Analytical CRM

Analytical CRM supports organizational back-office operations and analysis. It deals with all the operations and processes that do not directly deal with customers. Hence, there is a key difference between operational CRM and Analytical CRM. Unlike from operational CRM, where automation of marketing, sales-force and services are done by direct interaction with customers and determining customers needs, analytical CRM is designed to analyze deeply the customers information and data and unwrap or disclose the essential convention and intension of behavior of customers on which capitalization can be done by the organization.

Primary goal of analytical CRM is to develop, support and enhance the work and decision making capability of an organization by determining strong patterns and predictions in customer data and information which are gathered from different operational CRM systems.

The following are the key features of analytical CRM:

Seizing all the relevant and essential information of customers from various channels and sources and collaboratively integrating and inheriting all this data into a central repository knowledge base with a overall organization view. Determining, developing and analyzing inclusive set of rules and analytical methods to scale and optimize relationship with customers by analyzing and resolving all the questions which are suitable for business. Implementing or deploying the results to enhance the efficiency of CRM system and processes, improve relationship and interaction with customers and the actual business planning with customers. Combine and integrate the values of customers with strategic business management of organization and value of stakeholders.

Analytical CRM is a solid and consistent platform which provides analytical applications to help predict, scale and optimize customer relations. Advantages of implementing and using an analytical CRM are described below. Leads in making more profitable customer base by providing high value services.

Helps in retaining profitable customers through sophisticated analysis and making new customers that are clones of best of the customers. Helps in addressing individual customers needs and efficiently improving the relationships with new and existing customers. Improves customer satisfaction and loyalty.

The power of CRM provides a lot of managerial opportunities to the organization. It implements the customer information in an intelligent way and creates views on customer values, spending, affinity and segmentation. Analysis is done in every aspect of business as described below:

Customer Analytics- This is the base analytic used to analyze customer knowledge base. It provides a better view of customer behavior and by modeling, assessing customer values and assessing customers portfolio or profiles and creates an exact understanding of all the customers.

Marketing Analytics- This helps discovering new market opportunities and seeks their potential values. It also helps in managing marketing strategies and scale and plan marketing performance at district, regional and national levels. Marketing analytics also focus on campaign management and planning, product analysis and branding.

Sales Analytics- Sales analytic provides essential environment to plan, simulate and predict sales volumes and profits by constantly analyzing organizational sales behavior. It helps in pipelining all the selling opportunities in an efficient way by indulging and improving the sales cycle.

Service Analytics- Analytical CRM has major role in enhancing the services which answering all the questions regarding customer satisfaction, quality and cost of products, complaint management etc. It even helps in improving and optimizing the services by sophistically analyzing the service revenue and cost.

Channel Analytics- This type of analysis helps to determine the customer behavior on channel preferences, like web channel, personal interaction, telephone channel etc. This information is efficiently integrated in customers knowledge base so that they can be contacted accordingly.

The essential results produced by Analytical CRM system could diversely help the organization to tackle customers based on values. It also helps in determining which customer is best to invest in, which can be treated at an average level and which should not be invested in.

Collaborative CRM

Collaborative CRM deals with synchronization and integration of customer interaction and channels of communications like phone, email, fax, web etc. with the intent of referencing the customers a consistent and systematic way. The idea is not only enhancing the interactions but also to increase and improve customer retention and liberty. Collaborative CRM entangles various departments of organization like sales, marketing, finance and service and shares the customer information among them to highlight better understanding of customers. For example, the information of preferred products could be shared with marketing department so that analysis can be performed in this aspect to provide preferred products to customers. The information regarding varied cost or price of a particular product in market defined by customers can be delivered to finance department so that strategies could be created to match the product cost with similar products in market and after analysis bring an affordable and efficient product in market. The information regarding a specific service which is not installed in the companys environment and intimated by the customers can be transferred to service department to improve or install that particular service in-house. All this is done efficaciously within the range of channels so that the process automates the needs and minimal time is required for fulfilling these needs.

Collaborative CRM can be broadly identified by two aspects:

Interaction Management- This management process deals with designing the communication or interaction channel process within an organization which is specific to customer interaction and finally enhancing the extent of communication between both the parties. The communication channel depends on the customers preference on how they require the interaction to be dealt with. Some customers prefer to be contacted via phone and email because of more comfort ability or non availability of manual interaction due to no time or unavailability of resources. Some of them prefer to have live online meeting or web meeting to reduce the travel time and lack of time or may be they prefer more clarified real time environment by sitting at desk and transact. Some of the customers

insist for agent conducted services which is often face-to-face interaction as they believe that this way is more efficient and conclusive. Depending on these channels of interaction it is very important for organization to fulfill these needs of customers and gather information from them and implementing it into the CRM before interacting to enhance the interaction power.

Channel Management- After analyzing and implementing the interaction medium its important to enhance the power of channels through which the customers are interacted. By using latest technological aspects for improving channel interaction could help to contact customers in an efficient way and gather information from them to help organization to understand the customers. Hence it is important for an organization to clearly arrange the channel responsibilities and duties.

Below are advantages of Collaborative CRM: Enables valued customer interaction across the channels. Entangles web or online collaboration to cut down service cost of customers. Integrates customer interaction with call centers to enable multi-channel interaction with customers and helps them make understand the overall process vales. Describes a view of integrated customers details during interaction to server them in a better way.

This CRM solution brings customers, process and strategies and data together so that organizations could serve and retain customers more efficiently. Bargaining Power of Customers

One of the essential requirements in todays business scenario is to realize and evaluate the bargaining power of customers. The word bargaining here does not only mean price negotiation, it is a much differentiated and broader term. Bargaining can be encompassed throughout the process of deal. The following are some these areas where a customer can bargain: Obviously on the product price or any package of products what they buy. On provision of services whether it is pre deal service or post deal.

On performance and efficiency. On technical aspects of process, products and system. On completion of schedule. This may include time of delivery of support and processes or time required to deliver of products and brands. On product modification according to the changing technological trends. On quality Checks.

Buyers or customers always bargain or negotiate on the above given aspects. It always depends on the present requirement of customers on which they basically bargain. At times a customer could bargain on price but not on quick delivery of that product but some other times for fulfilling companys needs or for bonus and premium; the customers could also negotiate on quicker delivery and not the price.

Some of the customers who are new in the competitive business will always want that the right products are timely available and in reliable form so as to have good returns for the investments made by them in their projects for which they need these products. Hence, irrespective of the cost and time to deliver the products, they rather focus on the benefits and positive features that these products would have that would help accomplishing the projects, the failure cost of which is much higher than the buying cost.

There are customers who totally concentrate on performance and efficiency of the products they have bought to control and minimize the repeating operating expenses. This is because they are so dependent on product performance that even a minimal down time of these products could cost them huge business loss. So they do not usually bargain on initial cost of the product and concentrate more on the operating cost and keep focus on the product performance and efficiency.

It is very important aspect for customers to have an intense bargaining power to sustain and remold their business strategies effectively and remain in the competition. For this the customers need knowledge empowerment and need to collect all the related information regarding the project they have invested in. This knowledge and information could help them to become project specific and experienced enough to deal with suppliers and bargain strategically. But acquiring this knowledge and experience is very difficult unless and until all the minute technical and calculative aspects are not

explored. Poorly experienced and informed customers fall in the category of being un-subjective and loose the ability to mould the suppliers according to their needs.

Bargaining power of customers also depends on the flexibility of bargaining approach. For example a customer wants to buy a product only when the supplier would give discount but the supplier has a fixed price tag for that product and is not ready to provide any sort of discounts. The supplier is always ready for selling the products and only gives discounts in some sort of technical emergencies in the competitive environment. If the supplier is not ready to provide any discount and is ready to close the deal by exiting, then the customer should understand that the product is actually worth and if possible then intelligently he can further negotiate of other factors to keep the deal intact and profitable.

Finally, a customer can show the best bargaining power if they possess a good image in the market and this is only possible when they have healthy relations with suppliers. Determinants of Customer Retention

According to the market evidences following are the main determinants of customer retention: Delivered quality of products and services versus customer expectation: The worthiness of a particular product or service does not depend on its own merits. It is only worth and useful if it meets all customers expectation. If the customer expectation is very high and the provided product or service does not meet his expectation then the customer will obviously not purchase that particular product again. Hence one of the key facets in determining retention is the deference between the quality of the product or service provided and the customers expectation. The organization must always try to optimize the balance between quality of product and expectation from customers.

Value: Value here could be defined as the getting a quality product at optimal cost. Possibilities are there that the organization could provide excellent quality product with matching price or similar quality products at comparatively lower price. Some times the organizations justify a lower quality product to be of good quality product and argue to get greater price. After the customer identifies that real value of the product is not worth its quality it may lead to customer detection.

Uniqueness and suitability of products: Most customers prefer unique and different product. Identical products normally decrease the probability of selling. Uniqueness in products often increases the demand of that particular product in the global market. More importantly, the unique products should also be suitable so that it meets the differential expectations of range of customers. Hence uniqueness and suitability of products helps in retaining customers to a higher extent.

Loyalty: It is necessarily required for an organization to interact and communicate with customers on a regular basis to increase customer loyalty. In these interactions and communications it is required to learn and determine all individual customer needs and respond accordingly. Even if the products are identical in competing markets, loyalty provides high retention rates. For example, shoppers and retailers are engaged with frequent shopping and credit cards to gain customer loyalty, many high end retailers also provide membership cards and discount benefits on those cards so that the customer remain loyal to them. All the important marketing strategies results in customer retention.

Easy availability: Some of the products in market are not easily available. This may be because of poor marketing strategy or less retail stores. This could have an adverse effect on retention rates. For example, a customer is not able to buy a special brand of perfume if it not widely available in market or if the direct supplier or retail stores are not reachable to the customer, even if the product is of high demand. Hence, easily available products could be enhances its selling power and hence customer retention.

Customer service: Customer service could be considered as the most important aspect of customer retention. In some cases, customer service determines if or not a customer defects from organization. Customer service is the reaction by the organization to the queries and activities of the customer. Dealing with these queries intelligently is very important as small misunderstandings could convey unalike perceptions. Success totally depends on understanding and interpreting these queries and then working out to provide the best solution. During this situation if the supplier wins to satisfy the customer by properly answering to his queries, he succeeds in explicating a professional and emotional relationship with him. Hence customer service is one of the most influential determinants of customer retention.

Exit barrier: Organizations which are successful in creating an exit barrier can obviously retain customers. For example, by providing rewards and concessions to continuously buying customers or by designing and customizing the products according to customer needs could create a barrier against the customer to switch to other options.

Customer Retention Strategy

Following are some of the important strategies that should be implemented for increasing customer retention:

Changing Retention rates: There are two basic strategies for changing retention rates:

Fixed response higher spending: Retention rates can be substantially increased by spending more on creating new business strategies or remolding existing strategies to increase retention rates. Fixed spending higher response: The retention rates graph can also be hiked by implementing changes in business processes without spending anything. However, its a tough task for organizations to achieve this because its difficult to increase retention without incurring any cost. Though this approach is preferred but its not always feasible.

By taking an example of organizational customer service we can easily compare the above two strategies. The organization could endow their customer service executives and allow them to take quick actions with regards to customer queries and problems. This may lead to increase retention rates without incurring any cost. But if the organization enhances retention spending by rather adding more customer service executives, queries and problems could be more quickly materialized and hence increase retention rate vastly.

Short term loss and long term gain: It is not desirable for organization to retain all the customers. But high valued and profitable customers must be retained. Loyal customers who are high valued and are in relationship with supplier for a longer period of time, tend to produce higher profit. They normally require low service cost and are most likely ready to take premium services. They also act like brand ambassadors for the supplier to advocate other prospects to become potential customers. Hence it is essential for the organization to nurture their customers to create a strong bonding with them in short run and then focusing on higher profits in the long run over the whole life cycle of customers.

Pricing best customers: Retention rate also depends on how the pricing of products are managed among the best valued customers. All the customers are always cost sensitive and concentrate basically to buy products on cheap rates. However, cost sensitivity of a customer substantially depends on condition of the market. For example if a product becomes extraordinarily famous and demanding in market and every customer is tending towards capturing this product then it becomes necessary to focus on technological aspects rather than focusing on the cost. If they do so then the cost sensitivity of these customers is least. Similarly if a product becomes common in market due to emerging competitors coming up with similar but more prominent products, then in this competition the value of the product decreases and the companies become rarely bothered for them. In this scenario the customers have the right to become highly cost sensitive as they know that they can negotiate with the suppliers to a greater extent.

