Nghiên cứu về công tác quản trị quan hệ khách hàng của công ty ila

Thus, it is a necessity to have a suitable system of managing customers to get the loyalty from the existing customers of ILA, to remain the service quality and fulfill the programme des

VIETNAM NATIONAL UNIVERSITY, HANOI

SCHOOL OF BUSINESS

NGUYEN THI THANH TU

A STUDY ON

CUSTOMER RELATIONSHIP MANAGEMENT OF ILA

Major: Business Administration Code: 60 34 05

MASTER OF BUSINESS ADMINISTRATION THESIS

Supervisor: Dr Tran Doan Kim

Hanoi – 2011

TABLE OF CONTENTS

ACKNOWLEDGEMENT i

ABSTRACT ii

TÓM TẮT iv

TABLE OF CONTENTS vi

LIST OF FIGURES ix

LIST OF TABLES x

INTRODUCTION 1

1 The thesis title 1

2 The thesis necessity 1

3 Objectives 1

4 Scale of sample 2

5 Type of research 2

6 Research approach 3

7 Data sources and Processing 3

8 Research method 3

9 Research questions 3

10 Significance 4

11 Limitations 4

12 Expectation 4

13 Disseminations 4

14 Follow-up 5

15 The thesis structure 5

CHAPTER 1 LITERATURE REVIEW 6

1 Conception of Customer relationship 6

1.1 Root of relationship 6

1.2 Characterize of relationship 7

1.3 Relationship – value of company 8

2 Customer relationship management (CRM) 11

2.1 Definition of CRM 11

2.2The use of CRM during times 12

3 The importance of CRM toward corporations 14

3.1 Benefit of CRM 14

3.2 CRM success factors 16

4 Basic model of CRM 17

CHAPTER 2 ANALYSIS AND ASSESMENT ON CUSTOMER RELATIONSHIP MANAGEMENT AT ILA 31

2.1 About ILA 31

2.1.1 Introduction about ILA 31

2.1.3 ILA principle 32

2.2 Assessment on Customer relationship management in ILA 34

2.2.1 Research method description 34

2.2.2 Description of the Research process 35

2.2.3 The research survey and results 37

2.2.4 Interview result 44

2.2.5 Report research 47

2.2.6 Current loyal programmes 51

CHAPTER 3 RECOMMENDATIONS TO IMPROVE THE CUSTOMER

RELATIONSHIP MANAGEMENT AT ILA 55

3.1 CRM – Training programme for ILA people – Create a CRM view 55

3.2 Improve Customer relationship software 58

3.2.1 It is not necessary to use complicated solution when simple solution does 58

3.2.2 Employees at all level can collect information 58

3.2.3 Tools should be customer-employee friendly 59

3.2.4 Report data need to be used, use data reported 64

3.3 Applying CRM model in improving CRM in getting, maintain and growing customers 66

3.3.1 CRM in getting and growing customers activities 66

3.3.2 CRM in maintaining customers – Building relationships 70

3.3.3 Privacy 76

3.3.4 Metric for measuring the success of CRM 77

CONCLUSION 79

APPENDIX 80

LIST OF FIGURES

Figure 2.1 Training centres 32

Figure2 2The interest in CRM between Academic and Business departments 37

Figure2 3 ILA's perception about CRM 37

Figure 2 4 The benefit of CRM for business operation 38

Figure 2.5 Criticise of CRM from Business group 39

Figure 2.6 Satisfaction about ILA's communication 42

Figure 2.7 Satisfation about loyalty programme 43

Figure 2.8 Judgment ILA's problem solving 43

Figure 2.9 New sales based on programmes 49

Figure 2.10 Re-enrolment based on programmes 49

Figure 2.11 Sources to receive complaints 50

Figure 2.12 Times to solve problems 51

Figure 2 13 Satisfaction about problem solving 51

LIST OF TABLES

Table 2.1 Number of Training centres 32

Table 2 2 Number of responsed questionnaire 36

Table 2.3Tools to get ILA information 41

Table 2.4 Visitors based on programmes 48

Table 2.5 New sales based on programmes 49

INTRODUCTION

1 The thesis title

A study on Customer relationship management of ILA

2 The thesis necessity

ILA was established in 2000 in Ho Chi Minh City and opened Training Centre Hanoi in 2007 After four years of operation, ILA Hanoi has not been known on a large area Thus, attracting new students is very difficult without the help from the marketing department of Head office Therefore, in order

to stabilize the company‘s revenue, it has become more urgent to make the existing customers more loyal to ILA

Thus, it is a necessity to have a suitable system of managing customers to get the loyalty from the existing customers of ILA, to remain the service quality and fulfill the programme design, to motivate the employees to contribute for the customer relationship management of company honestly Having been operated well but ILA Hanoi is coping with many difficulties from competitors

All the plausible reasons above lend me strong grounds enough to choose the topic: ―A study on Customer relationship management of ILA‖ for my MBA graduation thesis

3 Objectives

The objectives of this thesis are:

