Customer Relationship Management

CHAPTER 1

Customer Relationship Management

Definition of CRM

Customer Relationship Management (CRM) is a comprehensive strategy and process of acquiring, retaining & partnering with selective customers to create superior value for the company & the customer

Understanding CRM
It is a process or methodology used to learn more about customers' needs and behaviors in order to develop stronger relationships with them It brings together information from all data sources within an organization to give one holistic view of each customer in real time This allows customer facing employees in such areas as sales, customer support, and marketing to make quick yet informed decisions on everything from cross-selling and upselling opportunities to target marketing strategies to competitive positioning tactics

Understanding CRM
CRM can be viewed in 4 principal ways
It is a contemporary response to the emerging climate of unprecedented customer churn, waning brand loyalty & lower profitability It is central to the task of making an organisation customer centric It is the surest symbol of embracing IT in business It is the most certain way to increase value to the customers & profitability to the practicing organisations

CRM is all about capturing pertinent data about prospective & current customers in respect of their buying pattern, shopping behaviour & usage habits of the products & services & to use the information to commence a 2-way dialogue with them

Understanding CRM
There are three key elements to a successful CRM initiative
People: The people throughout a company-from the CEO to each and every customer service rep-need to buy in to and support CRM Process: A company's business processes must be reengineered to bolster its CRM initiative, often from the view of, How can this process better serve the customer? Technology: Firms must select the right technology to drive these improved processes, provide the best data to the employees, and be easy enough to operate

If one of these three foundations is not sound, the entire CRM structure will crumble

Thus,CRM
Enhances: Customer satisfaction Return on relationships Competitive advantage Number of consumers Retention rate Revenue per customer Reduces: Cost to acquire customers Cost to sell Cost to serve Time to serve

Is CRM a new concept???

Pre-Industrial Era
Practised since centuries by merchants & traders Markets traditional & small & businesses built on trust Customisation of product and all aspects of delivery & payment possible Personal rapport shared with customers in the form of social interactions

NO!!!

Industrial Era
Mass production, mass communication & mass distribution to achieve economies of scale More focus on lowering costs & increasing operational efficiency Emergence of intermediaries resulting in many layers between manufacturer & customer

Is CRM a new concept???

Post- Industrial Era (Information Era)
Rapid advances in technology
Helped firms know their customers, learn more about them & build stronger bonds through frequent interactions The above information helped them respond to their needs through manufacturing, delivery & customer service

Intensive competition
In competitive markets, specially ones that were maturing and witnessing slow/no growth), firms found it more profitable to focus on existing customer Shift from just selling products to understanding customer needs/wants and then satisfying them

Is CRM a new concept???

Post- Industrial Era (Information Era)
Growing importance of service sector
In services, provider usually involved in production as well as delivery directly. Eg: doctor, consultants Customers directly involved in purchase & consumption of these services These direct contacts create opportunities for better understanding of needs & constraints & emotional bonding

Adoption of TQM programmes

This required firms to work closely with their customers, intermediaries & suppliers

Benefits of CRM
Lower cost of marketing
Occurs as the company specifies its target segment customers & knows their needs better, thus spending less money on advertising & promotions

Decreased cost for customers

As marketing expenses of a firm decreases, firms can offer the same product at a bit low cost, thus benefiting customers

Increased sales revenue

Results from spending more time with customers which results from spending less time chasing needed information

Improved customer satisfaction

Results from customers finding the company more responsive & better in touch with their specific needs

Benefits of CRM
Improved customer retention
As old customers will be fully satisfied, they will buy the same companies products as they know their problems would be taken care of ,well

Creates intelligent opportunities for cross-selling & up-selling Opens up possibility of rapid introduction of new brands & products Strong customer loyalty
CRM helps to build good relationship with customers, thereby ensuring that they remain loyal with the company

Why CRM???
The top four reasons for implementing CRM are:
gaining customer confidence and loyalty providing personalized service to customers acquiring better knowledge of customers and their buying habits differentiating themselves from the competition

CRM architecture
A holistic approach to CRM inevitably makes it essential to
integrate the back office & the front office activities & Provde information seamlessly across all tiers of the organisation

