Module 5: Customer Relationship Management

3 priorities in customer journey excellence are..

- adopt journey-based approaches - correct areas where negative experiences are wide-spread - and deliver consistently

the role of marketing: identify customers, satisfy customers, retain Customers

1. Identify Customers: - understand customer wants and needs - identify whom to target and how to reach them 2. Satisfy Customers: - make the right product or service available to the right people at the right time - make everyone feel better off from the exchange 3. Retain customers: - give Customers a reason to keep coming back - find new opportunities to win their business

how do marketers know where to focus their efforts to derive maximum return?

Companies look at the total profit that can be gained from a relationship with the customer throughout the customer's lifetime to help make this determination. This view takes into account the costs incurred throughout the customer life cycle to acquire and retain customers

Establishing appropriate expectations in the minds customers is a function of the prepurchase communications the seller has with them.

- If you set the expectations too low, people will not buy the offering. - If you set the expectations too low, people will not buy the offering. But if you set the expectations too high, you run the risk that your buyers will be dissatisfied.

How does a customer relationship management (CRM) system benefit a customer?

A CRM allows an organization to customize the marketing and sales messages that a customer is given. This information is given by the customer, based on the data collected from their experience.

leads

Information about a potential customer

benefit: Collaborative

Work across teams and departments more effectively, including with suppliers and vendors

4. Retention

engaging an existing customer to keep them

CRM processes can loosely be divided into three categories: operational, analytical, and collaborative

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CRM is a tool you need to manage business relationships, business practices and business processes.

- CRM is a strategy - helps manage not only business contacts but also: Business Contacts * vendor relationships * internal sales activities * marketing teams (help team stay on task by using "automatic workflow rules")

two critical ways to improve customer satisfaction:

1. The first is to establish appropriate expectations in the minds of customers. 2. The second is to deliver on those expectations consistently.

All this information is gathered on a customer and then calculated into customer lifetime value using the following formula (CLV Formula):

CLV = (profit margin per customer x # of years customer is active) - cost of acquiring customer

what is Customer Equity?

Customer equity is the total combined customer lifetime values of all a company's customers. In other words, customer equity is the total value of all the expected purchases of all a company's customers minus the costs of acquiring and retaining those customers.

CRM software allow companies to track a variety of customer interactions, including how each customer or prospective customer relationship is progressing over time.

Many CRM packages also include sophisticated analytical tools to help marketing and sales analysts examine the data and find patterns and correlations that help them better anticipate and address customer needs (with the goal of strengthening each customer relationship).2 Finally, it is worth noting that CRM functions are collaborative and can be used to build more effective supplier and vendor relationships.

common saying in business is "underpromise and overdeliver."

In other words, set consumers' expectations lower, and then exceed those expectations to create delighted customers who are enthusiastic about your product

Technology plays a key role in modern CRM processes, providing a huge variety of useful tools, programs, and scripts to automate process and integrate CRM perspectives.

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The greater the customer equity, the more future revenue in the lifetime of a company's customers. This means that a company with higher customer equity can expect to gain greater profit from its customers on average than another company that is identical in all other characteristics

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The primary objective of CRM is the retention of current users

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Benefits of CRM

operational, analytical, collaborative

prospect

qualified and interested potential customer

nondisclosure agreements (NDAs)

signed documents when entering into a business relationship detailing what information cannot be disclosed about another company

cookies

small packet of information stored on your web browser to help a website keep track of your visits and activity

Most importantly, organizations are doing all of this to make customers happier. The upsides to this from the customer point of view are fairly significant: (CRM)

- Marketing/sales messages are individualized to be of interest to the consumer - Pricing is constantly evolved to match what the market believes is appropriate - Quality of products are constantly assessed and, if necessary, improved by on consumer behavior - Customer support assistance is integrated across a wide variety of media channels

what is Automatic workflow rules?

- automated actions and messages that are triggered by certain events . this ensures interactions with potential customers dont fall through the cracks. and saves you time from having to repeat the same steps over and over again.

A key benefit of CRM is enabling companies to be more responsive to (and retain) customers. The customer experiences more unified, relevant communication with the company. Marketing and sales can analyze the data collected to better fit their target customer needs.

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Because CRM relies on customer data—and specifically the effective use of internal data—it is important to discuss CRM systems in the context of marketing information and research

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Empowering employees to drop what they are doing to do something special for a customer can certainly delight customers and is the type of action illustrated in the scenario.

