Research Topic- FUTURE PROSPECTS OF CRM IN

THE AUTOMOTIVE INDUSTRY

Customer relationship management (CRM) is a strategy that enables organizations to

reduce costs, increase profitability and strengthen loyalty of their customers. CRM

collects information based on all data sources within the organization (and when it is

possible, beyond organization) and represents a holistic insight on every customer in

real time.

Customer relationship management is of upmost importance. Nobody wants one-off

customers who come and go. With the ever increasing cost of acquiring customers it

becomes important that we optimize the process while maintaining and nurturing a

deeper relationship with customers who are already are on board.

In order to do that, a company should have a clearly defined method of nurturing

customers. From acquiring information to approaching potential buyers, following

up, offering relevant content as well as loyalty programs and promotions. CRM

product is the idea that a company should have organized in order to access

information regarding the accounts and people they serve.

The emergence of CRM strategy as a management approach is the result of several

important trends that characterize contemporary society.

A shift in business focus from transactional to relationship marketing;

 Understanding that customers are business associates, not just commercial

audience;
 Transitions in the structuring of the organization at the strategic level,

from functions to processes;

 Recognition of the advantages of using information proactively rather

than only reactively;

 Greater use of technology in the management and the maximum value of

information;

 Accepting the need to balance the delivery and extraction of customervalue;

 Development of "one to one" marketing approach.

There are many technological solutions for CRM, but to think of CRM just in

technological terms is a mistake. CRM is primarily a business strategy or set of

processes, people and technology used by the companies to successfully attract and

retain customers for the maximization of growth and profit of the organization.

1.2 Automotive Industry (India) – Industry and Post Sale Practices

According to India brand equity foundation, the automotive industry in India is one

of the largest in the world with an annual production of 23.96 million vehicles in FY

(fiscal year) 2015–16, following a growth of 2.57 per cent over the last year. The

automobile industry accounts for 7.1 per cent of the country's gross domestic

product (GDP). The Two Wheelers segment, with 81 per cent market share, is the

leader of the Indian Automobile market, owing to a growing middle class and a

young population. Moreover, the growing interest of companies in exploring the

rural markets further aided the growth of the sector. The overall Passenger Vehicle

(PV) segment has 13 per cent market share.

India is also a prominent auto exporter and has strong export growth expectations for

the near future. According to the Society of Indian Automotive Manufacturers (SIAM),

Indian automotive sector today is a $74 billion industry and by 2026, the industry is
expected to achieve a turnover of $300 billion- clocking a CAGR of 15%. The

Automotive Mission Plan (AMP) was drafted in 2006 to map the aspirations of the auto

and auto component industry, to promote India as a preferred global manufacturing

destination and introduced intervention and prescription mechanisms for promoting

the industry.

Figure- Growth of Automotive Sector in India (FY06 to FY16)

Source: Indian brand Equity Foundation

Production of automobiles increased at a CAGR of 9.4% over FY06-FY16 .During FY06-

FY16, passenger vehicle segment witnessed the fastest growth, at a CAGR of 10.09%,

followed by two wheeler segment, which grew at a CAGR of 9.48% during same time

period.

2.1 Current CRM Practices

As per the automotive analyst, new vehicle profit margins are wafer thin. Additionally,

in a growing multi-channel world, it has been discovered that customers are ultimately

interested in the final product and don’t really care what kind of touch point was used

to interact with car dealers. And , makes essential for companies to ensure that focus

not focus on sale but to gain loyal customer for a life, in order to harness the massive

potential payoff in post-sales activities.

Traditionally, the distribution system of the automotive industry was such that the

manufacturers and end customers were largely distanced. For most automotive

manufacturers, their real customer was the 'dealer' and focus was on how to keep
them happy. Once the vehicle reached the dealer and the OEMs’ dues were settled,

the only interest that the manufacturers had was to ensure that the dealer succeeded

in making a sale. Manufacturers are concerned with keeping their factories running,

car production and shipping them - after which the final onus to sell the car is

transferred to the dealer.

However, as progressing time gave birth to the much evolved customer; many

manufacturers are today regretting having ever had this outlook. Having washed

their hands off all proximity with the end customer, a large volume of customer

related information was lost - customer preferences played a small role in vehicle

manufacturing.

CRM in the automotive industry is complex and despite its size, there are very few

CRM software solutions which can be tailored to meet the industry’s specific needs.

2.2 Capturing Customer Requirements

When we talk about “CRM built cars”, there are two important steps which the

industry needs to take forward. First of all, the manufacturing process flexibility has to

be increased and secondly dealer-manufacturer integration must be improvised.

