GLBIM

CUSTOMER RELATIONSHIP MANAGEMENT

UNIT 1
FACULTY:-Ms Divyanshu Chauahan

Introduction
Customer satisfaction has always been a key element in the pursuit of corporate goals and
objectives. However, the current competitive environment fostered by liberalization and
globalization of the economy, and the rising customer expectations for quality; service and
value have prompted many companies to organize their business around customers they
serve, rather than around product lines or geographic business units. This is partly because
customer contact, care and insight have been rendered increasingly more practicable and
economical through computers, telecom technology and internet, historically, customer
relationship existed even in the pre-industrial era due to the direct interaction between
producers and customers as between farmers and buyers of agricultural products, or as
artisans and craftsmen produced customized products for each customer. It was when mass
production of goods in the industrial era led to the emergence of middlemen and
transaction-oriented marketing, that direct interaction between producers and customers
became less frequent.

In recent years, however, several factors have contributed to the rapid development of
direct interaction between producers and customers. The concept of customer relationship
management as a co-operative and collaborative process has thus tended to be more
common. Its purpose is mutual value creation on the part of the marketer and customer.
Customer Relationship

Management (CRM) solutions provide customer-oriented services for planning, developing,

maintaining, and expanding customer relationships, with special attention paid to the new
possibilities offered by the Internet, mobile devices, and multi-channel interaction. CRM
enables a company to capture a consolidated customer view through multi-channel
interactions in a data warehouse solution.

Sophisticated analytical techniques are then applied to this customer information to better
understand and predict customer behaviour. CRM can then be used to strategically
implement acquired customer knowledge in every area of the company, from the highest
management level to all employees who come into direct contact with customers. CRM thus
enables an organisation to address its customers’ preferences and priorities much more
effectively and efficiently. CRM is a tool that can help organisations to profitably meet the
lifetime needs of customers better than their competitors.

Definition and Scope of Customer Relationship Management

Customer Relationship Management is a comprehensive approach for creating, maintaining
and expanding customer relationships.

Significance of the words used in the definitions:

(a) Comprehensive: CRM does not belong to just sales or marketing. It is not the sole

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responsibility of customer service group or an IT team; i.e. CRM must be a way of doing
business that touches all the areas.

(b) Approach: An approach is broadly a way of treating or dealing with something. CRM is a
way of thinking about and dealing with the customer relationship. We can also use the
word strategy because CRM involves a clear plan. In fact, CRM strategy can usually serve
as a benchmark for other strategies in your organization, because any strategy sets
directions for your organization. We can also consider this from a department or area
level just as a larger organization has strategies for shareholder management, marketing,
etc. Each strategy must support managing customer relationships.

Thus CRM is strategic.

To realize this, one can make a list of key strategies, to brief your area of responsibility.
Then write down organizational approach towards customers. Compare the CRM strategies
with other strategies. They should support each other. External customers are those outside
the organization who buy goods and the services the organization sales. Internal customers
is a way of defining another group in some organization whose work depends upon work
of your group. Therefore, they are your customers. It is your responsibility to provide
what they need so that they can do their job properly.

(c) Customer relationship: Finally let us see what we mean by customer relationship. In
today’s world where we do business with individuals or groups with whom we may
never meet and hence much less know in person-to-person sense. CRM is about creating
the feel of comfort in this high tech environment.

CRM is a discipline as well as a set of discrete software and technologies which focuses on
automating and improving the business process associated with managing customer
relationships in the areas of sales, marketing, customer services and support. CRM software
applications facilitate the coordination of multiple business functions (such as sales,
marketing, customer services, and support) and also coordinate multiple channels of
communication with the customer face to face, call centres and the Web – so that
organizations can accommodate their customers’ preferred channels of interaction.

CRM (Customer Relationship Management) is a comprehensive strategy and process of

acquiring, retaining and partnering with selective customers to create superior value for the
company and the customer. The basic objective of CRM is to increase marketing efficiency
and effectiveness.

It is co-operative and collaborative processes that help in reducing transaction costs and
overall development costs of the company.

