• Two sources of competitive advantage

• CRM Definition -1
• CRM Definition -2
• CRM Customer Strategy
• Customer Relationship & Loyalty Page 2
• CRM Strategy
• Market Share versus Share of Customer
• CRM Programs
• CRM Process Framework
• Relationship Theory Perspective Page 2 Page 3
• CRM Relationship Theory
• CRM Relationship Theory Graph
• CRM Building Blocks Page 2 Page 3 Page 4
• CRM Approach Relationship Life Cycle Page 2
• Relation Marketing
• CRM Implementation Process
• CRM Implementation Tasks Page 2
• CRM – Differentiating Customers by Needs
• CRM Understanding Needs

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 WE HAVE TWO SOURCE
OF COMPETITIVE
ADVANTAGE

• THE ABILITY TO LEARN MORE

ABOUT OUR CUSTOMERS FASTER
THAN THE COMPETITION.

• THE ABILITY TO TURN THAT

LEARNING INTO ACTION FASTER
THAN THE COMPETITION.

NOTE: ABOVE TWO STATEMENTS ARE POINTERS &

NECESSARY DRIVERS TOWARDS BUILDING
LONG TERM RELATIONSHIP WITH CUSTOMERS

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 CRM : DEFINATION -1

RELATIONSHIP MARKETING IS ATTRACTING,

MAINTAINING AND IN MULTISERVICE
ORGANSIATION ENHANCING CUSTOMER
RELATIONSHIPS.

BY LEONARD.L BERRY
(1983)

RELATIONSHIP MARKETING

RELATIONSHIP MARKETING (GRONROQS)

RELATIONSHIP MARKETING IS TO
ESTABLISH, MAINTAIN, ENHANCE AND
CUSTOMER RELATIONSHIPS (OFTEN BUT
NOT NECESSARILY ALWAYS LONG TERM
RELATIONSHIPS) SO THAT THE OBJECTIVES
OF THE PARTIES ARE MET. THIS IS DONE BY
A MUTUAL EXCHANGE & FULFILMENT OF
PROMISES.

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 CRM : DEFINATION- 2

CUSTOMER RELATIONSHIP MANAGEMENT IS

A COMPREHENSIVE STRATEGY & PROCESS
OF ACQUIRING, RETAINING & PARTNERING
WITH SELECTIVE CUSTOMERS TO CREATE
SUPERIOR VALUE FOR THE COMPANY AND
THE CUSTOMER.

BY PARVATIYAR & SHETH

A STRATEGIC DEFINATION –
CRM IS THE STRATEGIC USE OF
INFORMATION, PROCESSES, TECHNOLOGY
& PEOPLE TO MANAGE THE CUSTOMER
RELATIONSHIP WITH YOUR COMPANY
(MARKETING, SALES, SERVICES &
SUPPORT) ACROSS THE WHOLE
CUSTOMER LIFE CYCLE.

BY KINCAID

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 CRM – CUSTOMER STRATEGY
1. INCREASING VALUE OF CUSTOMER BASE
 ACQUIRE CUSTOMERS GET
 RETAIN CUSTOMERS LONGER (PROFITABLE).
 WIN BACK PROFITABLE CUSTOMERS KEEP
 ELIMINATE UNPROFITABLE CUSTOMERS

 UPSELL ADDITIONAL PRODUCTS IN A

SOLUTION
 CROSS SELL OTHER PRODUCTS TO
CUSTOMERS GROW
 REFERRAL & WORD OF MOUTH BENEFITS
 REDUCE OPERATIONAL & SERVICE COSTS

2. UNDERLYING PROFIT GROWTH PROCESS IN CRM

 PROFIT DERIVED FROM INCREASED
PURCHASE (UPSELL/GROSS SELL)
 PROFIT FROM REDUCED OPERATING COSTS
 PROFIT FROM REFERRALS TO OTHER
CUSTOMERS
 PROFIT FROM PRICE PREMIUM.

3. OBJECTIVES BEHIND “KEEP” &”GROW”-

“GET” i.e. ACQUIRE CUSTOMERS IS A FAMILIAR
NOTION & PRACTICE OF TRADITIONAL
MARKETING. “KEEP” & “GROW” PROPELS
ORGANSIATION/FIRM TO BUILD PROFITABLE &
LONG TERM RELATIONSHIP WITH CUSTOMER
TO EARN THEIR LOYALTY.
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 CUSTOMER RELATIONSHIP
AND LOYALTY

1. CUSTOMER RELATIONSHIP WHEN MAINTAINED

SUCESSFULLY LEADS TO CUSTOMER LOYALTY.

