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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.
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To understand this, few key concepts should be taken into consideration. They are
stated as under:
Who is a Customer?
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What is a Relationship?
What is Management?
In today’s 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:
• Customer’s time is precious.
• Apart from him, there are several other service providers to serve
his customer.
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APPROACHES TO MARKETING
There are two approaches to marketing for any marketer. They include
• Traditional marketing
• Relationship marketing
1. Traditional Marketing
2. Relationship Marketing
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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”.
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• 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
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Customers make their purchasing decision and they bid the price
up or driving it down depending on the value they perceive from a product or
service. It’s the customer who decides which way and when he or she wants to
interact with the company and how he or she wants to buy a product-online, over
the phone, in the store, or through any other channel. It’s the customer’s
perception of everything a company does that creates an image of its brand and
eventually determines its success or failure as a business. Hence, you need to
develop strategies that enable your organization to continuously improve the
ability to win, know and keep your customers.
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• The average company loses 20% of its customers every year and the
number is increasing every year.
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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.
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EVOLUTION OF CRM
In recent years however, several factors have contributed to the rapid development
and evolution of CRM. These include: -
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.
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6. Emerging real time, interactive channels including e-mail, ATMs and call centre
that must be synchronized with customer’s non-electronic activities. The speed of
business change, requiring flexibility and rapid adoption to technologies.
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
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1. Technology.
2. Call centre.
3. Complaint resolution.
4. Customer data.
5. Making customer happy.
• 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
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• Differentiating Offerings
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.
• 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
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remain as advocates on the loyalty curve. Referral sales invariably low cost
high margin sales
OBJECTIVES OF CRM
1. CRM aims at integrating all business strategies that places the customer at
the centre of a business’s consciousness.
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Following mentioned are some of the expectations of the customer when they
carry out transaction with the organization.
1. Overall quality
2. Handling queries
3. Staff friendliness
4. Treat as a valued customer
5. Complaint handling
6. Competence of staff
7. Speed of service
8. Ease of doing business
9. Helpfulness of staff
10. Kept informed
(a) Interactions
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• TIME: - When customers find reliable seller they need not waste time
searching for various other sellers.
• SEARCH: - The information search costs and energy cost gets minimized.
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• SOCIAL VALUE: - Consumers are social beings and they look for identity
and recognition in society. When sellers wish them at various social occasions,
they feel very happy and delighted.
It is not only the market share but the mind share and heart share
that need to be captured. For this reason only, organizations should adopt
relationship marketing with a strong process to achieve the above mentioned
purpose.
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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
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fulfill mutual goals. It will further help in evaluating CRM performance by
comparing results achieved against objectives.
CRM PROGRAMS
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• 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.
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• 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.
Does CRM really matter? Is your business and customer ready for it?
Whatever the business activity is, all companies have to ask themselves is CRM
the real factor for their company to succeed. Some customers do not need long-
term relationship with their suppliers; therefore only minimal information is
required from that customer. That however is still a form of CRM. Other
companies have high quality and high value customers that they need to know
information about, they need to provide exceptional service, the ‘pedigree’ of
CRM.
Whatever the business is, if it has customer it has to ask, does customer
relationship management matter? What does it mean to them in business terms? At
what cost? What is the overall loss if not adhered to?
CRM: Yes it does really matter – the strategy needs to last, be constantly reviewed
and can evolve over time.
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• 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.
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relationship expectations are important. So is the issue of creating the right
motivation through incentives and rewards.
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CUSTOMER SELECTIVITY
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customer, and then keeping them as a loyal customer whose satisfaction with the
product or service urges other customers to join the cycle.
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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.
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Awareness- This is the first stage. Here the customer gets information about the
product from various sources. These includes from media, websites, medical
representatives, references, magazines, newspapers etc.
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Comparison – In this stage, the customer compares the new product with the
product of competitor. By giving what the customer expects, benefits over
competitors and credibility are the key to success at the comparison stage.
Essentially, the more information you provide, the higher the likelihood you will
make the sale.
