The Emergence of CRM Practice: Customer Relationship Management

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RELATIONSHIP MANAGEMENT
The Emergence of CRM Practice
The Past:
Looking back at a snapshot history of marketing, we can see the

following clear developments and progression over the last four
decades:
• 1960’s – the era of Mass Marketing, when Gibbs SR toothpaste
began the first marketing of this kind with its black and white
campaign.
• 1970’s – saw the beginning of segmentation, direct mail campaigns

and early telemarketing (such as publishing)
• 1980’s – where Niche marketing made millionaires of those who

were best at it.
• 1990’s – Relationship Marketing. The explosion of telemarketing and

call centres, all set up to develop relationships with customers. The
recognition of the true value of retention and the use of Lifetime Value
as a business case.
In addition to this, a number of key marketing concepts can also be

used to see where CRM has developed from:
• Satisfying Needs, Customer Orientation

• The organisation needs to be arranged so that all functions
contribute
• Profit must be the consequence of delighting customers (Kotler)
Developing customer relationship has historical antecedents going
back into the pre industrial era. Similarly artisans often developed
customized produce for each customer. Such direct interaction led to
relational bonding between the producer and the consumer. It was
only after industrial era’s mass production society and the advent of
the middlemen that there were less frequent interactions between
producers and the consumers leading to transactions oriented
marketing. The production and consumption factions got separated
leading to marketing functions being performed by the middle men
and middlemen are in general oriented towards the economic aspects
of buying since the largest cost is often the cost of goods sold.
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In recent years however, several factors have contributed to the

rapid development and evolution of CRM. These include: -
1. The growing de-intermediation process in many industries due to

the advent of sophisticated computer and telecommunication
technologies that allow producers to directly interact with end-
customers. For example, in many industries such as airlines, banks
insurance, software or household appliances and even consumables,
the de-intermediation process is fast changing the nature of marketing
and consequently making relationship marketing more popular.
Databases and direct marketing tools give them the means to
individualize their marketing efforts.
2. Advances in information technology, networking and manufacturing
technology have helped companies to quickly match competition. As a
result product quality and cost are no longer significant competitive
advantages.
3. The growth in service economy. Since services are typically
produced and delivered at the same institution, it minimizes the role of
the middlemen.
4. Another force driving the adoption of CRM has been the total quality
movement. When companies embraced TQM it became necessary to
involve customers and suppliers in implementing the program at all
levels of the value chain. This needed close working relationships with
the customers. Thus several companies such as Motorola, IBM,
General Motors, Xerox, Ford, Toyota, etc formed partnering relations
with suppliers and customers to practice TQM. Other programs such as
JIT and MRP also made use of interdependent relationships between
suppliers and customers.
5. Customer expectations are changing almost on a daily basis. Newly
Empowered customers who choose how to communicate with the
companies across various available channels. Also nowadays
consumers expect a high degree of personalization.
6. Emerging real time, interactive channels including e-mail, ATMs and
call centre that must be synchronized with customer’s non-electronic
activities. The speed of business change, requiring flexibility and rapid
adoption to technologies.
7. In the current era of hyper competition, marketers are forced to be
more concerned with customer retention and customer loyalty.
8. As several researches have found out retaining customers is less
expensive and more sustainable competitive advantage than acquiring
new ones.
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9. On the supply side it pays more to develop closer relationships with

a few suppliers than to develop more vendors.
10. In addition several marketers are concerned with keeping
customers for life than making one time sale. There is a greater
opportunity for up selling and cross selling. In a recent study, Naidu,
et al(1999) found that relational intensity increased in hospitals facing
a high degree of competitive intensity
11. The globalization of world marketplace makes it necessary to have
global account management for the customers.
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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 improve 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.
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• 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.Retaining existing customers
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CRM Purpose
The overall purpose of CRM is to improve marketing productivity and

enhance value for parties in involved in the relationship. By seeking
and achieving operational goals, such as lower distribution costs,
streamlining order processing and inventory management, reducing
the burden of excessive customer acquisition cost, and through
customer retention economics, firms could achieve greater marketing
efficiencies. They can enhance marketing effectiveness by carefully
selecting, customers for its various programs, individualizing and
personalizing their market offerings to anticipate and serve the
emerging needs of individual customer, building customer loyalty and
commitment, partnering to enter new markets and develop new
products, and redefining the competitive playing field for their
company. Thus, stating the objectives and defining the purpose of
CRM in a company helps clarify the nature of CRM programs and
activities that ought to be performed by the partners. Defining the
purpose would also help in identifying suitable relationship partners
who have necessary expectations and capabilities to fulfill mutual
goals. It will further help in evaluating CRM performance by comparing
results achieved against objectives. These objectives could be specified
as financial goals, marketing goals, strategic goals, operational goals,
and general goals.
Customers are motivated to engage in relational behavior because of

psychological and sociological benefits associated with reduction in
choice decisions. In addition, to their natural inclination of reducing
choices, consumers are motivated to seek the rewards and benefits
associated with CRM programs.
Relational Parties
In the Initial phase, a company has to decide which customer type

and specific customers or customer groups will be the focus of their
CRM activities.
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CRM Programs
A careful review of literature and observation of corporate practices

suggest that there are three types of CRM programs:
 Continuity Marketing
 One-to-One Marketing and,
 Partnering Programs.
These take different forms depending on whether they are meant for
end-consumers, distributor consumers, or business-to-business
customers.
Continuity Marketing
• After- Marketing
• Loyalty Programs
• Cross-Selling
• Continuos Replenishment
• ECR Programs
• Special Sourcing Arrangements
One-to-One Marketing
• Permission Marketing
• Personalization
• Customer Business Development
• Key Account
• Global Account
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Partnering/Company-Marketing
• Affinity Partnering
• Co-Branding
• Logistics Partnering
• Joint Marketing
• Strategic Partnership
• Co-Design
• Co-Development
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.
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.
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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.
CRM Governance Process
• Greater the scope of CRM program and associated tasks, and the
more complex is the composition of the relationship management
team; the more critical is the role specification decision for the
partnering firms.
• It is essential to establish intra-company communication particularly
among all concerned individuals and corporate functions that directly
play a role in managing the relationship with a specific customer or
customer group.
• With mass-market customers frequent face-to-face interactions will
be uneconomical. Thus marketers should create common bonds
through symbolic relationships, endorsements, affinity groups, and
membership benefits or by creating online communities
• Involving customers in the planning process would ensure their
support in plan implementation and achievement of planned goals. All
customers are not willing to participate in the planning process nor is it
possible to involve all of then for relationship marketing programs for
the mass markets.
• Operating process between the company and customer partners:
Operating alignment will be needed in order processing, accounting
and budgeting processes, information systems, merchandising
process, etc
• Human resources decisions are also important in creating the right
organisation climate for managing relationship marketing. Training
employees to interact with customers, to work in teams, and manage
relationship expectations are important. So is the issue of creating the
right motivation through incentives and rewards.
• Periodic evaluation of goals and results, initiating changes in
relationship structure, design or governance process if needed,
creating a system for discussing problems and resolving conflicts.
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CRM Performance Evaluation Process
Without a proper performance metrics to evaluate CRM efforts, it

would be hard to make objective decisions regarding continuation,
modification, enhancement, or termination of CRM programs.
If co-operative and collaborative relationship with the customers is

treated as an intangible asset of the firm, its economic value add can
be assessed using discounted future cash flows estimates. Here the
term relationship equity comes in where you measure the intangible
assets of the firm.
Another global measure used by firms to monitor CRM performance

is the measurement of relationship satisfaction. By measuring
relationship satisfaction, one could estimate the propensity of either
party’s inclination to continue or terminate the relationship. Such
propensity could also be indirectly measured by measuring customer
loyalty.
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CRM Implementation Issues
One of the most interesting aspects of CRM development is the

multitude of customer interfaces that a company has to manage in
today’s context. Until recently, a company’s direct interface with the
customers, if any was primarily through sales people or service agents.
In today’s environment most companies interface with their customers
through a variety of channels including sales people, service
personnel, call centres, Internet websites, marketing departments,
fulfillment houses, market and business development agents, etc. For
large customers it also includes cross-functional teams that may
include personnel from various functional departments. While each of
these units could operate independently, they still need to share
information about individual customers and their interactions with the
company on a real time basis. For example, a customer who just
placed an order on the Internet and subsequently calls the call centre
for order verification expects the call centre staff to know the details of
his or her order history. Similarly a customer approached by a sales
person unaware that she has recently complained about dissatisfactory
customer service, is not likely to be treated kindly by the customer.
Therefore effective CRM requires a front-line information system that

shares relevant customer information across all interface units.
Relational databases, data warehousing and data mining tools are thus
very valuable for CRM systems and solutions.
However, the challenge is to develop and integrated CRM platform

that collects relevant data input at each customer interface and
simultaneously provides knowledge output about the strategy and
tactics suitable to win customer loyalty and support. If a call centre
personnel cannot identify or differentiate a high value customer and
does not know what to up-sell or cross sell to him then it would be a
tremendous loss of opportunity for the company. Although most CRM
software solutions based on relational databases are helping share
customer information, they still do not provide knowledge output to
the front line personnel. CRM solutions platform needs to be based on
interactive technology and processes.
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It should assist the company in developing and enhancing customer

interactions and one-to-one marketing through the help of suitable
intelligent agents that help develop front-line relationship with
customers. Such a system would identify appropriate data inputs at
each customer interaction site and use analytical platforms to generate
appropriate knowledge output for front-line staff during customer
interactions.
In addition, implementation tools to support interactive solutions for

customer profitability analysis, customer segmentation, demand
generation, account planning, opportunity management, contact
management, integrated marketing communication, customer care
strategies, customer problem solving, virtual team management of
large global accounts, and measuring CRM performance would be the
next level of solution sought by most enterprises.
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Information Platform for CRM
Since CRM implementation comprises a significant information

technology (IT) component, these companies have handed over the
responsibility of CRM implementation to information technology
departments. They are focussed on simply installing CRM software
solutions without a CRM strategy or program in place. This leads to
creating an operational tool within the company, but the usability and
effectiveness in producing desirable results from such tools is limited.
CRM tools would be valuable when they are used to identify and
differentiate individual customers and to generate individualized offer
and fulfill customized solutions. The lack of CRM strategy or CRM
programs, would leave the front-line people without any knowledge of
what they should be doing with the additional customer information
that they now have access to. For those who apply themselves and
develop improvised solutions, it could backfire as ad hoc solutions
could cause unintended deterioration in customer relationships.
Appropriate strategy and excellent implementation are both needed for
obtaining successful results.
From a corporate implementation point of view, CRM should not be

misunderstood to simply mean a software solutions implementation
project.
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CRM and Related Concepts

Knowledge Management (KM) with focus on CRM
As Peter Drucker defined “Information is data endowed with

relevance and purpose”.
To effectively implement a CRM solution it is very important to

identify real knowledge about different types of customers (Viz. Most
valued customers, Most growable customers, Below zero customers)
from plethora of internal and external data, figures, surveys, etc. A
straightway technique is to create a data warehouse, thereafter
information which is required to effectively implement principles of
CRM, could be mined out of this data warehouse.
Marketing, sales after-sales people would be knowledge workers.

Front office could be more productive if they could utilize customer
knowledge. Knowledge Management (KM) is about embracing a
diversity of knowledge resources, like legacy systems, existing data
warehouses, portals, websites, customers, suppliers, partners,
external marketing research agencies and cultivating the knowledge
where it resides.
Metrics, ROI, Balance Scorecard method, benchmarking are some of

the common technique of KM system evaluation. KM implementation is
the key to CRM.
It’s a proven fact that 80% of an organisation revenues come form

20% of its customers, it becomes imperative to design CRM solutions
keeping in mind these most valuable customers and to leverage 80%
non structured data of about 20% of these most valuable customers.
Just as more tangible corporate assets like computer systems have a
finite shell life, so too does knowledge, it must be available at the right
time to be able to act upon it. Retaining tacit knowledge (derived from
experiences, data and documents) means retaining the individual,
which is invariably not possible.
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It is possible to generate explicit knowledge from tacit knowledge,

but it’s a complex exercise. The key ingredient of this exchange is face
to face sharing of knowledge or virtual environmental tools like Lotus
Notes, which can facilitate tacit knowledge exchange. Hence for tacit
knowledge exchange text mining is very useful and important. There
are ways to do text mining, like search engines, web solutions, text
analysis tools, etc. The key to successful customer KM is
personalization, i.e. how to extract the knowledge that is pertinent to
the user and translate it into a format that is easily understood. The
choice of Customer Knowledge Management (CKM) architecture should
have a layered approach. Existing systems should be seamlessly linked
with the proposed layer. The choice for CKM system could be Web
(Enterprise information portal) or a packaged solution such as Lotus
Notes, Microsoft solution.
Role of CRM in the Context of SCM
In the context of SCM, where alliances and partnerships are keys to

success, CRM plays an important role in building long-term
relationships. Apart from the end-users, it involves internal employees,
channel members and other external entities such as advertising
agencies and consulting organisations. 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.
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ERP and CRM
Like ERP, CRM solutions focus on automating and improving business

processes, albeit in front-office areas such as marketing, sales,
customer service, and customer support. Whereas ERP implementation
can result in improved organisational efficiency, CRM aims to provide
organisational effectiveness by reducing sales cycle and selling cost,
identifying markets and channels for expansion, and improving
customer value, satisfaction, profitability, and retention. While CRM
applications provide the framework for embodying, promoting and
executing best practices in customer facing activities, ERP provides the
backbone, resources and operational applications to make
organisations more efficient in achieving these goals.
Regain Management
“ The cost of acquiring a new customer is 9 to 12 times that of holding

on to an existing customer.”-Philip Kotler
A study conducted by Andersen Consulting in conjunction with EIU

found that businesses are intensifying their focus on customer and are
taking a more process oriented approach to customer relationship
management. Key Findings of the study are:
(a) the number of businesses citing customer retention as a critically

important measure in the next 5 years has jumped to nearly 60%, as
companies shift their focus from attracting new customer to retaining
their more profitable ones;
(b) by 2002, 83% of companies expect to have customer data

warehouses, up from about 40% today; and
(c) companies predict their use of Internet to collect customer data will
surge by 430%
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Consumer Life Time Value
Quantifying the “value” of customers is absolutely essential in regain

management. In fact, the percentage of profit a company makes from
continued sales to its own customer base is consistently higher than
the profit made on original sale.. Each of the customers then delivers
an income stream and the stream of profit far exceeds the value of
original purchase. Income streams contribute cash flows in terms of
years for any single product.
Regain Strategies:
• Customization
• Differentiation Strategies
The lost customer would be segmented differently from the existing

customer Base and the company could provide additional features and
benefits to win them back.
“Wow” Syndrome
For example, a client checks into a hotel and his/her room isn’t ready.
The clerk could respond by “You are in luck! Your room isn’t ready.
That means you get to eat breakfast “on us” and use our business
centre for free!”
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Technological Tools for CRM

