BA 7015 CUSTOMER RELATIONSHIP MANAGEMENT

UNIT1: INTRODUCTION

Prepared and presented by,N. Ganesha Pandian,Assistant professor,

Madurai School of management.

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CONTENTS Definitions Concepts and context of relationship

management Evolution Transactional Vs relationship approach CRM as a strategic marketing tool CRM significance to the stakeholders

MEANING OF CRM Customer relationship management can be

defined as a business philosophy and set of strategies, programs, and systems that focuses on identifying and building loyalty with a marketer’s profitable customers.

The goal is to develop a base of loyal customers who patronize the retailer frequently

DEFINITION OF CRM According to Gartner, “CRM is a business

strategy designed to optimize profitability, revenue and customer satisfaction”.

According to PWC consulting, “CRM is a business strategy that aims to understand/appreciate, manage and personalize the needs of an organization’s current and potential customers”.

CRM consists of three definitional components in its architectural structure:

1. Customer2. Relationship3. Management

CONCEPTS AND CONTEXT OF RELATIONSHIP MANAGEMENT Relationship management is a strategy

employed by an organization in which a continuous level of engagement is maintained between the organization and its audience.

Relationship management aims to create a partnership between the organization and its audience rather than consider relationship merely transactional.

Concepts and context of Relationship management

Quality

Commitment

Promise Trust

Shared goals and mutual

benefits

Satisfaction

EVOLUTION OF CRM The concept of customer relationship

management came into vogue in the mid 1990’s, CRM has undergone a substantial evolution.

1. First generation (Functional CRM approach)- Sales force automation (SFA)-Customer service and support (CSS)

2. Second generation (customer facing front end approach)

3. Third generation (strategic approach)

TYPES OF CRM AND ITS DOMAIN CHARACTERISTICS1. Strategic CRM: is a core customer

centric business strategy aims at winning and keeping profitable customers

2. Operational CRM: focuses on the automation of customer facing processes such as selling, marketing and customer service

CONTD…3. Analytical CRM: focuses on the

intelligent mining of customer related data for strategical or tactical purposes

4. Collaborative CRM: applies technology across organizational boundaries with a view to optimizing company, partner and customer value

STRATEGIC CRM Product oriented Production oriented Sales oriented A customer / Market oriented

OPERATIONAL CRM

1. Marketing automation

Market segmentation

Campaign management

Event based marketing

2. Sale force automation

Account Management

Lead management Opportunity

managementPipeline

managementContract

managementQuotation and

proposal management

Product configuration

CONTD…3. Service Automation Case management Inbound communications management Queuing and routing Service level management

TRANSACTIONAL VS RELATIONSHIP MARKETING Transactional marketing or mass

marketing is on individual transaction and does not concern continuous relationship with customers

Relationship marketing focus on continuous multiple transactions rather than isolated individual transactions.

TRANSITION FROM TRADITIONAL MARKETING TO RELATIONSHIP

MARKETING

RELATIONSHIP MARKETING

TRANSACTIONAL MARKETING

Customer retention

Customer acquisition

Functionally based marketing

Cross- Functionally based marketing

WHAT IS RELATIONSHIP MARKETING? Relationship marketing is the practice of using

marketing activities to establish, develop, and maintain successful long term relationships.

Relationship marketing has numerous implications for market planning, employee training, advertising, promotion, public relations, direct marketing, package design and more.

Mass Marketing

Discrete transactions

Short term emphasis

One-way communication

Acquisition focus

Share of market

Product differentiation

Relationship marketing

Continuing transaction

Long term emphasis

Two-way communication and

collaboration

Retention focus

Share of mind

Customer differentiation

CHARACTERISTICS OF CRM Share of customer Lifetime value of customers Customer equity Greater focus on high value customers Use of technology

KEY PRINCIPLES OF CRM Understand what motivates customers Treat customers individually Differentiate offerings Increase loyalty Providing efficient and consistent

service Selecting ‘good’ customers instead of

‘bad’ customers based on lifetime value

Manage customer as an asset Rate customers on the basis of their

profit stream – current and future potential

Using information based decision making capabilities

Implement innovative ways and means to get close to the customer – Hear the voice of customers

GOALS OF CRM To provide updated information To customize strategies To anticipate problems To prompt follow-up To establish problem solving mechanism To assess customer interest To integrate functional system

CRM AS A STRATEGIC MARKETING TOOL Strategic CRM is a core customer centric

business strategy aims at winning and keeping profitable customers

CRM as a effective strategic marketing tool acts as a competitive advantage

CRM helps in strategic planning and reduces cost to serve

CRM SIGNIFICANCE TO STAKEHOLDERS Business owners VP of sales and sales manager Salespeople Customer service/ support manager Customer service representatives Business development/ marketing manager Financial perspective – CFO/Controller/Accounting IT department All other employees

SIGNIFICANCE OF CRM Increased sales revenue and reduced

cost of sales Increased customer satisfaction Lower costs of recruiting customers Increased customer retention Evaluation of customer profitability Excellent customer service

Customer knowledge Customization Positive referral creation Reduced cost through customer self-

service Opportunity to Cross-sell and up-sell Decreased general sales and marketing

administrative costs

CONTD…

LIMITATIONS OF CRM Requires top management support Confusion in attributes Problem in implementation Building relationship Not functionally organized Customer dissatisfaction Front line staff

MISCONCEPTIONS ABOUT CRM

1. CRM is a database marketing2. CRM is a marketing process3. CRM is an IT issue 4. CRM is about loyalty scheme5. CRM can be implemented by any

company

WHY COMPANIES WANT RELATIONSHIPS WITH CUSTOMERS Reduced marketing costs Better customer insight Life time value The goal of maintaining customer base

must be to retain existing customers and recruit new customers that have future profit potential or are important for other strategic purposes

B2C CONTEXT1. Recognition2. Personalization3. Power4. Risk reduction5. Status 6. Affiliation

THANK YOU