You are on page 1of 58

Evolution of CRM

Why are Customer Initiatives Important ?


6
Participate
in Global
Remain In Village
Business
5 Customer
Reach the Initiatives
Customer

Increase 4 Decision
Revenue Enhance Executive Support
Decision Making Initiatives
3
Enhance Products & Services Operational
Optimize Initiatives
2
Resources &
Minimize Leverage Investments
1 Financial
Costs Initiatives
Reduce Costs

1960s 1970s 1980s 1990s 2000s 2010s 2020s


Customer is the Focus
Strategy

Structure

People

Process

Systems
Core and Extended Customer Service
Core Customer Service. Mechanical elements including Quality, Cost and service
Delivery.
Extended (Caring) Customer Service. Human elements including: Friendliness,
Caring, Flexibility, Problem-solving, and Recovery.
Customer Grade
Perceived
Outstanding A
Value

Exceeds Expectations
B

Customer Perceived Customer


Satisfactory C Expectation Value Expectation

Unsatisfactory D

Failing F
Core Service Caring Service
Satisfies Delights
Core service will never exceed a grade of C or satisfactory. Dont spend time and money
attempting to exceed expectations here. Caring service will allow the organization to
exceed customer expectations through perceived service delivery.
The Customers Perceived Value = The State in which the quality of a total
experience, perceived by the customer, exceeds its cost.

How is a Customer Delighted?


Expectations Customer Delight A condition in
attitudes which form a which experience exceeds
framework for judging expectations.
performance.

Touch Experience The point at Satisfaction The measure


Point which the customer reflecting a customers
Service
interacts or touches the experience against their
organization. expectations.

Quality A bundle of tangibles


Value The quality of an experience
and intangibles a customer takes
as perceived by the customer and
into account when evaluating the
related to its cost
experience
Customers Value Package
Aesthetic - any sensory experience that
affects the perception of value (flavor,
visual appeal, smell, temperature, music,
Environmental - the physical sound levels).
setting in which the customer
experiences the delivery of the
product.
Interpersonal - the
customers experience or
human interaction with
those who deliver the
Procedural - what an
individual must go through
The Customer product or service.

to function as a customer Value Package


(waiting in lines, filling out
forms, visiting numerous
Financial - what the customer
facilities).
pays for the total experience, as
well as the nature of the
financial interaction.
Deliverable -
anything of which
the customer takes
custody, even Informational - the information a
temporarily. person needs to function as a customer
(where to go, who to contact, payment
amount, office hours).
Today, Emphasis is placed on the customer transaction rather than the long-term
relationship, e.g. staff are measured by how many telephone calls they can take within an
hour.
The Need to Move Beyond a Single Transaction
Services Customer Understanding and Analysis
Services Long-Term Customer Relationship
Services Transactions

Customer Interactions
Channels

Customer Transactions

Channels
Transaction vs. Relationship
Marketing:
Transaction Relationship
Ongoing
One-time
Managing People
Managing Brands
Individual
Mass communication
communication
Market share
Customer share
Profitability of
Profitability of
transaction
longevity
Brand Equity
Customer share equity
CRM Definitions
Customer Relationship Management (CRM) is a business
strategy to select and manage customers to optimize long-
term value.
Customer Relationship Management is a comprehensive
strategy and process of acquiring, retaining and partnering
with selective customers to create superior value for the
company and the customer.
CRM is a complete system that: 1) provides a means and
method to enhance the experience of the individual
customers so that they will remain customers for life, 2)
provides both technological and functional means of
identifying, capturing, and retaining customers, and 3)
provides a cohesive view of the customer across the
enterprise.
CRM Definitions
CRM is a management approach, a model that puts a
customer at the core of a company processes and practices.
CRM leverages cutting edge technology integrated strategic
planning up-close and personal marketing techniques and
Organization development tools to build internal external
relationships that increase profit margins and productivity
within a company.