Tools
• 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.
Other Technologies that are used are as follows:
• Electronic Point of Sale(EPOS)
• Sales Force Automation
• Customer Service Helpdesk
• Call Centres
Call Centre helps in automating the operations of inbound and

outbound calls generated between company and its customer. These
solutions integrate the voice switch of automated telephone systems
(e.g. EPABX) with an agent host software allowing for automating call
routing to agents, auto display of relevant customer data, predictive
dialing, self service Interactive Voice Response systems, etc. These
systems are useful in high volume segments like banking, telecom and
hospitality.
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Today, more innovative channels of interacting with customers are

emerging as a result of new technology, such as global telephone
based calls centres and the internet. Companies are now focusing to
offer solutions that leverage the internet in building comprehensive
CRM systems allowing them to handle customer interactions in all
forms.
• 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.
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CRM – A FRAMEWORK
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.
Operational CRM solutions involve integration of business processes
involving customer touch points. Collaborative CRM involves the
facilitation of collaborative services(such as e-mail) to facilitate
interactions between customer and employees. All this effort produces
rich data that feeds the Analytical CRM technologies.
Information Requirements Of An Effective CRM Solution
The employees of a firm employing CRM would require rich information

about their firm and customer base including:
• Information about the market
• Information about the firm
• The current segment
• Demographic Distribution (by age, sex, education, income, marital

status, etc)
• The firm’s best customers and the segment they belong to, products
they buy, preferences, habits and tastes of each segment.
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• Individual level information consisting of:

→ Customer personal details such as name, address, family details,
education, etc
→ The customer group /segment to which the individual belongs
→ History of present and past behavior
→ Likes, dislikes, habits and preferences
→ Events coming up in their personal life etc.
Levels of data mining operations
 The aggregate or the Macro level
Mining at the macro level gives us a broad overview of the data e.g.
when customer of the retail store are segmented by profitability
criteria, we obtain clusters who are profitable to various extent.
Knowledge obtained by mining at macro level is useful when dealing
with situations where:
• We are dealing with a customer about whom we do not have

individual information . Hence, we need to extrapolate the
characteristics of the group to which he/she might belong. In retail
store example, a store can segment its customers on basis of age and
characteristics can be extracted. When a new customer enters the
store, the salesman could use his intuition in arriving at the customer’s
age and recover the characteristics of that age group such as the
frequently bought products, colour preferences, etc.
• Targeting new set of customers. If the retail chain has opened a new
store it can use the data from the most similar current store to predict
the behavior of the new prospects.
• We are dealing with aspects of the service, which influence a
majority of the customer and therefore cannot be customized to suit
individual tastes, example being the design of the physical layout of a
retail store.
• Predicting the possibility of an action that the cu has never
undertaken. A customer might not have tried out a new product
because he/she was not aware of it. A salesman can encourage
him/her to try out the product if his/her profile matches that of the
current product users.
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 The Individual or Micro level
As interactions of the individual with the firm increases, the firm

obtains more data about him/her. Offering individualized value adding
propositions can strengthen relationship with the individual customer.
For this, we need to track the cu and mine at the individual or micro
level. Some important features to note about mining at this level are:
• Micro-level mining provides specific information about a particular
customer. For example, the retail store can go to the extent of finding
out the preferred colours of his shirt
• A firm takes up micro level mining to build a detailed customer
profile of a regular customer.
• Data mining this level might be expensive if the data mining tool has
to cull out individual information from a large database. Having a
separate database for profitable customer might be helpful.
• Knowledge obtained at the individual level is useful in situations
where:
− The firm wants to customize its offering to the customer based on
the customer’s tastes and preferences e.g. the retail store can offer
discounts on the purchase of a bundle of products that the customer
prefers buying together.
− The firm wants to assist the purchase of a new product based on the
information it has of the last purchase. For example, if a customer has
bought a suit in his visit, then the store might offer a discount on the
purchase of a tie of a matching colour.
− The firm wants to take advantage of the personal events in a
customer’s life (e.g. birthdays, anniversaries, birth of child etc.) to
further cement the precious relationship.
− Current patterns that go against usually observed customer
behavior point to interesting phenomenon. If retail customer suddenly
switches brand then he/she might not be satisfied with the last
purchase.
The most common operations used at this level are: -
Classification:
Classification is a process that maps a given data item into one of the
several predefined classes. CRM uses classification for a variety of
purposes like behavior prediction, product and customer
categorization.
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Regression
Regression is the operation of learning a function that predicts the

value of a real valued dependent variable based on values of other
independent variables. Regression finds application in a CRM
environment where prediction needs to be made about the behavior
regarding real value added variables. Suppose the retail store collects
data on the monthly visits of the customers viz. Frequency, time spent
on each visit. And purchases made during each visit. If the manager
has a strong intuition that total purchase is linked to frequency of visit,
then this situation can be modeled by regression. This model can then
be used to predict future purchases of a customer. Regression needs
sufficient amount of data to be reliable and valid.
Link Analysis
Link Analysis seeks to establish relationship between items or variables

in a database record to expose patterns and trends. Link analysis can
also trace connections between items of record over time. The most
important link analysis application in CRM, called market basket
analysis, is an operation that seeks relationship between product items
characterizing product affinities or buyer preferences. The retail store
collects thousands of interactions daily. A link analysis task performed
on this data will point to items that are bought together e.g. bread and
butter are bought together rather than bread and orange juice. Such
information can be used to design store layouts, design coupons, etc.
Segmentation
Segmentation aims to identify a finite set of naturally occurring

clusters or categories to describe data.
Deviation Detection
Deviation Detection (DD) focuses on discovering the most significant

changes in the data from previously measured, expected or normative
values. Most CRM solutions have a DD task running in parallel on a
regular basis. Suppose a retailer finds out that the sales from a
particular section of the store have been much less than expected.
This deviation on further analysis points out to non-stocking of a
popular brand.
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Tools such as decision trees, rule induction, case based reasoning,

visualization techniques, nearest neighbor techniques, clustering
algorithms, etc are used for the above purposes.
The existing CRM Solutions
Delivering the ‘360 view’ requires automation to bring together all the
data concerning a customer. This implies the organisation has to
change from:
• Mass Marketing Product Focus
• Product Focus Customer Focus
• Economies of Scale Economies of time
• 1 way communication Interactive
• Response Time Real Time
Present CRM Alternatives
Present CRM solutions are offered by host of vendors that are to a

great extent not industry specific. While there are some vendors, who
have come up with industry specific solutions, the broad model around
which the CRM solutions are built remain the same. Adopting a similar
or a look a like solution across industries is what causes major strain in
servicing a customer.
Typical offerings of the current CRM solutions (such as Siebel, Oracle

Apps or MySap.com, etc) vary from solution to solution. However
typical CRM offerings consist of:
Customer Development Field sales, Tele sales, Internet Sales

Service Centre Call Centres, Field Service
Sale management and support Internet Customer Service
Market Analysis Service Interaction Centre
Internet, Tele marketing Business Partner Collaboration
Product and brand management
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The Customer focussed organisation: CRM

Model
The idea here is to develop systems that allow flexibility, work on

not completely predefined processes so as to enable front office to be
proactive to each customer needs
The Mindset impact on CRM
A typical data warehouse will have the following components:
• While developing a data warehouse one takes into account all the
legacy and operation systems. But typically sales teams could be
managing leads on an excel worksheet. Sometimes critical DSS input
like “Profitability Analysis” itself may reside on a worksheet.
Thus a Data Warehouse solution must be able to accept information

from such “unstructured” sources as well as budget for an open
architecture to enable plug-in for systems to be developed in the
future.
a) Generally the existing information is mapped into a data warehouse.

Since a customer centric info-base is being developed, its is critical
that extensive customer research is done to identify their information
needs and thus what profile data will be relevant for us. Thus any
data-warehousing project needs to work closely with the research
team.
b) After extracting the data from various systems, we need to scrub
and clean the data, deduplicate.
c) Even though we may find 80% of the names in a database of a
million customers using combinations of lets say a 1000 first and last
names, to take into account all possible combinations we may actually
need a database of 10,000 first and last names. Even then we may not
be able to comprehensively cover all future combinations. Now, the
system must expect this kind of input on a regular basis rather than it
happening by exception, as is the case with updating “masters” in a
traditional system.
d) Ad-hoc querying is a tool that is most often used in such
applications. Unfortunately not much effort is made to make this tool
“end-user” friendly so that even a layman could run his/her reports.
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Typically a data-warehouse and data mining person is placed in

information technology to manage all queries. With the advent of tools
like MetaData Repository, drill down OLAP tools and Palm Pilots it is
now possible for hardcore marketing and sales types to directly access
and run their queries. Infact we need to budget for training the sales
and marketing team with the use of data-warehouse.
e) The real power of the CRM system is its ability to provide a rich,
value added experience to our customers at all touch points – call
Centres, kiosks, retail outlets, mobile devices, Internet and branches.
Integration and information dissemination must happen at all these
points. Thus the CRM specialist in marketing must be well versed with
all these tools and techniques.
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eCRM
What is eCRM?
In simplest terms eCRM provides companies with means to conduct

interactive, personalized and relevant communications with customer
across both electronic and traditional channels. It utilizes a complete
view of the customer to make decisions about messaging, offers and
channel delivery. It synchronises communication across otherwise
disjoint-customer facing systems. It adheres to permission based
practices, respecting individual’s preferences regarding how and
whether they wish to communicate with you and it focuses on
understanding how the economics of customer relationship affect the
business.
eCRM Vs CRM
CRM is essentially a business strategy for acquiring and maintaining

the “right” customers over the long term. Within this framework, a
number of channels exist for interacting with customers. One of these
channels is “electronic” – and has been labeled “e-commerce” or “e-
business”. This electronic channel does not replace the sales force, the
call Centre, or even the fax. It is simply another extension, albeit a
powerful new one, to the customer. The thrust of eCRM is not what the
organisation is “doing on the web” but how fully the organisation ties
its on-line channel back to its traditional channels, or customer touch
points.
Why employ 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 reach
• Company-ordinate marketing activities across all customer channels.
• Leverage customer information for more effective emarketing and
ebusiness
• Focus the business on improving customer relationship and earning a
greater share of each customer’s business through consistent
measurement, assessment and “actionable” customer strategies.
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The six “E’s” of eCRM
1. Electronic channels
2. Enterprise
3. Empowerment
4. Economics
5. Evaluation
6. External Information
eCRM Architecture
The primary inputs to this module are mainly from the eCRM
Assessment and strategy alignment modules. During this stage the
company will try and develop a Connected Enterprise Architecture
(CEA) within the context of the company’s own CRM strategy. The
following is a set of technical eCRM capabilities and applications that
collectively and ideally comprise a full eCRM solution:
• Customer Analytical Software

• Data mining software
• Campaign Management software
• Business Simulation
• A real time decision engine
Review and Assessment of CRM solutions
CRM software applications embody best practices and employs

advanced technologies to help organisations achieve these goals.
Categories of CRM solutions
Any enterprise , which wants to implement CRM solutions can choose

from four categories of solutions
− Integrated applications suite

− Interfaced applications bundle
− Interfaced best of breed solutions
− Best of cluster
Selecting an interfaced best of breed approach for pure functionality

or a front office application suite solely for integration limits enterprise
choices. Enterprises need to start with a clear picture of the basic
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truths of integration, interfacing and functionality. An integrated
application suite is a set of application that employs a common
architecture, referencing a common logical database with a single
schema. Some suites are more often interfaced application bundle i.e.
a set of interfaced application from a single vendor containing more
than one technical architecture or more than one logical database-
frequently assembled by the vendor through the process of acquisition
or partnership
An alternative approach to suites is an interfaced best of breed

solution – an approach whereby an enterprise selects from multiple
vendors a set of applications that must be interfaced to work together,
either by the enterprise, one of the selected vendors or a third party
integrator. The individual applications are not the best in any objective
sense. Rather, some enterprises select the applications because they
best meet the particular needs. The challenge of this approach is that,
in some cases, the enterprise fails to complete the necessary
interfaces to get the individual applications working together;
consequently, the applications remain stove pipes. Best of cluster is
similar to best of breed except that here best is chosen from the
cluster and they are interfaced.
Key requirements for CRM solutions
Some of the functional and technical requirements for CRM solutions

are as listed below:
• Business intelligence and analytical capabilities

• Unified channels of customer interactions
• Support for web based functionality
• Centralized repository for customer information
• Integrated work flow
• Integration with ERP applications
Functional Components of CRM solution
CRM applications are a convergence of functional components,

advanced technologies and channels. Functional components and
channels are described below:
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Sales applications
Common applications include calendar and scheduling, contact and

account management; compensation; opportunity and pipeline
management; sales forecasting; proposal generation and
management; pricing; territory assignment and management; and
expense reporting.
Marketing applications
These include web based and traditional marketing campaign

planning, execution, and analysis;list generation and management;
budgeting and forecasting; collateral generation and marketing
materials management.
Customer service and support applications
These include customer care; incident, defect and order tracking;

field service; problem and solution database; repair scheduling and
dispatching; service agreements and contracts; and service request
management.
Given below is a brief review of what some of the known vendors in

this area have in their applications for these verticals. :
• SIEBEL
It continues to out_market and out_sell the competition. It is one of

the few front office suite vendors having vertical specific functions. Its
functionality is compelling. It can be integrated with most of the back
office solution like SAP and Oracle. It has solutions for automotive,
public sector (US), communications, consumer goods, apparel and
footwear, energy, finance, insurance, health care, life sciences and
high technology industry sectors.
The solutions for the verticals described above are discussed below:
• For Consumer goods: a Siebel eConsumer goods offers eBusiness

solution spanning the entire demand chain from the end consumer,
through the retailer and the wholesaler, to the manufacturer. It has
robust trade promotions planning functionality allowing users to
manage customer promotion plans and the funds to support them,
while comprehensive route planning functionality enables integrated
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account targeting. Using Siebel eConsumer Goods, organisations can
also identify customer-buying behaviors and translate this
understanding into new trade promotions and product offerings
• For Financial Services: Siebel eFinance enables banking,

brokerage, insurance, and capital market organisations to establish
and maintain long term profitable relationship with consumers, small
businesses, and corporate customers. The organisations can capitalize
on information captured during each customer interaction to more
effectively cross-sell and up-sell additional products and services.
Additionally, Siebel eFinance provides a comprehensive view of the
entire customer relationship across multiple product lines, enabling
financial service organisations to provide a personalized experience
across all channels.
• For Healthcare: Siebel eHealthcare gives organisations the ability

to streamline and improve sales, member services, medical
management, and network management services. By using multiple
distribution channels, including the Internet, call Centres, home office
staff and independent brokers, Siebel eHealthcare provides
organisations with a single view of their customers, thereby ensuring
better service and improved quality of care.
• For telecom service providers: Siebel eCommunications helps

wireless, cable, and Internet service providers to target and win the
right customers, accelerate service delivery, and provide service
across all touchpoints. Siebel eCommunications embodies the
industry’s best practices for generating accurate service orders,
managing billing inquiries and adjustments, and up-selling and cross-
selling additional services. By using Siebel eCommunications’
integration technology, service representatives and salespeople can
instantly access information such as billing, order management, and
network management from Operation Support Systems (OSS), to
deliver highly responsive customer support and significantly increase
sales.
Siebel 99, the vendor's major release, boasts 117 applications that
span sales and service and incorporate multiple vertical markets.
A major effort in the new application release is it integrates all the
channels companies use to contact customers: Web, E-mail, voice,
wireless and face-to-face contact.
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Some of Siebel employee-facing applications are: Some of Siebel

customer-facing applications are:
Some of the additional products available in version 6.0

