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CERTIFICATE

This is to certify that this is a report on “CRM PRACTISES IN FUEL

RETAILING INDUSTRY” submitted by Mr. Sunil Sethia, Ms. Soumya

Achanala, Ms. Sruthi Raju, Mr. Kunal Barghav & Mr. Ujwal Patnaik

(PGP/SS/2007-09) as a part of the curriculum for the third trimester. The work has

been undertaken and completed under the guidance of Prof. Amit Baruah and is

satisfactory.

Prof:

Date:

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ACKNOWLEDGEMENT

Throughout the course of study, as we analyzed and compiled this report,

innumerable people have given suggestions, encouragement, complaints and

opinions, all of which have been in some way or the other contributed to the final

report. We think it is essential to thank all those who contributed to our

understanding of the subject and helped us through the duration of the project.

We thank Prof. Amit Baruah, under whose supervision and guidance this report

was completed successfully.

We would also like to thank our parents and friends who rendered their whole

hearted co-operation in the successful completion of the project work.

Finally, we are thankful to all the people who willingly responded to our

questionnaire and whose contribution has been invaluable. This project would not

have been completed without their participation.

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PREFACE

The primary objective of this report is to provide the readers the insight into CRM

Practices followed in Fuel Retailing Industry, Behavior of consumers towards it

and different opinions generated out of such practices.

We hope that the report has made the text interesting and lucid. In writing this

report, we have benefited immensely by referring to many publications and

articles. We express my gratitude to all such authors and publishers.

Any suggestions to improve this report in contents or in style are always welcome

and will be appreciated and acknowledged.

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DECLARATION

We hereby declare that all the information that has been collected, analyzed and

documented for the project is authentic possession of us.

We would like to categorically mention that the work here has neither been

purchased nor acquired by any other unfair means. The data and information

existing in this report are accurate and update to the current data, to the best of our

knowledge.

However, for the purpose of the project, information already compiled in many

sources has been utilized.

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CONTENTS

OBJECTIVE OF STUDY Pg. 08

INTROSDUCTION TO CRM Pg. 09

EMERGENCE OF CRM PRACTICE Pg. 10

ARCHITECTURE OF CRM Pg. 13

OPERATIONAL Pg. 13

ANALYTICAL Pg. 14

COLLABORATIVE Pg. 15

KEY PRINCIPLES Pg. 16

WHO NEEDS CRM? Pg. 17

ADVANTAGES OF CRM Pg. 18

CRM RELATED SURVEY FACTS Pg. 20

STEPS TO SUCCESSFUL IMPLEMENTATION OF CRM Pg. 22

CHALLENGES IN IMPLEMENTATION OF CRM Pg. 23

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SUMMARIZING CRM ACTIVITES Pg. 24

FUEL RETAILING IN INDIA OVERVIEW Pg. 25

PROMISING ROAD AHEAD Pg. 26

NEW COMPETITORS Pg. 27

RETAIL SITE HEADACHE Pg. 29

CRM PRACTISE IN FUEL RETAILING BUSINESS Pg. 30

CROSS INDUSTRY CRM PRACTISE (ICICI) Pg. 34

RESEARCH SURVEY Pg. 41

QUESTIONNAIRE & FEEDBACK FORMAT Pg. 42

RESULT AND ANALYSIS Pg. 47

SUGGESTIONS Pg. 56

SPECIAL FOCUS ON CUSTOMER RELATIONSHIP Pg. 59

BIBLOGRAPHY Pg. 60

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OBJECTIVES OF STUDY

The CRM implementation process involves defining business objectives, business

processes, organization structure, customer hierarchy, and management needs. It is

essential that the project team consist of business owners, business users, an

executive sponsor, a project lead, a CRM system administrator, and CRM domain

experts. The project team will work together to plan, design, configure, implement,

and support the CRM solution.

It is important to understand that a successful CRM project evolves as the business

grows. Planning for change is essential for success. Regardless of the size of the

project all stages defined should be used for every CRM project.

GOALS:

Document high level business processes and requirements.

Conduct a CRM readiness assessment.

Create a vision scope document.

Create a CRM project proposal.

Present a CRM project proposal.

Gain consensus to move forward.

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INTRODUCTION TO CRM

Customer Relationship Management (CRM) can be widely defined as company

activities related to developing and retaining customers. It is a blend of internal

business processes: sales, marketing and customer support with technology and

data capturing techniques. Customer Relationship Management is all about

building long-term business relationships with customers.

Different organizations define CRM differently. In today’s economy, there is no

single undisputed definition of CRM. Here is what we believe CRM is:

CRM is an alignment of strategy, processes and technology to manage

customers and all customer-facing departments & partners.

Any CRM initiative is and has the potential of providing strategic advantages to

the organization, if handled right.

Most CRM initiatives begin with a strategic need to manage the process of

handling customer related information more effectively. For beginners it could

simply mean better lead management capabilities or sales pipeline visibility.

However, as organizations mature in their CRM initiatives, they begin to look at

CRM as tool to acquire strategic differentiators. Despite the immense benefits that

the CRM solutions can deliver, they are not entirely without their share of

problems.

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THE EMERGENCE OF CRM PRACTICE

Looking back at a snapshot history of marketing, we can see the following clear

developments and progression over the last four decades:

1960’s – the era of Mass Marketing, when Gibbs SR toothpaste began the

first marketing of this kind with its black and white campaign.

1970’s – saw the beginning of segmentation, direct mail campaigns and

early Telemarketing (such as publishing).

1980’s – where Niche Marketing made millionaires of those who were best

at it.

1990’s – Relationship Marketing. The explosion of telemarketing and call

centers all set up to develop relationships with customers.

In recent years however, several factors have contributed to the rapid development

and evolution of CRM. These include:

1. The growing de-intermediation process in many industries due to the advent

of sophisticated computer and telecommunication technologies that allow

producers to directly interact with end-customers. For example, in many

industries such as airlines, banks insurance, software or household

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appliances and even consumables, the de-intermediation process is fast

changing the nature of marketing and consequently making relationship

marketing more popular. Databases and direct marketing tools give them the

means to individualize their marketing efforts.

