i

Consumer Relationship

Management

By

Dr. Ashok V. Giri

BLUE DIAMOND PUBLISHING

www.bluediamondpublishing.in

ii

“Customer Relationship Management”

Author and Publishing Copyrights © Dr. Ashok V. Giri

Book Published in India

With

BLUE DIAMOND PUBLISHING INDIA

Plot no.27 SBI Colony, Junwani, Bhilai, Chhattisgarh

Zip code: 490020

Website: www.bluediamondpublishing.in

© Copyright, Author

All rights reserved. No part of this book may be reproduced, stored in a retrieval system,

or transmitted, in any form by any means, electronic, mechanical, magnetic, optical,

chemical, manual, photocopying, recording or otherwise, without the prior written

consent of its writer.

Interior Design by Sharda Singh

Publishing Year 31 Jan 2017

ISBN: 978-93-86518-22-4

Price: 480.00 D

The opinions/ contents expressed in this book are solely of the author and do not

represent the opinions/ standings/ thoughts of Blue Diamond Publishing or the Printing

Press.

Printed and Distributed by Blue Diamond Publishing, India.

iii

About the Author

X

Dr. Ashok V. Giri

M.Com, B.Ed, M.Phil. G.D.C.& A. Ph.D.

(Marketing)

Dr. Ashok V. Giri is having an excellent

academic career. He has 27 years of

teaching experience in various subjects in

Commerce at graduate level as well as post

graduate level. Right now he is working as

Associate Professor in MES, Garware College of Commerce,

Karve Road, Pune-411004. He is recognized Research guide for

M.Phil and Ph.D course at Savitribai Phule pune University. He

has attended number of national and international conferences and

Published 66 Research Papers in various reputed research Journals.

He has been invited for presenting his research papers by Central

Queensland university, Sydney, Australia and F H wien University

of applied sciences, Vienna, Austria (Europe). He is the winner of

number of prestigious awards like Best Teacher Award (twice)

from Pune Municipal Corporation, Best ANO Award (6 Times)

from Group Commander Pune NCC Group, DDG Jammu &

Kashmir, Group Commander Ranchi Jharkhand Group, NGOs and

other educational and social related fields.

He is working since 2001 in the capacity of Head of

National Cadet Corps Department, MES, Garware College of

Commerce, Karve Road, Pune-411004. He has attended various

NCC camps including 12 NIC camps at National level and in all

NIC he won winner ship Trophy for Maharashtra.

He has organized several industrial study visits for

students. Such as District industries centre, Mitcon, Garware wall

ropes ltd, Telco, Mapro industries Ltd., Videocon industries Ltd.,

sahyadri industries Ltd, Satara.

iv

He has organized and conducted several study visits for

Environment science students namely Kaas Pathar Satara,

Ralegansiddhi as ideal Village of famous social activists – “Anna

Hajare” and Aadarsh gram Hivare Bazaar “Shri Popatrao Pawar”

for water conservation and rural development.

He has organized Various Trekking Camps for NCC

students on different forts such as Rajgad, Raigad, Rohideshwar,

Torna, kenjalgad and Purandar as well as various tree plantation

programs conducted by him. He also organized various pleasure

trips for students in Kokan area of Maharashtra.

He has initiated and conducted various social rallies like

Anti Tobacco Rally, Anti Gutaka Rally, Anti Smoking and Liquor

Rally, Anti Drunk and Drive ralley, 125 Km bicycle rally for

spreading the awareness about tree plantation, village surveys,

Traffic control in Pune city, security assistance in Ganpati

immersion procession and Dnyaneshwar and Tukaram maharaj

Palkhi Vari etc.

He has worked as support Executive on the organizing

committee of Pune international Marathon from 2004-2012.

X

v

About the book

X

This book presents an extensive information of the strategic and

tactical aspects of Consumer Relationship Management as we

know it today. It stresses developing an understanding the

consumer value as the guiding concept for marketing decisions.

The goal of the book is to serve as a comprehensive and up-to-date

learning information for students and executives who want a

detailed and conceptually sound insight into the field of Consumer

Relation Management.

X

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Contents

Chapter -1 :: Introduction and Origin of CRM 1-14

Introduction

What is CRM?

Ingredients of CRM

Objectives of CRM

Origin of CRM

How to Introduce CRM in the Business Organisation

Significance of the CRM

History of CRM

Chapter -2 :: Features, Importance and Benefits

of CRM 15-30

Features of CRM

Common Features of CRM Software

CRM Process

What is Relationship?

Evolution of Consumer-Suplier Relationship

Why a Business Wants Relationship with its Consumers?

The Benefits of CRM

Business Benefits of CRM

Chapter - 3 :: Need and Necessity of CRM 31- 42

Need of CRM

Use of CRM

Consumer Relationship Management

vii

Chapter- 4 :: CRM and Human Resource 43- 66

Operational CRM

Analytical CRM

Collaborative CRM

Measuring Consumer Response

Medium of Consumer Responses

Qualities of a Good Response - What a response must provide?

