BUILDING

CUSTOMER
RELATIONSHIP

LEADS TO

EFFECTIVE MARKETING

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2
 EXECUTIVE SUMMERY

Le Méridien is an international hotel brand with a European perspective, formerly

headquartered in the United Kingdom, with 130 properties. It is owned by Starwood
Hotels & Resorts Worldwide.

Le Méridien is a global hotel chain with a portfolio of more than 120 hotels in over 50
countries worldwide. The majority of its properties are located in cities and resorts
throughout Europe, Africa, the Middle East, Asia Pacific and the Americas.

The Le Méridien brand was established in 1972 by Air France "to provide a home away
from home for its customers." The first Le Méridien property was a 1,000-room hotel in
Paris — Le Méridien Etoile. Within two years of operation the group had 10 hotels in
Europe and Africa. Within the first six years the number of hotels had risen to 21 hotels
in Europe, Africa, the French West Indies, Canada, South America, the Middle East and
Mauritius. By 1991, the total number of Le Méridien properties had risen to 58.

In late 1994, Le Méridien was acquired by UK hotel giant, Forte Group, which in turn
was acquired by Granada Group plc in 1996. Through a merger in the summer of 2000
between Forte's parent company, Granada Group plc, and global contract catering giant,
Compass Group plc — and the subsequent de-merger of the two companies in February
2001 — the ownership of the Forte Hotels division and its three brands (Le Méridien,
Heritage Hotels and Posthouse Forte) passed solely to Compass Group.

In May 2001, Nomura International plc announced the acquisition of Le Méridien Hotels
& Resorts from Compass Group plc for £1.9 billion and Le Méridien was merged with
Principal Hotels, which was acquired in February 2001. In December 2003, Lehman
Brothers Holdings acquired the senior debt of Le Méridien.

On November 24, 2005, the Le Méridien brand and management fee business was
acquired by Starwood Hotels & Resorts. The leased and owned real estate assets were

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acquired in a separate deal by a joint venture formed by Lehman Brothers and Starwood
Capital.

INTRODUCTION

TO

THE COMPANY

4
 INTRODUCTION TO THE INDUSTRY

Past Scenario:

The hotel industry in India was going through an interesting phase. One of the major
reasons for the increase in demand for hotel rooms in the country was high growth in
sectors like information technology, telecom, retail and real estate. New business
opportunities were also attracting foreign investors and international corporate travelers
to look for business opportunities in the country

Present Scenario:

The Indian hotels sector was adversely affected by the global economic crisis and the
terrorist attack in Mumbai on November 26, 2008. The sector has witnessed a crash in
average room rents and occupancy rates. The players in the sector reported a fall in
profits in the quarter ended March 2009, despite this quarter generally being the peak
season for the hotel business.

The foreign tourist arrivals and foreign exchange earnings fell on a y-o-y basis in the first
four months of the current financial year. The former fell by 12 per cent to 18.32 lakhs
(1.83 million), while the latter fell by 9 per cent to Rs 17,643 crore (Rs 176.43 billion)
during the above period. But once the normalcy in business conditions resume, the
foreign tourist arrivals can reach 10 million while domestic tourists (demand) will soar to
500 million in the medium term.

As this materializes, there will be shortage of 150,000 rooms in India, considering the
current capacity of 110,000 rooms. That means the demand is going to exceed the current
supply by 100 per cent over next 3-4 years. For adding 150,000 rooms, the industry needs
an investment of Rs 50,000 crore (Rs 500 billion) and the additional inventory would
lead to a huge opportunity of employment. Considering the huge employment potential,
and also due to the need to scale up supplies to meet the demand, the hotel sector expects

5
the following fiscal benefits/incentives to be bestowed in the ensuing Union Budget
2009-10.

Future Scenario:

Five-star hotels in metro cities allot same room, more than once a day to different guests,
receiving almost 24-hour rates from both guests against 6-8 hours usage. With demand-
supply disparity, hotel rates in India are likely to rise by 25% annually and occupancy by
80%, over the next two years. This will affect the competitiveness of India as a cost-
effective tourist destination. To overcome, this shortage Indian hotel industry is adding
about 60,000 quality rooms, currently in different stages of planning and development,
which should be ready by 2012. Hotel Industry in India is also set to get a fillip with
Delhi hosting 2010 Commonwealth Games. Government has approved 300 hotel
projects, nearly half of which are in the luxury range. The future scenario of Indian hotel
industry looks extremely rosy. Moreover, the government’s decision to substantially
upgrade 28 regional airports in smaller towns and privatization and expansion of Delhi
and Mumbai airport will improve the business prospects of hotel industry in India.
Substantial investment in tourism infrastructure is essential for Indian hotel industry to
achieve its potential. It is expected that the luxury segment will witness growth and
perform extremely well over the next few years .

Constraints for the Industry Growth:

While the potential of hotel industry is great, there are several constraints for the industry
to grow. High cost of land in the country often discourages an investor to put in money in
construction of new hotels. Construction of hotels is highly capital intensive and it is
estimated that to construct a single five-star room it costs around Rs 1.25 crore. As a
result there is no incentive to construct new hotel properties and there is a mismatch
between demand and supply leading to higher occupancy rates and increasing prices. In
fact, average rate of hotel rooms in five-stars has gone up from Rs 4,000 five years ago to
Rs 16,000 now. Though this rate can be affordable for business travelers, it is very
difficult for leisure travelers to pay such exorbitant rates

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Across the country there is no rationalization of taxes as states charge different rates.
Secondly, multiplicity of taxes like value added tax and service tax further compound the
problem. Tax holidays are available only to hotels at heritage sites and so this measure is
restrictive for the growth of the hotel industry. In order to increase the stock of hotel
rooms, the Federation of Hotel and Restaurant Associations of India suggested to the
government that the floor area ration of the existing hotels should be increased. This was
a couple of years before and will help create additional rooms in the existing properties
and ease the burden of shortage of hotel rooms in the country. The proposal is yet to be
implemented.

Industry expectations:

Rationalize tax structure

In order to remain competitive with other destinations in Asia like Malaysia, Indonesia,
etc, which has a low level of taxation, hotels in India need to be subjected to a rational tax
structure.

Infrastructure status for the hotel industry

In the list of infrastructure projects, hotels may be included just like airports, seaports,
and railways, etc. Infact under Section 10 (23) g of the Income Tax Act, hotels were
added to the infrastructure list so that the interest received by financial institutions and
banks for loans extended to hotels were tax exempted. However, the section itself was
discontinued with effective from April 1, 2007.

VAT/Sales tax and other taxes

Vat/Sales tax on food & beverage are different for each state and it should be uniform
over the country. It will help in many hotel projects coming up all over the country which
leads to lowering hotel tariffs and generating employment.

Deemed export benefits

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Implementation of government granting “deemed export status” would enable hotels and
restaurants to import the required inputs without paying any duty fee and assist guests to
get the best from the world over.

Political View (In Maharashtra):

“Delicensing is the need of the hour. I don’t believe in controlling. Mumbai requires
more infrastructures to make it a world-class city and an international financial centre.
We ought to have more (hotel) rooms in the city. We will keep the requirements of the
industry in mind. We will meet hoteliers and representatives of the tourism industry soon
to formulate policies for the growth of this sector. We need good infrastructure and hotels
are a part of it. We talk about making Mumbai an international financial centre. BKC
(Bandra Kurla Complex) and the international airport are all growing. Soon, we will have
a new airport in Mumbai. There is a scope to improve this further”. Such a confident
statement from Maharashtra Chief Minister Ashok Chavan was delivered during the
inauguration of the Imperial Palace Hotel.

Le Meridien:

Starwood Hotels & Resorts is a major international player in the luxury upscale hotel,
resort and timeshare markets. It was founded in 1995 when Barry Sternlicht acquired the
struggling Hotel Investors Trust, which was then valued at less than $10m (£5.3b). By
2005, he had built Starwood into a company worth $15b. The group owns, leases or
franchises more than 850 properties in 95 countries across eight brands. They are:

1. Sheraton Hotels and Resorts

2. Le Méridien Hotels and Resorts
3. Westin Hotels and Resorts
4. St Regis Hotels & Resorts
5. W Hotels (a boutique business brand)
6. Four Points by Sheraton (a mid-scale brand)
7. Aloft
8. The Luxury Collection.

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Timeline of Le Meridien:

· 1972: Air France found Le Méridien in 1972 to provide accommodation for its
customers. Its first hotel is the 1,000- bedroom Le Méridien Etoile in Paris. Within two
years, it has grown to 10 hotels in Europe and Africa.

· 1978: The group now has 21 hotels in Europe, Africa, the Caribbean, Canada, South
America, the Middle East and Mauritius.

· 1991: The portfolio has grown to 58 hotels.

· September 1994: UK hospitality giant Forte buys the 85- strong Le Méridien chain,
which becomes its focus for international growth.

· 1996-2001: Granada Group buys Forte and subsequently merges with contract caterer
Compass (in 2000) and then de-merges in February 2001, leaving Compass with the
Forte hotel, restaurant and contract catering businesses.

· April 2000: The 125-strong Le Méridien group signs a strategic alliance with Nikko
Hotels International, which is owned by Japan Airlines and has 22 properties. Within a
year, Le Méridien records a 30% increase in business from Japan, its third revenue-
generating market.

