CIMA P3 Syllabus C. Internal controls - Customer Relationship Management - Notes ^{18 / 21}

CRM is an approach to build and sustain long term business with customers.

It consists of the processes a company uses to track and organise its contacts with its current and prospective customers

CRM software is used to support these processes; information about customers ( such as their order history, personal information - address) and customer interactions can be entered, stored and accessed by employees in different company departments.

The Customer Relationship Management Development Process

relationships with customers are slowly built over time.  

The key is to retain the highest proportion of the customers in the business.  

The main stages of developing and maintaining appropriate customer relationships are illustrated below:

1. Phase 1 - Selection:

   Identify the customers to be targeted through the normal Segmentation, Targeting and Positioning Process. 

   Some form of market research may need to be carried out to ensure that the right customers are targeted;

2. Phase 2- Acquisition:

   How to get a new customer.  

   Remember that first impressions last - so this stage is critical. 

   The customer needs to be delighted.

   The costs of getting this customer though need to be minimised.

3. Phase 3 – Retention:

   Retention is the ultimate objective of CRM systems particularly since it costs more to get a new customer than to retain an existing one. 

   Retention requires an in-depth understanding of the needs of the customer so that products and services are tailored to his or her specific requirements. 

   Some lock in strategies are normally used such as is the case for loyalty schemes that are widely popularised by supermarkets, vendors of fast moving consumer goods and airlines.

4. Phase 4 – Extension:

   Retention results in the generation of additional sales from the customers with whom the organisation has built a relationship. 

   Additional sales may be generated either by reselling the same product (ex selling a renewal of a motor insurance policy), cross-selling (ex selling a home insurance policy to an existing customer having a motor insurance policy) or even up- selling (ex- encouraging a customer to upgrade his motor insurance policy from a third party only cover to a fully comprehensive cover).

5. After-sales service

   Using technology to provide answers to frequently asked questions, make and handle complaints.

   This service should help retain customers. 

   Newsletters, special offers for established customers and targeted emails should also boost customer retention.

Acquiring Customers

One of the most challenging phases in an eMarketing initiative is the acquisition stage. 

From an eCRM perspective, a number of methods of acquisition may be contemplated. 

These include the following:

• Search engine Optimisation (SEO)

• Pay Per Click (PPC)

  Here advertisers pay their host only when their ad is clicked.

• Contextual Advertising

  The advertisements themselves are selected and served by automated systems based on the content displayed to the user.

• On-Line Public Relations

  These include on-line blogs and social media

• Affiliate Marketing

  This is where a business rewards the affiliate for each visitor or customer brought about by their marketing efforts.

• Sponsorship

  Firms advertise themselves as sponsoring or part sponsoring the web-site under review.

• Co-Branding

  This is when two companies form an alliance over the internet to work together, creating marketing synergy.

• Opt in emails
   
  Opt in e-mail is a term used when someone is given the option to receive "bulk" e-mail, that is, e-mail that is sent to many people at the same time. 

  An example of this is the email recap sent to all aCOWtancy students.

• Viral Marketing

  Where the advertising is passed around indirectly by consumers (thus becoming viral). 

  Viral promotions may take the form of video clips, interactive games, ebooks etc.