Customer Focus & Relationship Management: Master of Business Administration

CUSTOMER FOCUS & RELATIONSHIP
MANAGEMENT
By
SEETHARAM. ANANTHANARAYAN
(Roll No: 2009PECMB169)

Of
PANIMALAR ENGINEERING COLLEGE
A SEMINAR REPORT
Submitted to the
FAULTY OF MANAGEMENT STUDIES

In partial fulfillment of the requirement
For the award of the degree
Of
MASTER OF BUSINESS ADMINISTRATION

November 2009
Customer Focus & Customer Relationship Management
Table of Contents
S. No CHAPTERS Page No
Abstract I
Chapter-1: Introduction 1
Chapter-2: Customer & Customer Focus 5
2.1 Definition of a customer 5
2.2 What does customer focus mean? 6
2.3 What do customers want? 6
2.4 What is Customer Satisfaction? 7
2.5 How is Customer’s expectation related to his 7
satisfaction?
2.6 What are the main elements? 9
2.7 “Customer Focused Experience & Enterprise 10
Framework”?
2.8 Six Customer Service Strategies That Win 13
Chapter-3: Customer Relationship Management 17
3.1 Why do organizations need CRM? 18
3.2 CRM as a process 19
3.3 Why do organizations undertake CRM? 19
3.4 Features of good CRM 19
3.5 Customer focused CRM solution 20
3.6 Pareto's Law 21
3.7 What are 'Moments of truth' 22
3.8 CRM and communications 23
3.9 People and CRM 24
3.10 Benefits of effective CRM 25
3.11 CRM software solutions and ICT 25
Chapter-4: Case Study 28
4.1 Peppers&RogersGroup 29
4.2 Mckinsey&Company 37
4.3 The Best Buy Experiment 41
Chapter-5:Review of literature 47
5.1 Newspaper and Magazines 47
5.2 Internet 51
Appendix 55
Bibliography 63
ABSTRACT
CUSTOMER FOCUS & CUSTOMER
RELATIONSHIP MANAGEMENT
Abstract
This paper is a discussion on the changing paradigm in the world on how businesses
perceive their Customer and how do organizations manage their relationship with their
respective customers.
The paper has been divided into the following parts –
 Customer focus and what does that entail
 Customer experience framework
 Customer relation management - CRM
 Communication in CRM and benefits of effective CRM
 Case studies
In the customer focus section the following are discussed –
 Definition of a customer
 What do customers want?
 What is customer satisfaction and
 Customer’s expectation – dynamic nature of it and the parameters

affecting customer’s expectation.
The section on Customer experience framework looks at the six key characteristics of
CFE, and the application of innovative approaches.
 Customer authority
 Customer dialog
 Integrated execution
 Solution experience
 Human performance
 Customer focused organization
In the customer Relationship management section, different aspects of CRM like
 Front office operations,
 Back office operations,
 Business relationships,
 Analyses of data are looked into.
Different types of CRMs like
 Operational CRM,
 Analytical CRM,
 Sales Intelligence CRM,
 Campaign management,
 Collaborative CRM is also discussed.
The paper also looks into the basic question of why organizations need CRM. It further
looks at Features of a good CRM and how to achieve a good CRM
Communication aspect of CRM and Benefits of effective CRM are discussed in the
next section.
Case studies section is divided into three –
 Peppers and Rogers group case studies that were done by them on
their client,
 Mckinsey case studies and
 Best buy experiments with CRM are detailed out.
CHAPTER NO 1:
INTRODUCTION
1. Introduction
Over a century ago, in small-town America, before the advent of the supermarket, the
mall, and the automobile, people went to their neighborhood general store to purchase
goods. The proprietor and the small staff recognized the customer by name and knew
the customer's preferences and wants. The customer, in turn, remained loyal to the
store and made repeated purchases. This idyllic customer relationship disappeared as
the nation grew, the population moved from the farm communities to large urban areas,
the consumer became mobile, and supermarkets and department stores were
established to achieve economies of scale through mass marketing. Although prices
were lower and goods more uniform in quality, the relationship between the customer
and the merchant became nameless and faceless. The personal relationship between
merchant and customer became a thing of the past. As a result, customers became
fickle, moving to the supplier who provided the desired object at lowest cost or with the
most features.
The last several years saw the rise of Customer Relationship Management (abbreviated
CRM) as an important business approach. Its objective is to return to the world of
personal marketing. The concept itself is relatively simple. Rather than market to a
mass of people or firms, market to each customer individually. In this one-to-one
approach, information about a customer (e.g., previous purchases, needs, and wants) is
used to frame offers that are more likely to be accepted. This approach is made
possible by advances in information technology.
CRM is an abbreviation for Customer Relationship Management, not Customer

Relationship Marketing. Management is a broader concept than marketing because it
covers marketing management, manufacturing management, human resource
management, service management, sales management, and research and
development management. Thus, CRM requires organizational and business level
Seetharam. A PANIMALAR ENGINEERING COLLEGE Page 1

approaches – which are customer centric – to doing business rather than a simple
marketing strategy.
CRM involves all of the corporate functions (marketing, manufacturing, customer

services, field sales, and field service) required to contact customers directly or
indirectly. The term “touch points” is used in CRM to refer to the many ways in which
customers and firms interact.
Peter Drucker said, “The purpose of a business is to create customers.” Implied in

his words and his work is the importance of keeping those same customers and of
growing the depth of their relationship with you. In one sense, managing customer
relationships is as old as the hills.
There has been a significant shift in business focus from product sales and profit to
customer’s profitability and customer retention. Because of this shift there has been a
corresponding shift in how business measures profits and the investments, which
support or even investments. Companies have tried to focus on customers all through
the 1990s, often with little idea of what focus demands or even what customers want.
The IT revolution makes it far easier for everyone to understand those wants; to create
customer loyalty through continuous feedback; and to achieve the elusive 'customer
focus'. IT has come to the fore in boardroom after boardroom as, consciously or not, top
managements have reacted to fundamental, far-reaching change in their markets. Being
customer focused means providing services that are useful and relevant for your
existing and potential customers. It reflects the culture of a service and an organization
that aims to find out what is important to their customers. It also means that people are
offered choice in the type of services that are being provided for them and the way in
which services are provided. If your service is customer focused the needs of your
customers will drive it. You may feel that you already know what these needs are. If not,
you will need to discover what it is that your customers expect and try to address these
expectations where possible.

CRM today is about keeping the old-time spirit of customer connection even when you
can’t shake every hand. CRM today is about using information technology systems to
capture and track your customers’ needs. And CRM today is about integrating that
intelligence into all parts of the organization so everyone knows as much about your
customers.
It may be easier to understand your existing customers because you will know who they
are. By fully and accurately assessing the need, you will be able to identify who your
potential customers are.
Customers vary according to the type of service being used or needed. However, the
same customers can use more than one service, so understanding all their service
interactions is important. For example:
 Children in care: social services, education services, transport services, leisure

services
 Elderly people in nursing homes: social services, health services, benefits
services
 Library users: transport services, library services, culture services
 Asylum seekers: social services, housing services, health services
 Students: transport services, leisure services, education services

CHAPTER NO 2:
CUSTOMER & CUSTOMER FOCUS

2. Customer & Customer Focus
“Your most unhappy customers are your greatest source of learning.”

Source: Bill Gates, CEO Microsoft Inc.
2.1. Definition of Customer

The customer is the only source of the company’s present profit and future
growth. However, a good customer, who provides more profit with less resource,
is always scarce because customers are knowledgeable and the competition is
fierce. Sometimes it is difficult to distinguish who is the real customer because
the buying decision is frequently a collaborative activity among participants of
the decision-making process [Wyner, 1999].Information technologies can provide
the abilities to distinguish and manage customers. CRM can be thought of as a
marketing approach that is based on customer information.
A business cannot exist without customer but to capture customers, a business must try
to find out what people want, how much and how often they will buy and how their post-
purchase satisfaction will be ensured. Customer may be an individual or an enterprise
that hires or purchases the products or services from another person or business in
exchange of money.
There are two distinct types of customers i.e. external and internal. Internal customers
are within the company-the colleagues working together for delivering a service or
product for the external customer. We will, however, remain restricted to the external
customers here. An external customer may be an individual or an enterprise that hires
or purchases the products or services from another person or business in exchange of
money.
One of the most important factors for the success of an enterprise is its customers.
Without them, a business cannot exist. But to capture customers, a business must try to
find out what people want, how much and how often they will buy and how their post-
purchase satisfaction will be.

