Customer Relationship

Management
~ An Introduction to the Course

Dr. Banasree Dey

Jaipuria Institute of Management
 Agenda

• Discussion of Course Outline

• Introduction to CRM – Evolution, relevance,

definition and elements
 Course Outline

 Module 1: Conceptual Framework

 Module 2: Customer Life Cycle Management

 Module 3: Technology in CRM

 Module 4: CRM Implementation

 Module 5: CRM – Issues and Applications

 Evaluation Criteria

S. no. Criteria Weightage

(%)
1 Quizzes 20%

2 Project Report and Group Presentation 20%

3 Assignment 20%

4 End-term examination 40%

 Project
 Each group would be allocated an industry. The group members are
required to select two companies in the given industry and analyze
the CRM practices of these two companies. The report should
include the following:

◦ Brief background of the two companies.

◦ CRM practices adopted in each company.

◦ Implementation and Measurement of CRM Strategy in the above firms

◦ CRM Software tools used by them.

◦ A comparative assessment of the practices followed by each company.

◦ Suggestions to enhance the CRM effectiveness in the selected companies.

Introduction to CRM
Firm’s Focus??
 Evolution of CRM

• 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.

• 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.
 Evolution of CRM (contd.)
• Real Customer Relationship Management as it’s thought of
today really began in earnest in the early years of this
century.

• Instead of feeding information into a static database for

future reference, CRM became a way to continuously
update understanding of customer needs and behavior.

• The Internet provided a huge boon to the development of

these huge databases
 Early Adopters…

• Financial Services

• Retailing

• Telecommunication

• Travel and Hospitality

• Utilities
 Consider these scenarios……
Scenario 1 Scenario 2
You need service on a product you’ve
purchased from a business you’ve used
before. You even registered the product. You make that support call. By merely
When you call the customer support line, the taking down your name and verifying
representative has no idea who you are, what who you are, the representative has
you’ve purchased, or when the purchase took your entire purchase and service history
place. You now have to go through the available and treats you like the valued
tedious process of supplying information that
should be readily available to the
customer you are. Even with product
representative, such as a model or serial issues, this type of personal treatment
number that’s often difficult to find or access. will keep you coming back.
Not only are you wasting valuable time
providing this information to a company that
should have it on hand, you feel that you’re
not very important to them since they seem
to know nothing about you. Even though you
did receive the service needed, you look hard
at the competition the next time you think
about purchasing from that company.

CRM supports the second type of customer experience. Every interaction based
on CRM creates an opportunity for your customer to have a more personal,
compelling experience. It’s also a chance for you to build brand equity, improve
satisfaction, and make more sales.
A few terms…..
Touchpoints…..
 Customer Touchpoints

• Involves the areas where direct customer contact occurs. May be

classified into:

• Face-to-face touchpoints
• E.g. sales, service, events

• Database driven touchpoints

• E.g. telephone, e-mail, sms

• Mass media
• E.g. Advertising, PR, Website
 Cross-selling and Up-selling

• Cross-selling: act of selling a product or service to a customer as a

result of another purchase

• Up-selling: act of motivating customers to trade up to more profitable

products
 Customer Centricity

• There is greater profitability for an organization when consumers are

willing to pay a premium for a product/service or are willing to pay
more/recommend it more and stay longer – thus committing more of
their share of the wallet to the organization

• Central to this has to be the strategy to bring about a company’s

transformation to ‘customer centricity’. It is a long-term strategy that
requires long-term management and commitment of significant
resources

• It deploys technology solutions for managing customers at front-end,

database to integrate sales, service, marketing touchpoint inputs to
provide a single view of the customer
 Key Elements of CRM initiative

• People: The people working within a business, from the CEO to the
customer service representative, need to not only buy into the idea,
but also support it.

• Process: The company then needs to create processes intended to

build upon the CRM initiative, such as identifying methods through
which a process will benefit the customer.

• Technology: Then, the company must have the right technology to

drive the processes and provide data to employees.
 Technology and CRM

• The advances in information, communication and production

technologies have helped marketers come closer to their customers

• Technology has changed the way a customer interacts with the

organization. The touchpoints have grown and matured from the
age-old personal contacts to interactive and technology-driven
methods

• Technology has made possible the mass customization of products

and services, enabling businesses to treat different customers
differently, in a cost-efficient way.

• Though the emergence of CRM in recent times coincided with the

information age, we must remember that technology is just an
enabler.
 Role of Technology

• To foster customer-focused business relationships, an enterprise

must integrate:
• The disparate information systems
• Databases
• Business units
• Customer touch points
• And many other facets

to ensure that all employees

who interact with customers have real-time access to current
customer information.
 Role of Technology
• The objective is to optimize each customer interaction
and ensure that the dialogue is seamless
– that each conversation picks up
from where the last one ended.
• CRM Market to Reach USD 113.46 Billion by 2027; Increasing
Investments in Integration of Advanced Concepts to Aid
Growth, says Fortune Business Insights™

• The global customer relationship management market is

expected to register a CAGR of 14.9% during the forecast
period - ResearchAndMarkets.com
 Evolution of Relationships
with Customers

We have only two sources of competitive advantage:

1. The ability to learn more about our customers

faster than the competition.

2. The ability to turn that learning into action

faster than the competition

- Jack Welch, former CEO, General Electric

Bloomberg News Service, 2000
In Essence…

CRM involves treating different customers differently.

