unit-2 marketing new

8/7/2019 unit-2 marketing new

1/35

UNITUNIT--22

CONCEPTUAL FRAMEWORK OF CRMCONCEPTUAL FRAMEWORK OF CRM

MBMB--543543


2/35

Discussion Outline

What is CRM

Key CRM Principles

Evolution of CRM practice

Relevance of CRM for todays business

Current Status of CRM in Indian business

Software Solution for CRM.


3/35

What is CRM?What is CRM?


4/35

Customer Relationship Management

TheThe customercustomer isis thethe mostmost importantimportant partpart ofof thethe productionproduction lineline..

WithoutWithout someone someone toto purchasepurchase ourour productproduct wewe mightmight asas wellwell shutshutdowndown thethe wholewhole plantplant..

W . Edwards Deming


5/35


Jagdish N Sheth and Atul Parvatiyar have defined Customer

Relationship Management (CRM) as :

CRM is a comprehensive strategy and process of acquiring,

retaining and partnering with selective customers to create

superior value for the company and the customer.


6/35


It is a process or methodology used to learn more about

customers' needs and behaviors in order to develop stronger

relationships with them.

It is a process that will help bring together lots of pieces of

information about customers, sales, marketing effectiveness,

responsiveness and market trends.


7/35


CRM deals with long term mutually beneficial relationship among consumers,companies and other stake holder.

It is a well defined series of functions, skills, processes and technologies whichtogether will allow companies to more profitable manage customer as Tangibleassets.

CRM is a new technology enabled way to do business that revives a simple, oldfashioned notice; keep pleasing customers and they will keep coming back.

CRM technology can be summed up in the following four simple steps:

1. Customer identification through referrals;

2. Customer relationship development

3. Customer satisfaction through cross selling

4. Customer retention and increasing their loyalty


8/35


It is a process or methodology used to learn more about

customers' needs and behaviors in order to develop stronger

relationships with them.

It is a process that will help bring together lots of pieces of

information about customers, sales, marketing effectiveness,

responsiveness and market trends.


9/35

CRM Stands For Relationship marketing is a means for attracting, developing andretaining customers to build strong customer loyalty.

CRM- a strategic imperative helps serve customers unspokenneeds

B2C Space

CRM means keeping pace with a savvy and increasingly impatient

consumer base that is closer than ever to finding your maincompetitor and more willing than ever to share their bad experienceswith your prospects


10/35

4Cs ofCRM4Cs ofCRM

CONNECT

COMBINE

COGNIZE

CORRELATE

The insight gainedthrough capture andanalysis of detailed

information is to createcontinuous learning

(customers, production,channels, market,

competition from thedata warehouse

The application ofinsight to create relevant

interaction orcommunication withconsumer channels,

suppliers and partnersthat build value

relationships

Series of transactionand interaction that

make a dialoguebetween customer

channel/end user andorganization

Mapping andmanagement of

interaction pointsbetween a

customer/channels/end user and an

organization


11/35

KEY CRM PRINCIPLESKEY CRM PRINCIPLES


12/35

Principles of Relationship Marketing

INTENTION

INTERACTION INTEGRATION

INFORMATION INVESTMENTS INDIVIDUALITY


13/35

Key Principles ofCRM

MostMost ofof thethe customercustomer relationshiprelationship programsprograms areare developeddeveloped ononthethe basisbasis ofof certaincertain principles,principles, whichwhich enunciateenunciate thatthat itit isis necessarynecessary forfororganizationsorganizations toto maintainmaintain mutuallymutually beneficialbeneficial relationshipsrelationships withwith theirtheir

customerscustomers forfor thethe longlong--termterm benefitsbenefits ofof bothboth.. TheThe basicbasic underlyingunderlyingprinciplesprinciples areare::

11.. PrinciplePrinciple ofof CustomerCustomer lifelife--timetime valuevalue

22.. PrinciplePrinciple ofof 'Customer'Customer satisfaction'satisfaction'

33.. PrinciplePrinciple ofof 'Customer'Customer loyalty'loyalty'

44.. PrinciplePrinciple ofof 'Share'Share ofof customer'customer'

55.. PrinciplePrinciple ofof 'Cross'Cross--sellingselling andand upup--selling'selling'

6. Principle of 'Customer profitability'6. Principle of 'Customer profitability'


14/35

Principle of 'Customer Life-time Value

This principle states that the value of the entire stream of purchasesthat the customer would make over a lifetime of patronage is far

higher than the value of a single sale.