CRM requires a customer-centric business philosophy and


culture to support effective marketing, sales, and service
processes. CRM applications can enable effective Customer
Relationship Management, provided that an enterprise has
the right leadership, strategy, and culture.
Importance of CRM
CRM is the transformation of people, process and
technology required to become a customer-centric
organization.
CRM is not just a software that allows for the recording of
customer interactions, accurate histories to be kept, and
knowledge to be shared across departments within a
company.
CRM is not a product. It is not even a suite of products.
CRM is a business philosophy that touches upon many
independent parts of the organization, CRM addresses the
Sales, Marketing, and Service activities of the organization.
Importance of CRM
CRM must be part of an overall company philosophy.
CRM is core to all businesses, essentially it is about
selling good products or services to the right people.
CRM solutions must include not just systems, but also
people, process and strategy.
CRM must focus on selecting and managing customer
value and loyalty through a long-term relationship.
CRM is not a single system but a comprehensive
application architecture consisting of several systems.
Need for CRM
To meet the changing expectations of customer due to:
(a) social and demographic factors.
(b) economic situations.
(c) educational standards.
(d) competitors product
(e) experience.
Loyal customers are the source of most profits
A relatively small percentage of customers may generate
most of the profits.
Marketing cost and efforts are less for existing customers.
Dissatisfied customers tell others about their experiences, So
do satisfied customers.
Slowing the rate of defection grows the customer base.
Need for CRM
CRM typically costs 5-10 times to acquire a new
customer.
Some companies can boost profits by almost 100% by
retaining just 5% more of their customers.
Most companies lose 50% of their customers in 5 years
.
70% of repeat purchases are made out of indifference
to the seller, NOT loyalty.

Customer Customer Customer


Profit
satisfaction commitment retention
Why customers move away?
New Associations Miscellaneous
5% 3%
Competition
9%

Product
dissatisfaction
14%

Perceived
indifference
69%
Economics of Customer Retention

Winning back a lost customer can cost up to 50-100


times as much as keeping a current one satisfied.
Rob Yanker, Partner, McKinsey &
Company
Goals of CRM
Provide better customer services.
Cross sell product, Cross-selling is a strategy of providing
existing customers the opportunity to purchase additional
items offered by the seller.
Cross-selling involves offering the customer items that
complement the original purchase in some manner
more effectively.
The telecommunications industry is a prime example of this
type of sales activity. When establishing local telephone
service, the new subscriber is often invited to enjoy other
telecommunications options offered by the service provider.
These may include long distance packages, cell phone
services, or high-speed Internet services.
Up selling involves promoting upgrades or add-ons to
customers that are extra purchases and increase
sales. When you up sell, you offer the customer another
product for purchase.
Incentives are crucial features of up selling. Incentives
such as a discount and/or free shipping give the
customer good reasons to purchase something extra
right away.

Helps sales staff close deals faster

Increase customer revenue


Personally recognizing customers;
Offering appropriate value and great service to
encourage repeat business;
Ensuring that employee and customer
satisfaction continues to improve.
Beating the competition by offering a better
product, competing on the service experience
rather than price alone.
Benefits of CRM
Simplify marketing & sales process
Access to customer information
With CRM, all of your customer information is in
one centralized location and is constantly updated
every time an activity happens with a prospect or
customer.
So now you have up to the minute tracking of all
your prospects and customers.
Benefits of CRM
Increase Sales Effectiveness
Make sales teams more effective by automating
tedious repetitive tasks.

With CRM, sales people can automate a big chunk of


their daily tasks such as sending out emails,
generating reports, organizing leads and so on.

With CRM's Mobile access, sales people have instant


access to customer information when they need it,
without being tethered to a computer.
Benefits of CRM
Reduce Customer Support Time
CRM enables your service agents to answer all
customer inquiries quickly, accurately and
consistently by phone, e-mail, chat or in person.

With FAQs and the knowledge base you can help your
customers help themselves.
Benefits of CRM
Retention rate: CRM increases customer loyalty,
which increase revenue per customer and frequency of
purchases.
Referrals: CRM can turn customers into advocates.
Referrals typically have higher retention rates and
spending rates than other newly acquired customers.
Increased sales: CRM leads to increased cross-selling,
upgrades, or simply more products by existing
customers.
Reduced costs: CRM can lead to more cost effective
marketing; avoids expenses of mass marketing.
Benefits of CRM
Provide better customer service
Cross sell products more effectively
Help sales staff close deals faster
Simplify marketing and sales processes
Increase customer revenues
Reduced costs, because the right things are being done
Increased customer satisfaction, because they are getting exactly
what they want
Ensuring that the focus of the organisation is external
Growth in numbers of customers
Maximisation of opportunities
Increased access to a source of market and competitor
information
Long term profitability and sustainability
Customer Life Cycle Management
Customer Need Assessment and
Acquisition

Customer
Customer
development through
Retention and
Personalization and
Referrals for new
Customization
Customers

Customer Equity
Leverage through
Cross Selling, and
Up Selling,
RFM Data in CRM
Organizations can find their most valuable
customers through RFM
Recency - How recently a customer purchased
items.
Frequency - How frequently a customer
purchased items.
Monetary Value - How much a customer
spends on each purchase.
CRM evolution
Stage State Culture
Satisfaction Re-active Meet customer needs
Based Respond to complaints
Minimal evaluation of customer
service levels
Performance Pro-Active Evaluate customer perception
Based
Identify customer retention factors

