EMBA Program

Patuakhali Science & Technology University

Bangladesh

Customer Relationship Management

 Prepared by
Ahmed Sabbir

Copyright © 2020, Ahmed Sabbir

It is a personal study note prepared as per Curriculum of

EMBA Program, Patuakhali Science & Technology University, Bangladesh

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 2

 Unit-I

Concept and Nature of CRM

Concept of Customer Relationship Management (CRM)

Relationship Management
 Means maintaining relationship over long run.
 Relationship between customer & firm does not end after the 1 st transaction (sale).

Relationship management is a term that refers to practices, strategies and technologies that
companies use to manage and analyze customer interactions and data throughout the customer
lifecycle, with the goal of improving business relationships with business partners.

Customer Relationship Management (CRM)

Customer Relationship Management is a comprehensive approach for creating, maintaining and
expanding customer relationships.

First, consider the word “comprehensive” CRM does not belong to just sales or marketing. It is
not the sole responsibility of customer service group or an IT team; i.e. CRM must be a way of
doing business that touches all the areas. When CRM is delegated to one area of an organization,
such as IT, customer relationship will suffer. Likewise, when an area left out of CRM planning,
the organization puts at risk the very customer relationships it seek to maintain.

The second key word in our definition is “approach”. An approach, according to Webster, is “a
way of treating or dealing with something.” CRM is a way of thinking about and dealing with the
customer relationship. When you implement your CRM strategy, you will capture and analyze
data about your targeted customer and their buying habits.

CRM (Customer Relationship Management) is a comprehensive strategy and process of

acquiring, retaining and partnering with selective customers to create superior value for the
company and the customer. The basic objective of CRM is to increase marketing efficiency and
effectiveness. Notes It is co-operative and collaborative processes that help in reducing
transaction costs and overall development costs of the company.

CRM system consists of two dimensions, Analysis and Action.

The purpose of CRM system is to enhance customer service, improve customer satisfaction and
ensure customer retention by aligning business processes with technology integration.

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 3

CRM Constituents
1. Company-Companies that implementing CRM
2. Customer and partners of those companies
3. Vendors of CRM software-Vendors of CRM software includes names such as Oracle, SAP,
SAS, KANA, Microsoft and StayinFront etc.
4. Vendors of CRM hardware and infrastructure
5. Management consultants-can help companies implementing CRM. The major
consultancies such as Accenture, Mckinsey, Bearing Point, Braxton and CGEY etc.
6. Data warehouse

Potential benefit of CRM system to the Organization

1. Customer Focus-It means that the organization is ready to view the purchasing process
from the customer’s point of view.
2. Customer retention-simply means that the firm satisfies customer and offers variety such
that the customer comes back and repeats transactions with the same organization.
3. Share of wallet-Capturing the large share of wallet
4. Cross selling-selling of complementary products to the existing customers. For example,
while purchasing a digital camera it was offered memory card or blade for Rezor etc.
5. Up-selling is the marketing of higher value product to the customers. Examples of an
upsell could be introducing a 3-camera in a smart phone or adding a warranty to the
product being sold.
As organization experience the benefits of a customer focus, retention of loyal customers and
greater share of customer, the long term profit picture should also improve.

Potential Costs of CRM systems to the organization

 Information technology (IT) infrastructure (Server based system, software licenses and
updates, firewalls for security, training for system users in different discipline, etc.) is the
processing capacity to fulfill customer needs.
 Process change implies an alteration in habitual pattern for accomplishing a task.

Life time Value of relationship:

The Life time Value of relationship defines as the benefits to each party in an exchange over the
length of time that interactions occur.

Customer Life time Value (CLV)

Customer life time value (CLV) is the amount of value a customer contributes to your business
over their lifetime-which starts with a new customer’s first purchase or contract and ends with
the “moment of churn”

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 4

CLV=(Past Purchase +Future Purchase)-Amount of reaching that customer.

Higher CLV customer is important customer.

Understanding CLV can help your business answer these critical question:
1. How much can we comfortably spend on marketing and sales for customer acquisition?
2. How much should we spend on customer service to retain an existing customer?
3. Who are our most valuable customers and how can we better target this demographic for
future sales?

CLV can be measured in the following way:

 Identify the touch points where the customer creates the value
 Integrate records to create the customer journey
 Measure revenue at each touch point
 Add together over the lifetime of that customer

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 5

 Unit-II
Strategic Options for approaching Customers

RFM Score
RFM is acronyms of
R-Recency of Purchase
F-Frequency of Purchase
M-Monetary Value of Purchase

Organizations with sophisticated CRM systems often have databases that record a customer’s
RFM score. RFM is a strategy for analyzing and estimating the value of a customer.

Majority Fallacy

Majority fallacy is the name given to blind pursuit to the largest, most easily identified or most
accessible market segments.
This segment attracts intense competition and prove to be least profitable.

Majority fallacy is the strategy error which leads to mistaken belief that largest segment of the
market is the most profitable one.

Right level of aggregation

Categorize customers in groups that are neither too big not too small.
The promise of CRM technology is to define that are large enough to approach with unique
marketing mix.

