CRM.

Introduction to Customer Relationship Management

Prabhat Jain prabjain@aol.in

What is CRM ?

CRM is not a software package. Its not a database.

Its not a call center or a Web site. Its not a loyalty program, a customer service program, a customer

acquisition program or a win-back program. CRM is

an entire philosophy. (Steve Silver)

Prabhat Jain prabjain@aol.in

"Any customer can have a car painted any color that he wants so long as it is black."
- Henry Ford 1908

 Better than competition Understanding customer segments and wants Satisfying Customer Value

Evolution of CRM
Marketing Concept
Selling Concept

Good quality Performance Innovative features

Product Concept Production Concept

Aggressive selling Widely Available Inexpensive Promotion Effort

Prabhat Jain prabjain@aol.in

Defining CRM CRM is about how you attract, develop and retain customers.
Customer acquisition
Customer research

Customer defection Customer

Customer value

Focus

Customer loyalty

Customer satisfaction

Customer churn

Customer development
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Prabhat Jain prabjain@aol.in

Why CRM..

Customers are fickle and becoming more cynical.

We no longer believe what we read and see. Convergence of markets. Competition- leader or follower ? Customer loyalty at any cost Fear of viral complainers A great experience in one industry, also raises expectations in dealing with other industries. (cost and technology !!) You cant treat customers like cattle and thus it is important to recognize and treat each customer as an individual.
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Prabhat Jain prabjain@aol.in

What is CRM all about.. CRM promises to help companies get to know their customers CRM helps an organization to understand which customers to keep and which ones they should be willing to lose - and why? Overall helps in proper targeting, spending money wisely, saving time and customer satisfaction. CRM also means automating many of business processes and accompanying analysis. CRM can allow a company to surmise a customers unspoken needs. CRM is how to differentiate customer treatment according to individual preferences.
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Prabhat Jain prabjain@aol.in

CRM: How ? Touchpoint is defined as where the customer interacts with the organization.
Touch Points

Branch / Service center / Usage

Call Center

Postal/Courier

Direct Sales/ Delivery

ATM/Kiosk

Email

Web Access

Fax

Mobile SMS / WAP

Prabhat Jain prabjain@aol.in

Changing Rules: Internet

24 hour access Up-to-the-minute-information The ability to research a product or merchant during a shopping trip Online customer support Online self service Personalized content
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Customer Advantage
Shorter delivery time Improved accuracy Positive perception

Zero latency
Real-time information On-demand product delivery

Company Advantage
Alternative low cost channel Decreasing sales time

Automated customer service

Customer satisfaction

Prabhat Jain prabjain@aol.in

CRM: Acronyms eCRM : electronic CRM simply means CRM i.e. web-based. (online or offline) PRM : Partner Relationship Management means managing alliance partner and reseller relationships. cCRM : Collaborative CRM denotes situations in which customers can interact directly with organization using web. Eg. Dell. SRM : Supplier Relationship Management focuses on suppliers. mCRM: Mobile CRM linking to customers through wireless technologies. xCRM: x used to replace other hybrids.

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Prabhat Jain prabjain@aol.in

CRM Types
Direct communication with customers that may or may not include a companys sales or service representative

Collaborative CRM

Operational CRM

Automation or support of customer processes that include a companys sales or service representative

Analytical CRM

Analysis of customer data for a broad range of purposes

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Prabhat Jain prabjain@aol.in

Collaborative CRM Collaborative CRM supports collaboration and communication with customers, partners and suppliers with the possibility of personalization.

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Prabhat Jain prabjain@aol.in

Operational CRM Operational CRM focuses on the direct support of the day-to-day needs of customer-facing employees. Operational CRM is the automation of horizontally integrated business processes that include direct access to customers, crosssales, marketing and customer support through multi-layered communication channels

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Prabhat Jain prabjain@aol.in

Analytical CRM
Analytical CRM analyses customer data for a variety of purposes including design and execution of targeted marketing campaigns to optimise marketing effectiveness design and execution of specific customer campaigns, including customer acquisition, cross-selling, up-selling, retention analysis of customer behaviour to aid product and service decision making (e.g. pricing, new product development etc.)

management decisions, e.g. financial forecasting and customer profitability analysis

prediction of the probability of customer defection (churn).

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Prabhat Jain prabjain@aol.in

CRM and BI Analytical CRM leads to accumulation of large amounts of cross functional data. This data is stored in data warehouse, a repository of corporate data. When data from data warehouse is used to analyze business performance is known as business intelligence (BI). Data warehousing is NOT CRM and neither is business intelligence (BI)but they are related. BI extends over extrapolation to determine response to business initiatives. The mandate of CRM is the ability to act on the data and to change fundamental business processes to become more customer centric.
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Prabhat Jain prabjain@aol.in

CRM, Data Warehousing and BI

Business

Intelligence

CRM

Data
Warehousing

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CRM integrates information with business action

Prabhat Jain prabjain@aol.in

CRM & Organizations

Building Relationships
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Prabhat Jain prabjain@aol.in

CRM: Get, Keep, and Grow Customers

Getting customers is all about making the sales and marketing process not only more efficient, but also more effective Keeping customers is also about knowing which are the right customers to keep (EOD its all about profitability) example: Frequent Business traveler in airline, Credit card holder with no annual fee. Growing customers is about increasing every customers lifetime value to a company.
The two ways to grow customers are to increase their lifetime, and increase the amount of revenue generated from every customer interaction during that lifetime.
Need of a mindset wherein Every customer interaction is an opportunity to build on that relationship and grow that customers value.

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Prabhat Jain prabjain@aol.in

What Characterizes a Relationship?