Siebel Call Center Siebel eChannel Siebel eBusiness Connector for SAP
R/3 ®
Siebel eMail Response Siebel eCustomer Siebel Communications

Server
Siebel Field Service Siebel eMarketing Siebel Distance Learning
Siebel Marketing Siebel eSales Siebel Global Enterprise Support
Siebel Sales Siebel eService Siebel Language Extensions
Siebel Service Siebel Wireless
• Clarify
It offers customer service & support and field service suite; however
its sales functionality is immature.
• Oracle
Oracle is betting everything on its thin, Web Based, centralized

computing model. The Internet computing architecture is compelling
for connected non-mobile users; Oracle is rebuilding functionality on
the new platform and integrates its various acquired products. It offers
a broad set of functionality across e-commerce, front office and
business intelligence applications.
Some frequent modules that most CRM have is:
Forecast Management, Encyclopedia Management, Campaign

Management, Brand Management, Opportunity Management, and
Event Management.
CRM solutions are interwined combinations of technology and business

processes. In order to be effective CRM service providers will need a
balanced understanding of both products and services. It’s necessary
to have an expertise in not CRM technology but also customer service
processes.
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The potential use of CRM lies in it being the leading indicator of

future revenue than just being used as a customer facing transaction-
processing tool or as a lagging indicator communicating past consumer
grievances.
The complete concept of CRM can be mapped on a technology solution

as per the following blue print. The databases feed the technology
infrastructure which links You with the customer touch points.
Thus we have four components of a CRM initiative rollout
• Customer Value Management Strategy

• CRM roadmap keeping in mind industry nuances
• Database solutions
• Customer access channels
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CRM in Banking Industry
Consumers largely selected their banks based on how convenient the

location of bank's branches was to their homes or offices. With the
advent of new technologies in the business of bank, such as Internet
Banking and ATMs, now customers can freely chose any bank for their
transactions. The pressures of competitive and dynamic markets have
contributed to the growth of CRM in the Financial Services Sector.
5% increase in customer retention can increase profitability by 35%

in banking business, 50% in insurance and brokerage, and 125% in
the consumer credit card market. Therefore, banks are now stressing
on retaining customers and increasing market share. Private Banks
have traditionally viewed themselves as exceedingly 'Customer
Centric' offering what they believe to be highly personalized services to
the High Net Worth Customers. The wealthier the customers, the more
demanding they are - and the clients expect more and more from their
banks, to understand what their wants and needs are, so that the
organization can be built around serving those needs. The structured
approach to CRM provides various benefits to the bank, viz., a
distinctive and consistent customer experience, clear identification of
the organizational, technological and process-related capabilities and
prioritization of these capabilities.
In this era customer is not a mere person who buys the product or
uses the service but is a king who is rational in his choice and a long
term asset of the business and is capable of generating going and
ongoing revenue
Growth Strategies International (GSI) performed a statistical

analysis of Customer satisfaction data encompassing the findings of
over 20,000 customer surveys conducted in 40 countries by Infoquest.
The conclusions of the study were:
• A Totally Satisfied Customer contributes 2.6 times as much revenue
to a company as a Somewhat Satisfied Customer.
• A Totally Satisfied Customer contributes 17 times as much revenue
as a Somewhat Dissatisfied Customer.
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• A Totally Dissatisfied customer decreases revenue at a rate equal to
1.8 times what a Totally Satisfied Customer contributes to a business.
• By reducing customer defection (by as little as 5%) will result in
increase in profits by 25% to 85% depending from industry to
industry.
An important facet of CRM is “customer selectivity”. As several

research studies have shown not all customers are equally profitable
(Infact in some cases 80% of the sales come through 20% of the
customers). The company must therefore be selective and tailor its
program and marketing efforts by segmenting and selecting
appropriate customers for individual marketing programs. In some
cases, it could even lead to “ outsourcing of some customers” so that a
company better utilize its resources on those customers it can serve
better and create mutual value. However, the objective of a company
is not to really prune its customer base but to identify appropriate
customer programs and methods that would be profitable and create
value for the firm and the customer.
Traditionally, few people changed their banks unless serious

problems occurred. In the past there was, to certain extent, a
committed, often inherited relationship between a customer and
his/her bank. The philosophy, culture and organization of financial
institutions were grounded in this assumption and reflected in their
marketing policies, which were product and transaction-oriented,
reactionary, focused on discrete rather than continuous activities.
Today, financial institutions can no longer rely on these committed

relationships or established marketing techniques to attract and retain
customers. As markets break down into heterogeneous segments, a
more precisely targeted marketing technique is required, which creates
a dialogue with smaller groups of customers and identifies individual
needs.
Also, before the Internet revolution, consumers largely selected their

banks based on how convenient the location of bank's branches was to
their homes or offices. With the advent of new technologies in the
business of bank, such as Internet banking and ATMs, now customers
can freely chose any bank for their transactions. Thus, the customer
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base of banks has increased, and so has the choices of customers for
selecting the banks.
This situation coupled with the pressures of competitive and

dynamic markets has contributed to the growth of CRM in the Financial
Services Sector.
Customer Relationship Management: The Concept
Customer Relationship Management is the establishment,

development, maintenance and optimization of long-term mutually
valuable relationships between consumers and the organizations.
Successful customer relationship management focuses on
understanding the needs and desires of the customers and is achieved
by placing these needs at the heart of the business by integrating
them with the organization's strategy, people, technology and business
processes.
At the heart of a perfect CRM strategy is the creation of mutual

value for all the parties involved in the business process. It is about
creating a sustainable competitive advantage by being the best at
understanding, communicating, and delivering, and developing
existing customer relationships in addition to creating and keeping new
customers. So the concept of product life cycle is giving way to the
concept of customer life cycle focusing on the development of products
and services that anticipate the future need of the existing customers
and creating additional services that extend existing customer
relationships beyond transactions.
Need of CRM in the Banking Industry
A Relationship-based Marketing approach has the following benefits: -
 Over time, retail bank customers tend to increase their holding of

the other products from across the range of financial products /
services available.
 Long-term customers are more likely to become a referral source.
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 The longer a relationship continues, the better a bank can
understand the customer and his/her needs & preferences, and so
greater the opportunity to tailor products and services and cross-sell
the product / service range.
 Customers in long-term relationships are more comfortable with

the service, the organization, methods and procedures. This helps
reduce operating cost and costs arising out of customer error.
With increased number of banks, products and services and

practically nil switching costs, customers are easily switching banks
whenever they find better services and products. Banks are finding it
tough to get new customers, and more importantly, retain existing
customers.
According to a research by Reichheld and Sasser in the Harvard

Business Review, 5% increase in customer retention can increase
profitability by 35% in banking business, 50% in insurance and
brokerage, and 125% in the consumer credit card market. Therefore,
banks are now stressing on retaining customers and increasing market
share.
Private Banking and CRM
Private Banks have traditionally viewed themselves as exceedingly

'Customer Centric' offering what they believe to be highly personalized
services to the High Net Worth Customers. However, changes in the
customer behavior and accumulation of wealth are resulting in the
needs of HNW customers becoming more diverse and complex in
terms of the sorts of products they want, the channels through which
they want to access them and the associated range of advice.
The wealthier the customers, the more demanding they are - and the
clients expect more and more from their banks. Competition for
"Supremely elite" is increasing
Customer Experiences
The first step towards successfully winning, retaining and growing

the profitability of private banking customers is to understand what
their wants and needs are, so that the organization can be built around
serving those needs. Only when an organization has done this and
incorporated this into its strategy can it start to design its value
proposition and a customer experience that will enable it to achieve a
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differentiated competitive position in the private banking market, and
more importantly, do so in an economically viable way.
The Basic Customer Experience
There is a basic 'generic' customer experience that many private

banking customers are seeking. To be a credible player in the market,
a private bank must be able to deliver this 'base' experience. This
represents a common set of needs that are shared by most HNW
customers. Therefore, the private bank must have the capabilities
required to meet these needs for the majority of its customer base.
All customers, regardless of wealth levels, have similar emotional

needs, which drive their need for advice and their purchase of
products. Different wealth levels impose different priorities on meeting
these needs and open up new avenues for doing so.
Take a simple example, HNW customers can afford on it to fund

their retirement, so their priorities may be associated with growing
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wealth, rather than preserving it, allowing them to choose a product
option with a higher risk/reward ratio.
If this is true, it means all HNW customers start with a basic, common
set of what they want and need from a bank, which might include: -
 Personal, long-term relationship
 Advice combining industry expertise and knowledge of personal

circumstances
 High quality, consistent quality
 Security, privacy, confidentiality
At this basic level, grouping together these core wants and needs
produces a set of generic characteristics that an HNW individual seeks
from an organization before he or she will even consider placing any of
his or her wealth with it.
Underlying these generic characteristics is a set of capabilities

covering organization, process and technology, which the private bank
must process to operate in the high net worth market.
The Segment-Specific Experience
To build this 'base' experience, private banks also need to consider

the segment-specific needs of their target customers. This in itself
requires a capability to identify and justify target customers and
understand their needs beyond banking, to ensure that their emotional
needs are met. It is here that the customer is made to feel like an
individual, but it is also at this point that costs and infrastructure
spiral, as customers' needs start to diverge.
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The segmentation process identifies groups of customers with similar

wants and needs, who are seeking a similar experience from the
provider. Importantly, from the organizations' viewpoint, this means
that they can also be served by similar sets of capabilities.
The experience at this level is made up of: -
 The channel preferences of each segment and associated

channel experience - for example, a self-directed group of
customers will use internet for transacting, information gathering and
even some advice, whereas advice seekers and less financially
sophisticated segments require more access to an adviser /
relationship manager and a more basic experience over the Internet.
 The product and service preferences of that segment - for

example, the more sophisticated customers are more likely to demand
more complex products such as alternative investments, whilst others
may prefer discretionary portfolio management.
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The new components are added to the experience and the 'base'
experiences elements become defined in more depth, according to the
specific needs of the customer segment.
Once the segment experiences have been defined, the associated

capabilities must again be identified. The hierarchical approach to
defining customer experiences helps filter these capabilities as: -
 it is possible to identify experience elements that are common to

more than one segment - this will carry a higher priority for
development as they will benefit more customers;
 the segmentation exercise will provide comparative sizings for the

target segments.
Capabilities required for the larger, more profitable segments take

precedence over those needed for smaller segments.
The Organisation-Specific Experience
Having identified the base and segment specific elements of HNW

customer experience, the final step is to identify how the
experiencethat each organization offers its customers is distinct from
other banks. Now this would mean that one has to distinctly identify
the components of the experience that are not only associated with a
particular bank but also be the key differentiator.
This process will define: -
 Elements of the organization style and culture.
 Products and Services to be provided.
In the same way, every brand is different, so is the experience.
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REVIEW OF
LITERATURE
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Case Study 1:
Building Relationship with Doctors

For Effective Marketing
The Case of the Pharmaceutical Industry
Introduction
The Indian Pharmaceutical market is worth approx. Rs. 140000

million growing at a healthy 10%. There are around 16,000 players
both in the organised and the unorganised market vying for a piece of
this pie. It is a very fragmented market with the number one player,
Glaxo Wellcome, having a market share of 5.8%. Infact the combined
of the top 5 companies does not exceed 20%. Earlier MNC’s used to
sell on the quality plank but today quality is a table stake condition
where even the smallest player is able to meet the highest quality
norms.
Doctor Population
There are approximately 500,000 doctors in India who are registered

with the Indian Medical Association. The largest of the
pharmaceutical companies cannot meet more than 125,000 of this
doctor population. As a result most of the doctors are being met by
atleast 60-100 companies.
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Out of the total doctor population as much as 60-65% are general

practitioners within the basic MBBS degree. The higher specialties
constitute the remaining 35-40%.
Promotion
In an ethical market product promotion is directed solely to the

qualified directors. No advertising mentioning the brand names is
allowed in the lay press. The medical representative (MR) is the major
means of promotion though other media like direct mail, journal
advertising, conferences, also play a role albeit a limited one.
Starting a CRM initiative
Having understood the major characteristics of the industry, the

identification, differentiation, interaction and customization (IDIC),
model as suggested by Don Peppers and Martha Rogers would be used
to understand the steps to a CRM initiative.
Identification
The first step towards any CRM initiative is identification of the

customer. Each medical representative maintains a list of doctors in
his area. This list is generated through interviews with stockists,
retailers, as well as his peers from other companies. The list called the
MSL (must see list), MVL (Must Visit List), Customer list, etc typically
lists the name, address, telephone no., specialty, qualification, visit
timings, and other basic data of the doctor. The key driver for a CRM
program is integration of this data from all the MRs to a central
database.
The next step is to add to this data by collecting details from other
sources like
• Membership directories of association: Almost all cities have

their branches of the Indian Medical Association’s (IMA). These have a
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directory of all their members listing their contact details and some
personal information. These are a good source to begin with but most
are updated at very long intervals and hence the veracity of the data
has to be checked. Similarly, there are individual associations for
almost all the specialties whose membership directories are also easily
available.
• List of conference participants: each specialty of doctor organises

a national level conference every year where members from all over
the country attend. Details can be collected through the sponsorship of
the front-desk; organising contests, or distributing give always in
exchange for information.
• Doctors Referral: Another route would be akin to a member get

member scheme wherein doctors would be encouraged to refer follow
practitioners.
Thus a semblance of a database would take shape. The term is a

misnomer, since at best it is a customer list, as it contains nothing
more than contact information along with some basic information. But
nevertheless it is a starting point.
The database at no stage can be termed as final as collection of

doctor details is an ongoing process. Continuos additions, updations
and deletions are always taking place.
The list cam be mined for details of specialty wise break-up,

