Chapter 1

Customer management (CM)
- Overview -
1. Scope and challenge of customer management Basics

2. Fundamental concepts of CM
3. Customer analysis (prospects) The customer

4. Transaction initiation
5. Relationship management
management
process
6. Organizing for CM Support functions

7. IT support for CM
8. Controlling of CM
Customer Management – Dr. Isabelle | S.

Hillebrandt 11
- Overview -
1. Scope and challenge of customer management Basics

2. Fundamental concepts of CM
3. Customer analysis (prospects) The customer

4. Transaction initiation
5. Relationship management
management
process
6. Organizing for CM Support functions

7. IT support for CM
8. Controlling of CM
Case Study Loyalty

Design Thinking Practical
Guest Lecture Applications
Chapter 1
1. Scope and challenge of customer management
1.1. Customers as focal element of marketing

1.1.1 Financial performance, market position and customers
1.1.2 Marketing and customers
1.1.3 Customers as resources
1.2. Relationship marketing

1.2.1 A company’s customer base
1.2.2 The relevance of relationship marketing
1.2.3 Relationships and motives to enter them
1.2.4 Relationship marketing
1.2.5 A process model of relationship marketing
1.3. CRM as the IT component of relationship marketing

1.3.1 Defining Customer Relationship Management (CRM)
1.3.2 Levels and challenges of CRM
Customer Management – Dr. Isabelle Hillebra

ndt
| S. 13
Chapter
1
Customers
 Companies may have different types of customers

 Some companies serve only one type of customer
 Other companies need to manage different customer types at once
Customers
Governments and public auth.

Commercial businesses
1 2 3Institutions
4 Consumers

Hillebrandt 14
1 Commercial business customers
Trade Market
rvices to include into or support, directly or indirectly, production of other goods and services (i.e. value creation)
Retailers and wholesalers who
purchase goods for resale to
ng parts or complete products others.
es
Examples:
• dealerships of agricultural
machinery, insecticides etc.
• pharmaceutical wholesalers
selling medicaments
• office supply wholesalers
• consumer goods retailers
(Metro, Rewe, Carrefour,
Auchan, Tesco, WalMart
etc.)
Note: the word “reseller” is often used
to describe the wholesalers and retailers
Chapter
1
1 Commercial business customers
Industrial Market Trade Market
Bosch supplying parts to BMW Lidl and Edeka reselling Haribo

Hillebrandt 16
1 Example: Schwan STABILO
Sales of:
- Eyeliners and other cosmetics products to
industrial buyers (e.g. L‘Oréal, Avon,
Dior)
 direct sale of products to OEMs
- Highlighters and other writing instruments to

companies in the office supply category
 sale to office supply wholesalers and
retailers (stationary & distance
order)
- Highlighters and other writing instruments to final

customers
 sale to different types of intermediaries
2 Government Organizations
Include domestic units of federal, state, local and foreign governments

Bundeswehr buys products to provide federal defense service
Bundeswehr buys consulting services to improve purchasing skills
Federal construction authority buys exterior aluminium construction
Bundesministerium für Verkehr , Berlin

Alumin.-Fassadenkonstruktionen in 2-schaliger Ausführung als Schallschutz- und
Energiesparfassade, mit eingebauten Lüftungselementen und vorgeblendeten
Natursteinelementen in den Brüstungsbereichen
Auftragssumme Metallbauarbeiten
ca. € 5.500.000,--
Ausführende Metallbaufirma :
Fenster Keller , Neuenstein
Chapter
1
3 Institutions
Includes a wide variety of organizations, both public and private,

such as
- hospitals,
- churches,
- universities,
- museums, and
- not-for-profit agencies.

