Professional Documents
Culture Documents
MBCH772D
CUSTOMER RELATIONSHIP
MANAGEMENT
www.cce.upes.ac.in
Course Design
Advisory Council
Chairman
Mr. Sharad Mehra
Members
Dr. S J Chopra Dr. Sunil Rai Dr. Veena Dutta
Chancellor Vice Chancellor Registrar
Author
___________________
___________________
___________________
Introduction ___________________
4
Notes
The Origin of CRM
CRM has its origin in the early 1970s when the businesses started
___________________
believing that it would be beneficial to become customer centric
___________________ than product centric. CRM evolved from the concept of relationship
marketing, which is based on the fact that long-term connections
___________________ with customers are more lucrative and advantageous than short-
___________________ term relationships.
5
• The acceptance of the fact that the use of high-end technology
Notes
would reduce the cost without affecting the quality of products.
• The goal to retain current customers by building a relationship ___________________
and working to get more business from them.
___________________
• The acceptance of the fact that the old trends of selling and
marketing are drastically fading out in the present dynamic ___________________
scenario. ___________________
___________________
Meaning of CRM
___________________
CRM is a strategical approach and a process of gathering,
maintaining, and collaborating with potential customers to build ___________________
superior values for the organization and the customer. It includes ___________________
the integration of marketing activities, sales, customer service, and
supply-chain actions to deliver efficient and effective customer value.
The concept of CRM has emerged from relationship marketing.
Figure 1.1 explains the concept clearly.
Relationship Marketing
Customer Orientation
CUSTOMER
6
In framing and implementing CRM strategies, the entire
Notes
organization should be involved. It includes an appropriate approach
in terms of sales, marketing, and customer support. When a company
___________________
limits its entire attention only to operational activities, it reduces
___________________ communication between business and customers.
___________________ Though the major part of CRM is based on technology, considering
CRM only as a technology-based solution has chances to fail. A
___________________
successful CRM implementation needs a balanced and collaborative
___________________ approach to people, technology, and process.
Rise of CRM
Today the relationships with our customers are not like they used
to be in the past. In the past, we knew our customers’ faces, their
family, and what their kids were fond of. Customers used to become
retailers’ friends. We used to share phone numbers and knew when
and whom to call.
But today, as we have a large number of customers, most of us deal
with our customers in a very simple manner and always over email.
Understanding the emotions of our customers is replaced with the
rare emotion. We really do not have any idea about what our
customers care for. The Internet has found a solution to customer
queries as there is real data captured through smart phones, which
can be used by customers to ask corporates about their services.
7
• Today, a customer looks for transparency. A customer hunts
Notes
information about the product/service from e-receipts to full-
on customer dashboards.
___________________
• Technology is supporting human connectivity–today, the young
___________________
generation is totally digital. There exists a change from a wide
range of audiences who are engaged differently to young ___________________
generation who are entirely digital, even laggards are engaged
___________________
on their smartphone and chatting online.
___________________
2. Effect of mobile phones
___________________
Today, various mobile devices have more interactions across
numerous marketing channels resulting in the accumulation of large ___________________
data. This data has revealed that, if one has to improve service,
___________________
there need to be a lot more emphasis on the mobile experience.
Most of the firms are still removing wrinkles from their mobile ___________________
experiences.
___________________
3. Collaboration between business and information
technology leaders
Siloed information is found to be the main obstruction to innovation.
However, chief marketing officers (CMOs) and chief information
officers (CIOs) are working along with marketing, sales, and IT to
remove siloed organization structures and data sets.
4. Global markets
Globalization, better fulfillment, marketplaces, PPC permitting fast
access to new markets, and international pricing strategies.
5. Habits of work
The major advantage of cloud platforms and a single sign-in on
mobiles is the rise in productivity due to flexibility in work. The
CRM that can be upgraded and referred to on the move and from
individual homes is surely going to be a more productive business
tool, more of a constant point of reference and an action setter.
8
Notes
Significance of CRM
CRM is an efficient approach used to build and maintain strong
___________________
relationships with customers and to form personal and emotional
___________________ bonding within customers. Building such a bond drives businesses
to success. Such strong relationships help organizations find the
___________________ needs and demands of customers and provide them full customer
___________________ satisfaction.
9
• CRM raises the level of customer satisfaction because
Notes
organizations handle customers efficiently by providing
whatever they require at the right time. This provides
___________________
opportunities for more business and increases profit and
turnover. ___________________
Summary ___________________
CRM means how your business interacts with your potential ___________________
customers. Most people view CRM as a system to collect data of
your customers. However, CRM means using technology to capture
the intelligence you require to provide the best support and services
to your customers. CRM is a set of procedures, policies, and strategies
used by any organization to gather its customer information and
provide a technology-based platform to trace customer data. The
CRM approach tries to gather and analyze data about customers’
history with a company with the aim to improve business
relationships with customers, focusing on retaining customers for a
long period, in order to gain sales and make profit.
To build customer relationships, organizations deliver benefits by
customizing their offerings, optimizing the price, integrating
products and services, and providing services according to the
customer’s expectations. A happy customer is observed to be loyal
for a longer period. The strategic benefits of CRM are that it helps
organizations reduce the cost of customer acquisition and enables
the established players in the market to act like a new market
entrant with their competitors.
Customer
Customer--Supplier Relationships
Relationships ___________________
___________________
___________________
Introduction ___________________
12
increases. The number of transactions increases and trust begins to
Notes
develop. The commitment phase involves increased adjustment and
mutually understood roles and objectives. Automated purchasing
___________________
processes are a good example of commitment. One method to resolve
___________________ the problems and maintain relationship is by reducing the serving
cost.
___________________
___________________ Trust
___________________
• Benevolence: A trust that one party acts in the interest of
the other party.
___________________
• Honesty: A confidence that the opposite party’s word is reliable
and credible.
• Competence: A belief that the opposite party has the essential
expertise to perform as needed.
The building of trust is an investment in relationship, which has a
long-term payoff. Trust evolves as both parties share their
experiences, evaluate and interpret one another’s motives. When
they get to know more about each other, it reduces risk and doubt.
For such reasons, trust is said to be a bonding that carries a
relationship together over time.
Commitment
Commitment is an important factor for successful, long-term
relationships. Morgan and Hunt define relationship commitment as
‘an exchange partner believing that an ongoing relationship with
another is so important as to warrant maximum effort to maintain
it; that is, the committed party believes the relationship is worth
working on to ensure that it endures indefinitely’. Commitment
motivates partners to co-operate with each other to retain the
relationships.
Relationship Quality
The density of trust and commitment will tell which relations are
better than others. Relationship satisfaction is not the same as
commitment. Commitment to a supplier evolves as investments are
contributed in the relationship, and investments are made when
the committed party is satisfied with their transactional history.
Given that CRM implementations are meant to build closer, more
Unit 2: Customer-Supplier Relationships
13
value-driven relationships with customers, it makes sense for
Notes
managers know the quality of the relationships they have with
their customers.
___________________
Customers ___________________
Lifetime Value
This idea that a customer should not be considered as a set of
independent transactions but as a lifetime income-stream, is a
success. Lifetime value, also known as customer lifetime value (CLV),
is a measure of a customer’s/customer segment’s profit, which is for
an organization. Lifetime value is calculated as the present-day
value of the net margins earned from a relationship with a customer/
customer segment. Such kind of analyses can be useful, for example,
to find whether particular channels are more efficient and effective
at recruiting high-value customers.
Customer Relationship Management
14
Notes
Why Customers Want Relationships with Suppliers
B2B Context
___________________
A B2B customer may want good relations with suppliers for a
___________________ number of reasons:
___________________ Product complexity: This means that the product and its
___________________ applications are complex, e.g., networking infrastructure.
___________________ Financial risk: When there is large financial risk, e.g., purchasing
large capital equipment.
___________________
Reciprocity: A financial audit practice needs a strong relationship
with the management consultancy such that every party is benefited
from another’s referrals.
B2C context
In the B2B context, relationships are valued if the customer
experiences advantages above those directly derived from gathering
and using the product/service. For example,
Recognition: Customers feel special if they are identified and
addressed by their name, as observed in a Bank or in the Airlines.
Personalization: Products/services are customized. Like in a beauty
salon, the service provider understands the customer’s expectations
well and delivers customized services.
Power: Healthy supplier relationships can be empowering. For
instance, the power asymmetry in relationships among banks and
its customers might be reversed if customers experience a
personalized relationship, e.g., with specific bank officers or branches.
Reduction of Risk: Risk could have various forms – performance,
physical, financial, social, and psychological. Many customers feel
uncomfortable with a high level of perceived risk. A good relationship
can minimize rather than eliminate the perceived risk. Let’s say, a
customer might build a relationship with a car service station to
minimize the physical risk involved in getting the car serviced.
Status: Customers have a general perception that if they have a
good relation with supplier, their status is enhanced, e.g., a company
offering a platinum credit-card.
Unit 2: Customer-Supplier Relationships
15
Affiliation: The customer’s social needs could be fulfilled through
Notes
commercial as well as non-commercial relationships. Many people
are members of professional associations. Customer’s desire might
___________________
be different in having relationships with suppliers might be different
in having relationships with suppliers. ___________________
Suppliers ___________________
Fear of dependency: Customers have a fear that once the supplier ___________________
is in a preferred position, it may act opportunistically, perhaps ___________________
raise the price. They also have a fear that their flexibility in choosing
the alternative suppliers would reduce. They would also be concerned ___________________
that they would lose the personal authority and control.
Lack of perceived value in the relationship: Customers might
not believe that they would save substantially in transaction costs,
or that the relationship would help create a superior competitive
position or additional revenue would be generated, or there may be
any kind of social benefits.
Lack of confidence in the supplier: Customers also lack
confidence in the supplier, they feel that the potential partner is
not reliable, very small, strategically not significant, has a poor
reputation, or is not innovative.
Customer lacks relational orientation: Relationship building is
not given much importance in all organizational cultures. Many
still work on a transactional concept. For example, many retailers
have a policy of buying a huge proportion of their merchandise
through special offers.
Rapid technological changes: As there are rapid changes in the
technology, commitment to just one supplier may let the customer
miss out on new advancements that are offered by other suppliers.
Summary
A relationship develops when a series of interactive episodes among
two or more parties take place over time. Every episode comprises
of a chain of interactions. Interaction consists of action (deeds) and
their response. The fundamental reason why companies are
interested in building relationships with customers is economic.
Companies perform better when they manage their customer base
Customer Relationship Management
16
with an aim to identify, acquire, satisfy, and retain profitable
Notes
customers. Relationships do not remain the same as time changes.
Parties get closer or go apart, interactions become frequent or
___________________
decrease. Dwyer discovered five phases that may give rise to
___________________ customer–supplier relationships: awareness, exploration, expansion,
commitment, dissolution. Lifetime value, also known as customer
___________________
lifetime value (CLV), is a measure of a customer’s/customer
___________________ segment’s profit, which is for an organization. Lifetime value is
calculated as the present-day value of the net margins earned from
___________________
a relationship with a customer/customer segment. Such kinds of
___________________ analyses can be useful, for example, to find out whether particular
channels are more efficient and effective at recruiting high-value
___________________ customers.
___________________
Questions for Discussion
___________________
1. Discuss the five phases discovered by Dwyer that may give
___________________ rise to customer-supplier relationships.
2. Explain why companies want relationships with customers.
3. What do you understand by lifetime value?
4. Elaborate why companies want relationships with suppliers.
5. Explain why customers do not want relationships with
suppliers.
17
Unit 3 Notes
___________________
___________________
___________________
Introduction ___________________
18
CRM to develop and effectively manage relationships with their
Notes
customers. In today’s globally competitive environment, customers
have more expectations as more choices are available with them,
___________________
and they are comparatively less loyal. CRM software supports CRM
___________________ strategy.
___________________ How to Create a CRM Strategy
___________________ Here is a four-step approach to create a CRM strategy:
___________________ 1. First, if change is needed in the business, it should be
recognized throughout the organization in the form of an
___________________
opportunity.
___________________
2. Second, CRM vision should be clearly mentioned, which
___________________ highlights the need for change. It is essential that the staff
understands the vision and its framework with an aim to shape
___________________
the vision into reality.
___________________ 3. Third, the organization must design and develop its culture
and capabilities to work on the vision. The CRM strategy should
be designed focusing on the customer inside out and include a
mix of culture, people, business processes, and enable
technology.
4. Finally, the organization should make a delivery plan with an
aim to achieve its objectives. The CRM strategy and supporting
plan must be managed by business leaders and be supported
by the IT staff.
Elements of CRM
CRM is a business strategy that has an impact in the processes of
the whole organization and brings a drastic shift in the way the
staff understands and interacts with current as well as prospects.
Critical success factors for a CRM implementation:
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culture, and behavior. Resources need to be re-allocated and
Notes
important customer-facing processes and activities need to be re-
engineered, so that they can be aligned with the new goals.
___________________
CRM Process
20
achieve customer satisfaction, customer loyalty, and deliver customer
Notes
value. Then the assessment of organizational readiness is done by
turning the organization’s focus toward the customer, ensuring the
___________________
top management’s support and planning for the successful
___________________ implementation of a CRM system. After that, CRM programs are
carried out, where the focus is on carrying out differentiated
___________________
strategies for every customer segment by specific designed programs.
___________________ At the end, an evaluation of the effectiveness of the CRM program
is done by the preparing a set metrics, which is used to measure
___________________
the attainment of customer objectives, to evaluate the contribution
___________________ of individual program to the overall CRM initiative, to assess the
contribution of each program in the enhancement of an organization’s
___________________ data capability, and to assess the potential for improving the future
___________________ programs.
Vision
Enhance
Analysis
Suppor t
CRM success.ca
Support
Deploy
Design
Develop
This framework consists of eight stages that are important for any
CRM project regardless of size, complexity, industry, or technology:
Unit 3: CRM as a Business Strategy
21
Vision
Notes
In this phase, we engage a large variety of employees to discuss the
major challenges the organization is facing and explain how a CRM ___________________
solution can help solve these challenges. ___________________
Analysis ___________________
Design
Once the technology is decided, a further analysis of the
requirements and some business-process reengineering might be
required (which depends on the project size, complexity, and
technology).
Develop
After the design is developed, the build process can start. But we
still continue to work independently or with the implementation
partner to quickly configure or execute more in-depth development/
integration activities.
Deploy
Once the solution is developed, work is done with the client for
testing the solution. Once the solution is tested and ready for
deployment into production, we move the solution onto the
production cloud or on premise infrastructure. Then we roll out the
system to the users and provide end-user training, management
training, and administrative training.
Support
After the system has been deployed, work is done with the client to
transition system support and administrative management to the
internal resources, which will be managing the system to move
forward. Work is done with client to keep the system maintained by
installing service packs and ensuring that the performance is
optimized.
Customer Relationship Management
22
Enhance
Notes
This phase consists of restructuring business rules, implementing
___________________ system automated functions, designing meaningful analytics, and
___________________
implementing new functionality including mobile access or
integrating to additional back-office systems.
___________________
___________________
Summary
___________________ CRM is one of the most important elements of marketing. The main
aim of CRM is to form strong and long-term relationships with
___________________ consumers, get more familiar with customers at every touch point,
and improve on the number of customers. CRM means finding,
___________________
acquiring, and sustaining customers. There is a four-step approach
___________________ to create a CRM strategy: First, if change is needed in the business,
it should be recognized throughout the organization in the form of
___________________
an opportunity. Second, CRM vision should be clearly mentioned,
___________________ which highlights the need for change. It is essential that the staff
understands the vision and its framework with an aim to shape the
vision into reality. Third, the organization must design and develop
its culture and capabilities to work on the vision. The CRM strategy
should be designed focusing on the customer inside-out and include
a mix of culture, people, business processes, and enable technology.
Finally, the organization should make a delivery plan with an aim
to achieve its objectives. The CRM strategy and supporting plan
must be managed by business leaders and be supported by the IT
staff. A successful CRM framework consists of eight stages that are
important for any CRM project regardless of size, complexity,
industry, or technology: vision, analysis, procurement, design,
develop, deploy, support and enhance.
CRM PPrograms
rograms and Marketing ___________________
___________________
Initiatives ___________________
___________________
___________________
Introduction ___________________
Decisions of CRM
The decision-making process of effective CRM involves the following
factors:
• Clearly define the management objective and strategy.
• Choose the right process of implementation.
• Identify the best software solution.
• Analyze the hidden costs involved and understand the
obstacles.
• Support the process with good training.
The major areas that are responsible in automating business
processes related to CRM are mentioned below:
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Customer Service and Support (CSS)
Notes
CSS is responsible for the automation of different services like
___________________ complaints of products, service requests, and returning products,
___________________
etc.
Trouble Tickets
A trouble ticket system gathers and manages queries/requests from
customers to facilitate customer relationship management. Whenever
Unit 4: CRM Programs and Marketing Initiatives
25
a customer sends a query/request, a ticket is assigned to him/her by
Notes
the software. The generated ticket has a ticket number, which is
used as a reference number of the customer’s query. Trouble tickets
___________________
keep track of the customer’s problems and help the company to
monitor their support processes. ___________________
___________________
Types of CRM Programs
___________________
Today, organizations are using a different approach to business,
which involves relationship marketing, customer retention and cross ___________________
selling, which in turn leads to customer extension, which proves to ___________________
be far better than the traditional marketing approach. Based on
the present practices and previously used practices, it is possible to
identify three main types of CRM programs that have some
variations attempted by innovative marketers. These CRM programs
are as follows:
Continuity Marketing
The main aim of these programs is to retain customers and attain
customer loyalty. The basic premise is to offer long-term special
services that have the potential to increase mutual value.
Organizations offer rewards to consumers by providing membership
and loyalty-cards with a variety of rewards, which may include
discounts, privileged services, and cross-purchased products. The
basis of continuity marketing offers continuous replenishment,
including just-in-time (JIT) inventory management, efficient
consumer response initiatives through electronic order processing
(ERP), and material resource planning (MRP).
In B2B markets, continuity marketing may include preferred
customer programs or special sourcing arrangements, or just-in-
time sourcing.
26
advancements have a great contribution in making this possible at
Notes
a low cost.
___________________
Co-Marketing
___________________
As regards business-to-business marketing, individual marketing
___________________ has been long in use by way of key account management programs,
which involves the appointing of separate teams by marketers to
___________________ decide on the use of company resource to meet individual customer
___________________ needs, and if necessary, engage in joint planning with customers at
the national as well as global levels.
