CUSTOMER

RELATIONSHIP
MANAGEMENT
MARKETING MANAGEMENT-II
LECTURE 8
Learning Objectives

Importance of CRM

Customer centric approach towards managing customer

interactions

Technology and CRM

 Customer Relationship Management
(CRM)

CRM is a company-wide business strategy designed

to optimize profitability, revenue, and customer
satisfaction by focusing on highly defined and precise
customer groups.
 Customer Relationship
Management Strategy
Organize
Organizethe
thecompany
companyaround
aroundcustomer
customersegments
segments

Encourage
Encourageand
andtrack
trackcustomer
customerinteraction
interactionwith
withthe
thecompany
company

Foster
Fostercustomer-satisfying
customer-satisfyingbehaviors
behaviors

Link
Linkall
allprocesses
processesofofthe
thecompany
companyfrom
fromits
itscustomers
customers
through
throughits
itssuppliers
suppliers

Allows
Allowscompanies
companiesto
totightly
tightlyfocus
focusin
inon
ontheir
theirtarget
targetmarkets
markets
A Simple Flow Model of the Customer
Relationship Management System
Identify customer relationships

Leverage customer Understand interactions

information with current customer base

Capture customer data

Identify best customers
based on interactions

Store and integrate

customer data using IT
 Identify Customer Relationships
Customer-centric company customizes its product and
service offering based on data generated through
interactions between the customer and the company.
Knowledge Management is the process by which learned
information from customers is centralized and shared in
order to enhance the relationship between customers and
the organization.
Knowledge Management
Experiential
Experiential
observations
observations

Comments
Comments
Collected
Collected
Information
Information
Includes:
Includes: Customer
Customer actions
actions

Qualitative
Qualitative facts
facts
 Interactions of the
Current Customer Base

All
Allpossible
possibleareas
areasof
ofaabusiness
business
Touch
TouchPoints
Points where
wherethethecustomers
customers
communicate
communicatewithwiththat
thatbusiness.
business.
Communications
Communicationsbetween
between
Point-of-Sale
Point-of-Sale customers
customersandandorganizations
organizationsthat
that
Interactions
Interactions occur
occuratatthe
thepoint
pointof
ofsale,
sale,normally
normally
in
inaastore
store
 Capture Customer Data
The traditional approach for acquiring data from
customers is through channel interactions.

Store
Store visits
visits
Conversations
Conversations with
with salespeople
salespeople
Interactions
Interactions via
via the
the Web
Web
Traditional
Traditional phone
phone conversations
conversations
Wireless
Wireless communications
communications
 Capture Customer Data
In a CRM system, channel interactions are
viewed as prime information sources based
on the channel selected.

Interactions between the company and the

customer facilitate collection of large
amounts of data, captured across several
touch points.
 Customer Data

Only useful if consistent and accurate.

Use information technology to capture, store, and integrate
important information (data warehousing)
 Useful information:
 Customer vital stats
 Purchasing habits
 Transaction methods
 Product usage
 Access vast amounts of information required to make decisions
Data Mining
Identify and profile the best customers

Calculate their lifetime value

Predict purchasing behavior

 Data Analysis

Customer
Customer segmentation
segmentation

Recency-frequency-monetary
Recency-frequency-monetary analysis
analysis

Lifetime
Lifetime value
value analysis
analysis

Predictive
Predictive modeling
modeling
Lifetime Value Analysis and Predictive
Modeling
Lifetime
Lifetime Value
ValueAnalysis:
Analysis:
A data manipulation technique that projects the
future value of the customer over a period of
years.

Predictive
Predictive Modeling:
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.
 Common CRM Marketing
Database Applications
Reinforcing
Reinforcing customer
customer
Campaign
Campaign management
management purchase
purchase decisions
decisions

Retain
Retain loyal
loyal Inducing
Inducingproduct
producttrial
trial
customers
customers by
bynew
newcustomers
customers

Increasing
Increasingeffectiveness
effectiveness
Cross-selling
Cross-selling other
other of
of distribution
distributionchannel
channel
products
products and
and services
services marketing
marketing

Designing
Designing targeted
targeted Improving
Improving
marketing
marketing communications
communications customer
customer service
service
Campaign Management

Developing
Developingcustomized
customized
offerings
offeringsfor
forappropriate
appropriatesegment
segment

Pricing
Pricingthese
theseofferings
offerings
attractively
attractively

Communicating
Communicatingofferings
offeringsin
inaaway
way
that
thatenhances
enhancescustomer
customerrelationships
relationships
 Retaining Loyal Customers
Retaining
Retainingan
anadditional
additional55percent
percentof
ofcustomers
customerscan
can
increase
increaseprofits
profitsby
byas
asmuch
muchasas25
25percent
percent

Improving
Improvingcustomer
customerretention
retentionby
by22percent
percentcan
can
decrease
decreasecosts
costsby
byas
asmuch
muchas as10
10percent
percent

Loyalty
Loyaltyprograms
programsreward
rewardloyal
loyalcustomers
customersfor
for
making
makingmultiple
multiplepurchases
purchases

Loyalty
Loyaltyprograms
programsprovide
provideinformation
informationabout
about
customers
customersand
andtrends
trends
 Cross-Selling Other
Products and Services

Match product profiles and consumer profiles to cross-sell

products matching customer characteristics
Use product and customer profiling online to reveal cross-
selling opportunities while customers surf company Web
sites
Designing Targeted Marketing
Communications
Infrequent
Infrequent Offer direct incentives, such as a
Users
Users price discount

Moderate
Moderate Offer more reinforcement of past
Users
Users purchase decisions

Heavy
Heavy Design around loyalty and
Users
Users reinforcement of purchase