Unit V- Information

Systems in
Organizations
Part III- Customer
Relationship
Management Systems

Ms. Monisha John

Dnyanprassarak Mandal’s
College and Research Centre
WHAT IS CUSTOMER What kinds of information would you need to
build and nurture strong, long-lasting relationships
RELATIONSHIP with customers?
MANAGEMENT?
 • In small businesses it is possible to know customers
Customer individually.
Relationship • In large businesses this is not possible because of the
number of customers and the number of ways customers
Management interact with the firm (over the Web, the phone, e-mail,
blogs, and in person).
• It becomes especially difficult to integrate information
from all these sources and to deal with the large numbers
of customers.
Customer Relationship Management

A large business’s processes

for sales, service, and Some information on a Other pieces of information
marketing tend to be highly specific customer might be about the same customer
compartmentalized, and stored and organized in might be organized by
these departments do not terms of that person’s products that were
share much essential account with the company. purchased.
customer information.

There is no way to
consolidate all this Solution- customer
information to provide a relationship management
unified view of a customer systems.
across the company.
Customer Customer relationship management (CRM) systems capture
and integrate customer data from all over the organization,
Relationship consolidate the data, analyze the data, and then distribute the
results to various systems and customer touch points across the
Management enterprise.

Systems A touch point (also known as a contact point) is a method of

interaction with the customer, such as telephone, e-mail,
customer service desk, conventional mail, Facebook, Twitter,
Web site, wireless device, or retail store.

Well-designed CRM systems provide a single enterprise view of

customers that is useful for improving both sales and customer
service (see Figure 9.6.)
Image source: < Management Information Systems, Managing the Digital Firm THIRTEENTH EDITION, Kenneth C. Laudon, James P. Laudon>
 • Good CRM systems provide data and analytical tools for
Customer answering questions such as these:
Relationship • What is the value of a particular customer to the firm
over his or her lifetime?
Management • Who are our most loyal customers? Etc.
Systems • It can cost six times more to sell to a new customer than
to an existing customer.
• Firms use the answers to these questions to acquire new
customers, provide better service and support to existing
customers, customize their offerings more precisely to
customer preferences, and provide ongoing value to retain
profitable customers.
Customer Relationship
Management Software
 • Commercial CRM software packages range from niche
Customer tools that perform limited functions, such as personalizing
Relationship Web sites for specific customers, to large-scale enterprise
applications that capture myriad interactions with
Management customers, analyze them with sophisticated reporting
tools, and link to other major enterprise applications, such
Software as supply chain management and enterprise systems.
• The more comprehensive CRM packages contain modules
for partner relationship management (PRM) and
employee relationship management (ERM).
Partner Relationship Management (PRM)

PRM uses many of the same data, tools, If a company does not sell directly to
and systems as customer relationship customers but rather works through
management to enhance collaboration distributors or retailers, PRM helps
between a company and its selling these channels sell to customers
partners. directly.

It provides a company and its selling

It also provides a firm with tools to
partners with the ability to trade
assess its partners’ performances so it
information and distribute leads and
can make sure its best partners receive
data about customers, integrating lead
the support they need to close more
generation, pricing, promotions, order
business.
configurations, and availability.
Employee Relationship Management (ERM)

ERM software deals with employee

issues that are closely related to CRM, Major CRM application
such as setting objectives, employee software vendors include
performance management, Oracle, SAP, Salesforce.com,
performance-based compensation, and Microsoft Dynamics CRM.
and employee training.
Customer Relationship Management
Software
• Customer relationship management systems typically provide
software and online tools for:
• Sales
• Customer Service and
• Marketing.
 1. Sales Force
Automation (SFA)
 • Sales force automation modules in CRM systems
Sales Force help sales staff increase their productivity by focusing
Automation sales efforts on the most profitable customers, those
who are good candidates for sales and services.
• CRM systems provide sales prospect and contact
information, product information, product
configuration capabilities, and sales quote generation
capabilities.
• Such software can assemble information about a
particular customer’s past purchases to help the
salesperson make personalized recommendations.
 • CRM software enables sales, marketing, and delivery
Sales Force departments to easily share customer and prospect
Automation information.
• It increases each salesperson’s efficiency in reducing
the cost per sale as well as the cost of acquiring new
customers and retaining old ones.
• CRM software also has capabilities for sales
forecasting, territory management, and team selling.
2. Customer Service
Customer Service

Customer service modules in CRM systems provide They have capabilities for assigning and managing
information and tools to increase the efficiency of customer service requests.
call centers, help desks, and customer support staff.
 • One such capability is an appointment or advice telephone
Customer Service line:
• When a customer calls a standard phone number, the
system routes the call to the correct service person,
who inputs information about that customer into the
system only once.