___________________
___________________
CRM Marketing Initiatives
___________________ Companies simply do not purchase CRM products to automate
campaign management without a clear view of what they want to
___________________ do. After all, companies devoid of a marketing vision rarely have a
___________________
sufficient budget for CRM software. Those who do, have a variety
of tactics in mind for increasing customer value and loyalty.
Cross Selling
Cross selling means selling a product/service to a customer when
he/she has come to purchase another product. For example, a man
goes to purchase laptop for his son and at the same buys a new
handset for himself. Cross selling is common these days as it enables
to sell more products and services to existing customers at the
same cost with increased revenue. Not all customers can be targeted
for cross selling. For example, credit card holders have proven to be
poor candidates for cross selling because of favorable interest rates
and low fees – not the card itself or even the issuer – are the
dominant determinant of consumer response to credit card offers.
Upselling
Organizations are also looking for opportunities to upsell, or motivate
their current customers to purchase high-priced products. The art
of cross selling and upselling is to analyze which products will raise
a company’s overall profitability.
Behavior Prediction
Behavior prediction helps marketing departments determine the
future action of the customers. This analysis includes several
variations:
• Propensity to purchase analysis – determining which products
a specific customer is likely to buy.
• Next sequential purchase – determining which product/service
a particular customer is likely to purchase next.
Unit 4: CRM Programs and Marketing Initiatives
27
• Product affinity analysis – analyzing what products can be
Notes
purchased along with other products.
• Price elasticity modeling – determining the optimal price for ___________________
a product, particularly for a given customer or customer
___________________
segment.
___________________
Marketing Decisions
___________________
With the study of consumer behavior, an organization can take
marketing decisions based on this knowledge: ___________________
Customer Value
Different companies will have different value metrics. It refers to
a customer’s lifetime value (LTV), potential value, or competitive
value (also called wallet share). The score is then used in many
ways to fine tune communications with that customer. For instance,
a brick-and-mortar retailer recognizes a shopper with a frequent
buyer card who visits the retail store only during advertised sales.
Customer-Centric Decisions
Personalization is the ability to customize customer communication
dependent on knowledge, preferences, and behaviors during
interaction. These technologies support the analysis of the individual
customer over a period and across channels, making use of customer
profile data, previous purchases, and web survey responses, to
identify which product the customer is going to buy next or the
customer is likely to discontinue, which helps to take decisions to
offer discounts to lure him back.
Customer Relationship Management
28
Event-Based Marketing
Notes
Event-based marketing, also known as event-driven marketing, can
___________________ be targeted to individual customers for particular services. For
___________________
example, e-mailing a request to all customers who have recently
met with accidents, for an increase in collision damage insurance,
___________________ is a good example of event-based marketing to an undifferentiated
segment of the existing customer base.
___________________
___________________ Summary
___________________ Companies simply don’t purchase CRM products to automate
campaign management without a clear view of what they want to
___________________
do. After all, companies devoid of a marketing vision rarely have
___________________ sufficient budget for CRM software. Those who do, have a variety
of tactics in mind for increasing customer value and loyalty.
___________________
Personalization is the ability to customize customer communication
___________________ dependent on knowledge, preferences, and behaviors during
interaction. These technologies support the analysis of the individual
customer over a period and across channels, making use of customer
profile data, previous purchases, and web survey responses, to
identify which product the customer is going to buy next or the
customer is likely to discontinue, which helps to take decisions to
offer discounts to lure him back.
___________________
___________________
Personal Touch: First Impressions Make or Break
___________________
the Entire Customer Experience
___________________
“Foody Goody” is a fast food restaurant founded in 2014. The
restaurant serves Indian and Chinese cuisines and delivers packed ___________________
food to homes. The restaurant’s business is improving day-by-day as
___________________
their focus is on customized attention. The food is prepared, packed
and delivered from the same place. The customers are regular and ___________________
they have a special bonding with the restaurant as it understands the
needs of the customers and satisfies them. This was topped with ___________________
personalized attention provided, and the restaurant takes care of the
___________________
customers during special days. The goal as a business is to increase
customer loyalty and the number of loyal customers by creating a
memorable experience that brings the customer back repeatedly.
Ms. Penny Joseph, a customer, shares: “I always felt special, coming
to Foody Goody, as they provided me a warm feeling”. She is a regular
customer of Foody Goody as she likes the cuisines and the taste. As
she is also working, delicious and hygienic food delivered at home
when she comes tired from work is what she wants from a decent
restaurant. She also regularly gets messages and calls in advance for
each day’s menu, which solves the problem of deciding from a variety
of dishes. The restaurant also keeps loyal customer discount schemes
on offering. She shares one of her memorable experiences, “I am a
loyal customer of Foody Goody and I like the way they interact with
me by giving calls during the hours convenient to me. It was our
wedding anniversary and we had no plans to dine out as it was 25th
May, 2016, and both of us had almost emptied our accounts waiting
for the 1st of next month…. And then I get a message followed by a
call that Foody Goody has planned a dinner party for us as we are the
winners of Most Loyal Customers…I don’t know when this contest
happened. Anyway, we got ready and reached there as a dinner out
was what we were desiring today, and I had a life time memorable
experience. We were welcomed at the entrance with my favorite
flowers. Then we were taken to the dining hall where the ambience
and color theme was of my choice. The hostess dressed in pink and
white came with a small cake. And then, something beyond our
expectations happened. The icing on the cake had a layer on which
a photograph of my husband and mine was printed (don’t remember
when it was collected from us)… My favorite music was played and
we were offered drinks followed by a rich and healthy dinner (the
entire menu was my favorites). It seems they collected all the
information from the calls and feedbacks they had got from me earlier.
Contd…
Customer Relationship Management
30
Notes I understood that the interactions and long-term relations matter. I
still remember that day and emotions tickle.
___________________ This was a surprise gift for me. I stopped calling for home deliveries
and every evening I started going to Foody Goody to pick my food…
___________________
just to see the place and stand and chat with the staff… it became
___________________ one of my favorite places to visit. The bonding grew stronger, the
trust and commitment increased, and the experience I shared with
___________________ my contacts gave Foody Goody a good business as I have a wide
network.
___________________
The Challenge:
___________________
Marketing manager Mr. Joe Hawk got a break in the US and a new
___________________ Manager Mr. Vinod Dua was appointed at his place. As the business
had expanded, the sale was increasing every week leading to a turnover
___________________
of 100-unit, $5 million revenue a year in the restaurant business. It
___________________ was becoming difficult for Mr. Dua to manage the staff and the large
customer base, which led to poor internal marketing.
___________________
For this speciality food provider, the customer experience defined in
social media posts revealed that while the table and bar service were
efficient and friendly and contributed to enriched experiences, the
hostess stand, reservation and reception services were severely lacking.
Mr. Dua knew that he could not control the crowd or add more tables
to the restaurant to reduce wait times but he could make the waiting
experience more pleasant. Moreover, the biggest challenge was to
manage the customer interactions and provide a personalized attention.
As a result, indifferent consumer behavior was observed as the
customers started switching to other famous food outlets. As the sales
started declining drastically, the owner Mr. John finally called Mr.
Dua one day and shouted “Perform or move”.
___________________
___________________
___________________
Introduction ___________________
34
(including its sub-systems) varies based on their access to customers
Notes
and their placement in the system.
___________________ A closer look on such a system clarifies that all the sub-systems
(credit card services, transportation services, insurance services,
___________________
etc.) providing their services to a master service provider (restaurant
___________________ in the above example), can actually be the master service providers
to other service sub-systems. While analyzing an end service
___________________
provider, it is clearly observable that all the sub-systems can be
___________________ given a specific role and placement in its service system hierarchy.
___________________
Subsystem Required inputs Subsystem
___________________
Customer (s)
Local Visibility
Global Visibility
35
Degree of Interaction and Customization
Notes
Low High
Service Factor Service Shop ___________________
Airlines Hospitals
___________________
Trucking Auto Repair
Hotels ___________________
Other Repair Service
Resorts & Recreation ___________________
Mass Service Professional Service
___________________
Retailing Doctors
Wholesaling Lawyers ___________________
Schools
Accounting ___________________
Retail aspects of commercial
Architects
Banking ___________________
___________________
Figure 5.2: Service-process matrix
___________________
Based on the Schmenner’s service-process matrix (Figure 5.2) to
classify the services, a new model is suggested as the service-process-
technology (SPT) matrix (shown in Figure 5.3) which will be used
to relate the service development process with the level of technology
used.
Y
1st 2nd
Z Quadrant
Quadrant
X
3rd 4th
X Degree of Customisation and Interaction Quadrant Quadrant
Y Degree of Labor Intensity
Z Degree of technical complexity used
36
establish an important relationship among different sub-systems
Notes
therein. Technology being the driving force for service organizations
to compete in the global markets amid all the intercontinental low-
___________________
cost solutions, it is necessary to have such models available to be
___________________ able for differentiate among them, based on the level of technological
advances they wish to pursue over time to remain competitive in
___________________
the business.
___________________
Service as a Business
___________________
A service business entails selling a product that does not exist until
___________________
the customer pays for it. Because it is “intangible,” marketing a
___________________ service business is an entirely different ball game from marketing
a product. Know the strategies for marketing a service business.
___________________
Marketing a service business is not the same as marketing a product.
___________________
When marketing a retail good, you are selling a product that is
___________________ tangible – an item that can be seen, handled and used. Consumers
can gain information and evaluate the product based on what they
see.
In a service business, you are marketing yourself – your expertise
and capabilities, your reliability, and commitment to excellent
service. Your service technically does not exist until the customer
pays for it. Service is not a tangible good, so what you are selling
is the promise to deliver what you set out to deliver. Your marketing
efforts will have to focus on communicating that promise to your
clientele.
Mass marketing strategies do not work well with a service business.
You are constrained by the amount of clients you can service well.
To please your clients, you can focus only on a selected number of
accounts or customers to sustain your business. If you decide to get
as many clients as possible, there is a risk that you will spread
yourself too thin and that the quality of your work will eventually
suffer.
A solo home-based web designer, for example, cannot mass market
his services as he can only create a limited number of web pages in
a day. A massage specialist can only massage a finite number of
clients before her hands give up. A wedding consultant can
coordinate a few clients at one time to ensure optimum service. The
same applies to doctors and dentists too.
Selling a service is more difficult than selling a tangible product.
Consumers are much less certain when they are buying a service,
since what they are buying is merely a promise that someone will
do something for them in a way that will satisfy their expectations.
Unit 6: CRM in Services
37
The following are promotional tools in marketing a service business:
Notes
Referrals: The recommendation of a satisfied client or a professional
colleague is often the most effective way of bringing in new clients. ___________________
People tend to view recommendations from those who have
___________________
previously used the service as highly credible and are more inclined
to use the recommended service. Referrals, however, do not always ___________________
come easily. Most often, you have to ask for it. If one of your clients
___________________
seems satisfied with your service, request him or her to refer your
business to their friends or acquaintances who may benefit from ___________________
your service. To reinforce your request, you may give them
___________________
promotional material such as business cards or brochures that they
may share with others. Other entrepreneurs even make it a point ___________________
to reward those who refer a client to them. It may not be money
(some professions frown on the practice of giving money for referrals) ___________________
but a simple note or a small act of thoughtfulness to show your ___________________
clients that you appreciate their effort to spread the word about
your business. ___________________
38
Service industries can be classified by users and thus there are
Notes
three types of end-users:
___________________ Individual Consumer As an End-User: Services are consumed
by individuals. Some examples are leisure, hairdressing, personal
___________________
finance, packaged holiday tour, etc. The implication for the marketer
___________________ is profound: it is for the mass market and there is scope for mass
communication. If there is a possibility of branding (NIIT Futurz)
___________________
then there is a tremendous scope of enlarging the geographical
___________________ reach of the market, the catchment area of a service retail outlet as
well as for franchising.
___________________
Business-to-Business End-Users: This implies that one business
___________________
or a firm from one industry will seek services from another business
___________________ or another company from another industry. This has connotations
of industrial marketing – abhorring mass media, more personal
___________________ selling, high involvement, with decision-making units and decision-
___________________ making processes different from those for individual consumers.
Industrial End-Users: These end-users of services are plants and
factories. They might require very unique services that are highly
technical.
Summary
A service system is said to have customers, a physical or virtual
facility to house the required hardware and/or infrastructure, and
service providers. Services can be distinguished from other activities
based on their specific characteristics, lack of ownership,
heterogeneity, intangibility, perishability and inseparability. A
service business entails selling a product that does not exist until
the customer pays for it. Because it is “intangible”, marketing a
service business is an entirely different ballgame from marketing a
product. Know the strategies for marketing a service business. Mass
marketing strategies do not work well with a service business. You
are constrained by the amount of clients you can service well. To
please your clients, you can focus only on a selected number of
accounts or customers to sustain your business.
___________________
___________________
___________________
Introduction ___________________
40
Notes
Concept of Customer Relationship Measurement
With the adoption of information technology, it has now become
___________________
possible to forge a close relationship with each of the customers.
___________________
According to Cap Gemini Ernst and Young, a leading management-
___________________ consulting firm, CRM is defined as “a company’s ability to
continuously maximize the value of its customer franchise by
___________________ effectively allocating scarce resources to specific customers segments
___________________ in those areas viewed as having a significant impact on the profit
– impacting behaviors of customers.”
___________________
41
companies do try to measure and quantify and
Notes
correlate to future company performance.
Competitive This approach measures how competitors are ___________________
assessments interacting with customers and decisions are
___________________
made to either seek parity or exceed a
competitor’s capabilities. ___________________
CRM measurement frameworks are not only used to help managers ___________________
collectively formulate plans and make decisions, but they are also
___________________
used to inform and guide ongoing daily activities related to
customers. This is related but somewhat different from influencing ___________________
decision-making. Measuring customer activities not only helps
companies decide which customer strategies to adopt but also helps
front-line employees and managers perform regular tasks. Often,
this is the predominant focus for CRM measurement systems. For
example, for those businesses with call centers, managers frequently
run reports from the call center technology systems, such as
automatic call distribution (ACD) systems, on how well the call
center is performing and if customers are being catered to at the
prescribed level. If managers see problems with performance, those
problems can be diagnosed and resolved.
Depending on the company’s business model and the business unit
within the company, these measurement frameworks vary. Some
categories include
• Brand performance measures
• Customer asset management
• Customer behavior
• Marketing performance
• Sales force performance
• Service center performance
• Field service performance
• Supply chain and logistic performance
• Web site performance
Since a company interacts with customers through a variety of
different business units in a variety of methods, each business unit
measures customers very differently. The way a brand manager
Customer Relationship Management
42
measures his or her customer-facing activities is very different from
Notes
the way the field service staff may measure his or her customer-
facing activities. It is this different way of “touching the elephant”
___________________
that contributes to a company’s inability to deliver on the promise
___________________ of CRM systems. Given the diverse nature of these measurement
frameworks, it is not surprising that CRM practitioners are often
___________________
skilled in one measurement framework and unaware of the issues,
___________________ complexities and importance of the other frameworks.
Customer
insight
capabilities
43
beyond measuring those activities that directly touch the customer
Notes
(value delivering capabilities). Companies frequently need to
measure specific attributes about how a product or service is
___________________
produced (value production capabilities), especially if the product
·
or service I s customized for the customer. Value production ___________________
capabilities extend through to suppliers and partners. Hence CRM
___________________
measurement may also involve supply chain management activities.
In fact, supply chain management, as a discipline, exists to deliver ___________________
better value to customers and therefore is often a key component in
___________________
CRM activities.
___________________
When it comes to coordinating customer-facing activities, the level
of inter connectedness within companies and within value chains ___________________
can be surprisingly high. In the retail consumer packaged goods
(CPG) industry, when a grocery store chain changes its consumer ___________________
promotion schedules, at least seven groups within a CPG firm are ___________________
impacted: sales, marketing, trade promotions, warehouse,
transportation, manufacturing and finance (Rubin, 2001). Rubin ___________________
reports the lack of coordination costs manufacturers $100,000 in
lost revenue per promotion. Collaborative supply chain tools,
planning, forecasting and replenishment applications. Address these
issues and all are heavily dependent on customer insight capabilities
within each company in the value chain to work.
When CRM measurement is looked at in this way, one gets the
impression that CRM is too wide a discipline and a technology set
since it encompasses nearly every aspect of a company. While this
is true, companies exist to sell to and serve customers and it is
natural that a wide set of measurements would need to be managed.
Companies also have to manage all sorts of measures and
measurement frameworks that customers are typically not interested
in, such as stock price volatility, bank financing interest rates, overall
accounts receivables days’ sales outstanding and so on. So where
does CRM measurement begin and end? One way to answer that is
to say that CRM should measure those company activities that
pertain to or can benefit specific customers as well as specific
customer’s behavior and mindset.
CRM measurements can play a significant role in measuring portions
of corporate strategy. While customer measures are discussed in
the balanced scorecard literature, most CRM measurement
approaches involve far more metrics at a lower level of abstraction
than those represented within a balanced scorecard. However, as
companies continually review and reformulate their customer
strategies, CRM technology solutions now allow digital execution of
those strategies. Technology serves as a mechanism for quickly
generating customer measurement data. Figure 6.2 depicts the
relationship between tactic execution and data collection and
customer strategy review and reformulation.
Customer Relationship Management
44
Typically, the mechanism for creating customer knowledge is not
Notes
measured, and neither are the mechanisms for generating customer
strategies. While CRM measurements can and do measure the
___________________
outcome of these strategies and serve as leading indicators for future
___________________ corporate financial performance, they can potentially be extended
to measure how frequently and accurately customer strategies are
___________________
reviewed and reformulated. Specific CRM tactics can be linked to
___________________ the strategic process that spawned them. This linkage can be used
to “score the strategy generation capabilities.
___________________
Measuring strategic capabilities
___________________
___________________
___________________
Strategy reformation
CRM activities
execution
Strategy review
45
towards which direction their market and customers are headed.
Notes
From there these companies can determine companies have a need
to use CRM technology to help anticipate customer needs or
___________________
otherwise predict a future customer or market state. Within
marketing, there is a long history of using predictive modelling ___________________
techniques to test out potential marketing approaches to determine
___________________
how successful the program will be in advance of launching the
entire program. CRM technologies and approaches are being used ___________________
to help companies improve the design of existing products and build
___________________
new innovative products through closer collaboration with customers.
Digital technologies let companies engage customers in a less costly ___________________
and highly measurable dialog.