CRM can also be defined as an alignment of strategy, processes and technology to

manage customers and all customer-facing departments and partners. CRM in short is
about effectively and profitably managing customer relationships throughout the entire
lifecycle.

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Most CRM initiatives begin with a strategic need to manage the process of handling
customer related information more effectively. For beginners it could simply mean better
lead management capabilities or sales pipeline visibility. However, as organizations mature
in their CRM initiatives, shall visualize as a tool to acquire strategic differentiators, it includes
adoption of IT related systems, training of employees and amendments in business
processes related to customers.

It is not just software but an approach to update and enhance business methods to improve
customers’ relationship with the organization. CRM is a comprehensive approach which
provides seamless integration of every area of business that touches the customer namely –
marketing, sales, customer service and field support –
through the integration of people, process and technology, taking advantage of the
revolutionary impact of the Internet. CRM creates a mutually beneficial relationship with
your customers. In the rapidly expanding world of e-commerce, there is a new generation of
empowered customers emerging who demand immediate service with the personalized
touch.

 Relationship marketing is a term often used in marketing literature. It is sometimes

used interchangeably with CRM.
 Relationship marketing has been defined more popularly with a focus on individual
or one-to-one relationship with customers, integrating database knowledge with
long term customer retention and growth strategy.
 Some writers have taken a strategic view and shifted the role of marketing to
genuine customer involvement (communicating shared knowledge) rather than
manipulating the customer (telling and selling). Overall, the core of CRM and
relationship marketing is the focus of co-operative and collaborative relationships
between the firm and its customers and for other marketing factors.
 It must, however, be noted that CRM programs now envisage a wider spectrum of
efforts other than data-based one-to-one relationship with customers, which
characterizes relationship marketing.

The development of CRM as a strategy is attributable to certain emerging factors. One is the
process of disinter-mediation in many industries i.e., direct interaction with end-consumers.
This is due to the easy accessibility of companies to the sophisticated computer and telecom
technologies.
 Thus, in the case of financial institutions including banks, insurance companies,
Computer software, household appliances and even consumables, the process of
disintermediation is making relationship marketing more popular. This development
is also due to the growth of service sector, so far as services are supplied directly to
the customers, it minimizes the role of middlemen. There is inevitably a greater
emotional interaction between service provider and user, which is found necessary
to be sustained and enhanced.
 Today, CRM is being used to achieve the best of both worlds. Companies want to
maintain strong relationships with their clients while simultaneously increasing their
profits. The CRM systems of today could be called “true” CRM systems.
 They have become the systems that were originally envisioned by the pioneers of
this paradigm. Software companies have continued to release advanced software

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 programs that can be customized to suit the needs of companies that compete in a
variety of different industries. Instead of being static, the information
processedwithin modern CRM systems is dynamic. This is important, because we live
in a world that is constantly changing, and an organization that wants to succeed
must constantly be ready to adapt to these changes.

Evolution /Landmarks in the History of CRM: 1960-2022

1960s : Mass Production/Mass Product

1970s : Mass Market
1980s : Total Quality Management
1990s : Customer Relationship Management (CRM)
2000s : Customer Relationship Management (CRM)
2010s : E-Customer Relationship Management (e

Mass Production/Mass Product:

 Mass Production is a system of manufacturing based on principles such as the use of
interchangeable parts, large-scale production, and the high-volume Assembly Line.
Although ideas analogous to mass production existed in many industrialized nations
dating back to the 18th century, the concept was not fully utilized until refined by
Henry Ford in the early 20th century and then developed over the next several
decades. Ford’s success in producing the Model T automobile set the early standard
for what mass production could achieve.
 As a result, mass production quickly became the dominant form of manufacturing
around the world, also exerting a profound impact on popular culture. Countless
artists, writers, and filmmakers used the image of the assembly line to symbolize
either the good or the evil of modern society and technological prowess.
 Mass production techniques maximized the profit making ability of corporations, but
it dehumanized the lives of workers. Frederick W. Taylor introduced Scientific
Management at the beginning of the 20th century, which used time and motion
studies (often timing them with a stopwatch) to measure workers’ output. Taylor’s
goal was to find the ideal process and then duplicate it over and over.
 In the abstract, scientific management was a giant leap forward, but in reality, mass
production led to worker unrest, turnover, and social conflict. Unionization efforts,
particularly the struggles to organize unskilled workers by the Congress of Industrial
Organizations (CIO) in the 1930s and 1940s, and battles between management and
employees intensified as workers became more alienated because of the factory
setting.

