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Customer Relationship Management by IBM
Customer Relationship Management by IBM
Management by IBM
Project on
CUSTOMER RELATIONSHIP MANAGEMENT
With focus on IBM
IBM is one of the leading multinational high-technology firms that markets hardware,
software, and services to B2B customers. IBM intends to proactively manage individual
customer relationships to maximize overall firm profitability. A variety of marketing factors
including product/service innovation, product/service pricing, transaction channel, mass
market advertising, and individual customer contacts are expected to impact customer
profitability. Among these factors, the level of customer contacts is most applicable for
customization across customers, and is the focus of differential resource allocation for
managing customer profitability at IBM. Customers are contacted through several channels,
such as salesperson, direct mail, telesales, e-mail, and catalogs. At the time of this study, the
channels used for contacting a customer depended largely on the past relationship with a
customer. For example, customers who have employees ranging from 100 to 999 (the
midmarket) are contacted primarily through direct mail, telesales, e-mails, and catalogs.
Customer management activities at firms involve making consistent decisions over time,
about: (a) which customers to select for targeting, (b) determining the level of resources to be
allocated to the selected customers, and (c) selecting customers to be nurtured to increase
future profitability. Measurement of customer profitability and a deep understanding of the
link between firm actions and customer profitability are critical for ensuring the success of
the above decisions. We present the case study of how IBM used customer lifetime value
(CLV) as an indicator of customer profitability and allocated marketing resources based on
CLV. CLV was used as a criterion for determining the level of marketing contacts through
direct mail, telesales, e-mail, and catalogs for each customer. In a pilot study implemented for
about 35,000 customers, this approach led to reallocation of resources for about 14% of the
customers as compared to the allocation rules used previously (which were based on past
spending history). The CLV-based resource reallocation led to an increase in revenue of
about $20 million (a tenfold increase) without any changes in the level of marketing
investment.
Each year, IBM sorts customers based on their score on a customer-level metric and
prioritizes marketing contacts to customers based on this score. The choice of the metric
(used to score customers) is considered as one of the primary factors that determines the
return on marketing and is constantly refined by IBM with the objective of maximizing
potential value from customers. Through the 1990s, a customer spending score (CSS) was
used to score customers. CSS was defined as the total revenue that can be expected from a
customer in the next year. Customers from the top one or two CSS deciles, depending on the
customer segments (small to medium businesses or large companies), are selected for future
targeting. Over the years, additional components were added to augment CSS. Ultimately, the
CSS score was abandoned because it focused primarily on customer revenues (i.e., the top
line) and largely ignored the variable cost of serving a customer--and therefore, the bottom
line. Trials of customer profitability and customer lifetime value (CLV) were proposed as an
alternative for scoring customers. In this study, we present the case study of how CLV was
measured, evaluated, and implemented in IBM for prioritizing marketing resources among
customers in the midmarket. The objectives of the customer selection process at IBM are
summarized by the following questions:
3.How can the selected customers be nurtured in order to increase future profitability?
To accomplish these objectives, IBM adopted the following CLV management framework.
The CLV management framework is intended to guide the marketing activity directed
towards customers each year. Customer Lifetime Value Management Framework and Impact
Assessing the Impact of the Customer Lifetime Value Management Framework
We now describe the two-stage process used to determine whether the CLV management
framework achieved its objectives. In the first stage, several models were developed to
generate inputs for implementation. In the second stage, a field study was conducted based on
recommendations from the models developed in the first stage. In the field experiment, we
tested an initial theoretical assumption within IBM that, an increase in contacts to the right
customer creates high value from low value customers when all other drivers are similar.
IBM used CLV, coupled with other qualitative inputs from the sales team, to base their
marketing decisions for a sample of midmarket customers.
Phase I: Defined and developed a model to measure CLV for each customer.
Phase II: Conducted a prediction exercise to compare the performance of customers rank
ordered based on the traditionally used metrics with that of CLV
Phase III: To maximize CLV, we developed an optimal contact strategy to allocate contact
resources to each customer. Once the guidelines for the optimal number of contacts (in
different channels of communication--telephone, catalog, e-mail, and direct mail) with the
customers are established, we then observed the performance in the marketplace based on our
recommendations.
Phase IV: Propensity models were built for each product category to identify the product to
feature in addition to the CLV measure, which helps to select the customers for targeting; and
the optimization process, which suggests the contact strategy.
