Customer relationship management

Acknowledgements to Euan Wilson (Staffordshire University)

Purpose of CRM
Why we need CRM Defining CRM Identifying different customer types Developing customers i.e. Loyalty programs A buzz phrasewith meaning Good CRM has a sophisticated database Management of customers dont have to be passive recipients of their behavior

History of CRM

B&S
Time line

RM

CIMS

CRM

e-CRM

Late 80s

Early 90s

Mid 90s

2002 - Future

B&S Buying & Selling RM Relationship Marketing CIMS Customer Information Management Systems CRM Customer Relationship Management e-CRM- A subset of CRM that focuses on enabling customer interactions via e-channels (The web, email and wireless)

Definitions
is a business strategy with outcomes that optimise profitability, revenue and customer satisfaction by organizing around customer segments, fostering customer-satisfying behaviors and implementing customer-centric processes. is a strategy used to learn more about customers' needs and behaviors in order to develop stronger relationships with them.

Underpinning Theory Customers have many points of contact with an organisation Retaining customers is far most cost effective than recruiting new ones Some customers are more profitable than others
The 80/20 rule For most firms, 80 percent of profit comes from 20 percent of customers

Use of Technology

An example
The Elements of CRM
Sales force automation Call center telephone sales E-commerce Field sales Retail Customer service/call center management Call Centers Managing aspects Of customer contact Marketing automation Campaign management

Web-based self service

Content management

Third-party brokers, Distributors, agents

Field services and dispatch

Data analysis And business Intelligence tools

Data warehouse and data cleaning tools

Potential Benefits Of CRM

Customer retention Share of customer or share of wallet Cross-selling Up-selling

Potential Costs Of CRM

IT infrastructure Process change

Benefits Of CRM For Customers

Continuity A contact point Personalisation

Three phases of CRM

Acquiring New Relationships

Enhancing Existing Relationships

Retaining Customer Relationships

Steps to improve CRM

1. Build a database 2. Analyse, define types, profitability 3. Customer selection 4. Activities to delight selected customers - discourage others 5. Analyse again to see how were doing

What should be in the database

Demographics
How do you get people to provide this?

History of contacts Transaction history or summary Response to marketing communications

Behavioral Patterns

Behavioral patterns Consumption channel Benefit segments Degree of loyalty Permission

Analytically Derived Segments

Analytically derived On-line analytical processing (OLAP) Customer lifetime value Intangible benefits

CRM Applications

*Source: Patricia Seybold Group

Customer Types
Platinum Heavy, reliable users, not pricesensitive, try new products, loyal Gold Large users who push for price breaks, shop around and not so loyal Iron Low volume or intermittent users; cost to serve them is quite high Lead Demanding, want special attention but dont buy much and show no loyalty

Advantages of CRM
While company is quickly growing, customers are more satisfied as well Service provided in a better way, and a quicker way Sales force automated Integrated customer information Certain processes eliminated Operation cost cut, and time efficient Brand names more quickly established A central database so that everyone in your company can keep track of customer contacts Sales and marketing teams can benefit from having all this inside knowledge about customers Lets you set up rules for distributing work throughout your company Lets you pick and choose the functionality that you want

 Disadvantages: -Organizational wise change of priority to customers. - Significant investment of time and money - Threatens managements control/power struggle - Heightens peoples resistance to change - Inappropriate integration leads to disaster