Study of CRM as a competitive advantage

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TABLE OF CONTENTS
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1. BACKDROP 4
2. FOCUS ON RELATIONSHIP BUILDING 5
3. BENEFITS OF CRM STRATEGIES 9
4. CUSTOMER EXPECTATIONS 16
5. CRM COMPETITIVE ADVANTAGE 19
6. CRM STRATEGIES 28
. SURVE! ON CRM 29
8. ENVIRONMENTAL SCAN " PEST 31
9. COMPETITIVE ADVANTAGE FOR KINGFISHER " CRM STRATEGIES 33
1#. ANNEXTURE 34
11. NO OB$ECTION CERTIFICATE 36
12. DECLARATION B! LEARNER 3
BACKDROP
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Traditionally, ndian companies have placed their T bets on internal systems, such as financial
and H! solutions. "ut a rapidly evolving business landscape is now making #!$ a key
competitive differentiator among ndia%s most innovative companies, large and small alike.
& range of business pressures is driving this new push for #!$, from nimbler competitors and
rising customer expectations to an increasingly global customer base. n fact, investment in
#!$ solutions is growing across a wide spectrum of industries. 'inancial institutions and
telecoms have been leading the drive, but utilities, healthcare providers, media, manufacturers,
and the public sector are (uickly following suit.
&nd now midsi)e companies *so integral to ndia%s dynamic economic growth*are considering
#!$ offerings that have traditionally been the privilege only of their larger rivals.
#ustomer !elationship $anagement, or #!$, is an essential part of modern business
management. This #!$ article is provided by +llen ,ifford, who specialises in helping
organi)ations develop excellence in #!$, and this contribution is gratefully acknowledged.
What is #ustomer !elationship $anagement, or #!$- #ustomer !elationship $anagement
concerns the relationship between the organi)ation and its customers. #ustomers are the
lifeblood of any organi)ation be it a global corporation with thousands of employees and a
multi.billion turnover, or a sole trader with a handful of regular customers. #ustomer
!elationship $anagement is the same in principle for these two examples . it is the scope of
#!$ which can vary drastically.
CRM focuses on the relationship
/uccessful organi)ations use three steps to build customer relationships0
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determine mutually satisfying goals between
organi)ation and customers
establish and maintain customer rapport
produce positive feelings in the organi)ation and the
customers
CRM conditions
The organi)ation and the customers both have sets of conditions to consider when building the
relationship, such as wants and needs of both parties1
organi)ations need to make a profit to survive and
grow
customers want good service, a (uality product and an
acceptable price
,ood #!$ can influence both sets of conditions.
Why do organizations undertake CRM?
#!$ is a new concept to many organi)ations. f it%s new to you, here%s why most forward.
thinking organi)ations devote lot of energy and resources to the set up and management of a
#!$ capability.
#!$ can have a major impact on an organi)ation through0
shifting the focus from product to customer
streamlining the offer to what the customer re(uires,
not want the organi)ation can make
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highlighting competencies re(uired for an effective
#!$ process
Why does the organization need CRM?
The ultimate purpose of #!$, like any organi)ational initiative, is to increase profit. n the case
of #!$ this is achieved mainly by providing a better service to your customers than your
competitors. #!$ not only improves the service to customers though1 a good #!$ capability
will also reduce costs, wastage, and complaints 2although you may see some increase initially,
simply because you hear about things that without #!$ would have stayed hidden3. +ffective
#!$ also reduces staff stress, because attrition . a major cause of stress . reduces as services
and relationships improve. #!$ enables instant market research as well0 opening the lines of
communications with your customers gives you direct constant market reaction to your products,
services and performance, far better than any market survey. ,ood #!$ also helps you grow
your business0 customers stay with you longer1 customer churn rates reduce1 referrals to new
customers increase from increasing numbers of satisfied customers1 demand reduces on fire.
fighting and trouble.shooting staff, and overall the organi)ation%s service flows and teams work
more efficiently and more happily.
Features of good CRM
The old viewpoint in industry was0 %Here%s what we can make . who wants to buy our product-%
The new viewpoint in industry is0
%what exactly do our customers want and need-% and
%what do we need to do to be able to produce and
deliver it to our customers-%
This is a significant change of paradigm and a (uantum leap in terms of how we look at our
business activity.
What do customers want?
$ost obviously, and this is the extent of many suppliers% perceptions, customers want cost.
effective products or services that deliver re(uired benefits to them. 2"enefits are what the
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products or services do for the customers.3 4ote that any single product or service can deliver
different benefits to different customers. t%s important to look at things from the customer%s
perspective even at this level.
$ore significantly however, customers want to have their needs satisfied. #ustomers% needs are
distinctly different to and far broader than a product or service, and the features and benefits
encompassed. #ustomers% needs generally extend to issues far beyond the suppliers% proposition,
and will often include the buying-selling process 2prior to providing anything3, the way that
communications are handled, and the nature of the customer-supplier relationship.
$odern #!$ theory refers to the idea of %integrating the customer%. This new way of looking at
the business involves integrating the customer 2more precisely the customer%s relevant people
and processes3 into all aspects of the supplier%s business, and vice versa. This implies a
relationship that is deeper and wider than the traditional %arms.length% supplier.customer
relationship.
The traditional approach to customer relationships was based on a simple transaction or trade,
and little more. 5erhaps there would be only a single point of contact between one person on
each side. &ll communication and dealings would be between these two people, even if the
customers% organi)ation contained many staff, departments, and functional re(uirements
2distribution, sales, (uality, finance, etc3.
The modern approach to customer relationship management is based on satisfying all of the
needs . people, systems, processes, etc . across the customer%s organi)ation, such as might be
affected and benefited by the particular supply.

