CRM

Dr Amod Markale
 Evolution of Marketing
Author Definition of the marketing concept

“The permanent analysis of the demand on one hand and on the

Denner, 1971 other hand, the development and usage of the means to satisfy
this demand in the condition of having a profit”

“Marketing represents an entire system of economic activities

regarding the programming, pricing, promotion and distribution
Stanton, 1974
of products and services meant to satisfy the needs of current and
potential consumers”

“Marketing is a process of exchange between individuals and/or

Baker 1976 organizations which is concluded to the mutual benefit and
satisfaction of the parties’”
 Evolution of Marketing
Author Definition of the marketing concept
“Marketing is the process of planning and executing the
conception, pricing, promotion, and distribution of ideas, goods,
AMA, 1985
and services to create exchanges that satisfy individual and
organizational goals”

“Marketing is an organizational function and a set of processes for

creating, communicating, and delivering value to customers and
AMA, 2004
for managing customer relationships in ways that benefit the
organization and its stakeholders.”

“Marketing is the process by which the companies create value for

Kotler and
the clients and develop a strong relationship with the consumers to
Armstrong, 2008
obtain a certain value from them”
 Evolution of Marketing
Author Definition of the marketing concept
“Marketing activity represents the societal process by which
Kotler and Keller, individuals or groups get what they need or what they want, by
2008 creating, offering and free exchange of products and of services
that carry value”.

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

AMA, 2013 creating, communicating, delivering, and exchanging offerings that
have value for customers, clients, partners, and society at large”.

Chartered Institute “Marketing is the management process responsible for identifying,

of Marketing, 2015 anticipating and satisfying customer requirements profitably”.
Evolution of Marketing
 CRM Definitions

 Customer Relationship Management (CRM)

– Defined as an art and science of collecting information on present and
prospective needs of product of customers so as to market them using all such
kind of efforts and technology in collection of data and information relating to
customers.
 CRM is a business strategy designed to optimize profitability, revenue
and customer satisfaction. -Gartner.
 CRM is a comprehensive strategy and process of acquiring, retaining
and partnering with selective customers to create superior value for the
company and the customer.
 Objectives of CRM

 To simplify marketing and sales process.

 To make call center's more efficient.
 To provide better customer service.
 To discover new customers and increase customer revenue.
 To cross sell products more effectively.
 To get better and healthy relationship.
 To identify the feedback of service from customer.
 To reduce the misunderstanding and communication gap.
 Elements of CRM

 The information needed to understand customers better

 The process management needed to deliver efficient and appropriate
experiences to customers.
 The software tools that allow us to use that knowledge.
 The training and change management elements so our people and
organizations understand and are capable of delivering experiences
that build stronger relationships and increase loyalty.
 The CRM Cycle

Obtaining
information
from
customers
Working Creating
towards superior
increased customer
profitability value

Acquisition Building
of new loyal
customers customers
 Stages in Customer life cycle:
Consider-
customer becomes
aware of a need and
investigates alternative
solutions.
Use –
Customer operates
Set up- and maintains the
product and finally
Customer installs the makes the decision to
product and learns how retire it or upgrade,
Purchase – to use it. which starts the cycle all
customer evaluates and over again.
chooses the best
alternative and places an
order.
Selected criteria Transaction Oriented
Marketing
Time Focus is for the Short term
Price Sensitivity More number of price sensitive Less number of customers tend
customers
Role of Marketing Function Suitable marketing mix
programme
Measuring of Customer Market share is monitored
Satisfaction
Customer related Service Customer related service is
paid less importance
Quality Dimension Quality is the sole
responsibility of production
Relationship Oriented
Marketing
Focus is for the Long Term
to be price sensitive
Interactive marketing
Customers are managed
Customer related Service is
paid Strong emphasis
Quality is concern for every
one
 4 C’s of CRM

Cost
Convenience

Relationship
Marketing

Consumer
Communication
 Components CRM

People
Information

Components of
CRM

Technology
Process
 Customer Acquisition

 Customer Acquisition means gaining new customers or existing

prospects to become new customers for business. The targeted
customers are the one who are not aware about your products and
services of and they have bought from your competitors.
Objectives of Customer Acquisition

Identifying
potential
customers

Measuring the Designing and

success of implementing
strategies marketing
strategies
Following up
on potential
sales
 Customer Retention

 Customer retention refers to the ability of a company or product to

retain its customers over some specified period.
 High customer retention means customers of the product or
business tend to return to, continue to buy or in some other way
not defect to another product or business, or to nonuse entirely.
 Objectives of Customer Retention

 Customer service
 Quality of products and services
 Creating a customer-friendly environment
 Loyalty programs
 Types of CRM
 Operational CRM
– Provide front- and back-end support for sales and marketing, administrative personnel, or
customer-service processes.

