The

Quality
of
Life
is
The Quality of Life is
the
the Quality
Qualityof
ofYour
Your
Relationships
Relationships

- -Antony
Antony

1.
1. Customer
Customer
Relationship
Relationship
Management
Management
Robbins
Robbins

Customer Relationship
Management
UNIT I: CRM
FUNDAMENTAL

Theoretical Perspective of Relationship

Evolution of relationship marketing
Stages of relationship
Issues of relationship
Purpose of relationship marketing

Approaches towards Marketing

A paradigm shift, Historical perspective

CRM Definitions,

Emergence of CRM practices

CRM cycle
Stakeholders in CRM
Significance of CRM
Types of CRM
Success factors in CRM
CRM comprehension
CRM implementation

Objectives to Understand

The CRM Explosion

Reasons of growth of CRM
Criticality of Customer Relationship
Why business should adopt CRM
Implementing CRM
Evolution of Customer relationships
Benefits of CRM
Transaction vs. Relationship orientation
Theories & thoughts on CRM
Defining CRM

Explosion of CRM in
Marketing

Academics & Practitioners follow

CRM
Conferences, Journals - Specific
issues
Associations & Forums
Centers for CRM
IT Solutions:
Siebel,
E. piphany,
Oracle,
SAP,
Sage CRM,
Microsoft Dynamics,

RELATIONSHIP IN BUSINESS
THEORITICAL PERSPECTIVE

I. Social Penetration Theory (Irvin Altman &

Dalmas Taylor): Relationship closeness dynamics
occurs through a gradual process of selfdisclosure. Stages are:

Orientation: follow only standards of social desirability &

norms
Exploratory Affective: Start revealing self & personal
attitudes
Affective Stage:
Graduate to private & personal
matters.
Criticism & arguments rise
Stable Stage: Maturity . Share personal things &
emotional reactions
De-penetration: Cost > Benefits, withdrawal of
disclosures etc.

II. Social Exchange Theory: Social change &

RELATIONSHIP IN
BUSINESS
III. Equity Theory: John Stacey Adams (1965)
Relations developed & maintained on distribution
proportion of rewards to the costs.
Individuals Outcomes
Outcomes
------------------------------ =
------------------------------------Individual's own inputs
inputs

Relational partners

Relational partners

Rewards < demanded Equity = Dissatisfaction leading

to exit relationship

IV. Attraction Theory: Four major factors of

attraction
Attractiveness (physical appearance &
personality

STAGES
Six
Stage OF RELATIONSHIP
Model:
Relationships
development
(Devito, Joseph
takes time
1993) IncrIneavoselvdemcoennt:ta
C

ct
a
t
on

frequency

Intimacy:
Depth of
Relationsh
ip

EB
R

Relationship
Stages

N
O
D
so
l

ut
io

REPAIR

D
is

ct

Marketers try
Det
to
erio
rati
on
understand &
exploit
each stage of
relationship for
cross-selling &

TYPES OF RELATIONSHIP
RELATIONSHIP:
Different Forms & Types
Different time & Circumstances
KARYESHU DASI, KARANESHU MANTRI,
BHOJESHU MATA, SHYANESHU RAMBHA,
ROOPESHU LAKSHMI, KSHAMAYESHU
DHARITRI,
SATKARMA NARI, KULDHARMA PATNI

TYPES OF RELATIONSHIP

Parent Child
Teacher Student
Leader follower
Comrade-at-arms
Fellow-enthusiast
Confident

Idol to be worshipped
Casual Friend
Soul mate
Old Flame
Seek out to escape
from monotony

SCHOOLS OF THOUGHT ON RM

Anglo-Australian Approach:

RM as a Confluence
of Quality Mgmt, Customer relationship economics &
Service marketing concepts.
Nordic Approach: a Confluence of interactive theory,
customer relationship economics and service marketing
concepts.
North American Approach: Contrast
Organizations environment decides the relationship
between buyer and seller.

