Chapter -I

Customer Relationship Management (CRM)

Learning Objectives

Define CRM;
Understand the importance of CRM;
Explain the determinants of CRM and the key stages in its development;
Discuss the main functions and various models of CRM;
Explain the role of salespeople as relationship developers
Discuss the management of customer relationships.
Customer Relationship Management (CRM)

What is Customer Relationship Management (CRM)?

CRM is “the development and maintenance of mutually beneficial

long-term relationships with strategically significant customers”
(Buttle, 2000)

CRM is “an IT enhanced value process, which identifies, develops,

integrates and focuses the various competencies of the firm to the
‘voice’ of the customer in order to deliver long-term superior
customer value, at a profit to well identified existing and potential
customers”.
(Plakoyiannaki and Tzokas, 2001)
Customer Relationship Management (CRM)

Understanding Customer Relationship Management (CRM)?

CRM is a business philosophy based on upon individual customers

and customised products and services supported by open lines
of communication and feedback from the participating firms that
mutually benefit both buying and selling organisations.

The buying and selling firms enter into a “learning relationship”,

with the customer being willing to collaborate with the seller and
grow as a loyal customer. In return,, the seller works to maximize
the value of the relationship for the customer’s benefit.

In short, CRM provides selling organisations with the platform

to obtain a competitive advantage by embracing customer needs
and building value-driven long-term relationships.
Customer Relationship Management (CRM)

Determinants of CRM

Trust

The willingness to rely on the ability, integrity, and motivation of

one company to serve the needs of the other company as agreed
upon implicitly and explicitly.

Value

The ability of a selling organisation to satisfy the needs of the

customer at a comparatively lower cost or higher benefit than
that offered by competitors and measured in monetary,
temporal, functional and psychological terms.
Customer Relationship Management (CRM)

Determinants of CRM

In addition to trust and value, salespeople must:

Understand customer needs and problems;

Meet their commitments;

Provide superior after sales support;

Make sure that the customer is always told the truth

(must be honest); and

Have a passionate interest in establishing and retaining a long-

term relationship (e.g., have long-term perspective).
Customer Relationship Management (CRM)

Stages in the development of a Customer Relationship

The Pre-relationship Stage
The event that triggers a buyer to seek a new business partner.

The Early Stage

Experience is accumulated between the buyer and seller although a great
degree of uncertainty and distance exists.
The Development Stage
Increased levels of transactions lead to a higher degree of commitment and
the distance is reduced to a social exchange.
The Long-term Stage
Characterised by the companies’ mutual importance to each other.

The Final Stage

The interaction between the companies becomes institutionalized.
Customer Relationship Management (CRM)

Stages in the Development of a Key-Account Relationship

High
Synergistic KAM

Partnership
Degree of
involvement Mid-KAM

Early-KAM

Low Pre-KAM

Transactional Collaborative
Nature of customer relationship
(Millman and Wilson, 1995)
 Customer Relationship Management (CRM)

A Relationship Life Cycle Model

High cooperation
Low competition Pre- Development Maturity Decline
relationship stage stage stage
stage

Low cooperation
High competition

Time
(Wilkinson and Young, 1997)
Customer Relationship Management (CRM)

Class Exercise

What should the focus and main activities of a global

salesperson be in each stage of the relationship
development process?

Why? (Please justify your answer)

Customer Relationship Management (CRM)

Functions of Customer Relationship Management

Direct functions (are the basic requirements of a company that are

necessary to survive in the competitive marketplace)
Profit;
Volume; and
Safeguard

Indirect functions (are the actions necessary to convince the

customer to participate in various marketing activities).
Innovation:
Market;
Scout: and
Access.
Customer Relationship Management (CRM)

Functions of Customer Relationship Management

Value Creation Process
Technology delivery process
•R&D
•Technology integration
Management •Efficiency, effectiveness
Decision learning
Process
Value-based
Customer sensitivity Product delivery process Strategies
•Concept to launch •Pricing
•Diversity •Manufacturing process •Communication
•Information
•Differentiated
offering Customer delivery process
•Supply chain
•Distribution
•Infomediation (distribution
of information)
(Sharma et. al., 2001)
Customer Relationship Management (CRM)

The role of salespeople as relationship builders and promoters

Salespeople by:

identifying potential customers and their needs;

approaching key decision makers in the buying firm;
negotiating and advancing dialogue and mutual trust;
coordinating the cooperation between the customers and
their company;
encouraging the inter-organisational learning process;
contributing to constructive resolution of existing conflicts; and
leading the customer relationship development team

are the individuals in any organisation who act both as relationship

builders and as relationship promoters.
Customer Relationship Management (CRM)

Models of Customer Relationship Management

The Evans and Luskin (1994) model for effective
Relationship Marketing

Relationship marketing inputs

•Understanding customer expectations
•Building service partnerships
•Empowering employees
•Total quality management
Relationship marketing outcomes
•Customer Satisfaction
•Customer loyalty
•Quality products
•Increased profitability

Assessment state
•Customer feedback
•Integration
(Evans and Luskin, 1994)
Customer Relationship Management (CRM)

Models of Customer Relationship Management

The Brock and Barcklay (1999) model of selling
partner relationship effectiveness

Independence

Mutual trust Selling partner

relationship
Cooperation
effectiveness

Relative influence
Customer Relationship Management (CRM)

Managing Customer Relationships

The global salesperson must be involved in the following activities in order to initiate,
develop and enhance the process that is aimed at building trust and commitment with the
customer.

