UNIT1 INTRODUCTION TO CRM

CRM
Many successful organizations display the following poster
around their offices and on shop floors to inspire employees and
make them customer oriented.
“What is a customer? A customer is the most important
visitor on our premises. He is not dependent on us, we are
dependent on him. He is not an interruption on our work. He
is the purpose of it. He is not an outsider on our business. He
is a part of it. We are not doing a favor by serving him. He is
doing us a favor by giving us an opportunity to do so.
-Mahatma Gandhi , 1890
This visionary statement was made by the father of the nation at a
time when the world was experiencing a sellers’ market. Today
the world is experiencing a buyers’ market where the customer is
supreme. Customization is the key word today for which the
marketers have to get connected with the customers.
The heart of business –The
Customer
Irrespective of what product the company is selling right from a
soap to software to financial or medical service the customer is
the heart of a business. This is because the company’s revenues,
profits and market-share and even the employees’ salaries - all
come ultimately from only one source: the customers. In short, the
one single thing a company needs to be in business is a
customer. Once a company has a customer, even a single
customer, it doesn’t need money or a factory or an office or
people not even a product to be in business. All these things if
present help no doubt but they are not as crucial as a customer
because a business just cannot start without a customer. For a
successful business one must have a large number of “ good
customers”. Good customers are those who do good things like-
• Buying regularly and in large quantities– even if the prices are (somewhat) higher
than those of the competitors.
• Recommending the company’s products to colleagues, family and friends
.Referrals is the best promotional message a business can have coming from a
satisfied customer.
• Treating the company as an idol and being ready to try out its new products and
assist in improving them further.
• Taking efforts to let the company know of their dissatisfaction. A good customer
generates a lot of business, while a dissatisfied customer can hurt badly. For every
complaint , there are many other dissatisfied customers who do not make the effort
to let the company know of their dissatisfaction. The companies look at complaints
as opportunities to improve. They encourage the customers to come forward and
register their complaints if they have any rather than keeping it to themselves. The
companies ensure that the mail id’s , the toll free numbers for feedback are very
easily accessible to the customers so that if at all there is a complaint it must reach
the company. It is necessary for a business to be in touch with its customers so as
to detect the complaints and the potential complaints in the budding stage before it
becomes a crisis in the form of lost customers or bad publicizers .
 Today’s customer
Today’s customer is no longer a passive acceptor of the
product offered to him but is an active co -creator of the
product /experience he expects. He is very choosy and
well informed and knows what exactly he wants. If he is
not happy he has no sense of guilt in defecting .Thus
customer loyalty is a precious asset of the business.
 INTRODUCTION OF
CRM
Customer Relationship Management is a concept that became very
popular during the 1990s. It offered long-term changes and benefits
to businesses that chose to use it. The reason for this is because it
allowed companies to interact with their customers on a whole new
level. While CRM is excellent in the long-term, those who are looking
for short term results may not see much progress.
One of the reasons for this is because it was difficult to effectively
track customers and their purchases. It is also important to realize
that large companies were responsible for processing tremendous
amounts of data. This data needed to be updated on a consistent
basis.In the last few years, a number of changes have been made to
customer relationship management that has allowed it to advance.
These capabilities have allowed CRM to become the system that
was once envisioned by those who created it.
However, the biggest problem with these newer systems is the price. A number of personalized
Internet tools have been introduced to the market, and this has driven down the cost of
competition. While this may be a bane for vendors who are selling expensive systems, it is a
bonanza for small companies that would otherwise not be able to afford CRM programs. The
foundation for CRM was laid during the 1980s.The 1990s saw the introduction of a number of
advances in this system. It was during this time that term Customer relationship management
was introduced. Unlike previous customer relationship systems, CRM was a dual system.
Instead of merely gathering information for the purpose of using for their own benefit, companies
started giving back to the customers they deserved. Many companies would begin giving their
customers gifts in the form of discounts, perks, or even money. The companies believed that
doing this would allow them to build a sense of loyalty in those who bought their products.
Customer relationship management is the system that is responsible for introducing things such
as frequent flyer gifts and credit card points. Before CRM, this was rarely done. Customers would
simply buy from the company, and little was done to maintain their relationship. Before the
introduction of CRM, many companies, especially those that were in the Fortune 500 category,
didn’t feel the need to cater to the company. In the minds of the executives, they have
tremendous resources and could replace customers whenever it became necessary. While this
may have worked prior to the 1980s, the introduction of the Information Age allowed people to
make better decisions about which companies they would buy from, and global competition
made it easier for them to switch if they were not happy with the service they were getting.
Today, CRM is being used to achieve the best of both worlds. Companies want to
maintain strong relationships with their clients while simultaneously increasing their
profits. The CRM systems of today could be called “true” CRM systems. They have
become the systems that were originally envisioned by the pioneers of this paradigm.
