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CUSTOMER RELATIONSHIP MANAGEMENT

CRM is a business philosophy based on upon

individual customers

and customised products and services supported by

open lines

of communication and feedback from the participatingfirms that mutually benefit both buying and selling

organisations.

The buying and selling firms enter into a learningrelationship,

with the customer willing to collaborate with the seller

and grow as a loyal customer.

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CUSTOMER RELATIONSHIP MANAGEMENT

In return, the seller works to maximizethe value of the relationship for the customers

benefit.

In short, CRM provides selling organisations with

the platform

to obtain a competitive advantage by embracing

customer needsand building value-driven long-term relationships.

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CRM

CRM in general is operationally defined-

a management process ofacquiring customers byunderstanding their requirements,

retaining customers by fulfilling their requirements

more than their expectationsand attracting new customers through customer

specific strategic marketing approaches.

The process invites total commitment on the part of

the entire organization in evolving and implementingrelationship strategies that would be rewarding to all

concerned.

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WHAT IS CRM?

CRM is the development and maintenance ofmutually

beneficial long-term relationships with strategically significantcustomers

(Buttle, 2000)

CRM is an IT enhanced value process, which identifies,

develops,

integrates and focuses the various competencies of the firm to

the

voice of the customerin order to deliver long-term superior

customer value, at a profit to well identified existing andpotential customers.

(Plakoyiannaki and Tzokas, 2001)

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CRM

CRM is a comprehensive approach for

creating, maintaining and expandingcustomer relationships.

Comprehensive: CRM does not belong just to

sales and marketing. It must be a way of doingbusiness that touches all areas.

Approach: A way of treating or dealing with

something. It is way of thinking about and dealing

with customer relationships.

Strategy: It involves a clear plan.

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CRM

CRM is an approach to interacting withcustomers

and prospects to provide a seamless

(faultless) flow of information and service tothe customer from marketing, through sales

and customer service for the entire

customer life cycle.

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GOALS OF CRM

Most companies expect( waits for) CRM toadd stability through increased customer

retention

andlong-term profitability through increased

efficiencies in sales (higher conversion

rates of prospects to customers throughprospect relationship management)

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DIFFERENT TERMS OF CRM

eCRM (alternatively e-CRM): eCRM refers to

electronic customer relationshipmanagement or, more simply, CRM that is

Web-based. E.g. Golf retailer chipshot.com

cCRM: Collaborative CRM denotes

situations in which customers can interact

directly with the organization, usually throughthe Web. e.g. Dell allows customers to

choose their own workstation components,

essentially designing their own Pcs.

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CONTINUED

SRM: Supplier Relationship Management

focus on actual suppliers. SRM helps

companies evaluate and categorize

suppliers for given projects to optimize

supplier qualification and selection, therebystreamlining the supply chain.

mCRM:Mobile CRM suggests theprovision of data to customers, suppliers,

and business partners via wireless

technologies.

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CONTD

CXM: Customer Experience Management

Includes both the individual experience in a

single transaction as well as the sum of all

experiences between a customer and a

supplier over the duration of their

relationship.

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CONTINUE

Type of CRM a company is looking into,

the common denominator is

Motivating the right customers to continue

doing business with customers.

Important distinctionis Operational vs.

Analytical CRM.
http://localhost/var/www/apps/CRM%202.jpeghttp://localhost/var/www/apps/CRM%202.jpeg

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OPERATIONAL CRM

Known as front-office CRM, involves theareas where direct customer contact

occurs.

Refer to these interactions as customer

touch points,

can be inbound contact e.g. a call tocompanys customer support hotline

oroutbound contact. e.g. an in- personsales call or an e-mail promotion.

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ANALYTICAL CRM

Known as Back-office or Strategic CRM,involves understanding the customer

activities that occurred in the front office.

It requires technology (to compile andprocess the mountains of customer data to

facilitate analysis) and

new business processes (to refinecustomer-facing practices to increase

loyalty and profitability).

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Campaign management:

Analyzing data for purposes of launching amarketing campaign and then monitoring

that campaign and tracking its results to

determine the campaigns value.

Can also refer to the technology that

automates the campaign management

A linear campaign: For launching a newmarketing campaigns, rendered all the

more difficult with the increasing frequency

of smaller, more target promotions.

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But only those with the necessary data canreally monitor the results of threat campaign,and use these results to refine futurecampaigns, a process known as closed

loop campaign management. This means not only to analyze and

understand whether a campaign is asuccess and why. It means using that new

knowledge as the basis for futurecampaigns, in effect closing the loop withevolving customer information.

