CUSTOMER RELATIONSHIP MANAGEMENT

UNIT III
Unit III: CRM program - Groundwork for effective use of CRM - Components of CRM - Types
of CRM.
----------------------------------------------------------------------------------------------
Types of Customer Relationship Programmes:

There are four types of Customer Relationship Programmes that enables the company to
-Win back customers who have defected or
-Are planning to create loyalty among existing customers. They are

1. Win Back or Save:

This is the process of convincing a customer to stay with the organization while they are
discontinuing service or convincing them to rejoin once they have left. Of the four categories of
campaigns, win back campaigns is four times more likely to succeed, if contact is made within the
first week following a defection that if it is made in the fourth week.
Selectivity is another aspect of a successful win back campaign. Leading organizations often filter
prospects for contacting to exclude customers who have frequently switched , who have bad credit
ratings or whose usage is low.
To preserve the revenue stream and prevent the customer from becoming a “traditional” win back
candidate, a few organizations are now including partial disconnects and reduced usage customers
in their win-back campaign.
2. Prospecting:

Prospecting is the effort to win new, first time customers. Apart from the offer itself, the three
most critical elements of prospecting campaign are segmenting, selectivity and sources. It is
essential to develop an effective-need based segmentation model that allows the organization to
effectively target the offer. Without this focused approach, the organization fails to achieve an
adequate acceptance on the offer or spends too much on promotions, advertising and
concessionary pricing.
Selectivity is important to prospecting as it is to win back. Need-based segmentation defines what
the customer wants from the organization and profit-based segmentation defines how valuable the
customer is and helps the organization decide how much it is willing to spend to get the customer.
Pre-scoring a consumer credit rating is one of the techniques that organization can use to determine
the latter.

1
 3. Loyalty:
Loyalty is the third category in which it is most difficult to gain accurate measures. The
organizations trying to prevent customers from leaving, uses three essential elements: Value based
and Need based segmentation and predictive churn models. Value-based Segmentation allows the
organization to determine how much it is willing to invest.
Once the customer is determined to belong to the value based segmentation screening, the
organization can use need-base segmentation to offer customized loyalty program. Affinity
programs such as airline miles and hotel points are some of the most popular methods. However,
the organization focus more on needs of individual customers, they find that they are able to
achieve the same loyalty with less investment.
4. Cross Sell / Up-sell:

The Cross –sell/ Up sell is also known as increasing the wallet share or the amount the customer
spends. The purpose is to identify complementary offerings that a customer would like. For
instance, a basic long-distance customer could be a candidate to buy internet access. Up selling is
similar but, instead of offering a complementary product, the organization offers an enhanced one.
For example, If the customer has used his credit card a few times in apparel shop. CRM tool will
enable the credit card company to send his customized mailers on apparel offers including special
incentive schemes.
Cross- Sell and Up-sell campaigns are important because the customers targeted already have
relationship with the organization. In financial terms, when a customer accepts a cross –sell or up-
sell offer, that organization begins to reap more profits.

Tools Required Supporting Your CRM Program:

•

Technology
 Using technology to maximize the benefits derived from customer
relationships
 Hardware and software
 Technologies in use today
 The technologies of tomorrow
•

People
 Executing a CRM plan
 Assuring a positive customer experience
2
 How employees can maximize the customer's positive experience
 How to support employees operating in a CRM work environment
Structure
 The foundations of CRM
= Orderliness
 Processes
 Metrics
 Ensuring that the business functions smoothly for both employees and
Customers
Understanding the business
 Customers
 Products
 Process segmentation
 How to communicate within the organization to ensure that people
function as a cohesive team
 Metrics for monitoring and assessing the business and customer
relationships

Groundwork for effective use of CRM:

I. Customer Relationship Survey Design:
The amount of work it takes to design and develop an effective survey is often an inhibiting factor
that prevents many organizations from more aggressively finding out what exactly their customers
are thinking.
Graphical design tools:
Sophisticated surveys are used by dragging and dropping elements in place. Questions include
multiple choice, numerical scale and unstructured text.
Branching logic:
Surveys designed and executed can incorporate branching logic to dynamically present customers
with different questions in real-time, based on their answers to previous questions.

