RM

C
BOOKS

1. Customer Relationship Management : Strategic Perspective ,

By .. G Shainesh and Jagdish .N. Sheth

2. Customer Relationship Management

William G. Zikmund and Raymond Mcleod and Faye .W. Gilbert

PRE INDUSTRIAL AGE

Pre-industrial society refers to social attributes and forums of political and

cultural organization that were prevalent before the advent of Industrial
Revolution which occurred from 1750 to 1850. 

Pre-industrial refers to a time before there were machines and tools to help

perform tasks en masse.
ATTRIBUTES
• Limited Production
• Extreme agricultural economy
• Limited division of labour In pre-industrial societies, production was
relatively simple and the number of specialized crafts was limited.
• Limited variation of Social Classes
•  Communications were limited between communities in pre-industrial
societies. Few had the opportunity to see or hear beyond their own village.

•
• Industrial societies grew with the help of faster means of communication,
having more  information of the world , allowing knowledge transfer and
cultural diffusion  between them.
• Populations grew at substantial rates 
• Social classes: peasants and lords
• Basic level of living
INDUSTRIAL AGE
The Industrial Age is defined by mass production, broadcasting, the rise of the nation state,
power, modern medicine and running water.

The quality of human life increased dramatically during the Industrial Age.

Life expectancy today worldwide is more than twice as high as it was when the Industrial
Revolution began.

The Industrial Age  encompasses the changes in economic and social organization that
began around 1760 in UK  and later in other countries, characterized chiefly by the
replacement of hand tools with power-driven Machines  such as the power loom  and the
steam engine , and by the concentration of industry  in large establishments.
SERVICE ECONOMY AGE
 In the simplest of terms, a service economy  is an economy where the
primary economic activity is the provision of services rather than the
production of goods. The United States pretty much has a service economy
because most of the growth of the U.S. economy is tied to services.

It should be no surprise to you that the focus on service rather than

manufacturing is the fundamental characteristic of a service economy. For
example, our shoe salesman's job is to sell shoes to consumers, not design
and manufacture shoes. Our doctor doesn't create medicine or medical
devices but rather provides diagnosis and treatment of injuries and disease.
 Another important characteristic is that the service economy tends to
provide a great deal of opportunities for freelancers and entrepreneurs.
It's a lot cheaper to start a lawn care business than to open up a factory
to manufacture lawn mowers.

On the other hand, much of the growth in the service economy concerns
jobs that pay quite less than traditional manufacturing jobs. While some
service sector employees, like doctors, lawyers, and investment bankers,
may earn very large salaries with great benefits, a great many of service
sector jobs pay low and offer very limited, if any, opportunities for
professional growth, such as jobs in retail and food services.
KNOWLEDGE ECONOMY
The knowledge economy is focused on the essential importance of human
capital in the 21st-century economy.

The rapid expansion of knowledge and the increasing reliance on

computerization big data , and automation are changing the economy of
the developed world to one that is more dependent on intellectual capital
and skills, and less dependent on the production process.
 
Understanding Relationship
Marketing

Why it is important ??
What do Relationships Require ????
WHAT DO RELATIONSHIPS REQUIRE ????

Two way communication

Emotional Connect, Empathy for each other

Trust
Why to manage Relationships with Customers ?????
MANAGING RELATIONSHIPS
Means,

Staying in touch with customers

Knowing about Customer needs and wants
Designing Products and Services according to customer needs and wants
Better products and Services
More Satisfied Customers
More loyal Customers
More revenue
MOVEMENT FROM TRANSACTIONAL TO
RELATIONSHIP ORIENTATION

Rapid Advances in Technology

Intensive competition in most markets
Growing importance of Service Sector
Adoption of Total Quality Management
Programs
CRM

CRM is a comprehensive strategy and process

of acquiring , retaining and partnering with
selective customers to create superior value
for the company and customers
REASONS AND CHALLENGES : CRM

Non Traditional competition

Market Maturity
Misalignment between Revenue and Profits
EVOLUTION OF MARKETING PRACTICES

Product centric Marketing

Segment centric Marketing

Customer centric marketing

WHY BUSINESSES SHOULD ADOPT CRM

Rising Customer Expectations

Increasing customer expectations

Greater awareness due to explosive growth of internet
Customers Diversity
WHY BUSINESSES SHOULD ADOPT CRM

Affordable Technological Advances

Production : Flexible Manufacturing , JIT,

TQM
Distribution : Computer aided logistics system
Facilitation
Consumption
 BENEFITS OF CRM
Customers are profitable over a period of time