(a) Review and summarize the theory of Customer relationship management (b) Apply the reviewed literature to analyze and access the managing customer relationship in ILA now

(c) Propose some recommendations to enhance the customer relationship management in ILA, contributing to the tangible and intangible profit of the company

4 Scale of sample

Sampling unit: ILA staff, current students and alumni

Sampling size: This thesis only does the research on ILA Hanoi branch including 01 Academic manager, 01 Training center manager and teachers and staff, 250 students and parents who chosen randomly

is happening Reminds about descriptive, descriptive research can be used to

identify and classify the elements or characteristics of the subject With the

combination of descriptive and analytical research with analytical plays a main role, the author locates and identifies the different factors (or variables) involved

Quantitative techniques are most often used to collect, analyze and summarize data

6 Research approach

The author urged to identify the main variable which causes low revenue at ILA Hanoi Due to the large range of factors, the author collected facts and figures to find out specific problems Quantitative is very supportive

Although the quantitative is harder to design initially, the writer still apply it because it brings highly detailed and structures and results can be easily collated and presented statistically

To well prediction, the author also use qualitative research It is more subjects in nature then quantitative research and involves examining and reflecting on the less tangible aspects of a research subject

7 Data sources and Processing

Primary data was collected from questionnaire and interview Secondary data has been performed by research of documents, annual/quarterly reports of ILA and internet sources

The author conducts this research by collecting both primary and secondary information To analyze the operating situation, the author use secondary with filtering the useful information to have the big picture but supportive detail This data is not only for this research, the author has the ambition to use them for our suggestion with the Board of director because it is from the real situation

(a) Which theories can be applied in Customer relationship at ILA

(b) What current situation of Customer relationship management at ILA

(c) How to improve Customer relationship management at ILA

10 Significance

By reviewing the theory of customer relationship management, this research benefits ILA in recommendation to apply method of increasing loyal customers, from that increase the reputation and improve the revenue, which contribute to the

The frame of reference on the other hand could be interesting for new customers when they have to find the English centre for their improvement of learning English process in future

The findings in theory will help both parties to reach the right target in supplying English training service and being satisfied by service quality

14 Follow-up

Further study will be taken on improvement of implementation customer relationship management based on the experience and achievements of using and perfecting in large range Other way of study will be analyzing the impact of the competition of other English centers and require the steps of avoiding and get over the unexpected impacts

15 The thesis structure

The thesis is started with the introduction part, followed by the three chapters and the conclusion part:

Chapter 1: Literature review

Chapter 2: Analysis and assessment on the customer relationship management in ILA

Chapter 3: Recommendations to improve the customer relationship management in ILA

CHAPTER 1 LITERATURE REVIEW

1 Conception of Customer relationship

1.1 Root of relationship

To understand customer relationships, should go back to the basics-back to the social psychology origins of interpersonal relationships, which James Barnes and Daphne Sheaves did in their book ―The fundamentals of relationships‖ Their conclusions about what contributes to the development and strength of interpersonal relationships are just valid in allowing us to better understand what customers want in their dealings with businesses and other organizations A relationship in its simplest form and as understood

by customers is based on feelings and emotions However, many customers are exhibiting functional loyalty; there is no emotional connection in this case1

Some companies follow very well this guidance For examples, Dell Computers invites customers to specify exactly what they want in a computer and delivers a custom-built one in a few days Proctor & Gamble (P&G), on its Reflect.com website, allows someone to specify needs for a shampoo by answering a set of questions P&G then formulates a unique shampoo for that person Levi's is now able to produce customized jeans that are based on a person's measurements Those companies know what their customers want and focus on the thing they are good at best From that, their customers feel they are respected from their favorite brands

Katherine Lemon with Don and Martha in their working paper ―Managing the customer lifetime value: The role of learning relationships‖ said that learning relationships brings two benefits:

The customer learns more about his own preferences from each experience and from the firm‘s feedback, and is therefore able to shop, purchase, and handle some aspect of his life more efficiently and effectively than was possible prior to this relationship

The enterprise learns more about its own strengths and weakness from each interaction and from the customer‘s feedback, and it therefore able to market, communicate, handle some aspect of its own tactics or strategy more efficiently and effectively than was possible prior to the relationship2

In conclusion, the root of any relationship is to satisfy the interest of both parties Relationship between customers and enterprises is the root of CRM that helps enterprise increases its value The reality is that becoming a customer-strategy enterprise is about using information to gain a competitive advantage and deliver growth and profit Enterprises need to decide early on which customers they want to have relationships with, which they do not, and what type of relationships to nurture

1.2 Characterize of relationship

The most important issue for us to consider is how well our own definition of relationship helps companies succeed in the ―customer dimension‖ of competition Before do any CRM, companies should characterize relationship to come to the least risk decision Don and Martha listed some of the distinct qualities that should characterize a relationship between an enterprise and a customer3

