CUSTOMER RELATIONSHIP MANAGEMENT

CHANGING MARKET ENVIRONMENT

Market has changed its focus from product-centric to customer-centric.

Customers have assumed the most important position in the business equation.

Customers are demanding a different relationship with suppliers than the traditional sales model

CRMCustomer – 1. A person who buys on products or services from a shop on

business.2. A person or thing of a specific kind that one has to deal

with.Relationship-1.The way two or more people are connected or in a state of

being connected.-The way in which two or more groups of people regard & behave towards one another.

2. An emotional association between two people.Management-1. The process of managing 2. The people managing an organisation

NEW AGE CUSTOMERS’ BEHAVIOUR

Customers want “Value for Money” Customers are no longer loyal to brands Customers are better informed Customers want to share problems they face They want to inform Companies the kind of product /

service they want They want Companies to share information with them They want facility of delivering products anytime,

anywhere

COMPANY’S PERSPECTIVE

Era of competition and declining margins Companies are vying to attract customers by

offering product features, price and distribution network

Acquiring customers is usually much more expensive than keeping them

Companies need information about what customers want

Increased revenue results from increased Customer Satisfaction

What should be a Company’s strategy in today’s customer driven economy?

The Key to a Company’s success lies in establishing relationship with customers.

What is Customer Relationship ?

Developing, maintaining and sustaining a close bond between the Customer and the Company.

What is CRM ? It is a process by which a company maximises

customer information in an effort to increase loyalty and retain customers’ business.

The use of wide range of marketing, sales, communication, service and customer care approaches to :

• Identify a company’s customers• Create a relationship between company & customers• Manage that relationship to the benefit of both It is not a technology solution, it is a business culture

What is CRM ?• CRM is an information industry term for

methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way.

• CRM is both a business strategy and system to enable companies to better manage customers through introduction of reliable processes and procedures for interacting with them

• It is a strategic tool which enables management to know all about the customers—customer profile, purchase behaviour , capacity to buy etc.

How a Company could describe CRM to its customersRelationship marketing is how we

• Find you• Get to know you• Keep in touch with you• Try to ensure that you get what you want

from us in every aspect of dealings with you• Check that you are getting what we

promised you

Goal of CRM

• To improve customers’ experience of how they interact with Companies—get closer to the customers

• To create Customer Satisfaction which leads to loyalty and more sales

• To build long term profitable relationship with customer

• To maximise Company’s revenue

Benefits of CRM• Improved customer retention & loyalty- customers

stay longer, buy more & more often• Higher customer profitability – lower cost in

retaining customers, no need for more recruitment • Reduced cost of sales- existing customers are

more responsive• It offers customers an insight into the Company• It builds a long-term relationship with customers

and maximises revenue

Constituents of QoS

• Service support performance- ability to provide service & to maintain it

• Service operability performance-user freindliness , simplicity ,ease of use

• Service integrity performance- performance to pre-established criteria

• Serveability performance- accessibility, retainability, reliability, ability to provide service on request & without interruption

Service QualityDegree and direction of discrepancy between customers’ perceptions & expectation.

Five Dimensions:• Reliability -ability to perform promised service

dependably & accurately• Assurance- knowledge & courtesy of employees,

ability to inspire trust & confidence• Tangibles- physical facilities, equipment &

appearance of personnel• Empathy- caring & individualised attention• Responsiveness- willingness to help customers &

prompt service

Service Guarantees

The service customers can expect and what the company will do if it fails to deliver

Contains two elements:

• A service promise or pledge that expresses the firm’s willingness to engage in a behaviour considered desirable by customers

• A compensation in case of service failure

Stages of Relationship• Targeting- appropriate customers are induced to join• Enquiry Management- in process of joining• Welcoming- customer should know whom to contact,

how to use product• Getting to know- additional needs become apparent• Customer Development-relationship managed securely• Managing problems- attention needed to ensure they

return • Win back- can be initiated if relationship ended due to

high price / wrong product

Requirements of CRM

• Good manufacturing/ operations & distribution• Properly recruited, trained & motivated people• Robust enquiry, sales & complaints handling

processes• Good information technology ,so that the

company can recognize customers and provide offers, information and advice

CRM BUSINESS CYCLE

Acquisition and Retention Understand & differentiate • profiling• Segmentation• Research to capture needs & attitude• Customer valuation—profitability , long term potential

, ability to refer other customers Develop & Customize Interact & Deliver– increase the value delivered to

customers

Targeting

• Who do we target

• What segments are most profitable

• What segments match our value proposition

• What is the best segmentation strategy for us

Acquisition

• What is the best channel for each segment

• What is the acquisition cost for a channel / segment

• Do certain channels deliver certain types of customers

• Cost effective acquisition

Retention

• How can we improve retention

• What is our average retentionship length

• How can we hold customers for as long as we can

• What is the most attractive method of retention

Expansion

• How many products does our average customer buy

• How can we induce our current base to buy more product

• Who are the prime targets for expansion

• What is the cost of expansion

Aspects of CRM

• Operational CRM: The automation or support of customer processes involving sales or service representatives

• Collaborative CRM: Direct communication with customers not involving sales or service representatives (“self service”)

• Analytical CRM: The analysis of customer data for a broad range of purposes

Operational CRM• Operational CRM provides support to "front

office" business processes, including sales, marketing and service. Each interaction with a customer is generally added to a customer's contact history, and staff can retrieve information on customers from the database as necessary.

