Customer Relationship Management

Chapter 20

Prepared by Deborah Baker Texas Christian University

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

Learning 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.
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Learning Objectives (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.

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Learning Objective

Define customer relationship management.

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

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.

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

Accomplishing Customer Relationship Management

Organize the company around customer segments Encourage and track customer interaction with the company Foster customer-satisfying behaviors Link all processes of the company from its customers through its suppliers
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Customer Relationship Management Cycle

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Key Assumptions in Implementing CRM

 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.
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Learning Objective

Explain how to establish customer relationships within the organization.

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

CustomerCustomer-Centric Focus

The company customizes its product and service offering based on data generated through interactions between the customer and the company.

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Establishing Customer Relationships

 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
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CRM


CRM and One-to-One Marketing One-toOne-toOne-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
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Company-wide process that focuses on learning, managing customer knowledge, and empowerment.

Broad and Systemic

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

Learning in a CRM Environment

An informal process of collecting customer data through customer comments and feedback on product or service performance.

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Knowledge Management in a CRM Environment

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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Knowledge Management
Experiential Observations Comments

Collected Information Includes:

Learned Lessons

Conclusions Quantitative Facts about the Customer

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Empowerment in a CRM Environment

Delegation of authority to solve customers problems quicklyusually by the first person that the customer notifies regarding the problem.

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Interaction 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.
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Learning Objective

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

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CustomerCustomer-Centric Approach for Managing Customer Interactions

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Touch Points in a CRM System

All possible areas of a business where customers communicate with that business.

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Touch Points in a CRM System

Customer registration for a particular service Completion of warranty card Communication with customer service

External Touch Points

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

Customer discussions with sales, delivery, and installers

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Touch Points in a CRM System

Marketing Research, for developing profiles Production, for analyzing problems Accounting, for establishing cost-control models

Internal Touch Points

Knowledge Center (call center)

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Interactions for CustomerCustomer-Centric Organizations

Web-Based Interactions

New and Unique Interactions to Obtain Customer Data

Point-of-Sale Interactions

Transaction-Based Interactions
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Interactions for CustomerCustomer-Centric Organizations

Communications between customers and organizations using Web vehicles. Communications between customers and organizations that occur at the point of sale, normally in a store. The exchange of information that occurs between the company and the company at the point of the actual transaction.
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Web-Based Interaction Point-of-Sale Interactions TransactionBased Interactions

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

Learning Objective

Outline the process of acquiring and capturing customer data.

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Guidelines for Data Use in a CRM System

1. Customers take center stage in the organization. 2. Customer information must be centralized. 3. Information is retained over the customers life span. 4. Information must define the products and services, the customers product preferences, and contact methods for interaction.
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Guidelines for Data Use in a CRM System

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Channels for Acquiring Data 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.
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Channels for Acquiring Data

Store Visits Conversations with Salespeople Interactions via the Web Traditional Phone Conversations Wireless Communications

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Transaction

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 Relationship with Organization
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Product and Service

Various Brands Package Types Time to Consume Price Paid

Key Customer Data

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Preferred Transaction Type

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Learning Objective

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

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Data 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.
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Operational Components of Data Warehouse

InformationInformation-Access Component

Provides for classification of customer data and broad access to data Defines and interprets data in a longitudinal manner

SystemSystem-Management Component

CustomerCustomer-Initiated Component
Chap. 20 Marketing 7e Lamb Hair McDaniel 2004 South-Western/Thomson Learning

Stores and categories data initiated by the customer

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Learning Objective

Describe how to analyze data for profitable and unprofitable segments.

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Data Mining

A data analysis procedure that identifies significant patterns of variables and characteristics that pertain to particular customers or customer groups.

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Capabilities of Data Mining

 Automated prediction of trends and behaviors  Automated discovery of previously unknown patterns

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Modeling

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.

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Critical Factors for Success with 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

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Learning Objective

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

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Leveraging and Disseminating Customer Information

Data mining leverages knowledge to identify the most profitable customers Marketing strategies are designed to penetrate these segments

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Campaign 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.
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Campaign Management

Developing customized offerings for appropriate segment

Campaign Management Achieves Personalization by:

Pricing these offerings attractively

Communicating offerings in a way that enhances customer relationships

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