CUSTOMER RELATIONSHIP MANAGEMENT

(CRM)
SESSION 19-20

SUBJECT MATTER EXPERT

ACKNOWLEDGEMENT

These slides have been adapted from

R. Kelly Rainer, JR, Brad Prince, (2023).
Introduction to Information Systems, 10th
Edition.
John Willey & Sons, Inc,
EPUB ISBN: 978-1-394-16512-4
Chapter 11
ACKNOWLEDGEMENT

These slides have been adapted

from
Laudon, K. C., Laudon, J. P.
Management Information Systems:
Managing the Digital Firm,
Global Edition, 17th Edition,
Chapter 9
ACKNOWLEDGEMENT

These slides have been adapted

from:
Luvai F. Motiwalla; Jeff Thompson
Enterprise Systems for Management
second edition (2014)
Pearson Education Limited, England
ISBN: 978-1-29202-348-9
Chapter 11
LEARNING OUTCOME

• LO 2: Explain various strategies to achieve organizational

competitive advantage for IS leader. (C2)
• LO 3: Explain the concept of information systems development
and strategy. (C2)
• LO 4: Illustrate the use of information system and information
technology in the global business world. (C2)
LEARNING OBJECTIVES

• Identify the primary functions of both customer relationship

management (CRM) and collaborative CRM.
• Describe how businesses might utilize applications of each of the
two major components of operational CRM systems.
• Discuss the benefits of analytical CRM systems to businesses.
• Explain the advantages and disadvantages of mobile CRM
systems, on-demand CRM systems, and open-source CRM
systems.
• How do customer relationship management systems help firms
achieve customer intimacy?
• Understand the customer relationship process.
• Examine the CRM life cycle and its relationship with other
enterprise software.
• Examine the impact of CRM on an organization.
http://www.juniortouchchamps.org/aimsobjectives
SUBTOPICS

2. Operational 3. Analytical
1. Defining Customer Customer Customer
Relationship Relationship Relationship
Management Management Management
Systems Systems

4. Other Types of
Customer
Relationship 5. CRM Life Cycle
Management
Systems
Defining Customer Relationship
Management
 DEFINING CUSTOMER RELATIONSHIP MANAGEMENT

Customer relationship management (CRM) is an organizational

strategy that is customer-focused and customer-driven.
From Neighborhood
Mobile
Stores……. population

The Web
© MONKEY BUSINESS-LBR/Age Fotostock America, Inc.

Giant malls
Personal

Impersonal

Source: R. Kelly Rainer, JR, Brad Prince, (2023), Introduction to Information Systems,
DEFINING CUSTOMER RELATIONSHIP MANAGEMENT

• Knowing the customer

• In large businesses, too many customers and too many ways customers
interact with firm

• C R M systems
 Capture and integrate customer data from all over the organization
 Consolidate and analyze customer data
 Distribute customer information to various systems and customer
touch points across enterprise

 Provide single enterprise view of customers

Source: Laudon, K. C., Laudon, J. P. Management Information Systems: Managing the

DEFINING CUSTOMER RELATIONSHIP MANAGEMENT

• It is important for the company to understand that CRM

implementation needs to be customer driven more than
technology driven.
• CRM implementation must involve people, process, and systems,
rather than just a narrowly defined IT application.
• A true CRM integrates corporate strategy, business methodology,
and technology to accomplish a myriad of goals for companies
that want to operate in a customer-driven environment.
• No business can survive without understanding its customers and
having a positive relationship with them.
• CRM provides support for the front-end customer facing
functionality (e.g., marketing, sales, and customer service), which
are usually not available in traditional ERP systems.
Source: Luvai F. Motiwalla; Jeff Thompson, Enterprise Systems for
• A good CRM should provide support for the following functions.
 Capture and maintain customer needs, motivations, and
behaviors over the lifetime of the relationship.
 Facilitate the use of customer experiences for continuous
improvement of this relationship.
 Integrate marketing, sales, and customer support activities
measuring and evaluating the process of knowledge
acquisition and sharing.

Source: Luvai F. Motiwalla; Jeff Thompson, Enterprise Systems for

• Campaign Management
 To generate “leads” or potential clients for the organization.
• Sales Management
 To convert the lead generated by campaign management into a
potential customer.
• Service Management
 Provide ongoing support for the client and to assist in the
operation of the product or service purchase.
• Complaint Management
 To improve customer satisfaction by directly addressing the
complaint of the customer and supporting a continuous
improvement process.
Source: Luvai F. Motiwalla; Jeff Thompson, Enterprise Systems for
CRM SUPPORT PROCESS

• Market Research
 Focuses on systematic design, collection, analysis, and
reporting of data, and on findings relevant to specific sales
activity in an organization.
 Involves integration of external and internal data from a wide
variety of sources.

• Loyalty Management
 Provides the processes to optimize the duration and intensity of
relationships with customers.