2. LOYALTY IS AN EMOTION & OCCURS WHEN AN

INDIVIDUAL HAS A VESTED INTEREST IN MAINTAINING
A CLOSE RELATIONSHIP, THOUGH MAY NOT ALWAYS
BE RATIONAL.

3. BUT THIS OCCURANCE RESULTS FROM A SERIES OF

POSITIVE EXPERIENCES OVER TIME VIZ.

(i) IN A CUSTOMER/ORGANSIATION CONTEXT IT COULD

MEAN TANGIBLE EXPERIENCES FOR CUSTOMERS LIKE;
GOOD PRODUCT QUALITY, EASE OF USE, PROMPT &
EFFECTIVE SERVICE.
AND
(ii) INTANGIBLE EXPERIENCES LIKE RESPECTFUL OR
AMIABLE COMMUNICATIONS, TRUSTWORTHY
COMPANY IMAGE ETC. PROACTIVE POSITIVE ACTIONS
FULFILLING NEEDS/WANTS OVER TIME.

4. THUS CUSTOMER LOYALTY IS AN EMOTIONAL BOND

LEADING TO CONSISTENT CUSTOMER BEHAVIOUR,
LIKE CONTINUE TO BUY A FIRM’S
PRODUCTS/SERVICES EVEN WHEN SOME TIMES THEY
MAY NOT APPEAR TO BE MOST RATIONAL. HOWEVER
THIS BEHAVIOUR IS BUILT ON POSITIVE EXPERIENCES
AND VALUE RECEIVED OVER TIME FROM THE FIRM.

5. LOYALTY ONCE ESTABLISHED GENERATES A

MOMENTUM IN THE CUSTOMER TO REMAIN LOYAL &
CONTINUE THE RELATIONSHIP WITH MUTUAL BENEFIT.

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1. CUSTOMER LOYALTY – COULD BE OF TWO TYPES VIZ.
EMTIONAL OR (ii) FUNCTIONAL.

2. RESEARCH IN CUSTOMER BEHAVIOUR INDICATES

THAT MANY A TIME CUSTOMER CONTINUES TO BUY
PRODUCT/SERVICES OF A FIRM OUT OF COMPULSION
OR SITUATIONAL FACTORS. SUCH LINKAGE WITH A
FIRM IS CALLED FUNCTIONAL LOYALTY WHICH IS
UNSTABLE IN NATURE AND TEND TO SNAP WHEN
COMPULSIVE OR SITUATIONAL FACTORS ALTER.

3. ATTEMPT OF A FIRM SHOULD BE TO CULTIVATE CARE

& NURTURE OF A CUSTOMER BY CREATING POSITIVE
EXPERIENCES & VALUE FOR HIM DURING THE PERIOD
OF FUNCTIONAL LOYALTY TO CONVERT THE
CUSTOMER TO BECOME EMOTIONALLY LOYAL.

4. KEY TO BUILDING CUSTOMER LOYALTY IS THROUGH

CREATING VALUE & POSITIVE EXPERIENCES. TO
CREATE THAT FIRM NEEDS TO BE IN TOUCH WITH
CUSTOMER AND CAPTURE & STORE KNOWLEDGE
ABOUT HIM & USE THAT KNOWLEDGE
SYSTEMATICALLY TO RECOGNISE & REMEMBER HIM &
HIS CHANGING NEEDS & SERVE THEM IN A COST
EFFICIENT WAY.

5. CAPTURING & STORING KNOWLEDGE ABOUT

CUSTOMERS IS AN ASSET WHICH ONLY THE FIRM
KNOWS & HAS THROUGH ITS CONSTANT
INTERACTION & DIALOGUE. COMPETITORS CAN
DUPLICATE PROCESSES/PRODUCTS/SERVICES, BUT
CANNOT DUPLICATE KNOWLEDGE THAT THE FIRM
HAS ACQUIRED. THIS ENABLES UNIQUE & TIMELY
VALUE ADDITIONS & EXPERIENCES BY THE FIRM.
EVENTUALLY THIS DRIVES REINFORCEMENT OF
RELATIONSHIP & LOYALTY.

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 CRM - STRATEGY
MARKET SHARE STRATEGY CUSTOMER SHARE STRT.