2.2. What does customer focus mean?
Customer Focus is an aligned, organization-wide and unwavering commitment to

service excellence, leading to customer loyalty and advocacy. The result is
sustainable profitability.
In a Customer-Focused organization, Leadership Processes and People are customer-

aligned. This requires three things:
1. Every action is shaped by a relentless commitment to meeting and exceeding

customer expectations regarding product and service quality.
2. Customer touch points and supporting internal processes are constantly

evaluated and improved to meet or exceed those expectations.
3. Every employee understands what he/she must do in order to maintain and add
value to every relationship with both the paying customer and those within the
organization that rely on them for the work they do.
2.3. What do customers want?

Most obviously, and this is the extent of many suppliers' perceptions, customers want
cost-effective products or services that deliver required benefits to them. (Benefits are
what the products or services do for the customers.) Note that any single product or
service can deliver different benefits to different customers. It's important to look at
things from the customer's perspective even at this level.
More significantly however, customers want to have their needs satisfied. Customers'
needs are distinctly different to and far broader than a product or service, and the
features and benefits encompassed. Customers' needs generally extend to issues far
beyond the suppliers' proposition, and will often include the buying-selling process (prior
to providing anything), the way that communications are handled, and the nature of the
customer-supplier relationship.

Modern CRM theory refers to the idea of 'integrating the customer'. This new way of
looking at the business involves integrating the customer (more precisely the customer's
relevant people and processes) into all aspects of the supplier's business, and vice
versa. This implies a relationship that is deeper and wider than the traditional 'arms-
length' supplier-customer relationship.
The traditional approach to customer relationships was based on a simple transaction or
trade, and little more. Perhaps there would be only a single point of contact between
one person on each side. All communication and dealings would be between these two
people, even if the customers' organization contained many staff, departments, and
functional requirements (distribution, sales, quality, finance, etc).
The modern approach to customer relationship management is based on satisfying all
of the needs - people, systems, processes, etc - across the customer's organization,
such as might be affected and benefited by the particular supply.
2.4. What is Customer Satisfaction?
Customer satisfaction is not an objective statistics but more of a feeling or attitude. If a

customer is happy with a product or a service it has hired or purchase they will pay their
bills promptly, which greatly improves cash flow-the lifeblood of any organization.
Customers that are satisfied will increase in number, buy more, and buy more
frequently.
2.5. How is Customer’s expectation related to his satisfaction?
If an organization cannot at least meet its customers' expectations it will struggle.

Ideally a business organization should exceed its customers' expectations, thereby
maximizing the satisfaction of its customers, and also the credibility of its goods and
services in the eyes of its customers. Customers normally become delighted when a
supplier under-promises and over-delivers. To over-promise and under-deliver is a
recipe for customers to become very dissatisfied.
Rule No 1 - You cannot assume that you know what a customer's expectations are ...
You must ask.
Rule No 2 - Customer expectations will constantly change so they must be determined

on an on-going basis.
The expectations of different customers for the same product or service will vary
according to:
 Social and demographic factors

 Economic situation
 Educational standards
 Competitor products
 Experience
Therefore, given all these variable factors, it is no surprise that one size certainly does
not fit all.
Ask your customers what is important to them. Find out why your customers do
business with you. There are a wide variety of relationship drivers. For example:
 quality
 price
 product
 location
 customer service
When you ask you might discover some factors that you'd perhaps never even
considered, for example:
 health and safety support

 systems compatibility
 contract structure
 distribution flexibility
 technical support
 troubleshooting and problem-solving, to name just a few

2.6. What are the main elements?
Excellent customer focus and meaningful community engagement are key ambitions
that an organization and all its services should strive to achieve. The way to achieve this
focus and engagement is by using the different ingredients in innovative and
appropriate ways. All of the elements in the diagram below, if carried out well, will help
you put in place effective customer focus and community engagement.

2.7. “Customer Focused Experience & Enterprise Framework”?
The growing bifurcation of the marketplace between the two extremes of product
commodity and customer needs-based solutions will make rapid losers and winners
across different industries. Innovative companies know that they cannot merely sit
safely in the middle anymore.
Leading companies want to build strong bases of loyal, profitable customers who are
also advocates for the company. Customer advocacy is a measure of customer attitude
toward a company. In order to drive sustainable, profitable organic growth and
competitive differentiation organizations must better integrate and align the way they
treat customers with their go-to-market strategy and branding at each touch point of the
relationship. Achieving this is a continual, uphill battle as competitors increasingly raise
the stakes. Customers’ expectations continue to rise – largely through their experiences
with a boundless commercial world – but also through unrepentant brand marketing and
well-publicized customer focus programs. Given the vast number of customer interfaces
companies have to manage – multiple channels, front-line employees and customer

segments – the key challenge is to create the right experiences at the right time in the
right way for the right cost.
To complicate matters, customer experiences have emotional characteristics which

companies historically haven’t been good at delivering. The customer experience is
more than an analysis of hard metrics about speed, availability and information. These
tactile performance measures are critical, but real progress in shaping the customer
experience has to involve the emotive aspects of high impact interactions. The key to
achieving emotive success is to understand the customers’ needs and expectations. By
doing so, companies can understand what the most important interactions are – the
“moments of truth” – and prioritize delivery on these interactions. Building meaningful
experiences is a daunting challenge in this environment, particularly given the sheer
number of customer interactions any one company must address across many different
businesses within an organization. A new perspective is needed for delivering customer
experiences – one that builds a competitively superior experience while prioritizing a
company’s resources and investments.
The core of this view is defined by three simple guidelines that apply to each and every
customer interaction:
1. Delight customers when it makes sense (and cents)
2. Fix where the company fails on its promise
3. Right-size delivery when an interaction doesn’t matter
Companies who excel in the customer experience arena operate as “customer focused
enterprises (CFEs).”
The CFE embodies six key characteristics, and applies innovative approaches and
resources as it grows and improves:
 Customer authority
 Customer dialog
 Integrated execution
 Solution experience
 Human performance
 Customer focused organization.
The old viewpoint in industry was:

'Here's what we can make - who wants to buy our product?'
The new viewpoint in industry is:

 'What exactly do our customers want and need?' and
 'What do we need to do to be able to produce and deliver it to our
customers?'

This is a significant change of paradigm and a quantum leap in terms of how we look at
our business activity.
2.8. Six Customer Service Strategies That Win
Strategy #1: Stay in Touch
Let your customers know you value their business by reaching out to them. Use
newsletters, postcards, individual letters, or e-mails to deliver news about
products, special promotions, and store events. (Allow customers to sign up for these
missives in the store, and never send an e-mail without their express permission.) Send
a thank-you note after a major purchase, inviting the customer to contact you with
questions, feedback, or to discuss additional requests. Focus all these communications
on letting customers know that you can solve their problems and meet their needs.
Strategy #2: Make Great Service a Priority
Excellent customer service requires training your staff and constantly reinforcing the
message that customers come first. Start with the little things, such as a standard way
of politely greeting people on the phone or asking that sales staff courteously greet
anyone who enters the store.
Strategy #3: Store Collective Wisdom
One of the most important customer strategies is to set up a system for responding to
customer inquiries or complaints. The last thing you want is for your employees to
provide inaccurate information to your customers. Neither should they fail to provide a
solution to a problem or quote policies that may not accurately address the situation.
Your goal should be to resolve issues during the initial customer contact, or, when that's
not possible, within one business day. Whenever necessary, make sure employees let
customers know that they may need some time to locate the information. Do not leave
customers hanging. You can have every product that your customers could possibly

want, but if you don't treat your customers

well, you can kiss your business goodbye. Numerous studies have shown that it costs
more to acquire new customers than it takes to retain existing ones. Use these six
service strategies to keep your customers coming back for more:
Strategy #4: Empower Your Staff
In some cases, where there is no policy -- and occasionally in cases where the policy
needs to be flexed -- you need to empower certain people to make decisions, use good
judgment, and bend the rules. Ask them to document these special cases; you can
provide a pad of paper forms, let them enter information into the computer, or simply
leave you a voice mail. Depending on the size of your operation, you may want to
designate one person per shift as chief problem-solver.
Strategy #5: Know Your Customers
Instituting a formal way of tracking your customer interactions will help you identify your
best customers, as well as those who may not have frequented your business in a
while. You can also see if someone has needed repairs or is due for servicing on a
product.
There are many software applications designed to do this, ranging from powerful -- and
expensive -- "enterprise software" products to simple Web-based applications that cost
less than $20 a month. As you gain new customers, you enter their contact information
and notes about the transaction into the software. Later, you can sort this data or
analyze it to uncover useful information.
But you don't have to use a computer to track customers. A small shop could simply
prepare an index card for each customer and file them alphabetically. If the customer
returns, sales staff can pull the card from the file, review the history, and note the latest
interaction.
Strategy #6: Manage Customer Relationships
Once you have some history on your customers, whether from written notes or via a
database, you can identify your best customers and reward them. Perhaps you'll offer a
special discount to frequent customers or make a follow-up call to those who have
needed recent repair work.
Use the information you've gathered about your customers to make customer service a
science. Give them a quality experience and complete satisfaction, and they'll keep
coming back for more.

