Chapter 1:

What is COSTUMER RELATIONSHIP MANAGEMENT (CRM)?

What's So Hard About Customer Service?

One person's excellent service may represent barely adequate service to someone else.

What impresses one customer may make absolutely no impression on another. To

complicate matters, what a customer believes to be good service in one context may be

unacceptable in another situation or at another time. Service is perceptual; it is

individualized; and it is situational. So how can you figure out what customers want from

you in terms of service? The kind and level of service that you must deliver depends on

who the customer is, what her expectations are, what experience she has had with you

and other firms, what your strategy is and what role customer service plays in its delivery

—along with a host of other things.

Many managers and executives are uncomfortable with this notion of variable service

delivery; they would much prefer to be able to pin down service and to be able to

standardize it so that it can be consistently delivered. But I don't believe service should be

the same for everyone. In fact, the value of service as a relationship-building tool is its

customizability. Simply out, some customers require and deserve better service than

others. In some situations, you will want to be able to provide service that will impress

customers so as to make an emotional connection. Whenever your employees can say to a

customer, "Let me take care of that for you," you are delivering a higher level of service

than the customer was expecting.

Yet customer service gets far less attention than it deserves in many companies, simply

because managers do not realize or accept its importance in influencing customer

satisfaction and loyalty. Many view customer service provision as a cost, rather than an

investment. Many spend a great deal of time looking for ways to reduce that cost, without

appreciating the impact it has on the customer's feelings toward the firm.

At the same time, managers tend to focus on what I call the functional side of service

provision: the speed and accuracy of service delivery, in particular. Do we arrive on

time? Do we have things in stock? Do we answer incoming calls within 20 seconds?

These are the aspects of service with which managers in many firms are most

comfortable, mainly because they are most easily and frequently measured in

conventional customer satisfaction surveys. But they are a dangerously limiting view of

service and not nearly as all-encompassing as the customer's view of service.

Four levels of service

Another element that gets in the way of impressive service delivery is management's very

simplistic view of customer service. I can think of at least four levels of customer service,

each of which involves the creation of progressively more emotional value for customers.

To the customer, service involves more than just the functional delivery of service (the

first level, which, in a world where companies like FedEx have practically perfected

technical service provision, customers take as a given). Customers care how easy you

make it for them to communicate with you. This opens the door to a discussion of your

phone system, your web site and your customer service center—not to mention whether

customers can find someone to serve them in your store. Increasingly, when you keep

them on hold for 20 minutes, don't respond to their email inquiries and ask them to deal

with unknowledgeable and unhelpful staff, they will walk away.

At the third level, companies need to understand how customer service is linked to the

people they employ. My experience suggests that customers are most likely to equate the

notion of service with the way they are treated by employees. Finally, the level of service

that customers experience is a powerful influence on how customers feel emotionally

toward a company. Poor service can make a customer feel neglected, unimportant,

frustrated, angry or even humiliated. Surprisingly good service leads to emotions such as

comfort, relief, delight or excitement.

That holistic view again

Yet, many companies have a less-than-holistic view of their value proposition. Customer

service must be seen to be an integral part of what we offer the customer. I recently

encountered a major company that has separate marketing, sales and customer service

departments, each of which prepares its own annual plan and sets its own budgets,

without consulting with the others. In that firm, customer service is defined mainly as the

operation of the call center. To the customer, service means much more.

It is far too simplistic to ask customers to rate your customer service on the predictable

10-point scale. It's much too complex a concept for customers to reduce it to a single

number. You can't interpret it, anyway. So last month they gave us a rating of 8.1 on

customer service. What does that mean? Very little. There's no direction on how we can

improve. Anyway, the only people who are rating you are current customers. How would

those customers who stormed out or hung up in disgust rate your customer service? You

will never know. Yet theirs is a much more important number.

Customer service is not optional. It's not trivial. And it's not easily standardized. Don't

make the mistake that one Canadian bank made of treating customer service as a

promotion. That bank offered customers $5 if they had to wait in line more than five

minutes in its branches. Customers were generally not impressed. To them, a wait time of

five minutes was not the issue. Of course, wait time is important—but not nearly as

important as being served politely and efficiently once you reach the counter.

Customer service is extremely complex, much like value, satisfaction and the

increasingly popular customer experience. To apply such concepts effectively,

management must appreciate their complexity. To utilize customer service to increase

customer loyalty, to reinforce the positioning of the brand and to gain a competitive

advantage, companies much have a strategy to guide its development and

implementation.

What is Customer Relationship Management?

Before we begin to examine the conceptual foundations of CRM, it will be useful to

define what CRM is. A narrow perspective of customer relationship management is

database marketing emphasizing the promotional aspects of marketing linked to database

efforts.

Another narrow, yet relevant, viewpoint is to consider CRM only as customer retention in

which a variety of after marketing tactics is used for customer bonding or staying in

touch after the sale is made.

Shani and Chalasani define relationship marketing as “an integrated effort to identify,

maintain, and build up a network with individuals consumers and to continuously

strengthen the network for mutual benefit of both sides, through interactive,

individualized and value-added contacts over a period of time”.

In today’s hyper competitive scenario, more than three quarters of the money and time

spent by companies go towards acquiring and retaining customers. Customer-centricity

has become the buzzword and the ones with clear and relentless focus on customers,

enjoy a better competitive position. This is proved time and again. Yet, companies go

through meticulous processes to gradually and consistently mature into an “organization

for the customers”. But, how would you mature into a customer-focused or customer-

centric organization? The answer is: By reading and understanding your customers. Yes,

this is all you need to do! And this you need to do not just once, but regularly and

consistently over the lifetime of your customer and beyond.