___________________
As more companies and value chains adopt CRM technology and as
the technology gets more robust, companies will be able to capture ___________________
a fairly comprehensive set of data representing the behavior of a ___________________
market. This information gives these companies clearer insight into
what direction their market and customers are headed. From there ___________________
these companies can determine how to shape or adapt to their
changing market conditions
Companies use the CRM technology to help predict future states in
other ways. Gathering customer insight to drive product or service
innovation can take many forms, from well-controlled research
experiments and surveys to more collaborative and ethnographic
approaches. All of these approaches collect data that can be
structured and measured. For more traditional CRM system
implementations, companies frequently pilot the solution within a
single business unit or customer segment (or a small part of a
customer segment) to determine if the program will be successful
before being rolled out to the entire company or market.
46
• Differing styles of customer decision-making approaches.
Notes
• Differing CRM measurement purposes: influencing
___________________ collaborative decision-making processes, guiding ongoing
activities and predicting future states.
___________________
The challenge for businesses is to weave together a CRM
___________________
measurement approach that deftly handles these complexities and
___________________ constraints.
___________________
Summary
___________________
Comprised of several distinct disciplines and cutting across just
___________________ about all business units within most companies, CRM measurement
is complex. Companies use CRM measurements for different
___________________
purposes; digital channels provide for new measurement and
___________________ product/service distribution options; businesses are fractured
internally with inconsistent communication and often incompatible
___________________ systems. Despite this complexity, companies are adopting
measurement systems, or frameworks, that have acceptance in the
marketplace.
___________________
Implementation ___________________
___________________
After completing this unit, the students will be aware of the following topics: ___________________
\ Implementing customer relationship measurement
___________________
\ Attributes of CRM measurement framework
\ Building a composite measurement framework ___________________
\ Customer lifetime value
___________________
\ Calculating customer lifetime value
___________________
\ Managing customer lifetime value
\ Uses of customer lifetime value
\ Customer equity
Introduction
The consumer’s behavior is changing because of dynamic and
changing market, the new tools designed to understand significant
patterns of consumer behavior on old data cannot be calibrated on
old data and assumptions. The tools must evolve with the market.
48
• Breadth of the field
Notes
• Depth of the field
___________________
• Field Tractability
___________________
Field means customer-facing and customer-impacting activities that
___________________ must be measured which include processes in an organization, with
its suppliers and customers. All of these attributes compete with
___________________
one another for management funding and attention.
___________________
Field breadth means out of the total set of activities needed to be
___________________ measured how many are actually measured.
___________________ Field depth means how much granular is the measurement approach.
How frequently data is measured and how far are sub-attributes
___________________ broken down.
___________________ Field tractability means how well the CRM measurement framework
___________________ employed can be explained and proved.
Keeping these attributes in mind the following principles should be
considered for a good measurement framework:
• The measurement framework should cover the field width,
field depth and field tractability that meet the organization’s
strategic goals and are cost effective.
• The measurement framework should consider the stability or
complexity level within the market or enterprise. The
measurement framework must be timely and adaptive with
volatile markets.
• The measurement framework should be able to function with
incomplete and partial measures.
• The measurement framework for highly complex markets has
to be self-adapting so that it can be reconstituted as and when
required.
49
1. Consider the planning time horizon, competitive market
Notes
stability or volatility and other market of company factors.
(a) Are current market conditions stable or chaotic with rapid ___________________
unpredictable change?
___________________
(b) What is the company’s current competitive posture? Is the
company attempting to shape the market significantly, ___________________
adapt as a fast follower to the market, or sitting it out for
___________________
a while and doing nothing?
___________________
(c) What is the balance of focus needed between measuring
internal capabilities and measuring customer behavior? ___________________
(d) How much of the measurement framework needs to ___________________
measure past activity or predict future events?
___________________
2. Consider the technology implications:
___________________
(a) What technical infrastructure changes are needed to
support the measurement framework? ___________________
(b) Can the data needed be collected and combined within this
infrastructure?
(c) What is the ongoing cost of measurement and data
collection?
(d) What are the sampling and refresh rates that will be needed
to support the measurement framework?
(e) What are the core analytic techniques and technologies to
support the data analysis needed?
(f) What are the technical needs to continually collect strategic
and qualitative data as opposed to conventional CRM
operational data?
3. Consider the organizational implications:
(a) What skill sets are needed to support the measurement
framework?
(b) How do motivation and incentive approaches in the
company need to be altered to encourage successful
measurement?
(c) Can the company’s decision-making abilities absorb and
use the measurement framework?
(d) Does the company have flexible communication and
collaboration tools and policies that let people within the
company interact with each other concerning measurement
data?
(e) Can the customer decision-making capabilities of the
company be measured and monitored so that the health of
decision-making capabilities can be assessed?
Customer Relationship Management
50
(f) Can feedback from the decision-making process inform and
Notes
alter the measurement framework?
___________________ Taking these implications into consideration, a CRM measurement
framework deployment plan could be framed. With the inherent
___________________
risks in disrupting a customer base and employees that serve the
___________________ customers within an organization, organizations choose to limit
deployment along some axis. The organizations try to control the
___________________
field breadth in the following ways:
___________________
• Product Deployment: A measurement approach is deployed
___________________ for all customers for single particular product/service.
___________________
• Segment Deployment: A measurement approach deployed
for single segment
___________________
• Narrow Deployment: A measurement approach deployed for
___________________ single customer segment per one product/service.
___________________
Customer Lifetime Value
Lifetime customer value or long-term customer value is a reflection
of the possible future business a company can expect from a loyal
customer. This includes not only the repeat purchases by the
customer but also his family purchases, referral purchases, cross
sells, etc., over a long period of time. It should also consider the
future product introductions of the company for which this loyal
customer is a ready prospect. This adds more dimensions to the
exact assessment of the LCV. Use of customer lifetime value as a
marketing metric tends to place greater emphasis on customer
service and long-term customer satisfaction, rather than on
maximizing short-term sales. In marketing, customer lifetime value
(CLV), lifetime customer value (LCV), or lifetime value (LTV) and
a new concept of “customer life cycle management” is the present
value of the future cash flows attributed to the customer relationship.
51
lifetime” to find out the value to use the concept in managing
Notes
customer value. If you are new to this lifetime value stuff and have
not tracked the appropriate parameters, or your company is new
___________________
and lacks meaningful operating history, you can look for “relative
lifetime value,” link it to customer behavior, and still get leverage ___________________
from using LTV/LCV in your business model to manage customer
value. ___________________
Here is a very simple example. Say I run the same ad in two ___________________
different newsletters and get response from both. When I look at ___________________
these responders, maybe a week later for a content visit or 30 days
later for a purchase, I find a high percentage of repeat visitors or ___________________
buyers from one newsletter and a low percentage from the other.
___________________
Repeat behavior indicates higher lifetime value and predicts future
___________________
repeat behavior, regardless of what the actual monetary Lifetime
value is when I can switch money out of the low-repeat newsletter ___________________
into the high-repeat newsletter and get higher ROI without having
___________________
to measure anything but repeat behavior. By the way, using
customer behavior to predict the relative lifetime value and loyalty
of customers is a 40-year old technique still used by mail order and
TV shopping companies today. Large sites with CRM analytics are
using this technique, known as RFM, to predict customer value and
response to promotions. If you’d like to see more details on using
relative lifetime value to make ad or product decisions, see the
tutorial: Comparing the potential value of customer groups.
Here’s a one-way approach it if the operational data you need is
unclear. Try to focus on the average unit sold and break up all the
revenue and cost components that comprise the unit. Once you get
to a profit/unit, just multiply by units sold to a customer over the
“lifetime,” minus overhead and promotional costs and you get the
LTV.
Average price, cost of goods sold, and gross margin should be easy
to find. To get customer service costs, look at how many units you
move annually and divide by annual customer service cost. Do the
same thing for returns, and so on, until you know the costs/unit
sold of all the elements going into a sale. Do not forget credit
processing, after sale support, etc. For example, most models to
calculate the CLV apply to the contractual or customer retention
situation. These models make several simplifying assumptions and
often involve the following inputs:
Churn Rate: The percentage of customers who end their
relationship with a company in a given period. One minus the churn
rate is the retention rate. Most models can be written using either
churn rate or retention rate. If the model uses only one churn rate,
the assumption is that the churn rate is constant across the life of
the customer relationship.
Customer Relationship Management
52
Discount Rate: The cost of capital used to discount future revenue
Notes
from a customer. Discounting is an advanced topic that is frequently
ignored in customer lifetime value calculations. The current interest
___________________
rate is sometimes used as a simple (but incorrect) proxy for discount
___________________ rate.
___________________ Retention Cost: The amount of money a company has to spend in
a given period to retain an existing customer. Retention costs include
___________________
customer support, billing, promotional incentives, etc.
___________________
Period: The unit of time into which a customer relationship is
___________________ divided for analysis. A year is the most commonly used period.
Customer lifetime value is a multi-period calculation, usually
___________________
stretching 3–7 years into the future. In practice, an analysis beyond
___________________ this point is viewed as too speculative to be reliable. The number
of periods used in the calculation is sometimes referred to as the
___________________ model horizon.
___________________ Periodic Revenue: The amount of revenue collected from a
customer in the period.
Profit Margin: Profit as a percentage of revenue. Depending on
circumstances, this may be reflected as a percentage of gross or net
profit. For incremental marketing that does not incur any
incremental overhead that would be allocated against profit, gross
profit margins are acceptable.
53
Customer Equity Notes
Customer equity is the net present value of a customer from the
___________________
perspective of a supplier. It can – and should – include customer
goodwill that is normally not expressed in financial terms, for ___________________
example, a customer’s level of loyalty and advocacy. The concept of
customer equity, which unifies customer value management, brand ___________________
Summary
How companies build and deploy a CRM measurement framework
depends on the planning horizon under consideration, the market
volatility, the company’s overall strategic posture and goals, and
how much of the organization and customer base is impacted by the
CRM solutions considered. In addition, how customer knowledge is
created and utilized for benefit is under continual debate with
different points of view. This unit reviews the key issues in CRM
measurement, offers some attributes for describing and evaluating
CRM measurement frameworks, and suggests several
implementation approaches. Change begins with knowing.
Companies today need to implement more sophisticated ways of
measuring this complex and diverse field.
Customer Relationship Management
54
Notes
Questions for Discussion
1. What do you understand by implementing CRM measurement?
___________________
2. Describe the attributes of a CRM measurement framework.
___________________
3. Explain the method of building a composite measurement
___________________ framework.
___________________ 4. Discuss the concept of customer lifetime value.
___________________
(a) Calculating lifetime customer value (LCV)
(b) Churn rate
___________________
(c) Discount rate
___________________
(d) Retention cost
___________________
(e) Profit margin
___________________
(f) Customer equity
55
Unit 9 Notes
___________________
___________________
Introduction ___________________
56
• Preventive measures help to assure the customers that an
Notes
organization is meeting customer service and reliability
standards and that customers will be compensated if it does
___________________
not meet the standards.
___________________
• Complete information about how a business responds to
___________________ customer complaints is available.
57
suggests that even when the customer is clearly confused, treating
Notes
him with respect helps retain business.
Delivery Error: With online shopping on the rise, delivery errors ___________________
increase. Upset customers may complain to the company, but the
___________________
company may use an independent shipper, complicating complaint
resolution. ___________________
58
Step Two: Hold Preliminary Discussions with Major
Notes
Stakeholders
___________________ The aim of this stage is to identify the partners who are willing to
___________________ develop the customer complaints management initiative and to test
the conclusions drawn from the information-collecting stage. Other
___________________ than like-minded industry colleagues, government officials and
___________________
consumer group representatives could help in confirming initial
perceptions of the management initiative or stimulate useful
___________________ revisions. Informal bilateral sessions and focus groups are also
helpful in testing new ideas.
___________________
___________________ Having the right people is necessary on the working group. These
people must be credible, knowledgeable and dependable, represent
___________________ the diversity of affected stakeholders, and possess the essential
___________________ resources and time to complete the project. In an organization, an
effort should be made to ensure that frontline employees, who play
a major role in handling the Customer complaints, managers and
leaders of the organization, are included.
59
made which explains who should be aware of the Consumer
Notes
Complaints Management initiative, who must have a copy of it and
how individuals can be reached.
___________________
firms. ___________________
Summary
Customer complaint management initiatives are approaches,
mechanisms and techniques used by merchants for increasing a
customer’s satisfaction. The CCM initiatives help to prevent
problems and complaints from arising, appropriately and promptly
address the complaints through internal systems and resolve
disputes effectively and efficiently by external private dispute
resolution methods if internal complaint-handling processes are
insufficient. A consumer complaints management initiative has less
chance of success if it is not publicized. Participating merchants,
managers, consumers and government officials all have to be
informed about the initiative and how it will affect them. To find
the impact of a consumer complaints management initiative, relevant
data is required depending on the situation before the launch of the
consumer complaints management initiative.
Customer Relationship Management
60
Notes
Questions for Discussion
1. Discuss the customer compliant management initiatives.
___________________
2. What are the benefits of effective customer complaint
___________________ management initiatives?
___________________ 3. What are the different types of customer complaints?
___________________ 4. What are the categories of customer complainers?
___________________
___________________
___________________
___________________
61
Unit 10 Notes
___________________
___________________
Bad Airline Customer Service: No One to
___________________
Complain To
___________________
This is not a story about lost luggage. It is a story about whom to call
at the airlines when you feel you’ve been mistreated. The answer, ___________________
increasingly, is no one.
___________________
But, it starts with a lost bag – the black duffel Delta Airlines lost on
my recent trip from Kansas City to New York City after a nightmarish ___________________
day of travel: a cancelled flight on a perfectly clear morning; a
cumbersome rerouting through Atlanta; arrival at LaGuardia after 6 ___________________
p.m., more than five hours late. When my bag failed to show up, I
___________________
faced yet another missed connection: to the bus I needed to catch for
the two-hour ride to my final destination. So rather than wait in line
at the lost-luggage counter, I took a phone number to call in the
report later. Which I did – only to be told sternly that lost-baggage
reports cannot be taken over the phone, only in person at the airport.
This seemed patently unreasonable. Delta had put me through a lot
of trouble: cancelling a flight, adding five hours of flying time to my
day, losing my luggage. All I asked was the same courtesy accorded
any passenger whose bag was lost by the airline: its return free of
charge. But after three calls to the baggage folks, the best I could do
was get the bag tracked (it eventually made it to LaGuardia). I was
told that I had to either pick it up myself at the airport or pay a hefty
delivery charge. Three times I asked for a supervisor to whom I could
make an appeal. Three times I was told the person I was talking to
was a supervisor. (Big labour news: at Delta Airlines, everyone is a
boss!) Finally, I asked for a customer-service number so I could lodge
a complaint. That’s when I found out how the airlines really feel
about customer service: Delta no longer has such a number. An
unhappy passenger’s only recourse is to go to the website and write
an e-mail.
I spent half an hour filling out the online form, sent off an e-mail and
got this response: “We are sorry but this service is unavailable at this
time. Please try again later.” I managed to send the e-mail on a
second try the next day. Still, I wanted a live human being to hear
my case sooner. I called the main reservations line and wheedled a
number at Delta’s corporate headquarters in Atlanta. But that only
elicited a brusque gentleman who quickly swatted away my complaint.
“That is Delta Airlines policy,” he said. “You just don’t like the policy.”
Actually, airlines break their own policies all the time. Indeed, one of
the few redeeming features of dealing with airlines is that, if you’re
persistent and persuasive enough, you can usually find a representative
willing to find you a seat on that sold-out flight, waive a change fee,
Contd…
Customer Relationship Management
62
Notes ease your outrage by upgrading you to first class or give you a free
meal voucher. When my flight was cancelled, Delta waived the usual
___________________ $15 fee on checked luggage. It’s actually smart business; even small
gestures go a long way toward defusing consumer wrath.
___________________
At least, that’s the way it used to be. The major carriers have, quietly,
___________________ made it steadily more difficult to air your complaints to a live human
being. “The airlines don’t want to talk to their customers,” says John
___________________ Tschohl, a consultant to businesses on customer service. American
Airlines stopped taking customer complaints by phone several years
___________________ ago, according to a spokesperson; putting the complaint in writing, he
insisted, is more efficient. United used to have a customer-support
___________________
number but dropped it “some months ago,” according to a reservations
___________________ agent. (A corporate spokesperson didn’t return several phone calls
asking for confirmation.) Even the few airlines that still have customer-
___________________ service numbers, like Continental and Southwest, tuck them away
deep within their websites, where only the truly obsessive can find
___________________
them.
___________________ A Delta spokeswoman seemed perplexed by the whole question. First
she said simply, “We direct customers to our e-mail.” After more
checking, she reported that Delta does have a customer-care option
on its toll-free number. When I couldn’t find it, she checked once
more and clarified: the customer-care line is found on Delta’s main
corporate phone number — but that number is not publicized and “it
is not suggested” that customers call it. A representative at that
number said they do not take customer complaints and directed me
to the website.
The airlines are obviously under severe economic pressure and are
clearly trying to reduce the amount of time their personnel spend on
the phone with unhappy customers. Still, in an era of burgeoning
complaints about service, four-hour waits on the tarmac and renewed
pressure in Congress for a passenger’s bill of rights, this seems
counterproductive, to say the least.
After a couple of days I got my bag back — though I had to send my
brother to the airport to pick it up. I even got a response to my e-mail
complaint: an apology and a $50 voucher for future Delta travel. I’m
not sure whether to say thank you or ask what took so long. But it
doesn’t matter. There’s no one to call.
Source: http://content.time.com/time/business/article/0,8599,1920121,00.html
Block–III
Detailed Contents
___________________
___________________
Introduction
Customer relationship management (CRM) is a concept which refers
to practices, strategies and technologies used by organizations to
manage customer data and interactions throughout the customer
life cycle to improve relationships with customers, to retain
customers and increase sales. To attain a personalized strategy,
most of the firms use a relationship policy as a marketing strategy.
66
• A relationship marketing policy emphasizes on increasing the
Notes quality and quantity of the customer database.
___________________ • It is important to increase the quality and quantity of the
customer database. Why do you think it is important to do so?
