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Introduction
to
Chapter 21: Customer Relationship
Management (CRM)
Designed & Prepared by Laura Rush
B-books, Ltd.
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Learning Outcomes
LO1
Define customer relationship management
LO2
Explain how to identify customer relationships
with the organization
LO3
Understand interactions with the current
customer base
LO4
Outline the process of capturing customer
data
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Learning Outcomes
LO5
Describe the use of technology to store
and integrate customer data
LO6
Describe how to identify the best
customers
LO7
Explain the process of leveraging customer
information throughout the organization
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Customer Relationship Management
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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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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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 in
order to enhance the relationship
between customers and
the organization.
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Interactions of the
Current Customer Base
Touch-Points - All possible areas
of 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.
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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 a
centralized computer system.
Database - A collection of data, especially one
that can be accessed and manipulated by
software.
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Data Analysis
Customer segmentation
Recency-frequency-monetary analysis
Lifetime value analysis
Predictive modeling
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Data Manipulation Techniques
Lifetime
Value Analysis
A data manipulation technique
that projects the future value of
the customer over a period of
years.
Predictive
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.
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Campaign Management
Developing customized
offerings for appropriate segment
Pricing these offerings
attractively
Communicating offerings in a way
that enhances customer relationships
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Retaining Loyal Customers
Retaining an additional 5 percent of customers
increases profits by as much as 25 percent
Improving customer retention by 2 percent can
decrease costs by as much as 10 percent
Loyalty programs reward loyal customers for
making multiple purchases
Loyalty programs provide information
about customers and trends
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Cross–Selling 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-selling
opportunities
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Targeted Marketing
Communications
Infrequent
Users
• Offer direct incentives,
such as a price
discount
Moderate
Users
• Offer more
reinforcement of past
purchase decisions
Heavy
Users
• Design around loyalty
and 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
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Increasing Effectiveness of
Distribution Channel Marketing
RFID technology
Multichannel Marketing
CRM Databases
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Improving Customer Service
•Level of customer service is influential in
customer retention
•Customer retention – the percentage of
customers 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 over
privacy.
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