TERM PAPER

TERM PAPER

ON

CUSTOMER

RELATIONSHIP

MANAGEMENT

Submitted To Submitted By

Ms. Manita Matharu Rahul Kumar

Faculty guide Reg. No- 312

Sec-C , PGPM-IV

K.R.MANGALAM INSTITUTE OF MANAGEMENT, NEW DELHI

TERM PAPER

INTRODUCTION:-

CRM is a business philosophy that describes a strategy placing the client in the
center of its processes, its activities and its culture

Customer relationship management is a broadly

recognized, widely-implemented strategy for managing and nurturing a company’s
interactions with clients and sales prospects. It involves using technology to
organize, automate, and synchronize business processes—
principally sales activities, but also those for marketing, customer service,
and technical support. The overall goals are to find, attract, and win new clients,
nurture and retain those the company already has, entice former clients back into
the fold, and reduce the costs of marketing and client service. Once simply a label
for a category of software tools, today, it generally denotes a company-wide
business strategy embracing all client-facing departments and even beyond. When
an implementation is effective, people, processes, and technology work in synergy
to increase profitability, and reduce operational costs.

The main CRM concept is quite simple. Throughout many years, the companies
focused their efforts primarily on lowering the costs and improving their internal
efficiency. Thus they concentrated more on the internal processes, often
automatizing back-office functions elements like manufacturing, logistics and
finance. In contrast, the management effort invested in client service, for example
selling and marketing, was often relegated in a last place. As the market gets
stronger and the providers become more efficient in offering products or services,
it becomes more difficult to differentiate between rivals. What is the true
K.R.MANGALAM INSTITUTE OF MANAGEMENT, NEW DELHI
TERM PAPER
difference between two types of toothpaste? In the meantime, as the quality of
services and products improves, client expectations increase. As long as the client
has the possibility of changing his provider, it becomes harder to keep him loyal.
In conclusion, it is highly important for a modern company to own a system that
will shorten the reaction time to customers' requests and complaints, thus

offering support and quality for its services

Many industries evolved their method of doing business over the years. The
providers that offer large amounts of products struggled over the years to create
brands based on quality and price. But the clients' empowerment and their
importance have increased. Today, in an environment ruled by Internet, when
changing providers can be done with just a few mouse-clicks, the
problem becomes more complex. It affects each organization, no matter if it
concentrates on clients or on business. It has been proven that necessary costs for
client maintenance are significantly lower than those associated with new client
acquisition. While businesses will continue to extend the clients database, they
should also concentrate on keeping and multiplying the best of these clients.
Increasing a client's action - or in other words the quantity of business each client
generates -becomes as important as increasing the action of the market. Through a
good administration of the relationship with a good client, the profitability will
certainly grow.

CRM Fundamentals

K.R.MANGALAM INSTITUTE OF MANAGEMENT, NEW DELHI

TERM PAPER
The term CRM became popular in the mid-1990s even
though the principles that underline the concept of relationship management -
representing the essence of marketing - are not new and have been practiced for a
long time, especially by small businesses.

Since the marketing instruments used by small businesses (e.g., mostly personal
contact between buyer and seller and therefore a good knowledge of the buyers
needs) are not achievable for larger businesses, CRM technology should enable
managing customer relationships on a larger scale. The philosophy of CRM is the
recognition that a long-term relationship with customers can be one of the most
important assets of an organization, providing competitive advantage and
increased profitability. According to studies, the average company loses between
20 and 50 percent of its customers every year, and also finds it hard to retain its
best customers. Deregulation, diversification and globalization have stimulated a
dramatic rise in competition. These marketplace realities have forced companies to
switch from a product-centric approach to a customer-centric approach. According
to , the CRM industry gained momentum in the past years and the CRM
application market increased by 84 percent, to $6.2 billion in 2000.

How It Works?

K.R.MANGALAM INSTITUTE OF MANAGEMENT, NEW DELHI

TERM PAPER
Customer Relationship Management (CRM) is a complex
system, consisting of procedures, strategies, software and web applications, that
assists a company in organizing and managing the relationship with its clients.