Relationship Defined: a state of affairs existing between those having relations or dealings.-webster
Some of the distinct qualities that should characterize a relationship between an enterprise and a customer are: First, a relationship implies mutuality. In order for any state of affairs to be considered a relationship, both parties have to participate in and be aware of the existence of the relationship. Second, relationships are driven by interaction. When two parties interact, they exchange information, and this information exchange is a central engine for building on the relationship.

This leads to the third characteristic of a relationship: It is iterative in nature. That is, since both parties are interacting mutually, the interactions themselves build up a history, over time a context. The richer the context of any customer relationship, the more difficult it will be for the customer to re-create it elsewhere, and so the more loyal the customer is likely to be. Relationships also require a change in behavior on the part of both partiesthe enterprise as well as the customerin order to continue.
Uniqueness: Relationships are constituted with individuals, not with populations Trust: It is important for keeping the relationship on going.
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Prabhat Jain prabjain@aol.in

Learning Relationships: The Crux of Managing Customer Relationships

The basic strategy behind Learning Relationships is that the enterprise give a customer the opportunity to teach the company what he wants, remember it, give it back to him, and keep his business. The more the customer teaches the company, the better the company can provide exactly what the customer wants and the more the customer has invested in the relationship.

As the relationship progresses, the customers convenience increases, and the enterprise becomes more valuable to the customer, allowing the enterprise to protect its profit margin with the customer, often while reducing the cost of serving that customer.
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Contd. ..

Prabhat Jain prabjain@aol.in

Learning Relationships: The Crux of Managing Customer Relationships

In a Learning Relationship, the enterprise learns about an individual customer through his transactions and interactions during the process of doing business. The customer, in turn, learns about the enterprise through his successive purchase experiences and other interactions.

Not all customers are equal and so enterprises need to decide early on which customers they want to have relationships with, which they do not, and what type of relationships to nurture

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Prabhat Jain prabjain@aol.in

IDIC: Four Implementation Tasks for Creating and Managing Customer Relationships
Setting up and managing individual customer relationships can be broken up into four interrelated implementation tasks. These implementation tasks are based on the unique, customer-specific and iterative character of such relationships

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Prabhat Jain prabjain@aol.in

IDIC: Four Implementation Tasks for Creating and Managing Customer Relationships
# Relationships are only possible with individuals, not with markets, segments, or populations

Identify
Customers

# Many companies dont really know the identities of many of their customers, so for them this first step is absolutely crucial # Need for organizing information resources so that organization can take a customer-specific view of its business # Essential to tag customer and a mechanism to track his interaction, habits, preferences and relationship with the organization

# Customer differentiation allows a company (1) to focus its resources on those customers who will bring in the most value for the enterprise, and (2) to devise and implement customer-specific strategies designed to satisfy individually different customer needs.

Differentiate Customers

# Customer groupingthe process by which customers are clustered into categories based on a specified variableis a critical step in understanding and profitably serving customers # The customer differentiation task will involve an enterprise in categorizing its customers by both their value to the firm and by what needs they have.
Prabhat Jain prabjain@aol.in

IDIC: Four Implementation Tasks for Creating and Managing Customer Relationships
# Enterprises must improve the effectiveness of their interactions with customers. Interact with Customer # Each successive interaction with a customer should take place in the context of all previous interactions with that customer. A bank may ask one question in each months electronic statement, and next months question may depend on last months answer. # A conversation with a customer should pick up where the last one left off. Effective customer interactions provide better insight into a customers needs.

# The enterprise should adapt some aspect of its behavior toward a customer, based on that individuals needs and value. Customize Treatment # To engage a customer in an ongoing Learning Relationship, an enterprise needs to adapt its behavior to satisfy the customers expressed needs. # This might entail mass-customizing a product or tailoring some aspect of its service

Prabhat Jain prabjain@aol.in

Individual Information Requires Customer Recognition

To treat customer differently first step is simply to know one customer from another. Lets take a few examples:
Retail Banks Consumer packaged goods companies Insurance companies : They can nearly always tell you how many policies they have written, but many cannot tell you how many customers they have, or even how many households or businesses they serve. A computer equipment company selling systems to other companies in a business-tobusiness environment may be able to identify the businesses it is selling to, but it is much more difficult for the firm to identify the individual players who actually participate in each organizations decision to buy. Yet within any business customer it is these players decision makers, influencers, specifiers, approvers, contract authorities, purchasing agents, reviewers, end userswith whom the selling company should be developing relationships. Car and Car Owner recognition (chassis no, registration no, etching)

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Prabhat Jain prabjain@aol.in

CRM & Enterprise Strategy Map

Quadrant I: Traditional Mass Marketing Companies that compete primarily on cost efficiencies based on economies of scale and low price. Companies in this quadrant are doomed to commoditization and price competition.

Quadrant II: Niche Marketing Companies that focus on target markets, or niches, and produce goods and services designed for those defined customer groups. This more strategic and targeted method of mass marketing still offers the same thing the same way to everyone, but in a small, relatively homogeneous group.

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Prabhat Jain prabjain@aol.in

CRM & Enterprise Strategy Map

Quadrant III: Database Marketing Companies utilize database management to get better, more efficient use of their mailing lists and other customer information. Generally focused primarily on continuation of traditional strategies, but at lower costs to serve. Quadrant IV: One-to-one Learning Relationships Companies use data about customers to predict what each one needs next, and then is able to treat different customers differently, and increase mutual value with the customer.

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Prabhat Jain prabjain@aol.in

End of slide

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Prabhat Jain prabjain@aol.in