1. Chapter 21: Customer Relationship Management (CRM)
Prepared by Amit Shah, Frostburg State University
Designed by Eric Brengle, B-books, Ltd.
Copyright 2010 by Cengage Learning Inc. All Rights Reserved 1

2. Copyright 2010 by Cengage Learning Inc. All Rights Reserved
Chapter 21 Customer Relationship Management
Learning Outcomes
Define customer relationship management
Explain how to identify customer relationships with the organization
Understand interactions with the current customer base
Outline the process of capturing customer data
LO1
LO2
LO3
LO4
Copyright 2010 by Cengage Learning Inc. All Rights Reserved

3. Copyright 2010 by Cengage Learning Inc. All Rights Reserved
Chapter 21 Customer Relationship Management
Learning Outcomes
LO5
Describe the use of technology to store and integrate customer data
Describe how to identify the best customers
Explain the process of leveraging customer information throughout the organization
LO6
LO7
Copyright 2010 by Cengage Learning Inc. All Rights Reserved

4. What is Customer Relationship Management?
Chapter 21 Customer Relationship Management
What is Customer Relationship Management?
Define customer relationship management.
LO1
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5. Customer Relationship Management
Chapter 21 Customer Relationship Management
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.
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6. Customer Relationship Management Cycle
Chapter 21 Customer Relationship Management
Customer Relationship Management Cycle
Identify customer relationships
Store and integrate customer data using IT
Capture customer data based on interactions
Identify best customers
Understand interactions with current customer base
Leverage customer information
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7. Implementing a CRM System
Chapter 21 Customer Relationship Management
Implementing a CRM System
Key Points:
Customers take center stage
The business must manage the customer relationship across all points of customer contact
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8. Review Learning Outcome Customer Relationship Management
LO1
Chapter 21 Customer Relationship Management
Review Learning Outcome Customer Relationship Management
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9. Identify Customer Relationships
Chapter 21 Customer Relationship Management
Identify Customer Relationships
Explain how to identify
customer relationships
with the organization.
LO2
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10. Identify Customer Relationships
Chapter 21 Customer Relationship Management
Identify Customer Relationships
Customer-Centric - The company
customizes its product
and service offering based
on data generated through
interactions between the
customer and the company.
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11. comments and feedback on product or service performance.
Chapter 21 Customer Relationship Management
Learning
An informal process of
collecting customer
data through customer
comments and feedback on
product or service performance.
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12. Knowledge Management The process by which learned
Chapter 21 Customer Relationship Management
Knowledge Management
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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13. Experiential observations Collected Information Includes:
Chapter 21 Customer Relationship Management
Knowledge Management
Qualitative facts
Customer actions
Comments
Experiential observations
Collected Information Includes:
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14. Interaction The point at which a customer and a company
Chapter 21 Customer Relationship Management
Interaction
The point at which a customer
and a company
representative exchange
information and develop
learning relationships.
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15. Review Learning Outcome Identifying Customer Relationships
LO2
Chapter 21 Customer Relationship Management
Review Learning Outcome Identifying Customer Relationships
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16. Interactions of the Current Customer Base
Chapter 21 Customer Relationship Management
Understand interactions with the current customer base.
LO3
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17. Interactions of the Current Customer Base
Chapter 21 Customer Relationship Management
Requested
Service
Channel
Past
Relationship
Current
transaction
Customer
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18. Interactions of the Current Customer Base
Chapter 21 Customer Relationship Management
Interactions of the Current Customer Base
Touch-Points - All possible areas
of a business where customers
communicate with that
business.
Point-Of-Sale Interactions -
Communications between
customers and organizations that
occur at the same point of sale,
normally in a store.
Online
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19. Review Learning Outcome Interactions with Current Customer Base
LO3
Chapter 21 Customer Relationship Management
Web
Point of Sale
Kiosk
Delivery, Installation
Survey
Product Registration
Customer Service
Customer
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20. capturing customer data.
Chapter 21 Customer Relationship Management
Capture Customer Data
Outline the process of
capturing customer data.
LO4
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21. Capture Customer Data Store visits Conversations with salespeople
Chapter 21 Customer Relationship Management
Store visits
Conversations with salespeople
Interactions via the Web
Traditional phone conversations
Wireless communications
Online
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22. Review Learning Outcome Capturing Customer Data
LO4
Chapter 21 Customer Relationship Management
Review Learning Outcome Capturing Customer Data
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23. Store and Integrate Customer Data
Chapter 21 Customer Relationship Management
Store and Integrate Customer Data
Describe the use of technology to store and integrate customer data.
LO5
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24. Customer Data Data Warehouse - A central
repository for data from various
functional areas of the organization
