CUSTOMER RELATIONSHIP MANAGEMENT

By-Neelam Kshatriya

What is CRM
Consumer Relationship Management Customer Relationship Management Client Relationship Management Customer Recall Management Customer Retention Management

Introduction and Significance of CRM

Definition Benefits Basic Concepts of CRM Tools for CRM Basic causes of Failure CRM-People Vs Technology

Customer +Relationship +Management

There is only one boss; the customer. And he can fire everybody in the company, from the chairman on down, simply by spending his money somewhere else. -Sam Walton: Founder ,Wal-Mart Stores

What is CRM
You can please some of the people most of the time & most of the people some of the time, but you cannot please all the people all of the time. Today CRM is the key that fulfills the promise of helping sellers please all of the people most of the times.

Definition
CRM is a comprehensive strategy and process of acquiring ,retaining and partnering with selective customers to create superior value for the company and for the customers. It is a strategy for managing and nurturing a companys interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processesprincipally sales activities, but also those for marketing, customer service, and technical support. It focuses on building strong relationships with customers and potential customers for creating and maintaining a loyal customer base. CRM works across all departments to harmonize customer-centric thinking i.e it is an enterprise wide activity. It reduces costs, increases efficiency and improves customer satisfaction.

Why CRM..
CRM helps organizations maximize the value of every customer interaction and drive superior corporate performance . With multiple lines of businesses and overlapping customers, the challenge is to make it easy for the customer to do business with the organization the way they want-anytime through any channel and in any language or currency-and to make them feel that they are dealing with a single ,unified organization that recognizes them at every touch point. The reduced role of intermediaries ,with the advent of sophisticated computer and telecommunication technologies. This growth allows the producers of products and services to directly get in touch with customers 24*7 at very low cost. Focus on TQM-Application of supply chain initiatives like JIT,MRP,ERP is not possible until the company works in close coordination with the stakeholders.

Evolution of CRM
Is CRM really a new conceptCustomer Relationship Management originated years before the start of the first millennium in Mesopotamia. Farmers who were eager to sell their surplus produce became the first initiators of the customer oriented processes we are now familiar with. With the passage of time and the first millennium an accurate record of transactions was kept by the merchants accounting for what was sold and whom it was sold to. This list of customers provided the first comprehensive customer oriented data and proved to be the beginning of customer oriented strategies. The advent of the 1990's however saw a more refined customer oriented implementation taking place, laying the ground for the CRM strategy as we now know it.

8 Key Concepts of CRM

Comprehensive strategy: CRM at one end links itself to SCM supply chain management and on the other hand the customer service and customer care. This makes a comprehensive strategy. Acquiring: Using effective sales promotion methods, prospective buyer can be acquired. It is about developing new customer as well as converting competitors customers. Selection: You may not be able to serve and satisfy all the customers at the same time. Some may not be willing to have long time relationships with you. Hence selectivity should be the manta.

Continued
There are a number of benefits for selection of the right customer for an organization: It reduces cost ;It increases profitability It helps create goodwill for your organization It gets you good word-of mouth publicity It improves the possibility of greater customer satisfaction and loyalty Select the right customer, have the right understanding of their needs and evolve a right way to satisfy them.

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Retaining: Frederick Freichheld in his book on the loyalty effect bought out the following facts relating to customer retention: 1. Acquiring a new customer can cost five times more than the costs involved in satisfying and retaining current customers. It requires great deal of effort to induce satisfied customers to switch away from their current suppliers . 2. The average company loses 10% of its customers every year(Dr. Batras print ad) 3. A 5% reduction in the customer defection rate can increase profits between 5% and 85% depending on industry. 4. The customer profit rate tends to increase over the life of the retained customer. 5. In nutshell the operating cost decreases when a customer stays.

Continued
Partnering: Its about constantly striving to create better value for each other i.e. the buyer and the seller. Interactive communication: A clearly planned and focused two way, interactive communication is a very essential ingredient of CRM. Technology + people: CRM is all about people and relating people to technology. This is all automation of people is all about! Mutually beneficial long term relationship: It is all about the long-term relationship of the buyer and the seller.

