CRM

1) INTRODUCTION
WHAT IS CRM? The infrastructure that enables the delineation of and increase in customer value; the correct means by which to motivate
valuable customers to remain and potential customers to become loyal – indeed to buy again.
Customer: END-USER consumer; B2B - Purchasing Agent, User At A Customer Company, Entire Customer Company, Retail Business.
Competition: Anything A Customer Might Choose That Would Preclude Choosing The Organization That Is Trying To Build A Relationship
With The Customer
What is a relationship? Enterprise strives to get a CUSTOMER, keep that customer for life, and grow the value of the customer to the
enterprise. It is the crux of the Customer Strategy. Provide a framework for exchange between a CUSTOMER and the ENTERPRISE.
Customers give information in return for personalized service that meets individual needs. Interaction allows for collaborative dialogue.
Provide a framework for everything connected to the CUSTOMER-VALUE business model. Do customers have relationship with enterprises
that do not know them? Do enterprises have relationship with customers they do not know? Is it sufficient for the business objective to be
limited to acquiring the most customers and gaining the greatest market share for a product or service? To be successful, in the era of
customer interaction and involvement, the business objective must include establishing meaningful and profitable relationship at least with
the most profitable customers.
MANAGEMENT: Developing and advancing the framework to create and deliver value thereby gaining CUSTOMER LOYALTY. WHO SHOULD
MANAGE THE RELATIONSHIP? Enterprise or customer or both!
Operational aspects aside, CRM is a Business Strategy. Get, keep & grow customers. Connect, communicate, collaborate with customers
CRM Strategy: Acquire profitable Customers (GET); Retain profitable customers longer, Win back profitable customers; Eliminate
unprofitable customer (KEEP); Upsell additional products in a solution, Cross-sell other products to customers, Referral and word-of-mouth
benefits, Reduce service and operational costs (GROW).
CRM Represents the way customers in all walks of life, in all industries, all over the world, want to be served. Simply a more efficient way of
doing business. Examples of customer specific behavior and business initiatives driven by customer specific insights: A car rental customer
rents a car without having to complete another reservation profile, An online customer buys a product without having to re-enter their
credit card number and address or A company saves money by eliminating duplicate mailings. Above illustrations provide examples of
where an enterprise makes itself, its products, and/or its services so satisfying, convenient, or valuable to the customer that he/she
becomes more willing to devote his/her time and money to the enterprise than to any competitor. Managing customer relationships is a
different type of competition.
A comparison of Market-share and Share-of-Customer Strategies: Product or Brand Managers sell one product at a time to as many
customers as possible (MS) – Customer Manager sells as many products as possible to one customer at a time (SoC); Differentiate Products
from competitors (MS) – Differentiate customers from each other (SoC); Sell to Customers (MS) – Collaborate with Customers (SoC); Find a
constant stream of new customers (MS) – Find a constant stream of new business from estableshed customers (SoC); Use mass media to
build brand and announce products (MS) – Use interactive communication to determine individual needs and communicate with each
individual (SoC).
Does focus on CRM mean discarding the other competitive advantages? All the practices that have helped the enterprise successfully
develop the, product-edge or operational efficiencies have to be maintained. Example of PEPSICO in India: Maintaining Brand Awareness
(increase brand preference and brand loyalty); Branded Relationship (is aware of the customer and constantly changes to suit the needs of
the particular individual). It does mean using new strategies (and nearly always requiring new technologies) to focus on growing the value
of the enterprise by deliberately growing the value of the customer base. Growing the value of the customer base increases the value of the
demand chain, the stream of business that flows from the customer up through the Supply Chain upstream.
Why CRM? Knowledgeable Consumers, Use Of World Wide Web/ Internet, Increase In Web-Based Interaction, Increasing Competitive
Pressures (Lower Prices, Purchasing Incentives). The Paradigm Product-centric focus and Operational Efficiencies as the sole competitive
advantage no longer valid. Traditional market efforts (4Ps) - Product, Price, Promotional Activity, Place.
CRM is both operational and analytic process.