3
Customer satisfaction Survey Design:
A customized CRM Customer Satisfaction Survey is designed for the organization or taking an
existing survey and altering it to be administered via the Internet, telephone, fax or newspaper. All
customer satisfaction survey instruments reviewed to assure validity, reliability and bias reduction.
Relevant survey instruments should be composed that will yield sound and valid conclusions while
achieving the maximum survey response rate possible.
Customer Satisfaction Surveys should cover nearly every facet of customer satisfaction including:
1. Overall satisfaction
2. Product –level satisfaction
3. Importance Vs Satisfaction
4. Timeliness of delivery
5. Customer service process satisfaction
6. Returns and Exchange process satisfaction
7. Interest in new potential products and services.
For online CRM customer satisfaction surveys, send a personalized email invitation to each
customer with simple directions explaining how to access and complete the survey
The organization should offer a number of unique services designed to help the clients achieve
maximum survey response rate possible including personalizes email reminders to incomplete
respondents.
Customer Loyalty Survey:
A Customer loyalty survey is ultimately a reflection of the company’s desire for customer
feedback, as well as an expression of the organization to potential respondents. As such, whether
one is starting from scratch or modifying an existing survey instrument, there are some key areas
of consideration that should be taken into account. First, start with the overview of the content
areas of the typical loyalty survey:
 Overall perception of quality, cost and value
 Measurement of how customers perceive our corporate image
 Detailed questions about the areas where customers interact with you on day-to-day
basis.

4
Gaining Higher Customer Survey Co-operation:
The following are the steps for higher customer survey participations-
1. Communicating the purpose by explaining what the survey means to maintain business
relationship
2. Asking personal permission to participate in the survey
3. Reminding the customers tactfully
4. Sharing the findings-In some cases, consider an immediate gift of small value, and/or the
chance to win a larger prize by entry to a draw. Online services are increasingly being used
in the distribution of such incentives such as coupons.
Designing and Operating a CRM Programme:
Customer Database:
Customer Database is the foundation of any CRM programme.
Today’s businesses are better placed for creating versatile customer database:
Today in most businesses, customer data flows in routinely. Customers feed in a good amount of
data about them into the records of the company at the first contact itself that all transaction details
automatically form part of the records. For example, a mobile phone customer provides to the
phone company, right at the start certain basic information about him. Once the transaction
commence, more and more details about him become available to the company. In fact, the
company details of his incoming and outgoing calls are available to it. It also knows which value
added services, promotional schemes and cross selling deals were of interest to the customer.
Similarly, a customer of a credit card company provides the company a good amount of basic data
about him \ and once the transaction start, the company knows how much the customer spend
through the whole year, it will become an excellent database that is rich in content and capable of
being used to great advantage, not only by the companies concerned but also by others in the
marketplace setting out to acquire customers.
Customer database has to be comprehensive, up-to date and functional:
The three most vital requisites of a good customer database are-
•
 Comprehensiveness
 Up-to-datedness
 Functionality
Comprehensiveness:
The customer database has to be comprehensive. In fact, it has to be so in two senses. It must cover
all the customers and it must have all essential information about them. In practice, many data base
5
do not meet these requirements in some others, essential details about the customers such as
income, size of the family, and the products (durables) he already owns are not available. The
reason is easy to discern. Though a lot of information on customers and data flows are routine in
the today’s business, many firms fail to capture them.
Up-to-datedness:
Once the company puts a customer database together, it needs to keep updating it. After all the
customer is a very dynamic entity and when the marketing environment is also highly competitive
and fast changing. Updating customer data naturally that is up-to date and relevant, minimizing the
wastage arising out of obsolescence and data irrelevance is a necessity for the firm.
Functionality:
The customer database should be functional as well. Though most companies appreciate that
customer database is crucial to CRM, many of them do not appreciate that database must be
functional. For instance, grouped by age, life style, employment, attitude and loyalty the database
must be capable of being sliced and diced at will. Once then it can be described as functional.
Data gathered needs to be integrated:
Integrating data gathered from multiple points:
Today, firms gather customer data via multiple points spread over diverse delivery channels .Let
us take illustration of a bank. The customer may carry out his debit and credit transactions with the
bank at different branches/ATMs of the bank, located in different cities. Data is card of the bank; it
would allow the bank to know at a click of a button, the complete history of the customer and his
worth to the bank.
Integrating data scattered over multiple departments:
Normally in most business, customer points spread over diverse delivery channels. Let us take a
bank for illustration. The customer may carry out his debit and while others may not have access to
it .Often the data lie scattered over desperate sources each team/applications/purchase maintain its
own database. A system that enables every executive easy access to the customer
transaction/purchase behaviour is often absent.
Providing a single, cohesive, view of the customer:
CRM counters the above scenario and enable all the customer interacting executives to have a
single, cohesive view of the customer. The tools aggregate the business and maintain the customer
information in such a manner that ensures easy access for all. The tools also tie together the
multiple channels of communication with the customers such as live chat through phone or e-mail.