2. Advances in information technology, networking and manufacturing

technology have helped companies to quickly match competition. As a result

product quality and cost are no longer significant competitive advantages.

3. The growth in service economy. Since services are typically produced and

delivered at the same institution, it minimizes the role of the middlemen.

4. Another force driving the adoption of CRM has been the total quality

movement. When companies embraced TQM it became necessary to involve

customers and suppliers in implementing the program at all levels of the

value chain. This needed close working relationships with the customers.

Thus several companies such as Motorola, IBM, General Motors, Xerox,

Ford, Toyota, etc formed partnering relations with suppliers and customers

to practice TQM. Other programs such as JIT and MRP also made use of

interdependent relationships between suppliers and customers.

5. Customer expectations are changing almost on a daily basis. Newly

Empowered customers who choose how to communicate with the companies

across various available channels. Also nowadays consumers expect a high

degree of personalization.

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6. Emerging real time, interactive channels including e-mail, ATMs and call

centre that must be synchronized with customer’s non-electronic activities.

The speed of business change, requiring flexibility and rapid adoption to

technologies.

7. In the current era of hyper competition, marketers are forced to be more

concerned with customer retention and customer loyalty.

8. As several researches have found out retaining customers is less expensive

and more sustainable competitive advantage than acquiring new ones.

9. On the supply side it pays more to develop closer relationships with a few

suppliers than to develop more vendors.

10. In addition several marketers are concerned with keeping customers for life

than making one time sale. There is a greater opportunity for up selling and

cross selling.

11. The globalization of world marketplace makes it necessary to have global

account management for the customers.

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ARCHITECTURE OF CRM

There are three parts of application Architecture of CRM:

1. OPERATIONAL - automation to the basic business processes (marketing, sales, service).

2. ANALYTICAL - support to analyze customer behavior, implements business intelligence alike technology.

3. COLLABORATIVE - ensures the contact with customers (phone, email, fax, web, sms, in person and Post).

OPERATIONAL CRM

Operational CRM means supporting the "front office" business processes, which

include customer contact (sales, marketing and service). Tasks resulting from

these processes are forwarded to resources responsible for them, as well as the

information necessary for carrying out the tasks and interfaces to back-end

applications are being provided and activities with customers are being

documented for further reference.

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Operational CRM provides the following benefits:

• Delivers personalized 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

ANALYTICAL CRM

In analytical CRM, data gathered within operational CRM and/or other sources are

analyzed to segment customers or to identify potential to enhance client

relationship. Customer analysis typically can lead to targeted campaigns to

increase share of customer's wallet.

Examples of Campaigns directed towards customers are:

Acquisition: Cross-sell, up-sell

Retention: Retaining customers who leave due to maturity or attrition.

Information: Providing timely and regular information to customers.

Modification: Altering details of the transactional nature of the customer’s

relationship.

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COLLABORATIVE CRM

Collaborative CRM facilitates interactions with customers through all channels

(personal, letter, fax, phone, web, e-mail) and supports co-ordination of employee

teams and channels. It is a solution that brings people, processes and data together

so companies can better serve and retain their customers. The data/activities can be

structured, unstructured, conversational, and/or transactional in nature.

Collaborative CRM provides the following benefits:

Enables efficient productive customer interactions across all

communications channels.

Enables web collaboration to reduce customer service costs.

Integrates call centers enabling multi-channel personal customer interaction.

Integrates view of the customer while interaction at the transaction level.

CRM is based on the premise that, by having a better understanding of the

customers’ needs and desires we can keep them longer and sell more to them.

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KEY CRM PRINCIPLES

DIFFERENTIATE CUSTOMERS

All customers are not equal; recognize and reward best customers

disproportionately. Understanding each customer becomes particularly important.

And the same customers’ reaction to a cellular company operator may be quite

different as compared to a car dealer. Besides for the same product or the service

not all customers can be treated alike and CRM needs to differentiate between a

high value customer and a low value customer.

What CRM needs to understand while differentiating customers is?

Sensitivities, Tastes, Preferences and Personalities.

Lifestyle and Age.

Culture Background and education.

Physical and psychological characteristics.

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MAXIMIZING LIFE TIME VALUE

Exploit up-selling and cross-selling potential. By identifying life stage and life

event trigger points by customer, marketers can maximize share of purchase

potential. Thus the single adults shall require a new car stereo and as he grows into

a married couple his needs grow into appliances.

INCREASE LOYALTY

Loyal customers are more profitable. Any company will like its mindshare status to

improve from being a suspect to being an advocate. Company has to invest in

terms of its product and service offerings to its customers. It has to innovate and

meet the very needs of its clients/ customers so that they remain as advocates on

the loyalty curve.

WHO NEEDS CRM?

Putting it simply, CRM is ideally embraced by that organization which besides

making and retaining clients also makes serious effort to optimize their revenue

potential. This organization is one that aims at organizational growth through sharp

focus on CUSTOMER RELATIONSHIP MANAGEMENT.

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ADVANTAGES OF CRM

• Provide better CUSTOMER service.

• Increase CUSTOMER revenues.

• Increase CUSTOMER Lifecycle Value.

• Discover new CUSTOMERS.

• Cross Sell/Up Sell products more effectively.

• Help sales staff close deals faster.

• Make call centers more efficient.

• Simplify marketing and sales processes.

Many companies are turning to customer-relationship management systems to

better understand customer wants and needs. Customer Relationship

Management applications, used in conjunction with data warehousing,

E commerce applications, and call centers, allow companies to gather and access

information about customers' buying histories, preferences, complaints, and other

data so they can better anticipate what customers will want and how to best retain

them.

The adoption of Customer Relationship Management is being fuelled by

recognition that long-term relationships with customers are one of the most

important assets of an organization, providing competitive advantage and

improved profitability.

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CRM helps businesses use technology and human resources to gain insight into the

behavior of customers and the value of those customers & boost their business

efficiency, thereby increasing profit and revenue generation capabilities. In most

businesses, the cost of acquisition of customers is high. To make profits, it is

important to keep the customer longer and sell him more products (cross sell, up

sell, etc) to him, during his lifecycle. Customers stay, if they are provided with

value, quality service and continuity. CRM solutions enable’s to do that.

