Customer Relationship Management (CRM) Fundamentals

These vocabulary flashcards cover the core concepts of Customer Relationship Management (CRM) as detailed in the lecture transcript, including data collection methods, analysis techniques like RFM, and the customer pyramid segmentation.

Customer Relationship Management (CRM)

A philosophy, set of strategies, programs, and systems focusing on identifying & building loyalty with a retailer’s most valuable customers.

Share of Wallet

The percentage of the customers’ purchases from the retailer.

Customer Loyalty

Commitment to purchasing merchandise & services from a retailer, resisting efforts of competitors, and having an emotional attachment to the retailer.

CRM Process

An iterative process that turns customer data into customer loyalty using four activities: collecting customer data, analyzing data, developing programs, and implementing programs.

Transactions

A component of a customer database featuring a complete history of purchases, including purchase date, price paid, SKUs bought, and promotional stimulation.

Customer Contacts

Interactions or touch points between the retailer and customer, such as web site visits, service desk inquiries, call center interactions, and social media comments.

Customer Preferences

Data regarding what a customer likes, including brands, flavours, colours, fabrics, textures, and sizes.

Frequent Shopper Cards

Loyalty programs that identify and provide rewards to customers who patronize a retailer.

Biometrics

The use of human characteristics such as fingerprints or voice to identify customers at the point of sale.

Radio Frequency Identification (RFID)

Technology where an in-store reader gets customer information from devices they carry and product tags; used to collect information on in-store movements.

PoPI Act

Legislation in RSA (Protection of Personal Information Act) that ensures responsible conduct by institutions when collecting, processing, storing, and sharing personal information.

Customer Lifetime Value (CLV)

A customer’s expected contribution to the retailer’s profits over their lifetime relationship with the retailer.

RFM Analysis

A technique used to segment customers for promotional purposes based on Recency, Frequency, and Monetary value.

Recency

A component of RFM analysis showing how recently customers have made a purchase.

Frequency

A component of RFM analysis showing how frequently customers make purchases.

Monetary

A component of RFM analysis showing how much a customer has bought.

Retail Analytics

Statistical techniques and models aimed at improved retail decisions through the use of customer data analysis.

Data Mining

A data processing technique used to identify patterns in customer data.

Market Basket Analysis

A popular data mining application that focuses on the composition of items bought during a single shopping trip.

Tiered Rewards

A frequent-shopper programme feature using cascading levels to encourage customers to spend more to reach a higher status.

80-20 Rule

$80\%$ of sales or profits come from $20\%$ of the customers.

Platinum Segment

The best, most loyal, and least price sensitive customers in the customer pyramid.

Gold Segment

The next best customers who are profitable but not as loyal as the platinum segment.

Iron Segment

Customers in the pyramid who are considered undeserving of much attention.

Lead Segment

Customers who have negative LTV (Lifetime Value) and are often targeted to be led out.

Customer Alchemy

The process of converting gold and iron customers into platinum customers.

Add-on Selling

Offering and selling more products and services to existing customers to increase the retailer's share of wallet.