Definitions

Craig Conway,President and CEO,PeopleSoft

Every time a customer approaches your business, they arrive with an expectation. It may be a service need,or a new product interest, but in every case they have an expectation that accompanies their interest in your business.What happens next will form a experience that will shape their behaviour. A good experience will increase their loyalty or it may accelerate their tendency to purchase. A bad experience may transfer their business to your competitor.The ability to recognize this process and to actively manage it becomes the basis for Customer Relationship Management.

Scott Fletcher, President and COO, Epipeline At its core, CRM is an enterprise-wide mindset, mantra,and set of business processes and policies that are designed to acquire,retain,and service customers.Broadly speaking,CRM includes the customer facing business processes of marketing, sales and customer service. CRM is not a technology. Technology is a CRM enabler.Innovative and proactive companies, adopt customer centric business processes and leveraging technology these companies better serve their customers by providing better product and delivering personalized services.

Brent Frei, President& CEO, Onyx Software

It is a comprehensive set of processes and technologies for managing the relationship with potential and current customers and business partners across marketing, sales and service regardless of the communication channel. The goal of service is to optimize customer and partner satisfaction, revenue and business efficiency by building the strongest possible relationship at an organizational level. Successful CRM requires a holistic approach to every relationship with the entire organization sharing and contributing to that view.

Ronni T Marshak, Senior vice president, Patricia Seybold Group Establishing and managing customer relationships is first and foremost a strategic endeavour, not a technology category, Just as a company establishes goals, strategies and plans and objectives, it has to determine how customer relationships will be better served at each level. Technology fits only at the tactical level. Every companys game plan constitutes the G-SPOT

Goals

Profitability

Strategies

The CRM G-SPOT

CRM Invest in CRM Technologies CRM CRM CRM Achieve 60% Customer retention

Establish long-term customer relationships

Plans Objectives

Tactics

Implement 24/7 call center

Definition
Customer Relationship Management is a business strategy to select and manage customers to optimize long-term value.CRM requires a customer-centric business philosophy and culture to support effective marketing,sales and service processes.CRM applications can enable effective Customer Relationship Management, provided that enterprise has the right leadership, strategy and culture.

Business Intelligence vs. CRM

Display customers who visit one of the video store of XYZ co. Display a list of customers who have lodged a complaint for the past 30 days. Once a month for the next six months send direct mails solicitation to customers who are most likely to rent the next months feature. Contact all high value customers who have lodged a complaint.

BI/ CRM (contd)

Analyze the top five most popular office supplies and compare approved vendors prices to prices of other potential suppliers. Identify the top five purchased office supplies and trial run an automated Web Request For Quote System for limited quantities to check price improvement.

Strategies for Building Relationships

People People includes both the internal customers as well as external customers. Commitment to any programme can only be garnered through acceptance of the inherent merits.CRM as a philosophy should be accepted by all the employees. Second group of people that is the external customers should also be made aware of the companys commitment to their welfare through integrated marketing.

Processes It involves a logical sequence of activity, right from the need identification of potential customers to need fulfillment. Need fulfillment includes the correct translation of customers desires into tangible benefits, experiences, etc. All these activities require synchronized processes and zero communication gaps. Efficient processes bridge the gap between expectation and performance

Product As a product is available in the market, it has to be upgraded continuously to match the changing needs of the customers. Companies should not over promise and under deliver,as customers become disenchanted with the company. Many companies loose out on their customers because they fail to live up to expectations created by themselves.

Organization Organizations should be active entities and should be highly proactive to changes in the environment. The responsive and learning nature of the organization must build confidence in the minds of the customers. The organization of the organization should also be fault-free, so that slips between the cups and lips are minimal.

Concentration On Competitors
Isolated companies are standalone entities, and have an ostrich tendency. An organization must focus constant attention on the competitors performance, their strategies and style of operation and compare it with their own performance. The organization should be in a position to ascertain the actions of the competitors, and should have a backup strategy to counter the offensive.

Customer analysis

Customers here means present customers and potential customers.