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THE SURVEY FACTS

Growth Strategies International (GSI) performed a statistical analysis of Customer

satisfaction data encompassing the findings of over 20,000 customer surveys

conducted in 40 countries by Infoquest.

The conclusions of the study were:

A Totally Satisfied Customer contributes 2.6 times as much revenue to a

company as a Somewhat Satisfied Customer.

A Totally Satisfied Customer contributes 17 times as much revenue as a

Somewhat Dissatisfied Customer.

A Totally Dissatisfied customer decreases revenue at a rate equal to 1.8

times what a Totally Satisfied Customer contributes to a business.

By reducing customer defection (by as little as 5%) will result in increase in

profits by 25% to 85% depending from industry to industry.

An important facet of CRM is “customer selectivity”. As several research studies

have shown not all customers are equally profitable (In fact in some cases 80% of

the sales come through 20% of the customers). The company must therefore be

selective and tailor its program and marketing efforts by segmenting and selecting

appropriate customers for individual marketing programs. In some cases, it could

even lead to “outsourcing of some customers” so that a company better utilize its

resources on those customers it can serve better and create mutual value.

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CAN CRM DRIVE REVENUE?

The important considerations of any organization looking forward to incorporating

a CRM are understandably, more business related than technical. All the different

objectives that are fulfilled through CRM, by default; revolve around increasing

the top line revenue.

CRM is not just a guarantee for quicker growth and bigger revenues but also a

means to keep up with competition. Through CRM, you can determine the

Customer Lifetime Value or in other words, the present and projected business

worth of a customer to your organization. This once known, acts as the basis on

which you can formulate marketing strategies targeting customers individually.

Customer intelligence and CRMs predictive analysis capabilities help’s to

generate a highly accurate demand forecast which leads to better and more

informed inventory management, thus, curtailing significantly, the internal costs

through new and efficient processes.

Further, the simplification and streamlining of the sales process, significantly

reduces the time spent by sales reps on their paperwork and administrative

engagements, and lets them focus on selling instead. The ROI gained out of

implementing a CRM is what makes the experience worthwhile. It is best

measured by comparing the past and the present customer acquisitions,

enhancements in customer value/worth, long-term customer retention, etc, all of

which contribute to the organizations revenues.

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5 STEPS TO SUCCESSFUL IMPLEMENTATION OF CRM

Many organizations have burned their fingers trying to implement the technology

and manage costs. To successfully undertake CRM initiatives it is essential to

Clearly define the management objective & strategy.

Evolve the right process around it.

Identify the right software solution for implementation.

Understand the hidden costs and hurdles.

Back it up with good training and support.

CUSTOMER RELATIONSHIP MANAGEMENT is a strategy, not a specific

software or hardware; but it encompasses the technology and strategy needed to

completely integrate a business in order to get a holistic view of customers and

their relationship to the entire enterprise. The software that links the back office to

the front office, the technology needed to make the call centre customer-friendly,

and integrating each component seamlessly with the customers' point of contact,

web-based or other means, are all part of Customer Relationship Management.

There are many technological components to CRM, but thinking about CRM in

primarily technological terms is a mistake. The more useful way to think about

CRM is as a process that will help bring together lots of pieces of information

about customers, sales, marketing effectiveness, responsiveness and market trends.

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KEY CHALLENGES IN IMPLEMENTING CRM SOLUTIONS

Companies around the world have leveraged CRM strategies to gain competitive

advantage. As more and more companies rush to implement CRM, precautions

must be taken to do it right. It is approximated that 50-70% CRM implementations

fail, depending on the Industry vertical. Hence, it is essential to identify the key

challenges, address risks and build a strategy that can make your CRM successful.

CRM is full of talk about strategy, but at the end of the day, someone has to lead

the way and implement, even if operations report that the network is operating

perfectly and services are running normally, your customers may not be happy,

leading to revenue shortfall and increasing levels of churn.

UNLOCKING THE VALUE OF CUSTOMER SATISFACTION SURVEYS

In today's business environment companies cannot afford to lose a single

profitable customer. By effectively leveraging results from a customer

satisfaction survey an organization can respond to their customer's needs in ways

that increase revenue as well as improve customer and employee, satisfaction and

loyalty. Many companies perform customer satisfaction surveys, but don't receive

full value from their investments to administer the program. Too often survey

results are used simply for monthly reporting on "how we did last month".

GAP MODEL

There is a gap because of which a market goes up or come down. What the

company perceives and what the customers perceives is different. It is this gap

which identifies a product of the company as product centric. The customer has a

different point of view. He may focus on the price.

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SUMMARIZING CRM ACTIVITIES

The CRM cycle can be briefly described as follows:

Learning from customers and prospects, (having in depth knowledge of

customer).

Creating value for customers and prospects.

Creating loyalty.

Creating profits.

Acquiring new customers.

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FUEL RETAILING IN INDIA

OVERVIEW

1976, India barred the private sector from participating in fuel retail and

nationalised the local businesses of international oil companies. Brands commonly

seen at petrol stations elsewhere in the world - Shell, Esso and Caltex -disappeared

from the Indian market. Shell, for instance, became Bharat Petroleum and Esso

metamorphosed into Hindustan Petroleum.

In 2002, however, the government made a U-turn, allowing multinationals and

other private players to re-enter the market. The policy shift sparked a rush of

service station openings as both private and public companies positioned

themselves to sell to the nation’s growing, increasingly mobile middle class.

While the private sector welcomed the liberalised market, in practice it came with

several strings attached. Private players were required to invest at least 20 billion

rupees (around $500 million) in refineries, pipelines or other energy-related assets

in the country, limiting the number of new entrants. And although the government

abolished formal controls on fuel prices, it continued to dictate them indirectly

through the pricing policy of India’s national oil companies (NOCs). These factors

have slowed the evolution of the sector – at least for the moment.

