McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. 3-1 CRM is… a comprehensive business model for increasing revenues and profits by focusing on customers. both an overarching business philosophy and a process tool to facilitate a truly customer-driven enterprise.

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. 3-2 CRM is… “…a journey of strategic, process, organizational and technical change whereby a company seeks to better manage its enterprise around customer behaviors. This entails acquiring knowledge about customers and deploying this information at each touchpoint to attain increased revenue and operational efficiencies.” PriceWaterhouse Coopers

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. 3-3 Customer Orientation Continues to move toward being customer- centric. Builds upon… –The marketing concept which overarches all business strategy –Use of the marketing mix as a “tool kit” for marketing strategy creation –Consumers information fueling strategic decisions about products –Aligning all business processes and functions to maximize the firm’s success.

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. 3-4 Customer-Centric Cultures Include… Adopting a partnership business model with mutually shared risks and rewards Defining selling as customer business consultation Formalizing customer analysis processes and agreements Being proactive in educating customers about value chain and cost reduction opportunities Focusing on continuous improvement principles stressing customer satisfaction

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. 3-5

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. 3-6 Marketing Evolution MASS MARKETING Evolved in the early 1900s and dominated marketing m a nagement for decades TARGET MARKETING In the ‘60s, many firms began to apply the principles of segmentation to different customer groups.

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. 3-7 CUSTOMER MARKETING In 1980, the focus shifted towards developing customer relationships. ONE-TO-ONE MARKETING Technology allows firms to customize offerings to individual users. Marketing Evolution

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. 3-8 Objectives of CRM Customer Retention - retain loyal and profitable customers and channels Customer Acquisition - acquire customer based on known characteristics which drive growth and increase margins Customer Profitability - increase individual customer margins by offering the right product at the right time

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. 3-9 Advantages of CRM Reduces advertising costs Increases awareness of customer needs Tracks the effectiveness of promotional campaigns Allows competition for customers based on service, not prices Prevents overspending on low-value clients and under spending on high-value ones Speeds the time it takes to develop and market a product Improves use of the customer channel

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. 3-10

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved Critical Questions in CRM Customers 1.Who are our customers? 2.What do our customers want and expect? 3.What is the value potential of our customers? The Relationship 4.What kind of relationship do we want to build? 5.How do we foster exchange? 6.How do we work together and share control? Managerial Decision Making 7.Who are we? 8.How do we organize to move value closer to our customers? 9.How do we measure and manage our performance? 10.How do we increase our capacity for change?

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved The Importance of Market Orientation Successful salespeople think beyond “selling” Market-driven companies do better market sensing Market-drive companies develop stronger relationships with customers and channels Internal partnering is a critical component of market orientation

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved Role of Personal Selling in IMC An Integrated Marketing Communications (IMC) strategy effectively integrates personal selling, advertising and other communications options Advantages of Selling in IMC Face-to-face contact More persuasive More demonstrative Customization opportunities Disadvantages of Selling in IMC Limited ability to duplicate More costly

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. 3-14

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved Customer Satisfaction and Feedback Maintaining customer loyalty is one outcome of customer orientation. Loyal customers... 1.Tend to concentrate on their purchases. 2.Provide positive word-of-mouth and customer referrals. 3.May be willing to pay premium prices for the value they receive. Satisfaction measures need to be supplemented with examinations of customer behavior, such as annual retention rate, frequency of purchases and percentage of the customer’s total purchases captured by the firm.