CRM Questions.docx
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CRM Questions
1. What do you understand by the voice of the customers? Explain the
relationship between customer ownership and value.
The voice of the customer has won clear prominence over product focused
fundamentals in the market. Today marketers have realized that selling theirproduct/services will not be easy till they cater to the needs and exhilarating
expectations of the high demands of the customers. This is the reason behind
companies delving deep into the intricacies of consumer research to know more
about the customers, their preferences and expectations. Using research to know
the voice of the customer has been a rewarding strategy. Excessive research
with focus only on the product can lead to under estimation of needs and
expectations of the customer, which further leads to market myopia.
The relationship between customer ownership and value is as follows:
The ideal relationship between customer and a brand can be an emotional
attachment with the brand, as if they own the brand and it belongs to them. The
survival mantra today is not to concentrate on return investments, but on return
on relationships.
Mutual Value.
The real challenge to the organizations is not only to create customer
satisfaction, but to create high customer value, where the customer has a strongperception of tangible and intangible benefits derived from the product. Also, the
customer should be able to constantly map in his mind a comparative analysis of
benefits versus the cost of the product. After all, the customer is going to spend
his valuable resources in terms of time, money and efforts whenever he decides
to purchase the product and he has to be assured of certain benefits from the
product/ service/ brand/ organization.
The customer value that an organization has created, results in customer
ownership, where the customer is perceived as one who has a strong emotional
bonding with the product.
2. What is customer care? Explain the various stages of customer care?
It is an undisputed fact that the prime reason for the existence of any enterprise
is its customers. Customer care is the process that seeks to acquire new
customers, providing appropriate services and then building customer loyalty.
Customer Brand
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Organizations have to put in place a system for all these stages of interaction
with the customers.
Listening:
Organizations should have sufficiently equipped channels of
communication to listen to the customers. It is very frustrating for any
customer to not find a method of communicating his query or grievances
to the respective organization. To listen to the customers, there can be a
number of channels and strategies, from traditional complaint centers to
modern use of technology like mobiles and the internet. The method and
procedures of listening to the customer should be accessible, easy, simple
and widely communicated to all the customers.
Responding:
It is very important that call from the customer is acknowledged. Every
customer expects a quick and appropriate response to his call. The
complaint or service request should be handled appropriately.
Improving:Organizations should learn from the previous experiences of complaints
and grievances so that recurrences of problems to the customers are
minimal. The customer care mechanism should provide inputs to product
improvement, new product development, improvement in service delivery
system, training of manpower etc.
3. What is Knowing your customer? What information does it involve? In what
areas can an organization device its strategies having known its
customers?
The foundation of any good customer care system is the knowledge of
customers. Identifying needs, wants and expectations of the customers is
collected and responding to them accordingly is crucial for customer care.
Information about the customers is collected by the organizations during each
interaction. This information generally comes through contact centers, sale
persons and service technicians. Besides these, organizations undertake special
Listening Responding Improving
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market research projects to know their existing and prospective customers. The
knowledge of the customers involve information in the following areas:
What consumers buy
Why they buy
When they buy
Where they buy
How often they buy
How often they use the product
What are the service requirements
How customer interacts with the organization
What are the modifications in the product/ service required by the
customer
Better knowledge of the customer helps an organization in devising strategies in
the following areas:
Customer care mechanism
Marketing communication plans
Market segmentation
Targeting of consumers
Positioning of products
New product development/ product innovations
New market penetration
4. What are customer touch points and moment of truth?
The organization and the customer both have to interact with each other. A
customer has a particular experience whenever he comes in contact with an
organization, its employees, its products/services or any other channel of
interaction. These experiences of touching the brand and getting associated with
the organization creates an impact in the mind of a customer. These touch points
generate the moment of truth, wherein a customer perceives the experience of
interaction either as good or bad, constructive or destructive, positive or negative.
It is the quality of these moment of truth that decide customers long term
association and involvement with the brand/ service.
The first touch point occurs when a customer becomes aware of the brand or the
point. Multiple experiences at individual touch points create an overall impression
in the mind of the customer. It is the multiple interactions over a long period of
time that strongly bind the customer emotionally and psychologically. For this to
happen there should be consistency in positive experiences, otherwise there will
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be a diffused perception in the mind of the customer. A large number of touch
points associated with overall customer experience makes it a complex process
demanding cautious handling of each touch point by the organization.
