Customer Relationship
Management
Key Concepts
Customer Relationship
Management Strategy
Organize the company around customer segments
Encourage and track customer interaction with the company
Foster customer-satisfying behaviors
Link all processes of the company from its customers
through its suppliers
Customer Relationship Management Cycle
Identify customer relationships
Leverage customer
information
Understand interactions
with current customer base
Identify best customers
Capture customer data
based on interactions
Store and integrate
customer data using IT
Implementing a CRM System
Key Points:
1. Customers take center stage
2. Business must manage the customer
relationship across all points of
customer contact
Customer Relationship Management
Identify Customer Relationships
Customer-Centric
The company customizes its
product and service offering
based on data generated
through interactions between
the customer and the company.
Identify Customer Relationships
Learning
An informal process of
collecting customer data
through customer comments
and feedback on product or
service performance.
Identify Customer Relationships
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
Experiential
observations
Comments
Collected
Information
Includes:
Customer actions
Qualitative facts
Empowerment
Empowerment
Delegation of authority to solve
customers’ problems quickly—
usually by the first person that
the customer notifies regarding
the problem.
Identifying Customer Relationships
Interactions of the
Current Customer Base
Current
Transaction
Past
Relationship
Channel
Customer
Requested
Service
Interactions of the
Current Customer Base
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 point of sale,
normally in a store.
Interactions with Current Customer Base
Web
Point of Sale
Customer
Kiosk
Delivery, Installation
Survey
Product Registration
Capture Customer Data
Store visits
Conversations with salespeople
Interactions via the Web
Traditional phone conversations
Wireless communications
Capturing Customer Data
Store and Integrate Customer Data
Response list
Compiled list
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Database
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Data Warehouse
Identifying the Best Customers
Data
Mining
A data analysis procedure
that identifies significant
patterns of variables and
characteristics that pertain to
particular customers or
customer groups.
Data Mining
 Identify and profile the best customers
 Calculate their lifetime value
 Predict purchasing behavior
 Amazon.com great at it
Data Analysis
Customer segmentation
Recency-frequency-monetary analysis
Lifetime value analysis
Predictive modeling
Recency-Frequency-Monetary
Analysis
1. Identifies customers most
likely to purchase again
2. Identifies and ranks “best
customers”
3. Identifies most profitable
customers
Data Manipulation Techniques
Lifetime
Value Analysis
A data manipulation technique
that projects the future value of
the customer over a period of
years.
Predictive
Modeling
A data manipulation technique
in which marketers try to
determine what the odds are
that some other occurrence will
take place in the future.
Identify the Best Customers
CRM Marketing
Database Applications
How to Use Info Effectively
Campaign management
Reinforcing customer
purchase decisions
Retain loyal
customers
Inducing product trial
by new customers
Cross-selling other
products and services
Increasing effectiveness
of distribution channel
marketing
Designing targeted
LO7 communications
marketing
Improving
customer service
Campaign Management
Campaign
Management
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.
Campaign Management
Developing customized
offerings for appropriate segment
Pricing these offerings
attractively
Communicating offerings in a way
that enhances customer relationships
Retaining Loyal Customers
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
Loyalty programs provide information about
7
customers
and trends
LO
Targeted Marketing
Communications
Infrequent
Users
• Offer direct incentives,
such as a price
discount
Moderate
Users
• Offer more
reinforcement of past
purchase decisions
Heavy
Users
• Design around loyalty
and reinforcement
of purchase
Increasing Effectiveness of
Distribution Channel Marketing
RFID technology
Multichannel Marketing
CRM Databases
REVIEW LEARNING OUTCOME
Leveraging Customer Information
Marketing Information
 Campaign management
 Retaining loyal customers
CRM Database
 Cross-selling other products
 Designing targeted marketing
communications
Applications
 Reinforcing purchase decisions
 Inducing product trial by new customers
 Increasing effectiveness of distribution
channel marketing
 Improving customer service