Section I

Conceptual Framework for CRM

What is Customer Relationship management?

Customer relationship management is creating a team relationship among sales, marketing, and
customer support activities within an organization.
Another narrow, yet relevant, viewpoint is to consider CRM only as customer retention in which
a variety of after marketing tactics is used for customer bonding or staying in touch after the sale
is made.
Shani and Chalasani define relationship marketing as “an integrated effort to identify,
maintain, and build up a network with individual consumers and to continuously
strengthen the network for mutual benefit of both sides, through interactive, individualized
and value-added contacts over a period of time”.
The core theme of all CRM and relationship marketing perspectives is its focus on co-operative
and collaborative relationships between the firm and its customers, and/or other marketing
actors.
CRM is based on the premise that, by having a better understanding of the customers’ needs and
desires we can keep them longer and sell more to them.
Growth Strategies International (GSI) performed a statistical analysis of Customer satisfaction
data encompassing the findings of over 20,000 customer surveys conducted in 40 countries by
Info quest.
The conclusions of the study were:

• A Totally Satisfied Customer contributes 2.6 times more revenue to a company as a

Somewhat Satisfied Customer.
• A Totally Satisfied Customer contributes 17 times as much revenue as a Somewhat
Dissatisfied Customer.

• A Totally Dissatisfied customer decreases revenue at a rate equal to 1.8 times what a Totally
Satisfied Customer contributes to a business.
• By reducing customer defection (by as little as 5%) will result in increase in profits by 25%
to 85% depending from industry to industry.

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An important facet of CRM is “customer selectivity”. As several research studies have shown
not all customers are equally profitable (Infact in some cases 80% of the sales come through
20% of the customers). The company must therefore be selective and tailor its program and
marketing efforts by segmenting and selecting appropriate customers for individual marketing
programs. In some cases, it could even lead to “ outsourcing of some customers” so that a
company better utilize its resources on those customers it can serve better and create mutual
value. However, the objective of a company is not to really prune its customer base but to
identify appropriate customer programs and methods that would be profitable and create value
for the firm and the customer. Hence, CRM is defined as:
Customer Relationship management is a comprehensive strategy and process of acquiring,
retaining and partnering with selective customers to create superior value for the company
and the customer.
As is implicit in the above definition, the purpose of CRM is to improve marketing
productivity. Marketing productivity is achieved by increasing marketing efficiency and by
enhancing marketing effectiveness. In CRM, marketing efficiency is achieved because
cooperative and collaborative processes help in reducing transaction costs and overall
development costs for
the company. Two important processes for CRM include proactive customer business
development and building partnering relationship with most important customers. These lead to
superior value creation.
The basic concept is that the customer is not someone outside the organization, he is a part of
the organization.
Key CRM principles

Differentiate Customers: All customers are not equal; recognize and reward best customers
disproportionately. Understanding each customer becomes particularly important. And the same
customers’ reaction to a cellular company operator may be quite different as compared to a car
dealer. Besides for the same product or the service not all customers can be treated alike and
CRM needs to differentiate between a high value customer and a low value customer.
What CRM needs to understand while differentiating customers is?
– Sensitivities, Tastes, Preferences and Personalities

– Lifestyle and age

– Culture Background and education

- Physical and psychological characteristics

• Differentiating Offerings

→ Low value customer requiring high value customer offerings

→ Low value customer with potential to become high value in near future

→ High value customer requiring high value service

→ High value customer requiring low value service

 High value customers who
High Low value customers who require a high level of service are
Require high levels of service maintained without expanding
Must either purchase the higher level the costly offering to the entire
of service or become our competitors customer population
Service low value/high cost customers
Requirement

Low

Low Customer Value High

Fig. 1 Customer value – Service Matrix

• Keeping Existing Customers

Grading customers from very satisfied to very disappoint should help the organization in
improving its customer satisfaction levels and scores. As the satisfaction level for each customer
improve so shall the customer retention with the organization.

• Maximizing Life time value

Exploit up-selling and cross-selling potential. By identifying life stage and life event trigger
points by customer, marketers can maximize share of purchase potential. Thus the single adults
shall require a new car stereo and as he grows into a married couple his needs grow into
appliances.

• Increase Loyalty

Loyal customers are more profitable. Any company will like its mind share status to improve
from being a suspect to being an advocate.
Company has to invest in terms of its product and service offerings to its customers. It has to
innovate and meet the very needs of its clients/ customers so that they remain as advocates on the
loyalty curve. Referral sales invariably are low cost high margin sales.
 (Fig 2. Categorizing Customers)
High *You have No Choice But To
Handle Them Very Carefully.
Strategi
c Will Consume Energy
Import
ance To
# Think Of Innovative Ways of
Your
Getting them On Your Side, But
Busines
The ‘Cost Of Acquisition’ Must
s Plan
*Focus On Short Term Profitability.
Spend Minimum Energy To Meet Your
Objectives.
#Don’t Pursue.
LowUse Opportunity As It Comes.
Low
Short Term Acquisition Shouldn’t Affect
Relationship & Profitability
Potential
Summarizing CRM activities:
The CRM cycle can be briefly described as follows:
*Cultivate Relationship.
Spend Energy.
Go Out Of Your Way.
*Existing
Customers
#Think Of Strategies TO Move
#Potential
Them Away From Competition.
Customers
*Very cautious decision needed. Re-
examine business Plan & Strategy.
Evaluate That Your Loss (i.e. Your
competitor’s gain) Doesn’t become
nightmare for you.
#Needs In-depth strategic review as
acquisition alone and dissatisfaction later
High
could be more harmful
 1. Learning from customers and prospects, (having in depth knowledge of customer)
2. Creating value for customers and prospects
3. Creating loyalty
4. Acquiring new customers
5. Creating profits