geographical coverage etc, to serve as a tool for the marketing
decision making process.
Differentiation
The success of any loyalty program lies in differentiating the key

customers. Typically, a MSR would classify his doctors using the ABC
Method as core, important and others based on the amount of
business he gets.(or expects to get) from them. The number of sub-
classes would vary but the principle would be the same. In a typical
pyramidal fashion the top-rung doctors who are the least in number
would be commercially most important and the importance would
linearly decrease as one goes down the pyramid. The numbers would
propotionately increase as per the Pareto principle.
The point to be borne in mind is that the whole basis of differentiation
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is being done on very subjective terms of the perception of the local
MR unlike other industries viz. Airlines, who would classify frequent
fliers based on data collected from reservation. Since there is no
formal mechanism of capturing data about the revenue generated
from a doctor, the MR is the sole and final judge.
Thus the database formed is step one, can be now classified into the
important doctors and the not so important ones.
Interaction
Now comes the stage of building on the database collected and

refined in the above 2 stages. The basic idea now is to build on the
data collected in the first stage. The idea is get to know the doctor
intimately. His hobbies, likes, dislikes, family details,etc. The
fundamental premise being that the doctor is as human as anybody
else is and hence we should recognise his individuality. It is of utmost
important that it is decided beforehand what kind of information would
be collected and much more importantly how it will be used.
Interaction can be done at two levels:
•Personally at the MR level: the most productive would be using

human intervention. The MR can easily collect most of the information
from his day to day interaction with his customers. Alternatively a
formal structured questionnaire can also be administered.
The biggest hurdle to this approach is not surprisingly enough the MR.
A level of conviction has to e brought into him that the data he would
collect would actually be used and more importantly will help him do
his job better. Numerous instances abound of companies who have
gone about collecting loads of information on their doctors through
their MRs and finally not using them at all.
• Direct at the corporate level. : The structured questionnaires

requesting further details can also be mailed to doctors with each
response entitled to a token gift, etc. This approach typically would
yield a lower rate of return but the quality of information would be
superior to the first approach as it is coming directly from the doctor.
The information collected is then incorporated to the basic database
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earlier formed. Just to give an idea of the type of information collected
by companies consider the following:
 Personal information : date of birth, marriage anniversary,

details of children, qualification and experience, etc
 Hobbies and Interests: Activities during spare time, tv channels

watched, general interest, magazines read, favorite vacation
destinations, etc
 Professional Interests: Type and name of medical journals read,

professional membership of associations, attendence at national
conferences, etc
 Ownership Details: Household durables owned, vehicle

ownership, etc
Companies have been able to collect enormous amount of such

data, through either of the means elaborated earlier. What is
important to note that they have been able to demonstrate their
sincerity in actually using this data.
Customisation
This is the time to start using the data. The easiest and the most
preliminary step is to start greeting the doctor on his birthday and
marriage anniversary. From a simple card personally signed to a
personal phone call from the head office anywhere in the country to
a birthday cake being actually presented are some of the ideas.
Even bouquets can be delivered at the doorstep. A company even
arranges for the doctor to have dinner with spouse on their
marriage anniversary, with the tab taken care ofcourse!
But more important to customise the interaction with the doctor
based on the data we have on him. Gifts based on the interests and
hobbies can be presented. If a doctor has expressed interest in
national conferences of his specialty the same can be arranged.
The success of the whole programme
hinges on how well can the companies pass on the data of the
doctor to their field force and train them on how to use this data.
He is actually the man of the moment. It is necessary that the
information received on an interaction be fed into the system so
that it can be used for the next interaction. A sort of ‘master-
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database’ can be generated which would recover every contact with
a doctor through the field, mail, telephone, web, etc. this master
database would be the key driver to foster a learning relationship.
Loyalty programme
The next obvious step is to have a loyalty programme as a

frequency marketing initiative. An ideal loyalty programme would
be able to identify its key accounts, reward them for their custom
and encourage them to increase their spend.
This concept in case of the pharmaceutical industry has a twist

since the customer (the doctor) is not the actual consumer (the
patient) of the product. Thus there are ethical issues involved in
rewarding points in return for prescriptions. One cannot have a
reward programme based on the redemption of these points.
One approach would be to set the whole programme based on the
classification into which the doctor falls. Thus the lowest rung would
be restricted to the basic of activities. The number and the level of
activities would increase as the important of the doctor grows. A
branded programme can be started for the most important doctors.
It is important that it is clearly defined at the onset what will be the
objective of the programme and more importantly convey the
exclusivity of the programme. The doctor has to be made to realise
that he is the ‘chosen one’. All activities and inputs should only
reinforce this communication.
The success of such a programme hinges on making the doctor

covet the membership to the programme. Thus a continuous
monitoring is required of the returns generated from the doctor. If
they fall below a predefined limit then the doctor can be
downgraded and his privileges reduces.
Direct Marketing
It is a valuable tool for effective CRM. Since a captive database

has been put into place it can easily lend itself to direct marketing
initiatives. As the primary fields captured are the contact address a
program through mail is easiest to accomplish. Brand awareness
mailers, new launches, contests all can be conducted by mail.
Information technology has several advantages
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• It is very cost effective: A large audience can be touched at a

relatively cheaper cost as compared to personal selling.
• It can be targeted and specific to the right target audience in term

of specialisation or geographical area.
• It is measurable with use of reply devices one can immediately

gauge the efficacy of a campaign. In fact since the target audience
for a brand is usually sharply defined in terms of their specialisation
e.g. An allergy product to ENTs, Dermatologists and GPs, the
response received is usually much higher then that accepted as a
norm in other industries. A response of 15-20% can be easily
achieved through such communications.
Most of the pharmaceutical companies have realised the

advantages of this mode of communication. The primary rationale is
to save the time of the field by promoting the low involvement (for
the doctor) products, promote brand recall for a new product,
exploit alternative avenues for brand promotion etc.
Apart from mail other DM media like telemarketing and web have
also been tried. While telemarketing has been tried for promoting
new launches to get instant feedbacks the web has still to achieve
its potential. The PC penetration in India is still very low which
handicaps the growth of this mode. Using the e-mail to correspond
and interact with doctors is being tried. It is especially useful for
targeting higher specialties, which is more technology savvy and
information hungry.
Call Centre
In case of chronic therapies like hypertension, serious conditions like

AIDS and in hitherto unknown conditions (atleast in India) like erectile
dysfunction the call centre provides the answer.
The medium lends an ear to three types of customers
1. Doctors, who would like to more about the drug profile, discuss a
specific case, ask for a reference on use in a specific condition.
2. Patients who seek counseling, the nearest physician or chemist

shop. The telephone provides anonymity to the caller especially when
discussing taboo subjects
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3. Retailers asking for pricing details, product availability

With the advent of paging companies who can provide a single number
nation wide, facility of leased lines from DOT and the toll free numbers
in select metros this medium is set for take-off.
There are certain factors to be borne in mind whilst setting up a call

centre. The sheer diversity of the country means that callers would
speak different languages and may not be comfortable with English.
This is especially relevant if the centre would cater to calls from
patients. Also doctors would not prefer their queries being answered
by a lay person without any medical knowledge.
Thus most medical queries have to be escalated to a qualified

physician who responds to a doctor’s queries within a set time limit.
These limitations notwithstanding, the call centre is an excellent
medium to come closer to the customer and pharmaceutical industry is
realising the potential.
Measurement Systems
The measurement system would require studying the prescription

profile of the doctors who are being exposed to the CRM programme
vis a vis a control sample who are met by the field force but not
exposed to CRM activities. The prescription given by the doctors can
be studied over a particular time frame and the amount of
prescriptions before exposure to the programme can be measured.
The idea is to check if the prescription levels have increased after the
doctor has been made the member of the loyalty programme. This
method would at best provide a qualitative idea but would
nevertheless give an idea of the success or failure of the programme.
Conclusion
The importance of internally marketing the CRM programme is very

important. The success of the whole programme hinges on the support
of the top management who can act as a mentor. The programme
takes time to take off and much more time to actually show results.
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Case Study 2:
Relationship Building in
Cement Marketing
The Case of Indian Rayon
Indian Rayon an Aditya Birla group company, was one of the first
cement companies which felt the need to gain this immediate
distinguishing factor and further long run equity by using CRM as a
strategy.
The company wanted to bring about a transformation in the way in

which it interfaced with its customers. Dealers being the interface with
the customers were identified as one of the major areas in this
direction.
The company consciously worked on the aspect of maintaining long

term relationship with its set of customers and came out with the
conclusion that if the user-customer can build long-term relationship
with the distribution channel (and thus the company) of Indian rayon
cement Products, this will be a major gain in the overall strategic
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marketing objectives of the company and also it will provide the
company a distinct positioning.
Indian Rayon decided to upgrade select dealers to become Birla

Super Shoppes. The intention was also to make the retailer go beyond
being a mere sales channel. The Birla Shoppes were geared to become
Centres for what the company prefers to call “ technomarketing
service” and relationship outlets focussed at maintaining long term
relationship with its customers, which no other competitor can offer.
The idea of building relationship with the customers through this
unique route came after studying the buying behaviors of customer
more closely.
For one, the customer base was not homogenous – there were
different categories of cement buyers in the market; the mason, the
civil engineer, the architect, the contractor, and the institutional or
large scale buyer along with the end user.
While each of its customer has some degree of knowledge and

practical experience of the products quality and usage, there was a
latent need for technical information and advice before purchase. In
most cases though this need was never addressed, simply because the
dealer himself did not know much. At the same time most dealers
tended to stock multiple brands were more concerned with pushing
their stock then spending time explaining the exact details of any
brand.
Each of these Shops had a qualified civil engineer that offered free
technical consultation to every customer. Customers were provided
with comprehensive information right from manufacturing of cement to
its application in various end purposes. Based on the type of
construction, the right type of cement along with the free advice on
the usage of cement and other additives and building materials. To
further consolidate customer relationship each shops has a regular
“Mason Meet” where the actual users are invited and given technical
and practical knowledge and solutions. Besides the shop owners of a
particular area also get together once a week on an average for
market and technical information sharing.
Here the differences are ironed out and collective strategies shaped.
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The company involvement manifests through the regular seminars and
training programs that are organised for the shoppe personnel.
Indian rayon has been successful in achieving results on twin fronts

of CRM:
a) Consolidating Relationships with the customers through the unique

distribution channel route.
b) The company has also been able to strengthen bonds with its
distribution channel(who is also amongst the company’s customer
groups)
Conclusion
To conclude, CRM in cement industry although in a very nascent stage

has strong strategic connotations. CRM is a strategy towards the
marketers’ objective of providing value to its customers. This value
when translated is able to provide a distinct equity to the cement
marketers to stand apart and gain an edge in the clutter of intense
competition, and relatively undifferentiated products – which is
peculiar to the cement industry.
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Case Study 3:
Employee Empowerment and CRM
The Case of Hewlett-Packard India
Relationship between Employee Satisfaction, Customer Satisfaction &

Market Share
Initiatives for Employee satisfaction
A demotivated, unenthusiastic and unhappy employee will never care

for the customers. Also organisations willing to spend money when
they are doing well should spend on employees more rather than less
when things get bad. An employee satisfaction survey should be
carried out on a regular basis.
Hewlett Packard (HP) Case

HP sells its products through its channels. Whenever the customer
purchases a product, and there is an issue to be resolved, the point of
contact is the front line team. It handles the usage-related, the
application related and the real product related issues. The backend
team handles the upgradation issues. The partners provide the
hardware support. The sales and services are provided by DPSP’s and
the ASP’s only. Typically in a month, the total number of customer
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calls logged in at HP are 21,000 out of which 4600 are through web
support, 1270 e-mails and 15,000 telephone calls. They use
automated call distribution software, which also enables to track the
particular history of the customer. The service providers are assessed
continuously. It is a challenge to motivate engineers who are the
employees of the service providers and are not HP employees. The
engineers/service providers’ performance is monitored on:
• Turnaround Time
• Number of parts requested per call
(Multiple Part consumption)
• Closing the call
• Customer satisfaction
• Repair rate
• Effective handling of customer escalations
HP has allocated points for each of these parameters for partner
performance measurement. In case the partner performance falls
below the desired level of points, then there would be deduction in the
reimbursements of that reseller. However if he exceeds the given point
scale then he qualifies for additional reimbursements which are offered
as rewards.
HP contacts all customers, who are not happy with the service, and
through the partners it is attempted that certain steps are taken so
that the customer is happy. The training program for the partner is
also regularly revived.
There is also a Reward 1000 plus program where there are points
awarded. There are points for various aspects such as training, quiz
bulletin, customer feedback, customer service, re-repair rate. The top
contributors among the resellers are identified and are sent for training
or entertainment apart from monetary incentives.
So at HP, there is synchronisation of the employee satisfaction and
customer satisfaction process to ensure a higher market share.
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Case Study 4:
Titan Watch Repair Services

What did Titan Do?
The Titan Signet CRM initiative was undertaken in May 1995 to provide
that ‘extra’ touch to its special customers at the exclusive World of
Titan stores.
Its mission was to create a sense of belonging of the customer to the
store and vice versa by:
• Building a special relationship with high life time value Titan
customers
• Recognising and rewarding his/her loyalty to Titan
• Providing a platform for direct feedback from these valued customers
to the company
Where?
It initially started in 6 showrooms in Banglore. Today the Titan Signet

has been extended to 102 World of Titan showrooms across 59 cities
all over India
Behind The Scenes
While the program has taken customer bonding one step further in
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Titan, there are many behind-the-scene activities that ensure that the
program is run efficiently, effectively and with the level of enthusiastic
participation. These are :
• Showroom Personnel are trained not only in the operations of the
program at the showroom but also in the finer details of CRM.
• Enrolments in the program are tracked on a monthly basis for each
showroom, along with data on purchases made by Signet members
who have returned to the showroom to buy again.
• Signet operations form a part of the quarterly appraisal for their
showrooms, thereby ensuring that they earn more marks on their
efficient and effective performance.
• A grievance redressal system is in place to ensure that our valued
customers are responded to within stipulated time frame.
Case Study 5:
Customer Relationship Management

