You are on page 1of 30

Customer Relationship Management (CRM


What is CRM?
• CRM “is a business strategy that aims to understand, anticipate and manage the needs of an organisation‟s current and potential customers” .

• It is a “comprehensive approach which provides seamless integration of every area of business that touches the customernamely marketing, sales, customer services and field support through the integration of people, process and technology”

• CRM is a shift from traditional marketing as it focuses on the retention of customers in addition to the acquisition of new customers • “The expression Customer Relationship Management (CRM) is becoming standard terminology, replacing what is widely perceived to be a misleadingly narrow term, relationship marketing (RM)”

. development and enhancement of individualised customer relationships with carefully targeted customers and customer groups resulting in maximizing their total customer life-time value”.Definition of CRM “CRM is concerned with the creation.

• When customers value the customer service that they receive from suppliers. they are less likely to look to alternative suppliers for their needs.The purpose of CRM • “The focus [of CRM] is on creating value for the customer and the company over the longer term”. • CRM enables organisations to gain „competitive advantage‟ over competitors that supply similar products or services. .

M. Both retaining customers and building relationships with other valueadding allies is critical to corporate performance” . alliances and partnerships of many kinds. • “The adoption of C.R. is being fuelled by a recognition that long-term relationships with customers are one of the most important assets of an organisation” .Why is CRM important? • “Today‟s businesses compete with multiproduct offerings created and delivered by networks.

Why did CRM develop? CRM developed for a number of reasons: • The 1980‟s onwards saw rapid shifts in business that changed customer power • Supply exceeded demands for most products • Sellers had little pricing power • The only protection available to suppliers of goods and services was in their relationships with customers . .

What does CRM involve? CRM involves the following : • Organisations must become customer focused • Organisations must be prepared to adapt so that it take customer needs into account and delivers them • Market research must be undertaken to assess customer needs and satisfaction .

staff and financial resources • • . relationships should be built with customers that are likely to provide value for services Building relationships with customers that will provide little value could result in a loss of time.“Strategically significant customers” • “Customer relationship management focuses on strategically significant markets. Not all customers are equally important” Therefore.

data mining and one-to-one marketing can assist organisations to increase customer value and their own profitability • This type of technology can be used to keep a record of customers names and contact details in addition to their history of buying products or using services . • This personalised communication provides value for the customer and increases customers loyalty to the provider . • This information can be used to target customers in a personalised way and offer them services to meet their specific needs. • Technological approaches involving the use of databases.Information Technology and CRM • Technology plays a focal role in CRM .

The website regularly send emails to previous customers to inform them of similar upcoming events or special discounts.Information Technology and CRM: Examples Here are examples of how technology can be used to create personalised services to increase loyalty in customers: • Phone calls. similar or alternative services or products . . emails. or WAP services (2): Having access to customers contact details and their service or purchase preferences through databases etc can enable organisations to alert customers to new. This helps to ensure that customers will continue to purchase tickets from When tickets are purchased online via bookmyshow. the website retains the customers details and their purchase in the future. mobile phone text messages.

g.Illustration: The online store. In addition. they are „greeted‟ with a welcome message which uses their name (for e. their previous purchases are highlighted and a list of similar items that the customer may wish to purchase are also highlighted. uses “cookies” to provide a personalised service for its customers. . and maintaining specific information about users. “Hello John”). such as site preferences and the contents of their electronic shopping carts” (5). Flipkart requires customers to register with the service when they purchase items. tracking. . HTTP cookies are used for authenticating.Information Technology and CRM: Examples • Cookies “A “cookie” is a parcel of text sent by a server to a web browser and then sent back unchanged by the browser each time it accesses that server. flipkart. When registered customers log in to Flipkart at a later time.

response rates to offers. This in turn leads to customer comprehension and cost insights (e. and where money is being wasted on circulars). Tescos. followed by appropriate marketing action and follow-up analysis” (6) Illustration: The supermarket chain. customer retention rates at different spending levels.Information Technology and CRM: Examples • Loyalty cards “the primary role of a retailer loyalty card is to gather data about customers. When a customer calls. details of the purchases are stored in a database which enables Tescos to keep track of all the purchases that their customers make. When customers use the loyalty cards during pay transactions for goods. Tescos sends its customers money saving coupons by post for the products that the customers have bought in the past. and also keeping all information on a customer in one place. offers loyalty cards to its customers. The aim of this is to encourage customers to continually return to Tescos to do their shopping - • - CRM software. the system can be used to retrieve and store information relevant to the customer. At regular intervals. new customer conversion rates. and also encourage new customers” (7) .“Front office” solutions “Many call centres use CRM software to store all of their customer's details. a company aims to make cost savings.g. By serving the customer quickly and efficiently.