• Focus on customers value is key to a successful CRM strategy. Different customers have to be treated differently. Variables like customers ranking, actual value and potential value are strategy drivers.

Collaborative CRM

• Collaborative CRM covers the direct interaction with customers. This can include a variety of channels, such as internet, email, or automated phone answering system. It can generally be equated with “self service”.

• The objectives of Collaborative CRM can be broad, including cost reduction and service improvements. Driven by authors from the Harvard Business School (Kracklauer/ Mills/ Seifert),

Collaborative CRM contd.• Collaborative CRM seems to be the new paradigm to

succeed the leading Efficient Consumer Response and Category Management concept in the industry/trade relationship. Many organizations are searching for new ways to use customer intimacy to gain and retain a competitive advantage. Collaborative CRM provides a comprehensive view of the customer, with various departments pooling customer data from different sales and communication channels.

• Collaborative CRM also includes Partner Relationship Management (PRM) which enables organizations to manage their relationships with partners (consultants, resellers and distributors), and potentially the customers of those partners.

Analytical CRM• Analytical CRM analyzes customer data for a variety of purposes,

including:• design and execution of targeted marketing campaigns to optimize

marketing effectiveness • design and execution of specific customer campaigns, including

customer acquisition, cross-selling, up-selling, retention • analysis of customer behavior to aid product and service decision

making (eg pricing, new product development, etc) • management decisions, e.g. financial forecasting and customer

profitability analysis • risk assessment and fraud detailer for credit card transactions • Analytical CRM generally makes heavy use of Predictive

analytics.

Strategy• Several commercial CRM software packages are

available which vary in their approach to CRM. However, CRM is not just a technology, but rather a holistic approach to an organization's philosophy in dealing with its customers. This includes policies and processes, front-of-house customer service, employee training, marketing, systems and information management. CRM therefore also needs to consider broader organizational requirements.

• A company's CRM strategy is dependent on both the company’s current situation and the needs and expectations of its customers.

Technology considerations• The technology requirements of a CRM strategy are very

complex and far reaching. The basic building blocks include:• A database to store customer information. This can be a CRM

specific database or an enterprise data warehouse. • Operational CRM requires customer agent support software. • Collaborative CRM requires customer interaction systems, eg

an interactive website, automated phone systems etc. • Analytical CRM requires statistical analysis software, as well as

software that manages any specific marketing campaigns. • Support CRM systems require interactive chat software to

provide live help and support to web site visitors

Use of Technology in CRM

• Sales force automation

• Call centres

• Data warehousing

• Data mining & OLAP

• Decision support & reporting tools

• Electronic point of sale

Successes

• While there are numerous reports of "failed" implementations of various types of CRM projects, these are often the result of unrealistic high expectations and exaggerated claims by CRM vendors. In contrast there are a growing number of successes. One example is the National Australia Bank (NAB) which has pursued a CRM strategy for over ten years and has won numerous awards for its efforts.

Privacy and Data Security

• The data gathered as part of CRM must consider customer privacy and data security. Customers want the assurance that their data is not shared with 3rd parties without their consent and not accessed illegally by 3rd parties.

• Customers also want their data used by companies to provide a benefit for them. For instance, an increase in unsolicited telemarketing calls is generally resented by customers while a small number of relevant offers is generally appreciated.

Customer relationship management software

• Customer relationship management software is defined as business management and automation of the front-office divisions of an organization. CRM software is essentially meant to address the needs of Marketing, Sales and Distribution, and Customer Service and Support divisions within an organization and allow the three to share data on prospects, customers, partners, competitors and employees. The purpose of CRM software is to manage the customer through the entire lifecycle, i.e. from prospect to qualified opportunity to order.

Customer relationship management software

• CRM software automates many of the needs of Marketing, Sales and Support users, such as Telephony, or the ability to conduct phone calls and manage call data, and tools to capture, share and manage automated alerts on lead data as it passes through the sales pipeline. CRM software provides a standard framework for pushing leads through a sales pipeline and managing it amongst many stakeholders in real time, in order to provide better customer relations and grow revenues by creating more sales, and losing fewer customers.

Customer relationship management software

• CRM software helps organizations achieve their customer relations goals by measuring key performance indicators collected by the CRM software about customer lifecycle behaviour. Benefits include isolating those marketing campaigns that drove the most and best quality leads, improving internal efficiency, complete customer histories and the ability to provide appropriate support and consequently retain customers.

References

• Handbook of Customer Relationship Marketing –Merlin Stone, Neil Woodcock, Liz Machtynger ( Crest Publ. House)

• Effective CRM-Braj Mohan Chaturvedi (ICFAI Univ.)

• Marketing Services-V R Vedulla (Jaico Publ. House)

• Wikipedia website