2011.2.21 marketing

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  • Chapter 21 Customer Relationship Management (CRM) Marketing cannot be accomplished in isolation. Even though the marketing function resides with marketers, the concept of marketing must permeate the entire organization.
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM) Notes: Today, information technology links marketing and its functional counterparts, making it possible for all functions to have access to the same valuable market information. Marketers respond to customer demands, and technology has enabled rapid response. Through technology, companies have been able to attract consumers, and it is the successful interaction of all business functions that keep customers returning to these companies as loyal and repeat users.
  • Chapter 21 Customer Relationship Management (CRM) Notes: Customer relationship management is the ultimate goal of a new trend in marketing that focuses on understanding customers as individuals. What customers want today is recognition, convenience, information, helpfulness, and excellent service every time they interact with a company. A CRM system helps businesses acquire, retain, and grow customers in ways that would not be possible without it. Information is maintained about the customer groups, then the information is used to increase customer service and satisfaction.
  • Chapter 21 Customer Relationship Management (CRM) Online ERP Software Investigate the kinds of software available to power CRM efforts. One site that contains a sizable list with new items added every month is CRM Download. Review some of the software descriptions and select the one you think would be best suited for, say, Starbucks, and another that would work better for a car manufacturer like General Motors. Notes: CRM is a business strategy designed to optimize profitability, revenue, and customer satisfaction by focusing on highly defined customer groups. This is accomplished by the points shown above. The difference between CRM and traditional mass marketing can be compared to shooting a rifle and a shotgun. A rifle is the most efficient, if you have good aim. This is the CRM approach. A shotgun increases your odds of hitting the target when it is more difficult to focus. This is the mass marketing approach.
  • Chapter 21 Customer Relationship Management (CRM) Notes:
  • Chapter 21 Customer Relationship Management (CRM) Notes:
  • Chapter 21 Customer Relationship Management (CRM) Notes: 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 . 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): B reathe: Set aside time every week to focus on what your brand is communicating. R elax: 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. A im: Make sure your marketing message is standardized and contain the essential elements listed on the slide. Apply S teady pressure S hoot. Applying these tips will result in an on-target shot.
  • Chapter 21 Customer Relationship Management (CRM) Notes: While CRM appears to be a simplistic customer service strategy, it is only a small part of an integrated, holistic approach to building customer relationships. CRM is described as a closed-looped system that builds relationships with customers. Exhibit 19.1 illustrates this closed-loop system, one that is continuous and circular with no defined starting or end point . The CRM cycle is initiated by identifying customer relationships within the organization. Once the company identifies its customers and its particular products, it then determines the interaction each customer has with the company. Information gathered includes demographics, purchase frequency and amount, and distance driven to purchase. Based on knowledge of the customer and his/her interaction with the company, the company can then acquire and capture all relevant information about the customer, including date of the last communication with the customer, how often the customer makes purchases, and whether the customer redeemed coupons sent through direct mail. Technology plays a critical part in a CRM system which uses technology to store and integrate customer data. Not all customers are equally important to a business. Consequently, the company uses data mining to determine its profitable and unprofitable customer segments. Once the customer data are analyzed, they are leveraged. Data are transformed into information and disseminated throughout the organization—to the right person in the right place at the right time.
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM) Notes: Customer-centric is an internal management philosophy similar to the marketing concept. The company customizes its product and service offerings based on data generated through interactions with company and customer. This philosophy transcends all functional areas of the business producing an internal system where all company decisions are based on customer information.
  • Chapter 21 Customer Relationship Management (CRM) Notes: A customer-centric company learns from customers about ways to enhance its product and service offerings.
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM) Notes: 1. Collected information is from sources shown above.
  • Chapter 21 Customer Relationship Management (CRM) Notes: The success of CRM can be measured by the effectiveness of the interaction between the customer and the organization. The more empowerment a company gives its representatives, the more likely the interaction will conclude in a way that satisfies the customer. When a customer and a company representative exchange information and develop learning relationships, it is called an interaction. With CRM, the customer, and not the organization, defines the terms of the interaction. The organization responds by designing products and services around customers’ desired experiences.