Learning from
customers &
Creating prospects
Profits

Acquiring new
Fig.3 5
customers 1

3 Creating value for

CRM Activities 4 customers &
prospects

2
Creating loyal
customers
 Customer Relationship Life Cycle
CRM facilitates closed- loop customer interactions through all phases of the customer relation life
cycle including:

1. Customer Engagement 2. Business Transaction

• Marketing Planning and • Order Acquisition
Campaign Management • Internet Pricing and
• Telemarketing and Lead Configuration
Generation • E-Selling
• Opportunity Management • Telesales
• Sales Activity and Contact • Field Sales
Management • Profitability Analysis
• Customer Segmentation, • One Step Buying and Selling
Product, and Service Profiling
• Collaborative Content
Management
3. Order Fulfillment 4. Customer Service
• Complete Order Life Cycle • Interaction Center
Process • Internet Customer Self-Service
• Real-Time Availability Checks • Service Management
• Contract, Billing, and Financials • Claims Management
Management • Field Service -- Mobile Service
• Fulfillment Visibility and Order • Field Service -- Dispatch
Tracking • Integration of Marketplace
Services
 Customer Engagement
• Marketing Planning and Campaign Management -- Enables complete marketing campaigns,
including content development, audience definition, market segmentation, and communications
• Telemarketing and Lead Generation -- Facilitates customer segmentation, lead
qualification, call list management, and monitoring of campaign progress by using
integrated analytical CRM functionality
• Opportunity Management -- Provides sales tracking and sales forecasting; helps plan
sales approaches, identify key decision makers, and estimate potential-to-buy and
potential closing dates
• Sales Activity and Contact Management -- Organizes daily workloads and customer
contact information for display in calendar application; provides links to Business
Intelligence reporting capabilities
Business Transaction
In the business transaction phase of the relationship life cycle Customer Relationship
Management supports the following key functional areas:
• Order Acquisition -- Enables planning, organizing, and implementation of sales
strategy; monitors sales pipeline, sales portfolio, and sales budget; facilitates coordination
of budgets, forecasts, and reports on product and pricing trends
• Internet Pricing and Configuration -- Delivers online systems that allow users to
configure products online and compare prices across different catalogs and marketplaces;
includes shopping basket functions
• E-Selling -- Provides solution for selling products and services via the Internet; covers all
phases of sales cycle, including one-to-one marketing, catalog browsing, search, order
placement, payment, contract completion, and customer support
• Telesales -- Manages inbound and outbound calls; handles high call volumes; provides
efficient user interface; integrates sales information from back-office systems and product
information from online catalogs
• Field Sales -- Delivers key customer and prospect information to sales personnel at any
place, at any time; facilitates planning and maintenance of sales activities, such as
appointments, visits, and calls, and provides activity reports; creates quotations and takes
orders; includes support for mobile and wireless devices
Order Fulfillment
In the order fulfillment phase of the relationship life cycle Customer Relationship Management
supports the following key functional areas:
• Complete Order Life Cycle Process -- Provides the ability to track and trace orders at
all points along order management, manufacturing, distribution, and service processes;
proactively notifies customers of changes that affect delivery
• Real-time Availability Checks -- Enables allocation of resources in real-time at the
front-end; includes real-time access to inventory levels, production capacity, and lead-
time requirements across the entire supply chain; enables visibility into product and
service delivery dates
• Contract, Billing, and Financials Management -- Provides information about customer
contracts, billing status, and accounts; integrates back-office functions
• Fulfillment Visibility and Order Tracking -- Enables real-time tracking of order
fulfillment; provides unique, customized and "guided" content for customers; allows
sharing of information with customers via the Internet
Customer Service
In the customer service phase of the relationship life cycle Customer Relationship Management
supports the following key functional areas:
• Interaction Center -- Provides inbound and outbound call processing, e-mail
management, and activity management to track, monitor, and enhance all customer
contact; supports multiple channels for customer communication, including telephony
and Web; integrates industry-leading eFrontOffice call center applications from Nortel
Networks Clarify; provides certified interfaces to leading computer telephony integration
(CTI) solutions
• Internet Customer Self-Service -- Offers customers and prospects access to information
and customer service functions via Internet; supports effective
• customer self service; includes case-logic system featuring advanced decision support for
problem determination and resolution
• Service Management -- Meets varied demands of service management business; handles
customer installations; facilitates simple and complex services; supports services carried
out at customer site or in-house repair center (depot); supports involvement of external
service providers; integrates contract management; checks customer warranties when
 services are performed; calculates services charges; integrates information from materials
management, cost accounting, billing, and accounts receivable; monitors day-to-day
operations; helps decision makers with strategic management issues
• Claims Management -- Facilitates handling of entire claims process
• Field Service - (Mobile Service) -- Delivers and tracks customer and account
information for field service personnel; provides service planning and forecasting,
scheduling, and dispatching functionality through tight integration with fulfillment
systems; includes support for mobile and wireless devices
• Field Service - (Dispatch) -- Enables rapid allocation of service engineers and materials
to meet incoming service requests
• Integration of Marketplace Services -- Provides access to a broad range of applications and
services hosted on virtual marketplace

Figure 4 Customer Life Cycle Management

Business Transaction

Customer Retention
and referrals for new
customers

Customer Order Fulfillment

Engagement

Customer Service
The Emergence of CRM Practice

The Past:
Looking back at a snapshot history of marketing, we can see the following clear developments
and progression over the last four decades:
• 1960’s – the era of Mass Marketing, when Gibbs SR toothpaste began the first marketing of
this kind with its black and white campaign.

