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Customer Relationship Management In Product Management.

This Project Is About CRM services Provided To Customers For Before Sales And After Sales. PROJECT DONE BY:Suchita Singhvi 55. Neha Tamhanekar 56. Hetal Tanna -57.
TY(BFM) K.C.College

Sneha Tharwani 58. Urvashi Tody - 59. Rishabh Jain 60.

1/13/2012

Customer Relationship Management in Product Management.


In order to survive in todays competitive marketplace, organizations must strive to offer improved customer services. Consumers have started looking for professional and better services and with this the importance of Customer Relationship Management are being given due considerations in the new economy. Today, customers are informed and educated like never before. They scrutinize products and services before spending on them, they exercise their consumer rights and with the advent of social media they are more capable now to influence the purchasing decision of others as well. In such a scenario, businesses are bound to employ a helpful Customer Relationship Management strategy to promote their product and create a loyal customer base. These loyal customers again promote products and services through their own networks. This is the additional advantage that a business can achieve through its patrons. Through Customer Relationship Management, a business promises of offering a distinguished level of satisfaction to its customers. In their efforts towards offering a better level of customer satisfaction, companies should attract and retain customers and give them the advantages that others in the same niche dont provide. The key attributes bringing success in Customer Relationship Management are ultimate product experience, quality performance, timely response to customer queries and exemplary customer services. In Customer Relationship Management, resourcefulness is the key. A business need to be always prepared and things must be in place to satisfy a clients needs. The image of a caring organization stands between its failure and success. If a business manages to create its image with better customer services, more and more people will show their interest to be part of its ever-growing customer base. For this, businesses should adapt to the consumers needs and preferences. For the success of Customer Relationship Management, businesses need to prepare a pool of professional and efficient customer service representatives who must be ready to address the issues of the customers promptly and positively. Whenever felt, appropriate training should be provided to these representatives to remain updated and skillful to help them perform their jobs efficiently. Customer Relationship Management is not all about answering to the queries of the customers and clearing their doubts. Businesses implement lots many innovative programs to engage customers and promote their products or businesses. Customer survey is a popular form of Customer Relationship Management where customers opinions on their experience with the products are recorded. These opinions form the basis of decision making while

deciding on advertising, promotion and product attributes. These improved product attributes play a significant role in retaining patrons and luring new customers as well. In real sense, Customer Relationship Management reinforces an organization's commitment go the extra mile in an attempt to please its customers and keep them interested in its brand. In a cut-throat competition scenario, where everyday a new product hits the market, businesses need to implement strategies to develop a long-lasting relationship with its customers. When you successfully add a wow factor to your product and services, customers cherish your brand and ensure your dominance in the industry. Think on the ways of building better customer relationships, if you havent implemented any Customer Relationship Management yet. When there are multiple tiers, the brands in all the tiers should convey the same organizational values. These values can be communicated through brand logos and taglines. CRM is a strategic tool for marketers to acquire customers, retain them, and maintain longterm profitable relationships with them. It uses information technology to achieve these objectives. Competitive pressures have led marketers to realize the necessity of customer retention to survive in a deregulated economy. CRM has enabled the shift in approach from being product-centric to being customer-centric. In addition to maximizing customer value, CRM helps marketers to cross-sell products, achieve long-term profitability, and build the brand. Relationship marketing is concerned with relationships that exist between any two stakeholders of a business. It involves relationship building with both external customers and internal customers. In an organization, relationship marketing can be at one of the following five levels -- basic, reactive, accountability, proactive, and partnership levels. One-to-one marketing essentially involves knowing about each and every possible need of the targeted customers and developing tailor-made solutions for them. To implement one-to-one marketing, the marketer needs to identify the target customers, differentiate them into groups, interact with each customer group, and provide customized products and solutions in a costeffective manner. This can be done using the technique of mass customization. Customer knowledge, customer loyalty, and customer switching are three important concepts in CRM. The components of customer knowledge can be classified into three broad categories: knowledge about the customer, knowledge to support the customer, and knowledge from the customer. Customer loyalty can be either affirmative loyalty or reluctant loyalty. The level of affirmative loyalty is influenced not only by traditional factors, such as customers, product offerings, employees, and measurement systems, but also on emerging practices such as electronic customer care. Eight different reasons have been identified for customer switching. They include (a) core service failures, (b) service encounter failures, (c) price failures, (d) inconvenience, (e) employee response to service failures, (f) attraction by competitors, (g) ethical problems, and (h) involuntary switching. The first five reasons in this list can be addressed through the use of CRM techniques.