  • Chapter 21 Customer Relationship Management (CRM) The Bureau of Labor Statistics is predicting a major skilled labor shortage by the end of the decade. That means talented people at every level will have increasing options. Certainly skilled employees, and the companies they work for, will be increasingly vulnerable to the lure of higher wages offered by other companies. To stem the tide of employees leaving for “greener pastures”, today’s managers will have to focus more on offering intangible rewards such as positive environments, challenging work, and career paths. Perhaps as an unlooked-for added benefit, these same benefits and rewards also serve to empower employees.
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM) Notes: Exhibit 19.2 illustrates the customer-centric approach for managing customer interactions. An interaction can occur through a formal or direct communication channel, and through a current transaction or previous relationship the customer has had.
  • Chapter 21 Customer Relationship Management (CRM) Online: Best Buy What evidence do you see on Best Buy’s Web site of the company’s behind-the-scenes CRM program? How many touch points can you identify at BestBuy.com? Notes: In a CRM system, touch points are those areas of a business where customer data are gathered and used to guide and direct the decision making within that business unit. Through interactions, organizations learn about the expectations of customers, generate and manage knowledge about them, negotiate mutually satisfying commitments, and build long-term relationships. Interactions can be Web-based, as well as point-of-sale.
  • Chapter 21 Customer Relationship Management (CRM) Notes: Touch points are all areas of a business where customers have contact with the company and data might be gathered. Data gathered at each of these external touch points provides information that affect touch points inside the company.
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM) Online GEICO Insurance How comfortable are you completing the information form for an online rate quote at GEICO Insurance? Would you be more comfortable talking with a representative on the phone? How effective is the Web as a channel for this type of customer interaction? Notes: The traditional approach for acquiring data from customers is through channel interactions, such as the ways shown on this slide. Large amounts of data are collected through various touch points, and creates a question of who owns these data—the customer or the company.
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM) Notes: A data warehouse is a central repository of customer data collected by an organization. The core of the data warehouse is the database. The CRM database focuses on collecting information and purchasing habits on consumers. When a company builds the database, the first step is to develop a: Response list—based on customers who have indicated interest in a product or a Compiled list—created by an outside company that has collected names and contact information for potential customers
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM) Notes: Data mining builds models to answer questions by using existing information from a data warehouse to predict future customer behavior. The usefulness of data mining extends beyond its ability to create a mailing list. It is used to identify the best customers, and calculate their lifetime value, while predicting their purchasing behavior.
  • Chapter 21 Customer Relationship Management (CRM) Notes: Before the data mining information is leveraged, several types of analysis are often run on the data. These are listed on this slide and described on the following slides.
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM) Notes: Page 294 lists some common CRM marketing database applications.
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM)
  • Chapter 21 Customer Relationship Management (CRM) Notes: If a company has identified its best customers, effort should be made to maintain and increase their loyalty. As shown here, customer retention can have a dramatic effect on a company’s profitability, while in turn continue to reward loyal customers.
  • Chapter 21 Customer Relationship Management (CRM) Notes: Using transaction and purchase data, customers can be segmented into infrequent, moderate, and heavy users. Communications programs for each segment are designed to encourage customer purchases and loyalty.
  • Chapter 21 Customer Relationship Management (CRM)
  • 2011.2.21 marketing

    1. 1. Lamb, Hair, McDaniel CHAPTER 21 Customer Relationship Management (CRM) 2010-2011
    2. 2. LO 1 Define customer relationship management LO 2 Explain how to identify customer relationships with the organization LO 3 Understand interactions with the current customer base LO 4 Outline the process of capturing customer data Learning Outcomes
    3. 3. LO 5 Describe the use of technology to store and integrate customer data LO 6 Describe how to identify the best customers LO 7 Explain the process of leveraging customer information throughout the organization Learning Outcomes
    4. 4. What Is Customer Relationship Management? Define customer relationship management LO 1
    5. 5. Customer Relationship Management LO 1 A company-wide business strategy designed to optimize profitability, revenue, and customer satisfaction by focusing on highly defined and precise customer groups.
