CUSTOMER RELATIONSHIP MANAGEMENT

STUDY MATERIAL

Mr.Babin Dhas D
Assistant Professor
Mr.Babin Dhas D
Assistant Professor
INTRODUCTION

 A long term relationship with customers to nurture its stability in today‘s blooming
market.

 Customer‘s expectations are now not only limited to get best products and services,
they also need a face-to-face business in which they want to receive exactly what they
demand and in a quick time.

 CRM is a business strategy directed to understand, anticipate and respond to the needs
of an enterprise's current and potential customers in order to grow the relationship
value.
 The Customer Relationship Management is the procedure that is crucial for every
business.

MEANING

• A management philosophy according to which a company’s goals can be best

achieved through identification and satisfaction of the customers' stated and unstated
needs and wants.

• Customer Relationship Management is an upright concept or strategy to solidify

relations with customers and at the same time reducing cost and enhancing
productivity and profitability in business.

• A CRM system is implemented for small business, as well as large enterprises also as
the main goal is to assist the customers efficiently.

• The Customer Relationship Management is the procedure that is crucial for every
business. As the customer is the most important part of the business.

DEFINITION

• CRM is a business strategy designed to optimize profitability, revenue and customer

satisfaction. -Gartner.

• CRM is the core business strategy that integrates internal processes and functions, and
external networks, to create and deliver value to targeted customers at a profit. It is
Mr.Babin Dhas D
Assistant Professor
 grounded on high quality customer-related data and enabled by information
technology.CRM is the establishment, development, maintenance and optimization of
a long- term mutually valuable relationship between consumer and organization.
Successful CRM focuses on understanding the needs and desires of the consumer and
is achieved by placing these at the heart of the business by integrating them with the
organization strategy, people, technology and business processes.-CRM (UK) Ltd.,
2000.

• Customer relationship management system is a combination of people, processes, and

technology that seeks to provide understanding of a company’s customer and to
support a business strategy to build long- term, profitable relationship with
customers.- Shang and Feng Ko 2006

• Parvatiyar and sheth (2001) defined CRM is a comprehensive strategy and process of
acquiring, retaining and partnering with selective customers to create superior value
for the company and the customer.

• A CRM system is not only used to deal with the existing customers but is also useful
in acquiring new customers. The process first starts with identifying a customer and
maintaining all the corresponding details into the CRM system which is also called
an Opportunity of Business‘. The Sales and Field representatives then try getting
business out of these customers by sophistically following up with them and
converting them into a winning deal.

• Customer Relationship Management strategies have given a new outlook to all the
suppliers and customers to keep the business going under an estimable relationship by
fulfilling mutual needs of buying and selling.

Elements of CRM

CRM is a discipline that covers all the elements needed to build successful relationships
with customers. It includes the following elements:

1. The information needed to understand customers better

Mr.Babin Dhas D
Assistant Professor
2. The process management needed to deliver efficient and appropriate experiences
to customers.
3. The software tools that allow us to use that knowledge.
4. The training and change management elements so our people and organizations

Mr.Babin Dhas D
Assistant Professor
 understand and are capable of delivering experiences that build stronger
relationships and increase loyalty.

The CRM Cycle

The CRM cycle is as follows
1. Obtaining information from customers
2. Creating superior customer value
3. Building loyal customers
4. Acquisition of new customers
5. Working towards increased profitability

Example “Henrys General Store”

Henry is a young entrepreneur who owns a general store located in an urban settlement.
But it’s no ordinary general store. Henry knows his regular customers and takes good care
of them. Customer Eduard is approaching the store and Henry sees him from the window
(process of identification). Eduard enters the store and Henry kindly greets him and
addresses him by his name (personalization). Henry remembers what Eduard usually
buys, that he has a wife and two kids (customer data). During the shopping Henry talks
with Eduard and gently tries to gather additional information (establishing relationship,
possibility for cross- selling, analysis). Eduard appreciates the interest and personal
approach and returns often to this store. Henry is thanks to all this in4formation always
able to offer him exactly the goods he needs. Another advantage for Eduard is the time
saving if he is in a hurry because Henry knows his needs and can serve him faster as well
as allow him to leave a debit (trust based on long-term relationship)

CRM Concepts

(a) Customer life cycle:

The Customer life cycle is the total time that the customer is engaged with
your company from the customer’s experience and viewpoint.
In customer relationship management (CRM), customer life cycle is a term

Mr.Babin Dhas D
Assistant Professor
 used to describe the progression of steps a customer goes through when
considering, purchasing, using, and maintaining loyalty to a product or
service.

Stages in Customer life cycle: (4 stages)

Mr.Babin Dhas D
Assistant Professor
 a. Consider- customer becomes aware of a need and investigates alternative
solutions.

b. Purchase – customer evaluates and chooses the best alternative and places
an order.

c. Set up- Customer installs the product and learns how to use it.

d. Use – Customer operates and maintains the product and finally makes the
decision to retire it or upgrade, which starts the cycle all over again.

(b) B2B CRM

“B2B CRM is the strategic process of strengthening relationships with

business customers, especially important clients, beyond transactional
relationships to better manage the value of these buyer seller relationships.“

(c) Customer Asset

The concept of customer being an asset is very important because investing in
customer relationship often does not generate short-term gains.
Customer information: It is a tangible asset that can be inventoried and
managed.

Customer Value: Identifying and rewarding the most loyal customers

increase their value to the company
(d) Customer Touch point

They are the means that we use to interact with our customers. Touch point
interactions must be targeted to a specific customer or customer company, and
/ or they must allow for a response (a conversation, a transaction, a reply, and
so on).
Touch point (also touch point, contact point, point of contact) is business
jargon for any encounter where customers and business engage to exchange
information, provide service, or handle transactions.

Mr.Babin Dhas D
Assistant Professor
SCOPE of CRM/ Stake holders in CRM

CRM is concerned with the development and maintenance of mutually beneficial

relationships with strategically significant partners. Its focus is the creation of

Mr.Babin Dhas D
Assistant Professor
 long-term value, and not just short-term profits, for the company and all it works
with. The scope of CRM can thus be defined according to its constituencies, how
long-term value can be created for and with them and the benefits of doing so.

The Customer

The customer is of key importance because only relationships with customers

generate revenues for a company.

The Owners

Companies may remain private for the duration of their lifespan, remaining the
property of single proprietors or many owners.

The Suppliers

Suppliers provide input, such as raw materials, technologies, components,

investment, human resources and expertise, to the company’s value chain.

The Employees

Employees are central to CRM practitioners. Many businessmen, such as Bill

Marriott and Richard Branson,
Claim that their employees or “internal customers” are their most important
constituency, not the customers per se.

Other Partners

Establishing a partnering relationship with another company, such as a strategic

alliance or joint venture, is done through sharing complementary strengths such as
technological expertise, market reach, supplier networks, customer data and
customer bases. Partnering with another firm can thus support the creation and
delivery of value through increasing efficiency, sharing product development,
marketing and distribution costs, and sharing key resources

CONCEPT AND CONTEXT OF RELATIONSHIP MANAGEMENT

Mr.Babin Dhas D
Assistant Professor
Customer relationship management is the technique of providing information to prospects
and customers, and collecting information about prospects and customers, that allows us to
help them evaluate and purchase products that deliver the best possible value to them.

Mr.Babin Dhas D
Assistant Professor
One-to-one marketing, and relationship marketing is to make it easier for the customer to do
business with you. Marketing and sales people have many opportunities to influence
customer purchase decisions. Until recently it was normal for these functions to be
performed separately — by different departments within a company — without acting as a
unified team. So we must understand that coordinated efforts are now being made to unify
approach

Customer Relationship Management has become a popular name for a variety of

software tools and techniques aimed at attracting and retaining customers. In general, CRM
uses a centralized database to bring marketing and sales activities together in a unified
approach to serving customers.
One-to-one marketing and relationship marketing is to make it easier for the
manufacturer to do business.

• Marketing and sales people have many opportunities to influence customer purchase
decisions by the way making smooth relationship with the customer.

• The concept of relationship management with respect to the customer, to get

efficiency (cost reduction) and responsiveness (instant delivery).

• RELATIONSHIP MANAGEMENT by an organization can be divided into two

categories
1. External relations
2. Internal relations

EXTERNAL RELATIONSHIP

• Two major external stakeholders of a business are customers and suppliers.

Customer relations: customer relations can be defined as the process by which
companies promote customer satisfaction and loyalty.

• It involves managing communications with customers, particularly customer‘s

questions and complaints and solving their disputes.

• The ultimate goal of customer relations program is to build long term relationships.

Mr.Babin Dhas D
Assistant Professor
• Building a strong reputation for the brand and company.

Mr.Babin Dhas D
Assistant Professor
 Supplier relations: All companies try to build a strong relationship with their
suppliers. Supplier relationships are different from simple purchasing transactions in
several ways. There can be a sense of commitment to the supplier.

• Eg: vendor (seller) sells certain items to the buyer for several times then he thinks that
he will come for a next time purchase.

INTERNAL RELATIONSHIP

• It is an integrative process with in a system for fostering positive working relationship

in a developmental way in a climate cooperation and achievement.

• Internal relationship is an ongoing process that occurs strictly within a company or

organization.

• Internal relationship helps to motivate and empower employees at all levels of

management and it’s consistently delivering a satisfying customer experience.

• Features of internal relationship management

• Customer commitment is earned in a social contract

• There is a open ideas for mutual gain.

• Close partnership between suppliers and customers.

• Customers are viewed as individual people and so are value providers.

• Continuous interaction and dialogue between suppliers and customers.

• Focuses on discovering, creating and responding to customer needs.

• Relationships are viewed as enterprise assets.

• There is a systematic collection and dissemination of customer information (detailing

and negotiating requirements, expectations, needs, attitudes and satisfaction)
Mr.Babin Dhas D
Assistant Professor
ROLE OF INTERNAL RELATIONSHIP MANAGEMENT

Mr.Babin Dhas D
Assistant Professor
 • MANAGEMENT OF CHANGE Introduction of IT & new management practices.

• BUILDING CORPORATE IMAGE:

The team develops corporate image among the employees.

• STRATEGIC INTERNAL MARKETING:

The CRM team solve an inter departmental conflict and work common benefit of the
organization.

• Relationship between companies and customers

• Reducing marketing costs

• Better customer insights

• Life time value (LTV)

EVOLUATION OF CRM

The modern concept of customer service has its roots in the Craftsman Economy of the
1800s, when individuals and small groups of Manufacturers competed to produce arts and
crafts to meet public Demand. Individual orders were booked for each customer and supplied
according to his/her taste and demands. The economies were small and so were the
transactions. The manufacturer was able to meet the customers on one to one basis and talk to
customer to understand the minute details. Customer care and service were highly
personalized. But then the economics swing was setting in. The technology was increasing
and so was it difficult to cater to the individualistic needs of the customer. Gradually, the era
of mass production came in.
The advent of Mass Production in the early 20th century, followed by an explosion in
the demand for goods after World War II, increased the power of suppliers at the expense of
consumers, and thus reduced the importance of customer service. History tells us that
customer service as a concept was kept aside in the cell. The manufacturers could produce

Mr.Babin Dhas D
Assistant Professor
What they could and these goods will find their way to customers on their own. Infect, it was
the age of demand exceeding supplies. There was no need for customer service as an activity
or as a tool for promotion or enhancement of markets. But things never remain the same for

Mr.Babin Dhas D
Assistant Professor
long periods of time.