• 1970’s – saw the beginning of segmentation, direct mail campaigns and early telemarketing
(such as publishing)

• 1980’s – where Niche marketing made millionaires of those who were best at it.

• 1990’s – Relationship Marketing. The explosion of telemarketing and call centers, all set up
to develop relationships with customers. The recognition of the true value of retention and
the use of Lifetime Value as a business case.
In addition to this, a number of key marketing concepts can also be used to see where CRM has
developed:

• Satisfying Needs, Customer Orientation

• The organization needs to be arranged so that all functions contribute

• Profit must be the consequence of delighting customers (Kotler)

Developing customer relationship has historical antecedents going back into the pre industrial
era. Similarly artisans often developed customized produce for each customer. Such direct
interaction led to relational bonding between the producer and the consumer. It was only after
industrial era’s mass production society and the advent of the middlemen that there were less
frequent interactions between producers and the consumers leading to transactions oriented
marketing. The production and consumption factions got separated leading to marketing
functions being performed by the middle men and middlemen are in general oriented towards the
economic aspects of buying since the largest cost is often the cost of goods sold.
In recent years however, several factors have contributed to the rapid development and evolution
of CRM. These include: -

1. The growing de-intermediation process in many industries due to the advent of sophisticated
computer and telecommunication technologies that allow producers to directly interact with
end-customers. For example, in many industries such as airlines, banks insurance, software
or household appliances and even consumables, the de-intermediation process is fast
changing the nature of marketing and consequently making relationship marketing more
popular. Databases and direct marketing tools give them the means to individualize their
marketing efforts.
2. Advances in information technology, networking and manufacturing technology have helped
companies to quickly match competition. As a result product quality and cost are no longer
significant competitive advantages.
3. The growth in service economy. Since services are typically produced and delivered at the
same institution, it minimizes the role of the middlemen.
4. Another force driving the adoption of CRM has been the total quality movement. When
companies embraced TQM it became necessary to involve customers and suppliers in
implementing the program at all levels of the value chain. This needed close working
relationships with the customers. Thus several companies such as Motorola, IBM, and
General Motors, Xerox, Ford, Toyota, etc formed partnering relations with suppliers and
customers to practice TQM. Other programs such as JIT and MRP also made use of
interdependent relationships between suppliers and customers.
5. Customer expectations are changing almost on a daily basis. Newly Empowered customers
who choose how to communicate with the companies across various available channels.
Also nowadays consumers expect a high degree of personalization.
 6. Emerging real time, interactive channels including e-mail, ATMs and call centre that must be
synchronized with customer’s non-electronic activities. The speed of business change,
requiring flexibility and rapid adoption to technologies.
7. In the current era of hyper competition, marketers are forced to be more concerned with customer retention and
customer loyalty.

CRM Formation Process

In the formation process, three important decision areas relate to defining the purpose (or
objectives) of engaging in CRM, selecting parties (or customer partners) for appropriate CRM
programs and developing programs (or relational activity schemes) for relationship engagement
with the customer.

Team Structure

Purpose
Role Specification
 Increase
Planning Process Relationship Performance
Effectiveness
 Strategic

 Financial
Process Alignment
 Marketing
Programs
→ Retention
 Account Management Monitoring Process

 Retention Marketing
Communication

Employee Motivation
Partners
 Criteria
 Employee Training

Evolution

• Enhancement

Fig 5. CRM Process Framework

Business Objectives From CRM
The following are some of the strategic objectives offered by the Sales Applications in the CRM
suite:
• Increased Revenue
Focus your sales force on increasing your company’s revenues through better Information and
better incentives to drive top line growth.
Through a CRM integrated solution, sales reps can access and share account and contact
management information throughout the enterprise, facilitating team selling that will lead to
closing more deals, faster. It also allows sales reps to effectively target their selling efforts to
focus on high-value deals and meet revenue targets.
• Improve Global Forecast and Pipeline Management
Improve information access, forecasting and pipeline management to improve your
organization's ability to close deals.
Field Sales Online provides up-to-the minute pipeline and forecasting information to an account
manager, sales manager, or territory manager. For an account, sales rep, or sales group, a pipeline
analysis is available real time by sales channel, sales status, and sales stage. Field Sales Online's
multi-currency consolidation of divisional forecasts provides sales executives with a higher,
global visibility of their company revenue forecast.
Sales reps can review and monitor the health of their sales pipeline through graphical views.
Sales reps can easily manage and view any combination of won, forecasted, upside or lost
pipeline opportunities by depicting their sales information through this fully interactive interface.
Sales reps can also define a forecasting window on a "rolling" schedule for any number of pre-
defined periods. This gives your sales organization the flexibility to project forecasts for multiple
periods, freeze forecasting periods, and retain historical information for trend and win/loss
analysis. Sales reps can also generate sales forecasts in units as well as currency.