Chapter- 5 :: Challenges and Issues of

CRM

67-78

The Challenges of CRM Implementations

CRM Implementation Issues

The Future of CRM Solutions

Types of Consumers

Consumer Orientation

Drawbacks of CRM

Chapter- 6 :: Strategy of CRM 79-94

Consumer Retention - A Strategic Process to Retain Existing Consumers

Consumer Retention Strategy

Strategic CRM - Maintain Long Term Relationship With Consumers

Determinants of Consumer Retention

Methods and Tools for Consumer Retention

Myths about Consumer Retention

Consumer Management Strategies

Consumer Acquisition

Chapter- 7 :: Type of Consumers and Relationships

Management 95- 118

Different Types of Consumers

Orientation of Consumers

Consumer Modeling - Meaning and its Different Aspects

Consumer Profiling

Regression Scoring - Meaning, Its Process and Types of Scoring

Quality of Relationship with Consumers

viii

Need of Relationship with Consumers

Consumer Relationship with Supplier

Cost / Price Sensitivity of Consumers

Bargaining Power of Consumers

Consumer Relationship Measurement

Chapter- 8 :: Market Research and CRM 119-132

Stages in Market Research Process

Desk Research - Methodology and Techniques

Field Research - Definition and its important sources

Data Analysis and Compilation

Report Preparation - Characteristics of a Good Report

Action Plan in Report Preparation Process

Chapter- 9:: Communication Issues in CRM 133-142

STEP 1. Ask Questions

STEP 2. Listen

STEP 3. Spend Time Together

STEP 4. Ask Significant Others About the Person

STEP 5. Create Opportunities for New Experiences

Chapter- 10 :: Impact of CRM on Various Business

Organizations 143-154

How CRM Impacts on the Organization

Why Does the Organization Need CRM?

Features of Good CRM

What Do Consumers Want?

Generating a Consumer Focused CRM Solution

CRM as A Process

Achieving Good CRM

Characteristics of Excellent CRM

CRM and Communications

Benefits of Effective CRM

CRM Software Solutions and ICT (Information and

Communications Technology)

Chapter- 11:: Consumer Privacy Concern and

Protective Response 155- 166

Importance of Consumer Information

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Privacy issues

The Concept of Consumer Privacy

Drivers of Consumer Privacy Concerns

Consumer Privacy Concerns

Consumer Privacy Protective Responses

Consequences of Privacy Protective Responses

Chapter- 12 :: Consumer Loyalty and Satisfaction 167-186

Consumer Loyalty: Important Concepts

What is Consumer Satisfaction?

Drivers of Consumer Loyalty

Consumer Loyalty Breakers

Tracking Consumer Loyalty

Increasing Consumer Loyalty

Measuring Consumer Satisfaction

Methods of Measuring Consumer Satisfaction

Factors affecting Consumer Satisfaction

Chapter- 13 :: Case Studies 187-202

Case Study-1

Case Study-2

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Introduction

The biggest management challenge in the new millennium of

liberalization and globalization for a business is to serve and maintain

good relationship with the king – the consumer. In the past producers

took their consumers for granted, because at that time the consumers

were not demanding nor had alternative source of supply or suppliers.

But today there is a radical transformation. The changing business

environment is characterized by economic liberalization, increasing

competition, high consumer choice, demanding consumer, more

emphasis on quality and value of purchase etc.

All these changes have made today’s producer shift from

traditional marketing to modern marketing. Modern marketing calls for

more than developing a product, pricing it, promoting it and making it

accessible to target consumer. It demands building trust, a binding force

and value added relationship with the consumers.

The process of developing a cooperative and collaborative

relationship between the buyer and seller is called consumer relationship

management shortly called CRM. According to Ashoka dutt head of Citi

Bank “the idea of CRM is to know the individual consumer intimately,

so that the company has a customized product ready for him even before

he asks for it.”

What is CRM?

There can be multiple definitions of CRM from different perspectives

Chapter 1 Introduction and Origin of CRM

Consumer Relationship Management

2

From the viewpoint of the Management, CRM can be defined as

an organized approach of developing, managing, and

maintaining a profitable relationship with consumers.

By equating the term with technology, the IT organizations

define CRM as a software that assists marketing, merchandising,

selling, and smooth service operations of a business.

As per Franics Buttle, World’s first professor of CRM, it is the

core business strategy that integrates internal processes and

functions, and external networks, to create and deliver value to a

target consumer at profit. It is grounded on high quality

consumer data and information technology.

The primary goal of CRM is to increase consumer loyalty and in

turn improve business profitability.

Ingredients of CRM

Take a look at the following illustration. It shows the ingredients that

work together to form a successful CRM system.

Consumer

Care

HR

Management

Lead

Management Marketing

Sales force

Automation

Work flow

Automation

Analytics Business

Report

CRM

System

Dr. Ashok V. Giri

3

Here are some of the important ingredients of CRM −

Analytics − Analytics is the process of studying, handling, and

representing data in various graphical formats such as charts,

tables, trends, etc., in order to observe market trends.