Advocacy – This is the final stage of customer development cycle. This is the
stage where the customer becomes the company’s promoter and gives
recommendations to the aspirers of the product. It is considered to be the most
effective form of advertising ever devised.
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1. CUSTOMERS AS FRIENDS
The following are the guiding principles for this stated concept:
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• Do not make abnormal and unfair profits out of friends. SAE basis
its repair pricing on labour costs plus a 40% margin. As most of its
customers are themselves automotive experts, there is no point in even
trying to hoodwink them.
• Try to share your friend’s concerns. Learn more about his vehicle,
what is causing him trouble and keep him cautioned on what could cause a
problem in the future. Take a ride with him in his vehicle to understand his
concern fully.
• Drive with him when he comes to collect the car, and ensure that he
is fully satisfied with the repair. Do not compromise on this.
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• Friends will give you a chance for they know that no one is perfect.
Even if you make a mistake they may be willing to overlook it. Just let
them know that you are doing your best. Track your performance and keep
improving so as to help your friends better. Get back to school! (To learn
new advances and update on technology).
2. CUSTOMERS AS GUESTS
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an expertise that can respond to the customer’s needs and expectations and still
make a profit.
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In the context of SCM, where alliances and partnerships are keys to
success, CRM plays an important role in building long-term relationships. Apart
from the end-users, it involves internal employees, channel members and other
external entities such as advertising agencies and consulting organizations. The
success of relationships depends upon sharing of savings from the supply chain,
which may be reinvested to further enhance its efficiency, and sustain the
competitive advantage. The supply chain of tomorrow will look like a virtual
organization, seamlessly integrated through sharing data and savings as well. The
bonding between partners will be closely held by CRM practices.
CUSTOMER SATISFACTION
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a number of both psychological and physical variables which correlate with
satisfaction behaviors such as return and recommend rate. The level of satisfaction
can also vary depending on other options the customer may have and other
products against which the customer can compare the organization's products.
Your Performance
Customer Satisfaction =
Customer Expectations
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And that's where things can get tricky, because how you
perceive your performance may differ from how your customers perceive it. In
fact, discrepancies between your perceptions and theirs would not be at all
unusual; I routinely encounter such discrepancies when I interview a company's
service staff as well as its customers. So, even if you're working yourself to the
proverbial bone, if customers view you as unresponsive, then you are
unresponsive in their eyes.
CUSTOMER RETENTION
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The trend in marketing towards building relationships with
customers continues to grow and marketers have become increasingly interested in
retaining customers over the long run. Marketing analysts have identified
satisfaction as a key determinant in a consumer’s decision making, relating to
keeping or dropping a given product or service relationship.
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The key to customer retention is to offer continuous satisfaction to
customers.
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organization and have had their complaints satisfactorily resolved, usually tell an
average of 5 people about the good treatment they receive.
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successive level of strategy results in ties that bind the customer a little closer to
the firm.
1. Financial bonds:-
At this level, customers are offered financial incentives either for
greater volume purchases or for continuation of relationship for a long time.
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The strategy is to develop structural bonds along with financial and
social bonds. Structural bonds are created by providing highly customized service
to the clients. Specific customer needs are brought into organizational system to
design new ways and to improve the offerings to the clients.
ECRM
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The ‘e’ in e-CRM not only stands for electronic but also stands for
many other connotations viz:
1. ELECTRONIC CHANNELS:
New electronic channels such as the web and personalized e-
messaging have become the medium for fast, interactive and economic
communication, challenging companies to keep pace with this increased velocity.
2. ENTEPRISE:
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Through e-CRM a company gains the means to touch and
shape a customers experience through sales, services and corner offices whose
occupants need to understand and assess customer behaviour.
3. EMPOWERMENT:
E-CRM strategies must be structured to accommodate
consumers who now have the power to decide when and how to communicate
with the company.
4. ECONOMICS:
An e-CRM strategy ideally should concentrate on customer
economics, which drives smart asset allocation decisions, directing efforts at
individuals likely to provide the greatest return on customer communication
initiatives.
