MODULE 1: SALES AND MARKETING OVERVIEW

Module Overview
This chapter explains the basic principles of Sales and Marketing as it relates to
Customer Relationship Management. The chapter describes the key elements in
the Microsoft Dynamics® AX Sales and Marketing module that refer to basic
customer relationship management theory to create an understanding of the
ideas behind the module.

Objectives

The objectives are as follows:

• Understand the basic theory of Customer Relationship Management

• Understand CRM-based elements
• Gain an overview of the various parts of the Sales and Marketing
module

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Customer Relationship Management

You experience Customer Relationship Management (CRM) every day. You are the
target of marketing strategies based on CRM ideas from companies worldwide,
such as the following:

• Marketing mail in the Inbox

• Marketing flyers in your postal mailbox
• Advertisements on television, billboards, and online

CRM is not a definitive theory. It is concepts, ideas, and strategies used by CRM
specialists with varying definitions. Here are some examples:

• "CRM is a business strategy - an attitude to employees and customers

- supported by processes and systems. The goal is to build long-term
relationships by understanding individual needs and preferences and
add value to the enterprise and the customer." (Source: The CRM
Handbook)
• CRM is a company-wide business strategy that reduces costs and
increase profitability by solidifying customer loyalty. (Source: CRM
Magazine)
• "CRM is a philosophy that puts the customer at the design point. It is
getting intimate with the customer." (Source: Liz Shahnam, CRM
analyst, META Group)
• "CRM is a strategy used to learn more about customers' needs and
behavior to develop stronger relationships with them." (Source: CRM
Research Center)

Experts do not agree on all the fine points defining CRM. However, all the
definitions are customer focused.

CRM consists of three disciplines:

• Know your customer

• Act on what you know
• Learn from what you know

Know Your Customer

Knowing the customer's preferences and needs is important in any business

situation. Knowing means the ability to collect, store, assimilate, analyze, and
access relevant, correct, and up-to-date knowledge about customers, their needs,
history, preferences, development possibilities, and business sectors. Knowing the
customer facilitates more personal, direct, and specialized customer service.

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 Module 1: Sales and Marketing Overview
Act on What You Know

Customers constantly look for better prices, improved services, and more
enthusiastic suppliers. They may change suppliers on a whim or based on one bad
experience. The challenge CRM seeks to resolve is customer retention through
excellent customer experiences. To achieve this, you must act on the collected
knowledge in the organization to provide better customer service than the
competition. For example, a salesperson may discover through a sales initiative
that a customer is celebrating a significant anniversary soon. You can use this
information to send a gift to the customer commending the achievement.

Learn From What You Know

Your customer knowledge cannot remain static. A company cannot implement a

CRM solution, increase customer satisfaction, increase sales, and consider the CRM
initiative completed.

The world changes, and so do customers, their needs, and the marketplace. The
company must change with them, gearing the organization and work procedures,
better assimilating and using new knowledge about customers.

CRM is a never ending process; learn from the responses to your actions. A
company must be willing to learn, adapt, and adjust to new knowledge; what
works, what does not work, and what is coming in the future. Therefore, the CRM
solution a company selects must support the evolution of business strategies and
processes.

The Customer
Customer Relationship Management focuses on keeping and growing the
appropriate customers. The appropriate customers are those who generate the
most profit for your business. Customers vary; some require more maintenance
whereas other customers return a larger profit to the company. The key is to
identify the very important customers and to gear the sales organization to
maintaining and satisfying these customers. The company must cater to the needs
of these customers to increase sales to them, or at a minimum, to avoid losing
them.

Keeping Customers

Businesses gain and lose customers constantly. It is expensive to gain new

customers. The cost of advertising and selling can be significant. Therefore, make
sure that you keep customers. Customer experiences must be positive and make a
difference; negative experiences must be resolved in a positive manner to show
the company's commitment.

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Sales and Marketing in Microsoft Dynamics® AX 2012
Inactive or uninterested customers consume time, energy, and resources. A
company must recognize unprofitable customers and stop efforts to keep them.
This frees resources to focus on customers driving profits. The successful company
drops customers who are not profitable and will not be profitable.

Profitable customers must feel so special and important that they do not consider
the competition. A customer who does business with a company that meets or
exceeds expectations generates repeat business. This leads to increased sales.

