Customer Relationship Management

1..BIIRTH OF CUSTOMER RELATIIONSHIIP MANAGEMENT 1 B RTH OF CUSTOMER RELAT ONSH P MANAGEMENT

Throughout the 90s businesses were focused on improving internal operations. CEO¶s tried to distinguish their company through operational excellence and product innovation. Middle management focused on automating departmental functions such as sales and help desk support. They believed that automation and better management of their sales and customer service process would lead to increased revenue and customer satisfaction. Vendors were all to happy to support this belief and raced to the scene with independent solutions for sales force automation, help desk and customer service functions. While many of these applications provided increased productivity, the approach of using independent solutions to address departmental needs served only to created islands of information and database duplication. Furthermore, the lack of system integration and workflow between these departments meant that vital customer information was unavailable to sales and support personnel without jumping from system to system. This did little to support cross selling opportunities or increase customer satisfaction. By the time customers walk into your business - or log-on to your website or call your sales center - most already know what they want and how much they're willing to pay. With easy access to mountains of information, today's customers do their homework, and they now have the upper hand in most purchase transactions. In response, sellers are bending over backwards to improve offerings and services. However, rather than adopt a streamlined "you-want-it-we've-got-it" approach, sellers have

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Customer Relationship Management

created a marketplace where products and services are sold, serviced and marketed in an increasingly fragmented and ultimately frustrating way. Never before has so much "clutter" bombarded consumers from so many online and offline sources. Trying to be all things to all buyers, sellers face a harsh reality that brings an old adage to life: You can please some of the people most of the time andmost of the people some of the time, but you can't please all of the people all of the time. It wasn't supposed to be this way. Customer Relationship Management (CRM), which swept through the business landscape in the early 1990s, brought the promise of helping sellers please most of the people most of the time. Riding the coattails of customer satisfaction would come increased organizational efficiency and, better still, increased revenues.That dream has been slow in coming. While incremental improvements have occurred, CRM has not yet delivered its ultimate promise - the transformed customer experience. Yes, companies have implemented call centers and sales force automation software and customer sales representative training. However, while improving the sales and service components of customer transactions, companies have largely ignored the very piece required to attract customers in the first place. It's the piece that ensures sales and service efforts are effective and integrated. It's the piece that allows sellers to segment and analyze their customer information in order to create a more personalized, long-term relationship. It's the piece called "marketing" (see Figure 2.1).

Figure 2.1 - Completing the CRM vision

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Customer Relationship Management

We're not saying that the last decade's investment in CRM has been wasted. Quite the contrary: what began as a solution for providing more efficient customer transactions evolved into a process by which companies could foster more meaningful customer interactions (see Figure 2). This was the right direction to take. However, companies haven't reached the end of the CRM road. Today, the challenge is to take this evolution one step farther - to focus on building lasting and profitable customer dialogues at all interaction and transaction touch points to build customer and brand value.

Figure 2.2: Evolution of CRM As CRM evolved, many companies assumed that just bolting on new technology (e.g., client/server, call centers, salesforce automation software, data warehouses, etc.) or adding new services would enhance customer relationships. This assumption was as pernicious as it was false. After all, you can't sell what people don't want to buy, no matter how efficient and serviceoriented your sales channel. And as for gathering customer insights, be careful what you wish for. Many companies faced the unsettling paradox of having advanced data availability and analytic techniques that quickly outpaced their ability to absorb and apply the information. They were left with sophisticated tools that offered little real value. The belief is that the third wave of CRM will bring about the ultimate transformation of customer experiences - not just by strengthening sales and service or even promoting interactions with your customers - but by creating a series of "intelligent conversations" that build over time into a long-term, meaningful dialogue.
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Customer Relationship Management

In this next evolutionary phase of CRM, information will be exchanged and acted on in real time. Consumer history will be recorded (and remembered) and the expectations of both parties will be met. Naturally, not every conversation will be profitable. But the series of conversations and the ongoing knowledge transfer will continue to grow, creating a memorable and differentiated customer experience, and, in the long run, a profitable relationship CRM became popular from the early 1990¶s. Over the years , it has evolved from operational to collaborative to analytical CRM. Operational CRM focuses on combining service, marketing and sales automation. It gathers data from customer interactions like service calls, sales transactions, website activity, etc. Collaborative CRM uses more versatile software to give 360 degree view of the customers. Business intelligence applications turn the operation data into strategic information that is used by decision makers to analyze, plan, communicate and measure business performance. Analytical CRM links data from any enterprise management or CRM system to analyze customer¶s buying habits and navigates buyers on online interactions. Analytical CRM can correlate and report on information such as customer¶s past, present and future revenue, together with customer satisfaction levels, drawn from different sources. Companies can get greater insights about customers which will ultimately help them acquire new customers and further to retain them. Companies can evaluate the data and use it to design their marketing strategy. CRM analytics is an important part of any company¶s e-business strategy. Financial institutions gain advantage through analytical support using systems that can quickly organize and retrieve information stored in their centralized data base. For example, PeopleSoft CRM analytics provides a company with metrics that enables it be more strategic about allocating the resources to marketing, sales and product development. CRM supports a company¶s strategy, business planning and enables it to measure progress on an ongoing basis. CRM system tracks customer interactions with the business and facilitates workflow management, which ultimately leads to better performance and better customer retention levels. The first step in CRM is to accumulate the data into repositories. The next step is to use CRM analytics, such as PeopleSoft CRM to transform that data into profitable actions.

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Developing customer relationship has historical antecedents going back into the preindustrial era. when Gibbs SR toothpaste began the first marketing of this kind with its black and white campaign. software or household appliances and even consumables. 1990¶s ± Relationship Marketing. in many industries such as airlines. 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. all set up to develop relationships with customers. direct mail campaigns and early telemarketing (such as publishing) 3. Databases and direct marketing tools give them the means to individualize their marketing efforts. 1970¶s ± saw the beginning of segmentation. 1960¶s ± the era of Mass marketing. the de-intermediation process is fast changing the nature of marketing and consequently making relationship marketing more popular. the shift of focus from product-oriented to customer-oriented services helped in the development of CRM over the years. Similarly artisans often developed customized produce for each customer.Customer Relationship Management Emergence of the CRM practice: The Past: Looking back at a snapshot history of marketing. Profit must be the consequence of delighting customers (Kotler) and thus satisfaction of customers is seen today as a prime objective. banks. Such direct interaction led to relational bonding between the producer and the consumer. insurance.In addition to this. 4. The explosion of telemarketing and call centres. From sales force automation software (SFA) that focused on customer contact management to integrated knowledge management solutions. these were the early foundations of CRM. several factors have contributed to the rapid development and evolution of CRM. For example. we can see the following clear developments and progression over the last four decades: 1. Page 5 . 1980¶s ± where Niche marketing made millionaires of those who were best at it. The last couple of years have seen the term broaden to encompass a more strategic approach and the investment of billions of dollars worldwide into CRM solutions and services has followed. 2. CRM in those days referred to the software used to help businesses manage their customer relationships. 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. The recognition of the true value of customer retention and the use of Lifetime Value as a business case. In recent years however. The term CRM was first coined in the mid-1990s.

6. Page 6 . Another force driving the adoption of CRM has been the Total Quality Management. The globalization of world marketplace makes it necessary to have global account management for the customers. networking and manufacturing technology have helped companies to quickly match competition. etc formed partnering relations with suppliers and customers to practice TQM. IBM.Customer Relationship Management 2. Xerox. The growth in service economy. The speed of business change. requiring flexibility and rapid adoption to technologies. Newly Empowered customers choose how to communicate with the companies across various available channels. Emerging real time. 11. 9. Thus several companies such as Motorola. 8. 7. 5. This needed close working relationships with the customers. it minimizes the role of the middlemen. et al (1999) found that relational intensity increased in hospitals facing a high degree of competitive intensity. Other programs such as JIT and MRP also made use of interdependent relationships between suppliers and customers. In addition several marketers are concerned with keeping customers for life than making one time sale. In the current era of hyper competition. Ford. Customer expectations are changing almost on a daily basis. 4. interactive channels including e-mail. As several researches have found out retaining customers is less expensive and more sustainable competitive advantage than acquiring new ones. As a result product quality and cost are no longer significant competitive advantage. In a recent study. marketers are forced to be more concerned with customer retention and customer loyalty. When companies embraced TQM it became necessary to involve customers and suppliers in implementing the program at all levels of the value chain. Toyota. 3. ATMs and call centre that must be synchronized with customer¶s non-electronic activities. 10. There is a greater opportunity for up selling and cross selling. General Motors. Advances in information technology. On the supply side it pays more to develop closer relationships with a few suppliers than to develop more vendors. Since services are typically produced and delivered at the same institution. Naidu. Also nowadays consumers expect a high degree of personalization.