2

Katherine Lemon, Don Peppers, and Martha Rogers, PhD, "Managing the Customer Lifetime Value: The role of learning relationships," Peppers & Rogers Group white paper series, 1998 3

Don Peppers and Martha Rogers, "Managing customer relationships: A strategic frame work", Published by John Wiley & Sons, Inc., Hoboken, New Jersy, 2004, p.36

First, a relationship implies mutuality This means that relationships must inherently

be two-way in nature It is a very important distinction for parsing out what does and does not constitute relationship-building activities with customers

Second, relationships are driven by interaction An interaction takes place when a customer buys a product from the company that sells it Every interaction adds to the total information content possible in the relationship

Third, it is iterative in nature One practical implication of the iterative nature of a customer relationship is that it generates a convenience benefit to the customer for continuing the relationship

Forth, it will be driven by an ongoing benefit to both parties Each party expects form the continued relationship can easily outweigh the current cost of remedying

an error or problem

Fifth, relationships also require a change in behavior on the part of both parties in order to continue This is an important characteristic to note separately, because companies sometimes mistakenly believe that interactions with a customer need only involve routine, outbound communications, delivered the same way to every customer

Sixth, it is uniqueness Relationships are constituted with individuals, not with populations

Finally, the ultimate requirement and product of a successful, continuing relationship is trust Shared values, interdependence, quality communication and no opportunistic behavior are factors to of main contributors to formation of trust

1.3 Relationship – value of company

Peter Drucker said, "The purpose of a business is to create customers."4 Implied in this words and his work is the importance of keeping those same customers and of growing the depth of their relationship with company

4

Peter F.Drucker, "The practice of management", Published by Elsevier Ltd, 2007, p.31

In the book Managing customer relationships, 2004, Don Peppers and Martha Rogers said that: ―The goal of every enterprise is simply to get, keep, and grow customers‖5

According to Michael Treacy and Fred Wiersema (The discipline of market leaders, 1995), whether a business focuses its efforts on product innovation, operational efficiency and low price, or customer intimacy, that firm must have customers This is true for non-profit as well as for profits, for firms large and small, for public as well as private enterprise6

Exhibit 1.1 is the reference about increasing the value of the company through specific customer strategies

Acquire profitable customers GET

Retain profitable customers longer

Win back profitable customers

Eliminate unprofitable customers

KEEP

Unspell additional products in a solution

Cross-sell other products to customers

Referral and word-of-mouth benefits

Reduce service and operational costs

GROW

Exhibit 1.1 Increasing the value of the customer base

Getting customers is all about making the sales and marketing process not only more efficient, but also more effective Keeping customers address the biggest

challenge in business today Keeping customers is also about knowing which the right customers to keep Fundamentally, this is a question of profitability Finally, growing customers is about increasing every customer‘s lifetime value to company The two ways to grow customers are to increase their lifetime, and increase the amount of revenue generated from every customer interaction during that lifetime The first part is straightforward-understanding a customer and effectively anticipating and responding to that customer‘s needs is the fastest way to increase loyalty and make sure that customer is around for a long time The second part-increasing the sales yield per every contact-involves predicting a customer‘s needs and reacting in real time to his actions with personalized, relevant offers

George, in his book, Market-Driven strategy: Process for creating value, had the agreement with Don and Martha and released a similar conclusion that ―it is an enterprise approach to understanding and influencing customer behavior through meaningful communications to improve customer acquisition, customer retention, and customer profitability‖7

From those views of Don and Martha, the author came to the statement:

Enterprises determined to build successful and profitable customer relationships understand that the process of becoming an enterprise focused on building its value

by building customer value begins with: (1) A strategy or an ongoing process that helps transform the enterprise from a focus on traditional selling or manufacturing

to a customer focus, while increasing revenues and profits; (2) The leadership and commitment necessary to cascade the thinking and decision-making capability throughout the organization that puts customer value and relationships first

7

George S.Day, "Market driven strategy: process for creating value", Published by Free Press,

1999

2 Customer relationship management (CRM)

2.1 Definition of CRM

Customer relationship management has been addressed by many academic researchers To some extend, customer relationship management is a widely-implemented strategy for managing a company‘s interactions with customers, clients and sales prospects It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing, customer service, and technical support The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service Customer relationship management describes a company-wide business strategy including customer-interface departments as well as other departments, according to Gartner, Inc (6 June 2009) What's 'Hot' in CRM Applications in 2009

To some executives, CRM is a technology or software solution that helps track data and information about customers to enable better customer service Others think of CRM, or one-to-one, as an elaborate marketing or customer service discipline, even recently heard CRM described as "personalized email"

From other point of view, customer relationship management supplies a reliable system helping managers and staff to improve relationship between staff and customers A reasonable customer relationship policy contains training courses for staff, adjust running business method and apply an appropriate information technology Customer relationship is not only software or a technology; it is also a business strategy containing marketing strategy, training and services which company provides customers Enterprises can choose a customer relationship based

on centralize customers, care about customers demand to get along well with customers and maximize profit There are many technological components to CRM, but thinking about CRM in primarily technological terms is a mistake The more useful way to think about CRM is as a process that will help bring together lots of

pieces of information about customers, sales, marketing effectiveness, responsiveness and market trends

