CRM:

Developing close, cooperative relationship with customer is more important in the current era of intense competition & demanding customer than it has ever been before. Today marketers consider retaining customer is much more challenging than acquiring new customer in the context of growing competitive forces. Thus, traditional approach of marketing became insufficient to achieve the desired result. So It become necessary to introduce Relationship Marketing which is nothing but Customer Relationship Marketing. Some of the following definitions of CRM are offer: 1. The business strategy, process, culture and technology to enable organization to optimize revenue and increase shareholder value by better understanding the needs of customers. 2. CRM is the establishment, development, maintenance and optimization of long term mutually valuable relationship between consumers and organizations. 3. According to Cap Gemini Ernst & Young, a leading management consulting firm, CRM is define as a companys ability to continuously maximize the value of its customer franchise by effectively allocating scarce resources to specific customers segments in those arrears viewed as having a significant impact on the profit-impacting behaviors of customers.

CRM objectives: The following are the specific objectives of CRM: 1. Enable the company to quickly identify, contact, attract, & acquire new customers: With the help of information gather through the CRM it allows organization to focus its limited marketing resources on most promising customer. 2. Obtain a better understanding of the customers-their wants and needs: CRM used the application such as data warehousing, e-commerce application, data mining, to gather and access information which helps to analyze buyers behavior towards product and services as well as complaints and other information. So organization can execute the marketing plan in better way and also help customer to interact with seller. 3. 4. 5. 6. Define the appropriate product and service offering and watch Manage and optimize a companys sales cycle. Identify cross selling and up-selling opportunities. Increase retention of existing customers through improved after sales, service and support.

Need for CRM: CRM currently, a much talked about issue it is not a fad, but is very vital for companies in the present highly competitive scenario. 1. Companies have increasingly purpose a customer centric competitive strategy rather than a product-centric one. 2. Focus is shifting from supply chain to demand chain effectiveness. 3. Better understanding and intelligent management of customers relationship is essential for survival.

CRM Benefits: The benefits of customer relationship management are as follows: I) II) III) Identifying and targeting the most profitable customers and having a deeper knowledge customer. Getting more marketing or cross-selling opportunities. Ability to manage marketing campaigns with clear objectives.

CRM Process:
Introduction and Objectives of a CRM Process: CRM process is defined as any group of action that is instrumental in the achievement of the output of an operation system, in accordance with a specified measure of effectiveness. The final objective of the CRM process is to originate a powerful new tool for customers retention. The CRM implementation and success rate purely depend upon the process, which includes the future, revenue, customer value, customer retention, customer acquisition and profitability. Benefits of a CRM process: Ability to retain loyal and profitable customers and channels for rapid growth of the business project

Acquiring the right customers, based on known characteristics, which drives growth and increased profit margins. Increasing individual customers margin, while offering the right products at the right time.

The essentials of a CRM program include focus, commitment to CRM goals and above all a desire to be customer focused. Here's how the CRM process actually works in an organization. A look at the steps in the CRM process Establishing CRM goals Educating other departments Assembling customer information Designing the data model Vendor study Selecting the CRM solution Establishing authority responsibility Pilot projects Communication with customers through direct mail, electronic mail etc. Customer surveys Customer satisfaction program Collection of customer information Provision of customer information to employees Usage of customer information in the business activities Feedback Analyze Documenting a new process Implementing final methodology

In nutshell first , understand organization customer s needs, sales, channel preference like direct sales, telesales and profitability. Second define organization coverage strategies like plan to increase target customer acquisition, retention, and penetration. Third, use this information to carefully evaluate and select technology and vendors.

Correlate

Connect

Combine

Cognize

Fig 1.1 Four Cs (element) of CRM process Four Cs (element) of CRM process: The appropriate approach for the CRM process involves: 1. Correlate: A series of transaction and interaction that make up a dialogue between customer/ channel/ end user and an organization. 2. Combine: The mapping & management of interaction points between a customer /channel/end user & an organization. 3. Cognize: The insight gained through capture and analysis of detailed information is to create continuous learning (about customer, products, channels, market & competitor) from the data warehouse & knowledge base that is created & analyzed. 4. Connect: The application of insight to create relevant interaction or communication with consumers, customers, channels, suppliers, & partners that build value relationship.

Continuous CRM process improvement is planned and participation of the all departments in the organization in the expected to improve their customer comfort.