Changing
From:

Landscape

To:

Product Supplier

Solution Provider

Multipliers
Supplier
Functional
Orientation
Vertical Integration

Preferred Partners

Market
Segmentation
Sales People as
Relationship
Managers
Customer

Customer
Segmentation
Cross Functional
Teams as
Relationship
Customer
Managers
Loyalty/commitment

Value Chain
Orientation
Outsourcing

A shift in thinking

Transaction Learning relationship

Mass Marketing Individual
marketing
Transaction Value Life time value
Conquest Marketing Retention
marketing
Product Life Cycle Customer Life
Cycle
Customer Satisfaction Customer
Loyalty

Transaction vs. Relationship

Marketing?
DIMENSIONS
TRANSACTION
RELATIONSHIP
FOCUS
TIME
DIMENSION
COMMUNICATI
ON
FEED-BACK
MECAHNISM
MARKET SIZE

SUCCESS
CRITERIA

MARKETING
One Off
Exchanges
Short-term
Focus
Mass

MARKETING
Ongoing
Exchanges
Long Term
Focus
Personal

Isolated Market
Research
Mass
/Segmented
Marketing
Market Share

Ongoing
Dialogue
Personalized
Marketing
Mind & Heart
Share

Evolution of Customer
Relationships
Hig
h
Relations
hip
Orientati
on

Low
PreIndustrial Era

Industrial
Era

Information
Era

Relationship

Product

Relationship

Why to Adopt
Demand Side
CRM
Rising customer expectations

Rising affluence in emerging

economies
Greater awareness & media explosion
Increasing customer diversity

Supply Side

Technological advancement
Production: CAD/CAM, JIT etc.
Distribution: Computer Aided
Logistics (CALS)
E-commerce
EDI for facilitations
Declining cost of ICT supporting
technology led CRM initiatives
Revenue Distribution exponential then

Criticality of CRM

Non-traditional competition

Market maturity

New Entrants from outside the industry

Substitute Technology
Suppliers as competitors - forward
integration
Buyers As competitors - backward
integration
From capacity creation to capacity
utilization
Growth of emerging markets
Understanding customers critical to
success
Maturing markets forcing firms towards
customer oriented.

Whats a relationship?

Can an organization have a

relationship with a person?
Emphasis on CRM is the notion of a
learning relationship
Knowledge
Intent
Trust

Defining CRM

Attracting, maintaining & enhancing customer

relationship
(Berry, 1983)
Establish, maintain & enhance relationships with
customers & other partners, at a profit through
mutual exchange & fulfillment of promises
(Gronroos, 1990)
RM puts the customer 1st from (telling & selling)
to genuine customer involvement)
(communicating & sharing knowledge
(McKenna, 1991)
CRM: Database marketing (Bickert, 1992)

Promotional aspects of marketing ltd. to database

efforts

CRM: Customer Retention (Vavra,1992)

After -marketing efforts for customer bonding & staying

in touch with customers after sales is made

Defining CRM contd

CRM: All marketing activities directed towards

establishing, developing & maintaining successful
relationships
(Morgan & Hunt, 1994)
CRM: Establishment, development, maintenance
& optimization of a long term mutually valuable
relationship between consumer & organization.
(CRM UK Ltd.
2000)of cooperation &
Ongoing managing
process

collaborative activities & programs with

immediate & end user customers to create &
enhance mutual economic value at reduced
cost

Defining CRM
contd

Management approach of identifying,

establishing, maintaining & enhancing lasting
relationships with customers
Creating a competitive advantage by best
understanding, communicating, delivering &
developing existing customer relationships, in
addition to creating & keeping new customers

Common: Issues

Process of interaction over a period of time

Collaborative & cooperative nature of
relationship for long-term mutual benefits
&
Metrics of relationship performance
include enhanced value.

Enablers/Reasons for CRM

Growth
Emergence of Service Economy,
GDP Service Sec,: Advanced nations80%, India-58%
Hotel/airlines/banking/finance/telecom
/retailing ...

