E-Commerce Customer Relationship Management

roughhewnstupidInternet and Web Development

Nov 18, 2013 (4 years and 7 months ago)


Commerce Customer Relationship Management

Pesewa Presentati ons

Learning Objectives

Identify the key features of the Internet audience

Discuss the basic concepts of consumer behaviour and
purchasing decisions

Understand how consumers behave online

Describe the basic marketing concepts needed to
understand Internet marketing

Identify and describe the main technologies that
support online marketing

Identify and describe basic e
commerce marketing and
branding strategies

Explain how online market research is conducted

Consider the function and practice of effective CRM

Online Activities

What drives consumer behaviour?

Five stages in the consumer decision process:

awareness of need

search for more information

evaluation of alternatives

the actual purchase decision

purchase contact with the firm

How do we use this information?

Making Process

Business: drivers and inhibitors

Drivers and Inhibitors toward e



Cycle (SDLC) Approach

Phase 1:

Business Planning

Phase 2:



Phase 3:


Phase 4:


Phase 5:


Phase 6:





Website and marketing

“What criteria

determine who will be our
most profitable

Gartner’s Model of Customer Interaction:











“How can we acquire this
customer in the most
efficient / effective way?

“How can we keep this
customer for as long as

“How can we increase the
loyalty and profitability of
this customer?”

Understand your customers

Lewis & Lewis (1997) identify 5 basic types of Internet

Directed information seekers: searching for timely,
relevant, accurate information on a topic or topics

Undirected information seekers: classic “web surfer”
user who follows a random interest
driven path
through the web following links at random or where
their interest is captured briefly

Bargain hunters: seeking free items, trial samples and

Entertainment seekers: browsing online entertainment,
games, music, streaming audio or video

Directed buyers: hard
core shoppers online; they know
what they want and where to find it and buy it

Online Retailing: 8 Cs

Content: Is it a compelling offering to the Customer?

Convenience: How easy is the site to navigate and use?

Customer Care: Extent to which the organization shows a commitment to
Customers (Terms & Conditions, Privacy, etc)

Community: Cybercommunity as integral part of Customer experience (e.g

Communication: Where Customer can opt into a conversation with the
organization, and expect to receive a useful exchange of information

Connectivity: Site
site connectivity (useful and meaningful links) and User
site connectivity (speed of access, navigability, site design, etc)

Customisation: Basic form of relationship marketing where site recalls previous
transactions and Customer may be able to control what (s)he sees

Concern for Customers (and Customer concerns): Relates to understanding
Customer fears, inhibitors and distractions (e.g. security, trust, 128
bit data
encryption, etc)

Jones et al, 2001

How can you segment them?

Customers’ Characteristics

What do they want from your site?

Return to consumer decision
making process:

How do they behave online?

What do they do / look for?

What do they buy?

How do they find you?

What entices them to buy?

What do we need to offer?

What do we need to offer?

In my opinion: Customer Service

Not Products, but BRANDS

Customer Relationship Management

CRM: Customer Relationship Management.

Strategy used to learn more about customers' needs and

behaviours in order to develop stronger relationships with them.

Good customer relationships are at the heart of e
business success.

There are many technological components to CRM, but it is wrong to think of
CRM in primarily technological terms.

CRM is a strategic process that helps firms understand their customers’ needs

Indicates how those needs can be best met, and improve profitability

Strategy depends on bringing together information about customers and market
trends so that products and services can be marketed and sold more effectively.

CRM seeks to build long
term relationship with customers

CRM Tools

Many software companies offer CRM solutions,

IBM [IBM.com]

SAP [sap.com]



Goals of CRM:

providing services and products that are exactly what

customers want (need?)

offering better customer service

cross selling and

products more effectively

helping sales staff close deals faster

retaining existing customers and discovering new ones

Derived from cio.com

CRM Strategy

For effective CRM, an organization must first understand who its customers are and what
their value is over a lifetime.

Company must then determine what the needs of its customers are and how best to meet
those needs.

For example, many financial institutions keep track of customers' life stages in order to market
appropriate banking products like mortgages or Investment Trusts to them at the right time to fit
their needs.