Hence, CRM architecture has 3 primary components

Customers Operational CRM Collaborative CRM

Firm

Analytical CRM

CRM architecture
Operational CRM
Automation of horizontally integrated business processes involving front end customer touch points ie: places where a customer makes direct contact with the employees of the organisation At the root of any CRM success or failure ,is a well-designed operational CRM infrastructure.If an organisations front-line customer service, sales and marketing employees are not efficient, its CRM initiative is bound to fail Operational CRM is the source for customer-related information, which is invaluable for an organisation as it can be processed by analytical CRM tools to extract business value A badly co-ordinated operational CRM initiative will capture incorrect data, paint an untrue picture of the buyers needs, and provide insufficient service and response levels. Operational CRM needs to be in sync with business units to receive complete and updated information on which it can act. It must also integrate the systems at various customer touch points

CRM architecture
Analytical CRM
Analysis of data created on the operational side of CRM for the purpose of business performance management & improvement Prediction of customer behaviour, identifying relevant customer segments, identifying potential customers are some of the activities that could be performed from knowledge arising from this CRM

Collaborative CRM
Consists of technologies to ensure enterprise/customer interaction across all contact channels such as in-person, phone, electronic and wireless

CRM process framework

Formation Management & Governance

Purpose

Performance

Programs Evolution Partners

There are 3 main components
Formation Management & governance Performance

CRM process framework: Formation

Purpose

What is the need /specific requirement from the CRM process?

Partners
Selection of partners is based on intuitive judgement of seniors in the company or extensive research Criteria varies according to company goals & policies

Programs
Three generic types of CRM programs applied on three different set of customers

CRM process framework: Formation

Program type Continuity marketing Mass markets Distributors Business to Business markets 1. Special sourcing arrangement 1. After marketing 1. Continuous 2. Loyalty replenishment programs 3. Cross selling 4. Up selling 1. Permission market 2. Personalisation 1. Affinity partnering 2. Co-branding 1. Customer business development

One to one marketing Partnering / Comarketing

1. Key account program

1. Logistic 1. Strategic partnering partnering 2. Joint marketing 2. Co-design

3. Co-development

CRM process framework: Formation

Continuity marketing - To retain customers & increase loyalty through long term special services Continuity marketing aimed at Mass markets After marketing : Reaching to customers, post sales, to know their
feedback

Loyalty programs : Designed and implemented to refrain

customers from switching to competitors. Eg: Shoppers Stop

Cross selling : Getting back to customers to buy related

product/services

Up selling : Selling an upgraded version of the basic product to the

same customer over a period of time

CRM process framework: Formation

Continuity marketing aimed at Distributors Continuous replenishment: Delivering information of goods
sold , to the manufacturer through integrated computer networks & communication protocols

Continuity marketing aimed at Business markets Special sourcing arrangement: It can be single sourcing,
multiple sourcing or just in time

CRM process framework: Formation

One to one marketing - To satisfy each customers need uniquely One to one marketing aimed at Mass markets Permission marketing : Requesting permission from customers
to talk about products/services

Personalistion: Addressing customer by his name or personalising

his home page like rediff does

One to one marketing aimed at Distributors Customer business development: Providing knowledge about
customer type, buying behaviour, habits etc

One to one marketing aimed at Business markets Global account managers: One to one marketing practised in a
business to business environment

CRM process framework: Formation

Partnering / Co-marketing Focuses on the capability of the business to partner with the relevant customer Partnering aimed at Mass markets Affinity partnering: Two different businesses coming together to
increase their profit

Co-branding: Advertising not only own brand but also the brand of
the component that goes inside the product

Partnering aimed at Distributors Logistic partnering: Sharing the process of transportation Joint marketing: Dividing the marketing expenses between the
manufacturer & the retail outlet owner

CRM process framework: Formation

Partnering aimed at Business units Strategic partnering/ Co-design/ Co-development : During
the development stage, sharing of strategic plans by the manufacturer with his vendors or raw materials provider. Also includes people from the vendors team at the design stage

CRM process framework

Management & Governance
Team structure Role specification Planning process Process alignment Monitoring process Communication Employee motivation Employee training

CRM process framework

Performance : Measured under three heads
Strategic: How has the program helped in increasing the strategic asset of the company is measured Financial : How has the program helped in improving the financial status of the company is measured Marketing: Customer retention, satisfaction & loyalty is measured

Measuring CRM
A good CRM strategy should be followed by measurable criteria defined before the implementation
For eg: the success of CRM at a banks retail business unit depends on the rate of revenue growth, yield per customer, rate of decrease in customer complaints and rate of customer acquisitions etc..

