The document discusses the importance of understanding customers and building strong relationships for organizational success, emphasizing the shift from ROI to ROR. It outlines key elements such as knowing customer needs, improving communication, and gathering feedback to enhance customer satisfaction and loyalty. Additionally, it explores critical metrics for measuring customer engagement and retention, along with the stages of relationship development.

1. M O D U L E I
U N D E R S T A N D I N G
C U S T O M E R S A N D
R E L A T I O N S H I P S
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2. Understanding Customers
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3.  Who is your customer?
 What consumers buy?
 Why they buy?
 When they buy?
 Where they buy?
 How often they buy?
 How often they use the product?
 What are the service requirements ?
 How customer interacts with the organization?
 What are the modifications in the product / service
required by the customer?
Knowing Your Customer
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4. • Survival mantra today is not to concentrate on Return on
Investments (ROI), but on Return on Relationships (ROR).
• The real challenge with the organizations is not only to create
customer satisfaction, but to create high customer value
ROI Vs ROR
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5. Listening Responding Improving
Customer Care
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6.  Organizations should have sufficiently equipped channels of
communication to listen to the customers.
 Complaint Handling Mechanism is a passive and reactive
approach.
 This should be converted into a pro-active system, where
organizations can find out innovative ways to get feedback from
the customers and respond on its own.
 The method and procedures of listening to the customer should
be accessible, easy, simple and widely communicated to the
customers.
Listening
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7. • First of all any call from the customer must be
acknowledged.
• Customer expects a quick and appropriate response to
his call. The complaint or service request should be
handled appropriately.
Responding
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8. • Organizations need to learn from previous experiences of
complaints and grievances, so that recurrences of problems to
the customers are minimal.
• The customer care mechanism should provide inputs to product
improvement, new product development, improvement in service
delivery system, training of manpower, campaign planning,
brand building exercises etc.
Improving
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9. Analyze,
Segment,
Engage,
Optimize
Prof.NATARAJ,
THIAGARAJAR
SCHOOL
OF
MANAGEMENT
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11. RFM Analysis
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12. Airtel Vs Jio
• https://www.youtube.com/watch?v=XYOZ4RzrHW0&t=745s
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13. Customer
Portfolio
Analysis
TOP TIER, 11% OF
CUSTOMERS
THRESHOLD, NEXT
22%
FENCE SITTERS,
NEXT 39%
VALUE DESTROYERS,
BOTTOM 28%.
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14. Customer Touch Points and Moments of
Truth
 The organization and customer both
have to interact with each other.
 All these interactions represent touch
points.
 This experiences of ‘touching’ the
brand and getting associated with the
organization creates an impact in the
mind of customer. These touch points
generate ‘moments of truth’, wherein
the customer perceives the experience
of interaction with organization either
as good or bad, constructive or
destructive, positive or negative.
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15. Customer touch
points
• Brick and Mortar
• Channel Partners
• Interaction Centers (Kiosks)
• Employees
• Promotional Campaigns
• Digital
• Web interface
• Mailers
• Mobile Communication
• Publicity- Youtube, Facebook, Instagram, Association,
Newspapers, TV,
• Intangibles
• Brand
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16. Customer Loyalty and Customer
Advocacy
 The ultimate purpose of any customer care
system is to generate customer satisfaction.
 A satisfied customer spreads the positive word
