crm questions.docx

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CRM Questions

1. What do you understand by the voice of the customers? Explain the

relationship between customer ownership and value.

The voice of the customer has won clear prominence over product focused

fundamentals in the market. Today marketers have realized that selling theirproduct/services will not be easy till they cater to the needs and exhilarating

expectations of the high demands of the customers. This is the reason behind

companies delving deep into the intricacies of consumer research to know more

about the customers, their preferences and expectations. Using research to know

the voice of the customer has been a rewarding strategy. Excessive research

with focus only on the product can lead to under estimation of needs and

expectations of the customer, which further leads to market myopia.

The relationship between customer ownership and value is as follows:

The ideal relationship between customer and a brand can be an emotional

attachment with the brand, as if they own the brand and it belongs to them. The

survival mantra today is not to concentrate on return investments, but on return

on relationships.

Mutual Value.

The real challenge to the organizations is not only to create customer

satisfaction, but to create high customer value, where the customer has a strongperception of tangible and intangible benefits derived from the product. Also, the

customer should be able to constantly map in his mind a comparative analysis of

benefits versus the cost of the product. After all, the customer is going to spend

his valuable resources in terms of time, money and efforts whenever he decides

to purchase the product and he has to be assured of certain benefits from the

product/ service/ brand/ organization.

The customer value that an organization has created, results in customer

ownership, where the customer is perceived as one who has a strong emotional

bonding with the product.

2. What is customer care? Explain the various stages of customer care?

It is an undisputed fact that the prime reason for the existence of any enterprise

is its customers. Customer care is the process that seeks to acquire new

customers, providing appropriate services and then building customer loyalty.

Customer Brand



Organizations have to put in place a system for all these stages of interaction

with the customers.

Listening:

Organizations should have sufficiently equipped channels of

communication to listen to the customers. It is very frustrating for any

customer to not find a method of communicating his query or grievances

to the respective organization. To listen to the customers, there can be a

number of channels and strategies, from traditional complaint centers to

modern use of technology like mobiles and the internet. The method and

procedures of listening to the customer should be accessible, easy, simple

and widely communicated to all the customers.

Responding:

It is very important that call from the customer is acknowledged. Every

customer expects a quick and appropriate response to his call. The

complaint or service request should be handled appropriately.

Improving:Organizations should learn from the previous experiences of complaints

and grievances so that recurrences of problems to the customers are

minimal. The customer care mechanism should provide inputs to product

improvement, new product development, improvement in service delivery

system, training of manpower etc.

3. What is Knowing your customer? What information does it involve? In what

areas can an organization device its strategies having known its

customers?

The foundation of any good customer care system is the knowledge of

customers. Identifying needs, wants and expectations of the customers is

collected and responding to them accordingly is crucial for customer care.

Information about the customers is collected by the organizations during each

interaction. This information generally comes through contact centers, sale

persons and service technicians. Besides these, organizations undertake special

Listening Responding Improving



market research projects to know their existing and prospective customers. The

knowledge of the customers involve information in the following areas:

What consumers buy

Why they buy

When they buy

Where they buy

How often they buy

How often they use the product

What are the service requirements

How customer interacts with the organization

What are the modifications in the product/ service required by the

customer

Better knowledge of the customer helps an organization in devising strategies in

the following areas:

Customer care mechanism

Marketing communication plans

Market segmentation

Targeting of consumers

Positioning of products

New product development/ product innovations

New market penetration

4. What are customer touch points and moment of truth?

The organization and the customer both have to interact with each other. A

customer has a particular experience whenever he comes in contact with an

organization, its employees, its products/services or any other channel of

interaction. These experiences of touching the brand and getting associated with

the organization creates an impact in the mind of a customer. These touch points

generate the moment of truth, wherein a customer perceives the experience of

interaction either as good or bad, constructive or destructive, positive or negative.

It is the quality of these moment of truth that decide customers long term

association and involvement with the brand/ service.

The first touch point occurs when a customer becomes aware of the brand or the

point. Multiple experiences at individual touch points create an overall impression

in the mind of the customer. It is the multiple interactions over a long period of

time that strongly bind the customer emotionally and psychologically. For this to

happen there should be consistency in positive experiences, otherwise there will



be a diffused perception in the mind of the customer. A large number of touch

points associated with overall customer experience makes it a complex process

demanding cautious handling of each touch point by the organization.

