Second Edition

Concepts and Cases

Alok Kumar Rai

M

CR

ustomer

elationship

anagement

Customer relationship managementConCepts and Cases

SECOND EDITION

Alok Kumar RaiAssociate Professor

Faculty of Management StudiesBanaras Hindu University

Varanasi

Delhi-1100922013

CUSTOMER RELATIONSHIP MANAGEMENT: Concepts and Cases, Second EditionAlok Kumar Rai

© 2013 by PHI Learning Private Limited, New Delhi. All rights reserved. No part of this book may be reproduced in any form, by mimeograph or any other means, without permission in writing from the publisher.

ISBN-978-81-203-4695-6

The export rights of this book are vested solely with the publisher.

Third Printing (Second Edition) … … January, 2013

Published by Asoke K. Ghosh, PHI Learning Private Limited, Rimjhim House, 111 Patparganj Industrial Estate, Delhi-110092 and Printed by Raj Press, New Delhi-110012.

ToThe Anchor of my life Maa Sati,

Blessings of my parentsSri Tarkeshwar Narain Rai

&Smt. Rajeshwari Rai

andLove of my dear sister Smt. Bhavana Rai

Contents

Preface xvii

Acknowledgements xxi

Abbreviations Used xxiii

Part I Fundamentals of Customer Relationship Management

1. Relationship in Business: A Management Tool 3–26

Introduction 3 Theoretical Perspective of Relationship 4 I. Social Penetration Theory 4 II. Social Exchange Theory 5 III. Equity Theory 6 IV. Attraction Theory 8 Types of Relationship 9 Stages of Relationship 11 Issues in Relationships 12 Evolution of Relationship as a Marketing Tool 12 Purpose of Relationship Marketing 13 Approach towards Marketing: A Paradigm Shift 15 Marketing Phase One: Practices in the Agricultural Economy 16 Conclusion 19 Review Questions 19 References 19 Further Reading 22 Case study: Customer relationship initiatives at Ford 23

v

vi a Contents

2. Customer Relationship Management: A Conceptual Foundation 27–44

Introduction 27 Emergence of CRM Practice 31 Factors Responsible for Growth of CRM 31 CRM Cycle 33 Stakeholders in CRM 35 Significance of CRM 35 Conclusion 37 Business and Working Hours 37 Guidance to Customers 37 Brochure/Pamphlets 38 Advisory Services on Deposit Schemes 38 Identity Badges 38 Systems and Procedures 38 Customer Service Audit 38 Complaint Book 38 Infrastructure Provision 39 Customer Education 39 Security Arrangements 39 Fair Practices Code-Display of Service Charges 39 Display of Time Norms 39 Review Questions 39 References 40 Further Reading 41 Case study: hero honda passport programme 41

3. Customer Relationship Management: A Literary Perspective 45–55

Introduction 45 Attributes of CRM 46 Classification of Attributes of a Service Organisation 46 Unidimensional View of Customer Relationship Management 46 Customer and CRM Programme: Behavioural Dimension 47 Strategic Issues in Relationship Marketing 48 CRM Success Factors 50 Conclusion 51 Review Questions 51 References 52 Case study: student relation management in management institutions 53

4. Customer Relationship Management Comprehension and Implementation Model 56–68

Introduction 56 CRM Comprehension 57 Components of CRM Programme 58

Contents a vii

CRM Value Chain 59 CRM Process: A Historical Perspective 59 CRM Process: Modern Variables 62 Designing a CRM Implementation Model 64 Conclusion 65 Review Questions 66 Further Reading 66 Case study: Customer relationship management in shopper’s stop 66

Part II Research Dimensions of Customer Relationship Management

5. Research in Customer Relationship Management: Tools, Techniques and Methods 71–101

Introduction 71 Factors Affecting Management Research 73 Problem Identification 74 Framing of Objectives/Hypothesis 74 Research Design 74 Exploratory Research Design 75 Descriptive Research Design 76 Causal Research Design 77 Research Method 78 Secondary Data Studies 78 Surveys 78 Experiments 78 Observation Techniques 78 Sampling 79 Need for Sampling 79 Terms Used in Sampling 79 Sampling Techniques 82 Sampling Process 85 Data Collection Tools 85 Classification of Questionnaires 85 Questionnaire Design 87 Validity Testing of the Questionnaire 91 Reliability Testing of the Questionnaire 91 Subordinate Style Questionnaire 92 Data Sources 93 Primary Data 94 Secondary Data 94 Evaluation of Data 95 Measurement Scales 95 Types of Measurement Scale 96 Criteria for Good Measurement Scale 98

viii a Contents

Conclusion 99 Review Questions 99 Further Reading 100 Case study: Business researCh For MSME entrepreneur 101

6. Customer Satisfaction 102–135

Introduction 102 Satisfaction 103 Customer Satisfaction: Meaning and Definition 104 Components of Customer Satisfaction 105 Customer Satisfaction Models 107 Rationale of Customer Satisfaction 108 Customer Satisfaction Spells Success: Learns Government Telecom Companies 108 Customer Satisfaction in Maruti Suzuki 111 Measuring Customer Satisfaction 112 The Need to Measure Customer Satisfaction 112 The ISO Guideline 114 Scales and Models for Meaning Customer Satisfaction 117 Customer Satisfaction Index 117 The Common Measurement Tools (CMT) 118 Kano Model 119 Advantages of Customer Satisfaction in Banking Industry 120 Conclusion 121 Review Questions 121 References 125 Further Reading 130 Case study: guest satisFaCtion traCking system—in taj group oF hotels 133

7. Customer Loyalty 136–183

Introduction 136 Concept and Significance of Customer Loyalty 137 Defining Customer Loyalty 139 Customer Loyalty Ladder 143 Loyalty Principles 144 Rationale of Customer Loyalty 145 Other Advantages of Customer Loyalty 146 Dimensions of Customer Loyalty 147 Attitudinal Loyalty 147 Behavioural Loyalty 148 Loyalty as Cognition 150 Determinants of Customer Loyalty 151 Categories of Customer Loyalty 155 Factors Affecting Customer Loyalty 156 Creating Customer Loyalty: The Customer Loyalty Grid 160

Contents a ix

Differentiating Customer Loyalty 161 Difference between Customer Loyalty and Customer Retention 161 Difference between Customer Loyalty and Customer Satisfaction 162 Difference between Customer Loyalty and Brand Loyalty 163 Examples of Loyalty Programs in India 164 Conclusion 165 Review Questions 165 References 166 Further Reading 174 Case study: Customer loyalty in indian insuranCe industry 177

8. Service Quality 184–231 Introduction 184 Quality 185 Defining Quality 186 Defining Services 186 Service Quality 187 Service Quality Definitions 188 Types of Service Quality 190 Service Quality Dimensions 190 Service Quality Gaps 192 Quality Gaps 193 Measures for Bridging Service Quality Gaps 201 Other Service Quality Gaps 203 Service Quality and its Relation with Other Behavioural Attributes 206 Relationship between Service Quality and Satisfaction 206 Relationship between Service Quality, Satisfaction and Loyalty 207 Service Quality Measurement Scales 208 SERVQUAL Scale 208 SERVPERF Scale 213 Retail Service Quality Scale 215 Banking Service Quality Scale 216 Conclusion 218 Review Questions 218 References 218 Further Reading 225 Case study: serviCe Quality in domino’s 226

Part III Information Technology Dynamics in Customer Relationship Management

9. Technological Developments in CRM 235–252

Introduction 235 e-CRM: An Information Technology Tool 236 e-CRM in Business 236

continue

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