CUSTOMER RELATIONSHIP
MANAGEMENT
Prof. Venicia Creado
CONCEPT AND DEFINITION
• Customer Relationship Management (CRM) is the process of carefully managing detailed
information about individual customers and all customer touchpoints to maximise customer
loyalty.
• According to Paul Greenberg, “CRM is a philosophy and a business strategy, supported by
a system and a technology, designed to improve human interactions in a business
environment.”
• CRM unites the potential of relationship marketing strategies and IT to create profitable,
long-term relationships with customers and other stakeholders.
FEATURES OF CRM
1. Central Database
2. Effectiveness
3. Useful to various departments in an organisation
4. Helps to attract potential customers and retain existing ones
5. High Cost
6. Simple and easy
7. Reduces process time
EVOLUTION OF CRM
Stage I: Refers to the first generation of CRM in organisations
It involved only two aspects – Sales Force Automation (SFA) and Customer Service and
Support (CSS)
Stage II: Refers to the second generation of CRM
CRM was used to support front-office activities and fulfill the requirements of customers.
Stage III: Refers to the third generation of CRM
Organisations realised the need of integrating front-office CRM systems with back-office CRM
systems.
EVOLUTION OF CUSTOMER RELATIONSHIPS
1. Customers as Strangers
2. Customers as Acquaintances
3. Customers as Friends
4. Customers as Partners
TYPES OF CRM
1. Operational CRM
a) Sales Automation
b) Marketing Automation
c) Service Automation
2. Analytical CRM
3. Collaborative CRM
OBJECTIVES OF CRM
1. To improve customer satisfaction
2. To improve efficiency of business
3. To expand customer base
4. To manage time and resources effectively
5. To enhance sales and support teams
6. To reduce operational costs
BENEFITS OF CRM
A. Benefits of CRM to Customers
1. Improved customer services
2. Responsive to customer’s needs
3. Improve customization of marketing
4. Time saving
B. Benefits of CRM to Organisations
1. Better co-ordination and co-operation
2. Improved customer experience
3. Identify potential customers
BENEFITS OF CRM
4. Automated Analytics and Reporting
5. Customer Segmentation
6. Focused marketing efforts
7. Effective Time Management
8. Reduce Operational Costs
9. Process automation replaces repetitive manual tasks
10. Improve customer satisfaction and loyalty
LIMITATIONS OF CRM
Focused on retention rather than acquisition of new customers
Legal aspects – privacy and ethical issues
Customer discrimination as profitable customers may enjoy better treatment
CUSTOMER PROFITABILITY SEGMENTS
The Customer Pyramid
COMPONENTS OF CRM
1. Information
Information
2. Process
3. Technology
4. People
People
CRM Process
Components
Technology
BARRIERS TO CRM
Inaccurate data
Lack of direction and guidance
Reluctance on part of employees
Inability to integrate
Other problems:
Lack of overall project responsilibity
Poorly written/ Unclear objectives
Inferior technical performance
RELATIONSHIP MARKETING
Relationship is a series of interactions that take place between two parties over a period of
time.
It is a strategy used by an organisation for increasing the level of customer satisfaction and
establishing long-term relationships with them.
According to Philip Kotler, “The aim of relationship marketing is for building mutually
satisfying long-term relations with key parties like the customers, suppliers, distributors in
order to earn and retain their business.”
A
It groups customers according to their level of loyalty-
d
Prospect Customer Client Supporter v Advocate Partner
c
a
t
e
RELATIONSHIP MARKETING & CRM
Both are closely related to each other.
Both focus on customer retention and loyalty.
Relationship Marketing came into existence in the 1980’s.
CRM came into existence in 1999 and was initially considered as a technological solution for
managing databases.
CRM is a more complex concept as compared to Relationship Marketing.
CRM focuses on providing customized products to customers by accumulating useful
information about them.
RELATIONSHIP DEVELOPMENT STRATEGIES
1. Organizational Pervasive Approach
2. Managing Customer Emotions
3. Brand Building through Relationship Marketing
Ways to build relationships:
Offering customers(repeat purchases) a discount on services
Giving rewards for references
Offering updates
Caring about customers
RELATIONSHIP CHALLENGES
Relationship Marketing will depend upon the stage and nature of relationship with the
customer
It’s not just about attracting customers but also maintaining and enhancing on-going
relations
Huge investment in technology
Small organisations may find it difficult to maintain its website
Choosing the right kind of technology
Measuring the return on investment
Relationship Marketing is more challenging in the service segment than in the consumer
segment.
SERVICE LEVEL AGREEMENTS (SLA)
A SLA is part of a standardised service contract where a service is defined formally.
It is a tool for formalising a relation with the customers and is used mainly for high value
customers.
It is an agreement between the customer and service provider.
SLA can be:
A communication tool
A conflict-prevention tool
A living document
An objective basis for measuring service effectiveness
ELEMENTS OF SLA
1. Overall objectives
2. Description of the services
3. Performance Standards
4. Compensation / Service Credits
5. Critical failure
Key Components of an Effective SLA:
1. Accountability
2. Performance Level
3. Remuneration
