1. 1 Chapter 21: Customer Relationship Management (CRM) Prepared by Amit Shah, Frostburg State University Designed by Eric Brengle, B-books, Ltd. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

2. Learning Outcomes 2 Define customer relationship management Explain how to identify customer relationships with the organization Understand interactions with the current customer base Outline the process of capturing customer data LO 1 LO 2 LO 3 LO 4 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

3. Learning Outcomes 3 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 LO 5 LO 6 LO 7 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

4. What is Customer Relationship Management? 4 Define customer relationship management. LO 1 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

5. Customer Relationship Management 5 A company-wide business strategy designed to optimize profitability, revenue, and customer satisfaction by focusing on highly defined and precise customer groups. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

6. Customer Relationship Management Cycle 6 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 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

7. Implementing a CRM System 7 Key Points: 1.Customers take center stage 2.The business must manage the customer relationship across all points of customer contact Copyright 2010 by Cengage Learning Inc. All Rights Reserved

8. Review Learning Outcome Customer Relationship Management 8 LO 1 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

9. Identify Customer Relationships 9 Explain how to identify customer relationships with the organization. LO 2 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

10. Identify Customer Relationships 10 Customer-Centric - The company customizes its product and service offering based on data generated through interactions between the customer and the company. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

11. Learning 11 An informal process of collecting customer data through customer comments and feedback on product or service performance. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

12. Knowledge Management 12 The process by which learned information from customers is centralized and shared in order to enhance the relationship between customers and the organization. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

13. Knowledge Management 13 Qualitative facts Customer actions Comments Experiential observations Collected Information Includes: Copyright 2010 by Cengage Learning Inc. All Rights Reserved

14. Interaction 14 The point at which a customer and a company representative exchange information and develop learning relationships. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

15. Review Learning Outcome Identifying Customer Relationships 15 LO 2 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

16. Interactions of the Current Customer Base 16 Understand interactions with the current customer base. LO 3 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

17. Interactions of the Current Customer Base 17 Requested Service Channel Past Relationship Current transaction Customer Copyright 2010 by Cengage Learning Inc. All Rights Reserved

18. Interactions of the Current Customer Base 18 Online http://www.bestbuy.com 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 same point of sale, normally in a store. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

19. Review Learning Outcome Interactions with Current Customer Base 19 LO 3 Customer Web Point of Sale Kiosk Delivery, Installation Survey Product Registration Customer Service Copyright 2010 by Cengage Learning Inc. All Rights Reserved

20. Capture Customer Data 20 Outline the process of capturing customer data. LO 4 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

21. Capture Customer Data 21 Store visits Conversations with salespeople Interactions via the Web Traditional phone conversations Wireless communications Online http://www.geico.com Copyright 2010 by Cengage Learning Inc. All Rights Reserved

22. Review Learning Outcome Capturing Customer Data 22 LO 4 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

23. Store and Integrate Customer Data 23 Describe the use of technology to store and integrate customer data. LO 5 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

24. 24 Customer Data Data Warehouse - A central repository for data from various functional areas of the organization that are stored and inventoried on a centralized computer system. Database - A collection of data, especially one that can be accessed and manipulated by software. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

25. Review Learning Outcome Store and Integrate Customer Data 25 LO 5 Database Compiled list Response list Data Warehouse :::::::::::::::::::::::::::::::::::::::::: \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ /////////////////////////////////////////////////////////// ~~~~~~~~~~~~~~~~~~~~~~~~~~ Copyright 2010 by Cengage Learning Inc. All Rights Reserved

26. Identifying the Best Customers 26 Describe how to identify the best customers. LO 6 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

27. Data Mining 27 A data analysis procedure that identifies significant patterns of variables and characteristics that pertain to particular customers or customer groups. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

28. Data Analysis 28 Predictive modeling Lifetime value analysis Recency-frequency-monetary analysis Customer segmentation Copyright 2010 by Cengage Learning Inc. All Rights Reserved

29. Customer Segmentation 29 The process of breaking large groups of customers into smaller, more homogeneous groups Generates a “profile” or picture of the customers’ similar demographic, geographic, and psychographic traits Focuses on best customers Copyright 2010 by Cengage Learning Inc. All Rights Reserved

30. Recency-Frequency-Monetary Analysis 30 1.Identifies customers mostly like to purchase again 2.Identifies and ranks “best customers” 3.Identifies most profitable customers Copyright 2010 by Cengage Learning Inc. All Rights Reserved

31. Data Manipulation Techniques 31 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. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

32. Review Learning Outcome Identify the Best Customers 32 LO 6 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

33. Leverage Customer Information 33 Explain the process of leveraging customer information throughout the organization. LO 7 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

34. CRM Marketing Database Applications 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 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

35. Campaign Management 35 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. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

36. Campaign Management 36 Communicating offerings in a way that enhances customer relationships Developing customized offerings for appropriate segment Pricing these offerings attractively Copyright 2010 by Cengage Learning Inc. All Rights Reserved

37. Retaining Loyal Customers 37 Loyalty programs reward loyal customers for making multiple purchases 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 provide information about customers and trends Copyright 2010 by Cengage Learning Inc. All Rights Reserved

38. Cross–Selling Other Products and Services 38 CRM provides opportunities to cross-sell related products Cross-sell to customers with demographic, lifestyle, or behavioral characteristic matches Internet companies use product and customer profiling to reveal cross-selling opportunities Copyright 2010 by Cengage Learning Inc. All Rights Reserved

39. Targeted Marketing Communications 39 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 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

40. Reinforcing Customer Purchase Decisions 40 Cognitive dissonance is the feeling consumers experience when they recognize inconsistency between values and opinions and their purchase behavior Thanking customers help cement a long-term, profitable relationship Update customers periodically on the status of their order Copyright 2010 by Cengage Learning Inc. All Rights Reserved

41. Increasing Effectiveness of Distribution Channel Marketing 41 CRM Databases RFID technology Multichannel Marketing Online http://www.kidsdadsmoms.com Copyright 2010 by Cengage Learning Inc. All Rights Reserved

42. Improving Customer Service 42 Level of customer service is influential in customer retention Customer retention – the percentage of customers that repeatedly purchase products from a company Copyright 2010 by Cengage Learning Inc. All Rights Reserved

43. Review Learning Outcome Leveraging Customer Information 43 LO 7  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 Marketing Information CRM Database Applications Copyright 2010 by Cengage Learning Inc. All Rights Reserved