processes and procedures around your customer needs are vital building blocks that define CRM. regardless of where the interaction takes place. systems. NATURE AND SCOPE OF CRM 2 NATURE AND SCOPE OF CRM What is Customer Relationship Management? The center of CRM Universe is your customer Customer Relationship Management involves the implementation of a single integrated system. which will allow an organization to effectively and consistently manage prospects and customers. A Narrow perspective of customer relationship management is database marketing emphasizing the promotional aspects of marketing linked to database efforts.Customer Relationship Management 2. direct marketing operations and Internet applications.Another narrow. Tailoring communications. yet Page 7 . Customer Relationship Management puts the customer at the heart of the organization. This spans outside sales.. call centers. telemarketing operations.

getting. activities and culture to improve his satisfaction of service and. relevant and true today than ever before. CRM is defined as: ³Customer Relationship Management is a comprehensive strategy and process of acquiring. As is implicit in the above definition. with direct effect on revenues and growth. Page 8 . marketing efficiency is achieved because co-operative and collaborative processes help in reducing transaction costs and overall development costs for the company. by having a better understanding of the customers¶ needs and desires we can retain them longer and sell more to them. These lead to superior value creation. The Customer is King! This credo is more powerful. In a truly customer driven economy. 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. success depends on a company's ability to be with the customer on a round the clock basis« satisfying all their product and service specific needs. and/or other marketing actors. Marketing productivity is achieved by increasing marketing efficiency and by enhancing marketing effectiveness In CRM. CRM is based on the premise that. citizen relationships affect everything from league tables to egovernment targets. Simply stated. retaining and partnering with selective customers to create superior value for the company and the customer´. CRM is µa simple philosophy that places the customer at the heart of a business organization¶s processes.Customer Relationship Management relevant. viewpoint is to consider CRM only as customer retention strategy in which a variety of after marketing tactics are used for customer bonding or staying in touch after the sale is made. in turn. maximize the profits for the organisation¶. Customer Relationship Management (CRM) is about finding. In the commercial world these relationships can make or break customer loyalty and acquisition. Developing and maintaining CRM is increasingly critical for achieving competitive advantage or providing superior public services. Two important processes for CRM include proactive customer business development and building partnering relationship with most important customers. and retaining customers. While in the public sector. the purpose of CRM is to improve marketing productivity.

selecting CRM systems and developing training programs. To make effectively managed customer relationships Page 9 . traditional departmental applications for sales. CRM is all about building long term business relationships with your customers.´ What has given CRM such a boost in recent years is modern information technology that allows companies to deal with customers individually. processes. CRM implementation involves re-engineering the front office. you have drawbacks and advantages that the big boys don¶t have. organizations looking to implement successful CRM strategies need to focus on a common view of the customer using integrated information systems and contact center implementations that allow the customer to communicate via any desired communication channel. And as a small or medium sized enterprise. sales. According to the perception of businessmen many companies would invest a huge amount of money in CRM. Customer Relationship Management has been the oldest concept that had taken shape in India when business had started. departments and business units involved.Customer Relationship Management Peter Ducker had said´ true business of every company is to make and keep customers. it¶s easier to delight them.CRM changes all of this and represents a continuing evolution in managing front office operations. and service. Spending more time and money on customers is profitable. CRM should be there even if a business has one customer and one competitor. software. a process that grows in difficulty in direct relationship to the number of people. and usually Internet capabilities that help an enterprise manage customer relationships in an organized way. CRM isn¶t for the big boys. Marketing and Customer support with technology. In today's hyper-competitive world. marketing and customer service are consolidated into a single unified system capable of managing the entire customer life cycle. CRM requires a learning curve: reshaping customer processes. It is best described as the blending of internal business processes: Sales. CRM (customer relationship management) is an information industry term for methodologies. With CRM.CRM is at the core of any customer-focused business strategy and includes the people. and technology questions associated with marketing. CRM solutions empower businesses to more efficiently and effectively manage the activities that affect their relationship with their customers. If the employees know the customers more personally than employees. The ultimate goal of CRM is to meet and exceed customer expectations. create a positive customer experience and build customer loyalty. Organizations who are implementing CRM solutions feel confident that providing access to this level of information will assist their sales and support staff in better understanding the needs and buying patterns of their customers. Any company who sells one product to one customer over one competitor needs CRM. On the downside business spend relatively more on implementing and profiting from CRM than their larger counterparts. This approach allows employees throughout an organization to have immediate access to a complete profile of important customer information.

It requires this customer focused business philosophy to support effective sales. CRM systems basics focus on the idea that customers hold the key to success and this is easily evident from their phenomenal impact on sales. It uses a business strategy that puts the customer at the core of a companies processes and practices. customer service and order fulfillment. This step although the first proves to be as much a perquisite as the actual implementation. businesses have begun to recognize the value and importance of customer retention and are embracing new technology for automating customer service and support. Vendor scrutiny is absolutely essential to ensure that an organization chooses the most appropriate solution for its business activities.  The philosophy of CRM is the recognition that your long-term relationships with your customers can be one of the most important assets of an organization. providing competitive advantage and improved profitability  The most important part of CRM is the "customer-focus". marketing. convincing customers to buy the products or services and then taking care of them after the sale so they come back again and again! Traditionally these functions are called marketing. Customer Service and Marketing. CRM is a process of targeting and acquiring new customers. Here's a general overview:  CRM is used to learn more about your key customers needs in order to develop a stronger relationship with them. Page 10 . CRM is about building partnerships with your customers.While choosing a solution it is important to scrutinize each vendor and make sure that the chosen solution contributes to organization goals.  Customer Relationship Management can be defined as a companies activities related to increasing the customer base by acquiring new customers and meeting the needs of the existing customers. and market trends . marketing. Together they form a lifecycle of Customer Relationship Management.Regardless of company size or industry. It uses internal business processes from Sales. sales and service. strategic planning and personal marketing techniques to build a relationship that increases profit margins and productivity. For the new millennium.Customer Relationship Management through any direct or indirect channel a company opts to use CRM. What exactly is the definition of Customer Relationship Management? Ask a dozen professionals. get a dozen different definitions. CRM uses technology. it seems that the customer has finally become King!!! CRM Basics: Vendor Scrutiny Essential Industries need to know that most CRM solutions are far from easy to implement and that they need acute understanding of CRM services and vendors before its actual implementation.

ideas and suggestions. CRM services are vital to an organization and are a perquisite that needs to be adopted. the product strategy is greatly influenced by customers. augmented product. with the net result being a hike in customer retention and customer loyalty. It is the common misconception that technology comes before customer strategies but in reality it is the other way around. The basics of CRM require a comprehensive study of the customer. Depending on these factors.boosts customer interest in the organization itself along with the products and services it carries . Page 11 . competitors. establishing an excellent rapport with the customer himself all contributes to the success of the organization. The Net Result Observing an excellent response from the organization . A venue is required for these suggestions. the rapport established with them and the interest paid to their suggestions and ideas. For a financial product. and government & legislation. the product mix strategy could be product mix expansion. Customer Strategy Merely focusing on the implementation of varied technology would not suffice. product mix contraction. Customer strategies are the keystone to business activities and technology is the latter half. in addition to managing customer relationships effectively for achieving long-term profitability. collation of his data and provision of this data to the organization. Hundreds of sales leads are lost yearly as disinterested employees pay slack attention to customer suggestions. technology. expected product.Customer Relationship Management Technology vs. It is imperative that organization employees gain access to this data especially those that are engaged in direct dealings with the customer himself. With the installation and use of technology alone customer pitfalls cannot be overcome. What CRM Offers: CRM has a lot to offer most industries but it is the mode in which it is actually implemented that holds the key to actual CRM success. This is supplied by CRM implementation. CRM Rewards CRM also provides the customer with a much needed avenue to vent his problems. It is evident that personal contact. and potential product. employee knowledge of customers. Financial product marketers need to manage their product portfolio in response to the changing environment and consumer needs. and product modification. This collated data proves rewarding in that it is an insight into the customer and thereby provides the person / persons using it to find solutions to customer problems. There can be such a thing as CRM collapse if the organization fails to do what it needs to in order to ensure success and use adequate management and other resources required . The concept of a product can be understood in terms of the following four terms ± actual product.

and customer switching are three important concepts in CRM. but also on emerging practices such as electronic customer care. It involves relationship building with both external customers and internal customers. and maintain long-term profitable relationships with them. In addition to maximizing customer value. (d) inconvenience. employees.Customer Relationship Management Branding in financial services is done more at the corporate level than at the product level. When there are multiple tiers. retain them. Relationship marketing is concerned with relationships that exist between any two stakeholders of a business. achieve long-term profitability. Page 12 .master brand. the marketer needs to identify the target customers. (c) price failures. CRM is a strategic tool for marketers to acquire customers. and sub-core brands. One-to-one marketing essentially involves knowing about each and every possible need of the targeted customers and developing tailor-made solutions for them. and knowledge from the customer. reactive. core brands. customer loyalty. (e) employee response to service failures. the brands in all the tiers should convey the same organizational values. knowledge to support the customer. It uses information technology to achieve these objectives. and build the brand. and measurement systems. They include (a) core service failures. Customer loyalty can be either affirmative loyalty or reluctant loyalty. interact with each customer group. These values can be communicated through brand logos and taglines. (g) ethical problems. This can be done using the technique of mass customization. To implement one-to-one marketing. such as customers. The components of customer knowledge can be classified into three broad categories: knowledge about the customer. (b) service encounter failures. and provide customized products and solutions in a cost-effective manner. Branding should start with a clear strategy for targeting and positioning. Customer knowledge. accountability. In the financial product sector. (f) attraction by competitors. relationship marketing can be at one of the following five levels -basic. brands can occur in three tiers -. In an organization. Advertising can be successful in building the brand only if the financial product caters to the requirements of the consumer and the entire service experience is consistent with the brand image that is communicated. and partnership levels. The level of affirmative loyalty is influenced not only by traditional factors. differentiate them into groups. CRM has enabled the shift in approach from being productcentric to being customer-centric. The brand image should be consistent with the marketing strategy. Eight different reasons have been identified for customer switching. proactive. CRM helps marketers to cross-sell products. product offerings. Competitive pressures have led marketers to realize the necessity of customer retention to survive in a deregulated economy. and (h) involuntary switching.

