Page 251 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Customer Relationship Management

Notes It requires board-level vision and leadership to drive a “relentless focus on the customer.”
It involves learning new customer management skills, potentially difficult changes to processes,
culture and organization, and grappling with the technology challenges of multichannel
alignment, systems integration and data quality.
Even if the board accepts the need for enterprise-level CRM, the quarterly demands of revenue
and profit targets, especially in delicate economic conditions, often mean that, although CRM is
the most important challenge facing an enterprise, it is not seen as the most urgent.

This typically results in a focus on isolated tactical “quick wins” until conditions are better.

10.1 CRM Strategy

Customer relationship management (CRM) strategies and the technologies that enable them
make it possible to figure out what customers want and the most profitable ways to give it to
them – important in an age when acquiring new customers – is about five to 10 times the cost of
retaining current ones. CRM strategies are based on the premise that quick, accurate knowledge
about customers empowers organizations to increase the value of current customers, keep them
longer and more effectively acquire new customers.
A CRM strategy takes direction and financial goals from the business strategy, and revisits the
marketing strategy to customize it. It provides an overview of how the enterprise will build
valuable customer relationships and customer loyalty.
1. The first stage in developing the CRM strategy is to segment customers into categories,
and to set objectives and metrics for each segment.

2. The second stage is to assess the state of the customer base when viewed as an asset. That
can be achieved by plotting the strength and value of customer relationships along two
perspectives:
(a) How much does the customer value the enterprise?
(b) How much does the enterprise value the customer?

Notes The result is a customer asset matrix as seen in Figure 10.2, which combines the
supplier’s view of customer value segments with an estimate of the strength of the customer
relationship.

3. The third stage is to define the objectives to be met and the tactics to be used. The customer
strategy customizes the traditional marketing strategy for different target customer
segments, and thus supersedes it.

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