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Transcript of 1st lec CRM
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CUSTOMER RELATIONSHIP MANAGEMENT
CRM is a business philosophy based on upon
individual customers
and customised products and services supported by
open lines
of communication and feedback from the participatingfirms that mutually benefit both buying and selling
organisations.
The buying and selling firms enter into a learningrelationship,
with the customer willing to collaborate with the seller
and grow as a loyal customer.
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CUSTOMER RELATIONSHIP MANAGEMENT
In return, the seller works to maximizethe value of the relationship for the customers
benefit.
In short, CRM provides selling organisations with
the platform
to obtain a competitive advantage by embracing
customer needsand building value-driven long-term relationships.
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CRM
CRM in general is operationally defined-
a management process ofacquiring customers byunderstanding their requirements,
retaining customers by fulfilling their requirements
more than their expectationsand attracting new customers through customer
specific strategic marketing approaches.
The process invites total commitment on the part of
the entire organization in evolving and implementingrelationship strategies that would be rewarding to all
concerned.
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WHAT IS CRM?
CRM is the development and maintenance ofmutually
beneficial long-term relationships with strategically significantcustomers
(Buttle, 2000)
CRM is an IT enhanced value process, which identifies,
develops,
integrates and focuses the various competencies of the firm to
the
voice of the customerin order to deliver long-term superior
customer value, at a profit to well identified existing andpotential customers.
(Plakoyiannaki and Tzokas, 2001)
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CRM
CRM is a comprehensive approach for
creating, maintaining and expandingcustomer relationships.
Comprehensive: CRM does not belong just to
sales and marketing. It must be a way of doingbusiness that touches all areas.
Approach: A way of treating or dealing with
something. It is way of thinking about and dealing
with customer relationships.
Strategy: It involves a clear plan.
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CRM
CRM is an approach to interacting withcustomers
and prospects to provide a seamless
(faultless) flow of information and service tothe customer from marketing, through sales
and customer service for the entire
customer life cycle.
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GOALS OF CRM
Most companies expect( waits for) CRM toadd stability through increased customer
retention
andlong-term profitability through increased
efficiencies in sales (higher conversion
rates of prospects to customers throughprospect relationship management)
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DIFFERENT TERMS OF CRM
eCRM (alternatively e-CRM): eCRM refers to
electronic customer relationshipmanagement or, more simply, CRM that is
Web-based. E.g. Golf retailer chipshot.com
cCRM: Collaborative CRM denotes
situations in which customers can interact
directly with the organization, usually throughthe Web. e.g. Dell allows customers to
choose their own workstation components,
essentially designing their own Pcs.
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CONTINUED
SRM: Supplier Relationship Management
focus on actual suppliers. SRM helps
companies evaluate and categorize
suppliers for given projects to optimize
supplier qualification and selection, therebystreamlining the supply chain.
mCRM:Mobile CRM suggests theprovision of data to customers, suppliers,
and business partners via wireless
technologies.
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CONTD
CXM: Customer Experience Management
Includes both the individual experience in a
single transaction as well as the sum of all
experiences between a customer and a
supplier over the duration of their
relationship.
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CONTINUE
Type of CRM a company is looking into,
the common denominator is
Motivating the right customers to continue
doing business with customers.
Important distinctionis Operational vs.
Analytical CRM.
http://localhost/var/www/apps/CRM%202.jpeghttp://localhost/var/www/apps/CRM%202.jpeg -
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OPERATIONAL CRM
Known as front-office CRM, involves theareas where direct customer contact
occurs.
Refer to these interactions as customer
touch points,
can be inbound contact e.g. a call tocompanys customer support hotline
oroutbound contact. e.g. an in- personsales call or an e-mail promotion.
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ANALYTICAL CRM
Known as Back-office or Strategic CRM,involves understanding the customer
activities that occurred in the front office.
It requires technology (to compile andprocess the mountains of customer data to
facilitate analysis) and
new business processes (to refinecustomer-facing practices to increase
loyalty and profitability).
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Campaign management:
Analyzing data for purposes of launching amarketing campaign and then monitoring
that campaign and tracking its results to
determine the campaigns value.
