A STUDY ON EFFECTIVENESS OF CUSTOMER RELATIONSHIP

MANAGEMENT ON COMPANY DEVELOPMENT WITH SPECIAL

REFERENCE TO MALABAR TRADING COMPANY-
PERINTHALMANNA
1.1 INTRODUCTION
CRM is passed and the premises that by having a better understanding of the customer’s needs
and desires .We can keep them longer and sell more to them.
There are various customer relationship management problems that businesses are faced with
time after time. Proper management of customer interactions is a major challenge for modern
companies, especially with the high competition that is now witnessed. The ages of monopoly
are long gone and consumers’ rapid sophistication rate has meant dissatisfaction in the first
experience will lead to ultimate loss. The key to brand building has shifted over the years to rely
solely on quality, reliability and efficiency of service. Businesses are therefore faced with the
challenge of retaining existing customers and sourcing new ones in their path to success. Poor
customer relationship management will result in disastrous outcomes including customer loss,
company misdirection and eventual liquidation.
Customer Relationship Management involves the management of a company’s relations with its
customers and its potential clients. It fuses basic business techniques, human resources, and
technology to accomplish its mission: to maintain and to acquire the right customers, the ones
who will not just buy today, but will continue purchasing its products in the future. It’s a general
business strategy to help companies, even small businesses, understand their customers and their
purchasing habits in order to build better, longer relationships with them that will benefit both
parties.

Customer relationship management (CRM) is a technology for managing all your company’s
relationships and interactions with customers and potential customers. The goal is simple:
Improve business relationships. A CRM system helps companies stay connected to customers,
streamline processes, and improve profitability. When people talk about CRM, they are usually
referring to a CRM system, a tool that helps with contact management, sales management,
productivity, and more. A CRM solution helps you focus on your organisation’s relationships
with individual people — including customers, service users, colleagues, or suppliers —
throughout your lifecycle with them, including finding new customers, winning their business,
and providing support and additional services throughout the relationship.

1.2 STATEMENT OF THE PROBLEM

There are other minor challenges faced which are much easier to deal with and have marginal
impacts on the results. Dedication, comprehensive planning and professional execution should
all be harmonized to produce the best results and minimize chances of losses through
misdirection. Customer relationship management problems should be expected and forecast to
ensure various solutions are put in place to deal with them, if not totally prevent them.
1.3 OBJECTIVES OF THE STUDY
PRIMARY OBJECTIVES
 A study the customer relationship management of Malabar Trading Company

SECONDARY OBJECTIVES
 To study the level of Service with the customer.
 To analyse the effectiveness of customer relationship management on customer satisfaction.
 To explore various CRM activities conducted or initiated by various companies

1.4 IMPORTANCE OF THE STUDY

 CRM helps businesses learn about their customers, including who they are and why they
purchase your products, as well as trends in customers' purchasing histories. This allows
businesses to better anticipate their customers' needs and, as a result, fulfill them.
 All the processes that will be undertaken in achieving the set goals should be clearly
defined and relayed to everyone. The best practice involves establishing a central
repository system that can be accessed by everyone. This system should contain all the
process definitions as well as a section for documentation to act as a referencing
resource.
 Businesses often find problems in defining key processes such as management changes,
re-evaluations and security measures. This has arguably been the demeanor of many
attempts to establish effective CRMs that can last. Security is important as it identifies
those who are authorized to access information at any given level.

1.5 SCOPE OF THE STUDY

The study will most probably help-pad the understand note and importance of CRM in the
working of this company. The study was conducted in well structured questionnaire the findings
will help to analyse and solve the problem faced by suitable suggestions.The scope of the study
covers in depth , the various activities in Customers Relationship Management is limited to
company. It also work for maintain good relationship with customer and try to avoid customer
retention for make an good growth.
 1.6 RESEARCH METHODOLOGY