Customer types by expected value in B2B Market

Expected Future Value

High Low
Historical High Premium Customer Uneconomical
Value of customer
Purchase
Low Prospect Customers Undesirable
customer

 Firms shouldn’t target or spend money on undesirable customers because these segments
have a poor purchase history and low expectations of any purchases in future.

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 6

  Uneconomical customers express a low likelihood of purchasing from the firm in the
future making them a judgment call as to the level of funds to be spent in their pursuit.
 Premium Customers exhibit a good purchase history and a high probability of continued
loyalty to the firm.
 Prospect customers have little or no past purchase history with the firm but exhibit a high
potential for value in the future and should be cultivated even if the firm loses money in
the short run.

Approaching B2C market through Mass Customization

Mass customization implies that an organization can communicate with target audiences at a
mass or segment level, but is also able to offer customized value propositions for individual
customers.
Mass customization is widespread in service industries serving end consumers. This is largely
because of the insuperability of service production and consumption. The interaction between
consumers and service producers during the service encounter lets customer influence both the
service delivery process and the outcome.
Key issues for CRM strategies are:
 Do customers want customization?
 What degree of customization is required?
 Are customers willing to pay a “premium”?

Contact Point/Touch Point

The “Touch points” where the customer interacts with the firm in multiple channels.

Example, help desk, terminal of payment, /payment counter, company website, advertisement
etc.
Touch-points allow customers to have experiences every time they “touch’ any part of the
product, service, brand or organization, across multiple channels and various points in time.

It is a point where customers and business engage to exchange information, provide service, or
handle transactions.

Point of Sales System

A computerized network operated by a main computer and linked to several checkout terminals.

Necessity of POS system

With a POS system:
 You can analyze your sales data, figure out how well all the items on your selves sell and
adjust purchasing levels accordingly.

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  You can analyze your sales history, -to help adjust your buying decision for seasonal
purchasing trends.
 You can improve pricing accuracy, by integrating bar-code scanners and credit card
authorization ability with POS system.
 POS systems help you gain better control of your business through advanced reporting
system.
There are plenty of popular POS software systems that enable you to use add-on devices at your
checkout stations, includes electronic cash drawers, bar-code scanners, credit card readers and
receipt or invoice printers. POS packages frequently come with integrated accounting modules,
including general ledger, accounts receivable, accounts payable, purchasing and inventory
control systems.

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 8

 Unit-III
Collection of Customer Data

 Data warehouse: is a large reservoir of detailed and summery data regarding business
activities and dimensions.
 It describes organization’s activities
 It facilitates easy retrieval of information.

 Data Mart is a subset of data warehouse that has been developed to meet the needs of
particular group of users.
 Data mining describes how the user extracts previously unknown information from the
large reservoir of the data warehouse.

Collecting Customer Data: Internal Data Source

Customer 1. Order
entry system

2. Inventory
system

4. Accounts 3. Billing
Receivable
System system

Accounts
Customer Inventory
Receivable
Master File Master File
Master File

Gather data from order processing system

 The set of similarly integrated system is used to process sales orders
 Another set of similarly integrated system used to order replenishment inventory from
suppliers and there are additional systems such as those that the project materials
requirement for the production process and compensate the employees.
 The diagram shows the order processing systems starting in the upper-left corner, the
customer sales order are input to the order entry system, which logs in all orders.
 Approved orders is passed to the inventory system, which checks the inventory master
file to determine whether sufficient quantities exist to fill the order.
 The billing system uses the customer master file to prepare invoices that are mailed or
transmitted electronically to the customer.

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 9

  The diagram also includes two entities that typically provide dimensions for multi-
dimensional analysis. These entities are customer and product.

This system provide answers to such questions as these:

 Which customers are ordering and which are not?
 What products do our customer order?
 What percent of our customer are bad credit risks?
 What percent sales orders are filled?
 What are the paying habits of our customers?

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 10

 Unit-IV
Concept of Customer Loyalty

Concept of Customer Loyalty

Customer’s loyalty is the attachment or commitment toward a brand, company, service provider
or other entity that is reflected by favorable attitude and behavior.
Example: Repeat purchase.

One of the purpose of the CRM is to make loyal customer.

There are two approaches to define and measure loyalty, one based on attitude and other on
behavior.
Building customer loyalty is the basic platform of relationship formation. In a highly competitive
and challenging business environment, organization are really blessed if they are fortunate to
have loyal customers in their customer inventory.
A customer loyalty program is based on a simple premise: as a company develops stronger
relationship with their best customers, these customers will stay with the company longer and
become more profitable.

 Behavioral brand loyalty approach explore the consistency of repurchasing the

brand. Loyalty is expressed through continued purchasing and patronage.
Variations in behavioral brand loyalty includes-
(i) Undivided loyalty-the customer purchase the same brand repeatedly.
(ii) Occasional Switcher-the customer usually purchase the same brand, but may
want a change due to different situation, e.g., out of stock situation
(iii) Switched loyalty-describes a customer who has changed the brand.
(iv) Divided loyalty-the customer is loyal more than one brand.
(v) Indifference Loyalty-customer who sees no distinction between brands.

