“Customer Relationship Management”

Introduction

Today, we are moving away from transaction marketing towards relationship

Management known as Customer Relationship Management. Relationship
Management focuses on customer retention via customer satisfaction. Customers
are most concerned about the value of the product or service that is offered rather
than the price of the product. Firms are more focused on the post-sales activity in
customer service for the long-term rather than the short-term as in transaction
marketing. Firms communicate their product or service to their customers via
customized marketing efforts

The retail industry is divided into organized and unorganized sectors. Organized
retailing refers to trading activities undertaken by licensed retailers, that is, those
who are registered for sales tax, income tax, etc. These include the corporate-
backed hypermarkets and retail chains, and also the privately owned large retail
businesses. Unorganised retailing, on the other hand, refers to the traditional
formats of low-cost retailing, for example, the local kirana shops, owner manned
general stores, paan/beedi shops, convenience stores, hand cart and pavement
vendors, etc.

As a sector, retail has been slow to adopt CRM principles and practices. Compared
with such industries as financial services and telecom, retail appears downright
sluggish. The early CRM experiments at retail focused on store-based efforts like
branded credit cards and frequent-shopper programs, some of which have taken
root and been extended year after year. There are pockets of CRM success in retail,
observes Adam Sarner, CRM analyst at Gartner Group. "We are seeing some
interesting programs in email marketing, in customer service, and in customer
segmentation."

At the high end of the retail sector, several creative new CRM strategies have
emerged. And experiments with "clienteling," which means automating
(computerization) the "black book" traditionally maintained by store sales
personnel on their own customers, containing purchase history, preferences and
contact information. Sales people will be able to pull up customer profiles and
email their best customers about upcoming events like trunk shows or the arrival of

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new merchandise. "This is the 'last mile' of CRM," says Gartner's Sarner. "It
supercharges the sales person's ability to manage the existing relationship."

Over the years there have evolved a handful of distinct approaches, none of them
are perfect: Store cards, whether a branded credit card or a discount or loyalty card.
Only a fraction of customers will use the card, and even then, usage can be
sporadic.

The Indian Retail Scene

There is no doubt that the Indian retail scene is booming. A number of large
corporate houses — Tata’s, Raheja’s, Piramals’s, Goenka’s — have already made
their foray into this arena, with beauty and health stores, supermarkets, self-service
music stores, every-day-low-price stores, computers and peripherals stores, office
equipment stores and home/building construction stores. Every retail category has
been attacked, by the organized players today.

Headlining stories from the convention and the figures posited by Reliance Retail
president / CEO Raghu Pillai showing that organized retail business in India is set
to grow from 10 percent of the country’s GDP to as much as 25 per cent within the
next five years. Maureen Johnson of communication services group WPP’s retail
consultancy, The Store, meanwhile called customer relationship management
crucial and that “CRM has been key…it is very powerful” in the rise of organized
retail in India.

Indian Retail Industry is ranked among the ten largest retail markets in the world.
The attitudinal shift of the Indian consumer in terms of "Choice Preference",
"Value for Money" and the emergence of organized retail formats have
transformed the face of Retailing in India. The Indian retail industry is currently
estimated to be a US$ 200 billion industry and organized Retailing comprises of 3
per cent (or) US$6.4 Billion of the retail industry. With a growth over 20 percent
per annum over the last 5 years, organized retailing is projected to reach US$ 23
Billion by 2010.

CRM in Sales-Relationship is Capital

For sales, CRM is an especially important research domain. As a strategy,

organizations pursue CRM for a variety of reasons, including information sharing

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between departments to improve customer service or simply to stay abreast of the
competition. Hence, the sales force benefits from an increased speed of response,
greater internal synergy in serving the customer, better value-adding service, and
cost savings. Indeed, the greatest benefit of a CRM strategy may be the
information available for increasing the coordination of various customer service
functions. A secondary benefit of an organization wide CRM strategy is the
opportunity for salespeople to sell more efficiently by increasing quality selling
time, and more effectively, through having better and more timely customer
information.

CRM helps companies make sense of customer needs and helps companies
manage these relationships more intelligently and help predict the future. Such
knowledge provides a crucial competitive differentiation for companies to gain
market share and reduce operational costs with retaining their customers.

