chapter 1 CRM by judith w. kincaid

1. CUSTOMER
RELATIONSHIP
MANAGEMENT
CRM: Is It Right For Your Company?
Ch. 1 – Commerce in the 21st Century
Judith W. Kincaid

2. Customer?
• Oxford: A person of a specified kind with whom one
has to deal
• Webster’s: An individual usually having some specified
distinctive trait
• The one who is buying a product but it includes all
other individuals who influence (influencers) the
decision, directly visible or not;
• wife, son, daughter, toddlers and small kids, a close
friend or the informal/formal group the customer belongs
to or likes to be identified as member of that group
• In B2B, all members of buying committee or the
influencers like Finance Manager, Production Manager,
Buying Manager, CEO or a consultant

3. Loyalty?
• Oxford: A strong feeling of support or allegiance (commitment)
• Webster’s: A feeling of strong support for someone or something
• Customer loyalty is a behavior, built on positive experiences and
value with a product, company or retailer. The behavior may not
sometimes be supported by rational logic.
• Customer loyalty is the result of consistently positive emotional
experience, physical attribute-based satisfaction and perceived value of
an experience, which includes the product or services.
• Buying a specific brand
• Buying a product of a specific company, the new product may not be
better than available alternatives
• Loyalty is when a customer is prepared to wait for few days to buy the
specific product/brand and/or is prepared to travel a distance to buy
the specific product

4. Customer Loyalty

5. Understanding the Background
• The Internal Situation
• The competitive advantage built on:
• Operational Excellence (best cost)
• Product Leadership (best product)
• Customer Intimacy (strong customer relationship)
• Focus to build one and keep other two at
reasonably acceptable level

6. Understanding the Background
• The New (e)Marketplace
• “Brick and Mortar” to “Brick and Click”
company. What has changed:
• Access: more information and at faster rate
for the customer due to Internet
• Control: Opportunity to do business 24 hours
due to 24/7 online
• Speed: Immediate response on internet, No
physical visits, no waiting of sales rep
response
• Globalization: Entire world opened as
marketplace for everyone, no border
restriction
• Automation: Many employees;
administrators, coordinators, eliminated due
to automated response through internet

7. Impact of (e)Marketing
Internet
Effects
Operational
Excellence
Product Leadership Customer Intimacy
Access Easy
comparison with
other products
and swap
Commoditization easy.
Leadership lost due to
information availability
to competitors
Providing human
contact
Control Always on 24/7 Broader choice, less
differentiation
Interaction preference
Speed Quick Process
expectations
Uniqueness for shorter
period/ copy able
Efficiency preferred
and not loyalty
Globalization Language
issues,
Localization
Localization of products Unknown language
and culture
Automation Process
disconnects
Distance from
customer needs
Loss of human
memory/connection

8. Loyalty in new Marketplace?
• Increase in Loyalty by 5%, increases profits from 18 to
125% (both B2C and B2B) ~ (Bain and Company)
• Loyalty due to positive experience has not changed with
internet and automation
• Negative experiences do reduce loyalty
• Reversing negative experience a strong way to ensure improved
loyalty ~ (Vevra, 1992)
• Internet has reduced human interaction so is the loyalty
• However use of information for better interaction with customers
can help improve loyalty

9. Loyalty and Operational Excellence
• Outsourcing to third party at lower costs
• Moving internal processes to internet
• Order management product delivery, product support and fulfillment
• Customers Expectations raised
• Comparison with competitors product easy
• Competitors can emulate (match, copy) your processes
• Any improved process is matched or improved by competition easily
• Not as quick as price slashing
• Counter Competitors by using knowledge only you have
• Respond to their needs and specific requirements in cost efficient
manner
• Duplication by competitors of product and processes is possible but
not the knowledge
• Deliver as per needs of customer at best possible price

10. Loyalty and Product Leadership
• Product differentiation harder to sustain
• Competitor can copy without heavy investment of time
and money
• Sustained advantage is lost
• Commoditization occurs

11. Commoditization & its impact
Commoditization
Lower Profits
Less R & D
Less differentiation
Less
Differentiation
Commoditization
Lower Profits
Less R & D Budget

12. Loyalty and Customer Intimacy
• Internet
• No direct contact with customer/employee
• Historically humans managed relationship with customers
• Now no human interaction is involved due to internet
• Issue is to How to develop customer intimacy without
human interaction?
• We will learn how to do this in context of too few or
too many persons responsible for relationship