CHAPTER 6
Opening Case:
Harnessing Customer
Relationships at Fairmont
Hotels & Resorts
©2011 The McGraw-Hill Companies, All Rights Reserved McGraw-Hill-Ryerson

• SECTION 6.1 – CRM FUNDAMENTALS
– Using Information Systems to Drive Operational CRM
– Using Information Systems to Drive Analytical CRM
• SECTION 6.2 – CRM BEST PRACTICES AND
TRENDS
– Implementing CRM
– CRM Metrics
– Using IT to Drive Analytical CRM
– CRM Applications and Vendors
– Managing Other Relationships
– Future CRM Trends
Copyright © 2011 McGraw-Hill Ryerson Limited
6-2

6-3
1.
Understand the difference between customer relationship management and customer relationship management systems.
2.
Describe the business benefits of customer relationship management and how customer relationship management systems can help achieve those benefits.
Copyright © 2011 McGraw-Hill Ryerson Limited

3.
Understand the differences between: operational analytical customer relationship management; the operational customer relationship management systems used by marketing departments, sales departments, and customer service departments and the various analytical customer relationship management systems used by organizations.
6-4
Copyright © 2011 McGraw-Hill Ryerson Limited

4.
Identify and explain best practices in implementing CRM in organizations, including the tracking of common customer relationship management metrics by organizations.
5.
Describe the benefits of expanding customer relationship management to include suppliers, partners, and employees, as well as other future trends in CRM.
6-5
Copyright © 2011 McGraw-Hill Ryerson Limited

McGraw-Hill-Ryerson
SECTION 6.1
CRM FUNDAMENTALS
©2011 The McGraw-Hill Companies, All Rights Reserved

CRM involves the managing of all the aspects of a customer’s relationship with an organization to increase loyalty and retention and an organization’s profitability.
6-7
CRM systems are technologies designed to assist the CRM functions or activities.
Copyright © 2011 McGraw-Hill Ryerson Limited

• CRM as a business strategy
• Business benefits of CRM
• The evolution of CRM
• Operational and analytical CRM
6-8
Copyright © 2011 McGraw-Hill Ryerson Limited

• CRM enables an organization to:
– Provide better customer service
– Make call centres more efficient
– Cross-sell products more effectively
– Help sales staff close deals faster
– Simplify marketing and sales processes
– Discover new customers
– Increase customer revenues
Copyright © 2011 McGraw-Hill Ryerson Limited
6-9

• Organizations can find their most valuable customers through “RFM” R ecency,
F requency, and M onetary value
– How recently a customer purchased items
(Recency)
– How frequently a customer purchased items
(Frequency)
– How much a customer spends on each purchase (Monetary Value)
Copyright © 2011 McGraw-Hill Ryerson Limited
6-10

1.
CRM reporting technology – help organizations identify their customers across other applications
2.
CRM analysis technologies – help organizations segment their customers into categories such as best and worst customers
3.
CRM predicting technologies – help organizations make predictions regarding customer behaviour such as which customers are at risk of leaving
Copyright © 2011 McGraw-Hill Ryerson Limited
6-11

• Three phases in the evolution of CRM include reporting, analyzing, and predicting
6-12
Copyright © 2011 McGraw-Hill Ryerson Limited

6-13
Copyright © 2011 McGraw-Hill Ryerson Limited

6-14
• Operational CRM – supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customers
• Analytical CRM – supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers
Copyright © 2011 McGraw-Hill Ryerson Limited

6-15
Copyright © 2011 McGraw-Hill Ryerson Limited

6-16
Copyright © 2011 McGraw-Hill Ryerson Limited

• Three marketing operational CRM technologies:
1.
List generator – compiles customer information from a variety of sources and segments the information for different marketing campaigns
2.
Campaign management system – guides users through marketing campaigns
3.
Cross-selling and up-selling
• Cross-selling – selling additional products or services
• Up-selling – increasing the value of the sale
6-17
Copyright © 2011 McGraw-Hill Ryerson Limited

6-18
• The sales department was the first to begin developing CRM systems with sales force automation – a system that automatically tracks all of the steps in the sales process
Copyright © 2011 McGraw-Hill Ryerson Limited

6-19
• Sales and operational CRM technologies
1.
Sales management CRM system
– automates each phase of the sales process, helping individual sales representatives coordinate and organize all of their accounts
2.
Contact management CRM system
– maintains customer contact information and identifies prospective customers for future sales
3.
Opportunity management CRM system
– targets sales opportunities by finding new customers or companies for future sales
Copyright © 2011 McGraw-Hill Ryerson Limited

• CRM Pointers for Gaining Prospective
Customer
1.
Get their attention
2.
Value their time
3.
Overdeliver
4.
Contact frequently
5.
Generate a trustworthy mailing list
6.
Follow up
Copyright © 2011 McGraw-Hill Ryerson Limited
6-20

6-21
• Three customer service operational CRM technologies:
1.
Contact centre (call centre)
2.
Web-based self-service system
• Click-to-talk
3.
Call scripting system
Copyright © 2011 McGraw-Hill Ryerson Limited

6-22
Copyright © 2011 McGraw-Hill Ryerson Limited

• Personalization – when a Web site knows enough about a person’s likes and dislikes that it can fashion offers that are more likely to appeal to that person
6-23
• Analytical CRM relies heavily on data warehousing technologies and business intelligence to glean insights into customer behaviour
• These systems quickly aggregate, analyze, and disseminate customer information throughout an organization
Copyright © 2011 McGraw-Hill Ryerson Limited