Phase V: Customers were split into two groups--(1) not contacted so far (Not Contacted Until
2004 group), and (2) previously contacted (Contacted by 2004 group). Marketing contacts
were then reallocated to align resources to the high CLV customers.
Phase VI: Customers with potential for higher CLV, but not contacted so far--i.e., the Not
Contacted until 2004 group--were contacted in 2005 as per the recommendations of the CLV-
based approach. The performance of this group of customers was compared between the
years 2004 and 2005 to illustrate the impact of the model recommendations. Further, the
model recommendations were evaluated even for the intersection of the Contacted by 2004
group and the Contacted in 2005 group to see if we missed out on existing source of
revenues. In other words, if we recommended that someone be contacted in 2005, did the
customers provide higher revenue than the customers who were not contacted
Drivers of CLV. Although firms are interested in knowing the lifetime value of their
customers, they are also keen on identifying the factors that are in their control that could
increase the value of their customers. Reinartz and Kumar (2003) identified the factors that
explain the variation in the profitable lifetime duration among customers. The antecedents of
profitable lifetime duration are grouped as exchange characteristics and customer
heterogeneity. The exchange characteristics define and describe the nature of the customer-
firm exchange, whereas firmographic variables capture customer heterogeneity. Different
exchange characteristics that we include as drivers of purchase propensity and contribution
margin include past customer-spending level, cross-buying behavior, purchase frequency,
recency of purchase, past purchase activity, and the marketing contacts by the firm. IBM also
evaluated interactions between the drivers to accommodate for nonlinearity in the influence
of the drivers on purchase incidence and contribution margin. Drivers of marketing contacts
were based both on theory and discussions about how marketing contacts are executed at
IBM. The drivers of contact history include past customer spending, past levels of marketing
contacts, customer relationship (or exchange) characteristics such as cross buying and
recency, and past purchase activity. The past levels of marketing contacts were by definition
equal to zero for establishment without contact history. Similar to the purchase propensity
and contribution margin equations, we included interactions between the drivers in the
marketing contacts equation. When assigning predictors, we ensured that there is at least one
unique predictor for each dependent variable, i.e., marketing contacts, purchase propensity,
and contribution margin, to ensure model identification (Greene 1993).
Customer firm graphics were included as drivers of a customer-specific intercept (a in
Equation (A7) in Appendix A) in all three components of our model framework: marketing
contacts, purchase propensity, and contribution margin. The various firm graphics included
were the sales of an establishment (a measure of the size of the establishment), an indicator
for whether the establishment belonged to the B2B or B2C industry category, and the
installed level of PCs in the establishment (PCQ), a measure of the level of demand for IT
products in the establishment.
Regarding the level of marketing contacts, the results reflect IBM practices related to
contacting customers. The level of marketing contacts for a customer depends on the recent
purchase behavior of the customer, which is captured through the covariates--lagged
indicators of purchase incidence, lagged contribution margin, and the lagged number of
purchases made by a customer so far. Whereas a customer's past purchase behavior in general
determines whether a customer is contacted, the specific level of marketing contacts directed
towards a customer in a particular month is influenced to a large extent by the level contacts
for the customer in the two prior months. Finally, the interaction of cross buying and recency
of purchase reflects IBM's strategy of focusing marketing activities on customers who have
been actively purchasing products across several categories.
The heterogeneity distribution for the customer-specific intercepts indicate that although IBM
allocates more marketing contacts for customers who have a higher sales, the purchase
incidence and contribution margin is lower for these customers. This is possible because
customers who have higher sales (or larger companies) in general split their purchases across
several vendors (Bowman and Narayandas 2004). Similarly, customers in the B2B industry
are allocated more marketing contacts, but these customers have a lower purchase incidence
and lower contribution margin than customers in the B2C industries. The coefficients for
customer sales and industry category imply that IBM may benefit from reallocating the
marketing contacts. Finally, customers who have a large installed base of PCs (an indicator of
the demand for IT-related products) have a higher purchase incidence and contribution
margin and are contacted more by IBM.