On the other hand the generally accepted purpose of CRM is to enable sales
organization to better serve its customer through the introduction of reliable
processes and for interaction with those customers.

In today's environment, retail companies need to practice customer relationship

marketing to gain a competitive edge. This is feasible if CRM becomes an
integrated part of the marketing management paradigm.

The retailer must identify the characteristics and needs of consumers. The
customer group that a retailer seeks to attract and satisfy is called the target market.
In selecting its target market, a retailer may use one of the three techniques: selling
goods and services to broad spectrum of consumers, the mass market; zeroing in
on one specific group, a market segment; or aiming at two or more distinct
consumer groups, multiple segments.

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 Review of Literature

The goal of this review is to identify research and articles published over the past
ten years related to CRM with relevance to sales management. The ten-year time
frame was chosen because it encapsulates the rise to prominence of CRM and
much of the technology that aids in implementation of CRM concepts. The review
includes both empirical studies and conceptual articles.

Fournier, Dobscha, and Mick 1998; Day (2000). Utilizing a case analysis,
espouses that by properly implementing information technology throughout an
organization, effective relationship management can become an organizational
capability.

Clemons (2000) says that a tiny proportion of a company's customers will generate
the bulk of its profits. Identifying, collecting and keeping these clients is the very
essence of customer relationship management.

Leigh and Marshall (2001) highlights that the sales function will increasingly be
viewed as the firm's means of "partnering" with customers. This redefines the sales
function whereby strategic account management will be the objective, which will
require CRM-related processes and technologies such as lifetime customer value
analysis. Ingram, LaForge, and Leigh (2001) specifically call for research on this
aspect of CRM.

Parthenios and Amalia (2001) focuses on what keeps a good customer coming
back is good service and today’s economic climate demands more than ever that
customer acquisition, profitability, and retention remain central to an
organization’s business. But that cannot be done if customers are running out the
door before organizations even discover who they were or, more important, what
they potentially were. To keep them in the store, organizations need to offer a better
customer experience and they are turning to CRM applications and processes to do
just that.

As Leigh and Marshall (2001) note, insights into information acquisition and
management will be important to understanding CRM as a business process.
Beyond simply gathering important customer data, salespeople and sales

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management should be involved in CRM analytics--that is, the design, creation,
and maintenance of CRM systems. They should help initiate new CRM processes
and technologies, because they are experts in the types of information needed to
enhance the performance of their sales role.

Anderson (1996); Ingram, LaForge, and Leigh (2002); Leigh and Marshall
(2001). Further, each stresses the effect that CRM-related strategies and
technologies will have on the sales organization. Anderson (1996) recognizes that
SFA and electronic sales channels dramatically reshape not only the role of the
salesperson but the role of personal selling within the firm. While not couching
such trends in terms of CRM, Anderson's (1996) "blending of sales and marketing"
notion closely parallels the relationship management activities prevalent in CRM.
Sales force roles that are touted as irreplaceable by advanced technology include
anticipating new customer needs and developing long-term strategies in
partnership with customers.

Moreover, as Widmier, Jackson, and McCabe (2002) suggest, some of the most
useful technology is likely to be initiated by salespeople, and managers should
examine those instances to aid in the redesign of the sales force. In sum,
salespeople are useful (1) for gathering important data, because of their boundary-
spanning role; (2) in identifying the types of data that should be collected and how
that data translates into useful customer information based on their sales
experience; and (3) for suggesting how that information should be utilized in CRM
by aiding in the design of supportive CRM systems. Hence, the sales role may
become increasingly intertwined with the information system manager and data
analyst roles. Thus, as customer experts, salespeople could become valuable to the
firm by providing insights for planning activities such as new product
development, product forecasting and supply-chain management, and financial
planning and resource allocation.

Romano, (2003) brings out that moreover, in recent years, CRM’s potential to
contain and reduce cost has been explored. CRM, in concert with other processes,
can help reduce churn or turnover in an organization’s customer base. Better
customer management can result in lower sales and service costs, higher buyer
retention, and lower customer replacement expenditures.

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Badrinarayanan, Vishag (2005) suggests that the use of Customer Satisfaction
teams is likely to continue into the future (Macy forthcoming). By examining their
ability to enhance the development of a knowledge management competence and a
relationship marketing competence, our study explicates further their value to the
firm. As the demands placed on selling organizations increase in the future, more
firms will embrace customer-needs--driven CRM strategies; firms that understand
the role that CS teams play in these strategies will have a competitive advantage
over their rivals.