· May 2001: Nomura International’s Principal Finance Group buys Le Meridien from
Compass for £1.9b following Marriott’s withdrawal from the auction after dropping its
bid from £2.2b to £1.7b. Le Meridien merges with the 15 Principal Hotels acquired by
Nomura in February 2001, adding 12 UK properties to its existing eight along with two
hotels in Copenhagen and one in Amsterdam.

· June 2001: The Royal Bank of Scotland (RBoS) enters into a £1.25b sale-and-
leaseback deal with Le Meridien in 2001. This involves 11 UK hotels, including London
properties Grosvenor House and the Waldorf (for £440m) and the Cumberland.

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· August 2001: Le Meridien extends its marketing alliance with Nikko to include another
22 hotels.

· September 2001: The group announces Art+Tech, its new design and technology
upgrade for bedrooms.

· May 2002: The group announces plans to sell six former Principal hotels, which would
leave it with 17 hotels in UK and Ireland. In April, it sells two properties to
Quintessential Hotels for £40m and another to the Feathers Group for around £6m. It
offloads another two hotels in July 2003 for £7.5m.

· January 2003: Le Meridien kick-starts a six-hotel sale-and leaseback drive to raise

£1.25b with the sale of the Le Meridien Barcelona in Germany. In April, it sells the five-
star Le Méridien Ritz in Barcelona.

· April 2003: The group’s key senior bank lenders (including RBoS and US investment
bank Lehman Brothers) take control after poor trading leaves Le Meridien unable to keep
up with its rent payments. The group, which made a loss of £225.8 in the year to June
2002, sees its value drop to £700m and its debt soar to £1b.

· July 2003: The group faces administration as rescue bids from Guy Hands (who
masterminded the Nomura takeover) and Lehman Brothers come to nothing. RBoS takes
control of its 11 hotels. By December, it has sold the leases to the Waldorf (to Hilton) and
Grosvenor House and the Shelbourne in Dublin (to Marriott). In January 2004, Tony
Troy (former Principal boss and managing director of the UK and Ireland for Le
Meridien from July 2001 to January 2003) takes leases on four former Principal hotels in
London, Manchester, Leeds and York. In October, the Cumberland reopens under
Thistle’s management.

· November 2003: Takeover talks between Lehman Brothers (which has a £200m stake
in Le Meridien) and Hyatt Financial Corporation collapse.

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· January 2004: Lehman Brothers announces plans to assume Le Meridien’s outstanding
debt of $1.3b (£725m) in partnership with Starwood Capital of the US.

· April 2005: Starwood Capital and Lehman Brothers make a £700m rescue offer for the
struggling, 130-strong four-star Le Meridien chain. In a separate deal, Starwood Hotels
and Resorts is to assume the Le Meridien brand, along its management and franchise
business, and operate the hotels.

· Late November 2005: Starwood Hotels and Resorts completes the acquisition of the Le
Meridien brand, management and franchise business for $225m (£130m) while a joint
venture between Starwood Capital and Lehmann Brothers buys the 32 owned and leased
Le Meridien hotels.

Le Meridien Group of Hotels:

• Le Meridien Ahmedabad
• Le Meridien Bangalore
• Le Royal Meridien Chennai
• Le Meridien Cochin Resort & Convention Center
• Le Meridien Jaipur
• Le Royal Meridien Mumbai
• Le Meridien New Delhi
• Le Meridien Pune

Le Meridien New Delhi

Category: 5 Star

Address:

8, Windsor Place,

New Delhi -110 001, India.

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Accessibility:

Airport: 15 km., Airport(Domestic): 16 km., Railway Station: 2 km

Description:

Situated in the 'green heart' of India's capital city, Le Meridien New Delhi is committed
to serving and anticipating the needs of its guests. Le Meridien New Delhi represents the
culture and traditions of India. This subtle alliance of consistency and individuality gives
our hotel its own distinctive personality.

Overlooking Lutyen's Delhi, the Parliament house, India Gate Lawns, the hotel is also in
close proximity to historical and cultural sights like Red Fort, The National Museum and
the Old Fort to name a few.

Mixing contemporary culture with its European heritage, Le Méridien creates a culturally
refined, meaningful and stimulating atmosphere which inspires participants to celebrate
the beauty of a moment and the possibilities for insight that live within common
occurrences.

Guests discover more than just a new destination. They discover a new way of seeing
things.

Currently, Le Méridien is a global hotel group with a portfolio of more than 120 luxury
and upscale hotels in over 50 countries worldwide. The majority of its properties are
located in the world’s top cities and resorts throughout Europe, Africa, the Middle East,
Asia Pacific and the Americas.

Accommodation:

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The hotel's exquisitely designed 355 guest rooms include 7 tastefully decorated designer
suites, 54 exclusive Club President rooms and 44 well-appointed deluxe suites
overlooking to suit our guest's needs, at all times.

Amenities:
Beauty Parlour, Travel Desk, Barber shop, Courier service, Front Desk, Newspaper,
Parking, Bar, Banquet, Restaurant, Safe Deposit Box, Conference Facilities, Business
Centre, Sauna, Jacuzzi, Swimming Pool, Health Club

Services:

Doctor on Call, Laundry, Valet, Travel Desk Service, Dry Cleaning, Post, Baby Sitting,
Currency Exchange, Hair Dryer, Newsstand, Safety Deposit Box, Secretarial Services,
Wake up service, Shoe Shine

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OBJECTIVE

OF THE

STUDY

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 OBJECTIVE OF THE STUDY

The research project is mainly divided into two parts first one is general study about
customer relation management and the second is how it leads to effective marketing.

The subjects under these two parts are

1. General study about customer relation management.

a. To study about what is the customer relation management
b. To study about the tools, process, advantage, disadvantage, levels and all
other aspects of customer relation management.
2. What is the impact of customer relation on marketing
a. A survey on consumer preference and idea about services at Hotel Le
Meridian Delhi.
b. Analyzing the data on the basis of survey findings
c. Extracting the effects on marketing due to customer relationship
management

The study will end with a conclusion giving a reflection of whole project and
recommendations on the basis of data findings.

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PURPOSE AND SCOPE

OF

THE STUDY

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 PURPOSE AND SCOPE OF THE STUDY

Purpose of the study

The main purpose of this study is to analyze the effects of customer relationship on the
marketing in le meridian hotel Delhi. .

Scope of the project

This project will be very helpful to :

• The marketing department of Le Meridian

• The customer or visitor of hotel

This project will be an information guide to the hotel for increasing the sales by
improving the customer relationship.

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CUSTOMER RELATION
MANAGEMENT

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 What's So Hard About Customer Service?

One person's excellent service may represent barely adequate service to someone else.
What impresses one customer may make absolutely no impression on another. To
complicate matters, what a customer believes to be good service in one context may be
unacceptable in another situation or at another time. Service is perceptual; it is
individualized; and it is situational. So how can you figure out what customers want from
you in terms of service? The kind and level of service that you must deliver depends on
who the customer is, what her expectations are, what experience she has had with you
and other firms, what your strategy is and what role customer service plays in its delivery
—along with a host of other things.

Many managers and executives are uncomfortable with this notion of variable service
delivery; they would much prefer to be able to pin down service and to be able to
standardize it so that it can be consistently delivered. But I don't believe service should be
the same for everyone. In fact, the value of service as a relationship-building tool is its
customizability. Simply out, some customers require and deserve better service than
others. In some situations, you will want to be able to provide service that will impress
customers so as to make an emotional connection.

Whenever your employees can say to a customer, "Let me take care of that for you," you
are delivering a higher level of service than the customer was expecting. Yet customer
service gets far less attention than it deserves in many companies, simply because
managers do not realize or accept its importance in influencing customer satisfaction and
loyalty. Many view customer service provision as a cost, rather than an investment. Many
spend a great deal of time looking for ways to reduce that cost, without appreciating the
impact it has on the customer's feelings toward the firm.

At the same time, managers tend to focus on what I call the functional side of service
provision: the speed and accuracy of service delivery, in particular. Do we arrive on
time? Do we have things in stock? Do we answer incoming calls within 20 seconds?
These are the aspects of service with which managers in many firms are most

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comfortable, mainly because they are most easily and frequently measured in
conventional customer satisfaction surveys. But they are a dangerously limiting view of
service and not nearly as all-encompassing as the customer's view of service.

Four levels of service

Another element that gets in the way of impressive service delivery is management's very
simplistic view of customer service. I can think of at least four levels of customer service,
each of which involves the creation of progressively more emotional value for customers.

To the customer, service involves more than just the functional delivery of service (the
first level, which, in a world where companies like FedEx have practically perfected
technical service provision, customers take as a given). Customers care how easy you
make it for them to communicate with you. This opens the door to a discussion of your
phone system, your web site and your customer service center—not to mention whether
customers can find someone to serve them in your store. Increasingly, when you keep
them on hold for 20 minutes, don't respond to their email inquiries and ask them to deal
with unknowledgeable and unhelpful staff, they will walk away.

At the third level, companies need to understand how customer service is linked to the
people they employ. My experience suggests that customers are most likely to equate the
notion of service with the way they are treated by employees. Finally, the level of service
that customers experience is a powerful influence on how customers feel emotionally
toward a company. Poor service can make a customer feel neglected, unimportant,
frustrated, angry or even humiliated. Surprisingly good service leads to emotions such as
comfort, relief, delight or excitement.

That holistic view again

Yet, many companies have a less-than-holistic view of their value proposition. Customer
service must be seen to be an integral part of what we offer the customer. I recently
encountered a major company that has separate marketing, sales and customer service
departments, each of which prepares its own annual plan and sets its own budgets,

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without consulting with the others. In that firm, customer service is defined mainly as the
operation of the call center. To the customer, service means much more.

