Download Customer Relationship Management, Part I

Customer Relationship
Marketing
Dr. Zahay
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by Debra L. Zahay 2002
Marketing and Seduction
• Lonely hearts club
members
• Received direct mail
from fictional “lonely
women”
• Over time, solicited
money, gifts
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by Debra L. Zahay 2002
Deighton, Harvard University
Marketing is….
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by Debra L. Zahay 2002
Customer Relationship Marketing
Marketing
Customer
Service
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by Debra L. Zahay 2002
CRM
Operations
Three phases of company
strategy
Product
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by Debra L. Zahay 2002
Competitors
Customers
Customer Relationship
Marketing
• Definition: Process of creating relationships with
customers involving integration of processes
throughout the company with the objective of
create customer value
• Integrated Sales, marketing and service strategy
• Management approach, not just software
• Front-end applications as well as business
philosophy
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by Debra L. Zahay 2002
CRM means
• Understanding your customer
• Meeting his/her needs in a way that you
also make profit
• Looking at your customer in an integrated
way
• Making sure all touch points are
coordinated
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by Debra L. Zahay 2002
Other Names for CRM
•
•
•
•
•
1 to 1 Marketing
Relationship Marketing
Aftermarketing
Segment-of-one marketing
IMC
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by Debra L. Zahay 2002
Direct Marketing
• An organized and planned system of
contacts
• Using a variety of media
• Seeking to produce a lead or an order
• Developing and maintaining a database
• Measurable in cost and results
• Expandable with confidence
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by Debra L. Zahay 2002
Interactive Marketing
• 1) the ability to address an individual
• 2) the ability to gather and remember a response
of an individual
• 3) the ability to address that individual once more
in a way that takes into account his or her unique
response (Marketing=conversation)
» Deighton, 1996
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by Debra L. Zahay 2002
RM >> CRM >> eCRM
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by Debra L. Zahay 2002
To what extent are Interactive
Marketing, Direct Marketing,
Relationship Marketing and Customer
Relationship Management related?
Are they the same thing?
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by Debra L. Zahay 2002
Why CRM?
• Use relationships to grow revenue
• Use integrated information for excellent
service
• Introduce more repeatable sales processes
and procedures
• Create new value
• Instill loyalty
• Why else?
Kahlota and Robinson 1999
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by Debra L. Zahay 2002
Why CRM in Insurance
Industry?
• Customer Retention (4/5)
• Customer Satisfaction
• Cost Savings (2.8/5)
Source: Insurancenet, Peoplesoft
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by Debra L. Zahay 2002
“The Loyalty Effect”
Customers
Suppliers
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by Debra L. Zahay 2002
Profitability
Shareholders
Reichheld 1996
Reminder: Aftermarketing,
Retention Marketing
• The average company loses half its customers every 5 years.
• Reducing defections by 5% can increase profits by 25 to 85%,
depending on industry.
• Up to 85% of customers who defect say they were satisfied.
• Customers who are extremely satisfied are 6 times more likely to
repurchase than customers who are merely satisfied.
• A satisfied customer will tell 5 people while a dissatisfied
customer will tell 9 people.
Source: Cambridge Technology Partners
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by Debra L. Zahay 2002
What is a relationship?
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by Debra L. Zahay 2002
Relationships
• Reciprocity
– “we should return good for good, in proportion
to what we receive;. . . We should resist evil,
but not do evil in return;. . . We should make
reparation for the harm we do.” (Bagozzi
(1995), Becker (1990)
• In interpersonal relationships, a close
relationship is one where two people,
“mutually influence each other’s behavior
over a long period.” (Kelley 1983)
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by Debra L. Zahay 2002
Characteristics of Relationships
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by Debra L. Zahay 2002
Type of Customer
• Market segmentation
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Demographic
Product end-use
Buying situation
Customer benefits
Customer buying behavior
Customer decision making style
» Rangan, Moriarty and Swartz (1992)
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by Debra L. Zahay 2002
Buying Behavior: Relationship
Types
• Jackson (1985)
– Always a share (Long-term)
– Lost for good (Short-term)
• Friendship Continuum (Fournier 1998)
• Rangan Moriarty and Swartz (1992)
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–
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programmed buyers
relationship buyers
transaction buyers
bargain hunters
by Debra L. Zahay 2002
Can a consumer have a
relationship with a company?