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PROMISING ROAD AHEAD

The Indian market for transportation fuels holds a lot of promise. The country’s

aspiring middle class, recently estimated at 40 million households by consultancy

McKinsey, is becoming increasingly motorised. Small towns are expanding at a

rapid pace, sparking investment in roads and other infrastructure. The largest

express highway project in India, for example, aims to link the cities of New Delhi,

Mumbai, Kolkata and Chennai with a system of four- to six-lane highways.

Automobile sales, which today number just over a million vehicles a year, could

reach 20 million a year by 2030, predicts US-based consultancy Keystone, making

India the third-largest automobile market in the world after China and the USA.

Moreover, the fact that many of India’s service stations are poorly designed and

congested leaves a natural opening for newcomers who offer a better alternative.

Typical old-fashioned Indian service stations feature long queues, cars jockeying

for position, oily forecourts and hand-operated petrol pumps that may not

accurately measure the volume of each sale. They also lack convenience stores or

other facilities.

Liberalisation prompted Indian companies such as Reliance and Essar to

aggressively enter the fuel retail market. Reliance, for instance, expanded its

network rapidly, building more than 1,200 service stations, with plans for up to

6,000. However, Reliance stopped at around 1,300 stations when it started to lose

money, due to the government’s policy of influencing prices.

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Shell is so far the only international oil company to enter the Indian retail market.

The company’s development of a liquefied natural gas terminal and regasification

facility at Hazira allowed it to meet the government’s call for investment. In 2005,

after an absence of nearly three decades, Shell opened a new petrol station in India.

Run by a former Pizza Hut manager with a track record of good customer service,

the station - on Dr. Rajkumar Road in Bangalore - quickly became a landmark

thanks to its team of efficient attendants directing traffic, cleaning windshields and

pumping petrol. Today Shell operates 35 stations in southern India.

India’s NOCs dominate the market that the newcomers have entered. Bharat

Petroleum, Indian Oil and Hindustan Petroleum have vast networks of petrol

stations across India - approximately 30,000 in all. Many of these petrol stations

were inherited from the old multinationals or established when land prices were

much lower than they are today.

NEW COMPETITORS

For almost 30 years the government strictly controlled public-sector companies,

dictating prices, and directing the expansion of their dealer networks. While these

companies had retained the infrastructure of the nationalised multinationals, their

reason for being changed dramatically. Objectives such as job creation had taken

precedence over purely commercial goals, including profitability when running the

business.

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The move toward liberalisation brought a sudden shift in priorities as the public -

sector companies prepared to face the new competition. “We’ve actually grown

more in the last four years than we had in the last 30,” says Tejbir Singh Sanghvi,

Deputy General Manager of Highway Retailing at Hindustan Petroleum. “The

government has given us more flexibility in terms of expanding our dealer

network. We’ve also had to develop a lot in order to compete. There are new

initiatives, new physical standards and new technologies. Fuel retail used to be a

seller’s market. Now the focus has shifted to the consumer.”

Newcomers to the Indian market face several challenges. For one, the government

has an indirect hand in pricing policy through its national oil companies. The

policy takes into account factors such as inflation and the proximity of upcoming

elections. For example, between 2002 and 2006 the price of petrol in the

international market increased one and a half times. During the same period the

retail price of petrol in India only rose by about 50%.

The government subsidises India’s NOCs to compensate for below-market prices.

Between April, 2005 and March, 2006 subsidies totaled approximately $3.6

billion, according to a government advisory committee report. Since state-owned

oil companies command some 80% market share, private-sector competitors must

match their artificially-low prices to stay in business.

“It was assumed that after the APM (Administered Pricing Mechanism) was

dismantled in 2002, there would be a genuine free market in India for

transportation fuels,” says Vivek Srivastava of Reliance. “But the APM never

really faded away in practice, thanks to political reality.”

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RETAIL SITE HEADACHE

Securing prime retail sites is also a headache. Real estate prices remain high and

the process of acquiring real estate is mired in red tape. Moreover, land titles in

India tend not to be clear, leading to delays. And construction can be challenging –

schedules aren’t adhered to, quality needs to be closely monitored, and safety

consciousness has a long way to go.

However, the outlook for newcomers is starting to improve. Government policies

are becoming increasingly liberal and market-driven, and there is an overall

cultural shift towards greater professionalism in Indian business. While there does

not appear to be any imminent movement on the government’s approach to fuel

pricing, the economy in general is moving towards greater deregulation. Tax

reform promised in 2010 could significantly improve the outlook for private play-

ers in the oil sector through a simplified indirect tax structure. This could allow the

government greater room to introduce free pricing.

Meanwhile, fuel retailers in India are gradually adopting the practices already used

in international markets, which plays to the strength of newcomers who are

building their networks from scratch. Fuel retailing in other parts of Asia, such as

Singapore, has moved towards providing convenience stops for customers,

following the model that prevails in Europe and North America. India is likely to

follow in the same direction, especially in cities. However, the pace of change and

the speed with which newcomers gain a foothold in the Indian market still depend

largely on government policy. As long as market forces do not determine prices

and subsidies to NOCs continue, these companies will have an advantage.

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CRM PRACTISE IN PETROL RETAILING BUSINESS

The definite answer would be NO. There has been no Customer Relationship

Management program followed at a Fuel Retail Station anywhere in the world for

various reasons, but a significant change has been observed with Oil Companies

which are into retailing going in for ERP & CRM implementation in the

organisation but restricted within the company, connecting to suppliers and

distributors but not at all the END CONSUMERS.

Reasons for NO CRM at Fuel Retailing Stations:

High Cost of Implementation.

Lower Margins on sales.

Huge Customer Base.

Geographically Widely Spread.

CRM a pretty new concept to be tested.

Few Driveway Attendant’s. (Western Countries Usually)

Customization not possible.

Sales Boost not predicted in developed countries.

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THE NEED FOR CRM AT FUEL STATIONS IN INDIA

This project is exclusively done on all the leading petrol bunks in the city of

Hyderabad. The main reason for choosing this sector is that, there is not much of

customer relationship is being maintained with the bunks & the end user as such.

To bridge the gap between the customer & the dealers so that an effort is being

made to make a customer a brand loyal.

