CRM Unit 1 Notes

Introduction to CRM
CRM is a process of collecting information about the customers and aligning and
remodeling the organizations strategy to meet the customers demand, the focus of CRM
is on people rather than products and services. Business and processes are built with the
customer in mind and the emphasis is on what can be done to make people who want to
do business with over and over again.
Customer relationship management or popularly identified as CRM can be defined as an
art and science of collecting information on present and prospective needs of product of
customers so as to market them using all such kind of efforts and technology in collection
of date and information relating to customers.
CRM helps companies to understand, establish and nurture long term relationships with
clients, as well as help in retaining current customers. The most important step that an
organization has to take in the direction of CRM is to create an inter-disciplinary team to
review how the organization interacts with each customer and determine how to improve
and extent the relationship.
CRM today is a discipline as well as a set of discrete software and technologies, which
focuses on automating and improving the business processes associated with managing
customer relationships in the areas of sales, marketing, customer service and support.
At present, more and more companies are adopting various CRM practices, as CRM
promises numerous benefits including shorter sales cycles, integrated customer
feedback, improved communication, improved response, improved customer knowledge,
improved efficacy, better customer tracking, enhanced customer satisfaction and
increased loyalty.
Concept of CRM
The concept of CRM is the methodology which enables the organization to understand
the customer needs and behavior better. It introduces reliable processes and procedures
for interacting with customer and develops stronger relationships with them.
The process helps organization in assimilating information about customers, sales
marketing effectiveness, and responsiveness and market trends. Then this information is
used to give insight into behavior of customers and value of retaining those customers.
The whole process is designed to reduced cost and increase profitability by holding on to
the customer loyalty. A simple installation and integration of the software package does
not endure success. It has to be absorbed into the system. Employees have to be
convinced about its positive attributes and then they have to be trained.
The company must drill in the database of its customer and ascertain their buying
patterns, product preferences, the potential for add on sales etc.
A good strategy will be to integrate every area of touch point with customers like
marketing, sales, customer service and field support. This is achieved with the integration
of the people, process and technology in the business.
Need and benefits of CRM
Benefits
Better customer service: A CRM manages all of your contacts and gathers important
customer information – like demographics, purchase records and previous messages
across all channels – and makes it easily accessible to anyone in your company who needs
it. This ensures that your employees have all they need to know about the customer at
their fingertips and can provide a better customer experience, which tends to boost
customer satisfaction.
Increased sales: A CRM tool can help you streamline your sales process, build a sales
pipeline, automate key tasks and analyze all of your sales data in one centralized place,
potentially increasing sales and productivity.
Improved customer retention: Once you've procured and converted leads, it's vital that
you put in the work to retain them as customers and promote customer loyalty. High
customer turnover can have many negative effects for your business, like diminished
revenue or disrupted cash flow, so use your CRM and the information it provides about
your customers to encourage repeat business.
High productivity
Centralized database of information
Managed communications with prospective leads
Improved customer segmentation
More accurate sales forecasting
Detailed analytics
IDIC model for building relationship
In order to enable the smooth functioning of the customer service, certain models are
followed. These customer relationship models have been developed over the past few
decades by various researchers. The most common models relating to CRM are IDIC
Model, QCI Model, and CRM Value Chain Model.
The IDIC (identify, differentiate, interact, customise) is a model developed by Peppers &
Rogers (1995). The model helps to assess the expectation of customers and their value to
the business

