Marketers use customer relationship management tools to create marketing programs that satisfy customers
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
- 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?
- 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?
- 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
- 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
- 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
- CRM entails building and maintaining profitable customer relationships
- 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
- 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
Find customer who is in jeopardy of being lost
- Longer = less likely to return