Customer Relationship

Management
Prof Ashish K Mitra
What is CRM?
Multiple Choice :
a. Sales Force Automation applications
b. A marketing buzz word
c. A corporate philosophy
d. Software that implements marketing, sales and
service business process
e. Implemented through a wide array of
applications
f. A way to improve customer satisfaction and
increase business
g. The next wave of information technology
h. Very difficult to implement
i. All the above
j. None of the above
• A report published by American Society of
Quality and Arthur Anderson Consulting says
– A repeat customer costs 1/5th of acquiring a new
customer
– A customer tells eight friends about a satisfying
experience and 20 friends for a negative experience.
– It is much easier to influence existing customers to
buy 10% more than it is to increase the customer
base by 10%
– 80% of successful new product and service ideas
come from existing customers
Dissatisfied Customers

• Studies show that of 100 dissatisfied

customers:
– 4 will complain to the business
– 91 will leave as customers
– 100 will tend to tell 8-20 people each
about the dissatisfaction
Increasing Competitive pressure driving
changes…
• ‘Product Centric’ vs ‘Customer Centric’
• Market Share vs Share of Customer Wallet
• CRM is not new , previously falling under
the guise of customer satisfaction
• Worldwide, service organizations have
been pioneers in developing customer
retention strategies
• Many sectors have turned into commodity
markets
• All customers are not equal
• Realization by Organizations that customers are a
business assets that when managed effectively can
derive continuous and sustainable economic value
over their lifetime.
• There has been a shift in business focus from
transactional to relationship marketing –
restructuring their processes around the needs of their
strategically significant customers
• CRM involves a comprehensive business
strategy. It helps business organize its activities
around the customer
• CRM does not enable a quick win. It is a long term
approach that has to be adopted at a strategic level
• CRM involves business processes an
organization goes through , in order
to identify, select, acquire,
develop, and retain its most
profitable customers, to serve
them better.
 Business Strategy
How do we deliver stakeholder value and build competitive advantage?

Marketing Strategy CRM Strategy

How do we take advantage of How do we get closer to the

Market opportunities and customers to deliver value to
Mitigate competitive threats? them & create value for us?
 Business Strategy
Marketing Strategy
• Vision: Market Position
• Market definition, MR &
Audit
• Analysis of strengths,
weakness, opportunities &
threats
• Target market segments
• Objective for each market
segment : penetration,
development, maintenance
& productivity
• Measures: Market Share,
Brand equity and Market
penetration
• Based on Product life cycle
CRM Strategy
• Vision: Customer Experience
• Customer definition : Behavior &
requirement audit
• Capability Analysis
• Target segments by customer
Value
• Objective for each customer
segment: acquisition,
development, retention and
efficiency
• Measures: Satisfaction, loyalty,
cost to serve and employee
satisfaction
• Based on the customer lifecycle
• Benefits of CRM fall into three
categories:
– Revenue enhancement – Increased
Sales revenues, increased win rates
– Cost Savings – Increased margins,
decreased general sales and marketing
administrative costs
– Strategic Impact – Increased Customer
Satisfaction ratings, improved response
time, Customer loyalty, take advantage
of new business opportunities
• Operational CRM
– Sales Force Automation ( SFA)
• Accounts Management
• Contact Management
• Opportunities Management
• Activities Management
• Configuration Management
• Sales Forecasting
– Customer Service Management
• Call Centre Management
• Service Request / Customer Complaints
Management
• Analytical CRM
• Collaborative CRM
Definition of CRM (Peelen’s
text book)
• “ The automation of horizontally integrated
business processes involving front office customer
contact points (marketing, sales, service and
support) via multiple, interconnected delivery
channels” --- Metagroup, 2000.
• In this definition - CRM is positioned in IT corner.
• A company is engaged in CRM if
– Customer is ‘recognized ‘ - irrespective of the type of
channel through which he approaches
– Does not need to provide his history to proceed with
dialogue
• CRM is “a process that addresses all aspects of
identifying customers, creating customer knowledge,
building customer relationships, and shaping their
perceptions of organization and its products”. This
definition refers CRM as a process, attention on
customer, developing a longer term mutual interest
deeper than the mere purchase / sale transaction.
– Above definition requires more attention to be paid to goals vis-à-vis
customers , supplier’s interest goes beyond one sale transaction
– It is important for the customer to get an impression of the
company as a whole & its products and for the supplier to get to
know the customer more as a person rather than just as a buyer.
– An image is created that customers are recognized, respected & mostly
receive special attention
• Gartner group’s definition ( 2004) of CRM – “ an IT
enabled business strategy, the outcome of which
optimize profitability, revenue and customer
satisfaction by organizing around customer segments,
fostering customer- satisfying behaviors and
implementing customer -centric processes”. . CRM is
not postulated as a process but instead as a business
strategy
• Goal is to increase revenue and profit, and most
importantly , to improve customer satisfaction. Due to
the fact that individual customer knowledge is being
accumulated, it creates strategic competitive
advantage over the competition.
• Customer Satisfaction is not to occur at expense of
efficiency & profitability.
• Definition of CRM provided by Regis McKenna
highlights the cultural change / mind set change that
is needed to be brought in an Organization which
pursues CRM is true spirit.
• Since CRM targets building of an infrastructure for ‘real
time marketing’ which helps develop a long term
customer – supplier relationship - the walls between
company and customer are being torn down.
• ‘Privacy’ of both parties are to be carefully defined.
• Customer and company move closer to each another;
Each will have to react to and anticipate the other’s
action more directly, Organizations will have to adjust
their cultures and will have to learn how to operate in a
more customer oriented manner. Processes will have to
be high quality because customers now be ‘having a
look in the supplier’s kitchen’. Companies will not allow
the potential advantage of long-term customer-
supplier relationships to slip through their fingure.
• Formulate a vision and strategy at the very outset
which points the way for the entire CRM programme.
CRM as a business Strategy

