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Copyright Cengage Learning 2013All Rights Reserved
1
Chapter 21: Customer Relationship
Management (CRM)
Prepared & Designed by Laura Rush, B-books, Ltd.
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Copyright Cengage Learning 2013All Rights Reserved
2
Learning Outcomes
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
LO1
LO2
LO3
LO4
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Copyright Cengage Learning 2013All Rights Reserved
3
Learning Outcomes
Describe the use of technology to storeand integrate customer data
Describe how to identify the bestcustomers
Explain the process of leveraging customer
information throughout the organization
LO5
LO6
LO7
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Copyright 2013 by CengageLearning Inc. All Rights Reserved 4
What is Customer
Relationship Management?
Define customerrelationship management.
LO1
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Customer Relationship Management
A company-wide businessstrategy designed to optimize
profitability, revenue, and customersatisfaction by focusing on highly
defined and precise customer
groups.
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Learning Inc. All Rights Reserved 6
Customer Relationship Management
Cycle
Identify customer relationships
Store and integratecustomer data using IT
Capture customer databased on interactions
Identify best customers
Understand interactions
with current customer base
Leverage customer
information
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7
Implementing a CRM System
Key Points:
1. Customers take center stage
2. The business must manage thecustomer relationship across allpoints of customer contact
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Learning Inc. All Rights Reserved 8
Review Learning OutcomeCustomer Relationship Management
LO1
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Learning Inc. All Rights Reserved 9
Identify Customer Relationships
Explain how to identify
customer relationships
with the organization.
LO2
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Identify Customer Relationships
Customer-Centric - The company
customizes its product
and service offering based
on data generated through
interactions between the
customer and the company.
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11
Learning
An informal process of
collecting customer
data through customer
comments and feedback on
product or service performance.
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Knowledge Management
The process by which learned
information from customers is
centralized and shared inorder to enhance the relationship
between customers and
the organization.
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Knowledge Management
Qualitative facts
Customer actions
Comments
Experientialobservations
Collected
Informat ion
Includes:
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Interaction
The point at which a customer
and a companyrepresentative exchange
information and develop
learning relationships.
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Review Learning OutcomeIdentifying Customer Relationships
LO2
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Learning Inc. All Rights Reserved 16
Interactions of the
Current Customer Base
Understand interactionswith the currentcustomer base.
LO3
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Interactions of the
Current Customer Base
RequestedService
ChannelPast
Relationship
Currenttransaction
Customer
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18
Interactions of the
Current Customer Base
18
http://www.bestbuy.com
Online
Touch-Points - All possible areasof a business where customers
communicate with that
business.
Point-Of-Sale Interactions -Communications between
customers and organizations that
occur at the same point of sale,normally in a store.
R i L i O
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Review Learning OutcomeInteractions with Current Customer Base
LO3
Customer
Web
Point of Sale
Kiosk
Delivery, Installation
Survey
Product Registration
Customer Service
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Learning Inc. All Rights Reserved 20
Capture Customer Data
Outline the process of
capturing customer data.
LO4
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Capture Customer Data
Store visits
Conversations with salespeople
Interactions via the Web
Traditional phone conversations
Wireless communications
Online
http://www.geico.com
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Review Learning OutcomeCapturing Customer Data
LO4
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Store and Integrate Customer Data
Describe the use oftechnology to store andintegrate customer data.
LO5
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Customer Data
Data Warehouse -A central
repository for data from various
functional areas of the organization
that are stored and inventoried on acentralized computer system.
Database -A collection of data, especially one
that can be accessed and manipulated by
software.
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Review Learning OutcomeStore and Integrate Customer Data
LO
5
Database
Compiled listResponse list
Data Warehouse
::::::::::::::::::::::::::::::::::::::::::
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///////////////////////////////////////////////////////////
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Learning Inc. All Rights Reserved 26
Identifying the Best Customers
Describe how to identify
the best customers.
LO6
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Data Mining
A data analysis procedure
that identifies significantpatterns of variables and
characteristics that pertain to
particular customers or
customer groups.