Identify customer expectations

A business working towards customer relationship management has to first identify its
customer needs, wants and preferences. This helps to curate new products and strategies
oriented towards customers. For instance, in terms of identification, Nestle conducted a
market survey to identify the customer base for their coffee by assessing the nations
where caffeine intake was high. It found that Western countries had a more positive
outlook towards coffee drinks while Eastern nations preferred tea as their caffeine drink.
The company then established its coffee brand, Nescafe, in the Western countries. The
brand also offered coffee-flavored candies in Eastern countries to gauge reaction to the
flavor.
Differentiate customer expectations
To meet customer expectations it is important to differentiate customer base into value
and need. This differentiation helps to prepare strategies that meet company goals and
customer expectations for strong customer relations.
Differentiation by value helps to identify customers that are loyal and should be focused
on. Their feedback can be valuable for product line extension, increased efficacy, and
performance, as well as revenue generation.
Differentiating existing customers on the basis of their needs helps to strategize
promotions. For instance, apart from analyzing the customers who add value to the
company’s brand image, DuPont made it a point to understand that other customers
needed effective customer service to address their needs individually.
Customer interaction
Customer interactions help to understand customer expectations and how they relate to
business products and services. The interaction, based on customer value and needs,
provides a chance to collect feedback, opinions and wants. Unilever always has its sales
representatives and customer care executives ready to discuss possible improvements
they can make on their product line or take feedback for improvements. This has helped
them develop customer-oriented products.
Customizations to meet customer expectations
After identifying, differentiating and interacting with the customers a fair idea can be
drawn for new strategies and product customizations (Peppers & Rogers, 1995). For
instance, market research firms like McKinsey realized the need for customizations from
the feedbacks of customers. Their customers expected increased customizations on their
requests.
The IDIC model provides a sound framework through which businesses can tread through
customer engagement and work to meet their expectations.

Features & advantages of e-CRM

Electronic customer relationship management is the application of internet based
technologies such as emails, websites, chatrooms, forums and other channels to achieve
CRM objectives. It is a well-structured and coordinated process of CRM that automates
the process in marketing, sales and customer service.
An effective E-CRM increases the efficiency of the processes as well as improves the
interactions with customers and enables businesses to customize products and services
that meet the customer’s needs.
A typical E-CRM strategy involves collecting customer information, transaction history
and product information, click stream and contents information. It then analyzes the
customer characteristics to give a transactional analysis consisting of the customer’s
profile and transactional history and an activity analysis consisting of exploratory
activities showing the customer’s navigation, shopping cart, shopping pattern and more.
Features:
 Customer management
Provides access to all customer information including enquiry status and
correspondence.
 Knowledge management
A centralized knowledge base that handles and shares customer information.
 Account management
Access to customer information and history, allowing sales teams and customer
service teams to functions efficiently.
 Case management
Captures enquiries, escalates priority cases and notifies management of
unresolved issues.
 Back end integration
Blends with other systems such as billing, inventory and logistics through relevant
customer contact points such as websites and call centers.
 Reporting and analysis
Report generation on customer behavior and business criteria.
Benefits:
 Improved customer relations, service and support
 Matching the customers' behavior with suitable offers
 Increased customer satisfaction and loyalty
 Greater efficiency and cost reduction
 Increased business revenue
Process of CRM
Identify target market
The process of CRM technique starts with identifying its target customers. Firstly it
recognizes its customers in the market. It performs several researches to gather
information about the customers.
Once the customers are identified it becomes easy to make strategies for them. Business
is easily able o get an idea of demands in the market. They are able to get an idea of likes
and dislikes of their customers.
Collect and store data
The next step in CRM technique is collection and storing of required data. CRM is not only
concerned with searching for information but also properly storing it. Under CRM
technique, there are several databases where information is stored.
The data stored in the database is centralized and can be easily accessed by anyone. This
systematic collection and storage of data saves times and also increase the efficiency.
Proper communication channel
The next step in the CRM process is communicating and contacting your target customers.
A proper communication channel should be developed to attract more and more
customers.
It should be such that all required information is provided to the customers in short time.
Attempts should be made to describe the company products in a better way. It is the duty
of the marketing department to communicate with customers as per their interest.
Several complimentary and add on products should be introduced to them to create long
and good relation. Customer’s reviews and suggestions about the products should be
taken.
Analyzing the sales data
This is one of the important step in the CRM process. Under it, the data collected through
sales and different customer is analyzed. The data is analyzed with the aim of making and
attracting more profitable and loyal customers.
First of all, identify the most profitable and loyal customers. Then try to understand what
thing they like in your products or what attracts them.
Several interviews of such customers should be conducted to understand them. This
information collected should be used in attracting new customers in the same sector. It
will help in understanding key points that a person sees when enters the market.
Provide Data to Staff
Now the next step is to make data accessible by all persons who are in the field. The
information will help the people working in understanding their targets audience
properly.
They will work in a better way to satisfy & attract more customers. If salesperson is able
to access the data collected, it will help them to understand the people behavior.
Salesperson will implement this information while delivering their duties.
It will definitely improve the responsiveness of the customers to the business. Customers
will interact in a more interesting way when are treated properly.
Personalize Interaction with Customers
The final step in CRM technique is to personalize your interaction with customers.
Information collected is used to modify & correct the communication method. The
communication channel is personalized as per customer behavior to provide them better
satisfaction.
If any customer has any complaint or problem, attempts should be made that it may not
arise again. Customer problems should always be given top priority. This will help in long
retention of customers.
If a customer is satisfied & happy with the business, it will bring more customers to
business. A satisfied & happy customer will communicate to different people.

