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004 CRM in Retailing v2 PDF
004 CRM in Retailing v2 PDF
Retailing Management, 7/e © 2008 by The McGraw-Hill Companies, All rights reserved.
Investment on CRM
Questions for discussion
What is CRM?
■ A business philosophy and set of
strategies, programs, and
systems that focus on identifying
and building loyalty with a
retailer’s most valuable
customers
Why CRM?
■ Committed to purchasing
merchandise
11-12
Which Customer Probably Has
the Greatest Lifetime Value
Platinum
Best
Most loyal
Least price sensitive
80-20 rule:
80% of sales or profits come from
20% of the customers
11-14
Customer Pyramid
Gold
Next best
Not as loyal
11-15
Customer Pyramid
Iron
Doesn’t deserve
as much attention
11-16
Customer Pyramid
Lead
Have negative LTV value
“Lead out”
11-17
RFM Analysis
11-18
RFM Target Strategies
11-19
Illustration of RFM Application
11-20
Illustration of RFM Application
Retaining Best
Customers
Converting Good
Customers into
Best Customers
Getting Rid of
Unprofitable
Customers
11-22
Customer Retention
Royalty-Free/CORBIS
11-23
Elements in Effective
Frequent Shopper Programs
11-24
Issues with Effective
Frequent Shopper Programs
■ Expense
■ Difficulty in Making Changes
■ Impact on Loyalty Questionable
■ Easily Duplicated – Difficult to
Gain Competitive Advantage
Need to offer “invisible” benefits
11-25
Personalization
11-26
Converting Good Customers
into Best Customers
11-27
Dealing with Unprofitable Customers
11-28
Implementing CRM Programs
■ Shift in orientation
Product Centric Customer Centric
11-29