Chapter 11 - Customer Relationship Management
Customer Relationship Management
- CRM transforms people, processes, and technology required to become customer-centric
- CRM is the philosophy of putting the customer first
- Why do companies need CRM?
1) Acquire new customers
2) Retain old customers
3) Meet the changing expectations of customers
- Loyal customers are the source of most profits!!
- Goals and Benefits of CRM:
1) Increased customer satisfaction
2) Increased customer loyalty and retention
3) Increased revenue
4) Growth of the customer base through referrals
5) Increase sales effectiveness (closing sales faster)
6) Increased sales through cross-selling or up-selling
7) Simplified and more cost-effective marketing and sale process
8) Faster responses to customer inquiries
9) Access to updated customer info and personal interactions
10)Automation of repetitive tasks
- CRM is NOT for every customer, it is for strategically significant customers:
- High lifetime value, role models for others, inspire change
- CRM’s role is to meet the customers’ needs
- Companies may not sell directly to end-consumer, so they need to train others in
CRM going down the chain as well
Key Tools and Components of CRM
- Predicting Customer Behaviors: can help with marketing and ads and the sales budget
- Personalizing Customer Communication: clickstream tracks how customer navigates web
- Segmenting Customers: divide customer base into similar individuals for marketing
- Target Marketing: more effective than mass marketing, more focused
- Event-Based Marketing: “Black Friday”, “4th of July”, etc.
- Cross-Selling: company sells complementary good/service
- Up-Selling: convince customer to upgrade of spend more for “better value”
- Relationship Marketing or Permission Marketing: “opt-in” to increase depth
- Customer Defection Analysis: analyzing why customers stopped buying
- Finding a new customer costs 5-10 times more than keeping an existing customer
- Churn Reduction: efforts to stop losing customers
- Churn: customers finding alternatives (better/cheaper)
- 5% improvement in customer retention can lead to 75% increase in profits
- Customer Lifetime Value (CLV): prediction of net-profit attributed to customer
Customer Relationship Management
- CRM transforms people, processes, and technology required to become customer-centric
- CRM is the philosophy of putting the customer first
- Why do companies need CRM?
1) Acquire new customers
2) Retain old customers
3) Meet the changing expectations of customers
- Loyal customers are the source of most profits!!
- Goals and Benefits of CRM:
1) Increased customer satisfaction
2) Increased customer loyalty and retention
3) Increased revenue
4) Growth of the customer base through referrals
5) Increase sales effectiveness (closing sales faster)
6) Increased sales through cross-selling or up-selling
7) Simplified and more cost-effective marketing and sale process
8) Faster responses to customer inquiries
9) Access to updated customer info and personal interactions
10)Automation of repetitive tasks
- CRM is NOT for every customer, it is for strategically significant customers:
- High lifetime value, role models for others, inspire change
- CRM’s role is to meet the customers’ needs
- Companies may not sell directly to end-consumer, so they need to train others in
CRM going down the chain as well
Key Tools and Components of CRM
- Predicting Customer Behaviors: can help with marketing and ads and the sales budget
- Personalizing Customer Communication: clickstream tracks how customer navigates web
- Segmenting Customers: divide customer base into similar individuals for marketing
- Target Marketing: more effective than mass marketing, more focused
- Event-Based Marketing: “Black Friday”, “4th of July”, etc.
- Cross-Selling: company sells complementary good/service
- Up-Selling: convince customer to upgrade of spend more for “better value”
- Relationship Marketing or Permission Marketing: “opt-in” to increase depth
- Customer Defection Analysis: analyzing why customers stopped buying
- Finding a new customer costs 5-10 times more than keeping an existing customer
- Churn Reduction: efforts to stop losing customers
- Churn: customers finding alternatives (better/cheaper)
- 5% improvement in customer retention can lead to 75% increase in profits
- Customer Lifetime Value (CLV): prediction of net-profit attributed to customer
