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Doc 28 Customer Relationship Management II

Doc 28 Customer Relationship Management II

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10/30/2010

 
Syntel CQA Forum Customer Relationship Management IICQA Doc No 28What is CRM?
CRM is about retaining customers! If you're truly retaining customers, you're deliveringincreased value. In a perfect world, CRM marshals marketing materials, tracks customers'histories and coordinates a company's multipronged interactions with its customers.CRM is a comprehensive approach which provides seamless integration of every area of business that touches the customer – namely marketing, sales, customer service and fieldsupport-through the integration of people, process and technology, taking advantage of therevolutionary impact of the Internet. CRM creates a mutually beneficial relationship with yourcustomers.CRM is about acquiring, developing, and retaining satisfied loyal customers; achievingprofitable growth; and creating economic value in a company's brand.
Customer Relationship Management is the practice of identifying, attracting and retaining the best customers to increase sales and profits.
Why CRM?
Several companies are turning to customer-relationship management systems and strategiesto gain a better understanding of their customer’s want and needs. Used in association withdata warehousing, data mining, call centers and other intelligence-based applications, CRM"allows companies to gather and access information about customers' buying histories,preferences, complaints, and other data so they can better anticipate what customers willwant. The goal is to instill greater customer loyalty."
Brief history
Customer Relationship Management (CRM), which swept through the business landscape in theearly 1990s, brought the promise of helping sellers
 please most of the people most of the time
.Riding the coattails of customer satisfaction would come increased organizational efficiencyand, better still, increased revenues.As CRM evolved, many companies assumed that just bolting on new technology (e.g.,client/server, call centers, sales force automation software, data warehouses, etc.) or addingnew services would enhance customer relationships. This assumption was as pernicious as itwas false. After all, you can't sell what people don't want to buy, no matter how efficient andservice-oriented your sales channel. And as for gathering customer insights, be careful whatyou wish for. Many companies faced the unsettling paradox of having advanced dataavailability and analytic techniques that quickly outpaced their ability to absorb and apply theinformation. They were left with sophisticated tools that offered little real value.
Benefits
At face value, the case for implementing a CRM system is a no-brainer. There are goodreasons why companies continue to implement these tools, even while the economicslowdown pressures them to cut back on other IT expenditures.
For starters, the cost of retaining anywhere from 5 to 10 existing customers -- the numberdepends on the analyst -- is almost the same as the cost of attracting a single newcustomer. Research from Boston, Massachusetts-based consultancy Bain & Co. shows thatevery five years, U.S. companies lose half their customers. Cutting these losses by just 5percent can double profits.
CRM tools tend to be easily implemented on a piecemeal basis, which is a source of greatrelief to those that survived -- if barely -- the seemingly never ending implementations of ERP applications in the early and mid-1990s.
Current trends
 
CRM Wave 1 CRM wave 2CRM Wave 3Call Center/ Sales Force Multi-channelConversationalEffectiveness IntegrationMarketing Early 90’sToday
CRM Improving channel Improving customer Predicting customer10718259.doc Page 1 of 4
 
