Customer Relationship

Management
Orla O’Connor
connorla@hotmail.com

Université de Rouen Normandie

Customer Relationship
Management – an introduction
Monday 14 November 2022
Agenda
• Course overview
• Customer Relationship Management (CRM) introduction
• Value of customer loyalty
• Customer journey
• Channel distribution – who owns the customer experience?
• Summary
Course overview
Course overview
• 6 days – online lectures over 6 days, exam at later stage
• 14.00 – 18.30
• Learning will take the form of interactive lectures, audio/video, peer-
feedback, independent reading and student presentations
• Exam:
Individual written exam (2 hours, 50%)
Group case study (1 hour, 40%)
Plus 10% (2 marks per day) for contribution to group activities
• Assessed against set of learning outcomes
Learning outcomes
At the end of the course students should be able to:

1. Demonstrate understanding of how to manage in-store promotions

through cooperative relationships with external brand managers
2. Draw on range of product placement techniques in order to boost
sales
3. Optimise point-of-sale opportunities
4. Convey the importance of customer loyalty and select appropriate
customer loyalty strategies to extend customer longevity
5. Negotiate commercial contracts with central purchasing managers
6. Set sales objectives and understand ways to organise the sales force
to achieve objectives
Customer Relationship
Management (CRM)
Customer Relationship Management (CRM)
• Based on premise of ‘value’ exchange between businesses and
customers (not just money or goods/services)

- Creating and delivering ‘real’ value

- Relevant customer propositions (7Ps)
- Consistent customer experiences

Knox et al (2002)
Short v long term customers
Transactional marketing
• Focus on single sale
• Short term approach
• Sales to anonymous buyers
• Sales person is main link to
buyers
• Limited customer commitment
• Quality is responsibility of
production department
Relationship marketing
• Focus on customer retention
• Long term approach
• Tracking of named buyers
• Lots of employees have links and
relationships with buyers
• High customer commitment
• Quality is the responsibility of
everyone
Customer retention
• Goal of CRM is to retain customers – why?
• X 5 more expensive to acquire a customer than keep one
(Apple budget $2000)
• Increased ‘share of wallet’
• As relationship develops, costs reduce
• Long term customers become less price sensitive – especially B2B
• Satisfied customers recruit others
(peer-to-peer marketing)

Reichheld and Sasser (1990)

Customer Lifetime Value (CLV)
• CRM concerned with customer life time
• CLV = net present value of future profit over a customer’s lifetime
Customer Lifetime Value (CLV)
• CRM concerned with customer life time
• CLV = net present value of future profit over a customer’s lifetime
Munster Rugby Club – developing customer lifetime value

http://www.mrsc.ie/home.php
Activity – case study
Friends First – building the customer centric organisation
(Casestudy 4.1, P.105)

Read case study. What value is the organisation creating? Can you find any
evidence of a focus on Customer Lifetime Value?
Customer loyalty
Pareto Law
• 80% of effects come from 20% of causes
• Application:
- 80% of profit from 20% of customers
- 20% of customers purchase 80% of products/services
• Rationale for Key Account Management (KAM)
Loyalty Ladder
Customer loyalty techniques
CRM systems
• System for managing interactions with customers – existing and
prospective
• Good CRM systems can enable automation – caution!
• Relies on sound and clean customer data
Why is CRM important?
Good CRM enables marketers to:
• Identify most profitable customers
• Ensure they are being taken care of
• Understand why they are profitable
• Satisfy their needs, add value, retain them
• Find more customers like them
• Become less reliant on less profitable customers
How loyalty schemes create value
• More purchases more often – conscious choice to commit to brand in exchange for reward.
Additional valued reason for choice
• Mass customise marketing communication – talk to individual customers
• Asset value of the data – what’s actually happening in every store to every customer
• Trend tracking – what customers are buying and what they’re not
• Minimise wasted marketing effort – better targeting through real customer insight
• Promote trust – built on knowledge and understanding and consistently delivering on
promises
The Clubcard customer contract
Identify individual
customers

Enable more personal Reward involvement,

more relevant service to spend, consolidation
customers The customer of spend.
contract

Create accurate
segmentation for Build dynamic
marketing efficiency customer knowledge
Loyalty segments (based on Dick and Basu 1994)
Behaviour

High repeat purchase Low repeat purchase

TRUE LOYAL LATENT LOYALTY

High Gofton 1995 only 17% Well disposed but not
attachment buy same brand in 50%+ heavy user
product service sectors Using other suppliers?
they use. Understand Create attitudinal
why loyalty is divided attachment
Attitude

FALSE LOYALTY NO LOYALTY

Low
Apathy, inertia, high No perceived difference
attachment
switching costs Frequent price switches
Increase degree of Communicate distinct
positive differentiation advantages
Loyalty lessons from Tesco: the dunnhumby loyalty
cube

Championing

Location
All customers can be
determines
placed at some point in
marketing
the loyalty cube Commitment action to earn
loyalty

Customer Contribution
Contribution
• Should you reward “profitability” or “loyalty” eg low spending loyal
versus high spending but promiscuous
• High spender may take more rewards but not be loyal
• Encourage loyalty, not just profitability
Commitment
• Future value based on “headroom”
• Potential to be more valuable in the future
• What emerging financial needs can be assumed/identified and
targeted
• Strengthen the bond
Championing
• Loyal customers as brand ambassadors
• Benefits become an aspiration for friends and associates
• Word of mouth/pass on your long term opinion
• Long term value of a low value but loyal customer may be in
recruiting higher customers
Clubcard segments
Clubcard segments
Using Clubcard data
Emotional attachment
• “Marketing people use the expression emotional attachment in too free a
way. People have an emotional bond to Tesco in that they feel we are on
their side…that we look out for their interests…and most important we
deliver on our promises. It’s the sort of customer thinking that says ‘Tesco
has always done alright by me.’ On the one hand that sounds rather dull,
but it is actually massively valuable. It is, infact, branding”
Tim Mason
Other ideas about loyalty
• Clubs that identify real emotional needs
• “The only club that is worth running is one that satisfies a genuine
customer need, because they’re the ones that consumers are interested
in” Tim Mason
• Unconditional benefits are powerful. An up-front reward gains positive
perceptions and influences shopping behaviour in a valuable direction
• Be a “chosen” not a “given”. People value most what they actively choose
https://risnews.com/10-hottest-retail-loyalty-plans-2022
https://risnews.com/10-hottest-retail-loyalty-plans-2022
https://risnews.com/10-hottest-retail-loyalty-plans-2022
Nike membership
• Activity:
Research the Nike membership scheme

Discuss within your groups –

1. How does it develop customer lifetime value?
2. How does it boost sales?
Activity: customer loyalty programmes
• Consider a customer loyalty programme that you are a member of
• Describe how it works
• What do you think the organisation is trying to achieve?
• What ‘customer loyalty technique’ is at play?
The customer journey
The customer journey
• Where does it begin?
• Where does it end?
Channel distribution
Channel distribution
• Who owns the customer experience?
• The EFES story..
Relationships with intermediaries
• The quality of channel partner relationships have a direct impact on the
end customer experience and loyalty
• All channel members must be marketing orientated and share common
goals to achieve end customer satisfaction
• Each intermediary has a responsibility for the customer experience

Geyskens et al. (2010)

Lecture 1: Introduction to B2B Marketing 45
Activity: the customer journey
• For a product or service of your choice, map out your journey as a
customer.
Summary
• Customer relationship management relies on good data
• Loyal customers are a valuable investment
• There are many opportunities to win/or lose the customer along the
customer’s journey
• All channel distribution members must be committed to the end
customer to sustain loyalty