5. What is customer life cycle? Explain pictorially be means of any example.
The customer life cycle is the journey of a customer from getting attention to
becoming a customer and finally being retained and associated for a long time
with an organization. The behavior of a customer is different during different
phases of this life cycle and is dependent on various exogenous and
endogenous factors. An individual or organization becomes the customer if the
perception of expected value from the purchase is more than the money being
paid for the product or service. However this association will result into a
relationship only if the value perceived is realized by the customer. So the
concept goes beyond selling the product or service. The experiences of thecustomer during multiple individual interactions for the consumption of
product/services and service requirements convert the customer into a loyal or
lapsed customer. If the customer is satisfied during most of these interactions, he
may continue to use the product or subscription of service in spite of attractive
campaigns by the competitors. To make the customer undeterred by market
conditions and continuous bombardment of marketing stimuli from the
competitors in the form of their aggressive promotional campaigns, it is important
to convert the customer into a loyal customer and subsequently turning him into
an advocate of the organization.
Organizational
Process
Employees
Mailers
Brands
Publicit
Customers
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Customer life cycle.
6. Explain the differences between traditional marketing approach and relationshipmarketing approach.
The traditional marketing mix approach emphasized only on the importance of
four fundamental P's of marketing ie; Product, Promotion, Place and Price. The
marketers thought of attracting the customers with innovations in product,
creating brand image by promoting the same, having efficient sales and
distribution network and offering an attractive price for the product. The
promotion was targeted towards brand management, communicating product
features and price offerings through mass communication. The market research
was meant only to find out why the products were not being sold or why the
market share was falling. The only focus was to acquire new customers so as to
increase the market share. There was no focus on retention of customers or
creating a sustainable relationship with them.
However in today's competitive market, organizations cannot survive just by
making good products and price offerings. The market situations have changed
and it is tough to retain customers. Multiple and highly innovative media are
explored by the organizations to connect with customers. In such a scenario,
Market Suspect
ProspectLapsed
customersLoyal
customer
Customer
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relationship marketing is the answer to maintain contact with customers
continuously and sustain a relationship with them.
Traditional Marketing
Relationship marketing is an ongoing process of continued interaction with
customers through multiple touch points and channels, so as to build a bond
between customers and organization.It is not a tool or technique within an organization, but an organizational
pervasive approach that establishes long term relations which result in customer
loyalty and are a step ahead of generating customer advocacy. Each member of
the organization, irrespective of the hierarchical level, is responsible for
developing relations with the customers.
Marketing
mix
Product
Promotion
Price
Place
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Relationship Management.
7. Explain the organizational pervasive approach to relationship marketing.
Relationship marketing is an ongoing process of continued interaction withcustomers through multiple touch points and channels, so as to build a bond
between customers and organization.
It is not a tool or technique within an organization, but an organizational
pervasive approach that establishes long term relations which result in customer
loyalty and are a step ahead of generating customer advocacy. Each member of
the organization, irrespective of the hierarchical level, is responsible for
developing relations with the customers. It is a holistic approach comprising of
interrelated series of marketing efforts instead of single unconnected events. The
emphasis is not on acquiring new customers but on making existing customers
happy and satisfied which will result in an expanded customer base.
Customer touch points, which were predominantly personal touch points are now
changing to technological driven interaction. The customer interacts with an
organization through a variety of channels and if individual interaction has no
connection with the past interaction then the customer feels loss of identity and
insensitivity in such an interaction. To avoid this scenario relationship marketing
Customer Touch Point
Interaction
Relationships
Customer Loyalty
Customer Advocacy
Relationship management
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focuses on the process of interaction of the customer with the organization in
totality, rather than discrete event based interactions.
8. What is customer lifetime value? Explain pictorially by means of any
example.
Relationship marketing is a strainous and cost intensive process, organizations
may not give the same level of attention to all their customers. They will have to
segregate customers giving high profitability to them in comparison to the
customers who are frequent users of their products. Without knowing the value of
the customer, it is difficult to know how the company should invest in acquiring
and retaining the customer. The customer lifetime value (CLTV) is the net sale
achieved from the customer during the entire period of his stay with the
organization. In this approach the customers are treated as assets and the
company wants to know how much is the return from these assets. CLTVincludes the total financial contribution of a customer over the lifetime of that
customer's relationship with a company. Calculating a customer's lifetime value
requires the cost of acquiring the customer, stream of revenues coming from
customer and computations of the recurring costs of delivering services to the
customerr.
9. What is service level agreement (SLA)? What are the processes involved in
preparing a SLA? What are the contents of SLA?
Service Level Agreement is a tool for formalizing the relationships with thecustomers. It is mainly used for enterprise customers and high value customers.
The SLA is a contract between the service providing organization and its
customer or between two organizations, in which one is getting some service
from the other. It is a means to quantify and define the expectations from each
other. The SLA is that part of a service contract where the level of service is
formally defined. An SLA is a formally negotiated and written agreement between
Recurring
costs
Recurring
revenues
Life span of
customer
Net margins
Cumulative
mar ins
Acquisition
cost
Lifetime
value
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two parties- the service provider and the service receiver. It is a contract that
exists between customers and service providers that records the common
understanding about services, priorities, responsibilities and other parameters
which are collectively called level of service. The service organizations try to
build long term relationships with high value customers by signing the SLA.