Implementation of CRM includes customer knowledge management, technology adoption and implementation, and performance measurement. The customer knowledge management process (journey) is a cycle with four inter-related steps - developing a customer-focused strategy; developing the customer buying process; implementing actions, tactics, campaigns; and customer learning. Technology implementation has become the key to CRM implementation in an organization as huge volumes of customer data can be stored, managed, and retrieved using the latest technologies. CRM software tools can be categorized into operational CRM tools and analytical CRM tools. When the performance measurement of the CRM activities is done using a carefully defined basket of metrics, it helps in managing and controlling the CRM initiatives in the organization. In the future, large enterprises in India are expected to opt for CRM applications which have pre-built interfaces with standard ERP applications, while the small and medium business enterprises may still continue to use stand-alone CRM applications. The usage of CRM in India is expected to evolve from ensuring operational efficiency (in customer handling) to yielding strategic benefits -- through real-time customer segmentation, and co-creation of products with customers.

Product life-cycle management


Product life-cycle management (or PLCM) is the succession of strategies used by business management as a product goes through its life-cycle. The conditions in which a product is sold (advertising, saturation) changes over time and must be managed as it moves through its succession of stages. Product life-cycle (PLC) Like human beings, products also have an arc. From birth to death, human beings pass through various stages e.g. birth, growth, maturity, decline and death. A similar life-cycle is seen in the case of products. The product life cycle goes through multiple phases, involves many professional disciplines, and requires many skills, tools and processes. Product life cycle (PLC) has to do with the life of a product in the market with respect to business/commercial costs and sales measures. To say that a product has a life cycle is to assert three things:

Products have a limited life, Product sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller, Products require different marketing, financing, manufacturing, purchasing, and human resource strategies in each life cycle stage.

The four main stages of a product's life cycle and the accompanying characteristics are: Stage 1. Market introduction stage 1. 2. 3. 4. Characteristics costs are very high slow sales volumes to start little or no competition demand has to be created

5. customers have to be prompted to try the product 6. makes no money at this stage 1. 2. 3. 4. 5. costs reduced due to economies of scale sales volume increases significantly profitability begins to rise public awareness increases competition begins to increase with a few new players in establishing market 6. increased competition leads to price decreases 1. costs are lowered as a result of production volumes increasing and experience curve effects 2. sales volume peaks and market saturation is reached 3. increase in competitors entering the market 4. prices tend to drop due to the proliferation of competing products 5. brand differentiation and feature diversification is emphasized to maintain or increase market share 6. Industrial profits go down 1. 2. 3. 4. costs become counter-optimal sales volume decline prices, profitability diminish profit becomes more a challenge of production/distribution efficiency than increased sales

2. Growth stage

3. Maturity stage

4. Saturation and decline stage

CRM Role in Sales Strategy

CRM software can help increase revenue for your business. businessman and chart image by Kit Wai Chan from Fotolia.com Customer relations management software can help your business grow by managing many sales processes, from lead scoring to enhancing long-term customer relationships. A January 2010 study by the Aberdeen Group revealed that many of the fastest-growing companies use CRM technology to turn more sales leads into revenue. The study showed that 63 percent of companies with the highest annual growth in terms of revenue from sales leads used lead management technology, such as CRM. Sales Planning CRM software can give you an overview of your projected sales for a specific period. Such forecasting data can help you plan marketing campaigns and prepare for increases or dips in sales volume. You can also use data from the CRM system to manage sales territories more effectively. It allows you to view the schedules of your field agents along with the potential of various territories so you can place the right members of your team in the locations where they are most needed, thus optimizing your team's performance. Improve Lead Conversion CRM can help shift the focus of your sales professionals away from peripheral tasks so they can spend more time selling. Data gathered through CRM software can help monitor sales quotas, identify deals that have not yet closed and create strategies to shorten sales cycles. Your CRM system will track and assess incoming leads and distribute the most promising leads to the agents most likely to close the sale. CRM applications can also help to foster efficient collaboration within your team by coordinating tasks among agents. Build Customer Relationships Maintaining existing customer relationships is just as important to your business as acquiring new customers. CRM applications can store detailed data from each interaction with your customers. Your sales and marketing teams can use this information to anticipate your

