Customer Value and Customer ourree Satisfaction: Precursors to CRM Le After reading this chapter, you will be able to understand: + How marketers can create and enhance customer value i E + The parameters affecting customer satisfaction and how CRM can help + How marketers can be alerted to the risk of losing customers and ensure loyalty CUSTOMER VALUE Kotler (2005) explains customer value as the difference between total customer value and total customer cost. According to Kotler, the components of total customer value include: product value, services value, personnel value and image value. On the other hand, total customer cost comprises of: monetary cost, time cost, energy cost and psychic cost The customer pays to get value out of the purchased item. Obviously, in certain cases the value is created through the image (such as a brand of perfume or after shave); in some instances the value is created through product features (such as a television set with attractive features); in certain instances it is a combination of both (such as an automobile for the family); in certain instances personnel creates the value (such as the services of a doctor). Therefore, marketers make every effort to ensure that suitable value is being offered to customers. To ensure value, the steps taken by marketers include: Customer intimacy: Regular customer contact and intimacy with customers enable marketers to understand customer needs better and what the customer seeks from the product. Many CEOs (like CISCO’s John Chambers) spend a significant amount of time in direct contact with customers to ensure that they are in touch with the market needs. Market research may help to uncover some of these aspects but the insight gained from customer intimacy is more valuable. Es30. | Customer Relationship Management: A Strategic Approach to Marketing Interpreting needs: Customer needs may not be readily apparent and therefore, the marketer needs to interpret the needs that customers may have. For example, Sony's Akio Morita interpreted the need for listening to music while going around the house or while taking a walk and came up with the Walkman which became a resounding success. Co-creating value: Dell computers became a market leader by engaging the customer in co-creating value. Most PC manufacturers were offering standard PCs to customers but Dell enabled the customer to custom-create a PC based on the usage requirements of the individual customer. Therefore, when customers could get what is actually useful to them, they feel satisfied by the offered value. Suitable branding: ‘The value that is offered to customers needs to be communicated through suitable branding efforts. Therefore, it is necessary to ensure that the branding does not create exaggerated expectations for customers while ensuring that adequate value is propositioned. For example, when Tanishq launched its branded jewellery, the branding created the impression that Tanishq was ‘expensive’ and marketing experts pointed out that the brand was ‘over-positioned’ (the company claimed that the products were not actually expensive). On the other hand, the fabric whitening brand ‘Ujala’ offered the value proposition of ‘just 4 drops for whiteness’ and ended up beating the market leader Reckitt Benckiser’s Robin Blue. Therefore, communicating suitable value through branding makes a significant difference in marketing success Training and empowering personnel: Value is created through the actions performed by the personnel. This is especially true for service based offerings (that are essentially intangible). For example, the manner in which the air hostess takes care of passengers in a flight creates the value. Likewise, the problem-solving skills of a car technician create value for customers. Therefore, to ensure desirable customer value, the personnel should be imparted adequate training and empowerment to enable them to dispense with their duties in a manner that will result in customer value. Research techniques: To gain deeper understanding into customer needs and desires, marketers often make use of research. Typically, customer surveys are undertaken and the findings analyzed to find out which needs of customers are not being fulfilled and the gaps in value delivery. Customers may fail to articulate their needs and therefore, research techniques like observation, experimentation, etc. may be employed. Alternatively, focus group interviews may be conducted to get insights into customer psyche, Value based pricing: The customer judges the pricing by taking into account the value that is received. In this respect, Stedman (2000) mentions that value based pricing is based on how much the product or service is worth to the customers. A white paper published by A.T. Kearney (2003) states that most pricing strategies fail to connect value and price. If the perceived value that the customer attaches to the product is first taken into account to create the pricing, it will be more attractive to the customer instead of adopting a cost based approach.‘Customer Value and Customer Satisfaction: Precursors to CRM | 31 ENHANCING CUSTOMER VALUE ‘Companies need to keep adding value to enhance the attractiveness of the product point of view of the customers. In this respect, companies can gain advantage and leapfrog ahead of the competition through significant value additions. The methods used by companies to enhance customer value include: Innovative Features By adding innovative features the value offered by the product is greatly enhanced. This is because if innovations offer added benefits to customers, then they would treat these as additional value. For example, Gillette has consistently innovated on its razors and come out with innovations like the Sensor Excel, Mach 3 Turbo, etc. ‘These provide users with added benefits resulting in value enhancement. It should be noted that the innovations should actually be benefits and not cosmetic changes. Complete Solutions By providing customers with total solutions instead of a part of the solution (or product) the value is enhanced. For example, Nescafe launched a sachet to enable customers to prepare coffee by just adding hot water to the contents. Therefore, customers were provided the complete solution in one go resulting in enhanced value. Likewise, a number of stores advertise ‘everything under one roof’ stressing the point that they provide complete solutions. Value at Lesser Cost If a product is available at a particular price and an intrepid marketer offers the product at a much lower price (albeit with some lesser features) customers would consider that as enhanced value. The point here is that the core benefit should remain the same. For example, Air Deccan began operations with the objective of enabling the common Indian to fly and used the positioning line ‘simplifly’ to convey the idea. Likewise, Tata Motors is developing a car that is expected to cost Rs, 1 lakh and has generated great interest among middle class Indians who currently do not own cars. Removing Pain Points Value is enhanced when the pain points in the delivery process are removed. In other words, the activities that customers have to endure to obtain the value need to bbe analyzed and the ones that are painful to customers removed from the delivery process. For example, bank customers were subjected to considerable pain and agony for transacting since banks were open for only a few chosen hours and loan.32 | Customer Relationship Management: A Strategic Approach to Marketing sanctioning, etc. were rather tedious tasks. However, banks have consistently worked on removing the pain points by offering facilities like ATMs, internet banking, phone banking, easy home loan approvals, etc. Use of New Technology By adopting new technology, the value can be enhanced. Sometimes, the new technology may be developed by the company. For example, Apple created the iPod which offered enhanced value to music players and customers have responded very positively to this product. ENHANCING VALUE OF PRODUCTS AND SERVICES ‘The manner in which the value of products and ser Table 3.1. ss can be enhanced is given in Table 3.1 Ways to Enhance the Value of Products and Services Products + Adding innovative features that customers find beneficial (ike Gillette introducing Sensor Excel, Mach 3, etc.) + Enabling product customization to meet individual customer requirements (euch as Dell offering custom developed PCs) + More variants to satisty diverse customer needs (such as Rexona launching a roll-on deodorant and Lifebuoy launching a hand wash liquid soap) CUSTOMER SATISFACTION Supplementary services that enhance value ‘such as a hotel offering guests guided tours {or sightseeing. New distribution channels to facilitate easier ‘access to customers (like mobile telephony ‘services selling prepaid cards through kKirana shops or aitines enabling customers to book tickets online) Enhancing value through better physical presence (restaurants sprucing up interiors to offer more value to customers) Strategic alliances