 Defining loyalty as “attitudinal” implies that loyalty is a state of mind. In other words,
customers are “loyal” to a brand or company if they have a positive, preferential
attitude toward it.
(i) Inertia loyalty has also been called spurious loyalty to indicate that behavior
appears to be bogus, because there is no strong attitudinal influence. Spurious
loyal have high levels of repeat purchase but weak relative attitude. The behavior of
these customer can be driven by habit.
(ii) Latent loyalty-customer have strong attitudes, but repeat purchase is low.

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 11

Factors that affect Customer Loyalty

Customer Satisfaction
 Customer satisfaction is a post-purchase or post-choice evaluation
 The extent to which product’s perceived performance match with buyer’s expectation.
 So, Customer satisfaction is a post-purchase or post-choice evaluation that results from a
comparison between those pre-purchase expectations and actual performance.
 Confirmation-If performance match with the expectation. Fulfilment of an expectation
is confirmation
 Dis-confirmation-Performance does not match with expectation.

Effective marketers try to understand if the discrepancy between expectations and performance
is large or small.
 Delightful experience-When performance exceed expectation.
Describe situations in which customer receive fulfilment that exceeds the satisfaction
of unexpected needs or wants.
 If the product’s performance falls short of the customer’s expectations, the buyer is
dissatisfied.
If customer dissatisfied, the following problems may be occurred.
o Customer may make complain
o Customer may stop buying from your firm.

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 12

“Satisfied customers may not be loyal customers.”

Your satisfied customer moving toward the competitors. Satisfaction does not guaranteed loyal
customer. Satisfaction is pre-condition of customer loyalty. One explanation is, there are various
level of satisfaction. According to experts, most of the customers have a zone of tolerance
regarding satisfaction. Satisfaction is ranked on a 5-point scale ranging from 1 for completely
dissatisfied to 5 for completely satisfied.
5—Strongly Satisfied
4—Satisfied
3-Neutral
2—Dissatisfied
1—strongly dissatisfied

At levels two to four, customers are fairly satisfied but still find it easy to switch when a better
offer comes along, at level five, the customer is very likely to repurchase and even spread good
work of mouth about the company. Up to Level four there is a chance of customer to leave the
brand but from level five customer satisfactions is proportional to the customer loyalty.
It found that customers who rated their satisfaction as 4 were six times more likely to switch to a
competitive offering than those who marked 5 were.

Why do satisfied customer switch brand?

There are several explanations.

 Customers get equally satisfying experience with a competitor’s offering.

 Customers need for variety. They may simply opt for an experience because they get
less and less satisfaction from the old one
 New information can change customer’s perception regarding untried offering.

Emotional Bonding
Emotional bonding means attachment or affinity of the customers with the brand /company.

Over time customer loyalty requires emotional bonding. Customers have a positive brand affect,
which is an affinity with the brand, or they have a company attachment, which means they like
the company.
In many circumstances, consumers may identify with and become emotionally attached to mental
images that a company or a brand develops or acquires.
 For example, many customers identify with Polo Ralph Lauren. They identify with the
brand because the brand identifies them and their friends. From a consumer’s perspective

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 13

 the brand equity associated with Polo leads to customer loyalty. Brand equity is the value
of the brand name associated with a product or service that goes beyond the functional
aspect alone.
 Many customers feel a closeness with other people who also use the good or service.
 Some companies know how to connect emotionally with their customers while others
have more difficulty in accomplishing this level of commitment. CRM must reach beyond
the idea of the rational consumer and strive to establish feeling of closeness, affection, and
trust as true emotional bonding is often based on trust and respect.

Trust:
Trust the third component of the model, is interrelated with emotional bonding. Trust exist when
one party has confidence that he or she can rely on the other exchange partner.

Trust can be defined as the willingness of the customer to rely on the organization or brand to
perform its stated function.
Trust reduces uncertainty/risk and is viewed as a carefully thought out process, whereas brand
affect may be an instantaneous response.

In many situations, trust means a customer believes that the marketer is reliable and has integrity.

In many personal selling situations, trust means that a customer has confidence that the sale
representative is honest, fair and responsible and that his or her word can be relied on. If a
delivery date is given the buyer has confidence that the product will be shipped on time.

Behavioural Loyalty Factors

Choice Reduction Habit
Contrary to the traditional economic theory, consumer research shows that people have a natural
tendency to reduce choices. In fact, consumers like to reduce their choices to a manageable set,
usually not more than three.
People feel comfortable with familiar brands and well known situations that have been
rewarding.
Part of customer loyalty, such as the absence of brand switching behaviour is based on an
accumulation of experience over time. With a simple repetition we become familiar with a brand,
store, company, web site or search engine. We develop habits that results in continuity. For
example, it has been estimated that consumers go to the same supermarket up to 90% of the time.

There can be a switching cost associated with change to the unfamiliar, the untried or new. There
may be a cost in time, money and personal risk.

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 14

There may be perceived risk in change. Perceived risk means the customer may be uncertain
about the consequences of making a purchase.
Perceived risk may be include perceived performance risk or social risk.
 The perceived performance risk, i.e., the consumer may think the new product will not
perform well as the current brand.
 Social risk-the consumer may believe, his/her friends will not like the new brands as well.

History with the Company

Historical image has positive influence on repeat purchasing,
A positive corporate image may have a favourable impact on customer loyalty, creating habitual
responses to the company name.
For example, Wal-Mart, for example, is known for everyday low price (EDLP) while another
departmental store, such as Nordstrom, may be known for excellent customer service.