It is far too simplistic to ask customers to rate your customer service on the predictable
10-point scale. It's much too complex a concept for customers to reduce it to a single
number. You can't interpret it, anyway. So last month they gave us a rating of 8.1 on
customer service. What does that mean? Very little. There's no direction on how we can
improve. Anyway, the only people who are rating you are current customers. How would
those customers who stormed out or hung up in disgust rate your customer service? You
will never know. Yet theirs is a much more important number.

Customer service is not optional. It's not trivial. And it's not easily standardized. Don't
make the mistake that one Canadian bank made of treating customer service as a
promotion. That bank offered customers $5 if they had to wait in line more than five
minutes in its branches. Customers were generally not impressed. To them, a wait time of
five minutes was not the issue. Of course, wait time is important—but not nearly as
important as being served politely and efficiently once you reach the counter.

Customer service is extremely complex, much like value, satisfaction and the
increasingly popular customer experience. To apply such concepts effectively,
management must appreciate their complexity. To utilize customer service to increase
customer loyalty, to reinforce the positioning of the brand and to gain a competitive
advantage, companies much have a strategy to guide its development and
implementation.

What is Customer Relationship Management?

Before we begin to examine the conceptual foundations of CRM, it will be useful to

define what CRM is. A narrow perspective of customer relationship management is
database marketing emphasizing the promotional aspects of marketing linked to database
efforts. Another narrow, yet relevant, viewpoint is to consider CRM only as customer
retention in which a variety of after marketing tactics is used for customer bonding or
staying in touch after the sale is made.

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Shani and Chalasani define relationship marketing as “an integrated effort to identify,
maintain, and build up a network with individuals consumers and to continuously
strengthen the network for mutual benefit of both sides, through interactive,
individualized and value-added contacts over a period of time”.

In today’s hyper competitive scenario, more than three quarters of the money and time
spent by companies go towards acquiring and retaining customers. Customer-centricity
has become the buzzword and the ones with clear and relentless focus on customers,
enjoy a better competitive position. This is proved time and again. Yet, companies go
through meticulous processes to gradually and consistently mature into an “organization
for the customers”. But, how would you mature into a customer-focused or customer-
centric organization? The answer is: By reading and understanding your customers. Yes,
this is all you need to do! And this you need to do not just once, but regularly and
consistently over the lifetime of your customer and beyond.

Reading the customer demographics and understanding their needs (both explicit and
implicit) is what customer insight is all about. Customer insight is the basic point or the
foundation for building a customer centric organization. Everything in the value chain
revolves around this. This is the raw material. This is more a conversion process rather,
since the end product is Customer Loyalty! Over decades, many organizations had
successfully completed the conversion process and tasted higher returns, most
organizations miserably failed in their efforts. Customer Insight goes through a set of
processes to get converted into Customer Loyalty- the finished product. The set of
processes include use of machine, process and people to obtain the final outcome - just
like a manufacturing process in a factory. The machine here is technology - information
technology to be precise, process - the custom made steps based on set objectives; and
people - those who are trained to efficiently carry out the conversion process. This whole
scheme of activities that begin from customer information and end in processes and
interactions that result in customer loyalty - in entirety, is what CRM is all about.

CRM relies on customer data to create customer loyalty. The concept of CRM was again
the result of an evolution born out of necessity. When companies understood the need to

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obtain and maintain customer data, which was exhaustive and scattered in nature and
were desperately looking for a tool that could compile, preserve use the data in a way
they want, technology came to the rescue with exclusive methods called data mining,
data warehousing and thus data base management techniques were born. Technology is
mechanistic and didn’t know what is required and what is not. A managerial tool was
needed to perform the director’s role in order to decide the path and processes. Thus
CRM was engineered as a tool to manage customer data using IT enabled techniques.

CRM gives a framework for the activities. It decides on what to do - the objectives, what
is required to do it - the resources, who should do it - the people, how to do it - the
processes, how long to do it - the time frame. CRM could be ready made, tailor-made or
hand made depending on the specific objectives it is set to achieve. CRM is unique in the
respect that it follows a set of pre-determined processes to accumulate and manage
customer data, which was hitherto unpracticed. Hence, CRM is defined as:

“Customer relationship management (CRM) is a business strategy to acquire and

manage the most valuable customer relationships. CRM requires a customer-centric
business philosophy and culture to support effective marketing, sales and service
processes. CRM applications can enable effective customer relationship management,
provided that an enterprise has the right leadership, strategy and culture.”

As is implicit in the above definition, the purpose of CRM is to improve marketing

productivity. Marketing productivity is achieved by increasing marketing efficiency and
by enhancing marketing effectiveness. In CRM, marketing efficiency is achieved because
cooperative and collaborative processes help in reducing transaction costs and overall
development costs for the company. Two important processes for CRM include proactive
customer business development and building partnering relationship with most important
customers. These lead to superior value creation. The basic concept is that the customer is
not someone outside the organisation, he is a part of the organisation.

Purpose of CRM

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CRM, in its broadest sense, means managing all interactions and business with
customers. This includes, but is not limited to, improving customer service. A good CRM
program will allow a business to acquire customers, service the customer, increase the
value of the customer to the company, retain good customers, and determine which
customers can be retained or given a higher level of service. A good CRM program can
improve customer service by facilitating communication in several ways :

• Provide product information, product use information, and technical assistance on

web sites that are accessible 24 hours a day, 7 days a week.
• Identify how each individual customer defines quality, and then design a service
strategy for each customer based on these individual requirements and
expectations.
• Provide a fast mechanism for managing and scheduling follow-up sales calls to
assess post-purchase cognitive dissonance, repurchase probabilities, repurchase
times, and repurchase frequencies.
• Provide a mechanism to track all points of contact between a customer and the
company, and do it in an integrated way so that all sources and types of contact
are included, and all users of the system see the same view of the customer
(reduces confusion).
• Help to identify potential problems quickly, before they occur.
• Provide a user-friendly mechanism for registering customer complaints
(complaints that are not registered with the company cannot be resolved, and are a
major source of customer dissatisfaction).
• Provide a fast mechanism for handling problems and complaints (complaints that
are resolved quickly can increase customer satisfaction).
• Provide a fast mechanism for correcting service deficiencies (correct the problem
before other customers experience the same dissatisfaction).
• Use internet cookies to track customer interests and personalize product offerings
accordingly.
• Use the Internet to engage in collaborative customization or real-time
customization.

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 • Provide a fast mechanism for managing and scheduling maintenance, repair, and
ongoing support (improve efficiency and effectiveness).
• The CRM program can be integrated into other cross-functional systems and
thereby provide accounting and production information to customers when they
want it.

Key CRM principles

Differentiate Customers

All customers are not equal; recognize and reward best customers disproportionately.
Understanding each customer becomes particularly important. And the same customers’
reaction to a cellular company operator may be quite different as compared to a car
dealer. Besides for the same product or the service not all customers can be treated alike
and CRM needs to differentiate between a high value customer and a low value customer.

What CRM needs to understand while differentiating customers is:

– Sensitivities, Tastes, Preferences and Personalities

– Lifestyle and age
– Culture Background and education
– Physical and psychological characteristics

Differentiating Offerings

– Low value customer requiring high value customer offerings.

– Low value customer with potential to become high value in near future.
– High value customer requiring high value service.
– High value customer requiring low value service.

Keeping Existing Customers

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Grading customers from very satisfied to very disappointed should help the organisation
in improving its customer satisfaction levels and scores. As the satisfaction level for each
customer improves, so shall the customer retention with the organisation.

Maximizing Life time value

Exploit up-selling and cross-selling potential. By identifying life stage and life event
trigger points by customer, marketers can maximize share of purchase potential. Thus the
single adults shall require a new car stereo and as he grows into a married couple his
needs grow into appliances.

Increase Loyalty

Loyal customers are more profitable. Any company will like its mindshare status to
improve from being a suspect to being an advocate. Company has to invest in terms of its
product and service offerings to its customers. It has to innovate and meet the very needs
of its clients/ customers so that they remain as advocates on the loyalty curve. Referral
sales invariably are low cost high margin sales.

Summarizing CRM activities

The CRM cycle can be briefly described as follows:

1. Learning from customers and prospects, (having in depth knowledge of customer)

2. Creating value for customers and prospects
3. Creating loyalty
4. Acquiring new customers
5. Creating profits
6. Acquiring new customers

Why CRM is necessary?

Several companies are turning to customer-relationship management systems and

strategies to gain a better understanding of their customer's wants and needs. Used in

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association with data warehousing, data mining, call centers and other intelligence-based
applications, CRM "allows companies to gather and access information about customers'
buying histories, preferences, complaints, and other data so they can better anticipate
what customers will want. The goal is to instill greater customer loyalty." Other benefits
includes:

– Faster response to customer inquiries.