• CRM is a business strategy & therefore affects

the organization as a whole : marketing, service,
logistics, finance, IT , HR etc.
• Back office whose task is to fulfill the promises
made by the front office, will ultimately have to
learn to cater for individual customers.
• Processes have to be well defined , and will have
to be executed flawlessly and efficiently, because
after all, the customers are watching.
• In practice CRM strategies of many
companies began by focusing on
Operational excellence, on Increasing
efficiency & reliability. Eg self service
provides customers continuous access &
at the same time reduces load on back
office. However, the underlying processes
have to be perfectly defined & controlled
• A business strategy whose goal is the
development of long term, mutually profitable
customer – supplier relationships, places
customer in a central position. Who is the
customer and what does he or she want? What
types of solutions should the organization provide
to make the customer more satisfied? How can
the organization develop & deliver these ,
together with the customer?
• As a Business Strategy, CRM’s goal is ‘customer
intimacy’. Two parties get to know one another,
help trust & make a commitment to one another
for the long term.
Elements of CRM (Peelen’s
text book)
• While ability to create an infrastructure
which makes it possible for customer
and supplier to recognize one
another and be able to interact in ‘real
time’ is an obvious technology
underpinning need for CRM, from
Business Strategy perspective, the four
cornerstones of CRM are:
– Customer Knowledge
– Relationship Strategy
– Communication
– The individual value proposition
Customer Knowledge
• Customer ( also Prospects) must be identifiable
• Customer’s profile must be known – past
purchases, preferred communication mode,
preferences
• Customer Data base must be current
( relevant for ultimate goal fulfillment)
• Supplement customer characteristics with
independent Market research intelligence
Relationship Strategy
• Long- lasting customer – supplier relationship
vs stimulation of transaction
• Relationship strategy has a longer-term horizon –
‘tell’ and ‘listen’ more than seducing to ‘sell’.
Interest in individual customers does not end at
the moment the transaction is completed.
• On the contrary, the purchase only marks the
beginning of the relationship in which trust &
commitment must grow.
• The Company has to develop the contours of a
policy necessary to develop & deepen the
relationship.
Communication
• Supplier’s capability to carry out dialogue with
individual customers is crucial- Can only pre-
determined information’s be provided , rather than
engage in a dialogue?
• A network of communication channels , must be
deployed through which it is possible to
communicate ‘any where, any time, any place’
• Dialogue should be possible without repetition and
reiteration of the identification ritual : who are you
and what do you like?
• Shifts can be made between various channels, and
the transitions between them should proceed
smoothly..
The Individual Value Proposition
• Knowledge of individual customer enables
offering the customers an individual
proposition customized to their needs
( product, service , price etc).
• Customization / design of the product or service
can be done together with the customer .
( might be assembled from standard modules)
• Pricing of the proposition can also be tuned
• One of the pitfalls involved in the development
of the customized propositions is that companies
create a complexity which may be too large.
Combining large scale aspect with flexibility is
practical using technology.
• The development of these four cornerstones
/ competencies must occur in a step-by-step ,
balanced manner
• It is not desirable for one of the four to move
much ahead of the others in its development.
• If too much is invested in one of the sub-
elements, the expected benefit of CRM will not be
encouraging & might cause disappointments for
sustained commitment of top management.
CRM processes and systems
• In many situations, the achievement of the four competencies is
to a great extent dependent on IT.
• The system must make it possible for customer knowledge to
be developed in an efficient manner, for the relationship
strategy to be implemented, for a dialogue to be conducted ,
and for customization to be supplied.
• Old day craftsmanship approach – only possible with small
customer base where each customer represent sufficient value
to justify an individual approach to CRM.
• With large customer base, a portion of which is of low value to
supplier, use of IT becomes inevitable. Many customers prefer
electronic communication.
• The construction of appropriate IT system presents a real challenge.
Many companies find themselves confronted with ‘legacy’
systems which are outdated, difficult to integrate -difficult to
‘real time querying’ necessary for implementing CRM
strategy.
• Most often, the creation of CRM strategy involve the Internet as a
channel, the call centre and sales information systems for account
managers and sales person. Often these systems are developed
independently & linking them together for conducting ‘ongoing
dialogue’ with customer is a challenge.
• Effective linkage of front office with back office systems is a
‘moment of truth’ for many companies.
• Customer asking a question which deviates from the standard is a
challenge when system integration reduces role of human element.
• CRM is a strategy that affects the entire company.
• Product oriented organizations will have to translate
themselves into a customer oriented ones.
• Investments have to be made in infrastructure to communicate
with customers through variety of channels
• Organizations have to learn how to conduct a dialogue with the
customers
• Formulate marketing strategy which targets relationship
building instead of stimulating transactions.
• CRM is much more than just some of a number of innovative IT
projects.
• Patience is a prerequisite.
History of CRM
• In marketing theory & practice – there has been a long standing &
clear tendency to focus on sale , the single event of a transaction.
• After transaction – salesman ‘looks elsewhere for next sale’ & the
buyer feels –’ You don’t care’
• Within transaction marketing, the process between two or more
transactions is neither analysed nor influenced.
• The attention for the relationship and investments in relationship is
lacking
• Marketing defined as ‘an exchange process between buyer and
seller’ and thereby formed the basis for subsequent
conceptualization of Relationship marketing..
• Relationship marketing was first conceptualized in B 2B
market – interaction & networking between buyers and sellers.
• Mostly in the shape of voluntary, long term, binding
commitments among the organizations involved. Transactions
were planned & administered instead of being conducted in an
ad-hoc basis.
• An after-effect of analysis & research studies led to
importance of customer retention and ‘ customer lifetime
value’ concept (Reichheld 1995).
• Relationship marketing with its origin in business to business
markets & the Service industry was then applied to the
consumer markets for branded goods.
•
Customer Supplier Relationships
• Relationship
– Interaction must take place between at least two parties; activities of one of
the parties influence those of the other & vice-versa
– A certain degree of continuity must be present in a relationship
– The effects of interactions are dependent upon the actual events
• Psychologists classify relationships between :
– Primary relationships- long term interpersonal relationship based on
emotional bonds & feelings of mutual obligation; like mother & daughter,
man & women
– Secondary relationships – such as between customer & supplier, are by
contrast relatively short relationships with fairly clear rules of etiquette &
reasonably well defined social roles. Deep emotional involvement rarely
occurs; the various players may be more easily replaced in general
• The transitional area between secondary & primary relationship
is rather large.
Relationship Marketing

• Relationship marketing is not about having a

"buddy-buddy" relationship with your customers.
• Customers do not want that.
• Relationship Marketing uses the event-driven
approach of customer retention marketing, but
treats marketing as a process over time rather
than single unconnected events
• Is a long-term process
• There are a number of identifiable stages in
long term customer relationship
• This can be explained through the Relationship
Ladder constituting of six different phases of
relationship
Customer – Supplier Relationship
ladder
Phases of Relationship

