Meaning and Definition:

Customer satisfaction has always been a key element in the pursuit of corporate goals and objectives. However, the current
competitive environment fostered by liberalization and globalization of the econ-omy and the rising customer expectations
for quality, service and value have promoted many compa-nies to organize their business around the customers they serve,
rather than around the product lines or geographic business units.

Customer relationship management (CRM) first gained prominence in the early 1990s. It refers to the holistic approach that
organizations can take to manage their relationships with their customers, includ-ing policies related to contact with
customers, collecting, storing, analysing customer information, and the technology needed to perform these tasks.

According to Philip Kotler and Gary Armstrong, „CRM is concerned with managing detailed information about individual
customers and all customer “touch points” to maximize customer loyalty. It can also be defined as, „an alignment of strategy,
processes and technology to manage customers, and all customer-facing departments and partners‟. In short, CRM is about
effectively and profitably managing customer relationships through the entire life cycle.

CRM helps in providing better service to the customers and developing effective customer relation-ships. CRM integrates
everything that a company‟s sales, services and marketing teams know about the individual customers to get a 360-degree
view of the customer relationship.

The aim of CRM is to build customer equity; customer equity is the sum of lifetime values of all the customers. CRM analysts
develop data warehouses and use data-mining techniques to develop and maintain long-lasting relation-ships with the
valuable customers.

A data warehouse is a company-wide electronic database of detailed customer information. The purpose of data warehouse is
not just to gather information but also to place it into a central location for easy access. Once the data warehouse locates the
data at a central place, the data analysts use the data-mining techniques to examine the mounds of data to find out
interesting facts about the customers.

Need and Importance of CRM:

1. Better service to customers:

CRM provides more avenues for customers to communicate and explain their needs to the organization through numerous
contact points. Customers get increased satisfaction and a feeling of being special and important because of the increased
personalization of services and customization of goods offered to them.

For example, ICICI Bank maintains a list of priority customers and provides them with addi-tional facilities and special
offers such as free tickets to concerts, movies, and so on. Some banks, such as Syrian Catholic Bank provide personalized
services to their important customers.

2. Customization of market offerings:

Companies can customize a product or service depending on the data available with the firm. The firm can facilitate
customer-company interaction through the company contact centre and web site. Such interactions help develop customized
products.
3. Reduction in the customer defection rate:

CRM emphasizes on training and development of the employees to become more customer oriented. Due to CRM training
and development, employees show care and concern towards the valuable customers; therefore, the customer defection rate
may be reduced to a great extent.

4. Increase and improvement in long-term relationships:

Some firms treat their customers as partners. Firms solicit the help of the customers to design new products or to improve
their ser-vices. If the customer gets involved with the firm, they are more likely to remain with the firm.

5. Increase in customer equity:

CRM increases customer equity. Firms focus the marketing efforts more on the most valuable customers (MVCs). The main
aim of CRM is to produce high customer equity. Customer equity is the sum of lifetime values of all customers. More focus
on MVCs will enable a firm to increase the customer equity.

6. Competitive advantage:

The firms that adopt CRM get competitive advantage in the market. They can face the competition with much ease.
Competitive advantage helps in generating higher returns on investment.

7. Building and maintaining corporate image:

The image of the firm also gets enhanced. Loyal customers become evangelists. The evangelists spread a good word about
the company and its products. This enables a firm to get additional customers to its fold.

8. Higher return on investment:

Due to CRM, a company gains a position to generate higher returns on investment. This is because of the repeat purchases
on the part of the loyal customers. The company also makes money through cross selling. The higher return on investment
increases the shareholders‟ value.

Techniques of Building CRM:

Firms use a number of techniques to build, maintain and enhance CRM. The techniques include the
software programmes, promotional techniques, pricing strategies, MVC programmes, and so on. Some
of the techniques have been discussed in detail.

Data Warehousing and Data Mining:

CRM analysts develop data warehouses and use data-mining techniques to develop and maintain long-
lasting relationships with the valuable customers.
1. A data warehouse is a company-wide electronic database of detailed customer information. The
purpose of data warehouse is not just to gather information, but to place it into a central location for
easy access.