Don and Martha said: ―Customer relationship management is a comprehensive approach for creating, maintaining and expanding customer relationships‖8

I totally agree with two authors that CRM need to be comprehensive way because it does not belong to sales and marketing or the customer service group CRM must be

a way of doing business that touches all areas The fact of the matter is that it costs a company dramatically less to retain and grow an existing client, than it does to court new ones Customer relationship management is a business philosophy, describing a strategy which places the customer at the heart of an organisation‘s processes, activities and culture While businesses will continue to expand their client base, they must also focus on keeping and growing their best clients Increasing ‗share of customer‘ – in other words, the amount of business which each good client gives to you – becomes as important as increasing market share.CRM can develop better communication channels, collect vital data, like customer details and purchasing histories; create detailed profiles such as customer preferences, deliver instant, company-wide access to customer histories, identify new selling opportunities

2.2The use of CRM during times

According to Lucy P Roberts, CRM is one of those magnificent concepts that swept the business world in the 1990's with the promise of forever changing the way businesses small and large interacted with their customer bases9

The 1980's saw the emergence of database marketing, which was simply a catch phrase to define the practice of setting up customer service groups to speak individually to all of a company's customers In the case of larger, key clients it was

a valuable tool for keeping the lines of communication open and tailoring service to the clients needs In the case of smaller clients, however, it tended to provide repetitive, survey-like information that cluttered databases and did not provide much insight As companies began tracking database information, they realized that the bare bones were all that was needed in most cases: what they buy regularly, what they spend, what they do

In the 1990's companies began to improve on Customer Relationship Management

by making it more of a two-way street Instead of simply gathering data for their own use, they began giving back to their customers not only in terms of the obvious goal of improved customer service, but in incentives, gifts and other perks for customer loyalty This was the beginning of the now familiar frequent flyer programs, bonus points on credit cards and a host of other resources that are based

on CRM tracking of customer activity and spending patterns CRM was now being used as a way to increase sales passively as well as through active improvement of customer service

Real CRM as it's thought of today really began in earnest in the early years of this century Instead of feeding information into a static database for future reference, CRM became a way to continuously update understanding of customer needs and behavior Branching of information, sub-folders, and custom tailored features enabled companies to break down information into smaller subsets so that they could evaluate not only concrete statistics, but information on the motivation and reactions of customers With the increased fluidity of these programs came a less rigid relationship between sales, customer service and marketing CRM enabled the development of new strategies for more cooperative work between these different divisions through shared information and understanding, leading to increased customer satisfaction from order to end product

3 The importance of CRM toward corporations

3.1 Benefit of CRM

CRM today is about using information technology systems to capture and track your customers' needs And CRM today is about integrating that intelligence into all parts of the organization so everyone knows much about your customers: data turned into information and information turned into customer-satisfying action If customer relationships are the heart of business success, then CRM is the valve the pumps a company's life blood As such, CRM is best suited to help businesses use people, processes, and technology to gain insight into the behaviour and value of customers This insight allows for improved customer service, increased call centre efficiency, added cross-sell and up sell opportunities, improved close rates, streamlined sales and marketing processes, improved customer profiling and targeting, reduced costs, and increased share of customer and overall profitability The impetus for this interest in CRM came from Reichheld, who demonstrated dramatic increase in profits from small increases in customer retention rates Reichheld showed the dramatic increase in profits from small increases in customer retention rates, " His studies showed that as little as a 5% increase in retention had impacts as high as 95% on the net present value delivered by customers Other studies done by consultants such as McKinsey have shown that repeat customers generate over twice as much gross income as new customers

From some theories of authors, benefit of CRM can be divided into each party‘s sake as below:

- Increased sales through better timing by anticipating needs based on historic trends

- Identifying needs more effectively by understanding specific customer requirements

- Cross-selling of other products by highlighting and suggesting alternatives or enhancements

- Identifying which of your customers are profitable and which are not

(2) This can lead to better marketing of your products or services by focusing on:

- Effective targeted marketing communications aimed specifically at customer needs

- A more personal approach and the development of new or improved products and services in order to win more business in the future

- Collect purchase data, campaign responses, account information and web data Review and analysis of this data helps the company to organize marketing campaigns and to formulate business strategies The CRM system can manage new customer leads and information on the changing marketplace Ultimately this could lead to get to know who customers are and what company can do to eliminate obstacles and problems in conducting their business This cultivates customer loyalty and builds company brand; works to increase the value of the benefits the customers receive; develops products and services that speak to your customer's needs

- Enhanced customer satisfaction and retention, ensuring that good reputation in the marketplace continues to grow

- Increased value from existing customers and reduced costs associated with supporting and servicing them, increasing overall efficiency and reducing total cost

of sales

- Improved profitability by focusing on the most profitable customers and dealing with the unprofitable in more cost effective ways