Business Reporting − Business Reporting includes accurate

reports of sales, consumer care, and marketing.

Consumer Service − Consumer Service involves collecting and

sending the following consumer-related information to the

concerned department −

o Personal information such as name, address, age

o Previous purchase patterns.

o Requirements and preferences.

o Complaints and suggestions.

Human Resource Management − Human Resource

Management involves employing and placing the most eligible

human resource at a required place in the business.

Lead Management − Lead Management involves keeping a

track of the sales leads and distribution, managing the

campaigns, designing customized forms, finalizing the mailing

lists, and studying the purchase patterns of the consumers.

Marketing − Marketing involves forming and implementing

sales strategies by studying existing and potential consumers in

order to sell the product.

Sales Force Automation − Sales Force Automation includes

forecasting, recording sales, processing, and keeping a track of

the potential interactions.

Workflow Automation − Workflow Automation involves

streamlining and scheduling various processes that run in

parallel. It reduces costs and time, and prevents assigning the

same task to multiple employees.

Objectives of CRM

The most prominent objectives of using the methods of Consumer

Relationship Management are as follows −

Consumer Relationship Management

4

Improve Consumer Satisfaction − CRM helps in consumer

satisfaction as the satisfied consumers remain loyal to the

business and spread good word-of-mouth. This can be

accomplished by fostering consumer engagement via social

networking sites, surveys, interactive blogs, and various mobile

platforms.

Expand the Consumer Base − CRM not only manages the

existing consumers but also creates knowledge for prospective

consumers who are yet to convert. It helps creating and

managing a huge consumer base that fosters profits continuity,

even for a seasonal business.

Enhance Business Sales − CRM methods can be used to close

more deals, increase sales, improve forecast accuracy, and

suggestion selling. CRM helps to create new sales opportunities

and thus helps in increasing business revenue.

Improve Workforce Productivity − A CRM system can create

organized manners of working for sales and sales management

staff of a business. The sales staff can view consumer’s contact

information, follow up via email or social media, manage tasks,

and track the salesperson’s performance. The salespersons can

address the consumer inquiries speedily and resolve their

problems.

Objectives

of CRM

Expand the

Consumer

Base

Improve

Workforce

Productivity

Improve

Consumer

Satisfaction

Enhance

Business

Sales

Dr. Ashok V. Giri

5

Origin of CRM

CRM originated in early 1970s when the business units had a

manifestation that it would be advisable to become ‘consumer emphatic’

rather that ‘product emphatic’. Birth of CRM was because of this needful

perceptiveness.

The famous writer and management consultant Peter Drucker

wrote; ‘The true business of every company is to make and keep

consumers’. Traditionally every transaction was on paper and dependent

on goodwill which created hindrance in clutching consumers. People

used to work hard in entertaining consumers by presenting new products

with astonishing services; they were ready to work overtime for grasping

more and more consumers for increasing business. This too resulted in

consumer satisfaction and loyalty up to some extent, but at the end of the

day there was no such bonding or relation between the two to carry on

with future business smoothly.

Previously business was quite easy as it was mere a one-to-one

dealing without any specific process. But with time, due to incoming

complexities in communication, it found itself in troubled waters.

Emerging of new strategies and technologies in global marketplace and a

mammoth degree of competition in business, the approach needed to be

changed to proactive rather than reactive. Origination of CRM turned out

to be a piece of cake for all suppliers and consumers due to its

advantages. Consumer relationship management came as a process that

dealt with relationships with consumers surpassing the whole business.

Originally consumer relationship management was based on

three major principles; shielding the current consumers, fostering new

consumers and enhancing asset value of all the consumers. With the

advent of CRM which was integrated with high end software and

technology, business perspectives were totally changed. A CRM system

eventually emerged as consisting of company-full of information which

is depicted sophistically to increase business profit and meliorate

consumer satisfaction and loyalty, on the same hand reduces business

cost and investment.

The outgrowth in origin of CRM as a strategic approach is a

result of some of the following important perspectives:

Consumer Relationship Management

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1. The belief that consumers are the real assets and not just the

people in the audience.

2. The maturation of one-to-one transaction advent.

3. Extensive use of software and technologies to maintain useful

information and no manual labor.

4. The realization of the benefits of utilizing information

proactively and not reactively.

5. The change of business view to relationship approach rather than

transactional approach.

6. The approach of concentrating more on consumer values rather

than concentrating on how the product is delivered to the

consumer.

7. The approach of focusing on consumer satisfaction and loyalty

rather than focusing self-satisfaction and profit.

8. The acceptance of the fact that using high end technologies and

software the cost can radically be decreased without

compromising on quality and service of products.

9. The increasing tendency to retain existing consumers and trying

to get more and more business out of them.

10. The realization that the traditional trends of marketing and

selling are increasingly fading out in the current economic

scenario.

These additive approaches helped a lot in building up

consequently the modern CRM. Today we have well defined and

sophisticated CRM systems into being which are always in process of

improvement.

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