RICHARD KARUME MAHINDA

19/02452

BACHELOR OF COMMERCE

SSS

MAIN CAMPUS

FULL TIME

ASSIGNMENT II
a) Understanding of E-CRM and the concepts and technology behind the working of a
typical E-CRM system. [4 Marks]
Electronic customer relationship management (E-CRM) is the application of Internet-
based technologies such as emails, websites, chat rooms, forums and other channels to
achieve CRM objectives. It is a well-structured and coordinated process of CRM that
automates the processes in marketing, sales and customer service.
An effective E-CRM increases the efficiency of the processes as well as improves the
interactions with customers and enables businesses to customize products and services
that meet the customers’ individual needs.
Electronic customer relationship management provides an avenue for interactions
between a business, its customers and its employees through Web-based technologies.
The process combines software, hardware, processes and management’s commitments
geared toward supporting enterprise-wide CRM business strategies.
Electronic customer relationship management is motivated by easy Internet access
through various platforms and devices such as laptops, mobile devices, desktop PCs
and TV sets. It is not software, however, but rather the utilization of Web-based
technologies to interact, understand and ensure customer satisfaction.
An effective E-CRM system tracks a customer’s history through multiple channels in
real time, creates and maintains an analytical database, and optimizes a customer’s
relation in the three aspects of attraction, expansion and maintenance.
A typical E-CRM strategy involves collecting customer information, transaction history
and product information, click stream and contents information. It then analyzes the
customer characteristics to give a transactional analysis consisting of the customer's
profile and transactional history, and an activity analysis consisting of exploratory
activities showing the customer's navigation, shopping cart, shopping pattern and more.
b) Explain THREE methods an online business may employ to advertise its products and
services in the online environment. [6 Marks]

i)Social Media Marketing

One of the huge advantages to Social Media Marketing is that if is free to use even
for business accounts, meaning you can put your business in front of its ideal
customers who spend their time on social media over and above anything else. Most
social media platforms also allow some level of paid advertising so that you can
reach even more potential customers, often for a far lower cost than through other
forms of online advertising such as PPC.
For many, the main cost of Social Media Marketing is the time it takes, as the whole
point of the platform is to be social rather than to sell. In fact, most social media
users are averse to advertising, what they want is a one-to-one relationship.
Business that do well on social media do well because they are social. Links,
photographs, video and blog posts all do well to help build your relationships, they
also help you build credibility and expertise so that when people are ready to buy
they will remember your business because they have been gently reminded of your
name every time they’ve seen or liked a link on Social Media.

ii)Content Marketing
Content is the word used to describe the articles, posts, videos, images, and
anything else that makes up the substance of your web page.
Websites rich in content are seen as trustable, the more you have to say on a
subject, the more you must know about it, therefore you can show yourself to be an
authority or an expert. If you have a website for your business, you should have a
blog section there that you update regularly. Look for ways that you can use the
content of your website or blog to market your business so that when people read
your page you are giving them something they want – knowledge – and subtly
pointing out that you can offer them more.
Look for ways to get your content in front of as many people as possible, because
the more who see it and visit your site, the more it increases the chances of your
content being shared and seen by even more people. Good content will also help
with your SEO. If you’re not sure where to start with sharing your content, try some
of the popular submission sites such as e-zine, Business2Community or look for
something similar that serves your particular niche.

iii)Online Advertising
This term includes other types of online advert that you see, such as Banner Ads
and Text links Many of these fall under a PPC category, but istead of being on
search engines they’re on other websites. One of the best things about online
adverts is that if something works, you can quickly scale it up to a bigger audience. If
it doesn’t work you can tweak it or turn it off.
c) As the owner of an e-commerce startup, discuss measures you would put in place to
enhance trust and confidence among your online customers. [6 Marks]

1. Security Logos and Site Seals

This is perhaps the most obvious method, and it does reassure shoppers
unfamiliar with your site that they can enter their card details with
confidence.Trustmarks or site seals come in many forms and reassure
customers about various aspects of sites security.

2. Social Proof
Social proof is perhaps as effective as any other method used to gain a users’
trust.While product reviews will help to push shoppers towards buying a
particular product, they won’t tell users anything about the trustworthiness of
the site.For this, services such as Google’s Trusted Stores scheme provide an
average user rating and essentially tell the customer that people have bought
from the site before and would recommend it.

3. Site Design
The look and feel of a website helps to persuade users that it is
trustworthy.It’s a subjective thing, but users will gain an instant impression
when they arrive at a site.

4. User Experience (UX)

In addition to an appealing design, a site needs to be usable. This is too big a
topic to tackle in detail here, but basically it should work as users expect it to.

Put simply, the journey from arrival on the site to the final payment stage
should be as frictionless as possible.Anything that adds more work for
users to do makes it less likely that they’ll make a purchase.For example,
Banana Republic hits users with a pop-up asking them to provide feedback on
their shopping experience.It’s intrusive and adds extra work in forcing them to
click the ‘x’ before they can continue shopping. Additionally, it’s ridiculous to
ask shoppers for feedback as soon as they arrive on the site.

