CHAPTER : 1 INTRODUCTION TO CRM 1.

1 INTRODUCTION In the recent years, it has been observed that for any business giant to have maximum market share requires something more than technology, innovation, capital. It has been seen that the company first tries to be market favorite and then heads on to be the market leader. The key which takes the share price of the company at top most level is the customer. Once beautifully quoted by Mahatma Gandhi customer is the most important person for a business. He is not an interruption to our work but the purpose of it. He is not an outsider; he is a part of it. We are not doing him a favour; he is doing us a favour by giving us an opportunity to serve him. Many organizations have realized that to sustain in the market they have to do more than selling of their product. For this the only mantra is to provide customized and personalized services to customers, which in management is also known as praticising customer relationship management. This concept is tremendously gaining importance in corporate circles and is emerging as the business theme for the 21st century. Relationship Marketing The concept of relationship marketing has emerged within the fields of service marketing and industrial marketing. From the start service companies based their marketing on the marketing mix paradigm. The marketing mix, which consists of the 4Ps(product, price, place and promotion), has dominated the marketing research The concept emerges from the idea of the marketer as a offers competitive. However, within the field of services the marketing mix showed to have several disadvantages. This was made clear since the characteristics of services differ noticeably from the characteristics of commodities. Often services are intangible and consequently hard to demonstrate and its therefore difficult to estimate their value. In addition they

normally require some kind of interaction between the seller and the customer during the production of the service.

Fundamental Values of Relationship Marketing According to Gummesson (2002) there are four fundamental values of Relationship Marketing. Firstly, marketing management should be broadened into marketing-oriented company management. This means that there must be a marketing orientation of the whole company; marketing should not be an activity of a specialized department. Secondly, Relationship Marketing emphasizes on long-term collaboration and win-win attitude. A company should view their suppliers, customers and other parties as partners, where the goal is to create a mutual value. The relationship must be meaningful for all those involved, with the purpose of retaining longterm relationships with existing parties. Another fundamental value of Relationship Marketing is that all parties should be active and take responsibility. The relationship should be interactive.

1.2 WHAT IS CUSTOMER RELATIONSHIP MANAGEMENT? In marketing literature, the term customer relationship management and relationship marketing are used interchangeably. CRM starts with in dept knowledge of customers, their habits, desires and their needs by analyzing their cognitive, effective behavior and attributes. CRM applies this knowledge to develop and design marketing strategies, to cultivate long lasting mutually beneficial interaction and relationship with the customer. Every organization should remember that you are not in a business to delight customers. You are in a business to be delighted by them.

CRM is a business strategy that can help organizations drive new growth, attain operational excellence, and gain competitive agility. The core theme of all CRM and relationship marketing perspectives is its focus on co-operative and collaborative relationships between the firm and its customers. CRM is based on the premise that, by having a better understanding of the customers needs and desires we can keep them longer and sell more to them. CRM isnt new; every company needs to do CRM-one way or another. No matter what the business, every company has to make its product known to the market and find customers who are willing to buy its products in order to stay in business. Every company must discover customer needs, market and sell the products that meet these needs, provide some sort of customer service and make sure the revenue it generates covers the cost of business plus any profit margin it tries to achieve. Once a business organization selects its target market, it has to collect customer database and develop customer preference. The relationship cannot be a one sided approach. It should involve the other side equally with value sharing proposition. Hence, CRM is development of lasting strategic alliances with customers on a value sharing basis. This implies future orientation and a win-win proposition between the seller and the customer.Relationship marketing is a philosophy of doing business on strategic orientation that focuses on keeping and improving current interactions with the parties concerned rather than acquiring new parties. The philosophy has an underlying assumption that the customers prefer to have an ongoing relationship with an organization than to switch continually in search for values. It is

undoubtedly a slow and a continuous approach of an organization to become market favourite and increase its customer base. Hence, CRM cycle can be described as follows: Acquiring customers Keeping customers Growing your customers Gaining customer insight Interacting with your customers across all touch points Building lasting relationships with your customers Delivering value to your customers Achieving a sustainable competitive advantage Growing your business

These parameters are integrated together to achieve one goal for organization i.e.:- to establish and manage long term mutually beneficial relationships with current and prospective customers. Infact successful companies build their business around their customers. They strive to become fully customer driven, delivering superior customer value and consistently providing exceptional customer service. Tom Peters stated listening to customers must become everyones business. With most competitors moving ever faster, the race will go to those who listen and respond intently.