Factors that lessen customer loyalty

There are several factors that tend to lessen loyalty as well
 Competitive parity: When offerings of different organization are not differentiated.
 Variety seeking behaviour: People become bored with a particular brand and have a need
for variety, i.e., people may simple want a new experience.
 Low involvement: A low level of personal relevance or perceived importance of a product
or service to the individual is referred to simple as low involvement.
 Price Sensitive: Price sensitive customers do not become loyal customer. Customers who
are low in involvement to be price sensitive.
 Low share of voice: When company’s promotional expenditures are low.

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 15

 Unit-V
Customer Retention Strategy

The Evaluation of Relationship Marketing Program

There are mainly three aspects of relationship program:
1. Financial Incentives
2. Social Bonding
3. Structural Interaction

Aspects of Relationship Program

Financial Social Bonding Structural

Incentives Interaction

 Friendly  Systematic
Companionship Mass
 Trust personalization
 Discounts
 Product Upgrades  Personal  Management
 Awards Insights Mass
 Prizes  Recognition Personalization
 Mutual  Cultivation
affection  Simulation

Financial Incentives
Financial Incentives are discounts, product upgrades, or prizes that serve as rewards for
customers who are loyal or make repeat purchase (Frequently purchase).
For example, season ticket holders for professional hockey games or the opera receive discounts
for establishing a relationship with organization.
Example in Bangladesh: GP star customer get 15% discount on Bill amount of all food items
(except beverage & water)
Drawbacks
 Competitor can easily copy this programs
 Customer may become loyal toward the incentive, not to company or brand.

Social Bonding
The formation of social bond between the organization and its customers may create a stronger
relationship.

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 16

Social bond refers to friendly relationship/companionship or affective tie between organization
and customer.
Example: Interpersonal interactions, party, club membership program, customer meeting etc.
Corporate Example-Apple –People who use Apple technologies have joined together in user
groups all around the world. Hundreds of groups offer members the chance of become friends
with other Apple product users.
IBBL arranges iftar party in Holy Ramadan for its valued customers.

Structural Interactive Relationship

Structural Interactive Relationship use system design to solve problems, reinforce purchases and
recognize the importance of each customer. Here system design means using artificial
intelligence, information system, software, apps etc.
Example of Starbuck, they introduce “Starbuck app.” To manage loyalty programs.

Relationship based on structural interaction do not depend on relationship building skills of a

particular service provider, as in the traditional customer-stock broker relationship, but on the
service delivery system itself. For example, an internet retailer may use its database to send e-
mail messages about discounted items to its regular customer.

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 17

 Unit-V
Customer Retention Strategy

Welcome Strategy
A welcome is kind of greeting designed to introduce a person to a new place or situation, and to
make them feel at ease. The term can similarly be used to describe the feeling of being accepted
on the part of the new person.

In CRM, a Welcome strategy acknowledges the organization’s appreciation for initiation of a

relationship or for the exchange.

Purpose of Welcome Strategy:

1. The opportunity to create a “delightful surprise”
2. Provides the first touch point where additional customer information may be collected.
3. Provides the opportunity to reassure the buyer that he or she made the correct choice.
4. Reduce “Cognitive dissonance”
5. Provides supportive information such as giving a toll free hot line number
6. Required data entry such as item purchased, zip codes, e-mail address etc. into CRM
system.

Cognitive dissonance
A psychologically uncomfortable post-purchase feeling especially negative feelings or “buyer’s remorse”
In the field of psychology, cognitive dissonance is the mental discomfort (psychological stress)
experienced by a person who holds two or more contradictory beliefs, ideas, or values.

The discomfort is triggered by a situation in which a person's belief clashing with new evidence
(facts) perceived by the person. When confronted with facts that contradict beliefs, ides, and
values, people will find a way to resolve the contradiction to reduce their discomfort.

Festinger’s (1957) cognitive dissonance theory suggest that we have an inner drive to hold all our
attitudes and behavior in harmony and avoid disharmony (or dissonance). When there is an
inconsistency between attitudes or behaviors (dissonance), something must change to eliminate
the dissonance.
For example, when people smoke (behavior) and they know that smoking cause cancer
(cognition), they are in a state of cognitive dissonance.

A more common example of cognitive dissonance occurs in purchasing decision we make on

regular basis. Most people want to hold the belief that they make good choices. When a product
or item we purchase turns out badly, it conflicts with our previously existing belief about our
decision making abilities.

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 18

 Unit-VI
Complaint Management

Definition
“Complaint is defined as statement that is something wrong or not good enough, which shows
customer dissatisfaction about the company and the product”.
Complaints management is about resolving individual complaints and identifying opportunities to make
systemic improvements.

