UNIT 1

Customer Relationship Management

Unit 1: Evolution of Customer Relationship: CRM- Definition, Emergence of CRM Practice, Factors
responsible for CRM growth, CRM process, framework of CRM, Benefits of CRM, Types of CRM, Scope
of CRM, Customer Profitability, Features Trends in CRM, CRM and Cost-Benefit Analysis, CRM and
Relationship Marketing. (7 Hours)

(Hour1)- Customer Relationship Management (CRM) is a strategic approach that focuses on

building and maintaining long-term relationships with customers to enhance customer satisfaction,
loyalty, and profitability

It involves: Understanding customer needs and behavior and Using technology to organize,
automate, and synchronize sales, marketing, customer service, and support.

Factors Responsible for CRM Growth:

Factor Explanation
Increased Competition Businesses needed better ways to differentiate themselves and retain
loyal customers.
Changing Customer Modern customers demand personalized, fast, and efficient service.
Expectations
Technology & Internet CRM systems became more powerful, accessible, and cloud-based.
Tools like Salesforce, Zoho, HubSpot made CRM mainstream.
Data Availability Abundance of customer data allowed businesses to understand
behavior and preferences.
Globalization Firms needed CRM to manage and understand diverse customer bases
across geographies.
Cost of Acquiring Retaining existing customers became more economical than constantly
Customers acquiring new ones.
Customer Loyalty as Businesses began seeing loyal customers as long-term revenue
Asset contributors.

Emergence of CRM Practice: CRM evolved as a response to changing business dynamics in the late
20th century:

a) From Product-Centric to Customer-Centric: Traditionally, companies focused on mass production

and product features. The shift occurred when businesses realized that retaining customers is more
cost-effective than acquiring new ones.

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Edited and compiled by
Dr. Ameet Chate ([email protected])
For academic purpose and private circulation only
 UNIT 1
Customer Relationship Management
b) Technological Advancements: With the rise of database marketing and information systems in
the 1980s and 1990s, businesses could track and analyze customer interactions. This gave rise to
modern CRM tools and platforms.
c) Rise of Services and Relationship Marketing: Increased importance of service industries led to
more emphasis on personalized customer experiences. Marketing moved from transactional focus
to relational marketing.

(Hour 2)- CRM Process: is a strategic cycle that helps businesses attract, retain, and grow customers
by managing interactions throughout the customer lifecycle. Key Steps in the CRM Process are as
follows

Step Description
1. Identify Potential Use marketing strategies to attract potential customers and create
Customers awareness.
(Acquisition)
2. Customer Segment customers based on demographics, preferences, behavior,
Segmentation and value.
3. Interaction Track and manage all customer interactions through various
Management touchpoints (email, call, social media, etc.).
4. Personalization & Deliver personalized products, services, and communications based
Customization on customer data.
5. Service & Support Provide post-sales service to enhance satisfaction and resolve
customer issues quickly.
Relationship Build loyalty programs, offer value-added services to strengthen long-
Development term relationships.
7. Feedback & Collect feedback, analyze customer behavior, and refine CRM
Improvement strategies continuously.

CRM Benefits

• Stronger Customer Relationships – Personalized interactions build trust and loyalty.

• Higher Customer Retention – Timely support and follow-ups reduce customer churn.
• Effective Targeting – Segment customers for focused marketing campaigns.
• Better Communication – Centralized data ensures consistent messaging across teams.
• Increased Sales – Tracks leads and opportunities to boost conversions.

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Dr. Ameet Chate ([email protected])
For academic purpose and private circulation only
 UNIT 1
Customer Relationship Management
• Improved Customer Service – Faster and more personalized support.
• Informed Decisions – Analytics help in understanding trends and customer behavior.
• Greater Efficiency – Automates routine tasks and reduces manual effort.
• Brand Loyalty – Positive experiences turn customers into repeat buyers.
• Competitive Advantage – Quick response to customer needs and market changes.
Types of CRM (Hour 3,4)
1. Operational CRM: Automates and streamlines customer-facing operations like sales, marketing,
and support. The common functions include Sales force automation (lead tracking, reminders),
Marketing automation (emails, campaigns), Service automation (chatbots, helpdesk). Benefits of
such CRM are Faster response, improved productivity and better service quality.
Examples: Salesforce – Automates sales pipeline and customer service, Zoho CRM – Offers lead
management, workflow automation, and marketing tools, Freshdesk – Automates customer
support with ticketing and live chat.

