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Customer relationship management (CMR). Strategic marketing. Customer relationship management. What is customer Relation Management (CRM)? A company-wide business strategy designed to optimize profitability revenue customer satisfaction - PowerPoint PPT Presentation
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CUSTOMER RELATIONSHIP MANAGEMENT (CMR)
STRATEGIC MARKETING
CUSTOMER RELATIONSHIP MANAGEMENT
WHAT IS CUSTOMER RELATION MANAGEMENT (CRM)?• A COMPANY-WIDE BUSINESS STRATEGY DESIGNED TO OPTIMIZE
• PROFITABILITY• REVENUE• CUSTOMER SATISFACTION
BY FOCUSING ON HIGHLY DEFINED AND PRECISE CUSTOMER GROUPS
CONCEPT IS TO TREAT CUSTOMERS AS INDIVIDUALS RATHER THAN PART OF A GROUP
CUSTOMER RELATIONSHIP MANAGEMENT STRATEGY
• THE COMPANY ACCOMPLISHES THIS STRATEGY BY• ORGANIZING THE COMPANY AROUND CUSTOMER SEGMENTS• ESTABLISHING AND TRACKING CUSTOMER INTERACTIONS WITH THE COMPANY• FOSTERING CUSTOMER SATISFYING BEHAVIORS
• EXAMPLE WHEN YOU LOGIN TO A WEBSITE LIKE WWW.LISTEN.COM • RHAPSODY PLAYER TARGETS CONSUMERS WHO STREAM AUDIO• TRACKS THEIR MUSICAL PREFERENCES AND USAGE• USES THIS INFORMATION TO OFFER SPECIAL PROMOTIONS & MAKE RECOMMENDATIONS TO YOU
SPECIFICALLY
CUSTOMER RELATIONSHIP MANAGEMENT
CRM V. MASS MARKETINGMASS MARKETING MEANS USING ONE APPROACH & HOPING IT HAS MASS APPEAL
CRM ALLOWS YOU TO EFFECTIVELY COMMUNICATE WITH THE INDIVIDUAL CUSTOMER
CUSTOMER RELATIONSHIP MANAGEMENT CYCLE
• CUSTOMER RELATIONSHIP MANAGEMENT SEEMS LIKE A SIMPLE CUSTOMER SERVICE MANAGEMENT STRATEGY
• IT IS A CLOSED-LOOP SYSTEM THAT BUILDS RELATIONSHIPS WITH CUSTOMERS• CONTINUOUS• NO PREDEFINED STARTING/ENDING
POINT
Identify customer relationships
Store and integratecustomer data using IT
Capture customer data based on interactionsIdentify best customers
Understand interactions with current customer base
Leverage customerinformation
CUSTOMER RELATIONSHIP MANAGEMENTBRIDGESTONE TIRE USES ONDEMAND 5
• GATHERS INFORMATION FROM P.O.S.• DEMOGRAPHIC, FREQUENCY OF PURCHASES, HOW MUCH THEY PURCHASE, & HOW FAR THEY DRIVE
• GATHERS INFORMATION FROM ALL TYPES OF COMMUNICATION THE CUSTOMER HAS• HOW OFTEN THEY VISIT A SPECIFIC STORE & PURCHASING HISTORY
• CAPTURES RELATIVE CUSTOMER DATA ON INTERACTIONS• LAST PURCHASE MADE, DOES CUSTOMER REDEEM COUPONS, LAST FORM OF COMMUNICATION
BETWEEN CUSTOMER• STORE & INTEGRATE CUSTOMER DATA
• STORES CUSTOMER RESPONSES FROM SURVEY, WARRANTY CARDS, ANY CUSTOMER INPUT SOURCE• IDENTIFY MOST PROFITABLE CUSTOMERS
• NOT ALL CUSTOMERS ARE THE SAME. FOCUS ON MONEY MAKERS• LEVERAGE INFORMATION
• CUSTOMER DATA IS SENT TO ALL DEPARTMENTS OF A COMPANY. GET ALL INFORMATION TO RIGHT DEPARTMENT.