Software companies have continued to release advanced software programs that can
be customized to suit the needs of companies that compete in a variety of different
industries. Instead of being static, the information processed within modern CRM
systems is dynamic. This is important, because we live in a world that is constantly
changing, and an organization that wants to succeed must constantly be ready to
adapt to these changes.
Landmarks in the History of CRM: 1960-2010
1960sMass Produ ction/Mass Product
1970s Mass Market
1980s Total Quality Management
1990s Customer Relatio nship Management (C RM)
2000s Customer Relationship Management (C RM)
2010 e-Customer Relationship Management (e-CR M)
MassProduction/Mass Product: Mass Production is
a system of manufacturing based on principles such
as the use of interchangeable parts, large-scale
production, and the high-volume Assembly Line.
Although ideas analogous to mass production
existed in many industrialized nations dating back to
the 18th century, the concept was not fully utilized
until refined by Henry Ford in the early 20th century
and then developed over the next several decades.
Mass Market: Mass Marketing is a market coverage
strategy in which a firm decides to ignore market segment
differences and go after the whole market with one offer.
It is type of marketing (or attempting to sell through
persuasion) of a product to a wide audience. The idea is
to broadcast a message that will reach the largest
number of people possible. Traditionally mass marketing
has focused on radio, television and newspapers as the
medium used to reach this broad audience. By reaching
the largest audience possible exposure to the product is
maximized.
Total Quality Management (TQM): Total Quality Management, a buzzword phrase
of the 1980’s, has been killed and resurrected on a number of occasions. The
concept and principles, though simple seem to be creeping back into existence by
“bits and pieces” through the evolution of the ISO9001 Management Quality System
standard.
Companies who have implemented TQM include Ford Motor Company, Phillips
Semiconductor, SGL Carbon, Motorola and Toyota Motor Company.
Total Quality Management (TQM) is a management strategy aimed at embedding
awareness of quality in all organizational processes. TQM has been widely used in
manufacturing, education, government, and service industries, as well as NASA
space and science programs.
Total = Quality involves everyone and all activities in the company.
Quality = Conformance to Requirements (Meeting Customer Requirements).
Management = Quality can and must be managed.
TQM = A process for managing quality; it must be a continuous way of life; a
philosophy of perpetual improvement in everything we do.
Customer Relationship Management (in 1990): Customer Relationship
Management (CRM) is one of those magnificent concepts that swept the
business world in the 1990’s with the promise of forever changing the way
businesses small and large interacted with their customer bases. In the
short term, however, it proved to be an unwieldy process that was better in
theory than in practice for a variety of reasons. First among these was that it
was simply so difficult and expensive to track and keep the high volume of
records needed accurately and constantly update them.In the last several
years, however, newer software systems and advanced tracking features
have vastly improved CRM capabilities and the real promise of CRM is
becoming a reality. As the price of newer, more customizable Internet
solutions have hit the marketplace; competition has driven the prices down
so that even relatively small businesses are reaping the benefits of some
custom CRM programs. In the beginning…
The 1980’s saw the emergence of database marketing, which was simply a
catch phrase to define the practice of setting up customer service groups to
speak individually to all of a company’s customers
Advances in the 1990’s: In the 1990’s companies began to improve on
Customer Relationship Management by making it more of a two-way street.
Instead of simply gathering data for their own use, they began giving back to
their customers not only in terms of the obvious goal of improved customer
service, but in incentives, gifts and other perks for customer loyalty.
E-CRM: This is a web based Sales Force Automation tool that helps you to
focus on un-covered customer-revenue opportunities that are not possible in
a manual sales process. The architecture of the product brings your
Customers/Sales Teams/Channel partners into a single centralized
structure. This will help you overcome the stumbling block of remote
accessibility of information across your organization. Its easy to use web
based interface, faster deployment and effective implementation will
streamline your sales process quickly and in a cost effective way. It records
enquiries, follow ups, complaints and details of any other interaction with the
client which helps to build and maintain life long relation with the customer
 Definition and Scope of Customer
Relationship Management

Customer Relationship Management is a comprehensive approach for creating, maintaining and

expanding customer relationships.
Significance of the words used in the definitions:
(a) Comprehensive: CRM does not belong to just sales or marketing. It is not the sole
responsibility of customer service group or an IT team; i.e. CRM must be a way of doing
business that touches all the areas.
(b) Approach: An approach is broadly a way of treating or dealing with something. CRM is a
way of thinking about and dealing with the customer relationship. We can also use the word
strategy because CRM involves a clear plan. In fact, CRM strategy can usually serve as a
benchmark for other strategies in your organization, because any strategy sets directions for your
organization. We can also consider this from a department or area level just as a larger
organization has strategies for shareholder management, marketing, etc. Each strategy must
support managing customer relationships. Thus CRM is strategic. To realize this, one can make
a list of key strategies, to brief your area of responsibility. Then write down organizational
approach towards customers. Compare the CRM strategies with other strategies. They should
support each other. External customers are those outside the organization who buy goods and
the services the organization sales. Internal customers is a way of defining another group in
some organization whose work depends upon work of your group. Therefore, they are your
customers. It is your responsibility to provide what they need so that they can do their job
properly.
