An Introduction

to
Customer Relationship
Management
 Session Objectives:
To Discuss:

• The need of CRM/ Why CRM

• Concept and understanding of CRM
• What Motivates Companies to Adopt CRM Strategies
• Determinants of CRM
• Introducing CRM Strategy
What Motivates Companies to Adopt CRM
Strategies:

• Competition
• Consumer Expectation
• Technology
• Diminishing impact of advertising
 What is Customer Relationship
Management?
Different things to different people:

• An IT capability for facilitating relationship management

• To some people, it is a ‘contact centre’ for managing relationship with
consumer through phone, e-mal or web
•Others view as relationship marketing and
• Some considers it as ‘post sales’ management of customers
CRM is all this and more. CRM aims to look at all aspects that will
enable an organization’s capability to manage and nurture its 1:1 relationship
with its consumers (an organization is not necessarily a company, it could
also be a government or non-financial entity).
 Customer Relationship Management

CRM is about creating a competitive advantage by being the best at

understanding, communicating, delivering and developing existing
customer relationships in addition to creating and keeping new
customers.
 What is CRM?
CRM is a comprehensive way to manage the relationship with your
customers — including potential customers — for long-lasting and
mutual benefit. More specifically, modern CRM systems enable you
to capture information surrounding customer interactions and
integrate it with every customer-related function and data point.

The resulting information is then used to create and automate a

variety of processes that identify and describe the valuable
customers. Most important, these processes help you personalize
new and ongoing interactions to cost-effectively acquire, stay close
to, and retain these "good" customers.
 What is Customer Relationship Management (CRM)?

CRM is “the development and maintenance of mutually beneficial

long-term relationships with strategically significant customers”
(Buttle, 2000)

CRM is “an IT enhanced value process, which identifies, develops,

integrates and focuses the various competencies of the firm to the
‘voice’ of the customer in order to deliver long-term superior
customer value, at a profit to well identified existing and potential
customers”.
(Plakoyiannaki and Tzokas, 2001)
 Some Definitions of CRM:
• Definition by Gartner
CRM as a business strategy designed to optimize profitability, revenue and customer
satisfaction.
• Definition by PwC Consulting
CRM is a business strategy that aims to understand / appreciate manage and
personalize the needs of an organization’s current and potential customers.
• Definition by Parvatiyar and Sheth
CRM is a competitive strategy and process of acquiring , reacting and partnering with
selective customers to create superior value for the company and the customer.
• Definition by Bob Thompson- CRM Guru.com
CRM is a business strategy that applies to every organization. It means working with
customers such that they receive great service and are motivated to return again and
again to do more business with the company.
 Some Definitions of CRM Cont…
Definition by CRM (UK) Ltd., 2000

Customer Relationship Management is the establishment, development maintenance

and optimization of a long term mutually valuable relationship between consumer and
organization.
Successful CRM focuses on understanding the needs and desires of the
consumer and is achieved by placing these at the heart of the business by integrating
them with the organization’s strategy, people, technology and business processes.

Common features in the above definitions:

• CRM is about strategy

• CRM- The Customer Orientation
 Is CRM ?
• A Strategy
• A Process
• A Software- implementing marketing, sales and customer service
processes
• A Philosophy
• A Project
• Call Centre Support
 CRM is Not:

CRM is not:

• Piece of software solution

• Sales Tactics
• Call centre services
• Relationship building by softer attributes of a contact
person
• Waiving (a portion or full) of the customers’ bill
 Determinants of CRM

•Understand customer needs and problems;

•Meet their commitments;
•Provide superior after sales support;
•Make sure that the customer is always told the truth
(must be honest); and
•Have a passionate interest in establishing and retaining a long-
term relationship (e.g., have long-term perspective).
 Some Issues Relating to Marketing and
CRM
• Customer receives value not only from purchase but from each
exchange between the customer and provider
• The second concept is customer value creation
Competitive advantage is not based exclusively on price but also
on the ability of the provider to help customers create value for
themselves
• Third relates to the providers responsibility
The company can build stronger relationships with its customers
only if it takes the responsibility for developing these
relationships.
 Designing a CRM Strategy
A successful CRM strategy will address 4 key areas of the business:
Strategy, People, Technology and Processes
And the combination of these elements the Cog Wheel Process