Research methodology is the specific procedures or techniques used to identify,

select, process, and analyze information about a topic. In a research paper, the
methodology section allows the reader to critically evaluate a study's overall validity
and reliability.
1.6.A RESEARCH DESIGN:-
Fundamental to the success of any research project is a sound research design. In this
project descriptive type of research design is used.
1.6.B SAMPLE DESIGN:-
Simple random sampling method is used for this study .
1.6. C SOURCES OF DATA
The data collection method is an integral part of research design. The data was
collected with the help of questionnaire and interview with the workers in SIMCO
The study is based on both primary and secondary data.
 PRIMARY DATA
It is the data used in research originally obtained through the direct efforts of
the researcher through surveys, interviews and direct observation. Primary data is
more costly to obtain than secondary data, which is obtained through published sources,
but it is also more current and more relevant to the research project .Primary data are
collected from questionnaire, interview and survey.
 2. SECONDARY DATA
Secondary data is the data that have been already collected by and readily
available from other sources. Such data are cheaper and more quickly
obtainable .secondary data are collected from company broachers, annual publications,
websites, registers and journal.
1.5.4 SAMPLE DESIGN
A sample design is a definite working plan for obtaining a sample from a given
population. It refers to the technique or the procedure the researcher would adopt in
selecting items for samples. As the customers for the study are from different parts of the
districts, We had to do convenience sampling. For the study I contacted fifty workers
from non random sample and collected information from them using questionnaire,
which are directly filled and mailed by the customers. Therefore the data is mainly
composed of primary nature.
 1. Population
Population of the study 100
2. Sample Size
Sample size refers to the number of items or respondents include in the sample.
The sample used for the study is the workers of SIMCO . Sample size is 50.
3. Sampling Technique
Random sampling method is the sampling technique used for the study.
1.6.D TOOLS USED FOR THE STUDY

 Tools for data collection

Primary data : Questionnaire is the tool used for collecting primary data.

Secondary data: Books, website, Journals, company records are the tools
used for collecting secondary data.

 Tools for data analysis

Percentage analysis

 Tools for Presentation

Tables and Graphs
1.6 PERIOD OF THE STUDY

The period of study is 21 days starting from ……………………

1.7 Limitations of the Study

 There may be personal bias of the respondents, which affect the results of the study.
 The sample size was limited to 100.
 The attitude of the worker changes from time to time. Hence the result of the research
may be applicable only at present.
 The researcher may not get exact information because some of the employees are
reluctant to share the information
 CHAPTER II
LITERATURE REVIEW
AND
THEORETICAL FRAME WORK
 LITERATURE REVIEW
Review of Literature on CRM:

Customer Relationship Management (CRM) has become one of the most dynamic
technology topics of the millennium. According to Chen and Popovich (2003), CRM is not a
concept that is really new but rather due to current development and advances in information and
enterprise software technology, it has assumed practical importance. The root of CRM is
relationship marketing, which has the objective of improving the long-term profitability of
customers by moving away from product-centric marketing.

Bose (2002) noted that CRM was invented because the customers differ in their
preferences and purchasing habits. If all customers were alike, there will be little need for CRM.
As a result, understanding customer drivers and customer profitability, firms can better tailor
their offerings to maximize the overall value of their customer portfolio (Chen and Popovich).
The attention CRM is currently receiving across businesses is due to the fact that the marketing
environment of today is highly saturated and more competitive (Chou et al, 2002). According to
Greenberg (2004), CRM generally is an enterprise-focused endeavor encompassing all
departments in a business. He further explains that, in addition to customer service, CRM would
also include, manufacturing, product testing, assembling as well as purchasing, and billing, and
human resource, marketing, sales and engineering. Chen and Popovich (2003) argued that CRM
is a complicated application which mines customer data, which has been retrieved from all the
touch points of the customer, which then creates and enable the organization to have complete
view of the customers. The result is that firms are able to uncover and determine the right
type of customers and predicting trend of their future purchases. CRM is also defined as an
all embracing approach that seamlessly integrates sales, customer service, marketing, field
support and other functions that touch customers (Chou et al, 2002). They further stated that
CRM is a notion regarding how an organization can keep their most profitable customers and at
the same time reduce cost, increase in values of interaction which then leads to high profits.