1. PRODUCT (OR BRAND) CUSTOMER MANAGERS

MENEGERS SELL ONE SELL AS MANY PRODUCTS
PRODUCT AT A TIME TO AS AS POSSIBLE TO ‘ONE
MANY CUSTOMERS AS CUSTOMET AT A TIME’.
POSSIBLE.

2. DIFFERENTIATE PRODUCTS DEFERENTIATE

FROM COMPETITORS CUSTOMERS FROM EACH
OTHER.

3. SELL TO CUSTOMERS COLLABORATE WITH

CUSTOMERS

4. FIND A CONSTANT STREAM FIND A STREAM OF NEW

OF NEW CUSTOMERS. BUSINESS FROM
ESTABLISHED
CUSTOMERS.
5. USE MASS MEDIA TO USE INTERACTIVE
ANNOUNCE PRODUCTS & COMMUNICATION TO
BUILD BRANDS DETERMINE INDIVIDUAL
NEEDS & COMMUNICATE
WITH EACH INDIVIDUAL.

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Customer
Needs Increasing
Satisfied Returns

1 to 1 Strategies Diminishing
Returns
Traditional Traditional

Customer
Reached

MARKET SHARE VERSUS

SHARE OF CUSTOMER

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 BIRDS EYE VIEW OF VARIOUS TYPES OF
ORG/CUSTOMER RELATIONSHIPS &
PROGRAMMES
TABLE : CRM PROGRAMS

CUSTOMER TYPE
MASS MARKETS DISTRIBUTORS B2B MARKETS
PROG.
TYPES

AFTER –MARKTG CONTINOUS

LOYALTY PROGS. REPLENISHMENT SPECIAL SOURCING
CONTINUITY CROSS SELLING ECR PROGRAMS ARRANGEMENTS
MARKETING

PERMISSION MAKTG CUSTOMER KEY ACCOUNT

ONE-TO-ONE PERSONALIZATION BUSINESS GLOBAL A/C
DEVELOPMENT PROGRAMS
MARKETING

AFFINITY LOGISTICS STRATEGIC

PARTNERING OR PARTNERING PARTNERING PARTNERING
CO-MARKTG CO-BRANDING JOINT MAKTG CO-DESIGN
CO-DEVELOPMENT

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 CRM PROCESS FRAMEWORK

FORMATION MAGT. & PERFORMANCE

GOVERNANCE

Purpose:
- Increase
Effectiveness
- Improve
Efficiency Team Structure

Role Specification
Programs Relationship
Planning process
- A/c Management. Performance
Process Alignment
- Retention Marketing -Strategic
Monitoring
- Cooperative -Financial
Arrangements & Communication
-Marketing
Agreements
Employee Motivation • Retention
- Strategic & Training
Partnerships • Satisfaction
Employee Trg. For • Loyalty
Interactive Prac.
Fe
ed
Ba
ck

Partners
Evolution
- Criteria
- Enhancement
- Process
- Improvement Feed Back

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RELATIONSHIP THEORY PERSPECTIVE

DISTINCT QUALITIES CHARACTERIZING

RELATION BETWEEN ENTERPRISE

& CUSTOMER

Mutuality

Interaction

Iterative

Ongoing Benefit

Change in Behaviour

Uniqueness

Trust

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 RELATIONSHIP THEORY PERSPECTIVE
RELATIONSHIP DEVELOPMENT PROCESS

HIGH RELATIONAL
SELLER EXCHANGE
INTEREST LOW DISCREET
IN
LOW HIGH
RELATION
BUYERS INTEREST IN RELATION

LEARNING RELATIONSHIP PROCESS

DEVELOPMENT ENHANCERS: COMMUNICATION, COOPERATION, CONFLICT RESOLUTION

AWARENESS EXPLORATION EXPANSION COMMITMENT

DEVELOPMENT : DISSOLUTION
DETRACTIONS

AWARENESS:PREEXCHANGE OR TRANSITION PHASE

EXPLORATION: TESTING PERIOD – POTENTIAL RELATIONSHIP
MEMBERS ENGAGE IN SEARCH & TRIAL ACTIVITIES.
COMMUNICATION OF WANTS. ISSUE PRIORITIES & OFFERS
EXPANSION: POSITIVE OUTCOME OF EXPLORATION
PHASE- WORTINESS OF REL. MEMBER APPRECIATING MUTUAL
BENEFIT THROUGH REALIZATION OF INTERDEPENDNCY.
COMMITMENT: A HIGH LEVEL OF MUTUAL VALUE CREATION &
SATISFACTION COMMITMENT TO CONTINUE RELATIONSHIP

