CRM in Marketing Chapter 2

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CRM in MarketingChapter 2

• Curtis Adams
• Jordan Burns
• Lindsey Birmingham
• Leah Barnhill

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Motivational Research

• -1960s Practice
• -Included everything from showing volunteers a
  series of advertising to administering focus
  groups
• -Scope of these efforts remained unwavering in
  product focus
• -However with the customer acting as a component
  of the purchase cycleBRAND WAS KING.

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Product Marketing

• -Became a study within itself
• -Part researchPart guessing gamepart leap of
  faith
• -Predictable
• -Product marketing campaigns were designed to
  reach as many as possible
• -Focused on all customers having the same needs
  and wants and the actual pitch of the product

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Target Marketing

• Customer data as important as the product data
• Sum of all the customers to a single individual

• Segmenting customers allowed room for specialized
  communication
• Segmenting customers based on preferences can
  reveal interesting facts about consumer behavior

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Relationship Marketing

• -Understanding their preferencesincreasing the
  odds of retaining them
• -You are not trying to sell a single product to
  as many customers as possible
• -You are trying to sell a single customer as many
  products as possible
• -One to One means not only communicating with
  customers as individuals but also developing
  customer products and tailored messages based on
  customers unspoken needs
• -Relies heavily on customers experience of the
  company as it does on the specific message
  received

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Campaign Management

• -CRM is a necessity.
• -Hard Labor in launching new marketing campaigns
• -Conceive, plan, define the target audience,
  determine channel of communication, launching the
  promotion
• -CRM products offering campaign management
  present savings of time, labor and cost and
  demonstrate quantitative ROI
•  -Proactive campaign management is like a good
  wineit gets better with age.
• -Tracking campaign success results in higher
  response rates and greater ROI
• -Use of results of campaigns to refine future
  campaigns has been acknowledged as the best CRM
  practice.

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CRM Marketing Initiatives

• Cross-selling and Up-Selling
• Customer Retention
• Behavior Prediction
• Customer Profitability and Value Modeling
• Channel Optimization
• Personalization
• Event-Based Marketing

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Cross Selling and Up Selling

• Cross-selling- the act of selling a product or
  service to a customer as a result of another
  purchase.
• Example- New mothers buy clothes for their babies
  and then themselves as well.
• Up-selling- motivating current customers to trade
  up to more profitable products.
• Example- McDonalds super size option.

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Cross Selling and Up Selling Ctd.

• These two forms of selling are an art and knowing
  which products will increase the customers
  buying is the key.
• Here are some things to think about
• Selling customers something they wouldnt want or
  need could cause them to buy less.
• Not every customer is a good candidate for these
  types of selling.
• Understanding the ways how and whether the
  customer responds to promotions

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Customer Retention

• Understanding why customers leave for competitors
  is key to find ways to retain them in the future.
• Churn- the customers leaving one business for its
  competitors.
• When a customer leaves there is
• Loss of revenue
• Loss of investment in acquiring them

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Customer Retention Ctd.

• Loss of stable market for new products
• Businesses have studied the characteristics of
  those who have left their business to understand
  why, to predict who might leave next, and to find
  out who is desirable to keep.
• They also are tying to find what method might
  work best to keep these customers, such as
  promotions or free stuff

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Behavior Prediction

• This uses past consumer behavior to foresee the
  future behavior of their customers.
• This analysis includes several variations.
• Propensity-to-buy analysis- understanding what a
  particular customer might buy.
• Next Sequential Purchase- predicting the
  customers next buy.
• Product Affinity Analysis- Understanding which
  products will be bought with others. Also known
  as market basket analysis.
• Price elasticity modeling and dynamic pricing-
  determine the best price for a given product.

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Behavior Predictions Ctd.

• The marketing decisions that come for this
  analysis
• Preemptively offering discounts or fee waivers to
  existing customers who are at risk of churning.
• Refining target marketing campaigns so smaller
  customer segments or specific products.
• Packaging certain products together and
  fixed-pricing them to sell more products and
  increase their profitability.
• Cross-selling products likely to be purchased
  with other products.

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Customer Profitability and Value Modeling

• Customer Profitability- deals with the companys
  view of the possible profit to be made from its
  customers.
• Value Modeling deals with the value of the
  customers other features like ability to bring
  in more profitable customers or the potential to
  be a more profitable customer.
• Value modeling is only as accurate as the
  customers data is rich.

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Channel Optimization

• Offering the right message to the right customer
  at the right time.
• Example Customers who us Internet banking
  services might prefer a new emailed offer with
  their regular statement and a customer visiting a
  branch office might prefer a cup of coffee along
  with a brochure.
• Once you understand the channels your customers
  prefer to interact with your company you must
  then decide what is the best way to communicate
  with them.

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Personalization

• This is the capability to customize customer
  communication based on knowledge preferences and
  behaviors at the time interaction.
• Examples a site you bought CDs from greet you
  and offers you CDs that are of your favorite
  artists when you enter the site or the home
  shopping channel operator greets you on when you
  call and helps you quickly purchase what you need
  and all because you shopped there once before.

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Personalization Ctd

• The first example used variable insertion to
  personalize the site for the current customer
  because it had information recorded from the last
  transaction. Over time, the customer is more and
  more known to the company through study of the
  customers profile data, past purchases, click
  stream data, and web survey responses. Then the
  company knows what to offer the customer to
  entice them to buy more or keep them from
  churning.
• Example if a person responds to a discount on
  skis then they might also buy cold weather
  apparel.
• Using personalization can take out he guess work
  in your business.
• Personalization in the B2C space is based on
  studying click stream data (ones navigation path
  through a companys Website.

