CUSTOMER

RELATIONSHIP
MANAGEMENT
CRM: Is It Right For Your Company?
Chapter 2 - The Case of Customer Relationship Management

Judith W. Kincaid

Common CRM obstacles

Customers have more information and more control
To decide what to buy and from whom
Customer expectation significantly raised due to internet
Internet itself obstacle to meeting the expectations
Information due to online system difficult to integrate with old
fragmented system infrastructure
Eliminated human glue

Common CRM obstacles

Major Internal Obstacles (gaps - difficult managing

relationships consistently)
Intellectual Barriers (Unrealistic Expectations)
Wave Magic wand-Customer will be loyal
Software and consulting magic
Actual work for creation of loyalty abandoned

Cultural Barriers Product focused-no plans

Same form filled by patients in every dept.
Internally Focused (Organizational Silos- organized on

independent functional areas)

No sharing of common goals, strategies, plans, information and

practices

Common CRM obstacles

Unrealistic Expectations
Wishful thinking
Buy software- achieve loyalty
Loyalty is achieved by providing consistent positive experience over a

long term, takes focus, effort and patience. Potential payback is huge
Impatience- measuring results on the first month or quarter and not

years
Loyalty- who is loyal and why? Most organization do not know
No experience on developing relationships
Belief in magic wand or one who can do it
Less than satisfactory results-give up

Common CRM obstacles

Product versus Customer centered Cultures
Product-Centered Cultures
A company that makes plans and decisions based on an internal

perspective (impact inside the company)

Customer-Centered Cultures
The company has an external point of view, making plans and
decisions based on anticipated impact on customer

Common CRM obstacles

Product-Centered Cultures

Customer
Wants

Technology
and
Performance

Company
Focus

Product
(Inside out)

Solution and Convenience

Customer
(Outside in)

(Geoffrey Moore 1991)

Common CRM obstacles

Wishful thinking, product centricity, and organizational

silos results in fragmented (split) interactionsunsatisfactory experiences for customers

Common CRM obstacles

Infrastructure
Fragmented infrastructure due to:
Traditional automation of vertical processes
Data files defined to support specific use of data

Implemented system becomes part of

infrastructure:
Dependencies built
Difficult to make changes

Integration of old and new systems difficult, often

impossible
New technologies adopted by system
Older technologies are stuck

Information quality in older system

Risky to show the customers in original form

Common CRM obstacles

Organization
Functional Siloes companies act as a loose confederation
Different set of objectives, measures of success

Managers do not perceive a relationship with other functions

Do not coordinate their plans

Functional depts. deliver different messages

Sales wants numbers/revenue,

Marketing believes in long term beneficial relationship

Production wants more units to produce
R & D and Mktg, want consistent quality
Channel members may be giving same message to two different

segments

Total Customer Experience

External
Market Place

Brand
Customer
Experience

Front Office
Functions

Back Office
Functions

Design &
Development

Product
Mfg

Product
Quality

Marketing

Sales

Customer
Service

Product
Support

How Does this Ad Appeal to

Ones Goals?

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

It Appeals to Several Physical

Appearance-related goals.

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

To Which of Maslows
Needs Does This Ad Appeal?

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

Both Physiological and Social Needs

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

To Which of Maslows
Needs Does This Ad Appeal?

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

Self-Actualization

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

Ensuring Customers Loyalty

Why work on building loyalty?
Economics
5% increase in loyalty (customer retention) increase profits by 35 to

100%
1-Company customer inventory
Increase retention by 5% to double the customer inventory in 14 years

2- loyal customers
Buy more
Cost less to serve
Less sensitive to price
Refer friends to your product/company/store
Wait and travel a distance to buy on your products
Prepared to buy a little inferior or equal quality product against

competitor

Ensuring Customers Loyalty

Internet
Loyalty is more important in absence of information
Some customers still prefer human communication against online

buying
Internet used for easy information
Loyalty plays its part, when customer ignores low price and little better
quality of competitor

Ensuring Customers Loyalty

Building Loyalty
Just Satisfying Customers?
Satisfaction and Loyalty are independent factors

Satisfied Customers
May not be loyal always
May shift to competitors products

Dissatisfied Customers
Are never loyal

Tell others of negative experience

Terrorists will hurt your reputation (disagreement from US point is

terrorism)
For Loyalty you must work to delight (pleasant surprise) the

customer

Ensuring Customers Loyalty

Building Loyalty
Just Under standing Customer?
Understanding customer, the demography, psychography etc. does

not create loyalty

Customer knowledge must help us to devise products and
strategies to make customer loyal

Just Automating Processes and customer

interactions?
Time and cost saver
Helps in devising strategies and implementation faster

Defining Customer Relationship Management

Customer Relationship Management (CRM) is a discipline

that covers all the elements needed to build successful

relationships with customers.
CRM includes the following elements:
The information needed to understand customer better
The process management needed to deliver efficient and appropriate

experiences to customers
The software tools that allow us to use that knowledge
The training and change management elements so our people and
organizations understand and are capable o delivering experiences that
build stronger relationships and increase loyalty