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RELATIONSHIP THEORY PERSPECTIVE

COMMITMENT: MEASUREMENT CRITERIA

1. INPUTS: BETWEEN MEMBERS QUALITY

RELIABLE, TRANSPARENT & PREDICTS AN
ACURATE FUTURE RELATIONSHIP

2. CONSISTENCY : DEPENDABILITY ON INPUT

QUALITY WITHOUT ANY DISSONANCE
WITH EASIER INPUTS.

3. DURABILITY : EXCHANGE BENEFITS

IDENTIFIABLE & EXPECTED TO CONTINUE
IN FUTURE EXCHANGES.

4. DISSOLUTION : COULD HAPPEN AT ANY

STAGE IN DEVELOPMENT PHASE COULD
BE ABRUPT & IN A SHORT SPAN AS
AGAINST A LONG FORMATION OF PERIOD
IN RELATIONS BUILDING.

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 CRM – RELATIONSHIP THEORY

RELATIONSHIP BUILDING BLOCKS:

KEY VARIABLES ENABLING STABLE

RELATIONSHIP

1. TRUST

2. COMMITMENT

3. SATISFACTION

4. UNCERTAINITY/INTERDEPENDENCE

5. FAIRNESS

6. SYMMETRY

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 CRM – RELATIONSHIP THEORY

TRUST

DEFINED AS

RELIABILITY DURABILITY INTEGRITY

COMES OUT OF ACTION/BEHAVIOURS

NON
SHARED INTER QUALITY OPPORTUNISTIC
BELIEF DEPENDENCE COMMUN. BEHAVIOUR

LEAD TO POSITIVE OUT COME (OF TRUST)

COOPERATION COMMITMENT RELATIONSHIP QUALITY

DURATION

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 CRM BUILDING BLOCKS..
COMMITMENT –TYPES
 CALCULATIVE COMMITMENT – BASED ON
COST/BENEFIT ANALYSIS MOSTLY ON
COMPULSION, SHORT TERM
INDUCEMENTS.
 AFFECTIVE COMMITMENT – BASED ON
DESIRE TO CONTINUE LONG TERM
RELATIONSHIP BUILT ON PSYCHOLOGICAL
& EMOTIONAL ATTACHMENTS MOVING TO
TRUST/COMMITMENT & EVENTUALLY TO
LONG ECONOMIC BENEFITS

SATISFACTION –
1) CREATES MOTIVATION TO CONTINUE
RELATIONSHIP
2) CUSTOMER SATISFACTION & LOYALTY
ARE POSITIVELY CORRELATED.
3) CUSTOMERS ARE MORE VULNERABLE TO
MISHAPS IN EARLIER STAGES OF
RELATION BUILDING.
4) HOWEVER IN A CONTINUING
RELATIONSHIP NEGATIVE ENCOUNTERS
SHOULD BE MINIMISED FOR
RELATIONSHIP TO ENDURE.

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 CRM – BUILDING BLOCKS…

UNCERTAINITY & DEPENDENCE

 UNCERTAINITY EMANATES FROM ENVIRONMENT.

 COULD LEAD TO SCARCITY OF RESOURCES.

 ENTERPRISE SEEKS RELATIONSHIP TO COPE

WITH THE RESOURCE CONSTRAINTS.

 RELATIONSHIP MEMBERS’ JOINT SYNERGY

BETTER THAN SEEKING RESOURCES
INDIVIDUALLY. THIS MOTIVATES RELATIONAL
ACTIONS.

 HOWEVER IT MAY START WITH DEPENDENCY & IF

NOT CORRECTED SOON COULD TEND TO
BECOME UNEQUAL WITH SONSEQUENCES LIKE
COERCION, LACK OF TRANSPARENCY/TRUST &
ULTIMATE DISSOLUTION

 CONVERSION OF EARLY DEPENDENCY INTO

TRANSPERANCY & AVOIDANCE OF COERCIVE &
OPPORTUNISTIC TACTICS ASSURES LONG TERM
RELATIONSHIP BASED ON TRUST/COMMITMENTS

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 CRM – BUILDING BLOCKS…
FAIRNESS – IN DEALING BETWEEN RELATIONAL
MEMBERS ENHANCES QUALITY OF
RELATIONSHIP WHICH IN TURN PAYS OFF IN
LOWER LEVELS OF CONFLICTS, GREATER
EXPECTED CONTINUITY & GREATER
WILLINGNESS OF REL. MEMBERS TO INVEST IN
THE RELATIONSHIP.

