9061 lecture 13

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Customer Relationship

M A N A G I N G B U S I N E S S R E L A T I O N S H I P S

W E E K 7 , L E C T U R E 1 .

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Lecture Overview

an re a ons p mar e ng

Definition of CRM

Benefits of CRM

Role of CRM

Direct marketing

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CRM and Relationshi Marketin

n e aca em c commun y, e erms re a ons p

marketing and CRM are often used interchangeably. ,commonly used in the context of technology

-enabled relationship marketing (Ryals and Payne

, . , .

o ng to concentrate on t e tec n ca e ements oCRM in the second half of the lecture

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Benefits of CRM

retaining a customer (Kotler & Keller, 2006)

C urn n some n ustr es very g e.g., 40% per year n mo ephone industry (Benjamin, 2008), UK average is 22% (TheKnowled e: Stat watch 2008

A 5% decrease in churn can cause profits to increase by 25 ,2006)

s re a ons p progresses, cus omers ecome more pro a e(Kotler & Keller, 2006)

Can a cross se ng Tapp, 2005

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Definin CRM

e n ng s pro ema c, ere s no one

accepted definition

Big differences between definitions are

The association with technology The timescale of the use of CRM

The objectives set for the CRM programme

Definitions impact on how CRM is applied or what isexpected of it

Payne and Frow (2005)

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CRM Continuum

ayne an row 2005 ent e a cont nuum o

definitions from tactical, technological definitions to more,


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Pers ective 1: Tactical CRM Definitions

ome e n ons c e y ayne an row 2005

CRM is an e-commerce application (Khanna, 2001) I.e., only concerned with sales

,

1997)

Concerned either with a short term objective or onenarrow part o t e us ness


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Pers ective 2: Technical CRM Definitions

s a erm or me o o og es, ec no og es an

e-commerce capabilities used by companies toWoodcock, 2001)

. .,

- ,the people element of CRM


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Pers ective : Holistic CRM

s a ou e eve opmen an ma n enance o

long term mutually beneficial relationships with Less about how CRM is carried out

CRM is an enterprisewide initiative that belongs in ,

2003)

Both definitions broad, but quite light on detail of how


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g y more e a e e n on g ven y mu , a

and Gray (2009, citing Liu, 2007) RM can e e ne as us ness strateg es,

processes and information technology which enable

a company o op m ze revenue an ncrease evalue through understanding and satisfying the n v ua cus omers nee s

Technolo still has a role but it is not the onl oreven the most important, element

ote, no ment on o mar et ng

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nvo ves e w o e organ sa on wor ng o

develop and maintain the relationship with the

CRM puts the customer into the central focus of ,

influences the quality of the customer experience and

What Gummesson (1991) calls part-time marketers

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Definition of CRM

s e process o manag ng e a e

information about individual customers and maximise customer loyalty Kotler & Keller

customer touch oint refers to an occasion whena customer interacts with the organisation, e.g.,

an inquiry, a sale, receiving a piece of mail.

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Relationshi Develo ment

emem er s

Each act is a customer touch point

Holmlund, 1997, cited by Fill, 2009

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Role of CRM

o en y ose cus omers a are mos

valuable to the organisation

To segment the organisations customers in the most

useful way, e.g., by demographics, needs, value

To retain the customers that are most valuable to the

or anisation Involves thinking about the economic indicators of

relationship intensity

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Relationshi Intensit

Economic indicators identify best customers

Fill (2011, p. 569 citing Bruhn)

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Identif in Customer Value

ecency, requency an va ue

Based on historical data

Customer lifetime value Net resent value of the future rofits ex ected from the

customer Based on predictions of future activity

Remember not all customers are worth having a'

Equally not all customers will want a relationshipw t t e organ sat on

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Leak Bucket

us omers are cons an y eav ngrelationships, for various reasons

Try to limit leaks, but

flow of new customers enteringrelationships

Therefore acquisition activity

needs to continue However, wont be the only, or the

main, focus of the organisations

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Vir in Media

us omer c urn now a . year on year o ovem er2009 ( The Week, 2009)

, of 2009 ( The Week, 2009)

. . ,

2009) Has database of customers of different roducts

Make use of a number of tools and media

TV ress and outdoor ads Website, email and text

Nature of roduct ran e su ests CRM suitabilit

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How CRM is Carried Out

e a ons ps are ase on among o er ngsknowledge of the other party, in this case the

For organisation this means building and applying aicture of our customers

Generally this means using direct marketing CRM is not just direct market, but direct marketing does play a big role

Also known as;

Database marketing Direct and database marketing

Data driven marketing

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Direct Marketin

rec mar e ng s a way o acqu r ng an eep ng

customers by providing aframework for three

information, strategy formation and

directly (Tapp, 2005, P. 9)

Central point is information

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What Data is Needed

rgan sa ons co ec an use a w e var e y o a a

on consumers

Personal / contact data

Name Address

Telephone number

Email address

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What Data is Needed

emograp c n orma on

Gender ge

Marital status

e av oura a a Purchase patterns

sage ata

Loyalty

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What Data is Needed

ar e ng re a e n orma on

Product(s) purchased epurc ase ra e

Method of payment

Discounts due (if any)

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Sources of Customer Data

n erna sources

Product registration docs arran y car s

Credit card details

In-store offers

Records from events or promotions

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Sources of Customer Data

Specialised research companies e.g. Neilsen

y . . v y

Web site

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Storin and Usin Data

a a s s ore n a a a ase

Used both as a way of understanding and contactingindividual customers and detecting trends in the

marketplace

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Next Time.

ow s carr e ou

9061 lecture 13

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