Lamb, Hair, McDaniel
MKTG 2009-2010
19
CHAPTER
Designed by
Amy McGuire, B-books, Ltd.
Chapter 19
Customer
Relationship
Management
(CRM)
Prepared by
Dana Freeman, B-books, Ltd.
Copyright ©2010 Cengage Learning Inc. All rights reserved
1
Learning Outcomes
LO1
Define customer relationship
management
LO2
Explain how to establish customer
relationships within the organization
LO3
Understand interactions with the current
customer base
LO4
Outline the process of capturing
customer data
Chapter 19
Copyright ©2010 Cengage Learning Inc. All rights reserved
2
Learning Outcomes
LO5
Describe the use of technology to
store and integrate customer data
LO6
Describe how to identify the best customers
LO7
Explain the process of leveraging customer
information throughout the organization
Chapter 19
Copyright ©2010 Cengage Learning Inc. All rights reserved
3
LO1
What Is Customer
Relationship Management?
Define customer
relationship
management
Chapter 19
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4
Customer Relationship Management
Customer
Relationship
Management
A company-wide business
strategy designed to optimize
profitability, revenue, and
customer satisfaction by
focusing on highly defined
and precise customer groups.
LO1
Chapter 19
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5
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
LO1
http://www.crmdownload.com
Online
Chapter 19
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6
Beyond the Book
LO2
Chapter 19
Take Aim with Your Marketing Message
According to an ex-marine and
retired Dell marketing executive:
In times of panic there is a
lot of shooting going on
and not enough aiming.
Source: Casey Jones, “Go to War Against Wasted Marketing Spending: What Marines Can Teach CMOs
About Success Under Fire,” Advertising Age, December 17, 2008.
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7
Beyond the Book
LO2
Chapter 19
Take Aim with Your Marketing Message, cont.
On the Marine Corps rifle range, recruits are taught the
acronym BRASS: breathe, relax, aim, squeeze, shoot.
Marketers, too, can use this technique to make the most of
their marketing budget (their arsenal):
1. Breathe: Set aside time every week to focus on what your
brand is communicating.
2. Relax: Remember that the brand will not fail if you pause
for a moment to focus. It may fail, however, if you continue
to waste marketing shots that are off-target.
3. Aim: Make sure your marketing message is standardized
and contain the essential elements listed on the slide.
4. Apply Steady pressure.
5. Shoot.
Copyright ©2010 Cengage Learning Inc. All rights reserved
8
Beyond the Book
LO2
Chapter 19
Take Aim with Your Marketing Message, cont.
Aim to persuade:
 Who is the target customer?
 What is the target customer’s current perceptions of
your brand?
 In what context will the target customer make
purchase decisions?
 What do you want the target customer to think and
feel after you communicate with him or her?
 What are the minimum points you must
communicate in order to achieve your goal?
If it doesn't persuade, don't say it!
Copyright ©2010 Cengage Learning Inc. All rights reserved
9
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
LO1
Chapter 19
Store and integrate
customer data using IT
Copyright ©2010 Cengage Learning Inc. All rights reserved
10
Implementing a CRM System
Key Points:
1. Customers take center stage
2. Business must manage the customer
relationship across all points of
customer contact
LO1
Chapter 19
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11
LO1 REVIEW LEARNING OUTCOME
Customer Relationship Management
Chapter 19
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12
LO2
Identify Customer Relationships
Explain how to
establish customer
relationships within
the organization
Chapter 19
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13
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.
LO2
Chapter 19
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14
Identify Customer Relationships
Learning
An informal process of
collecting customer data
through customer comments
and feedback on product or
service performance.
LO2
Chapter 19
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15
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.
LO2
Chapter 19
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16
Knowledge Management
Experiential
observations
Comments
Collected
Information
Includes:
Customer actions
Qualitative facts
LO2
Chapter 19
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17
Empowerment
Empowerment
Delegation of authority to solve
customers’ problems quickly—
usually by the first person that
the customer notifies regarding
the problem.
