Submitted To – Submitted By -

Dr. Smriti Sood Ravneet Kaur

Swati Sharma
Vikas Dhiman
Vishal Vivek
What is CRM?
Customer Relationship Marketing
Customer Relationship Marketing (CRM) is a business process
in which client relationships, customer loyalty and brand value
are built through marketing strategies and activities. CRM
allows businesses to develop long-term relationships with
established and new customers while helping streamline
corporate performance. CRM incorporates commercial and
client-specific strategies via employee training, marketing
planning, relationship building and advertising.
Some Definitions:
 ‘Relationship Marketing is attracting, maintaining and – in
multi-service organisations – enhancing customer
relationships.’ (Berry, 1983)
 ‘Relationship marketing is marketing seen as relationships,
networks and interaction.’ (Gummesson, 1984)
 ‘Relationship Marketing is the process whereby both parties
– the buyer and provider – establish an effective, efficient,
enjoyable, enthusiastic and ethical relationship: one that is
personally, professionally and profitably rewarding to both
parties.’(Porter, 1993)
 ‘Relationship Marketing refers to all marketing activities
directed to establishing, developing, and maintaining
successful relational exchanges.’(Morgan and Hunt, 1994)
Evolution of Customers Relationship
Marketing
Period Focus area
1950’s Customer Good Marketing
1960’s Industrial Goods Marketing
1970’s Marketing of Non-Profit
Organization or Societal
Marketing
1980’s Services Marketing
1990’s Customers Relations Marketing
Transaction Marketing Vs. Relationship
Marketing
 In 1990’s the concept of Relationship Marketing has emerged
strongly and the focus has been changed from Transaction
Marketing to Relationship Marketing as shown below:

Transaction marketing Relationship marketing

Focus on Single sale Focus on customers retention

Orientation on product features Orientation on product benefits

Little emphasis on Customers High customer service emphasis

Service
Limited customer commitment High customer commitment
The “Bucket Theory Of Marketing”
 Define and measure retention rate
 Distinguish the causes of customer attrition and identify
those that can be managed better.
 Compare the lost customers’ lifetime value to the costs the
reducing defection rate.
 Relationship Management
 Move from a ‘transactional’ model of marketing to a
‘relationship’ model

Advocate
Emphasis
On
on
Supporter developing
and
Emphasis Client Enhancing
enhancing
on new relationships
Customers
customers (customer
Customer keeping)
(customer
catching)
Prospect

Source: Christopher et al (1991)

Basis of CRM
 It requires building and maintaining long term relationship
between buyers and sellers.
 It is based on trust and commitment between the two parties.
 Emphasis is on retaining the customers over making sales.
 CRM ranks customer service as a high priority.
 It encourages frequent customer contact.
 Fosters customer commitment with the firm.
 Bases customer interaction on cooperation and trust.
 The buyers and sellers must share values, trust, mutual
respect, mutual benefit, frequent communications, honest
feedback, cooperation, flexibility, understanding and
relationship commitment.
Goals Of Relationship Marketing
The goal of customer relationship marketing are:
1) Customer Acquisition
2) Customer Satisfaction
3) Retention of the customers
4) Enhancing the customer base
Since it costs five times as much to attract a new
customer as it does to keep a current one
satisfied, the main focus is on customer
satisfaction so as to achieve customer loyalty. This
is important as highly satisfied customers are:
1) Less price sensitive
2) More likely to talk favourably about product
3) More likely to refer product to others
4) Remain loyal for long
The Customer Pyramid
Platinum Tier - Company’s most profitable
customers, typically heavy users of the product,
not overly price sensitive, willing to invest in and
try new offerings, and committed customers of
the firm.

Gold Tier - Profitability levels are not as high,

perhaps because customers want price discounts
that limit margins or are simply not as loyal. May
be heavy users who minimize risk by working
with multiple vendors.
Iron Tier - Essential customers that provide the
volume needed to utilize the firm'’ capacity but their
spending levels, loyalty, and profitability are not
substantial enough for special treatment.

Lead Tier - Customers who are costing the firm

money. They demand more attention than they are
due given their spending and profitability and are
sometimes problem customers—complaining about
the firm to others and tying up firm resources.
Segmenting Customers Based on
Commitment And Profitability
Different Levels of Relationship
Marketing
 Basic Marketing – The salesperson sells to the final
customers. This is also known as direct sales.

 Reactive Marketing – The sales person sells the product

and encourages the customer to call for any comments or
enquiries.

