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Principles of Marketing

Chapter 16- Customer Relationship Management

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Customer Relationship Management

• Defined: Management of relationships with your clients

• There needs to be some relationship management with customers since they are key to your success:– Buy products– Cocreate products and information

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Terms to Understand

• Stakeholder- Anyone/anything that has an interest in how a resource is managed. – Sometimes broken out into different levels• Shareholders are at a different level than the business

community where the firm operates.

• Customer- arguably the most important stakeholder since without them, there is no firm

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CRM

• CRM can also generate leads - potential customers

• We can look at previous data to see who is a potential customer of a new product, etc. by focusing on their behavior.

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CRM

• Customer-centric and Customer driven– Customer-centric is where the decisions are made

with the customers in mind– Customer driven is when the consumers take over

some of the firm’s business processes, like with airlines allowing self-checkin,

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CRM

• Operational CRM- Supporting the “front office” business processes (sales, marketing, services, etc.)– Online through CRM software or just through the

presentation of the user experience

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CRM

• Analytical CRM- Analyzes data collected by a business to determine information about customers that can inform sales and marketing decisions. – Data mining is a component of this– Previous purchase behaviors and even search behavior

can give a wealth of information about customers. “Other customers who searched for X also liked…”

– Sales-force automation is CRM for the management of the salesforce.

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CRM

• Collaborative CRM- Combination of all customer data across all channels to ensure the best experience

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CRM

• CRM can be viewed from a–Marketing perspective by increasing the number of

people who know about your service or product– Sales perspective by turning those that know about

the service or product and purchasing the service or product

– Service perspective by ensuring that people who have interacted with you are satisfied and delighted

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CRM

• A first step for CRM is to understand the value of each relationship. Can be based:– Only on sales– Only on the cost of acquiring that customer– Lifetime value of the customer– On additional referrals– Etc.

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CRM

• CRM to aid in emarketing tactics– First step is gaining permission. No one likes to be

sold without their knowledge–With this permission usually comes an email

exchange as email is one of the most efficient ways to stay in contact with consumers.

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CRM

• CRM to aid in emarketing tactics– Online advertising is beneficial but tricky. • Consumers want ads when they want them, not before

or after and not too much nor too little……..

– Affiliated marketing can be beneficial since it is bringing customers into the process and arguably the best at targeting, but it is difficult to control the message.

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CRM

• CRM to aid in emarketing tactics– Search engine marketing (SEO, PPC, etc.) can be

beneficial, but again can be difficult to measure what is working and what isn’t.

– Social Media marketing- Social media can generate a lot of information, but that information can be pretty useless at times, so sifting through the garbage can be difficult.

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CRM

• Customer service- – Rapidly changing with the ease of the internet and

other electronic means. – Previously, calling would have been the most

common, but now email has become the most prominent.

– Text messaging is also becoming a regular method of interaction• UPS tracking, etc.

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CRM

• Customer service- – Call centers- Still prominent, but often have a bad

connotation for one reason or another. – Training and integration are improving and so are

perceptions, but call centers still have issues with the negative perception.

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CRM

• Customer service- – Chat and instant messaging are also gaining in

popularity due to simplicity and ability to be clearer than a call center (at times).

– Anecdotal experience- I cant remember the last contact area I visited that didn’t have a chat function.***

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CRM

• Analysis of CRM data– Once data is collected and in a form that can be

utilized, CRM really becomes important. – As stated before, we can map behaviors and can

almost get an exact number for how much a customer is “valued at” with good, aggregated data.

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Vendor Relationship Management (VRM)

• A new way of looking at the relationship context. • Vendors often have very good information on

customers that other chain members do not, so through their integration and knowledge sharing, there can be better value for all members. – Coupons where information is shared, possible non-

direct campaigns to vendors instead of retailers, etc.

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