This has made companies shift their focus from "mass production" to "mass customization". Here hard work reaps high quality service and over the years develops a database of loyal customers. Then why is the CRM industry attracting investments of millions and billions of dollars? The reason is simple. These factors are pushing companies into taking a closer look at their customer relationships. CRM focuses on bringing customers from level 1 to level 3 and retaining apostle customers. On the other hand companies are finding it difficult to differentiate them in the marketplace. Today any company can copy products or services offered by other companies. They have a medium level of satisfaction and loyalty towards the company. 3. Zone of defection where customers are extremely hostile and have the lowest level of satisfaction. Options for customers have increased with the cycle of innovation-to-production-to-obsolescence gaining momentum. If the new entrant adds features like less order turn around time and direct communication then established players are bound to have sleepless nights. This simply states that. Organizing business to satisfy customer demands organizes/simplifies internal functioning of the organization. Customers can be divided into three zones: 1. Workflows are reduced. Take the example of a small enterprise. Customer demands for customization is increasing with every passing day. Zone of indifference where customers are not sure. passing work from one pit to another. 2. any company which is a step ahead of others because of some web product or service will not be able to hold on to that advantage for long. Organizations that implement CRM and turn their business into e-businesses will find their competitors' customers ready to welcome them with a "smile". The third level of customers is in the zone of affection described as "Apostles". The concept of "Seller's Customer" has just rotated 180 degrees to become "Customer's Seller". information flow of non-productive things gets eliminated and the most important thing Page 13 . Key to stability in today's dynamic marketplace is forging long-term relationships with the customers. Implementing CRM brings to the front the "pits" that the organization had dug over the years. cycle times become shorter.Customer Relationship Management WHY CRM ? Keeping in mind the pace at which technology is changing today. now the customer is more powerful than the seller. In this enterprise computers are optional. The present scenario of companies using "poorly implemented" multi channel strategies for living upto the expectations of customers is bringing both customer satisfaction and customer loyalty down the ladder.

Tastes. High value customer requiring low value service. Differentiating Offerings: p p p p p Low value customer requiring high value customer offerings. CRM principles: 1. High value customer requiring high value service. Grading customers from µvery satisfied¶ to µvery disappointed¶ should help the organisation in improving its customer satisfaction levels and scores. 2. Understanding each customer becomes particularly important. Compact sized organizations get into a position of making more money. CRM has become a strategic initiative because of its potential for increased revenues and improved customer service. Sensitivities. Preferences and Personalities. As the satisfaction level for each customer improves so shall the customer retention with the organisation. Smaller businesses are forging ahead as well. 4. This in turn enables them to please more customers. And the same customers¶ reaction to a cellular company operator may be quite different as compared to a car dealer. Physical and Psychological characteristics. Page 14 . 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: 1. Lifestyle and Age. 3. 2. and are using CRM solutions to capture and share customer information across multiple departments and job functions. Cultural background and Education. recognize and reward best customers disproportionately. Keeping Existing Customers. Differentiate Customers: All customers are not equal.Customer Relationship Management "pits" get covered automatically with all the positive features. For large enterprises. Low value customer with potential to become high value in near future.

By identifying life stage and life event trigger points by customer. Maximizing Life time value: Exploit up-selling and cross-selling potential.Customer Relationship Management 3. Page 15 . marketers can maximize share of purchase potential. Increase Loyalty: Loyal customers are more profitable. Thus a single adult shall require a new car stereo and as he grows into a married couple his needs grow into appliances. It has to innovate and meet the very needs of its clients/ customers so that they remain as advocates on the loyalty curve. Company has to invest in terms of its product and service offerings to its customers. Any company will like its mindshare status to improve from being a suspect to being an advocate. Referral sales invariably are low cost high margin sales. 4.

³The prerequisite for effective CRM is mindset change for true customer focus by all functions of company. Mr. In such a situation.´ Mr. Mentioned Mr. Creating Value through Relationship Marketing was the theme of the Marketing Continuum held at the Shailesh J Mehta School of Management. Head of CRM and SCM at Mahindra and Mahindra Ltd. Mangesh M Korgaonkar. IIT Bombay on October 15. the Head of SOM Prof.. He also shed light on some of the CRM approaches adopted in the airline industry and the value it generated for customers. which focuses at building a strong industry linkage with what is being taught at classrooms and features talks by experienced people from the industry who share their perspective and views with the students. It was then followed by a talk by Mr. ³The vision to retain customers at a senior level and translating this vision to the lower levels is one of the key aspects of customer retention. Page 16 . he added that it is an organization¶s effort and not just that of one salesperson that can ensure effective CRM initiatives. B. The event was a part of the school¶s yearly lecture series µContinuum¶. The talk by Mr. Inaugurating the event. Sahi. a frequent flier incentive scheme of Jet Airways. Ashwin Yardi. who shared a real life experience in implementing CRM in a large engineering company like M and M..crucial to business success It is estimated that it is far more costly to obtain a new customer than retain an existing one. R. The event was well attended by students of other business schools as well as working professionals from the corporate world. Bijay Jayarajan of Jet Airways spoke about the role which loyalty programmes can play in customer retention by extensively discussing the example of Jet Privilege programme. Arun Choudhari. Associate Director. President of Retail Petroleum Business at Reliance India Ltd. Dr. he emphasized the importance of aligning processes and integrating the whole organization around the customer promise. he talked about global trends in this regard with specific focus on the telecom industry. Speaking on the various CRM activities undertaken at the SJM School of Management. Vinay Patkar. Sanjaya S Gaur. investing in CRM makes sense for companies. Commenting on he need for trust and ability to keep up promises made to the customer. Professor of Marketing at the school pointed out that the school was one of the first to start a full-credit course on CRM for the Post Graduate Management students. Describing customer retention as one of the biggest challenges facing maturing companies in their race for industry leadership. Patkar. who focused on the various CRM activities initiated by Reliance Industries in the Petroleum Retailing business venture. Customer Retention and the ways to address Customer Churn was the theme of the talk by Mr. CapGemini Consulting India Pvt. emphasized the role which technology can play in Customer Relationship Management (CRM) and marketing innovations but lamented the fact that the Relationship Marketing has not been deeply understood and applied in India. You have to have it in your heart that you need to respect your customer. Dwelling on the importance of CRM.´ he added. Head of Centre of Excellence for CRM at I-Flex Solutions revolved around the theme of how technology manifests in CRM initiatives with a specific focus on the banking sector. ³Technology by itself is not the solution. Ltd.Customer Relationship Management CRM .´ he observed.

John Zhang and Wharton doctoral student Upender Subhramanium cautions that firing your low. firing low-value customers can be counterproductive. and that many customers are unprofitable. But other types of firms have inbreeded CRM and are giving low value customers a cold shoulder. says a new study by Wharton marketing professors. For instance. The rationale is clear-cut: low value customers such as the ones who hardly spend any money on your service or product yet tie up costing more money than the customers provide. Jag Mohan Raju and Z. discounts or other inducements to customers identify as having high value.Customer Relationship Management Case Study Why firing your worst customers isn¶t such a great idea For the overwhelming majority of companies operating in a competitive environment. So why not jettison them and focus on your customer relationship efforts and more profitable individuals? OR. The notion that firing unprofitable customers is a smart thing to have emerged out of the broad acceptance of a practice usually referred to as customer relationship management (CRM). Continental airlines emails only it¶s high value customers apologizing for flight delays and update them with frequent flier mails. As an alternative. Fire your bad customer. why not at least try to increase the worth of the low-value customers to the firm? It sounds quite rational and many corporation have jumped on the bandwagon.In July 2007. The financial institutions are best known for treating low value customers differently from good ones. That advice has become widely accepted in recent years as companies have sought to manage their relationship with customer in more sophistical ways. But a new study by two Wharton marketing professors. bad customers at fidelity investment are made to wait longer in queues to have their calls taken by call centers. CNN reported that sprint had dropped about 1000 customers who are calling the customer Page 17 .value customers may actually decrease firm profits and that trying to increase the value of these customers may be counterproductive. In their study. firm qften use information technology to quantify the value of individual customers and provide better privileges. With CRM. This customer analysis have often shown that a small proportion of customers contribute to a large percentage of profit.Raju and Zhang have coined the term customer value based management (CVM) described this central component of CRM.