Types of CRM
In the past twenty years, the focus of global markets has shifted from sellers to customers.
Today, customers are more powerful than sellers, if we consider the driving factors of
market. We have different types of CRM according to the changes in customer portfolios,
speed of business operations, requirement of handling large data, and the need of sharing
information, resources, and efforts jointly.
CRM systems are divided based on their prominent characteristics. There are four basic
types of CRM systems −
 Strategic CRM
 Operational CRM
 Analytical CRM
 Collaborative CRM
The following table lists the types of CRM and their characteristic features −

Type Characteristic

Strategic CRM Customer-centric, based on acquiring and maintaining

profitable customers.

Operational CRM Based on customer-oriented processes such as selling,

marketing, and customer service.

Analytical CRM Based on the intelligent mining of the customer data and
using it tactically for future strategies.

Collaborative CRM Based on application of technology across organization

boundaries with a view to optimize the organization and
customers.

Strategic CRM
Strategic CRM is a type of CRM in which the business puts the customers first. It collects,
segregates, and applies information about customers and market trends to come up with
better value proposition for the customer.
The business considers the customers’ voice important for its survival. In contrast to
Product-Centric CRM (where the business assumes customer requirements and focuses
on developing the product that may sometimes lead to over-engineering), here the
business constantly keeps learning about the customer requirements and adapting to
them.
These businesses know the buying behavior of the customer that happy customers buy
more frequently than rest of the customers. If any business is not considering this type of
CRM, then it risks losing the market share to those businesses, which excel at strategic
CRM.
Operational CRM
Operational CRM is oriented towards customer-centric business processes such as
marketing, selling, and services. It includes the following automations: Sales Force
Automation, Marketing Automation, and Service Automation.
Salesforce is the best suitable CRM for large established businesses and Zoho is the best
CRM for growing or small-scale businesses.

Sales Force Automation

SFA is the application of technology to manage selling activities. It standardizes a sales
cycle and common terminology for sales issues among all the sales employees of a
business. It includes the following modules –
 Product configuration
 Accounts management
 Lead management
Marketing Automation
Marketing automation involves market segmentation, campaigns management, event-
based marketing, and promotions. The campaign modules of Marketing Automation
enable the marketing force to access customer-related data for designing, executing and
evaluating targeted offers, and communications.
Service Automation
Service automation involves service level management, resolving issues or cases, and
addressing inbound communication. It involves diagnosing and solving the issues about
product.
Analytical CRM
Analytical CRM is based on capturing, interpreting, segregating, storing, modifying,
processing, and reporting customer-related data. It also contains internal business-wide
data such as Sales Data (products, volume, and purchasing history), Finance
Data (purchase history, credit score) and Marketing Data (response to campaign figures,
customer loyalty schemes data). Base CRM is an example of analytical CRM. It provides
detailed analytics and customized reports.
Collaborative CRM
Collaborative CRM is an alignment of resources and strategies between separate
businesses for identifying, acquiring, developing, retaining, and maintaining valuable
customers. It is employed in B2B scenario, where multiple businesses can conduct
product development, market research, and marketing jointly. Collaborative CRM
enables smooth communication and transactions among businesses.