– Increased efficiency through automation.
– Deeper understanding of customers.
– Increased marketing and selling opportunities.
– Identifying the most profitable customers.
– Receiving customer feedback that leads to new and improved products or services

Benefits of CRM

Implementing a customer relationship management (CRM) solution might involve

considerable time and expense. However, there are many potential benefits. A major
benefit can be the development of better relations with your existing customers, which
can lead to:

– Increased sales through better timing due to anticipating needs based on historic
trends
– identifying needs more effectively by understanding specific customer
requirements
– cross-selling of other products by highlighting and suggesting alternatives or
enhancements
– effective targeted marketing communications aimed specifically at customer
needs
– a more personal approach and the development of new or improved products and
services in order to win more business in the future
– enhanced customer satisfaction and retention, ensuring that your good reputation
in the marketplace continues to grow

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 – increased value from your existing customers and reduced cost associated with
supporting and servicing them, increasing your overall efficiency and reducing
total cost of sales

Once your business starts to look after its existing customers effectively, efforts can be
concentrated on finding new customers and expanding your market. The more you know
about your customers, the easier it is to identify new prospects and increase your
customer base. Even with years of accumulated knowledge, there's always room for
improvement. Customer needs change over time, and technology can make it easier to
find out more about customers and ensure that everyone in an organisation can exploit
this information.

History of CRM

Customer Relationship Management (CRM) is one of those magnificent concepts that

swept the business world in the 1990’s with the promise of forever changing the way
businesses small and large interacted with their customer bases. In the short term,
however, it proved to be an unwieldy process that was better in theory than in practice for
a variety of reasons. First among these was that it was simply so difficult and expensive
to track and keep the high volume of records needed accurately and constantly update
them. In the last several years, however, newer software systems and advanced tracking
features have vastly improved CRM capabilities and the real promise of CRM is
becoming a reality. As the price of newer, more customizable Internet solutions have hit
the marketplace; competition has driven the prices down so that even relatively small
businesses are reaping the benefits of some custom CRM programs.

In the beginning…

The 1980’s saw the emergence of database marketing, which was simply a catch phrase
to define the practice of setting up customer service groups to speak individually to all of
a company’s customers.

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In the case of larger, key clients it was a valuable tool for keeping the lines of
communication open and tailoring service to the clients needs. In the case of smaller
clients, however, it tended to provide repetitive, survey-like information that cluttered
databases and didn’t provide much insight. As companies began tracking database
information, they realized that the bare bones were all that was needed in most cases:
what they buy regularly, what they spend, what they do.

Advances in the 1990’s

In the 1990’s companies began to improve on Customer Relationship Management by

making it more of a two-way street. Instead of simply gathering data for their own use,
they began giving back to their customers not only in terms of the obvious goal of
improved customer service, but in incentives, gifts and other perks for customer loyalty.

This was the beginning of the now familiar frequent flyer programs, bonus points on
credit cards and a host of other resources that are based on CRM tracking of customer
activity and spending patterns. CRM was now being used as a way to increase sales
passively as well as through active improvement of customer service.

True CRM comes of age

Real Customer Relationship Management as it’s thought of today really began in earnest
in the early years of this century. As software companies began releasing newer, more
advanced solutions that were customizable across industries, it became feasible to really
use the information in a dynamic way.

Instead of feeding information into a static database for future reference, CRM became a
way to continuously update understanding of customer needs and behavior. Branching of
information, sub-folders, and custom tailored features enabled companies to break down
information into smaller subsets so that they could evaluate not only concrete statistics,
but information on the motivation and reactions of customers.

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The Internet provided a huge boon to the development of these huge databases by
enabling offsite information storage, where before companies had difficulty supporting
the enormous amounts of information. The Internet provided new possibilities and CRM
took off as providers began moving toward Internet solutions.

With the increased fluidity of these programs came a less rigid relationship between
sales, customer service and marketing. CRM enabled the development of new strategies
for more cooperative work between these different divisions through shared information
and understanding, leading to increased customer satisfaction from order to end product.

Today, CRM is still utilized most frequently by companies that rely heavily on two
distinct features: customer service or technology. The three sectors of business that rely
most heavily on CRM -- and use it to great advantage -- are financial services, a variety
of high tech corporations and the telecommunications industry.

The financial services industry in particular tracks the level of client satisfaction and what
customers are looking for in terms of changes and personalized features. They also track
changes in investment habits and spending patterns as the economy shifts. Software
specific to the industry can give financial service providers truly impressive feedback in
these areas.

In recent years however, several factors have contributed to the rapid development and
evolution of CRM. These include: -

1. The growing de-intermediation process in many industries due to the advent of

sophisticated computer and telecommunication technologies that allow producers to
directly interact with end-customers. For example, in many industries such as airlines,
banks insurance, software or household appliances and even consumables, the de-
intermediation process is fast changing the nature of marketing and consequently making
relationship marketing more popular. Databases and direct marketing tools give them the
means to individualize their marketing efforts.

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2. Advances in information technology, networking and manufacturing technology have
helped companies to quickly match competition. As a result product quality and cost are
no longer significant competitive advantages.

3. The growth in service economy. Since services are typically produced and delivered at
the same institution, it minimizes the role of the middlemen.

4. Another force driving the adoption of CRM has been the total quality movement. When
companies embraced TQM it became necessary to involve customers and suppliers in
implementing the program at all levels of the value chain. This needed close working
relationships with the customers. Thus several companies such as Motorola, IBM,
General Motors, Xerox, Ford, Toyota, etc formed partnering relations with suppliers and
customers to practice TQM. Other programs such as JIT and MRP also made use of
interdependent relationships between suppliers and customers.

5. Customer expectations are changing almost on a daily basis. Newly Empowered

customers who choose how to communicate with the companies across various available
channels. Also nowadays consumers expect a high degree of personalization.

6. Emerging real time, interactive channels including e-mail, ATMs and call centre that
must be synchronized with customer’s non-electronic activities. The speed of business
change, requiring flexibility and rapid adoption to technologies.

7. In the current era of hyper competition, marketers are forced to be more concerned
with customer retention and customer loyalty.

8. As several researches have found out retaining customers is less expensive and more
sustainable competitive advantage than acquiring new ones.

9. On the supply side it pays more to develop closer relationships with a few suppliers
than to develop more vendors.

10. The globalization of world marketplace makes it necessary to have global account
management for the customers.

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CRM Programs & Activities

CRM Programs

One-to-one Marketing

Meeting and satisfying each customer’s need uniquely and individually. In the mass
markets individualized information on customers is now possible at low costs due to the
rapid development in the information technology and due to availability of scalable data
warehouses and data mining products. By using online information and databases on
individual customer interactions, marketers aim to fulfill the unique needs of each mass-
market customer. Information on individual customers is utilized to develop frequency
marketing, interactive marketing, and after marketing programs in order to develop
relationship with high-yielding customers. In the context of business-to-business markets,
individual marketing has been in place of quite sometime. Known as Key Account
Management Program, here marketers appoint customer teams to husband the company
resources according to individual customer needs.

Continuity Marketing Programs

Take the shape of membership and loyalty card programs where customers are often
rewarded for their member and loyalty relationships with the marketers. The basic
premise of continuity marketing programs is to retain customers and increase loyalty
through long-term special services that has a potential to increase mutual value through
learning about each other.

Partnering Programs

The third type of CRM programs is partnering relationships between customer and
marketers to serve end user needs. In the mass markets, two types of partnering programs
are most common: co-branding and affinity partnering.

Missing process of CRM

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Traditionally customer relationship management (CRM) revolves around the three
functions of selling, marketing and support. Various process models have been built
around how these functions are integrated and operated in a customer oriented enterprise.
There is however a fourth critical function that is lacking in most CRM models.

The fourth function that often is the source of a competitive edge is that of innovation.

Companies must continually reinvent themselves to deliver an improved and often a

totally new value offering to their customer base. CRM must provide the customer
intelligence that feeds information back into the enterprise’s knowledge management
processes where it can trigger new innovation processes. When CRM is integrated into
the innovation process, significant value can be derived from faster time to market cycle
times and with new processes and services.

Marketing automation must ensure that the innovation processes are actually market
driven. A market driven innovation process must include both strategies that are focused
on satisfying customer requirements as well as strategies focused at redefining customer
requirements. Sales automation should be integrated with the innovation process by
ensuring that all sales channels are prepared and ready to take new processes and services
to market before competitive forces can react. Customer service automation must be
designed to empower the customer with the option of assisting with the design of the
value offering. Redefining CRM around innovation, sales, marketing and service can
identify new competitive opportunities for an enterprise. The remaining question is
whether companies are prepared to take the initiative and expand the definition of
customer relationship management to include the process of innovation. The pressure to
deliver results within the traditional definition of CRM already overwhelms companies.
The dialog must start rather earlier than later because the competitive window of
traditional CRM is decreasing and customer demands for a more innovative and
responsive enterprise will increase

Architecture of CRM

There are three parts of application architecture of CRM:

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 – Operational - automation to the basic business processes (marketing, sales,
service)
– Analytical - support to analyze customer behavior, implements business
intelligence alike technology
– Collaborative - ensures the contact with customers (phone, email, fax, web, sms,
post, in person)

Operational CRM

Operational CRM means supporting the "front office" business processes, which include
customer contact (sales, marketing and service). Tasks resulting from these processes are
forwarded to resources responsible for them, as well as the information necessary for
carrying out the tasks and interfaces to back-end applications are being provided and
activities with customers are being documented for further reference.

Operational CRM provides the following benefits:

– Delivers personalized and efficient marketing, sales, and service through multi-
channel collaboration.
– Enables a 360-degree view of your customer while you are interacting with them.
– Sales people and service engineers can access complete history of all customer
interaction with your company, regardless of the touch point.

The operational part of CRM typically involves three general areas of business:

– Sales force automation (SFA)

SFA automates some of the company's critical sales and sales force management
functions, for example, lead/account management, contact management, quote
management, forecasting, sales administration, keeping track of customer preferences,
buying habits, and demographics, as well as performance management. SFA tools are
designed to improve field sales productivity. Key infrastructure requirements of SFA are
mobile synchronization and integrated product configuration.

