Customer relationship management unit 1 introduction
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Transcript of Customer relationship management unit 1 introduction
BA 7015 CUSTOMER RELATIONSHIP MANAGEMENT
UNIT1: INTRODUCTION
Prepared and presented by,N. Ganesha Pandian,Assistant professor,
Madurai School of management.
II ye
ar II
I Sem
este
r Ac
adem
ic ye
ar 2
016-
2017
CONTENTS Definitions Concepts and context of relationship
management Evolution Transactional Vs relationship approach CRM as a strategic marketing tool CRM significance to the stakeholders
MEANING OF CRM Customer relationship management can be
defined as a business philosophy and set of strategies, programs, and systems that focuses on identifying and building loyalty with a marketer’s profitable customers.
The goal is to develop a base of loyal customers who patronize the retailer frequently
DEFINITION OF CRM According to Gartner, “CRM is a business
strategy designed to optimize profitability, revenue and customer satisfaction”.
According to PWC consulting, “CRM is a business strategy that aims to understand/appreciate, manage and personalize the needs of an organization’s current and potential customers”.
CRM consists of three definitional components in its architectural structure:
1. Customer2. Relationship3. Management
CONCEPTS AND CONTEXT OF RELATIONSHIP MANAGEMENT Relationship management is a strategy
employed by an organization in which a continuous level of engagement is maintained between the organization and its audience.
Relationship management aims to create a partnership between the organization and its audience rather than consider relationship merely transactional.
Concepts and context of Relationship management
Quality
Commitment
Promise Trust
Shared goals and mutual
benefits
Satisfaction
EVOLUTION OF CRM The concept of customer relationship
management came into vogue in the mid 1990’s, CRM has undergone a substantial evolution.
1. First generation (Functional CRM approach)- Sales force automation (SFA)-Customer service and support (CSS)
2. Second generation (customer facing front end approach)
3. Third generation (strategic approach)
TYPES OF CRM AND ITS DOMAIN CHARACTERISTICS1. Strategic CRM: is a core customer
centric business strategy aims at winning and keeping profitable customers
2. Operational CRM: focuses on the automation of customer facing processes such as selling, marketing and customer service
CONTD…3. Analytical CRM: focuses on the
intelligent mining of customer related data for strategical or tactical purposes
4. Collaborative CRM: applies technology across organizational boundaries with a view to optimizing company, partner and customer value
STRATEGIC CRM Product oriented Production oriented Sales oriented A customer / Market oriented
OPERATIONAL CRM
1. Marketing automation
Market segmentation
Campaign management
Event based marketing
2. Sale force automation
Account Management
Lead management Opportunity
managementPipeline
managementContract
managementQuotation and
proposal management
Product configuration
CONTD…3. Service Automation Case management Inbound communications management Queuing and routing Service level management
TRANSACTIONAL VS RELATIONSHIP MARKETING Transactional marketing or mass
marketing is on individual transaction and does not concern continuous relationship with customers
Relationship marketing focus on continuous multiple transactions rather than isolated individual transactions.
TRANSITION FROM TRADITIONAL MARKETING TO RELATIONSHIP
MARKETING
RELATIONSHIP MARKETING
TRANSACTIONAL MARKETING
Customer retention
Customer acquisition
Functionally based marketing
Cross- Functionally based marketing
WHAT IS RELATIONSHIP MARKETING? Relationship marketing is the practice of using
marketing activities to establish, develop, and maintain successful long term relationships.
Relationship marketing has numerous implications for market planning, employee training, advertising, promotion, public relations, direct marketing, package design and more.
Mass Marketing
Discrete transactions
Short term emphasis
One-way communication
Acquisition focus
Share of market
Product differentiation
Relationship marketing
Continuing transaction
Long term emphasis
Two-way communication and
collaboration
Retention focus
Share of mind
Customer differentiation
CHARACTERISTICS OF CRM Share of customer Lifetime value of customers Customer equity Greater focus on high value customers Use of technology
KEY PRINCIPLES OF CRM Understand what motivates customers Treat customers individually Differentiate offerings Increase loyalty Providing efficient and consistent
service Selecting ‘good’ customers instead of
‘bad’ customers based on lifetime value
Manage customer as an asset Rate customers on the basis of their
profit stream – current and future potential
Using information based decision making capabilities
Implement innovative ways and means to get close to the customer – Hear the voice of customers
GOALS OF CRM To provide updated information To customize strategies To anticipate problems To prompt follow-up To establish problem solving mechanism To assess customer interest To integrate functional system
CRM AS A STRATEGIC MARKETING TOOL Strategic CRM is a core customer centric
business strategy aims at winning and keeping profitable customers
CRM as a effective strategic marketing tool acts as a competitive advantage
CRM helps in strategic planning and reduces cost to serve
CRM SIGNIFICANCE TO STAKEHOLDERS Business owners VP of sales and sales manager Salespeople Customer service/ support manager Customer service representatives Business development/ marketing manager Financial perspective – CFO/Controller/Accounting IT department All other employees
SIGNIFICANCE OF CRM Increased sales revenue and reduced
cost of sales Increased customer satisfaction Lower costs of recruiting customers Increased customer retention Evaluation of customer profitability Excellent customer service
Customer knowledge Customization Positive referral creation Reduced cost through customer self-
service Opportunity to Cross-sell and up-sell Decreased general sales and marketing
administrative costs
CONTD…
LIMITATIONS OF CRM Requires top management support Confusion in attributes Problem in implementation Building relationship Not functionally organized Customer dissatisfaction Front line staff
MISCONCEPTIONS ABOUT CRM
1. CRM is a database marketing2. CRM is a marketing process3. CRM is an IT issue 4. CRM is about loyalty scheme5. CRM can be implemented by any
company
WHY COMPANIES WANT RELATIONSHIPS WITH CUSTOMERS Reduced marketing costs Better customer insight Life time value The goal of maintaining customer base
must be to retain existing customers and recruit new customers that have future profit potential or are important for other strategic purposes
B2C CONTEXT1. Recognition2. Personalization3. Power4. Risk reduction5. Status 6. Affiliation
THANK YOU