19 MKTG CHAPTER Lamb, Hair, McDaniel 2008-2009 Chapter 19 Customer Relationship Management (CRM) MKTG Lamb, Hair, McDaniel 2008-2009 19 Customer Relationship Management (CRM) CHAPTER Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian University

Learning Outcomes LO1 LO2 LO3 LO4 Chapter 19 Customer Relationship Management (CRM) Learning Outcomes Define customer relationship management Explain how to establish customer relationships within the organization Understand interactions with the current customer base Outline the process of capturing customer data LO1 LO2 LO3 LO4

Learning Outcomes LO5 LO6 LO7 Describe the use of technology to Chapter 19 Customer Relationship Management (CRM) Learning Outcomes Describe the use of technology to store and integrate customer data Describe how to identify the best customers Explain the process of leveraging customer information throughout the organization LO5 LO6 LO7

Customer Relationship Management Chapter 19 Customer Relationship Management (CRM) Customer Relationship Management Customer Relationship Management A company-wide business strategy designed to optimize profitability, revenue, and customer satisfaction by focusing on highly defined and precise customer groups. LO1

Customer Relationship Management Strategy Chapter 19 Customer Relationship Management (CRM) Customer Relationship Management Strategy Link all processes of the company from its customers through its suppliers Foster customer-satisfying behaviors Encourage and track customer interaction with the company Organize the company around customer segments Online http://www.crmdownload.com LO1

Customer Relationship Management Cycle Chapter 19 Customer Relationship Management (CRM) Customer Relationship Management Cycle Identify customer relationships Understand interactions with current customer base Leverage customer information Capture customer data based on interactions Identify best customers Store and integrate customer data using IT LO1

Implementing a CRM System Chapter 19 Customer Relationship Management (CRM) Implementing a CRM System Key Points: Customers take center stage Business must manage the customer relationship across all points of customer contact LO1

REVIEW LEARNING OUTCOME Chapter 19 Customer Relationship Management (CRM) REVIEW LEARNING OUTCOME LO1 Customer Relationship Management

Identify Customer Relationships Chapter 19 Customer Relationship Management (CRM) Identify Customer Relationships Customer-Centric The company customizes its product and service offering based on data generated through interactions between the customer and the company. LO2

Identify Customer Relationships Chapter 19 Customer Relationship Management (CRM) Identify Customer Relationships Learning An informal process of collecting customer data through customer comments and feedback on product or service performance. LO2

Identify Customer Relationships Chapter 19 Customer Relationship Management (CRM) Identify Customer Relationships 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. LO2

Experiential observations Collected Information Includes: Chapter 19 Customer Relationship Management (CRM) Knowledge Management Qualitative facts Customer actions Comments Experiential observations Collected Information Includes: LO2

Empowerment LO2 Empowerment Chapter 19 Customer Relationship Management (CRM) Empowerment Empowerment Delegation of authority to solve customers’ problems quickly—usually by the first person that the customer notifies regarding the problem. LO2

REVIEW LEARNING OUTCOME Chapter 19 Customer Relationship Management (CRM) REVIEW LEARNING OUTCOME LO2 Identifying Customer Relationships

Interactions of the Current Customer Base Chapter 19 Customer Relationship Management (CRM) LO3 Requested Service Channel Past Relationship Current Transaction Customer

Interactions of the Current Customer Base Chapter 19 Customer Relationship Management (CRM) LO3 Touch Points All possible areas of a business where customers communicate with that business. Point-of-Sale Interactions Communications between customers and organizations that occur at the point of sale, normally in a store. Online http://www.bestbuy.com

REVIEW LEARNING OUTCOME Chapter 19 Customer Relationship Management (CRM) REVIEW LEARNING OUTCOME LO3 Interactions with Current Customer Base Web Point of Sale Kiosk Delivery, Installation Survey Product Registration Customer

Capture Customer Data LO4 Store visits Conversations with salespeople Chapter 19 Customer Relationship Management (CRM) Capture Customer Data Store visits Conversations with salespeople Interactions via the Web Traditional phone conversations Wireless communications LO4 Online http://www.geico.com

REVIEW LEARNING OUTCOME Chapter 19 Customer Relationship Management (CRM) REVIEW LEARNING OUTCOME LO4 Capturing Customer Data

REVIEW LEARNING OUTCOME Chapter 19 Customer Relationship Management (CRM) REVIEW LEARNING OUTCOME LO5 Store and Integrate Customer Data Database Compiled list Response list Data Warehouse :::::::::::::::::::::::::::::::::::::::::: :::::::::::::::::::::::::::::::::::::::::: \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ /////////////////////////////////////////////////////////// ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Identifying the Best Customers Chapter 19 Customer Relationship Management (CRM) Identifying the Best Customers Data Mining A data analysis procedure that identifies significant patterns of variables and characteristics that pertain to particular customers or customer groups. LO6

Data Mining LO6 Identify and profile the best customers Chapter 19 Customer Relationship Management (CRM) Data Mining Identify and profile the best customers Calculate their lifetime value Predict purchasing behavior LO6

Data Analysis LO6 Customer segmentation Chapter 19 Customer Relationship Management (CRM) Data Analysis Predictive modeling Lifetime value analysis Recency-frequency-monetary analysis Customer segmentation LO6

Recency-Frequency-Monetary Analysis Chapter 19 Customer Relationship Management (CRM) Recency-Frequency-Monetary Analysis Identifies customers most likely to purchase again Identifies and ranks “best customers” Identifies most profitable customers LO6

Data Manipulation Techniques Chapter 19 Customer Relationship Management (CRM) Data Manipulation Techniques Lifetime Value Analysis 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. LO6

REVIEW LEARNING OUTCOME Chapter 19 Customer Relationship Management (CRM) REVIEW LEARNING OUTCOME LO6 Identify the Best Customers

Database Applications CRM Marketing Database Applications Chapter 19 Customer Relationship Management (CRM) Campaign management Retain loyal customers Cross-selling other products and services Designing targeted marketing communications Reinforcing customer purchase decisions Inducing product trial by new customers Increasing effectiveness of distribution channel marketing Improving customer service LO7

Campaign Management LO7 Campaign Management Chapter 19 Customer Relationship Management (CRM) 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

Campaign Management LO7 Chapter 19 Customer Relationship Management (CRM) Communicating offerings in a way that enhances customer relationships Developing customized offerings for appropriate segment Pricing these offerings attractively LO7

Retaining Loyal Customers Chapter 19 Customer Relationship Management (CRM) Retaining an additional 5 percent of customers increases profits by as much as 25 percent Improving customer retention by 2 percent can decrease costs by as much as 10 percent Loyalty programs reward loyal customers for making multiple purchases Loyalty programs provide information about customers and trends LO7

Targeted Marketing Communications LO7 Chapter 19 Customer Relationship Management (CRM) Infrequent Users Moderate Users Heavy Users Offer direct incentives, such as a price discount Offer more reinforcement of past purchase decisions Design around loyalty and reinforcement of purchase LO7

Multichannel Marketing Increasing Effectiveness of Distribution Channel Marketing Chapter 19 Customer Relationship Management (CRM) Multichannel Marketing CRM Databases RFID technology Online http://www.kidsdadsmoms.com LO7

REVIEW LEARNING OUTCOME Chapter 19 Customer Relationship Management (CRM) REVIEW LEARNING OUTCOME LO7 Leveraging Customer Information Marketing Information Campaign management Retaining loyal customers Cross-selling other products Designing targeted marketing communications Reinforcing purchase decisions Inducing product trial by new customers Increasing effectiveness of distribution channel marketing Improving customer service CRM Database Applications