CRM in Marketing

CRM Initiatives
 “CRM is concerned with the creation,
development and enhancement of
individualised customer relationships
with carefully targeted customers and
customer groups resulting in maximizing
their total customer life-time value” .
 The focus [of CRM] is on creating value
for the customer and the company over
the longer term” .
 When customers value the customer
service that they receive from suppliers,
they are less likely to look to alternative
suppliers for their needs .
 CRM enables organisations to gain
‘competitive advantage’ over competitors
that supply similar products or services
CRM developed for a number of reasons:
 The 1980’s onwards saw rapid shifts in
business that changed customer power
 Supply exceeded demands for most products
 Sellers had little pricing power
 The only protection available to suppliers of
goods and services was in their relationships
with customers
Strategically significant customers

 “Customer relationship management focuses

on strategically significant markets. Not all
customers are equally important” .
 Therefore, relationships should be built with
customers that are likely to provide value for
services
 Building relationships with customers that will
provide little value could result in a loss of
time, staff and financial resources
Information Technology and
CRM
 Technology plays a pivotal role in CRM .
 Technological approaches involving the use of
databases, data mining and one-to-one marketing can
assist organisations to increase customer value and
their own profitability
 This type of technology can be used to keep a record
of customers names and contact details in addition to
their history of buying products or using services
 This information can be used to target customers in a
personalised way and offer them services to meet their
specific needs
 This personalised communication provides value for
the customer and increases customers loyalty to the
provider
CRM Marketing Initiatives

 Cross-Selling

 Selling a product or service to a customer

as a result of another purchase

 Selling the right product to the right

customer
CRM Marketing Initiatives
 Cross-Selling (continued)
 Selling more products to a customer
increases revenue from that customer and
costs less than acquiring a new one

 Not every customer is a good candidate

 It is critical to understand the ways by which

customers evaluate how and whether to
respond to promotions
CRM Marketing Initiatives
 Up-Selling
 Motivating customers to trade up to more profitable
products

 Customer Retention
 Analyzing customer attrition
 Understanding why customers have left
 Understanding who
 How do you keep them?
 Churn prediction
 What is CHURN?
CRM Marketing Initiatives
 Behavior Prediction
 Using modeling and data mining techniques,
including
 Propensity to buy analysis
 What product is a particular customer likely to buy next
 Next sequential purchase
 What product is a customer likely to buy next
 Product affinity analysis
 Which products will be purchased with other products
 Price elasticity modeling and dynamic pricing
 Determining the optimal price for a given product
CRM Marketing Initiatives

 Customer Profitability and Value

Modeling
 Can a customer be unprofitable but still
considered valuable?

 Customer Lifetime Value (LTV)

 Potential value
 Competitive value (wallet share)
CRM Marketing Initiatives

 Customer value measurement is data-

intensive
 Value modeling is only as accurate as the
customer data is rich
CRM Marketing Initiatives
 Channel Optimization
 Means optimizing a company’s “inbound” channels
with its “outbound” means of customer interaction

 Knowing how to choose the best approach for each

 Understanding the channels through which specific

customers prefer to interact with the company
AND
 How best to communicate with your customers
CRM Marketing Initiatives

 Personalization
 Customizing customer communication
based on knowledge preferences and
behaviors at the time of interaction
 Online messages tailored to a particular
customer or customer segment
 In the B2C model, personalizaiton is based
on the analysis of a customer’s clickstreams
CRM Marketing Initiatives
 Personalization
 Clickstreams
 A customers navigation path through a company’s Web
site
 A company can see not only what a customer purchased
by how the customer reached the site in the first place
 How he traveled through the site after he got there
 How much time he spend on each page
 Which products might have stimulated purchases of other
products
CRM Marketing Initiatives

 What new tactics can analyzing

clickstreams trigger?
 Changes to Web images

 Custom promotions or discounts

 Customized Web pages according to the

visitor’s use of the site
CRM Marketing Initiatives

 Event-Based Marketing
 Time-sensitive marketing or sales
communication reacting to a customer-
specific event.
 Also called event-driven marketing

 Can apply to a segment of customers or to

individual customers
 This is what companies adopting CRM are
striving for
CRM Marketing Initiatives

 Event-based marketing
 Combine personalization techniques with
process design to ensure that the right
action targets the right customer at the right
time
 Ideal goal is to react to customers in near
real-time