CRM Cycle

•Marketing Stage – In this stage of CRM cycle, the basic focus is to identify customers by
running various marketing campaigns (such as emails, blogs, advertisements, and more),
create the database for Account (pertaining to Organization) and Contacts (pertaining to
individuals), and finally generate leads by analyzing the gathered customer data.
•Sales Stage –In the Sales stage, basic focus remains on leads. They are the individuals
who have expressed some kind of interest in your product offering. ‘Leads’ are further
categorized into Open, Contacted, Qualified and Un-qualified. Krawler CRM offers a
functionality to convert ‘leads’ into ‘opportunity’ for carrying out further sales activities.
•Product Stage – In this stage of CRM cycle, the basic focus is on delivery of product.
Krawler CRM offers Product Management functionality that captures details about the
product price, vendor, and description, among others.
•Support Stage – During Support Stage, the primary focus remains on resolving customer
issues and providing customer support. In CRM terminology, this function is known as
Case Management. (To visit our previous blog on Case Management, please click here).
To conclude, CRM cycle provides insight into various stages of Customer Relationship
Management from customer acquisition to retention and service. CRM cycle lays down
the roadmap for how the business can connect with their customers efficiently and serve
them more effectively.
Customer Retention
Customer retention is a business’s ability to keep existing customers and continue to
generate revenue from them. Companies use different tactics to convert first-time buyers
into repeat shoppers. In other words, customer retention allows a business to increase
the profitability of an existing customer and maximize their lifetime value (LTV).
Think of customer retention as a process where a business aims to convince existing
customers to keep purchasing their products or services. Since a customer has already
made a purchase, it’s different from lead generation, which is the effort involved in
capturing contact information of businesses or individuals who are likely to buy a product
or service.
Instead, customer retention is focused on existing customers. The goal is to increase
repeat purchases by building customer loyalty through excellent customer service,
product value and a distinct advantage over similar products or services.
Need & Importance
 Increase revenue
Customer retention has a direct influence on increasing the revenue of the business. It
enables the business to retain its customers for the long term and develop a sense of
loyalty in them.
 Reduce promotional expenses
It is one of the important advantages of customer retention process. Customer retention
cuts down the advertisement and marketing cost of companies. If companies are able to
retain sufficient customers for the long term then it is required to focus less on targeting
new customers.
 Reduces competition
Competition from rival companies is one of the major challenge faced by every company.
Customer retention helps in lowering the competition effect in market on business.
Businesses are able to develop more loyal customers through their customer retention
programs.
 Provides more referrals
Customer retention increases the customer’s base by providing more and more word of
mouth referrals. It develops more number of loyal and happy customers for the business.
These customers refer the brand products to their relatives, friends and other ones and
explains all features and benefits over others in the market.
 Valuable feedback from customers
It helps the companies in acquiring valuable feedback from its customers. Through
customer retention programs business are able to connect with their customers in a
better way. They develop a better level of understanding with their customers
 Boost employee confidence
Customer retention will also affect the morale and confidence level of your employees. If
customers remain with the business for the long term, employees feel confident that they
are serving better and performing well.
 Enhances brand image
It enhances the overall business in the market and creates its goodwill. Customer
retention helps in serving customers better and holds them for the long term. It focuses
on the specific needs of customers and attempts to make them happy and feel satisfied.