A shift in this balance began in the 1970s, as international competition increased, and
the dominance of western manufacturers was challenged, first by Japan, then by Korea, China
and other developing economies. New world emerged with these Eastern economies taking to
tremendous growth Producers responded by improving the quality of their products and
services.
They introduced to the world entirely a new concept—the concept of simplicity and
convenience and economy to the world The economic boom of the 1990s again increased the
power of suppliers who, while not completely reverting to lower standards of service, were
able to be more selective of which customers to serve, and of what levels of service to
provide.
The overall quality of customer service - in society and in specific industry- will
continue to be determined by the relative balance of power between suppliers and
consumers; it will improve as competition becomes more intense, and decline as
competition decreases. We have to assess the global situation today and derive that we are
facing a new development. Briefly, the product similarity is making it more a challenge
today than ever before, to upgrade customer services to get an edge over the
competitors.

 The changes in market demand and competitive strategy forced the company to
change from transactional marketing to relationship marketing.

 Marketing mix was developed in the 1950s in order to exploit market demand. all the
p‘s of marketing helps to explore increased demand of the company‘s products and
services.

 The objective of transactional approach of marketing is to sell more products and

services to maximize sales and profit.

 Increased competition and matured markets have led to the low growth. It results in
increased pressure and corporate profitability.

 The beginning of globalization of markets, new competitions led to the greater

customer choice.

Mr.Babin Dhas D
Assistant Professor
 Companies must move from a short-term transaction oriented goal to long term

Mr.Babin Dhas D
Assistant Professor
 relationship building goal.
 Companies are competing successfully in domestic and global markets including
customers, distributors, employees, unions and governments.

 The term marketing domain is defined as stakeholders who have to be taken into
consideration in order to develop relationships and to achieve long-term success in the
final marketplace.

 The increased importance of relationship marketing also led to an increasing demand

for an efficient customer relationship management.

 Create customer knowledge and the utilization of the customer relationship

management system is essential.

Parts of CRM/ Types of CRM

Strategic CRM is focused upon the development of a customer-centric business culture.

This culture is dedicated to winning and keeping customers by creating and delivering
value better than competitors. The culture is reflected in leadership behaviors, the design
of formal systems of the company, and the myths and stories that are created within the
firm.

Operational CRM automates and improves customer-facing and customer-supporting

business processes. CRM software applications enable the marketing, selling and service
functions to be automated and integrated. Some of the major applications within
operational CRM are marketing automation, sales force automation and service
automation.

Analytical CRM is concerned with capturing, storing, extracting, integrating, processing,

interpreting, distributing, using and reporting customer-related data to enhance both
customer and company value. Analytical CRM builds on the foundation of customer-
related information. Customer-related data may be found in enterprise-wide repositories:
sales data (purchase history), financial data (payment history, credit score), marketing
data (campaign response, loyalty scheme data) and service data.

Collaborative CRM is the term used to describe the strategic and tactical alignment of
Mr.Babin Dhas D
Assistant Professor
normally separate enterprises in the supply chain for the more profitable identification,
attraction, retention and development of customers. For example, manufacturers of

Mr.Babin Dhas D
Assistant Professor
 consumer goods and retailers can align their people, processes and technologies to serve
shoppers more efficiently and effectively. They employ practices such as co-marketing,
category management, collaborative forecasting, joint new product development and joint
market research. Collaborative CRM uses CRM technologies to communicate and
transact across organizational boundaries. Although traditional technologies such as
surface mail, air mail, telephone and fax enable this to happen, the term is usually applied
to more recent technologies such as electronic data interchange (EDI), portals, e-business,
voice over internet protocol (VoIP), conferencing, chat rooms, web forums and e-mail.
These technologies allow data and voice communication between companies and their
business partners or customers. Collaborative CRM enables separate organizations to
align their efforts to service customers more effectively. It allows valuable information to
be shared along the supply chain.

The Goals of CRM

Maximum customer loyalty, the goal of CRM, cannot be achieved overnight. In the following
Figure we see that, much like Maslow's self-actualization pyramid, you cannot jump right in at
the top designing loyalty programs unless you have already addressed all the lower levels of the
pyramid.

CRM is practiced in a wide variety of commercial contexts, which present a range of different
customer relationship management problems. We’ll consider four contexts: banks, automobile
manufacturers, and high-tech companies and consumer goods manufacturers. Banks deal
with a large number of individual retail customers. Banks want CRM for its analytical capability
to help them manage customer defection (churn) rates and to enhance cross-sell performance.
Data mining techniques can be used to identify which customers are likely to defect, what can
be done to win them back, which customers are hot prospects for cross-sell offers, and how best
to communicate those offers. Banks want to win a greater share of customer spend (share of
wallet) on financial services. In terms of operational CRM, many banks have been transferring
service into contact centers and online in an effort to reduce costs, in the face of considerable
resistance from some customer segments.

● Automobile manufacturers sell through distributor/dealer networks. They have little

contact with the end- user owner or driver. They use CRM for its ability to help them develop

Mr.Babin Dhas D
Assistant Professor
better and more profitable relationships with their distribution networks. Being physically
disconnected from drivers, they have built websites that enable them to interact with these end-
users. This has improved their knowledge of customer requirements. Ultimately, they hope
CRM will enable them to win a greater share of end-user spend across the car purchase,
maintenance and replacement cycle.

Mr.Babin Dhas D
Assistant Professor
● High-tech companies manufacture complex products that are generally sold by partner
organizations. For example, small innovative software developers have traditionally partnered
with companies such as IBM to obtain distribution and sales. However, companies like Dell
have innovated channels. They go direct-to- customer (DTC). CRM helps these DTC companies
to collect customer information, segment their customer base, automate their sales processes
with product configurator software and deliver their customer service online. They have also
developed automated relationships with suppliers, so that they carry no or low levels of
inventory, which are replenished frequently in rapid response to order patterns.

● Consumer goods manufacturers deal with the retail trade. They use CRM to help them
develop profitable relationships with retailers. CRM helps them understand costs-to-serve and
customer profitability. Key account management practices are applied to strategically significant
customers. IT-enabled purchasing processes deliver higher levels of accuracy in stock
replenishment. Manufacturers can run CRM-enabled marketing campaigns which are highly
cost-effective.

TRANSACTIONAL vs RELATIONSHIP APPROACH

As marketing has entered the 21st Century, a significant change is taking place in the way
companies interact with customers. The traditional view of marketing as a simple exchange
process—a concept that might be termed transaction-based marketing—is being replaced by a
different, longer-term approach.

Transactional marketing strategies focused on attracting consumers. The goal was to identify
prospects, convert them to customers, and complete sales transactions. But today‘s marketers
realize that, although it remains important, attracting new customers is truly an intermediate
step in the marketing process. Marketing efforts must focus on establishing and maintaining
mutually beneficial relationships with existing customers. These efforts must expand to
include suppliers and employees, as well.

The concept, called relationship marketing, refers to the development, growth, and
maintenance of long-term, cost-effective exchange relationships with individual customers,
suppliers, employees, and other partners for mutual benefits. It broaches the scope of external
Mr.Babin Dhas D
Assistant Professor
marketing relationships to include suppliers, customers, and referral sources.

They must apply the same high standards of customer satisfaction to inter-

Mr.Babin Dhas D
Assistant Professor
departmental relationships as they do to external customer relationships. Relationship
marketing recognizes the critical importance of internal marketing to the success of external
marketing plans. Programs that improve customer service inside a company also raise
productivity and staff morale, resulting in better customer relationships outside the firm.

Relationship marketing gives a company new opportunities to gain a competitive edge

by moving customers up a loyalty hierarchy from new customers to regular purchasers, then
to loyal supporters of the company and its goods and services, and finally to advocates who
not only buy the company‘s products but recommend them to others. By converting
indifferent customers into loyal ones, companies generate repeat sales.

The cost of maintaining existing customers is far below the cost of finding new ones,
and these loyal customers are profitable ones. Effective relationship marketing relies heavily
on information technologies such as computer databases that record customers ‘tastes, price
preferences, and lifestyles along with the increase of electronic communications. This
technology helps companies become one-to-one marketers that gather customer-specific
information and provide individually customized goods and services.

The firms target their marketing programs to appropriate groups, rather than relying
on mass-marketing campaigns. Companies who study their customers ‘preferences and react
accordingly gain distinct competitive advantages.

THE KEY POINTS ARE AS FOLLOWS.

• Transactional marketing, which was developed in the late 1950‘s and 1960‘s.

• Transactional marketing main concept which centers on the four P‘S, was developed
by Borden in 1964.

• The marketing mix has since been described as an ―infallible guide for
the effective planning and implementation of marketing strategy‖.

• The focus on transactional marketing is shifting to focus on relationship marketing.

• The firms make the market fall by providing consumer packaged goods at one
Mr.Babin Dhas D
Assistant Professor
extreme and the services at the other.

Mr.Babin Dhas D
Assistant Professor
• In this situation all the firms are forced to adapt from transactional to relationship
approach.
• Transactional marketing approach is on individual transaction and does not concern
continuous relationship with customers.

• Transactional marketing does not contain a strategic long term perspective.

• The relationship marketing focuses on continuous multiple transactions rather than

isolated individual transactions.

• It also considers customer as insiders to the business and aims to build a long term and
never-ending relationship with them.

CRM AS A STRATEGIC MARKETING TOOL

Marketing is one of the new discoveries in business management. Of late, marketing

has come to occupy significant position in the overall strategic studies. Various
challenges are emerging in marketing as well as new approaches are being made in its
study to view its different aspects of the many things it has been recently realized that
customer is the most important elements in marketing and its sustenance and retention
is far more important than any other marketing functions. CRM is one of the core area
in marketing.

The major areas of CRM focus on:

• Generation and servicing more loyal customers.

• Expansion of customer base
• Reduction of advertising costs
• Increase in profitable customers
• Ease in introduction of new products
• Personal Information Gathering and Processing, Self-Service.
• CRM is the marketing management practice of identifying, attracting and retaining
the most valuable customer to sustain profitable growth

• CRM is the process of making and keeping customers and maximizing their
Mr.Babin Dhas D
Assistant Professor
profitability, behaviors and satisfaction.

Mr.Babin Dhas D
Assistant Professor
 • Today customer demand open equal access, real time specialized information,
convenient access, portability, process and logistics transparency, pricing
transparency, global pricing, ability to set prices, choices of distribution channels and
control over their information.

• First time customer can become a repeat customer, thereafter a client, then an
advocate and finally one‘s partner in progress.

• Loyal customers always create a profit and also reduced operating cost, increased
purchases and give plenty of referrals.
• The realistic observation on customers that it costs ten times more to sell to new
customers than to sell to an existing one.

• Existing customer deliver most of the revenues.

• It‘s very important part of CRM is to identify the Most Valuable Customers (MVC)
for the success of the business.

• Marketing and sales are charged with influencing customer behavior.

• Customer success always equal to business success.

CRM SIGNIFICANCE TO STAKEHOLDERS

• Four principal stake holders play a major role in the entire process of customer
relationship management.

1. Customers

2. Employees

3. Suppliers

4. Partners

Relationship Marketing
Mr.Babin Dhas D
Assistant Professor
One of the things of most value to a company is its relationships—with customers,

Mr.Babin Dhas D
Assistant Professor
 employees, suppliers, distributors, dealers, and retailers. The company’s
RELATIONSHIP CAPITAL is the sum of the knowledge, experience, and trust a
company has with its customers, employees, suppliers, and distribution partners. These
relationships are often worth more than the physical assets of a company. Relationships
determine the future value of the firm.