 Analytical CRM
– Provide tools for collection and analysis of data gathered during the operational process to help
create a better relationship and experience with clients or end-users.

 Collaborative CRM
– Deal with the interaction points between the organization and the customer.

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 Business Strategy Perspective of CRM
Business Promotes customer-centric approach
Customer segmenting
One-on-one marketing
Increase customer retention
Technology Foster close customer relationship
Analyze customer information
Coherent view of customer

Customer Increased interaction opportunity

Increase customer loyalty
Better “word-of-mouth” advertising

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 Customer Relationship Processes
 A good CRM should provide support for the following functions.
– Capture and maintain customer needs, motivations, and behaviors over
the lifetime of the relationship.

– Facilitate the use of customer experiences for continuous improvement

of this relationship.

– Integrate marketing, sales, and customer support activities measuring

and evaluating the process of knowledge acquisition and sharing.

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 CRM Delivery Processes
 Campaign Management
– To generate “leads” or potential clients for the organization.

 Sales Management
– To convert the lead generated by campaign management into a potential customer.

 Service Management
– Provide ongoing support for the client and to assist in the operation of the product or service
purchase.

 Complaint Management
– To improve customer satisfaction by directly addressing the complaint of the customer and
supporting a continuous improvement process.

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 CRM Support Process
 Market Research
– Focuses on systematic design, collection, analysis, and reporting of data, and on findings relevant
to specific sales activity in an organization.
– Involves integration of external and internal data from a wide variety of sources.

 Loyalty Management
– Provides the processes to optimize the duration and intensity of relationships with customers.

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 CRM Analysis Processes
 Lead Management
– Focus is on organizing and prioritizing contacts with the prospective customers.

 Customer Profiling
– Focus is to develop a marketing profile of every customer by observing his or her buying
patterns, demographics, buying and communication preferences, and other information that
allows categorization of the customer.

 Feedback Management
– Consolidates, analyzes, and shares the customer information collected by CRM delivery and
support processes with the analysis process and vice versa.

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 E-CRM – a definition
E-CRM is:
 Applying –
Internet and other digital technology…
(web, e-mail, wireless, iTV, databases)
 To –
acquire and retain customers
(through a multi-channel buying process
and customer lifecycle)
 By –
Improving customer knowledge, targeting,
service delivery and satisfaction.
CRM Architecture

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

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 Key Terms

Accessibility Addressability Blogs

Community Database Digitalization

Interactivity Portal Spam

 Consumer-Generated Electronic Marketing

 Wikis
 Blogs
 Public Opinion
websites
 Social Networks
Conceptual model of Internet-based customer value
management
 An Organisation looks for information

Which are our lowest/highest margin customers

Who are my customers and what products are they buying?

Which customers are most likely to go

What impact will new products/services have on revenue and margins?

What product promotions have the biggest impact on revenue?

What is the most effective distribution channel?
 Some Queries
 Given a database of 1,00,000 names, which persons are the most likely to
buy Pulser 150?
 Which types of transactions are likely to be fraudulent given the
demographics and transactional history of a particular customer?
 If competitor raises the price of product by Rs. 2, what is the effect on my
ROI?
 If Frequent flyer plan changed to: 2,500 airline miles as an incentive to
purchase, rather than 5,000, how many lost responses will result?
 In case of a microwave oven what should be emphasized: Ease-of-use of
the product OR its technical capabilities? Which will affect the revenue
most?
 Which of my customers are likely to be the most loyal?
 What is Data Warehousing?

A process of transforming data into

Information information and making it available to
users in a timely enough manner to
make a difference

[Forrester Research, April 1996]

Data
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 What is a Data Warehouse?

A single, complete and consistent store of data obtained from

a variety of different sources made available to end users in a
what they can understand and use in a business context.

[Barry Devlin]

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 Data Mining works with Warehouse Data

 Data Warehousing provides the Enterprise with a memory

 Data Mining provides the Enterprise with intelligence
 Customer Relationship Management

 Focuses on using information about customers to create marketing

strategies that develop and sustain desirable long-term
relationships.
– Database Marketing
– Customer Lifetime Value
– Technology Driven
• Customer support
• Call-center software
– Customer Satisfaction
 The Online Buying Process

 Five different types of web users

– Directed information-seekers (These are the users that will be
looking for a product, market or leisure information)
– Undirected information seekers (‘surfers’, browsers. these are the
likely to change sites following hyperlinks.)
– Directed buyers (Buyers that are online to purchase specific
products online.)
– Bargain hunters ‘compers’ looking for offers ,sales promotions
– Entertainment seekers (Interact with the web for enjoyment through
contests, quizzes, games or interactive multi-player games.)
Types of CRM applications
 CRM Technology
 CRM technology implements a companywide business strategy in an
effort to reduce costs and enhance service by solidifying customer
loyalty.