Studies show, that 1 % increase in customer retention increases

profits by 08 to 10 %

Same amount of sale to new customers increase profits by 3 percent

It means company can increase profits by 85 % by increasing its

customer retention by 08 %
SERVICE BENEFITS OF CRM
95 % OF Customers do not bother to complaint , they just
change the service provider

Most loyal customers take time to complaint , which gives

companies time to make corrections

Dissatisfied customers tells at least 14 others and satisfied

customer tells at least 6 others

70 % of customers who complaint will do business with company

again if it quickly takes care of service problem
SERVICE BENEFITS OF CRM

Negative word of mouth has a multiplier effect and

keeps away lot of potential customers

On other side , a satisfied customer and a loyal

customer can give feedback which can help
companies improve their product or service
SERVICE BENEFITS OF CRM
To understand ,

Firms are engaged in CRM because of superior economics of customer

retention and competitive advantage of building better relationships

The longevity , of this relationship depends on commitment made by

consumer to continue patronising a particular product inspite of choices
and alternatives in market

Companies should also be careful , and should not take for granted that
managing loyalty will automatically mean more profitability
VALUE EXPLORATION AND CREATION OF VALUE
CHAIN
A value chain is a business model that describes the full range of activities needed
to create a product or service. For companies that produce goods, a value chain
comprises the steps that involve bringing a product from conception to
distribution, and everything in between—such as procuring raw materials,
manufacturing functions, and marketing activities.
A company conducts a value chain analysis  by evaluating the detailed procedures
involved in each step of its business. The purpose of a value-chain analysis is to
increase production efficiency so that a company can deliver maximum value for
the least possible cost.
FIVE GENERIC INTERRELATED PROCESSES ,
PAYNE AND FROW MODEL
APPLICATION OF PAYNES FIVE PROCESS
MODEL
E-retailers have majorly benefitted from this model. Integrating Payne’s Five Process
model is very important to provide a customer-based value proposition. E-retailers work to
build CRM strategy by engaging customers, offering value propositions such as discounts,
loyalty privileges and priority shipping.

Multi-channel integration can also be included from customer reviews, customer service,
e-mail support as well as return policies. Performance of the CRM process can also be
assessed from the online traffic, time spent on browsing and surfing habits. Assessing what
factors trigger purchase intention can help create better value propositions.

Payne’s Five Process model evaluated the correlation between business processes,
prospects and customers. The various processes encompass the spectrum of CRM, right
from the strategic point of view to assessing the performance of customer engagement.
Every process supports itself and other processes, with each task being interdependent for
success.
BUTTLES VALUE CHAIN
BUTTLES VALUE CHAIN MODEL
The main aim of this model is to integrate an organisation’s internal and
external process to create value for the customer at a profit. Furthermore, the
model is applicable in both business-to-business (B2B) and business-to-
customer (B2C) type of businesses of all sizes (Gummesson 2015).
According to this model, the primary stage towards good CRM is assessment of
customers’ portfolio to:
• understand their long-term association chances
• assess a customer’s level of connect with the organization
• work to develop a network
• create a value proposition and
• manage the cycle of customer management (Chen & Myagmarsuren 2011)
Customer segmentation is perquisite to CRM
TYPES OF CRM

Sales Force Automation

Campaign Management

Sales Intelligence
CUSTOMER TOUCH POINT MANAGEMENT
Identification of customer journeys and touch points

Contact Centre management systems

Front Desk Management Tech

Web Based Knowledge management

Customer Experience Management
CUSTOMER EXPERIENCE MANAGEMENT
Customer experience management, often called CXM or CEM, is a system of
marketing strategies and technologies that focus on customer engagement,
satisfaction, and experience.

Here are three steps to successful customer experience management:

Create and maintain complete customer profiles.

Personalize all customer interactions.
Get the right information to the right place at the right time – every time.