Source: Luvai F. Motiwalla; Jeff Thompson, Enterprise Systems for

• Lead Management
 Focus is on organizing and prioritizing contacts with the
prospective customers.
• Customer Profiling
 Focus is to develop a marketing profile of every customer by
observing his or her buying patterns, demographics, buying and
communication preferences, and other information that allows
categorization of the customer.
• Feedback Management
 Consolidates, analyzes, and shares the customer information
collected by CRM delivery and support processes with the
analysis process and vice versa.
Source: Luvai F. Motiwalla; Jeff Thompson, Enterprise Systems for
 DEFINING CUSTOMER RELATIONSHIP MANAGEMENT

The Need for CRM :

• It costs six times more to sell to a new customer than to sell to
an existing one.
• A typical dissatisfied customer will tell 8-10 people.
• By increasing the customer retention rate by 5%, profits
could increase by 85%.
• Odds of selling to new customers = 15%, compared to the odds
of selling to existing customers (50%)
• 70% of complaining customers will remain loyal if their problem
is solved

Source: R. Kelly Rainer, JR, Brad Prince, (2023), Introduction to Information Systems,
 DEFINING CUSTOMER RELATIONSHIP MANAGEMENT

The Need for CRM :

• Tenets of CRM
• One-to-one relationship between a customer and a seller.
• Treat different customers differently.
• Keep profitable customers and maximize lifetime revenue from
them.

Lifetime Customer Value

• The value of a customer to a company depends on three
dimensions:
the duration of the relationship,
the number of relationships (e.g., the number of products from a
company that a customer purchases), and
the profitability of the relationship.
Source: R. Kelly Rainer, JR, Brad Prince, (2023), Introduction to Information Systems,
DEFINING CUSTOMER RELATIONSHIP MANAGEMENT

Source: R. Kelly Rainer, JR, Brad Prince, (2023), Introduction to Information Systems,
 DEFINING CUSTOMER RELATIONSHIP MANAGEMENT

Customer
Touch
Points

Source: R. Kelly Rainer, JR, Brad Prince, (2023), Introduction to Information Systems,
 DEFINING CUSTOMER RELATIONSHIP MANAGEMENT

Data Consolidation
CRM TECHNOLOGY

Accounting • CRM technology implements a

HR companywide business strategy
in an effort to reduce costs and
enhance service by solidifying
customer loyalty.
Finance • With the rise of the Internet,
data mining and analytics
techniques have advanced to
where they can be considered
Marketing an integral component of CRM.
MIS • True CRM brings together
information from all data
sources within an organization
to give one, holistic view of
Data Consolidation = 360-Degree View of
each customer in real time.
Customers
Source: R. Kelly Rainer, JR, Brad Prince, (2023), Introduction to Information Systems, 10th Edition. Source: Luvai F. Motiwalla; Jeff Thompson, Enterprise Systems for
Operational Customer Relationship Management
Systems
OPERATIONAL CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

• Operational CRM is the component of CRM that supports the

front-office business processes. That is, those processes that
directly interact with customers; i.e., sales, marketing, and
service.

• Two major components of operational CRM

Customer-facing applications
Customer-touching applications

Source: R. Kelly Rainer, JR, Brad Prince, (2023), Introduction to Information Systems,
OPERATIONAL CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

• Customer-facing applications are those applications where an

organization’s sales, field service, and customer interaction center
representatives actually interact with customers.
• Customer service and support refers to systems that
automate requests, complaints, product returns, and requests
for information.
• Customer Interaction Centers (CIC)
Call center
Outbound telesales
Inbound teleservice

Continue..

Source: R. Kelly Rainer, JR, Brad Prince, (2023), Introduction to Information Systems,
OPERATIONAL CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

Customer-facing applications (continue..)

• Sales force automation automatically records all the aspects
in a sales transaction process.
Contact management system
Sales lead tracking system
Sales forecasting system
Product knowledge system
Configurators

Continue..

Source: R. Kelly Rainer, JR, Brad Prince, (2023), Introduction to Information Systems,
OPERATIONAL CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

Customer-facing applications (continue..)

• Marketing
Cross selling is the practice of marketing additional, related
products to customers based on their previous purchases.
Up selling is a sales strategy in which the sales person will
provide customers the opportunity to purchase higher-value
related products or services as opposed to, or along with, the
consumer’s initial product or service selection.
Bundling is a form of cross selling in which a business sells a
group of products or services together at a price that is lower
than the combined individual prices of the products.
• Campaign management applications help organizations plan
campaigns so that the right messages are sent to the right people
through the right channels.
Source: R. Kelly Rainer, JR, Brad Prince, (2023), Introduction to Information Systems,
OPERATIONAL CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

Responses by Channel for

C R M packages typically include tools for: January 2019 Promotional
• Sales force automation (S F A) Campaign
 Sales prospect and contact information
 Sales quote generation capabilities
• Customer service
 Assigning and managing customer service
requests
 Web-based self-service capabilities
• Marketing
 Capturing prospect and customer data,
scheduling and tracking direct-marketing
mailings or e-mail
 Cross-selling FIGURE 9.7 HOW CRM SYSTEMS
SUPPORT MARKETING

