Group Members

Sikandar kamal
Hassan sohail
Zia shahid
Shafqat ali

Customer Relationship Management

Process
Collecting customer data
Analyzing customer data
Identifying market segment

Customer relationship management is a

business philosophy, set of strategies,
programmers and systems that focus on
identifying and building loyalty of retailer's most
valued customer.

All customers are not equally profitable, and more

or less profitable customers need to be treated

differently
Retailers now concentrate on providing more value

to their best customers using targeted promotions

and services to increase their share- the percentage
of the customers purchases made from the retailer

What is loyalty?

Why retailers encourage

customer to became
loyal ?

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

Why retailers makes customer

loyal
Based on the philosophy that retailers can

increase their profitability by making customer

loyal.
Retailers can compete with market or survive
when they have loyal customers.
Retailers wants to retain their customer
because customer acquisition cost is 3 to 6
times more then customer retention cost.

Customer Relationship
Management Process
Customer relationship management process
converts customer data to customer loyalty
through four stages
1. Collecting customer data
2. Analyzing customer data and
identifying target market
3. Developing CRM program
4. Implementing CRM program

CRM Process Cycle

Collecting customer
data
First step in customer relationship

management process is collecting the

customer data.
Retailers or firms collect all data about their

customers because it is the foundation for

subsequent activities of customer relationship
management.

Customer data base

A good customer data base must contains

following information
Transactions -a complete 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 to web site, inquires to call center, direct
mail sent to customer

 Customers preferences
Descriptive information- about customer
Demographic and psychographic data
Response to marketing activities- to
marketing activities

Identifying
information
Constructing the data base for catalogue,

internet shoppers and customers who use

retailers credit cards for shopping is relatively
easy.
But for the in store customers and those who
use cash or third party credit card, building
data base is much difficult.

Approaches to
collecting data
There are three main approaches to collecting

data in store retailing channel

Asking the customer to identifying

information
Offering a frequent shopper card
Connecting internet purchases data with
store

1.Asking the customer to identifying information

Sales associates ask customers to identifying

information such their phone number, address

or other information
Limitations
1. Customers feels hesitation to provide
information
2. Sales associate might forget to ask the
information

2.Offering a frequent shopper card

These are loyalty cards that retailers provides

to their customers.
Benefits
1. Customers provide descriptive data
2. Customers motivated by loyalty cards
. Limitations
1. Customers miss the card or dont show when
in hurry

3.Connecting the internet data with store

This approach is applicable when a customer

purchases a product on internet and pay the

bill via his/her credit card and he also make a
purchase in store and pay via same credit
card.
Retailers can match the data and can record
it.

Privacy Concerns
Control over Collection
Do customers know what information is being
collected?
Do customers feel they can decide upon the
amount and type of information collected by
retailers?
Control over Use
Do customers know how the information will be
used by the retailer?
Will the retailer share the information with third
parties?

Analyzing customer
data

The next step in customer

relationship management
process is analyzing the
data and convert it into
the information. By using
this information retailers
can built loyalty program.

Approaches to data
analysis
1. Data mining

In data mining approach retailers sees the

pattern in the information or data.
Example
A DVD seller analyze that most of his customer
who buy DVDs are commuted to work by train.
He increase his sale 43% by advertising in
daytime and on train stations.

Approaches conti.
2. Market basket analysis
Market basket analysis is a specific type of data
analysis which creates a basket or bundle of the
products purchased for home during a single
shopping occasion.
This analysis often used to suggest where to
put
merchandise in an outlet.

Identifying market
segment
Traditionally data analysis focused on

identifying market segment who should be

targeting for customer relationship
management program.
Example
Eddie bauer

Identifying best
customers
Through data analysis retailers identify

market segment. They also identify best

customer who highly contribute in profit.
Customer life time value
Customer LTV is the expected contribution of
the customer in retailer profit for the entire
relationship between them.

Customer pyramid

Customer Pyramid
Platinum
Best
Most loyal
Least price
sensitive
80-20 rule:
80% of sales or profits come from
20% of the customers

11-26

Customer Pyramid
Gold
Next best
Not as loyal

11-27

Customer Pyramid

Iron
Doesnt deserve
as much attention

11-28

Customer Pyramid

Lead
Have

negative LTV
value
Lead out
11-29

RFM analysis
A RFM (recency, frequency and monetary)

Analysis often use in catalogue and direct

marketing channel.
It is a scheme to segmenting the customer
according to how recently they have made a
purchase and how frequently they made a
purchase and how much they have bought.