In view of this fact organizations should seek to establish good

relationships with the customers for conducting repeated business withthem


15/35

Principle of 'Customer Satisfaction

Customer satisfaction is defined as the extent to which a product's

actual performance matches a buyer's expectations.

A customer might experience various degrees of satisfaction. If the

product's performance falls short of expectations, the customer is

dissatisfied.


16/35

Principle of 'Customer Loyalty

This principle states that highly satisfied customers produce several

benefits to the company.

They are less price sensitive, spread good word-of- mouth and

remain loyal to the company's products and services for a longerperiod.


17/35

Principle of 'Share of Customer

This principle means that if any company goes beyond the idea ofattracting and retaining good customers, it can capture a greater share

of the customer's purchasing in their product/service categories,

either by becoming the sole supplier of the products, the customer is

currently buying or by motivating the customer to purchase

additional company products.


18/35

Principle of 'Cross-Selling and Up-Selling

Cross-selling means getting more business from the current customeof one product or service by selling them the additional offerings.

Encouraging a customer to purchase products that are higher in valu

and more profitable is treated as up selling


19/35

Principle of 'Customer Profitability

This principle states that while implementing a relationship programit is not wise to maintain similar relationships of high value with all

the customers.

The principle advocates attracting, keeping and maintaining

profitable customers.


20/35

The 10 Principles ofCRM

1.1. ValueValue segmentationsegmentation::

BasedBased onon thethe customercustomer needs,needs, preferences, preferences, behaviors behaviors andand economiceconomic potential, potential, whichwhichprovidesprovides thethe basisbasis forfor resourceresource allocationallocation decisiondecision inin marketing,marketing, salessales andand serviceservice..

22.. CollaborationCollaboration::TheThe customercustomer isis involvedinvolved inin thethe specification,specification, designdesign and/orand/or deliverydelivery ofof aa descrieddescried resultresult..

33.. InstitutionalInstitutional MemoryMemory::

WhenWhen aa customercustomer interactsinteracts withwith youryour company,company, everyoneeveryone isis thethe enterpriseenterprise isis awareaware ofof priorpriorinteractions,interactions, outstandingoutstanding issuesissues andand pendingpending opportunitiesopportunities..

44.. TouchTouch--pointpoint AlignmentAlignment::CustomersCustomers areare ableable toto dodo businessbusiness withwith youyou throughthrough multiplemultiple channelschannels whichwhich areare alignedaligned totocustomercustomer needneed andand valuevalue..

5. Real-time information management:

EmployeesEmployees havehave realreal--timetime accessaccess toto thethe rightright informationinformation inin orderorder toto makemake customercustomer basedbaseddecisionsdecisions andand resolveresolve issueissue immediatelyimmediately


21/35

66.. Closed-loop processes:

Integrated front and back office systems, logical conclusions, closing the customer loopand enabling continuous knowledge capture.

7 Customer scorecard:Employee performance requirements and measures are designed drive specific customerbehavior.

8. Listening posts:

Forums to facilitate information sharing and learning about your customers that helpsyou to do business with them learn from each other and provide valuable customer input

to your business.

9. One and done:

Solving customer needs first time.

10. Total experience management:

Mapping all of the touch-points between you and your customers and attempting to

deliver a consistent quality experience as perceived by the customer.

The 10 Principles ofCRMcontd..


22/35

Evolution of CRM practiceEvolution of CRM practice


23/35

Evolution ofCRM

The genesis of CRM (Customer Relationship Management) lies in Sales Force

Automation (SFA) tools.

Companies like Siebel and Vantive (now part of PeopleSoft) took the early lead by

introducing tools to help the sales personnel become more efficient in tracking theircustomers. There were also a few problem-tracking tools for help desk such as

Remedy.

Companies focused more on customer relationships, additional applications

emerged in areas of customer support, field support, and marketing automation.

There are currently over 200 CRM software vendors and the number continues to

grow. Companies are trying to manage relationships with their customers, partners, and

suppliers in a personalized and automated manner.


24/35

Evolution ofCRM


25/35

Relevance of CRM for todays businessRelevance of CRM for todays business


26/35

Relevance ofCRMRelevance ofCRM

Enables the companies to quantify their return.Enables the companies to quantify their return.

Helps retailers to understand the lifetime value of a customer.Helps retailers to understand the lifetime value of a customer.

Ability to capture, use and manage customer information.Ability to capture, use and manage customer information. Reducing costs.Reducing costs.

