UNIT-V CRM - identifying and Satisfying Customer needs - Relationship marketing - Customer

Satisfaction - Managing Service Brands.

Definition of CRM
According to Philip Kotler and Gary Armstrong, „CRM is concerned with managing

detailed information about individual customers and all customer “touch points” to maximize

customer loyalty. It can also be defined as, „an alignment of strategy, processes and technology

to manage customers, and all customer-facing departments and partners‟. In short, CRM is about

effectively and profitably managing customer relationships through the entire life cycle.

Elements of CRM
CRM Comprises of Several Components which are essential to the organization. The
components of CRM are:
1. People Management:
Effective use of people in the right place at the right time is called people management. It
is very essential the job roles assigned to the employee are in accordance to their skills and
capabilities. At the initial stage, an effective people strategy is adopted and followed by work
force analysis. The analysis of work force includes the analysis of their skills and development.
Finally, the strategy which would be required for the development and change is set down and
implemented.

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2. Lead Management:
Keeping a track of sales leads and its distribution is the essence of lead management. The
benefits of lead management are directly available to the sales, call center and marketing
industries. The activities involved in lead management relate to market campaign, making
customized forms, mailing lists etc. These activities are performed with a view, to capture
maximum sales leads which would add to the sales. This can be achieved through a
comprehensive study to purchase the patterns, patterns of the customers and the identification of
potential sales leads.
3. Sales force automation:
Sales force automation (SFA) is the most essential component of CRM. It is used by
almost all organization. It is a software solution that includes forecasting, tracking potential
customers, interaction with customers and processing sales. It helps in identifying revenue
possibilities. SFA includes opportunity management i.e. supporting sales methodologies and
provide interconnection with other functions to the company. The sales force automation has the
capability to perform correct management, activity management, document management, order
management, sales analysis and product configuration.
4. Customer Service:
Customer service is also an important CRM because CRM focus on comparison of
customer data, gathering information related to their purchase patterns. CRM also provides this
information to every department that requires it. Therefore, sales, marketing and personnel
department are able to gain in their knowledge of the customer. This enables the organization to
provide suitable solution to every customer. Thus, enhances the retention of customers and their
loyalty.
5. Marketing:
It involves the promotional activities that are involved in promoting a product. It may be
aimed to the general public or to a specific group. CRM facilitates in increasing the effectiveness
of marketing by studying the potential targeted customers.

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6. Work flow automation:
Work flow automation is a very productive component of customer relation management.
Work flow process mainly includes the streamlining of process which ultimately help in
reducing cost. Work flow automation saves time and energy of several people doing the same job
again and again. It relieves work force from unnecessary tasks. It avoid paper work. This process
also includes the integration of people and processes, so that they work in harmony achieving a
common objective. This whole process of work automation saves time, money and effort.
7. Business Reporting:
CRM plays an important role by providing reports on the business. Business reporting
simply means the ability to identify the exact position of your company at any given point of
time. Business reporting as a component of CRM serves the benefit of instant access to
information at any given point of time. It also ensures accurate information. This component of
CRM helps in exporting these reports to different systems and also helps in comparison of
historical data.
8. Analytics:
Analytics is the study. The data is studied so that information can be used to study the
market trends. Historical and current data help in the creation of charts and diagrams which
ultimately facilitates a complete trend study. Analytics is an essential and pivotal part of CRM
because it enables study of data which can be used further to makes an estimate of the business
conditions at any given point of time.

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Need and Importance of CRM:
1. Better service to customers:
CRM provides more avenues for customers to communicate and explain their needs to

the organization through numerous contact points. Customers get increased satisfaction and a

feeling of being special and important because of the increased personalization of services and

customization of goods offered to them.

For example, ICICI Bank maintains a list of priority customers and provides them with

additional facilities and special offers such as free tickets to concerts, movies, and so on. Some

banks, such as Syrian Catholic Bank provide personalized services to their important customers.
2. Customization of market offerings:
Companies can customize a product or service depending on the data available with the

firm. The firm can facilitate customer-company interaction through the company contact centre

and web site. Such interactions help develop customized products.