• Improve Win Probability

Improve the focus of your sales efforts with better information to close deals.
Global -line view of their entire sales pipeline-across business units and products. With this view,
sales organizations can better qualify leads and assign organizations have a top their top sales
reps to the top accounts that have the highest win probability. Sales reps also have access to
competitive information collected from deals lost through pipeline management features, thus
increasing the chances for a successful sale. Through mobile functionality, sales reps have the
ability to download complete territory information to their laptops for better account
management while on the road. Account, contact, activity, and opportunity information can be
accessed and updated throughout the sales cycle, completely disconnected from the corporate
network. Next time the sales rep connects to the network, the information is uploaded and is
available throughout the organization.
• Reduce Cost of Sales
New technologies can lower the cost of deploying sales automation solutions and at the same
time improve the effectiveness of your sales efforts.
Field Sales Online reduces implementation time as well as promotes sustained use of the
application by the sales force, reducing the cost of deploying sales automation solutions within
your organization. Field Sales Online's Web architecture enables global deployment and upgrade
to remote users as well as easy customization. Dynamic menus and tabs facilitate navigation and
eliminate the need for user training. Users can access summary information for their customers,
opportunities, and compensation by a single click of the mouse, export the information to their
preferred spreadsheet or drill-down to the lowest level of detail. This reduces costs and extends
the mobility of sales one step further with the introduction of application support for mobile
hand-held devices.

• Increase Sales Rep Productivity.

Reduce the steps involved in tracking and quoting customer data with integration of sales
capabilities across your enterprise.
Field Sales Online provides sales managers with an efficient tool to monitor sales force
performance. Opportunities and pipeline are tracked at each stage of the sales funnel by channel,
sales group, sales rep, or partner sales rep. In addition, sales managers and executives can
identify their top and bottom performers. Managers can then analyze background, training, and
tools used by their top performers to replicate successful profiles within the sales organization to
maximize its efficiency and performance.
• Promote Sales Representation Retention
Empower your sales force to proactively track and monitor their performance and compensation
levels to better incentive them to achieve goals and be successful within their positions and for
your company.
Sales applications enable sales reps to view their compensation summary, the breakdown of their
commission by deal, product line, and period, adjustments and transactions. In addition, sales
reps can "blind-rank" themselves at anytime to measure their performance against a group of
peers. Sales reps can forecast their future compensation and commissions based on their current
pipeline and focus their selling time on the most valuable opportunities.
Effective tracking and reporting options provide verification to the sales force that they are
receiving appropriate compensation, so they can track their own performance.
Sales Compensation offers flexible reporting access, letting you define the information users can
access. For example, you can allow users to create reports for only their commission and
performance data, or sales managers to create reports related to the sales people who are assigned
to them within the salesperson hierarchy.

The objectives for Marketing Applications offered by a CRM suite are as follows
• Closed- loop Marketing
Improve marketing management and programs with a comprehensive marketing system that
supports planning, campaign management, execution, Internet support and analysis.
Marketing Applications automates the entire marketing process from demand creation to revenue
recognition. Designed specifically for marketing professionals, the application automatically
collects campaign results and tracks campaign effectiveness across different sales channels, by
market segments, and even individual customer results. This level of detail enables marketers to
reduce costs while increasing the effectiveness of their marketing efforts.
• Better Information for Better Management
Implement highly focused, targeted campaigns with better returns on your marketing
investments.
Marketing applications are tightly integrated with the other applications of the CRM suite as well
as the ERP applications. This integration enables marketers to tap into the wealth of data
collected through every customer "touch" with their company whether through field sales, a call
center, or the Web. Without a dependence on simple demographics, marketers will be able to
profile customers based on any number of criteria including sales cycle, payment preference, and
purchase frequency, to tailor messages and campaigns with better accuracy for highly focused,
individualized marketing campaigns.
• Expand Marketing Channels Through
Utilize the power of the Internet to increase your marketing reach and effectiveness. In addition
to supporting traditional marketing and demand creation channels such as direct mail and tele-
business, many vendors are enhancing the integrated closed-loop marketing application through
relationships with several strategic third-party vendors.