customers' needs. Consistently providing personalized customer service will help you build a loyal customer base. CRM can manage customer account profiles and sales processes as well as develop and monitor your long-term customer contracts. Track And Analyze CRM enables you to track lead data so you can calculate the return on your lead investments and marketing campaigns on an ongoing basis. This allows you to see which lead sources are producing the most revenue and adjust your focus accordingly. It also lets you access data on each lead, which is a valuable asset for your sales team. According to CRM producer SAP, the sales analysis aspect of the software can "monitor the overall health of your business by creating accurate forecasts, proactively monitoring pipeline performance, effectively managing budgets and properly allocating resources to meet revenue goals. Pricing And Order Fulfillment CRM helps to ensure accurate pricing and quotes. It also captures and tracks customer orders, confirms product availability and expedites order fulfillment. Among the chief purposes of CRM, according to the CRM information resource website SearchCRM, is "providing employees with the information and processes necessary to know their customers, understand and identify customer needs, and effectively build relationships between the company, its customer base and distribution partners."

The role of sales process in CRM


No two companies sell in exactly the same number of steps or use exactly the same set of conditions or rules to sell. Any company that has not produced a successful, repeatable, sales processeither manually or with some prior automationwill not gain ground by implementing more technology. They will simply drive an incomplete or ineffective process faster! This blog article discusses the need for the development of an accurate map of the most efficient process for each discrete sales effort prior to committing that process to automation. Mapping and improving processes prior to enabling them with technology provides several benefits:

Locks in agreement on how things work among sales process owners Provides an efficient environment to discuss or produce change Provides Least Cost initiative approaches o Compresses the time needed to decide on changes

Provides an accurate picture of the steps and relative ROI of each for prioritization Provides documentation and internal disciplines to re-create change downstream

The Role of Process Process mapping is the documentation of discrete activities involved in completing the sales cyclefrom point of customer contact through information-gathering to closure and fulfillment. Surprisingly, few companies take the time to produce this map in any great detail or to understand the roles within the sales and marketing team. Beyond sales and marketing are many more layers of support and customer service people whose roles create touch-points within the sales process. If sales roles are not well understood, these supporting roles suffer as well. The reason most companies dont map their sales process is a sense that everything is workingthat the perceived process is in place and working by its own momentum. Process is important to the entire enterprise, although for purposes of this document we are generally speaking about CRM process improvement and its role within the enterprise. Example Many sales teams have a few savvy team members who have learned to achieve and excel in standalone mode. The motivation comes from an extreme desire to clear away all hurdles between themselves and commission checks with extreme dispatch and efficiency. As these few continue to blow out their monthly sales number, management looks at the success as proof of a successful process and often begins to skew the structure of the entire sales force and support staff to mimic these successes. But is it a process, and is it a success? Once you begin to break down the steps needed to support these top performers, it often becomes clear that their sales are supported by an inordinate amount of background resources who manage extraordinary, unpredictable gyrations of paperwork, communications and customer contact to make all ends meet in the middle. If every salesperson on the team were allocated similar resources, cost of sales would skyrocket as margins plummeted. In fact, these top performers are the antithesis of process. They are inefficient, resource-gobbling engines driving events through the path of least resistance using anyone and everyone who will help them. They rarely do it the same way twice. Documenting the processliterally creating a graphic and textual representation of the steps being created to support the example abovewould quickly highlight the problem.

