Evolution of CRM

Why are Customer Initiatives Important ?

1960s 1970s 1980s 1990s 2000s 2010s

Reduce Costs

2

Leverage Investments

3

Enhance Products & Services

4

Enhance Executive Decision Making

5 Reach the Customer

6 Participate in Global Village

2020s

1

Optimize Resources & Minimize Costs

Increase Revenue

Remain In Business

Customer Initiatives

Decision Support Initiatives

Operational Initiatives

Financial Initiatives

Customer is the Focus Strategy

Structure

Process

People

Systems

Core and Extended Customer Service

Customer Grade

Outstanding A

Exceeds Expectations B

Satisfactory C

Unsatisfactory D

Failing F

Core Service Satisfies

Caring Service Delights

Customer Expectation

Perceived Value

Customer Expectation

Perceived Value

Core Customer Service. Mechanical elements including Quality, Cost and service Delivery. Extended (Caring) Customer Service. Human elements including: Friendliness, Caring, Flexibility, Problem-solving, and Recovery.

Core service will never exceed a grade of C or satisfactory. Don’t spend time and money attempting to exceed expectations here. Caring service will allow the organization to exceed customer expectations through perceived service delivery.

How is a Customer Delighted? Expectations Customer attitudes which form a framework for judging performance.

Quality A bundle of tangibles and intangibles a customer takes into account when evaluating the experience

Value The quality of an experience as perceived by the customer and related to its cost

Service

Touch Point

Experience The point at which the customer interacts or touches the organization.

Satisfaction The measure reflecting a customers experience against their expectations.

Delight A condition in which experience exceeds expectations.

The Customer’s Perceived Value = The State in which the quality of a total

experience, perceived by the customer, exceeds its cost.

The Customer Value Package

Customers Value Package

Environmental - the physical setting in which the customer experiences the delivery of the product.

Aesthetic - any sensory experience that affects the perception of value (flavor, visual appeal, smell, temperature, music, sound levels).

Interpersonal - the customers’ experience or human interaction with

those who deliver the product or service.

Deliverable - anything of which the customer takes custody, even temporarily.

Procedural - what an individual must go through to function as a customer

(waiting in lines, filling out forms, visiting numerous

facilities).

Informational - the information a person needs to function as a customer (where to go, who to contact, payment amount, office hours).

Financial - what the customer pays for the total experience, as well as the nature of the financial interaction.

The Need to Move Beyond a Single Transaction Service’s Customer Understanding and Analysis

Service’s Long-Term Customer Relationship

Service’s Transactions

Customer Interactions

Customer

Channels

Channels

Transactions

Today, Emphasis is placed on the customer transaction rather than the long-term

relationship, e.g. staff are measured by how many telephone calls they can take within an

hour.

Transaction vs. Relationship Marketing:

Transaction Relationship

One-time

Managing Brands

Mass communication

Market share

Profitability of transaction

Brand Equity

Ongoing

Managing People

Individual communication

Customer share

Profitability of longevity

Customer share equity

CRM Definitions Customer Relationship Management (CRM) is a business

strategy to select and manage customers to optimize long-term value.

Customer Relationship Management is a comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customer.

“CRM is a complete system that: 1) provides a means and method to enhance the experience of the individual customers so that they will remain customers for life, 2) provides both technological and functional means of identifying, capturing, and retaining customers, and 3) provides a cohesive view of the customer across the enterprise.

CRM Definitions CRM is a management approach, a model that puts a

customer at the core of a company processes and practices.

CRM leverages cutting edge technology integrated strategic planning up-close and personal marketing techniques and Organization development tools to build internal external relationships that increase profit margins and productivity within a company.

CRM requires a customer-centric business philosophy and culture to support effective marketing, sales, and service processes. CRM applications can enable effective Customer Relationship Management, provided that an enterprise has the right leadership, strategy, and culture.

Importance of CRM CRM is the transformation of people, process and

technology required to become a customer-centric organization.

CRM is not just a software that allows for the recording of customer interactions, accurate histories to be kept, and knowledge to be shared across departments within a company.

CRM is not a product. It is not even a suite of products. CRM is a business philosophy that touches upon many independent parts of the organization, CRM addresses the Sales, Marketing, and Service activities of the organization.

Importance of CRM

CRM must be part of an overall company philosophy.

CRM is core to all businesses, essentially it is about selling good products or services to the right people.

CRM solutions must include not just systems, but also people, process and strategy.

CRM must focus on selecting and managing customer value and loyalty through a long-term relationship.