2. Once the data warehouse locates the data at a central place, the data analysts use data mining
techniques to examine the mounds of data to find out interesting facts of the customers.

The mined data can be utilized for various marketing decisions such as the following:

1. Product design and modification

2. Product pricing

3. Promotion mix

4. Selection of channels of distribution

5. Maintaining dealer relationships.

One-to-one Marketing:

Some firms adopt one-to-one marketing strategy. Such firms treat their customers as partners,
especially in the case of B2B markets firms solicit the help of customers to design new products or to
improve their services. If the customer gets involved with the firm, then they are more likely to remain
with the firm.

Loyalty Programmes:

Firms may use variety of loyalty programmes to retain customers. For example, airlines may offer
spe-cial discount for frequent fliers. Firms may also provide gifts and other benefits to the loyal
customers. But it is to be noted that all loyal customers need not be profitable, and all profitable
customers need not be loyal.

Therefore, the firm must be selective. In order to enhance marketing efficiency, a firm has to find out
which of its customers are worth retaining and which are not, and which customers should be given
extra care and attention. In other words, the firm has to determine the value of its customers, and focus
on MVCs accordingly.
Priority Customer Programmes:

Some firms introduce priority customer programmes. The priority customers are the MVCs. They are
given priority in after-sales service, delivery and resolving complaints. The priority customer
programmes are followed by several organizations, especially in the banking industry.

For example, Citibank maintains a list of priority customers and provides them with additional facilities
special offers such as free ticket to concerts, movies, and so on. Some banks, such as Syrian Catholic
Hank provide personalized services to the important customers.

Complementary Layers of CRM:

CRM is a term that is often referred to in marketing. This is because CRM can be

considered from a number of perspectives.

Customer relationship management Page 2

1. CRM from the information technology perspective.

2. CRM from the customer lifecycle perspective.

3. CRM from the business strategy perspective.

1. CRM From the information technology perspective:

From the technology perspective companies often buy in to software that will help to

achieve their business goals. It based customer mgt system to support sales people. CRM

have 3 key elements:

A) Customer touch points:

Customer touch points are vital since your business has a marketing orientation and

focuses up on the customer and his or her current and future needs. This is the interface

between your organisation and its customers.

B) Applications:

Applications serve marketing (e.g) data mining software and permission marketing.
C) Data stores: contain data on every aspect of the customer and the customer life cycle.

Data stores for patterns or relationships between groups or individuals or segments.

2. CRM from the customer life cycle perspective:

The customer life cycle has obvious similarities with product life cycle. Customer life

cycle focuses up on the creation of and delivery of lifetime value to the customer.

3. CRM from the business strategy perspective:

The business strategy perspective has most in common with many of the contained

website and indeed with in the field of marketing itself.3key phases and 3contextual factors.

1.Customer acquisition:

This is the process of attracting our customer for the first their first purchase.

2.Customer retention:

Our customer returns to us and buys for a second time.

3.Customer extension:

Our customers are regularly returning to purchase from us.

4. Marketing orientation:

Marketing orientation means that the wholes organisation is focused up on the needs

of customers.

5. Value creation:

Customer relationship management Page 3

Centres on the generation of shareholder value based up on the satisfaction of

customer needs and the delivery of a sustainable competitive advantage.

6. Innovative information technology:

IT must be up to date. It should be efficient, speedy and focus up on the needs of

customers.

CUSTOMER SATISFACTION:
It is a measure of how products and services supplied by a company meet or the

customer expectations. Customer satisfaction=Delivery-Expectations.

Factors influencing customer satisfaction:

Product (Basic design):

Designers are with customer needs, the designing, manufacturing and quality control.

Sales Activity:

The company sends out in its advertising and promotion programmes.

After-sales:

Guarantees, parts and service, feedback, complaints, handling, and overall

responsiveness to a customer with a problem.

Culture:

Intrinsic values and beliefs of the firm as well as the tangible and intangible symbols

and systems it uses to in still these values in to employee behaviour at all levels.

