1. BGS Customer Relationship Management
Chapter 1
Introduction to Customer Relationship Management
Thomson Publishing 2007 All Rights Reserved

2. OLD VS. NEW MARKETING OLD MARKETING NEW MARKETING Transaction oriented
Market share oriented
All customers are equal
Marketers sell
4P marketing
Mass marketing
Sell to the customer
Focus on new customers
Offensive
Broadcast oriented
Transaction profit
NEW MARKETING
Relationship oriented
Share of wallet oriented
All customers are not equal
Marketers manage demand
Relationship marketing
Individual marketing
Manage customer experience
Focus on existing customers
Defensive
Dialogue oriented
Customer lifetime value

3. Five Different Orientations Toward CRM
CRM is software, system, technology.
CRM is data storage and analysis.
CRM is a change in corporate culture from a
transaction focus to a customer centric one.
CRM is “managing demand.”
5. CRM is a strategy cycle focusing on customers.

4. A CRM System Contains Four Components
Data warehouse
Analytical tools
Campaign management tools
Interfaces to maintain databases

5. CRM System Failure
When CRM systems fail, it tends to be as a result of cultural as opposed to technological issues.

6. The Market Share Fallacy
Increasing market share should not be a company’s goal. Rather, increasing share of the right kinds of customers should be the goal.

7. CRM is Founded on Four Tenets
Customers should be managed as important assets.
Not all customers are equally desirable.
Customers vary in their needs, preferences, and buying behavior.
By better understanding their customers, companies can tailor their offerings to maximize their overall value.

8. THE CRM ADVANTAGE

9. Definition
“Customer Relationship Management is the initiation, enhancement, and maintenance of mutually beneficial customer and partner long-term relationships through business intelligence-generated strategies based on the capture, storing, and analysis of information gathered from all customer and partner touch points and transaction processing systems.”
Baran, Galka, Strunk

10. Do You Want To Keep These Customers?
Do not buy frequently
Buy your products only when they are on sale
Frequently return your merchandise
Complain a lot
Recommend your company to others just like them

11. Offensive vs. Defensive Marketing
OM refers to increasing your customer base.
DM refers to activities aimed at existing customers.
Defensive marketing has become more profitable. “Mass and Blast” is being replaced by 1:1.

12. Why CRM Systems are Being Used
Identifying prospects
Acquiring customers
Developing customers
Cross-selling and up-selling
Managing migration
Servicing
Retaining
Increasing loyalty
Winning back defectors

13. Four Basic Steps in CRM ID your customers in detail.
Differentiate the most and least profitable.
Interact.
Customize your offerings to fit each customer’s needs.

14. CRM Systems
Allow companies to ID and focus on their high-profit customers while enabling companies to transform low-value customers into higher-value ones.

15. Retail Banks Have Realized the Following Benefits from CRM Benefits
Increase in average products sold per customer over one year from 4.6 to 6.2
3-5 percent decrease in administrative costs
200 percent return on technology investment through cost reduction over one year
96 percent reduction in average time for a CCC agent to refer a customer to a branch loan office
83 percent decrease in average customer info retrieval time
15 percent increase in product revenue in one year

16. CRM Benefits Benefits Realized in Retail Banking
Increase in average products sold per customer over one year from 4.6 to 6.2
3-5 percent decrease in administrative costs
200 percent return on technology investment through cost reduction over one year
96 percent reduction in average time for a CCC agent to refer a customer to a branch loan office
83 percent decrease in average customer info retrieval time
15 percent increase in product revenue in one year

17. A Customer Focus Can Aid Retention
Annual Defection Rates
Newspaper subscriptions 66 percent
Residential tree and lawn care 32 percent
U.S. long distance telephone 30 percent
Clothing catalogues 25 percent
Internet service providers 22 percent
Griffen and Lowenstein 2001

18. Customer Retention and Profits
Increase retention 5 percent and improve profitability in net present value from percent.
It costs five to ten times more to obtain a new customer than it does to keep an existing one.

19. The Objectives of CRM ID potential customers Understand needs
Differentiate dollars and cents
Decrease attrition
Increase usage
Increase cross usage
Increase usage of more prestigious items
Increase satisfaction
Integrate marketing and sales throughout channels
Improve campaign management
Increase referrals
Win back lost customers
Move customers up relationship hierarchy
Strangers
Acquaintances
Friends
Partners

20. Multichannel Marketing
Over half of all customers in certain industries (apparel and banking) are using multiple channels for shopping and purchasing: store, telephone, ATM/Kiosk, catalogue, online, etc.
Multiple channel users have two to four times more to spend. In retail banking they are percent more profitable.

21. Customers Transact Business through the Following Channels
Web application
Free form
Telephone with a live agent
Internet VOIP through a live agent
Text chat with a live agent
Telephone through an interactive VRS
Fax
ATM/Kiosk
Entering the store or branch

22. Which Companies Benefit Most from CRM?
Companies serving large numbers of customers through complex and frequent interactions:
Communications companies
Retail banks
Insurance companies
Healthcare organizations
Utilities
Companies with a steep skew
Companies in “lost for good” markets

23. Which Companies Benefit the Least from CRM Today?
Companies that engage in minimal interactions with each customer
Auto dealers
Government agencies
Companies with simple transactions
Movie theaters
Retail stores

24. Questions?