CHAPTER NO 3:
CUSTOMER RELATIONSHIP
MANAGEMENT- CRM

3. Customer Relationship Management – CRM

Traditional marketing strategies focused on the four Ps (price, product,
promotion, and place) to increase market share. The main concern was to
increase the volume of transactions between seller and buyer. [Wyner, 1999]
Volume of transactions is considered a good measure of the performance of
marketing strategies and tactics.
Customer Relationship Management concerns the relationship between the

organization and its customers. Customers are the lifeblood of any organization be it a
global corporation with thousands of employees and a multi-billion turnover, or a sole
trader with a handful of regular customers. Customer Relationship Management is the
same in principle for these two examples - it is the scope of CRM which can vary
drastically. Customer relationship management (CRM) is an approach to doing business
and providing better customer service. The technological solutions badged under the
CRM header are enablers of this approach. As an approach to doing business, CRM
implementation is as much about cultural and process change as it is about new
technology.
Customer relationship management (CRM) is a business strategy aimed at

understanding and anticipating the needs of an organization’s current and potential
customers. It is about maintaining a complete and single view of the relationship
between service provider and customer, which is available to all appropriate staff. CRM
systems can help your organization to use core data to support service delivery across
multiple channels, and to create the single view of customer relationships that you need.
Successful implementation of CRM systems will help your organization to improve

customer service and service efficiency.
CRM aims to improve customer service by encouraging better interaction with your
customers and smoother internal operations. The emphasis is very much on improving
the service you provide to the individual customer. Customer Relationship Management
concerns the relationship between the organization and its customers. Customers are
the lifeblood of any organization be it a global corporation with thousands of employees
and a multi-billion turnover, or a sole trader with a handful of regular customers.
Customer Relationship Management is the same in principle for these two examples - it
is the scope of CRM which can vary drastically.
From the outside, customers interacting with a company perceive the business as a
single entity, despite often 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.
3.1. Why do organizations need CRM?

The ultimate purpose of CRM, like any organizational initiative, is to increase profit. In
the case of CRM this is achieved mainly by providing a better service to your customers
than your competitors. CRM not only improves the service to customers though; a good
CRM capability will also reduce costs, wastage, and complaints (although you may see
some increase initially, simply because you hear about things that without CRM would
have stayed hidden). Effective CRM also reduces staff stress, because attrition - a
major cause of stress - reduces as services and relationships improve. CRM enables
instant market research as well: opening the lines of communications with your
customers gives you direct constant market reaction to your products, services and
performance, far better than any market survey. Good CRM also helps you grow your
business: customers stay with you longer; customer churn rates reduce; referrals to

new customers increase from increasing numbers of satisfied customers; demand

reduces on fire-fighting and trouble-shooting staff, and overall the organization's service
flows and teams work more efficiently and more happily.
3.2. CRM as a process

CRM can be regarded as a process, which has:
 Identifiable inputs
 Identifiable components
 Identifiable characteristics, which define CRM for your organization and
customer base
 Capacity for improvement and evolution over time
3.3. Why do organizations undertake CRM?
CRM is a new concept to many organizations. If it's new to you, here's why most
forward-thinking organizations devote lot of energy and resources to the set up and
management of a CRM capability.
CRM can have a major impact on an organization through:
 Shifting the focus from product to customer

 Streamlining the offer to what the customer requires, not want the organization
can make
 Highlighting competencies required for an effective CRM process
3.4. Features of good CRM
The following characteristics are associated with delivery of excellent CRM:
 Reliability
 Responsiveness
 Accessibility

 Safety
 Courtesy
 Consideration
 Communication
 Recognizing the customer
 Competence
3.5. Customer focused CRM solution

So what do we need to make this quantum leap of customer integration?
A new way of thinking:
 Change in paradigm
 Change in the messages sent and received
 Change in the overall culture
And a new way of doing things:
 Processes that are capable and effective

 Structures and systems that support a business centered on its customers
 Connectivity (end-to-end processes) both internally and externally (e.g., with
suppliers)
3.6. How do you achieve a good CRM?

Achieving effective Customer Relationship Management requires many organizations to
adopt a new perspective. Consider the following:
 Traditional customer service is something you 'do to' the customer

 Modern Customer Relationship Management is 'done with' the customer
The second statement is emphasizes the big differences between conventional

traditional customer service, and the modern progressive CRM approach.

Your relationships with customers should be ongoing, cooperative, and built for the long
term.
Organizations that have many transitory relationships with customers consequently
have to spend a lot of money on finding new customers.
The cost of keeping existing customers is a tiny fraction of the cost of acquiring new
customers.
3.7. Pareto's Law

Pareto's Law is commonly known as the 80:20 rule. Typically in any organization:
 20% of customers account for 80% of your turnover

 20% of customers account for 80% of your profits
 20% of customers account for 80% of your service and supply problems
It is important to know is which customers fit into which category and then to manage
them accordingly.
Highly satisfied customers who perceive a high value in your products and services
commonly make excellent advocates for your organization - nurture these customers
and give the special treatment.
Dissatisfied customers who perceive a low value in your products and services are
potential saboteurs. These customers could have little or no loyalty and may actively
'engage' against your organization. Therefore you should seek to rebuild relationships
and trust, and a new basis for a future relationship, or manage the separation with
dignity, professionalism and integrity.
The essential CRM focus of any organization should be on developing core

competencies, and an overall strategy of building customer relationships. In this way, all
efforts in the organization can be aligned to:
 Customers and the culture of exceeding of customer expectation

 Understanding and managing the people impact on the culture of the
organization
 Customers being recognized and treated as partners

 The value of relationship-building being valued
 Service being seen as a value-adding activity
 Reward and recognition being based on customer focus i.e., 'going the extra
mile'
 Evidence of corporate support for service activity
3.8. What are 'Moments of truth'

'Moments of truth' are encounters with customers which cause them to form a view of
the organization based on how they are engaged, particularly compared to their
expectations.
Expectations can be met, exceeded or disappointed. Moments of truth can therefore be
positive, in the case of meeting and exceeding expectations, or negative, in the case of
disappointment. Monitoring the 'moments of truth' allows the company to focus on
improving areas responsible for negative customer experiences.
Remedial action to prevent repetition is crucial. A single mistake is forgivable. A repeat
rarely is.
If you put things right your customers will see that they are important to you. Put things
right and you will be seen as a supplier who knows how to manage quality.
Organizations that fail to put right things that go wrong, might as well say to the
customer, "You are not important to us". Failing to put things right and to prevent
reoccurrence says of the organization "We are not capable of managing quality
service."
Bear in mind also that research has proven time and again that when an issue of poor
service to a customer is satisfactorily resolved by a supplier, the customer increases
their loyalty to the supplier to a higher level than existed prior to the problem.
An approach to managing 'moments of truth' involves 'continuous improvement'. This
entails processes that continually monitor, check and resolve negative moments of truth
by ensuring alterations happen to the customer process, and integrating these changes
into 'business as usual'. Here are the elements of such an approach:

 Define the cycle of service

 Identify negative moments of truth
 Define the reasons (i.e., root causes - not symptoms)
 Develop solution/s
 Test solution(s)/review/amend
 Implement
 Monitor impact on the cycle of service
This is similar to the EPACA model - the helix of continuous improvement.

Negative moments of truth carry a lot of weight with the customer and will adversely
affect the relationship.
To maximize positive moments of truth - set standards in your processes.
Standards using SMART criteria Standards (which may also be objectives) can be
established using the SMART framework.
 Specific
 Measurable
 Agreed
 Realistic
 Time-bound
3.9. CRM and communications
Communication is central to any successful relationship. In terms of Customer

Relationship Management, communication needs to be consistent and high quality; as
determined by:
 On time
 Focused
 Relevant
 Reliable
 Coherent
Importantly also, for effective communications it's the message and meaning that
is received that counts, irrespective of what the communicator thinks they've said, or
written. Communications must be judged most vitally by the reaction of the receiver. If
the reaction is not good then the communication is poor.
The information contained in a CRM system allows communication to be directed at the
correct audience, in the correct way. The communication system must also encourage
and facilitate honest and actionable feedback.
Feedback from customers - especially complaints - is essential for good organizational
performance and ongoing development. Most organizations avoid, discourage and hide
from complaints. Don't. Complaints are free guidance for improving your quality, and
free opportunities to increase customer loyalty.

