CRM NOTES
02 Emergence and Role Of CRM
How CRM came about?
-Production Era, Sales Era, Marketing Era, Customer Relationship Era
1. Crm Stands for Customer relationship management.
2. It is a business strategy to acquire, retain and maintain customers.
3 Levels of CRM
1. Strategic CRM – Customer-centric business strategy that aims at keeping
profitable customers
2. Operational CRM – Automation: service automation, sales automation,
marketing automation
3. Analytical CRM – Intelligent mining of customer data for strategic or tactical
purposes
Benefits of CRM
Customer satisfaction and loyalty
Call centers more efficient
Cross sell products more effectively
Sales staff close deals faster
Simplify marketing and sales processes
Increase internal accountability
Increase employee satisfaction
Discover new customers through better business intelligence
Increase profits through customers
CRM – Evolution
CRM – Evolution (Past)
- Advertisements, Campaigns, Direct Marketing, Competing Prices
CRM – Evolution (Present)
- Data Mining, Direct Marketing, Customized products, Privilege Customer
A relationship consists of interaction between two parties over time
5 Phases: Awareness, Exploration, Maturation, Commitment, Dissolution
1. Commitment – Commitment exists when both parties believe that the relationship is
important to maintain
2. Relational Consequences – Believes that replacement difficult, Co-operate to
preserve the relationship, Pass over short-term for long-term alternatives, Open to
getting hurt
Satisfaction-Loyalty Grid
Trust
Stages of Trust
CRM 1: Introduction
03 Role Of Technology in CRM
Definition : Different Perspectives
CRM is an IT enabled business strategy, the outcomes of which optimize profitability,
revenue, and customer satisfaction by organizing around customer segments , fostering
customer satisfying behaviours and implementing customer centric processes. (Gartner,
2004)
Customer Expectations
Technology/Architecture
Multi-channel
Usable, Flexible
High Performance
Scalable
Data Modelling
Mobile, Wireless
Business Rules
Knowledge Management
Web Based
Automated Workflow
Integration
Technology: Workflow Automation
Marketing Automation
Sales Automation
Service/Support Automation
Technology Challenges
• If CRM is so great, what aren’t all companies using them?
• And if companies are using them, why aren’t they getting the right results?
• Challenges:
– Difficult to convince staff to adopt new technology
– Difficult to train staff to use technology correctly
03 Emergence and Role of Technology in CRM
04 Implementation Of CRM
CRM Strategic Approach
More profitable relationships with customers.
CRM is a business initiative that uses technology.
Strategy is essentially to align business practice and process to the demands of the
environment.
CRM Strategies
Portfolio – Banks
o Not all customers should be managed the same way
o Standardised products, Customised products, Web-based self-service
Intimacy
o Knows the customers so as to anticipate needs and wants
o Earn Trust
Network
o Internal and External Stakeholders
Value Source: Are sources of value for customers
o Products
o Service
o Processes
o People
o Physical
o Communication
o Channel
Customer Lifecycle
o Prospect to New to Experienced
Leadership/Culture
Processes
Mass personalization – Starbucks – Offerings customization at little additional cost
Online communities – Smart customers getting info from online sources
Process Flow – leads management
Process Flow – sales management
Process Flow – service management
CRM Evaluation
CRM Audit
The CRM disconnect refers to the gap between sales and marketing strategy and
CRM software usage. For example, we have found up to a 70% gap between the
espoused sales and marketing strategy and what is actually measured in the CRM
software.
CRM Evaluation – Audit
CRM Evaluation
Audit: Areas to look at could be
Management
Stakeholders
Environment
Technology
Security
Marketing & Sales
Support & Service
Checklist: It serves as a memory aid by helping to ensure all areas are covered.
10 Steps
CRM 3: Implementing
05 & 06 Customer Centricity
Customer Centricity refers to the orientation of a company to the needs and behaviour of
its customers.
Measurement Tools
Mystery Shopping
Experience Mapping
o Process to identify customers’ touch points
o Branches, emails, websites, ATMs, financial consultants, internet banking
services, apps such as Grab, shoppee, etc, loans officer, relationship
managers or personal bankers, tellers, receptionists
Customer Activity Cycle
o Before buying
o Buying
o After Buying
Experience Map
Arrival at Spa
Is there ample parking space?
Was the receptionist friendly?
Was the receptionist expecting the customer?
Activities:
Was the airconditioning, music, etc…right?
Was there privacy?
Was the treatment within expectation?
Departure
Was it easy to make payment?
