Customer relationship management 12 (1)

1Chap. 20 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Prepared byPrepared byDeborah BakerDeborah Baker

Texas Christian UniversityTexas Christian University

Chapter 20

Customer Relationship ManagementCustomer Relationship Management


Learning ObjectivesLearning Objectives

1. Define customer relationship management.

2. Explain how to establish customer relationships within the organization.

3. Explain how to establish and manage interactions with the current customer base.

4. Outline the process of acquiring and capturing customer data.


Learning Objectives Learning Objectives (continued)(continued)

5. Describe the use of technology to store and integrate customer data.

6. Describe how to analyze data for profitable and unprofitable segments.

7. Explain the process of leveraging and disseminating customer information throughout the organization.


Learning Objective Learning Objective

Define customer relationship management.

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Customer Relationship Customer Relationship ManagementManagement

A company-wide business strategy designed to optimize profitability,

revenue, and customer satisfaction by focusing on highly defined and precise

customer groups.

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Accomplishing Customer Accomplishing Customer Relationship ManagementRelationship Management

Link all processes of the company from its customers through its suppliers

Foster customer-satisfying behaviors

Encourage and track customer interactionwith the company

Organize the company around customer segments

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CRMCRM

Customer Relationship Management is the ultimate goal of a new trend in marketing that focuses on understanding customers as individuals instead of as part of a group.

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 Customer Relationship Management CycleManagement Cycle1


Customers take center stage in any organization.

Business must focus on the day-to-day management of the customer relationship across all points of customer contact.

Key Assumptions in Key Assumptions in Implementing CRMImplementing CRM1

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Explain how to establish customer relationships within the organization.

2


Customer-Centric FocusCustomer-Centric Focus2

The company customizes its product and service offering based on data

generated through interactions between the

customer and the company.


Establishing Customer Establishing Customer RelationshipsRelationships

Creates customized products and services based on data generated through interactions

Builds its system on what satisfies and retains valuable customers

Establishes relationships with customers similar to those of artisans of bygone years

2


CRM and One-to-One CRM and One-to-One MarketingMarketing2

CRMCRM Company-wide

process that focuses on learning, managing customer knowledge, and empowerment.

Broad and Systemic

One-to-One MarketingOne-to-One Marketing Individualized marketing

method that utilizes customer information to build a long-term, personalized, and profitable relationship with each customer.

Focused and Individualized


Learning Learning in a CRM Environmentin a CRM Environment2

An informal process of collecting customer data

through customer comments and feedback on

product or service performance.


Knowledge Management Knowledge Management in a CRM Environment in a CRM Environment2

The process by which learned information from customers is centralized

and shared in order to enhance the relationship

between customers and the organization.


Qualitative Facts about the Customer

Conclusions

Learned Lessons

Comments

Experiential Observations

CollectedCollectedInformation Information

Includes: Includes:

2 Knowledge ManagementKnowledge Management


Empowerment Empowerment in a CRM Environment in a CRM Environment2

Delegation of authority to solve customers’ problems

quickly—usually by the first person that the

customer notifies regarding the problem.


InteractionInteraction2

The point at which a customer and a company representative exchange information and develop learning relationships.

The customer, not the organization, defines the terms

of the interaction.



Explain how to establish and manage interactions with the current customer base.

3


Customer-Centric Approach Customer-Centric Approach forfor

Managing Customer Managing Customer InteractionsInteractions

3


Touch Points in a CRM Touch Points in a CRM SystemSystem3

All possible areas of a business where customers

communicate with that business.



