OHT 9.

Chapter 9
Customer Relationship Management

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OHT 9.2

Learning objectives
• Outline different methods of acquiring
customers via electronic media;
• Evaluate different buyer behaviour amongst
online customers;
• Describe techniques for retaining customers
and cross- and up-selling using new media.

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OHT 9.3

Issues for managers

• What is the balance between online and
offline investment for customer acquisition?
• What technologies can be used to build and
maintain the online relationship?
• How do we deliver superior service quality to
build and maintain relationships?

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OHT 9.4

Forecasts
• Gartner (www.gartner.com)
– $25 billion spent on CRM 2002
– $50 billion by 2005

– Yet 70% of CRM projects fail

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OHT 9.5

What is CRM?
• You have a job interview for Centrica
(AA, British Gas, Goldfish) working in the CRM team
www.theaa.co.uk, www.house.co.uk
• How would you explain the terms:
– CRM
– e-CRM
• Why does Centrica have a CRM function?
– Why is CRM different?
– What are benefits of this approach?

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OHT 9.6

E-CRM – a definition
• E-CRM is:

• Applying…
Internet and other digital technology…
(web, e-mail, wireless, iTV, databases)

• to…
acquire and retain customers
(through a multi-channel buying process
and customer lifecycle)

• by…
improving customer knowledge, targeting,
service delivery and satisfaction

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 OHT 9.7

Marketing applications of CRM

• A CRM system supports the following marketing applications:
• 1. Sales force automation (SFA). Sales representatives are supported in
their account management through tools to arrange and record customer
visits.
• 2. Customer service management. Representatives in contact centres
respond to customer requests for information by using an intranet to
access databases containing information on the customer, products and
previous queries.
• 3. Managing the sales process. This can be achieved through e-
commerce sites, or in a B2B context by supporting sales representatives
by recording the sales process (SFA).
• 4. Campaign management. Managing ad, direct mail, e-mail and other
campaigns.
• 5. Analysis. Through technologies such as data warehouses and
approaches such as data mining, which are explained further later in the
chapter, customers characteristics, their purchase behaviour and
campaigns can be analysed in order to optimize the marketing mix.

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 OHT 9.8

Three phases of
customer relationship management

Figure 9.1 Three phases of customer relationship management

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 OHT 9.9 A summary of an effective process
of online relationship building

Figure 9.2 A summary of an effective process of online relationship building

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OHT 9.10

From old media to new media

• 1. From push to pull.
• 2. From monologue to dialogue.
• 3. From one-to-many to one-to-some and one-to-one.
• 4. From one-to-many to many-to-many
communications
• 5. From ‘lean-back’ to ‘lean-forward’.
• 6. Form of tools changes.
• 7. Increase in communications intermediaries.
• 8. Integration remains important.
See diagrams in chapter 8 also on media characteristics
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 OHT 9.11 Offline and online communications
techniques for e-commerce

Figure 9.3 Offline and online communications techniques for e-commerce

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OHT 9.12

Evaluate the effectiveness of the tools with

AIMRITE
• Audience: can the target audience be reached?

• Impact: can message get through the clutter?

• Message: is message communication effective?

• Response: is responding easy (direct/indirect)?

• Internal management: can the tools be

managed readily by agency or internally?
• The End Result: What are the response rates, costs and
returns?

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OHT 9.13
AIMRITE – Online advertising
Positive features Negative features
Audience

Impact

Message

Response

Information
management

End Results

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 OHT 9.14 The relationship between banner
ads and destination sites

Figure 9.4 The relationship between online ads and destination sites
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OHT 9.15
Skyscraper to microsite example

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OHT 9.16

Standard landing page

http://www.norwichunion.com/products/
insurance/travel/single_annual_travel.htm
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OHT 9.17
Online ads - effectiveness
• Instruct, not hope • Brand the first frame
• Evolve, not cycle • Brand top of skyscrapers
• Flash, not GIF • Ditch ‘Click here!’
(Rich media) • High contrast
• Use large ad formats • Use < 15 ad elements
www.lemonad.com • Use large logos
• Include a human face
www.avantmarketer.com

