This document provides an overview of customer relationship management (CRM) concepts through 5 modules. Module 1 introduces key CRM concepts like strategic, operational, analytical and collaborative CRM. Module 3 discusses developing and managing customer databases. Module 4 covers how CRM relates to customer expenses. Module 5 focuses on managing networks to improve CRM performance, including relationships with investors, employees, and use of technologies like sales force automation. The document also discusses benefits and costs of CRM for organizations and customers, as well as common misunderstandings about CRM.

1. Customer Relationship Management

2. Module 1
Introduction to Customer Relations
Management (CRM)
• Consumer, Client & Customer – Differences –
Customer Relations: Meaning –Strategic CRM,
Operational CRM, Analytical CRM,
Collaborative CRM, Misunderstandings about
CRM, CRM Constituencies – Models for CRM

3. Module 3
Customer Database
• Developing, managing and using customer
related databases, developing a customer related
database – Data integration, Data ware housing,
Data access & interrogation, Data mining, privacy
issues, Customer Portfolio Management (CPM),
Basic discipline of CPM, Market segmentation,
Sales forecasting life time Value estimation.

4. Module 4
Customer Relationship Management Expenses
• Customer relationship management and
Customer expenses – Experimental marketing
strategies and tactics, Features of CRM
software applications that influence customer
experience, creating value for customers,
Customer acquisition, Customer retention and
development

5. Module 5
Managing network for customer relationship
management performance
• Managing investor and employee
relationships, IT for CRM, Sales force
automation, marketing automation, service
automation, Organizational issues and CRM

6. Module 1
Introduction to Customer Relations
Management (CRM)

7. Customer
• Customer is a person who buys goods or services from
a business
• Traditionally, a customer was viewed as a person who
had a brief interaction with a firm that ends when they
left the premises. Not something ongoing.
• Customers lack loyalty to the company providing the
products or services
• Customers buy on price & value
– Example, you became a customer when you buy ice cream
from a van on a day out to the beach or when you pay an
entry fee to the museum.

8. Consumer
• Consumers are the end users of a product. i.e.,
the person who actually uses the product or
service.
• A mother who purchases diapers from a store
is a customer. But her baby (who will use the
product) is the consumer.

9. Comparison between customer &
consumer
Basis of comparison Customer Consumer
Meaning Person who purchase the
goods or services
End user of goods and
services
Resell Customer can be a
business entity, who can
purchase it for the purpose
of resale
No
Purchase of goods Yes Not necessary
Purpose Resale or consumption Consumption
Price of product/service Paid by customer May not be paid by the
consumer
Person Individual or organization Individual, family or group
of people.

10. Client
• Someone who uses the professional services of
an individual or a company.
• Implies a long standing relationship as well as the
purchase of services, solutions, advice etc. from
law firms, marketing agencies & health care.
These services & solutions can be personalized &
customized for the client.
• Clients buy on experience & trust
– For example, a law firm will advertise how many years
they have been in business & their confidence in
getting results on a client’s behalf.

11. Customer relations
• The function of an enterprise’s marketing
activities is to bring buyers & sellers together
to create customers.
• While getting customers is fundamental to
business success, keeping customers is more
important.
• Successful firms work to build long term
relationship with the customers

12. Customer relationship management
• Customer relationship management (CRM) is the
combination of practices, strategies and technologies
that companies use to manage and analyze customer
interactions and data throughout the customer
lifecycle, with the goal of improving customer service
relationships and assisting in customer retention and
driving sales growth
• CRM aims to look at all the aspects that will enable and
organization’s capability to manage and nurture its 1:1
relationship with its consumers.

