Customer Relationship Management Chapter 20 Prepared by Deborah

Customer Relationship Management Chapter 20 Prepared by Deborah Baker Texas Christian University 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. Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 2

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. Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 3

1 Learning Objective On Line http: //www. studentadvantage. com Define customer relationship management. Chap.

1 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 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 5

Accomplishing Customer Relationship Management 1 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 Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 6

Customer Relationship Management Cycle 1 Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel

1 On Line http: //www. ptcruiser. com 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. Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 8

2 Learning Objective Explain how to establish customer relationships within the organization. Chap. 20

2 Customer-Centric Focus The company customizes its product and service offering based on data generated through interactions between the customer and the company. Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 10

2 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 Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 11

2 CRM and One-to-One Marketing CRM One-to-One Marketing § Company-wide process that focuses on learning, managing customer knowledge, and empowerment. § Individualized marketing method that utilizes customer information to build a long-term, personalized, and profitable relationship with each customer. § Broad and Systemic § Focused and Individualized Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 12

Learning in a CRM Environment 2 An informal process of collecting customer data through customer comments and feedback on product or service performance. Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 13

Knowledge Management in a CRM Environment 2 The process by which learned information from customers is centralized and shared in order to enhance the relationship between customers and the organization. Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 14

2 Knowledge Management Experiential Observations Comments Collected Information Includes: Learned Lessons Conclusions Qualitative Facts about the Customer Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 15

Empowerment in a CRM Environment 2 Delegation of authority to solve customers’ problems quickly—usually by the first person that the customer notifies regarding the problem. Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 16

2 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. Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 17

3 Learning Objective Explain how to establish and manage interactions with the current customer

3 Customer-Centric Approach for Managing Customer Interactions Chap. 20 Marketing 7 e Lamb Hair

3 Touch Points in a CRM System All possible areas of a business where

3 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 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning Customer discussions with sales, delivery, and installers 21

3 Touch Points in a CRM System Marketing Research, for developing profiles Production, for analyzing problems Accounting, for establishing cost-control models Internal Touch Points Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning Knowledge Center (call center) 22

3 Interactions for Customer-Centric Organizations Web-Based Interactions New and Unique Interactions to Obtain Customer Data Point-of-Sale Interactions Transaction-Based Interactions Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 23

3 On Line http: //www. kroger. com Interactions for Customer-Centric Organizations Web-Based Interaction Communications between customers and organizations using Web vehicles. Point-of-Sale Interactions Communications between customers and organizations that occur at the point of sale, normally in a store. Transaction. Based Interactions The exchange of information that occurs between the company and the company at the point of the actual transaction. Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 24

4 Learning Objective Outline the process of acquiring and capturing customer data. Chap. 20

Guidelines for Data Use in a CRM System 4 1. Customers take center stage in the organization. 2. Customer information must be centralized. 3. Information is retained over the customer’s life span. 4. Information must define the products and services, the customer’s product preferences, and contact methods for interaction. Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 26

Guidelines for Data Use in a CRM System 4 Chap. 20 Marketing 7 e

4 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. Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 28

4 Channels for Acquiring Data Store Visits Conversations with Salespeople Interactions via the Web Traditional Phone Conversations Wireless Communications Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 29

4 Transaction On Line http: //www. geico. com 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 Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 30

4 Product and Service Various Brands Package Types Time to Consume Price Paid Key Customer Data Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning Preferred Transaction Type 31

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

5 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. Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 33

5 On Line http: //www. aa. com Operational Components of Data Warehouse Information-Access Component Provides for classification of customer data and broad access to data System-Management Component Defines and interprets data in a longitudinal manner Customer-Initiated Component Stores and categories data initiated by the customer Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 34

6 Learning Objective Describe how to analyze data for profitable and unprofitable segments. Chap.

6 Data Mining A data analysis procedure that identifies significant patterns of variables and characteristics that pertain to particular customers or customer groups. Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 36

6 Capabilities of Data Mining § Automated prediction of trends and behaviors § Automated discovery of previously unknown patterns Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 37

6 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. Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 38

Critical Factors for Success with Data Mining 6 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 Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 39

7 Learning Objective Explain the process of leveraging and disseminating customer information throughout the organization. Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 40

7 On Line http: //www. americanexpress. com Leveraging and Disseminating Customer Information Data mining leverages knowledge to identify the most profitable customers Marketing strategies are designed to penetrate these segments Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 41

7 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. Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 42

7 Campaign Management On Line http: //www. kidsdadsmoms. com Developing customized offerings for appropriate segment Campaign Management Achieves Personalization by: Pricing these offerings attractively Communicating offerings in a way that enhances customer relationships Chap. 20 Marketing 7 e Lamb Hair Mc. Daniel © 2004 South-Western/Thomson Learning 43