• SEND CUSTOMERS PROMOTIONS AIMED AT INCREASING STORE VISITS & SALES
CUSTOMER RELATIONSHIP MANAGEMENTCRM KEY POINTS
• CUSTOMERS TAKE CENTER STAGE
• BUSINESS MUST MANAGE THE CUSTOMER RELATIONSHIP ACROSS ALL POINTS OF CUSTOMER CONTACT
IDENTIFY CUSTOMER RELATIONSHIPS
• COMPANIES HAVE A CRM SYSTEM THAT FOLLOWS A CUSTOMER-CENTRIC FOCUS OR MODEL
• CUSTOMER CENTRIC• AN INTERNAL MANAGEMENT PHILOSOPHY SIMILAR TO THE MARKETING CONCEPT• COMPANY CUSTOMIZES ITS PRODUCT & SERVICE OFFERING BASED ON DATA
GENERATED THROUGH INTERACTIONS BETWEEN THE CUSTOMER AND THE COMPANY
• ALL COMPANY DECISIONS AND ACTIONS ARE A DIRECT RESULT OF CUSTOMER INFORMATION
CUSTOMER RELATIONSHIP MANAGEMENT
• COMPANIES FORCE CUSTOMERS TO LOGIN TO WEBSITES SO THAT THEY CAN GAIN ACCESS TO THEIR INFORMATION & PREFERENCES• TAKE ADVANTAGE OF ONLINE OPPORTUNITIES; HAVE TO LOGIN
LEARNING• AN INFORMAL PROCESS OF COLLECTING CUSTOMER DATA THROUGH
CUSTOMER COMMENTS AND FEEDBACK ON PRODUCT OR SERVICE PERFORMANCE.
CUSTOMER RELATIONSHIP MANAGEMENT
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.
• KNOWLEDGE MANAGEMENT INVOLVES COLLECTING INFORMATION THROUGH:• EXPERIMENTAL OBSERVATIONS• COMMENTS• CUSTOMER ACTIONS• QUALITATIVE FACTS
CUSTOMER RELATIONSHIP MANAGEMENT
EMPOWERMENTDELEGATION OF AUTHORITY TO SOLVE CUSTOMERS’ PROBLEMS QUICKLY—USUALLY BY THE FIRST PERSON THAT THE CUSTOMER NOTIFIES REGARDING THE PROBLEM.
• EMPLOYEES DON’T HAVE TO RELY ON MANAGEMENT TO MAKE DECISIONS
• TRUSTED TO TAKE CARE OF CUSTOMER WITHOUT SUPERVISION
CUSTOMER RELATIONSHIP MANAGEMENT
INTERACTIONTHE POINT AT WHICH A CUSTOMER AND A COMPANY REPRESENTATIVE EXCHANGE INFORMATION AND DEVELOP LEARNING RELATIONSHIPS
• CUSTOMER DEFINES THE TERMS OF THE INTERACTION (OFTEN BY PREFERENCE)
• ORGANIZATION RESPONDS WITH PRODUCTS & SERVICES THAT MEET CUSTOMER NEEDS
• ANY ACTIVITY OR TOUCH POINT A CUSTOMER HAS WITH A COMPANY (DIRECTLY OR INDIRECTLY) CONSTITUTES AN INTERACTION
CUSTOMER RELATIONSHIP MANAGEMENT
TOUCH POINTSALL POSSIBLE AREAS OF A BUSINESS WHERE CUSTOMERS COMMUNICATE WITH THAT BUSINESS.
-- AMAZON SAVES YOUR SEARCHES BASED ON LOGIN
POINT OF SALE INTERACTIONSCOMMUNICATIONS BETWEEN CUSTOMERS AND ORGANIZATIONS THATOCCUR AT THE POINT OF SALE, NORMALLY IN A STORE.
