Customer Relationship Management-

Introduction
 Overview
 Foundational aspects of relationship orientation

in business.

 Marketing concept to customer concept

 CRM from a business strategy perspective

 Customer value management approach

 Marketing-definition-Evolution-AMA
Marketing is the performances of
business activities that direct the
flow of goods and services from
producers to consumers.
American Marketing
Association,1935
“Marketing is the process of
planning and executing the
conception, pricing,
promotion, and distribution
of ideas, goods and services
to create exchanges that
satisfy individual and
organizational objectives.
American Marketing
Association,1985
Marketing is an organizational
function and a set of processes for
creating, communicating, and
delivering value to customers and
for managing customer
relationships in ways that benefit
the organization and its
stakeholders.
American Marketing
Association,2004
Marketing is the activity, set of
institutions, and processes for
creating, communicating,
delivering, and exchanging
offerings that have value for
customers, clients, partners and
society at large. American
Marketing Association,2007
 2008 defn. ‘includes the role marketing plays within the
society at large, and defines marketing as a science,
educational process and a philosophy –not just a
management system. It also expands the previous scope of
the term to incorporate the concept that one can market
something to “do good”.

Marketing is the activity, set of institutions, and processes for

creating, communicating, delivering, and exchanging offerings
that have value for customers, clients, partners, and society at
large. (Approved 2017)

4
 From the marketing to the customer
concept
Marketing concept
Development of
Marketing is an organizational information The customer concept is the
function and a set of processes technology and the
internet
conduct of all marketing
for creating, communicating,
activities with the belief that
and delivering value to
customers and for managing Time the individual customer is the
customer relationships in ways central unit of analysis and
that benefit the organization action.
and its stakeholders.
American Marketing
Association,2004

Main function:
Main function: Meeting individual customer needs
Addressing the needs of customer segments
 Questions to ponder
• Can relationships and marketing be put together?
• When did relationship orientation appear in marketing?
Some theories
supporting
relationships • Social exchange theory(1959)
 Social penetration theory SPT(1973)

Describes relationship in terms

of breadth and depth. Depth is
degree of personalness.

Insurance Salesperson develops

informality by talking something
very general gradually becomes
personal in the number of issue
he discusses
Attraction Theory(1980) postulates that one is
attracted towards other based on
• attractiveness
• proximity
• reinforcement
• similarity
“Before selling the product one needs to sell
oneself”
• Equity Theory(1983)
We enter relationships where rewards are in
proportion to costs. When share of reward is
less than what is expected, we experience
dissonance, exit relationship.
Customers exit when they perceive differential
treatment.

Behavioral scientist establishes 6 stages( Devito

1993)
Contact, involvement, intimacy, deterioration, repair
and dissolution
 Analogies of Relationships
• parent-child (loan marketer),
• leader-follower (fashion brand),
• fellow enthusiast (sports car),
• confidante (financial services adviser),
• idol to be worshipped (luxury brand),
• casual friend (beer, crisps)
• soul mate (special whisky),
• old flame (brands your mum used),
• a friend whom you seek out to escape from everyday reality
(holiday)
 Age of the customer Customer Era
2010
Relationship Era/Experience Era
2000
Information Age
Marketing Company Era

1960
Marketing Era
Marketing Era
1940
Automation &
Communication Age Sales Era
1920

2nd Industrial Age Simple trade & Production

1840

1st Industrial Age

1760

Innovation timeline Marketing Timeline

Is relationship in business new phenomenon?

Relationship orientation of marketing in different era (Adopted from Sheth and

Parvatiyar, 1995)
 Focus Areas

• Pre-industrial era-Trust, trade within clans, silk route, early

branding

• Industrial era – mass production, shift in jobs,

metrics like sales, revenue, Mkt Share, profitability.

• Post industrial era -complex products, service economy, KAM

 The product & strategy continuum

Consumer
Durables B2B Services
packaged

60’s 70’s 80’s-90’s

Transaction or exchange Relationship
approach approach
 Understanding the shift
Exchange Paradigm Relational Paradigm
Time Perspective Short term Prolonged

Dominating Mktg Marketing mix Interactive marketing

Function
Quality Dimension Quality of output Quality of experience

Metrics Market share Share of wallet focus

Measurement of CS Ad hoc Real time

Customer information Ad hoc Real time

Interdependency Low Interface is substantial

between mktg,
operations and HR
Internal Marketing Negligible Very high
 Shift continues………..
• The 4-P paradigm involves marketing • The relationship marketing
to anonymous masses of customers paradigm in:
– services marketing
– managing channel
– strategic alliances
– B2B marketing
– SCM
– Internal (HR)

How do you think CPG firms build relationships with customers?

 Relationship Marketing
Long term sustainable relationships, primarily
with customer, but also with suppliers, partners,
employees, and others who might affect firm’s
business.
Idea is that everyone is a winner.

Critics of RM
Nothing new
Lacks conciseness
RM easier said than done
 Drivers of RM
• Marketing of Services
• Focus on customer retention
• B2B marketing
• Industrial networks
• Supply chain management
 Marketing has come a long way

30 R’s

http://www.emeraldinsight.com/doi/pdfplus/10.1108/09564239410074
4P’s
4p’s 349

Gummensson 1997
Marketing: Contemporary view
Suppliers
Partners &
Competitiors
Customer

Company

Regulators Employees
&Influencers
Intermediaries

Stakeholder View
Transition from 4P’s to RM
Transactional/traditional /product centric marketing
• Mass production led to lack of direct relationships.
• Only “brands” were the visible aspect of supplier.
• Direct contact existed in service only. industries(retail, travel,
banking, insurance and B2B)
• ‘relationship’ was overlooked
• Focus was 4P’s,4A’s 15P’s, 4C’s
• Product advantage is short lived.
• Geographic advantage was lost.
• Stable industries shaken.
• Rising consumer power.
• Availability of customer data, cheap and
abundant
 Relationship/customer centric marketing
• Being customer centric is not being customer friendly.
• Companies capable of leveraging customer data at an
individual level.
• Integrate offline and online data.
• Having best product, best service, and best technology won’t
always be enough.
 What customer centricity means
• Celebrates customer heterogeneity.
• Differentiate customers based on “value”.
• Investment in technology and human capabilities..
• Product centricity is good, but customer centricity is better for
some.
• CC focusses on CLC, customer acquisition, retention and
development.
• Why focus on hypothetical average when you can
focus on a high value , real world customers.

• The differences between distinct group of customers

is something to celebrate.

Peter Fader in his book

on Customer Centriciy
It used to be every investor’s dream to get in on the ground floor of a
company poised to become a unicorn (i.e., a privately held company with
a valuation in excess of $1 billion), so VCs flocked to companies with big
dreams and charismatic leaders.

Innovation might be the buzzword on everyone’s

lips but customer and design centricity is what will
win the day with customers according to Gartner.

Gartner, citing statistics garnered from social media

conversations. There were over 76,000 conversations on
CX design, over 146,000 conversations on CX channels,
over 163,000 on CX data and analytics and over 82,000
on CX strategy. 40% of all data analytics projects is
about customer experience
Marketing leaders who dont know how much their customers
are worth-66%
Potential increase in sales from identifying and maximizing
top value customers-17%
• Regulatory bodies, GDPR,CCPA will gain steam — impacting and shaping markets,
in a very real way, in 2020.

• Forrester’s Customer Experience Index (CX Index™) reveals that customer service is
the most important driver category of customer experience quality across most
industries and markets. We repeat: Human channels still matter….Forrester 2020

• The number of CX executives will grow by 25%.

• Two areas of spend may actually enjoy growth — marketing technology and digital
channels.

• Technology currently accounts for the largest proportion of marketing budgets

(26.2%), compared to media (24.8%), and agencies (23.7%).

• Marketing leaders say they’re least likely to cut customer data platforms, mobile
marketing platforms and digital commerce tech.
Martech Landscape 2020
Customer Life Cycle
 Types of bonding
Level 1: Financial bonds
Volume and frequency of rewards.(LP’S)

Level 2: Social Bonds

Personal relationships, continuous and social bonds.

Level 3:Customisation bonds

Customer intimacy mass customization

Level 4 Structural bonds

Joint investments shared processes and equipment

Berry & Parasuraman(1991)

 Power of customer relationships?

• Value of brands and CR’s revealed by M&A data.

• 6000 cases of M&A from 2003-2013
• Brand valuation declined 18% -10%
• CR valuation appreciated 9-18%
• Acquirers have moved from investing in business with strong
brands to firms with strong CR’s
 Customer Loyalty Exercise
• Think of a service provider to whom you are
loyal.

• What do you do (your behaviors, actions,

feelings) that indicates you are loyal?

• Why are you loyal to this provider?

• What factors have influenced the formation of

your loyalty?
 Linkage CC,CX,CV

Where does CRM stand?

 CRM
• CRM and Relationship Mktg. term used
interchangeably in academics.(Parvatiyar & Seth
2001)
• CRM is more about
marketing.(Ryals & Payne 2001)
 Practitioner’s view
Forrester says
that CRM is the business processes and supporting
technologies that support the key activities of targeting,
acquiring, retaining, understanding, and collaborating with
customers.
Customer relationship management (CRM) is a business
strategy with outcomes that optimize profitability, revenue
and customer satisfaction by organizing around customer
segments, fostering customer-satisfying behaviors and
implementing customer-centric processes. CRM
technologies should enable greater customer insight,
increased customer access, more-effective interactions, and
integration throughout all customer channels and back-
office enterprise functions. Gartner
 What researchers say
CRM is the core business strategy that integrates internal processes and functions,
and external networks, to create and deliver value to targeted customers at a profit.
It is grounded on high quality customer related data and enabled by IT
Francis Buttle 2007
 Definition.
CRM is a comprehensive strategy and process of acquiring,
retaining and partnering with selective customers to create
superior value for the company and the customer. It involves
the integration of marketing, sales, customer service, and the
supply chain functions of the organization to achieve greater
efficiencies and effectiveness in delivering customer value.
(Parvatiyar & Seth 2001)
CRM is the practice of analyzing and utilizing marketing
databases and leveraging communication technologies to
determine corporate practices and methods that will
maximize the lifetime value of each individual customer to
the firm (V. Kumar,Werner J. Reinartz)
CRM applications, supported by ERP/data warehouse, link front and back-office
functions
A CRM implementation model
Link Between CRM and Customer Value

Customer Value: The economic value of the customer

relationship to the firm – expressed on the basis of
contribution margin or net profit
 Customer Value Management

• Benefits

 Decrease in Costs
 Maximization of Revenues
 Improvement in Profits
 Acquisition and Retention of Profitable Customers
 Reactivation of Dormant Customers
Profit Generated by a Customer Over Time
Profit Impact of 5 Percent Increase in Retention Rate

Source: F. F. Reichheld, “Loyalty and the Renaissance of Marketing,” Marketing Management, vol. 2, no. 4 (1994), p. 15.
The Customer Pyramid
 Misunderstandings about CRM

• CRM is database marketing

• CRM is marketing process

• CRM is an IT issue

• CRM is about loyalty schemes

• CRM integration with platforms, processes and salespeople.

• 15% use manual method, 32% spreadsheets, 20% email in SME

segement.
 Explosion of CRM in Marketing and IT

• In the 1990s, CRM started attracting attention of academicians

as well as practitioners from marketing and IT.

• The early adopters of CRM in the B2C markets were financial

services, retailing, telecommunication, travel and hospitality,
utilities and automotive.

49
ENABLERS FOR THE GROWTH OF CRM

Emergence of service economy

Emergence of market economy

Global orientation of businesses

Aging /Changing population of the economically

advanced economies

50
THE CRITICALITY OF CUSTOMER RELATIONSHIPS

Disruptive
competition

Misalignment
between revenue
and profits

Market maturity

51
Misalignment between Revenue
and Profit

52
Rising Customer Expectations

Aging
population (DC)

Individualism

Time scarcity

53
Changes with respect to Consumers

Demographic changes Behavioral changes

and increasing consumer diversity

 Aging populations, especially in  Increased use of social media

developed countries
 Increased use of apps
 Increasing diversity in term of
ethnicity
 Use of real time data
 Increasing individualization
 Rise of convenience and self-service
stores(SST)

 Increased demand for experience

and authenticity

 Rise of health and sustainability

consciousness
 Decreasing Customer Loyalty- Example

Number of different financial service providers that respondents are associated with
35
30.2 30.7
30

% of consumers
25
21.1
20
14.1 1996
15
10
5
0
1 2 3 4+
Number of financial service providers
Source: Unidex Report
Customer-centricity
Some Misunderstanding and pitfall of CRM

• CRM is database marketing

Misunderstandings about CRM
• CRM is marketing process

• CRM is an IT issue

• CRM is about loyalty schemes

• Lack of Customer-Centric Vision may lead to poor outcomes.

• Lack of appreciation of customer-based metrics or customer lifetime

value
CX Project outline @ DHL Freight
• Is there a clear vision that differentiates DHL from the rest?
• Does DHL know what the customer needs and does it deliver in a
timely way?
• Does leadership acknowledge, customer is priority?
• Are employees happy and motivated at work?
• Are systems and tools to provide customer information and
feedback?
CEM Maturity model @ DHL Freight
The dimensions of the CEM maturity model:
• Having a customer-centric vision
• Customer-centric culture
• Visionary leadership
• Employee engagement
• Customer-centric processes and tools
Some views on Centricity-Peter Fader
• Not all customers are created equal.
• Create-market-sell a product and repeat-----99% of companies
mantra.
• Profits maximised through market share.
• Being customer friendly falls short of being truly customer centric.
• Which companies may gain through brand equity and customer
equity?
 Potential Roadblocks to CC culture
Culture
Culture

Structure Process
Product Centricity Customer Centricity

Financial Metrics
Customer centricity
framework(Deloitte)

Engage
Backoffice
Adapted from Analytics at Work, Tom Davenport (2017)
Economics of Customer Relationship
Management
 Revenue Enhancement Metrics

• Acquisition/prospect increase 27-45 percent

• Expense per convert decrease 30-60 percent
• Renewal rate increase 5-15 percent
• Cross-sell/up-sell increase 3-25 percent
• Share of wallet increase 3-25 percent
• Churn decrease 30-80 percent
• Campaign conversion increase 20-50 percent
• Win-back increase 25-33 percent
 The Market Share Fallacy

Increasing market share should not be a company’s goal. Rather,

increasing share of the right kinds of customers should be the
goal.

Public company financial disclosure rules and corporate

accounting practices require little or no reporting on customer
value.

Shareholder primacy vs customer capitalism.

 Customer Metrics: Integral part of
financial reporting
• Reporting about a firm’s customer management and focus on the value of the
customer base
Therefore, investors should receive information about

(1) How much it cost to acquire new customers in a cohort? What % remains active?
How much does it cost to serve?

(2) What is the cash flow per customer?

