Crm ppt final (1)

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CUSTOMER RELATIONSHIP MARKETINGSubmitted To Submitted By -Dr. Smriti Sood Ravneet Kaur Swati Sharma Vikas Dhiman Vishal Vivek

What is CRM?

Customer Relationship MarketingCustomer Relationship Marketing (CRM) is a business process in which client relationships, customer loyalty and brand value are built through marketing strategies and activities. CRM allows businesses to develop long-term relationships with established and new customers while helping streamline corporate performance. CRM incorporates commercial and client-specific strategies via employee training, marketing planning, relationship building and advertising.

Some Definitions:Relationship Marketing is attracting, maintaining and in multi-service organisations enhancing customer relationships. (Berry, 1983)Relationship marketing is marketing seen as relationships, networks and interaction. (Gummesson, 1984)Relationship Marketing is the process whereby both parties the buyer and provider establish an effective, efficient, enjoyable, enthusiastic and ethical relationship: one that is personally, professionally and profitably rewarding to both parties.(Porter, 1993) Relationship Marketing refers to all marketing activities directed to establishing, developing, and maintaining successful relational exchanges.(Morgan and Hunt, 1994)

Evolution of Customers Relationship MarketingPeriod Focus area1950sCustomer Good Marketing 1960sIndustrial Goods Marketing 1970sMarketing of Non-Profit Organization or Societal Marketing 1980sServices Marketing 1990sCustomers Relations Marketing

Transaction Marketing Vs. Relationship MarketingIn 1990s the concept of Relationship Marketing has emerged strongly and the focus has been changed from Transaction Marketing to Relationship Marketing as shown below:

Transaction marketingRelationship marketingFocus on Single saleFocus on customers retentionOrientation on product featuresOrientation on product benefitsLittle emphasis on Customers ServiceHigh customer service emphasisLimited customer commitmentHigh customer commitment

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The Bucket Theory Of MarketingDefine and measure retention rateDistinguish the causes of customer attrition and identify those that can be managed better.Compare the lost customers lifetime value to the costs the reducing defection rate.

Relationship Management Move from a transactional model of marketing to a relationship model

Source: Christopher et al (1991)

Basis of CRMIt requires building and maintaining long term relationship between buyers and sellers.It is based on trust and commitment between the two parties.Emphasis is on retaining the customers over making sales.CRM ranks customer service as a high priority.It encourages frequent customer contact.Fosters customer commitment with the firm.Bases customer interaction on cooperation and trust.The buyers and sellers must share values, trust, mutual respect, mutual benefit, frequent communications, honest feedback, cooperation, flexibility, understanding and relationship commitment.

Goals Of Relationship Marketing

The goal of customer relationship marketing are:Customer AcquisitionCustomer SatisfactionRetention of the customersEnhancing the customer base

Since it costs five times as much to attract a new customer as it does to keep a current one satisfied, the main focus is on customer satisfaction so as to achieve customer loyalty. This is important as highly satisfied customers are:Less price sensitiveMore likely to talk favourably about productMore likely to refer product to othersRemain loyal for long

The Customer Pyramid

Platinum Tier - Companys most profitable customers, typically heavy users of the product, not overly price sensitive, willing to invest in and try new offerings, and committed customers of the firm.

Gold Tier - Profitability levels are not as high, perhaps because customers want price discounts that limit margins or are simply not as loyal. May be heavy users who minimize risk by working with multiple vendors.

Iron Tier - Essential customers that provide the volume needed to utilize the firm' capacity but their spending levels, loyalty, and profitability are not substantial enough for special treatment.

Lead Tier - Customers who are costing the firm money. They demand more attention than they are due given their spending and profitability and are sometimes problem customerscomplaining about the firm to others and tying up firm resources.

Segmenting Customers Based on Commitment And Profitability

Different Levels of Relationship MarketingBasic Marketing The salesperson sells to the final customers. This is also known as direct sales.

Reactive Marketing The sales person sells the product and encourages the customer to call for any comments or enquiries.

Accountable Marketing The sales person calls the customers to ensure whether the product is working as per satisfaction and if there is any problem in the product. Furthermore he also asks the customer for any suggestions / feedback to improve the service / product. Thus he is taking responsibility for the sale.

