Customer

Relationship
Management
Lesson 1
What is CRM
• It is an upright concept or strategy to solidify relations
with customers and at the same time reducing cost and
enhancing productivity and profitably in business
• CRM system provides a well defined platform for all
business units to interact with their clients and fulfil all
their needs and demands very effectively and to build
long-term relationship.
• It is a model for managing a company’s interactions
with current and future customers.
What is CRM
• It involves using technology to organize, automate and
synchronize sales, marketing, customer service and
technical support.
• It is a new business philosophy based on trust and
value.
• It provides selling organizations with the platform to
obtain a competitive advantage by embracing customer
needs and building value-driven long-term
relationships.
 An ideal CRM system
• A centralized collection all data sources under an
organization and provides an atomistic real time vision
of customer information
• Vast and significant, but it can be implemented for
small business, as well as large enterprises also as the
main goal is to assist the customers efficiently.
• Piles up this information centrally examines it and then
makes it addressable within all the departments.
• It is not only used to deal with the existing customers
but is also useful in acquiring new customers
 An ideal CRM system
• The process first starts with:
 Identifying a customer and maintaining all the
corresponding details into the CRM system which is also
called an Opportunity of Business
 The sales and field representatives then try getting business
out of these customers by sophistically following up with
them and converting them into a winning deal
 Customer Relationship Management strategies have given a
new outlook to all the suppliers and customers to keep the
business going under an estimable relationship by fulfilling
mutual needs of buying and selling.
Timelines of
CRM
• 1980s: Database marketing emerges
• 1980s: Database helped larger organizations rather then
small who only got survey type info
• 1990s: CRM appears as a two-way communication device
• 1990s: CRM leads to programs such as frequent flyer
miles and bonus points on credit cards.
• 2000s: Internet has helped expand from stagnant
database and allows off-site information storage
• 2000s: Used most frequently in financial services, high
tech corporations
• The outgrowth in origin of CRM as a strategic approach
is a result of some of the following important
perspectives:
 The belief that customers are the real assets and not
just the people in the audience.
 The maturation of one-to-one transaction advent.
 Extensive use of software and technologies to maintain
useful information and no manual labour.
The realization of the benefits of utilizing information
proactively and not reactively
The change of business view to relationship approach
rather than transactional approach.
 The approach of concentrating more on customer values
rather than concentrating on how the product is delivered to
the customer.
 The approach of focusing on customer satisfaction and
loyalty rather than focusing self satisfaction and profit.
 The acceptance of the fact that using high end technologies
and software the cost can radically be decreased without
compromising on quality and service of products.
 The increasing tendency to retain existing customers and
trying to get more and more business out of them.
 The realization that the traditional trends of marketing and
selling are increasingly fading out in the current economic
scenario.
 Determinants of CRM
• Trust

The willingness to rely on the ability, integrity, and

motivation of one company to serve the needs of
the other company as agreed upon implicitly and
explicitly
 Determinants of CRM
• Value

The ability of a selling organization to satisfy the

needs of the customer at a comparatively lower
cost or higher benefit than that offered by competitors
and measured in monetary temporal, functional and
psychological terms.
 Determinants of CRM
• In addition to trust and value:

 Understand customer needs and problems;

