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Crm

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Crm

  1. 1. Customer Relationship Management Introduction to Customer Relationship Management
  2. 2. OLD VS. NEW MARKETING <ul><li>OLD MARKETING </li></ul><ul><ul><li>Transaction oriented </li></ul></ul><ul><ul><li>Market share oriented </li></ul></ul><ul><ul><li>All customers are equal </li></ul></ul><ul><ul><li>Marketers sell </li></ul></ul><ul><ul><li>4P marketing </li></ul></ul><ul><ul><li>Mass marketing </li></ul></ul><ul><ul><li>Sell to the customer </li></ul></ul><ul><ul><li>Focus on new customers </li></ul></ul><ul><ul><li>Offensive </li></ul></ul><ul><ul><li>Broadcast oriented </li></ul></ul><ul><ul><li>Transaction profit </li></ul></ul><ul><li>NEW MARKETING </li></ul><ul><ul><li>Relationship oriented </li></ul></ul><ul><ul><li>Share of wallet oriented </li></ul></ul><ul><ul><li>All customers are not equal </li></ul></ul><ul><ul><li>Marketers manage demand </li></ul></ul><ul><ul><li>Relationship marketing </li></ul></ul><ul><ul><li>Individual marketing </li></ul></ul><ul><ul><li>Manage customer experience </li></ul></ul><ul><ul><li>Focus on existing customers </li></ul></ul><ul><ul><li>Defensive </li></ul></ul><ul><ul><li>Dialogue oriented </li></ul></ul><ul><ul><li>Customer lifetime value </li></ul></ul>
  3. 3. Five Different Orientations Toward CRM <ul><li>CRM is software, system, technology. </li></ul><ul><li>CRM is data storage and analysis. </li></ul><ul><li>CRM is a change in corporate culture from a </li></ul><ul><li>transaction focus to a customer centric one. </li></ul><ul><li>CRM is “managing demand.” </li></ul><ul><li>5. CRM is a strategy cycle focusing on customers. </li></ul>
  4. 4. A CRM System Contains Four Components <ul><li>Data warehouse </li></ul><ul><li>Analytical tools </li></ul><ul><li>Campaign management tools </li></ul><ul><li>Interfaces to maintain databases </li></ul>
  5. 5. CRM System Failure <ul><li>When CRM systems fail, it tends to be as a result of cultural as opposed to technological issues. </li></ul>
  6. 6. The Market Share Fallacy <ul><li>Increasing market share should not be a company’s goal. Rather, increasing share of the right kinds of customers should be the goal. </li></ul>
  7. 7. CRM is Founded on Four Tenets <ul><li>Customers should be managed as important assets. </li></ul><ul><li>Not all customers are equally desirable. </li></ul><ul><li>Customers vary in their needs, preferences, and buying behavior. </li></ul><ul><li>By better understanding their customers, companies can tailor their offerings to maximize their overall value. </li></ul>
  8. 8. THE CRM ADVANTAGE Increases Market Share Quicker Cash Flow Better Customer Knowledge Creates Up and Cross-Selling Opportunities Increased Product Acceptance
  9. 9. Definition <ul><li>“ 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.” </li></ul><ul><li>Baran, Galka, Strunk </li></ul>
  10. 10. Do You Want To Keep These Customers? <ul><li>Do not buy frequently </li></ul><ul><li>Buy your products only when they are on sale </li></ul><ul><li>Frequently return your merchandise </li></ul><ul><li>Complain a lot </li></ul><ul><li>Recommend your company to others just like them </li></ul>
  11. 11. Offensive vs. Defensive Marketing <ul><li>OM refers to increasing your customer base. </li></ul><ul><li>DM refers to activities aimed at existing customers. </li></ul><ul><ul><li>Defensive marketing has become more profitable. “Mass and Blast” is being replaced by 1:1. </li></ul></ul>
  12. 12. Why CRM Systems are Being Used <ul><li>Identifying prospects </li></ul><ul><li>Acquiring customers </li></ul><ul><li>Developing customers </li></ul><ul><li>Cross-selling and up-selling </li></ul><ul><li>Managing migration </li></ul><ul><li>Servicing </li></ul><ul><li>Retaining </li></ul><ul><li>Increasing loyalty </li></ul><ul><li>Winning back defectors </li></ul>
  13. 13. Four Basic Steps in CRM <ul><li>ID your customers in detail. </li></ul><ul><li>Differentiate the most and least profitable. </li></ul><ul><li>Interact. </li></ul><ul><li>Customize your offerings to fit each customer’s needs. </li></ul>
  14. 14. CRM Systems <ul><li>Allow companies to ID and focus on their high-profit customers while enabling companies to transform low-value customers into higher-value ones. </li></ul>