Hillebrandt 19
The importance of business markets
There are two aspects of importance:
1. Volume of business (exchanges):
These markets are 3-4 times the volume of consumer markets
2. Impact on economic development:
Innovation mainly takes place in business markets

4 Consumers
As consumers, we are typically customers of

- retailers (e.g. Edeka, Rewe, Tesco, WalMart, Auchan, Amazon)
- service providers (e.g. banks, airlines, insurance companies)
- industrial companies with direct sales (e.g. adidas / outlet sales)
On most consumer markets, anonymity characterises customers.
A main challenge for companies is to collect information about

customers and their needs / wishes, e.g. through market research,
loyalty programs, or call centers.
Chapter 1




Hillebrandt 22
1. Scope and challenge of customer
management
Financial performance is the most important firm objective
ny objectives, but one of them is fundamental and can‘t be compromised:

Financial
Performance
Resource advantage
Competitive position
matrix
Value produced for
customer
theory
(Hunt 2000)
(effectiveness)
Lower P Higher
a
ri
t
y
Market position
Lower
Indeterminate Competitive Competitive

position advantage advantage
Co
P
Parity
st Competitive Competitive
disadvantage a advantage
pos
rit
itio y
n p
(e o
ffi si
- ti
ci o
en n
cy
)
Higher
Competitive Competitive Indeterminate

disadvantage disadvantage position

Hillebrandt 23
management
Compulsory reading: Resource-Advantage-Theory

Hillebrandt 24
management
Financial performance depends on two dimensions
Competi Value produced for customer

tive
(effectiveness)
position
matrix Lower Parity Higher
(Hunt 2000)
Lower
Indetermin Competi Competit

ate tive ive
C position advanta advanta
o ge ge
st
Parity
p Competiti Pari Competit

ve ty ive
o
disadvant posit advanta
si age ge
ion
ti
o Competiti Competiti Indetermin
Higher
n ve ve ate
disadvant disadvant position
(e age age
ffi
-
ci
en
c
y)
management
Customer Management – Dr. Isabelle | S. 24

Hillebrandt
Value dimension:
How much value (product, brand, service etc.) does a firm create in the eyes of its
Has an impact on purchase, willingness-to-pay, loyalty, recommendations, etc.
Cost dimension:
What is the firm‘s cost situation (wages, raw materials, production, logistics etc.)?
management
Financial performance depends on two dimensions
Competitive Value produced for customer

position matrix
(Hunt 2000)
(effectiveness)
Lower Parity High
er
Lower
Indeterminate Competitive Competitive

position advantage advantage
Cost
itive
position Parit
Parity
Compet
(efficienc Competitive
disadvanta y advantage
y) ge positi
on ntag
e

Hillebrandt 25
management
Competitiv Competitive
Higher
Indeterminate
e disadva
position
disadvanta
ge

Hillebrandt 26
Market position depends on resources and capabilities
Financial
Performance
Competi Value produced for customer

tive
(effectiveness)
position
matrix Lower Parity Higher
(Hunt 2000)
Lower
Indetermin Competi Competit
Market position
ate tive ive
C position advanta advanta
o ge ge
st
Parity
p Competiti Pari Competit

o ve ty ive
disadvant posit advanta
si
age ion ge
ti
o Competiti Competiti Indetermin
Higher
n ve ve ate
Resources and
capabilitites
management
Customers as resources
What resources allow a company to occupy market positions of

competitive advantage?
Types of resources
 financial (e.g. cash resources, access to financial markets)

 physical (e.g. factory, building, IT equipment)
 legal (e.g. trademarks, licenses)
 human (e.g. the skills and knowledge of individual employees)
 organizational (e.g. processes, controls, policies, culture)
 informational (e.g. knowledge from customer intelligence)
 relational (e.g. relationships with suppliers and customers)

Hillebrandt 27
Resources for customer management
What resources are required for effective and efficient

customer management?
Types of resources
 financial (e.g. cash resources, access to financial markets)

 physical (e.g. factory, building, IT equipment)
 legal (e.g. trademarks, licenses, permissions) => DSGVO
.g. theskills and knowledge of individual employees)
 processes, controls, policies, culture) informational(e.g. knowledge from customer intellig
tional(e.g.

 relational (e.g. relationships with suppliers and customers)

management
Summary of the resources – position – performance link
 When firms have a comparative advantage (disadvantage) in

resources, they will occupy marketplace positions of competitive
advantage (disadvantage), as shown in the competitive position matrix.
 Marketplace positions of competitive advantage (disadvantage)
then result in superior (inferior) financial performance.
 Competition, then, is the constant struggle among firms for a comparative
advantage in resources that will yield marketplace positions of
competitive advantage, and, thereby, superior financial performance.
Customers can be valuable resources for a firm.

Customer management can be a valuable capability.

