Lamb Hair Mc Daniel MKTG 2009 2010 19

Lamb, Hair, Mc. Daniel MKTG 2009 -2010 19 CHAPTER Designed by Amy Mc. Guire, 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 LO 1 Define customer relationship management LO 2 Explain how to establish customer relationships within the organization LO 3 Understand interactions with the current customer base LO 4 Outline the process of capturing customer data Chapter 19 Copyright © 2010 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 19 Copyright © 2010 Cengage Learning Inc. All rights reserved 3

LO 1 What Is Customer Relationship Management? Define customer relationship management Chapter 19 Copyright

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. LO 1 Chapter 19 Copyright © 2010 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 LO 1 Chapter 19 http: //www. crmdownload. com Online Copyright © 2010 Cengage Learning Inc. All rights reserved 6

Beyond the Book LO 2 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. 7 Source: Casey Jones, “Go to War Against Wasted Marketing Spending: What Marines Can Teach CMOs About Success Under Fire, ” Advertising Age, December 17, 2008. Copyright © 2010 Cengage Learning Inc. All rights reserved 7

LO 2 Take Aim with Your Marketing Message, cont. Beyond the Book 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): Chapter 19 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. 8 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 LO 2 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? 9 § 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 LO 1 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 LO 1 Chapter 19 Copyright © 2010 Cengage Learning Inc. All rights reserved 11

LO 1 REVIEW LEARNING OUTCOME Customer Relationship Management Chapter 19 Copyright © 2010 Cengage

LO 2 Identify Customer Relationships Explain how to establish customer relationships within the organization

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. LO 2 Chapter 19 Copyright © 2010 Cengage Learning Inc. All rights reserved 14

Identify Customer Relationships Learning An informal process of collecting customer data through customer comments and feedback on product or service performance. LO 2 Chapter 19 Copyright © 2010 Cengage Learning Inc. All rights reserved 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. LO 2 Chapter 19 Copyright © 2010 Cengage Learning Inc. All rights reserved 16

Knowledge Management Experiential observations Collected Information Includes: Comments Customer actions Qualitative facts LO 2

Empowerment Delegation of authority to solve customers’ problems quickly— usually by the first person that the customer notifies regarding the problem. LO 2 Chapter 19 Copyright © 2010 Cengage Learning Inc. All rights reserved 18

Beyond the Book LO 2 Empowering Employees Chapter 19 u Training and Skill Development u Communication Development u Recognition and Rewards u Employee Growth Strategy u Compensation and Benefits Reviews u Resource and Workload Planning 19 u Performance Appraisals u Career Planning SOURCE: Society for Human Resource Management and CRM Today Copyright © 2010 Cengage Learning Inc. All rights reserved 19

LO 2 REVIEW LEARNING OUTCOME Identifying Customer Relationships Chapter 19 Copyright © 2010 Cengage

LO 3 Interactions of the Current Customer Base Understand interactions with the current customer

LO 3 Interactions of the Current Customer Base Current Transaction Past Relationship Channel Customer

LO 3 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, 23 normally in a store. http: //www. bestbuy. com Online Chapter 19 Copyright © 2010 Cengage Learning Inc. All rights reserved 23

LO 3 REVIEW LEARNING OUTCOME Interactions with Current Customer Base Web Point of Sale Kiosk Customer Delivery, Installation Survey Product Registration Chapter 19 Copyright © 2010 Cengage Learning Inc. All rights reserved 24

LO 4 Capture Customer Data Outline the process of capturing customer data Chapter 19

Capture Customer Data Store visits Conversations with salespeople Interactions via the Web Traditional phone conversations Wireless communications LO 4 Chapter 19 http: //www. geico. com Online Copyright © 2010 Cengage Learning Inc. All rights reserved 26

LO 4 REVIEW LEARNING OUTCOME Capturing Customer Data Chapter 19 Copyright © 2010 Cengage

LO 5 Store and Integrate Customer Data Describe the use of technology to store

LO 5 REVIEW LEARNING OUTCOME Store and Integrate Customer Data Response list Compiled list : : : : : : : : : : : : : : : : : : : : : Database \\\\\\\\\\\\\\\ ////////////////////////////// ~~~~~~~~~~~~~~~~~~~~~~~~~~ Data Warehouse Chapter 19 Copyright © 2010 Cengage Learning Inc. All rights reserved 29

LO 6 Identifying the Best Customers Describe how to identify the best customers Chapter

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. LO 6 Chapter 19 Copyright © 2010 Cengage Learning Inc. All rights reserved 31

Data Analysis Customer segmentation Recency-frequency-monetary analysis Lifetime value analysis Predictive modeling LO 6 Chapter

Recency-Frequency-Monetary Analysis 1. Identifies customers most likely to purchase again 2. Identifies and ranks “best customers” 3. Identifies most profitable customers LO 6 Chapter 19 Copyright © 2010 Cengage Learning Inc. All rights reserved 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. LO 6 Chapter 19 Copyright © 2010 Cengage Learning Inc. All rights reserved 35

REVIEW LO 6 LEARNING OUTCOME Identify the Best Customers Chapter 19 Copyright © 2010

LO 7 Leverage Customer Information Explain the process of leveraging customer information throughout the

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 LO 7 communications marketing Improving customer service Chapter 19 Copyright © 2010 Cengage Learning Inc. All rights reserved 38

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. LO 7 Chapter 19 Copyright © 2010 Cengage Learning Inc. All rights reserved 39

Campaign Management Developing customized offerings for appropriate segment Pricing these offerings attractively LO 7 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 Copyright © 2010 Cengage Learning Inc. All rights reserved 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 LO 7 Chapter 19 Copyright © 2010 Cengage Learning Inc. All rights reserved 42

Increasing Effectiveness of Distribution Channel Marketing RFID technology Multichannel Marketing CRM Databases LO 7 Chapter 19 http: //www. kidsdadsmoms. com Online Copyright © 2010 Cengage Learning Inc. All rights reserved 43

LO 7 REVIEW LEARNING OUTCOME Leveraging Customer Information Marketing Information þ Campaign management þ Retaining loyal customers CRM Database Applications þ Cross-selling other products þ Designing targeted marketing communications þ Reinforcing purchase decisions þ Inducing product trial by new customers þ Increasing effectiveness of distribution channel marketing þ Improving customer service Chapter 19 Copyright © 2010 Cengage Learning Inc. All rights reserved 44