The combination of these applications will expand the automation of the marketing planning and
execution process over multiple deployment channels and sales models, specifically through the
Web. By leveraging the Web as a channel, Marketing applications will help companies capitalize
on this rapidly expanding opportunity to reach a larger audience with their marketing campaigns.
The objectives for Service Applications offered by a CRM suite are as follows
• Service Increases Profitability
Create a profit center out of your service organization using operational and customer
information to reduce costs and generate more revenues.
Service application enables organizations to reduce costs by providing a comprehensive closed
loop support and service information management system. Its comprehensive resource
management capabilities enable organizations route the calls to the right agent to reduce call
resolution time. Its enterprise wide customer management ability enables you to reduce billing
time with built-in integration between contracts, warranties, resource usage and the billing
system. Further, with interfaces to customer care, organizations can track total customer contact
history to increase customer knowledge and reduce redundancies and resolution time. Fast parts
rotation enables reduced inventory levels and therefore, reduced costs.
• Service Improves Service Delivery
Create an efficient and effective service business using integrated enterprise-wide information
available in other Front Office and ERP applications.
Many of the features that increase profitability also streamline and improve organization’s
service delivery. Service Applications provides complete support for the aftermarket service
cycle enabling companies to improve response times by sending the right engineer to a field
service call, or improve customer service by routing a support call to the agent trained in
supporting a particular product. The Customer Care features of Service Applications also provide
the customer management information to allow agents to respond to a variety of customer
inquiries during one call without transferring the customer from person to person.
• Service Helps organizations to Delight Customers
Provide enhanced customer care, service and customer information management across your
organization to improve customer satisfaction and loyalty.
With an end-to-end Customer Care and Service Solution, Organizations can achieve a full 360-
degree view of their customer. This translates into better response to customer's needs; an ability
to extend proactive customer management programs as well as have the information at your
disposal to better understand the customer. Service applications also track all product defect
information, which enables organizations to proactively manage customer issues, so that they are
well informed and can also accurately inform customers of service issues. The built-in self-
learning knowledge base enables companies to leverage employee knowledge and achieve skills
transfer, increasing employee retention and reducing customer churn. Additionally, Service
Applications enables organization’s customers to communicate with the company though many
different venues, web, call centers, and directly with Field Representatives, offering customers
flexibility in interacting with the company. This integrated customer contact capability ensures
that the organization’s customers receive consistent service and information, thus reduce his need
to turn to one of the competitors for new products or services.
• Service Helps organizations Differentiate their Product
Distinguish business by offering service as a differentiator using multiple channel
communications with customers, full enterprise wide view of customer information.
As products become commoditized, the next purchase decision customers make is increasingly
based on either the quality of service or the perceived care they receive from the company.
Service Applications by enabling both improved product service, and customer care, help
organization’s provide their customers with a positive experience in dealing with the company,
maximizing the likelihood of additional product purchases.
 • Service Applications Grows Company’s "Share of Customer Wallet"
Service Applications help to leverage expanded business opportunities extending beyond
company’s service needs, as well as tailoring the service offering to specifically address any
customer’s needs.
Service Applications provides companies to turn support service into a high return profit center.
Service enables the company to attract new service market opportunities by servicing third party
products with its ability to track competitive products and service repair information. The
Companies can also anticipate their customer needs and proactively build and sell new support
and service offerings. Further, they can tailor Service Contracts individually, by customer, by
product or by business, enabling new revenue streams with customized service. Additionally,
they can also maximize the logistics and costs within their expanding service business with
integrated sales and spare parts forecasting.
CRM Programs
A careful review of literature and observation of corporate practices suggest that there are three
types of CRM programs: continuity marketing; one-to-one marketing; and, partnering programs.

These take different forms depending on whether they are meant for end-consumers, distributor
consumers, or business-to-business customers.

Table 1 presents various types of CRM programs developed for different types of customers.

Custom er Types Mass Markets Distri- Business to

Business
Program Types butors
Markets
Continuity • After- • Continuous • Special
Marketing
Marketing Replenishment Sourcing

• Loyalty • ECR Programs Arrangements

Programs

• Cross-Selling
One-to-One • Permission • Customer Business • Key Account
Marketing Marketing Development • Global
• Personalization Account
Partnering/ • Affinity • Logistics • Strategic
Company- Partnering Partnering Partnership
Marketing • Co-Branding • Joint Marketing • Co-Design

• Co-
Development

Table 1 CRM Programs

Continuity Marketing Programs
Take the shape of membership and loyalty card programs where customers are often rewarded
for their member and loyalty relationships with the marketers. The basic premise of continuity
marketing programs is to retain customers and increase loyalty through long-term special
services that has a potential to increase mutual value through learning about each other.

One-to-one Marketing
Meeting and satisfying each customer’s need uniquely and individually. In the mass markets
individualized information on customers is now possible at low costs due to the rapid
development in the information technology and due to availability of scalable data warehouses
and data mining products. By using online information and databases on individual customer
interactions, marketers aim to fulfill the unique needs of each mass-market customer.
Information on individual customers is utilized to develop frequency marketing, interactive
marketing, and after marketing programs in order to develop relationship with high-yielding
customers. In the context of business-to-business markets, individual marketing has been in place
of quite sometime. Known as Key Account Management Program, here marketers appoint
customer teams to husband the company resources according to individual customer needs.

Partnering Programs
The third type of CRM programs is partnering relationships between customer and marketers to
serve end user needs. In the mass markets, two types of partnering programs are most common:
co-branding and affinity partnering.
CRM and Related Concepts

Knowledge Management (KM) with focus on CRM

As Peter Drucker defined “Information is data endowed with relevance and purpose”.
To effectively implement a CRM solution it is very important to identify real knowledge about
different types of customers (Viz. Most valued customers, Most grow able customers, below zero
customers) from plethora of internal and external data, figures, surveys, etc. A straightway
technique is to create a data warehouse, thereafter information which is required to effectively
implement principles of CRM, could be mined out of this data warehouse.
Marketing, sales after-sales people would be knowledge workers. Front office could be more
productive if they could utilize customer knowledge. Knowledge Management (KM) is about
embracing a diversity of knowledge resources, like legacy systems, existing data warehouses,
portals, websites, customers, suppliers, partners, external marketing research agencies and
cultivating the knowledge where it resides.

Metrics, ROI, Balance Scorecard method, benchmarking are some of the common technique
of KM system evaluation. KM implementation is the key to CRM.
It’s a proven fact that 80% of organization revenues come form 20% of its customers, it becomes
imperative to design CRM solutions keeping in mind these most valuable customers and to
leverage 80% non structured data of about 20% of these most valuable customers.
Just as more tangible corporate assets like computer systems have a finite shell life, so too does
knowledge, it must be available at the right time to be able to act upon it. Retaining tacit
knowledge (derived from experiences, data and documents) means retaining the individual,
which is invariably not possible. It is possible to generate explicit knowledge from tacit
knowledge, but it’s a complex exercise.