Can also refer to the technology that
automates the campaign management
A linear campaign: For launching a newmarketing campaigns, rendered all the
more difficult with the increasing frequency
of smaller, more target promotions.
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But only those with the necessary data canreally monitor the results of threat campaign,and use these results to refine futurecampaigns, a process known as closed
loop campaign management. This means not only to analyze and
understand whether a campaign is asuccess and why. It means using that new
knowledge as the basis for futurecampaigns, in effect closing the loop withevolving customer information.
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Cross- selling: selling a customer aproduct or service based on her past
behaviors or purchase history. Best
done when a company understand the
relationship between two products and
identifies which product might "pull
another.
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Up-selling: Motivating a customer totrade up to a more expensive or profitable
product. The logic is, now that I know
what this customer wants to buy, perhapswe can motivate him to buy a more
profitable version or model.
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TRANSACTIONAL MARKETING
This approach is focus on individual
transaction and does not concern continuousrelationship with customers.
It does not contain a strategic long- term
perspective.
It centers around tentative adjustment
process as regards performing marketing
functions.Customers are viewed as outsiders to the
business.
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TRANSACTIONAL MARKETING
In this approach, customers expectations,satisfaction, multiple influences on their
decisions- making process etc. are not
given due significance.
Little attention is paid to customer services
and customer commitments.
The thrust is on gaining more and more
new customers rather than retaining
existing customers.
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RELATIONSHIP MARKETING
It has a narrow focus on the customersand only on the marketing function of the
organization concerned.
CRM focuses more widely on customersand the entire function connected with
value creation and delivery chain of the
organization concerned.
Organization uses the term CRM rather
than relationship management.
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RELATIONSHIP MARKETING
It is the philosophy of doing business, that
focuses on keeping and improving currentcustomers, rather then on acquiring newcustomers.
It assumes that consumers prefer to have anongoing relationship with one organizationthan to switch continually among providerson their search for value.
It is usually much cheaper to keep a currentcustomer than to attract a new one,successful marketers are working oneffective strategies for retaining customers.
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COMPARISONS OF TRADITIONAL &
RELATIONSHIP MARKETING
Traditional transaction
oriented Marketing
Relationship Marketing
Focus on single sale Focus on customer retention
Short term orientation Long term orientation
Sales to unidentified buyers Tracking of identifiable buyers
Limited customercommitment High customer commitment
Quality is the responsibility of
production department
Quality is the responsibility of all.
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EVOLUTION OF RELATIONSHIP MARKETING
They concentration at the beginning was only on
Consumption.
Human activities were confined (restricted) toconsuming whatever was available within their
reach. Then concentration moved to production.
Production was performed initially for consumptiononly and then for exchange.
In due course, production activities were extendedto produce things both for consumption and forsales.
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EVOLUTION OF RELATIONSHIP MARKETING
During the sales area, production was performed
exclusively for sales and the attention was only on
products.
Whatever was produced became saleable
because of limited supply.As the attention shifted to production, selling
became a tough job because of increased supply.
This made organization to move towards marketing
and related activities. At this stage the focus was
shifted from products to customers.
BENEFITS OF RELATIONSHIP
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BENEFITS OF RELATIONSHIP
MARKETING
From the organizations point of view-
1. Reduction in customer recruitment cost.
2. Generation of more and more loyal customers
3. Expansion of customer base4. Reduction in advertisement and other sales promotion
expense
5. Benefiting customer selectivity approach
6. Increase in the number of profitable customers7. Easy introduction of new products.
8. Easy business expansion possibilities.
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GOALS OF RELATIONSHIP MARKETING
The primary goals is to build andmaintain a base of committed customerswho are profitable for the organization, toachieve this goals, the firm will focus on
the Attraction, Retention andEnhancement of customer relationship
The firm will seek to attract customers
who are likely to become long termrelationship customers.
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Through market segmentation, thecompany can understand the best targetmarkets for building lasting customerrelationships.
As the no. of these relationships grows,the loyal customers will frequently help to
attract new customers with similarrelationship potential.
