Customer Relationship Management

K.L.Bhaskaran

What is CRM?
Phone Banking: ordering a cheque book, complaint Ordering a product on internet Receiving calls from various vendors for buying of their new product Loyalty points (airlines, restaurants, credit card) Your local Baniya knowing the grocery list of your family at start of each month and addressing you on first name basis. In fact at times, he is knowledgeable of events in your family. He uses this to enhance your experience with his outlet / shop by giving the extra and much needed Personal Touch.

CRM and the Need for It

Marketing philosophy: putting customer first Collection and analysis of customer data for sales and marketing decision support Understand and support customer and prospect needs Competitive survival strategy: Responding to change quickly is differentiator between winners and losers Provide a product-service package

Customer-Driven Organizations
Are easy to do business with Add value to their products/services by integrating products and information Educate customers during and after the decision-making process Are innovative in design of services, marketing, delivery, customer care Design business contact points from customer perspective Share insights about customers within SC network

Customer-Driven Marketing

Customer requirements must drive product and service design.

All products and services have more than one market segment.

Profitability is more important than sales volume.

Logistics and marketing strategy must focus on customer segments.

Scope and Elements of CRM

Customer information dissemination Product Relationship building

Multiple supply chains for different customer segments

Place Analysis

Customer Price segment

Collaboration Promotion

Sales operations

Primary Cash Flow

Primary Product Flow

Supplier

Orient Towards Customer

Information Flow Reverse Logistics Flow

Manufacturer

Customer

What is CRM?

Gandhiji said Customer is God

The philosophy of putting Customer first And Aligning all processes and operations to add value to the customer Developing mutually beneficial long term relationship with 8 Strategic Customers

Your customers

Have more choices than ever

Expect immediate, high quality, personalized 24-7 service

Customer Relations Manager

CRM is about
finding customers collecting info about them along the way At reduced cost and increased using that info to enhance their experience and Profit margin foster long-term relationships Nurturing and retaining existing customers and increasing business with them Winning back lost customers
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Focus on Customers
What are their needs?
Do you offer products in response to their needs?

or your organizations convenience?

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CRM
It is a process or methodology used to learn more about customers' needs and behaviors in order to develop stronger relationships with them. CRM is a process that will help bring together lots of pieces of information about customers, sales, marketing effectiveness, responsiveness and market trends. CRM helps businesses use technology and human resources to gain insight into the behavior of customers and the value of those customers.
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CRM Vs.CSM
Customer service is the provision of service to customers before, during and after a purchase. CRM is the strategic process implemented to maintain and retain the customer long term. This relationship development process is designed to improve customer retention rates, thus reducing churn, increasing profitability and reducing the need to focus so heavily on new business for revenue growth.
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Sales

Marketing

Customer Service

CRM

Beware!!
CRM is not technology or some software By implementing a CRM product, a company will not become customer-centric. Companies need to have well laid customer-centric processes, before opting for implementation of CRM products And of course, the mindset!

Is CRM a technology?

CRM is a philosophy that is

supported and enhanced

by technology
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In short, Develop Customer Focus

Customer Relationship Management

A manufacturer or a retailer that responds to changes in sales in hours instead of weeks is no longer at heart a product company, but a service company that has a product offering

- Bill Gates
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It is 5 times more expensive to get a new customer than to retain the existing one.

If you do not listen to the customer,

competition will

Reasons to Identify and Understand Market Segments

Customer Segmentation

Definition: The practice of dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing

#1
Reason

To increase the organizations profits (or its equivalent) over the long term

Developing and Implementing CRM Strategy

CRM strategy indicates how organization plans to initiate, develop, or sustain relationships with customers. What markets will we serve? Business strategy Components of CRM strategy
Price Placement (channel strategy) Segmentation Promotion (marketing, branding, and advertising) Product

+ Financial goals

Aligning CRM Strategy and Product or Service Life Cycle

Development: Use Decline: Emphasize customer customer data to align to care (ensure parts availability/ what customers want; test migrate to new products) and against KPIs and metrics. lifetime customers. Introduction: Focus on promotion (advertising). Growth: Manage production and inventory levels; identify strong vs. weak segments. Maturity: Identify strongest sales by item and allocation of inventory; promotions Time avoid deep discounting.
Development

Introduction

Sales

Growth

Maturity

Decline

CRM Strategy
4 Ps of Traditional Marketing - Product - Price - Placement - Promotion

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Product
Past - Same product to all customers. Product generated demand.
Present - Products suited to customer needs - Designed to fulfill customer needs of different segments. - Distribution, sales methods, promotions are customized for different customer segments