The Value of Process Mapping Process mapping is a proven analytical and communication tool intended to help improve existing processes or to implement a new process-driven structure in order to improve business processes. By definition, a business is only as efficient as its processesprocesses that are measurable and rewarded based on performance relative to strategic goals. It is imperative to understand how each process fits into the overall enterprise structure. Everything a business does to survive is process-driven. Any metrics used to assess or value success can only be calculated within the discipline of process. Within CRM, process is extremely important to establishing valid roll-up of some of the most critical indicators for ROI:

Revenue per year Gross profit dollars per year Lower costs of sales as percent of revenue Customer satisfaction and retention

Each of these metrics requires an accurate and repeatable process in order to derive true and accurate measurements. If the gross results feeding these numbers are calculated in any way through a random or subjective (non-process) methodology, they have no accurate value. A good example lies in the process of managing customer contracts: Preferred customersthose who buy in volume or regularity or bothare often offered more competitive pricing and delivery terms and conditions on the products or services purchased. A relative value, or pecking order, is established by layering these conditions in some kind of matrix that makes sense for the product provider. As long as these contracts are administered through an effective and unchanging set of business rules (process), the rolled-up results of sales in each category have meaning. If, on the other hand, there is subjective management of conditions within the contracts, such as an ad hoc discount thrown in on a one-time or erroneous basis, the rolled-up revenue from that contract will reflect a different number than would have occurred in a strictly managed process. The only way to guarantee the number remains consistent over time is to know and exercise the right process the same way time after time. For companies who have repeatable processes in place, process mapping can be used to analyze the purposes an application serves as conditions, customers or markets change

How product managers make a difference

There are at least four reasons why product managers must consider after-sales activity since they own the definition and the packaging of after-sales product and services as an integral part of the customer offerings.

Sales services have a strong impact on customers satisfaction and consequently on the repurchase rate of a product because a customer who is experiencing a problem with an after-sales product will tend to switch to another product. After-sales service is part of the products Brand Promise and it is up to service to ensure the reality of the value proposition promised by product managers to customers. Reliable and robust after-sale services can increase the acceptance rate of a new product by making mainstream customers much more secure to adopt an innovative solution. A sound and consistent after-sales offer often contributes to a sustainable competitive advantage, less easily duplicable than just a product.

Finally, the beauty of those services is that they can double profit margin compared to the profitability of the goods sold, especially in an environment that is depressed.[1] A recent study by AMR found that while after-sales service represents on average 24% of revenue, it generates an astounding 45% of profit.[2] This share of revenues can be even higher, as in the case of Rolls-Royce plc where after-sales represented 55% of overall turnover in 2004. In B2B, after-sales can generate three to four times the turnover of the original purchase during the solutions lifecycle. For example, Snecma or Bombardier, companies in the aircraft engines and spare parts business, report after-sales representing 80% of the net present value versus 20% for original equipment. Interestingly, the opposite effect for aircraft occurs. Airbus after-sales account only for 30% of the net present value versus 70% for new equipment. For consumer products, it can be estimated that after-sales services can generate between 2030% of total sales if correctly managed. The bulk of the margin does not come from the direct repairs but from spare parts, whose margin can be more than 50%, and support and warranty contracts whose margin may be above 75%.

Growing your after-sales services


There is still room for growth as many marketers and product managers have not fully grasped and made use of the whole potential of after-sale services. How? First by segmenting the after-sales market according to customers needs and second by designing the correct service offer. Various companies, such as Dell, Lexmark, Raytheon and Agilent have conducted research in the needs and expectations of their customers regarding after-sales services. Dell Enterprise Field Operations is consistently utilizing customer feedback to increase their service levels and manages to stay one step ahead of the competition. All the surveys demonstrate that although price is important to customers, the key issues are swiftness of delivery, reliability, and availability of repair and maintenance services as shown below. The relative importance of those expectations usually depends on the attitude of the customers toward risk as well as the capability and willingness to do some work internally without the assistance of the product supplier.