Reading the customer demographics and understanding their needs (both explicit and

implicit) is what customer insight is all about. Customer insight is the basic point or the

foundation for building a customer centric organization. Everything in the value chain

revolves around this. This is the raw material. This is more a conversion process rather,

since the end product is Customer Loyalty! Over decades, many organizations had

successfully completed the conversion process and tasted higher returns, most

organizations miserably failed in their efforts.

Customer Insight goes through a set of processes to get converted into Customer Loyalty-

the finished product. The set of processes include use of machine, process and people to

obtain the final outcome - just like a manufacturing process in a factory. The machine

here is technology - information technology to be precise, process - the custom made

steps based on set objectives; and people - those who are trained to efficiently carry out

the conversion process. This whole scheme of activities that begin from customer

information and end in processes and interactions that result in customer loyalty - in

entirety, is what CRM is all about.

CRM relies on customer data to create customer loyalty. The concept of CRM was again

the result of an evolution born out of necessity. When companies understood the need to

obtain and maintain customer data, which was exhaustive and scattered in nature and

were desperately looking for a tool that could compile, preserve use the data in a way

they want, technology came to the rescue with exclusive methods called data mining,

data warehousing and thus data base management techniques were born. Technology is

mechanistic and didn’t know what is required and what is not. A managerial tool was

needed to perform the director’s role in order to decide the path and processes. Thus

CRM was engineered as a tool to manage customer data using IT-enabled techniques.

CRM gives a framework for the activities. It decides on what to do - the objectives, what

is required to do it - the resources, who should do it - the people, how to do it - the

processes, how long to do it - the time frame. CRM could be ready made, tailor-made or

hand made depending on the specific objectives it is set to achieve. CRM is unique in the

respect that it follows a set of pre-determined processes to accumulate and manage

customer data, which was hitherto unpracticed. Hence, CRM is defined as:

“Customer relationship management (CRM) is a business strategy to acquire and

manage the most valuable customer relationships. CRM requires a customer-

centric business philosophy and culture to support effective marketing, sales and

service processes. CRM applications can enable effective customer relationship

management, provided that an enterprise has the right leadership, strategy and

culture.”

As is implicit in the above definition, the purpose of CRM is to improve marketing

productivity. Marketing productivity is achieved by increasing marketing efficiency

and by enhancing marketing effectiveness. In CRM, marketing efficiency is achieved

because cooperative and collaborative processes help in reducing transaction costs and

overall development costs for the company. Two important processes for CRM include

proactive customer business development and building partnering relationship with

most important customers. These lead to superior value creation. The basic concept is

that the customer is not someone outside the organisation, he is a part of the

organisation.

Purpose of CRM

CRM, in its broadest sense, means managing all interactions and business with

customers. This includes, but is not limited to, improving customer service. A good CRM

program will allow a business to acquire customers, service the customer, increase the

value of the customer to the company, retain good customers, and determine which

customers can be retained or given a higher level of service. A good CRM program can

improve customer service by facilitating communication in several ways :

Provide product information, product use information, and technical assistance on

web sites that are accessible 24 hours a day, 7 days a week.

Identify how each individual customer defines quality, and then design a service

strategy for each customer based on these individual requirements and

expectations.

Provide a fast mechanism for managing and scheduling follow-up sales calls to

assess post-purchase cognitive dissonance, repurchase probabilities, repurchase

times, and repurchase frequencies.

Provide a mechanism to track all points of contact between a customer and the

company, and do it in an integrated way so that all sources and types of contact

are included, and all users of the system see the same view of the customer

(reduces confusion).

Help to identify potential problems quickly, before they occur.

Provide a user-friendly mechanism for registering customer complaints

(complaints that are not registered with the company cannot be resolved, and are a

major source of customer dissatisfaction).

Provide a fast mechanism for handling problems and complaints (complaints that

are resolved quickly can increase customer satisfaction).

Provide a fast mechanism for correcting service deficiencies (correct the problem

before other customers experience the same dissatisfaction).

Use internet cookies to track customer interests and personalize product offerings

accordingly.

Use the Internet to engage in collaborative customization or real-time

customization.

Provide a fast mechanism for managing and scheduling maintenance, repair, and

on-going support (improve efficiency and effectiveness).

The CRM program can be integrated into other cross-functional systems and

thereby provide accounting and production information to customers when they

want it.

Key CRM principles

Differentiate Customers

All customers are not equal; recognize and reward best customers disproportionately.

Understanding each customer becomes particularly important. And the same

customers’ reaction to a cellular company operator may be quite different as

compared to a car dealer. Besides for the same product or the service not all

customers can be treated alike and CRM needs to differentiate between a high value

customer and a low value customer.

What CRM needs to understand while differentiating customers is:

- Sensitivities, Tastes, Preferences and Personalities

- Lifestyle and age

- Culture Background and education

- Physical and psychological characteristics

Differentiating Offerings

Low value customer requiring high value customer offerings.

Low value customer with potential to become high value in near future.

High value customer requiring high value service.

High value customer requiring low value service.

Keeping Existing Customers

Grading customers from very satisfied to very disappointed should help the

organisation in improving its customer satisfaction levels and scores. As the

satisfaction level for each customer improves, so shall the customer retention with the

organisation.

Maximizing Life time value

Exploit up-selling and cross-selling potential. By identifying life stage and life event

trigger points by customer, marketers can maximize share of purchase potential. Thus

the single adults shall require a new car stereo and as he grows into a married couple

his needs grow into appliances.

Increase Loyalty

Loyal customers are more profitable. Any company will like its mindshare status to

improve from being a suspect to being an advocate. Company has to invest in terms

of its product and service offerings to its customers. It has to innovate and meet the

very needs of its clients/ customers so that they remain as advocates on the loyalty

curve. Referral sales invariably are low cost high margin sales.