• Analytical CRM information examples
1.
Give customers more of what they want
2.
Find new customers similar to the best customers
3.
Find out what the organization does best
4.
Beat competitors to the punch
5.
Reactivate inactive customers
6.
Let customers know they matter
6-24
Copyright © 2011 McGraw-Hill Ryerson Limited

OPENING CASE QUESTIONS
Harnessing Customer Relationships at Fairmont
Hotels & Resorts
6-25
3.
Define analytical CRM. How has FHR effectively used analytical CRM? How important is analytical CRM to companies like
FHR?
4.
What is the difference between customer information and customer-intelligence, as described in the Opening Case Study? In your opinion, is there a difference between customer-intelligence and analytical CRM? If so, how?
Copyright © 2011 McGraw-Hill Ryerson Limited

McGraw-Hill-Ryerson
SECTION 6.2
CRM BEST PRACTICES
AND TRENDS
©2011 The McGraw-Hill Companies, All Rights Reserved

• To achieve success in implementing CRM, organizations should follow CRM best practices listed as follows:
1.
Clearly communicate the CRM strategy
2.
Define data needs and flows
3.
Build an integrated view of the customer
4.
Implement in iterations
5.
Scalability for organizational growth
Copyright © 2011 McGraw-Hill Ryerson Limited
6-27

6-28
Organizations can also improve their CRM implementation processes by aligning the previously noted 5 best practices with Gartner’s 8 building blocks of CRM:
Copyright © 2011 McGraw-Hill Ryerson Limited

Eight building blocks of CRM:
1.
Creating a CRM vision that provides a “big picture” of what the customer-centric organization should look like.
2.
Defining and weaving a CRM strategy that aligns with broader marketing and sales strategies, and informs operational and production strategies.
3.
Understanding and engaging the customer.
Copyright © 2011 McGraw-Hill Ryerson Limited
6-29

Eight building blocks of CRM (continued):
4.
Ensuring organizational collaboration between internal groups and external business partners.
5.
Focusing on improving customer processes
6.
Achieving data integrity across the enterprise
7.
Leveraging information systems to implement
CRM.
8.
Defining, collecting, and analyzing CRM metrics.
Copyright © 2011 McGraw-Hill Ryerson Limited
6-30

Copyright © 2011 McGraw-Hill Ryerson Limited
6-31

Supplier Relationship Management (SRM) focuses on keeping suppliers satisfied by evaluating and categorizing suppliers for different projects.
Partner Relationship Management (PRM) focuses on keeping vendors satisfied by managing alliance partner, dealer, retailer, and reseller relationships that provide customers with an optimal sales channel.
Employee Relationship Management (ERM) is a management activity that focuses on managing an organization’s relationships with its employees.
6-32
Copyright © 2011 McGraw-Hill Ryerson Limited

• CRM future trends include:
– CRM applications will continue to evolve and be used by a wide variety of partners
– CRM will continue to be a major strategic focus for companies
– CRM applications will continue to adapt wireless capabilities supporting mobile sales and mobile customers
– CRM suites will incorporate SRM, PRM and ERM modules
6-33
Copyright © 2011 McGraw-Hill Ryerson Limited

6-34
OPENING CASE QUESTIONS
Harnessing Customer Relationships at Fairmont
Hotels & Resorts
5.
Describe some best practices evident in the CRM industry. Discuss to what extent Fairmont Hotels &
Resorts (FHR) is following these best practices.
6.
Describe the trends found in the CRM industry. Discuss to what extent FHR is following these trends. In your opinion, which trends are more important for FHR to adopt?
7.
Explain SRM and how FHR could use it to improve its business.
8.
Explain PRM and how FHR could use it to improve its business.
9.
Explain ERM and how FHR could use it to improve its business.
Copyright © 2011 McGraw-Hill Ryerson Limited

6-35
1.
How could the ACS’s marketing department use operational CRM to strengthen its relationships with its customers?
2.
How could the ACS’s customer service department use operational CRM to strengthen its relationships with its customers?
3.
Review all of the operational CRM technologies and determine which one would add the greatest value to ACS’s business
Copyright © 2011 McGraw-Hill Ryerson Limited

6-36
4.
Describe the benefits ACS could gain from using analytical CRM.
5.
Summarize SRM and describe how ACS could use it to increase efficiency in its business.
Copyright © 2011 McGraw-Hill Ryerson Limited

1.
What advantages are there for American companies looking to establish call centres in
Canada?
6-37
2.
Given the forces threatening Canada’s ability to attract American companies to set up call centres in Canada, how secure do you think
Canada is in its future in the call centre industry? What extent do you think future
CRM systems will erode Canada’s advantages in attracting American business for call centres?
Copyright © 2011 McGraw-Hill Ryerson Limited

3.
Explain how a contact centre (or call centre) can help an organization achieve its CRM goals.
6-38
4.
What are the two different types of CRM and how can they be used to help an organization gain a competitive advantage?
Copyright © 2011 McGraw-Hill Ryerson Limited

1.
What are the two different types of CRM and how has Harley-Davidson used them to become a world-class customer-service business?
6-39
2.
Which of HarleyDavidson’s customer-centric strategies is the most important for its business?
Why?
3.
Evaluate the Harley’s Owners Group’s CRM strategy and recommend an additional benefit
Harley-Davidson could provide to its HOG members to increase customer satisfaction.
Copyright © 2011 McGraw-Hill Ryerson Limited

6-40
CLOSING CASE THREE
Harley-Davidson
4.
Describe three ways Harley-Davidson can extend its customer reach by performing
CRM functions over the Internet.
5.
What benefits could Harley-Davidson gain from using analytical CRM?
6.
Explain ERM and describe how Harley-
Davidson could use it to increase efficiency in its business.
Copyright © 2011 McGraw-Hill Ryerson Limited