Identifying contracting needs


It is important to avoid the one fits all model with only one standard type of after-sales service contract. The needs for after-sales services vary according to the type of customer. On the other hand, be careful not to customize every contract for each customer because it becomes difficult to manage the associated complexity. Furthermore, it usually increases costs to the point where after-sales services are no longer profitable. There is a fine line between standardization and customization of after-sales services. Various customer expectations may be used to segment after-sales customers according to their main requirements. To make it simple, three different groups can be considered.[3] In the first group are demanding customers who want a very high level of after-sales services in order to hedge the risk of a disastrous loss in their business; they want swift and consistent response time as well as reliable operations and are ready to pay a premium price for that assurance. In the second category are the customers who are more price-sensitive and less concerned with instant availability; they want robust maintenance service but not necessarily immediately. The third group consists of the customers who aspire to a basic level of after-sales services with simple operations; they are prepared to wait or to perform some maintenance operations themselves in order to cut costs; in any case, they cannot or do not want to pay huge sums for post sales-operations.

Developing profitable after-sales services


Once the various market segments have been identified, the second challenge is to design profitable after-sales services which will meet the expectations of each category of customers. There are three options:

flat fees for unlimited services

fixed prices for specific services time and materials billing

Demanding customers belonging to the first group tend to require a full-coverage service contract with a specific service over a given period of time, which is usually between one to four years, and for a flat fee such as Hewlett Packard is doing for its hardware with the Care Pack contracts. For the after-sales provider, such a contract can be extremely profitable, but can also be hazardous if there is no repair experience or if some service requirements cause costs to increase dramatically. Costs for servicing old equipment can also be higher than newer models because special order parts may be needed or because technicians lack the experience in working on old equipment. Also, if the contract implies servicing a competitors piece of equipment, it is important first to check that technicians can do the work cost-effectively. Middle-of-the-road customers in the second group usually look for fixed prices for specific services such as maintaining a given part of the equipment. To avoid cost overruns, the company must have, in advance, a sound knowledge of its true costs for time and material as does, for example, the Global Commercial Field Service of GE Aircraft Engines. In these instances, this type of contract can be extremely profitable. The margins are not in the repairing but in the selling of spare parts and services. Finally, price-sensitive customers belonging to the third group prefer time-and-materials billing: the company performs services as required and charges an hourly/daily rate for labor and a mark-up on parts and materials. For the company, the fees are usually higher than in the previous model because there is no promise of repeat business. However in certain markets, local service competitors with a lower cost structure can drive the price down, especially for the maintenance of standard parts. In that case, managing the productivity of the field service operations is crucial for success. Siemens has managed to do this recently where Peter Manni, VP National Support Services, eliminated 30% of field service staff with no reduction in the level of customer service, and an annual cost savings of $6.5M over two years. The savviest companies then manage to combine those three main categories of offerings often referred to as Service Level Agreements (SLAs)and mix them by providing contract additions in order to meet the expectations of the customers. Ensure that each package of service, even enhanced with some additional features, does not deliver more services than a higher category of after-sale services at a higher price. It is also important to assign SLAs that can consistently be met by the field service team as well as matching service content of the contract to the criticality of the equipment.

Pricing after-sales product and services


As a rule, after-sales products and services can and should be priced to value whenever possible. For example, after running a quick market survey by its main users, a telecommunication company figured out that some customers were ready to accept (and to pay) a limited level of maintenance and monitoring; but other customers were eager to pay more for extra services such as remote supervising or preventive maintenance. The average price of the spare parts order for a communication router is about $600. However, the cost of having the Internet down ranges from $10,000 per day for a business school to more than $600,000 for an e-business vendor like Amazon , eBay , or Expedia .

After-sales solutions must be designed and marketed to keep out competitorsusually thirdparty maintenance specialists or customers in-house maintenance unitsbecause switching costs and convenient alternatives also has a strong influence on the value perceived by customers, as shown below. A premium price can be charged for a critical component or service with no alternative on the market (pricing to value), but not for a simple part easily available nearby (market price or cost + margin price). Caution: if price + cost or value is excessive in the customers eyes, the supplier will be seen as monopolistic; so best pricing should always be perceived as reasonable.

