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CRMModels

The CRM Value Chain model provides a framework for businesses to develop and implement customer relationship management strategies. The primary stage consists of locating customers, understanding their habits, interacting to develop relationships, and providing customer service. The secondary stage is a support system that includes leadership, culture, data/IT, employees, and processes. Together these stages integrate internal and external processes to create value for customers and profits for the business.

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0% found this document useful (0 votes)
52 views10 pages

CRMModels

The CRM Value Chain model provides a framework for businesses to develop and implement customer relationship management strategies. The primary stage consists of locating customers, understanding their habits, interacting to develop relationships, and providing customer service. The secondary stage is a support system that includes leadership, culture, data/IT, employees, and processes. Together these stages integrate internal and external processes to create value for customers and profits for the business.

Uploaded by

Ngân Thùy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CRM MODELS

Họ và tên SV: Trần Nguyễn Thùy Ngân - Lớp: 47K22.1

MỤC LỤC
1. The IDIC models 1
2. The CRM Value Chain 2
3. The five-process model PAYNE and FROW 5
1. The IDIC models

The IDIC (identify, differentiate, interact, customize) is a model developed by Peppers


& Rogers (1995). The model helps to assess the expectation of customers and their
value to the business.

IDIC Model of customer relationship management (Buttle, 2009)

The IDIC model suggests that companies should take four actions in order to build
closer one-to-one relationships with customers:
+ Identify who the customers are and build a deep understanding of them.
+ Differentiate customers to identify which customers have most value now and
which offer most for the future.
+ Interact with customers to ensure a deep understanding of customer
expectations and customers’ relationships with other suppliers or brands.
+ Customize the offer and communications to ensure that the expectations of
customers are met.

More specifically, this model has supported businesses with each action as follows:
● Identify customer expectations
A business working towards customer relationship management has to first identify its
customer’s needs, wants and preferences. This helps to curate new products and
strategies oriented towards customers. For instance, in terms of identification, Nestle
conducted a market survey to identify the customer base for their coffee by assessing
the nations where caffeine intake was high. It found that Western countries had a more
positive outlook towards coffee drinks while Eastern nations preferred tea as their
caffeine drink. The company then established its coffee brand, Nescafe, in Western

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countries. The brand also offered coffee-flavored candies in Eastern countries to
gauge reaction to the flavor.

● Differentiate customer expectations


To meet customer expectations it is important to differentiate the customer base into
value and need. This differentiation helps to prepare strategies that meet company
goals and customer expectations for strong customer relations.

Differentiation by value helps to identify customers that are loyal and should be
focused on. Their feedback can be valuable for product line extension, increased
efficacy, and performance, as well as revenue generation.

Differentiating existing customers on the basis of their needs helps to strategize


promotions. For instance, apart from analyzing the customers who add value to the
company’s brand image, DuPont made it a point to understand that other customers
needed effective customer service to address their needs individually.

● Customer interaction
Customer interactions help to understand customer expectations and how they relate
to business products and services. The interaction, based on customer value and needs,
provides a chance to collect feedback, opinions and wants. Unilever always has its
sales representatives and customer care executives ready to discuss possible
improvements they can make on their product line or take feedback for improvements.
This has helped them develop customer-oriented products.

● Customizations to meet customer expectations


After identifying, differentiating and interacting with the customers a fair idea can be
drawn for new strategies and product customizations. For instance, market research
firms like McKinsey realized the need for customizations from the feedback of
customers. Their customers expected increased customizations on their requests. This
will help them in taking their own strategic decisions based on the reports of
McKinsey. McKinsey incorporated the clause of providing a percentage of
customization leverage in its reports.

The IDIC model provides a sound framework through which businesses can tread
through customer engagement and work to meet their expectations.

2. The CRM Value Chain


The value chain model of Customer Relationship Management (CRM) is a model that
provides insights to businesses on how to develop and implement CRM strategies. It

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was developed by Francis Buttle in 2004. The main aim of this model is to integrate
an organization’s internal and external processes to create value for the customer at a
profit. Furthermore, the model is applicable in both business-to-business (B2B) and
business-to-customer (B2C) types of businesses of all sizes.
The value chain model for customer relationship management is staged into primary
and secondary stages. The secondary stage is a support system for the primary stage
and both of these stages consist of various processes.

The CRM Value Chain

The primary stage of the value chain model


The primary stage of the value chain consists of different processes. Each of these has
its own concepts and tools which help enable the use of the model. The primary stage
helps to:
+ Locate the customer,
+ Understand their habits,
+ Interact to develop a relationship
+ Provide customer service
Furthermore, this process helps the business to maintain a relationship with their
customers by serving customers’ desire to build a lasting relationship.

