Chapter 5: CRM,

Big Data, and

Marketing
Analytics
LO 5-1 Define CRM and articulate its objectives and capabilities.

LO 5-2 Describe the CRM process cycle.

LO 5-3 Understand the concept of customer touchpoints and why they

are critical in CRM.

LO 5-4 Identify and appreciate the types of data used in marketing

management decision making.

Learning objectives
LO 5-5 Recognize key approaches to marketing analytics.

LO 5-6 Understand the concept of dashboard and how it improves

marketing planning for a firm.

LO 5-7 Explain return on marketing investment (ROMI), including

cautions about its use.
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LO 5-1 Define CRM
and articulate its
objectives and
capabilities.
Objectives and Capabilities of CRM

CRM (Customer relationship management)

comprehensive business model for increasing

revenues and profits by focusing on customers.

Who use it?

Drives the firm to be
entire organization but most used by customer-centric.
marketing, sales, and customer service.

No one department owns CRM.

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Objectives of CRM
Customer Acquisition
Acquisition of the right
customers based on known or
learned characteristics that will
drive growth and increase
margins.
Customer Retention
Retention of satisfied and loyal
profitable customers and
channels lead to long- term
growth and profits.
Customer Profitability
Increased customer margins
while offering the right
products at the right time.
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 How can you
accomplish these
objectives?”

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Customer Success Concepts
Customer satisfaction means that the offering
meets or exceeds the customer’s expectations.
Customer loyalty means the degree to which the
individual will resist switching, or defecting, from one Gauge the health of

offering to another.
their business and
brands

• High satisfaction.
• High level of perceived value.
• Strong relationship with the provider and the
brand.

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Customer Success Concepts 2

Customer value co-creation means customers

and providers combine forces to co-create
offerings of value. E.g. Nike, Lego

Customer experience management refers to

how the firm ensures the customer has an
excellent experience at every encounter. (aka,
CEX, CX, CEM)

Customer Empowerment is the extent to

which a firm provides ways for the customer
to connect and shape the nature of those
encounters and ways to connect and
collaborate with each other.
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CRM Metrics

Customer Lifetime Value (CLV)

• Relationships pay off in terms of cost savings, revenue growth, profits, referrals.

Return on customer investment (ROCI) can be calculated to determine if the firm

should fire a customer.

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LO 5-2

Describe the CRM

process cycle.

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Process Cycle for CRM The process of analyzing
the customer information
acquired through various
customer touchpoints.
organizational learning
takes place.

phase is the
implementation of the phase uses the key use of
customer strategies and the output from the
programs. Includes knowledge discovery
personal selling and other phase. Develops the
customer-directed marketing mix strategy.
interactions aimed at
touchpoints.
╸ Access the text alternative for slide images.
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Phase 1: Knowledge Discovery

Customer touchpoints: point-of-sale systems, call-center files, Internet

access, direct selling contacts, other customer contact.
A data warehouse contains all information about touchpoints and
transforms it into useful information.
Data mining uses massive amounts of data collected through CRM to
develop segments and micro-segments.
Database marketing is the creation of lists to reach segments.

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 LO 5-3 Understand the
concept of customer
touchpoints and why they are
critical in CRM.

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Customer Touchpoints: Interactivity

Interactive touchpoints are two-way and have direct interface between

customers and the sales force, telemarketer, customer service rep, or
interactive website.

Non-interactive touchpoints are static such as direct mail or website data entry
form.

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Customer Touchpoints: Interactivity

Successful use of touchpoints

1. Identify all potential touchpoints
2. Develop objectives for the information collected at each one.
3. Determine how to collect and integrate the information into the customer
database.
4. Develop policies on how the information will be accessed and used.

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CRM, Touchpoints, & Customer Trust

╸ Customer information raises ethical and legal issues regarding privacy.

Sensitive customer information like social security numbers has led to
heavy regulation.
Firms must tell customers how that information and be used and allow
them to opt out.
Firms need to be aware of the potential for abuse.
Customers must feel they can trust firms to protect sensitive information.
Marketers can use the firm’s security strategy to build loyalty to the brand.

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 Customer-Centric Culture

╸ Formalization means that structure, processes

and tools, and managerial knowledge and
commitment are formally established in support How an organization member exhibit a
of the culture. Today CRM is the most used customer orientation?
formalization mechanism.
╸ Customer mind-set means all employees see
both internal and external customer satisfaction
as central.

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Big Data
Whoa! That’s a big number,
aren’t you proud?

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Big Data and Marketing Decision Making

Big Data: the every-increasing quantity and complexity of data

being continuously produced by technological sources such as
laptops, smartphones, and other smart devices
Four Vs: Characteristics of Big Data
1. Volume: the amount of data produced in bytes
2. Velocity: the frequency and speed of analysis
3. Variety: different types of data
4. Veracity: reliability and validity

https://www.youtube.com/watch?v=XjmldAL9RQs.

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The Value of Big Data

Big Data helps marketers better understand customer

behavior.
Allows marketing managers to identify:
• Experiences of customers in the purchasing process.
• Customer’s touchpoints.

• How customers interact and experience different products and services .

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Marketing Analytics

Marketing analytics: A set of methods facilitated by technology

that utilize individual-level and market-level data to identify and
communicate meaningful patters within the data for the purpose of
improving marketing-related decisions.
Google users input 4 million queries per minute
Facebook users post 2 ½ million pieces of content each minute.

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Marketing Analytic Approaches

Approaches depend on the complexity of the analyses.

A marketing analyst is a highly skilled expert who may be
required for complex data.
Types of marketing analytics:
• Descriptive.
• Diagnostic.
• Predictive.
• Prescriptive.

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Descriptive Analytics
Descriptive analytics uses data to provide summary
insights.
Raw data is transformed into measurements.
Often presented in a visual format like histograms or pie
charts.
Appropriate first step before more complex and expensive
analyses.

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Diagnostic Analytics

Diagnostic analytics uses data to explore relationships

between different marketing factors that influence the
firm’s performance.
• Example: Advertising frequency, ad placement or product pricing that the firm
can control can influence sales.

Diagnostic analytics uses linear regression.

• Example: How do the number of conversations in an online forum about a new
TV show impact ratings?

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Predictive Analytics

Predictive analytics utilizes data to make predictions about

future marketing outcomes of interest.
Some use historical data to extrapolate into the future.
Others make predictions between a set of factors and an
outcome of influencing factors.
Example: American Express looks at loyalty indicators to
proactively contact potential at-risk customers.

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Prescriptive Analytics

Prescriptive analytics involves determining the optimal

level of marketing relevant factors for a specific context by
considering how adjusting their levels in varying ways will
impact different marketing outcomes.
Most advanced and costly; draws on the other three
approaches.
“What if” questions allows the firm to evaluate the value of
different decisions.

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The Marketing Dashboard

The marketing dashboard is a comprehensive system

providing managers with up-to-the minute information
necessary to run their operation.
╸ actual sales versus forecast,
╸ progress on marketing plan objectives,
╸ distribution channel effectiveness,
╸ sales force productivity, brand equity evolution, and so
on.
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Blue Red
Is the colour of the Is the color of
clear sky and the blood, and because
deep sea. It is of this it has
located between historically been
violet and green on associated with
the optical sacrifice, danger
spectrum. and courage.

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Goals and Elements of a Marketing Dashboard

An effective dashboard is organic, not static. It changes as

the organization changes.
Goals:
• Diagnostic insight looks at what happened and tries to know why.
• Predictive foresight uses diagnostic insights for forecasting.

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Return On Marketing
Investment (ROMI)

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