Initiating the relationship

Engage in strategic prospecting and qualifying;
Gather and study pre-call information;
Identify buying influences;
Plan the initial sales call;
Demonstrate an understanding of the customer’s needs;
Identify opportunities to build a relationship; and
Illustrate the value of a relationship with the customer
Customer Relationship Management (CRM)

Managing Customer Relationships

The global salesperson must be involved in the following activities in order to initiate,
develop and enhance the process that is aimed at building trust and commitment with the
customer.

Developing the relationship

Select an appropriate offering;
Customise the relationship;
Link the solutions with the customer’s needs;
Discuss customer concerns;
Summarize the solution to confirm benefits; and
Secure commitment.
Customer Relationship Management (CRM)

Managing Customer Relationships

The global salesperson must be involved in the following activities in order to initiate,
develop and enhance the process that is aimed at building trust and commitment with the
customer.

Enhancing the relationship

Assess customer satisfaction;

Take action to ensure satisfaction;
Maintain open, two-way communication; and
Work to add value and enhance mutual opportunities.
 Why CRM is crucial to your organization
• CRM Boosts Overall Development: CRM on account of its acute
involvement in marketing, sales and service manages to sustain and increase
customer retention.
• Why use CRM? This undying philosophy has proven to be beneficial in overall cost
reduction, better management strategies and enhancement of sales. Mass marketing is
made possible on account of the increased focus placed on marketing functions.
• Customer relationship management tools enable an organization to work in a
competitive environment and manage to supersede competitor efforts with its
customer centric approach. It carefully studies customer attitudes and ingrains
customized approaches in the business activities.
• From Strategy to Results-CRM Vital: The primary step in CRM implementation
involves a sound business philosophy with customer satisfaction and learning at the
focal point. After this comes the actual implementation itself whereby technological.
• processes are used to convert this philosophy into results. CRM is the
bed for this launch. It enables this act and facilitates a better
understanding between the customer and the organization

• It manages to cultivate a one on one relationship with its end users.

Strengthening a relationship with long standing customers is more than
beneficial because almost 80% of profits are actually generated from
loyal customers.

• CRM ensures that the organization pays adequate attention to customer

ideas. It instills the idea that these end users- customers are highly
essential to success and focuses on the organizations need to study their
behavioral patterns.
• Why use CRM? CRM basics studies customer responses and uses it to
identify the market trends and then uses this information to advocate
marketing plans. CRM with its use of software analyzes and assimilates
customer data so as to study purchasing patterns..
• This clearly indicates to the organization what means of communication
to the customer is most effective. Irrespective of what is used CRM does
reward

• CRM Facilitates Customer Loyalty :Since CRM constantly serves to

keep a tag on what a customer is buying, these opportunities can be
utilized to encourage sales leads. Slipping in at the time of purchase with
an offer of discount on another purchase induces him to purchase further.
• CRM is basically a highly developed marketing strategy that uses the
organizations resources by delivering personal messages to a target
audience. This target audience is generally the most profitable customers.

• CRM also serves to measure the effectiveness of marketing campaigns.

Customer relationships are the back bone of an organization and are
essential to almost all departments. CRM
 manages to turn an organization image into one of warmth and
portrays a customer friendly attitude to its users.
• CRM enables organizations to deal out better customer care, one that
is more personalized. Customer relationship management seeks to
encourage better marketing effectiveness and helps in identifying
potential customers
• CRM's impact on the world has been phenomenal .Customer service
sectors are proof of this growth. As companies opt for CRM strategies,
the ones who haven't will lose the competitive edge.