The handle of the cogwheel is the corporate strategy that gives “direction”
to the company. In turn, the strategic direction moves the two enablers:
people and technology. The interaction between these elements are the
business processes that sit behind successful CRM.
 The D4 company analysis: the 4 step
process
• Define the existing CRM Processes within the company
• Determine the perceptions of how the company manages their customers
relationships
• Design the ideal CRM solutions relative to the company or industry
• Deliver the strategy for the implementations of the recommendations based on
the findings

The outcome of the D4 analysis is:

• The development of a tailored and specific strategy that build on the
organization’s existing CRM practices and position in the marketplace.
• Allows organization to prioritize the actions to be taken for placing CRM
activities at the heart of the business.
• One significant outcome of D4 analysis is to reveal who or what is driving the
organization’s current strategy or , in this case holding the handle.
 The concept of Customization and
Personalization

• Customization: Customization will assume that

manufacturer will design a product to suit
customer needs.
• Personalization: is about customer becoming a
co-creator of the content of their experience.
 Then Now
Maximizing market share and revenue Maximizing customers value is the primary
was the objective objective
• Quality standards were determined • Quality standards are determined by the
internally customer
• Product and service were separate • Products are developed in service for
entities customization
• Only marketing people were concerned • Everyone in the company is concerned with
with the customer the customer
• Marketing management was an • Marketing is managed by cross-functional
independent function teams
The Old The New
• Products were developed to enter new • Products are developed to meet customers
market need
• Delivery systems were used to make • Delivery is used to reinforce the value
purchase easier proposition
• Relationships were less important than • Relationships are built to offer lifetime
sales customer value
The Nine Truths of Relationship Marketing

• Customers are no longer loyal

• Customers do not really want a relationship but companies do
• Customers want information
• Customers not only want to be thanked for their patronage, they expect it
• Customers control the selling process
• The lifetime value of a customer is not relevant
• Do not overcomplicate the programme
• Keep reporting simple and focused on the customer
• What if? Ask it often experiment every chance you get and do not call it
testing
 Types of CRM
• Proactive versus Reactive: Companies attempting Proactive CRM are generally
those which are increasing the level of personalization and are practicing one to one
marketing
Reactive CRM is where attempts to distinguish and describe the scope of
operational, collaborative and analytical CRM
• Operational, Collaborative and Analytical CRM:
Operational CRM: Also known as front office CRM, and involves the areas where
direct customer contact occurs. Operational CRM enables and streamlines
communication to and from the customer. These interactions are referred to as
Customer touchpoints.

Customer touchpoints classification:

• Face to face touchpoints: Sales/service/channels/events/stores
• Database driven touchpoints: Telephone/e-mails/SMS/Fax
• Mass Media: Advertising/PR/Website
 Types of CRM cont…

Collaborative CRM: Collaborative CRM as a specific functionality that enables a two

way dialog between a company and its customers through a variety of channels to
facilitate and improve the quality of customer interactions.
The mandate of collaborative CRM is to manage various partners of the
company be it business partners, agents, brokers distributors, and retailers.
(Dyche, 2002)
Analytical CRM: Also known as back office or strategic CRM. It involves understanding
the customer activities that occurred in the front office. It involves analyzing large
amount of data through data mining and other methods and feeding the result
(knowledge gained) back to operational CRM.
 Linking Profitability and Loyalty
• High profitability and short term customers
(butterflies)
• Low profitability and short-term customers
(Strangers)
• Low profitability but long-term customers
(Barnacles)
• High profitability and long-term customers
(True friends)
 Customer Value
• Customer’s value is the customers
perception of what outcome he expects in
a specific use situation with the help of a
product or service offering in order to
accomplish a desired purpose / goal.
 Five new approaches to customer
value
• The total value of a customer’s
relationship with the company;
• The potential value of the relationship;
• The profitability of the relationship;
• The insights the customer can provide to
the company;
• The influence a customer can exercise
over other customers.
 Few fundamental lessons on
customer value:
• Value is customer defined; opaque
• Customers differ in who they are, what outcomes (value
in use) they seek and therefore what value they place on
different benefits of an offering;
• Value is contextual and context has three dimensions:
the end user; the end-use situation; and the
environment;
• Value is multidimensional
• Value is a trade-off: Trade-off between the total benefits
that customers get against the total costs they pay.
• Value is relative: customer always evaluate value relative
to available alternatives.
 Types of Customer Value

