What is CRM?

CRM Customer Relationship Management is a system for coordinating the business strategies, organisational structure and culture of companies with customer information and IT in order to satisfy customer needs at every contact and thus achieve business advantages and profit.

Microenv. enablers of CRM

Rapid technological development Adoption TQM Empowerment of teams & individuals Customer retention - due to intensity of competition Growth of service

Evolution of CRM
High

R e l a ti o n s h i p

Pre Industrial

Industrial Era

Information Era

1. evolution CRM Advances in Tech

Customer needs thru manufacturing, delivery & customer service Mass marketing reduced costs all but marketing Lack of effective and interactive modes of customer contact Lack of Consolidated information

2. evolution CRM Intensive Competition

Profitable to retain existing customer Costs upto 6-8 times to attract new customer Satisfying their needs

3. evolution CRM Growing Importance of Service Sector

Service Sector contributes over 2/3 to the GDP. Direct interaction between marketer and buyer Better understanding

4. evolution CRM TQM programmes

Quality products work closely with customers Demanding customers for high quality work competitive advantage (not replicated)

1. Benefits of CRM
Customers are profitable over period of time Initial acquisition cost exceeds gross margin while retention costs are lower
(1% increase in sales existing customer profit increase 17%; new customer 3%)

Probability of selling to new prospect 15%, existing customer 50%

Source: Bain & Co

2. Benefits of CRM
Customer profitability is skewed
Top 20% customers contribute 150% profits bottom 60% just break even Programs developed to retain and build stronger bonds with top 20% Analysing shift from bottom to potential

3. Benefits of CRM
Marketing Benefits
Gradually reduce dependence on periodic surveys Customised promotions no wasteful mass promotions Customer centric products

4. Benefits of CRM
Service Benefits of CRM
Customers dont complain they go elsewhere Customers patronise a brand as long as they are being serviced

Trust and Commitment

Trust
Willingness to rely on an exchange partner in whom one has confidence Honesty Competency Overcome insecurity and doubt Rational in nature

Commitment
Enduring desire to maintain a valued relationship Personal will to continue the relationship Moral sense of obligation Structural no escaping from this Psychological concept because of social environment Emotions

Relationship Steps
Aware of each other Exploration or sounding out Growth Phase Commitment or Saturation Decline

Conventional marketing
Absence of stiff competition Price pressure was less Information dissemination process was not in place

r e t e n ti o n

relationship

a c q u i s it i o n

transactional

Functional marketing

Cross functional marketing

Transactional vs Relational
Transaction Marketing
One off exchange Brand Management Focus

Relationship Marketing
Ongoing exchanges Customer Management

Short term focus

Isolated Markets

Time perspective
Customer feedback

Long term focus

Ongoing dialogue

Market Share
Profitability of transaction Brand equity

Market Size
Central Metrics

Market of one
Lifetime value of customer Customer equity

Transactional vs Relational
Transactional Relationship

Importance of Employees
Internal Marketing importance Intensity of contact

Low
Low Interpersonal; High 4P

High
Relatively high Impersonal; Low 7P

Levels of Marketing
Price Preference based

Feelings based Birthday, Recognition Structure oriented value policies & systems are changed. Individual is not important

Schools of Thought
Anglo Australian Approach North American Approach Nordic Approach

Anglo Australian Approach

Quality Management

Services Mktg

Customer relationship

Relationship Marketing

Nordic Approach
Interactive network theory

Services Mktg

Customer Relationship Economics

Relationship Marketing

North American Approach

Organisation Environment

Relationship Manager

Buyer

Six markets Framework

Internal Markets

Supplier Market

Referral Market Customer Markets

Recruitment Market

Influence Market