Customer Relationship Management
(CRM)
Changes in Marketing
OLD MARKETING NEW MARKETING
– Transaction oriented – Relationship oriented
– Market share oriented – Share of wallet oriented
– All customers are equal – All customers are not equal
– Marketers sell – Marketers manage demand
– 4P marketing – Relationship marketing
– Mass marketing – Individual marketing
– Sell to the customer – Manage customer experience
– Focus on new customers – Focus on existing customers
– Offensive – Defensive
– Broadcast oriented – Dialogue oriented
– Transaction profit – Customer lifetime value
Offensive vs. Defensive Marketing
OM refers to increasing your customer base,
acquiring new customers(may be from competitors)
DM refers to activities aimed at existing customers.
– Defensive marketing has become more profitable. “Mass
and Blast” is being replaced by 1:1.
Customer centricity and other business logics
1. Product-oriented businesses believe that
customers choose products with the best quality,
performance, design or features.
2. Sales-oriented businesses make the assumption
that if they invest enough in advertising, selling,
public relations (PR) and sales promotion,
customers will be persuaded to buy. Push
Strategy
Customer centricity and other business logics
3. Production-oriented businesses believe that customers choose
low-price products.
4. A customer or market-oriented company shares a set of
beliefs about putting the customer first. It collects, disseminates
and uses customer and competitive information to develop
better value propositions for customers. Pull Strategy
Value Discipline Model for market oriented
firms
The Best Product =
Focusing investment and
Product energy in to developing
Leadership the newest and most
revolutionary
Operational Customer
Excellence Intimacy
The Best Total Cost The Best Total Solution
= Product quality+ = Building strong
best price+ best customer relationships,
purchasing experience really understand the
customer
6
CRM ?
“Strategy”
“An approach to building and sustaining
long-term business with customers.”
It is about creating a feel of high touch in
high tech environment
CRM
CRM is the business strategy which ensures :
Maximum return on spend per customer
Reduced customer acquisition costs
Motivates customer to be a brand ambassador
The Objectives of CRM
Identify potential Increase longevity
customers
Improve campaign
Understand needs
management
Differentiate dollars
and cents Increase referrals
Decrease attrition Win back lost customers
Increase usage Move customers up
Increase cross usage relationship hierarchy
Increase usage of Integrate marketing and
more prestigious items sales throughout
Increase satisfaction channels
Benefits of CRM
Competitive Advantage
Reduces costs, provides efficient operation
Increases customer satisfaction & Loyalty
Automate inefficient and expensive work processes
Increased marketing and selling opportunities
Benefits of CRM
Identifying the most profitable customers
Making it easier for sales and channel partners to sell
Faster response to customer inquiries
Receiving customer feedback that leads to new and
improved products or services
11
THE CRM Advantage
Business facts!
It costs six times more to sell to a new customer than to sell to
an existing one.
Satisfied customers may be passive supporters but a
dissatisfied customer will tell eight to ten people about his or
her experience.
The odds of selling a product to a new customer are 15
percent, whereas the odds of selling a product to an existing
customer are 50 percent.
90% companies don’t have sales and service integration
70% of complaining customers will do business again if their
complaint quickly addressed.
Framework for CRM
Identify prospects and customers
Differentiate customers by needs
and value to company
Interact to improve knowledge
Customize for each customer
Four types of CRM
Type of CRM Dominant characteristic
Strategic CRM is a core customer-centric
Strategic business strategy that aims at winning and
keeping profitable customers.
Operational CRM focuses on the automation of
Operational customer-facing processes such as selling and
customer service.
Analytical CRM focuses on the intelligent mining
Analytical of customer-related data for strategic or
operational purposes.
Collaborative CRM applies technology across
Collaborative organizational boundaries with a view to
optimizing company, partner and customer
value.
Operational CRM
Marketing automation
Market segmentation
Campaign management
Event-based marketing
Sales force automation
Account management
Lead management
Opportunity management
Pipeline management
Contact management
Quotation and proposal generation
Product configuration
Service automation
Case ( incident or issue) management
Inbound communications management
Queuing and routing
Service level management
Sources of data for analytical CRM
Internal sources
– Sales data (purchase history), financial data
(payment history, credit score), marketing data
(campaign response, loyalty scheme data) and
service data.
External sources
– Geo-demographic and life-style data from
business intelligence organisations, for
example IMRB, ORG-MARG.
Beneficiaries of analytical CRM
Customer
– Analytical CRM can deliver timely, customized,
solutions to the customer’s problems, thereby
enhancing customer satisfaction.
Company
– Analytical CRM offers the prospect of more
powerful cross-selling and up-selling programs,
and more effective customer retention and
customer acquisition programs.
CRM is not just a software
CRM applications & technologies
are just a tool to support CRM
strategy
Business
Strategy
People & Process
Information Technology
CRM strategy drives structure & technology 19
Misunderstandings about CRM
1. CRM is database marketing
2. CRM is a marketing process
3. CRM is an IT issue
4. CRM is about loyalty schemes
5. CRM can be implemented by any company
CRM constituencies
1. Companies implementing CRM
2. Customers and partners of those companies
3. Vendors of CRM software
4. CRM application service providers (ASPs)
5. Vendors of CRM hardware and infrastructure
6. Management consultants
CRM challenges vary across
context
1. Banks
2. Auto manufacturers
3. High tech companies
4. Consumer goods manufacturers
5. Not-for-profits
The IDIC model of CRM
Identify who your customers are and build a deep
understanding of them
Differentiate your customers to identify which
customers have most value now and which offer
most for the future.
Interact with customers to ensure that you
understand customer expectations and their
relationships with other suppliers or brands
Customize the offer and communications to
ensure that the expectations of customers are met.
The CRM Value Chain
The CRM Value Chain
Customer Customer Network Value Manage
Portfolio Intimacy Development Proposition The
Primary Analysis (SCOPE) Customer
Development
stages Lifecycle
Leadership and culture
Supporting Data and information technology
conditions
People
Processes