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by Debra L. Zahay 2002
The Relationship Marketing Process
Interactions
Customize and
Personalize of the
Marketing Mix
Learn About
Customers
1. Products/Services
2. Communications
3. Channels
4. Price
Interactions
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by Debra L. Zahay 2002
Customer Relationship
Marketing
• Process of creating relationships with customers,
integration throughout the company to create
value
• Integrated Sales, marketing and service strategy
• 400-600 software programs claiming to deal with
some aspect of relationship management
• Claims made for these packages in terms of
performance
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by Debra L. Zahay 2002
Phases of relationship building
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1) awareness
2) exploration
3) expansion
4) commitment
5) dissolution
• Scanzoni (1979)
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by Debra L. Zahay 2002
The Relationship Continuum
Mass Market
Differentiation/Segmentation
Differentiated
Personalization
Mass Market
Customization
Customized
Relationships
Transactions
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by Debra L. Zahay 2002
Relationships
Not All Customers Are Valued or
Treated Equally
Tier 1
Tier 2
Tier 3
Tier 4
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1%
50%
5%
10%
40%
30%
24%
7%
45%
65%
3%
20%
Customers
Revenues
Cost
by Debra L. Zahay 2002
Adopted from
Haht Corporation
Nor Should They Be Treated
Equally
Improve Customer Service
Enhance Customer Loyalty
Tier 1
1%
50%
5%
Improve Customer Service
Tighten Demand Chain
Tier 2
10%
40%
30%
Reduce Costs
Tier 3
24%
7%
45%
Grow or Aggregate
Tier 4
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65%
3%
20%
Customers
Revenues
Cost
by Debra L. Zahay 2002
Haht Corporation
CRM vs. 1 to 1
•
•
•
•
Identify
Acquire
Enhance
Retain
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by Debra L. Zahay 2002
•
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Identify
Differentiate
Interact
Personalize/Customize
Fulcrum Analytics, The Path to Customer
Relationships
Meet me (collect data)
Remember Me (create database)
Value Me
(create targeted campaign,
campaign management)
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by Debra L. Zahay 2002
Understand Me
(analyze individual customers,
data mining)
SAS CRM Business Flow:
The Role of Customer Intelligence
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by Debra L. Zahay 2002
CRM Technologies
Analytical CRM
Operational CRM
Customer
Interaction
Supply Chain
Mgmt.
Order Mgmt.
Order Promising
Customer
Service
Marketing
Automation
Sales
Automation
Mobile Sales
(Product CFG)
Field Service
Voice
(IVR, CTI,
ACD)
Closed Loop Processing
(EAI Toolkits, Embedded/Mobile Agents)
Business Performance Mgmt.
ERP/ERM
Mobile
Office
Front
Office
Back
Office
Business Operations Mgmt.
Legacy
Systems
Conferencing
Email
Web Conference
E-Resp. Mgmt.
Collaborative CRM
Business Collaboration Management
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by Debra L. Zahay 2002
Data
Warehouse
Customer
Activity
Data Mart
Customer
Data Mart
Product
Data Mart
Vertical Apps
Marketing
Automation
Category Mgmt.
Campaign Mgmt.
Fax, Letter
Direct
Interaction
CRM and the Value Chain
Information
Technology
Application
Customer
Relationships
Value (Use)
Primary
Inbound
Marketing
Operations
Outbound
(Purchasing, (Production, (Distribution) and Sales
Logistics)
Inventory
Management)
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by Debra L. Zahay 2002
Service