CUSTOMER RELATIONSHIP
MANAGEMENT (CMR)
STRATEGIC MARKETING
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
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 WWW.LISTEN.COM
• 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
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
CUSTOMER RELATIONSHIP
MANAGEMENT CYCLE
• CUSTOMER RELATIONSHIP MANAGEMENT
SEEMS LIKE A SIMPLE CUSTOMER SERVICE
MANAGEMENT STRATEGY
• IT IS A CLOSED-LOOP SYSTEM THAT BUILDS
RELATIONSHIPS WITH CUSTOMERS
• CONTINUOUS
Identify customer relationships
Leverage customer
information
Understand interactions
with current customer base
Identify best customers
Capture customer data
based on interactions
• NO PREDEFINED STARTING/ENDING POINT
Store and integrate
customer data using IT
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
CUSTOMER RELATIONSHIP MANAGEMENT
CRM KEY POINTS
• CUSTOMERS TAKE CENTER STAGE
• BUSINESS MUST MANAGE THE
CUSTOMER RELATIONSHIP ACROSS
ALL POINTS OF CUSTOMER
CONTACT
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
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.
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
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
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
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
CUSTOMER RELATIONSHIP MANAGEMENT
• MOST COMMON WAYS A COMPANY CAN INTERACT WITH CURRENT CUSTOMERS
• WEB
• POINT OF SALE
• KIOSK
• DELIVERY, INSTALLATION
• SURVEY
• PRODUCT REGISTRATION
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
UNDERCOVER BOSS
• DIRECTV
• HTTP://WWW.YOUTUBE.COM/WATCH?V=CK3RK2DCPJC
• 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
CRM PART II
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?
A.
CAPTURING CUSTOMER DATA
B.
IDENTIFICATION OF CUSTOMER RELATIONSHIP
C.
LEVERAGING THE CUSTOMER INFORMATION
D.
STORING & INTEGRATING CUSTOMER DATA USING INFORMATION TECHNOLOGY
CUSTOMER RELATIONSHIP
MANAGEMENT CYCLE
Identify customer relationships
• 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
Understand interactions
with current customer base
Identify best customers
Capture customer data
based on interactions
• LEVERAGE CUSTOMER INFORMATION
Store and integrate
customer data using IT
HOW DO COMPANIES STORE &
INTEGRATE CUSTOMER DATA?
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
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
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
FORMS OF ANALYSIS CAN BE
PERFORMED AFTER CUSTOMER
DATA IS CAPTURED?
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
HOW DO COMPANIES LEVERAGE
CUSTOMER INFORMATION?
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
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
Campaign Management
Developing customized
offerings for appropriate segment
Pricing these offerings
attractively
LO7
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
LO7
• Design around loyalty
and reinforcement
of purchase
Increasing Effectiveness of
Distribution Channel Marketing
RFID technology
Multichannel Marketing
CRM Databases
LO7
http://www.kidsdadsmoms.com
Online
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