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For example, websites commonly use cookies, or little data files, to store information on a user's web browser. This has benefits for customers, such as storing the items you save in your online shopping cart for the next time you visit the company's website. It can also be used to track information about you and create behavioral profiles. Concerns about data privacy have led to laws requiring companies to obtain your consent before using cookies.

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what do CRM systems capture?

- CRM systems are designed to capture data across the customer life cycle, starting with the initial contact point and progressing through each conversation and interaction that moves a prospective customer toward a purchasing decision. - CRM systems also capture sales and spending data, and they enable analysts to project future spending patterns and lifetime value based on broader patterns in the customer data.

A clothing store uses a customer relationship management (CRM) system and notices that when one line of the clothing is purchased, customer retention is low. What is a benefit of CRM for this store? A clothing store uses a customer relationship management (CRM) system and notices that when one line of the clothing is purchased, customer retention is low. What is a benefit of CRM for this store?

- Customer satisfaction can be improved by tracking buyer behavior. By identifying the customer's that are not being retained by the company, it can work on the supply chain with their vendor to help improve customer satisfaction.

Customer Retention is Key

- Interactions between an organization and its past, current, and prospective customers is critical to success. While it delivers a wide range of benefits, the central focal point of customer relationship management (CRM) is customer retention. - Customer retention is a simple concept. When customer needs are being met, and expectations are exceed, it is highly likely that current customers will remain customers, or be retained. The rate at which an organization can retain its customer base can be a key source of competitive advantage.

What is CRM (customer relationship management)?

- a way to manage leads, people interested in your business, and your existing customers in the most efficient way possible to extract the most value. (value=money) - refers to a system companies use to analyze customer interactions and manage data throughout the customer life cycle.

CRM systems are powerful software systems that serve several essential functions for marketing, sales, and account management. Organizations use them to

- capture internal data about customers and customer interactions and house these data in a central location; - provide business users with access to customer data to inform a variety of customer touch points and interactions; - conduct data analysis and generate insights about how to better meet the needs of target segments and individual customers; and - deliver a marketing mix tailored to the needs and interests of these target segments and individual customers

The promotional activities of an organization continue long after customer acquisition

- communication tactics that are meant to remind customers why they should continue purchasing a brands products (just as important as promoting to potential customers)

CRM goal:

- to improve business relationships with customers through: (1) customer retention and (2) customer acquisition - and when you're effectively able to manage your leads and your customers; * more leads end up being happy, paying customers * you build a loyal customer base that become your loyal advocate * and customers have a better experience with your company.

Problems that having a CRM will solve:

- you feel like you're swimming in information and can't keep track of it. - you're losing business because leads are falling through the cracks. - you have no idea if your marketing dollars are helping or hurting your business. - you waste time trying to find emails from a customer. - you're missing appointments and not following through on all of your tasks. - you have no idea if your business is growing or how it's growing. - your customers have to repeat themselves everytime they call your business. - each person on your sales team has a different sales process. - you lost a hot lead or a list of leads when an employee left your company. - there's no consistency in email messaging sent to your leads - you have no idea if your Google Adwords campaigns are profitable because most sales closed offline - your sales team has no way of prioritizing their tasks lists - you don't have a way of collaborating as a team.

To help protect consumer privacy, the Federal Trade Commission recommends four fair information practice principles. These are guidelines that represent widely accepted concepts concerning fair information practice in an electronic marketplace:

1. Notice: Consumers should be given notice of a company's information practices before any personal information is collected from them. 2. Choice: Consumers should be given options to control how their data is used by opting in or opting out. 3. Access: Consumer should have the ability to view the data collected and verify and contest its accuracy. 4. Security: Information collectors should ensure that the data they collect are accurate and secure. They can improve the integrity of data by cross-referencing it with only reputable databases and by providing access for the consumer to verify it. Information collectors can keep their data secure by protecting against both internal and external security threats. They can limit access within their company to only necessary employees to protect against internal threats, and they can use encryption and other computer-based security systems to stop outside threats.

Steps in the Customer Life Cycle

1. Reach 2. Acquisition 3. Conversion 4. Retention 5. Loyalty and Advocacy

There are three drivers to customer equity:

1. Value Equity: how the customer assesses the value of the product or service provided by the company 2. Brand Equity: how the customer assesses the value of the brand, above its objective value 3. Retention Equity: the tendency of the customer to stick with the brand, even when it is priced higher than an otherwise equal product.

