E-Marketing and E-CRM

E-Marketing, CRM, and Understanding

Relationships
Week 1
 E-MARKETING, CRM, AND
UNDERSTANDING RELATIONSHIPS

1. E-Marketing Landscape
2. E-Marketing 1.0 – 3.0
3. Defining CRM
4. Models of CRM
5. Relationship quality
6. Customer satisfaction,
loyalty, and business
performance
E-Marketing Landscape
 E-Marketing Landscape

The Impact of Electronic on Marketing

Owned, paid,
The customer is Social media Brand
and earned
CEO communities transparency
media

Mobile Content Inbound

E-commerce
marketing marketing marketing

Local and
Advertising User-generated
location-based Metrics rule
online content
marketing

Search engine
marketing
 E-Marketing Landscape

Types of access to the internet:

1. Public internet: the global network that is accessible by anyone,
anywhere, anytime.
2. Intranet: network that runs internally in an organization.
3. Extranet: two joined networks that share information.

E-business, e-marketing, and e-commerce are internet applications.

1. E-business is the optimization of a company’s business activities using
digital technology
2. E-commerce is the subset of e-business focused on transactions that
include buying/selling online, digital value creation, virtual marketplaces
and storefronts, and new distribution channel intermediaries.
3. E-marketing is the use of information technology for the marketing activity,
and the processes for creating, communicating, delivering, and
exchanging offerings that have value for customers, clients, partners, and
society at large.
E-Marketing 1.0 – 3.0
E-Marketing 1.0

Gartner predicted that

the e would drop,
making electronic
business just part of
the way things are done
(refer to Exhibit 1.4).
This means that e-
business is just
business, and e-
marketing is just
Marketers must stay
marketing.
well grounded in the
discipline and
simultaneously be
current on new
information
technologies and
changing e-marketing
 E-Marketing 1.0 – 3.0
E-Marketing 1.0

Gov.uk, a government site in the United Kingdom, assists marketers by

summarizing
e-business and e-marketing opportunities flowing from the internet’s unique
properties:
1.Lower costs
2.Trackable, measurable results
3.Global reach
4.Personalization
5.One-to-one marketing
6.More interesting campaigns
7.Better conversion rates (increased purchases)
8.Twenty-four-hour marketing
 E-Marketing 1.0 – 3.0
E-Marketing 2.0

Power Shift from Sellers to Buyers

1. Consumers and business
customers’ word of mouth has
long been a powerful market
force, but now individuals are not
limited to their friends,
colleagues, and families.
2. The internet allows a disgruntled
customer to tell a few thousand
friends with one mouse click:
word of mouth on steroids.
 E-Marketing 1.0 – 3.0
E-Marketing 2.0

Other trends affecting consumer attention are as follows :

1.Consumers trust each other more than companies
2.Market and media fragmentation
3.Connections are critical
4.Everyone is a content producer
5.Information transparency
6.Social commerce
 E-Marketing 1.0 – 3.0
E-Marketing 3.0

Semantic Web
1.is an extension of the current Web, in
which information is given a well-defined
meaning through HTML-like tags.
2.will make the search easier by providing
a standard definition protocol so that
users can easily find information based on
its type
 E-Marketing 1.0 – 3.0
E-Marketing 3.0

Key technologies that affect marketing strategies follow:

1.Any channel, any device, anywhere— Bring your own everything
2.Smarter things
3.Big data and global scale computing at small prices
4.The human way to interact with technology
5.What payment could really become
6.The voice of the customer is on file
7.3D print at home
 Defining CRM

Customer Relationship Management (CRM), has been in use since the early
1990s. Since then, there have been many attempts to define the domain of
CRM
Tabel 1.1. Definitions of CRM
CRM is an information industry term for methodologies, software and usually Internet
capabilities that help an enterprise manage customer relationships in an organized
way.
(http://whatis.techtarget.com/definition/0,289893,sid9_gci213567,00.html (Accessed 29 November 2005).

CRM is the process of managing all aspects of interaction a company has with its
customers, including prospecting, sales and service. CRM applications attempt to
provide insight into and improve the company/customer relationship by combining all
these views of customer interaction into one picture.
http://onlinebusiness.about.com/cs/marketing/g/CRM.htm (Accessed 29 November 2005).

