Dr. Stephen A Oyewole Northcentral University Prescott Valley, Arizona

1. Customer Retention
Stephen A Oyewole
NORTHCENTRAL UNIVERSITY
Prescott Valley, Arizona.

2. Presentation Outline
 Introduction and definition of Customer Relationship
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Management
Determinants of Customer Relationship Management
Components of Customer Relationship Management
Customer Relationship Management Cycle
Customer Relationship Management Implementation
Benefits of Customer Relationship Management
Customer Relationship Management and Customer Loyalty
Conclusion
Resources

3. Introduction and definition of CRM
CRM is an abbreviation on Customer Relationship Management not
Customer Relationship Marketing. Management is a broader concept than
marketing because it covers marketing management, human resource
management, manufacturing management, service management, sales
management and research and development management .
Customer Relationship Management (CRM) is an integrated cross functional
focus on improving customer retention and profitability for the company.
Other definitions could be:
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Process of creating and maintaining relationship with business
customers or consumers. (Payne & Frow, 2005)
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A holistic process of identification, attracting, differentiating and
retaining customers. (Plakoyiannaki & Tzokas, 2001)
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Integrating the firm’s value chain to create enhanced customer value
at every step.

4. Determinants of Customer Relationship Management
 Trust
The willingness to rely on the ability, integrity and
motivation of one company to serve the needs of the
other company as agreed upon implicitly and
explicitly(Kalaignanam & Varadarajan, 2012).
 Value
The ability of selling organization to satisfy the needs
of the customer at a comparatively lower cost or higher
benefit than offered by competitors and measured in
monetary, temporal, functional and psychological
terms.

5. Component of CRM
Customer
CRM
Relationship
Management

6. Customer
 The customer is the only source of the company’s
present profit and the future growth. However, a good
customer, who provides more profit with less resources
is always scarce because customers are knowledgeable
and the competition is fierce.
“ Business are not to paid to reform customers they are paid
to satisfy customers” – Peter Ducker

7. Relationship
 The relationship between a company and its customers
involves continuous bi-directional communication
and interaction (Alvarez, Casielles & Martin, 2011).
 The relationship can be short term or long
term, continuous or discrete, and repeating or one
time.
 Relationship can be attitudinal or behavioral . Even
though customers have a positive attitude towards
company and its products their buying behavior is highly
situational.

8. Management
 Customer relationship management is not an activity
only within a marketing department.
 Rather it involves continuous corporate change in
culture and processes .
 The customer information collected is transformed
into corporate knowledge that lead to activities that
take advantage of the information and of market
opportunities.
 CRM required a comprehensive change in the
organization and its people.

9. Customer Relationship Management Cycle
To achieve CRM Goals Four basic tasks are required to achieve the basic goals of
CRM. (Chen & Popovich, 2003; Bhattacharya & Sen, 2003).
Customer Identification
 To serve or provide value to the customer ,the company must know or identify
the customer through marketing channels, transactions , and interactions over
time.
Customer Differentiation
 Each customer has their own lifetime value from the company’s point of view
and each customer imposes unique demands and requirements for the
company.
Customer Interaction
 Customer demands change over time. So keeping track of customer behavior &
needs is an important task of CRM.
Customization/ Personalization
 “Treat each customer uniquely” is the motto of the entire CRM process .

10. CRM Implementation
The business drivers
Competition for customer is intense. From a purely economic point of
view, firms learned that it is less costly to retain a customer than to find
a new one.
 By Pareto’s principle it is assumed that 20% of a company’s
customers generate 80% of its profits.
 In industrial sales, it takes an average of 8 to 10 physical calls in
person to sell a new customer, 2 to 3 calls to sell an existing
customer.
 It is 5 to 10 times more expensive to acquire a new customer than
obtain repeat business from an existing customer.
 A typical dissatisfied customer tells 8 to 10 people about his or
her experience. A 5% increase in retaining existing customers
translates into 25% or more increase in profitability

