Customer Relationship Management
Customer Relationship Management
Customer Relationship Management
Management
Day 2
The Basics
Contents
Introduction
Relationship marketing vs. relationship management
Definitions of customer relationship management
Forms of relationship management
Managing customer loyalty and development
Reasons behind losing customers by organizations
Significance of customer relationship management
Social actions affecting buyer-seller relationships
Introduction
Learning Objectives
After studying this unit, you will be able to
Explain the meaning, need and relevance of customer
relationship management.
Mention the forms of relationship management.
Cite the reasons for losing customers by organizations.
Bring out the significance of customer relationship
management.
Why CRM?
It costs six times more to sell to new customer
than to sell to an existing one.
A typical dissatisfied customer will tell 8-10
people
By increasing the customer retention rate by 5%,
profits could increase by by 85%
Odds of selling to new customers = 15%, as
compared to those for existing customers (50%)
70% of the complaining customers will remain
loyal if problem is solved
90% of companies do not have the sales and
service integration to support e-commerce
Defining CRM
CRM is an integrated sales, marketing and service
strategy that is based on a timely and accurate
information infrastructure and that depends on
coordinated enterprise-wide activities.
Example: tracking customers interactions with the firm
Customer tracking includes steps in the selling and
customer service cycles
Defining CRM
Targeting
Who do we target?
What segments are most profitable?
What segments match our value proposition?
What is the best segmentation strategy for us/our
industry?
Acquisition
What is the best channel for each segment?
What is the acquisition cost for a
channel/segment?
Cost effective acquisition?
Defining CRM
Retention
How can we improve retention?
What is our average customer relationship length?
How can we hold customer for as long as possible?
What is the most cost effective method of retention?
Expansion
How many products does our average customer buy?
How can we induce our current base to buy more
products?
Who are the prime targets for expansion?
What is the cost of expansion?
Goals of CRM
Using existing relationship to grow
revenue
Using integrated information for
excellent service
Introducing consistent, replicable
channel processes and procedures
Acquiring
Enhancing
Retaining
new customers profitability of existingprofitable customers
customers
for life
Retaining profitable
customers for life
Retention focused on service
adaptability
Delivering not what the market
wants but what the customer wants
Providing a value proposition that
offers a proactive relationship that
works on the best interest of the
customer
Example: customer retention is
becoming a key competitive strategy for
Economics of customer
retention
Winning back a lost customer can cost up to 50-100 times as much as keeping a
current one satisfied.
Rob Yanker, Partner, McKinsey & Company
Cost of Service
Duration of
Relationship
Retention
Lift/upsell
Likelihood to
Recommend
High
Available at
Convenient Times
Know. Product/Svcs.
Resolution Time
Easy to Reach
# of Rings
Low
Total Perceived
Value
Ownership of Problems
Low
Access to
Live Agents
Courteous
Right Tel. #
Know. About Account
Current Performance
The
The customer
customer value
value analysis
analysis should
should be
be performed
performed for
for each
each segment
segment individually.
individually. The
The
perceived
perceived importance
importance of
of price
price and
and service
service drivers
drivers can
can differ
differ significantly
significantly by
by segment.
segment.
High
Managing
customer
development is one of the
important
aspects
of
relationship marketing.
The focus is on two things
customer
catching
and
customer keeping.
Customer catching is the
process of attracting new
customers (inviting new blood),
while customer keeping is the
process
of
retaining
the
existing ones (encouraging old
blood).
Modern Chart
Top
Customers
Front Line people