ABS

Customer Relationship
Management
Module 1
 ABS

Conceptual Foundations of CRM

2
 Evolution of CRM ABS

Merchants and traders have been practicing

customer relationship for centuries. Their business
was built on trust.
The industrial revolution changed these
relationship-oriented practices.
Manufacturers started focusing on manufacturing
and efficient operations to cut costs.
The resulting gap reduced direct contacts and had
a negative impact on their relationships.

3
 ABS

The post-industrial era (information era) saw the re-

emergence of relationship.
Following factors caused this shift in orientation:-
 Rapid advances in technology,

 Intensive competition in most markets

 Growing importance of the service sector, and

 Adoption of total quality management programs

 The Evolution of ABS

Relationship Orientation

5
 ABS

Origin of CRM
• Originated in Pre-Industrial Era
• Mwamula- Lubandi (1992): traders of
Africa
• Rothermund (1998): Traders of diamond
and precious metals in Gujarat, India
ABS

7
 ABS

1. The Anglo-Australian Approach,

2. The Nordic Approach, and
3. The North American Approach.

8
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9
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 Nordic Approach ABS

• Service Marketing: The service

consumption and production have
interfaces that are always critical to the
consumer's perception of the services.
• The management of these interfaces is
called interactive marketing
 ABS
The Interaction
Process
Logical sequence
• Acts
• Episodes: Visit to a bank office
• Relationships
ABS

13
 ABS

What is Marketing Management?

Marketing management is the

art and science of choosing target
markets and getting, keeping, and
growing customers through creating,
delivering, and communicating
superior customer value.
 Determinants of ABS

Customer-Delivered Value
Total
Product Personal
customer
value value
value
Customer-
delivered
value
Total
Monetary Energy
customer
cost cost
cost
 Marketing Mix and ABS

the Customer
Four P’s Four C’s
• Product • Customer solution
• Price • Customer cost
• Place • Convenience
• Promotion • Communication
Holistic Marketing ABS

Dimensions
 Amity Business School

The Transition to Relationship Marketing

Emphasis on Relationship
all market marketing
domains T

Emphasis on Transactional
customer Marketing
relations

Functionally Cross-functionally
based based
 ABS
Marketing Orientation
Customer Organization
- Needs Commonality
- Ability
- Wants - Quality
- Requirement - Value system
- Expectation - Moments of
Truth
Establishment of
Customer
Relationship
Base

Increased
Customer
Customer
Evaluation
relationship Base

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 ABS
Approach to CRM

•Strategic, not more tactics.

•Customers, not companies.
•Process, not software.
•Outcomes, not inputs.
•Long-term, not short-term, views.
 ABS
CRM value chain
 ABS

22
ABS
 ABS
What is Value Chain ???
• Value Chain can be defined as a tool for
identifying ways to create more customer
value.
• According to Michael Porter’s model of Value
Chain every firm is a synthesis of activities,
performed to design, produce, market, deliver
and support its product.
• These activities combined together becomes a
value chain.
 Value Chain is divided into ABS

two types of activities :

 Primary Activities

 Support Activities
 ABS

The Primary Stages

•Customer portfolio analysis,

•Customer intimacy,
•Network development,
•Value proposition development and
•Managing the customer lifecycle

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 ABS

The Supporting Conditions

• Leadership and culture,

• Data and IT,
• People and
• Processes
 Holistic Marketing Orientation ABS

Customer Value

• Value has emerged as the key element in the

business marketing because of the dominant
role of functionality or performance of the
offering made by the seller.
• The concept of a value chain where a firm in
business markets is part of a larger ecosystem
in delivering value to the end customer is
becoming central to ensuring sustained
competitiveness.
 ABS

• Holistic marketing framework is designed to

address key management questions
• Value Exploration – How can a company
identify a new value opportunity?
• Value Creation – How can a company
efficiently create more promising new value
offerings?
• Value Delivery – How can a company use its
capabilities and infrastructure to deliver the
new value offerings more efficiently?
 Amity Business School

A holistic marketing framework, shows how the

interaction between relevant actors (customers,
company, collaborators) and value based
activities (value exploration, value creation and
value delivery) helps to create, maintain and
renew customer value.
 ABS

