CRM: Customer Relationship

Management
 CRM in Services
• CRM is a comprehensive strategy and process
of acquiring, retaining and partnering with
selective customers, to create superior value
for the company and customer.
• CRM can also be defined as development of
lasting strategic alliances with customers on a
value sharing basis.
 Why Is Customer Loyalty Important to a
Firm’s Profitability?
• Customers become more profitable the longer they
remain with a firm:
– Increase purchases and/or account balances
• Customers/families purchase in greater quantities as they grow
– Reduced operating costs
• Fewer demands from suppliers and operating mistakes as
customer becomes experienced
– Referrals to other customers
• Positive word-of-mouth saves firm from investing money in
sales and advertising
– Price premiums
• Long-term customers willing to pay regular price
• Willing to pay higher price during peak periods
 Traditional Marketing Vs. Relationship Marketing

• Focus on making a sale • Focus on making a customer

loyal
• Product features are focused • Product benefits are focused
• Long term focus
• Short term focus • High customer service
• Little emphasis on customer emphasis
service
• Customer commitment is high
• Customer commitment is low
• High Customer Contact
• Moderate customer contact
• Quality is the concern of all
• Quality is primarily a concern of • Customer Retention
production
• Customer satisfaction
 Goles of Relationship Marketing

• Building Relationship

• Maintaining Relationship

• Enhancement of Relationship
 Essentials of Relationship Marketing
• Identifying the need for relationships in different areas of business operations.
• Collecting data and information relating to the prospects,
• Careful scrutiny of the list of prospects,
• Designing programmes for building relationships
• Development of plan for approach and reapproach
• Developing package for maintaining the relationships
• Developing package for enhancing relationships
• Training personnel of the organisation in relationship marketing
• Designing the system, infrastructure and support services that facilitate
relationships
• Execute the programme
• Design a feed back system
• Collect feed back and make necessary improvements.
 Integrated Framework for
CRM Strategy (Fig 12.10)

Strategy Value Creation Multi-Channel Performance

Development Integration Assessment
Process Process
Process Process

Information Management Process

Source: Adapted from: Adrian Payne and Pennie Frow, “A Strategic Framework for Customer
Relationship Management,” Journal of Marketing 69 (October 2005): pp.167–176.
 Integrated Framework for
CRM Strategy Development

• Strategy Development
– Assessment of business strategy
– Business strategy guides development of
customer strategy
Integrated Framework for CRM Strategy: Value
Creation

• Value Creation
– Translates business and customer strategies into specific value propositions
for both customers and firm

• Customers benefit from priority, tiered services,

loyalty rewards, and customization
• Company benefits from reduced customer acquisition
and retention costs, and increased share-of-wallet
– Dual creation of value: Customers need to participate in CRM to reap value
from firm’s CRM initiatives
 Integrated Framework for CRM
Strategy: Multi-Channel Integration

• Multi-Channel Integration
– Serve customers well across many potential
interfaces
– Offer a unified interface that delivers
customization and personalization
Integrated Framework for CRM
Strategy: Performance Assessment

• Performance Assessment
– Is CRM system creating value for key stakeholders?
– Are marketing and service standard objectives
being achieved?
– Is CRM system meeting performance standards?
Integrated Framework for CRM Strategy:
Information Management

• Information Management
– Collect customer information from all channels
– Integrate it with other relevant information
– Make useful information available to the frontline
– Create and manage data repository, IT systems,
analytical tools, specific application packages
Common Objectives Of CRM Systems (1)
(Service Perspectives 12.3)

• Data collection
– Customer data such as contact details, demographics, purchasing
history, service preferences, and the like
• Data analysis
– Data captured is analyzed and categorized
– Used to tier customer base and tailor service delivery
accordingly.
• Sales force automation
– Sales leads, cross-sell, and up-sell opportunities can be
effectively identified and processed
– Entire sales cycle from lead generation to close of sales and after-
sales service can be tracked and facilitated through CRM system
Common Objectives Of CRM Systems (2)
(Service Perspectives 12.3)

• Marketing automation
– Mining of customer data enables the firm to target its market
– Goal to achieve one-to-one marketing and cost savings, often in the
context of loyalty and retention programs
– Results in increasing the ROI on its marketing expenditure
– CRM systems also enable the assessment of the effectiveness of
marketing campaigns through the analysis of responses
• Call center automation
– Call center staff have customer information at their fingertips and can
improve their service levels to all customers
– Caller ID and account numbers allow call centers to identify the
customer tier the caller belongs to, and to tailor the service accordingly
• For example, platinum callers get priority in waiting loops
 Common Failures in
CRM Implementation
• Service firms often equate installing CRM systems with having a
customer relationship strategy
• Challenge of getting it right with wide-ranging scope of CRM
• Common reasons for failures
– Viewing CRM as a technology initiative
– Lack of customer focus
– Insufficient appreciation of customer lifetime value
(CLV)
– Inadequate support from top management
– Failure to reengineer business processes
– Underestimating the challenges in date integration
 Key Issues in Defining a
Customer Relationship Strategy
• How should our value proposition change to increase customer
loyalty?
• How much customization or one-to-one marketing and service
delivery is appropriate and profitable?
• What is incremental profit potential of increasing share-of-wallet with
current customers? How much does this vary by customer tier and/or
segment?
• How much time and resources can we allocate to CRM right now?
• If we believe in customer relationship management, why haven’t we
taken more steps in that direction in past?
• What can we do today to develop customer relationships without
spending on technology?