IMPORTANCE OF CUSTOMER SATISFACTION:

Customer oriented management:

During the course of a customer satisfaction analysis, customer share goals, needs,

offer to the expectations and perceptions of the customer. Because of reliable feed

back received from the customers side, it is possible for the company to guide its

actions toward establishing and assuring a long term relationship with the customer.

Comparison with the competition:

A Customer will only maintain a relationship with a company if the products and

services be being offered lead to satisfaction and are better than alternative offers.

Comparison over time:

Customer relationship management Page 4

It is important for a company to not only use satisfaction or dis satisfaction but to
also use them for analysing and deriving possible strategies for action. Comparisons

can be derived with regard to product and service quality over a given time period.

Loyalty:

The term brand loyalty is used to describe the behaviour of repeat purchases, as

well as those that offer good ratings, reviews, or testimonials. customers may express

high satisfaction levels with a company in a survey, but satisfaction does not equal

loyalty.

Reduced cost:

A highly satisfied customer costs less to serve than a new customer. A highly

satisfied customer is willing to pay more for the product or service. Customer tells

their family and friends about the product or service.

Customer satisfaction process:

They suggest five categories of approach.

1. Customer satisfaction indices: customer satisfaction indices are among the most

popular methods of tracking or measuring customer satisfaction.

2. Feedback: Feedback in this context includes comments, complaints and questions, it

may be among the most effective means of establishing the customers regards as a

satisfactory level of performance.

3. Market Research: In addition to research among customers and non-customers in to

potential ‘satisfiers, dis satisfiers, and customer expectations.

4. Frontline personnel: Direct contact with staff can provide a good means of listening

to the customers.

5. Strategic activities: Actively involving in the customer in the company decision

making may be means of pre-empting potential “dissatisfiers” and establishing

potential “satisfiers”.
BENEFITS OF CUSTOMER SATISFACTION:

hare from competitors

Customer relationship management Page 5

CUSTOMER LOYALTY:

Customer loyalty indicates the extent to which customers are developed to a

company’s products or service and how strong is their tendency to select one brand over the

competition.

ADVANTAGES:

1. Buliding relationships with customers.

2. Gathering customer information.

3. Depending market position

4. Planning against competitive activity.

Classification of customers with reference to loyalty:

There are six classifications of customers in respect of loyalty:

1. Current loyal customers will continue to use the product or service.

2. Current customers may switch to another brand

3. Occasional customers increase consumption of the brand if the incentives were right.

4. Occasional customers decrease consumption of the brand if competitor offered the right
incentive.

5. Non-users could become customers.

6. Non-users could never become customers.

TYPES OF CUSTOMER LOYALTY:

1. Supplier loyalty

2. Supra-loyalty

3. De-loyalty

1. Supplier loyalty:

Customer

satisfaction

Customer

Retention

Customer

profitability

Customer relationship management Page 6

Many customers are not only loyal to a particular brand, but also loyal to particular

supplier, of customer known as hostage. Somebody has no choice but to be a customer of

a particular brand or supplier.

2. Supra loyalty:

Supra loyalty is a term that can be applied to those are extremely. loyal to an

organisation, product or service.

3. De-loyalty:

A Customer makes a deliberate decision to move to another organisation because he

or she has been let down by an organisation.

PRODUCT MARKETING:
“The essential element of marketing is customer want satisfaction. The customers

want satisfaction is the economic and social reason for an organisation’s existence.”

THE MARKETING PLAN:

1. Market Research:

A Situation analysis is broken down in to several different areas. Swot analysis,

customer analysis competitor appraisal, and resource analysis.

a) Customer analysis:

The demography the population in a group or areas of an assortment of places.

b) Competitor appraisal:

Direct competition: when one business approaches the customers of another business

and attempts to win them over. Substitute products: Another type of competition which

can come from one company producing a substitute product of another company’s product

line.

c) Resource analysis:

Staff, finance ,assets swot analysis.

2. Objectives and strategies:

a) Specific objectives:

Increasing market share. Expanding product image. Targeting the

geographical representation. Expansion of marketing opportunities.