Benefits of CRM
The benefits fall into 3 broad categories: 1.Cost saving 2. Revenue enhancement 3.Strategic Impact 1. Perpetual stream of revenue. 2. Positive referral creation 3. Provides premium 4. Helps customer retention 5. Lowers cost of sale 6. Helps understanding consumer behavior 7. Provides opportunities to cross sell and up-sell 8. Reduces marketing time 9. Channel cost rationalization 10. Enables business process re-engineering.

Common causes of CRM failure

Treating CRM = Technology + Automation Large-scale systems with long-term promise are better Old organizational mindset Lack of CRM understanding Poor strategy and planning Lack of skills essential for CRM Inefficient or inappropriate software Lack of commitment Though CRM software sale accounts for over 1/3rd of the total software in the world ,it is actually designed to support the strategic vision of the company and can only support it.

Tools ,continued.
1. CRM Tool for Customer Data CRM tool has the ability to record and analyze customer data. a)Need not flip from screen to screen in various programs once you have installed a CRM tool. Everything you ever need to know about a customer is in one place. b)A CRM tool records contact information, purchase history, service plans, and even notes the information collected when contacting your customers. A CRM tool will allow you to personalize your customers experiences and drive repeat business

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2. CRM Tool for Organization.

CRM Tool has the ability to organize various aspects of your business. From assigning tasks to maintaining client contact at regular intervals, all of this can be accomplished using a CRM tool. One glance at the information for a salesperson will tell you how many pending sales they have or if they have followed up with their last client after the sale. A CRM tool can help you to manage your staff, increase productivity, and create and act on sales opportunities

Continued
3.CRM Tool for Reports. All of the information you have recorded about your customers and salespersons is useless if you cannot analyze the information within the CRM tool. CRM tool allows you to make customized reports that will let you know what your sales outlook is, what your conversion rate looks like, and where your employees are not utilizing the CRM tool to its fullest. Everything within the CRM tool database can be analyzed and organized for you to review with your employees or other management staff to create a better business plan going forward or reward the team members who are producing results.

Continued
4. Using A CRM Tool to Close Sales. The actual closing of a sale may seem completely unrelated to the use of a CRM tool, however there is yet another benefit of using this type of software. Once the initial contact with a customer is made, the key to closing more sales with a CRM tool is 1)follow up and 2)direct marketing. A good CRM tool will schedule the follow up tasks for you and even send out emails at specified intervals to clients. The CRM tool can also alert you when a customer is due for service or if a warranty is soon to expire, allowing you to contact the customer and gauge their needs, marketing products directly to them. Above all, a CRM tool allows you to provide the personalized service and excellent customer commitment that brings customers back, every time.

Applications of CRM(Six Broad classifications are possible basis the application of CRM):
Operational CRM/Front office CRM Analytical CRM Supporting the front office "business.(SFA,CSS ) Makes use of data mining /other techniques to produce results for decision making Facilitates interaction between customer and organization via web technologies /e-mails etc Similar to Analytical CRM ,but a more direct sales tool Combination of operational & Analytical CRM Handles customer by Customer Relations Contact Centre

Collaborative CRM

Sales Intelligence CRM

Campaign Management CRM Customer Relationship Management CRM

Spin on Customer Loyalty

Some facts to ponder upon : The paradigm shift has happened from Whats to Whos
CUSTOMER SPEAK=CUSTOMER INSIGHT is no more correct

I know my consumer-Shes my wife, mother ,sister daughter cousin & friend.

CRM In Marketing
Importance of CRM in marketing Evolution from Product to Relation Marketing Marketing initiatives under CRM Customer retention techniques

What is CRM Marketing

It is basically using CRM to direct the cos marketing techniques in the most effective direction for higher conversion. Pertinent information is gathered about the customers and their needs and the same is analyzed to develop CRM marketing plans that targets the customer groups which are most likely to respond. It not only saves business money on excessive marketing costs ,but also increases customer satisfaction with a more personalized appraoch to marketing & advertising Every business with direct customer contact can benefit form CRM marketing. E.g-LIC roped in WIPRO +IBM for its CRM Project. BPCLs customer centric programmes (Pure for Sure)

Some Applications
CRM Marketing for Email-follow up e mail programmes CRM Marketing for Direct Mail-Most cost effective mode e.g. Sodexho Pass CRM Marketing for Telemarketers-CRM marketing strategy must for Telemarketing for sales(Cold -calling techniques are tough ,lead to wastage of time & effort) Other uses The software keeps the info and does a lot of analysis for you,infact its only limited by the imagination of you and the marketing dept.