5. EVALUATION:
Understanding customer economics relies on the companies’
ability to attribute customer behaviour to market programs, evaluate customer
interactions etc.
6. EXTERNAL INFORMATION:
The e-CRM should be able to gain and leverage information
fro such sources as third party information networks and web page profile
application.
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4. Given that any CRM vendor only provides 20% of the total CRM
solution, examine how easy or difficult it will be to integrate the vendor’s
product into your company’s legacy and new systems.
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5. CRM needs are inheritantly fluid and will change as organizations
evolve. CRM solutions should be able to support these changes without
massive professional service charges.
6. Any CRM project that takes more than 90 days to implement runs
the risk of failure.
7. Total cost of ownership over 5 years must include the whole CRM
strategy not just an individual peace of software. If you don’t factor in these
costs you will be unable to measure true ROI.
8. One has to make sure that the CRM vendor is financially stable and
can weather an economic downturn.
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From the above diagram we can come to know weather the CRM
strategy of the organization is a success or a failure. A fact which should be taken
into consideration is that only 10% of the CRM is executed properly.
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Six check points are given in terms of a riddle and the participant
has to solve it and locate the check point at a particular city and get a stamp at the
check point and then move to the next. The race is about who travels the shortest
distance and in the speed limit of the city. An ideal speed is fixed by the company
and the shortest distance is noted. Whoever comes nearest to these readings, wins.
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• Customer meets:
Every Sunday in each dealership of maruti, customer meets are
held. The customers are asked to talk about the problems they are facing in the
vehicles, during the sales process and in the after sales service. These flaws are
deleted and the customers are informed about it. This again ensures customer
loyalty is achieved.
• Corporate events:
Under corporate events, the people from the company and/or
dealership gets together and they arrange a sales promotion camp or a free check
up camp in any particular company. By this maruti ensures that the employees of
that particular company are benefited. In this way, they build customer loyalty.
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• Call center
• Magazine called gateway
• Loyalty card system
• Special schemes
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4. As cars are no more a lifetime investment and companies give cars as perks
and opportunity to change it in 3-4 years. How do you ensure that they consider
Maruti, in respect to CRM?
Ans: Maruti calls its customers after 3-4 years of their purchase. We give them
an offer to upgrade the model of their car. They also come up with special
schemes like if you deal with maruti then they sell the car on behalf of customer.
They also provide special loyalty schemes and special bonus schemes under which
they provide discount on bulk purchases.
Moreover, they also provide some incentives to them for handling the
customers in proper manner. The Finance department comes up with the various
financial schemes, special bonus schemes, etc for the benefit of the customer. Due
to this, customer loyalty is ensured.
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8. Are their any differences in the tools and processes of CRM earlier and
now?
Ans: Post 1999, when Maruti launched its toll free number, the speed of
operations was increased. Earlier the managers and executives used to target the
customer and now the server itself identifies which customer to target for the
upper model. Precisely, customer selectivity is done by the server itself.
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10. How is CRM helping you in retaining and increasing the market share?
Ans: Continuous market analysis is done in order to take care of customers.
Maruti has excellent after sales service. This ensures that the customers come back
to maruti again. All complaints and queries of customers are solved immediately.
The sales executives are specially trained to build relationships with customers.
This helps in building one-to-one relationship with the customer. Monthly training
programs are conducted to train executives specifically for teaching how to build
personalized relationships and give customized services.
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The second company I visited was ICICI Bank Ltd. On 7th September, 2007.
Here, I visited Ms.Anjali Tolani who is deputy customer relationship manager at
the call center of ICICI Bank at Andheri, Mumbai.
Within an hour of interaction, I got the following answers to the questions asked:
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2. What are the tools and the processes for delivering CRM?
ANS: The tools and the processes are as follows-
(a) Customer application form
(b) Centralized software where the whole data is collected
(c) Wide range of offering
(d) Cross-selling and
(e) Feedback forms
Bank collects all the data from customer application form and gets
the personalized information to know which product to offer to which customer.