Summarizing CRM activities

The CRM cycle can be briefly described as follows:

1. Learning from customers and prospects, (having in depth knowledge of customer)

2. Creating value for customers and prospects

3. Creating loyalty

4. Acquiring new customers

5. Creating profits

6. Acquiring new customers

Why CRM is necessary?

Several companies are turning to customer-relationship management systems and

strategies to gain a better understanding of their customer's wants and needs. Used in

association with data warehousing, data mining, call centers and other intelligence-based

applications, CRM "allows companies to gather and access information about customers'

buying histories, preferences, complaints, and other data so they can better anticipate

what customers will want. The goal is to instill greater customer loyalty." Other benefits

includes:

Faster response to customer inquiries.

Increased efficiency through automation.

Deeper understanding of customers.

Increased marketing and selling opportunities.

Identifying the most profitable customers.

Receiving customer feedback that leads to new and improved products or services

Benefits of CRM

Implementing a customer relationship management (CRM) solution might involve

considerable time and expense. However, there are many potential benefits. A major

benefit can be the development of better relations with your existing customers, which

can lead to:

increased sales through better timing due to anticipating needs based on historic

trends

identifying needs more effectively by understanding specific customer requirements

cross-selling of other products by highlighting and suggesting alternatives or

enhancements

effective targeted marketing communications aimed specifically at customer needs

a more personal approach and the development of new or improved products and

services in order to win more business in the future

enhanced customer satisfaction and retention, ensuring that your good reputation in

the marketplace continues to grow

increased value from your existing customers and reduced cost associated with

supporting and servicing them, increasing your overall efficiency and reducing total

cost of sales

Once your business starts to look after its existing customers effectively, efforts can be

concentrated on finding new customers and expanding your market. The more you know

about your customers, the easier it is to identify new prospects and increase your

customer base.

Even with years of accumulated knowledge, there's always room for improvement.

Customer needs change over time, and technology can make it easier to find out more

about customers and ensure that everyone in an organisation can exploit this information.

History of CRM

Customer Relationship Management (CRM) is one of those magnificent concepts that

swept the business world in the 1990’s with the promise of forever changing the way

businesses small and large interacted with their customer bases. In the short term,

however, it proved to be an unwieldy process that was better in theory than in

practice for a variety of reasons. First among these was that it was simply so difficult

and expensive to track and keep the high volume of records needed accurately and

constantly update them.

In the last several years, however, newer software systems and advanced tracking

features have vastly improved CRM capabilities and the real promise of CRM is

becoming a reality. As the price of newer, more customizable Internet solutions have

hit the marketplace; competition has driven the prices down so that even relatively

small businesses are reaping the benefits of some custom CRM programs.

In the beginning…

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 case of larger, key clients it was a valuable tool for keeping the lines of

communication open and tailoring service to the clients needs. In the case of smaller

clients, however, it tended to provide repetitive, survey-like information that cluttered

databases and didn’t provide much insight. As companies began tracking database

information, they realized that the bare bones were all that was needed in most cases:

what they buy regularly, what they spend, what they do.

Advances in the 1990’s

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.

This was the beginning of the now familiar frequent flyer programs, bonus points on

credit cards and a host of other resources that are based on CRM tracking of customer

activity and spending patterns. CRM was now being used as a way to increase sales

passively as well as through active improvement of customer service.

Chapter 2:

CRM Programs & Activities

CRM Programs

One-to-one Marketing

Meeting and satisfying each customer’s need uniquely and individually. In the mass

markets individualized information on customers is now possible at low costs due to the

rapid development in the information technology and due to availability of scalable data

warehouses and data mining products. By using online information and databases on

individual customer interactions, marketers aim to fulfill the unique needs of each mass-

market customer. Information on individual customers is utilized to develop frequency

marketing, interactive marketing, and aftermarketing programs in order to develop

relationship with high-yielding customers. In the context of business-to-business markets,

individual marketing has been in place of quite sometime. Known as Key Account

Management Program, here marketers appoint customer teams to husband the company

resources according to individual customer needs.

Continuity Marketing Programs

Take the shape of membership and loyalty card programs where customers are often

rewarded for their member and loyalty relationships with the marketers. The basic

premise of continuity marketing programs is to retain customers and increase loyalty

through long-term special services that has a potential to increase mutual value through

learning about each other.

Partnering Programs

The third type of CRM programs is partnering relationships between customer and

marketers to serve end user needs. In the mass markets, two types of partnering programs

are most common: co-branding and affinity partnering.

Missing process of CRM

 Traditionally customer relationship management (CRM) revolves around the three

functions of selling, marketing and support. Various process models have been built

around how these functions are integrated and operated in a customer oriented enterprise.

There is however a fourth critical function that is lacking in most CRM models.

 

The fourth function that often is the source of a competitive edge is that of innovation.

Companies must continually reinvent themselves to deliver an improved and often a

totally new value offering to their customer base. CRM must provide the customer

intelligence that feeds information back into the enterprise’s knowledge management

processes where it can trigger new innovation processes. When CRM is integrated into

the innovation process, significant value can be derived from faster time to market cycle

times and with new processes and services.

 

Operational CRM

Operational CRM means supporting the "front office" business processes, which include

customer contact (sales, marketing and service). Tasks resulting from these processes are

forwarded to resources responsible for them, as well as the information necessary for

carrying out the tasks and interfaces to back-end applications are being provided and

activities with customers are being documented for further reference.

Operational CRM provides the following benefits:

Delivers personalized and efficient marketing, sales, and service through multi-

channel collaboration.

Enables a 360-degree view of your customer while you are interacting with them.

Sales people and service engineers can access complete history of all customer

interaction with your company, regardless of the touch point.