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Price

A strategic decision based on competition, perceived value, and brand identity Commodity price based on competition Differentiated market can base price on R&D, marketing costs, or value to customer CRM can differentiate products/price by segment CRM finds optimal balance of profit vs. attractive price to customers

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Placement

How product/service gets to customer Traditionally one-way communication; now back-forth flow Contact channel strategy
Means to increase profitability Interactive contact channels (call centers, live dialogue Web sites, chat rooms) Is itself a product; different segments get different options
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Evaluating channel strategy

Customer perspective Accessible Fast Convenient

Secure

Control and Consistency

Business Perspective
Profitability

Error-free

Direct access

Complete answers

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Flexible

Components of a CRM Strategy

4PsPromotion
Segmentation of promotions
Creation of brand image CRM Cost-effective Loyalty from Traditional customization product to promotional of advertising provider activities materials Trust they will be taken care of Single failure can undo Research: study buyer motivation and behaviors

Promotion
Segmentation Based Cost effective advertisements Brand Image- From producer to provider?

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Ways to Segment Markets

Historic segmentation
Preconceptions of groups

CRM segmentation
Actual buying behaviors Finer segments (e.g., ecologically oriented products)

Representative groups

Pareto Principle
High Service Needs
Customer Base

20%

80%

Revenue or Profit

Low Service Needs

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Segmentation by Customer Needs

Value for Money Convenience Product features Service Preferred Contact Channels Reliability Payment Terms

Customer Value Profile

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Segmentation by Customer Needs

Preferred contact channels

Reliability

Best value price

Convenience

Product/ service features

Value profile

Developing CRM Strategies for Specific Customer Segments

Segmentation by preferred contact channel

Expensive

Retail sales associates

Live call center help Live instant messaging help Automated phone system E-mail response Cheap Self-help Web sites and catalogs

Must test customer receptiveness to each channel

Refers to Web for faster service

Encouraged and rewarded, not required

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Paradigm Shift
OLD
Mass Customer Supply Driven Transaction Based Print/Other Media Separate Sales/service Time Consuming Obscure Pricing

NEW
Customized Demand Driven Relationship Based Web Based Bundled Offerings Short Duration Transparent Pricing
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Pre-relationship

The event that triggers a buyer to seek a new business partner

Early Stage

Experience is accumulated between the buyer and seller although a great degree of uncertainty and distance exists

Development

Increased levels of transactions lead to a higher degree of commitment and the distance is reduced to a social exchange.

Long Term

Characterised by the companies mutual importance to each other

Life Long

The interaction between the companies becomes institutionalized.

CRM Strategy
Goal is to move from top to bottom
Success measured by conversion rate
Conversion rates higher through the funnel
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CRM Phases

Customer Acquisition Customer Retention Customer Extension Contextual Phases - Marketing Orientation - Value Creation - Innovative I.T
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Steps for Creating customer focused business

Identify Customer Needs

Create customer segment maps

Align BP for Customer Needs

Implement CRM

Monitor ,Measure and Take corrective action

Customer Segmentation Profitability

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Customer Purchase Experience

AWARENESS
INFO SEEKING SHOPPING PURCHASE

What do they know about you?

Will you be on their short list?

Consider the 4 Cs
Customer, cost, convenience, communication

How difficult do you make it?

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Is CRM new?
No! Simply an extension of relationship marketing Builds on customer service and satisfaction concepts Just the latest buzzword for creating customer orientation Bottom-line is still the same

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Is CRM new?
Yes!
A shift in corporate philosophy concerning the customer segmentation Customer-centric approach to value chain New and technology-enhanced processes Focus is not just on bottom-line, but on topline Goal is to have life long customers
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Relationship- Customer Side

Trend towards lifelong customers. Customer segmentation. Products and delivery designed to the specific segmented customers. Greater integration internally to meet customer needs. Greater integration through sharing of Information. For large customers, relationship managers, totally dedicated to these customers. Customer Involvement while developing new products.
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CRM and the Lifetime Customer

Development of lifetime value
4 3 2 1 0 1 2 3 4 1 10 9 8 7 6 Revenue e.g., monthly phone bill 5 4 Net profit 3 2 1 0 1 2 Expense 3 e.g., free cell phone, marketing 4 5 2 3 4 5 6

Lifetime revenue +10

Lifetime profit +6

Lifetime expense 4
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Year

CRM and the Lifetime Customer

Evolving relationship with lifetime customers
High Strategic value Lifetime Value Retention Acquisition Low Low Med High Customer Satisfaction and Loyalty
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Dependency (win-win)

Value for money

Commodity (cost only)

Customer Focus

Quality No more differentiator

PriceBrand Image?