Another name of complaint is “free consultation”

Complain Management Procedure

Keep in
touch and
listen to
customer

Followup
Be
and
customer
prevent
centric
recurrence
Complaint
Management

Express Resolve
regret conflict

1. Be customer centric-
 Focus your customer
 Listenting attentively and displaying sensitivity to customer’s position conveys
respect and communicate the message tha the organization is customer centric.
2. Express regret:
 A simple apology can go a long way.
 Just saying I am truly sorry this problem occur?” may turn an angry customer n to
appeased customer
3. Resolve conflict
Conflict is a disagreement in which the views of the customer and the organization appear
to be compatible. So making amends of the conflicts immediately and appropriately is the
must.
From the organization’s perspective, there are several way to resolve the conflict:
i) Accommodation: Accommodation is a settlement of conflict that emphasize
cooperative behaviour. When the customer or customer’s lifetime value is more

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 19

 important than the issue under dispute, accommodation can be a goodwill
gesture. It increases the customer’ commitment to the relationship.
ii) Compromise: Compromise is an attempt to find a mutually acceptable middle
ground that is somewhat satisfactory to both parties. Mutually beneficial
compromises usually involve careful negotiation.
iii) Termination: Termination occurs when the organization or customer ends the
relationship and sees no hope of resolving the conflict. Some customer needs to
patronize competitive organizations.
iv) Follow-up and prevent Recurrence: A satisfaction survey to prevent recurrence
and customer retention. It can be automated. The feedback should indicate
whether or not customer’s problem is resolved. There are many alternatives to
follow-up like telephone call, e-mail etc. but the outcome should be the same.
v) Keep in touch and Listen to customers: Yesterday’s solution may not apply today
as “There is nothing permanent except change-Herculitus.” So it is very important
for companies to keep touch with customers and know what competitors’ are
doing differently and how customer perceive this changes.

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 20

 Unit-VI
Win back Strategies

Win back Strategy

A recent study showed that every year a typical business enterprise loses 20-40 percent of its
customers. Companies should identify how many defections there have been each year but many
do not.
Win-back strategies make an effort to reactivate and revitalize relationships with high-value, lost
customers. Recovering lost customers who have defected to competitors or rejuvenating lapsed
customers who have simply stopped doing business in the product category provides a major
opportunity for most companies.

Win-back consists of identifying which customers have been lost or are about to terminate their
relationships, reasons for losing high-value customers, effective methods for re-contacting lost
customers and offers that communicate the benefits of reactivation.

Steps to design a successful win back strategy/effort

1. Identify who are about to terminate: The best time to win back a customer is before the
customer terminates the relationship. In the best win back strategies, the company acts
rather than reacts. The sooner a company realizes that a customer is about to defect, the
better able the company is to win back the lapsing customer.
2. Consider lifetime customer Value: Some customers have a low lifetime value and the
organization may not want to reestablish relationships with those who demand too much
service without a corresponding amount of revenue. Thus an initial aspect of win back
strategy is to profile customers by lifetime future value. A win back strategy should
identify and focus on high value customers who show the greatest potential to respond to
win back efforts. It is not worthwhile to try to win back low value customers.
Life Time Value=Past Purchase+ Future purchase-Cost.
3. Establish why customers terminate: Customers may switch brands for-
Variety, Competitor’s better relative advantage, performance below their expectations,
lower price, unhappy with customer service etc.
Methods of knowing the reasons--
i. The customer exit interview is an attempt to ask, “Why are you leaving us?” In
business to business markets, a senior executive may visit the lost customer a
month or two after the relationship has been terminated.

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 ii. A focus group interview usually involves 8 to 12 former customers who are paid
a fee to talk 45 to 90 minutes with a moderator about the reasons for leaving the
organization or for failing to purchase from the organization.
iii. Organization may also conduct surveys to identify what factors drive customers
to defection.
iv. A company can also establish formal listening posts on the frontline to learn what
customers are thinking.
4. Re-contact lapsed customers: Re-contracting may be as simple as telephoning the lost
account. The call may begin with a question to determine why the customer stopped
buying.
In some organizations a designed cast of salespeople with good communication skills is
assembled into a win back team to perform the re-contract and reactivation tasks.
5. Provide a reactivation offer: Customers must benefit from reestablishing a relationship
with an organization. The reactivation offer is the motivation an organization gives
customers to return to the fold. If a particular customer wasn’t treated right, the offer
should be to fix the problem. If a customer received a better deal from the competition,
the offer should be sweeter.

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 22

 Unit-VII
Sales Force Automation

Concept of SFA
 Sales Force Automation (SFA) has offered technological support to sales people and
managers since the beginning of the 1990s.
 The word “Sales Force” means employee who engage in sales.
 It is seen as a “comparative imperative” that offers ‘competitive parity’
 Sales force automation is the application of computerized technologies to support sales people and
sales manager in the achievement of their work-related objectives.
 Sales force automation (SFA) is an integrated application of customizable customer
relationship management (CRM) tools that automate and streamline sales inventory,
leads, forecasting, performance and analysis.

Benefit of SFA
There are three parties who are benefited from SFA. They are-
 Sales People:
 Shorter sales cycle
 More closing opportunity.
 Higher win rate
 Time Saving
 Sales Manager:
 Accurate reporting
 Improved sales person productivity
 Improved customer relationship
 Reduced cost of sales
 Senior Management
 Accelerated cash flow
 Increased sales revenue
 Market share growth
 Improved profitability

How SFA Change Performance

 There have been number of independent assessments of effects of SFA on sales
performance. Due to adoption of SFA, it increases the sales performance of the company.
 Improvements in sales representatives’ selling skills, knowledge and performance and
became more adaptable and productive.