13. • CRM is a competitive strategy and process of
acquiring, reacting and partnering with selective
customers to create superior value for the
company and the customer.
» Parvatiyar & Seth
• CRM is a business strategy that aims to
understand/appreciate, manage and personalize
the needs of an organization’s current and
potential customers.
» PWC consulting

14. • CRM is a business strategy that applies to
every organization. It means working with
customers such that they receive great service
and are motivated to return again and again
to do more business with the company.
» Bob Thompson –crmguru.com

15. Why companies need to adopt CRM
strategies?
• Competition: With globalization & e-commerce
continuing to spread, differentiating products &
services is becoming more and more difficult. In
such scenario, CRM shows a company the way to
increase customer loyalty, earn higher margins &
a stronger branding.
– Eg. Godaddy.com
• Consumer expectation: Companies that use CRM
to truly understand their customers and respond
to their needs, will come on top.

16. • Diminishing impact of advertising: Whether it
is TV, print, facebook ad, all forms of
advertising are becoming ineffective. With
CRM you can target your message more
precisely, hold people’s attention better and
retain customers longer and at a lesser cost.

17. CRM is all about
• Acquiring customers
• Keeping customers
• Growing your customers
• Gaining customer insight
• Interacting with your customers across all touch
points
• Building lasting relationship with the customers
• Delivering value to the customers
• Acquiring a sustainable competitive advantage
• Growing your business

18. Potential costs & benefits of CRM
Benefits
Customer focus
Customer retention
Share of customer
Long-term profitability
Costs
Infrastructure
Investments
Process change
Benefits
Continuity
Contact touch points
Personalized services
Enhanced satisfaction,
safety
Costs
Privacy
Opportunity cost
Organization
Customer
Life time value of customer

19. Benefits of CRM to the organization
• Customer focus
– CRM allows the organization to hear the customer’s
voice.
– Customer focus means the organization is ready to
view the purchasing process from the customer’s
point of view, to empathize with the customer’s
feelings, and to treat customer’s information with
great care.
– If organizations can learn enough about individual
customers, then the customers will be more satisfied,
trusting and willing to talk positively to others about
the organization.

20. • Customer retention
– Customer retention means the firm satisfies
customers and offers variety such that the customer
comes back and repeats transactions with the same
organization
– The cost of acquiring a customer can be high.
– “It costs 6 times as much to get a new customer as it
does to keep the old customer.”
– There are no acquisition costs for existing customers.
– Higher customer retention will generally increase
revenues and reduce costs.

21. • Share of customer
– Means that the organization want to please
customers to the point that they want the
organization to sell something else.
• E.g. Wal-Mart
– CRM systems attempt to make individual
customers more profitable by recognizing the
initial sale and recommending related items or
services to enhance the customer’s experience.

22. • Long-term profitability
– As organizations experience the benefits of a
customer focus-retention of loyal customers and
greater share of customer- the long term profit
picture should also improve.

23. • Increased sales revenue
• Increased win rates
• Increased margins
• Improves customer satisfaction rating
• Decreased general sales and marketing
administrative costs
• Access to customer account history, order
information, and customer information at all
touch points
• Identify new selling opportunities

24. • More effective reach and marketing
• Improved customer service and support
• Enhanced customer loyalty
• Better stand against global competition
• Reduction in customer acquisition cost
• Reduction in customer attrition rate
• Reduction in advertisement and promotional
cost

25. Costs of CRM to the organization
• Infrastructure investments
– Achieving the level of quality from a CRM system
may require a significant investment in the
organization’s IT infrastructure (server-based
systems, software licenses and updates, firewalls
for security, personnel to install and maintain
systems, training for system users etc.)
– Depends on whether it is on premise or SAAS

26. • Process change
– Process change implies an alteration in habitual
pattern for accomplishing task.
– Implementing new systems and changing
traditional though patterns may both be very
difficult to accomplish.
– Old employees will be reluctant to change from
the old processes

27. Benefits of CRM to the customer
• Continuity
– Many buyers do not want to evaluate too many
factors when choosing among alternatives.
– If a firm can consistently meet a customer’s needs
over time, the continuity of the exchanges serves
to simplify the process and reduce the risk of
dealing with the new supplier

28. • Contact touch points
– Effective CRM systems provide a number of contact
points, or touch points where customers can
communicate and explain their needs, thus enabling
the organization to learn more about each customer’s
requirements. Which ultimately benefit the customer
as he will get products, services and support as he
need.
– A contact point is a method of interaction such as the
telephone, e-mail, point-of-purchase, customer
service desk, or mail

29. • Personalization
– With the help of CRM organization knows the
customer by name, knows the customer’s
purchasing routine, and forecast the customer’s
need.
– A major benefit that customer gain from CRM is
increased customization and personalization of
services.