This process helps in collecting the data and knowing what the customer wants.
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After collecting the data from the customer, team decides what product to
offer to which customer. Incase the bank recognizes you as a valuable customer
then it offers a more customized service.
(d) Cross-selling:-
The bank distributes feedback forms at all its branches. The customer
feedbacks on the service, technology used, employee behavior and promptness in
solving customer’s problems, are taken and they are analyzed.
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ANS: Most banks have their own databases but because of the huge
technological investments done by ICICI the databases in all the branches are
integrated, which means they can be accessed from anywhere and at anytime.
ICICI Bank has tied up with Terradata Company for making their software and is
the only bank doing this.
4. How is CRM helping you in retaining and increasing the market share?
ANS: CRM helps to know the needs and wants of the customer. So, on the
basis of this company can decide which product to offer to which customer.
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5. Does technology helps in practicing CRM?
ANS: Yes definitely. The whole base for practicing CRM is technology. It
helps in collecting the data, processing the data and then according to the available
information offering different products to the customer through emails, call centre,
pop ups during the transaction in the ATM.
In serving the customer with full dedication, it is very important for employees to
be in right frame of mind. And this will be possible only when the employees are
given freedom at work to do things as there way keeping in mind the
organizational goals.
For any customer, it is the front line personnel who embody the
organization. So, employees are the walking billboards of the organization. Hence
while delivering services to the customers and ensuring them that their perceived
expectations and given services are equal, empowering them is very essential. This
helps in delivery of efficient CRM.
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HP sells its products through its channels. Whenever the customer purchases a
product, and there is an issue to be resolved, the point of contact is the front line
team. It handles the usage-related, the application related and the real product
related issues. The backend team handles the upgradation issues. The partners
provide the hardware support. The sales and services are provided by DPSP’s and
the ASP’s only. Typically in a month, the total number of customer calls logged in
at HP is 21,000 out of which 4600 are through web support, 1270 e-mails and
15,000 telephone calls. They use automated call distribution software, which also
enables to track the particular history of the customer. The service providers are
assessed continuously. It is a challenge to motivate engineers who are the
employees of the service providers and are not HP employees. The
engineers/service providers’ performance is monitored on:
• Turnaround Time
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• Number of parts requested per call
(Multiple Part consumption)
• Closing the call
• Customer satisfaction
• Repair rate
• Effective handling of customer escalations
HP contacts all customers, who are not happy with the service, and
through the partners it is attempted that certain steps are taken so that the customer
is happy. The training program for the partner is also regularly revived.
There is also a Reward 1000 plus program where there are points
awarded. There are points for various aspects such as training, quiz bulletin,
customer feedback, customer service, re-repair rate. The top contributors among
the resellers are identified and are sent for training or entertainment apart from
monetary incentives.
So at HP, there is synchronization of the employee satisfaction and customer
satisfaction process to ensure a higher market share.
CONCLUSION
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QUESTIONNAIRE
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Ans:-
_______________________________________________________________
_______________________________________________________________
BIBLIOGRAPHY
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www.crmassist.com
www.crmguru.com
www.crmfoundation.com
www.crmindia.org
www.crmsearch.com
www.crmcommunity.com
www.CRM-forum.com
http://www.marketingsource.com/articles/view/3553
http://www.internetretailer.com/internet/marketing-conference/35899-growing-
importance-crm.html
http://www.pr-inside.com/amc-integration-study-can-help-customers-
r348913.html
http://www.nkarten.com/mce.html
http://www.destinationcrm.com/articles/default.asp?ArticleID=3544
http://en.wikipedia.org/wiki/Customer
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http://www.businesslink.gov.uk/bdotg/action/detail?
type=RESOURCES&itemId=1075422939
http://www.williecrawford.com/loyalty.html
http://searchcrm.techtarget.com/sDefinition/0,,sid11_gci757452,00.html
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