• Economic value
• Functional Value
• Psychological Value
 Other types of Customer Value
• Choice based value: Choices created in how customers:
deal with the company; how they can pay for their
purchases; how they want them shipped; and how they
receive information.
• Employee based value
• Information value
• Association value
• Relationship value
• Customer unique value
• Product for price value
• Convenience value
• Experience Value
 Dimensions of Customer Lifetime
Value (CLTV)
• The duration of the ‘customer lifetime’
• The firms shares of wallet among its customers:
what portions of the customer’s purchases in the
firm’s offering categories are captured by the
firm as opposed to its competitors
• The firm’s success in terms of frequency of up
and cross-selling to its customers so as to
increase the levels and monetary value of their
purchases over time.
• The firm’s cost of acquiring, serving and
retaining its customers.
 What would make a successful
CLTV Method
• Connect with overall strategy of the business;
• It should link with the loyalty that the company seeks to
bring in;
• Referrals must be part of the component of the CLTV;
• Constant rate of retention and discount not feasible;
• Risk rate should also be associated;
• Dynamics of the different sectors must be incorporated;
• Truly customized CLTV for highly volatile sectors such
as financial services and online companies;
• It should link with the loyalty programmes.
 CLTV Calculations (Simple
calculation)
• Simply put the LTV of any given customer
can be expressed as:
LTV = Total Revenues – (Fixed Costs +
Variable Costs)
Revenue is fairly straightforward to measure
: one simply adds up the total of all of the
orders placed with the organization
 Some important points regarding
CLTV
• Identify those customers who are most
profitable and focus retention efforts on
them;
• Find more customers who match the
profile of the most profitable customers;
• Calculate which products or product
combinations are contributing most to
profit.
 Other Calculations of CLV
• CLV = Average transaction vale * Frequency of
purchase * Customer life expectancy
Link between the customer retention rate and the
average customer lifetime;
Average customer lifetime (years) = 1/ 1-retention
rate
Example: if the customer retention rate is 90 % per
annum (meaning that the company lose 10 % of
the existing customer base each year), then the
average customer lifetime will be 10 years.
 CLTV using Referrals
• CLTV = D [(Rt-Ct) + Rf (Ac-Acr)] / (1+r) – Ac)
Where t = Year
Rf = number of referrals generated by customer each year
n = length of customer relationship
Ac = Full acquisition costs (for the new customer)
D = customer retention rate
Acr = reduced acquisition costs (for existing customers)
Rt = Revenues earned from customer in year t
r = discount rate
Ct = Cost of serving customer in year t
 CLTV calculation without referrals
• CLV = { summation (Ma-Ca) r(a-1)/ (1+i)a} –AC N/a-1

Where
N = the number of years over which the relationship is
calculated;
Ma = the margin the customer generates;
Ca = the cost of marketing communications or promotions
targeted to the customer in year a;
r = the retention rate; r(a-1) is the survival ratefor year a;
i = the interest rate
AC = the acquisition cost
 The other approach of CLTV
• CLTV = m (r/1+i-r)

Where
m = margin or contribution for each
customer in a given time period;
i = discount rate;
r = retention rate; and
Factor r/(1+i-r) is the margin multiple
Using CLV to segment customers
“Until you identify and understand
exactly how much combined profit a
client represents to your business,
for the life of the relationship, you
can’t begin to know how much time,
effort, and expense you can afford
to invest to acquire that client in the
first place.”
 Graduated account management
strategy
• Is based on the existing and future
potential value of customers;
• Many B to B companies have
implemented a graduated approach where
important commercial customers are
served by key account managers, medium
sized businesses through telephone based
account and small customers through a
call centre.
 Channel migrator strategy
• Concerned with the customers who migrate from
one channel to another;
• This strategy may be driven by a new channel’s
potential to serve more lucrative (profitable)
customer segments or the opportunities to
reduce costs or increase customer value. For
instance, low cost Airline easy jet, sold tickets
solely through a call centre but is now
encouraging customers to purchase its tickets
through the internet.
 Customer Value Management
Customer value management (By Khalid & Scott) is an
approach to:

• Understand what causes customer purchase and

repurchase behavior;
• Predict the future purchase behavior of customers and
potential customers;
• Maximize future purchase behavior by managing the
predictors;
It is the process that enables businesses to
determine how well they address the expectations and
needs of prospective and direct customers, distributors
and end users, relative to the competition.
 Contact Centre Technology
• Interactive voice response: Generally used by service organizations
for order placement, purchasing airline tickets, telephone banking
obtaining balance enquiries. Also used by call centres to help
identify the caller’s needs and prepare the live customer service
representative by obtaining information from the caller.
• Is a software application that allows a telephone caller to select
options (pre-recorded voice prompts) from a voice menu and are
available 24 hours.
• A technology that automates interaction with telephone callers
• If the caller is just seeking basic information, placing simple orders
and say, buying tickets IVR system can quickly and effectively help
the caller while eliminating long waits for a live customer service
representative.
• IVR systems also enables users to retrieve information including
bank balances, flight schedules, product details, order status and
much more from any telephone.
 IVR Platforms
• IVR platforms: Are the server and operating
system hardware and software platforms on
which IVR solutions run.
• IVR Applications: IVR applications are the
programmes that control and respond to calls on
the IVR platform. IVR applications can be
developed by an enterprise or by a IVR
development company. IVR applications direct
the IVR platform to prompt callers gather input,
and also transfer callers to other phones.
 IVR Platforms
• Back-end servers: Back end servers are
existing enterprise servers on which the required
customer or corporate data can be found.
• Telephony infrastructure: includes telephone
lines, call switching equipments, and call centre
Automatic Call Distributors(ACDs)
• IVR Experts: IVR experts includes employees
and consultants who know the IVR technology
and its challenges.
 Considerations for an organization
when buying an IVR
• Hosted version versus installed version:
There may be two choices- sometimes IVR can
be installed on your own network and sometimes
it may be hosted elsewhere by the IVR
company. Hosted applications give the
organization a cost benefit whereas the installed
versions are more customized.
• Capacity:IVR capacity can be measured by how
many phone lines it can handle simultaneously,
how many menus and messages you can have.
 Considerations for an organization
when buying an IVR
• Specialty: It helps to find an IVR that is specific
to or has special experience in your industry/
business or particular need.
• Demo
• Integration and implementation: an important
consideration for any IVR is how well the IVR will
integrate with your current network, operating
systems, and other software packages already
running in your organization.
• Training and support
• Quality of Website
 Considerations for an organization
when buying an IVR
• DTMF IVR and Speech Recognition IVR: DTMF system
incorporates dual tone multi frequency technology- more
commonly referred to as DTMF an industry standard for
many IVR system. It allows callers to navigate system
menus by pressing a key on a touchtone telephone.
DTMF is a signal to the IVR system that a caller generates
when he presses a telephone's touch key.

• The second type is speech recognition technology and it

allows callers to speak their choice rather than using the
telephone keypad, a conversational IVR, providing
customers a user friendly and natural experience.
 Speech Recognition for
Customer Service
• Speech recognition is often used in call centres
to improve customer service operations and
specially used for self-service environment.
Speech recognition allows computers to
recognize natural human voice and translate it
into text or actions based on the flow of a call.
• Callers can make requests in their own voice
and complete self-service transactions in an
easier and user-friendly way.
 The benefits of voice recognition