3.10.People and CRM

As with any other business process your people have a huge impact on the success of
the CRM process.
Successful and effective Customer Relationship Management people tend to display the
following key characteristics:
 Positive attitude
 People orientation
 Organizational skills
 Analytical skills
 Customer focus (natural empathy)
 Understanding of the link between CRM and profitability
On the subject of empathy: Empathy is about understanding, not necessarily

agreeing. Effective customer focus enables the organization and its staff to see both
sides, and to work with the customer to arrive at a mutually satisfactory and sustainable
solution. Agreement alone amounts to capitulation, which is neither practicable nor
sustainable.

3.11.Benefits of effective CRM
There are significant business benefits which accrue from an effective, integrated
Customer Relationship Management approach. These include:
 Reduced costs, because the right things are being done (i.e., effective and
efficient operation)
 Increased customer satisfaction, because they are getting exactly what they
want (i.e., exceeding expectations)
 Ensuring that the focus of the organization is external
 Growth in numbers of customers
 Maximization of opportunities (e.g., increased services, referrals, etc.)
 Increased access to a source of market and competitor information
 Highlighting poor operational processes
 Long term profitability and sustainability
Forward thinking organizations understand the vital need to maintain a strategic focus
on CRM and to resource and manage it appropriately.
3.12.CRM software solutions and ICT (information, communication &

technology)
Software and ICT play a significant part in enabling an effective CRM capability,
especially in large organizations.
There are many and various systems available, and it is important to have a clear idea
of your requirements during the software solution selection process, which for most
organizations will also involve the selection of ICT service provider too, since any
software solution, for all but very small companies, generally requires support for
specifying, implementation, training and maintenance.
Siebel, Sage (who now provide the well-known Accpac and ACT! CRM solutions), and
Front Range (whose product is Goldmine) are all significant and proven CRM software
products companies. There are many others, and very many more ICT service
providers through whom distribution and support is normally arranged.
As with any ICT project, ensure you work with reliable and knowledgeable advisors, with
access to cost-effective proven solutions, who can help you to build and implement an
effective CRM software and ICT capability.
 Went from nerd-niche to general usage. Mobile phones went from a business
luxury to a must-have for everyone from children to the elderly. The mix of
interaction technologies will only grow in complexity and sophistication going
forward.
 Knowledge of customer-focused programs at large companies (e.g., “customer is

job #1” type slogans) has permeated the minds of consumers. Customers know
their value to companies, and hold their providers to the standards they proclaim.
 Customers’ embrace and backlash of new technologies and outsourcing. It

seems that many of the new advancements in the contact center can bring both
cheers and groans to a finicky customer base. Despite being able to do more
faster, customer often bemoan IVRs, primitive voice recognition, and other
capabilities that cause confusion and frustration. Offshore outsourcing is often
pegged as a social mar on television. Customers want accessibility, features and
flexibility, but are sensitive to change.

CHAPTER NO 4:
CASE STUDY

4. Case Study
The Following Case Studies Are Discussed below
1) Peppers&RogersGroup conducted on their client

2) Mckinsey&Company Case Studies
3) Best Buy Experiment
4.1. Peppers&RogersGroup
Peppers & Rogers Group is a management consulting firm, recognized as the world's
leading authority and acknowledged thought leader on customer-based strategies and
underlying business initiatives. Founded in 1993 by Don Peppers and Martha Rogers,
Ph.D., Peppers & Rogers Group invented the term 1to1 ® marketing to illustrate the
importance of treating different customers differently, and transformed the concepts into
practical methodologies driving financial results for companies.
Client Case Studies
Peppers&RogersGroup conducted the following case studies on their client
a) Hewlett-Packard (HP)
b) BMW
c) Leading Canadian Bank
d) Major Europe Bank
e) Leading Transportation & Logistics Company

f) Emirates Transport
g) Telkom South Africa
Client: Hewlett-Packard (HP)
Industry: Telecom, Internet, Media and Entertainment
Capability: Customer Experience Management
Challenge: Shrinking customer satisfaction scores in HP's Consumer Services and

Support Americas division reflected consumer frustration resulting from frequent support
needs and the slow resolution times. As a result, HP sought to transform itself from a
technical support center into a more customer-focused organization.
Work: Peppers & Rogers Group helped HP create tactics designed to close the gap
between customer support processes and competitors' activities from a customer
perspective. Peppers & Rogers Group and HP identified four areas of strategic focus
and 13 associated initiatives based on customers' needs.
Result: Internal HP measures show a marked improvement in customer satisfaction:
 13% improvement in customer satisfaction scores during the project.

 $250,000 in savings from the installation of the voice recognition system. This
was the result of an estimated 10,000 hours a month of saved consumer time
cycling through multiple menus by consumer.
 2-3% attributed lift in the customer satisfaction initiative
Client: BMW
Industry: Automotive
Capability: Customer Experience Management
Challenge: BMW of North America (BMW NA) sought to leverage its dealer network to
gain greater insight into customers, and ultimately identify and design opportunities to
create the premium customer experience. The planned result was to assess dealer
operations and processes to make them more customer-focused, efficient and
ultimately, drive sales.
Work: BMW NA and Peppers & Rogers Group evaluated dealers across six modules
that reflect key aspects of the customer lifecycle: lead management, showroom traffic
control, lease end, new vehicle delivery, initial ownership, and people and environment.
Through interviews with dealer center personnel Peppers & Rogers Group classified
each dealer's strengths, gaps and opportunities for improvement in each of the six
modules. Following the interviews, the BMW NA and Peppers & Rogers Group team

drafted an action plan for each dealer center that includes recommendations and next
steps.
Result: At last measure, 14% of the total BMW NA dealer networks have been
conducted with great success, and SPM has been identified as one of the leading
growth strategy initiatives for BMW NA.
Client: Emirates Transport
Industry: Transportation and Logistics
Capability Corporate Strategy
Challenge: Due to challenges in its core market, Emirates Transport recognized the
need to realign its strategy based on market opportunities and customer needs. The
goal: increase customer satisfaction and improve bottom-line results through an
operational excellence program, a revenue growth strategy, and diversification.
Work: Peppers & Rogers Group conducted a comprehensive internal and external
diagnostic, evaluated the existing value proposition, developed the 5-year destination
vision and created the strategic, organizational and business processes roadmap. This
work was supplemented by a comprehensive needs assessment of all the company's
stakeholders. Peppers & Rogers Group also dived into core business processes to
identify quick wins and longer-term improvement opportunities.
Result: Peppers & Rogers Group recommendations were quickly implemented. The
recommended expansion strategy is based on a combination of "new products for
existing customers," "new customers for existing products," and diversification

opportunities. Successful implementation of the roadmap is projected to result in:
 100% increase in revenue by 2010

 400% increase in net profits by 2010
Client: Telkom South Africa
Industry: Telecom, Internet, Media and Entertainment
Capability: Customer-Centricity Roadmap
Challenge: Telkom South Africa (Telkom) was at risk for high churn due to its poor
service approach and increased competition. The company was also challenged by
saturation in the landline market and decreased revenue from its traditional income
services. Telkom's sought to protect the subscriber base and develop new offerings.
Work: Telkom South Africa selected Peppers & Rogers Group to develop a customer-
centricity strategy. The engagement included an end-to-end solution in which Peppers &
Rogers Group would create the roadmap as well as the implementation plan. The
objective of the initiative was to help Telkom curb potential customer churn by better
anticipating and responding to the increasingly sophisticated needs of its customers.
The project included visioning, benchmarking, Touch mapping and roadmap
development.

Result: The Customer-Focus Initiative has become a key component of Telkom's

overall corporate strategy and provided a focus for its customer-based initiatives. The
Roadmap was used as an internal and external communication tool to demonstrate
Telkom's customer commitment. This turned around Telkom's perception in the
marketplace and was praised by consumers. The project delivered significant financial
benefits within the first 12 months and long-term benefits are expected.
Client: Leading Canadian Bank
Industry: Financial Services
Capability: Customer Lifetime Value Analysis
Challenge: One of Canada's largest banks was facing an attrition problem. Because
the institution did not understand the Lifetime Value of its customer base, it could not
differentiate treatment strategies to its most valuable or its most growable customers.
Therefore, the company did not allocate resources for maximum return.
Work: Peppers & Rogers Group worked with the financial services giant to create a
pilot program targeted to the bank's Retirement Savings market. A customer lifetime
value model was developed and attrition predictors were created. Added to the value
analysis was a needs assessment, targeted, customized offers, and data integration
across branch Web and phone channels.
Result: The pilot program saw immediate success. It resulted in a 51% increase in
average deposits, a 10% increase in sales penetration rates, and a 61% reduction in
marketing cycle time. The bank is now looking to roll out the value-based approach
across the organization.