Relationship marketing (RM) marks a significant paradigm shift in marketing, a

movement from thinking solely in terms of competition and conflict toward thinking in
terms of mutual interdependence and cooperation. It recognizes the importance of various
parties—suppliers, employees, distributors, dealers, retailers—cooperating to deliver the
best value to the target customers. Here are the main characteristics of relationship
marketing:

 It focuses on partners and customers rather than on the company’s products.

 It puts more emphasis on customer retention and growth than on customer acquisition.
 It relies on cross-functional teams rather than on departmental-level work.
 It relies more on listening and learning than on talking.

Traditional transaction marketing (TM) tended to ignore relationships and relationship

building. The company was viewed as an independent agency always maneuvering to
secure the best terms. The company was ready to switch from one supplier or distributor
to another if there was an immediate advantage. The company assumed that it would
normally keep its current customers, and it spent most of its energy to acquire new
customers. The company neglected the interdependence among its main stakeholders and
their roles in affecting the company’s success.

Difference between Relationship Marketing and CRM

Relationship marketing and customer relationship management (CRM) are closely-related

business concepts. However, most experienced marketing professionals agree that CRM
is an evolution of relationship marketing that enhances key concepts of customer
retention.
Main Differences
1. "CRM is conceiving a strategy and RM is executing it"
Mr.Babin Dhas D
Assistant Professor
2. CRM includes collection of data about customers, segmenting them logically and
targeting the right kind of marketing programs. RM executes the strategies of
CRM. RM has direct contact with the clients orcustomers.
3. A relationship manager is basically into sales & acquisition of clients...whereas a
CRM is into maintenanceof those clients

Mr.Babin Dhas D
Assistant Professor
 4. RM is focused on the building the relation itself while CRM is more focused on
how to maintain that relation.
5. While relationship marketing is a sales and marketing concept, CRM refers to the
tools used to carry out the concept.
6. Relationship marketing is implemented as a strategy and includes activities such
as identifying long- term sales and retention goals, public relations, marketing and
advertising campaigns.
CRM includes the operational tasks that support the relationship marketing
strategy. Activities include gathering data about the customers, then organizing
and analyzing it to create target customer profiles. CRM data is also effective in
finding opportunities to create special offers to reward long-time customers for
their loyalty, further building the relationship.

Key principles of Relationship Management.

1. Manage customer as an asset

2. Rate customers on the basis of their profit stream-current and future potential.
3. Customize relationship to individual customer-using information based decision
making capabilities.
4. Implement innovative ways and means to get close to the customer to hear “ the voice
of the customer”

Customer Segmentation:

All customers are not equal so they have to be treated differently by segmenting them on
various basis.
Basis of Segmentation:
1. Behavioral segmentation: Customers can be segmented on the basis of Loyalty,
frequency of use, usage occasion, and whether they would recommend to others.
2. Geographic segmentation: The customers can be segmented on the basis of the
geographic region to which they belong like the region or the locality from where they
come from eg. Uptown customers.
3. Demographic segmentation: the customers are also classified on the basis of age,
gender, occupation, educational qualification.
Mr.Babin Dhas D
Assistant Professor
4. Channel preferences: Segmentation is done based on frequency of communication
expected number and choice of communication channel.
5. Based on Purchases: The customers are segmented based on the proportion of
purchases, frequency of purchases, types and quality of goods purchased, average value
of purchases.

Mr.Babin Dhas D
Assistant Professor
Types of Customers

1. Apostles- loyal customers, they are highly satisfied with the company’s offerings

2. Terrorists/ Defectors- highly dissatisfied, or dissatisfied customers and also includes

satisfied customers who have encountered failures with the company’s offerings.
3. Mercenaries- satisfied customers but chase low prices, pursue fashion, buy on impulse.
They are highly disloyal customers.

4. Hostages- They are very loyal, are highly habituated to a particular brand. They are
without power and they even accept even the worst things a company can offer.

Types of relationship with the above category of customers

1. Need centered relationship: Based on personalization of services this relationship is

with apostles in favorable circumstances and with defectors in unfavorable circumstances.

2. Price centered: Based on the best deal. This type of relationship is with mercenaries.

3. Value centric: based on the collaboration with customers over a period of time

4. Product centered: based on the delivery of customized products, services and solutions
this type of relationship is with apostles and hostages.

Loyalty as a basis of segmentation:

Who are loyal customers?
-The customers who purchase a same brand over a period of time.
-Purchasing the same brand for more than 70% of time for a period of three years
according to Kraft international.
- If a customer spends large proportion of the annual budget spent on a particular brand
then he/she is Loyalty and satisfaction on a grid.

Mr.Babin Dhas D
Assistant Professor
Linking profitability and loyalty

Customers can be divided into four types .All four of those types of customers tend to
show up as though they are repeat business, but several of them do not bring the profit
margins that warrant focusing your attention on reaching them. Reinartz and Kumar

Mr.Babin Dhas D
Assistant Professor
suggest the following strategies for addressing these groups.

Loyal Customer

 True Friends – These are the truest of loyal customers. They think highly of your
company/product, and continue to come back for more. They also bring in the most
profit. The authors suggest that these customers should be rewarded the most, with
exclusive products of high value and other elite benefits. However, they warn against
over-contact. True Friends are already bringing value to your business, and exploiting
them may lead to burnout.
 Butterflies – Butterflies are also profitable, but much less loyal to the company. They
should be given a hard sell in the early stages of their purchase, while they are still
interested in the company’s products. However, once it appears that their purchases
have dropped off, you should stop investing much time and effort into selling tothem.

 Barnacles – Barnacles tend to be less profitable. Although they think highly of the
company and its products, they spend very little to make dedicating resources to them
profitable. Ideally, the best course of action is to try to sell them on products that are
related to what they already have, and otherwise spend resources elsewhere. .

 Strangers – Strangers may often seem like loyal customers, but they rarely bring in
much value and otherwise don’t show other signs of customer loyalty. The authors
suggest that this group should be left alone, as they bring in very little value and are
not otherwise befitting the company.

Customer Value.

There are various interpretations of what is meant by customer value. The term may mean
low price, receiving what is desired, receiving quality for what is paid, or receiving
something in return for what is given (Zeithaml, 1988). Woodruff’s (1997) definition of
customer value is widely cited and encompasses most interpretations of customer value.
Woodruff defines customer value as: “a customer perceived preference for and evaluation
of those products attributes, attribute performances, and consequences arising from use
that facilitate (or block) achieving the customer’s goals and purposes in use situations”.
Mr.Babin Dhas D
Assistant Professor
Types of customer values

Mr.Babin Dhas D
Assistant Professor
1. Economic value- this is based on the economic benefit of the net monetary advantage
from using a product versus its alternatives.
2. Functional value- Those aspects of a product that provide, measurable functional or
utilitarian benefits
3. Psychological value- Focus on tangibles such as brand names, image etc.

Technology in CRM

Why technology is used needed in CRM?

Organizations are evolving to accommodate rapidly changing customer’s requirements,

increased competitive pressure and business imperatives to do more with less. Applying
the appropriate technology and clearly defining effective processes are keys to supporting
and enabling rapid changes.

e-CRM

E-C RM stands for Electronic Customer Relationship Marketing. E-CRM relates all forms
of managing customer relationship with the use of IT (Information Technology). It uses
information technology for integrating the Internal Organization Resources and External
Marketing Strategies to know and satisfy the needs of customers. When e-CRM is
compared with CRM, e-CRM is very effective for communicating with the customers.

Difference between CRM and e-CRM:

CRM uses phone, fax and retail store for contacting customers while e-CRM uses
wireless, PDA technology, internet and email.
CRM requires the client to definitely download different applications for viewing
Web-Enabled applications while e-CRM does not have such requirements.
The personalized views of CRM are not available while the personalized views of
e-CRM are related to purchase preferences and history.
The design of CRM system is related to job products and functions while the
design of e-CRM system is related to customer needs.
The maintenance of CRM is very expensive while the maintenance of e-CRM is
less expensive and requires only less time.
Mr.Babin Dhas D
Assistant Professor
 Technology used in CRM

I. Contact center technology

Mr.Babin Dhas D
Assistant Professor
 II. Front desk management technology
III. CRM technology
IV. Customer data management.

I Contact center technology:

1. Interactive voice response (IVR)

2. Speech recognition for customer service
3. Computer telephony integration (CTI)
4. Automatic call distribution (ACD)
5. Contact management technology
1. Interactive voice response (IVR): is a technology that allows a computer to interact
with humans through the use of voice and DTMF tones input via keypad. It is a
software application that allows a telephone caller to select options (pre- recorded
voice prompts) from a voice menu.

2. Speech recognition for customer service: It recognizes the spoken words and
phrases and converts them to a machine-readable format. Common voice recognition
applications include call routing, speech-to-text and voice dialing. Speech
Recognition has a wide range of use and is effectively deployed in contact centers

Key benefits of speech recognition:

 Customer satisfaction: the customer directly speaks up his request and the back
end system helps the customer in getting the required service.
 Cost savings: A lot of out bound calls can be avoided with a well deployed voice
recognition solution
 Improved productivity: it offers mobile workers safe, hands-free access to tools and
information resulting in greater collaboration and faster decision making.
 Revenue generation: businesses are leveraging speech beyond traditional uses like
voice commerce, personalized notifications, and targeted up selling and cross selling by
call center agents.

3. Computer telephony integration (CTI): Is a common name for any technology that
allows interactions on a telephone and a computer to be integrated or coordinated. The
Mr.Babin Dhas D
Assistant Professor
term is predominantly used to describe desktop-based interaction for helping users be
more efficient, though it can also refer to server-based functionality such as automatic
call routing.

The benefits of CTI:

Mr.Babin Dhas D
Assistant Professor
 1. Improved customer service
2. Greater efficiency
3. Flexibility
4. Automatic call distribution (ACD): is a device or system that distributes incoming
calls to a specific group of terminals that agents based on customer need, type, and
agent skill set. It is often part of a computer telephony integration (CTI) system.

5. Contact management technology: The technology for complaint management

system is generally divided into two parts namely front end and back end. The front
end is used by the employees who are dealing with the customers for taking their
complaints and communicating a solution back to them. Back end systems are used by
the responsible for resolving customer complaints.

II Front desk management technology:

1. Electronic queue management systems

2. Payment technology
3. Customer self- service portals

1. Electronic queue management systems:

This helps the service providers to manage the complete customer service effectively
especially the rush hours. The electronic queue management systems is ideal for
customer related concerns, where waiting forms an essential part of the service, such
as airline, hospitals, post office, banks railways etc.

2.Bill payment kiosks:

These kiosks allow users to make cash payment and obtain receipts instead of waiting
in lines for check cashing and bill payment centers that can be hard to find. These
kiosks typically include a computer inside a durable enclosure.

3.Customer self-service portals

The self- service modules provide an opportunity to the customer to access his/her
account and gets lots of information as and he wants and from where he wants. The

Mr.Babin Dhas D
Assistant Professor
self-service applications help the customers in the following ways.

 Empowering the customers

 Improve supply chain efficiency
 Reduce cost of service

Mr.Babin Dhas D
Assistant Professor
III. CRM Technology.

1. Functional and technical requirements for CRM solutions. 2.Global CRM

product market.

1. Functional and technical requirements for CRM solutions.

1.Business Intelligence and analytical abilities
2.Unified channels of customer interactions
3.Support for web based technology
4. Centralized repository for both customers and other enterprise information.
5. Integrated work flow for business rules and procedures.
6. Integration with ERP and other enterprise wide applications.

CRM applications address the three core areas of business delivery

a. Sales process

b. Marketing process

c. Customer service and support process.