Retention and acquisition link: Retention and acquisition are interdependent approaches. Take an example of a Gym that provides a very low introductory offer to all the customers to attract them. Many customers are very price sensitive and have the tendency to defect if the Gym increases future membership price. If the Gym also provides the renewal cost to be as low as introductory price then they have a better chance to retain these price sensitive customers. But by doing so they are in risk of loosing high valued customers who prefer best services and less surrounding crowd. In this case the Gym must implement the strategy to continue taking high membership renewal cost. This process may lead to most of the low value customers to defect but the total profit in retaining the high value customers will be always more. This also helps to uplift the image and status of the Gym by providing best services to its customers which results in acquiring and retaining more high valued customers and generate good profit. Customer Relationship with Supplier

For a positive growth of business all customers have to depend, directly or indirectly, on good and reliable suppliers. Apart from their expectations from the supplier the customers also need to be loyal to them so as to strengthen their relationship. Therefore customers should work on building a strong and long-lasting supplier relationship as they do with their own customers. And it is not a complicated process.

The positive customer-supplier relationship begins with the initiative of the supplier to demonstrate his sensitivity to the customers needs. A customer always vouches for the conditions of his business deal with the supplier and likes to be honest with them to have a smooth flow of business. But many non-serious suppliers sabotage the deal in the beginning only by making the customer struggle to even getting a relationship started. The lapses and diversions on the part of the suppliers can affect their relationship in many ways as given below: Satisfaction: The customer expects overall attention and convenience in all departments to ensure smooth fulfillment of his needs. This includes quality, timeliness, ease of access and commitment of conditions. He wants to believe that the supplier cares for him. Competitiveness: Customers assess the supplier through competition based on the pricing and quality of their products, its reliability, its technological background and industry trends. These factors affect the deal. Innovation: It is difficult for the supplier to divert the customer from their quality assessment. Customer knows and lives the products more than the supplier does, as he is working on them and is in a position to suggest innovation and development for the products. Finance: Suppliers have to be ready for providing financial advantages as loan, extended terms on purchases and postponement of debt when demanded by their loyal customers particularly at their growth stage or when they are into a financial crisis.

On the other hand suppliers also have a right to get their needs met as they are ultimately motivated by profit. They want to be known as the best in their deals so they count on customer loyalty and satisfaction at all levels which translate into direct benefit of both of them. Therefore it is only winwin relationships between them in all stages of the customer-supplier chain to produce total satisfaction. It should be remembered that a customer assumes his name only in relation to his supplier. As such in order to be a valued customer to suppliers, here are a few things he should do:

Payments always on time. The customer should always negotiate for favorable payment terms before the deal is initiated. But once the order is placed, the commitment should be honored. Any problems arising in this regard should be properly dealt with to maintain the goodwill and benefits to earn. Provide adequate flexibility. The customer should try to give suppliers as much flexibility as possible for them unless there is a compelling, competitive reason not to do it. Unreasonable demands should be avoided. This tendency also connects to quality production. Personalize the relationship. The customer should always be in contact with the supplier and visit him frequently, not necessarily only when it is needed. He may also be invited to attend and give suggestions in some of their strategy meetings. Methods of improving business may also be discussed. Sharing of knowledge, opportunities, service benefits, software compatibility etc. would be beneficial for both. Share information. The customer should be communicative by keeping the suppliers aware of what is going on in their organization. He may share some of the key strategic information with them. Frequent and open communications are important in understanding each others expectations. All relationships begin with self. Be a demanding but a valued customer. Being a demanding customer can just be fair. The customer should state his demands clearly and tell his supplier to hold his agreements. At the same time as a valued customer he must always cooperate with him to keep up his commitments without embarrassment. Sharing knowledge, service benefits, media exposure opportunities, software compatibility, efficiencies etc. would add to enhance relationship.

These essential factors are important for the customers to create and maintain a healthy relationship with the suppliers.

Customer Relationship Management (CRM) and Marketing

CRM leverages and amplifies customer base of an organization through efficacious and efficient marketing. In fact CRM has brought up new dimensions in the field of marketing by significantly improving marketing functioning and execution. Intuitive CRM associated marketing strategies like direct marketing, web marketing, e-mail marketing etc. have been matured during the recent past.

These marketing strategies are more promising as compared to the traditional ways on marketing as they help delivering higher-up performance and walloping business. They also help meliorating response rates in marketing campaigns, cut cost on promotions due to low asset values and provide higher scrutiny on organizational investments.

The various aspects of CRM oriented marketing are discussed below. Web Marketing- With the growing popularity of web, customers are tending towards web marketing or web shopping. This helps both customers and suppliers to transact in a real time environment irrespective of their locations. Some of the major advantages of Web Marketing are listed below: It is relatively very inexpensive as it reduces the cost for physically reaching to the target customers for interaction. Suppliers can reach to more number of customers in lesser amount of time. The online marketing campaigns can be easily tracked, traced, calculated and tested. The selection process of any product or brand is simplified due to proven online research and analysis techniques. Online marketing campaigns are more promotional as compared to manual campaigns. Email Marketing- Email marketing has turned out to be more efficacious and inexpensive as compared to mail or phone based marketing strategies. Email marketing is direct marketing which is data driven and leads to more accurate customer response and effective fulfillment of customer needs. More attractive features include newsletters, sending of eCoupons, eCards, provision of saving events into calendars etc. Analyzing customers buying behavior online- A CRM system provides a platform to analyze the customers buying behavior online. This interactive strategy provides great accuracy with high speed which includes profiling services furnishing elaborated bits of information regarding customers purchasing habits or behavior. Individualized analysis of this behavior also helps to identify to which product or brand the customers are more tended. For example an online selling website www.xyz.com can analyze the customers buying behavior by installing an in-house service with the help of a full-fledged CRM that checks what all products are being purchased by a particular customer and under which specific group they fall. This is achieved by personalized analyzing the buying history of customers in the past which predicts the future business with those customers also. This accomplishes to build a long-term relationship with customers by properly canvassing customer needs and resulting in customer satisfaction. Analyzing this particular buying behavior of customers online also helps to fix or change of marketing techniques or strategies to mould the system according to the future perspectives.

Forecasting future marketing strategies- Down the line marketing strategies keeps on changing according to the emotional behavioral change of customers. CRM market forecasting techniques help to understand this change through regression and statistical analysis of customer behavior online. These are some complex but more accurate analysis techniques provided by CRM system which are proved to be one of best marketing strategies. This innovative approach is carried out with greater risks but is believed to outturn astonishing rewards. Building business impact models- It is important for an organization to have check on marketing performance regularly so that the techniques never deteriorate and always match to yield greater results. These CRM oriented models help in delivering accurate measurement of marketing performance throughout the organization and to do better every time.

These synergistic marketing strategies make a part of CRM system to develop high-end marketing business. Hence it is very important for an organization to incorporate them by carefully anticipating change, testing their performance and assembling the best possible combination of these strategies to meet the needs of the customers and maximize its marketing growth

Customer Relationship Management (CRM) and HR

Human Resources are those constituents of an organization that take care of the human facets and needs of all employees within that organization. Key functions of HR in an organization areEmployee recruitment and selection. Compensation calculation and reward program management. In-house training for all employees according to skill sets. Performance calculation and managing employee behavior. Portfolio management and area location management. Transformation and change management. Structuring hierarchy of employees. Employee relationship management. Hiring Campaign management.

Employees are the significant assets and the primary promoters of profitable business for an organization. Hence, apart from managing clients and customers for business purpose, its a decisive responsibility of an organization to manage and fulfill all needs of its own employees. It would be improper to say that a CRM system is only used to manage clients and customer; most of the HR heads or managers are using CRM technologies for managing companys human capital. This approach is called as Employee Resource Management (ERM). An ERM is a business process that fills gaps between an organizations and its employee to create a strong emotional and professional bonding among them.

A well integrated ERM provides a committed information base system for all Human resources. This is termed as Human Resource Information System (HRIS) in most of the renowned organizations which provides a better interface for HRs to deal with internal employees and screens all problems associated with relationship among organization and employee. Some of its features are listed belowProfile Management- A profile management technique is used to manage profiles of all the employees which contain the entire employee related information which is also exposed to the employees in HRIS tool. Employees are allowed to change or edit some of this general information whenever there is a need. Payment/Compensation- Details regarding employee payroll and employee branding can be easily managed under this. An employee can see all the payroll related features and the salary statements can be automatically mailed to every employee. Training- Notification to attend online and manual training can be easily distributed within the organization. These can be online tracked for internship which can be optional or mandatory. Leave Management- Employee have a dedicated portal for applying or notifying for leaves. They just have to apply for leave through this portal and the information is escalated to his/her manager. The manager has the option for approving or rejecting this application online. The applied leaves get deducted from the bundle of employees annual leaves automatically for which he gets email notification regularly. Meetings and Certifications- Managers and employees have the facility to online schedules of meetings or to book available meeting rooms. A notification is sent automatically to all the attendees informing them to be present in the meeting on the specified timings and venue. All the employees also have the facility to complete or attain online certifications as and when needed. Generate online Letters and data- The human resource managers or executives have the zeal to furnish offer letters or response letters online to the newly joined employees. There is no need for the new employees to re-enter their respective information again and again whenever needed.

Online Alerts- Online alters are generated whenever any employee have something due. For example, employees are used to get these alerts automatically when they need to complete any survey or review or when there is a need to renew any software license. Export/Import facility- Every employee does have the deftness to export or import any sort of data available on the portal to and from an excel sheets or comma separated files (CSV files).

An organization is always benefitted by Employee Relationship Management if it is implementing it with CRM strategies with clear rules and guidelines. For an organization an upright and healthy relationship with employees always acts as reciprocal commutation and leads to betterment of both. Customer Relationship Management - What is CRM ?

Every business unit emphasizes on spurting a long term relationship with customers to nurture its stability in todays blooming market. Customers expectations are now not only limited to get best products and services, they also need a face-to-face business in which they want to receive exactly what they demand and in a quick time.

Customer Relationship Management is an upright concept or strategy to solidify relations with customers and at the same time reducing cost and enhancing productivity and profitability in business. An ideal CRM system is a centralized collection all data sources under an organization and provides an atomistic real time vision of customer information. A CRM system is vast and significant, but it be can implemented for small business, as well as large enterprises also as the main goal is to assist the customers efficiently.

Usually an organization consists of various departments which predominantly have access to customers information either directly or indirectly. A CRM system piles up this information centrally, examines it and then makes it addressable within all the departments. Lets take an example of an international call center which uses a CRM tool called xyz and is integrated with a phone and a computer system or laptop. Now this system automatically perceives which customer is calling. Before the executive attends the phone the CRM system brings forth the customer details on the computer or laptop screen and also indicates what the opportunity of deals is with that particular customer, what the customer had already purchased or ordered in past and what is the probability of buying in future. Not only this, it can also highlight what all products best suit this customer. For finance department it may show the information regarding the current balance and for accounting

department it may pop out the information regarding the recent purchases by the customer. All these pieces of data are stored in the CRM database and are available as and when it is needed. According to this example, CRM system provides a well defined platform for all business units to interact with their clients and fulfill all their needs and demands very effectively and to build long-term relationship.

Wangling this kind of relationship with customers is not easy to manage and it depends on how the systematically and flexibly a CRM system is implemented or integrated. But once its accomplished it serves the best way in dealing with customers. In turn customers feels gratitude of self-satisfaction and loyalty which results in better bonding with supplier and hence increasing the business.

A CRM system is not only used to deal with the existing customers but is also useful in acquiring new customers. The process first starts with identifying a customer and maintaining all the corresponding details into the CRM system which is also called an Opportunity of Business. The Sales and Field representatives then try getting business out of these customers by sophistically following up with them and converting them into a winning deal.

Customer Relationship Management strategies have given a new outlook to all the suppliers and customers to keep the business going under an estimable relationship by fulfilling mutual needs of buying and selling.

Customer Profiling

For a developing business it is very important to understand who are the best customers, how to find more customers like these and where to find. Customer profiling is the best strategy to accomplish this. It helps to find valuable new customers, enhance the profitability by retaining existing customers and also identify low valued customers so as to minimize the cost to reach them. Customer profiling is a behavioral relationship marketing technique which includes a variety of marketing strategies ranging from simple ones to most complex ones.

Customer profiling starts with identification of relevant information regarding all the satisfied existing customers and then try to target new prospects with matching profiles. The profiles of customers can be categorized differently according to some influential variables present in their profile.

For example, lets examine the following two customer profiles: This profile shows, the customer is married and has two children. He lives in a high society area and continuously read Economic Times newspaper. This profile shows, the customer visited the suppliers site regularly for 3 months, but has never visited in last 2 weeks.

The first profile clearly indicates that the customer characteristics are demographic. The demographic profiles always help the suppliers to attract the customers and generate good revenue in the amateur stages of projects; these projects are basically online projects. The first profile will be interesting for someone inside the organization who is in advertisement department or who is involved in deciding the content and matter of websites.