 Meet their commitments;
 Make sure that the customer is always told the truth
(must be honest);
 Have a passionate interest in establishing and
retaining a long-term relationship.
 Features of CRM
• Customers Needs
• Customers Response
• Customer Satisfaction
• Customer Loyalty
• Customer Retention
• Customer Complaints
• Customer Service
 Customer Needs
• An organization can never assume what actually a
customer needs.
• Hence it is extremely important to interview a
customer about all the likes and dislikes so that the
actual needs can be ascertained and prioritized.
• Without modulating the actual needs it is arduous to
serve the customer effectively and maintain a long-
term deal.
 Customer Response
• Customer response is the reaction by the organization to
the queries and activities of the customer.
• Dealing with these queries intelligently is very important as
small misunderstandings could convey unalike perceptions
• Success totally depends on the understanding and
interpreting these queries and then working out to provide
the best solution.
• During this situation if the supplier wins to satisfy the
customer by properly answering to his queries, he succeeds
in explicating a professional and emotional relationship
with him.
 Customer Satisfaction
• Customer satisfaction is the measure of how the needs
and responses are collaborated and delivered to excel
customer expectation
• In today's competitive business marketplace, customer
satisfaction is an important performance exponent and
basic differentiator of business strategies
• Hence, the more is customer satisfaction; more is the
business and the bonding with customer
 Customer Satisfaction
• Customer loyalty is the tendency of the customer to
remain in business with a particular supplier and buy the
products regularly
• This is usually seen when a customer is very much
satisfied by the supplier and re-visits the organization for
business deals, or when he is tended towards re- buying
a particular product or brand over times by that supplier.
• To continue the customer loyalty the most important
aspect an organization should focus on is customer
satisfaction. Hence, customer loyalty is an influencing
aspect of CRM and is always crucial for business success.
 Customer Complaints
• Always there exists a challenge for suppliers to deal with
complaints raised by customers. Normally raising a
complaint indicates the act of dissatisfaction of the
customer.
• There can be several reasons for a customer to launch a
complaint. A genuine reason can also exist due to which
the customer is dissatisfied but sometimes complaints
are launched due to some sort of misunderstanding in
analyzing and interpreting the conditions of the deal
provided by the supplier regarding any product or service
 Customer Complaints
• Handling these complaints to ultimate satisfaction of the
customer is substantial for any organization and hence it
is essential for them to have predefined set of process in
CRM to deal with these complaints and efficiently
resolve it in no time.
 Customer Service
• In an organization Customer Service is the process of
delivering information and services regarding all the
products and brands
• Customer satisfaction depends on quality of service
provided to him by the supplier.
• The organization has not only to elaborate and clarify
the details of the services to be provided to the
customer but also to abide with the conditions as well.
• If the quality and trend of service go beyond customer's
expectation, the organization is supposed to have a
good business with customers
 Importance
• CRM system consists of a historical view and analysis of all the
acquired or to be acquired customers.
• This helps in reduced searching and correlating customers and to
foresee customer needs effectively and increase business.
• CRM contains each and every bit of details of a customer, hence it is
very easy for track a customer accordingly and can be used to
determine which customer can be profitable and which not.
• In CRM system, customers are grouped according to different aspects
according to the type of business they do or according to physical
location and are allocated to different customer managers often
called as account managers.
• This helps in focusing and concentrating on each and every customer
separately.
 Importance
• A CRM system is not only used to deal with the existing
customers but is also useful in acquiring new customers.
• The process first starts with identifying a customer and
maintaining all the corresponding details into the CRM
system which is also called an Opportunity of Business’.
• The Sales and Field representatives then try getting
business out of these customers by sophistically
following up with them and converting them into a
winning deal.
• All this is very easily and efficiently done by an
integrated CRM system
 Importance
• The strongest aspect of Customer Relationship
Management is that it is very cost-effective.
• The advantage of decently implemented CRM system is
that there is very less need of paper and manual work
which requires lesser staff to manage and lesser
resources to deal with.
• The technologies used in implementing a CRM system
are also very cheap and smooth as compared to the
traditional way of business
 Importance
• All the details in CRM system is kept centralized which is
available anytime on fingertips. This reduces the process
time and increases productivity.
• Efficiently dealing with all the customers and providing
them what they actually need increases the customer
satisfaction. This increases the chance of getting more
business which ultimately enhances turnover and profit
• If the customer is satisfied they Will always be loyal to
you and will remain in business forever resulting in
increasing customer base and ultimately enhancing net
growth of business
 Stages of CRM
• The Pre-relationship Stage:
The event that triggers a buyer to seek a new
business partner.
• The Early Stage:
Experience is accumulated between the buyer and
seller although a great degree of uncertainty and
distance exists.
• The Development Stage:
Increased levels of transactions lead to a higher
degree of commitment and the distance is reduced to a
social exchange.
 Stages of CRM
• The Long-term Stage:
Characterized by the companies' mutual
importance to each other.
• The Final Stage:
The interaction between the companies becomes
institutionalized.
 Direct and
Indirect Functions of CRM
• Direct functions:
(are the basic requirements of a company that are
necessary to survive in the competitive marketplace)

 Profit;
 Volume; and
 Safeguard
 Direct and
Indirect Functions of CRM
• Indirect functions:
(are the actions necessary to convince the
customer to participate in various marketing activities)

 Innovation:
 Market; and
 Access
 Functions of CRM
Value Creation Process
Technology Delivery Process
• R&D
• Technology Integration
• Efficiency
Management
Decision Process
Value-Based
Product Delivery Process Strategies
Customer sensitivity
• Concept to launch
• Diversity • Manufacturing process
• Information • Pricing
• Differentiated • Communication
offering
Customer Delivery Process
• Supply chain
• Distribution
• Infomediation (distribution of
information
 Functions of CRM
Value
Propositions
Company / Target Customers Benefits Price Value Proposition
Product
Perdue Quality conscious Tenderness 10 % More tender golden chicken
(Chicken) consumers of premium at a moderate price premium
chicken

