UNIT 1

Someone

who pays for goods or services. a current or potential buyer or user of the products of an individual or organization(supplier, seller, or vendor) Traditionally only a paying client.

 Existing

customers: Purchased/used services in recent past, most beneficial,chance to retain them Former customers:Made previous purchase but long back,bought similar product from competitor,value depends on previous relationship Potential customers:not yet purchased ,have a need for product, have purchasing power, authority to decide to buy

EXTERNAL CUSTOMERS Paying Client: They give money to the company & company gives them products and/or services. INTERNAL CUSTOMERS Employee: Company gives them a paycheck and benefits and bonuses and they give (hopefully) productive work in return to the company. Supplier/Vendor: They give products and/or services to the company & company gives them money. Business Partner: They give sales and added value services to the company & company give them the same and/or percentages of a sale they help make.

Ways customers interact with the organization In Person Telephone Internet Kiosks In Person product support Financial assistance

Initiator

User

Influencer

CUSTOMER

User

Purchaser

Decider

 Customer

Relationship Management is a comprehensive approach for creating, maintaining and expanding customer relationships. A process to compile information that increases understanding of how to manage an organizations relationships with its customers.

business strategy that uses Information Technology to provide an enterprise with a comprehensive, reliable and integrated view of its customer base so that all processes and customer interactions help maintain and expand mutually beneficial relationships. A comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customer.

High

Relationship orientation

Low

Pre-industrial Era

Industrial Era

Information Era

 Pre-industrial

era: Relationship centric-small

scale
Industrial

Era: Product centric Era: Relationship centric-large

Information

scale

1.

Rising Customer Expectations:

Affluence

Increasing Greater

awareness: explosive media growth diversity: mass marketing fails

Customer

2.

Affordable technological advances

 Cost

of Acquiring a customer is high. Customers are profitable over a period of time. Customer profitability is skewed All customers are NOT equal. Implications Competitors may lure top customers affecting firms revenue in big way. Firms should adopt different strategies for different customer groups.

 Programmes

to be developed to retain and build stronger bonds with top customers. Cost analysis to be done with middle group of potentials to reduce cost of serving them. Efforts should be made to increase the profitability of these customers by cross selling or up selling. For bottom group, cost of service to be reduced by encouraging them to use lower cost channels . In some cases, they may be encouraged to defect to competitors.

 Dependence

on periodic surveys and other ways to gather data is reduced as it is an ongoing process. Due to known customer preferences, wastage on mass marketing is reduced.

 95%

of customers do not bother to complain. They just change the seller. Loyal customers take time to complain and shift. They give time to sellers. A satisfied customer doesnt tell as much as a dissatisfied customer. 70% of customers who complain come back if complaints are dealt with carefully. A satisfied customers feedback helps in improving service.

 Build

long term and profitable relationships with chosen customers

closer to those customers at every point of contact with them.

Getting

 It

is often said-To have effective CRM , buy the right application (technology/tools). The right application is critical. But it is your CRM strategy that informs which application will be right for you.
CRM Strategy Organizational Structure Technology Implementation
CRM strategy drives organizational structure and Technology Implementation

Business Objectives Programme Initiatives

Departmental Plans
Technology

Business Objectives: Outlining 2 to 5 year strategic goals. Initial planning leading to long term goals. Programme Initiatives: Short term game plans that move the company towards long term goals Measurable initiatives giving clear indications of forward progress 1-1.5 years scope Include plans to derive maximum customer satisfaction

Departmental Plans: Processes that will determine every day functioning within the organization Departmental plans with cross-departmental integration Technology: Drives the entire architecture Used to automate and enable some or all of the business processes and initiatives Generally a reflection of the co-ordination, or lack thereof, of the organization.

Functional CRM: For organizations with no departmental coordination The modules work for individual dept. Specialized modules Initial amount spent is high Departmental CRM: Some modules common to some dept. Intra departmental coordination needed Partial CRM: Two to three departments share a common master database. Full CRM: Entire organization uses the same database.

 Scalability:large

scale usability,expandability Multiple communication channels Act as trigger Assignment: assigning requests to person or group Database: maintain data warehouse Privacy maintenance: of customer data

 Operational
Analytical

CRM

CRM CRM

Collaborative

CRM TECHNOLOGY FRAMEWORK

 Most

identifiable part of CRM Covers customer facing transactions Includes Sales Force Automation, Enterprise Marketing Automation, Front Office Suites Includes typical business functions like customer service, order management etc. Eg. SAP CRM-On Demand, PeopleSoft

Involves 3 general areas SFA-Sales Force Automation

CSS-Customer

Service and support

Marketing Automation

EMA-Enterprise

 Includes

capture, storage, extraction, processing, interpretation, reporting of customer data to user. Customers data is taken from multiple sources and stored in customer data repository Algorithms are used to analyse and interpret data as needed. Uses data mining Eg. Micro Strategy

Design and execution of targeted marketing campaigns to optimize marketing effectiveness Design and execution of specific customer campaigns, including customer acquisition, cross-selling, up-selling, retention Analysis of customer behavior to aid product and service decision making (e.g. pricing, new product development etc.) Management decisions, e.g. financial forecasting and customer profitability analysis Prediction of the probability of customer defection (churn).