Difference between CLV and the Traditionally Used Metrics. Although recency-frequency-
monetary value (RFM), past customer value (PCV), and CSS are commonly used for
computing the customer's future value, they suffer from the following drawbacks. (3) RFM
and PCV are not forward looking and do not consider whether a customer is going to be
active in the future. These measures consider only the observed purchase behavior and
assume that past behavior reflects future behavior. RFM assumes that the recency, frequency,
and monetary value of a customer's purchase explain the future value of the customer. It fails
to account for other factors (e.g., marketing actions) that help to predict the customer's future
purchase behavior and the customer's worth to the firm. Also, the weights given for R, F, and
M greatly influence the computation of a customer's worth. PCV fails to account for factors
(e.g., cross buying) influencing future purchase behavior of customers. It also does not
incorporate the expected cost of maintaining the customer in the future. This limits its use as
a valuable input in designing customer-level marketing strategies. As mentioned before, CSS
focuses only on customer revenue and ignores the cost of serving a customer. On the other
hand, the CLV measure incorporates the probability of a customer being active in the future,
the future contribution margin, and the marketing costs to be spent to retain the customer. All
these factors used to measure CLV are essential for designing customer-level marketing
strategies that maximize firm value.
Metrics Evaluation: The CLV score for each customer was computed using information from
the predictions of marketing contacts, purchase incidence, and contribution margin (obtained
from the proposed modeling framework illustrated in Appendix A), as well as the unit
marketing costs for each channel. Seventy-two months of historical data were available for
model development. Traditional metrics were also computed using the first 54 months of
data. Customers were then rank ordered based on the CLV measure as well as on the
traditionally used metrics. The comparative performance of the customers (i.e., the observed
profits provided by the customers in the last 18 months) in the top 15% of each metrics' list
clearly shows the power of CLV to identify the best customers for future targeting (see Table
4). Previous research in contractual settings has found that current profit is a good indicator
of future profitability (Donkers et al. 2007). In contrast, our results indicate that in non
contractual settings, at least with regard to selecting high-potential customers for future
targeting, current profit performs worse than estimates of future profitability.
To compute the optimal contact strategy, IBM would make the same number of contacts to a
particular customer every month over the three-year prediction horizon. IBM contacts its
midmarket customers through direct mail, telesales, and e-mail. Within IBM, the
implementation of marketing contacts within each channel is managed by separate groups.
Obtaining the support and participation of each marketing channel group would have
significantly delayed the implementation of the field experiment. Also, the field experiment
was intended to illustrate the usefulness of the CLV management framework within the
organization. We expected the success of the field experiment to improve the chances of
organization-wide adoption of this framework and also to help us obtain the participation of
all the marketing channel groups in future campaigns. Therefore, we identify the optimal
level of marketing contacts across all channels, and not the optimal level for each channel.
For example, some customers in Segment D are not being contacted at all, and some other
customers in that segment are contacted at a very low frequency. The proposed framework
recommends that customers in Segment D be contacted more so that the resulting CLV is
higher. This exercise indicates that the resource allocation strategy suggested by CLV is
different from that suggested by a CSS metric. However, we would be able to assess whether
the different resource allocation strategy suggested translates into higher profits for the firm
only through a field experiment. The optimal level of marketing contacts is used to guide the
determination and budgeting of customer-level marketing resources. However, recognizing
the fact that the optimization framework does not consider competitive reactions and changes
in the product/service space, the optimal level of contacts served only as a planning tool.
During implementation, a customer was contacted until a purchase, or when an additional
contact would result in negative profitability. Because the customer responses in the current
period are augmented to the customer database, repetition of the CLV measurements and the
determination of the corresponding optimal level of contacts over time are expected to reduce
the discrepancy between the planned optimal level of resources and the realized level of
resources.