3. Reduction in the customer defection rate:
CRM emphasizes on training and development of the employees to become more

customer oriented. Due to CRM training and development, employees show care and concern

towards the valuable customers; therefore, the customer defection rate may be reduced to a great

extent.
4. Increase and improvement in long-term relationships:
Some firms treat their customers as partners. Firms solicit the help of the customers to

design new products or to improve their services. If the customer gets involved with the firm,

they are more likely to remain with the firm.

5. Increase in customer equity:
CRM increases customer equity. Firms focus the marketing efforts more on the most

valuable customers (MVCs). The main aim of CRM is to produce high customer equity.

Customer equity is the sum of lifetime values of all customers. More focus on MVCs will enable

a firm to increase the customer equity.

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6. Competitive advantage:
The firms that adopt CRM get competitive advantage in the market. They can face the

competition with much ease. Competitive advantage helps in generating higher returns on

investment.
7. Building and maintaining corporate image:
The image of the firm also gets enhanced. Loyal customers become evangelists. The

evangelists spread a good word about the company and its products. This enables a firm to get

additional customers to its fold.

8. Higher return on investment:
Due to CRM, a company gains a position to generate higher returns on investment. This

is because of the repeat purchases on the part of the loyal customers. The company also makes

money through cross selling. The higher return on investment increases the shareholders‟ value.

CRM process
CRM process can be defined as any group of action that is instrumental in the
achievement of the output of an operational system, in accordance with a specific measure of
effectiveness. CRM is a process of acquiring, retaining and partnering with selective customers
for creating superior value for the company and the customer. The need to set up a CRM process
may arise because of the growth in the business or for the proper management of customers.
The CRM process involves the following five steps:
Identifying Target Market and Value proposition
↓
Defining Overall Strategy
↓
Deciding on Customer Handling
↓
Selection of Software for Performance Management
↓
Re-engage Customers

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1. Identifying the target market and value proposition:
This is the first step in establishing a CRM process, for effective results, the target market
must be clearly defined. The definition of target market will depend on psychographics,
demographics tastes and preferences of the customers. These factors would include age, sex,
religion, interest, and perception of the customers. Efforts should be made to offer a clear value
proposition. A value proposition is a promise of a value which will be delivered by vendors. It is
specifically targeted towards potential customers. It is defined and designed to convince
customers that a particular product or service will add more value than competitive set of
products.

2. Defining the Overall CRM Strategy and Consider Costs.

This step involves the selection of a customer relationship strategy. The choice of
strategy would be based on the type of customer service to be offered by the business. It would
also include the decision relating to the type of relationship management that would work better
for the business and the customers. There are various strategies available for a customer
relationship manager. The CRM process can be co-created with the help of customers. The
business can have a dedicated online CRM community or may also involve the handling of
customers with hands on assistance i.e. the traditional way of dealing with customers.

3. The Way Of Handling Each Customer Type Should Be Defined.

This step involves the manner in which each type of customer is to be handled throughout
the CRM process. This can be done with the help of customer profiles in priority from step 1 and
the customer service strategies in step 2.

4. Selection of CRM Software for the Measurement of Performance.

Every organization, whether big or small will install a CRM SOFTWARE to measure the
performance of its strategy. CRM software helps in reducing the complexity of the process each
software provides a definite solution. The best CRM software solutions include SAAS (software
as a service delivered online), and innovations in Thai area improve regularly. This ensures that
there is no need of an in-house IT team and server space which would have been expensive.

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5. Re – Engage Customers
Customer engagement is a complex and never-ending task. Customers should be
regularly engaged in the organizations products and services. This will help in creating a
reminder in the minds of customers. Re-engaging of customers positively in the business is
utmost important and yields excellent results. Following are the three most used forms of
customer‟s re-engagement in the CRM PROCESS: -Customer satisfaction surveys -E-mails. -
Social media.

Types of CRM
CRM systems are divided based on their prominent characteristics. There are four basic types of
CRM systems −
1. Strategic CRM
2. Operational CRM
3. Analytical CRM
4. Collaborative CRM
The following table lists the types of CRM and their characteristic features −

Type Characteristic

Strategic CRM Customer-centric, based on acquiring and maintaining profitable

customers.

Operational CRM Based on customer-oriented processes such as selling, marketing, and

customer service.

Analytical CRM Based on the intelligent mining of the customer data and using it tactically
for future strategies.

Collaborative CRM Based on application of technology across organization boundaries with a

view to optimize the organization and customers.

