Meaning & Significance

From the outside, customers interacting with a company perceive the business as a single
entity, despite often interacting with a number of employees in different roles and
departments. CRM is a combination of policies, processes, and strategies implemented by an
organization to unify its customer interactions and provide a means to track customer
information. It involves the use of technology in attracting new and profitable customers,
while forming tighter bonds with existing ones.
Customer Relationship Management entails all aspects of interaction a company has with its
customer, whether it is sales or service related; it starts with the foundation of relationship
marketing. CRM is a systematic approach towards using information and on going dialogue to built
long lasting mutually beneficial customer relationship.
CRM includes many aspects which relate directly to one another:
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 Front office operations — Direct interaction with customers, e.g. face to face
meetings, phone calls, e-mail, 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.)
 Business relationships — Interaction with other companies and partners, such as
suppliers/vendors and retail outlets/distributors, industry networks (lobbying groups,
trade associations). This external network supports front and back office activities.
 Analysis — Key CRM data can be analyzed in order to plan target-marketing
campaigns, conceive business strategies, and judge the success of CRM activities
(e.g., market share, number and types of customers, revenue, profitability).

Types of CRM
There are several different approaches to CRM, with different software packages
Operational CRM
Operational CRM provides support to "front office" business processes.
Interactions with customers are stored in customers' 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 (products owned, prior support
calls etc.), eliminating the need to individually obtain this information directly from the
customer.
Analytical CRM
Analytical CRM generally makes use of large volumes of data and other techniques to
produce useful results for decision-making. The more information that the analytical software
has available for analysis, the better its predictions and recommendations will be.
 Designing and executing targeted marketing campaigns
 Analyzing behavior of the customer in making decisions relating to products and
services (e.g. pricing, product development)
 Analysing customer profitability.

Collaborative CRM
Collaborative CRM information of company's dealings with customers that are handled by
various departments within a company, such as sales, technical support and marketing. Staff
 members from different departments can use information collected when interacting with
customers.
Consumer Relationship CRM
Consumer Relationship System (CRS) covers aspects of a company's dealing with customers
handled by the Consumer Affairs and Customer Relations department within a company.
Departments handle in-bound contact from anonymous consumers and customers. Early
warnings can be issued regarding product issues (e.g. item recalls) and consumer feedback.

Social CRM
The rapid growth in social media and social networking forced CRM product companies to
integrate "social" features into their traditional CRM systems. Other emerging capabilities
include messaging, sentiment analysis, and other analytics. Many industry experts contend
that Social CRM is the way of the future, but there are certain disadvantages. Top CRM
minds agree that online social communities and conversations can be dangerous for
companies. They must be monitored frequently.
Strategies for Building Relationship:
Organizations develop and maintain relationship depending on certain factors. These include
nature of business, its size its market share, nature of product , volume of sales, geographical
concentration, socio – economic status and customers concerned, competitors and so on
1. People : People within the organization have the basic role in developing and maintaining
relationship with customers. Everyone in the organization must know that satisfying the
customer is their utmost goal. Everyone from the lowest to the highest level irrespective of
their functional specialization must work towards one of the main objectives of the
organization – customer satisfaction.
2. Process : Process involves series of activities from the identification of needs to need
fulfillment. Need fulfillment requires manufacture of products with desired attributes. The
process has to be derived from the customer’s viewpoint which leads to total customer
satisfaction.
3. Product : The product must constantly provide value addition. The customers expectations
increases due to various reasons. A customer satisfied with a given product may soon
become a dissatisfied customer in view of the changes that take place in his expectations.
4. Organization : To build customer relationship, an organization should be aware of the
technology advancements and provide quality services in tune with the customer’s
expectations. It should concentrate on total customer satisfaction and respond to the
requirements of the customers faster than its competitors.
5. Setting Satisfactory Service Standard : A customer not only expects quality products but
also quality services. Organization should provide service in all phases viz. pre sales, during
sale and after sales. During presales when the customer develops expectations, the
organization must ensure quality and availability of the products in time. During sales, when
the customer experiences the sales process, the organization must provide the customer an
opportunity to inspect, and treat them with courteous attentiveness, prompt reply etc. During
after sales, when the sales are finalized, the organization must provide supporting services
such as speedy replacements, simplified complaint procedures, efficient maintenance .
6. Concentration on Competitors: An organization must be aware of the competitors
performance, their strategy and style of operations and compare same with its own
performance. Customers do such comparison and make purchase decisions. Such analysis
done by organization would help in increasing its strengths and reducing its weaknesses.
7. Customer Analysis : Customers referred include the present customers consuming the
products of an organization and customers who are presently using products of competitors.
 so on. This analysis is to be performed not only on the existing customers but also on the
former customers, so that corrective actions may taken to retain current customers.
8. Cost Analysis : An organization must focus attention on the cost of the product or service.
Always, there must cost reduction without compromising on quality. The organization must
reduce costs and retain the same good quality or improve quality.
9. Concentration on the Paying ability of Customers: Pricing decision are to be governed not
merely by cost related factors. Before fixing price, the paying ability of the potential
customers must also be viewed. To some extent prices are to be adjusted in tune with the
fluctuations in the paying ability of potential customers.
10. Knowledge on Purchase Behavior Pattern: Organizations should have a
knowledge of the purchase behavior pattern of their customers. The influencing factors of the
purchases decisions process and the ultimate outcome are to be analyzed in depth.
11. Differentiation in Prices and Quality Standards : An organizations may come forward
to offer services or brands of different varieties with price variations.
12.Attention on Changing Requirements of Customers : The requirements of the
customers are bound to change in time with the changes in their lives, demographic and
psychographic profiles and the related aspects. Customers up to a given point of time would
concentrate on life maintenance needs and then to life changing needs,.
13. Building Switching Barriers : In order retain customers, organizations must come
forward to the build brand switching barriers. In view of those barriers, switching may be
made difficult and not worthwhile. Those barriers may include incentive schemes,
relationship based pricing, additional services, attractive prize schemes, sentiments based
schemes and so o

