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
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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