CONSUMER’S INCREASING EXPECTATIONS

With growing competition in the petro-retailing sector, today’s consumer is

becoming more and more demanding. The emergence of new psychographic

segments in petro retail market bears the testimony to this fact. A closer look at

these segments tells us what exactly a consumer is looking for whenever he goes to

a fuel station to purchase fuel. He looks for-

Quality & Quantity assurance

Quick filling and efficient forecourt service

Rewarding loyalty

Premium fuels

Cashless transactions

Non-fuel services

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NEW PLAYERS IN PETRO-RETAIL SECTOR

The deregulation of the marketing sector has led to the grant of marketing rights to

Reliance Industries (5,849), Essar Oil (1,700), ONGC (1,110), and Shell (2,000).

Anticipating the immense competition ahead in the petro-retailing, the existing oil

marketing companies has geared up and the following are the changes that have

occurred in recent past since the deregulation of downstream oil industry.

Shifting focus from the urban to highways and sub-urban areas.

More communication with the customers in the media and onsite.

Building PFS, Club HP, Q&Q as a brand.

From fuel dispensing to multi product selling.

From commodity selling to brand marketing.

From executive level sales management to intermediary supervisory cadres .

From direct controls to third party audits – these certifying agencies require

their own infrastructure.

From dealer proprietor to reputed companies from other sectors making

forays into petro-retail management.

Given today's open & competitive environment, oil marketing companies, both

existing and new entrants, are going full steam ahead to capture the largest share of

the pie. While the PSUs have added more than 3000 retail outlets to their network

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in last three years since deregulation, the private players have added only a little

over450 retail outlets. However, we can say that with 30,000 petrol retail outlets

expected in the next 5 years, up by 30% from today, there is going to be a

downward pressure on profit margins and revenues per outlet which will push the

industry to reinvent itself.

And in order to reinvent; the industry will either face cut throat competition,

Consolidation or a sure path to increase customer loyalty by higher customer

satisfaction & increasing brand value through future vision thinking.

INITIATIVES TAKEN SO FAR

Strict Implementation of Programs to avoid Fraud’s.

Automation of Fuel Dispensers.

Establishing new Fuel Stations at Convenient Locations.

Revamp of Old Outlets.

ERP & CRM implementations at Company level.

Marketing for Brand Recognition.

Launch of New Products & Related Goods & Services.

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CROSS INDUSTRY CRM PRACTISE

Implementing a Technology - Based CRM Solution

The ICICI Experience

ICICI set up as Development Bank over four decades ago to provide products and

services for the corporate segment, diversified into the retail segment of the

financial markets in the early 1990s.

In 1994, it established ICICI bank as a commercial bank that is flexible, innovative

and prompts in meeting customer requirements. In addition to the bank, the retail

initiatives include Prudential ICICI AMC, ICICI Personal Financial Services,

ICICI Capital Services, and ICICI web trade, Prudential ICICI Life Insurance,

ICICI Lombard General insurance. This apart the retail initiatives also include a

plethora of web based businesses including city portals and various other utility

sites such as billjunction.com, icicimoneymanager.com, and magiccart.com,

among others.

THE RETAIL STRATEGY

As part of plans, it is implementing various projects to establish world class CRM

practices, which would provide an integrated view of its customers to everyone in

the organisation. CRM at ICICI involves increased communication between the

virtual universal bank and its customers and prospects, as well as within the group

itself. The underlying idea is to enhance every instance of contact with the

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customer. ICICI believes that a true customer centric relationship can only be

accomplished by considering the unique perspectives of every single customer of

the organisation. Hence the pressing need to put in place a technology enabled

CRM solution.

THE CRM ROADMAP

CRM, at ICICI, is viewed as a discipline as well as a set of discrete software

technologies, which will focus on automating and improving the business

processes associated with the customer – face –to-face, call Centre, ATM, web,

telephone, kiosk, bank branch, sales associates, etc – so as to allow ICICI to carry

out cradle-to-grave customer management more efficiently. It should allow ICICI

to engage in one-to-one marketing by tracking complete customer life-cycle

history. To begin with it will automate process-flow tracking in the product sales

process, and be able to generate customized reports and promote cross selling. It

will also enable efficient campaign management by providing a software interface

for definition, tracking, execution, and analysis of campaigns.

From an architecture perspective, the enterprise-wide CRM solution should

seamlessly integrate non-transactional related customer information housed in the

front-office with the transactional information housed in the back office.

Page | 36

IMPLEMENTING CRM

A very detailed and comprehensive CRM action plan was developed based on the

understanding that CRM will require enterprise wide transformation.

Interviews with key individuals throughout the organisation helped identify

different initiatives that have been launched, all focused on CRM.

The next step in the planning process was a Gap Analysis. This analysis essentially

compared current stage against optimal relative to the five aspects of business, to

identify and specifically describe the gaps.

THE CRM BUSINESS CYCLE

Understand and Differentiate

Develop and Customize

Interact and Deliver

Acquire and Retain

Page | 37

Successful customer retention is based very simply on the organisations ability to

constantly deliver on three principles:

Maintain interaction; never stop listening to customers.

Deliver on customer’s value definition. Remember that customers change as

they move through differing life stages; be alert for the changes and be

prepared to modify the service and value proposition as they change.

Prioritizing Changes; because there might be many gaps, therefore many

changes that an organisation will need to make, prioritization is critical.

The evaluation of each of the strategies identified to resolve the gaps at ICICI were

based on:

Cost to implement – including initial one time costs, as well as anticipated

ongoing expenses.

Overall benefit – some changes may have higher impacts on an

organisation’s ability to increase customer value and loyalty.

Feasibility – based on the organisation readiness, data and systems support,

resource skill sets and a number of other factors.

Time Required – including the time necessary for training and addressing

“cultural” change management issues related to a specific strategy.

Creating an Action Plan.

Page | 38

The next step in the planning process was the development of a very detailed

action plan. While the complete plan might span three or more years, it was based

on three-month phases with clear deliverables that will demonstrate both progress

and quick hits or measures of success. The plan identified interdependent activities

and should comprehensively detail the time and resources required for each

activity.

