Customer relationship

Management
 What Is Customer
Relationship Management?
• a company-wide business strategy designed to
optimize profitability, revenue, and customer
satisfaction by focusing on highly defined and
precise customer groups.
• It believes in a 80:20 rule.
Basis of comparison Traditional Marketing Relationship
Marketing
Orientation Managing a Company's
Managing a company's
product portfolio, setting
customer portfolio, building
and modifying marketing
long-term business
mix parameters to achieve
relationship.
optimal 4 Ps.
4 Ps, segmentation, Interaction, relationships
Key concepts
branding etc. and networks
Product / Service and
Marketing focus Product / Service
Customer.
customer retention and
Customer acquisition/
Marketing goal customer recovery/ Wallet
Market share
Share
Marketing interaction One-way communication Interactive communication.
Assessment Period Short duration Long duration.
 Customer Relationship
Management Strategy

Organize the company around customer segments

Encourage and track customer interaction with the company

Foster customer-satisfying behaviors

Link all processes of the company from its customers

through its suppliers
A Simple Flow Model of the Customer
Relationship Management System

Identify customer relationships

Leverage customer Understand interactions

information with current customer base

Capture customer data

Identify best customers
based on interactions

Store and integrate

customer data using IT
 Types of CRM
• Operational CRMs.
– Marketing automation
– Sales force automation
– Service automation
• Analytical CRMs.
– Customer Acquisition: Turning prospects into customers and upselling where
possible.
– Customer Retention: Keeping current customers happy and coming back for more.
– Managing Data: Tracking customer interactions and other information that can
improve your bottom line.
• Collaborative CRMs
– streamline communication
– seamless multi-channel customer experience across all points of contact.
• Question-1-An internet service provider
charges 190 rupees per month with a variable
cost of about 15 rupees per month. With
marketing spending of Rs 60 per year for
acquisition of customer, the retention rate is
95%. At a yearly discounting rate of 8%,
calculate the LTV of customer for 3 years.
 Question-2: XYZ Limited believed that with the
adoption of Niche strategy it can generate a average
gross margin of Rs. 60,000 with a customer attrition
rate of 30% per year. At the same time if it is adopting
mass marketing strategy its average gross margin will
increase by 20% from that in niche strategy with a
annual retention rate of 60%. Like wise if it will adopt
selective distribution strategy average gross margin will
decline by 10% from that in mass marketing strategy
with a retention rate of 75% per year.
Assuming a discounting rate of 10% and based on
these data which option XYZ limited Should take if he is
deciding the strategy for next 3 years?
With an objective to acquire 100 million subscriber in 100
days, R-Jio launched its welcome offer. By the end of
December 2016 it acquired around 112 million customer of
which 72 million opted for prime membership paying Rs 99
to Jio and also recharged for its summer surprise offer by
paying Rs 309. The per head interconnect cost for Jio stood at
Rs 70. Assuming a discounting rate of 7% estimate the
retention rate of R-Jio , average life time of customers with R-
Jio and the life time value attributed to the average life time
of customers with R-JIO.