MIS 13 Customer Relationship Management

MANAGEMENT INFORMATION SYSTEM

Third Year Information Technology

Part 13Customer Relationship Management

Tushar B Kute,Sandip Institute of Technology and Research Centre, Nashikhttp://www.tusharkute.com

CRM

Of the people, by the people, and for the people.

THREE ERAS IN THE HISTORY OF MARKETING

Production Era “A good product will sell itself.”

Sales Era “Creative advertising and selling will overcome

consumer resistance and convince them to buy.”

Marketing Era “The consumer is king! Find a need and fill it.”

PROFITABILITY OF LONG-LIFE CUSTOMERS According to a study conducted by the

American Management Association, 65 percent of the average company’s business comes from its present, satisfied customers

Costs a company 6x’s more to sell a product to a new customer than it does to an existing one

PROFITABILITY OF LONG-LIFE CUSTOMERS A business that each day for one year

loses one customer who customarily spends $50/week would suffer a sales decline of $1,000,000 the next year

Reichheld found that companies could boost profits by 100 percent by retaining just 5 percent more of their customers.

RELATIONSHIP MARKETING

Relationship marketing involves long-term, value-added relationships developed over time with customers and suppliers.

Relationship marketing recognizes the critical importance of internal marketing to the success of external marketing plans.

RELATIONSHIP MARKETING

Morgan and Hunt (1994) proposed the following definition of relationship marketing: Relationship marketing refers to all

marketing activities directed toward establishing, developing, and maintaining successful relationship exchanges

CUSTOMER RELATIONSHIP MANAGEMENT “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.”

“A view of the customer that asserts that he or she is a valuable asset to be managed.” –S. Thomas Foster.

Deciding that “you want lifetime clients.” -Richard Buckingham.

CUSTOMER RELATIONSHIP MANAGEMENT

Bottom-line:

The use of information-enabled systems for enhancing individual customer relationships to ensure long-term customer loyalty and retention

CRM CONFIGURATION

Front office operations Meetings, phone calls, emails, online

services. Back office operations

Billing, maintenance, planning, marketing, advertising, finance, manufacturing.

Business relationships Interaction with companies and partners,

suppliers, vendors and retail outlets, distributors.

Complaint Resolution

Feedback

Guarantees

Corrective Action

FOUR TOOLS

Three types of complaints: Regulatory, Employee, Customer

Compensation Ease of Resolution

COMPLAINT RESOLUTION

Customer Data

Customer Behavior

Data-gathering

Analyzing Data

FEEDBACK

Customer Rights Guarantee Design:

Unconditional Meaningful Communicable Painless to invoke

GUARANTEES

The way a firm reacts to a problem so that the problem never reoccurs.

CORRECTIVE ACTION

CustomerRetention

Customer Relationships

Customer Referrals Recovery

BARNE’S 4 R’S

A low-cost way to increase revenue. Retention is cheaper than acquisition.

Must be voluntary.

Must lead to long-term relationships.

CUSTOMER RETENTION

Attempting to know the customer.

Commitment and Communication

“Clients should call you only once. After that, you should proactively call them.” –Richard Buckingham.

RELATIONSHIPS

Powerful tool that results from customer satisfaction or dissatisfaction.

“Referral clients are already sold, before they even call you.” –Richard Buckingham

REFERRALS

Empower employees so that they may deal with mistakes as they occur.

RECOVERY

CUSTOMER RELATIONSHIP MANAGEMENT

Time line of CRM evolutionFirst Generation (before 1990) started with such

functions like maintaining prospects data, generating leads, creating sales quotations & placing sales orders and other functions like after sales help desks, call centers etc

Second Generation (1990-1996) consolidation of various activities into pre-sales through SFA transactions and post sales through CSS. Not much of an integration with back office operations

Third Generation ( After 2002) integration of the customer facing front end systems with the back end systems as well as with partners& suppliers helped by the growth of the Internet technology.

TYPES OF CRM

1) Operational CRM automation of Business processes involving customers. e.g. Sales Force Automation, Customer service automation, Customer Touchpoints- all sources by which the customers interact with the company

2) Analytical CRM is the synthesis & interpretation of operational Data to identify opportunities, optimize customer interactions and manage business performance. e.g. Data warehousing and Data marts

3) Collaborative CRM provide interactions between customers, staff and business partners through web technologies. e.g. interactive voice technology, computer telephony and web conferencing.

CHANGES WITH RESPECT TO CUSTOMERSGrowing Customer DiversityTime ScarcityValue Consciousness & intolerance for Low Service LevelInformation AvailabilityDecrease in Loyalty

CHANGES WITH RESPECT TO MARKETPLACEGrowing Competition

CHANGES WITH RESPECT TO DATA STORAGE TECH.IT and ITES

CHANGES WITH RESPECT TO MARKETING FUNCTIONMedia Dilution & MultiplicationDecrease in Marketing Efficiency

WHY IS CRM IMPORTANT TODAY?

CRM OBJECTIVES Lifetime Value (LTV)

Refers to the net present value of the potential revenue stream for any particular customer over a number of years.

Starts with current purchase activity then extrapolates to include potential additions from cross-selling, upgrades, total ownership, etc.

Customer Ownership Attempts to “own” the lionshare of customer

spending and/or “share of mind” in a particular product category

Building brand equity, maintaining vigilant customer contact, keeping current with the market trends is critical

5% points increase in customer retention=20-125% increase in profit

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

APPROACHES TO CRM

Data driven approach. Process driven approach.

DATA DRIVEN APPROACH

It relies on the past data and information and customer intelligence for designing CRM strategies.

CustomerData

Analysis and Processing

Customerintelligence

Evolve CRM Strategies

ImplementStrategies

Evaluate and

Modify

PROCESS DRIVEN APPROACH

The CRM solution senses the behavior of the customer and act proactively to deliver the service.

Initiation Of

service

Transition to

servicePreservice Service

Post-Service

EvaluateKMS

CustomerKnowledgeDatabase

CRM-RELATED TERMS

eCRM CRM that is Web-based

ECRM Enterprise CRM

PRM Partner relationship management

cCRM Collaborative CRM

CRM-RELATED TERMS

SRM Supplier relationship management

mCRM Mobile CRM

xCRM More hybrids to com

“You can learn a lot about our motorcycle company by understanding our customers. By valuing and responding to our customers, we have become the leader in the heavyweight motorcycle market.” –Harley-Davidson website

“The customers’ first choice in casual dining.” –Chili’s Vision

QUOTES

REFERENCES

Waman Jawadekar, "Management Information Systems” , 4th Edition, Tata McGraw-Hill Publishing Company Limited.

Tushar B Kute,Sandip Institute of Technology and Research Centre, Nashikhttp://www.tusharkute.com