Every business unit, from operational to the back office, must create well-defined metrics for measuring performance a day before CRM Any improvement in performance over time (week, month or quarter) can be quantified and considered the measurement of success of a CRM initiative

CRM used by Indian firms

Below mentioned companies have all adopted technology smartly to create better customer care solution & systems 1. Customer care begins before the sale:
Lakme Lever
Unveiled a radically new customer service: interactive kiosks that allow women to choose products that suit them Branded as Lakme Beauty Zones, these kiosks first take a picture of the customer's face. Then, as the customer chooses different shades of eyeshades & lipsticks, these are superimposed on the image on the screen. That way, she is able to decide whether the colour suits her before she buys the product Lakme had found that for many products, particularly foundation creams, the number of lapsed users who bought it once & then stopped buying, were high

CRM used by Indian firms

For long time, Lakme organized Beauty Clubs, where experts offered beauty tips. But over time, organising these gatherings proved to be a logistic nightmare Now, with these kiosks, Lakme hopes to reach out to more women right at the point of sale Godrej - GE
Has set up a Customer Care Call Centers manned by executives who have a complete description of all appliances sold by the company The call centres across Mumbai, Chennai & Delhi receive close to 3000 pre-sale calls. Sometimes, customers ask for information to help them decide which product model will suit them better

CRM used by Indian firms

2. Understanding buying patterns:
Food World
Undertake bar coding of products to keep a track of stock keeping Planning to implement a system to understand purchase patterns better Apart from regular customer meets & formal research, it has invested in data mining software in Chennai that would help understand product adjacencies ie: figuring out which products are typically bought together This will, in turn, help formulate product placements, undertake cross promotions or develop new pack sizes

3. Understanding the customer: ICICI

All customer information will be centralized in ICICIs server farm at Mahalaxmi in Mumbai & gather information real time

CRM used by Indian firms

4. Rewarding customer loyalty:
BPCL
Initiated a smart card programme, enlisting select petrol pumps, where customer is assured of a minimum level of quality service Pumps had to have the ability to upgrade their facilities, practice ood house keeping & customer care & of course, provide the right quality & quantity of product Customers were given points for transactions made on the card, which later, could be redeemed through gifts

5. Making after sales service easier: Samsung Electronics

If a cusomer finds a defect in their product, they can simply log on to the company website & key in their address & product serial no.

CRM used by Indian firms

Immediately, the name & contact no. of the nearest Samsung dealeras well as the complaint no. If the dealer does not have the part, then the software directs the customer to the nearest dealer who has the part

There is a common thread running through all these organisations, Talking, listening & understanding what the customer is all about!!

Impact of globalisation on CRM

Market segmentation
Advancement in communication technology & growth of internet

Product Life Cycle

Product availability in different country markets, creates difficulty to manage product life cycle

Competitive environment
Different competitive environment in different countries lead o inconsistent CRM

Cultural difference
Leads to differences in products and services sold across different country markets leading to inconsistent CRM programs.

Winning markets through effective CRM

There are 2 approaches to CRM Traditional approach
Customer contact: a) Telephone b) mails Personal selling After sales service Complaint handling Account management Customer care Customer satisfaction

Web enabled & Integration approach

Customer database EPOS (Electronic Point Of Sale) Automation of customer service(SFA) Call centre System integration Customer lifetime value

Traditional approach to CRM

Customer contact
Established through different methods Telephonic method : Cheap, but less effective Mails: Low conversion rate in India because of poor computer literacy

Personal selling
Costly & time consuming Each of the contact should reflect good things about the company to the customer

After sales service

Customers can become advocates for the product/service only when they are happy using it. This is possible if the after sales service provided is a good functional one

Traditional approach to CRM

Complaint handling
Procedure for filing complaint & receiving attention should be easy, simple & fast

Account management
Each interaction of a high potential customer is recorded so that the company can manipulate his future interactions

Customer care & customer satisfaction

Are ongoing processes through which company creates chances to interact with the customer & make each of these interactions, a happy one for the customer Eg: AMC is a method of customer contact

Web enabled approach to CRM

Customer database
A hardware which gets regular flow of information Helps understand customers & accurately anticipates their behavioural patterns Also helps to plan, implement & monitor customer contact All this is possible if the database is a robust one & good data mining tools are applied on customer data

