Syntel CQA Forum Customer Relationship Management II

CQA Doc No 28
What is CRM?
CRM is about retaining customers! If you're truly retaining customers, you're delivering
increased value. In a perfect world, CRM marshals marketing materials, tracks customers'
histories and coordinates a company's multipronged interactions with its customers.
CRM is a comprehensive approach which provides seamless integration of every area of
business that touches the customer – namely marketing, sales, customer service and field
support-through the integration of people, process and technology, taking advantage of the
revolutionary impact of the Internet. CRM creates a mutually beneficial relationship with your
customers.
CRM is about acquiring, developing, and retaining satisfied loyal customers; achieving
profitable growth; and creating economic value in a company's brand.
Customer Relationship Management is the practice of identifying, attracting and
retaining the best customers to increase sales and profits.
Why CRM?
Several companies are turning to customer-relationship management systems and strategies
to gain a better understanding of their customer’s want and needs. Used in association with
data warehousing, data mining, call centers and other intelligence-based applications, CRM
"allows companies to gather and access information about customers' buying histories,
preferences, complaints, and other data so they can better anticipate what customers will
want. The goal is to instill greater customer loyalty."
Brief history
Customer Relationship Management (CRM), which swept through the business landscape in the
early 1990s, brought the promise of helping sellers please most of the people most of the time.
Riding the coattails of customer satisfaction would come increased organizational efficiency
and, better still, increased revenues.
As CRM evolved, many companies assumed that just bolting on new technology (e.g.,
client/server, call centers, sales force automation software, data warehouses, etc.) or adding
new services would enhance customer relationships. This assumption was as pernicious as it
was false. After all, you can't sell what people don't want to buy, no matter how efficient and
service-oriented your sales channel. And as for gathering customer insights, be careful what
you wish for. Many companies faced the unsettling paradox of having advanced data
availability and analytic techniques that quickly outpaced their ability to absorb and apply the
information. They were left with sophisticated tools that offered little real value.
Benefits
• At face value, the case for implementing a CRM system is a no-brainer. There are good
reasons why companies continue to implement these tools, even while the economic
slowdown pressures them to cut back on other IT expenditures.
• For starters, the cost of retaining anywhere from 5 to 10 existing customers -- the number
depends on the analyst -- is almost the same as the cost of attracting a single new
customer. Research from Boston, Massachusetts-based consultancy Bain & Co. shows that
every five years, U.S. companies lose half their customers. Cutting these losses by just 5
percent can double profits.
• CRM tools tend to be easily implemented on a piecemeal basis, which is a source of great
relief to those that survived -- if barely -- the seemingly never ending implementations of
ERP applications in the early and mid-1990s.
Current trends
CRM Wave 1 CRM wave 2
CRM Wave 3
Call Center/ Sales Force Multi-channel
Conversational

Effectiveness Integration
Marketing Early 90’s
Today
CRM Improving channel Improving customer Predicting customer

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Goals efficiency interactions behavior
Increasing Customer Increasing customer Building brand and
retention lifetime customer value
Satisfaction
CRM Provide more efficient Provide customers with Integration
Strategy means of customer multiple points of contact; communications and
interaction gather insights brand across channels
Resulting Customers enjoyed more Customers had more Customer is given a
Customer convenient transactions, options to interact with the seamlessly integrated
but channels were not company, but the experience across all
Experienc
integrated experiences were channels
e
fragmented across contact
points
Marketing Customer acquisition Customer retention Customer conversation
focus
Product Sales Cross-selling Brand Equity