(2) the value of the customer base (usually operationalized as customer equity)

(3) components of customer equity (marketing expenditures, retention

expenditures, acquisition expenditures)

(4) changes in customer equity over time

Two sides of Customer value
Marketing and Business Valuation Linkage
Profit and Retention Patterns for the
Customers of a Credit Card Company
Customer Profit over Time for
an Insurance Company
Churn Rate in the US Wireless Industry
(Quarter 2 in 2012)
Churn Rates by Industry and Country

https://recurly.com/research/churn-rate-benchmarks
A Customer Focus Can Aid Retention
• Annual Defection Rates

– Newspaper subscriptions 66 percent

– Long distance telephone 30 percent
– Apparel store 25 percent
– Internet service providers 22 percent

Griffen and Lowenstein 2001

 Which Companies Benefit Most
from CRM?
• Companies serving large numbers of customers through
complex and frequent interactions:
– Communications companies
– Retail banks
– Insurance companies
– Healthcare organizations
– Utilities
Introduction to Customer Based
Marketing Metrics

Traditional Marketing Metrics

Customer based Marketing Metrics

 Traditional and Customer Based
Marketing Metrics
Traditional Marketing Metrics Primary Customer Based metrics
Acquisition rate
Acquisition cost
Market share Retention rate
Sales Growth Survival rate
Lifetime Duration

Popular Customer Based metrics Strategic Customer Based metrics

Size of Wallet
Share of Wallet RFM value
Customer Lifetime Value
Customer Equity
Traditional Marketing Metrics

• Market share

• Sales Growth

Adequate indicator of marketing performance?

 • Customer Acquisition
Primary Measurements
Customer
Based – Acquisition rate
– Acquisition cost
Metrics
 • Acquisition rate (%) = 100*Number of
prospects acquired / Number of prospects
targeted
• Always calculated for a group of customers
• Typically computed on a campaign-by-
campaign basis, or in a day or week. CTR,
bounce rate , conversion rate.

Acquisition • Evaluation
Rate – Choice between re-acquiring old and
acquiring new customer.

– Gives a first indication of the success of

a marketing campaign

– But cannot be considered in isolation

Adequate indicator of marketing

performance?
Customer Acquisition Cost (CAC)

• Measured in monetary
terms
• Acquisition cost (Rs) =
Acquisition spending (Rs) /
Number of prospects
acquired
• Precise values for
companies targeting
prospects through direct
mail

Evaluation:
• Difficult to monitor on a
customer-by-customer
basis
 Customer Activity Measurement
• Objectives

– When customer is a customer? Marketing interventions

– Active living relationship.

– Non-purchase interaction contributes to relationship.

 Customer Activity Metrics

• Average Inter-Purchase Time

• Retention & Defection Rate

• Survival Rate

• Lifetime Duration

• P(Active)
Average Inter-purchase Time (AIT)
• Average Inter-purchase Time of a customer
= 1 / Number of purchase incidences from the first purchase
till the current time period
• Measured in time periods
• Information from sales records
• Important for industries where customers buy on a frequent basis

Information source
Sales records
Evaluation:
Easy to calculate, useful for industries where customers make frequent purchases
Firm intervention might be warranted anytime customers fall considerably below their
AIT
Customer Activity Measurement

• Objectives
– Managing marketing interventions

– Aligning resource allocation with actual customer

behavior

– Providing key input for customer valuation models

such as the net-present value (NPV)
 Retention and Defection
• Retention rate (%) = 100* Number of customers in cohort buying in (t)|
buying in (t-1) / Number of customers in cohort buying in (t-1)

• Avg. retention rate (%) = 1 – Avg. defection rate

• Avg. Defection rate (%) = 1 – Avg. Retention rate

• Avg. retention rate (%) ∝ Avg. lifetime duration

• Avg. lifetime duration = [1/ (1- Avg. retention ratet)

 Retention/Defection/CLV
• The effect for a cohort of customers over time out of 100
customers who start in year 1, about 32 are left at the end of year 4
Customers starting at the beginning of year 1: 100
Customers remaining at the end of year 1: 75 (0.75*100)
Customers remaining at the end of year 2: 56.25 (0.75*75)
Customers remaining at the end of year 3: 42.18 (0.75*56.25)
Customers remaining at the end of year 4: 31.64 (0.75*42.18)
Assuming constant retention rates, the number of retained
customers at the end of year

The defection rate is 1-0.75 = 0.25 or 25%

 Variation in Defection rate with
respect to Customer Tenure
30
# of customers defecting

25

20

15

10

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Customer tenure (periods)

Plotting entire series of customers that defect each period, shows variation (or
heterogeneity) around the average lifetime duration of 4 years.
Change in Customer Lifetime Duration
with Retention Rate
20
Avergae Customer Lifetime

16

12
(periods)

0
50% 55% 60% 65% 70% 75% 80% 85% 90% 95%
Retention rate

Note: increasing the marginal retention rate is likely to be increasingly expensive

•
CRM at Work: Amazon
One of the leaders in implementing customer relationship management programs
on the web

• Helped drive both customer acquisition and retention

• In 1999 Amazon acquired 11 million new customers, nearly tripling its number of
customers from 1998

• Greatest success in customer retention: Repeat customers during the year

accounted for 71% of all sales

• Success attributed to attempt to learn about customers and their needs and then
using this information to offer value-added features to them
 How is retention different from
loyalty?
Is retention only about buying?
• Retention measured on a period by period basis.

• Loyalty has theoretical meaning.

• Loyalty has an emotional and psychological dimension.

• Retention may be simply due to inertia and convenience.

 Survival Rate

• Measured for cohorts of customers

• Provides a summary measure of how many customers survived

between the start of the formation of a cohort and any point
in time afterwards

• Survival rate t (%) = 100*Retention rate t * Survival rate t-1

• Number of Survivors for period 1 = Survival Rate for Period 1 *

number of customers at the beginning
 Survival Rate Computation-Example
Number of Customers starting at the beginning of year 1: 1,000

Retention rate Survival rate Survivors

Period 1: 0.55 0.55 550
Period 2: 0.62 0.341 341
Period 3: 0.68 0.231 231
Period 4: 0.73 0.169 169

Number of Survivors for period 1 = 0.55 * 1000 = 550

Survival rate for period 2 = Retention rate of period 2 * Survival
Rate of Period 1. Therefore, Survival rate for period 2 = 0.62 * 0.55
= 0.341 (=34.1%)
 Size-of-Wallet
• Size-of-wallet ($) of customer in a category = Sj 
J

j 1

Where: Sj = sales to the focal customer by the firm j

j = firm, J
= summation of value of sales made by all the J firms that
j 1
sell a category of products to the focal customer
Information source:
Primary market research

Evaluation:
Critical measure for customer-centric organizations based on the assumption
that a large wallet size indicates more revenues and profits

Example:
A consumer might spend an average of $400 every month on groceries across the supermarkets she shops
at. Her size-of-wallet is $400
 Individual Share-of-Wallet (SoW)
It is the % of customer’s spending within a category that’s captured by
a given brand, or a store or firm.
Important measure of customer loyalty.
• If a HH spends Rs 5000/- on groceries monthly, and Rs 3000/- of its
purchases are with Big Bazaar, then BB’s share of wallet of that
consumer HH is 60%
• Wallet allocation rule(WAR) states the rank that customers assign to
a brand relative to its competitors predicts SoW
• WAR can be predicted using both rank and the no. of brands in the
set the consumer uses.
• Correlation between WAR score and SoW is consistently high across
companies and industries > 0.9
The Wallet Application Rule formula
 Example of a category(Oral Care)
Brand X Brand Y Brand Z

Customer 1 3 (17%) 1 (50%) 2 (33%)

Customer 2 3 (17%) 2 (33%) 1 (50%)

Customer 3 3 (17%) 1 (50%) 2 (33%)

What is the SoW for Customer 1 for Brand X?

Take the average of all customer’s SoW scores to arrive at the brand’s SoW .
Focus of managers shifts from CS to SoW
 Strong correlation between rank and
SoW
• How to improve the brand’s rank?
• Determine how many of your customers use each
competitor?
• Calculate the revenue that goes from your
customer to each competitor.
• Identify the primary reasons your customer use
your competitor.
• Prioritize your opportunities to improve your
SoW. Estimate the costs and weigh them against
the financial returns.
 Difference between SoW & MS for
wallet players?
UPI Apps Transactions in Millions Market Share

PhonePe 1,622.95 45.64%

Google Pay 1,234.75 34.72%
Paytm 423.63 11.91%
Amazon pay 60.67 1.7%

8th Sep 2021

Aggregate Share-of-Wallet of firm (%)
• aSW is defined as the proportion of category
value accounted for by a focal brand or focal
firm within its entire base of buyers.
• Calculating aSW of BB, groceries expenditures
from BB in time period t (1 crore). Total
grocery expenditures of BB customers in the
same period ( 5 crore). aSW will be 20%
 Applications of SoW

• Share of wallet and size of wallet simultaneously – with same

share of wallet, different attractiveness as customers
• Example:

Share-of- Size-of-Wallet Absolute expenses with

Wallet(Brand A) firm

Buyer 1 50% $400 $200

Buyer 2 50% $50 $25

• Absolute attractiveness of Buyer 1 is eight times higher even

though the Share of Wallet is the same as for Buyer 2
 Size of Wallet (B2B)
• BASF, one of the few manufacturers of car paint, supplies its
product to Mercedes- Benz. Based on its knowledge of how much
paint it takes to paint an average sized car, it can infer Mercedes
Benz’s size of wallet for car paint based on its worldwide
production output- figure easily derived from secondary sources.
 Segmenting Customers Along
Share of Wallet and Size of Wallet

High Maintain and guard

Hold on

Share-of-wallet

Target for
Do nothing additional selling

Low

Small Large
Size-of-wallet

The matrix shows that the recommended strategies for different segments differ
substantively. The firm makes optimal resource allocation decisions only by
segmenting customers along the two dimensions simultaneously
 Strategic Customer Based Value
Metrics
• CLV Metrics

• Customer Equity

• RFM

• Past Customer Value

 Customer Lifetime Value
• Is a measure to determine how much customer
will spend on a given business during the whole
period of his/her relationship .
• It is a metric to calculate the total future profit
that can be expected of a customer.
• Helps firms forecast the future value they can
generate from their work.
• Focusing on CLV enables firm to make efficient
strategy.
 CLV
Is dependent on
• Cost to acquire
• Annual profits the customer generates for the
firm
• No. of years the customer is likely to purchase
from the firm
 Basic CLV
• CLV = CM* t – CAC
• CM- Contribution margin
• t- time periods
• CAC – Customer Acquisition cost

• What are the assumptions?

 Lifetime Value metrics
(Net Present Value models)
• Multi-period evaluation of a customer’s value to the
firm
Recurring
Revenues
Contribution
margin
Recurring
costs

Lifetime of a
customer Lifetime Profit
CLV

Discount Acquisition
rate cost
 Boosting CLV
• High CLV means loyal customers.
• Create forum to answer customer doubts.
• Be aware of trends and offer them in CJ.
Analyze the data and figure the improvements
in CJ
• Be able to send personalized messages to
enable purchase. Key is to engage.
• E.g. Delhivery creating better CX for ecom
customers.
Calculation of CLV: Simple Definition
𝑇 𝑡
1
𝐶𝐿𝑉 = 𝐶𝑀𝑡
1+𝛿
𝑡=1

where CLV = lifetime value of an individual customer in $, CM = contribution margin,

 = interest rate, t = time unit,  = summation of contribution margins across time
periods

• CLV is a measure of a single customer’s worth to the firm

• Used for pedagogical and conceptual purposes

Information source:
CM and T from managerial judgment or from actual purchase data.

Evaluation:
Typically based on past customer behavior and may have limited diagnostic value for future
decision-making
 Identifying profitable Customers

Historical CLV (PCV) Predictive CLV

• Can be calculated w/o To cover up drawbacks of
thinking about his future historical CLV
behavior. It holds information about
• Drawback: every past behaviors and future
customer to be same, his expected retention of
behavior will remain customers to estimate CLV
constant.
 Customer Equity
• Sum of the lifetime value of all the customers of a firm
Customer Equity,
t
I T
 1 
CE    CM it  
i 1 t 1  1   

• Indicator of how much the firm is worth at a particular

point in time as a result of the firm’s customer
management efforts
• Can be seen as a link to the shareholder value of a firm
 Problem
What is the difference in customer lifetime value (CLV) of a customer who is
retained for 10 years versus a customer who is retained for 5 years, assuming
each is 100% loyal during those times, each spends $1,000 a year that
generates a margin of 15%to the company, and each has a discount rate of
10%?

𝑇 𝑡
1
𝐶𝐿𝑉 = 𝐶𝑀𝑡
1+𝛿
𝑡=1
 Problem Customer Equity
A company targets a list of 10000 purchased addresses with an acquisition
campaign. The company acquires 1000 customers through the target mailing;
thus, the acquisition rate is 10%. Once acquired, a customer generates on
average $120 in sales. The margin of the firm is 30% resulting in a constant
gross margin. Marketing and service costs are constant as well $ 20 . The
retention rate in the 1st period is 40%, next year it was 63%, followed by
75%,82% and 85% in the subsequent years. Find out the CLV of the cohort.
Yr Sales Manuf Gross Mktg Actual Surviv Expect Profit Discou
from per margin Margi & RR al ed Per nted
acquisi custo n Servic Rate No. Custo profit
tion mer e Of mer per
Costs active cust
4
1 2 3 custo
mes 9
10
5 8
6 7
1 1

2 0.63

3 0.75

4 0.82

5 0.85
 Three CLV calculation scenario
Period 1 Period 2 Period 3 Period 4 Period 5

t=1 t=2 t=3 t=4

t=0

Case 1 m m m m m

Case 2 m m m m

Case 3 m m m m
 Formulas
• Case 1 m*(1+d)/1+d-r

• Case 2 m*r/1+d-r

• Case 3 m/1+d-r
 How does CLV differ from traditional
metrics
Metrics like RFM,SoW,PCV are backward looking and do not
take into account future revenues and future costs of
servicing customers (depending on how long customers will
be active)

CLV takes into account the probability that the customer will
be active in the future and thus future revenues as well as the
costs of marketing to customers in order to retain them.

Customer acquisition costs apply to new customers.

Acquisition costs can be free trial period, sign up incentives
etc.
Acquiring customers can be expensive.
 Customer Lifetime Duration
• Customer relationships

– Contractual Lifetime duration is time from the start of the relationship

until the end of the relationship (e.g.: mobile phone contract)

– Noncontractual
Whether customer is active at a given point in time (e.g.: department
store purchase)
Customer Lifetime Duration when the Information is
Incomplete

Buyer 1

Buyer 2

Buyer 3

Buyer 4

Observation window
Buyer 1: complete information
Buyer 2 : left-censored
Buyer 3: right-censored
Buyer 4: left-and-right-censored
 Estimation of P(Active)-Example
Customer 1

Customer 2

Observation period

Month 1 Month 8 Month 12 Month 18

An x indicates that a purchase was made by a customer in that month

To compute the P(Active) of each of the two customers in the 12th month of activity
For Customer 1: T = (8/12) = 0.6667 and n = 4
P(Active)1= (0.6667)4 = 0.197
And for Customer 2: T = (8/12) = 0.6667 and n = 2
P(Active)2= (0.6667)2 = 0.444
 P (Active)
• Probability of a customer being active in time t
(P active ) = (T / N)n

Where, n is the number of purchases in the observation period.

