Chapter 2

Measuring Customer Relationship:

Measuring Customer Relationship, Role of Market and Market Survey in customer satisfaction. Market research and CRM. Market Research Process – Data
and Information Collection.
Total Customer care programme, customer acquisition-meaning, process, effectiveness and sources; Customer retention-concept, need and process; Customer
defection-meaning and causes
CRM in Manufacturing Sector, CRM in Service Sector – Tourism, Hotel, Transport, Banking and Insurance, Airline and Hospital Industry.
Case Studies.
1. In the differentiate stage of customer relationship building identify and explain the role
of marketers.
2. How to measure customer relationship? Explain the process.
3.Identify the various strategies to maintain customer loyalty from marketers point of view.
4. Customer acquisition encompasses all activities and efforts undertaken by businesses to acquire new customers. Justify the statement.
5. Identify and explain any two methods to generate leads in customer relationship management.
6. Identify and explain the key performance indicators (KPIs) for measuring the effectiveness of customer acquisition efforts.
7. Customer acquisition can be sourced from various channels and methods. In the light of the statement explain the various channels .
8. Customer retention focuses on building strong, lasting relationships with existing customers by providing value. Elucidate the statement
with example.
9. How CRM can be established in Manufacturing sector.

10. Customer Defection is the process of loss of users or consumers in purchases made by them. Identify and explain various methods
to retain customers.
Steps in customer relationship building
• 1. identify
• Differentiate
• Interact
• Customise
Measuring Customer Relationship
 Customer acquisition

• Meaning: Customer acquisition encompasses all activities and efforts

undertaken by businesses to acquire new customers and expand their
customer base. It involves identifying potential customers,
understanding their needs and preferences, and implementing
strategies to convert them into loyal, paying customers.
 Process
1. Identifying Target Audience: The first step in customer acquisition is identifying the target audience or
ideal customer profile. This involves conducting market research, analyzing demographics, behaviors,
and preferences to understand who is most likely to be interested in the product or service.
2. Generating Leads: Once the target audience is identified, businesses focus on generating leads—
potential customers who have expressed interest in the product or service. Lead generation methods
may include content marketing, social media marketing, email campaigns, search engine optimization
(SEO), advertising, events, and networking.
3. Engagement and Nurture: After generating leads, businesses engage with potential customers to
nurture relationships and build trust. This involves providing valuable content, personalized
communication, and addressing their needs and concerns to move them through the sales funnel.
4. Converting Leads to Customers: The ultimate goal of customer acquisition is to convert leads into
paying customers. This is achieved through persuasive sales tactics, offers, discounts, trials, demos, and
other incentives to encourage purchase decisions.
5. Retention and Loyalty: Customer acquisition doesn't end after the first purchase. Businesses also focus
on retaining customers and fostering loyalty by providing exceptional customer service, personalized
experiences, loyalty programs, and ongoing communication to encourage repeat purchases and referrals.
 Effectiveness

• The effectiveness of customer acquisition efforts can be measured using

various key performance indicators (KPIs) including:
• Conversion Rate: The percentage of leads that convert into paying customers.
• Cost Per Acquisition (CPA): The cost incurred to acquire a new customer.
• Customer Lifetime Value (CLV): The total revenue generated from a
customer over their lifetime.
• Return on Investment (ROI): The ratio of revenue generated to the cost of
customer acquisition efforts.
• Retention Rate: The percentage of customers who continue to do business
with the company over time.
 Sources

