1. University of Washington EMBA Program
“Relationship Marketing & CRM Intro ”
Instructor: Elizabeth Stearns

2. Relationship Marketing
Marketing on the Differences
Marketing with a Memory
Demassifying the Communications Process
Customizing Communications and Products/Services

3. Relationship Marketing Attributes
Evolutionary process, not an event
Experience-based, not transaction-based
Mutually beneficial, two way
Emotional and/or logical appeals

4. Relationship Process Measurement On-going Dialogue Database Support
Communication Objectives
Customer Segmentation
Brand Equity / Promise

5. Relationship Marketing
Relationship marketing recognizes that prospects and customers can be at different points of awareness, interest and intent-to-buy along the prospectivity continuum
Persuasion is a process: Dialogue precedes purchase/engagement for most products and services

6. Model of Market Prospectivity
Unaware
Vague Awareness
Category Familiarity
Brand Familiarity
Passive Consideration
Active Interest
Purchase Usage

7. Understand Your Customers
Their Demand for Your Product or Service
Their Changes over Time
Their Growth Needs
Their Technology/Personal Service Conundrum
Their Available Choices for Solutions
Their Value to You!

8. Some Customers are Worth More!$$
$$$
$$$$ $$ $$ $ $$ $ $$ $ $$ $$
$$$$
$$$ $$

9. Brand Relevance to Customers
“To enhance customer loyalty, a company must strengthen the relationship with the brand”
“A focus on loyalty segmentation provides strategic and tactical insights that assist in building strong brands”
David Aaker, “Building Strong Brands”

11. Customer Loyalty Reduced or No Desire to Switch
Increased Perception of Value / Quality
Reduced Risk of Buying (More)
Trial New Products or Services

12. Customer Loyalty Feels Recognized and Special Volunteers Information
Positive Word of Mouth / Recommends to Others

13. Satisfaction = Performance minus Expectations

14. Make Surveys Count!
“One of my customers cornered me at a charity board meeting and told me, “I got a call after I picked up my car asking if I was satisfied with the sales experience. Then I got a call after the car was serviced, asking if I was satisfied with the service experience. Finally, another surveyor called several weeks later to check if I was happy with the ownership experience. So when am I going to get a call asking if I’m satisfied with the satisfaction survey experience?””
Reichheld, The Loyalty Effect

15. Why Relationship Marketing?

16. Economic Value to Keeping Customers
2% Retention equals approximately 10% reduction in costs

17. Why Customers Are More Valuable Over Time
Price Premium
Referrals
Company Profit
Reduced Operating Costs
Increased Purchases & Higher Balances
Base Profit
Customer
Acquisition
Cost
Time
Profit Comes from Different Sources
Reichheld & Sasser, Jr.

18. Relationship Marketing Can Increase Lifetime Value
Increase the retention rate
Increase the referral rate
Increase the spending rate
Decrease the direct costs
Decrease the marketing costs

20. CRM

21. The CRM Goal
Individual Permission – Based Interaction

22. The CRM Process Acquire & Retain Interact & Deliver CRM Understand &
Differentiate
Develop &
Customize

23. Customer Experience Cycle
Understanding

24. Customer Experience Cycle
Customer Purchase Cycle
Customer
Understanding
Stages of the Purchase Cycle
Length of each Stage
Related Complexity of Each Stage
Indicators of When a Customer Enters a Stage
Frequency at Which a Customer Repeats the Cycle
Level of Resources Directed at Each Stage

25. Customer Experience Cycle
Customer Needs
Customer
Understanding
Information
Convenience
Efficiency
Price
Reputation
etc.

26. Customer Experience Cycle
Customer Interaction Opportunities
Customer
Understanding
Tied to specific stages of the purchase cycle.
Inbound and outbound.
Cross-channel and cross-media.
Situation-driven or driven by a deeper understanding of customer needs and behaviors

27. Customer Satisfaction Customer Value Customer Loyalty Customer
Marketing
Communications
Customer
Satisfaction
Field Sales
Corporate Comm./
Public Relations
Point of Sales/
Service
Customer
Understanding
Customer
Value
Advertising
Call
Center
Customer Care
Web
Customer
Loyalty

28. Organizational Structure
CRM Transformation Map
Business Focus
Products
Sales
Channels
Marketing
Services
Customers
Organizational Structure
Product
Management
Place
Promotion
Channel
Contact
Customer
Business Metrics
Performance
Program
Revenues
Satisfaction
Lifetime Value
and Loyalty
Customer Interaction
Mass
Transaction
Opportunistic
Targeted
Campaigns
Segment-Specific
Communication
Customer-Contact
Integration
Individual
Permission-Based
Interaction
Technology
Processing
Data
Maintenance
Access
Marts
Touchpoint
Systems

29. CRM Implementation Situation Assessment CRM Gap Analysis
Internal evaluation of your capabilities
External evaluation of the customer’s experience with your org.
CRM Gap Analysis
Comparison between an organization's current state and the desired state. It is essential to define the desired customer experience.
CRM Action Plan
Cost to implement
Benefit
Feasibility (organizational readiness, senior management acceptance, etc.)
Time

