2011.2.21 marketing

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Lamb, Hair, McDaniel

CHAPTER 21

Customer Relationship Management (CRM)

2010-2011

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LO 1 Define customer relationship management

LO 2 Explain how to identify customer relationships with the organization

LO 3 Understand interactions with the current customer base

LO 4 Outline the process of capturing customer data

Learning OutcomesLearning Outcomes

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LO 5 Describe the use of technology to store and integrate customer data

LO 6 Describe how to identify the best customers

LO 7 Explain the process of leveraging customer information throughout the organization

Learning OutcomesLearning Outcomes

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Define customer relationship management

What Is Customer What Is Customer Relationship Management?Relationship Management?

LO1

5LO1

A company-wide business strategy

designed to optimize profitability,

revenue, and customer satisfaction by

focusing on highly defined

and precise customer groups.

Customer Relationship Management

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Customer RelationshipManagement Strategy

Link all processes of the company from its customers through its suppliersLink all processes of the company from its customers through its suppliers

Foster customer-satisfying behaviorsFoster customer-satisfying behaviors

Encourage and track customer interaction with the companyEncourage and track customer interaction with the company

Organize the company around customer segmentsOrganize the company around customer segments

LO1

Allows companies to tightly focus in on their target marketsAllows companies to tightly focus in on their target markets

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According to an ex-marine and retired Dell marketing executive:

In times of panic there is a lot of shooting going on and not enough aiming.

LO1

Take Aim with Your Marketing Message

Source: Casey Jones, “Go to War Against Wasted Marketing Spending: What Marines Can Teach CMOs About Success Under Fire,” Advertising Age, December 17, 2008.

8LO1

Breathe: Set aside time every week to focus on what your

brand is communicating. Relax: The brand will not fail if you pause to focus. It may fail,

however, if off-target marketing shots waste money. Aim: Make sure your marketing message is standardized and

contain the essential elements listed on the slide.

Squeeze: Apply Steady pressure.

Shoot.


On the rifle range, Marine recruits learn the acronym BRASS: Breathe, Relax, Aim,

Squeeze, Shoot. Marketers can use BRASS to make the most of their marketing budget:

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Aim to persuade: • Who is the target customer?• What is the target customer’s current perceptions

of your brand? • In what context will the target customer make

purchase decisions?• What do you want the target customer to think and

feel after you communicate with him or her? • What are the minimum points you must

communicate in order to achieve your goal?

LO1

If it doesn’t persuade, don’t say it!


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Customer Relationship Management Cycle

Identify customer relationships

Store and integratecustomer data using IT

Capture customer data based on interactionsIdentify best customers

Understand interactions with current customer base

Leverage customerinformation

LO1

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Implementing a CRM System

Key Points:

1. Customers take center stage

2. Business must manage the customer relationship across all points of customer contact

LO1

12LO1

Customer Relationship Management

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Explain how to identify customer relationships with the organization

Identify Customer RelationshipsIdentify Customer Relationships

LO2

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Identify Customer Relationships

Customer-Centric:Customer-Centric:

LO2

The company customizes its product and service offering based on data generated through interactions between the customer and the company. Generates long-lasting relationships

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LO2

Learning:Learning:

An informal process of collecting customer

data through customer comments and

feedback on product or service

performance.

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LO2

Knowledge Management:Knowledge Management:

The process by which learned information

from customers is centralized and shared in

order to enhance the relationship between

customers and the organization.

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Knowledge Management

Qualitative facts Qualitative facts

Customer actionsCustomer actions

CommentsComments

Experiential observationsExperiential observations

CollectedCollectedInformation Information

Includes: Includes:

CollectedCollectedInformation Information

Includes: Includes:

LO2

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Empowerment

LO2

Empowerment:Empowerment:

Delegation of authority to solve customers’ problems quickly. Usually solved by the first person that the customer notifies regarding the problem.

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• Training and Skill Development

• Communication Development

• Recognition and Rewards

• Employee Growth Strategy

• Compensation and Benefits Reviews

• Resource and Workload Planning

• Performance Appraisals

• Career Planning

SOURCE: Society for Human Resource Management and CRM TodayLO2

Empowering EmployeesEmpowering Employees

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Identifying Customer Relationships

LO2

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Understand interactions

with the current customer base

Understand Interactions Understand Interactions of the of the

Current Customer BaseCurrent Customer Base

LO3

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Interactions of the Current Customer Base

Requested Service

Channel PastRelationship

CurrentTransaction

Customer

LO3

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Interactions of the Current Customer Base

LO3

Touch Points:Touch Points:

Point of Sale Interactions:Point of Sale Interactions:

Communications between customers and organizations that occur at the point of sale, normally in a store.

