115
C H A P T E R 9
Customer relationship management
Table of contents
Learning outcomes 115
Management issues 115
Chapter at a glance 116
Learning outcomes
After completing this chapter the reader should be able to:
Outline different methods of reaching and acquiring customers via digital media
Evaluate different buyer behaviour amongst online customers
Describe techniques for retaining customers and cross- and up-selling using digital media
Management issues
Customer relationship management involves these management issues:
Which digital media should we invest in to reach new audiences?
What are the practical success factors for using 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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Chapter at a glance
Main topics
What is e-CRM?
Conversion marketing
The online buying process
Focus on
Marketing communications for customer acquisition including search engine marketing,
online PR, online partnerships, interactive advertising, email marketing and social media
marketing
Social media and social CRM strategy
Case studies
Case study 9.1 Tesco.com increases product range and uses triggered communications to
support CRM.
Suggested teaching and learning approaches
This chapter examines practical, tactical issues in e-marketing using a CRM framework.
Suggested lectures that are generally independent and after first do not need to follow this
sequence:
1. Introduction to e-CRM. Base on first section using framework of acquisition, retention,
2. E-marketing communications. Examine the different techniques based on the focus on
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4. Delivering online service quality Focus on excelling on service quality.
Case studies
Note that there are 10 mini case studies on managing e-CRM in this chapter which can also be
referenced.
Case study 9.1 Tesco.com increases product range and uses triggered
communications to support CRM
Question
Based on the case study and your own research on competitors, summarise the
strategic approaches which have helped Tesco.com achieve success online.
The strategic decisions covered in this chapter provide a useful framework for summarising the
strategic approaches adopted by Tesco.com:
Decision 1: Market and product development strategies.
Tesco has used the Internet to extend its market into new product markets, such as financial
Decision 2: Business and revenue model strategies.
New revenue sources are available through extending the product range online as explained
Decision 3: Target market strategy.
Tesco.com has a broad market of customer types, so it is less relevant for them to use online to
selectively target these with communications. However, the article explains how Tesco has
Decision 4: Positioning and differentiation strategy (including the marketing mix).
Tesco offers some unique online promotions and lower online prices for select products such
as financial services which could attract a percentage discount when purchased online. It
Chaffey, Digital Business and E-Commerce Management, 6th edition,
Instructors Manual on the Web
The marketing mix which is covered in Chapter 8 is also suitable for assessing some of the
tactical elements of Tesco.com strategy.
Product
Price
Decision 5: Multi-channel distribution strategy.
Decision 6: Multi-channel communications strategy.
This is not referred to in the article this describes the mix between online and offline
communications tools for driving visitors to the site. Offline communications in store and
through direct mail are clearly important for attracting visitors to the site.
Decision 7: Online communications mix and budget.
Decision 8: Organisational capabilities (7S).
Questions for debate
Debate 9.1 Is permission marketing the future?
In the future, all marketing communications, regardless of medium, will be
permission-based.
See also the debate in Chapter 4 which covers a similar topic. Summary of arguments for:
Likely to be required by law in all countries phone and email already have preference
services.
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Summary of arguments against:
Direct mail is likely to remain opt-out since the direct marketing associations are strong
bodies against it.
Debate 9.2 Will software replace humanware?
Some remote customer service contacts will always require personal, human interaction
rather than automated electronic responses.
Summary of arguments for:
Summary of arguments against:
Exercises
Self-assessment questions
1. What are the goals of acquisition and retention in an online context?
Customer acquisition
Customer retention
2. Outline the differences between permission marketing and interruption marketing
including reference to the terms opt-in and opt-out.
Permission marketing
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Interruption marketing
Marketing communications that disrupt customers activities, for example, telesales call, and is
not explicitly opt-in.
3. Summarise the main types of online marketing communications for traffic-building.
Search engine registration
Link building
4. Explain why mixed-mode buying needs to be understood by those managing an e-
commerce site.