he last thing any business would want to face! in an increasingly electronic and mobile
global marketplace! is an alienated! impersonal! "uirky! fickle! unpredictable and rootless
customer-base# $ uni"uely personalized and intimate rapport and long-lasting loyalty! repeat-
business and %alued relationship on the other hand! that is mutually beneficial and rewarding!
is what most enterprises are after these days#
#!$ 2#ustomer relations management3 has been perceived as a company. wide business
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strategy to reduce costs and increase profitability by solidifying customer loyalty. True #!$
combines information from all sources of data within an organi)ation 2and if appropriate, from
out side the organi)ation3 to give one holistic view of each customer. n the past few years, #!$
has established as a separate discipline within marketing and service industries and a host of
vendors are producing various #!$ software packages for anything and everything in #!$.
However, many #!$ implementations have failed due to the over dependence on such ready.
made solutions and many of these failures may be attributable to the lack of a vision or strategy
on organi)ation wide acceptance and involvement in the #!$ initiative. & reali)ation that #!$
is not just collecting customer data and analy)ing, but a detailed strategic initiative involving
people, processes and technology can create the difference for a successful #!$
implementation. Traditionally marketers have focused on ac(uiring customers, either new from
the market or from competition, which involves prohibitive advertising and promotion costs.
Today they have reali)ed that the key to profitability is retaining the customers, if possible for a
lifetime. The relevance of innovative #!$ techni(ues is in this context. This article analy)es
some of the practical issues in implementing a #!$ initiative and also suggests a systematic
framework for organi)ation wide implementation of #!$.
&# 'ntroduction
#!$ has emerged as a customer centric phenomenon that permeates through the entire
organi)ation. There are 6 7ey areas to a successful #!$ initiative1 5eople, 5rocess and
Technology. 5eople at all levels in the organi)ation should take active roles in the #!$
initiative. & company%s business process should be reengineered to bolster the #!$
initiative. #ontemporary high technology should be employed to collect and provide the
best possible data to the employees.
#!$ helps business to use people, process and technology to gain insights in to the
value and behavior of the customers. This insight brings in improved customer service,
increased call centre efficiency, added cross sells, improved closure rates, streamlined
sales and marketing process, improved customer profiling and targeting, reduced costs,
increased market share and profitability.
To be successful in the long run, an organi)ation must develop a competitive advantage.
The best strategy to pursue a competitive advantage is the customer strategy. "ut still
many organi)ations do not know how to maintain a relation with their customers,
especially those organi)ations which have unintentionally distanced themselves from
their customers through extensive dependence on the distribution channel.
#!$ software is enabling organi)ations to collect, store and analy)e customer
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information and improves their ability to attract and retain customers. These systems
integrate company%s sales, marketing and customer support functions in order to serve
the customer better. 8earning to rank customers in terms of profitability is the future of
business.
(# )enefits of a sound CRM strategy
Time, #ompetency, 5ersonali)ation and #are are the attributes experienced by a
customer during a contact
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.

'orward thinking organi)ations now focus on keeping and
growing the most profitable accounts they presently have. /o companies need to wisely
pick the customers with whom they are going to have relations and what type of
relations. &dopting this :profitable customer: strategy can change the face of their
business and bring in one or more of the following benefits.
;. +nsure consistent service and (uality delivery across all channels.
9. mprove response time to customer re(uests for information.
6. !educed cost of products or services
<. mmediate access to order status.
=. ncreased customer loyalty due to higher satisfaction levels.
>. 5rovide self.service options to customers over nternet.
?. ntegrate front and back office systems.
@. dentify cross sellingA reference selling opportunities based on the customer profile.
B. 'ocus on ac(uiring high value customers
;C. +stablish a sound understanding of customer purchase lifecycle.
;;. &llow sales over nternet, 6>= days in a year.
;9. 5romote convenient, timely, user.friendly sales and service delivery.
*# CRM- some practical issues#
*#& Customer $c"uisition %s# Retention+ the Marketer,s dilemma#
& new customer is either created from the market or converted from a competitor. "oth involve a
cost of ac(uisition. /imilarly, to retain or :recreate: a customer also involves a cost. /tudies
have shown that the cost of retaining is almost one fifth of the cost of ac(uisition. n other words,
for the same amount of marketing budget spent on ac(uisition and retention, the later will yield
more profits for the company. Dptimi)ing the spending on ac(uisition or retention still continues
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to be a dilemma for marketers.
*#( -ifetime Customer .alue /-C.0
8ifetime #ustomer Ealue or 8ong term #ustomer Ealue is a reflection of the possible future
business a company can expect from a loyal customer. This will include not only the repeat
purchases by the customer, but also his family purchases, referral purchases, cross sells etc over
a long period of time. t should also consider the future product introductions of he company for
which this loyal customer is a ready prospect. This adds more dimensions to the exact
assessment of the 8#E.
*#* 1ata Mining
$any a times, customer data in various forms for various purposes is residing in the
organi)ation%s database itself. However, to analy)e it as per the parameters needed for a #!$
program needs skill. Dut of the large number of customers existing on the database, a few may
be exhibiting characteristics, which make them more receptive, loyal and useful to the
organi)ation in future. These are the ,ems in the database and searching the database to list out
these ,ems is the process of Fata mining. &ny #!$ initiative will produce more results at
lesser costs if the ,ems are properly identified.
*#2 3coring a database
#ustomers vary in their buyer behavior and readiness to respond to promotion programs.
&pplying the concerned parameters to a database and getting a customer list which is more
likely to evince a positive behavior towards the company is called scoring a database. &pplying
or addressing company campaigns on a scored database will yield better results than on a raw
database.
*#4 .isualizing the results of 1ata mining
The results of data mining are to be presented in an easy to understand, practical form
for the reader who will try to make future #!$ programs. The purpose of conducting
data mining should be well understood by all concerned.
