Customer Relationship Management

Lecture 1

CRM Stands for

CRM is an abbreviation for Customer Relationship

Management, not Customer Relationship Marketing.

Management is a broader concept than marketing

because it covers marketing manage., Manufacturing

management, human resource management, service
management, sales management, and research and
development management.

Thus, CRM requires organizational and business

level approaches which are customer centric to

doing business rather than a simple marketing
strategy.

CRM Stands for

Customer

Relationship

Management

History of CRM

B&S

RM

CIMS

CRM

e-CRM

Time line

Late 80s

Early 90s

Mid 90s

2002 - Future

B&S Buying & Selling

RM Relationship Marketing
CIMS Customer Information Management Systems
CRM Customer Relationship Management
e-CRM- A subset of CRM that focuses on enabling customer
interactions via e-channels (The web, email and wireless)

Cost of Acquiring Customers

Nowadays, the competition is just a mouse-click away
Without customers product dont sell and revenue dont

materialized.

Become smarter about selling leads to smarter about who

is buying.

It costs a company six times more to sell a product to

new customers than existing ones.

The old bird in hand thus coming to roost

Smarter Definition of CRM

the infrastructure that enables the delineation of and

increase in customer value, and the correct means by
which to motivate valuable customers to remain
loyal-indeed to buy again.

What is CRM
An integrated cross-functional focus on improving

customer retention and profitability for the

company.
Process of creating and maintaining relationships

with business customers or consumers

A holistic process of identifying, attracting,

differentiating, and retaining customers

Integrating the firms value chain to create

enhanced customer value at every step

What is CRM
CRM is the development and maintenance of

mutually beneficial long-term relationships

with strategically significant customers

(Buttle, 2000)

CRM is an IT enhanced value process, which

identifies, develops, integrates and focuses the

various competencies of the firm to the voice of
the customer in order to deliver long-term
superior customer value, at a profit to well
identified existing and potential customers.

(Plakoyiannaki and Tzokas, 2001)

CRM Definition

CRM is concerned with the creation,

development and enhancement of

individualised customer relationships
with carefully targeted customers and
customer groups resulting in
maximizing their total customer lifetime value.

Misunderstandings about CRM

Misunderstanding 1: CRM is database Marketing
Misunderstanding 2: CRM is a marketing Process
Misunderstanding 3: CRM is an IT issue
Misunderstanding 4: CRM is about loyalty Schemes
Misunderstanding 5: CRM can be implemented

by any company

Paradigm Shift

Determinants of CRM
Trust
The willingness to rely on the ability, integrity,

and motivation of one company to serve the

needs of the other company as agreed upon
implicitly and explicitly.

Value
The ability of a selling organisation to satisfy

the needs of the customer at a comparatively

lower cost or higher benefit than that offered
by competitors and measured in monetary,
temporal, functional and psychological terms.

Determinants of CRM
In addition to trust and value, salespeople must:
Understand customer needs and problems;
Meet their commitments;

Provide superior after sales support;

Make sure that the customer is always be told the truth

(must be honest); and

Have a passionate interest in establishing and retaining a

long-term relationship (e.g., have long-term perspective).

CRM Cycle

Principles of CRM
The overall processes and applications of CRM are based

on the following basic principles.

Treat Customer individually

Acquire and retain customer loyalty through Personal
Relationship
Select Good customer instead of Bad customer based on
Lifetime value.

In summary , personalization, loyalty , and lifetime value

are the main principles of CRM implementation.

How to achieve goals of CRM

Four basic tasks are required to achieve the basic goals of

CRM. [Peppers, et al., 1999]

Customer Identification

To serve or provide value to the customer ,the company must know or

identify the customer through marketing channels, transactions , and
interactions over time.

Customer Differentiation
Each customer has their own lifetime value from the companys point of
view & each customer imposes unique demands and requirements for
the company.
Customer Interaction
Customer demands change over time. So keeping track of customer
behavior & needs is an important task of CRM.
Customization/ Personalization
Treat each customer uniquely is the motto of the entire CRM process .

Strategically significant customers

Customer relationship
management focuses on
strategically significant markets.
Not all customers are equally
important .

Therefore, relationships should be

built with customers that are likely
to provide value for services

Building relationships with

customers that will provide little
value could result in a loss of time,
staff and financial resources

Strategically significant customers

Strategically significant customers

need to satisfy at least one of three

conditions :
1.

Customers with high life-time

values (i.e. customers that will
repeatedly use the service in the
long-term)

2.

Customers who serve as

benchmarks for other customers.

3.

Customers who inspire change in

the supplier

Effective Marketer
BE RELIABLE-

consistent performance is what customer wants from us

BE CREDIBLE-

if the customer buys the product, he/she wants to safe and

guaranteed.

BE ATTRACTIVE-

body language, personality, appearance,

BE RESPONSIVE

accessible, available and willing to help customer whenever

the customer has a problem.

BE EMPATHIC-

to be in customers shoes and grasp his/her point of view

Implementing CRM
When introducing or developing CRM, a strategic review of
the organisations current position should be undertaken

Organisations need to address four issues

1.

What is our core business and how will it evolve in the future?

2.

What form of CRM is appropriate for our business now and in

the future?

3.

What IT infrastructure do we have and what do we need to

support the future organisation needs?

4.

What vendors and partners do we need to choose?

Benefits of CRM
Benefits of CRM include :

reduced costs, because the right things are being done (ie.,
effective and efficient operation)
increased customer satisfaction, because they are getting
exactly what they want (ie. meeting and exceeding
expectations)
ensuring that the focus of the organisation is external
growth in numbers of customers
maximisation of opportunities (eg. increased services,
referrals, etc.)
increased access to a source of market and competitor
information
highlighting poor operational processes
long term profitability and sustainability