Factors responsible for evolution of

the concept of CRM

Shorter Product Life Cycle

Rapid New Product Offering

Growth of demand

Well-informed and educated customers

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Competitive market pressures

Decline in customers brand loyalty and
company loyalty

More choices for the customer

Busier schedules of customers thus
massive demand for web-based customer
interaction
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Why CRM..?

It costs six times more to sell to a new

customer than to sell to an existing one (Gruen,
1997)
A typical dissatisfied customer will tell eight to
ten people about his or her experience.
A company can boost its profits 85 percent by
increasing its annual customer retention by
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5 percent.
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The odds of selling a product to a new

customer are 15 percent, whereas the odds of
selling a product to an existing customer are
50 percent.
Seventy percent of complaining customers will
do business with the company again if it
quickly takes care of a service snafu.
More than 90 percent of existing companies
don't have the necessary sales and service
integration to support E-commerce
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CRM (What is it?)

CRM is the infrastructure that

enables the delineation of and
increase in customer value and
the correct means by which to
motivate valuable customers to
remain loyalindeed, to buy
again
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CRM is the business process an

organization goes through, in
order to identify, select,
acquire, develop and retain its
most profitable customers to
serve them better.

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CRM is a methodology to achieve

global excellence through
customer satisfaction. It tracks
customers history, needs and coordinates companys multipronged interaction with its
customer for business excellence.

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CRM uses information technology

to create a cross-functional
enterprise system that integrates
and automates many of the
customer serving processes in
sales, marketing, and product
services that interact with a
company's customers.

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CRM is the strategic use of

information, processes, technology
and people to manage the customers
relationship with your company
(marketing, sales, services, and
support) across the whole customer
life cycle

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Key elements of the definition:

Focuses on strategic impact rather than

operational impact.
Benefits are long term rather than immediate
CRM is a total discipline. It includes all the
functions that directly touch the customer.
Information
+Technology
+People
+Process
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=Products

10

Phases of Customer Management

Customer Relationship Marketing, which included a
very strong focus on the customer

Customer Relationship Management, which was

supposed to remedy the alleged neglect of other

functions contributions to the management of
customer relationships;

Enterprise Relationship Marketing, which adds the

supply chain dimension;

e-CRM Electronic Customer Relationship

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Management
which adds the focus of e-business;

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Aspects of CRM

There are four aspects of CRM, each of which can be

implemented in isolation:
Active CRM: A centralized database for storing data,
which can be used to automate business processes and
common tasks.
Operational CRM: The automation or support of
customer processes involving sales or service
representatives
Collaborative CRM: Direct communication with
customers not involving sales or service representatives
(self service)
Analytical CRM: The analysis of customer data for a
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broad range of purposes

The Benefits of CRM

From a company perspective

Lower Cost of Marketing

Common Growth for Marketers and Customers

Improve Customer Satisfaction

Improved Employee And Customer retention

Strong Customer Loyalty

Customized Marketing Efforts

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It helps companies to:

Identify customer needs
Rediscover the customer and
understanding him
Identify untapped business potential
Identify fields requiring new technology
and development
Identify strong and weak points of
supplier
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Provide feedback to the supplier on his

total operation
Provide feedback and new information on
competitors
Bench mark to achieve global excellence
Get details on the aspects on which
customer is happy with the supplier and
on those where he feels that
improvement needs to be incorporated
Develop an action plan to make
organization customer-centric
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CRM helps the companies develop

competitive advantage through

Comprehensive approach tailored to meet

customers specific needs
Building up customer focused operating
environment and culture
Preparation and implementation of result oriented
action plan
Continuous up gradation of competencies to provide
enhanced
benefits and satisfaction to customer
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CRM Reduces

Cost to acquire
customers
Cost to sell
Cost to serve
Time to serve

CRM Enhances

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Customer satisfaction
ROR
Competitive advantage
Number of consumers
Retention rate
Revenue per customer
Impact of order fulfillment,
returns and call center activity
on actual sales performance

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From a customer perspective

Better understanding & fulfillment of customer needs

Decreased cost for customers

Increased customer satisfaction

More efficient handling of customers

Increase in convenience for customers

More personalized attention

Special and better treatment for profitable customers

Better coordinated & integrated functioning of the organization

leading to increased customer satisfaction
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Benefits for Customers

Confidence benefits
Comprise feelings of trust or confidence
in the provider along with a sense of
reduced anxiety and comfort in knowing
what to expect
Helps customers to free up their time and
mind for other concerns and priorities
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Prof.
Agarwal
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19

Social benefits
Customers develop a sense of familiarity
and even a social relationship with the
company
The social support benefits resulting from
these relationships are important and
many a times form the basis for
customers loyalty
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Prof.
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Special treatment benefits