*#5 6utsourcing
Dutsourcing company activities to call centers and logistic companies will have
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implications on #!$. The customers presume and react to the good or bad actions by
the outsourcing agency as if these are actions by the company itself. $ore the extent of
outsourcing, more vigilant the company should be to the service (uality of the agency.
2# $ Workable CRM strategy
Tarrystone defines #!$ as :the understanding, ac(uisition, servicing, development and
retention of customers for profits by an organi)ation with a truly customer focused
culture using an integrated, customer centric contact strategy, systems and processes.:
Gnderstanding customer buying habits, making exciting offers for conversion, adding
value at every possible contact with customer for retention, etc will be part of this
strategy. The best pattern is to "uild, 8aunch and mprove rather than pent months
together in preparations
=
. &ccordingly, a procedure for implementing a systematic #!$
initiative is proposed here.
2#& Return on 'n%estment
Dften #!$ is seen as an T investment to implement a multi channel contact
management platform across the company or in a customer service call center. This is
potentially a large investment but clear benefits should be seen in improved and more
efficient customer service and in centrali)ing data management. However, a financial
return is often difficult to justify. This is because the clear benefits of a #!$ approach,
particularly top line revenue generation, are not fully addressed at the same time and in
an integrated way.
2#( 7nowing your customer#
How can one feel loyalty to a large $4# where the person you speak to is different every
time- &mong the most difficult parts of customer experience management is ensuring
that the (uality of experiences across all interaction channels is the same. #ustomers
expect to be known regardless of the channel H in the retail store1 on the phone1 through
email and chat1 or via web.self service.
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8oyalty works on a :what is in for me: attitude and with so much choice available, good
reasons to stay have to be provided to the customers constantly. /imilarly, providing
innovative, value for money products supported by a brand recogni)ed by good customer
service is vital.
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t is difficult to sell additional products to an unhappy customer. /o, it is important not
only to proactively manage the unhappy customer, but also to get a statistical fix on the
level of customer satisfaction, from all potential contact points within the organi)ation.
Fissatisfaction can occur on any of the customer contact points, not necessarily in the
marketing or customer service points. #learly there is a need to know what a customer
has bought, the value, the channel, and when. &dditional products to sell to clusters of
customers need to be defined according to their existing portfolio, when their previous
purchases were made and which channel was preferred. This will involve filling product
gaps, collecting key information from customers before maximi)ing customer value,
target accurately and market cost efficiently. & sales and marketing multi channel
strategy to sell the additional products then needs to be developed.
2#* 1ata collection and management
The collection of data has to be both accurate and consistent over a long period of time if
it is to be there in a meaningful (uantity for profiling and targeting options. Fata
collection strategy should be geared precisely to the marketing initiatives and sales
opportunity. Eague data collection under the assumption that it may become handy some
time in the future will dilute what is important (ualitatively and (uantitatively.
2#2 Customer contact strategy
& contact strategy needs to be decided for different segments of customers according to
the sales potential offered. Within this it may be considered that some customers do not
justify any proactive contacts at all. $ore weightage should be on how the customer is
likely to react rather than the potential offered per se.
The customer needs to hear from the company with the relevant and well.timed
propositions fre(uently enough to keep the brand on top of mind, but not too often as to
make him turn off to the constant bombardment.
2#4 8se the data for Customer ac"uisition
"y understanding the profile of customers who have bought some products through
certain channels, prospect data can be sought with a similar profile to refine and make
more cost effective future customer ac(uisition activity. "y researching a customer%s and
prospect%s experience of the sales process, lessons can be learned to improve the buying
experience and hence the conversions. This needs to be reviewed as and when the
number of communication channels for potential contact increases.
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2#5 1e%elop the customer for retention#
n typical situations, the customer would expect a certain product to be with in the stable
but the company sees limited value in it. &lternatively, the company may have gaps in the
portfolio, which the customer sees as a logical extension. Hence the product development
A sourcing is a key area in the #!$ strategy. & prioriti)ation of accounts and a servicing
and development strategy combining the field sales with the internal sales and direct
marketing is often the best method to maximi)e customer development, while giving the
sales force sufficient time to focus on key accounts and customer ac(uisition.
& lost customer research is needed to understand when and why customers leave and to
develop the corrective action program to improve retention. The issues could be partly
due to product offering and competitiveness and A or with the (uality of customer service.
2#9 Customer ser%ice and the call centre
'ront line staff in the call centre can do so much to add value to a customer%s brand
experience by having a positive, upbeat attitude and a helpful disposition. This can be
partially achieved through formal training but more through ongoing supervision, call
monitoring and coaching. Their high motivation levels will drive home the #!$ culture.
4# Restructuring the marketing organization
4owhere does the #!$ impinge more than on the $arketing function. t is here that
most of the opportunities can be reali)ed to build customer value and additional revenue
streams.
& multi channel contact situation will lead to a few fundamental changes in the
marketing thinking. 'irst is the need to identify the "rand across all the channels. n
other words, a tightening of the corporate identity is warranted. & common, creative,
marketing communication strategy that transcends all media is the next logical step. The
best combination of hybrid channel can be selected after evaluation as a third stage.
4#& 6%erall 6rganization structure for CRM
#!$ cannot be executed by one part of the company in isolation because the customer
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does not see it that way and most projects cannot be executed that way. The complexity
of projects demands the potential involvement of a lot of staff, all working together with
common purpose and vision. The degree of cultural change re(uired means #!$
projects need a lot of corporate drive to see them through to success. &ny initiative will
need key project champions throughout the organi)ation, and ownership and drive at
"oard level.
4#( CRM Measurement
Dne big issue in convincing the top management about allocation of #!$ budget is the
lack of proper measurement tools to show the improvements convincingly. What makes
#!$ measurement difficult is that the measurement problem is not confined to just
measuring customer behavior and mindset.