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Mass Market:

 Mass Marketing is a market coverage strategy in which a firm decides to ignore

market segment differences and go after the whole market with one offer. It is type
of marketing (or attempting to sell through persuasion) of a product to a wide
audience.
 The idea is to broadcast a message that will reach the largest number of people
possible.
 Traditionally mass marketing has focused on radio, television and newspapers as the
medium used to reach this broad audience. By reaching the largest audience
possible exposure to the product is maximized.
 In theory this would directly correlate with a larger number of sales or buy in to the
product.
 Mass marketing or undifferentiated marketing has its origins in the 1920s with the
inception of mass radio use. This gave corporations an opportunity to appeal to a
wide variety of potential customers.
 Due to this, variety marketing had to be changed in order to persuade a wide
audience with different needs into buying the same thing. It has developed over the
years into a worldwide multi-billion dollar industry.
 Although sagging in the Great Depression it regained popularity and continued to
expand through the 40s and 50s. It slowed during the anti-capitalist movements
of the 60’s and 70’s before coming back stronger than before in the 80’s, 90’s and
today.
 These trends are due to corresponding upswings in mass media, the parent of mass
marketing.
 For most of the 20th century, major consumer-products companies held fast to
mass marketing,mass producing, mass distributing and mass promoting about the
same product in about the same way to all consumers.
 Mass marketing creates the largest potential market, which leads to lowered costs.

Total Quality Management (TQM):

 Total Quality Management, a buzzword phrase of the 1980’s, has been killed and
resurrected on a number of occasions. The concept and principles, though
 simple seem to be creeping back into existence by “bits and pieces” through the
evolution of the ISO9001 Management Quality System standard.
 “Total Quality Control” was the key concept of Armand Feigenbaum’s 1951 book,
Quality Control: Principles, Practice, and Administration, in a chapter titled “Total
Quality Control” Feigenbaum grabs on to an idea that sparked many scholars interest
in the following decades, that would later be catapulted from Total Quality Control
to Total Quality Management. W. Edwards Deming, Joseph Juran, Philip B. Crosby,
and Kaoru Ishikawa, known as the big four, also contributed to the body of
knowledge now known as Total Quality Management.

Total = Quality involves everyone and all activities in the company.

Quality = Conformance to Requirements (Meeting Customer Requirements).
Management = Quality can and must be managed.

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  TQM = A process for managing quality; it must be a continuous way of life; a
philosophy of perpetual improvement in everything we do.

Customer Relationship Management (in 1990):

 Customer Relationship Management (CRM) is one of those magnificent
concepts that swept the business world in the 1990’s with the promise of
forever changing the way businesses small and large interacted with their
customer bases.
 In the short term, however, it proved to be an unwieldy process that was
better in theory than in practice for a variety of reasons. First among these
was that it was simply so difficult and expensive to track and keep the high
volume of records needed accurately and constantly update them.
 In the last several years, however, newer software systems and advanced
tracking features have vastly improved CRM capabilities and the real promise
of CRM is becoming a reality. As the price of newer, more customizable
Internet solutions have hit the marketplace; competition has driven the
prices down so that even relatively small businesses are reaping the benefits
of some custom CRM programs.
 In the beginning…
 The 1980’s saw the emergence of database marketing, which was simply a
catch phrase to define the practice of setting up customer service groups to
speak individually to all of a company’s customers.
 In the case of larger, key clients it was a valuable tool for keeping the lines of
communication open and tailoring service to the clients needs. In the case of
smaller clients, however, it tended to provide repetitive, survey-like
information that cluttered databases and didn’t provide much insight.
 As companies began tracking database information, they realized that the
bare bones were all that was needed in most cases: what they buy regularly,
what they spend, what they do.
 Advances in the 1990’s: In the 1990’s companies began to improve on
Customer Relationship Management by making it more of a two-way street.
Instead of simply gathering data for their own use, they began giving back to
their customers not only in terms of the obvious goal of improved customer
service, but in incentives, gifts and other perks for customer loyalty.
 This was the beginning of the now familiar frequent flyer programs, bonus
points on credit cards and a host of other resources that are based on CRM
tracking of customer activity and spending patterns. CRM was now being
used as a way to increase sales passively as well as through active
improvement of customer service.

