OMIS 320 Exam 4 Cope

5

Finding a new customer costs _____ times as much as keeping an old customer

CRM must include:

1. Talking to customers

2. Understanding their behavior and their requirements

3. Building a system to satisfy those requirements

Customer Relationship Management (CRM)

Building and maintaining profitable long-term customer relationships

Segmenting Customers

Grouping customers to create specialized communications about products

Target Marketing Efforts

Email or direct mail saves labor and postage, reduces chances of being a nuisance

Relationship Marketing or Permission Marketing

Customers select the type and time of communication. Requires software & customer participation

Cross-Selling

Additional products are sold as the result of an initial purchase (e.g., e-mails from Amazon.com describing other books bought by people)

Predicting Customer Behaviors

Firms forecast likelihood of customers' purchases

Customer Defection Analysis

Finding methods to retain customers

Churn Reduction

Reducing customer defections

Customer Value Determination

Verify the customer lifetime value for individuals or segments

Personalizing Customer Communications

Understanding customer behaviors and preferences, allows a firm to customize communications

Clickstream

How a customer navigates a Website

Event-Based Marketing

Offer the right products and services to customers at the right time

Sales Force Automation (SFA)

Used for documenting field activities, communications with the home office, & retrieving sales history.

Pre-transaction Elements

Precede the sale (e.g., customer service policies, the mission statement, org. structure, & system flexibility).

Transaction Elements

Occur during the sale & include the order lead time, the order processing capabilities & the distribution system accuracy.

Posttransaction Elements

Occur after the sale & include warranty repair capabilities, complaint resolution, product returns, & operating information.

Steps in Designing and Implementing a Successful CRM Program

Step 1: Creating the CRM Plan

-Objectives of CRM Program, CRM's fit with corporate strategy, New applications to be purchased/ developed, Integration/ replacement of existing legacy systems

-Personnel Requirements -personnel, training, policies, upgrades, and maintenance, cost and time frame for implementation

Step 2: Involve CRM users from Outset

-Employees should understand how it affects their jobs, Create a project team with members from all affected organizational areas, test with pilot application

Step 3: Select the Right Application and Provider

-Find an appropriate application and determine the extent of customization

Step 4: Integrate Existing CRM Applications

-CRM is a collection of various applications implemented over time, Customer contact mechanisms need to be coordinated so that every CRM user in the firm knows about all of the activity associated with each customer, Centralized database or data warehouse containing all customer information

Step 5: Establish Performance Measures

-Allows firms to: Determine if objectives have been met, Compare actual to planned variance

Step 6: Providing CRM Training for All Users

-Provide and require training for all initial users and then provide training an ongoing basis as applications are added, Training can also help convince key users like sales, call center, and marketing personnel of the benefits and uses of CRM applications

Trends in CRM

  The customer experience: Engaging with customers is today more important than ever, making the customer experience an important brand differentiator

Use of artificial intelligence: One biggest benefit is its capacity to take over tedious, time-consuming
manual tasks.

 

 

Facility location

Must be part of the firm's supply chain strategy.

Companies can locate anywhere in the world due to

Increased globalization, technology, transportation, & open markets.

Location still matters-

Industry clusters show that innovation and competition are geographically concentrated.

Global Location Decisions

Involve location of the facility, defining its strategic role, and identifying the markets it serves

World Trade Organization (WTO) successor to the General Agreement on Tariffs/ Trade (GATT) Fuction Include:

-Administering Agreements

-Forum for Trade Negotiations

-Trade Disputes

-Monitor Trade Policies

-Aid for Developing Countries

-International Organizations

European Union (EU)

[1950] Set up after WWII, EU consists of 27 members

North American Free Trade Agreement (NAFTA)

[1994] among the U.S., Canada, and Mexico

Competitiveness of Nations

Degree to which a country produces goods & services which meet the needs of international markets, while maintaining or expanding personal real income over time. Made up of 323 criteria grouped into 4 factors:

1: Economic Performance (79 criteria)

2: Government Efficiency (72 criteria)

3: Business Efficiency (71 criteria)

4: Infrastructure (101 criteria)

Access and Proximity to Markets

"The trend in manufacturing is to be within delivery proximity of your customers. Logistics timelines & costs are the concerns, so that reinforces a clustering effect of suppliers & producers to places that offer lower cost labor & real estate."- Daniel Malachuk

Critical Location Factors

-Environmental Issues

-Labor Issues

-Right-to-Work laws

-Access to Suppliers and Cost

-Utility Availability and Cost

-Land Availability and Cost

Environmental Issues

-Global warming, air pollution, and acid rain are debated as being the price of industrialization.

-Trade liberalization creates the need for environmental cooperation

Labor Issues

-Labor availability, productivity, and skill.