Importance of CRM in Marketing

Successful marketing tactics use the results from Customer interactions to improve future interactions ,paving way for high-impact decisions such as these: 1.Shifting spend on marketing towards campaigns more likely to generate high responses 2.Understanding the traits of high-value customers, finding such traits and changing interactions accordingly 3.Improving the effectiveness of high cost channels to maximize revenue streams 4. Institutionalizing personalized communications for specific customer segments 5. Understanding research & purchase patterns & aligning the segmentation criteria to improve future interaction.

Evolution from Product Marketing to Relationship Marketing

Brand was the king Product marketing campaigns were designed to reach as many people as possible/Mass marketing campaigns treated all customers as if they have the same needs and wants. Data analysts began associating products to customers who were buying themslowly companies began to understand that their customer data could be as valuable as the product data thus evolved the termTarget Marketing Then came Relationship Marketing got to know the customers more intimately by knowing their preferences .

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From one of exchanges 2 Ongoing exchanges From Brand Management to Customer Management From Market share to Mind Share From Brand Equity to Customer Equity From Mass Communication to Personal Communication From isolated market research to Ongoing dialogue From Mass markets to markets of one. And From Profitability of transaction to Lifetime Value of Customer.

Relationship Marketing and 1-to -1

The author of The one to One Future, Don Peppers and Martha Roggers declared: The demise of Mass Marketing The need to focus less on products and more on customer relationships .You will not be trying to sell a single product to as many customers as possible. Instead you will be trying to sell a single customer as many products as possible over a long period of time .And across different product lines .To this you will need to concentrate on building unique relationships with individual customers on a 1-to 1 basis The vision on one-to -one marketing relies more heavily on I.T to track individual customers ,to understand their difference and acknowledge their interaction preference.

Refining Marketing Campaigns

Mass Marketing
Product focused Anonymous Few categories

Market Segmentation
Group focused General Category profiles More Campaigns

Relationship Marketing
Customer focused Targeted to individuals Many Campaigns

Wide reach
Little or no research

Smaller reach
Based on segment analysis of demographics Short term

Discrete reach
Based on detailed customer behavior and profiles Long term

Short-term

CRM Marketing Initiatives

Cross selling & Up-Selling ( cross sell e.g. on purchase worth 1000,get a gift ;Up sell-instead of 17 monitor sell 21) Customer retention Behavior prediction Customer profitability & Value modeling Channel optimization Personalization-Customize Customer Communication-CCC Event based marketing

e-CRM
What is e-CRM Different levels of e-CRM The concept of mobile CRM Evolution of e-CRM Difference between CRM & e-CRM The need to adopt e-CRM

Ten Traits of the "New Consumer and Buyer-Centric Market

Relevancy I am not overloaded by irrelevant data. Experiences I seek Memorable and Remarkable Experiences over Products. Attention I am unwilling to waste attention. You must earn It. Value I expect to receive 2-3x value in return for investing my attention. Desire For Knowledge and Individuality I desire information that is valuable to me because it enables me to decide what to do, and how best to do it. Decoded Complexity I will turn to reliable sources of evaluated information and may find it convenient to complete my purchase at the same time, and at the same point.

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Not Deliberately Misled or Confused Your uncoordinated marketing communications result in no single version of the truth to me. Organizational Memory I expect all employees that I interact with to know me. Respects Privacy My data is not shared with anyone and is only used to improve your value and service my needs. Problems and Needs I expect you to solve my current and future problems and needs quickly, professionally and efficiently. Ideal: Let me define what information I am interested in, and an agent would go and find it for me, and report back later in a form, at a time, on a device, and over a medium appropriate to me.

