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Module 1: Customer

Relationship Management

Nirupama Vaishnav Jina


Training & Development
IMA
Session 2- Basic concepts of CRM

Learning Objectives

 Defining and understanding CRM


 Basic determinants of CRM
 Functions of CRM model
 Managing customer relationship
Definition of the term customer
and customer relationship
management
A customer is someone who makes use of or receives the products or
services of an individual or organization. The word historically derives
from "custom," meaning "habit"; a customer was someone who frequented
a particular shop, who made it a habit to purchase goods there, and with
whom the shopkeeper had to maintain a relationship to keep his or her
"custom," meaning expected purchases in the future.

CRM is “the development and maintenance of mutually beneficial


long-term relationships with strategically significant customers”
(Buttle, 2000)

CRM is “an IT enhanced value process, which identifies, develops,


integrates and focuses the various competencies of the firm to the
‘voice’ of the customer in order to deliver long-term superior
customer value, at a profit to well identified existing and potential
customers”.
(Plakoyiannaki and Tzokas, 2001)
Understanding Customer Relationship Management:

CRM is a business philosophy based on upon individual customers


and customised products and services supported by open lines
of communication and feedback from the participating firms that
mutually benefit both buying and selling organisations.

The buying and selling firms enter into a “learning relationship”,


with the customer being willing to collaborate with the seller and
grow as a loyal customer. In return,, the seller works to maximize
the value of the relationship for the customer’s benefit.
In short, CRM provides selling
organisations with the platform
to obtain a competitive advantage by
embracing customer needs
and building value-driven long-term
relationships.
Determinants of CRM

Trust

The willingness to rely on the ability, integrity, and motivation of


one company to serve the needs of the other company as agreed
upon implicitly and explicitly.

Value

The ability of a bank to satisfy the needs of the


customer at a comparatively lower cost or higher benefit than
that offered by competitors and measured in monetary,
temporal, functional and psychological terms.
Determinants of CRM:

In addition to trust and value, we must:

 Understand customer needs and problems

 Meet their commitments

 Make sure that the customer is always told the truth


(must be honest) and

 Have a passionate interest in establishing and retaining a long-


term relationship (e.g., have long-term perspective).
Functions of Customer Relationship Management

Direct functions (are the basic requirements of a company that are


necessary to survive in the competitive marketplace)
•Profit
•Volume and
•Safeguard

Indirect functions (are the actions necessary to convince the


customer to participate in various marketing activities).
•Innovation:
•Market;
•Scout: and
•Access.
Functions of Customer Relationship Management
Value Creation Process
Technology delivery process
•R&D
•Technology integration
Management •Efficiency, effectiveness
Decision learning
Process
Value-based
Customer sensitivity Product delivery process Strategies
•Concept to launch •Pricing
•Diversity •Manufacturing process •Communication
•Information
•Differentiated
offering Customer delivery process
•Supply chain
•Distribution
•Info mediation (distribution
of information)
(Sharma et. al., 2001)
Models of Customer Relationship Management
The Evans and Luskin (1994) model for effective
Relationship Marketing

Relationship marketing inputs


•Understanding customer expectations
•Building service partnerships
•Empowering employees
•Total quality management
Relationship marketing outcomes
•Customer Satisfaction
•Customer loyalty
•Quality products
•Increased profitability

Assessment state
•Customer feedback
•Integration
(Evans and Luskin, 1994)
Models of Customer Relationship Management
The Brock and Barcklay (1999) model of selling
partner relationship effectiveness

Independence

Mutual trust Selling partner


relationship
Cooperation
effectiveness

Relative influence
Managing Customer Relationships
You must be involved in the following activities in order to initiate, develop and enhance
the process that is aimed at building trust and commitment with the customer.

Initiating the relationship


 Engage in strategic prospecting and qualifying
 Gather and study pre-call information
 Identify buying influences
 Demonstrate an understanding of the customer’s needs
 Identify opportunities to build a relationship and
 Illustrate the value of a relationship with the customer
Managing Customer Relationships
You must be involved in the following activities in order to initiate, develop and enhance
the process that is aimed at building trust and commitment with the customer.

Developing the relationship


 Select an appropriate offering
 Customise the relationship
 Link the solutions with the customer’s needs
 Discuss customer concerns
 Summarize the solution to confirm benefits and
 Secure commitment.
Managing Customer Relationships
You must be involved in the following activities in order to initiate, develop and enhance
the process that is aimed at building trust and commitment with the customer.

Enhancing the relationship

 Assess customer satisfaction;


 Take action to ensure satisfaction;
 Maintain open, two-way communication; and
 Work to add value and enhance mutual opportunities.
Managing Customer Relationships
Qualifying prospects for relationship building

High
Use a non Build a strong
customized and lasting
approach relationship
Opportunities
for adding value

Seek better Focus on


opportunities loyalty-building
elsewhere program
Low
Low Potential profitability of customer High
Relationship networks

The ultimate outcome of a successful CRM strategy is the creation


of a unique company asset known as a relationship network.

A relationship network consists of the company and its major


customers with whom the company has established long and
enduring business relationships.

The additional aspects of a global salesperson’s job are to:

 Manage customer value


 Act as customer advocate and
 Enhance customer loyalty and build a “health” and
 profitable network of relationships.