5. Site Performance
As well as UX, site performance is vital to engender trust with users. When
sites don’t work as they should, potential customers lose confidence.There
are two main areas to look at:

 Site speed. If a site is noticeably slow, not only will that make it more
annoying to use, but it may also plant seeds of doubt about the general
reliability of the site.Use tools like Google’s Page Speed Insights to check.
Even the established sites can find room for improvement here.
 Error avoidance. Errors and bugs, especially within checkout, can be fatal for
transactions. If the site does not work properly, that tells customers that their
payment may not be secure.

6. Clear Contact Details

Contact options reassure shoppers that, if there is a problem with their order,
they can get in touch easily.
d) Discuss how credit card payment processing work including FOUR parties involved in the
transaction. [8 Marks]

STAGE 1: AUTHORIZATION

The first stage of the credit card transaction lifecycle is authorization, and it
normally lasts just a few seconds. When the cardholder initiates the purchase,
the merchant requests electronic authorization from the issuing bank. Here, the
merchants is asking the bank if the card number is valid, and whether
funds/credit associated with the card are available for the transaction.
Even this simple task is more involved than it seems. The authorization request
must travel from the merchant to the processor (via a payment gateway), then on
to the card network, who forwards the request on to the issuer. Once the issuer
grants authorization, the response travels back through the card scheme and the
acquirer before the merchant has clearance to accept the transaction. All this
happens in near-real time.It’s important to note that the authorization phase
doesn’t actually finalize the transaction. This stage merely confirms the card is
active and has not been reported stolen, and that there are resources to cover
the purchase. Having a transaction authorized by the bank doesn’t inherently
mean the purchase is authorized by the cardholder. “Authorized” transactions
can still be cases of fraud.
STAGE 2: BATCHING

Once the issuer has granted authorization, the merchant can complete the
purchase. A request for authorization is still not a request for the payment,
though. The merchant now must send the bank a formal request for funds to
cover the transaction.
This is usually not done immediately. Instead, most eCommerce merchants store
their authorized transactions in a batch to be transmitted later (typically the end
of the business day).
Once the batch is complete, the merchant sends off all the authorized
transactions to the processor for sorting. The processor then forwards them to
the acquiring bank.

STAGE 3: CLEARING

The clearing process is the midway point in the credit card transaction lifecycle.
After the acquirer (the merchant’s bank) receives the transactions from the
processor, things get even more complex.
The acquirer distributes the transactions to the appropriate card schemes (Visa,
MasterCard, UnionPay, etc.), who in turn distribute the transactions they receive
to the appropriate issuer banks. The issuers charge the cardholders’ accounts for
the amount of each transaction before routing the payments back through the
card schemes. Finally, the schemes transfer all requested funds to the acquiring
bank.

STAGE 4: FUNDING

Even after all this, the merchant still has not been reimbursed for the card
payment. Up to this point, the merchant has completed the purchase, and may
have already provided the goods and services requested to the customer;
however, the money is still in transit.
Funding is the last phase of the credit card transaction process. This is where the
acquirer deposits the funds into the merchant’s account, finally making the
money available for the merchant’s use.
As you can see, there are many credit card transaction steps and touchs tones,
and it would be naïve to think it all happens for free. Every party in the chain
charges a small fee for each transaction. Those fees charged by the acquirer, the
issuer, and the card network are subtracted from the final amount the merchant
receives.

e) Explain the role of e-government in enhancing efficiency in public procurement in Kenya. [6

Marks]
f) Explain your understanding of machine learning and its significance in e-commerce. [5 Marks

Better Search and Display

Machine learning can give users the ability to find exactly what they want
based on their search query. At present, users find products on an e-
commerce site using keywords, so the site owner must ensure that they have
attributed those keywords to products that users are searching for.

Machine learning can enhance this by providing support for a broader set of
synonyms. Smart machine learning looks for synonyms of keywords used, as
well as similar phrases people use for the same query. Machine learning’s
ability to do this comes from its capability to analyze a site and its metrics.
This allows e-commerce sites to prioritize click rates and existing conversions
while putting high-rated products on the top of the page. Machine learning can
also accurately predict what customers want and then adapt product
suggestions to best fit their needs. For example, you can set the search
results to default sorting (“By Relevance” or “By Featured”) based on the
search keywords as well as the customer’s profile and analysis. An e-
commerce search engine using a customer’s profile has a higher probability of
selling its listed products as the system predicts what the customer wants to
see, rather than listing all products that match the keywords.

Chatbots

Chatbots backed by machine learning can provide a more “human”

conversation with users by understanding structured data. Using machine
learning, chatbots can be programmed with general information to respond to
customer queries. The more the bot interacts with people, the more it will be
able to understand an e-commerce site and its products/services. As more
complex learning is employed, chatbots can do so much more, such as
identifying potential upselling opportunities, delivering customized coupons by
asking questions and addressing the customer’s long term needs. The cost of
developing a custom chatbot for a site can range between $25,000 to
$30,000, including design, development and integration. This can easily be
financed using a small business loan.While all of this is fair and good, one
thing to always keep in mind is to respect your customer’s private information.
A majority of chatbots are third-party applications and may be collecting or
using your customer’s data to answer questions or create social media
content automatically. Make agreements to lay down how much data can be
used and make sure it’s anonymized.