´ Zhang. ³customer value based management : competitive implications. Raju said that if you make low value customers more valuable. such as teaching them to spend more or to use low cost support channels. The researchers acknowledge that firing bad customer may make some sense in industries where there is little or no competition. of those roaming customers are of high value variety. The key reason is companies that try to get rid of these low value customers or take steps to turn low value customers into high value ones --.firms should find cheaper ways to keep low value customers because they are confusing your competition to your advantages and there¶s a change someday that they will become good customers. or most. who may become unhappy and leave for overwhelming majority of companies operating in a competitive environment.you have to keep your competitor confused about who your good and bad customers are´. it also underserves profitable customers. So what is proper way to manage relationships with low and high value customers? ³The research finds that a better approach is to improve the quality of your low value customers at the same time that you keep your low end customers. they are likely to intensify their efforts to take your roaming customers away from you because they know that all. not only does the company waste resources on attracting and retaining unprofitable customers . (Referred from Hindustan Times Page 18 . Raju says that you should focus on good customers and try to improve their quality and not just to get rid of the bad ones. If the firm treats all customers equally the argument goes. If the competitor knows that you have fired many of your low value customers. cheaper ways to manage the low value customers. this can also be counterproductive because it also encourages your competitors to poach more intensely. But Wharton researchers found that this idea is also wrong headed. but you should find other . Raju and Subramanium break ground by analyzing CVM in the context of a competitive environment. however firing low value customers can be counterproductive.leave themselves open to successful poaching by competitors. In the study. such as encouraging them to use automated phone response systems or offering minimal discounts or other benefits.Customer Relationship Management care centre too frequently²40 to 50 times more than the average customers every month over and extended period. Instead of firing unprofitable customers some companies have tried to turn them in to high value customers by giving them inducement to change their behavior .

. In addition. creative and operational marketing. ROLE OF MARKETIING IIN CRM 3 ROLE OF MARKET NG N CRM To continuously attract and retain the most valuable customers. understand and interact intelligently with customers. Figure 3. companies must act aggressively to increase the economic value of both their brand and customer relationships.1 -The revitalization of marketing Page 19 . companies must continue their efforts to maximize their investments in the sales and service technologies that help reach. they must sustain bottom-line performance in the face of skyrocketing marketing costs.Customer Relationship Management 3. To realize these goals. But they must also extend this traditional scope of CRM to reach a higher standard of excellence in three distinct disciplines: analytical.

In a sense. analytical marketing tools are the "nuts and bolts" of the marketing engine. Customer relations are often confused with marketing. Without analytics. pricing. Creative Marketing relies on analytical tools and customer insight capabilities to improve marketing programs. consistent and real-time response across marketing. customer relations differ from marketing in that the goals of the program are to develop positive relationships with the customers rather than to sell certain number of products. Such inconsistent messages delivered via a number of different channels . In the past.However. analytical marketing converts customer data. and channels. sales and customer service.often produce fragmented experiences that frustrate the customer who probably won't come back. analytical marketing puts customer insights to work for the organization and prevents the company from delivering the wrong content to the wrong person at the wrong time. Fortunately. companies will be able to drive seamless. which involves all the activities associated with building and sustaining a compelling brand and ensuring that customer interactions reflect a satisfying brand experience.Customer Relationship Management Once these improved marketing processes are linked with core CRM capabilities. companies are changing the way they approach creative Page 20 . Information from each customer interaction channel is collected. and more informed decisions related to the development of product. companies will keep investing in CRM without ever knowing where their money is having the greatest impact.that are unintentionally inconsistent. promotion. In short. analyzed and used to develop predictions of your individual customer's behaviors. based on customer differentiation. optimize the overall marketing investment and deliver the brand promise. gathered at various touch points. Through predictive modeling.when coupled with poor understanding of why brand and message consistency is so critical to the customer experience . analytics lead to a more robust understanding of customers and markets and an improved ability to make strategic and operational decisions about customer treatment. packaging. The result will be a sustainable process that not only enables lasting customer relationships but also harnesses that elusive construct: superior brand value. It's been far too easy for companies to develop a host of messages from ad campaigns to customer service representative scripts . Analytical marketing utilizes those processes and sophisticated technologies that allow businesses to direct their overall marketing investment across the brand and customer. The ultimate outcome is increased profitability. As the number of customer channels has exploded. so has the need for creative marketing. and in fact it is important that the public relations professionals work with the marketing professionals when developing goals for a customer relations program. Analytical Marketing drives market segmentation and identifies your most profitable customers. creative marketing efforts have been applied to CRM efforts in much the same way as technology.Specifically. into relevant insights that direct market segmentation activities and feed into more effective campaign design.

The goal of operational marketing is to enable ongoing "conversations" with individual customers across all channels. creative marketing is no longer considered an "afterthought". as does your brand value and. Comprehensive marketing campaigns become targeted and compelling. which continuously harvest customer information from a variety of contact points. it is certainly true that the companies with the best customers win. ultimately. Information becomes dynamic.Reimer Thedens [ Chairman|CEO. Page 21 . While this may be true. grow and retain those loyal high value customers which make all the difference between a market leader and the other players in a category is so crucial to the success of any business. Operational Marketing relies on customer insight information to personalize interactions. Leveraged by creative and analytical marketing capabilities. In other words. When these marketing disciplines work in tandem with your existing sales and service capabilities. Insights become powerful barometers of customers' likes and dislikes. personalized marketing efforts. and by focusing on the total customer experience.´ --.] OgilvyOne Worldwide Ltd. CRM in Financial Services Marketing Globalization. ³It is often said that companies with the best people win. Customer loyalty rises. technology. How to win. deregulation and intensive competition are changing the pattern of the financial services industry in terms of market geography. this information is assessed and converted into meaningful insights that drive ongoing. that every manager must at least know the fundamentals of customer management. Its efforts encompass all the activities of data mining and data warehousing. differentiate sales and service across segments. product offerings and distribution channels. creative marketing can now be used to build a unified brand across all of a company's online and offline channels. your revenue. The result is a customer base that is pleased with the unique and personalized interactions you provide. drive continuous improvement across customer interaction processes and generate revenue lift. By integrating its processes with those of analytical and operational marketing. The article focuses on the changing pattern of financial services industry and outlines the way in which solutions like Customer Relationship Management (CRM) can help financial organizations to acquire new customers and retain them and in the process. increase profitability and market share. The success of a financial service primarily depends on how effectively customer¶s orders are recorded and carried out. your entire CRM effort becomes revitalized.Customer Relationship Management marketing.

kiosk. call centre. ease of access and personalized service. greater value. a kiosk or a website to personally visiting a bank or an insurance company.´ This explains that to earn real profit. it will build loyalty and retention. where brokers represent more than one company and do not share the information. ATM.stage. companies should have clear picture about their CRM business goals and then go for appropriate technology to implement CRM.  CRM should be used to gain greater insights into customers and design suitable incentives and loyalty programs to create brand loyal customers. the organization spends more money to attract customers through promotion and research activities. People these days prefer an automated Teller Machine (ATM). Some Tips for CRM success Some important tips are given below as to how CRM may be used for improved marketing of financial services:  At first.Customer Relationship Management Customer Relationship Management (CRM) is definitely not only a technology solution but an important strategic business and process issue. The development of technology has empowered customers with multiple options to interact with the company and also to check their stock portfolio or compare insurance rates online. telephone. retention is a must. etc. Successful organizations always keep the customers at the center. According to Peter Drucker. The changing landscape of the financial sector is posing new challenges to the organizations.  Customer interactions need to be consistent across multiple touch points like direct contact. They need to know which type of offers and incentives to be given to the customers. This becomes an issue in the case of insurance industry. The CRM approach includes all the business processes which organization employees to identify. Organizations must integrate all the processes and technology that support and coordinate customer interactions. If this is done right. ³Customer is profitable only from the second year. Internet. Page 22 . e-mail.  Information must be shared amongst all concerned. fax. Interactive Voice Response (IVR).  The data collected from multiple touch points. Customer¶s expectations from the companies have increased substantially. select. There is a sea change in the way the businesses were carried out earlier. In the first year. customers are expecting more offerings. acquire and retain customers. refined and finally used to design the marketing strategy. With the availability of increasing array of financial products and services. should be analyzed.  Companies must develop the right contact strategy.

Page 23 . financial institutions require comprehensive CRM strategy that integrates every department of the company. This will enhance the company¶s performance and profitability. Authorized employees should have access to the information about the customers from any place with the use of internet\intranet. CRM should be backed by adequate security and privacy. This not only includes call centers but also sales. marketing and support functions. CRM should be used to streamline customer communications and link customer accounts over telephone or Internet banking.Customer Relationship Management  CRM must be used to identify the most profitable customers and nurture them for long-term business and profitability. Unauthorized persons should not be allowed to access the system. CRM must provide a single window view of the customer to anyone in the company with appropriate security permission. In today¶s competitive market place.