• Why use CRM? CRM tends to get hold of peoples potential and uses
this to make the customer service experience of its customers much
better. Statistics state that CRM is implemented in almost 30 % of
American companies. The estimated amount that is likely to be poured
into the CRM industry is $90 million. With such staggering statistics it
is but right for those who haven't opted for it to do so.
CRM Benefits - How much do organizations stand to
gain?
• The popularity of CRM is due to its fundamental and increased focus
on customers. CRM benefits include its ability to help to ensure
excellent customer service as it is aware of customer needs and is
able to react to them effectively. It enables an organization to
anticipate and respond to its customers needs in the right way.
• It is a business strategy that applies to almost every organization;
therefore almost all organizations stand to gain from its use.
• Customers are motivated to return again and again as they receive
good customer service and continue to do business
• Since acquiring a new customer is far more costly than retaining an
existing customer more and more companies are turning to CRM as
it is able to achieve this. Companies need this in order to stay
competitive.
• Many forms of advertising are not as effective as they need to be.
CRM enables a company to target their audience more precisely
and gain customer retention, all at a lesser cost. CRM helps your
business as it lets you do more for your customer and gain more
from them.
• Since every organization needs to understand the importance of
cross-selling and since CRM does that they are able retain their
customers for longer periods
• CRM delivers company-wide access to customer information.
• Using CRM applications can lead to increases in revenue from
almost all areas.
• Reductions in operating costs is a by product of CRM
implementation.
• Simplification of marketing and sales processes is achieved in
organizations implementing CRM by their understanding of
customer needs
• Better customer service is achieved through improved
responsiveness and understanding. This builds customer loyalty
and decreases customer loss.
• CRM enables a company to build a database about its customers so
that management, salespeople etc could access information, match
customer needs with plans and offerings, render better customer
service etc.
• It enables an organization to create detailed profiles such as
customer likes/dislikes etc.
• CRM gains the trust of customers by meeting their needs in a more
personalized way
• CRM delivers personalized, informed service that customers
expect. This is because of a system that contains and provides a
complete profile of the customer, including all past and present
behavior patterns.
• A higher percentage of cross-selling is possible in companies opting for
CRM
• With globalization CRM offers companies a chance at increased customer
loyalty, higher margins and customer retention
• Companies achieve more success in attracting new customer on account
of their quicker and more efficient responses to customer leads and
customer information.
• CRM helps an organization to develop better communication channels
• CRM helps an organization to collect vital data, like customer details etc.
This data can be used for customer interaction.
• Companies opting for CRM find it easy to identify new selling
opportunities.
• The traditional systems used by Customer Service, Sales and Marketing
can now be done away with and the gaps filled with CRM implementation
•
Customer Relationship Management (CRM)

Managing Customer Relationships

(QPR)Qualifying prospects for relationship building

High
Use a non Build a strong
customized and lasting
approach relationship
Opportunities
for adding value

Seek better Focus on

opportunities loyalty-building
elsewhere program
Low
Low Potential profitability of customer High
• This relationship matrix method is based on the relationship life
cycle theory that can be used to determine what priorities should be
given in managing customer relationships. To ensure long-term
profitability and value creation, a company should focus on building a
strong and lasting relationship for continuous growth in terms of
value and profit
• It has 2 dimensions: Potential profitability of customer and
opportunities for adding value. The basic idea behind the matrix is
that the customer having highest potential profitability and which
gives the highest opportunities for adding value the better it is for the
company. 
• Placing profitability/opportunities in the matrix results in 4
approaches in the qualifying prospects for relationship building of a
company: 
• 1. Build a Strong and lasting relationship (=high profitability, high
opportunity for adding value).
• - use large amounts of cash and are leaders in the business so
they should also generate large amounts of cash.
-Opportunity for adding values is very high. If needed any attempt
  should be made to acquire or retain the customer, because the
rewards will be a very high if a relationship is maintained.
• 2. Focus on loyalty-building program (=high profitability, low
opportunity for adding value).
- Profits and cash generation should be high, and because of the
low potential for adding values and growth, investments would be
done                     
• 3. Use a non customized approach (= low profitability, High
opportunity for adding value).
 - have the worst relationship characteristics of all, because low
potential profitability and high opportunity for adding values.   
• --avoid and minimize the number of such relationships with a
company.
• 4. Seek better opportunities elsewhere. (=low growth, low market
share).
- beware of any new plans for value building.
- Efforts should be made to get out of the relationship as these
companies will simply absorb great amounts of time and effort.

• Some limitations of the Relationship Matrix include:

• 1.      It all depends on the potential profitability with/without
considering the dynamic nature of market/client.
• 2.      Sometime the value received from low profitability customers
are more than High profitability customer. The values in the form
of experience and knowledge transfer.
• The QPR (qualifying prospects relationship building) matrix –
This graph describes the qualifying prospects for relationship
building depending upon the opportunities for adding value and
potential profitability of customer from the relationship.
Customer Relationship Management (CRM)

Relationship networks

The ultimate outcome of a successful CRM strategy is the creation

of a unique company asset known as a relationship network.

A relationship network consists of the company and its major

customers with whom the company has established long and
enduring business relationships.