The CLV ranking determines which customers to target; the propensity model determines
which products to pitch to the targeted customers. In Phase IV IBM estimated a customer's
propensity to purchase in each of the product categories. A series of binomial logit models
are estimated (one for each product category) to predict customer purchase propensity. The
use of sophisticated modeling approaches that accommodate for coincidence of product
category purchases such as the multivariate probit model (Seetharaman et al. 2006) are also
being evaluated currently for predicting purchase propensity. However, the simple binary
logistic model approach was used in this study because it was the primary methodology used
in the organization at the time, and we wanted to clearly evaluate the benefits from
implementing the CLV approach first. Propensity models were built to predict the propensity
of buying products within the following categories--hardware, software, and services. Our
assumption is that the customer's need for certain product types as well as familiarity with the
local categories is the key drivers of product category choice. The drivers of product category
choice that have a significant influence include (1) the proportion of same-category
purchases, i.e., the dominance of a category over others; (2) the depth of same-category
purchases measured as the number of products purchased within the focal category, i.e., the
knowledge of the focal category; and (3) the breadth of same-category purchases measured as
the number of different product types purchased within the focal category. Marketing
contacts are not included as a predictor in the logistic regressions because the customer
database currently does not register the product message in a marketing contact. The
percentage of correct classifications for the propensity models were 88%, 84%, and 89% for
the hardware, software, and services categories, respectively. A product message was used in
a marketing contact to a customer if the predicted purchase propensity for the category was
greater than 0.5 for that customer. The predictions from the propensity models were used to
provide further insight on the right product/service message to convey when contacting the
selected customers.
The second stage involves the field implementation of the models developed and validated
for measuring CLV, and the selection of the product message in the first stage. The general
guidelines for the second stage, which involves the implementation of the CLV management
framework, are provided below:
1. Assess the distribution of customer value.
2. Identify customers with high potential value that have been ignored in the past.
3. Select customers for contacting in the next year by dropping customers that were
targeted in the past but are predicted to have low CLV, and picking customers who
are identified in Step 2.
4. Provide the new customer list to the salespeople. Make them aware of the optimal
level of resources and the product message identified for each customer in Phase III
(in the first stage) as a guideline.
5. Record the revenue obtained from each customer and the resources that were
required to obtain the revenues.
6. Going forward to the subsequent year, re-estimate the CLV and propensity models
developed in the first stage with the new data obtained the prior year.
In Phase V, the marketing resources are aligned with customers who have the highest
potential. The customers are first divided into two groups--customers who have not been
contacted at all (the Not Contacted Until 2004 group), and customers who were contacted
previously (the Contacted by 2004 group). In each group, the customers were further divided
into deciles, and based on the distribution of CLVs across the deciles, it was recommended
that marketing contacts be reallocated from customers in deciles 10 in the Contacted by 2004
group to customers in the top three deciles of the Not Contacted Until 2004 group. For the
customers in the top three deciles of the Not Contacted Until 2004 group, we then obtained
the predictions for purchase probability for the three product categories from Phase IV.
Customers who had a high purchase propensity for at least one of the three product categories
were selected as candidates for resource reallocation. The candidate customers were then
rank ordered based on their CLV (provided in Table 6). Marketing resources were allocated
based on this rank order (i.e., higher CLV candidate customers were first allocated resources)
until all the resources that were available from deciles 10 of the "Contacted”.
2. INSTITUTING BEST PRACTICES;-
One can't apply B2C practices to B2B communities.
CRM is nothing short of a strategy which places CUSTOMERS in a pivotal position for the
organization. It changes the focus of the organization to better exploit its key relationship
with customers, to significant advantage for BOTH parties.
However, embracing Customer Relationship Management is often easier said than done. Of
course it requires commitment, but also needs an understanding and knowledge of the
concepts and successful and proven practices. Equally, a framework of tools can prove to be
invaluable in terms of ensuring accuracy and saving time/resources.
One of the examples to highlight the B2B relationship between the two well known firms
includes ING Bank and IBM.
IBM Customer Relationship Management practitioners are constantly provided many
opportunities to learn new skills and techniques. From Call Centre Transformation to
leveraging Customer Information in new ways, ensures that practitioners are exposed to the
very latest business and technical challenges facing our clients today. Within CRM, we have
focused heavily on developing a strong community of interest, ensuring great teaming and
co-operation across the various regions."
The ING Bank Business Challenge-- Facing the industry-wide challenges of tight
cost/income ratios, slow time to market, and increasing customer demands, Dutch banking
giant ING concluded that it needed to reorganize and streamline its internal business
processes across the enterprise if it was to gain a competitive edge on the commercial loans
market.
Dutch banking and insurance giant ING faced such a situation. It had diverse, segmented
channels and many discrete systems and processes spread across the globe. Workflows often
involved employees switching screens multiple times, re-entering the same data, overlapping
functionality, multiple systems involved in single processes, and little coordination between
business units. There was a great deal of human intervention involved in doing business, to
compensate for lack of unification in the bank’s IT systems and business processes. All of
this drove up costs and made it difficult to bring new products and services to market.