Besides clarifying the operational and quality parameters to the customers, SLA's
form the foundation for organizational internal processes and service delivery
mechanism.
Preparing an SLA:
Developing and documenting an SLA involves finding out key parameters that
determine quality of service expected by the customer, their method of
measurement and their expected value. This process involves the following
steps:
Identifying key service parameters that are linked to service level.
Defining service level objectives. Defining the target level of each parameter.
Establishing accountability for meeting these parameter levels.
Establishing linkage of these parameters to commercial reward and
payment system
Defining actions and liabilities for non compliances.
A well documented SLA should create self confidence in the mind of the
customer that he will get an appropriate level of service.
Contents of an SLA:
A well documented SLA should contain the following:
Scope and objectives
Description of service
Service level matrix
Roles and responsibilities of service provider
Roles and responsibilities of the customer
Performance tracking and reporting method
Escalation procedure
Compensation in case of non compliance
10. Define customer relationship management? Explain pictorially the integratedapproach of crm?
CRM is an approach implemented by an organization in which it integrates its
strategy, business processes and functionalities to build up, maintain and expand
relationships with customers. CRM is a way of ensuring customer loyalty by
being sensitive to the needs of customers. It is an inherent philosophy in any
organization to create, maintain, sustain and develop the customer base. CRM
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creates mutually beneficial relationships with customers. The continuous
expansion of satisfied customer base is the end result of CRM
CRM
Strategy
Businessprocess
Functionalities
People
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Integrated approach to CRM
Crm is not just a software application to be implemented in an organization. It is
the way of working of an organizatio. It is the central theme on the basis of which
all business processes are designed and all resources including human capital
are oriented to achieve stronger ties with customers.
11. What is customer relationship framework? Explain pictorially.
Customer relationship framework is a coordinated approach involving the
following:
Know your customer
Before initiating a relationship with a customer, it is imperative to know thecustomer. If the customer interacts with the organization, the touch points
of the organization should be capable of extracting and recording the
information of the customer. If the organization wishes to initiate
interactions with the customer, it should have all possible information
about the customer well in advance and, subsequently, it should be
capable of capturing the data for future.
Recognize your customer
During the subsequent interactions with the customer, the organization
should be able to recognize the customer. Recognition is necessary so
that each transaction is not an isolated one, but should be an extension of
previous interactions. There are various means and ways to recognize the
customers, a few examples are as follows:
a) Calling line identification (CLI) is used in many call centers to
recognize the calling customer and on the basis of this all available
Sustain
Maintain
Create
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information of the customer and his previous interactions are made
available to the call center agents.
b) Customer mobile numbers are registered to identify and recognize
the customers.
If the organization fails to recognize a customer in subsequenttransactions, the link will be isolated. That is why recognition of customers
is very important and it will form the foundation of relationship.
Customer Relationship Framework
Value Addition through Interaction
Only an efficient method of recognition of customer is not sufficient. The
interaction should result in some value addition to the customer. If a creditcard holder calls the call center of the company to inquire about payment
details, he should be recognized and greeted by the call center agent.
This will be possible only if the call center agent has the appropriate and
relevant details of the customer available at his desktop.
Interdependence and relationships
Know your
customer
Recognize your
customer
Interdependence Value through
Interaction
Relationship
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If the customer is satisfied with the delivery of the service, there will be
value addition because of this interaction. Such repeated interactions
create interdependence between the customer and the organization which
subsequently results in stronger relationships between them.
12. What are the levels of CRM?
There are two levels of CRM and they are as follows:
Operational CRM:
This takes care of individual transactions and is used by operational staff.
Interactions by the customers are stored in the database and the same
are used later by services, sales, and marketing staff for operational
decisions. Operational CRM processes customer data for a variety of
purposes such as:
a) Customer service management
b) Managing campaignsc) Enterprise marketing automation
d) Sales force automation
e) Sales management system
Analytical CRM:
This is the use of analysis and reports of historic data captured over a
period of time to take decisions by the senior management on what should
happen. Such decisions are not day-to-day operational decisions; but
these are strategic decisions which would affect the business as a whole.
CRM analytics also give insights into customer satisfaction level and
customer loyalty. These reports can be further analyzed to take corrective
actions. Analytical CRM analyses customer data for a variety of purposes:
a) Designing and executing targeted marketing campaigns
b) Designing and executing sales campaigns
c) Designing and executing customer information campaigns
d) Analyzing customer behavior in order to make decisions relating to
product up gradation, new product development, service delivery
process re- engineering.
e) Management information system
f) Designing and executing sales and distribution strategies and
supply chain management.
