BSM 3590 Customer Relationship Management

1. BSM 3590 Customer Relationship Management • │LECTURE 2│ • CRM: Customer Acquisition, Retention and Strategic Customer Care By Leo Kwan BSM / IVE (TY)

2. Learning Objectives • Classify customers into three categories in the stage of service evolution. • Apply the five strategic activities for implementing Strategic Customer Care.

3. Customer Relationship Management Basic concept and definition Customers Relationship Management of relationship Process Technology Information People Implementation of CRM

4. Customer Acquisition, Retention and Strategic Customer Care • Transaction • Giving you the opinion to improve your products • Making referral to other customers and generating the word of mouth (WOM) What is a Customer? New Customer Retain Existing Customer Loyal customers who buy from you in their lifetime

5. 2.1 Customer Strategy: Profiling Customers • Stage I • Promotions • Customer referrals • Copying strategies from competitors • Stage II • Focus on maximizing relationship with customers • Segment customers into groups of different strategic values • Different service + products to different groups of customers • (e.g. Hong Tai Travel Agency) • Stage III • Strengthen services on potentially profitable customers • Grow with customers (e.g. Citibank Black Platinum Visa Card) • (e.g. Japanese pinball company)

6. Example 2: Stage I - Promotion, Copying best practices, Customer referrals.

7. Stage II: Segmenting customers according to their value to a company • Example 1: Hong Tai Travel (video) • Example 2: Standard Chartered Hong Kong Marathon.

8. Stage III: Strategic Customer Care • Case: Pin ball machine shop in Japan

9. The Five Strategic Activities for Implementing Strategic Customer Care Fig 3.1 The five strategic activities for implementing strategic customer care.

10. 2.1 Profiling Customers • Define your customers characteristics in a meaningful way – best to understand the attributes they value most. • Video at seminar • Spending amount • Frequency of spending • Recentness of spending • Classify customers into groups of common characteristics.

11. The Five Strategic Activities for Implementing Strategic Customer Care Fig 3.1 The five strategic activities for implementing strategic customer care.

12. Willingness to become a partner Trend of increased revenues generated for your organization Your current share of customer’s business Significance of your company’s product or service to the customer’s business Customer’s current gross profit and its potential Potential to cross-sell and up-sell Profile of Good Customers Contribute the highest proportion of gross profit Have potential to add further to gross profit Are profitable organizations themselves Customers who have permitted you to achieve a dominant share in the category Are savvy and intelligent Conscious of the need to be flexible and show adaptability 2.2 Segmenting Customers into Natural Groupings Observe that they are not segmented by demographics

13. Group B savvy Group A High profit Strategy A Strategy B

14. The Five Strategic Activities for Implementing Strategic Customer Care Fig 3.1 The five strategic activities for implementing strategic customer care.

15. 2.3 Researching Customers’ Industries and Concerns • Going beyondloyalty, enterpriseneeds toobtaina rich knowledge of theircustomers’worldsin order to achieve meaningfulserviceniche for the customers • E-Cards and Octopus

16. Understand Your Customer(Not in your notes) Knowing the Political, Social, Economic, Technology environment The homework required for preparing a sales call Knowing the industry Knowing the company Knowing the department Knowing the dialogue environment The communication skill Knowing your product Selling Skills The Point of Interaction

17. The Five Strategic Activities for Implementing Strategic Customer Care Fig 3.1 The five strategic activities for implementing strategic customer care.

18. 2.4 Investing in Technology to ProvideSolutions to Customers • Different customers deserve different levels of service • Technology and efficiency will drive success • Strategic alliances are needed • Satisfied customers lead to higher profits

19. 2.4 Investing in Technology to ProvideSolutions to Customers • Best practices in the use of technology • Proactive database marketing – finding out the value of customers without using survey. • Developed models to analyze profitability • Use intranet and extranet for information sharing • Executive Information System (EIS) • Apply help desk, quality assurance and customer intelligence…etc.

20. The Five Strategic Activities for Implementing Strategic Customer Care Fig 3.1 The five strategic activities for implementing strategic customer care.

21. 2.5 Managing Customers through Consistency of Treatment • Systematically apply a streamlined account management process to all important customers • Involve senior management in the account management process • In the video at seminar, the CEO of Oriental Mandarin Hotel write letters to his key account customers every week. • Provide operational objective to the strategic account team as well as the objective measurement criteria

22. End of Lecture 2