The modern customer relationship management concept was shaped and influenced by the
theories of total quality management (Gummesson) and by new technological paradigms
(Zineldin, 2000). There is however, a perceived lack of clarity in the definition of customer
relationship management, although all accepted definitions are sharing approximately the same
basic concepts: customer relationships, customer management, marketing strategy, customer
retention, personalization (Zineldin 2000).
 However, while academics debate the subtitles of various definitions, the practitioners
have developed a wealth of applicative papers analyzing the concrete challenges and
opportunities of implementing the systems (Bacuvier et al. 2001). CRM in some firms is
considered as a technology solution, considering of individual databases and sales force
automation tools and sales and marketing functions so as to improve targeting effort. Peppers
and Rogers (1999) argued that other organizations view CRM as a tool, which has been
particularly designed for one-to-one customer communications, which is the function of sales,
call centres or the marketing departments. Accordingly Frow and Payne (2004) added that CRM
stresses two-way communication from the customer to the supplier to build the customer over
time. The two-way communication has been enhanced greatly by advances in technology
particularly the Internet.

In term of information technology (IT), CRM means an enterprise –wide integration of

technologies working together such as data warehouse, web site, and intranet/extranet, phone
support system, accounting, sales, marketing and production. Kotler (2000) assured that CRM
uses IT to gather data, which can then be used to develop information acquired to create a more
personal interaction with the customer. In the long-term, it produces a method of continuous
analysis and reinforcement in order to enhance customer’s lifetime value with firms.

Goldenberg (2000) believes that CRM is not merely technology applications for
marketing, sales and services but rather when it is successfully implemented ; it enables firms to
have crossfunctional , customer-driven , technology-integrated business process management
strategy that maximses relationships. Chin et al (2003) stated that that due to many technological
solutions available for CRM automation, it is often misconstrued as a piece of technology. But
they maintained that in recent times many companies have realized the strategic importance of
CRM, and as a result, it is becoming a business value-effort rather than technology- centric
effort.

Using information technology as an enabler, CRM strategy leverages key functional

areas to maximize profitability of customer interactions (Chen and Popovich, 2003). It has been
recognized that technological advancements and innovations , keen competitive marketing
environment , coupled with the internet are main drivers of present and future customer
profitability which makes it possible to appropriately and proportionately allocate firm’s
resources to all functional areas that affect customer relationship ( Chou et al , 2003).

For customers, CRM offers customization, simplicity and convenience for completing
transactions irrespective of the kind of channel of interaction used (Gulati and Garino, 2000).
Many businesses today realize the importance of CRM and its potential to help them achieve and
sustain a competitive edge (Peppard, 2000). This view was further boosted by Bose (2002) that
as a result of changing nature of the global environment and competition, firms cannot compete
favorably with minor advantages and tricks that can easily be copied by competing firms .The
implementation of CRM is an enabled opportunity to rise above minor advantages with real
focus on developing actual relationships with customers. Firms those are most successful at
delivering what customers want are the more likely to be leaders of the future.

Benefits of CRM
According to Chen and Popovich (2003), CRM applications have the ability to deliver
repositories of customer data at a much smaller cost than old network technologies. Throughout
an organization, CRM systems can accumulate, store, maintain, and distribute customer
knowledge. Peppard (2000) noted that effective management of information has a very
important role to play in CRM because it can be used to for product tailoring, service innovation;
consolidate views of customers, and for calculating customer lifetime value.

CRM systems assists companies evaluate customer loyalty and profitability based on
repeat purchases, the amount spent, and longevity. Bull (2003) added CRM makes it practicable
for companies to find unprofitable customers that other companies have abandoned. This
position is supported by Galbreth and Rogers (1999) that CRM helps a business organization to
fully understand which customers are worthwhile to acquire , which to keep, which have
untapped potential, which are strategic, which are important , profitable and which should be
abandoned.

Greenberg emphasized that CRM can increase the true economic worth of business
by improving the total lifetime value of the customer , adding that successful CRM strategies
encourage customers to buy more products, stay loyal for longer periods and communicate
effectively with a company. CRM can also ensure customer satisfaction through allocation,
scheduling and dispatching the right people, with the right parts, at the right time (Chou et al.,
2002).

