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Customer Relationship
ManagementSession-3
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Customer life cycle management
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Customer life cycle management
The stagesa customer goes through from the
time of before deciding to do businesswith
an organization until he or she decides to
stopbeing a customer is called Customer life
cycle
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Customer life cycle management
Another view
Pre-Purchase Purchase Usage Re-Purchase Winning back
Pre-Purchase Purchase Usage
Pre-Purchase Purchase Re-PurchaseUsage
Pre-Purchase PurchaseWinning back
Re-PurchaseUsage
Pre-Purchase Purchase
Pre-Purchase Purchase Usage
Pre-Purchase PurchaseRe-PurchaseUsage
Pre-Purchase Purchase
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Customer life cycle management
Role of CRM in pre purchase
Campaigning
Mass media advertizing, Direct mailing, Telephonic Solicitation
Non intrusivePermission marketing
Easy access to right information
Website, Retail stores, Call centers, Email responses to
enquiries, Home visits by service personnel
Comprehensive information in suitable formats Comparison with competitive products; queries on usage,
service, warranty, guaranty etc.
Product demonstrations & trials
Home appliances, food products, computer software
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Customer life cycle management
Role of CRM in purchase
Purchase options Variety of purchasing avenues
Cash
Cheque
Credit/Debit card
E-payment
Mobile-payment
Easy Procedures Home loans
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Customer life cycle management
Role of CRM in purchase (cotd..)
Access to hire purchase Loans
EMIs
Complete solution Product cum installation
Installation & training at customers convenience At suitable time & place
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Customer life cycle management
Role of CRM in Usage stage
Easy access to after sales service Provide multiple access methods like
Toll free service helpline
Website space for registering service requests
Email id
This access information should be readily available for consumer
Quick trouble shooting Promptness of service desired
Understand what is customers idea of quick service?
Spare parts easily available & affordable
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Customer life cycle management
Role of CRM in Usage stage (cotd..)
Updated features Software patches, upgrades
Engaging customers Website
Social media : Face book, twitter etc.
Events Activations : Contests
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Customer life cycle management
Role of CRM in Re-purchase
Easy disposal of old products Buy new sell old
Loyalty bonus Frequent flyer scheme
Loyalty cards
New products with useful value addition Understand gaps in existing product
Find out unfulfilled expectations of customers
New product should take care of these aspects
Eg: Frost free refrigerator
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Customer life cycle management
Role of CRM in Winning back lost customers
Keeping track of the churn
Alert should be sounded when loyal customer stops
making purchases. By tracking Regularity of purchases
Value of purchases
Analyze the cause of departure through Interviews with customers (in person, telephone)
Interviews with concerned sales person
Analyzing transactions. Locating gaps in service
delivery or unattended complaints
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Customer life cycle management
Role of CRM in Winning back lost customers (contd..)
Make relevant offers
Offer should be attractive Should acknowledge worth of customer
Reassure about the issues that led todeparture
Follow-up Understand why customer hasnt responded
Maybe he seeks something different
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Let us discuss a Case of a
Telecom operator
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Customer Market Segmentation
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Customer Lifetime Value
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Customer Lifetime Value
Expected profit that a customer/s
brings to the firm during its lifetime
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Customer Lifetime Value
Most Basic models
RFM model based on Recency of purchase
Frequency of purchase
Monetary : Customers avg. purchase size
Avg. value per purchase XNo. of purchases per year X
No. of years of customer life time
Revenue generated/yrX Profit margin %XAvg. life time
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Customer Lifetime Value
An exampleToothy, a 20 yrs old female brushes her teeth daily twice aday. She wants to live really long & healthy so dentist hasadvised her to change her brush every quarter in order to
ensure good cleaning which will lead to a life expectancy of100 years!! Toothy likes to play with colours. Her favoritecolours are red, blue, green, yellow & recently neon pink. Shelikes to buys brushes also in same colours. The cost of abrush is dependent on the colour so a red brush costs as low
as 10, where as blue & green 20, a yellow 25 & the latestneon costs 50 Rs. As brushing is such an important activityfor her, Toothy wants to budget her life time cost. Please helpher.
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Customer Lifetime Value
Adding a little complexitymaking it more realistic
As time value of money reduces over a period so
adjusting future profit margins by discount rate
So formula looks like :
m = Profit obtained in that year
i = WACC OR rate of borrowing funds OR rate of inflation etc.
t = No. years to wait before receiving the payments
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Customer Lifetime Value
Little more complexity
As there will be loss of few customers so let us account
for customer retention rate (r)
So now formula becomes :
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Customer Lifetime Value
Add value
Life time
Avg. value of purchase
Frequency of purchase Discount rate of purchase
value
Cross-selling & up-selling
Network effect (eg. Word ofmouth, communities)
Reduce Value
Cost of acquisition
Cost of retention
Cost of marketing activities Cost of returns
Factors impacting CRM
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Group Assignment
Topics
Groccery & household products Big Bazzar, Reliance mart, More, Haiko, Dmart
Fashion & lifestyle retailer Shoppers Stop, Westside, Pantaloons, Lifestyle
Electronics & digital Croma, Ezone, Reliance digital
Telecom service provider Vodafone, Airtel, Idea
Airlines Jet, Indigo, Go Air...
Banks ICICI, Citibank (India), HDFC.
Insurance
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Group Assignment
Areas to be covered
CRM practices Model, Best practices, failure, evolution, learnings etc.
Your analysis of practicesgood/bad, why?
Data, facts, figures wrt. CRM
CRM software used
Org. structure wrt. CRM
CRM in comparison with competitors Anything else which contributes to CRM
course
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Group Assignment
rules
10 groups5-6 members each
15 minute of content (You need to manage time)
2 presentations every class
Starting next tuesday ie. 4
th
march Hardcopy of the presentation should be given to me
before-hand
Presentations should be already loaded in thesystem
List of groups with First & second topic preferenceand order of presentation should reach me byThursday night.
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Thank you, Have a good day!!