30. The Strategy Development and Implementation Process
Contention
Project Planning
Differing
Perspectives
Consensus
Execution
Program
Formulation
Marketing
Strategy
Formulation
Finance
Human Resources
R&D
Operations
Creativity
Coordination
Sales

31. Designing Offers for Customers
Product
Price
Time
Effort
Risk
Delivery
Services
Sales
Relation-
ship
Technical
Innovation
Brand
Equity
Value
Cost
Offer

32. A Business Focus on Customers Means:
The organization's primary focus is on acquiring, deepening, and retaining customer relationships.
The business model is based on optimizing value delivered to customers to maximize value received from them.
Customers are at the core of the organization's value system, and the unifying force across business units and functions.
Business Focus
Products
Sales
Channels
Marketing
Services
Customers

33. Organizing around CRM
Appoint segment managers, each responsible for acquisition, development, and retention of their customer segment.
Create a cross-functional Customer Relationship department, which will ensure that CRM strategies are successfully implemented across the organization
Implement staff training, performance measurement and compensation based on CRM
Organizational Structure
Product
Management
Place
Promotion
Channel
Contact
Customer

34. Customer Metrics Customer Revenues Customer Satisfaction
Who are the top customers in terms of revenue?
Are revenues from any customer segment increasing or decreasing?
Customer Satisfaction
For which customer segments has satisfaction increased or decreased?
How do satisfied customers differ from dissatisfied customers?
Customer Loyalty and Value
How can we increase customer profitability?
What drives loyalty for our most profitable customers? How can we increase customer loyalty?
Which prospects should our organization focus on in order to “clone” our best customers?
Business Metrics
Product
Performance
Place
Program
Customer
Revenues
Satisfaction
Lifetime Value
and Loyalty

35. Developing Customer-Focused Metrics and Analyses
Collect the Right Customer Data
Increase Your Customer I.Q.
Customer Profiling
Customer Segmentation
Customer Valuation
Profitability
Lifetime Value
Share of Wallet
Customer Lifecycle
Customer Attitudes
Customer Changes
Create and Track a Customer Scorecard

37. Arthur Hughes’ Chrysler Story
Letter to Lee Iacocca
Eastern Region (Baltimore) Sales Manager
“Mr Hughes, I have your letter here to Mr Iacocca. Now Mr Hughes, I want to assure you that we do have a database. I’ve looked you up, and you’re on it!”

38. Arthur Hughes’ Chrysler Story (continued)
db Marketing Conference/Chrysler Exec/
25 million names
“So, you are in charge of the Chrysler database?”
“Yes, I am.”
“Well, tell me. What are you doing with your database?”
“Oh,” he said, “we have it on a UNIX platform.”
! ! ! ! ! ! ! ! ! ! !

39. Two Kinds of Database People
Constructors
People who build databases
Merge/Purge, Hardware, Software
Creators
People who understand strategy
Build loyalty and repeat sales
You need both kinds!

40. CEO’s Brain Right Side Left Side Costs Revenues Market Share
Budgets
Incentives
Compensation
Strategic Plans
Profits
Market Value
Quality First
Customer Focus
Customer First
Service Quality
Customer Satisfaction

41. A CRM System is: Technology
Any application that supports the collection, cleansing, and maintenance of, and/or access to, customer information, and that provides this information to appropriate entities in support of CRM applications.
Including…
Customer databases
Marketing applications
Data mining applications
Sales force automation systems
Customer care applications
Online applications
Technology
Transaction
Processing
Data
Maintenance
Access
Marts
Customer
Touchpoint
Systems

42. CRM Systems Issues
It is important to develop a customer information plan, including:
Where and how to efficiently collect customer data
How to transform data into meaningful, practical information
How to distribute customer information throughout the organization
Build a business case for your system
Determine whether your system should be in-house or outsourced, based on:
Solution scope
Core competencies
Time horizons
IT resources

43. CRM Systems Issues Monitor the quality of your data, including:
Data coverage
Data accuracy
Data precision
Data relevance
Make the data accessible to people who can put it to use
Gain the acceptance of employees who will be using the system

44. Aspects of Measuring CRM Success:
Internal CRM Capabilities
Customer Interactions
Create a customer interaction scorecard
Customer Dynamics
Customer acquisition
Customer growth & development (cross-sell, upsell)
Customer retention
Customer reactivation
Operational Efficiencies
Bottom-Line Business Metrics
Increased revenues
Decreased costs
Increased competitive differentiation

45. Think like a Customer: 10 rules for Building Customer Relationships
The “average customer” does not exist – get to know us
Make our experience special: Give us something to talk about.
If something is wrong, fix it quickly.
Guarantee our satisfaction.
Trust us, and we’ll trust you. (respect)
Don’t take us for granted.
Our time is as important as your time.
The details are important to us – they should be to you, too
Employ people who are ready, willing, and able to serve us
We care whether you’re a responsible corporate citizen.