The biggest reason to concentrate on 'built to order' (BTO car models) is to do away

with waste that occurs due to large left-over inventories. In an ideal automotive world,

the manufacturer will start building the car only after getting specific orders from

customers thereby leading to smart use of inventories and negligible wastage. This is

the crux of CRM in the automotive industry - customer inputs kick start production.

Inline production like paint,seating or other last minute job can be delayed a little until

the exact customer preference gets conveyed.

The idea is to have a fewer number of cars but more customized, thereby eliminating

features or options that customers do not even want. There needs to be a shift from

the stagnant mentality that quota fulfilment is more important than a satisfied

customer. The ideal tagline for CRM in the automotive industry should be “Specify

what you want and we will build it for you.”

The sales team belief in CRM system and are convinced to work for the greater

vertical good, they have the potential to bring in huge value to the customer and

vendor relationship management process.

Foresee demand - The automotive industry faces an on-going issue of

accurate demand measurement, the solution to which is not just

technological. Sometimes, certain options in cars are not even offered to

customers, as a result of which gauging the demand for it is out of the

question. Through a comprehensive CRM solution which incorporates social

CRM, sales reps can make note of customer requirements/ interests and

establish links between features and specific customer demands while

simultaneously tracking competitors' offerings. This can then be put forth to

the manufacturer for consideration. However, this is only effective with

high user adoption.

 Track open activities - Customers often have strict preferences with regardsto

when they want to be contacted by sales people and often request pertinent

written material/ reviews/ catalogues prior to further discussions or

system for each customer in the database, making it available through a central

repository. In addition, escalation rules can be customized to ensure efficient

follow-ups.

 Auto-populate campaign participants - Connections between customers and

marketing programs can be established through an effective CRM solution -

customer names can pop up against a particular marketing program or a

specific segment can be suggested to optimize lead generation.

 Calculate ROI for new initiatives - Integrate with multiple systems and collate

expenses and outcomes of various vendors/ dealer related marketing activities

and incentives on single CRM software to ensure accurate calculation of return

on investment (ROI).

2.4 Achieving CRM Success in the Automotive Industry

Marketing executives are discovering that mere implementation of a CRM system is

not the only solution to woo, communicate with and retain customers. There is often

a communication gap between customers and companies which IT systems alone

cannot bridge. According to studies, auto company-customer interaction occurs about

1.5 times per annum which does not provide sufficient data to answer questions like

which customer should receive what offer and product, when, etc. This brings forth a

crucial fact – automotive companies need that approach to CRM that marketers and

customers both can embrace with ease.

Automotive industry CRM programs must incorporate two vital principles in orderto

succeed –

 Understanding purchase-cycle intimacy - A productive CRM system must dig

deep into what drives the purchase decision before the purchase is made, and

unlock real value by recognizing that different customers tread on different

purchase paths.

 Analyse ownership experience - Since different customers follow different

individual’s ownership experience, their relationship with the automotive

throughout the cycle of ownership. A single repository with details of all

related purchases (services, AMC, insurance, accessories, etc.) and complaints

will facilitate analytical insights and redesign ofstrategies to optimize customer

experience.

4. Literature Review

1) Reichheld and Sasser (1990) indicated that an improvement of 5 percent in customer

retention leads to an increase of 25 percent to 75 percent in profit of automobile

companies. Further, Wills (2009) reported that it costs more than five times as much to

obtain a new customer than to keep an existing one. Moreover, with loyal customers,

for example, companies can increase their revenue. First, loyal customers are less price

sensitive, and the premiums of loyal customers increase 8 percent annually in the

personal insurance industry (Reichheld and Teal, 1996).

Second, loyal customers are willing to purchase frequently, try the firms’ other

products or services, and bring new customers to the firms (Reichheld and Sasser,

1990). Further the author indicates that customer loyalty provides a foundation for a

firm to examine their marketing strategy, relationship quality improvement activities,

and value creation program.

Day (1969) introduced the concept of commitment to loyalty studies, and reported

that commitment to the brand is necessary in determining the loyalty. The study seeks

to develop a conceptual framework of brand image on customer commitment and

loyalty. Therefore, the purpose of study is to evaluate how corporate brand image

affects customer commitment as well as impact on loyalty in automobile sector. The

biased behavioral response expressed over time by some decision making unit with

respect to one or more alternative brands out of a set of such brands and is a function

of psychological process (Jacoby and Chestnut (1978).

technology topics of the millennium. According to Chen and Popovich (2003), CRM is

not a concept that is really new but rather due to current development and advances

in information and enterprise software technology, it has assumed practical

importance.The root of CRM is relationship marketing, which has the objective of

improving the long-term profitability of customers by moving away from productcentric marketing.

