Customer Relationship

Management
 Customer as a Stakeholder
• Customers= Stakeholders.
• As per management definition, everyone in an
organization has customers. Right from HR,
Support staff, Managers, CEO etc. Without
customers business cannot exist.
 Examples of a company's stakeholders
Stakeholders Examples of interests
• Government : taxation, VAT, low unemployment, truthful
reporting
• Employees: rates of pay, Job security, compensation,
respect, truthful communication
• Customers: value, quality, customer care, ethical products
• Suppliers : providers of products and services used in the
end product for the customer, equitable business
opportunities
• Creditors : credit score, liquidity
• Community: jobs, involvement, environmental
protection, truthful communication
• Trade Unions: quality, Staff protection, jobs
Types of Stakeholders
 Types of stakeholders
• Internal Stakeholders - Primary Stakeholders
are those that engage in the business. (For
example employees, Managers and Owners)
• External Stakeholders –Secondary
Stakeholders are those who - although they do
engage in direct economic transactions with
the business -. (For example Customers,
Suppliers, Society, Government, Shareholders
and creditors)
 Customer Lifetime Value
Customer Lifetime Value(CLV) describes the net
present value of the stream of future profits
expected over the customer’s lifetime
purchases.

It is the value of entire stream of purchase that a

customer would make over a lifetime of
support.
 Customer Lifetime Value (CLV)
Now suppose the company estimates average
customer lifetime value as follows.
Annual customer revenue: Rs5000
 Average number of loyal years:20
 Company profit margin: 10%=0.10
 Customer lifetime value: 5000*10/100=Rs.500
Rs.500*20 years=Rs.10,000
 Tools for Measuring Customer Satisfaction
• Complaint & Suggestion System:

A Customer centered organization makes it easy for its customers to deliver

suggestions and complaints. Ex: Through Toll free numbers, email, web

pages.
• Customer Satisfaction Survey:

Companies measure customer satisfaction directly by conducting periodic

service. They sent questionnaires or make telephone calls to a random

sample of recent customers. Studies show that less than 5% of dissatisfied

customers will complaint and most of them customers switch to other

companies.
 Tools for Measuring Customer Satisfaction
• Ghost Shopping:
Companies can hire persons to act as potential
buyers to report on strong & weak points
experienced in buying the company’s and
competitors products. These Mystery
shoppers can even test whether the
company’s sales personnel handle various
situations well.
• Lost Customer Analysis:
Company should contact customers who have
stopped buying or who have switched to
another supplier to learn why this happened.
Ex: Exist interview for customers, customer loss rate.
 Need for Customer Retention
Importance of Customer Retention:

1. Acquiring new customer can cost 5 times more

than the cost involved in satisfying & retaining the
current customers.
2. The Average company loses 10% of its customers in
each year.
3. A 5 % reduction in the customer defection rate can
increase the profit by 25% to 85% .
4. The customer profit rate will be increased over the
life of the retained customer.
Benefits of Customer Retention:
The key to consumer Retention is customer
satisfaction.
The highly satisfied customer :
 Stays longer period
 Buys more company products
 Talks more favorably about the company
product.
 Pays less attention to compete the products.
 Less sensitive to price.
 Customer Suspects
Development
Process Prospects

First time customers

Repeat customers

Clients

Members

supporters

partners
 How to handle customer complaints

• Set up 7 day,24 hr toll free hot line

• Contact the complaining customer as quickly
as possible
• Accept responsibility for the customer
complaint
• Train the customer service people properly
• Resolve the complaints swiftly & create
customer satisfaction.
 Reducing customer Defection
• The company must define and measure its
retentions & rate.
• The company must distinguish the causes of
customer attrition & mange them better.
• The company needs to estimate how much
profit it losses when it losses customers.
• The company needs to figure out how much it
would cost to reduce the defection rate.
• Listen & understand the customer needs.
 CRM Technology

• CRM technology mandates that all

interactions between the customer and
the company are recorded and stored in
a central information database, which
can be shared with anyone in the
company who contributes to processing
the customer's transaction.
 Customer Information in One Place
Accounting Purchasing
Manufacturing HR

Marketing Service
eMail
eMail Phone
Phone
Marketing
Marketing Service
Service

Web
Web Customers, Field
Field
Marketing
Marketing Service
Service
Products,
Tele-
Tele- & Everything Web
WebSelf
Self
Marketing
Marketing Service
Service
Else!
Partner
Partner Email
Email
Marketing
Marketing Service
Service

Direct
Direct Service
Marketing Service
Marketing Partners
Partners
Point
Pointof
of Direct
Direct Partner
Partner Web
Web
TeleSales
TeleSales Sales
Sale
Sale Sales Sales
Sales Sales
Sales
Sales
 Types of CRM Technology
• Operational CRM: This is the “ERP-like” segment of
CRM and sales force automation, marketing
automation.
• Analytical CRM: Analytical CRM is the capture, storage,
extraction, processing, interpretation, and reporting of
customer data to a user and include data ware houses.
• Collaborative CRM: The collaborative CRM reaches
across customer touch points. It is the communication
center, the coordination network that provides the
neural paths to the customer and his suppliers. It could
mean communication channels such as the Web or
email.
 Customer Database
• It is an organized collection of comprehensive
information about individual customers &
prospects for the purpose of building strong
relationship.
 Database Marketing
• It is the process of building, maintaining & using
customer databases& other database like products,
suppliers, resellers for the purpose of contacting,
transacting & building customer relationship.
• Data warehouse
– Customer databases are organized into data warehouse.
• Data Mining
– It is the process of abstracting useful information from data
warehouse. The informations like customer preference,
trend, fashions would help the marketing decisions.
– Data mining involves the use of sophisticates statistical &
mathematical techniques such as cluster analysis, automatic
interaction detection, predictive modeling & neural
networking
 Uses of Database
• To identify prospects
• To decide which customer should receive a
particular offer.
• To deepen customer loyalty
• To reactivate customer purchase
• To avoid serious customer mistakes
Customer Database Customer Mailing lists Business Database

Past purchases Name Customer past

purchases
Demographic factors Addresses Past volumes
like age, gender,
income and family
members

Psychographics like Telephone numbers Prices and profits

activities, interests and
opinions

Media graphics like Buyer team member

preferred media and name, age, birthday,
other useful favorite food and
information hobbies and etc
 CRM Building
• Basic Marketing : The sales person simply sells the product.
• Reactive Marketing: The sales person sells the product and
encourages the customer to call if she has a question,
comments / complaints.
• Accountable Marketing: Sales person phones the customer
to check whether the product is meeting expectations.
• Proactive Marketing: The sales person contacts the
customer from time to time with suggestions about
improved / new product.
• Partnership Marketing: The Company works continuously
with its large customers to improve their performance.