III SEMESTER

BA9156 Customer Relationship Management

REGULATION 2009
SYLLABUS
UNIT – I INTRODUCTION 9

Definitions - Concepts and Context of relationship Management – Evolution -

Transactional Vs Relationship Approach – CRM as a strategic marketing tool – CRM
significance to the stakeholders.

UNIT – II UNDERSTANDING CUSTOMERS 9

Customer information Database – Customer Profile Analysis - Customer perception,
Expectations analysis – Customer behavior in relationship perspectives; individual and
group customer’s - Customer life time value – Selection of Profitable customer segments.

UNIT – III CRM STRUCTURES 9

Elements of CRM – CRM Process – Strategies for Customer acquisition – Retention and
Prevention of defection – Models of CRM – CRM road map for business applications.

UNIT – IV CRM PLANNING AND IMPLEMENTATION 9

Strategic CRM planning process – Implementation issues – CRM Tools- Analytical CRM
– Operational CRM – Call center management – Role of CRM Managers.

UNIT – V TRENDS IN CRM 9

e- CRM Solutions – Data Warehousing – Data mining for CRM – an introduction to
CRM software packages.
Total: 45

TEXT BOOKS
1. G.Shainesh, Jagdish, N.Sheth, Customer Relationships Management Strategic
Prespective, Macmillan 2005.
2. Alok Kumar et al, Customer Relationship Management : Concepts and applications,
Biztantra, 2008

REFERENCES
1. H.Peeru Mohamed and A.Sahadevan, Customer Relation Management, Vikas
Publishing 2005.
2. Jim Catheart, The Eight Competencies of Relatioship selling, Macmillan India, 2005.
3. Assel, Consumer Behavior, Cengage Learning, 6th Edition.
4. Kumar, Customer Relationship Management - A Database Approach, Wiley India,
2007.
5. Francis Buttle, Customer Relationship Management : Concepts & Tools, Elsevier,
2004.

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 Unit I
Definition
“Customer Relationship Management is a comprehensive strategy and process of
acquiring, retaining and partnering with selective customers to create superior
value for the company and the customer.”
- Parvatiyar and Sheth

“Customer relationship management is about attracting, developing, maintaining

and retaining profitable customers over a period of time.”
- Massey, Montoya-Weiss & Holcom

What is CRM ?
Customer Relationship Management (CRM) is a business strategy that enables:
 organizations to get closer with their customers,
 to better serve their needs,
 improve customer service to enhance customer satisfaction, thereby
maximizing customer loyalty and retention.

CRM - Why is it important?

 CRM is the array of processes that help a company to understand the
preferences or dislikes of individual customers in order to build lasting
relationships.
 CRM solutions help to safely store volumes of customer data in an organized
easy-to-access manner. By analyzing this data, company can determine
individual customer behavior, analyze preferences and provide one-to-one
services to maximize customer satisfaction.

Definitions;
“CRM” as a business strategy designed to optimize profitability, revenue and customer
satisfaction. - defined by Gartner
History of CRM:
 1980s: Database marketing emerges.

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  1980s: Database helped larger organizations rather then small who only got survey
type info.
 1990s: CRM appears as a two-way communication device.
 1990s: CRM leads to programs such as frequent flyer miles and bonus points on
credit cards.
 2000s: Internet has helped expand from stagnant database and allows off-site
information storage.
 2000s: Used most frequently in financial services, high tech corporations and the
telecommunications industry.
What it does...
 Builds a database that describes the customers and the relationship they hold with
the company.
 Database: a collection of information that is organized in a way that allows it to be
easily accessed, managed and updated.
 Provides enough detail so that the company can offer the client the product/service
that matches their need the best
 May contain information about their past purchases, who is involved with the
account and a summary of all conversations.

The Concept of CRM:

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CRM Pyramid :

What to look for in CRM software:

 Make sure the primary goal (ie: customer service) is standard in the software.
Customization is very expensive.

 Be able to integrate smoothly and flawlessly.

 Make sure the program doesn't offer more then you need.

 Compare with other companies of equivalently the same size who have purchased
the same CRM software and examine their results.
Benefits of CRM:
 Research has shown that companies that create satisfied, loyal customers have more
repeat business, lower customer-acquisition costs and stronger brand value.
 This equals better financial performance.

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CRM may...
 Help marketing departments identify and target their best customers, manage
campaigns as well as discover qualified leads.
 Qualified Leads: prospects who seem most likely to buy because of some
information known about them.

 Improve sales and streamline existing processes.

 Form individualized relationships with customers.

 Give employees information needed to improve customer service and also to better
understand customer needs
It also...
 Is a fast way to identify and handle potential problems.

 Tracks all points of contact between a customer and the company.

 Provides all employees with product specs, product use information and technical
assistance.

 CRM quickly manages the scheduling of follow-up sales calls to assess the
satisfaction of customers and their repurchase probabilities (when and how much).
CRM leads to...
 Identifying prospects and helps them become customers.
 Closing sales more effectively and efficiently.