2. Global CRM product market

Criteria for CRM product selection:
i) Organization imperative

ii) Integrating with existing IT applications landscape

iii) Product adaptability

iv) Scalability of the application

v) Implementation experience

vi) Post roll out support structure.

Mr.Babin Dhas D
Assistant Professor
GLOBAL CRM PRODUCT MARKET

Target Industries Server centric Web centric (hosted)

Large industries Siebel, oracle, people soft, My Siebel CRM on demand.

SAP CRM Sales force.com
Small and medium Talisma, sales logix, Microsoft, Sales notes.netNetCRM.
enterprise ory & sales notes.

CUSTOMER INFORMATION DATABASE:

The true business of the every company is to make and keep customers‖. The single
most important factor for the success of any business enterprise is the customer.
Understanding the customer needs and wants is the important factor for selling of our product
and services.

CUSTOMER INFORMATION
The most often used information in a CRM database is the customer information. This can
include personal information, such as contact addresses and phone numbers, as well as family
size, location, and other demographic information. Many companies also use their CRM
database to record purchase information, service calls, customer support needs, and even
warranty information. Anything relative to customer interaction can be placed in a CRM
database.

• Customer information database includes personal information, such as contact

addresses, phone numbers etc.

• It also includes family size, location and other demographic information and
geographical location.

• CRM database to record purchase information, service calls, customer support needs,
and even warranty information.

• Customer related databases might be maintained in a number functional areas; eg.

Mr.Babin Dhas D
Assistant Professor
 Sales, marketing, logistics and accounts.

IV Customer data management.

1. Data Mining

2. Data warehousing

1. Data Mining:

It is a methodology to assess the value of data and to leverage that value an asset to
provide valuable information for decision making to the management based on a
continuously evolving analytical model. Any service organizations will have a lot of
data pertaining to various milestones of customer life cycle. However the effectiveness
of this data utilization for better customer service has always been a challenge.

2. Data warehousing:

Data warehouses are generally used to store large customer data. This technology
makes it possible to provide all the key people in an enterprise an access to
information that is needed by the enterprise to survive and prosper in an increasingly
competitive world. Data warehousing is a field that has grown out of the integration of
a number of different technologies and experiences over the last few years. The need
is multi fold and organizations are realizing this very strongly.

INFORMATION TO BE INCLUDED IN CUSTOMER DATABASE

• Contact names

• Job title and job definitions

• Demographic or psychographic information

• Name of the company

• Address

• Methods of contact
Mr.Babin Dhas D
Assistant Professor
• Buying history

• Sources of lead

Mr.Babin Dhas D
Assistant Professor
 • Sources of sale

• Special needs of customers

BENEFITS OF A CUSTOMER DATABASE

By using a customer database to keep in touch with, and market to, your customers, you can:

 Increase awareness of your brand

 Enhance marketing opportunities
 Build and strengthen relationships between you and your customers
 Build trust in your products and services
 Increase your profits

DEVELOPING A CUSTOMER INFORMATION DATABASE

1. Define the database functions

• Strategic CRM: Data about markets, market offering, customers, channels,

competitors, performance and potential.

• Operational CRM: Customer related data to help in the everyday running of the
business.

• Analytical CRM: Data to support the marketing, sales and services decisions that aim
to enhance the value created for and from the customers.
• Collaborative CRM: It includes two subsets of operational and analytical
purpose.(OLTP,OLAP)online-transaction, A-analytical processing.

2. Define the information requirements

• Customer information fields

• Contact data
Mr.Babin Dhas D
Assistant Professor
• Contact history

• Transactional history

Mr.Babin Dhas D
Assistant Professor
 • Current pipeline

• Opportunities: It looks forward after sales.

• Products

• Communication preferences

3. Identify the information sources

• Internal data: market size ,market segmentation, customer profile, customer

acquisition channel, competitor product and pricing, customer requirement

• External data:

a) Compiled list data:

b) Census data: obtained from government records.

c) Modeled data generated by third parties includes variety of sources.

• Secondary and primary data:

a) Competition entries

b) Subscriptions: customer Subscribe of newsletter or magazine

c) Registrations: customers are invite to register their purchase d)Loyalty

programs
4. Select the database technology and hardware platform

• Hierarchical

• Network

• Relational: assign unique number in rows and columns and assign other data's of
marketing, service, payments and so on.
5. Hardware Platform

Size of the databases: using of PC and server

Mr.Babin Dhas D
Assistant Professor
Existing technology: using software

Mr.Babin Dhas D
Assistant Professor
 Number and location of users

Relational Database Management System (RDBMS)

Populate the database
Sourcing: obtain information from customers Verification
Validation
1. Range validation: Does an entry lie outside the possible range for a
field.

2. Missing values: Check for values that are missing in column.

3. Check against the external values: check the details with mail
authority.

• De-duplication :

1. Remove the record that should be retained

2. Retain the record that should be removed

• Merge and purge &

6. Maintain the Database

• All new transactions, campaigns and communications are inserted immediately.

• Regularly re duplicates the database.

• Get customers to update their own records.(online purchase)

• Audit the subset of files every year.

• Drip-feed

CUSTOMER PROFILE

• A good method of identifying and understanding customers is to develop customer

profile.

Mr.Babin Dhas D
Assistant Professor
• This approach is similar to that used in market segmentation.

Mr.Babin Dhas D
Assistant Professor
 • The marketers create some basis for dividing the various customer groups.

• The marketer then develops a typical customer profile which helps to analyze and
understand consumer behavior.

COMPONENTS OF CUSTOMER PROFILE

• Customer profile analysis :

Customer profile that gives an indication of who might typically use their outlet.

A customer profile is affected by the macro business environment.

A customer profile is also influenced by the micro-environment, the specific business

arena in which the individual market operates.

The perspective of changing consumer profile can be very important to the marketer
in order to adequately manage the marketing mix and formulate a marketing strategy.

• Changing customer profile includes into two categories.

Changing customer demography

Changing in consumer values and life style.

CHANGING SHOPPER DEMOGRAPHY

• Demographics comprise selected characteristics of a population

(Age and income distribution and trends, mobility, educational attainment, home
ownership and employment status.)

The study of the population in terms of measurable aspects such as birth rate, age
profile, working pattern and occupation, total income and expenditure levels.

1. Generational cohorts (buddies or followers)

• Those who share historical or social life experiences. These life experiences tend to
distinguish one generation from another.
Mr.Babin Dhas D
Assistant Professor
• Members of the generation groups are linked through shared experiences which create
a bond tying members together in what has termed as cohorts.

• Generation cohorts includes

Mr.Babin Dhas D
Assistant Professor
1. Seniors before 1946(conformity, conservatism, traditional family values, team player)
2.Baby boomers 1946-1964(experimental, individualism, free spirited, less optimistic)
3. Generation X 1965-1976 (quest of emotional security, independent, informality,
entrepreneurial)

4. Generation Y 1977-1994 (physical security and safety, patriotism, heightened fears,

acceptance of change) bal. b/w work and life style.

5. Tweens 1995 to till date (Belief in individuality, technology interpreted, fast face living)

Changing customer demography

1. Age profile (falling population of teenagers)

2. Income and Expenditure

(The changes in income brought changes in spending pattern of the consumers)

3. Ethnic Diversity (Differences in groups, culture, customs, religion etc)

4. Working patterns (The trend of more women's to enter into workplace. Increasing of
working time in work place)

CHANGES IN SHOPPERS VALUE AND LIFE STYLE

 Changing shopping perspective

 Changing patronage for different retail format

 Attitude towards shopping

CUSTOMER PERCEPTION ANALYSIS

Customer perception analysis is a value-chain assessment methodology that gives a better

understanding of one‘s interaction with customers.

Perception is a process through which the information from outsider‘s environment is

selected, received, organized and interpreted to make it meaningful.
Mr.Babin Dhas D
Assistant Professor
PERCEPTION

Mr.Babin Dhas D
Assistant Professor
 According to kolasa, I perception is selection and organization of materials which stems
from the outside environment at one time or the other to provide the meaningful entity we
experience.

According to Robbins, "perception may be defined as a process by which individuals

organize and interpret their sensory impressions in order to give meaning to their
environment.

FACTORS INFLUENCING CUSTOMERS PERCEPTION ANALYSIS

1. Exposure- attention(ad)

2. Interpretations (It involves making sense out of stimulus)

3. Relevance –several other factors (substitute)

4. Surprising stimuli

5. Subliminal stimuli

6. Selective perception process

7. Selective Exposure

8. Selective Attention

9. Selective Comprehension

10. Selective Retention

STRATEGIES FOR INFLUENCING CUSTOMER PERCEPTION

1. Measure and manage customer satisfaction and service quality

2. Aim for customer quality and satisfaction in every service encounter-zero defects

3. Plan for effective recovery

4. Facilitate adaptability and flexibility

5. Encourage spontaneity
Mr.Babin Dhas D
Assistant Professor
6. Help employees with problem customers

7. Reflect evidence of service

Mr.Babin Dhas D
Assistant Professor
 8. Enhance customer perception of quality and value through pricing.

CUSTOMER BEHAVIOR

Customer or consumer behavior is the study of how individuals make decisions to spend
their valuable resources (Time, money, effort) on consumption-related items. It includes
what they buy it, why they buy it, where they buy it, how often they buy it, and how often
they use it.

According to belch and belch ‖consumer behavior is the process and activities people
engage in when searching for, selecting, purchasing, using, evaluating and disposing of
products and services so as to satisfy their needs and desires.

CUSTOMER BEHAVIOR IN RELATIONSHIP PERSPECTIVE

1. Understanding customer is the central part of the marketing process to know why a
customer or buyer makes a purchase.

2. Without such an understanding, business will find it hard to respond to the customer‘s
needs and wants.

3. Some business still produces the product without knowing the importance of the
customer.

4. Organization clearly understands the benefits wanted by customers, reasons for purchase,
re- purchase etc.

5. Importance of customer behavior

6. Production policies

7. Price policies

8. Decision regarding channel of distribution

9. Decision regarding sales promotion

10. Exploiting market opportunities

11. Customers do not always act or react predictably.

Mr.Babin Dhas D
Assistant Professor
12. Consumers preferences are changing and becoming highly diversified.

13. Rapid introduction of new products

Mr.Babin Dhas D
Assistant Professor
14. Implementing the ―marketing concept‖

FACTORS INFLUENCING CONSUMER BEHAVIOR

15. Psychological factors

1. Motivation

2. Perception

3. Learning

4. Beliefs and attitude

• Personal Factors

1. Age and Life cycle stage

2. Occupation

3. Life style

4. Personality and self-concept

• Cultural factors

1. Culture

2. Sub culture

3. Social class

• Social factors

1. Reference groups

2. Family

3. Roles and status

• Buying role of a customer

Mr.Babin Dhas D
Assistant Professor
• Initiator

• Influencer

Mr.Babin Dhas D
Assistant Professor
 • Decider

• Gatekeeper
• Buyer

• User

Buying decision of customers

• What to buy?

• How much to buy?

• Where to buy?

• When to buy?

• How to buy?

INDIVIDUAL CUSTOMER

• The term consumer, end user, individual buyer and individual user refer to the same, a
buyer who buys product and services for end use.

• Understanding their need, want, value expectation and service expectations are the
way to win this market by product and services which a firm is offering.