● Customer portfolio analysis


The identification of a customer is the prime responsibility of an organization as it
helps establish the target audience and develop products and services. The customers
to be identified are the ones who can add value to the business and are the most
desirable for a business to succeed. The analysis helps to create a profile of customers,

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and their needs. Furthermore, it helps the business to strategize for effective
interaction and helps discover highly valued customers for a long-term relationship.

● Network development
The process of network development is slow and steady as it requires extensive
interaction between the organization and the customers, at every step of the
relationship. Moreover, the customer needs to be engaged in the pre-sales, sales and
post-sales stages.
EXAMPLE: To develop this kind of network, Amway chose to make its customers a
part of its marketing plan. The company worked to include their loyal customers to
develop more connections for the company in return for greater concessions on
products and services, along with a percentage of commission on sales through them
to their related networks, thus building a quite extensive customer network.

● Value proposition development


The proposition of value in relation to a product or service comes when the
organization has an overall idea of what the customer needs, and how the company
can strategize to provide to the customers. The process involves:
+ Identification of resources,
+ Development of sources and,
+ Development of products and services to address the value-based needs of
customers.
EXAMPLE: Airtel, one of the leading telecommunications providers in India, created
an application wherein customers can access all information related to their services.
Customers can also customize their subscription and service plans as per their needs.
The customers can also talk to customer service to manage their service plans. This
helped Airtel with better leverage and helped to create a valuable network.

● Manage customer lifecycle


Customers may not remain indefinitely loyal to a business. The lifecycle of a customer
may include the time from which an individual is a prospect to the time when the
individual has become a customer and left it. On the other hand, in some cases, the
customer might become interested in advocating the services and products of the
company to their peer network. Furthermore, the company is always interested in
converting the customer into its advocate, thus, helping in extending the life cycle of a
customer.

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The secondary stage of the value chain model
The secondary stage of the CRM value chain model is a supportive stage that provides
structure and helps the business to perform its primary functions. The various aspects
of this stage:

● Leadership and culture: Effective leadership helps to create a good business


value proposition towards customer management. It prioritizes customer
relationship management processes.
● Data and information technology: Today’s CRM processes are quite reliant on
Information Technology and Data. The data helps in acquiring information
related to customers’ needs. Information technology helps in analyzing a vast
amount of data to develop value propositions. Also, customer information
drives CRM and helps in strategizing new processes that might help to address
the customers’ needs.
● People or employees: They are the most important support structure of a
business, as they interact with customers to understand the way CRM needs to
work. They may include the sales staff, customer service staff, production staff
or delivery staff.
● Processes: They include the tasks that the company needs to follow to produce
a product or service as understood through customer profiling and network
analysis. If the company requires a generic product or service, the process
works to make it possible. On the other hand, if the customers are more centric
towards personalized offerings, the processes help deliver the same on behalf
of the organization.

Customer relationship management strategies need to be supportive to ensure


organizational success. Buttle’s CRM Value chain model offers a comprehensive
guide for organizations looking to frame an inclusive CRM strategy. However, a
critical shortcoming of this model is that it fails to consider competitor analysis as a
part of its process. Furthermore, with the markets becoming increasingly clustered and
dynamic, competitors affect business greatly in terms of sales, revenues and brand
presence.

3. The five-process model PAYNE and FROW


Payne’s Five Processes Model helps to improve Customer Relationship Management
(CRM) which makes acquisition and retention of customers a priority. It includes
processes that can help to build and maintain relationships with customers. The model
was established by Adrian Payne and Pennie Frow in 2005 to identify and assess
processes relevant to CRM.

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Each of the above is a cross-sectional, process-oriented approach and are interlinked.
They have their own role and function for increased success with CRM
implementation. Strategy development and value creation process are a part of
strategic CRM. The multichannel integration process is a part of operational CRM.
Information management and performance assessment processes are a part of
analytical CRM

● Strategy development
The strategy development process is further divided into two parts; business strategy
and customer strategy. For business strategy, a business needs to develop a vision in
relation to its offerings. The purpose is to create a goal to establish itself as a key
player in the industry. This model suggests that invariably:
+ Business strategy paves the way for understanding,
+ How customer strategy needs to be shaped and,
+ How it should change over time in conjunction with the changing needs of the
customers.
It involves understanding the choice of customers and their characteristics for
developing effective products and services. According to Payne and Frow, it is
important to examine both current and potential customer base as a part of customer
strategy. It helps with appropriate segmentation and identifying future actions to tackle
different customer needs.

