CRM

CUSTOMER RELATIONSHIP MANAGEMENT
INTRODUCTION
In the recent years, it has been observed that for any business giant
to have maximum market share requires something more than technology,
innovation, capital. It has been seen that the company first tries to be market
favorite and then heads on to be the market leader. The key which takes the share
price of the company at top most level is the customer.
Once beautifully quoted by Mahatma Gandhi “customer is the most

important person for a business. He is not an interruption to our work but the
purpose of it. He is not an outsider; he is a part of it. We are not doing him a
favour; he is doing us a favour by giving us an opportunity to serve him”.
Many organizations have realized that to sustain in the market they

have to do more than selling of their product. For this the only mantra is to provide
customized and personalized services to customers, which in management is also
known as praticising “customer relationship management”. This concept is
tremendously gaining importance in corporate circles and is emerging as the
business theme for the 21st century.
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To understand this, few key concepts should be taken into consideration. They are
stated as under:
Who is a Customer?
A customer refers to individuals or households that purchase

goods and services generated within the economy. The word historically derives
from "custom," meaning "habit"; a customer was someone who frequented a
particular shop, who made it a habit to purchase goods from there and with whom
the shopkeeper had to maintain a relationship to keep his or her "custom,"
meaning expected purchases in the future.
There is a difference between customer and a consumer. A

consumer is always a customer but a customer is not necessarily a consumer. A
customer can be a medium between a goods manufacturer and/or a service
provider and the end user E.g. A person who purchases a chocolate from a retail
shop is a consumer who is also a customer but the same retail shop owner when
purchases it from the wholesaler or manufacturer is just a customer and not a
consumer because he never consumes the chocolate.
Customer who was considered to be the king of market is now

regarded as the emperor of market. Since all the organizations have the same
technology and more or less the same price offering, it is only the customer’s
loyalty which can take their business sky high.
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What is a Relationship?
A relationship is a specific connection between objects,

entities or concepts. This bond can exist between an individual and an
organization or between two individuals or between two organizations. These
relationships are categorized as social relationships, causal relationships and
mathematical or theoretical relationships which are between components of a
modeled system. Herein, presence of both the parties is a must. Both cannot
survive without each other.
What is Management?
Management comprises directing and controlling a group of

one or more people or entities for the purpose of coordinating and harmonizing
them towards accomplishing a goal. Managing of human resources, financial
resources, technological and natural resources are the core activities of a business.
Now, in case of customer relationship management it means

managing of the customers of the company.
In today’s competitive environment, customer is not only the king but the emperor
of the market. Two things a service provider has to keep in mind while performing
business activities:
• Customer’s time is precious.
• Apart from him, there are several other service providers to serve
his customer.
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Because of this, the company cannot afford to loose a single

customer, may it be regular or occasional. Retaining the customer is an essential
part of business today. That is why a healthy relationship should be established
with the customers of the company. In order to serve the customers, the company
should understand all their needs and desires, so that the customer buys the
company’s product over and over again.
The personnel who manages these relationships with the

customers is called customer relationship manager and the process carried out by
the company is called customer relationship management. Like any other manager,
the Customer relationship Manager also has certain set of responsibilities and
goals to be achieved for his organization. For him, the duties include right from
building relationships with the customers to maintaining and enhancing
relationships with the valued customers.
Converting a stranger to a potential buyer and then to a loyal

customer who does not change his loyalty even if there are cost benefits, this task
is undertaken by the customer relationship manager. Essentially he reshapes
business process to meet customer expectations, empower employees to best serve
the customer and determine how to most efficiently and effectively deliver on
those needs.
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APPROACHES TO MARKETING
There are two approaches to marketing for any marketer. They include
• Traditional marketing
• Relationship marketing
1. Traditional Marketing
This is also called as transaction marketing. Herein, the focus is

entirely on making a sale. Only product features are focused. Very little attention
is given to customer service. Because of this the commitment of customer is low,
there is moderate customer contact.
This kind of marketing approach solely aims at customer
satisfaction by showing the customer only functional benefits of the product.
2. Relationship Marketing
This kind of approach is practiced in modern times. Herein, the

focus is much more than selling. It aims at making a customer loyal. This is done
by emphasizing on high customer service. Primary concern is quality.
It does not emphasize on selling more and making more
customers. It stresses on the fact that a customer should b a lifetime client for the
company. Customer retention is the sole aim of relationship marketing.
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Definition of CUSTOMER RELATIONSHIP MANAGEMENT
There are various definitions of customer relationship management stated by many

experts over the years.
Berry defined CRM as relationship marketing is attracting, maintaining and

enhancing customer relationships.
Shani and Chalsani also in 1992 defined relationship marketing (CRM) as “an
integrated effort to maintain and build up a network with the individual consumers
and to continuously strengthen the network for mutual benefits of both the sides,
through interactive, individualized and value added contacts over a long period of
time”.
Peppers and Rogers in 1993 gave a recent technology based approach in which
they have said, “CRM is to focus on an individual or one-to-one relationship with
the customers that integrate database knowledge with long term customer retention
and the growth strategy”.
From the above definitions we can arrive at one suitable definition,

which is “customer relationship management is a comprehensive strategy and the
process of acquiring, retaining and partnering with selective customers to create
superior value for the company and the customer”.
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UNDERSTANDING CUSTOMER RELATIONSHIP MANAGEMENT
In marketing literature, the term customer relationship

management and relationship marketing are used interchangeably. CRM starts
with in dept knowledge of customers, their habits, desires and their needs by
analyzing their cognitive, effective behavior and attributes. CRM applies this
knowledge to develop and design marketing strategies, to cultivate long lasting
mutually beneficial interaction and relationship with the customer.
Every organization should remember that “you are not in a

business to delight customers. You are in a business to be delighted by them”.
CRM is a business strategy that can help organizations drive new

growth, attain operational excellence, and gain competitive agility. The core theme
of all CRM and relationship marketing perspectives is its focus on co-operative
and collaborative relationships between the firm and its customers. CRM is based
on the premise that, by having a better understanding of the customers’ needs and
desires we can keep them longer and sell more to them.
CRM isn’t new; every company needs to do CRM-one way or

another. No matter what the business, every company has to make its product
known to the market and find customers who are willing to buy its products in
order to stay in business. Every company must discover customer needs, market
and sell the products that meet these needs, provide some sort of customer service
and make sure the revenue it generates covers the cost of business plus any profit
margin it tries to achieve.
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Once a business organization selects its target market, it has to

collect customer database and develop customer preference. The relationship
cannot be a one sided approach. It should involve the other side equally with value
sharing proposition. Hence, CRM is “development of lasting strategic alliances
with customers on a value sharing basis. This implies future orientation and a win-
win proposition between the seller and the customer.
Relationship marketing is a philosophy of doing business on

strategic orientation that focuses on keeping and improving current interactions
with the parties concerned rather than acquiring new parties. The philosophy has
an underlying assumption that the customers prefer to have an ongoing
relationship with an organization than to switch continually in search for values. It
is undoubtedly a slow and a continuous approach of an organization to become
market favourite and increase its customer base.
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Hence, CRM cycle can be described as follows:
• Acquiring customers
• Keeping customers
• Growing your customers
• Gaining customer insight
• Interacting with your customers across all touch points
• Building lasting relationships with your customers
• Delivering value to your customers
• Achieving a sustainable competitive advantage
• Growing your business
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These parameters are integrated together to achieve one goal for