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 – Customer service and support (CSS)

CSS automates some service requests, complaints, product returns, and information
requests. Traditional internal help desk and traditional inbound call-center support for
customer inquiries are now evolved into the "customer interaction center" (CIC), using
multiple channels (Web, phone/fax, face-to-face, kiosk, etc). Key infrastructure
requirements of CSS include computer telephony integration (CTI) which provides high
volume processing capability, and reliability.

– Enterprise marketing automation (EMA)

EMA provides information about the business environment, including competitors,

industry trends, and macro-environmental variables. It is the execution side of campaign
and lead management. The intent of EMA applications is to improve marketing campaign
efficiencies. Functions include demographic analysis, variable segmentation, and
predictive modeling occurs on the analytical (Business Intelligence) side. Integrated
CRM software is often also known as "front office solutions." This is because they deal
directly with the customer. Many call centers use CRM software to store all of their
customer's details. When a customer calls, the system can be used to retrieve and store
information relevant to the customer. By serving the customer quickly and efficiently,
and also keeping all information of a customer in one place, a company aims to make
cost savings, and also encourage new customers.

CRM solutions can also be used to allow customers to perform their own service via a
variety of communication channels. For example, you might be able to check your bank
balance via your WAP phone without ever having to talk to a person, saving money for
the company, and saving your time.

Analytical CRM

In analytical CRM, data gathered within operational CRM and/or other sources are
analyzed to segment customers or to identify potential to enhance client relationship.

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Customer analysis typically can lead to targeted campaigns to increase share of
customer's wallet. Examples of

Campaigns directed towards customers are:

– Acquisition: Cross-sell, up-sell

– Retention: Retaining customers who leave due to maturity or attrition.
– Information: Providing timely and regular information to customers.
– Modification: Altering details of the transactional nature of the customers'
relationship.

Analysis typically covers but is not limited to:

– Decision support: Dashboards, reporting, metrics, performance etc.

– Predictive modeling of customer attributes
– Strategy and research.

Analysis of Customer data may relate to one or more of the following analyses:

– Contact channel optimization

– Contact Optimization
– Customer Acquisition / Reactivation / Retention
– Customer Segmentation
– Customer Satisfaction Measurement / Increase
– Sales Coverage Optimization
– Fraud Detection and analysis
– Financial Forecasts
– Pricing Optimization
– Product Development
– Program Evaluation
– Risk Assessment and Management

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Data collection and analysis is viewed as a continuing and iterative process. Ideally,
business decisions are refined over time, based on feedback from earlier analysis and
decisions. Therefore, most successful analytical CRM projects take advantage of a data
warehouse to provide suitable data. Business Intelligence is a related discipline offering
some more functionality as separate application software.

Collaborative CRM

Collaborative CRM facilitates interactions with customers through all channels (personal,
letter, fax, phone, web, e-mail) and supports co-ordination of employee teams and
channels. It is a solution that brings people, processes and data together so companies can
better serve and retain their customers. The data/activities can be structured, unstructured,
conversational and/or transactional in nature.

Collaborative CRM provides the following benefits:

– Enables efficient productive customer interactions across all communications

channels
– Enables web collaboration to reduce customer service costs
– Integrates call centers enabling multi-channel personal customer interaction
– Integrates view of the customer while interaction at the transaction level

Tools for CRM

Customer database

A good customer information system should consist of a regular flow of information,

systematic collection of information that is properly evaluated and compared against
different points in time, and it has sufficient depth to understand the customer and
accurately anticipate their behavioral patterns in future. The customer database helps the
company to plan, implement, and monitor customer contact. Customer relationships are
increasingly sustained by information systems. Companies are increasingly adding data

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from a variety of sources to their databases. Customer data strategy should focus on
processes to manage customer acquisition, retention, and development.

Call Centre

A call centre is a centralized office used for the purpose of receiving and transmitting a
large volume of requests by telephone.

A call centre is operated by a company to administer incoming product support or

information inquiries from consumers. Outgoing calls for telemarketing, clientele, and
debt collection are also made. In addition to a call centre, collective handling of letters,
faxes, and e-mails at one location is known as a contact centre.

A call centre is often operated through an extensive open workspace, with work stations
that include a computer, a telephone set/headset connected to a telecom switch, and one
or more supervisor stations. It can be independently operated or networked with
additional centres, often linked to a corporate computer network, including mainframes,
microcomputers and LANs. Increasingly, the voice and data pathways into the centre are
linked through a set of new technologies called computer telephony integration (CTI).

Most major businesses use call centres to interact with their customers. Examples include
utility companies, mail order catalogue firms, and customer support for computer
hardware and software. Some businesses even service internal functions through call
centres. Examples of this include help desks and sales support.

Systems Integration

While CRM solutions are front office automation solutions, ERP is back office
automation solution. An ERP helps in automating business functions of production,
finance, inventory, order fulfillment and human resource giving an integrated view of
business, where as CRM automates the relationship with customer covering contact and
opportunity management , marketing and product knowledge, sales force management,
sales forecasting, customer order processing and fulfillment, delivery, installation, pre-

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sale and post-sale services and complaint handling by providing an integrated view of the
customer. It is necessary that the two systems integrate with each other and complement
information as well as business workflow. Therefore, CRM and ERP are complementary.
This integration of CRM with ERP helps companies to provide faster customer service
through an enabled network, which can direct all customer queries and issues through
appropriate channels to the right place for speedy resolution. This will help the company
in tracking and correcting the product problems reported by customers by feeding this
information into the R&D operations via ERP.

Data Mining for CRM: Some Relevant issues

Data mining is an important enabler for CRM. Advances in data storage and processing
technologies have made it possible today to store very large amounts of data in what are
called data warehouses and then use data mining tools to extract relevant information.
Data mining helps in the process of understanding a customer by providing the necessary
information and facilitates informed decision-making.

How to implement CRM

The implementation of a customer relationship management (CRM) solution is best

treated as a six-stage process, moving from collecting information about your customers
and processing it to using that information to improve your marketing and the customer
experience.

Stage one - Collecting information

The priority should be to capture the information you need to identify your customers and
categorise their behaviour. Those businesses with a website and online customer service
have an advantage as customers can enter and maintain their own details when they buy.

Stage two - Storing information

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The most effective way to store and manage your customer information is in a relational
database - a centralised customer database that will allow you to run all your systems
from the same source, ensuring that everyone uses up-to-date information.

Stage three - Accessing information

With information collected and stored centrally, the next stage is to make this information
available to staff in the most useful format.

Stage four - Analysing customer behaviour

Using data mining tools in spreadsheet programs, which analyse data to identify patterns
or relationships, you can begin to profile customers and develop sales strategies.

Stage five - Marketing more effectively

Many businesses find that a small percentage of their customers generate a high
percentage of their profits. Using CRM to gain a better understanding of your customers'
needs, desires and self-perception, you can reward and target your most valuable
customers.

Stage six - Enhancing the customer experience

Just as a small group of customers are the most profitable, a small number of complaining
customers often take up a disproportionate amount of staff time. If their problems can be
identified and resolved quickly, your staff will have more time for other customers.

Types for implementing CRM

The final way to implement CRM is to find a full-service vendor of customer-service

solutions, which might include phone assistance, e-mail handling, real-time chat and even
creation of a knowledge base for your site. If you outsource your CRM, then you won't
need any customer service infrastructure, including customer-service representatives;

40
however, you will need to make sure that your marketing teams can access the business-
intelligence components.

Purchasing or Licensing Software

Owning the software and running it on your own servers is ideal if you have highly
customized enterprise resource planning, or ERP, or order-management system, or OMS,
software. If you have third-party software for your back-office processes (accounting,
ERP, OMS, etc.) and your front-end systems (content management, merchandising,
checkout, personalization engine), then you should be able to find CRM software that
works with at least some of your systems without extensive customization. It's
unavoidable that you will have to do some customization, but, by working with vendors
that have partnerships and interfaces with your existing vendors and their software — or
with vendors that have partnerships with the ASPs that host your existing solutions —
you can keep customization to a minimum. Customization is not only expensive when
you first install third-party software, but it's also expensive every time you try to apply a
patch or an upgrade.

The advantages of purchasing or licensing the software and implementing it on your own
servers are that you have complete control over the software and over the data. There
aren't any of the privacy issues that might arise from having your data residing with a
third party. If you already have a customer-service department with trained associates,
and you don't expect rapid growth — or you believe you're equipped to handle rapid
growth — then there's no point in paying to train CSRs elsewhere.

CRM Via ASP

Only recently have CRM services become available via an ASP. There are two kinds of
ASPs providing CRM solutions. With one type, of which ShopTok is one example, the
ASP hosts its own CRM software. The other type hosts a best-of-breed third-party
solution. The disadvantage of the second type is that when something isn't working with
the software, you don't always know whether the problem rests with the ASP or with the
software, and you can't necessarily get it fixed. With ASPs that host their own software,

41
the vendor hears your requirements for new features and your complaints about existing
functionality.

