Customer Relationship Management

Customer Relationship Management

The Present Market Scenario

Marketers realized that all customers were NOT alike!
The changes in marketing environment demands a radically new
approach to marketing
The customer is more empowered today & selling to them requires
a focused strategic approach
The emerging trends include a shorter PLC, experiential
[practical] marketing, focus on customer experience

The underlying factor that unifies them is that customers have

hidden or overt [open] preferences that marketers can help them
reveal by building a learning relationships. In other words,
marketers are not only attempting to interpret the needs of
customers based on their buying behavior but are also
predicting their future needs. The objective is to satisfy these
customers and ensure their loyalty towards the company.

Factors initiating new trends at

Marketing

Changing Social Trends [Products & Services, Sales & Distribution,

Targeting & Positioning]
Lesser Government Control [WTO, globalization, cost of manpower,
energy, govt subsidies, availability of technical expertise]
Rising income levels
Characteristics of the empowered
customer
Increased demands
Easy access to information
Emerging Trends in Marketing
Shorter Product Life Cycle
Emergence of Permission Marketing
Experiential Marketing
Offering Complete Solution
Rewarding Loyal Customers
Disruptive Innovations

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Contribution of CRM to marketers [Strategic

Marketing Tool]

Provides marketers with a fresh method to

approach customers
Create value through a more effective
strategy
Enables marketers to enhance the customer
value & ensure customer satisfaction
Enables companies to focus on their key
customers, whose needs & wants can be
fulfilled adequately using the competence
possessed by the company
Enables to segment customers in a better
manner which lead to more effective
marketing campaigns, personalization of
products and services as well as providing

The Objectives of CRM

Technology : will enable the desired functionality
for the CRM practice
People : skills, abilities and attitudes of the
people responsible for the CRM initiatives
Process: the processes that the company has
identified to enable it to ensure that the CRM
objectives
are
fulfilled
which
includes
transactional interactions with customers
Knowledge & insight to ensure stronger and
deeper customer relationships with the right set
of customers, the companies need to identify
the right approaches that will enable them to
gain knowledge and insight into enhancing
customer value
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Evolution
Production Concept
Marketing Concept
Product Concept
Selling Concept

producing more goods with identical offerings that did not

make any variations
Marketing Orientation the firms focus on customers,
market research and product development as well as the
strategic importance of the marketing function and the
marketing department in the organization.

Aspects
of
Marketing
Orientation
A method to enable
firms to achieve better understanding
of customers
Customer focus
Coordinated marketing
Marketing impact on strategy
Status and professionalism of the marketing function

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Marketing
Orientation

A Company with Marketing Orientation will generate an organization

wide market intelligence pertaining to customer needs; the
intelligence would be accessible to the people within the firm and the
organization would respond to the intelligence that has been
gathered
a holistic
manner.
The firms in
need
to consider
not just the customer but also
the competitors & issues like market sensing, customer
linking, channel bonding

technology
monitoring, keeping track of change &
responding to it appropriately.

Marketing
Productivity

Marketing
Efficiency
Marketing
Effectiveness

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Definitions
It is a process or methodology used to learn more about
customers' needs and behaviors in order to develop
stronger relationships with them
CRM is a comprehensive strategy and process of
acquiring, retaining and partnering
with selective
customers to create superior value for the company and
the customer

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CRM Key Business Areas

Marketing
Sales & Service
Partner channel management
Running an interaction center
Web channel enablement
Business
communications
management
Real-time offer management

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CRM Key Business Areas

Make intelligent business decisions with enhanced

Marketing
customer
insights
Drive
customer
demand
Increase returns on your marketing
investments
Grow profitable relationships
Sales & Service
Improves sales efficiency service
Reduce cost of customer service and
field
service
Boosts
revenue through channel
Partner channel Mgmt
collaboration
Reduce indirect channel support costs
Increase partner satisfaction & ease of
doing business
Drive revenue and extended market
Web channel enablement
Increase customer convenience and

Running an interaction center

satisfaction
Reduce cost of sales & support
Drive revenue and extended market
Increase customer convenience and
satisfaction
Reduce cost of sales & support

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CRM FORMATION
PROCESS
It refers to decisions regarding initiation of relational activities
for a firm with respect to a specific group of customers or with
respect to an individual customer with whom the company
wishes to engage in co-operative or collaborative relationship
Three important decision areas of formation process that
relate to
Defining the purpose [or objectives] of engaging in CRM
Selecting parties or customer partners for suitable CRM
programs
Developing programs or relational activity for customer
engagement

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Customer Life Cycle Management

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Customer Migration

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Understanding Customers
Key Customers the customers whose needs and wants
can be satisfied by the company.
perfect match between the value sought by the customer and
Customer Profile Analysis
that offered by the companys products.

Loyal Customers : they perceive the companys

product as much superior to a competitors
product

Competitive Customers: perceive the companys

product as slightly superior to a competitors
product
Switchable Customers : perceive a competitors
product as slightly superior to the companys
product
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Competitor loyal customers: perceive a

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Selection of Profitable
Nature of Need Fulfillment
Customer

Role of product in Need

fulfillment
Position against
competitors
Nature of Need Fulfillment
Length
competitors
The exact need that the customer requires
to beoffulfilled
should
be taken into account while deciding whether the customer can be
a key customer or not.
Different customers have different style of satisfying the same
need.