5. Explain a range of techniques for attracting repeat visits to a website.
Direct email with incentive/offer
6. What is the difference between personalisation and mass customisation?
7. How can an e-commerce site be used to achieve extension in CRM?
Customer extension
Techniques to encourage customers to increase their involvement with an organisation. See
Question 5.
8. What are the management issues in managing data and applications integration in
CRM?
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Essay and discussion questions
1. On what basis should marketing managers decide on the communications mix for
an e-commerce site?
This question also requires reference to the previous chapter (6Is) (Focus on section on
Characteristics of digital media communications) since a useful start is to summarise the
2. Evaluate the current communications mix for an online e-tailer and make
recommendations for future communications to achieve customer acquisition and
retention.
This question requires assessment of online and offline communications. A period of at least a
month is required for students to subscribe to an online service and then evaluate it. The
following online techniques can be evaluated:
Site design (see Chapter 11), how is brand proposition communicated, how is the site used
as a tool for acquisition and retention.
3. Show how an understanding of the online buying process can be used to revise
marketing communications.
This analysis can be based around simple models of the buying decision referencing their
accuracy. Students should refer to the following:
Techniques that can be used to drive a prospect through the buying process
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4. Explain, using examples, typical differences between a traffic–building campaign for a
B2B and a B2C company.
Questions should probably refer more specifically, for example, to a low value, simple buying
decision product. Differences should centre on:
5. Examine the relationship between customer satisfaction, loyalty and sales in relation
to a pureplay e-commerce site.
Issues which can be referenced include:
Average cost of acquisition for pure-play is high often due to offline promotion such as TV. Is
this the best approach or can a more organic approach be used with a smaller growth rate.
6. Examine the benefits and disadvantages of personalisation, community–building and
direct email. For an organisation of your choice recommend a suitable balance
between these e-marketing tools.
Students should devise a table to summarise the advantages before tackling this question, the
7. Assess whether a multi-vendor or single (limited number) vendor strategy is best
for the implementation of e-CRM systems.
Referring to the previous Boots case study can help in answering this question. Issues to
consider are:
Importance of seamless data integration (single vendor) against best of breed features
(multi-vendor)
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8. Recommend a social CRM data and application architecture for a B2C company
that provides integration with related legacy systems.
Examination questions
1. Explain the concept of mixed-mode buying with reference to a pureplay e-
commerce bookseller.
Mixed-mode buying
The process by which the customer changes between online and offline channels during the
buying process.
2. You are the e-commerce manager for a B2C site. Write an explanation to be included
in a report to the managing director of why a permission marketing approach is
required.
Permission marketing
Customers agree (opt-in) to be involved in an organisations marketing activities, usually as a
result of an incentive.
Required since:
3. What different types of searching behaviour are exhibited by online users and what
are the implications for someone responsible for traffic building on a site?
Two main types are:
4. With reference to customer acquisition and retention, explain two goals for each
required by an e-commerce site manager.
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Acquisition must target correct segment(s); must be able to profile leads to help
5. Outline four different methods of building website traffic.
Online search engine registration
6. Explain three factors that will influence the balance of online and offline website
promotion for an organisation.
7. How can an e-commerce site be used to inform new product development?
8. What is a legacy system and what is its relevance to CRM?
A legacy system is an existing system which is not compatible with current CRM systems. It
does not offer the functionality or data content required today. It may have some data, perhaps
from a transaction processing system, that needs to be integrated with CRM systems.
Activity answers
Activity 9.1 Understanding the range of social media marketing platforms
Visit the Conversation Prism (www.conversationprism.com) or the Smart Insights Digital
Marketing Radar (http://bit.ly/smartradar) and identify the types of social media sites
you and your colleagues use. How do you think the popularity of tools would differ for
different types of B2B and B2C sites? Discuss how businesses should decide on the most
important to invest in to achieve their goals.
No suggested answer.