For customers:

CRM contributes to promote last-long relationship between customers and enterprises, customers know more clearly about enterprise and are served attentively They are cared from tiny things such as birthday, interests, demands, etc

For managers:

Managers need to modify business processes based on the customer's needs and adopt computer services that enable the CRM strategy CRM provides managers variety of effectively supporting tools such as statistic analyze and assess business situation in fastest way Enterprises discover threats, hidden risks to give out timely solutions CRM also helps manager to evaluate job performance of employees For employees:

CRM allows staff to manage time and work effectively, helps them understand customers‘ information to contact and take care customers and make reputation for company and make customers retention

3.2 CRM success factors

According to Kristin Anderson and Carol Kerr, Customer relationship management,

200210, while clear intention fuels the power of CRM, there are several other success factors to consider

- Employees at all levels and all areas accurately collect information for the CRM system

Employees are most likely to comply appropriately with your CRM system when they understand what information is to be captured and why it is important They

10

Kristin Anderson and Carol Kerr, "Customer relationship management", McGraw-Hill, 2002

are also more likely to trust and use CRM data when they know how and why it was collected

- It is not necessary to use high-tech solution when low-tech solution still works Organizations that successfully implement CRM look for the simplest solution when implementing their CRM strategy A low-tech solution that works for the people who actually use it is more effective than high-tech solution that is cumbersome, costly and apt to be discarded or inconsistently implemented

Tools enable customer relationship management Tools don't have to be high-tech The best tools are the ones that allow you to gather the information you need in the easiest way for both you and your customer

- CRM tools are customer-and employee-friendly

CRM tools should be integrated into your systems as seamlessly as possible, making them a natural part of the customer service interaction

- Report out only the data you use, and use the data you report

Just because your CRM tool can run a report doesn't mean it should Refer back to your CRM strategy, and then run the data you will actually use And share that data with your team

4 Basic model of CRM

Russell established a model in his paper with a major purpose of providing a managerially useful, end-to-end view of the CRM process from a marketing perspective The basic model is shown in Exhibit 2 and contains a set of 7 basic components11:

11

Russell S Winer, "A framework for Customer relationship management", California

management review, 2001

A database of customer activity

Analyses of the database

Given the analyses, decisions about which customers to target

Tools for targeting the customers

How to build relationships with the targeted customers

Privacy issues

Metrics for measuring the success of the CRM program

Exhibit 1.2 Model of CRM Step 1: Creating a Customer Database

A necessary first step to a complete CRM solution is the construction of a customer database or information file The task will involve seeking historical customer contact data from internal sources such as accounting and customer service Ideally, the database should contain information about the following:

 Transactions: This should include a complete purchase history with accompanying details (price paid, delivery date)

 Customer contacts: There is an increasing number of customer contact points from multiple channels and contexts This should include sales calls and service requests, any customer- or company-initiated contact

 Descriptive information: This is for segmentation and other data analysis purposes

 Response to marketing stimuli: This part of the information file should contain the customer responded to a direct marketing initiative, a sales contact, or any other direct contact

 The data should also be over time

Companies have traditionally used a variety of methods to construct their databases For example, telecom companies built customer records from e-mails, direct mail, telemarketing, and other customer contacts, with descriptive information by department, division, and location; tour companies developed agents

to enlist the assistance of travel agents in building the database; some shops offer a discount on purchases if customers provide information to the company, etc

Step 2 Analyzing the Data

Customer databases have been analyzed to define customer segments Their goals are to target the most profitable prospects from different groups More recently, such segmentation approaches have been heavily criticized.12 Taking a large number of customers and forming groups or segments presumes a marketing effort towards an average customer in the group Database needs more attention on criticizing what customers can deliver to the company in terms of profits and then, depending on the nature of the product or service, either addressing customers individually or in small clusters

As a result, a new term, lifetime customer value or LCV, has been introduced

into the marketers The idea is that each customer of the database should be analyzed in terms of current and future profitability to the firm When a profit figure can be assigned to each customer, the marketing manager can then decide which customers to target The past profit that a customer has produced for the firm

is the sum of the margins of all the products purchased over time less the cost of reaching that customer

=

12

Don Peppers and Martha Rogers, The One to One Future, (New York: Doubleday, 1993), Ch.4

sum of the margins of all the products purchased over timecost of reaching that customer (*)

Profit that

customer

produces

(*):These costs include any that can be broken out at the individual customer level such as direct mail, sales calls, etc

LCV is calculated by adding forecasts for the major parameters and discounting back This obviously requires assumptions about future purchasing, product and marketing costs, as well as how long the customer can be expected to remain with the firm Generally, this will result in a number of scenarios for each customer depending upon these assumptions

The LCV formula can also be used to show where additional profits can be obtained from customers Increased profits can result from:

 Increasing the number of products purchased, by cross-selling;

 Increasing the price paid, by up-selling or charging higher prices;

 Reducing product marginal costs;