CRM is an integrated approach to identifying, acquiring and retaining customers. By

enabling organizations to manage and coordinate customer interactions across
multiple channels, departments, lines of business and geographies, CRM helps
organizations maximize the value of every customer interaction and drive superior
corporate performance
http://www.siebel.com/what-is-crm/software-solutions.shtm (Accessed 29 November 2005).
 Defining CRM

Tabel 1.1. Definitions of CRM

CRM is an integrated information system that is used to plan, schedule and control
the pre-sales and post-sales activities in an organization. CRM embraces all aspects
of dealing with prospects and customers, including the call centre, sales force,
marketing, technical support and field service. The primary goal of CRM is to
improve long-term growth and profitability through a better understanding of
customer behaviour. CRM aims to provide more effective feedback and improved
integration to better gauge the return on investment (ROI) in these areas.
http://computing-dictionary.thefreedictionary.com/CRM (Accessed 29 November 2005).

CRM is a business strategy that maximizes profitability, revenue and customer

satisfaction by organizing around customer segments, fostering behaviour that
satisfies customers, and implementing customer-centric processes.
http://www.destinationcrm.com/articles/default.asp?ArticleID=5460 (Accessed 29 November 2005). This definition is attributed to
Gartner Inc. (www.gartner.com).
 Defining CRM

Types of CRM

Type of CRM Dominant characteristic

Strategic CRM is a core customer-centric

Strategic business strategy that aims at winning
and keeping profitable customers
Operational CRM focuses on the
Operational automation of customer-facing processes
such as selling, marketing and customer
service
Analytical CRM is the process through
which organizations transform customer-
Analytical related data into actionable insight for
either strategic or tactical purposes
 Models of CRM

A number of comprehensive CRM models have been developed. There

are four of them here
The IDIC model
The IDIC model was developed by Don Peppers and Martha Rogers. The
IDIC model suggests that companies should take four actions in order to
build closer one-to-one relationships with customers
1. Identify who your customers are and build a deep understanding of
them.
2. Differentiate your customers to identify which customers have most
value now and which offer most for the future
3. Interact with customers to ensure that you understand customer
expectations and their relationships with other suppliers or brands.
4. Customize the offer and communications to ensure that the
expectations of customers are met
 Models of CRM

The CRM Value Chain

 Models of CRM

Payne and Frow’s 5-process model

 Models of CRM

The SCHEMA Model

 Relationship quality

Change within relationships

Relationships change over time. Dwyer has identified five general phases
through which customer–supplier relationships can evolve
1.Awareness.
2.Exploration.
3.Expansion.
4.Commitment.
5.Dissolution.
This discussion of relationship development highlights two attributes of
highly developed relationships: trust and commitment. These have
been the subjects of a considerable amount of research
 Relationship quality

Trust
Trust is focused. That is, although there may be a generalized sense of
confidence and security, these feelings are directed. One party may trust
the other party’s
1.Benevolence.
2.Honesty.
3.Competence.
Commitment
Commitment is an essential ingredient for successful, long-term
relationships. Morgan and Hunt define relationship commitment as
follows:
Commitment is shown by ‘an exchange partner believing that an
ongoing relationship with another is so important as to warrant
maximum effort to maintain it; that is, the committed party believes
the relationship is worth working on to ensure that it endures
indefinitely
 Relationship quality

This discussion of trust and commitment suggests that some

relationships can be thought to be of better quality than others. Research
into relationship quality generally cites trust and commitment as core
attributes of a high-quality relationship. However, a number of other
attributes have also been identified, including relationship satisfaction,
mutual goals and cooperative norms
Relationship satisfaction is not the same as commitment. Commitment to
a supplier comes as investments are made in the relationship, and
investments are only made if the committed party is satisfied with their
transactional history. In other words, investments are made in
relationships that are satisfactory
 Customer Satisfaction, Loyalty,
and Business Performance

