1. Copyright Cengage Learning 2013 All Rights Reserved 1 Chapter 21: Customer Relationship Management (CRM) Introduction to Designed & Prepared by Laura Rush B-books, Ltd.

2. Copyright Cengage Learning 2013 All Rights Reserved 2 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 LO 1 LO 2 LO 3 LO 4

3. Copyright Cengage Learning 2013 All Rights Reserved 3 Learning Outcomes 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 LO 5 LO 6 LO 7

4. 4 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. Copyright Cengage Learning 2013 All Rights Reserved

5. 5 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. Copyright Cengage Learning 2013 All Rights Reserved

6. 6 Learning An informal process of collecting customer data through customer comments and feedback on product or service performance. Copyright Cengage Learning 2013 All Rights Reserved

7. 7 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. Copyright Cengage Learning 2013 All Rights Reserved

8. 8 Interactions of the Current Customer Base 8 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. Copyright Cengage Learning 2013 All Rights Reserved

9. 9 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. Copyright Cengage Learning 2013 All Rights Reserved

10. 10 Data Analysis Predictive modeling Lifetime value analysis Recency-frequency-monetary analysis Customer segmentation Copyright Cengage Learning 2013 All Rights Reserved

11. 11 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. Copyright Cengage Learning 2013 All Rights Reserved

12. 12 Campaign Management Communicating offerings in a way that enhances customer relationships Developing customized offerings for appropriate segment Pricing these offerings attractively Copyright Cengage Learning 2013 All Rights Reserved

13. 13 Retaining Loyal Customers Loyalty programs reward loyal customers for making multiple purchases 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 provide information about customers and trends Copyright Cengage Learning 2013 All Rights Reserved

14. 14 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 Copyright Cengage Learning 2013 All Rights Reserved

15. 15 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 Copyright Cengage Learning 2013 All Rights Reserved

16. 16 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 Copyright Cengage Learning 2013 All Rights Reserved

17. 17 Increasing Effectiveness of Distribution Channel Marketing CRM Databases RFID technology Multichannel Marketing Copyright Cengage Learning 2013 All Rights Reserved

18. 18 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 Cengage Learning 2013 All Rights Reserved

19. 19 Privacy Concerns How companies use consumer data is governed by some laws, such as Gramm-Leach-Bliley Act and HIPAA Many companies have privacy policies, in line with growing consumer concerns over privacy. Copyright Cengage Learning 2013 All Rights Reserved