Analysis should encompass the current consumption pattern of these customers, their behaviour,etc. This would indicate why a customer behaves in a particular way, what would be the retention tactics, loyalty parameters etc.,

Cost analysis Focus of the organization should be on the cost of production, cost of providing the service, avenues of cost reduction, etc., The whole objective of the organization should be to deliver value for the money taken from the competitors. Even if the company is charging extra than the competitors, the customers should be aware of the extra benefits that they are getting for the extra money given.

Environmental Analysis The whole environment will give an idea about the change in social, cultural,political and technological scenario. Accordingly the needs ands preference of the customers will change. Customers up to a certain point of time would concentrate on life maintenance needs and then to life changing need sand then to life enhancing needs.

Taking action

Interaction With Company

Formulate strategy based on analysis

Company

Analyze Data Gather Customer Data

Gatherin Service/ g Info, Support Storing SFA Info Marketing Processi ng Data Automation

Customer Experience

Customer

Customer Behaviour

CRM Processes

Customer Acquisition Considerations

1 Focused Approach: Companies have to understand their target markets and also their psychographics.
Knowers: This set of people just know about the product without any specific attitude towards the product Preferrers: People who know about the product and have specific preferences also. Indifferent: Rejecters: These people mentally reject the organizations offerings and are far away from the acquisition process.

2 Providing a win-win situation:

Offerings should be so designed as to be advantageous for both the parties. Customer acquisition is facilitated in such a scenario as customers believe that they are getting value for money. 3 Attempt to minimize FUD(Fear Uncertainty Doubts) The organization must effectively plan to minimize FUD that might occur in the mindsets of the customers, during the course of acquisition. 4 Projection Of Benefits and not Products:

Process Of Acquisition

It involves the following stages

Enquiry: The prospective buyer undertakes a detailed enquiry with regard to different aspects pertaining to the organization, product, nature of transaction, etc., Interaction: After storing the information, the prospect interacts with the organization and obtains additional information, and clarifies already gathered information

Exchange:The terms of exchange, mode of delivery and other things related to exchange are sorted here.
Co-ordination: Co-ordination means the discussions are converted into order, through synch-marketing. Adoption: The acquisition process is complete with adoption of the product or service by the prospect, who becomes a customer.

Influences On Acquisition
Type Of Buying: There are two different types of buyingrational and emotional. The former is a systematic and logical while the latter is based solely on impulse. In rational buying customer would logically graduate from one stage to the other while in emotional it may not be the case. Type Of Product: Different categories of consumer products and industrial products will have different acquisition behaviour. Type Of Customers: If the customer is an individual his/her behaviour will be different from an organization. Also affecting the acquisition will be the fact whether the acquisition is for first time or not.

Influences On Acquisition
Economic Environment:The operations of the competing forces, supply and demand conditions, purchasing power etc.,will affect the process. Contextual Operations:The context of operation refers to the prospects previous experience, urgency, specific benefit expected etc.,

Customer Interaction Management(CIM)

Routes to CIM

Online Routes Interactive website E-mails Web Communities Chat Rooms

Offline routes Telephones Fax

Outsourcing

Face to Face Interaction Mails, etc.

Customer Retention

What is Customer Retention?

Customer Retention is the process of keeping customers in the customer inventory for an unending period by meeting the needs and exceeding the expectations of those customers. It is the approach of converting a casual customer into a committed loyal customer. In todays competitive environment, the focus of the company is more on customer retention than on customer acquisition.

Why is Customer retention preferred?

Customer by chance Customer by occasion Customer by choice Customer by repetition Customer by loyalty

Contd.
Conversion of a transactional relationship to a relationship tied up with emotion and commitment will help the organization in the following ways

An asset An ambassador An experience shaper A knowledge provider A resource provider A partner A spokesperson

Acquisition/Retention
Focus is on acquiring relationship Demographic, psycho graphic profile of the customers are important. Customer is driven by offer and incentives. Focus is on nurturing relationship In addition past and present transactional profiles become important. In addition type and extent of relationship maintained is focused on.