The second profile can be depicted as a behavioral profile. The basic questions arise regarding to this profile should be, will they buy again? Will they visit again? A behavioral profile indicates the prominence of the relationship with customer in near future hence these profiles are crucial for organizations that focus on retaining more customers to increase their business value. Although behavioral profiles are more prominent than demographic but a combination of both provides a powerful and strong database to decide the customer characteristics in efficient way. The following steps depicts an ideal profiling technique: Gathering demographic related and influential information from existing customers. Encapsulate this information in profiling database to each customer record. Attach more relevant information like behavioral characteristics (recent purchases, sales historical view etc) and some other related information to each of the profiles. Implement the variables and strategies that determine the best and worst customers. Applying these effective variables to non-customers profiles to identify valuable prospects.

The above process is involved ideally for simple profiling which can become complex for complex strategies. After profiling is completed the customers are then segmented according to segmentation variables. Every customer has individual preferences, needs and behavior associated with products which are different from other customers. Substantially it becomes impossible for suppliers to

manage customers separately on individual characteristics; hence they pool customers into separate segments according to the type and variables they have in common.

Invalid or wrong information passed while profiling process will result in suboptimal decisions and unworthy consequences and could fetch customer dissatisfaction and could even lead to customer defect. Hence all the information and data should be validated and corrected before profiling is done. Customer profiling is the basis of market research techniques and is proved to be the most useful strategy under any circumstances in customer acquisition approach.

Cost/Price Sensitivity of Customers

Price sensitivity can be defined as the consciousness of the customers to cost windows or range within which they make dealings. All the customers are always cost sensitive and concentrate basically to buy products on cheap rates. However, cost sensitivity of a customer substantially depends on condition of the market. For example if a product becomes extraordinarily famous and demanding in market and every company is tending towards capturing this product then it becomes necessary to focus on technological aspects rather than focusing on the cost. If they do so then the cost sensitivity of these customers is least. Similarly if a product becomes common in market due to emerging competitors coming up with similar but more prominent products, then in this competition the value of the product decreases and the companies become rarely bothered for them. In this scenario the customers have the right to become highly cost sensitive as they know that they can negotiate with the suppliers to a greater extent. This is when the customers are called as high cost sensitive customers.

It is important for the suppliers to understand how cost sensitive the customers are; so that they should focus on some strategies always to keep their customers falling under least price sensitive stage. For example, reducing one dollar on a towels price could put that towel on sale and everybody rushes to buy it, but reducing one dollar on a car will not make any difference and will not attract customers by any means. Hence the primary challenge for all the organizations should be making certain that the change in price is perceptible for all the customers.

Price sensitivity strategy for suppliers also depends on customer usage of products. Their can be two categories of customers as per the buying aspect; heavy buying users and light buying users. Take an example of an organization which consists of 30% heavy buyers and 70% light buyers. Now if the organization cuts off the price of the product to some extent only for heavy users, then a substantial growth in percentage from 30% to 40% is probably possible. And obviously 40% heavy buyers and 60% light buyers will be more productive for the organization rather then 30% heavy buyers and 70% light buyers.

Hence, knowing about the customers price sensitivity always helps suppliers to entertain and satisfy them. If the customer is highly competitive and perceives short term projects, then it is not worth for suppliers to convince them for high end or expensive products. The customer will anyway supercharge to reduce the cost or cut the related frills as it may not be affordable or is out of budget for them to purchase. So it is important for suppliers to sacrifice on cost or else he may leave the customer unsatisfied, in worst case he may loose that customer also.

Making fruitful strategies and positive analyzing cost sensitivity is one of the most important challenges that an organization could face. On the other hand it is desirable to deal efficiently with it. The best practice is to pre-evaluate the customer needs and make a fair offer to them according to their requirement and budget. Cultural Factors affecting Consumer Behaviour

Consumer behaviour deals with the study of buying behaviour of consumers. Consumer behaviour helps us understand why and why not an individual purchases goods and services from the market.

There are several factors which influence the buying decision of consumers, cultural factors being one of the most important factors. What are Cultural Factors ?

Cultural factors comprise of set of values and ideologies of a particular community or group of individuals. It is the culture of an individual which decides the way he/she behaves. In simpler words, culture is nothing but values of an individual. What an individual learns from his parents and relatives as a child becomes his culture.

Example - In India, people still value joint family system and family ties. Children in India are conditioned to stay with their parents till they get married as compared to foreign countries where children are more independent and leave their parents once they start earning a living for themselves.

Cultural factors have a significant effect on an individuals buying decision. Every individual has different sets of habits, beliefs and principles which he/she develops from his family status and background. What they see from their childhood becomes their culture.

Let us understand the influence of cultural factors on buying decision of individuals with the help of various examples.

Females staying in West Bengal or Assam would prefer buying sarees as compared to Westerns. Similarly a male consumer would prefer a Dhoti Kurta during auspicious ceremonies in Eastern India as this is what their culture is. Girls in South India wear skirts and blouses as compared to girls in north India who are more into Salwar Kameez.

Our culture says that we need to wear traditional attire on marriages and this is what we have been following since years.

People in North India prefer breads over rice which is a favorite with people in South India and East India. Subcultures

Each culture further comprises of various subcultures such as religion, age, geographical location, gender (male/female), status etc. Religion (Christianity, Hindu, Muslim, Sikhism, Jainism etc)

A Hindu bride wears red, maroon or a bright colour lehanga or saree whereas a Christian bride wears a white gown on her wedding day. It is against Hindu culture to wear white on auspicious occasions. Muslims on the other hand prefer to wear green on important occasions.

For Hindus eating beef is considered to be a sin whereas Muslims and Christians absolutely relish the same. Eating pork is against Muslim religion while Hindus do not mind eating it.

A sixty year old individual would not like something which is too bright and colorful. He would prefer something which is more sophisticated and simple. On the other hand a teenager would prefer funky dresses and loud colours.

In India widows are expected to wear whites. Widows wearing bright colours are treated with suspicion. Status (Upper Class, Middle class and Lower Class)

People from upper class generally have a tendency to spend on luxurious items such as expensive gadgets, cars, dresses etc.You would hardly find an individual from a lower class spending money on high-end products. A person who finds it difficult to make ends meet would rather prefer spending on items necessary for survival. Individuals from middle class segment generally are more interested in buying products which would make their future secure. Gender (Male/Female)

People generally make fun of males buying fairness creams as in our culture only females are expected to buy and use beauty products. Males are perceived to be strong and tough who look good just the way they are. Customer Modeling - Meaning and its Different Aspects

Customer modeling is the process of predicting and forecasting behavioral aspects of customers future perspectives. The process includes identification of marketing and campaigning targets and optimizing predictive analysis. Following are the broadly discussed aspects of customer modeling:

Response modeling - Modeling enhances the organizations knowledge on each individual customer and identify if the customers under specific segment are good and effective for marketing campaigns and promotion. This process includes validation and testing of collected customer response data and

information. After analyzing and computing this data, scores or ranks are assigned to customers that represent their willingness to respond to a specific program or promotion. The approach is to divide the customers into modules or sub groups and then assign probability of response to each sub group. Marketing professional and decision making personals then decide the exact number of customers to be included in that particular promotion or program.

Predicting customer Behavior - All the organizations are interested in determining the future value of all their existing customers. Modeling techniques are used to predict life time value of customers and profit impacting customer behavior like probability of product purchase, frequency of product purchase, spending capabilities, loyalty, usage of support and services. These predictive models support various kinds of processes like marketing campaigns, forecasting of financial and developmental aspects, customer budget management and asset management.

Return on investment (ROI) optimization - Modeling emphasizes on optimizing following marketing activities like pricing, channeling and response medium determination. Organization usually gets highest return on investment from their marketing promotions by modeling the price elasticity of customers so that a valid offer can be given to each customer. By this the profit margin of product increases with low cost to the organization.

Measuring market impact - In todays scenario, organizations have to come up with efficient and attractive marketing programs to communicate with customers and convey their message because customers are exposed to the open market where marketing competition is inevitable. Due to this market stimulation on customers are properly accounted which brings confusions in customers and they become biased. Due to this biased behavior the predictions and analysis could defect from actual implementation. Modeling being multidimensional in nature helps to measure and sustain this impact of marketing on customers behavior in a controlled and efficient manner.

Modeling and profiling are mostly same but the basic difference between them is the factor of time involved in modeling processes; as the modeling is not a static process. Modeling is quite more sophisticatedly implemented and thus making it powerful technique to predict customer behavior. Modeling process is action oriented and is not at all static throughout the customer life cycle. Profiling on the other hand is static and no action is taken apart from just recording the actual information and doing analysis on that information. Modeling on other hand involves action to be taken over times. Modeling also increases the return on investment and enhances business perspectives by fetching out good profit. Being more powerful and effective technique, marketing professionals prefer customer modeling in place of customer profiling because they have to deal with actual customer data What is Customer Relationship ?

In CRM the alphabet R means relationship. But there is always an ambiguity to understand the actual meaning of this relationship. This relationship between supplier and customer is not a personal relationship or a one-time transaction relationship; for example buying a refrigerator from a consumers outlet would not be called as a relationship.

Relationship between any two parties is actually the interaction or transaction done between the two over-times or consists of a continuous series of synergistic episode of interaction many a times. This relationship only exists when the two parties diverge from a state of autonomy to mutual or interdependent. Occasionally having a cup of tea from a caf does not mean that there is a relationship. If the customer returns to the caf and orders the same tea again because he likes the environment and taste or the method of making tea, more looks like a relationship.

Relationship with customers can change from time to time because it is evolved under distinguished situations. Following are the stages from where the relationship with customers can evolveExploration- Exploration is the process when customer investigates or tests the suppliers capabilities and performance or cross verifies the products or brands usefulness. If the test results fail to satisfy customers demands, the relationship can drastically come to an end. Awareness- Awareness is the process when the customer understands the motivational values of supplier or the products he sells. Expansion- Expansion is the process when the supplier wins customers faith and customer falls under huge interdependence of the supplier. This is time when there are more chances of business with that particular customer and expand business.

Commitment- Commitment is a powerful stage when suppliers learn to adapting business rules and goal to excel. Dissolution- Dissolution is a stage when customer requirement suddenly changes and he looks for better perspectives. This sudden change is the end of relationship.

Relationship can come to an end due to many reasons like - customer is not satisfied with the services of supplier or customer diverges to other better brands and products. Suppliers can also prefer to break relationships due to customer failing to be a part to increase sales volume or when the suppliers are entangled with fraud cases.

Broadly there can be two distinguished attributes of a developed relationship between supplier and customer: Trust: Trust means confidence and security in any relationship and can be treated as the biggest investment in building long term relationships. Trust is developed between the two parties when they experience flawless and satisfied motives between each other. As a result of knowing more about each other, all the doubts and risks are minimized and leads to inevitably smooth business. Lack of trust on the other hand weakens the relationship foundation and chances of uncertainty and conflicts increases. Commitment: Commitment is yet another milestone that should be achieved to set a long term mutual relationship. Commitment can only be attained when there is mutual trust and the two parties share each others values. In a committed relationship both suppliers and customers strive to uphold the relationship and never want to exit which in turn results in building the relationship stronger and sharper. There is, in fact, huge cost which is incurred in switching from committed relationships of one supplier and build new relationships with other suppliers from scratch.

Relationship is always mutual or reciprocal so it is important for both supplier and customers to stick to common guideline to attain better relationship among each other. There is lot of involvement of cost, efforts and time in striving developed relationships between the two parties but the outcome is always inevitable.

What is Consumer Behaviour - Meaning and Important Concepts

Before understanding consumer behaviour let us first go through few more terminologies:

Who is a Consumer ?

Any individual who purchases goods and services from the market for his/her end-use is called a consumer.

In simpler words a consumer is one who consumes goods and services available in the market.

Example - Tom might purchase a tricycle for his son or Mike might buy a shirt for himself. In the above examples, both Tom and Mike are consumers. What is consumer Interest ?

Every customer shows inclination towards particular products and services. Consumer interest is nothing but willingness of consumers to purchase products and services as per their taste, need and of course pocket.

Let us go through the following example:

Both Maria and Sandra went to the nearby shopping mall to buy dresses for themselves. The store manager showed them the best dresses available with him. Maria immediately purchased two dresses but Sandra returned home empty handed. The dresses were little too expensive for Sandra and she preferred simple and subtle designs as compared to designer wears available at the store.

In the above example Sandra and Maria had similar requirements but there was a huge difference in their taste, mind set and ability to spend. What is Consumer Behaviour ?

Consumer Behaviour is a branch which deals with the various stages a consumer goes through before purchasing products or services for his end use.

Why do you think an individual buys a product ? Need Social Status Gifting Purpose

Why do you think an individual does not buy a product ? No requirement Income/Budget/Financial constraints Taste

When do you think consumers purchase products ? Festive season Birthday Anniversary Marriage or other special occasions

There are infact several factors which influence buying decision of a consumer ranging from psychological, social, economic and so on.

