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Transcript of CRM
As Marketing Managers within Sainsburys discuss and evaluate how you would strategically utilise Customer Relationship Management (CRM) as a marketing management tool
Sainsburys and CRM
CRM Strategy Cycle
How many of you have a Nectar card and why?
What type of customer are you to Sainsburys?
CRM can be defined as “a business philosophy and set of strategies, programs, and systems that focuses on identifying and building the loyalty with retailers most valued customers”.
(Rao and Kumar 2013)
Sainsburys is currently the third largest supermarket chain in the UK behind Tesco and ASDA (Rafiq et al. 2013).
Hassan and Parves (2013) state that Sainsburys prioritises collecting information on their customers to ensure adequate information is collected and uses this important database to create their marketing strategies.
CRM has its roots in relationship marketing and it is only one aspect of relationship marketing
Collects data from customers and aims to maximize the value of the customer database and analyse individual customer data
(Verhoef and Lemon, 2012).
The purpose of CRM is to “efficiently and effectively increase the acquisition and retention of profitable customers by selectively initiating, building and maintaining appropriate relationships with them” .
(Payne and Frow, 2006)
Types of Customers
Types of Customers Continued
It is important to develop an accurate view of every customer in order to manage the customer relationship effectively (Baran and Galka, 2013, p.83)
CRM uses technology in three ways; data gathering, data storage and information delivery (Zikmund et al. 2003, p.31)
The best way for a company to obtain customer data would be at the point of sale. This would be in relation to loyalty cards such as Nectar. This card associates the purchase made with the customer (Zikmund, 2003, p.36).
Loyalty cards were introduced with the aim of acquiring customer knowledge (Mauri, 2003).
The most well-known loyalty card method would be a plastic card with a magnetic strip or a chip (Höpken at el. 2012).
The nectar card is one of the leading loyalty cards in the UK with 18.5 million people owning a nectar card (Sainsburys, 2013).
£1 = 2 points (in-store)
£1 = 1 point (fuel)
What do you think about the Nectar Process? Could Sainsburys improve anything?
CRM and Social Media
Customers value this interaction and Social CRM helps companies achieve brand loyalty (Ang, 2011; Verhoef and Lemon, 2012).
When repeat customers shop online, Sainsburys use the data they have collected to suggest to you items that they have predicted you will buy.
CRM and Social Media
An example of this is when even though sales of a certain breakfast cereal were low; the company decided it was still viable to stock this product as the customers who purchased this product were loyal customers.
Benefits of CRM
Reduces the cost of acquiring a new customer (Ko et al. 2008)
Able to monitor complaints and responses (Borchert, 2006)
Customise their approach for each customer
Increase customer satisfaction (Mithas et al. 2005)
Create competitive advantage (Mithas et al. 2005)
Helps build a relationship with the customer
Allows the company to provide excellent customer service
Create a better customer database (Nguyen et al. 2007)
Currently, there is controversy surrounding the value of loyalty cards for both businesses and customers
Worthington (2000) believes that customer loyalty is not available to purchase, it is an emotional bond that is created by trust.
CRM Strategy Cycle
Types of Customers
CRM and Social Media
Benefits of using CRM
Evaluation and Implications
CRM is essential for every company as customer loyalty is essential for the company to succeed. If Sainsburys did not use CRM, they may not be the successful company they are today.
If CRM is implemented successfully, the company can reap the benefits that it creates, including: increased customer loyalty, increased customer satisfaction and an in depth customer database, thus giving the company a competitive advantage over other retailers
(Hollensen, 2003, p627) Loyalty development in customer relationship management
(Xu and Walton, 2005) Profit-cost matrix
Anon. (2007) Sainsbury’s to trial new in-store CRM scheme. London: Metropolis International Group Ltd. Available from: http://www.talkingretail.com/news/industry-news/sainsburys-to-trial-new-in-store-crm-scheme [Accessed 28/11/13].
Ang, L. (2011) Community relationship management and social media. Journal of Database Marketing &
Customer Strategy Management, 18 (1), 31-38.
Baran, R.J. and Galka, R.J. (2013) CRM The Foundation of Contemporary Marketing Strategy. London: Routledge.
Brandweiner, N. (2012) CRM: What can Sainsbury’s tiger bread tale teach us? Available from: http://www.mycustomer.com/topic/crm-what-can-sainsbury-s-tiger-bread-tale-teach-us/136844 [Accessed: 20/11/13].
Borchert, C.A. (2006) Untangling the jungle of e-journal access issues using CRM software. Library Collections, Acquisitions, and Technical Services, 30 (3), 224-237.