organization i.e.:- to establish and manage long term mutually beneficial
relationships with current and prospective customers. Infact successful companies
build their business around their customers. They strive to become fully customer
driven, delivering superior customer value and consistently providing exceptional
customer service.
Tom Peters stated “listening to customers must become everyone’s

business. With most competitors moving ever faster, the race will go to those who
listen and respond intently”.
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CUSTOMERS DEFINE YOUR BUSINESS
No business can exist without customers. Without customers there

is no reason to make any investment in employees, products, office equipments or
technology. That’s why you need to look at your business from the customer’s
perspective. No matter how good a product is or how efficiently an organization
operates, without customers there is neither growth nor profitability.
Customers make their purchasing decision and they bid the price
up or driving it down depending on the value they perceive from a product or
service. It’s the customer who decides which way and when he or she wants to
interact with the company and how he or she wants to buy a product-online, over
the phone, in the store, or through any other channel. It’s the customer’s
perception of everything a company does that creates an image of its brand and
eventually determines its success or failure as a business. Hence, you need to
develop strategies that enable your organization to continuously improve the
ability to win, know and keep your customers.
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Growth strategies International (GSI) performed a statistical analysis of

customer satisfaction data encompassing the findings of over 20,000 customer
surveys conducted in 40 countries by Infoquest.
• A totally satisfied customer contributes 2.6 times as much revenue to the

company.
• A totally satisfied customer contributes 17 times as much revenue as a

somewhat dissatisfied customer.
• The average company loses 20% of its customers every year and the
number is increasing every year.
• It costs up to 10 times to acquire a new customer as it does to keep an

existing one.
• A 5% deduction in customer defections can result 25% to 100% increase in

profits depending on the industry.
• A totally dissatisfied customer decreases revenue at a rate equal to 1.8 times

what a totally satisfied customer contributes to a business.
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HISTORY OF CRM
Looking back at the snapshot history of marketing, we can see the following clear
developments and progression over the last four decades:-
• 1960 – The era of Mass Marketing when Gibbs SR toothpaste began the
first marketing of its kin with its black and white TV campaign.
• 1970 – Saw the beginning of segmentation, direct mail campaigns and early
tele-marketing.
• 1980 – Where Niche Marketing made millionaires of those who were best
at it.
• 1990 - Relationship Marketing. The explosion of telemarketing and

callcentres all set up to develop relationship with customers. The recognition of
the true value of retention and the use of lifetime value as a business case.
In addition to this, a number of key marketing concepts can also be

used to see where CRM has developed from:-
• Satisfaction needs customer orientation.
• The organization needs to be arranged so that all functions
contribute.
• Profit must be the consequence of delighting customers.
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EVOLUTION OF CRM
In recent years however, several factors have contributed to the rapid development
and evolution of CRM. These include: -
1. The growing de-intermediation process in many industries due to the advent of

sophisticated computer and telecommunication technologies that allow producers
to directly interact with end-customers. For example, in many industries such as
airlines, banks insurance, software or household appliances and even consumables,
the de-intermediation process is fast changing the nature of marketing and
consequently making relationship marketing more popular. Databases and direct
marketing tools give them the means to individualize their marketing efforts.
2. Advances in information technology, networking and manufacturing technology

have helped companies to quickly match competition. As a result product quality
and cost are no longer significant competitive advantages.
3. The growth in service economy. Since services are typically produced and
delivered at the same institution, it minimizes the role of the middlemen.
4. Another force driving the adoption of CRM has been the total quality
movement. When companies embraced TQM it became necessary to involve
customers and suppliers in implementing the program at all levels of the value
chain. This needed close working relationships with the customers. Thus several
companies such as Motorola, IBM, General Motors, Xerox, Ford, Toyota, etc
formed partnering relations with suppliers and customers to practice TQM.
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5. Customer expectations are changing almost on a daily basis. Newly Empowered

customers who choose how to communicate with the companies across various
available channels. Also nowadays consumers expect a high degree of
personalization.
6. Emerging real time, interactive channels including e-mail, ATMs and call centre
that must be synchronized with customer’s non-electronic activities. The speed of
business change, requiring flexibility and rapid adoption to technologies.
7. In the current era of hyper competition, marketers are forced to be more

concerned with customer retention and customer loyalty.
8. As several researches have found out retaining customers is less expensive and
more sustainable competitive advantage than acquiring new ones.
9. On the supply side it pays more to develop closer relationships with a few
suppliers than to develop more vendors.
10. In addition several marketers are concerned with keeping customers for life
than making one time sale. There is a greater opportunity for up selling and cross
selling. In a recent study in 1999 it was found that relational intensity increased in
hospitals facing a high degree of competitive intensity
11. The globalization of world marketplace makes it necessary to have global

account management for the customers.
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Following things comes to our mind when we hear of CRM
1. Technology.
2. Call centre.
3. Complaint resolution.
4. Customer data.
5. Making customer happy.
KEY CRM PRINCIPLES
• Differentiate Customers
All customers are not equal; recognize and reward best customers
disproportionately. Understanding each customer becomes particularly important.
And the same customers’ reaction to a cellular company operator may be quite
different as compared to a car dealer. Besides for the same product or the service
not all customers can be treated alike and CRM needs to differentiate between a
high value customer and a low value customer.
What CRM needs to understand while differentiating customers is
 Sensitivities, Tastes, Preferences and Personalities
 Lifestyle and age
 Culture Background and education
 Physical and psychological characteristics
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• Differentiating Offerings
→ Low value customer requiring high value customer offerings

→ Low value customer with potential to become high value in near future
→ High value customer requiring high value service
→ High value customer requiring low value service
• Keeping existing customers
Grading customers from very satisfied to very disappoint should help the
organization in improving its customer satisfaction levels and scores. As the
satisfaction level for each customer improves so shall the customer
retention with the organization.
• Maximizing life time value
Exploit up-selling and cross-selling potential. By identifying life stage and

life event trigger points by customer, marketers can maximize share of
purchase potential. Thus the single adults shall require a new car stereo and
as he grows into a married couple his needs grow into appliances.
• Increase Loyalty
Loyal customers are more profitable. Any company will like its mindshare
status to improve from being a suspect to being an advocate. Company has
to invest in terms of its product and service offerings to its customers. It has
to innovate and meet the very needs of its clients/customers so that they
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remain as advocates on the loyalty curve. Referral sales invariably low cost
high margin sales
OBJECTIVES OF CRM
1. CRM aims at integrating all business strategies that places the customer at
the centre of a business’s consciousness.
2. Aligning of organization towards customers.
3. Integrating your customer touch points.
4. Establishing and managing relationships with customers.
5. Knowing and understanding your customers and potential customers
Before framing and implementing CRM it is very important to

know what your customer expectations are. Be it a small organization or a
business giant, every organization is bound to have a CRM strategy for itself. The
only difference is their level of operation. A satisfied customer always acts as an
unpaid salesman for the company. So, better the organization understands its
customers expectations, the future results are to be expected positively.
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Following mentioned are some of the expectations of the customer when they
carry out transaction with the organization.
1. Overall quality
2. Handling queries
3. Staff friendliness
4. Treat as a valued customer
5. Complaint handling
6. Competence of staff
7. Speed of service
8. Ease of doing business
9. Helpfulness of staff
10. Kept informed
From the above mentioned, it is observed that 7 out of 10

relate to EMOTIONS. So the customers remember:-
(a) Interactions
(b) Specifically how “human” the company was
In mathematical form, a customer remembers only 30%