___________________
• Referring to the customer pyramid, most companies want to
___________________ turn their customer into a partner.
___________________
___________________ Partner
___________________ Ambassador
supporter
___________________
___________________ Client
customer
___________________
___________________ Prospect
67
distinctions based on their financial contributions toward the
company. The customer can be either Gold or Silver or Bronze. Notes
• The Gold customer contributes the most profit in the company ___________________
while the Silver contributes lesser and the Bronze contributes
the least. ___________________
• By understanding the different segment of customers, the ___________________
company can determine the most suitable way to satisfy and
develop the relationship further. ___________________
• Refer to Table 11.1 for the example of a framework build based ___________________
on financial arguments.
___________________
Table 11.1: Relationship policy per segment
Availability and service level ___________________
68
3. Relationship policy by relationship phase
Notes
•· Company should not use the relationship per segment alone.
___________________ The relationship life cycle will have to be taken into
consideration.
___________________
• The relationship life cycle indicates the idea of type of approach
___________________ that is suitable for customers although they are in the same
___________________
segment.
• Refer to Table11.1 for an example of relationship policy per
___________________
phase.
___________________
Relationship Policy per Phase
___________________
Exploratory phase
___________________
• During the exploratory phase, the relationship starts out
___________________ positively.
___________________
• The goal of the relationship policy in this phase is to reinforce
the relationship and to increase commitment.
• The supplier at this stage should increase the volume of
transactions to get return on investments from the relationship
made.
• The supplier has positioned itself as an attractive company in
order to acquire customers.
• This will raise certain expectation among customers or potential
customers on the company’s products or services.
• That is why, it is important for the supplier to spot negative
developments of the relationship to make sure the relationship
does not end.
• At this stage, the relationship is still quite fragile since there
is no history created. This means, no sentimental value created
on the products or services.
Growth phase
• The goal of the relationship policy during the growth phase is
to increase commitment and to continue the positive growth
trend seen in the turnover.
• This can be done by having unique and appealing activities
that continue to attract customers.
• For example, giving rewards to repeat purchase customers
can create attractiveness in the relationship.
• Apart from that, providing good services with extra care and
warmth to the customers may also show appreciation toward
customers. If this service leaves an unforgettable impression,
the relationship will nourish and get stronger.
Unit 11: The Relationship Policy
69
Saturation or maturity stage
Notes
• At this stage, a supplier encounters its most profitable and
loyal customers. ___________________
• The belief exists that the other party has not knowingly or ___________________
intentionally made the mistake and is prepared to repair the
damage. ___________________
Decline phase
• The decline phase shows a possible end to the relationship.
• Turnover decreases and commitment lessens.
• The objective of the relationship policy in this phase is to
determine the causes of the change.
• Normally, the cause of the change in relationship is due to
external factors such as the need for supplier services has
disappeared. A person may no longer have their car. This means
the relationship with the supplier is no longer needed.
• How to retain this type of customer?
• The suppliers may actually get in contact again with the
customer like they did at the introduction and growth stage.
70
the most suitable communication means and strategy to
Notes
approach the customers.
___________________ •· A communication plan must be outlined to appreciate an
effective relationship management.
___________________
___________________
5. Communication pressure and initiative
• The reasons to communicate with customers could vary from
___________________
one supplier to another.
___________________
• The company could introduce new products, create a special
___________________ promotion, or inform customers about specific developments
in the industry.
___________________
•· For example, an insurance company has a new form of savings
___________________ account, or would like to provide customers who are insured
___________________
via their employer with an extra special offer, or inform them
about the consequences of upcoming legislative changes to their
___________________ pension fund.
• In creating the contact plan, the communication with the
supplier may be different, depending on the stage in the
relationship.
• How to translate relationship policy into communication with
customers? In other words, what are the initiatives to maintain
good communication that may strengthen the relationship with
customers?
Normally, at the exploratory phase, suppliers are recommended
to:
1. Offer a welcome packet or make a welcome ‘call’ to give positive
experience to customers
• This initiative allows the company to gather important
information about customer.
• This can be done by handing out a questionnaire or taking
a customer’s interview.
• Questions are asked about the other wishes and/or purchase
plans of the customer and their satisfaction with the product
or service.
2. Develop communication calendars
• Communication calendars are useful to note when the
customer will be approached and with what particular
information.
3. Crossselling
• Cross selling is the strategy to push different products to
the customer after they make the first purchase.
Unit 11: The Relationship Policy
71
• The new product is recommended to the customer based on
Notes
their past purchases.
• This strategy helps the supplier to identify the chances of ___________________
the customer to consider purchasing the product within a
___________________
certain period.
• It also tells the supplier whether approaching the customer ___________________
72
At saturation or maturity stage, supplier should
Notes
1. Continue improving the communication medium
___________________
• This can be done by either technological advancement or
___________________ allocating more experienced staff to the appropriate
customers.
___________________
At declining stage, supplier should
___________________
1. Seek contact with customers who threaten to end the
___________________ relationship
___________________ • Simply demonstrating interest can provide an important
reason for customers to adjust their image of the supplier.
___________________
2. Undergo an exit interview with customers
___________________
• Even a portion of the customers who have already left may
___________________ be persuaded during an exit interview to give the supplier
another chance.
___________________
1. Influence of marketing communication on relationship
development
• Marketing communication is very crucial to relationship
development as it helps the company obtain reliable
information on future events involving its customers.
• It also helps the company to make contact at exactly the
right time with the customer.
• In the future, an organization with customer relationship
management strategy aims for a marketing communication
where customers help one another.
• For instance, via a ‘member-get member’ promotion. This
approach is increasingly popular because it represents a
relatively high value to the company (Verbeke, Peelen and
Brand, 1995).
• The advantages of this type of communication are less effort
required to convince customer as well as lower
communication cost.
2. Loyalty programs
• In order to further develop the commitment of their
customers, various companies also implement loyalty
programs.
• The term ‘loyalty’ here means savings schemes that are
linked to a database containing information on the name,
address, city, certain behavior and background information
for individual customers.
Unit 11: The Relationship Policy
73
• The success of the program lies in providing customers with
Notes
specific rewards.
• The intention of the loyalty program is to reward loyal, ___________________
frequent buyers more often.
___________________
• Customers are classified between good and bad customers
using the behavior parameter (justified by the company ___________________
itself). ___________________
• For example, Motorists who buy fuel from Esso more often ___________________
can qualify for double points. In reality, companies are
careful about discriminating between bad, good, better and ___________________
best customers. This is because, if the customers know that
___________________
the company applies this distinction, customers may not
buy the product or service. ___________________
___________________
There are THREE (3) categories of loyalty programs. These consist
of a savings program, a club program, and a relationship marketing
program.
1. Saving programs
• Savings programs are not true loyalty programs.
• This is because, the focus of saving programs is to encourage
a customer to make transactions by rewarding him or her for
certain behavior: purchasing.
• Customers will be differentiated between short-term and long-
term savings programs.
• The short-term savings programs aim to stimulate behavior.
For example, the customer will be made eligible to receive a
gift with minimum additional charge or free of charge.
• The long-term savings programs aim to retain relationship
with customers.
• This program is more popular compared to the short-term
one.
• However, to prevent consumers from having to wait too long
for their rewards, and the chance that the desired customer
behavior will decrease, customers will be given a combination
of long and short-term savings programs.
• This allows the customer to receive benefits within both
programs.
Customer Relationship Management
74
2. Club programs
Notes
• Club programs are programs when people are offered the
___________________ opportunity to become members of a club either free or for a
___________________ very small fee.
Savings Performing a Purchase Geared toward points Increases pending Free or with additional Yes
Program Transaction and gifts behavior of customers; payment (Product-
Unit 11: The Relationship Policy
Club Program Customers must register; Geared toward Increase customer Information (magazine), No, cognitive processes
the conditions under product and brand, involvement with brand/ possible discounts, also take place
which members are or points supplier Long-term insurance, credit,
accepted vary (buying commitment with the guarantees, etc.
history, payment of customer and thus more
contribution, etc. purchases
Relationship Minimum number of Geared toward Increase mutual involve- Complimentary products No, cognitive process
Marketing Transactions customer usage ment between customer and services, including also takes place
Program patterns, product/ and supplier; long-term customer magazine,
brand, points and commitment with the advice, service,
gifts customer and thus more discounts, credit, etc.
purchases
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Customer Relationship Management
76
Notes
Effectiveness of Loyalty Programs
• The savings and club programs and the ‘real’ relationship
___________________ marketing programs will definitely have different impact on
___________________ customers.
• The effectiveness of these loyalty programs also depend very
___________________
much on the company itself.
___________________
• If the company can to appreciate, activate and inform the
___________________ customer effectively, loyalty programs will most likely become
an effective means to attract and retain customers.
___________________
___________________ Summary
___________________ A relationship policy helps build a relationship to increase the value
of the customer base. There are different ways to do this. Marketing
___________________
communication is very crucial to relationship development as it
___________________ helps the company obtain reliable information on future events
involving its customers. Companies should not use the relationship
per segment alone. The relationship lifecycle should be taken into
consideration. Translating the relationship policy into contact
moments means, identifying customers from different segments and
phases, and employing with the most suitable communication
methods to approach the customers. The relationship marketing
programs or the ‘real’ loyalty programs aim to improve the
involvement of suppliers and customers.
Customer LLoyalty
oyalty ___________________
___________________
___________________
Introduction ___________________
Customer Loyalty
Customer loyalty is the basic platform of relationship formation.
Loyalty is the ability of an organization to retain satisfied customers
for a long period. In this challenging and highly competitive business
environment, organizations are said to be fortunate if they are
blessed with loyal customers in their customer inventory. The
organization struggling in the present-day context gains a
sustainable competitive edge by possessing loyal customers.
Maintaining loyalty among customers is not an easy task for any
business, because the wants of a customer change much faster than
the needs and are very dynamic.
78
Brand Loyalty as Attitude
Notes
Measuring frequency of purchases, sequence of purchase does not
___________________ tell the marketer, the reason of selection of a particular brand. A
___________________
customer might be doing a repeat purchase not because of true
loyalty or commitment but because of convenient location,
___________________ competitive price, and ease of availability or due to a habit.
___________________ The attitudinal brand loyalty views that loyalty involves much more
than a repeat purchase behavior. This view describes that brand
___________________
loyalty should also include a favorable attitude which reflects a
___________________ preference expressed over a period.
___________________ For attitudinal loyalty to develop, there should be a psychological
process that includes evaluation, decision-making and awareness of
___________________
a strong predisposition toward purchase and overall linking of a
___________________ brand. An attitude implies a predisposition to purchase, indicating
that an emotional attachment exists. The emotional component of
___________________
loyalty is difficult to capture in the data warehouse of the
organization. Attitude, loyalty, and behavior together provide a
framework for thinking about customer loyalty that differentiates
no loyalty from latent loyalty and inertia.
Relationship Commitment
Loyal customers possessing high repeat purchase behavior and
having a strong positive attitude are expected to be the most
profitable customers. In addition to large and frequent purchases of
their own, they also refer the product to others. They love sharing
their experiences and knowledge with family and friends. Loyalty
indicates a commitment to a relationship. Relationship commitment
is defined as an enduring desire to have a long valued relationship.
A strong toward commitment toward relationship is developed if
the relationship has benefits for both the parties. A committed
partner agrees that the relationship is valuable and is willing to
work at preserving it.
79
Satisfaction
Notes
Emotional Attitudinal Degree of customer
bonding loyalty loyalty ___________________
Trust ___________________
Emotional Bonding
Long-time customer loyalty demands emotional bonding. Customers
possess a positive brand attitude, which is an affinity with a
particular brand, or they have an attachment with the company,
that is, they like the company. Brand equity is the value of the
brand name associated with a product or service that goes beyond
the functional aspect alone. For e.g., many customers feel an
association with the people who also use the same goods or service.
Although CRM systems make an attempt to develop emotional bonds
with customers, IT linkages might limit emotional bonds among
organizations and their customers.
Personal contacts have proved very powerful in relationship-building
process and could reveal many issues that affect a customer’s
willingness to purchase.
Trust
Trust is also interrelated with emotional bonding. Trust means the
willingness of a consumer to have faith in an organization or
particular brand in performing their stated function. For example,
if the date of delivery is communicated, the customer has confidence
that the product will be shipped on time. Whenever there is trust
in a relationship, all partners take for granted that none of the
partners would act opportunistically. Marketers, especially for
Customer Relationship Management
80
services, build trust by having honest and open communication and
Notes
by keeping the promises made.
___________________ Choice Reduction and Habit
___________________ Consumer research has shown that consumers having a natural
___________________ tendency to reduce their choices. In fact, consumers wish to reduce
their choices to no more than three, which is a manageable set.
___________________ Consumers feel comfortable with known brands and familiar
situations that have been rewarding. With repeat purchases over
___________________
time, we become familiar with a brand, retail store, company,
___________________ website, or search engine that results in a habit. For example, it
has been found that 90 percent of the time, customers visit the
___________________ same supermarkets.
___________________
History with the Company
___________________
The last component of customer loyalty includes the customer’s
___________________ history with the organization. Customer’s history with the company
reflects their behavior. But a distinction has to be drawn between
repeat behavior and contact history with the organization and the
image. A positive corporate image has a favorable impact on
customer loyalty, creating habitual responses to the company. For
e.g., Wal-Mart is popular for its low prices whereas Nordstrom,
another departmental store, is famous for its excellent customer
service.
81
If customers feel loyalty toward the company, then institutional
Notes
advertising, tours, and public relations might reinforce that
attachment. Many purchasers of Saturn automobiles gather for
___________________
reunions each year, thus exhibiting a type of loyalty toward the
other purchasers of this car as well as toward the brand image of ___________________
the car itself. Similar to Saturn, many organizations can benefit
___________________
from carefully reinforcing the image of the target market.
___________________
Factors Reducing Customer Loyalty
___________________
When the customers perceive that an organization has a deficiency
___________________
in any of the factors positively contributing to customer loyalty, it
may mean that they are less loyal. Other factors also lessen the ___________________
loyalty.
___________________
Competitive Parity ___________________
If the offerings of various organizations are not differentiated, ___________________
competitive parity exists. When customers notice identical brands,
perceived risk is low and there are chances of brand switching as
the likelihood of loyalty toward a product decreases.
Variety-seeking Behavior
Customers who get bored using one type of product and have a
need for some kind of change are engaged in variety seeking buying
behavior. Organizations may benefit from variety seeking behavior
by satisfying the needs and creating new flavors, flanker brands or
other extensions in the generic products.
Low Involvement
Low involvement refers to a less perceived importance or low
relevance of a product or service to an individual. Customers having
less interest in a product category are less likely to be loyal to a
particular brand or company. Customers having low involvement
are price sensitive, so another factor that decreases product or brand
loyalty is to be less price-sensitive.
Summary
Customer loyalty is the basic platform of relationship formation.
Loyalty is the ability of an organization to retain satisfied customers
for a long period of time. There are two basic perspectives on brand
loyalty, the behavioral approach and the attitudinal approach. The
behavioral approach to brand loyalty investigates how consistent
consumers are in their repurchase if a brand. The attitudinal
approach to brand loyalty considers beliefs, emotional responses,
and intensions that from a predisposition toward the brand that is
Customer Relationship Management
82
expressed over time. Satisfaction, trust and emotional bonding
Notes
contribute to attitudinal loyalty. Choice reduction and organization
contribute to behavioral loyalty. Attitudinal and behavioral loyalty,
___________________
together affect the degree of customer commitment and loyalty. If
___________________ customers feel loyalty toward the company, then institutional
advertising, tours, and public relations might reinforce that
___________________
attachment.
___________________
Questions for Discussion
___________________
1. What do you mean by brand loyalty? What are its components?
___________________
2. What factors seem to affect customer loyalty?
___________________
3. How does a company develop customer trust?
___________________
4. Explain different types of customer loyalty.
___________________
5. What are the factors reducing customer loyalty?
___________________
83
Unit 13 Notes
___________________
___________________
Introduction
In the present marketing environment, organizations focus more on
customer retention than just on customer acquisition. Customer
retention is a process of maintaining the customers with them for
a long period by satisfying the customers’ needs beyond their
expectations that later leads to customer loyalty. We can say it is
a method of converting an ordinary customer to a loyal customer.
Acquisition is an important step in building customer relationship.
Some of the issues concerned with customer acquisition are given
in the following.
For the purpose of customer acquisition, an organization is likely to
focus its attention on various types of customers that a firm comes
across in its marketing arena and treats the same as its major
sources for providing input for acquisition:
(i) suspects represent the segment of the market and have the
potential to become prospective customers; (ii) enquiries are casual
wanderers and proper responses to enquiries are likely to result in
customer acquisition; (iii) a lapsed customer specific need leads to
the customer no longer buying from an organization, thus becoming
a lapsed customer and he should be encouraged to become a customer
again, through marketing of the organization’s new offers to fulfill
the customer’s emerging new needs and so on; (iv) company’s former
customers and competitors’ former and lapsed customers can be
acquired with precise marketing and CRM program; (v) referrals
play a significant role and provide a strong base for new customer
Customer Relationship Management
84
acquisition. It is likely that fresh customers will rely heavily on
Notes
referrals rather than the organization’s own promotion efforts; and
(vi) existing buyers may also be targeted for acquisition in the
___________________
event of the organization expanding its product line.
___________________
Customer Acquisition
___________________
Following are some of the requisites essential for an organization
___________________
to be effective in its acquisition efforts.
___________________
• The organization operating in a market condition consisting of
___________________ potential consumers who can be categorized from the
organization’s service or product point of view as;
___________________
Knower – these are a set of people who only are aware of the
___________________ existence of the product/service and do not have any specific
___________________ preference;
Referrers – these are a set of people who have the preference,
___________________
but have not acted on their preference;
Indifferent – these are a set of people who are indifferent
toward the organization’s offer;
Rejecters – these are a set of people who are far away from the
acquisition process and simply reject the organization’s offers.
• The organization should have a detailed database containing
the above classification of the market and related details, which
would help to make the approach of acquisition effective.
• It is necessary to develop and provide a win-win platform
applicable to both the prospective customers and to the
organization concerned. This would induce easy customer
acquisition because of the benefits the customers might
anticipate.
• The organization should also ensure integrated communication,
ensuring integrity and dependence every time the customer
communicates. This would bring confidence in the minds of
the customers and toward bring about acquisition.