A Banking Example - Customer Focus

Customers require different treatment , depending on their preferences and

capabilities; consider the following example.

A bank has customers of different value regarding interest and handling fees.
Consider the difference between the banking needs of a couple with a mortgage
and car loans instead of a teenager with one bank account.

The bank may enable teenagers to conduct business through the Internet with
minimal personal interaction. The bank's costs related to teenagers' accounts are
low, but teenagers are retained as customers. Retention holds the potential of
additional profits when the teenagers have mortgages and loans themselves.

Today's low value teenage customer may be a high value customer tomorrow
when treated correctly. The challenge is to keep the customer at a low
maintenance cost when the customer is of low value. Maintenance costs increase
as the customer becomes a high value customer, but the profitability of the high
value customer offsets the larger maintenance costs. The competition must then
try to steal a loyal, well-treated customer - a costly and potentially unprofitable
proposition.

Customers' Effect on Public Perception

CRM theory categorizes customers into types, the most extreme of which are the
Advocate and the Terrorist.

An advocate customer willingly and publicly praises the company's service,

products, and support. This customer acts as a loyal supporter of the company. A
terrorist customer publicly defames the company and its service at every
opportunity.

CRM's focus turns good customers into advocates of the company and prevents a
departing customer from becoming a terrorist. Knowing a customer's grievances,
their history, and needs help reduce dissatisfaction.

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 Module 1: Sales and Marketing Overview
Growing Customers

CRM advocates growing existing customers which may be high value in the future
if lots of work is invested. The figure illustrates how CRM can move customers
toward the first quadrant (Area 1), improving customer loyalty and profit.

FIGURE 1.1 COMPANIES STRIVE TO MOVE CUSTOMERS TO HIGHER LOYALTY

AND PROFITABILITY LEVELS

Customer Focus

To increase customer loyalty and profitability, CRM advocates an increased focus

on key customers. This starts with obtaining and using the customer's name and
address correctly. Making sure all relevant customer data is accessible and current
is important. Mistakes can be caused by multiple databases with little
synchronization. This leads to duplicate records and conflicting information.

One Contact Person

Supplying the customer a single point of contact increases the level of

personalization, trust, and respect. Contact should be personal and take the
customer's needs into consideration.

One-to-One contact is almost never the norm, as the customer usually interacts
with many departments; for example, Marketing, Sales, Reception, Service, and
Support. However, the customer must feel that all communication is personal.

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Collected Communication

Because increasing the level of personalization is difficult, it becomes important to

collect relevant data on the contact person and the company. Treat the contact
person's hobbies and interests with as much importance as the customer's future
production to strong relationships.

This information must be stored centrally to facilitate personalized contact and

communication. Even preferred greetings and closings on letters can be stored
and used to personalize correspondence. This data must be available to all
employees interacting with the customer. This increases the level of consistency
when you deal with the contact person, because many people from a company
communicate with the contact person.

Product Customization

Each customer is special, different, and may require product based on these
specializations and differences. This is true even when the product is a carton of
milk. A company must know their customers' wants to customize products.

Learning Relationships

Knowing a customer and its contact people is the main focus of CRM. The
company must constantly learn about the customer's needs and wants, now and
in the future to grow and evolve.

Predicting what a specific customer does or needs is almost impossible, but when
analyzed in groups, trends and tendencies can be discovered and acted upon. If
customer A is in the same business sector as customer B and the two have similar
characteristics, they may be subject to the same business conditions.

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 Module 1: Sales and Marketing Overview
The illustration is frequently used in CRM materials. It shows how the customer's
loyalty and lifetime value is increased by using CRM correctly to know the
customer, understand their needs, and help the customer grow.

FIGURE 1.2 CRM HELPS COMPANIES GROW THEIR CUSTOMERS' BUSINESS

Companies must decide what they are willing to spend keeping and growing a
customer. This decision varies , depending on the company, business sector, and
specific business.

A Banking Example - Growing a Customer

The teenage, low value customer might grow into a high-value customer,
requiring increased banking services as income increases when the teenager is a
full-time member of the work force.

By maintaining a good personal relationship and knowing the teenager's needs

and wants, the bank can take advantage of this knowledge to better supply
services needed as his or her income increases.

The System

All this data-gathering requires a system or application to store, filter, and search
the data for meaningful information. New technology and integrated business
solutions enable companies to pursue a level of personal communication with
customers previously found only in small, locally-based companies.

