21 Customer Relationship Management CRM Professor Close Chapter

Learning Outcomes LO 1 Define customer relationship management LO 2 Explain how to identify

Learning Outcomes LO 5 Describe the use of technology to store and integrate customer

What Is Customer Relationship Management? Define customer relationship management Chapter 21 Copyright © 2012

What Is Customer Relationship Management? Customer Relationship Management (CRM) is… a company-wide business strategy

Customer Relationship Management Strategy Organize the company around customer segments Encourage and track customer

Exhibit 21. 1 A Simple Flow Model of the Customer Relationship Management System Identify

Implementing a CRM System Key Points: 1. Customers take center stage 2. Business must

Identify Customer Relationships Explain how to identify customer relationships with the organization Chapter 21

Identify Customer Relationships Customer-centric is… a philosophy under which the company customizes its product

Identify Customer Relationships Learning is… an informal process of collecting customer data through customer

Identify Customer Relationships Knowledge Management is… the process by which learned information from customers

Knowledge Management Experiential observations Collected Information Includes: Comments Customer actions Qualitative facts Chapter 21

Empowerment is… delegation of authority to solve customers’ problems quickly—usually by the first person

Successful CRM Interaction Occurs when a customer and a company representative exchange information and

Understand Interactions of the Current Customer Base Understand interactions with the current customer base

Exhibit 21. 2 © Image Source/Jupiterimages Customer-Centric Approach for Managing Customer Interactions Chapter 21

Interactions of the Current Customer Base Chapter 21 Touch Points All possible areas of

Capture Customer Data Outline the process of capturing customer data Chapter 21 Copyright ©

Capture Customer Data The traditional approach for acquiring data from customers is through channel

Capture Customer Data u. In a CRM system, channel interactions are viewed as prime

Store and Integrate Customer Data Describe the use of technology to store and integrate

Customer Data • Only useful if consistent and accurate. – Use information technology to

Store and Integrate Customer Data Response list Compiled list : : : : :

Identify the Best Customers Describe how to identify the best customers Chapter 21 Copyright

Identifying the Best Customers Data Mining: A data analysis approach that identifies patterns of

Data Analysis Customer segmentation Recency-frequency-monetary analysis Lifetime value analysis Predictive modeling Chapter 21 Copyright

Customer Segmentation: The process of breaking large groups of customers into smaller, more homogeneous

Recency-Frequency. Monetary Analysis 1. Identifies customers most likely to purchase again 2. Identifies and

Lifetime Value Analysis and Predictive Modeling Lifetime Value Analysis: A data manipulation technique that

Leverage Customer Information Explain the process of leveraging customer information throughout the organization Chapter

Exhibit 21. 3 Common CRM Marketing Database Applications Campaign management Reinforcing customer purchase decisions

Campaign Management is… developing product or service offerings customized for the appropriate customer segment

Campaign Management Developing customized offerings for appropriate segment Pricing these offerings attractively Communicating offerings

Retaining Loyal Customers Retaining an additional 5 percent of customers can increase profits by

Cross-Selling Other Products and Services • Match product profiles and consumer profiles to cross-sell

Designing Targeted Marketing Communications Chapter 21 Infrequent Users Offer direct incentives, such as a

Reinforcing Customer Purchase Decisions • Thanking customers for purchases and telling them they’re important

Inducing Product Trial • Use of marketing database to identify new customers – Best

Increasing Effectiveness of Distribution Channel Marketing • Use Web sites to keep in touch

Improving Customer Service Examples of Web site tools used to get customers to return

Privacy Concerns and CRM • If customers fell their privacy is being violated, then

Email Marketing Bumps Web site Traffic Beyond the Book Looking for return customers? Email

Beyond the Book Chapter 21 Videos Chapter 21 Method – Customer Relationship Management How

Slides: 45

Download presentation

Learning Outcomes LO 1 Define customer relationship management LO 2 Explain how to identify customer relationships with the organization LO 3 Understand interactions with the current customer base LO 4 Outline the process of capturing customer data Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 2

Learning Outcomes LO 5 Describe the use of technology to store and integrate customer data LO 6 Describe how to identify the best customers LO 7 Explain the process of leveraging customer information throughout the organization Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 3

What Is Customer Relationship Management? Customer Relationship Management (CRM) is… a company-wide business strategy designed to optimize profitability, revenue, and customer satisfaction by focusing on highly defined and precise customer groups. Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 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 Allows companies to tightly focus in on their target markets Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 6

Exhibit 21. 1 A Simple Flow Model of the Customer Relationship Management System 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 Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 7

Implementing a CRM System Key Points: 1. Customers take center stage 2. Business must manage the customer relationship across all points of customer contact Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 8