6
Hence, CRM is often described as the tool that leverages technology for delivering superior value
to customers.

Data gathering becomes increasingly sophisticated and hi-tech:

CRM involves an integrated and automated approach to customer data gathering and technology is
the pivotal in this process. In fact, the term “customer database” is now getting out dated it is now
referred to by the term “Customer focused technology”. Hi- tech data warehousing is a part of this
technology.
Marketing people must be involved in the running of the database:
One basic requirement in running the CRM set up is quality-manpower. People well versed with
the relevant technology must be working on the database. But the job of developing and
maintaining it cannot be left entirely to the software/data entry people to ensure that marketing
could readily and meaningfully use the output from the system.
The Following steps help to put the organization on the right path to CRM success:
1. Remember that culture is supreme:
A CRM encompasses a mindset, a way of doing business and a way of interacting with others in
the firm. The success of CRM implementation rests on the shoulders of a workforce that is willing
to share information about clients and contacts. However, this “collaborative” mentality flies in the
face of the culture within some professional services firms. For better or worse, many professional
services practitioners are skeptical of sharing “contacts” information for the fear of losing
opportunities to generate work that can produce themselves. However, if a CRM implementation is
introduced to the workforce as an opportunity to create new opportunities for all, success rates will
improve significantly.
2. Set Realistic Goals:
One of the greatest mistakes a management team can make is to force –feed technology across the
organization. This is particularly true with the CRM implementation. As the firm management
prepares for a CRM rollout, planning and patients are critical. Working with the implementation
team from the software developer, management should agree upon a plan of phasing software use
across the firm. Some organizations orchestrate a CRM rollout by location, others by practice
group or department. A phased approach gives both the firm and the implementation team an
opportunity to make adjustments, manage expectations, achieve milestones and promote successes.

7
3. Obtain and Maintain Senior Management support:
Successful CRM implementation start and end at the top. As a rule, successful CRM
implementations are characterized as those in which management leads by example. Management
should not sugarcoat the process or minimize the effort involved. Similarly, when milestones are
achieved, the same managers should be the first to strongly promote the benefits being realized by
the firm.
4. Analyze working Processes:
The process of fitting a CRM solution into a professional service organization provides a
wonderful opportunity to evaluate processes and procedures across the firm. Working with the
implementation team from the software provider firm, management should review, analyze and
evaluate the firm’s procedure as well as all the data sources that are used in finding a CRM
solution. This is the perfect time to discuss and develop new procedures that will increase the
firm’s success.
4. Analyze working Processes:
The process of fitting a CRM solution into a professional service organization provides a
wonderful opportunity to evaluate processes and procedures across the firm. Working with the
implementation team from the software provider firm, management should review, analyze and
evaluate the firm’s procedure as well as all the data sources that are used in finding a CRM
solution. This is the perfect time to discuss and develop new procedures that will increase the
firm’s success.
Components of CRM:
CRM is the combination of policies, processes and strategies implemented by an organization to
unify customer interactions and provide a means to track customer information. CRM brings
together lots of pieces of information about customers, sales, marketing effectiveness and market
trends. CRM software is used to support these processes, information about customers and
customer interactions which can be entered , stored and accessed by employees in different
company departments..
The Generic constituents are
Components of CRM
CA- Customer Acquisition encompasses:
Counter staff automation
Marketing