 Reducing customer acquisition costs

Other kinds of data analyses besides LCV are appropriate for CRM purposes Marketers are interested in what products are often purchased together, often referred to as market basket analysis

Step 3 Customer Selection13

Companies have their own kind of customer selection types For example, segmentation - type analyses are performed on purchasing or related behavior, the customers in the most desired segments such as highest purchasing rates, greatest brand loyalty would be selected first for retention programs

If individual customer-based profitability is also available through LCV, the marketing manager can use a number of criteria such as simply choosing those

13

Valarie A Zeithaml, Roland T Rust, and Katherine N Lemon elaborate on this section in their paper, ―The Customer Pyramid: Creating and Serving Profitable Customers,‖ published in this issue

customers that are profitable (or projected to be) The goal is to use the customer profitability analysis to separate customers that will provide the most long-term profits from those that are currently hurting profits This allows the manager to

―fire‖ customers that are too costly to serve relative to the revenues being produced, while this may seem contrary to being customer-oriented The 80/20 rule often holds in approximation: most of a company‘s profits are derived from a small percentage of their customers The point is that without understanding customer profitability, these kinds of decisions cannot be made

An obvious problem is that by not accounting for a customer‘s possible growth in purchasing, you could be eliminating a potentially important customer Customers with high LCV could be chosen; this does a better job incorporating potential purchases However, these are difficult to predict and may be include a large number of unprofitable customers in the selected group Thus, de-selected customers need to be chosen carefully Once driven away or ignored, unhappy customers can spread negative word-of-mouth quickly, particularly in today‘s Internet age

Step 4 Tools for targeting the Customers

Mass media in the past is very good tool for getting awareness of customers However, writers such as Peppers and Rogers14 have urged companies to begin to dialogue with their customers through these targeted approaches rather than talking

―at‖ customers with mass media Because mass marketing approaches such as television, radio, or print advertising are useful for generating awareness and achieving other communications objectives, but they are poorly-suited for CRM due

to their impersonal nature

Some conventional approaches for targeting selected customers include a portfolio of direct marketing methods such as email, direct mail, and personal sales

14

Peppers and Rogers, op.cit

E-mail: An extremely popular form of Internet-based direct marketing is the use of personalized e-mails Created by Godin‘s call for ―permission‖-based programs whereby customers must first ―opt-in‖ or agree to receive messages from a company, direct e-mail has become a very popular and effective method for targeting customers for CRM purposes.15 The main criticisms of targeted e-mails have focused on the privacy issue

Direct mail: Direct mail includes advertising circulars, catalogs, free trial CDs, approved credit card applications, and other unsolicited merchandising invitations delivered by mail or to homes and businesses Bulk mailings are a particularly popular method of promotion for businesses operating in the financial services, home computer, and travel and tourism industries Advertisers often refine direct mail practices into targeted mailing, in which mail is sent out following database analysis to select recipients considered most likely to respond positively

pre-Personal sales: pre-Personal selling is a promotional method in which one party (e.g., salesperson) uses skills and techniques for building personal relationships with another party (e.g., those involved in a purchase decision) that results in both parties obtaining value In most cases the "value" for the salesperson is realized through the financial rewards of the sale while the customer‘s "value" is realized from the benefits obtained by consuming the product However, getting a customer to purchase a product is not always the objective of personal selling For instance, selling may be used for the purpose of simply delivering information

Step 5 Relationship Programs

The overall goal of relationship programs is to deliver a higher level of customer satisfaction than competing firms deliver There has been a large volume

15

Seth Godin, Permission Marketing, (New York: Simon & Schuster, 1999)

of research in this area.16 From this research, managers today realize that customers match realizations and expectations of product performance, and that it is critical for them to deliver such performance at higher and higher levels as expectations increase due to competition, marketing communications, and changing customer needs In addition, research has shown that there is a strong, positive relationship between customer satisfaction and profits.17 Thus, managers must constantly measure satisfaction levels and develop programs that help to deliver performance beyond targeted customer expectations

A comprehensive set of relationship programs is shown in Exhibit 3 and includes

Program 1 Customer Service

Program 2 Frequency/loyalty programs

Program 3 Customization

Program 4 Community building

Exhibit 1.3 Set of relationship programs

Customer Service

Because customers have more choices today and the targeted customers are most valuable to the company, customer service must receive a high priority within the company In a general sense, any contact or ―touch points‖ that a customer has with a firm is a customer service encounter and has the potential to gain repeat

Eugene W Anderson, Claes Fornell, and Donald R Lehmann, ―Customer Satisfaction, Market

Share, and Profitability,‖ Journal of Marketing, July, pp 53-66

business and help CRM or have the opposite effect Programs designed to enhance

customer service are normally of two types Reactive service is where the customer

has a problem (product failure, question about a bill, product return) and contacts

the company to solve it Proactive service is a different matter; this is a situation

where the manager has decided not to wait for customers to contact the firm but to rather be aggressive in establishing a dialogue with customers prior to complaining

or other behavior sparking a reactive solution This is more a matter of good account management where the sales force or other people dealing with specific customers are trained to reach out and anticipate customers‘ needs

