1. AMITY SCHOOL OF BUSINESS
Customer Relationship
Management
Module I
By
Dr Ruchika Jeswal
2. • CRM by Zikmund
• CRM by G SHAINESH
• CRM By Peeru &Sagdevan
• CRM by FRANCIS BUTTLE.
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3. Relationship Marketing
• Relationship marketing is a facet of
customer relationship management
(CRM) that focuses on customer loyalty
and long-term customer engagement
rather than shorter-term goals like
customer acquisition and individual sales.
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4. Definition
• It is a process to compile information that
increases understanding of how to
manage an organization’s relationship with
its customers.
• CRM is a combination of people,
processes and technology that seeks to
understand a company’s customers.
• CRM is a business strategy designed to
optimize profitability, revenue and
customer satisfaction.(Gartner)
4AMITY SCHOOL OF BUSINESS
5. CRM Purposes
• Enhance Customer Service
• Improve Customer Satisfaction
• Ensure Customer Retention
GOALS OF CRM
• Build long-term and profitable
relationships with chosen customers.
• Get closer to those customers with every
point of contact with them.
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6. What motivates companies to
adopt CRM strategies?
Competition- With globalization, corporate offerings are
increasing and becoming commoditized. Differentiating product and
services is becoming difficult. CRM helps to increase customer loyalty,
earn higher margins and stronger branding.
Consumer Expectations- Cos that use CRM to truly
understand their customers and respond to their needs, will come out
on top.
Technology- The cost of technology has dropped, so it is easier to
justify systems that consolidate your customers touchpoints.
Diminishing Impact of advertising- TV, print journalism,
direct mail or email marketing, all forms of advertising are becoming in
effective. With CRM you can target your message more precisely, hold
people’s attention better and retain customer longer.
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7. Benefits of CRM system to
customer
• Continuity implies a stable connection.
• Personalization- organization knows the
customer by name, knows its purchasing
patterns and can also forecast the
customer’s needs.
8. Benefits of CRM system to the
Organization
• Customer Focus- the organization is ready
to view the purchasing process from the
customer’s point of view.
• Customer Loyalty & customer retention-
Higher customer retention rates would
increase revenues and reduce costs.
• Share of Customer/wallet- the
organization wants to please customers to
the point that they want the organization to
sell them something else.
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9. Benefits of CRM system to the
Organization
• Cross- selling- It is the marketing of
complementary products to existing
customers.
• Up-selling- It is the marketing of higher
value products to new or existing
customers.
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11. ANALYTICAL CRM
• It is concerned with capturing, storing,
extracting, integrating, processing,
interpreting, distributing, using, and
reporting customer-related data to
enhance both customer and company
value.
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12. COLLABORATIVE CRM
• Collaborative CRM enables all companies
along the distribution channel, as well as
all departments in a company, to work
together and share information about
customers .
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13. STRATEGIC CRM
• It is focused upon the development of a
customer centric business culture. This
culture is dedicated to winning and
keeping customers by creating and
delivering value better than competitors.
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14. OPERATIONAL CRM
• It aims at combining sales, support, and
marketing databases into a single
repository that tracks and manages
interactions with customers, thereby
focusing on improving the efficiency of
customer interactions.
• It automates and improves customer- facing and customer-
supporting business processes.
• It generally refers to services that allow an organization to take care
of their customers.
• It provides support for business processes, which can include sales,
marketing and service.
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15. SALES FORCE AUTOMATION
• “It allows interface with campaign
management software so that sales
people can receive a comprehensive view
of the ongoing and completed marketing
campaigns.”
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16. Sales-Force Automation
• SFA was the original form of operational
CRM.
• It applies technology to the management of a
company’s selling activities.
• The selling process can be decomposed into a
number of stages, such as lead generation, lead
qualification, needs identification, development
of specifications, proposal generation, proposal
presentation, handling objectiona and closing
the sale.
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17. • SFA software enables cos automatically to
assign leads and track opportunities as
they progress through the sales pipeline
towards closure.
• Opportunity management lets users
identify and progress opportunities to sell
from lead status through to closure and
beyond, into after-sales support.
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18. Lifetime value of Relationship
• It can be defined as the net benefit to each
party in an exchange over the length of
time that interactions occur.
