Crm in Action: Maximizing Value Through Market Segmentation, Product Differentiation & Customer Retention
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About this ebook
Written in Dr. Wongs vivid and interesting style, and furnished with real-life examples from Canada, this book helps marketers to generate greater customer value by making good use of market segmentation, product differentiation, and customer retention strategies.
Advance Praise for CRM in Action
This book helped me a lot in figuring out how to attract the right customers who can see real value in our healthcare services and retain them. It is a lot of planning and thinking behind this seemingly simple task, and this book guides you all the way with simple language and a lot of illustrative examples.
Ekaterina Leonova, Sweden
Readers will gather from Dr Wongs experience after reading the book because he reveals common traps and pitfalls, and gives advice on self-check questions on how to overcome them or bypass them altogether. This book should give you an excellent start in your CRM initiative.
Hoo Chee Wai, Singapore
Dr. Ken K. Wong
Dr. Ken K. Wong is a Marketing Professor and Subject Area Coordinator at U21Global where his success in teaching was recognized with Faculty Excellence Awards in 2008, 2009, and 2010. Dr. Wong is also affiliated with the University of Toronto’s School of Continuing Studies. He is the author of Avoiding Plagiarism, Discovering Marketing in 38 Hours and CRM in Action.
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Crm in Action - Dr. Ken K. Wong
About the Author
missing image fileDr. Ken Kwong-Kay Wong
Dr. Ken K. Wong is a U21Global Marketing Professor and Subject Area Coordinator, training corporate executives and MBA students from over 70 countries. In 2008 and 2009, he received the Faculty Excellence Award, and was honoured in all three award categories, including: Outstanding Professor, Most Innovative Professor and Excellence in Online Education. Since 2003, Dr. Wong has been developing and lecturing marketing courses at the University of Toronto’s School of Continuing Studies and also at various institutions of higher education in North America.
Dr. Wong’s research interests include marketing for luxury brands, customer relationship management, and online education. His articles have appeared in peer-reviewed international journals such as Telecommunications Policy, Service Industries Journal, and Journal of Database Marketing and Customer Strategy Management. Dr. Wong is also the author of the SCS lecture series in the areas of International Marketing, Advertising, PR & Publicity, E-Business, and Retail Merchandising. His latest work includes Avoiding Plagiarism, Approved Marketing Plans for New Products and Services, Putting a Stake in the Ground, More Bucks Annually, and Discovering Marketing in 38 Hours.
Prior to entering the academic field, Dr. Wong was the Vice President of Marketing at TeraGo Networks (TSX: TGO) and had previously served as Director of eProduct Marketing at the e-commerce division of PSINet (NASDAQ: PSIX). He had also carried progressive product marketing roles at Sprint Canada and TELUS Mobility.
Certified by the American Marketing Association as a Professional Certified Marketer, Dr. Wong completed his Bachelor of Science degree at the University of Toronto and holds the International MBA degree from Nyenrode Business Universiteit in the Netherlands. He earned his Doctor of Business Administration degree from the University of Newcastle, Australia and has completed executive education programmes at both Kellogg and Queen’s.
Table of Contents
Foreword
Preface
Acknowledgement
PART 1 CRM: An Introduction
Chapter 1—Introduction
What This Book is All About
The 4 Key Stages of CRM
How This Book is Organized
Chapter 2—Do you know your customers’ need?
What is an Adaptive Enterprise?
Become an Adaptive Enterprise
Sense Your Customers’ Latent Needs
Respond with the Right Solution
Respond Through the Right Channel
Respond with the Right Message
Respond at the Right Time
Respond Respectfully
Means-End Chain
Consumer Behaviour — The 5-Stage Buying Process
A Few Words about Problem Recognition
PART 2 Segmentation Basics
Chapter 3—Dividing Your Customers into Groups
What is Market Segmentation?
Understand the Key Characteristics of a Market Segment
Choose Number of Segments
A Priori
versus Post Hoc
Segmentation Approach
Segmentation Readiness Checklist
Chapter 4 - Basic Segmentation Examples for Consumer Market
Consumer Market—A Quick Definition
Demographic Variables
Age
Ethnicity
Gender
Geographic Variables
Does it matter?