Customer Core Collaborative

focus Competencies Network

Value Cognitive Competency Resource

Exploration Space Space Space

Value Customer Business

Business
Creation Benefits Partners
Domain

Internal
Value Business
CRM Resource
Delivery Partner Mgmt.
Mgmt.
 ABS

CRM is a holistic approach that utilises

customers’s insight
 ABS
What is CRM?
IDIC Model ( Peppers and Roger’s )
Amity Business School

34
ABS
 Understanding of CRM ABS

CRM involves three important steps:

1.Identify current and potential customers
2.Differentiate between individual customers (focus on the differences
between high- value and low-value customers)
3.Customize marketing mix offerings to meet the needs of individual
customers
The Strategic Framework for CRM ABS
ABS
 ABS
CRM Defined
• It is the core business strategy that
integrates processes and functions, and
external networks, to create and deliver
value to targeted customers at a profit.
• It is grounded on high quality customer
related data and enabled by information
technology
Acquire Retain Prune Customers
 CRM BUSINESS CYCLE ABS

1. Understand
customer’s needs 2. Differentiate
based on customer needs,
8. Retain valuable characteristics and
customers. behavior.

7. Acquire customers 3. Develop product

and prospective services
CRM
customers. Channels to meet
customer’s needs.

6. Deliver increased 4. Customize by

value to the customer. customer segment.
5. Interact with
customers and
prospective
customers.
ABS
ABS
ABS
ABS
ABS
ABS
ABS
 ABS

Internal
Markets

Supplier Customer Markets Referral

Markets Markets

Recruitment Influence
Markets Markets

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 ABS

 Berry (1995), defined relationship marketing as attracting,

maintaining, and, – in multi-service organisations –
enhancing customer relationships.
 Morgan and Hunt (1994) suggested that relationship
marketing refers to all marketing activities directed toward
establishing, developing, and maintaining successful
relationships.
 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.

49
 ABS

• A process-oriented view which looks at the

interactions over a period of time,

• Explicitly highlight the collaborative and

cooperative nature of the relationship for long-
term mutual benefit, and

• Metrics of relationship performance include

enhanced value.

50
 The CRM System Amity Business School

Customer
Marketing

CRM
System Management

Sales Analytical
Operational CRM CRM
Shared
Data Base
Service
 ABS

52
 ABS

53
 ABS

Operational and Analytical

Process affecting the
Operational CRM
software
installations

day-to-day
operations
changes of a firm
focuses on in process
the
 Operational and Analytical ProcessA B S

strategic needed
Analytical CRM
planning to build

cultural
focuses on
the
measurement
changes
customer
value
organizational
 ABS

56
 ABS

Type of CRM Dominant characteristic

Strategic CRM is a core customer-centric business

strategy that aims at winning and keeping
profitable customers
Operational CRM focuses on the automation of
customer-facing processes

Analytical CRM focuses on the intelligent mining of

customer-related data for strategic or
tactical purposes
Collaborative CRM applies technology across
organizational boundaries with a view to
optimizing company, partner and customer
value
 Strategic CRM at ABS

Boise Office Solutions

In 1998 the CEO of Itasca, Illinois-based Boise Office

Solutions, decided that the only way to escape the
bruising price competition and razor-thin margins of office
supply superstores such as Staples and Office Depot was to
provide greater value through superior customer service,
with the support of a CRM system. Three years and $20
million later, the $3.5 billion subsidiary of Boise Cascade
switched on a CRM system that differentiated them from
other competitors in the office supplies industry.
 ABS

The company can now share customer data

across five business units, 47 distribution centres
and three customer service centres. This has
allowed Boise to cross-sell, retain and service
accounts much more effectively. One of the CRM
system’s many features is web collaboration which
allows representatives to co-browse and chat with
customers online while making recommendations.