that are stored and inventoried on a
centralized computer system.
Database - A collection of data, especially one
that can be accessed and manipulated by
software.
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25. Review Learning Outcome Store and Integrate Customer Data
LO5
Chapter 21 Customer Relationship Management
Review Learning Outcome Store and Integrate Customer Data
Database
Compiled list
Response list
Data Warehouse
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26. Identifying the Best Customers
Chapter 21 Customer Relationship Management
Identifying the Best Customers
Describe how to identify
the best customers.
LO6
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27. Data Mining A data analysis procedure that identifies significant
Chapter 21 Customer Relationship Management
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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28. Copyright 2010 by Cengage Learning Inc. All Rights Reserved
Chapter 21 Customer Relationship Management
Data Analysis
Predictive modeling
Lifetime value analysis
Recency-frequency-monetary analysis
Customer segmentation
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29. Customer Segmentation
Chapter 21 Customer Relationship Management
Customer Segmentation
The process of breaking large groups of customers into smaller, more homogeneous groups
Generates a “profile” or picture of the customers’ similar demographic, geographic, and psychographic traits
Focuses on best customers
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30. Recency-Frequency-Monetary Analysis
Chapter 21 Customer Relationship Management
Recency-Frequency-Monetary Analysis
Identifies customers mostly like to purchase again
Identifies and ranks “best customers”
Identifies most profitable customers
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31. Data Manipulation Techniques
Chapter 21 Customer Relationship Management
Data Manipulation Techniques
Lifetime Value Analysis
Predictive Modeling
A data manipulation technique that projects the future value of the customer over a period of years.
A data manipulation technique in which marketers try to determine what the odds are that some other occurrence will take place in the future.
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32. Review Learning Outcome Identify the Best Customers
LO6
Chapter 21 Customer Relationship Management
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33. Leverage Customer Information
Chapter 21 Customer Relationship Management
Leverage Customer Information
Explain the process of
leveraging customer
information throughout
the organization.
LO7
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34. CRM Marketing Database Applications
Chapter 21 Customer Relationship Management
Campaign management
Retain loyal customers
Cross-selling other products and services
Designing targeted marketing communications
Reinforcing customer purchase decisions
Inducing product trial by new customers
Increasing effectiveness of distribution channel marketing
Improving customer service
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35. Campaign Management Developing product or service offerings customized
Chapter 21 Customer Relationship Management
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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36. Chapter 21 Customer Relationship Management
Campaign Management
Communicating offerings in a way that enhances customer relationships
Developing customized offerings for appropriate segment
Pricing these offerings attractively
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37. Retaining Loyal Customers
Chapter 21 Customer Relationship Management
Retaining Loyal Customers
Retaining an additional 5 percent of customers increases profits by as much as 25 percent
Improving customer retention by 2 percent can decrease costs by as much as 10 percent
Loyalty programs reward loyal customers for making multiple purchases
Loyalty programs provide information about customers and trends
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38. Cross–Selling Other Products and Services
Chapter 21 Customer Relationship Management
Cross–Selling Other Products and Services
CRM provides opportunities to cross-sell
related products
Cross-sell to customers with demographic,
lifestyle, or behavioral characteristic matches
Internet companies use product and
customer profiling to reveal cross-selling
opportunities
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39. Targeted Marketing Communications
Chapter 21 Customer Relationship Management
Targeted Marketing Communications
Infrequent Users
Moderate Users
Heavy Users
Offer direct incentives, such as a price discount
Offer more reinforcement of past purchase decisions
Design around loyalty and reinforcement of purchase
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40. Reinforcing Customer Purchase Decisions
Chapter 21 Customer Relationship Management
Reinforcing Customer Purchase Decisions
Cognitive dissonance is the feeling consumers
experience when they recognize inconsistency
between values and opinions and their
purchase behavior
Thanking customers help cement a long-term,
profitable relationship
Update customers periodically on the status
of their order
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41. Increasing Effectiveness of Distribution Channel Marketing
Chapter 21 Customer Relationship Management
CRM Databases
RFID technology
Multichannel Marketing
Online
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42. Improving Customer Service
Chapter 21 Customer Relationship Management
Improving Customer Service
Level of customer service is influential in
customer retention
Customer retention – the percentage of
customers that repeatedly purchase products
from a company
Copyright 2010 by Cengage Learning Inc. All Rights Reserved

43. Review Learning Outcome Leveraging Customer Information
LO7
Chapter 21 Customer Relationship Management
Campaign management
Retaining loyal customers
Cross-selling other products
Designing targeted marketing communications
Reinforcing purchase decisions
Inducing product trial by new customers
Increasing effectiveness of distribution channel marketing
Improving customer service
Marketing Information
CRM Database
Applications
Copyright 2010 by Cengage Learning Inc. All Rights Reserved