According to Swift (2001), companies can gain many benefits from CRM
implementation. He states that the benefits are commonly found in one of these areas:

i) Lower cost of recruiting Customers

ii) No need to acquire so many customers to preserve a steady volume of
business
iii) Reduced cost of sales
iv) Higher Customer Profitability
 v) Increased Customer retention &
Loyalty
vi) Evaluation of customers
Profitability

Curry and Kkolou (2004) refer to the major benefits and reasons for adoption of
CRM which include: customers from the competition will come prefer the organization; a
simplified, customer – focused internal organization will simplify the infrastructure, shrinking
the work flow and eliminating non-productive information flow; and profits will increase from
satisfied customers which will lead to more compact & focused company.

There are some companies that adopt CRM systems just because it is the most advanced
technology and they think they should have it since their competitors have it (Chou et al, 2002),
Some statistics that motivate this behavior are resumed as follows:

a) By Pareto’s principle, it is assumed that 20% of a company’s customers generate 80% of

its profits.
b) In industrial sales , it takes an average of 8 to 10 physical calls in person to sell to a new
customer , 2 to 3 calls to an existing customer.
c) It is 5 to 10 times more expensive to acquire a new customer than obtain repeat business
from existing customer.
d) A typical dissatisfied customer tells 8 to 10 people about his or her experience source.
Getting to “know” each customer through data mining techniques and a customer-centric
business strategy helps the organization to proactively and consistently offer and sell more
products and services for improved customer retention and loyalty over long periods of time.
Peppers and Rogers (1999) refer to this as maximizing “lifetime customer share”, resulting in
customer retention and customer Profitability.
Like any other new function, CRM too has its own drawbacks and challenges. Any
organization that seeks to implement CRM may focus on value creation and on a continuous
stream of profits. They will give up their myopic fix that CRM is the fixed responsibility of
marketing or IT department. The firms will realize that in order for CRM to contribute to
corporate renaissance, the CRM responsibility must rise to the level of CEO. CRM will be more
strategy driven, and thus be able to concentrate on what customer expects from relationships.
The ‘final take’ for the CEOs will be that CRM is and can be a vehicle for cultural integration in
the organization. In short, a true CRM encourages a relationship view of the world that goes
beyond the customers, includes multi –members and facilitates corporate renaissance.

Two trends have brought CRM to the forefront, explains Boston University professor
Tom Davenport, who directs Andersen consulting’s Institute for Strategic Change. First, as
global competition has increased and products have become harder to differentiate, “companies
have begun moving from a product-centric view of the world to a customer-centric one,” says
Davenport. Second, technology has ripened to the point where it is possible to put customer
information from all over the enterprise into a single system. “Until recently, we didn’t have the
ability to manage the complex information about customers, because information was stored in

20 different systems,” says Davenport. But as network and Internet technology has matured,
CRM software has found its place in the world. Many companies are turning to
customerrelationship management systems to better understand customer wants and needs. CRM
applications, often used in combination with data warehousing, E-commerce applications, and
call centers, allow companies to gather and access information about customers’ buying
histories, preferences, complaints, and other data so they can better anticipate what customers
will want. The goal is to instill greater customer loyalty.

Types/Variations of CRM:

Types of CRM can be broadly understood by looking at the two different ways of
categorization.
These two types of categorization are as follows:

1. Proactive versus Reactive CRM

2. Operational, Collaborative and Analytical CRM

Proactive versus Reactive CRM:

When company responds to the recommendations/suggestions/complaints/requests of the
customers, it is called reactive CRM. Contrary to this, it is called Proactive CRM when a
company anticipates and responds to customers’ need of itself. In constant changing market
situations, proactive companies take stock of their customers’ future needs and provide value to
customers through their offerings.

Operational, Collaborative and Analytical CRM:

Operational CRM:

There are various ways through which a customer can approach the business. This
interaction is direct with company and its employees. The junction where this interaction
happens is called touch point. Usually transactions like sale, payment, information seeking,
queries, suggestions, and complaints happen at these operational touch points. That is why it is
also called front office CRM.

The customer can approach / be approached through the following ways:

• Face to face: Interacting while selling, serving customers by way of organizing

events, promotions etc.
• Database driven: In this interaction contacting customers is through
Telephone/Email/Mail/Fax/Loyalty programs/Cards/ATMs/SMS.
• Mass Media: when the contact is through public broadcasting. The contact is
public in nature and people at large are contacted. For example public advertising
and public relations campaigns.