To deliver a stellar customer experience, you have to know your customer better
than ever before.
CUSTOMER EXPERIENCE MANAGEMENT

A customer experience management mindset

prioritises the orchestration and personalisation of
the entire end-to-end customer experience and
helps to do it at scale, on any channel, in real time.
CRM AND CEM
• CRM tracks the company’s view of the customer , while CEM
tracks a
customers view of the company

• CRM focuses on sales funnel while CEM focuses on touchpoints

• Both CRM and CEM optimise customer relationships but CRM is

what
facilitates relationship building for the organisation while
CEM
focuses on monitoring and improving the experience of the
customer
CUSTOMER EXPERIENCE MANAGEMENT
CEM takes the next step in managing customer relationships. Where CRM
mostly deals with optimising the internal processes of a business, CEM offers
an even more customer-centric approach in several ways—with new
technologies, as well as processes, strategies, and customer-centric design.
CEM differs from traditional CRM in the technology itself—with added benefits
and capabilities for building customer relationships. While CRMs gather data
through manual or batch entry, a true CXM will enable a real-time flow of data
to offer deeper insights into customer preferences and behaviour.
The CEM mindset also goes beyond a traditional CRM in its strategy and
processes. A company who wants to become more customer-centric uses
CEM to put processes in place to track, oversee, and orchestrate interactions
and engagements with customers.
 UNDERLYING LOGIC OF CUSTOMER
RETENTION BENEFITS TO THE
ORGANIZATION
Customer Satisfaction

Customer Retention & Quality

Increased Profits Service

Employee Loyalty
SERVICE BENEFITS OF CRM

In that context , a relationship orientation

which focuses on lifetime value of customers ,
is clearly more profitable
GOALS OF CRM

Build long term and profitable relationships with

chosen customers

Getting close to those customers at every point of

contact with them
CUSTOMER GOALS OF
RELATIONSHIP MARKETING

Enhancing

Retaining

Satisfying

Getting
FOUR KEY STEPS IN RELATIONSHIP BUILDING
PROCESS

Identify

Differentiate

Interact

Customise
LADDER OF LOYALTY

Prospect
Customer
Client
Supporter
Advocate
Partner
BONDING FOR CUSTOMER RELATIONSHIPS

Financial Bonds

Social Bonds

Customization Bonds

Structural Bonds
 Figure 6-6
Levels of Retention Strategies
Stable
Volume and Pricing
Frequency Bundling and
Rewards Cross Selling

Integrated I. Financial Continuous

Information Bonds Relationships
Systems

IV.
Excellent
Quality II.
Joint Structural Personal
Investments and Social Relationships
Bonds
Value Bonds

Shared Social Bonds

Processes III. Customization Among
and Bonds Customers
Equipment

Anticipation Customer
/ Innovation Intimacy
Mass
Customization
CUSTOMER DEFECTIONS

Price Defectors
Product defectors
Service defectors
Technology defectors
Process defectors
CUSTOMER RETENTION DEPARTMENT

Measure Customer retention

Interview former and existing customers
Analyse complaint and service data regularly
Identify switching barriers
PSYCHOLOGICAL STEPS ACROSS
RELATIONSHIP STAGES

Switching

Satisfaction

Trust

Commitment
ECONOMICS OF CRM

Market share v/s Share of Customer

LIFETIME VALUE OF CUSTOMERS

Length of average life time

Average revenue generated per relevant time period

Sales of additional products and services during that lifetime

Value of referrals generated during that life time

ACTIVITY BASED COSTING

It allows managers to see which Products , services or

customers are profitable , or loosing money

It means measuring the time required and volume

required for each activity
HIGH COST TO SERVE CUSTOMERS
Orders customised products
Small Order Quantitities
Unpredictable order arrivals
Customised delivery schedule
Changing delivery requirements
Manual Processing
Large pre sale and post sale support
Require company to hold inventory
Paying slowly
LOW COST TO SERVE CUSTOMERS

Order standardised products

Orders high quantities
Standardized delivery schedules
No changes in delivery requirements
Electronic processing
Little or no pre sale and post sale support
Pays on time
WHY IT IS DIFFICULT TO MANAGE QUALITY IN
SERVICES
Intangibility

Simultaneity

Perishability

Heterogenity
BERRY , 1997 HAS IDENTIFIED THREE
CHARACTERISTICS FOR FIRMS NEEDING CRM

There is ongoing and periodic desire for services

Customer can decide which services provider to choose

Alternatives are available and switching is common

COST OF LOOSING A CUSTOMER

It reduces cash flows

Firm has to attract new customers
Servicing old customers becomes more cost effective over a period
Premium can be charged
Highly satisfied long term customers give referrals
ECRM
Integrated online sales , marketing and service strategy
that is used to identify , attract and retain an
organisation’s customers