Operational CRM focuses on the processes affecting day-to-day operations of the company. It involves where direct customer contact
occurs (TOUCHPOINTS), what a company has to do to make customer more valuable. Migrate From Transaction Based To Relationship
Based Model. Transaction-Based: In organizations focused on sales of products each transaction is thought as a discrete event with no
correlation to any prior or future transactions. Exchange between anonymous parties that will very likely never repeat in the future. Eg., An
out-of-town traveler passing through a town stopping to buy food or gasoline for cash. Relational-Based: The customer expects to receive
the same level of performance/service even though price, location, presentation and other factors may vary. Eg., A consumer traveling
across the country repeated purchasing the same brand of gasoline. A consumer choosing to stay at the same brand of hotel across the
country. In the customer’s mind the transactions are related. If the customer pays for the services/product using a specific credit card, or is
known to company by a special identification then the company has the potential to recognize the connection between the transactions.
The company has then the ability to determine whether she is someone with whom it would like to build a relationship.
Analytical CRM involves understanding the customer activities that occurred at the touch-points. It focuses on strategic planning needed to
build customer value. Focuses on and aids cultural, measurement, organizational changes required implement the strategy successfully.
The Spectrum: Discrete (Transactional)  Relational (Collaborative)
In Summary, Operational CRM: Automation of horizontally integrated business processes via interconnected delivery channels. (Front
Office CRM). Analytical CRM: Analysis of the data created on the operational side of the CRM and other relevant operational data sources
for the purpose of business performance management and customer specific analysis.
CRM and Business Intelligence: CRM integrates business intelligence with business actions. CRM and ERP/SCM/SFA/Data
Warehousing/Enterprise Application Integration.
Food for thought (Can use in Case!): In the age of CRM what will happen to the four Ps, traditional advertising or branding? How can we
account for the upheaval in orientation from focusing on product profitability to focusing on customer profitability? If it’s such a good idea,
why didn’t companies operate from the perspective of building customer value 50 years ago?
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2) CRM in Marketing
Key factors in successful marketing? (Shifts in Customer Relations) On the customer side: Valuing privacy and confidentiality, More
knowledgeable and expressive, Evolving sense of value, Availability of choices – products, Universal access to internet – providers
On the company side- Increasing competition, Decreasing profit margins, Evolving global supply resource, Presence in the internet
Impact of this on Marketing Strategy:
Product Marketing: Mass Marketing campaigns – Reach as many customers as possible, Focus on Product features, Stock the shelves and
alert the customer, Choice of products and availability key to success, Product Revenue analysis and Price elasticity modeling. Direct
Marketing - Communications with large number of customers, Primarily through promotional mailing or magazine advertisements, Several
versions of promotional campaigns launched, Campaign success evaluated – learn from what worked and what didn’t. The process of
Product Marketing (fig): New Product  Launch Marketing Campaign  Did people buy?  [YES]  Monitor Revenues  Adjust Pricing
 Launch Revised Campaign or [NO]  Re-package/ Rebrand product  Launch Revised Campaign  Go back to “Did people buy?”
Target Marketing: Promoting product/service to a subset of customers/prospects, Customer Data was in focus, Customer Segmentation
(Demographics – age, gender, income, locality, family size), Preferred sales channel, LT Value, Life stage, Propensity to buy (Early Adapters,
Pragmatists, Skeptics, Laggards).
Relationship Marketing (Regis McKenna, 1993) : Focus shift (Single product multiple customers to single customer multiple products,
Custom products and tailored messages), Permission marketing (Differentiate customer. Customers stipulate how and when, Align business
processes), Underestimated the amount of work that was needed.
Permission Marketing: Focus on - Putting customers in charge of their preferences, Goal is to move each one of the brands closer to the
customer, Reduces waste of customer time and waste of company’s money, Over time differentiate customer, Internet is a permission only
zone. Eg., Walt Disney World Ride Pass, Airline Travel, GATOR Software (remembers user info once entered online)
In summary, Conventional Marketing Initiatives are Mass Marketing, Direct Marketing & Target Marketing; Refined Marketing Initiatives
are Relationship Marketing and Permission Marketing. Figure: Outer Triangle  customer interaction, refined understanding, refined
communication. Inner triangle  New campaign, customer response, behavior analysis. Campaign Management (fig): Concieve  Plan 
Determine who  Determine how  Launch  Analyze Results [all this over TIME]. {Open Loop and Closed Loop for these}
Cross-Selling: Selling a product or service to a customer as a result of another purchase; Selling products that increase a customer’s overall
profitability; Selling the right product to the right customer; Understanding the ways customers evaluate how and whether to respond (Eg:
Online brokerage marketing new checking account to retirement account holders; Super-sizing). Selling more products to a customer
increases revenue from that customer and costs less than acquiring a new one; Not every customer is a good candidate; It is critical to
understand the ways by which customers evaluate how and whether to respond to promotions.