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1. Strategic CRM
Strategic CRM is a type of CRM in which the business puts the customers first. It
collects, segregates, and applies information about customers and market trends to come up
with better value proposition for the customer. The business considers the customers‟ voice
important for its survival. In contrast to Product-Centric CRM (where the business assumes
customer requirements and focuses on developing the product that may sometimes lead to over-
engineering), here the business constantly keeps learning about the customer requirements and
adapting to them.
These businesses know the buying behavior of the customer that happy customers buy
more frequently than rest of the customers. If any business is not considering this type of CRM,
then it risks losing the market share to those businesses, which excel at strategic CRM.
2. Operational CRM
Operational CRM is oriented towards customer-centric business processes such as
marketing, selling, and services. It includes the following automations: Sales Force Automation,
Marketing Automation, and Service Automation. Salesforce is the best suitable CRM for large
established businesses and Zoho is the best CRM for growing or small-scale businesses.

a).Sales Force Automation

 SFA is the application of technology to manage selling activities. It standardizes a
sales cycle and common terminology for sales issues among all the sales employees of a
business. It includes the following modules −
 Product Configuration − It enables salespersons or customers themselves to
automatically design the product and decide the price for a customized product. It is
based on if-then-else structure.

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  Quotation and Proposal Management − The salesperson can generate a quotation of
the product prices and proposal for the customer by entering details such as customer
name, delivery requirements, product code, number of pieces, etc.
 Accounts Management − It manages inward entries, credit and debit amounts for
various transactions, and stores transaction details as records.
 Lead Management − It lets the users qualify leads and assigns them to appropriate
salespersons.
 Contact Management − It is enabled with the features such as customers‟ contact
details, salespersons‟ calendar, and automatic dialing numbers. These all are stored in the
form of computerized records. Using this application, a user can communicate
effectively with the customers.
 Opportunity Management − It lets the users identify and follow leads from lead status to
closure and beyond closure.
b).Marketing Automation
Marketing automation involves market segmentation, campaigns management, event-
based marketing, and promotions. The campaign modules of Marketing Automation enable the
marketing force to access customer-related data for designing, executing and evaluating targeted
offers, and communications.
Event-based (trigger) marketing is all about messaging and presenting offers at a
particular time. For example, a customer calls the customer care number and asks about the rate
of interest for credit card payment. This event is read by CRM as the customer is comparing
interest rates and can be diverted to another business for a better deal. In such cases, a
customized offer is triggered to retain the customer.
c).Service Automation
Service automation involves service level management, resolving issues or cases, and
addressing inbound communication. It involves diagnosing and solving the issues about
product.
With the help of Interactive Voice Response (IVR) system, a customer can interact with
business computers by entering appropriate menu options. Automatic call routing to the most
capable employee can be done.

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 Consumer products are serviced at retail outlets at the first contact. In case of equipment
placed on field, the service expert may require product servicing manual, spare parts manual, or
any other related support on laptop. That can be availed in service automation.
3. Analytical CRM
Analytical CRM is based on capturing, interpreting, segregating, storing, modifying,
processing, and reporting customer-related data. It also contains internal business-wide data
such as Sales Data (products, volume, and purchasing history), Finance Data (purchase history,
credit score) and Marketing Data (response to campaign figures, customer loyalty schemes
data). Base CRM is an example of analytical CRM. It provides detailed analytics and
customized reports. Business intelligence organizations that provide customers‟ demographics
and lifestyle data over a large area pay a lot of attention to internal data to get more detail
information such as, “Who are most valuable customers?”, “Which consumers responded
positively to the last campaign and converted?”, etc.
Analytical CRM can set different selling approaches to different customer segments. In
addition, different content and styling can be offered to different customer segments. For the
customers, analytical CRM gives customized and timely solutions to the problems. For the
business, it gives more prospects for sales, and customer acquisition and retention.
4. Collaborative CRM
Collaborative CRM is an alignment of resources and strategies between separate
businesses for identifying, acquiring, developing, retaining, and maintaining valuable
customers. It is employed in B2B scenario, where multiple businesses can conduct product
development, market research, and marketing jointly.
Collaborative CRM enables smooth communication and transactions among businesses.
Though traditional ways such as air mail, telephone, and fax are used in communication,
collaborative CRM employs new communication systems such as chat rooms, web forums,
Voice over Internet Protocol (VoIP), and Electronic Data Interchange (EDI).