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LEAKY BUCKET MODEL OF CUSTOMER
RETENTION AND DEFECTION
New customers
Current level
Of customers
Lost customers
Bucket theory of marketing
By Andrew Ehrenberg
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LEAKY BUCKET MODEL OF CUSTOMER
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LEAKY BUCKET MODEL OF CUSTOMER
RETENTION AND DEFECTION
Marketing can be thought of as big bucket:
its what sales, advertising, and promotion programsdo that pours business in to the top of the bucket. Aslong as these programs are effective, the bucketstays full.
There is a hole is the bucket, when the business isrunning well and the service industry is delivering onits promises, the hole is small and few customers are
leaving.When the operation is weak and customers are notsatisfied with what they get, however, people startfalling out of the bucket through the holes faster than
they can be poured in through the top.
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Why organization lose theircustomers?
WHY ORGANIZATION LOSE THEIR
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WHY ORGANIZATION LOSE THEIR
CUSTOMERS
Price related reason: Customer try to matchthe price they pay for acquiring a brand. If the
customer perceives a mismatch between theprice and the value, he would opt for acompetitors brand.
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Product related reasons: Due to
technological advancement, the new brand
which makes entry would be capable of
offering better performance as compared to
the already existing brand. This would
induce customers to make a brand switch
over.
WHY ORGANIZATION LOSE THEIR
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WHY ORGANIZATION LOSE THEIR
CUSTOMERS
Service related reasons: The customers are
concentrating services offered at presales,
during sales and after sales. Anydissatisfaction as regards to services would
cause the customer to move.
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Competitors related reasons:
Technological advancement, attractive
offers, value added services, etc. offered by
competitors would also draw the attentionand induce customers towards brand
switching.
WHY ORGANIZATION LOSE THEIR
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WHY ORGANIZATION LOSE THEIR
CUSTOMERS Benefits related reasons: The customers may be
attracted by various augmented benefits offered bythe competitors. Such benefits may be more
appealing ad will induce customers towards brand
changes.
Personal reasons: customer would become a brand
defector due to-
Moved away from the market area where the brand is
sold. Influence of other members of the family or friends
Role changes in life cycle, anger, disgust, distress
developed with in the process of product delivery.
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BENEFITS OF CUSTOMER RETENTION
Customers will receive greater value
relative to what they expect fromcompeting firms and remain loyal to a firm.
Consumers gets quality, satisfaction,
specific benefits exceed gives monetaryand non-monetary costs.
Building a long term relationship with aservice provider can reduce consumer
stress as initial problem & solved specialneeds like legal, medical, education orweight-loss program.
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BENEFITS OF CUSTOMER RETENTION
Most consumers have many competingdemand for their time and money and are
continually searching for ways to decision
making to improve the quality of their lives.
Firms may actually become part of the
consumers social support system.
E.g. Health club who known her customers
personally, private school principal knows an
entire family and its special needs.
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BENEFITS FOR THE ORGANIZATION
Increasing purchases: A consumers get knowa firm and are satisfied with the quality of itsservices relative to that of its competitors,they will tend to give more of their business
to the firm. Free advertising through word of mouth:
when a product is complex and difficult toevaluate, consumers most often look to
others for advice on which providers toconsider. Satisfied, loyal customers are likelyto provide a firm with strong work of mouth
endorsements.
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BENEFITS FOR THE ORGANIZATION
Employee retention: It is easier for a firm toretain employees when they have stable
base of satisfied customers. people like to
work for companies whose customers are
happy and loyal.
Lifetime value of a customer: If companies
knew how much it really costs to lose a
customer, they would be able to makeaccurate evaluations of investments
designed to retain customers.
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STRATEGIES FOR BUILDING RELATIONSHIP
An organization's strategies towards developing
and maintaining sustainable relationship differ fromone organization to another depending on certainfactors such as:-
1.People:People have basic role in developing and
maintain relationship with customers.
Everyone from the lowest to the highest levelirrespective of their functional specializationand responsibilities must integrate theiractivities towards- customer satisfaction.
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STRATEGIES FOR BUILDING RELATIONSHIP
2.Process:
It involves a logical sequence of activitiesright from the need identification of potential
customers to need fulfillment.