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Cross- selling: selling a customer aproduct or service based on her past

behaviors or purchase history. Best

done when a company understand the

relationship between two products and

identifies which product might "pull

another.

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Up-selling: Motivating a customer totrade up to a more expensive or profitable

product. The logic is, now that I know

what this customer wants to buy, perhapswe can motivate him to buy a more

profitable version or model.

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TRANSACTIONAL MARKETING

This approach is focus on individual

transaction and does not concern continuousrelationship with customers.

It does not contain a strategic long- term

perspective.

It centers around tentative adjustment

process as regards performing marketing

functions.Customers are viewed as outsiders to the

business.

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TRANSACTIONAL MARKETING

In this approach, customers expectations,satisfaction, multiple influences on their

decisions- making process etc. are not

given due significance.

Little attention is paid to customer services

and customer commitments.

The thrust is on gaining more and more

new customers rather than retaining

existing customers.

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RELATIONSHIP MARKETING

It has a narrow focus on the customersand only on the marketing function of the

organization concerned.

CRM focuses more widely on customersand the entire function connected with

value creation and delivery chain of the

organization concerned.

Organization uses the term CRM rather

than relationship management.

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It is the philosophy of doing business, that

focuses on keeping and improving currentcustomers, rather then on acquiring newcustomers.

It assumes that consumers prefer to have anongoing relationship with one organizationthan to switch continually among providerson their search for value.

It is usually much cheaper to keep a currentcustomer than to attract a new one,successful marketers are working oneffective strategies for retaining customers.

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COMPARISONS OF TRADITIONAL &


Traditional transaction

oriented Marketing

Relationship Marketing

Focus on single sale Focus on customer retention

Short term orientation Long term orientation

Sales to unidentified buyers Tracking of identifiable buyers

Limited customercommitment High customer commitment

Quality is the responsibility of

production department

Quality is the responsibility of all.

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EVOLUTION OF RELATIONSHIP MARKETING

They concentration at the beginning was only on

Consumption.

Human activities were confined (restricted) toconsuming whatever was available within their

reach. Then concentration moved to production.

Production was performed initially for consumptiononly and then for exchange.

In due course, production activities were extendedto produce things both for consumption and forsales.

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EVOLUTION OF RELATIONSHIP MARKETING

During the sales area, production was performed

exclusively for sales and the attention was only on

products.

Whatever was produced became saleable

because of limited supply.As the attention shifted to production, selling

became a tough job because of increased supply.

This made organization to move towards marketing

and related activities. At this stage the focus was

shifted from products to customers.

BENEFITS OF RELATIONSHIP

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BENEFITS OF RELATIONSHIP

MARKETING

From the organizations point of view-

1. Reduction in customer recruitment cost.

2. Generation of more and more loyal customers

3. Expansion of customer base4. Reduction in advertisement and other sales promotion

expense

5. Benefiting customer selectivity approach

6. Increase in the number of profitable customers7. Easy introduction of new products.

8. Easy business expansion possibilities.

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GOALS OF RELATIONSHIP MARKETING

The primary goals is to build andmaintain a base of committed customerswho are profitable for the organization, toachieve this goals, the firm will focus on

the Attraction, Retention andEnhancement of customer relationship

The firm will seek to attract customers

who are likely to become long termrelationship customers.

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Through market segmentation, thecompany can understand the best targetmarkets for building lasting customerrelationships.

As the no. of these relationships grows,the loyal customers will frequently help to

attract new customers with similarrelationship potential.

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LEAKY BUCKET MODEL OF CUSTOMER

RETENTION AND DEFECTION

New customers

Current level

Of customers

Lost customers

Bucket theory of marketing

By Andrew Ehrenberg

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RETENTION AND DEFECTION

Marketing can be thought of as big bucket:

its what sales, advertising, and promotion programsdo that pours business in to the top of the bucket. Aslong as these programs are effective, the bucketstays full.

There is a hole is the bucket, when the business isrunning well and the service industry is delivering onits promises, the hole is small and few customers are

leaving.When the operation is weak and customers are notsatisfied with what they get, however, people startfalling out of the bucket through the holes faster than

they can be poured in through the top.

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Why organization lose theircustomers?

WHY ORGANIZATION LOSE THEIR

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CUSTOMERS

Price related reason: Customer try to matchthe price they pay for acquiring a brand. If the

customer perceives a mismatch between theprice and the value, he would opt for acompetitors brand.

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Product related reasons: Due to

technological advancement, the new brand

which makes entry would be capable of

offering better performance as compared to

the already existing brand. This would

induce customers to make a brand switch

over.