Successful customer ownership will create competitive advantage and result in improved customer retention and profitability for the company. Surveys after surveys. To some it is about a loyalty scheme. Only a small number of businesses have a clear idea what should be done with information technology in order to successfully implement CRM. The new CRM paradigm reflects a change from traditional marketing to what is now being described as µcustomer management¶. is concerned with the creation. promotion and place within the functional context of the marketing department. CRM TO IICRM ((IInttegrratted Custtomerr Rellattiionshiip Manage mentt)) 4 CRM TO CRM n eg a ed Cus ome Re a onsh p Manage men Customer Relationship Management (CRM) is developing into a major element of corporate strategy for many organizations. INTEGRATED CUSTOMER RELATIONSHIP MANAGEMENT (ICRM) The development of the Customer Relationship Management (CRM) marketing practice has made more and more people realize the importance of strong customer relationship in building sustainable competitive advantages in their market competitions and in generating sustainable profits in the long run. Relatively few organisations have implemented an integrated approach.. CRM. This approach emphasised management of the key marketing mix elements such as product. Narrow functionallybased traditional marketing is being replaced by a new form of cross functional marketing CRM. to some it is about a help desk. To others it is about a relational data base for key account management and for others it is about mass profiling the customer base without undertaking detailed segmentation. The adoption of CRM is being fuelled by a recognition that long-term relationships with customers are one of the most important assets of an organisation and that information-enabled systems must be developed that will give them 'customer ownership'. whilst recognising these key elements still need to be addressed.one which emphasises keeping as well as winning customers. The traditional approach to marketing has been increasingly questioned in recent years. reflects the need to create an integrated cross-functional focus on marketing .Customer Relationship Management 4. which addresses all the key strategic elements of CRM. development and enhancement of individualized customer relationships with carefully targeted customers and customer groups resulting in maximizing their total customer life-time value. However. The new CRM approach. a surprisingly high rate of failure has been reported for CRM practices. In many companies there is still confusion as to what CRM is all about. The major CRM system developers received much lower Customer Satisfaction scores than companies in other industries Page 24 . also known by other terms such as relationship marketing and customer management. price. the currently popular CRM marketing practice often produces disappointing outcomes. The failure rate of CRM systems ranges from 50% to over 80%. Industry leaders are now addressing how to transform their approach to customer management.

Customer Relationship Management did. What is customer relationship? What drives customer relationship? How to measure customer relationship? Which customers should you build relationship with? How to improve customer relationship? How to develop effective customer relationship management strategies? However. no existing CRM system is able to answer (or is designed to answer) these questions. 6. needs construct value and value determines customer relationship. Rule 3: Customer relationship should be measured and improved under market competitions. restricts its marketing scope within a company's database and ignores customers needs by focusing on purchase correlation in a company¶s database. y y Rule 2: Customer relationship should be defined and constructed based on customers¶ basic needs. 4. Without clear answers to these critical questions. so unavoidably. the more people who realize that the current CRM practice hardly manages customer relationship. 5. The current CRM practice was originated from a combination of database technologies and database marketing (analytical techniques). its inherited characteristics become its limitations. it inherits database as its only focus. In the ³Customer Centric´ customer relationship management practice. Customer relationship is competitive and a company should manage its Competitive Customer Relationship. When it gets into the spotlight and becomes a major marketing practice. y Page 25 . how could a company know what customer relationship it needs to manage? How could it know if it has a strong relationship with its customers under market competitions and how could it know with which customers it needs to build strong relationship? To effectively manage customer relationship. Any good customer relationship management practice should start by answering the following 6 critical questions: 1. one should follow the following rules: Rule 1: Building strong customer relationship should be set as the primary goal of a company¶s marketing practice and all marketing functions should serve to the enhancement of a company¶s customer relationship. It incorrectly defines customer purchase and contact behaviors as customer relationship. The more popular this marketing practice gets. 3. 2.

in ICRM practice. It is our solution to overcome the limitations of the current CRM practice.Customer Relationship Management Rule 4: Customer relationship management practice should not be a sub-function of a company¶s IT department. ICRM is based on the very fact that by building a strong customer relationship. a company can build sustainable competitive advantages in the long run. building strong customer relationship is set as the primary goal of a company¶s marketing practices and it requires all marketing functions in a company to serve to the enhancement of its customer relationship. Page 26 . which has developed to meet the challenges raised from our daily marketing consulting services. ICRM also provides a practical guideline of a standard process for effective customer relationship management. Customer relationship management should be an INTEGRATED part of a company¶s marketing practices. Therefore. It integrates all major marketing functions in the process of building strong customer relationship. y Integrated Customer Relationship Management (ICRM) is the latest marketing strategy. ICRM puts customer needs in the center of marketing practices and defines customer relationship based on customers¶ basic needs under market competitions. ICRM manages Competitive Customer Relationship. ICRM provides a theoretical framework to define and to construct customer relationship based on customers¶ needs under market competitions.

However. aligning business processes. and marketing processes as well as the CRM technology environment with the customer. audience definition. and communications Telemarketing and Lead Generation -. In the customer engagement phase of the relationship life cycle Customer Relationship Management supports the following key functional areas: Marketing Planning and Campaign Management -. and measurable. service. CUSTOMER LIFE CYCLE MANAGEMENT CLCM is a three-domain business system. there is a very important Engage activity that may start in the service process: cross-sell/up-sell.Facilitates customer segmentation.Provides sales tracking and sales forecasting. including Web-based personalized interactions and electronic catalogs. This discipline falls predominantly into the domain of CRM. There are Engage activities. lead qualification. call list management.Customer Relationship Management 5. and monitoring of campaign progress by using integrated analytical CRM functionality Opportunity Management -." or generating leads and converting them into customers. with sales automation and campaign management the principal technology applications. market segmentation. and estimate potential-to-buy and potential closing dates Page 27 . including content development. repeatable.Enables complete marketing campaigns. This business system must integrate sales. identify key decision makers. some Engage functions cross all customer channels. and the customer life cycle. These systems should be clearly defined. technologies. What may start as a service request may end as an Engage activity. helps plan sales approaches. thus enabling predictable business activities to be automated and leveraged by technology. Customer Life Cycle Patterns Engage This is where advertising or marketing efforts create initial awareness of the organization or product offering. However. The Engage process is fundamentally about "funnel management. business systems must align these three domains in ways that are predictable. To fully realize the potential of CRM. which primarily support the e-channel.

and customer support y Telesales -. Related Transact activities include product and sales configuration. facilitates planning and maintenance of sales activities. and implementation of sales strategy. includes support for mobile and wireless devices Fulfill The Fulfill category is where the offering is delivered to the client.Enables planning. Fulfilling a service may involve consultants coming onsite to complete a project.Provides solution for selling products and services via the Internet. In the business transaction phase of the relationship life cycle Customer Relationship Management supports the following key functional areas: y Order Acquisition -. contract completion. and reports on product and pricing trends y Internet Pricing and Configuration -. order placement. search. payment. whatever the channel. catalog browsing. facilitates coordination of budgets. and provides activity reports. this may simply be an electronic transfer. Tightly coupled. and calls. and sales budget. visits.Customer Relationship Management Sales Activity and Contact Management -. and order management. such as appointments. provides links to Business Intelligence reporting capabilities Transact In the transact process. or a utility offering such as telephone phone or electrical service being turned on. bi-directional integration with order management applications is a requisite technology step in the Transact process pattern to provide a seamless commerce environment. creates quotations and takes orders. monitors sales pipeline. including one-to-one marketing. provides efficient user interface. customers actually purchase the product offering. forecasts. at any time. includes shopping basket functions y E-Selling -. sales portfolio. pricing.Delivers online systems that allow users to configure products online and compare prices across different catalogs and marketplaces. covers all phases of sales cycle.Manages inbound and outbound calls. This may consist of a product being physically shipped to the customer. or in the case of an electronic product. handles high call volumes.Organizes daily workloads and customer contact information for display in calendar application.Delivers key customer and prospect information to sales personnel at any place. integrates sales information from back-office systems and product information from online catalogs y Field Sales -. organizing. Page 28 .

