Chapter 5

Customer Relationship Management (CRM) System

-A comprehensive business model for increasing revenues and profits by focusing on customers. -No one department owns CRM. -Must have the support of senior management. -Cuts across the entire organization but most used by marketing, sales, and customer service. -Drives the firm to be customer-centric.

3 Objectives of CRM

-Customer Acquisition -Customer Retention -Customer Profitability

Big data helps marketing managers to identify

-Experiences of customers in the purchasing process. -Customer's touchpoints. -How customers interact and experience different products and services.

Successful steps for the use of touchpoints

-Identify -Develop -Determine -Develop

Levels of Granularity of Personalization Achievable with Marketing Analytics

-Individual-level personalization -segment-level personalization -mass personalization

Marketing Planning Phase

-Marketing planning phase uses the key variables of the output from the knowledge discovery phase. -Develops the marketing mix strategy. -CRM supports the situational analysis, market research, strategy development, implementation, and measurement.

Customer Orientation Steps

-Place the customer at the core -Instill a firm-wide focus on understanding customers -Make sure that all employees understand the customer -Align system capabilities internally

Two categories of big data

-Structured: logical organization, easy to categorize, numeric or text limited to certain input values -Unstructured: no specific organizational structure, rich source of customer insights, social media posts and sales force interactions

Three factors of customer loyalty

-high satisfaction -high level of perceived value -strong relationship with the provider and the brand

Goals of a dashboard

1.Diagnostic insight 2.Predictive foresight which is more important

Four characteristics of big data

1.Volume: the amount of data produced in bytes 2.Velocity: the frequency and speed of analysis 3.Variety: different types of data 4.Veracity: reliability and validity

Customer Acquisition

Acquisition of the right customers based on known or learned characteristics that will drive growth and increase margins.

Benefits of a Marketing Dashboard

Aligns marketing objectives, financial objectives, and firm strategy based on the selected dashboard metrics. • Enhances alignment within the marketing function and also clarifies marketing's relationships with other organizational functions. Cross-functional alignment contributes greatly to a shared spirit for organizational success • Portrays data in a user-friendly manner. Creates a direct, understandable link between marketing initiatives and financial results. • Fosters a learning organization that values fact-based, logical decision making about allocation of marketing resources to achieve desired organizational results. • Creates organizational transparency about marketing's goals, operations, and performance, increasing marketing's credibility and trust by organizational leadership and other areas of the firm.

Customer Success Concept: customer empowerment

Customer Empowerment is the extent to which a firm provides ways for the customer to connect and shape the nature of those encounters and ways to connect and collaborate with each other.

Customer Success Concept: customer experience management

Customer experience management refers to how the firm ensures the customer has an excellent experience at every encounter.

Customer Loyalty

Customer loyalty means the degree to which the individual will resist switching, or defecting, from one offering to another.

Customer Satisfaction

Customer satisfaction means that the offering meets or exceeds the customer's expectations.

Customer Success Concept: co-creation

Customer value co-creation means customers and providers combine forces to co-create offerings of value.

Diagnostic analytics

Diagnostic analytics uses data to explore relationships between different marketing factors that influence the firm's performance. •Example: Advertising frequency, ad placement or product pricing that the firm can control can influence sales. Diagnostic analytics uses linear regression. •Example: How do the number of conversations in an online forum about a new TV show impact ratings?

Customer Profitability

Increased customer margins while offering the right products at the right time.

Customer Retention

Retention of satisfied and loyal profitable customers and channels lead to long- term growth and profits.

Customer information raises ethical and legal issues regarding privacy (T/F)

True

Sentiment analysis

allows better understanding of unstructured data for the general attitude contained in a message.

Non-interactive touchpoints

are static such as direct mail or website data entry form.

Interactive touchpoints

are two-way and have direct interface between customers and the sales force, telemarketer, customer service rep, or interactive website.

Data Warehouse

contains all information about touchpoints and transforms it into useful information.

Marketing dashboard

is a comprehensive system providing managers with up-to-the minute information necessary to run their operation.

Content filtering

looks at a customer's past preferences to make new recommendations.

Collaborative filtering

looks at similar customers and their preferences to make recommendations.

An effective dashboard is _________, not _______. It changes as the organization changes.

organic, static

Attribution

pertains to how to give credit to different elements of the marketing mix.

Customer interaction

phase is the implementation of the customer strategies and programs. Includes personal selling and other customer-directed interactions aimed at touchpoints.

Customer Touchpoints

point-of-sale systems, call-center files, Internet access, direct selling contacts, other customer contact.

Database Marketing

the creation of lists to reach segments.

Big Data

the every-increasing quantity and complexity of data being continuously produced by technological sources such as laptops, smartphones, and other smart devices

Predictive foresight

uses diagnostic insights for forecasting.

Data mining

uses massive amounts of data collected through CRM to develop segments and micro-segments.

Analysis and Refinement

where organizational learning takes place.

Marketing Analytics

•A set of methods facilitated by technology that utilize individual-level and market-level data to identify and communicate meaningful patters within the data for the purpose of improving marketing-related decisions.

Big Data Sources

•Business systems. •Social media platforms. •Internet-connected devices. •Mobile apps. •Commercial entities. •Government entities.

Data from Business Sytems

•CRM systems are often the central hub of data and can integrate with other applications. •Allows a holistic view of the customer. •Point of sales systems and online transaction data can be tied to other customer information. •Processing systems help determine a customer's relative value and which offerings would appeal to the customer. •Web-related activity: Every action of a customer is captured in a web log. Clickstream data shows the sequence of mouse clicks a customer used.

Descriptive analytics

•Descriptive analytics uses data to provide summary insights. •Raw data is transformed into measurements. •Often presented in a visual format like histograms or pie charts. •Appropriate first step before more complex and expensive analyses.

Types of marketing analytics

•Descriptive. •Diagnostic. •Predictive. •Prescriptive.

Predictive analytics

•Predictive analytics utilizes data to make predictions about future marketing outcomes of interest. •Some use historical data to extrapolate into the future. •Others make predictions between a set of factors and an outcome of influencing factors. Example: American Express looks at loyalty indicators to proactively contact potential at-risk customers

Prescriptive analytics

•Prescriptive analytics involves determining the optimal level of marketing relevant factors for a specific context by considering how adjusting their levels in varying ways will impact different marketing outcomes. •Most advanced and costly; draws on the other three approaches. "What if" questions allows the firm to evaluate the value of different decisions

Marketing analyst

•is a highly skilled expert who may be required for complex data.

Increased personalization

•is the ability to provide products, services, and customer experiences based on an understanding the characteristics of different customers and of what they value.

Diagnostic insight

•looks at what happened and tries to know why.