Customer Relationship Management

(CRM)

Dr. Suresh Malodia

 Case Study: Lalji Meghji
 He opens early and closes late
 He recognises you by face and name
 He knows your family size and the members
 He knows the brands you and your spouse like
 He is knowledgeable about new products and suggests what ‘you’
invariably will buy
 He will alert you to the offers relevant to you
 He gives you free home delivery
 He recognises your voice over the phone and doesn’t need your
address
 What’s more?
– He’ll even give you a month’s credit!

 Naturally, he has your confidence and your custom

 A Scenario
You’ve spent two grueling weeks of nonstop business in london and are ready to head home.
Virgin Atlantic Airways sends a driver to fetch you at your hotel and bring you to the
airport. Upon arrival at Heathrow, the driver stops at an outdoor kiosk. Your window
magically rolls down to reveal a uniformed virgin associate, who politely requests your
ticket. As the associate check you in, the driver retrieves your luggage from the boot, in
the local vernacular – tags it, and deposit it on the baggage conveyor belt. The Virgin
associate smiles and hands you your boarding pass.
The driver then proceeds to the terminal, pointing the way to the entrance of the Upper Class
Lounge, which features sleek décor, laptop hookups, and a beauty salon. As you enter and
stow your carry-on-bag, a waiter asks for your drink order. Midway through your haircut,
Peter Frampton walks by on his way to the bar and gives you a little wave. Once in flight,
you are offered a pair of fleece pajamas and a free massage.
Everyone’s been super friendly. In fact, you’ve made no special requests since you left the
hotel, have barely lifted a finger, and still have the cash you left the hotel with. (Declaring
this a far cry from your typical airport experience would be an understatement.) As you
take the last sip of your complimentary cosmopolitan and prepare for preferred boarding,
you make a mental note: You’ll be flying Virgin Atlantic again
What is Customer Relationship Management

CRM is “the automation of horizontally

integrated business processes involving front
office customer contact points (marketing,
sales, service and support) via multiple,
interconnected delivery channels.”
CRM is “a process that addresses all
aspects of identifying customers,
creating customer knowledge, building
customer relationships, and shaping
their perceptions of the organisation and
its products”.
CRM is “an IT enabled business
strategy, the outcome of which optimize
profitability, revenue and customer
satisfaction by organizing around
customer segments, fostering customer-
satisfying behaviours and implementing
customer-centric processes.”
 CRM as a Business Strategy
 CRM is a business strategy and therefore
more than a functional strategy alone.
 CRM strategy provides direction to each
department to improve customer centric
approach
 CRM needs to be focused on the achievement
of operational excellence.
 CRM’s goal is so called Customer Intimacy.
 Customer Relationship Management

 “Process of creating and maintaining relationships

with business customers or consumers”
 “A holistic process of identifying, attracting,
differentiating, and retaining customers”
 “Integrating the firm’s value chain to create
enhanced customer value at every step”
 “An integrated cross-functional focus on
improving customer retention and profitability for
the company.”
 Customer Relationship Management

Bottom-line:

The use of information-enabled systems for

enhancing individual customer relationships
to ensure long-term customer loyalty and
retention
 Is CRM New?
No! Yes!
• Simply an extension of • A shift in corporate

relationship marketing philosophy concerning the

approach to value delivery
• Builds on customer
• Customer-centric approach
service and satisfaction to value chain
concepts • New and technology-
• Just the latest buzzword enhanced processes
for creating customer • Focus is not just on
orientation bottom-line, but on top-line
• Bottom-line is still the • Goal is to create satisfying

same experiences across all

customer contact points
 CRM Objectives
 Lifetime Value (LTV)
– Refers to the net present value of the potential revenue
stream for any particular customer over a # of years
– Starts with current purchase activity then extrapolates to
include potential additions from cross-selling, upgrades,
total ownership, etc.
 Customer Ownership
– Attempts to “own” the lionshare of customer spending
and/or “share of mind” in a particular product category
– Building brand equity, maintaining vigilant customer
contact, keeping current with the market trends is critical
– 5% points increase in customer retention=20-125%
increase in profit
 Elements of CRM
 Customer Knowledge
 Relationship Strategy
 Communication
 The Individual Value Proposition
CRM Processes
 CRM Programs Can Potentially Improve
 Analytical CRM
– Customer Segmentation
– Trend Analysis
 Operational CRM
– Campaign Management
– Tele-Marketing/Tele-Sales
– Activity and Time Management
– Quotation and Order Processing
– Delivery and Order Fulfillment
– Customer Service and Support
– Remote Access
 Collaborative CRM
– Enterprise Portals
– Customer Access
– Supplier Access
– Personalization
 Areas of CRM Activity