● Value creation process


The value creation process of Payne’s Five Processes model involves identifying the
value of a customer to the business and vice-versa. The business needs to understand
which customers are valuable through the process of value proposition and value

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assessment. This process, as per the model, needs to be transformative as per the
results received from the strategy development so that value is extracted and
transformed into meaningful propositions. Payne’s Five Processes model explains that
there are 3 aspects of effective value creation. Firstly, the organization needs to
determine which processes can create value for the customer. Secondly, identify
customers who can add value to the organization. Thirdly, identify how to maximize
value in desirable customer segments for a successful exchange of values

● Multichannel integration process


Payne and Frow consider the multichannel integration process as an important process
as it works on inputs from value creation processes and business strategy. It involves
converting the insights from these processes to outputs in value-adding activities. This
process suggests the business conduct tasks to engage customers, understand their
perspective and retain them for a longer duration. It helps businesses to focus on
making decisions that integrate all channels and ensure the customer experience is
positive. Moreover, feedback from this process needs to be taken into account to
further evaluate both strategy and value proposition. This helps in better CRM
implementation for a greater success of the organization

● Performance assessment process


Performance assessment is very important to understand how well the value
proposition of the business is and whether the customer’s interest is leading to better
business performance. Payne and Frow suggest an understanding of the performance
through shareholder value, customer engagement scenario, profit margins, and returns
through dividends. According to Payne’s Five Processes model, performance
assessment of business should also include monitoring of customer satisfaction and
analysis of Key Performance Indicators (KPIs). Doing so shall help to assess the
extent of success of the implementation of the CRM processes.

● Information management or analytical process


Information management is the analytical part of the model. It is a support to the other
processes. Payne’s Five Process model suggests collecting, organizing, and using
information related to customers helps with insights on consumer behavior. It helps
businesses to create appropriate marketing responses and improve value propositions.
To manage such activities, businesses should develop a data repository system with
data analysis tools. These applications can help keep the CRM process a
comprehensive one for quantitative and qualitative measurement of market
competitiveness.

Application of Payne’s Five Process model of CRM in an e-commerce business

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E-retailers have majorly benefitted from this model. Integrating Payne’s Five Process
model is very important to provide a customer-based value proposition. E-retailers
work to build CRM strategy by engaging customers, offering value propositions such
as discounts, loyalty privileges and priority shipping. Multi-channel integration can
also be included from customer reviews, customer service, e-mail support as well as
return policies. Performance of the CRM process can also be assessed from the online
traffic, time spent on browsing and surfing habits. Assessing what factors trigger
purchase intention can help create better value propositions.

Payne’s Five Process model evaluated the correlation between business processes,
prospects and customers. The various processes encompass the spectrum of CRM,
right from the strategic point of view to assessing the performance of customer
engagement. Every process supports itself and other processes, with each task being
interdependent for success.

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References
[1] Francis Buttle, Stan Maklan. (2019). Customer Relationship Management
Concepts and Technologies
[2] Ahmadi, H., Osmani, M., Ibrahim, O., & Nilashi, M. (2012). Customer
relationship management model for UTM Alumni Liaison Unit. CRM History, 2(5).
[3] Eko, K. (2014). The comparison of CRM model: A baseline to create Enterprise
architecture for social CRM. In Proceedings of the First International Conference on
Advanced Data and Information Engineering (DaEng-2013) (pp. 479–487).
Singapore: Springer.
[4] Srivastava, M. (2013). Principles of Managing Customer Relationships. SIBM,
VI(2).
[5] Gummesson, E., (2015) Return on Relationships (Ror): Financial Aspects of
Relationship Marketing and Crm in a Business-To-Business Context. In Creating and
Delivering Value in Marketing. Springer, Cham, pp. 43–47.
[6] Kapooria, P., (2017) Customer Relationship Management: Key to Customer
Sovereignty, New Delhi: Idea Publishing.
[7] Abdul-Muhmin, A.G. (2012). CRM technology use and implementation benefits in
an emerging market. Journal of Database Marketing & Customer Strategy
Management, 19(2), 82–97.
[8] Debnath, R., Datta, B., & Mukhopadhyay, S. (2016). Customer Relationship
Management Theory and Research in the New Millennium: Directions for Future
Research. Journal of Relationship Marketing, 15(4), 299–325.
[9] Pinnington, S., & Jones, M. (2015). Performance Measurement for Customer
Relationship Management (CRM). In Developments in Marketing Science:
Proceedings of the Academy of Marketing Science (DMSPAMS) (pp. 112–117).
Springer.

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