Role of Product in Need fulfillment

The role played by the product with regard to the fulfillment
of the need should be taken into account to decide whether
a customer can be termed as a key customer or not
Position against Competitors
The position that a company occupies against competitors from the
customers point of view should be taken into consideration about
key
customers
Length
of Relationship
In case a customer has been with the company over a long time, then
the customer can be considered as a key customer. While even a new
customer gives a major order, it may be too early to think of the new
customer as a key customer

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Cross- Selling : -involves selling to a customer as a result of another

purchase made by the customer.
For Ex: a savings bank a/c customers requirement for a housing loan
Up-Selling :- selling a superior product to a customer when he has outgrown
[used] the old product.

In both cases, the efforts will be fruitful only when the database is
created through well-qualified prospects and campaign management
is done bearing in mind personalization & customization requirements
along with customer profile and segmentation process.

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Customer Lifetime Value

The present value of the stream of future profits expected over the
customers lifetime purchases. The company must subtract from the
expected revenues, the expected costs of attracting, selling and
servicing that customer
The aim of CRM is to produce high customer equity. Customer equity
is the total of discounted lifetime values of all of the firms customers.
This CLV marks a shift from the traditional concept of focusing
on brand equity and also makes a shift from focusing on
customers instead of brands or products since traditionally,
companies have been elaborating the value of their brands!

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Features of Customer Lifetime Value

Features of CLV
CLV will help realizing the lifetime value of customers.
CLV is a metric tool for selecting customers and designing
marketing programes
CLV creates a relationship between itself and marketing actions
Benefits of CLV in CRM
Differentiating Customers:Segmenting Customers:Satisfying Customers:Retaining Customers:-

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PERCEPTION OF CUSTOMERS
Perception is the process by which people select,
organize, and interpret information.
Perception has four major steps:
Exposure - When a stimulus comes within range of your
senses (vision)
Attention - Determined by the individual and the
situation; Nerves pass the information onto the brain
for processing
Interpretation assign the meaning
Memory
Short-term - for immediate decision making
Long-term - for retention

PERCEPTION OF CUSTOMERS
Customer perception
Perception is the process through which a person forms an
opinion about the various stimuli he receives from his sensory
organs.
In marketing, perception is concerned with understanding how
the consumer views a product or service.

A perceptual outcome generated from processing product or

service features (benefits delivered) that leads the consumer to
make inferences about the quality of that product or service.
Dimensions of perceived quality for durable goods are ease of
use, versatility, durability, serviceability, performance, and
prestige.

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Customer Relationship Management (CRM) is: the

integration of sales, marketing, service and
support
strategy,
process,
people
and
technology to maximize customer acquisition,
value, relationships, retention and loyalty.
A Redesigning of your Business from the Outside In.
Customers, Data and Database at the Center of your Organization
(Customer-centricity).
A organization-wide single customer view.
A Foundation for 1to1 Marketing: Treating Different Customers
Differently (Single Ticket Buyer vs. Subscriber)
A Means to Your Total Customer Development Ends.

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Approaches to Segmentation
Traditional Segmentation Methods
The CRM Approach
Demographics
By purchase value, customer lifecycle stage
Behavioural
By purchase frequency, product preferences
Psychographics
By purchase attitudes

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CRM FORMATION
PROCESS

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A CRM Process Framework

It comprise of the following 4 sub-processes:
Customer Relationship Formation Process
Relationship management and governance process
Relational performance evaluation process
CRM evolution or enhancement process
CRM formation process
It refers to decisions regarding initiation of relational activities for a firm with respect to a
specific group of customers or with respect to an individual customer with whom the company
wishes to engage in co-operative or collaborative relationship

Three important decision areas of formation process that relate to

Defining the purpose [or objectives] of engaging in CRM
Selecting parties or customer partners for suitable CRM programs
Developing programs or relational activity for customer engagement

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Strategies for Key

Customers

The key customers are of strategic importance to the company

Can make an impact on the performance of the CRM initiatives
It is necessary to give special consideration to them
Create strategies that will enable the company to fulfill their needs better
and retain them longer.

Meeting all commitments made to the customer

Ensuring that the customers needs have been
satisfied
Offering good value for money and not overcharging
Develop personal trust Prompt attention to any complaints received from the
customer
Highly competitive prices that new competitors
Social meetings with the customer
Create Entry Barriers

find difficult to match

Products with innovative features that are not
easily duplicable
Building a brand that create resonance [quality]
with key customers
Developing expertise in as many areas of the value
chain

Offering custom designed training and servicemaking the customer dependent on the company
Reinforce Exit Barriers Long term contracts with benefits staggered over
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time [AMC]

CRM Purpose
The overall purpose of CRM is
to improve marketing productivity
enhance mutual value for the parties involved in the relationship
CRM has the potential
to improve marketing productivity
create mutual values by increasing marketing efficiencies and or
enhancing marketing effectiveness
By seeking and achieving operational goals, such as
Lower distribution costs
Streamlining order processing & inventory management
Reducing the burden of excessive customer acquisition costs,
Customer retention economics

Stating 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.
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CRM Model

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CRM Cycle

The CRM cycle. The arrows show the three basic stages of the
cycle whereas the outer ring indicates the operations that
can benefit from Information Visualisation

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Elements of CRM

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Elements of CRM

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Elements of CRM

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Elements of CRM
eCRM enables e-business wherein the internet does play a major
role.
Business have increasingly taken advantage of the power of the
internet to build relationships with customers in electronic
marketplace
It gives marketers the power to practice one-to-one customer
relationships and undertake mass customization
It generates value, which can be delivered to customers
Using internet technology companies have become more efficient
in managing relationships
Benefits of eCRM
Understanding Customer Behaviour
Personalization
Cheaper and Faster Transactions
Global Reach
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