CRM facilitates the interaction with clients through the most efficient, the fastest
and the most sofisticated channel of communication - the Internet. It is a
solution that concentrates on the people, the processes and the information from
within a company, and aims to support its clients better and increase the level of
fidelity/loyalty.The spectacular growth and the continuous reevaluation of the
organizations that use websites brought the Internet to the attention of today's
management philosophy. The Internet offers another infrastructure through which
the organizations can interact with clients in the same way they interact through
phone, fax or email. The complexity of this interaction through multiple channels
indicates some areas in which technology can reduce personnel effort and
investments. At this moment, many companies consider that the advantage of the
web is actually the fact that visitors can find answers on their own, thus
minimizing the effort of the companies, reducing direct contact with the agents and
improving the efficiency. Generally, this consists of pages that contain answers to
the most frequently asked questions (FAQs). More complex systems analyze the
questions and search the database for possible answers. In each case, the system
should be updated constantly, as new problems and new solutions appear. The
most sophisticated systems will automatically "learn" from the cases where the
problems were solved, adding the necessary information in their databases.
Because many users don't trust the web concept, part of the Internet support
systems will offer different ways to communicate directly with the agents,
including online chatting. Most of the web based systems will have this feature,
that will allow clients to be contacted or to contact the agents directly over the
phone, thus respecting the request of receiving services through the favorite

K.R.MANGALAM INSTITUTE OF MANAGEMENT, NEW DELHI

TERM PAPER
channel of communication. When this facility is activated in an integrated system,
the contact center will have the possibility to identify the client immediately and to
access his interaction history with the organization.

CRM Systems and Technology

K.R.MANGALAM INSTITUTE OF MANAGEMENT, NEW DELHI

TERM PAPER

Data sources that are used in CRM systems

are customer service inquiries, customer surveys or sales force input such as
purchase history, shipping history, account data, demographic data and Web sales
data.

Since a part of this information is obtained through enterprise resource planning

systems, ERP databases must be integrated with some aspects of the CRM
databases. Furthermore, CRM technology includes different aspects of information
management, including integration with other enterprise-related systems and
methods that convert data to usable information. CRM uses technology, strategic
planning and personal marketing techniques to build a relationship that increases
profit margins and productivity. It uses a business strategy that puts the customer at
the core of a company's processes and practices. The implementation of CRM
software should come along with a change of the company's mindset to become
more customer oriented. It requires this customer focused business philosophy to
support effective sales, marketing, and customer service and order fulfillment.

Some examples of CRM initiatives are

- A database that specifically tracks customer service issues;
- A web page that allows customers to check inventory availability, order
status, and place orders;
- Data warehousing to build an information database to better
understand your customers.
- Capturing visitor data including their name, e-mail, location, and purchasing
preferences.

Defining CRM Objectives

K.R.MANGALAM INSTITUTE OF MANAGEMENT, NEW DELHI
TERM PAPER
The business objectives for the implementation of CRM software are:
- Increased customer number and customer profitability;
- Increase in market share;
- Increased campaign response;
- Higher customer satisfaction ratings;
- Greater number of returning customers
on the Web site.
- Simplified internal organization (shrink workflow, shortens cycle times, and
eliminates non-productive information flow).

Furthermore, The Conference Board surveyed 96 global firms in order to analyze

the CRM programs. 52 percent of the interviewed companies have implemented a
CRM solution and, among others, the top three strategic motives were to increase
customer retention and loyalty, to respond effectively to competitive pressure and
to achieve a competitive advantage, and to differentiate competitively based on
customer service superiority.

CRM Goals Differentiated by Departments

Different departments have different objectives

when adopting a CRM program.

In the following, some examples of department-specific goals are presented:

- Customer Support - Customer service objectives are: obtain basic information
K.R.MANGALAM INSTITUTE OF MANAGEMENT, NEW DELHI
TERM PAPER
about customers and their complaints, customer satisfaction monitoring and
faster complaints resolution in order to raise customer retention rates, to
increase self-service efficiencies, and to mitigate the need for in-person
assistance.
- Marketing - The marketing department is interested in performing dynamic
customer segmentation to begin more targeted customer communications and
campaigns, refined marketing campaigns, customer satisfaction by
segment analysis, and tracking campaign responses.
Sales - The sales department objectives are to deploy sales force automation across
regions, to track contact history, to streamline the sales process, and to qualify
prospects based on past experience.
- Field Service - Field service implies the service or repair of the customer's
equipment on the customer's premises. Field service engineers need to monitor

customer complaints and repairs histories.

Customers
According to a survey conducted by The Database Group concluded
in November 2000, retailers with an implementation level of 15.1 percent – one of
the pioneering sectors for CRM – and utilities companies with 17.9 percent
implementation level lead the field for CRM strategy. Banks and insurers are
heaving relatively poor CRM implementation levels, 7.3 percent, and 4.4 percent

K.R.MANGALAM INSTITUTE OF MANAGEMENT, NEW DELHI

TERM PAPER
implementation level respectively, but are expected to catch up in the next years.
However, their share on total customers is very high. About one third of the 100
companies surveyed have a CRM strategy, but again only one third of them
achieved their plans. However, about a quarter executes important components of
CRM. These components are, e.g., the ability to deal with customers consistently
across multi communications channels (21 percent of companies) and the linkage
of key customer information databases (28.8 percent of companies).