Client: Major European Bank
Industry: Financial Services
Capability: Contact Center Strategy
Challenge: Competitive pressures created a need for one of Europe's top banks to
improve customer satisfaction, differentiate the customer experience and capture
customer insight to drive new product innovation. Since these priorities were so closely
connected with the call center, the bank realized that it needed to rethink how to best
leverage this channel.
Work: Peppers & Rogers Group worked with the bank to create a vision for the call
center that tied in with the overall growth strategy for the bank. After achieving buy-in
from management on the vision, Peppers & Rogers Group mapped the current state of
the call center operations, including an assessment of operational capabilities. Through
rigorous analysis, the team then developed recommendations for next steps and
created detailed action plans.
Result: As a result of the assessment, the bank's executives had a clear picture of the
current state of their call center operations and future potential. This work gave them a
common understanding of what it would take to realize the vision. The bank has moved
into the execution phase of the recommendations and is making progress towards their
customer-centric vision.
Client: Leading Transportation & Logistics Company
Industry: Transportation and Logistics
Capability Data Analytics
Challenge: A leading logistics company faced an increasingly competitive marketplace

as key challengers gained significant market share. Historically, the organization
responded by streamlining operations and increasing product promotion to drive
profitability. However, a series of annual losses mandated a more drastic shift in
business focus.
Work: Peppers & Rogers Group was engaged to provide the advanced analytical
capabilities required to create and execute a customer-focused strategy. First steps
included consolidating customer demographic, transactional and interaction data. Next
was the development of a series of analytical tools to help the marketing team use
customer data for business results.
Result: The customer analytics effort continues to support the client in reaching
financial targets through customer acquisition, retention and growth. The creation of
data-driven analysis and reporting provides marketing executive management with
clearer visibility into value-creation opportunities.

4.2. McKinsey&Company
Client Case Studies
a) Customer Relationship Management
Background
A leading retail bank wanted to boost the effectiveness of its cross-selling programs.
Brokers were particularly interested in identifying and reaching out to banking
customers who could benefit from higher-value products like brokerage accounts, credit
cards, or home equity loans. Client executives asked for a “tactical CRM” program that
would get results in 3 to 6 months.
Analysis and Teamwork
We worked with our client to understand customer segment groups and historic
preferences by segment. Our team developed customer profiles based on propensity-
to-buy assessments and profitability analysis, resulting in a prioritized list of cross-sell
opportunities.

We then developed support tools for frontline staff, tailored to the cross-sell efforts for
each product type. Materials included a script to use when making calls, strategies for
successful customer conversations, and a tracking system to record contact rates, rates
of follow-up appointments, and other measures of impact. Over 7 weeks, we helped the
client pilot the program in 30 branches across three regions. The team held meetings
every week with area and branch managers to share results and best practices.
Results
Pilot branches opened 10 percent more brokerage accounts than non-pilot branches.
And home equity loan applications jumped by 20 percent.
The bank achieved bottom-line impact during the fiscal year in which the pilot program
was launched, with no significant systems or organizational changes. A full rollout of the
program followed.
b) Customer Loyalty
Background
A large, multi-format retailer faced two challenges. Retail sales were under threat from
specialty stores and discounters. And the store's credit franchise was suffering as
customers moved balances to non-proprietary cards with lower interest rates.
The company had historically employed an event-driven mass marketing approach.

Management asked McKinsey for assistance in developing a new, more customer-
focused approach that would boost sales and improve profit performance with its most
important customer segments.
Analysis and Team Work
Our team built a retail/credit customer database and developed an integrated customer-
level profit model. Using these tools, we evaluated the customer base to identify which
groups were “migrating” toward lower-value spending patterns. We also worked with our
client to help identify the segments that would be most valuable to reach based on their
current and future profitability, derived from analysis of shopping behavior (frequency of
visits, types of purchases) and typical credit use.
We then developed marketing programs tailored to increase the loyalty of these high-
value customer segments (e.g., frequent tailored communications with consistent “best
customer” messages).
The new programs offered a mix of retail and credit benefits based on the shopping
preferences of each segment.
We also helped our client develop systems to track the programs closely, helped train
the frontline sales force to support the programs, and recommended to management
that strong project management was essential for the successful implementation of the
programs.
Results
Our client reduced downward migration by 20 to 30 percent for its highest-value
customer segments
c) Customer Insights
Background
A leading manufacturer of consumer goods faced eroding profits. Increasing raw
material costs and retailer price competition had triggered a downward spiral of industry
pricing, leading to declining profits.
The company asked McKinsey to evaluate whether and how customers and other
players could accommodate price increases.
Analysis and Teamwork

Our team conducted extensive market research and created models to gauge brand
and price sensitivity. The resulting customer insights suggested that prices could be
moved upward.
We worked with our client to develop a solution that included overall category price
increases at both the retailer and trade levels.
Results
Two successful price increases for the client resulted in an EBIT improvement of more
than a $100 million. The price movement changed the industry’s conduct on pricing and
enabled improved returns to the retailer. The efforts also improved relationships with
retailers, building the foundation for improved negotiations.

4.3. The Best Buy Experiment
A good example of a major retailer who has adopted a customer-centric approach is

Best Buy. About three years ago, Best Buy determined that it could not continue to
operate on price as its major strategy and message to its customer. Brad Anderson,
chief executive officer (CEO) of Best Buy, said, "If we do nothing, Wal-Mart will surpass
us by the simple fact that they open more stores than we do each year. “There is no
point in trying to compete on price"
How Best Buy became customer-centric
With that statement in mind, Best Buy launched its customer-centric strategy. During
2005, Best Buy spread its customer-centric message to selected North American stores
(110 in all), and allocated more than $50 million in capital expenditures to those stores.

The initiative was two-pronged—getting customers to buy what was already in stock,
and asking them what products they would like to see the company offer.
Best Buy identified key customer segments in five areas of its customer-centric
program:
 Affluent professionals seeking the best technology experience (internally

identified as "swinging single professionals").
 Younger males wanting cutting-edge technology and entertainment

("gadgeteers").
 Fathers looking for technology to improve their lifestyle ("cherry pickers").
 Mothers seeking technology to enrich their children's lives ("affluent soccer

moms").
 Small business-people using technology to improve their bottom lines ("small

business").
The way Best Buy adapted the stores to target each segment is interesting. For
example, for the soccer mom, the stores feature brightly colored signage, play
areas for children, educational toys, and in-wall appliance displays, and provide
personal shopping assistants. For small businesses, the stores have signage that
reads "Best Buy for Business," and have an expanded computer section and a
stronger "Geek Squad" (Best Buy's in-home/office technology assistance team)
presence, as well as central help islands staffed by associates wearing blue-
collared shirts (as opposed to knitted golf shirts)
Part of the strategy also included giving employees closest to the customer some of the
more important decision-making responsibilities. In addition, Best Buy store associates
received customer-centric training to be able to really deliver on the promise at the store
level.

"People come to specialty stores because they are looking for some service or selection
that they can't get from the mass market," Anderson said. He went on to say that "for
those reasons, Best Buy intends to invest more heavily in customer service, and
position itself as a solutions provider for consumers of high-tech entertainment products.
Best Buy's customer service initiatives will mean a more decentralized structure for the
business. We are moving power from Minneapolis [the company's headquarters] to
wherever the engagement is with the customer. Instead of head office telling the store
what to do, it would be the store asking what it can do in assisting its customers."
Internally, Best Buy has also worked extensively on its customer database. The
company wanted to identify who its best customers are, as well as who the customers
are that are costing them money by abusing their customer service policies.
Results of Best Buy becoming customer-centric
Initially, the customer-centric strategy in the stores paid off. The company posted an
incredible 85 percent profit gain in its fiscal first quarter in 2005—a gain Best buy
attributed, in part, to its customer-centric initiative. In the first quarter, sales increases at
stores converted to the new model were more than double the increases at Best Buy’s
"comp" stores without the initiative. But in December 2005, Best Buy said its third-
quarter profit would fall well short of Wall Street expectations because of higher costs.
Anderson said that month that the company's "customer-centricity" initiative has proved
more expensive than anticipated, and Best Buy might have to eliminate staff to help
control costs.
"Right now, the evidence suggests that we overspent" on becoming more customer-
centric, Anderson said. "We have to make adjustments." But he also says that Best
Buy's commitment to being customer-centric has not been reduced. “Customer-
centricity at its core is ... identifying a customer that you want to serve better,” he said.
"In some stores, it's working great."
Lessons Learned

The lesson to be learned from Best Buy's move to a more customer-centric focus is not
that it doesn't work, but rather, that it is not an easy thing to accomplish. Best Buy likely
should have done it slower and used more of what they learned about each segment
before they expanded the program. Another issue they are trying to address is that
many locations have a mix of all five customer segments, and to design a store for just
one of these segments can be dangerous. They are now trying to integrate areas for all
five segments, with one being dominant (without ignoring the others).
Being customer-centric is key to future growth and profitability, but it must be done right.
First you need to identify the major groups of customers (the "segments" described
earlier) that now shop at your store, and then identify what these customers have in
common, how they like to shop, and what products they like.
When you have answered these questions, you are ready to structure your store
experience for these customer segments.
Checklist for Creating Customer-Centric Stores
1. Have you identified distinct customer segments? Two or three are good, but
more than five is too many. For example, how many younger, middle-aged, or
older customers do you serve? How many price-sensitive, quality-driven, speed-
oriented customers do you have?
2. Do you know the special needs and wants of each segment? Have you asked
them in either informal focus groups or by observing their current purchases?
3. Do you have products and services that meet these customers' needs and
wants?
4. Have you created an environment that is attractive to each segment? Mid-lifers,

for example, would welcome easier to read price tickets, chairs to sit in while
considering a purchase, and more open areas.