Edward, M. and Sahadev, S. (2011) Role of switching costs in the service quality, perceived value, customer satisfaction and customer retention linkage. Asia Pacific Journal of Marketing and Logistics, 23 (3), 327-345.
Ferguson, D. (2013) How supermarkets get your data – and what they do with it. London: The Guardian. Available from: http://www.theguardian.com/money/2013/jun/08/supermarkets-get-your-data [Accessed 28th November 2013].
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, 4 (1), 1-10.
Hollensen, S. (2003) Marketing Management: a relationship approach, Harlow: Pearson Education Limited.
Höpken, W., Deubele, P., Höll, G., Kuppe, J., Schorpp, D., Licones, R.O.Z. and Fuchs, M. (2012) Digitalizing Loyalty Cards in Tourism. In: Anon.Information and Communication Technologies in Tourism 2012. Springer, 272-283.
Ko, E., Kim, S.H., Kim, M. and Woo, J.Y. (2008) Organizational characteristics and the CRM adoption process. Journal of Business Research, 61 (1), 65-74.
Kotler, P., Keller, K.L., Bradey, M., Goodman, M. and Hansen, T. (2009) Marketing Management, Harlow: Pearson Education Limited.
Kwon, K. and Kim, C. (2012) How to design personalization in a context of customer retention: Who personalizes what and to what extent? Electronic Commerce Research and Applications, 11 (2), 101-116.
Nguyen, T.H., Sherif, J.S. and Newby, M. (2007) Strategies for successful CRM implementation. Information Management & Computer Security, 15 (2), 102-115.
Mauri, C. (2003) Card loyalty. A new emerging issue in grocery retailing. Journal of Retailing and Consumer Services, 10 (1), 13-25.
Mithas, S., Krishnan, M.S. and Fornell, C. (2005) Why do customer relationship management applications affect customer satisfaction? Journal of Marketing, 69, 201-209.
Payne, A. and Frow, P. (2006) Customer relationship management: from strategy to implementation. Journal of Marketing Management, 22 (1-2), 135-168.
Rafiq, M., Fulford, H. and Lu, X. (2013) Building customer loyalty in online retailing: The role of relationship quality. Journal of Marketing Management, 29 (3-4), 494-517.
Rao, V.R. and Kumar, S.B. (2013) Customer relationship management in retail sector–An empirical study of spencer’s retail outlet in Warangal district of Andhra Pradesh. South Asian Journal of Marketing & Management Research, 3 (1), 129-141.
Sainsburys (2013) Nectar is the most popular loyalty scheme in the UK. London: J Sainsbury plc. Available from: http://www.j-sainsbury.co.uk/media/latest-stories/2010/20100208-nectar-is-the-most-popular-loyalty-scheme-in-the-uk/ [Accessed 28th November 2013].
Thomas, J.S. (2001) A methodology for linking customer acquisition to customer retention. Journal of Marketing Research, 38 (2), 262-268.
Wangenheim, F.V. and Bayón, T. (2007) The chain from customer satisfaction via word-of-mouth referrals to new customer acquisition. Journal of the Academy of Marketing Science, 35 (2), 233-249.
Verhoef, P.C. and Lemon, K.N. (2012) Successful customer value management: Key lessons and emerging trends. European Management Journal, 31 (1), 1-15.
Worthington, S. (2000), A classic example of a misnomer: the loyalty card, Journal of Targeting, Measurement and Analysis for Marketing, 3, 222-34.
Xu, M. and Walton, J. (2005) Gaining customer knowledge through analytical CRM. Industrial management & data systems, 105 (7), 955-971.
Zikmund, W. G. (2003) Customer relationship management : integrating marketing strategy and inform. Hoboken: Wiley.
Kirsty Jess and Karen Deane
If you were Sainsbury's Marketing Manager how would you improve our CRM strategy?
Thank you for listening
It is difficult for companies to predict their future customers as there is no data available for non-acquired prospects, (Thomas, 2001).
Customer satisfaction is important for word of mouth referrals, which is a significant factor in managing the customer relationship within a company (Wangenheim and Bayon, 2007).
Companies would benefit from increasing the number of customers they retain (Edward and Sahadev 2011).
It is for this reason that Sainsburys give new and existing customers unique vouchers at the till after each purchase to help encourage customers to spend in store again and also serves as a way of targeting specific customers when they do not use the nectar card system Anon (2007).
Kwan and Kim (2012) note that by increasing personalisation you can increase customer retention by creating a competitive edge over competitors.
Strategic Customer Care
For the customer to be involved with a company, a high degree of satisfaction is required to establish customer loyalty.
It is essential for companies to be able to recognise these loyal customers as they are essential for succeeding in strategic customer care (Hollensen, 2003, p.629).