T is the time elapsed between acquisition and the most recent

purchase.

N is the number of purchases in a given period.

• Scenario non contractual

 Strategic Customer Based Value
Metrics
• RFM

• Past Customer Value

• CLV

• Customer Equity
 RFM
• Recency, Frequency and Monetary Value-applied on historical data

• Recency -how long it has been since a customer last placed an order
with the company

• Frequency-how often a customer orders from the company in a

certain defined period

• Monetary value- the amount that a customer spends on an average

transaction

• Tracks customer behavior over time in a state-space

• Only on historical data , not on prospect data.

 Computation of RFM

• Method 1: Sorting customer data based on

RFM, grouping and analyzing results
• Example:
RFM Method 1
– Customer base: 400,000 customers

– Sample size: 40,000 customers

– Firm’s marketing mailer campaign: $150 discount coupon
– Response rate: 808 customers (2.02%)
Recency coding: Analysis
– Test group of 40,000 customers is sorted in a descending order based on the criterion of
‘most recent purchase date’.
– The earliest purchasers are listed on the top and the oldest are listed at the bottom. The
sorted data is divided into five equal groups (20% in each group)
– The top most group is assigned a recency code of 1 and the next group
a code of 2 and so on, until the bottom most group is assigned a code of 5
– Analysis of customer response data shows that the mailer campaign got the highest
response from customers grouped in recency code 1 followed by code 2 etc
 Response and Recency
Recency Vs. Response

Customer Response % 5.00% 4.50%

4.00%
2.80%
3.00%
Response %
2.00% 1.50%
1.05%
1.00%
0.25%
0.00%
1 2 3 4 5
Recency Code (1 - 5)

Graph depicts the distribution of percentage of those customers who responded fell
within the recency code grouping of 1 through 5

Highest response rate (4.5%) for the campaign was from customers in the test
group who fell in the highest recency quintile (recency code =1)
 Response and Frequency
Frequency Vs. Response

3.00%
2.45%
Response Rate %

2.50% 2.22% 2.08%

2.00% 1.67% 1.68%
1.50% Response %
1.00%
0.50%
0.00%
1 2 3 4 5
Frequency Code 1-5

Graph depicts the distribution of what % of those customers who responded fell
within the frequency code grouping of 1 through 5

The highest response rate (2.45%) for the campaign was from customers in the
test group who fell in the highest frequency quintile (frequency code =1)
 Response and Monetary Value
Monetary Value Vs. Response

2.50% 2.35%
2.05% 1.95% 1.90%
Response Rate %

2.00% 1.85%

1.50%
Response %
1.00%

0.50%

0.00%
1 2 3 4 5
Monetary Value Code (1-5)

Customer data is sorted, grouped and coded with a 1 to 5 value

The highest response rate (2.35%) for the campaign was from those customers in the
test group who fell in the highest monetary value quintile (monetary value code =1).
 Limitations

• RFM method 1 independently links customer response data with R, F and M values and
then groups customers, belonging to specific RFM codes

• May not produce equal number of customers under each RFM cell since individual
metrics R, F, and M are likely to be somewhat correlated

– For example, a person spending more (high M) is also

likely, on average, to buy more frequently (high F)
• For practical purposes, it is desirable to have exactly the same number of individuals in
each RFM cell
 RFM Cell Sorting
Example:
• List of 40,000 test group customers is first sorted for Recency and grouped into 5 equal
groups of 8000 each

• The 8000 customers in each group is then sorted based on Frequency and divided into five
equal groups of 1600 each- at the end of this stage, there will be RF codes starting from 11
through 55 with each group having 1600 customers

• In the last stage, each of the RF groups is further sorted based on monetary value and
divided into five equal groups of 320 customers each
- RFM codes starting from 111 through 555 each having 320 customers

• Considering each RFM code as a cell, there will be 125 cells ( 5 recency divisions * 5
frequency divisions * 5 monetary value divisions = 125 RFM Codes)
 RFM Cell Sorting (contd.)
M
F
131
11
12 132
R
13 133
1
14 134

15 135
2
41
3 441
42
442
4 43
443
44
5 444
45
445
Customer
Database Sorted Once Sorted five times Sorted twenty five
per R quintile times per R quintile

Helps target valuable customers with high chances of purchasing

 Past Customer Value/Win back rate

• Where i = number representing the customer

• r = applicable discount rate (for example 15%
per annum or 1.25% per
• month)
• T = number of time periods prior to current
period when purchase was made
• GCit = Gross Contribution of transaction of the
ith customer in time period, t.
 How does CLV differ from traditional
metrics
Metrics like RFM,SOW,PCV are backward looking and do not
take into account future revenues and future costs of
servicing customers (depending on how long customers will
be active)

CLV takes into account the probability that the customer will
be active in the future and thus future revenues as well as the
costs of marketing to customers in order to retain them.

Customer acquisition costs apply to new customers.

Acquisition costs can be free trial period, sign up incentives
etc.
Acquiring customers can be expensive.
CEM & CRM
Some scenario
• The company whose software you use to organize your photo does a
major relaunch of its site with no warning, and suddenly you can’t
find all your photos. You visit their community to find that many users
having the same issue, but no one seems to have a definite answer on
how the new system works.

• You buy a product from the manufacturer, only to have one of its
retailers offer you the same product at a discount a week later. You
email customer support; they are unaware of the promotion and
unwilling to offer a refund.
Contd…
• You reach out for customer support on Twitter, go through the process of
mutual ‘following’ so that you can direct-message and then explain the
issue, only to get redirected to another channel where you have to start all
over again.

• You research product online and find some great reviews, but you have also
spotted some dismal ones, and the company has not responded to the
concerns. You reach out on social media to hear from the company, but
they don’t respond.

• You visit an online clothing retailer and browse its entire sweater catalog.
The company follows up with a series of emails containing offers, but none
are for sweaters. You then pass by one of the company’s retail stores on
your way to work and discover that there was a store wise sale over the
weekend.
Contd…

• You call one of your phone service provider’s retail locations to ask if it
does handset exchanges in-store. The representative says ‘yes’ and
tells you to come over, but when you arrive you discover there’s an
hour wait for service. The clerk asks for your number but then tells you
that you have to stay in the store in order to keep your appointment.
When your turn finally comes up, the clerk informs you that in-store
exchanges are subject to a restocking fee that does not apply to online
exchanges.
Strategic Planning Assumptions: CEM

• By 2024, 25% of traditional-large-enterprise CIOs will be held accountable

for digital business .operational results, effectively becoming “COO by
proxy.”

• By 2025, 30% of large business-to-business (B2B) companies will use AI

predictive analytics to drive all of their sales KPIs and insights.

• By 2024, organizations with IT teams that understand the needs of

customers will outperform other organizations’ customer experience
metrics by 20%.

Gartner.com
Why experience?
 Correlation between CX and Customer Behaviour
Customer
Attitude Purchase intention
Impressions
TV Ads 0.51 0.77 0.59

Stores 0.75 0.74 0.84

Web sites 0.81 0.45 0.76

CEM By Bernd H Schmitt

The Transition
Economy Agrarian Industrial Service Experience
Function Extract Make Deliver Stage
Nature Fungible Tangible Intangible Memorable
Attribute Natural Standardized Customized Personal
Method of Stored in Inventoried Delivered Revealed
supply bulk on demand over time

Seller Trader Manufacturer Provider Stager

Buyer Market User Client Guest

Power of Experience
• “A brand is no longer what we tell the customer it is – it is what
consumers tell each other it is”. Scott Cook…….Intuit Founder
What is customer experience?
• CX is the internal and subjective response customers have to any
direct or indirect contact with a company.

• DC would be purchase, use, and service mostly initiated by

customer.

• IDC are unplanned encounters with sales rep, product, services and
brands like recommendations, news report, advtg, reviews etc.

• CX is high quality end to end, research to delivery ….Amazon

• Customer's experience is end-to-end experiences, not at

touchpoints.
Why are we talking about CX now? Is CS not
enough?
• Customers are 100 times more impatient online than in physical reality.
• 63% will defect if they find the content irrelevant.
• 41% end brand relationships.
• 71% receive inconsistent experience across channel messaging.
Negativity affects CX
• 1in10 customers says inconsistency from device to device.
• 86% will buy where CX is better.
• CX projects not meeting customer needs deemed to fail.
What is CEM
• Is a process of strategically managing a customer’s entire experience
with a product or a company.
Bernd H Schmitt ….. CEM
What are CRM and CX Implementation
Goals?
• Customer satisfaction
• Acquiring new customers
• Retaining customers
• Creating a single view of the customer
• Cross-selling/upselling to customers
• Improving campaign response rates
• Increasing customer advocacy/referrals and/or improving margins via
improved pricing.
Customer Journey Simplified

Engage Buy Use Share Complete

 CJM is the steps followed while engaging with product, online store, physical store, or a service
https://servicedesigntools.org/
http://files.thisisservicedesignthinking.com/tisdt_cujoca.pdf
CJ and Service Blueprinting should be aligned
• Sophisticated version of flowcharting.
• Involves
• Identifying processes(front stage and backstage)
• Isolating fail points
• Establishing timeframe
• Highlighting tangible evidence.
• Manpower decisions.
Service Blueprint Components
Customer Actions
line of interaction

Visible Contact Employee Actions

line of visibility

Invisible Contact Employee Actions

line of internal interaction

Support Processes
Service Blueprint Components
CDJ across Pre-Purchase, Purchase and Post
Purchase
CEM
Gartner defines customer experience management as "the practice of designing and reacting to
customer interactions to meet or exceed customer expectations and, thus, increase customer
satisfaction, loyalty, and advocacy. It is a strategy that requires process change and many
technologies to accomplish."
Touchpoints
• CX is the delivery of brand promise. It happens in touch points. Intersection
of customer and enterprise.
• Salespeople
• Call centre
• Advertising event
• Debt collectors
• Reception
• Websites
• APP
• Store
Key issues

Should CX be left to the matter of chance or

managed?

Experience may/not tie with products.

Branded experiences
Some concepts

Touchpoint

MOT

Engagement
Metrics to measure
NPS
CSAT
CES
https://www.youtube.com/watch?v=7HUDGA1jDJg

https://www.youtube.com/watch?v=BCEBU3fa-wk

https://www.youtube.com/watch?v=S27hVnnLBtE
Key differences between CRM and CX
• The permanence of CX operational capability differs from the
transience of a CRM project.
• More time is needed to demonstrate the benefits of a superior CX.
• The association with technology is greater in CRM.
• The focus for CRM is on actions taken; in CX, it is the customer's
perception of the actions.
• A rational approach is more important in CRM; in CX, the customer
emotions matter more.
• A CX initiative typically coordinates several projects, while a CRM
project stands alone
How does a Gartner Magic Quadrant work?
• A Magic Quadrant provides a graphical competitive positioning of
four types of technology providers, in markets where growth is high
and provider differentiation is distinct:
• Leaders execute well against their current vision and are well
positioned for tomorrow.

• Visionaries understand where the market is going or have a vision for

changing market rules, but do not yet execute well.

• Niche Players focus successfully on a small segment, or are unfocused

and do not out-innovate or outperform others.

• Challengers execute well today or may dominate a large segment, but

do not demonstrate an understanding of market direction.
https://www2.deloitte.com/global/en/pages/technology/articles/magic-quadrant-for-crm-and-
customer-experience-implementation-services.html

https://www.gartner.com/doc/reprints?id=1-26JLQSL7&ct=210617&st=sb
Designing Loyalty Programs
Reichheld’s theory
 Case
• A frequent flyer of ABC airline might continue
the relationship because he has accrued
many points and wants to redeem his miles.
Although he intends to travel with XYZ airline
because of its superior quality of service and
experience, he feels compelled to continue
transacting with ABC.
• Reichheld’s theory in practice
 The link between Loyalty and Profits
• Reichheld’s hypotheses

– Long term customers spend more per period over

time
– Cost less to serve per period over time
– Have greater propensity to generate word-of-
mouth
– Pay a premium price when compared to that paid
by short-term customers

• Does not hold true in a non-contractual

relationship
The link between Satisfaction and Retention
 Lifetime Duration-Profitability
Association
• Reinartz and Kumar: Across the different firms,
– there is a segment of customers that is loyal but not very profitable
– there is a segment that generates very high profits although it has
only a short tenure
– Since these short-term customers can be very profitable, it is clear
that loyalty is not the only path to profitability

– Airlines have started moving from “miles flown to

dollars spent”. 45% of flyers stand to lose.
Meaning measure and management of
LP changing
• Identify
• Reward
• Retain profitable customers….
 Loyalty
• Behavioral loyalty: the observed action that customers have
demonstrated towards a particular product or service

• Attitudinal loyalty: the perceptions and attitudes that a customer has

towards a particular product or service.
• Is there a correlation between this two?
• What kind of loyalty does Walmart ‘super catcher app’ create?
• When loyalty involves bribery , its bad for business.
• Confusing loyalty with retention, promotion and rewards undermines
brand equity.
 Loyalty Programs
• A marketing process that generates rewards to
customers based on their repeat purchasing .

• Customer forgoes free choice while entering an LP

• In return accumulate assets (for example, ‘points’)

• Points are exchanged for products and services,

typically but not necessarily associated with the focal
firm
• CRM tool used by marketers to identify, award, and
retain profitable customers
• https://www.youtube.com/watch?v=eA96Hu30g4s
1.Sephora Beauty INSIDER
2.Virgin Atlantic Flying Club
3.Amazon Prime
4.TOMS Passport Rewards
5.Hyatt Loyalty Program
6.Swarm Perks
7.REI Co-op
8.United Mileage Plus
9.Odacité Rewards
10.Starbucks Rewards
11.PetSmart Treats
12.Sweet Green Sweet Rewards
13.DSW
14.The North Face
15.The Body Shop
Key Objectives of Loyalty Programs
• Key objectives of introducing LPs:

– 1. Building true (attitudinal and behavioral) loyalty

– 2. Effiency profits
– 3. Effictiveness profits
– 4. Value alignment
 CRM at Work: Supermarkets -
Difficulty in Building True Loyalty
• Despite spending hundreds of millions of pounds on price-cutting
campaigns and loyalty card schemes, supermarkets
have only persuaded a small minority of shoppers to stay loyal
• According to a report from Mintel Research:
– Only 15% of all grocery shoppers are completely loyal to the store
where they do their main grocery shopping
– 29% use one other store
– 22% use two others
– Men are more likely than women to be loyal to a single store
– 46% of men shop in just one or two main stores
 Efficiency Profits

• Change in buying behavior can be measured,

in:
• Basket size
• Purchase frequency acceleration
• Price sensitivity
• share-of-wallet
• Retention
• Lifetime duration

Any shortcoming to this?