Reorganizing with outside help;- In 2007, ING concluded that it needed to change its
operational model in order to make the company more efficient, and hired outside
consultants. They identified the changes needed, but ING still needed to determine how to
execute them and called on IBM Global Business Services.
Meetings with IBM showed that there was a clear way to institute change, and in fact ING
was already using it: IBM Information Frame Work (IFW). IFW is an industry-standard
framework of best practices designed to streamline and improve operations across the
enterprise. IFW is technology-agnostic and includes configuration and deployment models
for aligning, streamlining and rationalizing internal processes in the banking industry. In an
earlier engagement, ING had instituted IFW to make parts of its global operations more
efficient, but the deployment was limited to IT processes.
In the more recent engagement, IBM helped ING come to the realization that IFW could be
extended beyond IT, into the business side of the organization, and could help to better
integrate both business and IT within the bank.
In many cases, the tried-and-true strategies for addressing these issues have run their course.
For example, the historically significant returns of enterprise wide applications and shared
services have already been realized. This means that CEOs, CFOs and line of business
leaders are looking for new ways to reduce costs, increase efficiency, free up capital and
divert resources to critical core competencies.
● Reduced costs
● Increased productivity
IBM’s Global Architectural Imperative (GAI) is the strategy IBM is following to implement
full globalization within IBM hardware and software.
Customer Benefits
IBM products following the globalization architecture deliver a variety of customer benefits:
Multilingual applications
Use a single server to support applications in different languages and applications that
support multiple languages simultaneously, reducing the cost and time to develop and
deploy applications worldwide
Flexibility
Design a network and deploy servers based on load and resources rather than
language support requirements since any server can support all the languages
Lower cost of ownership
Use the same version and patch level of a product throughout the world, reducing the
cost of support, maintenance, and training.
Consistent data handling
Use multiple IBM products with the assurance that each product will handle the data
(collation, date/time format) in the same way and consistent with established industry
standards
Shorter time to market
IBM's current target is for all Natural Language Versions (NLVs) to be delivered
within 60 days of the English product release. Many multinational customers will not
deploy a product until all the NLVs are available. The architecture imperatives
described on this page, in particular the single executable and localization packs,
greatly shorten the time it takes to deliver all the NLV's
Consistent delivery of maintenance releases, updates, fixpacks, patches
The single executable model improves on the current model by allowing executables
to be delivered independently of the translation so that new translated versions are
needed only when there are changes to the product's user interface.
IBM has provided tremendous solutions to many industries like automobile, insurance,
pharmaceuticals etc
1. TATA Motors-
TATA Motors is India's foremost, and the only fully integrated automobile manufacturer.
Established in 1945 as TATA Engineering & Locomotive Company (TELCO), to
manufacture locomotives and other engineering products, the company is today among the
world's top 10 producers of commercial vehicles. TATA Motors was also previously known
as TATA Engineering. It is today one of the biggest and most prominent companies in the
TATA group, with an annual revenue of $1.8 billion in 2001-02. Today TATA motors'
vehicles run in more than 70 countries.
The basic challenge was to provide a Dealer Management System (DMS) solution.
All in all, TATA Motors required a standardised solution that would provide them with:
The new infrastructure from IBM also gives the company a foundation to accommodate rapid
future growth and ever-changing demands from the market place.
2. HDFC Bank-
HDFC Bank is a prominent bank in the private sector and caters to a wide range of banking
services including commercial and investment banking on the wholesale side and
transactional/branch banking on the retail side. HDFC Bank also acts as a clearing/settlement
bank to various leading stock exchanges. It has a network of over 367 branches and 900
ATMs, spread over 177 cities across the country.
With an authorized capital of Rs.450 crores and paid-up capital of Rs.282 crores, the annual
revenue of HDFC bank for the year 2004 was Rs.1817.9 crores and the net profit was
Rs.509.5 crores.
Through the above examples it can be seen that IBM has provided solutions for long-term
benefit.