about the product and its price and rest 70% is determined by treatment during
interactions, which includes sales and marketing is 15%, repair/service takes
30%, installation is 10% and billing accounts for nearly 15%. (Source- bell labs
scientist’s study of 3,00,000 customers)
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DO CUSTOMERS LOOK FOR RELATIONSHIP
The answer is YES. Customers do look for relationship

with business people. They also gain some benefits through the relationship with
the seller. The following are some of the benefits the customers gain:
• RELIABILITY: - Customers want to build relations to find a reliable

source of supply and service.
• TIME: - When customers find reliable seller they need not waste time
searching for various other sellers.
• SEARCH: - The information search costs and energy cost gets minimized.
• EXCHANGE: - A known seller accepts return of defective goods or

executes recovery in the case of service without any difficulty.
• SUPPORT: - Many a time customers seek sellers support in taking

purchase decisions. The advice of a known seller provides greater support to the
customer.
• IN ABSENTIA PURCHASE: - A continuous rapport with the seller

enables the customer to communicate his/ her likes, dislikes or preferences. He
may manage to get the products at home, without personally going out for the
service.
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• CREDIT: - Customers make seek liberal credit without security from a

known seller.
• SOCIAL VALUE: - Consumers are social beings and they look for identity
and recognition in society. When sellers wish them at various social occasions,
they feel very happy and delighted.
In the changing competitive scenario many business concerns

satisfy the values listed above. The imbalance in value to the business and value to
the customers due to relationships still exists. Companies which progress through
value- sharing relationships are likely to achieve better results. The spread of
information and the educational campaigns of many organizations have increased
consumer expectations manifold.
It is not only the market share but the mind share and heart share
that need to be captured. For this reason only, organizations should adopt
relationship marketing with a strong process to achieve the above mentioned
purpose.
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CRM FORMATION PROCESS
In the formation process, three important decision areas relate to defining the
purpose (or objectives) of engaging in CRM, selecting parties (or customer
partners) for appropriate CRM programs and developing programs (or relational
activity schemes) for relationship engagement with the customer.
CRM PURPOSE
The overall purpose of CRM is to improve marketing productivity

and enhance value for parties in involved in the relationship. By seeking and
achieving operational goals, such as lower distribution costs, streamlining order
processing and inventory management, reducing the burden of excessive customer
acquisition cost, and through customer retention economics, firms could achieve
greater marketing efficiencies. They can enhance marketing effectiveness by
carefully selecting, customers for its various programs, individualizing and
personalizing their market offerings to anticipate and serve the emerging needs of
individual customer, building customer loyalty and commitment, partnering to
enter new markets and develop new products, and redefining the competitive
playing field for their company.
Thus, stating the objectives and defining the purpose of CRM in a

company helps clarify the nature of CRM programs and activities that ought to be
performed by the partners. Defining the purpose would also help in identifying
suitable relationship partners who have necessary expectations and capabilities to
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fulfill mutual goals. It will further help in evaluating CRM performance by
comparing results achieved against objectives.
These objectives could be specified as financial goals, marketing

goals, strategic goals, operational goals, and general goals.
Customers are motivated to engage in relational behavior because of psychological
and sociological benefits associated with reduction in choice decisions.
CRM PROGRAMS
A careful review of literature and observation of corporate

practices suggest that there are three types of CRM programs: continuity
marketing; one-to-one marketing; and, partnering programs. These take different
forms depending on whether they are meant for end consumers, distributor
consumers or business-to-business consumers.
(A) CONTINUITY MARKETING
Take the shape of membership and loyalty card programs

where customers are often rewarded for their member and loyalty relationships
with the marketers. The basic premise of continuity marketing programs is to
retain customers and increase loyalty through long-term special services that has a
potential to increase mutual value through learning about each other.
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(B) ONE-TO-ONE MARKETING
This relates to meeting and satisfying each customer’s need

uniquely and individually. In the mass markets individualized information on
customers is now possible at low costs due to the rapid development in the
information technology and due to availability of scalable data warehouses and
data mining products. By using online information and databases on individual
customer interactions, marketers aim to fulfill the unique needs of each mass-
market customer.
Information on individual customers is utilized to develop frequency

marketing, interactive marketing, and after marketing programs in order to
develop relationship with high-yielding customers. In the context of business-to-
business markets, individual marketing has been in place of quite sometime.
Known as Key Account Management Program, here marketers appoint customer
teams to husband the company resources according to individual customer needs.
(C) PARTNERING PROGRAMS
The third type of CRM programs is partnering relationships between

customer and marketers to serve end user needs. In the mass markets, two types of
partnering programs are most common: co-branding and partnering.
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ORGANIZING FOR CRM
How do you know that your business requires CRM?

It is very easy for a business to get caught in the latest ‘customer trap’ when it is
being driven by the information technology (IT) market.
Every business does require CRM. The question is to what
level. Many businesses are pushed by the current trend to change their business
strategy, especially around CRM. There are basically three trends that affect a
business. They are as follows:-
• CONSUMER
The customer is an ever-changing image; to be really successful
with CRM you must recognize the customer trends that are affecting the business.
If a business does not understand a customer profile and the changes that have
occurred then it is not possible to provide true customer relationship management.
• PRODUCTS
It is the business providing the products that meet the
changing customer trends. Products need to be reviewed constantly perhaps
enhanced or even removed. Supermarkets are a perfect profile to look at for
viewing ‘product trends’, they constantly add and remove products and they
constantly view customer buying profiles and set out the pattern of the store to
meet the strongest buying trend.
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• TECHNOLOGY
Ensure that the business is ready to install the new
technologies, is the customer data up to it, or is it time to start again? Do you need
to review every technology being used or just one area. Will it assist the business,
is it going to grow with the business requirements or is the technology just another
‘trend’?
Relationship management should not be an alternative to
existing functions/technology; it could be a logical extension to enhance those in
existence, though it could radically change some of the operational process.
Does CRM really matter? Is your business and customer ready for it?
Whatever the business activity is, all companies have to ask themselves is CRM
the real factor for their company to succeed. Some customers do not need long-
term relationship with their suppliers; therefore only minimal information is
required from that customer. That however is still a form of CRM. Other
companies have high quality and high value customers that they need to know
information about, they need to provide exceptional service, the ‘pedigree’ of
CRM.
Whatever the business is, if it has customer it has to ask, does customer
relationship management matter? What does it mean to them in business terms? At
what cost? What is the overall loss if not adhered to?
CRM: Yes it does really matter – the strategy needs to last, be constantly reviewed
and can evolve over time.
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CRM GOVERNANCE PROCES
• Greater the scope of CRM program and associated tasks, and the
more complex is the composition of the relationship management team; the
more critical is the role specification decision for the partnering firms.
• It is essential to establish intra-company communication particularly

among all concerned individuals and corporate functions that directly play a
role in managing the relationship with a specific customer or customer
group.
• With mass-market customers frequent face-to-face interactions will

be uneconomical. Thus marketers should create common bonds through
symbolic relationships, endorsements, affinity groups and the membership
benefits or by creating online communities.
• Involving customers in the planning process would ensure their

support in plan implementation and achievement of planned goals. All
customers are not willing to participate in the planning process nor is it
possible to involve all of them for relationship marketing programs for the
mass markets.
• Human resources decisions are also important in creating the right

organization climate for managing relationship marketing. Training
employees to interact with customers, to work in teams, and manage
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relationship expectations are important. So is the issue of creating the right
motivation through incentives and rewards.
CRM IMPEMENTATION ISSUES
One of the most interesting aspects of CRM development is the

multitude of customer interfaces that a company has to manage in today’s context.
Until recently, a company’s direct interface with the customers, if any was
primarily through sales people or service agents. In today’s environment most
companies interface with their customers through a variety of channels including
sales people, service personnel, call centers, Internet websites, marketing
departments, fulfillment houses, market and business development agents, etc. For
large customers it also includes cross-functional teams that may include personnel
from various functional departments. While each of these units could operate
independently, they still need to share information about individual customers and
their interactions with the company on a real time basis.
For example, a customer who just placed an order on the