Emergence of Market Economy

Deregulations & reforms in economies &

industries

Global Orientation of Businesses

Integration ofof
world economy lowering
Criticality
barriers
Emergence of trading blocks
CRM
Non-traditional competition

Aging population of Advanced

Market
maturity
economies
Apollo

CRM CYCLE
Obtain Info.
From
Customers
Raise
Profitabilit
y

Acquire
New
Customers

CRM
CYCLE

Create
Superior
Customer
Value

Build Loyal
Customers

CRM CYCLE - ACURA

MODEL
( American Express).
Acquir
e
Advoca
cy

Retain

CRM
CYCLE

Cross sell

Up-sell

STAKEHOLDERS IN CRM
Employe
es

Custom
ers
Partne
rs

Suppli
ers

Significance of CRM

Perpetual Source/Stream of Revenue

Positive referral Creation
Provides Premium
Customer Retention
Lowers Transaction Costs
Helps understand CB
Opportunities to Cross-sell & Up-sell
Lowers Marketing time
Help Rationalize Channel Costs
Supports Business Process Re-

Six Markets Framework

of CRM

Suppli
ers
Marke
ts

Intern
al
Marke
ts

Custom
er
Markets

Recruitm
ent
Markets

Referr
al
Marke
ts
Influenc
e
Markets

CRM, Marketing & Relationship

Marketing

Investment in relationship with

various stakeholders is very important.
CRM is the domain of relationship
management with customers.
Industrial Revolution: This is what I
make, wont you please buy it?
Customer Revolution: This is what I
need, Cant you please make it.

Companies have to turn from a make

& sell philosophy to sense & respond
philosophy.

Shared
CoValue
partnerin
Relationship
g

Experienti
al Mgmt.
Operation
al
Excellenc
e
Cost
Mgmt.

Emotional Connect
Relationship

Premium

Value
Chain

Relationship
Hierarchy

Satisfaction Based
Relationship

Transactional
Relationship

Basic
Minimu
m

Committed
Buyer:
CopartnerinChampion &
Spokesperson
g
for brand

Experienti
Likes the Brand:
al Mgmt. Considers it as a friend
Operation
al
Excellenc
e
Cost
Mgmt.

Premium

Value
Chain

LOYALTY
PYRAMID

Satisfaction Buyer:
No reason to break off
relations but will
switch on inducements
SWITCHERS:
No Feeling for Loyalty

Basic
Minimu
m

Nine Truths of Relationship

Marketing

TRUTH # 1: Customers are no longer

loyal.
TRUTH # 2: Customers do not really
want a relationship but companies do.
Your Best Customers Can Leave
Your Marginal Customers Can Move
Consumers Can Become Customers

TRUTH # 3: Customers want

information.
TRUTH # 4: Customers not only want to
be thanked for their patronage, they
expect it.

Nine Truths of Relationship Marketing

TRUTH # 5: Customers control the

selling process.
TRUTH # 6: The Lifetime Value of a
customer is not relevant.
TRUTH # 7: Do not overcomplicate
the program.
TRUTH # 8: Keep reporting simple &
focused on the customer.
TRUTH # 9: WHAT IF? Ask it often.
Experiment every chance you get &
dont call it testing.

Types of CRM

Proactive vs. Reactive CRM

P
e
r
s
o
n
a
l
i
z
a
t
i
o
n

Proactive
Customer Data Analytics

Interactive
Customer Facing Business
Processes
Responsive/
Reactive
Customer
Interactive
Management

Types of CRM Mapped on Degree of

Operational, Collaborative
Personalization
and Analytical

CRM

Channel partners
Mid level Info
Transformation

IC

COLLABORATI
VE through
2 way Interaction

YT
AL
AN

OP
ER
AT
AL I O
N

C
on
ta
ct
C
ha To Mg
nn ol
m
t
e
C
l
M
on To
te ol gm
nt
t.
M
To
ol gm
t.

