credit risk mgmt ..CRM.ppt

8/14/2019 credit risk mgmt ..CRM.ppt

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Customer Relationship Management


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11-2

Information Systems

Retailing Strategy

Retail Market Strategy

Financial Strategy Site Location

Retail Locations

Customer Relationship

Management

Organizational Structure and

HR Management


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11-3

Customer Relationship Management

A business philosophy and set of strategies,

programs, and systems that focus on identifying

and building loyaltywith a retailers most

valuable customers.

What is loyalty? Is it the same thing as liking a

retailer or frequently patronizing a retailer?


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Customer Loyalty

Committed to purchasing merchandise

and services from a retailer

Resist efforts of competitors to attract the

loyal customer

Emotional attachment to retailer

Personal attention

Memorable positive experiences

Brand building communications programs


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11-5

Can Offering Discounts Achieve

Customer Loyalty?

No!Retail strategies like these can

be copied by competitors

These strategies encourage

customers to be always

looking for the best deal

rather than developing a

relationship with a retailer

McGraw-Hill Companies, Inc./Gary He, photographer


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11-6

CRM Process


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Information About Each Customer in the Database

History of purchases

Purchase date, price paid, SKUs bought, whether or not

the purchase was stimulated by a promotion

Customer contacts by retailer (touch points) --visits toweb site, inquires to call center, direct mail sent to

customer

Customer preferences

Descriptive information about customer Customers responses to marketing activities


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Approaches for Collecting

Customer Information

Need to connection contacts with a specific

customer identifier

Ask for identifying information Telephone number, name and address

Encourage use of frequent shopper cards

Link checking account number and/or thirdparty credit cards to customer


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11-9

Privacy Concerns

Control over Collection Do customers know what

information is being collected?

Do customers feel they can

decide on the amount and type ofinformation collected by retailers?

Control over Use

Do customers know how the

information will be used by theretailer?

Will the retailer share the

information with third parties?

Steve Cole/Getty Images


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11-10

Frequent Shopper Cards

Card is often squeezed out of wallet

Customers forget to bring it to the store

Might not even show it if in a hurry

(c) image100/PunchStock


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Heighten Concerns When Using

Electronic Channel

Information collected without

the awareness of customers

Collecting click stream data

using cookies

Similar to an invisible person

videotaping a customer as they

walk through a store

Stockbyte/Punchstock Images


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11-12

Customers Decision to

Offer Information

Balance benefits and risks

Discounts

Special TreatmentPersonal Attention

Disclosure of Information

Unwanted Sales Contacts

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11-13

Analyzing Customer Data

Data Miningtechnique used

to identify patterns in data.

Market Basket Analysis

Identifying Market Segments

Identifying Best CustomersRyan McVay/Getty Images

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Market Basket Analysis

Data analysis focusing onthe composition of the

customers market basket

what items are bought

during a single shopping

occasion

Uses:

-Adjacencies for displaying merchandise

-Joint promotions

Burke/Triolo Productions/Getty Images

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Market Basket Analysis Taught Wal-Mart to Change!

Product Placed NearBananas cornflakes, produce

Kleenex paper goods, cold medicineMeasuring spoons housewares, Crisco shortening

Flashlights hardware, Halloween costumes

Little Debbie snack cakes coffee

Bug spray hunting gear

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Identifying Best Customers

Estimating Lifetime Value

Based on assumptions that the

customers future purchase behaviorswill be the same as they have been inthe past

Classifying Customers by recency,

frequency, and monetary value ofpurchases (RFM Analysis)(c) Brand X Pictures/PunchStock

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Which Customer Probably Has the

Greatest Lifetime Value

Purchases Over Last 10 Weeks

1 2 3 4 5 6 7 8 9 10

Jack $20 $20 $20 $20 $20 $20 $20 $20 $20 $20

Jill $210 $0 $0 $0 $0 $0 $0 $0 $0 $0

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Customer Pyramid

Platinum

Best

Most loyal

Least price sensitive

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11-19

Customer Pyramid

Gold

Next bestNot as loyal

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11-20

Customer Pyramid

Iron

Doesnt deserve

much attention

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11-21

Customer Pyramid

Lead

Demands attentionMay have

negative value

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CRM Programs

Retailing Best Customers

Converting Good

Customers to Best

Customers

Getting Rid of

Unprofitable

Customers

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Customer Retention Programs

Frequent Shopper Programs

Special Customer Services

Personalization1-to1 Retailing

Community

Royalty-Free/CORBIS

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El t i Eff ti


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Elements in Effective

Frequent Shopper Programs

Tier Based on Customer Value

Offer Choices of Rewards

Non-monetary incentives

Reward all Transactions

Transparent and Simple

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11 25

Personalization

Hello, Barton Weitz

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Dealing with Unprofitable Customers

Offer less approaches

for dealing with these

customers

Charge customers for

extra services

demandedDon Farrall/Getty Images

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Implementing CRM Programs

Need systems, databases

Close coordination between departments

marketing, MIS, store operations, HR

Shift in orientation

Product Centric Customer Centric

Documents

credit risk mgmt ..CRM.ppt