Hillebrandt 29
Chapter 1




Hillebrandt 30
management
Evolution of marketing‘s strategic focus
Product
• product-market-matrix
• Portfolio analysis Orientation today
time
50s/60s 70s/80s 90s 2000s
Customer Management – Dr. Isabelle Hillebrandt
Source:
management
Bruhn 2003
| S.31
management
"I will build a car for the great multitude. It will be large enough for the
family, but small enough for the individual to run and care for. It will be
constructed of the best materials, by the best men to be hired, after the
simplest designs that modern engineering can devise. "
Sept. 27th, 1908
15 million produced
90% world market

share in 1914
last car in 1927
Customer Management – Dr. Isabelle Hillebrandt | S. 32

management
• Market segmentation
• Positioning
Market
Orientation
Product
time
50s/60s 70s/80s 90s 2000s
management
Source: Bruhn 2003
| S. 33
management
Differentiation
based on
segmentation
Coke:
• Classic Coke, Diet Coke, Cherry Coke,
Vanilla Coke ... etc. (horizontal differentiation)
Volkswagen:
Fox, Polo, Golf, Passat, Sharan, Phaeton

(vertical differentiation)
Customer Management – Dr. Isabelle Hillebrandt | S. 34
management
• Quality
measurement Customer
• Customer satisfaction Orientation
indices
• Competitive analysis
• Value chain analysis
Competition
Orientation
• Positioning
Market
Orientation
Product
time
50s/60s 70s/80s 90s 2000s
management
Customer Management – Dr. Isabelle
Source: Bruhn | S. 35
Hillebrandt
2003
Source: https://www.theacsi.org/images/stories/images/economic/financial-indicator-2016-lg.jpg

Hillebrandt
Marketing and sales
e.g.
Goals
Marketing strategy Resources
Timing
Offer development
Offer
management
Offer maintenance
Customer acquisition
Customer
Customer care management
management
Offer management
Offer development Offer

management
Offer maintenance
Product offer Products, services, brands etc.

Offer
Communicative offer Information, advertsing etc.
Opening hours, sales offices, logistics

Distributive offer
platforms etc.
Price levels, price systems, terms of

Price offer
payment etc.

Hillebrandt 38
management
Customer management
Customer acquisition Customer

management
Customer care
Customers
Prospects / Identify, analyse, approach,

leads, newly won convince etc. potential
customers new customers
Existing customers Interact and satisfy

Hillebrandt 39
Some misconceptions about Customer Orientation…
“Customers are always right!”
“Customer requirements have to be implemented directly into products!”
“The Customer is the focus of every company

decision!”
management
• Calculation of
customer contribution
Customer
margins Value
• Customer value Orientation
determination
• Quality
measurement Customer
• Customer satisfaction Orientation
indices
• Competitive analysis
• Value chain analysis
Competition
Orientation
• Positioning
Market
Orientation
Product
70s 90s
• Portfolio analysis Orientation /80
s
50s/60s
management time
2000s ay
tod
Customer Management – Dr. Isabelle | S. 41
Hillebrandt Source: Bruhn
2003
Chapter 1




Hillebrandt 42
management
General framework: what is a resource?
Resource-based view of the firm:

a limited number
• of items the company controls fulfill the criteria to qualify as a valuable resource
Precious item,
very high value
Few items
Just another item,

very low value
Most items
Value for the firm

Items Resource

Hillebrandt 43
General framework: what is a resource?
Criterion Explanatio
n
The owner of an item can

Value creation or
• create value with it
protection
• or protect himself against damage
Rareness The item exists only a limited number of times
Inimitability The item is hard or impossible to imitate by

competitors
It is hard for competitors to find other types of items

Non-substitutability
that have a comparable positive effect for firm
performance
Examples: human resources, brands etc.
Criterion Sales person Brand
Value
Rareness
Inimitability
Non-
substitutabili
ty
Criterion Sales person
Value A good sales person will be able

to understand customer needs,
explain value propositions to
customers, and obtain orders
Rareness Good sales people who are
competent in explaining products
and skilled in interacting with
customers are often hard to find
Inimitability It may take years to train a new
sales person to become as
familiar with customers and
products and as well accepted by
customers as an older one
Non-
substitutabili If a competitor is unable to find a
ty sales person that is as skilled as
the one a firm ownes, then is there
another item (e.g. an online sales
channel) that could be as useful in
making porfitable sales?
Brand
A strong brand will attract

customers, make them loyal
and allow the firm to charge
higher prices than for
unbranded products
There are only few strong
global brands (Coke, IBM,
BMW etc.)
Building up a new brand that is

well known, has a clear and
positive image, loyal
customers etc. takes years
Instead of building up a strong

brand of his own, can a
competitor achieve a strong
market position through some
other item with a comparable
effect on profit (e.g. a
Can a customer be a valuable resource?
Discuss this with your neighbor for the example of