5. What is customer life cycle? Explain pictorially be means of any example.

The customer life cycle is the journey of a customer from getting attention to

becoming a customer and finally being retained and associated for a long time

with an organization. The behavior of a customer is different during different

phases of this life cycle and is dependent on various exogenous and

endogenous factors. An individual or organization becomes the customer if the

perception of expected value from the purchase is more than the money being

paid for the product or service. However this association will result into a

relationship only if the value perceived is realized by the customer. So the

concept goes beyond selling the product or service. The experiences of thecustomer during multiple individual interactions for the consumption of

product/services and service requirements convert the customer into a loyal or

lapsed customer. If the customer is satisfied during most of these interactions, he

may continue to use the product or subscription of service in spite of attractive

campaigns by the competitors. To make the customer undeterred by market

conditions and continuous bombardment of marketing stimuli from the

competitors in the form of their aggressive promotional campaigns, it is important

to convert the customer into a loyal customer and subsequently turning him into

an advocate of the organization.

Organizational

Process

Employees

Mailers

Brands

Publicit

Customers



Customer life cycle.

6. Explain the differences between traditional marketing approach and relationshipmarketing approach.

The traditional marketing mix approach emphasized only on the importance of

four fundamental P's of marketing ie; Product, Promotion, Place and Price. The

marketers thought of attracting the customers with innovations in product,

creating brand image by promoting the same, having efficient sales and

distribution network and offering an attractive price for the product. The

promotion was targeted towards brand management, communicating product

features and price offerings through mass communication. The market research

was meant only to find out why the products were not being sold or why the

market share was falling. The only focus was to acquire new customers so as to

increase the market share. There was no focus on retention of customers or

creating a sustainable relationship with them.

However in today's competitive market, organizations cannot survive just by

making good products and price offerings. The market situations have changed

and it is tough to retain customers. Multiple and highly innovative media are

explored by the organizations to connect with customers. In such a scenario,

Market Suspect

ProspectLapsed

customersLoyal

customer

Customer



relationship marketing is the answer to maintain contact with customers

continuously and sustain a relationship with them.

Traditional Marketing

Relationship marketing is an ongoing process of continued interaction with

customers through multiple touch points and channels, so as to build a bond

between customers and organization.It is not a tool or technique within an organization, but an organizational

pervasive approach that establishes long term relations which result in customer

loyalty and are a step ahead of generating customer advocacy. Each member of

the organization, irrespective of the hierarchical level, is responsible for

developing relations with the customers.

Marketing

mix

Product

Promotion

Price

Place



Relationship Management.

7. Explain the organizational pervasive approach to relationship marketing.

Relationship marketing is an ongoing process of continued interaction withcustomers through multiple touch points and channels, so as to build a bond

between customers and organization.

It is not a tool or technique within an organization, but an organizational

pervasive approach that establishes long term relations which result in customer

loyalty and are a step ahead of generating customer advocacy. Each member of

the organization, irrespective of the hierarchical level, is responsible for

developing relations with the customers. It is a holistic approach comprising of

interrelated series of marketing efforts instead of single unconnected events. The

emphasis is not on acquiring new customers but on making existing customers

happy and satisfied which will result in an expanded customer base.

Customer touch points, which were predominantly personal touch points are now

changing to technological driven interaction. The customer interacts with an

organization through a variety of channels and if individual interaction has no

connection with the past interaction then the customer feels loss of identity and

insensitivity in such an interaction. To avoid this scenario relationship marketing

Customer Touch Point

Interaction

Relationships

Customer Loyalty

Customer Advocacy

Relationship management



focuses on the process of interaction of the customer with the organization in

totality, rather than discrete event based interactions.

8. What is customer lifetime value? Explain pictorially by means of any

example.

Relationship marketing is a strainous and cost intensive process, organizations

may not give the same level of attention to all their customers. They will have to

segregate customers giving high profitability to them in comparison to the

customers who are frequent users of their products. Without knowing the value of

the customer, it is difficult to know how the company should invest in acquiring

and retaining the customer. The customer lifetime value (CLTV) is the net sale

achieved from the customer during the entire period of his stay with the

organization. In this approach the customers are treated as assets and the

company wants to know how much is the return from these assets. CLTVincludes the total financial contribution of a customer over the lifetime of that

customer's relationship with a company. Calculating a customer's lifetime value

requires the cost of acquiring the customer, stream of revenues coming from

customer and computations of the recurring costs of delivering services to the

customerr.

9. What is service level agreement (SLA)? What are the processes involved in

preparing a SLA? What are the contents of SLA?

Service Level Agreement is a tool for formalizing the relationships with thecustomers. It is mainly used for enterprise customers and high value customers.

The SLA is a contract between the service providing organization and its

customer or between two organizations, in which one is getting some service

from the other. It is a means to quantify and define the expectations from each

other. The SLA is that part of a service contract where the level of service is

formally defined. An SLA is a formally negotiated and written agreement between

Recurring

costs

Recurring

revenues

Life span of

customer

Net margins

Cumulative

mar ins

Acquisition

cost

Lifetime

value



two parties- the service provider and the service receiver. It is a contract that

exists between customers and service providers that records the common

understanding about services, priorities, responsibilities and other parameters

which are collectively called level of service. The service organizations try to

build long term relationships with high value customers by signing the SLA.