Improved and increased communication between an

organisation and clients by creating and enhancing
customer interaction through innovative technology
ECRM SOFTWARE SYSTEM
Increases the efficiency of the processes
Improves interactions with customers
Enables businesses to customize products and services
to meet customers needs
Effective E CRM tracks customer history through
multiple channels in time
Creates and maintains an analytical database and
optimizes customers relationship with organization
BENEFITS OF ECRM

Improved customer relationship , service and support

Matching customer behavior with offers
Increased customer satisfaction and retention
Greater efficiency and cost reduction
Increased business revenue
M CRM OR MOBILE CRM

MCRM delivers a full CRM experience on smartphone ,

tablets and other Internet devices
It enables teams to manage key informations in real
time
BENEFITS OF MCRM
Remote employees can work and plan using calendar
integration
Dial into meetings with click to call
Access and update leads , contacts and opportunities
Open and share files on the go
Track , manage and respond to customer service cases
on the go
Access up to date database at all time
CUSTOMER RETENTION

Customer Retention refers to activities and actions companies and

organisations take to reduce the number of customer defections

Goal of customer retention program is to help companies retain as

many customers as possible often through customer loyalty and
brand loyalty initiatives
CUSTOMER RETENTION STRATEGIES

Regularly Measuring customer activity or inactivity

Sell and sell them again
Reactivate dormant customers
Frequent communication calendar
Extraordinary customer service
Courtesy culture in organization
CUSTOMER RETENTION STRATEGIES
Product or service integrity
Measure lifetime value and customize offers
Respecting customer complaints
CRM systems
Loyalty programs
Regular reviews
Social media page
Personal touch
Faster response times
PREVENTING CUSTOMER DEFECTIONS

Know your customer , create a profile

Regular customer satisfaction surveys and suggestions
Know your competition and benchmark
Create and sell your USP to customer
Upsell and cross sell your customers
Personalize the realtionship
CROSS SELLING AND UPSELLING STRATEGIES
Start with your best customers
Perform business quarterly reviews regularly with clients
Create successful client case studies
Write a blog or post on new products or services
Offer a free trial
Offer a discount or incentive program to loyal customers
Tell the customers how they need the new product or service
Sales team incentive plans
4 C’S OF CRM – ELEMENTS OF CRM

Currency

Correctness

Consistency

Completeness
CUSTOMER ACQUISITION STRATEGIES

Increase engagement with email automation

Creating Eye catching content and functional web design
Republish and Update old content
Social Media Campaign
Deliver more than what customer expects
 START AFFILIATE PROGRAMS

Paid email campaigns on someone lists

Featuring on websites with Big Base following

Sharing revenue with leading players through

affiliations
CRM CYCLE

Assessment Phase

Planning Phase

Execution Phase
CUSTOMER EQUITY

Customer Equity is the total of discounted

lifetime value of all the firms customers

More loyal the customers more is the customer

equity
DRIVERS OF CUSTOMER EQUITY

Value Equity

Brand Equity

Retention Equity
IMPORTANT CUSTOMER METRICS

Customer Acquisition Cost (CAC)

Sales closing rate
Length of sales cycle
No. of Complaints received and solved
Average time taken to solve customer complaint
Customer Satisfaction index
IMPORTANT CUSTOMER METRICS

Customer Retention Rate

CLTV
ARPU
Marketing Campaign ROI
Time to recoup Customer Acquisition cost
Number of complaints handled by Customer Service
Representatives per day
Managing customer Complaints
MANAGING CUSTOMER COMPLAINTS

Managing Customer Complaints is a favourable

business Practice for ensuring excellent customer
service in a company

By having complaint management system in place

business can use the information to make product
and process improvements and more
COMPLAINT MANAGEMENT SYSTEM

Complaint Management System is the process

of how organization handles, manages,
responds to and reports customer complaints

Systems are put into place to track and trend

the data that is captured by complaint
management process
FEATURES OF CMS
Centralized location for Customers to lodge
complaints
System for storing complaints
Process for logging complaints
A method for acknowledging complaints
A process for investigating complaints
A process for resolving and following up with
complaints
GROWTH OF SERVICE SECTOR IN INDIA
Service Sector is key driver of India’s Economic growth

Sector contributed around 53.8 percent of its gross

value added in 2016-17 and employed 28.6 % of total
population

Health Care , education , engineering , communication,

IT , Banking , Finance, management among others
GROWTH OF SERVICE SECTOR IN INDIA
Indian Services market is expected to grow at CAGR of
17 % BETWEEN 2015 and and will surpass USD 19
BILLION mark on account of booming retail and
hospitality sectors

