Customer Relationship Management

Chapter 01: The Nature of CRM

By Group 04

The agenda of the presentation

Concept of Relationship Management CRM CRM System as a Hub of Applied Learning Potential Returns of CRM Systems Potential Benefits of CRM Systems to the Organization Potential Costs of CRM Systems to the Organization Potential Benefits of CRM Systems for Customers Potential Costs of CRM Systems for Customers Lifetime value of the relationship

Concept of RM
 Communicates the idea that a major goal of a business enterprise is to engage in interaction with customers over the long term.

CRM
Process of compiling information:
 An organization tries to compile all the information about their customers so that they can manage the relationships with their customers properly.

Two dimensions: analysis and action:

 After compiling of the information they analyze them and take proper actions.

Extended use of IT:

 Now a days most of the big organizations make extensive use of I.T. for maintaining proper C.R.M. relationships

CRM System as a Hub of Applied Learning

Potential Returns of CRM System

Potential Benefits of CRM Systems to the Organization

 Customers Retention:  If an organizations maintains CRM in an effective manner it helps them to retain customers and thereby reducing there costs significantly.  Share of Wallet:  It means an organization after retaining its customers tries sell them as many products as they can which they have under their umbrella.  Cross Selling and Up Selling  Cross sell is when customer comes up to buy something and we sell completely a different product (not similar).  Up sell is when customer comes to buy something and we sell the similar product but expensive one.

Potential Costs of CRM Systems to the Organization

 Significant investment in the IT Infrastructure:  With significant increase in customer base an organization needs to implement a proper I.T infrastructure in place so that they can manage their customers efficiently. For this they need to make significant investment for the I.T. infrastructure.  Price of Process Change:  Switching from the normal habituated process to the modern I.T. systems both the customers and the employees of an organization takes time to change. If the said changes are not done in an effective manner all the investments made may go haywire.

Potential Benefits of CRM Systems for Customers

 Continuity:  If there is an effective CRM an customer will continue doing business with the organization. Thus the customer need not have to such for too many alternatives if all its need are fulfilled under a single umbrella.  Contact Point:  Through a contact point a customer can interact with the organization and thus get their queries fulfilled.  Personalization:  With huge customer bases organizations now a days use CRM software to personalize with their customers. Through this they come to know about customers purchasing routine and thus make tailor made offerings to their customers.

Potential Costs of CRM Systems for Customers

 Loss of Privacy:  Since the organizations want to give personalized service to their clients they all want to access all the details of their customers like bank a/c no etc. this leads inevitable loss of privacy for the customers.  Opportunity Costs:  When customer turns loyal towards a particular organization they usually do look at the offers made by other organizations. Thus by turning loyal they may miss a good opportunity provided by other similar organizations.

Lifetime value of the relationship

Why CRM?
The impact of a 5% increase in retention rates

 It is 6-7 times more expensive to gain a new customer than retain an existing customer (Harvard Business Review)  Customers become more precarious  A 5% increase in customer retention can increase profits 60-100% proved customer retention  Data as on 2007

Industry Increase in profits Advertising Agency 95% life-insurance company 90% branck bank deposits 85% publishing 85% auto service 81% auto/home insurance 80% credit card 75% industrial brokerage 50% industrial distribution 45% industrial laundry 45% office-building management 40%
Source: The Loyalty Effect (Harvard Business School Press) By Frederick Reichhek

Market Situation of CRM

Domestic CRM Market Transition (license)
CAGR:13.5% unit: billion won
58

CRM Failure

45.7 39.9 35.3 34.9 36.4

75% of CRM projects that do not deliver measurable ROI will have failed because of poor business executive decision-making of the companies got worse performance tasks, of companies which implement CRM system didnt get improvement of tasks,.
Source: Gartner Group, Insight Technology Group report

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2007

Source :http://www.krgweb.com

CRM Failure Reasons

CRM Market is getting bigger but, companies should pay too much cost and time to implement CRM. Also, the CRM system does not guarantee higher performance

Sin One : Failing to Plan Sin Two : Failing To Establish Outcomes Sin Three : Excluding the Human Factor Sin Four : Automating Flawed Processes Sin Five : Ignoring Constraints Sin Six : Disregarding Politics Sin Seven : Choosing the Wrong Vendor
Source: interview of Gartner Researchs Beth Eisenfeld with CRMDaily

Some of the Popular Software available in the market

 Microsoft Dynamics CRM Solution  Oracle CRM  Intelestream  Kayako  Incontact  GoldMine  EpesiBIm  Siebel CRM