 Effectiveness Profits
• better learning about customer preferences
over time

• firms avoid costly mass marketing expenses,

offers personalized recommendations.
 Eg
• Pizza Chain Earns More Dough in Bad Weather
A pizza chain uses a mobile app and mobile
marketing techniques to deliver coupons
based on bad weather or where power
outages leave consumers unable to cook. This
mobile and location-based marketing
campaign achieves a 20% response rate
 Value Alignment
• Aligning the cost to serve a particular customer with the value he/she
brings to the firm

• Value alignment is particularly critical when there is great heterogeneity

in the customer’s value and in the cost to serve the customer
Example: the airline business, the hospitality industry and the financial
services industry
1000
860

800

600
435

(in $'s)
Revenue

• Example of a firm with a highly

400
per year
161 159
200 Annual

heterogeneous customer base: 0

17

-67
profit

-200
Tier A represents 71% of the customer base Tier A Tier B Tier C

Tier B 42% and Tier C the remaining 27%. Should have 3 typres of LP’s
Loyalty Programs Membership Growth
 Examples of LPs
• Frequent-Buyer programs
– In 2015, Payback, Germany’s largest LP and
couponing platform had 28million member accounts.
– American Advantage is the largest flyer program in
the world.
• Tesco managed to take market share from
Sainsbury with Clubcard with 30%
• Amazon developed Prime. Prime customers
spend 150% more on Amazon after becoming a
member.
 Typology of LP
• Type 1 –supermarket programs. LP open for all.
(Members receive additional discount at register)

• Type 2- Car wash, salon. LP open to all.

(Members receive 1 free when they purchase n
units.)
 Typology of LP contd…
• Type 3 Airlines, hotels, credit cards
(Members receive rebates on points based on
cum. purchases.)

Type 4 Tesco, Harrah’s, Hallmrk

(Members receive targeted offers and mailings)
 Design Characteristics of Loyalty
Programs
• Reward structure

– Hard vs. soft rewards

– Product proposition support (Choice of rewards)
– Aspirational value of reward(Neiman Marcus,
MIG 29)
– Rate of rewards
– Timing of rewards
 Reward Structure

• Hard vs. soft rewards

– Hard rewards: price reductions, promotions, free

products and preferred treatment

– Soft rewards: psychological benefit of having special

status in addition to receiving preferred customer
service
 Reward Structure (contd.)
• Product proposition support
– Reward directly supports the firm’s product proposition

• Example: The US Bagel franchise Finagle-A-Bagel has a LP that allows

participants to redeem their accumulated bonus points for the firm’s
own products – sandwiches and drinks

– Allows LP member to redeem points for products that are

completely unrelated to the focal firm’s offering
• Example: British Petroleum’s LP users may redeem points from their
gasoline-related purchases for merchandise such as first-aid kits,
photographic films, coffee mugs, and Barbie dolls
 Reward Structure (contd.)
• Aspirational value of reward

– Consumers prefer hedonic goods as opposed to utilitarian goods

when receiving a gift or a LP reward

• Mercedes Benz’s LP makes it possible to transform points against a

flight in a MIG 29 combat aircraft

• Neimann Marcus, the US luxury retail chain, gives out each year a new
list of “wow and cool” rewards. These unique rewards include a world
famous photographer to come to a customer’s home for taking pictures
 Reward Structure (contd.)
• Rate of rewards

– Ratio of reward value (in monetary terms) over

transaction volume (in monetary terms)

– How much a consumer is getting in return for

concentrating his or her purchases
 Reward Structure - Timing of
rewards
• Timing of Rewards

– The longer the timing to build up to a certain reward

level, the greater the “breakage” (the amount of
rewards that are never redeemed)

– Customers build up assets that function as switching

cost
 How to Measure Customer Loyalty
1. Customer Retention Rate
2. Negative Churn
3. Net Promoter Score®
4. Customer Effort Score
5. Purchase Habits
6. Referral Traffic
7. Social Media Mentions
Steps in Developing, Implementing, and
Controlling a Loyalty Program
1. Outlining LP objectives
2.Developing a Budget
3. Determining LP eligibility
4. Selecting LP Rewards
5. Considering partnerships
6. Building an appropriate Organisation
7.Developing and maintaining LP Database
8.Managing internal DW and DM capacity
9. Evaluation success/failure of LP
10. Taking corrective action
 Drivers of LP Effectiveness
LP Benefits to
Demand side: Organization
Attitudinal
Loyalty 1.Commitment,
positive WOM!,
Community,
LP Design Demand side: True Loyalty
Characteristics Behavioral
Loyalty 2. Efficiency
Profits:
Greater SCR*
Supply side: or retention
Cost of
Loyalty 3. Effectiveness
Customer Characteristics Program Profits:
Market Characteristics Better value
proposition
Firm Characteristics through learning

4. Value
Alignment
!Word-of-Mouth
*Share of Category Requirement
 LP to Achieve Competitive Advantage:
CRM at Work: Tesco
• Launched the first LP in British supermarket industry in 1995 called Club Card ;
relied on incentive aspect of the loyalty scheme

• Successful in capturing both market share and share-of category requirements in

subsequent years

• Later established segmentation scheme of its customer base

– Sends 80 different versions of its mailing to members and publishes four versions of its
clubcard magazine
– Offers tailored cards to students, families, top customers, seniors, etc

• Aligned its LP offering closely with the specific members’ needs as opposed to
giving out general incentives e.g. Tesco’s Baby club

• Tesco merges information on customer transactions within Tesco’s website and

with point of sale data to customize its product offerings and communications
CRM in B2B Markets

1
 B2B
activities are
beyond the B2C
scene of B2C marketers
experience are learning
Upstream from B2B
interorganisa B2B
tional transaction
trading contributing
to national
economies.
5-8% of GDP
Purchasing
B2B
of public and
exchanges
pvt org are Significance of
have greater
huge. B2B market
impact on
people’s lives
than B2C
 B2B face of Cargill
• We buy, trade, transport, blend, mill, crush,
process, refine, season, distribute around the
clock, around the globe. The firm's product
end up as flour in bread, wheat in noodles,
corn in tortillas, oil in salad dressing, and the
meat on people’s tables.. .Yet Cargill has no
consumer face.
 Realities of Business Markets
• Retaining customers in business markets isn't
just about keeping them in the fold;
companies must also develop relationships
with customers and grow their loyalty over
time. Unfortunately, more than 80% of
companies use satisfaction scores to monitor
customer loyalty.

4
 TM……………………………..RM
• Single sales to customer retention.
• Short term timing to long timescales.
• Product quality to interaction quality.
• Little to high emphasis on customer service.
• Discrete customer contact to continuous
contact.
 Relationship Ladder of loyalty
• Prospect- somebody persuaded to do business
• Customer- done business, once.
• Client- repeat business, neutral.
• Supporter-positive towards vendor.
• Advocate- actively recommends
• Member- great affinity, truly loyal
• Partner- mutual partnership
 B2B RM Framework

Communication
Customer service

Committment

Mutual
Benefit
B2B RM
Trust

Long term perspective.

 Core elements
• Trust
Willingness to rely on an exchange partner in whom
one has confidence
• Commitment
One partner’s belief that an ongoing relationship is
so important that it deserves maximum efforts to
maintain it
 One company that has successfully implemented such
a process is Siemens Information and Communications
(IC). On the basis of a systematic corporate account
management (CAM) program, Siemens IC managed to
transform its organization from an internally focused,
Executive engineering-driven firm to a customer-centric, highly
responsive global company. Applying Siemens’ learning
Engagement can help firms develop a more systematic, interaction
@Siemen’s between senior executives and their counterparts at
customers’ organizations. What’s more, the senior
executives’ actions will significantly accelerate the
business growth rate – an effect ‘‘executive growth
factor”.
 • David Macaulay, President of Siemens IC’s
corporate accounts, took charge of the company’s
strategic customers in 2000, he knew that
unifying the various divisional and national sales
interfaces into a single team and providing
accelerated sales growth, while still improving
Orchestrating profit of course, was a daunting task.
Growth
• 2004, Siemens’ Corporate Account Management
efforts organization has grown by 55 percent. Customers
with which senior executives were systematically
involved doubled their revenues.

• During the same time, the number of strategic

accounts was streamlined by 25 percent, program
costs were slashed by more than half, and
profitability enjoyed significant yearly growth
within the assigned accounts.
 Payoffs

• Increased EODB
• Reduced customer expenditures
• Greater access to Siemens’ resources
around the world
• More customer-focused relationship
(i.e., shifted from mainly pursuing
product portfolio
• Customer-specific innovations, which
have led to a stronger competitive
position.
 • Top executives making regular planned
sales calls on top executives from
customers.

• The whole project TERP took time and

Focus areas after implementation impact went beyond
the scope of the project.

• Named as ‘‘Siemens One’’ initiative.

 Industry bandwidth
• Continuum of buyer-seller relationships
• Transactional, Value-added & Collaborative exchanges

The Working Relationship Spectrum

 Supplier firm strategy
• Flaring out by unbundling strategy.
• Flaring out by augmenting strategy.
 Figure 4.5 - Transactional & Collaborative Working
Relationships
Pure (a) Industry Relationship Bandwidths Pure
Transactional Collaborative
Exchange Exchange
Medical Equipment
Hospital Supplies (e.g. imaging systems)
(e.g. surgical gloves, syringes)

(b) “Flaring Out” from the Industry Bandwidth

Pure Pure
Transactional Collaborative
Exchange Exchange
Hospital Supplies

A B C D

SOURCE: Adapted from James C. Anderson and James A. Narus, “Partnering as a Focused Marketing Strategy,” California Management Review 33 (spring
1991)’ p. 97. Copyright © by the Regents of the University of California. Reprinted by permission of the Regents.
 Flaring Out Strategy
• ‘Flaring out’ strategy (Fig 4.5b) states that the
seller can either unbundle (point A), that is,
reduce the service associated with a lower
price (transactional in nature), or

• Augment by adding more services to the core

offerings (point D) which adds cost to the
services. This is collaborative in nature.
 Spectrum of Buyer-Seller Relationships
Buyers and sellers craft various relationships in response to:
a) Market conditions
b) Characteristics of the purchase situation
 Transactional Exchanges
The business market includes items like:
• Packaging,
• Cleaning products or
• Commodity-type products or service activity
where bidding is employed.
 Collaborative Exchange
 Occurs when alternatives are few, market is
dynamic, the purchase is complex and the price is
high
 Features close information, social, and operational
linkages, as well as mutual commitments
 Switching costs are extremely important to
collaborative customers
 Trust is the key and it exists when one party has
complete confidence in their partner’s ability and
integrity
 Why Retain Loyal Customers?

Established customers buy more.

Cost of serving loyal customers declines.

Less expensive than acquiring new customers.

• Flaring out by augmenting strategy
PENSKE’S LEASEWAY AUTO CARRIERS flared out to create
collaborative offerings in a market populated with transactional
offerings. As a part of its service to GM, Leaseway hired Op
Researchers to build a model for GM’s physical distribution
requirements. Based on this model Leaseway designed a
program to help GM schedule shipping routes, select car models
for shipping and determine optimal sequence for offloading
cars at GM dealers to minimize potential damage and delivery
time.. The computer model is highly interfaced with GM’s
inhouse computer systems and can be utilised to troubleshoot
emergency problems. Although Leaseway has a 30 day contract
with GM, that contract has been in effect continuously for over
35 years. Leaseway remains a major supplier of trucking services
to GM
 Strategic Sourcing/Procurement

H
Sup
ply
diffi Customized Strategic
cult
y solutions
and
co
mpl
exit Non Commodities
y
Strategic

H
L Rupees expenditure
 Extended Enterprise alliances
• DaimlerChrysler develops, implements, and
monitors commodity and supplier strategies for all
main automotive commodities worldwide material
or product groups such as flat glass, aluminum
body panels, door trims, or hydraulic brake
systems.

• Deciding on the type of relationship is an

important part of the company’s global
procurement and supply (GP&S) strategy process.
Management of Relationship Portfolio
• How many suppliers to have for each material or product category?

• The supplier mix (parts ,component module and system suppliers in

portfolio)

• the regional distribution of suppliers that is, the ratio of domestic to

foreign suppliers and their distribution
in economic regions (dollar, yen, euro)

• supplier risk — that is, the risk of one or more suppliers

in the portfolio not being able to provide the expected input.

the proportion of ISO 9000-certified suppliers

 The decision is based on criteria

1. share in value-adding costs

2. dependency on supplier’s technical know-how
3. buyer’s own know-how about specifications
and design for a given technology or product
4. number of possible suppliers
5. costs of changing to another supplier, and
general barriers to switching
6. supplier’s negotiating power, or supplier power
in general
 Extended Enterprise – Daimler
Transaction Coordination Cooperation Alliance
(market-based (selective (selective (strategic
competition) competition) partnership) partnership)
Operational types Strategic types
Relationship Data Exchanging Transferring Building up to
based on information know-how specialist
knowledge
Relationship lasts Transaction Annual contract Series life cycle Life cycle and
for beyond
Extent of joint Suppliers not Integrated into Integrated into Several depts
commitment integrated NPD to limited NPD to limited integrated, joint
extent, via well- extent, interfaces NPD, investment
defined defined jointly in joint assets
interfaces
Examples Office supplies Mouldings Exhaust systems Fuel cells
 Systems Buying & Selling
The Indonesian government requested bids to build a cement
factory near Jakarta.

• An Australian firm made a proposal that included choosing the site,

designing the cement factory, hiring the construction crews,
assembling the materials and equipment and turning over the
finished factory to the Indonesian government.

• A Japanese firm, in outlining its proposal, included all of these

services, plus hiring and training the workers to run the factory,
exporting the cement through its trading companies, and using the
cement to build roads and new office buildings in Jakarta. Although
the Japanese proposal involved more money, it won the contract.
 Switching Costs
• A major consideration before changing from one supplier to
another is the switching costs.

