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CUSTOMER

RELATIONSHIP
MANAGEMENT
CRM: Is It Right For Your Company?
Ch. 1 Commerce in the 21st Century

Judith W. Kincaid

Customer?
Oxford: A person of a specified kind with whom one

has to deal
Websters: An individual usually having some specified
distinctive trait
The one who is buying a product but it includes all

other individuals who influence (influencers) the


decision, directly visible or not;
wife, son, daughter, toddlers and small kids, a close

friend or the informal/formal group the customer belongs


to or likes to be identified as member of that group
In B2B, all members of buying committee or the
influencers like Finance Manager, Production Manager,
Buying Manager, CEO or a consultant

Loyalty?
Oxford: A strong feeling of support or allegiance (commitment)
Websters: A feeling of strong support for someone or something
Customer loyalty is a behavior, built on positive experiences and

value with a product, company or retailer. The behavior may not


sometimes be supported by rational logic.
Customer loyalty is the result of consistently positive emotional

experience, physical attribute-based satisfaction and perceived value of


an experience, which includes the product or services.
Buying a specific brand
Buying a product of a specific company, the new product may not be
better than available alternatives
Loyalty is when a customer is prepared to wait for few days to buy the
specific product/brand and/or is prepared to travel a distance to buy
the specific product

Customer Loyalty

Understanding the Background


The Internal Situation
The competitive advantage built on:
Operational Excellence (best cost)
Product Leadership (best product)
Customer Intimacy (strong customer relationship)
Focus to build one and keep other two at

reasonably acceptable level

Understanding the Background


The New (e)Marketplace
Brick and Mortar to Brick and Click

company. What has changed:


Access: more information and at faster rate
for the customer due to Internet
Control: Opportunity to do business 24 hours
due to 24/7 online
Speed: Immediate response on internet, No
physical visits, no waiting of sales rep
response
Globalization: Entire world opened as
marketplace for everyone, no border
restriction
Automation: Many employees;
administrators, coordinators, eliminated due
to automated response through internet

Impact of (e)Marketing
Internet
Effects

Operational
Excellence

Product Leadership

Customer Intimacy

Access

Easy
comparison with
other products
and swap

Commoditization easy.
Leadership lost due to
information availability
to competitors

Providing human
contact

Control

Always on 24/7

Broader choice, less


differentiation

Interaction preference

Speed

Quick Process
expectations

Uniqueness for shorter


period/ copy able

Efficiency preferred
and not loyalty

Globalization

Language
issues,
Localization

Localization of products Unknown language


and culture

Automation

Process
disconnects

Distance from
customer needs

Loss of human
memory/connection

Loyalty in new Marketplace?


Increase in Loyalty by 5%, increases profits from 18 to

125% (both B2C and B2B) ~ (Bain and Company)


Loyalty due to positive experience has not changed with
internet and automation
Negative experiences do reduce loyalty
Reversing negative experience a strong way to ensure improved

loyalty ~ (Vevra, 1992)

Internet has reduced human interaction so is the loyalty


However use of information for better interaction with customers
can help improve loyalty

Loyalty and Operational Excellence


Outsourcing to third party at lower costs
Moving internal processes to internet
Order management product delivery, product support and fulfillment
Customers Expectations raised
Comparison with competitors product easy
Competitors can emulate (match, copy) your processes
Any improved process is matched or improved by competition easily
Not as quick as price slashing
Counter Competitors by using knowledge only you have
Respond to their needs and specific requirements in cost efficient
manner
Duplication by competitors of product and processes is possible but
not the knowledge
Deliver as per needs of customer at best possible price

Loyalty and Product Leadership


Product differentiation harder to sustain
Competitor can copy without heavy investment of time

and money
Sustained advantage is lost
Commoditization occurs

Commoditization & its impact


Commoditization
Lower Profits

Less
Differentiation
Commoditization

Lower Profits
Less R & D Budget

Less R & D
Less differentiation

Loyalty and Customer Intimacy


Internet
No direct contact with customer/employee
Historically humans managed relationship with customers

Now no human interaction is involved due to internet


Issue is to How to develop customer intimacy without

human interaction?
We will learn how to do this in context of too few or
too many persons responsible for relationship