59
 Operational CRM (SFA) at ABS

Roche
Roche is one of the world’s leading research-based
healthcare organizations, active in the discovery,
development and manufacture of pharmaceuticals and
diagnostic systems. The organization has traditionally been
product-centric and quite poor in the area of customer
management. Roche’s customers are medical practitioners
prescribing products to patients.
Customer information was previously collected through
several mutually exclusive sources, ranging from personal
visits to handwritten correspondence, and not integrated into
a database or central fi ling system, giving incomplete views
of the customer. Roche identified the need to adopt a more
customer-centric approach to understand their customers
better, improve services offered to them and to increase
 ABS
Roche continued..
Roche implemented a sales-force automation
system where all data and interactions with
customers are stored in a central database which
can be accessed throughout the organization.
This has resulted in Roche being able to create
customer profiles, segment customers and
communicate with existing and potential
customers. Since implementation Roche has been
more successful in identifying, winning and
retaining customers.
 ABS
Analytical CRM at
AXA Seguros e-Inversiones (AXA)

Spanish insurer AXA Seguros e Inversiones (AXA)

has revenues of over €1.8 billion (US$2.3 billion),
two million customers and is a member of global
giant The AXA Group.
AXA runs marketing campaigns in Spain for its
many products and services. The company wanted
better understanding of its customers, in order to
be able to make more personalized offers and
implement customer loyalty campaigns.
 ABS

AXA used CRM vendor SAS’s data mining solution to build a

predictive policy cancellation model. The solution creates
profiles and predictive models from customer data which
enables more finely Targeted campaign management, call centre
management, sales-force automation and other activities
involved in customer relationship management.
The model was applied to current and cancelled policies in
Various offices, to validate it before deploying it across Spain.
Moreover, the model was used to create two control groups
(subdivided into high and low probability) that were not
targeted in any way, while other groups, similarly divided into
high and low probability, were targeted by various marketing
actions.
 ABS

The outcome was that the auto insurance policy

cancellation rate was cut by up to nine
percentage points in specific targeted segments.
With the customer insight obtained from the
model, AXA is now able to design and execute
personalized actions and customer loyalty
campaigns tailored to the needs and
expectations of high-value customers.
 ABS
Strategic CRM
Strategic CRM is focused upon the
development of a customer-centric business
culture.
• Leadership
• Behaviours,
• The design of formal systems (resources to
be allocated where they would best enhance
customer value, reward systems and
retention, and customer information to be
collected, shared and applied across the
business.
ABS
 Operational CRM ABS

Sales force automationSFA.doc

• Account management
• Lead management
• Opportunity management
• Pipeline management
• Contact management
• Quotation and proposal generation
• Product configuration
 ABS

Sales force automation

• Sales force automation (SFA) software is
a type of program that automates business
tasks such as inventory control, sales
processing, and tracking of customer
interactions, as well as analyzing sales
forecasts and performance.
• Web-ready database,
• an e-mail package, and Customizable
template..
 ABS

• A three tiered architecture is typically used

to separate
• the database,
• server, and
• application to reduce programming
demands on clients. A module-based
design is generally used, to allow users to
customize the package to suit their needs
ABS
Account Management ABS
 Operational CRM continues.. A B S

Marketing automation
• Market segmentation
• Campaign management
• Event-based (trigger) marketing (Event-based,
or trigger, marketing is the term used to describe
messaging and offer presentation to customers
at particular points in time.
Campaign Management
Amity Business School
 ABS

Service automation
• Case (incident or issue) management
• Inbound communications management
• Queuing and routing
• Service level management
http://www.crmworks.co.uk/Solutions/Cher
well%20Service%20Management/ITIL%20
Best%20Practice/Service%20Level%20M
anagement
 The CRM System Amity Business School

Customer
Marketing
Call
Centre
CRM
System Management

Sales Analytical
Operational CRM CRM
Shared
Data Base
Service
Queuing and routing ABS
Service Level Management ABS
 ABS
Operational and
Analytical CRM

• Operational CRM: effective and efficient use and

management of people, process and technology
• Analytical CRM: the measurement of people, process
and technology
 Building Blocks of CRM
Amity Business School

Data Data Knowledge Enabling

Capture Warehousing Management Technologies

Customer Touch
EIS Segmentation Call Centres
Point Integration

Market Customer Sales Process

OLAP
Research Profitability Automation

External
Data Cleansing Data Mining e-Business
Databases

Statistical
MetaData Modeling

Organization

People

Deployment and Support

The building blocks of CRM are the things that need to be in place for an effective Customer
Relationship management program
 Data Capture &Warehouse A B S