The additional aspects of a global salesperson’s job are to:

Manage customer value;

Act as customer advocate; and
Enhance customer loyalty and build a “health” and
profitable network of relationships.
Customer Relationship Management (CRM)

Summary

CRM is a new business philosophy based on trust and value;

The core function of CRM is the value creation process;

Customer relationships develop over time;

The role of global salespeople in the process is that of both

relationship builders and relationship promoters; and

The basic premise of CRM is to offer superior value to

customers in an effort to turn prospects into
customers, customers into loyal customers, and
loyal customers into partners.
 Building Effective CRM Capabilities
12 steps that companies must ensure to build effective CRM

capabilities .
1. Clearly define vision and develop actionable strategies regarding
customer relationships
• It is imperative to have a clear vision about what kind of a relationship
structure a company wants to build with its customers and what actionable
strategies would yield that structure. For example, if a bank wants to build
a very personal relationship with customers an actionable strategy would
be to enable them to have 24-hour access to bank personnel, which could
be executed by increasing branch banking hours or providing 24-hour
access to a call center. Having a noble, but vague vision like we are going
to be perceived as the customer-friendly bank does not lead to actionable
strategies. It is critical to determine both the vision and actionable
strategies before investing in any CRM infrastructure.
 2. Gain consensus in the company regarding CRM.
• It is quite common to find within companies that departmental or
business unit goals do not align with overall corporate goals. It is
imperative that management agrees on a common customer vision and
strategies, and review department and business unit strategies to
ensure everyone is working towards a common goal. This alignment
is critical to orient the functioning of all departments and business
units toward the goals of increasing customer retention, loyalty, and
profitability.

3. Establish measurable business goals.

• Companies cannot ascertain the effectiveness of CRM projects unless
they put measurable goals in place. Examples of metrics for CRM
projects are customer churn rate, average revenue per customer, and
customer profitability. A recent study of insurance companies, banks,
and other financial institutions revealed that
 60 per cent of respondents did not have a way to measure whether
a CRM project was delivering a return, and 50 percent were unable
to determine whether customer churn had increased or decreased
after implementing CRM.

• 4. Get top executive support up front.

Once an organization sets a common vision and actionable
customer strategies, achieves enterprise wide alignment, and
establishes metrics, it is ready to implement a CRM solution.
However, before embarking on an implementation project, it is
essential that top executives of the company are squarely behind
the project and send a clear signal to the enterprise that the project
is a key element of the company's overall business strategy. They
also need to emphasize that this initiative will benefit each and
every customer, employee, and shareholder.
 5. Get end user buy-in up front and maintain it.
Implementing a CRM initiative without buy-in across all facets of the
enterprise is almost always a recipe for failure. The more people
involved, the better the acceptance of the initiative and the higher the
chances for success. And although obtaining an executive mandate is
essential for success, creating a top-down push strategy without buy-in
from end users often does more harm than good.

6. Actively involve end users in solution design.

Active participation of end users n designing the CRM solution is a must.
It is the end users who ultimately will have ownership of the solution and
will determine its success or failure. Active participation by end users in
the solution design will minimize the risk of non-use or inadequate use of
the solution which is the fate suffered by many solutions.
• 7. Let business goals drive functionality of the solution.
Clearly define functionality requirements based on business need.
It is important to remember that the solution is intended to provide
business benefits and is not an exercise in technological prowess.
A careful and effective balance has to be struck between technical
efficiency and business requirements. This can be done through
cost-benefit analyses.

8. Designate a consensus building project manager for

implementation.
One critical tactical element that is often overlooked during a CRM
solution implementation is the need for an overall project manager
who can effectively serve as a bridge among the various end-user
groups and the implementation team. Territorial disputes and
control issues among the various end-user groups and the
implementation team can be the greatest
impediment to progress of the project. An effective project manager
must have credibility with the user groups and the implementation
team, and be able to mediate and build consensus on areas of potential
conflict.

9. Invest in training and communication plans to enable and

empower end users.
Many CRM initiatives are doomed from the beginning due to
inattention to two relatively inexpensive yet critical elements of
success: training and communication plans. It has been seen that
while companies spend large sums on technology and process
alignments, they are reluctant to allocate a small fraction of those
sums to train end users on the solution and have a communication
plan in place to keep everyone abreast of updates, modifications,
success stories, glitches, etc.
10. Use a phased approach to building CRM capabilities .
While it is important for a company to have a grand vision of its
CRM capabilities, it is critical to keep in mind that that vision
probably has to be attained through a series of incremental steps.
Reaching for too much almost always sets up the initiative for
failure. A company needs to determine the sequence of
incremental steps it can take given its business priorities, budget
constraints, and organizational environment and get to the
eventual goal by demonstrating value at each step.
11. Continuously measure and track results.
Once the CRM capabilities are in place, it is essential to
continuously measure the results and track them against
benchmarks and targets set for the metrics. The project leader and
team must put in place measuring and tracking mechanisms to
enable course corrections and making of more precise decisions
12. CRM is a never-ending journey--don't look for a
final destination.
CRM is not a discrete project; it is a business
philosophy aimed at achieving customer centricity for
the company. The mode of execution of this
philosophy will change and evolve as customer
needs, preferences, and values change. The
implementation of CRM capabilities does not stop
once the logic is understood and the concepts are
rolled out to the company. CRM is a mindset that
every employee must embrace and practice, every
day
• The CRM process is the most influential customer oriented
strategy of the decade. Despite its humble origins it has
evolved into a relatively complex strategy. The essentials of a
CRM program include focus,
• The commitment to CRM goals and above all a desire to be
customer focused. Here's how the CRM process actually
works in an organization.