The operational part of CRM typically involves three general areas of business:

Sales force automation (SFA) 

SFA automates some of the company's critical sales and sales force management

functions, for example, lead/account management, contact management, quote

management, forecasting, sales administration, keeping track of customer preferences,

buying habits, and demographics, as well as performance management. SFA tools are

designed to improve field sales productivity. Key infrastructure requirements of SFA are

mobile synchronization and integrated product configuration.

Customer service and support (CSS) 

CSS automates some service requests, complaints, product returns, and information

requests. Traditional internal help desk and traditional inbound call-center support for

customer inquiries are now evolved into the "customer interaction center" (CIC), using

multiple channels (Web, phone/fax, face-to-face, kiosk, etc). Key infrastructure

requirements of CSS include computer telephony integration (CTI) which provides high

volume processing capability, and reliability.

Enterprise marketing automation (EMA) 

EMA provides information about the business environment, including competitors,

industry trends, and macro-environmental variables. It is the execution side of campaign

and lead management. The intent of EMA applications is to improve marketing campaign

efficiencies. Functions include demographic analysis, variable segmentation, and

predictive modeling occurs on the analytical (Business Intelligence) side.

Analytical CRM

In analytical CRM, data gathered within operational CRM and/or other sources are

analyzed to segment customers or to identify potential to enhance client relationship.

Customer analysis typically can lead to targeted campaigns to increase share of

customer's wallet. Examples of Campaigns directed towards customers are:

Acquisition: Cross-sell, up-sell

Retention: Retaining customers who leave due to maturity or attrition.

Information: Providing timely and regular information to customers.

Modification: Altering details of the transactional nature of the customers'

relationship.

Analysis typically covers but is not limited to:

Decision support: Dashboards, reporting, metrics, performance etc.

Predictive modeling of customer attributes

Strategy and research.

Analysis of Customer data may relate to one or more of the following analyses:

Contact channel optimization

Contact Optimization

Customer Acquisition / Reactivation / Retention

Customer Segmentation

Customer Satisfaction Measurement / Increase

Sales Coverage Optimization

Fraud Detection and analysis

Financial Forecasts

Pricing Optimization

Product Development

Program Evaluation

Risk Assessment and Management

Collaborative CRM

Collaborative CRM facilitates interactions with customers through all channels (personal,

letter, fax, phone, web, e-mail) and supports co-ordination of employee teams and

channels. It is a solution that brings people, processes and data together so companies can

better serve and retain their customers. The data/activities can be structured, unstructured,

conversational and/or transactional in nature.

Collaborative CRM provides the following benefits:

Enables efficient productive customer interactions across all communications

channels

Enables web collaboration to reduce customer service costs

Integrates call centers enabling multi-channel personal customer interaction

Integrates view of the customer while interaction at the transaction level

Chapter 3:

Tools for CRM

Customer database

A good customer information system should consist of a regular flow of information,

systematic collection of information that is properly evaluated and compared against

different points in time, and it has sufficient depth to understand the customer and

accurately anticipate their behavioral patterns in future. The customer database helps the

company to plan, implement, and monitor customer contact. Customer relationships are

increasingly sustained by information systems. Companies are increasingly adding data

from a variety of sources to their databases. Customer data strategy should focus on

processes to manage customer acquisition, retention, and development.

Call Centre

A call centre is a centralized office used for the purpose of receiving and transmitting a

large volume of requests by telephone.

A call centre is operated by a company to administer incoming product support or

information inquiries from consumers. Outgoing calls for telemarketing, clientele, and

debt collection are also made. In addition to a call centre, collective handling of letters,

faxes, and e-mails at one location is known as a contact centre.

A call centre is often operated through an extensive open workspace, with work stations

that include a computer, a telephone set/headset connected to a telecom switch, and one

or more supervisor stations. It can be independently operated or networked with

additional centres, often linked to a corporate computer network, including mainframes,

microcomputers and LANs. Increasingly, the voice and data pathways into the centre are

linked through a set of new technologies called computer telephony integration (CTI).

Most major businesses use call centres to interact with their customers. Examples include

utility companies, mail order catalogue firms, and customer support for computer

hardware and software. Some businesses even service internal functions through call

centres. Examples of this include help desks and sales support.

Systems Integration

While CRM solutions are front office automation solutions, ERP is back office

automation solution. An ERP helps in automating business functions of production,

finance, inventory, order fulfillment and human resource giving an integrated view of

business, where as CRM automates the relationship with customer covering contact and

opportunity management , marketing and product knowledge, sales force management,

sales forecasting, customer order processing and fulfillment, delivery, installation, pre-

sale and post-sale services and complaint handling by providing an integrated view of the

customer. It is necessary that the two systems integrate with each other and complement

information as well as business workflow. Therefore, CRM and ERP are complementary.

This integration of CRM with ERP helps companies to provide faster customer service

through an enabled network, which can direct all customer queries and issues through

appropriate channels to the right place for speedy resolution. This will help the company

in tracking and correcting the product problems reported by customers by feeding this

information into the R&D operations via ERP.

Data Mining for CRM: Some Relevant issues

Data mining is an important enabler for CRM. Advances in data storage and processing

technologies have made it possible today to store very large amounts of data in what are

called data warehouses and then use data mining tools to extract relevant information.

Data mining helps in the process of understanding a customer by providing the necessary

information and facilitates informed decision-making.

Chapter 5

CRM Related Concepts

Knowledge Management

Knowledge Management (KM) refers to a range of practices used by organizations to

identify, create, represent, and distribute knowledge for reuse and learning across the

organization.

Knowledge Management programs are typically tied to organizational objectives and are

intended to lead to the achievement of specific business outcomes such as improved

performance, competitive advantage, or higher levels of innovation.