Syntel CQA Forum Customer Relationship Management IICQA Doc No 28
 
GoalsefficiencyIncreasing CustomerSatisfactioninteractionsIncreasing customerretentionbehaviorBuilding brand andlifetime customer valueCRMStrategyProvide more efficientmeans of customerinteractionProvide customers withmultiple points of contact;gather insightsIntegrationcommunications andbrand across channelsResultingCustomerExperienceCustomers enjoyed moreconvenient transactions,but channels were notintegratedCustomers had moreoptions to interact with thecompany, but theexperiences werefragmented across contactpointsCustomer is given aseamlessly integratedexperience across allchannelsMarketingfocusCustomer acquisitionProduct SalesCustomer retentionCross-sellingCustomer conversationBrand Equity The major current trends in customer relationship management (CRM) can be split into threecategories--
market, executive, and implementation
trends.
Market Trends
Increasing Customer Expectations
With greater consumer education, increased availability of information, the adoption of theInternet, global competition, and more choice and deregulation in many industries,expectations are being set by direct competitors and by enterprises in other industries.Increasing customer expectations are driving the adoption of new channels, leading to poorlyimplemented multichannel strategies. This is lowering both customer satisfaction andcustomer loyalty, and making CRM even more vital.
Increasing customer relationship complexity
 The relationship-complexity function between an enterprise and its customers states that: R (f)= (number of segments) x (number of products) x (number of channels) x (number of corporations). All the elements of the equation are increasing due to new technology, greatermobility, and faster development of new products. Managing this complexity is becoming key.
A growing shift from mass production to mass customization
Customers are demanding an exact fit to their requirements. Mass customization provides ananswer to this demand for both products and services. It is made possible by the Internet,which is enabling improved supplier collaboration to support mass customization. However,this evolution to collaborative commerce is in its infancy.
Executive Trends
Intensified CEO attention on CRM
 The larger CRM consultancies and vendors are presenting evidence that successful CRMinitiatives are leading to improve profits and better stock prices. With shareholders happy,CEOs can look forward to larger bonuses, but the expectations set by IS and businessmanagement will be critical.
Formalization of governance for customer relationships
Many enterprises describe themselves as customer-centric, but few involve customeradvocates on their leadership teams. Governance for customer relationships is starting to beformalized in more advanced enterprises. However,
through 2003, just 15 percent of enterprises will "promote" customers at a senior management level through thecreation of a chief customer officer (0.8 probability).
Implementation Trends
Shift in CRM application architecture and spending
Applications developed in-house are being supplanted by packages; client/server architecturesare moving to Web-based architectures; and CRM suites that handle most functions arereplacing best-of-breed point solutions. Per-seat pricing is shifting to role-based pricing.10718259.doc Page 2 of 4
 
Syntel CQA Forum Customer Relationship Management IICQA Doc No 28
 Therefore, we expect prices to fall from $2,500 per seat to $250 per seat in three years. Thebuying of software is moving toward greater use of application service providers, leasing, andrental models. Call-center outsourcing is increasing due to a lack of skills and staff, butdatabase marketing is being insourced.
Explosion of customer data
In the past, the bulk of spending for CRM applications has been on sales and customer service.Beyond these areas, marketing and analytics are now the fastest-growing areas, due to anexplosion of customer data from transactional, personalization, clickstream, voice, and videocommunications, and the resulting analysis. We expect that customer data management (inparticular that which protects privacy) will become a key skill set.
Future trends
While incremental improvements have occurred, CRM has not yet delivered its ultimatepromise - the transformed customer experience. Companies have implemented call centersand sales force automation software and customer sales representative training. However,while improving the sales and service components of customer transactions, companies havelargely ignored "Marketing" what began as a solution for providing more efficient customer
transactions
evolved into a process by which companies could foster more meaningfulcustomer
interactions
. Today, the challenge is to focus on building lasting and profitablecustomer dialogues at all interaction and transaction touch points to build customer and brandvalue. In this next evolutionary phase of CRM, information will be exchanged and acted on inreal time.In this next evolutionary phase of CRM, information will be exchanged and acted on in realtime. Consumer history will be recorded (and remembered) and the expectations of bothparties will be met. Naturally, not every conversation will be profitable. But the series of conversations and the ongoing knowledge transfer will continue to grow, creating a memorableand differentiated customer experience, and, in the long run, a profitable relationship.
The CRM market is continuing to experience exponential growth. According toGartner Research, industry analysts estimate that the CRM market will grow tomore than76 billion dollarsby the year2005.That's a promising future indeed!
Important investments
In a recent survey of 600 enterprises headquartered in the United States across eight verticalmarkets, the following areas were rated as the most important investment to be made in thefollowing 12 months (multiple responses were allowed):Application areaOpinion Poll inPercentageElectronic commerce applications34Marketing automation29Call-center applications22Sales-force automation21Data warehouse with detailedcustomer information17Supply chain management14Enterprise resource planning12Source: Gartner Consulting
 According to Gartner Research, industry analysts estimate that the CRM market will grow tomore than76 billion dollarsby the year 2005.That's a promising future indeed!
Architecture
 
The Elements of CRM
Sales forceautomationCustomer service/callcenter managementMarketingautomationCall center telephone salesCall centers - managingaspectsof customer contactCampaign managementE-commerce10718259.doc Page 3 of 4

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