Derived Data
Segments Profitability Life Time Value Intentions

Customer Customer Customer External

Behaviour Interactions Profile Data

Product / Service
Inbound Contact

Demographics /

demographics
Usage Profile

Firmgraphics

Preferences
Migration in

Information
Acquisition

Campaign
Outbound
Switching

Attitudes
Loyalty /

Census
Contact

History
Usage

Geo-
Product Portfolio Householding

Base Data
The Customer Data Model
 ABS

Enabling Technologies
 ABS

Techniques: Relationship marketing, automated packaging and pricing, knowledge-based selling

• Increase revenue from your customer • Consultative selling

base • Responsiveness to market
• Customer satisfaction measure conditions
Sales Force Automation

Techniques: ACD, IVR, CTI Techniques: WEB based

application, e-mail processing
• Automatic Call Distribution (ACD)
• Incoming Call Queuing
• Performance Statistics CRM

Electronic Business
• • Automated product and service
•
Integrated Voice Response (IVR)
Automated Inquiry & Transactions
Technologies information
Call Centre

• Automated screen “pop” on agent’s • WEB based sales and support

screen through standard menus and
• Integration with company legacy automated help screens.
platforms • WEB based training
• Billing & Meter Reading • Reaching the global market
• Direct Access to Customer Data
 ABS
Call Centers - Definition
Call centres are a key enabling arm of Customer
Relationship Management. A well designed call
centre will integrate people, process, and
technology to improve operational efficiency and
maximize the value of the customer relationship
for both inbound and outbound contact.
• Call Centre
• Sales Force Automation
• e-Business
 Amity Business School

Call Centre
Technologies

People Process
IVR ACD
 External customer  Marketing / up-selling
 Internal customer  Technical support
 Sales Force  Product support
 Support team  Service support
 Back-office  7 x 24 support
CTI
 Technical staff
Information

• Customer data updates, purchase information • Customer history, billing, purchases, value, profile
• Leads tracking update, customer tracking updates • Product & service information, packages, prices
• Call statistics, inquiries, etc. • Marketing hints, reports, promotions

Data
Warehouse
Call Centres Amity Business School

Architecture

Data
Warehouse

• Customized Agent Desktop

Applications by Customer & Call Type
• Automated Scripting of Call Handling &
Wrap-up
• Flexibility to Add New Products,
Services, and Customer Service
Opportunities
• Scripted Cross-Selling
• Legacy Integration
• Billing & Meter Reading
• Direct Access
 Amity Business School

Call Centre Call Centre of the Future

Old Rule
Paradigm Shifts
Multiple products
Single product
and cross selling

Backroom operation Front Office operation

Stand-alone operation Distribution channel &

& information information integration
Leading edge and
Minimal technology integrated technology

Reactive Proactive

Low skilled CSR’s Multi-skilled CSR’s

Tactical Strategic

Customer Inquiries Enhanced Customer Satisfaction

Cost of Business and Retention Revenue Growth
Lower Cost Distribution
 Sales Process Automation ABS

• Sales Process Automation (SPA) is the approach for helping organizations dramatically
improve their sales and marketing effectiveness through the reengineering and automation of
their sales and marketing processes, with the ultimate goal of increasing revenues. SPA
combines a working knowledge of the market’s best ideas, technologies, and vendors with a
practical, relentless focus on implementation to deliver outstanding shareholder and customer
value.
Basic Features
• Intranet - as an alternative sales channel • News Service - Optional news sorting and
• Electronic catalog - On-line self served service reporting will result in informed sales people
ordering • Order Entry Quoting - On the spot quoting will not
• Commission - Effective tracking of performances give the client a chance to shop around and be
and accurate commissioning hunted
• Opportunity Management - tools such as • Proposal Development - Automated document
automated customer data analysis and pop-up creation based on corporate standards
screens will assist in up-selling • Pricing - Automated on-line prices based on
• Competitor Data - effective analysis of competitive company rules
data and automated access for sales force • Product - On-line and easily accessed
• Contact Management - Effective tracking and • Just-in-Time Training - Automated training, WEB
follow-up of leads based training, and self training through
• Customer Data - Sales people will have a information sharing
complete analysis of the customer before their • Electronic Kiosk - WEB page shopping.
eyes when attending to a customer. No wait, no
repeated questions, no frustrated customers
 e-Business - Definition ABS