• Customer satisfaction
• Cost savings
• Improved productivity
• Revenue generation
 Key considerations for deploying
speech recognition
• The organization should evaluate various available options
to it and determine which application will deliver the greatest
customer and business benefit.
• Whether the project utilizes in-house or out sourced
resources should be a key consideration for deployment of
solution.
• Decision regarding the various standards used in the voice
recognition technology including various software.
• The organization should be clear about their customer
communication policy.
• Select a vendor with a strong system of expert partners and
proven leadership and experience.
 Computer telephony
integration(CTI)
• By integrating the telephone and computer
systems you can save the operating costs
and improve companies efficiency.
• Computer telephony integration enables
integration of both the computer as well as
telephone to enhance the customer
experience by improving operational
efficiency.
 CTI applications can enhance the
agent’s efficiency by:
• Screen pops in which caller information and associated files can be
given to the agent along with the telephone call. This also helps in
the authentication of the caller.
• Intelligent transfer of data to another agent with the caller’s detail on
desktop , also called hot transfer.
• Intelligent routing which helps the caller by routing the call to an
agent as per pre-defined routing logic like skill based , language
based or product based. Here Automatic call distribution helps.
• Manage voice or video conferences.
• Receive fax messages and route them to appropriate fax machine.
• Use in for outbound calling such as tele -marketing.
Administering telephone system
using CTI
• Make/ answer calls
• Hold and transfer calls
• Setup conference calls
• Pickup calls from another extension
• Initiate calls by name from a personal
directory
• Identify the caller on –screen
 Unified messaging
• With CTI, one can also bring together other office
communication tools, such as Fax , E-mail, and voice
mail to manage them from a single point.

with unified messaging you can setup an electronic

messaging system for a company creating a single
interface with one directory and one storage location
for all message types. Hence, your company’s contacts
and all communications with them, whether by
telephone, fax or direct e-mail are integrated into one
record which is readily available.
 Benefits of CTI
• Improved customer service
• Greater efficiency
• Flexibility

CTI Solution: Basic Solutions

Advanced Soultions
 Key considerations while selecting
a CTI solution for organization
• Interactive voice recognition
• Integrated Fax Server: allows user to fax to and from every PC
giving a separate fax number but requiring no additional line.
• VOIP/IP: by using voice over internet protocol, internet can be used
for all incoming and outgoing calls and save significantly call
charges.
• Back-office integration: the organization must choose a solution
which matches up with its existing software.
• Versatility: if appropriate for business, certain solutions will also
work with other devices.
• Use of standard phones:
• Scalable and convergence: make sure that the CTI solution has the
capacity to grow with the future demands of your business.
• Cost
 Automatic Call Distribution
• These are call routing utilities for incoming
calls and can route the calls to the
available agent. Basic ACD distributes the
telephone calls on a first come , first
served basis. The system answers each
call immediately and if necessary, holds it
in a queue until it can be directed to the
next available call centre agent.
 Major components of an ACD
System
• Call Processing Features: help customize ACD systems
configurations to meet an organization’s unique requirements,
handling high volumes of incoming calls, and finally distributing
them to agents or devices.
• Agent features: are designed to ensure that customers receive
quality service by providing agents with a comprehensive and
quickly accessible set of functions that serve the current
requirement best.
• Supervisor features: enable administrative staff to monitor agents’
work and provide them with the support they need. Supervisors can
access current status display as well as historical information
collected by the system in the day to day management of call centre
operations.
 Key call handling features of an
ACD
• Call hold
• Call Transfer
• Call Forward: redirect all incoming calls to another
number.
• Three way calling: allows to include a third party on an
outgoing call. This is a form of three party conferencing.
• Station Hunting: Hunting (Rollover Lines) is placed on
individual telephone lines that makeup a group , known
as hunt group . Hunt groups are a series of lines
organized in such a way that if the first line is busy the
next line is hunted and so on until a free line is found.
 Customer complaint management
technology
• Defined by BSI as “any expression of dissatisfaction by a
customer with a product or service, however small,
whether considered justified or not..”- it leaves plenty of
scope for most organizations to capture, manage and
benefit from the feedback freely offered by complaints.
• Hence, a customer complaint is a feedback and this
feedback is freely available.
• The technology for complaint management system is
generally divided into two parts: Front end and Back end
 Front End & Back End
Front end:
• Customer Profile Page
• Customer Interaction Page

Back end:
• Complaint resolution page
• MIS Page
Benefits of complaint management
system
• Enhanced productivity of employees
• Speedy and error free resolution of complaints
• Monitoring and tracking mechanism
• Singular database and customer history
• Wide angle view of customer

Complaint Management System Technology:

• Web Based
• LAN Based
 Frontdesk Management
Technology
• Electronic queue: helps the service
providers to manage the complete
customer service effectively the rush
hours.
• Ideal for customer related concerns where
waiting forms an essential part of the
service, such as:
• Airlines , Hospitals, Post offices and other
services….
 Electronic queue management
modules
• Ticket dispenser unit : Customer obtain a ticket through
the ticket dispenser unit , generally installed at the
entrance of an office simply by pressing a button. Ticket
is issued serially, states the time at which it was issued,
along-with the approximate waiting time.
• Status dispenser unit (SDU): Placed in the customer’s
waiting area, the SDU displays the ticket number along-
with the number of the counter to where the customer
has to proceed.
• Teller station unit: This unit comes with a LCD Display is
generally used by counter staff. The counter clerk
punches the ticket number to be served and enables the
staff to call up the next number.
 Electronic queue management
modules ….
• Counter Display Unit (CDU): The CDU
placed on the top of the counter displays
the ticket number of the customer being
served. Each CDU has a digital display
and can be customized from the software
to meet the service provider’s requirement.
 Key Consideration for queue
management system
• Make use of standard computer equipment, displays,
ticket printers, with paper with no costly proprietary
hardware.
• Would be good if it can be managed on a single server
at a central location and can support a network of branch
offices and receptions.
• Should be managed via standard internet browsers with
no local installation required.
• Should be fully equipped with fully customizable tickets,
displays and voice annoucements.
 Payment Technology
• Bill Payment kiosks: bill payment kiosks provide a
convenient option for service providers to avoid the
customers queues and thereby waiting time. These kiosks
allow users to make cash payments and obtain receipts
instead of waiting in lines for check cashing and bill
payment centres. One can find these machines in heavily-
trafficked areas such as super market, convenience stores
and even banks.
• Bill payment kiosks generally include a computer inside a
durable enclosure and these kiosks can be customized to
suit the organizational needs. Kiosks provide the facilities
like credit card readers, bill and coin acceptors security
cameras for customers for accepting payments. Also have
the scanner to read the check amount to read the amount
paid by the customer.
 Touch Screen Kiosks
• A touch screen kiosk functions similar to a
standard PC and requires command from
the user to move from page to page. The
machines are equipped with specially
designed software for kiosk applications.
This software responds to human touch
and allows a customer to view information
or make a purchase.
 Internet kiosk
• The internet kiosk provides a public web access for a fee
to people that need to get online when they are away
from home or office. Business like shopping malls
highway rest stops, and airports offer these machines to
the public to check e-mail and websites.
• Internet kiosks have a computer with a hard-wired
wireless high speed connections. In addition, it may
include a standard keyboard, mouse or a touch screen
display that can be activated with a finger. A bill accepter
or credit card reader allows the user to prepay for their
access and provides secure access to the web for a
specific length of time.
 “Any time money” Kiosk
• The ATM kiosk is probably the most sophisticated and
fully interactive kiosk. These are used to offer customers
24X7 access to their accounts even when they are
closed.
• ATM kiosk may be with a standard keyboard to enter
your account information or a touch screen for this
purpose.
• Other than simple money withdrawal, the ATM Kiosk
also provide other type of services like take loan
applications, offer bonds and certificates of deposit and
also allow to trade stock.
 Customer Self-Service Portals
• The self service portals provide an
opportunity to the customer to access his
account and get lots of information as and
when he wants and from where ever he
wants.
• Self service applications help the
customers in the following ways:
– Empowering the customer
– Improve supply chain efficiency
– Reduce cost of service
 Customer Self-Service Portals
• Organizations can empower their customers by
providing them timely and accurate information
about their order, shipment or account at their
convenience – without their having to wait for a
response from a customer service agent.
• With the self service modules, the customer can
access their account and get all kind of
information on real time basis. The customer can
see their bills, outstanding payments and also
make payments.
 Forms of self-service modules
• Fulfillment self-service: enables customer to
accelerate supply-chain fulfillment by directly
placing their own product orders with their
product providers, reviewing and tracking those
orders and changing orders if necessary.
Customers can also update their address book
information. The self-service modules provide
the customer an option to get the service online
and without any human intervention during the
transaction.
Forms of self-service modules…
• Sales force management self-service: Enables
field and sales personal to manage their clients’
business transactions more closely with the
ability to directly enter and track sales orders,
check product availability, and verify and update
customer information. Hence, a complete
account management can be made possible
online through well designed sales force
management self service module.
Criteria for CRM Product Selection
• Organization imperative
• Integration with existing IT application
landscape
• Product adaptability
• Scalability/ upgradation
• Implementation experience
• Post roll out support structure (after sale
services)
 Customer data management
• Data Warehousing
• Data Mining
 Consumer Research
• Service managers need information from
their consumers regarding:
– Target market
– Product and service
– Price
– Distribution
– Promotion
 Consumer behavior in the context
of relationship management
• Need recognition
• Information search
• Evaluation of alternatives
• Service purchase and consumption
• Post purchase evaluation
 Marketing Research to understand
consumer expectations
• Objectives of service marketing research:
– To determine a customer’s expectation
– To identify a dissatisfied customer so that service recovery can
be attempted
– To monitor the service performance and customer satisfaction
level
– To identify the gaps in service expectations and customer
perception
– To understand the effectiveness of the service delivery
– To understand the level of service delivery, appreciate the team
performance and reward the efforts of various teams for their
customer focus and deliveries
– To understand the customers’ changing expectations
– To monitors the customer’s changing requirements in the
industry.
Research as management support
tool