1.3 DEFINITION OF CUSTOMER RELATIONSHIP MANAGEMENT

There are various definitions of customer relationship management stated by many experts over the years. Berry defined CRM as relationship marketing is attracting, maintaining and enhancing customer relationships. Shani and Chalsani also in 1992 defined relationship marketing (CRM) as an integrated effort to maintain and build up a network with the individual consumers and to continuously strengthen the network for mutual benefits of both the sides, through interactive, individualized and value added contacts over a long period of time. Peppers and Rogers in 1993 gave a recent technology based approach in which they have said, CRM is to focus on an individual or one-to-one relationship with the customers that integrate database knowledge with long term customer retention and the growth strategy. From the above definitions we can arrive at one suitable definition, which is customer relationship management is a comprehensive strategy and the process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customer.

1.4 HISTORY OF CRM Looking back at the snapshot history of marketing, we can see the following clear developments and progression over the last four decades: 1960 The era of Mass Marketing when Gibbs SR toothpaste began the first marketing of its

kin with its black and white TV campaign. 1970 Saw the beginning of segmentation, direct mail campaigns and early tele-marketing. 1980 Where Niche Marketing made millionaires of those who were best at it.

1990 - Relationship Marketing. The explosion of telemarketing and callcentres all set up to

develop relationship with customers. The recognition of the true value of retention and the use of lifetime value as a business case. In addition to this, a number of key marketing concepts can also be used to see where CRM has developed from: Satisfaction needs customer orientation. The organization needs to be arranged so that all functions contribute. Profit must be the consequence of delighting customers.

1.5 EVOLUTION OF CRM In recent years however, several factors have contributed to the rapid development and evolution of CRM. These include: 1. The growing de-intermediation process in many industries due to the advent of sophisticated computer and telecommunication technologies that allow producers to directly interact with endcustomers. For example, in many industries such as airlines, banks insurance, software or household appliances and even consumables, the de-intermediation process is fast changing the nature of marketing and consequently making relationship marketing more popular. Databases and direct marketing tools give them the means to individualize their marketing efforts.

2. Advances in information technology, networking and manufacturing technology have helped companies to quickly match competition. As a result product quality and cost are no longer significant competitive advantages. 3. The growth in service economy. Since services are typically produced and delivered at the same institution, it minimizes the role of the middlemen. 4. Another force driving the adoption of CRM has been the total quality movement. When companies embraced TQM it became necessary to involve customers and suppliers in implementing the program at all levels of the value chain. This needed close working relationships with the customers. Thus several companies such as Motorola, IBM, General Motors, Xerox, Ford, Toyota, etc formed partnering relations with suppliers and customers to practice TQM. 5. Customer expectations are changing almost on a daily basis. Newly Empowered customers who choose how to communicate with the companies across various available channels. Also nowadays consumers expect a high degree of personalization. 6. Emerging real time, interactive channels including e-mail, ATMs and call centre that must be synchronized with customers non-electronic activities. The speed of business change, requiring flexibility and rapid adoption to technologies. 7. In the current era of hyper competition, marketers are forced to be more concerned with customer retention and customer loyalty. 8. As several researches have found out retaining customers is less expensive and more sustainable competitive advantage than acquiring new ones. 9. On the supply side it pays more to develop closer relationships with a few suppliers than to develop more vendors.

10. In addition several marketers are concerned with keeping customers for life than making one time sale. There is a greater opportunity for up selling and cross selling. In a recent study in 1999 it was found that relational intensity increased in hospitals facing a high degree of competitive intensity 11. The globalization of world marketplace makes it necessary to have global account management for the customers.