When you work with an ASP, the first thing you'll want to know is the degree to which
you can customize the interface and the software so that your other business software will
talk to your CRM software. After all, your CSRs need to know what a customer has
purchased to handle inquiries from that customer, requiring integration between the
order-management system and the CRM system. If the customer database doesn’t talk to
the CRM system, then your marketing department can’t segment customers based on
purchases and use the analytical tools frequently built into CRM software to make
intelligent decisions on what kind of promotions to make to attract the highest-value
customers. There are several advantages to either kind of ASP described above. First, the
cost of getting started is usually low — certainly much lower than the cost of
implementing software on your own servers. Second, the implementation time is usually
short. Finally, no additional infrastructure or support are required from your IT
department. However, some ASPs will tell you that they'll implement whatever CRM
software you'd like (at your expense, of course), in which case you don't get to take
advantage of speed, reduced cost, or experienced tech support. Rather than choosing the
software and the ASP separately, let the software dictate the ASP you select.

Outsourcing Customer Service

While you can outsource customer service, which is one component of CRM, you can't
outsource business intelligence, which is the strategic component of CRM. If you don’t
need to integrate with existing systems, or you only need limited integration, then the
fastest route to take is to outsource your customer service to a full-service provider who
will give you Web access to the business-intelligence tools. Most full-service customer-
service providers will work with the best-of-breed CRM vendors and offer you a choice
of CRM systems with which to manage your customers. Some are also willing to
purchase and install the CRM software of your choice on their servers, but be aware that
this will eliminate the advantage of a quick implementation, lower entry costs and CSRs
who already know the software. The cost associated with outsourcing CRM is usually a

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significant startup cost for developing your materials, their training materials and your
knowledge base, then a monthly fee based either on the number of hours of CSR you
want available or on the number of calls/messages they receive for your site. The pay-as-
you-go model can be very attractive to smaller merchants. The ability to grow quickly
can be an advantage for any size Web merchant.

Critical Success Factors for Implementation of CRM Systems

Critical success factors have been defined as the elements that make a project a success,
and as the ‘events and conditions in a few key areas which absolutely must go right for
the business to succeed’. These include trust, effective communication, and top
management support. For this to occur, proper measurement tools and metrics must be
utilized to effectively control the project.

The key CSF for CRM projects are:

Key Stakeholder Support

Support from all stakeholders in the organization, including top management and all
management levels, employees, government, suppliers, strategic partners, and investors.
Includes the timely reporting of the project status with accurate information.

Sufficient Resources

Resources of money, equipment and expertise available with appropriate support

structures in place. Includes time and budget allocations for training.

Clearly Defined Objective

A clearly defined mission with a set of defined goals and objectives communicated to all
stakeholders through clearly defined communication channels, with alignment of project
and corporate goals. This is managed through a detailed project plan.

Managing Change

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Project changes are implemented through a formally defined process with appropriate
approvals sought. Any scope changes are mutually agreed and documented, with
appropriate analysis of resource requirements.

Challenges of CRM Implementation

Organizations face a number of key challenges in implementing CRM systems. These

include:

 Methodology driven by end users

IT personnel do not have knowledge or authority to influence corporate decision makers

 Lack of executive sponsorship

CRM projects are mostly driven by a functional head, such as a VP or sales/marketing,

and rarely produce an enterprise view of customers

 Lack of customer centric culture

An acceptable return on investment will no be achieved if the organization does not have
a strong customer centric culture

 Inappropriate design approach

CRM is designed to model a single functional view not an enterprise wide customer
view, resulting in failure

 Over automation

Focus on functionality and process design leads to highly automated business functions
Lack of network infrastructure Inadequate IT infrastructure and networking facilities
prevent the CRM from being implemented enterprise wide

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As can be seen from the challenges faced, it is important for organizations to realize that
a CRM system implementation will only succeed when it is supported by a customer
focused organizational culture. The CRM system will be the main driver for a paradigm
shift, becoming an enabler for communication between the organization and its
customers, and within the organization itself.

CRM Related Concepts

Knowledge
 Management

Knowledge Management (KM) refers to a range of practices used by organizations to

identify, create, represent, and distribute knowledge for reuse and learning across the
organization. Knowledge Management programs are typically tied to organizational
objectives and are intended to lead to the achievement of specific business outcomes such
as improved performance, competitive advantage, or higher levels of innovation. While
knowledge transfer (an aspect of Knowledge Management) has always existed in one
form or another, for example through on-the-job discussions with peers, formally through
apprenticeship, through the maintenance of corporate libraries, through professional
training and mentoring programmes, and — since the late twentieth century —
technologically through knowledge bases, expert systems, and other knowledge
repositories, Knowledge Management programs attempt to explicitly evaluate and
manage the process of creation or identification, accumulation, and application of
knowledge or intellectual capital across an organization. Knowledge Management,
therefore, attempts to bring under one set of practices various strands of thought and
practice relating to:

– intellectual capital and the knowledge worker in the knowledge economy

– the idea of the learning organization;
– various enabling organizational practices such as Communities of Practice and
corporate Yellow Page directories for accessing key personnel and expertise;

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 – various enabling technologies such as knowledge bases and expert systems, help
desks, corporate intranets and extranets, Content Management, wikis, and
Document Management.

While Knowledge Management programs are closely related to Organizational Learning

initiatives, Knowledge Management may be distinguished from Organizational Learning
by its greater focus on the management of specific knowledge assets and development
and cultivation of the channels through which knowledge flows.

The emergence of knowledge management has generated new organizational roles and
responsibilities an early example of which was the Chief Knowledge Officer. In recent
years, Personal Knowledge Management (PKM) practice has arisen in which individuals
apply KM practice to themselves, their role in the organisation and their career
development. Knowledge Management is a continually evolving discipline, with a wide
range of contributions and a wide range of views on what represents good practice in
Knowledge Management.

Knowledge Management Plays a Key Role in CRM Success

CRM and knowledge management (KM) were once considered entirely different
disciplines, with the two sharing little but perhaps the same data warehouse hardware and
a vague understanding that both efforts were meant to improve business efficiency and
customer satisfaction. It has become clear, however, that the two disciplines were really
working toward the same goal, and that to deliver continuous improvement to business
clients, they would have to start speaking the same language.

KM focuses largely on finding the right solution to a problem that requires detailed
insight, be it locating the right expert at the right time, or ensuring that the solution to a
complex problem can be written once but reused many times. It is not difficult to
understand why that capability is of great interest to CRM strategists. Industry estimates
suggest that upwards of three quarters of variable support costs come from the time and
energy put into the resolution of customer support inquiries, rather than routing and post-
call management.

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Better KM/CRM integration can help companies navigate complex support problems
more easily. Many manufacturers, such as computer companies, sell a single product that
may incorporate dozens or even hundreds of other components. Being able to cross-
reference the entire collected library for technical support and conflict resolution can
make the difference between first-call resolution and a lingering headache.

Many companies still have not attained the level of deep integration that ties knowledge
base activity (particularly at the self-service level) to a CRM-facing customer record, but
companies like computer peripheral manufacturer Adaptec use the intersection of CRM
and KM to guide product and service decisions and attempt to waylay customer service
overloads before they begin.

Conquering their own individual demons will not mean the end of the road for CRM and
knowledge management leaders, as they must join forces to realize even more value from
the spheres of customer and product knowledge.

Regain Management

“The cost of acquiring a new customer is 9 to 12 times that of holding on to an existing

customer.” - Philip Kotler

Goal of customer regain management is to reinitiate valuable customer relationships,

which have been already terminated. Regain management has to detect such ‘lost’
customers, select valuable relationships and attempt to regain them in an effective and
efficient way, for which a systematic process is necessary. Addition to this process
structure, there is an information base needed, which enables the exchange of collected
information along the customer regain process.

- An incentive strategy tempts to regain business relations by offering

customers some form of incentives like for example tickets for events, gifts and
discounts.

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 - A compensation strategy aims to compensate some (real or perceived)
disservices, which as the motive for termination. For example the company could
offer some form of vouchers.
- A dialogue strategy tries to regain trust through a dialog (e.g. personal
call).
- A convincing strategy aims to persuade customers by means of use
argumentations and explanation of some product advantage.

CRM in Supply Chain Management (SCM)

Supply Chain Management (SCM) is a business system of enterprise strategies, business

processes and information technologies for improving the planning, execution and
collaboration of material flows, information flows, financial flows and workforce flows
in the supply chain.

SCM is supported by modular software applications that integrate activities across

organizations, from demand forecasting, product planning, parts purchasing, inventory
control, manufacturing, and product assembly to product distribution. In the context of
SCM, where alliances and partnerships are keys to success, CRM plays an important role
in building long-term relationships. The success of relationships depends upon sharing of
savings from the supply chain, which may be reinvested to further enhance its efficiency,
and sustain the competitive advantage.

The supply chain of tomorrow will look like a virtual organisation, seamlessly integrated
through sharing data and savings as well. The bonding between partners will be closely
held by CRM practices.

Goals of SCM

– to reduce inventory cost,

– to increase sales
– To improve the coordination and the collaboration with suppliers, manufacturers
and distributors.