-Unemployment and underemployment rates.

-Wage rates; turnover rates; labor force competitors.

Right-to-Work Law

-Right of employees to decide whether or not to join or support a union

Access to Suppliers and Cost

Supplier proximity influences the delivery of materials and effectiveness of the supply chain

Utility Availability and Cost

- Supply of electricity has not kept pace with the high speed of development.

-In heavy industries the availability and cost of energy are critical considerations.

-Telecommunication costs have dropped dramatically. Many organizations now have back office operations and call centers internationally to serve the U.S. market.

Land Availability and Costs

As land and construction costs in big cities continue to escalate, the trend is to locate in the suburbs and rural areas.

Quality-of-Life Issues

-Education

-Economy

-Natural Environment

-Social Environment

-Culture/recreation

-Healthcare

-Government/politics

-Mobility

-Public Safety

Business Clusters

-Geographic concentration of interconnected companies and institutions

-Research parks and special economic/industrial zones serve as magnets for business clusters

-Reasons for success:

-Close cooperation, coordination, and trust among clustered companies

-Fierce competition among rival companies

-Companies recruit from local skilled workers

Pure Services

Offering few or no tangible products to customers

State Utility

Do something to things owned by customer (e.g. store supplies and repair machines)

Difference Between Goods and Services

-Services cannot be inventoried

-Services are often unique (e.g. Insurance policies/legal service)

-Services have high customer-service interaction

-Services are decentralized due to inability to inventory and transport service products

Improving Service Productivity is Challenging due to:

-High labor content

-Individual customized services

-Difficulty of automating services

-Problem of assessing service quality

Global Service Issues

-Labor, facilities, and infrastructure support

-Legal and political issues: Laws may restrict foreign competitors

-Domestic competitors and the economic climate: Managers must be aware of local competition and their environment

-Identifying global customers

Service Strategy Developments

1: Cost Leadership Strategy

2: Differentiation Strategy

3: Focus Strategy

Cost Leadership Strategy

Requires large capital investment in state-of-the art equipment and significant efforts to control and reduce costs.

Differentiation Strategy

Unique service is created as companies listen to customers.

Focus Strategy

Serve a narrow niche better than other firms

Services performed require a ___________ labor component than manufactured products

Larger

Services also require use of

Facilitating products (e.g. computers, furniture, office supplies) that aren't part of the service sold

Customer have no idea how things actually get to the destination

But they sure notice when the shipment is late!

Service Response Logistics (SRL)

Management and coordination of the organization's service activities

4 Primary Activities of SRL

1: Service capacity

2: Waiting times

3: Distribution channels

4: Service quality

Service Capacity

The # of customers per day the firm's service system is designed to serve.

Level-Demand Strategy

Capacity remains constant regardless of demand. When demand exceeds capacity, queue management tactics deal with excess customers

Chase-Demand Strategy

Capacity varies with demand

Poisson Distribution

Is often used to model customer arrivals

Queue Characteristics

- Queuing models assume infinite length of a queue

- Configuration can contain single or multiple lines

- Queue discipline describes the order in which customers are served

Service Characteristics

-Provided either by single server or by multiple servers who act in series or in parallel.

-Multiple servers, acting in parallel, referred to as a multiple-channel queuing system.

-Multiple servers acting in series is referred to as a multiple-phase queuing system.

-Single-channel, single-phase configuration is the most basic.

-Another characteristic of the service is the time required to complete each of the services provided.

Waiting Time Management Techniques

-Keep Customers Occupied

-Start the Service Quickly

-Relieve Customer Anxiety

-Keep Customers Informed

-Group Customers Together

-Design a Fair Waiting System

Eatertainment

Combination of restaurant & entertainment elements.

Entertailing

Retail locations with entertainment elements

Edutainment (infotainment)

Combines learning with entertainment to appeal to customers looking for substance along with play

Internet Distribution Strategies

-Internet retailing is growing faster than traditional retailing.

-Primary advantages of the Internet: ability to offer convenient sources of real-time information, integration, feedback, & comparison shopping.

-Many retailers today sell products exclusively over the Internet (a pure strategy), while others use it as a supplemental distribution channel (a mixed strategy).

Managing Service Quality

-Customer satisfaction with the service depends not only on the ability of the firm to deliver what customers want, but on the customers' perceptions of the quality of the service received.

-Service quality depends on the firm's employees to satisfy customers varying expectations.

Dimensions of Service Quality

-Reliability: consistently performing the service correctly and dependably.

-Responsiveness: promptly and timely service.

-Assurance: using employees who convey trust and confidence to customers.

-Empathy: providing caring attention to customers.

-Tangibles: the physical characteristics of the service including (Ex. facilities, servers, equip., & other customers.