13. What is customer loyalty? What are the stages in graduation of customer
organizational relationship? What are the stages of association of customer?
The term loyalty is used to describe the post purchase behavior of customer,
wherein the customer indulges in repeat purchases of the same brand/ service
offered by an organization over a period of time. Customer loyalty management
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is a continuous process, a programme, or a group of programes, designed with
the objectives of keeping a customer satisfied so that he or she will provide more
business. Customer loyalty can be achieved in some cases by offering a quality
product with a guarantee/ warranty. Some of the methods of benefiting
customers loyalty are through offers, coupons, low interest rates etc.
Stages of graduation of customer organizational relationship are as follow:
Prospect: the prospect is an individual or organization in the market, which
fulfills the requirement of the marketer's definition of target.
Customer: when the prospect is attracted by the offering of the marketer
and purchases it, he or she becomes a customer.
Client: when the customer buys the product several times, he is referred to
as a client.
Support: when the customer is very much satisfied with the product, he
starts telling about the product to his acquaintances, thus promoting the
product through word of mouth. Advocate: a supporter who besides referring the product or services to
others, proactively works to enhance the company's product or services is
referred to as an advocate.
Partner: an advocate becomes a partner when he becomes actively
involved in the decisions of the company.
Stages of association of customer are as follows:
Customer satisfaction: it is the function of product/ service quality, post
purchase support and realization of the product value by the customer.
Repurchase: the customer will repurchase the product or continue to
subscribe to the service, if he/ she is satisfied and is convinced that other
alternatives in the market are not capable of providing a better value.
Recommendation: the customer not only purchases the product, but also
becomes its patron and advocates the product to others. It happens only if
the product is able to generate a strong emotional bonding and ownership
for a prolonged period.
14. How do organizations plan and manage loyalty programms?
A typical loyalty management programme revolves around measure, plan,
communicate, do, check, and improve cycle.
Measure the current loyalty levels through surveys and behavioral data.This needs market research through well structured questionnaire and
internal analysis to find out where the company lacks in terms of its
products, policies, and procedures. Voice of customers in terms of
feedback from the customers is needed periodically to measure current
loyalty levels.
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Benchmark current loyalty levels against those of competitors and analysis
should be done accordingly.
Identify the dimensions of performance of the product that matter most to
customers and track them rigorously.
Systematically communicated survey feedback throughout the organization
for higher involvement of each member of the organization.
Build loyalty and retention programmes and integrate them into the
company's product, policy and procedures.
Develop new programmes to reduce customer churn rates and to compete
in the market.
Revise policies that drive short term results at the expense of long term
loyalty, such as high service fees and discounts given only to new
customer; instead with high lifetime value should be given preferential
treatment.
An individual loyalty scheme is build up around these steps:
Outline objectives of the loyalty programme/ scheme. Objectives should be
measurable and realistic as far as possible.
Prepare budget according to market forces, competitors analysis etc and
get financial approval within the organization
Determine the eligibility for rewarding the customer as per customer lifetime
value or any other relevant parameter.
Select appropriate reward methods for the customer. Care should be taken
so as to ensure more purchases get better tangible and intangiblerewards.
Explore partnerships with others for cross selling/ up selling distribution and
promotion
Design and prepare organizational structure and processes to implement
the programme, including training of the staff where ever required.
Integrate the programme with existing tariff/pricing plans, distribution
networks and customer touch points
Monitor the implementation of the programme and take corrective actions to
ensure its success in terms of revised service capacity planning and other
measures.
Take corrective action including restructuring and redesigning distribution
networks, new partnerships with intermediaries.
15. What are the various types of loyalty programmes? Why do loyalty programmes
fail?
The following are the most common types of loyalty programmes:
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Appreciation: in such programmes, the customer doing repeat purchase or
subscribing to service for longer periods are given additional product/
service without extra cost; for example, subscribers are given free
additional talktime by the mobile service providers.
Rewards: in these programmes, customers are given special rewards
unrelated to a company's product/service; for example, reward points
given by a credit card company which can be used by the customers to
buy amongst a variety of products.
Partnership: companies sign up special long term agreements to benefit
from each other. This provides the framework for repeated purchase from
each other. Companies can even plan to do partnership with retail
customers by innovating special schemes.
Rebate: here companies give preferential pricing schemes to loyal
customers; for example, the subscribers who use more talktime are given
special tariff plans by mobile service providers. Affinity: under such schemes, companies try to earn goodwill of the
customers by offering non tangible rewards and getting involved in social
responsibility.
Reasons for the failure of loyalty programme are as follows:
Every loyalty programme is not successful. Loyalty programme should be
carefully designed and implemented. They can fail or be ineffective because of:
Poor design
Insufficient/ unattractive reward policy
Poor implementation of the programme
Programme not communicated properly
Programme not integrated with organizational policies and procedure.