 Allowing customers to perform business transactions quickly and easily.

 Providing better service and support following a sale.
 Which = Customer Service!!

Customer Service
 Helps make call center more efficient.
 Aids in cross and up selling products.
 Cross Selling: Provide additional products / services.
 Up Selling: Upgrade existing products/services.
 Helps sales staff close deals faster.
 Simplifies marketing and sales processes.
 Allows companies to discover new customers.
It even ties into BI…
(Business Intelligence)
 CRM is closely related to business intelligence because both methods involve using
technology to gather, analyze and organize data in order to develop relevant
information.

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  CRM is just a more specific form of BI that concentrates strictly on customer’s
behaviors and actions, for both past and future information.
Technical Functionality
 Scalability: CRM may be used on a large scale while also being able to be reliably
contracted/expanded to whatever scale is necessary. So.. the data is flexible and
won’t distort when adjusted.
 Multiple communication channels: the ability to interface with users via many
different devices (phone, WAP, internet etc.) Basically, you can get what you want,
when you want wherever you are.

Concept and Context of CRM:

Buyer and Seller Relationship over the Ages
Barter Age
Customized Product Age
Mass Production Age
Customer
Consumer
Customization Age: 1:1 Relationship

What is CRM
a) CRM is about Strategy

CRM is about creating a competitive advantage by being the best at understanding,

communicating, delivering and developing existing customer relationships, in addition to
creating and keeping new customers (Strategic CRM)
Ask questions for a good CRM Strategy:
What products and services are we offering now and in the future?
In what markets?
What customer groups will these products and services appeal to?
Which of these are of greatest value to the organization? In terms of expenditure,
reliability, growth potential?
What additional needs do the most valuable customer groups have? Additional
products? Additional services?
In what different ways can we do business to deliver to our customers better?

What motivates companies to adopt CRM Strategies?

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  Competition: Globalization

 Customer Expectation: e-Commerce

 Technology: Touch points

 Diminishing impact of advertising: Information through e-mail and web sites

b) CRM – the ‘customer’ thread

Whether the customers are current / potential / selected CRM is about acquiring,
retaining, partnering, personalizing relationships with them

CRM helps businesses use technology and human resources to gain insight into the
behavior of customers and the value of these customers.

Concept of Personalization and Customization:

 Customization: Customization assumes that manufacturer will design / or enable

designing a product to suit customer needs.

 Personalization: Personalization is about customer becoming a co-creator of the

content of their experience.

 An integrated approach to identifying, acquiring and maintaining customers.

 Allows companies to coordinate their approach across channels, departments and

also geographically

Concepts of CRM

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Customer relationship management (“CRM”) is a term that refers to two things:
 A company’s strategy for managing leads and customer data
 Software that manages that data
In its simplest form, CRM is a database where sales and marketing teams store
critical account data:
 Contact & account information (contact names, emails, phone numbers,
SIC code, address, etc.)
 Source of the lead
 Sales rep name and activity history (calls, emails sent, inquiries, etc)
 Purchase history
 Projected revenue by customer

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  Marketing campaign data
CRM can also be an important reporting tool. For example, it can be used to:
 Generate revenue projections for a product, a sales rep, and your company
as a whole
 Tie revenue to the original marketing campaign
 Pull up lists of leads and activities by sales rep
 View the number of leads you have at each step in your sales process
 Track your progress against your goals
 Manage marketing campaigns
 Capture leads from your website
 Minimize the time your team spends creating manual sales & activity reports

Stages of CRM
1. The Pre-relationship Stage : The event that triggers a buyer to seek a new
business partner.
2. The Early Stage : Experience is accumulated between the buyer and seller
although a great degree of uncertainty and distance exists.
3. The Development Stage : Increased levels of transactions lead to a higher
degree of commitment and the distance is reduced to a social exchange.
4. The Long-term Stage : Characterised by the companies’ mutual importance
to each other.
5. The Final Stage : The interaction between the companies becomes
institutionalized.

The areas of CRM

Sales Force Automation (SFA)

Customer Service and Support (CSS)

Help Desk

Field Service

Marketing Automation

Context of Relationship Management

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CRM – the ‘customer’ thread
Whether the customers are current / potential / selected CRM is about acquiring,
retaining, partnering, personalizing relationships with them. CRM helps businesses
use technology and human resources to gain insight into the behavior of customers
and the value of these customers.

Concept of Personalization and Customization

 Customization: Customization assumes that manufacturer will design / or
enable designing a product to suit customer needs.
 Personalization: Personalization is about customer becoming a co-creator
of the content of their experience.

RELATIONSHIP MANAGEMENT- Hierarchy

Nine Truths of Relationship Management

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TRUTH # 1: Customers are no longer loyal.
TRUTH # 2: Customers do not really want a relationship but companies do.
- Your Best Customers Can Leave
- Your Marginal Customers Can Move
- Consumers Can Become Customers
TRUTH # 3: Customers want information.
TRUTH # 4: Customers not only want to be thanked for their patronage, they
expect it.
TRUTH # 5: Customers control the selling process.
TRUTH # 6: The Lifetime Value of a customer is not relevant.
TRUTH # 7: Do not overcomplicate the program.
TRUTH # 8: Keep reporting simple and focused on the customer.
TRUTH # 9: WHAT IF? Ask it often. Experiment every chance you get and don’t
call it testing.