Volvo Safety conscious Durability 20 % The safest, most durable

(station “upscale” families and safety premium station wagon your family
wagon) can travel in at a significant
price premium

Domino’s Convenience- Delivery 15 % A good pizza, delivered hot to

(pizza) minded pizza speed and premium your door within 30 minutes
lovers good of ordering, at a moderate
quality price premium
 Checking Value
proposition
• Is the target customer clearly identified?
• Are the customer benefits explicit, specific, measurable
and distinctive?
• Is the price, relative to competition, explicitly stated?
• Is the value proposition clearly superior for the target
customer (superior benefits, lower price or both)?
• Do we have, or can we build, the skills to deliver it?
• Can we deliver it at a cost that permits an adequate
profit
 Checking Value
proposition
• Is it viable and sustainable in the light of competitors and
their capabilities?
• Is it the best of several value propositions we
considered?
• Are there any impending discontinuities (in technology,
customer habits, regulation, market growth, etc.) that
could change our position?
• Is the value proposition clear and simple?
 Types of CRM
Types of CRM Dominant Characteristics
Strategic It is core and customer business centric strategy
that aims at winning and keeping profitable
customers
Operational Focuses on the automation of customer-facing
processes such as selling, marketing and
customer services
Analytical Is the process through which organization
transform customer related data into actionable
insights for either strategic or tactical purposes
 Strategic CRM
• Development of customer centric business culture
dedicated to winning and keeping customers by creating
and delivering value better than competitors
• Major business orientations:
◦ Product orientation:
• Believes that customers choose products
with best quality performance and design
• believes that if they have a superior product
customers will automatically like it as well.
 Strategic CRM
◦ Product orientation:
• Believes that customers choose products with
best quality performance and design
• believes that if they have a superior product
customers will automatically like it as well.
• They over specify or over engineer so often costly
products
• Highly innovative or entrepreneur
• Mostly works with startups
 Production
• The focus for the business is to reduce costs through
mass production.
• Seek to offer customers best value for money
• Believes that the "economies of scale" generated by
mass production will reduce costs and maximize profits.
• Strive to keep operating costs low , standardized offers
• Focus their innovation on supply chain optimization and
simplification
• Serve customers who want good enough', low priced
products and services
 Market
• A market orientated company puts the customer at the
"heart" of the business; all activities in the organization are
based around the customer.
• The customer is truly king!
• A market orientated organization endeavors to understand
customer needs and wants, then implements marketing
strategy based on their market research; from product
development through to product sales
• It collects, disseminates and uses customer and competitive
information to develop better value propositions
• It is a continuous learning firm
 Operational
• Streamlines the business process that includes Sales
automation, Marketing automation and Service
automation
• Aim is to automate and integrate the service functions
• Main purpose is to/generate leads, convert them into
contacts, capture all required details and provide service
throughout customer lifecycle
 Operational
• Sales Automation:
 Helps an organization to automate sales process.
Main purpose of sales automation is to set standard
within organization to acquire new customers and deal
with existing customers.
It organizes information in such a way that the business
can meet customers’ needs and increase sales more
efficiently and effectively.
It includes various CRM sales modules like lead
management, contact management, Quote-to-Order
management, sales forecasting
 Operational
• Marketing Automation:
 Main purpose of marketing automation is to find out
the best way to offer products and approach potential
customers
 Major module in marketing automation is campaign
management
 It enables business to decide effective channel/s (like
emails, phone calls, face to face meeting, ads on social
media) to reach up to potentials customers.
 Operational
• Marketing Automation:
 Main purpose of marketing automation is to find out
the best way to offer products and approach potential
customers
 Major module in marketing automation is campaign
management
 It enables business to decide effective channel/s (like
emails, phone calls, face to face meeting, ads on social
media) to reach up to potentials customers.
 Operational
• Service Automation:
Service automation enables business to retain customers
by providing best quality of service and building strong
relationship.
It includes issue management to fix customers'
problems, customer call management to handle
incoming/outgoing calls, service label management to
monitor quality of service based on key performance
indicators.
Marketing
Automation
 Analytical CRM
• Analytical CRM helps top management, marketing,
sales and support personnel to determine the better
way to serve customers.
• Data analysis is the main function of this type of CRM
application.
• It analyses customer data, coming from various touch
points, to get better insights about current status of an
organization
 Analytical CRM
• It helps top management to take better decision
marketing executives to understand the campaign
effectiveness, sales executives to increase sales and
support personnel to improve quality of support and
build strong customer relationship
 Features of Analytical CRM
• Gather customer's information, coming from different
channels and analyze data in a structured way
• Help organization to set business methodology in Sales,
Marketing and Support to improve customer
relationship and loyalty
• Improve the CRM system effectiveness and analyze key
performance indicators, set by business
 Benefits of CRM
• Companies that create satisfied and loyal customers,
have more repeat business, lower customer-acquisition
costs and stronger brand value which results in better
financial performance.
Misunderstandings about
CRM
• IT is mealy a database management ◦ It is a marketing
process
• It is an IT issue
• It is about loyalty schemes
• Can be implemented in any company
 IDIC Model

