Customer Relationship Management: A Database Approach

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Customer Relationship ManagementA Database
Approach
MARK 7397 Spring 2007
Class 2
James D. Hess C.T. Bauer Professor of Marketing
Science 375H Melcher Hall jhess_at_uh.edu 713
743-4175
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Four Perils of CRM
1. Implementing CRM before creating a customer
strategy
2. Installing CRM technology before creating a
customer-focused organization
3. Assuming that high tech CRM is better than low
tech
4. Stalking, not wooing, customers
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1. Implementing CRM before creating a customer
strategy
Potential Repurchase Frequency
High Retention Strategy Loyalty rewards Communication Personalization Strategy Differentiation Operations
Low CRM has low payoff Acquisition Strategy Data Analytics Attract Angels
Low High
Potential Degree of Customizability Potential Degree of Customizability

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2. Installing CRM technology before creating a
customer-focused organization

• CRM-Forum 2001 study of problems with CRM
• Organizational change 29
• Company politics 22
• Lack of CRM understanding 20
• Lack of CRM skills 6
• Software problems 2

Management often has marketing myopia (focus on
existing products rather than customer needs)
We are in the business of selling filing
cabinets rather than We are in the business
of storing and accessing paper records.
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3. Assuming that high tech CRM is better than low
tech
A customer bought a 45,000 Lexus and on the way
how from the dealer turned on the radio. He
discovered his favorite classical radio stationed
was programmed on the first channel button. He
pushed the second button and it had his regular
news station. The third button had his
daughters favorite rock station. When he got
home, he called the Lexus dealer to ask whether
they were psychic. No, said the salesperson,
We just had the mechanic note the settings on
your trade-in car and set the radio in the your
new Lexus for you.
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4. Stalking, not wooing, customers
Isnt CRM just capturing names and addresses from
customer transactions and then up-selling or
cross selling them in the future?
Customers just want there lives made easier.
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American Customer Satisfaction Index
Customer Satisfaction driven by the gap between
the customer's expectation of performance and
their perceived experience of performance
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Declining Customer Satisfaction- Examples
(American Customer Satisfaction Index) with
products and services Source http//www.theacsi.
org, University of Michigan
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Preventing the Premature Death of CRM

• CRM from the Consumers Viewpoint
• Too many trivial one-to-one relationships is
  untenable
• Relationships are give and take
• Companies focus on best customers only
• Companies often create rather than solve problems
  for customers

• Relevant Rules of Friendship
• Provide emotional support
• Respect privacy and preserve confidence
• Be tolerant of other friendships

Does CRM court customer friendship?
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The New Consumer Apartheid

• GE Capital 25 annual fee for people that did
  not have at least 25 in interest changes
• Schwab answers the phone in 15 seconds for
  Signature clients with 100,000 assets
• Starwood Hotels ejected customers from rooms to
  make way for Platinum club member
• Best Buy stocks merchandise that appeals to
  angels and has cut ties to http//www.fatwallet.
  com/

What are some of your examples of delightful
customer relationships? Flying
Billing Lodging Retail
Is this bad news for consumers?
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What are Americans Concerned With?
Loss of personal privacy 56 Healthcare 54 Crime
53 Taxes 52
October 2001 Harris Interactive survey
Privacy is valued To a Radio Shack clerk My
zip code's none of your business. But so is
identity At a hotel reception desk Do you know
who I am?
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Permission Marketing
92 of people surveyed in 2001 feel positively
about companies that ask permission before
sharing information.
Opting In Can I send you stuff? Opting On
Will you agree to listen? Opting When Will you
tell me when you will listen? Opting Where
Where do you want to listen? Opting How How
should I reach you? Opting Now Should I be
always on for you?
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How should companies interact with reluctant
customers?
Martha Rogers
Adjunct Professor of Marketing Duke University Ph.D. University of Tennessee, 1983
With Don Peppers, Dr. Rogers co-authored The One
to One Future (Currency/Doubleday 1993),
celebrating its 11th year in print, was named by
Inc. magazine's editor, George Gendron, as "one
of the two or three most important business books
ever written" and is widely acknowledged as the
bible of the customer strategy revolution.