Acquisition

Stages Of Retention in The Customer Life Cycle

Satisfaction

Dissatisfaction

Retention Attrition

Loyalty

Defection

Reacquisition

Sequences In The Retention Process

Exploring: customers are explored on the basis of parameters like value given to the company in terms of frequency of purchase, profit margin, etc., Evaluating: Detailed analysis of explored customers is done. Purchase history is an important parameter. Establishing Strategies: Appropriate strategies are formulated according to the customer type. Examining Feedback: Result of implemented strategies are monitored periodically.

Customer Attrition
Attrition is the process of gradually weaving down.This is the stage where the customer begins to question his continued patronage with the product or service, or the provider of the goods or service. Attrition if not arrested leads to defection.Attrition signals must be carefully monitored.

Attrition Signals
Increase in the number of complaints. Decrease in the frequency of contacts. Decrease in personal visits. Decrease in enquiries Decrease in the volume of business. Increase in the perceptual differences between customers and organization on various issues. Decrease in the number of active buyers.

Customer Loyalty

Relationship Through Loyalty

Understanding Brand: Brand plays a key role towards attracting and retaining sustainable relationship with customers.Brand represents the combination of tangible and intangible attributes of a customer looking for satisfying his core as well as augmented needs.Brand is an identification that reveals what attributes are embodied in it. These are the attributes with which the customer will identify himself with.

Process Of Brand Choice:The process will take the following sequence. Total Brands Awareness Brands Considered Brands

Choice Brands
Decided Brands

Customer Loyalty and The Types:Customer loyalty may fall into several type that includes Loyalty towards brands Loyalty towards stores Loyalty towards organization Loyalty towards sales persons and Loyalty towards any other related aspect in the process of sales and consumption.

Process Of Brand Loyalty

Brand Awareness

Brand Familiarity
Brand Recognition Brand non-recognition

Brand Image Formation

Brand Conviction

Brand Selection
Brand Loyalty Brand Rejection

Loyal Customer Ladder

A customer reaches the status of loyal customer by passing through a series of stages, which are as follows;

Customer By Loyalty Customer By Influence Customer By Repetition Customer By Choice Customer By Occasion Customer By Chance

Strategies to prevent defection and recover lapsed customer

Total Knowledge about Customer Behaviour; The organization should have complete knowledge about the behaviour patterns, migration patterns of target customers. Interactive Communication System; The system of communication should be transparent, and interactive. Special Promotion Campaign; Whenever the signals of customer defection is noticed, it is essential to formulate special promotions to attract the likely defectors and potential customers.

Developing Barriers to Exit; The organization should carefully evolve barriers to exit like Emotional appeal Lifetime utility

Social relationship
Concessional Price schemes Innovative Approach Reducing Risk Holistic Approach

Commitment

Customer Win Back Approach; The organization should introduce reward based programmes, rewarding employees who are actively involved in customer win back programs.
Developing Bondage With Customers; The bondage should be developed using professionalism as a tool, so that the customer is linked to the organization in view of the professional expertise and service that the organization will provide.

Improvement of value delivery system; Value Delivery System consists of the entire process right from the time the customer has expressed a need for the product, to the time the customer has received the service.

Benchmarking Of Services; In an attempt to win back customers, organization can benchmark its practices against the best practices available in the industry.

Continuous Improvement; The organization should continuously improve its status in terms of quality, trust, credibility, capability, confidence, and communication.

Value Orientation Frame( Richard Whilseley, Diana Hasson)

High Relationship Oriented Partnership Oriented

Transaction Oriented
Low

Information Oriented

Low

Need Of Info

High

Transaction Oriented
The focus of the company is profit and not long term relationships. This can be seen in the case of convenience goods

Stages In CRM Implementation

How to juggle the act?

COLLAB ORATIVE ANALTYTICAL Cust data analyzed on the basis of internal&external data OPERATIONAL Creates customer profile repository to be shared across mktg.sales&service functions INFRASTRUCTURAL Provides common data,content&other infrastructural services, Includes back office applications,

Stages Of CRM
Operational Analytical Collaborative

Operational
It is the first stage of CRM . This stage is transaction related. Here the customer interfaces with the company through different media call centres, internet etc., The customer gets the required information about the co. and the co. gets the required information about the customer. CRM applications are in internationally outsourced call centers and also in companies that have high number of customer interaction, e.g., mobile services, banking, etc.,

Operational(CONTD.) Global companies like GE, GM, Ford etc., have already implemented CRM. In India companies like BPCL,Asian Paints,ICICI Bank have implemented CRM and have been able to increase their revenue and profits with high level of customer satisfaction.