 With the rise of the Internet, data mining and analytics techniques have
advanced to where they can be considered an integral component of
CRM.

 True CRM brings together information from all data sources within an
organization to give one, holistic view of each customer in real time.

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 CRM Technology
 E-CRM Technology

 Chatbots
– AI ML based chatbot

– Implementation of techniques with various chatbots

 Interactive Voice Response

 Virtual customer representative

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 CRM Components
 Market Research
– The two key functionalities here are campaign management and market
analysis.
• Campaign management provides support for preparing such things as
marketing budgets, ad placement, sales targeting, and response
management.
• Marketing analysis tools provide statistical and demographic analysis.

 Sales Force Automation (SFA)

– Provide basic functionality for sales personnel to automate sales lead
distribution and tracking etc.

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 CRM Components (Cont’d)
 Customer Service Support
– Typically includes help desk ticket management software, e-mail, and
other interaction tools connected to a fully integrated customer
database, which is connected to the SCM and ERP application.

 Data Mining and Analytics

– Data must be collected, sorted, organized, and analyzed for trends,
demographics, cross-selling opportunities, and identification of other
sales patterns.

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CRM Components

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 CRM Packages and Vendors
 Big CRM vendors provide more features than the smaller vendors do, but there is no
software package that can work directly off-the-shelf.
Target Market Vendor
Large Enterprises Siebel, Vantive (PeopleSoft in 1999) => Oracle
Clarify => Amdocs
Midsize Firms Servisoft, Onyx, Pivotal, Remedy (=> BMC), and
Applix (=> Cognos)
Small Companies Goldmine, Multiactive, and SalesLogix

On-Demand CRM
– Provides firms with the option of a scalable CRM application suite via a
browser, and pay a per-month, per-user set fee.
– The term CRM on demand often appears in the context of software a service
(SaaS) or application service providing (ASP). 42
 CRM Architecture
 Typical CRM systems follow client – server architecture. The system
environment consists of the following components:

– Application server: Runs either front-end processing or querying

data and possibly a Web interface for the CRM system.

– Database server: Houses the back-end database and possibly

retrieves information from other database systems in the company to
present through the application server.

– Web server: Used if the CRM provides an extranet access point for
such external users as vendors or customers and an intranet access
point for employees.
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 On-Demand CRM
 High-speed secure Internet connectivity has recently spurred a lot of interest and
demand in hosted CRM systems.

 Using thin-client architecture, such vendors as NetSuite, Inc. and Salesforce.com

have provided firms with the option of a scalable CRM application suite via a
browser and pay a per-month, per-user set fee

 Other on-demand CRM vendors include Siebel, RightNow, Microsoft, and Oracle

 Small businesses are slowly shifting to on-demand software due to high costs of
installation, maintenance, and security

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 CRM Life Cycle

 A CRM system life cycle involves focus on people, procedures, company

philosophy, and culture, rather than just information technology.

 Adequately outline the corporate CRM goals and the practical process changes that
have to occur before focusing on possible technology solutions.

 Functional requirements must be considered before making a decision on the

architecture.

 There are many CRM products from which to choose, depending upon the
complexity of the information needed and the resources to manage the program.

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CRM Life Cycle

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 Implications for Management

 CRM is a strategic business solution and not a technical solution.

 CRM should not be implemented as a single system or at one time.

 CRM systems come in a variety of shapes and sizes, but there is no real off-the-shelf
solution.

 Even though CRM provides a great solution for one-on-one individualized marketing,
it also provides good mechanisms for privacy and ethical violations.

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 Customer lifetime value
 Customer lifetime value (CLV) is the total amount of money a customer is expected to
spend in your business, or on your products, during their lifetime. This is an important
figure to know because it helps you make decisions about how much money to invest
in acquiring new customers and retaining existing ones.
 The Value of Knowing Your CLV
 Calculating the CLV for different customers helps in a number of ways, mainly
regarding business decision-making. Knowing your CLV you can determine, among
other things:
 How much you can spend to acquire a similar customer and still have a profitable
relationship
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 Customer lifetime value
 What kinds of products customers with the highest CLV want

 Which products have the highest profitability

 Who your most profitable types of clients are

 Together, these types of decisions can significantly boost your business’ profitability.

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 CLTV
 The basic formula for calculating CLTV is the following:
(Average Order Value) x (Number of Repeat Sales) x (Average Retention Time)

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