Individual customer decision making process/Buying process

• Problem recognition

• Pre-purchase information research

1. Personal service

2. Commercial sources

3. Public sources

4. Experimental sources

Mr.Babin Dhas D
Assistant Professor
 • Evaluation of alternatives:

1. Evaluative criteria

Mr.Babin Dhas D
Assistant Professor
2. Beliefs

3. Attitudes

4. Intensions

• Purchase decisions

• Post-purchase behavior

1. Post-purchase satisfaction
2. Post-purchase action

3. Post-purchase use and disposal

GROUP CUSTOMERS

• Group customer are referred as industrial market which consists of all the individuals
or organizations who acquire goods and services that enter into the production of
other products or services that are sold, rented or supplied to others.

• Organizations establish the need for purchased products and services, and identify,
evaluate and choose among alternatives brands and suppliers.

Group customer decision making process/Buying process

• Problem recognition

• General need Description

• Product specification

• Supplier Search

• Proposal solicitation

• Supplier selection

• Purchase Routine selection

• Post purchase evaluation

Mr.Babin Dhas D
Assistant Professor
CUSTOMER LIFE TIME VALUE

• Customer lifetime value (CLV), lifetime customer value (LCV), or lifetime value

Mr.Babin Dhas D
Assistant Professor
 (LTV) is the net present value of the cash flows attributed to the relationship with a
customer.

• The use of customer lifetime value as a marketing metric tends to place greater
emphasis on customer service and long-term customer satisfaction, rather than on
maximizing short-term sales.

• Building Profitable Customer-Centric Strategies: Maximizing Profit Potential

• Our high-impact processes for becoming more customer-centric and creating

innovative strategies will be valuable only if we can effectively deliver on these
profitably.
SELECTION OF PROFITABLE CUSTOMER PROFITABILITY

• We first understand the key factors that will drive profitability for customer insight
initiatives.

• During the innovation stage, the objective was to creatively generate new sources for
capturing intelligence from customers and creating insight that could enhance the way
we communicate and sell to customers.

• As you learn more from customers about their needs and preferences, you have the
opportunity to better target your marketing messages, offers and channels, which
ultimately leads to reduced marketing expenses and increased conversion rates.

• Customer life time value

The key factors that will drive the profitability of customer insight initiatives include these:

• Reaching high-value customers and prospects

• Capturing intelligence on a critical mass of customers to justify the fixed costs of

setting up and managing the program

• Generating incremental profits from increased sales to new customers, higher

customer retention, selling more to existing customers or winning back lost customers

• Reducing costs of delivering solutions and servicing customers

Mr.Babin Dhas D
Assistant Professor
• Capturing intelligence cost-effectively

• Building the ability to influence customer profitability over time

Mr.Babin Dhas D
Assistant Professor
ELEMENTS OF CRM:

When your company communicates with your customers the process can involve many
different people within both organizations using a variety of different methods. The main tool
that is used is an order that is communicated by your customer to your sales department.
However this is only one of many communications that should be managed. To ensure that
your company can provide the best customer service experience possible the use of customer
relationship management (CRM) software should be considered.

• CUSTOMER KNOWLEDGE

The customer service function in your company represents the front office functions
that interact with your customers. These are the business processes that allow your
company to sell products and services to your customers, communicate with your
customers with regards marketing and dealing with the after sales service
requirements of your customers. Each interaction with the customer is recorded and
stored within the CRM software where it can be retrieved by other employees if
needed.

• RELATIONSHIP STRATEGY

• COMMUNICATION

• INDIVIDUAL VALUE PROPOSITION

• SALES FORCE AUTOMATION

• The company‘s sales department is constantly looking for sales opportunities with
existing and new customers. The sales force automation functionality of CRM
software allows the sales teams to record each contact with customers, the details of
the contact and if follow up is required. This can provide a sales force with greater

Mr.Babin Dhas D
Assistant Professor
 efficiencies as there is little chance for duplication of effort. The ability for employees
outside of the sales team to have access to this data ensures that they have the
most recent contact Information with customers. This is important when customers contact
employees outside of the sales team so that customers are given the best level of customer
service.

CAMPAIGN MANAGEMENT

• The sales team approach prospective customers in the hope of winning new business.
The approach taken by the sales team is often focused in a campaign, where a group
of specific customers are targeted based on a set of criteria. These customers will
receive targeted marketing materials and often special pricing or terms are offered as
an inducement. CRM software is used to record the campaign details, customer
responses and analysis performed as part of the campaign.

CRM PROCESS

• The formation process of CRM refers to the decisions regarding initiation of

relational activities for a firm with respect to a specific group of customers or to an
individual customer with whom the company wishes to engage in a cooperative or
collaborative relationship.
• It is important that a company be able to identify and differentiate individual
customers. In the formation process, there are three important decision areas: 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.

Mr.Babin Dhas D
Assistant Professor
CRM PROCESS FIGURE 1

• THREE STEPS OF CRM PROCESS 1.Acquisition :

It comprises enquiry, interaction, exchange, co-ordination and adaptation.

2. Customer Interaction Management 3.Customer Retention

• Customer Acquisition
Mr.Babin Dhas D
Assistant Professor
• Customer acquisition is a broad term that is used to identify the process and

Mr.Babin Dhas D
Assistant Professor
 procedures used to locate, qualify, and ultimately secure the business of new
customers.

• Customer retention effort is to identify and quality potential customers.

• Inputs for Acquisition

• The purpose of customer acquisition an organization is likely to focus its attention on

the following

1. The suspects

2. The enquiries
3. The lapsed customers

4. The former customers

5. The competitors customers

6. The competitors lapsed customer‘s

7. The competitor‘s enquiries

8. The competitors former customers

9. The referrals

10. The existing customers

STRATEGIES FOR CUSTOMER ACQUISITION

1. FOCUSED APPROACH:

a) Knower
b) Preferred
Mr.Babin Dhas D
Assistant Professor
c) Indifferent
d) Rejecters

2. PROVIDING A WIN-WIN PLATFORM

Mr.Babin Dhas D
Assistant Professor
 3. INTITATE FORUM FOR COMMUNICATION

4. ATTEMPT TO MINIMIZE ―FUD (Fear,Uncertainity,Doubts)

5. PROJECTION OF BENEFITS AND NOT PRODUCTS

6. CONTEXTUAL APPLICATION

7. FOCUS ON DECISION PROCESS

CUSTOMER RETENTION

Customer retention is the activity that a selling organization undertakes in order to reduce
customer defections.

Successful customer retention starts with the first contact an organization has with a
customer and continues throughout the entire lifetime of a relationship.

A company‘s ability to attract and retain new customers, is not only related to its product
or services, but strongly related to the way it services its existing customers and the
reputation it creates within and across the marketplace.

Mr.Babin Dhas D
Assistant Professor
 Customer Retention Programs : Figure: 3.2

STRATEGIES FOR CUSTOMER RETENTIONS

1. PEOPLE

2. PRODUCT

3. PROCESS

4. ORGANISATION

5. SETTING SATISFACTORY SERVICE STANDARDS

6. CONCENTRATION ON COMPETITORS
Mr.Babin Dhas D
Assistant Professor
7. CUSTOMER ANALYSIS

Mr.Babin Dhas D
Assistant Professor
8. COST ANALYSIS

9. CONCENTRATION ON THE PAYING ABILITY OF CUSTOMERS

10. KNOWLEDGE ON PURCHASE BEHAVIOUR PATTERN

11. DIFFERENCIATION IN PRICES AND QUALITY STANDARDS

12. FOCUS ON REDUCING DISSATISFACTION

13. ATTENTION ON CHANGING REQUIREMENT OF CUSTOMERS

14. CONCENTRATION ON PERFORMANCE

15. TRAINING TO SUPPLY CHAIN EMPLOYEES

16. EMPOWERMENT TO SERVICE PROVIDERS

17. INCENTIVIZING SERVICE PROVIDERS

18. AUGMENTING INTANGIBLE BENEFITS

19. VISIT TO THE POINT OF USAGE OF THE PRODUCT

20. DEVELOP PARTNERSHIP WITH CUSTOMERS

21. ORGANIZING CUSTOMER CLUBS

22. RELATIONSHIP BASED PRICING SCHEMES

23. EFFECTIVE CUSTOMER COMMUNICATION SYSTEM

24. CUSTOMER COMPLIANT MONITORING CELL

25. DEVELOPING CUSTOMER SATISFACTION INDEX

Mr.Babin Dhas D
Assistant Professor
26. FOCUS ON PREVENTIVE ACTIONS

Mr.Babin Dhas D
Assistant Professor
 CUSTOMER DEFECTION

Customer defection is the rate at which customers defect or stop the usage of products of
a company. Business with high defection rate would be losing their existing customers.

In order to overcome this they use another term of customer retention, in simple words
it’s to retain or prevent the existing customers to defect the product.
TYPES OF DEFECTION

 PRICE DEFECTORS
 PRODUCT DEFECTORS
 SERVICE DEFECTORS
 MARKET DEFECTORS
 TECHNOLOGICAL DEFECTORS
 ORGANISATIONAL DEFECTORS

STRATEGIES FOR PREVENTION OF DEFECTION

Every customer that you keep represents at least three that you don’t have to attract.
Numerous research studies indicate that the cost of acquiring a new customer usually runs
from two to four times the annual cost of keeping an existing customer. Obviously, an
effective customer retention strategy translates into profits.

It has been estimated that most companies spend about 98 percent of their time reacting to
problems and less than 2 percent preventing them. The first, most important, way to prevent
customer defections is to identify and define each problem from the customer‘s vantage point.
This blog suggests several ways to retain customers once you understand the problems and
their ramifications.

Superior service and database management provide your best defense against customer
defections. Service provides the opportunity to solve customer problems and build

Mr.Babin Dhas D
Assistant Professor
 partnerships; the database serves as a vehicle to personalize customer communication and
enhance your relationships.
MODELS OF CRM

• IDIC MODEL:

• I- IDENTIFY

D – DIFFENCIATE
I – INTERACT
C - CUSTOMIZE
• IDIC MODEL : Figure:3.3

Mr.Babin Dhas D
Assistant Professor
• CRM Value chain Figure:3.4

Mr.Babin Dhas D
Assistant Professor
• Payne‘s Five-process model : Figure:3.5

Mr.Babin Dhas D
Assistant Professor
Gartner Competency model: Figure: 3.6

CRM IMPLEMENTATION ROADMAP

A CRM Roadmap is a strategic plan that identifies how a company can meet and exceed its
customers ‘needs. This includes, but is not limited to, assessing how the sales, marketing,
And service entities work together to:
1) Gain insight from their customers
2) Produce valuable offerings/products (for example, personalized product); and 3) Provide
the ultimate customer experience.
Developing a CRM Roadmap involves aligning an organization‘s business strategy with its

Mr.Babin Dhas D
Assistant Professor
prioritized CRM capabilities. For example, if a company‘s business strategy is to develop
products faster to gain unique market positioning, the capabilities that the company needs to
master should be aligned with that strategy and might include:
• Leveraging customer information from the service process (for example, integrating
customer feedback during service calls with the marketing department).
• Effectively managing product mix (measure success by campaign).
• Effectively managing sales channel strategy (eliminate conflict between distribution
channels).
So how do companies know which CRM capabilities they have, and which they‘ll need to
realize their strategic goal? Below are the eight primary steps (which have been used across
industries, including financial services, electronics and high-tech, consumer products,
manufacturing, etc.) to follow when developing a CRM Roadmap.

• SCENARIO ANALYSIS

• PURPOSE AND OBJECTIVES

• BUSINESS PLANNING

• PROCESS DESIGN

STRATEGIC CRM PLANNING PROCESS:

• Defining the business objectives.