There are some condition for successful SFA:

1. Sales people find that SFA is easy to use.
2. Availability of SFA training.

Customer Relationship Management Note for EMBA Program, PSTU, Bangladesh 23

 3. Users have positive attitude toward technology. i.e., sales people find technology is useful
because it fits their roles well.
4. Support of Senior Management
5. Involvement of user groups, including sales representatives, and manager, during project
planning and technology selection.

Sales force automation (SFA) is a specific type of CRM (customer relationship management)
software, used primarily by B2B companies to support sales teams by managing the data and tasks
involved in lead generation, opportunity tracking, sales activity, etc.

SFA Ecosystem
The SFA ecosystem is made up of three major groups:
 SFA solution provider.
 Hardware and infrastructure vendors
 Service provider

Figure The CRM ecosystem

SFA Solutions providers
SFA solutions providers can be classified in a number of ways.
 Some are SFA specialists. They compete against enterprise and mid-market CRM suites that
include SFA modules, and enterprise suite vendors that offer a full range of IT solutions to support
business, including supply chain management (SCM), enterprise resource planning (ERP) and
customer relationship management (CRM).
o SFA specialists-Selectica, EzRoute, Salesnet etc.
o SFA as part of CRM suite-Onyx, Salesforce.com, Pivotal, NetCRM, etc.
o SFA as part of Enterprise suite-Oracle, SAP, Epicor etc.

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  Some SFA specialists focus on particular areas of functionality within SFA. Selectica, for example,
builds customized configurators.

A configurator is a software-based application engine that allows companies to configure complex

products and services based on predefined rules. Sometimes, customers interact directly with
configurators.
For example, the Dell Computer website allows customers to build their own personal computers
(PCs). Configurators guide users through the buying and specification process, offering only valid
options and features at each step. This can deliver benefits to customers, salespeople and
management. This can deliver benefits to customers, salespeople and management. Customers can
define and build their preferred customized solutions, reducing cost and meeting specifications.

Hardware and infrastructure vendors

The performance requirements of SFA applications can create significant challenges for both
hardware and technology infrastructure.
 Office-bound salespeople and sales managers might be happy to use desktop or laptop
computers.
 Field sales representatives often want lighter, handheld devices, such as Microsoft-based
Windows Pocket PC, Palm Pilot or Blackberry.
 Where companies have geographically dispersed external salespeople, SFA systems must be able
to operate out of the office and over the web. Mobile or wireless solutions are necessary, as the data
held on portable devices must be regularly synchronized with the central database.
 In growing industries and companies, SFA applications must be supported by hardware and
infrastructure that can sustain increased numbers of users.

Services
The services component of the SFA ecosystem is very diverse.
SFA project leaders might buy services from providers that re-engineer selling processes, manage
projects, train salespeople, consult on organizational structure or conduct customer portfolio
analysis.
During implementation External support is needed, e.g., outsourcing of call centre.

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 Unit-VIII
Automated Customer Service Centre

Call Centers
A company’s call center is an organizational unit that supports direct customer interaction
via telephone, well configured information technology and capable service personnel.

It is a centralized office used for receiving or transmitting a large volume of enquiries by

telephone.

 An inbound call center is operated by a company to administer incoming product or

service support or information enquiries from consumers.
 Outbound call centers are operated for telemarketing, for solicitation of charitable or
political donations, debt collection, market research, emergency notifications, and
urgent/critical needs blood banks.

The origins of call centres dates back to the 1960s with the UK-based Birmingham Press and
Mail, which installed Private Automated Business Exchanges (PABX) to have rows of agents
handling customer contacts. During the 1990s, call centres expanded internationally and
developed in all over the world.

Characteristics of customer service personnel:

Typically, customer service personnel should have the following qualifications-
 A good phone voice
 Good listening skill
 Proper etiquette and manner
 Positive attitude
 In depth knowledge of company’s product and services
 Work under pressure
 Self-motivation.

Call Routing:
Guiding each customer’s call to the customer service representative who is most capable of
helping is the concept of call routing.
In many instances call routing software directs the call to an interactive voice response system
rather than a person to allow the computer to handle the entire call.

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Interactive Voice Response (IVR)
It can be thought of as a computer talking to a person.
IVR is a convergence of computer telephone integration and voice messaging.
The most common input device is touch tone telephone and the common CRM system response
is a human voice.
Some systems incorporated voice recognition as input. FedEx’s system asks, “Is your package
over 100 pounds?” and caller merely responds “Yes”.
The use of IVR allows callers' queries to be resolved without a live agent.

Caller ID System
It is a system to send incoming phone numbers to data warehouse, where the number is matched
with individual customer record.
Simple caller ID systems, such as those in households, provide the name, number, date and time
of call.
Sophisticated caller ID systems trigger information about the entire history of interactions and
purchase of the customer with organization.

Call Scripting/Situational Scripting

Call scripting is a prearranged and written response toward repetitive problems of customers.

