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Customer Relationship Marketing CRM

overview of Customer Relationship Marketing

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Customer Relationship Marketing CRM

  1. 1. OVERVIEW OF Relationship Marketing in the Millennium Source: Relationship marketing –Text &Cases, McGraw-Hill
  2. 2. Market place has been evolving under the converging pressures of changing demographics, global politics, economics, technology and so on.
  3. 3. PARADIGM SHIFT IN MARKETING Prominent marketing scholars like Philip Kotler and Frederick Webster have expressed that there has been a shift from a transactions to a relationship focus
  4. 4. Customer orientation focus on profitability rather than sales volumes and emphasis on market segmentation are gaining importance. New trend in marketing has replaced “products and “services” with “value” Relationship Marketing concept requires specific resource commitments, key part of which is the use of marketing research, DRIVING FORCES
  5. 5. THEMES FOR NEW MARKETING The 4Ps are also loosing credibility. They are more production than customer oriented and poses lot of flaws in its definition A creative process to look at the market;  Understand potential customer needs and wants  Consider the basic capabilities of the firm;  Conceive potential product offerings based on the present and potential capabilities;  Design and develop products and services for their customers
  6. 6. Relationship marketing gives a solution for many problems Emphasis should be given to create value for chosen customer value segments and gain profitability for the company The focus on value equity enables the company to assume and exert control over matching customer’s perception with the firm’s objective Managing the customer as an asset is more critical to a firm’s success MOVING TOWARDS RELATIONSHIP MARKETING
  7. 7. Managers need to create a business model for their organisations that uses technology for strategic purposes Customers gain near-perfect information on their alternatives, dropping switching barriers dramatically Direct selling, target marketing, technological marketing and cross selling are some of the successful emerging practices in marketing INTERGRATING RELATIONSHIP STRATEGIES WITH INFORMATION TECHNOLOGY (IT)
  8. 8. ADOPTING RELATIONSHIP MARKEING PRACTICES Many companies sensing the pulse of the market trend have opted for relationship marketing practices. On an average, business firms spend six times more to acquire customers than they do to retain them Developments in IT, data warehousing and data mining have made it possible for firms to maintain a one-to-one relationship with their customers. Contd….
  9. 9.  developing customer-centric processes,  selecting and implementing technology solutions,  employee empowerment,  customer information and knowledge generation capabilities and  the ability of the organisation to learn from best practices Successful implementation of relationship marketing practices requires a strategic approach which encompasses
  10. 10. Winning confidence and loyalty of customers are the prime foci of any business Market-driven organisations excel at retaining their most valuable customers
  11. 11. BASIS OF BUILDING RELATIONSHIP Establishing a relationship can be divided into two parts:  Attracting right type of the customer  Building relationship with that them in a mutually beneficial manner
  12. 12. Every organisation irrespective of whether it is a service firm or a manufacturing firm should learn to cope with the new competition of the service economy Relationship marketing makes customers less price sensitive Mind share analysis and customer satisfaction surveys inputs for building relationship strategies Customer perceived quality (CPQ) is basically a function of the customer perception of two dimensions viz., technical quality and functional quality SERVICE COMPETITION
  13. 13. BUILDING BRAND EQUITY Positive associations and predisposition in the mind of the consumer brought by building brand equity result in more favorable response to the firm’s marketing efforts A brand creates value by creating positive attitude towards firm’s offer
  14. 14. RELATIONSHIP MARKETING AND VALUE CHAIN The concept of relationship marketing is built around the concept of customer value and the value chain Managing the customer as an asset is becoming increasingly important where emphasis is given to customer retention, lifetime value and customer affinity
  15. 15. RELATIONSHIP MARKETING PROGRAMMES Continuity marketing Partnering One-to-one marketing Integrated telephone marketing
  16. 16. STRIVING FOR INTERRACTIVITY Interactivity results in high lifetime value Recency is the most powerful predictor
  17. 17. RFM MODEL A customer who has visited the company website recently (R) and frequently (F), and created a lot of monetary value (M) through purchase is the target audience for e-promotion campaign Higher the RFM score, more profitable the customer is
  18. 18. Customer Acquisition Strategies
  19. 19.  A firm should  focus on each stage in the customer life cycle and develop more touch points for expanding customer relationship  recognise and act on customer’s uniqueness  A benchmark estimate of the potential in this strategy is the Life Time value
  20. 20. CUSTOMER LIFE CYCLE Stage 1: Prospects Stage 2: First-time buyers Stage 3: Early repeat buyers Stage 4: Core customers, Stage 5: Core defectors
  21. 21. TARGETING The Acquisition Tactical Management (Actman) model helps in detecting various elements in the customer acquisition process The next in the set is to compute acquisition equity
