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Chapter 19 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 1
MKTG
Designed byAmy McGuire, B-books, Ltd.
Prepared byDeborah Baker, Texas Christian University
Lamb, Hair, McDaniel 2007-2008 Custom
er Relationship Management (CRM)
19
CHAPTER
Chapter 19 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 2
LO1
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.
CustomerRelationshipManagement
CustomerRelationshipManagement
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LO1
Customer RelationshipManagement Strategy
Link all processes of the company from its customers through its suppliersLink all processes of the company from its customers through its suppliers
Foster customer-satisfying behaviorsFoster customer-satisfying behaviors
Encourage and track customer interaction with the companyEncourage and track customer interaction with the company
Organize the company around customer segmentsOrganize the company around customer segments
Online
http://www.crmdownload.com
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LO1
Customer Relationship Management Cycle
Identify customer relationshipsIdentify customer relationships
Store and integrateStore and integratecustomer data using ITcustomer data using IT
Capture customer data Capture customer data based on interactionsbased on interactionsIdentify best customersIdentify best customers
Understand interactions Understand interactions with current customer basewith current customer base
Leverage customerLeverage customerinformationinformation
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LO1
Implementing a CRM System
Key Points:
1. Customers take center stage
2. Business must manage the customer relationship across all points of customer contact
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REVIEW LEARNING OUTCOMELO1
Customer Relationship Management
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Identify Customer Relationships
LO2
The company customizes its
product and service offering
based on data generated
through interactions between
the customer and the company.
Customer-CentricCustomer-Centric
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Identify Customer Relationships
LO2
An informal process of
collecting customer data
through customer comments
and feedback on product or
service performance.
LearningLearning
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Identify Customer Relationships
LO2
The process by which learned
information from customers is
centralized and shared in order
to enhance the relationship
between customers and the
organization.
KnowledgeManagement
KnowledgeManagement
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Knowledge Management
LO2
Qualitative facts Qualitative facts
Customer actionsCustomer actions
CommentsComments
Experiential observationsExperiential observations
CollectedCollectedInformation Information
Includes: Includes:
CollectedCollectedInformation Information
Includes: Includes:
Chapter 19 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 11
Empowerment
LO2
Delegation of authority to solve
customers’ problems quickly—
usually by the first person that
the customer notifies regarding
the problem.
EmpowermentEmpowerment
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REVIEW LEARNING OUTCOMELO2
Identifying Customer
Relationships
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Interactions of the Current Customer Base
LO3
Requested Service
Channel PastRelationship
CurrentTransaction
Customer
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Interactions of the Current Customer Base
LO3
Touch PointsTouch PointsAll possible areas of a business
where customers communicate
with that business.
All possible areas of a business
where customers communicate
with that business.
Point-of-SaleInteractions
Point-of-SaleInteractions
Communications between customers and organizations thatoccur at the point of sale, normally in a store.
Communications between customers and organizations thatoccur at the point of sale, normally in a store.
Online
http://www.bestbuy.com
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REVIEW LEARNING OUTCOMELO3
Interactions with Current Customer Base
WebWeb
Point of SalePoint of Sale
KioskKiosk
Delivery, InstallationDelivery, Installation
SurveySurvey
Product RegistrationProduct Registration
Customer
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LO4
Capture Customer Data
Store visitsStore visits
Conversations with salespeopleConversations with salespeople
Interactions via the WebInteractions via the Web
Traditional phone conversationsTraditional phone conversations
Wireless communicationsWireless communications
Online
http://www.geico.com
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REVIEW LEARNING OUTCOMELO4
Capturing Customer Data
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REVIEW LEARNING OUTCOMELO5
Store and Integrate Customer Data
DatabaseDatabase
Compiled listCompiled listResponse listResponse list
Data Warehouse
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Chapter 19 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 19
Identifying the Best Customers
LO6
DataMining
DataMining
A data analysis procedure
that identifies significant
patterns of variables and
characteristics that pertain to
particular customers or
customer groups.
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Data Mining
LO6
Identify and profile the best customers
Calculate their lifetime value
Predict purchasing behavior
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Data Analysis
LO6
Predictive modelingPredictive modeling
Lifetime value analysisLifetime value analysis
Recency-frequency-monetary analysisRecency-frequency-monetary analysis
Customer segmentationCustomer segmentation
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Recency-Frequency-Monetary Analysis
LO6
1. Identifies customers most likely to purchase again
2. Identifies and ranks “best customers”
3. Identifies most profitable customers
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Biz Flix
LO6 Casino
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Data Manipulation Techniques
LO6
Lifetime Value Analysis
PredictiveModeling
A data manipulation technique that projects the future value of the customer over a period of years.
A data manipulation technique in which marketers try to determine what the odds are that some other occurrence will take place in the future.
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REVIEW LEARNING OUTCOMELO6
Identify the Best
Customers
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CRM Marketing Database Applications
LO7
Campaign managementCampaign management
Retain loyalcustomers
Retain loyalcustomers
Cross-selling other products and services
Cross-selling other products and services
Designing targetedmarketing communications
Designing targetedmarketing communications
Reinforcing customerpurchase decisions
Reinforcing customerpurchase decisions
Inducing product trialby new customers
Inducing product trialby new customers
Increasing effectivenessof distribution channel
marketing
Increasing effectivenessof distribution channel
marketing
Improving customer service
Improving customer service
Chapter 19 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 27
Campaign Management
LO7
CampaignManagement
CampaignManagement
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 19 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 28
Campaign Management
LO7Communicating offerings in a way
that enhances customer relationshipsCommunicating offerings in a way
that enhances customer relationships
Developing customized offerings for appropriate segment
Developing customized offerings for appropriate segment
Pricing these offeringsattractively
Pricing these offeringsattractively
Chapter 19 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 29
Retaining Loyal Customers
LO7
Loyalty programs reward loyal customers for making multiple purchasesLoyalty programs reward loyal customers for making multiple purchases
Retaining an additional 5 percent of customers increases profits by as much as 25 percentRetaining an additional 5 percent of customers increases profits by as much as 25 percent
Improving customer retention by 2 percent candecrease costs by as much as 10 percentImproving customer retention by 2 percent candecrease costs by as much as 10 percent
Loyalty programs provide information about customers and trendsLoyalty programs provide information about customers and trends
Chapter 19 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 30
Targeted Marketing Communications
LO7
InfrequentUsers
ModerateUsers
HeavyUsers
• Offer direct incentives, such as a price discount
• Offer more reinforcement of past purchase decisions
• Design around loyalty and reinforcement of purchase
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Increasing Effectiveness ofDistribution Channel Marketing
LO7
Multichannel MarketingMultichannel Marketing
CRM DatabasesCRM Databases
RFID technologyRFID technology
Online
http://www.kidsdadsmoms.com
Chapter 19 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 32
REVIEW LEARNING OUTCOMELO7
Leveraging Customer Information
Campaign management
Retaining loyal customers
Cross-selling other products
Designing targeted marketingcommunications
Reinforcing purchase decisions
Inducing product trial by new customers
Increasing effectiveness of distribution channel marketing
Improving customer service
Marketing Information
CRM Database
Applications