CHAPTER 2: CONCEPT OF CRM 2.1 COMPONENTS OF CRM CRM consists of three components: customer, relationship, and management (Figure 1). CRM tries to achieve a single integrated view of customers and a customercentric approach [Roberts-Witt, 2000].
CUSTOMER

RELATIONSHIP

MANAGEMENT

Who is a Customer? A customer refers to individuals or households that purchase goods and services generated within the economy. 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 from there and with whom the shopkeeper had to maintain a relationship to keep his or her "custom," meaning expected purchases in the future. There is a difference between customer and a consumer. A consumer is always a customer but a customer is not necessarily a consumer. A customer can be a medium between a goods manufacturer and/or a service provider and the end user E.g. A person who purchases a chocolate from a retail shop is a consumer who is also a customer but the same retail shop owner when purchases it from the wholesaler or manufacturer is just a customer and not a consumer because he never consumes the chocolate. Customer who was considered to be the king of market is now regarded as the emperor of market. Since all the organizations have the same technology and more or less the same price offering, it is only the customers loyalty which can take their business sky high. What is a Relationship? A relationship is a specific connection between objects, entities or concepts. This bond can exist between an individual and an organization or between two individuals or between two organizations. These relationships are categorized as social relationships, causal relationships and mathematical or theoretical relationships which are between components of a modeled system. Herein, presence of both the parties is a must. Both cannot survive without each other. What is Management? Management comprises directing and controlling a group of one or more people or entities for the purpose of coordinating and harmonizing them towards accomplishing a goal. Managing of human resources, financial resources, technological and natural resources are the core activities of a

business. Now, in case of customer relationship management it means managing of the customers of the company. In todays competitive environment, customer is not only the king but the emperor of the market. Two things a service provider has to keep in mind while performing business activities: Customers time is precious. Apart from him, there are several other service providers to serve his customer.

Because of this, the company cannot afford to loose a single customer, may it be regular or occasional. Retaining the customer is an essential part of business today. That is why a healthy relationship should be established with the customers of the company. In order to serve the customers, the company should understand all their needs and desires, so that the customer buys the companys product over and over again. The personnel who manages these relationships with the customers is called customer relationship manager and the process carried out by the company is called customer relationship management. Like any other manager, the Customer relationship Manager also has certain set of responsibilities and goals to be achieved for his organization. For him, the duties include right from building relationships with the customers to maintaining and enhancing relationships with the valued customers.Converting a stranger to a potential buyer and then to a loyal customer who does not change his loyalty even if there are cost benefits, this task is undertaken by the customer relationship manager. Essentially he reshapes business process to meet customer expectations, empower employees to best serve the customer and determine how to most efficiently and effectively deliver on those needs. 2.2 TYPES OF CRM Customer relationship management (CRM) is defined as a business and technology discipline that manages the ways an organization deals with its customers in order to enhance the revenue,

profitability, customer satisfaction and retention. It analyzes the different aspects of customer relationships, including customer services, sales, and marketing, to improve their customer focus. Nowadays, three major types of customer relationship management systems, namely operational CRM, analytical CRM and collaborative CRM are being used in many organizations.

Operational CRM Analytical CRM Collaborative CRM

Operational CRM The operational application of CRM enables effective interaction with customers. For this purpose various tools are used. These contact management tools aim to reduce costs by improved process efficiency and use of media based communication channels. These are also aimed to provide customers with a consistent interface across all communication channels. To achieve this relevant customer data is collected and also displayed at all customer touch points. This is the customer master data. Another set of data where employees' contact with customers is also logged. This has information like topics discussed, customer requirements, soft customer data like hobbies, preferences, interests, details about children and other minor stuffs. Banks are an exemplary implementation of CRM as customer contact management. Channel management tools aim to understand how customer interacts with the company. It aims to deliver products and services across multiple channels in effective, efficient, and consistent manner. Content management toolsenable the company to manage what is visible to the customers i.e. what the customers are able to see when they interact with the company. The various processes undertaken are: campaign management, sales management, service management, and complaint management.

Analytical CRM The data collected in operational management is analyzed to segment customers. The valuable information thus obtained is used to satisfy customers. Analytical CRM is composed of:

1. Pattern discovery component 2. Product and customer analysis component 3. Multitude component 4. Sorting and customer fractionation component 5. Customer value evaluation component

Analytical solutions provided for most companies are integrated view of customer across all channels and applications, campaign performance analysis, customer profitability analysis, crossselling and up selling. The analytical solutions help answer questions like:

1. Who are their best customers? 2. Whom they are likely to loose? 3. How to retain them? 4. How to attract new customers? 5. How to improve profitability of customers?

