Learning Objectives

Define Customer Relationship Management Explain how to identify customer relationships with the organization Understand interactions with the current customer base Outline the process of capturing customer data

Learning Objectives 
Describe the use of technology to store and integrate customer data Describe how to identify the best customers Explain the process of leveraging customer information throughout the organization Creating customer value, satisfaction, and loyalty

What is CRM? 
A company-wide business strategy companydesigned to optimize profitability, revenue, and customer satisfaction by focusing on highly defined and precise customer groups. It is the ultimate goal of a new trend in marketing

What is CRM? 
The difference between CRM and traditional mass marketing can be compared to shooting a rifle and a shotgun.

What is CRM? 
Shotgun Approach ± scattering messages far and wide across the spectrum of mass media Rifle Approach ± CRM marketers now are homing in on ways to effectively communicate with each individual customer

The CRM Cycle
Identify customer relationship

Leverage customer information

Understand interactions with the current customer base

Identify best customers

Capture customer data based on interactions

Store and integrate customer data using information technology

Identify Customer Relationships

Customer Centric 
It is an internal management philosophy similar to the marketing concept. Under this philosophy the company customizes its product and service offering based on data generated through interactions between the customer and the company.

The Playstation web site is designed to create a community of users who can join Playstation Underground where they will ³feel like they belong to a subculture of intense gamers.´ To achieve this objective, the web site offers online shopping, opportunities to try new games , customer support, and information on news, events, and promotions.

Learning 
In customer relationship management environment involves collecting customer information through comments and feedback on product and service performance.

Knowledge Management
-is a process by which customer information is centralized and shared in order to enhance the relationship between customers and the organization. Information collected includes experiential observations, comments, customer actions, and qualitative facts about the customer.

Empowerment
-is the latitude organizations give their representatives to negotiate mutually satisfying commitments with customers.

Interaction
-is the point at which a customer and company representative exchange information and develop learning relationship. With CRM the customer, and not the organization, defines the terms of the interaction. Often by stating his or her preferences.

Interaction
The organization responds by designing products and service around customers desired experiences.

Identify Customer Relationships 
The success of CRM ± building lasting and profitable relationships ± can be directly measured by the effectiveness of the interaction between the customer and the organization.

Understand Interactions with the Current Customer Base

Understand Interactions with the current Customer Base 
The interaction between the customer and the organization is the foundation on which a CRM system is built.

Understand Interactions with the current Customer Base 
Only through effective interactions can organizations learn about the expectations of their customers, generate and manage knowledge about them, negotiate mutually satisfying commitments, and build long-term longrelationships.

Understand Interactions with the current Customer Base 
Companies that effectively manage customer interactions recognize that customers provide data to the organization that affect a wide variety of touch points. *touch points ± all possible areas of a business
where customers communicate with that business

Understand Interactions with the current Customer Base
CUSTOMER Interactions 
WEB Points of Sale Kiosk Customer Service Delivery, Installation Survey Product Registration

Capture Customer Data

CAPTURE CUSTOMER DATA 
Vast amounts of data can be obtained from the interaction between an organization and its customers. Channel interactions - include store visits, conversations, and wireless communications, such as cell phone conversations and satellite communications.

CAPTURE CUSTOMER DATA 
Interactions between the company and the customer facilitate collection of large amounts of data. The physical as well as the psychological consumption of the firm¶s product or service constitutes an additional touch point for customer interaction.

CAPTURE CUSTOMER DATA 
The unique dimension of the product or service interaction is that it enables customer data to be collected during the actual use of the product. Even more important are data related to the performance of the product and the method customers use to report performanceperformance-related issues.

Web I N F O R M A T I O N Point of Sale Kiosk Customer Service Delivery, installation Product use, consumption Survey Product Registration

Store and Integrate Customer Data using Information Technology

Data Warehouse 
A central repository for data from various functional areas of the organization that is stored and inventoried on a centralized computer system so that the information can be shared across all functional departments of the business.

Database 
A collection of data, especially one that can be accessed and manipulated by computer software. The core of the data warehouse.

Database 
CRM database focuses on collecting vital statistics on consumers, their purchasing habits, transactions methods, and product usage in a centralized repository that is accessible by all functional areas of a company.