- BMW who is a very important customer to Bosch
- Edeka as a very important customer for Procter&Gamble

Hillebrandt 47
management
Resource test criteria – applied to customers
1. Value criterion:
With certain customers companies can create value or protect
themselves against threats

Hillebrandt 48
management
How certain customers can be important resources
• Sales (accumulated quantity over time, regular purchases)

Hillebrandt
management
• Sales (value – high price levels)
• Customer serves as reference (on website, brochures etc.)

Hillebrandt 50
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management
• Customer wins new additional customers (word-of-mouth)
• Customer possesses important information
• Customer participates in R&D or other processes
• Customer is global / going global
• ...

Hillebrandt 52
• Customer wins new additional customers (word-of-mouth)
• Customer possesses important information
• Customer participates in R&D or other processes
• Customer is global / going global
• ...
| S.
54
Resource test criteria – applied to customers
1. Value criterion:
With certain customers companies can create value or protect
themselves against threats
2. Rareness criterion:
Some customers are rare (large customers, innovative
customers etc.)
3. Inimitability criterion:
“Creating” a customer (i.e. building up a new important
customer) is extremely difficult, particularly large or unique
customers
4. Non-substitutability criterion:
Important customers cannot easily be replaced by an
equivalent item (another resource, e.g. a machine) that has the same
effect (i.e. bring revenue, information, references etc.)

Hillebrandt
Chapter 1

Required reading:
Hunt, S. (1997):
1.2.1 A company’s Competing
customer through relationships: Grounding relationship marketing in Resource- Ad
base
431-445.


Hillebrandt 56
management
The customer portfolio
 A company’s customer portfolio is the set of customers, irrespective of

their type or link with the company…
 current
 past
 potential
 These customers may differ in…

 size (large turnover vs. smaller turnover)
 their position in the value chain (professional vs. private, direct vs.
indirect customers)
 their power position
 their loyalty to the selling company
 …

Hillebrandt 57
management
Type Potential
customers Current customers Lost customers
Recent Long-term
Rela-
Danger Danger Lost, but
tion- Not Lost for
Potential New Stable (complaint (other may be won
ship attractive ever
pending) reasons) back
status
Avoid
Objec- Streng-
Initiate Extend Stabilize Stabilize Dissolve Recover negative
tive then
WoM
Churn
New Customer Dissolu- Reanima-
Lead Complaint preven- Exit
customer loyalty tion tion
Main manage- manage- tion manage-
manage- manage- manage- manage-
tasks ment ment management
ment ment ment ment
ment

Hillebrandt
Chapter 1


1.2.5 A process model of Relationship marketing


Hillebrandt 59
management
Relationship between customer and hotel
Episode 1: Episode 2: Episode n:

December 2013
Check- Check-
Mai 2014
Check- Confe- Check-

March 2017
Check- Room Well- Check-

...
Room Room
in out in rence out in ness out
Transaction 1 Transaction 2 Transaction n

Hillebrandt 60
management
Definition
Relationships are
 interaction processes
 between a supplier of goods or services
 and a value creation partner
 directed at repeated transactions
 and mainly motivated by economic objectives

Hillebrandt 61
Transactions vs. relationships
Transaction Relationship
Reasons for establishing relationships
Motives
Motives for Motives

customers for
suppliers
1) Sociological / psychological Already discussed: customers as

2) Risk-oriented resources
3) Cost-oriented
1) A sociological / psychological perspective
Opportunism Social
(egoism, price awareness, promotion hunting, mistrust)
integration
(social ties, acceptance, affiliation)
Variety Continuity
(curiosity, entertainment, (routine, dullness, convenience, security)
innovation proneness)
Autonomy Loyalty
(independence, liberty, emancipation) (solidarity, gratitude, trust)
- Relationship proneness
+
2) A risk-oriented perspective: reducing opportunism
Perceived Risks in Purchasing Goods and Services
 Functional: unsatisfactory performance outcomes