• “Lifetime Value is the present day value of
all net margins earned from a relationship
with a customer, customer segment or
cohort.”
• Costs accrue but it emphasizes the need
to view the long-term potential in the
exchange.
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19. Basic advantages and benefits
of CRM are these:
• satisfied customer does not consider
leaving
• product development can be defined
according to current customer needs
• a rapid increase in quality of products and
services
• the ability to sell more products
• optimization of communication costs
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20. • proper selection of marketing tools (communication)
• trouble-free run of business processes
• greater number of individual contacts with customers
• more time for customer
• differentiation from competition
• real time access to information
• fast and reliable predictions
• communication between marketing, sales and services
• increase in effectiveness of teamwork
• increase in staff motivation
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21. Disadvantages
• proper implementation and running of CRM is
very difficult (technology, people – employees,
initial money investment etc.
• one is the safety of information that companies
keep about their customers, sharing information
with third party and its overall protection.
• entire operating principle of CRM (gathering
information, recording calls, analyzing all clients’
activities etc.) is invasion of privacy of
customers.
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22. CRM Models
• IDIC Model
• Q Ci Model
• The CRM Value Chain
• Payne’s Five-Process Model
• Gartner Competency Model
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23. IDIC MODEL
Developed by Peppers and Rogers
This model suggests that companies should take four actions in order
to build closer one-to-one relationships with customers.
•Identify who your customers are and build a deep understanding of
them.
•Differentiate your customers to identify which customers
•Interact with customers to ensure that you understand customer
expectations and their relationships with other suppliers or brands.
•Customize the offer and communications to ensure that the
expectations of customers are met.
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25. Q Ci Model
• Described as the customer management
model.
• At the heart of the model they depict a
series of activities that companies need to
perform in order to acquire and retain
customers.
• Model features people performing and
using technology to assist in those
activities.
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27. CRM Value Chain
• Francis Buttle.
• It consists of primary stages and four
supporting conditions leading towards the
end goal of enhanced customer
profitability.
• Primary stages- these are sequenced to ensure
that the company, with the support of its network
of suppliers, partners and employees, creates
and delivers value propositions that acquire and
retain profitable customers.
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28. • The supporting conditions of leadership
and culture, data and IT, People and
processes enable the CRM Strategy to
function effectively and efficiently.
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30. Payne’s five process model
Payne’s Model CRM process divided into
Five main and sub process that includes
strategy development process,
value creation process, multichannel
integration process which is also known as
operational CRM, performance assessment
process information management process
or analytical process.
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32. Gartner Competency model
Companies need to concentrate on 8 issues
in order to be successful:
Building CRM vision
Developing CRM strategies
Designing valued customer experiences
Intra and extra organizational collaboration
Managing customer life cycle process
Information management
Technology implementation
Developing measures indicative of CRM success and
failure.
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34. Understanding Principles of
CRM
• CRM is not about only purchasing software, but
it is a strategy
• CRM must be conducive to the work
environment, present as well as future.
• In CRM, quantitative goals have to be set and
benchmarked.
• Total cost of CRM implementation must be
studied carefully.
• Selection of the right partner to find the right
CRM solution
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35. Relationship Building Strategies
For creating a CRM Business Strategy:
•Analyze your customer.
•Crack CRM and corporate strategies.
•Keep it flexible.
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36. LADDER OF LOYALTY
• The relationship building process can be explained very well by the
concept of :
The Ladder of Loyalty
It shows the different stages through which a prospect
becomes a customer, a client and finally a partner.
It can be understood in the following order.
PROSPECT
CUSTOMER
CLIENT
SUPPORTER
ADVOCATE
PARTNER
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37. The ladder of loyalty
• Any relationship that
attempts to develop
customer value
through partnering
activities is likely to
create greater
bonding between
customers and
marketers.
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38. Building Customer Relationship
Management by Customer Retention
• Customer retention is the process of
keeping customers in the customer
inventory for an unending period by
meeting the needs and exceeding the
expectations of those customers.
From a customer by chance you can convert
to Customer by Loyalty.
