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Customer Relationship Management

K.L.Bhaskaran

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What is CRM?

Phone Banking: ordering a cheque book, complaint…Ordering a product on internetReceiving calls from various vendors for buying of their new productLoyalty points (airlines, restaurants, credit card…)Your local Baniya knowing the grocery list of your family at start of each month and addressing you on first name basis. In fact at times, he is knowledgeable of events in your family. He uses this to enhance your experience with his outlet / shop by giving the extra and much needed Personal Touch.

CRM and the Need for It

• Marketing philosophy: putting customer first• Collection and analysis of customer data for

sales and marketing decision support• Understand and support customer and

prospect needs• Competitive survival strategy: Responding to

change quickly is differentiator between winners and losers

• Provide a product-service package

Customer-Driven Organizations

• Are easy to do business with

• Add value to their products/services by integrating products and information

• Educate customers during and after the decision-making process

• Are innovative in design of services, marketing, delivery, customer care

• Design business contact points from customer perspective

• Share insights about customers within SC network

Customer-Driven Marketing

Customer requirements must drive product and service design.

All products and services have more than one market segment.

Profitability is more important than sales volume.

Logistics and marketing strategy must focus on customer segments.

Scope and Elements of CRM

Analysis

Sales operations

Relationshipbuilding

Customer information

dissemination

Place

Product

Collaboration

Price

Promotion

Customer segment

Multiple supply chains for different customer segments

SupplierSupplier

Information Flow

Reverse

Logistics Flow

ManufacturerManufacturer CustomerCustomer

Primary Product Flow

Primary Cash Flow

Orient Towards Customer

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What is CRM?

The philosophy of putting Customer firstAnd

Aligning all processes and operations to add value to the customer

Developing mutually beneficial long term relationship with

Strategic Customers

Gandhiji said”Customer is God”

Have more choices than ever

Expect immediate, high quality, personalized 24-7 service

Your customers……

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CRM is about…

• finding customers• collecting info about them along the way• using that info to enhance their experience

and foster long-term relationships• Nurturing and retaining existing customers

and increasing business with them• Winning back lost customers

At reduced cost and increasedProfit margin

Customer Relations Manager

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What are their needs?

Do you offer products in response to their needs?

…or your organization’s convenience?

Focus on Customers

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CRM

• It is a process or methodology used to learn more about customers' needs and behaviors in order to develop stronger relationships with them. CRM is a process that will help bring together lots of pieces of information about customers, sales, marketing effectiveness, responsiveness and market trends.

• CRM helps businesses use technology and human resources to gain insight into the behavior of customers and the value of those customers.

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CRM Vs.CSM

• Customer service is the provision of service to customers before, during and after a purchase.

• CRM is the strategic process implemented to maintain and retain the customer long term.  This relationship development process is designed to improve customer retention rates, thus reducing churn, increasing profitability and reducing the need to focus so heavily on new business for revenue growth.

Sales Marketing CustomerService

CRM

Beware!!

CRM is not technologyor some software

By implementing a CRM product,

a company will not

become customer-centric.

Companies need to have well laid

customer-centric processes,

before opting for implementation of

CRM products

And of course, the mindset!

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CRM is a philosophy that is

supported and enhanced

by technology

Is CRM a technology?

In short,

Develop Customer Focus

In short,

Develop Customer Focus

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“ A manufacturer or a retailer that responds to changes in sales in hours instead of weeks is no longer at heart a product company, but a service company that has a product offering”

Customer Relationship Management

- Bill Gates

It is 5 times more expensiveto get a new customer

than to retain the existing one.

If you do not listen to the customer,

competition will

Reasons to Identify and Understand Market Segments

Customer Segmentation

Definition:The practice of dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing

To increase the organization’s profits (or its equivalent) over the long term

#1 Reason

Developing and Implementing CRM Strategy

Price

Placement (channel strategy)

Segmentation

Promotion (marketing, branding, and advertising)

Product

Components of CRM strategy

CRM strategy indicates how organization plans to initiate, develop, or sustain relationships with customers. What markets will we serve?

Business strategy

Financial goals

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Aligning CRM Strategy and Product or Service Life Cycle

• Development: Use customer data to align to what customers want; test against KPIs and metrics.

• Introduction: Focus on promotion (advertising).

• Growth: Manage production and inventory levels; identify strong vs. weak segments.

• Maturity: Identify strongest sales by item and allocation of inventory; promotions avoid deep discounting.

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• Decline: Emphasize customer care (ensure parts availability/ migrate to new products) and lifetime customers.

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CRM Strategy

• 4 Ps of Traditional Marketing

- Product

- Price

- Placement

- Promotion

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Product

• Past - Same product to all customers. Product generated demand.