It requires manufacture of products withdesired attributes.
The performance of each link must be
objectively analysed and corrected in tunewith the internal and external customers
expectations.
STRATEGIES FOR BUILDING
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STRATEGIES FOR BUILDING
RELATIONSHIP 3.Product:
The product offered must constantly provide valueaddition. A customer satisfied with a given product
may soon become a dissatisfied customer In view
of the changes that take place in his expectations.
4.Organization:
To build customer relationship, organization should
be aware of the technology advancements and
provide quality services in tune with the customer'sexpectations. should concentrate on total customer
satisfaction and respond to the requirements of
customers faster that its competitors.
STRATEGIES FOR BUILDING RELATIONSHIP
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STRATEGIES FOR BUILDING RELATIONSHIP
5.Setting satisfactory service standard:Acustomer expects quality products and services. So
Organizations is expected to render in 3 stages.Presales: During this customer developsexpectations and organization must ensure qualityand availability of the product in time.
During sales: During sales process, organizationmust provide the customer an opportunity to inspect,and treat them with courteous attentiveness, promptreply, etc.
After sales: Organization must provide supportingservices such as speedy replacements, simplifycomplaint procedure, efficient maintenance andrepair services and so on.
STRATEGIES FOR BUILDING RELATIONSHIP
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STRATEGIES FOR BUILDING RELATIONSHIP
6. Concentration on competitors:
An organization must focus constant
attention on the competitors performance,their strategy and style of operations and
compare same with its own performance.
The organizations performance must always
be a step ahead of its competitors and itmust know that the customer feels the
difference.
STRATEGIES FOR BUILDING RELATIONSHIP
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STRATEGIES FOR BUILDING RELATIONSHIP
7.Customer Analysis:
It includes those who are presentlyconsuming the products. And alsoprospective customers who are presentlyconsuming the products of competitors.
These customer must be analyzed whichconstitute customer inventory, level ofcustomer retention, what makes them buy,
level of satisfaction, place in loyalty ladderetc. this must be done by organization withhelp of experts i.e. external agencies.
With existing customer and former customer.
STRATEGIES FOR BUILDING RELATIONSHIP
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STRATEGIES FOR BUILDING RELATIONSHIP
8. Concentration on the paying ability ofcustomers:
Pricing decisions are to be governed not
merely by cost related factors. Beforefixing the price, the paying ability of thepotential customers must be viewed. Tosome extend prices are to be adjusted
with the fluctuations in the paying abilityof potential customers.
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9.Cost Analysis:An organization must focus on cost ofthe product or services. They must
perform value analysis. And try toreduce costs and retain the same goodquality or improve quality of product orservice.
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STRATEGIES FOR BUILDING RELATIONSHIP
10.Knowledge on purchase behaviors
pattern: Organization must have knowledgeabout factors of the purchaser decision process and
ultimate outcome.
The outcome of purchase decision may be-1.Purchase 2.Rejection 3.Postponement 4.Search for substitutes. They should have anidea about what % of customers arrive and what
sort of a decision and appropriate steps are to
be initiated towards making them buy the
products on a continued basis.
STRATEGIES FOR BUILDING RELATIONSHIP
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STRATEGIES FOR BUILDING RELATIONSHIP
11. Differentiation in prices and qualitystandards: Must offer services orbrands of different varieties with pricevariations. So that depending upon the
customers financial positions, may prefera least one of the varieties available. Thisprevents switching over other brands.
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12.Focus on reducing dissatisfaction: Thecauses for dissatisfaction are to be identified
and have to be attended well. If a complaint
is well attended then customers becomesloyal and relationship would continue to exist.
STRATEGIES FOR BUILDING RELATIONSHIP
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STRATEGIES FOR BUILDING RELATIONSHIP
13. Attention on Changing requirements of
customers:-
The requirements of the customers are bound
to change in tune with the changes in their
lives, demographic and psychographicprofiles and the related aspects. They would
concentrate on life- maintenance needs and
then to life-changing needs, which will befollowed by life- enhancing needs.
