Marketers use customer relationship management tools to create marketing programs that satisfy customers

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Customer relationship management involves three stages: customer acquistion, customer retention, and customer reacquisition

Customer relationship management

  • Overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction
  • Information technology and database systems
  • Customer contact brands or companies at touch points
  • Gain insight into customer’s needs and behaviour, then used to improve customers dealings with the company

CRM and Cultural Changes

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  • Overall strategy approach; not merely software
  • Technology is useless if employees do not use the system
  • CRM not quick fix

o   Requires top-down long-run commitment by management

  • Cultural attitudes of the organization must change internally to a CRM culture
  • CRM: 5 Questions:

o   Company vision and mission statement reflect a customer-centric sentiment?

o   % of employees can state mission state or company vision?

o   Do employees complain about customers?

o   To what degree do employees feel that they are rewarded for behaving in a way that has the customer’s interests at heart?

o   Company feel comfortable talking to 10 randomly chosen customers about sales and after-care experience?

Customer Acquisition

  • Examine the profiles of company’s most popular customers and use these characteristics to find prospective customers?
  • How do they look like? Where to get more of them?
READ:
Marketing: Distribution and Supply Chain

Customer Retention

  • Maintain profitable customer relationships; more sales and profits; less expensive than making sale to new customer
  • Long term customers

o   Spread out the cost of acquiring

o   Less price sensitive; less inclined to switch

o   Word of mouth

Loyalty Programs

  • Programs specifically designed for customer retention
  • A small number of heavy users account for a large percentage of brand’s sales

o   Pareto’s Rule

80% of sales come from 20% of its customers

  • have come a way for one company to differentiate itself from another

Data mining

  • an efficient way to sort through large amounts of data to find relatinship between variables
  • spot trends
  • customer data stored in data warehouse

Customer Lifetime Value

  • potential sales that will be generated if that customer remains loyal to that company for a lifetime
  • share of wallet:

o   related concept; percentage of a customer’s purchases that a company has in specific product category

Customer Service

  • CRM entails building and maintaining profitable customer relationships

Marginal Customers

  • CRM allows firms to use information technology to quantify the value of individual customers in terms of sales and profit
  • Many customers are unprofitable
  • Fire low-value customers; focus on high value
  • Dangers of firing low-value customer

o   If only high-value customers, leaves the company open to poaching by competitors if they are aware of its customer base

Customer Reacquistion

  • Losing a customer means more than losing a sale

o   Losing the entire future stream of purchases that customer make over a lifetime

o   Poor customer service often why lose customers

o   Recover:

Find customer who is in jeopardy of being lost

  • Longer = less likely to return

Contact customers

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