4. Relationship Marketing
The dynamic nature of the Internet has changed the playing field, reshaping how we market
our products and services. Companies that did not exist five years ago are now capturing not
only customer attention and imagination but dollars from traditional merchants and channels
with the promise of “you can get it on the Web the way you want it, when you want it,
quickly and easily”.As boundaries between industries, channels, even buying and selling, are
blurring, the earlier wait-and-see attitude by some direct marketers and brick-and-mortar
retailers has now become a mandate to use the Internet to leverage the channels and brands
they have worked long and hard to establish. The Internet challenge for merchants and
businesses is to hold onto
valued customers while creating new loyal ones. How do you do it? Through effective
relationship marketing. Relationship marketing is the shift from a product-centric paradigm to
a customer-centric one, earning customers loyalty and selling them services and goods over a
lifetime, maximizing revenue per customer. The approach is to provide customers with
personalized, pleasant experiences: to make them feel special by anticipating and meeting
their individual needs. For businesses in a customer-centric world, the Web is just one more
channel to integrate into the other customer touch points in a comprehensive relationship
marketing strategy. This explores how relationship marketing, founded on the customer-
centric paradigm, can help you better capitalize on e-commerce in both business-tobusiness
and business-to-consumer environments. IBM relationship marketing components include
advertising, pricing and promotion and customer profiling. Since the advent of mass
production, the focus of marketing and merchandising has been product-centric .In the last
two decades, as marketing has become increasingly more sophisticated, manufacturing more
flexible, and competition global, the need for and possibility of a new customer centric
paradigm has emerged, making the goal of relationship marketing a reality. Many factors
contributed to the rise of relationship marketing.
Selling many products over time to one customer yields savings on customer acquisition and
recruitment costs. An individuals interests, attitudes and values (psychographics) provide
important insights into whole new types of products and services that he might be interested
in. For customers, an ongoing relationship with a supplier is convenient, saves time and
money and provides value in having their needs anticipated. The bottom line for merchants is
that relationship marketing helps to develop new sources of sales, increase customer loyalty
and reduce cost of operations all resulting in more revenue and profit.
While relationship marketing is often thought of as a business-to-consumer endeavor, in
reality it has long been employed in the business-to-business world by sales representatives
who monitored what their clients were doing and suggested appropriate products and
services. This paper outlines traditional approaches as well as a new generation of smart
marketing technologies, enabled through the Internet, that can bring such thoughtful selling to
both Internet and traditional channels.
Relationship marketing is now being pursued by many kinds of organizations in business-to-
business and business-to-consumer venues, including:
Going from customer awareness to an online sale can happen immediately. Product
information, answers and offers should drive to complete the sale, and make the entire
process as easy as possible.
Service and support can be delivered faster and cheaper due to 24x7 availability and
self-service capabilities. These properties can enable the Internet to become the
central point of contact for increasing numbers of customers as Web usage grows.
Your e-commerce site can also become a synchronization point for all of your service
and support channels .
Personalization:
Personalization techniques
1. Customization
Customer controlled page and site layout
Customer/merchant controlled feeds, e.g., news, weather, stocks, etc.
2. Targeting
Explicit buyer groups
Rules
3. Prediction
Based on group behavior and/or individual behavior
4. Functional Components
User Profile developed from multiple sources, including registration, self
profiling, current activity and data mining
Content selection from a range of internal and external information sources
Rules applied to achieve marketing, sales and business optimization
objectives
Business analysis of Web site statistics and traditional customer data
sources
5. Business intelligence
Business intelligence closes the marketing loop by helping you understand the customer and
gauge the effectiveness of campaigns. These systems can find patterns in customer
purchasing so you can tune your marketing campaigns for maximum effectiveness or enhance
up- and cross-selling opportunities. Business intelligence components for Net.Commerce
include:
Crystal Reports Net.Commerce-specific reports available for fast startup and early
discovery of what is happening on your site.
IBM Surfaid IBM service that provides analysis on the effectiveness of your site and
site design, ads and promotions.
net. Genesishelps perform Web site analysis using Web site-specific data. It enables
powerful, flexible analysis and reporting, collection and interpretation of visitor
behavior information and correlation of this behavioral data with business and
customer information.
Business integration
Business integration ties various channel transaction and support systems together, sharing
information and relaying transactions, if appropriate. Business integration components for
Net Commerce include:
IBM Commerce Integrator, optional Net Commerce software and tools, which
provide open, intelligent ways to connect business processes within your company or
between your company and your business-to-business customers, suppliers and
trading partners. With Commerce Integrator, you can establish system-to-system
links between EDI, ERP, supply chain and customer relationship management
applications in a fraction of the time required with other integration tools. This is
because knowledge of many common business processes, document formats,
transactions and transport methods is built in.
