Chapter 8 Customer Relationship Management (CRM) PDF

Chapter 8 Customer Relationship Management (CRM) Adapted for the fifth Canadian edition by Janice M. Shearer, Consultant Learning Objectives 8-1 Summarize customer relationship management 8-2 Explain the CRM cycle 8-3 Describe the three stages in the CRM cycle: marketing research, business devel...

Chapter 8 Customer Relationship Management (CRM) Adapted for the fifth Canadian edition by Janice M. Shearer, Consultant Learning Objectives 8-1 Summarize customer relationship management 8-2 Explain the CRM cycle 8-3 Describe the three stages in the CRM cycle: marketing research, business development and customer feedback 8-4 Identify privacy issues in CRM 8-5 Determine the future challenges for CRM Copyright © 2022 by Cengage Canada. CUSTOMER RELATIONSHIP MANAGEMENT • Customer relationship management is more than just customer addresses. Companies collect all kinds of different information to continue to meet the needs and wants of customers. They can use it to collect information on recent transactions and orders, • EXAMPLE – Bell sent me a promo text, customer satisfaction surveys, etc. – CRM collects this inforamation • EXAMPLE AT Extendicare – SalesFORCE • CRM Tool – SALESFORCE https://www.youtube.com/watch?v=9CcZHLESFcE Copyright © 2022 by Cengage Canada. WHAT IS CUSTOMER RELATIONSHIP MANAGEMENT? • Identifying profitable customers • Finding ways to interact with them • Goal: Building customer loyalty and retaining those valued customers • Seen simultaneously as a process to help improve relationships • A system involving working with employees and the external customer • Use of technology to manage the people and the processes Copyright © 2022 by Cengage Canada. What Is Customer Relationship Management? Building Customer Loyalty Retaining Valued Customers Delivering on the Promises Now and in the Future To develop a customer who will invest in maintaining a mutually beneficial interaction Copyright © 2022 by Cengage Canada. THE OTHER CRM Copyright © 2022 by Cengage Canada. The CRM Cycle Copyright © 2022 by Cengage Canada. THE CRM CYCLE STAGE 1: MARKETING RESEARCH • Creation of the offering • Based on market research • Collect as much information as possible • Then, the development of the most effective marketing mix • The creation of an offering that reflects and satisfies the customer ensures that the company will develop a holistic CRM system. Copyright © 2022 by Cengage Canada. THE CRM CYCLE—STAGE 1: MARKETING RESEARCH Copyright © 2022 by Cengage Canada. THE CRM CYCLE STAGE 2: BUSINESS DEVELOPMENT Copyright © 2022 by Cengage Canada. Identify customer relationships. • Who they are, where they are located, what they are buying Understand the interaction. • By collecting data on all types of communication the customer has with the company Capture relevant data on the interaction. • Dependent on what company wants—last interaction, when, how much… Store and integrate the data. • The value of the data in building relationships depends on the system—key element: high-quality, actionable data Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. DATA MINING IDENTIFYING THE BEST • Discovery of anomalies, patterns, correlations, and trends. • Prediction of likely outcomes. • Answering specific questions. • This it is a solid basis for an efficient data-driven decision-making process. • Focus on big data sets and databases. Copyright © 2022 by Cengage Canada. Examples of business applications and questions that data mining answers: Possible Question Application How to better target product? Market segmentation Which customers to invest in? Profitability How to increase sales with loyalty programs and promotions? Online retail How to minimize operational costs? Asset management Which products are customers likely to buy together? Cross-selling Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. WATCH OUT FOR “CONFOUNDING VARIABLES” • A “Confounding Variable” (also known as a “Confounder”) is a variable that simultaneously causes the predictor/independent variable/explanatory variable/treatment (X) and the dependent variable/outcome (Y). Copyright © 2022 by Cengage Canada. So, what is going on here? Let us look at another graph. Copyright © 2022 by Cengage Canada. IDENTIFY CUSTOMER RELATIONSHIPS Customer-centric • Internal management philosophy • Customize products and services based on data gathered through interactions. • All the decisions and actions are a direct result of customer information. • Builds long-lasting relationships • Focus on what satisfies and what retains. Copyright © 2022 by Cengage Canada. IDENTIFY CUSTOMER RELATIONSHIPS Learning Knowledge management Empowerment Interaction • Informal process of collecting customer information • Process that centralizes and shares learned information • Ensuring company employees have the authority/latitude to negotiate mutually satisfying commitments with customers • The customer defines the interaction and then the organization responds—customer focused! Copyright © 2022 by Cengage Canada. UNDERSTAND INTERACTIONS OF THE CURRENT CUSTOMER BASE Copyright © 2022 by Cengage Canada. TOUCH POINTS QR code Email Customer service call Registrations Web-based TOUCH POINTS Copyright © 2022 by Cengage Canada. Point-of-sale CAPTURE CUSTOMER DATA • The issue is not how much data to collect, but rather what data to collect and how to use the data effectively for relationship management. • Channel interactions are the traditional source. • Store visits, website visits, phone conversations, wireless communications • Data captured from multiple customers across multiple check points leads to a huge volume of data. • Technology drives the management of this data. Copyright © 2022 by Cengage Canada. Store and Integrate Customer Data Data Warehouse Database Copyright © 2022 by Cengage Canada. Response List Compiled List Identifying the Best Customers • To be successful, companies need to use CRM to identify those customers that • yield high profits • have high potential • Analyze and interpret the data. Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. Marketing Funnel Rick Kettner DATA MINING Search the data warehouse Capture the relevant data Categorize Copyright © 2022 by Cengage Canada. Develop customer profiles ANALYSIS RFM Analysis Customer Segmentation LTV Analysis Data Analysis Copyright © 2022 by Cengage Canada. Predictive Modelling RECENCY, FREQUENCY, AND MONETARY (RFM) • This process allows firms to identify customers who have purchased recently and often and who have spent considerable money, because they are most likely to purchase again. • Whereas RFM looks at how valuable a customer currently is to a company, lifetime value (LTV) analysis projects the future value of the customer over a period of years. • One of the basic assumptions in any LTV analysis is that marketing to repeat customers is more profitable than marketing to first-time buyers. • Recency, frequency, and monetary data can be used to create a lifetime value model on customers in the database. • https://clevertap.com/blog/rfm-analysis/ Copyright © 2022 by Cengage Canada. RFM ANALYSIS Copyright © 2022 by Cengage Canada. THE CRM CYCLE STAGE 3: CUSTOMER FEEDBACK • An overreliance on technology and data can result in losing sight as to the real goal—maintaining long-term relationships with customers. • The cycle must be complete by implementing measures of customer satisfaction. • https://www.c-zentrix.com/blog/6-methods-ofmeasuring-customer-satisfaction Copyright © 2022 by Cengage Canada. LEVERAGING THE INFORMATION GATHERED Copyright © 2022 by Cengage Canada. HOW CRM MAY BE FAILING COMPANIES CRM programs focus too much on transactions and not on other aspects of the customer’s life. Relationships cannot be solely about achieving loyalty, and companies need to find multiple ways to retain their customers. A relationship is dynamic and two-sided. It is not enough to get a list of customers and their spending habits; the relationship will evolve with each transaction, and CRM systems must as well. Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. LEVERAGING CUSTOMER INFORMATION • Data mining identifies the most profitable customers and prospects. • Managers can then design tailored marketing strategies to best appeal to the identified segments. • Leverage the customer information to facilitate enhanced relationships with customers. Copyright © 2022 by Cengage Canada. COMMON CRM DATABASE APPLICATIONS CAMPAIGN MANAGEMENT • Leveraging and monitoring interactions to sell and improve customer service • Customizing offerings RETAINING LOYAL CUSTOMERS • Build long-term relationships that are mutually beneficial. CROSS-SELLING OTHER PRODUCTS AND SERVICES • Use the database to match product profiles with customer profiles to cross-sell. Copyright © 2022 by Cengage Canada. COMMON CRM DATABASE APPLICATIONS DESIGNING TARGETED • Transaction and purchase data can be used to segment and then to help modify messages to MARKETING enhance effectiveness. COMMUNICATIONS REINFORCING • CRM offers the opportunity to reach out after CUSTOMER PURCHASE purchase to reduce cognitive dissonance. DECISIONS INDUCE PRODUCT TRIAL BY NEW CUSTOMERS • Use data to create a customer profile that can then be used for evaluating lists of prospects for the identification of new customers. Copyright © 2022 by Cengage Canada. LOYALTY Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. COMMON CRM DATABASE APPLICATIONS INCREASING EFFECTIVENESS • CRM databases can help manufacturers stay in touch with the customer so no OF DISTRIBUTION longer reliant on channel members for CHANNEL customer contact. MARKETING IMPROVING CUSTOMER SERVICE • CRM database information can be used to enhance customer service, whether that be a phone call, webinar, etc. Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. PRIVACY CONCERNS AND CRM • Consumers’ reactions to the growing use of databases • Concern regarding invasion of privacy • Marketers’ relationships with customers built on trust • If the consumer feels the knowledge gained from database information is being used inappropriately. trust is diminished. • Internet-driven data collection has increased alarm in privacy-minded consumers. • The Personal Information Protection and Electronic Documents Act (PIPEDA) • Global issues Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. 23ANDME HIT WITH FIRST-OF-ITS-KIND DATA BREACH Copyright © 2022 by Cengage Canada. THE FUTURE OF CRM • Continued use of the newest and best technologies will be vital to CRM maintaining its relevance. • Cloud storage • Time needed to input data and manage the information provided is a growing concern. • Movement in CRM to automating customer relationship— predictive modelling advances, relational databases— Amazon, etc. Copyright © 2022 by Cengage Canada. THE FUTURE OF CRM continued • On-demand marketing—taking CRM to a new level • Consumers expectation of their decisions and buying-related experiences have risen. • Want to interact anywhere anytime • Want to do new things with varied information to create value • Expect data stored about them to be targeted uniquely to them • Expect all interactions to be easy Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada.