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CUSTOMER

RELATIONSHIP
MANAGEMENT
CHANGING MARKET
ENVIRONMENT
 Market has changed its focus from product-
centric to customer-centric.
 Customers have assumed the most
important position in the business equation.
 Customers are demanding a different
relationship with suppliers than the
traditional sales model
CRM
Customer –
1. A person who buys on products or services from a shop on
business.
2. A person or thing of a specific kind that one has to deal
with.
Relationship-
1.The way two or more people are connected or in a state of
being connected.
-The way in which two or more groups of people regard &
behave towards one another.
2. An emotional association between two people.
Management-
1. The process of managing
2. The people managing an organisation
NEW AGE CUSTOMERS’
BEHAVIOUR
 Customers want “Value for Money”
 Customers are no longer loyal to brands
 Customers are better informed
 Customers want to share problems they face
 They want to inform Companies the kind of product /
service they want
 They want Companies to share information with them
 They want facility of delivering products anytime,
anywhere
COMPANY’S PERSPECTIVE
 Era of competition and declining margins
 Companies are vying to attract customers by
offering product features, price and distribution
network
 Acquiring customers is usually much more
expensive than keeping them
 Companies need information about what
customers want
 Increased revenue results from increased
Customer Satisfaction
What should be a Company’s strategy
in today’s customer driven economy?

