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8/14/2019 credit risk mgmt ..CRM.ppt
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Customer Relationship Management
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Information Systems
Retailing Strategy
Retail Market Strategy
Financial Strategy Site Location
Retail Locations
Customer Relationship
Management
Organizational Structure and
HR Management
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Customer Relationship Management
A business philosophy and set of strategies,
programs, and systems that focus on identifying
and building loyaltywith a retailers most
valuable customers.
What is loyalty? Is it the same thing as liking a
retailer or frequently patronizing a retailer?
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Customer Loyalty
Committed to purchasing merchandise
and services from a retailer
Resist efforts of competitors to attract the
loyal customer
Emotional attachment to retailer
Personal attention
Memorable positive experiences
Brand building communications programs
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Can Offering Discounts Achieve
Customer Loyalty?
No!Retail strategies like these can
be copied by competitors
These strategies encourage
customers to be always
looking for the best deal
rather than developing a
relationship with a retailer
McGraw-Hill Companies, Inc./Gary He, photographer
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CRM Process
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Information About Each Customer in the Database
History of purchases
Purchase date, price paid, SKUs bought, whether or not
the purchase was stimulated by a promotion
Customer contacts by retailer (touch points) --visits toweb site, inquires to call center, direct mail sent to
customer
Customer preferences
Descriptive information about customer Customers responses to marketing activities
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Approaches for Collecting
Customer Information
Need to connection contacts with a specific
customer identifier
Ask for identifying information Telephone number, name and address
Encourage use of frequent shopper cards
Link checking account number and/or thirdparty credit cards to customer
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Privacy Concerns
Control over Collection Do customers know what
information is being collected?
Do customers feel they can
decide on the amount and type ofinformation collected by retailers?
Control over Use
Do customers know how the
information will be used by theretailer?
Will the retailer share the
information with third parties?
Steve Cole/Getty Images
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Frequent Shopper Cards
Card is often squeezed out of wallet
Customers forget to bring it to the store
Might not even show it if in a hurry
(c) image100/PunchStock
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Heighten Concerns When Using
Electronic Channel
Information collected without
the awareness of customers
Collecting click stream data
using cookies
Similar to an invisible person
videotaping a customer as they
walk through a store
Stockbyte/Punchstock Images
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Customers Decision to
Offer Information
Balance benefits and risks
Discounts
Special TreatmentPersonal Attention
Disclosure of Information
Unwanted Sales Contacts
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Analyzing Customer Data
Data Miningtechnique used
to identify patterns in data.
Market Basket Analysis
Identifying Market Segments
Identifying Best CustomersRyan McVay/Getty Images
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Market Basket Analysis
Data analysis focusing onthe composition of the
customers market basket
what items are bought
during a single shopping
occasion
Uses:
-Adjacencies for displaying merchandise
-Joint promotions
Burke/Triolo Productions/Getty Images
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Market Basket Analysis Taught Wal-Mart to Change!
Product Placed NearBananas cornflakes, produce
Kleenex paper goods, cold medicineMeasuring spoons housewares, Crisco shortening
Flashlights hardware, Halloween costumes
Little Debbie snack cakes coffee
Bug spray hunting gear
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Identifying Best Customers
Estimating Lifetime Value
Based on assumptions that the
customers future purchase behaviorswill be the same as they have been inthe past
Classifying Customers by recency,
frequency, and monetary value ofpurchases (RFM Analysis)(c) Brand X Pictures/PunchStock
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Which Customer Probably Has the
Greatest Lifetime Value
Purchases Over Last 10 Weeks
1 2 3 4 5 6 7 8 9 10
Jack $20 $20 $20 $20 $20 $20 $20 $20 $20 $20
Jill $210 $0 $0 $0 $0 $0 $0 $0 $0 $0
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Customer Pyramid
Platinum
Best
Most loyal
Least price sensitive
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Customer Pyramid
Gold
Next bestNot as loyal
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Customer Pyramid
Iron
Doesnt deserve
much attention
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Customer Pyramid
Lead
Demands attentionMay have
negative value
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CRM Programs
Retailing Best Customers
Converting Good
Customers to Best
Customers
Getting Rid of
Unprofitable
Customers
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Customer Retention Programs
Frequent Shopper Programs
Special Customer Services
Personalization1-to1 Retailing
Community
Royalty-Free/CORBIS
11-24
El t i Eff ti
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Elements in Effective
Frequent Shopper Programs
Tier Based on Customer Value
Offer Choices of Rewards
Non-monetary incentives
Reward all Transactions
Transparent and Simple
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Personalization
Hello, Barton Weitz
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Dealing with Unprofitable Customers
Offer less approaches
for dealing with these
customers
Charge customers for
extra services
demandedDon Farrall/Getty Images
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Implementing CRM Programs
Need systems, databases
Close coordination between departments
marketing, MIS, store operations, HR
Shift in orientation
Product Centric Customer Centric