The key ingredient of this exchange is face-to-face sharing of knowledge or virtual

environmental tools like Lotus Notes, which can facilitate tacit knowledge exchange. Hence for
tacit knowledge exchange text mining is very useful and important. There are ways to do text
mining, like search engines, web solutions, text analysis tools, etc. The key to successful
customer KM is personalization, i.e. how to extract the knowledge that is pertinent to the user
and translate it into a format that is easily understood. The choice of Customer Knowledge
Management (CKM) architecture should have a layered approach. Existing systems should be
seamlessly linked with the proposed layer. The choice for CKM system could be Web (Enterprise
information portal) or a packaged solution such as Lotus Notes, Microsoft solution.

ERP and CRM

Like ERP, CRM solutions focus on automating and improving business processes, albeit in front-
office areas such as marketing, sales, customer service, and customer support. Whereas ERP
implementation can result in improved organizational efficiency, CRM aims to provide
organizational effectiveness by reducing sales cycle and selling cost, identifying markets and
channels for expansion, and improving customer value, satisfaction, profitability, and retention.
While CRM applications provide the framework for embodying, promoting and executing best
practices in customer facing activities, ERP provides the backbone, resources and operational
applications to make organizations more efficient in achieving these goals.
 Technological Tools for CRM
Tools

•Customer database

A good customer information system should consist of a regular flow of information, systematic
collection of information that is properly evaluated and compared against different points in time,
and it has sufficient depth to understand the customer and accurately anticipate their behavioral
patterns in future. The customer database helps the company to plan, implement, and monitor
customer contact. Customer relationships are increasingly sustained by information systems.
Companies are increasingly adding data from a variety of sources to their databases. Customer
data strategy should focus on processes to manage customer acquisition, retention, and
development.
Call Center helps in automating the operations of inbound and outbound calls generated between
company and its customer. These solutions integrate the voice switch of automated telephone
systems (e.g. EPABX) with an agent host software allowing for automating call routing to agents,
auto display of relevant customer data, predictive dialing, self service Interactive Voice Response
systems, etc. These systems are useful in high volume segments like banking, telecom and
hospitality. Today, more innovative channels of interacting with customers are emerging as a result
of new technology, such as global telephone based calls centers and the Internet. Companies are
now focusing to offer solutions that leverage the Internet in building comprehensive CRM systems
allowing them to handle customer interactions in all forms.

•Systems Integration

While CRM solutions are front office automation solutions, ERP is back office automation
solution. An ERP helps in automating business functions of production, finance, inventory, order
fulfillment and human resource giving an integrated view of business, where as CRM automates
the relationship with customer covering contact and opportunity management, marketing and
product knowledge, sales force management, sales forecasting, customer order processing and
fulfillment, delivery, installation, pre-sale and post-sale services and complaint handling by
providing an integrated view of the customer.

It is necessary that the two systems integrate with each other and complement information as well
as business workflow. Therefore, CRM and ERP are complementary. This integration of CRM
with ERP helps companies to provide faster customer service through an enabled network, which
can direct all customer queries and issues through appropriate channels to the right place for
speedy resolution. This will help the company in tracking and correcting the product problems
reported by customers by feeding this information into the R&D operations via ERP.
Traditional Approach to CRM Web-Enabled & Integration
Approach
Fig 7: CRM – A FRAMEWORK

• Customer Contact by • Customer Information

Telephone System

Mail • Customer Database

In Person • Electronic Point of Sale

• Personal Selling • Sales Force Automation

• After Sales Service • Automation of Customer

 Integration with
technology

(Web & Internet)

Data Mining for CRM: Some Relevant issues

Data mining is an important enabler for CRM. Advances in data storage and processing
technologies have made it possible today to store very large amounts of data in what are called
data warehouses and then use data mining tools to extract relevant information. Data mining
helps in the process of understanding a customer by providing the necessary information and
facilitates informed decision-making.
Operational CRM solutions involve integration of business processes involving customer touch
points. Collaborative CRM involves the facilitation of collaborative services (such as e-mail) to
facilitate interactions between customer and employees. All this effort produces rich data that
feeds the Analytical CRM technologies.

Operational CRM Analytical CRM Collaborative CRM

 Customer

Fig.8 Interactions between CRM Technologies

Information Requirements Of An Effective CRM Solution

The employees of a firm employing CRM would require rich information about their firm and
customer base including:

• Information about the market

• Information about the firm

• The current segment

• Demographic Distribution (by age, sex, education, income, marital status, etc)

• The firm’s best customers and the segment they belong to, products they buy, preferences, habits
and tastes of each segment.

• Individual level information consisting of:

→ Customer personal details such as name, address, family details, education, etc

→ The customer group /segment to which the individual belongs

→ History of present and past behavior

→ Likes, dislikes, habits and preferences

→ Events coming up in their personal life etc.

