9061 lecture 13
TRANSCRIPT
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Customer Relationship
M A N A G I N G B U S I N E S S R E L A T I O N S H I P S
W E E K 7 , L E C T U R E 1 .
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Lecture Overview
an re a ons p mar e ng
Definition of CRM
Benefits of CRM
Role of CRM
Direct marketing
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CRM and Relationshi Marketin
n e aca em c commun y, e erms re a ons p
marketing and CRM are often used interchangeably. ,commonly used in the context of technology
-enabled relationship marketing (Ryals and Payne
, . , .
o ng to concentrate on t e tec n ca e ements oCRM in the second half of the lecture
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Benefits of CRM
retaining a customer (Kotler & Keller, 2006)
C urn n some n ustr es very g e.g., 40% per year n mo ephone industry (Benjamin, 2008), UK average is 22% (TheKnowled e: Stat watch 2008
A 5% decrease in churn can cause profits to increase by 25 ,2006)
s re a ons p progresses, cus omers ecome more pro a e(Kotler & Keller, 2006)
Can a cross se ng Tapp, 2005
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Definin CRM
e n ng s pro ema c, ere s no one
accepted definition
Big differences between definitions are
The association with technology The timescale of the use of CRM
The objectives set for the CRM programme
Definitions impact on how CRM is applied or what isexpected of it
Payne and Frow (2005)
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CRM Continuum
ayne an row 2005 ent e a cont nuum o
definitions from tactical, technological definitions to more,
Payne and Frow (2005)
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Pers ective 1: Tactical CRM Definitions
ome e n ons c e y ayne an row 2005
CRM is an e-commerce application (Khanna, 2001) I.e., only concerned with sales
,
1997)
Concerned either with a short term objective or onenarrow part o t e us ness
Payne and Frow (2005)
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Pers ective 2: Technical CRM Definitions
s a erm or me o o og es, ec no og es an
e-commerce capabilities used by companies toWoodcock, 2001)
. .,
- ,the people element of CRM
Payne and Frow (2005)
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Pers ective : Holistic CRM
s a ou e eve opmen an ma n enance o
long term mutually beneficial relationships with Less about how CRM is carried out
CRM is an enterprisewide initiative that belongs in ,
2003)
Both definitions broad, but quite light on detail of how
Payne and Frow (2005)
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Pers ective : Holistic CRM
g y more e a e e n on g ven y mu , a
and Gray (2009, citing Liu, 2007) RM can e e ne as us ness strateg es,
processes and information technology which enable
a company o op m ze revenue an ncrease evalue through understanding and satisfying the n v ua cus omers nee s
Technolo still has a role but it is not the onl oreven the most important, element
ote, no ment on o mar et ng
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Pers ective : Holistic CRM
nvo ves e w o e organ sa on wor ng o
develop and maintain the relationship with the
CRM puts the customer into the central focus of ,
influences the quality of the customer experience and
What Gummesson (1991) calls part-time marketers
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Definition of CRM
s e process o manag ng e a e
information about individual customers and maximise customer loyalty Kotler & Keller
customer touch oint refers to an occasion whena customer interacts with the organisation, e.g.,
an inquiry, a sale, receiving a piece of mail.
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Relationshi Develo ment
emem er s
Each act is a customer touch point
Holmlund, 1997, cited by Fill, 2009
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Role of CRM
o en y ose cus omers a are mos
valuable to the organisation
To segment the organisations customers in the most
useful way, e.g., by demographics, needs, value
To retain the customers that are most valuable to the
or anisation Involves thinking about the economic indicators of
relationship intensity
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Relationshi Intensit
Economic indicators identify best customers
Fill (2011, p. 569 citing Bruhn)
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Identif in Customer Value
ecency, requency an va ue
Based on historical data
Customer lifetime value Net resent value of the future rofits ex ected from the
customer Based on predictions of future activity
Remember not all customers are worth having a'
Equally not all customers will want a relationshipw t t e organ sat on
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Leak Bucket
us omers are cons an y eav ngrelationships, for various reasons
Try to limit leaks, but
flow of new customers enteringrelationships
Therefore acquisition activity
needs to continue However, wont be the only, or the
main, focus of the organisations
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Vir in Media
us omer c urn now a . year on year o ovem er2009 ( The Week, 2009)
, of 2009 ( The Week, 2009)
. . ,
2009) Has database of customers of different roducts
Make use of a number of tools and media
TV ress and outdoor ads Website, email and text
Nature of roduct ran e su ests CRM suitabilit
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How CRM is Carried Out
e a ons ps are ase on among o er ngsknowledge of the other party, in this case the
For organisation this means building and applying aicture of our customers
Generally this means using direct marketing CRM is not just direct market, but direct marketing does play a big role
Also known as;
Database marketing Direct and database marketing
Data driven marketing
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Direct Marketin
rec mar e ng s a way o acqu r ng an eep ng
customers by providing aframework for three
information, strategy formation and
directly (Tapp, 2005, P. 9)
Central point is information
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What Data is Needed
rgan sa ons co ec an use a w e var e y o a a
on consumers
Personal / contact data
Name Address
Telephone number
Email address
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What Data is Needed
emograp c n orma on
Gender ge
Marital status
e av oura a a Purchase patterns
sage ata
Loyalty
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What Data is Needed
ar e ng re a e n orma on
Product(s) purchased epurc ase ra e
Method of payment
Discounts due (if any)
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Sources of Customer Data
n erna sources
Product registration docs arran y car s
Credit card details
In-store offers
Records from events or promotions
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Sources of Customer Data
Specialised research companies e.g. Neilsen
y . . v y
Web site
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Storin and Usin Data
a a s s ore n a a a ase
Used both as a way of understanding and contactingindividual customers and detecting trends in the
marketplace
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Next Time.
ow s carr e ou