Module 5 - suggested content

What is CRM?
What is CRM?

“ CRM is the core business strategy that integrates internal

processes and functions, and external networks, to create and
deliver value to targeted customers at a profit. It is grounded
on high quality customer data and enabled by information
“
technology
 Some examples of companies using CRM solution providers

McDonald’s partners with Astute Solutions, allowing the restaurant chain greater insights
into consumer feedback and satisfaction levels

BA has been using a CRM solution called Teradata since 2002. It allows the airline to keep
track of all the customers on its books, and re-engage them with offers and deals

Salesforce helps Uber extract data from people engaging with its brand on social media

With Salesforce, Coca-Cola Germany’s team can easily log issues with customers or suppliers,
and then respond by dispatching field service technicians in real time

With the help of SAP CRM, Unilever improved its call centre capabilities, and boosted the
productivity of its consumer advisory representatives

Source: https://www.expertmarket.co.uk/crm-systems/customer-relationship-management-case-studies#link-coca-cola 4
Customer Lifetime Value (CLTV / CLV)
Customer Lifetime Value (CLTV / CLV)

 Customer should not be viewed as a set of independent transactions…..but as a LIFETIME

revenue stream

 CLTV or CLV (Customer Lifetime Value) is a measure for profit generation for a company

 It is the present day value of all net margins earned from a relationship with a customer
or a customer segment

 It focuses on current and future estimates. And does not consider the past

 Major strategic goal of many companies today is to identify customers that have the highest
CLTV potential
Customer Lifetime Value (CLTV / CLV)

Profit margins tend to grow and accelerate over time. WHY?

Defining customer loyalty
Defining customer loyalty

 Loyalty is EMOTION ! It is not a rating

 Satisfaction is a rating ! It is not an emotion

 Usually resulting from series of

positive experiences that have
occurred over period of time
Defining customer loyalty

Loyalty occurs when an individual has a interest in maintaining a close relationship, usually
resulting from series of positive experiences that have occurred over period of time

Tangible Intangible
experiences experiences

Product quality, Brand Image

Ease of use, Reliability, Effective Respectful communication
service Self Expressive and Emotional
benefits

Product Brand
The relationship between customer satisfaction and Loyalty (Tepeci, 1999)

Loyalty

Highly Somewhat Natural Somewhat Highly

dissatisfied dissatisfied satisfied satisfied

Satisfaction
Relationship between
Satisfaction
Loyalty
and
Business performance
Satisfaction, Loyalty and Business performance

Satisfaction-Profit Chain

Customer Business
Customer Loyalty
Satisfaction Performance

• Understand • Behavioral Loyalty • Revenue growth

Customer • Attitudinal Loyalty • Share of customer
Requirements • Customer Tenure
• Meet customer
expectations
• Deliver Customer
Value
Satisfaction, Loyalty and Business performance

Customer Customer satisfaction is the customer’s fulfillment response to a

Satisfaction customer experience, or some part thereof.

Satisfaction is a ‘pleasurable’ response Vs Dissatisfaction is ‘unpleasurable’ response

Satisfaction / Dissatisfaction evaluation can be directed at any or all elements of customer experience
- Product
- Service
- Process
- any other components of customer experience

Expectations-Disconfirmation Model :
- Positive confirmation when expectations are met … Happy
- Negative disconfirmation when expectations are underperformed…Unhappy
Satisfaction, Loyalty and Business performance

Customer Loyalty Two approaches in defining and measuring loyalty.

Behavioral Loyalty Attitudinal Loyalty

Measured by customer Measured by reference to attitudes

purchasing behavior - beliefs, feelings and purchasing
- Patronage in buying intention
- Repeat buying

RFM measure of behavioral loyalty

R = time elapsed since last buying

F = number of purchases in a given time period
M = monetary value of purchases
Satisfaction, Loyalty and Business performance

Business
Performance

Customer Linked KPIs in a CRM focused Company can be…

1 Customer Satisfaction Levels (CSAT)

2 Customer Retention Rates (or Churn rates)

3 Customer Acquisition Costs

4 Number of new customers required (Acquisitions)

5 Customer Tenure

6 Customer Loyalty (Attitudinal and Behavioral)

7 Share of Wallet (Share of Customer)

What is
Customer
Lifecycle?
What is Customer Lifecycle?

= Customer lifecycle (CLC) = the customer lifecycle describes the various stages a consumer goes through
before, during and after they complete a transaction
What is
Customer
Acquisition?
What is Customer Lifecycle?

1 Acquiring new customers ? Which prospects will be targeted?

Who is a new customer?

New to the product category New to the company

- Customers who identified new - Customers who are won from
need OR competition
- Customers who have found a
new category of solution for
existing need

In matured stage of industry : Who would you focus on for acquisitions?

= New-to-company customers
What is
Customer
Retention?
What is Customer Lifecycle?

2 Retaining existing customers

Types of Customer retention strategies

Locking customers by
Positive retention rewarding them for
strategies remaining in
relationship

Negative retention Locking customers by - imposing high switching costs

penalising them to - Retained customers spread
strategies
avoid shifting negative word-of-mouth
What is Customer Lifecycle?

2 Retaining existing customers

Types of Customer retention strategies

1 Creating customer delight / pleasantly surprising customers

Positive retention CD = P>E
strategies CD=Cust Delight, P=Perceived customer experience, E=Customer expectations

2 Adding customer-perceived value

Loyalty schemes, Customer clubs, Sales promotion (Vouchers, Rebates, Free
premiums, Collection schemes,

3 Creating social and structural bonds

Social bonding = cultural bonding, geographical bonding etc
Structural bonding = suppliers and customers commit resources to relationship.
(Financial / legal / Knowledge based / technological etc)

4 Building customer engagement

Customer engagement
Customer Co-creation
What is Customer Lifecycle?

2 Retaining existing customers

Types of Customer retention strategies

1 Creating customer delight / pleasantly surprising customers

Positive retention CD = P>E
strategies CD=Cust Delight, P=Perceived customer experience, E=Customer expectations

3 Quality forms

Basic Qualities Linear Qualities Attractive Qualities

(Basic Needs) (Performance Needs) (Delighters / Excitement)
Kano’s customer delight model
Customer
P>E
delight High
High
High
l
ona
ti
cep
Ex

Level of achievement
Low

High

ate
equ
d
I na
g
Low is s
in
Low
M

Low Customer
P<E dissatisfaction

Basic Qualities Linear Qualities Attractive Qualities

(Basic Needs) (Performance Needs) (Delighters / Excitement)
What is Customer Lifecycle?

2 Retaining existing customers

Measure of Customer Loyalty

+ve A Customer Satisfaction / CSAT ( Ex: Scale 1-7, 1-5)

= Score is average of ratings the customers have given for a product /service

+ve or -ve B Net Promoter Score (NPS)

= % of promoters minus % of detractors

+ve C Customer Effort Score (CES)

= is average of scores the customers have given for how much they struggle
with the brand to get expected service
What is Customer Lifecycle?

2 Retaining existing customers

Measure of Customer Loyalty

SOW (Share of Wallet) or Share of

Customer is – Company’s share of
chosen customers’ spending
Developing
Customer Value
What is Customer Lifecycle?
3 Developing customer value Customer development
= is the process of growing the value of retained customers

Customer development strategies

Up-selling Cross-selling

Selling higher priced Selling additional

or higher margin products to existing
products to existing customers
customers

Big Challenge is: Customers don’t respond positively to these methods of up-selling and cross-selling