The existing CRM Solutions

Delivering the ‘360 view’ requires automation to bring together all the data concerning a
customer. This implies the organisation has to change from:

Mass Marketing Product Focus

Product Focus Customer Focus
Economies of Scale Economies of time
One way communication Interactive
Response Time Real Time

Present CRM Alternatives

Present CRM solutions are offered by host of vendors that are to a great extent not industry
specific. While there are some vendors, who have come up with industry specific solutions, the
broad model around which the CRM solutions are built remain the same. Adopting a similar or a
look a like solution across industries is what causes major strain in
servicing a customer.
Typical offerings of the current CRM solutions (such as Siebel, Oracle
Apps or MySap.com, etc) vary from solution to solution. However
typical CRM offerings consist of:
Customer Development Field sales, Tele sales, Internet Sales

Service Centre Call Centres, Field Service

Sale management and support Internet Customer Service
Market Analysis Service Interaction Centre
Internet, Tele marketing Business Partner Collaboration
Product and brand management

eCRM

What is eCRM?
In simplest terms eCRM provides companies with means to conduct interactive, personalized
and relevant communications with customer across both electronic and traditional channels. It
utilizes a complete view of the customer to make decisions about messaging, offers and channel
delivery. It synchronises communication across otherwise disjoint-customer facing systems. It
adheres to permission-based practices, respecting individual’s preferences regarding how and
whether they wish to communicate with you and it focuses on understanding how the economics
of customer relationship affect the business.

eCRM Vs CRM
CRM is essentially a business strategy for acquiring and maintaining the “right” customers over
the long term. Within this framework, a number of channels exist for interacting with customers.
One of these channels is “electronic” – and has been labeled “e-commerce” or “e-business”. This
electronic channel does not replace the sales force, the call Centre, or even the fax. It is simply
another extension, albeit a powerful new one, to the customer. The thrust of eCRM is not what
the organisation is “doing on the web” but how fully the organisation ties its on-line channel
back to its traditional channels, or customer touch points.

Why employ eCRM?

Companies need to take firm initiatives on the eCRM frontier to
 •Optimize the value of interactive relationship

•Enable the business to extend its personalized reach

•Company-ordinate marketing activities across all customer channels.

•Leverage customer information for more effective emarketing and ebusiness

•Focus the business on improving customer relationship and earning a greater share of each
customer’s business through consistent measurement, assessment and “actionable” customer
strategies.

The six “E’s” of eCRM

1. Electronic channels
2. Enterprise
3. Empowerment
4. Economics
5. Evaluation
6. External Information

eCRM Architecture
The primary inputs to this module are mainly from the eCRM Assessment and strategy alignment
modules. During this stage the company will try and develop a Connected Enterprise
Architecture (CEA) within the context of the company’s own CRM strategy. The following is a
set of technical eCRM capabilities and applications that collectively and ideally comprise a full
eCRM solution:

•Customer Analytical Software

•Data mining software

•Campaign Management software

 •Business Simulation

•A real time decision engine

Categories of CRM solutions

Any enterprise, which wants to implement CRM solutions can choose from four categories of
solutions

Integrated applications suite

 Interfaced applications bundle

Interfaced best of breed solutions

Best of cluster

Selecting an interfaced best of breed approach for pure functionality or a front office application
suite solely for integration limits enterprise choices. Enterprises need to start with a clear picture
of the basic truths of integration, interfacing and functionality. An integrated application suite is a
set of application that employs a common architecture, referencing a common logical database
with a single schema. Some suites are more often interfaced application bundle i.e. a set of
interfaced application from a single vendor containing more than one technical architecture or
more than one logical database- frequently assembled by the vendor through the process of
acquisition or partnership
An alternative approach to suites is an interfaced best of breed solution – an approach whereby
an enterprise selects from multiple vendors a set of applications that must be interfaced to work
together, either by the enterprise, one of the selected vendors or a third party integrator. The
individual applications are not the best in any objective sense. Rather, some enterprises select the
applications because they best meet the particular needs. The challenge of this approach is that,
in some cases, the enterprise fails to complete the necessary interfaces to get the individual
applications working together; consequently, the applications remain stovepipes. Best of cluster
is similar to best of breed except that here best is chosen from the cluster and they are interfaced.
Key requirements for CRM solutions

Some of the functional and technical requirements for CRM solutions are as listed below:

•Business intelligence and analytical capabilities

•Unified channels of customer interactions

•Support for web based functionality

•Centralized repository for customer information

•Integrated work flow

•Integration with ERP applications

Functional Components of CRM solution

CRM applications are a convergence of functional components, advanced technologies and

channels. Functional components and channels are described below:
Sales applications
Common applications include calendar and scheduling, contact and account management;
compensation; opportunity and pipeline management; sales forecasting; proposal generation and
management; pricing; territory assignment and management; and expense reporting.
Marketing applications
These include web based and traditional marketing campaign planning, execution, and analysis;
list generation and management; budgeting and forecasting; collateral generation and marketing
materials management.
Customer service and support applications.
These include customer care; incident, defect and order tracking; field service; problem and
solution database; repair scheduling and dispatching; service agreements and contracts; and
service request management.

Organising for CRM

Assessing Need
How do you know your business requires CRM?
It is very easy for a business to get caught in the latest ‘customer trap’ when it is being driven by
the information technology (IT) market. Every business does require CRM; the question is to
what level?
Trends
Many businesses are pushed by the current trend to change their business strategy, especially
around CRM. There are basically three trends that effect a business:
Consumer
The customer is an ever-changing image, to be really successful with CRM you must recognize
the customer trends that are effecting the business.
If a business does not understand a customer profile and the changes that have occurred then it is
not possible to provide true customer relationship management.
Products
It is the business providing the products that meet the changing customer trends. Products need
to be reviewed constantly perhaps enhanced or even removed. Supermarkets are a perfect profile
to look at for viewing ‘product trends’, they constantly add and remove products and they
constantly view customer buying profiles and set out the pattern of the store to meet the strongest
buying trend. This may not always be by using the latest ‘technology’, it could be by just
reviewing shells at the end of the day, but the super market is at the minimum watching for the
two basic trends in CRM.