The study of consumer behaviour explains as to: Why and why not a consumer buys a product ? When a consumer buys a product ? How a consumer buys a product ?

During Christmas, the buying tendencies of consumers increase as compared to other months. In the same way during Valentines week, individuals are often seen purchasing gifts for their partners. Fluctuations in the financial markets and recession decrease the buying capacity of individuals.

In a laymans language consumer behaviour deals with the buying behaviour of individuals.

The main catalyst which triggers the buying decision of an individual is need for a particular product/service. Consumers purchase products and services as and when need arises.

According to Belch and Belch, whenever need arises; a consumer searches for several information which would help him in his purchase.

Following are the sources of information: Personal Sources Commercial Sources Public Sources Personal Experience

Perception also plays an important role in influencing the buying decision of consumers.

Buying decisions of consumers also depend on the following factors: Messages, advertisements, promotional materials, a consumer goes through also called selective exposure. Not all promotional materials and advertisements excite a consumer. A consumer does not pay attention to everything he sees. He is interested in only what he wants to see. Such behaviour is called selective attention. Consumer interpretation refers to how an individual perceives a particular message.

A consumer would certainly buy something which appeals him the most. He would remember the most relevant and meaningful message also called as selective retention. He would obviously not remember something which has nothing to do with his need.

Strategic CRM - Mainitain Long Term Relationship with Customers

The aim of strategic CRM is to concentrate and enhance the knowledge about customers and use this knowledge to improve and customize the interactions with customers to maintain a long-term relationship with them.

Determining and development of CRM strategies involves following steps:

Amplify Commitment- Strategic CRM involves almost all the departments of an organization e.g. finance, sales, manufacturing, distribution, marketing etc. Hence it is essential to get support and use their important feedback while determining strategies. For this each and every department should be kept informed about all the developments and implementation of processes carried out or performed. Everyone should also be emphasized about the positive approaches and end results of the strategies.

Building valuable project team- After organizational commitment is secured the next important stage in developing CRM strategies is building a determined and valuable project team. Each and every member of this team should be experiences and dedicated professional as these members will be the key decision makers in the whole process. They will be responsible to communicate all the related details and benefits of the CRM strategies to all the members of the organization. These members should be from following work groups to ensure all the aspects of strategies are addressed efficiently;

Management- Management professionals are responsible to provide motivation, leadership and management at every strategic development step especially when a change in business process or organizational structure is expected.

Technical- Automation of CRM strategies are important and must involve experienced technical hands. Also technical professional provide their useful contribution in building and managing software application and determining their compatibility with existing software features. Sales and Marketing- These are final users of CRM system once the strategies are determined and implemented. The applied strategies are supposed to be successful once these users fell comfortable and satisfied by using all the CRM features. Being the end users these people are also responsible to provide useful feedbacks on efficiency and effectiveness while the strategies are in development phase. Financial- The CRM strategies must also be gone through or evaluated under financial aspects. The financial professionals of the team can provide crucial analysis on assessment of enhanced productivity, evaluation of operational and production cost and final estimated cost of the project. They also help in assessing the investment cost per module or segment so that the product is delivered inside the budget. External Experts- Many times some external consultants and other CRM vendors are substantially helpful in strategy development. These are people who are generally hired or outsourced for second fruitful opinion or if the organization is lacking with sufficient CRM experts. These professionals have vast experience in the same field and helps analyzing organizations actual business needs, work with other professional to review and approve complex business structure and even helps in formulating the team members according to the expertise they posses.

Requirement Analysis- CRM strategies should always focus and concentrate on the actual business requirements. This process involves a series surveys and questionnaires with top level sales, marketing and financial managers to gather the actual expectations regarding the strategies to be implemented and what results these strategies will throw in the final stage. This is a very crucial factor in the development of an effective CRM system because if the results are not matching the actual requirement or if they diverge from focus points, then that means its not achieving the desired goals.

Stages in Consumer Decision Making Process

An individual who purchases products and services from the market for his/her own personal consumption is called as consumer.

To understand the complete process of consumer decision making, let us first go through the following example:

Tim went to a nearby retail store to buy a laptop for himself. The store manager showed him all the latest models and after few rounds of negotiations, Tim immediately selected one for himself.

In the above example Tim is the consumer and the laptop is the product which Tim wanted to purchase for his end-use.

Why do you think Tim went to the nearby store to purchase a new laptop ?

The answer is very simple. Tim needed a laptop. In other words it was actually Tims need to buy a laptop which took him to the store.

The Need to buy a laptop can be due to any of the following reasons:

His old laptop was giving him problems. He wanted a new laptop to check his personal mails at home. He wanted to gift a new laptop to his wife. He needed a new laptop to start his own business.

The store manager showed Tim all the samples available with him and explained him the features and specifications of each model. This is called information. Tim before buying the laptop checked few other options as well. The information can come from various other sources such as newspaper, websites, magazines, advertisements, billboards etc.

This explains the consumer buying decision process.

A consumer goes through several stages before purchasing a product or service.

NEED INFORMATION GATHERING/SEARCH EVALUATION OF ALTERNATIVES PURCHASE OF PRODUCT/SERVICE POST PURCHASE EVALUATION

Step 1 - Need is the most important factor which leads to buying of products and services. Need infact is the catalyst which triggers the buying decision of individuals.

An individual who buys cold drink or a bottle of mineral water identifies his/her need as thirst. However in such cases steps such as information search and evaluation of alternatives are generally missing. These two steps are important when an individual purchases expensive products/services such as laptop, cars, mobile phones and so on.

Step 2 - When an individual recognizes his need for a particular product/service he tries to gather as much information as he can.

An individual can acquire information through any of the following sources: Personal Sources - He might discuss his need with his friends, family members, co workers and other acquaintances.

Commercial sources - Advertisements, sales people (in Tims case it was the store manager), Packaging of a particular product in many cases prompt individuals to buy the same, Displays (Props, Mannequins etc) Public sources - Newspaper, Radio, Magazine Experiential sources - Individuals own experience, prior handling of a particular product (Tim would definitely purchase a Dell laptop again if he had already used one)

Step 3 - The next step is to evaluate the various alternatives available in the market. An individual after gathering relevant information tries to choose the best option available as per his need, taste and pocket.

Step 4 - After going through all the above stages, customer finally purchases the product.

Step 5 - The purchase of the product is followed by post purchase evaluation. Post purchase evaluation refers to a customers analysis whether the product was useful to him or not, whether the product fulfilled his need or not?

Social Factors affecting Consumer Behaviour

Consumer Behaviour is an effort to study and understand the buying tendencies of consumers for their end use.

Social factors play an essential role in influencing the buying decisions of consumers.

Human beings are social animals. We need people around to talk to and discuss various issues to reach to better solutions and ideas. We all live in a society and it is really important for individuals to adhere to the laws and regulations of society.

Social Factors influencing consumer buying decision can be classified as under: Reference Groups Immediate Family Members Relatives Role in the Society Status in the society

Reference Groups

Every individual has some people around who influence him/her in any way. Reference groups comprise of people that individuals compare themselves with. Every individual knows some people in the society who become their idols in due course of time.

Co workers, family members, relatives, neighbours, friends, seniors at workplace often form reference groups.

Reference groups are generally of two types:

Primary Group - consists of individuals one interacts with on a regular basis.

Primary groups include: Friends

Family Members Relatives Co Workers

All the above influence the buying decisions of consumers due to following reasons:

They have used the product or brand earlier.

They know what the product is all about. They have complete knowledge about the features and specifications of the product.

Tim wanted to purchase a laptop for himself. He went to the nearby store and purchased a Dell Laptop. The reason why he purchased a Dell Laptop was because all his friends were using the same model and were quite satisfied with the product. We tend to pick up products our friends recommend.

A married individual would show strong inclination towards buying products which would benefit not only him but also his family members as compared to a bachelor. Family plays an important role in influencing the buying decisions of individuals.

A consumer who has a wife and child at home would buy for them rather than spending on himself. An individual entering into marriage would be more interested in buying a house, car, household items, furniture and so on. When an individual gets married and starts a family, most of his buying decisions are taken by the entire family.

Every individual goes through the following stages and shows a different buying need in each stage:

Bachelorhood: Purchases Alcohol, Beer, Bike, Mobile Handsets (Spends Lavishly)

Newly Married: Tend to purchase a new house, car, household furnishings. (Spends sensibly)

Family with Children: Purchases products to secure his as well as his familys future.

Empty nest (Children getting married)/Retirement/Old Age: Medicines, Health Products, and Necessary Items.

A Ford Car in the neighbourhood would prompt three more families to buy the same model.

Secondary Groups - Secondary groups share indirect relationship with the consumer. These groups are more formal and individuals do not interact with them on a regular basis, Example - Religious Associations, Political Parties, Clubs etc.

Role in the Society

Each individual plays a dual role in the society depending on the group he belongs to. An individual working as Chief Executive Officer with a reputed firm is also someones husband and father at home. The buying tendency of individuals depends on the role he plays in the society. Social Status

An individual from an upper middle class would spend on luxurious items whereas an individual from middle to lower income group would buy items required for his/her survival.

Security Analysis and Portfolio Management What is a Security ?

Assets with some financial value are called securities. Characteristics of Securities Securities are tradable and represent a financial value. Securities are fungible. Classification of Securities

Debt Securities: Tradable assets which have clearly defined terms and conditions are called debt securities. Financial instruments sold and purchased between parties with clearly mentioned interest rate, principal amount, maturity date as well as rate of returns are called debt securities.

Equity Securities: Financial instruments signifying the ownership of an individual in an organization are called equity securities. An individual buying equities has an ownership in the companys profits and assets.

Derivatives: Derivatives are financial instruments with specific conditions under which payments need to be made between two parties.

What is Security Analysis ?

The analysis of various tradable financial instruments is called security analysis. Security analysis helps a financial expert or a security analyst to determine the value of assets in a portfolio. Why Security Analysis ?

Security analysis is a method which helps to calculate the value of various assets and also find out the effect of various market fluctuations on the value of tradable financial instruments (also called securities). Classification of Security Analysis

Security Analysis is broadly classified into three categories: Fundamental Analysis Technical Analysis Quantitative Analysis What is Fundamental Analysis ?

Fundamental Analysis refers to the evaluation of securities with the help of certain fundamental business factors such as financial statements, current interest rates as well as competitors products and financial market. What are Financial Statements ?

Financial statements are nothing but proofs or written records of various financial transactions of an investor or company.

Financial statements are used by financial experts to study and analyze the profits, liabilities, assets of an organization or an individual. What is Technical Analysis ?

Technical analysis refers to the analysis of securities and helps the finance professionals to forecast the price trends through past price trends and market data. What is Quantitative Analysis ?

Quantitative analysis refers to the analysis of securities using quantitative data. Difference between Fundamental Analysis and Quantitative Analysis

Fundamental analysis is done with the help of financial statements, competitors market, market data and other relevant facts and figures whereas technical analysis is more to do with the price trends of securities. What is Portfolio Management ?

The stream which deals with managing various securities and creating an investment objective for individuals is called portfolio management. Portfoilo management refers to the art of selecting the best investment plans for an individual concerned which guarantees maximum returns with minimum risks involved.

Portfolio management is generally done with the help of portfolio managers who after understanding the clients requirements and his ability to undertake risks design a portfolio with a mix of financial instruments with maximum returns for a secure future. Portfolio Theory

Portfolio theory was proposed by Harry M. Markowitz of University of Chicago. According to Markowitzs portfolio theory, portfolio managers should carefully select and combine financial products on behalf of their clients for guaranteed maximum returns with minimum risks.

Portfolio theory helps portfolio managers to calculate the amount of return as well as risk for any investment portfolio.

Role of Family in Consumer Behaviour

No two individuals have same buying preferences. The buying tendencies of individuals vary as per their age, need, income, lifestyle, geographical location, willingness to spend, family status and so on. An individuals immediate family members play an essential role in influencing his/her buying behaviour.

An individual tends to discuss with his immediate family members before purchasing a particular product or service. Family members might support an individuals decision to buy a particular product, stop him for purchasing it or suggest few other options.

Family comprises of: Parents Siblings Spouse Grandparents Relatives (Cousins/Aunts, Uncles etc)

What an individual imbibes from his parents becomes his/her culture. In countries like India, where children are supposed to stay with their parents till the time they get married, the influence of parents on an individuals buying decisions can not be ignored. What he sees from his childhood becomes his habit or in other words lifestyle. A female from an orthodox background would prefer salwar suits, saris instead of westerns or short outfits. In India, parents expect their children to dress up in nice, colourful outfits during marriages, festivals or other auspicious occasions. Even if children want to buy something else, their parents would always prompt them to buy traditional attire, thus influencing their buying decision.