CRM is not a single system but a comprehensive application architecture consisting of several systems.

Need for CRM To meet the changing expectations of customer due to:

(a) social and demographic factors.

(b) economic situations.

(c) educational standards.

(d) competitors product

(e) experience.

Loyal customers are the source of most profits

A relatively small percentage of customers may generate most of the profits.

Marketing cost and efforts are less for existing customers.

Dissatisfied customers tell others about their experiences, So do satisfied customers.

Slowing the rate of defection grows the customer base.

Need for CRM CRM typically costs 5-10 times to acquire a new

customer.

“Some companies can boost profits by almost 100% by retaining just 5% more of their customers.”

Most companies lose 50% of their customers in 5 years .

70% of repeat purchases are made out of indifference to the seller, NOT loyalty….

Customer satisfaction

Customer commitment

Customer retention

Profit

Why customers move away?

Perceived indifference

69%

Product dissatisfaction

14%

Competition 9%

New Associations 5%

Miscellaneous 3%

Economics of Customer Retention

“Winning back a lost customer can cost up to 50-100

times as much as keeping a current one satisfied.”

Rob Yanker, Partner, McKinsey &

Company

Goals of CRM Provide better customer services.

Cross sell product, Cross-selling is a strategy of providing existing customers the opportunity to purchase additional items offered by the seller.

Cross-selling involves offering the customer items that complement the original purchase in some manner more effectively.

The telecommunications industry is a prime example of this type of sales activity. When establishing local telephone service, the new subscriber is often invited to enjoy other telecommunications options offered by the service provider. These may include long distance packages, cell phone services, or high-speed Internet services.

Up selling involves promoting upgrades or add-ons to customers that are extra purchases and increase sales. When you up sell, you offer the customer another product for purchase. Incentives are crucial features of up selling. Incentives such as a discount and/or free shipping give the customer good reasons to purchase something extra right away. Helps sales staff close deals faster Increase customer revenue

Personally recognizing customers;

Offering appropriate value and great service to encourage repeat business;

Ensuring that employee and customer satisfaction continues to improve.

Beating the competition by offering a better product, competing on the service experience rather than price alone.

Benefits of CRM Simplify marketing & sales process

Access to customer information

With CRM, all of your customer information is in one centralized location and is constantly updated every time an activity happens with a prospect or customer.

So now you have up to the minute tracking of all your prospects and customers.

Benefits of CRM Increase Sales Effectiveness

Make sales teams more effective by automating tedious repetitive tasks.

With CRM, sales people can automate a big chunk of their daily tasks such as sending out emails, generating reports, organizing leads and so on.

With CRM's Mobile access, sales people have instant access to customer information when they need it, without being tethered to a computer.

Benefits of CRM Reduce Customer Support Time

CRM enables your service agents to answer all customer inquiries quickly, accurately and consistently by phone, e-mail, chat or in person.

With FAQs and the knowledge base you can help your customers help themselves.

Benefits of CRM

Retention rate: CRM increases customer loyalty, which increase revenue per customer and frequency of purchases.

Referrals: CRM can turn customers into advocates. Referrals typically have higher retention rates and spending rates than other newly acquired customers.

Increased sales: CRM leads to increased cross-selling, upgrades, or simply more products by existing customers.

Reduced costs: CRM can lead to more cost effective marketing; avoids expenses of mass marketing.

Benefits of CRM Provide better customer service

Cross sell products more effectively

Help sales staff close deals faster

Simplify marketing and sales processes

Increase customer revenues

Reduced costs, because the right things are being done

Increased customer satisfaction, because they are getting exactly what they want

Ensuring that the focus of the organisation is external

Growth in numbers of customers

Maximisation of opportunities

Increased access to a source of market and competitor information

Long term profitability and sustainability

Customer Life Cycle Management

Customer Need Assessment and

Acquisition

Customer

development through

Personalization and

Customization

Customer Equity

Leverage through

Cross Selling, and

Up Selling,

Customer

Retention and

Referrals for new

Customers

RFM Data in CRM

Organizations can find their most valuable customers through “RFM”

Recency - How recently a customer purchased items.

Frequency - How frequently a customer purchased items.

Monetary Value - How much a customer spends on each purchase.

