Customer Development

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Session Objectives
✥ By the end of the session, students are expected to:

※ Learn and apply I.D.I.C. framework to CRM

※ Understand the concepts involved in differentiating customers

※ Appreciate the role of CRM in developing and retaining customers

“All customers are equal, but some are more equal than others”

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Customer Relationship Cycle

Customer
Acquisition

Customer Customer
Retention Development

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I.D.I.C. Model (Peppers & Rogers)
Information to organizations about customer’s value &
needs

Identify Differentiate Interact Customize

• Customers • Customer’s • Based on • Products

• Be visible value to values & • Services
firm needs
• Customer’s
needs from
firm

Information to customers about firm’s ability to cope

Internal External
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Identifying Customers
✥ How much customer identification does a company have? (Existing
customer base)
✥ Get customers to identify themselves
※ Identification activities (Define, collect, link, integrate, recognize, store,
update, analyze, make available, secure)
✥ Types of data
※ Behavioral, Attitudinal, Demographic
✥ Organizing Customer Data – Customer Information File (CIF)
※ Customer Characteristics (demographic)
※ Response to firm decisions (attitudinal)
※ Purchase history (behavioral)

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Differentiating Customers
High

VULNERABLE STAR
Customer Profitability
CUSTOMERS CUSTOMERS
2 1

LOST CAUSES FREE RIDERS

4 3

Low Customer Experience High

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Differentiating Customers
✥ Value of customers to firm (Profitability)
※ CHAID, CART, Cluster Analysis
✥ Differentiating by needs (Life stages)
✥ Differentiating by customer characteristics (e.g., demographics,
psychographics)

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Interaction & Customer Information
R
C

Information
Face-to-face
Medium

Telephone

Internet

Database

S
L Cost H

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Two main strategies for customer development

✥ Cross-selling is selling additional products and services to an

existing customer

✥ Up-selling is selling higher priced or higher margin products

and services to an existing customer

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CRM technologies used for customer development
✥ Campaign management
※ Software for developing campaigns & tracking effectiveness

✥ Event-based marketing
※ Software triggered programs / benefits / promotions
✥ Data mining
✥ Customization
✥ Channel integration
✥ Integrated customer communications
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Customer Information Portfolio

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.T. Perspective – Customer Info File (CIF)

✥ Customer database requirements

※ Demographic characteristics
※ Attitudinal information

※ Transaction information

※ Customer-wise acquisition and retention costs

※ Profitability calculation
Customer Characteristics Response to Marketer Purchase Profit
C11 C12 C13 R11 R12 R13 P11 P12 P13 P1
C21 C22 C23 R21 R22 R23 P21 P22 P23 P2
ΣPn

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I.T. Perspective

ERP CRM

FRONT END
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