Background

• Customer Relationship Management is as old a concept

as marketing itself
• Both B2B and B2C have always made attempts
to encourage repeat buying from regular and frequent
customers
• As markets worldwide become highly competitive,
companies are desperately looking for ways and means
to differentiate their offerings from those of their
competitors
• ‘Customer Relationship Management’ seems to have
emerged as a strategic management tool which is
being adopted by most companies to retain customers
CRM-Flowchart
 Introduction: CRM
• CRM is about attracting, maintaining and
enhancing customer relationships
• It focuses on the “lifetime value” of the
customer instead of a single transaction
• It is about enabling the brand to use hard data
to understand and guide the relationship that
exists between the brand and its customers-
both present and future
 Definition
Dr Philip Kotler has defined Customer
Relationship Management (CRM) as “the
overall process of building and maintaining
profitable customer relationships by delivering
superior customer value and satisfaction.”
 CRM: A strategic tool
• Once a sale is made, companies should not sit
back and lose the opportunity of converting a
customer into a “customer for life”
• E g - A company representative may call a
customer a month before the warranty period is
over and offer to rectify any problems that may
have cropped up
• This is an opportunity not only to remind the
customer that you care but also to create
referrals, repurchase or sell a related product/
service
 CRM: A strategic tool
• It moves beyond customer satisfaction to
“customer delight”
• E g- If a travel agency were able to offer a family
a holiday to the right place , at the right time at
the right price
• If they could arrange for an extra bed for the 5-
year old without being asked and even get a pizza
delivered at the doorstep when the family returns
from the holiday, too tired to cook
• In the process it would ensure not only a lifelong
customer but also a loyal ambassador- WOM
 Need & Importance of CRM
• Consumers today demand a continually expanding
range of options, models, types, sizes, colours-
customization
• Technology and process innovation has enabled
them to create, develop and maintain stronger
relationships with each of their customers and
deliver greater value to them- personalization
• Price is used tactically to help secure short-term
advantage amid chaotic competition in the market
place
• Marketers therefore, are increasingly thinking less
and less about markets and more and more about
customers
 11 Cs of CRM
1. Customer:

• The Company should identify its best, average

and worst customers and ensure that each
receives appropriate value

• Objectives and strategies should be

formulated for each customer.
 11 Cs of CRM
2. Categories:
• The scope of product and service offerings for
each customer should be defined
• Companies can decide to sell only what they
make
• or what their customers think appropriate to
buy from them.
 11 Cs of CRM
3. Capabilities:
• The range of capabilities that will exist in
a company, like process, technology, people
and knowledge/ insight, need to be planned
• These would be needed to identify the best
customers, see how they are doing, predict
what they will buy next, etc.
 11 Cs of CRM
4. Cost, Profitability and Value:
• Customer profitability , customer costs and
customer value perceptions need to be
focused on

• A company may sell a product even at a loss to

better the overall relationship.
 11 Cs of CRM
5. Control of Contact to Cash Process:
• Time should be made one of the key metrics
in the company

• The time taken to go to market, to get an order,

to get a product to a customer on receipt of an
order, etc.

• Speed and efficiency- the key

 11 Cs of CRM
6. Collaboration and Integration:
• A customer’s technology, people and process
should be integrated with the company’s to
implement CRM successfully

• Refers to B2B customer situations rather than

B2C
 11 Cs of CRM
7. Customization:
• Individual customers should be engaged and
the value that they want should be provided
to them

• Viability and strategy will be the key

considerations
 11 Cs of CRM
8. Communications, Interaction and Positioning:
• Two-way communications should be tailored
to the customer
• Communication is the most important aspect
of marketing
• Communication need not be creative
• It needs to be relevant to the context
of each customer
 11 Cs of CRM
9. Customer Measurements:
• Time for each aspect of customer engagement
(inquiry, order fulfilment , cash remittance,
etc.)should be measured
• The profitability of each customer should be
tracked, and the best, average and worst
customers identified
• Then decide who to invest in, who to reward,
who to discard, etc and year-to-year
comparisons made.
 11 Cs of CRM
10. Customer Care:
• A customer care philosophy should be
developed throughout the organization, which
dispels the notion that customer service
is “only after-sale”
 11 Cs of CRM
11. Chain of Relationships:
• A company should ensure that employee
relationships align with customer relationships