Store and Integrate Customer Data 
The foundation of the data warehouse is the database, which begins with collecting the ³right´ information. The first step is to develop a list. 1. Response List 2. Compiled List

Store and Integrate Customer Data
1. Response List ± a customer list that includes the names and addresses of individuals who have responded to an offer of some kind, such as by mail, telephone, direct-response television, directproduct rebates, contests or sweepstakes, or billing inserts.

Store and Integrate Customer Data
2. Compiled List ± a customer list that was developed by gathering names and addresses from telephone directories and membership rosters, usually enhanced with information from public records, such as census data, auto registrations, birth announcements, business start-ups, startor bankruptcies

Store and Integrate Customer Data 
A customer database becomes even more useful to marketing managers when it is enhanced to include more than simply a customer¶s or prospect¶s name, address, telephone number, and transaction history.

Store and Integrate Customer Data 
Data enhancement involves purchasing information on customers or prospects to better describe their needs or determine how responsive they might to marketing programs. It typically includes demographic, lifestyle, or behavioral information.

Identifying the Best Customers

Identifying the Best Customers 
To be successful, companies must identify customers who yield high profits or potential profits.

Identifying the Best Customers 
Significant amounts of data must be gathered from customers, stored and integrated in the data warehouse, and then analyzed and interpreted for common partners who are different from other customer segments.

Data Mining 
It is used to find hidden patterns and relationships in the customer data stored in the data warehouse. A data analysis approach that identifies pattern of characteristics that relate to particular customers or customer groups.

Modeling 
It involves building a model in a situation where the answer is known and then applying the model to another situation where the answer is unknown.

Customer Segmentation 
The process of breaking large groups of customers into smaller, more homogenous groups. It generates a ³profile´ or picture of the customer¶s similar demographic, geographic, and psychographic traits as well as their previous purchase behavior.

Recency-FrequencyRecency-Frequency-Monetary Analysis 
Identifies those customers most likely to purchase again because they have bought recently, bought frequently, or spent a specified amount of money with the firm.

Lifetime Value Analysis 
A data manipulation technique that projects the future value of the customer over a period of years using the assumption that marketing to repeat customers is more profitable than marketing to first-time buyers. first-

Predictive Modeling 
A data manipulation technique in which marketers try to determine, based on some past set of occurrences, what the odds are that some other occurrence, such as a response or purchase, will take place in the future.

Leverage Customer Information

Campaign Management 
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.

Retaining Loyal Customers 
Loyalty programs reward loyal customers for making multiple purchases. The objective is to build longlong-term mutually beneficial relationships between a company and its key customers.

CrossCross-Selling Other Products and Services 
CRM provides many opportunities to crosscross-sell related products. Marketers can use the database to match product profiles and consumer profiles so that they can cross-sell customers products crossthat match their demographic, lifestyle, or behavioral characteristics.

Designing Targeted Marketing Communications 
Using transaction and purchase data, a database allows marketers to track customers¶ relationships to the company¶s products and services and modify the marketing message accordingly.

Reinforcing Customer Purchase Decisions 
CRM offers marketers an excellent opportunity to reach out to customers to reinforce the purchase decision by thanking customers for their purchases and telling them they are important, marketers can help cement a long-term, longprofitable relationship.

Inducing Product Trial by New Customers 
Although significant time and money are expended on encouraging repeat purchases by the best customers, a marketing database is also used to identify new customers.

Increasing Effectiveness of Distribution Channel Marketing 
With CRM databases, manufacturers now have tool to gain insight into who is buying their products. Instead of simply unloading products into the distribution channel and leaving marketing and relationship building to dealers, auto manufacturers today are using websites to keep in touch with their customers or prospects.

Improving Customer Service 
Many companies are using CRM techniques to service customers better by hosting online feedback forums and chat rooms where users can discuss and debate products. Allowing customers much freer access to the company.

Privacy Concerns and CRM 
Before rushing out to invest in a CRM system and build a database, marketers should consider consumer¶s reactions to the growing use of databases.

Privacy Concerns and CRM 
Although database technology enables marketers to compile ever-richer everinformation about their customers that can be used to build and manage relationships, if these customers feel their privacy is being violated, then the relationship becomes a liability.

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