E-CRM:
 This is a web based Sales Force Automation tool that helps you to focus on un-
covered customer-revenue opportunities that are not possible in a manual sales
process.

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  The architecture of the product brings your Customers/Sales Teams/Channel
partners into a single centralized structure.
 This will help you overcome the stumbling block of remote accessibility of
information across your organization.
 Its easy to use web based interface, faster deployment and effective
implementation will streamline your sales process quickly and in a cost effective way.
It records enquiries, follow ups, complaints and details of any other interaction with
the client which helps to build and maintain life long relation with the customer.

Customer Relationship Management: Components and

Architecture
The following stages strive to determine the main components of the various styles of
Customer
Relationship Management:
(a) Functional
(b) Departmental
(c) Partial CRM
(d) Full CRM

Functional CRM:
 This model of implementation is possible only with the large scale organizations. This
will be possible only with the organizations which will not be having any
departmental coordination.
 These modules will work only for the particular departments.
 This can be called as specialized modules. Because of this department-wise
implementation the initial amount spent will always be higher than the Return on
Investment (ROI).
 This method will benefit only to the specific area not to the entire
organization. For example, we can consider the company like TATA which will be
having various types of business with variety of modules where the commonality will
be very less. In this kind of situation this type of CRM will come into the picture.

(b) Departmental:
 This model is possible for all size of organizations. There will be some departments
which will be common for one or more business modules.
 This intra departmental coordination can be utilized and the modules can be
implemented accordingly.
 This will give success from bottom line to the middle level. That means these
modules can help the modules like call centres, SFA etc.

(c) Partial CRM:

 This module is possible only when the intra departmental coordination is more
among the departments. In this model two to three departments will be sharing a

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 common master database. As the modules are shared among the various business
processes the return on investment will be always 4 to 7 times higher than the initial
investment.
 For example the sales, marketing departments will always share a common database
of the products and the customers.

(d) Full CRM:

 This model is applicable with all levels of organizations. In this model the entire
organization will be using a same database. There will be a greater coordination
among the departments with this type of organization. As a whole the
implementation done. Because of this common nature, this model provides a greater
ROI which is 7 to 10 times greater than the initial investment.
 As mentioned above each and every organization will have its own working method.
By identifying their level in any of the above mentioned models, the organizations
can proceed with the implementation. Customer intelligence is another name for
customer facing system.
 This creates the strong base of data about the customers that the organization is
having with itself. Any organization which is having good customer intelligence can
create a best customer data repository with which the retention of customer will be
easy for the organization.
 The customer intelligence is having above mentioned four steps that are to be
followed. Each and every step is interrelated with each other.

Gather data:
1. Gather Customer Data
2. Analyse Data
3. Formulate Strategy Action
4. Data collection
5. Various sources are considered.
6. Various touch points are accessed.
7. Various parameters are considered
8. Data will be accumulated in a single repository

Analyze the data:

1. Patterns are to be designed for the analysis.
2. Detailed analysis will be performed.
3. Samples will be taken into consideration.
4. Final formulation will be done.
Formulation Strategy:
1. Conclusions will be derived from the analysis.
2. Data segmentation will be done.
3. Models will be prepared.
Action:
1. The final step in the customer intelligence.
2. Actions will be taken based on the strategies planned.
3. Final repository will be stored with the plans.

