CRM – UNIT 1

J.JASMINE CHRISTINA MAGDALENE

INTRODUCTION

• Customer Relationship Management (CRM) in use since the early 1990s.
• The meaning of the three-letter acronym CRM is contested.
• For example, CRM means Customer Relationship Management, others have used the acronym to mean Customer Relationship Marketing.
• Information technology companies tend to use CRM to describe the software applications that are used to support the marketing, selling and service functions of businesses.
• This equates CRM with technology.

DEFINITIONS TO CRM

• CRM is an information industry term for methodologies, software and usually Internet capabilities that help an enterprise manage customer relationships in an organized way
• CRM is the process of managing all aspects of interaction a company has with its customers, including prospecting, sales and service.
• CRM is an integrated approach to identifying, acquiring and retaining customers.

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TYPES OF CRM

STRATEGIC CRM

• Focuses on the development of a customer-centric business culture
• Winning and keeping customers by creating and delivering value better than competitors.
• The culture is reflected in leadership behaviors, design of formal systems and the myths and stories that are created within the firm.
• Resources to be allocated where they would best enhance customer value, reward systems to promote employee behavior to satisfy and retain customers and customer information to be collected, shared and applied across the business.

STRATEGIC CRM

• The heroes of customer-centric businesses deliver outstanding value or service to customers.
• Many businesses claim to be customer-centric, customer-led, customer focused or customer-oriented but few are.
• Customer-centricity competes with other business logics.
• Kotler identifies three other major business orientations: product, production and selling.

KOTLER’S MAJOR BUSINESS ORIENTATION

• Product-oriented businesses believe that customers choose products with the best quality, performance, design or features.
• These are often highly innovative and entrepreneurial firms.
• Many new business start-ups are product-oriented.
• In these firms, the customer’s voice is missing when important marketing, selling or service decisions are made.
• Little or no customer research is conducted.
• Management makes assumptions about what customers want and/or provides visionary leadership for the market.
• The most iconic example of product-orientation is Apple.

PRODUCT-ORIENTED

• Leading fashion houses tend to be product-oriented
• These companies often over-specify or over-engineer (market) and hence too costly.
• Price-insensitive customers marketers(‘innovators’) respond positively but they are in small segment

PRODUCTION ORIENTED BUSINESSES

• Focuses on operational excellence.
• They seek to offer the customers the best value for money, time and/or effort.
• Strives to keep operating costs low and develop standardized offers and routes to market.
• Complexity, customization and innovation are unappealing to production-oriented businesses.
• Rarely are first to market with the best new offer.
• Focus their innovation on supply chain optimization and simplification.
• Serve customers who want ‘good-enough’, low-priced products and services.

PRODUCTION-ORIENTED BUSINESSES

• Production-oriented businesses choose not to believe that customers have unique needs or wants.
• It is possible to be highly profitable by being the lowest cost business player, for example D-Mart.
• Moreover, an excessive focus on operational efficiency might make you blind to disruptive changes; making cheap products that no one wants to buy is not a sustainable strategy.

SALES-ORIENTED BUSINESSES

• Make the assumption that if they invest enough in advertising, selling, public relations (PR) and sales promotion, customers will be persuaded to buy.
• Very often, a sales orientation follows a production orientation.
• The company produces low-cost products and then has to promote them heavily to shift inventory – a ‘make and sell’ approach.
• The deal-maker and persuader is king in such firms.

SALES-ORIENTED BUSINESSES

• In markets that are growing rapidly, such an approach can promote strong market share growth and attendant economies of scale.
• Many large technology firms have promoted an emphasis on selling.
• The risks of this orientation are twofold:
• (1) winning large contracts is not the same thing as making money from them (2) focus on the immediate sale

CUSTOMER OR MARKET-ORIENTED COMPANY

• Shares a set of beliefs about putting the customer first.
• Collects, disseminates and uses customer and competitive information to develop better-value propositions for customers.
• Customer-centric firm - learning firm - constantly adapts to customer requirements and competitive conditions.
• Customer-centricity correlates strongly to business performance.
• Managers argue customer-centricity must be right for all companies - may not be true all times.

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OPERATIONAL CRM

• Operational CRM automates customer-facing business processes.
• CRM software applications enable the marketing, selling and service functions to be automated and integrated.