5. How will you communicate with each segment? For each segment you identify,
you should create a specific strategy around merchandise selection, display,
signage, staff, pricing, and special events that addresses their needs.
6. Is your staff aligned with these segments? For example, if you have a large
segment of younger customers, you should most likely have younger staff who
can relate to this segment.
7. Is your staff trained to meet the requirements of these customers? And have you
put a training program in place?
8. How will you measure success? What specific measures will you use to ensure
that the program is working?
9. Is your technology sufficient to deliver the information about these customers?

For example, can you implement real customer relationship management (CRM)
solutions; can you do shopping basket clustering? Can you get real time data
when you need it?
If you take the time to fully answer these nine questions, you will be well on your way to
making your store customer-centric, and enjoying the increased sales and customer
satisfaction that comes with that.


CHAPTER NO 5:
REVIEW OF LITERATURE
5. Review of literature
5.1. Newspaper and Magazines

Newspaper: – [Financial Times, 2000, p.25]
Before 1993, CRM included two major markets

1. Sales Force Automation (SFA) and
2. Customer Services (CS).

Sales Force Automation was initially designed to support salespersons in managing

their touch points and to provide them with event calendars about their customers.
SFA’s meaning expanded to include opportunity management that is supporting sales
methodologies and interconnection with other functions of the company such as
production. The box below indicates the range to sales force automation capabilities
currently available.
Sales Force Automation Capabilities
 Contact Management: Maintain customer information and contact histories for

existing customers. May include point in the sales cycle and in the customer’s
replenishment cycle
 Activity Management: Provide calendar and scheduling for individual sales
People
 Communication Management: Communicate via E-mail and fax
 Forecasting: Assist with future sales goals, targets, and projections
 Opportunity Management: Manage leads and potential leads for new customers
 Order Management: Obtain online quotes and transform inquiries into orders
 Document Management: Develop and retrieve standard and customizable
management reports and presentation documents
 Sales Analysis: Analyze sales data
 Product Configuration: Assemble alternate product specifications and pricing
Marketing Encyclopedia: Provide updated information about products, prices,
promotions, as well as soft information about individuals (e.g., influence on
buying decisions) and information about competitors
Compared to SFA, Customer Service (CS) is an after sales activity to satisfy customers.
The goal of Customer Service is to resolve internal and external customer problems
quickly and effectively. By providing fast and accurate answers to customers, a
company can save cost and increase customer loyalty and revenue. As shown in the
box below, customer services include call center management, field service
management, and help desk management.

Customer Services Capabilities

Call Center Management
Provide automated, end-to-end call routing and tracking
Capture customer feedback information for performance Measurement, quality control,
and product development
Field Service Management

Allocate, schedule, and dispatch the right people, with the right parts, at the right time
Log materials, expenses, and time associated with service orders
View customer history
Search for proven solutions
Help Desk Management

Solve the problem by searching the existing knowledge base
Initiate, modify, and track problem reports
Provide updates, patches, and new versions
Today, CRM includes all customer-facing applications, including:

o Sales Force Automation (SFA),
o Customer Service (CS),
o Sales and Marketing Management (SMM), and
o Contact & Activity Management [Emerging Market Technologies, 2000].
MAJOR VENDORS
The major vendors changed over time. In 1993, the leaders of SFA were Brock Control,
Sales Technologies, and Aurum. Since then, Brock Control changed its name to
Firstwave Technologies, Inc. In 1998, Sales Technologies merged with Walsh
International and now is consolidated into SYNAVANT Inc. to provide pharmaceutical
and healthcare industry relationship management service. Aurum was merged into
Baan, which in turn was acquired by Invensys plc in July 2000 [Invensys, 2000].
In the CS area, Scopus, Vantive and Clarify were the major vendors. However, things
also changed rather rapidly:

 Siebel merged with Scopus in 1995 and dominated the consolidated CRM market
with 68% market share.
 Vantive was bought by PeopleSoft in 1999.
 Clarify was bought by Nortel in 1999.
In 1998, the CRM market was divided by Siebel, Vantive (now PeopleSoft), Trilogy, and
Clarify (now Nortel), and Oracle (in that order) plus fewer than 20 other companies with
small market shares. [Financial Times, 2000, p. 1]
At the beginning of 2000, Siebel Systems Inc. was the market leader with a 35% share.
Vantive (PeopleSoft) and Clarify Inc. (Nortel) followed. SAP and Oracle Corporation
were introducing new application to the market based on their software development
capabilities. Recent entrants offering Web applications and services include Silknet
Software, Epiphany, and netDialog. [Hamm, 2000]
CURRENT OFFERINGS
The current Siebel application provides a customer information system, a product
information system, a competitive information system, and a decision support system
with a large database. [Financial Times 2000, p.25]
Today, the rapid development of network and communication technologies leads each
CRM company to move towards new technologies such as data warehousing,
knowledge management, and portals on the web. [Howlett, 1999]
In addition, a reverse movement took place as many companies in such fields as data
warehousing and Enterprise Resource Planning (ERP) began offering CRM software.

5.2. Internet: – Wikipedia
CRM includes many aspects which relate directly to one another:
 Front office operations — Direct interaction with customers, e.g. face to face
meetings, phone calls, e-mail, online services etc.
 Back office operations — Operations that ultimately affect the activities of the
front office (e.g., billing, maintenance, planning, marketing, advertising,
finance, manufacturing, etc.)
 Business relationships — Interaction with other companies and partners, such
as suppliers/vendors and retail outlets/distributors, industry networks (lobbying
groups, trade associations). This external network supports front and back
office activities.
 Analysis — Key CRM data can be analyzed in order to plan target-marketing
campaigns, conceive business strategies, and judge the success of CRM
activities (e.g., market share, number and types of customers, revenue,
profitability).
Types/variations of CRM
Operational CRM
Operational CRM provides support to "front office" business processes, e.g. to sales,
marketing and service staff. Interactions with customers are generally stored in
customers' contact histories, and staff can retrieve customer information as necessary.
Operational CRM processes customer data for a variety of purposes:
 Managing campaigns
 Enterprise Marketing Automation
 Sales Force Automation
 Sales Management System
Analytical CRM
Analytical CRM analyzes customer data for a variety of purposes:
 Designing and executing targeted marketing campaigns

 Designing and executing campaigns, e.g. customer acquisition, cross-selling, up-
selling, add-on-selling
 Analyzing customer behavior in order to make decisions relating to products and
services (e.g. pricing, product development)
 Management information system (e.g. financial forecasting and customer
profitability analysis)

Analytical CRM generally makes heavy use of data mining and other techniques to
produce useful results for decision-making. It is at the analytical stage that the
importance of fully integrated CRM software becomes most apparent. Logically
speaking, the more information that the analytical software has available for analysis,
the better its predictions and recommendations will be.
Sales Intelligence CRM
Sales Intelligence CRM is similar to Analytical CRM, but is intended as a more direct
sales tool. Features include alerts sent to sales staff regarding:
 Cross-selling/Up-selling/Switch-selling opportunities
 Customer drift
 Sales performance
 Customer trends
 Customer margins
 Customer alignment
Campaign Management
Campaign management combines elements of Operational and Analytical CRM.

Campaign management functions include:
 Target groups formed from the client base according to selected criteria
 Sending campaign-related material (e.g. on special offers) to selected recipients
using various channels (e.g. e-mail, telephone, SMS, post)
 Tracking, storing, and analyzing campaign statistics, including tracking
responses and analyzing trends.