Collaborative CRM:
Jill Dyche defines Collaborative CRM as a specific functionality that enables a two way
communication between a company and its customers through a variety of channels to facilitate
and improve the quality of customer interaction.( Dyche 2002)

The essence of collaborative CRM is to manage partners of the firm. These could be
channels, agents and other business stakeholders but not direct customers. The focus is on
maintaining relations with partners to facilitate coordination in business.

Analytical CRM:

Also known as back office or strategic CRM. This type of CRM is characterized by
presence of designations like business analysts. The objective of analytical CRM is to find out
various taste, preferences, and activities of the customers so as to customize solutions for them.
The basis of this data is captured customer interactions at various touch points. Extensive use of
MIS and technology is done in Analytical CRM.

CRM & eCRM:

The ability of the customers to take care of themselves through online or the firms being
able to take care of its customers through internet outlines the basic difference between CRM &
e CRM. As far as concept, methodology and process are concerned there is hardly any difference
 between CRM & e CRM. But there is lot of difference when it comes to execution as the
communication media is different.

E CRM is the customer facing internet portion of the CRM. It contains capabilities like self
service knowledge bases, automated email response system, personalization of web contents and
online pricing. Though E CRM increases efficiency by way of reducing cost, an increased
dependence only on e CRM can backfire .A dissatisfied customer wanting to meet an
employee of the company, might get frustrated in an e CRM setup. Therefore, it is prudent to
have a mix of web and traditional channels in CRM.

Ever changing customer interaction channel that constantly keep companies on its toes .
Various web applications have to keep it abreast with the changing needs of the customers. This
drives E CRM.

The declining cost of internet has increased affordability and accessibility. The speed and
convenience of internet has further added to growth of E CRM .

The companies have realized that there is need to customize. The customers are not
interested in mass mails.

The realization among companies that retention is more economical & feasible than new
customer acquisition .

Past Survey-Facts

Growth Strategies International (GSI) performed a statistical analysis of Customer

satisfaction data encompassing the findings of over 20,000 customer surveys conducted in 40
countries by Infoquest .

The conclusions of the study were:

a) A Totally Satisfied Customer contributes 2 .6 times as much revenue to a company as a

Somewhat Satisfied Customer.

b) A Totally Satisfied Customer contributes 17 times as much revenue as a Somewhat Dissatisfied

Customer.

c) A Totally Dissatisfied customer decreases revenue at a rate equal to 1.8 times what a Totally
Satisfied Customer contributes to a business.

d) By reducing customer defection (by as little as 5%) will result in increase in profits by 25% to
85% depending from industry to industry.
 An important facet of CRM is “customer selectivity”. As several research studies have
shown not all customers are equally profitable (In fact in some cases 80% of the sales come
through 20% of the customers). The company must therefore be selective and tailor its program
and marketing efforts by segmenting and selecting appropriate customers for individual
marketing programs.

Customer Relationship Management in Higher Education

Past research has shown that consumers were reluctant to complain about poor
professional service, such as education, but the same consumers are becoming increasingly more
value conscious. There is mounting pressure from the customers of higher education, ie;
students, parents, alumni and employers, to close the widening gap between their expectations of
institutional performance and the actual performance (Brigham, 1994; Gronhaug and Arndt,
1980; Quelch and Ash, 1981). This indicates how important it is for institutions of higher
learning to actively monitor the quality of their services and commit to continuous improvements
in an effort to respond to the needs of the institutional constituencies.

As Darlaston-Jones et al. (2003) explained students are becoming more conscious of

their customer rights and of gaps between their expectations of service delivery and the reality of
that service. For example, in 2003, Darlaston-Jones et al. noted that the Australian universities
have undergone a major transition in the past decade as they have moved from public to a greater
emphasis on private funding, and re-invested themselves as business enterprises. Furthermore,
students are viewing themselves as consumers and are demanding value for money in their
education.