• Present - Products suited to customer needs - Designed to fulfill customer needs of

different segments. - Distribution, sales methods,

promotions are customized for different customer segments

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Price

• A strategic decision based on competition, perceived value, and brand identity

• Commodity price based on competition

• Differentiated market can base price on R&D, marketing costs, or value to customer

• CRM can differentiate products/price by segment

• CRM finds optimal balance of profit vs. attractive price to customers

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Placement

• How product/service gets to customer

• Traditionally one-way communication; now back-forth flow

• Contact channel strategy– Means to increase profitability– Interactive contact channels (call centers, live

dialogue Web sites, chat rooms) – Is itself a product; different segments get different

options

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Control andConsistency

Profitability

Convenient

Error-free

Complete answers

Flexible

Direct access

Secure

Accessible

FastCustomer perspective

Evaluating channel strategy

BusinessPerspective

Components of a CRM Strategy

•4Ps—PromotionSegmentation of promotions

Research: study buyer motivation and behaviors

Cost-effective customization of advertising

materials

Creation of brand image• Loyalty from

product to provider

• Trust they will be taken care of

• Single failure can undo

Traditional promotional

activities

CRM

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Promotion

• Segmentation Based• Cost effective advertisements• Brand Image- From producer to

provider?

Ways to Segment Markets

Historic segmentation

Preconceptions of groups

“Representative” groups

Actual buying behaviors

Finer segments (e.g., ecologically oriented products)

CRM segmentation

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Pareto Principle

High Service Needs

Low Service Needs

Customer Base

Revenue orProfit

20% 80%

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Value for MoneyConvenience

Product featuresService

Preferred Contact ChannelsReliability

Payment Terms

Customer ValueProfile

Segmentation by Customer Needs

Segmentation by Customer Needs

Value profile

Product/service features

Preferred contact

channels

Best value ≠ priceReliability Convenience

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•Segmentation by preferred contact channel

Encouraged and rewarded, not required

Live call center help

Live instant messaging help

Automated phone system

E-mail response

Self-help Web sites and catalogs

Refers to Web for faster service

Retail sales associatesExpensive

Cheap

Must test customer receptiveness to each channel

Developing CRM Strategies for Specific Customer Segments

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Paradigm Shift

OLD NEWMass Customer Customized

Supply Driven Demand Driven

Transaction Based Relationship Based

Print/Other Media Web Based

Separate Sales/service Bundled Offerings

Time Consuming Short Duration

Obscure Pricing Transparent Pricing

Pre-relationship

Early Stage

Development

Long Term

Life Long

The event that triggers a buyer to seek a new business partner

Experience is accumulated between the buyer and seller

although a great degree of uncertainty and distance exists

Increased levels of transactions lead to a higher degree of commitment and the distance is reduced to a social exchange.

Characterised by the companies’ mutual importance to each other

The interaction between the companies becomes institutionalized.

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• Goal is to move from top to bottom

• Success measured by conversion rate

• Conversion rates higher through the funnel

CRM Strategy

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CRM Phases

• Customer Acquisition• Customer Retention• Customer Extension

Contextual Phases

- Marketing Orientation

- Value Creation

- Innovative I.T

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Steps for Creating customer focused business

Identify Customer Needs

Create customer segment maps

Implement CRM

Monitor ,Measure and

Take correctiveaction

Align BP forCustomer Needs

Customer SegmentationProfitability

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Customer Purchase Experience

AWARENESS

PURCHASE

SHOPPING

INFO SEEKING

What do they know about you?

Will you be on their short list?

Consider the 4 CsCustomer, cost, convenience, communication

How difficult do you make it?

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Is CRM new?

• No!• Simply an extension of relationship

marketing• Builds on customer service and

satisfaction concepts• Just the latest buzzword for

creating customer orientation• Bottom-line is still the same

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Is CRM new?

Yes!• A shift in corporate philosophy concerning the

customer segmentation• Customer-centric approach to value chain• New and technology-enhanced processes• Focus is not just on bottom-line, but on top-

line• Goal is to have life long customers

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Relationship- Customer Side

• Trend towards lifelong customers.• Customer segmentation. • Products and delivery designed to the specific

segmented customers.• Greater integration internally to meet customer

needs.• Greater integration through sharing of

Information.• For large customers, relationship managers,

totally dedicated to these customers. • Customer Involvement while developing new

products.

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CRM and the Lifetime Customer

•Development of lifetime value

Year

0

– 1

– 2

– 3

– 4

1

2

3

4

– 5

5

6

7

8

9

10

Lifetime expense–4

Lifetime profit+6

Lifetime revenue+10

0– 1

– 2– 3

– 4

123

4

1 2 3 4 5 6

Revenue

Net profit

Expensee.g., “free” cell phone, marketing

e.g., monthly phone bill

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CRM and the Lifetime Customer

•Evolving relationship with lifetime customers

Lifetime Value

Customer Satisfaction and Loyalty

High

Low

Strategic value

Retention

Acquisition

Low Med High

Commodity (cost only)

Value for money

Dependency (“win-win”)

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Quality No more differentiator

Price- Brand Image?