• At the foot is the ‘prospect’ or target market

• The traditional or classical marketing emphasizes on
means of converting prospects into customers
• In relationship marketing customer is
– Someone who has done business with us only once or
occasionally
• The next is ‘client’ who is someone who will do
business with us on a repeat basis but may be
neutral or negative about company
• The client when converted into a ‘supporter’,
strength of relationship becomes apparent
• These people like being associated us and may
also be persuaded to become advocates
• The final step is when customers become
partners in which mutual advantage can be
gained from relationship
Scope of Marketing in Relationship
Marketing
• Emphasis in relationship marketing is on
– Finding appropriate means to move customers up the
ladder and to keep them there
• Conventional marketing focuses on
– Winning of customers and building market share without
emphasizing more on customer retention
• There is wider view of marketing rather than simply
focusing on end user
• For building and sustaining real customer value
– Relationships need to be built with numerous constituents
– This is known as ‘Six Markets’ model
• Internal markets
– Individuals and groups within organization who
determine the style and ethos of business
• Referral markets
– From sources of professional advice (doctors,
lawyers, bank managers etc)
– Building relationships with these sources of word-
of-mouth should be integral part
• Influence markets
– Entities, individuals and organizations having the ability
positively or negatively to influence the marketing
environment in which the company competes
• Employee markets
– There is need to recruit and retain employees who will
further the aims of the company in the marketplace
• Supplier markets
– Refers to network of organizations that provide material,
products and services to the organization
– Results in improved quality, faster time-to-market, more
innovative products and lower levels of inventory
• Customer markets
– All people and organizations that buy goods or services from us
– Can be either end users or intermediaries
– Customer service is the most important tool
 Is CRM New?
No! Yes!
• A shift in corporate philosophy
• Simply an extension of concerning the approach to
relationship marketing value delivery
• Customer-centric approach to
• Builds on customer value chain
service and satisfaction • New and technology-enhanced
concepts processes
• Focus is not just on bottom-
• Just the latest line, but on top-line
buzzword for creating • Goal is to create satisfying
experiences across all
customer orientation customer contact points
• Bottom-line is still the
same
CRM Programs Can Potentially Improve
• Analytical CRM
– Customer Segmentation
– Trend Analysis
• Operational CRM
– Campaign Management
– Tele-Marketing/Tele-Sales
– Activity and Time Management
– Quotation and Order Processing
– Delivery and Order Fulfillment
– Customer Service and Support
– Remote Access
• Collaborative CRM
– Enterprise Portals
– Customer Access
– Supplier Access
– Personalization
 Areas of CRM Activity

• Sales Force Automation (SFA)

• Customer Service and Support
(CSS)
• Help Desk
• Field Service
• Marketing Automation
 Areas of CRM Activity:
Sales Force Automation
• 35-40% of all CRM activity
• Manages lead generation, tracks movement of
leads through the pipeline, allows better usage of
customer data, integrates activities across sales
channels, simplifies relationship management,
forecasts for opportunities (SWOT)
• Goldmine and SalesLogix are examples of
prepackaged SFA solutions.
• Ex. Staples used SFA to integrate catalog, online,
in-store sales efforts directed at its best customers
 Areas of CRM Activity:
Customer Service and Support (CSS)
• 20-25% of CRM
• Assign, escalate, and track trouble tickets,
inquiries, solution attempts through resolution
• Provides information to support customer call
center activity
• Gleans customer data from those interactions
and records it in SFA for later use
• Remedy, Siebel, Vantive, and Clarify are major
vendors
• Ex., 3M Adhesive Products division
 Areas of CRM Activity:
Help Desk
• 15-20% of all CRM
• Allows individuals to access network database
to solve their own problems or find information.
• Can be internal or external
• Offers many bottom-line savings
• Human Click, Tivoli, LivePerson, are providers
• Ex., Land’s End Live allows customers browse
FAQ’s but also click a link to talk directly with
live representative.
 Areas of CRM Activity:
Field Service CRM
• 3-5% of all CRM activity
• Mobile service technicians can log information about
work orders and service calls, as well as access
information from the remote site.
• Can feed information from customer problems into
SFA for salesperson leads.
• Market information can be gathered and logged into
central database.
• Ensures appropriate resource allocation by matching
available resources to job requirements
• Major vendors are RTS, Metrix, eDispatch
 Areas of CRM Activity:
Marketing Automation
• 3-5% of CRM, but growing 5X faster than all others
• Interfaces with data warehouses and data mining activities to
tailor page views, products, and promotions, so that the right
offer goes to the right person at the right time.
• Can interact with SFA to support field sales efforts
• Provides customized customer interactions critical to segment
of one marketing, mass customization, customerization, etc.
• www.webgroove.com, Epiphany, Oracle, Siebel, and Personify
are leaders
Core elements of a customer-
supplier relationship
(Peelen’s book)
• Interaction & reciprocity – without a reciprocal
basis, there is no relationship.
• Commitment – is defined as ‘an enduring desire
to maintain a valued relationship’. Within this
framework of commitment, the objective is to
continue the relationship, producing outcomes
which are as beneficial as possible for both
parties. The exchange of resources will influence
the level of commitment present in the
relationship.
• Trust – is a basic condition necessary in
order for a relationship to grow and has been
defined as ‘a willingness to rely on an
exchange partner in whom one has
confidence’. It can be ‘the perception of
confidence in the exchange partner’s
reliabilty and integrity. Trust also originates in
the competency of the organization ,
protecting customer’s interest.
The relationship orientation
• Interactions must take place between at least two
parties; activities of one of the parties influence
those of the other and vice versa.
• A degree of continuity; interactions from the past
influence present and future interactions;
– extend over a longer period of time.
• The effects of interactions are dependent upon the
actual events and the subjective approach to
these events.
Figure 2.1 Pyramid of relationships
Table 2.2 Profile of close and weak relationships
Source: Peelen et al, 1996.
 Loyalty
Loyalty is a deeply held commitment to rebuy
or repatronise a preferred product/service
consistently in the future, thereby causing
repetitive same-brand or same brand-set
purchasing, despite situational influences
and marketing efforts having the potential
to cause switching behaviour.

Source: Oliver (1996).