Evolution of CRM
Buyer and Seller Relationship over the Ages
Barter Age
Customized Product Age
Mass Production Age
- Customer
- Consumer
Customization Age: one to one Relationship

***Industrial Revolution: “This is what I make, won’t you please buy it?”
***Customer Revolution: “This is what I need, Can’t you please make it.”

Companies have to turn from a ‘make and sell’ philosophy to ‘sense and respond’
philosophy.

As observed by Sheth& Parvathiar, developing customer relationship has historical

antecedents going back to pre-industrial era.

Much of it was due to direct interaction between producers of agricultural products

and their consumers. Such direct interaction lead to relational bonding between the
producers consumers.

In recent years several factors have contributed to the rapid development and
evolution of CRM. These include the growing de-intermediation process in many
industries, due to advent of sophisticated computer and telecommunication
technologies that allow producers to directly interact with end-customers.
Eg. Airlines, banks insurance computer program software.

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The de-intermediation process is fast changing the nature of marketing and
consequently making relationship marketing more popular. Databases and direct
marketing tools give them the means to individualize their marketing efforts. As a
result, producers don’t need those functions formerly performed by the middlemen.
Even consumers are willing to undertake some responsibilities of direct ordering,
personal merchandising and product use related services with little help from the
producers.

Holistic Marketing Framework

The THREE dimensions (CRM, Relationship Management and Marketing) are
extremely clearly integrated in a concept called ‘Holistic Marketing’ framework.
Management Decision depends on:
1. How can a company identify new value opportunities for renewing its
marketing – (Marketing Dimension)
2. How can a company create more promising new value offering? –
(Stakeholders Relationship Dimension)
3. How can a company use its capabilities and infrastructure to deliver the new
value offering efficiently? – (CRM Dimension)

Transaction VS Relationship approach

Transaction Approach Relationship Approach

 Functional Marketing
 Focus on a single sale
 Orientation on product
feature
 Short time scale
 Little emphasis on
customer service
 Moderate customer
contact
 Quality is a concern of
production
 Cross-functional
marketing
 Focus on customer
retention
 Orientation to customer
values
 Long time scale
 High emphasis on
customer service
 High customer contact
 Quality is everyone’s
concern

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Some Key CRM Marketing Initiatives

 Cross- selling and up- selling

 Cross-selling: act of selling a product or service to a
 customer as a result of another purchase
 Up-selling: act of motivating customers to trade up to
 more profitable products
 Customer retention
 Churn analysis: identify who are likely to “churn” and
 understand why they leave and join

 Behavior prediction:

 Propensity-to-buy analysis:

 Understanding which products or services a particular customer is likely to

purchase

Next sequential purchase:

 Predicting what product or service a customer is likely to buy next

 Project affinity analysis:

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  Understanding which products will be purchased with other products

 Price elasticity modeling and dynamic pricing:

 Determining the optimal price for a given product, often for a given
customer or customer segment.

Proactive versus Reactive CRM

Types of CRM
I. Proactive versus Reactive CRM
II. Operational, Collaborative and Analytical CRM

I. Proactive versus Reactive CRM

(discussed in class)

II. Operational, Collaborative and Analytical CRM

1. Operational CRM: Front office CRM. Interaction between the customer and
marketer directly through customer touchpoint (POS, Call centers, web
etc.).
Face to face touchpoints: Sales/Service/Channel/Events/Stores/Promotions
Database driven touchpoints:
Telephones/Email/Mail/SMS/Fax/Loyalty Cards/ATM’s
Mass Media:
Advertising/PR/Websites

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 Any Transaction can take place through these touchpoints. Low level
managers interact in this stage and process the information to the mid level
managers

2. Collaborative CRM: Two way dialog between a company and its customers
through a variety of channels (business partners, agents, brokers,
intermediaries) to facilitate and improve the quality of customer interactions
and maintain a long term profitable relationship.

Performed by Mid level managers and transform the information to the top
level managers and decision makers.

3. Analytical CRM: Known as back-office or strategic CRM. It involves

understanding the customer activities that occurred in the front office. Using
technology, mass data is going to get transformed into ‘business knowledge’
(behavior patters, preferences, values of customers).

Top Level managers and decision makers establish the process and convey
the message to the mid level and low level managers for implementation.

Operational CRM is focused on the automation of the customer-facing parts of

businesses. Various CRM software applications enable the marketing, selling and
service functions to be automated.
The major applications within operational CRM are as follows:
Marketing automation:

Marketing automation (MA) applies technology to marketing processes.

Several capabilities are offered by MA software: customer segmentation, campaign
management and event-based marketing. Software enables users to explore their
customer data in order to develop targeted communications and offers.
Segmentation, in some cases, is possible at the level of the individual customer.
Unique offers may be made to a single customer at an appropriate point in time.

