Customer relationship Management

Unit 1 - Evolution of Customer relationship

Introduction:

Relationship management helps organizations and business to maintain a certain level of

engagement with its audience and it can happen between two businesses or a business and its
customers. This relationship that is maintained with the partners and customers is more than
transactional and it helps in building the brand loyalty for the specific business. Studying the
mentalities of people overall and their reactions to different products or advertisements or social
media interactions may be different each time. This is why companies and businesses hire
relationship managers to take care of relationship management. It is important that the company
remains connected to their customers so it can understand the needs of their customers. The same
applies for their business partners too. Improvising and changing according to the demands of the
customers and clients help businesses to hold on to them thereby continuing to uphold the sale of
their products and services. Relationship management also ensures that while the company is
capturing newer markets and making more customers it doesn‘t lose the older ones. Customer
relationship management takes care of building a bond of trust be- tween the organisation and the
existing customers.

Evolution of CRM

1950s – 1970s: Pre - PC Era

Recording customer data with the help of pen and paper, it became a massive hassel, The Rolodex
(rolling dex) was invented in 1956 to store customer data. As mainframe computers came into
existence, a digital database was created, which laid the groundwork for future CRM.

1980s – Mid 90s : Origin of CRM

As technology advanced, the Contact Management System was developed. Everything from names,
email addresses, phone numbers, etc, could be stored here

Its first step was the introduction of Sales Force Automation (SFA). This allowed daily repetitive tasks,
such as tracking, recording, pipeline management, etc, to be automated.

In 1993, Siebel Systems was founded, which marked the beginning of comprehensive CRM solutions

The 2000s – 2020s: Modern CRM Systems

CRMs started integrating with social media platforms like Facebook, Twitter, and Instagram.
Businesses could better understand customer needs, preferences, based on likes and comments.

Late 2010s

Artificial intelligence (AI) was incorporated into the CRM system in the late 2010s, which enabled
CRMs to analyze large volumes of data.
Meaning

Customer Relationship Management (CRM) Is a technology for managing all the company’s
interactions with current and potential customers.

It refers to the process of managing interactions with existing and prospective customers during the
sales process.

Benefits of CRM

1.Satisfied Customers and Higher Business Revenue:

- Example: A retail store uses CRM software to track customer preferences and purchase history.
By analyzing this data, they can tailor promotions and offers to individual customers, resulting in
increased sales and customer satisfaction.

2. Retention of Existing Customers:

- Example: A software company implements CRM to stay in touch with existing clients, providing
regular updates, support, and personalized assistance. This proactive approach builds loyalty,
reducing churn rates and increasing customer lifetime value.

3. Customer Satisfaction and Loyalty:

- Example: A hotel chain utilizes CRM to record guest preferences, such as room preferences,
dietary restrictions, and special occasions. By remembering and fulfilling these preferences during
each stay, the hotel ensures a positive experience, leading to repeat visits and positive word-of-mouth
referrals.

4. Improvement in Customer Relationships:

- Example: A telecommunications provider uses CRM to track customer inquiries, complaints, and
feedback. By addressing customer issues promptly and efficiently, the company strengthens trust and
loyalty, fostering long-term relationships and reducing customer turnover.
5. Enhanced Bond Between Sales Representatives and Customers:

- Example: A financial services firm adopts CRM to centralize customer information and
communication history. Sales representatives can access this data during interactions, providing
personalized recommendations and building rapport with clients, leading to increased sales and
customer satisfaction.

6. Enable the company to identify, contact, attract, and acquire new customer

7.Identify and target market with high revenues:

Using data analytics and market research, a company can identify segments of the market with high
purchasing power or potential for growth. For example, a luxury car manufacturer might target affluent
neighborhoods or demographics with high disposable income.
8.Select contact media, plan promotions, and incentives: Companies can utilize various marketing
channels such as social media, email marketing, and traditional advertising to reach potential
customers. For instance, a retail clothing brand might use Instagram ads to target younger
demographics, while offering promotional discounts to incentivize purchases.

9.Obtain a better understanding of the customers, their wants, and needs: Customer Relationship
Management (CRM) software integrates data from various sources such as sales transactions,
customer interactions, and website analytics to provide insights into customer preferences and
behavior. For example, Amazon uses CRM data to recommend products based on past purchases
and browsing history.