Examples are data warehousing, online analytical processing (OLAP), and data mining systems. Note : Concept of customer segmentation : the value of customer is judged based on RFM analysis i.e. focusing on Recency, Frequency, and Monetary value from customer purchasing data in retail business. Accordingly the customers are divided into various levels. The four main segments of customers are:

At the top is the VIP customer whose expenditure is most and form 1% of all customers in a certain period.

Then the main customer forming 5%. Next the ordinary customer forming 20%. And at the bottom is the scattered customer an overwhelming 80%.

The first three categories create more than 80% of all profits for the company and as a result they are differentiated as the best customers. They are the real targets of Customer Centralization. Collaborative CRM The various departments of company like the sales, technical support, and marketing, share the information they collect about customers. The objective is to improve the quality of customer service and increase customer loyalty. It allows the company to synchronize and manage efficient, productive interaction with customers, prospects, partners, and internal associates across all communication channels. The customers' viewpoint is taken care of at every transaction level thus enabling better service to the customer. Collaborative CRM also reduces web service costs by enabling web collaboration.

2.3 KEY CRM PRINCIPLES Differentiate Customers

All customers are not equal; recognize and reward best customers disproportionately. Understanding each customer becomes particularly important. And the same customers reaction to a cellular company operator may be quite different as compared to a car dealer. Besides for the same product or the service not all customers can be treated alike and CRM needs to differentiate between a high value customer and a low value customer.

What CRM needs to understand while differentiating customers is Sensitivities, Tastes, Preferences and Personalities Lifestyle and age Culture Background and education Physical and psychological characteristics Differentiating Offerings Low value customer requiring high value customer offerings Low value customer with potential to become high value in near future High value customer requiring high value service High value customer requiring low value service Keeping existing customers

Grading customers from very satisfied to very disappoint should help the organization in improving its customer satisfaction levels and scores. As the satisfaction level for each customer improves so shall the customer retention with the organization. Maximizing life time value

Exploit up-selling and cross-selling potential. By identifying life stage and life event trigger points by customer, marketers can maximize share of purchase potential. Thus the single adults shall require a new car stereo and as he grows into a married couple his needs grow into appliances. Increase Loyalty

Loyal customers are more profitable. Any company will like its mindshare status to improve from being a suspect to being an advocate. Company has to invest in terms of its product and service

offerings to its customers. It has to innovate and meet the very needs of its clients/customers so that they remain as advocates on the loyalty curve. Referral sales invariably low cost high margin sales.

CHAPTER 3 : OBJECTIVES OF CRM 3.1 OBJECTIVES OF CRM The real value to a company lies in the value they create for their customers and in the value the customers deliver back to the company. Accordingly, it is important to mark. That the value does not lie in more information and in more advanced technology. The value lies in the customer knowledge and in how the company uses that knowledge to manage their customer relationships. Knowledge is according to Newell (2000) the sole of CRM. Unfortunately, few companies are transforming the information to customer knowledge and therefore they miss the opportunity to provide value to their customer. However, applied in the right way, CRM is the tool that contributes to profit. If companies are transforming the customer data into knowledge and then uses that knowledge to build relationships it will create loyalty, followed by profit. (Newell, 2000) According to Mr Swift (2001) companies can gain many benefits from CRM. He states that the benefits are commonly found in one of these areas:

1. Lower cost of recruiting customers: The cost for recruiting customers will decrease since there are savings to be made on marketing, mailing, contact, follow-up, fulfillment, services, and so on 2. No need to recruit so many customers to preserve a steady volume of business: The number of long-term customers will increase and consequently the need for recruiting many new customers decreases. 3. Reduced costs of sales: The costs regarding selling are reduced owing to that existing customers are usually more responsive. In addition, with better knowledge of channels and distributors the relationships become more effective, as well as that costs for marketing campaigns is reduced. 4. Higher customer profitability: The customer profitability will get higher since the customer wallet-share increases, there are increases in up-selling, cross-selling and follow-up sales, and more referrals comes with higher customer satisfaction among existing customers. 5. Increased customer retention and loyalty: The customer retention increases since customers stay longer, buy more and buy more frequently. The customer does also more often take initiatives, which increase the bounding relationship, and as a result the customer loyalty increases as well. 6. Evaluation of customer profitability: The company will get to know which customer are profitable, the ones who never might become profitable, and which ones that might be profitable in the future.

