ppt 11-1 5 th edition. ppt 11-2 mcgraw-hill/irwin levy/weitz: retailing management, 5/e copyright ©...
TRANSCRIPT
PPT 11-2McGraw-Hill/IrwinLevy/Weitz: Retailing Management, 5/e Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
Customer Relationship Customer Relationship ManagementManagement
Chapter 11Chapter 11
PPT 11-3
Information Systems
Retailing Strategy
Retail Market Strategy
Financial Strategy Site Location
Retail Locations Organizational Structure and HR Management
Customer RelationshipManagement
PPT 11-4
Customer Relationship Management
A business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty with a retailer’s most valuable customers.
What is loyalty? Is it the same thing as liking a retailer or frequently patronizing a retailer?
PPT 11-5
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
PPT 11-7
Collecting Customer Data
• Types of Information in the Customer Database
• Approaches for Collecting Information
• Privacy Concerns
PPT 11-8
Information About Each Customer in the Data Base
• 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
• Customer preferences
• Descriptive information about customer
• Customer’s responses to promotions
PPT 11-9
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 third party credit cards to customer
PPT 11-10
Privacy Concerns
Control over Collection
• Do customers know what information is being collected?
• Do customers feel they can decide on 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?
PPT 11-11
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 theywalk through a store
PPT 11-12
Customer’s Decision to Offer Information
Balance benefits and risks
DiscountsSpecial TreatmentPersonal Attention
Disclosure of InformationUnwanted Sales Contacts
PPT 11-13
Consumer Protection Differences
United States
• Limited protection in specific areas
– Credit reporting
– Video rentals
– Banking
– Medical records
European Union
• Information only can only be collected for specific purposes
• Purpose must be disclosed to customer
• Information can only be used for specific purpose
• Information can not be exported to countries with less stringent regulations
PPT 11-14
FTC Guideline for Fair Information Practices
• Notice and awareness
– comprehensive statement about information storage, manipulation, and dissemination
• Choice/consent
– Opt-in and opt-out options
• Access/participation
– Customer able to confirm accuracy
• Integrity/security
– Controls for theft and tampering
• Enforcement/redress
– Mechanism to insure compliance
PPT 11-16
Analyzing Customer Data
Data Mining – technique used to identify patterns in data. Expl :DVD Player
Market Basket Analysis
Identifying Market Segments
Identifying Best Customers
PPT 11-17
Market Basket Analysis
Data analysis focusing on the composition of the customer’s market basket – what items are bought at the same time.
Uses:
-Adjacencies for displaying merchandise
-Joint promotions
PPT 11-18
Identifying Best Customers
• Estimating Lifetime Value
• Classifying Customers by recency, frequency, and monetary value of purchases (RFM Analysis)
PPT 11-19
Which Customer Probably Has the Greatest Lifetime Value
Purchases Over Last 10 Weeks
1 2 3 4 5 6 7 8 9 10Jack $20 $20 $20 $20 $20 $20 $20 $20 $20 $20Jill $210 $0 $0 $0 $0 $0 $0 $0 $0 $0
PPT 11-26
Illustration of RFM Application
A catalog retailer is deciding which group of customers to send a catalog.. Based on experience and an RFM analysis of customer database:
•Average order size for customers in cell - $40
•Contribution margin – 50%
•Response rate – 5%
•Cost of catalog and mailing -$.75
Will the retailer make a profit mailing to this RFM segment?
PPT 11-27
Illustration of RFM Application
A catalog retailer is deciding which group of customers to send a catalog.. Based on experience and an RFM analysis of customer database:
•Average order size for customers in cell - $40
•Contribution margin – 50%
•Response rate – 5%
•Cost of catalog and mailing -$.75
Will the retailer make a profit mailing to this RFM segment?
$20.00 contribution x .05 response rate - $.75 cost
= $.25 profit per catalog mailed
PPT 11-28
CRM Programs
Retailing Best Customers
Converting Good Customers to Best Customers
Getting Rid of Unprofitable Customers
PPT 11-29
Customer Retention Programs
• Frequent Shopper Programs
• Special Customer Services
• Personalization
– 1-to1 Retailing
• Community
PPT 11-31
Elements in EffectiveFrequent Shopper Programs
• Tier Based on Customer Value
• Offer Choices of Rewards
– Non-monetary incentives
• Reward all Transactions
• Transparent and Simple
PPT 11-32
Issues with Effective Frequent Shopper Programs
• Expense
• Difficulty in Making Changes
• Impact on Loyalty Questionable
• Easily Duplicated – Difficult to Gain Competitive Advantage
– Need to offer “invisible” benefits
PPT 11-35
Dealing with Unprofitable Customers
• Offer less approaches for dealing with these customers
• Charge customers for extra services demanded