8
 CR- Customer Retention through:
Data warehousing and analytical tools
Customer service
Call service
Contact center
ICV- Improved Customer value through:
Marketing automation and campaign management for cross-selling and
Up-selling

CRM includes many aspects which relates directly to one another through :
Front Office Operations: Direct contact with customers. For example. Face to Face meeting,
Phone calls, emails, online services etc.
Back Office Operations: Operations that ultimately affect the activities of the front office (e.g.
Billing, maintenance, planning, marketing, advertising, finance, manufacturing etc.)
Core CRM Activities:
Survey Management Software:
Survey software automates an enterprise’s electronic surveys, polls, questionnaires and enables to
understand customer preference Once the customer is categorized, the company can start
promotions and pricing accordingly
Sales Force Automation (SFA):
Occurrences of customer contacts are logged in the database. SFA Software can automatically
route customers who contact the sales representative. Companies can contact the sales
representative forecast the customer’s need based on the customer history and transactions. This
initial lead software is called “Lead Management Software”. This software enables to track the
transaction from the initial lead to post sale follow up.
Sales Campaign Management:
This software lets a company organize a marketing campaign and compile its results automatically.
Marketing Encyclopedia:
This software serves as a database for promotion of the products. The material can be routed to
sales representatives. This can also be shown to the customers on request.
Call Centre Automation:
When customers call a company to get assistance with the continued products, representatives can
query a knowledge management database containing information about the product. Some

9
knowledge management software accepts query natural language. If the company must develop a
new solution in response to customer query, the information can be added to the knowledge base,
which becomes “smarter”.
Business Relationships:
Interaction with other companies and partners such as suppliers/vendors, retail outlets/distributors
and industry networks (lobbying groups, trade associations).This external network supports front
and back office activities.
CRM is not just a technology but rather a comprehensive, customer centric approach to
an organization’s philosophy of dealings with its customers.
Types of CRM:
There are several different approaches to CRM with different aspects. In general, Customer
Service, Campaign Management and Sales Force Automation (SFA) form the core of the system
(with SFA being more popular).
1. Operational CRM:
Operation CRM provides support to “Front Office” business processes. For example, Sales
Marketing and Service Staff. Interaction with customers is generally stored in customer contact
histories and staff can retrieve customer information as necessary. The contact history provides
staff members with immediate access to important information on the customer (Product owned
prior support calls etc) eliminating the need to individually obtain this information directly from
the customer. Reaching the customer at right time at right place is preferable.
Operational CRM processes customer data for a variety of purposes:
 Managing Campaigns
 Enterprise Marketing Automation
 Sales Force Automation
 Sales Management System
 Activity and Time Management
 Quotation and Order Processing
 Delivery and Order Fulfillment
 Tele-marketing and Tele-sales
 Customer Service and Support
 Remote Access

10
2. Analytical CRM:
Analytical CRM analysis customer data for variety of purposes:
a) Designing and Executing targeted marketing campaigns
b) Designing and executing campaigns. For example- Customer Acquisition, Cross selling,
up selling and add on selling.
c) Analyzing customer behavior in order to make decisions relating to products and
services ( eg. Pricing, Product development)
d) Managing Information System (eg. Financial Forecasting and Customer
Profitability Analysis)
e) Customer Segmentation (eg. Age, Sex, Income level)
f) Trend Analysis for Customer Satisfaction.
Analytical CRM generally makes heavy use of data mining and other techniques to
produce useful results for decision making.
3. Sales Intelligence CRM:
Sales Intelligence CRM is similar to Analytical CRM, but it is intended as a more direct sales tool.
Features include alerts sent to sales staff regarding a) Cross selling/ up selling / Switch selling
a)opportunities
b) Customer drift
c) Sales Performance
d) Customer trends
e) Customer margins
f) Customer Alignment
4. Campaign Management CRM:
Campaign Management combines elements of operational and Analytical CRM. Campaign
Management function includes:
 Target groups formed from the client base according to selected criteria
 Sending Campaign related material (eg. On special offers) to selected recipients using various
channels (eg. E-mail, Telephone, SMS, Post)
 Tracking, Storing and analyzing campaign statistics
 Tracking responses and analyzing trends.
5. Collaborative CRM:
Collaborative CRM covers aspects of a company dealing with customers that are handled by
various departments within the company such as sales, technical support and Marketing. Staff