Investments include:
1. Money
2. People
3. Training Costs
4. Equipment
5. Procedures and processes
How are CP,
CLV and CE
related?
The Whale Curve
 Whale Curve & Profitability
• 20/80 Rule says “20% of customer provide 80%
of sales

• Whale Curve reveals:

– 20% of customers generate 150–300% of total profits
– 70% of customers break even
– 10% of customers lose from 50-200% of total profits
– Leaving company with 100% of total profits
 Customer Profitability
• Accurate tracing of costs to individual
customers
• The profitable few
– Large customers – most/least profitable, seldom in the
middle
– Low cost-to-serve customers – profitable
– High cost-to-serve customers – unprofitable, unless paying
premium for specialised services received
 High- vs. Low-Cost-to-Serve Customers(MSDA)
High-Cost-to-Serve Customers Low-Cost-to-Serve Customers

Order custom products Order standard products

Order small quantities Order large quantities

Unpredictable order arrivals Predictable order arrivals

Customized delivery Standard delivery

Frequent changes in delivery requirements No changes in delivery requirements

Electronic processing (EDI)
Manual processing
(i.e., zero defects)

Large amounts of presales support Little to no presales support

(i.e., marketing, technical, and sales resources) (i.e., standard pricing and ordering)

Large amounts of post-sales support No post-sales support

(i.e., installation, training, warranty, field service)

Require company to hold inventory Replenish as produced

Pay slowly (i.e., high accounts receivable) Pay on time

Source: Robert S. Kaplan and V.G. Narayanan, “p. 8. Measuring and Managing Customer Profitability,” Journal of Cost Management 15, No. 5
(September/October 2001):
MSDA expenses distribution in CLC

Acquire M S D A

M S D A
Develop

M S D A
Retain

S D A
Exit
Measuring Customer Profitability

• Activity-based costing (ABC) is a technique that

allocates the cost of performing various services
to each customer (customer-specific costing).

• Through Customer Relations Management

(CRM) programs, one can relate revenues and
costs to each and every activity.
 Customer Cost categories in ABC
• Transaction specific cost
• Customer specific cost
• Support costs
• Cost to serve (CTS) is the sum of total pre sale,
order related distribution and post sale service
cost required to maintain an ongoing
exchange relationship.
 Customer Profit
• Anticipated (or actual) profits to be generated
from doing businesses with the customer. It
can be direct and indirect customer profits.
Direct customer profit (DCP) is a financial
benefit contributed directly from the
customer, e.g., profits earned from sale
transactions. Indirect customer profit (ICP) is
the imputed financial benefit(s) derived from
the customer due to referrals.
Customer profit (CP) = direct customer profit
(DCP) + indirect customer profit (ICP)
 CP/CTS Ratio
• Therefore, CTS should be measured in terms of
customer profit (CP).
• Firms should always ask: how much profit the firm can
earn for each rupee/dollar of CTS spent?
• Linking profit to CTS forms a rational basis for customer
performance evaluation.
• CP/CTS ratio indicates the profit to be earned on each
dollar of CTS .
• High CP/CTS ratio means high efficiency of CTS in profit
generation, whereas low CP/CTS ratio means the
contrary.
• Negative CP/CTS ratio?
 Customer Performance Management
Grid(CPMG)
• Yardstick to manage customer performance.
Average or Target
Safety Zone Value
Champion

CP/CTS
Ratio
Alert Zone Value
Defenders

Individual CTS

Danger Zone
Value
exploiters
 Caselet
• Kanthal a heating wire manufacturer, learned that GE’ Appliance
Division was one of the most unprofitable customers. A customer
order that normally would cost Kanthal $ 150 to process cost more
than $600 from GE because of frequent changes, expedited
deliveries and scheduling adjustments. A senior manager at
Kanthal suggested GE that such order changes were turning costlier
to both. After a quick internal review GE corrected internal
inefficiencies and awarded Kanthal with largest contract in the
firm’s history. The contract involved a surcharge for any change GE
made in an existing order and established a minimum order size. By
isolating the true cost of serving GE, Kanthal converted an
unprofitable relationship to a profitable one and provided further
value by helping a key customer reduce costs.
 Options to raise Customer Profit
Some customers are profitable, and some aren’t. To determine this,
we look at the cost/profitability structure with the plan to:
1. Manage each customers CTS to a lower level.
2. Establish surcharge or reprice expensive CTS activities
3. Reduce services.
4. Introduce new product and service lines.
5. Raise prices.
6. Offer customer profit positive service level options. Upsell/cross
sell
Customer Profitability

High

Passive Costly to service,

Product is crucial but pay top
Net Margin Realized

Good supplier match dollar

Price-sensitive but Aggressive

few special Leverage their buying power
demands Low price and lots of
customization
Most challenging
Low
Low High

Cost-to-Serve

SOURCE: From “Manage Customers for Profits (Not Just Sales)” by B.P. Shapiro et al., September-October 1987, p. 104, Harvard Business Review.
 Firing the Customer
• We must try everything to make a customer
profitable before firing them.
• If after trying, and the customer continues to be
reluctant to change, and the relationship remains
unprofitable, we can say outright, “YOUR FIRED!”
but…
• There are better approaches. We can let customers
‘fire themselves’ by raising our prices, reducing or
charging more for services, eliminating discounts,
etc., until they become profitable or find another
distributor.
 Network
• Situated/embedded in a network of relationships
• Networks improve value and cut costs for the
customers
• Change in mindset: From control to
interdependence
• Extends capabilities beyond the boundaries of the
firm.
 Value Net

The Value Net Source: Brandenburger and Nalebuff, 1997

 Evolution of Networks
• Relationships  channels  supply chains 
networks
• Marketing & purchasing distinction is
meaningless - seamless, iterative process
• Purchasing can overlap with product
development, marketing planning
 Supply
chain Supply
network

Inter-
organisational Marketing
Relationship Channel
Industrial
Network

Distribution
network
 Network Industries
• Telecom
• Broadcasting
• Finance-ATM, bank, payment systems, clearing
houses
– Exchanges – stocks, derivatives, commodities
• Airlines
• Multi-sided platforms(MSPs) –Uber, Alibaba
mediate user interaction, differ from linear
control of activities across value chain.
 Network Industries
• Telecom
• Broadcasting
• Finance
– ATM, bank, payment systems, clearing houses
– Exchanges – stocks, derivatives, commodities
• Airlines
The Media Industry - 2001
The Media Industry - 2006
 Alliances
• Non-competing firms
– International expansion – Renault & Diesel Nacional
(Mexico)
– Vertical integration – Aerospatia & Thomson
– Diversification – BMW & Rolls Royce
• Competing firms
– Shared supplier alliance – Volkswagen & Renault
(gearbox)
– Quasi-concentration alliance – BAE, EADS Systems,
Alenia (Tornado fighter)
– Complementary alliance – Tata & Fiat (distribution)
Sales Organization around relationship

• Motorola Semi conductor Products sector

organise around relationships. The div has 4 FSF
• MSMSF(Mot . Strategic Mkt. Sales Force): Tech
engineers, sales engineers, application and
quality engineers, service personnel.
• MGSF: call individual customers
• MDSF: manages trade
• MISF: telemarketing, incoming orders via
phone,fax
Types of CRM
 Time-line of CRM Evolution
1st Generation (functional CRM approach)
• Sales force Automation (SFA)
Pre-sales functions, prospect management, telemarketing, lead generation,
sales quotation, placing sales order.

• Customer Service and Support (CSS)

• Help desks, contact and call centres, field service support combined SFA/CSS
market niche small
• Market for ERP growing
CRM Evolution (contd.)
2nd Generation (customer facing front-end approach)
• CRM technology filled the gaps left in ERP
• Goal was single view of customer irrespective of purpose of contact/mode of
contact.

3rd Generation ( Strategic CRM) End 2002

• Integration of customer-facing front-end with back-end systems as well as web
integration.

• 4th Gen: Social CRM: Facebook, Twitter, LinkedIn, Second life and other
engaging social media networks, enable a more precise segmentation
Social CRM

Collaborative

Analytical

Operational
Operational CRM
• Automates communication with customers and connects to customer
touch points.
• Function like call center, order processing, online transaction, website
mgmt., changing data collection process and data management.

• Includes installation of hardware/software upgrading, reconfiguring IT

infrastructure.

• Directly these projects do not produce revenue, if successfully done,

provides data for CRM projects
https://www.youtube.com/watch?v=F5dPvfvEjIk
CRM software demo

• https://youtu.be/IMAXKV47zg4 (Salesforce Training 17 min)

• https://youtu.be/gkQ3-tWkerY (Managing leads SF 16 min)

• https://youtu.be/MUfriLR2XTA (SF Training for Beginners (Part-3)

• https://youtu.be/f1AMkMQw-p4(Salesforce Tutorial 3hr)

 Operational CRM : Infrastructure
Involves ...automation of processes involving customer touch points.

CRM solutions :
• Electronic Point of Sale (EPOS)
• https://www.youtube.com/watch?v=5LhqY_jIMnM

• Sale Force Automation(SFA)-

• https://www.youtube.com/watch?v=suBmMoadDdo
• https://www.youtube.com/watch?v=1tuWJ1qzhN4
• Customer Service Support(CSS)
• https://www.youtube.com/watch?v=ktYPUwEVSf4
• https://www.youtube.com/watch?v=SzRiR1T1LQ0
• https://www.youtube.com/watch?v=Ot4wh15M5mI (ZOHO)

• Call Centers

• Campaign Management (CM)

• https://www.youtube.com/watch?v=pXwKUnQa5Ec (Agile)
• https://www.youtube.com/watch?v=5bJk5ibxZFE (Salesforce)
• https://www.youtube.com/watch?v=fRtVhFI0zVQ (Dynamics 365 CE CRM)

• https://www.youtube.com/watch?v=sxOibuTUGjQ (Hubspot)
• https://www.youtube.com/watch?v=vRFQDmRkCv8&t=38s (Lead scoring SF)
• https://www.youtube.com/watch?v=E6FPQA1pcGU (Dynamics 365 Sales (CRM)
Analytical CRM
• The only sustainable competitive advantage is the ability to learn
faster than your competition and to be able to act on the learning.

Jack Welch….former CEO GE

Analytical CRM
• Blends the customer data collected in Operational CRM with data
from external sources in order to increase companies' knowledge and
understanding of customers, products, and transactional data to
improve strategic decisions.
Analytical Projects
• Leverages resources created by operational projects

• Helps determine customer strategy and development of on-

going CRM strategy

• Major activities:
• Customer data transformation- data warehousing, data
integration
• Customer knowledge discovery-data analysis, prediction
based on results
Analytic Competitors across industries
CPG BFS Hospitality& Industria Pharma Retail Telecom Transport eCommer
Entertainment l ce
Products
Anheuse Barclays Harrah’s Cemex Astra Amazon Sprint Fedex Google
r entertainment Zeneca
Busch
Mars Capital Oakland A’s John Solvay TESCO O2 Schneider Netflix
One Deere National

P&G RBC Marriott Vertex JCPenny UPS Yahoo

Gallo Progres New England Walmart

Winery sive Patriots
Core of Analytic CRM
• Expansion of customer knowledge and its application in customer
contacts. It constitutes
• Relationship data
• Data Mining
• Segmentation and selection
• Cross selling & Retentions
• Marketing effectiveness
• Reporting
Analytical CRM projects
• Customer demographic analysis and customer behavior
modeling

• Define customer segments to form basis for differential marketing

decisions
• Analysis of customer transaction history
• Analysis of customer service records
• Prediction of future purchase behavior

• Customer value assessment

• Focus resources on most valuable customer relationships
Attributes of Analytical CRM
• Distinctive capability, strategic.
• Enterprise wide approach and management of analytics.
• Senior management commitment
• Large scale ambition
Analytics in Use
• Netflix: predicting customer’s movie preference.
• Harrah’s: customer loyalty
• Marriott International: Revenue management
• Capital One: customer desirability.
• Walmart: supply chain analytics
• Professional sports team: choosing the right players
• Progressive: High FICO score will pay less premiums
• US elections 2012: us of big data
Collaborative CRM
• Focus on exploiting interaction with customers through customer
touch points for enhancing customer self service.
Applications of Collaborative CRM
Responsible for gathering data through various channels (fax, phone,
web, email, chat) of communication of the enterprise with the
customer.

It manages the data in a way that facilitates interactions with

customers.

Collaborative CRM employs new communication systems, such as

web forums, Voice over Internet Protocol (VoIP), and chat rooms.
Social CRM
• Is the integration of social media channels into CRM platforms.

• Increasingly, CRM platforms support social media alongside

traditional channels so customers can interact with businesses via
their preferred channels.

• This means better customer service and greater marketing insight

gathered from customer social media data.
Social CRM-Case of Bosch
• The firm provided a social media service - the ‘Bob Community’ - which is accessible
from its website. Bob Community had attracted 460,000 visitors with 35,000
registrations. By comparison, its new company Facebook page had attracted 4,000 fans.
• Bosch needed to determine whether its investment in Facebook was reaching the
desired demographic, and to measure the value of its Facebook fans compared to that of
Bob Community users.
• Using this data, Bosch could then allocate the right amount of marketing resources into
each channel and produce a focused social media CRM programme.
• The company also aimed to build relationships with key customers who, it felt, would
significantly influence the purchasing behaviour of other Facebook fans and visitors to
the fan page.
• The challenge was to foster a relationship with these ‘brand advocates’, and to continue
to facilitate positive interaction amongst the community, through an increasingly focused
social media programme.
Components of CRM Strategy
1) Customer-Management
Orientation

4) CRM
Strategy
Implementation

2) Integration and 3) Information capture

alignment of and alignment of
organizational processes technology
CRM Implementation Matrix

Customer dimension (CLC stages)

Acquisition Growth and Decline and

stage retention stage exit stage

Analytical
CRM

Management
Operational
Dimension
CRM

Each cell in the matrix corresponds to a specific implementation activity or process

Customer dimension: captures influence of changing phase of a customer-firm
relationship
Management dimension: constitutes analytical and operational aspects of CRM
Implementation Issues

• Resistance from employees

• Motivation and Training

• Availability of information
CRM@Employees
• CRM Strategy is increasing employee satisfaction
to increase customer satisfaction

• Internal Marketing (IM)-treating employees as if they were

customers- involves:
• Improving management style
• Improving recruitment practices
• Integrating all employees into the planning cycle
• Refocusing training on interactive and service skills
• Open communication lines and empowerment of front-line staff
CRM Failure and the Seven Deadly Sins

• Focusing solely on technology.

• Losing sight of customers.
• Ignoring customer lifetime value.
• Lack of management support.
• Undervaluing data analysis.
• Underestimating change management.
• Inflexible business processes.
CRM & Marketing Channels
“Despite the prevalence of new advertising and promotional channels
and significant investments in data and technology, marketers are still
struggling to generate and to prove sales results in an increasingly
omnichannel world”.

Eric Solomon, Senior VP Nielsen 2018

Pre-Internet and
Pre-Digitization
era role of
channel
Emergence of of multichannel world
Scope of Multi channel Marketing
• Scope of MCM grew beyond fulfillment to whole gamut of
interactions between firm and its customer.

• ‘Design, deployment, coordination and evaluation of the channels to

enhance CUSTOMER VALUE through effective CUSTOMER
ACQUISITION, RETENTION and DEVELOPMENT”

• Every stage of CJ can be performed by specific channel. Creating a

portfolio of channels. Allows customer to self select channel.
How multi channel worked
• There have never been more ways to connect with customers.
• A customer checks a bill online, following up minutes later with
an email to report an unresolved issue. Not satisfied with the
automated response, she calls the service center, and while on
hold for 10 minutes, tweets about the company and updates
Facebook friends about the ordeal.