Charles W. Jaeger (May 2005) says that, in today's business environment

companies cannot afford to lose a single profitable customer. By effectively
leveraging results from a customer satisfaction survey an organization can respond
to their customer's needs in ways that increase revenue as well as improve
customer and employee, satisfaction and loyalty.

Tariq Mohiuddin Ahmed – (2005) says that CRM builds especially on the
principles of relationship marketing; the formal study of which goes back 20
years. CRM builds on the philosophy of relationship marketing. This emphasis on
relationships, as opposed to transactions, is redefining how companies are
interacting with their customers. Customer relationships have received considerable
attention from both academicians and practitioners. The increasing emphasis of
relationship marketing is based on the assumptions that building committed
customer relationships results in greater satisfaction, loyalty, positive word of
mouth, business referrals, references, and publicity. Intense competition for
market share in today’s market requires managers to attend to customer retention
and the how’s or whys of a patron returning and continuing to repurchase.

Tariq Mohiuddin Ahmed –(2005) again focus that to survive in the global market,
focusing on the customer is becoming a key factor for companies big and small.
It is known that it takes up to five times more money to acquire a new customer
than to get an existing customer to make a new purchase. A Second aspect of
CRM is that knowing the customer and his /her problem allows to acquire new
customers more easily and facilitates targeted cross-selling.

Prof Arun Saxena in his research paper CRM in service sector (2006) today’s
customer is empowered by information and choice. This presents new challenges
to companies, who in their quest to acquire retain and service customers are

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adopting CRM in a big way, and changing their business approach from being
‘product centric’ to ‘customer centric’. The role of CRM is to provide a wide range
of touch-points through which a customer can interact with the company. The
objective of this paper is to explore the efficiency and effectiveness of CRM in the
service sectors, (with special reference on), which calls for a more personalized
service than ever before.

Joseph Gagnon, Global Leader of IBM's retail consulting practice. (2006) in

his article says that Consumers are clearly telling retailers that they want a
personalized and interactive shopping experience. They want immediate access to
promotions based on past purchases and loyalty, as well as precise details on
product availability or items that are out-of-stock. They also want helpful sales
associates, fast service and a store that is easy to shop, sometimes even more than
they want low prices,"

Bob Thompson, founder of CRMguru.com (2007) says that relationship

management (CRM) is a business strategy to select 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".

Paul Christ, (January 2007) The lesson for marketers is that even some of the
largest companies that have a lot of money to invest in making sure customers are
happy have a long way to go before the goals of CRM are achieved. ”The lesson
for marketers is that even some of the largest companies that have a lot of money
to invest in making sure customers are happy have a long way to go before the
goals of CRM are achieved. Marketers should also remember that customer service
can be an important component in the “features” offered by a company and those
negative experiences a customer may have with customer service may affect a
customer’s perception of the value they are getting from their relationship with a
company. When CRM is done right it not only can boost customers’ perception of
the value they are receiving it can also help stimulate additional purchasing. And,
of course, customer service done wrong can have the opposite effect.

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Tim Fargo (CRM project) A sales force or customer service system can identify
high-value customers to sales and service forces so these customers will benefit
from individualized retention activities.

Conrad Chang (2007) it is still all about the customer. At the end of the day, the
end-to-end solutions need to satisfy what really matters – the customer. It is vital
that enterprises know their corporate objectives and directions and invest
accordingly in the relevant CRM solutions that match their needs. Enterprises in
fast growing and niche areas would require a different set of solutions than those
that serve mature and slow-growing markets.

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 Rationale of the study

All companies are facing massive challenges in today’s highly competitive market
and strive to acquire the maximum possible market share in an overcrowded
market. There are certain threats which companies are facing such as:
• The nature of competition which is going global.
• The rate of change is accelerating out of control.
• Margins are being eroded.
• Customers are becoming more demanding and getting less loyal
• Customer churn is increasing.
• Product life cycles are decreasing.
• Industry barriers are collapsing, major brands entering new markets.
• The internet is transforming the business landscape.

are compelling for a designing of CRM Solutions and comprehensive strategies by

integrating people, process and technology to maximize relationships with all
customers.