Another key factor for the planning process was the Leadership Action Plan.

Advancing on the CRM transformation map required significant organisation

change. This part of the action plan helped assess the drivers and restraints of

change and the organisation’s readiness to assess the change.

Selecting and Implementing a Technology Based Solution Technology

The successes of the CRM initiatives were contingent on various decisions

pertaining to technology. Some of the key issues were:

Make or Buy: - The decision to buy was based on an evaluation of an

identified set of criteria. Some criteria were Functionality, Flexibility,

Scalability, Fit with existing architecture, etc. was decided to purchase an

off-the-shelf CRM solution and customize it to suit ICICI’s requirements.

From whom to buy: Some Criteria included were CRM expertise, Retail

Finance Experience, Credentials including financials, client list, life history,

etc. A detailed Request for Information (RFI) was sent to each of the

shortlisted companies. After receiving the RFIs, another round of evaluation

was done. After short listing two product vendors and system integrators,

reference calls were made to several of the past clients of all shortlisted

companies.

Page | 39

PROCESSES

All processes were mapped on to product by understanding the details. During the

course of the process mapping, several opportunities for improvement were

identified and implemented.

LESSONS SO FAR FROM THE ICICI EXPERIENCE

If CRM involves optimizing product, price, place of distribution, promotion, sales

and service, why are so many companies struggling? Hasn’t anyone really

mastered the art and science of CRM, and if not, why is it so difficult?

CRM is difficult because it is an enterprise wide initiative.

CRM is not a technology initiative. Many have confused CRM as a

technology initiative, and assigned the CRM implementation project to their

information system or information technology group. CRM conferences

often equate to technology exhibits and demonstrations. Technology is

needed in order to implement CRM – particularly the customization part –

but technology is not the driver of CRM, or the solution to successful CRM

implementation.

CRM is not exclusively a marketing initiative. Many organisation have

merely equated CRM with customer focused marketing, or data-

driven/database marketing. CRM results in more effective, data driven

Page | 40

marketing efforts; CRM requires marketing experience. But CRM is strictly

not a marketing initiative.

CRM is not exclusively a sales initiative. Similar to marketing, CRM is

often lodged within the sales department. The sales-force, after all, is

extremely close to their customers understanding their needs and wants, and

trying to fulfill them. Sales, however, is just one functional area that can

benefit from CRM, and that is necessary for effective CRM.

CRM is not exclusively a service initiative. As with sales and marketing,

customer service is one functional aspect of successful CRM

implementation. But customer service is not the sole driver of the process.

CRM involves marketing, sales, service, and technology, as well as the other

inner workings of the organisation. Having even one “broken spoke in the

wheel”, one area of the organisation that is less than committed to CRM, can

make the difference between success and failure.

Page | 41

SURVEY

In order to get a real outlook regarding a need for CRM implementation at Retail

Fuel Stations, a lead of various Primary, Secondary Research & Methodology has

been designed.

Some Parts of the Lead being:

Questionnaire.

Interviews.

Observation.

Feedback.

Enterprise Policies.

Case Studies.

Statistical Tools.

Marketing Concepts.

Page | 42

CUSTOMER FEEDBACK

OFF – SITE CUSTOMER SURVEY

1. Which Fuel Station do you usually go to get your vehicle refueled?

__________________________________________________________________

2. Do you visit?

a) Only One Fuel Station.

b) More than One less than Five.

c) Any fuel station.

3. What is the reason for selecting the Fuel Station?

a. Close/ on the way to your Residence / Office.

b. Have Loyalty Card.

c. Quality of Fuel.

d. Driveway Attendants. (Service Rendered).

e. Vehicle Water Servicing.

f. Other Services (IF, THEN WHAT___)

g. All the Above.

4. What all services do you avail at the Fuel Station?

a) Only Vehicle Refueling. b) Tyre Air Pressure Check.

c) Vehicle Oil. d) Convenience Store.

e) ATM. f) Vehicle Water Servicing.

g) General Clean Up (Window Panes etc.)

Page | 43

5. What is the usual Mode of Payment?

a. Cash

b. Credit / Debit Cards

c. Special Credit cum Loyalty Cards

d. Petro Cards

6. Do you trust upon the Fuel Quality & Quantity purchased by you at Fuel

Station of your Choice?

a) YES

b) MAY BE

c) NO

d) Does not Matter

7. Do you prefer any other services to be provided in the petrol station?

a) YES

b) NO

c) No Idea

8. Do you find any difference in the Quality of Fuel at different Fuel Stations?

a) YES b) NO

Page | 44

9. Prioritize your Needs for Selecting a Fuel Station? (From 1 to 10, 1 Being Top

Priority)

a. Quantity & Quality of Fuel.

b. Driveway Attendants.

c. Convenience of Location.

d. Convenience Store.

e. ATM.

f. Provision of Loyalty Benefits.

g. Free Glass Clean Up.

h. Vehicle Water Servicing.

i. Variants of Fuel.

j. Other related Products & Services {Oil, PUC, Tire Air Pressure Check

etc.}

k. Others (Please Specify and Rate) _______________________________

NAME: Profession:

Vehicle Held: Avg. Predicted Age Group:

Avg. Fuel Consumption per Month:

Page | 45

ON SITE CUSTOMER SURVEY: {SHELL STATION (SOMAJIGUDA,

AMEERPET)}

1. Do you often Visit Shell Fuel Station. How many times per Month?

2. Why do / did you visit Shell petrol station?

1. Quality & Quantity of Fuel.

2. Brand Name.

3. Convenient Location.

4. Driveway Attendants.

5. Others

6. Refuel was required on priority.

3. Are you satisfied with the services that are rendered to you at Shell?

a) YES b) NO c) Partly satisfied

4. Do you believe in the Quality & Quantity of Fuel that is provided in here?

a) YES b) NO c) Can’t Say

5. Do other services like CAR WASH, CONVENIENCE STORE, Good Drive

way Attendants attract you towards this station?

a) YES b) NO c) MAY BE

Page | 46

QUESTIONNAIRE

MANAGER AT SHELL & RELIANCE FUEL STATION

1. What is the Station’s major Factor making customer drive in?

2. What extra services do you provide for your customers?

3. How much usual storage of extra fuel is always there at station?

4. What is Max Storage of Fuel at the station?

5. Does customer come here only for refueling or any other service?

6. Do you maintain complaint book?

Page | 47

RESULTS / ANALYSIS OF SURVEY AND OBSERVATION

The following are analysis obtained after scrutinizing the Feedback from

customers, and comparing various bits from cross industry CRM practises and also

from the Interview with Manager.