• The organisation culture should be customer

centric
 Models of CRM: A-CLASS Model
• The Customer Relationship Cycle Model
• This model is also known as the A-CLASS Model,
consists of the following sequence of steps-
Analyze, Connect, Learn, Act, Sell and Satisfy
• Analyze: The cycle begins with an analysis of the
brand (what category it competes in, what value
it delivers, etc.), and the demographics,
psychographics as well as the specifics about
individual customers
 Models of CRM: A-CLASS Model
• Connect:
• This includes building a database
by systematically collecting or buying in-
formation about consumers of one’s brand
• And competing brands in the same category ,
from advertising, inquiries, sales outlets, etc.
 Models of CRM: A-CLASS Model
• Learn:
• The cycle continues with continually revising
and refining the demographic and
psychographic information database and
identifying trends, patterns, buying cycles etc
• Creating customer profiles and mapping the
lifetime value of different customers
• This information is then used to prioritize the
value of every customer and decide how much
can be invested in each one of them
 Models of CRM: A-CLASS Model
• Act:
• Once the present and potential customers
have been identified , something has
to be done to make them feel special and
valued
• This will form the beginning of a long-lasting
relationship
 Models of CRM: A-CLASS Model
• Sell:
• This becomes easy once everything else is in
place

• Companies can actually increase the value

to customers by cross-selling & up-selling
 Models of CRM: A-CLASS Model
• Satisfy:
• Companies must use the opportunity to
convert a one-time customer into a customer-
for-life

• By actively seeking to delight , not just satisfy,

the customer after the sale has been made
 Models of CRM-The RFM Model
• The RFM model ranks customers on three
attributes- Recency , Frequency and Monetary
Value of purchase
• It involves tracking customer records so that
customers who had bought the most recently,
most frequently and spent the most money
• They are labelled as the “best”, while those at the
bottom of the list are labelled as the “worst”
• RFM techniques help in calculating the LTV
(Lifetime Value) of customers
 Models of CRM-The RFM Model
• High RFM customers represent future business
potential, because the customers are willing
and interested in doing business with a company,
and have a high LTV
• These are the customers the company needs
to focus on to build close relationships
• Low RFM customers represent
dwindling business opportunity, a low LTV
• The company needs to take a decision on these
customers – develop or dump
 Models of CRM- The KAM approach
• KAM is an approach to business development,
based on an understanding of the strategic value
of Key Account Management (KAM)
• This approach is particularly useful in the B2B
markets
• The emphasis is placed on the profit earned
through account retention and development
• Placing emphasis on “account lifetime value”
• The approach has emerged as a leading
management approach in recent years
 Five broad types of CRM programs
1. Broad-based CRM programs are the most
basic form of CRM
• This program targets all types of customers-
existing and new
• Advertising is required for a leveraging activity
• Promotion may also be used to update
customers and expect response
 Five broad types of CRM programs

2. A Limited CRM program is a restricted version

of the broad-based program

3. Market-focused CRM programs allows the

firm to target specific types of consumers
• This may involve targeting new segments by
selectively promoting the CRM program
• Market-focused programs can be capped or
uncapped- driven by costs
 Five broad types of CRM programs

4.Replacement CRM programs allow firms to

replace

• These can be aimed at new or existing

customers, but are usually targeted at all
types of customers.
 Five broad types of CRM programs

5. Multi-phase CRM programs require that

consumers purchase a good and then
undertake a secondary activity
• They can be aimed at either new or existing
consumers and can be unlimited or capped in
nature
• They require advertising and sales promotion
to facilitate the secondary behaviour
 CRM in India
• The concept of Customer Relationship Management
took time taking root in India due to the
underdeveloped nature of the Indian markets
• India has traditionally been a seller’s market
• So mass production and a good distribution network
were sufficient till the 90s- liberalisation policies
dynamically altered the market structure
• The current scenario is characterized by an increased
competition among firms many of them being MNCs
• Today the customers are cash rich and choice rich
 CRM in India
• Volumes in the premium segment are limited and product
offerings are sophisticated, technologically advanced, and
almost of the same quality
• So, it is the company’s attitude toward the customer that
will ultimately tilt the balance in its favour
• Indian companies have taken to CRM in some form or
another
• Majority of these are in the services sector
• The hotel industry has traditionally been following CRM
• Banking services and the retail sector are other industries
leading in the practice
• Some consumer durable/ electronics marketers in the
premium segment are also taking to this tool to retain their
existing customer base
• Costs still remain a very important consideration
 Some Indian Cos to study on CRM
• MUL
• TCS
• Infosys
• Eureka Forbes
• Shoppers Stop
• Kotak Mahindra Bank
• Taj Group