EPOS
The electronic gadget at the check out counter of a retail outlet where the billing happens is an example of EPOS Helps calculate sales rate, stock levels, price & margin Since sale of products depend on demographic & socio economic lifestyle of the customers, useful information about the products that the customer wants, can be given by an EPOS

Web enabled approach to CRM

Sales force automation
One of the powerful software modules of a CRM package, usually used by sales people Helps in automating & optimising sales processes Shortens sales cycle & increases sales productivity Gives information on
Customer, company & hierarchy of people to be contacted over there Characteristics of the important person in the customer company Information about competitors & their product profile After sales information

Call centres
Systems used by companies to interact with customers to sell their products & solve customer problems Can be inbound or outbound

Web enabled approach to CRM

Use the following technology Automatic call distribution: A programmable telephone system
used in incoming call centres which automatically answers, queues & distributes calls to agents.Also plays delay announcements to callers, provide real-time & historical reports on these activities

Predictive dialing: A feature of a phone system where outbound

calls from a user elected list are automatically initiated & answered calls are passed to available service agents. Is designed to minimise the time between answered calls, thus enhancing agent productivity

Interactive Voice Response: A system with menu driven

choices that specify which choices you can make by hitting numbers on your telephone pad. Helps handle routine transactions without involvement of live agents

Web enabled approach to CRM

Use the following technology Computer Telephony Integration: A software that helps
application programs control the phone system. Helps increase employee productivity, enhance customer service & reduce costs with the custom functionality of Windows, Unix or Web applications. Data collected by ACD or IVR systems can be passed to existing PC, Unix or Web applications through the phone software

System integration
There should be seamless integration between the front office & backoffice applications

Customer lifetime value

Amount of money that a customer spends while doing business with a company in his entire lifetime. This will also include the money spent by his referrals in doing business with the company

Problems with CRM

Exorbitant Costs
Huge investment needed to maintain a customer database. Money required for computer hardware, software, personnel etc

Inadequate Focus on Objectives

When starting off on a CRM strategy the objectives are clearly established and followed Midway during the CRM implementation, when hard times hit, the organization loses sight of its goals and ultimately steers away from it

Insufficient Resources
Sometimes in phased implementation of CRM, if conditions worsen within the company or without, organizations start lessening their budgets for the current phase When funds are less, budgets get strained & the necessary costs required for CRM success are not employed. As a result CRM starts failing midway

Problems with CRM

Inappropriate Metrics
The old adage You cant manage what you cant measure is true for CRM also Failure to choose the right method of measurement and implementation is one of the chief reasons why CRM fails

Business Needs Most Important

One of the chief mistakes companies make is letting the technology drive their CRM functionality Instead they need to analyze their business problems first and then find the appropriate CRM solution for it

Slow Returns
Another failure of CRM is its inability to provide quick returns on investment Waiting for years to see their investments show results, tests patience and leads to both employees and management slackening their efforts in the implementation

Problems with CRM

No Customer Focus
Employees need to be motivated to be absolutely customer centric. This involves tremendous effort on the part of the company CRM problems arise because of employee reluctance to be more customer focused The result is a highly expensive customer strategy being adopted by the company in an effort to retain customers, with reluctant, unfocussed employees implementing it Most CRM problems can be mitigated, resolved and ultimately obliterated. What is highly required is the ability to focus on the business needs, choose a CRM package that works towards it, employ the right resources and assume the right metrics. Adopting these measures would go a long way in alleviating CRM problems.

CHAPTER 2

Technological tools for CRM

Data Mining
Is the discovery and presentation of non trivial, novel, interesting and ultimately potential useful information from a very large customer database or data ware house Information received above helps solve critical business problems. For eg: to increase market share, to improve internal productivity or to gain competitive advantage An inter-disciplinary field that takes its inputs from diverse but related disciplines Is usually done on data collected while undertaking day-to-day transactions of a company. Such data usually has less bias than data that has been specifically collected for the purpose of analysis Aims to facilitate the involvement of the end user in the discovery process without the need for trained experts either for running the various techniques or for interpreting the results

Applications of Data Mining

Covers a wide range of applications in commercial as well as non-commercial fields Commercial applications Non - commercial Customer profitability applications
Customer retention Customer segmentation Channel optimisation Targeted marketing Fraud prevention Market basket analysis Demand forecasting Price optimisation Oil exploration & research Medical research Crime investigations Astronomy & cosmology

