Electronic Commerce - 702054

CHAPTER 7: CUSTOMER
RELATIONSHIP MANAGEMENT
 Contents

• 7.1. What is e-CRM?

• 7.2. Conversion marketing
• 7.3. The online buying process
• 7.4. Customer acquisition management
• 7.5. Customer retention management

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 Contents

• 7.6. Excelling in e-commerce service

quality
• 7.7. Customer extension
• 7.8. Technology solutions for CRM

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 Learning outcomes

• 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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 7.1. What is CRM?

• You have a job interview for a company

such as Future Shop or Staples working in
the CRM team
• How would you explain the terms:
– CRM / E-CRM
• Why does the company have a CRM
function?
– Why is CRM different? / What are benefits of
this approach?
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 7.1. What is CRM?

• It is a strategy used to learn more about

customers' needs and behaviors in order to
develop stronger relationships with them.
• An approach to building and sustaining
long-term business with customers

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 7.1. What is CRM?

Dave Chaffey, [2009], E-business and e-commerce management: strategy, implementation

and practice 4th edition, Prentice Hall, USA, page 483

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 7.1. What is CRM?

• Marketing applications of CRM

• A CRM system supports the following
marketing applications:
– Sales force automation (SFA).
– Customer service management.
– Managing the sales process.

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 7.1. What is CRM?

• Marketing applications of CRM

– Campaign management.
• Managing ad, direct mail, e-mail and other
campaigns
– Analysis.
• Through technologies such as data warehouses
and approaches such as data mining,

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 7.1. What is CRM?

• 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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 7.1. What is CRM?

• E-CRM – Benefits
– What benefits can e-CRM produce?
– What’s Wikinomics and how can a company
take advantage of it to enhance CRM?
– What is permission marketing?
– What is customer profiling?
– What is IDIC? Identification, differentiation,
interactions, and customization

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 7.2. Conversion Marketing

• Using marketing communications to

change the potential customers
– to actual and existing customers to repeating
customers
• Many companies invest primarily in
customer acquisition but not enough in
conversion.
• What can be done to improve the
conversion rate?
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 7.3. The online buying process

• What is the typical online and offline

purchase process?
• How can online marketing communications
support the purchase process?

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 7.3. The online buying process

• Searching behaviors
• Directed info seeker
• Undirected info seeker
• Directed buyer
• Bargain hunters
• Entertainment seeker

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 Figure 9.3 A
summary of
how the
Internet can
impact on
the buying
process for a
new
purchaser

Dave Chaffey, [2009], E-business

12/12/2016
and e-commerce management: strategy, implementation
702054 - Marketing and Advertising in E-Comm 16
and practice 4 edition, Prentice Hall, USA, page 493
th erce
 7.3. The online buying process

• Differences btw B2C and B2B Buyer

Behavior
– Market structure
– Nature of the buyer unit
– Type of purchase
– Importance of Trust

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Figure 9.4 A
model of the
relationship
between
different
aspects of
trust and
consumer
response
based on the
categories of
Bart et al.
(2005)
Dave Chaffey, [2009], E-business
and e-commerce management:
strategy, implementation and
practice 4th edition, Prentice Hall,
USA, page 496

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 7.4. Customer acquisition
management

• The characteristics of interactive Marketing

Comm
– From push to pull
– From monolog to dialog
– From 1:M to 1 to some and 1:1
– From 1:M to M:M

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 7.4. Customer acquisition
management

• The characteristics of interactive Marketing

Comm
– From lean-back to lean-forward
– The medium changes the nature of the
standard marketing communication tools
– Increase in communication intermediaries
– Integration remains important

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 Figure 9.6 Online and offline communications techniques for e-commerce
Dave Chaffey, [2009], E-business and e-commerce management: strategy, implementation
and practice 4th edition, Prentice
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Marketing page in499
and Advertising E-Comm 22
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 7.4. Customer acquisition
management

• Assessing marketing communications

effectiveness
• Acquisition cost
– Per visitor / Per lead / Per sale
• Bounce rate
– % of visitors entered the site but left
immediately after viewed one page only

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 7.4. Customer acquisition
management
Dave Chaffey, [2009], E-business and e-commerce management: strategy, implementation
and practice 4th edition, Prentice Hall, USA, page 502

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 7.4. Customer acquisition
management

• Online Marketing Communication

– Search engine marketing
– Assessing the effectiveness of a web
campaign
– How does Google work?
• Crawlingindexingrankingquery request and
result serving

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 7.4. Customer acquisition
management

• Online Marketing Communication

– Keyphrase analysis
– Search-engine optimization—review

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Dave Chaffey, [2009], E-business and e-commerce management: strategy, implementation
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and practice 4th edition, Prenticeerce
Hall, USA, page 504
Dave Chaffey, [2009], E-business
12/12/2016
and e-commerce management: strategy, implementation28
702054 - Marketing and Advertising in E-Comm
and practice 4th edition, Prenticeerce
Hall, USA, page 506
 7.4. Customer acquisition
management

• Online Marketing Communication

– Online PR
• Maximizing favorable mentions of an organization,
its brands, products, to web sites on 3rd-party web
sites
• Communication with media online
• Link building
• Blogs, podcasting and RSS

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 7.4. Customer acquisition
management

• Online Marketing Communication

– Online PR
• Online community and social networks
• Marketing how your brand is presented on 3rd
party sites
• Creating a buzz-online viral marketing

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Dave Chaffey, [2009], E-business and e-commerce management: strategy, implementation
and practice 4th edition, Prentice Hall, USA, page 515
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 7.4. Customer acquisition
management

• Online Marketing Communication

– Online Partnership
• Affiliate marketing
• What’s the differences between online sponsorship
and affiliate marketing?