The IDIC Model has been developed by Peppers and Rogers (2004) According to IDIC model18, companies should take four actions in order to build closer one-to-one relationships with customers: Exhibit 1.4 IDIC

allow the companies to devise and implement customer specific strategies designed

to satisfy individually different customer need The clients represent different levels

of value to the company and they their needs are radically not the same from the enterprise According to Peppers and Rogers (2004), the customer differentiation task will involve an enterprise in categorizing its customers by both their value to the firm and by what needs they have

* Interacting with them in order to ensure that companies understand customer expectations and their relationships with other suppliers or brands Thus, companies must improve the effectiveness of their interactions with clients Each successive interaction with a customer should take place in the context of all previous interactions with that customer A conversation with a customer should pick up where the last one left off Effective customer interactions provide better insight into customer‘s needs

* Customizing the offer and communications to ensure that the expectations of customers are met Indeed, the company should adapt some aspect of its behavior toward a customer, based on that individual‘s needs and value To involve a customer in a relationship, a company needs to adapt its behavior to satisfy the customer‘s expressed needs

Loyalty/Frequency Programs

Loyalty programs (also called frequency programs) provide rewards to customers for repeat purchasing The study also identified the three leading problems with these programs: they are expensive, mistakes can be difficult to correct as customers see the company as taking away benefits, and, perhaps most importantly, there are large questions about whether they work to increase loyalty or

average spending behavior.19 However, in some industries, such programs have become a competitive necessity, it can generate loyal behavior

Customization

The notion of mass customization goes beyond 1-to-1 marketing as it implies the creation of products and services for individual customers, not simply communicating to them Many companies have developed processes and systems for creating customized products according to customers‘ tastes Slywotzky refers

to this process as a ―choice board‖ where customers take a list of product attributes and determine which they want.20 The idea is that it has turned customers into

product makers rather than simply product takers Shapiro and Varian21 argue that such customization is cheap and easy to do with information goods Such customization is termed ―versioning.‖ It is, of course, easier to do this for services and intangible information goods than for products but the examples above show that even manufacturers can take advantage of the increased information available from customers to tailor products that at least give the appearance of being customized even if they are simply variations on a common base

See also Grahame R Dowling and Mark Uncles, ―Do Customer Loyalty Programs Really

Work?‖ Sloan Management Review, Summer, 1997, pp.71-81, and Werner J Reinartz and V

Kumar, ―On the Profitability of Long-Life Customers in a Noncontractual Setting: An Empirical

Investigation and Implications for Marketing,‖ Journal of Marketing, October, 2000, pp.17-35

create relationships between the customers and the company or brand These

networks and relationships are called communities The goal is to take a

prospective relationship with a product and turn it into something more personal In this way, the manager can build an environment which makes it more difficult for the customer to leave the ―family‖ of other people who also purchase from the company

Step 6 Privacy Issues

The CRM system described in this paper depends upon a database of customer information and analysis of that data for more effective targeting of marketing communications and relationship-building activities There is an obvious tradeoff between the ability of companies to better deliver customized products and services and the amount of information necessary to enable this delivery Particularly with the popularity of the Internet, many consumers and advocacy groups are concerned about the amount of personal information that is contained in databases and how it is being used

A study by Forrester Research found a continuum of privacy concerns22:

1 Simple irritation This comes mainly from unwanted e-mails

2 Feelings of violation or ―How do they know that about me?‖

3 Fear of harm This could come from browsing X-rated sites, booking travel that a consumer does not want others to know about, etc

Step 7 Metrics for measuring the success of the CRM program

The increased attention paid to CRM means that the traditional metrics used

by managers to measure the success of their products and services in the marketplace have to be updated Financial and market-based indicators like profitability, market share, and profit margins have been and will continue to be

22

Jay Stanley, ―The Internet‘s Privacy Migraine,‖ Forrester Research, Inc., May, 2000

important However, in a CRM world, increased emphasis is being placed on developing measures that are customer-centric and give the manager a better idea of how her CRM policies and programs are working

Some of these CRM-based measures are the following:23

 Customer acquisition costs

 Conversion rates (from lookers to buyers)

 Retention/churn rates

 Same customer sales rates

 Loyalty measures

 Customer share or share of requirements (the share of a customer‘s purchases

in a category devoted to a brand)

All of these measures imply doing a better job acquiring and processing internal data to focus on how the company is performing at the customer level

23

Donald R Lehmann and Russell S Winer, Product Management, 3rd ed., (Burr Ridge, IL:

