Lecture #17-18

MKT517
Customer Relationship
Management
-Operational CRM
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Activity

• Create Customer Journey Map by using the Excel file Template shared
through LPU Live
Evaluating the effect of marketing activities on the
customer value
• Marketing performance
• Customer valuation: the life-time value
• Linking marketing investments to the development of the life-time
value
• How organisations can learn how their marketing activities correlate
with life-time value and other financial outcomes
Evaluating the effect of marketing activities on the
customer value
• The life-time value of all customers is a good indicator of the total value of a firm.

• After deducting the net present value of the total spending on overhead for the
period for which the calculation is made, the remaining amount tends to
accurately reflect the value of the organization.

• The goal of optimising the life-time value of a customer is consequently a goal

that benefits the entire organisation.
Evaluating the effect of marketing activities on the
customer value
Evaluating the effect of marketing activities on the
customer value
Evaluating the effect of marketing activities on the
customer value

• In Table 10.2, in which the acquisition is described, it appears that the acquisition
of large customers requires more effort than the acquisition of smaller clients.
• The greater amount of money spent by the larger customers cannot compare
with the additional efforts necessary to acquire the initial sale.
• By the end of the year, there is still no profit being earned in the large customer
segment.
Lecture Outcome

Students will examine and comprehend the concepts under

Operational CRM:
• multichannel management
• personal selling
• contact center management
• online environment-internet and website
Operational CRM

• Multichannel management
• One of the toughest challenges in CRM today is multichannel management,
including managing such complex and dynamic channels as social media and the
internet.

• How can we increase profit margins and revenue generated through customer
contact, while at the same time improving our accessibility, offering a better
customer experience and reducing the costs of our channel infrastructure?
Multichannel management

• In the meantime, the number of channels is growing and the technologies that
enable even more ways of communicating are seeing the light of day.

• Think about the speed with which we have seen the following channels develop:
web, e-mail, mobile (data and voice), text (SMS and MMS), kiosks and
multifunctional ATMs, interactive speech technology.

• The offering of services from third parties makes the adoption of channels easier
for organisations.
Multichannel management

• The challenge is to use knowledge gained on the individual customers to produce

a perfect combination of channels.

• Which channels best fit a certain type of contact?

• What differences should we apply between customer segments and customer

types?

• Which opportunities to learn and to collect information should be seized and how
do we work together with partners?
Multichannel management

According to Wilson, Street and Bruce (2008), aspects which play an important role
in the formulation of a multichannel strategy are:
• How do we translate our relationship strategy into channel combinations?
• How do we distinguish between segments?
• How do we manage the increased costs that are inevitable when opening up
more channels?
• How do we manage the complexity that is bound to increase when multiple
interconnected channels are used?
• How do we decide which channels to integrate?
• How do we measure and manage the performance of integrated channels?
Multichannel management

Whether or not change in the existing channel mix is actually desired depends on
three aspects (Wilson et al., 2008):

1 costs;
2 accessibility of the organisation;
3 customer experience that is offered (or rather, created).

The criteria are strategically relevant in judging whether or not the current channel
combination is working or needs to be adapted.
Multichannel management

Whether or not change in the existing channel mix is actually desired depends on
three aspects (Wilson et al., 2008):

1 costs;
2 accessibility of the organisation;
3 customer experience that is offered (or rather, created).

The criteria are strategically relevant in judging whether or not the current channel
combination is working or needs to be adapted.
Multichannel management
Multichannel management
Multichannel management
Multichannel management

• Imagine a concert, when the touch points occur during orientation, booking,
preparing for the event, travelling to the event, experiencing the event itself and
the period shortly after.

• The ‘touch points’ will not all take place within the same channel. On their way to
the concert, people may be informed over the radio, the telephone (text
messages from friends), the billboards alongside the road etc.

• The main goal is to have the touch points create a logic unity that has a clear
branded identity, which is consistent in terms of content, and that they are tuned
in to each other in terms of creating a continuous flow.
Multichannel management
Multichannel management
Multichannel management

• Differentiation is shown between three different segments – gold, silver and

bronze.
• It highlights the way channels are used and the quality of communication that is
demanded.
• In determining the level of differentiation, an organisation may have to make
difficult choices.
• Customers may view differentiation as discrimination. They may perceive the
differentiation as unfair, without valid reason, viewing it as another person
getting better treatment than them.
• The party feeling ‘disadvantaged’ might see it as a reason not to continue the
relationship.
Multichannel management
Multichannel management

• It may be practical, just to get an overview, to draw the paths typical customer
groups use in each phase from orientation to after sales in one diagram;
• The lines indicate the customer types or groups.
• These diagrams can be compared to the actual routing, where it is clear a portion
of customers will always deviate, but the dominant channels should be about
right for each customer group.
• The thickness of the line may indicate the percentage of customers within the
group following the path.
• By bringing together the customers, propositions and channels during several
customer contact moments (‘touch points’) in the relationship, we must take into
account that preferences are likely to change over time.
What is Operational CRM???

A centralized system that supports the sales, marketing, and customer

service functions within a company that stores information on
customers, leads, and employees using a shared interface.
How Does Operational CRM works????
Probable Questions
• What is the role of the Internet and the website in the contact cycle?
• How to build traffic applying on- and offline methods.
• How to measure the quality of the site visit.
- How can companies capitalize on visitors’ expectations?
- What direction should the development of the website’s functionality take?
• Various functionalities of websites. The influence of the context and the type of website on the
determination of the desired functionality.
• How to increase the quality of the web visit.
• How to improve the design of the page, the content and the website.
• How to convert visitors into buyers: how to entice visitors to buy.
• How to handle transactions by means of order-taking and payment systems.
Figure 16.1 The contact cycle on the Internet
Source: Cap Gemini.
Traffic building
• Online traffic building
• Cybermediaries
• portals, affiliate marketing programs, virtual communities,
integrators/malls, comparison sites, mobile agents and consumer
aggregated buying sites.
• Online marketing tools
• Advertising banners and buttons, search engines
• Offline traffic building
Figure 16.2 Site functionality and visitors’ expectations
Source: Bügel, 2002.
Meeting expectations
Creating trust
• The brand and the reliability of the organisation
• Presentation: the content, layout and design of the site
must disseminate the organisation’s objectives
• Navigation
• Seals of quality
• Technology (speed and functionality)
• Fulfilment
• Privacy
Table 16.1 Example of cost structures in the food sector
Source : Cost/profit Analysis Marketing and Logistics (2000).
Figure 16.4 Functionality of transactional websites in the stages of one-to-one
marketing
Source : Peppers and Rogers Group.
Activity
• Open your favourite shopping website/app and critical evaluate the
same.
• List down the three things which you would recommend to change
for the perfect user experience?

• _______________
• _______________
• _______________