Analytical CRM
It is a super set customer database with internal & external data analyzed to create segmentation, develop marketing programmes and campaigns and measure tactics.For e.g., Sudarshan chemicals, a chemical supplier to companies like Asian Paints, focuses on analyzing customer data and sales information, for providing customized products to Asian Paints.

Collaborative CRM
It focuses on realizing the capabilities and potential in the environment and along with the customers implementing marketing programmes and strategies.The main focus is on B2B transaction. E.g., Maruti Udyog has a collaborative CRM with its ancillary makers. Marico industries has a functional collaboration with Parachute and Saffola brands respectively

Components Of Operational CRM

Sales Force Automation: Customer Service and Support Enterprise Marketing Automation

Sales Force Automation

SFA automates some of the companies critical sales sales force management functions.For e.g., lead account management, contact mgmt, quote mgmt., forecasting, sales administration, keeping track of customer preferences, buying habits and demographics as well as sales staff performance. SFA tools are designed to improve field sales. Key infrastructural requirements of SFA are mobile synchronization and integrated product configuration. Software available includes Leads360 e-automation, etc.,

Customer Service and Support(CSS)

CSS automates some service request complaints, product returns and information requests. Traditional internet help desk and traditional inbound call centers support for customer inquiries are now evolved into customer interaction centers using multiple channels like web, phone,fax, face to face,etc., Key infrastructural requirements for CSS includes computer telephone integration, which provides high volume processing capability and reliability.

Operational CRM (contd.)

Integrated CRM software is also called front office solutions because they deal directly with the customer. Many call centers use CRM software to store all their customer details. When the customer calls all the information can be retrieved CRM solutions can also be used to allow customers to perform their own service via a variety of communication channels. For e.g. checking of bank account using WAP phone

Enterprise Marketing Automation

EMA provides information about the business environment including competitors industry trends and macro environment variables. It is the execution side of campaign and lead mgmt. The intent of EMA application is to improve marketing campaign efficiencies. Functions include demographic analysis and variable segmentation and predictive modeling occur on the analytical side

Analytical CRM (contd.)

It is a sophisticated analysis of customer data generated by operational CRM It uses business intelligence tools like data warehousing, data mining and OLAP to present a unified view of the customer.The real value of A-CRM is its ability to recognize a customer at a point of needi.e., where all marketing opportunities begin. When the point of need can be more accurately identified through personalized communications through the right channels, customer relationships can be enhanced.

Critical applications of A-CRM

Customer segmentation: from the data warehouse enormous data can be obtained. By applying data mining tools records of similar nature can be selected. From this list the company can come to a list of customers who are more likely to respond to a new product , new promotion, discount on specific products etc.

Contd.
Prediction; data mining tools can build a classification system based on past data taking a number of customers in consideration. Depending on this system new customer behavior can be predicted with reasonable accuracy. The same principle applies to a new product launch. Befor a product is launched its sales can be predicted. This can help in deciding the advertisement and pricing strategy.

Customer loyalty analysis

To develop extensive customer retention programmes it is vital to analyze the reasons for customer attrition. Data mining and OLAP tools can help in understanding customer attrition with respect to various factors influencing a customer at different times. At times even individual transactions can be identified which result in customers moving to competitors.

Cross selling
Based on previous purchases made using data mining tools a huge amount of information regarding association between different products can be made. This is used in building a strategy for promotion or to sell more products to the same customer at the time of contact.

Customer lifetime value

Customers who are not profitable today may have the potential of being profitable in the future. This can be identified through ACRM

 Product pricing: using data mining and data warehousing techniques price models can be developed. Price relationships can be developed for different products and the relationship between price and sales can also be established.

E-CRM

Process Of A-CRM
Collection of data Analysis of data Process plan/action of A-CRM Measurement