More Ways to Make People Buy

Machine learning also creates opportunities for a host of virtual buying

assistance with functionalities. This includes reminding users when prices
drop below a specific limit and reminding them to get their air conditioner filter
changed every few months. E-commerce sites can take this a step further by
using coupons to reduce prices up to a limit, or for saving big, ahead of a
holiday season.

Machine learning removes a lot of manual labor and guesswork required to

identify consumer segments and allows e-commerce owners to send
promotional content with differentiated pricing. Using profiles and analyzing
browsing/purchase data, machine learning systems can create sales
campaigns that meet multiple threshold criteria related to inventory, margins
and repeated business.

Recommendation Engine

One of the biggest reasons why Amazon continues to dominate the e-

commerce industry is because of its recommendation engine, which is based
entirely on machine learning. Recommendation engines are like the rack of
magazines or candy that you find at the checkout counter at a store. Their
purpose is to remind customers about an item they may need, but have
forgotten about. A recommendation engine learns and analyzes patterns from
past user behavior from millions of data records. The engine will then be able
to predict how a new user may browse the website, what they may be
interested in and what people with similar profiles have behaved like in the
past. When a user successfully makes a purchase, the engine sees if the
recommendations were successful or not to further improve the algorithm.
Retargeting, Upselling and Discounts

Not every user visiting your site is going to end up buying something. Some
may be just looking for product information, or some may actually add
something to the cart, but back off at the end. Machine learning can help get
more people to complete their purchase using dynamic
retargeting, upselling and discounts. Machine learning enables e-commerce
owners to better retarget users by looking at data to find out what had worked
to convert similar profiles in the past through retargeting.

In some cases, a Facebook Ad may work; in other cases, a time-bound

discount on the abandoned item may work. It all depends on what the data is
pointing towards. Machine learning goes through millions of profiles, analyzing
their behavior and outcomes to predict what will most likely work when trying
to convert a customer.

Fraud Protection

The larger the amount of data, the easier it gets to catch any anomalies.
Machine learning can identify patterns in data, identify what’s ‘normal’
behavior and notify admins when something is not ‘normal’. The most
common application of this is in fraud detection. The problem of customers
buying with stolen credit cards, or retracting payments after the item has been
delivered, is rampant in e-commerce. Detecting and preventing such fraud is
nearly impossible without machine learning that rapidly processes the
repetitive data to detect frauds before they happen.
Better Inventory Management

One of the persistent problems in e-commerce is with inventory management.

What’s astounding is that, even though $1 Trillion is tied up in capital, 46% of
companies in the United States don’t track their inventory. Sellers sometimes
oversell, shipments can take too long to deliver or forecasting must have been
wrong. This affects the standard e-commerce motto of delivering the right
products in the right place at the right quantity. Inventory management can be
painstaking (especially for e-commerce sellers) if done manually – eventually
impacting accurate sales predictions, which can subsequently lead to cash
flow problems. Machine learning can make forecasting future demand a lot
more precise. Not only will this help with easy supply chain management, but
it also ensures that you understand your customers and their behaviors better.

Stock replenishment is necessary to avoid stock-outs and it ensures that

customer demands are met in an accelerated timescale. Using machine
learning algorithms, stock replenishment can be automated based on
historical and current sales analysis. This can be configured for both “Pick up
from store” and “Deliver to customer” arrangements.

Understand Your Customer Better

Customers demand more personalized experiences and, if you’re not

‘listening’ to them, they will find someone who will. The only way to meet this
demand is by understanding their preferences better; it will be different for
different types of customers. Since almost every interaction with the customer
is digital, e-commerce sites collect huge amounts of customer data, including
demographics, psychographics and behavioral data. The complex part is
putting them all together and deriving actionable insights out of them for
merchandising and marketing decisions. This is exactly where machine
learning shines. Machine learning algorithms assess individual customer
inventory and behavior data to predict exactly what they want. It can also
deep dive into complex journey analytics and expose opportunities that you
didn’t know even existed so that you can provide hyper-personalized
experiences to customers.

Trend Analysis

Before putting products up for sale on an e-commerce site, you have to

analyze their trend; is it a best-selling product, a normal seller or is it
outdated? Trend analysis also has an impact on procurement, be it from an
external vendor or internal fulfillment. Returned products will play a huge part
in procurement if trends are not properly analyzed. Hence, it is critical to
analyze the trend of a product, as it can reduce the overall size of the catalog,
maintenance cost of products and improve space utilization at the warehouse.
Using machine learning, this can be easily achieved as it analyses and cross
compares product reviews, ratings and social media inputs. Products with low
ratings can be discontinued from the site.