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STRATEGIES FOR BUILDING RELATIONSHIP
14.Concentration on performance:Performance of each one in the chain ofproduct/ service offering is to be
continuously monitored and correctiveactions are to be initiated.
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15.Develop partnership with customers:Partnership builds long relationship with
customers. This type of partnership may be
form of buyback arrangements, trainingemployees and extending managerial
support to the customer organizations. This
approach creates evidence for care andinterest on the customers organisation
STRATEGIES FOR BUILDING RELATIONSHIP
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STRATEGIES FOR BUILDING RELATIONSHIP
16.Training to supply chain employees:
Organization must come forward to offerstate-ofthe art training to all those who are
connected in the supply chain.
Training in the areas of customer care,customer approach, body language of
service providers, customer communication,
customer need assessment, customerscomplaint management ,etc. are to be
provided.
STRATEGIES FOR BUILDING RELATIONSHIP
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STRATEGIES FOR BUILDING RELATIONSHIP
17.Organizing customer clubs:
should focus on sense of mutual belonging,understanding, and sharing of common
problems, and emotions of the customers.
Club serves as an effective platform forcommunicating organization's marketing
activities, regular entertainment meets,
pleasure trips awareness programmes,consumer education programmes, etc. can
be organized involving the customers.
STRATEGIES FOR BUILDING RELATIONSHIP
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STRATEGIES FOR BUILDING RELATIONSHIP
18.Effective customer communication
system:communication must be simple, open,
efficient customer friendly. They must feel
free so that, special training may be given topersonnel working in the communication
channel in respect of receptive (friendly),
encouraging, positive, optimistic andcustomer friendly to customers.
The response from the organization to the
complaints received also should be recorded.
STRATEGIES FOR BUILDING RELATIONSHIP
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STRATEGIES FOR BUILDING RELATIONSHIP
19.Developing Customer satisfaction
Index: Should build customer satisfactionindex and measure the extent of satisfaction
of the customers in terms if various attributes
of brand and the related aspects. 20.Focus on preventive Actions:
More attention should be devoted for order
processing, delivery scheduling and therelated aspects. Such actions would help
damage control.
STRATEGIES FOR BUILDING RELATIONSHIP
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STRATEGIES FOR BUILDING RELATIONSHIP
21.Concentration on customer
satisfaction Research:Research on customer satisfaction in terms
of customers level of satisfaction, factors
contributing towards satisfaction, extent ofcustomer retention, influence of competitors
brand on customer satisfaction, customer
attitude towards brand, perception of brandimage so on. These strategies helps for
improving customer satisfaction.
STRATEGIES FOR BUILDING RELATIONSHIP
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STRATEGIES FOR BUILDING RELATIONSHIP
22.Unethical approach to build and maintain
customer relationship:There are unethical way which are brought to your
attention only for creating an awareness and not
for application.
Addiction: Creating a sense of addiction to thebrand by adding ingredients that are harmful to
body and mind such as soft drinks, food items etc.
Fear: Developing a sense of fear in the mind of thecustomers, that once a brand is continuously used
would cause problems in case of cosmetics, food,
drinks medicines, etc.
STRATEGIES FOR BUILDING RELATIONSHIP
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STRATEGIES FOR BUILDING RELATIONSHIP
Commitment: Developing misleading commitmentsand obligations.
Imitating: Imitating the attributes of well-acceptedbrands in an unlawful way.
Promises: Making promises to customers with no
intentions to perform. Discrimination: Discrimination on the quality and
services among buyers.
Forcing: Making tie-up sales with other highly
preferred items. Rewarding: Extending undue benefits in the forms
of cash or equal means of benefits to the membersof purchase team in case of industrial
organizational purchase.
DEVELOPING TOTAL CARE PROGRAMMES
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Have to develop an excellent Total Customer CareProgramme to suit to the specific requirements of
its target customers. Keep constant communication with customers.
Respond as quickly as possible for all enquires received
Concentration should be not only on the product
satisfaction, but also on purchase consumption process.
Make the products available within easy reach of the
customers.
Never hesitate to render advice to customers.
Give product related educational programmes free of cost
or with minimum fees.
Encourage customer to participate in organizational
t l t d ti iti