Technology
Ensure that the business is ready to install the new technologies, is the customer data upto it, or is
it time to start again? Do you need to review every technology being used or just one area. Will it
assist the business, is it going to grow with the business requirements or is the technology just
another ‘trend’? Relationship management should not be an alternative to existing
functions/technology; it could be a logical extension to enhance those in existence, though it
could radically change some of the operational processes.

Does CRM really matter?

Whatever the business activity is all companies have to ask themselves is CRM the real factor for
their company to succeed. Some customers do not need long-term relationship with their
suppliers; therefore only minimal information is required from that customer. That however is
still a form of CRM. Other companies have high quality and high value customers that they need
to know information about, they need to provide exceptional service, the ‘pedigree’ of CRM.
Whatever the business is, if it has customer it has to ask, does customer relationship management
matter? What does it man to them in business terms? At what cost? What is the overall loss if not
adhered to?
CRM: Yes it does really matter – the strategy needs to last, be constantly reviewed and can
evolve over time.

Financial Framework for CRM

There are organisational constraints encountered in execution of CRM programs. Mainly they are
as follows:
 •A mismatch between resource allocated and service levels desired for building customer
relationship

•Absence of financial business case and ROI for investments in Customer Relationship

•Horizontal non alignment of organisations to customers line of sight

•Balance to be achieved between maximisation of revenue and customer satisfaction.
Direct selling machinery would have costs that are significantly higher than referral sale – hence
the need to invest in customer relationship with an eye on acceleration of referrals so as to bring
down costs or increase productivity of sales. (higher cold call to order ratio) Figure 1 illustrates
the phenomenon that organisations can drive referral sale line in a manner that can reduce time
T1 and with that in figure 1(a) the overall unit selling cost (average of direct sales cost + referral
sale cost) can be reduced with higher sales productivity.

Composite Costs
100%
100% Direct Sale

% 50% Unit
of Selling
overall cost
sale
Referral Sale

T1 T1
Time Time

Fig. 1. ‘Torpedo Graph’ Fig. 1. (a) Sale Cost Line

Figure 2 illustrates that with a given investment in direct sale channel the productivity can at
best be only slightly increasing line, while a referral line will be an exponentially increasing
trend line with growing subscriber numbers. This creates a multiplier effect that quickly
overtakes the direct sale numbers. Organisation dependency on direct sale can gradually be
reduced since they stand to account for reduced numbers in the overall sums.

Direct sale

Sale
Unit
No.

Referral Sale

T1
Time Figure 2

Organisational measure of referral propensity can be taken through customer feedback on their
willingness to recommend the product to their friend and acquitances.
referrals.
 CRM in select Services

1) Taj Air Caterers & Singapore Airlines

Taj actively participates in product designs and influences service design, wherever necessary.
This has evolved after getting an insight into Singapore Airlines’ customer profile and their needs.
The product is designed to reflect their passengers’ preferences, which are quite different in Delhi
and Mumbai, and on different sectors ex-Mumbai. TAJ Chefs conduct an annual workshop on
Indian Cuisine for Singapore Airlines’ caterers worldwide. Taj staff gets trained at Singapore
Airlines’ catering subsidiary, SATS. Taj Ctareres share a lot of information and can access
technology issues with Singapore Airlines.

2) Taj Air Caterers & GE Capital Services

There is e-mail connectivity between the service provider i.e. Taj and GE (for canteen and
food supply). Taj customer relations responds within a stipulated time frame directly to GE
employees and analyses their satisfaction. Also on cards is a ‘fitness program’ where taj’s experts
will share information of food nutrition, exercise, etc with GE staff. Similarly, a loyalty program is
being designed where in for purchases snacks and confectionery, GE employees can obtain
attractive discounts at Taj outlets/hotels. With another company Taj is involved in cafeteria design
and selection of equipment.
3) Titan Watch Repair Services
What did Titan Do?
The Titan Signet CRM initiative was undertaken in May 1995 to provide that “extra” touch to its
special customers at the exclusive World of Titan stores.

Its mission was to create a sense of belonging of the customer to the store and vice versa by: •
Building a special relationship with high life time value Titan customers

• Recognizing and rewarding his/her loyalty to Titan

• Providing a platform for direct feedback from these valued customers to the
company

Where?
It initially started in 6 showrooms in Bangalore. Today the titan Signet has been extended to 102
World of Titan showrooms across 59 cities all over India

Behind The Scenes

While the program has taken customer bonding one step further in Titan, there are many behind-
the-scene activities that ensure that the program is run efficiently, effectively and with the level
of enthusiastic participation. These are :

• Showroom Personnel are trained not only in the preparation of the program at the
showroom but also in the finer details of CRM.

• Enrolments in the program are tracked on a monthly basis for each showroom,
along with data on purchases made by Signet members who have returned to the showroom
to buy again.

• Signet operations form a part of the quarterly appraisal for their showrooms, there
by ensuring that they earn more marks on their efficient and effective performance.
• A grievance redressal system is in place to ensure that out valued customers are
responded to within stipulated time frame.

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