30. • Enhanced safety & satisfaction
– For the customer, over time, CRM should increase
the value of the relationship, increase satisfaction,
reduce the risks associated with interactions, and
thereby increase the safety and comfort of having
needs met.
– Customers may benefit from feeling special and
enjoy being recognized as an important entity to
the organization.

31. Costs of CRM to the customers
• Privacy
– Privacy means confidentiality or a feeling that you
can have some space to yourself where other
people cannot intrude
– Organizations want to know which people
purchase which products in which colors on which
days of the week with which credit card.
– Customers want to feel that no one knows that
much about their personal choices.
• GDPR - General Data Protection Regulation

32. • Opportunity cost
– Opportunity cost associated with ignoring other
offers from the competitive sources.
– If customers take the time to search, they may
find a better price for the same features. But once
a good relationship with the customer is formed,
most customers will not look for other options.

33. Strategic CRM
• “70% of CRM initiatives fail”
– Source: Cap Gemini Ernst & Young
• “90% of enterprises cannot show a positive
return on CRM”
– Source: META Group
• “75% of CRM initiatives fail to substantially
impact the customer experience”
– Source: Gartner

34. • Strategic CRM is a core customer-centric
business strategy that aims at winning and
keeping profitable customers.
• A successful CRM strategy will address 4 key
areas of the business: strategy, people,
technology and processes.
• Strategic CRM is focused upon the
development of a customer-centric business
culture.

35. • In order to ensure that the 4 aspects of strategy, people ,
technology and processes are taken into the consideration
in the design of a CRM strategy, we can use an audit tool
called ‘D4 company analysis’.
• It has 4 steps
– Step 1 – Define the existing customer relationship management
processes within the company.
– Step 2 – Determine the perceptions of how the company
manages their customer relationships both internally and
externally.
– Step 3 – Design the ideal customer relationship management
solutions relative to the company or industry.
– Step 4 – Deliver a strategy for the implementation of the
recommendations based on the findings.

36. Types of CRM
• Operational CRM
• Analytical CRM
• Collaborative CRM

37. Operational CRM
• Operational CRM means supporting the “front
office” business processes which include all
customer contact (sales, marketing and service).
• Tasks resulting from these processes are
forwarded to employees responsible for them, as
well as the information necessary for carrying
them out.
• Interfaces to backend applications are provided
and activities with customers are documented for
further reference.

38. • Operational CRM provides the following
benefits:
– Delivers personalized & efficient marketing, sales,
& service through multichannel collaboration.
– Enables a 360-degree view of your customer
– Sales people and service engineers can access
complete history of all customer interaction with
your company, regardless of the touch point

39. • A touch point can be an inbound contact –
e.g., a call to a company’s customer support
hotline – or an outbound contact – e.g., an in-
person sales call or an e-mail promotion.
• Operational CRM represents the automation
of business processes involving customers.
• Its purpose is to provide transactional level
data about individuals and products, and to
provide support for customer facing problems

40. • The operational part of CRM typically involves
three general areas of business:
– Sales force automation(SFA): SFA automates some
of the company’s critical sales and sales force
management functions like lead management,
contact management, sales administration etc.
• SFA tools are designed to improve the field sales
productivity

41. – Customer service & support (CSS)
• CSS automates some service requests, complaints,
product returns, and information requests
– Enterprise marketing automation (EMA)
• EMA provides information about the business
environment, including competitors, industry trends,
and macro-environmental variables.
• The purpose of EMA applications is to improve
marketing campaign efficiencies.

