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Introduction To Customer Relationship Management

Customer relationship management (CRM) involves managing detailed customer information to maximize loyalty. It identifies prospects and differentiates customers to interact and customize offerings. CRM aims to reduce defection rates, increase longevity and wallet share. Retaining customers is important as acquisition costs more, companies naturally lose customers, and profit rates rise over the customer lifetime. The goal is moving customers through a development process from suspect to advocate.

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Megha Malhotra
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79 views

Introduction To Customer Relationship Management

Customer relationship management (CRM) involves managing detailed customer information to maximize loyalty. It identifies prospects and differentiates customers to interact and customize offerings. CRM aims to reduce defection rates, increase longevity and wallet share. Retaining customers is important as acquisition costs more, companies naturally lose customers, and profit rates rise over the customer lifetime. The goal is moving customers through a development process from suspect to advocate.

Uploaded by

Megha Malhotra
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Introduction to

Customer Relationship
Management
Organizational Charts
Introduction
 Companies have moved their focus from transaction
based to relationship centered

 One time purchases alone do not keep companies in


business, repeat purchases are the key to success

 80/20 rule does have merit


 80% of the revenue comes from 20% of the customers

 20% of the revenue comes from 80% of the customers


What is Customer Perceived Value?

Customer perceived value is the


difference between the prospective
customer’s evaluation of all the
benefits and all the costs of an
offering and the perceived
alternatives.
Determinants of Customer Perceived Value

Total customer benefit Total customer cost

Product benefit Monetary cost

Services benefit Time cost

Personal benefit Energy cost

Image benefit Psychological cost


Steps in a Customer Value Analysis
 Identify major attributes and benefits that
customers value

 Assess the qualitative importance of different


attributes and benefits

 Assess the company’s and competitor’s


performances on the different customer values
against rated importance

 Examine ratings of specific segments

 Monitor customer values over time


Delivering High Customer Value - The Value
Proposition

The whole cluster of


benefits the
company promises
to deliver.
Its more than the
core positioning.
Measuring Satisfaction

Periodic
Periodic Surveys
Surveys

Customer
Customer Loss
Loss Rate
Rate

Mystery
Mystery Shoppers
Shoppers

Monitor
Monitor Competitive
Competitive
Performance
Performance
J.D. Power
Rates
Customer
Satisfaction
Maximizing Customer Lifetime Value

Customer
Profitability

Customer Lifetime
Equity Value
 Customer Profitability :
A profitable customer is a person, household, or company that over
time yields a revenue stream that exceeds company’s cost of attracting,
selling and servicing a customer.

 Customer Lifetime Value (CLV):


It describes the net present value of future profits expected over the
customer’s lifetime purchases.

Subtract the expected cost of attracting, selling and servicing a


customer from the expected revenues.

Examples of products and services that have a high lifetime value are:
- credit cards
- mobile phone
- services software as a service (subscription software)
What is Customer Relationship
Management?

CRM is the process of carefully


managing detailed information about
individual customers and all
customer touch points to maximize
customer loyalty.
Framework for CRM

Identify prospects and customers

Differentiate customers by needs


and value to company

Interact to improve knowledge

Customize for each customer


CRM Strategies

Reduce
Reduce the
the rate
rate of
of defection
defection
(train
(train employees)
employees)

Increase
Increase longevity
longevity
(treat
(treat as
as partners)
partners)

Enhance
Enhance “share
“share of
of wallet”
wallet”
(offer
(offer more
more options)
options)

Converting
Converting low
low profit
profit customers
customers
more
more profitable
profitable

Focus
Focus more
more effort
effort on
on high-profit
high-profit
customers
customers (give
(give services
services like
like greetings
greetings
on
on special
special occasions)
occasions)
Customer Retention
 Acquisition of customers can cost five times more
than retaining current customers.

 The average customer loses 10% of its customers


each year.

 A 5% reduction to the customer defection rate can


increase profits by 25% to 85%.

 The customer profit rate increases over the life of a


retained customer.
The Customer Development Process

Suspects/
Potentials

Disqualified
Prospects
Prospects

First-time Repeat
customers customers Clients Members

Partners Advocates

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