• Customer acquisition can be sourced from various channels and methods including:
1. Digital Marketing: Channels such as search engine marketing (SEM), social media marketing, content
marketing, email marketing, and affiliate marketing.
2. Traditional Marketing: Methods like print advertising, direct mail, TV commercials, radio ads, and
outdoor advertising.
3. Referral Programs: Encouraging existing customers to refer new customers through word-of-mouth,
incentivized referral programs, and affiliate partnerships.
4. Events and Networking: Participating in industry events, conferences, trade shows, and networking events
to connect with potential customers face-to-face.
5. Partnerships and Alliances: Collaborating with complementary businesses, influencers, or organizations
to reach new audiences and tap into their customer base.
6. Public Relations: Generating media coverage, press releases, and PR campaigns to raise awareness and
attract attention from potential customers.
7. Word-of-Mouth: Positive recommendations and reviews from satisfied customers can drive organic
customer acquisition through referrals and social proof.
 Customer retention
• Customer retention refers to the ability of a business to maintain and nurture
relationships with existing customers over time, encouraging repeat purchases,
loyalty, and long-term engagement. It involves strategies and efforts aimed at
keeping customers satisfied, engaged, and committed to doing business with the
company repeatedly. Here's a deeper look at the concept, need, and process of
customer retention:
• Concept:
• Customer retention focuses on building strong, lasting relationships with existing
customers by providing value, personalized experiences, and exceptional service. It
recognizes the importance of retaining customers beyond the initial purchase and
emphasizes the lifetime value of a customer to the business. Retaining customers is
often more cost-effective than acquiring new ones, as loyal customers tend to spend
more, refer others, and contribute to the company's profitability over time.
• Need:
1. Revenue Growth: Retaining existing customers can lead to increased revenue and
profitability as they make repeat purchases and potentially spend more over their lifetime.
2. Cost Efficiency: Acquiring new customers can be more expensive than retaining existing
ones. Investing in customer retention strategies can help reduce customer acquisition costs
and improve overall return on investment (ROI).
3. Brand Loyalty and Advocacy: Loyal customers are more likely to recommend the
company to others, leading to positive word-of-mouth marketing and brand advocacy. This
can attract new customers and strengthen the company's reputation in the market.
4. Stability and Predictability: A base of loyal customers provides a stable and predictable
source of revenue, reducing the reliance on fluctuating sales and external market factors.
5. Competitive Advantage: Building strong relationships with customers can differentiate the
company from competitors and increase barriers to entry for new competitors.
• Process:
1. Understanding Customer Needs: The first step in customer retention is understanding the needs, preferences, and behaviors of
existing customers. This involves collecting and analyzing data, conducting surveys, and soliciting feedback to gain insights into
what motivates customers to stay loyal to the brand.
2. Personalization and Segmentation: Once customer needs are understood, businesses can personalize their offerings and
communication to better meet individual preferences. Segmentation allows for targeted marketing campaigns and tailored
experiences based on customer segments and preferences.
3. Proactive Communication: Regular and proactive communication with customers is essential for building relationships and
staying top-of-mind. This may include sending personalized messages, newsletters, special offers, and updates on products or
services.
4. Exceptional Customer Service: Providing exceptional customer service is key to retaining customers. This involves addressing
inquiries and concerns promptly, resolving issues effectively, and going above and beyond to exceed customer expectations.
5. Loyalty Programs and Incentives: Loyalty programs and incentives can encourage repeat purchases and reward customers for
their loyalty. This may include discounts, rewards points, exclusive offers, or VIP perks for loyal customers.
6. Continuous Improvement: Customer retention is an ongoing process that requires continuous improvement and adaptation to
changing customer needs and market dynamics. Businesses should regularly evaluate and refine their retention strategies based on
feedback and performance metrics.
7. Surprise and Delight: Surprise and delight tactics involve unexpected gestures or rewards to delight customers and strengthen
their emotional connection to the brand. This could be sending personalized gifts, handwritten notes, or exclusive access to events.
Customer defection-meaning and causes

• Customer Defection refers to the process of loss of users or

consumers (churn/ attrition) or the decrease in purchases by them,
with the following impact on reducing the Company's business. On
average, CEOs of US companies lose half of their customers every
five years. This surprises many people including the CEOs of these
companies.
• Service plays very high role and it should not vary regardless of the channel
customer purchased your product or services. Any dip in the standard of services
causes customer defect.
• A bad product is biggest reason for dissatisfaction leading towards not only
defecting but also
• negative word of mouth publicity.
• Improper communication strategy
• Internal Drift of the company.
• Pricing related issues
• Change in consumer behaviour
• Natural causes
CRM in Manufacturing Sector

• Manufacturing sector meaning

• Manufacturing sector profit, sales, product classification- intro
• Need of Crm in Manufacturing sector
• How CRM can be established in Manufacturing sector.
CRM in Service Sector – Tourism, Hotel, Transport, Banking and Insurance, Airline and Hospital Industry.
Questions: