Module 1

INTRODUCTION TO
CUSTOMER
RELATIONSHIP
MANAGEMENT
MA. BERNADETTE O. TAÑAMOR, MBA

LEARNING OUTCOMES
After completion of module 1, students should be able to:
1. Define Customer Relation and Customer Relationship
Management.
2. Identify the major perspectives on CRM: strategic, operational
and analytical.
3. Be aware on the common misunderstandings about CRM 4.
Familiarize with the constituencies having an interest in CRM 5.
Understand the contributions of CRM to performance in different
industries

CUSTOMER RELATIONSHIP
MANAGEMENT (CRM)
CRM is an information industry term for methodologies, software and usually Internet
capabilities that help an enterprise manage customer relationships in an organized
way.
CRM is the process of managing all aspects of interaction a company has with its
customers, including prospecting, sales and service. CRM applications attempt to
provide insight into and improve the company/customer relationship by combining all
these views of customer interaction into one picture.

CUSTOMER RELATIONSHIP
MANAGEMENT (CRM)

CRM is an integrated approach to identifying, acquiring and retaining customers. By

enabling organizations to manage and coordinate customer interactions across
multiple channels, departments, lines of business and geographies, CRM helps
organizations maximize the value of every customer interaction and drive superior
corporate performance.

CUSTOMER RELATIONSHIP
 MANAGEMENT (CRM)

CRM is an integrated information system that is used to plan, schedule and control the
pre-sales and post-sales activities in an organization. CRM embraces all aspects of
dealing with prospects and customers, including the call center, sales force,
marketing, technical support and field service. The primary goal of CRM is to improve
long-term growth and profitability through a better understanding of customer
behavior. CRM aims to provide more effective feedback and improved integration to
better gauge the return on investment (ROI) in these areas.

CUSTOMER RELATIONSHIP
MANAGEMENT (CRM)
CRM is a business strategy that maximizes profitability, revenue and
customer satisfaction by organizing around customer segments, fostering
behavior that satisfies customers, and implementing customer-centric
processes.

TYPES OF CRM
1.Strategic
Strategic CRM is a core customer-centric business
strategy that aims at winning and keeping profitable
customers.

TYPES OF CRM
2. Operational
Operational CRM focuses on the automation of
customer-facing processes such as selling, marketing
and customer service.

TYPES OF CRM
3. Analytical
Analytical CRM is the process through which
organizations transform customer-related data into
actionable insight for either strategic or tactical
purposes.
 STRATEGIC CRM
Strategic CRM is focused upon the development of a customer centric
business culture 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. In a customer
centric culture you would expect resources to be allocated where they
would best enhance customer value, reward systems to promote
employee behaviors that enhance customer satisfaction and retention,
and customer information to be collected, shared and applied across the
business.

OTHER MAJOR BUSINESS

ORIENTATIONS
 Product-oriented businesses believe that customers
choose products with the best quality, performance,
design or features. These are often highly innovative
and entrepreneurial firms. Many new business start-
ups are product-oriented.

OTHER MAJOR BUSINESS

ORIENTATIONS
Sales-oriented businesses make the assumption that if
they invest enough in advertising, selling,
publicrelations (PR) and sales promotion, customers
will be persuaded to buy. Very often, a sales orientation
follows a production orientation. The company
produces low-cost products and then has to promote
them heavily to shift inventory – a ‘make and sell’
approach.

OTHER MAJOR BUSINESS

ORIENTATIONS

A customer or market-oriented company shares a set of

beliefs about putting the customer first. It collects,
disseminates and uses customer and competitive
information to develop better-value propositions for
customers. A customer-centric firm is a learning firm
that constantly adapts to customer requirements and
competitive conditions. There is evidence that
 customer-centricity correlates strongly to business
performance.

MARKETING AUTOMATION
Marketing automation (MA) applies technology to marketing processes.
Campaign management module sallow marketers to use customer related
data in order to develop, execute and evaluate targeted communications
and offers. Customer segmentation for campaigning purposes is, in some
cases, possible at the level of the individual customer, enabling unique
communications to be designed.

MARKETING AUTOMATION
 Real-time marketing (automation), combining predictive modelling and
work-flow automation, enables companies to make relevant offers to
customers as they interact with company technologies at different touch
points such as websiteand retail outlet.As consumers share more data with
companies, and as the company’s abilityto analyze those data improves,
online marketing increasingly occurs in real time. The choices the customer
makes as she navigates through the Web, the enquiries she makes and her
profile enable firms to predict which products and services will be most
appealing to her: the so-called Next Best Offer or NBO. This offer can be
refreshed in real time as a result of customer behaviour online.

