Customer Relationship Management

Customer Relationship Management (CRM)

Out of four stages of customer relationship cycle i.e. Customer Acquisition Customer Development Customer Retention Customer Decline CRM is identified with Customer Retention

Customer Loyalty

refers to customers belief in retailers offer, based on value proposition resulting in repeated buying behaviour Customer Loyalty is of three types: - Emotional Loyalty - Price Loyalty - Monopoly Loyalty

Various Stages in Loyalty Development

Customer Relationship Management

- holistic & collaborative approach to manage & develop relationship with customer
Reasons to adopt loyalty & CRM programmes - hyper-competition in market - low product differentiation

Benefits of Customer/CRM Programmes

higher profitability lower cost of retaining old customers better satisfaction of customers greater employee productivity helps in micromarketing better visibility of business performance development of store as a brand

CRM as a Process
1. Acquiring and Maintaining Consumer Database
Data Warehouses consists information about:

Customers Transactions Customer Interactions Customer Preferences

CRM as a Process contd

2. Analyzing Customer Data & Identifying Target Customers

Data Mining: analysing information available in Data-warehouses, purchasing patterns are established Market Basket Analysis: determining which products will sell together

CRM as a Process contd

3. Identification of Target Customers

80:20 Rule: 20% of customers contributing towards 80% of sales or vice versa Lifetime Value of Customers: Present value of all the profits or sales. Objective of CRM is to increase LTV RFM Model: addresses 3 important dimensions of purchases

Recency: when was the last purchase made? Frequency: how many purchases made during specific period? Monetary Value: what was the value of purchases?

RFM Analysis

RFM Model

Customer Segments

by combining concepts of 80:20 Rule, Life Time Value and RFM models, Customer Pyramids are designed. For example:

Silver: Low Value Segments Gold: Growable Segments Platinum: Most Valueable Segment

Customer Pyramid

CRM as a Process contd

4. Developing Loyalty Programmes

This stage marks deeper relationship, stability, trust & commitment by both parties Transactional & Non Transactional benefits Customised Services Customer Complaint Handling Mechanism Making Customers more profitable

5. Implementation of CRM Programmes

CRM as a Process contd

Comprehensive Customer Centric Approach Continuous benchmarking of CRM Processes & Services Motivation of employees Management support Use of IT Need-based segmentation of customers Mapping the processes Effective customers services

6. Evaluation of Performance

Customer Services
Retail has service orientation

Levels of Customer Services: 1. Self Service 2. Assorted Service 3. Full Service

Main Services offered by Retailers

Display of merchandise Alterations of apparel merchandise Acceptance of Credit cards Car Parking Credit Facility Shopping Carts Gift Wrapping Demonstration of to use the merchandise Repairs & Warranties

Service Quality & Performance Gaps: SERVQUAL

1. Knowledge Gap: b/w buyers expectations & retailers perception 2. Standards Gap: b/w retailers perception about quality of services & service quality parameters 3. Delivery Gap: b/w service quality parameters & actual service delivery 4. Communication Gap: b/w actual service delivery & retailers communication about service delivery 5. Service Gap: b/w perceieved service & expected service

SERVQUAL- GAPS Model contd.

SERVQUAL
On the basis of GAPS model five major components of Service Quality are:

Reliability Assurance Tangibles Empathy Responsiveness

These are also abbreviated as term R A T E R