Customer Relationship Management
I teach Customer Relationship Management at The Rutgers Business School to MBA and undergraduate students in Newark & New Brunswick. I also practice what I teach. I was the business owner of the marketing database at The Macy’s Group. I also built marketing databases at LexisNexis and some mid-size and small start-up companies. I use the case study approach teaching MBA students. My preferred book is Managing Customer Relationships: A Strategic Framework by Peppers & Rogers.
CRM is a shift in focus away from marketing’s traditional focus of acquiring customers toward creating, maintaining and enhancing an organization’s relationship with its existing customer base. While originally conceived as a technology, CRM has evolved into an enterprise-wide philosophy of maximizing customer value by placing the customer, rather than a product or service, at the center of business decisions.
This shift from product-centric to customer-centric marketing requires the use of new tools and expertise in understanding and predicting customer preferences and behavior. It also requires an enterprise to reexamine its organizational structure and processes.
Creating a full fledged Customer Relationship Management system connected and integrated with accounting, ordering, fulfillment as well as marketing campaign management and analytics is the goal of many in CRM ERP integrations. Using one system to view the customer data and manage a customer relationship from initial inquiry to purchase and accounting. Larger companies have many legacy systems that make this difficult, but not impossible. Smaller companies with limited budget can act like a big business with open source or web-based solutions.
A clear segmentation strategy is needed to created common needs and response groups that are alike. While some customers may be in a segment of one, for unique messaging and sales approaches, this discussion is about grouping like customers or prospects together. A Market Segment is a grouping of consumers (professional or residential consumers) that are relatively similar in terms of their consumption preferences.
A company can differentiate their product to different market segments, and link customer needs to specific calls to actions. You link your market segmentation to your marketing mix including target market ‘groups’ in your database.
Identify the needs of your market segments in terms of benefits of your product / service. Link the needs to action. Group buyers into segments, group products into categories, estimate the size of markets, select your target markets and create marketing actions to touch the groups or segments.
A business can use sophisticated segmentation criteria (behavioral or psychographic to name a few) or simple geographic and demographic segmentation criteria.
You segment your markets, so you can have a refined marketing message and product positioning to your consumers.
Why do you segment your markets and furthermore, why do you take those markets and create targeted audiences included in your CRM system or Database?
You do it to differentiate your product or service to a more finite group, so you can create a marketing campaign and product that meets the audiences needs.
Customer Relationship Management is the place where you make the actionable market segments into marketing campaigns to drive profitable campaigns.
Many business users look at Campaign Management as the entire scope of CRM, it is not the entire scope of CRM, but campaign management is an important part that creates a marketing campaign (list output and creative assets for your mailing). An email campaign management system allows you to create the assets for the email – the actual email creative can be put together in some campaign tools and then the list is selected that attaches to the creative for ‘blasting’ to your list(s) or audience. The campaign is the entire list and creative (the actual email that is being sent out including the subject line, the sender name, the copy and images and links in the email) and the ‘blasting’ action. The marketing analytics are attached to the particular campaign (in the creative). It is tagged for tracking the open rates, the click thru rates and the conversion. The landing page that belongs to the campaign is part of campaign management and needs to be included in the process.
A direct mail campaign is similar, but relies on a printer to take the list output and the creative and merge it into a print job for mailing. The mail process might have a letter shop component, but we’ll keep our example simple. The printer creates the direct mail piece for mailing purposes and merges it with the list to create the actual piece to be mailed adding the stamp and required address information for the envelope.
Furthermore, other direct marketing campaigns can be created from a campaign management tool including a voice mail blast or outbound telemarketing list and you can integrate your outbound campaigns (any type) and add a social media connection to the campaign.
Acquiring the Right Customers
Some marketers ‘mail’ the whole file still (particularly when some businesses email their entire list). But, you might ‘burn’ out your file by mailing it multiple times a week or even less frequently. And, frankly you’ll also just waste money and time. Is there a cost to email marketing or regular postal mailings? Of course, a printed piece and postage that doesn’t get wasted can be saved or redirected into other advertising spend. Even, an email list that gets mailed too many times could end up driving up the opt-outs or worse yet, the ISPs might shut down your ESP and not allow email from your business.
Your business also wants to make a profit and drive revenue growth, but not by burning your base.
You need to target your customer base. Some businesses use RFM criteria
R – Recent purchasers
F – Frequency of purchase
M – Monetary value
and, they build mailing segments from these attributes of customer spending behavior. This is a great way to move from mass marketing to targeted marketing.
Other companies use predictive models, and predict the people who will buy (respond) to your next campaign. This process scores your file for a particular mailing or overall, to figure out the propensity for buying again. Some models go much further and predict to the level of the day & time and seasonally when a customer is likely to re-buy.
Other companies have loyalty programs, that act somewhat like predictive models, and they target campaigns to each loyalty segment.
Other companies create unique segments that get certain treatments.
This is not an exhaustive list or a list in a certain order of priority for a company. Each company has its own product and marketing mix, and can create its own targeting criteria. The key is that you must continuously evaluate how your segmentation performs.
The Marketing Database needs fundamental structures and criteria to manage the records in it through hygiene, business rules and appends.
- NCOA – National Change of Address
- ECOA – Email Change of Address & verification of email address
- DSF – Delivery Sequence File
Business Rules can create a better record resulting in more good addresses to market
- Family Moves
- Account to Individual to Household rules
- Mailing Universe changes
- Append – postal appends from email address, missing address components like apartment number and correcting zip codes on your records.
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