of mouth and gets emotionally attached to the
product/service/organization.
 Customer advocacy is much more and beyond
customer satisfaction, as in this stage customer
becomes the ambassador of the product /
service, which adds to the credibility and image
of the organization.
 Customer advocacy can be the ideal stage that
the organization can dream to achieve.
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17. • Seamlessness
• Trustworthiness
• Attentiveness
• Resourcefulness
Value of a Loyal Customer Base
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18. Value Creation
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19. Customer Life Cycle (CLC)
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20. CLC Marketing
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21. DATA GENERATED PER SECOND
"it’s estimated that 1.7 MB of data will be created every second for every
person on earth."
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22. Decisions to
be Data Driven
• Net Promoter Score (NPS)
• Customer Acquisition Cost (CAC)
• Customer Lifetime Value (CLV)
• CAC-to-CLV
• Customer Satisfaction Score (CSAT)
• Customer Effort Score (CES)
• Customer Retention Rate
• First Contact Resolution
• Average Ticket Time
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23. Net Promoter Score (NPS)
• NPS, short for net promoter score, is a metric that calculates how
likely a customer is to recommend your company or product.
How Likely will you
recommend our
Product to others?
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24. Net Promoter Score., Contd.,
• Count the number of
promoters, passives, and
detractors you have, and
enter those numbers
• The percentage of
detractors is subtracted
from the percentage
of promoters to give an
NPS.
• Anything above zero is
good, while anything below
zero suggests you need to
make improvements
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25. How to Get NPS Data
• To get the raw data, send out a survey to existing customers, asking
them to rate how likely they would be to recommend your product or
service to a friend or colleague.
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26. Customer Acquisition
Cost
• Customer acquisition cost, or CAC, is the amount of
money spent on sales and marketing required to
close a deal.
• It is calculated by summing a company's total sales
and marketing spend and dividing it by the number
of new customers.
• Companies can calculate CAC for a given time
period or all time, and is helpful to compare the
effectiveness of different marketing tactics and
strategies.
• A lower CAC is better, as it suggests your marketing
and sales teams are efficient and properly scaled.
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27. Customer Lifetime Value
(CLV)
• Customer lifetime value equates to revenue an
average customer will provide a company
before they discontinue their patronage.
• simple CLV formula
• multiply average annual revenue by the
average lifespan of a customer.
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28. Customer Satisfaction
Score (CSAT)
• Similar to NPS, customer satisfaction score
(CSAT) measures how happy your customers
are.
• Enter how many responses each option
receives, and the CSAT will appear in the
labeled cell.
• If you run a survey from 1-5, 1-7, etc., leave
the cells outside the range of the scale blank
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29. How to get Data
for CSAT?
Run a survey asking customers
how satisfied they are on a sale
from 1 to up to 10.
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30. Customer Effort Score
(CES)
• Customer effort score (CES) is a metric to show
how much effort was required from customers
to solve a problem and/or find information
they're looking for.
• A high CES might suggest customers take a
long time to find the resources they need,
indicating your company may need a
knowledge base for easy problem-solving
documentation to be stored.
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31. How to Get Data?
• You can prompt CES surveys
on customer
training/documentation
pages, after support phone
calls, on chatbots, or in
customer support emails.
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Prof.NATARAJ, THIAGARAJAR SCHOOL OF MANAGEMENT