Psychographic Variables
PART 3 Advanced Segmentation Techniques
Chapter 5—The Eight Mental Models of Segmentation for Consumer Market
Benefit Segmentation
Lifestyle and Lifecycle Segmentation
Belief Segmentation
Product Usage Segmentation
Choice Rule Segmentation
Brand Loyalty Segmentation
Price Sensitivity Segmentation
Search and Shopping Segmentation
Chapter 6—Consumer Segmentation Framework Developed by Commercial Firms
P-Types
Disinterested Outsiders
Tie-Dyed Grey
Passive Malcontents
Les Petite Vie
Protective Providers
Contented Traditionalists
Joiner Activists II
Mavericks
Up and Comers
VALS-Types
Innovators
Survivors
Thinkers
Believers
Achievers
Strivers
Experiencers
Makers
Chapter 7—Segmentation Examples for Business Market
Firmographic Segmentation
Employee Size
Size of Transaction
Standard Industrial Classification Code
North American Industry Classification System Code
International Standard Industrial Classification of All Economic Activities Code
Organizational Type
Buying Centralization
Location: Province and Regional Levels
Location: City Levels using CMA, Postal Code, and FSA
PART 4 Creating Stickiness
Chapter 8—Product Differentiation
Importance of Product Differentiation
Relevancy of Product Attributes
3 Approaches to Product Differentiation
Physical Differences
Perceived Differences
Support Services Differences
How about Commodity Business?
Chapter 9—Branding and Positioning
The 5-stage A.I.D.M.A. Framework
Awareness
Interest
Desire
Memory
Action
What is a brand and why is it important?
3 Functions of a Brand
Recognition
Risk Reduction
Identification
Brand Positioning
Positioning (Perceptual) Map
Chapter 10—Retaining Your Customers
Why Spend Time on Customer Retention?
The Concept of A.R.A.
Acquisition of Customer
Retention of Customer
Add-on Selling
Importance of f (CLV)
How to Calculate CLV?
What is Churn?
When to Address Churn?
Why are Customers Leaving?
Cannibalization
Fourteen Ways to Retain Your Customer
Epilogue
References
Foreword
Today, we are living in a period of chaotic transition - defined by the instantaneous flow of information, all-the-time
communication, extreme competition, pervasive business complexity and rampant globalization. The pace of change has become so rapid that companies need to rethink their approaches to Customer Relationship Management (CRM). As we move towards advanced customer analytics, sophisticated customer-facing technologies are the new battleground. Now customers have more choices than ever before and insist on the flexibility to conduct business anytime, anywhere and through any device or media.
To meet heightened customer expectations, companies must now shift their business focus from the efficiencies of supply chain management to the effectiveness of demand chain management by directing their efforts toward identifying, acquiring and retaining profitable customers. CRM now in its third stage of evolution, the most exciting time in its history. From the early days of contact management, CRM has evolved into Social Customer Relationship Management
(SCRM). SCRM is catalyzed by social technologies and utilizes the power of the cloud – in short, CRM is becoming multi-directional. Facebook, Twitter, and other social media platforms have made the fabric of the Internet richer. At long last, it’s all about customers and their needs - their dialogue and relationships can finally become the true focus of CRM. It’s no longer about technologies - the future of CRM will be social, transparent and customer-centric.
Social media is pushing customer relationships to a new frontier; creating risks and opportunities, exposing strengths and weaknesses, rants and raves, almost anything, that anyone, from anywhere, wants to say about your brand. Suddenly, what used to be private conversations between you and your customers is now public. Social CRM strategy is about customer engagement, not customer management. There is a fundamental shift in the dynamic between a company and its customers. Customers see themselves as part of a community that engages in shaping the company’s behavior and the brand’s values.
This book has been written to help readers think about the multiple facets of customer relationship management – from strategic imperatives to tactical implementations. It will help you think about how well you integrate your customer relationship management applications, program design and business processes with the rest of your marketing and customer service strategy. The advancement in social technologies will only accelerate in the coming years. The SCRM of tomorrow will differ significantly from the SCRM of today as disruptive technologies continue to emerge. The one thing that will not change is the need to focus on the customer, engaging, crafting and enhancing their experience.
My hope is that you will find this book very practical and will be able to refer back to the book as a resource when you eventually apply your ideas at work.
Idris Mootee
CEO of Idea Couture
Author, High Intensity Marketing
Preface
Customer Relationship Management (CRM) is one of the key modules in my marketing course. Virtually all of my MBA students have heard about this term and many of them can proudly name the top CRM software vendors in the market, but very few students can practically tell me what CRM means from an organizational perspective. Although all my students agree that CRM is important to an organization’s success, most of them unfortunately have no idea where or how to start the initiative.
The lack of fundamental concepts of CRM has prevented many of these students from making the best use of their CRM systems that cost them thousands if not millions of dollars. Some students even enter the endless cycle to change CRM vendor every few years when the expected return on investment (ROI) is not achieved, without realizing that the underlying problem is actually a business and not a technology one. If you do not know about your customers or understand why they select your brand, it will not help too much even if you have got the most expensive CRM package from the best vendor on this planet.
When I sit down with my class to discuss these CRM challenges, our conversation often leads to a thorough discussion of market segmentation, product differentiation and customer retention strategies. I find that mastering these academic theories and concepts well is a prerequisite to getting the most out of any CRM implementation, no matter which software vendor has been chosen. As such, I am writing this little book to help you better understand your customers, with the ultimate intention to increase your organization’s competitive advantage through launching suitable products/services that fit with their needs.