This is very important since the key to success in any business is to focus on acquiring customers who generate profit, and once you have found them, never let them go. (Ibid) All customers are not valuable; some may even be of danger to the business. This occurs when the customers use the companys time, energy and resources withoutgenerating enough business to make them worth the effort. (Budhwani, 2002) Hence, a company should perform CRM efforts where they will get the best possible return, which means focusing on customers who already are or will become the companys most profitable customers. (Newell, 2000)

3.2 THE BENEFITS OF CRM Knowledge of Customer Needs CRM allows an organization to develop a knowledge base that all employees can accessible easily. This allows the company to analyze available data and provides employees with accurate information about customers. It also empowers the organization to arrive at correct and well-informed decisions. In addition, it helps the company be as close to the client base as possible so it can effectively anticipate their changing needs and cater to such needs. With the knowledge base, employees can easily share and update any piece of information to any department with ease. Higher Revenues CRM can boost customer revenue through efficient computerized bookkeeping. This allows the organization to increase its revenue through higher volumes of purchases. With improved customer satisfaction, businesses can be assured that their clients will veer away from competitors. CRM assists an organization with its advertising campaigns, direct mail, and ecommerce. It will also help manage customer profile analyses to enhance marketing strategies. With CRM, coordination of various processes such as customer sales, customer care, orders,

warehousing, payment processing, packing, returns processing, and inventory management becomes easier. For example, you can make sure to offer the lower cost opportunities to clients who are more conscious of price while offering the higher-end products to those clients in the luxury market.

Improved Communication and Customer Satisfaction Employing efficient CRM processes will help achieve goals that target successful communication and fulfillment of customer needs. Therefore, CRM helps improve communication between the company and its customers. Employing CRM methods enhance customer satisfaction with the company and all its products. If customers are happy and satisfied, the company can easily retain customers for long periods of time without exerting much effort. This will also contribute to the company's good reputation in the market and in the eyes of the customers. In other words, CRM will help create and retain customers, and help keep them loyal. It ensures customers will have fulfilling relationships with the company, which will always do its part in delivering excellent customer service.

What Is the Importance of CRM? Identification Customer Relationship Management, or CRM, is a business strategy that focuses on customer knowledge, satisfaction, and retention. While the goal of any business is profit, CRM strategies start with the customer and work toward the sale, versus a "selling" strategy that starts with the product or service and leads toward the customer. Starting with the customer involves collecting and analyzing information to determine who the customer is, what the customer needs, and how a business can meet, then exceed, those needs.

Goals To understand the importance of CRM, you need to look at its ultimate goals. Five important CRM goals include superior customer service, a need-based selling strategy, effective cross-selling, sales staff support, and customer generation and retention policies. Realizing these goals means your business must create a marketing mix that involves product, price, place, and promotion unique to each customer you serve. Adopting the goals of CRM involves a process of studying the customer and the buying process, providing your sales staff with the training and technology required to match products or services with needs, and assisting sales staff efforts to discover ways to add value and profit with cross selling. Strategies CRM involves developing strategies that focus on customers because consumers can have a significant impact on the bottom line. Essential CRM strategies include customer retention or winback strategies, new customer generation, personalized selling plans that work to ensure customer loyalty, and continued enhancement of the product/service line to provide the right products in the marketing mix. To carry out these strategies effectively requires commitment and communication, along with the technology and infrastructure required to support it. Implementation CRM can bring a company together. Focusing attention on the needs of the customer and making successful implementation of CRM strategies of the utmost importance creates a common goal for all concerned. Implementing CRM strategies, however, requires an investment of both time and money. Technology in the form of a network infrastructure and CRM software is essential for successful implementation, as is training staff to use the software to its fullest potential.

Potential CRM significantly increases a business's potential for profit. It increases internal communication, provides ways for employees to work together toward a common goal, makes the selling process easier and more effective, and most importantly, increases customer satisfaction and loyalty. A business that makes a commitment to CRM also makes a commitment to change and evolve as customers move through their life cycle, change their wants, needs, and buying habits, and as business and economic conditions change. This evolution is essential for continued success and profitability.