CRM technologies supporting this process pattern must support multiple points of interaction. enables visibility into product and service delivery dates y Contract.Enables real-time tracking of order fulfillment. the organization must provide support functions ranging from troubleshooting to replacement. and activity management to track. supports multiple channels for customer communication. manufacturing. and Financials Management -. and crosssell/up-sell. e-mail management. integrates industry-leading eFrontOffice call center applications from Nortel Networks Clarify. Billing. distribution. The notion of "continuous customer satisfaction" is fulfilled in this stage as well. billing status. allows sharing of information with customers via the Internet Service Another process predominantly in the CRM domain. They also expect this support to be consistent. self-service.Customer Relationship Management In the order fulfillment phase of the relationship life cycle Customer Relationship Management supports the following key functional areas: y Complete Order Life Cycle Process -. provides certified interfaces to leading computer telephony integration (CTI) solutions y Page 29 . The fundamental point here is that when a business interacts with its customers.Provides inbound and outbound call processing. Other Service activities include issue tracking/resolution. customized and "guided" content for customers. and service processes. so customers can use whatever interaction capability they find most appropriate. integrates back-office functions y Fulfillment Visibility and Order Tracking -. In the customer service phase of the relationship life cycle Customer Relationship Management supports the following key functional areas: Interaction Center -. and accounts.Enables allocation of resources in real-time at the front- end. proactively notifies customers of changes that affect delivery y Real-time Availability Checks -. and enhance all customer contact. monitor. and the flow among the patterns to be transparent . production capacity. including telephony and Web.Provides the ability to track and trace orders at all points along order management. they don't even realize it's happening. provides unique. Service is the final stage of the customer life cycle and typically involves helping the customer work with the product offering.Provides information about customer contracts. customers inherently perceive the business as being able to support these four life cycle patterns. To do this. and lead-time requirements across the entire supply chain. includes real-time access to inventory levels.in other words.

Each level is build upon the level before. supports services carried out at customer site or in-house repair center (depot). provides service planning and forecasting. includes caselogic system featuring advanced decision support for problem determination and resolution y y Service Management -. Page 30 .Enables rapid allocation of service engineers and materials to meet incoming service requests y Integration of Marketplace Services -. or fourth time. cost accounting. third. And it¶s the customers who sees himself or herself in a positive relationship with you who can provide the strongest advocacy for you and your products and services. calculates services charges. Repeat customers develop greater economic and emotional ties with you. supports effective customer self service. These customers actively tell others about their positive experience. integrates information from materials management. checks customer warranties when services are performed. Customer Advocates This level represents those customers who are not just satisfied and are willing to do business with you again. They spread the good word.Facilitates handling of entire claims process y Field Service . customers won¶t want to do business with you again. supports involvement of external service providers.(Dispatch) -. car insurance customer may come back to the agent for disability and life insurance. integrates contract management.(Mobile Service) -. and accounts receivable. includes support for mobile and wireless devices Field Service . Without quality initial transactions.Provides access to a broad range of applications and services hosted on virtual marketplaces y The next very stage in the cycle is Repeat customers At this level focus is on getting customers to return for a second. scheduling. billing. handles customer installations. They maybe considered as active participants on your marketing team. helps decision makers with strategic management issues y Claims Management -.Meets varied demands of service management business. and dispatching functionality through tight integration with fulfillment systems. Customers may come back for the same purchase.Offers customers and prospects access to information and customer service functions via Internet. The customers may turn for variety of products and services. For e.g. monitors day-to-day operations.Delivers and tracks customer and account information for field service personnel. facilitates simple and complex services.Customer Relationship Management Internet Customer self-service -.

Creating profits. Creating value for customers and prospects. Acquiring new customers. 4. Creating Profits Learning from customers & prospects Acquiring new cust ers 5 3 4 Creating value for customers Creating loyal customers ¡  2 Page 31 . 5.Customer Relationship Management CRM cycle: The CRM cycle can be briefly described as follows: 1. 3. Learning from customers and prospects (having in depth knowledge of customer). 2. Creating loyalty.

Customer Relationship Management 6..1 -.STEPS IN CRM implementation Page 32 . IIMPLEMENTATIION OF CRM 6 MPLEMENTAT ON OF CRM STEP I: Needs Analysis STEP II: Project Planning STEP III: Implementation STEP IV: Testing & Quality Assurance STEP V: Deployment & Training Figure 6.

System configuration and administration will be completed and customization will be identified. HR STEP II: Project Planning The implementation plan will be created and finalized during this phase. A system administrator will be selected. Customer Support. Customer Support STEP III: Implementation It is during this phase that the software implementation will begin. who will work in conjunction with the vendor or system integrator managing the implementation process. finance. Authority: middle / lower level mgmt Duration: 8 . Corporate communication Software: Oracle. as well as team members from each department. EDP (IT). Authority: Top management Duration: 12 . SAP Page 33 .Customer Relationship Management STEP I: Needs Analysis This phase of the implementation consists of reviewing the strategic objectives of the CRM implementation and gaining management acceptance and commitment to the project. EDP (IT). During this phase you will define the policies and procedures for managing customer interaction. Authority: Middle management Duration: 8 . EDP(IT).12 hours per person Schedule: One month Concerned authority: Marketing.12 hours per person Schedule: 15 days Concerned authority: Marketing.16 hours per person Schedule: 15 days Concerned dept: Marketing.

Training will begin for all end users.40 hours Authority: Middle & lower level managers Schedule: 8 day Concerned authority: EDP (IT). There are no additional installation activities. HR One of the most important aspects of implementing a customer relationship management (CRM) system is ensuring that it meets the expectations of a variety of audiences within your company. managed. Duration: 12 . Quality Control. and performance measurement. Marketing. campaigns.24 hours per person Authority: lower level mgmt Schedule: 15 days Concerned authority: EDP (IT). CRM software tools can be categorized into operational CRM tools and analytical CRM tools. The customer knowledge management process (journey) is a cycle with four inter-related steps ± developing a customer-focused strategy. technology adoption and implementation. tactics. The system administrator should provide ongoing support with telephone assistance from the vendor or system integrator. and customer learning. so all of these concerns are valid. Call center operators. Technology implementation has become the key to CRM implementation in an organization as huge volumes of customer data can be stored. implementing actions. To make sure failure isn't the outcome of your hard work in building a CRM system. Here are some ways to do just that. Operational issues are identified and resolved and basic modifications will be made. developing the customer buying process. More than 65% of CRM projects fail to meet expectations. Duration: 24 . it helps in managing and controlling the CRM initiatives in the organization. Marketing STEP V: Deployment & Training During this phase the CRM system will be completely operational. and retrieved using the latest technologies. Implementation of CRM includes customer knowledge management. think through the consequences of the system from every angle. Page 34 .Customer Relationship Management STEP IV: Testing & Quality Assurance An operational prototype of the system is up and running at this time. When the performance measurement of the CRM activities is done using a carefully defined basket of metrics.

regional managers. you need to get their input. Your job is to sell the system throughout its implementation.salespeople. and take them seriously. Ask them their ideas. Sales are a major component in CRM system implementation and project management. course or refresher in selling skills will give you tremendous payoffs as you go ahead with your new CRM system. They can also play a part in product development. Look at your sales processes as well as the technology. Identify the most important of these features and priorities for your new system. Do the same for your sales managers. call in your CRM team and compare notes. Write down exactly what you want your system to do for you Write your list from the perspectives of everyone affected by the system -. consulting company and your implementation plan at some point. Only after you and your team have done your homework can you call in consulting and software companies for sales presentations. software. keep notes and print out reports. A workshop. targeting the right audience and shortening the sales cycle. If you do. Live a day in the life of several of your salespeople. ease of use or low maintenance costs? CRM systems track sales contacts and potential sales schedule appointments and calls so they don't fall through the cracks. customer service people and telemarketing people. Choose at least one sales star. Go with them for a whole day. sales managers. you'll end up with quick fixes rather than true solutions. You may want to ask the following questions:  What do you want the system to do for you that the current one doesn't do?  What are the top three challenges you face in your work?  What are the top challenges your customers face? Be as complete and detailed as you can. CEO. think about what will make the most difference in your organization. after you've made your notes about their answers. the CEO and the IT department. Take time to put yourself in the shoes of people in your organization In order to design your new system from the perspectives of everyone affected. if possible. someone who's been there a long time and one new salesperson. When designing your system. What's missing now? Are you looking for speed. CIO. Watch them work. as if you're designing and selecting your first system Don't try to fit your current system to your new needs. Getting everyone's perspectives is important also because you will be "selling" them the new system. Page 35 . and they can help your salespeople give dynamite presentations.Customer Relationship Management Start with a clean slate. Then. Ask questions.

you might write: y Do salespeople like and use the system? y Is management getting the reports they want? y Are there increased sales? By how much? How will these happen? y Will there be more calls and more meetings? Be careful here. Look for descriptions of successful projects. too: There might be interdepartmental synchronization problems (i." Identify the project killers List them so you will be more aware if these red flags appear. you want to include specific. Talk about their projects and how they made their decisions.e. find out how other companies managed their projects Learn from their experiences. software and consulting company? What were they most satisfied with? Who did they include on their implementation team? Ask to visit and see exactly how their systems work. Once you've designed your "ideal" system on paper. For example. measurable goals. a project killer would be that the salespeople aren't using the system." or "Salespeople should contact twice as many people as they did last year. Ask their advice. "Increased sales" is too vague. Page 36 .Customer Relationship Management Identify the success criteria for the project Define exactly what the system and the implementation will be measured on. For example. Look for companies in similar businesses or companies that have solved some of the challenges you want to solve with your system. if salespeople liking and using the system is important. To carry through with our example. Call them up and ask questions such as:      What advice would they give as you start your project? What would they have done differently? What were their key reasons for selecting the system.. To build success into your CRM implementation. projects not done on time or according to plan). There could be other project killers that aren't part of your success criteria. you could decide one criterion should be "Sales should increase by XX% one year after implementation.