Determinants of retention
 Delivered quality of products and services versus customer expectation
The worthiness of a particular product or service does not depend on its own merits. It is
only worth and useful if it meets all customers’ expectation. If the customer expectation
is very high and the provided product or service does not meet his expectation then the
customer will obviously not purchase that particular product again. Hence one of the key
facets in determining retention is the deference between the quality of the product or
service provided and the customer’s expectation.
 Value
Value here could be defined as the getting a quality product at optimal cost. Possibilities
are there that the organization could provide excellent quality product with matching
price or similar quality products at comparatively lower price. Sometimes the
organizations justify a lower quality product to be of good quality product and argue to
get greater price. After the customer identifies that real value of the product is not worth
its quality it may lead to customer detection.
 Uniqueness and suitability of products
Most customers prefer unique and different product. Identical products normally
decrease the probability of selling. Uniqueness in products often increases the demand
of that particular product in the global market. More importantly, the unique products
should also be suitable so that it meets the differential expectations of range of
customers. Hence uniqueness and suitability of products helps in retaining customers to
a higher extent.
 Loyalty
It is necessarily required for an organization to interact and communicate with customers
on a regular basis to increase customer loyalty. In these interactions and communications
it is required to learn and determine all individual customer needs and respond
accordingly. Even if the products are identical in competing markets, loyalty provides high
retention rates. For example, shoppers and retailers are engaged with frequent shopping
and credit cards to gain customer loyalty, many high end retailers also provide
membership cards and discount benefits on those cards so that the customer remain loyal
to them. All the important marketing strategies results in customer retention.
 Easy availability
Some of the products in market are not easily available. This may be because of poor
marketing strategy or less retail stores. This could have an adverse effect on retention
rates. For example, a customer is not able to buy a special brand of perfume if it not widely
available in market or if the direct supplier or retail stores are not reachable to the
customer, even if the product is of high demand. Hence, easily available products could
be enhances its selling power and hence customer retention.
 Customer service
Customer service could be considered as the most important aspect of customer
retention. In some cases, customer service determines if or not a customer defects from
organization. Customer service is the reaction by the organization to the queries and
activities of the customer. Dealing with these queries intelligently is very important as
small misunderstandings could convey unalike perceptions. Success totally depends on
understanding and interpreting these queries and then working out to provide the best
solution.

Strategies to boost customer retention

 Reward promoters and loyal customers
 Retain customers with a smooth onboarding process
 Focus On Quality Customer Experience
 Engage With Customers Via Social Media
 Deliver Even More Value Than Promised
 Ask Customers For Feedback On Your Service
 Respond to customer issues instantly
Customer Loyalty
Customer Loyalty simply refers to a long term positive relationship created between
customer & business. It is the result of repeated purchases that customers make of same
brand. It means long term association of customers with the business. Loyal customers
do not shift easily to other brands and are even ready to pay more for the same quality
product of their particular brand. Customer satisfaction is the main factor governing
customer loyalty.
Customer when are properly satisfied by a particular brand, they stick to it for a long time.
They prefer a particular brand over other ones available in the market. They become loyal
to the brand & do not prefer switching to other brands easily. Businesses are able to retain
customers for a long time if they once become loyal to them. It helps in increasing their
sales as loyal customers tend to use different products of the same brand.
Objectives
 Boost sale and revenue
 Attract more customers
 Strengthen relation with customers
 Gather valuable data
 Enhance brand reputation
 Make customer feel appreciated

Attitudinal vs Behavioural loyalty

Attitudinal loyalty—Customers that are loyal because they love a particular brand.
Behavioral loyalty—Customers that are only loyal because they’re trapped.
If you only have one grocery store in your town, you’re going to exhibit behavioral loyalty.
You’re a repeat customer because you don’t have any other choice.
On the flip side, if you drive past three grocery stores just to get to the nearest Publix,
you’re exhibiting attitudinal loyalty. You have many options, but you’re picking Publix
because of what they stand for, how you’re treated, etc.
Companies like Apple have the best of both worlds. As you buy more iDevices and become
more dependent on iCloud, switching to Android becomes harder (behavioral). At the
same time, they have millions of raving fans exhibiting attitudinal loyalty.
Attitudinal loyalty is built on amazing experiences. It has strong ties into customer
support. Every interaction is a chance to reinforce attitudinal loyalty by exceeding
expectations, removing roadblocks, and delivering delight.