Purposes of Customer Relationship Management

CRM, in its broadest sense, means managing
all the interactions and business activities between a company and its customers.

This includes, but is not limited to, improving customer service. A good CRM
program will allow a business to acquire customers, service the customer, increase
the value of the customer to the company, retain good customers, and determine
which customers can be retained or given a higher level of service. A good CRM
program can improve customer service by facilitating communication in several
ways:

• Increases the efficiency of customer interaction through all the

communication channels available.
• Facilitates the collaboration between the client and the provider using the
web, thus reducing the costs of customer relations management.
• Provides product information, product use information and technical assistance
on web sites that are accessible 24 hours a day, 7 days a week.

K.R.MANGALAM INSTITUTE OF MANAGEMENT, NEW DELHI

TERM PAPER
• Identifies how each individual customer defines quality, and then designs a
service strategy for each customer, based on these individual requirements
and expectations.
• Provides a fast mechanism for managing and scheduling follow-up sales calls to
assess post-purchase cognitive dissonance, repurchase probabilities,
repurchase times, and repurchase frequencies.
• Provides a mechanism to track all points of contact between a customer and the
company, and does it in an integrated way, so that all the sources and the
types of contacts are included, and all the users of the system see the same
view of the customer (reduces confusion).
• Helps to identify potential problems quickly, before they occur.
• Provides an user-friendly mechanism for registering customer complaints
(complaints that are not registered with the company cannot be resolved, and
are a major source of customer dissatisfaction).
• Provides a fast mechanism for handling problems and complaints (complaints
that are resolved quickly can increase customer satisfaction).
• Provides a fast mechanism for correcting service deficiencies (correct
the problem before other customers experience the same dissatisfaction).
• Uses internet cookies to track customer interests and personalizes product
offerings accordingly.
• Provides a fast mechanism for managing and scheduling maintenance, repairs
and on-going support (improves efficiency and effectiveness).

K.R.MANGALAM INSTITUTE OF MANAGEMENT, NEW DELHI

TERM PAPER

Challenges

Despite the benefits, many companies are still not fully leveraging
these tools and services to align marketing, sales, and service to best serve the
enterprise.

Tools and workflows can be complex to implement, especially for large

enterprises. Previously these tools were generally limited to contact management:
monitoring and recording interactions and communications. Software solutions
then expanded to embrace deal tracking, territories, opportunities, and at the sales
pipeline itself. Next came the advent of tools for other client-facing business
functions, as described below. These technologies have been, and still are, offered
as on-premises software that companies purchase and run on their own IT
infrastructure.

Often, implementations are fragmented; isolated initiatives by individual

departments to address their own needs. Systems that start disunited usually stay
that way: siloed thinking and decision processes frequently lead to separate and
incompatible systems, and dysfunctional processes.
K.R.MANGALAM INSTITUTE OF MANAGEMENT, NEW DELHI
 TERM PAPER

Strategy
Choosing and implementing a system is a major undertaking. For enterprises of
any appreciable size, a complete and detailed plan is required to obtain the funding,
resources, and company-wide support that can make the initiative successful.
Benefits must be defined, risks assessed, and cost quantified in three general areas:

 Processes: Though these systems have many technological components, business

processes lie at its core. It can be seen as a more client-centric way of doing
business, enabled by technology that consolidates and intelligently distributes
pertinent information about clients, sales, marketing effectiveness, responsiveness,
and market trends. Therefore, before choosing a technology platform, a company
needs to analyze its business workflows and processes; some will likely need re-
engineering to better serve the overall goal of winning and satisfying clients.
Moreover, planners need to determine the types of client information that are most
relevant, and how best to employ them.

 People: For an initiative to be effective, an organization must convince its staff that
change is good and that the new technology and workflows will benefit employees
as well as clients. Senior executives need to be strong and visible advocates who
can clearly state and support the case for change. Collaboration, teamwork, and
two-way communication should be encouraged across hierarchical boundaries,
especially with respect to process improvement.

 Technology: In evaluating technology, key factors include alignment with the

company’s business process strategy and goals; the ability to deliver the right data
to the right employees; and sufficient ease of use that users won’t balk. Platform
selection is best undertaken by a carefully chosen group of executives who
understand the business processes to be automated as well as the various software

K.R.MANGALAM INSTITUTE OF MANAGEMENT, NEW DELHI

TERM PAPER
issues. Depending upon the size of the company and the breadth of data, choosing
an application can take anywhere from a few weeks to a year or more.

