Hi
This time our topic is Customer Relationship Management.
These days,
the marketplace is becoming more and more competitive,
with many companies providing similar products to similar
or overlapping target groups.
This leads to weaker customer loyalty
since customers have more products to choose from;
and smaller profit margins, since companies have to lower
their prices to compete with rivals.
In order to solve this problem,
companies in all industries are racking their minds
to come up with strategies to retain customers
and maximize profits.
Hence,
a marketing strategy called one-to-one marketing,
also known as Customer Relationship Management
came into being.
It is based on the idea of treating different
customers differently,
to customize offerings.
By this way,
companies wish to create long-term,
mutually beneficial relationships with customer,
and hence to improve customer loyalty and profit margins.
One-to-one marketing organizations often create
a customer feedback loop,
which is also a learning process.
It is just like communicating such information with customers:
"I know you";
"You tell me what you want";
"I'll make it";
and "I'll remember next time".
In other words,
the feedback loop requires the company to
firstly identify customers at all points of contact.
Secondly to differentiate between customers on their
individual needs and value to organization.
Besides,
it requires the organization to interact with customers
in a two-way dialogue,
to customize or tailor some aspects of products
based on what's learned from customers.
Just imagine you buy something from a shop or a specialty store.
When you swap your membership card and pay for the goods
the in-house customer relationship management system
automatically identifies you,
and offers a discount off the original price.
You may feel very happy about this surprising discount.
At the same time,
the system will automatically record your transaction details,
obtain more information
about your characteristics and preferences.
In other words,
the system will know you more and better.
After this process,
whenever the brand or the shop puts on an event
to promote the product
the system will automatically send a message or email
to you according to the preset contact information of yours.
As a result,
if you are interested,
you may revisit the brand or the shop
and make another purchase.
And possibly you may select other products you
find in the shop as well.
Through this cycle
the system knows you more and better,
the chances of winning you back become greater.
Hence it is called a learning process.
The system is called Customer Relationship Management system.
Put in other words,
we may have the following definition:
Customer Relationship Management,
commonly known as CRM
is a term that refers to practices,
strategies and technologies that companies use to manage
and analyze customer interactions and data
throughout the customer life cycle
with the goal of improving business relationships with customers
assisting in customer retention and driving sales growth.
CRM systems are designed to compile information on customers
across different channels
or points of contact between the customer and the company
which could include the company's website,
telephone,
live chat,
direct mail,
marketing materials and social media.
CRM systems can also give customer-facing staff
detailed information on customers' personal information,
purchase history,
buying preferences and concerns.
CRM technology supports a CRM strategy by gathering,
storing and analyzing customer data.
Front-office systems,
such as call centers or loyalty cards
gather information directly from clients
which is then stored and processed in a
back-office system called a database or data warehouse.
A data warehouse many contain information collected
from different databases.
Back-office systems make it possible for a company
to follow sales and fulfill orders
and hence are regarded as the pivotal part of a CRM system.
The marketing department can use software
tools to mine the data,
in other words,
analyze the data stored in the data warehouse.
Data mining reveals patterns in customer behavior.
Customer behavior patterns play a very
important role for marketers
since they rely on these to predict and plan
the promotion of certain products.
A very famous example is,
fathers tend to buy branded food products
whilst mothers prefer private labels.
This discovery can help marketers promote
their products more precisely.
Relationship marketers can then tailor or
customize their marketing efforts towards the customers.
With CRM technology
mass customization is made possible.
Mass customization,
a concept which seems to be paradoxical
is realized through big data collected by way of CRM technology.
Analysis of the data will help marketers identify
and group customers according to their major preference categories
and offer products that are tailor-made for them in large amount.
Hence mass customization on the basis
of mass production is realized.
This means that each customer will receive slightly
different offers and discounts.
Customer relationship management or CRM seems to be one
solution to the problem of declining customer loyalty
and shrinking profit margins.
Yet the biggest criticism to it focuses
on consumer privacy protection.
Some consumer protection groups are concerned about the
gathering and storing of large quantities of customer information.
A company should promise to protect customers' privacy
not leaking customers' information to other organizations
without customers' consent.
Customers may wish to keep their
purchase information confidential
or secret.
Most companies should have privacy policy and promise
not to disclose non-aggregate data of customers.
OK
this is the introduction to CRM.
Let me sum up a little bit.
CRM
also known as one-to-one marketing,
is a strategy to build and maintain a firm and
mutually beneficial relationship with customers,
encourage customers to repeat their purchases with the business,
so as to improve customer loyalty and profit margins.
Customer relationship management is realized through
the combination of CRM technologies.
Therefore,
we can say technology makes it possible to strengthen
the ties between companies and customers.