While knowledge transfer (an aspect of Knowledge Management) has always existed in

one form or another, for example through on-the-job discussions with peers, formally

through apprenticeship, through the maintenance of corporate libraries, through

professional training and mentoring programmes, and — since the late twentieth century

— technologically through knowledge bases, expert systems, and other knowledge

repositories, Knowledge Management programs attempt to explicitly evaluate and

manage the process of creation or identification, accumulation, and application of

knowledge or intellectual capital across an organization.

Knowledge Management, therefore, attempts to bring under one set of practices various

strands of thought and practice relating to:

- intellectual capital and the knowledge worker in the knowledge economy

- the idea of the learning organization;

- various enabling organizational practices such as Communities of Practice and

corporate Yellow Page directories for accessing key personnel and expertise;

CRM in Supply Chain Management (SCM)

Supply Chain Management (SCM) is a business system of enterprise strategies, business

processes and information technologies for improving the planning, execution and

collaboration of material flows, information flows, financial flows and workforce flows

in the supply chain. SCM is supported by modular software applications that integrate

activities across organizations, from demand forecasting, product planning, parts

purchasing, inventory control, manufacturing, product assembly to product distribution.

In the context of SCM, where alliances and partnerships are keys to success, CRM plays

an important role in building long-term relationships. The success of relationships

depends upon sharing of savings from the supply chain, which may be reinvested to

further enhance its efficiency, and sustain the competitive advantage.

The supply chain of tomorrow will look like a virtual organisation, seamlessly integrated

through sharing data and savings as well. The bonding between partners will be closely

held by CRM practices.

CRM-ERP Integration

ERP’s foundation (which evolved from either manufacturing-based manufacturing

resources planning (MRP) applications and its later incarnation, MRPII applications), it is

based on creating internally stable business functions and predictable process control.

The concept of ERP was the integration of all back-office functions so that the basic

problems responsible for interruptions and breaks in the processes were smoothed out and

the incompatibilities of the best of processes were smoothened and the incompatibilities

of the best-of-breed applications were eliminated or reduced. This doesn’t work with

CRM, which is external. How can you be in command of the processes when they are

based on your customers’ behaviour? Conceptually, one important reason for CRM is

real-time response to the constantly liquid-shifting of customer demands, which is not

controlled internally at all.

What is eCRM?

In simple terms, eCRM provides to companies a means to conduct interactive,

personalised and relevant communication with customers across both electronic and

traditional channels. It utilises a complete view of the customer to make decisions about

messaging, offers, and channel delivery. It synchronises communications across

disjointed customer-facing systems. It focuses on understanding how the economics of

customer relationships affect the business. Advocates of eCRM recognize that a

comprehensive understanding of customer activities, personalization, relevance,

permission, timeliness and metrics is a means to an end optimizing the value of your most

important asset: your customers.

For Fortune 500 companies, evolving to eCRM requires process and organisational

changes, a suite of integrated applications and a non-trivial technical architecture to

support both the eCRM process and the enterprise applications that automate the process.

Mid-size companies may benefit from less sophisticated and easier-it-implement (and

affordable), hosted solutions offered through Application Service Providers. But

regardless of the size of the firm, you have no choice but to evolve to eCRM quickly.

eCRM v/s CRM: The Differences

Being able to take care of your customer via the Internet, or, customers being able to take

care of themselves online: That’s the difference between CRM and eCRM. It implies a

myriad of issues, questions, approaches, technologies, and architecture that are different

from client/server-based CRM. Many of them are issues general to the Internet. Others

are issues related to the creation of applications for the Internet. The third group is related

directly to eCRM and its actual value to business.

Companies agree that eCRM is critical to their business, but unfortunately very few

understands exactly what it is or how to evolve from their existing database marketing

practices to an eCRM solution.

Basic Requirements of eCRM or Six “E” of eCRM

Electronic Channels

New electronic channels such as the Web and personalised eMessaging have become

the medium for fast, interactive and economic customer communications, challenging

companies to keep pace with this increased velocity.

Enterprise

Through eCRM, a company gains the means to touch and shape a customer’s

experience across the entire organization, reaching beyond just the bounds of

marketing to sales, services and corner offices – whose occupants need to understand

and assess customer behaviour. An eCRM strategy relies heavily on the construction

and maintenance of a data warehouse that provides a consolidated, detailed view of

individual customer behaviour and communication history.

Empowerment

In this new age, eCRM strategies must be structured to accommodate customers who

now have the power to decide when and how to communicate with the company and

through which channel, which ability to opt for or out of. Consumers decide which

firms earn the privilege to “talk” with them.

Economics

Too many companies execute communication strategies withlittle effort or ability to

understand the economics of customer relationships and channel delivery choices.

Yet customer economics drives smart asset allocation decisions, directing resources

and efforts at individuals likely to provide the greatest return on customer

communication initiatives.

Evaluation

Understanding customer economics relies on a company’s ability to attribute

customer behaviour to marketing programs. A company should evaluate customer

interactions along with various customer touch point channels and compare

anticipated ROI against returns, through customer analytic reporting. Evaluation of

results allows companies to continuously refine and improve efforts to optimise

relationships between companies and their customers.

External Information

The use of consumer-sanctioned external information can be employed to further

understand customer needs. This information can be gained from sources such as

third-party information networks and Webpage profiler applications, under the

condition that companies adhere to strict consumer opt-in rules and privacy concerns.

The Need to Adopt eCRM

Companies need to take firm initiatives on the eCRM frontier to

Optimize the value of interactive relationship.

Enable the business to extend its personalized messaging to the Web and e-mail.

Co-ordinate marketing activities across all customer channels.

Leverage customer information for more effective eMarketing and eBusiness.

Focus business on improving customer relationship and earning a greater share of

each customer’s business through consistent measurement, assessment and

“actionable” customer-contact strategies.