Marketing: advertising
Advertisements are designed to capture the customer’s attention, but their objectives for e-
commerce include driving traffic to the site, generating immediate sales through the ad and
gaining market and mind share. Exciting ads that deliver business results must be dynamic,
placed in the right place at the right time, enable click-through and buy-now actions.
Advertising components for Net Commerce include:
IBM Hot Media, which provides a rich medium in which a buyer can pick up, rotate
or zoom in on virtual products. It brings the Web shopping experience one step closer
to an in-person experience without restricting download performance.
The Banner Ads reference application, which selectively displays advertising or
messages based on shopper ID or rotational basis and can link out to other locations.
net.Gravity, which provides comprehensive online marketing management solutions
that give organizations direct marketing techniques, targeted advertising, ability to
drive customers to destination sites, scalability to start small and grow big (even
across a network of sites) and the flexibility to integrate with other packages or
systems.
Marketing: pricing/promotions
Pricing and promotions play critical roles in attracting traffic to your site and in improving
conversion rates. Then, in trying to maximize profit from your e-commerce site, you need to
select from a range of price policies, sometimes even while the customer is online, browsing
the catalog. Pricing and promotion components for Net Commerce include:
Time-based prices, which simplify price administration by providing start and end
effective dates for the advance scheduling of pricing changes.
Flexible discounting options which can: offer discounts at a product, sub-order, or
order level ,offer discounts to all buyers or restrict them to members of shopper
groups be calculated based on total order value, unit value or percentage.
Priority pricing, which enables you to prioritize different prices to temporarily
override regular prices for special occasions.
Euro-currency conversion, which translates prices into euros for international
coverage.
On-site coupons creation, enabled by the e-coupon reference application, which can
be stored by individuals in a coupon caddy and applied against future purchases.
Marketing: merchandising:
The goal of merchandising is to maximize your share of the customer’s wallet share. While
the range of merchandising strategies is limited only by one’s imagination, some typical
strategies include: up-selling (to sell a more feature-rich and profitable item), cross-selling (to
sell an additional, related item), accessorization (to sell add-ons) and substitution (to offer an
in-stock item in place of an out-of-stock item the customer may have requested).
Merchandising components for Net Commerce include:
The Accessorizer reference application, a tool for Net Commerce to associate
products and their accessories. It alerts customers about additional items to consider
purchasing when they place an item in the shopping cart.
IBM Corepoint, a suite of products that can work in conjunction with Net Commerce to
provide multiple avenues and means of service and support for customers, including: E-mail
support using Mail Analyzer Web-based customer support and self-service problem
determination
Web-based collaboration based on voice over IP Web-enabled sales force automation.
Business Evolution*, which offers Web-based customer assistance through e-mail, i-
mail (live messaging), chat and call-back.
Sideware, which enables customer service representatives to answer questions, send
out Web catalog pages to the customer, synchronize browsers and update
Net Commerce, the award winning e-commerce server, has the flexibility to exchange
customer relationship marketing information with the systems that support any of the other
channels, and can play an important role in pulling all the information together for your
marketing and customer support staff (working in a call center, for example), as well as Web-
savvy end customers wanting to check the status of all their transactions.
With Net Commerce, you can start simply, and over time extend the relationship marketing
capabilities of your e-commerce site to include all the capabilities mentioned above and many
more. So, no matter what business processes participate in relationship marketing in your
organization, IBM Net Commerce can create the single view that is so critical to making
good marketing judgement in structuring relationship marketing plans.
IBM Net Commerce can help deliver important benefits to end customers as well sellers,
suppliers and merchants.
End-customer benefits:
End-customer benefits of relationship marketing can pay dividends of increased loyalty and
lifetime revenue to your business. Some key customer benefits include:
Higher utility- Personalized offers based on understood customer needs can meet a higher
share of those real needs, and so represent higher utility to customers. You then have the
opportunity to convert that utility into higher value and loyalty.
Greater convenience-. As the site delivers greater accessibility, more comprehensive
customer support and service, and anticipates more needs of the buyer, the level of
convenience increases, which encourages buyers to keep visiting your site.
More confidence- As your products and services become more highly tailored to the buyer’s
needs, the buyer’s confidence in the site increases, which erects a barrier to their exploration
of competitive services.
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