All possible areas of a business where customers communicate with that business

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Interactions with Current Customer Base

WebWeb

Point of SalePoint of Sale

KioskKiosk

Delivery, InstallationDelivery, Installation

SurveySurvey

Product RegistrationProduct Registration

LO3

CustomerCustomer

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Outline the process of capturing

customer data

Capture Customer DataCapture Customer Data

LO4

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Capture Customer Data

Store visitsStore visits

Conversations with salespeopleConversations with salespeople

Interactions via the WebInteractions via the Web

Traditional phone conversationsTraditional phone conversations

Wireless communicationsWireless communications

LO4

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Capturing Customer Data

LO4

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Describe the use of technology to store

and integrate customer data

Store and Integrate Store and Integrate Customer DataCustomer Data

LO5

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• Only useful if consistent and accurate.– Use information technology to capture,

store and integrate important information (data warehousing)

• Useful information:– Purchasing habits– Transaction methods– Product usage

• Access vast amounts of information required to make decisions

LO5

Customer Data

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Store and Integrate Customer Data

DatabaseDatabase

Compiled listCompiled listResponse listResponse list

Data Warehouse

::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\///////////////////////////////////////////////////////////~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

LO5

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Describe how to identify the best

customers

Identify the Best CustomersIdentify the Best Customers

LO6

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Identifying the Best Customers

Data Mining:Data Mining:

A data analysis procedure that identifies

significant patterns of variables and

characteristics that pertain to particular

customers or customer groups.

LO6

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Data Mining

Identify and profile the best customers

Calculate their lifetime value

Predict purchasing behavior

LO6

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Data Analysis

Predictive modelingPredictive modeling

Lifetime value analysisLifetime value analysis

Recency-frequency-monetary analysisRecency-frequency-monetary analysis

Customer segmentationCustomer segmentation

LO6

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1. Identifies customers most likely to purchase again

2. Identifies and ranks “best customers”

3. Identifies most profitable customers

LO6

Recency-Frequency-Monetary Analysis

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Data Manipulation Techniques

LO6

Lifetime Value Analysis:Lifetime Value Analysis:

Predictive Modeling:Predictive Modeling:

A data manipulation technique that projects the future value of the customer over a period of years.

A data manipulation technique in which marketers try to determine what the odds are that some other occurrence will take place in the future.

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Identify the Best Customers

LO6

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Explain the process of leveraging customer information

throughout the organization

Leverage Customer Leverage Customer InformationInformation

LO7

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Campaign managementCampaign management

Retain loyalcustomers

Retain loyalcustomers

Cross-selling other products and services

Cross-selling other products and services

Designing targetedmarketing communications

Designing targetedmarketing communications

Reinforcing customerpurchase decisions

Reinforcing customerpurchase decisions

Inducing product trialby new customers

Inducing product trialby new customers

Increasing effectivenessof distribution channel

marketing

Increasing effectivenessof distribution channel

marketing

Improving customer service


CRM Marketing Database Applications

LO7

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Campaign Management

Developing product or service offerings

customized for the appropriate customer

segment and then pricing and communicating

these offerings for the purpose of enhancing

customer relationships.

LO7

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Campaign Management

Communicating offerings in a waythat enhances customer relationships

Communicating offerings in a waythat enhances customer relationships

Developing customized offerings for appropriate segment

Developing customized offerings for appropriate segment

Pricing these offeringsattractively

Pricing these offeringsattractively

LO7

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Retaining Loyal Customers

Loyalty programs reward loyal customers for making multiple purchasesLoyalty programs reward loyal customers for making multiple purchases

Retaining an additional 5 percent of customers increases profits by as much as 25 percentRetaining an additional 5 percent of customers increases profits by as much as 25 percent

Improving customer retention by 2 percent candecrease costs by as much as 10 percentImproving customer retention by 2 percent candecrease costs by as much as 10 percent

Loyalty programs provide information about customers and trendsLoyalty programs provide information about customers and trends

LO7

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• Match product profiles to cross-sell products matching customer characteristics

• Modify message to align with consumer relationships to the company’s products

• Thank customers, update about order status, maintain strong relationship– Loyal customers cost less and spend more

with the favored company

Using the Data

LO7

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Targeted Marketing Communications

InfrequentUsers

InfrequentUsers

ModerateUsers

ModerateUsers

HeavyUsers

HeavyUsers

Offer direct incentives, such as a price discount

Offer more reinforcement of past purchase decisions

Design around loyalty and reinforcement of purchase

LO7

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Using the Data

• Use best customers’ data to profile ideal customer– Demographic and behavioral data locate strong potential

customers• CRM helps manufacturers know who is actually buying

their products.– RFID technology improves distribution, gathers info on product

usage• Improves customer service

– Wishlists, recommendations, remember purchase information• Privacy Concerns

– Build relationships on trust• Avoid Spam• Inform users of privacy policy and how information is used

LO7

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Leveraging Customer Information

Campaign management

Retaining loyal customers

Cross-selling other products

Designing targeted marketingcommunications

Reinforcing purchase decisions

Inducing product trial by new customers

Increasing effectiveness of distribution channel marketing


Marketing Information

CRM Database

Applications

LO7

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Email Marketing Bumps Web site Traffic

Looking for return customers? Email marketing gets customers to click back. Being well-established, trusted, and easy makes email the ideal medium for marketers to get the word out. Online traffic is fairly simple to track, and using customer information gathered from online purchases offers businesses a relatively simple way to establish a relationship with customers.

Source: “Email marketing ‘a trusted method,’” www.directnews.co.uk, Wednesday November 11, 2009.LO7