2. Analytical CRM: Analyzes customer data to understand patterns, behaviors, and trends. Features
include Customer segmentation, Predictive modeling, Dashboards and reports. This type of CRM
facilitates Informed decision-making, targeted marketing, and improved ROI.
Examples: SAP CRM – Helps businesses understand customer behavior through data, Microsoft
Dynamics 365 – Offers business intelligence and customer insights, Tableau (used with CRM
systems) – Visualizes CRM data for strategic decisions.

3. Collaborative CRM: Focuses on Facilitates communication and information sharing across

departments and external stakeholders (e.g., suppliers, partners). Features include Shared customer
data across sales, support, and marketing, Multi-channel integration (phone, email, chat, social
media) and Partner management systems
Examples: HubSpot CRM – Allows sales, marketing, and support teams to share data and insights,
Zendesk – Integrates with multiple platforms to centralize customer communication, Slack or
Microsoft Teams (integrated with CRM) – For team collaboration on customer accounts.

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Dr. Ameet Chate ([email protected])
For academic purpose and private circulation only
 UNIT 1
Customer Relationship Management

Scope of CRM (Customer Relationship Management)

1. Customer Acquisition – Identifying and targeting potential customers through marketing
strategies.
2. Customer Retention – Building long-term relationships by satisfying customer needs.
3. Customer Support – Providing after-sales services and problem resolution.
4. Sales Force Automation – Streamlining sales tasks, tracking customer interactions.
5. Marketing Automation – Campaign management, segmentation, and performance analysis.
6. Customer Service Management – Managing queries, complaints, and feedback efficiently.
7. Data Management – Collecting and analyzing customer data to understand behavior.
8. Integration with Other Systems – ERP, social media, e-commerce platforms, etc.
9. Customization & Personalization – Delivering tailored experiences based on preferences.
10. Multi-Channel Communication – Supporting interactions via email, phone, chat, and social
media.

(Hour 5)- Customer Profitability: refers to the profit a company makes from serving a particular
customer or segment over a specific time period.
Key Aspects:
• Customer Lifetime Value (CLV): Measures long-term profitability.
• Segmentation: Classifying customers into profitable vs. non-profitable.
• Cost-to-Serve: Understanding expenses incurred in serving different customers.
• Retention vs. Acquisition Cost: Retaining existing profitable customers is often more cost-
effective.
• 80/20 Rule: Often, 20% of customers contribute to 80% of profits

CRM and Cost-Benefit Analysis

Definition: Cost-Benefit Analysis (CBA) in CRM involves evaluating the financial returns from CRM
investments compared to the costs incurred in implementation and operation.

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Dr. Ameet Chate ([email protected])
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 UNIT 1
Customer Relationship Management
Key Components:
1. Costs:
• Software licensing and subscription
• Implementation & training costs
• Hardware or cloud infrastructure
• Data migration and maintenance
• Ongoing support & upgrades
2. Benefits:
• Increased sales through better lead conversion
• Higher customer retention and loyalty
• Reduction in customer acquisition cost
• Improved customer service and satisfaction
• Enhanced productivity of marketing and sales teams
• Better decision-making through customer insights
3. Tangible Benefits:
• Higher revenue
• Reduced churn
• Improved ROI on campaigns
4. Intangible Benefits:
• Stronger brand image
• Enhanced customer experience
• Competitive advantage

CRM and Relationship Marketing (Hour 6,7)

Definition: Relationship Marketing focuses on building long-term, value-based relationships with

customers rather than focusing solely on individual transactions.

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Edited and compiled by
Dr. Ameet Chate ([email protected])
For academic purpose and private circulation only
 UNIT 1
Customer Relationship Management
Relationship Marketing Goals How CRM Supports
Customer retention and loyalty CRM tracks customer interactions and
preferences for personalized service.
Long-term engagement CRM automates follow-ups, loyalty programs,
and customer feedback.
Trust and communication CRM enables consistent communication across
multiple channels
Customer segmentation and targeting CRM uses data analytics to identify and nurture
high-value segments.
Value co-creation with customers CRM allows collaborative feedback and
integrates customer suggestions.

Benefits of CRM in Relationship Marketing:

• Builds emotional connections with customers
• Enables consistent and personalized experiences
• Improves Customer Lifetime Value (CLV)
• Facilitates two-way communication and trust
• Supports loyalty programs and referral marketing

Flipped class: Choose a multinational company of your choice and study the CRM strategies and the
strategic initiatives undertaken by the company to build profitable customer relationships

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Edited and compiled by
Dr. Ameet Chate ([email protected])
For academic purpose and private circulation only