Proactive marketing The company works continuously with its large customers to help improve performance. This is especially seen in financial companies wherein the movement in the financial market induces the company to make changes regularly. However at the same time, these financial companies have to take care of their customers as well. Thus they take regular feedback from their large customers thereby developing their products accordingly.

Partnership Marketing The company works continuously with its large customers to improve its performance.

Relationship Marketing and the 4PsProduct -More products are customized to the customers preferences.New products are developed and designed cooperatively with suppliers and distributors.

Price The company will set a price based on the relationship with the customer and the bundle of features and services ordered by the customer.In business-to-business marketing, there is more negotiation because products are often designed for each customer.

Place (Distribution) RM favours more direct marketing to the customer, thus reducing the role of middlemen.RM favours offering alternatives to customers to choose the way they want to order, pay for, receive, install, and even repair the product.

Promotion (Communication) RM favours more individual communication and dialogue with customers.RM favours more integrated marketing communications to deliver the same promise and image to the customer.RM sets up extranets with large customers to facilitate information exchange, joint planning, ordering, and payments.

Framework For Customer Relationship Marketing

Six Types Of MarketsInternal MarketsSupplier MarketsRecruitment MarketsReferral MarketsInfluence Markets Customer Markets

Relationship Marketing Strategies Core Service :-A key strategy in relationship marketing is the design and marketing of a `core service around which a customer relationship can be established. The ideal core service is one that attracts new customers through its need meeting character, cements the business through its quality, multiple parts, and long term nature, and provides a base for the selling of additional services over time.

Customizing the Relationship :-By learning about the specific characteristics and requirements and individual customers, and then capturing these data for use as needed, service firms can more precisely tailor service to the situation at hand. This results in the customization of relationships.Service Augmentation :-Service augmentation involves building extras into the service to differentiate it from competitive offerings. For meaningful service differentiation to occur, the extras must be genuine extras- that is, not readily available from competitor that are valued by customers. When this is the case, customer loyalty is encouraged.

Relationship Pricing:-Relationship pricing mean pricing services to encourage relationships. An old marketing idea a better price for better customer forms the basis of relationship pricing, another strategy option available to service companies pursuing customer loyalty.Internal Marketing :-In an internal marketing strategy, employees are treated as internal customers who must be convinced of a company's vision and worth just as aggressively as external customers. Internal marketing is based on the idea that customers attitudes toward a company are based on their entire experience with that company, and not just their experience with the companys products. Any time a customer interacts with an employee, it affects their overall satisfaction. Therefore, customer satisfaction is deeply dependent on the performance of a company's staff.

Relationship Marketing ProgramsBy observations of the corporate practices ,there are three types of relationship marketing programsContinuity marketingOne- to One marketingPartnering programsThey take different forms depending upon whether they are meant for end-customer, distributor customers ,or business to-business customers.Marketers use a combination of one or more types of theses to build closer and mutually beneficial relationships with their customers.

PROGRAM TYPESCUSTOMER TYPESIndividual customersDistributors/ResellersInstitutional Buyers (B2B)Continuity marketingLoyalty programsContinuous ReplenishmentSpecial supply arrangementsE.g.-JITIndividual marketingData warehousing and data miningCustomer business developmentKey account management and co-developmentCo-marketing/PartneringCo-brandingCo-operative marketingJoint marketing and co-development

Various Types Of Relationship Marketing Programs

Case Study of Volkswagen India

BackgroundVolkswagen (VW) is one of the worlds leading automobile manufacturers and the largest carmaker in Europe. As Volkswagen pursues its goal of becoming the number one automaker in the world by 2018, India has become a key component of its strategy. India is currently the worlds second fastest growing car market, with shipments expected to more than double by 2018.

CRM Practice -1 Attracting Working ProfessionalsChallenge Create brand awareness among working professionals Build loyalty and aspiration Influence decision-makingSolution Establish VW-branded Company Page on LinkedIn Enable LinkedIn members to recommend their favorite VW models Use LinkedIn Recommendation Ads to extend reach

CRM Practice -1 Attracting Working ProfessionalsWhy LinkedIn? #1 Resource for career-minded professionals Precise targeting by seniority and geography ensures match with affordability criteria, dealership locationsResults 2,700 product recommendations in 30 days 2,300 new followers on VW India Company Page 960,000 viral updates about VW car models

CRM Practice -2 Made In IndiaChallenge: To foray into the small car segmentSolution: The campaign created by DDB Mudra and executed by MediaCom, clearly displayed themade in Indiafactor in the Polo which is rolling out of the Chakan plant in Pune.

