Customer

Relationship
Management
UNIT-2 -Prof Rohit Joshi
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 Learning Objectives
After reading this chapter students will be able to:-
▧ develop clear understanding of CRM definitions and its meaning
▧ develop clear understanding of types of CRM and stakeholders
▧ Understand the factors critical for successfully implementing CRM in
an organization
▧ understand the meaning and importance of customer satisfaction and
also its models

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 CRM is an Amalgamation…!!
CRM is blend of the following three concepts i.e.
1. Relationship Marketing-Relationship marketing is a strategy designed
to foster customer loyalty, interaction and long-term engagement
2. Database marketing- Database marketing is a form of direct
marketing using databases of customers or potential customers to generate
personalized communications in order to promote a product or service for
marketing purposes.
3. Customer Orientation- Customer orientation is all about focusing on
helping customers meet their goals
How and why CRM came
into existence ??
Let’s start with our second set of slides

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 Emergence of CRM practice

2010s
1990-2000 Electronic-CRM
1980 Customer
Total Quality relationship
Management
1970 Management

Mass Market
1960
Mass Production

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 Emergence of CRM
▧ The term Customer Relationship Management (CRM) came into commercial
use in 1980s
▧ Before the use of technology and internet, it was difficult to effectively trace
customers’ information.
▧ It was also important for companies to handle large data collected which
needed to be updated on a regular basis.
▧ With the shifting focus of companies towards customers, it became more
important to maintain database of millions of customers
▧ Data analysis techniques and software started to be implemented for
analysing large pieces of information
▧ Complete information about customers was required which led to
integration of all the data bases of companies
▧ This gave birth to CRM applications and softwares
 Contd…

▧ In 1990s mobile and e-CRM were provided by

companies such as Siebel(Siebel sales Handheld)
▧ Cloud CRM came into existence(Salesforce)
▧ SAAS- Software as a service offering
▧ CRM in 21st century

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What was happening to the companies prior to using CRM

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Post CRM implementation/ Adoption

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 Who uses a CRM system?
CRM systems can be easily customized to meet the specific needs of
any business type and size
Hospitality
firms NGOs

Start-ups

Insurance
Legal

Large enterprises Restaurants

Media
 Customer Relationship Management Definitions
▧ CRM is a business process in which client relationships, customer loyalty and
brand value are built through marketing strategies and activities.
▧ CRM is a technology for managing all your company’s relationships and
interactions with customers and potential customers
▧ CRM is a business strategy designed to optimize profitability, revenue and
customer satisfaction.
▧ CRM is a philosophy and business strategy, supported by a system and a
technology, designed to improve human interactions in a business environment
▧ CRM is the Infrastructure that enables the delineation and increase in
customer value and the correct means by which to motivate valuable customers
to remain loyal and buy again
▧ CRM is the process of carefully managing detailed information about individual
customers and all customer “touch points” to maximise loyalty.
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 What is meant by touch points?
A touch point is any occasion on which the customer encounters the brand or product/service
Exercise: Guess the touch-points for any firm from
Hospitality sector?
 Significance of CRM
▧ Establishing effective communication channels
▧ Gathering effective information about customers
▧ Creating detailed profile of individual customers
▧ Helps in achieving high level of customer satisfaction
▧ Tracking new sales opportunities
▧ Increasing market share and profit margins
▧ Enhancing customer loyalty
▧ Fulfilling customer requirement
Types of CRM

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 Types of CRM on the basis of Functionality
• Some organisations may use CRM to enhance sales and some may use
CRM for improving its customer service, etc
• Based on the different applications of CRM, it can be divided in to three
types

TYPES OF CRM

Operational CRM Analytical CRM Collaborative CRM

 Operational CRMs
▧ Operational CRMs give marketing, sales, and customer service departments the possibility to better
support existing and potential customers.
▧ As you can structure information about your contacts within the tool and set standard procedures,
the tool can be used for automation, including Marketing automation, Sales automation, Service
automation
▧ This way, different departments can work together on capturing, nurturing, and closing deals for
your company.
▧ Leads coming from different marketing channels can be automatically uploaded to the CRM through
integration and then Using tags, they can then be assigned to appropriate stages of your sales
cycle and be investigated further by the sales team.
▧ Having all the information in one tool improves how your company operates. At the same time,
there’s less chance of “losing” a deal, or miscommunication between departments.
▧ Examples of operational CRM: two great and popular examples of operational CRM tools
are Hubspot and Salesforce.