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nstead, businesses need to measure
activities that occur inside the company, too. #!$ measurement also sometimes goes
beyond measuring those activities that directly touch the customer 2value delivering
capabilities3. #ompanies fre(uently need to measure specific attributes about how a
product or service is produced 2value production capabilities3, especially if the product
or service is customi)ed for the customer. Ealue production capabilities extend through
to suppliers and partners. Hence #!$ measurement may also involve supply chain
management activities. n fact, supply chain management, as a discipline, exists to better
deliver value to customers and therefore is often a key component in #!$ activities.
5# Conclusion
mplementing a successful #!$ strategy is more of an intellectual activity and not a
mere T or data processing activity. The managements commitment to reap future
benefits by truly satisfying the customer will be tested in the process through the empathy
they exhibit in understanding customer issues.
Their keenness to make the initiative a : customer experience management: process by
adding value at every possible customer experience or contact points within and out side
the organi)ation will be the key to its success. 'or the same reason, a #!$ strategy and
system tailor made based on the organi)ation%s customer philosophy and experience may
be a better option than the run of the mill #!$ solutions.
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:enerating a customer focused CRM solution
/o what do we need to make this (uantum leap of customer integration-
& new way of thinking0
change in paradigm
change in the messages sent and received
change in the overall culture
&nd a new way of doing things0
processes that are capable and effective
structures and systems that support a business centred
on its customers
connectivity 2end.to.end processes3 both internally and
externally 2eg., with suppliers3
Customers, e;pectations
f an organi)ation cannot at least meet its customers% expectations it will struggle.
deally a business organi)ation should e;ceed its customers% expectations, thereby maximising
the satisfaction of its customers, and also the credibility of its goods and services in the eyes of
its customers.
#ustomers normally become delighted when a supplier under.promises and over.delivers. To
over.promise and under.deliver is a recipe for customers to become very dissatisfied.
!ule 4o ; . Iou cannot assume that you know what a customer%s expectations are ... Iou must
ask.
!ule 4o 9 . #ustomer expectations will constantly change so they must be determined on an on.
going basis.
The expectations of different customers for the same product or service will vary according to0
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social and demographic factors
economic situation
educational standards
competitor products
experience
Therefore, given all these variable factors, it is no surprise that one si)e certainly does not fit all.
&sk your customers what is important to them. 'ind out why your customers do business with
you. There are a wide variety of relationship drivers. 'or example0
(uality
price
product
location
customer service
When you ask you might discover some factors that you%d perhaps never even considered, for
example0
health and safety support
systems compatibility
contract structure
distribution flexibility
technical support
troubleshooting and problem.solving, to name just a
few


CRM as a process
#!$ can be regarded as a process, which has0
identifiable inputs
identifiable components
identifiable characteristics, which define #!$ for
your organi)ation and customer base
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capacity for improvement and evolution over time


managing customers
Why manage customers- #ustomers are the usual source of income for an organi)ation. 2f not
then they will certainly leverage your income, as in the case of readers of a free publication
which is funded by advertising. &s such there are two types of customers0 the readers and the
advertisers3.
#ustomers are also an exceptional source of information . information which is vital to enable a
business to succeed1 ie., giving customers what they want.
$anaging customers entails0
knowing what customers want and need . which
enables you to focus your production and service
efforts
knowing which products or customers have most
growth potential . which enables you to focus on
developing highest potential
knowing which products or customers are most or
least profitable . which enables you to focus on
maximising profit
knowing which customers will be advocates and
supporters . which enables you to provide references,
case studies, and to safely test new products and
services
There are significant business benefits which accrue from an effective, integrated #ustomer
!elationship $anagement approach. These include0
reduced costs, because the right things are being done
2ie., effective and efficient operation3
increased customer satisfaction, because they are
getting exactly what they want 2ie., exceeding
expectations3
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ensuring that the focus of the organi)ation is external
growth in numbers of customers
maximisation of opportunities 2eg., increased services,
referrals, etc.3
increased access to a source of market and competitor
information
highlighting poor operational processes
long term profitability and sustainability
'orward thinking organi)ations understand the vital need to maintain a strategic focus on #!$
and to resource and manage it appropriately.
HOW CRM ACTS AS A COMPETT!E AD!A"TA#E
$OR K"#$SHER AS COMPARED TO OTHERS
Fistinctive #haracteristics of /ervices
;# 'ntangibility.Gnlike physical products,services can not be seen,tasted,felt,heard or smelled
before they are bought.The person getting a facelift can not see the results before the purchase
and the patient in the psychiatrists office cannot know the exact outcome.
To reduce uncertainty,buyers will look for evidence of (uality.Therefore the service providers
task is to Jmanage the evidenceK,to Jtangibili)e the intangible.KWhereas product marketers are
changed to add abstract ideas,service marketers are changed to add physical evidence and
imagery to abstract officers.
<lace-
The exterior and interior shoud have clean lines.The layout of the desks and the traffic follow
should be planned carefully.Waiting lines should not get overly long.
<eople.
5ersonnel should be busy.There should be a sufficient number of employees to manage the
workload.
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="uipment-#omputers,copying machines,desks should be and looks Jstate of the artK.

Communication Materials-5rinted materials.text and photos.should suggest efficiency and
speed.
3ymbols-The name and symbols should suggest fast service.
<rice.The bank could advertise that it will deposite !s.=C in the account of any customer who
waits in the line for more than five minutes.
9. 'nseparability-/ervices are typically produced and consumed simultaneously.This is not true
of physical goods,which are manufactured,put into inventory,distributed through multiple
resellers,and consumed later.f a person renders the service,then the provider is part of the
service."ecause the client is also present as the service is produced,provider.client interaction is
a special future of services marketing.
a. 8earn to work with larger groups.
b. 8earn to work faster.
c. Train more service providers and build up client confidance.
d. Gse technology to reach a larger audience without sacrificing interactivity.