11
Members from different departments can share information collected when interacting with
customers. For example, feedback received by Customer support agents can provide other staff
members with information on the services and features requested by customers. Collaborative
CRM’s ultimate goal is to use information collected by all departments to improve the quality of
services provided by the company. Collaborative CRM processes customer data for variety of
purposes:
 Enterprise Portals
 Customer Access
 Supplier Access
 Personalization

12
 UNIT IV
Unit IV: CRM process framework - Governance Process - Performance
Evaluation
Process.
----------------------------------------------------------------------------------------------
CRM Process Framework:
A four stage relationship marketing process was developed by Atul Parvathiyar and Jagdish. N.
Sheth . The model suggests that relationship marketing process comprises of Four sub processes:
1) Formation Process
2) Management and Governance process
3) Performance Evaluation process
4) Relationship Evolution or enhancement process.
The generic model is shown in the figure.
Relationship Marketing Process Framework

Formation

Management and Evolution

Governance

Performance
Evaluation

I. Formation Process of Relationship Marketing:

The formation process of relationship marketing involves the decisions that must be made
regarding the initiation of relationship marketing activities for a firm with respect to a specific
group of customers or an individual customer with whom the customer wishes to engage in a
cooperative and collaborative relationship. In the formation process, three important decision areas
relate to defining the purpose (objectives) of engaging in relationship marketing, selecting parties
(customer partners) for relationship marketing and developing programs (relation activity
schemes) for relationship marketing engagement.

13
II. Management and Governance Process:
Once a relationship marketing program is developed, the program as well as the individual
relationship within it must be managed and governed. For mass market customers, the degree to
which there is symmetry in the primary responsibility in deciding whether the customer or the
program sponsoring company will be managing the relationship values with the size of the market.
However, the programs directed at distributors and business customers, the management of the
relationship require the involvement of both the parties. The degree to which these governance
responsibilities are shared or managed independently depends on the perception of norms of
governance processes among rational partners given the nature of their marketing program and the
purpose of engaging in the relationship. Not all relationships are managed alike. However, several
researchers have suggested appropriate governance norms for different hybrid relationships.
Irrespective of whether relational partners undertake management and governance responsibilities
independently or jointly, they must address several issues. These include decisions regarding role
specification, communication, common bonds, planning process, process alignment, employee
motivation and monitoring procedures.
III. Performance Evaluation Process:
Companies need to undertake periodic assessment of the results of relationship marketing in order
to evaluate whether or not programs are meeting expectations or whether or not they are
sustainable in the long run. Performance evaluation is also useful because it allows firms to take
corrective areas of relationship governance regarding continuation, modification or termination of
relationship marketing programs.
IV. Evolution Process of Relationship Marketing:
Individual relationships and relationship marketing programs are likely to undergo change as they
mature. Some evolution paths may be planned, where as others will evolve naturally. In any case,
the partners involved have to make several decisions about the evolution of their relationship
marketing programs .These include the decisions regarding the continuation, termination,
enhancement and modification of the relationship engagement. Several factors could affect any of
these decisions. Among these factors, relationship performance and relationship satisfaction are
likely to have the greatest impact in the evolution of relationship marketing programs. When
performance is satisfactory, partners would be motivated to continue or enhance their relationship
marketing program. When performance does not meet expectations, partners may consider
terminating or modifying their relationship. When companies can chart out their relationship, they
can engage in relatively systematic relationship marketing programs.

14