Up-Selling: Motivating customers to trade up to more profitable products.
Customer Retention : Analyzing customer attrition (Understanding why customers have left? Understanding who? How do you keep them?
Churn prediction)
What is CHURN? Customers leaving your business to go to a competitor implies that the customer might or might not return. “Churn
Reduction” is another way of saying customer retention and is a major goal of CRM. Churn is most often used in conjunction with highly
competitive commodity product business such as Communication cos., Utilities and Airlines.
Behavior Prediction: Using modeling and data mining techniques predict - Propensity to buy (Whether a customer likely to buy a product
or not); Next sequential purchase (What product is a customer likely to buy next); Product affinity analysis (Which products will be
purchased with other products); Price elasticity modeling and dynamic pricing (Determining the optimal price for a given product)
Benefits of modeling Buyer Behavior: Offer discounts, incentives to those at risk of churning; Refine target marketing campaigns (Limit to
smaller customer segments or specific products); Bundling products together and selling at fixed price; Cross-selling, Up-selling
KEY TO SUCCESS??? Know who your best customers are!
Customer Value: Financial asset to a firm represented by the customer. Difficult to calculate data (Price sensitive customers do not recoup
value); Marginal contribution from customer = Revenue – Cost
Q: Can a customer be unprofitable but still considered valuable (Can use in Case!)?
Customer Long Term Value (CLTV): Past behavior, Repeat purchases, Referrals and indirect benefits, Response rate to campaigns,
Willingness to business in the future rather than switch, Cost of sale of product/service, Cost of acquisition, Marketing costs, Unrealized
Potential (Amount by which the firm could increase the value of a customer if it applied a strategy). Customer Value Categories: Most
Valuable Customers (MVC), Most Growable Customers (MGC), Below Zero (BZ), Migrators.
Channel Optimization: Means optimizing a company’s “inbound” channels with its “outbound” means of customer interaction, Knowing
how to choose the best approach for each, Understanding the channels through which specific customers prefer to interact with the
company and How best to communicate with your customers.
Personalization: Customizing customer communication based on knowledge preferences and behaviors at the time of interaction;
Adaptive Personalization( As customer’s behavior data becomes enriched systems learn); Online messages tailored to a particular
customer or customer segment; In the B2C model personalization is based on the analysis of a customer’s click-streams. Clickstreams ->A
customers navigation path through a company’s Web site; A company can see not only what a customer purchased by how the customer
reached the site in the first place; How he traveled through the site after he got there; How much time he spend on each page; Which
products might have stimulated purchases of other products; Changes to Web images; Custom promotions or discounts; Customized Web
pages according to the visitor’s use of the site.
Event-based marketing: What is needed to use this program approach successfully? Clear understanding of possible events; Outcomes of
these events; Clearly defined course of action(s) to make outcome favorable; Time sensitive action
The need to incorporate privacy measures into CRM initiative: Privacy issues initiate Risk Management Strategies:Ensure that no privacy
threats occur either intentionally or unintentionally; Solicit and incorporate in profile customer’s privacy preference
Some pertinent questions (Can use in Case!): What keeps our loyal customers coming back? Strategies to entice prospects to become
customers; How can we anticipate the products and services a customer may want? How do we translate what we have learnt to improve
performance and experience? How do we migrate customers to lower-cost channels? Do other units in the company see the customers
differently than we do and how does that influence our marketing efforts – for e.g. campaign messages?
Use of mobile devices in CRM applications
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3) CRM and Customer Service
Customer Service and CRM: Customer Service Center or Call Center - As part of customer strategy created to provide customer interaction
to support the business of a company.
WHY CUSTOMERS CALL? Complain, Problem resolution, Order/ Verify or change order/ Order enquiry, Questions concerning product/
service, Store/ business operating hours/ locations, Account questions, Returning/ exchanging merchandise.
Customer Service: Critical to both keeping existing customers and acquiring new customers. If this function has such importance how
should its value 2 the business be considered? Is it a necessary cost of doing business? How we value a function dictates how we manage it.
