CRM- An Introduction

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History of CRM
• 1960 :
– ERA OF MASS MARKETING

• 1970 :
– SEGMENTATION AND
CUSTOMISATION

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1980 :
NICHE MARKETING AND
SFA

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1990
:RELATIONSHIP MARKETING, TELEMARKETING AND
CALL CENTERS

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Monopoly Market

• Single Seller
• Seller’s Market
• No Close Substitutes
• Barriers to Entry
• Firm and Industry are the same

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Bits and bytes

• CRM – the hottest buzz word in business today

• Developing a personal and a professional profile about
each customer
– Basic and historical information
– Personal preferences
– Trends and habits
– Demographical information
• Building a CRM culture
• The power of integration
• Using emerging technology to get closer to the customer

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Current facts… A Reality
Check
• Today customers are in charge – they make the rules
• Putting technology at the center stage
• Business intelligence is one of the most growing segment in the
marketplace
• Customer loyalty is very difficult to maintain due to
competition
• Customers want an excellent service and they want to feel
special
• Most companies think they are customer-focused however in reality they
are product-centric
• There is a need to formulate customer-focused firms which needs:
– CRM strategy
– Organizational change
– Corporate culture

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 Economics of customer retention

“Winning back a lost customer can cost up to 50-100 times as much as keeping
a
current one satisfied.”
Rob Yanker, Partner, McKinsey & Company

Understanding your customer is key to retention….. 10

Why CRM?

• It costs 6 times more to sell to a new customer than to sell

to an existing one
• A typically dissatisfied customer will tell 8 to 10 people about
his/her experience (mainly related to poor customer service)
• The odds of selling to a new customer is 15% versus 50%
to an existing customer
• 70% of the customers complaining will do business again
with the company if the complaints are quickly addressed
• 90% of existing companies do not have integrated CRM
tools
and platforms

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 Customer Relationships Today

Customer
Relationships

Branding Product

Pricing
Distribution

Building a customer-centric Community

Communication
approach to Internet
marketing by focusing on
customers

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CRM Basics

• CRM is the timely delivery of excellent service

“customer relationship management”
• CRM is a combination of business process and
technology that seeks to understand a
company’s customers from a number of
perspectives including:
– Who they are?
– What they do?
– What do they like?

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Age of the never-satisfied customer…
• CRM becomes a support tool in a time characterized by:
– Increased competition
– Globalization
– Growing cost of customer acquisition
– High customer turnover
• CRM is all about creating a better value proposition
to customers
• Information and communication technology is now
acting as a
catalyst for CRM
– Extended enterprise
– World wide web and the Internet

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Defining
CRM
• CRM is an integrated sales, marketing and service strategy
that is based on a timely and accurate information
infrastructure and that depends on coordinated enterprise-
wide activities
– Example: tracking customers interactions with the firm
– Customer tracking includes steps in the selling and
customer service cycles
• CRM steps include
– Targeting
– Acquisition
– Retention
– Expansion

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Defining
CRM
• Targeting
– Who do we target?
– What segments are most profitable?
– What segments match our value proposition?
– What is the best segmentation strategy for us/our
industry?
• Acquisition
– What is the best channel for each segment?
– What is the acquisition cost for a
channel/segment?
– Do certain channels deliver certain types of
customers?
– Cost effective acquisition?
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Defining
CRM
• Retention
– How can we improve retention?
– What is our average customer relationship length?
– How can we hold customer for as long as possible?
– What is the most cost effective method of retention?

• Expansion
– How many products does our average customer buy?
– How can we induce our current base to buy more
products?
– Who are the prime targets for expansion?
– What is the cost of expansion?
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Goals of
CRM

• Using existing relationship to grow revenue

• Using integrated information for excellent
service
• Introducing consistent, replicable channel
processes and procedures

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CRM…

• CRM is a business strategy and not a product

• Putting CRM into practice requires developing a set
of integrated applications to address all aspects
related to the front-office needs
• CRM could be a major support platform for small and
medium-sized enterprises
• Cost of the information and communication
technology applications and infrastructure should be
calculated as opposed to the return-on-investment

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CUSTOMER RELATIONSHIP MANAGEMENT

• CRM enables an organization to:

– Provide better customer service
– Make call centers more efficient
– Cross sell products more effectively
– Help sales staff close deals faster
– Simplify marketing and sales processes
– Discover new customers
– Increase customer revenues

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THE BENEFITS OF CRM

• Firms can find their most valuable customers by using

the RFM formula: recency, frequency, and monetary
value

• Organizations MUST track:

– How recently a customer purchased items
– How frequently a customer purchased items
– The monetary value of each customer purchase

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EVOLUTION OF CRM

• There are three phases in the evolution of CRM:

– Reporting
– Analyzing
– Predicting

• CRM Reporting Technologies help organizations identify their

customers across other applications
• CRM Analysis Technologies help organizations segment their
customers into categories such as best and worst customers
• CRM Predicting Technologies help organizations predict
customer behavior, such as which customers are at risk of
leaving

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The Evolution of CRM

• Three phases in the evolution of CRM include

reporting, analyzing, and predicting

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The Evolution of CRM

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CUSTOMER RELATIONSHIP MANAGEMENT SUCCESS FACTORS

• CRM success factors include:

1. Clearly communicate the CRM strategy.
2. Define information needs and flows.
3. Build an integrated view of the customer.
4. Implement in iterations.
5. Scalability for organizational growth.

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