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 7.4. Customer acquisition
management

Dave Chaffey, [2009], E-business and e-commerce management: strategy, implementation

and practice 4th edition, Prentice Hall, USA, page 515

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 7.4. Customer acquisition
management

• Online Marketing Communication

– Interactive Advertising
• What is media multiplier/halo effect?
• Purpose of Interactive Advertising
– Delivering content / Enabling transactions /
Shaping attitudes / Soliciting response /
Encouraging retention

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 7.4. Customer acquisition
management

• Online Marketing Communication

– Interactive Advertising
– Interactive ad target options
– Interactive ad formats
• Banner size, message length, promotional
incentive, animation, action phrase, company
brand/logo

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 7.4. Customer acquisition
management

• Online Marketing Communication

– Media planning
– E-mail marketing
– Viral marketing
• Three important factors
– Creative Material /Seeding—Find the starting
point / Tracking

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 7.5. Customer retention
management

• Goals of Customer Retention

– Retain customers
– Keep customers using online channel
– Satisfaction  loyalty  profitability
– How to keep customers satisfied?
– Experience from Dell—ref. table 9.4 on p. 528

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 7.5. Customer retention
management

• Personalization and mass customization

– Mass customization — deliver customized
content to groups of users through web or
email
– Collaborative filtering — deliver specific info
and offers based on the interests of similar
customers

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 7.5. Customer retention
management

• Online Community
– Online Community becomes important to the
success of the business
– Various 3rd party online communities and
cooperation sponsored communities have
been established in the recent years.

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 7.5. Customer retention
management

• B2B, in many cases B2C, communities are

commonly built based on
– purpose-people who do the similar jobs or
achieve a similar objectives
– Position
– Interest
– Profession

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 7.5. Customer retention
management

• Online Community
• Do we need an online community?
• How to build one?
• Questions to be asked before start a
community
• Typical problems
– Empty community / Silent community / Critical
community

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 7.5. Customer retention
management

• Managing Customer activity and value

– Increase # of new users
– Increase % of active users
– Decrease % of dormant users
– Decrease % of non-activated users

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 7.5. Customer retention
management

• Retention metrics are often used

– Repeat-customer conversion rate
– Repeat customer base
– # of transaction per repeat customer
– Revenue per transaction of repeat customer

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 7.5. Customer retention
management

• Lifetime Value Modeling

• Total net benefit that a customer or a group
of customers will provide over their total
relationship with the company
• What can LTV be used for?
– Ref. p. 535

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 Figure 9.19 An example of an LTV-based segmentation plan
Dave Chaffey, [2009], E-business and e-commerce management: strategy, implementation
and practice 4th edition, Prentice
12/12/2016 Hall,
702054 USA,
- Marketing andpage 535in E-Comm
Advertising 45
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 7.6. Excelling in e-commerce
service quality

• Improving online service quality

– Tangible
• easy of use and visual appeal of the site
– Reliability—availability of the site
– Responsiveness
• speed of page load, speed of responses to
questions, if any

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 7.6. Excelling in e-commerce
service quality

• Improving online service quality

– Assurance
• quality of response, privacy and security, etc.
– Empathy
• personalized interaction, context, task relevant help
and assistance, e.g., during the purchase process

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 7.7. Customer extension

• The goal is to increase the lifetime value of

the customer
• Advanced online segmentation and target
techniques
– Identify lifetime group/ Identify profile
characteristics
– Identify behavior in response and purchase
– Identify multi-channel behavior
– Tone and style preference

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Dave Chaffey, [2009], E-business and e-commerce management: strategy, implementation
and practice 4th edition, Prentice Hall, USA, page 541
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 7.7. Customer extension

• Advanced online segmentation and target

techniques
– Sense, respond, and adjust
• Monitor customer actions or behaviour
• React with appropriate messages and offers
• Monitor response to the messages and act
accordingly

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 7.7. Customer extension

• Advanced online segmentation and target

techniques
– (RFM) value analysis
• Recency—how recent was the customer’s action?
• Frequency—How often did the customer act?
• Monetary—How much did the customer spent?
• Hurdle rate—% of customers in a group who
completed an action; it can be used to compare
different groups or set an objective for the group

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 7.8. Technology solutions for CRM

• Technologies in use
– Database is the core of the CRM
– Web interface becomes the main stream
– Emails and workflow systems are
commonplace
– Customer self-service is the trend

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 7.8. Technology solutions for CRM

• Types of CRM Applications

– Find more info about products/service
– Place an order
– Receive post-sales service
• Integration with back-office systems
– How to link with the backend legacy system is
a big challenge

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Dave Chaffey, [2009], E-business and e-commerce management: strategy, implementation
12/12/2016
and practice 4th edition, Prentice 54
erce Hall, USA, page 548
702054 - Marketing and Advertising in E-Comm
 7.8. Technology solutions for CRM

• Single vendor solution or multiple vendors?

– Why the question?
– What’s your opinion?
• Data Quality
• CRM systems depend on the currency,
completeness, and accuracy of their
database

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 Summary

• The objective of CRM is to increase

customer loyalty in order to increase
profitability.
• CRM is aimed at improving all aspects of
the level of customer service.
• CRM tactics can be based around the
acquisition–retention–extension model of
the ideal relationship

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 Summary

• In an e-commerce context, acquisition

refers to gaining new customers to a
company
– and converting existing customers to online
services.
• Marketing communications techniques
include traditional online mass-media
techniques
– and specialized online techniques

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 Management issues

• What are the practical success factors

digital media need to make customer
acquisition more effective?
• 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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 Next Lecture

• Chapter 8: Electronic Commerce Payment

Systems
• Case study:
– Pay-per-Page: Alternatives to E-
Micropayments, [1] page 522
– Case 11.1: EC Application: Crutchfield Goes
Mobile, [1] page 540

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