SURVEY RESULTS

Off – Site Customer Survey Results (Survey Size 100)

1. Which Fuel Station do you usually go to get your vehicle refueled?

Various, the highly visited fuel station being Indian Oil petrol station at

Panjagutta, & Greenlands intersection (Full Moon Service Station)

2. Do you visit?

a. Only One Fuel Station (61%)

b. More than One less than Five. (23%)

c. Any fuel station. (16%)

3. What is the reason for selecting the Fuel Station?

a. Close / on the way to your Residence / Office. (67%)

b. Have Loyalty Card. (4%)

c. Quality of Fuel. (21%)

d. Driveway Attendants. (Service Rendered) (2%)

e. Vehicle Water Servicing. (0%)

f. Other Services (Free Cleaning, Convenience Store) (2%)

g. All the Above. (4% & 42 of 100)

Page | 48

4. What all services do you avail at the Fuel Station?

a) Only Vehicle Refueling. (93 out of 100)

b) Tyre Air Pressure Check. (56 out of 100)

c) Vehicle Oil. (18 out of 100) 2 wheeler oil

d) Convenience Store. (4 out of 100)(Used, no more)

e) ATM. (0)

f) Vehicle Water Servicing. (2, At Tarnaka only there)

g) General Clean Up (Window Panes etc.) (Would Take, if knew where)

5. What is the usual Mode of Payment?

a) Cash (72)

b) Credit / Debit Cards (19)

c) Special Credit cum Loyalty Cards (4)

d) Petro Cards (5)

6. Do you trust upon the Fuel Quality & Quantity purchased by you at Fuel

Station of your Choice?

a) YES (2)

b) MAY BE (92)

c) NO (5)

d) Does not Matter (1)

Page | 49

7. Do you prefer any other services to be provided in the petrol station?

a) YES (Option for Mobile Battery & Account Recharge, ATM)

b) NO

c) No Idea (97)

8. Do you find any difference in the Quality of Fuel at different Fuel Stations?

a) YES (33) b) NO (67)

9. Prioritize your Needs for Selecting a Fuel Station? (From 1 to 10, 1 Being Top

Priority)

a. Quantity & Quality of Fuel. (2) (33 = 1, 57 = 2, 12 = 3)

b. Driveway Attendants. (4)

c. Convenience of Location. (1) (67 = 1, 18 = 2, 17 = 3)

d. Convenience Store. (8)

e. ATM. (10)

f. Provision of Loyalty Benefits. (6)

g. Free Glass Clean Up. (7)

h. Vehicle Water Servicing. (9)

i. Variants of Fuel. (5)

j. Other related Products & Services. (3) (47)

k. Others (Please Specify and Rate)

Avg. Fuel Consumption per Month: 68.3 Ltrs

Page | 50

ON SITE CUSTOMER SURVEY RESULTS:

{SHELL STATION (SOMAJIGUDA, AMEERPET)}

1. Do you often Visit Shell Fuel Station. How many times per Month?

21 – Yes 52 – NO (Sometimes) 27 – First Time

2. Why do / did you visit Shell petrol station?

a) Quality & Quantity of Fuel (52)

b) Brand Name (17)

c) Convenient Location. (On way to work Place or Residence). (42)

d) Driveway Attendants. (19)

e) Others (Suggested to Visit) (12)

f) Refuel was required on priority (18)

3. Are you satisfied with the services that are rendered to you at Shell?

a) YES (42)

b) NO

c) Partly satisfied (58 Never Availed All)

Page | 51

4. Do you believe in the Quality & Quantity of Fuel that is provided in here?

a) YES (74) b) NO c) Can’t Say (26)

5. Do other services like CAR WASH, CONVENIENCE STORE, Good Drive

way Attendants attract you towards this station?

a) YES b) NO c) May Be (Attendants) (29)

Avg. Fuel Consumption per Month: 67 Ltrs

Mode of Payment (OBSERVATION): CASH higher than Credit Cards.

Page | 52

QUESTIONNAIRE RESULTS

(MANAGER AT SHELL & RELIANCE FUEL STATION)

1. What is the Station’s major Factor making customer drive in?

Ans: Its Location, Brand & Quantity & Quality of Fuel (Shell & Reliance.

2. What extra services do you provide for your customers?

Ans: Lubricants are made available and for cars free glass clean up - Shell.

Lubricants - Reliance

3. How much usual storage of extra fuel is always there at station?

Ans: Roughly Around 15 to 20 thousand Ltrs per Day (Opening Stock)

4. What is Max Storage of Fuel at the station?

Ans: Tanks Capacity (Including tanks for Variants). Avg: 4 Lakh Ltrs

5. Does customer come here only for refueling or any other service?

Ans: Mostly for Fuel only, very rare for Lubricants only

6. Do you maintain complaint book?

Ans: Yes, It’s always given to customer on demand.

Page | 53

7. Which the most frequently used mode of payment?

Ans: CASH & CREDIT CARDS

8. Any future strategy to increase customer drive in?

Ans: Station is company owned - all directives from Company – Shell.

NO – Reliance

9. Do you prefer customer retention or new customers?

Ans: BOTH

10. No. of Employees: Total 17 (12 in 1st Shift Rest in 2

nd Shift) – Shell.

Total 10 (6 in 1st Shift Rest in 2

nd Shift) – Reliance.

11. Completely Automated Filling Machines & Station.

Page | 54

ANALYSIS

1. The Consumers do not have a major requirement at the Fuel Station.

2. The Customer selection of a Fuel Station mostly depends upon the

Convenience to them.