Besides clarifying the operational and quality parameters to the customers, SLA's

form the foundation for organizational internal processes and service delivery

mechanism.

Preparing an SLA:

Developing and documenting an SLA involves finding out key parameters that

determine quality of service expected by the customer, their method of

measurement and their expected value. This process involves the following

steps:

Identifying key service parameters that are linked to service level.

Defining service level objectives. Defining the target level of each parameter.

Establishing accountability for meeting these parameter levels.

Establishing linkage of these parameters to commercial reward and

payment system

Defining actions and liabilities for non compliances.

A well documented SLA should create self confidence in the mind of the

customer that he will get an appropriate level of service.

Contents of an SLA:

A well documented SLA should contain the following:

Scope and objectives

Description of service

Service level matrix

Roles and responsibilities of service provider

Roles and responsibilities of the customer

Performance tracking and reporting method

Escalation procedure

Compensation in case of non compliance

10. Define customer relationship management? Explain pictorially the integratedapproach of crm?

CRM is an approach implemented by an organization in which it integrates its

strategy, business processes and functionalities to build up, maintain and expand

relationships with customers. CRM is a way of ensuring customer loyalty by

being sensitive to the needs of customers. It is an inherent philosophy in any

organization to create, maintain, sustain and develop the customer base. CRM



creates mutually beneficial relationships with customers. The continuous

expansion of satisfied customer base is the end result of CRM

CRM

Strategy

Businessprocess

Functionalities

People



Integrated approach to CRM

Crm is not just a software application to be implemented in an organization. It is

the way of working of an organizatio. It is the central theme on the basis of which

all business processes are designed and all resources including human capital

are oriented to achieve stronger ties with customers.

11. What is customer relationship framework? Explain pictorially.

Customer relationship framework is a coordinated approach involving the

following:

Know your customer

Before initiating a relationship with a customer, it is imperative to know thecustomer. If the customer interacts with the organization, the touch points

of the organization should be capable of extracting and recording the

information of the customer. If the organization wishes to initiate

interactions with the customer, it should have all possible information

about the customer well in advance and, subsequently, it should be

capable of capturing the data for future.

Recognize your customer

During the subsequent interactions with the customer, the organization

should be able to recognize the customer. Recognition is necessary so

that each transaction is not an isolated one, but should be an extension of

previous interactions. There are various means and ways to recognize the

customers, a few examples are as follows:

a) Calling line identification (CLI) is used in many call centers to

recognize the calling customer and on the basis of this all available

Sustain

Maintain

Create



information of the customer and his previous interactions are made

available to the call center agents.

b) Customer mobile numbers are registered to identify and recognize

the customers.

If the organization fails to recognize a customer in subsequenttransactions, the link will be isolated. That is why recognition of customers

is very important and it will form the foundation of relationship.

Customer Relationship Framework

Value Addition through Interaction

Only an efficient method of recognition of customer is not sufficient. The

interaction should result in some value addition to the customer. If a creditcard holder calls the call center of the company to inquire about payment

details, he should be recognized and greeted by the call center agent.

This will be possible only if the call center agent has the appropriate and

relevant details of the customer available at his desktop.

Interdependence and relationships

Know your

customer

Recognize your

customer

Interdependence Value through

Interaction

Relationship



If the customer is satisfied with the delivery of the service, there will be

value addition because of this interaction. Such repeated interactions

create interdependence between the customer and the organization which

subsequently results in stronger relationships between them.

12. What are the levels of CRM?

There are two levels of CRM and they are as follows:

Operational CRM:

This takes care of individual transactions and is used by operational staff.

Interactions by the customers are stored in the database and the same

are used later by services, sales, and marketing staff for operational

decisions. Operational CRM processes customer data for a variety of

purposes such as:

a) Customer service management

b) Managing campaignsc) Enterprise marketing automation

d) Sales force automation

e) Sales management system

Analytical CRM:

This is the use of analysis and reports of historic data captured over a

period of time to take decisions by the senior management on what should

happen. Such decisions are not day-to-day operational decisions; but

these are strategic decisions which would affect the business as a whole.

CRM analytics also give insights into customer satisfaction level and

customer loyalty. These reports can be further analyzed to take corrective

actions. Analytical CRM analyses customer data for a variety of purposes:

a) Designing and executing targeted marketing campaigns

b) Designing and executing sales campaigns

c) Designing and executing customer information campaigns

d) Analyzing customer behavior in order to make decisions relating to

product up gradation, new product development, service delivery

process re- engineering.

e) Management information system

f) Designing and executing sales and distribution strategies and

supply chain management.

13. What is customer loyalty? What are the stages in graduation of customer

organizational relationship? What are the stages of association of customer?