AL rn
te ery
at
P cov ct
u
s
Di rod sis
P a ly er
m
An sto sis
u
y
C al g &
An tin ion
t
r
or
S acta me
Fr usto ue n
C al tio
V
ua
al
Ev

TYPES
OF
CRM

1. Operational CRM
Front office CRM: Direct Interaction b/w
customer & marketer via customer
touchpoint (POS, Call centers, web etc.).
Face to face touchpoints: Sales/Service/Chan
nel/Events/Stores/Promotions
Database driven touchpoints: Telephones/Em
ail/Mail/SMS/Fax/Loyalty Cards/ATMs
Mass Media: Advertising/PR/Websites

Touchpoints: Any Transaction can take place

through these.
Functional level managers interact at this
stage & process the information to the mid
level managers

2. Collaborative CRM

Two way dialog b/w a company & its

customers through a variety of
channels (business partners, agents,
brokers, intermediaries) to facilitate
& improve the quality of customer
interactions for maintaining a long
term profitable relationship.

Performed by Mid level managers &

transform the information to Top Level
& Decision Makers.

3. Analytical CRM

AKA Back-office or Strategic CRM:

Understanding customer activities
that occurred in the front office.
Mass data (using IT) is transformed
into business knowledge
(behavior patters, preferences, values of
customers).
Top Level & Decision Makers establish
the process & convey the message to the
mid & low level managers for
implementation.

Attributes of CRM

Service Quality (Persuraman -1985):

satisfaction as function of expectation (E)about
perceived performance (PP)

PP=>E Satisfied otherwise dissatisfied

- Reliability
- Responsiveness Competence
- Access
- Courtesy
- Communication
- Credibility
- Security
- Understanding &
- Tangibles

Classification of Attributes of Service

Organization
- Product itself

- Psychology related

Uni-dimensional View of CRM

Intrinsic (motivators) Factors

CRM Key
Issues
Shifting
Paradigm: from Transactions to
RM
Focus: Maximizing LCV of target
Customers
Develop & enhance relations with 6 key
markets.
Goal
of CRM

Customer
Quality,
Build Strong,
LongService
Term && Marketing:
closely
related.
Valuable
relationship with

chosen customers
Enhanci
Get closer to these customers
at
ng
every point of contact with them
Retainin

g
Satisfyin
g
Attractin

Good Hue (2002)

Top Mgmt. Support

Vision
Willingness to Change
Process
Willingness to Share
Data

Wilson (2002)

CRM SUCCESS
FACTORS

Determine the intent

Access the context
Describe the content
Construct the
intervention process
Manage the
intervention process

Siebel (2004)

Integration of b/o.

Chen & Chen (2004)

-

Top Management
System Integration
Knowledge Mgmt.
Alignment of IT

King & Burgess

(2007)
-

Top Mgmt. Support

CRM Strategy
Communication
KM capabilities
Data/Process share
willingness
Technological readiness
Cultural/Customer

Benefits of
Customers:
profitable over time
CRM
Marketing Benefits CRM:

promotions
Productivity gains: low cost media, improved
targeting & higher conversion rates

Service Benefits of CRM:

& varies
Information, knowledgedifferentially
customized

96% unhappy customers hardly complain but

dont turn up
70% of complaining customers if cared timely
redo business
Each satisfies customer tells to around 6 people
Each dissatisfied customer tell s to 14 more
people

Benefits of CRM to customers:

Satisfaction leads to loyalty,

Simplify buying & consuming tasks

KEY
KEYTO
TORELATIONAL
RELATIONALLONGIVITY
LONGIVITY

Conceptual
ConceptualClarity,
Clarity,Emotional
EmotionalMaturity
Maturity&&
Mental
MentalStability
Stability