CRM evolution Stage State Culture

Satisfaction Based

Re-active Meet customer needs

Respond to complaints

Minimal evaluation of customer service levels

Performance Based

Pro-Active Evaluate customer perception

Identify customer retention factors

Commitment Based

Very Pro-Active

Evaluate multiple customer needs

Continuous inbound/outbound flow and feedback

Continuous improvement

Stages of CRM

• Collecting information

Stage 1

• Storing information

Stage 2 • Accessing

information

Stage 3

• Analyzing customer behaviour

Stage 4 • Marketing more effectively

Stage 5

• Enhancing the customer experience

Stage 6

CRM Components

Customer Interaction Center

Customer Sales

Customer Marketing

Customer Field Service

Customer Service

Customer Analysis & Reporting

Various

Systems

Self-serve Channels

Customer Staff CRM may include:

Call Center Management

Call Center Software

Contact Management Software

Customer Relationship Management

Customer Interaction Center

Customer Service

Document Production

E-Business

Electronic Commerce

Electronic Purchasing

Executive Information System

Field Service Management

Help Desk Management

Marketing

Mobile Computing

Online Auctions

Portals

Sales

Sales & Marketing Systems

Sales Force Automation

Supply Chain Automation

Telemarketing / Telesales

Value Chain

Voice Over IP

Web Collaboration, Chat, Email

TYPES OF CRM:

Operational

Analytical Collaborative

Enhance Company

Relationship with Customer

Front Office Operations (sales, marketing, service

etc) Inter-department coordination

Types of CRM OPERATIONAL CRM

Gives support to ‘Front Office’ business process (e.g. sales, marketing etc)

Any interaction with customers is stored in customers contact histories, which the staff can retrieve as necessary.

Gives staff access to important information about the customer.

Operational CRM possesses customer data for a variety of purposes

Managing campaigns

Enterprise Marketing Automation

Sales Force Automation

Sales Management System

Components of Operational CRM CUSTOMER SERVICE AND SUPPORT (CSS)

Is the part of a company's CRM department that interacts with a customer for their immediate benefit, including components such as the contact center.

20-25% of CRM

Provides information to support customer call center activity

Build customer satisfaction & loyalty Resolve customer issues after the sales responsively It comprises two key functional areas:

Cases:- Track every interaction of customer service & support teams with each customer.

Solutions:- Maintain a centralized database of solutions to leverage knowledge across the enterprise.

SALES FORCE AUTOMATION (SFA):

These are tools which automate the collection and distribution of all types of sales or sales related information.

Calendar management, activity management, sales reporting and forecasting, lead distribution and tracking of sales contacts with customers are some of the capabilities offered within these solutions.

Sales Force Automation (SFA)

35-40% of all CRM activity

Sales force automation comprises of:

Account Management

Contact Management

Activity Management

Revenue Forecasting

Reporting & Analysis

Components of Operational CRM Field Force Automation (FFA)

Field Service or Field Force Automation (FFA), is an attempt to optimize processes and information needed by companies who send technicians or staff "into the field" (or out of the office) for maintenance and repair of equipment at the customer's location.

It involves a combination of some or all of the following: CRM applications, work order management, dispatch, wireless technology.

3-5% of all CRM activity

Components of Operational CRM Marketing Automation (MA):

Applies technology to marketing processes

Generating lists of customers to receive mailings or telemarketing calls, scheduling automatic or manual follow-up activities and receiving third-party lists for incorporation into the campaigns are all typical functions.

Ensures high efficiency by creating integrated, highly-targeted campaigns and tracking results across all channels.

Target the Best Customers.

Manage Marketing Campaigns.

Components of Operational CRM Marketing Automation (MA)

It comprises of two main functional areas: Campaign Management Lead Management

3-5% of CRM, but growing 5X faster than all others.

Interacts with SFA to support field sales efforts.

Inbound and outbound e-mail management capabilities are also becoming popular components of the marketing automation suites.

Marketing Automation Process Flow

2. Analytical CRM

analyses the customer data for various purposes such as design and execution of targeted marketing campaigns to optimize marketing effectiveness, design and execution of specific customer campaign,

analysis of customer behavior to aid product and service decision making, management decision, prediction of probability of customer defection.

Components of Analytical CRM OLAP (Online Analytical Processing)

One of the most popular type of decision-support analysis, allowing the average business person to explore data online with the aim of focusing on detailed data at a lower.

More often, this means generating an online report, analyzing the results and submitting a detailed query in order to understand the result data.

Data mining : Data mining tools identify patterns in data and deliver

valuable new information that can increase a company's understanding of itself and its customers.

The three types of data mining are:

Prediction: The use of historical data to determine future behaviors.

Sequence: Sequential analysis identifies combinations of activities that occur in a particular order.

This is used to determine whether customers are doing things in a particular order.

Association: Association analysis detects groups of similar items or events.

