unit 5, crm strategies
TRANSCRIPT
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Unit: 5
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What is a relationship Composed of a series of interactive episodes between two
parties over time.
Content of each interactive episode is a range ofcommunicative behaviours including speech, actions andbody language
Essential to have emotional content resulting into a bond
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Transactional ex Value added ex Collaborative ex
Automated
purchasing
Shift from
Acquiring to
RetainingIntegration of
Supplier with
Buyer
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Trans Ex Coll Ex
Availability of alternatives
Supply mkt dynamism
Imp of purchase
Complexity of Purchase
Info exchange
Operational linkages
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CRM is a core business strategy that integratesinternal processes and functions and externalnetworks, to create and deliver value to targeted
customers.
CRM is a systematic approach for servingcustomers so as to ensure that customer retention
and profitability in marketing are achieved.
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anages customer interaction and customerservice
Helps focus on profit and avoid mis-alignmentb/w revenue and profit
Gathers in-depth customer info, tracks customerbehaviour and applies the knowledge to all
marketing efforts.
Serves as a sustainable competitive advantage
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Why retaining customers are profitable1. Cost of acquisition at the beginning of the relationship.
Longer the relationship lower the amortised cost.
2. Account maintenance costs decline as a % of total costs
3. Long term customers tend to be less inclined to switch;less price sensitive
4. Likely to purchase ancillary products
5. Creates entry barrier to competition
6. Less expensive to service
7. Increased customer retention and loyalty makes theemployees job easier and satisfying.
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Do not sell to them; help them to buy instead ut the customers interest above your own Form trust teams Also build trust amongemployees
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Transactional Customers
Less loyalty and commitment
Cost of switching is low
Focus on price and service
Collaborative Customers Lasting commitment
Operational linkages & info sharing mechanisms Service offerings as per customers needs
Cost of switching is high
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ABC systemprovides a clear picture of thegross margins & cost to serve componentsthat yield individual CP.
Steps to calculate CP using ABC system Identify activities that vary across customers
sales, Mktg, service, Production
For each activity, identify the cost driver
CP -- revenue from Customer minus the costassociated with serving it
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Method to allocate and measure indirect costs
called
Time driven ABC Has 2 components: Identify cost per hr of each group of resources performing
work( R & D, Prodn, Services, etc )
Identify unit times spent on these resources by specific
activities for products, services and customers
Ex: Customer services has a cost of Rs. 5000 per hr and aparticular transaction has taken 30 min, a cost of Rs.2500 is thecost of transaction for that customer.
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Rank the profitability from most to leastand to plot the accumulated profit in agraph.
X axis list of customers
Y axis -, the accumulated profit Distribution of profits follows the 80 20 rule.
Firm makes profit from one / two groups ofcustomers and loses money from other groups ofcustomers.
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Passive
Product is crucial
Good supplier match
Costly to serve but
buyers pay
Price sensitive
Few special demands
Aggressive
Leverage buying power
Low price
Customized features
Net margin Vs. Cost to serve
High
Net
Margin
Low High
Cost to serve
Profit
Loss
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Some people always throw stones in your
path. It depends on you what you
make with them; a wall or bridge.Remember, you are the architect of your life.