Business Partner
Integrating
more directly
with the
Business business
The Value
Processes processes of
Proposition of customers and
Business Processes
Electronic partners
Business Business to Business
Solutions Tailoring
Profiles & products and
Preferences services to
customers
needs and
Business Partner values
Extending key business Business to Customer
applications to clients and
business partners
e-Business is all about integrating the internal and external processes between business
partners and customers.
 e-Business - Architecture ABS

Internet and
A$X,XXX B$X,XXX 5. Product
World Wide
1. Adaptive Fulfillment
Web
Product Offer
 Pick and pack
 Customer preferences
 Integration/configuration
 Products and availability
of third party products
 Pricing and promotions
 Ship products or deliver services
 Adaptive selling
 Inventory management
 Build/configure to order
 Order tracking

2. Order Capture and

 Payment 4. Order
Validation information
 Order entry Management
 Security
 Tax calculation  Link with  Link with third parties
 Validation 3. Payment finance  Create pick list
 Confirmation Processing  Consolidate orders

For both business-to-business and business-to-consumer sales, there are five key elements to
e-Business — product offer, order capture and validation, payment processing, order
management, and product fulfillment.
 ABS

Customer Service
Call Centres Management Management
Customer Care Systems Systems Systems Billing System
Sales Force Automation
IVR

Conclusion Enterprise
Management
Systems

Business Network
Data Warehouse Management Management OSS
Systems Systems

SAP, PeopleSoft, Oracle,

etc.

Customer Relationship Management is an integral part of successful convergence

 E-CRM Amity Business School

Customer –
Front end
Employee Mail/ Fax Telephone/ Mobile Phone Self-Service Web Other touch points
touch points

Front Office
Back office

Marke Sales: Service:

ting Opportunity Helpdes Order
Management k etc. Management
proposal Distribution and logistics
generation, Manufacturing,
and pricing procurement
Front office Finance
Accounting, HR, and
billing

Data Warehouse
Leads Opportunities Customers Interaction
 ABS
Analytical CRM

• Storing, analyzing and applying the

knowledge about customers and about
ways to approach customers
– Databases
– Statistical tools
– Data Mining
– Business Intelligence
 Analytical CRM ABS

• Usage
– Optimize Market Effectiveness
– Customer Acquisition: Cross Selling
– Analysis of Customer Behaviour
– Management Decisions - financial forecasting
– Predicting Customer Defections
 ABS
Analytical CRM

• Steps
– Problem Formulation
» Client segmentation
» Acquisition analysis (quality of database)
» Relation analysis (Opportunities for cross selling)
» Channel analysis (which channel gives maximum
results)
– Preparation
» Random survey, interviews
– Definitive Analysis
» Statistical analysis (Regression, Anova)
» Datamining
» Artificial Intelligence –neural networks
 ABS
Analytical CRM

• Steps
– Visualizing

• Benefits
– Explore useful knowledge in large database
– Classify customers, Predict customer behaviour
• Disadvantages
– Complex
– Early days
 Collaborative CRM ABS

• Improves on services offered and addresses

such issues as sales, technical support

• Improve the quality of customer service and

to increase customer satisfaction

• Internal collaborative functions address IT,

billing, invoicing, maintenance, planning,
marketing, advertising, finances and
planning.
 Collaborative CRM ABS

• Improves Communication and

coordination
• Raises Customer switching costs
 Promotional
ABS
Campaigns Touch
Channel Partners Points

Employees

Publicity
Organizational
Process Mailers
Customer

Product Usage

Interaction
Centres

Web interface

Mobile
Communication
ABS
ABS
 Touchpoint Management ABS

• Identify the Touchpoint

• Prioritize the Touchpoint
• Assess the Touchpoint
• Define the Touchpoint importance
• Define the business impact and
resources
• Develop key action steps.
 ABS

CRM cycle