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Customer Relationship Management (With examples)

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Deepika Ramanathan
Deepika Ramanathan

CRM is a competitive strategy and process of acquiring, reacting and partnering with selective customers to create superior value for the company and the customer.

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CUSTOMER RELATIONSHIP MANAGEMENT 1
Definition • CRM is a competitive strategy and process of acquiring, reacting and partnering with selective customers to create superior value for the company and the customer. - Parvatiyar and sheth 2
Why is CRM important ? • Competition • Consumer expectation • Technology • Diminishing impact of advertising 3
Scope of CRM • Build long term and profitable relationship with chosen customers. • Getting closer to the customers at every point of contact with them. • By fostering customer's loyalty, the company spends less time acquiring new customers and saves then time on other projects. 4
 Piece of software solution.  Sales tactics  Call center services Another buzzword like ERP / BUSINESS PROCESS MANAGEMENT. 5
Amul 6
Relationship Orientation • A relationship is composed of a series of interactive episodes between dyadic parties over time. – Making a purchase – Enquiring about a product – Making a sales call – Negotiating terms – Dealing with complaints • Independence to Dependence to Interdependence 7
Change within relationship • Awareness • Exploration • Expansion • Commitment • Dissolution 8
Exploration • Attraction • Communication and bargaining • Development and exercise of power • Development of norms • Development of expectation 9
Trust • Calculus-based trust • Knowledge-based trust • Identification based trust 10
Commitment • Trust, Shared values and belief • Trustworthy partners • Size of investment Negatives • Opportunism • High termination cost • Search cost and learning cost 11
Transaction Vs Relationship • Transaction: Trade of values between parties. – Monetary – Non-Monetary • Relationship orientation: Treating customers in an individualized way. – Long term – Mutually beneficial 12
Exchange map 1. Good quality, durable planes 2. Fair price 3. On-time delivery 4. Good financing terms 5. Prompt service and availability of spares Boeing FedEx 1. Good price 2. Timely payment 3. Good Word Of Mouth 13
Transaction Vs. Relationship Marketing Transaction • One off exchanges • Brand management • Short-term focus • Mass communication • Isolated market research • Market share • Profitabilty • Brand equity Relationship • Ongoing exchange • Customer management • Long-term focus • Personal communication • Ongoing dialogue • Mind share • Lifetime value of customer • Customer equity 14
Why companies want relationship with customers? • Reduce marketing cost • Better customer insight • Lifetime value: Present day value of all net margins earned from a relationship with a customer, customer segments or group of customers. 15
The customer journey 16
Why companies do not want relationship with customers? • Loss of control • Exit cost • Resource commitment • Opportunity cost 17
Why customers want relationship with suppliers? • B2B Context – Product complexity – Product strategic significance – Service requirement – Financial risk • B2C Context – Recognition – Personalization – Status and affiliation 18
Why customers do NOT want relationships with suppliers? • Fear of dependency • Lack of perceived value in the relationship • Lack of confidence in the supplier • Customer lacks relational orientation • Rapid technological changes 19
Customer satisfaction, loyalty & business performance • CRM aims to improve the Business performance by enhancing Customer Satisfaction and driving up Customer Loyalty. Customer’s Need and expectation  Identification & fulfilment  Satisfied customer  Repurchase  Business Process increases. 20
… continued • Satisfaction Profit Chain 21
Customer satisfaction • Customer Satisfaction is the customer’s fulfilment response to a customer experience or some part thereof. • Satisfaction is measured by comparing the customer experience with the customer expectations. • This is called Expectation – disconfirmation model of Customer Satisfaction. 22
… continued Expectation – disconfirmation model • If experience meet expectation then customers are Satisfied. • Experience > expectation = Positive disconfirmation. • Experience < expectation = Negative disconfirmation. • At times experience meets expectation but still unsatisfied because of low expectation. 23
Customer loyalty • Loyalty can be defined and measured by two major approach. – Behavioural loyalty. – Attitudinal loyalty. • Behavioural loyalty is measured by reference to customer purchase behaviour and loyalty is expressed in continued buying. • Many companies use RFM measures of Behavioural variables. 24
… continued R – Recency of purchase (time since last purchase) F – Frequency of purchases (No. of purchase in a given period) M – Monetary value of purchase. • Attitudinal loyalty is measured with reference to Belief, Feeling and purchasing intention 25
… continued • Two dimensional model of customer loyalty Based on Relative attitude & Repeat purchase behaviour. 26
Business performance • Measured in two ways – Quarterly profit(or) Earnings/share – Balanced score card(leading companies) • Four Key performance Indicator(KPI) – Financial – Customer – Process – learning & growth 27
… continued • Implied Connection B/w Indicators is People(learning & Growth) do things (process) for customers(Customer) that have affects on business performance(Financial). • Drivers of Business performance: – Customer outcomes of satisfaction – Loyalty • Share of customer is the popular measure of CRM. 28
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Customer Relationship Management (With examples)