• The organization should try to minimize Fear, Uncertainty
and Doubts (FUD), which may occur in a customer’s mind
during the course of acquisition. As far as an individual
customer is concerned, prior to becoming a customer, he would
be in the “buy” stage of Extended Problem Solving (EPS), in
which the FUD influence would be at the maximum level. In
the subsequent stages, namely Limited Problem Solving (LPS)
and Routine Responsive Behavior (RRB), the FUD aspects will
gradually minimize and the customer tends to become more
and more loyal. If the customer is an organization, the “buy”
Unit 13: Retention and Cross-sell Analysis
85
stages corresponding to EPS, LPS and RRB would be, new
Notes
task or experimental buying, Modified Re-buy and Straight
Re-buy.
___________________
Customers do not buy products or services; they are interested in
___________________
the core or the augmented benefits the product or service might
generate. If the benefits promised by the organization correspond ___________________
to their expectation, then the customers can be easily acquired.
___________________
The efforts toward acquisition are to be directed in tune with the
___________________
specific role the prospective customer plays in a given context. The
organization should gather those details in relation to who ___________________
influences, decides, buys, uses, and so on. At times, the same
___________________
individual would be playing all the roles. On occasion, different
individuals in a family or an organization would play different roles. ___________________
The organization attempting to acquire customers should have total
knowledge of these actors and must set its approach accordingly. ___________________
___________________
Process of Acquisition
Any organization planning to acquire the customers should be aware
of the stages of the consumer product acquisition process. These
stages are (1) Enquiry (2) Interaction (3) Exchange (4) Co-ordination
and (5) Adoption. First the potential customer enquires about the
organization, product, nature of transaction and other related issues.
After collecting the information the customer interacts with the
company and acquires more information and clarifies already
collected information. At the exchange stage, terms of exchange,
mode of delivery and other information related to exchange are
settled. Satisfied, the customer moves to adoption of the product or
service concerned. The application of the acquisition process
described above is influenced by the following.
Type of Buying: There are two different types of buying: one, the
rational and the other, emotional. Rational buying is a more
systematic buying influenced by reason and logic. On the other
hand, emotional buying (impulse buying) is influenced by the
emotions of the buyer. It is likely that a customer involved in rational
buying would move from one stage to another systematically,
whereas in emotional buying he may not do so.
Type of Product: Acquisition also depends on the type of product,
whether it is convenient shopping of the speciality product.
Accordingly, the significance of each stage of the acquisition process
varies.
Type of Customers: Further, the significance depends on the type
of customer, whether the customer is an individual or an
organization. In contrast to the individual buyer an organization
may have its own procedure to adopt product, and the process of
Customer Relationship Management
86
acquisition might vary depending on the organization’s policy,
Notes
culture, and the related aspects. Also, acquisition depends on
whether the acquisition is a first time exercise or a repeated one.
___________________
Economic Environment: The economic and environmental forces
___________________
focus attention on the market conditions, the operations of the
___________________ competing forces, supply and demand conditions, purchasing power
etc. The acquisition process is likely to differ under conditions of
___________________
limited availability of a product, with limited brand choice and
___________________ limited purchasing power, as compared to unlimited availability of
brands and purchasing power.
___________________
Contextual Operations: The context of operation refers to the
___________________
prospective buyer’s intention, urgency, previous experience; specific
___________________ benefits expected, life style of customer, and so on. The acquisition
process is likely to differ as per the context of operation concerned.
___________________ The above aspects explained have an impact on the acquisition
___________________ process. As such, the organization has to pay attention to these
aspects, by suitably managing its operations, which in turn leads to
acquisition of more and more customers.
87
• Partner
Notes
• Winning edge
___________________
• Spokesperson
• Knowledge provider ___________________
___________________
Approaches to Retention Process
___________________
At the retention process the approach of the organization is different
from the approach adopted at the acquisition process. The difference ___________________
could be understood as follows: ___________________
• During acquisition the attention is on acquiring relationships
___________________
while during retention, the focus is on nurturing the
relationship. ___________________
88
such as his own personal reasons, forced choice, inability or
Notes
unwillingness to assume the risk of brand switching and so on.
Effective control on attrition would strengthen retention and
___________________
minimize defection.
___________________
An organization focusing attention on retention may adopt the
___________________ following sequence of actions:
___________________ Exploring: This step focuses attention on exploring the type of
customers to be attracted or retained. The choice is based on the
___________________
value of customers’ volume of business as they bring in regularity
___________________ of purchase, profit margin and the like.
89
all his latent and expressed doubts are clarified. Psychological
Notes
satisfaction provides the customer an arena to reduce his
anxieties and fear with respect to the purchase and use of as
___________________
product.
___________________
Each one of the above components of satisfaction contributes toward
total satisfaction, which has direct linkage to customer retention. ___________________
Therefore, it is imperative that the organization has to carefully
___________________
monitor the level of satisfaction that their customers are enjoying,
and initiate measures to enhance the level of satisfaction. Of course, ___________________
it should be done on a continuous basis.
___________________
Though there appears to be a direct correlation between satisfaction
___________________
and retention, the condition cannot be taken for granted by any
organization, because even a satisfied customer can join the attrition ___________________
process, when he changes his expectation in terms of the various
components of satisfaction as discussed above. The levels of ___________________
satisfaction a customer normally expects can be booked under any ___________________
one of the following categories:
• Expected Satisfaction: It is the “must be” condition the
customer expects from a product performance; those attributes
contributing to expected satisfaction must be present. In the
absence of which, any customer will be dissatisfied.
• Desired Satisfaction: Which is a preferred condition the
customer expects, however the presence or absence of the
attributes that contribute to preferred satisfaction would have
no effect on the level of satisfaction.
• Exciting Satisfaction: Indicates a condition in which the
presence of certain attributes leads to a surprisingly attractive
performance. The presence of these attributes will further add
to the level of satisfaction.
The fact to be noted at this juncture is that the customer, whom an
organization can retain by rendering expected satisfaction, cannot
continue to be retained when the customer changes his satisfaction
level from expected to desired level and further from desired level
to exciting level.
Therefore, organizations must keep on building up their ability to
continuously satisfy their target customers to have customer
retention. A suitably designed customer satisfaction audit would
serve the purpose. Added to this, a well-structured customer care
program will go a long way in gradually furthering the customer
satisfaction in tune with their expectations. Customer care that
exceeds customer expectation will lead to higher rate of retention.
In the absence of due customer care, it is likely that the customers
will be dissatisfied and will be left with three options, namely,
Customer Relationship Management
90
• Rejection
Notes
• Postponement
___________________
• Substitution
___________________
Any option the customer selects, will lead him only to the attrition
___________________ process. To prevent this, the organization should implement a well-
designed customer segment specific (if not customized) to customer
___________________
care-programs and thereby increase the rate of retention.
___________________
Cross Sell Analysis
___________________
Cross selling is the act of selling additional product/service to an
___________________
existing customer who comes to purchase a product. The cross selling
___________________ objective could be either to maximize the income earned from the
existing client or to maintain relationships with customers.
___________________
Upselling is the practice of encouraging customers to purchase a
___________________ comparable higher-end product than the one in question, while cross
selling invites customers to buy related or complementary items.
Though often used interchangeably, both offer distinct benefits and
can be effective in tandem. Upselling and cross selling are mutually
beneficial when done properly, providing maximum value to
customers and increasing revenue without the recurring cost of
many marketing channels.
Cross Selling
Cross selling happens when the sales people have more than one
type of product/service for consumers, which may be of use to them.
Cross selling is more successful in fields like banking and financial
services. Customers visit a bank for a checking account and there
are sold various investment vehicles like bonds and CDs for a
retirement plan. Investment firms also start with clients for a
particular investment product and later identify various additional
needs of the clients, which can be offered by their company.
Cross selling identifies products that satisfy additional,
complementary needs that are unfulfilled by the original item. For
Unit 13: Retention and Cross-sell Analysis
91
example, a comb could be cross-sold to a customer purchasing a
Notes
blow dryer. Oftentimes, cross selling points users to products they
would have purchased anyway; by showing them at the right time,
___________________
a store ensures they make the sale.
___________________
In ecommerce, cross selling is often utilized on product pages, during
the checkout process, and in life cycle campaigns. It is a highly ___________________
effective tactic to generate repeat purchases, demonstrating the
___________________
breadth of a catalog to customers. Cross selling can alert users to
products they did not previously know were offered, further earning ___________________
their confidence as the best retailer to satisfy a particular need.
___________________
Upselling ___________________
Upselling is different from cross selling, as the salesperson does not ___________________
pay much attention in selling additional related products, rather
the salesperson is concerned in selling an upper-end version of the ___________________
original product demanded by the customer. The automobile
___________________
salesperson gets involved in upselling by demonstrating the customer
different versions of the same product.
Upselling often employs comparison charts to market higher-end
products to customers. Showing visitors that other versions or models
may better fulfill their needs can increase AOV and help users
walk away more satisfied with their purchase. Companies that excel
at upselling are effective at helping customers visualize the value
they will get by ordering a higher-priced item.
CROSS-SELL UP-SELL
92
Notes
Similarities
Cross selling and upselling are similar in many ways as they offer
___________________
customers additional value that they otherwise would not have
___________________ received if they bought alone without any support. Some salespersons
rather than building value, catalog the features of the additional
___________________ products. A successful cross selling and upselling salesperson would
___________________ build a picture of the value in the minds of consumers, highlighting
the benefits of the purchase.
___________________
Cross selling and upselling are similar in that they both focus on
___________________ providing additional value to customers, instead of limiting them to
___________________
already-encountered products. In both cases, the business objective
is to increase order value by informing customers about additional
___________________ product options they may not already know about. The key to success
in both is to truly understand what the customers value and then
___________________
responding with products and corresponding features that truly
___________________ meet those needs.
Summary
Customer retention is a process of maintaining the customers with
them for a long period by satisfying the customers’ needs beyond
their expectations which later leads to customer loyalty. The efforts
toward acquisition are to be directed in tune with the specific role
the prospective customer plays in a given context. Though there
appears to be a direct correlation between satisfaction and retention,
the condition cannot be taken for granted by any organization,
because even a satisfied customer can join the attrition process,
when he changes his expectation in terms of the various components
of satisfaction as discussed above. Cross selling and upselling are
similar in that they both focus on providing additional value to
customers, instead of limiting them to already-encountered products.
The key to success in both is to truly understand what the customers
value and then responding with products and corresponding features
that truly meet those needs.
___________________
___________________
___________________
Introduction
Since the technology is adding new ways to add new and faster
methods of interaction with customers, it has become essential to
turn data of customers into meaningful information. There are a
number of software tools to analyze the data. One of the dynamic
tools used is Analytical CRM. It is used to develop and execute
targeted marketing campaigns that help in optimizing marketing
effectiveness. Analytical CRM helps in taking product/service related
decisions, pricing, as well as decisions regarding new product
development. Used as a forecasting tool, Analytical CRM helps a
company analyze future success depending on the customer
knowledge database. The advantages of CRM analytics are many
and help form better customer relations, better understand
customers, which helps find the prospect quickly and efficiently.
94
• It determines, develops and analyzes an inclusive set of rules
Notes
and analytical methods to scale and optimize relationship with
customers by resolving and analyzing questions.
___________________
___________________
• Revenue Dollar Model
• Customer Upgrade
___________________
95
Steps in Analytical CRM Process
Notes
Step 1: Problem formulation
___________________
• Client segmentation
___________________
• Acquisition analysis
___________________
• Relation analysis
___________________
• Channel or approach analysis
___________________
Step 2: Preparation
___________________
Step 3: Definitive Analysis
___________________
• Using statistical techniques
___________________
• Data mining
___________________
• Machine learning methods
___________________
Step 4: Visualizing
96
• Helps in satisfying customer needs and expectations
Notes
individually and maintaining the relationships with existing
and new customers.
___________________
•· Increases customer satisfaction and customer loyalty
___________________
___________________ Summary
___________________ Analytical CRM is defined as a decision support system targeted to
help senior executives, marketing, sales and customer support
___________________
personnel to understand and capitalize on the customer needs and
___________________ wants. Analytical CRM records and analyzes various types of
customer information including sales information, financial data
___________________ and marketing data. Analytical CRM helps support back-office
___________________ operations and analysis. It has to deal with all the processes and
operations that do not have a direct contact with customers. Unlike
___________________ operational CRM, where automation of sales, marketing and services
are handled by direct contact with customers and identifying
___________________
customer’s needs, analytical CRM is developed to deeply analyze
the customers’ data and information and communicate the necessary
convention and intention of customer behavior on which the company
can capitalize.
___________________
___________________
Harness the Power of Customer Information
___________________
Jim was appointed as a data analyst in Shopper’s Stop in 2010.
___________________
Jim is a Master of Arts in statistics. He had been researching to
___________________
understand the relationship between data and human behavior all
his life. ___________________
Most shoppers don’t feel the urge of buying everything from one store. ___________________
They visit Shopper’s Stop only when they need all under one roof.
Shopper’s Stop sells everything from pencil to lawn furniture. The ___________________
first store was opened in Andheri, Mumbai, in 1991. The Company
opened its 22nd store at Noida in May 2007. In 2007, it entered into ___________________
partnership with Nuance Group AG, and opened stores in Mumbai
and Bengaluru Airports. An e-store with delivery across major cities
in India was launched in 2008, with a smartphone app in 2016.
Shoppers Stop Ltd. has been awarded “the Hall of Fame” and won
“the Emerging Market Retailer of the Year Award”, by the World
Retail Congress at Barcelona, in April 2008.
For years, Shopper’s Stop has gathered data of every customer who
regularly visits its stores.
For companies like Shopper’s Stop, data sets of the customers’ ins
and outs have geared how precisely they can sell.
Contd…
Customer Relationship Management
98
Notes A scientist explored habits about ten years ago. He had put wired
rats into a T-shaped maze with a loaf of bread at one end. It looked
___________________ like that the rat smelled the loaf of bread but couldn’t know how to
find it. There was no fixed pattern in the rat’s meanderings.
___________________
Every time a rat scratched a wall, the neuro sensors in the animal’s
___________________ head channelized with activity. As experiments were repeated, the
rats eventually stopped taking wrong turns and began to move through
___________________
the maze fast. As each rat learned how to complete the maze more
___________________ quickly, its mental activity decreased.
The process within our brains that creates habits is a three-step loop.
First, there is a cue, a trigger that tells your brain to go into automatic
mode and which habit to use. Then there is the routine, which can be
physical, mental or emotional. Finally, there is a reward, which helps
your brain find out if this particular loop is worth remembering for
the future.
Once the loop is established and a habit emerges, your brain stops
fully participating in decision-making. So unless you deliberately fight
a habit – unless you find new cues and rewards – the old pattern will
follow automatically.
Contd…
Unit 15: Case Study
99
The marketing team became active, and conducted in-depth interviews Notes
to find out where the problem was, Mr. Chatterjee recalled. The
breakthrough came when they went to a house outside the city and ___________________
found the house was clean and well organized. When the team entered
the living room, where the dogs of the house spent most of their time, ___________________
the smell was overpowering.
___________________
According to Mr. Chatterjee, who led the AER team, one researcher
asked the lady what she did about the smell of dogs. She answered ___________________
that they hardly smell at all.
___________________
The same feedback was received from many other houses that were
___________________
smelly. And that was the reason AER was not gaining sales; the
customers were immune to the smell and could not detect the bad ___________________
smell from their surroundings.
___________________
Godrej employed a research team to analyze the perception of AER
among customers. They gathered footage of people cleaning their ___________________
houses and found clues that may help them connect AER to customers’
behavior. They observed that a lady’s house in a nearby colony is ___________________
clean and tidy, she didn’t complain any odor problems, and she had
no pets; yet, she loved to use AER.
The researchers observed her when she cleaned the house. She was
very particular about cleanliness as well as tidiness, from the bedroom
to the living room to the kitchen. After cleaning each room, she sprayed
AER. At the frequency she was using, the team estimated, she would
empty a bottle of AER every two weeks.
AER, as the ads implied, was a pleasant treat, not a reminder that
your home stinks.
Andy was asked by Shopper’s Stop to use the same kind of researches
on consumers’ habits to expand Shopper Stop’s sales. His job was to
analyze all the cue-routine-reward loops among shoppers and help
the company know how to exploit them. His department was managing
database, finding out customers who have kids and sending them
Contd…
Customer Relationship Management
100
Notes catalogues periodically. The department identified customers who
purchase swimsuits in April and sent them discount coupons in June
___________________ and diet books during festivals. Andy’s most important job was to
identify those unique moments in consumers’ lives when their buying
___________________ habits become particularly flexible and choose the correct
___________________ advertisement or coupon to motivate them in making expenditures in
new ways.
___________________
If companies can find out pregnant shoppers, they can earn millions.
___________________
Shopper’s Stop maintains a baby-shower register, and Andy observed
___________________ how shopping habits changed as a lady approached her due date,
which women on the register had willingly disclosed. He started
___________________ analyzing the data, and before long, some useful patterns emerged.
Lotions, for example. Many people buy lotion, but one of Andy’s
___________________
colleagues noticed that women on the baby register were buying larger
___________________ quantities of unscented lotion around the beginning of their second
trimester. Another analyst noted that sometime in the first 10 weeks,
___________________ pregnant women purchased supplements like calcium, magnesium
and zinc.
Contd…
Unit 15: Case Study
101
“If we send someone a catalog and say, ‘Congratulations on your first Notes
child!’ and they’ve never told us they’re pregnant, that’s going to
make some people uncomfortable,” Andy told me. “We are very ___________________
conservative about compliance with all privacy laws. But even if you’re
following the law, you can do things where people get queasy.” ___________________
I had got into a bad habit of going to the pantry every afternoon and
eating a packet of chips, which contributed to my gaining a few
kilograms. Every afternoon, I managed to ignore the note on my
computer, wandered to the pantry, buy a pack of chips and eat it
while chatting with colleagues. Tomorrow, I always promised myself,
I’ll collect all my willpower to resist.
Next came some less obvious questions. What was the cue? Hunger?
Boredom? Low blood sugar? And what was the reward? The taste of
the chips itself? The chance to socialize with colleagues?
One day, when I felt an urge to have chips, I went outside and took
a walk instead. The next day, I went to the pantry and brought a
lemon tea instead. The next, I bought an apple and ate it while
chatting with friends. You get the idea. I wanted to test different
Contd…
Customer Relationship Management
102
Notes theories regarding what reward I was really craving. Was it hunger?
Was it the desire for a quick burst of energy? As it turned out to be,
___________________ the answer was that after several hours spent focused on work, I
wanted to socialize, to make sure I was up to date with office gossip,
___________________ and the chips was just a convenient excuse? After chatting, it turned
out, my urge for the chips was gone.
___________________
All that was left was identifying the cue.