 Financial: monetary loss, unexpected extra costs
 Temporal: wasted time, delays leading to problems
 Physical: personal injury, damage to possessions
 Psychological: fears and negative emotions
 Social : how others may think and react
 Sensory: unwanted impact on any of five senses
management
Transaction cost approach
Opportunism as a basic assumption

 Opportunism: „self-interest-seeking with guile“ (Williamson 1985)
 Opportunism comprises: lying, stealing, misleading or confusing
other people
 It is assumed that…
 people always act opportunistically
 all people have „moral weaknesses“
Active opportunism:
An actor acts Passive opportunism:
from his own An actor causes
motivation to damage to others
damage others by not acting

Hillebrandt 66
management
Transaction cost approach

Hillebrandt 67
3) Cost aspects: potential reduction of transaction costs in relationships
Initiatio Contractin Control Adaptatio

n g process n
processe processe
process es
s s
es
After a
Before purchase pu rchase
a
Search for
Respect of Adaptation of
a
contract
supplier
Negotiating
Collecting - dates
- dates
information
Formulating and - quality - quality
about supplier,
his value concluding a - quantities - quantities
proposition, his contract - price - price
terms and - - agreements
conditions etc. agreement
s
What could be motives for customers to establish
relationships with the following companies/brands?
Discuss this with your neighbor for the example of

- BMW
- Edeka
- Apple

Hillebrandt 69
Chapter 1




Hillebrandt 70
management
Defining relationship marketing
mprises all activities a company develops to initiate, maintain, develop, or terminate relationships (i.e. series of
 RM is a set of processes in which all employees with customer

contact participate
 RM is increasingly performed using specialized software solutions

 CRM: Customer Relationship Management Systems
 RM – just like all other marketing activities – pursues the objective

of optimizing financial performance

Hillebrandt 71
Transactional vs. relationship marketing
Transaction marketing Relationship marketing

(1) short-term orientation (1) long-term orientation
 growth through new customers  growth through loyal customers
 maximizing short-term profit from customer  maximizing long-term profit from customer
 evolutionary approach
(2) focus on product performance (2) focus on performance with the
customer
 sales and market share
 market and segmentation  satisfaction, loyalty, penetration
 individual relationships
 trust and fairness
(3) unilateral marketing (3) interactive marketing
 „broadcasting“type of communication  establishing dialogues
 standardized marketing  individualized marketing
 anonymous customers and sellers  customer integration
management
Selling is the daily business of companies
ompany can achieve revenues it first needs to define its

he value proposition)
he company needs to convince the customer that its own value proposition is superior as compared to competit
Seller Buyer
ling is an act of convincing and negotiating,

ring which an agreement needs to be reached that a seller and a buyer intend to exchange value in
onomic transaction

Hillebrandt 73
management
Selling and customer management
Customer relationship
Sale Sale Sale Sale
• Delivery • Delivery
• Customer • Delivery
• Customer
service • Customer service
service
• New offer • New offer
• New offer
• etc. • etc.
• etc.
time
Hillebrandt 74
Extensions from sales to customer management
Customer management
Sales
Discuss this with your neighbor which
companies/brands are good examples for doing
transaction marketing vs. relationship marketing?

Hillebrandt 76
Chapter 1




Hillebrandt 77
Relationship marketing processes
Approaching customers (Pre-Sale) Customer acquisition Relationship management
Market segmentation Preparing contacts Transaction management
Prospect identification Managing contacts Loyalty management
Prospect Controlling Complaint management

analysis contacts

Hillebrandt 78
Chapter 1

Required reading:
Hunt, S. (1997):
1.2.1 A company’s Competing
customer through relationships: Grounding relationship marketing in Resource- Ad
base
431-445.