• These channels have not been synergized.

Multichannel ----------------- omnichannel
• Unified CX rather than facilitating transactions.
• Set of channels should align with the way customers search, purchase,
consume and share their experiences.

• Omni channel Marketing: synergistic management of all customer

channels and touchpoints both internal and external to the firm to ensure
that CX across channels as well as firm side activity, including marketing
mix and marketing communication (owned, paid, earned) is optimized for
both firms and its customers.
• Objective function may be increased share, profits and CLV.
• According to Forrester Research, the term omni-channel is defined
as the strategic coordination of all channels—including online,
offline, paid, owned, or earned—as determined by a brand’s context
and channel mix. Average consumer requiring up to 13 unique
touchpoints before converting.

• a consumer is driving along the highway and notices a billboard for a

particular product. Sometime later, he notices a TV ad for the same
product. Curious, he begins to research the product on his phone.
Later on, he sees a retargeting ad on his computer. From there, he
makes the decision to walk into a brick-and-mortar location and
purchase the product.
• https://www.youtube.com/watch?v=xwE218NqM2o (Ford case)
Adrian Payne’s Framework
CRM and Marketing Channels – Channel
Types
Offline Channels

Indirect Channels

Online Channel

Channel Types

Offline Channels

Direct Channels

Online Channel
Customer Relationships:
Direct & Downstream
DIRECT RELATIONSHIP
Goods
TITAN
Information
Manufacturer End Customer
Dollars

Goods Goods
Information Channel Information
Dollars Intermediaries Dollars

UPSTREAM DOWNSTREAM
RELATIONSHIP RELATIONSHIP
(from channel perspective) (from Channel perspective)
CRM and Marketing Channels – Indirect Channels
Indirect customer relationship management requires the use of an intermediary to manage the end-customer relationship indirectly. For
example, Henkel sells its products through supermarkets.

Firms have created direct channels

Patanjali, Amul
Cadbury.co
Lakme.com
HUL.com may be? Advantages Disadvantages
1. Managing channels through 1. Lack of control over
specialized intermediaries the intermediary‘s
CRM activities
2. Use of existing channels
(less costly) 2. Need of intensive
3. Private label’s in conflict intrachannel coordination
with national labels
CRM and Marketing Channels – Direct
Channels
Direct customer relationship management does not include an intermediary; product information is communicated
directly to the consumer. E.g., In 2006, Nivea opened its first company-owned store in Hamburg, Germany.

Direct online channels are a

Direct offline channels can enhance
low-cost alternative to achieve
loyalty due to the ability to create
coverage and a valueable
social and economic bonds with the
source for customer
customer. Pseudo relationships/brand
information.
equity. Advantages Disadvantages
1. Control of CRM activities 1. Implementation of direct
2. Direct contact with customer channels costly Challenges / Disadvantages:
Challenges / Disadvantages:
guarantees service/ 2. Need to develop  Price focus of customers
 Channels are very costly. Thus, information quality channel-specific skills
 Low switching costs
firms increasingly switch to
electronic channels and/or develop
customer self-service strategies
(Payne & Frow, 2004).
Born direct
• Warby Parker
• Everlane
• Casper
• The Honest Company
• Mamaearth
• Wow Science
• Cure fit
CRM and Marketing Channels –
Multichannel Trends
1. Proliferation
of direct
channels
SST

4. 2.
Research Multichannel Multichannel
shopper Trends systems as a
phenomenon norm

3.
Multichannel
shopper
KEY QUESTION
• What are the best ways for firms to get to customers and for
customers to firms?

• What does a perfect customer experience look like?

Seamless, consistent digital and physical experience becomes
paramount – this separates retail company "winners" from "laggards,“.

Continuous touchpoints between physical and digital environments,

across stages of customer decision journeys.
Omnichannel Integration

The integration of channel functions helps to enhance customer

loyalty
 The integration of channel functions refers to the combination of service
outputs from various channels. E.g., H&M allows customers to return their
online purchases in any store

 Channel integration allows firm to gain access to more customer data and to
learn from recorded customer behavior

 Channel integration thereby increases customer satisfaction and loyalty

https://www.usatoday.com/story/money/business/2013/03/12/savvy-small-
business-bonobos-pants/1916885
Challenges
• Data challenges
Firms such as REI carefully plan for their customer experience to be unified across all touchpoints. While REI has a
large physical footprint, it is mobile-centric app encourages its customers to use the app. For instance, if a customer
clicks on a product in an email from REI and installs the mobile application, the app will note which nearest store has
the product in stock. In addition, when customers visit a store, they are strongly encouraged to join the store Wi-Fi,
log into the app, and check product availability. Disney and Bank of America are examples of other companies that
have carefully integrated the customer experience across different channels (Fontanella 2020)

• Marketing Attribution challenges

• Multichannel marketing-marketing investments are optimized on a channel-by-channel basis.
• Omnichannel setting, such optimization needs to be done jointly across all distribution and communication
channels.
• Purchase funnel has many stages, traversed in a non sequential manner.

• Customer privacy
CRM and Multichannel Management –
Multichannel Shoppers
1. Multichannel shoppers are more loyal
 Their service output demands can be easier met as multichannel shoppers choose the
most appropriate and convenient channel for each transaction

2. Multichannel shoppers spend more money

 They see advertisements more frequently through various channels

3. Multichannel shoppers purchase more frequently

 Shopping is possible in any situation

4. Multichannel shoppers are typically heavy users

 Customer self-selection: More profitable heavy users tend to purchase from multiple
channels (Neslin et al., 2006)
CRM and Multichannel Management –
Multichannel Shoppers
It is important for firms to identify multichannel shoppers to increase profits

High
degree of
cross-
buying
Active
Large
initiation
number of
of firm
channels
contact
Drivers of
multichannel
shopping
High level
High
of web-
purchase
based
frequency
contacts

Customer
tenure
 Change…in channel management
• Disintermediation in( Dell)

• Reinter mediation: emergence of new types of intermediary

with the use of technology.(Infomediaries)

• Reintermediaries in automobile industry.

Implementing CRM

1
CRM strategy and Vendor
business plan, evaluation &
process planning, Tech
ROI selection

Prioritizing staff
planning
 1.Implementation Readiness
Assessment
P
r
o C
j h
e
Strategy Development a
c n
t g
Enabling Processes e
M
Value Creation Multi channel Integration Information M
G
Management g
M
T m
Employee Engagement t

Performance Assessment
 Implementation Readiness Assessment
Driven by Enterprise CRM maturity vis-a-vis others understood by importance of
data and audit processes.

5 levels of CRM maturity

1.Pre CRM Planning

Acknowledge importance of data but no processes.

2. Build Data Repository

Build and maintain DW
Collect and clean and deduplicate data.
Pilot DW or small data marts.
Support operational CRM/ visible CX efforts.
Centralize data, identify who their customers are.
Multiple records, missing or out of date addresses are addressed.
Involves collecting and integrating.
3. Moderately Developed CRM
Full DW used in functional area.

Tools like SFA, Call Centre and Computer –Telephony

Integration , Campaign Management used. Visible CX
efforts

Tasks like customer profitability performed.

Segmentation issues, Identify and cluster.

Clustering around profitability.

Efforts towards acquiring similar customers.

Data from Brand communities, affinity groups.

4. Well Developed CRM

Enterprise wide DW, widening userbases.

Strengthen SFA/Contact Centre.
Integrate data from Social media , engage with customers
in a proactive manner.
Customer prioritization.
Deeper understanding of profitable customer.
Sophisticated segmentation tools.
Campaign management is selective .
5. Highly advanced CRM
Best in class
Application of neural networks and GA
Refine data, learn new insights.
Advanced segmentation, granular approach.
Predictive modeling
Data visualization.
Implementation Checklist
1. Develop CRM strategy
Situation analysis
Commence CRM education
CRM vision
Set priorities, goals and objectives
Identify contingencies, resources and people
Seek board approval
2. Build CRM Foundation
Establish governance structure
Identify change management process
Identify project/programme management needs
identify CSFs
develop risk management plan
3. Needs specification and partner selection
data review and gap analysis
process reengineering
technology needs
write for RFP’s
call for proposals
assessment and partner selection
4. Project Implementation
refine plan
prototype design
 identify technology customization need
5. Performance evaluation
project outcomes
Business outcomes
Barriers to Implementation

Lack of skill
Inadequate investment
Poor data quality
Functional boundaries
Leadership issues
Inadequate measurement systems.

Change Management
7’S Framework Mc Kinsey
7’S Framework Mc Kinsey
Utilising CRM technology solution
Selecting CRM vendor

Key segments for CRM applications architecture types include:

CRM suite (MS, Salesforce.com, Siebel)

Enterprise suite (Oracle SAP)
CRM best of breed (SAS)

CRM service providers and consultants

CRM strategy (Peppers and Rogers)
Change Mgmt (Accenture)
BT (IBM)
Business Analytics( SAS, Dunhumbey)
Ranking of vendors based on
Risk
Functionality
Technical complexity integration
Total cost of ownership
Implementation timescales
Track record
Employee Engagement

Customer experience is dependent on front line people.

34% are truly loyal, 8% accessible, 31 % trapped, 27% are high risk

Selecting employees
Emotional intelligence

Developing Employees as lifetime partners

Engaging and empowering, focus on internal marketing
 DEFINING A CRM STRATEGY
• ‘Customer-centricity’ a pre requisite for successful implementation of
CRM strategy

• Involves top management along with cross functional units.

• CRM implementation requires change management because almost all

aspects of a business, viz., processes, goals, orientation, focus, technology,
performance and effectiveness metrics are subject to change.

• CRM implementation requires defining the programs such as account

management, retention marketing and others.

13
CRM IMPLEMENTATION ROAD MAP

Technology and Vendor

Scenario Analysis
Selection

Purpose and Objectives Solution Development

Business Planning Implementation

Process Design Measurement

14
Organisation/Governance structure
• Appointment of CCO,CIO,CMO
• Formation of steering committee
• PMT
• Project Teams
Role of IT in
CRM
Biswajeet Mahapatra
 Introduction

Biswajeet Mahapatra

25 + years of experience in the industry. Worked in 1995 – Btech Engineering from Saurashtra University
companies like Gartner, HP, Oracle, Novell and Baan. (Gold Medalist)
1 Have been a CEO of Trasers, CTO of SAPG, CEO and
3 2011 – PGDM – PT XIMB (Gold Medalist)
Founder – muecio.com

Built startups, advised CXOs across the globe on Email: mbiswaje@gmail.com,

various aspects of Technology, & Processes, biswajeet.mahapatra@meucio.com
2 implemented ERP projects, sold Applications and 4 Linkedin :
research, published more than 100 papers https://www.linkedin.com/in/biswajeetmahapatra/
Agenda
01 CX and its importance
CX as a Superset of CRM, CEM Tools, CEM Maturity Model

02 CRM & its Linkage to CX

Basics of CRM, timeline, Maturity Model, Gartner Magic
Quadrant, Key Players, Functions and Feature & Pricing.

03 Social CRM & Implementation

challenges
Using Social CRM in Business, Setting up Whatsapp /
Instagram/ FB Business Channels

04 Blockchain in CRM
Provides enhanced security, data cleansing, and better
transparency
 Customer
Experience
And its Role in the Enterprise
CX and Customer Support
Best in class companies optimize customer journeys and not touch points
CRM and CX relationship
 CEM & CRM comparison

What When How Monitored Who uses the info. Relevance

Captures & distributes Surveys, VoCs Locates places to add

Business or functional offerings in the gaps
what a customers At customer touch research, targeted
CEM

leaders to create between expectations

thinks about the points studies, observational
better CX & experience
company research

Captures & distributes Drives cross selling, by

Point of Sale data, Customer facing group,
what a company After there is a bundling products in
CRM

market research, such as marketing,

knows about a customer interaction demand with ones
website click through sales, field marketing
customer that aren’t

Customer experience, is your customers’ holistic perception of their experience with your business or
brand.
Why is Customer Experience Important

Compete on Basis of CX 89%

Companies plan to compete primarily on the basis of Customer Experience - Gartner

Buyers are willing to pay more 86%

For the CX but only 1% feel that the vendors consistently meet their expectations - Forbes

Increase in Profitability 25%

Can be achieved by multichannel integration, as a key component of Customer Experience - Oracle

Customers feel CX is important 89%

From a Brand Loyalty perspective - eConsultancy

Customers stop interacting 86%

And buying from businesses where they had a bad customer experience – Harris Interactive

CX is more important than Price 64%

People feel Customer Experience is more important than price in their choice of Brand. - Gartner
What impacts CX ?

Measuring CX:

•Customer Effort Score (CES)

•Net Promoter Score® (NPS)

•Customer Satisfaction Score

(CSAT)

•Time To Resolution (TTR)

Ideal CX measurement system puts journeys at center and connects them
with other elements
Customer Experience needs to be mapped throughout the customer journey.
A typical Customer Journey Map – When buying software online

Phase Awareness Research Purchase Install Use Support Upgrade / Discard

C. Activities Friends, Browsing • Compare & evaluate • Look at various • Download online • Run files • Locating place to download • Choose a new upgraded version
online, Ads, social options/ alternatives online and offline • Install from USB/ CD • Use • For Installation • Forced to upgrade
media • Look for how and options • Usage related issues • Move out finding a better product
where to buy • Uninstall/ reinstall issues • Don’t need it anymore.
C. Goals No Goals at this Find the best suited Order effortlessly Download effortlessly Use as intended Resolve issues smoothly • Move to a better product
point product Re-install effortlessly without any issues • Remove any irritants or issues

Touchpoints Social Media, Ads, Web, Mobile, social Web, Mobile, Store Laptop/ mobile/ server Laptop/ mobile/ Support/ Call center, online Support/ Call center, Online web
Word of Mouth media, WOM server portal portal

Experience 5

Business Increase awareness Increase website visitors Increase online sales Readily available Product matching Increase customer satisfaction Increase conversion rates, turn
Goals online and conversion rate products to download expectations rate, Reduce waiting time, First customers to advocates
and install Call Resolution rates to be high

KPI Number of People Analytics Score, new Shopping cart value Customer installation Unaided customer Customer Service Success Rate, Conversion rate, retention rates
Reached website hits conversion rate success rates usage rates FCR time

Org Create Marketing Create Marketing Optimize Purchase Smooth Installation, Build simple and Create responsive customer Create awareness about new and
Activities content both online campaigns and content cycle, simplify the Proper guidelines and easy to use support and call center, simplify upcoming products, create
and offline both online and offline buying process instructions available, call products, self process to reach out to retention benefits programs.
center numbers explanatory customer support
provided processes

Responsible Sales and Marketing Marketing and Sales Product Development Product Customer Service and Support Customer Service, Support and
Communication and Support Development Marketing and Sales
CX encompasses both digital and physical touchpoints
Categories of CX tools - Bain
Direct Relation between tool adoption & financial performance
Adoption of CX tools
 Customer
Experience
1. Real life examples
2. Maturity Model
3. Application features
Airlines – Emirates/ Indigo and SpiceJet
Spicejet
Emirates Airlines and Indigo
BSNL – Money Return through PMO – Manmohan Singh

BSNL Follow up PMO Office

Landline connection in Hyderabad
For 2 years Wrote all details

No response after writing many mails

We had a Landline connection in to BSNL Hyderabad, talking to various PMO office had an online Redressal
Hyderabad. When we moved to departments Forum wherein anyone can post their
Bangalore, we surrendered it and were issue with all details. I did that. Did not
expecting INR 3000 deposit back expect anything.