Various pricing tactics for after-sales solutions


Number of alternative suppliers Low Consequences of failures for customers
Medium High Few/None Cost + Margin Value Value Some Market Price Value Value Many Market Price Market Price Market Price

Selling after-sales solutions


Who should be in charge of the selling of after-sales solutions? Usually the distribution channels, either the direct sales force or the third party distributors, sell the after-sales services connected directly to the initial sale, such as transport, installation, warranty, and training programs. However, experience shows that there is little interest in selling after-sales solutions during a products operational life unless a strong financial incentive exists. The sales force and distributors are more interested in selling new original equipment and services. One solution is to set up an independent organization, such as a service center or an aftersales department with its own marketing and sales organization dedicated to after-sales solutions, as did Pitney Bowes. In the US today, Sony has more than 20 service centers for business customers and 10 factory-controlled centers for consumers as well as a Sony Direct Accessories and Parts Center, which can be accessed online by consumers. All those centers provide spare parts and maintenance services for all of Sonys equipment. Similarly, JVC has more than 10 services centers in the US. Because the after-sales unit may be perceived as a competitor by the distribution channels direct or indirectit must not overlap with Sales when dealing with customers so as to avoid confusion and conflicts. But the risk of conflict is usually limited; especially when the service center can serve local distributors by supplying parts that distributors prefer not to store, or when the booking of after-sales sold to a business customer are also credited to the sales rep in charge.

Know your customer

In conclusion, product managers and marketers should know their customers expectations for after-sales product and services and should deliver a proposal that matches the customers expectations, in terms of delivery, reliability, availability, and price. Furthermore, there is more than just the delivery of after-sales services, it is also important for product managers to be involved in the definition of after-sales services. Product managers should also consider the design of their product in order to extract the maximum value of after-sales product and services, making them modular, with remote diagnostics or self-diagnostics and with reusable parts across multiple product generations. In doing so, product managers and marketers ensure full exploitation of complete potential of the aftersales market for their product in order to achieve more market power, market share, and profitability.

BENEFITS OF CRM
Implementing a customer relationship management (CRM) solution might involve considerable time and expense. However, there are many potential benefits. A major benefit can be the development of better relations with your existing customers, which can lead to: increased sales through better timing by anticipating needs based on historic trends identifying needs more effectively by understanding specific customer requirements cross-selling of other products by highlighting and suggesting alternatives or enhancements identifying which of your customers are profitable and which are not This can lead to better marketing of your products or services by focusing on: effective targeted marketing communications aimed specifically at customer needs a more personal approach and the development of new or improved products and services in order to win more business in the future Ultimately this could lead to: enhanced customer satisfaction and retention, ensuring that your good reputation in the marketplace continues to grow increased value from your existing customers and reduced costs associated with supporting and servicing them, increasing your overall efficiency and reducing total cost of sales improved profitability by focusing on the most profitable customers and dealing with the unprofitable in more cost effective ways Once your business starts to look after its existing customers effectively, efforts can be concentrated on finding new customers and expanding your market. The more you know about your customers, the easier it is to identify new prospects and increase your customer base.

Even with years of accumulated knowledge, there's always room for improvement. Customer needs change over time, and technology can make it easier to find out more about customers and ensure that everyone in an organisation can exploit this information. A type of CRM solution Customer relationship management (CRM) is important in running a successful business. The better the relationship, the easier it is to conduct business and generate revenue. Therefore using technology to improve CRM makes good business sense.

CRM solutions fall into the following four broad categories.

Outsourced solutions Application service providers can provide web-based CRM solutions for your business. This approach is ideal if you need to implement a solution quickly and your company does not have the in-house skills necessary to tackle the job from scratch. It is also a good solution if you are already geared towards online e-commerce. For more information see our guide on cloud computing.

Off-the-shelf solutions Several software companies offer CRM applications that integrate with existing packages. Cut-down versions of such software may be suitable for smaller businesses. This approach is generally the cheapest option as you are investing in standard software components. The downside is that the software may not always do precisely what you want and you may have to trade off functionality for convenience and price. The key to success is to be flexible without compromising too much.

Bespoke software For the ultimate in tailored CRM solutions, consultants and software engineers will customise or create a CRM system and integrate it with your existing software. However, this can be expensive and time consuming. If you choose this option, make sure you carefully specify exactly what you want. This will usually be the most expensive option and costs will vary depending on what your software designer quotes.