Applications of Data Mining

Non - commercial applications
Oil exploration & research Medical research Crime investigations Astronomy & cosmology

Tools/Techniques of Data Mining

Cluster detection Decision trees Memory based reasoning Link analysis Rule induction Neutral networks Genetic algorithms Sequential pattern discovery

How to perform data mining

Step 1: Define business objectives Step 2: Prepare data
Data selection Preprocessing of data Data transformation

Step 3: Perform data mining Step 4: Evaluate results Step 5: Present discoveries Step 6: Ensure usage for discoveries

Data Mining in banks & insurance cos

A large customer base coupled with detailed demographic information Cross-selling & Up-selling of products can be taken up due to cost advantage in selling to an existing customer However, for this, a lot of investment needs to be done in communicating about the offers to customer
A better idea would be identify those customers who would respond favourably to those offers

The favourable prospects are identified by segmenting the database (using classification algorithms) Data mining provides the intelligence & knowledge needed to understand customers & their behaviour from past interactions

E-CRM
E-CRM can be defined as activities to manage customer relationships by using the Internet, web browsers or other electronic touch points E-CRM provides companies with a means to conduct interactive, personalized & relevant communications with customers across both electronic & traditional channels It utilizes a complete view of the customer to make decisions about messaging, offers & channel delivery It synchronises communications across disjointed customerfacing systems Thus, E-CRM is the management of customer interactions at all levels, channels, and media

Basic Requirements of E-CRM

Electronic channels
Web & personalised e-messaging

Enterprise
Construction & maintenance of a data warehouse that provides a consolidated, detailed view of individual customer behaviour & communication history

Empowerment
Deliver timely, pertinent & valuable information to the customer

Economics
Asset allocation to be directed at individuals likely to provide the greatest return on customer communication initiatives

Basic Requirements of E-CRM

Evaluation
Customer interactions across various customer touch points need to be evaluated & anticipated ROI should be compared against actual returns through customer analytic reporting

External information
Gathered from sources like web page profile applications & third party information networks

An E-CRM solution must have applications that synchronise customer communications across channels & do so in real-time

Need of E-CRM
CRM offerings remain channel centric rather than customer centric Customer facing systems create new islands of non-integrated information One of the reasons eCRM is so popular nowadays is that digital channels can create unique and positive experiences - not just transactions - for customers

E-CRM architecture
Following is a set of technical E-CRM capabilities & applications that collectively comprise a full E-CRM solution Customer Analytic Software:
Integrates with customer communications software to help companies transform customer findings into ROI producing initiatives

Data Mining Software:

Integrates with campaign management software to keep pace with multiple campaigns running daily or weekly

Campaign Management Software

Tests various offers against control groups, captures promotion history for each customer & prospect & produces output for any online/offline customer touch point

E-CRM architecture
Business Simulation:
Used in conjunction with Campaign Management software, optimizes offer, messaging & channel delivery prior to campaign execution & compares planned costs & ROI projections with actual results

Real Time Decision Engine:

Contains business intelligence to determine & communicate the most appropriate message offer & channel delivery in real time & support 2-way dialogue with the customer

E-CRM framework
START Identify opportunity Plan communication strategy

Points of sale SFA Call center Direct mail Web E-mail

Evaluate result

Customer warehouse

Present communication

Deliver recommendation in batch 2-way dialogue & channel synchronisation

Optimize strategy

E-CRM framework
Left hand cycle : set of e-marketing & offline marketing functions that utilise a single view of the customer contained in the single data warehouse Right hand cycle: a sample of customer channels, containing both electronic applications as well as traditional direct mail One-way arrow: one-way batch outputs to the channels Two-way arrow: bi-directional customer communications in real time & synchronization of communications across channels

Benefits of E-CRM
Service level improvements - Using an integrated database to deliver consistent and improved customer responses Revenue growth - Decreasing costs by focusing on retaining customers and using interactive service tools to sell additional products Productivity - Consistent sales and service procedures to create efficient work processes Customer satisfaction - Automatic customer tracking and detection will ensure enquiries are met and issues are managed. This will improve the customer's overall experience in dealing with the organisation
Automation - eCRM software helps automate campaigns including:
Telemarketing Telesales Direct mail Lead tracking and response Opportunity management Quotes and order configuration

Benefits of E-CRM
Captures and Reuses past experiences Ensures Knowledge Management- A strategy to organize and use available information, experience and expertise Focus on customers across organization Lower cost of service as servicing a customer online costs less Help to capitalize on most profitable customers Helps increase marketing capabilities through gathering enhanced demographic data Many forms of advertising are not as effective as they need to be. CRM enables a company to target their audience more precisely and gain customer retention, all at a lesser cost

How does E-CRM work?