• Understanding CRM Three dimensions (people, process, IT)

• Using a structured approach to manage CRM

• Identifying both corporate and customer needs

• Using customer needs to re-engineer business processes

Mr.Babin Dhas D
Assistant Professor
• Selecting technology based on business needs and functionality

Mr.Babin Dhas D
Assistant Professor
• Ensuring systems development is business led

• Ensuring actionable measures of customer performance

• Actively managing culture and change, win buy in

• Using a phased implementation strategy

CRM IMPLEMENTATION (PHASES)

• Develop the CRM Strategy

• Build CRM Project foundations

• Need specifications and partner selection

• Project implementation

• Performance evaluation

1. Develop the CRM Strategy

• Situational analysis

• Customer or segments

• Market offering

• Channels of distribution
• Commencing the CRM education

• Developing CRM vision

Mr.Babin Dhas D
Assistant Professor
• Setting priorities

• Goals and objectives

• Identifying the people,process,and technology requirement

Mr.Babin Dhas D
Assistant Professor
• Develop a business case

2. Build CRM Project foundations

• Identify stakeholders

• Establishing the governance structure

• Identify the change management needs

• Identify the project management needs

• Identifying the criteria success factors

• Developing a risk management plan

3. Need specifications and partner selection

• Process mapping and refinement

• Data reviewing and gap analysis

• Hosted or On-premise CRM

• Calling for proposals

• Invite potential partners

• Revised technology need identification

• Asset the proposals and select one or more partners

4.Project Implementation

Mr.Babin Dhas D
Assistant Professor
• Refining project plan

• Identifying the technology customization needs

• Prototype design, test, modify, and roll out.

Mr.Babin Dhas D
Assistant Professor
 5.Performance Evaluation

• Project outcomes

• Business outcomes

• Implementation issues

• Poor planning

• Poor Integration

• Towards a solution

ANALYTICAL CRM

1 Analytical CRM may be defined as a decision support system that is targeted to helping
senior executives ,marketing, sales and customer support personnel to better understand
and capitalize upon their customer needs, the company‘s interaction with the customer
and the customer buying cycle.

2 Analytical CRM consist of applications that enable business to analyze relevant data in
order to achieve a more meaningful and profitable interaction with the customer.

3 It uses customer data for analysis, modeling and evaluation to create a mutual
relationship between company and its customers.

4 It helps to better understanding of customer behavior.

5 The analytical CRM solution enables the effective management of a customer

relationship. Analyses of customer data can a company begin to understand behaviors,
identify buying patterns and trends and discover causal relationship.

Key features of Analytical CRM

• It integrates and inheriting all this data into a central repository knowledge base with
Mr.Babin Dhas D
Assistant Professor
 an overall organization view.
• It combines and interacts the value of customers with strategic business management

Mr.Babin Dhas D
Assistant Professor
 of organization and value of stakeholders.

• It determines, develops and analyzes inclusive set of rules and analytical methods to
scale and optimize relationship with customers by analyzing and resolving of all
questions.

NEED OF ANALYTICAL CRM

• CUSTOMER ACQUISITION

• CUSTOMER ATTRITION(slow destruction)

• TIME UNTIL ATTRITION

• REVENUE DOLLAR MODEL

• CUSTOMER UPGRADE

PURPOSE OF ANALYTICAL CRM

• Design and execution of targeted marketing campaigns to optimize marketing

effectiveness.

• Design and execution of specific customer campaigns, including customer acquit ion,
cross selling, up- selling, and retention.

• Analysis of customer behavior to aid product and service decision making.

• Management decisions

• Prediction of the probability of customer defection

• Analytical CRM generally makes heavy use of data mining.

• Importance of analytical CRM

Mr.Babin Dhas D
Assistant Professor
• Make more profitable customer by providing high value services.

• Retaining profitable customer through sophisticated analysis.

Mr.Babin Dhas D
Assistant Professor
 • Addressing individual customer needs and efficiently improving the relationship with
new and existing customer.

• Improves customer satisfaction and loyalty.

• Find and explore useful knowledge in large customer database.

• It helps in classifying customers, predicting customer behavior.

• Steps in analytical CRM process Step:1 Problem formulation

• Segmentation of clients

• Acquisition analysis

• Relation analysis

• Channel or approach analysis. Step:2 preparation

Step:3 Definitive analysis
• Statistical techniques

• Data mining

• Machine learning techniques Step:4 Visualizing

OPERATIONAL CRM

• OPERATIONAL CRM involves the areas where direct customer contact occurs.
These interactions are referred to as customer touch points.

• Company maximizes the process of gathering and understanding customer

information from all touch points. (eg: call centers, point of sales, web etc.)

• Touch point classification:

Mr.Babin Dhas D
Assistant Professor
1. Face to Face touch points: sales/service/channel/events/stores/promotions

Mr.Babin Dhas D
Assistant Professor
 2. Database-Driven Touch-points: telephone/e-mail/mail/SMS/Fax/loyalty
cards/ATM‘s.

3. Mass Media: Advertising /public relations/Website.

APPLICATION OF OPERATIONAL CRM

1. MARKETING AUTOMATION: It is automatically focused on automating

marketing processes. In marketing campaign management involves marketers to use customer
specific information to determine, evaluate and develop communication that are targeted to
customers in individual as well as multi-level or multi-channel environment.
Campaigns developed to communicate customers individually are easy and involves
unique and direct communication.

2. SALES FORCE AUTOMATION:

The main part of CRM is not only deal with existing customer. It also try to acquire
new customers also. The process starts with identification of customers, maintaining
all correspondence details into the CRM system.

This process includes generation of lead and qualifying those leads into prospects.
Business people following up the customer continuously and convert them into a winning
deal. Automation of selling process is effectively handled by salesforce automation, which
automates all the methodologies or sales cycle.

3. SERVICE AUTOMATION-
It deals with managing organizations service. The actual interaction with the
customers such as contact, direct sales, direct mail, call center, web sites and blogs
etc. Are examples of operational CRM

Each interaction with the customer can be collected to the client database
generally known as customer’s history.

This helps to assess a clear view of customer needs such as products owned,
prior support calls etc.

Mr.Babin Dhas D
Assistant Professor
 Basis of the information, if e customer required the customer can easily be
contacted at the right time at the right place.

Mr.Babin Dhas D
Assistant Professor
 • CUSTOMER SERVICE AND OPERATIONAL CRM

CALL CENTER:

A call center is one of the best asserts a customer driven organization can have becoz
maintaining a high level of customer support is critical to obtaining and retaining customers.

Contact centers also track customer call history along with problem resolution.

• WEB BASED SELF SERVICE – This service allow customers to use the web to find
answers to their questions or solutions to their problems. Example, FedEx courier
service
, Gas Booking System, E-Ticketing.

• CALL SCRIPTING – This system helps to assess organizational databases that track
similar issues or questions and automatically generate details to the CSR (Customer
Service Representatives) who can then relay them to the customer. Example,
Frequently Asked Questions.

Mr.Babin Dhas D
Assistant Professor
 CALL CENTER MANAGEMENT

A call center is a place that encourages customers to make calls in order to facilitate their
easy usage of the product/service offered by the organization. All calls from customers
regarding their queries, problems, suggestions are entertained.

It consists of a group of personnel that are specifically trained in handling inbound and
outbound customer calls thus catering to customer service needs.
A center is a place where a number of people handle the incoming as well as outgoing
telephone conversations of a varied nature with their customers.

Call centers are undergoing major development. Companies are becoming customer oriented
instead of product oriented and are investing in CRM. CRM (Customer Relationship
Management ) being the customer centered strategy of the decade and finding its roots in
customer satisfaction and customer focus, has started to play a very prominent role in the call
center sector. How has it achieved this? Call centers are finding that implementing this
strategy brings them vast benefits. For example the high potential that call center CRM
software has in collecting vital customer data and storing it. This data is entirely essential to
the call center and is utilized in its day to day activities. It helps them possess a clearer view
of the customer being handled and enables them to give the right answers to customer
queries, problems etc. Knowing the customer, his preferences, his purchase history etc. all
contribute significantly to the better handling of the customer.

A few features available in this system.

1. Automatic call distribution

2. Interactive voice response ( IVR)

3. Predictive Dialing.

HISTORY OF THE CALL CENTER INDUSTRY

• The history of the call center was begins in USA in 1874. (Alexander Graham Bell
introduced the voice over wires).

63
 • May 1877, first telephone pattern was introduced and 6 telephone connections were in

Mr.M. Riaz Ahmed Mrs.W.Shabeena Shah

64
 use.

• Nov 1877, over 3000 phones were being connected through wires for homes and
business use. During this period, the first call center was created as individual rang
operators, who is manually connected their calls through a switch board with a
required party.
• In 1880, the number of phones in use had claimed to 1, 33,000. It became more
difficult for new or temporary operators to have the knowledge of how and where all
the phone lines are connected.

• First ever 24 hours call centers was an inbound customer service and sales center set-
up by pan American world airlines in1956.

• In 1967 AT&T introduced 800 toll free lines that gave customers a way of contacting
businesses at no cost to them.

• In recent times call centers was flourished because industries such as travel,
hospitality, banking, and catalog shopping have found value in the concept.

• They are utilized to provide superior customer service and increase sales to maximize
market share.

• Call center service depends on three factors like- speed, quality and efficiency. The
main objectives are
1. Customer satisfaction

2. Business process analysis

3. Employee development and welfare

4. Increase in revenue

5. Analyzing future trends

6. Cost reduction.

65
 CLASSIFICATION OF CALL CENTERS

7. Inbound / Outbound

8. International / Domestic

9. In-house / Out-Sourced

CALL CENTER DEVELOPMENT PROCESS

1. Select a Location for the call center where there is an educated work force.

2. Select the underlying technology component.

3. Decide which channels to support on the call center.

(Mail, Chat, Web Forms, Text Chat, VOIP)

4. Select the software solution that meet requirements and will integrate with existing
systems.

5. Integrate system when feasible.

6. Determine service level agreement and business processes.

7. High and retain staff.

8. Finalize the budget

9. Establish measurement and performance processes.

10. Establish on – going policies for training and updating CSR.

4.7 ROLE OF CRM MANAGERS

Role of CRM manager in planning and implementation

66
1 Developing CRM Programs

2 Direction

67
3 Listening

4 Conflict resolution

5 Positive image

6 Follow through

7 Administrative duties

8 Coaching sessions

9 Customer interaction

10 Communication

11 Reporting to senior management

Responsibilities:

1. Measurable increase in customer satisfaction measures

- Maintain or increase recurring revenue from their customers
- Develop/maintain referenceable customers
- Decrease in Executive level escalations from assigned customers.
2. Acts as Customer Advocate within the organization

- Develops in-depth knowledge of the customer's goals and strategy as it relates to the
product/service being used, assists the customer in reaching those goals, and
communicates those goals internally to help drive product/service decisions.

- A single contact/escalation point for cross product/cross functional issues

68
- Holds customer accountable for maintaining contracted levels of
training/staffing/etc.

69
 Customer Relationship Management (CRM)

– Focuses on providing and maintaining quality service for customers, by

effectively communicating and delivering products, services, information and
solutions to address customer problems, wants and needs can include:

• Call handling (the maintenance of outbound and inbound calls from

customers and service representatives)

• Sales tracking (the tracking and recording of all sales made)

• Transaction support (the technology and personnel used for conducting

business transactions)

Research in CRM/Consumer satisfaction survey I Consumer Behavior

It is the study of individuals, groups, or organizations and the processes they use to select,
secure, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts
that these processes have on the consumer and society.

Buying Behavior is the decision processes and acts of people involved in buying and using
products. Need to understand:

 Why consumers make the purchases that they make?