42. Marketing automation Sales force automation Service automation
Market segmentation Account management Customer complaint
management
Campaign management Lead management Web enabled contact
centre management
Event-based(trigger)
marketing
Pipeline management Order management
Contact management Invoice level management
Quotation and proposal
generation

43. Analytical CRM
• Analytical CRM is concerned with capturing, storing,
extracting, integrating, processing, interpreting,
distributing, using and reporting customer-related data
to enhance both customer and company value.
• Analytical CRM builds the foundation of customer
related information.
• There are many types of customer related data
available in a company like sales data (purchase
history), financial data (payment history, credit score),
marketing data (campaign response, loyalty scheme
data), etc.

44. • These raw data itself won’t give us any useful information.
• With the help of data mining tools and AI, a company can
then interrogate these data.
• Intelligent interrogation provides answers to questions such
as:
– Who are our most valuable customers?
– Which customers have the highest propensity to switch to
competitors?
– Which customers would be most likely to respond to a particular
offer?
– Where should I focus my sales effort?
– How to retain the best customer?
– How to attract new customers?
– How to improve the profitability of customers?

45. Analysis &
Segmentation
Personalization
Broadcast
through all
channels
Transaction
Customer
Information

46. • Analytical CRM analyzes customer data for a
variety of purposes:
– Designing & executing targeted marketing
campaigns (e.g., customer acquisition, cross-
selling, up-selling
– Analyzing customer behavior in order to make
decisions relating to products and services (e.g.,
pricing, product development)
– Management information system (e.g., financial
forecasting and customer profitability analysis)

47. • Understanding the buying behavior through
RFM analysis (recency, frequency, and
monitory).
– 80% revenue of a company comes from 20% of
customers – Pareto principle

48. Collaborative CRM
• Collaborative CRM is a method in customer
relationship management (CRM) where various
departments in a business like sales, marketing,
service and finance share customer information
to maximize profitability, increase customer
satisfaction and loyalty.
– For example, feedback from a customer gathered by
technical support team could help marketing team to
suggest more suitable products or services to the
customer.
• The purpose of collaboration is to enhance the
quality of service and customer satisfaction

49. Operational CRM Analytical CRM Collaborative CRM
Operational CRM
comprises the business
processes and technologies
that can help to improve
the efficiency and accuracy
of day today customer
facing operations”.
Analytical CRM “provides
analysis of customer data
and behavioral patterns to
improve business
decisions”.
Collaborative CRM
comprises “the
components and processes
that allow an enterprise to
interact and collaborate
with their customers”.
Operational CRM systems
involve the following
things.
• Marketing Automation
• Sales-force Automation
• Service Automation
Analytical CRM involves
the following kinds of
analytics:
• Customer Analytics
• Marketing Analytics
• Sales Analytics
• Service Analytics
• Channel Analytics
Collaborative CRM involves
following things:
• Communicative CRM
• Operational CRM
• Analytical CRM
• Social CRM
• Mobile CRM

50. Misunderstandings about CRM
Misunderstanding 1: CRM is database marketing
Database marketing is concerned with building and
exploiting quality customer databases for
marketing purposes.
CRM is much wider in scope than database
marketing.
Most of the things in analytical CRM has the
appearance of database marketing. But,
database marketing is less evident in strategic,
operational and collaborative CRM.

51. Misunderstanding 2: CRM is a marketing process
• CRM software applications are used for many
marketing activities: market segmentation,
customer acquisition, customer retention and
customer development.
• The deployment of CRM software to support a
company’s mission to become more customer-
centric often means that customer-related data is
shared widely throughout the enterprise than by
the marketing function alone.

