Transcript Week 11 - Buzzword Inc.

Class Discussion Notes
MKT 390 - 401
March 27, 2001
Customer Relationship Management
Relationship marketing
 Establish
 Maintain
 Enhance
 Commercialize
 Fulfill the promise
 Facilitate 2 way communication
 Focus
 Share of mind
 Share of customer
 Share of wallet
Customer Relationship Management
Stakeholders
 Employees
 Business customers and suppliers
 Other partners
 Consumers
Customer Relationship Management
Relationship levels
 Financial
 Uses pricing strategies
 Social
 Uses personal communication
 May also use pricing strategies
 Structural
 Creates solutions to customer problems
Customer Relationship Management
CRM process
 Identify customers
 Sales force
 Personal encounters
 Bar code scanner data
 Web site activity
 Personal disclosure
 Automated tracking
Customer Relationship Management
CRM process – cont’d
 Differentiate customers
 80/20 rule
 Identifying high-value customers
 Data mining
 Profiling
 Real-time data collection
• Look for RFM
• Analyze LTV (lifetime value)
• Evaluate sales growth over time
• Determine individual service costs
Customer Relationship Management
CRM process – cont’d
 Customize the marketing mix
 Tailored marketing communications messages
 Retaining customers
 Feedback loop
Integrating CRM with SCM
 Keeps inventories low
 Facilitates better product design
 Provide timely, helpful information to the customer
Customer Relationship Management
CRM benefits
 Increased profits
 Customer acquisition vs retention
 Retention costs are less
• Reduced promotion costs
• Effective sales team
• Loyalty = experience
• Loyal customers cost less to service
 Increase amount purchased
 Cross-selling
 Upselling
Customer Relationship Management

Increased profits – cont’d
 CRM metrics
 Lifetime value (LTV)
 Average order value (AOV)
 Recency, frequency, monetary analysis (RFM)
 Average annual sales over time
 New customer acquisition cost
 Current customer retention cost
• (1/5 of new)
 Cost per customer – high and low value
 Share of customer spending
• 80/20 rule
 % of customer retention
 Rate of customer recovery
 Referral revenue
 Price premium
Customer Relationship Management
CRM benefits – cont’d
 Word of mouth communication and referrals
 Each unhappy customer tells 10 people about the
experience
 E-mail
 Chat rooms
 Newsgroups
 Personal web pages
 Partnership synergy
 Increased sales
 Lower development or maintenance costs
 Affiliate programs = more revenue
 Customer’s perception of value add
Customer Relationship Management
CRM benefits – cont’d
 Customer benefits
 Choice reduction
 Personalized service
 Brand loyalty
Customer Relationship Management
Building CRM
 Target the right customers
 Own the customer’s total experience
 Streamline processes
 Provide 360 degree review within the firm
 Let customers help themselves
 Help customers do their jobs (B2B)
 Deliver personalized service
 Foster community
Customer Relationship Management
Customization tools
 Small segment customization – company-side tools “Push”
 Collaborative filtering
 Software that gathers opinions of similar users
 Data mining
 Extracting predictive information from databases
 Profiling
 Understanding user characteristics and behavior
 Outgoing e-mail
 Customized pricing, distribution, messages
 Permission marketing
 Spam
Customer Relationship Management
Customization tools – cont’d
 Small segment customization – client-side tools “Pull”
 Agents
 Shopping
 Search enginges
 Negotiation agents
 Experiential marketing
 Customer involvement
Customer Relationship Management
Customization tools – cont’d
 Individual customization – company-side tools “Push”
 Cookies
 Web site log
 Real time profiling
 Outgoing e-mail
Customer Relationship Management
Customization tools – cont’d
 Individual customization – client-side tools “Pull”
 Individualized web portals
 Training
 B2B
 Wireless data services
 PDAs
 Cell phone
 Pager
 Web forms
 Product registration
 Purchase
 Market research
 Fax on demand
 Incoming e-mail
 Customer feedback
 Automated responses
Customer Relationship Management
Building community
 Chat rooms
 Ex-employees
 Bulletin boards
 Distributed e-mail
 Professional discussion groups
 Intranet
 Providing internal information to employees
 Extranet
 Linked networks sharing information
 B2B suppliers
Customer Relationship Management
Guarding consumer privacy
 TRUSTe guidelines
 Adopt and implement a privacy policy
 Post notice and disclosure of information collection
parctices
 Give users consent
 Put security measures in place
 Publish the following information on the site:
 What information is being gathered
 Who is collecting the information
 How the information will be used
 Who will information be shared with
 Opt-out
 Security procedures
 Updating information
 AMA code of ethics for Internet marketing