In today's world, customers interact with an organisation via multiple communication channels-the World Wide Web, call centres, field salespeople, dealers and partner networks. Many organisations also have multiple lines of business that interact with the same customers eCRM systems enable customers to do business with the organisation the way the customer wants - any time, via any channel, in any language or currency-and to make customers feel that they are dealing with a single, unified organisation that recognises them every step of the way The eCRM system does this by creating a central repository for customer records and providing a portal on each employee's computer system allowing access to customer information by any member of the organisation at any time Through this system, eCRM gives you the ability to know more about customers, products and performance results using real time information across your business

CHAPTER 3

Implementing CRM

Steps to implement CRM

Need analysis Project planning Implementation Testing & quality assurance Deployment & training To implement CRM successfully, you'll have to reorganize your customer and change your organizational mindset. There are three important criteria

Steps to implement CRM

To implement CRM successfully, an organisation needs to reorganize customers and also change their mindset There are three important criteria
Good design interface: It has to be easier for a customer to give a company its information and for the company to capture that information Good memory: The company has to remember what the customer told them so that they dont need to ask the customer same question again Ability to integrate the information

These three criteria apply both on and off the Web

Measuring the effectiveness of Relship Marketing Research findings by Mr. A Lindgreen to measure effectiveness of relationship marketing are as follows:
The loyalty accounting matrix The relationship quality customer retention theory of creating shareholder value

Measuring the effectiveness of Relship Marketing

The loyalty accounting matrix

Satisfaction with the company H Yellow customer Green customer

Red customer

Yellow customer H

Relative attraction

The loyalty accounting matrix

Green customers More attracted to the company than competing business.. These customers need to be always kept satisfied & given special attention Yellow customers Score high on one parameter..hence greater scope to convert them into green customers by adopting an appropriate strategy Red customers More price sensitive; will move their business to suppliers of lower priced products..hence not very profitable to be concentrated on, by the company Thus, if the customers are properly chosen & administered with relationship marketing, good results can be achieved

The Relationship Quality model

Trust in credibility Customer revenue

Trust in benevolence

Customer`s cost

Affective commitment

Relship quality

Customer retention

Share of customer

Affective conflict

Employee satisfaction

Satisfaction
Social bonding

Share of future
Shareholder value

The Relationship Quality model

Relationship quality is made of 6 key constructs
Credibility Benevolence Commitment Healthy conflict Satisfaction Social bonding Relationship quality can be increased by bringing about an increase in the above mentioned factors. To achieve this, the businesses must meet its business customers more often, both formally & informally An increase/improvement in relationship quality will lead to increase in customer retention, thereby generating revenue for the business

The Past, Present & Future of CRM

The Past:
1960: Era of mass
marketing, standardised products were produced in large quantities in huge manufacturing set ups Products sold to all customers who wanted it & were willing to pay for it There was no segmentation or customisation

1980: Era of niche

marketing Small group of customers were offered customised service & products & they were ready to pay a premium for it

1990: Emergence of
relationship marketing Explosion of telemarketing & call centres , all set up to develop relationships with customers

1970: Introduction of
segmentation, direct mail campaigns & early telemarketing

The Past, Present & Future of CRM

The Present:
Now, organisations are moving through several stages of CRM as shown in the table below: Stage State Culture Satisfaction based Re-active 1. 2. 3. 1. 2. 1. 2. 3. Meet customer needs Respond to complaints Minimal evaluation of customer service levels Evaluate customer perception Identify customer retention factors Evaluate multiple customer needs Continuous inbound/outbound flow & feedback Continuous improvement

Performance based Commitment based

Pro-active

Very pro-active

The Past, Present & Future of CRM

The Present:
As seen from the table, a company can be just into CRM (satisfaction based), deep into CRM (performance based) or very much deep into CRM( commitment based) Depending on the companys commitment to keep its customers happy, it could be in reactive mode, proactive mode or very proactive mode In reactive mode, the company reacts to customer needs as it arises. In the other 2 states, the business tries to provide the services to the customers before they ask for it