 What factors influence consumer purchases?
 The changing factors in our society.

Consumer Buying Behavior refers to the buying behavior of the ultimate consumer. A firm
needs to analyze buying behavior for:
 Buyer’s reactions to a firms marketing strategy has a great impact on the firm’s
success.
 The marketing concept stresses that a firm should create a Marketing Mix (MM)
that satisfies (gives utility to) customers, therefore need to analyze the what,
where, when and how consumers buy.
 Marketers can better predict how consumers will respond to marketing strategies.

70
Stages of the Consumer Buying Process

Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual
purchasing is only one stage of the process. Not all decision processes lead to a purchase. All

71
consumer decisions do not always include all 6 stages, determined by the degree of
complexity...discussed next.

The 6 stages are:

Problem Recognition (awareness of need)--difference between the desired state and the actual
condition. Deficit in assortment of products. Hunger--Food. Hunger stimulates your need to eat.
Can be stimulated by the marketer through product information--did not know you were
deficient? I.E., see a commercial for a new pair of shoes, stimulates your recognition that you
need a new pair of shoes.

Information search--Internal search, memory.External search if you need more information.

Friends and relatives (word of mouth). Marketer dominated sources; comparison shopping;
public sources etc.A successful information search leaves a buyer with possible alternatives, the
evoked set. Hungry, want to go out and eat, evoked set is Chinese food Indian food Burger king

Evaluation of Alternatives--need to establish criteria for evaluation, features the buyer wants or
does not want. Rank/weight alternatives or resume search. May decide that you want to eat
something spicy, Indian gets highest rank etc. If not satisfied with your choice, then return to the
search phase. Can you think of another restaurant? Look in the yellow pages etc. Information
from different sources may be treated differently. Marketers try to influence by "framing"
alternatives.

Purchase decision--Choose buying alternative, includes product, package, store, method of

purchase etc. Purchase--May differ from decision, time lapse between 4 & 5, product
availability.

Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction.

Cognitive Dissonance, have you made the right decision. This can be reduced by warranties,
after sales communication etc. After eating an Indian meal, may think that really you wanted a
Chinese meal instead.

II What is Qualitative research?

Qualitative research is purely based on the opinions, views and attitudes of the respondents.
These methods consist of depth interviews, focus groups, metaphor analysis, college research
and projective techniques. Highly trained interviewers conduct these interviews and the findings
tend to be somewhat subjective. These results cannot be generalized since they are mostly based
72
on a small sample of respondents

73
Example of qualitative research: Interviewing a customer who has a complaint about the quality
of the services provided by the organization.

Difference between qualitative research and quantitative research

Features Qualitative research Quantitative research

Objective To gain a qualitative To quantify the data and
understanding of the generalize the results from the
underlying reasons and sample of the population of
motivation interest.
Sample Small number of non- Large number of
representative cases representative cases.
Data Unstructured Structured
collection
Data analysis Non statistical Statistical
Outcome Develop an initial Recommend a final course of
understanding action.

Qualitative research techniques

1. E-Focus groups: The online focus group is one of the newest innovations in
qualitative research and represents a technological breakthrough when it comes to
difficult-to-interview groups. The adoption and popularity of e- focus groups is
continuing to grow in business-to-business markets due to the many benefits they
offer.

2. E–surveys: With the technological advancements E-surveys have become a

preferred data collection method for many customer satisfaction and staff
satisfaction surveys. These surveys save time and cost and are also accurate.

3. Depth interviews: They are used where the subject is highly sensitive as in the
case of medical interviewing. In B2B markets depth interviews are the only option
due to the dispersion of respondents across the country. These are carried out face

74
to face or over the telephone and are very flexible.

75
 4. Industrial interviews: Interviewing is the key element in nearly all industrial
market research surveys. The information obtained through these interviews is
often accurate and deep. This often leads to worthy findings and
recommendations.

Difference between Marketing research and consumer research

Consumer Research Marketing research

It focuses more on the data collection It focuses on the data collection.
and relationship building between the
contacted customer and the company.
The consumer knows the identity of the The research sponsor’s identity is not
company disclosed to the respondent.
The consumer expects some action will Respondents cooperate in this research
be taken by the company to improve because they are motivated in some way
upon the product quality and the and even get paid to give their
information given by the respondent responses.
will be used for improvement.

CONS UM ER RESE ARCH PRO CESS

1. Develop Objectives
The first step of this process is to define the objectives of the study. A specific, thought -out set
of objects assists in determining the type and level of information required. Objective Examples:
To segment the marker for Mc Donald’s new meal deal. To assess consumers attitudes towards
Mc Donald’s services and quality.

2. Collection of Secondary Data

Secondary data is data that is readily available and may be from an internal or external source. It
is information that has been collected for an ulterior purpose that may be used to serve the
current purpose.

76
77
 3. Sampling
Sampling is the method in which participants are chosen. One can either use a Probability
Sample where Schiffman and Kanuk (2004: 43) tell is this should be chosen if the researcher
wants the finding to be project able to the total population. If it is sufficient to have the findings
representative of the population then a Non-Probability Sample should be selected.

Methods Of Probability Sampling Simple Random Sample Systematic Random Sample

Stratified Random Sample Cluster Sample Methods of Non-Probability Sampling
Convenience Sample Judgment Sample Quota Sample Selecting the sample type Determining
the sample type Determining the sample size

4. Conduct Primary Research

Primary Research is research that one must conduct to obtain the most relevant, valid and
reliable data possible. There are two types of research that can be conducted: Quantitative
Research Vs Qualitative Research

Quantitative Research Designs:

According to Schiffman and Kanuk (2004:32) there are several methods of conducting
qualitative research:

Observational Research:
Observational Research can be used to monitor consumers and gain insight into their bond
between people and products that is the essence of brand loyalty . Mechanical Observation uses
devices that monitor behavior such as the traffic a store receives or the stress levels in consumers
measured by their eye movements.
Example of Observational Research:
Companies may use this method to monitor the traffic their stores receive in order to determine
the most popular stores.

Experimental Research:
Schiffman and Kanuk (2004: 34) explain that Causal Research is the name given to an
78
experiment where only certain variables are manipulated whilst the others are kept constant in
order to encourage a change in the constant variable.
Example of Experimental Research:

79
Companies may use this technique to test market the packaging, price and promotion of a new
product.
Surveys:
McDaniel and Gates (2008: 50) tell us that a survey is a method of research in which an
interviewer interacts with respondents to obtain facts, opinions and attitudes.

Methods Of Conducting Surveys:

Via the telephone Via Email
Via Post Mail
Via Online Applications (Such as websites)

Quantitative Research Data Collection Instruments:

Data Collection Instruments normally come in for the form of questionnaires that may contain
attitude scales. They are systematic to ensure that all participants answer all the questions in the
same order to rule out any irregularities. They are to be pretested to pledge the validity and
reliably of the instrument. (Schiffman and Kanuk: 2004, 34)

Qualitative Research Designs And Data Collection Methods:

In-Depth Interviews Focus Groups

5. Analyze Data

The data collected must then be coded and quantified. All possible connections in the data must
be established and then displayed in the form of tables and graphics.

Data Analysis tools

a) Correlation analysis- the process of establishing a relationship or

connection between two or more things. Degree and type of relationship
between any two or more quantities (variables) in which they vary together
over a period; for example, variation in the level of expenditure or savings
with variation in the level of income.

80
b) Regression analysis- A technique for determining the statistical
relationship between two or more variables where a change in a dependent
variable is associated with, and depends on, a change in one or more

81
 independent variables.

c) Factor analysis- is a statistical method used to describe variability among

observed, correlated variables in terms of a potentially lower number of
unobserved variables called factors. For example, it is possible that
variations in four observed variables mainly reflect the variations in two
unobserved variables
d) Cluster analysis or clustering is the task of grouping a set of objects in
such a way that objects in the same group (called a cluster) are more
similar (in some sense or another) to each other than to those in other
groups (clusters).
e) Conjoint analysis is a statistical technique used in market research to
determine how people value different features that make up an individual
product or service. The objective of conjoint analysis is to determine what
combination of a limited number of attributes is most influential on
respondent choice or decision making. A controlled set of potential
products or services is shown to respondents and by analyzing how they
make preferences between these products, the implicit valuation of the
individual elements making up the product or service can be determined.
These implicit valuations (utilities or part-worths) can be used to create
market models that estimate market share, revenue and even profitability
of new designs.
6. Prepare Report
The report must be summarizing the entire document, as well as make suggestions on its
findings. It is often the case that researchers will include a sample of the questionnaire here for
the client to see.

Consumer satisfaction survey:

Consumer satisfaction surveys- meaning

Customer satisfaction surveys are a form of research in which companies ask their customers for
their views on issues that indicate how well or how badly the company is performing.
Satisfaction surveys are a valuable tool for small businesses, helping one gain a better

82
understanding of the customers' requirements and concerns so that one may improve the
products and the standards of service in line with customers' needs. By monitoring customer
satisfaction and responding to problems, companies can improve customer loyalty and protect
revenue and profitability.

Statistics suggests that the cost of keeping a customer is only 1/10 th of winning a new one,
because satisfied customers:

a) Usually return and buy more

b) They tell other people about their experiences

c) They may pay a premium for the privilege of doing business with a supplier they
trust.

Key requirements for a customer satisfaction survey program:

Developing a customer satisfaction program is not just about carrying out a survey, because
surveys provide important information on where attention is required. And most often it requires
fundamental transformation in the company involving,

a) Cultural change
b) Training of the staff
c) Cost
d) Time
e) Top management support

The results of the survey must be financially beneficial with less customer churn, higher market
rates, premium prices, stronger brands and happier staff.

Benefits / Advantages of a customer satisfaction survey:

1. Identifying the Key Drivers of Satisfaction

2. Understanding Customers’ Changing Needs

3. Prioritizing Improvement Actions

4. Improving Staff Performance

5. Increasing Customer Retention

 6. Increasing Customer Retention

7. Create a Customer Centric Culture

8. React Quickly to Unhappy Customers

9. Help to assess Company’s new products or Services –

10. Competitors Benchmark.

Six important steps/ parts of a customer satisfaction surveys:

1. Who should be interviewed?

We need to interview the right person and ask the right question. The traditional first in line
person is an obvious candidate for measuring customer satisfaction. A good customer
satisfaction survey program should also include some most important channel intermediaries
like the wholesalers and the retailers.

2. What should be measured?

The primary focus is to find out from the customer how he finds the service and product of the
organization. The information could be obtained at a high level (how satisfied you are with XYZ
Ltd.?) or at a specific level (how satisfied you are with the quality of service rendered?)
One should work out questions from a customer’s point of view to gather information at a
detailed level.

3. How should the interview be carried out?

There are three options to collect data- a. A self- completion method could be used in a face to
face interview b. A postal questionnaire proceeds by a telephonic interview and providing help
for the self-completion questionnaire.

4. How should satisfaction be measured?

Customer satisfaction can be measured by rating things with numerical scores. The respondents
can readily give a number to express their level f satisfaction. Typically, scale of 1to 5 is used
where the lowest figure indicates extreme dissatisfaction and highest score indicates extreme
satisfaction.

5. What do the measurements mean?

The scores obtained in the customer satisfaction surveys are used to create a customer
satisfaction index (CSI). There is no single definition for a CSI, some use the rating given to
overall satisfaction, and some use an average of two key measurements- overall performance
and the intention to re-buy.
The average or mean score of satisfaction given to each attribute provides a table of strengths
and weaknesses. For example-

 A mean score of more than 8/10 – market leader

 Mean score of 7/10 – adequate but needs attention

 Mean score of less than 7 –serious cause for concern.