A look at the steps in the CRM process

• Establishing CRM goals
• Educating other departments
• Assembling customer information
• Designing the data model
• Vendor study
• Selecting the CRM solution
• Establishing authority & responsibility
• Pilot projects
• Communication with customers through direct mail ,
electronic ```mail etc
• Customer surveys
• Customer satisfaction program
• Collection of customer information
• Provision of customer information to employees
• Usage of customer information in the business activities
• Feedback
• Analyze
• Documenting a new process
• Implementing final methodology
CRM Implementation - the Right Way!
• What do firms need to do to get the most out of their CRM
implementation? Here's a look
• at what can be done to get the utmost out of your CRM choice.
Implementing these Steps can Ensure that Success follows:
• CRM should be implemented right across all business units.
The CRM process should bring together employees, suppliers,
customers, partners etc.
• It is important to cooperate in order to retain customers and
increase customer loyalty. Employees, leaders, customers, etc.
need to work together in addressing key issues.
• A customer information file is absolutely essential as it
indicates various relationships. Organizations need to put
down and keep it safely.
• There should be no barriers to the flow of information
• Firms must implement new business processes that support the
CRM choice.
• Firms need to put customers first. A common ground with
customers should be identified. Organizations should identify
anything that affects the customer negatively
• A company should build a cross-functional cooperation across
your company. To do that it needs to increase the number of
people involved in the CRM process.
• In the adopted strategy CRM solution should address change
management
• Adequate CRM training should be provided within the
organization.
• CRM solutions need to be aligned with the business strategy.
• Technology should be integrated with core business areas
While automating business processes
• Give call centre staff customer profiles using existing data.
• An organization should Start self-service and FAQ's
• Support outbound message management within the organization
• Proper decision should be taken about the choice of CRM solution
only after appropriate information has been sought and analyzed.
• Secondly, a CRM implementation will essentially involve a
healthy contribution from functional staff. This means that care
should be taken to assign the roles of the project team and
functional staff in a manner that is not inappropriate
• CRM implementation should involve process re-engineering
• CRM implementation must never follow a stringent application
and configuration
• CRM development should be multi-tiered
• Provide scripting for call centre and telesales support service
• It is critical to understand the complexity of your CRM program
• It is important for an organization to ensure that CRM
development is executed around a structured development
business process
• It is also important to ensure that a sound development roadmap
is set forth in order to ensure things go as per schedule.
• The business-planning phase should clearly state the overall goals
of the CRM implementation
• Scoping and prioritizing CRM projects should be done:
• Here it is important to do the following:

--Understand the technologies involved in the CRM

implementation
– Learn the skills needed to implement CRM
–
 – Determine the number of staff members that will be
working on it
– Determine whether consultants will be used and if so
what the number will be
– Establish a time frame

• Implementing the above steps can go a long way in

ensuring success. CRM implementation without adequate
attention paid to the smallest details can have disastrous
results.
• The CRM systems adopted should be used in such a
manner that it gives its utmost to the organization.
CRM Failures
• CRM failures have been costly, disruptive, and embarrassing. Red
ink, shareholder losses, upset customers, lost market share,
lawsuits, and career setbacks are all typical outcomes of CRM
failures.
• The cost of CRM failure is dramatic and can take its toll in many
areas of the business. The following summarizes the typical
impacts by category:
• Financial Performance
Market share and operating losses Failure to achieve a return on
investments Budget overruns High post-implementation running
costs
• Customer Service Quality
Customer confusion, frustration, and dissatisfaction Lower service
levels Slower time to market Negative brand perception
• Sales Effectiveness
Lower sales force productivity Increased sales force cynicism
toward new systems Increased sales force turnover

