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Customer Relationship

Management (CRM)

Rahma Anisa

[email protected]

1/5/2015 10:47 AM

© copyright 2014. R Anisa. All rights reserved.

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What is CRM?

CRM is the strategic

process of selecting

customers that a firm can

most profitably serve and

shaping interactions

between a company andthese customers.

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(Kumar & Reinartz, 2012)


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The Concept of CRM1/5/2015 10:47 AM


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Firm/Company Customers

R&D

Finance

Sales/Marketing

Logistics

Share holdermanagement

All

Departments

End users

Intermediate users

Behaviors

Desires

Needs

Characteristics

interaction

CRM

Knowledge: Customer intelligence

Approach / Offer

Experiences

Services

understanding

Development

(Customization)

Preferences


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The Importance of CRM

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Product

Performance

ServicePerformance

Employee

Performance

CustomerSatisfaction

Retention /Loyalty

Revenue /Profit

CRM plays an important role in

the satisfaction-loyalty-profit chain above

Source: Anderson & Mital (2000) in Kumar & Reinartz (2012)


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Analytical Process

BusinessUnderstanding

• Defining the goal

DataUnderstanding

• Select the data

Data preparation

• Data cleansing,

select & transformvariables

Data ProcessingEvaluation /Validation

Deployment

• Implementation andmaintaining themodel

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Bussiness Understanding

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Attract and retain

profitable customersDefine the goals In general

TranslateBussiness goals Analytical Term

Targeting models(Methodology)

Descriptive

Predictive

(Rud, 2001)

Establish a clear goal and develop a process to achieve that goal.


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Common Analytic Goals

Profile Analysis

Segmentation

Response Models

Risk Models

Activation Models

Cross-Sell & Up-Sell Models

Churn Analysis

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Data Preparation

• Accessing the data

– Classifying data

– Reading raw data

• Creating the modeling data set – Sampling

• Cleaning the data

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Selecting and transforming variables – Defining the objective function

– Deriving variables

– Variable reduction

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Data Processing

DescriptionSummarization

Data visualization

etc.

Segmentation

Clustering

Principal Component Analysis (PCA)

Factor Analysis

Artificial Neural Network (ANN)

Decision Tree: CRT, CHAID, etc.

etc.

Modeling

Regression

Path Analysis

Time series analysis

etc.

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Deployment

• Applying the most efficient and powerful

methodology

• Building an automated system of the chosen

method which can follow latest information

• Building integrated information system as a

part of CRM process for every stake holders

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CRM in Retailing

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Customer-DrivenMarketing

Fraud Detectionand Prevention

IntegratedForecasting

Localization andClustering

Marketing MixModeling

PricingOptimization

ProductRecommendation

Supply ChainAnalytics

Multi-ChannelAnalytics & Data

Integration

EmergingAnalytical Trends

in Retail

SentimentAnalysis

RFM Method

(Recency, Frequensy,Monetary)

(Davenport, 2009)

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Case Study: TESCO vs Sainsbury’s

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Tesco Sainsbury’s

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Tesco’s Campaign Strategy

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encourage the trade of e-commercethrough company website

“The First Class Service”

“One on Front” service to reducewaiting time at the check-out

The Club Card loyalty program

Customer Championship

“Learn Thinking” concept

“Me Time” program for women

Magazine which highlights companyproducts

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Sainsbury’s Campaign Strategy

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The Nectar Card Scheme

Nectar partnership withstrategic alliance

strong presence in the socialnetworking websites

Company magazine

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Recent Trend of CRM

by Tesco & Sainsbury’s

• initiated loyalty card schemes

generate information on areas: merchandizing,

pricing, customer services, promotions,customer acquisitions, media effectiveness,

customer communications and market research

• utilized recent technological innovations

• remain attentive to their customers’ demands

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(Hassan & Parves, 2013)

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References

Chen, D. , Sain, L. S. , and Guo, K. (2012). Data Mining for The Online Retail Industry: A Case

Study of RFM Model-Based Customer Segmentation Using Data Mining. Database

Marketing & Customer Strategy Management 19 (3) :197-208.

Cheng, C-H., and Chen, Y-S. (2009). Classifying The Segmentation of Customer Value Via RFM

Model and RS Theory. Expert System with Application 36: 4176-4184.

Davenport, T.H. (2009). Realizing the Potential of Retail Analytics: Plenty of Food for Thosewith the Appetite. Working knowledge research report, Babson Executive Education.

Hassan, A. and Parves, M. (2013). A Comparative Case Study Investigating the Adoption of

Customer Relationship Management (CRM) The Case of Tesco and Sainsbury’s.

International Journal of Managing Value and Supply Chains 4(1): 1-10.

Kumar, V. and Reinartz, W. (2012). Customer Relationship Management: Concept, Strategy,and Tools. Berlin: Springer-Verlag.

Rud, O.P. (2001). Data Mining Cookbook: Modeling Data for Marketing, Risk, and Customer

Relationship Management. New York: John Wiley & Sons.

Tsiptsis, K. and Chorianopoulos, A. (2009). Data Mining Techniques in CRM: Inside Customer

Segmentation. New York: John Wiley & Sons.

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