Transcript Chapter 1
Lamb, Hair, McDaniel 2011-2012 CHAPTER 21 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 © ISTOCKPHOTO.COM/YUNUS ARAKON Customer Relationship Management (CRM) What Is Customer Relationship Management? Define customer relationship management LO1 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 2 What Is Customer Relationship Management? Customer Relationship Management (CRM) is… a company-wide business strategy designed to optimize profitability, revenue, and customer satisfaction by focusing on highly defined and precise customer groups. LO1 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 3 LO1 Customer Relationship Management Strategy Organize the company around customer segments Encourage and track customer interaction with the company Foster customer-satisfying behaviors Link all processes of the company from its customers through its suppliers Allows companies to tightly focus in on their target markets Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 4 Exhibit 21.1 A Simple Flow Model of the Customer Relationship Management System Identify customer relationships LO1 Chapter 21 Leverage customer information Understand interactions with current customer base Identify best customers Capture customer data based on interactions Store and integrate customer data using IT Copyright ©2012 by Cengage Learning Inc. All rights reserved 5 Implementing a CRM System Key Points: 1. Customers take center stage 2. Business must manage the customer relationship across all points of customer contact LO1 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 6 Identify Customer Relationships Explain how to identify customer relationships with the organization LO2 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 7 Identify Customer Relationships Customer-centric is… a philosophy under which the company customizes its product and service offering based on data generated through interactions between the customer and the company. LO2 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 8 Identify Customer Relationships Learning is… an informal process of collecting customer data through customer comments and feedback on product or service performance. LO2 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 9 Identify Customer Relationships Knowledge Management is… the process by which learned information from customers is centralized and shared in order to enhance the relationship between customers and the organization. LO2 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 10 Knowledge Management Experiential observations Comments Collected Information Includes: Customer actions Qualitative facts LO2 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 11 Empowerment Empowerment is… delegation of authority to solve customers’ problems quickly—usually by the first person the customer notifies regarding the problem. LO2 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 12 Successful CRM Interaction Occurs when a customer and a company representative exchange information and develop learning relationships • The success of CRM can be directly measured by the effectiveness of the interaction between the customer and the organization. LO2 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 13 Understand Interactions of the Current Customer Base Understand interactions with the current customer base LO3 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 14 Exhibit 21.2 © Image Source/Jupiterimages Customer-Centric Approach for Managing Customer Interactions LO3 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 15 Interactions of the Current Customer Base Touch Points All possible areas of a business where the customers communicate with that business. Point-of-Sale Interactions Communications between customers and organizations that occur at the point of sale, normally in a store LO3 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 16 Capture Customer Data Outline the process of capturing customer data LO4 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 17 Capture Customer Data The traditional approach for acquiring data from customers is through channel interactions. Store visits Conversations with salespeople Interactions via the Web Traditional phone conversations Wireless communications LO4 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 18 Capture Customer Data In a CRM system, channel interactions are viewed as prime information sources based on the channel selected. Interactions between the company and the customer facilitate collection of large amounts of data, captured across several touch points. LO4 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 19 Store and Integrate Customer Data Describe the use of technology to store and integrate customer data LO5 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 20 Customer Data • Only useful if consistent and accurate. – Use information technology to capture, store, and integrate important information (data warehousing) • Useful information: – – – – Customer vital stats Purchasing habits Transaction methods Product usage • Access vast amounts of information required to make decisions LO5 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 21 Store and Integrate Customer Data Response list Compiled list :::::::::::::::::::::::::::::::::::::::::: :::::::::::::::::::::::::::::::::::::::::: Database \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ /////////////////////////////////////////////////////////// ~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~ Data Warehouse LO5 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 22 Identify the Best Customers Describe how to identify the best customers LO6 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 23 Identifying the Best Customers Data Mining: A data analysis approach that identifies patterns of characteristics that relate to particular customers or customer groups. LO6 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 24 Data Mining Identify and profile the best customers Calculate their lifetime value Predict purchasing behavior LO6 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 25 Data Analysis Customer segmentation Recency-frequency-monetary analysis Lifetime value analysis Predictive modeling LO6 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 26 Customer Segmentation Customer Segmentation: The process of breaking large groups of customers into smaller, more homogeneous groups. LO6 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 27 Recency-FrequencyMonetary Analysis 1. Identifies customers most likely to purchase again 2. Identifies and ranks “best customers” 3. Identifies most profitable customers LO6 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 28 LO6 Lifetime Value Analysis and Predictive Modeling Lifetime Value Analysis: A data manipulation technique that projects the future value of the customer over a period of years. Predictive Modeling: A data manipulation technique in which marketers try to determine what the odds are that some other occurrence will take place in the future. Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 29 Leverage Customer Information Explain the process of leveraging customer information throughout the organization LO7 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 30 Exhibit 21.3 Common CRM Marketing Database Applications Campaign management Reinforcing customer purchase decisions Retain loyal customers Inducing product trial by new customers Cross-selling other products and services Increasing effectiveness of distribution channel marketing Designing targeted marketing communications Improving customer service LO7 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 31 Campaign Management Campaign Management is… 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. LO7 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 32 Campaign Management Developing customized offerings for appropriate segment Pricing these offerings attractively LO7 Chapter 21 Communicating offerings in a way that enhances customer relationships Copyright ©2012 by Cengage Learning Inc. All rights reserved 33 Retaining Loyal Customers Retaining an additional 5 percent of customers can increase profits by as much as 25 percent Improving customer retention by 2 percent can decrease costs by as much as 10 percent Loyalty programs reward loyal customers for making multiple purchases Loyalty programs provide information about customers and trends LO7 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 34 Cross-Selling Other Products and Services • Match product profiles and consumer profiles to cross-sell products matching customer characteristics • Use product and customer profiling online to reveal cross-selling opportunities while customers surf company Web sites LO7 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 35 Designing Targeted Marketing Communications Infrequent Users Offer direct incentives, such as a price discount Moderate Users Offer more reinforcement of past purchase decisions Heavy Users Design around loyalty and reinforcement of purchase LO7 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 36 Reinforcing Customer Purchase Decisions • Thanking customers for purchases and telling them they’re important • Updating customers periodically on order status • Offer customer service opportunities with postsale e-mails LO7 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 37 Inducing Product Trial • Use of marketing database to identify new customers – Best customer profile can be used to profile potential customers • Overlay demographic and behavioral data on existing customer data LO7 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 38 Increasing Effectiveness of Distribution Channel Marketing • Use Web sites to keep in touch with customers and gain information about them • Use multichannel marketing to monitor purchases of customer shopping both instore and online • Use RFID technology to improve distribution LO7 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 39 Improving Customer Service Examples of Web site tools used to get customers to return include – customer wish lists – recommendations based on purchase and search behavior – one click purchasing and shipment tracking LO7 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 40 Privacy Concerns and CRM • If customers fell their privacy is being violated, then the relationship can become a liability. • Privacy policies for companies in the U.S. are largely voluntary, but may vary outside the U.S. LO7 Chapter 21 Copyright ©2012 by Cengage Learning Inc. All rights reserved 41