Value

Niche Product

Lifelong Customer

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CRM and the Lifetime Customer

Not single transactions but sustained relationship Lower total marketing costs Increasingly easier to satisfy lifetime customers Increased revenue and profit opportunities Rely on established relationships when time, quality, or risk exposure are major concerns
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Developing CRM Strategies for Specific Customer Types

Specific customer types

Key points Prospective customers Vulnerable customers Win-back customers Loyal customers Market research Audience segmentation Right promotional message and contact channel Predictive churn model Early and accurate identification Target most valuable customers Rapid communication internally and with customer Increase sales: cross-selling and up-selling opportunities Courtesy-APICS
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Developing CRM Strategy for Customer Types

Market research Pricing Segmentation Promotional message and contact channel

Prospective customers

Vulnerable customers

Early and accurate identification Predictive churn model

Increase sales Cross-selling Up-selling

Loyal customers

Win-back customers

Target most valuable customers Rapid communication internally with customer

Developing CRM Strategies for Specific Customer Segments

Customer value and CRM strategies Define valuable customers. Deliver timely, detailed information to help identify the most valuable customers.

Define what product features/services mean the most to the best customers.
Measure impact.
Courtesy-APICS
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Understanding the Wants and Needs of Each Segment

Sources of customer information in CRM
Voice of the customer (VOC)

Transaction records Sales and service representatives Distribution points Purchased data

Research and measurement tool Innovative and proactive to constantly capture customers changing requirements/feedback with time
Scripted: why leaving, how satisfied, etc. Customers talk freely: what firm wont normally hear Know customers intimately; anticipate desires

Using Technology to Improve CRM

CRM technologies
Business systems
Transaction maintenance Information (pricing, inventory) Financial details

Customer care (Web-enhanced)

Solutions for response, product customization, convenience, order visibility, returns processing Online FAQ, customer service reps, chat rooms, detailed product data, service call wait choices Can reduce product returns
Courtesy-APICS
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Using Technology to Improve CRM

CRM technologies support marketing and sales
Complete customer view shared by marketing, sales, and support
Account Management
Customer inquiries Problem solving Call Centre

CRM

Commitment to be customer-centric and customer-driven

Marketing Automation

Sales Force Automation

Sales force management Channel partner management Lead tracking Pipeline management

Business Intelligence

Tools to analyze Direct mail customer sales Promotions information to uncover patterns, Catalogs preferences (e.g., data warehousing)
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Courtesy-APICS

Performance Measurement
Low Cost, Low Accuracy

Customer Complaints Transaction Questionnaires

Monthly, Quarterly Questionnaires

High Cost, High Accuracy

Voice of Customer
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Measuring Customer Satisfaction

Traditional metrics issues
Metrics measure the absence of issues, not satisfaction. Customer complaints measure customer dissatisfaction, and only small number are reported.

Measurement approaches
Voice of the customer (VOC) Transaction customer feedback questionnaires Monthly/quarterly customer feedback questionnaires Participation in performance reviews Collecting and responding to negative comments on the Internet and social networking sites

Quality of channels service

Trustworthiness of channel Treated fairly, with respect, in competent, friendly manner Effectiveness of problem resolution

Performance Measurement Performance Measurement Who assesses?

Internal??

External??

Cisco B-2-B

Configure the network on the web site of Cisco. Wrong configurations will not be accepted Once configuration is finalised, the system gives lead time and price. Place orders using username and password

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Cisco B-2-B Site

Order acknowledgement takes 10 minutes. 24 hours to give shipment schedule Cisco system decides from where the item will be shipped If not happy with delivery plan,escalate through predefined channels Once shipment is handed over to freight forwarder,the AWB no appears on the screen

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Cisco B-2-B Site

Invoice and pick slip can be downloaded from the site

Payment status on the net If payment is not made on time,flag is raised automatically to stop shipment.

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Cisco-product and Technology Details

Tells what are the products introduced What are the courses offered.

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Cisco-service And Support

Technical support on the site Technical documents on the net Service contact center Service and support solutions S/W centre

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Cisco-Training

Training and certification

Seminars and events

e-Learning

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Cisco-solutions for Network

Overview of internet business solutions Large corporations Internet communications Small,medium businesses Service providers Home networking Government education
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Cisco-Partners and Resellers

Current partners and resellers Find a partner and reseller

Become a partner and reseller

Partner in e-learning solution

Strategic solutions
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Cisco-Rejections

Dead on arrival and field returns are also on the net. Replacements are made within 48 hours
Can be traced on the site.

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Questions?

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