Sales-force automation:

Sales-force automation (SFA) was the original form of CRM. It applies technology
to the management of a company's selling activities. The selling process can be
decomposed into a number of stages such as lead generation, lead qualification,
needs identification, development of specifications, proposal generation, proposal
presentation, handling objections, and closing the sale. Sales-force automation
software can be configured so that is modeled on the selling process of any industry
or organization.

Sales force automation software enables companies automatically to record leads

and track opportunities as they progress through the sales pipeline towards closure.
Intelligent applications of SFA are based on comprehensive customer data made

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available in a timely fashion to salespeople through various media such as desktops,
laptop and handled computers, personal digital assistants (PDAs) and cell-phones.
Sales force automation software has several capabilities, including opportunity
management, contact management, proposal generation and product configuration.

Types of CRM Applications I

 Operational CRM :
 Also known as “front-office” CRM
 Involves the areas where direct customer contact occurs.
 Two types of touch points: inbound and outbound contact
 Analytical CRM :
 Also known as “back-office” or “strategic” CRM
 Involves “understanding” the customer activities that occurred in the front
office.

Direct Kiosk Web/Chat

Interaction ATM Voice Voice

Operational Multi-Channel synchronization Integration

CRM

Provider
Direct Agent Intermediate Partners
Broker

Distribution Channel synchronization Integration

Collaborative
CRM Marketing Sales Service/Support

Application Integration
Analytical
CRM
Customer data
Analytical Customer mart Product data mart
Business activity data mart
Intelligenc
e
Customer generic data warehouse

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CRM is about Strategy

CRM is about creating a competitive advantage by being the best at understanding,

communicating, delivering and developing existing customer relationships, in
addition to creating and keeping new customers (Strategic CRM)

The answers on the questions below will help to decide on a good CRM Strategy

 What products and services are being offering now and in the future?
 In what markets?

Designing a CRM Strategy

 Cog Wheel Process: CRM (UK) Ltd.
 (Four Key Areas of the Business)
- Strategy
- People
- Technology

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 - Processes

 Company Analysis
 Step 1: Define the existing customer relationship management processes
within the company

 Step 2: Determine the perceptions of how the company manages their

customer relationships both internally and externally

 Step 3: Design the ideal customer relationship management solutions relative

to the company or industry

 Step 4: Deliver a strategy for the implementation of the recommendations

based on the findings

What motivates companies to adopt CRM Strategies?

 Competition: Globalization
 Customer Expectation: e-Commerce
 Technology: Touchpoints
 Diminishing impact of advertising: Information through e-mail and web sites

STRATEGY
Choosing and implementing a system is a major undertaking. For enterprises of any
appreciable size, a complete and detailed plan is required to obtain the funding, resources,
and company-wide support that can make the initiative successful.

Benefits must be defined, risks assessed, and cost quantified in three general areas:
 PROCESSES: Though these systems have many technological components,
business processes lie at its core. It can be seen as a more client-centric way of
doing business, enabled by technology that consolidates and intelligently
distributes pertinent information about clients, sales, marketing effectiveness,
responsiveness, and market trends.
 Therefore, before choosing a technology platform, a company needs to analyze
its business workflows and processes; some will likely need re-engineering to
better serve the overall goal of winning and satisfying clients. Moreover, planners
need to determine the types of client information that are most relevant, and how
best to employ them.

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 PEOPLE: For an initiative to be effective, an organization must convince its staff
that change is good and that the new technology and workflows will benefit
employees as well as clients. Senior executives need to be strong and visible
advocates who can clearly state and support the case for change. Collaboration,
teamwork, and two-way communication should be encouraged across hierarchical
boundaries, especially with respect to process improvement.
 TECHNOLOGY: In evaluating technology, key factors include alignment with
the company’s business process strategy and goals; the ability to deliver the right
data to the right employees; and sufficient ease of use that users won’t balk.
Platform selection is best undertaken by a carefully chosen group of executives
who understand the business processes to be automated as well as the various
software issues. Depending upon the size of the company and the breadth of data,
choosing an application can take anywhere from a few weeks to a year or more

Implementation Issues
Dramatic increases in revenue, higher rates of client satisfaction, and significant
savings in operating costs are some of the benefits to an enterprise. Proponents
emphasize that technology should be implemented only in the context of careful
strategic and operational planning. Implementations almost invariably fall short when
one or more facets of this prescription are ignored:
 Poor planning: Initiatives can easily fail when efforts are limited to
choosing and deploying software, without an accompanying rationale,
context, and support for the workforce. In other instances, enterprises
simply automate flawed client-facing processes rather than redesign them
according to best practices.
 Poor integration: For many companies, integrations are piecemeal
initiatives that address a glaring need: improving a particular client-
facing process or two or automating a favored sales or client support
channel. Such “point solutions” offer little or no integration or alignment
with a company’s overall strategy. They offer a less than complete client
view and often lead to unsatisfactory user experiences.