Call from BSNL Money Returned

BSNL Hyderabad Within a week of the call

calls
After a month BSNL Hyderabad Not only I got a cheque from Hyderabad
called me and apologized. They also BSNL but they also called up to ensure I
mentioned they were called up by have received the money
PMO and I should not have gone
that far.
Gas Agency – HP Gas Agency – Maruthi Gas Bangalore

1. Gas Agency 2. Gas Booked 3. Threatened

Maruthi Gas agency (HP) in
Bangalore
Regular Client of Maruti Gas. But
cylinder was never delivered on time.
Delivery boy use to resell at higher
price
Automated IVR Booking
Booked the Gas through phone but
was never delivered, again rebooked,
same issue. Called the agency they
said it was already delivered twice,
now cant book again
Threatened by Agency
On a personal visit by my wife, the
delivery boy personally threatened and
said no one will ever deliver to our
house. We can do whatever we want

4. Wrote to 5. Gas Delivered

Chairman
Mail to Chairman Same Delivery boy delivered

Frustrated I wrote to the Chairman Within one hour of the mail, the same
of HP. Immediately within 10 mins delivery boy was at our doorstep fuming
his PA called me and understood and grunting. He delivered the cylinder
the situation without any extra charge and went .
LG – Microwave

1. LG 2. Complained to LG 3. Deccan
Chronicle
Microwave bought
Generic Response Published in Newspaper

They sent technician who could not

Got a Microwave for INR 18K but figure out, then they started giving Published our experience in Deccan
whenever we tried to make Pizza it excuses need some other part, Chronicle with all details
stopped. Realized it was not going waiting on factory, then started
above 180 degree, avoiding our calls

4. Immediate 5. Replaced
response
South India Head at New Microwave
home apologizing
Immediately got calls from LG, South After 3-4 days they sent a new
India head was at home apologizing, Microwave with a sorry note.
Technician checked our system and
said Microprocessor needs
replacement. and took it away.
Trident Gurgaon – Oberoi Group

Regular Visitor Not up to mark Feedback

Exceptional Service
In one visit Gave a rating of 3

Whenever I used to order room I needed lunch on time as was

rushing out for a meeting, Not only On their feedback mail I gave a rating
service, if it was late by even 5 mins
food did not come on time, I of 3. Normally I used to give a rating of
they used to call in advance and either
reminded them many times, and after 5 but this time due to this experience I
make the meal free or send some
it was late I could hardly finish it gave a 3
complements

Call Back Free Stay

After I came back Offered Free Stay

to Dubai
Oberoi called me up to understand the
3 nights free stay with them, when I visit
reason and I gave them a proper
next time, I never availed the offer but
explanation. They profusely apologized.
this left a good taste about them.
Not just that their manager also called
and sent a sorry letter.
Northwest Airlines

Return Flight No Help Hotel issues

Amsterdam - Mumbai
No information Did not allow anyone

Morning flight 10:30am, boarded the We were left in the airport for 2 more
hours with no information, then asked to Hotel had rooms but no information,
flight, all normal, went to the runway,
go through immigration again and go to so not allowing anyone. I checked in
came back saying AC issue and it went
the arrival gate without luggage, then personally and slept. No information
on multiple times, till we were
asked to go to a hotel nearby about flight
deplaned at 2:30 pm

Chaos Next day Fight

No information Company stopped all travel

However we went to the airport and

Fought with them, got an apology and
stayed there. Flight left at 12:30 pm, one
free ticket to London, never used, so
mother was arrested and one old man
next trip they gave 2 days free stay in
threatened. We reached Mumbai with half
stopover in Dubai
of the luggage missing,
Axis Bank

Account Job Done ? Forex not allowed

Opening
Smooth with lot of help
Account Created Access denied

Relationship manager came home Account was created, I go the cheque

book and all details. However had to I had some transfer from abroad but
with all the documents to get
follow up with the RM to get the could not access. Asked branch who
signature. He in-fact made the letter
online details. I was not told of the 1 put me to the call center, who again
head and the stamp.
Lakh limit which was a drawback put me to branch. RM was useless

No response on Resolved after

Social Media fight
Careless Bad experience

Wrote to MD, wrote on Twitter, on

It got resolved after 9 days, with lots of
Linkedin, no response. Kept following with
fights, mails and escalations. I have
RM , lame excuses. Not resolved for 9
started pulling out my funds from Axis.
days. Threatened to leave. But did not
care.
Learnings from the Case Studies

Majority of the companies do not care about the customers and their journey. They are only there to make quick money

Customers have to be empowered in order to get their rightful dues. Use all the medium to get the best services

Very few companies have actually started looking at customer satisfaction, but we are still very far away

Social Media has helped customers in making their voices heard. Yet many companies don’t care

CX & CRM have remained either an application issue or a senior management initiative which have never been followed
through
CEM Maturity Model
Maturity levels at which organizations are in

36% - Level 0
Level 1
Of Organizations are not even at Level 1
Fragmented Focus

19% - Level 1
Customer experience is important but funding and
support from Upper Level is minimal
Level 2
VoC Validated
22% - Level 2
CX is important & initial programs are put in place – but the effort is still
not connected to the profitability of the organization
Level 3
11% - Level 3 Engaged Executives
CX is critical to the company & it is understood how it is connected to the
end results : Yet CX is for the sake of CX

8% - Level 4 Level 4
CX is the core of company’s strategies and objectives Profit Maximized

4% - Level 5
Is the company’s DNA, essence of anything and everything
the company does
Level 5
Cultural Change
CX – Key features and Tools

Key Features Tools

• Customer Segmentation IBM Tealeaf and Customer Experience Suite

• Multi-Channel Data collection
• Knowledge Management Adobe Experience Manager
• Dashboard Zendesk
• Analytics
• Negative Feedback Management Qualtrics XM
• Predictive Analytics
Bitrix 24
• Sentiment Analytics
• Survey/ Poll Management Freshdesk
• Text Analysis
Salesforce

Global Market Size and Growth

Global customer experience management market size was valued at USD 8.5 billion in 2020 and is expected
to register a CAGR of 17.7% from 2020 to 2027
 Customer
Relationship
Management
CRM Definition - Gartner

Customer relationship management (CRM) is a business strategy

that optimizes revenue and profitability while promoting customer
satisfaction and loyalty. CRM technologies enable strategy, and
identify and manage customer relationships, in person or virtually.
CRM software provides functionality to companies in four
segments: sales, marketing, customer service and digital commerce
CRM Definition - Bain

Customer Relationship Management (CRM) is a process companies

use to understand their customer groups and respond quickly—and
at times, instantly—to shifting customer desires. CRM technology
allows firms to collect and manage large amounts of customer data
and then carry out strategies based on that information.
CRM (Applications) Timeline
Rodolex
Unique ability to spin
through business cards.
Failed as business grew
1960s
AR assisted CRM
Visualization of Products
applied in real-time, virtual
assistants and wearables,
big data, predictive analytics
and NLP
2020
Contact
Mainframes Database Marketing
Management
Included hotline numbers, Using customer databases,
sales force automation to have personalized
Systems
systems, customer communications First Digital Rodolex
information files launched – ACT !
1970s Early 80s Late 80s
Entry of Siebel
New CRMs CRM word is coined by
Social CRM Gartner and Tom Siebel,
Social Media Analytics, Microsoft launches
Dynamics, Sugar CRM, Oracle roles out Oracle
Mobile CRM, Cloud based Sales and Mktg, SAP
CRM, Oracle acquires Siebel
launches CRM
2016 2000s 1993
CRM Strategy Framework
Enterprise CRM Strategy
Company Values, Standards, Culture, Long Term Objectives Regulatory &
Budget, Finance CRM Compliance

Internal Back Office

Strategy

Relationship Transaction Channel Connect:

Management Management Outlets, mails, voice,
Customer Engagement social media,
Mobile, POS

Customer Facing Functions Marketing Sales Customer Service Partner Relationship

Customer Insights
Customer Touch Points
Management (PRM):
Distributors, Wholesalers,
Insights Management Resellers,
Geo or product Specific
partners etc
Contact Center Mobile POS Web Partner Sales
Transactions Mgmt:

External Facing
Search, Engage,
Partner Relationship Management Purchase, Deliver,
Customer Segments Support, Service,
Maintain, Dispose.

Channel Content Channel Connect Insights Mgmt:

Partners Customers,
Service, Products,
Customer Segments Major SMB Individual Channels, PR
5 High Level CRM functionality categories & CRM Marketplace

Commerce
Platform Multichannel
campaign Adobe Marketing SAP’s Hybris
management Cloud Exchange Extend
Marketplace

Salesforce’s Oracle Cloud

CRM Market Place Marketplace
AppExchange

Sales Force
Automation Microsoft SugarCRM’s
AppSource SugarExchange

Social CRM
Sales Analytics
Customer Engagement
Center
Classical Types of CRM

This distinction is blurred now with lot of overlap

Strategic Operational Analytical Collaborative

• Customer-centric, • Based on customer- • Based on the intelligent • Based on application of

based on acquiring and oriented processes mining of the customer technology across
maintaining profitable. such as selling, data and using it organization boundaries
marketing, and tactically for future with a view to optimize
customer service. the organization and
• Improve the CRM
• Salesforce Automation, system effectiveness customers.
Marketing Automation, and analyze key • Key components are
Service Automation performance indicators, Interaction Management
• Eg: Salesforce, Hubspot, set by business and Channel
Zoho • Use Date Warehousing, Management
Mining and OLAP tools • Eg: Copper

Most of the vendors provide a complete CRM suite which includes all these components
Traditional CRM Operating Model vs Integrated approach
Integrated approach - Steps

Social CRM
• Social Media integration
• BOTS integration
• App / Marketplace
• Enterprise Social Marketing
• Citrix/ Webex meeting
• Maps
• Social Intelligence
Key CRM features
Contact Management Sales Management
• Sales Forecasting
• Product & Catalog tracking
• 360 customer profile
• Competitor Tracking
• Client interaction tracking
• Approvals
• Partner Management
• Lead Capture, scoring, routing
• Contact Center integration and
automation
• Support integration & automation
• Territory Mgmt
• Quote Management
• Time tracking
Technical Mobile CRM
• Mobile to CRM access
• Email Integrations
• Native Apps
• Customization
• Mobile Access for Tablets
• Database Management
• Onsite availability
• Data Governance
• API
• Custom Workflows
Marketing Automation Reports &
& analytics Dashboarding
• • Monthly sales/new customers
Campaigns & Email mgmt.
• • Monthly new leads/prospects
Web to Lead tracking
• • Lead-to-sale conversion rate
Outbound call campaigns
• Email templates • Cost per lead
• SMS Marketing • Cost per conversion
• Google Adwords • Customer lifetime value
• 3rd party Integration • Customer turnover rate
• Net promoter score
Support & Sales Automation &
Administrative analytics
• Inventory Management • Quote Management
• Online Training • Billing and Invoicing
• Ticket Management Portal
• Email, chat, online support
• Conferencing/ IM
• Customer Self Service Portal
• Case Management
Mapping KPIs through customer journeys
CRM Maturity Model Building Blocks
CRM – Sales Force Automation – 2020 - 2021
CRM – Customer Engagement Center -2020 & 2021
CRM – Magic Quadrants

CRM for Lead Management – 2020 MQ

CRM for Multi Channel Marketing hubs – 2021 MQ
Emerging CRM Sales technologies – Gartner Hype Cycle 2019
Hype cycle for customer service and support technology 2021
Example: Retail Platform Architecture
Salesforce Lightning & Einstein Architecture
1: Platform capabilities
including microservices
and mobility

2 : Cross platform and

domain capabilities

3 : Development tooling
capabilities using
Einstein

4 : Custom Apps using

Einstein

5. Heroku based custom

apps.
Functionality Comparison of some of the Predominant CRM Software -1

Oracle Customer
Product Name Salesforce SAP CRM Dynamics 365 Zoho CRM FreshSales
Experience

API Access    
Cadence     
Contact Management      
Contract Management    
Database Management      
Funnel Reporting      
Integrations     
Partner Tracking   
Performance Reporting      
Pipeline Management      
Product & Price Control  
Sales Gamification     
Functionality Comparison of some of the Predominant CRM Softwares - 2

Oracle Customer
Product Name Salesforce SAP CRM Dynamics 365 Zoho CRM FreshSales
Experience

Quotation Handling    
Territory/ Quota Management      
Supplementary Features

CPQ (Configure, Price, Quote)  

Customer Service Automation      
Marketing Automation     
Social Relationship Management    
Customer Size

Small ( 1- 5 Users)     
Medium ( 51 – 2000 users)      
Enterprise ( 201 + Users)    
`$25/user/month (5 Free $12/25/49/ user/
Pricing $90/ user/ month $ 58/ user/ month $210/user/ month $12/user/ month
users) month
Sales Force Implementation actual cost
Core Products

1. Sales Cloud - sales automation, sales

process design, reporting and forecasting.
(Lightening essentials/ Professional/
Enterprise/ Unlimited USD 25 – 300 per user/
per month)
2. Service Cloud - omni-channel customer
service (Lightening essentials/ Professional/
Enterprise/ Unlimited USD 25 – 300 per user/
per month) Can buy Sales + Enterprise
3. Marketing Cloud - digital advertising, email,
web and social media marketing.
Suite 1 - Email, Mobile, and Web Marketing
Suite 2 – Social Media Marketing (USD 1000
per month – USD 40000 per month)
Suite 3 – Advertising
Suite 4 – B2B Marketing Automation (USD
1250 per month – USD 4000 per
month)
Sales Force Revenue
Typical Use of CRM
• Gather market research on customers, in real time if necessary

• Generate more reliable sales forecasts

• Coordinate information quickly between sales staff and customer support reps, increasing their
effectiveness

• Enable sales reps to see the financial impact of different product configurations before they set prices

• Accurately gauge the return on individual promotional programs and the effect of integrated
marketing activities, and redirect spending accordingly

• Feed data on customer preferences and problems to product designers

• Increase sales by systematically identifying and managing sales leads

• Improve customer retention

• Design effective customer service programs

Sales Force Lightning and Einstein

Salesforce Lightning is a UI/ UX tool

Salesforce Lightning includes features like drag and drop,

compared to Classic Salesforce.