Sources of Value
Products
o Quality
o Innovation
Service
o Before-sales And After-sale
Processes
o Simplify return policies
o Ease of contractibility
People
o Better trained front office staff
Physical
o Buildings – give impression of trustworthiness
o Uniform – give as sense of professionalism
Communication (Promotion)
o Direct (a direct link to an employee)
o Personalization (feeling special)
Channels (Place)
o Operating hours
o Place of distribution
Increase Perceived value by
Increasing perceived benefits by giving the products more features and functions,
through better packaging and better brand promotion
Decreasing perceived sacrifices by providing longer warranties, 24H hotline, etc
Improving relationships
Sacrifices
Monetary costs – price
Search cost
Psychic cost – mental stress/cost associated with purchase high value items such as
a house.
Reduce Sacrifices
Word-of-mouth
Warranties, guarantees
Known brands
Known suppliers
Buy Insurance – eg travel insurance
Trial samples
After-sales contracts
Value of a customer
All customers are not equal
Life-time value (LTV) (sometimes known as customer lifetime value (CLV) or lifetime
customer value (LCV))
Some variables for calculation: churn rate, time period, periodic revenue, profit
margin, total revenue, gross profit, discount rate, net present value, cumulative net
present value, retention cost
Churn rate - % of customers who end their relationship with a company in a given
period
Retention rate = 1 – churn rate
Time period – unit of time into which a customer relationship is divided for analysis
Periodic revenue – amount of revenue collected from a customer in that time period
Profit margin - % of revenue
Total revenue – total money received from sales in any given period
Gross profit
Total revenue
Discount rate – A sum of money that a person will receive in several years’ time will
not be worth the same amount today.
Periodic revenue – amount of revenue collected from a customer in that time period
Exited customer conversion value
Calculation used to decide when to target an ex- customer
Conversion Value =
Gross margin X Spending X Chance of Converting X Spending Share
A customer had spent $3000, $4000, $4000 in 3 years at gross margin 30%. Assuming
there is a 40% chance of winning him back and there will be 50% share of his available
spending, calculate if the company should spend $300 per year for next 3 years to win him
back
Conversion Value =
0.3 X ($3000+$4000+4000) X 0.4 X 0.5
= $660
The customer will probably contribute $660 within 3 years to the company. If the
company has to pay $300 X 3 = $900 to win him back then it is not a good decision.
Customer Lifecycle
New
The satisfied customer
The unsatisfied customer
The inactive customer
Experienced
High life-time value customers
High volume customers
Door openers
Technology partners
CRM 4: Customer Centricity
CRM: Customer Management & Retention
Cost Of Acquiring Customer
Prospecting – buying leads from research companies
Advertising
Commissions and incentives
Collateral materials
Sales promotion
Credit checks – financial check on new customers
Software costs
Prospecting Activities
Prospecting (B2B)
Referrals
Networking
Websites
Email
Lists and Directories
Promotional activities
Prospecting (B2C)
Advertising
Media
Sales Promotion
Merchandising
Canvassing / Telemarketing
Email
Pitching
Referrals
Customer Expectations
Customer Options in conflict
Do nothing
Exit the relationship
Word-of-mouth
Front-line
Management
Third-party (lawyer, media)
Social network
Customer feedback to build strategies
Tools for obtaining feedback
Paper
o At store locations:
o Lucky draw forms:
o After a service done:
Voice
o Phone survey
o Forwarded to a feedback department
Internet
o Website
o Email
Types of complaint
Delay in providing a service
Failure to provide a service
Poor quality service or product
Inappropriate service
Removal of a service
Inappropriate cost for a service
Employee’s behavior
Policy unreasonably disadvantages a customer
Discrimination
Rudeness.
Effective ways to handle complaints
View complaints as opportunities
Create websites for customers to write in complaints
Empowerment staff to resolve complaints
Dedicated free-phone line for customers
Customer complaints service centre
“No-questions-asked” return policy
Train all staff to understand complaints management process
A system to collect and analyse complaints
Damage control measures to save the situation
Integrated contact centre
Measurement of effectiveness
Number of calls that hang up before connecting to an agent
Average time that agents talk to customers
Agents adhering to schedules
Attendance & Punctuality of agents
Average speed of answer within a certain nbr of rings
The percentage of customer calls that are resolved the 1st time
How well is the staff scheduled for call volumes
Cost of a call arriving and answered by agents
Turnover of staff
Quality of Service
Why retain customers?
Cheaper
Number of purchases will grow
Customer management costs will fall
Customer referrals will grow
Premium prices
Competitive edge
Retention Plan
Decide which customers to target for retention
Set Objectives
Work out strategies to meet the goals.
Decide on the type of performance measurements
Obtain results and look into continuous improvement
Signs of customer defecting
RFM (Recency-Freq-Money)
No response to a special offer
Shown reduced satisfaction in feedback
Not satisfied with the handling of his complaint
The purchasing share reduced
Many calls for technical information
Late payment
Queries invoice
The contact person resigned
CRM 5: Managing Customer Needs
