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Summary of Chapter 8
“Customer Relationship Management”
by: M. Aziz Putra Akbar (425436)
Chapter 8, entitled “Customer Relationship Management”, can be understood clearly
as how a digital business entity should build a rapport with its customers. The chapter elaborates definition and ideas of electronic customer relationship management (eCRM), conversion marketing, the online buying process, how to acquire customers, how to retain customers, how to extend the reach of customers, and also how technology can be utilized in CRM. Customer relationship management (CRM) can be defined as approaches managers can adopt in order to build and sustain a long term business relationship with customers. CRM has been used for years because it could increase business revenues in several ways like providing products and services that are exactly what customers need and want, better customer service, close deals faster, and effective cross-selling transactions. As business nowadays extends its operations to a more digitised way, traditional CRM has become modernized and equipped with digital operation, making it called as the electronic CRM (eCRM). What differentiates traditional CRM and eCRM are the activities of digital marketing it makes use of, like increasing website and social presence, managing customer profile information, using email and social networks, data mining, online personalisation, online customer service, ensuring online service quality, and offering multichannel customer experience. Some benefits of eCRM is that targeting the audience can be done in a more cost-effective way, achieve mass customisation of the message, increase depth and breadth of the nature of relationship, etc. To get a better engagement and knowing more in depth about the customers, businesses usually conduct customer profiling, or acquiring information that can be useful to segment customers. First, the business should conduct customer identification. Followed by customer differentiation. Then building customer interactions, and last is creating customisation. Such efforts should be done in order to perform and achieve the goal of conversion marketing, which goals is to convert potential customers to become actual customers, and existing customers to become repeat customers. There are 3 main parts where conversion marketing takes place, which is the attraction phase (e.g site of visitor’s base), conversion phase, and retention base. In digital business, customers may have different buying processes of buying trends from one and another. According to Lewis and Lewis (1997), there are 5 different types of web users: directed information-seekers (directly looking for the information they seek), undirected information-seekers (web users who just like to surf the internet and click on hyperlinks), directed buyers (web users who use the internet only to buy products they already know), bargain hunters (web users who like to use vouchers of offers), and entertainment seekers (simply just like the use of internet). It is necessary for businesses to understand which type of web users their customers would likely be because it will affect the strategy formulation. For instance, deciding to operate in a B2B or B2C should be determined carefully because their market structure, nature of buying unit, type of purchase, type of buying decision, and communication may be different. When a business entity tries to acquire new customers, then there are several characteristics of interactive marketing communication that should be taken into account. The principles of converting from push to pull media, monologue to dialogue, one-to-many to one-to-some or one-to-one, lean-back to lean-forward, the changes of medium, increasing intermediaries, and making integration are just part of the communication. It is important to assess the communication process regularly, one of which is by using the return on investment (ROI) technique. Other digital marketing communication is to optimise the use of search engine marketing and search engine optimisation, digital public relation, online partnerships, digital advertising, email marketing, and social media marketing. Once a business has acquired customers, it is equally important to retain the customers by ensuring that the customers will make a return visit and return purchase of the business’ product. Increasing customer loyalty can be done in at least 3 broad efforts called the loyalty drivers: order fulfillment (with satisfaction), product performance, and post-sales & service support. Personalisation can be very useful as it may give a better customer experience. A business entity can offer personalisation in 4 categories: using web analytics, using software as a service (SAAS), features of commerce management system, or B2B marketing automation. Retaining customers could also be done by ensuring the quality of products and services, as well as the whole experience. When doing so, it is necessary to understand the dimensions of quality: - Tangibles - Reliability - Responsiveness - Assurance, and - Empathy As there is a so-called customer lifecycle segmentation, which describes the steps and cycle of customers when they first identify the product, making the purchase, until slowly leaving the products, customer extension is used to increase the lifetime value of the life cycle, or in other words to prolong the duration of the cycle. Such methods can be made like sense-respond-adjust framework, recency-frequency-monetary (RFM) analysis, etc. By using technology in the CRM process, it may help to adopt the marketing automation, by saving time, increase efficiency, CRM integration, data collection, multichannel management, increase consistency, and enabling personalisation.