can also enhance value {euch a2 an airline tying up with a hotel to offer customers a hotel stay at lower prices) ‘The aim of CRM initiatives is to retain the right customers and a key determinant of customer retention is customer satisfaction. The objective is to ensure that customers are satisfied to ensure their continued patronage. Before going in for a purchase, ‘customers form an idea with regard to the value that they expect from the product. ‘Thereafter, customers check whether the product has delivered value as per their expectations or not and decide on the satisfaction level. The expectations that ‘customers have from the product are created through the following means:‘Customer Value and Customer Satistacion: Precursors to CAM | 33 Past Experience ‘The experience that customers have had with the product in the past result in certain expectations being created. Thereafter, they judge satisfaction based on the past experience. For example, if a customer goes to have a masala dosa at a restaurant, she goes with certain expectations based on past experience. These could be: the dosa should be about 8 inches in diameter, it should be served hot, it should be accompanied by chutney and sambhar, etc. When the actual experience does not match these expectations, the customer is dissatisfied. Promotional Claims Customers form expectations based on promotional claims made by the marketer. For example, if Domino's pizza promises delivery within 30 minutes in their promotions, customers would be dissatisfied if the delivery is done after the stipulated time, Therefore, marketers should note that making tall claims for promotions could be counterproductive as customers would come with high ‘expectations and end up being dissatisfied. Third Party Information Customers form expectations based on inputs received from other parties. These could be their friends, relatives, acquaintances, etc. who may recommend a product to them by extolling its virtues. Based on these, the customer forms expectations regarding the said product and checks the satisfaction based on the performance with regard to the expectations. Media ‘The media is responsible for creating expectations regarding products. Therefore, when a customer reads the review of a movie in the newspaper, she goes to watch the movie with expectations created through the review. The electronic media (such as television and the internet) is also largely responsible for creating expectations based on the manner in which they showcase a product: Therefore, marketers need to find out the expectations that customers have and meet them in order to satisfy customers. In reality, it does not happen so easily. For ‘example, in a restaurant, the core offering is food. But customers take into account many other factors like service, ambience, music, cleanliness, ete. to decide the satisfaction level. ‘Another factor that needs to be taken into account is the varying expectations that different customers have from the same product. Consider the situation of a short train journey where the passengers include: a sales executive, an elderly lady and a family. The sales executive's expectation is that the train reach on time so that he is not late for his appointment while the elderly lady wants a very comfortable34 | Customer Relationship Management: A Strategic Approach to Marketing joumey even if it means the train getting late by several hours. On the other hand, the family would like to have enough refreshments to satisfy their children’s hunger and thirst at regular intervals. Therefore, the marketer finds it a challenge to meet the expectations that various customers may have from the same product. In order to satisfy the unique expectations of individual customers, marketers resort to segmentation and mass customization. They start offering products that can be tailored to meet individual requirements. Dell began marketing PCs that first considered the requirements that the customer had and created a PC that will cater to these requirements. In marketing terms, a customer is said to be satisfied when the expectations that the customer had from the offering have been fulfilled. Researchers have offered other perspectives to this issue. Boulding et al. (1999) mention that transaction specific customer satisfaction is the customer's post-choice evaluation judgment of a specific purchase occasion, On the other hand, according to Fornell (1992), ‘cumulative customer satisfaction is the customer's overall evaluation of the accumulated customer experiences with the firm. CRM AND CUSTOMER SATISFACTION According to Bolton et al. (2004), the customer satisfaction has significant implications for the economic performance of firms. Bolton (1998) and Fornell (1992) mention that customer satisfaction has a negative impact on customer complaints while having a positive impact on customer loyalty. Increased customer loyalty may have the following benefits: 1. Increase usage levels (Bolton et al. 2000) 2. Secure future revenues (Rust et al. 2002) 3. Minimize the likelihood of customer defections (Anderson and Sullivan, 1993; Mithas et al. 2002) According to Mithas et al. (2005), CRM applications are likely to impact customer satisfaction because of the following reasons: 1. CRM applications enable firms to customize offerings for customers and when offerings are customized, the perceived value gets enhanced. Perceived value is equated with perceived quality by customers and due to this, customer satisfaction is enhanced. 2. CRM applications enable firms to improve the reliability of consumption experiences by ensuring timely processing of various customer requests. The use of IT tools help in this regard. 3. CRM applications also enable firms to manage relationships across the various stages like initiation, maintenance and termination and thereby help significantly to impact on customer satisfaction. As discussed earlier, the factor that impacts customer satisfaction the most is the manner in which the firm meets customer expectations. Therefore, the firm needs to‘Customer Value and Customer Satisfaction: Precursors to CRM | 35 understand clearly the expectations that a customer has when he buys the product. Several questions need to be answered to arrive at a proper judgment regarding, ‘expectations. These are: * What is the exact need that the customer wishes to fulfil through this product? ‘+ How well does the product features meet the requirements that the customer has? + How much of personalization does the customer require? + What is the customer's expectation of value with regard to the price that is being charged? ‘+ What are the additional expectations that the customer has in mind while making this purchase? (such as the customer experience, delivery time ions, et.) the lifecycle stage of the customer is at present and what are the ‘expectations the customer has with regard to the product in the future? ‘+ What are the customer's expectations with regard to: after sales service, usage ‘experience, re-purchase or upgradations, etc.? DELIGHTING THE CUSTOMER The objective that marketers have is delighting the customer. When the customer gets more than what she expected, it leads to customer delight. The aspects that can help marketers delight customers include: Incorporate Elements which the Customer Values More Contrary to popular opinion, it is possible to delight customers by incorporating elements that may not be part of the core product but are highly valued by the ‘customer. It is also possible that such elements need not be expensive. For example, MeDonalds has attracted many small children by offering a free toy of some popular cartoon character along with the meals. The family gets to come to McDonalds because the child highly hankers for the toy. Therefore, through the clever deployment of supplementary elements customers may be delighted Focus on Customer Experience As product differentiation reduces, the factor that would enable companies to gain competitive edge is a focus on customer experience. This becomes more important for service industries. All the interactions that customers need to have should be examined meticulously and the experience be made pleasant and memorable. The loss making airline SAS (Scandinavian Air Services) under Jan Carlzon termed these interactions as ‘moments of truth’ and focused on each interaction to ensure that the ‘customer experience was exemplary.36 | Customer Relationship Management: A Strategic Approach to Marketing Going Out of the Way to Fulfill Wishes Employees passionate about customer satisfaction have been known to go out of their way to ensure that customer wishes have been fulfilled even if it meant going beyond the call of duty. Hotels have delighted customers by enabling them to buy their favourite footwear or apparel by asking the store keeper to bring samples to the customer's hotel room for inspection. MEASURING RELATIONSHIPS AT RISK To ensure retention of customers and realization of the lifetime values, CRM can be used to identify the