Web-based Self Service

Web based self-service is an online facility that allows users to perform routine tasks over the
internet without assistance of a support agent such as accessing information like bills, changing
profile information or even doing basic troubleshooting for devices and services. The self-
service on a company web site offers some unique opportunities. Like-
 FAQ-FAQs are frequently asked questions. It is a list of questions and answers relating
to a particular subject, especially one giving basic information for users of a website..
 Contact address-A website should have information indicating how to contact with the
company by letter, telephone, e-mail and having office address etc.
 “Contact us” link-A “contact us” link and an easy to use email response for feedback
are essential for a company about creating good customer relationship.

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 Unit-IX
CRM Measurements

“Measurement is the beginning of science, until you can measure something, your knowledge is meager
and unsatisfactory” Lord Kelvin.

Purpose of CRM measurement:

There are three main purposes for CRM measurement:
1. Influencing Decision-making:
- Companies implement CRM measurement very differently based on their internal
decision making styles. As companies make decisions about customer strategies,
they look to customer measurement to help influence specific decision makers or
the decision making process or validate initial ideas about how to manage
customer relationships.
2. Guiding Ongoing Activities:
 CRM measurement frameworks are not only used to help managers collectively
formulate plans and make decisions, but they are also used to inform and guide
ongoing daily activities related to customers.
3. Predicting Future Market
 Companies have a need to use CRM technology to help anticipate customer needs
or otherwise predict a future customer or market state.

What is metrics?
Metrics are internal and external indications of accomplishment.
They are used to justify, monitor, and track CRM success.
They serve as the feedback mechanism for the continuous development of your CRM strategies
and tactics.

List of common CRM metrics:

Sales Metrics
 Number of prospects
 Number of new customers
 Number of retained customers
 Number of open opportunities
 Close rate
 Renewal rate
 Number of sales calls
 Number of sales call per opportunity
 Amount of new revenue.

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  Sales stage duration
 Sales cycle duration.
 Number of sales calls made
 Competitive knockouts

Service Metrics
 Customer satisfaction level
 Complaint time-to-resolution
 Propensity for customer defection
 Average time to resolution
 Average number of service calls per day
 Number of service calls

Marketing Metrics
 Number of campaigns
 Number of new customers acquired by campaign
 Customer retention rate
 Number of customer referrals

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 Unit-X
Customer Acquisition

One of the primary areas of growth for an organization is the acquisition of new customers.
Customer acquisition involves identification of potential customers, understanding their
strengths and weaknesses, risk assessment and formulation of an acquisition strategy.

Customer acquisition is the process of acquiring new customers for business or converting
existing prospect into new customers.

Customer acquisition is the process of finding and persuading prospective customers to buy from
your business in a way that is both measurable and repeatable—not random.

Possible sources of new customer:

 Customers who are not using your product.
 Your competitor’s customers.

Ways of Customer Acquisition

1. Natural Referral:
 Natural referral means your product has been referred by your satisfied customer.
 Another name is “Positive word of mouth” advertisement.
 The customer of your company act as an advocate of your firms. The company has
to maximized the “Unique Selling Proposition” (USP)1
2. Affinity Program
Affinity programs are business partnerships in which a company offers special rates or
services to a members in an effort to increase revenue for both organizations.
 Incentives for referral from groups
 Try to utilize collaborative buying approach.
 Marketing toward group membership
 GP who have partnership with various companies, and GP star get a discount,
when he purchase from those companies.
3. Affiliate Network
 Reward people who as sales agent of the firm and receive a commission on each
sales.
 Amazon popularized the practice by creating an affiliate marketing program whereby
websites and bloggers put links to the Amazon page for a reviewed or discussed product
to receive advertising fees when a purchase is made.

1
A USP could be thought of as “what you have that competitors don't.” A unique selling proposition (USP) refers
to the unique benefit exhibited by a company, service, product or brand that enables it to stand out from
competitors such lower price, high quality, durability etc. For example, GP has good network coverage, Robi is better
for internet package, and Banglalink is for lower call rate. The unique selling proposition must be a feature that
highlights product benefits that are meaningful to consumers. The USP theory states that such campaigns made
unique propositions to customers that convinced them to switch brands.

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 4. Relative advantage
 Finding the new use of your product or improving your product

Relative advantage means the degree to which a product appears to be superior to another
existing product. The rate of acceptance of a new product or service is directly
proportional to the relative advantage of the product, i.e. greater the advantage for that
product, greater will be its acceptance by the target consumer and vice versa.

Relative advantage exists when a product/ brand/service offers the target consumers
either of the following:
o Improved performance when compared to other options
o Savings in time and effort
o The possibility of immediate reward

Google Wallet, an app that converts a smartphone into a payment device, offers a relative
advantage over traditional means of payment.

Targeting Lead user

 Lead users are early adopters of new products, services and technologies, who
experience needs that are unknown to the general public.
 Lead users face need which will be common in market.

Exit barrier/Switching Cost

 Exit Barriers are switching cost
 Enjoy discount from a firm
 Firm have good relationship

5. Eliminate switching cost

 Eliminate excuses to stay with the competitors
o Attack the exit barrier of the competitor, e.g., promotional offers for the customer
who leave the competitor.
o Provide money back guarantee.
6. Point of entry
 Point-Of-Entry Marketing refers to the creation and delivery of marketing messages to
current and potential customers at various points they might enter into business with a
company. This could be on the telephone, through email, on a website, in a mailer, or at
the fount door of the business.
 Attracting your probable purchaser’s attention immediately after they’ve reached the
Point of Market Entry is hugely valuable. If you can get a prospective customer’s attention
as soon as they become interested in what you’re offering, you become the standard by
which competing offers are evaluated.