Types of loyalty
Transactional loyalty: It is accomplished by making offers or offering discounts on goods
and services to customers. It is a potent tool for bringing back customers. It comes at a
price, but if effectively used, it can bring great results. The aim is to bring back customers.
Transactional loyalty offers discounts and more offers to bring back customers for future
purchases.
Social loyalty: This is done by engaging your customers on social media channels. A
customer loyalty program is put in place to award points to customers for sharing some
critical posts about the company. The action to be carried out differs from the social
media platform used – retweet, like, and sharing actions. This is another way of getting
your customers engaged. The task could involve the customers tagging a specific number
of their friends on their platform before sharing.
Engagement loyalty: This customer loyalty program is similar to that of social loyalty. It
offers rewards to customers for subscribing to newsletters, watching YouTube videos,
downloading apps or journals. It ensures that the coming and repetitive customers are
gaining from you. It helps to improve the rate of conversion of your marketing strategies.
Emotional loyalty: Emotional loyalty is another type of loyalty that keeps your customers
coming. This customer loyalty program engages with customers to be glued with their
emotions positively. It offers what discounts and other promotional offers cannot do. It
is aimed at getting an emotional connection with the customers. This can be done by
awarding points to regular customers on their birthdays or anniversary.
Behavioural loyalty: This customer loyalty program is directed at making the customers
do what you want them to do. Studying the behavioral pattern of your customers can
yield the best loyalty results. Behavioral loyalty is a crucial tool to influence your customer
buying behavior. An example of this is to buy two to get three sorts of buying. This affects
customers to get more when they buy two and expect to get an extra free one as a gift.
Another example is offering coupons for customers who pre-order ahead of a national
memorial day.
Advocacy loyalty: Just like awarding points to social media shares and retweets, advocacy
loyalty is focused on rewarding referrals. Customers are happier and more willing to bring
in new customers when they gain from it. Statistics show that a referred customer is likely
to get more than three sales spread across different times at the least.

Process of designing loyalty programme.

Loyalty programs are structured marketing strategies designed by merchants to
encourage customers to continue to shop at or use the services of businesses associated
with each program.
Step 1: Study your current customers
Before starting a loyalty program, you should assess customers’ expectation via
techniques such as surveys, interviews, etc. Find out what your customers expect and
their willingness to join. This is the essential step to estimate whether your program will
be welcomed by a large number of customers or be ignored.
Step 2: Determine what you want to achieve
The first step is specifying the purposes and expected results of the program. You look
forward to the increase in sales? Or you want more traffic to your site? Or you wish the
brand will be spread better? Whatever the expectation, you should make it clear before
you make a plan for a successful scheme. Depending on the goal, you will set up a plan in
the right way with a clear target.
Step 3: Choose program rewards
Your reward for loyalty program needs to be valuable to customers. After you make a
research about your customers’ expectations, choose the appropriate rewards which are
beneficial to customers and keep profitable to your business. Don’t forget to well-name
your loyalty program to attract more participants.
Step 4: Choose your loyalty program type
The next step is deciding the program type to support effectively your goal. For example,
if you would like to increase visits to your store site, you can consider the point type with
the requirement as check-in, sharing. If you would like to increase value per order, you
can consider spend-based type with the cashback policy.
Step 5: Set a budget
Consider the budget for the whole loyalty program. You can even separate the budget
using for retaining existing customers and the one targeting to new customers.
Step 6: Give incentives to start
Heat up the loyalty program with early start incentives to kick off the race. The incentives
must be simple and very easy to win to motivate customers to work for it. For example,
gain instantly 50 points when customers sign up the account at the store, or welcome first
visits to store with a 10% discount. Start incentives are the supportive step to engage
customers quickly and kick off the loyalty program effectively.
Step 7: Measure success
After the loyalty program, store owners should listen to customers’ feedback and see the
data report to assess whether the program is successful or not. Depending on that, you
can improve the next scheme with a better result.