At APTECH
The case of APTECH Ltd. Deals with an organisation in the intensely

competitive information technology education and software services
industry. In such markets where technology is changing by the
minute, organisations take initiatives to obtain even the slightest
competitive edge. The company described in the case is in the process
of implementing a Customer Response System across its 1500 odd
centres. The impact of such a move is being felt on customer
satisfaction ratings and the critical word of mouth that attracts new
inquiries. There are of course certain implementation issues to be
tackled. In order to evaluate the system implementation at test
centres, and to work through the implementation in the remaining
centres. APTECH is considering some cultural and organisational issues
within the organisation. Also, besides its relationships with customers,
it is working on its relationship with business partners and employees.
INTRODUCTION
Today, computers are not restricted to computer software field only, in

fact they have become a necessary part of every business industry.
This has led to tremendous rise in the demand for trained computer
professionals. With the increasing focus on computer software
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development by the Indian government and NASSCOM along with
many software export houses, this demand is bound to increase even
further in the near future and in the years to come. The Indian
computer software industry itself has grown from a mere 0.3 billion
ten years back to 70 billion today. The rapid growth of this industry
has led to high growth in the computer education and training
business. Private institutes today produce about 65% of the software
professionals and remaining by government affiliated institutes. The
growth in the demand in future is expected to be spurred by the
growth in the information technology sector both domestic and
international, which is growing by the rate of 30-40%. The demand for
computer software professionals has shown an increasing trend over
the years. As a result of this many entrepreneurs took to this
opportunity and opened computer-training institutes. Over the years
these institutes have developed rapidly to become huge in terms of
their spread and the number of students churned out. Notably among
them are companies like NIIT, APTECH, SSI, TULEC, BITS, IEC, LCC,
SOL-STAR etc.
Structure of information technology Education Industry
The information technology education industry in India is estimated to

be around 625 crores. Although there are many players, it is mainly
dominated by NIIT and APTECH in the organised sector. This sector is
growing at the rate of 20%.
CRM at APTECH
“There are tow sides to APTECH’s business: student education, and

corporate consultancy, training, software, etc. Eighty percent of the
students enroll at APTECH because of word of mouth. There is
qualitative and quantitative research. However, what experience was
shared is not documented. Therefore, we now have a system known as
Customer Response System (CRS) that captures any suggestion,
complaint or query made by a student. As far as reusable templates
are concerned, they are widely used in e-commerce and ERP solutions.
For ERP solution we have an e-link template that reduces development
time by sixty percent. We also have a service portal where plug and
play solutions can be downloaded. As far as students are concerned
CRM is providing unlimited access to anyone in the organisation.”
How did APTECH get into customer care?
Firstly, APTECH was in the knowledge management business. There
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was a need to be able to practice what one preached. Secondly, there
was the business imperative. The need to be at the vanguard of the
quality initiatives was recognised. There were already manual systems
in place, both formal and informal. Formal mechanisms included
feedback forms, while informal channels included faculty interaction
and open houses. However, these contained an element of
subjectivity. If a student had a good rapport with the centre staff
his/her feedback, complaints, suggestions, and queries were paid
cognisance. A need was felt for more quantifiable metric. Students,
being young, are wary of expressing their concerns. An element of
monotony had crept into the manual systems – students said what
they were expected to say. In the feedback forms emphasis was
placed on the contents of the course.
CRM Road Map at APTECH
There are two units of CRM – CRS and CAS. Using CRS, a student
gives feedback on the Centre, Product, People, and Specific Issues.
R.O., Product Design, and General Management for Monitoring Centre
Performance, Improving or revamping the product, making policy
decisions, and for Overall improvement in delivery process using this
feedback. Where policy decisions are taken, they affect CAS (Centre
Automation System) and RAS (Regional Automation System) and
changes are incorporated as necessary.
The second unit CAS (Centre Automation System) is the database of
the students. Currently this database is used by Centre Personnel for
student tracking and by the R.O. for monitoring centre performance in
terms of product delivery. The plan is to have a web interface, so that
students can access their information on a limited basis. This will help
the student o judge his/her current status and accordingly plan if any
corrective action is required. E-mail facility is already available for
APTECH members, so that the student can consult the respective
Faculty/Centre Personnel in case any assistance is required for
planning. It is also planned to use the available information and extend
the concept to a call centre., so those inquiries can be directed to the
nearest point, as convenient to them. Company also plans to use the
database being built up for alumni, so that students placed by them
can be given value added inputs on a time to time basis, depending on
their requirements and current job profile.
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COMPANY PROFILE
The Housing Development Finance Corporation Limited (HDFC) was amongst the first
to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a
bank in the private sector, as part of the RBI's liberalization of the Indian Banking
Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank
Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations
as a Scheduled Commercial Bank in January 1995.
BUSINESS FOCUS
HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build

sound customer franchises across distinct businesses so as to be the preferred provider of
banking services for target retail and wholesale customer segments, and to achieve
healthy growth in profitability, consistent with the bank's risk appetite. The bank is
committed to maintain the highest level of ethical standards, professional integrity,
corporate governance and regulatory compliance. HDFC Bank's business philosophy is
based on four core values - Operational Excellence, Customer Focus, Product Leadership
and People.
BUSINESSES
HDFC Bank offers a wide range of commercial and transactional banking services and
treasury products to wholesale and retail customers. The bank has three key business
segments:
Wholesale Banking Services
The Bank's target market ranges from large blue-chip manufacturing companies to small
& mid-sized corporate and agri-based businesses. For these customers, the Bank provides
a wide range of commercial and transactional banking services, including working capital
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finance, trade services, transactional services, cash management, etc. The bank is also a
leading provider of structured solutions, which combine cash management services with
vendor and distributor finance for facilitating superior supply chain management for its
corporate customers. Based on its superior product delivery / service levels and strong
customer orientation, the Bank has made significant inroads into the banking consortia of
a number of leading Indian corporates including multinationals, companies from the
domestic business houses and prime public sector companies. It is recognized as a
leading provider of cash management and transactional banking solutions to corporate
customers, mutual funds, stock exchange members and banks.
Retail Banking Services
The objective of the Retail Bank is to provide its target market customers a full range of
financial products and banking services, giving the customer a one-stop window for all
his/her banking requirements. The products are backed by world-class service and
delivered to the customers through the growing branch network, as well as through
alternative delivery channels like ATMs, Phone Banking, Net Banking and Mobile
Banking.
The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus
and the Investment Advisory Services programs have been designed keeping in mind
needs of customers who seek distinct financial solutions, information and advice on
various investment avenues. The Bank also has a wide array of retail loan products
including Auto Loans, Loans against marketable securities, Personal Loans and Loans for
Two-wheelers. It is also a leading provider of Depository Participant (DP) services for
retail customers, providing customers the facility to hold their investments in electronic
form.
HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the MasterCard Maestro debit card as
well. The Bank launched its credit card business in late 2001. By September 30, 2005, the
bank had a total card base (debit and credit cards) of 5.2 million cards. The Bank is also
one of the leading players in the "merchant acquiring" business with over 50,000 Point-
of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments.
Treasury
Within this business, the bank has three main product areas - Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the
liberalization of the financial markets in India, corporates need more sophisticated risk
management information, advice and product structures. These and fine pricing on
various treasury products are provided through the bank's Treasury team. To comply with
statutory reserve requirements, the bank is required to hold 25% of its deposits in
government securities. The Treasury business is responsible for managing the returns and
market risk on this investment portfolio.
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CAPITAL STRUCTURE
The authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up
capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the bank's
equity and about 19.4% of the equity is held by the ADS Depository (in respect of the
bank's American Depository Shares (ADS) Issue). Roughly 31.3% of the equity is held
by Foreign Institutional Investors (FIIs) and the bank has about 190,000 shareholders.
The shares are listed on the Stock Exchange, Mumbai and the National Stock Exchange.
The bank's American Depository Shares are listed on the New York Stock Exchange
(NYSE) under the symbol "HDB".
HDFC BANK LTD. - FINANCIAL RESULTS (INDIAN GAAP) FOR THE

QUARTER & NINE MONTHS ENDED DECEMBER 31, 2007
The Board of Directors of HDFC Bank Limited approved the Bank’s accounts for the
quarter and nine months ended December 31, 2007 at its meeting held on Monday,
January 21, 2008. The accounts have been subjected to a limited review by the Bank’s
statutory auditors.
FINANCIAL RESULTS
Quarter ended December 31, 2007
The Bank earned total income of Rs.3, 405.8 crores for the quarter ended December 31,
2007, and a growth of 64.4% over the corresponding quarter ended December 31, 2006.
Net revenues (net interest income plus other income) for the quarter ended December 31,
2007 were Rs.2, 116.5 crores, an increase of 70.5% over the corresponding quarter of the
previous year. Interest earned (net of loan origination costs and amortization of premia on
investments held in the Held to Maturity (HTM) category) increased by 60.5% to Rs.2,
726.9 crores for the quarter ended December 31, 2007. Net interest income (interest
earned less interest expended) for the quarter ended December 31, 2007 increased by
65.6% to Rs.1,437.6 crores driven by average asset growth of 43.9% and an improvement
in core net interest margin (NIM) to around 4.3% (NIMs adjusted for the HTM premia
amortization).
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Other income (non-interest revenue) registered strong growth of 81.9% from Rs.373.3
crores for the quarter ended December 31, 2006 to Rs.678.9 crores for the quarter ended
December 31, 2007. The main contributor to ‘Other Income’ for the quarter was fees and
commissions of Rs.460.1 crores, up 38.8% from Rs.331.4 crores in the corresponding
quarter ended December 31, 2006. The other two major components of other income
were foreign exchange/derivatives revenues of Rs.74.2 crores and profit/(loss) on
revaluation/sale of investments of Rs. 131.5 crores, as against Rs.63.0 crores and Rs.
(21.1) crores respectively for the quarter ended December 31, 2006. Operating (non-
interest) expenses for the quarter increased by Rs.445.1 crores to Rs.1,050.1 crores and
were 49.6% of net revenues. Provisions and contingencies for the quarter were Rs.423.1
crores (against Rs.206.0 crores for the corresponding quarter ended December 31, 2006),
principally comprising of specific provision for non performing assets and general
provision for standard assets of Rs.350.1 crores. After providing Rs.213.9 crores for
taxation, the Bank earned a Net Profit of Rs.429.4 crores, an increase of 45.2% over the
quarter ended December 31, 2006. Total balance sheet size increased by 46.7% from
Rs.89,608 crores as of December 31, 2006 to Rs.131,439 crores as of December 31,
2007. Total deposits were Rs.99,387 crores, an increase of 48.9% from December 31,
2006. With savings account deposits of Rs.24,961 crores and current account deposits at
Rs.25,602 crores, the CASA mix continued to remain healthy at around 50.9% of total
deposits as at December 31, 2007. Net advances as at December 31, 2007 were Rs.71,
387 crores, an increase of 48.7% over December 31,2006. Retail loans grew by 45.0% on
a year-on-year basis and now form 52.6% of gross advances. The Bank’s customer assets
(including advances, corporate debentures, investments in securitized paper, etc.) net of
loans securitized and participated out increased to Rs.74, 979 crores as of December 31,
2007, from Rs.53, 896 crores as of December 31, 2006.
Nine months ended December 31, 2007:

For the nine months ended December 31, 2007, the Bank earned total income of Rs.8,
892.6 crores as against Rs.5,843.2 crores in the corresponding period of the previous
year. Net revenues (net interest income plus other income) for the nine months ended
December 31, 2007 were Rs.5, 319.6 crores, up by 50.4% over Rs.3,535.8 crores for the
nine months ended December 31, 2006. Net Profit for the nine months ended December
31, 2007 was Rs.1, 119.1 crores, up by 40.3%, over the corresponding nine months ended
December 31, 2006.
As of December 31, 2007, the Bank’s distribution network was at 754 branches and
1,906 ATMs in 327 cities as against 583 branches and 1,471 ATMs in 263 cities as of
December 31, 2006. As of December, 2007 the number of debit cards issued by the bank
crossed 5 million while credit cards issued crossed the 3.5 million mark. Portfolio quality
as of December 31, 2007 remained healthy with net nonperforming assets at 0.4% of total
customer assets. Capital Adequacy Ratio (CAR) was 13.8% against the regulatory
minimum of 9%. Tier I CAR was at10.5%. as at December 31, 2007.
Note:
(i) Rs. = Indian Rupees
(ii) 1 crore = 10 million
(iii) All figures and ratios are in accordance with Indian GAAP.
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FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED DECEMBER 31, 2007
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(Rs. in lacs)
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Segment information in accordance with the Accounting Standard on Segment Reporting (AS17) of the
three operating segments of the Bank is as under:
(Rs. in lacs)
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(Rs. in
lacs)
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Awards and Achievements - Banking Services
HDFC Bank began operations in 1995 with a simple mission: to be a "World-class Indian
Bank". HDFC realized that only a single-minded focus on product quality and service
excellence would help us get there. Today, HDFC are proud to say that HDFC are well
on our way towards that goal.
2007
Business Today 'Best Bank' Award

Dun & Bradstreet – 'Corporate Best Bank' Award
American Express
Corporate Best Bank
Award 2007
The Bombay Stock 'Best Corporate Social Responsibility Practice' award
Exchange and
Nasscom
Foundation's
Business for Social
Responsibility
Awards 2007
Outlook Money & Best Bank Award in the Private sector category.
NDTV Profit
The Asian Banker Best Retail Bank in India
Excellence in Retail
Financial Services
Awards
Asian Banker Our Managing Director Aditya Puri wins the Leadership
Achievement Award for India
2006
Business Today Best Bank in India.

Forbes Magazine One of Asia Pacific's Best 50 companies.
Businessworld Best listed Bank of India.
The Asset Best Domestic Bank.
Magazine's Triple A
Country Awards
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Asiamoney Awards Best Local Cash Management Bank in Large and Medium
segments.
Euromoney Awards "Best Bank" in India.
2005
Asiamoney Awards Best Domestic Commercial Bank

Asiamoney Awards Best Cash Management Bank - India .
The Asian Banker Retail Banking Risk Management Award in India.
Excellence
Hong Kong-based Best Bank India
Finance Asia magazine
Economic Times "Company of the Year" Award for Corporate Excellence.
Awards
The Asset Triple A Best Domestic Bank in India Region - 2005
Country Awards
The Business Today- Best Local Cash Management Bank in India US$11-100m -
KPMG Survey 2005
The Business Today- "Best Bank in India" for the third consecutive year in 2005.
KPMG Survey
Economic Times - "Most Customer Responsive Company - Banking and
Avaya Global Connect Financial Services - 2005
Customer
Responsiveness
Awards
2004
Asiamoney Awards Best Local Cash Management Bank in India US$11-100m

Asiamoney Awards Best Local Cash Management Bank in India >US$501m
Asiamoney Awards Best Local Cash Management Bank in India 1989-2004 (poll
of polls)
Asiamoney Awards Best Overall Domestic Trade Finance Services in India - 2004
Asiamoney Awards Most Improved company for Best Management Practices in
India - 2004
Business World One of India's Most Respected Companies - 2004
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Forbes Global Best Under a Billion, 100 Best Smaller Size Enterprises in
Asia/Pacific and Europe - 2004
Asian Banker Awards Operational Excellence in Retail Financial Services - 2004
The Asset Triple A Best Domestic Bank in India - 2004
Country Awards
2003
Forbes Global Best Under a Billion, 200 Best Small Companies - 2003
The Asset Triple A Best Domestic Bank in India -2003
Country Awards
BusinessWorld - One of India's Most Respected Companies
The Business
World Most
Respected
Company Awards
The Asset Best Cash Management Bank
magazine
The Asset Best Trade Finance Bank
magazine
FE-Ernst & Young Best New Private Sector Bank - 2003
Best Banks Survey
Outlook Money Best Bank in the Private Sector – 2003
Business Today Best Bank in India -2003
NASSCOM & Best IT User in Banking -2003
economictimes.com
- IT Users Awards
There have also been some other proud moments for HDFC:
London-based Euromoney magazine gave us the award for "Best Bank - India" in 1999,
"Best Domestic Bank" in India in 2000, and "Best Bank in India" in 2001 and 2002
Asiamoney magazine has named HDFC "Best Commercial Bank in India 2002".
For their use of information technology HDFC has been recognized as a
"Computerworld Honors Laureate" and awarded the 21st Century Achievement Award
in 2002 for Finance, Insurance & Real Estate category by Computerworld, Inc., USA.
HDFC’s technology initiative has been included as a case study in their online global
archives. The Economic Times has conferred on us The Economic Times Awards for
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Corporate Excellence as the Emerging Company of the Year 2000-01.