MARKETING AUTOMATION

• Marketing automation (MA) applies technology to marketing processes.
• Campaign management modules allow marketers to use customer-related data in order to develop, execute and evaluate targeted communications and offers.
• Customer segmentation for campaigning purposes - possible - individual customer, enabling unique communications to be designed.
• Multi-channel environments - campaign management is challenging.

Ex., lifestyle

• Integration of communication and evaluation of performance, requires substantial amount of technology-aided coordination across these channels.

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MARKETING AUTOMATION

• Event-based or trigger marketing - describes messaging and offer development to customers at particular time.
• An event triggers the communication and offer.
• Event-based campaigns can be initiated by customer behaviors or contextual conditions.
• A call to a contact center is an example of a customer-initiated event.
• Credit-card customer calls a contact center to enquire about the current rate of interest

MARKETING AUTOMATION

• This event may trigger an offer designed to retain the customer.
• Examples of contextual events are the birth of a child or a public holiday.
• Both of these indicate potential changes in buyer behavior, initiating a marketing response.
• Event-based marketing also occurs in the business-to-business context.
• The event may be a change of personnel on the customer-side, the approaching expiry of a contract or a request for information (RFI).

• Real-time marketing (automation), combining predictive modelling and work-flow automation - companies - make relevant offers - customers as they interact with company technologies (website and retail outlet).
• As consumers share more data with companies, and as the company’s ability to analyze those data improves, online marketing increasingly occurs in real time.
• The choices the customer makes - navigates through the Web - enquiries she makes - her profile enable firms to predict which products and services will be most appealing to her: the so-called Next Best Offer or NBO.

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• This offer can be refreshed in real time as a result of customer behaviour online.
• E-retailers such as Amazon continually refresh their recommendations as a result of customer searches, and Google changes the advertising it pushes to you as a function of your location and search behaviours.

SALES FORCE AUTOMATION

• SFA applies technology to the management of a company’s selling activities.
• The selling process can be decomposed into a number of stages such as lead generation, lead qualification, lead nurturing, needs identification, development of specifications, proposal generation, proposal presentation, handling objections and closing the sale.

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• SFA software enables companies to assign leads automatically and track opportunities as they progress through the sales pipeline towards closure.
• Opportunity management lets users identify and progress opportunities-to-sell from lead status through to closure and beyond, into after-sales support.
• Opportunity management software usually contains lead management and sales forecasting applications.

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MISUNDERSTANDINGS ABOUT CRM

• MISUNDERSTANDING 1: CRM IS MERELY DATABASE MARKETING
• Database marketing is concerned with building and exploiting high-quality customer data - bases for marketing purposes.
• Whereas most large and medium-sized companies do indeed build and exploit customer databases, CRM is much wider in scope than database marketing.
• A lot of what we have described above as analytical CRM has the appearance of database marketing.

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MISUNDERSTANDING 2: CRM IS A MARKETING PROCESS

• CRM software applications are used for many marketing activities: market segmentation, customer acquisition, customer retention and customer development (cross-selling and upselling), for example.
• However, operational CRM extends into selling and service functions.
• The deployment of CRM software to support a company’s mission to become more customer-centric often means that customer-related data are shared more widely throughout the enterprise than the marketing function alone.

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MISUNDERSTANDING 3: CRM IS AN IT ISSUE

• There is no doubt that IT is a necessary enabler of CRM in most organizations, given the need to store, analyze and distribute huge amounts of data quickly throughout the organization and its business partners.
• However, two other important parts of most CRM projects are people and process.

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MISUNDERSTANDING 4: CRM IS ABOUT LOYALTY SCHEMES

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• Loyalty schemes are commonplace in many industries: car hire, airlines, food retail and hotels
• Loyalty schemes may play two roles in CRM implementations.
• First, they generate data that can be used to guide customer acquisition, retention and development.
• Second, loyalty schemes may serve as an exit barrier.

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MISUNDERSTANDING 5: CRM CAN BE IMPLEMENTED BY ANY COMPANY

• Strategic CRM can, indeed, be implemented in any company.
• Every organization can be driven by a desire to be more customer-centric.
• Any company can also try to implement operational CRM.
• Any company with a sales force can automate its selling, lead management and contact management processes.

