Chapter 9: Customer Relationship Marketing

Question 1

Define Customer Relationship

Answer 1

Goal: Maximize the value that is attributed to that customer relationship. Customer Relationships finds ways to sell better, earn profit, and finding ways to interact.

Question 2

Define Customer Relationship Management (CRM)

Answer 2

Interaction with your customers over a long term period, and not just tracking transactions over a short term period

• More about the relationship you build with customers

Question 3

Define Customer Relationship Marketing

Answer 3

Acquiring the hardware and software to create a database or system to gather and track customer information

Question 4

Define the Customer Relationship Management Cycle

Answer 4

Relationship building tool (3 stages). The cycle must be complete to implement measures of customer satisfaction.

Question 5

Define Stage 1 of the CRM Cycle

Answer 5

Requires that companies understand what they have to offer to their customers and the marketing and market research tools that can help them use the 4 P’s.

• Based off market research
• Creation of the offering
• Collecting as much info as possible
• Research through the 4 P’s
• The development of the most effective marketing mix

Question 6

Define Stage 2 of the CRM Cycle

Answer 6

Focuses on the use of technology to systemically identify customers, gather information on them, and store that information

• Technology tools can now be unleashed to seek out more detailed information on the customer

Question 7

Define Data Mining

Answer 7

An analytical process that compiles actionable data on the purchase habits of a companies current and potential customers

• Used to find hidden patterns and relationships in the customer data stored in warehouse

Question 8

Define Customer-Centric

Answer 8

Customize products and services based on the data gathered through information

• Focusing on what satisfies

Question 9

The Importance of Interaction

Answer 9

The interaction between customers and the organization is the foundation on which a CRM System is built.

• Can learn about the expectations of their customers
• Generate and manage knowledge
• Find out information about customers (their old past)
• Try and understand preferences, etc.

Question 10

Define Touch Points

Answer 10

All possible areas of a business where customers have contact with that business and data that might be gathered. Data gathered at these touch points provide information that affects points inside the company (extended warranty purchasers, cost control models, etc.)

Question 11

Define Capture Customer Data

Answer 11

The issue is not how much data to collect, but rather what data to collect and how to use it effectively for relationship management

• Store visits, website visits, phone conversations, etc.

Question 12

Define Data Warehouse

Answer 12

A central repository of data collected by an organization. The core of the data warehouse is the data base; the collection of data built through response and compiled lists

Question 13

Define Identifying the Best Customers

Answer 13

To be successful, companies need to use CRM to identify those customers that are valued customers (most profitable), high potential, etc.

Question 14

Define Customer Segmentation

Answer 14

Is the process of breaking large groups of customers into smaller groups. This type of analysis generates a profile, or picture, of the customers’ similar demographic, geographic; its focus particularly on the best customers

• The ability to reasonable predict future customer behaviour gives marketers a significant competitive advantage

Question 15

Define Stage 3 of the CRM Cycle

Answer 15

Requires that companies look at ways to use the information about customers to retain them in the long term by satisfying their needs.

• Maintaining long term relationships with customers

Question 16

How can CRM Fail

Answer 16

A CRM System must have the ability to move beyond just finding those loyal customers. Companies must leverage the information to build two-sided relationships

• Focusing too much on transactions and not on other aspects of the customer’s life
• Relationships cannot be solely about achieving loyalty, and companies need to find ways to retain their customers

Question 17

Define Leveraging Customer Identification

Answer 17

Data mining identifies the most profitable customers and prospects. Managers can then design tailored marketing strategies to best appeal to the identified segments

• Leverage the customer information to facilitate enhanced relationships with customers
• Design Tailored Marketing Strategies best appeal to the identified Segment

Question 18

Define Campaign Management

Answer 18

Refers to developing product or service offers customized for the appropriate customer segment and then pricing and communicating these offerings to enhance customer relationships

Question 19

Define Retaining Loyal Customers

Answer 19

Building long-term relationships that are mutually beneficial

• After a company has identified its best customers, it should make every effort to maintain and increase their loyalty

Question 20

Define Cross Selling other Products and Services

Answer 20

Use the database to math product profiles with customer profiles to cross-sell

• Online companies use product and customer profiling to reveal cross-selling opportunities while a customer is surfing their site

Question 21

Define Targeted Communications

Answer 21

Customers can also be segmented into frequent users, moderate users, and heavy users. A segmented communications strategy can then be developed depending on the customer’s segment

Question 22

Define Reinforcing

Answer 22

By thanking customers for their purchases and telling customers they are important, marketers can help cement a long-term, profitable relationship (reassurance)

Question 23

Define a Marketing Database

Answer 23

Can be used to identify new customers. Because a company using a marketing database already has a profile of its best customers, it can easily use the results of modelling to profile potential customers