Measuring CRM:
Measurement is an essential tool or rather activity in any business. Whenever any activity is planned it needs to be control & evaluate regularly so implementation can be done successfully. The reasons companies measure customers is obvious. In order to manage them effectively, one must measure. Similarly when CRM process is started in the organization it requires lot of financial & non-financial efforts. Similarly periodic assessment of result in CRM is needed to evaluate if programs are meeting expectation and if they are sustainable in the long run. Performance evaluation also helps in making corrective action in terms of relationship governance or in modifying relationship marketing objective and program feature. Without a proper performance metrics to evaluate CRM efforts, it would be hard to make objective decision regarding continuation, modification, or termination of CRM programs. Developing performance metrics is always a challenging activity as most firms are inclined to use existing marketing measures to evaluate. Existing system of marketing measures such as market share, total volume of sales may not be covering the actual CRM measures.it cannot be applied uniformity across all CRM program because purpose of each program is different from one another. By harmonizing the objectives and performance measures one would expect to see a more goal directed managerial action by those who involved in CRM process. Since implementing CRM is time consuming & require a significant commitment across the organization. CRM measurement should consider following: Establish means of measuring your progress on CRM initiatives. Establish enterprise-wide measures of success & metrics that can be applied to all the CRM initiatives. Apply these metrics on an ongoing basis to ensure continued funding of CRM activity.

With that in mind, three main benefits from CRM measurement systems are: 1. To influence or validate decision making : As companies make decisions about customer strategies, they look to customer measurement to help influence specific decision makers or the decision making process or validate initial ideas about how to manage customer relationships. 2. To guide ongoing activities or tactics : CRM measurement frameworks are not only used to help managers collectively formulate plans and make decisions, but they are also used to inform and guide ongoing daily activities related to customers. This is related to but somewhat different from influencing decision-making. Measuring customer activities not only helps companies decide which customer strategies to adopt, but also helps front-line employees and managers perform regular tasks. Often, this is the predominant focus for CRM measurement systems. 3. To predict future states : CRM measurements can play a significant role in measuring portions of corporate strategy. Below are the common CRM measurement frameworks or methods that both experience and literature review suggests: 1. Brand-building 2. Customer equity building a. Customer behavioral modeling b. Customer value management 3. Customer-facing operations a. Marketing operations b. Sales force operations c. Service center operations d. Field service operations e. Supply chain and logistic operations f. Web site operations 4. Leading indicator measurement a. Balanced scorecards b. Customer knowledge management 1. Brand-building : The goal in brand building is to carefully manage a companys name, brands, slogans and symbols, otherwise known as brand equity. Various models (and criticisms) of brand equity have been published over the years. The main challenge lies in how to quantify this important intangible asset. Brand loyalty can be measured quantitatively in a number of ways. So can brand awareness through surveys and interviews. Many qualitative techniques are used to generate measures for perceived quality and brand associations.

Companies can look at brand building as if they were managing an asset. Brand equity can be calculated by removing from operating earnings attributed to a brand the cost of capital, taxes and risk and then determining the value of the remaining number as a discounted cash flow extending out five or more years

2 Customer equity building : Looking at customers as the key asset, rather than the brand as the key asset. Companies have historically measured products and brands and focused on eliminating unprofitable products from their portfolio. Example: If a company produce 5 product and one of its product failed then company eliminate it .like mango bite from parle.

a. Customer behavioral modeling : These models try to explain one or more customer behaviors by describing the antecedents on that behavior and the level of influence each antecedent has. The reason customer behavioral modeling is discussed separately here is that the market research literature is rich with studies that do not necessarily try to tie customer behavior to financial performance or company responses. Instead, the research simply wants to understand customer behavior better more or less removed from specific company goals, objectives or performance. Through predominantly qualitative techniques, including surveys, interviews and focus studies, the authors established measures and collected data to understand how each of the relationship marketing tactics did or did not affect purchase behavior.

b. Customer value management: Different approaches exist for measuring customer value. Four approaches are considered here: customer equity management, customer value analysis, loyalty monitoring, and customer satisfaction. While customer equity management, as described by Rust et al. in 2001 is perhaps the most appropriate of the approaches. CVA compares price and quality (or value) of a product against competitors. The purpose of this analysis is to determine how changes in price, value or quality can affect market share and as such, this framework provides a linkage between a companys customer facing activities with overall corporate performance. CVM has a strategic component that helps companies answer 4 basic questions: a. b. c. d. Where are we now? Where do we want to go? How do we want to get there? Are we there?

4 basic steps for establishing and monitoring a CVM` measurement system: i. ii. iii. Identify strategic priorities in the context of customers and products. Conduct qualitative research to get a comprehensive understanding of the ways customers think about value Conduct surveys that will provide data for analysis so that the company can determine what from the customers perspective are the 3-4 key benefits of the 10 or 12 benefits for each product. These surveys need to be specific to customer segments. Monitor the value proposition with a limited subset of questions.

iv.