The Past, Present & Future of CRM

The Future:
Customers will play a significant role in managing relationships Service models will continue to change The web will create globalisation Loyalty programs will be the necessity in order to retain customers

Customer loyalty models

Relationship Continuous model
Rational & emotional 2 major connects to make consumers accept a product/service Rational connect executed through communication of potential value of products/services like functional value, quantitative benefits etc Emotional connect made through perceived value of products/service which would help marketers enjoy brand equity This model primarily focuses on enhancing customer relationships through continuous value offering

Customer Need model

Helps marketers identify the level of consumer needs & design & deploy appropriate strategies to capture their mind & money share

Customer loyalty models

Customer Involvement model
Degree of customer involvement would enable marketers to decide on the products/services & the appropriate communication to reach them Higher the customer involvement - higher the degree of brand loyalty & affinity towards the product & services

Campaign Management
To inform customers about various products & ultimately sell them, marketing managers routinely conduct various marketing campaigns. They may be for:
Launch of a new product Increase visibility of an existing product Re-launch of an old product with more features Campaigns for specific occasions & others

Many of these campaigns may be conducted in multi locations across various communication channels Campaign management solutions are software products that help plan, design, execute & measure the effectiveness of marketing campaigns

Campaign Management
Campaign management software works as follows:
Segment: Defining the campaign population & using different models to filter them Plan: Creating the campaign Execute: Scheduling the campaign across various channels like direct mail, email, telephone, SMS etc.. Track: Monitoring direct & inferred responses & tracking return on investment

Campaign management usually depends on Interruption marketing

Interruption marketing happens when a customer receives an unannounced phone call or unsolicited e-mail. Eg: pop-up windows in Internet

Campaign Management
Another type of campaign management E-campaign management based on Permission marketing

Response Management
Depending on which type of campaign management is used, the response also varies 2 types of response management
Traditional response management E-marketing response management

Traditional Response Management

Marketing campaign

Email

Time

Telephone response

Registration information

Others

Campaign refinement New Marketing campaign E

TR RI

E-marketing Response Management

E-marketing campaign

Email

Time

Telephone response

Registration information

Others

Feedback

Response Management
E-marketing response management is the process by which huge amount of customer feedback is consolidated for a campaign & the result studied as the campaign progresses
Hence mistakes made are rectified as the campaign progresses

In the traditional method, marketing people had to wait till a campaign was over to learn about the mistakes made & hence launch another campaign.
Time involved was enormous , almost double the time involved in emarketing response

CHAPTER 4

Relationship Management in Business To Business Commerce

Building customer loyalty in business-to business market

Need
As end customers demand better value proposition from the manufacturer in terms of quality, product variety & convenience; manufacturers expect the following from their vendors Greater responsiveness Reliability Quality consciousness Higher service level Integration with their system Bundled products & services Fierce competition & maturing markets have forced vendors to focus on building loyalty with their customers

Building customer loyalty in business-to business market

Market Intelligent Enterprise model of Price WaterHouse Cooper
Market Intelligent enterprise is an enterprise that instutionalises the capacity to acquire & apply market information quickly across & effectively manage customer relationships with the best customers & the best prospects Aligns strategy & process with customer expectation

Managing customer expectation

Managing customer relationship based on ongoing customer value

Embrace market intelligent technology Identify customer expectation

Collect customer information as strategic asset

Developing a MIE

Building customer loyalty in business-to business market

Collecting customer information as strategic asset
Collects information not only on its current customers but also its prospective & target customers Salesmen an important source for critical customer information. Hence important to educate them on the value & methodology of collecting this information

Identifying customer expectation

Customer expectation would generally be a combination of the following Supply reliability & flexibility Supply lead time (time between production & delivery) Quality Price Technological support Integration with customers process & systems

Building customer loyalty in business-to business market

Most industrial customers have a well defined vendor evaluation methodology..hence necessary for the market intelligence enterprise to identify the key drivers of customers expectations It can either be changing end market conditions or the specific competitive advantage of the manufacturer

Aligning strategies & processes with customer expectations

Processes like manufacturing cycle, procurement time & delivery time to be redesigned according to customers expectation The processes to be aligned after identifying the key process matrix of the customer

 Managing customer expectation

Building customer loyalty in business-to business market

Post alignment of processes, it is necessary to communicate the same to the customer This can be done by managing customer interactions across various touch points like marketing, customer support, billing & payment, product development If practised properly, a market intelligent enterprise can change a customer who is a terrorist into an advocate Terrorist Rejecters Defectors Vulnerable Supporter Advocate