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CUSTOMERS

Service related reasons: The customers are

concentrating services offered at presales,

during sales and after sales. Anydissatisfaction as regards to services would

cause the customer to move.

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Competitors related reasons:

Technological advancement, attractive

offers, value added services, etc. offered by

competitors would also draw the attentionand induce customers towards brand

switching.


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CUSTOMERS Benefits related reasons: The customers may be

attracted by various augmented benefits offered bythe competitors. Such benefits may be more

appealing ad will induce customers towards brand

changes.

Personal reasons: customer would become a brand

defector due to-

Moved away from the market area where the brand is

sold. Influence of other members of the family or friends

Role changes in life cycle, anger, disgust, distress

developed with in the process of product delivery.

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BENEFITS OF CUSTOMER RETENTION

Customers will receive greater value

relative to what they expect fromcompeting firms and remain loyal to a firm.

Consumers gets quality, satisfaction,

specific benefits exceed gives monetaryand non-monetary costs.

Building a long term relationship with aservice provider can reduce consumer

stress as initial problem & solved specialneeds like legal, medical, education orweight-loss program.

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BENEFITS OF CUSTOMER RETENTION

Most consumers have many competingdemand for their time and money and are

continually searching for ways to decision

making to improve the quality of their lives.

Firms may actually become part of the

consumers social support system.

E.g. Health club who known her customers

personally, private school principal knows an

entire family and its special needs.

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BENEFITS FOR THE ORGANIZATION

Increasing purchases: A consumers get knowa firm and are satisfied with the quality of itsservices relative to that of its competitors,they will tend to give more of their business

to the firm. Free advertising through word of mouth:

when a product is complex and difficult toevaluate, consumers most often look to

others for advice on which providers toconsider. Satisfied, loyal customers are likelyto provide a firm with strong work of mouth

endorsements.

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BENEFITS FOR THE ORGANIZATION

Employee retention: It is easier for a firm toretain employees when they have stable

base of satisfied customers. people like to

work for companies whose customers are

happy and loyal.

Lifetime value of a customer: If companies

knew how much it really costs to lose a

customer, they would be able to makeaccurate evaluations of investments

designed to retain customers.

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STRATEGIES FOR BUILDING RELATIONSHIP

An organization's strategies towards developing

and maintaining sustainable relationship differ fromone organization to another depending on certainfactors such as:-

1.People:People have basic role in developing and

maintain relationship with customers.

Everyone from the lowest to the highest levelirrespective of their functional specializationand responsibilities must integrate theiractivities towards- customer satisfaction.

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2.Process:

It involves a logical sequence of activitiesright from the need identification of potential

customers to need fulfillment.

It requires manufacture of products withdesired attributes.

The performance of each link must be

objectively analysed and corrected in tunewith the internal and external customers

expectations.

STRATEGIES FOR BUILDING

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STRATEGIES FOR BUILDING

RELATIONSHIP 3.Product:

The product offered must constantly provide valueaddition. A customer satisfied with a given product

may soon become a dissatisfied customer In view

of the changes that take place in his expectations.

4.Organization:

To build customer relationship, organization should

be aware of the technology advancements and

provide quality services in tune with the customer'sexpectations. should concentrate on total customer

satisfaction and respond to the requirements of

customers faster that its competitors.


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5.Setting satisfactory service standard:Acustomer expects quality products and services. So

Organizations is expected to render in 3 stages.Presales: During this customer developsexpectations and organization must ensure qualityand availability of the product in time.

During sales: During sales process, organizationmust provide the customer an opportunity to inspect,and treat them with courteous attentiveness, promptreply, etc.

After sales: Organization must provide supportingservices such as speedy replacements, simplifycomplaint procedure, efficient maintenance andrepair services and so on.


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6. Concentration on competitors:

An organization must focus constant

attention on the competitors performance,their strategy and style of operations and

compare same with its own performance.

The organizations performance must always

be a step ahead of its competitors and itmust know that the customer feels the

difference.


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7.Customer Analysis:

It includes those who are presentlyconsuming the products. And alsoprospective customers who are presentlyconsuming the products of competitors.

These customer must be analyzed whichconstitute customer inventory, level ofcustomer retention, what makes them buy,

level of satisfaction, place in loyalty ladderetc. this must be done by organization withhelp of experts i.e. external agencies.

With existing customer and former customer.


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8. Concentration on the paying ability ofcustomers:

Pricing decisions are to be governed not

merely by cost related factors. Beforefixing the price, the paying ability of thepotential customers must be viewed. Tosome extend prices are to be adjusted

with the fluctuations in the paying abilityof potential customers.