 Accountable Marketing – The sales person calls the

customers to ensure whether the product is working as per
satisfaction and if there is any problem in the product.
Furthermore he also asks the customer for any suggestions
/ feedback to improve the service / product. Thus he is
taking responsibility for the sale.
 Proactive marketing – The company works
continuously with its large customers to help improve
performance. This is especially seen in financial
companies wherein the movement in the financial
market induces the company to make changes
regularly. However at the same time, these financial
companies have to take care of their customers as well.
Thus they take regular feedback from their large
customers thereby developing their products
accordingly.

 Partnership Marketing – The company works

continuously with its large customers to improve its
performance.
Relationship Marketing and the 4Ps
• Product -
 More products are customized to the customers’ preferences.
 New products are developed and designed cooperatively with
suppliers and distributors.

• Price –
 The company will set a price based on the relationship with
the customer and the bundle of features and services ordered
by the customer.
 In business-to-business marketing, there is more negotiation
because products are often designed for each customer.
 Place (Distribution) –
 RM favours more direct marketing to the customer, thus
reducing the role of middlemen.
 RM favours offering alternatives to customers to choose the
way they want to order, pay for, receive, install, and even
repair the product.

 Promotion (Communication) –
 RM favours more individual communication and dialogue
with customers.
 RM favours more integrated marketing communications to
deliver the same promise and image to the customer.
 RM sets up extranets with large customers to facilitate
information exchange, joint planning, ordering, and
payments.
Framework For Customer Relationship
Marketing
Create a • A necessary first step to a complete CRM solution is the construction of a customer
database or information file.
Databas
e
• Each row/customer of the database should be analyzed in terms of current and
future profitability to the firm. When a profit figure can be assigned to each
Analysis customer the marketing manager can then decide which customers to target.

• Segmentation type analyses are performed on purchasing or related behaviour the

Customer customers in the most desired segments (e.g. highest purchasing rates greatest
Selection brand loyalty) would normally be selected first for retention programs.

• A portfolio of direct marketing methods such as telemarketing, direct mail, and,

Customer when the nature of the product is suitable direct sales is used to target customers
Targeting

• Managers must constantly measure satisfaction levels and develop programs that
Relations
help to deliver performance beyond targeted customers expectations.
hip
Marketing
Six Types Of Markets
1. Internal Markets
2. Supplier Markets
3. Recruitment Markets
4. Referral Markets
5. Influence Markets
6. Customer Markets
Relationship Marketing Strategies
1. Core Service :-
A key strategy in relationship marketing is the design and
marketing of a `core service’ around which a customer
relationship can be established. The ideal core service is
one that attracts new customers through its need –
meeting character, cements the business through its
quality, multiple parts, and long term nature, and
provides a base for the selling of additional services over
time.
2. Customizing the Relationship :-
By learning about the specific characteristics and
requirements and individual customers, and then
capturing these data for use as needed, service firms can
more precisely tailor service to the situation at hand.
This results in the customization of relationships.
3. Service Augmentation :-
Service augmentation involves building ‘extras’ into the
service to differentiate it from competitive offerings. For
meaningful service differentiation to occur, the extras
must be genuine extras- that is, not readily available from
competitor – that are valued by customers. When this is
the case, customer loyalty is encouraged.
4. Relationship Pricing:-
Relationship pricing mean pricing services to encourage
relationships. An old marketing idea – a better price for better
customer – forms the basis of relationship pricing, another
strategy option available to service companies pursuing
customer loyalty.
5. Internal Marketing :-
In an internal marketing strategy, employees are treated as
“internal customers” who must be convinced of a company's
vision and worth just as aggressively as “external customers.
Internal marketing is based on the idea that customers’
attitudes toward a company are based on their entire
experience with that company, and not just their experience
with the company’s products. Any time a customer interacts
with an employee, it affects their overall
satisfaction. Therefore, customer satisfaction is deeply
dependent on the performance of a company's staff.
Relationship Marketing Programs
By observations of the corporate practices ,there are
three types of relationship marketing programs
• Continuity marketing
• One- to – One marketing
• Partnering programs

They take different forms depending upon whether

they are meant for end-customer, distributor
customers ,or business –to-business customers.

