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Customer Relationship Management Introduction CREATE THE DIFFERENCE Customer Relationship Management? • A customer-centric business strategy with the key goals of maximizing profitability, revenue, and customer satisfaction. • A process concerning the relationship between an organisation and its customers. CREATE THE DIFFERENCE Traditional vs. Modern • The traditional approach to CRM is based on sales. • All communication and dealings go via the sales team and buyer even where both organisations contain many departments (distribution, sales, quality, finance, etc). • traditional customer service is something 'done to' the customer CREATE THE DIFFERENCE Traditional vs. Modern • The modern approach to CRM is based on satisfying all of the needs - people, systems, processes, etc - across the customer's organisation • modern Customer Relationship Management is 'done with' the customer CREATE THE DIFFERENCE Why manage customers? • Customers are the usual source of income for an organisation. • Customers are also an exceptional source of information - information which is vital to enable a business to succeed; i.e. finding out what the customer needs! • The cost of retaining existing customers through CRM is a tiny fraction of the cost of acquiring new customers. CREATE THE DIFFERENCE Business Benefits of CRM • Customer satisfaction and good CRM will – Increase customer loyalty Which will – maximise Average Revenue Per User (customer) - ARPU And – Increase customer referrals • The above will increase – Revenue – Profit CREATE THE DIFFERENCE Where does IT come in? • Where there is Information – IT can help. • Data mining technologies enable organisations to: – find out about customers in terms of • purchasing habits • preferences – profile individuals and groups to market more effectively and thereby increase sales CREATE THE DIFFERENCE IT helps to build relationships by: • Using data mining to find out about customers • Using database technologies to store and make customer data widely accessible throughout the organisation • Using IT to facilitate communication and to record details of communication CREATE THE DIFFERENCE Loyalty • Research has found that a 1% increase in customer loyalty generates a 25% increase in profits. • An example of a business building loyalty is Tesco PLC who in 1995 launched a loyalty card called ‘Tesco Clubcard’ • Within the first six months the Clubcard had increased the businesses six monthly profits by 16% and market share increased by 2.1% CREATE THE DIFFERENCE Customer Retention • Customer churn or defection rate is the process in which customers move from one business to their competitors • A loss of a customer means loss of revenue • The churn rate within competitive markets such as the mobile telephone sector can be especially high - anywhere between 20 and 30% • Customer retention depends on reducing customer churn. CREATE THE DIFFERENCE Identifying customers who are likely to churn • Use data-mining (neural modelling) to look into behaviour of past customers who churned eg – frequency and number of purchases – Spending – Range of products purchased • Use this data to predict loss of valuable customers well in advance • Produce an effective retention strategy to prevent this CREATE THE DIFFERENCE Preventing a churn • Possible strategies to prevent a customer from churning might be – Special offers – Discounts – Enhanced credit limits CREATE THE DIFFERENCE Personalisation • An example of personalisation could include Amazon.com who, once a user has registered their details and / or made their first purchase steers its repeat book buyers to other types of products according to interests they’ve shown in past purchases • Through the use of technology the Web site recognises a user when they return and greets them accordingly CREATE THE DIFFERENCE Cross Selling/Upselling • Cross-selling and up-selling are techniques used to entice customers to buy all of their purchases from one business as oppose to them going to multiple suppliers • Data Mining can be used to – explore linkages between products – Profile or segment customers - find out what type of customer buys which product. CREATE THE DIFFERENCE Types of Customer Relationship Management • Operational CRM • Analytical CRM • Collaborative CRM CREATE THE DIFFERENCE