Value Chain Model

CRM
Models Five Forces Model

QCI Model
IDIC Model

Value Chain Model

Five Forces Model

QCI Model
 IDIC Model

• Developed by Peppers and Rogers (2004)

• Companies should take four actions in order to build closer one-to-one
relationships with customers: Value Chain Model
 Identifying who the companies customers are and building a deep
understanding of them
 Differentiating their customers in order to identify which amongst them
have most value now and which offer most for the future
Five Forces Model
 Interacting with them in order to ensure that companies understand
customer expectations and their relationships with other suppliers or
brands.
 Customizing the offer and communications to ensure that the expectations
of customers are met.
QCI Model
Value Chain Model

IDIC Model

Five Forces Model

QCI Model
 Value Chain Model

• CRM Value Chain Modl developed by Francis Buttle in the year 2004.
• It divides the whole customer management
IDIC Model activity into two stages -
primary and secondary or supporting
• At primary stage the focus is on customer to develop strategy to
maintain significantly long-term mutually profitable relationship.
Five right
• Primary stage has been divided into five parts starting Forces
from Model
customer, portfolio analysis, it goes through customer intimacy,
network development, value proposition development and ending at
customer lifecycle management. significant to business.
QCI Model
 Value Chain Model

• Customer portfolio analysis is done to segment the customers

according to their lifetime purchase value and identifying mixture of
IDIC Model
different customer base significant to business.
• Customer intimacy is all about knowing you customer well so data
collected at various stages are stored as knowledge database which is
used for analysis purpose.
Five Forces Model
• Network development means the company must create a complete
network of suppliers, manufacturers, employees, investors,
technology, distributors and retailers for customers to serve profitably.

QCI Model
 Value Chain Model

• At this stage of value proposition customers should be provided with

products services that would enhance customer satisfaction and meet
IDIC Model
their expectation
• Last stage is about managing the customer lifecycle and building
customer equity which would serve as a goodwill for the business
along with consistent revenue.
Five Forces Model
• At secondary stages there are supporting conditions in terms of robust
technology, skilled people, efficient process and work-oriented culture
integrated to ensure profitability of business and support effective
customer relationship management
QCI Model
Five Forces Model

Value Chain Model

IDIC Model

QCI Model
 Five Forces Model

• The five step process model was developed by Adrian Payne and Pennie Frow.
• This model outlines five processes : Strategy development, Value creation,
Multichannel integration, Value Chain
Information Modeland Performance
|management
assessment.
• It emphasis on building collaborative business and customer strategy to create
value in product/ services provided ta customers.
IDIC Model
• It also focuses on developing multichannel integrated communication network
to make things more accessible and feasible for customers.
• Performance assessment is an important part of model to measure the
success of business in meeting set standards and targets Data repository
combines of IT system front and back office application, analytical tools and
web robustness QCI Model
 QCI Model

Five Forces Model

Value Chain Model

IDIC Model
 QCI Model

• This model shows series of activities related to external environment,

customer experience, people, organization and infrastructure which together
Five
helps in building the whole Forces
process Model
of customer management activity.
• According ta this model, external environment directly affects the customer
experience and also affects the planning & analysis process of the
organizations.
Value
• Customer experience is affected by Chain
: customer Model
proposition, customer
management activity, and measurement where, customer proposition means
something that a company offers to the customer as product/ service against
the price, customer management activity is a process of capturing customers
which start with targeting, conversation, selling and end with retaining or
winning back the customers andIDIC Model is about maintaining a follow
measurement
up with the acquired results.
 QCI Model

• Infrastructure deals with the organization in a sense of technology,

customer information, and process management to act as al facilitator
for CRM implementation. Five Forces Model
• Each activity, people. organization, process, and technology have a dual
effect and are inter-correlated with each other in the model
Value Chain Model

IDIC Model