RELATIONSHIP MARKETING: MEANING & SCOPE
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RELATIONSHIP MARKETING: MEANING & SCOPE
MEANING
Is a philosophy or theory of the way of doing business by building relationships – Internally and Externally.
Relationship with three primary Stakeholders – Shareholders, Employees and Customers.
It is about understanding the relationship framework in totality (why, what and how) in order to define the organizational goals and objectives.
EVOLUTION OF RM1960s – Direct Mail1970s – Direct Response Marketing /
AdvertisingLate ’70s – Direct Marketing1980s – Database MarketingLate ’80s – One-to-one Marketing1990s – Loyalty MarketingLate ’90s – Relationship Marketing
CHARACTERISTICSBusiness Strategy: Involves all the resources
of the organization aimed at enhancing relationship with stakeholders of the company
Two-way Relationship: Mutual benefit to all the parties involved
Pragmatic: Factual and practical. Relies on information.
One-2-one: Customised to suit individuals. No ‘one-fits-all’ strategy.
Dynamic: Need for details and scope for constant improvement.
TYPES OF CUSTOMER RELATIONSHIPSStrategic Relationship: An emotional
connection between the entities. Understanding the length, depth and width of relationships. A long-term relationship. Ex: FMCG Buying, Bank Accounts.
Tactical Relationship: Based on mutual convenience. Committed for a single transaction. A short-term relationship. Starting point for a strategic relationship.Ex: Insurance, Travel and Tourism, Healthcare, One-time Buying.
FUNDAMENTAL CONCEPTS OF CRMCustomer Satisfaction: Delivering
products to match / exceed customer expectations. Providing higher value through enhanced benefits.
Customer Retention: Activity that retains profitable customers. Mutually beneficial. Loyalty is the ultimate point of retention.
Customer Loyalty: Continued buying. An element of emotional attachment. Satisfied customers become loyal over a period of time.
PLANNING RM STRATEGIESThe Path
Identify key areas of relationship (why)Fix realistic objectives (what)Plan the relationship route (how)
The EssentialsResources: The FeasibilitiesMedium: The ChannelCommunication: The Message
BASIC RM STRATEGIESAcquisition Strategies
Allocation of ResourcesSTP based on information availableProviding need-specific productsEffective reach - Media
Retention StrategiesThe Retention Road-map: Suspect – Prospect -
Buyer – Customer – Loyal Customer – AdvocateThe Strategies: “Activity – Status – Next Steps”
Analysis.
CRM : AN INTORDUCTION
DEFINITIONCRM is the strategic use of Information, Processes, Technology and People to manage the customer’s relationship with the company’s various operations, viz., marketing, sales, services and support, across the customer life cycle.
CRM CONCEPTSCustomer Life Cycle (CLC): CLC is the total time
that the customer is engaged with the company derived from the customer’s experience and viewpoint.
Customer Asset: Customers as company’s assets. Loyal customers earn long-tern revenues.
Customer Value: Differentiating valuable customers from the rest. High-value customers generate higher revenues at lesser costs.
Customer Touch Points: TPs are the means / media that is used to interact with the customers. TP interactions must be targeted to a specific customer and allow for a response through a conversation / transaction / reply / feedback etc.
UNDERSTANDING CRMCRM is a total discipline. CRM is a strategic tool.CRM reaps long term benefits.CRM is an enterprise plan.CRM works on a set of processes.CRM links to all operations that touch customers.
THE CRM HIERARCHYThe Customer Actualization Paradigm
Customer Data
Customer Information
Customer Knowledge
Customer Analytics
Cus. loyalty
COMPONENTS OF CRM
Information – The raw material that is crucial for a production process to take place.
Technology – The Machine that enables the process of manufacturing – quickly and efficiently.
Process – All the critical processes that enable production.
People – The power to convert raw material into finished product.
Customer Loyalty – The finished product.
INFORMATIONManaging information is critical for success
of businessCrucial for forecasting and strategic decision
makingCustomer information is a tangible asset that
is inventoried and managedObtained from various sources – Internal and
ExternalScattered and crude, refined with the help of
technology
TECHNOLOGYThe tools (Hardware, Software and
Networks) employed to manage the information and process that is used to deliver customer experiences.
Technology is an initiator. Helps in designing the CRM process based on information and objectives.
Technology engineers the solution. Aid implementing and managing the CRM process.
Technology Decisions: The Platform, Partners and Vendors.