Next, the organization must look into all of the different ways information about customers
comes into a business, where and how this data is stored and how it is currently used.

One company, for instance, may interact with customers in a number of different ways:

mail campaigns,

Web sites,

mortar stores,

call centres,

mobile sales force staff and

marketing and advertising efforts.

CRM systems link up each of these. Data flows between operational systems (like sales and inventory
systems) and analytical systems that look for patterns.

Analysts then comb through the data to obtain a holistic view of each customer and pinpoint areas
where better services are needed.

Basic Marketing Strategies

Marketing: The strategies and actions firms take to establish a relationship with a
consumer and encourage purchases of products and services

Internet marketing: Using the Web, as well as traditional channels, to develop a
positive, long
term relationship with customers, thereby creating competitive
advantage for the firm by allowing it to charge a higher price for products or services
than its competitors can charge

Firms within an industry compete with one another on four dimensions:





Marketing seeks to create unique, highly differentiated products or services
that are produced or supplied by one trusted firm (“little monopolies”)

Internet Marketing Technologies

Web transaction logs

Search Engine Submission (absolutely essential): Need to tell the world
that you exist!

Cookies and Web bugs

Databases, data warehouses, and data mining

Collaborative Filtering (e.g. Amazon.com)

Advertising networks

Customer relationship management (CRM) systems

[but remember that it is not just about technology]

Organizational Resources:







Revolution in Internet Marketing

Three broad impacts:

Internet has broadened the scope of marketing communications

Internet has increased the richness of marketing communications

Internet has greatly expanded the information intensity of the

Unique Aspects of e

Web Transaction Logs

Built into Web server software

Records user activity at a Web site

WebTrends a leading log analysis tool

Can provide treasure trove of marketing information, particularly
when combined with:

Registration forms

used to gather personal data

Shopping cart database

captures all item selection, purchase and
payment data

Example Web Logfile (4 seconds)

Marketing Use of Log Data


Cookies: small text file that Web sites place on a visitor’s client
computer every time they visit, and during the visit as specific pages
are accessed.

Cookies provide Web marketers with a very quick means of
identifying the customer and understanding his or her prior behavior

Location of cookie files on computer depends on browser version

Typical Cookie File (Netscape)

Web Bug

Tiny (1 pixel) graphic files embedded in e
mail messages and on Web

Used to automatically transmit information about the user and the
page being viewed to a monitoring server


Often included with freeware and shareware.

Contains executable files (programs) that can obtain passwords, credit card
data and other private material from client computers on networks

Some also include aspects of Trojan Horse software



Social Issue: Should Web Bugs be

Marketers claim Web bugs are innocuous; privacy advocates say, if so, why
are they hidden

Different types include clear GIF, executable bugs and script
based executable

Privacy Foundation guidelines for Web bug usage:

Should be visible and labelled to indicate function

Should identify name of company that placed it

Should display disclosure statement if clicked

Should be able to opt

Network Advertising Initiative (NAI) calls them Web beacons, and have issued
their own guidelines

Currently, no government regulation

Databases and Data Warehouses

Database: Software that stores records and attributes

Database management system (DBMS): Software used to create, maintain and
access databases

SQL (Structured Query Language): Industry
standard database query and
manipulation language used in a relational databases

Relational database: Represents data as two
dimensional tables with records
organized in rows and attributes in columns; data within different tables can be
flexibly related as long as the tables share a common data element

Data warehouse: Database that collects a firm’s transactional and customer
data in a single location for offline analysis by marketers and site managers

Relational DB View of Customers

Data Mining

Set of analytical techniques that look for patterns in data of a database or
data warehouse, or seek to model the behaviour of customers

Types include:


based on specific queries


involves use of a model that analyses key variables of interest to
decision makers


examines demographic and transactional data of groups and
individuals at a Web site and attempts to derive general rules of behaviour for

Collaborative filtering

behavioural approach; site visitors classify themselves
into affinity groups based on common interests; products are then recommended
based on what other people in the group have recently purchased

Data Mining & Personalisation

Advertising Networks

Best known for ability to present users with banner advertisements
based on a database of user behavioural data