  15. 15. Retail Banks Have Realized the Following Benefits from CRM Benefits <ul><li>Increase in average products sold per customer over one year from 4.6 to 6.2 </li></ul><ul><li>3-5 percent decrease in administrative costs </li></ul><ul><li>200 percent return on technology investment through cost reduction over one year </li></ul><ul><li>96 percent reduction in average time for a CCC agent to refer a customer to a branch loan office </li></ul><ul><li>83 percent decrease in average customer info retrieval time </li></ul><ul><li>15 percent increase in product revenue in one year </li></ul>
  16. 16. CRM Benefits <ul><li>Benefits Realized in Retail Banking </li></ul><ul><ul><li>Increase in average products sold per customer over one year from 4.6 to 6.2 </li></ul></ul><ul><ul><li>3-5 percent decrease in administrative costs </li></ul></ul><ul><ul><li>200 percent return on technology investment through cost reduction over one year </li></ul></ul><ul><ul><li>96 percent reduction in average time for a CCC agent to refer a customer to a branch loan office </li></ul></ul><ul><ul><li>83 percent decrease in average customer info retrieval time </li></ul></ul><ul><ul><li>15 percent increase in product revenue in one year </li></ul></ul>
  17. 17. A Customer Focus Can Aid Retention <ul><li>Annual Defection Rates </li></ul><ul><ul><li>Newspaper subscriptions 66 percent </li></ul></ul><ul><ul><li>Residential tree and lawn care 32 percent </li></ul></ul><ul><ul><li>U.S. long distance telephone 30 percent </li></ul></ul><ul><ul><li>Clothing catalogues 25 percent </li></ul></ul><ul><ul><li>Internet service providers 22 percent </li></ul></ul><ul><li>Griffen and Lowenstein 2001 </li></ul>
  18. 18. Customer Retention and Profits <ul><li>Increase retention 5 percent and improve profitability in net present value from 20-85 percent. </li></ul><ul><li>It costs five to ten times more to obtain a new customer than it does to keep an existing one. </li></ul>
  19. 19. The Objectives of CRM <ul><li>ID potential customers </li></ul><ul><li>Understand needs </li></ul><ul><li>Differentiate dollars and cents </li></ul><ul><li>Decrease attrition </li></ul><ul><li>Increase usage </li></ul><ul><li>Increase cross usage </li></ul><ul><li>Increase usage of more prestigious items </li></ul><ul><li>Increase satisfaction </li></ul><ul><li>Integrate marketing and sales throughout channels </li></ul><ul><li>Improve campaign management </li></ul><ul><li>Increase referrals </li></ul><ul><li>Win back lost customers </li></ul><ul><li>Move customers up relationship hierarchy </li></ul><ul><ul><li>Strangers </li></ul></ul><ul><ul><li>Acquaintances </li></ul></ul><ul><ul><li>Friends </li></ul></ul><ul><ul><li>Partners </li></ul></ul>
  20. 20. Multi-channel Marketing <ul><li>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. </li></ul><ul><li>Multiple channel users have two to four times more to spend. In retail banking they are 25-50 percent more profitable. </li></ul>
  21. 21. Customers Transact Business through the Following Channels <ul><li>Web application </li></ul><ul><li>Free form e-mail </li></ul><ul><li>Telephone with a live agent </li></ul><ul><li>Internet VOIP through a live agent </li></ul><ul><li>Text chat with a live agent </li></ul><ul><li>Telephone through an interactive VRS </li></ul><ul><li>Fax </li></ul><ul><li>ATM/Kiosk </li></ul><ul><li>Entering the store or branch </li></ul>
  22. 22. Which Companies Benefit Most from CRM? <ul><li>Companies serving large numbers of customers through complex and frequent interactions: </li></ul><ul><ul><li>Communications companies </li></ul></ul><ul><ul><li>Retail banks </li></ul></ul><ul><ul><li>Insurance companies </li></ul></ul><ul><ul><li>Healthcare organizations </li></ul></ul><ul><ul><li>Utilities </li></ul></ul><ul><li>Companies with a steep skew </li></ul><ul><li>Companies in “lost for good” markets </li></ul>
  23. 23. Which Companies Benefit the Least from CRM Today? <ul><li>Companies that engage in minimal interactions with each customer </li></ul><ul><ul><li>Auto dealers </li></ul></ul><ul><ul><li>Government agencies </li></ul></ul><ul><li>Companies with simple transactions </li></ul><ul><ul><li>Movie theaters </li></ul></ul><ul><ul><li>Retail stores </li></ul></ul>

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