Leading Indian business magazine Business India named HDFC "India's Best Bank" in
2000.
In the year 2000, leading financial magazine Forbes Global named HDFC in its list of
"The 300 Best Small Companies" in the world and as one of the "20 for 2001" best
small companies in the world.
HDFC’s Range of Products & Services

Saving Deposits
a. Regular Savings: - An easy-to-operate savings account that allows

you to issue cheques, draw Demand Drafts and withdraw cash. Check up on
your balances from the comfort of your home or office through NetBanking,
PhoneBanking and MobileBanking.
Need money urgently? Withdraw cash from any of the 16471647 ATM
centres spread across the country.
Features & Benefits
Wide network of branches and over thousand ATMs to meet all your banking needs no
matter where you are located.
Bank conveniently with facilities like NetBanking and MobileBanking- check your
account balance, pay utility bills or stop cheque payment, through SMS.
Never overspend- Shop using your International Debit Card that reflects the actual
balance in your savings account.
Personalised cheques with your name printed on each cheque leaf for enhanced
security.
Take advantage of BillPay, an instant solution to all your frequent utility bill payments.
Instruct for payment over the phone or through the Internet.
Avail of facilities like Safe Deposit Locker, Sweep-In and Super Saver facility on your
account.
3 Free transactions on SBI/Andhra Bank ATMs per month.
Free Payable-at-Par chequebook, without any usage charges upto a limit of Rs.50,000/-
per month.
Free InstaAlerts for all account holders for lifetime of the account.
Free Passbook facility available at home branch for account holders (individuals).
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Free Email Statement facility.
b. Saving Plus Account: -Introducing the best banking option for you
with HDFC Bank Savings Plus Account. Now you can get access to some of
the finest banking facilities with HDFC Bank's Savings Plus Account. All you
have to do is maintain an Average Quarterly Balance of Rs. 10,000/- and
experience the benefits as mentioned below:
Features & Benefits
Wide network of branches and over thousand ATMs to meet all your banking needs no
matter where you are located.
2 Free transactions on SBI/Andhra Bank ATMs per month.
3 Free transactions on any other Bank's ATM per month.
Free International Debit Card for all account holders for life time of the account.
Free Payable at Par (PAP) chequebook without any usage charges upto a limit of
50,000 per month.*
Free Demand Drafts on HDFC Bank locations, upto a limit of 25,000/- per day.
Free BillPay & InstaAlerts for all account holders for lifetime of the account
Free Electronic Funds Transfer facility, NetBanking, PhoneBanking & MobileBanking
Special relationship discount on purchase of Gold Bars
25%-off on the Locker rental for the 1st year (only).
Intercity Banking / Multi-city Banking.
Free Email Statement facility .
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c. Saving Max Account: -Welcome to a world of convenience. Presenting

Savings Max account, loaded with maximum benefits to make your banking
experience a pleasure. By maintaining an average quarterly balance of just
Rs. 25,000/- you get a host of premium services from HDFC Bank absolutely
free*.
Features & Benefits
Free unlimited transactions: Cash withdrawal and balance enquiry, at all HDFC Bank
ATMs & on any other Bank's ATM using your HDFC Bank Debit Card.
Free Gold Debit Card for primary account holder for lifetime of the account. Gold
Debit Card for other account holders at Rs 250/- p.a.
Free Woman's Advantage/International Debit Card for all account holders for lifetime
of the account.
Free Payable-at-Par (PAP) chequebook, without any usage charges upto a limit of 1 lac
per month.*
Free Demand Drafts on HDFC Bank locations, upto a limit of 50,000/- per day at home
branch.
Self/Third Party Cash Deposit/Withdrawal at non-home branches, upto Rs 50,000/- per
day free. Above Rs 50,000 a charge of Rs 2.90 per thousand on the full amount would
be applicable.
Optional sweep out facility to transfer extra savings to a Fixed Deposit, at the threshold
of Rs.50,000/-.In the event of the balance in SavingsMax account exceeding Rs
50,000/-, the amount in excess of Rs 50,000/- will be swept out in to a Fixed Deposit
with a minimum value of Rs 25000/- for a 1year 1day period.
Free BillPay & InstaAlerts for all account holders for lifetime of the account.
Free Monthly Statement of Account.
50% off on the Locker rental for the 1st year only.
Folio maintenance charges on Demat account free for first year.
Free National Electronic Funds Transfer facility, NetBanking, PhoneBanking &
MobileBanking.
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d. Family Savings Group: -The Family Savings Group links together up to four
individual HDFC Bank accounts (same family) under a single group. Take
advantage of the group Average Quarterly Balance (AQB) and operate your
individual accounts without worrying about minimum balance.
Features & Benefits
All account holders can operate their account freely without worrying about their
minimum balance.
Family members with NRI status can also be part of the group.
Get 5 Free Cash withdrawal transactions on SBI ATMs per group per month.
Upto 2 free DD's/ MC's on HDFC Bank locations per account per month (max. up to
Rs. 25,000/- per instrument per day).
Free International Debit Card for all account holders till the account is part of the
Family group. (NRO Accounts will be issued only ATM cards)
Free BillPay & InstaAlerts facility for all account holders till the account is part of the
Family Group.
Free Standing Instructions for investment into Mutual Funds.
Free OneView to access all your accounts.
Free MobileBanking, NetBanking & PhoneBanking.
Enjoy a Savings account to Savings acount sweep-in to a nominated account (sweep-in
to NRE accounts not permitted from resident / NRO accounts).
Payable-at-par facility at a nominal cost for all accounts in the family group.
**Available only on request at the branch.
Cash delivery @ Rs. 50/- per delivery.
Free Email statements .
e. Kids Advantage Account: -Start saving for your child today and secure
his/her future. Open a Savings Account and transfer money every month
into his/her Kids Advantage Account. Watch the savings grow as your child
grows. The accumulated savings in the Kids Advantage Account can over
the years help in meeting your child's needs.
Features & Benefits

Builds up savings for your child's future.
Automatically increases the balance in your Kids Advantage Account by transferring
a fixed sum from your Savings Account every month.
Amounts in excess of Rs. 5,000/- over and above a balance of Rs. 10,000/- gets
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converted into Fixed Deposits for a specified period in your child's name.
Free International Debit Card for your child (above 7 years of age) with a maximum
drawing capability of Rs. 2,500/- per day.
Free Education Insurance cover of up to Rs. 1,00,000/- for your child with every
Kids Advantage Account.
Net Banking facility to monitor both, your Savings Account as well as your Kids
Advantage Account.
Free Funds Transfer between your Savings Account and your Kids Advantage
Account.
Opt for systematic Investment in Mutual Funds to plan for your childs future.
Free InstaAlerts for all account holders for lifetime of the account.
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f. Pension Saving Bank Account: -A Pension Saving Account is a Zero Balance

Account that accumulates your pension over the years. It comes with a free International
Debit Card and facilities like Phone and Net Banking. You can access this Account from
any branch within the HDFC network and also request for transfer to another bank.
Features & Benefits
The Pension Saving account is a Zero Balance Account.

Timely credit of receivables
Free International Debit Card.
Enjoy facilities such as NetBanking, PhoneBanking, BillPay, ATM facility, inter-city
and inter-branch banking.
Pension Accounts are transferable from one branch/bank to another.
The HDFC Bank advantage

Pension Accounts are opened immediately after advice, and deliverables reach in time-
within the 1st and 5th of the new month (in case of EPFO) and last day of the month (in
case of Central Govt. Civil Pensions).
Timely communication to the customer on receipt of the PPO.
No delays in commencement of pension disbursals (subject to all the stipulated
terms/conditions are fulfilled by the pensioner).
Dispatch of credit advice containing detailed calculations of the amount credited each
month within 10 days of the payment.
Timely issue of Form- 16A (by April 15th) for tax deducted at source in the
immediately previous financial year.
Timely intimation of revisions due to changes in rates of Pension or Dearness
Allowance.
Immediate action in case family pension devolves to the spouse.
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g. 'No Frills' Savings Account: - In an effort to make banking simpler and more
accessible for our customers, we have introduced the 'No Frills' Savings
Account, which offers you all the basic banking facilities. You can even avail
of services like NetBanking, Mobilebanking free of cost.
All this with a Zero Initial Pay-in and a Zero Balance account!
Features & Benefits
Access a wide network of branches and over a thousand ATMs across the country to
meet all your banking needs.
Bank conveniently with facilities like Free NetBanking and MobileBanking.
Use the Free Electronic Funds Transfer (EFT) facility to transfer funds from your
HDFC Bank account to an account in another Bank at the locations as specified by
RBI.
Enjoy Free IVR based PhoneBanking. (Agent assisted calls will be charged*)
Get Free Quarterly Account Statements.
Access your account through a Free ATM Card.
Enjoy free Cash Deposits at Branch/ATM.
9 Free Cash withdrawals per Quarter at Branch and HDFC Bank ATMs
 This
includes 1 Cash withdrawal per month at the Branch and 2 Cash withdrawals
per month at HDFC Bank ATMs
 Additional ATM Cash withdrawals in the month will be charged Rs. 15/- per
transaction. Other transactions like cheque deposit, balance enquiry and mini-
statement at the ATMs will be free of charge and without any restrictions
 Additional Branch Cash withdrawals in the month will be charged @ Rs.50/- per
transaction. Cheque deposits at branches will be free of charge and without any
restrictions
International Debit Card available only on request at the branch @ Rs. 100/- p.a. for
each applicant.
First Chequebook consisting of 25 leaves free and subsequent cheque books to be
charged at the rate of Rs 5/- per cheque leaf.
Take advantage of BillPay, an instant solution to all your frequent utility bill payments.
Instruct for payment over the phone or through the Internet*.
Enjoy InstaAlerts via e-mails or SMS at nominal charges*.
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Avail facilities like Safe Deposit Locker, Sweep-In and Super Saver on your account.
h. Institutional Savings Account: - A specially designed account that offers twin

benefits of a savings as well as a current account. Your funds continue to earn you
interest while you enjoy hassle-free banking & a host of other features. All this and more
in a Zero Balance account!
Features & Benefits
Zero balance account

Payable at Par chequebook facility Free: You can now use your PAP chequebook at any
of HDFC Bank locations (through Clearing only) without any charge.
Avail of Free Outstation Cheque Collection at HDFC Bank locations across the
country.
You can also avail of special rates for outstation cheque collection at non-HDFC Bank
locations.
Enjoy unlimited DDs on HDFC Bank locations Free.
Carry out cash transactions at any HDFC Bank branch. Third party cash transactions up
to Rs.50,000/ - per day Free.
Get monthly account statements Free.
Avail special discounts on Foreign exchange transactions.
Bank from home using our 24-hour NetBanking & PhoneBanking service.
Collect fees, donations online using our Payment Gateway facility.
Invest your surplus funds smartly! Get valuable investment advice from our monthly
newsletter absolutely Free.
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i. Kisan Club Savings Account
Features & Benefits
Free Personalised Cheque Book.

Free PAP Cheque Book (issued only on request).
No Cheque Book Charges (issuance charges as per S&F brouchure apply).
Free International Debit Card for 1st Year.
Free Personal Accident Insurance cover of Rs.2.00 Lacs on Debit Card.
Inter Branch Banking.
Free PhoneBanking , MobileBanking and NetBanking
Free Monthly email statements .
CURRENT ACCOUNT
a. Regular Current account: - A Current account is ideal for carrying out day-to-
day business transactions. With the HDFC Bank Regular Current Account, you
can access your account anytime, anywhere, pay using payable at par
cheques or deposit cheque at any HDFC bank branch. It also facilitates FREE
NEFT transactions & FREE RTGS collections for faster collections in your
account. Regular Current Account requires you to maintain an average
quarterly balance of only Rs. 10,000.
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Features & Benefits
Convenient inter-city banking : Deposit your local cheques in one branch of a city
and have it credited to your account at a branch in another city or make payments
across HDFC Bank locations using PAP cheque facility at a nominal rate
Free payments and collections through NEFT
Free RTGS collection. RTGS payment @ Rs.100/- per transaction
Inter-city Account to accounts funds transfer between HDFC Bank accounts at a
nominal charge of Rs.15/- per transactions
Free Demand Drafts (DD) above Rs.100,000/-. Demand drafts up to Rs.50,000/- at
flat cost of Rs.40/-. DDs above Rs.50,000/- & up to Rs.100,000/- at nominal cost of
Rs.25/- .
Free Pay Order (PO) above Rs.100,000/-. Pay Order up to Rs.50,000/- at flat cost of
Rs.40/-. POs above Rs.50,000/- & up to Rs.100,000/- at nominal cost of Rs.25/- .
Payable at par cheque book at nominal price.
Register for InstaAlert service and receive updates on your account as and when the
select transaction happens - all this without visiting the branch or ATM!
Enjoy facilities like 24-hour PhoneBanking, NetBanking and MobileBanking that
helps you check your balance & transaction details, find out the status of your cheque
or stop cheque payment.
b. Plus Current Account: - In today's fast-paced world, your business regularly

requires you to receive and send funds to various cities in the country. HDFC
Bank Plus Current Account gives you the power of inter-city banking with a
single account and access to more than 329329 cities.
From special cheques that get treated at par with local ones in any city where
we have a branch, faster collection of outstation cheques (payable at branch
locations), free account to account funds transfer between HDFC Bank
accounts to Free inter-city clearing of up to 100 lakhs per month, our priority
services have become the benchmark for banking efficiency.Plus Current
Account requires you to maintain an average quarterly balance of Rs.
100,000.
Features & Benefits
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Free Account to account funds transfer between HDFC Bank accounts