Commitment Very Pro- Evaluate multiple customer needs


Based Active Continuous inbound/outbound
flow and feedback
Continuous improvement
Stages of CRM

Stage 2 Marketing Stage 6


Collecting Accessing
Stage 4 more
information Storing information effectively
information Analyzing Enhancing
customer the
Stage 1 Stage 3 behaviour Stage 5 customer
experience
CRM Components
Staff Customer CRM may include:
Call Center Management
Customer Call Center Software
Interaction Contact Management Software
Center Customer Relationship Management
Customer Interaction Center
Customer Service
Self-serve Channels Document Production
E-Business
Electronic Commerce
Customer Sales Electronic Purchasing
Executive Information System
Field Service Management
Help Desk Management
Customer Marketing Marketing
Mobile Computing
Online Auctions
Customer Field Service Various Portals
Sales
Systems Sales & Marketing Systems
Sales Force Automation
Customer Service Supply Chain Automation
Telemarketing / Telesales
Value Chain
Customer Analysis & Voice Over IP
Reporting Web Collaboration, Chat, Email
TYPES OF CRM:
Front Office
Operations (sales,
Operational marketing, service
Inter- etc)
department
coordination

Collaborative Analytical
Enhance
Company
Relationship
with Customer
Types of CRM
OPERATIONAL CRM
Gives support to Front Office business process (e.g. sales,
marketing etc)
Any interaction with customers is stored in customers contact
histories, which the staff can retrieve as necessary.
Gives staff access to important information about the customer.
Operational CRM possesses customer data for a variety of
purposes
Managing campaigns
Enterprise Marketing Automation
Sales Force Automation
Sales Management System
Components of Operational CRM
CUSTOMER SERVICE AND SUPPORT (CSS)
Is the part of a company's CRM department that interacts
with a customer for their immediate benefit, including
components such as the contact center.
20-25% of CRM
Provides information to support customer call center
activity
Build customer satisfaction & loyalty
Resolve customer issues after the sales responsively
It comprises two key functional areas:
Cases:- Track every interaction of customer service &
support teams with each customer.
Solutions:- Maintain a centralized database of solutions to
leverage knowledge across the enterprise.
SALES FORCE AUTOMATION (SFA):

These are tools which automate the collection and


distribution of all types of sales or sales related
information.
Calendar management, activity management, sales
reporting and forecasting, lead distribution and
tracking of sales contacts with customers are some
of the capabilities offered within these solutions.
Sales Force Automation (SFA)
35-40% of all CRM activity
Sales force automation comprises of:
Account Management
Contact Management
Activity Management
Revenue Forecasting
Reporting & Analysis
Components of Operational CRM
Field Force Automation (FFA)
Field Service or Field Force Automation (FFA), is an
attempt to optimize processes and information
needed by companies who send technicians or staff
"into the field" (or out of the office) for maintenance
and repair of equipment at the customer's location.
It involves a combination of some or all of the
following: CRM applications, work order
management, dispatch, wireless technology.
3-5% of all CRM activity
Components of Operational CRM
Marketing Automation (MA):
Applies technology to marketing processes
Generating lists of customers to receive mailings or
telemarketing calls, scheduling automatic or manual
follow-up activities and receiving third-party lists for
incorporation into the campaigns are all typical functions.
Ensures high efficiency by creating integrated, highly-
targeted campaigns and tracking results across all
channels.
Target the Best Customers.
Manage Marketing Campaigns.
Components of Operational CRM
Marketing Automation (MA)
It comprises of two main functional areas:
Campaign Management
Lead Management
3-5% of CRM, but growing 5X faster than all
others.
Interacts with SFA to support field sales efforts.
Inbound and outbound e-mail management
capabilities are also becoming popular
components of the marketing automation
suites.
Marketing Automation Process
Flow
2. Analytical CRM
analyses the customer data for various purposes
such as design and execution of targeted
marketing campaigns to optimize marketing
effectiveness, design and execution of specific
customer campaign,
analysis of customer behavior to aid product
and service decision making, management
decision, prediction of probability of customer
defection.
Components of Analytical CRM
OLAP (Online Analytical Processing)
One of the most popular type of decision-support
analysis, allowing the average business person to
explore data online with the aim of focusing on
detailed data at a lower.
More often, this means generating an online report,
analyzing the results and submitting a detailed query
in order to understand the result data.
Data mining :
Data mining tools identify patterns in data and deliver
valuable new information that can increase a company's
understanding of itself and its customers.
The three types of data mining are:

Prediction: The use of historical data to determine


future behaviors.
Sequence: Sequential analysis identifies
combinations of activities that occur in a particular
order.
This is used to determine whether customers are
doing things in a particular order.
Association: Association analysis detects groups of
similar items or events.
3. Collaborative CRM covers aspects of a company's
dealings with customers that are handled by various
departments within a company, such as sales, technical
support and marketing.