10.Increase productivity of the sales process: Streamlining the sales process through automation and
digital tools can improve efficiency and reduce manual errors. For instance, implementing online
order entry systems, automated invoicing, and payment processing can expedite the sales cycle and
enhance customer satisfaction.

11. Identifies cross-selling and up-selling opportunities:

CRM helps in identifying opportunities for cross-selling and up-selling: By analyzing customer
purchase history and behavior, CRM systems can identify opportunities to recommend additional
products or services to customers. For example, a telecommunications company might offer
customers who subscribe to internet services the option to add cable TV or phone services at a
discounted rate based on their usage profitability.

Factors responsible for CRM growth

• Digital transformation
• Customer expectation
• Data driven decision making
• Technology advancement
• Cloud computing

(CRM) framework

A customer relationship management (CRM) framework outlines your organization’s plan for
managing and nurturing customer relationships, including the tools and activities you use to carry that
plan out.

There are several essential elements to CRM and a framework will help to focus activities in each
area. They include:

Technology

Products

Service

People

Marketing

Measurement
1.Technology

Technology is the glue that holds your CRM framework together. The best tools can inform decisions,
streamline processes and provide the metrics required to assess business performance.

• Lead management: Organizing, scoring, tracking and assigning leads effectively is the key to
shortening your sales cycle, increasing deals and growing retention.
• Reporting and forecasting: Dashboards, reports and other analytics features help users make
sense of large volumes of data.

2.Products

For example, our web design company might learn from reading online reviews that its customers
value their websites’ security credentials. Such insight could inspire security-themed marketing
content that aims to attract like-minded people.

3.Service

Customers always expect great service.

Service is about more than fixing customers’ problems.

key service aspects to build into your CRM framework include:

• Deliveries: Shorter delivery times work best, but offer various options to suit buyers with
different needs and budgets.
• Onboarding: For software vendors, onboarding is a second chance to make a great first
impression.
• Product updates: Increasing the value of an existing product is a reliable way to strengthen
relationships.
• Recommendations: Show you have customers’ needs in mind even after they convert by
providing personalized product recommendations

4.People
Every CRM framework needs people at its core. You need to focus on pleasing customers, but
companies must also enable their employees to build valuable connections with buyers.

• Offering CRM training

• Minimizing stress
• Providing adequate role training: Training takes many forms, so you can pick a style that works
for you and your team.

5.Marketing

Customers want personalized experiences before they’ve even bought from your company, which is
why marketing is a critical part of your CRM framework.

personalized customer interactions through marketing:

 • Webinars: Turn customer questions into webinar topics so you can dive deep into real-world
problems for precise sections of your audience
• Online advertising: Segment your audience by demographic data, website behavior and
transaction histories to serve the most relevant online ads
• Email marketing: Use email templates to include recipients’ names and account information
• Product demonstrations: Tailor each product demonstration to the individual lead’s needs by
emphasizing relevant features and qualities.
6.Measurement

Measuring performance regularly is key to your CRM framework since it helps you identify the most
effective relationship-building techniques.

Online engagement

Customer retention and churn rates

Conversion rates

CRM process

a.Creating Brand awareness

This is why the first step of the CRM process cycle is to enhance your brand awareness.

You can use various channels to gain your target audience’s attention, ranging from cold emails to
social media campaigns. CRM software contains a wealth of information. The tool can show patterns
in past leads and customers to give marketing teams a clear picture of their target audience.

b.Acquiring Leads

Once you have a powerful brand awareness strategy in place, you must focus on generating high-
quality leads for your business.

There are several lead generation strategies that you can use, including:

• Lead forms on websites

• Retargeting ads
• Personalized email campaigns
• Live chat on websites

c. Converting Leads to Customers

The next step of the CRM process involves converting the leads into profitable customers.
This requires a powerful, personalized, and automated engagement strategy. CRM tool crafts multi-
step drip email campaigns to follow up with prospects at the most relevant time. Segment leads
based on their data, interaction history, and other attributes.

D. Providing Customer Support

The CRM process also entails post-sale interactions that boost retention.