(c) Customer relationship: Finally let us see what we mean by
customer relationship. In today’s world where we do business with
individuals or groups with whom we may never meet and hence
much less know in person-to-person sense. CRM is about creating
the feel of comfort in this high tech environment.
CRM is a discipline as well as a set of discrete software and
technologies which focuses on automating and improving the
business process associated with managing customer
relationships in the areas of sales, marketing, customer
services and support. CRM software applications facilitate the
coordination of multiple business functions (such as sales,
marketing, customer services, and support) and also coordinate
multiple channels of communication with the customer face to face,
call centres and the Web – so that organizations can accommodate
their customers’ preferred channels of interaction.
CRM (Customer Relationship Management) is a
comprehensive strategy and process of acquiring,
retaining and partnering with selective customers to
create superior value for the company and the
customer. The basic objective of CRM is to increase
marketing efficiency and effectiveness. It is
co-operative and collaborative processes that help in
reducing transaction costs and overall development
costs of the company.
Relationship marketing is a term often used in marketing
literature. It is sometimes used interchangeably with CRM.
Relationship marketing has been defined more popularly with a
focus on individual or one-to-one relationship with customers,
integrating database knowledge with long term customer retention
and growth strategy. Some writers have taken a strategic view and
shifted the role of marketing to genuine customer involvement
(communicating shared knowledge) rather than manipulating the
customer (telling and selling). Overall, the core of CRM and
relationship marketing is the focus of co-operative and collaborative
relationships between the firm and its customers and for other
marketing factors. It must, however, be noted that CRM programs
now envisage a wider spectrum of efforts other than data-based
one-to-one relationship with customers, which characterizes
relationship marketing..
 Touch Point Analysis
(TPA)
Few marketers would dispute the statement that it is the sum of all customers’
interactions with a company, over time, that ultimately creates or destroys that
company’s brand value. Yet few companies take the time to look at their own
business practices comprehensively through the lens of their customers to
understand how they measure up to their customers’ needs and expectations.
Does each customer interaction live up to the brand experience that the company is
trying to create? Are you providing a more consistent and relevant customer
experience than your competitors are? Which interactions are the most powerful for
creating customer loyalty?
Fielding customer-satisfaction surveys is not enough. To better serve their customer
base and more effectively acquire new customers, organizations need to delve into
the details of individual interactions to understand the relationship between each
customer touch point and the value it delivers to customers.
After all, value may be built through a series of positive experiences, but it is
maintained through consistently meeting the needs and expectations of your
customers throughout the customer lifecycle—from pre-purchase consideration to
post-purchase evaluation.
Conducting a Touch-Point Assessment
Following points outlines an approach to assessing and managing
customer experience across all your touch points:
1.Baseline your performance: Customer touch-point projects
should begin with a review of the customer insights you already
have and a map of customer interactions to understand where
data collection is still needed. Gather supplemental data through
various research methods, such as direct interviews, short
post-event surveys, etc.The key is to ensure that the baseline
assessment not only collects the relevant information on
customers’ needs and expectations at every stage in the
customer lifecycle but also seeks to objectively measure how well
each interaction adds to or subtracts from brand value. Are you
delivering a consistent and relevant experience? How does a
particular interaction compare with your competitors?
2.Analyze value drivers: The next step is to analyze which
interactions matter most to customers and what dimensions of
those interactions drive value from a customer perspective.
Touch points with high volumes of customer interaction and those
that can elicit potentially strong emotions in customers (e.g.,
websites, customer service, service departments) tend to have
the most significant impact on your brand.
Understanding the value drivers, especially by customer segment,
will help you target where to begin improving value for your
customers. In doing such an analysis, ask yourself: What do my
customers value in an experience? Which experiences are
enhancing my relationship with my customers? How do these
experiences differ by customer segment?
3.Develop and implement an improvement plan: Kicking off initiatives to improve
customer experience usually requires the effort and support of several cross-functional
teams. The level of buy-in across the organization to deliver a consistent brand
experience will make or break your efforts.
For this reason, giving priority to a few quick wins—those that are easy to implement but
will have a big impact—will help show your customers (and your internal critics) the
benefits of managing the customer experience.
While mapping out the correct sequence of initiatives, ask yourself the following: What are
the needs of my most-profitable segments? What impact can I deliver in the short term?
In the long term? How am I going to align the organization to improve the customer
experience? Who do I need buy-in from?
4.Measure the impact: The goal of touch-point analysis is to drive customer value.
Measuring the improvement in customer experience and understanding movements in
key performance indicators (e.g., lifetime value of the customer, retention rates,
customers’ willingness to recommend your brand) will help you understand how improving
touch points affects loyalty, brand equity, and overall profitability of specific customer
segments.The shifts in some of these metrics will likely occur over the long term rather
than immediately;therefore, they must be monitored over time.