SALES FORCE AUTOMATION

Sales force automation (SFA) was the original form of operational CRM.
SFA systems are now widely adopted in business-to-business
environments and are seen as ‘a competitive imperative’ that offers
‘competitive parity’.
SFA applies technology to the management of a company’s selling
activities. The selling process can be decomposed into a number of stages
such as lead generation, lead qualification, lead nurturing, needs
identification, development of specifications, proposal generation, proposal
presentation, handling objections and closing the sale. SFA software can be
configured so that it is modelled on the selling process of any industry or
organization.

SALES FORCE AUTOMATION

Automation of selling activities is often linked to efforts to improve and

standardize the selling process. This involves the implementation of a sales
methodology. Sales methodologies allow sales team members and
management to adopt a standardized view of the sales cycle, and a common
language for discussion of sales issues

SALES FORCE AUTOMATION

SFA software enables companies to assign leads automatically and track
opportunities as they progress through the sales pipeline towards closure.
Opportunity management lets users identify and progress opportunities-to-
sell from lead status through to closure and beyond, into after-sales
support. Opportunity management software usually contains lead
management and sales forecasting applications. Lead management
applications enable users to qualify leads and assign them to the
appropriate salesperson. Sales forecasting applications generally use
transactional histories and salesperson estimates to produce estimates of
future sales.

SERVICE AUTOMATION
Service automation involves the application of technology to customer
service operations. Service automation helps companies to manage their
service operations, whether delivered through a call center, contact centre,
field service, the Web or face-to-face, with high levels of efficiency,
reliability and effectiveness. Service automation software enables
companies to handle inbound and outbound communications across all
channels. Software vendors claim that this enables users to become more
efficient and effective, by reducing service costs, improving service quality,
lifting productivity, enhancing customer experience and lifting customer
satisfaction.
 ANALYTICAL/ANALYTIC CRM

Analytical CRM, also called analytic 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/ANALYTIC CRM

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.

To these internal data can be added data from external sources: geo
demographic and lifestyle data from business intelligence organizations, for
example. These are typically structured datasets held in relational databases. A
relational database is like an Excel spreadsheet where all the data in any row is
about a particular customer, and the columns report a particular variable such
as name, postcode and so on.

ANALYTICAL/ANALYTIC CRM

Analytical CRM has become an essential part of many CRM implementations.

Operational CRM struggles to reach full effectiveness without analytical
information about customers. For example, an understanding of customer
 value or propensities to buy underpins many operational CRM decisions, such
as:

Which customers shall we target with this offer?

What is the relative priority of customers waiting on the line, and what level
of service should be offered?
Where should I focus my sales effort?
MISUNDERSTANDING ABOUT CRM

1.CRM is merely database marketing.

2.CRM is a marketing process.
3.CRM is an IT Issue.
 4.CRM is about loyalty schemes.
5.CRM can be implemented by any company.

WHAT IS CRM?
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
grounded on high-quality customer-related data and
enabled by information technology.

CRM CONSTITUENCIES
1.Companies implementing CRM.
2.Customers and partners of those companies.
3.Vendors of CRM systems.
4.CRM cloud solutions providers.
5.Social media players.
6.Vendors of CRM hardware and infrastructure.
7.Management consultants.

COMMERCIAL CONTEXTS OF CRM

Banks deal with a large number of individual retail
customers. They 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.

COMMERCIAL CONTEXTS OF CRM

Auto 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 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.

COMMERCIAL CONTEXTS OF CRM

Technology solution vendors manufacture or
assemble complex bundles of hardware,
software and implementation 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.
 COMMERCIAL CONTEXTS OF CRM
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
deliverhigher levels of accuracy in stock replenishment.
Manufacturers can run CRM enabled marketing
campaigns that are highly cost
effective.
 THE NOT-FOR-PROFIT CONTEXT –
THE ‘THIRDSECTOR’
The ‘third sector’, the not-for-profit community (charity, non-
government organization (NGO), education and government),
is very active in implementing CRM. Universities wish to
maintain relationships with alumni, charities campaign to
raise income and government increasingly is interested in
changing citizens’ behavior gently, through
‘nudges’(behavioral economics)