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4.Any organization which is following the above mentioned steps can create a good
customer
data repository.

Technology and CRM Technology Components

There are following types of CRM technology:
(a) Operational/functional CRM
(b) Collaborative CRM
(c) Analytical CRM

Operational CRM
 This is an ERP like segment of CRM.
 Typical business functions involving customer service, order management, invoice or
billing or sales and marketing automation and management are the parts of
operational CRM.
 It provides support to “Front Office” business processes, including sales, marketing
and service.
 Each interaction with a customer is generally added to a customer’s contact history,
and staff can retrieve information on customers from the database when necessary.
 One of the main benefits of this contact history is that customers can interact with
different people or different contact channels in a company over time without
having to describe the history of their interaction each time.
 It process customer data for a variety of purposes such as managing campaigns,
Enterprise Marketing Automation (EMA) and Sales Force Automation (SFA).
 Till now, this is the primary use of CRM. One characteristic of operational CRM is the
possibility of integrating with the financial and human resources functions of ERP
applications.
 With this integration, end-to-end functionality from lead management to order
breaking can be implemented.

Analytical CRM
 Analytical CRM is the capture, storage, extraction, processing, interpretation and
recording customer data to the user.
 Companies such as Micro Strategy have developed applications that can capture this
customer data from multiple resources and then use hundreds of algorithms to
analyze and interpret the data as needed.
 The value of the application is not just in algorithm and storage, but also in ability to
individually personalize the response using the data.
 It generally makes heavy use of data mining.
 It analyzes customer data for the following purposes.
 Design and execution of targeted marketing campaigns to optimize marketing
effectiveness.
 Design and execution of specific customer campaigns.
 Analysis of customer behaviour to aid product and service decision-making such as
pricing etc.

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  Aid in taking management decisions such as financial forecasting.
 Provide a tool in predicting the probability of customer defection.

Collaborative CRM
 It is the communication centre, coordination network that provides neural paths to
customer and its suppliers.
 It could mean a Partner Relationship Management [PRM] application or a customer
interaction centre.
 It could mean communication channels such as web or e-mail, voice applications and
even channel strategies.
 In other words, it is any CRM function that provides a point of interaction between
customer and the channel itself.

CRM Technology Components

 The following are the components, which are common to different CRM approaches.

CRM Engine:
 This could be the customer data repository. The data mart, the data warehouse is
the one where all the data on customer is captured and stored. This could include
basic stuff such as your name, address, telephone number, birth date etc. It could
also include more sophisticated information like how many times you have accessed
a particular web site and what you did on the web pages you accessed. It could also
include the help desk support and the purchase history.
 Ultimately, the purpose is a single gathering point for all individual customer
information so that a unified customer view can be created throughout the company
departments that need to know the data stored in this CRM engine house.

Front Office Solutions:

 These are the unified applications that run on the top of the customer data
warehouse. They could be sales force automations, marketing automation, or
service and support customer interaction applications. In the client server
environment (and now in the internet environment), they provide employees
with the information on the basis of which the decision of “what is to be done?
or “What next is to be done with the customer is made?”
 The more specific applications provide an element of self-service for the
customer.

Enterprise Application Integration

 They sit between back office and front office. They also sit between the newly
installed CRM system and old systems implemented by the enterprise.
 They permit CRM to CRM communication. They are pieces of codes, connectors and
bridges that as a body are called as EAIs.
 EAIs provide messaging services and data mapping services that allow one system to
communicate with different other systems regardless of their formatting.
 Consumer insight helps identify hidden meanings in consumer feedback, such as

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 Discovering latent consumer needs or value that they themselves might not be
aware of and applying this information to our products. LG Electronics is making
every effort to explore consumer insight and to reflect it in product development
and marketing, thereby increasing consumer value.

 LG Electronics opened a global marketing portal site as an in-house marketing

Centre in July 2008 so that marketing personnel around the world could share and learn
from important best practices as well as marketing strategies and activities. LGE will
continue to expand the portal and strengthen its function as a Global Insight Hub.

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