Mumbai University > Information Technology > Sem 7 > E–Commerce & E-Business

Marks: 10 M

Year: May 2015

Introduction:

Customer extension refers to increasing the depth or range of products that a customer purchases from company. It is often referred to as ‘customer development’. Customer extension has the aim of increasing the lifetime value of the customer to the company.

Use of ecommerce site to achieve CRM:

i. E-commerce site can be used to achieve extension in the following ways:

• Re-sell: Selling similar products to existing customers – particularly important in some B2B contexts as re-buys or modified re-buys.
• Cross-sell: Sell additional products which may be closely related to the original purchase, but not necessarily so.
• Up-sell: A subset of cross-selling, but in this case, selling more expensive products.
• Reactivation. Customers who have not purchased for some time, or have lapsed, can be encouraged to purchase again.
• Referrals: Generating sales from recommendations from existing customers, for example member-get-member deals.

ii. Direct e-mail is also an excellent way for informing a customer about other company products and it is also useful in encouraging repeat visits by publicizing new content or promotions. E-mail is vitally important to achieving online CRM since the web site is a pull medium which the customer will only be exposed to if they decide to visit the web site and they are unlikely to do this unless there is some stimulus. However, e-mail is a push medium where the customer can be reminded about current promotions and offers and why they should visit the web site.

iii. Segmentation and targeting schemes for extension are often used by e-retailers, who have detailed customer profiling information and purchase history data as they seek to increase customer lifetime value through encouraging increased use of online services over time.

iv. E-commerce sites enables e-retailers identify customers in the categories of value, growth, responsiveness or defection risk to characterize them using information about them which indicates their purchase and campaign-response behaviour. Marketers can then use the digital marketing to create a cycle of:

• Monitoring customer actions or behaviours and then . . .
• Reacting with appropriate messages and offers to encourage desired behaviours
• Monitoring response to these messages and continuing with additional communications and monitoring.

i. Also, Recency Frequency Monitory value (RFM) analysis can be done which helps in grouping customers into different RFM categories. For example, RFM analysis can be applied for targeting using e-mail according to how a customer interacts with an e-commerce site. Values could be assigned to each customer as follows:

Recency:

1 – Over 10 months

2 –Within last 8 months

3 –Within last 6 months

4 –Within last 3 months

5 –Within last 1 month

Frequency:

1 – More than once every 10 months

2 – Every 6 month

3 – Every 3 months

4 – Every 2 months

5 – Monthly

Monetary value:

1 – Less than $10 2 – $10–50

3 – $50–$100

4 – $100–$200

5 – More than $200

ii. Ecommerce sites help in evaluating customer characteristics, behaviour and then making recommendations for future products.