PROCESS
A set of tools / steps / scheme of activities for doing something
Based on objectivesCustom designed to suit the organizational
requirementsDefines the path / route from beginning to
end
PEOPLECritical component of CRMNearest to the customersSatisfied customers come from satisfied
peopleNeed to be trained on the CRM processes –
the tools and methodology.Measurements and rewards for people
retention.
Planning a CRM Project
BasicsAfter MarketingJoint MarketingFrequency
MarketingInteractive
MarketingIndividual
MarketingCo-branding
Up SellingCross SellingAffiliate PartneringStrategic PartneringCustomizationCustomerisation
Types of CRM ProjectsOperational CRM: Integrating business
processes involving CTPs. Collaborative CRM: Involves facilitation of
collaborative partners / services for building relationship with customers.
Analytical CRM: Involves use of analytical tools and technology to analyze the data that gets converted into knowledge.
Generic CRM Framework
PEOPLE PLANNING
IDENTIFYNG REQUIREMENT RECRUITMENT AND SELECTION TEAM STRUCTURE ROLE SPECIFICATION TRAINING & DEVELOPMENT MOTIVATION, EVALUATION &
CONTROL
GENERIC CRM FRAMEWORK
- IDENTIFYING THE ISSUE / NEED - DETERMINING THE OBJECTIVE / PURPOSE
o To improve efficiency o To increase effectiveness
IT PLANNING
Identifying IT requirements Understanding CTPs Modifying the CTPs Evaluating the CTPs
DATA PLANNING
- Understanding the legacy data systems - Integrating the customer data across the
operational and functional channels - Evaluating the customer data
requirements.
CRM EVALUATION - EVALUATING ACTUAL AGAINST PLANNED - METRICS FOR MEASURING CRM PERFORMANCE
o PROFITS o ROI o SALES o CSI: CUSTOMER SATISFACTION INDEX
Purpose / Objectives Improve Marketing Productivity: Increase
marketing efficiency through reducing distribution costs, streamlining order processing and inventory management, reducing acquisition costs and through retaining customer; enhance marketing effectiveness through segmenting, targeting and positioning, personalizing and customizing, partnering to enter new markets and develop new products.
Enhance Mutual Benefits: Personalize the offerings, anticipate and serve the emerging needs of the customers, Carving a niche and enjoying the advantage of competitive differentials.
Customer Loyalty: Building relationship, being committed, satisfy the expectations, listening to customers, fine tune service processes, partnering and building customer loyalty.
Programs – Based on PurposeContinuity Marketing
B2C Markets: After-marketing in the form of after sales relationship building efforts; Loyalty Programs in the form of special treatments given to privileged customers; and cross selling
B2B Markets: Special sourcing arrangements, preferred customer programs, JIT arrangements.
Programs – Based on PurposeOne-to-one Marketing / Individual Marketing
or Account based Marketing B2C Markets: Permission marketing via direct
marketing methods, and personalization B2B Markets: Key account Management,
Global account management programs.
Programs – Based on PurposePartnering / Co-marketing
B2C Markets: Affinity Partnering for mutual benefits using endorsement strategies or co-branding, by creating a new brand to target a new segment.
B2B Markets: Co-designing, strategic partnership and co-marketing for improved efficiency and mutual benefits.
CRM Planning - PeopleIdentifying the right employeesTeam structure – the number of members in a
team and the number of teams per project needs to be decided.
Management by partnership or individual management also needs to be decided.
Decisions regarding role specification with respect to who plays what role in CRM management.
Training employees on building effective customer interactions, handling complaints, motivating them through right incentives and planning a provision for all these
Monitoring process performance will safeguard against failure and give roadmap for further improvements.
CRM Planning - ITIdentifying the IT requirements: IT
requirements in the form of software, hardware, network, technology enable d CTPs
Understanding IT based CTPs like internet, mobile, telephone etc.
Modifying CTPs for improved performance, by enabling efficient technology systems
Evaluating the CTPs using metrics
CRM Planning- DataUnderstanding the legacy data systems, that
are there within the organisation.Integrating the data across the functional
and operational channels to get a 360 degree view of the customers
Evaluating the data to identify the requirements for CRM.
CRM – Performance EvaluationDefining metrics for performance evaluation
– the balanced scorecard method.To evaluate if programs adhere to
expectationsTo take corrective actions in terms of
modifying existing processes or to develop new processes
Building a relationship model and developing a performance metric confirming the objectives set.
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