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39. • Benefits to the organization-
• An asset
• An ambassador
• An experience shaper
• A winning edge
• A spokesperson
• A driving force
• A caretaker
• A resource provider
• A partner
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40. Stages in the retention in the
customer life cycle.(fig)
• Acquisition
• Retention
• Attrition
• Defection
• Reacquisition
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42. ATTRITION
• It is a process of gradually weaving down.
• Customer questions his continued
patronage and takes first step towards
Defection.
• Attrition if not arrested would lead to
DEFECTION.
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43. Attrition Signals
• Increase in the number of complaints.
• Decrease in the frequency of contacts.
• Decrease in personal visits.
• Decrease in enquiries.
• Decrease in the volume of business.
• Increase in the perceptual difference between customer and
organization on various aspects like product or service.
• Decrease in the number of active buyers.
• Decrease in the extent of interaction.
• Decrease in the flow of communication.
Appropriate measures need to be defined to capture, classify and
measure the attrition signals and erode attrition.
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44. Strategies for Customer
Retention
TWO ways to retain a customer:
1)POSITIVE – a strategy that rewards a
customer for remaining in a relationship.
2)NEGATIVE- a strategy that locks the
customer in by penalizing their exit from a
relationship.
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45. Positive Customer retention
Strategies
• Creating CUSTOMER DELIGHT
• Adding CUSTOMER PERCIEVED VALUE
• Creating SOCIAL AND STRUCTURAL
BONDS
• Building CUSTOMER ENGAGEMENT
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46. Customer Delight
• Delighting the customer or exceeding
customer expectations, means going
beyond what would normally satisfy the
customer.
• CD= P>E
• It can be influenced by TWO ways:
1)Managing expectations.
2)Managing Performance.
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47. Kano’s Customer Delight Model
• Noriaki Kano
• Product quality model that distinguished
between 3 forms of quality.
• Basic Qualities-
• Linear Qualities-
• Attractive Qualities-
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49. Customer Perceived Value
• Cos can explore ways to create additional
value for customers.
• Add value for customers without creating
additional costs for the company.
• THREE FORMS:
• LOYALTY SCHEMES
• CUSTOMER CLUBS
• SALES PROMOTION
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50. SALES PROMOTION
• SP is a temporary enhancement to customer value. It
can be used for customer acquisition. Retention oriented
sales promotion encourage the customer to repeat
purchase.
• Following are some examples:
1. In-pack or on-pack voucher
2. Rebate or cash back
3. Patronage awards
4. Free premium for continous purchase
5. Collection schemes
6. Self-liquidating premium
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51. BONDING
It is the next positive customer retention
strategy.
a)SOCIAL BONDS- These are found in positive inter-
personal relationships between people on both sides of the
customer- supplier dyad.
b)STRUCTURAL BONDS- It is established when
companies and customers commit resources to a
relationship.
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52. Customer Engagement
• Highly engaged customers have levels of
emotional or rational attachment or
commitment to a brand, experience or
organization that are so strong that they
are highly resistant to competitive
influence.
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53. CRM APPLICATIONS
• SALES FORCE AUTOMATION
• CAMPAIGN MANAGEMENT
• KEY ACCOUNT MANAGEMENT
• CUSTOMER SERVICE & SUPPORT
• CUSTOMER VALUE MANAGEMENT
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54. B2B
Some of the strategies that the companies in the B2B market
landscape have used to generate market leadership include the
following:
•Focusing on key customers and building strong relationships with
them.
•Proactively generate high levels of customer satisfaction with every
interaction with the customer.
•Anticipate customer’s need by careful study of the environment,
customer processes and their behavior. The firm responds to these
needs even before the competition becomes aware of these.
•Building closer customer ties with the customer, sometimes by
integrating their systems.
•Finally, creating a value perception for the customer. The customer
must see the relationship with the vendor as something that brings
value and adds to their competitive advantage. Otherwise the customer
will take the business elsewhere.
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55. • Assignment – Write down Applications of
CRM in B2C and B2B with reference to a
service industry?
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56. Churn Rate
• Churn Rate = Total no. of customers
churned/ total customers
• Churn rate can be calculated by dividing
the total number of customers who left in
the previous 12 months by the average
number of total customers during the
same period.
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The ultimate purpose of the CRM value chain process is to ensure that the company builds long-term mutually-beneficial relationships with its
strategically-significant customers.