Free payment and collection through RTGS.
Free payment and collection using NEFT (through Netbanking)
Free up to 50 Demand Drafts per month and can be issued from any HDFC Bank
Branch
Free up to 50 Pay Orders (PO) per month and can be issued from any HDFC Bank
Branch.
Free anywhere collection & payment transactions (clearing) within HDFC Bank branch
network (except Dahej), up to Rs.100 lacs per month.
Convenience to withdraw & deposit cash at all our branches*
300 "At Par" cheque leaves free per month.
Enjoy facilities like 24-hour Phone Banking, Net Banking and Mobile Banking that
helps you check your balance & transaction details, find out the status of your cheque
c. Premium Current Account: - Your business needs a partner who can manage
your finances while you concentrate on growing your business. You can avail
benefits of inter-city banking account with Premium Current Account that
requires an average quarterly balance of only Rs. 25 000, offers Payable-At-
Par cheque book facility & FREE inter-city clearing transactions across our
network up to Rs.25 Lacs per month.
This account provides the benefits of accessing your account from a large
network of branches, and through direct access channels - the phone, mobile,
Internet and through the ATM.
Features & Benefits
Free anywhere collection & payment within HDFC Bank branch network (except
Dahej), up to Rs.25 lacs per month, incremental amount to be charged @ Rs.1.50 per
Rs.1,000/-, min Rs.25/-
Free NEFT Transactions.
Free RTGS collection. RTGS payment @ Rs.100/- per transaction.
Inter-city Account to accounts funds transfer between HDFC Bank accounts at a
nominal charge of Rs.15/- per transactions.
Free Demand Drafts (DD) above Rs.100,000/-. Demand drafts up to Rs.50,000/- at
flat cost of Rs.40/-. DDs above Rs.50,000/- & up to Rs.100,000/- at nominal cost of
Rs.25/- and can be issued from any HDFC Bank Branch .
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Free Pay Order (PO) above Rs.100,000/-. Pay Order up to Rs.50,000/- at flat cost of
Rs.40/-. POs above Rs.50,000/- & up to Rs.100,000/- at nominal cost of Rs.25/- and
can be issued from any HDFC Bank Branch .
100 "At Par" cheque leaves free per month
Enjoy facilities like 24-hour PhoneBanking, NetBanking and MobileBanking to access
your account.
d. Flexi Current Account: - HDFC Bank Flexi Current Account is the answer to your
changing banking needs during peak seasons. With HDFC Bank Flexi Current Account
your Cash Deposit and Anywhere Transaction limits are a multiple of the balance you
maintain in your Current Account. So, during peak seasons, you get the benefit of higher
transaction limits due to the higher average balances maintained in your account. What’s
more, during lean seasons, you need not bother about maintaining huge balances to enjoy
high transaction limits, which you anyway may not need.
Flexi Current Account requires you to maintain a minimum Average Monthly

Balance (AMB) of just Rs. 75,000.
Features & Benefits
Enjoy dynamic free limits on Intercity Payments, Collections & Funds Transfer as
well as Cash Deposit at home location branches based on the AMB maintained*
For example, you maintain an AMB of Rs.2,00,000/- in a particular month. Your

dynamic free transaction limits for that month would be as per the following table:
Transaction Dynamic Free Limits*

Cash Deposit at Home Branch Location Rs. 24,00,000 in that particular
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month
Anywhere Payments, Collections & Funds Transfer Free up to Rs.1,00,00,000/- in that
(except Dahej) particular month
Pay your vendors on a real time basis using Real Time Gross Settlement (RTGS)
available across 23,000 Bank Branches*. What’s more, payments and collections
through RTGS are completely free!
Make and receive remittances to & from your vendors & customers across 20,000 +
Bank Branches of more than 50 Banks through Net Banking using National Electronic
Fund Transfer (NEFT), Absolutely Free!
Free 40 Demand Drafts & Free 40 Pay Orders issued from any HDFC Bank Branch*
Convenience to withdraw and deposit cash at all our branches*.
Competitive pricing on Demand Drafts drawn on Correspondent Banking Locations as
well as Outstation Cheque Collection at HDFC Bank Locations
InstaAlert service - receive updates on your account as and when the select transaction
happens – all this without visiting the Branch or ATM!
Enjoy facilities like 24-hour Phone Banking, Net Banking and Mobile Banking that
helps you check your balance and transaction details, find out the status of your cheque
e. Reimbursement Current Account: - No more paperwork, no more receipts to keep

track of - a hassle-free account that allows you to deposit the reimbursements you receive
from your company on a monthly basis.
How to Open a Reimbursement Account

 Procure an Account Opening Document (AOD) from HDFC Bank. (If you have
just joined, first request your company to open up a Salary Account for you).
 Mention your Salary Account number and your Debit Card number on the AOD
so that your Debit card can be linked to both, your Salary Account as well as your
new Reimbursement Account.
 Request your company to directly credit cash payments to the Reimbursement
Account.
Features & Benefits
Easily distinguish between reimbursements and basic monthly salary.

Choose from either your Salary Account or your Reimbursement Account when
withdrawing cash from HDFC Bank ATMs.
Utilise Net Banking, Phone Banking and Mobile Banking facilities.
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Receive half-yearly statements of all your reimbursements, thus doing away with filing
individual receipts.
No need to maintain a minimum balance (Zero Balance Account)
Receive a separate cheque book (on request) for your Reimbursement Account.
Implementing a Technology-
Based CRM Solution
The HDFC Experience
The Retail Strategy
As part of plans, it is implementing various projects to establish

world class CRM practices, which would provide an integrated view of
its customers to everyone in the organisation. CRM at HDFC involves
increased communication between the virtual universal bank and its
customers and prospects, as well as within the group itself. The
underlying idea is to enhance every instance of contact with the
customer. HDFC believes that a true customer centric relationship can
only be accomplished by considering the unique perspectives of every
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single customer of the organisation. Hence the pressing need to put in
place a technology enabled CRM solution.
The CRM Roadmap
CRM, at HDFC, is viewed as a discipline as well as a set of discrete

software technologies, which will focus on automating and improving
the business processes associated with the customer – face –to-face,
call Centre, ATM, web, telephone, kiosk, bank branch, sales associates,
etc – so as to allow HDFC to carry out cradle-to-grave customer
management more efficiently. It should allow HDFC to engage in one-
to-one marketing by tracking complete customer life-cycle history.
To begin with it will automate process-flow tracking in the product
sales process, and be able to generate customized reports and
promote cross selling. It will also enable efficient campaign
management by providing a software interface for definition, tracking,
execution, and analysis of campaigns.
From an architecture perspective, the enterprise-wide CRM solution

should seamlessly integrate non-transactional related customer
information housed in the front-office with the transactional
information housed in the back office.
Implementing CRM
A very detailed and comprehensive CRM action plan was developed

based on the understanding that CRM will require enterprise wide
transformation.
The CRM Business Transformation Map below shows the various

aspects of that change.
Product Sales Channel Marketing Service Customer
Product
Management Place
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Management Promotion
Management Channel
Management Contact
Management Customer
Performance Place
Performance Program
Performance Customer
Revenues Customer Patterns & Profitability Customer Lifetime Value
and Loyalty
Mass Advertising ,Sales Promotion ,Marketing Campaigns ,Integrated

Marketing ,Communications ,Segment Specific Marketing ,CRM
Transaction Processing Data ,Maintenance Data ,Access Data

Warehouse, Data Marts, Customer Touchpoint Systems
Interviews with key individuals throughout the organisation helped

identify different initiatives that have been launched, all focussed on
CRM.
The next step in the planning process was a Gap Analysis. This
analysis essentially compared current stage against optimal relative to
the five aspects of business, to identify and specifically describe the
The CRM Business Cycle:
• Understand and Differentiate
Organisations cannot have a relationship with the customer unless

they understand them… what they value, what types of services are
important to them, how and when they like to interact, and what they
wan to buy. True understanding is based on a combination of detailed
analysis and interaction. HDFC group’s customers need to see that the
company is differentiating service and communication based on both
what they have learned independently and on what the customer has
told them. At the same time, differentiation should be based on the
value customer are expected to deliver.
• Develop and Customize
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HDFC believes that the extent of customization should be based on the

potential value delivered by the customer segment.
• Interact and Deliver
HDFC is strongly of the opinion that value is not just based on the
price of the product or the discounts offered. In fact, customer
perceptions of value are based on a number of factors including the
quality of products and service, convenience, speed, ease of use,
responsiveness, and service excellence.
• Acquire and Retain
The more HDFC learns about customers, the easier it is to pinpoint

those that are producing the greatest value for the organisation.
Successful customer retention basically involves getting it “right” on an
ongoing basis. And that is exactly what HDFC group aims to achieve
out of its CRM initiatives.
Successful customer retention is based very simply on the

organisation’s ability to constantly deliver on three principles:
 Maintain interaction:- never stop listening to customers
 Deliver on customer’s value definition:- Remember that

customers change as they move through differing life stages; be
alert for the changes and be prepared to modify the service and
value proposition as they change.
 Prioritizing Changes :-Because there might be many gaps,

therefore many changes that an organisation will need to make,
prioritization was critical. The evaluation of each of the strategies
identified to resolve the gaps at HDFC were based on:
• Cost to implement – including initial one time costs, as well as

anticipated ongoing expenses.
• Overall benefit – some changes may have higher impacts on an

organisation’s ability to increase customer value and loyalty.
• Feasibility – based on the organisation readiness, data and

systems support, resource skill sets and a number of other factors.
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• Time Required – including the time necessary for training and

addressing “cultural” change management issues related to a specific
strategy
• Creating an Action Plan
The next step in the planning process was the development of a very
detailed action plan. While the complete plan might span three or
more years, it was based on three-month phases with clear
deliverables that will demonstrate both progress and quick hits or
measures of success. The plan identified interdependent activities and
should comprehensively detail the time and resources required for
each activity.
Another key factor for the planning process was the Leadership Action
Plan. Advancing on the CRM transformation map required significant
organisation change. This part of the action plan helped assess the
drivers and restraints of change and the organisation’s readiness to
assess the change.
Selecting and Implementing a Technology Based Solution
Technology
The success of the CRM initiatives were contingent on various

decisions pertaining to technology. Some of the key issues were: -
(a) Make or Buy: - The decision to buy was based on an evaluation

of an identified set of criteria. Some criteria were Functionality,
Flexibility, Scalability, Fit with existing architecture, etc. was decided
to purchase an off-the-shelf CRM solution and customize it to suit
HDFC’s requirements.
(b) From whom to buy: Some Criteria included were CRM expertise,
Retail Finance Experience, Credentials including financials, client list,
life history, etc. A detailed Request for Information (RFI) was sent to
each of the shortlisted companies. After receiving the RFIs, another
round of evaluation was done. After shortlisting two product vendors
and system integrators, reference calls were made to several of the
past clients of all shortlisted companies.
Processes
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All processes were mapped on to product by understanding the

details. During the course of the process mapping, several
opportunities for improvement were identified and implemented.
The Sales Process – Pre CRM and Post Implementation of CRM
Lessons so far from the HDFC experience

If CRM involves optimizing product, price, place of distribution,
promotion, sales and service, why are so many companies struggling?
Hasn’t anyone really mastered the art and science of CRM, and if not,
why is it so difficult?
CRM is difficult because it is an enterprise wide initiative.
• CRM is not a technology initiative. Many have confused CRM as a

technology initiative, and assigned the CRM implementation project to
their information system or information technology group. CRM
conferences often equate to technology exhibits and demonstrations.
Technology is needed in order to implement CRM – particularly the
customization part – but technology is not the driver of CRM, or the
solution to successful CRM implementation.
• CRM is not exclusively a marketing initiative. Many organisation have

merely equated CRM with customer focused marketing, or data-
driven/database marketing. CRM results in more effective, data driven
marketing efforts; CRM requires marketing experience. But CRM is
strictly not a marketing initiative.
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• CRM is not exclusively a sales initiative. Similar to marketing, CRM is

often lodged within the sales department. The sales-force, after all, is
extremely close to their customers…understanding their needs and
wants., and trying to fulfill them. Sales, however, is just one functional
area that can benefit from CRM, and that is necessary for effective
CRM.
• CRM is not exclusively a service initiative. As with sales and

marketing, customer service is one functional aspect of successful CRM
implementation. But customer service is not the sole driver of the
process.
CRM involves marketing, sales, service, and technology, as well as

the other inner workings of the organisation. Having even one “broken
spoke in the wheel”. one area of the organisation that is less than
committed to CRM … can make the difference between success and
failure.
Organising for CRM

Assessing Need
How do you know your business requires CRM?
It is very easy for a business to get caught in the latest ‘customer trap’
when it is being driven by the information technology (IT) market.
Every business does require CRM; the question is to what level?
Trends
Many businesses are pushed by the current trend to change their
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business strategy, especially around CRM. There are basically three
trends that effect a business:
Consumer
The customer is an ever-changing image, to be really successful with

CRM you must recognize the customer trends that are effecting the
business.
If a business does not understand a customer profile and the changes

that have occurred then it is not possible to provide true customer
relationship management.
Products
It is the business providing the products that meet the changing

customer trends. Products need to be reviewed constantly perhaps
enhanced or even removed. Supermarkets are a perfect profile to look
at for viewing ‘product trends’, they constantly add and remove
products and they constantly view customer buying profiles and set
out the pattern of the store to meet the strongest buying trend. This
may not always be by using the latest ‘technology’, it could be by just
reviewing shells at the end of the day, but the super market is at the
minimum watching for the two basic trends in CRM.
Technology
Ensure that the business is ready to install the new technologies, is the
customer data upto it, or is it time to start again? Do you need to
review every technology being used or just one area. Will it assist the
business, is it going to grow with the business requirements or is the
technology just another ‘trend’? Relationship management should not
be an alternative to existing functions/technology; it could be a logical
extension to enhance those in existence, though it could radically
change some of the operational processes.
Is your Business ready? Are your customers Ready?
What are the costs, monetary, time, people and long-term

issues?
Does CRM really matter?
Whatever the business activity is all companies have to ask
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themselves is CRM the real factor for their company to succeed. Some
customers do not need long-term relationship with their suppliers;
therefore only minimal information is required from that customer.
That however is still a form of CRM. Other companies have high quality
and high value customers that they need to know information about,
they need to provide exceptional service, the ‘pedigree’ of CRM.
Whatever the business is, if it has customer it has to ask, does
customer relationship management matter? What does it man to them
in business terms? At what cost? What is the overall loss if not
adhered to?
CRM: Yes it does really matter – the strategy needs to last, be

constantly reviewed and can evolve over time.
Financial Framework for CRM
There are organisational constraints encountered in execution of CRM

programs. Mainly they are as follows:
• A mismatch between resource allocated and service levels desired for

building customer relationship
• Absence of financial business case and ROI for investments in

