chapter 2 CRM by judith w. kincaid

1. CRM in MarketingCRM in Marketing
Chapter 2Chapter 2
Curtis Adams
Jordan Burns
Lindsey Birmingham
Leah Barnhill

2. Motivational ResearchMotivational Research
 -1960’s Practice
 -Included everything from showing volunteers
a series of advertising to administering focus
groups
 -Scope of these efforts remained unwavering
in product focus
 -However with the customer acting as a
component of the purchase cycle…BRAND
WAS KING.

3. Product MarketingProduct Marketing
 -Became a study within itself
 -Part research…Part guessing game…part
leap of faith
 -Predictable
 -Product marketing campaigns were designed
to reach as many as possible
 -Focused on all customers having the same
needs and wants and the actual pitch of the
product

4. Target MarketingTarget Marketing
 Customer data as
important as the
product data
 Sum of all the
customers to a
single individual
 Segmenting
customers allowed
room for specialized
communication
 Segmenting
customers based on
preferences can
reveal interesting
facts about
consumer behavior

5. Relationship MarketingRelationship Marketing
 -Understanding their preferences…increasing the
odds of retaining them
 -You are not trying to sell a single product to as
many customers as possible
 -You are trying to sell a single customer as many
products as possible
 -One to One means not only communicating with
customers as individuals but also developing
customer products and tailored messages based
on customers unspoken needs
 -Relies heavily on customer’s experience of the
company as it does on the specific message
received

6. Campaign ManagementCampaign Management
 -CRM is a necessity.
 -Hard Labor in launching new marketing campaigns
 -Conceive, plan, define the target audience,
determine channel of communication, launching the
promotion
 -CRM products offering campaign management
present savings of time, labor and cost and
demonstrate quantitative ROI
 -Proactive campaign management is like a good
wine…it gets better with age.
 -Tracking campaign success results in higher
response rates and greater ROI
 -Use of results of campaigns to refine future
campaigns has been acknowledged as the best CRM
practice.

7. CRM Marketing InitiativesCRM Marketing Initiatives
•Cross-selling and Up-Selling
•Customer Retention
•Behavior Prediction
•Customer Profitability and Value
Modeling
•Channel Optimization
•Personalization
•Event-Based Marketing

8. Cross Selling and Up SellingCross Selling and Up Selling
 Cross-selling- the act of selling a product or
service to a customer as a result of another
purchase.
 Example- New mothers buy clothes for their
babies and then themselves as well.
 Up-selling- motivating current customers to trade
up to more profitable products.
 Example- McDonalds super size option.

9. Cross Selling and Up Selling CtdCross Selling and Up Selling Ctd.
These two forms of selling are an art and knowing
which products will increase the customer’s
buying is the key.
Here are some things to think about:
 Selling customers something they wouldn’t want
or need could cause them to buy less.
 Not every customer is a good candidate for these
types of selling.
 Understanding the ways how and whether the
customer responds to promotions

10. Customer RetentionCustomer Retention
 Understanding why customers leave for
competitors is key to find ways to retain them in
the future.
 Churn- the customers leaving one business for
its competitors.
 When a customer leaves there is:
 Loss of revenue
 Loss of investment in acquiring them

11. Customer Retention Ctd.Customer Retention Ctd.
 Loss of stable market for new products
 Businesses have studied the characteristics of
those who have left their business to understand
why, to predict who might leave next, and to find
out who is desirable to keep.
 They also are tying to find what method might
work best to keep these customers, such as
promotions or free stuff

12. Behavior PredictionBehavior Prediction
This uses past consumer behavior to foresee the
future behavior of their customers.
This analysis includes several variations.
1. Propensity-to-buy analysis- understanding what
a particular customer might buy.
2. Next Sequential Purchase- predicting the
customers next buy.
3. Product Affinity Analysis- Understanding which
products will be bought with others. Also known
as market basket analysis.
4. Price elasticity modeling and dynamic pricing-
determine the best price for a given product.

13. Behavior Predictions CtdBehavior Predictions Ctd..
The marketing decisions that come for this
analysis:
1. Preemptively offering discounts or fee waivers
to existing customers who are at risk of
churning.
2. Refining target marketing campaigns so
smaller customer segments or specific
products.
3. Packaging certain products together and fixed-
pricing them to sell more products and increase
their profitability.
4. Cross-selling products likely to be purchased
with other products.

14. Customer Profitability andCustomer Profitability and
Value ModelingValue Modeling
 Customer Profitability- deals with the company’s
view of the possible profit to be made from its
customers.
 Value Modeling –deals with the value of the
customer’s other features like ability to bring in
more profitable customers or the potential to be a
more profitable customer.
 Value modeling is only as accurate as the
customer’s data is rich.

15. Channel OptimizationChannel Optimization
 Offering the right message to the right customer
at the right time.
 Example: Customers who us Internet banking
services might prefer a new emailed offer with
their regular statement and a customer visiting a
branch office might prefer a cup of coffee along
with a brochure.
 Once you understand the channels your
customers prefer to interact with your company
you must then decide what is the best way to
communicate with them.

16. PersonalizationPersonalization
 This is the capability to customize customer
communication based on knowledge preferences
and behaviors at the time interaction.
 Examples: a site you bought CD’s from greet you
and offers you CD’s that are of your favorite
artists when you enter the site or the home
shopping channel operator greets you on when
you call and helps you quickly purchase what you
need and all because you shopped there once
before.

17. Personalization CtdPersonalization Ctd
 The first example used variable insertion to
personalize the site for the current customer because
it had information recorded from the last transaction.
Over time, the customer is more and more known to
the company through study of the customer’s profile:
data, past purchases, click stream data, and web
survey responses. Then the company knows what to
offer the customer to entice them to buy more or
keep them from churning.
 Example: if a person responds to a discount on skis
then they might also buy cold weather apparel.
 Using personalization can take out he guess work in
your business.
 Personalization in the B2C space is based on
studying click stream data (one’s navigation path
through a company’s Website.

