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The Criticality of Customer Relationships
J Non ± traditional competition

J Market maturity, and

J Misalignment between revenue and


profits
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hy Businesses Should


 CRM
Adopt
1.) Rising Customer Expectations

J Increasing affluence in the emerging


economics.
J Greater awareness due to explosive
media growth.
J Customer diversity.
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£.) Affordable
Technology Advances
J Production

J Distribution

J Facilitation

J Consumption
Technology Advances
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Implementing CRM
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Implementing CRM

In the context of banking:


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      À   
  
 
     

    
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Implementing CRM
3 elements that a firm has to master for competitive
advantage:

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Implementing CRM

Shainesh & Sheth ( the authors)


believe that :
J A process oriented strategic approach
driven by the top management to link
the operational, informational and the
organisational components of CRM will
be crucial for the success of CRM
initiatives.
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Implementing CRM

Goff et al. (1998) reported:

 
      
  
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Evolution of CRM
(a) Rapid advances in technology.

(b) Intensive competition in most


markets.

(c) Growing importance of the service sector.

(d) Adoption of total quality management


(TQM) programs.
The Six Markets Framework
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Internal
Markets

Supplier Referral
Markets    
Customer Markets
Markets

Recruitment Influence
Markets Markets
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1) Jackson (1985) À       



  
   

 
 

£) Parvatiyar and Sheth (£ 1) defined
CRM as:

   
   
 
  
 
    


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BONDING FOR CUSTOMER
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RELATIONSHIP
Berry and Parasuraman (1991) have
identified four levels of bonds.

Level 1: Financial Bonds


Level £: Social Bonds
Level 3: Customisation Bonds
Level 4: Structural Bonds
CRM IN SERVICES
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Service Quality Themes in CRM

Building relationships with customers takes on different


dimension due to the very nature of services :

Listed below are the Important characteristics of Services:

1. Intangibility
£. Simultaneity of Production and Consumption
3. Perish ability
4. Heterogeneity
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Berry (1997) has identified three situations in


which relationship is most applicable to a service
firm.These are:
1. There is an ongoing or a periodic desire.
eg: a) telephonic service ± ongoing desire.
b) hospital service ± periodic desire.
£. The customer decides which service provider he/she
wants
eg: a) which restaurant (choice)
b) taking the first taxi/auto outside a
airport/station (no choice)
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3. There are alt. service suppliers and


switching of customers from one
supplier to another is common
eg: a) fly by an airline of his/her choice
(no switching costs)
b) as opposed to buying the
electricity (monopoly)
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Parasuram, Berry and Zeithaml (1985)


developed a model:

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Parasuraman, et al. (1988), identified the


following five dimensions that determine
service quality:

1. Reliability
£. Assurance
3. Tangibles
4. Empathy
5. Responsiveness
The Impact of Service Qualityu on Loyalty
 
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Service
Quality

Satisfaction Loyalty

Product

Price Relatively Easy for


Competitors to Copy
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There are many ways in which loss customer cost the


firm.
1. A lost customer reduces cash flows for the firm in
the future.
£. Second, if a firm wants to maintain the same
volume of business, it has to attract new
customers.
3. Servicing customers over a period of time becomes
more cost ± effective for service firms as they
discover new traits of the customer and his likes
and dislikes.
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4. Firms with long ± term customers, in


whom they have developed a higher
level of loyalty, can charge more for
their products and services.

5. Finally, highly satisfied long ± term


customers are likely to refer new
customers to the firm.