6# .ariability."ecause services depended on who provides them and when and where they are
provided,they are highly variable./ome doctors have an excellent bedside manner1others are
less patient with their patients./ome surgeons are very successful in performing a certain
operation1others are not ./ervice buyers are aware of this variability and often talk to others
before selecting a service provider.Here are three steps service firms can take to increase
(uality control. nvest in good hiring and training procedures.!ecruting the right employees and
providing them with excellent traning is crucial,regardless of whether employees are highly
skilled professionals or low skilled works./ervice company 'ed+x and $arriott empower their
front.line personnel to spend up toL;CC to resolve a customer problem.
/tandardi)e the service.performance process through out the organi)ation.This is done by
preparing a service blueprint that depicts events and processes in a flowchart,with the objective
of recogni)ing potential fail points.
$onitor #ustomer satisfaction.+mploy suggestion and complaint systems,customer surveys,and
comparison shopping.'irms can also develop customer information databases and systems to
permit more personali)ed,customi)ed service.
<. <erishability./ervices can not be stored.5erishability is not a problem when demand is
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steady.When demand fluctuates,service firms have problems.'or example,public transportation
companies have to own much more e(uipment because of rush.hour demand than if demand
were even throughout the day.
Femand side
Fifferential 5ricing will shift some demand from peak to off.peak periods.+xample include low
early evening movie prices. 4on peak Femand can be cultivated.$cFonalds pushes breakfast
service. #omplementary services can be developed to provide alternatives to waiting customers,
such as cocktail lounges in restaurants. !eservation systems are a way to manage the demand
level.&irlines,hotels employ them extensively.
/upply side
5art.time +mployees can be hired to serve peak demand .#olleges add part.time teachers when
enrollment goes up. 5eak.time efficiency routines can be introduced.+mployees perform only
essential tasks during peak periods. ncreased consumer 5articipation can be
encouraged.#onsumers fill out their own medical records or bag their own groceries. /hared
services can be developed./everal hospitals can share medical.e(uipment purchases.
'acilities for future expansion can be developed.&n amusement park buys surrounding land for
later development.
$ichael 5orter states, :#ompetitive strategy is about being different. t means deliberately
choosing a different set of activities to deliver a uni(ue mix of value.: #ustomer relationship
management 2#!$3 is a business philosophy that aligns strategy, business culture, customer
information and technology in order to manage customer interactions to the mutual benefit of
the customer and the enterprise. &t its highest use, it is a competitive strategy. The only long.
run competitive advantage is the ability to make better customer.facing decisions and make them
faster. Dne day, like operational excellence, rich product features, everyday low prices, high
product (uality and short time to market, some semblance of #!$ will be ubi(uitous and
expected by our markets. n the meantime, each company now has the opportunity to
differentiate itself through #!$ while leading companies are defining what the marketplace
#!$ expectation is going to be.
#!$ is a process that leverages customer data, marketing models and life events to improve
overall customer satisfaction and gives businesses the ability to perform customer segmentation
and treat each customer uni(uely. #!$ is a reaction to saturated marketplaces. t is also an
understanding that it is more expensive to win new customers than to keep existing customers,
that new customers come from competitors, that every company is in the :retail: business and
that everyone in the company :sells.: #ompanies wishing to survive must understand #!$.
20
#!$ is more important as a competitive advantage in some industries where it becomes
important to use these strategies to change the perception of the enterprise in the marketplace so
it is not seen as a commodity provider.
,oals of #!$ include facilitation of a reasonable dialogue with customers, higher customer
profitability, shared data across customer touchpoints, lower cost of customer ac(uisition,
reduced cost of sales and reduced profitable customer turnover.
+ach company must find ways to attract and retain profitable customers through the effective
use of information. 8eaders are able to succeed in the market without competing solely on price.
/ome leaders actually have some of the highest prices for their markets.
How.ever, these leaders continually expand their product offerings based on their knowledge of
customer interests gained through their use of data, including internally generated profile and
transaction data and third.party data.
#!$ as a business strategy re(uires that the implementing company show tangible commitment
to #!$ concepts such as customer satisfaction through information parity, regardless of
customers% communication channel choices.
Iou can%t improve what you can%t measure, and it%s simply not good enough to measure
customers based on aggregate numbers. ndividual forward.looking customer lifetime value
metrics are essential for segmentation 2see last month%s column3. $ore profitable customers and
higher lifetime values are more worthy goals than simply increasing the number of customers.
The #!$.ready data warehouse will have the data, the accessibility and the corporate
credibility for deriving these metrics.
$any companies venturing into #!$ think little of the organi)ational commitment to the
organi)ed use of the data beyond #!$ product implementation. The customer, not the product,
must become the center of the universe. 'unctionally siloed organi)ations may implement a
package well1 but without a refocusing through organi)ational structure, the goals of #!$ will
not be reali)ed. "oth product and new business strategy implementation must be done in
synchroni)ation across the enterprise.
The organi)ational structure for #!$ can take many forms. There is a need to organi)e around
the customer segment instead of the product a major shift for many businesses. 5art of this shift
re(uires that the following responsibilities, with the metrics indicated, actually be assigned0
21
Customer 1ata 3tewardship> +nsuring data (uality and compatibility for internally and
externally generated data that is used for segmentation and promotion development.
Customer 3egmentation> $easuring and grouping customers by customer profitability and
other customer rankings that will be useful in supporting promotion and customer management
efforts.
argeted <romotion :eneration> ,enerating promotions for uni(ue segments or individuals in
the customerA prospectAsuspect communities.
<romotion =ffecti%eness> $easuring the effectiveness of promotions (uantitatively and
understanding the reasons for the success or lack thereof.
<romotion Channel Management> +nsuring channels are capable of being fully utili)ed (uickly
for delivery of promotions and messages.