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 Analytical CRMs
▧ Analytical CRMs help companies make better use of the information they
gather about customers. This can include customer preferences, channels,
points of contact, interests, and more.
▧ While operational CRMs attribute customers to the sales funnel, analytical
CRMs help to understand them.
▧ Based on the contact data, components for data mining can gather even
more information including trends and help to recognise patterns in data
sets. This way, companies can make use of the data they already collect to
make better business decisions.
▧ Examples of analytical CRM: Zoho Analytics or Wave: Salesforce Analytics
Cloud.
 Collaborative CRM
▧ Collaborative CRMs allow different teams at your organisation to share the
information about customers. While operational CRMs often focus on
marketing and sales, in this case, the emphasis is on customer service.
▧ With collaborative CRMs, you can enhance the exchange of information
between departments like sales and marketing, but also support teams.
These departments often work separately, which make addressing
customers enquires more difficult. In collaborative CRMs, managing
relationships with your customers is easier.
▧ Examples of analytical CRM: Pipedrive or Copper( famous for improving
relationship management based on interactions with the customers.)
 Stakeholders in CRM
The success of a CRM implementation lies in its acceptance for use by the various
stakeholders,, the stakeholders vary depending on the industry and application.
Some of the stakeholders commonly involved in CRM are:
▧ Top management,
▧ Marketing managers
▧ Retail sales agents/call-center agents/field sales agents,
▧ Customers using self care applications,
▧ Dealers
▧ Product managers.
Each stakeholder has their own set of expectations from the CRM system. A good
CRM platform should cater to all the stakeholder’s requirements.
 Top Management:
What Top Management Expects:
1. Enhanced customer experience leading to improved top-line.
2. Reduced Total Cost of Operations resulting in improved bottom-line.
3. Improved business reporting leading to better governance.
4. Company branding through Improved Customer Service and diverse
innovative product portfolio.
5. Better achievement of designed policies and processes
 Marketing Managers:
What Marketing Managers Expect:
1. Correct customer segmentation based on various parameters.
2. Effective tracking of marketing budgets.
3. Effective Campaign Management.
4. Effective closed loop marketing.
5. Use of appropriate treatment for marketing campaigns based on
customer segments, to reduce marketing expenses.
6. Event planning.
7. Performance monitoring for dealers.
8. Effective management of customer life cycles
Retail Store Agents / Call Centre Agents / Field Sales Agents:

1. Ease of navigation.
2. High speed.
3. Availability of 360 degree view of the customer.
4. Validations to prevent duplication of data (e.g. customers, products etc).
5. Profiling as per area of work (display only “need to know” information).
6. Display prioritized list of activities.
7. Pre-intimation / training of new features / messages from time to time.
8. Faster, accurate calculation and disbursement of incentives.
9. Reduced work with other applications / manual paperwork activities
10. Increased level of integration with other systems to offer seamless customer service.
 Customers using the Self Care channel
1. Ease of navigation.
2. Facility to search products and services easily.
3. Facility to chat with an agent in case of any product/service related
queries.
4. Facility to see all the charges (fixed, recurring, usage related)
associated with the product / service.
5. Display of “Hot Offers”.
6. Ease in bundling products and services.
7. High speed.
8. Order / fault acknowledgement.
9. Facility to update/cancel already raised orders/faults.
10. Facility to make online payments, view bills, view usage pattern etc.
11. Automatic accrual and quick redemption of loyalty points.
 Dealers / Partners:

What do dealers/partners expect?