    6. 6. Customer Relationship Management Strategy LO 1 Allows companies to tightly focus in on their target markets 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
    7. 7. <ul><li>According to an ex-marine and </li></ul><ul><li>retired Dell marketing executive: </li></ul><ul><li>In times of panic there is a lot of shooting going on and not enough aiming. </li></ul>LO 1 Take Aim with Your Marketing Message 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. 8. LO 1 Breathe: Set aside time every week to focus on what your brand is communicating. Relax: The brand will not fail if you pause to focus. It may fail, however, if off-target marketing shots waste money. Aim: Make sure your marketing message is standardized and contain the essential elements listed on the slide. Squeeze: Apply Steady pressure. Shoot. Take Aim with Your Marketing Message On the rifle range, Marine recruits learn the acronym BRASS: B reathe, R elax, A im, S queeze, S hoot. Marketers can use BRASS to make the most of their marketing budget:
    9. 9. <ul><li>Aim to persuade: </li></ul><ul><li>Who is the target customer? </li></ul><ul><li>What is the target customer’s current perceptions of your brand? </li></ul><ul><li>In what context will the target customer make purchase decisions? </li></ul><ul><li>What do you want the target customer to think and feel after you communicate with him or her? </li></ul><ul><li>What are the minimum points you must communicate in order to achieve your goal? </li></ul>LO 1 If it doesn’t persuade, don’t say it! Take Aim with Your Marketing Message
    10. 10. Customer Relationship Management Cycle Identify customer relationships Store and integrate customer data using IT LO 1 Capture customer data based on interactions Identify best customers Understand interactions with current customer base Leverage customer information
    11. 11. Implementing a CRM System LO 1 Key Points: <ul><li>Customers take center stage </li></ul><ul><li>Business must manage the customer relationship across all points of customer contact </li></ul>
    12. 12. Customer Relationship Management LO 1
    13. 13. Identify Customer Relationships Explain how to identify customer relationships with the organization LO 2
    14. 14. Identify Customer Relationships Customer-Centric: LO 2 The company customizes its product and service offering based on data generated through interactions between the customer and the company. Generates long-lasting relationships
    15. 15. Identify Customer Relationships LO 2 Learning: An informal process of collecting customer data through customer comments and feedback on product or service performance.
    16. 16. Identify Customer Relationships LO 2 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.
    17. 17. Knowledge Management LO 2 Qualitative facts Customer actions Comments Experiential observations Collected Information Includes:
    18. 18. Empowerment LO 2 Empowerment: Delegation of authority to solve customers’ problems quickly. Usually solved by the first person that the customer notifies regarding the problem.
    19. 19. <ul><li>Training and Skill Development </li></ul><ul><li>Communication Development </li></ul><ul><li>Recognition and Rewards </li></ul><ul><li>Employee Growth Strategy </li></ul><ul><li>Compensation and Benefits Reviews </li></ul><ul><li>Resource and Workload Planning </li></ul><ul><li>Performance Appraisals </li></ul><ul><li>Career Planning </li></ul>SOURCE: Society for Human Resource Management and CRM Today LO 2 Empowering Employees
    20. 20. Identifying Customer Relationships LO 2
    21. 21. Understand Interactions of the Current Customer Base Understand interactions with the current customer base LO 3
    22. 22. Interactions of the Current Customer Base Customer LO 3 Requested Service Channel Past Relationship Current Transaction
    23. 23. Interactions of the Current Customer Base LO 3 Touch Points: Point of Sale Interactions: Communications between customers and organizations that occur at the point of sale, normally in a store. All possible areas of a business where customers communicate with that business
    24. 24. Interactions with Current Customer Base LO 3 Customer Web Point of Sale Kiosk Delivery, Installation Survey Product Registration
    25. 25. Capture Customer Data Outline the process of capturing customer data LO 4
    26. 26. Capture Customer Data LO 4 Store visits Conversations with salespeople Interactions via the Web Traditional phone conversations Wireless communications
    27. 27. Capturing Customer Data LO 4
    28. 28. Store and Integrate Customer Data Describe the use of technology to store and integrate customer data LO 5