Customer 3atisfaction Management> /peaks for itself.
Dverall, the execution of the promotions to the right customers through the right channels while
presenting a coordinated company image falls under a marketing executive. However, there is a
huge amount of overlap and coordination re(uired within the business team to execute an
effective #!$ strategy. The organi)ational elements of the #!$ strategy are as important as
the technical. &ccepting #!$ in its rightful place as a competitive strategy means it must be
supported by organi)ational structure.
Todays business environment is extremely competitive. n my last posting, we discussed
symptoms of a company that needs #!$ from inside the organi)ation. This posting addresses
some of the external pressures to use #!$ caused by the competitive business environment.
#!$ is not a Jnice to haveK. #!$ has become a competitive advantage. &nd, if your
competitor has a #!$ solution, and you lag behind, you are at a competitive disadvantage.
&lso, customers expect more from you.
become ac(uainted with companies on a daily basis that are doing nothing to improve. They
claim that what they are doing has worked for years. Why should they change now- /imple. t
costs them a significant amount of money, and if the cost is high enough, it may cost them their
business. $ost of these costs are difficult to detect without the trained eye.
22
=?$M<-= 6F $@ 6R:$@'A$'6@
The 7enosha 4ews, a Gnited #ommunications #orporation paper, is a growing daily newspaper
with a weekday circulation of 9>,CCC and a /unday edition that reaches 9@,=CC. #ommitted to
providing its customers with the best product and services on the market, the paper reali)ed that
it needed to replace its legacy circulation management system and provide online customer
services to remain competitive.
&ccording to Mared Thorson, marketing manager for The 7enosha 4ews, the paper%s legacy
solution could no longer support the needs of their growing business, JThe product had simply
not evolved with the changing times and the challenges that face the newspaper industry.K
'or one thing, the database did not provide the flexibility they re(uired to integrate with
external sources for list matching. Without the ability to efficiently ensure the addresses in their
database were accurate, the paper was failing to reach thousands of potential customers and
conse(uently achieving a low rate of return on their marketing investment.
To meet customer expectations for access to real time services, The 7enosha 4ews wanted to
offer an on.line self.service tool to enable prospects and customers to perform transactions via
the Web, such as a new subscription re(uest, online payments and starts and stops for vacations.
This online functionality was something their legacy application could not provide. Though The
7enosha 4ews did have an online presence via a Web form customers could fill out and submit,
the back.end of the process was completely manual, and re(uests took a minimum of 9.6 days
to process.
JThe newspaper business is fiercely competitive. t is critical that our customer service is the
best it can be and that we offer our customers a variety of real time options to meet their specific
needs,K said Thorson. JWe wanted to enable our customers to perform transactions online while
at the same time eliminate much of the time and costs involved with manual processing on our
end.K
23
The 7enosha 4ews had very specific criteria in mind when searching for a new solution. They
wanted a system that would offer a smooth and (uick implementation and the flexibility to
integrate with third party applications. With the addition of online services it was critical that
their new solution provide reliable 9<x? access for customers and prospects. "ecause the paper
had limited T resources, the new application also needed to be very easy to use and maintain.
"ut the most important criteria according to Thorson, was that the solution not only meet the
needs of their business today but continue to evolve to meet their growing and changing
demands well into the future. JWe wanted to work with a company that we knew would be
around for a long time and would listen to its customers and stay in touch with their needs.
t was critical that our new solution have the capability to scale with our ever.changing
business and the market.K The decision was narrowed to two vendors*5ublishing "usiness
/ystems 25"/3 and Fata /ciences, nc 2F/3. &s Thorson and his team spoke with the two
organi)ations about their products and development strategies, 5rogress partner 5"/ stood out
as the clear leader. 5"/% 5rogress.based i/ervices /ubscriber and $edia5lusN #irculation
solutions offered The 7enosha 4ews the ability to move their customer service online as well as
the list matching and targeted marketing capabilities they re(uired. The Dpen+dge integrated
business platform is the foundation for both products and offered the flexibility and extensibility
The 7enosha 4ews needed to increase efficiency and sustain change. i/ervices /ubscriber is a
self.service online application that enables new customers to start subscriptions and empowers
existing customers to manage their account information online. $edia5lus #irculation manages
the entire circulation business cycle from processing subscriber information to delivering the
newspaper. JWe chose 5"/ and 5rogress because we were confident the technology could scale
with our needs over time and support our growth strategy by bringing greater efficiency and
innovation to our business,K explained Thorson.
$CB'=.'@: $ C6M<=''.= $1.$@$:=
n less than four months, the implementation was complete. J5"/ was able to hit our time line
and significantly helped ease the pain of going through a migration,K said Thorson. JWe were
up and running and everything worked the day they said it would.K "oth the i/ervices
/ubscriber and $edia5lus #irculation applications rely on the Dpen+dge database, and both
solutions have been successfully implemented without the need for a database administrator.
JThe 5rogress database is extremely reliable and flexible, re(uiring very little to no
maintenance,K commented Thorson. JWe also find the ongoing costs for the database extremely
reasonable and competitive.K /ince implementing the 5rogress.based solutions, The 7enosha
4ews has seen a substantial increase in new revenue, L9CC,CCC in the first year alone, and a
decrease in resources and costs previously dedicated to manual operations.
