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    Unit 5, CRM Strategies

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    Arun Kumar
    This document discusses customer relationship management (CRM). It defines a relationship as a series of interactive episodes between two parties over time that involves communication behaviors and an emotional bond. It then discusses different types of business relationships from transactional to collaborative. CRM is presented as integrating internal and external networks to create and deliver value to targeted customers, with a focus on customer retention and profitability. Key benefits of CRM include converting buyers to profitable customers, building long-term relationships, customizing marketing, and retaining customers for life through gathering customer data.

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    Unit 5, CRM Strategies

    Uploaded by

    Arun Kumar
    124 views19 pages
    This document discusses customer relationship management (CRM). It defines a relationship as a series of interactive episodes between two parties over time that involves communication behaviors and an emotional bond. It then discusses different types of business relationships from transactional to collaborative. CRM is presented as integrating internal and external networks to create and deliver value to targeted customers, with a focus on customer retention and profitability. Key benefits of CRM include converting buyers to profitable customers, building long-term relationships, customizing marketing, and retaining customers for life through gathering customer data.

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    This document discusses customer relationship management (CRM). It defines a relationship as a series of interactive episodes between two parties over time that involves communication behaviors and an emotional bond. It then discusses different types of business relationships from transactional to collaborative. CRM is presented as integrating internal and external networks to create and deliver value to targeted customers, with a focus on customer retention and profitability. Key benefits of CRM include converting buyers to profitable customers, building long-term relationships, customizing marketing, and retaining customers for life through gathering customer data.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    124 views19 pages

    Unit 5, CRM Strategies

    Uploaded by

    Arun Kumar
    This document discusses customer relationship management (CRM). It defines a relationship as a series of interactive episodes between two parties over time that involves communication behaviors and an emotional bond. It then discusses different types of business relationships from transactional to collaborative. CRM is presented as integrating internal and external networks to create and deliver value to targeted customers, with a focus on customer retention and profitability. Key benefits of CRM include converting buyers to profitable customers, building long-term relationships, customizing marketing, and retaining customers for life through gathering customer data.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 19

    Unit: 5

    What is a relationship
    Composed of a series of interactive episodes between two

    parties over time.

    Content of each interactive episode is a range of

    communicative behaviours including speech, actions and body language

    Essential to have emotional content resulting into a bond

    Transactional ex

    Value added ex

    Collaborative ex

    Automated purchasing

    Shift from Acquiring to Retaining

    Integration of Supplier with Buyer

    Trans Ex

    Coll Ex

    Availability of alternatives Supply mkt dynamism

    Imp of purchase
    Complexity of Purchase Info exchange Operational linkages

    CRM is a core business strategy that integrates internal processes and functions and external networks, to create and deliver value to targeted customers.
    CRM is a systematic approach for serving customers so as to ensure that customer retention and profitability in marketing are achieved.

    Helps
    convert buyers into profitable customers Build enduring relations Customisation and one- to one marketing on mass scale Retain them as customers for life

    Enables sharper customer selection / targeting, by identifying the differences in value needs of customers

    Supports cross selling to existing customers

    Manages customer interaction and customer service


    Helps focus on profit and avoid mis-alignment b/w revenue and profit Gathers in-depth customer info, tracks customer behaviour and applies the knowledge to all marketing efforts.

    Serves as a sustainable competitive advantage

    Why retaining customers are profitable.


    1. Cost of acquisition at the beginning of the relationship. Longer the relationship lower the amortised cost. 2. Account maintenance costs decline as a % of total costs 3. Long term customers tend to be less inclined to switch; less price sensitive 4. 5. 6. 7. Likely to purchase ancillary products Creates entry barrier to competition Less expensive to service Increased customer retention and loyalty makes the employees job easier and satisfying.

    Do not sell to them; help them to buy instead

    Put the customers interest above your own


    Form trust teams. Also build trust among employees

    Transactional Customers
    Less loyalty and commitment Cost of switching is low Focus on price and service

    Collaborative Customers
    Lasting commitment Operational linkages & info sharing mechanisms Service offerings as per customers needs Cost of switching is high

    ABC system provides a clear picture of the gross margins & cost to serve components that yield individual CP. Steps to calculate CP using ABC system
    Identify activities that vary across customers sales, Mktg, service, Production

    For each activity, identify the cost driver


    CP -- revenue from Customer minus the cost

    associated with serving it

    Method to allocate and measure indirect costs called Time driven ABC. Has 2 components:
    Identify cost per hr of each group of resources performing work ( R & D, Prodn, Services, etc ) Identify unit times spent on these resources by specific activities for products, services and customers
    Ex: Customer services has a cost of Rs. 5000 per hr and a particular transaction has taken 30 min, a cost of Rs.2500 is the cost of transaction for that customer.

    Rank the profitability from most to least and to plot the accumulated profit in a graph.
    X axis list of customers Y axis -, the accumulated profit
    Distribution of profits follows the 80 20 rule. Firm makes profit from one / two groups of customers and loses money from other groups of customers.

    Net margin Vs. Cost to serve Profit


    High Passive Product is crucial Net Margin Good supplier match Costly to serve but buyers pay

    Loss

    Aggressive Price sensitive Few special demands Leverage buying power Low price Customized features Low High

    Cost to serve

    Some people always throw stones in your path. It depends on you what you make with them; a wall or bridge. Remember, you are the architect of your life.

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