1. Customer relationship management (CMR)
Strategic marketing

2. Customer relationship management
What is customer Relation Management (CRM)?
A company-wide business strategy designed to optimize
profitability
revenue
customer satisfaction
by focusing on highly defined and precise customer groups
Concept is to treat customers as individuals rather than part of a group

3. Customer relationship management strategy
The company accomplishes this strategy by
Organizing the company around customer segments
Establishing and tracking customer interactions with the company
Fostering customer satisfying behaviors
Example when you login to a website like
Rhapsody player targets consumers who stream audio
Tracks their musical preferences and usage
Uses this information to offer special promotions & make recommendations to you specifically

4. Customer relationship management
CRm v. Mass Marketing
Mass marketing means using one approach & hoping it has mass appeal
CRM allows you to effectively communicate with the individual customer

5. Customer relationship management cycle
Identify customer relationships
Store and integrate customer data using IT
Capture customer data based on interactions
Identify best customers
Understand interactions with current customer base
Leverage customer information
Customer relationship management seems like a simple customer service management strategy
It is a closed-loop system that builds relationships with customers
Continuous
No predefined starting/ending point

6. Customer Relationship Management
Bridgestone tire uses ondemand 5
Gathers information from P.O.S.
Demographic, frequency of purchases, how much they purchase, & how far they drive
Gathers information from all types of communication the customer has
How often they visit a specific store & purchasing history
Captures relative customer data on interactions
Last purchase made, does customer redeem coupons, last form of communication between customer
Store & integrate customer data
Stores customer responses from survey, warranty cards, any customer input source
Identify most profitable customers
Not all customers are the same. Focus on money makers
Leverage information
Customer data is sent to all departments of a company. Get all information to right department.
Send customers promotions aimed at increasing store visits & sales

7. Customer relationship management
CRM key points
Customers take center stage
Business must manage the customer relationship across all points of customer contact

8. Identify customer relationships
Companies have a crm system that follows a customer-centric focus or model
Customer centric
An internal management philosophy similar to the marketing concept
Company customizes its product & service offering based on data generated through interactions between the customer and the company
All company decisions and actions are a direct result of customer information

9. Customer relationship management
Companies force customers to login to websites so that they can gain access to their information & preferences
Take advantage of online opportunities; have to login
Learning
An informal process of collecting customer data through customer comments and feedback on product or service performance.

10. Customer relationship management
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.
Knowledge management involves Collecting information through:
Experimental observations
Comments
Customer actions
Qualitative facts

11. Customer relationship management
Empowerment
Delegation of authority to solve customers’ problems quickly—usually by the first person that the customer notifies regarding the problem.
Employees don’t have to rely on management to make decisions
Trusted to take care of customer without supervision

12. Customer relationship management
interaction
the point at which a customer and a company representative exchange information and develop learning relationships
Customer defines the terms of the interaction (often by preference)
Organization responds with products & services that meet customer needs
Any activity or touch point a customer has with a company (directly or indirectly) constitutes an interaction

13. Customer relationship Management
Touch points
All possible areas of a business where customers communicate with that business.
-- Amazon saves your searches based on login
Point of sale interactions
Communications between customers and organizations that occur at the point of sale, normally in a store.
-- Check out with store credit card

14. Customer relationship Management
Most common ways a company can interact with current customers
Web
Point of sale
Kiosk
Delivery, installation
Survey
Product registration

15. Customer relationship Management
Channel interactions
The traditional approach for acquiring customer data
The method of data collection (how information is obtained) is most important
Can include
Store visits
Conversations with sales people
Interactions via the web
Phone conversations
Wireless communications

16. Undercover boss Directv
How do they (or could they) develop customer retionships?
How do they identify customer relationships?
Examples of interactions between a company & its customer base
Types of information it wants to capture

17. CRM Part II

18. Warm up
Directv empowers its customer service representatives to offer discounts to long-established customers in order to solve a problem. This is an example of which stage of the customer relationship cycle?
Capturing customer data
Identification of customer relationship
Leveraging the customer information
Storing & integrating customer data using information technology

19. Customer relationship management cycle
Identify customer relationships
Store and integrate customer data using IT
Capture customer data based on interactions
Identify best customers
Understand interactions with current customer base
Leverage customer information
Identify customer relationships
Understand interactions with customer base
Capture customer data based on interactions
Store & integrate customer data using information technology
Identify best customers
Leverage customer information

20. How do companies store & integrate customer data?

21. Customer relationship Management
Data warehouse
A central warehouse of customer data collected by an organization.
Essentially it is a large computerized file of all information collected in the previous phase of the CRM process.
Takes information from a variety of databases and integrates them so that departments throughout an organization can have access to all pertinent customer data

22. Customer relationship Management
When Building a database you develop a list
Response list: customers who have indicated an interest in a product or service
Includes their name & addresses
Have responded to an offer at some time
Compiled list: created by an outside company that has collected data of potential customers
Gather information from telephone directories or membership rosters
Enhance information with census data & other public record information

23. Customer relationship Management
Goal of a company is to find your best customers
80/20 Rule: 80% of your profits come from 20% of your customers
Goal is to identify that 20%.
Data mining
Identify and profile the best customers
Pickup on patterns & characteristics to determine trends
Calculate their lifetime value
Predict purchasing behavior

24. forms of analysis can be performed after customer data is captured?

25. Customer relationship Management
Data mining
Customer segmentation
Break down large groups into smaller homogenous groups
Recency-frequency-monetary analysis (rfm)
Measures: recently purchased moves, frequency, & amount spent
Projects current value of a customer to a company
Lifetime value analysis (ltv)
Projects future value of a customer to a company
Explains how much it costs to acquire customers
Level of spending to retain customers
Facilitates targeting new customers
Predictive modeling
Predict when a purchase will take place

26. How do companies leverage customer information?

27. Leveraging customer information
Leveraging means designing & tailoring marketing strategies
to best appeal to identified customers
Campaign management
Monitoring the success of marketing strategies based on sales, orders, etc..
Develop customized sales for loyal customers
Customers that spend more, get more
Allows companies to store information about customers & trends

28. 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
Notes:
Page 294 lists some common CRM marketing database applications.
LO7

29. 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

30. 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
Notes:
If a company has identified its best customers, effort should be made to maintain and increase their loyalty. As shown here, customer retention can have a dramatic effect on a company’s profitability, while in turn continue to reward loyal customers.
Loyalty programs provide information about
customers and trends
LO7

31. 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
Notes:
Using transaction and purchase data, customers can be segmented into infrequent, moderate, and heavy users. Communications programs for each segment are designed to encourage customer purchases and loyalty.
LO7

32. Multichannel Marketing
Increasing Effectiveness of Distribution Channel Marketing
Chapter 19 Customer Relationship Management (CRM)
Multichannel Marketing
CRM Databases
RFID technology
Online
KidsDadsMoms10
Would you be comfortable building a profile about your child at KidsDadsMoms.com? Why or why not? What are the advantages of giving complete information? Are there any disadvantages? Can you use their highly customized site without building a learning profile for a child?
Notes:
With CRM databases, manufacturers have a tool to gain insight into the customers who are buying their products.
It is also possible to track purchases made online and in brick-and-mortar stores. This concept is called multichannel marketing.
Companies are also using RFID technology (radio-frequency-identification technology) to improve distribution.
Online
LO7

33. REVIEW LEARNING OUTCOME
Chapter 19 Customer Relationship Management (CRM)
LO7
REVIEW LEARNING OUTCOME
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