3. Collaborative CRM covers aspects of a company's dealings with customers that are handled by various departments within a company, such as sales, technical support and marketing.

Collaborative CRM's ultimate goal is to use information collected by all departments to improve the quality of services provided by the company.

Implementation of CRM To implement CRM, following factors need to be given due

consideration

Easy interaction between customers and company,

Easy access to information about company like content of customization, advantages of the company, benefits to the customers.

Abundant supply of customer information

Customers' information should be updated always

Have cordial relationship with other companies targeting the same customer segment

Analyze human resources and ensure that everyone has an understanding of philosophy of CRM

BE RELIABLE- consistent performance is what customer wants from us

BE CREDIBLE- if the customer buy the product, he wants to safe and guaranteed.

BE ATTRACTIVE- body language BE RESPONSIVE– accessible, available and

willing to help customer whenever the customer has a problem.

BE EMPATHETIC- be in customer’s shoes and grasp his point of view

Need for e-CRM Due to the introduction of new technology

Due to globalization

to satisfy the customers at global level

Sometimes customer itself prefer to do online purchasing.

Also, e-CRM is used for attracting & keeping economically valuable customers & eliminating less profitable ones.

Process of e-CRM

Benefits of e-CRM Convenience Improvement in overall quality of customer experience Increased profitability Low implementation Cost Rapid Development Accessibility Instant Information Sharing Increased customer loyalty

More effective marketing.

Improved customer service and support.

Through e-CRM, right tools helps sending right orders to right customers at right time.

Greater efficiency and cost reduction.

Some Applications of Technology in CRM Call centers

These are organizations which deal directly to the customer interactions.

These are otherwise known as "Customer Care Centre" or "Contact Centre" indicating more technological sophistication and multichannel support.

Call centre technologies entered the market place to effectively alleviate some of the repeat work and increase efficiencies, allowing companies to handle escalating call volumes.

Web based self-service

The customers themselves, without the help of a live person can resolve their problems or find out answers to their queries using the web.

This model is founded on the principle of enabling customers, partners and employees to obtain information or conduct transactions directly over the internet, avoiding time consuming and costly traditional processes involving multiple verbal or written interactions.

It provides control, performance, convenience and efficiency.

Customer satisfaction measurement:

Survey mails are the major way for companies to monitor customer satisfaction.

Nowadays, these survey forms are even personalized to specific customers or customer groups.

Responses are input into customer databases and included as part of individual customer profiles.

Such tracking of customer satisfaction over time enables a company to fine tune how it communicates with its customers according to their preferences.

Cyber agents

Cyber agents are 'life like representatives‘ normally depicted on a company’s web site as a real person.

It is an attempt to put together the best of both personalization and advanced technology.

It is given a personality and is having facial expressions and volume.

Usually a cyber agent addresses the web visitor with his/her first name.

It can draw from the wealth of detailed information to answer basic FAQs as well as guide a customer to the appropriate screen for a definite purpose/action.

Web site

It is the efficient and effective use of worldwide web for providing information to the customers, by a company who had created that site, in a hassle-free manner.

The main advantage of a web site is its 24 hours accessibility.

Usually gathering information from the site is a simple task and is cost-effective.

Information Technology and CRM: Examples

Cookies “A “cookie” is a parcel of text sent by a server to a web browser

and then sent back unchanged by the browser each time it accesses that server. HTTP cookies are used for authenticating, tracking, and maintaining specific information about users, such as site preferences and the contents of their electronic shopping carts”.

Illustration: The online store, Amazon, uses “cookies” to

provide a personalised service for its customers. Amazon requires customers to register with the service when they purchase items. When registered customers log in to Amazon at a later time, they are ‘greeted’ with a welcome message which uses their name (for e.g. “Hello John”). In addition, their previous purchases are highlighted and a list of similar items that the customer may wish to purchase are also highlighted.

CRM Limitations Not feasible for every market and

customers customers don’t want to be committed to

every brand/relationship Not feasible for low-involvement,

habitual purchasing in B2B or B2C Some markets/customers may have low

“personalization potential”.

Reasons for Failure of CRM

CRM Strategy not clear

CRM strategy and vision need to define what customers experience at each touch point, and how will they be handled at each touch point. The vision needs to be clear to everyone.

Implementation was limited to software installation

Inadequate motivations for employees to learn, provide input, and take full advantage of the information systems

Technology Errors Customer data is in more places than expected. Different CRM solutions are in place but do not work well together.

People errors Introducing CRM to hundreds of employees at a time. Changing the system, but not the people.