CRM Vs. Customer Retention

There are so many things that can go wrong with a CRM implementation and when any of
this occurs, it will but naturally have an impact on customer retention.

Customer Retention is crucial to success

Customer Retention focus is essential to overall business success. Profits can soar and
productivity and efficiency increase only when customer retention is achieved. Profits depend
on the customer - that is the fundamental truth. Customer Retention is definitely a must for
all businesses. Currently there is a plethora of websites, consultants, and companies all
willing and eager to offer advice on this much needed asset. There are heaps off theories
moving around propounded by various researchers, consultants etc. When companies have
the ability to train employees in the correct manner, and employ CRM in the right way, why
then do they fail to do what is essential to hold onto their customers The following are the
reasons:

Usage of Existing Information

Most companies believe that adopting a CRM project will allow them to establish a better
relationship with their customers, monitor their behavior and basically induce them to
continue their patronage to the company. Undoubtedly this is happening to a certain degree.
Then what's wrong? The fundamental problem with companies is that they continue to work
with what they already know about the customer rather than focus on what new information
they could learn in an attempt to know the customer better. They are working with existing
information in their customer retention strategy rather than looking for new avenues to their
biggest asset - their customers.

Reluctant Employees

Raising customer satisfaction involves considerable effort on the part of all employees
especially those at the forefront. Does this really happen? Of course not. Employees
sometimes due to a lack of adequate training or because they adopt the wrong attitude or have
inhibitions, fail to use customer information in the right manner. Most often employees fail to
realize the importance and goals of CRM and work in a manner that is in contravention of it.
They adopt sore attitudes towards customers and wind up achieving customer desertion rather
than customer retention.

Insufficient Attention

Ensuring that the customer has a pleasant experience will go a long way in ensuring his
continued patronage. The extra personal touch is what is missing in most organizations today.
They are focusing on aspects such as their marketing and sales efforts, cost adherence factors
and returns but forgetting the fundamental necessity- that of focusing on the customer and
making sure he is satisfied. Companies view this as an unnecessary and sometimes costly or
time consuming affair, shirk it and wind up paying the price of watching loyal customers
walk away.

An appropriate and viable business environment, well trained staff, prompt response to
customer enquiries and generally making the customer experience a pleasant one. What it
implies is the need to have your customers coming back to you again and again.