Hillebrandt 79
management
Customer Relationship Management
 CRM is a strategic approach that is concerned with creating

improved shareholder value through the development of
appropriate relationships with key customers and customer
segments.
 CRM unites the potential of relationship marketing strategies and IT

to create profitable, long-term relationships with customers and other
key stakeholders.
 CRM provides enhanced opportunities to use data and information

to both understand customers and co-create value with them.
Compulsory reading: Payne and Frow (2005), Journal of

Marketing
Hillebrandt 80
Structure of a CRM system
Co
Mailings
E-Mail Telephone mmu
InternetWAP n-
Personal icati
Customer Interaction TV/Radio
contact ve
Center / Customer Touch Points
Front Office Marketing Automation Sales Automation Service Automation

Oper
ati
ve
C
R
Back Office
Anal
ytica
l
Customer Data Warehouse CRM
Supply ChainEnterprise ManagementRessource

Computer
Planning
Integrated Manufacturing
......
Basic objectives of CRM (1)
Data collection such as customers´…

contact
demographic information
buying history
service performance etc.
Data is used…
for storage
for analysis
to segment customers
to adapt service in consequence
management
 Marketing automation
 Objective: to develop a system which recognizes specific events and
triggers activities
 CRM systems allow also to evaluate the efficiency of a marketing
campaign by analysis of the reactions
 Service automation
 Call center employees have direct access to customer’s information
and can improve the level of service for all the customers
 Identity and account of the customer who is calling allow the call
center to identify the segment of the costumer and to adapt its
service to it
 Example: the “platinum callers” have the priority in waiting lists
 Sales Force Automation (SFA)

 The whole workflow can be managed and facilitated by CRM

Hillebrandt 83
management
Strategic framework for CRM
Strategy development process Value creation process Multichannel integration process Performance assessment process
Value creation for customer

Shareholde
r results
Business strategy Sales channels,
e.g. Direct
marketing
E-Commerce
M-Commerce
Value appropriation for Outlets
company / organization Telephony
Sales force Performance
monitoring
Customer strategy
Information management process (CRM as IT system)

management
Compulsory reading: Payne and Frow
(2005), Journal of Marketing
84
Chapter 1




Hillebrandt 85
management
Levels of CRM
 Functional level: focuses on technology
 Sales force automation in the sales function

 Campaign management in the marketing function
 Customer facing front-end level: focuses on total customer experience
 To build a single-view of customers across contact channels

 To distribute customer intelligence to all customer-facing functions
 Strategy level = relationship marketing

 Frees CRM from technology underpinnings
 Describes CRM as a process to implement customer centricity in the
market and build shareholder value
 Knowledge about customers affects the entire organization
Hillebrandt 86
Most common barriers to successful CRM
 Focus on one channel = sales > lack of a customer strategy and

customer orientation
 often times lack of focus on identifying, segmenting and targeting
new profitable customer groups
 Lack of systematic measurement of success and profitability.

 without a controlling system, customer profitability, ROI in
communication and customer lifetime value cannot be measured
 Customer “information islands”.

 valuable customer data often remain fragmented in smaller data
bases without link; they are not sufficiently shared and used.
Exercise section
Potential exam questions - examples

Hillebrandt 88
Exercises
Define relationship marketing and explain how it

is different from transaction marketing!

Hillebrandt 89
management
Defining relationship marketing
mprises all activities a company develops to initiate, maintain, develop, or terminate relationships (i.e. series of
 RM is a set of processes in which all employees with customer

contact participate
 RM is increasingly performed using specialized software solutions

 CRM: Customer Relationship Management Systems
 RM – just like all other marketing activities – pursues the objective

of optimizing financial performance

Hillebrandt 90
Transactional vs. relationship marketing
Transaction marketing Relationship marketing

(1) short-term orientation (1) long-term orientation
 growth through new customers  growth through loyal customers
 maximizing short-term profit from customer  maximizing long-term profit from customer
 evolutionary approach
(2) focus on product performance (2) focus on performance with the
customer
 sales and market share
 market and segmentation  satisfaction, loyalty, penetration
 individual relationships
 trust and fairness
(3) unilateral marketing (3) interactive marketing
 „broadcasting“type of communication  establishing dialogues
 standardized marketing  individualized marketing
 anonymous customers and sellers  customer integration
Selling and customer management
Customer relationship
Sale Sale Sale Sale
• Delivery • Delivery
• Customer • Delivery
• Customer
service • Customer service
service
• New offer • New offer
• New offer
• etc. • etc.
• etc.
time
management
Extensions from sales to customer management
Customer management
Sales

Hillebrandt 93
Exercises
Define customer relationship management and

discuss the advantages CRM can bring to a
company, but also most common barriers to a
successful CRM!