CRM tool Save your support executives time by making help desk and contact data readily available
from the same platform

E.Driving Upsells

The last step of the CRM process is keeping customers loyal, so they spend more money on your
business. CRM tool helps Track the purchase history, buying behavior, needs, preferences, and pain
points using the CRM database to drive upsell opportunities. Deliver personalized recommendations
to clients based on their previous purchases.
Types of CRM

CRM can be divided not only into different areas, but also into four components, each used by Each
department as required. These components are:

• Analytical CRM:Analytical CRM transforms complex customer data into actionable

strategies, fostering stronger relationships, heightened satisfaction, and increased sales.

Key features of Analytical CRM.

• Better lead conversation rate

• Improved market analysis before running a marketing campaign
• Boost customer loyalty and satisfaction
• More accurate financial forecasting and planning
• The suggested actions come from vast amounts of consumer data that would be too
difficult for one person to handle
• It determines, develops and analyze inclusive set of rules and analytical methods to scale.
and optimize relationship with customers by analyzing and resolving of all questions.

• Operational CRM : Operational CRM is software that focuses on streamlining customer

interactions with sales and marketing. Operational CRM also provides service automation,
in other words, the ability to handle tasks more efficiently and with fewer steps (i.e. less
work). The task of operational CRM is to translate the findings of analytical CRM into
concrete Measures.

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.

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

3.SERVICE AUTOMATION

It deals with managing organizations service. The actual interaction with the customers
AUTOMATION Contact, direct sales, direct mail, call center , web sites and blogs etc. are
examples of Operational CRM. Each interactions with the customer can be collected to the client
database Generally known as customers history.

• Collaborative CRM :,Collaborative CRM assists businesses in consolidating

communications and shared resources when working towards winning a deal & it serves
to coordinate. However, this task is not about coordinating external actions but concerns
coordination across the company. coordinated. Collaborative CRM allows a company-wide
approach, which determines clear goals and responsibilities.
Components of Collaborative CRM are:

• Interaction Management

This management process deals with creating a contact or interaction channel process within a
company that is unique to customer interaction and eventually increases the level of communication
between the two parties.
• Channel Management

After evaluating and implementing the interaction medium, it is vital to enhance the channels through
which the customer interacts. Using the latest technical aspects to enhance channel engagement
could help contact customers and collect information from them to help organizations understand
their customers.

10 current trends in Customer Relationship Management (CRM) are:

1. Artificial Intelligence (AI) Integration:

- AI is transforming CRM by automating routine tasks, providing predictive analytics, and enhancing
customer service through chatbots and virtual assistants. AI can analyze customer data to predict
future behaviors and preferences, allowing for more personalized interactions.

2. Omnichannel CRM:

- Omnichannel CRM systems integrate customer interactions across various channels—such as

email, social media, phone, and in-person—into a single, unified view. This ensures a seamless and
consistent customer experience regardless of the communication channel used.

3. Mobile CRM:
 - With the increasing use of mobile devices, mobile CRM apps are becoming essential. These apps
enable sales and customer service teams to access customer information and perform tasks on the
go, improving responsiveness and productivity.

4.Cloud-based CRM : Cloud based CRM centralizes your data and boost productivity by automating
key tasks .

5. Personalization and Customer Experience:

- CRM systems are focusing more on personalization by leveraging customer data to tailor
interactions and offers. This enhances the customer experience, fosters loyalty, and increases
satisfaction.

6. CRM and Internet of Things (IoT) :

- Integrating IoT with CRM allows businesses to collect and analyze data from connected devices,
providing deeper insights into customer behaviors and preferences. This can lead to more proactive
and personalized customer service.

7. Social CRM:

- Social CRM involves integrating social media channels with CRM systems. This enables
businesses to engage with customers on social media platforms, monitor brand sentiment, and gather
valuable customer insights from social interactions.

8. Enhanced Data Security and Privacy:

- With increasing concerns over data security and privacy, CRM systems are enhancing their
security measures. Compliance with regulations like GDPR and CCPA is becoming a priority,
ensuring that customer data is protected and handled responsibly.