Niche Product

Lifelong Customer

Value

Customer Focus

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CRM and the Lifetime Customer

• Not single transactions but sustained

relationship• Lower total marketing costs• Increasingly easier to satisfy lifetime customers• Increased revenue and profit opportunities• Rely on established relationships when time,

quality, or risk exposure are major concerns

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•Specific customer types

Developing CRM Strategies for Specific Customer Types

Key points

Prospective customers

Market researchAudience segmentationRight promotional message and contact channel

Vulnerable customers

Predictive churn modelEarly and accurate identification

Win-back customers

Target most valuable customersRapid communication internally and with customer

Loyal customers

Increase sales: cross-selling and up-selling opportunities

Courtesy-APICS

Developing CRM Strategy for Customer Types

Prospective customers

Vulnerable customers

Win-back customers

Loyal customers

• Market research• Pricing• Segmentation• Promotional

message and contact channel

• Early and accurate identification

• Predictive churn model

• Target most valuable customers

• Rapid communication internally with customer

• Increase sales

• Cross-selling• Up-selling

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•Customer value and CRM strategies

• Define “valuable” customers.

• Deliver timely, detailed information to help identify the most valuable customers.

• Define what product features/services mean the most to the best customers.

• Measure impact.

Developing CRM Strategies for Specific Customer Segments

Courtesy-APICS

Understanding the Wants and Needs

of Each Segment

• Transaction records• Sales and service

representatives• Distribution points• Purchased data

Sources of customer

information in CRM

• Research and measurement tool

• Innovative and proactive to constantly capture customers’ changing requirements/feedback with time

• Scripted: why leaving, how satisfied, etc.

• Customers talk freely: what firm won’t normally hear

• Know customers intimately; anticipate desires

Voice of the customer (VOC)

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CRM technologies

Using Technology to Improve CRM

• Business systems– Transaction

maintenance– Information

(pricing, inventory)

– Financial details

• Customer care (Web-enhanced)

– Solutions for response, product customization, convenience, order visibility, returns processing

– Online FAQ, customer service reps, chat rooms, detailed product data, service call wait choices

– Can reduce product returns

Courtesy-APICS

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Using Technology to Improve CRM

•CRM technologies support marketing and sales

CRM

Account Management

Sales Force Automation

Business Intelligence

Marketing Automation

Commitment to be customer-centric and

customer-driven

Complete customer view shared by marketing, sales,

and support

• Customer inquiries

• Problem solving• Call Centre

• Sales force management

• Channel partner management

• Lead tracking• Pipeline

management

• Tools to analyze customer sales information to uncover patterns, preferences (e.g., data ware-housing)

• Direct mail• Promotions• Catalogs

Courtesy-APICS

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Performance Measurement

Low Cost,Low Accuracy

High Cost,High Accuracy

Customer Complaints

Transaction Questionnaires

Monthly, Quarterly Questionnaires

Voice of Customer

Measuring Customer Satisfaction

Traditional metrics issues• Metrics measure the absence of

issues, not satisfaction.

• Customer complaints measure customer dissatisfaction, and only small number are reported.

Quality of channel’s service• Trustworthiness of channel

• Treated fairly, with respect, in competent, friendly manner

• Effectiveness of problem resolution

Measurement approaches• Voice of the customer (VOC)• Transaction customer feedback

questionnaires• Monthly/quarterly customer

feedback questionnaires• Participation in performance

reviews• Collecting and responding to

negative comments on the Internet and social networking sites

Performance Measurement

Who assesses?

Internal?? External??

Performance Measurement

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Cisco B-2-B

Configure the network on the web site of Cisco.

Wrong configurations will not be accepted Once configuration is finalised, the system

gives lead time and price. Place orders using username and

password

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Cisco B-2-B Site

Order acknowledgement takes 10 minutes. 24 hours to give shipment schedule Cisco system decides from where the item will be

shipped If not happy with delivery plan,escalate through

predefined channels Once shipment is handed over to freight

forwarder,the AWB no appears on the screen

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Cisco B-2-B Site

Invoice and pick slip can be downloaded from the site

Payment status on the net

If payment is not made on time,flag is raised automatically to stop shipment.

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Cisco-product and Technology Details

Tells what are the products

introduced What are the courses offered.

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Cisco-service And Support

Technical support on the site Technical documents on the net Service contact center Service and support solutions S/W centre

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Cisco-Training

Training and certification

Seminars and events

e-Learning

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Cisco-solutions for Network

Overview of internet business solutions Large corporations Internet communications Small,medium businesses Service providers Home networking Government education

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Cisco-Partners and Resellers

Current partners and resellers Find a partner and reseller Become a partner and reseller Partner in e-learning solution Strategic solutions

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Cisco-Rejections

Dead on arrival and field returns are also on the net.

Replacements are made within 48 hours

Can be traced on the site.

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Questions?