Chapter 6:

Problems and Drawbacks

There are several reasons why a customer relationship management (CRM) solution

might not have the desired results.

There could be a lack of commitment from people within the company to the

implementation of a CRM solution. Adapting to a customer-focused approach may

require a cultural change. There is a danger that relationships with customers will break

down somewhere along the line, unless everyone in the business is committed to viewing

their operations from the customers' perspective. The result is customer dissatisfaction

and eventual loss of revenue.

Poor communication can prevent buy-in. In order to make CRM work, all the relevant

people in your business must know what information you need and how to use it.

Weak leadership could cause problems for any CRM implementation plan. The onus is

on management to lead by example and push for a customer focus on every project. If a

proposed plan isn't right for your customers, don't do it. Send your teams back to the

drawing board to come up with a solution that will work.

Trying to implement CRM as a complete solution in one goes is a tempting but risky

strategy. It is better to break your CRM project down into manageable pieces by setting

up pilot programs and short-term milestones. Consider starting with a pilot project that

incorporates all the necessary departments and groups but is small and flexible enough to

allow adjustments along the way.

Don't underestimate how much data you will require, and make sure that you can expand

your systems if necessary. You need to carefully consider what data is collected and

stored to ensure that only useful data is kept.

You must also ensure you comply with the eight principles of the Data Protection Act

that govern the processing of information on living, identifiable individuals. For more

information, see their guide on how to comply with data protection legislation.

Avoid adopting rigid rules which cannot be changed to be more flexible to the needs of

individual customers.

Reasons for CRM Implementation Failure

An understanding of the challenges and critical success factors is paramount to project

success. In this way, the organization is aware of those factors by which success can be

measured, and will ensure the CRM system is implemented in a manner to satisfy all

stakeholders. The main reasons for CRM failures include:

Customer focus

Organizational culture is not customer focused, with limited involvement of customer

facing personnel in the design and implementation phase

Organizational Management

Lack of support and understanding form senior management, lack of CRM

understanding, lack of communications and changing business needs

Project Management

Misalignment between project and business requirements, with unrealistic goals,

timelines, coupled with a lack of planning and insufficient reporting and control

Team Members

Lack of support, incentives, and lack of technical knowledge

Data & Warehouse Requirements

Short term solution focus not aligned to long term architectural infrastructure growth,

no prototyping or testing, misunderstanding technical requirements.

Chapter 8:

CRM in India

Software is to India what oil was to Gulf. It is therefore no surprise that the Indian

companies are jumping into the CRM bandwagon to seize a chunk of the global market,

both products as well as services.

With is vast talent pool; India is fast becoming an important development base of major

CRM companies. This trend is likely to increase in the future. Call centers, catering

primarily to the American and European markets are coming up in and around the

metros. With the easing of infrastructure constraints, India is likely to emerge as a

significant player in this segment.

Companies in India are realizing the need for RM and some of the forward-thinking ones

have been strategically investing in CRM initiatives and relate activities. Even though,

some industries like steel, aluminum and cement could get by without any active

customer management, they realize that is now all history and that they have to do

something to create and build relationships.

So the awareness of CRM there. The first steps have been taken by many. The question is

whether you want to compare CRM programs of Indian companies with the standards

and best practices of players like Ikea and Marriott who have been torchbearers in this

field. India has a long way to go. Indian companies would do well to realize that CRM

cannot be delegated to the marketing department.

It has to be whole revolution within the entire organization. The entire organization from

the chairman to the doorman has to be galvanized to become a customer-oriented

organization. It’s about training, learning, reskilling and the ability to adapt that will

distinguish the laggards from the winners. It needs a CEO who walks the talk, in other

words CRM is an absolute necessity now for the smallest kirana store to a large player

like Ambuja Cement. One has 200 customers and the other 2000 customers. But both

can’t afford to lose even a single of their customers, because the cost of creating a new

customer is 5 to 10 times more than the cost of retaining an old, good customer. CRM is

now an integral part of organizational strategy and overall business objectives.

Has CRM in India been reduced to an empty buzzword that’s tossed around so that a

company appears to be keeping up with the industry? Not entirely, because organisations

like Standard Chartered Bank, ICICI Lombard, BPL Telecom and Air-India have

successfully used these tools—and benefited. The difference lies in the way CRM has

been deployed at these organisations. It is a combination of technology and process

change that has worked.

Adoption of CRM by Indian companies is at an infancy stage. The CRM enabled

companies include Modi Xerox, Tata Telecom, TVS Electronics, HP India, Tata Infotech,

Carrier Refrigeration, Tata Teleservices, Satyam Infoway, Planet M, and Epicenter

Technologies among many others.

India even has a CRM Foundation in New Delhi, founded with the purpose of assessing

and improving CRM practices. Founding members include Tata Telecom, Escotel, Modi

Xerox, Global Groupware, AC Nielsen, Carrier Aircon, and Motorola India, among

others.

Outsourcing CRM back offices. India is growing to be the back office of the world, and

many Indian companies are managing CRM operations for Fortune 500 and medium-

sized companies in USA and Europe. Now that the outsourcing market is mature, Indian

companies may also begin to outsource for cost reduction.

BPO’s in India

The business process outsourcing industry in India has grown by leaps and bounds and as

its size increases so does its competitive advantage. Compared with 1996 when this

Industry had started inroads into the United States with Outbound Telemarketing

campaigns, today the vehicle for these calls-the internet has become cheaper and more

reliable for the average Indian business.

The business has boomed to the extent that many people are now running BPO’s out of

their cyber cafes and houses in New Delhi.