32. CAC-to-CLV
• This metric compares the customer's acquisition
cost to the revenue that customer will provide
over time.
• It helps businesses know if customers churn
before they start contributing profit to the
company.
• Support leaders can use this information to
discover if they need to invest more in customer
support tools if this is the case.
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33. Customer Retention
Rate
• Customer retention rate designates
the percentage of customers the company has
retained over a given time period
• High Retention Rate means you're keeping
most of your clients and customers happy.
• FORMULA
• Customers at the End of the Period- New
Customers Acquired in the Period)/ Customers
at the Start of the Period
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34. How to Get Data?
• Choose a specific period of time – one year, one month, all time, etc.
– and be consistent in entering the metrics from that time for
accuracy.
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Prof.NATARAJ, THIAGARAJAR SCHOOL OF MANAGEMENT

35. Why Companies want relationship
with Customers?
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36. Retention Rate and Average Customer tenure
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37. Customer Churn Rate
• Customer Churn Rate is a metric
used to see how many customers
have stopped coming to your
business or have cancelled their
membership, subscription,
or patronage.
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Prof.NATARAJ, THIAGARAJAR SCHOOL OF MANAGEMENT

38. B2B Marketing Metrics
Metric Name How to compute What it means if the
number increases
Bench marks
CAC (Customer
Acquisition Cost)
All sales and marketing
costs (advertising, salary,
commission, bonus) in a
period divided by number
of new customers in that
period
You are spending more
for each new customer
and/ or your sales and
marketing might be less
efficient.
Highly dependent on
industry and price point
Marketing % of CAC Take all the marketing
cost and divide by the
total sales and marketing
costs you used to
compute CAC
1. Your sales team
underperformed
2. Your marketing team
overspent
3. Your marketing team
is exaggerates the
forecast and sales
team could not meet
up the expectation
10 – 30% is desirable.
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39. Metric Name How to compute What it means if the
number increases
Bench marks
LTV: CAC LTV/ CAC Higher the better
Higher ratio means
higher ROI on sales and
marketing
3:1 is a good target, for
every 1 rupee you spent
you are getting a life
time value of 3 rupees
4:1 or higher indicates a
better model
Time to payback Take the CAC and divide
by how much your
customers pay you on
average each month.
A higher payback means
it takes longer time to
earn back the CAC.
Under 6 months means
you are underinvesting
in sales and marketing
9-18 months is ideal
More than 18 months is
problematic
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Prof.NATARAJ, THIAGARAJAR SCHOOL OF MANAGEMENT

40. Metric Name How to compute What it means if the
number increases
Bench marks
Marketing originated
customer percentage
Identify the number of
customers acquired
through marketing
activities and divide it by
total number of
customers acquired
through all activities
during a period.
Marketing is driving
more new business
40 to 60 % is desirable
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41. Computing Cohort value
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42. INSIGHTS
FROM
ANALYSIS
In year 1 the company lost 40 per cent of
these new customers,
but the remaining 60 per cent each
generated $50 contribution to profit.
If this is discounted at 15 per cent, in
year 0’s currency each retained
customer’s profit contribution is $43.48.
In year 2, the retention rate rises from 60
to 70 per cent, and each of the remaining
customers contributes $70 ($52.93 at
discounted rate) to profit.
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Prof.NATARAJ, THIAGARAJAR SCHOOL OF MANAGEMENT

43. INSIGHTS
FROM
ANALYSIS
You can see from the right
hand column in Figure 2.5 that it takes
nearly five years to recover the
investment of acquiring this cohort.
The data demonstrate two well-
established phenomena. First, profit
per customer rises over time,
Secondly, customer retention rate rises
over time. It is feasible to use data
such as these to manage a business for
improved profitability.
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44. Strategies
1. Improve customer retention rate in
the early years of the relationship.
This will produce a larger number of
customers to generate higher
profits in the later years.
2. Increase the profit earned per
customer by:
reducing cost-to-serve
cross-selling or up-selling additional products
and services.
3. Become better at customer
acquisition by:
using more cost effective recruitment
channels
better qualification of prospects.
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45. BREAK OUT ROOM
• CRM Done Right
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46. Discussion Questions CRM Done Right
• What do you understand from CRM Cycle?
• Do the organization need perfect data for CRM?
• Write short notes on Routine Aches Vs Strategic Pain Points
• How to calculate the Cost of CRM?
• What is the meaning behind business before technology?
• MBA
• https://forms.gle/HTmDZRnuvpKd9cJN9
• PGDM
• https://forms.gle/KMb7gsGK7o2E65aa6
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Prof.NATARAJ, THIAGARAJAR SCHOOL OF MANAGEMENT

47. Understanding
Relationships
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Prof.NATARAJ, THIAGARAJAR SCHOOL OF MANAGEMENT

48. By the end
You will
understand
how to recognize a relationship
attributes of successful relationships
the importance of trust and commitment within a
relationship
why companies and customers are sometimes
motivated to establish and maintain relationships
with each other, and sometimes not
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49. Put Relationship Back in to CRM
• Read the Article and submit your responses
• MBA
• https://forms.gle/RpaBp44WCtHMaotY7
• PGDM
• https://forms.gle/wteSrLbRd3V4eJZ77
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50. MAGGI!!!!!!!
• https://www.youtube.com/watch?v=r5OCFaXqS5I
Prof.NATARAJ, THIAGARAJAR SCHOOL OF MANAGEMENT 50