But remember, the 6X rule from www.atlasdmt.com:

CTRs vary 6 times more on placement than creative
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OHT 9.18
AIMRITE – Search engine marketing
Positive features Negative features
Audience

Impact

Message

Response

Information
management

End Results

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OHT 9.19
Search engine marketing

Premium Sponsorships (Position:CPM)

Adwords select(PPC)

Position: CPC and CTR

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OHT 9.20

1 Search engine registration

• What is it?
‘Timely submission of domain names, especially campaign-
specific names to key search engines’.

• The issues:
1. Representation. Are you registered on the main search
engines? Do you check continuously?
2. Time to register. Plan ahead and make use of paid inclusion
services to ensure that campaign-specific URLs can be found
when your campaign goes live.
3. New search engines. Search engines change in popularity –
are you listed with the latest ones?

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OHT 9.21

2 Search engine optimization (SEO)

• What is it?
‘Improving your competitive position in the search engine
results listings’.

• The issues:
1. It’s not just meta-tags. Ignored by most search engines –
keyword frequency in body copy, <title> tags, headings and
links are much more important.
2. Doorway pages. Creating special pages optimised for
different product-related keywords and search engines is a key
technique for high listings.
3. It’s a continuous process. Search engine algorithms,
popularity and competitor activity all change, so to stay
competitive, SEO demands continuous attention (Use an
agency).

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OHT 9.22

Search engine indexing

Figure 8.14 Stages involved in creating a search engine listing

(Chaffey et al., Internet Marketing) © Marketing Insights Limited 2004
 OHT 9.23

3 Search engine advertising (PPC)

• What is it?
‘Keyword-based, paid for placements or sponsored links to increase your
prominence (Position based on bid)’.
• The issues:
1. SEO is not enough. Increasingly, SEO alone does not give sufficient
visibility in many search engines. Paid placements are necessary to ensure
visibility.
2. Is your PPC effective? As with any campaign, there are more and less
effective approaches. Case study shows that by rationalising PPC, sales per
day were doubled, while the cost per click was halved.
3. It’s a continuous process. Competitor activity varies, so automated bid
management tools need to be used to optimise the bids, with frequent reviews
of strategy effectiveness
(www.gotoast.com, www.bidbuddy.co.uk).

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OHT 9.24
Overture / Freeserve ad options

Bid: £1.50

Bid: £1.32

Bid: £1.31

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OHT 9.25
AIMRITE – Affiliates and links
Positive features Negative features
Audience

Impact

Message

Response

Information
management

End Results

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 OHT 9.26

Link building

• Affects ‘Page Rank’ or link popularity in Google

– Type primary keywords into Google
– Use “link:site name” or Optilink to find referrers
– Beat them: in number AND reputation (referring text)
• A structured link-building programme will reap benefits both in
terms of visitors and enhanced Google listings.
• Reciprocal links are free, but are mainly practical for
intermediaries.
• Online PR is another form of link building. Is this neglected?

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 OHT 9.27

Affiliates
• What are they?
‘A commission based arrangement where referring sites
(publishers) receive a commission on sales by merchants’.

• ‘Affiliate networks’ such as Trade Doubler have over 400,000

companies across Europe. Used for financial services and
travel as well as retailers. MFI derives 8% of its online revenue
from affiliates
• Affiliates help expand reach through niche sites

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OHT 9.28
AIMRITE – E-mail marketing
Positive features Negative features
Audience

Impact

Message

Response

Information
management

End Results

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OHT 9.29
Why e-mail marketing?