relationships that are at the risk of chum. The typical measures used for identifying such customers are—recency, frequency and value. Recency By tracking the transactions with a particular customer, the company should develop a profile of the customer with regard to the purchases. In case a customer who generally makes purchases once a month on average but has not made a single purchase in the past six months, the relationship is at risk. However, based on the type of product and other relevant issues, suitable metrics may be created to identify such customers. Based on the recency factor, companies can take proactive steps to make relevant offers to the customer taking into account the demographic and psychographic profile of the customer and check the result of the campaign. For example, Amazon.com sends offers to customers based on the products that they had purchased and the launch of a new product in the same category is offered to the customer. Frequency ‘The frequency factor can also be tracked through the customer transactions. For ‘example, by tracking the visits of a customer at Shoppers Stop, it may be found that though he traditionally bought twice a month on average but of late the purchases have become less frequent and he may be buying only once in two months. In this situation as well, suitable metrics may be designed to ensure that the reducing frequency of loyal customers is immediately tracked and corrective measures taken. CRM enables the use of measures that help in tracking the frequency of purchases, Value Another important parameter that helps in identifying the relationships at risk is value. By tracking the purchases of customers, profiles of customers can be created which gives the average value of purchases made by particular customers. ‘Thereafter, the value of purchases made by a particular customer can be tracked and‘Customer Value and Customer Satisfaction: Precursors to CRM | 37 in case the average value of purchases has been falling significantly over a period of time, then the relationship can be said to be at risk of churn, In this case as wel, the ‘company can decide the metrics on the basis of which the alerts can be sounded and thereafter corrective measures taken EFFECT ON CUSTOMER LOYALTY According to Bendapudi and Berry (1997), and Morgan and Hunt (1994), relationship ‘commitment is a potential driver of customer loyalty ‘The issue of commitment has been explained by various marketing scholars such as + A desire to maintain a relationship (Moorman et al. 1998; Morgan and Hunt, 1994) + A pledge of continuity between parties (Dwyer et al. 1987) + The sacrifice or potential for sacrifice if a relationship ends (Anderson and Weitz, 1992) + The absence of competitive offerings (Gundlach et al. 1995). ‘These aspects suggest that companies should go beyond the basic transactional relation between a buyer and a seller and build a relationship with the buyers to enable loyalty and retention. This is what CRM seeks to achieve. Gustafsson et al. (2005) have undertaken research on customer satisfaction and relationship commitment and mention the following points with regard to the implications for CRM: * CRM managers should include both overall evaluations of performance (eg, customer satisfaction) and the viability of competitive offerings (eg, calculative commitment) in periodic surveys used to predict retention + There is a need to control heterogeneity in the satisfaction-retention relationship which can be done by ineluding prior data chum in the analysis CASE STUDIES STARBUCKS—ENSURING CUSTOMER VALUE AND SATISFACTION In 1971, three coffee lovers named Gerald Baldwin, Gordon Bowker, and Zev Siegl decided to set up Starbucks for selling whole coffee beans. During the initial years, they sold other items as well like bulk tea, spices, etc. The coffee beans were sold to various local restaurants and by 1982, it had set up five retail stores that also offered freshly roasted coffee beans. Afterwards, Starbucks introduced whole bean coffees, espresso beverages along with bakery products. By the mid 90s, it had also introduced ice creams and tea though most of the earnings still came from the coffee bars where people could order pastries and coffee while taking home coffee beans for brewing at home.38 | Customer Relationship Management: A Strategic Approach to Marketing Starbucks had always charged a premium price for its offerings and compared to the local cafes, it cost several times more. When the typical café charged 50 cents, Starbucks charged $1.75 for a cup of basic coffee while the special concoctions cost anywhere between $3.50 and $4.50. The reason why customers patronized Starbucks was because of the baristas who were willing to accommodate the special requests, customers made for preparing the brew. So, personalization helped in creating the desired customer value and justified the premium price. Though the cafes were initially frequented by the young, trendy, upmarket customers, very soon older ‘customers and those belong to even minority ethnic communities started thronging the cafes. The acceptance of the value could be conjectured from the motley customer base that Starbucks had begun to attract. The customer value was created not just through the quality of the coffee that was served but also through the ambience and the experience offered to the customer at the café. Howard Schultz, the chairman of Starbucks had commented: “We aren't in the coffee business, serving people. We are in the people business, serving coffee.” Schultz wanted customers to get the right kind of experience and invested in comfortable, velvety chairs, appropriately chosen ambient music and the ‘aroma that should advertise the quality of the coffee that was served. To ensure that the aroma of fresh brewed espresso reached customers, smoking was banned in the cafes, Essentially, Starbucks aimed at becoming a place for customers where they could be their own selves and do their own things. This meant that customers would just come to the café and read their favourite books seated on plush couches or plug in their laptops to reach their favourite websites and shop on online portals oF ‘conduct net meetings. Market research had shown that more than 10% of customers, visited Starbucks twice a day. Howard Schultz commented that Starbucks had become the ‘third place’ for customers (the first being the home and the second the place of work). ‘A very noteworthy aspect of Starbucks that ensures that it offers desirable ‘customer value even in countries like China, Japan, France, Greece or Kuwait is of serving food with a local flavour (maintaining the flavour of the espresso coffee to ensure a consistent brand experience). To ensure that the cafes were offering the desired level of customer value and satisfaction, Starbucks has avoided taking the franchising route. Since Starbucks did not invest in mass media advertising, it paid great attention to customer satisfaction to ensure high word of mouth publicity and customer loyalty To ensure that customers were offered the right experience, Starbucks made sure that the employees were imparted adequate knowledge about the products and paid ‘enough attention in detail to ensure that nothing was left to chance. The employees were chosen taking into account their personality and the ability to communicate the company’s passion for coffee to customers properly. It was important to deliver a pleasing experience to customers every time they came to Starbucks and this required tremendous commitment on the part of the employees. Some of the employees at Starbucks were college students who worked part time but had mastered the art of being a barista. The challenge for Starbucks was to attract the right set of employees and to reward and motivate them properly. In the words of‘Customer Value and Customer Satistacion: Precursors to CRM | 39 Howard Schultz: “The relationships that we have with our people are the driving force of innovation at Starbucks.” To enhance the value it was offering to the young customers, Starbucks extended its brand to music in 1999. Media bars were created to sell the CDs and also enabled customers to legally download music and bun them on CDs after paying a fee. The charges for this service were fixed at $9 for 7 songs. Though this was more than what customers would have had to bear by using their home PCs, the service was still found attractive by customers, In an effort to ensure a consistent experience for customers across stores and also pass on the benefits of reduced costs, Starbucks undertook certain measures. The average store opening costs in 1995 was $350,000 which was a concern for Starbucks It began consolidating the orders across the stores and going in for bulk purchases to get the price advantage. The high volumes enabled the company to get 20-30% discounts from the chosen vendors and also ensured that the stocks were delivered in just-in-time basis to the stores. To facilitate the unified approach, some standardization was also necessary. Modular