    29. 29. <ul><li>Only useful if consistent and accurate. </li></ul><ul><ul><li>Use information technology to capture, store and integrate important information (data warehousing) </li></ul></ul><ul><ul><ul><li>Useful information: </li></ul></ul></ul><ul><ul><ul><ul><li>Purchasing habits </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Transaction methods </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Product usage </li></ul></ul></ul></ul><ul><ul><ul><li>Access vast amounts of information required to make decisions </li></ul></ul></ul>LO 5 Customer Data
    30. 30. Store and Integrate Customer Data LO 5 Database Compiled list Response list Data Warehouse :::::::::::::::::::::::::::::::::::::::::: :::::::::::::::::::::::::::::::::::::::::: /////////////////////////////////////////////////////////// ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
    31. 31. Identify the Best Customers Describe how to identify the best customers LO 6
    32. 32. Identifying the Best Customers Data Mining: A data analysis procedure that identifies significant patterns of variables and characteristics that pertain to particular customers or customer groups. LO 6
    33. 33. Data Mining <ul><li>Identify and profile the best customers </li></ul><ul><li>Calculate their lifetime value </li></ul><ul><li>Predict purchasing behavior </li></ul>LO 6
    34. 34. Data Analysis LO 6 Predictive modeling Lifetime value analysis Recency-frequency-monetary analysis Customer segmentation
    35. 35. <ul><li>Identifies customers most likely to purchase again </li></ul><ul><li>Identifies and ranks “best customers” </li></ul><ul><li>Identifies most profitable customers </li></ul>LO 6 Recency-Frequency-Monetary Analysis
    36. 36. 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.
    37. 37. Identify the Best Customers LO 6
    38. 38. Leverage Customer Information Explain the process of leveraging customer information throughout the organization LO 7
    39. 39. 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
    40. 40. 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. LO 7
    41. 41. Campaign Management LO 7 Communicating offerings in a way that enhances customer relationships Developing customized offerings for appropriate segment Pricing these offerings attractively
    42. 42. 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 LO 7
    43. 43. <ul><li>Match product profiles to cross-sell products matching customer characteristics </li></ul><ul><li>Modify message to align with consumer relationships to the company’s products </li></ul><ul><li>Thank customers, update about order status, maintain strong relationship </li></ul><ul><ul><li>Loyal customers cost less and spend more with the favored company </li></ul></ul>Using the Data LO 7
    44. 44. 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 LO 7
    45. 45. Using the Data <ul><li>Use best customers’ data to profile ideal customer </li></ul><ul><ul><li>Demographic and behavioral data locate strong potential customers </li></ul></ul><ul><li>CRM helps manufacturers know who is actually buying their products. </li></ul><ul><ul><li>RFID technology improves distribution, gathers info on product usage </li></ul></ul><ul><li>Improves customer service </li></ul><ul><ul><li>Wishlists, recommendations, remember purchase information </li></ul></ul><ul><li>Privacy Concerns </li></ul><ul><ul><li>Build relationships on trust </li></ul></ul><ul><ul><ul><li>Avoid Spam </li></ul></ul></ul><ul><ul><ul><li>Inform users of privacy policy and how information is used </li></ul></ul></ul>LO 7
    46. 46. Leveraging Customer Information <ul><li>Campaign management </li></ul><ul><li>Retaining loyal customers </li></ul><ul><li>Cross-selling other products </li></ul><ul><li>Designing targeted marketing communications </li></ul><ul><li>Reinforcing purchase decisions </li></ul><ul><li>Inducing product trial by new customers </li></ul><ul><li>Increasing effectiveness of distribution channel marketing </li></ul><ul><li>Improving customer service </li></ul>Marketing Information CRM Database Applications LO 7
    47. 47. Email Marketing Bumps Web site Traffic <ul><li>Looking for return customers? Email marketing gets customers to click back. Being well-established, trusted, and easy makes email the ideal medium for marketers to get the word out. Online traffic is fairly simple to track, and using customer information gathered from online purchases offers businesses a relatively simple way to establish a relationship with customers. </li></ul>Source: “Email marketing ‘a trusted method,’” www.directnews.co.uk, Wednesday November 11, 2009. LO 7

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