Financed bySupported byImplemented in cooperation with Financed bySupported byImplemented in cooperation with Customer Retention

Financed bySupported byImplemented in cooperation with Retention of profitable customers is crucial to business. However, due to competition and internal / external environmental factors, achieving this goal is difficult. One method that is proving successful for customer retention is the use of CRM programs. Customer Retention

Financed bySupported byImplemented in cooperation with Customer Relationship Management (CRM) is a cross- functional process for achieving: a. Continuing dialog with customers across all contact and access points b. Personalized service to the most valuable customers c. Increased customer retention d. Continued marketing effectiveness Customer Relationship Management

Financed bySupported byImplemented in cooperation with CRM programs are software systems that capture information and integrate sales, marketing and customer service information. CRM programs can gather information from many sources including , call centers, service and sales reps. The information is available to the right people in the organization in real time. CRM Technology

Financed bySupported byImplemented in cooperation with There are many types of CRM programs: 1. Some companies develop their own proprietary programs. 2. Some companies purchase off-the-shelf programs. CRM Software Programs

Financed bySupported byImplemented in cooperation with Product name Price 1. Microsoft Dynamics CRM 3.0 $5,000 to $50, SalesLogix CRM $6,000 + install 3. SAP Business One CRM $11,250 + $3,000 install 4. Parature $5,000 + install 5. Entellium CRM $50 to $60 per user / month 6. Pivotal CRM ????? 7. Maximizer Enterprise CRM $499/ user +$7,500 install 8. NetSuite CRM+ $2,000 to $100, Oncontact V $1,000 to $1, ADAPT crm $1,500/ user + $1,200 install 11. e-Synergy $5,000 + install 2020software.com Most known software programs, or create your own?

Financed bySupported byImplemented in cooperation with A CRM program cannot help unless a company employs the proper strategy to secure and retain profitable customers. Special attention must be given to five areas. Responsive Strategies

Financed bySupported byImplemented in cooperation with 1. Acquire the right customer. 2. Craft the right value proposition. 3. Institute the best processes. 4. Motivate employees. 5. Learn to retain customers. CRM Strategy - Priorities

Financed bySupported byImplemented in cooperation with Account selection demands a clear understanding of: 1. Seller’s resources 2. Customer’s needs 3. Cost of serving various groups of customers 4. Potential profit opportunities 5. How customers define value and how to meet those expectations #1 - Acquiring the Right Customer

Financed bySupported byImplemented in cooperation with Some demand low price Some demand customer service Some demand quick delivery The question is: “Can the seller deliver it profitably?” Many sellers try to meet all their customer’s needs, and may do so, but fail to do it profitably. What do customers value?

Financed bySupported byImplemented in cooperation with A value proposition encompasses the products, services, ideas and solutions that a business marketer presents to the prospect/customer that is designed to solve the customers’ problems. They can be generic or customized. #2 – Crafting the Right Value Proposition

Financed bySupported byImplemented in cooperation with A value proposition may include: 1. Points of parity to a competitive option 2. Points of difference Best practice suppliers base their value proposition on their target market’s needs by communicating their offering of superior performance in a way that conveys they understand their customer’s business priorities. Value Proposition

Financed bySupported byImplemented in cooperation with Strategies that competitors employ fall into a range referred to as: “Industry Bandwidth of Working Relationships” It ranges from pure transactional to pure collaborative exchanges (see Fig. on the next slide). Value Proposition Strategies

Financed bySupported byImplemented in cooperation with (a) Industry Relationship Bandwidths (b) “Flaring Out” from the Industry Bandwidth SOURCE: Adapted from James C. Anderson and James A. Narus, “Partnering as a Focused Marketing Strategy,” California Management Review 33 (spring 1991)’ p. 97. Copyright © by the Regents of the University of California. Reprinted by permission of the Regents. Pure Transactional Exchange Pure Collaborative Exchange Hospital Supplies (e.g. surgical gloves, syringes) Medical Equipment (e.g. imaging systems) Pure Transactiona l Exchange Pure Collaborative Exchange Hospital Supplies ABC D Transactional & Collaborative Working Relationships

Financed bySupported byImplemented in cooperation with ‘Flaring out’ strategy (Fig, b) states that the seller can either unbundle (point A), that is, reduce the service associated with a lower price (transactional in nature), or Augment by adding more services to the core offerings (point D) which adds cost to the services. This is collaborative in nature. Flaring Out Strategy

Financed bySupported byImplemented in cooperation with The seller starts with a core service (“naked solutions”) and adds customized services to it (“custom wrapped”) that create more value. Creating Customized Products

Financed bySupported byImplemented in cooperation with

Financed bySupported byImplemented in cooperation with #3 - Institute Best Practices The sales force plays a key role in establishing and growing a customer from a transactional account to a collaborative partnership. They can do this by aligning and deploying technical and service support units to match with their customers’ units. Technical groups can consist of research, logistics and customer service units. Through careful management and screening, transactional accounts can progress to partnerships.