3. There Resembles no Brand Loyalty among the Customer.

4. Customers are tending towards Quality of Fuel & the pleasing Driveway

Attendants.

5. Most of the consumers carry a no problem attitude, i.e. a very undemanding

and careless attitude.

6. In the preview of entrance of private sector a definite Competition has been

raised which would be tougher to fight once the Price Control and the

subsidies given to PSU’s by Govt. is completely removed.

7. Due to the lack of Customers Survey Information, Customer Data and Huge

No. of Customers; it became impossible for Oil Retailing Firms to come

with any innovative strategy to tap the growing customer base & build a

brand loyalty within the customers.

8. Retailers don’t bother of customer satisfaction or growing customer base,

just because there margins are fixed on a very low rate, rather than thinking

of How to Raise Revenues?, Utilize the Extra Space available with them.

Page | 55

SUGGESTIONS

TO THE OIL RETAILING FIRM & RETAILERS: FUTURE VISION

1. Shift from retail outlet branding to corporate branding.

Ever since the market was deregulated, the oil companies are busy in

bringing the branding concept in petro-retailing which was a commodity market

for years with no differentiation. However, consistent efforts make them taste

success with the advent of branded fuels such as Speed, Xtrapremium etc. Also, at

the same time RO branding was initiated and PFS (Pure For Sure), Club HP and

Q&Q outlets came into existence. But still the oil companies have not found the

way how to make a customer say pointing towards a RO that as this outlet belongs

to a particular company, it will be the best in Q&Q and others concerns. In other

words, corporate branding is what on the cards in the future of petro-retailing.

2. Offer of range of premium branded fuels

Today, there are so many branded fuels of different oil companies in the

market like Speed (BPCL), Turbojet (HPCL), Xtrapremium (IOCL) etc. But these

fuels are more or less same with slight variations in the chemistry. Also, there is a

lack of product assortment in this business of branded fuels. There is not much

options to choose among. However, with high investment in R&D, things are not

going to remain same and very soon we will see a full range of premium branded

fuels like 93-octane petrol, 97-octane petrol, 125-octane petrol etc.

Page | 56

3. Emergence of non-fuel services as a major activity at retail outlets

The dismantling of APM has removed the privilege of assured returns from

the PSUs and thus, it has increased pressure on their margins, as to compete with

the private players, who are with deep pockets, it is imperative to make huge

investment in the services being offered at the ROs. Since the base product is

same, the differentiating factor would be the non-fuel services. Also, the changing

face of the Indian consumer is one of the main reasons behind the non-fuel services

in petro-retailing. Today, he is looking at a one stop solution to all his needs –

buying groceries, withdrawing cash from his bank, making utility payments,

renewing his insurance cover, grabbing a quick bite, obtaining Pollution Under

Control Certification and of course filling fuel in his car. On the other hand the

driver on the highways is seeking a clean and hygienic place to relax and freshen-

up, service his vehicle and have a good meal at the restaurant in the pump.

4. Loyalty programs an integral part

The immense competition will make loyalty programs an integral program

of the day to day functioning of petro-retailing. Of course, right now many such

loyalty programs are being run by the petro-retailers like Smart Fleet (BPCL),

Xtrapower (IOCL), Drivetrack (HPCL), Transconnect (Reliance), Petrocard

(BPCL) and others. However, these programs are mainly focused at the bulk

consumers and the small consumers are left unnoticed more or less. But in future,

there won’t be such differentiation and loyalty programs will be there for every

segment of consumers.

Page | 57

5. Attempt by all players to drive volumes to retail sites

In order to saturate the market before the private players can consolidate

network, the PSUs are vigorously setting up new outlets. In the last three years, the

PSUs have added more than 3000 outlets to their network. However, it will reduce

the throughput per RO in long run. Hence in order to maintain the throughput, all

players will strive to drive volumes to their retail sites.

6. Leveraging automation and communication for enhanced offerings

In the wake of the increased customer’s expectation, in future, retailing of

petroleum products is going to be very sophisticated and highly modernized. In the

pipeline, there is a slew of automation infrastructure solutions ranging from

integrated point of sale terminals, aggregated data management system, fuel

delivery management and fleet management systems that help customer self-

service, dynamic pricing, network planning, demand forecasting and so on.

7. Competition on price

Price was till recently not a differentiating factor in Indian market because

prices were same for all the companies. However, with private players coming into

the market, the picture has changed. Essar & Shell is a glaring example of this. In

the future when the market determined pricing mechanism will come into full

effect, we will see the focus of competition shifting from Q&Q to price.

Page | 58

8. Adoption of New Retail Skills

In the changed scenario, petro-retailers will have to take a look into the retail

skills they have and accordingly have to make adjustments in that. Network

optimization, Proposition/Brand Management, Dealer Management, Site

Operations Management, Partner Management, Customer Relationship

Management etc. are some of the skills that should be incorporated to succeed.

9. Alternate sources of Revenues

The growing competition will increase pressure on margins and therefore,

the retailers will seek for alternate sources of revenue, taking examples of foreign

experiences. To taste success in this, retailers need to develop a sustainable non-

fuel model which should synergize with core fuel business and not detract.

However, strategic foresight is one thing but what matters most is the superior

execution of those strategies and this is the factor which shapes core competency

for a company that is hard to replicate by the competitors.

Page | 59

SPECIAL FOCUS ON CUSTOMER RELATIONSHIP

Though, the very basic implementation of CRM is very difficult at retail outlet but

a CRM network would be easily setup with Enterprise and its various retailers,

hence reducing burden on low margin ridden Retailers.

As a CRM implementation in itself is a lengthy & risky process, but few Customer

driven, behavioral & management techniques should be used in order to achieve

greater revenues and Brand Loyal customers so as to surpass the upcoming serious

competition; stands bare essential.

Page | 60

BIBLOGRAPHY

www.shell.com

www.google.co.in

www.e-retail.com

www.managementparadise.com

www.businessline.com

Ministry of Petroleum & Energy.

University of Petroleum & Energy Studies, DELHI.

Managers at RELIANCE, HP, SHELL, IBP, BP & IOC Fuel Stations.

Whole Hearted Response of Customers.