Chapter 11 - Customer Relationship Management Chapter 11- Customer Relationship Management (known as CRM) Presented by: Cassie Furchner, Lindsey Danielson & Stacia Wakeley

Chapter Objectives Define the CRM process Know how to collect customer data Analyze customer data and identify target customers Develop an effective CRM program Implement CRM program Read objectives

Questions: What is customer relationship management? Why do retailers want to treat customers differently? How do retailers determine who their best customers are? How can retailers build customer loyalty? What can retailers do to increase their share of wallet? What can retailers do to alleviate the privacy concerns of their customers? Questions that we will answer during this presentation are:

Retailing Strategy Retail Market and Financial Strategy Chapter 5, 6 Retail and Site Locations Chapter 7 and 8 Customer Relationship Management Chapter 11 Customer Relationship Management (CRM) is a very important part of the Retailing Strategy. Organizational Structure and Human Resource Management Chapter 9 Information Systems & Supply Management Chapter 10

Customer Relationship Management (CRM) A business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty with a retailer’s most valuable customers. Based on the philosophy that a set of strategies, programs and systems that focuses on identifying and building loyalty with a retailer’s most valued customers, the goal of the CRM is develop a base of loyal customers who patronize the retailer frequently.

CRM All customers are not equally profitable, and more or less profitable customers need to be treated differently Retailers now concentrate on providing more value to their best customers using targeted promotions and services to increase their share of wallet – the percentage of the customers’ purchases made from the retailer A great example of this from the book is the Ritz-Carlton. Customers are greeted by name when they check in. All of their preferences are known from previous stays and everything possible is done to meet their needs and wants. Can anyone think of somewhere in Rapid City that displays this type of behavior towards it’s customers?

Customer Loyalty Committed to purchasing merchandise and services from a retailer Resist efforts of competitors to attract the loyal customer Emotional attachment to retailer Personal attention Memorable positive experiences Brand building communications programs Customer loyalty is the objective of CRM. It is more than having customers make repeat visits or being satisfied with their experience. Customer loyalty to a retailer means that customers are committed to purchasing merchandise and services from the retailer and will resist the activities of competitors attempting to attract them.

Can Offering Price Discounts Achieve Customer Loyalty? Retail strategies like these can be copied by competitors These strategies encourage customers to be always looking for the best deal rather than developing a relationship with a retailer Loyal customers have an emotional connection with the retailer. The view the retailer as a “friend”. The feel such good will toward the retailer that they will encourage friends and family to buy from it. McGraw-Hill Companies, Inc./Gary He, photographer

The CRM Process CRM is an iterative process that turns customer data into customer loyalty through four activities: Collecting customer data Analyzing the customer data and identifying target customers Developing CRM programs Implementing CRM programs The CRM process is very in-depth, iterative (it-uh-rey-tiv) process, meaning that it is repetitious. As you can see there are four steps involved the process. (Read them off).

CRM Process Cycle Shown her in the CRM process cycle, you can see how each step in the process relates to the next, then starts all over again. This cycle is important as customers buying behavior and needs are always changing.

Collecting Customer Data: Customer Database Transactions – a complete history of purchases Purchase date, price paid, SKUs bought, whether or not the purchase was stimulated by a promotion Customer contacts by retailer (touch points) --visits to web site, inquires to call center, direct mail sent to customer Customer preferences Descriptive information about customer Demographic and psychographic data Customer’s responses to marketing activities The best customer database will include information from these areas. By tracking transactions, a retailer can build on the knowledge of what their customers are buying. Customer contacts with the retailer also include contacts initiated by the retailer such as catalogs and direct mailers sent to the customers. By knowing the customer preferences (by seeing past transactions) sales associates can suggest additional purchases to assist the customer. This makes the customer feel special. Descriptive information would include demographic information as well psychographic (sahy-kuh-graf-ik) information which shows the relative traits of the customers personality (such as hobbies). Analysis of transaction and contact data provide information about the customer’s responsiveness to marketing activities.

Collecting Customer Data: Identifying Information Approaches that store-based retailers use: Asking for identifying information Telephone number, name and address Offering frequent shopper cards Loyalty programs that identify and provide rewards to customers who patronize a retailer Private label credit card (that has the store’s name on it) Connecting Internet purchasing data with the stores Collecting information from catalog and internet shoppers is realitively easy because retailers can compile information from transactions. Customers who shop in the store, however; often pay with check, cash or a third party credit card. In this case, other data collection is necessary. When asking for a customers identifying information at the time of the sale, the sales associate can built a transaction for that customer. Some customers though are reluctant to provide this information. Frequent shopper cards or private label credit cards identify customer automatically. This is probably the easiest of the three for collecting data. I use a frequent shopper card at several stores including Pet Smart, JC Penny and Best Buy. Connecting internet purchases to the third party credit card used while shopping in the store is another way of building the customer database. ***Lead in to Lindsey section*** This collection of data leads us to the next section which has to do with the customer’s concerns for privacy violation.