Three Value Disciplines
• Treacy and Wiersema in their study identified, what
they call, three value disciplines of the successful
market leaders.
• Each of the value disciplines addresses how
companies can define a value proposition in relation
to the customers
• An analysis of the environmental context will show
which of the value disciplines is most appropriate for
a specific organisation in a specific market.
• Attention will also be focused on the results which
may be obtained by implementing a CRM strategy
• The Orange Line case describes an operator of cruise
ships and ferries. The organisation brings three
product offerings to the market, i.e. ferries, luxury
cruises and short cruises.
• Each of the activities contributes to the success in a
different degree and their success asks for a different
value discipline.
• The challenge is to make product portfolio decisions
and to choose between one or two value disciplines
that can be realised within the organisation.
• Under which market circumstances is it unwise to
aim for a customer intimacy strategy?
• When the chance of repeat purchases is low.
• In situations where the minimum required level of
operational excellence is not realised (logistics
problems, product quality problems; there are
other priorities).
• In situations customers do not expect suppliers to
build a relationship with them.
• Why does the combination of the product leadership,
customer intimacy and operational excellence
strategies lead to problems?
• Partly, because conflicting competencies and ambitions
stand as the basis of each of the disciplines.
• Characteristics for product leadership are technology
focus, product innovation and short lead times to
market. It requires product managers to play a
dominant role. Customer intimacy, on the other hand,
demands customer managers to be in the lead. They
can select the ‘right customers’, read their needs and
wants and translate them to ‘new product
development’.
 Value disciplines
Customer intimacy
Leading edge
Performance of market
leaders Minimum expectation

Operational excellence
Product leadership Cost leader
Best/newest product
• Operational excellence also asks for
a organisation model that is hard to
combine with product leadership and
customer intimacy.
• The process focus forms the core;
the organisation is more internally
oriented
Figure 3.1 Offensive versus defensive strategies
• Why is a customer intimacy strategy
considered to be a defensive strategy?
Explain your answer.
• It is a defensive strategy as its aim is to
retain and to build relationships with
existing customers. The objective of the
strategy is to create entry barriers that
should stop or hinder competitors from
approaching their customers.
• Is it possible for the manufacturer of a low-
involvement product such as biscuits or crackers to
implement a customer intimacy strategy?
• Most ‘low involvement’ products can be transformed
into ‘high involvement solutions’. Biscuits are ‘low
involvement’, but a celebration breakfast is not. An
analysis of the market should indicate what the
demand is for the intimate solution.
• Furthermore the organisation should explore if the
business is related to its current activities and if its
customers are willing to pay for the services or
experience.
• The choice of a customer for a software supplier
is heavily influenced by product innovations and
the software standard.
• As such many customers have switched from
Wordperfect to Microsoft Word and the Microsoft
browser has attracted many Netscape users.
• In the life insurance market, customers close a
transaction with a long term horizon. Trust plays
a major role; will the company still exist over
twenty years and will it keep its promises?
• To what extent is the organisation of a
supermarket equipped to implement a customer
intimacy strategy?
• Supermarkets basically have an operational
excellence value discipline. It is self service!
• A customer intimacy discipline is therefore not
likely to be the most appropriate. CRM systems
can be used to increase the scores on customer
intimacy to some degree, if the value proposition
and market circumstances allow for it.
Figure 4.4 From strategy to critical success factors
 ‘High costs are associated with owning data, and
Gartner believes that having bad data can increase
these costs by a factor of 10 when one considers
costs arising from bad business decisions and poor
CRM based on such data.’

Gartner Research, Customer Data Quality and Integration:

The Foundation of Succesful CRM, 26 November 2001
Figure 5.2 Growth stages in database management
Figure 6.1 Communication continuum
Figure 6.2 Dimensions in which channels may be scored
Figure 7.3 How far is the individual customer order integrated in the supply chain?
Source: Lampel and Mintzberg (1996).
Figure 7.5 Step-by-step plan for revenue management
Figure 8.3 Relationship policy per phase
Source: Peelen (1999).
Figure 8.4 Relationship policy by segment
Source: Peelen (1999).
 Incentives and loyalty
programmes
• Savings programme
– Rewarding transactions; operant conditioning;
stamps
• Club programme
– Subscribe; increasing involvement; providing
information and eventually discounts and service;
cognitive processes; Fox Kids
• Relationship marketing programme
– Minimal purchase level; aimed at user situation;
complementary goods and services; frequent flyer
programmes
Figure 8.5 Relationship management
Source: Alberts and Buitendijk (1995).
Figure III.1 Sub-aspects of analytical CRM
 Data quality
operationalised
• Complete
–Within the record
–Within the universe
• Current
–Up-to-date
• Correct
–Form
–Content
• Valid vs. correct
• Integrity
• Unique
–No duplicates?
 Identification
Term Definition Measurement

Accessibility Percentage of customers 95% x

identified in call centre in
less than 30 seconds
Complete Percentage of customers 40% x
with complete file
Correct NA, phone, e-mail 48% =
transaction history
Data quality call centre 18%
 Identification
Term Definition
Consequences for
Consequences for Measure-
call center
call center ment
strategy/objectives
strategy/objectives
Accessibility % customers identified in 95% x
call center < 30 sec
Costs to
Costs to correct
correct mistakes
mistakes
Complete % customers with complete 40% x
file Customer satisfaction
Customer satisfaction
Correct NA, phone, e-mail 48% =
Employee satisfaction
transaction
Employee satisfaction and
history and
retention
retention
Data quality 18%
call center Missed turnover
turnover
Missed
 Data quality –
identification
the business case
The value of
data quality Returned . . .

Billing
The costs of a
lack of quality Irritation

Waste

Conversion

Cross-selling
The added value
of quality
Retention, etc.
Types of analysis questions
• Segmentation and selections
• Acquisition analyses and selections
• Customer analyses and selections
– Retention analysis
– Relationship development analysis
• Cross, deep and up-selling analysis
• Analyses to determine the effectiveness of
the way that the customer is approached
Figure 10.1 Phases in the analysis process
 Datamining
• The automated discovery of interesting,
non-obvious patterns hidden in a database
that have a high potential for contributing to
the bottom line

versus

• The discovery of knowledge in databases.

 Datamining techniques
• Neural networks
• Evolutionary computation
• Association rules
• Decision trees
• Case-based reasoning
 Cross-selling
• Definition of cross-selling
• Cross-selling over time
Customer buys more than one of the same product
during a contact (two life insurance policies)
Customer buys two or more different products
during a contact (home contents and liability
insurance policies)
Customer buys a second or third product at a later
time
Figure 14.3 Example of measurement criteria
Figure 14.4 Benchmarking in the financial sector
Source: Beltman et al. (2000).
Marketing Aspects of CRM

91
 Key Customers

• Are the customers whose needs and wants

can be satisfied by the company

92
 Types of Customers
• Loyal customers:
– Perceive the company’s product as much superior
to a competitor’s product
• Competitive customers:
– Perceive company’s product as slightly superior to
competitor’s product

93
 Cont:
• Switchable customers:
– Perceive competitor's product as slightly superior to
the company’s product
• Competitor loyal customers:
– Perceive competitor’s product much superior to the
company’s product