In simplest terms eCRM provides companies with means to conduct interactive. along with heightened pressure from competitors. Firms all around the world have realized the potential of the Internet as a medium for CRM and have been actively pursuing e-CRM strategies. and the efficient use of interactive channels. It utilizes a complete view of the customer to make decisions about messaging. Even more impressive. personalized and relevant communications with customer across both electronic and traditional channels. the delivery of customized products. Product excellence. by building one-to-one relationships with its customers and targeting their individual Page 37 . and operational efficiency are still important.000 emails from its customers. At the same time. however. y General Motors (GM) receives about 100.com was able to achieve a repeat purchase rate of 78%.. companies were able to recover their investments in seven months. have increased customer acquisition costs and decreased customer and brand loyalty. y According to IDC and Forrester worldwide investment in ecrm solutions will reach $11 billion to $14 billion annually by 2003. on average. saving $270 million in annual operating expenses and significantly reducing the time required to place an order. E-CRM refers to the set of activities that enable a firm to utilize the power of the Internet and the electronic medium to implement CRM. offers and channel delivery. And the payoff is significant. y Jupiter Communications survey of companies who have implemented eCRM solutions found that. y Amazon. the average return after one year was 300%. Customer demand for increased value. It synchronises communication across otherwise disjoint-customer facing systems. greater convenience.Customer Relationship Management 7. These technology developments are creating major opportunities to collect and use customer information to gain a better understanding of customer needs and to strengthen customer relationships. companies are shifting the focus of their efforts to adopt a customer-centric approach. advancements in technology have enabled the cost-effective distribution of huge amounts of customer data. more than double the industry average. and more control over products and services. y Cisco Systems automated customer interactions with its one-to-one website. innovation. successful companies are building on these existing business strengths as they shift their attention to their customers. E--CRM 7 E CRM The rules of the game have changed for CRM. The following statistics highlight the importance and potential of the e-CRM industry. To take advantage of these opportunities and address the escalating demands of customers. every day.

each interaction becomes an opportunity to build and extend your relationship with that customer. As you begin a dialogue with individual customers. Page 38 . y Sears demonstrated the cross-channel benefits of eCRM by increasing Web shoppers' subsequent offline purchases by 27%. This understanding comes only from collecting information that customers provide in their interactions with your company.1 --. To achieve positive results like these from their eCRM efforts. The more extensive the learning relationship.Customer Relationship Management needs.Key Aspects of e-CRM Know Your Customer Know Your Customer is about understanding your individual customer's value and needs. This strategy should include three key objectives: Know Your Customer Reach Your Customer Grow Your Customer CHANGING NEEDS Figure 8. companies must develop a comprehensive strategy for managing and utilizing customer knowledge. you create a learning relationship with your customers. This customer loyalty has enabled Amazon to remain a viable e-commerce company at a time when so many other dot-coms have failed. the more invested the customer becomes in the relationship and the more difficult it will be for the customer to switch to a competitor. y The volume of customer related email traffic is so much that almost 42% of the queries never get answered by the companies. and developing a 360-degree view of customer behavior across all touch points.

and services. Focusing on your best customers requires you to re-examine and re-allocate total Marketing and sales investments from less profitable customers and the acquisition of new customers. Sales Force Automation (SFA) E-Mail Management System (EMS) Interactive Voice Response (IVR) Knowledge Management (KM) Call Centers Instant online querying through Chat Managing a full range of customer relationship involves two related objectives 1. Additionally. a complete singular view of each and every customer 2. 4. but also leverage prior and future IT investments. To provide the customer with the same singular uniform level of service in every interaction with the company through every channel. 2. You must use scarce investment dollars to target your efforts to your best. IT is expected to support the selection and implementation of the best management tools that not only provide an integrated solution. You reach each customer with a personalized message based on his or her needs. A complete e-CRM architecture would comprise of the following components 1. Grow Your Customer Grow Your Customer refers to your company's ability to effectively execute Marketing strategies based on your knowledge of customer share and customer lifetime value. products. 3. For both IT and Marketing. Increasing the total value of your customer base by retaining and growing your best customers. behaviors. most valuable customers. 5. Provide the firm and its customer-dealing personnel. and value.Customer Relationship Management Reach Your Customer Reach Your Customer is about reaching the right customers with the right offer at the right time through the right channel. Based on your knowledge of each customer. you are able to reach specific customers with targeted offers. 6. information. resource constraints make it critical that the technology solution enables Marketing to manage its increased responsibilities with minimal intervention and assistance from IT Page 39 . is significantly less expensive than trying to generate the same amount of value by acquiring new customers.

CRM optimizes processes and functions related to the customer All operations can be optimized and systematized to enhance efficiency and effectiveness. This varies from customer to customer. irrespective of whether the communication is from operations. 1. It offers a 360-degree view a company should have a clear understanding of clients and their needs. CRM IIN IINDIIA 8 C R M N ND A In India. Sales operations have to be organised to make customer-facing systems efficient and effective. systems. telephone. 3. Some customers have preferred channels of communicating. CRM give a complete set of tools that are required to improve efficiency. This is why sales force automation became important and critical. It means that whoever the company speaks to. To learn from integration-The learning process should be focused on bettering marketing. The interaction will help an organisation to bring out better products that target potential and existing customers. Survey report on Indian CRM market ‡ The need for improved customer service and high global adoption shall drive the Indian CRM market ‡ The high cost of implementation and low awareness of benefits is going to prove a major deterrent The next two charts indicate the factors our respondents feel will drive acceptance of CRM in India. The whole idea is that if you know your customer better. Page 40 . CRM satisfies three basic objectives for companies that are keen on retaining customers and increasing market share.Their operations are aimed at getting the right customer and then retaining them by giving them the service they require. This is one of the key steps in a CRM implementation.. fax. The problem lay in convincing the sales guy who believed in his personal abilities. and the factors that will hold back acceptance. Personal Data Assessments and many other wireless devices. All these differences lead to the importance and need for CRM. sales and any other function that interacts with the customer.Customer Relationship Management 8. There are numerous channels of communication e-mail (eCRM). It is a matter of continuous improvement. Some customers may not like to transact over the Net and may prefer physical transaction. you can target them better. sales. the company is aware of the interaction. In order to get a complete picture these must be integrated and tracked. Sales automation results in more accurate predictions as well. Corporates began to realize that in the face of increasing competition. finance or support. 2. sales force automation is critical.

Customer Relationship Management Figure 9.1²Acceptance of CRM in INDIA Page 41 .

lack of customer orientation and poor existing IT infrastructure can prove major factors. and internal systems and database management practices need to be upgraded before CRM software can be used to any effect. respondents have put high cost of implementation as the main inhibitor. y Technical support: India graduates about 100. y While the first hurdle holding back the market is a lack of awareness. High Global adoption is likely to drive the MNCs to adopt CRM first in line with Global implementations. many organizations worldwide are outsourcing these services from locations like India. the manpower cost is approximately one-tenth of what it is overseas. tech-savvy personnel: A boon in a highgrowth industry faced with a shortage of skilled workers. with IT strengths recognized all over the world (65% of the CMM level5 companies are in India). English-speaking.000 engineers each year. Page 42 . y A vast workforce of educated. y A booming IT industry. Firms need to evolve their customer thinking by a significant extent before they accept CRM as the strategic imperative it is. 1 to 2. Complete and comprehensive CRM packages such as those of Siebel and Oracle costing in the range of Rs. In India. Factors favourable for CRM in INDIA In order to meet the growing international demand for cost-effective. y Cost-effective manpower: In a call interaction center operation.5 Crores (and more) are too expensive for most Indian firms.000. Per agent cost in USA is approximately $40. These can be used in call centers for troubleshooting/tech support as the salaries are dramatically lower than in Europe or the US. manpower typically accounts for 55 to 60 percent of the total cost. India has intrinsic strengths which have made it a major success as an outsourcing destination for CRM. Another major inhibitor indicated by respondents was that Indian firms lack the skills and strategic vision required to successfully implement CRM. y In the Indian context.000 while in India it is only $5.Customer Relationship Management Observations and Inferences y A need for improved Customer Service shall be the main driver for Industry sectors that depend on the quality of their customer interactions to retain existing customers and win new ones. customer-interaction centers. y The largest English-speaking population after the USA. However. with software vendors bringing down prices and offering relatively affordable packages bundled with integration and consulting services. this could soon change.