The moment an individual enters into wedlock, his/her partner influences his buying decisions to a great extent. In most families, wife accompanies her husband for shopping be it grocery, home appliances, furnishings, car etc.An individual would always discuss with his/her partner before any major purchase. After marriage, individuals generally do not like spending on himself/herself; rather they do it for their partner or family. A young bachelor would not mind spending on alcohol, attending night parties, casinos but the moment he has a wife at home, he would instead spend on household and necessary items. No bachelor likes to invest money on mutual funds, insurance policies, mediclaims etc but for someone who is married buying an investment plan becomes his first priority. Women generally are inclined towards buying toiletries, perfumes, dresses, household items, furnishings, food products while men would rather love to spend on gadgets, cars, bikes, alcohol

etc.Both have different tastes but when they come together, they mutually decide on what to buy and what not to buy.

A Bachelor would never purchase Womens Horlicks or Kelloggs K special or a female perfume but when he has a wife at home; he would love to purchase them for his wife. A young girl who has never purchased shaving creams or mens perfume all through her life for herself would not mind purchasing for her husband, father or father in law. A working woman would have different needs as compared to a housewife. A woman who goes to office would prompt her husband to buy formal trouser and shirt, office bag, make up products etc for her while a house wife would not like spending on all these as she does not require an office bag and so on.

Children also influence the buying decisions of individuals. An individual spends happily on toys, candies, ice creams, chocolates. sweets when he has children at home. Children in the family prompt their parents to subscribe to Disney Channel, Cartoon network and so on.

Individuals do not mind spending on medicines, health supplements, vitamin tablets, protein drinks if they have ailing parents at home.

Role of Consumer Behaviour in Marketing

Consumer Behaviour refers to the study of buying tendencies of consumers. An individual who goes for shopping does not necessarily end up buying products. There are several stages a consumer goes through before he finally picks up things available in the market. Various factors, be it cultural, social, personal or psychological influence the buying decision of individuals.

Marketers need to understand the buying behaviour of consumers for their products to do well. It is really important for marketers to understand what prompts a consumer to purchase a particular product and what stops him from buying. What marketers need to understand ?

The psychology of consumers (what they feel about a particular product and their brand on the whole).

How consumers are influenced by their immediate surroundings, family members, friends, co workers and so on.

What a consumer thinks when he goes out for shopping ?

A marketer needs to first identify his target consumers and understand their lifestyles, psychologies, income, spending capabilities, mentalities to offer them the right product.

Individuals from lower income group would never be interested in buying expensive and luxurious products. He would first fulfill his basic physiological needs like food, air, water etc. Trying to sell a Mercedes or a Rado watch to someone who finds it difficult to make ends meet would definitely be a disaster.

Kelloggs K special would hardly find any takers in the low income group. In this segment, individuals would be more interested in buying fresh fruits, vegetables, pulses which are necessary for their survival rather than spending on health supplements.

It is really essential for the marketers to understand the needs of consumers. Find out what they are actually looking for?

There are ideally two different ways which enable marketers to understand their consumers. Primary Research Secondary Research

Primary Research - Primary Research refers to a research methodology where marketers interact with consumers directly and gather as much information as they can. Information is generally collected through surveys, questionnaires, feedback forms, interviews etc.

Secondary Research - Secondary Research often refers to relying on information which has been collected by others at some point of time.

The background and family status of an individual also influence his/her buying behaviour.

Selling a laptop to an individual who is not much educated would be pointless. Remember consumers would show interest in your products only if they are of any use to them or their immediate family members. A low grade worker would never be interested in purchasing business suits or formal shirts.

Canned juices are a hit among middle and higher income group where individuals are really conscious about their health and fitness. Individuals who live hand to mouth would never spend on sugar free tablets, health supplements, or for that matter Diet Coke.

It is also important to give complete information to end-users. Do not hide anything from them. It is not ethical. All tobacco products come with a warning. Individuals should be familiar with not only the benefits but also the side effects of the products.

Marketers must also take into account: Age group of consumers Geographical location Lifestyle of consumers Social Status of consumers

Funky designs, loud colours would be a hit among teenagers whereas middle aged and elderly people would prefer subtle colours and sophisticated designs.

Salwar Suits are extremely popular in North India whereas females prefer saris and skirt blouses in eastern and southern parts of India.

Individuals from posh localities and good jobs would show keen interest towards buying exclusive and unique products as compared to individuals who do not come from an affluent background.

Role of Consumer Behaviour in Advertising

Marketers need to understand the buying behaviour of consumers while designing their advertisements for the desired impact. Advertisements play an essential role in creating an image of a product in the minds of consumers. Advertisements must be catchy and communicate relevant information to consumers.

Understanding the needs of the consumer is really important when it comes to creating the right advertisement for the right audience. Remember it is only through advertisements; individuals are able to connect with your brand.

Identify your target audience. The advertisement in some way must touch the hearts of the end-users for them to buy the product.

It is really essential to show what the consumers like. Meet your target audience and find out what they expect from your product and brand on the whole. Do not show anything which might offend any religious group or community. Make sure the message is relevant and crisp. Overload of information nullifies the effect and the advertisement might go unnoticed. Dont try to confuse the consumers. They will never buy your product. Understand their psychologies well.

The advertisement must show what the product is all about. It should, in a way give some kind of information about its price, benefits, usage, availability and so on.

Consumers perceive Women Horlics as a health and energy drink which is a must for all working women as well as expecting mothers for their overall well -being. A Horlics advertisement with a male model does not make sense as the target audience would never be able to connect with the product. A lean and inactive office going female drinking Womens Horlics and thereafter beaming with energy and confidence would be the ideal concept for the advertisement. Through advertisements, the

company actually tries to win over the confidence of consumers who would not mind spending on their product.

A Tag Heuer, Omega, Mercedes, I phone advertisement ought to be classy for people to recognize these products as status symbols. Use expensive props, unique concepts and well known faces for all premium and exclusive brands.

Advertisements meant for younger people (college goers, young professionals) ought to be colourful and trendy for them to be able to relate themselves with the product. Serious advertisements do not go very well with the youngsters. It is essential to understand the mindsets, attitudes and preferences of target audience.

Advertisements for insurance plans, medical benefits, hospitals ought to be sensible as they convey much serious information and target a mature segment of individuals altogether.

The time slot of commercials also needs to be taken care of. Advertisements for products meant for children should ideally be aired during afternoon or early evening hours as this is the time when they watch maximum television. Understand the lifestyle of your target audience. Prime time commercials are the ones which are viewed by maximum people.

Choose the right theme for your advertisement. The advertisements ought to create the need among the consumers for them to buy the product. Commercials ought to give complete information to the consumers. All tobacco and alcohol commercials must show the warning message.

Regression Scoring - Meaning, its Process and Types of Scoring

Regression scoring is one of the difficult but more precise and faithful marketing technique as compared to profiling and modeling. For targeting new and esteemed customers all the organization substantially pursue regression scoring techniques. Following is the process involved in regression scoring:

Identify the prospect or probable customers from the population of all customers and draw random samples from them.

Collect individual characteristics from the information and data available from these samples.

Record which all prospects are converted into customers after performing the marketing campaign on individual prospects.

Using this information and trend, produce a regression scoring model which is a series of important variables which are used to predict and which prospects can be easily converted into customers in accordance to their individual characteristics.

After the estimated model is ready the researchers engage themselves in following process.

According to the model, create regression equations to implement information of future group of prospect customer. Plug the information and individual characteristics of prospects that are not in the sample to calculate scores. Rank the prospects according to the regression score according to highest and lowest values. Perform marketing campaigns at the prospects that have scores above the cutoff value. This cutoff score depend on most of the important marketing and financial factors.

Following are the general types of regression scoring which are implemented according to specific need by the organization:

Linear Regression Scoring: This type of scoring is performed by implementing linear regression algorithm on the random sample of data. The process includes scoring techniques on variables that have linear dependencies. For example if scoring has to be done on 2 distinct data values and each these values is associated with 5 distinct characteristics, then 25 linear regression analysis are performed.

Non-Linear Regression Scoring: This is an extension linear regression scoring process which includes performing scoring by implementing nonlinear regression algorithm on the random sample of data. This means that the algorithm does not perform analysis on direct linear relationships of sample value, and hence the more and specific nonlinear analysis techniques are performed according to the conditions expected.

Weighted score tables: This type of scoring does not need any sampling of data before associating scores to prospects. Weighted and important variables are directly associated with sample of prospect to determine individual scores for them without creating historic regression model. This type of scoring is not as accurate as linear or nonlinear regression scoring but it takes less time to perform.

Regression scoring has many advantages over other marketing methods. The primary advantage is that it measures the usefulness of variables that helps in determining which prospect to target and when. Secondly it provides a sophisticated and scientific process to determine the cutoff values or scores for a particular marketing campaign. The outcome of regression scoring helps in enhancing marketing efficiency. The primary and the only disadvantage of regression scoring is that the whole process is very complex and costlier as compared to profiling which is easy to perform.

Even if regression scoring is considered as complex and costly process but it is hardly recommended for an organization to implement regression scoring as it usually targets high marketing efficacy and effectiveness. In acquiring new customers regression scoring is the most capable and important marketing process that yields great results, hence organization should usually compromise on complexity and cost.

Quality of Relationship with Customers

Satisfying customer needs ensures the business survival for an organization. A periodical check is required to enhance the quality of services and product to build a quality relationship with customers. For fulfilling this goal organizations must have a set of rules to measure and improve this quality. Delivering best quality services to customers is considered the most efficacious way to ensure that an organization stands out from a group of competitors and avail the privilege to be known as best among all. The main ingredients that are involved in a high quality relationship between customer and supplier are trust and commitment. Trust means confidence and security in any relationship and can be treated as the biggest investment in building long term relationships. Trust is developed between the two parties when they experience flawless and satisfied motives between each other. As a result of knowing more about each other, all the doubts and risks are minimized and leads to inevitably smooth business. Lack of trust, on the other hand, weakens the relationship foundation; as a result chances of uncertainty and conflicts increases. Commitment is yet another milestone that should be achieved to set a long term mutual relationship. Commitment can only be attained when there is mutual trust and the two parties share each others values. In a committed relationship both suppliers and customers strive to uphold the relationship and never want to exit which in turn results in building the relationship stronger and sharper. There is, in fact, huge cost which is incurred in switching from committed relationships of one supplier and build new relationships with other suppliers from scratch.

There are other attributes as well which promote a high quality relationship, these include the following: Courtesy- Many times customers become irritated and uncivil due to some unpredictable reasons. But it is substantially important for supplier to keep his calm and deal accordingly. Delivering the responses in calm voice with courtesy and sympathetic sense could dramatically act as a catalyst in driving customers satisfaction. Availability- Manic customers always prefer human responses instead of electronic emails or messages. Hence, it is important for an organization to make its executives always available for customers for responding and dealing with customer queries and needs. Provision of these services always promotes emotional bonding between customers and suppliers which in the end is always fruitful and drives to profitable business.

Responsive- The suppliers should always have prompt, responsive and experienced executives to serve customers. For example, if a customer calls and asks about some critical features of any product and the executive fails to explain it or being non-responsive to most of his questions then the customer could probably divert his way to some other organization for better response which could definitely result in end of the deal and relationship with that customer. Intelligent- Many customers are attracted towards good deals which consist of discounts and feasible prices. A supplier should be intelligent enough to deal with these situations and offer the best price and deal so that the customer is not lost to the supplier who is able to make some substantial profit if not more. This requires predefined strategies to be created and to respond intelligently towards fulfilling these strategies. Futuristic- Always be futuristic to technological changes. The strategies, types of services and products could gradually deteriorate with time due to huge competition and higher rate of technological changes. Keeping this in mind an organization should always focus on renovating business strategies periodically and convince the customers accordingly.

Inheriting the above quality attributes into business will always improve quality relationship between customers and suppliers and is always fruitful for both.

Psychological Factors affecting Consumer Behaviour

Consumer Behaviour deals with the study of buying behaviour of consumers.

Let us understand the effect of psychological factors on consumer behaviour: Motivation

Nancy went to a nearby restaurant and ordered pizza for herself.

Why did Nancy buy pizza ?

Answer - She was feeling hungry and wanted to eat something.

In the above example, Hunger was the motivating factor for Nancy to purchase pizza. There are several other factors which motivate individuals to purchase products and services. An individual who is thirsty would definitely not mind spending on soft drinks, packaged water, juice and so on. Recognition and self esteem also influence the buying decision of individuals.

Why do people wear branded clothes ?

Individuals prefer to spend on premium brands and unique merchandise for others to look up to them. Certain products become their status symbol and people know them by their choice of picking up products that are exclusive. An individual who wears a Tag Heuer watch would never purchase a local watch as this would be against his image. Perception

What is Perception ?