Companies calculate customer lifetime value using the following information:

1. average sales revenue per customer, 2. average profit margin contribution per customer, 3. average number of sales annually by customer, 4. number of years and months the average customer remains active, and 5. cost of acquiring a new customer.

5 benefits of using a CRM:

1. better data organization - just import your list of leads, contacts, and customers into your CRM and start tracking sales and engagement with leads and customers. 2. Enhanced communication: - automatic reminders & email templates: make it easy for your sales team to follow up with outstanding proposals by scheduling automatic reminders and creating a set of email templates. 3. Shared Information - you can easily share information by giving your sales team access through the same resources through selective data sharing. 4. Catch All Leads - create web to lead forms and embedd them into your contact pages on your website. the information that is captured will automatically be pushed to your CRM and assigned to the appropriate sales person. which allows for quick follow-ups so you don't lose sales. 5. Know Your Numbers - you can schedule weekly email reports so each of your sales team members know how close they are to achieving their monthly, quarterly, and annual goals.

3 keys of Customer satisfaction

1. customer journey consistency - every customer touch points must be superior and consistent during each interaction 2. Emotional consistency - consistency driven emotional connection is the key to customer loyalty and trust, positive customer experience emotions encompass in a feeling of trust are the biggest drivers of satisfaction and exceptional brand experience. 3. Communication Consistency: a combination of promises made and promises kept drive the brand. also, it is important to Proactively design communication messages that focus on consistent delivery.

the role of marketing

1. identify customers: - understand customers wants & needs - identify who to target & how to reach them 2. Satisfy customers: - make the right product or service available to the right people at the right time - make everyone feel better off from the exchange 3. Retain Customers: - Give customers a reason to keep coming back - find new opportunities to win their business

The Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act, passed in 2003, establishes federal standards for commercial email.

Consumers must be given the opportunity to opt out of receiving future solicitations. The act covers all commercial messages, which the law defines as "any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service." This includes email that promotes content on commercial websites. The law makes no exception for business-to-business email.

One customer satisfaction strategy that grew out of Carlson's idea of delighting customers is to empower customer-facing personnel

Customer-facing personnel are employees that meet and interact with customers. In a hotel, this might include desk clerks, housekeepers, bellman, and other staff.

Benefit: Analytical

Definition: CRM has a substantial data-oriented side as well, particularly with the rise of useful CRM data gathering tools. Utilizing the benefits of big data (where available), organizations can accurately asses who their core consumers are, how they behave, what they're looking for, and how satisfied they are Use data to understand who the company's core customers are, how they behave, what they are looking for, and how satisfied they are

downsides of CRM

Of course, there are downsides as well. Ongoing discussions regarding privacy relative to the observation of consumer behavior are still relevant concerns for modern consumers. There is also a paradox in all of this. As organizations optimize for user tastes based on data, it is the largest data points that will drive changes. As a result, while some consumers will benefit (presumably the majority), the rest of the users are at risk of being ignored entirely.

B2B Sales

Sales to another company that consumes the product or services as part of operating the business or uses the product in the assembly of the final product it sells to consumers

consumer retention

The act of keeping customers consistently consuming products offered by an organization.

The concept of CLV also includes less tangible benefits of long-term customers

They are more engaged with the brand, particularly on social media, which can provide valuable feedback for marketers. Loyal customers are also more likely to refer other customers.

Another customer satisfaction strategy involves offering customers warranties and guarantees.

Warranties serve as an agreement that the product will perform as promised or that some form of restitution will be made to the customer. Customers who are risk-averse find warranties reassuring

2. Acquisition

bringing a prospective customer into a sphere of influence

CRM Challenges

consumer perspective: - concerns about privacy are one of the greatest challenges - largest data points that drive changes (most will benefit but some will be ignored) Organizational perspective: - to be effective, CRM must be adopted by all areas of the business that come in contact with customers. - must be integrated with normal workflows and compatible with existing technological support - employees must be trained on how to use the system to capture & use the right data - employees must understand the technology they are being asked to use. - Data must also be securely protected to meet legal requirements and protect against the reputational risk of a data breach.