Internet and subsequently calls the call centre for order verification expects the
call centre staff to know the details of his or her order history. Similarly a
customer approached by a sales person unaware that she has recently complained
about dissatisfactory customer service, is not likely to be treated kindly by the
customer. Therefore effective CRM requires a front-line information system that
shares relevant customer information across all interface units. Relational
databases, data warehousing and data mining tools are thus valuable for CRM
systems and solution.
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The challenge is to develop and integrated CRM platform that

collects relevant data input at each customer interface and simultaneously provides
knowledge output about the strategy and tactics suitable to win customer loyalty
and support. If a call centre personnel cannot identify or differentiate a high value
customer and does not know what to up-sell or cross sell to him then it would be a
tremendous loss of opportunity for the company. Although most CRM software
solutions based on relational databases are helping share customer information,
they still do not provide knowledge output to the front line personnel. CRM
solutions platform needs to be based on interactive technology and processes. It
should assist the company in developing and enhancing customer interactions and
one-to-one marketing through the help of suitable intelligent agents that help
develop front-line relationship with customers.
Such a system would identify appropriate data inputs at each

customer interaction site and use analytical platforms to generate appropriate
knowledge output for front-line staff during customer interactions.
In addition, implementation tools to support interactive solutions

for customer profitability analysis, customer segmentation, demand generation,
account planning, opportunity management, contact management, integrated
marketing communication, customer care strategies, customer problem solving,
virtual team management of large global accounts, and measuring CRM
performance would be the next level of solution sought by most enterprises.
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CUSTOMER SELECTIVITY
An important facet of CRM is “customer selectivity”. As several

research studies have shown not all customers are equally profitable (Infact in
some cases 80% of the sales come through 20% of the customers). The company
must therefore be selective and tailor its program and marketing efforts by
segmenting and selecting appropriate customers for individual marketing
programs. In some cases, it could even lead to “outsourcing of some customers” so
that a company better utilize its resources on those customers it can serve better
and create mutual value.
However, the objective of a company is not to really prune its

customer base but to identify appropriate customer programs and methods that
would be profitable and create value for the firm and the customer
CUSTOMER LIFE CYCLE
Customer life cycle is a term used to describe the progression of

steps a customer goes through when considering, purchasing, using, and
maintaining loyalty to a product or service. Marketing analysts Jim Sterne and
Matt Cutler have developed a matrix that breaks the customer life cycle into five
distinct steps: reach, acquisition, conversion, retention, and loyalty.
In layman's terms, this means getting a potential customer's

attention, teaching them what you have to offer, turning them into a paying
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customer, and then keeping them as a loyal customer whose satisfaction with the
product or service urges other customers to join the cycle.
The customer life cycle is often depicted by an ellipse, representing

the fact that customer retention truly is a cycle and the goal of effective CRM is to
get the customer to move through the cycle again and again.
Following is the example of a particular customer who does business

with the bank and remains loyal irrespective of the existing competition. Here, the
customer life cycle does not break because the bank (organization) provides the
customer with customized services and creates a win-win proposition for both the
parties.
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CUSTOMER VALUE PROPOSITION.
In the field of marketing, a customer value proposition consists of the sum total of
benefits a customer is promised to receive in return for the customer's associated
payment (or other value transfer).
In simple words: value proposition = what the customer gets for what the
customer pays.
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5 STAGE CUSTOMER DEVELOPMENT CYCLE
1st step – Awareness

2nd step – Comparison
3rd step – Transaction
4th step – Reinforcement
5th step – Advocacy
Now lets see these in detail.
Awareness- This is the first stage. Here the customer gets information about the
product from various sources. These includes from media, websites, medical
representatives, references, magazines, newspapers etc.
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Comparison – In this stage, the customer compares the new product with the
product of competitor. By giving what the customer expects, benefits over
competitors and credibility are the key to success at the comparison stage.
Essentially, the more information you provide, the higher the likelihood you will
make the sale.
Transaction – This stage is the beginning of the relationship. Price becomes a

critical aspect for the customer. Unless you are giving products away for little or
no profit, the transaction stage will only take place if you have played your cards
right during the awareness and comparison stages. The transaction stage should be
viewed as the beginning, not the end, of the relationship.
Reinforcement -The reinforcement stage is where you add value to your

customers' purchases by showing them how to maximize the value and pleasure
their purchases can provide. The reinforcement stage presents you with an
opportunity to position yourself apart from your competition by thanking your
customers for their purchase and paving the way for future purchases. It's where
you begin the process of creating word-of-mouth ambassadors for your firm out of
satisfied customers.
Advocacy – This is the final stage of customer development cycle. This is the
stage where the customer becomes the company’s promoter and gives
recommendations to the aspirers of the product. It is considered to be the most
effective form of advertising ever devised.
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SUCCESSFUL APPROACHES TO CRM
1. CUSTOMERS AS FRIENDS
In the service business, personal relationships and warmth are

critical to success. A small automotive repair business in Mexico has blazed a new
trail in service leadership by treating customers as “friends”. At servicious
automatrices echegary (SAE), proprietor Alfredo Gomez impresses upon his
employees, through personal example that customers must be treated as friends.
The following are the guiding principles for this stated concept:
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• Do not make abnormal and unfair profits out of friends. SAE basis
its repair pricing on labour costs plus a 40% margin. As most of its
customers are themselves automotive experts, there is no point in even
trying to hoodwink them.
• Do not make a margin on a friends cause. The discounts offered by

suppliers should be passed on to friends.
• Do whatever is possible to help a friend. It may mean working

overnight or even on weekends. Remember, a friend in need is a friend
indeed.
• Try to share your friend’s concerns. Learn more about his vehicle,
what is causing him trouble and keep him cautioned on what could cause a
problem in the future. Take a ride with him in his vehicle to understand his
concern fully.
• Drive with him when he comes to collect the car, and ensure that he
is fully satisfied with the repair. Do not compromise on this.
• Friends need to be in touch. Maintain a database and call your

friends when it is time for routine maintenance.
• Friends should spend time together. So make a party of your job.