• Higher response rates

• Shorter campaign creation
• Faster response
• Shorter overall cycle time
• Lower costs
– More precise targeting
– Multiple messages to convert
– More detailed testing and measurement

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OHT 9.30

OHT 9.30 Example e-mail – rented list

Example e-mail – rented list

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OHT 9.31

Example e-mail house list

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 OHT 9.32

Example e-mail multi-message campaign

Figure 8.17 Example of a campaign structure for an e-mail campaign.

From Chaffey et al. Internet Marketing.
Supplied by UK-based e-mail marketing specialists Harvest Digital
(www.harvestdigital.com) © Marketing Insights Limited 2004
 OHT 9.33

Reasons why businesses do not

buy supplies online

Figure 9.5 Reasons why businesses do not buy supplies online

Source: DTI (2002) © Marketing Insights Limited 2004
 OHT 9.34 The simple buying process

Figure 9.6 The simple buying process

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OHT 9.35
Online behaviours
• Directed information seekers. Will be looking for product, market
or leisure information such as details of their football club’s
fixtures. This type of user tends to be experienced in using the
web and they are proficient in using search engines and
directories.
• Undirected information seekers. These are the users usually
referred to as surfers, who like to browse and change sites by
following hyperlinks. This group tends to be novice users (but not
exclusively so) and they may be more likely to click on banner
advertisements.
• Directed buyers. These buyers are online to purchase specific
products. For such users, brokers or cybermediaries who compare
product features and prices will be important locations to visit.
• Bargain hunters. These users want to use the find offers available
from sales promotions such as free samples or prizes.
• Entertainment seekers. Users looking to interact with the web for
enjoyment through entering contests such as quizzes.
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 OHT 9.36

Responses to question: ‘How did you find the

product website you used to research a purchase?’

Figure 9.7 Responses to question: ‘How did you find the product website you
used to research a purchase?’
Source: DoubleClick (2003b) © Marketing Insights Limited 2004
 OHT 9.37 RS Components web site
(www.rswww.com)

Figure 9.8 RS Components web site (www.rswww.com)

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 OHT 9.38 Schematic of the relationship
between satisfaction and loyalty

Figure 9.9 Schematic of the relationship between satisfaction and loyalty

Source: Adapted and reprinted by permission of Harvard Business Review from graph on p. 167 from
‘Putting the service-profit chain to work,’ by Heskett, J., Jones, T., Loveman, G., Sasser, W., and
Schlesinger, E., in Harvard Business Review, March–April 1994. Copyright © 1994 by the Harvard
Business School Publishing Corporation, all rights reserved.
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 OHT 9.39 Personalisation on Silicon.com
(www.silicon.com) for an IT manager audience

Figure 9.10 Personalization on Silicon.com (www.silicon.com) for an IT manager

audience
Used with permission from CNET Networks UK Ltd. © 2001,
all rights reserved © Marketing Insights Limited 2004
OHT 9.40 Permission marketing
• Interruption marketing
– To promote we must compete with many
marketing messages and cut into what the
customer is currently doing.
• Permission marketing
– Give customers the option to receive
information if they feel it will be of value to
them.

Opt-in Opt-out
Incentivise www.permission.com
© Marketing Insights Limited 2004
OHT 9.41 What exactly is permission marketing?

Seth Godin: www.permission.com

B2B Example: www.microstrategy.com

• Key features:
– Opt-in
– Based on initial incentive
– Opt-out
– Continue incentives through time to:
• Learn more about customer
• Tailor product offerings
• Sell more
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 OHT 9.42 Permission marketing
vs SPAM

Figure 9.11 Reactions to permission marketing vs SPAM

Source: DTI (2000)
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 OHT 9.43
IDIC

Source: Chaffey et al. (2003) © Marketing Insights Limited 2004

 OHT 9.44 Cisco site feedback options
(www.cisco.com)

Figure 9.12 Cisco site feedback options (www.cisco.com)

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 OHT 9.45 Overview of the components of
CRM technologies

Figure 9.13 An overview of the components of CRM technologies

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