Customer Relationship Management

Chapter 01: The Nature of CRM

By Group 04
The agenda of the presentation

 Concept of Relationship Management

 CRM
 CRM System as a Hub of Applied Learning
 Potential Returns of CRM Systems
 Potential Benefits of CRM Systems to the
Organization
 Potential Costs of CRM Systems to the
Organization
 Potential Benefits of CRM Systems for
Customers
 Potential Costs of CRM Systems for Customers
 Lifetime value of the relationship
Concept of RM

 Communicates the idea that a major goal of a

business enterprise is to engage in interaction with
customers over the long term.
CRM

Process of compiling information:

 An organization tries to compile all the information
about their customers so that they can manage the
relationships with their customers properly.
Two dimensions: analysis and action:
 After compiling of the information they analyze them
and take proper actions.
Extended use of IT:
 Now a days most of the big organizations make
extensive use of I.T. for maintaining proper C.R.M.
relationships
CRM System as a Hub of Applied
Learning
Potential Returns of CRM System
Potential Benefits of CRM Systems to the
Organization

 Customers Retention:
 If an organizations maintains CRM in an effective
manner it helps them to retain customers and
thereby reducing there costs significantly.
 Share of Wallet:
 It means an organization after retaining its
customers tries sell them as many products as they
can which they have under their umbrella.
 Cross Selling and Up Selling
 Cross sell is when customer comes up to buy
something and we sell completely a different
product (not similar).
 Up sell is when customer comes to buy something
and we sell the similar product but expensive one.
Potential Costs of CRM Systems to the
Organization

 Significant investment in the IT Infrastructure:

 With significant increase in customer base an
organization needs to implement a proper I.T
infrastructure in place so that they can manage their
customers efficiently. For this they need to make
significant investment for the I.T. infrastructure.
 Price of Process Change:
 Switching from the normal habituated process to the
modern I.T. systems both the customers and the
employees of an organization takes time to change.
If the said changes are not done in an effective
manner all the investments made may go haywire.
Potential Benefits of CRM Systems for
Customers

 Continuity:
 If there is an effective CRM an customer will continue doing
business with the organization. Thus the customer need not
have to such for too many alternatives if all its need are
fulfilled under a single umbrella.
 Contact Point:
 Through a contact point a customer can interact with the
organization and thus get their queries fulfilled.
 Personalization:
 With huge customer bases organizations now a days use
CRM software to personalize with their customers. Through
this they come to know about customers purchasing routine
and thus make tailor made offerings to their customers.
Potential Costs of CRM Systems for
Customers

 Loss of Privacy:
 Since the organizations want to give personalized
service to their clients they all want to access all the
details of their customers like bank a/c no etc. this
leads inevitable loss of privacy for the customers.

 Opportunity Costs:
 When customer turns loyal towards a particular
organization they usually do look at the offers made
by other organizations. Thus by turning loyal they
may miss a good opportunity provided by other
similar organizations.
Lifetime value of the relationship
Why CRM?

The impact of a 5% increase in retention rates

 It is 6-7 times more expensive
to gain a new customer than Industry Increase in profits
retain an existing customer Advertising Agency 95%
(Harvard Business Review) life-insurance company 90%
branck bank deposits 85%
 Customers become more
publishing 85%
precarious
auto service 81%
 A 5% increase in customer auto/home insurance 80%
retention can increase profits credit card 75%
60-100% proved customer industrial brokerage 50%
retention industrial distribution 45%
industrial laundry 45%
 Data as on 2007
office-building management 40%
Source: The Loyalty Effect (Harvard Business School Press)
By Frederick Reichhek
Market Situation of CRM

CRM Failure
Domestic CRM Market Transition (license)

CAGR:13.5% unit: billion won • 75% of CRM projects that do not deliver
58 measurable ROI will have failed because of
poor business executive decision-making
39.9
45.7
• ½ of the companies got worse performance
35.3 34.9 36.4
tasks, ¼ of companies which implement
CRM system didn’t get improvement of
tasks,.
Source: Gartner Group, Insight Technology Group report

20 02 2003 2004 2005 2006 2007

Source :http://www.krgweb.com
CRM Failure Reasons

Sin One : Failing to Plan

 CRM Market is getting bigger but, Sin Two : Failing To Establish Outcomes
companies should pay too much cost Sin Three : Excluding the Human Factor
and time to implement CRM. Sin Four : Automating Flawed Processes
Also, the CRM system does not Sin Five : Ignoring Constraints
guarantee higher performance Sin Six : Disregarding Politics
Sin Seven : Choosing the Wrong Vendor

Source: interview of Gartner Research’s Beth Eisenfeld with CRMDaily

Some of the Popular Software available in
the market

 Microsoft Dynamics CRM Solution

 Oracle CRM
 Intelestream
 Kayako
 Incontact
 GoldMine
 EpesiBIm
 Siebel CRM