CHAPTER 4: PROCESS OF CRM Crm process framework 1) CRM FORMATION PROCESS In the formation process, three important decision areas relate to defining the purpose (or objectives) of engaging in CRM, selecting parties (or customer partners) for appropriate CRM programs and developing programs (or relational activity schemes) for relationship engagement with the customer. CRM PURPOSE The overall purpose of CRM is to improve marketing productivity and enhance value for parties in involved in the relationship. By seeking and achieving operational goals, such as lower distribution costs, streamlining order processing and inventory management, reducing the burden of excessive customer acquisition cost, and through customer retention economics, firms could achieve greater marketing efficiencies. They can enhance marketing effectiveness by carefully selecting, customers for its various programs, individualizing and personalizing their market offerings to anticipate and serve the emerging needs of individual customer, building customer loyalty and commitment,

partnering to enter new markets and develop new products, and redefining the competitive playing field for their company. Thus, stating the objectives and defining the purpose of CRM in a company helps clarify the nature of CRM programs and activities that ought to be performed by the partners. Defining the purpose would also help in identifying suitable relationship partners who have necessary expectations and capabilities to fulfill mutual goals. It will further help in evaluating CRM performance by comparing results achieved against objectives. These objectives could be specified as financial goals, marketing goals, strategic goals, operational goals, and general goals. Customers are motivated to engage in relational behavior because of psychological and sociological benefits associated with reduction in choice decisions. CRM PROGRAMS A careful review of literature and observation of corporate practices suggest that there are three types of CRM programs: continuity marketing; one-to-one marketing; and, partnering programs. These take different forms depending on whether they are meant for end consumers, distributor consumers or business-to-business consumers. (A) CONTINUITY MARKETING

Take the shape of membership and loyalty card programs where customers are often rewarded for their member and loyalty relationships with the marketers. The basic premise of continuity marketing programs is to retain customers and increase loyalty through long-term special services that has a potential to increase mutual value through learning about each other. (B) ONE-TO-ONE MARKETING

This relates to meeting and satisfying each customers need uniquely and individually. In the mass markets individualized information on customers is now possible at low costs due to the rapid development in the information technology and due to availability of scalable data warehouses and

data mining products. By using online information and databases on individual customer interactions, marketers aim to fulfill the unique needs of each mass-market customer.

Information on individual customers is utilized to develop frequency marketing, interactive marketing, and after marketing programs in order to develop relationship with high-yielding customers. In the context of business-to-business markets, individual marketing has been in place of quite sometime. Known as Key Account Management Program, here marketers appoint customer teams to husband the company resources according to individual customer needs. (C) PARTNERING PROGRAMS

The third type of CRM programs is partnering relationships between customer and marketers to serve end user needs. In the mass markets, two types of partnering programs are most common: cobranding and partnering. ORGANIZING FOR CRM How do you know that your business requires CRM? It is very easy for a business to get caught in the latest customer trap when it is being driven by the information technology (IT) market. Every business does require CRM. The question is to what level. Many businesses are pushed by the current trend to change their business strategy, especially around CRM. There are basically three trends that affect a business. They are as follows: CONSUMER The customer is an ever-changing image; to be really successful with CRM you must recognize the customer trends that are affecting the business.If a business does not understand a customer profile and the changes that have occurred then it is not possible to provide true customer relationship management.

PRODUCTS

It is the business providing the products that meet the changing customer trends. Products need to be reviewed constantly perhaps enhanced or even removed. Supermarkets are a perfect profile to look at for viewing product trends, they constantly add and remove products and they constantly view customer buying profiles and set out the pattern of the store to meet the strongest buying trend. TECHNOLOGY Ensure that the business is ready to install the new technologies, is the customer data up to it, or is it time to start again? Do you need to review every technology being used or just one area. Will it assist the business, is it going to grow with the business requirements or is the technology just another trend? Relationship management should not be an alternative to existing functions/technology; it could be a logical extension to enhance those in existence, though it could radically change some of the operational process. CRM GOVERNANCE PROCES Greater the scope of CRM program and associated tasks, and the more complex is the

composition of the relationship management team; the more critical is the role specification decision for the partnering firms. It is essential to establish intra-company communication particularly among all concerned

individuals and corporate functions that directly play a role in managing the relationship with a specific customer or customer group. With mass-market customers frequent face-to-face interactions will be uneconomical. Thus

marketers should create common bonds through symbolic relationships, endorsements, affinity groups and the membership benefits or by creating online communities.