 Sales Force Automation (SFA)

 Customer Service and Support (CSS)
 Help Desk
 Field Service
 Marketing Automation
 Areas of CRM Activity:
Sales Force Automation
 35-40% of all CRM activity
 Manages lead generation, tracks movement of leads
through the pipeline, allows better usage of
customer data, integrates activities across sales
channels, simplifies relationship management,
forecasts for opportunities (SWOT)
 Goldmine and SalesLogix are examples of
prepackaged SFA solutions.
 Ex. Staples used SFA to integrate catalog, online,
in-store sales efforts directed at its best customers
 Areas of CRM Activity:
Customer Service and Support (CSS)
 20-25% of CRM
 Assign, escalate, and track trouble tickets, inquiries,
solution attempts through resolution
 Provides information to support customer call
center activity
 Gleans customer data from those interactions and
records it in SFA for later use
 Remedy, Siebel, Vantive, and Clarify are major
vendors
 Ex., 3M Adhesive Products division
 Areas of CRM Activity:
Help Desk
 15-20% of all CRM
 Allows individuals to access network database to
solve their own problems or find information.
 Can be internal or external
 Offers many bottom-line savings
 Human Click, Tivoli, LivePerson, are providers
 Ex., Land’s End Live allows customers browse
FAQ’s but also click a link to talk directly with live
representative.
 Areas of CRM Activity:
Field Service CRM
 3-5% of all CRM activity
 Mobile service technicians can log information about
work orders and service calls, as well as access
information from the remote site.
 Can feed information from customer problems into
SFA for salesperson leads.
 Market information can be gathered and logged into
central database.
 Ensures appropriate resource allocation by matching
available resources to job requirements
 Major vendors are RTS, Metrix, eDispatch
 Areas of CRM Activity:
Marketing Automation
 3-5% of CRM, but growing 5X faster than all others
 Interfaces with data warehouses and data mining
activities to tailor page views, products, and promotions,
so that the right offer goes to the right person at the right
time.
 Can interact with SFA to support field sales efforts
 Provides customized customer interactions critical to
segment of one marketing, mass customization,
customerization, etc.
 www.webgroove.com, Epiphany, Oracle, Siebel, and
Personify are leaders
 New Frontiers in CRM
 Commercial E-Communities
– What are people loyal to?
» Families
» Football teams
» Schools
» Clubs
» Cultures
» Countries
» I.E.: Communities not Corporations
 Commercial E-Communities
 Goal is to create an environment where people get
meaningful interactions with the company and
other users so that they feel part of the enterprise.
 Adds human component and engages customers.
 Creates more stickiness and “ownership”
 Ex. User Groups for software products (Oracle,
Intergraph)
 Ex. Dell / Sony technical support communities
 Can be run internally or by an external
organization such as Sift
 Components of Commercial E-Communities

 Customer-focused transactions
 Ex. IKEA Stock Query, Amazon rare book finder
 Community Interactions
 User product ratings, User alerts/Newswires, Dell
technical support
 Access to Relevant Information
 Dell technical library, Customer chat rooms, Zero-time
search facility
 Value-added Services Based on Customer Data
 New Frontiers in CRM
 Customerization
– Mass Customization – Using flexible processes and
organizational structures to produce varied and
individualized products and services at the price of
standard mass-produced offerings.
– Personalization – Customization of some features of a
product or services so that the customer enjoys more
convenience, lower costs, or some other benefit.
– Segment-of-One Marketing – Based on the idea of the firm
learning individual reactions to marketing strategies, then
treating this customer differently than other customers.
– Customerization – Mass customization + personalization +
segment-of-one, dependent on a web-based or electronic
interaction
 Distinctions in Customerization

Mass Marketing Customerization

Relationship Customer is passive Customer is active

with customers participant in process co-producer,
Customer needs Researched and May not be
articulated articulated
Product and service Marketing and R&D Customized based on
offering drive offering customer interactions
Price Fixed prices with Value based pricing;
discounting customer determined
Communication Advertising and PR Integrated, interactive

Distribution Mix of direct and Direct (online)

indirect
 Making CRM Happen
 Evaluate products and processes customers’ terms.
 Analyze the multiple channels through which the
company interacts with customers.
 Examine how the company understands its
customers. Does it keep good data? How does it get
that data? Does information flow between functional
areas?
 Provide fingertip access to all information.
 Analyze human resources and ensure that everyone
has an understanding of philosophy of CRM