customer relationship management 2010

8/7/2019 Customer Relationship Management 2010

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CustomerCustomerRelationshipRelationship

ManagementManagement


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The Leaky Bucket Model of Customer

Defection and Retention !

New

Customers

Current Level of

Customers

Lost Customers


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Customer Relationship Management

Relationship retailing comprises all the activities

designed to attract, retain, and enhance long-term

relationships with customers

A business philosophy and set of strategies,programs, and systems that focus on identifying

and building loyalty with a retailers most valuable

customers.

What is loyalty? Is it the same thing as liking a

retailer or frequently patronizing a retailer?


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Customer Loyalty

Committed to purchasing merchandise and

services from a retailer

Resist efforts of competitors to attract the loyalcustomer

Emotional attachment to retailer

Personal attention

Memorable positive experiences

Brand building communications programs


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CRM

CRM focuses on the lifetime value of customers

and on selling an increasing number of products

and services to them. It is concerned with

customer share. Attraction, Retention and Enhancement of

Customer Relationships

Objective of CRM is to build and maintain a baseof committed customers who are profitable to the

organization


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Focus on

Customer Lifetime Value

Customer Share


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The Customer Loyalty Ladder

Advocate

Supporter

Client

Customer

Prospect


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Benefits of CRM to Organizations

Increased customer purchases

Lower costs

Free advertising thru word-of-mouth Employee Retention

Employee Loyalty

Customer Retention

& Increased Profits

Customer Satisfaction

Quality Services


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CRM Process


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Collecting Customer Data

Types of Information in the Customer

Database

Approaches for Collecting Information

Privacy Concerns


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Information About Each Customer in the Data

Base( Individual/Household)

History of purchases

Purchase date, price paid, SKUs bought, whether or not the

purchase was stimulated by a promotion

Customer contacts by retailer (touch points)

Visit to outlet, Visits to web site, inquires over phone, direct mail

sent to customer

Customer preferences (Colors, sizes, styles, brands)

Descriptive information about customer: Gender, Age,Occupation, Income, Address etc. along with

psychographics

Customers responses to promotions


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Approaches for Collecting

Customer Information

Ask for identifying information

Telephone number, name and address

Encourage use of frequent shopper cards

Link in-house credit account number and/or

third party credit cards to customer


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Privacy Concerns

Control over Collection

Do customers know what information is beingcollected?

Do customers feel they can decide on the amountand type of information collected by retailers?

Control over Use

Do customers know how the information will be used

by the retailer?

Will the retailer share the information with thirdparties?


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Heightened Concerns When Using

Electronic Channel

Information collected without the awareness of

customers

Collecting click stream data using cookies Similar to an invisible person videotaping a

customer as they walk through a store


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Customers Decision to

Offer Information

Balance benefits and risks

Discounts

Special TreatmentPersonal Attention

Disclosure of Information

Unwanted Sales Contacts


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Analyzing Customer Data

Data Mining technique used to identify

patterns in data.

Market Basket Analysis

Identifying Market Segments

Identifying Best Customers


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Market Basket Analysis

Data analysis focusing on

the composition of the

customers market basket

what items are bought at

the same time.

Uses:-Adjacencies for displaying merchandise

-Joint promotions


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Identifying Best Customers

Estimating Lifetime Value

Classifying Customers by recency, frequency, and

monetary value of purchases (RFM Analysis)


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Which Customer Probably Has the Greatest

Lifetime Value

Purchases over the last 10 weeks (Rs.)

1 2 3 4 5 6 7 8 9 10

Gita 200 200 200 200 200 200 200 200 200 200

Rashmi 2000 0 0 0 0 0 0 0 0 0


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Customer Pyramid

Platinum

Best

Most loyal

Least price sensitive


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Customer Pyramid

Gold

Next bestNot as loyal


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Customer Pyramid

Iron

Doesnt deserve

much attention


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Customer Pyramid

Lead

Demands attentionMay have

negative value


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RFM Target Strategies

RecencyFrequency Monetary 0-2

mths

3-4

mths

5-6

mths

> 6

mths

1-2 < Rs. 50

First-time

customers

Low-value

customers1-2 > Rs. 50

3-4 < Rs.150

Early Repeat

Customers

Defectors3-4 >Rs.150

5-6 < Rs. 300

High-value

Customers

Core Defectors

5-6 > Rs. 300

> 6 < Rs. 450

> 6 > Rs. 450


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CRM Programs

Retaining Best Customers

Converting Good

Customers to Best

Customers

Getting Rid ofUnprofitable

Customers


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Customer Retention Programs

Frequent Shopper

Programs

Special Customer Services

Personalization

1-to1 Retailing

Community


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Frequent Shopper Programs

Used to

- build a customer database by identifying with transactions

- encourage repeat purchase behaviour and retailer loyalty

Use incentives to encourage customers to enroll in the

programme and use the card.These incentives usually are

- discounts on purchases made

- points on every rupee of purchases made which can be

redeemed for spl. gifts or further purchases


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Elements in Effective


Tiered: Rewards should be based on volume of purchase

Customer Value

Offer Choices of Rewards(Discounts on

entertainment, vacation packages, sportingevents; vouchers that can be used to make

purchases from other retail partners)

Linking to charitable programmes

Reward all Transactions- not just purchases of selected

merchandise.

Transparency and Simplicity


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Issues with Effective


Expense ( Even 5 % discount, training of store

personnel, fulfillment support, IT and systems cost)

Difficulty in Making Changes (Customers react

negatively to any perceived takeaway, howeversmall).

Impact on Loyalty Questionable

Easily Duplicated as Very Visible Difficult to Gain

Competitive Advantage

Need to offer invisible benefits


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Retention Strategies (Contd.)

Special Customer Services: E.g. contact more

frequently, inform about sale, hold previews, waivers and

discounts for platinum customers.

Personalization:Greeting by name, recommendmerchandise likely to interest customers e.g. call up

customers who are interested in a certain line of apparel

when a new set of designs arrive; 1-1 retailing

Community : Opportunity to develop more personalrelationships with each other and retailer(e.g.. A sporting

goods retailer could provide info. on local sporting events;

books retailers organizes poetry reading sessions)


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Converting Good Customers to Best Customers

(Customer alchemy)

Cross-selling

Add-on selling

Offering and selling more products and services to

existing customers and increasing the retailers share

of wallet with these customers.

customer relationship management 2010

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