Increasing Customer Retention

 Right from the inception itself there are several efforts any business needs to take in
order to ensure that the customer is on its list of priorities. And not just on its list of
priorities but one of the very first. It can do this in several ways. For starters a
company needs to ask itself several questions like –

What information it would like to have about its customers?

How it intends to use this information?
What is the most productive way to use it so as to benefit the customer?
Are there any other ways in which it can make the experience of its customers a better one?
Does it have the necessary resources and technology needed to implement CRM?
What other resources does it need to increase customer retention?

 Customer appreciation should be done. Despite the fact that engaging in this will go a
long way in mitigating customer loss, organizations fail to make it a part of their
 business process and employees fail to incorporate this in their dealings with the
customer. This needs to be done at all stages.
 Another failure on the part of businesses in claiming customer loyalty is their inability
to educate the customer about the product.. Attempting to educate the customer about
the product will go a long way in bettering the customer experience for him
 One of the ways in which organizations can assist their customer loyalty programs is
by ensuring that their customers get to share their positive experiences with other
customers thereby boosting customer retention.
 Customer feedback is fundamental and essential in any attempt to understand the
customer and succeed at customer retention. What happens when a company
encourages feedback from its customers is that they are equipped with additional
customer knowledge and can avail of the valuable suggestions and advice that is got
through customer feedback alone. Through feedback company gets to know the exact
picture of how customers feel about the enterprise.

It is only through adoption of the right customer practices, coupled with a genuine desire to
provide the customer with the best experience possible that CRM's goal of customer retention
can be fulfilled in an organization.

Brand Switching Behavior:

Brand switching is the behavioral actions of the customers with reference to their choice of
brand. A number of factors are responsible in initiating the brand switching behavior. This
includes:

 Dissatisfaction with present brand

 Change in fashion
 Promises made by competitors
 Change in the perceived benefits
 Personal Characteristics of the customer concerned
 Pressure of salespersons and so on
 Personal Reasons
Every organization aiming to build customer loyalty must concentrate on the pattern of brand
switching and safeguard them with suitable marketing strategies.
Following is the sample switching pattern:
Brand Switching Pattern
Period X Brand Period X1
A B C D
Brand A(100) 60 20 10 10
Brand B(100) 20 40 20 20
Brand C(100) 20 30 20 30
Brand D(100) 20 50 30 0

During a given point of time(X) as regards Brand A 100 customers were loyal to brand A.
However, another point of time (X1) the loyalty was distributed among A, B, C and D in the
ratio 6:2:1:1. In the case of Brand D, during the period X, there were 100 loyal customers and
during X1, there were total disloyal customers. The customer loyalty was shared among A,B
& C. the example above shows B was emerging as a proffered brand as almost all other
brands were losing their customers towards brand B.
 CRM Process
CRM process is defined as any group of action that is instrumental in the achievement of the
output of an operation system, in accordance with a specified measure of effectiveness.
The final objective of the CRM process is to originate a powerful new tool for customer
retention. The focus of any process is to achieve something we have always wanted, but
didn’t have the proper resources. The CRM implementation and success rate purely depends
upon the process, which includes the future, revenue, customer value, customer retention,
customer acquisition and profitability

Benefits of a CRM Process :

 Ability to retain loyal and profitable customers and channels for rapid growth of the business
project.
 Acquiring the right customers, based on known characteristics, which drives growth and
increased profit margins.
 Increasing individual customer margins, while offering the right products at the right time.

CRM Process for Marketing Organization :

The organizational structure of a marketing organization would be as follows:
1. Direct Marketing : The role of marketing Director is to coordinate the entire process
measured on customer – holding, purchase and profitability. He plays an important role in the
success of crm
Skills Required :
 Marketing Experience
 IT outsourcing
 IT knowledge
 Warehousing
 Internet technology concepts
 Data mining techniques
 E-channels
 Statistics

2. Marketing Analyst :
 To identify the right customers, you need to have marketing analyst
 The analyst is expected to have a sound business knowledge, industry knowledge and market
knowledge that would help in the development relating to customers identification and
segmentation. The marketing analyst would take care of analysis, reporting and predictive
modeling.
Skill Requirements:
 Statistical Modeling : QA statistics, Mathematics
 Data Mining: Use of SAS Clementine, TeraMiner, or other detailed knowledge discovery
tools.