Allow your friends to participate in what you are doing and how you are
doing it. Share with them whatever you do and plan to do. Encourage them
to help you fix their cars and maintain them.
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• Friends will give you a chance for they know that no one is perfect.
Even if you make a mistake they may be willing to overlook it. Just let
them know that you are doing your best. Track your performance and keep
improving so as to help your friends better. Get back to school! (To learn
new advances and update on technology).
2. CUSTOMERS AS GUESTS
Bruce Laval, a former senior vice president at Disney,

coined a term “guestology” to focus everyone’s attention on the importance of
guest behaviors and expectations. Guestology turns traditional management
thinking upside down. Instead of focusing on organizational design, managerial
hierarchy and production system to maximize organizational efficiency, it forces
the firm to look systematically at the customer experience from the guest point of
view. Guestology involves systematically searching for the key factors that
determine quality and value in the eye of guest, analyzing them, measuring their
impact on the customer experience, testing various strategies that might improve
the quality of experience and then providing a combination of factors or elements
that attracts loyal customers. Only after developing this total guest orientation, can
the rest of the organizational issues be addressed. The goal is to create and sustain
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an expertise that can respond to the customer’s needs and expectations and still
make a profit.
From their study of customer preferences, Disney’s

guestologists learnt that an important reason for customer satisfaction with its
theme parks is its cleanliness. Disney therefore stresses on keeping the parks
clean, and this has become one of its greatest assets. Keeping a theme park clean is
a big job. So the Disney organization encourages its customers to help out by
disposing of their own trash. In studying customer behaviour Disney learnt two
things about trash disposal.
First, if caste member (Disney term for park employees)

constantly pick up even the smallest bins of trash, park visitors would emulate,
rather than litter. Caste members practice and respect cleanliness, and so they are
role models for the customers. Second, if trash cans are convenient, easily seen
and not very far apart, most people will throw their own trash into them. Disney
locates its trash cans 25 to 27 paces apart. Understanding how customers respond
to environmental cues and using that knowledge to help maintain a high standard
of cleanliness is guestology in practicality.
ROLE OF CRM IN SCM
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In the context of SCM, where alliances and partnerships are keys to
success, CRM plays an important role in building long-term relationships. Apart
from the end-users, it involves internal employees, channel members and other
external entities such as advertising agencies and consulting organizations. The
success of relationships depends upon sharing of savings from the supply chain,
which may be reinvested to further enhance its efficiency, and sustain the
competitive advantage. The supply chain of tomorrow will look like a virtual
organization, seamlessly integrated through sharing data and savings as well. The
bonding between partners will be closely held by CRM practices.
CUSTOMER SATISFACTION
Customer satisfaction, a business term, is a measure of how

products and services supplied by a company meet or surpass customer
expectation. It is seen as a key performance indicator within business. In a
competitive marketplace where businesses compete for customers, customer
satisfaction is seen as a key differentiator and increasingly has become a key
element of business strategy.
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Measuring Customer Satisfaction
Organizations are increasingly interested in retaining

existing customers while targeting non-customers; measuring customer
satisfaction provides an indication of how successful the organization is at
providing products and/or services to the marketplace.
Customer satisfaction is an ambiguous and abstract concept

and the actual manifestation of the state of satisfaction will vary from person to
person and product/service to product/service. The state of satisfaction depends on
40
a number of both psychological and physical variables which correlate with
satisfaction behaviors such as return and recommend rate. The level of satisfaction
can also vary depending on other options the customer may have and other
products against which the customer can compare the organization's products.
Because satisfaction is basically a psychological state, care

should be taken in the effort of quantitative measurement, although a large
quantity of research in this area has recently been developed.
If expressed as a calculation, customer satisfaction might look something like

this:
Your Performance
Customer Satisfaction =
Customer Expectations
Of course, customer satisfaction is influenced by a complex

interplay of factors; it's hardly as simple as plugging numbers into a formula and
calculating the result. Nevertheless, this calculation serves as a reminder that your
customers' level of satisfaction can be affected by changes in either their
expectations or your performance. That means you have to pay attention to both.
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And that's where things can get tricky, because how you
perceive your performance may differ from how your customers perceive it. In
fact, discrepancies between your perceptions and theirs would not be at all
unusual; I routinely encounter such discrepancies when I interview a company's
service staff as well as its customers. So, even if you're working yourself to the
proverbial bone, if customers view you as unresponsive, then you are
unresponsive in their eyes.
CUSTOMER RETENTION
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The trend in marketing towards building relationships with
customers continues to grow and marketers have become increasingly interested in
retaining customers over the long run. Marketing analysts have identified
satisfaction as a key determinant in a consumer’s decision making, relating to
keeping or dropping a given product or service relationship.
According to Oliver, satisfaction is the consumer’s fulfillment

response. It is a judgement that a product or service feature, or the product or
service itself, provided a pleasurable level of consumption related fulfillment,
including level of under or over fulfillment.
Companies do spend a lot of money through different media to

attract new customers to the business. Attracting new customers requires
substantial skills and effort. However, these skillful efforts will be of little use if
the company suffers from high customer churn. Unless organizations pursue
customer retention strategies, the problem cannot be solved. Every company needs
to define and measure its retention rate. Each company must also distinguish the
reasons for loosing customers and identify those causes that can be managed
better. It is important to know how much loss the company makes when it looses
customers.
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The key to customer retention is to offer continuous satisfaction to
customers.
According to Philip Kotler, a highly satisfied customer
• Stays loyal and longer.

• Buys more as the company introduces new products and upgrades
existing products.
• Talks favourably about the company and its products.
• Pays less attention to competing brands and advertising and is less
sensitive to price.
• Offers product or service ideas to the company.
• Costs less to serve than making new customers because transactions
take place in a routine manner.
It is necessary, therefore, to measure customer satisfaction

regularly by surveying the customers to know whether they are highly satisfied,
indifferent, dissatisfied or highly dissatisfied. Customer complaints are one of the
important sources to track the level of customer satisfaction. Speedy recovery of
complaints results in a stronger customer base. In the words of Albrecht and
Zemke, between 54% and 70% of the customers who register a complaint will do
business again with the organization if their complaint is resolved.
The figure goes up to a staggering 95% if the customer feels that

the complaint was resolved quickly. Customers who had complained to an
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organization and have had their complaints satisfactorily resolved, usually tell an
average of 5 people about the good treatment they receive.
The key to customer retention is relationship marketing. The

service company should develop overtime the means of monitoring and evaluating
the quality of relationship. There are 2 basic approaches that can be pursued to
monitor the relationship: relationship survey and customer database.
Current customers should be surveyed in order to understand

their value perception of the services, the quality and satisfaction. Customer
database in relation to names addresses, phone numbers, demography, lifestyle,
usage pattern, interest, opinions and so on forms the basic foundation for
designing customer retention strategies.
Berry and Parshuraman have developed a framework which

suggests that retention marketing can occur at three different levels. Each
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successive level of strategy results in ties that bind the customer a little closer to
the firm.
Following are the three levels of retention strategy:-
o Level one: Financial Bonds.
o Level two: Financial and Social Bonds.
o Level three: Financial, Social and structural bonds.
1. Financial bonds:-
At this level, customers are offered financial incentives either for
greater volume purchases or for continuation of relationship for a long time.
2. Financial and social bonds:-

At this level, the firm intends to develop long-term relationships
with customers through social as well as financial bonds. The customers are
identified by name and services are customized to fit individual needs. Marketers
are looking for new ways to keep in touch with their customers by providing a
personal touch and building informal relationships.
3. Financial, social and structural bonds:-
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The strategy is to develop structural bonds along with financial and
social bonds. Structural bonds are created by providing highly customized service
to the clients. Specific customer needs are brought into organizational system to
design new ways and to improve the offerings to the clients.
In service business, sometimes there is a possibility of things going

wrong. Under such circumstances, a recovery strategy needs to be designed for
retaining customers. Effective recovery is essential to save and even build
relationships. Therefore, service firms should track and anticipate recovery
opportunities.
ECRM
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In simplest terms e-CRM provides companies with means to conduct

interactive, personalized and relevant communications with customer across both
electronic and traditional channels. It utilizes a complete view of the customer to
make decisions about messaging, offers and channel delivery. It synchronizes
communication across otherwise disjoint-customer facing systems.
It adheres to permission based practices, respecting individual’s

preferences regarding how and whether they wish to communicate with you and it
focuses on understanding how the economics of customer relationship affect the
business.
While the definition is simple, achieving e-CRM itself is hard. For

business organizations evolving to e-CRM requires process and organizational
changes, a suite of integrated applications and a non- trivial technical architecture
to support both the e-CRM process and the enterprise applications that automate
the process.
WHY EMPLOYEE E-CRM
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Companies need to take firm initiatives on the E-CRM frontier to:
• Optimize the value of interactive relationships.

