Customer Relationship Management & the Marketing Research Process

UNIT : 3

“As few as 10 percent of your customers contribute

90 percent to the company’s profits. The

problem is finding out who they are!!” – David Ogilvy

Continental Airlines Case Study

Continental Airlines prepares in-flight reports giving more detailed information about the passengers. For example, in addition to indicating passengers that have ordered special meals, the expanded reports flag the airline’s high-value customers and details such as whether they’ve had their luggage lost or experienced a delayed flight in the recent past. The flight attendants then apologize for the same.Such exercise increases customer loyalty and in turn drives revenue. The carrier built a real time data warehouse which enabled the carrier realize that customers to which a letter of apology or some compensation was given, forgot their past bad experiences.The data warehouse has solved the problem of inconvenience caused when the flight is delayed or canceled. The system automates the rebooking process

Value of Customer Relationship Management

Customer Relationship Management (CRM) is a business strategy that aims to understand, anticipate, and manage the needs of an organisation’s current and potential customers.

The outcomes of CRM are high customer knowledge, increased revenues, service quality & maximum customer satisfaction.

Companies which lack in customer driven information focus, loose service quality, experience high operating costs and reduced levels of customer retention.

Most companies fail to recognize that:1. There exist a strong correaltion between customer

satisfaction & customer retention. Customer who rate services high are unlikely to swith to another product/service provider.

2. Information through complaint behaviour is a key ingredient for CRM. Lack of opportunity to complain couuld be frustrating to the customer.

3. The focus of “making & selling” is outdated in present competitive environment. Value addition to product is key to the profitabilty of customers.

Customer Relationship Management is also refered as Customer value management, Customer-centricity, or Customer-entric management.

CRM is management of customer relationships based on the integration of customer information throughout the business enterprise (all facets of business, including suppliers & retailers) to achieve maximum customer satisfaction & retention.

Changes in Business Environment (Example: Internet & Electronic commerce) have made enterprises realise that treating existing customers is best source of profitability & sustained growth.

Essentials of Customer Relationship Management

The concept of selling products or services on transaction basis assuming constant customer acquistion mode has faded.

Todays business enterprises are thriving to establish dialogue with customers, understanding & anticipating customer change, and attempting to maximising the lifetime value of the customer.

CRM focuses on one customer at a time, but for millions of customers.

Customer Interaction is establishing relationship with customer. Relation here refers as perception the customer has of the enterprise

Perceptions are end result of interactions between customer & enterprise, directly or indirectly.

These can be either internal (distributors, sales, customer service) using different communication channels (face-to-face, telephone, e-mail, websites) or external (via advertising campaigns, direct mail, surveys).

Such interactions when stored are termed as Customer Knowledge. Customer knowledge are then used to create customer profiles which can be used to segment customers for appropriate products & services, build stronger relationships.

Exhibit 4.1: Flow Model of Customer Relationship Management Process

IDENTIFY Customer relationships in the

Enterprise

UNDERSTAND Interactions with

Current Customer base

ACQUIRE & capture Customer DATA based

interactions

Use TECHNOLOGY to store & Integrate customer data

ANALYZE data to identify BEST customers

Leverage & DISSEMINATE Customer information through the

enterprise

The primary function of Marketing Research(MR) in CRM process is to collect, store, & analyze customer interaction information.

Here the role of MR is transformed from a mere practice of traditional data gathering to strategic and real time information gathering to achieve competitive intelligence. Such concept is termed as Market Intelligence.

An enterprise cannot meet its customers needs & wants & offer value, unless it understands clearly the evolution & change of the customer.

Marketing Research & Customer Relationship Management

Collecting & capturing the information involves the development of Market Intelligence culture. This culture ensures that collected data are integrated into all facets of the enterprise.

Such culture becomes essential as most customer data in an enterprise exist in silos. Data in Silos are exclusive to one functional area of the enterprise & not shared with other areas of the enterprise.

Example: Late payment notices from accounting are not shared with customer service departments attempting to introduce new product or program.

Shared data facilitates improved customer understanding & such level of knowledge & integration comes only through Market Intelligence

Transforming into Market Intelligence enterprise is essentail because in such enterprises information is shared for the purpose of being connected, responsive, & proactive to customers.