THERE
IS
ONLY
ONE
BOSS

THE
THERE IS ONLY ONE BOSS THE
CUSTOMER
CUSTOMER
Who
Whocan
canfire
fireeveryone
everyonefrom
fromthe
theChairman
Chairmanon
on
down,
down,
Only
those
figuratively
&
literally
will
by
simply
spending
his
money
somewhere
those
figuratively
& literally
will
byOnly
simply
spending
his money
somewhere
survive,
else.
survive,
else.
.Sam Walton,
who
became
attached
to
their
customers
W/o
a
doubt,
to
be
successful
in
future,
the
.Sam
Walton,
who
became
attached
to
their
customers

Founder
WAL-MART
W/o a doubt, Founder
to be
in
future,
the
Tomsuccessful
Peters
WAL-MART
game
is
CRM.
If
you
Tomare
game is CRM. If you Peters
aresuccessful
successfulat
atCRM
CRM
game,
game,you
youare
areable
ableto
toacquire
acquiremore
more
customers
customers&&convert
convertthem
themon
onother
other
products.
products.
Success
in
CRM
isisthe
only
game
in
town
Success
in
CRM
the
only
game
in
town
CRM
Comprehension
&
CRM
Comprehension &
moving
movingforward
forward

Awad, Sr. VP CRM,

GE Capital
Implementation
Model
George
George Awad, Sr. VP CRM,
GE Capital

CRM COMPREHENSION
Typical Service Process
Identify
Customers
comfort
level

SUCCESS

Leverage
Technology

Emphasis on
sustained
CRM
practice

Train
Employees

Service
Innovation

CRM COMPREHENSION
1.
MODEL
3.Perceived
C
MARKETIN
R
G
M
PROGRAM
ME
Offers
Tangibles &
Intangibles
(7Ps),
Service
Delivery,
People
behaviour,
Grievance
handling,
C
Customers
R
handling

Performance

PP>E Customers
Satisfaction
Repeat Purchase, Positive
Referral, Cross selling &
CUSTOMERS
Up selling

COGNITIVE
ABILITY
PP<E Customers
Dissatisfaction

4.
COMPETITO
RS
OFFER

Negative WOM, Sales Loss,

Customer Dissonance

2.Customers
Expectations
Customers
Evaluation
Process

Components of CRM
Programme

Companys marketing programme

Consumer expectations
Perceived performance
Competitive Offers
Customers Resultant behaviour

CRM VALUE CHAIN

Customer
Satisfaction

Customer
Information

Customer
Knowledg
e

Customer
Data

Customer
Informati
on

CRM PROCESS
Historical Perspective
Unorganized &
Unstructured
More of Individual
Discretion
Restricted to Small
Group of Customers
Confined to Specific
Trade
No Technological
Support

CRM PROCESS Modern

Variables
Customer
Segmentation
Customer Lifetime
Value
Customer Service Cost
Cost-Revenue Parity
Employee Motivation
Sourcing Models

8. Technology support in CRM

Implementation
9. Consistent Testing & Evaluation for
effective Implementation

10

M
R
.C

7. CRM an Enterprise wide Activity

c
a
r

5. Employee Participation in
CRM Design
6. Employee Motivation for
Effective Implementation

4. Matching Cost & Revenue

ti c

3. Offer Customization

l
a
Ev

on CLV
2. Customer Profiling

n
o
i
t
a
u

Designing CRM Implementation

Model
1. Segmentation based

Summary

CRM: One of the most exciting

application that provides an integrated
view of critical business processes &
allows the marketers, corporate,
MSMEs, to create strong customer
relationships to effectively & efficiently
communicate & deliver superior value by
understanding the target customers
better than others. CRM also helps
business students to develop a real-world
understanding

ASSIGNEMENT - I

Define CRM, its Evolution and

Scope ?
Differentiate between transaction
marketing and Relationship
Marketing.
Discuss the significance of quality in
CRM. Also elaborate types of CRM.
What do you mean by customer
retention?
What do you understand by up

Any Questions?

THANK YOU!