52. • Operations management can use customer-
related data to produce customized products
and services.
• Human resource can use customer preference
data to help recruit and train staff for the
front-line jobs that interface with customers.
• R&D management can use customer-data to
focus on new product development

53. Misunderstanding 3: CRM is an IT issue
• Most CRM implementations require deployment of IT
solutions. However this should not be misunderstood.
• To say that CRM is about IT is like saying that art is
about the paint brush.
• IT is an enabler, a facilitator.
• Improvements come about in the way customers are
managed through a combination of improved
processes, the right competencies and
attitudes(people), the right strategies and right
enabling technologies.

54. • The importance of people and processes should
not be underestimated. People develop and
implement the processes that are enabled by IT.
• IT cannot compensate for bad processes and
unskilled people. Successful CRM
implementations involve people designing and
implementing processes that deliver customer
and company value. Often, these processes are
IT-enabled. IT is therefore a part of most CRM
strategies.

55. • That said, not all CRM initiatives involve IT
investments. The main goal of many CRM
projects is the development of relationships
with, and retention of, highly valued
customers.
• This may involve behavioral changes in store
employees, education of call centre staff, and
a focus on empathy and reliability from
salespeople. IT may play no role at all.

56. Misunderstanding 4: CRM is about loyalty schemes
• Most loyalty schemes require new members to
complete an application form when they join the
programme. This information is used along with
the purchase data to help companies to become
more effective at customer communication and
offer development. Whereas some CRM
implementations are linked to loyalty schemes
not all are.

57. Misunderstanding 5: CRM can be implemented
by any company
• Any company can implement strategic CRM
and operational CRM.
• Analytical CRM is a different matter, as it is
based on customer-related data. More data is
needed for the effective analysis and
optimization. If the data is missing then
analytical CRM cannot be implemented.

58. CRM Constituencies
CRM constituencies are defined as the
components that comprise the whole
ecosystem of relationship building between a
business and its consumers.
The CRM constituencies mainly comprise of
companies, customers & partners, vendors of
CRM software, CRM application service
providers, vendors of CRM hardware and
infrastructure, management consultants

59. • Companies
– Many companies have implemented CRM. Early
adopters were large companies in financial services,
telecommunications and manufacturing.
• Customers & partners of these companies
– Because CRM influences customer experience, it can
impact on customer satisfaction ratings and influence
loyalty to the supplier.
• Vendors of CRM software
– Include Oracle, SAP, SAS, KANA, Microsoft etc.

60. • CRM application service providers (ASPs)
– Companies implementing CRM can also choose to
access CRM functionality on a subscription basis
through hosted CRM vendors such as hubspot,
salesforce.com etc.
– Clients upload their data to the host’s servers and
interact with the data using their web browsers.
The ASP vendors will deliver and manage the
applications and other services via internet. This is
also known as SaaS (software as a service).

61. • Vendors of CRM hardware and infrastructure
– Hardware & infrastructure vendors provide the
technological foundations for CRM
implementations. They supply technologies such
as servers, computers, handheld devices, call
centre hardware, and telephony systems.
• Management consultants
– Consultancies offer clients a diverse range of CRM-
related capabilities such as strategy, business,
application and technical consulting.

62. Models of CRM
• The IDIC Model
• The QCi Model
• The CRM value chain
• Payne’s five process model
• The Gartner competency model

63. The IDIC model
• Developed by Peppers and Rogers
• The IDIC model suggests that companies
should take 4 actions in order to build closer
one-to-one relationships with the customer.
1. Identify who your customers are and build a
deep understanding of them
2. Differentiate your customers to identify which
customers have most value now and which offer
most for the future

64. 3. Interact with customers to ensure that you
understand customer expectations and their
relationships with other supplies or brands.
4. Customize the offer and communications to
ensure that the expectations of the
customers are met.

66. The QCi (Quality Competitiveness
Index) model
• The QCi model depict a series of activities that
companies need to perform in order to
acquire and retain customers.
• The model features people performing
processes and using technology to assist in
those activities.

