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Customer Relationship Management

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.
CRM and eCRM  : The Differences
The major difference  is being able to take care of the customer via the Internet, or, customers being able to take care of themselves online: That’s the difference between CRM and eCRM. It implies a myriad of issues, questions, approaches, technologies and architecture that are different from client/server – based CRM. Many of them are issues general to the Internet. Others are issues related to the creation of applications for the Internet. The third group is related directed to eCRM and its actual value to business.
The philosophical, methodological, systematic and process functional differences between CRM and eCRM are minimal. But the engineering and architecture for their execution is very different because the communication media is different.
Online Decision Making
 The popularity of interactive media such as the World Wide Web (WWW) has been growing at a very rapid pace.  
From a marketing perspective, this has manifested itself primarily in two ways: (1) a drastic increase in the number of companies that seek to use the world wide web to communicate with (potential) customers and (2) the rapid adoption of the world wide web by broad consumer segments for a variety of purposes, including pre-purchase information search and online shopping. The combination of these two developments provides a basis for substantial growth in the commercial use of interactive media.

  This behavior as a shopping activity performed by a consumer via a computer-based interface, where the consumer’s computer is connected to, and can interact with, a retailer’s digital storefront (implemented on some computer) through a network  (e.g., the WWW). A consumer can engage in online shopping in any location, but products of interest are not physically present at the time and no face-to-face assistance is available to the shopper.

A unique characteristic of online shopping environments is that they allow for the implementation of very high degrees of interactivity. The latter is a multidimensional construct, the key facets of which include reciprocity in the exchange of information, availability of information on demand, response contingency, customization of content, and real-time feedback  In the context of computer-mediated communication, a distinction has been made between person interactivity and machine interactivity. While the former describes the ability to communicate with other individuals, the latter refers to the ability to interactively access information in an online database . The consumers’ shopping behavior in online stores may be fundamentally different from that in traditional retail settings.

References:
Mohammed Peeru H,Sagadevn A ,Customer  Relationship Management-A step by step approach,Vikas Publishing House Pvt Ltd.







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