GST is expected to reduce costs in long run on account

of input credit , which will result in reduction of
prices of services
Service Recovery
SERVICE RECOVERY

Mistakes do Occur…. to heterogenous nature of

services

Service Quality variations are rule rather than

exceptions

Zero defects is not always attainable

STEPS COMPANIES TAKE FOR EFFECTIVE
RECOVERY

Companies often Underestimating the Costs of In

effective service recovery
Encouraging customer inputs
Anticipate need for recovery
Fast and prompt action
STEPS COMPANIES TAKE FOR EFFECTIVE
RECOVERY

Training and Empowering the employees

Service guarantees
a. Should be unconditional
b. Easy to understand and communicate
c. Easy to invoke
d. Easy to collect
BENEFITS OF SERVICE GUARANTEE

Service Guarantee is not just a powerful tool for raising

the standards but also a powerful Marketing tool
SG generates feedbacks from customers
It forces the firms to understand reasons of failure
SG boosts sales as it reduces risks of customers
SG is the best way to identify weak operations
BENEFITS OF SERVICE GUARANTEE

SG boosts sales as it reduces risks of customers

SG is the best way to identify weak operations

SG by improving the service quality in all dimensions

can provide firm with source of competitive
advantage and a strategy to differentiate its offerings
from its competitors
KEY ACCOUNT MANAGEMENT

Characteristics :
Customer of Strategic importance
Are also identified as National accounts Major
Accounts
However , not all key accounts are national
Contribution to Bottomline
OTHER INFORMATION: SOUGHT BY COMPANIES

Growth in Profits as compared to growth in sales

Cost of servicing each account vis-vis his contribution

Impact of loosing a key account

Pareto’s Analysis
CRM IN B TO B MARKETS

Characteristics of Business Markets

Market Structure and Demand
Nature of Buying Unit
Types of Decisions and process
Participants in Buying Process
IMPORTANCE OF CRM IN BUSINESS MARKETS

Fierce competition among Top consumers

Rising customer acquisition costs
Maturing markets
Commoditisation of many products and services
Lower vendor switching costs

Vendors are now forced to find ways to increase loyalty and

build relationship
CRM HELPS BUSINESSES
Focus on key customers and build strong relationships
Proactively generate high levels of customer satisfaction
Anticipate customer need by careful study of
environment, consumer behavior
Building closer ties with customers by integrating
Creating a value perception for the consumers
CUSTOMER VALUE MANAGEMENT IN BUSINESS
MARKETS

Understanding value

Creating value

Delivering value
IMPORTANCE OF CRM IN B TO C MARKET

Very little direct interaction takes place with customer

Training programs for dealers, sales and service
employees form an integral and essential part of
customer initiative
Forming Cross Selling and Upselling strategies
Word of mouth, Referrals, and Branding
CRM IN SERVICES – HOSPITALITY , BANKING ,
TELECOM , AIRLINES
Service Providers in Hospitality have to cultivate long term
relationships, by anticipating customer needs, warmth and
concern. Whole idea is to have repeat business
Frequent customers list, newsletters, publications, discounts ,
sightseeing and advisory services are offered to customers

In telecom , customer needs change frequently, packages

need to be designed and redesigned to meet their needs
CRM IN SERVICES – HOSPITALITY , BANKING ,
TELECOM , AIRLINES

Measuring Churn Rates , zero defection rates ,

measuring various parameters for quality issues
For Banking , defining customer relationship with
emphasis on primary channel , classification of
customers, appropriate pricing for different
customers, rewarding loyal customers, ensuring
security of data of customers
CRM IMPLEMENTATION ROADMAP
Determine objectives
Get Top Management approval and Executive Buy in
Documentation of requirements of depts
Selection Of CRM system
Deployment Roadmap
Systems training
CRM Review Audit
Mapping of Future requirements
4 P’S , ROADBLOCKS OF CRM
IMPLEMENTATION
Process

Perception

Privacy

Politics
EMERGING TRENDS IN CRM

Cloud Based CRM

Social CRM
Centralized data
Mobility
Flexibility
Crowdsourcing
COMPONENTS OF ECRM SOLUTIONS

Operational CRM

Analytical CRM

Collaborative CRM
CRM FRAMEWORK
Customers

Operational CRM

Collaborative CRM

Analytical CRM
DATA WAREHOUSING ARCHITECTURE
Monitoring and Administration

Servers

Analysis , Query and Reporting tools

Data Mining and Operational Databases