-- CHECK OUT WITH STORE CREDIT CARD
CUSTOMER RELATIONSHIP MANAGEMENT
• MOST COMMON WAYS A COMPANY CAN INTERACT WITH CURRENT CUSTOMERS• WEB• POINT OF SALE• KIOSK• DELIVERY, INSTALLATION• SURVEY• PRODUCT REGISTRATION
CUSTOMER RELATIONSHIP MANAGEMENT
CHANNEL INTERACTIONSTHE TRADITIONAL APPROACH FOR ACQUIRING CUSTOMER DATATHE METHOD OF DATA COLLECTION (HOW INFORMATION IS OBTAINED) IS MOST IMPORTANT
CAN INCLUDESTORE VISITSCONVERSATIONS WITH SALES PEOPLEINTERACTIONS VIA THE WEBPHONE CONVERSATIONSWIRELESS COMMUNICATIONS
UNDERCOVER BOSS
• DIRECTV• HTTP://WWW.YOUTUBE.COM/WATCH?V=CK3RK2DCPJC
• HOW DO THEY (OR COULD THEY) DEVELOP CUSTOMER RETIONSHIPS?• HOW DO THEY IDENTIFY CUSTOMER RELATIONSHIPS?• EXAMPLES OF INTERACTIONS BETWEEN A COMPANY & ITS CUSTOMER BASE• TYPES OF INFORMATION IT WANTS TO CAPTURE
CRM PART II
WARM UP
DIRECTV EMPOWERS ITS CUSTOMER SERVICE REPRESENTATIVES TO OFFER DISCOUNTS TO LONG-ESTABLISHED CUSTOMERS IN ORDER TO SOLVE A PROBLEM. THIS IS AN EXAMPLE OF WHICH STAGE OF THE CUSTOMER RELATIONSHIP CYCLE?
A. CAPTURING CUSTOMER DATAB. IDENTIFICATION OF CUSTOMER RELATIONSHIPC. LEVERAGING THE CUSTOMER INFORMATIOND. STORING & INTEGRATING CUSTOMER DATA USING INFORMATION TECHNOLOGY
CUSTOMER RELATIONSHIP MANAGEMENT CYCLE
• IDENTIFY CUSTOMER RELATIONSHIPS• UNDERSTAND INTERACTIONS WITH
CUSTOMER BASE• CAPTURE CUSTOMER DATA BASED ON
INTERACTIONS• STORE & INTEGRATE CUSTOMER DATA
USING INFORMATION TECHNOLOGY• IDENTIFY BEST CUSTOMERS• LEVERAGE CUSTOMER INFORMATION
Identify customer relationships
Store and integratecustomer data using IT
Capture customer data based on interactionsIdentify best customers
Understand interactions with current customer base
Leverage customerinformation
HOW DO COMPANIES STORE & INTEGRATE CUSTOMER DATA?
CUSTOMER RELATIONSHIP MANAGEMENT
DATA WAREHOUSEA CENTRAL WAREHOUSE OF CUSTOMER DATA COLLECTED BY AN
ORGANIZATION.
ESSENTIALLY IT IS A LARGE COMPUTERIZED FILE OF ALL INFORMATION COLLECTED IN THE PREVIOUS PHASE OF THE CRM PROCESS.