The sector witnessed considerable activity during 2004-05, including a ramping up of

operations by major Indian and MNC players and stepped up hiring. The domestic BPO

market, catalyzed by demand from the telecommunications and BFSI segments, matched

the growth of BPO exports. The market experienced maturity and consolidation, a result

of numerous mergers and acquisitions taking place within the sector. There were over

400 companies operating within the Indian BPO space, including captive units (of both

MNCs and Indian companies) and third-party services providers.

The Indian BPO industry remains on a growth path, emerging as one of the key

investment markets in the country.

BPO is one of the greatest global forces for improvement today. CRM outsourcing

providers alone have a $30 billion market opportunity, and businesses that capitalize on

the potential cannot only reduce cost, but also increase productivity and raise revenue

significantly.

BPO began as a way to significantly reduce labor costs for low-value or transaction

activities (e.g., help desk calls, bill payments), but now, it's emerging as a way to deal

with higher complexity, value-added activities. However, few companies have realized

the full range of benefits that BPO offers. To capture these benefits organizations need to

do two things: outsource to improve productivity (not just costs) and cost-effectively

identify emerging revenue opportunities.

Chapter 9:

Case Studies on CRM

1. HDFC – Banking and Financial Sector

Owing a Home still remains to be the single most cherished dream for many Indian

households and one need to be treated with great care while assisting people realize their

dreams. At HDFC, the element of care not only reflects in the very vision that prompted

its inception, but also in the manner in which the company relates to its customers. To

HDFC, providing finance for housing is not merely about earning profits, but a way to

provide an essential and valuable service to the society.

It all began with a thought that took shape in the mind of HDFC’s founder, Late Shri H.

T. Parekh, who built the organisation on the core values of integrity, transparency and

trust. Though HDFC enjoyed a monopoly when it started out, the company’s firm focus

has always been on customer care and satisfaction. It believed that the best strategies are

established with long-term commitment and relationships with the customers.

Since the company has always been dealing directly with its customers, this has helped it

keep in touch with the changing trends and customer expectations. Its experience and in-

depth knowledge of the sector is a boon for its customers. HDFC understands that buying

a house is an event which happens once in a lifetime for most and is the single largest

investment; hence buying the property with the fullest knowledge is vital. While buying a

property, where except in few cases the developers have established a brand, most

builders are local and relatively unknown, there are a number of issues and concerns a

customer has when he deals with any developer.

With over 28 years of experience in the real estate industry and business relations with

the developers, it has a thorough understanding of the market and this is passed on to the

customers. It provides counseling through its property services on how and where to buy

a house in India, the real estate prices and trends in the real estate market and any

assistance that may be required at various stages of property dealings. HDFC aims to

bring creditability and trust to the property deals.

It has from time to time tied up with developers to bring special packages to its customers

and reach out to them. It conveys the properties to the customers by visiting companies to

put up special counters displaying new projects of builders, so they don’t have to move

out to locate a home and make presentations to address their financial concerns. This

approach is also used in colonies with a large number of families. The company also

arranges property fairs where customers can visit, select the property and seal the deal

immediately.

At HDFC, product innovations are based on customer feedback and are aimed at

customer convenience. It was the first company to offer floating rate loans when the

interest rate scenario turned conducive for customers and introduce a part fixed part

floating product enabling customers to hedge their risks in an uncertain interest rate

environment. It was also the first to launch repayment option that supported housing

loans on the basis of age and customer needs. As the first company to computerize the

home loan process, technology has always been a focus area for the company in its

endeavour to simplify transaction for customers.

All in all HDFC is a brand, which not only offers Housing Finance but “Total Housing

Solutions”. Given the diverse portfolio of customers that HDFC caters to, the counselors

at HDFC are trained to understand customer requirements and structure the loan to match

individual concern. Departing from the usual norm of providing just loans, it offers

customers a personalised counseling service to help customers encash on the vast pool of

knowledge that comes with its experience.

It follows a single window concept where customers get legal and technical approvals by

its experienced in-house counsellors. This usually saves a lot of time and efforts for

customers of obtaining these clearances from other authorities and saves money as the

processing and administrative charges cover all these expenses. Customer service at

HDFC goes beyond process handling, with counsellors taking out time to understand the

applicants’ needs, the demands of their growing families, the necessity to ensure savings

for emergencies and then arriving at the right amount for them to borrow.

HDFC’s philosophy of care also engulfs its interaction with customers who have

defaulted in repaying the loan. From the beginning it followed a different model and

setup a “follow-up” department to deal with delinquent borrowers instead of a

“recoveries” section, believing that individuals were basically honest and would pay back

in time. Its debt collection policy emphasizes on fostering borrower confidence by

understanding their crisis; discussing their repayment capacity – considering their

income, number f dependents, he nature of their expenses etc; and after ascertaining the

facts and the reasons for default work out a solution, even reschedule the loan if required.

Though the policy deals with a negative situation, it has a strong value-based premise that

ensures that the implementation will not be unduly coercive. Infact, the policy is built on

courtesy, fair treatment and persuation.

The Home Loan Protection Plan (a product of HDFC Standard Life) that HDFC offers to

it home loan borrowers provides the customer the comfort of knowing that in case of the

unfortunate death of the borrower, a sum of money depending on the insurance cover will

be made available towards repaying the housing loan.

For HDFC, its strength emanates from its intrinsic value of customer orientation and care.

They are the basis for all growth and development. The task at hand is to bridge the gaps

and to provide the common man access to resources to fulfill his basic dream. In its 28

years of operations it has assisted 27 lakh families own a home through loan approvals of

over Rs. 1,00,000 crores. As it moves along taking small steps in this direction what

makes the effort truly worthwhile is when it ultimately benefits individuals and the

society at large.

Who’s in the CRM game?

About 50% of the CRM market is currently divided between five major players in the

industry: PeopleSoft, Oracle, SAP, Siebel and relative newcomer Telemation, based

on Linux and developed by an old standard, Database Solutions, Inc.

