CREATE THE DIFFERENCE Customer Relationship Management Introduction.
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CREATE THE DIFFERENCE Customer Relationship Management Introduction
CREATE THE DIFFERENCE Customer Relationship Management? A customer-centric business strategy with the key goals of maximizing profitability, revenue, and customer satisfaction. A process concerning the relationship between an organisation and its customers.
CREATE THE DIFFERENCE Traditional vs. Modern The traditional approach to CRM is based on sales. All communication and dealings go via the sales team and buyer even where both organisations contain many departments (distribution, sales, quality, finance, etc). traditional customer service is something 'done to' the customer
CREATE THE DIFFERENCE Traditional vs. Modern The modern approach to CRM is based on satisfying all of the needs - people, systems, processes, etc - across the customer's organisation modern Customer Relationship Management is 'done with' the customer
CREATE THE DIFFERENCE Why manage customers? Customers are the usual source of income for an organisation. Customers are also an exceptional source of information - information which is vital to enable a business to succeed; i.e. finding out what the customer needs! The cost of retaining existing customers through CRM is a tiny fraction of the cost of acquiring new customers.
CREATE THE DIFFERENCE Business Benefits of CRM Customer satisfaction and good CRM will –Increase customer loyalty Which will –maximise Average Revenue Per User (customer) - ARPU And –Increase customer referrals The above will increase –Revenue –Profit
CREATE THE DIFFERENCE Where does IT come in? Where there is Information – IT can help. Data mining technologies enable organisations to: –find out about customers in terms of purchasing habits preferences –profile individuals and groups to market more effectively and thereby increase sales
CREATE THE DIFFERENCE IT helps to build relationships by: Using data mining to find out about customers Using database technologies to store and make customer data widely accessible throughout the organisation Using IT to facilitate communication and to record details of communication
CREATE THE DIFFERENCE Loyalty Research has found that a 1% increase in customer loyalty generates a 25% increase in profits. An example of a business building loyalty is Tesco PLC who in 1995 launched a loyalty card called ‘Tesco Clubcard’ Within the first six months the Clubcard had increased the businesses six monthly profits by 16% and market share increased by 2.1%
CREATE THE DIFFERENCE Customer Retention Customer churn or defection rate is the process in which customers move from one business to their competitors A loss of a customer means loss of revenue The churn rate within competitive markets such as the mobile telephone sector can be especially high - anywhere between 20 and 30% Customer retention depends on reducing customer churn.
CREATE THE DIFFERENCE Identifying customers who are likely to churn Use data-mining (neural modelling) to look into behaviour of past customers who churned eg –frequency and number of purchases –Spending –Range of products purchased Use this data to predict loss of valuable customers well in advance Produce an effective retention strategy to prevent this
CREATE THE DIFFERENCE Preventing a churn Possible strategies to prevent a customer from churning might be –Special offers –Discounts –Enhanced credit limits
CREATE THE DIFFERENCE Personalisation An example of personalisation could include Amazon.com who, once a user has registered their details and / or made their first purchase steers its repeat book buyers to other types of products according to interests they’ve shown in past purchases Through the use of technology the Web site recognises a user when they return and greets them accordingly
CREATE THE DIFFERENCE Cross Selling/Upselling Cross-selling and up-selling are techniques used to entice customers to buy all of their purchases from one business as oppose to them going to multiple suppliers Data Mining can be used to –explore linkages between products –Profile or segment customers - find out what type of customer buys which product.
CREATE THE DIFFERENCE Types of Customer Relationship Management Operational CRM Analytical CRM Collaborative CRM