What an individual thinks about a particular product or service is his/her perception towards the same. For someone a Dell Laptop might be the best laptop while for others it could be just one of the best brands available.

Individuals with the same needs might not purchase similar products due to difference in perception.

Catherine and Roselyn had a hectic day at work and thus wanted to have something while returning from work. Catherine ordered a large chicken pizza with French fries and coke while Roselyn preferred a baked vegetable sandwich. Though both Catherine and Roselyn had the same motivation (hunger), but the products they purchased were entirely different as Roselyn perceived pizza to be a calorie laden food. Individuals think differently and their perceptions do not match.

Individuals perceive similar situation differently due to difference in the way they interpret information.

There are three different processes which lead to difference in perception:

Selective Attention - Selective attention refers to the process where individuals pay attention to information that is of use to them or their immediate family members. An individual in a single day is exposed to numerous advertisements, billboards, hoardings etc but he is interested in only those which would benefit him in any way. He would not be interested in information which is not relevant at the moment.

Selective Distortion - Consumers tend to perceive information in a way which would be in line to their existing thoughts and beliefs.

Selective Retention - Consumers remember information which would be useful to them, rest all they forget in due course of time. Michael wanted to purchase a watch for his wife and thus he remembered the RADO advertisement which he had seen several days ago.

Learning

Learning comes only through experience. An individual comes to know about a product and service only after he/she uses the same. An individual who is satisfied with a particular product/service will show a strong inclination towards buying the same product again. Beliefs and Attitude

Beliefs and attitude play an essential role in influencing the buying decision of consumers. Individuals create a certain image of every product or service available in the market. Every brand has an image attached to it, also called its brand image.

Consumers purchase products/services based on their opinions which they form towards a particular product or service. A product might be really good but if the consumer feels it is useless, he would never buy it.

Portfolio Revision - Meaning, its Need and Strategies What is a Portfolio ?

A combination of various investment products like bonds, shares, securities, mutual funds and so on is called a portfolio.

In the current scenario, individuals hire well trained and experienced portfolio managers who as per the clients risk taking capability combine various investment products and create a customized portfolio for guaranteed returns in the long run.

It is essential for every individual to save some part of his/her income and put into something which would benefit him in the future. A combination of various financial products where an individual invests his money is called a portfolio. What is Portfolio Revision ?

The art of changing the mix of securities in a portfolio is called as portfolio revision.

The process of addition of more assets in an existing portfolio or changing the ratio of funds invested is called as portfolio revision.

The sale and purchase of assets in an existing portfolio over a certain period of time to maximize returns and minimize risk is called as Portfolio revision. Need for Portfolio Revision

An individual at certain point of time might feel the need to invest more. The need for portfolio revision arises when an individual has some additional money to invest. Change in investment goal also gives rise to revision in portfolio. Depending on the cash flow, an individual can modify his financial goal, eventually giving rise to changes in the portfolio i.e. portfolio revision. Financial market is subject to risks and uncertainty. An individual might sell off some of his assets owing to fluctuations in the financial market. Portfolio Revision Strategies

There are two types of Portfolio Revision Strategies. Active Revision Strategy

Active Revision Strategy involves frequent changes in an existing portfolio over a certain period of time for maximum returns and minimum risks.

Active Revision Strategy helps a portfolio manager to sell and purchase securities on a regular basis for portfolio revision. Passive Revision Strategy

Passive Revision Strategy involves rare changes in portfolio only under certain predetermined rules. These predefined rules are known as formula plans.

According to passive revision strategy a portfolio manager can bring changes in the portfolio as per the formula plans only. What are Formula Plans ?

Formula Plans are certain predefined rules and regulations deciding when and how much assets an individual can purchase or sell for portfolio revision. Securities can be purchased and sold only when there are changes or fluctuations in the financial market.

Why Formula Plans ? Formula plans help an investor to make the best possible use of fluctuations in the financial market. One can purchase shares when the prices are less and sell off when market prices are higher. With the help of Formula plans an investor can divide his funds into aggressive and defensive portfolio and easily transfer funds from one portfolio to other. Aggressive Portfolio

Aggressive Portfolio consists of funds that appreciate quickly and guarantee maximum returns to the investor. Defensive Portfolio

Defensive portfolio consists of securities that do not fluctuate much and remain constant over a period of time.

Formula plans facilitate an investor to transfer funds from aggressive to defensive portfolio and vice a versa.

Portfolio Management - Meaning and Important Concepts

It is essential for individuals to invest wisely for the rainy days and to make their future secure. What is a Portfolio ?

A portfolio refers to a collection of investment tools such as stocks, shares, mutual funds, bonds, cash and so on depending on the investors income, budget and convenient time frame.

Following are the two types of Portfolio: Market Portfolio Zero Investment Portfolio

What is Portfolio Management ?

The art of selecting the right investment policy for the individuals in terms of minimum risk and maximum return is called as portfolio management.

Portfolio management refers to managing an individuals investments in the form of bonds, shares, cash, mutual funds etc so that he earns the maximum profits within the stipulated time frame.

Portfolio management refers to managing money of an individual under the expert guidance of portfolio managers.

In a laymans language, the art of managing an individuals investment is called as portfolio management. Need for Portfolio Management

Portfolio management presents the best investment plan to the individuals as per their income, budget, age and ability to undertake risks.

Portfolio management minimizes the risks involved in investing and also increases the chance of making profits.

Portfolio managers understand the clients financial needs and suggest the best and unique investment policy for them with minimum risks involved.

Portfolio management enables the portfolio managers to provide customized investment solutions to clients as per their needs and requirements. Types of Portfolio Management

Portfolio Management is further of the following types:

Active Portfolio Management: As the name suggests, in an active portfolio management service, the portfolio managers are actively involved in buying and selling of securities to ensure maximum profits to individuals.

Passive Portfolio Management: In a passive portfolio management, the portfolio manager deals with a fixed portfolio designed to match the current market scenario.

Discretionary Portfolio management services: In Discretionary portfolio management services, an individual authorizes a portfolio manager to take care of his financial needs on his behalf. The individual issues money to the portfolio manager who in turn takes care of all his investment needs, paper work, documentation, filing and so on. In discretionary portfolio management, the portfolio manager has full rights to take decisions on his clients behalf.

Non-Discretionary Portfolio management services: In non discretionary portfolio management services, the portfolio manager can merely advise the client what is good and bad for him but the client reserves full right to take his own decisions.

Who is a Portfolio Manager ?

An individual who understands the clients financial needs and designs a suitable investment plan as per his income and risk taking abilities is called a portfolio manager. A portfolio manager is one who invests on behalf of the client.

A portfolio manager counsels the clients and advises him the best possible investment plan which would guarantee maximum returns to the individual.

A portfolio manager must understand the clients financial goals and objectives and offer a tailor made investment solution to him. No two clients can have the same financial needs. Personal Factors affecting Consumer Behaviour

Consumer Behaviour helps us understand the buying tendencies and spending patterns of consumers. Not all individuals would prefer to buy similar products.

Consumer behaviour deals with as to why and why not an individual purchases particular products and services.

Personal Factors play an important role in affecting consumer buying behaviour. Occupation

The occupation of an individual plays a significant role in influencing his/her buying decision. An individuals nature of job has a direct influence on the products and brands he picks for himself/herself.

Tim was working with an organization as Chief Executive Officer while Jack, Tims friend now a retired professor went to a nearby school as a part time faculty. Tim always looked for premium brands which would go with his designation whereas Jack preferred brands which were not very expensive. Tim was really conscious about the clothes he wore, the perfume he used, the watch he wore whereas Jack never really bothered about all this.

That is the importance of ones designation. As a CEO of an organization, it was really essential for Tim to wear something really elegant and unique for others to look up to him. A CEO or for that matter a senior professional can never afford to wear cheap labels and local brands to work.

An individuals designation and his nature of work influence his buying decisions. You would never find a low level worker purchasing business suits, ties for himself. An individual working on the shop floor cant afford to wear premium brands everyday to work.

College goers and students would prefer casuals as compared to professionals who would be more interested in buying formal shirts and trousers. Age

Age and human lifecycle also influence the buying behaviour of consumers. Teenagers would be more interested in buying bright and loud colours as compared to a middle aged or elderly individual who would prefer decent and subtle designs.

A bachelor would prefer spending lavishly on items like beer, bikes, music, clothes, parties, clubs and so on. A young single would hardly be interested in buying a house, property, insurance policies, gold etc.An individual who has a family, on the other hand would be more interested in buying something which would benefit his family and make their future secure. Economic Condition

The buying tendency of an individual is directly proportional to his income/earnings per month. How much an individual brings home decides how much he spends and on which products?

Individuals with high income would buy expensive and premium products as compared to individuals from middle and lower income group who would spend mostly on necessary items. You would hardly find an individual from a low income group spending money on designer clothes and watches. He would be more interested in buying grocery items or products necessary for his survival. Lifestyle

Lifestyle, a term proposed by Austrian psychologist Alfred Adler in 1929, refers to the way an individual stays in the society. It is really important for some people to wear branded clothes whereas some individuals are really not brand conscious. An individual staying in a posh locality needs to maintain his status and image. An individuals lifestyle is something to do with his style, attitude, perception, his social relations and immediate surroundings.

Personality

An individuals personality also affects his buying behaviour. Every individual has his/her own characteristic personality traits which reflect in his/her buying behaviour.A fitness freak would always look for fitness equipments whereas a music lover would happily spend on musical instruments, CDs, concerts, musical shows etc.

Origin of CRM

CRM originated in early 1970s when the business units had a manifestation that it would be advisable to become customer emphatic rather that product emphatic. Birth of CRM was because of this heedful perceptiveness.

The famous writer and management consultant Peter Drucker wrote; The true business of every company is to make and keep customers. Traditionally every transaction was on paper and dependent on goodwill which created hindrance in clutching customers. People used to work hard in entertaining customers by presenting new products with astonishing services; they were ready to work overtime for grasping more and more customers for increasing business. This too resulted in customer satisfaction and loyalty up to some extent, but at the end of the day there was no such bonding or relation between the two to carry on with future business smoothly.

Previously business was quite easy as it was mere a one-to-one dealing without any specific process. But with time, due to incoming complexities in communication, it found itself in troubled waters. Emerging of new strategies and technologies in global marketplace and a mammoth degree of competition in business, the approach needed to be changed to proactive rather than reactive. Origination of CRM turned out to be a piece of cake for all suppliers and customers due to its advantages. Customer relationship management came as a process that dealt with relationships with customers surpassing the whole business.

Originally customer relationship management was based on three major principles; shielding the current customers, fostering new customers and enhancing asset value of all the customers. With the advent of CRM which was integrated with high end software and technology, business perspectives

were totally changed. A CRM system eventually emerged as consisting of company-full of information which is depicted sophistically to increase business profit and meliorate customer satisfaction and loyalty, on the same hand reduces business cost and investment.

The outgrowth in origin of CRM as a strategic approach is a result of some of the following important perspectives: The belief that customers are the real assets and not just the people in the audience. The maturation of one-to-one transaction advent. Extensive use of software and technologies to maintain useful information and no manual labor. The realization of the benefits of utilizing information proactively and not reactively. The change of business view to relationship approach rather than transactional approach. The approach of concentrating more on customer values rather than concentrating on how the product is delivered to the customer. The approach of focusing on customer satisfaction and loyalty rather than focusing self satisfaction and profit. The acceptance of the fact that using high end technologies and software the cost can radically be decreased without compromising on quality and service of products. The increasing tendency to retain existing customers and trying to get more and more business out of them. The realization that the traditional trends of marketing and selling are increasingly fading out in the current economic scenario.

These additive approaches helped a lot in building up consequently the modern CRM. Today we have well defined and sophisticated CRM systems into being which are always in process of improvement.

Orientation of Customers

Orientation of customer means how the customers preferences are possessed or in what areas of business the customers are conscious. A customer can be cost oriented, value oriented or technology oriented as discussed below:

Cost Oriented Customers- A cost-oriented customer focuses on least costs products and is ready to compromise on efficacy, performance and quality. These types of customers are always prone to loss as when they have sudden problems with the products they always blame the supplier without judging that they themselves are responsible for this loss. Some of the related type customers have a tendency to fix problems locally without taking suppliers direct help as it is anyway cheaper. For example, some customers try to repair costly machines by local vendors. These vendors do the work with marginal profit, so accountably are very cheap, but whatever they do is not quality work as they are not the actual manufacturer of that particular product and may lack in many aspects while repairing the machine. In case the machine fails the second time, these customers put the blame to the original supplier and he then has to pay for that. In some cases these customers are also ready to buy second hand products and then challenging it to perform as a new one. Hence the suppliers should always focus on strategies which are not only performance or quality driven but also self driven, otherwise they always find themselves arrested in payment related problems and they again have to put a lot of effort and cost on running for payment from these customers.