• Enable the business to extend its personalized reach.
• Leverage customer information for more effective E-marketing and
E-business.
• Focus the businesses on improving customer relationships and
earning a large market share through consistent measurement and
assessment.
THE SIX E’S OF E-CRM
The ‘e’ in e-CRM not only stands for electronic but also stands for
many other connotations viz:
1. ELECTRONIC CHANNELS:
New electronic channels such as the web and personalized e-
messaging have become the medium for fast, interactive and economic
communication, challenging companies to keep pace with this increased velocity.
2. ENTEPRISE:
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Through e-CRM a company gains the means to touch and
shape a customers experience through sales, services and corner offices whose
occupants need to understand and assess customer behaviour.
3. EMPOWERMENT:
E-CRM strategies must be structured to accommodate
consumers who now have the power to decide when and how to communicate
with the company.
4. ECONOMICS:
An e-CRM strategy ideally should concentrate on customer
economics, which drives smart asset allocation decisions, directing efforts at
individuals likely to provide the greatest return on customer communication
initiatives.
5. EVALUATION:
Understanding customer economics relies on the companies’
ability to attribute customer behaviour to market programs, evaluate customer
interactions etc.
6. EXTERNAL INFORMATION:
The e-CRM should be able to gain and leverage information
fro such sources as third party information networks and web page profile
application.
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KEY E-CRM FEATURES
An e-CRM solution must possess certain key characteristics. It must be:
• It must be driven by a data warehouse.

• Focused on consistent metrics to assess computer actions across channels.
• Built to accommodate new market dynamics that places the customer in
control.
• The loopholes in traditional CRM can be outlined.
• The CRM offering remains channel centric.
• Customer centric matrix is non consistent.
• Contemporary customer facing systems rarely interact with each other.
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10 WAYS TO AVOID CRM PITTFALLS
Despite the hype surrounding CRM, a number of reports

suggest that the company’s are dissatisfied with their CRM implementations. So is
this the beginning of CRM or the end of CRM. Not so fast.
Decision makers must identify a clear corporate strategy

before investing millions of dollars in the CRM project. The following list
determines the top ten strategies for avoiding the common pitfalls in CRM.
1. CRM software should mould to your company’s best practices rather

than forcing you to use the best practices of the CRM vendor.
2. One should understand their own business processes before buying

CRM software. The CRM vendor should be able to help, identify and align
these business processes with CRM technology.
3. No CRM vendor excels in all areas. If your main goal is to build a

customer contact centre, do not pick a vendor that specializes in sales force
automation or marketing automation.
4. Given that any CRM vendor only provides 20% of the total CRM
solution, examine how easy or difficult it will be to integrate the vendor’s
product into your company’s legacy and new systems.
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5. CRM needs are inheritantly fluid and will change as organizations
evolve. CRM solutions should be able to support these changes without
massive professional service charges.
6. Any CRM project that takes more than 90 days to implement runs
the risk of failure.
7. Total cost of ownership over 5 years must include the whole CRM
strategy not just an individual peace of software. If you don’t factor in these
costs you will be unable to measure true ROI.
8. One has to make sure that the CRM vendor is financially stable and
can weather an economic downturn.
9. Beware of jumping on the latest technology bandwagon.
10. CRM technology is useless if the employees are unwilling or untrained

to use the CRM project. Gain internal support by communicating
the benefits of CRM technology to all parties and provide
through product training.
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From the above diagram we can come to know weather the CRM
strategy of the organization is a success or a failure. A fact which should be taken
into consideration is that only 10% of the CRM is executed properly.
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CASE 1: MARUTI UDYOG LTD
I visited Maruti Udyog ltd. On 22nd September, 2007 at Delhi. I

got an appointment of Mr.Shirish Mathur, a team leader in CRM department.
Within one hour of conversation, I got the following answers to the questions
asked:
1. What is your understanding of CRM?

Ans: CRM, according to maruti consists of two approaches:
(a) Building customer loyalty
(b) Making profitable relationships
For building customer loyalty the company arranges various field

events like treasure hunts, customer meets and corporate events
• Treasure hunts:
Treasure hunt is not a race against time i.e. it has nothing to do
with the speed of the vehicle. It, rather judges the performance of the vehicle.
Six check points are given in terms of a riddle and the participant
has to solve it and locate the check point at a particular city and get a stamp at the
check point and then move to the next. The race is about who travels the shortest
distance and in the speed limit of the city. An ideal speed is fixed by the company
and the shortest distance is noted. Whoever comes nearest to these readings, wins.
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By this, we keep a check whether vehicles are performing up to

the mark or not. Here the customers are also given the feedback form and are
asked to fill it. At the end of the event the flaws are detected by analyzing these
feedbacks and later remove. After removal of the flaws in the product and the
service related to it, the customers are informed about the same. Hence, this
process ensures customer loyalty.
• Customer meets:
Every Sunday in each dealership of maruti, customer meets are
held. The customers are asked to talk about the problems they are facing in the
vehicles, during the sales process and in the after sales service. These flaws are
deleted and the customers are informed about it. This again ensures customer
loyalty is achieved.
• Corporate events:
Under corporate events, the people from the company and/or
dealership gets together and they arrange a sales promotion camp or a free check
up camp in any particular company. By this maruti ensures that the employees of
that particular company are benefited. In this way, they build customer loyalty.
(b) Making profitable relationships:

This means making relationships with the customers to improve
the quality of the product and the quality of service by involving the customers
in decision making through discussions, holding customer meets and
discussing their problems.
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Maruti builds the relationships with the following tools
• Call center
• Magazine called gateway
• Loyalty card system
• Special schemes
2. What are the tools and processes for practicing CRM?

Ans: The tools and the processes are customer meets, treasure hunts, corporate
events. Call centers and others which are mentioned above.
3. In what way is CRM practiced differently from other car manufacturers?

Ans: There are two ways that are unique at maruti
(a) Finance and insurance schemes:
Herein, these schemes are more customer friendly than
offered by other car manufacturers.
(b) Database marketing:

Maruti has highest product range in case of cars. So they use
database marketing. This means that they trace a person who already has
purchased maruti car and the car is 3-4 years old. Then the company calls the
customer and asks to upgrade the model. The company offers him the best deal
so that he purchases maruti again.
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4. As cars are no more a lifetime investment and companies give cars as perks
and opportunity to change it in 3-4 years. How do you ensure that they consider
Maruti, in respect to CRM?
Ans: Maruti calls its customers after 3-4 years of their purchase. We give them
an offer to upgrade the model of their car. They also come up with special
schemes like if you deal with maruti then they sell the car on behalf of customer.
They also provide special loyalty schemes and special bonus schemes under which
they provide discount on bulk purchases.
5. In what way are other departments contributing to CRM?