11. Benefits of Customer Relationship Management
Customer Relationship Management It is a business strategy that applies to
almost every organization; therefore almost all organizations stand to gain
from its use (Homburg, Droll & Totzek, 2008).
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Customers are motivated to return again and again as they receive good
customer service and continue to do business.
 CRM enables a company to target their audience more precisely and gain
customer retention, all at a lesser cost.
 CRM delivers company-wide access to customer information. Builds customer
loyalty and decreases customer loss.
 It enables an organization to create detailed profiles such as customer
likes/dislikes etc.
 CRM gains the trust of customers by meeting their needs in a more
personalized way.
 Companies opting for CRM find it easy to identify new selling opportunities.

12. CRM Enhancing Customer Loyalty
Customer retention is imminently important for organization success as the cost of acquiring a new
customer is greater than holding onto an old customer. – CRM achieves customer loyalty with ease.
TYPES OF CUSTOMER RETENTION PROGRAMS :
 Discount Programs
 Card Programs
 Loyalty Programs
Benefits of customer retention programs :
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They permits the collation of important customer data.
They allow the usage of this data in the understanding and dealing of customers.
The data collected is often used while making valuable customer decisions.
They assist in making the customer feel special.
They boost customer service and thereby increases customer loyalty.
Pitfalls of customer retention programs :
The main inhibition in this area is the cost factor. Customer retention program often
involve huge costs to the organization and most firms are reluctant to embark on this. In
this respect it is important to focus on the possible returns rather than the cost involved
as customer retention is a direct simulator for profitability and growth.

13. Conclusion
CRM is a business philosophy based on trust and value
The core function of CRM is the value creation process
 Customer relationships develop over time
 The role of global salespeople in the process is that of both
relationship builders and relationship promoters
 CRM requires a cultural change with organizations.
 The basic premise of CRM is to offer superior value to
customers in an effort to turn prospects into
customers, customers into loyal customers, and loyal
customers into partners.
It is essential to bear in mind that :
“If you are not listening to your customers, your competitors will.”

14. References
Alvarez, L. Casielles, R. and Martin, A. (2011). Analysis of the role of
complaint management in the context of relationship marketing.
Journal of Marketing Management, 27 (1-2), 143-164 . Retrieved from
ebscohost.com
Bhattacharya, C. and Sen, S. (2003). Consumer-company identification:
A framework for understanding consumers’ relationships with
companies. Journal of Marketing 67 (2), 76-88. Retrieved from
ebscohost.com
Chen, I. and Popovich, K. (2003). Understanding customer relationship
management (CRM): People, process and technology, Business Process
Management Journal, 9 (5), 672 – 688. Retrieved from
emeraldinsight.com.
Drucker, P. (2001).Management Challenges for the 21st Century. Harper
Business, New York.

15. References
Homburg, C. Droll, M. and Totzek, D. (2008). Customer prioritization:
Does it pay off, and how should it be implemented? Journal of
Marketing 72 (5), 110-130. Retrieved from ebscohost.com
Kalaignanam, K. and Varadarajan, R. (2012). Offshore outsourcing of
customer relationship management: conceptual model and
propositions. Journal of the Academy of Marketing Science 40 (2), 347363. Retrieved from ebscohost.com
Millman, T. Wilson, K.(1995). From key account selling to key account
management, Journal of Marketing Practice: Applied Marketing
Science, 1 (1), 9 – 21

16. References
Payne, A. and Frow, P. (2005). A strategic framework for customer
relationship management. Journal of Marketing, 69 167-176. Retrieved
from ebscohost.com
Plakoyiannaki, E. and N. Tzokas (2001). Customer Relationship
Management: a Capability Portfolio Perspective, Conference
Proceedings of the European Marketing Academy Conference (EMAC),
Norwegian School of Economics and Business Administration, Bergen,
Norway.
Wilkinson, I. and Young, L. (1994). Business dancing: The nature and
role of inter firm relations in business strategy. Asia-Australia
Marketing Journal, 2(1), 67– 79. Retrieved from sciencedirect.com