designs were created for the display cases in the stores and the store layouts were designed using a computer, enabling the calculation of costs while the design evolved on screen. These initiatives enabled reduced costs for opening new stores and also helped in getting the time taken for developing a new store from 24 weeks down to 18 weeks. Despite being customer focused and desirous of offering customer value, Starbucks also ensured it was business savvy. It had developed 20,000 permutations of various drink combinations and took care to take off the slow moving low margin products from the menu. By May 2004, the plain espresso coffee was not available on the menu but if a customer specifically asked for it, Starbucks made it specially for that customer. The speed of service was enhanced with the installation of automated espresso machines at 800 locations. Since customers ended up being hassled over paying through cash after finishing the meal, Starbucks offered prepaid Starbucks Cards starting from as low as $5 and going up to $500. These could be used for quick payments through swiping of the cards and the transaction time was reduced considerably. Starbucks even got into a strategic alliance with Bank One to offer the Starbucks Card Duetto Visa which possessed the dual benefits of being a stored value card as well as a credit card and became an instant success. In 2005, Starbucks had created a customer base of 33 million customers on an annual basis. The heartening factor was getting the typical customer to visit 18 times a month—which was the highest among any retailer in the US. The typical Starbucks store conducted 636 daily transactions and the average value of each was $4.05 essentially comprising of coffee and food. FAIR & LOVELY: OFFERING HIGHER CUSTOMER VALUE AND SATISFACTION The Hindustan Lever Research Centre developed a unique product called Fair & Lovely that promised to make women fairer. It was launched in the late 70s and40 | customer Relationship Management; A Strategic Approach to Marketing became the best-selling cosmetic brand in India within six years of the launch. In Asian countries like India, fairness being a very desirable attribute, the product had many takers and became a very successful brand. In 2003, it was voted the 12th most trusted brand in India. Around the world, the brand has been a part of 250 million The range of products offered by Fair & Lovely aims at fulfilling all the needs of its customers with regard to skincare, beauty, faimess, body care, etc. This intention has led to the launch of products that include the following + Fair & Lovely fairness soap ‘+ Fair & Lovely oil control gel Fair & Lovely multivitamin cream Fair & Lovely body lotion Fair & Lovely anti-marks cream Fair & Lovely perfect radiance + Fair & Lovely satin conditioner * Fair & Lovely radiance under eye Evidently, the range of products covers a large variety of needs that the customers may have and helps the brand offer solutions for the various grooming needs of the customers, The Fair & Lovely brand was initially positioned to offer the promise of ‘faimess’ and the benefit was that the girl became eligible to get a better groom in the marriage market. This worked well in India since most grooms (and their families) were keen to have a fair girl as the bride. The matrimonial columns in the leading newspapers are a testimony to this aspect. To ensure that the product offered the attributes desired by various customers, a product ‘ayurvedic’ under the Fair & Lovely banner was also launched. Therefore, by fulfilling all the grooming needs of the customers, Fair & Lovely was offering high customer value and ensuring customer satisfaction. However, in the 90s the psyche of the Indian women had changed. They no longer aspired to become a ‘fair’ bride waiting for her prince charming. The modem woman was ambitious and intent on pursuing her career to become a successful ‘career woman. Marriage was no longer the first priority of the young Indian woman. To ensure that the brand kept up with the psyche of the new Indian woman, Fair & Lovely began showcasing the product with the benefit of offering success in their careers. In the advertisement, they showed a girl who aspired to become a cricket commentator using the product and realizing her dreams. ‘Success in career’ was the new mantra of Fair & Lovely and this also enabled it to communicate desirable ‘customer value and enhance the customer satisfaction ‘As a CRM initiative, Fair & Lovely set up the Fair & Lovely foundation that supported the women in the pursuance of their career goals. The site wie fairandlovelyfoundation.com offered details of the various initiatives. The tagline of the site read ‘empowering women’ and was very much in line with the thinking Of the new Indian woman. The site promises to empower women through education, ‘career guidance and skills training,Customer Value and Customer Satisfaction: Precursors to CRM | 41 saree BS FOUNDATION @aEEEEIIEEEI | £4.05 SUMMA aL Biss Fame a Tazsoersee /1nnz20-130__ aktnovetdncunievecom AE (NEW! CAREER PROFILES | Education Fal lovely | “averedrenyaste (Bian eet | Wee ate at Under this initiative, there were various schemes that fulfilled the customer needs: + Project Saraswati—offering scholarships of Rs. 1,00,000 to undergraduate and graduate women to enable them to pursue their graduation and postgraduation course respectively. Girls studying in High School are also offered scholarships of Rs. 3,000 per annum. The academic credentials and financial position are taken into considerations to choose the beneficiaries. ‘+ Project Disha—the objective of this project is to enable women to get proper ‘career guidance and focus on the right career to ensure success. Exhibitions are held wherein the aspirant women are provided guidance on 1000 different career options under 19 different career zones. The women are provided information with respect to the following aspects: — Career overview Personal requirements = Job opportunities - Money and other benefits = Career prospects = Road map/career path Institute information (phone /address/website, eligibility, entrance exam requirements, course fees, admission procedures)42 | customer Relationship Management: A Strategic Approach to Marketing + Skills Training: The third initiative of the Fair & Lovely foundation aspires to help the women coming from an impoverished background by inculcating the necessary skills in them so that they can pursue a career and earn their livelihood. For example, under the banner of Project Swayam, women are taught to become teachers in the rural schools. Another initiative called Project Suvamna aims at selecting talented women athletes and training them to become champion athletes and perform well at the various athletic meets, PT Usha (a sprint queen in India) has been associated with this project. ASSIGNMENTS 1. Choose any three companies (belonging to three different sectors) and explain how they are enhancing the customer value through relevant value additions. 2. Choose any product or service and prepare a customer satisfaction strategy that can be used for ensuring better customer satisfaction. 3. Consider any service industry (such as airlines) and show how customer loyalty is being affected owing to the various factors impacting it. How can the industry ensure better customer loyalty? References Anderson, Erin and Barton Weitz, ‘The Use of Pledges to Build and Sustain Commitment in Distribution Channels, Journal of Marketing Research, 29(2): 1992, pp. 18-34. Anderson, Eugene W. and Mary W. Sullivan, ‘The Antecedents and Consequences of Customer Satisfaction for Firms,’ Marketing Science, 12(2): 1993, pp. 125-143. Bendapudi, Neeli and Leonard L. Berry, ‘Customers’ Motivations for Maintaining Relationships with Service Providers,’ Journal of Retailing, 73(1): 1997, pp. 15-37. Bolton, Ruth N., ‘A Dynamic Model of the Duration of the Customer’s Relationship with a Continuous Service Provider: The Role of Satisfaction,’ Marketing Science, I7(1): 1998, pp. 45-65. Bolton, Ruth N., Katherine N. Lemon, and Peter C. Verhoef, ‘The Theoretical Underpinnings of Customer Asset Management: A Framework and Propositions for Future Research,’ Journal of the Academy of Marketing Science, 32(7): 2004, pp. 271-292. Bolton, Ruth N., P-K. Kannan, and Matthew D. Bramlett, ‘Implications of Loyalty Program Membership and Service Experiences for Customer Retention and Value,’ Journal of the Academy of Marketing Science, 28(1): 2000, pp. 95-108. Boulding, William, Ajay Kalra, and Richard Staelin, ‘The Quality Double Whammy,’ Marketing Science, 18(4): 1999, pp. 463-484.Customer Value and Customer Satisfaction: Precursors to CRM | 43 Dwyer, F. Robert, Paul H. Schurr, and Sejo Oh, ‘Developing Buyer-Seller Relationships’ Journal of Marketing, 51(3): 1987, pp. 11-27. Fornell, Claes, ‘A National Customer Satisfaction Barometer: The Swedish Experience Journal of Marketing, $6(2): 1992, pp. 6-21 Gundlach, Gregory T., Ravi $. Achrol, and John T. Mentzer, ‘The Structure of ‘Commitment in Exchange,’ journal of Marketing, $9(2): 1995, pp. 78-92 Gustafsson, Anders, Michael D. Johnson, and Inger Roos, ‘The Effects of Customer Satisfaction, Relationship Commitment Dimensions, and Triggers on Customer Retention,’ Journal of Marketing, 69(4): 2005, pp. 210-218. Kearney, A.T., ‘Finding New Answers to the Pricing Question: What's it Worth to the Customer” White Paper by Kearney A.T., Chicago, IL, 2003. Kotler, Philip and Kevin L. Keller, Marketing Management, 12th ed., Prentice Hall, 2006. Mithas, Sunil, Joni L. Jones, and Will Mitchell, ‘Non-contractible Factors as Determinants of Electronic Market Adoption,’ in Proceedings ofthe 23rd International Conference on Information Systems, L. Applegate, R. Galliers, and Ji. DeGross, (Eds,), Barcelona, Spain: Association for Information Systems, 2002, Mithas, Sunil; M.S. Krishnan, and Claes Fornell, ‘Why Do Customer Relationship Management Applications Affect Customer Satisfaction?,” Journal of Marketing, 69(4): 2005: pp. 201-208. Moorman, Christine, Rohit Deshpandé, and Gerald Zaltman, ‘Factors Affecting Trust in Market Relationships,’ Journal of Marketing, $72): 1993, pp. 81-101 Morgan, Robert M. and Shelby D. Hunt, ‘The Commitment-Trust Theory of Relationship Marketing,’ Journal of Marketing, 58(4): 1994, pp. 20-38. Rust, Roland T., Christine Moorman, and Peter R. Dickson, ‘Getting Return on Quality: Revenue Expansion, Cost Reduction, or Both?" Journal of Marketing, 66(1): 2002, pp. 7-24. ‘Stedman, Craig, ‘Value Based Pricing,’ Computer World, 34(11): p. 58. Verma, Mridu, Starbucks in 2005—sustaining growth, Case Study, ICFAI Business School Pune, 2006. Zeithaml, A. Valarie, ‘A Dynamic Process Model of Service Quality: From Expectations to Behavioral Intentions’ Journal of Marketing Research, 30(1): 1998, pp. 7-27. Website ww fairandlovelyfoundation.comCHAPTER, 4 the Sales Cycle Le i E Role of CRM in Various Stages of After reading this chapter, you will be able to understand: + How marketers should plan for managing the customer through the lifecycle + The manner in which CRM can help in the various stages of the sales process + The use of CRM for proactively attempting to woo customers that have discontinued the relationship with the company CRM—GOING BEYOND TRADITIONAL MARKETING Traditional marketing is focused on a target segment and providing products that cater to the needs and desires of that segment. CRM is focused on the individual customer and offers products and services to suit the requirements of the individual customer. The roles played by traditional marketing and by CRM have been explained in Table 4.1 Table 4.1 A Comparison between Traditional Marketing and CRM Approach Role of marketing Focused on a customer segment Creating producte to ‘customer segment suit needs of the Targeting the segment through mass media advertising No methodical system to track the behaviour of an individual customer Role of CAM Focused on the individual customer Creating products to euit the needs of the individual customer ‘Targeting individual customers through a tailor made campaign Systems to track individual customer behaviour ‘and acquire transactional data (Contd)Role of CRM in Various Stages of the Sales Cycle | 45; Table 4.1 A Comparison between Traditional Marketing and CRM Approach (Contd) Role of marketing Role of CRM Transactional data not acquired— therefore no Data analyzed to distinguish the valuable analysis possible customers and focus on them; offer preitions regarding future needs; alerts sounded when valuable customers are lost Customer service based on company policies Customer service based on convenience and needs of individual customers Role limited to marketing function— other Customer focused role involving every function functions not customer focused to ensure a unified view of the customer THE CUSTOMER LIFECYCLE Since the role of CRM is focusing on the individual customer, itis necessary to track the customer from the acquisition stage and then throughout the lifecycle of the customer. The customer would have different requirements at the different stages and CRM should enable fulfilment of the requirements pertaining to a particular stage. On the other hand, the manner in which the relationship is managed at each stage will determine the customer's loyalty and lifetime value realization. ‘According to Lanning and Michaels (1988) explains the customer relationship among—the performance of the product, the fulfilment of customer needs and the total cost to the customer over the customer relationship life cycle. All these aspects are judged by the customer and the total customer value is therefore a function of them. Based on the total value received by the customer, the satisfaction is decided and this affects the loyalty exhibited by the customer. Therefore, it is imperative to censure that the customer is receiving adequate value at all stages of the life cycle to ‘ensure retention. CRM enables adequate delivery of customer value at all stages of the lifecycle ‘The roles played by CRM in different stages have been discussed in the following section. ROLE OF CRM IN PRE-PURCHASE STAGE In the pre-purchase stage, the customer is in the information gathering phase wherein the need for the product has been felt by the customer and he is undertaking, search to find the best means to satisfy the need. The role played by ‘CRM iin this stage should enable the following: Non-interruptive Campaigns To generate inquiries from customers, companies resort to various means including. mass media advertising, direct mailing, telephonic solicitations, among others. CRM envisages the use of ‘permission marketing’ propounded by Seth Godin in his book46 | customer Relationship Management: A Strategic Approach to Marketing titled Permission Marketing. The concept is based on the simple premise—taking, permission from the customer and then selling. In this way, the method is non- interruptive and non-intrusive thereby making the customer feel more comfortable and in control. This method has been implemented by various companies through the use of newsletters on their websites. Customers interested in a particular product ‘can sign up and receive information about the product as well as make purchase requests, Easy Access to Right Information ‘The customer must get easy access to the information that she is seeking. For example, if a customer visits a dealer who is selling washing machines, the dealer may not be able to provide all the information the customer is seeking. Therefore, the right information should be at the disposal of customers through convenient channels. Multiple Channels ‘The customer may prefer to get information through a particular source and the same should be facilitated by the company. For example, if a company has set up a website to offer information regarding the product, an elderly customer who is not very computer literate may find it inconvenient to use this source. Therefore, in the pre-purchase stage, the following options should be made available to customers for information search + Kiosks/retail counters + Call centres/toll free helplines + Intemet website (facilitating brochure downloads) + Email response ‘+ Inquiries through postal services, + Fax messages ‘+ Home visits (if commercially viable) Comprehensive Information in Suitable Formats When customers seek information before making a purchase, they are generally rather sceptical about the product and wish to satisfy themselves with regard to all aspects concerning the product. Therefore, it is necessary to ensure that comprehensive information is available. For example, customers often raise comparisons with competing products and seek clarifications with regard to the performance of the product with respect to the competing product. On the other hand, certain formats may be more suitable to communicate particular information. This means that the information should not be in the form of text only but also make use of audio, video, animations, etc. depending on the product's suitabilityRole of CRM in Various Stages ofthe Sales Cycle | 47 Product Demonstrations For a large number of customers, seeing is believing. This means that they would be ‘convinced about the product only after seeing the demonstration of the product. The customer should have easy access to the product’s demonstration and at the convenience of the customer. For example, a number of manufacturers of household goods have been holding product demonstrations at various housing societies (apartment blocks) that form the urban landscape in most Indian cities. They set up a makeshift kiosk on a Sunday within the society premises and invite all the householders to come and witness the demonstration of their product. Risk-free Trials To assure customers about the product, there should be provisions made for risk- free trials wherever feasible. For examples, computer software makers offer “trial” versions of their software to enable customers get a real feel of the product before making the purchase. ROLE OF CRM IN