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Customer Relationship Customer Relationship ManagementManagementCRM is the infrastructure that
enables the delineation of and increase in customer value, and the correct means by which to motivate valuable customers to remain loyal– indeed to buy again.
CRM is more than a standalone project for the company, but a business philosophy that affects the company-at-large.
What is Customer Relationship Management (CRM)?CRM is “the development and maintenance of mutually beneficial long-term relationships with strategically significant customers”
(Buttle, 2000)
CRM is “an IT enhanced value process, which identifies, develops, integrates and focuses the various competencies of the firm to the ‘voice’ of the customer in order to deliver long-term superior customer value, at a profit to well identified existing and potential customers”.
(Plakoyiannaki and Tzokas, 2001)
Customer Relationship Customer Relationship ManagementManagement
“Process of creating and maintaining relationships with business customers or consumers”
“A holistic process of identifying, attracting, differentiating, and retaining customers”
“Integrating the firm’s value chain to create enhanced customer value at every step”
“An integrated cross-functional focus on improving customer retention and profitability for the company.”
4
The Move Towards The Move Towards Relationship ManagementRelationship Management
E-commerce companies want to customize the user experience
Supermarkets want to be infomediaries
Credit card companies want to recommend good restaurants and hotels in new cities
Phone companies want to know your friends and family
Bottom line: Companies want to be in the business of serving customers rather than merely selling products
5
CRM is RevolutionaryCRM is Revolutionary Grocery stores have been in the business of
stocking shelves Banks have been in the business of managing
the spread between money borrowed and money lent
Insurance companies have been in the business of managing loss ratios
Telecoms have been in the business of completing telephone calls
Key point: More companies are beginning to view customers as their primary asset
6
Why Now ?Why Now ?
0
200
400
600
800
1000
1200
0 1 2 3 4 5 6 7 8 9 10 11
Year
Num
ber
of C
usto
mer
s (1
000s
) As growth flattens out, exploiting existing customers becomes more important
In this region of rapid growth, building infrastructure is more important than CRM
total customers
new customers
churners
Representative Growth in a Maturing Market
Functions of Customer Relationship Management
Management DecisionProcess
Customer sensitivity
•Diversity•Information•Differentiated offering
Value Creation Process
Technology delivery process•R&D•Technology integration•Efficiency, effectiveness learning
Product delivery process•Concept to launch•Manufacturing process
Customer delivery process•Supply chain•Distribution•Infomediation (distribution of information)
Value-basedStrategies•Pricing•Communication
(Sharma et. al., 2001)
Models of Customer Relationship Management
The Evans and Luskin (1994) model for effective Relationship Marketing
Relationship marketing inputs•Understanding customer expectations•Building service partnerships•Empowering employees•Total quality management
Relationship marketing outcomes•Customer Satisfaction•Customer loyalty•Quality products•Increased profitability
Assessment state•Customer feedback•Integration
(Evans and Luskin, 1994)
Models of Customer Relationship Management
The Brock and Barcklay (1999) model of selling
partner relationship effectivenessIndependence
Relative influence
Mutual trust
Cooperation
Selling partnerrelationshipeffectiveness
Why CRM?Why CRM? To thoroughly understand customer needs– even
before they know it themselves. Decreasing customer churn by increasing
customer satisfaction. Motivating customers to initiate revenue-
generating contacts with the company. Increasing the likelihood of the ‘right response’
by a given customer or customer group. To use technology to improve customer service
and enable greater degree of customer differentiation in order to deliver unique customer interactions.
To attract customers- both new and old- through more personalized communications.
Customer relationship Customer relationship management (CRM)management (CRM)
Combination of strategies and tools that drives relationship programs, reorienting the entire organization to a concentrated focus on satisfying customers.
BENEFITS OF CRM
• Software systems can make sense of huge amounts of data.
• Simplify complex business processes while keeping customers’ interests at heart.
PROBLEMS WITH CRM
• Requires companywide commitment and knowledge of how to use system.
• Failures often result from failure to effectively reorganize firm’s people and processes to take advantage of benefits CRM system offers.
RETRIEVING LOST CUSTOMERS
• Customers leave for a variety of reasons.
• Customer winback—process of rejuvenating lost relationships with customers.
How the Internet changes How the Internet changes the Rulesthe Rules24 hour accessUp-to-the-minute information (stock levels, product features, and prices).
The ability to research product or merchant during a shopping trip.
Online customer support.Online self-servicePersonalized content.
What Is In a Name? What Is In a Name? eCRM: refers to electronic customer
relationship management or CRM which is web-based.
ECRM: or ERM refers to enterprise CRM, meaning a CRM program that spans an enterprise-wide view of customer.
PRM: allows a company to manage its alliance partner and reseller relationships to provide customers with the optimal sales channel.
What Is In a Name? What Is In a Name? cCRM: Collaborative CRM denotes
situations in which customers can interact directly with the company, usually through the Web.
SRM: focuses on keeping the vendors happy.
mCRM: suggests the provision of data to customers, suppliers, and business partners via wireless technologies.
xCRM: a placeholder for hybrid CRMs.
CRM & Business CRM & Business IntelligenceIntelligence
CRM and business intelligence both involve critical business decisions and rely on IT to deliver value.
CRM is more complex than BI.CRM integrates information into
business action.CRM combines data analysis with
deployment of specific business actions. The mandate of CRM is to act on data
and change the fundamental business processes.
Is CRM New?Is CRM New?No!• Simply an extension
of relationship marketing
• Builds on customer service and satisfaction concepts
• Just the latest buzzword for creating customer orientation
• Bottom-line is still the same
Yes!• A shift in corporate
philosophy concerning the approach to value delivery
• Customer-centric approach to value chain
• New and technology-enhanced processes
• Focus is not just on bottom-line, but on top-line
• Goal is to create satisfying experiences across all customer contact points
Managing Customer RelationshipsQualifying prospects for relationship building
Opportunities for adding value
Potential profitability of customer
High
Low
Low High
Use a noncustomizedapproach
Seek betteropportunities
elsewhere
Build a strongand lastingrelationship
Focus onloyalty-building
program
Myths about CRM:Myths about CRM:
CRM has not been successful, it does not work.
CRM is all about technology.CRM is just a fad.CRM is supposed to be able to
improve customer satisfaction, but there is no evidence that improved CRM is worthwhile.
Common Pitfalls that Common Pitfalls that Prevent CRM from Prevent CRM from becoming a Reality becoming a Reality The executive toy syndrome.
The destruction of shareholder value is promoted by measuring the wrong things.
The best practice syndrome.Development is driven by IT alone.It becomes a reengineered reporting
process.Enterprise-wide common performance
management application are lacking.The links to human resources are missing.