Value Oriented Customers- Value oriented customers will always stick to efficient and high performing products as they know that during a long run this would be a profitable deal. They are interested in investing higher initial capital cost and then enjoy the cost free benefits in future. According to these customers this type of deal is like a long term investment with higher future profit. In some cases these types of customers are also ready to pay premium because they know that this would make a better economic sense during a long run and there will always be lesser maintenance efforts required. These customers are tended towards maintaining a healthy relationship with suppliers as they are the satisfied customers.

Technology Oriented Customers- These customers opt for best technology rather then less cost or good quality and performance. These customers are technology conscious because they feel that usage of best and newest technological products would help them to remain sustained in the changing technological environment. For suppliers who are based on making or launching trended technological products have a good chance in capturing these customers and finding business out of

them. These customers are innovative and have zeal towards technical aspects. They also have a tendency for experimenting new things and do interact with people of same nature or tendency, so the suppliers are helped by them in creating new referrals and increase the business. These customers are also satisfied customers and ends by making worthy relationships with suppliers.

It is necessary for a supplier to study the orientation of customers before dealing with them as it will help them to identify the specific customer needs and transact accordingly. By identifying the orientation of customers the suppliers could easily make their strategies to grab customers by fulfilling their aspirations and turn them to satisfy customers.

Operational CRM

Operational CRM is mainly focused on automation, improvement and enhancement of business processes which are based on customer-facing or customer supporting. The main importance of a CRM system lies on how the selling, marketing and service oriented processes are automated, and for which operational CRM systems are embedded with following major automation applications:

Marketing automation- As the name implies, marketing automation is basically focused on automating marketing processes. In marketing, campaign management involves marketers to use customer specific information to determine, evaluate and develop communications that are targeted to customers in individual as well as multilevel or multichannel environment. Campaigns developed to communicate customers individually are easy and involves unique and direct communications. For multichannel environment the implementation of marketing strategies and campaign management is quite difficult and challenging. For example, some retailers have multichannel transactions like shops or stores, wholesale stores, websites, home shopping and even television shopping. Here integration and implementation of communication strategy is difficult and evaluation of performance and quality of campaigns needs to be automated and should be technologically sound across each of the channels. For handling this, a CRM marketing strategy called event-based marketing is inherited. Using event based marketing communication and offers are presented to customers as and when they are required. For example, credit card customer calls the call center for inquiring the current interest

rates, this indicates that customer is specific about the interest rates and is trying to compare the interest rates and may switch to different competitor to find specific deals which suits him. Without wasting time the automated CRM system pops up an event of offer which is best suited for that customer and helps to retain him back.

Sales-force Automation- A CRM system is not only used to deal with the existing customers but is also useful in acquiring new customers. The process first starts with identifying a customer and maintaining all the corresponding details into the CRM system. This process can be distributed into many stages which includes generation of lead and then qualifying those leads as prospects. The Sales and Field representatives then try getting business out of these customers by sophistically following up with them and converting them into a winning deal. Automation of selling process is efficiently handled by Sales-force automation which automates all the methodologies or sales cycle and above described process sophisticatedly.

Service Automation- Service automation deals with managing organizations service. The actual interactions with customers such as contact, direct sales, direct mail, call centers, data aggregation systems, web sites and blogs etc. are examples of operational CRM. Each interaction with a customer can be collected to the client database generally known as customers history and the information can later be used wherever necessary. Any one in the organization can have access to this information about customer which gives a clear view of customers needs and important information on the customer such as products owned, prior support calls etc. It naturally eliminates the need to obtain this information individually from the customer. On the basis of the information, if required, the customer can easily be contacted at right time at the right place.

Operational CRM refers to services that provide support for various front office business processes in helping organization to take care of their customers. Focus on customers value is important for a successful operational CRM strategy. Different customers have to be treated differently so information on variables like customers ranking, actual value and potential value is of strategic value.

Need of Relationship with Customers

Building relationship with customers in current market trends is the most important aspect that an organization should focus on. Distinction and eminence are now most sustainable and affirm for which developing good relationship with customers is must. Some of the substantial outcomes of building a quality relationship is explained below by which need of relationship with customer are insight: Better Customer perceptiveness- As the customer lengthens to deal with a supplier, the supplier tends to explicate a better insight of customers needs and expectations. By this a high level of relationship can be developed between them. This will result in selling more products and retain the business with the customers which finally will lead to profitable business. Lead to Customer Satisfaction- Customer satisfaction is the measure of how the needs and responses are collaborated and delivered to excel customer expectation. It can only be attained if the customer has an overall good relationship with the supplier. In todays competitive business marketplace, customer satisfaction is an important performance exponent and basic differentiator of business strategies. Hence, the more is customer satisfaction; more is the business and the bonding with customer. Lead to Customer Loyalty- Customer loyalty is the tendency of the customer to remain in business with a particular supplier and buy the products regularly. This is usually seen when a customer is very much satisfied by the supplier and re-visits the organization for business deals, or when he is tended towards re-buying a particular product or brand over times by that supplier. To continue the customer loyalty the most important aspect an organization should focus on is customer satisfaction, hence it can be said that customer loyalty is also an outcome of good relationship. Lead to Customer Retention- Customer retention is a strategic process to keep or retain the existing customers and not letting them to diverge or defect to other suppliers or organization for business and this only possible when there is a quality relationship between customer and supplier. Usually a loyal customer is tended towards sticking to a particular brand or product as far as his basic needs continue to be properly fulfilled. He does not opt for taking a risk in going for a new product. More is the possibility to retain customers the more is the probability of net growth of business. Chances of getting referrals- It is always a cost-free advocacy by customers to provide referrals to supplier when they feel satisfied and encouraged and when they have a healthy relationship with customers. These referrals or customers reference of other customers acts like a piece of cake for suppliers as there is no cost and struggle involved in this. This could be treated as the best outcome of quality relationship what a supplier can think of.

Growth in revenue- When suppliers have healthy relationship with customers the revenue of the organization always increases as customers tend to buy more and more. There is possibility that a satisfied customer seek to buy special category of related products apart from the regular ones from that particular supplier. For instance if a satisfied and loyal customer has a home insurance from an insurance company then there are positive chances that he could also insure his property and car also if he is fully satisfied with the services of that insurance company. This will definitely result in growth of business. Cost to serve is low- Cost to serve existing satisfied customers is always very less for the supplier as they know and understand customers. Customers never come back with complaints and queries because they know the actual business flow and completely rely on the relationship with supplier.

By the above substantial outcomes it is prominent that creating and maintaining relationship with customer is always a key to success.

Misunderstandings about Customer Relationship Management (CRM)

Many companies have misconceptions about CRM in regard to assessing customer satisfaction in order to enhance business. There are several misunderstandings in Customer Relationship Management to be checked otherwise these may cost the organization revenue and profits. Identifying CRM with a software system- CRM is a business strategy which consists of people and business processes in addition to technological implementations. A successful implementation of CRM is not possible without each one of them. So CRM is not an IT issue only to be simply equated to software. It would be improper to have a successful business purely technology-centric ignoring the importance of people and processes. Software is only an enabling or a facilitating device. The process is implemented and enabled by the software only when it is properly designed and developed by people. Then only it can deliver customer and company value. Therefore the right implementation sequence has to be followed and it must include proper competencies and peoples attitudes, the right business strategies and then the right IT implementation.

CRM is a complicated system, difficult to understand- The meaning of CRM is simple - to fetch customers, retain them and maximize profitability. Because of the fast developing technology there is pressure on IT professionals to cope up with the recent developments. So the how part of implementing CRM may be felt difficult. But the why part of the CRM concept is also not difficult to understand. If we go back to the times when there was no IT implementation, still customer relationships were being managed then by keeping in mind a customer database. Now, in the present times technology is more advanced and the quality of customer management have been entirely changed. But the core of CRM and the target remain the same - to maximize business profits. Keeping this perspective in mind proper techniques must be employed to access its utility. CRM is expensive and unaffordable by small enterprises- It is a myth that IT maintenance cost is unaffordable by small and medium class entrepreneurs. Nowadays Application Service Providers with simple and limited functions have been introduced to provide CRM at affordable prices. Its operation is easy without involving expensive IT professionals. Therefore to target good results emphasis should be on people and procedure strategies and utilize software at the end part only. Wrong assessment for the Return On Investment in CRM- In CRM implementation, Return on Investment means the evaluation of returns with the costs incurred. CRM is sometimes regarded as giving a poor ROI? It is the wrong way to think so. In fact the probability of poor ROI is more if CRM is not deployed and the opportunity costs are more. The main causes of poor ROI are ignoring people and procedure strategies, absence of quantified benchmarking to measure the results, lack of vision in strategic acquirement of opportunities etc. These are the points to ponder before implementing a CRM. Who is responsible for CRM implementation - The Marketing, Sales, Customer Service, or IT officials?It is not at all advisable to lay the responsibility on all of them individually. The result will be that none of them will feel his responsibility. The responsible person should be the CEO who is the leader of the enterprise and it is he who formulates and manages the business strategies. Why the other person should be pressurized? In order to have a better success index, the CEO and his immediate deputy should be well educated and trained for a better implementation of CRM.

A better understanding of different dimensions of CRM therefore is a must to potentially enhance the benefits of CRM implementation.

Methods of Measuring Customer Satisfaction

Managing customers satisfaction efficiently is one the biggest challenge an organization face. The tools or methods to measure customer satisfaction needs to be defined sophisticatedly to fulfill the desired norms. There are following methods to measure customer satisfaction:

Direct Methods: Directly contacting customers and getting their valuable feedback is very important. Following are some of the ways by which customers could be directly tabbed:

Getting customer feedback through third party agencies. Direct marketing, in-house call centers, complaint handling department could be treated as first point of contact for getting customer feedback. These feedbacks are compiled to analyze customers perception. Getting customer feedback through face to face conversation or meeting. Feedback through complaint or appreciation letter. Direct customer feedback through surveys and questionnaires.

Organizations mostly employ external agencies to listen to their customers and provide dedicated feedback to them. These feedbacks needs to be sophisticated and in structured format so that conclusive results could be fetched out. Face to face meetings and complaint or appreciation letter engages immediate issues. The feedback received in this is not uniformed as different types of customers are addressed with different domains of questions. This hiders the analysis process to be performed accurately and consistently. Hence the best way is to implement a proper survey which consists of uniformed questionnaire to get customer feedback from well segmented customers. The design of the prepared questionnaire is an important aspect and should enclose all the essential factors of business. The questions asked should be in a way that the customer is encouraged to respond in a obvious way/. These feedback could received by the organizations can be treated as one of the best way to measure customer satisfaction.

Apart from the above methods there is another very popular direct method which is surprise market visit. By this, information regarding different segment of products and services provided to the customers could be obtained in an efficient manner. It becomes easy for the supplier to know the weak and strong aspects of products and services.

Indirect Method: The major drawback of direct methods is that it turns out to be very costly and requires a lot of pre compiled preparations to implement. For getting the valuable feedbacks the supplier totally depends on the customer due to which they looses options and chances to take corrective measure at correct time. Hence there are other following indirect methods of getting feedback regarding customer satisfaction:

Customer Complaints: Customers complaints are the issues and problems reported by the customer to supplier with regards to any specific product or related service. These complaints can be classified under different segments according to the severity and department. If the complaints under a particular segment go high in a specific period of time then the performance of the organization is degrading in that specific area or segment. But if the complaints diminish in a specific period of time then that means the organization is performing well and customer satisfaction level is also higher. Customer Loyalty: It is necessarily required for an organization to interact and communicate with customers on a regular basis to increase customer loyalty. In these interactions and communications it is required to learn and determine all individual customer needs and respond accordingly. A customer is said to be loyal if he revisits supplier on regular basis for purchases. These loyal customers are the satisfied ones and hence they are bounded with a relationship with the supplier. Hence by obtaining the customer loyalty index, suppliers can indirectly measure customer satisfaction.

Methods and Tools for Customer Retention

Following are some important methods and tools for customer retention:1. Data sources and databases for retention: An important aspect for an organization is to think what should be the reasons that enhance repeat purchase. On paper it is not possible to make definite strategies to increase customer retention. Hence, retention databases are created to have a wider range of data and information which helps in measuring and analyzing theoretical strategies for modeling customer retention behavior. Database could help in tracking and moderating all the interactions that a customer is indulged in with the supplier. However, the interaction with customers or prospect customers do not generate any revenue for the organization but it important to monitor it as it may return a potential profit in the coming future. This database is normally linked with a CRM system which helps the supplier to identify the reasons for customer defect and also to analyze the possible strategies to overcome it. Take an example of a loyal customer who spends $10,000 per annum with

an airline to travel for business reasons. Now this customer is having a bad experience with the airlines due to many delayed or cancelled flights or bad service provided by flight attendants. This customer could be on an urge to defect due to the overall negative experience. If the airlines does not implement strategies to save this defect or identify if the customer is vulnerable for defect then it may decrease customer retention. For overcoming this problem the airline should implement a sophisticated CRM database system to analyze the data and determine the change in buying trend of all the customers. It will also help the organization to identify the dissatisfaction sources of customers so that business tactics could be implemented to retain them efficiently.