FAIRNESS TYPES-

1) DISTRIBUTIVE FAIRNESS – BASED ON

PERCEPTION OF RELATIONSHIP REWARDS VIS A
VIS REL. BURDENS/OBLIGATIONS THUS
FOCUSSED AT OUTCOMES & THEIR RELATIVE
WORTH.

2) PROCEDURAL FAIRNESS- BASED ON

PERCEPTIONS THAT PROCEDURES &
PROCESSES USED ARE FAIR – THUS FOCUSSED
ON BEHAVIOURS INDEPENDENT OF OUTCOME.

THIS PART IS MORE SIGNIFICANT IN BUILDING

TRUST BEING IN CONTROL OR RELATIONSHIP
MEMBERS.

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 CRM – BUILDING BLOCKS…

SYMMETRY – REFERS TO DEGREE OF

EQUALITY BETWEEN RELATIONSHIP
MEMBERS.

 FUNCTIONS LIKE INFORMATION SHARING,

POWER DISPLAY OR DEPENDENCE LEVELS
CAN MAKE OR MAR RELATIONSHIP BUILDING
& DURATION.

 CONFLICT RESOLUTION IS SMOOTH/EASIER

IN SYMMETRIC RELATIONSHIP.

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 CRM – APPROACH
– RELATIONSHIP LIFE CYCLE

1. ANALYTICAL APPROACH FOR INVESTIGATION

OF RELATIONSHIP LIFE CYCLE CALLS FOR
INVESTIGATION OF THE RETAION BETWEEN
THE VARIABLES RELATIONSHIP DURATION
WITH RELATIONSHIP INTENSITY.

2. RELATIONSHIP INTENSITY : SOMEWHAT AN

ABSTRACT CONCEPT IS BASED ON THREE
INDICATORS THE CUSTOMERS DISPLAY
DURING THE RELATIONSHIP PHASES VIZ.

3. CUSTOMER RELATIONSHIP INTENSITY

Psychological Behavioural Economic

Indicators Indicators Indicators
1. Relationship Q. 1. Purchasing Beh. 1. Customer Profit
2. Trust 2. Information Beh. Contribution
3. Commitment 3. Integration Beh. 2. Customer Life Time
4. Communication Beh. Value.

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 CRM – APPROACH
– RELATIONSHIP LIFE CYCLE
 SELLER’S OBJECTIVE : TO CAPTURE
CUSTOMER’S LONG TERM BUYING BEHAVIOUR IN
HIS FAVOUR AT A PROFIT.

 CUSTOMER’S LONG TERM BUYING BEHAVIOUR IS

A FUNCTION OF CUSTOMER REQUIREMENT
CYCLE IN PHASES OF LIFE.

 SELLER’S PERSPECTIVE OF RELATIONSHIP

BUILDING IS WITHIN THE FRAMEWORK OF
CUSTOMER REQUIREMENT CYCLE.

 THUS SELLER NECESSARILY TRAVERSES

THROUGH A RELATIONSHIP LIFE CYCLE WITH
THE CUSTOMER ON THE BASIS OF ABOVE
PERSPECTIVE

DEFINATION : CUSTOMER RELATIONSHIP LIFE

CYCLE DESCRIBES IDEALISED PHASES THAT
OCCUR REGULARLY IN THE RELATIONSHIP OVER
TIME, AND ENABLES CONCLUSIONS TO BE
DRAWN FOR RELATIONSHIP MARKETING (CRM)
ON THE BASIS OF RELATIONSHIP INTENSITY

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 RELATION MARKETING –
COMMITMENT - TRUST - COOPERATION

Economic
Content

Relationship
Commitment

Resource
Content
Cooperation

Social Trust
Content

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 CRM – IMPLEMENTATION PROCESS
(IDIC – MODEL)
CRM IMPLEMENTED PROCESS – STEP BY STEP (4 STEP)
APPROACH, IDIC MODEL.