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  Toward a solution: overcoming sliced thinking. Experts advise
organizations to recognize the immense value of integrating their client-
facing operations. In this view, internally-focused, department-centric
views should be discarded in favor of reorienting processes toward
information-sharing across marketing, sales, and service. For example,
sales representatives need to know about current issues and relevant
marketing promotions before attempting to cross-sell to a specific client.
Marketing staff should be able to leverage client information from sales
and service to better target campaigns and offers. And support agents
require quick and complete access to a client’s sales and service history.

Stakeholder Value Returned from the Benefits of CRM

 An integrated CRM (Customer Relationship Management) system is a
component of business improvement strategy focused around the customer.
It produces a multiplication of results throughout the organization.
 The following is a listing of benefits to specific stakeholders in an
organization.
The business owner(s)
Higher net profitability with increased net sales and reduced operating costs. A
system that can scale to your growing business. Business success and their vision
achieved. Improved ability to grow the business that is customer focused. The VP of
Sales and Sales Manager. Ability to view sales opportunities stuck at a milestone and
needing sales coaching. Shorter sales cycles for improved sales efficiency. Quicker
to get new salespeople up to speed and productive in selling
Higher lead to close ratios
The Sales People
The Customer Service representatives
Ability to provide a personal touch using personal information and quick
access to their account information. Personal satisfaction- becomes a hero in the eyes
of the customer.
Business Development/Marketing manager:

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 More effective marketing campaigns to targeted prospects. Faster feedback from
Sales results by linking campaign to sale. More effective marketing materials for the
sales person.
Financial perspective: CFO/Controller/Accounting Manager
Happier customers pay their bills- less time in the collection and credit memo
process. Reduction in costs of Administrative personal
Less employee turnover. Reduction in paper documents and filing system.
Improved efficiency using known business operational processes More sales revenue
and net profit.
The IT department
 A scalable system that can grow and not have to be replaced in a few years
 A reliable and relational database backend that reduces the time for support and
troubleshooting.
 A Crystal reporting system for easier report modification and creation.
 A highly configurable system that also has visual customization tools build
on Microsoft technology.
 A highly configurable security system to meet your business needs.
All other employees
 Increase in productivity by using one main system that has the information
and processes they need for a consistent customer experience.
 Boost to employee satisfaction

UNIT – 2
Customer Information Database
 Collecting and using data about customers and market helps the firm to gain
a better understanding of the market which leads to utilize the sales and
marketing techniques in a effective way.

Understanding customer
 The customer knowledge and feedback developed thru database helps the
firm to develop an effective strategy for long term customer retention
 Quality, Price, delivery, convenience are some of the factors that could
explain why a customer continues to buy from a company

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Managing customer service
 Understanding the customer is the first step to develop positive, long term
relationship with them
 The customer information database can be used for :
 To improve customer handling by making info available to staff responsible
for sales, enquiries, help lines, complaints etc
 To improve understanding of customers purchasing lifecycle

Knowledge Management
 CRM starts with in-depth knowledge of customers, their habits, desires and
their needs by analyzing their cognitive, effective behavior and attributes.
 CRM applies this knowledge to develop and design marketing strategies to
cultivate long lasting mutually beneficial interaction and relationship with
customer.
 Customer knowledge and customer interaction on the basis of this knowledge
are the two pillars of any CRM design.
KM….. with focus on CRM
 As markets and product change with
 accelerating pace,
 marketing and sales people,
….. product / service design people must assimilate and apply current information
about their markets, their competition and the solution they can offer to the
customers.
 Marketing, sales, after-sales people would be the knowledge workers
 Forward looking companies have realized that their front office work force
could be more productive if they could utilize customer knowledge
 Successful companies not only possess customer knowledge but also able to
make critical business decision

KNOWLEDGE MANAGEMENT (KM)

 KM is a management discipline that treats intellectual capital as managed
asset. It is not about creating a central database that is a complete replica of
all that is known by employees.
 KM helps an organization to gain insight and understanding from its own
experience.
 KM is about embracing a diversity of knowledge sources, legacy systems,
existing data warehouses, portals, websites, customers, suppliers, partners,
external marketing agencies and cultivating this knowledge where it resides.
 KM implementation also protects intellectual assets form decay. It adds to
the firm’s intelligence and provides increased flexibility.