Building customer loyalty in business-to business market

One of the objectives of managing customer expectation for an enterprise is to convert key customers to advocates & address the grievances of terrorists In between the Rejectors, Defectors, Vulnerable & Supporters are the different stages through which a customer passes if handled properly by the business

Managing customer relationship based on ongoing customer value

Key customers can be identified on two basis Customer Lifetime Value: Total amount of value the customer brings to
the business directly or indirectly during his/her lifetime Generally measured as the monetary benefits the customer brings to the business

Building customer loyalty in business-to business market

Strategic importance of customer : Strategic importance
can be realised by considering the following points
How important is the customer to the achievement of the mission of the enterprise? What will be the overall impact of losing a particular customer? Does the enterprise gain any technical know how/skill set from the customer?

Based on the above values, the customers can be scaled on an increasing basis as shown below Customer Value
1. Do nothing/sell current value 2. Limited enhancement, cross sell with bundled benefits 3. Respond with enhanced feature & discount with certain parameters 4. Respond & match with competitors offer 5. pre-emptive refinement of offer

 Embracing market intelligent technology

Building customer loyalty in business-to business market

Technology plays an important role by facilitating information flow across the value chain But, the technology used like business application (ERP, CRM packages) & database used should be integrated properly to help relationship building with customers

M/E Technology template

Customer/Prospect/ Employee touch points

Mail,face to face, self-service, telephone

Business applications

Front office

Back office

Data stores

Data warehouse & operational data stores

Key Account Management or Relationship Chain

Weaving the web:
Planning the relationship Mapping the customer organisation Understand value drivers

Formalising the web:

Forming the contact matrix Owning the relationship Monitor tangible delivery

Managing the web:

Positive impact analysis Managing total Business experience

Enhancing the web

Key Account Management or Relationship Chain

A dedicated account team forms a contact matrix wherein different members from the vendor team develop & maintain contacts at various levels in the manufacturing organisations The relationship is built through the following steps

Weaving the web: The first stage involves laying the

foundation for the relationship. It involves the following:
Planning the relationship
During this stage, vendor consistently delivers in terms of specifications, performance, quality, reliability etc. Long term & short term plans are formulated based on customers growth potential

Key Account Management or Relationship Chain

Mapping the customer organisation
Vendor identifies key people in the customers organisation responsible for the business of the customer with the vendor Key people can be decision makers like purchase manager, production manager etc. or influencers like finance manager etc.

Understanding value drivers

Each of the key players identified above will have different value drivers ie: they consider certain things to be more important than others. For eg: for the purchase manager, cost might be the value driver, for production manager, timely delivery might be the value driver

Key Account Management or Relationship Chain Formalising the web:

Forming the contact matrix
Key account management is decided at this stage Members of the team are matched with the key people in the customers organisation. For eg; R&D expert in the vendors team will be mapped with the end users in the manufacturers company because the end users can give critical inputs which R&D expert can implement during product development

Owning the relationship

At any point of time, the vendor is responsible for the relationship Road map & timetable for the visits are created at this stage Two things are very important for the sustainability of the relationship

Key Account Management or Relationship Chain

Hierarchy: There must be equal participation from all levels of the organisation on both the sides Personal chemistry: People having one o one relationship must be comfortable in the interactions

Monitoring tangible delivery

A serious failure in delivery of promises, either tangible or intangible at this stage can be perceived as a breach of trust

Managing the web: Relationship has to be managed to give

higher value ie: profitability for the vendor & enhanced solutions for the customers. This can be done by 2 steps:
Positive impact analysis: Using increased exposure that the vendor gets with the customer, the interfaces can be classified into 3 kinds

Key Account Management or Relationship Chain

Positive impact analysis: Using increased exposure that the vendor gets with the customer, the interfaces can be classified into 3 kinds
Necessary impact interfaces: These things must be done like quotation, on time delivery etc. High impact interfaces: These activities by the vendor are highly appreciated by the manufacturer eg: giving a toll-free number for service queries Low impact interfaces: These things that the vendor does goes unnoticed by the manufacturer eg: changing the colour of the package

Managing total business experience

Vendors organisation is aligned to the customers processes All interaction points are monitored & quality of interaction specified internally. Thus the total experience of the business customer is managed