48
CRM-ERP Integration

ERP’s foundation (which evolved from either manufacturing-based manufacturing

resources planning (MRP) applications and its later incarnation, MRPII applications), it is
based on creating internally stable business functions and predictable process control.
The concept of ERP was the integration of all back-office functions so that the basic
problems responsible for interruptions and breaks in the processes were smoothed out and
the incompatibilities of the best of processes were smoothened and the incompatibilities
of the best-of-breed applications were eliminated or reduced. This doesn’t work with
CRM, which is external. How can you be in command of the processes when they are
based on your customers’ behaviour? Conceptually, one important reason for CRM is
real-time response to the constantly liquid-shifting of customer demands, which is not
controlled internally at all. It also means the psychology of the front office is quite
different from the psychology of the back-office. The simplest option is to hire a systems
integrator to come in and integrate the systems. However, the obvious hazard here is that
they are not only dealing with ERP and CRM applications they may not know much
about, they are also dealing with your legacy systems, which they know nothing about.
But integrating all of that is what you could hire the ERP vendor for and implements the
ERP vendor’s CRM solution. But many of the solutions remain vapor ware or poorly
integrated. The third solution is what many companies are increasingly turning to
Enterprise Application Integration (EAI). EAI applications, previously known as
middleware, can be the most cost-effective way of integrating the back and front offices.
EAI’s purpose is mainly to integrate data between disparate applications that don’t
natively speak with each other.

What is eCRM?

In simple terms, eCRM provides to companies a means to conduct interactive,

personalised and relevant communication with customers across both electronic and
traditional channels. It utilizes a complete view of the customer to make decisions about
messaging, offers, and channel delivery. It synchronises communications across
disjointed customer-facing systems. It focuses on understanding how the economics of

49
customer relationships affect the business. Advocates of eCRM recognize that a
comprehensive understanding of customer activities, personalization, relevance,
permission, timeliness and metrics is a means to an end optimizing the value of your most
important asset: your customers.

For Fortune 500 companies, evolving to eCRM requires process and organisational
changes, a suite of integrated applications and a non-trivial technical architecture to
support both the eCRM process and the enterprise applications that automate the process.
Mid-size companies may benefit from less sophisticated and easier-it-implement (and
affordable), hosted solutions offered through Application Service Providers. But
regardless of the size of the firm, you have no choice but to evolve to eCRM quickly.

eCRM v/s CRM: The Differences

Being able to take care of your customer via the Internet, or, customers being able to take
care of themselves online: That’s the difference between CRM and eCRM. It implies a
myriad of issues, questions, approaches, technologies, and architecture that are different
from client/server-based CRM. Many of them are issues general to the Internet. Others
are issues related to the creation of applications for the Internet. The third group is related
directly to eCRM and its actual value to business.

Companies agree that eCRM is critical to their business, but unfortunately very few
understands exactly what it is or how to evolve from their existing database marketing
practices to an eCRM solution.

Basic Requirements of eCRM or Six “E” of eCRM

Electronic Channels

New electronic channels such as the Web and personalised eMessaging have become the
medium for fast, interactive and economic customer communications, challenging
companies to keep pace with this increased velocity.

Enterprise

50
Through eCRM, a company gains the means to touch and shape a customer’s experience
across the entire organization, reaching beyond just the bounds of marketing to sales,
services and corner offices – whose occupants need to understand and assess customer
behaviour. An eCRM strategy relies heavily on the construction and maintenance of a
data warehouse that provides a consolidated, detailed view of individual customer
behaviour and communication history.

Empowerment

In this new age, eCRM strategies must be structured to accommodate customers who now
have the power to decide when and how to communicate with the company and through
which channel, which ability to opt for or out of. Consumers decide which firms earn the
privilege to “talk” with them.

Economics

Too many companies execute communication strategies withlittle effort or ability to

understand the economics of customer relationships and channel delivery choices. Yet
customer economics drives smart asset allocation decisions, directing resources and
efforts at individuals likely to provide the greatest return on customer communication
initiatives.

Evaluation

Understanding customer economics relies on a company’s ability to attribute customer

behaviour to marketing programs. A company should evaluate customer interactions
along with various customer touch point channels and compare anticipated ROI against
returns, through customer analytic reporting. Evaluation of results allows companies to
continuously refine and improve efforts to optimise relationships between companies and
their customers.

External Information

51
The use of consumer-sanctioned external information can be employed to further
understand customer needs. This information can be gained from sources such as third-
party information networks and Webpage profiler applications, under the condition that
companies adhere to strict consumer opt-in rules and privacy concerns.

The Need to Adopt eCRM

Companies need to take firm initiatives on the eCRM frontier to

– Optimize the value of interactive relationship.

– Enable the business to extend its personalized messaging to the Web and e-mail.
– Co-ordinate marketing activities across all customer channels.
– Leverage customer information for more effective eMarketing and eBusiness.
– Focus business on improving customer relationship and earning a greater share of
each customer’s business through consistent measurement, assessment and
“actionable” customer contact strategies.

Problems and Drawbacks

There are several reasons why a customer relationship management (CRM) solution
might not have the desired results.

There could be a lack of commitment from people within the company to the
implementation of a CRM solution. Adapting to a customer-focused approach may
require a cultural change. There is a danger that relationships with customers will break
down somewhere along the line, unless everyone in the business is committed to viewing
their operations from the customers' perspective. The result is customer dissatisfaction
and eventual loss of revenue.

Poor communication can prevent buy-in. In order to make CRM work, all the relevant
people in your business must know what information you need and how to use it.

Weak leadership could cause problems for any CRM implementation plan. The onus is
on management to lead by example and push for a customer focus on every project. If a

52
proposed plan isn't right for your customers, don't do it. Send your teams back to the
drawing board to come up with a solution that will work.

Trying to implement CRM as a complete solution in one goes is a tempting but risky
strategy. It is better to break your CRM project down into manageable pieces by setting
up pilot programs and short-term milestones. Consider starting with a pilot project that
incorporates all the necessary departments and groups but is small and flexible enough to
allow adjustments along the way.

Don't underestimate how much data you will require, and make sure that you can expand
your systems if necessary. You need to carefully consider what data is collected and
stored to ensure that only useful data is kept.

You must also ensure you comply with the eight principles of the Data Protection Act
that govern the processing of information on living, identifiable individuals. For more
information, see their guide on how to comply with data protection legislation.

Avoid adopting rigid rules which cannot be changed to be more flexible to the needs of
individual customers.

Reasons for CRM Implementation Failure

An understanding of the challenges and critical success factors is paramount to project

success.

In this way, the organization is aware of those factors by which success can be measured,
and will ensure the CRM system is implemented in a manner to satisfy all stakeholders.
The main reasons for CRM failures include:

 Customer focus

Organizational culture is not customer focused, with limited involvement of customer

facing personnel in the design and implementation phase

53
 Organizational Management

Lack of support and understanding form senior management, lack of CRM

understanding, lack of communications and changing business needs

 Project Management

Misalignment between project and business requirements, with unrealistic goals,

timelines, coupled with a lack of planning and insufficient reporting and control

 Team Members

Lack of support, incentives, and lack of technical knowledge

 Data & Warehouse Requirements

Poor quality data, inconsistent data between different systems

 Technical Factors

Short term solution focus not aligned to long term architectural infrastructure growth, no
prototyping or testing, misunderstanding technical requirements.

CRM is failing because the correct capabilities are not being built at the enterprise level.
The requisite changes in organizational culture, behavior and attitude are not being
implemented.

Overall, in failed projects, there is little or no alignment between stakeholders on success

criteria, critical success factors, performance metrics, project drivers, nor on the
dynamics of how these parameters may change over the project life cycle. The
requirements of the customer are either misunderstood, or not taken into account. The
result is an inconsistency in focus, with less than optimum system design and
implementation. Hence CRM is failing due to two primary reasons: a) technical; due to
the size, complexity, and lack of knowledge of technology, and b) human behavior; due
to general change management issues in the organization. What is required is a coherent,

54
all encompassing strategy that focuses on key stakeholder requirements. Companies
underestimate the complexities of CRM projects, lack clearly defined business objectives,
and tend to invest inadequately in the provision of CRM software.

CEM: Future Concept

Customer experience management (CEM) is "the process of strategically managing a

customer's entire experience with a product or a company"

Marketing research has shown that about 70 to 80% of all products are perceived as
commodities that are, seen as being more-or-less the same as competing products. This
makes marketing the product difficult. Marketers have taken various approaches to this
problem including: branding, product differentiation, market segmentation, and
relationship marketing. Relationship marketing, (also called loyalty marketing) focuses
on establishing and building a long term relationship between a company and a customer.
There are several approaches that have been espoused including customer experience
management, customer relationship management, loyalty programs, and database
marketing.

CEM's critique of traditional marketing

The development of customer experience management originally started with a critique

of three existing marketing concepts. It concluded that the following three concepts do
not go far enough:

Marketing concept--Since the 1970s there has been a gradual shift from a product-,
technology-, and sales-focused orientation towards a customer- and market-oriented
approach by determining the wants and needs of customers and satisfying them more
efficiently or effectively as compared to competitors. However, the approach is still
mostly functional, with similarities and differences between competitors being defined
mostly by product features and customer benefits.

55
56
 RESEARCH METHODOLOGY

Research methodology is considered as the nerve of the project. Without a proper well-
organized research plan, it is impossible to complete the project and reach to any
conclusion. The project was based on the survey plan. The main objective of survey was
to collect appropriate data, which work as a base for drawing conclusion and getting
result.

Therefore, research methodology is the way to systematically solve the research

problem. Research methodology not only talks of the methods but also logic behind the
methods used in the context of a research study and it explains why a particular method
has been used in the preference of the other methods

Research design:

Research design is important primarily because of the increased complexity in the market
as well as marketing approaches available to the researchers. In fact, it is the key to the
evolution of successful marketing strategies and programmers. It is an important tool to
study buyer’s behavior, consumption pattern, brand loyalty, and focus market changes. A
research design specifies the methods and procedures for conducting a particular study.
According to Kerlinger, “Research Design is a plan, conceptual structure, and strategy of
investigation conceived as to obtain answers to research questions and to control
variance.