Companies often attempt to gain more customers and increase revenue by improving customer equity. Customer equity is influenced by improving:

customer services, the value or desirability of the brand, or the trust of the customer toward the brand.

benefit: Operational

definition: These include the primary activities of CRM work. Operational CRM relates to integrating sales, marketing, and customer support to ensure that customer satisfaction is as high as possible. example: Ensure customer satisfaction by integrating sales, marketing, and customer support

Permission marketing

expectation that marketers will ask for permission to sell or to offer potential customers marketing messages

1. Reach

getting a prospective customer's attention

Customer relationship management (CRM)

is a combination of policies, processes, and strategies implemented by a company that unify its customer interaction and provide a mechanism for tracking customer information

Customer lifetime value (CLV)

known as CLV, predicts how much profit is associated with a customer during the course of their lifetime relationship with a company. - In other words, the lifetime value of a customer refers to calculating the costs of both acquiring and retaining a customer against all purchases made over the lifetime of the customer relationship

customer satisfaction

measure of how products or services delivered by a company meet or exceed customer expectations

customer life cycle

the steps in the customer relationship with a company, from initial contact to loyalty - incorporate data on customer satisfaction & support - can recommend an analytical approach and provide research tools to complete the analysis. - Many CRM systems have mechanisms for reporting results, orchestrating plans for taking action on the results, and even evaluating the effectiveness of those actions.

A customer's life cycle includes the customer's entire interaction with the company or brand: a path from the first contact to loyalty.

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CLV can help marketers assess the effectiveness of marketing efforts and the value of specific customer segments.

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CRM benefits companies by enabling more unified customer interactions, supporting the process of converting leads to customers, and providing data for marketing and sales insights.

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CRM helps sales and marketing organize data about leads, contacts, and customers. Better customer engagement leads to customer retention.

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CRM is a combination of policies, processes, and strategies implemented by a company that unify its customer interaction and provide a mechanism for tracking customer information.

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CRM software is used to support these processes, storing information on current, past, and prospective customers. Information in the system can be accessed and entered by employees in different departments such as sales, marketing, customer service, training, professional development, performance management, human resource development, and compensation

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Companies that collect data on their customers should be aware of consumer concerns for privacy and data security. Marketers can build trust with target customers by setting standards that are higher than the legal requirements.

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Customer lifetime value is one measure that marketing may use to determine the profitability and effectiveness of marketing campaigns.

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Customer relationship management (CRM) is a central process to organizational strategy in which the organization builds connections with users through communication and data

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Customer relationship management (CRM) is a term applied to processes implemented by a company to handle its contact with leads, prospects, and customers. As a business strategy, CRM puts the emphasis on meeting the needs of the customer.

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Customer relationship management requires an understanding of how (and how often) customers want to be contacted. An email newsletter might be seen as a value-add by a customer, or as a nuisance.

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Customer satisfaction is a critical component of retention for customer relationship management.

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Generally speaking, consumers benefit from CRM through better understanding of consumer needs, improved targeting, and customer support being offered across a wide variety of channels

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Many companies confuse having information about their customers with having a relationship with them.

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Many companies confuse having information about their customers with having a relationship with them. Information might constitute customer intelligence, but it is not a relationship. Relationships are built on common interests and an exchange of value. Both parties need to see that value, or it is not a relationship.

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Marketers should consider the type and frequency of contact desired by their customers to ensure their communications are appropriate and do not violate legal or ethical limits.

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Marketing is an effective way to cultivate and maintain an ongoing relationship with high-value customers.

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One challenge is ensuring consumer privacy and security given the increased collection of data. It may also be a challenge for organizations to integrate a CRM system into all relevant departments and workflows

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Privacy policies and privacy laws apply to both business customers and individual consumers. Many business buyers require vendors to sign nondisclosure agreements (NDAs) that specify what information is proprietary, or owned by the customer, and how, if at all, the seller can use that information

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Setting the customer's expectations at or slightly lower than the expected experience will create customer satisfaction.

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a company with higher customer equity is more valuable than one without it. Customer equity takes into account customer loyalty and extrapolates it over the lifetime of the customers.

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customers usually have a relatively low customer lifetime value, while frequent, loyal, repeat customers typically have a high customer lifetime value

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5. Loyalty & Advocacy

turning a customer into an advocate for the company

3. Conversion

turning a prospect into a paying customer