94
 Loyalty defined
• Loyalty is a deeply held commitment to
rebuy or repatronise a preferred
product/service consistently in the future,
thereby causing repetitive same-brand or
same brand-set purchasing, despite
situational influences and marketing
efforts having the potential to cause
switching behaviour.
 Strategies for deciding key
customers
• Nature of need fulfillment
• Role of product in need fulfillment
• Position vis-à-vis competitors
• Length of relationship

96
 Strategies for key customers

• Develop personal trust

• Create entry barriers
• Reinforce exit barriers

97
 Factors for Segmentation
• Long term objectives
• Customer profile (demographics,
psychographics, user status etc)
• Type of usage
• Purchase

98
 Customer Value
• According to Kotler: Customer value is the
difference between total customer value and
total customer cost
• Total customer value include:
– Product value
– Service value
– Personnel value
– Image value

99
 Contd.

• Total customer cost include:

– Monetary cost
– Time cost
– Energy cost
– Psychic cost

100
 How marketers ensure value
• Customer intimacy ( senior executives Spending
time with customers)
• Interpreting Needs (Creation of Walkman)
• Co-creating value ( product configuration-Dell)
• Suitable Branding
• Training and empowering personnel
• Research techniques
• Value based pricing
101
 Enhancing Customer Value

• Innovative feature (Samsung ,Gillette)

• Complete Solutions
• Value at lesser cost (Air Deccan, Nano)
• Removing pain points ( internet Banking)
• Use of new technology (iPod)

102
 Customer Lifetime Value (CLV)
• “ The present value of the stream of future
profits expected over the customer’s lifetime
purchases. The company must subtract from
the expected revenues, the expected cost of
attracting, selling and servicing that customer”
Kotler and Keller

103
 Contd.
• Customer Lifetime Value is defined as the total
value, in monetary terms, of your average customers
spanning the entire period that these customers are
likely to do business with you.
• It's the potential contribution of your customers to
your business over a period of time
• Required when company plans for long-term
relationships
• Lifetime value refers to ‘lifetime profitability’ when
cost data is readily available
• In absence of cost data, it refers to the lifetime
revenue stream

104
 LIFETIME VALUE

LIFETIME AVERAGE YEARLY

CUSTOMER
VALUE = TRANSACTION X FREQUENCY X ‘LIFE
VALUE OF PURCHASE EXPECTANCY’

105
 Calculating CLV
• Let's say you've 2,000 steady customers and
these customers remain with you for an
average of two years; for the past two years,
your net profit was $700,000.
• The Customer Lifetime Value can be
calculated as: $700,000/2,000 = $350.
• What this means is that over an average
customer lifespan of two years, each new
customer you could acquire and keep is worth
$350 to you in profits.
106
 Importance of CLV
• Knowing the Lifetime Value of your customers
is crucial to you and your business as it serves
as a benchmark without which you'll be groping
in the dark.
• When you know the Lifetime Value of your
customers, you can determine how much time,
effort and money you can afford to invest to
acquire that customer in the first instance.

107
 Contd.
• you can invest more today to reap a much
larger profits later down the road as long as
your cash flow is healthy and can support it.
• When you realize that customers are actually
an ongoing stream of revenue as opposed to a
one-shot sale, you can re-focus your marketing
efforts.

108
 Customer Equity
• Total of the discounted lifetime values of all
the firm’s customers
• There has been shift from brand equity to
customer equity
• ROI Indicates how well the firm creates value
from its investment, ROC quantifies how well
the firm creates value from its customers

109
 Contd.
• ROC is:
– Current period’s cash flow from its customers
plus any changes in the customer equity should be
divided by the total customer equity at the
beginning of the period
• Final figure of customer equity is:
– The customer lifetime values of all the current and
future customers added together

110
 Cost of acquiring customers include

• Cost of sales
• Promotions
• Branding
• Customer trials etc

111
Lifetime Value of Customers

112
 CLV depends on:

• The length of an average ‘lifetime’

• The average revenues generated per relevant
time period (mostly yearly) over the lifetime
• Sales of additional products and services
during that time
• Referrals generated by the customer over the
lifetime

113
 Activity-Based costing for CRM
• ABC is a budgeting and analysis process that evaluates
overhead and operating expenses by linking costs to
customers, services, products and orders
• Allows managers to see which products, customers or
services are profitable or losing money
• Measures the cost and performance of activities,
resources and cost objects
• Resources are assigned to activities, then activities are
assigned to cost objects based on their use

114
Customer Defection Curve

115
116
 Categories of Customer Defectors
• Price defectors
• Product defectors
• Service defectors
• Market defectors
• Technology defectors
• Organizational defectors

117
 Customer Life Cycle
• Pre Purchase stage
• Purchase stage
• Usage stage
• Re-purchase stage
• Lost customer stage

118
 CRM in Pre-Purchase Stage

• Easy access to right information

• Non interruptive campaigns
• Multiple channels
• Comprehensive information in right format
• Product demonstrations
• Risk-free trials

119
 CRM in Purchase Stage
• Purchase options
• Easy procedures
• Access to hire purchase
• Complete solution
• Installation and training at customer’s
convenience

120
 CRM in Usage Stage
• Easy access to after-sales service
• Quick trouble shooting
• Spare parts-easy availability and affordability
• Updated features
• Engaging customers

121
 CRM in Re-purchase stage
• Easy disposal of old product
• Loyalty bonus
• New products with useful value additions
• Keeping track of churn

122
CRM in winning back lost customers

• Analyze the cause of departure

• Make relevant offers
• Follow up

123
Customer Lifecycle Management
(CLM)

• CLM is simply the measurement of your CRM

program’s success over time – providing you have
CLM metrics from before and after your CRM
implementation.
• Your entire customer lifecycle must be properly
measured throughout its duration, and can be examined
on an individual customer or against a mean average.

124
 Aspects included in CLM
• Purchase history, which includes recency, frequency
and quantity;
• Gross amount of money spent on acquiring and
retaining the customer through marketing dollars,
• Resources spent generating each sale, as well as post
sales service and support;
• And the duration or longevity of that customer’s
relationship with your business.

125
 CRM Vs CLM
• CRM is the overall corporate philosophy of managing your
relationship with each customer in order to provide a better
overall customer experience.
• CRM, however, can wane in and out and be selective,
practicing on some customers but not others.
• It can also be a practice of one department but not others,
fluctuating at all the contact points within the organization.
• Perhaps you’re practicing CRM with a few of your biggest
clients, because they are worth exponentially more than all
your other customers combined.
• CRM can be selective and not at all static, as it’s more of a
practice than a measurement.
126
 Contd.
• CLM however is a static entity, and is more based upon a single
measurement which incorporates multiple metrics than a philosophy.
• Without practicing CRM , a company can take various measurements
of its customer lifecycles and find ways to improve, or ‘manage’
them better.
• CLM is also non-departmental, in that it by definition incorporates all
interactions with the customer throughout that customer’s life.
• The other key facet of differentiation between CRM and CLM is the
element of time.
• CLM is always a measurement over time, whereas CRM can be an
act at one particular contact point with the customer.

