Chapter 11

Customer Relationship
Management

McGraw-Hill/Irwin
PPT
11-1
Levy/Weitz: Retailing Management, 5/e

Copyright 2004 by The McGraw-Hill Companies, Inc. All rights

Customer Relationship Management

A business __________ and set of strategies,
programs, and systems that focus on identifying and
building _______ with a retailers most valuable
customers.

PPT 11-2

http://www.neimanmarcus.com/store/sitelets/incircle/index.jhtml

Three Components of Customer Loyalty

1. _________ to purchasing merchandise and
services from a retailer
2. ______ _______ of competitors to attract the
loyal customer
3. _________ attachment to retailer
Personal attention
Memorable positive experiences
Brand building communications programs

PPT 11-3

CRM Process

PPT 11-4

Collecting Customer Data

(3 things to consider)
Types of Information in the Customer Database
Approaches for Collecting Information
Privacy Concerns

PPT 11-5

Information About Each Customer in the

Data Base
History of purchases
Purchase date, price paid, SKUs bought, whether or
not the purchase was stimulated by a promotion

Customer contacts by retailer (touch points)

Visits to web site, inquires to call center, direct mail
sent to customer

Customer preferences
Descriptive information about customer
Customers responses to promotions
PPT 11-6

Approaches for Collecting

Customer Information
1. Ask for ___________ information
Telephone number, name and address
2. Encourage use of _______ shopper cards
(loyalty programs)
3. ____ checking account number and/or third
party credit cards to customer

PPT 11-7

Analyzing Customer Data

Data ______ technique used
to identify patterns in data.

Market Basket Analysis

Identifying Market Segments

Identifying Best Customers

PPT 11-8

Market Basket Analysis

Data analysis focusing on
the composition of the
customers market basket
what items are bought at
the same time.
Uses:
-Adjacencies for displaying merchandise
-Joint promotions
PPT 11-9

Identifying Best Customers

Estimating Lifetime Value
Classifying customers by recency, frequency, and
monetary value of purchases (RFM Analysis)

PPT 11-10

Which Customer Probably Has the

Greatest Lifetime Value?
Purchases Over Last 10 Weeks

1 2 3 4 5 6 7 8 9 10
Jack $20 $20 $20 $20 $20 $20 $20 $20 $20 $20
Jill $210 $0 $0 $0 $0 $0 $0 $0 $0 $0

PPT 11-11

Customer Pyramid
Platinum
Best
Most loyal
Least price sensitive

PPT 11-12

Illustration of RFM Application

A catalog retailer is deciding which group of
customers to send a catalog.. Based on experience
and an RFM analysis of customer database:
Average order size for customers in cell - $40
Contribution margin 50%
Response rate 5%
Cost of catalog and mailing -$.75

Will the retailer make a profit mailing to this RFM

segment?
PPT 11-13

Customer Retention Programs

Frequent Shopper Programs
Special Customer Services
Personalization
_________ Retailing
Community

YOUR ONLINE PERSONAL SHOPPER

PPT 11-14

Elements in Effective
Frequent Shopper Programs
Tier Based on Customer
Value
Offer Choices of Rewards
Non-monetary
incentives
Reward all Transactions
__________ and Simple
PPT 11-15

Issues with Effective

Frequent Shopper Programs

Expense
Difficulty in Making Changes
Impact on Loyalty Questionable
Easily _________ Difficult to Gain
Competitive Advantage
Need to offer invisible benefits

PPT 11-16

Converting Good Customers to Best

Customers
_____-selling
______ selling

PPT 11-17

Implementing CRM Programs

Systems, databases

+
Close coordination between departments
(marketing, MIS, store operations, HR)

=
_______
Centric

PPT 11-18

Shift in _________

________ Centric