3) Bose (2002) noted that CRM was invented because the customers differ in their

preferences and purchasing habits . If all customers were alike, there will be little need

for CRM. As a result, understanding customer drivers and customer profitability, firms

can better tailor their offerings to maximize the overall value of their customer

portfolio (Chen and Popovich) . The attention CRM is currently receiving across

businesses is due to the fact that the marketing environment of today is highly

saturated and more competitive (Chou et al, 2002).

4) According to Greenberg (2004), CRM generally is an enterprise-focused endeavor

encompassing all departments in a business . He further explains that, in addition to

customer service, CRM would also include, manufacturing, product testing, assembling

as well as purchasing, and billing, and human resource, marketing, sales and

engineering. Chen and Popovich (2003) argued that CRM is a complicated application

which mines customer data, which has been retrieved from all the touch points of the

customer, which then creates and enable the organization to have complete view of

the customers.

The result is that firms are able to uncover and determine the right type of customers

and predicting trend of their future purchases. CRM is also defined as an all embracing

approach that seamlessly integrates sales, customer service, marketing, field support

and other functions that touch customers (Chou et al, 2002) . They further stated that

CRM is a notion regarding how an organization can keep their most profitable

customers and at the same time reduce cost, increase in values of interaction which

then leads to high profits.

by the theories of total quality management (Gummesson) and by new technological

paradigms (Zineldin, 2000). There is however, a perceived lack of clarity in the

definition of customer relationship management, although all accepted definitions are

sharing approximately the same basic concepts: customer relationships, customer

management, marketing strategy, customer retention, personalization (Zineldin 2000).

6) In term of information technology (IT), CRM means an enterprise –wide integration of

technologies working together such as data warehouse, web site, and

intranet/extranet, phone support system, accounting, sales, marketing and production.

Kotler (2000) assured that CRM uses IT to gather data, which can then be used to

develop information acquired to create a more personal interaction with the customer.

In the long-term, it produces a method of continuous analysis and reinforcement in

order to enhance customer’s lifetime value with firms.

7) Goldenberg (2000) believes that CRM is not merely technology applications for

marketing, sales and services but rather when it is successfully implemented ; it

enables firms to have crossfunctional , customer-driven , technology-integrated

business process management strategy that maximses relationships. Chin et al (2003)stated that that
due to many technological solutions available for CRM automation, it is

often misconstrued as a piece of technology. But they maintained that in recent times

many companies have realized the strategic importance of CRM, and as a result, it is

becoming a business value-effort rather than technology- centric effort. Using

information technology as an enabler.

CRM strategy leverages key functional areas to maximize profitability of customer

interactions (Chen and Popovich, 2003). It has been recognized that technological

advancements and innovations , keen competitive marketing environment , coupled

with the internet are main drivers of present and future customer profitability which

makes it possible to appropriately and proportionately allocate firm’s resources to all

functional areas that affect customer relationship ( Chou et al , 2003).

transactions irrespective of the kind of channel of interaction used (Gulati and Garino,

2000). Many businesses today realize the importance of CRM and its potential to help

them achieve and sustain a competitive edge (Peppard, 2000). This view was further

boosted by Bose (2002) that as a result of changing nature of the global environment

and competition, firms cannot compete favorably with minor advantages and tricks

that can easily be copied by competing firms .The implementation of CRM is an

enabled opportunity to rise above minor advantages with real focus on developing

actual relationships with customers. Firms those are most successful at delivering what

customers want are the more likely to be leaders of the future.

4. Research Analysis, Findings &

Observations

4.1 Research Methodology

Objectives

The primary research objective isto analyse the aftersales Service practices of vehicle

and consumer satisfaction which broadly cover all the points below:

 To understand the level of transparency from service station tocustomer

 To analyse the level interaction of car company with customer and

 To study the functioning of Staffs at service station.

Consumer Research Methods

When talking about the conducting research we generally follow the two ways of

research as mentioned below:

1. Primary Research: There are several tools and agency available in market for

conducting the research e.g. . Questionnaire, Paper Survey, Observation and Testing

groups etc. .The data which we going to collect is through questionnaire.

2. Secondary Research: well it is generally done by coalition and synthesis of existing

research or data.

Sampling Process
A structured questionnaire was floated to people to meet objectives. There are 100

respondents to questionnaire and checked the quality and reliability of data. The

sampling frame is generally colleagues, relatives and friends. Now the sampling size

is 100.

The researches is majorly done in Delhi NCR with the age group ranges from 19 to 45

and both male and female are the respondents. And, the sampling process is

convenience sampling which is type of non-probability sampling technique and that

involves sample drawn from people which close at hand.

The following are results of the questions asked to the respondent in the

questionnaire. The respondents were asked a range of questions in two major

categories.

 The interaction with dealership or service centre.

 The work satisfaction in the whole process(Time/Experience/Money)