Strategic Marketing
1. Imperatives for Market-Driven Strategy
2. Markets and Competitive Space
3. Strategic Market Segmentation
4. Strategic Customer Relationship Management
5. Capabilities for Learning about Customers and Markets
6. Market Targeting and Strategic Positioning
7. Strategic Relationships
8. Innovation and New Product Strategy
9. Strategic Brand Management
10. Value Chain Strategy
11. Pricing Strategy
12. Promotion, Advertising and Sales Promotion
Strategies
13. Sales Force, Internet, and Direct Marketing Strategies
14. Designing Market-Driven Organizations
15. Marketing Strategy Implementation And Control
CHAPTER 4
STRATEGIC CUSTOMER
RELATIONSHIP
MANAGEMENT
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
PIVOTAL ROLE OF CUSTOMER RELATIONSHIP MANAGEMENT
DEVELOPING A CRM STRATEGY
 CRM Levels
 CRM Strategy Development
 CRM Implementation
VALUE CREATION PROCESS
 Customer Value
 Value Received by the Organization
 CRM and Value Chain Strategy
CRM AND STRATEGIC MARKETING




Implementation
Performance Metrics
Short-Term Versus Long-Term Value
Competitive Differentiation
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CUSTOMER RELATIONSHIP MANAGEMENT
 CRM is a cross-functional core business
process concerned with achieving
improved shareholder value through the
development of effective relationships
with key customers and customer
segments.
CRM Recognizes That
Customers:
 Vary in their economic value
to the company
 Differ in their expectations
toward the firm
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CUSTOMER LIFETIME VALUE
Customer lifetime value (CLV) calculates past profit
produced by the customer for the firm – the sum
of all the margins of all the products purchased
over time, less the cost of reaching that customer
 To this is added a forecast of margins on
future purchases (under different assumptions
for different customers), discounted back to
their present value.
 This process provides an estimate of the
profitability of a customer during the time
span of the relationship.
 The CLV calculation is a powerful tool for
focusing marketing and promotional efforts
where they will be most productive.
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PERSPECTIVES TOWARD CRM
STRATEGICTHE ENTIRE
COMPANY
REQUIRED
MARKETING
FUNCTIONS
THE CUSTOMER
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THE STEPS IN DEVELOPING A CRM STRATEGY
Gain enterprise commitment
Build a CRM project team
Business needs analysis
Define the CRM strategy
Source: V. Kumar and Werner J. Reinartz, Customer Relationship Management (Hoboken, NJ: John Wiley & Sons, Inc.), 2006, 39.
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DEFINE THE CRM STRATEGY
Value
Proposition
1
Other
Stakeholders
5
4
Enterprise
Transformation Plan
2
CRM
STRATEGY
3
Business
Case
Customer
Strategy
Source: V. Kumar and Werner J. Reinartz, Customer Relationship Management (Hoboken, NJ: John Wiley & sons, Inc.), 2006,
42.
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IMPLEMENTATION DANGERS
 Implementing Without Developing a
Customer Strategy
 Failing to Initiate Necessary
Organizational Change
 Allowing Technology to Dominate the
CRM Process
 Focusing on the Wrong Customers
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VALUE CREATION PROCESS
Value Received by
the Customer
Value Received by the
Organization
THE VALUE EXCHANGE
Successful Value
Exchange
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METRICS
FEATURE
How General Electric Co. Measures Customers’
Experience
Happy (And Not-So-Happy) Customers
General Electric is a big user of the “Net Promoter” concept of customer
satisfaction, popularized by Fred Reichheld of Bain & Co. Below, questions
similar to those on which GE’s Capital Solutions unit asks customers to rate the
unit’s performance on a 0 – 10 scale.
• How willing are you to recommend us to a friend or
associate?
• How would you rate our ability to meet your needs?
• How would you rate our people?
• How would you rate our processes?
• What is your impression of our market reputation?
• How would you rate the cost of doing business with us?
• How would you rate the overall value of our product or
service as being worth what you paid?
Source: Kathryn Kranhold, “Client-Satisfaction Tool Takes Root,” The Wall Street Journal, July 10, 2006, B3.
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CRM AND VALUE CHAIN STRATEGY
The Perfect Customer Experience
“The perfect customer experience, which must be affordable for the
company in the context of the segments in which it operates and its
competition, is a relatively new concept. This concept is now being
embraced in industry by companies such as TNT, Toyota’s Lexus, Oce,
and Guinness Breweries, but it has yet to receive much attention in
the academic literature. Therefore, multi-channel integration is a
critical process in CRM because it represents the point of co-creation
of customer value. However, a company’s ability to execute multichannel integration successfully is heavily dependent on the
organization’s ability to gather and deploy customer information, from
all channels and to integrate it with other relevant information.”
Adrian Payne and Pennie Frow, “A Strategic Framework for Customer Relationship Management,” Journal of Marketing (October 2005),
173.
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CRM AND STRATEGIC MARKETING
CRM
STRATEGIC
MARKETING
From the perspective of strategic marketing, there are several
reasons why CRM is important and why there should be extensive
marketing involvement in decisions about CRM. Importantly, an
organizational perspective is needed in guiding the CRM strategy.
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