Includes getting the benefit of the
doubt, being given a special deal or
price, or getting preferential treatment

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Prof.
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21

Benefits for firms

Economic benefits
Increased revenues over time from the
customer, reduced marketing and
administrative costs, and the ability to
maintain margins without reducing prices
Studies show that across industries
customers generally spent more each
year with a particular relationship partner
thanProf.
they
did in the preceding period
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As customers get to know a firm and

are satisfied with the quality of its
services relative to that of its
competitors, they tend to give more of
their business to the firm
Lowers costs- both acquisition as well
as relationship maintenance
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Prof.
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23

Customer behaviour benefits

Free advertising from satisfied, loyal
customers in the form of positive word of
mouth communication
Customer voluntary performance
Loyal customers may serve as mentors
and because of their experience with the
company help other customers
understand
how things are done
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Prof.
Agarwal
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Human resource management benefits

Loyal customers may because of their
experience with and knowledge of the
provider be able to contribute to the
coproduction of the service by assisting in
service delivery
Customer retention leads to employee
retention
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Prof.
Agarwal
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Key to successful long-term

strategic positioning depends on
three main activities:

Innovation
Quality
Customer relationships

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Customer relationship marketing is

an enterprise-wide commitment to
identify your named, individual
customers and create a relationship
between your company and these
customers so long as that
relationship is mutually beneficial.
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Relationship marketing (or

relationship management) is a
philosophy of doing business, a
strategic orientation, that focuses
on keeping and improving
relationships with current
customers rather than on acquiring
new customers.

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Relationship Marketing is how

we:

Find You;

Get to know you;

Keep in touch with you;

Try to ensure that you get what you want from us

in every aspect of our dealing with you;
Check that you are getting what we promised you.
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Goal of relationship
marketing
Enhancing
Retaining
Satisfying
Acquiring
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Difference between
Transaction Marketing & Relationship Marketing
Transaction Marketing

Relationship Marketing

Focus is on a single sale

Focus is on customer retention

Orientation is on product

Orientation is on product

features

benefits

It is on short time scale

Long time scale

Little emphasis on customer

High emphasis on customer

service

service

Limited customer commitment

High customer commitment

Moderate customer contact

High customer contact

Quality is primarily a concern

Quality is the concern of all

of product departments
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Key Steps in relationship building process

IDIC Framework

The six market model

Customer Markets

How Relationships
Evolve.
Partners
Friends
Acquaintances
Strangers
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Ladder of Loyalty
Partner

Advocate
Supporter
Client

Customer
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Prospect
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Stages in Relationship
Marketing
1.
2.

3.
4.
5.
6.
7.

Targeting
Enquiry management
Welcoming
Getting to know
Customer development
Managing problems
Winback

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Dimensions/Determinants
of Relationships

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Reciprocation
Mutual benefit
Trust
Transparency
Concern
Interdependency
Commitment
Shared values
Adaptation
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Types of Relationship

Parent-child (loan marketer)

Teacher-student (mass marketer of internet software)

Leader-follower (fashion brand)

Comrade-at-arms (pressure group)

Fellow enthusiast (sports car)

Confidante (financial services advisor)

Idol to be worshipped (luxury brand)

Casual friend (beer, crisps)

Soul mate (special whiskey)

Old flame (brands your mum used)

A friend whom you seek out to escape from everyday reality (holiday)

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The Four Rs of Marketing

Building Customer

Relationships
Leads to

Retention
Producing

Referrals
And easier

Recovery
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Relationship challenges

The wrong segment

Not profitable in the long run

Difficult customers

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The Problem of Customer Misbehavior

Identifying and Managing Jaycustomers
What is a jaycustomer?

A customer who behaves in a thoughtless or abusive fashion,

causing problems for the firm itself, employees, other customers

Why do jaycustomers matter?

Can disrupt processes

Affect service quality
May spoil experience of other customers

What should a firm do about them?

Try to avoid attracting potential jaycustomers

Institute preventive measures
Control abusive behavior quickly
Take legal action against abusers
BUT firm must act in ways that dont alienate other customers
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Six Types of Jaycustomer

Thief seeks to avoid paying for service

Rule breaker ignores rules of social behavior and/or
procedures for safe, efficient use of service
Belligerent angrily abuses service personnel (and
sometimes other customers) physically and/or
emotionally
Family Feuders fight with other customers in their
party
Vandal deliberately damages physical facilities,
furnishings, and equipment
Deadbeat fails to pay bills on time
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Ending business
relationships

Relationship established for a certain time

period/ purpose
Natural ending
Event occurs forcing the relationship to end---provider relocates
Customer not fulfilling his or her obligations
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