• The issues and concerns regarding

research as a management
support tool
 Service Research Programme
• A service research programme is the summation of various initiatives adopted by an
organization to find the customer’s voice and feelings about the organization’s products and
services.
• The service research programme may include:
– Complaint solicitation
– Requirement research
– Critical incident research
– Trailer calls
– Mystery shopping
– Customer panel
– Lost customer research
– Satisfaction survey
• Consumer research versus marketing
research

• Quantitative versus Qualitative Research

 Techniques of qualitative
research
• E-focus groups
• E-surveys
• Depth interview
• Industrial interview
• Structured versus unstructured interview
 Consumer Research Process
• Define the research objectives
• List the information needed
• Design data collection project
• Select the sample type
• Determine the sample size
• Carry out the field work
• Analyze data and prepare report
 Managing Customer Relationship
• Pre-Industrial Stage: Relationship between
producer and consumer: relationship
between craftsman and consumer;
• Industrial stage: Mass production/
desegregation/integration/merging
between producer and consumer
• Service economy age: Production
combined with intangibles to deliver
solution to consumers
Managing Customer Relationship…
• Knowledge economy age: information
combined with products and services to
deliver personalized customized solutions

Industrial Age Relational Economy

Functional Orientation Process Orientation
Customer as a Recipient Customer as driver
Transactional management Collaboration
Batch mentality Real time mentality
Managing Customer Relationship…
• Relationship management from customer or
from company?
• Relationship implies willingness of all parties
involved to engage with each other for mutual
benefits
• Relationship needs arise out of four goals:
– Need fulfillment goal
– Economic goal
– Security goal
– Esteem goal
 Key principles of relationship
management
• Manage customer as an asset
• Rate customers on the basis of their profit
stream: current and future potential
• Customize relationship to individual
customer- using information based
decision making capabilities
• Implement innovative ways and means to
get close to the customer to hear the
‘voice of the customer’.
 To succeed in the relationship
economy companies must:
Create capabilities to service Connect the business to the
the new customer customer