What is e-CRM
The concept of CRM ,when seen in the context of e-business or transactions over an electronic medium, is translated into e-CRM which essentially deals with managing customer interactions over the web. The e in e-CRM stands for electronic and indicates Webbased applications added to CRM/All activities to manage customer relationships by using the internet ,web-browsers or other electronic touch points.

CRM & e-CRM-The difference

Being able to take care of your customer via internet

CRM

Customers being able to take care of themselves online

e-CRM

Why e-CRM
Growth of the web as a commerce and communication media Online services and a growing consumer desire for self-service Transactional relationships today are multimodal-telephone , web-text chat , e-mail , the web ,handheld devices ,interactive entertainment and more. Customer management has morphed to a modern, complex form, customers are more demanding and desire for products and services round the clock. With increased competition at the marketplace ,customer loyalty is fickle, hence it requires a bundle of services to satisfy. Faster response and understanding every customer have become a key issue.

Where have you felt e-CRM

Airlines communicating the customer about flight through sms. A personalized touch at a hotel, when they took care to send you a morning coffee instead of tea since you mentioned the same in the feedback form during your last stay. Your bill at a retail outlet automatically reduced by the discount % you are entitled to and you are not compelled to show the points you have accumulated. SMS sent to you when a scheme is launched or new stock has arrived from varied stores.

How does it function

After the adoption of internet and availability of electronic channels of communication ,it is becoming possible to capture customer related information intelligently at the interaction stage itself. Customers can contact organizations via web or chat and e-mail . e-CRM provides to organizations a means to conduct interactive ,personalized and relevant communication with customers across both electronic and traditional channels. It utilizes a complete view of the customer to make decisions about messaging , offers and channel delivery. In a nutshell e-CRM results in comprehensive understanding of customer activities ,personalization , relevance ,permission ,timeliness ,and metrics and is a means to an end optimizing the value of the most important asset the customer.

What does e-CRM Technology do?

1. 2. 3. 4. e-CRM Technology is used to: Give managers online access to analytical reports . Allow efficient identification of profitable customers Integrate analytics across the enterprise Provide access to enterprise statistics from remote locations

Mobile CRM
Communication ,either one-way or interactive ,which is related to sales , marketing and customer service activities conducted through mobile medium for the purpose of building and maintaining customer relationships between a company and its customers. E.G Finnair,who made it possible for their customers to check in for their flights by SMS.

Key CRM features

1. 2. 3. 4. e-CRM is driven by the data warehouse which is maintained by the organization during purchases. It focuses on reaching out to the customers across multiple channels . It enables a company to accommodate new market dynamics that places the customer in control. It is structured to identify a customers' profitability or profit potential ,and to determine effective investment allocation decisions accordingly, so that most profitable customers could be identified and retained and the resources could be invested in relationships ,which are most profitable. Scalable to meet growth and performance needs

5.

Advantages of e-CRM
Lowers the cost-major cost is only the website creation. Availability-you can book yourself to a morning flight by buying a ticket previous night. Integration with the system-e.g train e-ticket Helps data construction customers are tracked in their use of websites, demographics are easily avilable. Maneuverability-planned movement to modify a website ,focus on some customer is possible Managing data reservoir-list of FAQs is available as a result Lesser response time-powerful search engines available Lower marginal cost-once website is created ,cost of addition of a web customer is low.

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New customer service opportunities Reach and service personalization-some website greet customers by name, provide information on products which are of interest, remember mailing address etc. User control-task of locating a package or shipment by giving customer access to tracking data .

e-CRM Tools
The following is a set of e-CRM capabilities that collectively compromise a full e-CRM solution: 1. Customer analytic software 2. Data mining software 3. Campaign management 4. Business simulation 5. Real time decision engine

Summary
The goal of CRM in marketing is to move C-level customers up to B-level & B-level customers up to A-level, and to motivate Alevel customers to stay that way-indeed to buy more. It is to ensure the optimal type & frequency of communication in order to ensure that the co. is customers first choice. To gain success the Co. must act on the information analyzed and institutionalize the practice of customer differentiation.