Customer Relationship Management

(CRM)
 Changes in Marketing
 OLD MARKETING
– Transaction oriented
– Market share oriented
– All customers are equal
– Marketers sell
– 4P marketing
– Mass marketing
– Sell to the customer
– Focus on new customers
– Offensive
– Broadcast oriented
– Transaction profit
 NEW MARKETING
– Relationship oriented
– Share of wallet oriented
– All customers are not equal
– Marketers manage demand
– Relationship marketing
– Individual marketing
– Manage customer experience
– Focus on existing customers
– Defensive
– Dialogue oriented
– Customer lifetime value
 Offensive vs. Defensive Marketing

 OM refers to increasing your customer base,

acquiring new customers(may be from competitors)

 DM refers to activities aimed at existing customers.

– Defensive marketing has become more profitable. “Mass

and Blast” is being replaced by 1:1.
Customer centricity and other business logics

1. Product-oriented businesses believe that

customers choose products with the best quality,
performance, design or features.

2. Sales-oriented businesses make the assumption

that if they invest enough in advertising, selling,
public relations (PR) and sales promotion,
customers will be persuaded to buy. Push
Strategy
Customer centricity and other business logics

3. Production-oriented businesses believe that customers choose

low-price products.

4. A customer or market-oriented company shares a set of

beliefs about putting the customer first. It collects, disseminates
and uses customer and competitive information to develop
better value propositions for customers. Pull Strategy
Value Discipline Model for market oriented
firms
The Best Product =
Focusing investment and
Product energy in to developing
Leadership the newest and most
revolutionary

Operational Customer
Excellence Intimacy
The Best Total Cost The Best Total Solution
= Product quality+ = Building strong
best price+ best customer relationships,
purchasing experience really understand the
customer
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 CRM ?
 “Strategy”

 “An approach to building and sustaining

long-term business with customers.”

 It is about creating a feel of high touch in

high tech environment
 CRM
CRM is the business strategy which ensures :

 Maximum return on spend per customer

 Reduced customer acquisition costs

 Motivates customer to be a brand ambassador

 The Objectives of CRM
 Identify potential  Increase longevity
customers
 Improve campaign
 Understand needs
management
 Differentiate dollars
and cents  Increase referrals
 Decrease attrition  Win back lost customers
 Increase usage  Move customers up
 Increase cross usage relationship hierarchy
 Increase usage of  Integrate marketing and
more prestigious items sales throughout
 Increase satisfaction channels
 Benefits of CRM

 Competitive Advantage

 Reduces costs, provides efficient operation

 Increases customer satisfaction & Loyalty

 Automate inefficient and expensive work processes

 Increased marketing and selling opportunities

 Benefits of CRM

 Identifying the most profitable customers

 Making it easier for sales and channel partners to sell

 Faster response to customer inquiries

 Receiving customer feedback that leads to new and

improved products or services

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THE CRM Advantage
 Business facts!
 It costs six times more to sell to a new customer than to sell to
an existing one.
 Satisfied customers may be passive supporters but a
dissatisfied customer will tell eight to ten people about his or
her experience.
 The odds of selling a product to a new customer are 15
percent, whereas the odds of selling a product to an existing
customer are 50 percent.
 90% companies don’t have sales and service integration
 70% of complaining customers will do business again if their
complaint quickly addressed.
 Framework for CRM

Identify prospects and customers

Differentiate customers by needs

and value to company

Interact to improve knowledge

Customize for each customer

 Four types of CRM
Type of CRM Dominant characteristic

Strategic CRM is a core customer-centric

Strategic business strategy that aims at winning and
keeping profitable customers.

Operational CRM focuses on the automation of

Operational customer-facing processes such as selling and
customer service.
Analytical CRM focuses on the intelligent mining
Analytical of customer-related data for strategic or
operational purposes.
Collaborative CRM applies technology across
Collaborative organizational boundaries with a view to
optimizing company, partner and customer
value.
 Operational CRM

Marketing automation
Market segmentation
Campaign management
Event-based marketing
Sales force automation
Account management
Lead management
Opportunity management
Pipeline management
Contact management
Quotation and proposal generation
Product configuration
Service automation
Case ( incident or issue) management
Inbound communications management
Queuing and routing
Service level management
 Sources of data for analytical CRM

 Internal sources
– Sales data (purchase history), financial data
(payment history, credit score), marketing data
(campaign response, loyalty scheme data) and
service data.

 External sources
– Geo-demographic and life-style data from
business intelligence organisations, for
example IMRB, ORG-MARG.
 Beneficiaries of analytical CRM

 Customer
– Analytical CRM can deliver timely, customized,
solutions to the customer’s problems, thereby
enhancing customer satisfaction.
 Company
– Analytical CRM offers the prospect of more
powerful cross-selling and up-selling programs,
and more effective customer retention and
customer acquisition programs.
 CRM is not just a software
CRM applications & technologies
are just a tool to support CRM
strategy
Business
Strategy

People & Process

Information Technology

CRM strategy drives structure & technology 19

 Misunderstandings about CRM
1. CRM is database marketing
2. CRM is a marketing process
3. CRM is an IT issue
4. CRM is about loyalty schemes
5. CRM can be implemented by any company
 CRM constituencies
1. Companies implementing CRM
2. Customers and partners of those companies
3. Vendors of CRM software
4. CRM application service providers (ASPs)
5. Vendors of CRM hardware and infrastructure
6. Management consultants
 CRM challenges vary across
context
1. Banks
2. Auto manufacturers
3. High tech companies
4. Consumer goods manufacturers
5. Not-for-profits
 The IDIC model of CRM

 Identify who your customers are and build a deep

understanding of them
 Differentiate your customers to identify which
customers have most value now and which offer
most for the future.
 Interact with customers to ensure that you
understand customer expectations and their
relationships with other suppliers or brands
 Customize the offer and communications to
ensure that the expectations of customers are met.
 The CRM Value Chain

The CRM Value Chain

Customer Customer Network Value Manage

Portfolio Intimacy Development Proposition The
Primary Analysis (SCOPE) Customer
Development
stages Lifecycle

Leadership and culture

Supporting Data and information technology

conditions
People

Processes