68. • Described as a customer management model rather
than a customer relationship model, the Quality
Competitive Index model focuses on three main
activities: acquisition, retention, and penetration.
• The QCI model starts with the customer’s external
environment at the top—their pain points, business
goals, and other factors will affect whether they are
ready to buy or interact with your sales team, which in
turn impacts the customer experience. The customer
experience then affects customer proposition (what
you offer the customer) and customer management
activities.

69. The Payne’s Five Process Model
• This is a comprehensive model developed by Adrian
Payne’ The model identifies five core processes in
Customer Relationship Management CRM such as the
strategy development process, the value creation
process, the multichannel integration process, the
performance assessment process and the information
management process.
• The first 2 represents strategic CRM; the multichannel
integration process represents operational CRM; the
information management process is analytical CRM

71. • The Strategy Development process is concerned
with integrating the business strategy from the
organization angle and the customer strategy as
to how firm interact and choose their customers.
• The Value Creation process with the main
purpose of identifying the value the firm can
create for the customer and the value the
organization can also benefit from.
• The Multichannel integration consists of all the
virtual and physical channels with which the firm
plans to interact with. But the main thing here is
that, regardless of the channel contact, the aim is
to create an experience that is uniform and also
common.

72. • The Information Management
process consists of many different of data
repository IT systems, back and front office
applications and analytical tools. It is thus
necessary to access the visibility of the system
so the need for performance assessment
process set in and it is concerned at the
strategic monitoring can be used to determine
customer satisfaction and standards,.

73. The CRM value chain
• A value chain is a high-level model developed
by Michael Porter that identifies the processes
a business uses to develop an end product or
service for the customer.
• The goal of the value chain model is to
identify and prioritize the most valuable
activities to the company and improve
processes to gain a competitive advantage.

74. CRM value chain

75. • The CRM value chain model applies this
principle to customer relationships. This CRM
model observes all the stages and activities
required to build a relationship with a
customer.
• These activities are divided into two stages:
primary and support.

76. • Primary stage
– The primary stage of CRM has five main processes
that enable the strategy.
1. Customer portfolio analysis: Similar to the IDIC
model, the first step of the value chain model is to
analyze your customers to identify your SSCs (a.k.a.
the customers who create the most value for the
company). This analysis stage helps companies
understand their customers so they can better
address their needs and expectations and develop
strategies to maximize their lifetime value.

77. 2. Customer intimacy: The next step is to engage
with the customer and build on the original
database of information.
At each touch point, companies should be
collecting data on the interaction in order to
better understand and serve their customer.
The better you know your customer (and adjust
your service accordingly), the more likely you are
to retain their business over the long term.

78. 3. Network development: A business’s network
includes all people and entities involved in the
value chain, including partners, suppliers,
customer service, investors, etc. The goal is to
use your customer data to inform the
processes at each level of your network so
that the entire system works together to
optimize your customer’s experience.

79. 4. Value proposition development: Armed with
your customer information and interaction
data, you can create value for your target
customers. The idea is to shift the focus from
the product to your service and to reduce
process costs to create more value for the
customer.

80. 5. Relationship management: The last stage of
the value chain model is to manage your
customer lifecycle. This process involves
evaluating your business processes and
organizational structure to manage
acquisition, retention, and customer
development.

81. Support stage
• There are five supporting conditions necessary in order
to effectively implement the strategic processes of the
primary stage:
– Leadership and culture
– Procurement processes
– HR management processes
– IT/data management processes
– Organization design
• Creating and developing these underlying conditions
will support a successful CRM value chain
implementation.

82. The Gartner competency model

83. • The model suggests that companies need
competencies in eight areas for CRM to be
successful.
• These include building a CRM vision, developing
CRM strategies, designing valued customer
experiences, intra & extra-organizational
collaboration, managing customer life cycle
processes, information management, technology
implementation and developing measures
indicative of CRM success or failure.

84. End of Module 1
Thank You