Customer Relationship Management...Customer Relationship Management Dr. Kalpana Dube Sr. Professor...
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Customer Relationship Management Dr. Kalpana Dube Sr. Professor (Fin. & PPP) IRITM/Lucknow
Transcript of Customer Relationship Management...Customer Relationship Management Dr. Kalpana Dube Sr. Professor...
Customer Relationship Management
Dr. Kalpana DubeSr. Professor (Fin. & PPP)
IRITM/Lucknow
Definition of CRM
CRM is thestrategic process of
selecting the customersa firm can most profitably serve and
shaping the interactionsbetween a company and these customers with the
objective ofoptimizing current and future value
of customers for the company.
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TraditionalApproach
Today’sApproach
Natureofexchange Transaction RelationshipMarketing Customeracquisition CustomerretentionFocus Products CustomersBuyersare Ill-Informed Well-Informed
Powerlieswith Sellers Buyers
Productsandservices Standardized,made-to-inventory
Customized,made-to-order
Communication Massapproach Targetedapproach
Performancemetrics Productprofit,volume,marketshare
Customerprofit,life-timevalue,loyalty
A Changing World – Customers
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CRM Strategy: Objectives
•Why do you want to engage in customerrelationship management?–Greater efficacy : Better customer insights enable a firm to
better match the right products and services with the rightcustomers at the right time for the right price in the rightquantities
–Strategic CRM: hard to implement, requires substantialchanges, significant potential for improving businessperformance
•IT is only an enabler
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CRM Strategy: Challenges
•CRM: Better customer insights–What kind of data must be collected and analyzed to better
understand customers and develop a CRM strategy?–What are key implementation obstacles?–How big is the potential for improved performance?–What else is needed to develop lasting and profitable
customer relationships?
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CRM Strategy: Basics
•Relationship has to be mutually beneficial (win-win)–Value to the customer–Value from the customer
•Business objective is to maximize value from thecustomer–Without delivering superior value to the customer there is
no business
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CRM Strategy: Objectives
•Why do you want to engage in customerrelationship management?–Greater efficiency : Do what you do at lower cost
o
o
Better allocate sales peopleReplace snail-mail with e-mail, telephone access with Internetaccess
–Tactical CRM: can be implemented relatively quickly, buthas limited potential to improve business performance
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Competitive Advantage With CRM
•Competitive advantage can be defined as …
… a company’s ability to outperform rivals interms of sustained profitability .
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Profit-earningpotential of a
capability
Is it unique?
Is itsustainable?
Is it valuable?
How distinctive?
How embedded?How imitable?
How substitutable?
How relevant?
How core?
Establishing Competitive AdvantageCompetitive Advantage
Customer & Consumer Focus
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• Understand the consumer– Look for dissatisfied consumers across segments and
identify a new way to configure segments– Focus on the decision making process, including the
consumption stage– Identify the different members of the decision making unit
and understand the role they play and what drives theirdecision making
– Provide ONLY the features consumers want– The entire organization needs to be consumer focused
Customer-Focused Management
CustomerBehavior
UnderstandingMarkets
CreatingValue
MarketAnalysis
MarketingStrategy
MarketingMix
OrganizationalGoals
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Whatever CRM Is – Firms Invest in ITApproximate Worldwide CRM Investments
(applications, hardware and services)
47.5
40.0
34.6
29.725.9
23.720.0
13.5
SpendingsYear-to-Year Growth %
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ScheduledA irlines
65
60
85
80
75
70
90
1994 1996 1998 2000 20022004
-8.4%
H o useho ldA ppliances
65
60
85
80
75
70
90
1994 1996 1998 2000 2002
-3.5%
C o mmercialB anks
65
60
85
80
75
70
90
1994 1996 1998 2000 2002
-2.7%
P arcel D elivery
65
60
85
80
75
70
90
1994 1996 1998 2000 2002
-2.5%
P ersonalC omputers
65
60
85
80
75
70
90
1994 1996 1998 2000 2002
-9.0%
P ublishing/N ewspapers
65
60
85
80
75
70
90
1994 1996 1998 2000 2002
-12.5%
Source: http://www.theacsi.org, University of Michigan
Decreasing Customer Satisfaction
American Customer Satisfaction Index (ASCI)
more than 50.000 consumes,measuring overall satisfaction with products and services.
What is Strategy?
What is Strategy?
An organization’s approach towards long-term value creation (& capture)…
How to win?(Competitive Advantage)
Where to play?(Scope)
External EnvironmentOrganizational Resources & Capabilities
What really is “value creation”?
Willingness to pay (WTP): The value that thebuyer attaches to the product or service, i.e.,
the most he/she could ever pay for it
Cost to Deliver (CTD): Opportunity cost of all inputs (e.g., raw materials, capital and labor) required to produce one unit of the product.
Customers
Company
Suppliers
More on “Willingness to Pay” (WTP)…
Thank You