Types of research is:

• Descriptive Research

The type of research adopted for study is descriptive. Descriptive studies are undertaken
in many circumstances when the researches is interested to know the characteristic of
certain group such as age, sex, education level, occupation or income. A descriptive study
may be necessary in cases when a researcher is interested in knowing the proportion of

57
people in a given population who have in particular manner, making projections of a
certain thing, or determining the relationship between two or more variables. The
objective of such study is to answer the “who, what, when, where and how” of the subject
under investigation. There is a general feeling that descriptive studies are factual and very
simple. This is not necessarily true. Descriptive study can be complex, demanding a high
degree of scientific skill on part of the researcher.

Descriptive studies are well structured. An exploratory study needs to be flexible in its
approach, but a descriptive study in contrast tends to be rigid and its approach cannot be
changed every now and then. It is therefore necessary, the researcher give sufficient
thought to framing research.

Questions and deciding the types of data to be collected and the procedure to be used in
this purpose. Descriptive studies can be divided into two broad categories: Cross
Sectional and Longitudinal Sectional. A cross sectional study is concerned with a sample
of elements from a given population. Thus, it may deal with household, dealers, retail
stores, or other entities. Data on a number of characteristics from sample elements are
collected and analyzed. Cross sectional studies are of two types: Field study and Survey.
Although the distinction between them is not clear- cut , there are some practical
differences, which need different techniques and skills. Field studies are ex-post-factor
scientific inquiries that aim at finding the relations and interrelations among variables in a
real setting. Such studies are done in live situations like communities, schools, factories,
and organizations.

Another type of cross sectional study is survey result, which has been taken by me. A
major strength of survey research is its wide scope. Detail information can be obtained
from a sample of large population .Besides; it is economical as more information can be
collected per unit of cost. In addition, it is obvious that a sample survey needs less time
than a census inquiry. Descriptive research includes survey and fact finding enquiries of
different kinds of the major purpose. Descriptive research is description of the state of
affairs, as it exists at present. The main characteristic of this method is that the researcher
has no control over the variables; he can only report what has happened or what is

58
happening. The methods of research utilized in descriptive research are survey methods
of all kinds including comparative and co relational methods. The reason for using such
needs to be flexile in its approach, but a descriptive study in contrast tends to be rigid and
its approach cannot be changed ever now and then.

Data collection methods:

After the research problem, we have to identify and select which type of data is to
research. At this stage; we have to organize a field survey to collect the data. One of the
important tools for conducting market research is the availability of necessary and useful
data.

Primary data: For primary data collection, we have to plan the following four
important aspects.

 Sampling
 Research Instrument
 Secondary Data - The Company’s profile, journals and various literature studies
are important sources of secondary data.
 Data analysis and interpretation

1. Questionnaires
2. Pie chart and Bar chart

59
Questionnaires:

This is the most popular tool for the data collection. A questionnaire contains question
that the researcher wishes to ask his respondents which is always guided by the objective
of the survey.

Pie chart:

This is very useful diagram to represent data , which are divided into a number of
categories. This diagram consists of a circle of divided into a number of sectors, which
are proportional to the values they represent. The total value is represented by the full
create. The diagram bar chart can make comparison among the various components or
between a part and a whole of data.

Bar chart:

This is another way of representing data graphically. As the name implies, it consist of a
number of whispered bar, which originate from a common base line and are equal widths.
The lengths of the bards are proportional to the value they represent.

Preparation of report:

The report was based on the analysis and presented with the findings and suggestions.
The sample of the questionnaires is attached with the report itself.

Sampling Methodology:

Details of the sampling methodology, I have made two questionnaire. The one is made
for the Customer and another is for dealer.

Sample size: The sample size for survey is 60.

60
DATA ANALYSIS

AND

INTERPRETATION

61
 DATA ANALYSIS AND INTERPRETATION

How would you rate your level of overall satisfaction with Le Meridian?

EXTREMELY SATISFIED 40
SATISFIED 12
NEUTRAL 4
DISSATISFIED 3
EXTREMELY DISSATISFIED 1

40

35 40

30

25

20

15

10 12
5 1
4 3
0
EXTREMELY

SATISFIED

NEUTRAL

DISSATISFIED

DISSATISFIED
EXTREMELY
SATISFIED

The result shows that the customers are very satisfied with the hotel overall.

62
How likely are you to recommend Le Meridian to a friend or relative? Would you say the
chances are.

Excellent 32
Very Good 16
Good 9
Fair 3
Poor 0

35 32

30

25

20 16

15
9

10
3

5
0

0
Excellent Very Good Good Fair Poor

Most of the customer will recommend this hotel to their friend as the customer relations
of the hotel is very nice.

63
How likely are you to repurchase products and services from Le Meridian? Would you
say the chances are …

Excellent 51
Very Good 6
Good 2
Fair 1
Poor 0

60
51

50

40

30

20
6

10 2 1 0

0
Excellent Very Good Fair Poor
Good

Most of the customer will come again to the le meridian for taking service of this hotel.

64
How would you rate the overall quality of your relationship with Le Meridian,
considering all of your experiences with them? Would you say it is …

Excellent 47
Very Good 3
Good 6
Fair 6
Poor 2

50 47
45
40
35
30
25
20
15
10 3 6 6 2
5
0
Excellent Very Good Fair Poor
Good

The relation between customers and hotel is very satisfactory which leads to customer
satisfaction.

65
How would you rate your level of satisfaction with Le Meridian in regards to customer
service?

EXTREMELY SATISFIED 34
SATISFIED 12
NEUTRAL 12
DISSATISFIED 2
EXTREMELY DISSATISFIED 0

DISSATISF
IED, 2 EXTREMEL
Y
NEUTRAL,
DISSATISF
12
IED, 0
EXTREMEL
Y
SATISFIED
SATISFIED
, 12
, 34

Customers are satisfied with the service of this hotel..

66
How would you rate your level of satisfaction with Le Meridian in regards to price?

EXTREMELY SATISFIED 31
SATISFIED 12
NEUTRAL 9
DISSATISFIED 6
EXTREMELY DISSATISFIED 2

6 2

31

12

EXTREMELY SATISFIED
SATISFIED
NEUTRAL
DISSATISFIED
EXTREMELY DISSATISFIED

As we can see prices are a little bit costly But satisfactory to the high profile customer.

67
Would you rate your level of satisfaction with Le Meridian in regards to value?

EXTREMELY SATISFIED 54
SATISFIED 4
NEUTRAL 2
DISSATISFIED 0
EXTREMELY DISSATISFIED 0

2
4

54

EXTREMELY SATISFIED SATISFIED

NEUTRAL DISSATISFIED
EXTREMELY DISSATISFIED

The values of le meridian are much satisfactory.

68
 FINDINGS

AND

CONCLUSION

69
 FINDINGS AND CONCLUSION

FINDINGS

1. The result shows that the customers are very satisfied with the hotel overall.
2. Most of the customer will recommend this hotel to their friend as the customer
relations of the hotel is very nice.
3. Most of the customer will come again to the le meridian for taking service of this
hotel
4. The relation between customers and hotel is very satisfactory which leads to
customer satisfaction.
5. Customers are satisfied with the service of this hotel..
6. As we can see prices are a little bit costly But satisfactory to the high profile
customer
7. The values of le meridian are much satisfactory.

CONCLUSION

The customer relationship management is working in the le meridian hotel so the

customers are very satisfied with the products and services of the hotel. We can say that
customer relationship is speaking the effective marketing.

70
 BIBLIOGRAPHY

Books

Marketing Management by Philip Kotler, Kevin Keller - Business & Economics -

2008
Research methodology: a step-by-step guide for beginners by Ranjit Kumar - Social
Science - 2005
Research methodology by Douglas K. Detterman - Psychology - 1985
Customer relationship management - Page 1 by Kristin Anderson, Carol Kerr -
Business & Economics - 2001

Web sources

1. www.managementparadise.com
2. www.starwoodhotels.com/lemeridien/index.html

71
ANNEXURE

72
 QUESTIONNAIRE

1. How would you rate your level of overall satisfaction with Le Meridian?
EXTREMELY SATISFIED
SATISFIED
NEUTRAL
DISSATISFIED
EXTREMELY DISSATISFIED
2. Why do you say that? What specifically are you satisfied or dissatisfied with Le
Meridian? Write your response below…

3. How likely are you to recommend Le Meridian to a friend or relative? Would you
say the chances are.

Excellent
Very Good
Good
Fair
Poor

73
4. How likely are you to repurchase products and services from Le Meridian? Would
you say the chances are …
Excellent
Very Good
Good
Fair
Poor
5. How would you rate the overall quality of your relationship with Le Meridian,
considering all of your experiences with them? Would you say it is …
Excellent
Very Good
Good
Fair
Poor
6. How would you rate your level of satisfaction with Le Meridian in regards to
customer service?

EXTREMELY SATISFIED
SATISFIED
NEUTRAL
DISSATISFIED
EXTREMELY DISSATISFIED

74
7. How would you rate your level of satisfaction with Le Meridian in regards to
price?
EXTREMELY SATISFIED
SATISFIED
NEUTRAL
DISSATISFIED
EXTREMELY DISSATISFIED
8. Would you rate your level of satisfaction with Le Meridian in regards to value?

EXTREMELY SATISFIED
SATISFIED
NEUTRAL
DISSATISFIED
EXTREMELY DISSATISFIED

75