• For example. face-to-face CRM could prove less useful when organisations have a large number of customers as it would be more difficult to remember details about each of them. • However. .Face-to-face CRM • CRM can also be carried out in face-to-face interactions without the use of technology • Staff members often remember the names and favourite services/products of regular customers and use this information to create a personalised service for them. in a hospital library you will know the name of nurses that come in often and probably remember the area that they work in.

because the right things are being done (ie. etc. effective and efficient operation) • increased customer satisfaction. meeting and exceeding expectations) • ensuring that the focus of the organisation is external • growth in numbers of customers • maximisation of opportunities (eg.) • increased access to a source of market and competitor information • highlighting poor operational processes • long term profitability and sustainability . because they are getting exactly what they want (ie..Benefits of CRM • reduced costs. referrals. increased services.

2.Implementing CRM • When introducing or developing CRM. . a strategic review of the organisation‟s current position should be undertaken. 4. 3. Organisations need to address four issues : What is our core business and how will it evolve in the future? What form of CRM is appropriate for our business now and in the future? What IT infrastructure do we have and what do we need to support the future organisation needs? What vendors and partners do we need to choose? • 1.

Suh & Hwang (2003) ) • Rationale for selecting the paper :• “any activity in marketing wiz not measured cannot be managed better” .Research paper • Metrics of CRM effectiveness (Kim.

reasons why performance measurement is so powerful in enhancing business. 4.and customer satisfaction . measurement not only improves the probability but also speeds the pace at which change occurs. Suh & Hwang (2003) propose an application framework for evaluating CRM effectiveness.measurement removes the ambiguity and disagreement that surround highlevel strategic concepts.Measurement allows the continual evaluation of organizational alignment on strategic objectives. 2. customer value. 3. each perspective is evaluated by appropriate metrics. 1. customer interaction. In the framework.The four perspectives are customer knowledge.Kim.measurement provides the precise language for clearly communicating at all levels what the organization wants to accomplish and how it intends to accomplish it.


• With the shift from mass marketing to one-to-one relationship marketing. analyzing. (e. • A major problem is filtering.Customer knowledge • In order to adopt the current customer-centric business environment. • Consumer information . Data mining tasks are used to extract patterns from large data sets • Technology learning is also important towards understanding customers. sorting. organizations use data mining and data warehousing technology. and managing this data in order to extract information relevant to CRM activities.

K .Measures for C.

and deliveries 3. Customer interaction has the following components 1.Customer interaction • Many communication channels are developed to interact with the customer effectively. sales visits. • The processes can be divided into internal and external processes • Internal processes determine operational excellence and external processes determine channel management effectiveness. Transaction . and terms . To manage various communication channels effectively. Physical service environment 4.price. value. Outbound contact management-mail. managers make an effort to monitor the business processes. Contacts with organizational staff-front line and other 2. telephone.

Measures for Customer interaction .

which help to arrange the relationship with the customer successfully. and net sales. number of retention customers. • In order to determine the customer value.Customer value • Customer value describes tangible and intangible benefits gained from CRM activities. • Calculating customer value potential and using it as a guideline will be profitable in the future. . organizations need to analyze such information as marketing campaigns. • CRM initiatives should provide mutually beneficial value to the customer and the organization.

Measures for Customer value .

• Among the four perspectives. the customer satisfaction perspective is the most important because customer satisfaction is directly linked to an organization‟s profits. and serves the development of a truly customer-focused management and culture. meaningful. and objective feedback about customer preferences and expectations. • Measuring customer satisfaction offers an immediate.Customer Satisfaction • Customer satisfaction is difficult to measure because it is hard to quantify the satisfaction level. • It represents a modern approach for quality in organizations. .

Proper CRM practices can potentially impact customer satisfaction ratings and can potentially lead to increased customer retention. .• Service delivery via various channels of IT applications has emerged as an important attribute in satisfying customers.

Measures for customer satisfaction .

6. Liz Shahnam. Customer Relationship Management: Where do you start? Wikipedia. What‟s really CRM? CRM Today. Online] [Accessed November 2008] Brian Woolf. 2003. 7. [Online] [Accessed November 2008] BusinessBulls. [Online] [Accessed November 2008] Adrian Payne. What is loyalty? The Wise Marketer. 5.C. Customer relationship management. Customer Relationship Management. Macquarie Graduate School of Management. [Online] [Accessed June 2006. Customer Relationship Management. [Online] [Accessed November 2008] . [Online] [Accessed June 2006.References 1.E of Customer Relationship Marketing. 8.O. Cranfield University. no longer available online] Manchester Business School. 2.P. The S. [Online] [Accessed June 2006. 4. no longer available online] Francis Buttle. 3. no longer available online] Wikipedia. HTTP Cookie.