Service is an intangible activity that is the main objective of transaction that serve to
meet the needs of customers. Service quality is an ability of an organization to meet or exceed
customer expectations. Since education service has very particularly characteristics, the
'SERVQUAL' model can be adapted according to the most important determining factors:
Reliability, Tangibility, Responsiveness, Assurance and Empathy as proposed by 'Parasuraman',
Zeithmal and Berry (1985).In this competitive market, satisfaction with services may make the
difference (Parasuraman , Zeithmal and Berry 1996).

Higher education in India has a serious quality problem. In current competitive

academic environment students have many options available to them. Therefore it is important to
study factors that enable education institutions to attract and retain students. Higher education
institutions which want to gain competitive edge in future may need to begin searching for
effective and creative ways to attract, retain and foster stronger relationship with students.

Therefore, it is necessary to invest in CRM for improvement.

 Relationship Marketing in Management Education:

The FAU's College of Business is a leading regional business school, offering a diverse
set of management education programs, including a Virtual MBA and a Ph.D. in business
administration. It offers bachelors, master and doctoral degrees and other executive education
opportunities. The school needed to create a consolidated view of its students to employ more
effective marketing and recruitment efforts, as well as to increase visibility into the recruitment
and admissions efforts. After teaming up with Intelliworks and its CRM software, the admissions
and recruitment process worked as a whole instead of fragmented operating silos, and it saw a 30
percent rise in graduate business college admissions. "With the increasing number of universities
initiating executive education programs, FAU needed to stay competitive," said Vegar Wiik,
program director at FAU.

Higher-education institutions need to successfully recruit, retain, inform and service

students and alumni to be competitive in a market where the competition from other institutions
is intense. They have even coined their own term - "student lifecycle management" - to refer to
the process of following students from prospect to alumni and supporting them all the way.

Thulasi Kumar, director of information management and analysis at the University

of Northern Iowa, says his administration relies on the power of predictive analytics to more
accurately determine enrollment figures for the coming semester and school year."By more
accurately predicting return enrollment of students, we have better control on budgets and
expenses," Mr. Kumar said. "Just as important, we use the predictive technology of SPSS to take
proactive measures to ensure the majority of our students return to campus in the fall. That's
what's important to the university and at the top of the list for parents and students as well."Mr.
Kumar said there are two major obstacles to the implementation of CRM in higher education.

If we discuss about Pune city, the following points are highlighted, which require
management colleges to focus on CRM.

• More number of institutes vying for less number of students

• Institutions need to establish itself as a Brand to attract more number of students
• Not only profitability but service is the goal of education
• Students’ life cycle management is the buzzword
• Predictive technology helps in better control & budgeting.
• Creating a long term relationship with students is a win - win for bothThere is a need to
understand the behavior of the students.

Questionnaires
1.Name :

2.Age :

3. Sex :

4.Do you conduct customer satisfaction survey?

Yes No

5.Do you actively seek out customer comments and complaints?

Yes. No

6.How do you get customer complaint?

Face to face Toll free number

Complaint box other means

7.Do You give concession to your regular customer

Yes No

8.would you say that the CRM systems solved your business problems or make you understand your
customers and improve your overall business performance?

Extremely likely. Quit Yes

Extremely No. Quit No

9.How likely would you be to use CRM system in your business?

Extremely likely. Very likely

Slightly likely. Not at all likely

10.How would you rate your Service experience?

Excellent. Good

Average. Poor

11.Will you give offers for your customers for increase better relationship?

Yes. No

12 . The ability of Employees to answer the customer Questions?

 High. Average

Below average. Low

13.How could you provide better Service to your customers than others?

Quality in service. Incentive or gifts

Offers Others

14.How could you different from other competitive firm?

Low cost. Best service

More offers. Others

15.What are the major facility offered by you?

Minimize Complexity. Discount in bill

Additional Gifts. Others

16.what are the main complaint registered by your customers?

High cost. Dissatisfied behaviour

Quality in service. Others

17.How an employee influence an customer to maintain good relationship?

Clarify about the product. Providing offers

Giving discount. Other

18.Do you communicate results of your customer satisfaction surveys regularly throughout the company?

Day by day. After the month

After the year. Never discuss

19.How their any improvement in customer’s response rate to the marketing activities?

Yes. No

20.How much is the role of computer in serving the customers?

Play excellent role Play an big role

No much role. No role

SIJAS PADI 500 ONLY