Concept of KM

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  People
 Process and
 Technology

KM - Conceptual frame
 An KM architecture can be developed if we know the following:
 Organizational structure
 Informational flow
 Information usage and storage
 Existing automation levels
 Existing data warehouse solutions
 Existing messaging systems
 Internet applications
 Any other legacy systems

KM Implementation
This approach may be adopted in 4 phases:
1. Evaluation
2. System Analysis, design and
development
3. Deployment
4. System evaluation

CRM-Value chain
 Customer Data > Customer Information > Customer knowledge >Wisdom to
completely satisfy customers

Implementation of CKM
 Resource Analysis
 Aligning CKM & business strategy
 CKM architecture design based on KM
 CRM knowledge and analysis
 CKM team foundation
 CKM team organization blueprint
 Develop the CKM system
 CKM deployment
 Organizational culture
 CKM performance and evaluation

Customer Expectation
 Truly successful business position itself for fully satisfying both current and
future customer needs
 The foundation of such a positioning is a precise understanding of customer
expectations
 In B2B setting, the customer expectation can be typically on following
dimensions

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 1. Supply reliability and flexibility
2. Supply lead time
3. Quality
4. Price
5. Technical support
6. Integration with customers processes and systems

Explanation
 The Market Intelligent Enterprise (MIE) must validate such an
understanding with other information on the customer and the market.
 It is necessary for the MIE to identify the drivers for customer expectation to
be able to anticipate shifts in expectation
 A mapping of customer expectation should lead to identification of discrete
customer segments that buy similar products and services, and demand
similar service levels

Managing Customer Experience

 Every interaction with a customer is an opportunity to delight the customer,
In B2B relationships, the major customer touch-points are:
 Marketing &sales.
 Customer support
 Billing & payment
 Dispute resolution
 Product development & testing.
Each of these interactions offers the enterprise an opportunity to demonstrate
its commitment to total customer satisfaction.

BROAD SPECTURM
 A typical Enterprise has a board spectrum of customers, right from
“terrorists”-extremely dissatisfied/alienated customers who actively erode
the brand equity of the enterprise.
 To “advocates”-delighted customers who actively work to strengthen the
market presence of the enterprise.
 Objective of managing customer experience for an enterprise is to convert
key customers to advocates and address the issue of the “terrorists” &
”rejecters” to minimize the negative impact on brand equity.
 Terrorist -> Rejecters -> Prospects / Conquest / Defectors -> Vulnerable -
>Supporter ->Advocate
 Building loyalty starts with taking right marketing approach. Relationship
marketing is a very effective approach in a B2B setting, where the focus is on
building and reinforcing a long term relationship with the customer with
every interaction

Managing CR on the basis of customer value

 The first step in managing CR is identification of key factors.
 This should be done on the basis of 2 factors

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  Life time value i.e., what the customer contributes to the enterprise
over his life time
 Strategic importance i.e., how much the customer contributes to
maintaining the competitive edge of the enterprise

Customer Lifetime Value

 It is defined as a value today of a customer based on the future profits over
its life expectancy
 The steps to estimating customer life time value are
 Estimate the annual revenues that customers generate each year
 Estimate the cost of acquisition
 Estimate the cost of retention
 Estimate how many years customers are likely to stay with the firm
 Know how to discount future earnings due to customers to their
present value

Embracing Market Intelligence Technologies

 “Disruptive technologies bring to a market a very different value proposition
than had been available previously” - Clayton Christensen
 The value proposition offered by current technologies to CRM truly makes
these technologies ‘disruptive’
 Technology and connectivity will remain the two great enablers for MIE.
Together they determine the velocity and quality of information flow

BEYOND CUSTOMER SATISFACTION:

Customers range from individuals who are extremely brand loyal at one
end of a continuum to individuals who demonstrate repeat purchase behavior at the
other end.
BRAND LOYALTY is the customer loyalty toward one brand without
accepting sub-situations
Customers who are brand loyal will buy only their preferred brand.

REPEAT PURCHASE BEHAVIOR:

It refers to subsequent purchases of a particular service caused by
factors other than loyalty to the brand.
The repeat purchase may be motivated by various factors such as price,
convenience, sales promotions or personal preferences’.

Customer Perception
 Perception is the second major psychological factor
 Perception can be described as “how we see the world around us”. All the
time we are receiving messages through our five organs viz., eyes, ears, nose,
mouth and skin, The different sights, sounds, smells, tastes and sensations
that we feel are knows as stimuli.

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  Each person recognize, selects, organizes and interprets these stimuli in his
own individual manner based on his needs, values and expectations and this
is knows as perception. Since each individual’s need, motives and
expectations are unique therefore each individual’s perception is unique.

Perception helps to explain the phenomenon of why different individuals

respond differently to the same stimulus under the same condition. As a
marketing manager, you are providing stimulus to your consumers through
the physical shape, color, size, fragrance, feel, taste of your product, it’s
package, advertisements and commercials.

Customer Profile analysis

 What makes up a customer profile?
 It depends on whether customers are businesses or consumers. In either case,
typically start with own customer data (such as location, purchases, spending
volume), append additional consumer or business data, then group into
segments that share similar characteristics.

Customer Profiles
 Demographics - age, income, gender, ethnicity, education level, etc.
 Geo-Demographic Clusters - there are many clustering databases available.
Some are industry specific, others are general. They often include data on
interests, lifestyles, purchasing behavior, attitudes and more.
 Survey Data - based on data available for purchase or gathered through
primary

Acquisition
 Acquisition is nothing but making profits by attracting the users to purchase
our product
 It emphasis on both sales promotional programs as well as service during the
time of purchase.
 Acquisition refers the process of attracting the new customers, making them
initial purchase and trying to incur gain for its investment on acquiring the
new customers.