• Cultural Impacts
Low morale within IT and affected departments Growing
cultural cynicism within the company toward adopting
business change Company-wide loss of confidence in its
ability to enact change Lost jobs in the executive suite
Propensity for companies to become overly conservative with
regard to investments in strategic initiatives. This leads to
dampened innovation, a failure to strengthen advantages, and
deferring the update of aging processes and infrastructure
CHAPTER -II
• CUSTOMER RELATIONSHIP MANAGEMENT From the
outside, customers interacting with a company perceive the
business as a single entity, despite interacting with a number of
employees in different roles and departments.
• CRM is a combination of policies, processes, and strategies
implemented by an organization to unify its customer interactions
and provide a means to track customer information.
• It involves the use of technology in attracting new and profitable
customers, while forming tighter bonds with existing ones.
•   Different Types of CRM Every Organizations Requirements are
unique, and require customized solutions. Typically all those
requirements can be categorized into Customer Service, Sales
Management, General Management.     
• Some Functionality of CRM
• > Contact management
• > Sales Reporting.
• > Lead management and sales management.
• > Customer data collection and analytics.
• > Customer purchase patterns and
customizations.
• > Sales campaigns and their effectiveness.
• > Calculating ROI for campaigns and
departments
• Enterprise resource planning (ERP) is an integrated computer-
based system used to manage internal and external resources
including tangible assets, financial resources, materials, and human
resources.
• It is a software architecture whose purpose is to facilitate the flow
of information between all business functions inside the
boundaries of the organization and manage the connections to
outside stakeholders.
• Built on a centralized database and normally utilizing a common
computing platform, ERP systems consolidate all business
operations into a uniform and enterprise wide system environment
• An ERP system can either reside on a centralized server or be
distributed across modular hardware and software units that
provide "services" and communicate on a LAN. The design allows
a business to assemble modules from different vendors without the
need for the placement of multiple copies of complex, expensive
computer systems in areas which will not use their full capacity
• ERP systems typically handle the Manufacturing, Logistics,
distribution, Inventory ,Shipping, Invoicing and Accounting for a
company.
• ERP software can aid in the control of many business activities,
including sales, marketing, delivery, billing, production, inventory
management Quality Management, and HRM
• ERP systems are cross-functional and enterprise-wide. All functional
departments that are involved in operations or production are
integrated in one system. In addition to areas such as manufacturing,
warehousing, logistics, and information technology, this typically
includes A/c, human resources, Marketing and Strategic
Management
• To implement ERP systems, companies often seek the help of an
ERP vendor or of third-party consulting companies. These firms
typically provide three areas of professional services: consulting;
customization; and support
CRM / ERP Integration
• The integration of CRM and ERP systems provides organizations
with an integrated approach to identifying, acquiring, and retaining
customers by enabling organizations to manage and coordinate
customer interactions across multiple channels, departments, lines
of business, and geographies.
• CRM and ERP integration helps organizations maximize the
value of every customer interaction, which leads to
improved corporate performance.

• The notion of integrating all departments and functions of an

organization on one platform and running off of one database has
traditionally been unapproachable for most organizations.  In many
organizations, each business application runs on its own
system, which is optimized for the particular business unit or
application.
• Typically, when a customer places an order, the order begins a
mostly paper-based journey from in-basket to in-basket around
the company, often being keyed and re-keyed into different
computer systems along the way. The vast amount of handling
and re-keying causes delays and lost orders, and all the keying
into different computer systems invites errors. Meanwhile,
there is a lack of visibility to the enterprise.

• Integration of the CRM and ERP platforms provide multiple

benefits and allows the organization to realize for highest ROI
on their IT investments. With automated processes such as
sales quotes, order submission, processing, and fullfilment.
With the customer account status, order history, the company
inventory levels and logistics data, you have full supply chain
visibility.
CRM and ERP Integration : Implementation Steps
Mapping Your Business
• “As a first step in integrating CRM with ERP, forget about the
technology and map your business processes,” advised Steve Lippock,
owner of Harvest gold, a Salesforce.com.inc partner. “Where
integration is required, decide which database will be the master, and
how often or how dynamically data needs to be updated. This will help
you decide on an integration approach, and the technology decisions
follow.” the procedure should be determined by the desired end result.
Plan and Understand
• At this point, you have to determine what features and capabilities you
want the integration to offer. “As with any implementation, planning
is essential,” said Edward Siegel, director of marketing for Super
office. CRM. “What needs to be displayed? How will the users access
the information?
• Will the ERP system feed the CRM system or vice versa ... or
both? Are there security concerns? Is either the ERP or CRM
system already in place or is this a totally new installation?”

Know What You're Working With

• Actually integrating the systems requires intimate knowledge of
where the two connect. “Integration points come when
opportunities convert to orders, and prospects convert to
customers,”
• “Ongoing changes to customer data must be considered — you
will need to decide which is the master database for customer
contact information.
• “Other possible integration points include synchronization of
product data, order history [to track actual sales volume against
forecasted opportunity values] and the
scoping/estimating/quoting process — especially where custom
design services and custom configuration is required,”
Link for Success
• From the beginning to the end of the integration process, one
constant remains.

“It is always best to avoid storing redundant information”

• Thus we can say that The integration of customer relationship

management (CRM) and enterprise resource planning (ERP)
systems can be a long and technically demanding process. we
can save time and money if we narrow the scope of our
integration efforts and use specialized software products and
coding techniques
 Common Available software Packages
• Compiere is a Open Source ERP software application with fully
integrated CRM software solutions. Compiere is a fully integrated
business solution for small-to-medium enterprises worldwide.
Compiere is based on business process rather then departmental
boundaries
• OpenBravo POS
• OfBiz
• Hipergate
• Daffodil ( providing seamless integration between sales, Marketing
,Customer service that handle Customer contact for an Enterprise)
• Open Source ERP & CRM Software · Yuza open Erp - Yuza open
ERP it's a open source enterprise Erp Application, written in c# and
running on MS Access database (also supported MS SQL Server
MySql Oracle).
 The common features are
*Campaign facility • * Data integrity and
security
 * Customizable Views •
 * Company backed
 * Applying Quick project
Filters •
 * Supports B2B and
 * Automatic Mail B2C functions
Attachment
• friendly interface
* Availability of a built-
 
