CRM MODEL

CRM PROCESS
Customer Relationship An effective CRM tool
Management (CRM) is a helps businesses with
management function that valuable feedback about
provides a base for products and attend queries
creating and maintaining and grievances.
good relations for a In order to enable the
long-term association. It
smooth functioning of the
provides a platform to
organize and synchronize customer service, certain
customer service, as well models are followed. These
as works to provide customer relationship
effective technical support. models have been
Therefore the process of developed over the past few
CRM becomes very
decades by various
important for a business in
researchers.
the long term.
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❏ IDIC Model,

❏ QCI Model,

❏ CRM Value
Chain Model.

❏ Payne’s Five
Force Model

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Purpose of CRM

The goal of any business is to generate profit from

its products or services. To that end, the purpose of
CRM is to optimize the relationship the company has
with its strategically significant customers in order to
maximize profits and build long-term success.
Strategically significant customers (SSCs) are a company’s
most valuable clients. Generally speaking, SSCs make up only
about 20% of the client base, but they generate 80% of the
revenue. Because they generate more revenue, loyalty, and
value than the average customer, they are an important part of
any business’s strategy.

When it comes to CRM, strategically significant customers are

a key focus. By capitalizing on the most valuable customer
segments, companies can improve their long-term profitability
and competitiveness.

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IDIC MODEL

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IDIC model

The IDIC model was developed by the Peppers and

Rogers Group as a generic blueprint for
implementing CRM in a variety of situations. IDIC
stands for the four stages of CRM implementation:
identify, differentiate, interact, and customize.

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BIG CONCEPT
Identify
The first step is to identify your customers,
which businesses can accomplish by
collecting information like the customer’s
name, address, and purchase history at each
point of contact across the company.

The goal is to collect as much information or

data as you can on each customer in order to
better understand their needs, wants, and
purchase behaviors.
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DIFFERENCIATE
VALUE NEED
The next step is to
By differentiating your
differentiate or segment customers based on their
your customers based value to the company, you
can prioritize your
on their current and
customer relationship
projected lifetime value. efforts on the most
Remember: Not all valuable clients and tailor
customers will have the your interactions to best
fit each segment for
same value to the
optimal profitability.
business.
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Interact
The third stage is where you get to apply your CRM
plans for interacting with your customers. Once
your customers are analyzed and categorized, you
can develop customized interactions—for example,
for valued customers, you might offer loyalty
benefits or rewards to encourage retention and
continued spending. Keep in mind, you should be
learning from each interaction to continually
improve future interactions.

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 Customize
After you have documented your customer
interactions, you can then analyze them to
develop more customized one-to-one
service. The goal is to ensure that your
customers’ needs and expectations are met
and that you have pinpointed them
individually (or very narrowly).

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QCI MODEL

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USE DIAGRAMS TO EXPLAIN YOUR
IDEAS
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➢ The QCI model is also a product of a consultancy
firm.

➢ The model’s authors prefer to describe their model

as a customer management model, omitting the
word ‘relationship’.

➢ At the heart of the model, they depict a series of

activities that companies need to perform in order
to acquire and retain customers.

➢ The model features people performing processes

and using technology to assist in those activities.

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➢ This model includes the series of activities
related to employees, people, and
organization, and technology as well.

➢ According to this model, relationships process

with the external environment. Because when
a customer wants to start selling process or
wants to interact with the organization,
external environment directly affects the
customer experience. External environment
also affects the planning process of the
organizations.

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➢ Now as you can see in the figure that
customer experience affects three
activities future: customer proposition,
customer management activity, and
measurement.

➢ Customer proposition means something

that a company offers to the customer
against the price.

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➢ Customer management activity is a
process of capturing customers, start with
targeting, conversation, selling and end
with retaining or winning back the
customers.
➢ Customer management activity affects
customer’s experience that how a
company acquires, retains a customer and
also penetrates.
➢ Finally, measurement process also affects
the customer experience.

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➢ People and organization have relation with the
planning process, customer proposition, customer
management activity and measurement.

➢ Because CRM starts with people and ends with

people.

➢ Infrastructure deals with the organization in a

sense of technology, customer information, and
process management.

➢ One big thing is that each activity, people,

organization, process, and technology have a dual
effect and intercorrelated with each other.

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CRM VALUE CHAIN MODEL

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LET’S REVIEW SOME CONCEPTS
Yellow
Is the color of gold, butter
and ripe lemons. In the
spectrum of visible light,
yellow is found between
green and orange.
Blue
Is the colour of the clear
sky and the deep sea. It is
located between violet
and green on the optical
spectrum.
Blue
Is the colour of the clear
sky and the deep sea. It is
located between violet
and green on the optical
spectrum.
Red
Is the color of blood, and
because of this it has
historically been
associated with sacrifice,
danger and courage.
Red
Is the color of blood, and
because of this it has
historically been
associated with sacrifice,
danger and courage.
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❏ The CRM value chain is a model which businesses can follow when
developing their CRM strategies (Buttle, 2004). This model had been
developed by a range of SMEs such as IT, software, telecoms, financial
services, retail, media, manufacturing, and construction.

❏ This model is built from strong theoretical principles and the practical
requirements of business.

❏ The main purpose of this model is, according to Buttle, to ensure that the
company builds long-term mutually-beneficial relationships with its
strategically-significant customers. Thus, some customers are merely
expensive to acquire and service

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❏ Buttle has identified four types of strategically significant customer
(SSC) such as the :

❏ High life-time value customer that is a key SSC and the present day of
all margins that might be earned in a relationship. He stated that tempting
as it may be to believe, not all high volume customers have high LTV If
they demand JIT, customised delivery, or are in other ways costly to serve,
their value may be significantly reduced.

We know of one company that applied activity-based costing disciplines in

order to trace process costs to its customer base […] as consequence the
company re-engineered its manufacturing and logistics processes, and
salespeople negotiated price increases

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❏ The second group of SSC is according to the above author “benchmarks” that are
customers that other ones copy. For instance, a manufacturer of vending machine
equipment is prepared to do business with any company because “they can tell other
customers that they are supplying to the world’s biggest vending operation” (Buttle, 2000).

❏ The third group of SSCs are customers ‘inspirations’. They are the ones that find new
applications, “come up with new product ideas, find ways of improving quality or reducing
cost. The may be the most demanding of customers, or frequent complainers, and though
their own LTV potential low, they offer other significant sources of value”.

❏ The fourth one deal with what Buttle (2004) calls “cost magnets” relating to those that
absorb a disproportionately high volume of fixed cost, thus enabling other, smaller
customers to become profitable

❏ John Stevenson (2007), asserts that the CVC includes four stages

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The Payne’s Five Forces
Model

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╸ Payne also introduced a strategic framework/model for
Customer Relationship Management CRM . The model
discusses the relevance of various processes,
namely (Payne & Frow, 2006):

● strategy development process

● value creation process
● multichannel integration process
● performance assessment process, and
● information management or analytical process in
CRM

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