51. What is
relationship?
• A relationship is composed of a series of
interactive episodes between dyadic parties over
time.
• Let’s be clear about what is meant by ‘ interactive
episode ’ . Episodes are time bound (they have a
beginning and an end) and are nameable.
• Within a sales representative–customer
relationship it is often possible to identify a few
discrete episodes, such as
• making a purchase,
• Enquiring about a product,
• making a sales call, negotiating terms, dealing
with a complaint,
• resolving dispute
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PROF.NATARAJ, THIAGARAJAR SCHOOL OF
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52. Dwyer has identified five general phases through
which customer– Firm relationships can evolve
Awareness
01
Exploration
02
Expansion
03
Commitment
04
Dissolution.
05
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53. Contd.,
• Awareness is when each
party comes to the attention
of the other as a possible
exchange partner.
• Exploration is the period of
investigation and testing
during which the parties
explore each other's- trial
purchases
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54. The
exploration phase
has five
subprocesses:
Attraction,
Communication
Bargaining,
Development
and exercise of
power,
Development
of norms,
Development of
expectations.
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55. • Expansion is the phase in which there increasing interdependence.
• More transactions take place and trust begins to develop.
• The commitment phase is characterized by
• increased adaptation and mutually understood roles and goals.
• Purchasing processes that have become automated are a sure sign
of commitment.
• Not all relationships reach the commitment phase.
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56. • Customers may exit relationships for many reasons, such as
• Repeated service failures or
• changed product requirements.
• Relationship development highlights two attributes of highly
developed relationships:
• Trust and Commitment.
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57. Trust
• Trust is focused. That is, although there
may be a generalized sense
of confidence and security, these feelings
are directed. One party may trust the
other party’s
• benevolence : a belief that one party
acts in the interests of the other
• honesty : a belief that the other party’s
word is reliable or credible
• competence : a belief that the other
party has the necessary expertise to
perform as required.
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58. Scam-1992
• https://www.youtube.com/shorts/9WqBm4mo8e4
PROF.NATARAJ, THIAGARAJAR SCHOOL OF
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59. Trust
PROF.NATARAJ, THIAGARAJAR SCHOOL OF MANAGEMENT 59
The development of trust is an
investment in relationship building
which has a long-term payoff.
Trust emerges as parties share
experiences, and interpret and assess
each other’s motives.
Trust has been described as the glue
that holds a relationship together
across time and experience

60. calculus-
based trust :
PROF.NATARAJ, THIAGARAJAR SCHOOL OF MANAGEMENT 60
this is present in the early stages of a
relationship and is quite calculative.
It is as if one party says: ‘ I trust you
because of what I am gaining or
expect to gain from the relationship ’ .
The outcomes of creating and
maintaining the new relationship are
weighed against those of dissolving it.

61. knowledge-based
trust
• this relies on the individual
parties ’ interactive history
and knowledge of each other,
allowing each to make
accurate predictions about
how the other will act
PROF.NATARAJ, THIAGARAJAR SCHOOL OF MANAGEMENT 61