The field of customer relationship marketing can be viewed as a sub-area of

“market focused management.”At the most simple level, CRM strategy prescribes
that it is more effective to invest in long-term customer interactions than to rely on
a series of potentially unrelated, one-time exchanges. In practice, however, CRM is
not that simple to implement. There are multiple stakeholders to consider, and
organizations must make certain that value is provided for all members of a
potential partnership. Here, we consider several strands of relationship marketing,
including the concepts of: customer relationship management, stakeholder theory,
affinity marketing, promotional incentives, strategy, and leadership.

Although many researchers have been conducted worldwide regarding CRM in

Organized retail sector, still looking at the dimensions of the Indian market, CRM
stands to be the survival mantra. For sales, CRM is an especially important
research domain. As a strategy, organizations pursue CRM for a variety of reasons,
including information sharing between departments to improve customer service or
simply to stay abreast of the competition.

Managing customer relationship effectively and effectively boots customer

satisfaction and retention rates. Organizations have discovered and research

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studies have shown that retaining current customers is much less expensive than
attempting to attract new ones. Companies have come to realize that in order to
develop successful long-term, relationship with customers they should focus on
the “economically valuable” customer, while keeping away and eliminating the
“economically invaluable” ones. Proper CRM practices can potentially impact
customer satisfaction rating and can potentially lead to increase customer retention.

This study responds by underscoring the criticality of performing a deep analysis

of a firm's readiness to undertake a CRM initiative. This assessment provide
detailed answers to the questions like: What is a firm's current CRM capability?
And what changes must be in place embarking on a CRM initiative, for increment
in the sales volume?

The purpose of this thesis is study of Customer Relationship Management process

in Customer Satisfaction and sales increment. We describe the objectives of
Customer Relationship Management (CRM) in sales increment, which is very
important for the survival of companies in today competitive environment.

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 Research Objectives

From the problem discussion above, the purpose of this study is to explore the
impact of Customer Relationship Management in increasing the sales volume
of organized retail stores. In order to reach our purpose the following research
question is stated:

• To study the conceptual framework of CRM in Organized retail stores.

• To analyze the effectiveness of CRM in improving target market effectiveness
of seasonal programs and promotions.
• To study the impact of CRM in increasing the revenue per customer visit, and
the number of visits by customer.
• To examine the impact of CRM in sales forecasting and understanding the
share of market.
• To study the effect of CRM on cross selling and up selling opportunities
• To identify the effectiveness of CRM on customer satisfaction and retention.
• To understand the techniques that can be used to build strong word-of-mouth
or referral (or pass along) campaigns for finding new customers through
CRM.
• To explore the potential challenges imposed by factors in effective
implementation of globalized campaign s to manage Customer relations.

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 Research Methodology

Type of Research: Descriptive Research

The major objective with a descriptive research is to describe something, such as
a population or phenomena. It seeks to answer who, what, where, and how
questions. Consequently, a descriptive research doesn’t give the answer to why
questions, in other words, it doesn’t give the explanation of the cause of the
findings.

The Sample Profile

During the sample design process the target population is identified, as well as
the sampling frame, sampling technique, and the size of the sample.

Sample Element: All organized retail stores.

The Population: All managers and sales executives of Organized Retail stores In
indoor city.

Sampling Frame: The sampling frame for this study are the managers of
organized retail stores.The sampling frame also includes all customer feedback
records.

The Techniques: In this study, the non probability Convenience sampling

technique wills be used.

Sample Size: Around 300 managers and sales executives will be selected for the
study.

Data Collection: to collect the Primary data a structures questionnaire using a five-
likert point scale will be developed including all dimensions above.

For Secondary data will be collected from various sources like Books , Internet ,
Statistical handbooks , Experts , periodicals , journals , research publications etc .

Data Analyses: to achieve the objectives of our study and testing of the hypothesis
ANOVA (Analyses of Variance) to study the cause and effect of CRM on sales and
other factors and CHI Square test will be used to statically prove the type of
association between the above two .

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 Hypothesis

• There exists a positive impact of Customer Relationship Management process

in increasing the sales volume.
• There exists a positive effect of CRM in increasing the number of customer.
• There exist a positive effect of CRM on customer satisfaction and retention.
• There is no significant difference between the companies with and without
CRM in terms of sales.

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