in database
 
Example 1: To calculate sales commissions:
• A simple example of ERP system is to calculate sales
commissions. The human resource users calculate sales
commission using an ERP system, by accessing a web
service. This is done using getSalesCommision web
service. This web service accesses two different back end
systems to calculate the sales commissions. One is the
ERP system that provides that invokes a function called
getSalary and the other system is the CRM system that
invokes getSalesData function call, wherein each function
call is in the form of a web service.
• Thus, from above simple example we can see how an
ERP system with its integrated web service applications.
Help to calculate the sales commissions of various agents
of a sales team in an organization.
 Integration of CRM With Data Warehouse
• Integration of CRM with Data-Warehouse
(Creating a Customer Database).

Customer relationship management, is a process whose

objective is to enhance customer loyalty.

This process consists of the following: -

* Creation and management of data mines & warehouses;

* Development of appropriate organizational structures;

* Investment in technology; & People development.

*Data Mining & Warehousing * People.
   
Loyalty
 
* Structure ,Alliances;
*Call Centre. * Technology* Web;
* Voice Mail;
* Telephones.
 

Source :- Prof. Rajan Saxena – Marketing Management, Tata McGraw-

Hill Publication, New Delhi.
• CRM process depends on data. Single operation focused integrated
logical database, data warehousing, data mining, decision support
system (DSS), campaign management tools as well as call center
software & hardware.
• A necessary step to a complete CRM solution is the construction of a
customer database or information file.
• This is the foundation for any customer relationship management
activity.
• For web based businesses, constructing a database should be a
relatively straightforward task, as the customer transaction & contact
information is accumulated as a natural part of the interaction with
customers.
• For existing companies that have not previously collected much
customer information, the task will involve seeking historical
customer contact data from internal sources such as accounting &
customer service.
• What should be collected for the database? Ideally, the database
should contain information about the following: -
• Transactions :-  This should include a complete purchase history with
accompanying details (price paid, delivery date, location etc.).

• Customer Contacts :- Today, there is an increasing number of

customer contact points from multiple channels and contexts. This
should not only include sales calls and service requests, but any
customer-or-company-initiated contact.

• Descriptive Information:- This is for segmentation and other data

analysis purposes.

* Response to Marketing Stimuli :- This part of the information file

should contain whether or not the customer responded to a direct
marketing initiative, a sales contact, or any other direct contact.
• The data should be represented over time.Companies have
traditionally used variety of methods to construct their
databases.
• Durable goods manufactures utilize information from warranty
cards for basic descriptive information.
• Unfortunately, response rates to warranty cards leave big gaps in
the databases.
• Service businesses are normally in better shape since the nature
of the product involves the kind of customer-company
interaction that naturally leads to better data collection.

• For examples, banks have been in the forefront of CRM

activities for a number of years. Telecom-related industries (long
distance, wireless, cable services) similarly have a large amount
of customer information.
• Most CRM software focused on simplifying the organization and
management of customer information.
• Such software, called 'Operational CRM', focuses on creating a customer
database that presents a consistent picture of the customer's relationship
with the company and providing that information in specific applications.
• This include sales force automation and customer service applications, in
which the company "touches' the customer.

Operational CRM  Analytical CRM  Collaborative CRM

CUSTOMER

Interaction of CRM Technologies

       
• Data mining is a process that uses a variety of data analysis
and modeling techniques to discover patterns and relationships
in data that are used to understand what customers want and
predict what they will do.
• Data mining can help to select the right prospects on whom to
focus, offer the right additional products to existing customers
and identity of good customers who may be about to leave.
• These results in improved revenue because of a greatly
improved ability to respond to each individual contact in the
best way and reduced costs due to properly allocated
resources.
• CRM applications that use data mining are called 'Analytical
CRM'.
• Data mining also frequently used to identify a set of
characteristics that segments customers into groups with
similar behaviors, such as buying a particular product.
• A special type of classification can recommend items based on
similar  interests held by groups of customers. This is called
'Collaborative CRM
• Data mining can improve profitability in each stages of customer life
cycle when integrated with operational, analytical or collaborative
CRM systems or implement it as independent applications.
“ Data Mining is the process of extracting & presenting new
knowledge, previously undetectable, selected from databases for
actionable decisions.“
• It is the process of extracting valid, previously unknown & ultimately
comprehensible information from a large database and using it to
solve business problems and to make crucial business decisions.
• Data mining & knowledge discovery are receiving increasing
attention in the business & technological press, among industry
analysts, & among corporate management.
Chapter-III
E-CRM
Customer Relationship Management
(CRM)
CRM is a strategy by which companies optimise profitability
through enhanced customer satisfaction.