Wrong focus by management: Considering call centers as a necessary cost of doing business instead of considering it as part of delivering
the objectives of the business, Rigid business processes play a larger role, Leads to wrong metrics to evaluate efficiency (Call volume
handled by each operator, Average call duration), Leads to wrong compensation measures, Leads to unwanted pressures on CSR Results in
high turnover (Results in high turnover).
In essence to position Customer Service/Call Center right: Right management focus - Must reflect function’s value to the business;
Appropriate efficiency evaluation metrics (Successful completion, Difficulty rating of calls, Volume of calls handled); Appropriate
compensation schemes; Well established process for hiring and training call center representatives.
Customer Service: Big contributor to CRM objective, Biggest impact to customer experience in many industrie, Each contact is another
opportunity to inform/up-sell/cross-sell, Nothing can replace the human element (The key is to get into customers shoes).
Digitization and advances in communication technology have brought about significant changes to the Call Center/ Customer Service
mode of operation.
Changes due to Technological Advances: Automated handling of calls, Call distribution to minimize wait times (Load balancing), Clusters of
call centers geographically dispersed (Transparent to customer, 24/7 operation-follow the sun), Precision/ intelligent call distribution
(product/domain/language experts), Priority handling of call based on customer value.
Benefits: Opportunity to provide multi modal support, Ability to increase call volume, Ability to personalize service through 1-1 interactio,
Ability to provide real time escalation of calls needing additional resources, Ability to customize self-service access screens, Opportunity to
‘mind share’, Ability to increase support efficiencies, Extend support to 24/7, Opportunity to enrich customer database .
Essential factors for success: Good communication skills and good multi-tasking by CSR.
Call Center Evolution: Organization of data was focused upon, Ability to eliminate duplicates, Get customers old records, Call classification:
Products: Remedy and Clarify were used: Monitoring call categories, Time to resolution, Escalation monitoring, Average call duration. Still
customer value was not considered.
Customer Satisfaction Measurement: Gather information about customers’ impressions, Leverage the findings to improve service,
Measurement instruments:mailed surveys, e-surveys by company or third parties, email.
What do companies measure? Customer impression about value of service provided, Is web site easy to locate info and navigate, Rate the
web site in comparison to other sites, Features of site they liked/ disliked, What they liked about the product they reviewed, Did visit
improve or mar impression about brand, How they found this site, What specifically induced the purchase, Why did they not complete a
sale,Why the customer did or did not register on site.
Call Scripting: Logical series of talking points and guiding CSR through a dialog with the customer.
Situational Scripting based on: The reason for contact,Customers value,Cross Selling opportunity/ propensity to buy data,Current
Promotions or Discount,Past Due bills or accounts payable issues.
Advantage of Call Scripting? Helps a company’s call center present a uniform approach to call resolution.
Cyberagents: A move in the direction to combine personalization and advanced technology, Cyberagent has voice and facial expressions,
Ability to use heterogeneous and detailed information about customer & complex rule sets, Provide information to actually make decisions.
Managing Call Center Workforce: Forecast peak volumes and busy periods, The number of CSRs needed, Training and education (On use of
CS ICT, Corporate personality, Problem resolution and escalation), On use of CS ICT, Corporate personality, Problem resolution and
escalation, Employee Scheduling based on skills, tenure and preferred work hours, Impress on issue of service recovery, Tracking
performance by metrics (Customer value, satisfaction, priority level etc), CSR Compensation, Reporting and analytics.
CSR Training: CSR – the real people to practice the mission vision and values, Need to realize that company does not sell Products /
Service / Benefits, they only sell value/ provide experience, What are the components of value: Benefits – Benefit is internal (Expected
Benefit, Expected Benefit, Assumed Benefit, Bonus Benefits), Costs (Time, Effort, Money), The difference of Benefit and costs is the value.
Customer Service – Checklist for success: Choose your Technologies carefully, Provide CSRs all the customer data they need, Establish
process for call center staff, Agree on customer success metrics (Product/ LTV/ Hold time/ Optimal Call Length/ Outcomes), Understand the
issue of service recovery, Training and Education of CSRs, Staff at appropriate levels, Share key learning with concerned departments,
Compensate adequately, Determine Corporate personality (Customer Service Attitude Reflects the Corporate Attitude/ Personality).
KEEP THE CUSTOMER FIRST,IMPROVE THE CUSTOMER EXPERIENCE