1. Self care functionality.
2. Sharing of opportunities to and from the company.
3. Joint marketing with the company.
4. Accurate calculation and speedy disbursement of
incentives and compensations.
5. Automatic accrual and quick redemption of loyalty points.
 Success factors in CRM
There are some factors that play an important role in successful implementation
of a CRM strategy in any organisation
The eight main factors responsible for the success of CRM are:
1. Top Management Commitment and Support
2. Skilful Staff
3. Customer Involvement
4. Culture Change (change management)
5. Inter-Departmental Integration
6. Key Information on Customers
7. Manage IT Structure
8. Defining and Communicating CRM Strategy
Without these factors in place, the best CRM technology in the world cannot assure a
successful CRM implementation
 Factor # 1. Top Management Commitment and Support:

▧ Top management involvement in the CRM implementation plan has

been identified in almost all success factors studies as a crucial
factor that ensure the successful implementation of CRM.
▧ Considering the scope of CRM implementation as an enterprise-
wide strategy requires a full support by the top level of the
organizational structure. The role of board level is essential in
backing the CRM implementation process and securing required
amount of financing for putting CRM projects into action.
 Factor # 2. Skilful Staff:

▧ Employees play a key role in the success of CRM projects. Issues

of the nature of learning new work systems, training programs,
change resistance, willingness to share information, and motivating
staff should be taken to consideration.
 Factor # 3. Customer Involvement:

▧ Direct and indirect Involvement of customers in CRM designing is a

tool for strengthening practical CRM. Such an involvement helps
the organization to analyze the customer relationship life cycle and
consequently find the areas of problems that can be managed by
CRM. Furthermore, customers’ acceptance and interaction with CRM
systems could be enhanced by involving those customers in building
CRM systems
 Factor # 4. Culture Change:

▧ In order for CRM to succeed in realizing its objectives, organization

should develop a culture where all staff are encouraged to share
and learn from new work structure and information that is based
on customers. Expected resistance of new ways of conducting work
tasks within the organization’s culture should be addressed and
minimized.
 Factor # 5. Inter-Departmental Integration:

▧ From strategic perspective CRM implementation has an

organization-wide influence. Different functions and departments of
the organization should be integrated and connected with a
structure that support the flow of information.
▧ Although all aspects of the organization should be integrated, a
special consideration should be devoted to functions that have direct
interaction with customers such marketing, sales, and services.
Such integration is required to deliver a unified view of the
organizations and its products to the customers.
 Factor # 6. Key Information on Customers:

▧ Acquiring and analyzing the right quantity and quality of information

on customers helps to meet customer’s needs. The right
information is the base for designing customized products and
services.
 Factor # 7. Manage IT Structure:

▧ Considering CRM as only a technological solution is a vital miscon-

ception that resulted in increasing failure of CRM projects.
▧ Nevertheless, IT is an enabler for acquiring and managing valuable
data on customers. Technological aspects such as data warehouse
capabilities and software configuration in addition to the influence of
the internet are crucial for CRM successful implementation
 Factor # 8. Define and Communicate CRM Strategy:

▧ A clear definition of the CRM strategy and alignment of this

strategy to the company’s strategy would facilitate the transition of
changing work structure and environment toward customer-centric
approach.
▧ The absence of a clear CRM strategy or the lack of developing
such a plan could cause the failure of CRM implementation.
Additionally, publishing the strategy to the staff is required to raise
their awareness of the CRM objectives, implications, and benefits.
 People Factor in CRM
▧ Customer Relationship Management (CRM) projects always start with a lot
of expectations. People expect a CRM system to improve productivity,
boost sales, streamline operations, and save money.
▧ But even though the CRM industry is indeed booming, over a decade
of research shows that from 30% to 65% of CRM projects fail.
▧ Insights claim that less than 40% of CRM projects demonstrate full scale
end-user adoption.
▧ And the main reasons for such poor adoption rates have little to do with
technology.
▧ The main problems that stand in the way of CRM success are very much
related to the organizational culture, lack of strategy and business goals,
and, most importantly, the people involved, who account for 42% of problems.
Why people play such an important role in the implementation of
a CRM ?
• Usually business owners who invest in a CRM software are led to believe that it
is the software itself that will improve their business.
• CRM adoption is not ONLY about technology – it is about the people using it!
• Spending thousands of dollars on a CRM solution turns out useless, if you don’t
take care of the people who are supposed to use it. Why? Because those are
the people who improve your customer relations, not the software! (software just
helps)
Since CRM implementation is a journey, not a one-off software project, you’ll need a
team to make sure it works right and stays with you for a long time.
Not all members of an organisation will see the benefits of CRM immediately and
embrace it with open arms. Yet, it still need various personalities to make CRM
work.
 Misconceptions about CRM