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MISUNDERSTANDING 5: CRM CAN BE IMPLEMENTED BY ANY COMPANY

• Analytical CRM is a different matter, being based on customer-related data.
• At the very least, data are needed to identify which customers are likely to generate most value in the future, and to identify within the customer base the segments or customers that have different requirements

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DEFINING CRM

• CRM is the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit.
• It is grounded on high-quality customer-related data and enabled by information technology.

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CRM CONSTITUENCIES

• COMPANIES IMPLEMENTING CRM
• Many companies have implemented CRM.
• Early adopters were larger companies in financial services, telecommunications and manufacturing in the USA and Europe.
• Medium-sized businesses are following.
• There is still potential for the CRM message to reach smaller companies, other worldwide markets, not-for-profits and new business start-ups.

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• CUSTOMERS AND PARTNERS OF THOSE COMPANIES
• The customers and partners of companies that implement CRM are a particularly important constituency.
• Because CRM influences customer experience, it can impact on customer satisfaction ratings, and influence loyalty to the supplier.

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VENDORS OF CRM SYSTEMS.

• Vendors of CRM include Oracle, IBM, SAP and SAS.
• There has been considerable consolidation of the CRM vendor marketplace in recent years.
• PeopleSoft and Siebel, two of the pioneering CRM vendors, are now integrated into Oracle.
• IBM has been integrating analytic solution providers as it builds a more comprehensive analytical CRM capability.
• Vendors sell licences to companies, and install CRM software on the customer’s servers.

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CRM CLOUD SOLUTIONS PROVIDERS

COMPANIES IMPLEMENTING CRM CAN ALSO CHOOSE TO ACCESS CRM FUNCTIONALITY ON A SUBSCRIPTION BASIS THROUGH HOSTED CRM VENDORS SUCH AS SALESFORCE.COM,

• RightNow (part of Oracle), Microsoft Dynamics and NetSuite.
• Clients upload their customer data to the host’s servers and interact with the data using their web browsers.

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SOCIAL MEDIA PLAYERS

• Facebook, Twitter and some other platforms are building enormous communities that generate valuable data about people’s preferences, activities, friends and wants.

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• Vendors of CRM hardware and infrastructure.
• Hardware and infrastructure vendors provide the technological foundations for CRM implementations.
• They supply technologies such as servers, computers, hand-held and mobile devices, call centre hardware and telephony systems.

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MANAGEMENT CONSULTANTS

• Consultancies offer clients a diverse range of CRM-related capabilities such as strategy, business, application and technical consulting.
• Consultants can help companies implementing CRM in several ways: systems integration, choosing between different vendors, developing implementation plans and project management as the implementation is rolled out.

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COMMERCIAL CONTEXTS OF CRM

• BANKS
• deal with a large number of individual retail customers.
• They want CRM for its analytical capability to help them manage customer defection (churn) rates and to enhance cross-sell performance.
• Data mining techniques can be used to identify which customers are likely to defect, what can be done to win them back, which customers are hot prospects for cross-sell offers and how best to communicate those offers.
• Banks want to win a greater share of customer spend (share-of-wallet) on financial services.

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AUTO MANUFACTURERS

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• sell through distributor/dealer networks.
• They have little contact with the end-user owner or driver.
• They use CRM for its ability to help them develop better and more profitable relationships with their distribution networks.
• Being physically disconnected from drivers, they have built websites that enable them to interact with these end-users.
• This has improved their knowledge of customer requirements.

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TECHNOLOGY SOLUTION VENDORS

• manufacture or assemble complex bundles of hardware, software and implementation that are generally sold by partner organizations.
• For example, small innovative software developers have traditionally partnered with companies such as IBM to obtain distribution and sales.
• CRM helps these companies to collect customer information, segment their customer base, automate their sales processes with product configurator software and deliver their customer service online.

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CONSUMER GOODS MANUFACTURERS

• Deal with the retail trade.
• They use CRM to help them develop profitable relationships with retailers.
• CRM helps them understand costs-to serve and customer profitability.
• Key account management practices are applied to strategically significant customers.

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MODELS OF CRM