127
 Measuring CLM Success
• First, we need to segment our customer database into as many
variables as we want to measure.
• The most important thing to remember when determining how to
segment your customer database is that time is the most crucial
factor in CLM measurements – so none of your segmentations
should be one-time transactions, other than as a starting point to
measure positive CLM success from.
• Customer database can be put into various groups such as
– repeat purchasers over time,
– frequency of those repeating purchasers,
– overall lifespan of each customer (first transaction to most recent) etc

128
 Results of CLM
• Did your customers purchase more frequently, more
recently?
• Did they have larger overall transactions?
• Were they less costly to your business in terms of
service and support?
• Did they respond better to marketing initiatives?
• Has your Total cost of Acquisition per customer
shrunk, or grown?

129
 Classification of customers
• High cost-to-serve-customers
– Order custom products
– Small order quantities
– Unpredictable order arrivals
– Customized delivery
– Change delivery requirements
– Manual processing
– Large pre-sales and post-sales
support
– Require company to hold
inventory
– Pay slowly (high A/c receivable)
• Low cost-to-serve customers
– Order standard products
– High order quantities
– Predictable order arrivals
– Standard delivery
– No changes in delivery requirements
– Electronic processing
– Little or no pre-sales or post-sales support
– Replenish as produced
– Pay on time (low A/c receivable)
130
131
 Classification of Customers
• Profitable customers fall in different quadrants
• Best ones are in the upper left-hand quadrant
• These are rare, but if present should be cherished
and protected as they are prime target for
competitors
• They need to be retained through bonding
strategies

132
 Contd.

• Customers who are price sensitive but have

few special demands help reduce the cost to
serve
• The high cost- high margin customers are also
profitable
• They value unique functionality, features and
extensive support and service and pay for them

133
 Contd.
• The most challenging customers are the low margin-high
cost to serve customers that include:
– Convertibles: by negotiating improved ordering and delivery
relationships, reducing discounts, establishing menu-based pricing
for special services and features

– New Customers: may not be profitable initially but can be

monitored for long term benefit

– Strategic Customers: customers who give prestige and reputation or

help the supplier learn and improve internal processes. E.g. Infosys,
Wipro and Birlasoft worked with GE in spite of low billing rates

134
 Why
Why CRM?
CRM? Profitability
Profitability –– driving
driving business
business

 Customers life time value

Profit
Profit generation

Acquisition Phase out

Time

135
 Profitability – the CRM answer
 Customers life time value
Cross-sell & up-sell
Profit

Churn analysis

Reduce
(Acquisition)
Time
Costs

136
 The Path to Strategic Customer Care

The Marriage
Customer Satisfaction/ Loyalty

The Relationship

RM
C Strategic
Customer Care

The Courtship Customer Retention

Customer Acquisition

Customer’s Lifetime Value

137
 Measuring
Measuring Loyalty
Loyalty in
in the
the CRM
CRM
Process
Process

Dialing
Relation
Customer Satisfaction/Loyalty

Share of Life
Transact

Share of Wallet
ion

M
Product
CR Strategic Customer Care

Customer Retention

Customer Acquisition

Customer’s Lifetime Value 138

 From
From Customer
Customer Acquisition
Acquisition to
to Strategic
Strategic
CRM
CRM
The Relationship The Marriage
+

(Customer (Strategic CRM)

Degree of Loyalty

Retention)
0

The Courtship The Relationship

(Customer (Customer
Acquisition) Retention)
-

- 0 +
Degree of Profitability 139
Customer Life Cycles

Business: size or maturity of the business

140
Customer Life Cycle
• Five Major “Life” Phases
•Prospects
•Responders
•New Customers
•Established Customers
•Former Customers

141
Business Processes
 Organized around the Cust. Life Cycle

142
Business Processes - Acquisition
 Acquisition is the process of attracting
prospects & turning them into customers
 Who are the prospects?
 Geographic expansion
 Product, service, pricing changes
 Competition changes
 Data Mining helps ID prospects

143
Business Processes - Activation

 Filling out registration form (simple)

 Include credit check, reference checks,
transcripts, notary service, etc. (more involved)
 Include physical exams (most involved)

144
Business Processes - Activation
 Activation steps (generalization)

 The Sale (Leads)

 The Order

 The Subscription

 The Paid Subscription

145
Business Processes – Relationship Management

 Goal: Increase customer’s value to us

 Up-Selling – premium products & services

 Cross-Selling – other products & services

 Usage Stimulation – come back for more!!!

 Be careful with this

 Web-based communication (spam)

146
Business Processes - Retention

 Survival Analysis
 Churn Analysis

147
Traditional vs. Personalized or (1:1) Marketing

Transactional Model Relational Model (CRM)

“Target “Permission
Marketing”
One-Way Messages Marketing”
Two-way Dialogue
Limited Hours and Capacity (24/7 Availability)
Non-addressable Individually Addressable
(On-line Chat and Networks)
Undifferentiated Promotions Integrated Marketing
“Occupant” Direct mail One-to-one media

Centralized “Call Centers” Customer Care Centers

Out-bound Telemarketing with really bad Integrated Internet & Telephony Systems with
music personalized offers and information

Buy targeted mailing lists Data Warehousing and Datamining

148
Enterprise CRM
Components of CRM Technologies

• Operational CRM – supports traditional

transactional processing for day-to-day front-
office operations or systems that deal directly
with the customers