2. Decile analysis: Decile analysis method helps in determining profitability and product sales aspects of segmented customers. This type of analysis identifies the most prominent percentage of customers who are responsible for incurring the actual profit. Deciles are nothing but the top grouping of customers which are ranked high according to the purchases they have made in a given period of time. The deciles percentage is normally 10% or 5% or even 1%, sometimes depending upon the organizational strategies. These deciles alone are responsible for 60 % to 80% of sales and profit. Hence, after determining this range of customers it becomes easy for the organization to determine which customers are profitable and which are not. After this, retaining strategies could be implemented to retain valuable customer.

3. RFM analysis: RFM technique is the one of the best tool to predict future valuable customers. RFM stands for Recency Frequency Monetary value. Recency means customer purchase in recent time, Frequency means what is the frequency of purchase and Monetary value means how much the customer is ready to spend. These three aspects are determined by creating an RFM matrix and putting all analyzed data and information inside this matrix. This technique is very important to characterize customers according to their buying habits so that according strategies could be implemented to retain them.

4. Targeting defectors: It is painfull for supplier to loose loyal customers as these are the ones who are responsible for the real profit to the organization. If the organizations identify potential defectors before they defect, then retaining becomes feasible. For this, recency sales (RS) matrix is created which is a simple but powerful method to target defectors. This process includes all the customers who have at least bought products for three times. For each of these customers the following three statistics are computed: Total time taken by the customer since last purchase. This is called recency.

Sales per period which the time taken by the customer since first purchase divided by the total number of times he did purchase. Total number of periods gone until the customer is supposed to purchase again.

According to the above strong statistics, if the customer recency is more than the first statistic, then the customer is more likely to divert. Hence after identifying this possibility of defection it becomes easy to retain the customers.

Importance of Customer Relationship Management (CRM)

Customer Relationship management is the strongest and the most efficient approach in maintaining and creating relationships with customers. Customer relationship management is not only pure business but also ideate strong personal bonding within people. Development of this type of bonding drives the business to new levels of success.

Once this personal and emotional linkage is built, it is very easy for any organization to identify the actual needs of customer and help them to serve them in a better way. It is a belief that more the sophisticated strategies involved in implementing the customer relationship management, the more strong and fruitful is the business. Most of the organizations have dedicated world class tools for maintaining CRM systems into their workplace. Some of the efficient tools used in most of the renowned organization are BatchBook, Salesforce, Buzzstream, Sugar CRM etc.

Looking at some broader perspectives given as below we can easily determine why a CRM System is always important for an organization. A CRM system consists of a historical view and analysis of all the acquired or to be acquired customers. This helps in reduced searching and correlating customers and to foresee customer needs effectively and increase business. CRM contains each and every bit of details of a customer, hence it is very easy for track a customer accordingly and can be used to determine which customer can be profitable and which not. In CRM system, customers are grouped according to different aspects according to the type of business they do or according to physical location and are allocated to different customer managers often called as account managers. This helps in focusing and concentrating on each and every customer separately.

A CRM system is not only used to deal with the existing customers but is also useful in acquiring new customers. The process first starts with identifying a customer and maintaining all the corresponding details into the CRM system which is also called an Opportunity of Business. The Sales and Field representatives then try getting business out of these customers by sophistically following up with them and converting them into a winning deal. All this is very easily and efficiently done by an integrated CRM system. The strongest aspect of Customer Relationship Management is that it is very cost-effective. The advantage of decently implemented CRM system is that there is very less need of paper and manual work which requires lesser staff to manage and lesser resources to deal with. The technologies used in implementing a CRM system are also very cheap and smooth as compared to the traditional way of business. All the details in CRM system is kept centralized which is available anytime on fingertips. This reduces the process time and increases productivity. Efficiently dealing with all the customers and providing them what they actually need increases the customer satisfaction. This increases the chance of getting more business which ultimately enhances turnover and profit. If the customer is satisfied they will always be loyal to you and will remain in business forever resulting in increasing customer base and ultimately enhancing net growth of business.

In todays commercial world, practice of dealing with existing customers and thriving business by getting more customers into loop is predominant and is mere a dilemma. Installing a CRM system can definitely improve the situation and help in challenging the new ways of marketing and business in an efficient manner. Hence in the era of business every organization should be recommended to have a full-fledged CRM system to cope up with all the business needs.

Features of CRM

Customer Relationship Management is a strategy which is customized by an organization to manage and administrate its customers and vendors in an efficient manner for achieving excellence in business. It is primarily entangled with following features: Customers Needs- An organization can never assume what actually a customer needs. Hence it is extremely important to interview a customer about all the likes and dislikes so that the actual needs can be ascertained and prioritized. Without modulating the actual needs it is arduous to serve the customer effectively and maintain a long-term deal. Customers Response- Customer response is the reaction by the organization to the queries and activities of the customer. Dealing with these queries intelligently is very important as small misunderstandings could convey unalike perceptions. Success totally depends on the understanding and interpreting these queries and then working out to provide the best solution. During this situation if the supplier wins to satisfy the customer by properly answering to his queries, he succeeds in explicating a professional and emotional relationship with him. Customer Satisfaction- Customer satisfaction is the measure of how the needs and responses are collaborated and delivered to excel customer expectation. In todays competitive business marketplace, customer satisfaction is an important performance exponent and basic differentiator of business strategies. Hence, the more is customer satisfaction; more is the business and the bonding with customer. Customer Loyalty- Customer loyalty is the tendency of the customer to remain in business with a particular supplier and buy the products regularly. This is usually seen when a customer is very much satisfied by the supplier and re-visits the organization for business deals, or when he is tended towards re-buying a particular product or brand over times by that supplier. To continue the customer loyalty the most important aspect an organization should focus on is customer satisfaction. Hence, customer loyalty is an influencing aspect of CRM and is always crucial for business success. Customer Retention- Customer retention is a strategic process to keep or retain the existing customers and not letting them to diverge or defect to other suppliers or organization for business. Usually a loyal customer is tended towards sticking to a particular brand or product as far as his basic needs continue to be properly fulfilled. He does not opt for taking a risk in going for a new product. More is the possibility to retain customers the more is the probability of net growth of business. Customer Complaints- Always there exists a challenge for suppliers to deal with complaints raised by customers. Normally raising a complaint indicates the act of dissatisfaction of the customer. There can be several reasons for a customer to launch a complaint. A genuine reason can also exist due to which the customer is dissatisfied but sometimes complaints are launched due to some sort of misunderstanding in analyzing and interpreting the conditions of the deal provided by the supplier regarding any product or service. Handling these complaints to ultimate satisfaction of the customer is substantial for any organization and hence it is essential for them to have predefined set of process in CRM to deal with these complaints and efficiently resolve it in no time.

Customer Service- In an organization Customer Service is the process of delivering information and services regarding all the products and brands. Customer satisfaction depends on quality of service provided to him by the supplier. The organization has not only to elaborate and clarify the details of the services to be provided to the customer but also to abide with the conditions as well. If the quality and trend of service go beyond customers expectation, the organization is supposed to have a good business with customers.

Let it be a newly brought up enterprise or a well established organization the above aspects prove to be of prime importance in dealing with a genuine customer through a well organized CRM system.

Factors affecting Customer Satisfaction

Customer satisfaction is the overall impression of customer about the supplier and the products and services delivered by the supplier. Following are the important factors that could affect customer satisfaction:Departmentwise capability of the supplier.

Technological and engineering or re-engineering aspects of products and services. Type and quality of response provided by the supplier. Suppliers capability to commit on deadlines and how efficiently they are met. Customer service provided by the supplier. Complaint management. Cost, quality, performance and efficiency of the product. Suppliers personal facets like etiquettes and friendliness. Suppliers ability to manage whole customer life cycle. Compatible and hassle free functions and operations.

The above factors could be widely classified under two categories i.e. suppliers behavior and performance of product and services. The suppliers behavior mostly depends on the behavior of its senior subordinates, managers and internal employees. All the functional activities like customer response, direct product and maintenance services, complaint management etc. are the factors that rely on how skillful and trained the internal and human resources of the supplier are. The second category is regarding all the products and services. This depends on the capability of supplier to how to nurture the products and service efficiently and how skilled the employees are. Its all about how the skills are implemented to demonstrate engineering, re-engineering and technological aspects of the products and services. The quality and efficaciousness of the products is also an important factor that enables compatible and hassle free functions and operations. This bears to lower maintenance and higher life of the product which is highly admired by the customers.

If the product is having some problem or compatibility issues and requires frequent maintenance and support than the customers could get irritated and possibilities of sudden divert is there which lead to suppliers financial loss. In the same way if the product is expecting huge amount of financial and manual resources then customers could get a feeling of dissatisfaction and worry. However, if these aspects are handled efficiently by giving class services and dealing with complaints effectively then dissatisfied customers could be converted into long time satisfied customers and retaining them becomes easy.

It is practically impossible for the supplier to provide all the above explained features. There are always some positive as well as negative features in products and services which could lead to delight or irritate customers. The final opinion is the sum of overall experiences which a customer percept. But it is also true that more the positive aspects, the more the customer is satisfied. Hence the aim of the supplier should be always to enhance these positive feelings among all the customers to increase customer satisfaction. The supplier must identify how to enhance these positive aspects to maximum level by analyzing the customers data and information using CRM system. The individual liking and disliking of customers differ from customer to customer. It is hence required to target a customer and identify individual requirement to make them satisfied.

Having discussed the above factors that affect customer satisfaction we can say that higher the satisfaction level, higher is the sentimental attachment of customers with the specific brand of product and also with the supplier. This helps in making a strong and healthy customer-supplier bonding. This bonding forces the customer to be tied up with that particular supplier and chances of defection are very less. Hence customer satisfaction is very important panorama that every supplier should focus on to establish a renounced position in the global market and enhance business and profit.

Customer Retention - A Strategic Process to Retain Existing Customers

It is difficult to exactly define customer retention as it is a variable process. A basic definition could be customer retention is the process when customers continue to buy products and services within a determine time period. However this definition is not applicable for most of the high end and low purchase frequency products as each and every product is not purchased by the customer. For example in the stock brokerage industry, a customer may not buy a particular scrip in the given period of time but is tended to buy the same when the conditions to buy the scrip becomes favorable and when the customer evaluates that now this scrip could be profitable to buy. In this case the definition of customer retention could be customer retention is the process when customer is intended to buy the product and services at next favorable buy occasion. These products are called as long purchase cycle products. In some scenarios customers buying intentions cannot be determined with respect to financial aspects. For example, some magazines are available online for free and there are no intended charges to read these magazines. A reader who is frequently reading every edition of magazine online could be considered as retained customer as through his intentional behavior he shows the magazine company that he likes the magazine content and he tends to maintain a valuable relationship with the company. Hence this magnifies one more aspect in customer retention definition that revenue is not the deciding criteria that indicates that the customer is retained or not.

Customer retention highly depends on attrition and silent attrition rates. Attrition is the process when customers no longer want to use product and services provided by the supplier and breaks the relationship bond by informing the supplier that he will be no more a customer. Most of the defecting customers dont even intimate the supplier that they are defecting. This process is called silent attrition where the customer stops purchasing the product and services and divert to other suppliers without even informing them. During attrition, organization should prepare serious customer retaining strategies to save the customer to defect. It is often seen that if these corrective measures are implemented successfully to save defection then retention level increases to a much higher level as compared to a normal retention process. Silent attrition causes the real damage to the organizations because they do not even know when the customer defected. They find no time to implement the corrective measures to try retaining that particular customer or even determine if the customer can be retained or not.

Customer retention does not make sure that the customer is loyal. For example, a brokerage firm has both traditional trading platform and online trading platform. A customer has his trading account in traditional platform but after some time he feels to switch to online trading platform. Now in this situation, the customer is not considered to be loyal to the given services, but the customer is said to be retained by the same organization.

Customer retention is a strategic process to keep or retain the existing customers and not letting them to diverge or defect to other suppliers or organization for business and this is only possible when there is a quality relationship between customer and supplier. Usually a customer is tended towards sticking to a particular brand or product as far as his basic needs are continued to be properly fulfilled. He does not opt for taking a risk in going for a new product. More is the possibility to retain customers the more is the probability of net growth of business.