  • 2. Definition • CRM is a competitive strategy and process of acquiring, reacting and partnering with selective customers to create superior value for the company and the customer. - Parvatiyar and sheth 2
  • 3. Why is CRM important ? • Competition • Consumer expectation • Technology • Diminishing impact of advertising 3
  • 4. Scope of CRM • Build long term and profitable relationship with chosen customers. • Getting closer to the customers at every point of contact with them. • By fostering customer's loyalty, the company spends less time acquiring new customers and saves then time on other projects. 4
  • 5.  Piece of software solution.  Sales tactics  Call center services Another buzzword like ERP / BUSINESS PROCESS MANAGEMENT. 5
  • 7. Relationship Orientation • A relationship is composed of a series of interactive episodes between dyadic parties over time. – Making a purchase – Enquiring about a product – Making a sales call – Negotiating terms – Dealing with complaints • Independence to Dependence to Interdependence 7
  • 8. Change within relationship • Awareness • Exploration • Expansion • Commitment • Dissolution 8
  • 9. Exploration • Attraction • Communication and bargaining • Development and exercise of power • Development of norms • Development of expectation 9
  • 10. Trust • Calculus-based trust • Knowledge-based trust • Identification based trust 10
  • 11. Commitment • Trust, Shared values and belief • Trustworthy partners • Size of investment Negatives • Opportunism • High termination cost • Search cost and learning cost 11
  • 12. Transaction Vs Relationship • Transaction: Trade of values between parties. – Monetary – Non-Monetary • Relationship orientation: Treating customers in an individualized way. – Long term – Mutually beneficial 12
  • 13. Exchange map 1. Good quality, durable planes 2. Fair price 3. On-time delivery 4. Good financing terms 5. Prompt service and availability of spares Boeing FedEx 1. Good price 2. Timely payment 3. Good Word Of Mouth 13
  • 14. Transaction Vs. Relationship Marketing Transaction • One off exchanges • Brand management • Short-term focus • Mass communication • Isolated market research • Market share • Profitabilty • Brand equity Relationship • Ongoing exchange • Customer management • Long-term focus • Personal communication • Ongoing dialogue • Mind share • Lifetime value of customer • Customer equity 14
  • 15. Why companies want relationship with customers? • Reduce marketing cost • Better customer insight • Lifetime value: Present day value of all net margins earned from a relationship with a customer, customer segments or group of customers. 15
  • 17. Why companies do not want relationship with customers? • Loss of control • Exit cost • Resource commitment • Opportunity cost 17
  • 18. Why customers want relationship with suppliers? • B2B Context – Product complexity – Product strategic significance – Service requirement – Financial risk • B2C Context – Recognition – Personalization – Status and affiliation 18
  • 19. Why customers do NOT want relationships with suppliers? • Fear of dependency • Lack of perceived value in the relationship • Lack of confidence in the supplier • Customer lacks relational orientation • Rapid technological changes 19
  • 20. Customer satisfaction, loyalty & business performance • CRM aims to improve the Business performance by enhancing Customer Satisfaction and driving up Customer Loyalty. Customer’s Need and expectation  Identification & fulfilment  Satisfied customer  Repurchase  Business Process increases. 20
  • 21. … continued • Satisfaction Profit Chain 21
  • 22. Customer satisfaction • Customer Satisfaction is the customer’s fulfilment response to a customer experience or some part thereof. • Satisfaction is measured by comparing the customer experience with the customer expectations. • This is called Expectation – disconfirmation model of Customer Satisfaction. 22
  • 23. … continued Expectation – disconfirmation model • If experience meet expectation then customers are Satisfied. • Experience > expectation = Positive disconfirmation. • Experience < expectation = Negative disconfirmation. • At times experience meets expectation but still unsatisfied because of low expectation. 23
  • 24. Customer loyalty • Loyalty can be defined and measured by two major approach. – Behavioural loyalty. – Attitudinal loyalty. • Behavioural loyalty is measured by reference to customer purchase behaviour and loyalty is expressed in continued buying. • Many companies use RFM measures of Behavioural variables. 24
  • 25. … continued R – Recency of purchase (time since last purchase) F – Frequency of purchases (No. of purchase in a given period) M – Monetary value of purchase. • Attitudinal loyalty is measured with reference to Belief, Feeling and purchasing intention 25
  • 26. … continued • Two dimensional model of customer loyalty Based on Relative attitude & Repeat purchase behaviour. 26
  • 27. Business performance • Measured in two ways – Quarterly profit(or) Earnings/share – Balanced score card(leading companies) • Four Key performance Indicator(KPI) – Financial – Customer – Process – learning & growth 27
  • 28. … continued • Implied Connection B/w Indicators is People(learning & Growth) do things (process) for customers(Customer) that have affects on business performance(Financial). • Drivers of Business performance: – Customer outcomes of satisfaction – Loyalty • Share of customer is the popular measure of CRM. 28
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