The term loyalty is used to describe the post purchase behavior of customer,

wherein the customer indulges in repeat purchases of the same brand/ service

offered by an organization over a period of time. Customer loyalty management



is a continuous process, a programme, or a group of programes, designed with

the objectives of keeping a customer satisfied so that he or she will provide more

business. Customer loyalty can be achieved in some cases by offering a quality

product with a guarantee/ warranty. Some of the methods of benefiting

customers loyalty are through offers, coupons, low interest rates etc.

Stages of graduation of customer organizational relationship are as follow:

Prospect: the prospect is an individual or organization in the market, which

fulfills the requirement of the marketer's definition of target.

Customer: when the prospect is attracted by the offering of the marketer

and purchases it, he or she becomes a customer.

Client: when the customer buys the product several times, he is referred to

as a client.

Support: when the customer is very much satisfied with the product, he

starts telling about the product to his acquaintances, thus promoting the

product through word of mouth. Advocate: a supporter who besides referring the product or services to

others, proactively works to enhance the company's product or services is

referred to as an advocate.

Partner: an advocate becomes a partner when he becomes actively

involved in the decisions of the company.

Stages of association of customer are as follows:

Customer satisfaction: it is the function of product/ service quality, post

purchase support and realization of the product value by the customer.

Repurchase: the customer will repurchase the product or continue to

subscribe to the service, if he/ she is satisfied and is convinced that other

alternatives in the market are not capable of providing a better value.

Recommendation: the customer not only purchases the product, but also

becomes its patron and advocates the product to others. It happens only if

the product is able to generate a strong emotional bonding and ownership

for a prolonged period.

14. How do organizations plan and manage loyalty programms?

A typical loyalty management programme revolves around measure, plan,

communicate, do, check, and improve cycle.

Measure the current loyalty levels through surveys and behavioral data.This needs market research through well structured questionnaire and

internal analysis to find out where the company lacks in terms of its

products, policies, and procedures. Voice of customers in terms of

feedback from the customers is needed periodically to measure current

loyalty levels.



Benchmark current loyalty levels against those of competitors and analysis

should be done accordingly.

Identify the dimensions of performance of the product that matter most to

customers and track them rigorously.

Systematically communicated survey feedback throughout the organization

for higher involvement of each member of the organization.

Build loyalty and retention programmes and integrate them into the

company's product, policy and procedures.

Develop new programmes to reduce customer churn rates and to compete

in the market.

Revise policies that drive short term results at the expense of long term

loyalty, such as high service fees and discounts given only to new

customer; instead with high lifetime value should be given preferential

treatment.

An individual loyalty scheme is build up around these steps:

Outline objectives of the loyalty programme/ scheme. Objectives should be

measurable and realistic as far as possible.

Prepare budget according to market forces, competitors analysis etc and

get financial approval within the organization

Determine the eligibility for rewarding the customer as per customer lifetime

value or any other relevant parameter.

Select appropriate reward methods for the customer. Care should be taken

so as to ensure more purchases get better tangible and intangiblerewards.

Explore partnerships with others for cross selling/ up selling distribution and

promotion

Design and prepare organizational structure and processes to implement

the programme, including training of the staff where ever required.

Integrate the programme with existing tariff/pricing plans, distribution

networks and customer touch points

Monitor the implementation of the programme and take corrective actions to

ensure its success in terms of revised service capacity planning and other

measures.

Take corrective action including restructuring and redesigning distribution

networks, new partnerships with intermediaries.

15. What are the various types of loyalty programmes? Why do loyalty programmes

fail?

The following are the most common types of loyalty programmes:



Appreciation: in such programmes, the customer doing repeat purchase or

subscribing to service for longer periods are given additional product/

service without extra cost; for example, subscribers are given free

additional talktime by the mobile service providers.

Rewards: in these programmes, customers are given special rewards

unrelated to a company's product/service; for example, reward points

given by a credit card company which can be used by the customers to

buy amongst a variety of products.

Partnership: companies sign up special long term agreements to benefit

from each other. This provides the framework for repeated purchase from

each other. Companies can even plan to do partnership with retail

customers by innovating special schemes.

Rebate: here companies give preferential pricing schemes to loyal

customers; for example, the subscribers who use more talktime are given

special tariff plans by mobile service providers. Affinity: under such schemes, companies try to earn goodwill of the

customers by offering non tangible rewards and getting involved in social

responsibility.

Reasons for the failure of loyalty programme are as follows:

Every loyalty programme is not successful. Loyalty programme should be

carefully designed and implemented. They can fail or be ineffective because of:

Poor design

Insufficient/ unattractive reward policy

Poor implementation of the programme

Programme not communicated properly

Programme not integrated with organizational policies and procedure.

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