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b) Strategies and analyzing of target market:

Selecting and analyzing a target market. Creating and maintaining a

marketing mix. Creation of advertising and promotional ideas.

c) cost /Benefit analysis:

This is a detailed study of the business operating section of the organisations

profit and loss statement.

MARKETING MIX:

Is a combination of marketing tools that a company users to satisfy their target

customers and achieving organisational goals.

1. Product:

Product is the actually offering by the company to its targeted customers. Product

may be tangible goods or intangible services.

2. Price:

Price includes the pricing strategy of the company for its products. Pricing strategy

not only related to the profit margins but also helps in finding target customers.

3. Place:

Availability of the product at the right place, right time, and right quantity is

crucial in placement decisions.

4. promotion:

Promotions includes all communications and selling activities to persuade

future prospects to buy the product.

SEVEN PHASES TO NEW PRODUCT DEVELOPMENT PROCESS:

Idea generation:

The idea for making a new product shall first of all be conceived by the marketer.

Product screening and evaluation:

Customer relationship management Page 8

The idea conceived shall then be reviewed to check whether it will materialise.

Availability of men, machinery, materials, and money must be ensured.

Concept testing:

The marketer may be interested in knowing the reactions of the buyers to the idea of
the product.

Business analysis:

In this phase, the businessman will carry out such further analysis that will help him

to know the cost of making the product ,cost of distribution and the profits to accure.

Product development:

At this stage, the businessman will do all that necessary to start production.

Test marketing:

By test marketing the complete marketing plan for the product consisting of

pricing, sales promotion, advertisement, and channels of distribution needs

evaluation.

PRODUCT LIFE CYCLE:

The time during which the product lives in the market. That is called product

life cycle.

few competitors ,a skimming price strategy is employed.

petitors are attracted in to the market with very similar offerings.

products become more profitable and companies form alliances, joint ventures and

take each other over.

this

phase. Sales grow at a decreasing rate and then stabilise.

products are introduced or consumer tastes have changed.

DIRECT MARKETING:

Direct marketing is an interactive marketing system that uses one or more advertising

media to affect a measurable response and /or transactions at any location.

Customer relationship management Page 9

ADVANTAGES OF DIRECT MARKETING:

1. Delivers near perfect solutions to customers problems

2. Gives individual attention to customers.

3. Helps achieve excellence in product/service.

4. Facilitates relation building with the customers.

5. IS better measurable compared to mass marketing.

6. Is more cost effective.

7. Saves channel costs ,for the most part.

DIFFERENT METHODS OF DIRECT MARKETING:

1. Direct mail marketing:

Direct mail marketing is similar to mail order marketing/catalogue marketing

In direct mail marketing, not only letters/brochures are mailed to the prospects, but

product samples ,gifts and complaints are also mailed, depending on the context.

2. Direct response marketing:

Direct response marketing is another expression of direct marketing.

Direct response marketing uses different media like telephone ,radio ,tv ,and internet.

3. Tele-marketing:

Tele marketing is yet another form of direct-marketing tool.

Direct to the customer using telecom/IT facilities. Tele marketing is less expensive as

compared to most other forms of selling.

4. Face to Face selling:

The original and oldest form of direct selling is the field sales call.

In addition many customers companies use a direct selling force. Insurance agents, stock

brokers and distributors working for direct sales organisations. Such as Amway,
Tupperware.

5. Email marketing:

Email marketing is also a direct marketing tool. A major concern is spam actually

predates legitimate email marketing.

Customer relationship management Page 10

6. Voice mail marketing:

Another type of direct marketing which has emerged is personal voice mail boxes and

business voice mail systems.

7. Online marketing:

Online marketing is the practice of leveraging web-based channels to spread a

message about company‘s brand, products, or services to its potential customers. The

methods and techniques used for online marketing .Examples:”photography on google,

yahoo, and being search engines to market.

BOOKS FOR REFERENCE:

1. DR. Freda Gnanaselvam A.v. Aruna kumar

2. DR. P. Sheela Rani .