Some Outsourcing Success Stories of India. under this scheme Ministry of information and Technology gave 10 year of tax holiday on software product and subsequent technology required for CRM. The Government of India has approved the plan and is in the process of implementing it. call centers. India joins a select band of 12 nations that have cyber laws. medical transcriptions. With this. mortgage and insurance claims. y The presence of most international technology vendors and solutions would enable creation of most advanced set-ups in this technology. y American Express processes internal financial transactions for all of Asia and employs 600 people . The IT Bill brings E-commerce within the purview of law and accords stringent punishments to "cyber criminals". y A separate Ministry of Information Technology is set up to expedite swift approval and implementation of IT projects and to streamline the regulatory process.intensive segment.Call center makes inbound and outbound calls for credit card collections and response to customer queries. . insurance claims processing. y Information Technology Act 2000: The Information Technology Bill that was passed in the Indian Parliament in May 2000.000 people and is expected to have 20.Manages global payroll. y The National IT Task Force submitted its 108 point Action Plan to promote IT in the country. British Airways employs 750 people to handle an array of back office applications. customer interaction centers and content development.000 people and $ 10 million pa in 1998 to over a million people and revenues in excess of $ 20 billion by 2008. Pivotal segments are going to be back office operations.Customer Relationship Management y The Government of India has recognized the potential of IT-enabled services and has taken positive steps by providing numerous incentives like Software Technology Park (STP).from 23. y GE Capital employs 10.in country finance organization has shrunk by 60%. Current trends suggest that the country is well on course for achieving the above target. the industry is forecast to explode at exponential rates . has now been notified as the IT Act 2000.000 by the end of 2003-04 . IT is a major thrust area for the Government of India y IT is one of the Government of India's top five priorities. As India emerges as a global outsourcing hub. Page 43 .

Everybody knows how difficult it is to get a new customer than to retain a existing one. Banks are figuring out how toserve their more valuable customers and retain them and cut the cost of serving the less valuable ones. And this imbalance is captured very well by 80/20 principle. But this rule has extreme relevance in business.20% of the world population holds 80% of the wealth. Not only do they have to replace the defected 40% but also add more to show some growth. Another example of expensive customer service is in the banking industry. Wireless companies in US are spending more in finding new customers but 40% of their customers defect every year this has made bussines extremely difficult for them. 20% 80% CUSTOMERS REVENUES Figure9. This is where 80/20 principle comes to play. 80% of the quality problems can be assigned to 20% of the causes and 20% of the customers bring in 80% of the revenues. 80% of the organizations salary budget goes to20% of the executives. Ever wondered why you wear only 20% of the clothes 80% of the time or why people spend 80% of their time with just 20% of their friends? Or the more popular example of unequal distribution of income across the world. CRM deployment is exorbitant and prohibitive for a small company. Most business would agree that 20% of their products bring in 80% of the revenues.Customer Relationship Management Strategy for small Indian companies who find CRM is good. but its expensive too« There is an inherent imbalance in the scheme of things in the world.The 80/20 principle is a solid start for any company. The 80 and 20 are not a hard and fast set of numbers but the basic idea is to understand the imbalance between the things and that to your advantage.2² 80\20 principle One ready application to this rule is customer relationship management. Most customers cost more than the returns on their deposits. One look at the customer file would separate your customers into the most Page 44 .

and co-creation of products with customers. Nowadays. problem-solver. But that surprisingly not the case.. large enterprises in India are expected to opt for CRM applications which have pre-built interfaces with standard ERP applications. what customers are actually looking for is better value. All companies are facing new and ambitious competitors. Companies are better able to retain their customers. where they buy. rather than doing business with the low cost provider. There is no technology investment required for some basic analysis on customer file which can unravel tons of knowledge about customers. customers are demanding more while paying less for products and services. What they need is a simple but yet effective way just to differentiate between their value adding so that they know where to concentrate their limited resources and energy. Moreover they are being challenged unusually to differentiate their products in a ³commodity´ market. This way they do disservice to those who deserve most attention and waste excessive time on less value-adding customer. Based on these answers. Identifying the most revenue generating 20% customers would immediately reduce the task to a more manageable level. In the future. better solutions to their problems.Customer Relationship Management valuable 20% and the other 80%. The usage of CRM in India is expected to evolve from ensuring operational efficiency (in customer handling) to yielding strategic benefits -through real-time customer segmentation. etc. The relationship between buyers and sellers is constantly changing. It would seem that big companies already analyse their customer files and use data for customer service. companies can then decide on their distribution. must adopt proven strategies and best practices to differentiate its selling efforts«. Small companies don¶t have resources to invest in CRM solutions and then to maintain them. Smart companies must offer competitive prices and focus more on their value-added services to win and retain customers. while the small and medium business enterprises may still continue to use stand-alone CRM applications. motivator and partner. Simple mean and standard deviation of a normally distributed set of customer data would give important on pricing strategies. This has also created incentive issues with sales people who get assigned to the less valuable 80% customers. This has helped them to retain their profitable clients. It is just proportional distribution of organizational effort. Companies can further know more about what they buy.This is not discrimination against certain set of customers. Companies should think beyond merely selling products or services to their customers.Companies consider in advertising and distributing equally to all the market. Every company no matter what it sells. coach. product development and pricing strategies. Sales personnel assume that lowering prices is the only way to attract customers. Page 45 . how much do they pay. But they have money to spend on CRM products. They need to play the role of a customer¶s consultant. Multi-million dollar companies often fail to do this simple analysis. There are standard services available to the other 80% customers. Most companies do not understand this imbalance and pay equal attention to every customer. However.

and customizing your business for them. must be integrated with front-office functions such as sales. you need to look for ways to improve cross-functional communication. If a company is going to treat a customer differently on what he is. But with the advent of CRM or one-to-one marketing or loyalty marketing. Every time a company interacts with a customer. CRM involves knowing your customers individually and having some mechanism for interacting with them or hearing from them. marketing. For a collection of Page 46 .Customer Relationship Management 9. In many companies. such as product or service delivery. marketing. Moreover the company is making the product more and more valuable to the customer. It will take nontraditional thinking for you to look at the way in which your company does business with your customer. they seem at odds about how to handle problems or complaints. One of the benefits of CRM is that it would make a company¶s customers more loyal. This is an inherently integrative operation. Despite this. then the back-end of the enterprise has to be capable of modifying its behavior on what the front end finds out about what the customer wants. Traditionally. customer service and accounts receivable.. the company customizes its service to be a bit more closely suited to the customer¶s needs.CRM is the Best Customer Strategy to Implement The basics of CRM include a business strategy that focuses on developing and retaining the relationships existing between customer and organization. experts have speculated that billions of dollars are going to be poured into the CRM industry making it one of the fastest growing sectors in the market. customers have had to do all the work to get their problems solved. the dynamics have changed. Some assign customer accounts to teams of employees from various areas where contact with customers is paramount--for example. The relationship with the customer is developing in its own context. purchasing and order fulfillment. Change does not occur in isolation. One of the major challenges in implementing CRM is resistance to change. the business units designed to serve the same customers rarely interact. The future requires a new mindset. So back end functions. The general perception is that CRM is but a hype and the chance of CRM failure is high. Only committed people implement CRM successfully. A single company contact might have responsibility for all inquiries regarding credit. and customer service. sales. The company is getting a little higher up on the customer¶s learning curve. and when they do. product design. CONCLUSIION 9 CONCLUS ON The Secrets out . It used to be that one could think of marketing as totally separate from the rest of the business enterprise. To remedy this lack of agreement.

it is more than just technology. The technology is crucial. These three criteria apply both on and off the Web. and when trust is increased relationships are increased. First. This understanding cannot be spoon-fed. they become excited about the possibilities for doing things differently. Ultimately every organization must address what it's going to do differently so it can respond more effectively to its customers. In the end." "ands. And. but it¶s also important to have managers with the vision to imagine what this technology enables the enterprise to accomplish «««. you'll have to reorganize your customer and change your organizational mindset." To implement CRM successfully. Second. If you want to implement CRM successfully. The company has to remember what the customer told them so that they don¶t need to ask the customer same question again.Customer Relationship Management people cutting across organizational boundaries to create the coordinated set of actions necessary to implement CRM. Page 47 . If the people that impact the customer improve their relationships by working effectively across functions. Third the company has to have the ability to integrate the information into the way it handles that customer. Building relationships across functions increases trust. they must feel connected to each other.. it is necessary to have a good design interface. Creating this environment equalizes power. you have to create this environment. It has to be easier for a customer to give a company its information and for the company to capture that information. as opposed to finding customers for the products and services the company sells. they learn how to do that with the customer too." or "buts. With CRM. is to have a good memory. There are no "ifs. It is seen repeatedly that as people come to understand the issues that are affecting them. This is a mutually reinforcing pattern. It occurs when people are actively engaged. That's what makes CRM work. There are three important criteria. one is operating in a different dimension of competition ± finding products and services for customers.

Customer Relationship Management BIBLOGRAPHY 1.wikipedia.com Page 48 . www. Public Relations Management (SYBMS) -----.Romeo Mascarenhas 2.google.bmscampus.com 3. www. Marketing Mastermind magazine (September 2008) WEBLOGRPHY 1. www. Hindustan Times 3. www.com 4.bmsparadise.com 2.