Salesforce lightning has higher security including Locker

Service which separates lightning components reducing the
interactions

Einstein analytics also comes with new dashboarding

experience, widget editing, advanced formula calculations

Salesforce Lightning is built on a mobile first framework (

Open source “ Aura” framework)

New features like Kanban view, Lightning voice, Sales Path,

Lightning App builder and News
CRM 2021 Trends
Thank You
Role of IT in
CRM
Biswajeet Mahapatra
 Introduction

Biswajeet Mahapatra

25 + years of experience in the industry. Worked in 1995 – Btech Engineering from Saurashtra University
companies like Gartner, HP, Oracle, Novell and Baan. (Gold Medalist)
1 Have been a CEO of Trasers, CTO of SAPG, CEO and
3 2011 – PGDM – PT XIMB (Gold Medalist)
Founder – muecio.com

Built startups, advised CXOs across the globe on Email: mbiswaje@gmail.com,

various aspects of Technology, & Processes, biswajeet.mahapatra@meucio.com
2 implemented ERP projects, sold Applications and 4 Linkedin :
research, published more than 100 papers https://www.linkedin.com/in/biswajeetmahapatra/
Agenda
01 CX and its importance
CX as a Superset of CRM, CEM Tools, CEM Maturity Model

02 CRM & its Linkage to CX

Basics of CRM, timeline, Maturity Model, Gartner Magic
Quadrant, Key Players, Functions and Feature & Pricing.

03 Social CRM & Implementation

challenges
Using Social CRM in Business, Setting up Whatsapp /
Instagram/ FB Business Channels

04 Blockchain in CRM
Provides enhanced security, data cleansing, and better
transparency
 CRM
Implementation
Best Practices and Challenges
Implementation Steps

01 02 03 04 05CRM Plan of 06
Get Enterprise- Plan the Create a Project Business Needs Setting Goals &
wide commitment implementation Team Analysis Action Project Specs

12 Data
11 10 09 08 07CRM software
Arch, Integration Service Partner & Technology
Management UI/UX definition selection
& Porting Vendor Selection Analysis

13 14 15 16 17 18
Change
Implementation Testing Training Support Handover
Management
Major CRM implementation challenges

Management Change Data Architecture & Usage &

Support Management Management Integration Monitoring
Ensure Top Old habits die hard. Data Loss needs to Seamless Need regular
Management Buy-in Handle major be avoided and data integrations to ERP, monitoring to ensure
concerns integrity to be Mailing app, Website CRM is used
maintained. etc properly

Failure Rate Business Improvement

Nearly 75% of CRM 74% enterprises
Implementations Fail believe CRM helped in
business improvement.

Failure Reason Improvement Reason

Mostly it is due to Poor adoption and lack of management Project taken through the finish line, constant management
support support and a great Project Manager.
Typical CRM cycle
• Start by defining strategic “pain points” in the customer relationship cycle. These are problems that have a
large impact on customer satisfaction and loyalty, where solutions would lead to superior financial
rewards and competitive advantage.

• Evaluate whether—and what kind of—CRM data can fix those pain points. Calculate the value that such
information would bring the company.

• Select the appropriate technology platform, and calculate the cost of implementing it and training
employees to use it.

• Assess whether the benefits of the CRM in formation outweigh the expense involved.

• Design incentive programs to ensure that personnel are encouraged to participate in the CRM program.
Many companies have discovered that realigning the organization away from product groups and toward
a customer-centered structure improves the success of CRM.

•Measure CRM progress and impact. Aggressively monitor participation of key personnel in the CRM
program. In addition, put measurement systems in place to track the improvement in customer
profitability with the use of CRM. Once the data is collected, share the information widely with employees
to encourage further participation in the program.
Overview of Important KPIs
Top Technical Issues

Customization &
personalization

Changing Priorities
Charts and
Dashboarding
As time progresses, business encounters
Each Function and each person has his own major pressures and challenges. Project
way of looking at charts and graphs. The Requirements also keep changing based on
project is a failure for them, If they do not get the business requirements
the dashboard they need. Content Title
Here

Integration Financial
with old Structures as
technology SI incompetency Bad and Stale in the software
Data
Social CRM
Social Media in CRM
Oct 2021 – Most used social platform - Hootsuite
Oct 2021 – Reasons for using Social Media - Hootsuite
Jul 2021– Use of social media for brand research
Benefits of Social Media

Telecoms provider BT says 40% of its customer feedback originates on Twitter, and its story is far from
unique.

Customer Care Service Marketing

Deliver customer support via the social media networks your Increased engagement and deeper relationships with customers.
customers are using;
Greater exposure in the places where your audiences spend their
Interact and engage with customers in real time time

Talk to each other so that customers get the best help Increased web traffic and conversions and higher search rankings

Monitor social media for complaints and resolve issues quickly More efficient marketing budgets with higher returns

Find and reward brand advocates and customers who help others Faster marketing campaigns with better targeting
Social Media Strategy Canvas
Social Media Objectives

Business Objectives Social Media Goal Metric(s)

Grow the brand Awareness Followers, shares,
Impressions, etc
(these metrics illuminate your current and potential audience)

Turn customers into Engagement Comments, likes,

advocates mentions, etc.
(these metrices show how your audiences are interacting with
your content)

Drive leads & sales Conversions Website clicks, email

signups, etc.
(these metrics demonstrate the effectiveness of your
social engagement)

Improve customer Consumer Testimonials, social media

retention sentiment, etc
(these metrices reflect how active customers think & feel
about your brand)

Inspire customers Advocacy Referrals, influencer

activity, NPS, etc
How CRM evolved into Social CRM

CRM Social CRM

Specific Departments Everyone

Who

Company Specific Processes Customer Centric Processes

What

Customer Defined Dynamic

Where Defined Channels
Channels

When Set business times Customer defined times

Why Transactions Interactions

How Inside Out Outside In

18 Use Cases of Social CRM

Social CRM Insights

Services & Customer

Marketing Sales Innovation Collaboration
Experience
Support

Social Social Social Innovations Collaboration Seamless

Marketing Sales Support Insights Insights customer
Insights Insights Insights experience

Rapid Crowd Enterprise

Rapid Rapid
Social Sourcing Collaboration VIP
Social Social Sales
Response R&D experience
Marketing Response
Response
Proactive Peer to
Social Social Lead Peer
Campaign Generation unpaid
Tracking armies

Social Event
Management
5Ms of Social CRM – Baseline Processes
Why is it Important
Monitoring Provides listening capabilities to filter out
noise from the social sphere. Encapsulate
both metrics and measurement. Extract
insights making measurement more
effective.
Mapping Mapping solutions identify relationships.
Due to lack of single identity, companies
must link social profiles to customer records
to provide a holistic experience.
Management Management systems bring CRM
processes to life. Without a purpose, social
data is unactionable. Business rules and
processes are needed to triage the right
information to the right teams in real-time.
Middleware Middleware technologies glue the social
world to the enterprise. Social CRM
connects to nearly every customer facing
system. Data will have to seamlessly flow
between systems, and advanced
dashboards that provide intelligence.
Measurement What you can’t measure you can’t improve,
therefore organizations must be able to
benchmark what’s been done.
Resources and Requirement
Brand monitoring software that monitors
and scrapes the social web, has team
based workflows and connects to
existing CRM databases.
First, find existing public profiles to
match, like LinkedIn and Google
profiles. Additional database fields must
be created that match customer records
to social profiles
Tie back the social world and channels
to existing innovation, marketing, sales,
support and service processes. Triage
profiles to create prioritization
frameworks.
Apply technologies such as complex
event processing, business process
management, business rules,
workflows, data integration, and
process orchestration among disparate
systems.
Advanced dashboards that provide
intelligence. Measure based on
business objective like improved
satisfaction, spread of message.
What they always don’t tell you
Use tightly scoped keywords to define the
search parameters. Yet don't go too tight or
you miss key opportunities – going too wide
results in too much noise
The trick is to get them to map their profiles
for you. Entice them with rewards, better
service, and special deals in an opt-in
manner
Companies must develop a crises plan for
the worst possible scenarios and conduct
internal fire drills. Expect the worst to
happen on Friday afternoons when
management is not available
Develop business rules based on your
unique processes. They will include:
workflows, complex event processing, and
enablement technologies to respond.
Rely on data to provide benchmarks,
trending, prediction, and sentiment. Bring
the insight into actionable state.
Vendors to Watch out for
Biz360, Buzzmetrics (Nielsen),
Cymfony, Radian6, SAS Institute,
Scoutlabs. Visible Technologies
Facebook (profiles), Gigya,
Google (profiles), OpenID,
SalesView, Spredfast, Sprinklr
CoTweet Infor, KANA, Oracle,
RightNow Technologies, SAP,
SAS, SugarCRM
Boomi, D&B Purisma, IBM,
Informatica, Oracle, Pervasive,
Progress Software, SAS
DataFlux, SOA Software,
Software AG, TIBCO
IBM Cognos, Information
Builders, Microsoft, Oracle
Hyperion QlikView, SAP
Business Objects, SAS Institute
Social Media Metrics
Measure Traffic and Conversion
Social CRM measures traffic & conversion rates from social
media platforms. This enables a business to see how many
customers visit sites and how those clicks convert into value.

Engagement
Social CRM enables you to measure not just clicks, but user
engagements with the sites.

Buzz Calculator
Find out what people are talking about you by keeping an eye on
the comments section from your various social posts, blogs,
review sites and other mentions.

Fans and Followers

Use Social Media to convert your followers into fans

Brand Mentions
Social CRM helps measure how many followers are talking about
a company or brand and if those customers are sharing their
experiences via social media platforms.
Social CRM Impact on Business Processes
Social CRM Comparison chart

Product Best For Pricing starts at

Salesforce Social Studio Best CRM for social media
overall
HubSpot Marketing Hub Top social customer
relationship management tool
Zoho Social Great free CRM for social
media management
Sprout Social Best CRM for social media
marketing
Nimble Good social media CRM
software for startups and small
business
eClincher Good social CRM tool for sales $59 per month for 1 user
teams
$1,000 per month, billed
annually
$45 per month
$10 per month, billed annually
$89 per user/month, billed
annually
$19 per user/month billed
annually
Social CRM Process
Social CRM Architecture
Social CRM Computer System architecture
CONTENT ENRICHMENT
Human Information
INTERACT
INQUIRE
Unstructured Unstructured Profiles
Query
text data rich media
Agents
Hyperlink
Social Media Text
Images Communities

Blogs Videos Expertise Location

News feed Audio files INVESTIGATE

IMPROVE
Twitter Phone calls Structured Analysis
Classification
Facebook Automatic Query • Sentiment analysis
guidance • Feature classification

Parametric Search Automatic language

Chat detection
Email Term analysis
Transactional Data Categorization
Machine Data
Documents
Highlighting
Webpages Taxonomy

Cluster Data

Databases ERP/ BI/ LDAP Rich Media

Unstructured • Audio Video Analysis
Repositories
Mail Servers Hadoop
Social Management apps
Hootsuite

What Is Hootsuite?

Hootsuite is a social media management tool with features to help with planning, scheduling, and syndicating
social posts. Key features include automatic scheduling, social media monitoring, performance reporting, basic
task management and more.

Why Is Hootsuite Useful?

Hootsuite can save you time with your social media marketing. Instead of logging into each network and
posting there one at a time, you can manage Facebook, Instagram, YouTube, LinkedIn, Twitter, and Pinterest
all from one place.

Its “Streams” feature can help stay on top of relevant conversations as they’re happening. You can monitor
conversions on different networks from a single dashboard.

Hootsuite also has a helpful Analytics feature for in-depth social media performance reporting. If you run an
agency, you know that reporting the ROI of social media can be tricky. Hootsuite’s Analytics feature helps you
show off your deliverables.
Hoosuite - architecture
Compare Hootsuite and SocialPilot
Hootsuite Pricing
Possibilities of Social CRM including Whatsapp

Enable purchases and bookings through

WhatsApp by integrating your internal APIs to
the WhatsApp API Business Client..
Through WhatsApp, customers can initiate conversations and
Process online payments by providing dynamically
01 ask for support regarding purchase details, delivery updates,
generated payment links through WhatsApp.
etc.
If designed and architectured well,
03 you can seamlessly connect your
existing CRM tools such as

03 01 SalesForce, FreshDesk(or in-house

software) including live chat agents
like ZenDesk to your WhatsApp
05 Transactions & Customer Support

Send purchase invoice and

05
Invoicing
Online
Payments
Business API Client.

bill details as an attachment

through WhatsApp

04
Updates
02 02
04 Navigation and Use NLP to understand the context of user
Dicovery inputs and help them discover relevant
Provide shipment details and
automated updates through products and services by connecting your
WhatsApp search APIs with the WhatsApp Business API
Client.
Whatsapp Enabled Business

Handling customer
Booking an Order requests
Instagram

Change your Insta account into business account and

connect it to you FB page

Create a Product Catalog in FB and tag them to your Insta

posts or stories.

Sign up for Insta shopping and turn on shopping in Insta

app.

Upload pictures in Instagram and tag the products. You can

also create Insta stories.

Insta check-out:
Facebook Marketplace

1. Take a photo of the product you want to sell

2. Enter Product details & choose a category
3. Confirm your location, and sell
How to sell in FB

1. Set up and Account with FB Commerce Manager

Start Selling 2. Click Get started for Facebook

4. Create a Collection

5. Customize your Storefront

6. Publish your shop

3. Do the account and tax set ups

 Blockchain
Implementation
Benefits and Use Cases
Timeline of blockchain development
How does a transaction get into the blockchain
Blockchain technology
Properties if Distributed Ledger Technology
Identity mgmt. using blockchain

ID generated by the service provider – verified by endorser (eg: ID

generated by Airtel and endorsed by Aadhar)

Same Id used to authenticate all services thereby not forcing the

customer to go through registration processes again &again

Blockchain technology is used to verify the identity & do payments

Increased data sovereignty security, and overall privacy

Creating a network of services thereby providing customers better

quality of services. Also enabling IDaaS (Identity as a Service)
Across of Blockchain across Insurance value chain
Blockchain in CRM – Use Cases

Financial Services – Customer Validation

1 KYC (Know your customer) process can be time consuming and

prone to manual errors . Partners – third party, govt agencies,
account managers, financial reviewers

Financial services - Regulatory Reporting

2 Data integrity maintained for all financial transaction. Partners

– regulators and other agencies

Loyalty Programs

3 Integration of Loyalty programs across industries like – hotels,

airlines, coffee shops, food trucks etc. Partners – Multiple
businesses across industries

Insurance Claims Management

4 Create a network of different parties for assessing, processing,

and adjudicating a claim. They can use smart contracts to
automate payout when predefined conditions are met. Partners
– insurer, Claims processors, Garages, Hospitals etc
Applications of Blockchain
Thank You