Objectives
 Setting objectives should take into account the cost of Customer Acquisition.

 The following steps can be taken to identify the investment requires to win a
new customer and to track the return on investment.
1. Establish a system to enumerate all costs of acquiring new customers
2. Divide the total cost of acquisition by the number of new customers gained in
a given time period to determine the average cost of acquiring a customer
3. Determine the number of months the organizations must keep a customer in
order to provide a pay back on investment
4. Evaluate the average new customer profitability and set customer acquisition

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 objectives.

Process of Acquisition
 The acquisition process constitutes the following stages:
 Enquiry
- The prospective buyer undertakes a detailed enquiry with regard to several
aspects pertaining to the organization, product, nature of transaction and all
other related aspects.
 Interaction
- Where the customer interacts with the organization and obtains additional
information, clarifies and ensures already collected information
 Exchange
- Terms of exchange, mode of delivery and other things related to exchange
are settled at the exchange stage.
 Co-ordination
- Further coordinated effort on either side would lead customers to…
 Adoption
- Moving adoption of the product or service concerned and that completes the
acquisition process.

SOURCES OF INPUT FOR ACQUISITION

 The suspects-represents segment of the market that have potential to become
prospective customers.
 The enquires: whether they are intentional/casual provide for a approach.
 The lapsed &former customer.
 The competitors customer
 The referrals
 The existing buyers.

REQUISITES FOR EFFECTIVE ACQUISITION

 Focused Approach: (knowers, preferers, indifferent, rejectors).
 Providing a win-win platform.
 Initiate Forum For Communication.
 Attempt to Minimize “FUD”: (Fear, Uncertainty, Doubts).
 Projection of Benefits and not Products.
 Contextual Application. (initiator, influencers, Decider, Buyer, User)

PROCESS OF ACQUISITION
 The acquisition process are influenced by:
 Type of buying.
 Type of product.
 Type of customers.
 Economic Environment.
 Contextual Operations.

WHY CUSTOMER RETENTION PREFERRED?

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 Customer retention is the process of keeping customers in the customer
inventory for an ending period by meeting the needs and exceeding the
expectations of those customers.
 It is approach of converting a casual customer into committed loyal
customers.
 Customers come in a fold of an organization in following ways:
 Customer by chance.
 Customer by occasion.
 Customer by choice.
 Customer by repetition.
 Customer by loyalty.
They makes every effort to convert a customer by chance into customer into
loyalty.

RETENTION STRATEGY
 A plan identifying what basic retention objectives will be pursued & how will
be achieved in the time available is considered to be a customer retention
strategy.
 The welcome.
 Reliability.
 Responsiveness. (wanted to treat right)
 Recognition. (special attention ,appreciation)
 Rewards. (redeemable points)

SATISFACTION IN THE RETENTION PROCESS

 Satisfaction is a state of mind that occurs when then customer feels that his
expected requirements is fulfilled by what is offered by the orgn.
 Customer aims for four major components:
->Product satisfaction (tangible core benefit)
-> Peripheral satisfaction (addition to core benefit)
-> Ambience satisfaction (tangible & intangible)
-> Psychic satisfaction (individuality of customer)

DIFFERENT TYPES OF LOYALTY

 Loyalty in the marketing context may be defined as a willful, voluntary,
repeated choice of a specific brand of a product or type of service.
 Loyalty caters to fulfilling a particular category of need.
 Loyalty explained in terms of the extent of commitment to the brand
selected.

TYPES OF LOYALTY
 Loyalty towards brands. (hard-core loyalists, soft-core loyalists ,switchers)
 Loyalty towards stores. (developed with reference to the point of purchase)
 Loyalty towards an organization. (accept product or service by the orgn)

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 Loyalty towards sales persons. (salesperson of a store of an orgn)

How do the organizations reach loyal customer?

 The reach of loyal customers involves of actions, starting with identification
of the right market for the product concerned.
 Market identification.
 Segmented & targeted market.
 Prospective customers.
 customers.
 Loyal customers.

MARKET IDENTIFICATION
 For the purpose of market identification, the organization may go in for a
marketing audit programme.
 Marketing audit is a purposeful examination of marketing environment,
marketing activities & its effectiveness.
 It is a systematic approach to review the activities of marketing functions
towards reaching marketing goals.
 Marketing audit enables to find appropriate markets.
 The orgn in terms of its market share is expected to play any of the following
roles:
 A market leader (largest market share)
 Market challenger (close competitor orgn)
 Market follower (follower of market leader)
 Market niche( a small player- Nichers confine their operations in a much-
limited way)

MARKET SEGMENTED & TARGETED

 Marketing segmentation refers to grouping of customers on the basis of
selected criteria.
 Criteria includes: Age, income, gender, location, volume of purchase, type of
customers, buying habits, life style.
 A target market refers to a well-defined set of prospective customers, whose
requirements have been identified, and the organization can meet those
requirements profitably.