Managed solutions A half-way house between bespoke and outsourced solutions, this involves renting a customised suite of CRM applications as a bespoke package. This can be cost effective but it may mean that you have to compromise in terms of functionalityHow to implement CRM

The implementation of a customer relationship management (CRM) strategy is best treated as a sixstage process, moving from collecting information about your customers and processing it to using that information to improve your marketing and the customer experience.

Stage 1 - Collecting information The priority should be to capture the information you need to identify your customers and categorise their behaviour. Those businesses with a website and online customer service have an advantage as customers can enter and maintain their own details when they buy.

Stage 2 - Storing information The most effective way to store and manage your customer information is in a relational database a centralised customer database that will allow you to run all your systems from the same source, ensuring that everyone uses up-to-date information.

Stage 3 - Accessing information With information collected and stored centrally, the next stage is to make this information available to staff in the most useful format.

Stage 4 - Analysing customer behaviour Using data mining tools in spread sheet programs, which analyse data to identify patterns or relationships, you can begin to profile customers and develop sales strategies.

Stage 5 - Marketing more effectively Many businesses find that a small percentage of their customers generate a high percentage of their profits. Using CRM to gain a better understanding of your customers' needs, desires and selfperception, you can reward and target your most valuable customers.

Stage 6 - Enhancing the customer experience Just as a small group of customers are the most profitable, a small number of complaining customers often take up a disproportionate amount of staff time. If their problems can be identified and resolved quickly, your staff will have more time for other customers.

If you are collecting, using and processing personal information covered by the Data Protection Act you must comply with the data protection principles. See our guide on privacy and data protection in direct marketing Potential drawbacks of CRM

There are several reasons why implementing a customer relationship management (CRM) solution might not have the desired results.

There could be a lack of commitment from people within the company to the implementation of a CRM solution. Adapting to a customer-focused approach may require a cultural change. There is a danger that relationships with customers will break down somewhere along the line, unless everyone in the business is committed to viewing their operations from the customers' perspective. The result is customer dissatisfaction and eventual loss of revenue.

Poor communication can prevent buy-in. In order to make CRM work, all the relevant people in your business must know what information you need and how to use it.

Weak leadership could cause problems for any CRM implementation plan. The onus is on management to lead by example and push for a customer focus on every project. If a proposed plan isn't right for your customers, don't do it. Send your teams back to the drawing board to come up with a solution that will work.

Trying to implement CRM as a complete solution in one go is a tempting but risky strategy. It is better to break your CRM project down into manageable pieces by setting up pilot programs and short-term milestones. Consider starting with a pilot project that incorporates all the necessary departments and groups but is small and flexible enough to allow adjustments along the way.

Don't underestimate how much data you will require, and make sure that you can expand your systems if necessary. You need to carefully consider what data is collected and stored to ensure that only useful data is kept.

You must also ensure you comply with the eight principles of the Data Protection Act that govern the processing of information on living, identifiable individuals. For more information, see our guide on how to comply with data protection legislation.

Avoid adopting rigid rules which cannot be changed. Rules should be flexible to allow the needs of individual customers to be met. Questions for CRM suppliers

For many businesses customer relationship management (CRM) can be a large investment. Therefore it is vital to choose your supplier carefully. Making the wrong choice could be expensive and even jeopardise your business. Before implementing a solution based on CRM technology, you might want to ask any potential suppliers the following questions:

How long has the supplier been established? What are the specific costs associated with the product, i.e. a one-off purchase price, an annual renewable license, a charge per user etc.? Does the supplier offer any form of evaluation software so that you can try before you buy? How much is charged for technical support? Does the supplier provide consultancy and, if so, at what rates? Is the system scalable? If your customer base grows will the system expand to cope? Can the supplier recommend any third-party developers that make use of their core CRM products? Is there an active independent user group where experience and ideas can be freely exchanged? Can the supplier provide references for businesses in your industry sector that use their software? Does it offer training in the CRM solution and, if so, at what typical cost?

ACKNOWLEDGEMENT

We sincerely like to thank Our Teacher who extended her kind support, encouragement and recognition to our work. We convey our deep sense of gratitude to her for providing us the help and ideas. The experienced gain from our teacher, while interacting with her has inspired us to present this project in such a fine manner.