Implementation Issues
Dramatic increases in revenue, higher rates of client satisfaction, and significant
savings in operating costs are some of the benefits to an enterprise. Proponents
emphasize that technology should be implemented only in the context of careful
strategic and operational planning.[10] Implementations almost invariably fall short
when one or more facets of this prescription are ignored:

 Poor planning: Initiatives can easily fail when efforts are limited to choosing
and deploying software, without an accompanying rationale, context, and
support for the workforce. In other instances, enterprises simply automate
flawed client-facing processes rather than redesign them according to best
practices.

 Poor integration: For many companies, integrations are piecemeal initiatives

that address a glaring need: improving a particular client-facing process or two
or automating a favored sales or client support channel. Such “point solutions”
offer little or no integration or alignment with a company’s overall strategy.
They offer a less than complete client view and often lead to unsatisfactory user
experiences.

 Toward a solution: overcoming siloed thinking. Experts advise organizations to

recognize the immense value of integrating their client-facing operations. In this
view, internally-focused, department-centric views should be discarded in favor
of reorienting processes toward information-sharing across marketing, sales,
and service.[3] For example, sales representatives need to know about current
issues and relevant marketing promotions before attempting to cross-sell to a
specific client. Marketing staff should be able to leverage client information
K.R.MANGALAM INSTITUTE OF MANAGEMENT, NEW DELHI
TERM PAPER
from sales and service to better target campaigns and offers. And support agents
require quick and complete access to a client’s sales and service history.[3]

Measuring the Success of CRM

As mentioned, one of the most difficult parts of a

CRM project is defining success parameters.

Even if the success factors are different, in the end many companies choose the
ROI (Return on Investment) as the only success factor, although this choice is
controversial. Sometimes, CRM systems measure the ROI simply as the
incremental revenue or margin return from implementing a CRM
technology. This has only limited applicability, as it doesn’t give sufficient
insight to make ongoing decisions that improve the customer relationship. It
considers the problem only from the business point of view, and sees the

K.R.MANGALAM INSTITUTE OF MANAGEMENT, NEW DELHI

TERM PAPER
customer only as a source of revenue, while CRM ROI should integrate both the
margin and the customer satisfaction. A study conducted by the researchers at the
University of Dayton illustrates four major measurements for CRM success:
- The CRM's ability to impact corporate strategy (according to 25 percent of
respondents); - Successful technological integration (according to 23 percent of
respondents); - Enhanced strategic partnerships (according to 20 percent of
respondents); - Assimilation of CRM-related technologies (according to 18 percent
of respondents). Another financial success indicator is the customer lifetime value
(CLV). It allows companies to measure beyond one time period and beyond one
customer, and combines both the discounted cash flow, the activity costs and the
probabilities for customer retention to help understand the impact of different
CRM scenarios. The profitability outcomes of the most likely scenarios that can be
implemented must be compared to find the best path to increase total profitability.

References

www.google.com
www.scribd.com
http://en.wikipedia.org/wiki/Customer_relationship_management

1. DestinationCRM.com (2002) What Is CRM?

2. SAP white paper (2003) CRM Without Compromise
3. ^SAP Insider (15 November 2007) Still Struggling to Reduce Call Center
Costs Without Losing Customers?
4. ^ Strativity Group, Inc. (2009) Global Customer Experience Management
Benchmark Study

K.R.MANGALAM INSTITUTE OF MANAGEMENT, NEW DELHI

TERM PAPER

5. ^ InsideCRM (2007) Get It Together with Collaborative CRM

6. ^ a b DestinationCRM.com (2009) Who Owns the Social Customer?
7. ^ Clara Shih, DestinationCRM.com (2009) Sales and Social Media: No
One’s social (Yet)
8. ^ TechTarget (2009) Strategy Checklist: Planning for CRM and Customer
Service Success
9. ^ Lior Arussy (2005). "Understanding the Fatal Mistakes". Passionate and
Profitable. John Wiley & Sons, Inc..
10. ^ "Avoid the Four Perils of CRM". Harvard Business Review.
a b
11. ^ Jim Dickie, CSO Insights (2006) Demystifying CRM Adoption Rates
a b
12. ^ David Sims, TMC.net (2007) CRM Adoption ‘Biggest Problem’ in 83
Percent of Cases
13. ^ DestinationCRM.com (2009) CRM Market Grows for Fifth Straight Year
14. ^ Gartner, Inc (2008-09-12). "Gartner Says Worldwide Customer
Relationship Management Market Grew 23 Percent in 2007". Press release.
Retrieved 2008-08-15.
15. ^ Gartner, Inc (2009-06-15). "Gartner Says Worldwide CRM Market Grew
12.5 Percent in 2008". Press release. Retrieved 2009-10-27.

K.R.MANGALAM INSTITUTE OF MANAGEMENT, NEW DELHI