Customer registrationfor a particular service

Completion of warranty card

Communication withcustomer service

Customer discussions withsales, delivery, and installers

External External Touch PointsTouch Points



Internal Internal Touch PointsTouch Points

Marketing Research, for developing profiles

Production,for analyzing problems

Accounting,for establishing cost-control models

Knowledge Center (call center)


Interactions for Interactions for Customer-Centric Customer-Centric

OrganizationsOrganizationsWeb-BasedInteractions

Point-of-SaleInteractions

Transaction-BasedInteractions

New and UniqueNew and UniqueInteractions toInteractions to

Obtain Customer Obtain Customer DataData

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Web-BasedInteraction

Point-of-SaleInteractions

Communications between customers and organizations

using Web vehicles.

Communications between customers and organizations that

occur at the point of sale, normally in a store.

Transaction-Based

Interactions

The exchange of information that occurs between the company and

the company at the point of the actual transaction.

Interactions for Interactions for Customer-Centric Customer-Centric

OrganizationsOrganizations

http://www.kroger.com/



Outline the process of acquiring and capturing customer data.

4


Guidelines for Data Use in aGuidelines for Data Use in aCRM SystemCRM System4

1. Customers take center stage in the organization.

2. Customer information must be centralized.

3. Information is retained over the customer’s life span.

4. Information must define the products and services, the customer’s product preferences, and contact methods for interaction.


Guidelines for Data Use in aGuidelines for Data Use in aCRM SystemCRM System4


Channels for Acquiring DataChannels for Acquiring Data4

A medium of communication through

which the customer interacts with a business at an external touch point; the

traditional approach for acquiring information

from customers.


Channels for Acquiring DataChannels for Acquiring Data4

Store Visits

Conversations with Salespeople

Interactions via the Web

Traditional Phone Conversations

Wireless Communications


TransactionTransaction4

An interaction between a company and a customer involving an exchange of information as well as an exchange of products or

services. Contact Information

Current Relationshipwith Organization

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Product and ServiceProduct and Service4

Various Brands

Package Types

Time to Consume

Price Paid

Preferred Transaction TypeKey CustomerKey Customer

DataData



Describe the use of technology to store and integrate customer data.

5


Data WarehouseData Warehouse

A central repository for data from various functional areas

of the organization that are stored and inventoried on a

centralized computer system so that the information can be shared across all functional

departments of the business.

5


Operational Components ofOperational Components ofData WarehouseData Warehouse5

Customer-InitiatedCustomer-InitiatedComponent Component

Information-AccessInformation-AccessComponentComponent

System-ManagementSystem-ManagementComponentComponent

Stores and categories data initiated by the customer

Provides for classification of customer data and broadaccess to data

Defines and interprets data in a longitudinal manner

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Describe how to analyze data for profitable and unprofitable segments.

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Data MiningData Mining

A data analysis procedure that identifies significant patterns of variables and

characteristics that pertain to particular customers or

customer groups.

6


Capabilities of Data MiningCapabilities of Data Mining6

Automated prediction of trends and behaviors

Automated discovery of previously unknown patterns


ModelingModeling

The act of building a model in a situation where the answer

is know and then applying the model to another situation

where the answer is unknown.

6


Critical Factors for SuccessCritical Factors for Successwith Data Miningwith Data Mining

A large, well-integrated data warehouse

A well-defined understanding of how the end result of the activities will be used and leveraged throughout the organization

6



Explain the process of leveraging and disseminating customer information throughout the organization.

7


Leveraging and Disseminating Leveraging and Disseminating Customer InformationCustomer Information

Data mining leverages knowledge to Data mining leverages knowledge to identify the most profitable customersidentify the most profitable customers

Marketing strategies are designed to Marketing strategies are designed to penetrate these segmentspenetrate these segments

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Campaign ManagementCampaign 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.

7


Campaign ManagementCampaign Management7

Campaign Campaign ManagementManagement

Achieves Achieves Personalization Personalization

by:by:

Communicating offerings in a wayCommunicating offerings in a waythat enhances customer relationshipsthat enhances customer relationships

Developing customized Developing customized offerings for appropriate segmentofferings for appropriate segment

Pricing these offeringsPricing these offeringsattractivelyattractively

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