Collaborative CRM's ultimate goal is to use information


collected by all departments to improve the quality of
services provided by the company.
Implementation of CRM
To implement CRM, following factors need to be given due
consideration
Easy interaction between customers and company,
Easy access to information about company like content of
customization, advantages of the company, benefits to
the customers.
Abundant supply of customer information
Customers' information should be updated always
Have cordial relationship with other companies targeting
the same customer segment
Analyze human resources and ensure that everyone has
an understanding of philosophy of CRM
BE RELIABLE- consistent performance is what
customer wants from us
BE CREDIBLE- if the customer buy the product,
he wants to safe and guaranteed.
BE ATTRACTIVE- body language
BE RESPONSIVE accessible, available and
willing to help customer whenever the customer
has a problem.
BE EMPATHETIC- be in customers shoes and
grasp his point of view
Need for e-CRM
Due to the introduction of new technology
Due to globalization
to satisfy the customers at global level
Sometimes customer itself prefer to do
online purchasing.
Also, e-CRM is used for attracting &
keeping economically valuable customers
& eliminating less profitable ones.
Process of e-CRM
Benefits of e-CRM
Convenience
Improvement in overall quality of customer experience
Increased profitability
Low implementation Cost
Rapid Development
Accessibility
Instant Information Sharing
Increased customer loyalty
More effective marketing.
Improved customer service and support.
Through e-CRM, right tools helps sending right orders to
right customers at right time.
Greater efficiency and cost reduction.
Some Applications of Technology in CRM
Call centers
These are organizations which deal directly to the
customer interactions.
These are otherwise known as "Customer Care
Centre" or "Contact Centre" indicating more
technological sophistication and multichannel
support.
Call centre technologies entered the market place to
effectively alleviate some of the repeat work and
increase efficiencies, allowing companies to handle
escalating call volumes.
Web based self-service
The customers themselves, without the help of a
live person can resolve their problems or find out
answers to their queries using the web.
This model is founded on the principle of enabling
customers, partners and employees to obtain
information or conduct transactions directly over the
internet, avoiding time consuming and costly
traditional processes involving multiple verbal or
written interactions.
It provides control, performance, convenience and
efficiency.
Customer satisfaction measurement:
Survey mails are the major way for companies to
monitor customer satisfaction.
Nowadays, these survey forms are even personalized
to specific customers or customer groups.
Responses are input into customer databases and
included as part of individual customer profiles.
Such tracking of customer satisfaction over time
enables a company to fine tune how it communicates
with its customers according to their preferences.
Cyber agents
Cyber agents are 'life like representatives normally
depicted on a companys web site as a real person.
It is an attempt to put together the best of both
personalization and advanced technology.
It is given a personality and is having facial expressions and
volume.
Usually a cyber agent addresses the web visitor with his/her
first name.
It can draw from the wealth of detailed information to
answer basic FAQs as well as guide a customer to the
appropriate screen for a definite purpose/action.
Web site
It is the efficient and effective use of worldwide web
for providing information to the customers, by a
company who had created that site, in a hassle-free
manner.
The main advantage of a web site is its 24 hours
accessibility.
Usually gathering information from the site is a
simple task and is cost-effective.
Information Technology and CRM:
Examples
Cookies
A cookie is a parcel of text sent by a server to a web browser
and then sent back unchanged by the browser each time it
accesses that server. HTTP cookies are used for
authenticating, tracking, and maintaining specific
information about users, such as site preferences and the
contents of their electronic shopping carts.

Illustration: The online store, Amazon, uses cookies to


provide a personalised service for its customers. Amazon
requires customers to register with the service when they
purchase items. When registered customers log in to Amazon
at a later time, they are greeted with a welcome message
which uses their name (for e.g. Hello John). In addition,
their previous purchases are highlighted and a list of similar
items that the customer may wish to purchase are also
highlighted.
CRM Limitations
Not feasible for every market and
customers
customers dont want to be committed to
every brand/relationship
Not feasible for low-involvement,
habitual purchasing in B2B or B2C
Some markets/customers may have low
personalization potential.
Reasons for Failure of CRM
CRM Strategy not clear
CRM strategy and vision need to define what
customers experience at each touch point, and how
will they be handled at each touch point. The vision
needs to be clear to everyone.
Implementation was limited to software installation
Inadequate motivations for employees to learn,
provide input, and take full advantage of the
information systems
Technology Errors
Customer data is in more places than expected.
Different CRM solutions are in place but do
not work well together.

People errors
Introducing CRM to hundreds of employees at
a time.
Changing the system, but not the people.