PURCHASE STAGE ‘The role that CRM should play in the purchase phase is to enable easy purchase of the product and ensure that the customer has got what she desired. Facilitating the purchase to suit the customer's convenience becomes critical during this stage Purchase Options To enable customers to feel comfortable in making the purchase, various purchasing options should be made available. These could include: * Providing a range of models to cater to various requirements with personalization options + Reduced financial risk through money back guarantees or other methods that help customers gain confidence in the purchase * Policies that enable customers to get replacements for malfunctioning products Easy Procedures Make the purchase procedure so easy and convenient that customers actually enjoy making the purchase. Previously, in India, customers desirous of taking home loans were required to visit the bank umpteen times and also visit other concerned parties to ensure that the loan purchase was done. But with the use of CRM by the private banks, customers need not visit the bank even once to purchase the home with a48 | customer Relationship Management: A Strategic Approach to Marketing Joan. In fact, the bank even organizes the registration deeds through lawyers and the registration of the documents to ensure that the customer does not have to deal with multiple parties for the purchase. Access to Hire Purchase To enable more customers to purchase the product, various financing schemes with minimal paperwork should be made available to customers. Strategic tie-ups with lending institutions help in this regard. For example, in India, automobile companies offer loans to customers at the time of purchase. The processing of the loans is carried out by the automobile companies’ personnel. Alternately, instalment based payments are also on offer. Various travel houses offering exotic vacations enable customers to pay in Equated Monthly Instalments (EMIs) by using their credit card Complete Solution ‘Companies can offer more value by providing the complete solution at the time of purchase rather than offering a part of the total solution required by the customer. For example, a dealer selling air conditioners should also offer installation of the equipment at the customer's location at reasonable cost. Likewise, a dealer of Personal Computers offers various software packages, internet connections, hardware accessories as well as computer furniture to ensure that customers get the complete solution, Installation and Training at Customer's Convenience In addition to being provided the complete solution, customers also require adequate training to enable them to make proper use of the equipment. This should be provided at a time and place suitable to the customer. For example, a franchisee of a leading consumer electronics company insisted on coming between 10 a.m. and 5 pan. to impart training to a customer who had bought a new washing machine. ‘The customer explained that he had to attend office during the said hours and wanted the training, to be done later in the evening. The franchisee refused to budge stating that the technicians’ working hours ended at 6 p.m. Therefore, flexibility should be ensured to enable the company to meet the customer's special requests for training and installation, ROLE OF CRM IN USAGE STAGE During the usage stage, the customer should be able to enjoy the benefits promised by the advertisements and the salespeople while making the sale. The most crucial stage in the lifecycle is the usage stage since it involves maximum value delivery to the customer. Therefore, the customer is keen to gain maximum benefit during thisRole of CRM in Various Stages of the Sales Cycle | 49 stage and any impediments to the same would result in significant erosion of customer satisfaction. The aspects during the usage stage and the role of CRM include: Easy Access to After-sales Service The customer should enjoy easy and quick access to service. However, often customers are not aware how they should avail of the service. For example, when a washing machine malfunctions, the customer is unaware where to call for service. Usually, the customer ends up calling the dealer from where the machine had been bought and they may direct them to the service centre. The role of CRM should be to ensure that customers are provided multiple access methods to avail customer service and the process of availing service be made simple. The various channels of accessing service could include: A toll-free service helpline + An email id for sending service requests +A website for receiving service requests + In fact, all these access lines (phone number, email id, website address, etc.) should be printed on the product and serve as a ready reference for customers. Quick Trouble Shooting During the usage stage, the customer seeks maximum usability of the product. Therefore, in case of any problems, there should be minimum downtime. Based on the product and the attendant circumstances, metrics should be created to provide indicators with regard to the promptness of the service. The customer's expectations should be taken into consideration before deciding the metrics, ie. what is the ‘customer's idea of ‘quick service?’ Standards should be set for service delivery and adhered to under all normal circumstances, Spare Parts—Easily Available and Affordable ‘The spare parts needed for servicing of products should be readily available to customers and service providers to ensure quick dispensation of service. These should also be affordable for the customer and not be an exorbitant burdlen on the customers. Therefore, the supply chain should be managed properly to ensure that there is the desired flow of the right materials that will enable supply of the spare parts as and when necessary. Also, logistics should be handled properly to ensure that the spare parts are sent to all locations where they are needed.50. | Customer Relationship Management: A Strategic Approach to Marketing Updated Features During the usage phase, the customer would benefit if the features of the product could be updated on a regular basis. This is possible for certain products like software (companies provide ‘patches’ that help to update the software). For other products, upgraded features could be installed through a modification process. In case of products that are supplied on a continuous basis (such as chemical or mechanical products to industrial manufacturers) the updated products could be supplied as and when they are developed. Engaging Customers To gain better insight into customer usage issues, companies should engage with ‘customers through creation of opportunities. These could be done by hosting events, customer site visits, websites, strategic partnerships with other entities, etc. The manner in which the engagement is done should be attractive for the customer. For ‘example, the company can organize contests on the website and invite customers to participate in them. While engaging the customers, the company should ensure that it is gaining insight into the customer's usage experience and the value gaps prevalent in the product. ROLE OF CRM IN RE-PURCHASE STAGE After the usage stage, a customer may go in for re-purchase if he was satisfied with the previous purchase. During this stage, the role of CRM is concerned with the following issues: Easy Disposal of Old Product ‘The customer should be able to easily dispose of the old product which is no longer useful to him, For example, Maruti Udyog has started the True Value Outlets that enable owners of Maruti cars to trade in their old models and buy new ones. White goods manufacturers also offer various schemes to enable customers to dispose of their old models and buy new ones. Loyalty Bonus ‘The customer who goes in for a re-purchase should get the benefit of being a loyal customer. Maruti keeps advertising the loyalty bonus it is paying for those who trade in their old Marutis for new models. Likewise, service providers like airlines have frequent flyer schemes that enable them to offer loyalty bonus to their loyal customers. Retailers also offer loyalty cards to their regular customers to enable them to enjoy loyalty bonus.Role of CRM in Various Stages of the Sales Cycle | 51 New Products with Useful Value Additions Research should enable companies to understand the value gaps that exist in the old products and find out the unfulfilled expectations of customers as well as the prevalent pain points. The new products should take care of these aspects. For example, refrigerator manufacturers incorporated features that customers desired like frost-free refrigerators and compressors that could endure 6 hour power cuts. ‘Therefore, the new products should not be upgraded versions with cosmetic changes but actually offer more value to customers. Keeping Track of Churn Alerts should be sounded when a loyal customer stops making purchases. This is generally done by tracking the regularity with which the customer is making