DoubleClick best
known example

Ad server selects appropriate banner ad based on cookies, Web bugs,
backend user profile databases

How Advertising Network Works

CRM System

Repository of customer information that records all of the contacts that a
customer has with a firm and generates a customer profile available to
everyone in the firm with a

need to “know the customer”

Customer profiles can contain:

Map of the customer’s relationship with the firm

Product and usage summary data

Demographic and psychographic data

Profitability measures

Contact history

Marketing and sales information

Example of CRM System

Market Entry Strategies

For new firms:

Pure clicks/first mover

Mixed “clicks and bricks”/alliances

For existing firms:

Pure clicks/fast follower

Mixed “clicks and bricks”/brand extensions

Generic Entry Strategies

Establishing Customer Relationship

Permission marketing: Marketing strategy in which companies obtain
permission from consumers before sending them information or promotional
messages (example: opt
in e

Affiliate marketing: Marketing strategy that relies on referrals; Web site
agrees to pay another Web site a commission for new business opportunities
it refers to the site

Viral marketing: Process of getting customers to pass along a company’s
marketing message to friends, family, and colleagues

Brand leveraging: Process of using power of an existing brand to acquire new
customers for a new product or service

Customer Retention

Mass market
personalization continuum ranges from mass marketing to
direct marketing to micromarketing to personalized, one
one marketing

one marketing: Involves segmenting the market on a precise and
timely understanding of an individual’s needs, targeting specific marketing
messages to these individuals and then positioning the product vis
competitors to be truly unique

Market Personalisation

Other Retention Techniques

Customization: Changing the product (not just the marketing message) according
to user preferences

Customer co
production: Allows the customer to interactively create the product

Transactive content: Results from the combination of traditional content with
dynamic information tailored to each user’s profile

Customer service tools include:

Frequently asked questions (FAQs)

based listing of common questions and

time customer service chat systems

company’s service representatives
interactively exchange text messages with one or more customers on a real

Intelligent agent technology


Automated response systems

send e
mail confirmations and acknowledgments

Net Pricing Strategies

Pricing (putting a value on goods and services) an integral part of marketing strategy

Traditionally, prices based on:

Fixed cost (costs of building production facility

Variable costs (costs involved in running production facility)

Market’s demand curve (quantity of goods that can be sold at various prices)

Price discrimination: Selling products to different people and groups based on their
willingness to pay

Free products/services: Can be used to build market awareness

Versioning: Creating multiple versions of a good and selling essentially the same
product to different market segments at different prices

Bundling: Offers consumers two or more goods for one price

Dynamic pricing:


establish an instant market price for goods

Yield management

Managers set prices in different markets, appealing to
different segments in order to sell excess capacity

Channel Management Strategies

Channel: Refers to different methods by which goods can be
distributed and sold

Channel conflict: Occurs when a new venue for selling products or
services threatens or destroys existing venues for selling goods

Examples: online airline/travel services and traditional offline travel

Some manufacturers are using partnership model to avoid channel

Online Market Research

Market research: Involves gathering information that will help a firm identify
potential products and customers

Two general types:

Primary research

involves gathering first
hand information using techniques
such as surveys, personal interviews and focus groups

Secondary research

relies on existing, published information as basis for
analysing market

Types of Survey Questions

Popular Research Tools

Marketing Communications

What is marketing communications?

Two aspects:

Branding (statements of “quality, reliability, non
price factors”)

Sales (promotion)

Promotional aspect : “buy NOW!”

Branding aspect: Focus on differentiated benefits of product

Online Brand Development and brand reinforcement

CRITICAL to business success

Develop and sustain competitive advantage

Create a climate of TRUST (building guangxi)

Create corporate “image” in mind of online visitor

Online Advertising

A mixed blessing

permission marketing: OK; spam: BAD


Online marketing jargon

Banner ad




Rich media ad

Interstitial ad

Superstitial ad

Banner swapping

Banner exchanges


Search engine marketing


Paid listing


Affiliate marketing

Direct e
mail marketing

Please do some online searches

for these terms and concepts

and build a database (on cards,

or whatever), to ensure that

you understand the concepts


their importance to

enabled business operation