6. How to use customer satisfaction surveys to greatest effect?

The purpose of customer satisfaction research is to improve customer satisfaction. Considerable

amount of research is done to understand the link between the customer satisfaction and
employee satisfaction. A coordinated customer satisfaction survey program should be linked
with an employee attitude survey because there can be a dangerous gap between the employees’
perception of performance and those of customers.

Developing and implementing CRM strategy

A CRM strategy has to be evolved to enable an organization to gain a quick, accurate

knowledge about customers and use it to increase the value of current customers, keeping them
for longer period and acquiring new customers more effectively. A CRM strategy takes
direction and financial goals from the businesses strategy and aligns with the marketing strategy.
CRM strategy is therefore fundamentally not a strategy for technology but a strategy for
customer relationship management. The aim of the CRM strategy is to be able to find ways to
deliver greater value to customers in more cost efficient ways that employees find satisfying. A
CRM strategy has to be good for the customer, the employee and the organization.

76
Frame work for building a CRM strategy

77
Developing a CRM strategy-

CRM strategy is developed by:

 Auditing the current position regarding customer’s value, loyalty and

satisfaction.
 Segmenting the customers
 Setting customer objectives with reference to acquisition, retention
and development.
 Defining metrics for monitoring the execution of the strategy (eg.
Satisfaction, loyalty, and cost to serve etc.)
 Authorizing the strategy for customization by product segment,
pricing, communication channel, customer service and segment
management.
 Specifying the required customer infrastructure(eg. Skills,
organization, IT, analysis and data)to give direction to the other
operational strategies.

Requisites for a successful CRM strategy

 CRM strategy starts with an understanding of a firm’s clients that is

derived by collecting client data and converting data to usable
intelligence about your clients, their industries and the markets you
have the potential to serve.

 A successful CRM strategy requires a supportive organizational

infrastructure, a client- centric culture and formalized business
processes.

 CRM implementation must be marketed internally to ensure that all

functional personnel use and regularly update client information.

 The CRM strategy should support the overall business objective by

building and leveraging client relationships for a sustained competitive
advantage.
78
 A CRM initiative that is supported from the top and has
implementation champions with power in the trenches will result in
improved revenue and profitability and move the firm toward its

79
 strategic vision.

The Eight Building Blocks of CRM

Gartner defines customer relationship management (CRM) as a business strategy that maximizes
profitability, revenue and customer satisfaction by:
Organizing around customer segments
Fostering behavior that satisfies customers
Implementing customer-centric processes
To achieve the long-term value of CRM, enterprises must understand that it is a strategy involving
the whole business, and thus should be approached at an enterprise level.
CRM initiatives need a framework to ensure that programs are approached on a strategic, balanced
and integrated basis. Gartner has developed such a framework, called the Eight Building Blocks of
CRM:
1. Vision - creating a picture of what the customer-centric enterprise will look like, in
order to build a competitive market position based on value propositions that are
defined, communicated and personified by the enterprise brand.
2. Strategy - developing a strategy to turn the customer base into an asset by delivering
customer value propositions. This includes setting objectives and determining how
resources will be used to interact with customers.
3. Valued Customer Experience - ensuring that the enterprise's offerings and
interactions deliver ongoing value to customers, are delivered consistently and achieve
the desired market position.
4. Organizational Collaboration - changing cultures, organizational structures and
behaviors to ensure that employees, partners and suppliers work together to deliver
customer value.
5. Processes - effectively managing not only customer life cycle processes (for example,
welcoming new customers, handling inquiries and complaints, and winning back lost
customers), but also analytical and planning processes that build knowledge of the
customer.
6. Information - collecting the right data and routing it to the right place.
7. Technology - managing data and information, customer-facing applications, IT
infrastructure and architecture.
8. Metrics - measuring internal and external indications of CRM success and failure.
80
81
Risks / roadblocks in CRM implementation

According to Kale, the seven deadly sins for unsatisfactory CRM outcome are:

(1) Viewing the CRM initiative as a technology initiative;

(2) lack of customer-centric vision;

(3) Insufficient appreciation of customer lifetime value;

(4) Inadequate support from top management;

(5) Underestimating the importance of change management;

(6) Failing to re-engineer business processes; and

(7) Underestimating the difficulties involved in data mining and data integration.

He states that most executives are not even aware of these issues, even though they could spell
disaster for their careers and for the company. Others argue CRM failures are heavily influenced
by the firm's lack of ability to integrate CRM technologies into its functional processes

CRM Metrics/ what needs to be measured?

A CRM Metric is a quantifiable measure that is used to track and assess the status of a specific
CRM initiative.
Measuring CRM activity is one of the most complex and varied measurement endeavors
businesses can undertake. Many companies develop KPIs( key performance indicators) for
measuring progress on CRM.

The main metrics or KPIs for measuring CRM initiatives are:

a. Customer contact initiative

82
b. Customer satisfaction
c. Customer profitability
d. Customer penetration
e. Customer loyalty index

83
Three approaches in KPI development.

 Measures to align (Balanced score card)

The balanced scorecard is a strategic planning and management system that is used extensively
in business to align business activities to the vision and strategy of the organization, improve
internal and external communications, and monitor organization performance against strategic
goals.
 Measures to motivate
These measures help companies adopt a proactive approach where in the selected KPIs under
this category motivate individuals to examine their contributions and drive improvement on the
selected metric
 Measures to improve
This has a reactive orientation and focuses on inputs received by the customer such as customer
complaints and drive concerned personnel to take to corrective action.

CRM metrics in various operations involving face to face transactions

Marketing Sales operations Service Website operations

operations operations

 Sales quota  Call counts  Completio  Visitor count

 Customer and duration n time  Unique visitor
score  Average hold  Repair count
 Sales time fulfillment  Page hits
expenses  Average talk time  Duration
 Close rate time  Service  Click through
 Sales totals  Average level rate
 Sales lost handle time  Customer  Impressions
 Call quality satisfactio
 Cross sell  Breakage
 Service level n score
rates
 Blocked calls  Service
 Number of
 Response call
calls
time priority
 Number of

84
new
customer

85
RM INTRODUCTION

• e-CRM is the application of CRM to an e-business‘ strategy

– Includes the personalization and customization of customers‘ experiences and

interactions with the e-business

• Relationship between merchant and customers is distant

• Less expensive to keep customers than to acquire new ones

• Repeat customers have higher lifetime value than one-time buyers

– A customer‘s lifetime value is the expected amount of profit derived from a

customer over a designated length of time

• Evaluate the potential to profit from a customer

• Tracking and Analyzing Data

• Employ tracking devices

– Personalize each visitor‘s experience

– Find trends in customer use

– Measure the effectiveness of a Web site over time

– Purpose is the same—to provide a personal customer service experience that is
individualized to each customer‘s needs and questions

– Allow customers with Internet access to contact customer service

representatives through e-mail, online text chatting or real-time voice
communications

• Integration of all customer service functions

• Change the culture of customer service representatives

– More technically knowledgeable to handle all forms of contact

 – Provide a highly personalized experience that satisfies customers

• New forms of contact can decrease costs 81

 • Outsource contact center services

– May be appropriate if a company cannot afford to implement a contact center

due to the costs of equipment, office space, service representatives and
technical support.

– Stream International, Inc. Sitel Corporation and TeleTech

e-Mail

• E-mail can provide a less expensive customer service solution

– Customers can use e-mail to ask questions or comment on your company‘s

services or products

• Only appropriate if you have resources to handle demands

• Customers may be not be willing to wait long for an e-mail reply

• Ideally, a response to a customer‘s e-mail inquiry should be completed within forty-

eight hours

• Brightware RightNow Technologies , Servicesoft and Delano

Sales-Force Automation
– Assists companies in the sales process, including maintaining and discovering
leads, managing contacts and other sales-force activities

– Can lighten the administrative load on the sales force

– Important information about products and customers can be accessed in real

time, allowing salespeople to keep current on company and client information

• Customers may want human contact at some point throughout the purchasing process,
especially with higher-priced items

• Salesforce.com, Sales.com Sales Logix and Clarify

• Business-to-Business e-CRM

• Key to (B2B) e-commerce is effective (CRM)

• When selling to another business, you may82be selling to someone who is not the direct
 user of your product

– Ask your contact to speak with the end users

• Developing good partner relationship management (PRM) includes increasing

efficiency in operations and processes between a business and its partners

– Partners can include resellers, distributors and businesses that improve your
product or service

– Integrating systems to combine selling, buying and marketing operations of

partners will streamline processes and provide technical conformity

– ChannelWave Software, Inc., Allegis and Partnerware

• Complete e-CRM Solutions

• Solutions, software or services that use and integrate all the tools of CRM provide a
single view of a customer

– Costs include the price of the software or service itself, the integration into the
current system, the maintenance of the system and employing the service
representatives

– Solutions will continue to become more efficient

• E.piphany

• eGain

• Siebel Systems
• Kana Communications

• Oracle Systems

DATA WAREHOUSING

• Data Warehouse is the extension of database

• Data warehouse is the main repository of customer‘s data

• Data in the data warehouse are processed (i.e., EFL) therefore is more integrated and
83
 consistent .

• While the information in the database tends to be real-time, the information in the data
warehouse can be updated regularly.

• While database focuses on automating the process of collecting and customers

information, data warehouse looks more at assisting managers in performing more
advanced analysis and thus making better decisions.

What is Data warehousing?

A series of analytical tools works with data stored in databases to find patterns and insights
for helping managers and employees make better decisions to improve organizational
performance.

DATA MARTS

• DATA MARTS

• Companies often build enterprise-wide data warehouses, where a central data

warehouse serves the entire organization, or they create smaller, decentralized
warehouses called data marts.

• A data mart is a subset of a data warehouse in which a summarized or highly focused

portion of the customer’s data is placed in a separate database for a specific
population of users.

• For example, a company might develop marketing and sales data marts to deal with
customer info.

• A data mart typically focuses on a single subject area or line of business, so it usually
can be constructed more rapidly and at lower cost than an enterprise-wide data
warehouse.

• However, complexity, costs, and management problems will rise if an organization

creates too many data marts.
• Sourcing, Acquisition, Cleanup and Transformation Tools
84
• Data Mining is a step of Knowledge Discovery in Databases (KDD) Process

– Data Warehousing

– Data Selection

– Data Preprocessing

– Data Transformation

– Data Mining

– Interpretation/Evaluation

• Data Mining is sometimes referred to as KDD and DM and KDD tend to be used as
synonyms

• Data Mining Evaluation

• Data Mining is Not …

• Data warehousing

• SQL / Ad Hoc Queries / Reporting

• Software Agents

• Online Analytical Processing (OLAP)

• Data Visualization

• Data Mining Applications

DATA MINING IN CRM:

• Customer Life Cycle

– The stages in the relationship between a customer and a business

• Key stages in the customer lifecycle

– Prospects: people who are not yet customers but are in the target market
85
– Responders: prospects who show an interest in a product or service

– Active Customers: people who are currently using the product or service

86
 – Former Customers: maybe ―bad‖ customers who did not pay their bills or who
incurred high costs

• It‘s important to know life cycle events (e.g. retirement)

• Customer Life Cycle

• What marketers want: Increasing customer revenue and customer profitability

– Up-sell

– Cross-sell

– Keeping the customers for a longer period of time

• Solution: Applying data mining

• DM helps to

– Determine the behavior surrounding a particular lifecycle event

– Find other people in similar life stages and determine which customers are
following similar behavior patterns.

87