• Analytical CRM – supports back-office

operations and strategic analysis and includes all
systems that do not deal directly with the
customers
• Collaborative CRM- the various departments
of a company, such as sales, technical support,
and marketing, share any information they
collect from interactions with customers
 Analytical CRM
• Companies need to
– Analyze the performance of the relationships with the
customers,
– Uncover trends in customer behavior, and
– Understand the true value of their customers to the
company.
• This is taken care of by Analytical CRM which is
“Back-Office” CRM
• Involves understanding the customer activities that
occurred in the front office.
 Cont.
• “Back-Office” CRM
– Requires technology to compile and process
customer data and
– New business processes to refine customer-facing
practices to increase loyalty and profitability.
• Analytical CRM is a consistent suite of
analytical applications that help you measure,
predict, and optimize customer relationships
CRM and Analytics…
2. What’s Missing?
 Who, what, why
 Robust qualitative: Hearing the
“Consumer/Client Voice”
1. Typically, CRM Analytics are …  Primary research customized to
 Automated ‘alerts’
client’s real marketing and sales need
 Automated scripts to assist Customer Service
 True 360 degree analytic view of
or Sales
client
 Automated data mining templates, very
 General lack of understanding of
restrictive and inflexible
client’s business and negligible insight
delivery
 No way to do standard market driver
protocols: tests, market measurement,
satisfaction & loyalty assessment
 No guidance on what to do with all the
3. This leads to three areas of need… data
• Deliver full faceted analytics
• Enrich customer understanding
• Optimize ‘CRM’ strategy and customer
intelligence (data, customer understanding, and
marketing driven solutions)
Full-Faceted
Full-Faceted CRM
CRM Analytics
Analytics Are
Are Needed
Needed
1. Attitudes & Perception 1. Automated Research
2. Customer Satisfaction 2. Behavioral Data
3. Customer Propensity 3. Prediction & Classification
4. Branding & Awareness 4. Rules /Flags/Scores
5. Segmentation (Values) Models 5. Enriched database

Consumer
Insight

Market Research CRM Analytics and Data Mining

Attitudinal Behavioral
 CRM Analytics Include
• Segmentation studies,
• Customer migration analysis,
• Cross-sell/up-sell analysis,
• New customer models,
• Customer contact optimization,
• Merchandising analysis,
• Customer attrition and churn models,
• Credit risk scoring,
• Lifetime value (LTV) modeling and much more.
 Use of CRM Analytics
• Segment your customers by business value.
– Next, model them to predict their migration into a spectrum of
value segments.
– Then, simulate and predict customer buying behavior based on a
variety of promotion strategies.
• Perform a marketing-influencers analysis
– To identify which customers can be influenced in their value
migration
– Then communicate to them in ways that move them in the right
direction.
 Cont.
• Make accurate assessments of each
customer's affinity to a message, product or
service.
• Learn how frequently you should contact
each customer - and which channel you should
use for specific messages.
 Cont.
• Perform very detailed analyses -
– Market- basket analysis,
– Product structure analysis,
– Cross-product correlation analysis,
– Multiple campaign response models,
– Customer growth models,
– Churn and attrition models, and customer lifetime
value models - to spot profit opportunities.
 Scope of Analytical CRM
• Capturing all relevant customer information like
– Your customers' response to your marketing
campaigns
– Your customers' priorities in your web shop
– The requests for information addressed to your
customer interaction center
 Contd.
• Some external information that can be included
are:
– Market data on your customers
– Enterprise data on competitors dealing with your
customers
– Web surveys to supplement your customer
information with details about customer satisfaction
and customer preferences
– Data from communities or clubs with a common
interest
The Customer Knowledge Base: a 360 Degree View
 Customer behavior modeling
• You can understand who your customers are
by observing their behavior and identifying
relevant patterns via profiling and scoring.
• This information can then be used to create
predictive models that help you acquire, grow,
and retain attractive and profitable customers
 Use of Customer behavior modeling

• Define homogeneous customer segments and use them as the

basis for your decisions in marketing, sales, and service.
– Tools used are: Analytical methods, such as clustering, customer
scoring, and proven techniques like recency, frequency, monetary
(RFM) analysis
• Acquire the best customers using profiles of your existing
top customers.
– Analytical tools used are customer scoring and decision trees
 Customer value assessment
• Most integral part of analytical CRM
• It helps you focus limited resources most
efficiently on the best and most valuable
customer relationships.
• This typically involves considering
– Customer profitability,
– Customer lifetime value, and
– Customer ratings.
 Customer Profitability
• It is the difference between revenues and costs
per customer
• Sound profitability analysis requires an
integrated business model for contribution
margin analysis that combines
– Various types of revenue,
– Product costs, and
– Sales costs to produce a coherent picture of your
customer profitability.
Customer Profitability
 Customer Lifetime Value
• Customer lifetime value is an appropriate
measurement of how much you would or
should be willing to invest to acquire a
customer.
• It is the net present value of the profit that a
company could realize with the average new
customer within a given customer segment
during a given number of years.
 Customer Profiling and Scoring
• Customer profiles, such as ABC analysis, provide
insights into customer structures.
• Customer scores, such as the assessment of the overall
attractiveness or satisfaction of a customer, are used for
this purpose
• In this way, you can weight different aspects to
perform integral customer assessments.
• You can use the results of this assessment to allocate
your resources in marketing, sales, and service to the
right customers.
 Customer portfolio optimization

• Is a key tool for analyzing and optimizing the

composition of your customer base.
• By using key figures, such as customer lifetime value,
customer ratings, or strength of the customer relationship,
– We can assess customers or customer groups more effectively
and
– Determine the most appropriate policy for winning over
customers,
– Providing them with the right kind of service and retaining
their business.
Customer Portfolio
Fundamental Steps in Analytical CRM
 Use of IT in Analytical CRM
• Personalization – when a Web site knows enough about a
persons likes and dislikes that it can fashion offers that are more
likely to appeal to that person
• Analytical CRM relies heavily on
– Data Mining technologies
– Data Warehousing technologies and
– Business Intelligence (BI) to give insights into customer behavior
• These systems quickly aggregate, analyze, and disseminate
customer information throughout an organization
Example of use of BI
 Data Mining
 Data mining – process of analyzing data to extract
information
 Data-mining tools – use a variety of techniques to
find patterns and relationships in large volumes of
information
◦ Classification
◦ Estimation
◦ Affinity grouping
◦ Clustering
Contd.

 Common forms of data-mining analysis capabilities

include:
◦ Cluster analysis
◦ Association detection
◦ Statistical analysis
Operational CRM
• Operational CRM means supporting the "front office"
business processes, which include all customer contact
(sales, marketing and service).
• Tasks resulting from these processes are forwarded to
employees responsible for them, as well as the
information necessary for carrying them out.
• Interfaces to back-end applications are provided and
activities with customers are documented for further
reference.
 Benefits of Operational CRM
• Delivers personalised and efficient marketing, sales, and
service through multi-channel collaboration
• Enables a 360-degree view of your customer while you
are interacting with them
• Sales people and service engineers can access complete
history of all customer interaction with your company,
regardless of the touch point
 Parts of Operational CRM

• Sales force automation (SFA)

• Customer service and support (CSS)
• Enterprise marketing automation (EMA)
 Cont.
• Document Management: Develop and retrieve standard
and customizable management reports and presentation
documents
• Sales Analysis: Analyze sales data
• Product Configuration: Assemble alternate product
specifications and pricing
• Marketing Encyclopedia: Provide updated information
about products, prices, promotions, as well as soft
information about individuals (e.g., influence on
buying decisions) and information about competitors
 Customer Service and Support