The other half of the market falls to a variety of other players, although Microsoft’s

new emergence in the CRM market may cause a shift soon. Whether Microsoft can

capture a share of the market remains to be seen. However, their brand-name

familiarity may give them an edge with small businesses considering a first-time

CRM package.

PeopleSoft was founded in the mid-1980’s by Ken Morris and Dave Duffield as a

client-server based human resources application. In 1998, PeopleSoft had evolved

into a purely Internet based system, PeopleSoft 8. There’s no client software to

maintain and it supports over 150 applications. PeopleSoft 8 is the brainchild of over

2,000 dedicated developers and $500 million in research and development.

PeopleSoft branched out from their original human resources platform in the 1990’s

and now supports everything from customer service to supply chain management. Its

user-friendly system required minimal training is relatively inexpensive to deploy. .

One of PeopleSoft’s major contributions to CRM was their detailed analytic program

that identifies and ranks the importance of customers based on numerous criteria,

including amount of purchase, cost of supplying them, and frequency of service.

Oracle built a solid base of high-end customers in the late 1980’s, then burst into

national attention around 1990 when, under Tom Siebel, the company aggressively

marketed a small-to-medium business CRM solution. Unfortunately they couldn’t

follow up themselves on the incredible sales they garnered and ran into a few years of

real problems.

Oracle landed on its feet after a restructuring and their own refocusing on customer

needs and by the mid-1990’s the company was once again a leader in CRM

technologies. They continue to be one of the leaders in the enterprise marketplace

with the Oracle Customer Data Management System.

Telemation’s CRM solution is flexible and user-friendly, with a toolkit that makes

changing features and settings relatively easy. The system also provides a quick

learning environment that newcomers will appreciate. Its uniqueness lies in that,

although compatible with Windows, it was developed as a Linux program. Will

Linux be the wave of the future? We don’t know, but if it is, Telemation’s ahead of

the game.

The last few years…

In 2002, Oracle released their Global CRM in 90 Days package that promised quick

implementation of CRM throughout company offices. Offered with the package was

a set fee service for set-up and training for core business needs. .

Also in 2002 (a stellar year for CRM), SAP America’s mySAP began using a

“middleware” hub that was capable of connecting SAP systems to externals and front

and back office systems for a unified operation that links partners, employees,

process and technologies in a closed-loop function.

Siebel consistently based its business primarily on enterprise size businesses willing

to invest millions in CRM systems, which worked for them to the tune of $2.1 billion

in 2001. However, in 2002 and 2003 revenues slipped as several smaller CRM firms

joined the fray as ASP’s (Application Service Providers). These companies, including

UpShot, NetSuite and SalesNet, offered businesses CRM-style tracking and data

management without the high cost of traditional CRM start-up.

In October of 2003, Siebel launched CRM OnDemand in collaboration with IBM.

Their entry into the hosted, monthly CRM solution niche hit the marketplace with

gale force. To some of the monthly ASP’s it was a call to arms, to others it was a sign

of Siebel’s increasing confusion over brand identity and increasing loss of market

share. In a stroke of genius, Siebel acquired UpShot a few months later to get them

started and smooth their transition into the ASP market. It was a successful move.

With Microsoft now in the game, it’s too soon to tell what the results will be, but it

seems likely that they may get some share of small businesses that tend to buy based

on familiarity and usability. ASP’s will continue to grow in popularity as well,

especially with mid-sized businesses, so companies like NetSuite, SalesNet and

Siebel’s OnDemand will thrive. CRM on the web has come of age!

Conclusion

CRM is basically the collection and distribution of “all” data to “all” areas of business.

The data can then help market the company, help up sell to existing customer, understand

customers better so that customers can be given better service and allows them to interact

with the company by whatever means they wish. Customer Relationships are achieved by

the whole company working together to give customers what they really want. CRM is a

business strategy to create and sustain long-term, profitable customer relationships.

Successful CRM initiatives start with a business philosophy that aligns company

activities around customer needs. Only then can CRM technology be used as it should be

used—as a critical enabling tool of the processes required to turn strategy into business

results.

CRM is now an integral part of the business vision/strategic roadmap of companies in

virtually every industry domain and feeder-linked sectors. It is the various stages that lead

to better understanding of all aspects of customer behavior; interface points, transactional

issues and “intangible” benefits proffered that helps a company differentiate itself from

others in terms of leadership and market dominance in a particular space. The “We Care”

principle has to be embedded in the very vitals of the organisation for long-term benefits

to accrue and for “delighted customers to keep coming back.

Clearly, it is a matter of being in synch with customers’ changing needs that shapes

business success stories. Companies that continuously align and re-align their brands,

products and services have a better chance of understanding their present as well as future

consumers. Total customer orientation centered on customer understanding is bound to

provide long-term customer value and by inference superior company and shareholders

value in terms of sustainable growth and profits.

Customer Relationship Management is a prerequisite for maneuver strategy as it provides

customer information proactively for making swift moves. When there is a strong info-

structure available for the firm through greater access of customer information that can be

manipulated with changing time and market dynamics, it allows the marketer to make

calculated judgments as to where and when to move. Tools of customer relationship

management like data warehousing help in realizing optimal results when the manager

understands the strategic paradox. Customer Relationship Management helps in

developing the most important competitive advantage in the form making the desired

consumer information available at the fingertips of the decision makers for taking

optimum decisions.

It has been said that the most successful companies of the future won’t be the big ones;

they’ll be the fast ones. The power of the emergent social network will undoubtedly

increase as global companies make their impact known, and you can bet that social

networks will try to keep up with even the fastest corporation. The Internet will be the

lens used by social networks to monitor bad corporate behavior, and the wallet will be the

stick to whip corporations into shape.

are in whatever circumstances.