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 Unit-X
Customer Portfolio

All customers are not equal and should be treated differently, because-
 Variation in customer need
 Importance of customers to the firms

Customer Portfolio Definition

Customer Portfolio is the collection of mutually exclusive customer groups that comprise a
business’s entire customer base.
For example, customer portfolio of a bank-
 First tier-60MNC’s as your customer (Sales Team for each customer)
 Second Tier-150 mid-size business firm (Appoint one employee for a single firm)
 Third tier-1000 small firms (5 center each will manage 200 customer separately)
This is called customer Portfolio Management.

Customer Portfolio Management (CPM) aims to optimise business performance – whether that
means sales growth, enhanced customer profitability, or something else - across the entire
customer base
It does this by offering differentiated value propositions to different segments of customers

Strategies of Customer Portfolio Management

1. Customer will be assigned in each cluster, based on one or more strategically important
variables.
e.g., Customer Life Time Value (CLV)
Current Profit generated
Prospect of the customer
Loyalty level of the customer.
2. Each customer will be assigned to a single cluster.
3. Most companies positioned their customers somewhere between the two extremes.

All customers All customers

are equal are unique

Strategically significant Customer

Strategically significant customers are those customers who create great value for the company
and in order to retain them for the long period of time, the company has to build some strong
possible strategies. 20-80 rules is applicable here as you know 20 % of total customer base generate
80% of total revenue for the company so simply we can say that those 20% are strategically

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significant customers for a company. Strategically significant customers create more revenue,
more value, loyalty and most of the time makes company build separate strategy for them.

There are five types of strategically significant customers-

 Customer who have high future life time value

 These customers will contribute significantly to the company’s profitability in the
future
 High volume customers
 These customers might not generate much profit, but they are strategically significant
because of their absorption of fixed costs, and the economies of scale they generate to
keep unit costs low
 Benchmark customers
 These are customers that other customers follow
 EX. Nippon Conlux supplies the hardware and software for Coca Cola’s vending
operation
 Whilst they might not make much margin from that relationship, it has allowed them
to gain access to many other markets
 Inspirations
 These are customers who bring about improvement in the supplier’s business
 They may identify new applications for a product, product improvements, or
opportunities for cost reductions
 They may complain loudly and make unreasonable demands, but in doing so, force
change for the better
 Door openers
 These are customers that allow the supplier to gain access to a new market
 This may be done for no initial profit, but with a view to proving credentials for further
expansion
 This may be particularly important if crossing cultural boundaries, say between west
and east
 E.g. Asian company start business to European countries.

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 Unit-XI
Customer Experience

Customer experience is an integral part of customer relationship management (CRM), and it is

important to businesses because customers who have a positive experience are more likely to
become repeat customers and loyal customers of the business. Nowadays customer experience
became an important factor in order to determine the success of company’s offering. It is
important for the firm to create and deliver the positive customer experiences to gain and retain
the customers. Next competitive battle ground is “Customer experience”

Definition

Customer experience is the cognitive and affective outcome of the customer's exposure to, or interaction
with, a company's people, processes, technologies, products, services and other outputs.

A good customer experience means that the individual's experience during all points of contact
matches the individual's expectations.

Customer experience implies customer involvement at different levels – such as rational,

emotional, sensorial, physical, and spiritual. Customers respond diversely to direct and indirect
contact with a company. Customer experience encompasses every aspect of a company’s
offering—the quality of customer care, but also advertising, packaging, product and service
features, ease of use, and reliability.

IKEA is a Swedish-origin Dutch-headquartered multinational group that designs and sells ready-
to-assemble furniture, kitchen appliances and home accessories, among other useful goods and
occasionally home services. They offer some special features such as price tag/description of the
product, one way route, packaging, home delivery, restaurant in the outlet, payment method for
better customer experience.

How to understand Customer Experience

 Mystery Shoppers: The Company can recruit paid shoppers to understand consumer’s
experience. The company recruit them for comparative shopping (to understand gap with the
competitive firm.)
 Experience Mapping-Understand chart and improve what happen in the touch point. An
Experience Map is useful tool for capturing and presenting key insights that occur across user
experiences with a particular product or service. Ways of collecting customer experience are-
 Face to face interview
 Focus group discussion
 Telephonic interview

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  Process Mapping: This is the form of blue-printing. Process mapping is the graphical
representation of business process. A process map visually shows the steps of a work
activity and the people who are involved in carrying out each step. The main purpose
behind business process mapping is to assist organizations in becoming more effective. A
clear and detailed business process map or diagram allows outside firms to come in and
look at whether or not improvements can be made to the current process.
 Participant Observation: Participants are employee of the firm. They observe customer
experience by participating in various touch points. The senior managers should serve as
frontline employee (serve the customer directly, e.g., sales person). In this method senior
management can get in depth knowledge and real time experience about customers’
intention.
 Non-Participant Observation: In Non-participant observation executives observe various
touch points of the customers. Here senior management cannot participate directly as
frontline employee.

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