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Data Analysis
Predictive modeling
Lifetime value analysis
Recency-frequency-monetary analysis
Customer segmentation
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Customer Segmentation
The process of breaking large groups of
customers into smaller, more homogeneous
groups
Generates a profile or picture of the customers
similar demographic, geographic, and
psychographic traits
Focuses on best customers
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Recency-Frequency-Monetary
Analysis
1. Identifies customers mostly like to
purchase again
2. Identifies and ranks best customers3. Identifies most profitable customers
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Data Manipulation Techniques
LifetimeValue Analysis
PredictiveModeling
A data manipulation techniquethat projects the future value ofthe customer over a period of
years.
A data manipulation techniquein which marketers try to
determine what the odds arethat some other occurrence willtake place in the future.
R i L i O t
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Review Learning OutcomeIdentify the Best Customers
LO
6
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Learning Inc. All Rights Reserved 33
Leverage Customer Information
Explain the process of
leveraging customer
information throughout
the organization.
LO7
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CRM Marketing Database Applications
Campaign management
Retain loyal
customers
Cross-selling other
products and services
Designing targeted
marketing communications
Reinforcing customer
purchase decisions
Inducing product trial
by new customers
Increasing effectiveness
of distribution channel
marketing
Improving
customer service
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Campaign Management
Developing product or service
offerings customized
for the appropriate customersegment and then pricing and
communicating these offerings
for the purpose of enhancing
customer relationships.
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Campaign Management
Communicating offerings in a waythat enhances customer relationships
Developing customizedofferings for appropriate segment
Pricing these offeringsattractively
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Retaining Loyal Customers
Loyalty programs reward loyal customers formaking multiple purchases
Retaining an additional 5 percent of customersincreases profits by as much as 25 percent
Improving customer retention by 2 percent can
decrease costs by as much as 10 percent
Loyalty programs provide informationabout customers and trends
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CrossSelling Other
Products and Services
CRM provides opportunities to cross-sell
related products
Cross-sell to customers with demographic,lifestyle, or behavioral characteristic matches
Internet companies use product and
customer profiling to reveal cross-sellingopportunities
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Targeted Marketing
Communications
InfrequentUsers
ModerateUsers
HeavyUsers
Offer direct incentives,
such as a price
discount
Offer more
reinforcement of past
purchase decisions
Design around loyaltyand reinforcement
of purchase
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Reinforcing Customer Purchase
Decisions
Cognitive dissonance is the feeling consumers
experience when they recognize inconsistency
between values and opinions and their
purchase behavior
Thanking customers help cement a long-term,
profitable relationship
Update customers periodically on the status
of their order
I i Eff ti f
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Increasing Effectiveness of
Distribution Channel Marketing
CRM Databases
RFID technology
Multichannel Marketing
Online
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Improving Customer Service
Level of customer service is influential in
customer retention
Customer retentionthe percentage ofcustomers that repeatedly purchase products
from a company
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Privacy Concerns
How companies use consumer
data is governed by some laws,
such as Gramm-Leach-Bliley Act
and HIPAA
Many companies have privacy
policies, in line with growing
consumer concerns overprivacy.
Review Learning Outcome
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Learning Inc. All Rights Reserved44
Review Learning OutcomeLeveraging Customer Information
LO7
Campaign management
Retaining loyal customers
Cross-selling other products
Designing targeted marketingcommunications
Reinforcing purchase decisions
Inducing product trial by new
customers
Increasing effectiveness of
distribution channel marketing
Improving customer service
MarketingInformation
CRM Database
Applications
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Chapter 21 Company Clip
Brand advocates, or Methods most
enthusiastic customers, are the companys
most vocal proponents and take an almost
evangelical approach to sharing the benefitsof green cleaning with the market.
http://www.cengage.com/marketing/book_co
ntent/9781111821647_lamb/videos/ch21.html
Copyright 2013 by Cengage 45
http://www.cengage.com/marketing/book_content/9781111821647_lamb/videos/ch21.htmlhttp://www.cengage.com/marketing/book_content/9781111821647_lamb/videos/ch21.htmlhttp://www.cengage.com/marketing/book_content/9781111821647_lamb/videos/ch21.htmlhttp://www.cengage.com/marketing/book_content/9781111821647_lamb/videos/ch21.htmlhttp://www.cengage.com/marketing/book_content/9781111821647_lamb/videos/ch21.htmlhttp://www.cengage.com/marketing/book_content/9781111821647_lamb/videos/ch21.html