TAKES INFORMATION FROM A VARIETY OF DATABASES AND INTEGRATES THEM SO THAT DEPARTMENTS THROUGHOUT AN ORGANIZATION CAN HAVE ACCESS TO ALL PERTINENT CUSTOMER DATA
CUSTOMER RELATIONSHIP MANAGEMENT
• WHEN BUILDING A DATABASE YOU DEVELOP A LIST• RESPONSE LIST: CUSTOMERS WHO HAVE INDICATED AN INTEREST IN A
PRODUCT OR SERVICE• INCLUDES THEIR NAME & ADDRESSES• HAVE RESPONDED TO AN OFFER AT SOME TIME
• COMPILED LIST: CREATED BY AN OUTSIDE COMPANY THAT HAS COLLECTED DATA OF POTENTIAL CUSTOMERS• GATHER INFORMATION FROM TELEPHONE DIRECTORIES OR MEMBERSHIP ROSTERS• ENHANCE INFORMATION WITH CENSUS DATA & OTHER PUBLIC RECORD INFORMATION
CUSTOMER RELATIONSHIP MANAGEMENT
• GOAL OF A COMPANY IS TO FIND YOUR BEST CUSTOMERS 80/20 RULE: 80% OF YOUR PROFITS COME FROM 20% OF YOUR CUSTOMERS
GOAL IS TO IDENTIFY THAT 20%.
DATA MINING IDENTIFY AND PROFILE THE BEST CUSTOMERS PICKUP ON PATTERNS & CHARACTERISTICS TO DETERMINE TRENDS CALCULATE THEIR LIFETIME VALUE PREDICT PURCHASING BEHAVIOR
FORMS OF ANALYSIS CAN BE PERFORMED AFTER
CUSTOMER DATA IS CAPTURED?
CUSTOMER RELATIONSHIP MANAGEMENT
DATA MINING• CUSTOMER SEGMENTATION
• BREAK DOWN LARGE GROUPS INTO SMALLER HOMOGENOUS GROUPS
• RECENCY-FREQUENCY-MONETARY ANALYSIS (RFM)• MEASURES: RECENTLY PURCHASED MOVES, FREQUENCY, & AMOUNT SPENT• PROJECTS CURRENT VALUE OF A CUSTOMER TO A COMPANY
• LIFETIME VALUE ANALYSIS (LTV)• PROJECTS FUTURE VALUE OF A CUSTOMER TO A COMPANY
• EXPLAINS HOW MUCH IT COSTS TO ACQUIRE CUSTOMERS• LEVEL OF SPENDING TO RETAIN CUSTOMERS• FACILITATES TARGETING NEW CUSTOMERS
• PREDICTIVE MODELING• PREDICT WHEN A PURCHASE WILL TAKE PLACE
HOW DO COMPANIES LEVERAGE CUSTOMER
INFORMATION?
LEVERAGING CUSTOMER INFORMATIONLEVERAGING MEANS DESIGNING & TAILORING MARKETING STRATEGIES
TO BEST APPEAL TO IDENTIFIED CUSTOMERS
CAMPAIGN MANAGEMENT• MONITORING THE SUCCESS OF MARKETING STRATEGIES BASED ON SALES,
ORDERS, ETC..• DEVELOP CUSTOMIZED SALES FOR LOYAL CUSTOMERS
• CUSTOMERS THAT SPEND MORE, GET MORE• ALLOWS COMPANIES TO STORE INFORMATION ABOUT CUSTOMERS & TRENDS
CRM Marketing Database Applications
LO7
Campaign management
Retain loyalcustomers
Cross-selling other products and services
Designing targetedmarketing communications
Reinforcing customerpurchase decisions
Inducing product trialby new customers
Increasing effectivenessof distribution channel
marketing
Improving customer service
Campaign Management
LO7Communicating offerings in a way
that enhances customer relationships
Developing customized offerings for appropriate segment
Pricing these offeringsattractively
Retaining Loyal Customers
LO7
Loyalty programs reward loyal customers for making multiple purchases
Retaining 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 percent
Loyalty programs provide information about customers and trends
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
Increasing Effectiveness ofDistribution Channel Marketing
LO7
Multichannel Marketing
CRM Databases
RFID technology
Online
http://www.kidsdadsmoms.com
REVIEW LEARNING OUTCOMELO7
Leveraging Customer Information Campaign management Retaining loyal customers Cross-selling other products Designing targeted marketing
communications Reinforcing purchase decisions Inducing product trial by new customers Increasing effectiveness of distribution channel
marketing Improving customer service
Marketing Information
CRM Database
Applications