purchases, the value of the purchases made, etc. These should be compared with the average value of purchases made by the customer previously; and the current frequency of purchases be compared with the previous purchase frequency. Based ‘on these comparisons, alerts concerning chum should be sounded and efforts made at winning back valuable customers. ROLE OF CRM IN WINNING BACK LOST CUSTOMERS In spite of the best efforts at offering value to customers, attrition is inevitable. Therefore, companies must make efforts at winning back the lost customers (after ensuring that they are worthy customers based on their lifetime values). The role of ‘CRM in winning back such customers involves the following issues: Analyze the Cause for Departure To gain valuable insight into the cause that resulted in the customer's departure, necessary methods should be adopted. These could involve: + One on one interviews with lost customers (through telephone /email, etc), ‘+ Interviews with salespeople responsible for customer interactions. + Analysing the transactions with the customer and locating gaps in service delivery or unattended complaints, etc. Make Relevant Offers Having understood the causes leading to departure of customers, relevant offers should be created to enable winning back of lost customers. The lost customers may be segmented based on the cause of discontent and new offers created that addressed the issue causing discontent. The offer should not just be attractive but52 | Customer Relationship Management: A Strategic Approach to Marketing also acknowledge the worth of the customer and reassure her about the issues that led to her departure. In case the company was at fault, an apologetic tone would help to soothe the customer's ruffled feelings. Follow-up In case the customer does not respond within a stipulated time, a follow-up action may be initiated that could involve a direct dialogue with the customer and the reason why the customer has not responded to the new offer can be understood. Itis possible that the customer seeks something different from what was offered CASE STUDIES MARRIOTT—FOCUSED ON CUSTOMERS ALL THE WAY J. William Marriott started a shop called The Hot Shoppe in 1927 which offered root beer and along with hot food. During the 1930s, it began offering its food to various airlines. Apart from serving airlines, it began ‘food services management’ which involved opening a cafeteria at the US Treasury Building and Highway division. On the strength of its airline catering business, it began its international operations and also changed its name to Marriott Corporation in 1967. After acquiring Host International in 1982, it became the largest operator of airport terminal food, beverage and merchandise facilities in the US. Marriott acquired a number of hospitality service provider in the 1980s to become the largest food service management company in the US. Marriott consolidated its position in the 1990s though the Marriott Vacation Club Intemational and other ventures like Marriott Grand Residence Club and the Ritz Carlton Club. To enable its customers to keep in touch and offer prompt service, it launched the website waw.marriott.com in 1996. The website offered the customers various facilities like hotel directories, reservations, meeting planners, access to travel agents and a suggestion box. In 1998, Marriott chose Siebel Systems as its CRM vendor and invested upwards of $70 million for its CRM initiative. CRM—Pre-purchase Stage Customers who were considering a stay at one of the Marriott hotels were offered the details of each hotel—the address, phone numbers and a site map showing the exact location of the hotel. The map also enabled customers to understand the location of the hotel with reference to the important landmarks and the tourist spots in the city. In October 2000, Marriott began offering a ‘personal planning service’ which enabled customers to plan their stay at the hotel. This involved being provided with a personal planning coordinator who made bookings for all the things that the customer desired such as: use of spas, golf playing sessions, specialRole of CRM in Various Stages of the Sales Cycle | 53 dinner bookings, etc. The coordinator also helped to arrange tours to sites desired by the customer. Therefore, the customer could plan the trip in great detail at the pre- purchase stage itself CRM—Purchase Stage ‘The website enabled customers enjoy the convenience of booking the Marriott Hotels, from the comfort of their homes. Customers could first click on the ‘Check Hotel Availability’ feature to find out the available rooms before making the reservation. ‘Thereafter, they could fill in the dates of arrival and departure, indicate the number of people and send their inquiry. The screen showed the available rooms along with the applicable tariffs. The customer could then book using a credit card (which was authenticated by the website) for any Marriott hotel located in any part of the world. Apart from the website, Marriott used the multi-channel approach to enable various ‘customers to make reservations using their convenient choice of channel. This meant that customers could undertake transactions through the website, telephonic access, travel agents and also the salespeople at Marriott. The company took care to ensure that all the transactions were captured and incorporated into a single database. Since many customers encountered frequent changes in their travel plans and schedules, this meant that Marriott also had to make the changes in their bookings—the consolidated transactions captured in the database enabled Marriott to take care of the changes, While booking using the e-business system, in case bookings were not available in one Marriott hotel in a city, the system would check for availability in another hotel in the same city and offer the same to the sales person handling the ‘customer. The centralized data containing consolidated information pertaining to all the hotels made this possible. While making reservations using the site, customers could also plan their meetings using the ‘Meeting Planner’ option and prepare travel plans using the ‘Travel Agent’ option on the website. CRM—Usage Stage When customers came to the Marriott hotel, they were offered ‘One Touch’ customer service which meant that they were given a single number for accessing any service that they needed. The ‘At Your Service’ associate who took the call was trained in handling a wide range of customer requests related to various aspects like housekeeping, business centre activities, recreation, food services, laundry services, wake-up call requests, ete. The customer database containing the consolidated transactions of customers proved useful to the servicing staff during the usage stage. They got an insight into the habits, tastes and preferences of the individual customers by accessing this information. Information also enabled personalization of the services that were offered,54 | Customer Relationship Management: A Strategic Approach to Marketing CRM—Post-purchase Stage Based on the transactions undertaken by a customer through the site, a profile of the customer was created and available to the customer for making bookings in the future. This contained information regarding choice of hotel brand (among the various Marriott properties), preferred type of room, preferred payment mode, Marriott Rewards Membership details and contact details. The customer could make changes to the preference if necessary. The cross-selling of products and services were also a part of the CRM strategy undertaken by Marriott. Customers who had signed up for a business trip were offered a vacation package. Through cross-selling efforts, Marriott earned an additional $55 million in 1999 alone. The success of the website is evident from the fact that Marriott clocked sales of $1 billion through the site in 2002. The credibility of the site was ratified by the C10-100 Award in 2003 (awarded by CIO magazine) and Marriott was the only company engaged in hospitality that found a mention in the CIO-100 edition of the magazine AIRTEL—MANAGING CUSTOMER RELATIONSHIPS THROUGH THE SALES CYCLE ‘The Airtel mobile telephony service is a venture of Bharti Airtel Limited. Established in 1985, Bharti has been engaged in various pioneering efforts in the telecom sector. When the market for mobile telephony was opened in the mid 90s, Bharti was quick to capitalize on the opportunity and began buying licences to end up providing GSM mobile services in 23 telecom circles in India. To streamline the operations and. ‘ensure proper customer focus, Bharti Airtel has been structured into three Strategic Business Units (SBUs)—mobile services, broadband and telephone services, and enterprise services. All these services are offered under the Airtel brand. The brand aimed at offering a different customer experience from what was prevalent in the Indian telecom market previously and also took a number of initiatives to ensure that the customer relationships were handled