Customer Relationship Management:

Meaning:
CRM is the core business strategy that integrates internal processes and functions, and external network,
to create and deliver value to targeted customers at a profit. It is grounded on high quality customer
related data and enabled by information technology.

Customer Relationship Management (CRM) is a strategy for managing all your company's relationships
and interactions with your customers and potential customers. It helps you improve your profitability.
The art of managing the organization’s relationship with the customers and prospective clients
refer to customer relationship management.

Customer relationship management includes various techniques and tools to maintain healthy relationship
with the organization’s existing as well as potential customers. By tools we mean that it integrates back
and front office systems to create a database of customer contacts, purchases, and technical
support, among other things. Organizations must ensure customers are satisfied with their products and
services for higher customer retention. Remember one satisfied customer brings ten new customers with
him where as one dissatisfied customer takes away ten customers along with him.

In simpler words, customer relationship management refers “to the study of needs and expectations of the
customers and providing them the right solution.”

Customer relationship management helps in profiling prospects, understanding their needs, and in
building relationships with them by providing the most suitable products and enhanced customer service.

More commonly, when people talk about CRM they are usually referring to a CRM system, a tool which
helps with contact management, sales management, workflow processes, productivity and more.
Customer Relationship Management enables you to focus on your organisation’s relationships with
individual people – whether those are customers, service users, colleagues or suppliers. CRM is not just
for sales. Some of the biggest gains in productivity can come from moving beyond CRM as a sales and
marketing tool and embedding it in your business – from HR to customer services and supply-chain
management.

Need for Customer Relationship Management

 Customer Relationship Management leads to satisfied customers and eventually higher

business everytime.

 Customer Relationship Management goes a long way in retaining existing customers.

 Customer relationship management ensures customers return back home with a smile.

 Customer relationship management improves the relationship between the organization

and customers. Such activities strengthen the bond between the sales representatives and
customers.
Advantages of CRM:

Improved customer relations

One of the prime benefits of using a CRM is obtaining better customer satisfaction. By
using this strategy, all dealings involving servicing, marketing, and selling your products
to your customers can be carried out in an organized and systematic way. You can also
provide better services to customers through improved understanding of their issues and
this in turn helps in increasing customer loyalty and decreasing customer agitation. In this
way, you can also receive continuous feedback from your customers regarding your
products and services. It is also possible that your customers recommend you to their
acquaintances, when you provide efficient and satisfactory services.

Increase customer revenues

By using a CRM strategy for your business you will be ab le to increase the revenue of
your company to a great extent. Using the data collected, you will be able to popularize
marketing campaigns in a more effective way. With the help of CRM software, you can
ensure that the product promotions reach a different and brand new set of customers, and
not the ones who had already purchased your product, and thus effectively increase your
customer revenue.

Improved Informational Organization

The more you know about your customers, the better you’ll be able to provide them with the kind
of positive experience that really pays off. Everything that they do, and every interaction that they have
with your organization needs to be identified, documented, and recorded. To do this, you need to move
beyond the sticky-notes and disorganized filing cabinets, and start utilizing advanced organizational
technology that can not only accurately quantify and categorize data for easy future reference, but also
make that data available across departments. Thanks to CRM this all becomes a possibility, it allows you
to store a vast list of customers and any important information regarding them. Access to their file is even
more convenient than before due to the cloud, so no matter who it is that is helping the customer in
question, they’ll have the same actionable data instantly available. This will result in less wasted time for
clients and employees.
Automation of Everyday Tasks

Completing a sale is never as easy as just getting a customer to agree to commit. Along with the surface
details of any sale, there are hundreds of smaller tasks that must be completed in order for everything to
function properly. Forms need to be filled out, reports need to be sent, legal issues need to be addressed—
these ancillary chores are a time consuming, yet vital aspect of the sales process. The best CRM systems
are designed to take the burden of many of these tasks from off the shoulders of your employees, thanks
to the magic of automation. This means that your representatives will be able to focus more of their
efforts towards closing leads and resolving customer pain points, while the automated CRM system takes
care of the details.

Maximize upselling and cross-selling

A CRM system allows up-selling which is the practice of giving customers premium
products that fall in the same category of their purchase. The strategy also facilitates cross
selling which is the practice of offering complementary products to customers, on the
basis of their previous purchases. This is done by interacting with the customers and
getting an idea about their wants, needs, and patterns of purchase. The details thus
obtained will be stored in a central database, which is accessible to all company
executives. So, when an opportunity is spotted, the executives can promote their products
to the customers, thus maximizing up -selling and cross selling.

Better internal communication

Following a CRM strategy helps in building up better communication within the company.
The sharing of customer data between different departments will enable you to work as a
team. This is better than functioning as an isolated entity, as it will help in increasin g the
company’s profitability and enabling better service to customers.