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Clickstream

• Clickstream monitoring includes how customer
• Reached site
• Traveled through site
• Spent his time and how much did he spend
• What was bought that stimulate buys of other
  products
• Analysis of clickstream can trigger new tactics
  in companies. Examples
• Changes in Web impressions according to
  customers clickstream
• Custom promotions or discounts based on past
  purchases of research.
• Customized web pages according to the visitors
  use of site.

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Event Based Marketing

• This is a time sensitive marketing or sales
  communication reacting to a customer-specific
  event.
• Example sending an application for collision
  insurance to people who recently had a car
  accident.
• Businesses today are to focus in on the
  individual customer in a real time situation and
  get away from the blank event-based marketing.
• An example of this ideal goal of reacting to
  customers event in near real time is when a
  customer receives coupons at the store, right
  after their purchase, that they might be
  interested in.

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Event Based Marketing Ctd.

• This kind of marketing requires solid process
  automation and a well calibrated workflow to be
  effective in influencing the customers buying
  behavior.
• The ultimate goal of a company, despite the type
  of customer communication, is to get them to
  visit the store or website to buy products they
  are happy with.

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Customer Privacy-One-to-Ones Saboteur?

• Why is customer privacy a concern?
• 11.1.Excessive amounts of available customer
  data- U.S. citizens can be uniquely identified by
  their date of birth, gender, 5-digit zip code
• 2. Personalization tools enable users to
  understand a consumers behavior history and
  share that info. without consumer consent
• 3. Identity theft
• 4. Consumer harassment

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• Opt In Policy- policy that requires companies to
  receive customer permission to solicit personal
  data.
• -This policy will require many businesses to
  rethink theyre marketing strategies and will
  result in millions spent on process and
  technology changes

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In Order to obtain good CRM

• Know which marketing message and channel to use
• Know customers preferred interaction level 
• Individual customers have different wants and
  needs, in order to reach these customers
  different marketing channels and interaction
  levels will be needed

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Customer Privacy Preferences

• Keeping record of Customer Privacy Preferences
  will help establish and maintain good customer
  relationships
• Unspoken needs can be observed through past
  interactions

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Marketing Automation Checklist for Success

• Successful marketing is a result of
•   A sound marketing process
•  Industry specific marketing practices
• Use of a variety of campaigns and analysis
  of the results

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Questions asked by companies focusing on CRM

• 1.     How do we focus our marketing campaigns
  on customers with whom wed like repeat
  business?
• 2.     How do we migrate customers to lower-cost
  channels?
• 3.     How do other organizations in the company
  see customers differently than we do and how
  does that influence our campaign message?

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Questions asked by companies focusing on CRM

• 4.     How can we anticipate products and
  services customer might want?
• 5.     What is the best means of communicating
  with customers on an ongoing basis?
• 6.     What tactics do we use to entice prospects
  to become customers?
• 7.     How do we tie what weve learned about
  customers to improving overall customer
  satisfaction?
• 8.     What keeps our most loyal customers loyal?

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Make it Happen

• Customer Relationships are about more than just
  understanding behaviors. Theyre about making
  them happen.
• Eddie Bauer- customer service has been a
  trademark since 1920 when the 1st store opened.
• 500 stores and 49 states later Eddie Bauer still
  concentrates on providing customers with the
  merchandise they want in an optimal way.

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Eddie Bauer

• Eddie Bauers 3 channels
• 1.     Brick-and-mortar store
• 2.     Catalog business
• 3.     Internet site
• Each channel thrives alone but together they
  compliment each other

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Eddie Bauer Ctd

• Strategy implemented
• Eddie Bauer struggled in the mid-90s because the
  knowledge of its customers and its ability to
  respond to their requests were lacking.
•  
• To fix this, the company began developing new
  metrics for understanding customer behavior. The
  new intelligence allowed the Eddie Bauer to
  examine customer behavior and predict future
  behaviors through its rapid modeling environment.
  

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Eddie Bauer Results

• 1. They can keep track of customer spending and
  determine which customers use which channels and
  develop more personalized offers for its
  customers.
• 2. Good communication with the customer requires
  the right channel at the right time.
• 3. Sending the most valuable customers a
  broader assortment of products pays off.
  (Customer Retention)

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CRM Never Ends

• The never ending journey (figure 2-9)
• CRM is a constant cycle to build customer value
• It is a learning relationship between the
  business and the customers

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Managers Bottom Line

• Before Implementing customer Segmentation and
  CRM, plans MUST BE in place, or.
• CRM can do more harm than good.

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CRM Benefits

• CRM provides insight in
• Identifying high response campaigns
• Understanding characteristics of high-value and
  potentially high value customers, and catering to
  them
• Improves effectiveness of high-cost channels
  (face-to-face)
• Personalized Communications for specific customer
  segments
• Understanding of purchase patterns for future
  maximum buying potential

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GOAL of CRM

• To ensure your company is ALWAYS customers 1st
  choice
• This can be done by
• Moving C customers to B customers, and to
  keep A customers at that level
• Marketing Process should be well definedshould
  act immediately
• Marketing Department should not exist in a
  vaccumbut should be linked to all other business
  functions