Transcript Chapter 21
Customer Relationship Management (CRM) CHAPTER 21 Marketing 10 Lamb, Hair, McDaniel Designed by Eric Brengle B-books, Ltd. Copyright ©2009 by Cengage Learning Inc. All rights reserved Prepared by Amit Shah Frostburg State University 1 LOI Customer Relationship Management Customer Relationship Management A company-wide business strategy designed to optimize profitability, revenue, and customer satisfaction by focusing on highly defined and precise customer groups. Copyright ©2009 by Cengage Learning Inc. All rights reserved 2 LOI Customer Relationship Management Cycle Identify customer relationships 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 ©2009 by Cengage Learning Inc. All rights reserved 3 LO2 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. Copyright ©2009 by Cengage Learning Inc. All rights reserved 4 LO2 Knowledge Management Experiential observations Comments Collected Information Includes: Customer actions Qualitative facts Copyright ©2009 by Cengage Learning Inc. All rights reserved 5 LO3 Interactions of the Current Customer Base Current transaction Channel Customer Past Relationship Requested Service Copyright ©2009 by Cengage Learning Inc. All rights reserved 6 LO3 Interactions of the Current Customer Base Touch Points All possible areas of a business where 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. http://www.bestbuy.com Online Copyright ©2009 by Cengage Learning Inc. All rights reserved 7 LO4 Capture Customer Data Store visits Conversations with salespeople Interactions via the Web Traditional phone conversations Wireless communications http://www.geico.com Copyright ©2009 by Cengage Learning Inc. All rights reserved Online 8 LO6 Identifying the Best Customers Data Mining A data analysis procedure that identifies significant patterns of variables and characteristics that pertain to particular customers or customer groups. Copyright ©2009 by Cengage Learning Inc. All rights reserved 9 LO6 Data Analysis Customer segmentation Recency-frequency-monetary analysis Lifetime value analysis Predictive modeling Copyright ©2009 by Cengage Learning Inc. All rights reserved 10 LO6 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 Copyright ©2009 by Cengage Learning Inc. All rights reserved 11 LO6 Recency-Frequency-Monetary Analysis 1. Identifies customers mostly like to purchase again 2. Identifies and ranks “best customers” 3. Identifies most profitable customers Copyright ©2009 by Cengage Learning Inc. All rights reserved 12 LO6 Data Manipulation Techniques 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. Copyright ©2009 by Cengage Learning Inc. All rights reserved 13 LO7 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 Copyright ©2009 by Cengage Learning Inc. All rights reserved 14 Retaining Loyal Customers Retaining an additional 5 percent of customers increases 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 Copyright ©2009 by Cengage Learning Inc. All rights reserved 15 Cross–selling 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-selling opportunities LO7 Copyright ©2009 by Cengage Learning Inc. All rights reserved 16 LO7 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 Copyright ©2009 by Cengage Learning Inc. All rights reserved 17 LO7 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 Copyright ©2009 by Cengage Learning Inc. All rights reserved 18 Increasing Effectiveness of Distribution Channel Marketing RFID technology Multichannel Marketing CRM Databases http://www.kidsdadsmoms.com LO7 Online Copyright ©2009 by Cengage Learning Inc. All rights reserved 19 Improving Customer Service •Level of customer service is influential in customer retention •Customer retention – the percentage of customers that repeatedly purchase products from a company LO7 Copyright ©2009 by Cengage Learning Inc. All rights reserved 20