1 Chapter 21: Customer Relationship Management (CRM) Prepared by Amit Shah, Frostburg State...

1

Chapter 21: Customer Relationship

Management (CRM)

Prepared by Amit Shah, Frostburg State University

Designed by Eric Brengle, B-books, Ltd.

Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Learning Outcomes

2

Define customer relationship management

Explain how to identify customer relationships with the organization

Understand interactions with the current customer base

Outline the process of capturing customer data

LO1

LO2

LO3

LO4


Learning Outcomes

3

Describe the use of technology to store and integrate customer data

Describe how to identify the best customers

Explain the process of leveraging customer information throughout the organization

LO5

LO6

LO7


What is Customer Relationship Management?

4

Define customer relationship management.

LO1


Customer Relationship Management

5

A company-wide businessstrategy designed to optimize

profitability, revenue, and customersatisfaction by focusing on highly

defined and precise customergroups.


Customer Relationship Management Cycle

6

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


Implementing a CRM System

7

Key Points:

1. Customers take center stage

2. The business must manage the customer relationship across all points of customer contact


Review Learning OutcomeCustomer Relationship Management

8

LO1


Identify Customer Relationships

9

Explain how to identify

customer relationships

with the organization.

LO2


Identify Customer Relationships

10

Customer-Centric - The company

customizes its product

and service offering based

on data generated through

interactions between the

customer and the company.


Learning

11

An informal process of

collecting customer

data through customer

comments and feedback on

product or service performance.


Knowledge Management

12

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

13

Qualitative facts Qualitative facts

Customer actionsCustomer actions

CommentsComments

Experiential observationsExperiential observations

CollectedCollectedInformation Information

Includes: Includes:

CollectedCollectedInformation Information

Includes: Includes:


Interaction

14

The point at which a customer

and a company

representative exchange

information and develop

learning relationships.


Review Learning OutcomeIdentifying Customer Relationships

15

LO2


Interactions of the Current Customer Base

16

Understand interactions with the current customer base.

LO3



17

Requested Service

Channel PastRelationship

Currenttransaction

Customer



18Online

http://www.bestbuy.com

Touch-Points - All possible areasof a business where customers

communicate with that business.

Point-Of-Sale Interactions - Communications between

customers and organizations thatoccur at the same point of sale,

normally in a store.


http://www.bestbuy.com/

http://www.bestbuy.com/

Review Learning OutcomeInteractions with Current Customer Base

19

LO3

Customer

WebWeb

Point of SalePoint of Sale

KioskKiosk

Delivery, InstallationDelivery, Installation

SurveySurvey

Product RegistrationProduct Registration

Customer ServiceCustomer Service


Capture Customer Data

20

Outline the process of

capturing customer data.

LO4


Capture Customer Data

21

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


http://www.geico.com/

http://www.geico.com/

Review Learning OutcomeCapturing Customer Data

22

LO4


Store and Integrate Customer Data

23

Describe the use of technology to store and integrate customer data.

LO5


24

Customer DataData Warehouse - A central

repository for data from various

functional areas of the organization

that are stored and inventoried on a

centralized computer system.

Database - A collection of data, especially one

that can be accessed and manipulated by

software.


Review Learning OutcomeStore and Integrate Customer Data

25

LO5

DatabaseDatabase

Compiled listCompiled listResponse listResponse list

Data Warehouse

::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\///////////////////////////////////////////////////////////~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


Identifying the Best Customers

26

Describe how to identify

the best customers.

LO6


Data Mining

27

A data analysis procedure that identifies significant patterns of variables and

characteristics that pertain to particular customers or

customer groups.


Data Analysis

28

Predictive modelingPredictive modeling

Lifetime value analysisLifetime value analysis

Recency-frequency-monetary analysisRecency-frequency-monetary analysis

Customer segmentationCustomer segmentation


Customer Segmentation

29

• The process of breaking large groups of customers into smaller, more homogeneous groups

• Generates a “profile” or picture of the customers’ similar demographic, geographic, and psychographic traits

• Focuses on best customers


Recency-Frequency-Monetary Analysis

30

1. Identifies customers mostly like to purchase again

2. Identifies and ranks “best customers”

3. Identifies most profitable customers


Data Manipulation Techniques

31

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.


Review Learning OutcomeIdentify the Best Customers

32

LO6


Leverage Customer Information

33

Explain the process of

leveraging customer

information throughout

the organization.

LO7


CRM Marketing Database Applications

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



Campaign Management

35

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.


Campaign Management

36

Communicating offerings in a waythat enhances customer relationships

Communicating offerings in a waythat enhances customer relationships

Developing customized offerings for appropriate segment

Developing customized offerings for appropriate segment

Pricing these offeringsattractively

Pricing these offeringsattractively


Retaining Loyal Customers

37

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


Cross–Selling Other Products and Services

38

• CRM provides opportunities to cross-sell related products

•Cross-sell to customers with demographic, lifestyle, or behavioral characteristic matches

•Internet companies use product and customer profiling to reveal cross-selling opportunities


Targeted Marketing Communications

39

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


Reinforcing Customer Purchase Decisions

40

•Cognitive dissonance is the feeling consumers experience when they recognize inconsistency between values and opinions and their purchase behavior

•Thanking customers help cement a long-term, profitable relationship

•Update customers periodically on the status of their order


Increasing Effectiveness ofDistribution Channel Marketing

41

CRM DatabasesCRM Databases

RFID technologyRFID technology

Multichannel MarketingMultichannel Marketing

Online

http://www.kidsdadsmoms.com


http://www.kidsdadsmoms.com/

http://www.kidsdadsmoms.com/

Improving Customer Service

42

•Level of customer service is influential in customer retention

•Customer retention – the percentage of customers that repeatedly purchase products from a company


Review Learning Outcome Leveraging Customer Information

43

LO7

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


Marketing Information

CRM Database

Applications


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