Provides point of interaction through various channels Includes Customer Interaction Center (CIC),communication channels like web, email etc. Direct communication with customers that does not include a companys sales or service representative (self service) Collaborative CRM covers the direct interaction with customers via a variety of channels, such as internet, email, automated phone (Automated Voice Response AVR), SMS or through mobile email.

 CRM

ENGINE:A database to store customer information. This can be a CRM specific database or an Enterprise Data warehouse.
OFFICE SOLUTIONS: Operational CRM, requires customer support software, SFA, EMA,Customer Interaction applications

FRONT

 ENTERPRISE

APPLICATION INTEGRATION(EAI):link CRM back and front office solutions, link old with new applications, allow one system to communicate with other systems BACK OFFICE SOLUTIONS: Analytical CRM requires statistical analysis software, work in background

 The

stages a customer goes through from the time before deciding to do business with an organization until he/she decides to stop being a customer. The progression of steps a customer goes through when considering, purchasing, using, and maintaining loyalty to a product or service. The goal of effective CRM is to get the customer to move through the cycle again and again.

ACQUISITION
suspect

RETENTION
Loyal advocate

WINBACK
Inactive customer

prospect

Repeat customer

Lost customer

Customers 1st transaction

 Understand customers needs Differentiate based on their needs characteristics and behaviour

Develop products,services,channels to meet customers needs Customize based on customer segments

Understand and Differentiate

Develop and customize

Acquire and Retain

Acquire customers and prospective customers Retain valuable customers

Interact and Deliver

Interact with customers and prospective customers Deliver increased value to customers

Amount of money a customer spends while doing business with a firm in his entire lifetime as the firms customer. It may also include money spent by his referrals. CLTV in quantitative terms is defined as the net present value(NPV) of the future profits to be received from a given no. of newly acquired or existing customers during a specified time frame. Some customers have low LTV so org. may not want to reestablish relationships with those who demand too much service without corresponding amt of revenue.

Average sale(A)=Total sale in a year/total no. of transactions Average No. of times customer buys from a firm in a year(B)= Total no. of transactions / total no. of customers No. of years a customer remains a cust.(C) No. of referrals(D) % of referrals who became customers(E) Gross sales/year/customer=A*B Gross sales over customers lifetime=A*B*C Referrals who became customers = D*E Gross sales from referrals=A*B*C*D*E Total Value of a satisfied customer=A*B*C+A*B*C*D*E

 Acquisition:

Helps to estimate how much to spend to acquire customer Targeting ROI(Return on Investment): helps to measure campaign performance Customer retention:helps to estimate how much to spend to retain Single customer profitability: can also be estimated Provides greater unity across business by establishing a common base for decision making

 Specification

of objectives: different ways of calculating for different purposes Organizational commitment: All must be convinced, not only managers. Continuous collection of relevant data required to ensure proper assessment Inability of legacy systems to adapt to new metrics It is an estimate.It requires hypothesis about future.Changes in circumstances must be accounted for.

 Customers

satisfied when expectations are

met. Expectations depend on:

Word of mouth Personal needs :physiological, safety, social, esteem, self actualization Past experience External communication by service provider

 Cost

associated with finding new customers

Advertising Keeping price low Personal selling Setting up new account Explaining business Inefficient dealing

 Profit

generated from old satisfied customers

Reduced price sensitivity Reduced switching to competitors Increased referrals Increased repeat purchase

 If

losing customers, find the reason,act fast Implement loyalty programs-loyalty cards Exceptional service Current customer satisfied-word of mouth free publicity

 In

case of customer complaint, confused: be sure to tell whom to contact Inattentive clients: repeat questions Product already sold,customer says expected more: Ask for his/her opinion about the best solution Agitated customer: practice to keep cool Forced to give product at lower than deserved price : consider terminating transaction

 Be

customer centric Listen carefully Let the customer know that he/she has been understood If org.is wrong

Express regret If possible upgrade of service

Whose fault is not clear-Resolve conflict

Accommodation-settlement of a conflict emphasizing cooperative behaviour, for customers with high CLV Compromise-attempt to find a mutually acceptable middle ground that is satisfactory to both parties. Termination

Follow up and prevent recurrence-feedback taken Keep in touch and listen to customers

Self Study--Advantages and disadvantages of CRM

THANKS