4. Customer-facing operations There are various departments which have direct relationship with customer so CRM tries to measure the each department relationship with customers. a. Marketing operations Collect all kinds of basic data regarding customer facing activities. Such as Reach, Response rates, conversation rates, customer acquisition costs, Average customer interaction cost, Share of budget from customer to spend, Average order size. b. Sales force operations : Measurements in sales force operations focus on tracking leads(initial contacts with buyers) as they develop into sales, measuring performance of individual sales staff members and teams, monitoring the sales performance of products, reviewing the impact training has on performance, and the cost of sales. c. Service center operations : Now a days as the service center operation are crucial with the help of telephone it judge such as call counts & duration, Average hold time, cost talk time. Duration, call quality etc. d. Field service operations Field service operations include a various post-sales activities, including: warranty and service contract management, scheduling and dispatching field service agents, service call routing for inside service, problem tracking and resolution management, service inventory management, managing the logistics of part fulfillment and replenishment. So it will measure how much time is taken to meet this. e. Supply chain and logistic operations supply chain management and logistic functions are significant areas of interest for CRM practitioners. Customers consume physical and digital products. How quickly and efficiently these products flow through the value chain is of importance, especially when the time it takes a product to be delivered is a key component of improving customer satisfaction and driving customer value.

f. Web site operations With the increase use of the Internet, companies have launched web sites for a variety of purposes including, marketing, sales and support. Because of the heavy use of marketing on the Internet, web site operational measures include many marketing operations measures such as visitor count, unique visitor count, page hits, duration, and registered users. 5. Leading indicator measurement : A leading indicating measurement is a predictor of future financial performance. Many companies look to CRM systems to provide the right leading indicator outputs so that the business can adapt to changing conditions sooner following are the tools a. Balanced scorecards : The measures included in the balanced scorecard are derived from the companys vision and strategy. The balanced scorecard is broken down into four sections, called perspectives: The financial perspective: The strategy for growth, profitability and risk from the shareholders perspective. The customer perspective: The strategy for creating value and differentiation from the perspective of the customer. The internal business perspective: The strategic priorities for various business processes that create customer and shareholder satisfaction. The learning and growth perspective: The priorities to create a climate that supports organizational change, innovation and growth. b. Customer knowledge management : When it comes to customer knowledge, companies can measure three aspects of customer knowledge: 1. The value customer knowledge has (intangible asset measurement) 2. The process by which it is produced and consumed (knowledge management operations) 3. The quality of the knowledge or data (data quality) Conclusion: It is very important to measure properly because if performance does not meet expectation firm will change its strategy for production, marketing etc. if it works then the firm can put more funds in to the same. Measurement will allow the firm to implement it more efficiently.

CRM in Services:

Perishability of services is viewed as one of the most fundamental characteristics that distinguish services from goods. Service is time, place & person bound so it cannot be store or save. This makes marketing more difficult & it became essential for organization not only to acquire but to retain them & increase their share of customers purchases. Slowing growth rates, intensifying competition & technological developments made business look for ways to reduce cost & improve their effectiveness. Such as fund management, TQM, JIT & efficient supply chain management. Studies have shown that cost production had gone down but the marketing cot has increase from 20% to 55%. For services CRM is define as attracting, maintaining & in multi-service organization enhancing customer relationships. Solidifying the relationship, transforming indifferent customers into loyal ones and serving customers as clients should also be considered as marketing. He outlined five strategy elements for practicing customer relationship management: developing a core service around which to build a customer relationship, customizing the relationship to the individual customer, augmenting the core service with extra benefits, pricing services to encourage customer loyalty and marketing to employees so that they, in turn, will perform well for customers. Berry has recommended following strategies for CRM in Service industry. i) ii) iii) iv) Developing a core around which to build a customer relationship. Customizing the relationship according to individual customer, Pricing services to encourage customer loyalty Marketing to employees so that they will perform well for customer.

Following things are taken on to consideration at the time of introduction of CRM in to services: 1. Customer centric business Processes: In this process marketers assess each customer individually to determines whether to serve that customer or via a third party. Also, customer-centric marketers determine whether to create an offering that customize the product and/ or some other elements. Therefore in services it is very important to have an understanding of all linkage between the customers and the business processes which help fulfill the customer needs. 2. Technology selection: IT is an important art while introducing CRM. Most of the services technology selection is customer centric like telecom, hospitality etc.

3. Employee empowerment: Every employee is empowered to take decision to ensure the customer satisfaction. Employee empowerment leads to the higher customer satisfaction. 4. Customer Knowledge Strategy: Knowledge about customers need, wants, demands helps to develop services accordingly it is done through regular surveys. This is done for particular selected customers.

This feeling of reduced anxiety, trust, and confidence in the organization appear to develop over time and only after a relationship has been established between customer and the service providing organization. Two major benefits are there as: 1. Monetary 2. Non-monetary 1. The economic benefits relate to discounts or price breaks for those customers who have developed a relationship with an organization. Addition to monetary benefits, 2. A non-monetary benefit is also identified many a times by the customer.

The economic benefits to customers are primary motivation for developing relationships with businesses. For their regular customers many service providers may tailor their service to meet particular needs. In some cases this may be perceived by customers as preferential or special treatment. For eg: VIP treatment in Banks, Hospitals, Aviation, and Hotels to the customer who is the loyal customer & giving monetary benefits to the organization