The Key to a Company’s success lies


in establishing relationship with
customers.
What is Customer Relationship ?
Developing, maintaining and
sustaining a close bond between the
Customer and the Company.
What is CRM ?
 It is a process by which a company maximises
customer information in an effort to increase loyalty
and retain customers’ business.
 The use of wide range of marketing, sales,
communication, service and customer care
approaches to :
• Identify a company’s customers
• Create a relationship between company & customers
• Manage that relationship to the benefit of both
 It is not a technology solution, it is a business culture
What is CRM ?
• CRM is an information industry term for
methodologies, software, and usually Internet
capabilities that help an enterprise manage customer
relationships in an organized way.
• CRM is both a business strategy and system to enable
companies to better manage customers through
introduction of reliable processes and procedures for
interacting with them
• It is a strategic tool which enables management to
know all about the customers—customer profile,
purchase behaviour , capacity to buy etc.
How a Company could describe
CRM to its customers
Relationship marketing is how we
• Find you
• Get to know you
• Keep in touch with you
• Try to ensure that you get what you want
from us in every aspect of dealings with you
• Check that you are getting what we
promised you
Goal of CRM
• To improve customers’ experience of how
they interact with Companies—get closer to
the customers
• To create Customer Satisfaction which
leads to loyalty and more sales
• To build long term profitable relationship
with customer
• To maximise Company’s revenue
Benefits of CRM
• Improved customer retention & loyalty- customers
stay longer, buy more & more often
• Higher customer profitability – lower cost in
retaining customers, no need for more recruitment
• Reduced cost of sales- existing customers are
more responsive
• It offers customers an insight into the Company
• It builds a long-term relationship with customers
and maximises revenue
Constituents of QoS
• Service support performance- ability to provide
service & to maintain it
• Service operability performance-user freindliness ,
simplicity ,ease of use
• Service integrity performance- performance to
pre-established criteria
• Serveability performance- accessibility,
retainability, reliability, ability to provide service
on request & without interruption
Service Quality
Degree and direction of discrepancy between
customers’ perceptions & expectation.
Five Dimensions:
• Reliability -ability to perform promised service
dependably & accurately
• Assurance- knowledge & courtesy of employees,
ability to inspire trust & confidence
• Tangibles- physical facilities, equipment &
appearance of personnel
• Empathy- caring & individualised attention
• Responsiveness- willingness to help customers &
prompt service
Service Guarantees
The service customers can expect and what
the company will do if it fails to deliver
Contains two elements:
• A service promise or pledge that expresses
the firm’s willingness to engage in a
behaviour considered desirable by customers
• A compensation in case of service failure
Stages of Relationship
• Targeting- appropriate customers are induced to join
• Enquiry Management- in process of joining
• Welcoming- customer should know whom to contact,
how to use product
• Getting to know- additional needs become apparent
• Customer Development-relationship managed securely
• Managing problems- attention needed to ensure they
return
• Win back- can be initiated if relationship ended due to
high price / wrong product
Requirements of CRM
• Good manufacturing/ operations & distribution
• Properly recruited, trained & motivated people
• Robust enquiry, sales & complaints handling
processes
• Good information technology ,so that the
company can recognize customers and provide
offers, information and advice
CRM BUSINESS CYCLE
 Acquisition and Retention
 Understand & differentiate
• profiling
• Segmentation
• Research to capture needs & attitude
• Customer valuation—profitability , long term
potential , ability to refer other customers
 Develop & Customize
 Interact & Deliver– increase the value delivered to
customers
Targeting
• Who do we target
• What segments are most profitable
• What segments match our value proposition
• What is the best segmentation strategy for
us
Acquisition
• What is the best channel for each segment
• What is the acquisition cost for a channel /
segment
• Do certain channels deliver certain types of
customers
• Cost effective acquisition
Retention
• How can we improve retention
• What is our average retentionship length
• How can we hold customers for as long as
we can
• What is the most attractive method of
retention
Expansion
• How many products does our average
customer buy
• How can we induce our current base to buy
more product
• Who are the prime targets for expansion
• What is the cost of expansion
Aspects of CRM
• Operational CRM: The automation or support of
customer processes involving sales or service
representatives
• Collaborative CRM: Direct communication with
customers not involving sales or service
representatives (“self service”)
• Analytical CRM: The analysis of customer data
for a broad range of purposes
Operational CRM
• Operational CRM provides support to "front
office" business processes, including sales,
marketing and service. Each interaction with a
customer is generally added to a customer's
contact history, and staff can retrieve information
on customers from the database as necessary.
• Focus on customers value is key to a successful
CRM strategy. Different customers have to be
treated differently. Variables like customers
ranking, actual value and potential value are
strategy drivers.
Collaborative CRM
• Collaborative CRM covers the direct interaction
with customers. This can include a variety of
channels, such as internet, email, or automated
phone answering system. It can generally be
equated with “self service”.
• The objectives of Collaborative CRM can be
broad, including cost reduction and service
improvements. Driven by authors from the
Harvard Business School (Kracklauer/ Mills/
Seifert),
Collaborative CRM contd.
• Collaborative CRM seems to be the new paradigm to
succeed the leading Efficient Consumer Response and
Category Management concept in the industry/trade
relationship. Many organizations are searching for new
ways to use customer intimacy to gain and retain a
competitive advantage. Collaborative CRM provides a
comprehensive view of the customer, with various
departments pooling customer data from different sales
and communication channels.
• Collaborative CRM also includes Partner Relationship
Management (PRM) which enables organizations to
manage their relationships with partners (consultants,
resellers and distributors), and potentially the customers
of those partners.
Analytical CRM
• Analytical CRM analyzes customer data for a variety of
purposes, including:
• design and execution of targeted marketing campaigns to
optimize marketing effectiveness
• design and execution of specific customer campaigns,
including customer acquisition, cross-selling, up-selling,
retention
• analysis of customer behavior to aid product and service
decision making (eg pricing, new product development, etc)
• management decisions, e.g. financial forecasting and
customer profitability analysis
• risk assessment and fraud detailer for credit card transactions
• Analytical CRM generally makes heavy use of Predictive
analytics.
Strategy
• Several commercial CRM software packages are
available which vary in their approach to CRM.
However, CRM is not just a technology, but rather a
holistic approach to an organization's philosophy in
dealing with its customers. This includes policies
and processes, front-of-house customer service,
employee training, marketing, systems and
information management. CRM therefore also needs
to consider broader organizational requirements.
• A company's CRM strategy is dependent on both
the company’s current situation and the needs and
expectations of its customers.
Technology considerations
• The technology requirements of a CRM strategy are very
complex and far reaching. The basic building blocks include:
• A database to store customer information. This can be a
CRM specific database or an enterprise data warehouse.
• Operational CRM requires customer agent support software.
• Collaborative CRM requires customer interaction systems,
eg an interactive website, automated phone systems etc.
• Analytical CRM requires statistical analysis software, as
well as software that manages any specific marketing
campaigns.
• Support CRM systems require interactive chat software to
provide live help and support to web site visitors
Use of Technology in CRM
• Sales force automation
• Call centres
• Data warehousing
• Data mining & OLAP
• Decision support & reporting tools
• Electronic point of sale
Successes
• While there are numerous reports of
"failed" implementations of various types of
CRM projects, these are often the result of
unrealistic high expectations and
exaggerated claims by CRM vendors. In
contrast there are a growing number of
successes. One example is the National
Australia Bank (NAB) which has pursued a
CRM strategy for over ten years and has
won numerous awards for its efforts.
Privacy and Data Security
• The data gathered as part of CRM must consider
customer privacy and data security. Customers
want the assurance that their data is not shared
with 3rd parties without their consent and not
accessed illegally by 3rd parties.
• Customers also want their data used by companies
to provide a benefit for them. For instance, an
increase in unsolicited telemarketing calls is
generally resented by customers while a small
number of relevant offers is generally appreciated.
Customer relationship
management software
• Customer relationship management software is
defined as business management and automation
of the front-office divisions of an organization.
CRM software is essentially meant to address the
needs of Marketing, Sales and Distribution, and
Customer Service and Support divisions within an
organization and allow the three to share data on
prospects, customers, partners, competitors and
employees. The purpose of CRM software is to
manage the customer through the entire lifecycle,
i.e. from prospect to qualified opportunity to
order.
Customer relationship
management software
• CRM software automates many of the needs of
Marketing, Sales and Support users, such as
Telephony, or the ability to conduct phone calls and
manage call data, and tools to capture, share and
manage automated alerts on lead data as it passes
through the sales pipeline. CRM software provides
a standard framework for pushing leads through a
sales pipeline and managing it amongst many
stakeholders in real time, in order to provide better
customer relations and grow revenues by creating
more sales, and losing fewer customers.
Customer relationship
management software
• CRM software helps organizations achieve their
customer relations goals by measuring key
performance indicators collected by the CRM
software about customer lifecycle behaviour.
Benefits include isolating those marketing
campaigns that drove the most and best quality
leads, improving internal efficiency, complete
customer histories and the ability to provide
appropriate support and consequently retain
customers.
References
• Handbook of Customer Relationship
Marketing –Merlin Stone, Neil Woodcock,
Liz Machtynger ( Crest Publ. House)
• Effective CRM-Braj Mohan Chaturvedi
(ICFAI Univ.)
• Marketing Services-V R Vedulla (Jaico
Publ. House)
• Wikipedia website