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Copyright Cengage Learning 2013All Rights Reserved

1

Chapter 21: Customer Relationship

Management (CRM)

Prepared & Designed by Laura Rush, B-books, Ltd.

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Learning Outcomes

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

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3

Learning Outcomes

Describe the use of technology to storeand integrate customer data

Describe how to identify the bestcustomers

Explain the process of leveraging customer

information throughout the organization

LO5

LO6

LO7

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Copyright 2013 by CengageLearning Inc. All Rights Reserved 4

What is Customer

Relationship Management?

Define customerrelationship management.

LO1

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Copyright 2013 by Cengage Learning Inc.All Rights Reserved

5

Customer Relationship Management

A company-wide businessstrategy designed to optimize

profitability, revenue, and customersatisfaction by focusing on highly

defined and precise customer

groups.

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Copyright 2013 by Cengage

Learning Inc. All Rights Reserved 6

Customer Relationship Management

Cycle

Identify customer relationships

Store and integratecustomer data using IT

Capture customer databased on interactions

Identify best customers

Understand interactions

with current customer base

Leverage customer

information

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7

Implementing a CRM System

Key Points:

1. Customers take center stage

2. The business must manage thecustomer relationship across allpoints of customer contact

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Review Learning OutcomeCustomer Relationship Management

LO1

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Identify Customer Relationships

Explain how to identify

customer relationships

with the organization.

LO2

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Identify Customer Relationships

Customer-Centric - The company

customizes its product

and service offering based

on data generated through

interactions between the

customer and the company.

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11

Learning

An informal process of

collecting customer

data through customer

comments and feedback on

product or service performance.

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12

Knowledge Management

The process by which learned

information from customers is

centralized and shared inorder to enhance the relationship

between customers and

the organization.

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Knowledge Management

Qualitative facts

Customer actions

Comments

Experientialobservations

Collected

Informat ion

Includes:

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Interaction

The point at which a customer

and a companyrepresentative exchange

information and develop

learning relationships.

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Review Learning OutcomeIdentifying Customer Relationships

LO2

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Interactions of the

Current Customer Base

Understand interactionswith the currentcustomer base.

LO3

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Interactions of the


RequestedService

ChannelPast

Relationship

Currenttransaction

Customer

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Interactions of the


18

http://www.bestbuy.com

Online

Touch-Points - All possible areasof a business where customers

communicate with that

business.

Point-Of-Sale Interactions -Communications between

customers and organizations that

occur at the same point of sale,normally in a store.

R i L i O
http://www.bestbuy.com/http://www.bestbuy.com/

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Review Learning OutcomeInteractions with Current Customer Base

LO3

Customer

Web

Point of Sale

Kiosk

Delivery, Installation

Survey

Product Registration

Customer Service

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Capture Customer Data

Outline the process of

capturing customer data.

LO4

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Capture Customer Data

Store visits

Conversations with salespeople

Interactions via the Web

Traditional phone conversations

Wireless communications

Online

http://www.geico.com
http://www.geico.com/http://www.geico.com/

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Review Learning OutcomeCapturing Customer Data

LO4

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Store and Integrate Customer Data

Describe the use oftechnology to store andintegrate customer data.

LO5

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Copyright 2013 by Cengage Learning Inc.All Rights Reserved 24

Customer Data

Data Warehouse -A central

repository for data from various

functional areas of the organization

that are stored and inventoried on acentralized computer system.

Database -A collection of data, especially one

that can be accessed and manipulated by

software.

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Review Learning OutcomeStore and Integrate Customer Data

LO

5

Database

Compiled listResponse list

Data Warehouse

::::::::::::::::::::::::::::::::::::::::::

::::::::::::::::::::::::::::::::::::::::::\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\

///////////////////////////////////////////////////////////

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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Identifying the Best Customers

Describe how to identify

the best customers.

LO6

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Data Mining

A data analysis procedure

that identifies significantpatterns of variables and

characteristics that pertain to

particular customers or

customer groups.

