CRM Session 3

8/12/2019 CRM Session 3

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Customer Relationship

ManagementSession-3


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Customer life cycle management


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The stagesa customer goes through from the

time of before deciding to do businesswith

an organization until he or she decides to

stopbeing a customer is called Customer life

cycle


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Another view

Pre-Purchase Purchase Usage Re-Purchase Winning back

Pre-Purchase Purchase Usage

Pre-Purchase Purchase Re-PurchaseUsage

Pre-Purchase PurchaseWinning back

Re-PurchaseUsage

Pre-Purchase Purchase

Pre-Purchase Purchase Usage

Pre-Purchase PurchaseRe-PurchaseUsage

Pre-Purchase Purchase


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Role of CRM in pre purchase

Campaigning

Mass media advertizing, Direct mailing, Telephonic Solicitation

Non intrusivePermission marketing

Easy access to right information

Website, Retail stores, Call centers, Email responses to

enquiries, Home visits by service personnel

Comprehensive information in suitable formats Comparison with competitive products; queries on usage,

service, warranty, guaranty etc.

Product demonstrations & trials

Home appliances, food products, computer software


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Role of CRM in purchase

Purchase options Variety of purchasing avenues

Cash

Cheque

Credit/Debit card

E-payment

Mobile-payment

Easy Procedures Home loans


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Role of CRM in purchase (cotd..)

Access to hire purchase Loans

EMIs

Complete solution Product cum installation

Installation & training at customers convenience At suitable time & place


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Role of CRM in Usage stage

Easy access to after sales service Provide multiple access methods like

Toll free service helpline

Website space for registering service requests

Email id

This access information should be readily available for consumer

Quick trouble shooting Promptness of service desired

Understand what is customers idea of quick service?

Spare parts easily available & affordable


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Role of CRM in Usage stage (cotd..)

Updated features Software patches, upgrades

Engaging customers Website

Social media : Face book, twitter etc.

Events Activations : Contests


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Role of CRM in Re-purchase

Easy disposal of old products Buy new sell old

Loyalty bonus Frequent flyer scheme

Loyalty cards

New products with useful value addition Understand gaps in existing product

Find out unfulfilled expectations of customers

New product should take care of these aspects

Eg: Frost free refrigerator


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Role of CRM in Winning back lost customers

Keeping track of the churn

Alert should be sounded when loyal customer stops

making purchases. By tracking Regularity of purchases

Value of purchases

Analyze the cause of departure through Interviews with customers (in person, telephone)

Interviews with concerned sales person

Analyzing transactions. Locating gaps in service

delivery or unattended complaints


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Role of CRM in Winning back lost customers (contd..)

Make relevant offers

Offer should be attractive Should acknowledge worth of customer

Reassure about the issues that led todeparture

Follow-up Understand why customer hasnt responded

Maybe he seeks something different


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Let us discuss a Case of a

Telecom operator


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Customer Market Segmentation


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Customer Lifetime Value


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Expected profit that a customer/s

brings to the firm during its lifetime


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Most Basic models

RFM model based on Recency of purchase

Frequency of purchase

Monetary : Customers avg. purchase size

Avg. value per purchase XNo. of purchases per year X

No. of years of customer life time

Revenue generated/yrX Profit margin %XAvg. life time


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An exampleToothy, a 20 yrs old female brushes her teeth daily twice aday. She wants to live really long & healthy so dentist hasadvised her to change her brush every quarter in order to

ensure good cleaning which will lead to a life expectancy of100 years!! Toothy likes to play with colours. Her favoritecolours are red, blue, green, yellow & recently neon pink. Shelikes to buys brushes also in same colours. The cost of abrush is dependent on the colour so a red brush costs as low

as 10, where as blue & green 20, a yellow 25 & the latestneon costs 50 Rs. As brushing is such an important activityfor her, Toothy wants to budget her life time cost. Please helpher.


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Adding a little complexitymaking it more realistic

As time value of money reduces over a period so

adjusting future profit margins by discount rate

So formula looks like :

m = Profit obtained in that year

i = WACC OR rate of borrowing funds OR rate of inflation etc.

t = No. years to wait before receiving the payments


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Little more complexity

As there will be loss of few customers so let us account

for customer retention rate (r)

So now formula becomes :


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Add value

Life time

Avg. value of purchase

Frequency of purchase Discount rate of purchase

value

Cross-selling & up-selling

Network effect (eg. Word ofmouth, communities)

Reduce Value

Cost of acquisition

Cost of retention

Cost of marketing activities Cost of returns

Factors impacting CRM


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Group Assignment

Topics

Groccery & household products Big Bazzar, Reliance mart, More, Haiko, Dmart

Fashion & lifestyle retailer Shoppers Stop, Westside, Pantaloons, Lifestyle

Electronics & digital Croma, Ezone, Reliance digital

Telecom service provider Vodafone, Airtel, Idea

Airlines Jet, Indigo, Go Air...

Banks ICICI, Citibank (India), HDFC.

Insurance


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Group Assignment

Areas to be covered

CRM practices Model, Best practices, failure, evolution, learnings etc.

Your analysis of practicesgood/bad, why?

Data, facts, figures wrt. CRM

CRM software used

Org. structure wrt. CRM

CRM in comparison with competitors Anything else which contributes to CRM

course


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Group Assignment

rules

10 groups5-6 members each

15 minute of content (You need to manage time)

2 presentations every class

Starting next tuesday ie. 4

th

march Hardcopy of the presentation should be given to me

before-hand

Presentations should be already loaded in thesystem

List of groups with First & second topic preferenceand order of presentation should reach me byThursday night.


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Thank you, Have a good day!!

Documents

CRM Session 3