An important rationale for CRM is that it improves business

performance by enhancing customer satisfaction and driving up
customer loyalty
 Customer Satisfaction, Loyalty,
and Business Performance

We will examine the variables and linkages between them. First we will
define the major variables: customer satisfaction, customer loyalty and
business performance
1. Customer satisfaction
Define customer satisfaction
Customer satisfaction is the customer’s fulfilment response to a
customer experience, or some part thereof

2. Customer loyalty

There are two major approaches to defining and measuring loyalty, one
based on behaviour, the other on attitude
 Customer Satisfaction, Loyalty,
and Business Performance

We will examine the variables and linkages between them. First we will
define the major variables: customer satisfaction, customer loyalty and
business performance
Behavioural loyalty is measured by reference to customer purchasing
behaviour. Loyalty is expressed in continued patronage and buying.
There are two behavioural aspects to loyalty. First, is the customer still
active? Second, have we maintained our share of customer spending?
Many direct marketing companies use RFM measures of behavioural
loyalty. The most loyal are those who have high scores on the three
behavioural variables: Recency of purchases (R), Frequency of purchases
(F) and Monetary value of purchases (M).
 Customer Satisfaction, Loyalty,
and Business Performance

The variables are generally measured as follows:

R = Time elapsed since last purchase

F = Number of purchases in a given time period
M = Monetary value of purchases in a given time period

Attitudinal loyalty is measured by reference to components of attitude

such as beliefs, feelings and purchasing intention. Those customers who
have a stronger preference for, involvement in or commitment to a
supplier are the more loyal in attitudinal terms
 Customer Satisfaction, Loyalty,
and Business Performance

These perspectives on loyalty have been combined by Dick and Basu, as

shown in Figure 2.2.

These authors identify four forms of

loyalty according to relative attitudinal
strength and repeat purchase behaviour.
‘Loyals’ are those who have high levels of
repeat buying and a strong relative
attitude.
‘Spurious loyals’ have high levels of
repeat purchase but weak relative
attitude.
‘Latent loyalty’ exists when a strong
relative attitude is not accompanied by
repeat buying
From a practical point-of-view, the behavioural definition of loyalty is
attractive because sales and profits derive from actions not attitudes
 Customer Satisfaction, Loyalty,
and Business Performance

Business Performance

Customer-related KPIs that can be used to evaluate business

performance following the adoption of CRM include:
a.customer satisfaction levels,
b.customer retention rates,
c.customer acquisition costs,
d.number of new customers acquired,
e.average customer tenure,
f.customer loyalty (behavioural or attitudinal),
g.sales per customer,
h.revenue growth,
i.market share and share of customer spending (wallet).
 Customer Satisfaction, Loyalty,
and Business Performance

Business Performance

The balanced scorecard is highly adaptable to CRM contexts. Companies

need to ask the following questions:
1.What customer outcomes drive our financial performance?
2.What process outcomes drive our customer performance?
3.What learning and growth outcomes drive our process performance?
The satisfaction–profit chain suggests that the customer outcomes of
satisfaction and loyalty are important drivers of business performance
 Customer Satisfaction, Loyalty,
and Business Performance

Business Performance

We will now look at some of the research into the links between
customer satisfaction, loyalty and business performance. Analysis has
been done on international data, national data, industry data, corporate
data and individual customer data

The American Customer Satisfaction Index (ACSI) was established in

1994. It has tracked the relationships between customer satisfaction and
a number of antecedents and consequences, including customer loyalty
as measured by customers’ probability of buying at different price points
 Customer Satisfaction, Loyalty,
and Business Performance

Business Performance

A number of studies in different

industries and companies
•Telecommunications,
•Banking,
•Airline and
•Automobile distribution
Are support the relationship
between customer satisfaction,
loyalty and business
performance
 Source

Buttle, Francis., & Maklan, Stan. (2019). Customer Relationship

Management: Concepts and Technologies, Fourth Edition, Routledge,
Taylor & Francis. New York. ISBN: 978-1-351-01655-1
Judy Strauss & Raymond Frost. (2016). E-Marketing, Seventh Edition,
Pearson Education, Inc. New Jersey. ISBN: 0-13-295344-7
Thank You