The Basic Concepts of Customer Relationship Management For Business

The basic concepts of Customer Relationship Management for business.
Basic elements of CRM are:
 CRM as a competitive strategy – a strategic view

 Customer satisfaction and loyalty
 Relationship: selection and retention
 Customer service and service marketing
 Sales Force Automation (SFA)
 Implementation of CRM
Key concepts of CRM are:
Comprehensive strategy:
CRM at one end links itself to SCM – supply chain management and on the other hand the customer
service and customer care. This makes a comprehensive strategy.
Acquiring:
You can’t please all people at all times. You may not be able to serve and satisfy all the customers at the
same time. There may be customers who may not be willing to have long time relationships with you. As
a consequence you need to have selectivity in the customers as well.
Retaining:
Once a right customer is selected, we need to provide the customer with a good product and a better
service which exceeds the customer requirements. Only then can the customer be satisfied and
retention of a customer can be possible.
Partnering:
Partnership is about constantly striving to create better value for each other i.e. the buyer and the seller.
Interactive communication:
A clearly planned and focused two way, interactive communication is a very essential ingredient of CRM.
A meaningful communication will always be an Interactive Communication.
Technology + people:
CRM is all about people and relating people to technology. This is all automation of people is all about!
Mutually beneficial long term relationship:

It is all about the long-term relationship of the buyer and the seller. This overall results in the mutual
benefit of both resulting in a long-term relationship.
Customer delight needs to be created instead only satisfying the customer. Customer service is about
giving facilities and services that the customer asks for, or delivering service that is expected in today’s
competitive world. Most products require additional or long-term support from the organization. These
traditional services include delivery, installation, lessons-in-usage, instruction manuals, repairs and
maintenance etc. Customer care (and also customer delight) is going beyond the “expectation check
list”. Customer care is being proactive in developing relationship with your customer. Always remember
“Good customers are worth keeping for life”. Great services can create a great experience and customer
delight.
Customer Retention:
The point to be remembered always is that a repeat customer is the best customer. 6:1 is the ratio
which means – you need to spend 6 times the money you spend in retaining an existing customer.
Another view point is 5% increase in retention of customer can add 25% to 125% increase in profit.
Essentially, retention is the key. However, not all your customers are worth retaining. You should select
the customer for retention. These customers should be the right ones with whom you wish to establish
a long term benefit for mutual benefit.
There are a number of benefits for selection of the right customer for an organization:
It reduces cost
It increases profitability
It helps create goodwill for your organization
It gets you good word-of mouth publicity
It improves the possibility of greater customer satisfaction and loyalty
Thus, it’s needless to say – select the right customer, have the right understanding of their needs and
evolve a right way to satisfy them.
The Service Marketing Triangle
The Service Marketing Triangle shows the relationship and linkage between three elements of service
marketing – Company, Customers and Employees. Three types of marketing happen between these 3
elements.
Company to customers: External Marketing
Company to employees: Internal Marketing
Employees to customers: Interactive Marketing

External Marketing:
It is a promise a company makes to a customer about the service and its delivery. External marketing
uses all the elements of communicating and reaching the customers through advertising, sales
promotion, selling, merchandising and all.
Internal Marketing:
It is all about applying marketing concepts to your own employees. You should be able to first convince
or market your concept to your own employees and enable them to deliver the service of the
customers. For this it is important to identify and fulfill your internal customers i.e. employee needs.
Internal marketing is thus a key to meeting the promises made through interactive marketing.
Interactive Marketing:
Service flows from people to people. The delivery or the actual service experience happens between
service employees and customers. Interactive marketing thus means keeping the promises made by the
external marketing and completing the service-marketing triangle. It is through the moments of truth
that happen during the interaction the service delivery is made.
Sales Force Automation (SFA):
SFA is Sales Force Automation. Understanding SFA begins with the study of basic selling process and the
importance of FAB (Features, Advantage and Benefits) approach to selling. It then moves to the
technology of Automating Sales process.
SFA is a technological tool to help sales people acquire and retain customers, which helps in reducing
administrative cost and provides good basis for account management. It increases better selling chances
for the Salesperson and more business for the company. SFA helps in the following ways:
It helps a company to get customer retention and hence increase profits
Customers get better information, better products or services, faster responses to their queries and
hence this results in Customer Satisfaction
The reasons why SFA is important to CRM are:
Reduction in cost of selling
Increased revenue
Easy availability of customer information
Increased sales force mobility
Meeting increased customer expectations
CRM Implementation:
The most difficult part of CRM is implementing it. Implementing CRM – making it a reality is the real
challenge and the purpose of any CRM initiative. When do you say that CRM has happened? When:
Your customer is more than satisfied; he/she is delighted
Your customer attrition rate is minimal. Thus, the selected customer is retained.
The bottom line improves: the profits multiply
Implementation starts with questioning the basics of your business; defining business, redefining your
strategy, setting up plans, implementing and evaluating the CRM. Implementing CRM is about creating a
change and an urge in your organization to become customer centric. The first important factor taken
into consideration while implementing CRM should be people; because CRM is nothing without people.
Secondly, technology and the process play should be taken into consideration. A good product or
service, sound process, technology and able people are some of the important baseline requirements to
begin with the CRM initiative.
Unless you have the CRM merits in place, it is not possible to judge if you are going in the right direction.
CRM evaluation has to be in place and predefined before you begin implementing CRM.
Common causes of CRM failure:
Treating CRM = Technology + Automation
Large-scale systems with long-term promise are better
Old organizational mindset
Lack of CRM understanding
Poor strategy and planning
Lack of skills essential for CRM
Inefficient or inappropriate software
Lack of commitment

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The basic concepts of Customer Relationship Management for business.

Basic elements of CRM are:

 CRM as a competitive strategy – a strategic view

Key concepts of CRM are:

Mutually beneficial long term relationship:

It helps create goodwill for your organization

It gets you good word-of mouth publicity

It improves the possibility of greater customer satisfaction and loyalty

The Service Marketing Triangle

Company to customers: External Marketing

Company to employees: Internal Marketing

Employees to customers: Interactive Marketing

Sales Force Automation (SFA):

It helps a company to get customer retention and hence increase profits

The reasons why SFA is important to CRM are:

Reduction in cost of selling

Easy availability of customer information

Increased sales force mobility

Meeting increased customer expectations

Your customer is more than satisfied; he/she is delighted

The bottom line improves: the profits multiply

Common causes of CRM failure:

Treating CRM = Technology + Automation

Large-scale systems with long-term promise are better

Old organizational mindset

Lack of CRM understanding

Poor strategy and planning

Lack of skills essential for CRM

Inefficient or inappropriate software

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