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 There are collaborative CRMs with in-built Partner Relationship Management
(PRM) software application which helps in managing partner promotions. SugarCRM is a
popular collaborative CRM. It enables expert collaboration and provides state-of-the-art social
capabilities.
Customer Needs Identification - Meaning
Customer Needs Identification is the process of determining what and how a customer
wants a product to perform. Customer Needs are non-technical, and they reflect the customers‟
perception of the product, not the actual design specifications, although frequently they are
closely related.
Objectives of Customer Needs Identification
1. To keep the product focused on customer needs
2. To identify not just the explicit needs of the customer, but also the latent needs
Method for Identifying Customer Needs:
1. Gather raw data from customers
2. Interpret the data in terms of customer needs
3. Organize the needs
4. Reflect on the Process

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1. Gathering Raw Data
Intuitively, the first step must be to gather data from the customers. Without their input, it
would be impossible to identify their needs. “Gathering needs data is very different than a sales
call: the goal is to elicit an honest expression of needs, not to convince a customer of what he or
she needs”. Try to learn as much as possible about the customers; the data are there to serve as
guidelines for product development. There are three recommended ways to gather data, and there
is one common trap that usually provides deceptively shallow data. First, the three robust
methods for collecting information:
a) Interviews: Interviews are one-on-one meetings with potential customers, usually 1-2
hours in length. Frequently they take place in the customer‟s own environment, as they
are more comfortable there and there is a chance to see a problem in action.
b) Focus groups: Focus groups are like expanded interviews. They are about 2 hours long,
and they involve about 8 to 12 customers. The group is lead in a discussion by an
interviewer. It is very common for the group to be watched by some number of unseen
observers who take notes on the proceedings.
c) Observation: Seeing someone struggle with a problem is an easy way to get a general
understanding of the issue. And frequently you are not the first person to identify that
problem, so “watching customers use an existing product or perform a task for which a
new product is intended” is a perfectly reasonable way to identify customer needs, as
well as ways in which successful companies are attempting to solve them
2. Interpreting Data
After the interviews it is usually necessary to translate the vague statements of the customers
into a useful list of needs. As this is a relatively subjective process, “multiple analysts may
translate the same interview notes into different needs”. For that exact reason, it is beneficial to
have multiple people work on the interpretations. So how, exactly, does one transform what the
customer says into something you can work with? Here is a useful process with several helpful
constraints and suggestions for expressing the data.
 Write the needs in terms of what the product has to do, not how it might do it.
 Express the needs as specifically as the raw data
 Use positive phrasing
 Express the needs as an attribute of the product

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  Avoid the words must and should
3. Organizing Needs
After interpreting the data, organize them. Group similar needs together, prioritize them, etc.
Decide what is truly important to the customer. Define the “critical needs,” those needs which
absolutely must be met before the product can be considered successful. In the 1980‟s Professor
Noriaki Kano developed a categorization system called the Kano Method, which helps to
organize needs. The essence of the Kano Method is the five Qualities that product features can
have (Figure 2).
1. Attractive Quality: when these product qualities are met they provide satisfaction, but when
they are not met they do not cause dissatisfaction. For example, when a backpack has a
separate compartment for a laptop.
2. One-Dimensional Quality: when these qualities are met they provide satisfaction, and when
they are not met they create dissatisfaction. For example, when the shoulder straps on a
backpack are padded, they provide comfort, but when not padded they are painful.
3. Must-Be Quality: these product qualities are assumed to be met, and they cause
dissatisfaction when they are not met. Backpacks are expected to be able to hold books.
4. Indifferent Quality: these qualities are neither good nor bad, and they do not increase nor
decrease customer satisfaction when met or not met.
5. Reverse Quality: The qualities cause either satisfaction or dissatisfaction when met, but it is
customer dependent. For example, backpacks with a lot of compartments and pouches. Some
customers really like the wealth of storage options these spaces provide, and other customers
actively dislike how excessive or unmanageable those same spaces are.