Chapter 1 summery

Customer relationship management is extremely important in the corporate setting This is actually quite understandable all on its own already After all, the customers are the blood that runs through the veins of any existing enterprise Thus, much-deserved attention has to be placed on customer relationship management or CRM The fact that relationship between customers and enterprises is the root of CRM that helps enterprise increases its value In other word, relationship is the value of every company Enterprises need to decide early on which customers they want to have relationships with, which they do not, and what type of relationships to nurture Some characterizes of relationships are: (1) a relationship implies mutuality, (2) relationships are driven by interaction, (3) it is iterative in nature, (4) it will be driven by an ongoing benefit to both parties, (5) relationships also require a change

in behavior on the part of both parties in order to continue, (6) it is uniqueness, (7) the ultimate requirement and product of a successful, continuing relationship is trust Understanding each characterize of relationship, a company will find the way

to manage its relationship with each kind of customers to earn maximally the profit from those customers Furthermore, operating process includes many step, if a company does well each step, the business result will be stable So does CRM Don and Martha said: ―Customer relationship management is a comprehensive approach for creating, maintaining and expanding customer relationships‖ CRM need to be comprehensive way because it does not belong to sales and marketing or the customer service group CRM must be a way of doing business that touches all areas

During time, CRM has been changed Today, CRM enabled the development of new strategies for more cooperative work between these different divisions through shared information and understanding, leading to increased customer satisfaction from order to end product CRM is best suited to help businesses use people, processes, and technology to gain insight into the behaviour and value of customers

This insight allows for improved customer service, increased call centre efficiency, added cross-sell and up sell opportunities, improved close rates, streamlined sales and marketing processes, improved customer profiling and targeting, reduced costs, and increased share of customer and overall profitability

CRM is more people arrangement than automatic technology Some factors leading

to successful CRM are: (1) eemployees at all levels and all areas accurately collect information for the CRM system, (2) don't go high-tech when low-tech will do, (3) CRM tools are customer-and employee-friendly, (4) report out only the data you use, and use the data you report So, well-organized CRM in both size and function

is very suitable with a medium company like ILA

The basic model of CRM contains a set of 7 basic components: (1) A database of customer activity, (2) Analyses of the database, (3) Given the analyses, decisions about which customers to target, (4) Tools for targeting the customers, (5) How to build relationships with the targeted customers, (6) Privacy issues, (7) Metrics for measuring the success of the CRM program With this model, a company can utilize

information systematically and have the spare plans to avoid unexpected things

CHAPTER 2 ANALYSIS AND ASSESMENT ON

CUSTOMER RELATIONSHIP MANAGEMENT AT ILA

2.1 About ILA

2.1.1 Introduction about ILA

ILA is one of the earliest wholly foreign owned education and training company in Vietnam In 2000, Tony William and Mark realized that the potential for education market in Ho Chi Minh city was very huge and it was truly the big cake for them while there was no strong investor explored With the business knowledge, life experience in Vietnam and capital collecting ability, they establish ILA The company offers a broad range of high quality training programme and services to individuals and organizations throughout Vietnam, including:

- English language programmes (for children, teenagers and adults)

- University pathway programmes (in co-operation with Martin College in Australia)

- Corporate training

- Teacher training (Celta, Delta, Celtyl) for native speakers

- Overseas study consultancy and placement services

With the wide range of products, each year, ILA serves over 15,000 people who take training programmes at ILA, from pre-school children to professional working adults From the success in running business in Ho Chi Minh city, the owners opened many branches in Hanoi, Danang, Vung Tau, Can Tho, Hai Phong

By the relationship with Study Group, the global leaders in international education and training providing a complete range of educational opportunities for students from over 120 countries in the world, ILA also get success in overseas study consultancy and bring many education chances for Vietnamese students

City Number of

Training centers

Ho Chi Minh 7

Ha Noi 1

Da Nang 1

Vung Tau 1

Table 2.1 Number of Training centers

According to the pie chart above, Ho Chi Minh city still the biggest segment and plays an important role in the operating and development of ILA Although Hanoi has the huge potential market, there is just one training center here Hanoi has quite balance in population, living standard, English training demand, etc compared to Ho Chi Minh city However, Board of Director has not focus on Hanoi and this is a regrettably waste Due to the limitation of this thesis, the author has not given out many evidences to prove this statement here and just concentrate on customer relationship management in following parts

Figure 2.1 Training centres

ILA Value

* The quality of the products / services we provide to our customers

* Employee satisfaction and development

* Efficiency in our business operations

ILA Mission

To be recognized, by local and international communities, as the leading independent provider [by volume and quality] of education and training products and services in Vietnam

For customer

We aim to provide superior products and services, appropriate to our customer needs and beyond their quality expectations We invest in the on-going development and improvement of our products and services

Community

We conduct our business, legally, transparently, honestly and with a high degree of integrity We aim to play a role in the development and improvement of our local community and we are proud to be part of the human resource development of Vietnam

2.2 Assessment on Customer relationship management in ILA

2.2.1 Research method description

To build Customer relationship management, it should need two parties, ILA and customers Thus, the author conducted the research with both two parties

With the primary information, the author use survey and interview method flow as below:

Primary information Secondary information

Analyzing possible reasons

Listing possible solutions

Filtering out the most appropriate solutions

Building up the plan of actions