Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Selling: Managing Customer Relationships 3e by Peter Rix Slides prepared by Mark Vincent 11−1 Chapter 11 Customer relationship management

11−2 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Selling: Managing Customer Relationships 3e by Peter Rix Slides prepared by Mark Vincent Customer relationship management The development of new customers Principles of customer relationship management  Customer relationships defined  Customer relationship needs perspective  Organisational supply planning perspective  Reduce or withdraw supply.  Increase sales for improved account viability.  Reduce costs of supply (economic order quantity, communication methods).  Increase prices.

11−3 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Selling: Managing Customer Relationships 3e by Peter Rix Slides prepared by Mark Vincent Customer relationship management cont. The development of new customers Defining CRM  Relationship marketing, loyalty marketing, customer metrics  A business concept that recognises the need to treat each customer differently  A management approach for systematically managing relationships between a company and its customers  A computer-based process to:  identify each customer’s actual or potential needs and preferences  measure the profitability of the relationship with each customer  encourage each customer to continue with mutually beneficial trade  dissuade customers from unprofitable trade arrangements

11−4 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Selling: Managing Customer Relationships 3e by Peter Rix Slides prepared by Mark Vincent Customer relationship management cont. The development of new customers CRM functions in the organisation

11−5 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Selling: Managing Customer Relationships 3e by Peter Rix Slides prepared by Mark Vincent Customer relationship management cont. The development of new customers CRM system generic objectives  Better understand each customer’s characteristics and needs  Identify profitable and potentially profitable customers  Improve customer satisfaction  Build customer loyalty  Increase profitable sales  Reduce unprofitable sales and other exchanges

11−6 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Selling: Managing Customer Relationships 3e by Peter Rix Slides prepared by Mark Vincent Customer relationship management cont. The development of new customers CRM tasks

11−7 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Selling: Managing Customer Relationships 3e by Peter Rix Slides prepared by Mark Vincent Benefits and limits of CRM The development of new customers Assumptions of CRM  Past purchase is the best predictor of future purchase behaviour.  Customers are consistent in the quality and price balance that they seek.  Establishing better relationships with customers will reduce the rate of customer turnover (also known as churning).  Are these all valid assumptions?  Under what conditions are these assumptions generally accurate and when are they clearly invalid? Discuss.

11−8 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Selling: Managing Customer Relationships 3e by Peter Rix Slides prepared by Mark Vincent Benefits and limits of CRM cont. The development of new customers Stakeholder aspects of CRM  Company management  benefits  challenges  Company front line staff  benefits  challenges  Customers  benefits  challenges

11−9 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Selling: Managing Customer Relationships 3e by Peter Rix Slides prepared by Mark Vincent Customer loyalty The development of new customers How to measure loyalty  Clear demonstrations of customer loyalty  Continued patronage over an extended period of time or after a change in circumstances such as moved location  Continued patronage despite a better alternative offer from competitors  Continued patronage despite being let down by some aspect of our organisation (support, product design, quantity etc.)  Continued referrals and recommendations to friends or business colleagues

11−10 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Selling: Managing Customer Relationships 3e by Peter Rix Slides prepared by Mark Vincent Customer loyalty cont. The development of new customers How to build loyalty  Manage customer expectations.  Be consistenty at all contact points.  Manage privacy issues.  Focus on value.  Reduce attractiveness of brand switching.  Develop proprietary systems/distribution/product accessories that are valuable but not transferable to other suppliers. Common examples include :  shelves that hold our product but not others  free memory cards that only fit our product  subsidised print cartridges that work only with our brand

11−11 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Selling: Managing Customer Relationships 3e by Peter Rix Slides prepared by Mark Vincent Developing a CRM strategy cont. The development of new customers Rationale Customer analysis Customer value proposition Distribution strategy Information strategy Measurement  alignment with strategic, customer and operational objectives

11−12 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Selling: Managing Customer Relationships 3e by Peter Rix Slides prepared by Mark Vincent Appendix to Chapter 11 Implementing customer contact programs  Four tiers of CRM  functionality  scalability  flexibility  cost

11−13 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Selling: Managing Customer Relationships 3e by Peter Rix Slides prepared by Mark Vincent Appendix to Chapter 11 cont. Implementing customer contact programs  Four tiers of CRM

11−14 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Selling: Managing Customer Relationships 3e by Peter Rix Slides prepared by Mark Vincent Appendix to Chapter 11 Implementing customer contact programs  Types of information useful for CRM