services to a customer for example if a customer wants to buy shoes, the employee might also sell a bag to go with the shoes. Up – selling – increasing the value of a sale. Eg McDonalds will ask a customer if they would like to super-size their meal to increase the value of a sale.
Describe business intelligence and its value to businesses
Business Intelligence refers to the applications and technologies that are used to gather, provide access to, and analyse data and information to support decision-making efforts. Business intelligence systems and tools allows a business to receive reliable, consistent, understandable and easily manipulated information. Many oranisations need to adapt and meet the high demands and fast changing needs of customers in order to stay competitive, in today’s consumer-centric market. Business intelligence determines information such as; the best and worst customers thereby gaining insight into where a company needs to concentrate on for future sales, identifying exceptional sales people, determining if companies resources are successful and determining the activity in which causes an organization to make or loose money. Moreover, business intelligence is the use of data mining, which is the process of analyzing data to extract information not offered by raw data alone, all to support decision making.
Available: http://www.microsoft.com/korea/dynamics/images/screenshotimages/Business_intelligence_circle_page3.jpg. What is B.I. The use of strategical, tactical and operational decisions.
Explain the problem associated with business intelligence. Describe the solution to this business problem
Challenges:
§ Collecting information
§ Discerning patterns and meaning in the information
§ Responding to the resultant information
§ Failure to recognize BI projects as cross-organizational business initiatives, and to understand that as such they differ from typical standalone solutions.
§ No work breakdown structure(no methodology).
§ No understanding of the necessity for and the use of meta-data.
They have so much data being processed and going around and organizations have difficulties in understand and knowing what their competitors are doing, organizations also don’t know what tactical or strategical tools/goals to make. Business intelligence can reduce the latency in making good decisions.
What are two possible outcomes a company could get from using data mining?
Data mining is the process of analyzing information to extract valuable information that cannot be extracted from raw data alone. Data mining includes, statistics, mathematical techniques and computer science to extract strategic information.
A company using data mining obtains:
- Increase profit
- Better sales
- Better deployment of resources.
- Data mining uncovers business intelligence in vast amounts of data
Video: http://video.google.com/videoplay?docid=-7252045691453600738#docid=-8328334832425023023. Example of Walmart.
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