▧ CRM is just a database of customers

▧ CRM is only concerned with Marketing Department
▧ CRM is too technical to learn
▧ CRM is just a promotional tool.
CRM Implementation

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 CRM Cycle
▧ It is a known fact that every software application is intended to accomplish
certain business goals. Customer Relationship Management or CRM is no different.
▧ Business owners expect that through CRM application they will be able to find
out the following:
-Who are their customers?
-What kind of marketing campaign is suitable for customers?
-How to efficiently maintain the Account and Contact database?
-How to track leads, and convert them into Opportunity?
-How to effectively resolve customer issues?
-How to provide better customer service?
Customer Relationship Management accomplishes the complete set of activities ranging
from customer acquisition and retention to service. This cycle of customer-related
activities is termed as CRM cycle
Dimensions of CRM

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Concept of Customer Satisfaction

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 Customer Satisfaction
Who is a customer? What is Satisfaction ?

One who uses the product or a pleasant feeling that we get when
service, or one who purchases the we receive something we wanted or
product or service. when you have done something
you wanted to do
Two types of Customers:
• Internal customers
• External customers
Other Definitions of Customer Satisfaction
Definition: Customer satisfaction indicates the fulfilment that customers derive from
doing business with a firm. In other words, it’s the measure of how happy the
customers are with their transaction and overall experience with the company.

Customer Satisfaction is a term used to describe a scenario when an exchange

meets the needs and expectations of its user.

Customer Satisfaction: It means the degree to which a company’s customers are

happy with their purchase or experience with the company.
 Purpose of Measuring CSAT

Customer satisfaction (Csat) is a

leading indicator of :
▧ Consumer purchase intentions
▧ Customer loyalty.
▧ Customer retention
▧ Superior business
performance
Purpose of Measuring CSAT
 How Customer Satisfaction is measured ?
Here are some tools to measure C-Sat-
(these are tools for measuring customer satisfaction not the models of
customer satisfaction):
▧ Customer Satisfaction Surveys
▧ Customer Satisfaction Score (CSAT)
▧ Net Promoter Score (NPS)
▧ Customer Effort Score (CES)
▧ Social Media Monitoring
Customer Satisfaction Score (CSAT)
Customer Effort Score (CES)
Example of a Customer Satisfaction Survey
 MODELS OF CUSTOMER SATISFACTION

Various customer satisfaction literatures identify many model types, which can be
used to determine levels of customer satisfaction.
Some of them are referred to as:
▧ Teboul Model
▧ The Expectation Disconfirmation Model
▧ The Perceived Performance Model
▧ Norms Model
▧ Multiple Process Model
▧ Attribution Model
▧ Affective Model
▧ Equity Model
#1 Expectation Disconfirmation Model
 KANO Model
What is Kano Model ?
▧ The Kano Model of product development
and customer satisfaction was published in
1984 by Dr Noriaki Kano, professor of
quality management at the Tokyo University
of Science
▧ The Kano Model is an approach to
prioritizing features on a product blueprint
based on the degree to which they are
likely to satisfy customers.
▧ Product teams can weigh a high-
satisfaction feature against its costs to
implement, to determine whether or not
adding it to the roadmap is a strategically
sound decision.
Seems like a complicated model…let’s break it into components..!!

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 Kano Model is Crossover of Customer satisfaction Vs Functionality
First the axes

1 2
 The Four Categories of Features

▧ Kano classifies features into four categories, depending on how

customers react to the provided level of Functionality.
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