1. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 1 MKTG Designed by Amy McGuire, B-books, Ltd. Prepared by Dana Freeman, B-books, Ltd. Lamb, Hair, McDaniel 2009-2010 Customer Relationship Management (CRM) 19 CHAPTER

2. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 2 Learning Outcomes Define customer relationship management Explain how to establish customer relationships within 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. Chapter 19Copyright ©2010 Cengage Learning Inc. 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 7 LO 6 LO 5

4. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 4 Define customer relationship management What Is Customer Relationship Management? LO 1

5. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 5 LO 1 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. Customer Relationship Management

6. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 6 LO 1 Customer Relationship Management Strategy Link all processes of the company from its customers through its suppliers 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 Online http://www.crmdownload.com

7. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 7 LO 2 Beyond the Book Take Aim with Your Marketing Message According to an ex-marine and retired Dell marketing executive: In times of panic there is a lot of shooting going on and not enough aiming. Source: Casey Jones, “Go to War Against Wasted Marketing Spending: What Marines Can Teach CMOs About Success Under Fire,” Advertising Age, December 17, 2008.

8. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 8 LO 2 Beyond the Book Take Aim with Your Marketing Message, cont. On the Marine Corps rifle range, recruits are taught the acronym BRASS: breathe, relax, aim, squeeze, shoot. Marketers, too, can use this technique to make the most of their marketing budget (their arsenal): 1.Breathe: Set aside time every week to focus on what your brand is communicating. 2.Relax: Remember that the brand will not fail if you pause for a moment to focus. It may fail, however, if you continue to waste marketing shots that are off-target. 3.Aim: Make sure your marketing message is standardized and contain the essential elements listed on the slide. 4.Apply Steady pressure. 5.Shoot.

9. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 9 LO 2 Beyond the Book Take Aim with Your Marketing Message, cont. Aim to persuade:  Who is the target customer?  What is the target customer’s current perceptions of your brand?  In what context will the target customer make purchase decisions?  What do you want the target customer to think and feel after you communicate with him or her?  What are the minimum points you must communicate in order to achieve your goal? If it doesn't persuade, don't say it!

10. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 10 LO 1 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

11. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 11 LO 1 Implementing a CRM System Key Points: 1.Customers take center stage 2.Business must manage the customer relationship across all points of customer contact

12. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 12 REVIEW LEARNING OUTCOME LO 1 Customer Relationship Management

13. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 13 Explain how to establish customer relationships within the organization Identify Customer Relationships LO 2

14. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 14 Identify Customer Relationships LO 2 The company customizes its product and service offering based on data generated through interactions between the customer and the company. Customer-Centric

15. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 15 Identify Customer Relationships LO 2 An informal process of collecting customer data through customer comments and feedback on product or service performance. Learning

16. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 16 Identify Customer Relationships LO 2 The process by which learned information from customers is centralized and shared in order to enhance the relationship between customers and the organization. Knowledge Management

17. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 17 Knowledge Management LO 2 Qualitative facts Customer actions Comments Experiential observations Collected Information Includes:

18. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 18 Empowerment LO 2 Delegation of authority to solve customers’ problems quickly— usually by the first person that the customer notifies regarding the problem. Empowerment

19. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 19 LO 2 Beyond the Book Empowering Employees  Training and Skill Development  Communication Development  Recognition and Rewards  Employee Growth Strategy  Compensation and Benefits Reviews  Resource and Workload Planning  Performance Appraisals  Career Planning SOURCE: Society for Human Resource Management and CRM Today

20. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 20 REVIEW LEARNING OUTCOME LO 2 Identifying Customer Relationships

21. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 21 Understand interactions with the current customer base Interactions of the Current Customer Base LO 3

22. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 22 Interactions of the Current Customer Base LO 3 Requested Service Channel Past Relationship Current Transaction Customer

23. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 23 Interactions of the Current Customer Base LO 3 Touch Points All possible areas of a business where customers communicate with that business. Point-of-Sale Interactions Point-of-Sale Interactions Communications between customers and organizations that occur at the point of sale, normally in a store. Online http://www.bestbuy.com

24. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 24 REVIEW LEARNING OUTCOME LO 3 Interactions with Current Customer Base Web Point of Sale Kiosk Delivery, Installation Survey Product Registration Customer

25. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 25 Outline the process of capturing customer data Capture Customer Data LO 4

26. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 26 LO 4 Capture Customer Data Store visits Conversations with salespeople Interactions via the Web Traditional phone conversations Wireless communications Online http://www.geico.com

27. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 27 REVIEW LEARNING OUTCOME LO 4 Capturing Customer Data

28. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 28 Describe the use of technology to store and integrate customer data Store and Integrate Customer Data LO 5

29. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 29 REVIEW LEARNING OUTCOME LO 5 Store and Integrate Customer Data Database Compiled list Response list Data Warehouse :::::::::::::::::::::::::::::::::::::::::: \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ /////////////////////////////////////////////////////////// ~~~~~~~~~~~~~~~~~~~~~~~~~~

30. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 30 Describe how to identify the best customers Identifying the Best Customers LO 6

31. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 31 Identifying the Best Customers LO 6 Data Mining Data Mining A data analysis procedure that identifies significant patterns of variables and characteristics that pertain to particular customers or customer groups.

32. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 32 Data Mining LO 6  Identify and profile the best customers  Calculate their lifetime value  Predict purchasing behavior

33. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 33 Data Analysis LO 6 Predictive modeling Lifetime value analysis Recency-frequency-monetary analysis Customer segmentation

34. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 34 Recency-Frequency-Monetary Analysis LO 6 1.Identifies customers most likely to purchase again 2.Identifies and ranks “best customers” 3.Identifies most profitable customers

35. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 35 Data Manipulation Techniques LO 6 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.

36. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 36 REVIEW LEARNING OUTCOME LO 6 Identify the Best Customers

37. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 37 Explain the process of leveraging customer information throughout the organization Leverage Customer Information LO 7

38. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 38 CRM Marketing Database Applications LO 7 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

39. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 39 Campaign Management LO 7 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.

40. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 40 Campaign Management LO 7 Communicating offerings in a way that enhances customer relationships Developing customized offerings for appropriate segment Pricing these offerings attractively

41. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 41 Retaining Loyal Customers LO 7 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 Loyalty programs provide information about customers and trends

42. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 42 Targeted Marketing Communications LO 7 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

43. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 43 Increasing Effectiveness of Distribution Channel Marketing LO 7 Multichannel Marketing CRM Databases RFID technology Online http://www.kidsdadsmoms.com

44. Chapter 19Copyright ©2010 Cengage Learning Inc. All rights reserved 44 REVIEW LEARNING OUTCOME LO 7 Leveraging Customer Information  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