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9.Cost Analysis:An organization must focus on cost ofthe product or services. They must

perform value analysis. And try toreduce costs and retain the same goodquality or improve quality of product orservice.

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10.Knowledge on purchase behaviors

pattern: Organization must have knowledgeabout factors of the purchaser decision process and

ultimate outcome.

The outcome of purchase decision may be-1.Purchase 2.Rejection 3.Postponement 4.Search for substitutes. They should have anidea about what % of customers arrive and what

sort of a decision and appropriate steps are to

be initiated towards making them buy the

products on a continued basis.


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11. Differentiation in prices and qualitystandards: Must offer services orbrands of different varieties with pricevariations. So that depending upon the

customers financial positions, may prefera least one of the varieties available. Thisprevents switching over other brands.

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12.Focus on reducing dissatisfaction: Thecauses for dissatisfaction are to be identified

and have to be attended well. If a complaint

is well attended then customers becomesloyal and relationship would continue to exist.


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13. Attention on Changing requirements of

customers:-

The requirements of the customers are bound

to change in tune with the changes in their

lives, demographic and psychographicprofiles and the related aspects. They would

concentrate on life- maintenance needs and

then to life-changing needs, which will befollowed by life- enhancing needs.

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14.Concentration on performance:Performance of each one in the chain ofproduct/ service offering is to be

continuously monitored and correctiveactions are to be initiated.

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15.Develop partnership with customers:Partnership builds long relationship with

customers. This type of partnership may be

form of buyback arrangements, trainingemployees and extending managerial

support to the customer organizations. This

approach creates evidence for care andinterest on the customers organisation


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16.Training to supply chain employees:

Organization must come forward to offerstate-ofthe art training to all those who are

connected in the supply chain.

Training in the areas of customer care,customer approach, body language of

service providers, customer communication,

customer need assessment, customerscomplaint management ,etc. are to be

provided.


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17.Organizing customer clubs:

should focus on sense of mutual belonging,understanding, and sharing of common

problems, and emotions of the customers.

Club serves as an effective platform forcommunicating organization's marketing

activities, regular entertainment meets,

pleasure trips awareness programmes,consumer education programmes, etc. can

be organized involving the customers.


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18.Effective customer communication

system:communication must be simple, open,

efficient customer friendly. They must feel

free so that, special training may be given topersonnel working in the communication

channel in respect of receptive (friendly),

encouraging, positive, optimistic andcustomer friendly to customers.

The response from the organization to the

complaints received also should be recorded.


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19.Developing Customer satisfaction

Index: Should build customer satisfactionindex and measure the extent of satisfaction

of the customers in terms if various attributes

of brand and the related aspects. 20.Focus on preventive Actions:

More attention should be devoted for order

processing, delivery scheduling and therelated aspects. Such actions would help

damage control.


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21.Concentration on customer

satisfaction Research:Research on customer satisfaction in terms

of customers level of satisfaction, factors

contributing towards satisfaction, extent ofcustomer retention, influence of competitors

brand on customer satisfaction, customer

attitude towards brand, perception of brandimage so on. These strategies helps for

improving customer satisfaction.


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22.Unethical approach to build and maintain

customer relationship:There are unethical way which are brought to your

attention only for creating an awareness and not

for application.

Addiction: Creating a sense of addiction to thebrand by adding ingredients that are harmful to

body and mind such as soft drinks, food items etc.

Fear: Developing a sense of fear in the mind of thecustomers, that once a brand is continuously used

would cause problems in case of cosmetics, food,

drinks medicines, etc.


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Commitment: Developing misleading commitmentsand obligations.

Imitating: Imitating the attributes of well-acceptedbrands in an unlawful way.

Promises: Making promises to customers with no

intentions to perform. Discrimination: Discrimination on the quality and

services among buyers.

Forcing: Making tie-up sales with other highly

preferred items. Rewarding: Extending undue benefits in the forms

of cash or equal means of benefits to the membersof purchase team in case of industrial

organizational purchase.

DEVELOPING TOTAL CARE PROGRAMMES

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Have to develop an excellent Total Customer CareProgramme to suit to the specific requirements of

its target customers. Keep constant communication with customers.

Respond as quickly as possible for all enquires received

Concentration should be not only on the product

satisfaction, but also on purchase consumption process.

Make the products available within easy reach of the

customers.

Never hesitate to render advice to customers.

Give product related educational programmes free of cost

or with minimum fees.

Encourage customer to participate in organizational

t l t d ti iti

Documents

1st lec CRM