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Figure 1
Diagram of the Kano model. Source: Image by Craigwbrown at Wikipedia
4. Reflect on the Process
The final step in the Customer Needs Identification process is to reflect on what‟s been
done. Consider the statements that have been gathered and study the interpretations. Try to
evaluate how the process was executed. Have all types of customers been interviewed? Do any
customers require follow-up interviews? Are any of the needs surprising?
What is Customer Satisfaction?
Customer satisfaction is defined as a measurement that determines how happy customers
are with a company‟s products, services, and capabilities. Customer satisfaction information,
including surveys and ratings, can help a company determine how to best improve or changes its
products and services. An organization‟s main focus must be to satisfy its customers. This
applies to industrial firms, retail and wholesale businesses, government bodies, service
companies, nonprofit organizations, and every subgroup within an organization.

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Techniques (or) Methods of Measuring Customer Satisfaction
1. Customer Feedback through Surveys
2. Customer Satisfaction Score
3. Net Promoter Score
4. Customer Effort Score
5. Web-Analytics
6. Social Media Metrics
1. Customer Feedback through Surveys:
Surveys are an essential method of measuring the quality of customer service. It is better
to ask your customers directly what they think of your service, rather than just self-calculations.
Initiate different types of surveys on various channels, mostly after the service is provided.
Surveys can be hosted in 3 different ways:
a) In-App Surveys:
Customers often tend to ignore such surveys unless they are caught in the action. The best
way to get an honest feedback is while they are availing your services on your app. initiate a
post-purchase or post-service survey. The response rate is definitely higher and the feedback is
most likely to be honest.
However, these surveys should not hinder the customer experience when availing the service.
The survey should be short and precise and smoothly integrated with the application.
b) Post-Call Surveys:
The best feedback is received as soon as the interaction gets over. CSAT surveys can be
initiated as soon as the call gets over. The caller can provide the feedback by just pressing a key,
which is automatically rolled up to the supervisor in the CSAT report.
c) Email Surveys:
These surveys are for long-time customers who have made repeat purchases. Email them a
form-based study with insightful questions. Keep those questions relevant to the customer‟s goal,
for better engagement. The answers are often lengthy; hence the response rate might be low. But
let‟s not get demotivated! Send out those surveys whatever feedback you get is bound to be
valuable.

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d) Voluntary Feedback:
Sometimes customers tend to provide feedback without any nudge from your end. This
can be for various reasons. Either they had a bad experience or an extremely good experience or
they want to let you know. However, an automated response often repels them from further
engagement. Thus, ensure a personalized response or arrange a phone call to understand the
customer‟s expectation. Furthermore, positive feedbacks can be recorded as success stories to
encourage other customers.
2. Customer Satisfaction Score:
The customer satisfaction score or the CSAT score is a universal metric used to rate a
customer's recent interaction with the customer service team. The parameter ranges from 1-5,
where the lowest number denotes highly unsatisfied, and the highest number indicates highly
satisfied. The more positive feedback results in a higher CSAT score.
The CSAT is an elementary method of understanding the quality of your service as it does not
indicate any essential factors from the interaction that took place. More than often, customers
vaguely choose either of the options because the service was indifferent.
3. Net Promoter Score:
According to a study in 2020, 64% of customers are more likely to recommend a brand to their
friends or families if it offers simpler experiences and communications. The net promoter score
or the NPS revolves around this point.
NPS was introduced to fill in the gaps which CSAT couldn‟t. NPS determines how likely a
customer will recommend a particular product/service to their friends. The scale ranges from 1-
10 where 1 denotes „not at all likely‟ and 10 denote „extremely likely.‟
4. Customer Effort Score:
The customer effort score, or CES, is a customer-centric approach for understanding the
quality of customer service. Here the customer is asked about the amount of effort he or she had
to put to avail the customer service for getting an issue resolved. Alternatively, it is asked if the
organization had made it easier for the customer to interact with the customer support team. The
scale ranges from 1 to 5, where 1 denotes fewer hardships, and 5 denotes excessive hassle.

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5. Web-Analytics:
Analytics is a data-driven metric that works without any direct involvement of the
customer. Web-analytics crawls your website traffic actively, reads the sales funnel, understands
the customer behaviour, and predicts future conversions. In-built attribution models give better
insights of touch points; most frequently visited FAQs, and more. These insights, if compiled
and utilized smartly, can result in a successful customer service strategy that can be a crucial
differentiator in this economy.
6. Social Media Metrics:
Customers are more vocal on the social media, today. They flaunt their purchases online
while dissing the brands that dissatisfy them. Social media is a two-way sword. Keeping that in
mind, it can be used to understand what the customers are saying about your product. Most social
media platforms come with a business account facility that provide an analytics dashboard.
Observe your audience and focus on their comments, on their recommendations. Customer
support teams can gather these data and formulate strategies to improve the
satisfaction/engagement levels for better social media presence.
What is Brand Management?