Identify Customer Relationships Customer-centric is… a philosophy under which the company customizes its product and service offering based on data generated through interactions between the customer and the company. Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 10

Identify Customer Relationships Learning is… an informal process of collecting customer data through customer comments and feedback on product or service performance. Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 11

Identify Customer Relationships Knowledge Management is… the process by which learned information from customers is centralized and shared in order to enhance the relationship between customers and the organization. Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 12

Empowerment is… delegation of authority to solve customers’ problems quickly—usually by the first person the customer notifies regarding the problem. Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 14

Successful CRM Interaction Occurs when a customer and a company representative exchange information and develop learning relationships • The success of CRM can be directly measured by the effectiveness of the interaction between the customer and the organization. Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 15

Interactions of the Current Customer Base Chapter 21 Touch Points All possible areas of a business where the 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 Copyright © 2012 by Cengage Learning Inc. All rights reserved 18

Capture Customer Data The traditional approach for acquiring data from customers is through channel interactions. Store visits Conversations with salespeople Interactions via the Web Traditional phone conversations Wireless communications Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 20

Capture Customer Data u. In a CRM system, channel interactions are viewed as prime information sources based on the channel selected. u. Interactions between the company and the customer facilitate collection of large amounts of data, captured across several touch points. Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 21

Customer Data • Only useful if consistent and accurate. – Use information technology to capture, store, and integrate important information (data warehousing) • Useful information: – – Customer vital stats Purchasing habits Transaction methods Product usage • Access vast amounts of information required to make decisions Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 23

Store and Integrate Customer Data Response list Compiled list : : : : : : : : : : : : : : : : : : : : : Database \\\\\\\\\\\\\\\ ////////////////////////////// ~~~~~~~~~~~~~~~~~~~~~~~~~~ Data Warehouse Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 24

Identifying the Best Customers Data Mining: A data analysis approach that identifies patterns of characteristics that relate to particular customers or customer groups. Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 26

Recency-Frequency. Monetary Analysis 1. Identifies customers most likely to purchase again 2. Identifies and ranks “best customers” 3. Identifies most profitable customers Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 30

Lifetime Value Analysis and Predictive Modeling 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. Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 31

Exhibit 21. 3 Common 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 marketing communications Improving customer service Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 33

Campaign Management is… 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. Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 34

Campaign Management Developing customized offerings for appropriate segment Pricing these offerings attractively Communicating offerings in a way that enhances customer relationships Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 35

Retaining Loyal Customers Retaining an additional 5 percent of customers can increase 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 customers and trends Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 36

Cross-Selling Other Products and Services • Match product profiles and consumer profiles to cross-sell products matching customer characteristics • Use product and customer profiling online to reveal cross-selling opportunities while customers surf company Web sites Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 37

Designing Targeted Marketing Communications Chapter 21 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 Copyright © 2012 by Cengage Learning Inc. All rights reserved 38

Reinforcing Customer Purchase Decisions • Thanking customers for purchases and telling them they’re important • Updating customers periodically on order status • Offer customer service opportunities with postsale e-mails Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 39

Inducing Product Trial • Use of marketing database to identify new customers – Best customer profile can be used to profile potential customers • Overlay demographic and behavioral data on existing customer data Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 40

Increasing Effectiveness of Distribution Channel Marketing • Use Web sites to keep in touch with customers and gain information about them • Use multichannel marketing to monitor purchases of customer shopping both instore and online • Use RFID technology to improve distribution Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 41

Improving Customer Service Examples of Web site tools used to get customers to return include – customer wish lists – recommendations based on purchase and search behavior – one click purchasing and shipment tracking Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 42

Privacy Concerns and CRM • If customers fell their privacy is being violated, then the relationship can become a liability. • Privacy policies for companies in the U. S. are largely voluntary, but may vary outside the U. S. Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 43

Email Marketing Bumps Web site Traffic Beyond the Book Looking for return customers? Email marketing gets customers to click back. Being wellestablished, trusted, and easy makes email the ideal medium for marketers to get the word out. Online traffic is fairly simple to track, and using customer information gathered from online purchases offers businesses a relatively simple way to establish a relationship with customers. Source: “Email marketing ‘a trusted method, ’” www. directnews. co. uk, Wednesday November 11, 2009. Chapter 21 Copyright © 2012 by Cengage Learning Inc. All rights reserved 44

Beyond the Book Chapter 21 Videos Chapter 21 Method – Customer Relationship Management How has method identified customer relationships within the organization? What does the company do to nurture those relationships? http: //www. cengage. com/marketing/boo k_content/1439039429_lamb/company_c lips/ch 21. html Copyright © 2012 by Cengage Learning Inc. All rights reserved 45