 In the current competitive
environment, companies are striving
hard to survive, realizing that the best
strategy is to retain existing customers
by developing a close and cooperative
relationship with them……
 Today, instead of Return on
Investments (ROI), organizations
stress on Return on
Relationships (ROR) !!
 CRM……

• Represents a tailored approach to an organization’s dealings with

customers

• IT is an enabler of CRM and customer knowledge is its resource

• Not confined to marketing department alone, entails the whole

organization to be customer-centric

• An important dimension of is selecting profitable customers

 Definitions of CRM

• Peppers and Rogers (2004) broadly describe CRM as “increasing the

value of the company through specific customer strategies”

• “A comprehensive strategy and process of acquiring, retaining and

partnering with selective customers to create superior value for the
company and the customer” (Parvatiyar and Seth)
 In a nutshell….

• CRM is a company-wide business strategy designed to reduce costs

and increase profitability by solidifying customer loyalty.

• True CRM brings together information from all data sources within
an organization (and where appropriate, from outside the
organization) to give one, holistic view of each customer in real
time. This allows customer facing employees in such areas as sales,
customer support, and marketing to make quick yet informed
decisions on everything from cross-selling and upselling
opportunities to target marketing strategies to competitive
positioning tactics.
 Goal Of CRM
• The idea of CRM is that it helps businesses use technology and human resources
to gain insight into the behavior of customers and the value of those customers.
With an effective CRM strategy, a business can increase revenues by:

 providing services and products that are exactly what your customers want
 offering better customer service
 cross selling products more effectively
 helping sales staff close deals faster
 retaining existing customers and discovering new ones

• The central purpose of managing customer relationships is for the enterprise to

focus on increasing the overall value of its customer base - and customer
retention is critical to its success.

- Increasing the value of the customer base through:

• Cross-selling
• Upselling
• Customer referrals
 Types of CRM

• Operational CRM

• Analytical CRM

• Collaborative CRM
 Operational CRM

 Takes care of individual transactions and is used by the operational

staff. Interactions by customers are stored in the database and are
used later by the service, sales and marketing staff for operational
decisions

 Operational CRM systems usually involve the processes and systems by

which day-to-day customer-based activities such as customer
enquiries, orders, shipment, and invoicing are managed

 Such systems need to be functionally integrated, to enable all those

who need to see a customer’s history to do so at the touch of a button.
 Operational CRM (SFA) at Roche

• Roche is one of the world’s leading research-based healthcare organizations,

active in the discovery, development and manufacture of pharmaceuticals and
diagnostic systems. The organization has traditionally been product-centric and
quite poor in the area of customer management. Roche’s customers are medical
practitioners prescribing products to patients. Customer information was
previously collected through several mutually exclusive sources, ranging from
personal visits to handwritten correspondence, and not integrated into a
database or central filing system, giving incomplete views of the customer.

• Roche identified the need to adopt a more customer-centric approach to

understand their customers better, improve services offered to them and to
increase sales effectiveness. Roche implemented a sales-force automation
system where all data and interactions with customers are stored in a central
database which can be accessed throughout the organization. This has resulted
in Roche being able to create customer profiles, segment customers and
communicate with existing and potential customers. Since implementation
Roche has been more successful in identifying, winning and retaining customers.
 Analytical CRM

 It is the use of analysis and reports of historical data

captured over a period of time to take decisions by the
senior management on ‘what should happen’

 Involves the strategic use of customer data to inform long-

term planning and decision-making at the top of the
organization. Questions such as which markets to serve
and how to maximize customer profitability are addressed
here

 Analytical CRM affects the shape and direction of the

organization
 Analytical CRM at AXA
• Spanish insurer AXA Seguros e Inversiones (AXA) has revenues of over €1.8 billion
(US$2.3 billion), two million customers and is a member of global giant The AXA
Group. AXA runs marketing campaigns in Spain for its many products and services.
The company wanted a better understanding of its customers, in order to be able
to make more personalized offers and implement customer loyalty campaigns.
AXA used CRM vendor SAS’s data mining solution to build a predictive policy
cancellation model.

• The solution creates profiles and predictive models from customer data which
enables more finely targeted campaign management, call centre management,
sales-force automation and other activities involved in customer relationship
management. The model was applied to current and cancelled policies in various
offices, to validate it before deploying it across Spain. Moreover, the model was
used to create two control groups (subdivided into high and low probability) that
were not targeted in any way, while other groups, similarly divided into high and
low probability, were targeted by various marketing actions. The outcome was
that the auto insurance policy cancellation rate was cut by up to nine percentage
points in specific targeted segments. With the customer insight obtained from the
model, AXA is now able to design and execute personalized actions and customer
loyalty campaigns tailored to the needs and expectations of high-value customers.
 Collaborative CRM

• In order to build long-term and profitable relationships with customers, it is

necessary that all the concerned parts of the organization work in
collaboration with the aligned purpose, objective and strategy to achieve
this outcome. This is the role of collaborative CRM

• Thus, Collaborative CRM is an approach to customer relationship

management (CRM) in which the various departments of a company, such
as sales, technical support, and marketing, share any information they
collect from interactions with customers.

• Feedback from a technical support center, for example, could be used to

inform marketing staffers about specific services and features requested by
customers. Collaborative CRM’s ultimate goal is to use information collected
from all departments to improve the quality of customer service.
 Collaborative CRM

• Feedback from support can be used proactively by the marketing

team to connect with targeted customers, relating to certain
products.  Without the collaborative CRM this would generally not
happen as data is not often shared and losses can occur as well as
damage to customer relationships.

• Example: a customer buys a new car and then has a problem with it. 
The customer service department liaises with the technical and the
data is fed into the system.  The department that sold the car can
communicate with the buyer, making sure their problem does not
manifest into a lost customer, also taking the time to ensure that
their problem is rectified correctly and they are made aware of offers
and deals particularly suitable to them i.e. warranty cover etc.