Optimize marketing
With the help of CRM, you will be able to understand your customer needs and behavior,
thereby allowing you to identify the correct time to market your product to the customers.
CRM will also give you an idea about the most profitable customer groups, and by using
this information you will be able to target similar prospective groups, at the right time. In
this way, you will be able to optimize your marketing resou rces efficiently. You can also
be ensured that you don’t waste your time on less profitable customer groups .

Steps to Customer Relationship Management

 It is essential for the sales representatives to understand the needs, interest as well as budget
of the customers. Don’t suggest anything which would burn a hole in their pockets.
 Never tell lies to the customers. Convey them only what your product offers. Don’t cook fake
stories or ever try to fool them.
 It is a sin to make customers waiting. Sales professionals should reach meetings on or before
time. Make sure you are there at the venue before the customer reaches.
 A sales professional should think from the customer’s perspective. Don’t only think about
your own targets and incentives. Suggest only what is right for the customer. Don’t sell an
expensive mobile to a customer who earns rupees five thousand per month. He would never come
back to you and your organization would lose one of its esteemed customers.
 Don’t oversell. Being pushy does not work in sales. It a customer needs something; he would
definitely purchase the same. Never irritate the customer or make his life hell. Don’t call him
more than twice in a single day.
 An individual needs time to develop trust in you and your product. Give him time to think
and decide.
 Never be rude to customers. Handle the customers with patience and care. One should never
ever get hyper with the customers.
 Attend sales meeting with a cool mind. Greet the customers with a smile and try to solve their
queries at the earliest.
 Keep in touch with the customers even after the deal. Devise customer loyalty programs for
them to return to your organization. Give them bonus points or gifts on every second purchase.
 The sales manager must provide necessary training to the sales team to teach them how to
interact with the customers. Remember customers are the assets of every business and it is
important to keep them happy and satisfied for successful functioning of organization.
The Payne’s Five Forces Model

This is a comprehensive model developed by Adrian Payne’ The model identifies five core processes
in Customer Relationship Management CRM such as the strategy development process, the value
creation process, the multichannel integration process, the performance assessment process and the
information management process. They can be grouped into strategic CRM, operational CRM and
analytical CRM.

Figure 2.9: The Strategic Model for CRM (Payne, 2006).

Payne (2006) introduced a strategic framework/model for Customer Relationship Management

CRM consisting of five generic processes such as Strategic Development, Value Creation,
Multichannel Integration, Information Management, and Performance Assessment.

The Strategy Development process is concerned with integrating the business strategy from
the organization angle and the customer strategy as to how firm interact and choose their customers.
The Value Creation process with the main purpose of identifying the value the firm can create for the
customer and the value the organization can also benefit from. The Multichannel integration consists
of all the virtual and physical channels with which the firm plans to interact with such as sale force,
outlets that is physical stores, telephony, direct marketing, e-commerce and mobile commerce. But
the main thing here is that, regardless of the channel contact, the aim is to create an experience that
is uniform and also common. The performance assessment stage consists of the performance
measurement ad monitoring which includes the shareholder results as shown in the diagram.
The Information Management process consists of many different of data repository IT
systems, back and front office applications and analytical tools. It is thus necessary to access the
visibility of the system so the need for performance assessment process set in and it is concerned at
the strategic monitoring can be used to determine customer satisfaction and standards,.
Various authors have proposed Customer Relationship Management CRM strategy framework.

2.2.1 THE IDIC Model

The IDIC is described as below (Figure 2.6)

Figure 2.6: The IDIC Methodology ( Peppers and Rogers, 2004)

The IDIC Model has been developed by Peppers and Rogers (2004). According to IDIC model,
companies should take four actions in order to build closer one-to-one relationships with customers:

 Identifying who the companies’ customers are and building a deep understanding of them.
 Differentiating their customers in order to identify which amongst them have most value now and
which offer most for the future. Besides, the differentiation can allow the companies to devise and
implement customer specific strategies designed to satisfy individually different customer need.
The clients represent different levels of value to the company and they their needs are radically not
the same from the enterprise. According to Peppers and Rogers (2004), 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.
 Interacting with them in order to ensure that companies understand customer expectations and their
relationships with other suppliers or brands. Thus, companies must improve the effectiveness of
their interactions with clients. Each successive interaction with a customer should take place in the
context of all previous interactions with that customer. A conversation with a customer should pick
up where the last one left off. Effective customer interactions provide better insight into customer’s
needs.
 Customizing the offer and communications to ensure that the expectations of customers are met.
Indeed, the company should adapt some aspect of its behavior toward a customer, based on that
individual’s needs and value. To involve a customer in a relationship, a company needs to adapt its
behaviour to satisfy the customer’s expressed needs. This might entail “mass-customization a
product or tailoring some aspect of its service”