Marketers use a combination of one or more types of

theses to build closer and mutually beneficial
relationships with their customers.
Various Types Of Relationship
Marketing Programs
CUSTOMER TYPES
PROGRAM
Individual Distributors/Res Institutional
TYPES
customers ellers Buyers (B2B)

Continuity Loyalty Continuous Special supply

marketing programs Replenishment arrangements
E.g.-JIT
Individual Data Customer Key account
marketing warehousing business management
and data development and co-
mining development
Co-marketing/ Co-branding Co-operative Joint marketing
Partnering marketing and co-
development
Case Study of Volkswagen India
Background
 Volkswagen (VW) is one of the world’s leading automobile
manufacturers and the largest carmaker in Europe. As
Volkswagen pursues its goal of becoming the number one
automaker in the world by 2018, India has become a key
component of its strategy. India is currently the world’s
second fastest growing car market, with shipments
expected to more than double by 2018.
CRM Practice -1 “Attracting Working
Professionals”
 Challenge
• Create brand awareness among working
professionals
• Build loyalty and aspiration
• Influence decision-making
 Solution
• Establish VW-branded Company Page on LinkedIn
• Enable LinkedIn members to recommend their
favorite VW models
• Use LinkedIn Recommendation Ads to extend reach
CRM Practice -1 “Attracting Working
Professionals”
 Why LinkedIn?
• #1 Resource for career-minded professionals
• Precise targeting by seniority and geography ensures
match with affordability criteria, dealership
locations
 Results
• 2,700 product recommendations in 30 days
• 2,300 new followers on VW India Company Page
• 960,000 viral updates about VW car models
CRM Practice -2 “Made In India”
 Challenge: To foray into the small car segment
 Solution: The campaign created by DDB Mudra and
executed by MediaCom, clearly displayed the made in
India factor in the Polo which is rolling out of the Chakan
plant in Pune.
CRM Practice -3 “India Assistance
Program”
The services that this program will offer to their passengers
will be:
 Travel and accommodation of the passengers in the
incidence of immobilization or theft of the vehicle.
 Transport to destination or habitual residence with luggage
and personal belongings.
 Towing of the vehicle to VW nearest dealer.
 On site repair, if possible.
 Dispatch of fuel; Wheel replacement.
 Transportation, storage and safekeeping of the vehicle.
CRM Practice -4 “Planet Volkswagen”
 A new digital campaign, like most of its other initiatives,
it is rich in creativity and ideas. It features a rotating
globe with different land masses for each of Volkswagen
India’s departments.
 Since the brand is not very old but has caught on quickly
with Indian people, many want to learn the heritage,
technology and German company’s background.
 There’s a Junior section targeted at kids who Volkswagen
see as future customers.
Case Study of Sheraton Suites

What people really remember is the guest experience

Service Excellence
o Service interaction key to customer loyalty
• Carefully selected and trained staff
• Brand-specific programs
⁻ ‘Building World Class Brands’
• Staff empowerment
• Strong service culture
• Awards for service
o Relationship marketing
• Tailored to each guest
• Personable, non-intrusive attention
• ‘It’s Our Pleasure’ program
• Starwood Preferred Guest program
• Loyalty reward point system
• Social media monitoring
Process Followed
• Chart the service delivery system.
• Identify critical service issues.
• Set service standards for all aspects of service delivery.
• Develop customer communication systems.
• Train employees on building and maintaining a good
relationship with clients.
• Monitor service standards, reward staff for exceeding
service levels.
• Each employee fully understands the importance of
quality and relationships in the marketing philosophy.
Benefits of Relationship
Marketing
• Benefits for Customers:
• Receipt of greater value
• Confidence benefits:
• trust
• confidence in provider
• reduced anxiety
• Social benefits:
• familiarity
• social support

• personal relationships

• Special treatment benefits:

• special deals

• price breaks
Benefits of Relationship
Marketing Contd.
• Benefits for Firms:
• Economic benefits:
• increased revenues
• reduced marketing and administrative
costs
• regular revenue stream
• Customer behavior benefits:
• strong word-of-mouth endorsements
• customer voluntary performance
• social benefits to other customers
• mentors to other customers
• Human resource management benefits:
• easier jobs for employees
• social benefits for employees
• employee retention
Disadvantages of Relationship
Marketing :
• Organizational wise change of priority to
customers.
• Significant investment of time and money
• Threatens management’s control/power
struggle
• Heightens people’s resistance to change
• Inappropriate integration leads to disaster
Conclusions
 There is potential for CRM to help firms to sustain in
market as it is becoming much more competitive.
 Successful implementation would mean many changes to
attitudes and structures.
 The process would almost certainly be painful.
 It would probably be particularly difficult to develop and
install customer centric strategies
 If CRM is used must be with the backing of those at the
highest level and it must be planned carefully
 A process must be gone through which would take note of
CRM theory and use the experiences of others to maximize
the chances of success
Precautions
 Don’t attempt to implement CRM without adopting
customer-centric strategies
 Don’t justify CRM implementation on the hope of
achieving operational efficiencies
 Don’t take shortcuts that bypass key implementation steps
(such as customer satisfaction research)
 Don’t try to avoid organisational change
 Don’t allow changes in workflow and process without
involving those affected
 Don’t let consultants or software vendors limit the scope of
your implementation to their capabilities