PROSPECTIVE CUSTOMERS
 In the target market, potential customers would be identified by means of a
systematic approach.
 The method of getting prospective customers may be any one or a
combination of more than one method:
->Referral letters.
->Through friends& relatives.
-> Various directories.
->Through trade associations.
->Advertisements.

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 ->Blind telephone calls.
-> Developing database.
-> Cold canvassing.
-> Follow-up of the competitor’s customers.
-> Customers of related products. Etc.

WHY DO ORGANISATIONS NEED LOYAL CUSTOMERS?

 By loyal customers the corporate always derives more benefits because of the
different roles they play.
 As partners and advisors, involving in organizations regular activities
 As advisors, give advice about the potential customer’s expectations, their
expected prices competitor’s offering and similar aspects
 As resources, in the sense that the organization can depend on them with
respect to new brand and brand extension programs.
 As change drivers, in view of cultural, social technological show new
directions to diversify in future
 Enable the organizations to run on very less operational costs, from the view
point of recruiting customers for new products.
 Loyal customers themselves act as major publicity source for promoting the
image of the organization.

Why do customers become defectors?

It is essential to discover the reasons as to why customers become defectors.
Following are some of commonly found defection drivers :
 The customers specific need has not been fulfilled
 Perceived better value for money from the competitors offerings.
 Developed misunderstanding with value delivery system
 Displeasure at the point of purchase
 Inherent feelings of individuals to try new products
 Dissatisfied with the performance of after sales service
 Compulsion due to technological and environmental forces
 Demographically moved away from the market place
 Personal reasons

Strategies to prevent defection and recover lapsed customers

 Total knowledge about Customer Behavior : like behavioral & migration
patterns of the target customers
 Interactive Communication systems
 Special Promotion Campaign : to attract the attention of likely defectors.
 Developing Barriers to Exit : by means of emotional appeal, durability, life-
time utility, flexibility, concessional price schemes etc.,
 Knowledge about Life Style and Life cycle: represents organizations'
matching offerings to activities, interests and opinions of customers.
 Establish measurement System: for measurement of customer satisfaction
and related aspects.

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 Attempt to track losses: To understand the cumulative impact

WHY DO COMPANIES MEASURE CONSUMER SATISFACTION?

 Measuring consumer satisfaction is a means of determing how well a product
or service is meeting customer expectations & organizational objectives.
 It is to communicate “we care” message to customers.
 Customer satisfaction is often measured by surveying customers and by
recording certain objective measures of operational activity.

STAGES OF CUSTOMER SATISFACTION SURVEY.

 Defining the problem & objectives.
 Plan the survey design.
 Design the questionnaire.
 Select the sample.
 Collect the data.
 Analyze the data.
 Draw conclusion and prepare a report.
 Follow up.

BRAND SWITCHING BEHAVIOUR

 Brand switching is the behavioral action of the customers with reference to
their choice of brand.
 A number of factors are responsible in initiating the brand switching
behavior.
 Dissatisfaction with present brand.
 Change in fashion.

MODULES IN CRM
 The CRM applications are a convergence of functional components ,
advanced technologies and channels.
 Functional components : It include sales applications, marketing automation,
and customer service and support applications.
 Channels include the web, call centre's, phones and mobile services.

SALES APPLICATIONS
 The cornerstone of CRM is SFA (sales force automation).
 The SFA is automating the fundamental activities of sales professionals, both
internally and in the field.
 Common applications include:
 Calendar &scheduling.
 Contact& account management.
 Compensation.
 Opportunity & pipeline management.
 Sales forecasting.
 Proposal generation & management.
 Pricing.

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 Territory assignment& management.
 Expense reporting.

MARKETING APPLICATIONS
 They form the newest breed of applications complement SFA applications
and provide capabilities unique to marketing.
 Common applications include:
 Web-based/ traditional marketing campaign planning, execution & analysis.
 Collateral generation & marketing materials management.
 Budgeting & forecasting.
 A marketing encyclopedia (a repository of product, pricing & competitive
information)

CUSTOMER SERVICE & SUPPORT APPLICATIONS.

 These applications have gained a major importance for effective customer
retention & in many cases profitability depends on providing superior
service.
 Common applications include:
 Customer care.
 Incident, defect, and order tracking.
 Field service.
 Problem and solution database.
 Repair scheduling & dispatching.
 Service agreements & contracts.
 Service request management.

REGAIN STRATEGIES
 Three relevant strategies that a service provider could look into in order to
regain lost customers, customization, differentiation and “wow” strategy.
 Customization: It is an extension of one-to-one marketing where customers
are treated as individuals and not as account numbers.
 It provide the latitude of the customer would enjoy and feel empowered to
choose & customize its options.

DIFFERENTIATION STRATEGY
 Differentiation is the ability to provide unique and superior value to the
consumer in terms of service quality, special features, or after-sales services.
 It allows a firm to command a premium price or premium market position
which leads to higher profitability.
 As customers are segmented, hence it is utmost important that different
segments should be addressed and dealt with accordingly.

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