CRM Practice -3 India Assistance ProgramThe services that this program will offer to their passengers will be:Travel and accommodation of the passengers in the incidence of immobilization or theft of the vehicle.Transport to destination or habitual residence with luggage and personal belongings.Towing of the vehicle to VW nearest dealer.On site repair, if possible.Dispatch of fuel; Wheel replacement.Transportation, storage and safekeeping of the vehicle.

The VW Info Service will be a part of the VW India Assistance Program which will take care of all needs and necessities for Volkswagen customers in India, coveringserviceappointments, commercial information, complaints management and concierge services. The VW Customer Club is expected to hit off by the second phase of the project.This new program from Volkwagen will cater a unique Customer Relationship Management service, which aims at offering a one-stop solution to the customers.33

CRM Practice -4 Planet VolkswagenA new digital campaign, like most of its other initiatives, it is rich in creativity and ideas. It features a rotating globe with different land masses for each of Volkswagen Indias departments.Since the brand is not very old but has caught on quickly with Indian people, many want to learn the heritage, technology and German companys background.Theres a Junior section targeted at kids who Volkswagen see as future customers.

Thepre-existing websiteis basically a simple corporate website focused on advertising & a way to locate a dealer for a test drive. But with this new portal, VW aims to takeCustomer Relationship Management (CRM)to new heights in the auto-industry where, till date, it was limited to after-sales service.Apart from basics like product & brand promotion, the new web-portal will have games, a separate section for kids (after all they do influence a buying decision!), feature drive destinations, integrate with Social networking sites like: Facebook, Twitter, YouTube. A virtual tour of the VW factory is also on the cards.34

Case Study of Sheraton Suites

What people really remember is the guest experience

Service ExcellenceService interaction key to customer loyalty Carefully selected and trained staffBrand-specific programs Building World Class BrandsStaff empowermentStrong service cultureAwards for service

Relationship marketingTailored to each guest Personable, non-intrusive attentionIts Our Pleasure programStarwood Preferred Guest program Loyalty reward point systemSocial media monitoring

Process Followed Chart the service delivery system. Identify critical service issues. Set service standards for all aspects of service delivery. Develop customer communication systems. Train employees on building and maintaining a good relationship with clients. Monitor service standards, reward staff for exceeding service levels. Each employee fully understands the importance of quality and relationships in the marketing philosophy.

Benefits of Relationship MarketingBenefits for Customers:Receipt of greater valueConfidence benefits:trustconfidence in providerreduced anxiety

Social benefits:familiaritysocial supportpersonal relationshipsSpecial treatment benefits:special dealsprice breaks

Benefits of Relationship Marketing Contd.Benefits for Firms:Economic benefits:increased revenuesreduced marketing and administrative costsregular revenue stream

Customer behavior benefits:strong word-of-mouth endorsementscustomer voluntary performancesocial benefits to other customersmentors to other customersHuman resource management benefits:easier jobs for employeessocial benefits for employeesemployee retention

Disadvantages of Relationship Marketing :

Organizational wise change of priority to customers.Significant investment of time and money Threatens managements control/power struggleHeightens peoples resistance to changeInappropriate integration leads to disaster

ConclusionsThere is potential for CRM to help firms to sustain in market as it is becoming much more competitive.Successful implementation would mean many changes to attitudes and structures.The process would almost certainly be painful.It would probably be particularly difficult to develop and install customer centric strategiesIf CRM is used must be with the backing of those at the highest level and it must be planned carefullyA process must be gone through which would take note of CRM theory and use the experiences of others to maximize the chances of success

PrecautionsDont attempt to implement CRM without adopting customer-centric strategiesDont justify CRM implementation on the hope of achieving operational efficienciesDont take shortcuts that bypass key implementation steps (such as customer satisfaction research)Dont try to avoid organisational changeDont allow changes in workflow and process without involving those affectedDont let consultants or software vendors limit the scope of your implementation to their capabilities