62. Identification-
based trust
this happens when mutual
understanding
is so deep that each can act as
substitute for the other in
interpersonal interaction.
This is found in the later stages of
relationship development
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PROF.NATARAJ, THIAGARAJAR SCHOOL OF
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63. Commitment
Commitment is shown by ‘ an
exchange partner believing that an
ongoing relationship with another is
so important as to warrant maximum
effort to maintain it;
that is, the committed party
believes the relationship is worth
working on to ensure that it
endures indefinitely ’
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64. Relationship quality
• Mutual goals are present when
the parties share objectives that
can only be achieved through
joint action and relationship
continuity.
• Cooperative norms are seen
when relational parties work
together constructively and
interdependently to
resolve problems.
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65. Why Companies want relationship with
Customers?
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66. CASE: Consequences of customer churn at
Sprint Nextel
• Sprint Nextel, the third largest wireless telecommunications fi rm in the USA, is
downsizing its workforce by 4000 jobs and closing 125 stores in the first half of 2008.
• The moves are part of cost-saving measures prompted by anticipated decreases in the
firm’s subscriber base, revenues and profitability in the fourth quarter of 2007. The firm
expects to save $700 to $800 million annually by cutting the jobs.
• Sprint Nextel lost 190 000 subscribers and 683 000 ‘ post-paid ’ customers during the
fourth quarter of 2007.
• The subscriber losses are being attributed to a slowdown in the growth of wireless
subscriptions in the USA, and continuing customer defection to larger rivals AT &
T Mobile and Verizon Wireless since Sprint bought Nextel Communications for $36
billion in 2005.
• The firm is also struggling with service quality problems. On this news, shares of Sprint
Nextel fell to their lowest price since October 2002.
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67. C U S T O M E R
I N S I G H T
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68. Why companies Want relationship with
Customers?
• Reduced Marketing Cost
• Better Customer Insight
• Revenues Grow
• Cost to serve is low
• Referrals are generated
• Higher prices are paid
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69. Profit Grow Over time
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70. Why Customers want relationship with
Companies B2C Context
Recognition Personalization Power
Risk Reduction Status Affiliation
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71. B2B Context.
PRODUCT
COMPLEXITY
PRODUCT STRATEGIC
SIGNIFICANCE
SERVICE
REQUIREMENTS
RECIPROCITY
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72. CRM RE
• https://makeityours.royalenfield.com/configurator/supernova
• https://forms.gle/oc69qLjMDCXdEBBv7 - PGDM
• https://forms.gle/F2hkz8i5DujuTpdx8- MBA
72
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73. Why customers
do not want
relationship with
companies?- B2C
• Ill Treated
• Dishonesty
• Lack of confidence
• Availability of substitutes
• Price
• Quality
• Change
PROF.NATARAJ, THIAGARAJAR SCHOOL OF MANAGEMENT 73

74. B2B
• Fear of dependency
• Lack of perceived value in
relationship
• Lack of confidence in supplier
• Customer lacks relational
orientation
• Rapid technological changes
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PROF.NATARAJ, THIAGARAJAR SCHOOL OF
MANAGEMENT

75. Why companies do not want relationship
with customers?
•B2B Context
• Loss of control
• Cost
• Resource Commitment
• Opportunity cost
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76. Customer Loyalty
• Behavioral Loyalty
• Attitudinal Loyalty
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77. Behavioural Loyalty
• Many direct marketing companies use RFM measures of
behavioural loyalty.
• The most loyal are those who have high scores on the
three behavioural variables:
• recency of purchases (R),
• frequency of purchases (F) and
• monetary value of purchases (M).
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78. The variables are measured as follows:
• R time elapsed since last purchase
• F number of purchases in a given time period
• M monetary value of purchases in a given time period.
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79. Attitudinal Loyalty
• Attitudinal loyalty is measured
by reference to components of
attitude such as beliefs, feelings
and purchasing intention.
• Those customers who have a
stronger preference for,
involvement in, or commitment
to a supplier are the more loyal
in attitudinal terms.
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80. Dick Basu's Model
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81. • The best known is Dick and Basu’s model,
• as shown in four forms of loyalty, according to relative attitudinal
strength and repeat purchase behaviour.
• ‘ Loyals ’
• are those who have high levels of repeat buying and a
strong relative attitude. ‘
• 'Spurious loyals ’
• have high levels of repeat purchase but weak relative attitude. Their
repeat purchasing can be explained by inertia, high switching costs
or indifference.
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82. Latent loyalty
• Exists when a strong relative
attitude is not accompanied
by repeat buying.
• This might be evidence of
weakness in the
company’s distribution
strategy, the product or service
not being available when and
where customers want.
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