___________________
So, to figure out the cue for my habit of having chips, I wrote down
___________________
three things the moment the urge hit:
___________________
1. Where are you? (Sitting at my workstation.)
___________________
2. What time is it? (3:45 pm)
___________________
3. What actions are taken just before the urge? (Answered an
___________________ e-mail.)
___________________ Now, the cue was clear: I always felt an urge for a snack around
3:40 pm.
Once I figured out all the parts of the loop, it seemed fairly easy to
change my habit. I needed to shift the routine – to socialize, rather
than eat chips. So now, every day around 3:30 pm, I spend 10 minutes
gossiping, and then went back to my desk. Only the routine has
shifted... I’ve lost 21 kilograms since then.
“And we found out that as long as a pregnant lady thinks she hasn’t
been spied on, she’ll use the coupons. She just assumes that everyone
else on her block got the same mailer for diapers and cribs. As long
as we don’t spook her, it works.”
Shopper Stop’s goal was selling them baby items they didn’t even
know they needed yet.
The executive told that some women react badly with pregnancy
products. So, we mixed them with ads of products we knew pregnant
women would never buy. This made the baby ads appear as random
ads. We’d put an ad for a house next to diapers. That way, it looked
like all the products were chosen by chance.
Contd…
Unit 15: Case Study
103
Soon after the new ad campaign began, Shoppers Stop’s the sales of Notes
baby items increased heavily. Shoppers Stop’s revenues grew from 5
billion to 6 billion. Andy got promoted. He has been invited to speak ___________________
at conferences.
___________________
A few weeks before this article went to press, I flew to Delhi to
speak to Andy. I mentioned that my wife was seven months pregnant. ___________________
We shop at Shopper’s Stop, I told him, and had given the company
our address so we could start receiving coupons in the mail. As my ___________________
wife’s pregnancy progressed, I noticed an upswing in the number of
___________________
advertisements for diapers.
___________________
Questions for Discussion
___________________
1. What do you infer from the case?
UNIT-18: ECRM
___________________
___________________
Introduction
CRM is a broad term that consists of concepts used by organizations
to establish and maintain relationships with customers including
acquiring the customers, analyzing the customer data and satisfying
the customer. CRM is not just a technology used to analyze but it
is a comprehensive approach to building relationships with
customers. Focusing on customer value is essential for a successful
operational CRM strategy.
108
The real CRM payoffs start as customer information is gathered
Notes
and analyzed to develop intelligence into both the marketplace and
individual customers. When analyzed this data helps in decision
___________________
making for future product development, marketing campaigns
___________________ targeted and added services.
___________________
Operational CRM
___________________
Operational CRM is focuses on automation and improvement of
___________________ business processes that are customer supporting and involve
customer contacts. The main aim of a CRM system lies on how the
___________________
marketing, selling and service oriented processes are automated for
___________________ which, operational CRM systems are embedded with following
automation applications.
___________________
Marketing Automation
Marketing automation is the use of advanced technologies to help
marketers and marketing management achieve their marketing
Unit 16: Operational CRM
109
objectives. Different people in marketing like marketing managers,
Notes
campaign managers, market analysts, market managers, promotions
managers, database marketers and direct marketing managers can
___________________
utilize the marketing Automation software.
___________________
Benefits of Marketing Automation
___________________
• Enhanced marketing efficiency: MA enables organizations
to develop streamlined, more cost-efficient processes that can ___________________
be operated by any marketing incumbent, experienced or new
___________________
to the system.
___________________
• Greater marketing productivity: MA enables organizations
to conduct thousands of campaigns and events through multiple ___________________
channels simultaneously, hence increasing productivity.
___________________
• More effective marketing: MA enables marketers to use
closed-loop marketing (CLM). CLM works on “plan–do– ___________________
measure–learn”. Marketers can plan a campaign, implement, ___________________
measure the outcomes, learn from the results and hence modify
the next campaign or event accordingly.
• Enhanced responsiveness: MA enables marketers to respond
quickly to opportunities, even though they are not part of the
plan. MA allows businesses to involve in real-time marketing,
responding instantly to an opportunity. For example, when a
female customer purchases baby toys from a catalog for the
first time, marketers send an automated invite to the customer
to join a mother and child club that offers additional benefits
to new mothers.
• Improved marketing intelligence: Reporting and analytics
provide valuable management insights to markets, customers,
campaigns, events etc. leading to increased efficiency and
effectiveness.
• Improved customer experience: Customers receive
customized, relevant communications and benefits at
appropriate times.
Service Automation
Service automation is the use of computerized technologies to help
service staff and management in achieving their objectives.
Service automation is used in five major contexts:
1. Contact centers 2. Call centers
3. Helpdesks 4. Field service
5. Web self-service
Customer Relationship Management
110
Benefits from Service Automation
Notes
• Enhanced service effectiveness: Service requests can be
___________________ dealt faster to satisfy customers by ensuring that requests are
entertained at the first point of contact, or diverted to the
___________________
respective service engineer/customer service agent, who
___________________ possesses up to date knowledge to solve the issue.
Need
Recognition
Establish Formulate
Relationship solution
Deliver and
Close sale
Evaluate
111
a right timeframe. So here, for sales effectiveness the CRM can
Notes
play a major role. The CRM as its definition implies it is attached
with the task to create a long-term relationship with the customer
___________________
in a way that both the customer and company will get value. So let
us look at the stages of the sales cycle and see where the CRM can ___________________
play its role to boost the effectiveness of the sales cycle: The sales
___________________
stages of the sales cycle may vary from company to company, so
here the most important and the universal stages are depicted and ___________________
described accordingly:
___________________
Need Recognition
___________________
One thing that is often the salespersons miss is to properly
___________________
understand the customers and establishing relationship with them.
Without doing so, the sales cycle cannot reach its ultimate goal ___________________
even the sales cycle cannot be stressed enough to do so. Here the
___________________
CRM suggests that the salespersons should take the time to
understand the customers well and build an effective relationship ___________________
with the customer with whom they deal. The term taking time does
not mean that spending lots of weeks and months to win and dine
a customer. This means that taking the adequate time to establish
a very long-term relationship with the customer by understanding
their needs and objectives and this must be done staying in the
competition as well.
Formulate Solution
The fatal error that the salespersons do that they just play the role
of selling the product to the customer. But if they apply CRM here
then to have an effective relationship with the customer, then they
have to position them as the consultant of the customer not simply
just as salespersons. Because, to be successful through the sales
cycle, the customer must see the salesperson as someone who can
solve their problems. By creating a long-term relationship, the
salespersons are actually creating the chance of long-term repeat
customer. If the salespersons do not understand these then they
will not have success in selling the product. The salesperson must
generate the demand for their product to the customer that they
need as their solution.
Closing Sale
Closing is a term that is used in sales, which means the actual sale
of the product. Here the sales persons should play a role of suggest
or and should not create pressure on the customer. The customer
must willingly pay for the product or give the signature. To do so
the salespersons should ask the customer some positive questions
like “Do I have your authority to proceed with this order?” or “When
would you like delivery?” or they may ask, “Would you like red or
green?” etc.
Customer Relationship Management
112
Delivery and Evaluate
Notes
The delivery means to physically moving the product to the
___________________ customers’ desired location or providing the means what the
customer signed for. Here the salespersons should emphasize that
___________________
the delivery must be on time and with customers’ convenience
___________________ without any damage of the product and the product must be as like
as what the customer seen at the time of purchase. After the delivery
___________________ the salesperson should enquire that, the product is useable and is
___________________ not doing any malfunction. If yes, then the malfunction must be
rectified as soon as possible without any delay.
___________________
Establish Relationship
___________________
By accomplishing the above stages successively, the salespersons
___________________ have made a way of relationship with the customer. To keep this
___________________ relationship in long run the salespersons should keep contact with
the customer and take the information about the product whether
___________________ it is working. They should provide the latest information to the
customer and any needed modification of the product
Summary
CRM software systems offer two value propositions. The first is cost
savings due to greater efficiency in business processes, known as
operational CRM. The second, analytical CRM, collects important
customer information which is analyzed for customization, greater
customer satisfaction and for forecasting future business and sales.
Operational CRM focuses on automation and improvement of
business processes that are customer supporting and involve
customer contacts. The main aim of a CRM system lies on how the
marketing, selling and service oriented processes are automated for
which, operational CRM systems are embedded with following
automation applications: Marketing automation is the use of
advanced technologies to help marketers and marketing
management achieve their marketing objectives. Service automation
is the use of computerized technologies to help service staff and
management in achieving their objectives.
___________________
Commerce ___________________
___________________
After completing this unit, the students will be aware of the following topics: ___________________
\ What are B2B and B2C marketing
___________________
\ B2C CRM
\ CRM in B2B ___________________
\ Key ingredients used in B2B relationships
___________________
\ Simple B2B relationship marketing process
___________________
\ Implementation of CRM in B2B
\ Importance of implementing CRM in B2B market
Introduction
Business-to-business (B2B) and business-to-consumer (B2C)
marketing is not the same. B2B works on marketing efforts for
relationship building. Some people think marketing is marketing
and whether you are marketing to consumers or marketing to
businesses, you are still just marketing to people, right? B2B depends
on relationship building marketing efforts. Using consumer-focused
strategies to market your B2B business will, at best, just cost you
money. Moreover, in some cases, it may cost you customers.
114
• Merchandising and point of purchase efforts
Notes
• Emotional buying decision based on status, desire, or price
___________________
Businesses That Sell to Businesses
___________________
B2B
___________________
• Focused on relationship
___________________
• Improve relationship value
___________________
• Target market small and focused
___________________ • Larger sales cycle, many steps in buying process
___________________ • Brand identity built on personal relationship
___________________ • Educational and awareness developing efforts
___________________ • Rational buying decision based on business value
___________________
B2C CRM
B2C CRM is coupled with e-commerce, as the Internet is the most
advanced and efficient method to reach customers. From a
functionality point of view, the emphasis is laid on marketing
automation and customer service management, rather than sales
force automation.
With the advancement of technology and network communications,
e-commerce has developed rapidly on a global level. As a transaction
channel, B2C e-commerce needs support by appropriate Customer
Relationship Management (CRM).
CRM in B2B
Customer relationship management (CRM) and business to business
(B2B) are necessary for the success of modern business. Though
these are two different modules, they have some similarities. While
B2C firms manage the relationship with their customers, many
B2B firms expand fast, develop new technologies, add new customers,
integrate with other systems and forge strategic alliances rather
than paying attention to the customers.
115
Respect: You may or may not become successful at earning the
Notes
respect of your prospective customers, but you will definitely not
succeed until you first show clearly that you respect them – their ___________________
needs, their business goals and their motivations. Too often, we get
caught up in trying to show buyers how great we are that we forget ___________________
to laud them for who they are. ___________________
Care: What happens when you really work those quality leads– ___________________
feed them valuable information, help them understand what is going
on their market, show them ways to resolve daily challenges, and ___________________
then… they decide not to buy from you. Will you still care for them? ___________________
Or will they get dropped from “hot lead” into the cold waters and
sink into oblivion off your radar? In 9 out of 10 cases, B2B marketers ___________________
will stop caring for a prospect that is engaged but just will not buy. ___________________
We do not really care to find out their readiness to buy in the first
place, and then we get disappointed. It is like feeling rejected because ___________________
your long-standing date decides she is not ready to tie the knot and
___________________
wear your ring–so you stop caring for her? Fickle love!
116
Notes
Simple B2B Relationship Marketing Process
1. Cleanse Your Data/Purchase Some Data
___________________
If you already have an established data set, make sure it is up to
___________________ date and worthwhile targeting. Assuming you do not already own
___________________ a decent opt-in database you will need to source a good quality list.
Recently updated data from a reputable broker or list owner is a
___________________ decent starting point.
___________________
2. Plug Your Data into a Social CRM Application
___________________
We recommend a platform such as Nimble for this task.
___________________
Upload your data into Nimble and it will automatically search
___________________ LinkedIn, twitter, Google+ and Facebook for matching profiles. As
you look at your customers, you can verify their social media accounts
___________________
and where appropriate connect there too, for example, follow on
___________________ twitter, or connect on LinkedIn.
4. Make Contact
Don’t broadcast an email to your entire list. Be more subtle in the
first instance. Start to get on the radar of your target by
• Adding a comment to their blog
• Following them on twitter
• Retweeting a few of their updates
• Following their company on LinkedIn
Unit 17: Relationship Marketing in B2B Commerce
117
• Submitting a contact request if you have any affiliation with
Notes
the target (or ask a connection to introduce you if possible)
I met with a marketer recently who has worked out a formula for ___________________
the perfect quantity of social media touch points before approaching
___________________
a prospect.
___________________
5. Research the Business
___________________
Once you have a rich profile of the individual, layer on top and
understanding of the company. Try to build up a picture including: ___________________
6. Value-Based Approach
Now you are ready to make a value based and personalized approach.
This may sound more like sales than marketing, but one to one
marketing is increasingly overshadowing traditional volume-based
tactics.
You should at the very least be on their radar. After all, they will
have seen you following them on twitter, appreciated your comment
on their blog and you retweeting them a couple of times, they may
even have registered your participation in those LinkedIn Groups.
118
The primary differences related to the market (B2B vs. B2C) are
Notes
the type of information collected in the CRM system and the
functional requirements, not so much the implementation.
___________________
In a B2B environment, it is necessary to have a data base structure
___________________
that provides for the concepts of Accounts (companies) and Contacts
___________________ (employees). In most B2B environments, there are multiple
constituents involved in the buying process so the CRM system
___________________
needs to be able to establish permanent relationships between a
___________________ single company and multiple employees. Often in the B2B
environment, there are also multiple sales processes that could be
___________________
active within a single account at the same time, perhaps being
___________________ managed by multiple sales people or sales teams. In this case, the
CRM system needs to be set up in such a way to allow for multiple
___________________ sales processes to be related to a single account or company and
___________________ have the ability to either allow or disallow sales people and/or sales
teams to share visibility into the relevant customer information. In
___________________ the B2B market, it is also important for the database to be able to
establish relationships between the main HQ account and
subsidiaries. Specific types of information need to be collected that
are not relevant in the B2C environment such as the company
website, the management hierarchy (who reports to whom), who is
the assistant of the buyer and what is his/her contact information,
etc. The CRM should be able to store information about the industry
of the prospect. It may be important to know the company’s legal
status, credit rating, tax identification number, etc. There are other
distinctions as well but these are a few of the main requirements
for a CRM system used in a B2B market.
119
But other databases, such as those available externally from
Notes
syndicated sources, are also available for purchase or lease directly
from brokers who design the database, compile the data, continually
___________________
update the database, and market the data to their clients. Concepts
from the area of Customer Relationship Management (CRM) are ___________________
used to seek new prospects and convert them into high-quality
___________________
customers.
___________________
Summary
___________________
Business-to-business (B2B) and business-to-consumer (B2C)
___________________
marketing is not the same. B2B works on marketing efforts for
relationship building. B2C refers to any business that sells to an ___________________
end consumer; B2B refers to any business that sells to another
___________________
business both offline as well as online. Whether the company is
selling in a B2B or B2C market, implementation could be as simple ___________________
as signing up for a web based, vendor hosted solution. In a B2B
environment, it is necessary to have a data base structure that ___________________
provides for the concepts of Accounts (companies) and Contacts
(employees). In most B2B environments, there are multiple
constituents involved in the buying process so the CRM system
needs to be able to establish permanent relationships between a
single company and multiple employees. In the recent past, CRM
has evolved as an important area in the field of marketing and
overall management of a company. Concepts from the area of
Customer Relationship Management (CRM) are used to seek new
prospects and convert them into high-quality customers.
ECRM ___________________
___________________
___________________
Introduction ___________________
122
communications technologies such as operational databases,
Notes
personalized web messages, customer service, Email and social media
marketing.
___________________
Note:
___________________
• Marketing was initially focused only on developing, selling
___________________
and delivering products. Since 1996, it was argued that
___________________ marketing should be about developing and maintaining a
longer-term customer relationship.
___________________
How does CRM translate into Social CRM?
___________________
• It morphs into the ability of managing online conversations
___________________
between customers, engaging existing customers, potential
___________________ customers and other stakeholders in order to create lasting
relationships. CRM is now crucial for eBusiness.
___________________
Customer Contacts
___________________
• CRM – Contact with customer made through the retail store,
phone, and fax.
• eCRM – All of the traditional methods are used in addition to
Internet, email, wireless, and PDA technologies.
System Interface
• CRM –Makes use of the ERP systems laying focus on back end
operations.
• eCRM –Focused building relationship at the front end, while
interacting with the back end using ERP systems, data
warehouses, and data marts.
123
System Focus
Notes
• CRM – System (created for internal use) designed based on
job function and products. Web applications designed for a ___________________
single department or business unit.
___________________
• eCRM – System (created for external use) designed based on
___________________
customer needs. Web application designed for enterprise-wide
use. ___________________
Customer Extension
• Recognize the customer’s relationship interest and respond
• “Cross Sell” and “Upsell”
• Service Quality
• Use appropriate platforms channels
Benefits of e-CRM
• Reducing costs Ýn customer targeting (customizing emails on
large scale therefore reducing costs for direct mail).
• Increasing the meaning of information.
• Better and relevant understanding of customers and
relationship dynamic.
• Encouraging customer relationship customer development and
retention through loyalty programs.
Customer Relationship Management
124
Notes
eCRM Process
There is a three-step process in implementing eCRM:
___________________
1. Data collection: Customers’ preference information gained
___________________ actively (answer knowledge) and passively (surfing record)
through website, questionnaire and email.
___________________
2. Data aggregation: Filtering and analyzing firms’ needs to
___________________
satisfy their customers.
___________________ 3. Customer interaction: The firm provides prompt feedback
___________________ to customers as required by them fulfilling their needs.
125
Step 1 – Needs analysis phase: This is the point to take your
Notes
time and understand all the technical needs and desires for each of
the users and stakeholders. It also has to be kept in mind that the
___________________
mobile CRM system must be able to grow and change with the
business. ___________________
Step 2 – Mobile design phase: This is the next critical phase that ___________________
will show all the technical concerns that need to be addressed. A
___________________
few main things to consider are screen size, device storage and
security. ___________________
Privacy
The effective and efficient employment of CRM activities cannot go
without the remarks of safety and privacy. CRM systems depend on
databases in which all kinds of customer data is stored. In general,
the following rule applies: the more data, the better the service
companies can deliver to individual customers. Some known
examples of these problems are conducting credit-card transaction
online of the phenomenon known as ‘cookies’ used on the Internet
in order to track someone’s information and behavior. The design
and the quality of the website are two-way important aspects that
influence the level of trust customers experience and their
willingness or reluctance to conduct a transaction or leave personal
information.