• Driven by voice of the • Align mindset and connectivity

customer • Invest in enough knowledge to
• Listening and learning process get the job done
• Customers experience • Balance elements of model
mapping business(strategy, people,
• Appropriate level of process, knowledge and
segmentation technology)
• Develop efficient and effective
fulfillment solutions
 Techniques and applications to
manage relationship
• Acquisition stage: From the time a company decides to
target a prospective customer to the time a customer
makes the final purchase- relationship management
needs to focused on ensuring that the product features,
quality and cost are:
– Well understood by consumers through correct
advertising and promotional efforts
– Provide consumers avenues to raise any relationship
disconnects and issues during the acquisition process
– Have product / service return guarantee.
 Techniques and applications to
manage relationship…
• Post Acquisition stage:
• Single product/ service user:
– Education
– Complaint request and query management support
– Relationship Recognition
Multiple product/ service relationship
– Recognition of ‘total share of wallet’ instead of
discrete spends
– Catering to individualized/ personalized needs
More favorable terms for additional business
 Acquisition cost vs. Relationship
cost
• Post purchase transaction handling: cost incurred on the
contact centre, collection, showroom, front-desk, web
support;
• Loyalty programmes: continuity marketing programmes-
designed for: (a) retaining customers and (b) increasing
loyalty
• Partnering programmes: co-branding and affinity
partnering
• Personalized services: one to one marketing
Service economy Experience economy
• Product or service • Experience
• Good stuff (material/things) • It’s a kick, a hoot
• It works • It leaves an
• I am glad I bought it indelible/permanent memory
• Satisfied customer • I want more
• Repeat customer • Member of a club
• You get what you pay for • Word of mouth-viral marketing
agent
• Agrees with your wallet
• You are surprised and
• Deals with one of your needs
delighted at every turn
• Agrees with your psyche/mind/
consciousness
• Helps define who you are
 Experience realms
• Entertainment: while being entertained people passively absorb
the experiences through their senses- such as while viewing a
performance, listening to music, or reading for pleasure.
• Educational: in an educational experience, a person absorbs the
events unfolding before him while also creatively participating like:
while learning Yoga, and arts.
• Escapist: during an escapist experience, the person actively
participates in an immersive (involve yourself) environment such as
casino’s , chat rooms etc.
• Esthetic: in an esthetic experience, individuals immerse themselves
but remain passive when they view museum exhibits, art galleries
etc.
Customer Experience Management
Psychological and behavioral principles:
• Sequence effects: when people recall an experience, they do not
remember every single moment of it, instead they recall a few
significant moments vividly(bright) and gloss over the others. They
remember snapshots, not movies.
• Duration effects: how people process time:
– People who are mentally engaged in a task do not notice how long it has taken them to do the task
– When prompted to pay attention to the passage of time, people overestimate the time elapsed (go away).
– Increasing the number of segments in an encounter lengthens its perceived duration like(10 minutes dance
sequence in 4 segments seems longer than an identical one split in 2 segments.
• Some organizations have evolved methodologies to manage customer expectations
by giving indicative time reference. For example: instead of stating precise duration
like 2 hours or 4 hours for a service fulfillment it is now stated ‘before lunch time’ or
‘before close of working hours’
• Rationalization effects: People desperately want things to make sense- if there is no
handy explanation for an unexpected event they will concoct (think-up/fabricate) one.
 Five operating principles
• Finish strong
• Get the bad experience out of the way
early
• Segment the pleasure- combine the pain
• Build commitment through choice
• Give people and stick to them
 Difficulties in interactions with customers
faced by frontline contact employees
• Unrealistic customer • Unavailable service
expectations: • Slow performance
• Unreasonable demands • Unacceptable service
• Demands against policies
• Unacceptable treatment of
employees
• Drunkenness
• Breaking of societal
/community/ communal norms
• Special need customers
 Critical success factors for People
in CRM
• Motivate and educate personnel
• Train users about how to use the product
and service
• Secure user ownership
• Foster employee’s creativity and
innovation
 Hiring and training for right skills /
attitude
• Hiring and selection process: some of the desired
personality attributes for a customer contact executive:
• Flexibility
• Tolerance for ambiguity
• Ability to monitor and change behavior on the basis of
situational cues
• Empathy for customers
• Willingness to help others
• Ready smile
 Hiring and training for right skills /
attitude …
Selection process:
• Interviewing techniques:
– Abstract questioning
– Situational case study discussion
– Role playing
– Multiple, Structured Interviews
• Personality test: psychometric test can be conducted to evaluate
attributes like:
– Willingness to treat customer/ colleagues with courtesy/good
manners
– Consideration /thoughtfulness / tact
– Perceptiveness/ insightfulness of customer needs
 Hiring and training for right skills /
attitude …
• Assessment center: creating standardized
situations / tests to observe a candidate
for his behavior and reactions.
Assessment center helps to compare
candidates and calibrate (adjust/
regulate)them against standards defined
by the company.
 Training
• Training: service employees need to learn
the following:
– Organizational culture, purpose and strategy
– Interpersonal and technical skills
– Product / service knowledge
 Methodologies to understand/
capture ‘voice of customer’
• Strategic use of complaints
• Focus group interviews
• Management-frontline contact forums
• Customer panels
• Customer contact programmes
• Customer satisfaction and perception gap analysis
• Call barge in
• Other sources of gathering ‘customer expectations: trade
associations, point of sale and blog sites.