• Once the customer’s data are in the system, any

service representative can handle the customer
relationship.
Customer Service

IMPROVED ACCESS TO CONSISTENT AND THUS, CALL CENTERS AND CUSTOMER SERVICE THE CUSTOMER IS HAPPIER BECAUSE HE OR SHE
ACCURATE CUSTOMER INFORMATION HELPS CALL GROUPS ACHIEVE GREATER PRODUCTIVITY, SPENDS LESS TIME ON THE PHONE RESTATING HIS
CENTERS HANDLE MORE CALLS PER DAY AND REDUCED TRANSACTION TIME, AND HIGHER OR HER PROBLEM TO CUSTOMER SERVICE
DECREASE THE DURATION OF EACH CALL. QUALITY OF SERVICE AT LOWER COST. REPRESENTATIVES.
 • CRM systems may also include Web-based self-
service capabilities:
• The company Web site can be set up to
Customer Service provide inquiring customers personalized
support information as well as the option to
contact customer service staff by phone for
additional assistance.
3. Marketing
Marketing

CRM systems support direct-

Marketing modules also
marketing campaigns by
include tools for analyzing
providing capabilities for
marketing and customer
capturing prospect and
data, identifying profitable
customer data, for providing
and unprofitable customers,
product and service
designing products and
information, for qualifying
services to satisfy specific
leads for targeted marketing,
customer needs and
and for scheduling and
interests, and identifying
tracking direct-marketing
opportunities for cross-
mailings or e-mail (see
selling.
Figure 9.7).
Image source: < Management Information Systems, Managing the Digital Firm THIRTEENTH EDITION, Kenneth C. Laudon, James P. Laudon>
Marketing • Cross-selling is the marketing of complementary
products to customers. (For example, in financial
services, a customer with a checking account
might be sold a money market account or a
home improvement loan.)
• CRM tools also help firms manage and execute
marketing campaigns at all stages, from planning
to determining the rate of success for each
campaign.
 • Figure 9.8 illustrates the most important capabilities
Marketing for sales, service, and marketing processes that
would be found in major CRM software products.
• Like enterprise software, this software is business-
process driven, incorporating hundreds of business
processes thought to represent best practices in each
of these areas.
• To achieve maximum benefit, companies need to
revise and model their business processes to
conform to the best-practice business processes in
the CRM software.
Image source: < Management Information Systems, Managing the Digital Firm THIRTEENTH EDITION, Kenneth C. Laudon, James P. Laudon>
Marketing • Figure 9.9 illustrates how a best practice for
increasing customer loyalty through customer
service might be modeled by CRM software.
• Directly servicing customers provides firms with
opportunities to increase customer retention by
singling out profitable long-term customers for
preferential treatment.
Image source: < Management Information Systems, Managing the Digital Firm THIRTEENTH EDITION, Kenneth C. Laudon, James P. Laudon>
 • CRM software can assign each customer a score based on
Marketing that person’s value and loyalty to the company and
provide that information to help call centers route each
customer’s service request to agents who can best handle
that customer’s needs.
• The system would automatically provide the service agent
with a detailed profile of that customer that includes his
or her score for value and loyalty.
• The service agent would use this information to present
special offers or additional service to the customer to
encourage the customer to keep transacting business with
the company.
Operational And
Analytical CRM
 All the applications we have just described support
either the operational or analytical aspects of
customer relationship management.
• Operational CRM includes customer- facing
Operational And applications, such as tools for sales force
automation, call center and customer service
Analytical CRM support, and marketing automation.
• Analytical CRM includes applications that
analyze customer data generated by operational
CRM applications to provide information for
improving business performance.
 • Analytical CRM applications are based on data from
Operational And operational CRM systems, customer touch points,
Analytical CRM and other sources that have been organized in data
warehouses or analytic platforms for use in online
analytical processing (OLAP), data mining, and other
data analysis techniques.
• Customer data collected by the organization might be
combined with data from other sources, such as
customer lists for direct-marketing campaigns
purchased from other companies or demographic
data.
• Such data are analyzed to identify buying patterns, to
create segments for targeted marketing, and to
pinpoint profitable and unprofitable customers (see
Figure 9.10).
Image source: < Management Information Systems, Managing the Digital Firm THIRTEENTH EDITION, Kenneth C. Laudon, James P. Laudon>
Operational Another important output of
analytical CRM is the

And customer’s lifetime value to

the firm.

Analytical Customer lifetime value

(CLTV) is based on the
relationship between the

CRM revenue produced by a

specific customer, the
expenses incurred in
acquiring and servicing that
customer, and the expected
life of the relationship
between the customer and
the company.
 Business Value Of
Customer Relationship
Management Systems
 Companies with effective customer relationship
management systems realize many benefits,
including:
• Increased customer satisfaction
Business Value Of • Reduced direct- marketing costs
• More effective marketing
Customer Relationship
• Lower costs for customer acquisition and
Management Systems retention.
• Information from CRM systems increases sales
revenue by identifying the most profitable
customers and segments for focused marketing
and cross-selling.
Business Value Of Customer Relationship
Management Systems

Customer churn is reduced as sales, The churn rate measures the number of It is an important indicator of the
service, and marketing better respond customers who stop using or growth or decline of a firm’s customer
to customer needs. purchasing products or services from a base.
company.
 Read Text:
Management Information Systems, Managing the
Digital Firm THIRTEENTH EDITION, Kenneth C.
Laudon, James P. Laudon

ENTERPRISE Pages 387- 389

APPLICATIONS: NEW To expand your knowledge about the following

OPPORTUNITIES AND topics:
• Enterprise Application Challenges
CHALLENGES
• Next-generation Enterprise Applications
• Social CRM and Business Intelligence
The End

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