  22. 22. TARGETING The Acquisition Tactical Management (Actman) model helps in detecting various elements in the customer acquisition process The next in the set is to compute acquisition equity
  23. 23. Customer profiling is the basis of behaviour- based relationship marketing Major forms of profiling :  Best customer profiling  Indexing profiling  Regression scoring  Net present value of a new customer Total new-customer investment as a percentage of sales and profits are critical measures in customer equity PROFILING
  24. 24. The ADD-ON Selling Strategies
  25. 25. Customer relationship marketing strategies are built around three core concepts:  Acquisition  Retention  Add-on selling The concept of add-on selling strategy is derived from the firm’s ability to  foster better decisions  generate higher profits, and  increase shareholder wealth
  26. 26. Add-on selling strategy assumes that not every potential customer is worth the customer acquisition investment Add-on selling depends on many factors like:  Number of add-on offers a firm can economically provide per period  Response rate to the product offers  Sales quantity per offer  The cost the company can afford while making the offer  Size of the customer universe  Margins on the offered product
  27. 27. Customer affinity is a combination of  the relationship a customer has with a firm and  the expertise that the customer believes the firm possesses Managing and delivering customer expectations is one of the major tasks of the firm
  28. 28. Cross-buying analysis Collaborative filtering Response modelling TYPES OF ANALYTICAL METHODS The impact of marketing mix on customer value analysis are felt in areas of acquisition, retention and add-on selling
  29. 29. MARKETING MIX BY STAGE IN THE CUSTOMER LIFE CYCLE High customer satisfaction or delight creates an emotional bond with the brand or company Add-on selling strategies help companies to strengthen their bond with customers
  30. 30. Information Technology (IT)-Enabled Marketing
  31. 31. True relationship marketing requires a fundamental shift in attitude towards viewing the customer as a partner and a business asset to be managed
  32. 32. Each actual or potential customer is identified as a record on the marketing database DATABASE MARKETING
  33. 33. Types of data  Transaction data  Product data  Promotion data Prospect database Merging data from different proprietary sources may result in redundant data SOURCES AND TYPES OF DATA
  34. 34. CHARACTERISTICS OF DATABASE MARKETING Database marketing is an interactive approach to marketing, which uses individually addressable marketing media and channels •To extend help to a company's target audience •To stimulate their demand and •To stay close to them by recording and keeping an electronic database memory of customer, prospect and all commercial contacts, to help improve all future contacts and to ensure more realistic planning of all marketing
  35. 35. ADVANTAGES OF DATABASE MARKETING The use of databases for targeting and analysis is powerful because it enables a shift from third-degree segmentations (or self – selection) to first degree segmentation: the creation of individually tailored offerings based on customer characteristics and behavior. It employs observation rather than inference.
  36. 36. CUSTOMER PROFILE DATABASE Profiling customers (or prospects) is the process of obtaining detailed information about them. This information can range from demographic to psychographic data. The results of profiling help a firm to determine the best messages to convey, products to target, and communications to avoid. There are six main categories of profile data for a Shopping mall : Contd…...
  37. 37. 1. Customer sales potential 2. Customer characteristics 3. Summary of customer acquisition, retention and add-on-selling measures 4. Organisational/product charts of various shops and key personnel 5. Influences and specifiers for the visit and 6. Customer attitudes and motivation to shop CUSTOMER PROFILE DATABASE
  38. 38. CASUAL MARKETING DATABASES Casual marketing databases capture data on the marketing programs offered to individual prospects and customers. They are extremely complex to create, because firms rarely track marketing activities at the individual-customer level. However, they are also extremely valuable, because the information they contain can significantly improve marketing efficiency and effectiveness.
  39. 39. DATA QUALITY Data quality is measured by the results of the surveillance audit carried out by the firm from time to time. During this period, every customer or prospect interaction is tracked form different angles. These contacts sometime may not generate revenue, but each one can be linked to an expected or potential monetary value in the future. Hence the quality of data in the data warehouse is more important.
  40. 40. DATA WAREHOUSES AND DATAMINING Data mining involves the use of sophisticated statistical and mathematical techniques such as cluster analysis, automatic interaction detection, predictive modeling, and neural networking. Through data mining, marketing statisticians can extract useful information about individuals, trends, and segments from the mass of data
  41. 41. Database marketing help the firm to focus on the data and undertake certain analyses like Deciles and the RFM The RS Matrix is a tool used to target defectors MEASUREMENT IN DATABASE MARKETING
  42. 42. TECHNOLOGICALSHIP MARKETING In technologicalship marketing, IT tools are used to provide relationship-building credibility and opportunities
  43. 43. COST EFFECTIVENESS OF MAKING OFFERS THROUGH DATADRIVEN MARKETING A well-integrated application of technology, staff and operations that respond instantaneously to customer needs can produce miraculous results