24
JWe chose 5"/ and 5rogress because we were confident the technology could scale with our
needs over time and support our growth strategy by bringing greater efficiency and innovation
to
our business.K
* Mared Thorson
$arketing $anager
@ew 6nline 3er%ices 'mpro%e Customer =;perience and 3a%e Costs
With i/ervices /ubscriber, the number of online transactions has steadily increased, and The
7enosha 4ews is saving more than ;CC hours a year that were previously dedicated to manual
data entry. i/ervices /ubscriber enables customers via The 7enosha 4ews Web site to start a
new subscription, place their paper on vacation hold, make an online payment, and if the
customer is an electronic subscriber they can validate and gain access to their electronic
subscription 9<x?. J"efore we implemented i/ervices /ubscriber it took at least <@.?9 hours for
a customer re(uest to be completed because everything was processed manually,K explained
Thorson. JToday customer and prospect transactions submitted online are completed
immediately, and all information is automatically updated in our Dpen+dge database. We are
now able to deliver a much higher level of customer attention and meet our customers
expectations for real time services.K
Fata from the customer.performed transactions is automatically integrated within the
$edia5lus #irculation database, where it provides a single, complete view of the customer. The
7enosha 4ews uses reporting tools within $edia5lus #irculation to run reports and track
trends among its subscribers and can create targeted marketing campaigns, such as a campaign
to convert subscribers to its +&/I5&I credit card enrollment program. /ince automating their
online customer service using i/ervices /ubscriber The 7enosha 4ews has increased its
+&/I5&I enrollment to 9CO, which is helping their renewal rates and ensuring uninterrupted
service to their subscribers. Thorson commented, J"y automating services such as online
payments, our company is saving money and our customers are provided a degree of flexibility
that makes their lives easier. n an industry as competitive as ours, these benefits translate into a
competitive advantage.K
'or example, with $edia5lus #irculation The 7enosha 4ews is now able to upload files from
the post office and through list matching update their own database of subscriber and non.
subscriber data. This saves the organi)ation hours of updating their lists manually, ensures
more accurate customer information and enables the company to take advantage of postage
discounts. J"efore using $edia5lus #irculation we had about 9C,CCC addresses in our database
25
that did not match addresses the post office said were valid. With this new solution we have
dramatically reduced the number of faulty addresses, achieving a B=O improvement in
accuracy,K explained Thorson. JThis technology is allowing us greater visibility into who we
are and are not reaching in our target markets and ensuring the dollars we do spend are
worthwhile.K
#ustomer relationship management 2#!$3 systems offer a range of benefits with the end view of
providing companies with a competitive advantage. "y enabling organisations to analyse
customer data in a timely and efficient manner, #!$ systems can impart the ability to cut costs,
enhance efficiency, streamline processes, capitalise on existing customers and source new
clients, and also revolutionise marketing and business development strategies based on accurate
data and reporting.
With the advent of #!$ systems several years ago, many organisations rushed to embrace the
new technology with its promises of delivering a competitive advantage. However, organisations
implementing #!$ systems have often struggled to align business and T objectives and develop
an effective strategy and project management approach. Without an effective strategy in place,
companies can find themselves caught out by the costs of implementation and ongoing
maintenance and also by the challenges of gaining support across the organisation, from end
users to senior management.
With a current resurgence of interest in #!$, those wishing to execute a #!$ project or ensure
its success beyond implementation, will need to be aware of how to mitigate such issues in order
to achieve the competitive advantage they set out to achieve.
This interactive two.day masterclass will provide plenty of opportunities for discussion around
the challenges presented by #!$ implementation and ongoing management. "y engaging with
the masterclass leader and other attendees, you will address critical issues such as0
. Gnderstanding the benefits and capabilities of #!$ systems, and choosing the right solution
. Fevising a holistic #!$ strategy that aligns business and T goals
. ,aining organisation.wide acceptance for #!$
. Fefining standard processes to ensure consistency in reporting
26
CRM STRATE#%& "ot Eve'yone(s Doing t) But
Most Ac*no+,edge t-e !a,ue
!esults revealed that = out of ;C firms 2=;O3 currently use #!$ systems to increase the
efficiency and effectiveness of their sales staff. n addition, @ out of ;C firms 2@9O3
acknowledged that a properly implemented #!$ system would have a direct impact on their
ability to retain customers, earn more of their business, and deliver superior customer service.
n terms of market activity, nearly a third of the companies interviewed indicated they were
either buying or investigating a new #!$ system or upgrading an existing #!$ system over the
next six to twelve months.
The study showed a variety of software brands and technology platforms competing for the
business with over ;< software vendors mentioned. < out of the ;< software packages were the
most popular packaged software choice for the financial services sector. The same < brands fall
into Jindustry leadingK #!$ packages as defined by independent technology and market
research companies. The majority of firms acknowledged the software was configured to their
specific business processes.
!esults revealed a large majority of financial services firms utili)e some form of home grown
#!$ system that was 6 H = years old on average. The top three challenges for this segment was
;3 older technology 93 user adoption 63 difficult to make changes. The top three benefits were ;3
internal T support 93 integrated with internal systems 63 standardi)ed for internal processes.
The study also showed that ;<O have recently implemented or upgraded their current
homegrown #!$ system and ;@O were in the process of investigating packaged software
options to replace their current homegrown #!$ systems.
&ccording to one nsurance +xecutive, JDur #!$ strategy is comprised of a blended approach
of both packaged and homegrown #!$ tools. n the past we built everything from the ground up
because there werent a lot of other choices at the time. 4ow were wise to the fact that investing
27
in a vendor supported packaged platform is a smarter decision. The tools we design, specifically
around reporting and trending metrics are specific to our business but they sit on top of the
packaged software platform.K
RECE"T S.R!E% $OR CRM AS
COMPETT!E AD!A"TA#E
!ecently launched are the findings of a study by 'orrester #onsulting on behalf of !esearch n
$otion 2!$3 that highlight how and why organi)ations in +urope are mobili)ing enterprise
applications, like #ustomer !elationship $anagement 2#!$3, to gain a competitive advantage.
"ased on the responses from over ;,CCC business and T decision makers, from companies in
'rance, ,ermany, taly, /pain and the G7, the research shows that the top two reasons
organi)ations mobili)e #!$ are improved sales and improved employee productivity 2@?O3.