9. CRM Analytics and BI:

- Advanced analytics and business intelligence (BI) tools within CRM systems are enabling
businesses to gain deeper insights from their customer data. This helps in making data-driven
decisions, identifying trends, and optimizing marketing and sales strategies.
10. Integration with Other Business Systems:

- Modern CRM systems are increasingly being integrated with other business systems such as
ERP (Enterprise Resource Planning), marketing automation, and e-commerce platforms. This
integration provides a holistic view of customer data across the entire organization, streamlining
processes and improving efficiency.

Customer Profitability

Customer profitability (CP) is a metric that measures the difference between the revenue a customer
generates and the company’s spending on acquiring or retaining that customer

Customer profitability analysis is a process of analyzing customers and their spending habits. It
can be used as a financial performance indicator.
Benefits of Customer Profitability Analysis

1. Resource Allocation : By understanding which customers are most profitable, businesses can
allocate resources more efficiently, focusing marketing and service efforts on high-value
customers.
2. Cost Management : Identifying unprofitable customers helps in reducing costs associated with
serving them, either by improving efficiency or by renegotiating terms to make these
customers profitable.
3. Tailored Marketing Strategies : Businesses can develop more targeted marketing strategies
that cater specifically to the needs and preferences of their most profitable customers, thereby
enhancing customer satisfaction and loyalty.
4. Pricing Optimization: Understanding customer profitability helps in setting appropriate prices.
Businesses can use this data to adjust pricing strategies to maximize profits from different
customer segments.
5. Improved Customer Relationships: By focusing on profitable customers, businesses can
improve relationships through personalized services and loyalty programs, leading to
increased customer retention.
6. Product Development: Insights gained from customer profitability analysis can inform product
development and enhancements, ensuring that new offerings meet the needs of the most
profitable segments.
7. Strategic Decision-Making: Customer profitability analysis provides critical data that can inform
strategic decisions, such as entering new markets, discontinuing unprofitable products, or
acquiring new customers.
8. Performance Measurement: It allows businesses to measure the performance of different
customer segments over time, helping to identify trends and make informed decisions about
future business strategies.

Customer Relationship Management (CRM) vs. Relationship Marketing

Both Customer Relationship Management (CRM) and Relationship Marketing are strategies focused
on managing and enhancing interactions with customers to foster long-term engagement and loyalty.
However, they differ in their approaches, tools, and scope.
A comparative analysis:

CRM:

- Definition: CRM is a technology-driven strategy that involves the use of software to manage a
company’s interactions with current and potential customers.

- Scope: It focuses on collecting and analyzing customer data, automating sales processes,
managing customer service, and ensuring efficient communication across different channels.

- Example: A CRM system like Salesforce helps businesses track customer interactions, manage
sales pipelines, and provide customer support.
Objective:To streamline processes, improve customer service, enhance sales efficiency, and provide
data-driven insights to better understand and serve customers. Example: Using CRM analytics to
identify and target the most profitable customer segments.
Tools:CRM software solutions (e.g., Salesforce, HubSpot, Zoho CRM), automation tools, data
analytics platforms.

Techniques: Data collection, segmentation, automated marketing campaigns, customer service

management.

Implementation: Requires integration of CRM software, training staff, and ongoing data management.

Focus: Efficiency, data accuracy, and process automation.

Data Usage: Extensive use of customer data for operational purposes, such as tracking sales,
monitoring customer interactions, and analyzing behavior patterns.

-Relationship Marketing:

- Definition: Relationship Marketing is a broader strategy focused on building long-term relationships

with customers by providing consistent value and personalized experiences.

- Scope: It emphasizes customer retention, loyalty, and satisfaction through personalized

communication, engagement, and relationship-building activities.

- Example: A loyalty program by a coffee shop that rewards frequent customers with discounts and
special offers.

Objective: To create emotional connections with customers, enhance their overall experience, and
foster loyalty and advocacy.- Example: Sending personalized birthday messages and special offers to
customers

Tools:Personalized communication channels (email, social media, direct mail), loyalty programs,
customer feedback systems.

Techniques: Personalization, loyalty rewards, consistent engagement, customer appreciation events.

Implementation: Involves strategic planning, customer-centric policies, and personalized marketing

efforts.
Focus: Building trust, emotional engagement, and long-term customer relationships.

Data Usage: Uses data to understand customer preferences and behaviors to create personalized
experiences and communications.

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