Ans: Sales department helps to target right customer. Production
department helps in making the product according to the needs of the customer.
HR department helps in organizing various training and development programs for
the executives.
Moreover, they also provide some incentives to them for handling the
customers in proper manner. The Finance department comes up with the various
financial schemes, special bonus schemes, etc for the benefit of the customer. Due
to this, customer loyalty is ensured.
Marketing department has come up with a special loyalty card scheme,

special corporate scheme, etc. all these efforts by different departments stated
above help in managing relationships with the customer.
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6. Your cars are exported to various countries. How do you manage

relationships with the customers there? Is there any difference in the tools,
processes and tactics used?
Ans: There is a separate team which handles all the matters related to
exports. The financial schemes, the bonus schemes are specially designed for the
respective countries. Usually the tools and processes are the same. But some tools
need to be changed as per the countries. For instance the tool of 24-hour call
center is used in India but it cannot be used in rest of the countries. So, it has been
changed.
7. Does technology help in practicing CRM?

Ans: The base of practicing CRM is the technology itself. All workshops are
connected with the main server and any complaint or problem given by the
customers is registered in the server. So that it gets solved immediately. Call
center mostly helps in tracking customers.
The problems of the customers are solved immediately with the

help of call center. Moreover, if the car of the customer breaks down in the middle
of the road then they can call the toll free number and get the help. Because of
this, the customers stick with the company and customer loyalty is ensured.
8. Are their any differences in the tools and processes of CRM earlier and
now?
Ans: Post 1999, when Maruti launched its toll free number, the speed of
operations was increased. Earlier the managers and executives used to target the
customer and now the server itself identifies which customer to target for the
upper model. Precisely, customer selectivity is done by the server itself.
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9. Are all employees trained towards CRM?

Ans: Yes, definitely. All our employees are trained towards CRM as
managing relationships with the customers is an integral part of maruti. Also, with
the increasing threat of competition, training to the employees for CRM has
become inevitable.
Production department employees are specially trained to develop

automobiles according to customers needs. Similarly, Sales department is trained
to build one-to-one relationships with the customer.
Customer relationship managers in every dealership are trained to

conduct customer needs every Sunday so that the problems faced by the customer
in the product and related service can be identified and solved immediately.
10. How is CRM helping you in retaining and increasing the market share?
Ans: Continuous market analysis is done in order to take care of customers.
Maruti has excellent after sales service. This ensures that the customers come back
to maruti again. All complaints and queries of customers are solved immediately.
The sales executives are specially trained to build relationships with customers.
This helps in building one-to-one relationship with the customer. Monthly training
programs are conducted to train executives specifically for teaching how to build
personalized relationships and give customized services.
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CASE 2 –ICICI BANK LTD.
The second company I visited was ICICI Bank Ltd. On 7th September, 2007.
Here, I visited Ms.Anjali Tolani who is deputy customer relationship manager at
the call center of ICICI Bank at Andheri, Mumbai.
Within an hour of interaction, I got the following answers to the questions asked:

ANS: CRM, according to ICICI consists of following approaches:
(a) Getting personalized information on customers.
(b) What is the value of the relationship?
(c) Customized offerings to the customers
(d) Converting a prospective customer into a true customer.
Now, we shall see each approach in detail
(a) Getting personalized information on customers.
First, the bank collects all the information about the

customers for processing. ICICI bank has mainly 4 service offerings viz: loan
account, saving account, current account and fixed deposits. Moreover, the bank
has many customers in each category. So, they collect the data on one server and
thus the company gets the personalized information on each customer by asking
them to fill the information in customer application form.
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(b) What is the value of the relationship?
After the collection of the personalized information on

every customer, the department checks out the value of the relationship with each
and every customer. Later, they decide how to approach the customer for knowing
what his needs and wants are? After this is done, the company offers him the
customized product.
(c) Customized offerings to the customer.
The step which comes after deciding the value of the

customer is that the company offers the person the customized product. Moreover,
they also practice a concept called cross-selling over here. Cross-selling refers to
offering another product from the service offering of the bank to the customer
which he has not gone for. Example: If a customer has a saving account with the
bank then they offer him a loan account.
(c) Converting a prospective customer into a true customer.
The last approach of CRM according to ICICI bank Ltd is

that they try to convert the prospective customer into a true customer. Right from
the moment the inquiry comes, they follow-up the customer and then make him to
come to the bank occasionally and then regularly.
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2. What are the tools and the processes for delivering CRM?
ANS: The tools and the processes are as follows-
(a) Customer application form
(b) Centralized software where the whole data is collected
(c) Wide range of offering
(d) Cross-selling and
(e) Feedback forms
(a) Customer application forms:-
Bank collects all the data from customer application form and gets
the personalized information to know which product to offer to which customer.
This process helps in collecting the data and knowing what the customer wants.
(b) Centralized software where the whole data is collected:-
The data collected through customer application forms is available at

one server and can be accessed anytime, anywhere. So, this helps in the further
process of customized offerings and cross-selling.
(c) Wide range of offering:-
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After collecting the data from the customer, team decides what product to
offer to which customer. Incase the bank recognizes you as a valuable customer
then it offers a more customized service.
(d) Cross-selling:-
It refers to offering another product from the service offering of the

bank to the customer which he has not gone for. Example: if a customer has
savings account with the bank then they offer him a loan account. This is called
cross-selling.
This depends on the value of the customer to the bank. Cross-selling is

not offered to every customer. It depends on how loyal the customer is to the bank.
The more business he gives us, the more are his chances of being special services
offered.
(e) Feedback forms:-
The bank distributes feedback forms at all its branches. The customer
feedbacks on the service, technology used, employee behavior and promptness in
solving customer’s problems, are taken and they are analyzed.
3. In what way is CRM of ICICI different from other banks?
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ANS: Most banks have their own databases but because of the huge
technological investments done by ICICI the databases in all the branches are
integrated, which means they can be accessed from anywhere and at anytime.
ICICI Bank has tied up with Terradata Company for making their software and is
the only bank doing this.
The difference can be known through matching tool parameter. This

refers to, on the server of ICICI sum standards are set in terms of value of the
customer and whenever the customer reaches the set standard, the server
automatically informs the department to offer him another product.
4. How is CRM helping you in retaining and increasing the market share?
ANS: CRM helps to know the needs and wants of the customer. So, on the
basis of this company can decide which product to offer to which customer.
Moreover, under CRM, we have identified that cross-selling is the best

weapon. It enhances the relationship value with the customer. This satisfies the
customer and that is the reason why the customer keeps on coming again and
again to the company. This helps in retaining the market share.
Now, the satisfied customers help in the word-of-mouth promotion of

the bank, which eventually increases our market share.
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5. Does technology helps in practicing CRM?
ANS: Yes definitely. The whole base for practicing CRM is technology. It
helps in collecting the data, processing the data and then according to the available
information offering different products to the customer through emails, call centre,
pop ups during the transaction in the ATM.
EMPOWERMENT AND CRM
In serving the customer with full dedication, it is very important for employees to
be in right frame of mind. And this will be possible only when the employees are
given freedom at work to do things as there way keeping in mind the
organizational goals.
For any customer, it is the front line personnel who embody the
organization. So, employees are the walking billboards of the organization. Hence
while delivering services to the customers and ensuring them that their perceived
expectations and given services are equal, empowering them is very essential. This
helps in delivery of efficient CRM.
Employee Empowerment and CRM
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The Case of Hewlett-Packard India
Relationship between Employee Satisfaction, Customer Satisfaction & Market