18. ClickstreamClickstream
Clickstream monitoring includes how customer:
 Reached site
 Traveled through site
 Spent his time and how much did he spend
 What was bought that stimulate buys of other
products
Analysis of clickstream can trigger new tactics in
companies. Examples:
 Changes in Web impressions according to
customer’s clickstream
 Custom promotions or discounts based on past
purchases of research.
 Customized web pages according to the visitor’s use
of site.

19. Event Based MarketingEvent Based Marketing
 This is a time sensitive marketing or sales
communication reacting to a customer-specific event.
 Example: sending an application for collision
insurance to people who recently had a car accident.
 Businesses today are to focus in on the individual
customer in a real time situation and get away from
the blank event-based marketing.
 An example of this ideal goal of reacting to
customer’s event in near real time is: when a
customer receives coupons at the store, right after
their purchase, that they might be interested in.

20. Event Based Marketing Ctd.Event Based Marketing Ctd.
 This kind of marketing requires solid process
automation and a well calibrated workflow to
be effective in influencing the customer’s
buying behavior.
 The ultimate goal of a company, despite the
type of customer communication, is to get
them to visit the store or website to buy
products they are happy with.

21. Customer Privacy-Customer Privacy-
One-to-One’s Saboteur?One-to-One’s Saboteur?
 Why is customer privacy a concern?Why is customer privacy a concern?
11.1.Excessive amounts of available customer
data- U.S. citizens can be uniquely identified by
their date of birth, gender, 5-digit zip code
2. Personalization tools enable users to understand
a consumer’s behavior history and share that
info. without consumer consent
3. Identity theft
4. Consumer harassment

22.  Opt In Policy- policy that requires
companies to receive customer
permission to solicit personal data.
 -This policy will require many
businesses to rethink they’re marketing
strategies and will result in millions
spent on process and technology
changes

23. In Order to obtain good CRM:In Order to obtain good CRM:
 Know which marketing message and channel
to use
 Know customers preferred interaction level
 Individual customers have different wants and
needs, in order to reach these customers
different marketing channels and interaction
levels will be needed

24. Customer Privacy PreferencesCustomer Privacy Preferences
 Keeping record of Customer Privacy
Preferences will help establish and
maintain good customer relationships
 Unspoken needs can be observed
through past interactions

25. Successful marketing is a result of:
 A sound marketing process
 Industry specific marketing practices
 Use of a variety of campaigns and
analysis of the results
Marketing AutomationMarketing Automation
Checklist for SuccessChecklist for Success

26. Questions asked by companiesQuestions asked by companies
focusing on CRM:focusing on CRM:
1. How do we focus our marketing campaigns
on customers with whom we’d like repeat
business?
2. How do we migrate customers to lower-cost
channels?
3. How do other organizations in the company
see customers differently than we do and
how does that influence our campaign
message?

27. Questions asked by companiesQuestions asked by companies
focusing on CRM:focusing on CRM:
4. How can we anticipate products and services
customer might want?
5. What is the best means of communicating with
customers on an ongoing basis?
6. What tactics do we use to entice prospects to
become customers?
7. How do we tie what we’ve learned about customers
to improving overall customer satisfaction?
8. What keeps our most loyal customers loyal?

28. Make it HappenMake it Happen
 Customer Relationships are about more than just
understanding behaviors. They’re about making
them happen.
 Eddie Bauer- customer service has been a
trademark since 1920 when the 1st
store opened.
 500 stores and 49 states later Eddie Bauer still
concentrates on providing customers with the
merchandise they want in an optimal way.

29. Eddie BauerEddie Bauer
Eddie Bauer’s 3 channels:
1. Brick-and-mortar store
2. Catalog business
3. Internet site
Each channel thrives alone but together
they compliment each other

30. Eddie Bauer CtdEddie Bauer Ctd
 Strategy implemented:
 Eddie Bauer struggled in the mid-90’s because the
knowledge of its customers and its ability to respond
to their requests were lacking.

 To fix this, the company began developing new
metrics for understanding customer behavior. The
new intelligence allowed the Eddie Bauer to examine
customer behavior and predict future behaviors
through its rapid modeling environment.

31. Eddie Bauer ResultsEddie Bauer Results
 1. They can keep track of customer spending and
determine which customer’s use which channels and
develop more personalized offers for its customers.
 2. Good communication with the customer requires
the right channel at the right time.
3. Sending the most valuable customers a broader
assortment of products pays off. (Customer
Retention)

32. CRM Never EndsCRM Never Ends
 The never ending journey: (figure 2-9)
 CRM is a constant cycle to build
customer value
 It is a learning relationship between the
business and the customers

33. Manager’s Bottom LineManager’s Bottom Line
 Before Implementing customer
Segmentation and CRM, plans MUST
BE in place, or….
 CRM can do more harm than good.

34. CRM BenefitsCRM Benefits
CRM provides insight in:
 Identifying high response campaigns
 Understanding characteristics of high-value
and potentially high value customers, and
catering to them
 Improves effectiveness of high-cost channels
(face-to-face)
 Personalized Communications for specific
customer segments
 Understanding of purchase patterns for future
maximum buying potential

35. GOAL of CRMGOAL of CRM
To ensure your company is ALWAYSTo ensure your company is ALWAYS
customer’s 1customer’s 1stst
choicechoice
This can be done by:
1. Moving “C” customers to “B” customers,
and to keep “A” customers at that level
2. Marketing Process should be well defined…
should act immediately
3. Marketing Department should not exist in a
vaccum…but should be linked to all other
business functions