Page 190 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Unit 7: Electronic-CRM

Three Dimensions in e-CRM Notes

E-CRM must address customer optimization in three dimensions viz.:
1. Acquisition getting (increasing number of new customers);
2. Expansion (increasing profitability by encouraging customers to purchase more products
and services); and
3. Retention (increasing the amount of time customers stays).
While acquisition and retention are fairly well understood, customer profitability through
expansion requires some scrutiny. Since expansion presents enormous untapped value; an e-CRM
strategy must be able to identify the expansion potential for each customer.
For example, historically, grocery retailers have struggled to understand the value in
communicating directly with a customer beyond basic promotions. The average margin in a
food retail store is only two to three percent. On the surface, these small margins appear to leave
little or no room to warrant sophisticated customer optimization techniques. As a result,
supermarkets have spent most of their energy on acquiring more customers. What many food
retailers fail to grasp is the marginal economics of customer behaviour? While profit margins
may float around three percent, the incremental margin obtained from getting a shopper to add
just to increase incremental margins hold potential. Uncovering that potential requires companies
not only to understand how customers behave with them but what interactions they have with
their competitors.

Customer Investment Allocation

While a significant amount of latest profit potential exists within your customer base, the
question remains how do you leverage those opportunities? Most companies have no central
mechanism to determine which customers should receive which investment allocations are
generally based on a decision to sell more products to optimize the channel.

An e-CRM strategy requires businesses to reallocate their investment toward customers who
deliver the most value and have the greatest potential value. To achieve this objective a business
must develop and deploy an additional set of business processes designed to be customer-
centric and not product-centric. This simple method can result in profound changes to the
organizational structure and technical infrastructure of a business.

Key e-CRM Features

Regardless of the company’s objectives, an e-CRM solution must possess certain key characteristics.
It must be:
1. Focus on process: A CRM process brings you the appropriate technology and it will reduce
the technology gap as well as refining your business process.
2. Data warehouse driven: In an e-CRM solution, the data warehouse or customer data mart
contains a consolidated and comprehensive view of the customer. The warehouse provides
the broadest possible profile of the customer. This is needed to determine an appropriate
course of action the most effective offer to make, and the best channel to deliver pertinent
message.
3. A multi-channel view: Organisations today have different methods of interacting with
customers. For example, a bank might use one application to support its Website; another
to support its call centre; another to support e-mail; another to support sales, another to
support ATMs; and yet another to support direct mail and telemarketing. These applications

LOVELY PROFESSIONAL UNIVERSITY 185