in the proper manner at every stage of the sales cycle. Pre-purchase stage In the pre-purchase stage, the customer usually had many queries with regard to the mobile service of Airtel. Also, customers belonging to various segments were keen to sign up for Airtel’s service. Therefore, there was a need to offer customer information and assistance through multi-channels to ensure that they could get the necessary information from the channel of their convenience. To ensure this, Airtel set up offices that were called the ‘Airtel Relationship Centre’ all over the circles where the services were offered. Typically, the smaller towns would have 2-3 such offices while the cities had about 8-10 offices to ensure that they were within reachRole of CRM in Various Stages of the Sales Cycle | 55 of all customers in the area. Information regarding the service could be obtained from the website eww airtlcorid con as well where a section called Frequently Asked Questions (FAQs) helped the customer to get list of typical questions and their answers. Apart from the retail counters and the website, the customer could also send email or call up on the toll free number that was operational on a 24/7 basis. Usage stage After a customer had signed up for the service, Airtel was keen to keep in touch with the customer and ensure that all the assistance needed by him was readily available. To ensure that services were in easy reach of the customer, the pre-paid vouchers were sold through a number of stores to ensure greater reach and easy access for the prepaid customers. For easier bill payment for the postpaid customers, a number of channels were made available. These included: + Internet based payments: By logging onto the airtel site or the websites of the leading banks like HDFC, ICICI and Citibank the customer could make the payment. Popular bill payment sites like billjunction.com could also be used for the purpose. + Home pay: The bill amount could be collected by an Airtel representative from the customer's home. This took 4 days and an SMS had to be sent to 121 to avail of the service. The bill could be paid by cheque or through the credit card. + ECS: The electronic clearing service could be availed of through the customer's savings bank account to ensure automatic clearing of the bills, This can also be availed of using the credit card. ‘+ Cheque drop boxes: Apart from the abovementioned methods, cheque drop boxes for Airtel bills are available at many locations in the cities where the service is offered. The customer can just go and drop the cheque in these boxes. ‘The customers of Airtel are offered many additional services as and when they are launched. Through strategic partnerships with various other entities, Airtel has offered its customers the opportunity to participate in various contests (such as the reality TV show Kaun Banega Crorepati 2); in association with ICICI Bank and VISA it created a new product called m-cheque which enabled the mobile phone to work asa credit card, et. Value additions By fulfilling the other needs of its customers, Airtel has endeavoured to practise better CRM. A large number of its customers being the youth, Airtel has launched the Airtel Live! initiative which offers customers various entertainment services— music downloads, movie clip downloads, cricket updates, games downloads. These are of particular interest to customers and therefore, serve to enhance the value of56 | Customer Relationship Management: A Strategic Approach to Marketing the Airtel service to them. Various subscriptions are available for customers that include: news alerts, astrology alerts, joke alerts, business news, health tips, and filmi gossip. The customers can enhance the power of their mobile phone by opting for various useful features like call conference, voice mail, GPRS mobile office, fax and data, etc. Customers can get the benefit of the mobile telephony combined with mobile email by opting for the Blackberry service offered by Airtel. Contests are ‘organized for customers and they can just dial 64640 to participate in them. Customers have won new cars of leading auto manufacturers by participating in contests like ‘June Joy Ride Contest’ and the ‘Airtel May Dhamaka’ Airtel does not just believe in customer focus alone for achieving the goals of CRM. It has tied up with IBM to outsource its network management function in a landmark deal reportedly worth $750 million over a 10 year period. Airtel uses the ‘Oracle CRM platform and to be in touch with the churn of the customers, it uses the SAS software for churn analysis. Most importantly, Airtel’s CRM has three focus areas—CRM with employees, CRM with partners and CRM with consumers. ASSIGNMENTS 1. Take any company of your choice and explain how they are using CRM in the pre-purchase stage 2. Take any company of your choice and explain how they are using CRM in the purchase stage. 3. Take any company of your choice and explain how they are using CRM in the usage and re-purchase stage. References Lanning, Michael J. and Edward G. Michaels, ‘A Business Is a Value Delivery System,’ Siaff Paper, McKinsey & Company, 1988. Marriott's Customer-focused E-business Strategy, Case Study, ICFAI Center for Management Research, 2004. Websites wuiv.airtelworld.com wiv. marriott.comCHAPTER 9 eCRM EXC After reading this chapter, you will be able to understand: + How eCRM can be used for fulfilling CRM objectives +The manner in which the internet helps in making CRM succeed BASIC CONCEPTS OF eCRM eCRM has often been wrongly thought of as internet based CRM, Actually, CRM has a broader scope and focuses on the symbiotic relationship of CRM strategy and the use of electronics for facilitation of the same. Rather than thinking of it only in terms of the internet it would be more proper to think of eCRM as a facilitator of e-business wherein the internet does play a major role. Bakos (1997) points out that business have increasingly taken advantage of the power of the internet to build relationships with customers in the electronic marketplace. Chen and Chen (2004) refer to eCRM as technology-facilitated interfaces with customers in a broad e-business context which goes beyond the web. They also mention that CRM gives marketers the power to practice one-to-one customer relationships and undertake mass customization. According to Sharma (2002) the use of the internet for relationship marketing is due to the value that can be generated and delivered to customers. Bradshaw and Brash (2001) have pointed out that with the use of internet technology companies have become more efficient in managing relationships. BENEFITS OF eCRM Understanding Customer Behaviour CRM makes use of sophisticated information systems that enable easy collation and analysis of data. The systems help to capture transactions in real time and undertake Ww118 | Customer Relationship Management: A Strategic Approach to Marketing credible analysis. Interpretation of customer data helps in understanding customer behaviour. This is possible through eCRM since all transactions are easily captured and collated into relevant databases. Various indicators regarding customer behaviour can be readily accessed. For example: the frequency of purchases, value of purchases, product affinities, etc. Personalization ‘The eCRM system would be capable of customer recognition and accordingly offer personalization. Once a customer logs into the system (using the website, or the interactive voice response system, or kiosks such as ATM machines), the customer's unique needs that have been stored are accessed and offered to the customer. Also, various details required for order placement (such as delivery address, credit card details, etc.) can also be pre-filled and the customer given the option of making, changes if necessary. Cheaper and Faster Transactions ‘The use of automated processes helps in reducing the role of service personnel in the transactions. Also, customers using self-service enabled co-creation of value and they lead to reduction in costs. The ATMs installed by banks are an example in this regard, Companies have also integrated the supply chains seamlessly with their production and delivery systems using technology—this also helps in reduction of time and costs. The customer would regard lesser time and costs as added value and therefore, the eCRM is beneficial to enable greater customer satisfaction. Global Reach ‘CRM enables companies to reach out to customers in any part of the world that is connected to the internet. Therefore, with proper logistics support systems in place, the company can easily cater to clients around the world using eCRM systems. This has enabled amazon.com to become a successful retailer within a few years Table 9.1 gives a list of the benefits offered by eCRM. Table 8.1 eCAM Benefits “More geographical coverage at lesser cost ‘+ Lesser expenditure for customer service since customers covereate value ‘© Easier targeting of customers ‘+ Real ime analysis of customer behaviour 411 relationships with customers