Brand management is a concept which deals with strategizing and evaluating brands in
terms of brand positioning, target customers, brand perception and brand image. For brand
management, the company should maintain a good image among the customers. The main
objective of brand management is to ensure that the product and service highlight the quality of
the brand.

Component of Brand Management

The brand image component of brand management can be maintained by tangible as well as
intangible aspects of the product.

 Tangible aspects of brand management include the core product, price, packaging,
augmented product etc.
 The intangible aspects of brand management include product positioning, customer
experience, value added services, customer relationship with the brand. Brand manager is
responsible for all these.

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Brand Management Process

Brand management process includes the following steps:

1. Identify Brand Positioning and Value

The first step in the brand management process is to understand the product and service
offering in terms of positioning and brand value it offers to the customers. This is the foundation
for companies as how they want the customers to perceive their product or service is a part of
brand development.

2. Brand Marketing Planning

Brand building is the next step in brand management for a product/service. This process
includes creation of the brand by creating components like pricing, packaging, customer service
etc. Also, brand awareness techniques like marketing, branding & advertising also come under
this step. Companies use integrated marketing communications (IMC) to promote its products &
services.

3. Measuring Brand Performance

It is not simply important to create brand but to also measure its performance vis-à-vis
competitors & other market dynamics. This step in brand management identifies parameters like
brand recall, brand preference, brand recognition etc.

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4. Growth & Sustainability

The final step in the brand management process post evaluation is to improve the brand
performance to ensure growth and sustainability. Brand equity is the measure of the quality
offered by a product and service.

Importance of Brand Management

Brand management is a concept adopted by companies & marketers to create an

emotional connect between customers and their product. Through brand management, an image
of the product or brand is created in the mind of the consumer. This becomes the foundation of
not only acquiring new customers but also increasing brand loyalty amongst existing users. Also,
brand management is important for any business as it helps companies evaluate the performance
of the brand and helps them improve and adapt with changing times. Inability to change with
customer preferences and needs can lead to the demise of the brand. A good overall brand
management can help increase business and have strong advocates for the brand. Brand
management is an important marketing strategy which helps companies establish their brand &
products.

Brand Management Examples

Some of the leading companies in the world have successfully used brand management to
make their brand top in the mind of the consumer. Consider the leading global brands like Nike,
Mercedes, Pepsi, Coca Cola, and Microsoft etc. All these companies are the best examples of
how companies do business using brand management as an integral part of their processes. All
these companies produce high quality products & services, and have a strong brand image (core
product, brand image). Once the products are ready, these companies use various media channels
like TV commercials, social media, online advertising, print ads etc to create brand awareness
among customers. The big companies ensure high quality post-purchase customer service and
are receptive to critical feedback which helps in improving their brand. Thus, all companies
using end-to end brand management processes for effective business are the best examples.

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Advantages of Brand Management

There are several benefits of brand management, some of which are highlighted below:

1. Brand management helps create an emotional connect between customers and products.

2. Effective brand management helps the business grow as consumers become loyal and
advocate for the products & services. Customer loyalty further helps boost business.

3. Taking critical and important feedback helps companies improve based on consumer insights.

4. Brand management‟s helps companies adapt their strategies with changing times based on the
needs and requirements of the customers.

5. Tools like brand development index (BDI), help a brand grow and fight competition.

What Is the Bottom Line?

The bottom line refers to a company‟s earnings, profit, net income, or earnings per share)
EPS. The reference to the bottom line describes the relative location of the net income figure on
a company's income statement.
The term "bottom line" is commonly used in reference to any actions that may increase
or decrease net earnings or a company's overall profit. A company that is growing its earnings
or reducing its costs is said to be improving its bottom line. Most companies aim to improve
their bottom lines through two simultaneous methods: increasing revenues (i.e., generate top –
line growth) and improving efficiency (or cutting costs).

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