Collaborative CRM
Collaborative CRM covers aspects of a company's dealings with customers that are
handled by various departments within a company, such as sales, technical support and
marketing. Staff members from different departments can share information collected
when interacting with customers. For example, feedback received by customer support
agents can provide other staff members with information on the services and features
requested by customers. Collaborative CRM's ultimate goal is to use information
collected by all departments to improve the quality of services provided by the company.
[7]
CRM also plays a role of data distributor within customers, producers and partners.
Producers can use CRM information to develop products or find new market. CRM
facilitates communication between customers, suppliers and partner by using new
information system such email, link and data bank.
Consumer Relationship Systems
Consumer Relationship System (CRS) covers aspects of a company's dealing with

customers handled by the Consumer Affairs and Customer Relations contact centers
within a company. Representatives handle in-bound contact from anonymous
consumers and customers. Early warnings can be issued regarding product issues (e.g.
item recalls) and current consumer sentiment can be tracked.
Simple CRM
A relatively new spinoff of the traditional CRM model first appearing in 2006. At their
core, CRM tools are designed to manage customer relationships. As described above
there are countless supplemental features and capabilities. Simple CRM systems
breakdown the traditional CRM system to focus on the core values managing contacts
and activities with customers and prospects. These systems are designed to create the
most value for the immediate end user rather than the organization as a whole. Many
times they focus on satisfying the needs of a particular marketplace niche,
organizational unit, or type of user rather than an entire organization.

Social CRM
Beginning in 2007, the rapid growth in social media and social networking forced CRM
product companies to integrate "social" features into their traditional CRM systems.
Some of the first features added are social network monitoring feeds (i.e. Twitter
timeline), typically built into the system dashboard. Other emerging capabilities include
messaging, sentiment analysis, and other analytics. Many industry experts contend that
Social CRM is the way of the future, but there are still many skeptics. Top CRM minds
agree that online social communities and conversations carry heavy consequences for
companies. They must be monitored for real-time marketplace feedback and trends.

CHAPTER NO 6:
POWERPOINT SLIDES

APPENDIX
APPENDIX A
About the CRM Practice by IBM
IBM clients – businesses worldwide, across industries – are today reaping the rewards
of a self-sustaining approach to CRM that enables them to accurately assess their
strengths and weaknesses, calculate risks, control investments, manage change and
set reasonable expectations from the start.
• Customer Focused Strategy spans the breadth of CRM transformation – from planning
through implementation and value realization – to help companies develop and manage
customer focused and CRM programs in a thoughtful, informed way using a practical,
focused, best practices-based process.
.
• Marketing and Sales Transformation focuses on solutions for improving the
effectiveness and efficiency of marketing and sales professionals to help organizations
utilize customer-related data to uncover patterns of behavior, deploy marketing
programs, increase sales productivity and accurately measure the success – and
returns – of customer focused initiatives.
• Service Transformation helps clients transform service operations to create customer

value, based on reduced service cost and improved customer satisfaction. Service
Transformation drives effectiveness and efficiency through the many stages and
channels of the post-sales service lifecycle.
• Contact Center Optimization improves the efficiency and effectiveness of contact

centre operations. It covers inbound and outbound, sales and service contact centers
and their related self-service channels.
• Business Intelligence describes an environment where relevant, accurate information

is provided in time to respond with speed in making decisions and taking action,
enabling companies to learn about their customers via a readily available and
information-rich environment.

APPENDIX B
DON’T ASK IF U CAN’T ACT

10 DEADLY SINS OF CUSTOMER SURVEY
EXCUTIVE SUMMARY

Despite the tendency of companies in every type of industry to seek customer feedback
through seemingly customer-centric surveys, the state of the customer experience and
of the relationship between companies and customers remains tenuous. Companies
continually fail to understand the value and purpose of these surveys from the
perspective of their customers. In the absence of this understanding, companies fail to
act and deliver the requisite changes that their customers have come to expect. While
companies are seeking feedback and data, customers are expecting action and change.
This behavior can have disastrous consequences and can lead to a decrease in
purchase frequency and increase in customer attrition. Even when these consequences
become apparent, many companies often remain self-centric, egotistical, transaction
based and product focused. They fail to act on the stated requests of customers or
utilize customer surveys as a way to excite customers and improve the customer
experience.
THE 10 DEADLY SINS OF CUSTOMER SURVEY
Over the years, we have been approached with numerous requests to improve
customer surveys so that results will translate into meaningful follow up that will lead to
measurable improvement. The following is a compilation of the deadliest sins of
customer survey design and execution that we found common to many companies.
Deadly Sin #1. Survey with an attitude

The most common sin is designing a questionnaire that is geared towards reaffirming
and validating the greatness and behavior of a company, not to conduct a true dialogue
with customers. Many customers realize this deception and either choose not respond
or respond in the exact manner requested by the company, thereby preventing the
company from ever discerning the true feelings of its customers and limiting the
opportunities for improvement. “You get what you ask for”. By committing this deadly
sin, companies make certain that they receive the scores they ask for – while ignoring

and alienating their customers and encouraging repeat behavior that desperately needs
improvement.
Deadly Sin #2. Failure to Capture Employee Emotions

Imagine being served a steak on time that is cooked exactly as requested. Satisfied?
Now imagine being served that perfectly cooked steak, this time by a server with a
resentful stare. Still satisfied? Many companies measure the attributes of their products
and services but routinely fail to capture the emotional element of the total experience –
the emotions of their employees. Inappropriately known as “soft skills”, positive attitudes
deliver positive results. The failure to capture and measure the emotions and attitudes
that are associated with your experience is a combination of not recognizing their
importance and the inability to measure them. Customer survey results that lack
emotion-based measurements are incomplete and present a distorted view of the
customer experience.
Deadly Sin #3. Statistically Speaking

Surveys are often designed by people with PhDs in statistics rather than by people who
truly understand customers and how companies operate. Statistics-based surveys are
typically not designed with follow-up actions in mind but rather as an exercise to qualify
a thesis in statistical analysis. The results of these surveys will be statistically valid but
the gap between the results and required actions will be too difficult to bridge. Although
all studies need to be statistically valid, there is a tendency of going overboard with the
statistical elements of the study’s design and a failure to design these studies in such a
way that will provide and empower managers with insight for actions. But will fail to
connect it to real life and follow up with concrete actions. Managers who use these
statistical studies may enjoy it as an intellectual exercise.
Deadly Sin #4. *In search of data not strategy

Customer surveys are often treated as just another spreadsheet full of numbers. The
decision to launch these surveys is not made as part of a customer-centric strategy, but
rather as a non-committal data gathering process that must take place for some stated
(or often unstated) reason. Companies rarely establish a strategic intent for the study
prior to deployment, leading them to deploy surveys in search of numbers, not answers.
As such, managers view the information as FYI or as yet another set of numbers they
need to calibrate against other sources of data they see every day from analyst reports
to news articles. When launched as a data gathering activity, customer surveys will
receive very little attention to say nothing of follow-up actions. Lacking strategic intent at
the onset of the study will result in limited strategic impact at its conclusion.
Deadly Sin #5. Challenging the result

When customer opinions are finally analyzed, correlated and reported, a typical
manager response is to challenge the validity of the results. Rather than looking at the
customers’ feedback as guidelines for taking action, managers will often spend their
time disputing the results to avoid any change. Managers will often cite other sources of
data from internal databases of external reports to contradict the survey’s findings. They
may also cite personal encounters with customers who said “exactly the opposite” of the
survey’s findings. This deadly sin will lead companies to challenge their customers’
feedback rather than internalize it. Beyond ego, behind this deadly sin lies the attempt
to avoid any (necessary) change and maintain the status quo.
Deadly Sin #6. Analysis

“Can we have the date segmented by zip codes in southern Alaska?” Endless analysis
often leads to the postponement of necessary changes and actions. Rather than facing
the results head on, managers will dig deeper into the data, creating endless ways of
slicing and dicing the data in the hope of finding a better picture than the one painted by
the report. The search for more data generally lacks any actionable purpose and is
often nothing more than the pursuit of numbers for numbers sake. The common threat
is the same – the more we engage in data analysis, the more we delay execution. The
result will be piles of reports about every possible scenario, and with managers trying to
digest so much information – they will be unable to take any substantive action.

