1Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Prepared by Deborah Baker Texas Christian University Chapter 20 Customer Relationship Management

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

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

4Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Learning Objective Define customer relationship management. 1 1 On Line On Line

5Chap. 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. 1 1

6Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Accomplishing Customer Relationship Management Link all processes of the company from its customers through its suppliers Foster customer-satisfying behaviors Encourage and track customer interaction with the company Organize the company around customer segments 1 1

7Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Customer Relationship Management Cycle 1 1

8Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning  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. Key Assumptions in Implementing CRM 1 1 On Line On Line

9Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Learning Objective Explain how to establish customer relationships within the organization. 2 2

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

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

12Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning CRM and One-to-One Marketing 2 2 CRM  Company-wide process that focuses on learning, managing customer knowledge, and empowerment.  Broad and Systemic One-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

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

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

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

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

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

18Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Learning Objective Explain how to establish and manage interactions with the current customer base. 3 3

19Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Customer-Centric Approach for Managing Customer Interactions 3 3

20Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Touch Points in a CRM System 3 3 All possible areas of a business where customers communicate with that business.

21Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Touch Points in a CRM System 3 3 Customer registration for a particular service Completion of warranty card Communication with customer service Customer discussions with sales, delivery, and installers External Touch Points

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

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

24Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning On Line On Line Web-Based Interaction Point-of-Sale Interactions Communications between customers and organizations using Web vehicles. 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. Interactions for Customer-Centric Organizations

25Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Learning Objective Outline the process of acquiring and capturing customer data. 4 4

26Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Guidelines for Data Use in a CRM System 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.

27Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Guidelines for Data Use in a CRM System 4 4

28Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Channels for Acquiring Data 4 4 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.

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

30Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Transaction 4 4 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 On Line On Line

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

32Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Learning Objective Describe the use of technology to store and integrate customer data. 5 5

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

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

35Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Learning Objective Describe how to analyze data for profitable and unprofitable segments. 6 6

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

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

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

39Chap. 20 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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 6 6

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

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

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

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