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Sales and Marketing in Microsoft Dynamics® AX 2012
Using integrated business solutions, large companies can pool financial data with
customer, production, and purchase data. An integrated solution can:

• Improve cost-reporting
• Provide for data mining for hidden relationships
• Enable personalized mass-communication, direct marketing initiatives
based on segments and people
• Create profile-based campaigns with customized products
• Store valuable data on customers and also competitors

The combination of CRM and IT provides a new set of capabilities within CRM.
Some customers like communicating by using the Internet; other customers
through more traditional channels such as telephone calls or postal mail.
Regardless of the preference, a company's CRM system improves the choice of
communication and enables storage of the customer's preferences.

Not only can traditional customer purchases be tracked and analyzed, but
Internet-based sales, answered questionnaires, and catalog purchases can be
accessed. This enables the analysis of customer-initiated sales.

Sales and Marketing and CRM

The Sales and Marketing Module contains basic elements and core ideologies of
Customer Relationship Management, focusing on the salesperson and the sales
organization. The main focus is the direct person-to-person contact with the
customer and the ease with which a salesperson can create quotations, create and
follow up on marketing initiatives, and report on the activities and sales of the
employees and customers.

The module includes functionality in acquiring, storing, and using a range of data
in the sales flow from the initial sales initiative to future follow up and additional
sales. Sales and Marketing consists of four main areas of functionality and the
ability to obtain selected customer data through the Enterprise Portal.

The four areas are as follows:

1. Sales Force Automation - Sales Force Automation includes external

business contacts called Prospects, and their employees, which are
known as Contact persons. Sales force automation activities in
connection with the Prospects create offers, which are known as
Quotations, for the Prospects.
2. Sales Management (SM) -Sales Management centers on the sales
performance of individual sales personnel, sales units, and the
company related to Prospects, Activities, and the Quotation process.

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 Module 1: Sales and Marketing Overview
3. Marketing Automation (MA) - Marketing Automation focuses on how
to create and execute a group of activities; for example, email
messages and direct mailings to a selected group Prospects and
collects information for a marketing campaign.
4. Telemarketing (TM) - Telemarketing groups Prospects and
administers contacts or surveys by telephone.

Using a shared database, Microsoft Dynamics AX provides front office personnel

access to all customer information collected by the company.

The Sales and Marketing module also contains five minor areas that complement
and support basic CRM functionality. Functionality that revolves around the
customer, as shown in the figure:

FIGURE 1.3 THE COMPLEMENTARY FUNCTIONALITY OF CRM

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The remaining five areas in the Sales and Marketing module are as follows:

1. Document Management: Document Management enables sales

personnel to store electronic correspondence such as letters,
pamphlets, email messages, and quotations.
2. Data Management: All Sales and Marketing transactions and data
are stored in a central database. This enables a quick and integrated
overview of the customer and contact person's data.
3. Project Management: You can attach campaigns to existing projects
or create a new project to track costs and employee time
consumption. This gives an accurate overview of the cost of the
campaign. Linking a quotation to a project enables the transfer of
quotation lines to the forecast. Additionally, users can create a project
to track the costs of Telemarketing initiatives; for example, when
temporary employees are used.
4. Knowledge Management: The Knowledge articles collects Internet
links, file paths, and files from stored locations to facilitate navigation
and categorization based on the needs of the user. The Knowledge
articles supports files, Web links, audio/video clips, presentations, and
graphic software by enabling preview of the files or starting in a
separate application.
5. Customer Self-Service: The enterprise portal can be set up for
increased customer self-service. It enables the respondent of a
campaign initiative to answer a questionnaire online. This increases
the quantity and quality of the information the company gains from
its customers.

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 Module 1: Sales and Marketing Overview

Module Review
Module Review and Takeaways

Sales and Marketing Overview explains the basic principles of Sales and Marketing
as it relates to Customer Relationship Management. This chapter provides
information on the following key points.

• Experts do not agree on all the fine points defining CRM. However, all
the definitions are customer focused. They consist of the following
three disciplines:
• Know your customer
• Act on what you know
• Learn from what you know
• Customers require different treatment, depending on their
preferences and capabilities. CRM requires product based options
that are based on these specializations and differences.
• CRM advocates growing existing customer relationships.

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Sales and Marketing in Microsoft Dynamics® AX 2012

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