Customer Relationship Management

3. Value Proposition (Customisation)

In most of the CRM systems, hardly any efforts are put in to customisation. The focus is usually on the development of systems for CUSTOMER KNOWLEDGE. Why get customer knowledge; s1cTo know as much about customer as possible The marketer therefore, after getting the knowledge about the customer, needs to study the product, service and process so that the gaps could be removed The more the company studies this and resolve the gaps, the more the company moves towards individualisation OR WHAT VALUES CAN BE GIVEN FOR THIS RELATIONSHIP

Examples; Peon in office servicing individually

Large hotels getting ready for regular customers

Customer Relationship Management

It is rightly said that THE CUSTOMERS DO NOT WANT MORE CHOICES.. THEY WANT EXACTLY WHAT THEY WANT A marketer gets it, by more interaction and feedbacks about;

How the customer behaves what activities he does or prefers

How can we make the offerings easier and enjoyable

INDIVIDUALISATION
Places high demand on production systems e.g. in automobiles, services, durables etc, you may offer Different variants of models Colours Combinations of interiors of cars Special limited variants (small quantities)

Customer Relationship Management

This however results in lower production and the firms lose the advantage of Economies of Scale as also costs are higher including coordination costs (with customers) The solution is therefore MASS CUSTOMISATION However mass customisation is only possible with limited features in certain products or categories The examples could be Pizza Food and other dishes in hotels and restaurants Car accessories

Personal computers, automobiles, durables etc, may offer as already discussed in previous slide

Customer Relationship Management

Products normally with high individualisation are costly as also take time for delivery However customisation is necessary in many fields for Revenue Management, since average price formula does not work with every service or industry In airlines, you have different categories of classes, and CRM programmes (frequent fliers) help in achieving revenues For Revenue management therefore the management depends on the role of CRM

Customer Relationship Management

4. Relationship Policy
In relationship policy various objectives play an important role. These are; a. Create a plan to increase quality and quantity of customer database The first step would obviously be to increase the quantity i.e. the total numbers in your database Once you have done that, the next step would be to analyse the database (of customer pyramid) and make segments of the customers b. Formulate a value proposition for each of the segments including products, services and communications

Customer Relationship Management

Study potential and current customer value and determine what additional product, availability of services or communication channels are best suitable to the customers e.g. a. Different options to cell connections (pre or post paid) b. Internet connections options (depending on usage) c. Frequent fliers / Frequent guests in hotels d. Magazines subscription (options of number of years with other gifts) c. Formulate retention policy of each segment considering RLC (Relationship Life Cycle)

Commitment is a factor of, Satisfaction, Attractiveness and Switching Cost

Customer Relationship Management

The actions in different phases be; i. Exploratory in this phase two way exchange of informations is done to understand each other so that accordingly action may be taken

ii. Growth This is commitment phase. Make sure that the customers do not leave, as the investments in developments have already been made, before becoming profitable
iii. Maturity In this phase the chances of termination of relationships are low Each party knows other party very well You break out of routine and increase product / service better and rationalise prices

iv. Decline The customer feels that the supplier is taking for granted. You therefore need to provide better attention (may be some competitor has entered the fray with better product / service / terms of supply

Customer Relationship Management

d. Translate relationship policy into contact moments Make a communication plan for different purchase phases of Exploration, Growth, Maturity and decline and finally

e. What loyalty programmes are there and how these contribute for development of relations between buyer and seller
The individual relationship plays an important role when the firms discriminate between a customer and a good customer It also shows that parties commit to each other, accommodate each other and intend for long term relationship Loyalty programmes are of three types; Savings programme Club programme and Relationship Marketing programme