Financed bySupported byImplemented in cooperation with In addition to using best practices, successful organizations (like IBM) employ follow-up techniques such as: 1. Assigning a client representative to take ownership of the relationship. 2. Assigning a Project Owner who completes the project or solves project problems. 3. Developing an in-process feedback and measurement system. Best Practices Follow-Up

Financed bySupported byImplemented in cooperation with Dedicated employees are the key to a successful customer relationship strategy. The best approach is to: 1. Hire good people. 2. Invest in them to increase their value to the company and its customers. 3. Develop challenging careers and align incentives to performance measures. #4 - Motivating Employees

Financed bySupported byImplemented in cooperation with Why Retain Loyal Customers? Less expensive than acquiring new customers. Established customers buy more. Cost of serving loyal customers declines.

Financed bySupported byImplemented in cooperation with Retain customers by: Providing superior value (more than expected) to ensure high satisfaction. Nurturing trust. Developing mutual commitment. If possible, helping customers grow their business. #5 - Retaining Customers

Financed bySupported byImplemented in cooperation with Identify and cultivate customers that offer the most growth potential by: 1. Estimating current percent “share of wallet” 2. Pursuing opportunities to increase share 3. Projecting and enhancing customer profitability How to Pursue Growth from Existing Customers

Financed bySupported byImplemented in cooperation with Some relationship-building efforts fail because expectations of the parties don’t mesh. Example: Seller wants a business relationship whereas the customer responds in a transactional mode. By understanding and isolating customer needs, the marketer is better equipped to match their product offerings to a particular customer’s needs. Evaluating Relationships

Financed bySupported byImplemented in cooperation with Evaluating Relationships

Financed bySupported byImplemented in cooperation with Relationship Quality: High-caliber relational bond characterized by commitment and trust Relationship Breadth: Number of interpersonal ties that connect the relationship Relationship Composition: Portfolio of contacts ranging from low- level influencers to high-level decision makers Relationship Strength: The ability of the buyer-seller relationship to withstand stress and/or conflict Relationship Efficacy: The ability of an inter-firm relationship to achieve desired objectives Drivers of RM Effectiveness: Definitions

Financed bySupported byImplemented in cooperation with Social RM Programs Structural RM Programs Financial RM Programs RM Programs

Financed bySupported byImplemented in cooperation with Social RM programs: Social engagements (sporting events, meals, etc.) Frequent and personalized communications that develop bonds Make the relationship special Results: Customers reciprocate with repeat business and referrals Difficult for rivals to duplicate Affect: Has a direct affect on profits & is long lasting Social RM Programs

Financed bySupported byImplemented in cooperation with Structural RM programs: Provide a service/product to increase productivity and/or efficiency for customers through targeted investment that customers would not make for themselves. For example they provide: Order-processing interfaces Free analysis of operations Results: Creating a structural bond makes it difficult for companies to switch to competitors Structural RM Programs

Financed bySupported byImplemented in cooperation with Financial RM programs provide economic benefits such as: Discounts Free shipping Extended payment terms Results: Companies respond financially to protect customer relationships, but they do not necessarily enhance the relationship because all companies do it. Financial RM Programs

Financed bySupported byImplemented in cooperation with Some companies are Relationship Oriented (RO), and some are not. RO companies seek to develop relationships with current or potential supplier. RO buyers look for companies that: Offer expertise Are able to be flexible (i.e., payment terms, R&D, etc.) Help reduce risk for both parties benefit Help both parties benefit from the relationship Targeting RM Programs

Financed bySupported byImplemented in cooperation with HIGH RO: Target those with high RO goals since they are looking for and are open to developing relationships LOW RO: For these companies, the strategy is to create high switching cost: Tie them into electronic ordering interfaces Stay in constant contact to keep what exists Align RM resources as closely as possible to the customer’s needs Strategy for Dealing with High and Low RO

Financed bySupported byImplemented in cooperation with What do we want to reach?

Financed bySupported byImplemented in cooperation with NmRkO/Building_Customer_Loyalty_powerpoint_ppt_presentation NmRkO/Building_Customer_Loyalty_powerpoint_ppt_presentation rate.html rate.html from-leaving.html from-leaving.html Drilling Down: Turning Customer Data into Profits with a Spreadsheet Michael W. Lowenstein. Customer Retention: An Integrated Process For Keeping Your Best Customers. Michael W. Lowenstein. Customers Inside, Customers Outside: Designing and Succeeding With Enterprise Customer-Centricity Concepts, Practices, and Applications Useful links