Intro to Supply Chain Management Chapter 11 Rutgers Taitt

Customer relationship management (CRM)

A philosophy of putting the customer first

Why do companies need CRM

- Acquire new customers

- Retain existing customers

- Meet the changing expectations of customers

Loyal customers are the source of most profits, and a relatively small percentage of those customers generate most of the profits for the company

Goals and Benefits of CRM

- Increased customer satisfaction

- Increased customer loyalty and retention

- Increased revenue

- growth of customer base through referrals

- Increase sales effectiveness (Closing sales faster)

- increased sales through cross selling / up selling

- simplified more cost effective marketing & sales process

- Faster responses to customer inquiries

- access to updated customer info and personalized interactions

- automation of repetitive tasks

Strategically significant customers

- not all customers are equal, focus on strategically significant customers

- customers with high lifetime value

- customers who serve as role models or benchmarks for others

- customers who inspire change in supplier / supply chain

- CRM is not for every customer

Predicting customer behaviors

Can collect customer buying history to predict future behavior

- can also be used to determine effective marketing, advertising, and promotions

Personalizing customer communications

- conveys to customer that the company cares about them

- likely to result in greater sales

- need to use customers language and communicate meaningfully with them

Segmenting customers

Dividing customer base into groups of individuals that are similar (in regard to marketing)

Target Marketing

A segment of customers a company has decided to aim its marketing efforts towards

Event Based Marketing

Form of marketing that identifies key events in the customer and business cycle

when said event occurs, customer specific marketing activity is taken

Cross Selling

Selling an additional complementary product or service to an existing customer after initial purchase (adding fries to burger order)

Up Selling

Persuading customer to buy a more expensive item/upgrade a product

- can be adding extra features

Relationship Marketing / Permission Marketing

an approach to selling products/services where a customer explicitly agrees in advance to receive marketing information

(like an opt in email chain)

Customer Defection Analysis

Analyzing why customers stopped buying

Churn Reduction

all efforts companies develop to stop losing customers to competition

Customer Lifetime Value (CLV)

prediction of net profit attributed t entire relationship with a particular customer

- essential for determining how much money a company is willing to spend on acquiring new customers and how much repeat business they can expect

Order Management

receiving and accepting customer orders and shipping, invoicing, and communicating the order status to the customer

Order Management Steps

1. Receive and validate the order to confirm accuracy

2. Check inventory

3. acknowledge to customer with target ship date

4. schedule warehouse picking of order (waving)

5. pick and pack order

6. prepare all paperwork for shipment

7. arrange for transportatin

8. confirm shipment with customer

9. produce and send invoice to customer

10. backorder any risidual quantity not shipped

Omnichannel

multichannel approach to sales that provides customers with seamless shopping experience, whether online, from a desktop or mobile device, by telephone, or in store

Why is order management critical?

- Customer satisfactin relies on companys ability t ship order on time

- good order management will reduce overall inventory a company needs to carry

- allows efficient management of competing demand to increase revenue and profitability

- effective order management will improve cash flow and minimize customer complaints and deductions

Customer service as a philosophy

company wide commitment to providing customer satisfaction by emphasizing quality

Customer service as an activity

customer service is a task a firm must accomplish

- order processing, billing, invoicing, product returns, claims etc.

Customer service as performance measure

category of performance measures

- % of orders delivers on time, # of orders processed within acceptable time limits etc.

Pre Transaction elements

precede the sale

- Include: customer service policies, mission statement, org structure, system flexibility, etc.

Transaction Elements

Occur during the sale

- Includes: order lead time, order processing capabilities, distributin system accuracy, etc.

Post Transaction Elements

Occur after the sale

- Includes: warranty repair, complaint resolution, product returns, operating information, etc.

Seven "R"s Rule

- Right Product

- Right Quantity

- Right Quality

- Right Place

- Right Time

- Right Customer

- Right Costs

Perfect Order

Seven "R"s + Right documentation

Call Center

- links org and customers together

- facility housing personnel who respond to customer queries

- usually customer service or tech support

Reverse Logistics

moving product from point of customer receipt back to point of origin

5 "R"s of Reverse Logistics

- Returns

- Recalls

- Repairs

- Repackaging

- Recycling

Green reverse logistics programs

reverse logistics programs with positive impact on environment

- usually by recycling, reusing, and refurbishing

Measuring customer satisfaction

Surveys, questionnaires, and direct phone calls

Self Service portals

customers can:

- Access their account info

- Check operating hours

- ask questions

- see product information

- find contact info

- check orders

- get shipping info

Benefits of self service

- Avoids employee errors and saves time

- customers can edit and modify their information

6 Steps to successful CRM program

1. Create CRM plan

2. Involve CRM users from Outset

3. Select the right application and provider

4. Integrate existing CRM applications

5. Establish Performance Measures

6. Provide CRM training for all users

Customer Data Privacy

Rules and laws regarding invasion of privacy include patriot act in US

Social Media

create and cultivate virtual communities around product or brand is a powerful way to engage customers