CRM is about automating and enhancing the customer-centric

business processes of Sales, Marketing, and Service.

CRM not only deals with automating these processes, but also
focuses on ensuring that the front-office applications improve
customer satisfaction, resulting in added customer loyalty
that directly affects the organization’s bottom line.
 CRM Evolution
Cost Reduction Strategy Growth Strategy

BPR ERP SFA CRM eCRM

Business Led IT Led Marketing Led

1980s 1990s 2000s

 Need for e-CRM or
the problems faced by Traditional
CRM
Vendor offerings exist within the broad CRM categories of
sales strong, service and marketing. CRM evolved with
different vendors carving out their own niches in complete
isolation from the others.

Lack of a single customer-centric data warehouse has caused

any addition of more customer touch points only served to
worsen the problem caused
 E-CRM
E-CRM (Electronic Customer Relationship Management)
expands the traditional CRM techniques by integrating new
electronic channels, such as Web, wireless, and voice
technologies and combines it with e-business applications
into the overall enterprise CRM strategy.

The goal is to drive consistency within all channels relative to

sales, customer service and marketing initiatives to achieve a
flawless customer experience and maximize customer
satisfaction, customer loyalty and revenue.

Therefore ,it is just an expanded, integrated version of CRM .

Thus, Old CRM + Internet = e-CRM
The differences between CRM and
e-CRM
 Key applications of e-CRM
Information integration application

 An incomplete view of customers reduces their loyalty and

trust
 Consolidating customer data and information from different
sources
 To keep up with every customer’s interaction

Customer analysis application

 Measures, predicts, and interprets customer behaviors

 Predictive models to identify the customers most likely to
perform a particular activity
 Online analytical processing, data mining and statistics
Continued….
Real-time decision application
 To coordinate and synchronize communications across
disparate customer
 An effective real-time decision application promotes
information exchange between the company and every
customer

Personalized messaging application

 Building customer profiles and enables customized product
and service offerings based on the information integration
application
 Benefits :
Retaining existing customers.
Selling more to existing customers.
Finding and winning new customers.
Interactions lead to trusted relationships:

 Focus the business on improving customer relationships and

earning a greater share of each customer’s business.

Increasing efficiency.
Improving marketing and sales decision making.
Enabling process measurement – leading to process
improvement.
Continued….

Enables 24/7 customers interaction:

optimize interactive relationships between customers and
companies.

Personalization through technology:

enable a business to extend its personalized messaging
through the Web and email.
 Goals of e-CRM

Reduce :
 Costs of marketing

Improve :
 Accuracy and relevancy of recommendations
 Customer satisfaction

Increase :
 Conversion rate, i.e., Turn browsers into buyers
 Customer retention and frequency
 Order size
Continued….
 customer response
 competitiveness through differentiation
 Profitability.
 CRM in Retail
• A look at most industries will show that each of them in turn are doing
their own little bit towards understanding the importance of
• customer focus. What is the retail industry doing on its part? What efforts
are they making to interact with their customers?
• Several retailers have endeavored to add that extra personal touch and
several more have not.
• The need for focusing a whole lot more on the customer has been acutely
felt by them and they have tried to accommodate it.
• The past few years has witnessed a strong upsurge in the number of
retailers looking for a lifetime strategy that will cater to their customer
requirements. What have they come up with?
• Most of them have seen that the need of the moment is a customer
strategy that caters to lifetime responsibilities.
• As a result they have turned to a customer strategy - CRM retail software
to fulfill those needs.
Why opt for CRM?
• Market analysts dispute the correct figure but all are of the opinion
that companies will pour billions of dollars into the CRM industry.
• This is because of its ability to maneuver customer relationships in
the direction of profitability.
• The philosophy behind adopting retail CRM - the way the retail
industry treats its customers influences future profitability. Net
result?
• Companies are making bigger investments in CRM solutions. Retail
CRM serves to support marketing, sales, and service processes
involved in the business.
• CRM causes changes in the organization and the business work
processes. CRM helps achieve a way of managing customer
relationships in a better manner.
• Partner Relationship Management is yet another offshoot of CRM
projects. It serves to support channel partners and all other channels
as well between an enterprise and its end customers.
E-CRM that basically serves to allow organizations to interact with their
customers via the corporate Websites

CRM Retail Software Benefits:

• targeting prospects
• acquiring new customers
• campaign management
• lead distribution
• long-term relationship value
• effective selling processes
• forecasting
• transactions done at the lowest cost
• better service and
• handling post-sales service
• support issues with call center
Useful Tips for the Retail Industry employing
CRM :
• don't back off at the first problem
• defined the project plan
• involve the right people
• choose appropriate technology
• train new employees
• maintain system support
• give them an easy way to get answers
The Bottom Line?
• Retailers need CRM!!! There is no disputing the fact that this is one
strategy the retail industry cannot afford to gloss over. The rewards
are huge and need to be availed of if one wants to succeed in a
competitive business world