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Data Analysis

Predictive modeling

Lifetime value analysis

Recency-frequency-monetary analysis

Customer segmentation

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Customer Segmentation

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

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Recency-Frequency-Monetary

Analysis

1. Identifies customers mostly like to

purchase again

2. Identifies and ranks best customers3. Identifies most profitable customers

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Data Manipulation Techniques

LifetimeValue Analysis

PredictiveModeling

A data manipulation techniquethat projects the future value ofthe customer over a period of

years.

A data manipulation techniquein which marketers try to

determine what the odds arethat some other occurrence willtake place in the future.

R i L i O t

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Review Learning OutcomeIdentify the Best Customers

LO

6

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Leverage Customer Information

Explain the process of

leveraging customer

information throughout

the organization.

LO7

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CRM Marketing Database Applications

Campaign management

Retain loyal

customers

Cross-selling other

products and services

Designing targeted

marketing communications

Reinforcing customer

purchase decisions

Inducing product trial

by new customers

Increasing effectiveness

of distribution channel

marketing

Improving

customer service

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Campaign Management

Developing product or service

offerings customized

for the appropriate customersegment and then pricing and

communicating these offerings

for the purpose of enhancing

customer relationships.

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Campaign Management

Communicating offerings in a waythat enhances customer relationships

Developing customizedofferings for appropriate segment

Pricing these offeringsattractively

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Retaining Loyal Customers

Loyalty programs reward loyal customers formaking multiple purchases

Retaining an additional 5 percent of customersincreases profits by as much as 25 percent

Improving customer retention by 2 percent can

decrease costs by as much as 10 percent

Loyalty programs provide informationabout customers and trends

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CrossSelling Other

Products and Services

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-sellingopportunities

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Targeted Marketing

Communications

InfrequentUsers

ModerateUsers

HeavyUsers

Offer direct incentives,

such as a price

discount

Offer more

reinforcement of past

purchase decisions

Design around loyaltyand reinforcement

of purchase

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Reinforcing Customer Purchase

Decisions

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

I i Eff ti f

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Increasing Effectiveness of

Distribution Channel Marketing

CRM Databases

RFID technology

Multichannel Marketing

Online

http://www.kidsdadsmoms.com
http://www.kidsdadsmoms.com/http://www.kidsdadsmoms.com/

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Copyright 2013 by Cengage Learning Inc.

All Rights Reserved

42

Improving Customer Service

Level of customer service is influential in

customer retention

Customer retentionthe percentage ofcustomers that repeatedly purchase products

from a company

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All Rights Reserved

43

Privacy Concerns

How companies use consumer

data is governed by some laws,

such as Gramm-Leach-Bliley Act

and HIPAA

Many companies have privacy

policies, in line with growing

consumer concerns overprivacy.

Review Learning Outcome

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Learning Inc. All Rights Reserved44

Review Learning OutcomeLeveraging Customer Information

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

Improving customer service

MarketingInformation

CRM Database

Applications

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Chapter 21 Company Clip

Brand advocates, or Methods most

enthusiastic customers, are the companys

most vocal proponents and take an almost

evangelical approach to sharing the benefitsof green cleaning with the market.

http://www.cengage.com/marketing/book_co

ntent/9781111821647_lamb/videos/ch21.html

Copyright 2013 by Cengage 45
http://www.cengage.com/marketing/book_content/9781111821647_lamb/videos/ch21.htmlhttp://www.cengage.com/marketing/book_content/9781111821647_lamb/videos/ch21.htmlhttp://www.cengage.com/marketing/book_content/9781111821647_lamb/videos/ch21.htmlhttp://www.cengage.com/marketing/book_content/9781111821647_lamb/videos/ch21.htmlhttp://www.cengage.com/marketing/book_content/9781111821647_lamb/videos/ch21.htmlhttp://www.cengage.com/marketing/book_content/9781111821647_lamb/videos/ch21.html

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