 STEPS COULD BE SEQUENTLY EXECUTED. HOWEVER

IT IS NOT SEQUENTIAL SPECIFIC AND THERE IS
POSSIBILITY OF OVERLAP DEPENDING ON THE
ENTERPRISE SPECIFIC SITUATION

 FOUR STEP MODEL

* Analysis part of 1. Identify Customers (I)

CRM. Behind the
Scenes out of 2. Differentiate Customers (D)
customer sight. * Based on value & need.
3. Interact with Customers (I)
*Each interaction provides
* Action part of CRM. mutual information flow leading
Customer facing to better understanding & value
Activity enabling creation
more customer 4. Customise Treatment (C)
Data/Information
Capture & Flow *Leads to on going learning
back for further relationship (along with step 3)
analysis & mutual behavioural
adaptiveness.
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 CRM – IMPLEMENTATION TASKS
(IDIC MODEL)

IDENTIFY CUSTOMERS – ACTIVITIES

 DEFINE – WHAT INFORMATION IS NEEDED, PURPOSE &
USE.
 COLLECT & STORE INFO.– MECHANISM/SOURCES, HOW
TO? PROBLEMS, ACESS & INFORMATION
 LINK – LINKAGE BETWEEN TOUCH POINTS, WITHIN
ORGANISATION, BETWEEN DIVISIONS/UNITS
 INTEGRATE – IN A DATAWARE HOUSE, THROUGH DATA
MINING CONVERT INTO FILTERED INFORMATION BACK
TO TOUCH POINTS TO OPERATIONALISE RELATIONSHIP
BUILDING
 RECOGNISE – THROUGH THE DATA CONVERT A
FACELESS CUSTOMER INTO A KNOWN & NURTURED
CLIENT. INTEGRATION IS KEY TO THIS STEP.
 UPDATE – CUSTOMER DATA IN PARTS IS DYNAMIC.
CHANGES NEED TO BE CAPTURED & RECORDED.
 MAKE AVAILABLE - INFORMATION/DATA MUST BE
AVAILABLE TO VARIOUS TOUCH PTS./UNITS &
FUNCTIONS ENABLING INDIVIDUALISED DEALING WITH
CUSTOMER.
 SECURE – PROVIDE SECURITY OF DATA/INF. TO
ENSURE CUSTOMER PRIVACY/COMPETITION AND
UNAUTHORISED USE.
 B2B SETTING –
(1)BUYING ENTERPRISE INVOLVES MORE THAN ONE
PERSON WITH VARIETY OF ROLES.
(2)IDENTIFY EACH PERSON & ROLE.
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 CRM – IMPLEMENTATION TASKS
DIFFERENTIATE CUSTOMERS-
 CUSTOMERS DIFFER IN TERMS OF VALUE & NEEDS.
INSTAL SYSTEMS/MODELS TO DETERMINE UNIQUE
VALUES & NEEDS FOR EACH CUSTOMER.
 VALUE DETERMINATION MUST BE FOLLOWED BY
ADEQUATE INDIVIDUALISED RESPONSE BY
ENTERPRISE – (TO CAPTURE THAT VALUE) SO ALSO
FOR NEEDS.
NOTE –WHAT FOLLOWS CONCENTRATES ON FIRST
ASPECT i.e. VALUE PROPOSITION.
 CUSTOMER VALUE – A FUTURE ORIENTED CONCEPT –
AN ESTIMATE OF FUTURE REVENUE STREAMS FROM
CUSTOMER AND HENCE PREDICTIVE IN NATURE WITH
POSSIBLE DEVIATIONS. PREDICTION IS BASED ON
PAST/CURRENT BEHAVIOUR.
 TWO TYPES OF CUSTOMER VALUE VIZ;
*(I) ACTUAL VALUE ALSO CALLED LIFE
SOMETIMES TIME VALUE (LTV) WHICH IS BASED ON
THIS REF. TO AS ASSUMPTION OF WHAT WE CURRENTLY
CUSTOMER KNOW ABOUT BUYING BEHAVOUR &
TRAJECTORY. EXPECT THAT TO CONTINUE
MEANING *(2)POTENTIAL VALUE – BASED ON
CARRYING ASSUMPTION THAT CUSTOMER
CUSTOMER BEHAVIOUR COULD BE CHANGED
THROUGH TIME THROUGH STRATEGIES & ACTIONS
IN A FINANCIAL BASED ON KNOWLEDGE OF
RELATIONSHIP CUSTOMERS.