The third biggest driver to mobili)e #!$ was improved customer service 2==O3, suggesting that
the trend to mobili)e enterprise applications not only benefits internal operations, but also
increases customer satisfaction.
With information changing at such a fast pace in today%s business environment, mobile
employees can not solely rely on accessing information from a desk.based system as it is often
inaccessible on a timely basis or out of date by the time they leave the office. !espondents from
the study also outlined five main benefits of mobile #!$, compared to traditional desk.based
access, which included0
. mproved productivity of front.line personnel 2??O3
. mproved customer experience 2?<O3
. ncreased customer satisfaction 2?6O3
. mproved business process efficiency 2?6O3
28
. !educed #!$ costs 2>6O3
4early three.(uarters 2?6O3 of the respondents who have deployed mobile #!$ explained that
it helps front.line personnel be more effective in their jobs. +mpowering employees to access
and update information wherever they are can prove to be a real business benefit not only to
mobile workers, but also for office.based employees who rely on real.time data.
The survey sample represented different si)ed organi)ations from across +urope and showed
that although larger companies 2P=CC employees3 have mobili)ed #!$ systems to date, a
greater number of smaller organi)ations 2>6O3 have plans to mobili)e their #!$ systems. The
benefits are so compelling, in fact, that over two.thirds 2>BO3 of companies who have mobili)ed
#!$ stated that they are likely to recommend others do so. The most common areas within an
organi)ation that utili)e mobile #!$ are0
. /ales 2>6O3
. #ustomer service 2>CO3
. 'ield service 2=;O3
'ew marketers would dispute the statement that it is the sum of all customers% interactions with a
company, over time, that ultimately creates or destroys that companys brand value. Iet few
companies take the time to look at their own business practices comprehensively through the
lens of their customers to understand how they measure up to their customers% needs and
expectations.
Foes each customer interaction live up to the brand experience that the company is trying to
create- &re you providing a more consistent and relevant customer experience than your
competitors are- Which interactions are the most powerful for creating customer loyalty-
'ielding customer.satisfaction surveys is not enough. To better serve their customer base and
more effectively ac(uire new customers, organi)ations need to delve into the details of individual
interactions to understand the relationship between each customer touch point and the value it
delivers to customers.
&fter all, value may be built through a series of positive experiences, but it is maintained
through consistently meeting the needs and expectations of your customers throughout the
29
customer lifecycle*from pre.purchase consideration to post.purchase evaluation. #ompanies
that have recogni)ed and leveraged this insight have reaped the benefits through improved key
performance metrics.
E"!RO"ME"TA/ SCA"&PEST
& brief analysis of the +nvironment in which the ndian airline industry operates is presented
below0
1emographic Factors
ndia has one of the worlds youngest populations. $ore importantly, this population is
characteri)ed by a large, fast growing middle class, thus forming a huge section of aspirant air
travelers. ,rowing education levels have also developed a very large network of 5rofessionals.
These form the business traveler segment of the population which is critical to the airline
industry.
=conomic Factors
5urchasing power levels are rising amongst the middle and upper sections of society
consistently. With the opening up of the economy, 'oreign direct investment limits in the airline
sector has been increased from <CO to <BO. This has raised the interest of foreign airlines
intending to invest in ndian airline companies. The government has also been striving in the
development of infrastructure at all levels and in the process airports are being upgraded and
capacities increased. Gnused airstrips have also been pressed into service in a few areas. /uch
infrastructure development efforts will continue.
<olitical Factors
The ,overnment has actively been promoting "rand ndia. This long term campaign is aimed at
attracting foreign investment, tourism development, etc. $ore specifically, the recent Gnion
30
"udget has created a very favorable taxation structure for the airline industry, with a ;C year
tax holiday on aircraft leasing. This is an excellent opportunity for airlines to increase their fleet
si)e in the medium term.
3ocio-Cultural Factors
The growing interest of an educated population in visiting various famed parts of the ndian
subcontinent on family vacation is a growing trend. The government is very actively promoting
domestic tourism that has increased 5opulation mobility. t is a characteristic of every ndian,
rich or poor, to demand value for money. This is a factor that works in favour of the low frills
carriers. /afety and /ecurity concerns with the rail network are increasing with a steady
increase in rail accidents. #orrespondingly, airline travel in ndia has had very few accidents,
too few and far between to act as a deterrent.
echnological Factors
&ircraft manufacturers continue to build and deliver new aircraft, adding new capacity. The fast
changing fly by wire aircraft technology is changing the way people fly, with a much wider
choice available for new airplane models and variants. However, in ndia, a severe constraint is
the lack of an effective and efficient airport infrastructure.
31
COMPETITIVE ADVANTAGE OF KINGFISHER
" GOOD CRM STRATEGIES
raining for e%ery facet of air transportation>
'light &ttendant Training
nitial, transition, and recurrent training for both domestic and international carriers.
,round 5assenger /ervice
Fomestic and international ticketing, gate and operations
nternational reservations
/ecurity and drug screening
&$! ,roup A&merican &irlines 'oundation Training provides management training and
consulting which can significantly improve the direction and profitability of your business.
32
A""E0T.RE 1
PROPOSA/
N%&' () *+' L'%,-', ..............................................
R'/01*,%*0(- N2&3', ...............................................
P,(/,%& N%&' ....................................................
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33
TOPIC OF THE PROJECT TU!" #$ %&' ( ( %#'P)T*T*+) (!+(,T(-)
WHI TH+ 5!DM+#T
To strengthen our knowledge
To develop practical approach
To understand real #!$ practices and how it can stand as a point of competitive
advantage and as a good strategy for many organi)ations.
To know the cold chain system
$+THDFD8D,I G/+F
5ersonal interviews
34
"O OB2ECTO" CERT$CATE
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CERT$CATE O$ S.PER!SOR
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37