Hillebrandt 94
management
Customer Relationship Management
 CRM is a strategic approach that is concerned with creating

improved shareholder value through the development of
appropriate relationships with key customers and customer
segments.
 CRM unites the potential of relationship marketing strategies and IT

to create profitable, long-term relationships with customers and other
key stakeholders.
 CRM provides enhanced opportunities to use data and information

to both understand customers and co-create value with them.
Compulsory reading: Payne and Frow (2005), Journal of

Marketing
Hillebrandt 95
Data collection such as customers´…

contact
demographic information
buying history
service performance etc.
Data is used…
for storage
for analysis
to segment customers
to adapt service in consequence
management
 Marketing automation
 Objective: to develop a system which recognizes specific events and
triggers activities
 CRM systems allow also to evaluate the efficiency of a marketing
campaign by analysis of the reactions
 Service automation
 Call center employees have direct access to customer’s information
and can improve the level of service for all the customers
 Identity and account of the customer who is calling allow the call
center to identify the segment of the costumer and to adapt its
service to it
 Example: the “platinum callers” have the priority in waiting lists
 Sales Force Automation (SFA)

 The whole workflow can be managed and facilitated by CRM

Hillebrandt 97
Most common barriers to successful CRM
 Focus on one channel = sales > lack of a customer strategy and

customer orientation
 often times lack of focus on identifying, segmenting and targeting
new profitable customer groups
 Lack of systematic measurement of success and profitability.

 without a controlling system, customer profitability, ROI in
communication and customer lifetime value cannot be measured
 Customer “information islands”.

 valuable customer data often remain fragmented in smaller data
bases without link; they are not sufficiently shared and used.

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Customer management (CM)

1. Scope and challenge of customer management Basics

3. Customer analysis (prospects) The customer

6. Organizing for CM Support functions

Customer Management – Dr. Isabelle | S.

1. Scope and challenge of customer management Basics

3. Customer analysis (prospects) The customer

6. Organizing for CM Support functions

Case Study Loyalty

1. Scope and challenge of customer management

1.1. Customers as focal element of marketing

1.2. Relationship marketing

1.3. CRM as the IT component of relationship marketing

Customer Management – Dr. Isabelle Hillebra

 Companies may have different types of customers

Governments and public auth.

Customer Management – Dr. Isabelle | S.

1 Commercial business customers

Industrial Market Trade Market

Bosch supplying parts to BMW Lidl and Edeka reselling Haribo

Customer Management – Dr. Isabelle | S.

- Highlighters and other writing instruments to

- Highlighters and other writing instruments to final

Include domestic units of federal, state, local and foreign governments

Bundesministerium für Verkehr , Berlin

Includes a wide variety of organizations, both public and private,

Customer Management – Dr. Isabelle | S.

There are two aspects of importance:

1. Volume of business (exchanges):

These markets are 3-4 times the volume of consumer markets

2. Impact on economic development:

Innovation mainly takes place in business markets

As consumers, we are typically customers of

On most consumer markets, anonymity characterises customers.

A main challenge for companies is to collect information about

1. Scope and challenge of customer management

1.1. Customers as focal element of marketing

1.2. Relationship marketing

1.3. CRM as the IT component of relationship marketing

Customer Management – Dr. Isabelle | S.

Financial performance is the most important firm objective

ny objectives, but one of them is fundamental and can‘t be compromised:

Indeterminate Competitive Competitive

Competitive Competitive Indeterminate

Customer Management – Dr. Isabelle | S.

Customer Management – Dr. Isabelle | S.

Financial performance depends on two dimensions

Competi Value produced for customer

Indetermin Competi Competit

p Competiti Pari Competit

Customer Management – Dr. Isabelle | S. 24

Financial performance depends on two dimensions

Competitive Value produced for customer

Indeterminate Competitive Competitive

Customer Management – Dr. Isabelle | S.

Customer Management – Dr. Isabelle | S.

Competi Value produced for customer

Indetermin Competi Competit

p Competiti Pari Competit

What resources allow a company to occupy market positions of

 financial (e.g. cash resources, access to financial markets)

Customer Management – Dr. Isabelle | S.

What resources are required for effective and efficient