Customer Relationship
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• Horizontal non alignment of organisations to customers line of sight
• Balance to be achieved between maximisation of revenue and

customer satisfaction.
Direct selling machinery would have costs that are significantly higher
than referral sale – hence the need to invest in customer relationship
with an eye on acceleration of referrals so as to bring down costs or
increase productivity of sales. (higher cold call to order ratio) . Figure1
illustrates the phenomenon that organisations can drive referral sale
line in a manner that can reduce time T1 and with that in figure 1(a)
the overall unit selling cost (average of direct sales cost + referral sale
cost) can be reduced with higher sales productivity.
References
• Gruen, T. W. (1997), ’Relationship Marketing: The Route to

Marketing Efficiency and Effectiveness’, Business Horizons, November
– December,
• Berry, L. L. (1983), ‘Relationship Marketing of Services: Growing
Interest, Emerging Perspectives’, Journal of the Academy of Marketing
Science,
• Parasuraman, A., Zeithaml, V. A., and Berry, L. (1985), "A
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Conceptual Model of Service Quality and its Implications for Future
Research," Journal of Marketing
• Payne, A. (2000), ‘Relationship Marketing: The UK Perspective’, in
Sheth, J. N. and Parvatiyar, A. (eds.) Handbook on Relationship
Marketing, Sage Publications, Inc.:
• Reichheld, F. F. and Sasser, W. E. (1990), 'Zero Defections: Quality
Comes to Services', Harvard Business Review, September – October
• Sheth, J. N. and Parvatiyar, A. (1995) ‘Relationship Marketing in
Consumer Markets: Antecedents and Consequences', Journal of the
Academy of Marketing Science
• Jagdish And Sheth, Atul Parvatiyar, G Shainesh, ‘CRM Emerging
Concepts, Tools and Applications’
• Websites
• http://www.crmassist.com/
• http://www.crmguru.com/
• http://www.crmfoundation.com/
• http://www.crmindia.org/
• http://www.crmsearch.com/
• http://www.crmcommunity.com/
• http://www.crm-forum.com/
• Philip Kotler: Marketing Management
GLOSSARY
A
ABC - Activity Based Costing An accounting method that enables an
organization to understand where costs are incurred by allocating
costs to all activities and then charging these to the relevant product,
product line, customer or supplier.
Anomalous data - Data that result from errors (for example, data entry
keying errors) or that represent unusual events. Anomalous data
should be examined carefully because it may carry important
information.
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Analytical model - A structure and process for analyzing a data set. For
example, a decision tree is a model for the classification of a data set.
Artificial neural networks - Non-linear predictive models that learn
through training and resemble biological neural networks in structure.
Association - A search for associated products in a range. Used in retail
(simultaneous purchases), services and finance (multi-holding) etc.
Temporal associations trace out sequences of associations. They
enable purchasing behavior patterns to be anticipated. They are based
on the probability of purchase of a product at a known time, taking
into account the purchase of another product at instant.
B
Business Intelligence (BI): This process involves analyzing and
exploring structured, domain-specific information — often stored in
data warehouses — to enable users to discern trends, recognize
patterns, gain insights and draw conclusions. The BI process includes
communicating findings and effecting change. The BI domains include
customers, products, services and competitors.
Back-office - business applications which relate to the day to day
transactions of a business such as accounting, logistics, human
resources
C
Call-centre - application which helps to manage telephone based
contact with customers.
Configurator - application which uses a set of rules to help guide a
customer through the features and options of a complex product
ensuring that they only choose a combination which is compatible and
meets their needs
Classification - Definition of segments.
Contact strategy - matching lifestage with the probability of
responding to a customized promotion.
Clustering - The process of dividing a data set into mutually exclusive
groups such that the members of each group are as "close" as possible
to one another, and different groups are as "far" as possible from one
another, where distance is measured with respect to all available
variables.
Churn analysis - The profile's definition of customers that have left and
the identification of customers that are likely to leave.
Classification - The process of dividing a data set into mutually
exclusive groups such that the members of each group are as "close"
as possible to one another, and different groups are as "far" as
possible from one another, where distance is measured with respect to
specific variable(s) you are trying to predict. For example, a typical
classification problem is to divide a database of companies into groups
that are as homogeneous as possible with respect to a
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creditworthiness variable with values of "Good" and "Bad."
Cross selling - Cross selling of a product. Enables the customer
portfolio to be increased and their loyalty to grow.
D
Database marketing - An approach by which computer database
technologies are harnessed to design, create and manage customer
data files containing information about each customer's characteristics
and history of interactions with the company. These files are used as
needed for locating, selecting, targeting, and establishing relationships
with the customers to enhance the long-term value of these customers
to the company.
Data mining - The process of selecting, exploring, and modeling large
amounts of data to uncover previously unknown patterns of data to
gain a business advantage. Involves examining data on customers and
transactions in order to find hitherto unknown information in the data
and respond to it
Decision tree - Technique splitting a population studied (purchasing,
response, etc.) into a series of sub-populations (branches) described
by criteria. It is based on the explanatory capacity of response to each
of the criteria taken into account by the analysis. The representation in
the form of a tree enables easier analysis of the results. We also speak
of segmentation trees (same thing).
Data warehouse - A system for storing and delivering massive
quantities of data. The database which allows the manipulation of large
quantities of information to aid analysis and decision making
Data Mining: This functionality involves the process of discovering
meaningful correlations, patterns and trends by sifting through large
amounts of data stored in repositories. Data mining employs pattern
recognition technologies, as well as statistical and mathematical
techniques.
Decision tree - A tree-shaped structure that represents a set of
decisions. These decisions generate rules for the classification of a
data set.
Direct marketing - All actions of direct communication with customers
and prospects (often based on the previous definition of segments).
Dynamic segmentation - This is based on the qualification, at each
instant, of each customer in relation to a family of offered products. A
score per family is prepared and calculated periodically for each
customer. When the score reaches a threshold value, the customer is
automatically prospected for the corresponding offer.
E
Electronic CRM: E-CRM involves the integration of Web channels into
the overall enterprise CRM strategy. The goal is to drive consistency
within all channels relative to sales, CSS and marketing initiatives to
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achieve a seamless customer experience and maximize customer
satisfaction, customer loyalty and revenue. A component of CRM and
e-business, it includes such Web-based customer channels as e-sales,
e-service, e-marketing and e-retailing.
EFTPOS - Electronic Funds Transfer at the Point of Sale - Technology
that enables consumers to pay for goods with plastic / cards to debit
account directly.
EPOS - Electronic Point Of Sale – Checkout counter equipped with bar
code reader
Efficient Consumer Response (ECR) - ECR is a strategy to remove
unnecessary costs from the retail / grocery distribution system and
make it more responsive to consumer demand. It requires distributors
and suppliers to focus jointly on the efficiency of the total grocery
chain rather than the efficiency of individual components. Aims to
reduce total costs, inventories and physical assets and improve
consumer choice, satisfaction and service.
Exploratory data analysis - The use of graphical and descriptive
statistical techniques to learn about the structure of a data set.
Electronic Business: E-business comprises any Internet- or network-
enabled business activity that transforms internal and external
relationships to create value and exploit market opportunities driven
by the new rules of the "connected economy".
Enterprise Resource Planning (ERP): This is a business strategy that
improves shareholder and customer value by integrating
manufacturing, financial and distribution functions to dynamically
balance and optimize an enterprise's resources.
Electronic ERP: E-ERP represents the Web-enabled elements of an ERP
business strategy that improve shareholder and customer value by
integrating interenterprise manufacturing, financial and distribution
functions to dynamically balance and optimize the resources of the
enterprise together with its trading partners.
F
Front office - the category of applications that might be used by
employees who have direct contact with the customer or by the
customer themselves, such as a call-centre or sales force automation
system
K
Knowledge Management (KM): This is a business process that
formalizes management and leverages an enterprise's intellectual
assets. KM is an enterprise discipline that promotes a collaborative and
integrative approach to the creation, capture, organization, access and
use of information assets, including the tacit, uncaptured knowledge of
people.
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L
Lifestyle data - Data on individuals/households typically collected via
consumer questionnaires, sold by companies such as ICD and Claritas.
Life Time Value (LTV) – Predicted value of a customer to an

organization, i.e. expected future profitability. Rather than
concentrating on the instantaneous profitability of a customer, we seek
to determine their trajectory over time (inactive-> average customer-
> good customer-> very good customer), and then estimate the
profitability potential over the period of the relationship. Actions are
subsequently implemented which will raise the customer on this
trajectory (or will avoid a descent).
M
Marketing information database - This is created from internal
management systems and external data. It is the customer knowledge
base (data warehouse marketing).
Middleware: This term is used in many ways. Basically, middleware is
the software "glue" that helps programs and databases that may be on
different computers work together. More formally, GartnerGroup
defines middleware as "runtime system software that directly enables
application-level interactions among programs in a distributed
computing environment." Its most basic function is to enable
communication between application programs or DBMSs within a
single-application system or across multiple-application systems
Marketing mix - Elements of the marketing process that need to be
coordinated - often referred to as the four P's: product, price, place
(physical distribution and marketing channels - in other words how the
product gets to where the customer wants it - for example sales force,
wholesale or retail outlets etc), promotion.
O
One to One Marketing - Relational marketing conducted at the
individual level by establishing a personal relationship (including in
direct marketing) with each customer. Depending basically on the
number of customers, it is the last stage in the customer relationship.
OLAP - Online analytical processing. Refers to array-oriented database
applications that allow users to view, navigate through, manipulate,
and analyze multidimensional databases.
P
Predictive model - A structure and process for predicting the values of
specified variables in a data set.
7 P's of relationship marketing - 4P's + People, Process, Provision of
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Customer Service.
POS - Point of Sale - Place where purchase is actually made e.g.
checkout or hole-in-the-wall
Partner Relationship Management (PRM): This is the CRM element that
extends sales, marketing, customer service and other enterprise
business functions to partners to foster more-collaborative channel
partner relationships.
Personalization: Using continually adjusted user profiles to match
content or services to individuals, personalization includes determining
a user's interest based on his or her preferences or behavior,
constructing business rules to select relevant content based on those
preferences or behaviors, and presenting the content to the user in an
integrated, cohesive format.
Profiling – Describing typical customers in terms of demographics,
habits etc
Psychographics - Basis for segmenting consumer markets based on
social class (A, B, C1 etc), lifestyle and personality.
R
Relational marketing – Marketing centered on the relationship
established with the customer base. It rests on continuous knowledge
of the requirements of the customer in relation to supply and the
channels of distribution. Expected results : loyalty, resistance to
external offers, power of recommendation.
RFM -(Recency, Frequency, Monetary) - classic marketing technique,
you typically want to find customers who purchased recently, purchase
frequently and spend a large amount.
S
Share of wallet - a measure of how much of a consumer's total
business a company has.
Supply Chain Management (SCM): This is the process of optimizing the
delivery of goods, services and information from the supplier to the
customer. SCM is a set of business processes that encompasses a
trading-partner community engaged in a common goal of satisfying
the end customer.
Sales force automation (SFA) - a tool for use by the sales force which
helps them to manage the sales cycle, hold information about their
contacts and give them access to information from the back-office
systems about pricing and product availability
Segmentation - Technique of identification, on the criteria chosen, of
groups of potential customers with the same requirements and needs
(eg. with regard to the product offered)
Four broad types of criteria may be distinguished:
1. geographical (territory, region, housing micro-area)
2. socio-demographic (age, income, sex, profession, etc.)
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3. behavioral (purchase situation, user status, etc.)
4. psychographical (social class, lifestyle, cultural class, etc.)
T
Targeting - Selection of a sub-population in a customer or prospect
file. Targeting may be done by focusing on:
1. the costs generated
2. the expectation of maximum profitability
3. the expectation of maximum return
Telephone Preference Service (TPS) - A service enabling domestic
telephone subscribers who don't wish to receive unsolicited telephone
calls to register their numbers.
U
Up-selling - Technique of increasing the value of a customer by selling
products with a higher status or perceived value (eg. A credit card
company offers a gold card to its standard card holders.)
V
Value chain analysis - Technique used to view organization as a series
of customer facing processes. Constructing the value chain consists of
identifying the sequence of direct activities that add value to the
customer and indirect or support activities that enable the direct
activities to take place.
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The Emergence of CRM Practice

Looking back at a snapshot history of marketing, we can see the

• 1970’s – saw the beginning of segmentation, direct mail campaigns

• 1980’s – where Niche marketing made millionaires of those who

• 1990’s – Relationship Marketing. The explosion of telemarketing and

In addition to this, a number of key marketing concepts can also be

• Satisfying Needs, Customer Orientation

In recent years however, several factors have contributed to the

1. The growing de-intermediation process in many industries due to

9. On the supply side it pays more to develop closer relationships with

Key CRM principles

• Differentiate Customers: All customers are not equal; recognize

What CRM needs to understand while differentiating customers is:

- Sensitivities, Tastes, Preferences and Personalities

→ Low value customer requiring high value customer offerings

• Keeping Existing Customers

Grading customers from very satisfied to very disappointed should

• Maximizing Life time value

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

Summarizing CRM activities

1. Learning from customers and prospects, (having in depth

2. Creating value for customers and prospects

4. Acquiring new customers

6.Retaining existing customers

The overall purpose of CRM is to improve marketing productivity and

Customers are motivated to engage in relational behavior because of

In the Initial phase, a company has to decide which customer type

A careful review of literature and observation of corporate practices

 One-to-One Marketing and,

• Special Sourcing Arrangements

• Customer Business Development

Continuity Marketing Programs

Take the shape of membership and loyalty card programs where

Meeting and satisfying each customer’s need uniquely and

The third type of CRM programs is partnering relationships between

CRM Governance Process

CRM Performance Evaluation Process

Without a proper performance metrics to evaluate CRM efforts, it

If co-operative and collaborative relationship with the customers is

Another global measure used by firms to monitor CRM performance

CRM Implementation Issues

One of the most interesting aspects of CRM development is the

Therefore effective CRM requires a front-line information system that

However, the challenge is to develop and integrated CRM platform

It should assist the company in developing and enhancing customer

In addition, implementation tools to support interactive solutions for

Information Platform for CRM

Since CRM implementation comprises a significant information

From a corporate implementation point of view, CRM should not be

CRM and Related Concepts

As Peter Drucker defined “Information is data endowed with

To effectively implement a CRM solution it is very important to

Marketing, sales after-sales people would be knowledge workers.

Metrics, ROI, Balance Scorecard method, benchmarking are some of

It’s a proven fact that 80% of an organisation revenues come form

It is possible to generate explicit knowledge from tacit knowledge,

Role of CRM in the Context of SCM

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