Deadly Sin #7. Lack of Prioritization

Customer surveys provide a wide variety of ideas for follow-up action. In order to make
use of them, they need to be prioritized. Attempting to fix everything, although
admirable, is simply not feasible. Surveys need to be designed with the ability to
recognize and prioritize areas of importance, or managers will not be able to move from
gathering data to taking action. For example, despite low customer satisfaction survey
scores with a company’s website, where customers may truly want to see improvement
is in response times with the customer service department. Prioritization is predicated
on importance and satisfaction, not on satisfaction alone. In the absence of
prioritization, companies may find themselves addressing the wrong issues or assigning
resources to areas that are not very important to their customers. Worse yet, a company
may end up debating endlessly on where to get started and delay urgently required
actions – disappointing their customers in the process.
Deadly Sin #8. Lack of cross functional leadership

Addressing customer survey findings is not the responsibility of a single function in the
organization. This requires cross functional coordination to ensure that all touch points
are addressed and the overall experience is being improved. Any cross-functional effort
will be challenging as each function operates according to its own agenda and metrics.
However, with customer surveys, this problem is magnified since it deals with people’s
faults and problems. Customer insights are subsequently treated as hot potatoes and
tossed from one function to the other. No one wants to assume responsibility for failures
such as faulty service or poor quality products. Customer survey results can often lead
to finger pointing and only a fully mandated cross functional Leadership can mobilize an
organization’s functions, agendas and personal opinions toward the required results.
Most companies commit this deadly sin by not assigning such leadership in advance
and by extension, not allowing real attention to execution to take place.
Deadly Sin #9. Change management

The single purpose of customer surveys should be improvement through change and
survey designers need to account for this when designing the survey. Customer surveys
are viewed by customers not as an opportunity to praise the company but rather as a
promise that the time spent responding will be honored with changes to policies,
processes and the overall customer experience. Since the corporate view of these
surveys stands in stark contrast to the view of customers, companies take limited or no
proactive action to ensure that when customers demand changes to policies or
processes, they can take immediate and corrective action. The tendency of
demonstrating reactive rather than proactive behavior as it relates to change serves to
fracture a relationship that needs healing.
.
Deadly Sin #10. Lack of follow up with customer
Customer surveys raise customer expectations. When customers are told that their
opinions matters, they take it seriously and expect to see changes, particularly when
they have committed time and effort to provide feedback. When companies do in fact
act and change policies, alter processes and add new services to reflect their
customers’ feedback, they seldom communicate these changes to their customers. The
next time the customer is likely to learn of these changes is during the next complaint
(when it may not matter). During this time, the customer has likely harbored ill feelings
towards the company, possibly communicated these feelings to others, refrained from
purchasing additional products or services, looked at competitive offerings or even
purchased from competitors. The company could have avoided this by communicating
these changes to the customer and subsequently improved its image. The lack of follow
up can render necessary and highly desirable changes useless.

BIBLIOGRAPHY
BIBLIOGRAPHY
Customer Relationship Management

Paul Gray Professor, Jongbok Byun

Why CRM doesn’t work how to win by letting customers manage the relationship
Frederick Newell, Seth Godin.
Customer Relationship Management Systems Handbooks

Duane E. Sharp
"The Customer-Centered Enterprise: How IBM and Other World-Class Companies

Achieve Extraordinary Results by Putting Customers First”
Harvey Thompson.
Managing Customer Relationships: A Strategic Framework

Don Peppers and Martha Rogers, PhD
2009 Global Customer Experience Management Benchmark Study

Strativity Group (2009)
Financial Times (2000) Financial Times Surveys Edition, June 7, 2000.
http://www.businessballs.com/crmcustomerrelationshipmanagement.htm
http://www.peppersandrogersgroup.com/view.aspx?docid=642
http://www.peppersandrogersgroup.com/view.aspx?itemid=548
http://totalqualitymanagement.wordpress.com/2008/09/12/customer-focus-and-
satisfaction/
http://www.microsoft.com/dynamics/en/us/industries/retail-customer-centric.aspx
http://www.mckinsey.com/practices/marketing/casestudies/crm.asp

http://en.wikipedia.org/wiki/Customer_relationship_management#cite_ref-0
http://books.google.co.in/books?
id=EBXVE9LU5k8C&printsec=frontcover#v=onepage&q=&f=false
http://www.allbusiness.com/sales/customer-service/4356639-1.html
INDEX
1. Introduction...........................................................................................................................1
2. Customer and Customer Focus.............................................................................................5
2.1. Definition of Customer..................................................................................................5
2.2. What does customer focus mean?.................................................................................6
2.3. What do customers want?..............................................................................................6

2.4. What is Customer Satisfaction?....................................................................................7
2.5. How is Customer’s expectation related to his satisfaction?..........................................7
2.6. What are the main elements?.........................................................................................9
2.7. “Customer Focused Experience & Enterprise Framework”?......................................10
2.8. Six Customer Service Strategies That Win.................................................................13
3. Customer Relationship Management – CRM.....................................................................17
3.1. Why do organizations need CRM?.............................................................................18
3.2. CRM as a process........................................................................................................18
3.3. Why do organizations undertake CRM?.....................................................................19
3.4. Features of good CRM................................................................................................19
3.5. Customer focused CRM solution................................................................................20
3.6. How do you achieve a good CRM?.............................................................................20
3.7. Pareto's Law................................................................................................................21
3.8. What are 'Moments of truth'........................................................................................22
3.9. CRM and communications..........................................................................................23
3.10. People and CRM......................................................................................................24
3.11. Benefits of effective CRM.......................................................................................25
3.12. CRM software solutions and ICT (information, communication & technology)....25
4. Case Study..........................................................................................................................28
4.1. Peppers&RogersGroup................................................................................................28
4.2. McKinsey&Company..................................................Error! Bookmark not defined.
4.3. The Best Buy Experiment...........................................................................................40
5. Review of literature............................................................................................................46
5.1. Newspaper and Magazines..........................................................................................46
5.2. Internet: – Wikipedia...................................................................................................50

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CUSTOMER FOCUS & RELATIONSHIP

(Roll No: 2009PECMB169)

PANIMALAR ENGINEERING COLLEGE

FAULTY OF MANAGEMENT STUDIES

MASTER OF BUSINESS ADMINISTRATION

The paper has been divided into the following parts –

 Customer focus and what does that entail

 Customer experience framework

 Customer relation management - CRM

 Communication in CRM and benefits of effective CRM

In the customer focus section the following are discussed –

 What do customers want?

 What is customer satisfaction and

 Customer’s expectation – dynamic nature of it and the parameters

 Customer focused organization

In the customer Relationship management section, different aspects of CRM like

 Front office operations,

 Back office operations,

 Analyses of data are looked into.

Different types of CRMs like

 Sales Intelligence CRM,

 Collaborative CRM is also discussed.

Case studies section is divided into three –

 Mckinsey case studies and

 Best buy experiments with CRM are detailed out.

CRM is an abbreviation for Customer Relationship Management, not Customer

Seetharam. A PANIMALAR ENGINEERING COLLEGE Page 1

CRM involves all of the corporate functions (marketing, manufacturing, customer

Peter Drucker said, “The purpose of a business is to create customers.” Implied in

Seetharam. A PANIMALAR ENGINEERING COLLEGE Page 2

 Children in care: social services, education services, transport services, leisure

Seetharam. A PANIMALAR ENGINEERING COLLEGE Page 3

Seetharam. A PANIMALAR ENGINEERING COLLEGE Page 4

2. Customer & Customer Focus

“Your most unhappy customers are your greatest source of learning.”

2.1. Definition of Customer

Seetharam. A PANIMALAR ENGINEERING COLLEGE Page 5

2.2. What does customer focus mean?

Customer Focus is an aligned, organization-wide and unwavering commitment to

In a Customer-Focused organization, Leadership Processes and People are customer-

1. Every action is shaped by a relentless commitment to meeting and exceeding

2. Customer touch points and supporting internal processes are constantly

2.3. What do customers want?

Seetharam. A PANIMALAR ENGINEERING COLLEGE Page 6

2.4. What is Customer Satisfaction?

Customer satisfaction is not an objective statistics but more of a feeling or attitude. If a

2.5. How is Customer’s expectation related to his satisfaction?

If an organization cannot at least meet its customers' expectations it will struggle.

Rule No 2 - Customer expectations will constantly change so they must be determined

 Social and demographic factors

 health and safety support

Seetharam. A PANIMALAR ENGINEERING COLLEGE Page 8

2.6. What are the main elements?

Seetharam. A PANIMALAR ENGINEERING COLLEGE Page 9

2.7. “Customer Focused Experience & Enterprise Framework”?

Seetharam. A PANIMALAR ENGINEERING COLLEGE Page 10

To complicate matters, customer experiences have emotional characteristics which

 Customer focused organization.

The old viewpoint in industry was:

The new viewpoint in industry is:

Seetharam. A PANIMALAR ENGINEERING COLLEGE Page 12

2.8. Six Customer Service Strategies That Win

Strategy #1: Stay in Touch