Day 1 CRM Introduction
Day 1 CRM Introduction
Day 1 CRM Introduction
Management
Orla O’Connor
connorla@hotmail.com
Knox et al (2002)
Short v long term customers
http://www.mrsc.ie/home.php
Activity – case study
Friends First – building the customer centric organisation
(Casestudy 4.1, P.105)
Read case study. What value is the organisation creating? Can you find any
evidence of a focus on Customer Lifetime Value?
Customer loyalty
Pareto Law
• 80% of effects come from 20% of causes
• Application:
- 80% of profit from 20% of customers
- 20% of customers purchase 80% of products/services
• Rationale for Key Account Management (KAM)
Loyalty Ladder
Customer loyalty techniques
CRM systems
• System for managing interactions with customers – existing and
prospective
• Good CRM systems can enable automation – caution!
• Relies on sound and clean customer data
Why is CRM important?
Good CRM enables marketers to:
• Identify most profitable customers
• Ensure they are being taken care of
• Understand why they are profitable
• Satisfy their needs, add value, retain them
• Find more customers like them
• Become less reliant on less profitable customers
How loyalty schemes create value
• More purchases more often – conscious choice to commit to brand in exchange for reward.
Additional valued reason for choice
• Mass customise marketing communication – talk to individual customers
• Asset value of the data – what’s actually happening in every store to every customer
• Trend tracking – what customers are buying and what they’re not
• Minimise wasted marketing effort – better targeting through real customer insight
• Promote trust – built on knowledge and understanding and consistently delivering on
promises
The Clubcard customer contract
Identify individual
customers
Create accurate
segmentation for Build dynamic
marketing efficiency customer knowledge
Loyalty segments (based on Dick and Basu 1994)
Behaviour
Championing
Location
All customers can be
determines
placed at some point in
marketing
the loyalty cube Commitment action to earn
loyalty
Customer Contribution
Contribution
• Should you reward “profitability” or “loyalty” eg low spending loyal
versus high spending but promiscuous
• High spender may take more rewards but not be loyal
• Encourage loyalty, not just profitability
Commitment
• Future value based on “headroom”
• Potential to be more valuable in the future
• What emerging financial needs can be assumed/identified and
targeted
• Strengthen the bond
Championing
• Loyal customers as brand ambassadors
• Benefits become an aspiration for friends and associates
• Word of mouth/pass on your long term opinion
• Long term value of a low value but loyal customer may be in
recruiting higher customers
Clubcard segments
Clubcard segments
Using Clubcard data
Emotional attachment
• “Marketing people use the expression emotional attachment in too free a
way. People have an emotional bond to Tesco in that they feel we are on
their side…that we look out for their interests…and most important we
deliver on our promises. It’s the sort of customer thinking that says ‘Tesco
has always done alright by me.’ On the one hand that sounds rather dull,
but it is actually massively valuable. It is, infact, branding”
Tim Mason
Other ideas about loyalty
• Clubs that identify real emotional needs
• “The only club that is worth running is one that satisfies a genuine
customer need, because they’re the ones that consumers are interested
in” Tim Mason
• Unconditional benefits are powerful. An up-front reward gains positive
perceptions and influences shopping behaviour in a valuable direction
• Be a “chosen” not a “given”. People value most what they actively choose
https://risnews.com/10-hottest-retail-loyalty-plans-2022
https://risnews.com/10-hottest-retail-loyalty-plans-2022
https://risnews.com/10-hottest-retail-loyalty-plans-2022
Nike membership
• Activity:
Research the Nike membership scheme