Share
Initiatives for Employee satisfaction

A demotivated, unenthusiastic and unhappy employee will never care for the
customers. Also organizations willing to spend money when they are doing well
should spend on employees more rather than less when things get bad. An
employee satisfaction survey should be carried out on a regular basis.
Hewlett Packard (HP) Case
HP sells its products through its channels. Whenever the customer purchases a
product, and there is an issue to be resolved, the point of contact is the front line
team. It handles the usage-related, the application related and the real product
related issues. The backend team handles the upgradation issues. The partners
provide the hardware support. The sales and services are provided by DPSP’s and
the ASP’s only. Typically in a month, the total number of customer calls logged in
at HP is 21,000 out of which 4600 are through web support, 1270 e-mails and
15,000 telephone calls. They use automated call distribution software, which also
enables to track the particular history of the customer. The service providers are
assessed continuously. It is a challenge to motivate engineers who are the
employees of the service providers and are not HP employees. The
engineers/service providers’ performance is monitored on:
• Turnaround Time
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• Number of parts requested per call
(Multiple Part consumption)
• Closing the call
• Customer satisfaction
• Repair rate
• Effective handling of customer escalations
HP has allocated points for each of these parameters for partner

performance measurement. In case the partner performance falls below the desired
level of points, then there would be deduction in the reimbursements of that
reseller. However if he exceeds the given point scale then he qualifies for
additional reimbursements which are offered as rewards.
HP contacts all customers, who are not happy with the service, and
through the partners it is attempted that certain steps are taken so that the customer
is happy. The training program for the partner is also regularly revived.
There is also a Reward 1000 plus program where there are points
awarded. There are points for various aspects such as training, quiz bulletin,
customer feedback, customer service, re-repair rate. The top contributors among
the resellers are identified and are sent for training or entertainment apart from
monetary incentives.
So at HP, there is synchronization of the employee satisfaction and customer
satisfaction process to ensure a higher market share.
CONCLUSION
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CRM is emerging as the central theme of corporate strategy. It is no more an

option to accept customer oriented philosophy for business. Essentially, customer
relationship assumes greater significance since customer participation is vital in
the production process and customer is the evaluator of service quality. It is also
evident that handling customer relationship is not only the responsibility of
marketing department or sales department, rather it is the responsibility of all the
people working right from lower level to management level.
Approach towards customer relationship management should be an

integrated one and continuous. This helps a business to gain customer loyalty at
faster pace and have an edge over other competitors. Philosophies like ‘friend
approach’ and ‘guest approach’ are of immense help for proper implementation of
CRM.
Customer Relationship Management is not a mere tool for improving the

relationships whenever a dip in the reputation of a company is noticed. Rather, it is
a method of securing long-term commitments with the customers by providing the
right product with the right quality.
Essentially, CRM plans relationship on the basis of win-win proposition

between the seller and the buyer. The scope of CRM is, therefore very vast and its
reach is mind-boggling. What remains to be seen is that, will CRM take a different
shape and come face- to-face with us or is CRM the final stage in the evolution of
relationships.s
QUESTIONNAIRE
69

Ans:-
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
2. What are the tools and processes for implementing CRM?

Ans:-
__________________________________________________________________
__________________________________________________________________
3. In what way is CRM of your organization different from others?

Ans:-
_______________________________________________________________
_______________________________________________________________
______________________________________
4. How is CRM helping you in retaining your customers and maintaining

market share?
Ans:-
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
5. Does technology helps in practicing CRM?
70
Ans:-
_______________________________________________________________
_______________________________________________________________
6. Are all employees trained towards CRM?

Ans:-
_______________________________________________________________
_______________________________________________________________
7. How are other employees contributing towards CRM?

Ans:-
_______________________________________________________________
_______________________________________________________________
8. How is relation with over seas customers handled by your organization?

Ans:-
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
BIBLIOGRAPHY
71
www.crmassist.com
www.crmguru.com
www.crmfoundation.com
www.crmindia.org
www.crmsearch.com
www.crmcommunity.com
www.CRM-forum.com
http://www.marketingsource.com/articles/view/3553
http://www.internetretailer.com/internet/marketing-conference/35899-growing-
importance-crm.html
http://www.pr-inside.com/amc-integration-study-can-help-customers-
r348913.html
http://www.nkarten.com/mce.html
http://www.destinationcrm.com/articles/default.asp?ArticleID=3544
http://en.wikipedia.org/wiki/Customer
72
http://www.businesslink.gov.uk/bdotg/action/detail?
type=RESOURCES&itemId=1075422939
http://www.williecrawford.com/loyalty.html
http://searchcrm.techtarget.com/sDefinition/0,,sid11_gci757452,00.html
Philip KOTLER – Marketing Management
Services Marketing – Parshuraman and Zeithmal
73

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CRM

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CUSTOMER RELATIONSHIP MANAGEMENT

Once beautifully quoted by Mahatma Gandhi “customer is the most

Many organizations have realized that to sustain in the market they

A customer refers to individuals or households that purchase

There is a difference between customer and a consumer. A

Customer who was considered to be the king of market is now

A relationship is a specific connection between objects,

Management comprises directing and controlling a group of

Now, in case of customer relationship management it means

Because of this, the company cannot afford to loose a single

The personnel who manages these relationships with the

Converting a stranger to a potential buyer and then to a loyal

This is also called as transaction marketing. Herein, the focus is

This kind of approach is practiced in modern times. Herein, the

Definition of CUSTOMER RELATIONSHIP MANAGEMENT

There are various definitions of customer relationship management stated by many

Berry defined CRM as relationship marketing is attracting, maintaining and

From the above definitions we can arrive at one suitable definition,

UNDERSTANDING CUSTOMER RELATIONSHIP MANAGEMENT

In marketing literature, the term customer relationship

Every organization should remember that “you are not in a

CRM is a business strategy that can help organizations drive new

CRM isn’t new; every company needs to do CRM-one way or

Once a business organization selects its target market, it has to

Relationship marketing is a philosophy of doing business on

Hence, CRM cycle can be described as follows:

These parameters are integrated together to achieve one goal for

Tom Peters stated “listening to customers must become everyone’s

CUSTOMERS DEFINE YOUR BUSINESS

No business can exist without customers. Without customers there

Growth strategies International (GSI) performed a statistical analysis of

• A totally satisfied customer contributes 2.6 times as much revenue to the

• A totally satisfied customer contributes 17 times as much revenue as a

• It costs up to 10 times to acquire a new customer as it does to keep an

• A 5% deduction in customer defections can result 25% to 100% increase in

• A totally dissatisfied customer decreases revenue at a rate equal to 1.8 times

• 1990 - Relationship Marketing. The explosion of telemarketing and

In addition to this, a number of key marketing concepts can also be

1. The growing de-intermediation process in many industries due to the advent of

2. Advances in information technology, networking and manufacturing technology

5. Customer expectations are changing almost on a daily basis. Newly Empowered

7. In the current era of hyper competition, marketers are forced to be more

11. The globalization of world marketplace makes it necessary to have global

Following things comes to our mind when we hear of CRM

KEY CRM PRINCIPLES

→ Low value customer requiring high value customer offerings

• Keeping existing customers

• Maximizing life time value

Exploit up-selling and cross-selling potential. By identifying life stage and

2. Aligning of organization towards customers.

3. Integrating your customer touch points.

4. Establishing and managing relationships with customers.

5. Knowing and understanding your customers and potential customers

Before framing and implementing CRM it is very important to

From the above mentioned, it is observed that 7 out of 10

(b) Specifically how “human” the company was

In mathematical form, a customer remembers only 30%

DO CUSTOMERS LOOK FOR RELATIONSHIP

The answer is YES. Customers do look for relationship

• RELIABILITY: - Customers want to build relations to find a reliable

• EXCHANGE: - A known seller accepts return of defective goods or

• SUPPORT: - Many a time customers seek sellers support in taking