Market Intelligence model provides a competitive advantage by using customer information at granular data level.

Granular data are detailed, highly personalised & specifically structured around an individual customer.

On the basis of granular customer information, market intelligence enterprises anticipate the desires of the customer & refine their offerings according to this anticipation. Such approach is commonly refered to as customer-centric approach.

Market Intelligence enterprise four unique characteristics which are

Transforming Marketing Research into Market Intelligence

1. Strategic Use of Customer Information An market intelligence driven enterprise strategically uses

customer information to address the following question & sort customers into profitable & unprofitable segments. “What does my customer value?” “What is the value of my customer?”

Information from internal & external sources sholud be organised & categorised into the firm’s data warehouse.

Information souces: transaction (purchase frequency, credit information), sales people (competitive information), call centers, sales promotion (purchase habits), survey data (customer information), in-store interations, the internet, demographic information, service bureaus, database marketing companies, & even motor vehicle registration.

2. Information Based on a Transactional Focus In every contact with customers an

opportunity exists to capture customer information, invest in the customer relationship, and build loyalty.

Real time communication also provides information beyond the transaction. (Buying Pepsi when Coke is not available)

The enterprise then shares such information throughout product planning and production to respond to the need for a product or service.

Example: A bank might learn that a particular customer generally phones the bank’s call center on Sunday evenings. When the banks wants to communicate with that customer, that would be the right time to interact.

3. Enterprisewide Approach to the Use of Information

In CRM, it is critical that information does not remain in the hands of few departments. Successful CRM enterprises use information across all business units to manage supply chain, create customised products & pricing structues, acquire new customers, and improve service and quality.

All individuals in the enterprise having direct or indirect contact with the customer must be exposed to identical level of customer information. (across various depatment).

Level of shared information must even extent beyond the firm to include all facets of the enterprise – Suppliers, independent contractors, faciliting agencies and retailers.

4. Technology Support of the CRM Structure

Technology support makes it possible to develop a strategic information-reach CRM infrastructure.

Technology support turns customer data into customer knowledge enabling profitability through precise targeting of market segments.

All such information is integrated and stored in a centralised database called a data warehouse. The data are then analysed through techniques of data mining.

Assessing Customer Data over the InternetSigning onto the internet, visiting virtual storefronts, sending & receiving e-mail, or chatting in newsgroups- all such activities are traced by various businesses. Such data search are classified as passive, active, or directive.

1. Passive DataRefers to automatic data given to a business once the consumer visits a particular website. The data obtained is the Internet address, and it can be in two forms; The Internet Protocol (IP) address disclosing the

numeric location of a computer. The Domain Name (DN). Ex:

Micheal@rosarycollege.edu

Data Collection in a CRM Environment

Passively gathered information can be used to categorise individuals into larger groups or segments.

Businesses can narrow its customer demographic base by checking for commonalities in the domain location and then targeting advertising or promotional material to such domain.

2. Activa DataAre data acquired by a business when customers interact with the business’s Website.Example: Information generated through ‘cookies’ or online application forms filled customers Using such technology, a business can track a customer’s

progress through a website page by page. Everytime the customer accesses the business’s website,

the business will have customer’s information and will can track the frequency of visits.

Active data increase the level of customer knowledge for the enterprise. Example: E-mail adresses, other volunteered information, surfing patterns tracked through cookies.

Such information can be used to predict tastes, desires, preferences, and buying patterns of the customer.

Example: items kept on shopping cart on the website are saved in the customer browser cookie file so that all items can be paid for at the end of shopping experience. If customer makes the purchase, e-mail addresses, credit card information, geographical location of the customer are also retained in the file. The firm can then plan its marketing efforts accordingly.

3. Directed Data

Directed data are the most comprehensive data available on customers. Such data are not necessarily new but can be considered as newly assessed information on customers.

Example: using just the customer’s last name, the internet can be used to find a person’s full address, get a map of the exact street location, a zip code, motor vehicle registration, even amount of donations made by an individual.

Example: CIBIL. This type of data yields all possible information

about a customer. Example: tracking a person’s visits on the web and buying habits. Sometimes could even generated customer’s complete profile.