Privacy policies can be ineffective in relaying to customers how
much of their information is being used. In a recent study by The
University of Pennsylvania and University of California, it was
Customer Relationship Management
126
revealed that over half the respondents have an incorrect
Notes
understanding of how their information is being used. They believe
that, if a company has a privacy policy, they will not share the
___________________
customer’s information with third party companies without the
___________________ customer’s express consent. Therefore, if marketers want to use
consumer information for advertising purposes, they must clearly
___________________
illustrate the ways in which they will use the customer’s information
___________________ and present the benefits of this in order to acquire the customer’s
consent. Privacy concerns are being addressed more and more.
___________________
Legislation is being proposed that regulates the use of personal
___________________ data. Also, Internet policy officials are calling for more performance
measures of privacy policies.
___________________
___________________ Summary
___________________ The eCRM or electronic customer relationship management
encompasses all the CRM functions with the use of the net
___________________ environment i.e., intranet, extranet and internet. eCRM is the
process of maximizing sales to the existing customer, encouraging
continuous relationships through the use of digital communications
technologies such as operational databases, personalized web
messages, Customer Service, Email and Social Media Marketing.
One subset of Electronic CRM is Mobile CRM (mCRM). This is
defined as “services that aim at nurturing customer relationships,
acquiring or maintaining customers, support marketing, sales or
services processes, and use wireless networks as the medium of
delivery to the customers. The effective and efficient employment of
CRM activities cannot go without the remarks of safety and privacy.
CRM systems depend on databases in which all kinds of customer
data is stored. In general, the following rule applies: the more data,
the better the service companies can deliver to individual customers.
___________________
___________________
Introduction
With the emergence of the Internet, enterprise portals took on a
whole different meaning. They have now become the gateways to
entire Web-based communities and customer activity. Customer
service and support applications are helping organizations make a
transition from cost centers to profit centers. Moreover, when these
applications get fully integrated with sales and marketing
applications, they can provide unique opportunities for organizations
to upsell and cross-sell additional products into their customer base.
128
data, but becomes a knowledge base that is tailored to the needs of
Notes
each different audience, with Web content, third-party applications,
reference materials, and detailed customer information. Portals thus
___________________
contain anything within or outside of the enterprise that customer-
___________________ facing groups can utilize, to enhance their understanding of a
customer’s experience and needs.
___________________
Several things are important for a highly successful CRM portal
___________________
strategy; the system should be the architect around the customer,
___________________ instead of around specific job functions. By putting the customer at
the applications core, no matter who is viewing, using or sharing
___________________
the information, companies are assured a sample customer
___________________ interaction process. Deploying a CRM portal solution only in one
department or one business unit will not yield the same results as
___________________ an enterprises-wide solution, which gives every front-office employee
___________________ access to the critical customer data and knowledge base.
129
technical background to assemble products. Unassisted web sales
Notes
capabilities enable customers to select and purchase products or
services via the Web.
___________________
Marketing Applications: They form the newest breed of
___________________
applications in the CRM space. These applications complement SFA
applications and provide certain capabilities unique to marketing. ___________________
Common applications include the following:
___________________
• Web-based/traditional marketing campaign planning, execution
___________________
and analysis.
• Collateral generation and marketing materials management. ___________________
130
Notes
Basic Requirements of eCRM
A company can approach eCRM from different evolutionary paths,
___________________
but they all need to proceed toward the same objective of optimizing
___________________ the value of customer relationships.
Empowerment
In this new age, eCRM strategies must be structured to accommodate
consumers who now have the power to decide when and how to
communicate with the company and through which channel, which
ability to opt for or out of. Consumers decide which firms earn the
privilege to “talk” with them. In light of this new consumer
empowerment, an eCRM solution must be structured to deliver
timely, pertinent, and valuable information that a consumer accepts
in exchange for his or her attention.
Economics
Too many companies execute communication strategies with little
effort or ability to understand the economics of customer
relationships and channel delivery choices. Yet customer economics
drives smart asset allocation decisions, directing resources and
efforts of individuals shall provide the greatest return on customer
communication initiatives.
Assessment
Understanding customer economics relies on a company’s ability to
attribute customer behavior to marketing programs. A company
should evaluate customer interactions along with various customer
Unit 19: Portals and Other Fields in eCRM
131
touch-point-channels and compare anticipated ROI against actual
Notes
returns, through customer analytical reporting. Evaluation of results
allows companies to continuously refine and improve efforts to
___________________
optimize relationships between companies and their customers.
___________________
Outside Information
___________________
The use of consumer-sectioned external information can be employed
to further understand customer needs. This information can be ___________________
gained from sources such as third-party information networks and ___________________
Web-page profiler applications, under the condition that companies
adhere to strict consumer opt-in rules and privacy concerns. ___________________
Conscious of each requirement that will shape its future business, ___________________
a company builds an eCRM solution in order to optimize ___________________
relationships between itself and its customers. For each company,
optimization might have different and multiple objectives such as ___________________
132
incremental margins hold potential. Uncovering that potential
Notes
requires companies not only to understand how customers behave
with them but what interactions they have with their competitors.
___________________
___________________
Focus on process: A CRM process brings you the appropriate
technology and it will reduce the technology gap as well as refining
___________________ your business process.
___________________ Data warehouse driven: In an eCRM solution, the data warehouse
or customer data mart contains a consolidated and comprehensive
___________________
view of the customer. The warehouse provides the broadest possible
___________________ profile of the customer. This is needed to determine an appropriate
course of action the most effective offer to make, and the best channel
___________________
to deliver pertinent message.
A multi-channel view: Organizations today have different methods
of interacting with customers. For example, a bank might use one
application to support its Website; another to support its call center;
another to support e-mail; another to support sales, another to
support ATMs; and yet another to support direct mail and
telemarketing.
Measurement driven: Today, many companies spend millions of
dollars communicating with customers, but spend little time and
effort determining the effectiveness of those campaigns. eCRM
provides the means to measure communications efforts.
133
redundant. Koch states that the main goals for an organization to
Notes
undertake ERP:
• Integrate financial information ___________________
134
An efficient and responsive supply chain can have a huge positive
Notes
impact on store product segmentation and effective customer
targeting. Integration between CRM and SCM improves
___________________
communication between the store and the manufacturing. For retail
___________________ businesses such integration can imply a lot of benefits such as
better distribution to retail outlets over various geographic locations;
___________________
feedback to suppliers, distributors, transporters, etc. The use of BI
___________________ for predicting performance at individual stores that can be
aggregated to obtain a holistic picture of the supply chain is relevant
___________________
to the entire exercise. Businesses can ensure the availability of
___________________ quick-moving items and reduce the likelihood of losing customers.
___________________ A wider view of the happenings at the retail level can also help to
take ad hoc decisions when pressed for time. Marketing and sales
___________________ can coordinate more fruitfully with the supply chain to move or
___________________ divert goods to given locations during peak seasons or for promotional
purposes. Viewing data pulled from marketing, sales, supply chain,
___________________ finance, etc. on a single dashboard can enable management as well
as store managers to take profitable decisions on cross selling and
upselling across different channels.
Summary
As a good CRM portal aggregates all relevant customer information
within a single application or desktop in a format that is customized
and personalized for the department or individual interacting with
the data. An ideal portal does not just provide access to customer
data, but becomes a knowledge base that is tailored to the needs of
each different audience, with Web content, third-party applications,
reference materials, and detailed customer information. Portals thus
contain anything within or outside of the enterprise that customer-
facing groups can utilize, to enhance their understanding of a
customer’s experience and needs.
___________________
___________________
What It Really Takes for Video Content to Go
___________________
Viral
___________________
Creating a viral video is the hope of nearly all online video creators.
For some, virility is a primary goal; for other sit is a welcome by- ___________________
product of creating engaging content and effectively marketing it.
___________________
Any serious content creator understands that things like optimized
meta data, attractive thumb nails, pop culture tie-ins, controversial ___________________
subject matter, and (perhaps above all) support from influencers, can
make a piece of content a good candidate for virility. Some companies ___________________
claim to sell virility, but their methods are unknown, their results
___________________
hidden, and their price tags hefty.
Contd…
Customer Relationship Management
136
Notes Three Steps to Going Viral: The Initial Push
___________________
There is a myth among smaller You Tube channels that big subscriber
numbers are instrumental in virility. Our channel had 188,000
___________________ subscribers the day this video was released–not huge, but nothing
to scoffat; those subscribers accounted formerly 9,500 views on the
___________________ first day. The subscribers are helpful to get a small handful of views
right off the bat, but they do little in the way of virility.
___________________
One effective tactic in this early stage, regardless of subscribers, is to
___________________
get other YouTube channels to ‘Like’ the video. Approach YouTubers
___________________ that post content similar to your own, and offer to exchange‘ Likes’ to
ensure your video gets into the feeds of those channels’ subscribers.
___________________ The (relatively) new ‘Community’ tab in the YouTube analytics can
help identify outside channels/users that regularly engage with your
___________________ content. “Elephant” benefited early on from ‘Likes’ from several
channels with fairly substantial followings.
___________________
VIDEO–https://www.youtube.com/watch?v=oB9JpI_JlAw
___________________
Three Steps to Going Viral: The Early Stages
Many people heart he word influencer and think of somebody like
Katy Perry who has millions of Twitter followers. Sure, if Perry were
to tweety our video it would get a lot of views. However, basing a
strategy around targeting Perry is not really area list icone, let us be
honest. Another kind of influencer, the much more reasonable kind to
target, is the small blogger that is seen as a leader in a particular
field. Early influencers for “Elephant” were smaller blogs like Say
OMG and half a dozen others that typically post funny caught-on-
camera videos with low view counts.
To be clear, these sites DID NOT refer a high volume of traffic. All
told, they provided less than 65,000 combined views on “Elephant”,
which represent less than two percent of the total view count. Their
value is not in the quantity of viewers they send, but in the quality;
moderators of the bigger, more popular sites look to them for
content. Indeed, Gawker’s viral content extraordinaire Neetzan
Zimmerman recently told the Wall Street Journal that every morning
he scan safeed of over 1,000 smaller sites for content to cover on
Gawker. Getting the attention of a monster site like Gawker is the
fastest way to virility.
Contd…
Unit 20: Case Study
137
Yahoo!, published an ice article surrounding “Elephant”, and embedded Notes
the video. Seeing how well the article was received on Grind TV,
Yahoo! Added it to the site’s front-page slider. This was monumental; ___________________
a video with roughly 150 k views from small blogs and YouTube
traffic gained another 300 k from Yahoo! Alone in just a few ___________________
hours.
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Asana side, only a handful of sites in the US can refer such a high
volume of traffic in such a short window of time: Yahoo, Gawker, and ___________________
Reddif certainly, and probably Huff Post, Buzz Feed, and 9 gag to a
lesser extent. I’ve left out a few others, to be sure, but not many.
Following the Yahoo! story, several other mid-size sites like AOL’s
Paw Nation picked up the story, referring an additional 100 k or so
views, collectively.
To this point (~28 hours after publishing), the video had been
post edonmore than 25 external blogs and websites, many of
which we pitched the video to, others of which picked it up
on their own.
The final event that cemented “Elephant” as a viral smash came from
none other than YouTube itself. By mid day on day two, YouTube
noticed it had a hit on its hands and selected “Elephant” for its
homepage. This was by far the biggest break for the video as
the YouTube homepage refer redraw hopping 1.3 million views
over a 48-hour period. If the Yahoo! Home page instigated virility,
the YouTube homepage sealed it.
Since our core business is media licensing, and our clients’ YouTube
videos are shown on TV on a daily basis, we have a tour disposal a
mountain of self-collected data on the topic. The data indicate that
the effect of TV on a viral video is highly variable; that is, it’s
Contd…
Customer Relationship Management
138
Notes sometimes significant but other times negligible. We can say with
certainty, however, that a large website like Yahoo! refers
___________________ many times more traffic than even a prime time, network TV
spot.
___________________
Interesting Facts from “Elephant” Analytics
___________________
• More than 350,000 views came from foreign blogs embedding the
___________________ video; advertiser value aside, a view in Kazakhstan is just as
valuable for virility as a view in the US. Take away? Don’t forget
___________________ foreign sites when promoting our video.
___________________ • Bucking traditional thinking on virility, less than 3% of
“Elephant’s” views came from social media. Social sharing is
___________________ one avenue to virility, but clearly not the only one.
___________________ • It received 5.1 million views in its first two weeks, and has gained
nearly 400 k views in its subsequent ‘long tail’ phase.
___________________
• Reddit accounted for only 500 views; studying Reddit traffic
___________________ to our videos over the years, the data suggests that the social
aggregation site refers roughly 10 views per ‘upvote’ on a YouTube
video post.
2. Other than what is mentioned in the case, what are the other
ways that a video can go viral?
Source: http://tubularinsights.com/video-go-viral
Block–V
Detailed Contents
Sales FForce
orce Automation ___________________
___________________
___________________
___________________
Introduction
Today every sales team in a business organization has to undergo
several constraints. They have to be in touch with their office
regularly for updates regarding stock availability, changing prices
and upcoming marketing schemes for the products they sell in the
market. This acts as a bottleneck in the process of selling and the
information gathered may not be accurate. Sales force automation
enables a highly mobile sales force to improve productivity on the
field, speedy fulfillment of customer requirements, access and update
sales related information at any place and at any time.
142
• Sharing sales information and statistics
Notes
• Screening and control of inventory
___________________
• Analyzing future sales patterns and behavior
___________________ • Evaluating performance of employees in sales
___________________ In short, sales force automation can help you to control your entire
___________________ sales process from head to toe. Sales force automation (SFA) software
is a type of program that automates business tasks such as inventory
___________________ control, sales processing, and tracking of customer interactions, as
___________________
well as analyzing sales forecasts and performance.
143
reports, and/or call sheets, sales people can fill-in prepared e-
Notes
forms. This saves time.
• Rather than printing out reports and taking them to the sales ___________________
manager, sales people can use the company intranet to transmit
___________________
the information. This saves time.
• Rather than waiting for paper-based product-inventory data, ___________________
144
techniques, and present the results in a user-friendly way.
Notes
This gives the sales manager information that is more useful
in
___________________
• Providing current and useful sales support materials to their
___________________
sales staff
___________________ • Providing marketing research data: demographic,
___________________ psychographic, behavioral, product acceptance, product
problems, detecting trends
___________________
• Providing market research data: industry dynamics, new
___________________ competitors, new products from competitors, new promotional
campaigns from competitors, macro environmental scanning,
___________________
detecting trends
___________________
• Co-ordinate with other parts of the firm, particularly
___________________ marketing, production, and finance
145
company. This will provide a competitive advantage because
Notes
customer satisfaction leads to increased customer loyalty, reduced
customer acquisition costs, reduced price elasticity of demand, and
___________________
increased profit margins.
___________________
Disadvantages
___________________
Detractors claim that sales force management systems have the
___________________
following disadvantages:
___________________
• Difficult to work with – need for training
___________________
• Require additional work inputting data
• Dehumanize a process that should be personal ___________________
Trusted by Executives
Executives need accurate information so they can evaluate their
company’s past performance while looking ahead to the future.
They want to answer critical business questions quickly without
sifting through reams of data. With the powerful analytics and
customizable dashboards that SFA provides, executives have the
real-time information they need to be effective.
Features of SFA
• Sales management
• Lead management
• Opportunity management
• Account and contact management
• Activity management
• Approvals and workflow
Customer Relationship Management
146
• Territory management
Notes
• Partner management
___________________
• Analytics and forecasting
___________________ • Reports and dashboards
___________________ • Customizable forecasting
___________________ • Data quality management
___________________ • Sales information
Other Features
Alerts: Messaging facility permits sales representative to receive
and send alerts to the central server.
Personal Information Management: These sets of applications
allow sales representatives to manage information on leaves, travel,
expenses and salary from the personal devices.
147
An administrative module helps in user authentication
Notes
transaction monitoring and synchronization. The server, based
on settings, hosts all the synchronization logic.
___________________
2. Client Application: The client application is hosted in the
___________________
Sales Representative’s PDA device and has the ability to view
appointments, create orders, search for customer details and ___________________
item details and synchronize with the Mobile Server using
___________________
GPRS.
___________________
Functional Features of SFA
___________________
The SFA client has the following features. The sample screen layout
___________________
for each of the features is also provided.
___________________
___________________
___________________
148
The Sales Representative can also view the list of customers
Notes
available in the PDA based on Customer ID or Customer Name.
___________________ 2. Order Management: Sales representatives can handle
inquiries, quotations and sales orders on their devices. Basic
___________________
functions like capturing user requirements, giving solutions,
___________________ etc., are possible. The key feature of this module is viewing
the order status. (see Figure 21.3)
___________________
___________________
___________________
___________________
___________________
___________________
___________________
149
4. Product Viewing: The information on products can be viewed
Notes
categorically or in alphabetical order. Information on price of
the product, description, availability and other specifications
___________________
can be viewed (See Figure 21.5).
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Delivery
instruction
Save Syn
Clear Exit
150
Notes
Summary
Sales Force Automation refers to automation of all the actions related
___________________
to selling in an organization. The SFA actions are usually
___________________ incorporated with other systems like supply and status of orders,
inventory of products and other related information and also CRM
___________________ program.
___________________ Sales force automation refers to automating all the actions related
___________________ to sales of an organization or business. This is a coordination of
applications that chiefly center on scheduling and contact
___________________ management. Sales force automation actions are usually
___________________
incorporated with other systems that supply the status of orders,
inventory and products and other related information and can be a
___________________ part of a bigger program of customer relationship management.
Sales force automation helps by making all business actions
___________________
pertaining to sales, automatic.
___________________
Questions for Discussion
1. What do you understand by sales force automation?
2. Describe the important features of sales force automation
system.
3. Discuss the advantages and disadvantages of sales force
automation.