LO2
Chapter 19
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18
Beyond the Book
LO2 Empowering Employees
Chapter 19
 Training and Skill Development
 Communication Development
 Recognition and Rewards
 Employee Growth Strategy
 Compensation and Benefits Reviews
 Resource and Workload Planning
 Performance Appraisals
 Career Planning
SOURCE: Society for Human Resource Management and CRM Today
Copyright ©2010 Cengage Learning Inc. All rights reserved
19
LO2 REVIEW LEARNING OUTCOME
Identifying
Customer
Relationships
Chapter 19
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20
LO3
Interactions of the
Current Customer Base
Understand
interactions
with the current
customer base
Chapter 19
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21
LO3
Interactions of the
Current Customer Base
Current
Transaction
Past
Relationship
Channel
Customer
Requested
Service
Chapter 19
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22
LO3
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.
http://www.bestbuy.com
Online
Chapter 19
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23
LO3 REVIEW LEARNING OUTCOME
Interactions with Current Customer Base
Web
Point of Sale
Kiosk
Customer
Delivery, Installation
Survey
Product Registration
Chapter 19
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24
LO4
Capture Customer Data
Outline the
process of capturing
customer data
Chapter 19
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25
Capture Customer Data
Store visits
Conversations with salespeople
Interactions via the Web
Traditional phone conversations
Wireless communications
LO4
http://www.geico.com
Online
Chapter 19
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26
LO4 REVIEW LEARNING OUTCOME
Capturing Customer Data
Chapter 19
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27
LO5
Store and Integrate
Customer Data
Describe the use of
technology to store
and integrate
customer data
Chapter 19
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28
LO5 REVIEW LEARNING OUTCOME
Store and Integrate Customer Data
Response list
Compiled list
::::::::::::::::::::::::::::::::::::::::::
::::::::::::::::::::::::::::::::::::::::::
Database
\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
///////////////////////////////////////////////////////////
~~~~~~~~~~~~~~~~~~~~~~~~~~
~~~~~~~~~~~~~~~~~~~~~~~~~~
Data Warehouse
Chapter 19
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29
LO6
Identifying the Best Customers
Describe how to
identify the best
customers
Chapter 19
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30
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.
LO6
Chapter 19
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31
Data Mining
 Identify and profile the best customers
 Calculate their lifetime value
 Predict purchasing behavior
LO6
Chapter 19
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32
Data Analysis
Customer segmentation
Recency-frequency-monetary analysis
Lifetime value analysis
Predictive modeling
LO6
Chapter 19
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33
Recency-Frequency-Monetary
Analysis
1. Identifies customers most
likely to purchase again
2. Identifies and ranks “best
customers”
3. Identifies most profitable
customers
LO6
Chapter 19
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34
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.
LO6
Chapter 19
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35
REVIEW
LO6 LEARNING
OUTCOME
Identify
the Best
Customers
Chapter 19
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36
LO7
Leverage Customer
Information
Explain the
process of leveraging
customer information
throughout the
organization
Chapter 19
Copyright ©2010 Cengage Learning Inc. All rights reserved
37
CRM Marketing
Database Applications
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
7
LO
marketing communications
Improving
customer service
Chapter 19
Copyright ©2010 Cengage Learning Inc. All rights reserved
38
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.
LO7
Chapter 19
Copyright ©2010 Cengage Learning Inc. All rights reserved
39
Campaign Management
Developing customized
offerings for appropriate segment
Pricing these offerings
attractively
LO7
Chapter 19
Communicating offerings in a way
that enhances customer relationships
Copyright ©2010 Cengage Learning Inc. All rights reserved
40
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
Chapter 19
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41
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
LO7
Chapter 19
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42
Increasing Effectiveness of
Distribution Channel Marketing
RFID technology
Multichannel Marketing
CRM Databases
LO7
Chapter 19
http://www.kidsdadsmoms.com
Online
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43
LO7 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
Chapter 19
Copyright ©2010 Cengage Learning Inc. All rights reserved
44