Involving customers in the planning process would ensure their support in plan

implementation and achievement of planned goals. All customers are not willing to participate in the planning process nor is it possible to involve all of them for relationship marketing programs for the mass markets. Human resources decisions are also important in creating the right organization climate for

managing relationship marketing. Training employees to interact with customers, to work in teams, and manage relationship expectations are important. So is the issue of creating the right motivation through incentives and rewards.

CHAPTER 5-CRM ISSUES CRM IMPEMENTATION ISSUES One of the most interesting aspects of CRM development is the multitude of customer interfaces that a company has to manage in todays context. Until recently, a companys direct interface with the customers, if any was primarily through sales people or service agents. In todays environment most companies interface with their customers through a variety of channels including sales people, service personnel, call centers, Internet websites, marketing departments, fulfillment houses, market and business development agents, etc. For large customers it also includes cross-functional teams that may include personnel from various functional departments. While each of these units could operate

independently, they still need to share information about individual customers and their interactions with the company on a real time basis. For example, a customer who just placed an order on the Internet and subsequently calls the call centre for order verification expects the call centre staff to know the details of his or her order history. Similarly a customer approached by a sales person unaware that she has recently complained about dissatisfactory customer service, is not likely to be treated kindly by the customer. Therefore effective CRM requires a front-line information system that shares relevant customer information across all interface units. Relational databases, data warehousing and data mining tools are thus valuable for CRM systems and solution. The challenge is to develop and integrated CRM platform that collects relevant data input at each customer interface and simultaneously provides knowledge output about the strategy and tactics suitable to win customer loyalty and support. If a call centre personnel cannot identify or differentiate a high value customer and does not know what to up-sell or cross sell to him then it would be a tremendous loss of opportunity for the company. Although most CRM software solutions based on relational databases are helping share customer information, they still do not provide knowledge output to the front line personnel. CRM solutions platform needs to be based on interactive technology and processes. It should assist the company in developing and enhancing customer interactions and one-to-one marketing through the help of suitable intelligent agents that help develop front-line relationship with customers Such a system would identify appropriate data inputs at each customer interaction site and use analytical platforms to generate appropriate knowledge output for front-line staff during customer interactions. In addition, implementation tools to support interactive solutions for customer profitability analysis, customer segmentation, demand generation, account planning, opportunity management, contact management, integrated marketing communication, customer care strategies, customer problem solving, virtual team management of large global accounts, and measuring CRM performance would be the next level of solution sought by most enterprises.

CUSTOMER SELECTIVITY An important facet of CRM is customer selectivity. As several research studies have shown not all customers are equally profitable (Infact in some cases 80% of the sales come through 20% of the customers). The company must therefore be selective and tailor its program and marketing efforts by segmenting and selecting appropriate customers for individual marketing programs. In some cases, it could even lead to outsourcing of some customers so that a company better utilize its resources on those customers it can serve better and create mutual value. However, the objective of a company is not to really prune its customer base but to identify appropriate customer programs and methods that would be profitable and create value for the firm and the customer CUSTOMER LIFE CYCLE Customer life cycle is a term used to describe the progression of steps a customer goes through when considering, purchasing, using, and maintaining loyalty to a product or service. Marketing analysts Jim Sterne and Matt Cutler have developed a matrix that breaks the customer life cycle into five distinct steps: reach, acquisition, conversion, retention, and loyalty. In layman's terms, this means getting a potential customer's attention, teaching them what you have to offer, turning them into a paying customer, and then keeping them as a loyal customer whose satisfaction with the product or service urges other customers to join the cycle. The customer life cycle is often depicted by an ellipse, representing the fact that customer retention truly is a cycle and the goal of effective CRM is to get the customer to move through the cycle again and again.Following is the example of a particular customer who does business with the bank and remains loyal irrespective of the existing competition. Here, the customer life cycle does not break because the bank (organization) provides the customer with customized services and creates a winwin proposition for both the parties.

CUSTOMER VALUE PROPOSITION. In the field of marketing, a customer value proposition consists of the sum total of benefits a customer is promised to receive in return for the customer's associated payment (or other value transfer). In simple words: value proposition = what the customer gets for what the customer pays.