4. Describe the benefits of sales force automation software.
5. Discuss the functional features of sales force automation.
151
Unit 22 Notes
___________________
___________________
Introduction ___________________
Definition of BPR
BPR was first introduced in a research program at MIT
(Massachusetts Institute of Technology) in the early nineties. The
term was used in the description of Davenport and Short’s
1990research project. They found out that the implementation of
modern information technology in organizations means not only
automation of managerial and production tasks but that it also has
a direct effect on the quality of the work done. Davenport (1993),
one of the fathers of BPR describes ‘business process redesign’ as:
“The analysis and design of workflows and processes within and
between organizations. Business activities should be viewed as more
Customer Relationship Management
152
than a collection of individual or even functional tasks; they should
Notes
be broken down into processes that can be designed for maximum
___________________
effectiveness, in both manufacturing and service environments.”
In its most radical form, the process enterprise is one that eliminates
functional structure in favor of an exclusive process based structure.
The more realistic approach for becoming a process enterprise is to
have a matrix structure of process hierarchy and functional-
hierarchy. Table 22.1 illustrates the differences between process
organization and functional organization.
Unit 22: BPR and CRM
153
Table 22.1 Functional versus Process Organization
Notes
Work Unit Functional Organization Process Organization
Department Team ___________________
154
were put in place to foster collective responsibility. These practices
Notes
include jobs with overlapping tasks, group-based rewards, open
workspaces, and collaborative work procedures.
___________________
Analysis of the data, after taking into account these management
___________________
practices, revealed that process-complete departments that
___________________ implemented these practices achieve cycle times as much as 7.4
times faster than process-complete departments that have not
___________________
implemented these practices. Furthermore, process-complete
___________________ departments that operated on traditional functional mindsets have
cycle times as much as 3.5 times longer than functional departments.
___________________
Organizational restructuring alone does not inherently bring about
___________________ forecasted improvements. Structural change has to be accompanied
by changes in managerial practices and mindsets to reach the desired
___________________ objectives. In fact, as we will discuss a little later, the lack of focus
___________________ on the human side of change is one of the biggest drawbacks of
traditional BPR practices. In the past, information technology has
___________________ been applied to help improve business operations.
What are the effects of BPR on corporate performance? Several
success stories have been widely publicized. Ford was able to reduce
75 percent of its staff in its accounting department, Mutual Benefit
Life achieved 60 percent productivity improvement in its insurance
applications department, Hewlett-Packard improved on time delivery
performance by 150 percent in its purchasing department, and
American Express was able to reduce average time for transaction
processing by 25 percent. However, by Hammer’s own admission,
50 percent to 70 percent of business process reengineering projects
failed. In addition to Hammer’s own assessment of the failure rate,
one study indicated that only 16 percent of corporate executives
were fully satisfied with their BPR implementations.
The degree of radical change is determined by respondents’ perceived
level of change in seven aspects of reengineering. The seven aspects
of reengineering are similar to those of the McKinsey study: process
work flows, roles and responsibilities, performance measurements
and incentives, organizational structure, IT, culture and skill
requirements. Other interesting results from this study are the
importance of process evaluation, process transformation, and social
design. Respondents rate these three stages as most important to
success among the eight project stages. The eight stages in sequence
are as follows:
• Identification of BPR opportunities
• Project preparation
• Analysis of existing process
• Development of process vision
Unit 22: BPR and CRM
155
• Technical design
Notes
• Social design
___________________
• Process transformation
• Process evaluation ___________________
156
method proposed by Porter and Millar (1985). Processes are generally
Notes
identified in terms of beginning and end points, interfaces, and
organization units involved, particularly the customer unit. High
___________________
Impact processes should have process owners.
___________________
Examples of processes include: developing a new product: ordering
___________________ goods from a supplier; creating a marketing plan; processing and
paving an insurance claim, etc. Processes may be defined based on
___________________
three dimensions (Davenport & Short 1990):
___________________
Entities: Processes take place between organizational entities. They
___________________ could be inter organizational (e.g., EDI), inter functional or
interpersonal (e.g., CSCW).
___________________
Objects: Processes result in manipulation of objects. These objects
___________________
could be Physical or Informational.
___________________
Activities: Processes could involve two types of activities:
___________________
Managerial (e.g., develop a budget) and operational (e.g., fill a
customer order)
Concept of BPR
BPR is a better approach for improvement than Total Quality
Management. A business process is a series of steps carried out to
perform some task in a business. For example, the steps undergone
to open an account in a bank explain a business process whereas
process re-engineering is similar in some respect to TQM, which is
viewed as a more sweeping approach to change. The difference
between the two is that TQM emphasizes on a team approach
involving people who work directly in the process while process re-
engineering is more likely to be imposed from above used for outside
consultants Process re-engineering is used by many organizations
in solving various problems focusing on simplification and reduction
of waste efforts.
The process re-engineering services include services like
1. Process Design and Development
2. Process Modelling
3. Process Analysis
4. Process Simulation
5. Process Implementation Support
Principles of BPR
While BPR is usually portrayed as a new concept, a number of the
principles and concepts underpinning BPR have their antecedents
Unit 22: BPR and CRM
157
in other disciplines. For example, Strassman (1993) identifies the
Notes
contribution of the industrial engineering discipline in which
methods such as process analysis, activity costing and value-added
___________________
measurement have been around for about 50 years. Earl (1994) also
discusses the contribution of a number of fields, including the ___________________
operations management domain (Juran, 1964), sociotechnical
___________________
systems thinking (Leavitt, 1964) and systems analysis. However,
BPR is now coming to the fore in a different business environment. ___________________
Summary
Business process reengineering concept depends on the premise
that each business requires a sense of direction. BPR is a way of
improving the operation and hence the output of businesses. The
aim of BPR is to discover how new methods to organize work, people
and redesign information technology to support the organization’s
goals. For an efficient and effective reengineering project,
organizations must meet certain conditions before commencing a
project. BPR is a better approach for improvement than Total Quality
Management. A business process is a series of steps carried out to
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158
perform some task in a business. Certainly, the technological
Notes
infrastructure is now very different, offering capabilities that were
not feasible in the past. Also, BPR attempts to reorient the axis of
___________________
the organization away from the traditional vertical management
___________________ control of employee up to management, and towards a horizontal
value orientation of vendor to customer
___________________
___________________
3. What do you mean by business process?
4. What are the services included in process re-engineering
___________________
services?
___________________
5. Describe the principles of BPR.
___________________
159
Unit 23 Notes
Creating Customer-F
Customer-Focused
-Focused ___________________
___________________
Organization ___________________
___________________
After completing this unit, the students will be aware of the following topics: ___________________
\ Quality as an organizational culture
___________________
\ Quality practices in Six Sigma
\ Growth through customer satisfaction ___________________
___________________
Introduction ___________________
160
Notes
Quality Practices in Six Sigma
As defined by Dean and Bowen (1994), a good management program
___________________
is one that has good principles, practices and techniques. The
___________________ principles include the guidelines, which through the practices are
implemented and get support through various techniques. The
___________________ quality practices must be the operational construct to be examined
___________________ when evaluating quality, as the practices are the noticeable
components of a quality program, which helps a manager achieve
___________________ continuous improvements. The principles are too general and
___________________
techniques are too much in detail to attain reliable results.
___________________
The key practices are as follows:
Customer Relationship
To attain quality, it is essential to understand the needs and wants
of customers and to satisfy them by providing products and services
which meet their expectations. When the company decides to
implement Six Sigma for quality improvement. A proper evaluation
system of customer requirements is considered as a platform for
customers to input their voices, using techniques like meetings with
customers, surveys and plant visits by customers.
Supplier Relationship
Suppliers’ involvement helps in delivering good quality products
and services to consumers in Six Sigma projects. A supplier selection
system is established based on quality considerations and whether
suppliers are willing to cooperate, that supports in establishing a
long-term working relationship between company and its small
number of suppliers.
Workforce Management
The implementation of Six Sigma also requires a supportive and
competent enough workforce to participate in the organization-wide
Unit 23: Creating Customer-Focused Organization
161
improvement efforts and their willingness is also important. In the
Notes
Six Sigma project, policies are formulated to strengthen job security
and motivate employees to come up with new ideas, and provide
___________________
technical and psychological support of employees. For example, a
policy in Six Sigma projects links employees’ performance with their ___________________
promotion and compensation, which motivates them to be more
___________________
involved and contribute to Six Sigma.
___________________
Quality Information
___________________
Six Sigma believes in using extensive data to identify and solve
problems. Information and data are gathered related to customer’s ___________________
needs and expectations, business processes, products and services, ___________________
which are analyzed to gain ideas for improvement, evaluate
improvement activities and maintain improvement outputs. Six ___________________
Sigma emphasizes on linking quality improvement with bottom-
___________________
line benefits and hence the metrics incorporate bottom-line
performance measures with the measures of quality defects. ___________________
Product/Service Design
To attain quality improvement, it becomes essential to design quality
into products and services and design products for manufacturability.
Cross-functional teams, for design, manufacturing and marketing
functions, are made to reduce the number of parts per product, to
have standardization of parts and work on improving manufacturing
processes. Six Sigma applies Design for Six Sigma (DFSS) in the
design process. A feature of DFSS is to use a structured, standardized
product development procedure, for example, Plan-Identify-Design-
Optimize-Verify (PIDOV). In DFSS a comprehensive set of tools is
used like phase-gate project reviews, benchmarking, measurement
system analysis, voice of the customer, Quality Function Deployment
(QFD), Pugh concept selection technique, design failure modes and
effects analysis etc.
Process Management
The implementation of Six Sigma reduces the variability of the
processes in manufacturing and delivering goods and services.
Process management is continuous improvement in production,
transactional and service processes by making use of preventive
maintenance, workplace organization, and use of line-stop ability
with an aim to satisfy the customers. Organizations for improvement
work on Six Sigma projects to resolve issues related to processes
related to customer satisfaction and the organization’s strategic
goals.
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162
Notes
Growth through Customer Satisfaction
There are two strategies for success of a business:
___________________
• Employee satisfaction
___________________
• Customer satisfaction
___________________
Productivity of corporate resources, money and machinery in all
___________________ aspects of business operations ranging from research and
___________________
development, manufacturing and operations, to sales and services
depends on customer and employee satisfaction.
___________________
Choosing the right employees, motivating them and rewarding them
___________________ on their performance becomes essential in early periods on company’s
life cycle. More important to that is motivation and satisfaction of
___________________
customers.
___________________
Not focusing on customers, essentially at the maturity stage of the
___________________ life cycle, creates a negative effect on the company’s growth
performance and profits. And once you start losing profits, growth
and market share, you also lose employee confidence, morale and
productivity. Therefore, employee satisfaction depends on customer
satisfaction. There are six major competitive advantages a company
gains by satisfying customers. All these contribute positively toward
the dual financial objectives of profits and growth.
Customer
Satisfaction
Corporate
Profits Growth
Performance
163
1. Growth in product diversification as a result of One-stop
Notes
shopping.
2. Market growth due to positive word of mouth. ___________________
Summary ___________________
___________________
The fundamental purpose of any business is to survive and earn
profit, which is not possible until the entire organization has a ___________________
customer focus. Quality management programs are being
___________________
continuously applied around the globe because businesses want to
sustain the competitive edge. Six Sigma is one of the latest quality ___________________
management programs that support businesses in attaining both
financial benefits and customer satisfaction. To attain quality, it is ___________________
essential to understand the needs and wants of customers and to ___________________
satisfy them by providing products and services which meet their
expectations. When the company decides to implement Six Sigma ___________________
for quality improvement. A proper evaluation system of customer
requirements is considered as a platform for customers to input
their voices, using techniques like meetings with customers, surveys
and plant visits by customers. Productivity of corporate resources,
money and machinery in all aspects of business operations ranging
from research and development, manufacturing and operations, to
sales and services depends on customer and employee satisfaction.
The FFuture
uture of CRM ___________________
___________________
___________________
___________________
Introduction
Relationships play a vital role here in achieving the goals. The
relationships are key to success in every aspect of life. For example
if a representative has to enter certain data which would increase
the productivity. He would only enter the data if some incentives
are given to him or some relationship has been built otherwise he
may not enter or may be lose data if he is not told the purpose or
importance of it.
Therefore, customer relationships are very important and to attain
success in business, we need to understand them.
Future of CRM
“The overarching theme for the future of CRM is that customer
demands are changing fast, and companies need to keep up. CRM
in the years to come will see general advancements in key technology
areas like Internet of Things (IoT) and Artificial Intelligence (AI)
coupled with the press for more modernization among legacy CRM
users, which will ultimately lead to a lot of interesting moves in the
market, both from vendors and CRM practitioners alike.” Says
Martin Schneider, Head of Product Evangelism at Sugar CRM.
End-users in CRM will have their time and workflow optimized
automatically, with the technology doing all the data enrichment
and action coordination for the user. In addition to workflow
optimization, systems will be able to recognize end-user skills
(proficiencies and weaknesses), surface recommendations to help
reps learn faster and perform better, and more consistently based
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166
on the context of the customer. Katherine Kostereva, Co-founder,
Notes
CEO & Managing Partner of bpm’ online
___________________
Shortcomings
___________________
The future of CRM is not certain. The results reported have been
___________________ very disappointing related to campaign management, marketing
analytics and call center management. According to a recent study
___________________
by McKinsey, just 35% of the managers were successful in attaining
___________________ objectives responsible for particular operations. CRM initiatives are
expensive, time taking and to be successful, require organizational
___________________
commitment. A typical CRM initiative within an organization can
___________________ cost over $80 million and would take around 3 years to complete.
167
to provide you with information like if your product/ service offering
Notes
is redundant or something that they are actually looking for. AI
and predictive analysis will make it possible to analyze customer
___________________
sentiments and intent, score leads, recommend products, and upsell.”
Rishi Khanna, CEO of ISHIR. ___________________
Mobile Devices
Mobile devices have their own importance. The customer interaction
through mobile devices is high as compared to laptops or other
computer devices. Optimizing your online presence for mobile
browsing, deploying applications to fulfill customer requirements
and integrating mobile into customer nurturing strategies are some
effective methods to improve future customer relationships.
Feedback Loops
Building feedback loops is equally important. Develop feedback
systems into the customer interaction structure either by CTAs
among your content marketing pieces or by reaching directly after
a purchase has been done and use the information collected to hone
the services provided by you.
CRM Software
Good quality CRM software is essential to process large data across
various fields and metrics. It helps reduce the load. A good CRM
platform helps to locate customer interactions, solve the grievances
and optimize the firm to achieve success in the market.
168
not very effective. Good relationships and performance are the way
Notes
to efficiency and effectiveness.
___________________
Summary
___________________
“The overarching theme for the future of CRM is that customer
___________________ demands are changing fast, and companies need to keep up. End-
users in CRM will have their time and workflow optimized
___________________
automatically, with the technology doing all the data enrichment
___________________ and action coordination for the user. Social media has proved to be
a vital tool in building customer relationships. More than 80% of
___________________
the population in the U.S. is engaged in Social media. Mobile devices
___________________ have their own importance. The customer interaction through mobile
devices is high as compared to laptops or other computer devices.
___________________
Automating all the processes, whether it is blasting marketing mails
___________________ to large customers or nurturing departments, is of course cheap but
not very effective. Good relationships and performance are the way
___________________ to efficiency and effectiveness.
___________________
___________________
CRM Strategies at Go Kart
___________________
Go Kart Logistics puts Zoho CRM at the hub of its business. Go Kart
___________________
has invested in CRM software system; however, adoption by the
employees was very poor as they were not understanding the full ___________________
potential of the CRM solution. Mr. Rick joined as IT manager at the
head office, Mumbai. Mr. Rick says, “Coming from a company which ___________________
uses CRM heavily, I well understand the advantages of using CRM
___________________
and what benefits it can bring to our partners, employees and
customers”. According to him, the biggest barrier is the human ___________________
resources as they often resist change. Working alongside Go Kart’s
biggest partner, ABC solutions, Mr. Rick has laid great emphasis on ___________________
IT training. He organizes a training session with ABC solutions every
fortnight that all key users attend. The users have the option of
logging into the session online as well. “The Library of the company
is well equipped. Once we’ve had our fortnightly training, all the
training session notes are loaded in there, making them available for
everyone to refer back whenever they need,” says Mr. Rick, “I’ve
observed when the staff has a better understanding of the system and
recognize the benefits it brings to the business and the clients, they
really embrace it”. These processes have helped in building good
customer relationships and so far, the benefits have been substantial.
Key Benefits
• User friendly and simple
• Higher adoption rate
• Well versed library for sharing documents and notes
• Complete knowledge of customer’s information and communications
in order to provide top level customer service
• Email campaign manager for providing complete information to
customers
The training has been successful, “We’ve been able to report on and
also pre-empt the customer life cycle and do the trend analysis. We
could reserve the shipping containers even before the customer books
it. This builds trust and confidence among the clients towards our
abilities and the service provided by us as a result improving our
relationships with our clients”, says Mr. Rick, the IT Manager. Now
the staff can access the complete information virtually and in real-
time. They have the up to date information of the clients at their
fingertips when they communicate with the client. This is helping Go
Contd…
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170
Notes Kart build strong relationships with its existing customers. The
feedback given by the customers is also good. They are using Go
___________________ Kart’s marketing campaign manager to send weekly transport
schedules that, as a result, is giving repeat customers.
___________________
Mr. Rick observed that Zoho CRM solution is playing an integral role
___________________ in planning the company’s day-to-day activities. They have plans to
fully roll out the system into the overseas offices and also bring more
___________________
of the external systems into the system’s interface. “We’ll connect the
___________________ financial system with the CRM and also link the booking system with
CRM, which is our core system. We would make it the front end to
___________________ all other systems, accessing information from our other core systems,
like the voyage and the cargo booking and also the financial systems
___________________ from a customer’s departure point”.
___________________ Zoho CRM helps in promoting the growth and development of many
businesses around the world. Our CRM solutions are fully loaded
___________________
with the marketing, sales and service functionality, catering to
___________________ companies’ need to optimize sales productivity, increase marketing,
and escalate the customer service. Zoho CRM is now the most
demanded CRM solution, with offices in Mumbai, Bangalore, Kolkata,
Ahmedabad, Chandigarh, Guwahati, Dehradun and Lucknow and a
worldwide network of certified business partners.
Our Customer
Go Kart Logistics was founded in 1995. Five years later, the company
commenced a multi-purpose liner service between Mumbai, Kolkata
and Lucknow. Today, this has become the main activity of the company
that now runs a fleet of fourteen vessels, transporting approximately
ten thousand tons of cargo a year.
2. What elements of CRM should Mr. Rick and his marketing team
analyze and assess to develop future marketing plans? And how
can the company attempt to protect its position as the market
leader?
ISBN: 978-81-945077-8-9
9 788194 507789