The major current trends in customer relationship management (CRM) can be split into three
categories--market, executive, and implementation trends.
Market Trends
Increasing Customer Expectations
With greater consumer education, increased availability of information, the adoption of the
Internet, global competition, and more choice and deregulation in many industries,
expectations are being set by direct competitors and by enterprises in other industries.
Increasing customer expectations are driving the adoption of new channels, leading to poorly
implemented multichannel strategies. This is lowering both customer satisfaction and
customer loyalty, and making CRM even more vital.
Increasing customer relationship complexity
The relationship-complexity function between an enterprise and its customers states that: R (f)
= (number of segments) x (number of products) x (number of channels) x (number of
corporations). All the elements of the equation are increasing due to new technology, greater
mobility, and faster development of new products. Managing this complexity is becoming key.
A growing shift from mass production to mass customization
Customers are demanding an exact fit to their requirements. Mass customization provides an
answer to this demand for both products and services. It is made possible by the Internet,
which is enabling improved supplier collaboration to support mass customization. However,
this evolution to collaborative commerce is in its infancy.
Executive Trends
Intensified CEO attention on CRM
The larger CRM consultancies and vendors are presenting evidence that successful CRM
initiatives are leading to improve profits and better stock prices. With shareholders happy,
CEOs can look forward to larger bonuses, but the expectations set by IS and business
management will be critical.
Formalization of governance for customer relationships
Many enterprises describe themselves as customer-centric, but few involve customer
advocates on their leadership teams. Governance for customer relationships is starting to be
formalized in more advanced enterprises. However, through 2003, just 15 percent of
enterprises will "promote" customers at a senior management level through the
creation of a chief customer officer (0.8 probability).
Implementation Trends
Shift in CRM application architecture and spending
Applications developed in-house are being supplanted by packages; client/server architectures
are moving to Web-based architectures; and CRM suites that handle most functions are
replacing best-of-breed point solutions. Per-seat pricing is shifting to role-based pricing.
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Therefore, we expect prices to fall from $2,500 per seat to $250 per seat in three years. The
buying of software is moving toward greater use of application service providers, leasing, and
rental models. Call-center outsourcing is increasing due to a lack of skills and staff, but
database marketing is being insourced.
Explosion of customer data
In the past, the bulk of spending for CRM applications has been on sales and customer service.
Beyond these areas, marketing and analytics are now the fastest-growing areas, due to an
explosion of customer data from transactional, personalization, clickstream, voice, and video
communications, and the resulting analysis. We expect that customer data management (in
particular that which protects privacy) will become a key skill set.
Future trends
While incremental improvements have occurred, CRM has not yet delivered its ultimate
promise - the transformed customer experience. Companies have implemented call centers
and sales force automation software and customer sales representative training. However,
while improving the sales and service components of customer transactions, companies have
largely ignored "Marketing" what began as a solution for providing more efficient customer
transactions evolved into a process by which companies could foster more meaningful
customer interactions. Today, the challenge is to focus on building lasting and profitable
customer dialogues at all interaction and transaction touch points to build customer and brand
value. In this next evolutionary phase of CRM, information will be exchanged and acted on in
real time.
In this next evolutionary phase of CRM, information will be exchanged and acted on in real
time. Consumer history will be recorded (and remembered) and the expectations of both
parties will be met. Naturally, not every conversation will be profitable. But the series of
conversations and the ongoing knowledge transfer will continue to grow, creating a memorable
and differentiated customer experience, and, in the long run, a profitable relationship.
The CRM market is continuing to experience exponential growth. According to
Gartner Research, industry analysts estimate that the CRM market will grow to
more than 76 billion dollars by the year 2005. That's a promising future indeed!

Important investments
In a recent survey of 600 enterprises headquartered in the United States across eight vertical
markets, the following areas were rated as the most important investment to be made in the
following 12 months (multiple responses were allowed):
Application area Opinion Poll in
Percentage
Electronic commerce applications 34
Marketing automation 29
Call-center applications 22
Sales-force automation 21
Data warehouse with detailed 17
customer information
Supply chain management 14
Enterprise resource planning 12
Source: Gartner Consulting
According to Gartner Research, industry analysts estimate that the CRM market will grow to
more than 76 billion dollars by the year 2005. That's a promising future indeed!
Architecture
The Elements of CRM
Sales force Customer service/call Marketing
automation center management automation
Call centers - managing
Call center telephone sales aspects
Campaign management
of customer contact
E-commerce
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Field sales Web-based self service Content management
Retail
Third-party brokers, Field services and Data analysis and business
distributors, agents dispatch intelligence tools
Data warehouse and data cleansing tools
Source: Internet.
Product and Vendor Information
CRM Applications Commence Goldmine Front Pivot Sieb Clarif
2000 Office 2000 al el y
Contact Management 4 4 4 4 4
Sales Force Automation 4 4 4 4 4
Help desk 4 Separate purchase 4 4
Customer Service 4 4 4 4
Call Center 4 4
Marketing 4 4
Partner relationship 4
management
Employee relationship 4
management
Price
Per Seat $495 $495 SFA $170
$995 Help Desk 0
Server N/A N/A N/A
Source: Internet.
Drawbacks
• A disproportionately high number of implementations end in failure because the ROI [return
on investment] not attaining the level that someone thinks it should, because no concrete
set of expectations had been developed prior to implementation
• Disconnect between buyers and sellers of CRM technology over "what the sellers say they
have and what the sellers' products actually can do,"
CRM summary
Though CRM goals, implementations, and strategies fluctuate wildly from company to
company, at the root of this recent CRM revolution is the desire of all businesses—regardless of
size—to know their customers better. And pulling the electronic communications media into an
overall CRM strategy is one way companies can do that. Electronic interactions with customers
allow organizations to capture massive amounts of information about how individuals behave
when purchasing products, whether they are buying books or wholesale auto parts. By
understanding that data, businesses can market their products more effectively and provide an
unprecedented level of service.
CRM is an incredibly simple concept that all companies must understand. "Everything old is
new again, and the same is true with CRM," says Mark Bartin, vice president of marketing at
OfficeLand. ( References http://www.crmassist.com/ )

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