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 CRM – IMPLEMENTATION TASK
ACTUAL VALUE (LIFE TIME VALUE –LTV) CALCULATION MODELS
MODELS- ASSUMING 7 YEAR RELATION OF THE CUSTOMER
Time Period t=0 t=1 t=2 t=3 t=4 t=5 t=6 t=7

Predicted 40 60 100 160 200 200 200 200

revenue
Strength
Unit -32 -48 -70 -88 -90 -90 -80 -80
Cost/Mktg.
Exp.
Acquisition -50 - - -
Cost
Net revenue -42 12 30 72 110 10 120 120 530

Net rev. -42 10.91 24.79 54.09 75.13 68.30 67.74 61.58 LTV Assuming
discounted Cust. Remaining
Val. for 7 Yr.
Today@10% 320.55
rate of
Interest
Model 2 providing 75% Uniform Ret. Rate i.e. Providing for Defection
Net. Rev. -42 8.18 13.95 22.82 23.77 16.21 12.06 8.22 LTV (providing)
discounted defection)
Val.(10% 63.21
Model 2 – Logic-Expectation is= Rev. X probability of Survival as Customer
Rate&75%
RET.
HenceRate.
Disc. Val. = rev. probability Disc. Rate
Ex. - @ t=1 12 X .75 = 8.18
1.1
Where 1 is Disc Factor & .75 is Prob. of continuing as Customer
1.1
 Categorisation of customers according to value, MVC (Most valuable Cust.), MGC
(Most Growthable Cust.), BZ( Below Zero) Migrators
 Proxy variable can be used where LTV is not used Viz. Recency, Frequency,
Monetary Value (RFM Approach) or in a frequent flier prog. ( Airlines) –
Mileage done & date
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 CRM – DIFFERENTIATING CUSTOMER BY
NEEDS
ATTRIBUTES – BENEFITS (LINKAGE)

PRODUCT ATTRIBUTES PRODUCT BENEFITS

1. TOYS IN FANTASY RECOGNIZABLE MAKE
CONFIGURATIONS BELIEVE STIUATIONS
2. COLOURFUL UNUSUAL LARGE VARIETY OF
SHAPES THAT EASILY INTERESTING COMBINATIONS
INTERLOCK
3. METICULOUS INSTRUCTIONS COMPLEX DIRECTIONS
TO ASSEMBLE THE FOLLOWING WHICH GIVES
SPACESHIP LOGICAL STEP BY MENTAL EXCITEMENT/THRILL
DIRECTIONS

BEYOND BENEFITS – NEEDS

CUSTOMER NEED ADDITIONAL
PRODUCTS/SERVICES
1 ACTOR: ROLE PLAYING, COSTUMES, VIDEOS, TOYS,
PRETENDING FANTASIZING STORY BOOKS
2. ARTIST: CREATING, MAKING COLOURS & PAINTS, UNIQUE
STUFFUP, DOING THINGS ADDONS
DIFFERENTLY
3. ENGINEER : SOLVING MORE DISGRAMS, PROBLEMS,
PROBLEMS, COMPLETING LOGICAL EXTENSIONS
PUZZLES

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 CRM – UNDERSTANDING NEEDS

CHARACTERISTICS OF CUSTOMER NEEDS

CUSTOMER NEEDS CAN BE SITUATIONAL-

 EVENT TO EVENT (SITUATIONS) SAME CUSTOMER
DISPLAY DIFFERENT NEEDS e.g. AIRLINE
PASSENGER , BUSINESS/LEISURE GROUP

 CUSTOMER NEEDS ARE DYNAMIC AND CHANGE

OVER TIME: VARIOUS INFLUENCES –
COMPETITION, MOODS & EMOTIONS(ATTITUDES),
LIFESTAGES & LIFE STYLES etc.

 CUSTOMER NEEDS OFTEN CORRELATE WITH

CUSTOMER VALUES. E.g. HIGH NETWORTH
INDIVIDUALS SHOWING SIMILAR KIND OF NEEDS.

 MOST FUNDAMENTAL HUMAN NEEDS ARE

PSYCHOLOGICAL(TRUE FOR B2C CUSTOMER BUT
NOT FOR B2B)

 THERE IS NO SINGLE WAY TO DIFFERENTIATE

CUSTOMER BY NEEDS – IT CALLS FOR
CREATIVITY BY ENTERPRISE TO REACH OUT
DEEPEST HUMAN MOTIVATION & NEEDS.

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