3. Manager Segments :
 The segment managers are the glue of the team and form the kingpin for the CRM process.
He handles all customer. Having ultimate say in campaigns and the customer and the
customer.
4. Campaign Manager: Having identified the opportunities, the campaign manager then
creates the right offer that will ultimately be made to the right customer. The right offers
include offers, strategy, timing, printed matter, product management, advertising, public
relations messaging, interactions, plans and measurements.

Key Responsibilities of Campaign Manager:

 Connecting with product managers, advertising managers, relationship managers and public
relation departments and outside firms scheme designing
 Scheme designing
 Determining campaign Strategy
 Trail marketing
 Relationship with telemarketing firms
Technical skills Requirement:
 Marketing automation tools
 Marketing experience
 Knowledge of campaign management tools and database
 Work with IT to ensure flow is accurate
 Vendor management

5. Channel Manager :
The channel manager coordinates the customer, offer and timing into the channel decision,
and ensures that the same offer is communicated and then reinforced across all of the
enterprises many touch points. The channel manager must interact with the call centre, the
Internet, the web and the direct or indirect sales force. It must be known and planned who are
the external channels of resellers, distributors, franchisees, and advertising and public relation
team, to make sure the process hits the front lines in parallel.

Key Responsibilities:
 Coordinating communications across all the contact channels
 Presents “Single-company image” to customers
 Manage liaison with call centre, Internet team sales force, customer service and resellers to
“coordinate: touch – points, treatment and total customer communication
Skill Requirements :
 Web implementation
 Integration of channels
 Operational call centre
 Internet experience
 Language prose skills
 Analysis and research
 Negotiating skills

6. Relationship manager:
Most of the Indian companies, do not have Relationship Manager, who is a most important
player in the CRM process. This person handles the business problems or the business
opportunities such as customer retention, customer purchase and customer profitability.

Skills Requirements:
 Relationship techniques (data mining, hypothesis development and communication
techniques).
7. CRM Project Manager
The CROM project manager will lead and mentor the project team in delivery of
SDLC(Software Development Life Cycle), system integration, and/or packaged software
configuration projects for CRM and eCRM business applications
8. CRM technical Consultant
As the CRM subject matter expert the CRM technical consultant, works with sales staff,
internal and partners, professional services and delivery staff to both plan and implement
eCRM projects for mid tier clients. Using proprietary opportunity assessment tools, he
analysses clients current CRM business process areas
eCRM
As the internet is becoming more and more important in business life, many companies consider it
as an opportunity to reduce customer-service costs, tighten customer relationships and most
important, further personalize marketing messages and enable mass customization. Together with
the creation of Sales Force Automation (SFA), where electronic methods were used to gather data
and analyze customer information, the trend of the upcoming Internet can be seen as the
foundation of what we know as eCRM today. eCRM includes activities to manage customer
relationships by using the Internet, web browsers or other electronic touch points. The challenge
hereby is to offer communication and information on the right topic, in the right amount, and at
the right time that fits the customer’s specific needs.
Channels through which companies can communicate with its customers, are growing by the day,
and as a result, getting their time and attention has turned into a major challenge. One of the
reasons eCRM is so popular nowadays is that digital channels can create unique and positive
experiences – not just transactions – for customers. An extreme, but ever growing in popularity,
example of the creation of experiences in order to establish customer service is the use of Virtual
Worlds, such as Second Life. Through this so-called eCRM, companies are able to create synergies
between virtual and physical channels and reaching a very wide consumer base. However, given the
newness of the technology, most companies are still struggling to identify effective entries in
Virtual Worlds. Its highly interactive character, which allows companies to respond directly to any
customer’s requests or problems, is another feature of eCRM that helps companies establish and
sustain long-term customer relationships.
Furthermore, Information Technology has helped companies to even further differentiate between
customers and address a personal message or service. Some examples of tools used in eCRM:
 Personalized Web Pages where customers are recognized and their preferences are
shown.
 Customized products or services (Dell).

CRM programs should be directed towards customer value that competitors cannot match.
However, in a world where almost every company is connected to the Internet, eCRM has become a
requirement for survival, not just a competitive advantage.