• CSS automates some service requests, complaints, product

returns, and information requests.
• Traditional internal help desk and traditional inbound call-
centre support for customer inquiries are now evolved into
the "customer interaction centre" (CIC), using multiple
channels (Web, phone/fax, face-to-face, kiosk, etc).
• Key infrastructure requirements of CSS include computer
telephony integration (CTI) which provides high volume
processing capability, and reliability.
Customer Services Capabilities
• Call Center Management:
– Provide automated, end-to-end call routing and tracking
– Capture customer feedback information for performance measurement, quality
control, and product development
• Field Service Management
– Allocate, schedule, and dispatch the right people, with the right parts, at the right
time
– Log materials, expenses, and time associated with service orders
– View customer history
– Search for proven solutions
• Help Desk Management
– Solve the problem by searching the existing knowledge base
– Initiate, modify, and track problem reports
– Provide updates, patches, and new versions
 Enterprise Marketing Automation

• EMA provides information about the business

environment, including competitors, industry trends, and
macro-environmental variables.
• It is the execution side of campaign and lead management.
• The intent of EMA applications is to improve marketing
campaign efficiencies.
• Functions include demographic analysis, variable
segmentation, and predictive modeling on the analytical
(Business Intelligence) side.
Technologies Used in Operational CRM
 Marketing and Operational CRM

 Three marketing operational CRM technologies:

1. List generator – compiles customer information from
a variety of sources and segment the information for
different marketing campaigns
2. Campaign management system – guides users
through marketing campaigns
3. Cross-selling and up-selling
 Cross-selling – selling additional products or services
 Up-selling – increasing the value of the sale
 Sales and Operational CRM

 The sales department was the first to begin developing

CRM systems with sales force automation – a system
that automatically tracks all of the steps in the sales
process
 Sales and Operational CRM

 Sales and operational CRM technologies

1. Sales management CRM system – automates each phase of the
sales process, helping individual sales representatives
coordinate and organize all of their accounts
2. Contact management CRM system – maintains customer
contact information and identifies prospective customers for
future sales
3. Opportunity management CRM system – targets sales
opportunities by finding new customers or companies for
future sales
Customer Service and Operational CRM

 Three customer service operational CRM

technologies:
1. Contact center (call center)
2. Web-based self-service system
 Click-to-talk
1. Call scripting system
Operational CRM: Customer Service
 1. Contact Center (call center)
Operational CRM: Customer Service

 2. Web-based self-service system - allows customers

to use the Web to find answers to their questions or
solutions to their problems
◦ Click-to-talk –customers click on a button
and talk with a CSR via the Internet
Operational CRM: Customer Service

 3. Call scripting system - accesses organizational

databases that track similar issues or questions and
automatically generate the details to the CSR who can
then relay them to the customer
 CRM Metrics

 Sales Metrics
◦ Number of prospective customers
◦ Number of new customers
◦ Number of retained customers
◦ Number of open leads
◦ Number of sales calls
◦ Amount of new revenue
◦ Amount of recurring revenue
◦ Number of proposals given
 CRM Metrics

 Service Metrics
◦ Cases closed same day
◦ Number of cases handled by agent
◦ Number of service calls
◦ Average number of service requests by type
◦ Average time to resolution
◦ Average number of service calls per day
 CRM Metrics
 Marketing Metrics
◦ Number of marketing campaigns
◦ New customer retention rates
◦ Number responses by marketing campaign
◦ Number of purchases by marketing campaign
◦ Revenue generated by marketing campaign
◦ Customer retention rate
 The CRM functionality history
Decision support systems Data Warehousing Artificial Intelligence
Internet
SFA

CRM

eBusiness

CSS Marketing Automation

1990 1995 1998 2001

CRM functionality basic
Sales
Segmentation and Sales
Forecasting
Coverage Planning Compensation

Territory Pipeline Order

Management Management Management

Marketing
Marketing, Planning Campaign
Segmentation
and Budgeting Management

Customer Loyalty Events Branding and

Programs Management Awareness

Service
Service Request Contract
Fulfill Service
Management Management

Invoice to Order
Cancel Orders
Cash Management
CRM - the channel concept - Siebel
Web and Email
Analytics

Call Center

Customers Customer
Information
Field

Back Office
Partners

Marketing
 CRM functionality
Web and Email
Analytics
Prospects

Call Center

ERP
Customers Customer
Information
Field

Back Office
Partners
Customer hierarchy
Customer contact
Marketing
 Benefits of data warehousing in CRM
Customization of
Marketing Mix
Product Management of
Planning Intermediaries

Data Warehouse
Relationship
Targeted
Marketing
Promotions

Customized
Sales Force
Services
Productivity
 Technology used in CRM
• One of the key inputs in CRM is the use of technology for data
mining and also for responding to the customer in real time.
• Some commonly used technological tools are the telephone,
the internet, computers, fax and electronic data interchange.

• The Three W’s to technology-web, work flow management

and data warehousing has led to the creation of electronic
customer relationship management (ECRM) the process by
which companies can understand customers in a seamless
manner.
 Contd.
• The web has been compared to the eyes, ears, and mouth of
the CRM process as it collects and presents the information to
the user
• The data warehouse servers are like a brain and central
nervous system.
• Principle task is to assimilate the information passed to it by
the web and then to formulate the response based on current
external and historical information.
• Work flow management systems automate the procedure by
which documents, information and all relevant tasks are
distributed among participants.
• It follows the normal rules of the division of labour and
sequencing of activities
 Contd.
• The web has been compared to the eyes, ears, and mouth of
the CRM process as it collects and presents the information to
the user
• The data warehouse servers are like a brain and central
nervous system.
• Principle task is to assimilate the information passed to it by
the web and then to formulate the response based on current
external and historical information.
• Work flow management systems automate the procedure by
which documents, information and all relevant tasks are
distributed among participants.
• It follows the normal rules of the division of labour and
sequencing of activities
 Data Mining Tools

– Market basket analysis and automatic cluster

generation
– Decision trees and memory-based reasoning
– Neural net systems
Chapter 15: Customer Relationship Management (CRM)

Summary

CRM is a new business philosophy based on trust and value;

The core function of CRM is the value creation process;

Customer relationships develop over time;

The role of global salespeople in the process is that of both

relationship builders and relationship promoters; and

The basic premise of CRM is to offer superior value to

customers in an effort to turn prospects into
customers, customers into loyal customers, and
loyal customers into partners.