Source: Laudon, K. C., Laudon, J. P. Management Information Systems: Managing the

OPERATIONAL CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

Customer-Touching Applications
• In customer-touching applications, customers interact
directly with online technologies and applications rather
than interact with a company representative.
• Search and Comparison Capabilities
• Technical and Other Information and Services
• Customized Products and Services
• Personalized web pages
• FAQs
• E-mail and Automated Response
• Loyalty Programs
Source: © Spencer Grant/PhotoEdit

Source: R. Kelly Rainer, JR, Brad Prince, (2023), Introduction to Information Systems,
Analytical Customer Relationship Management
Systems
ANALYTICAL CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

• Analytical CRM systems analyze customer behavior

and perceptions in order to provide actionable business
intelligence.
• Analytical CRM systems analyze customer data for a
variety of purposes, including:
• Designing and executing targeted marketing
campaigns
© VISION/Age Fotostock America, Inc.

• Increasing customer acquisition, cross selling, and up

selling
• Providing input into decisions relating to products and
services (e.g., pricing and product development)
• Providing financial forecasting and customer
Source: R. Kelly Rainer, JR, Brad Prince, (2023), Introduction to Information Systems,
THE RELATIONSHIP BETWEEN OPERATIONAL CRM AND ANALYTICAL CRM

Source: R. Kelly Rainer, JR, Brad Prince, (2023), Introduction to Information Systems,
THE RELATIONSHIP BETWEEN OPERATIONAL CRM AND ANALYTICAL CRM

FIGURE 9.10 ANALYTICAL C R M DATA

WAREHOUSE
Source: Laudon, K. C., Laudon, J. P. Management Information Systems: Managing the
 FIGURE 9.8 C R M SOFTWARE
CAPABILITIES

Source: Laudon, K. C., Laudon, J. P. Management Information Systems: Managing the

FIGURE 9.9 CUSTOMER LOYALTY MANAGEMENT
PROCESS MAP

Source: Laudon, K. C., Laudon, J. P. Management Information Systems: Managing the

THE RELATIONSHIP BETWEEN OPERATIONAL CRM AND ANALYTICAL CRM

• Operational CRM
 Customer-facing applications
 Sales force automation call center and customer service
support
 Marketing automation

• Analytical CRM
 Based on data warehouses populated by operational CRM
systems and customer touch points
 Analyzes customer data (O L A P, data mining, etc.)
Customer lifetime value (C L T V)

Source: Laudon, K. C., Laudon, J. P. Management Information Systems: Managing the

BUSINESS VALUE OF CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

• Business value of CRM systems

 Increased customer satisfaction
 Reduced direct-marketing costs
 More effective marketing
 Lower costs for customer acquisition/retention
 Increased sales revenue
• Churn rate
 Number of customers who stop using or purchasing products
or services from a company
 Indicator of growth or decline of firm’s customer base

Source: Laudon, K. C., Laudon, J. P. Management Information Systems: Managing the

Other Types of Customer Relationship
Management Systems
 OTHER TYPES OF CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

• On-demand CRM is a CRM system that is hosted by an external

vendor in the vendor’s data center.
• Mobile CRM is an interactive CRM system that enables an
organization to conduct communications related to sales,
marketing, and customer service activities through a mobile
medium for the purpose of building and maintaining
relationships with its customers.
• Open-source CRM is CRM software whose source code is
available to developers and users.

Source: Image Source Limited; J-C & D. PRATT/PhotoNonStop/Glow Images)

Source: R. Kelly Rainer, JR, Brad Prince, (2023), Introduction to Information Systems,
 OTHER TYPES OF CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

• Social CRM is the use of social media technology and services to

enable organizations to engage their customers in a collaborative
conversation in order to provide mutually beneficial value in a
trusted and transparent manner
• Realtime CRM help organizations to respond to customer
product searches, requests, complaints, comments, ratings,
reviews, and recommendations in near real time

Source: R. Kelly Rainer, JR, Brad Prince, (2023), Introduction to Information Systems,
CRM Life Cycle
• A CRM system life cycle involves focus on people, procedures,
company philosophy, and culture, rather than just information
technology.
• Adequately outline the corporate CRM goals and the practical
process changes that have to occur before focusing on possible
technology solutions.
• Functional requirements must be considered before making a
decision on the architecture.
• There are many CRM products from which to choose, depending
upon the complexity of the information needed and the resources
to manage the program.

Source: Luvai F. Motiwalla; Jeff Thompson, Enterprise Systems for

• A CRM system life cycle involves
focus on people, procedures,
company philosophy, and culture,
rather than just information
technology.
• Adequately outline the corporate
CRM goals and the practical process
changes that have to occur before
focusing on possible technology
solutions.
• Functional requirements must be
considered before making a decision Figure 12-4 CRM Life Cycle
on the architecture.
• There are many CRM products from
which to choose, depending upon the
complexity of the information needed
Source: Luvai F. Motiwalla; Jeff Thompson, Enterprise Systems for