Improving efficiencyImproving efficiency

Increase customer revenues

Discover new customers Cross sell/Up Sell products effectively

Help sales staff close deals faster

Simplify marketing and sales processes


27/35

Improved customer retentionImproved customer retention

Greater retention results in a larger future customer baseGreater retention results in a larger future customer base

Purchase amount increases over timePurchase amount increases over time

Average of 8%/year in the insurance industryAverage of 8%/year in the insurance industryReduction in costsReduction in costs

Order processingOrder processing

ShortShort--term acquisition coststerm acquisition costs

Customer referralsCustomer referrals

22--way communicationsway communications Improves customer satisfactionImproves customer satisfaction

Impact on the grey marketsImpact on the grey markets

Often harmful to profitsOften harmful to profits

Frequently used to level inventoriesFrequently used to level inventories

Relevance ofCRM.contd.Relevance ofCRM.contd.


28/35

Current status of CRM in Indian BusinessCurrent status of CRM in Indian Business


29/35

The Current Status ofCRM of Market in

India Across the world industries like insurance, pharmaceuticals, real estate and evenoffbeat ones like the advertising field are fast learning the fact that CRM can belucrative.

CRM spending is estimated to increase to an astounding $17.7 billion in 2006.

The annual rate of growth in the CRM industry is 6.7 percent.

Revenue from hosted CRM solutions alone is expected to reach an all time high of$2.8 billion.

However the perpetual license model has evidenced a sharp decline hitting almost$ 2 billion resulting in a decline of 18%.

In 2005, IT-spend ranged from $16,500 for two to 19 employee companies to$821,000 for mid-market enterprises with 500 to 1,000 employees.


30/35

The Current Status ofCRM of Market in

India.cont..CRM Market Growth

The pace of CRM Software New License Revenues Worldwide has slowed fromthe frenzied spending pace of 2001, when $3.74 billion was spent in comparison to $3.03billion this year, revealing that companies are now taking a more thoughtful and planned

approach.

CRM Vendor Trends

"..The 17 leading SMB (CRM Vendor) companies all declared they were doingmore implementations now than the previous years, with eight of them handling at least 60percent of customer implementations Of the winning enterprise vendors all but one does70 percent or more of its implementations in house He notes that CRM implementation byvendors is a trend that he predicts will eventually reach 90 percent..".

Small Business CRM Growth

The CRM market for small and midsize businesses is projected to grow at nearlythree times the pace of the overall market. This represents a 17.2 percent compounded annualgrowth rate between now and 2008, compared to 6.5 percent for the entire CRM industry.That growth will see SMB share of CRM business expand from less than 17 percent in 2005,to more than 27 percent in 2010.


31/35

Software Solution for CRMSoftware Solution for CRM


32/35

There is a need to integrate cross functional activity in an organization to provide

technology driven effective CRM solution.

There is a need to look at which data model and data structures will be needed in

providing an effective and efficient e-CRM solution.

To make the technology driven CRM to be most effective, use the most talented

employees, the best expert, opinion makers, influencers and change agents. The

CRM implementation must make attractive for all concerned to participate.

Business Intelligence and Analytical capabilities:

Information needs to be leveraged and analyzed by decision makers so that they can

make more informed and timely business divisions. An optional business intelligence

solution should work across CRM and ERP system so that organizations can directly

tie their profit making activities to cost.

Software solutions forCRM:


33/35

Unified channels of customer interaction:

Integrating the functional components of a CRM solution is just as important as integrating these

components across multiple channels.

Whether a customer interacts with an organization via the web, with a sales person carrying an SFA

application on her laptop, or with a call center agent, the interaction with the customer needs to be

seamless, consistent and efficient.

Support for web-based functionality :

Web based functionality is essential for applications such as web self survive and unassisted sales.

Although the web is critical as a channel for e-Business, the web is also important from an

infrastructure perspective.

The cost savings associated with deploying web or internet based applications can also be significant.


34/35

Centralized Repository for customer information:

CRM solutions should work from a centralized repository so that current customer

information is available in real time to all customer facing employees.

A centralized repository of customer information also provides date consistency

across business functions and functional applications.

Integrated workflow

Workflow refers to the automatic routing (i.e. not requiring human intervention)

of documents and work items to the users responsible for executing specific steps in a

discrete business process.

CRM solutions should have a strong workflow engine to ensure that cross functional

tasks can be accomplished as dynamically and seamlessly as possible


35/35

Integration with ERP applications :

CRM applications cannot live in a vacuum.

They need to integrate seamlessly with ERP applications such as

finance, manufacturing, inventory, distribution, logistics and human

resources to be truly effective (i.e.) provide a closed loop customer

interaction cycle)

Documents

unit-2 marketing new