CRM: Overview, Background,

Evolution
Conceptual Framework: Background

 Marketing is an organizational function and a set of

processes for creating, communicating and delivering
value to the customers, for managing customer
relationships in ways that benefit the organization and its
stakeholders

 CRM is practice of analyzing and utilizing marketing

databases and leveraging communication technologies to
determine corporate practices and methods that will
maximize the lifetime value of each individual customer
to the firm
The Root Cause

 Pre – Post Globalization

 Pre – Post Liberalization

Situation Analysis
(Ref in Text: 1990 as base year)….WHY?
CRM – Evolution

Old Classical Contemporary

Starting Point Factory Target market Individual Customer

Focus Products Customer Needs Customer

Experience

Selling & Integrated Marketing

Means Promotion CRM

Profits thru
Profits thru Customer Satisfaction Profits thru
End Sales volume Customer. Loyalty
CRM at the top of the Mind (for
Companies)!

 Value consciousness & Intolerance

 Information Availability

 Decrease in Preference Quotient

 Decrease in Output through Media and communication

 Increasing Scale, Complexity and Avenues for business.

CRM & Database Management

 Knowing Customer through

 Transactions
 Interactions
 Preferences

 Knowing Customer through

 Front-end
 Strategic level
CRM: Change in view

 Mass  Targeted
 Competitive Attention  Selective Attention
 Breadth  Depth
 Remember  Response
 Impression  Decision
 Pay for Everyone  Pay for Targets
 ROI Calculation
Does CRM live upto the HYPE?

 More than 72% CRM projects fail in Total.

 30% of CRM projects fail to go live

 30% had user adoption issues

 Trying to do much quickly

 Too complex and too disruptive

The Truth
 Customers are no longer loyal

 Customers do not really want a relationship but companies

do

 Customer will talk only when Complaining

 Customers want information

 Customers control the selling process

CRM: An enterprise wide Activity

Landscape
CRM: Evolution (1990s)
 FIRST GENERATION
 Improve Service operations
 Increase Sales efficiency

 Sales Force Automation

 Customer Data Management
 Lead Generation – Telemarketing, Sales orders, Quotations

 Customer Service & Support

 HelpDesks
 Call Centres

WIPRO
CRM: Evolution (late 90s- early 2000)
 SECOND GENERATION
 Reduce cost of interaction
 Improve customer experience & retention levels

 Integrated View of customer

 Presales, Sales, Transactions, Post Sales, phone, email, net
 Marketing function included – Campaign Design
 Technology - ERP
CRM: Evolution (Late first decade 2000)
 THIRD GENERATION - 2000s and beyond
 Integrating Front-end with Back-end
 Creating Competitive Advantage

 Analytics

 Product Portfolio Mapping – Prospective sales

 HUL – Galaxy Tabs, Shaktiman, Shaktiamma

CRM: Front End with Back End

CRM
ERP C
Sales U
R&D
S
Service & Support T
Manufacturing O
Order Processing M
Distribution E
R
Marketing
Types of CRM
 Operational
 Tacking customers through Touch Points (Physical,
Communcation)
 Gathering Information
 Collaborative
 Enabling two way dialogue with Channel Partners (OEM,
Dist., Dealer, Retailer, brokers, franchisee)
 Analytical
 Understanding customer through Technology
 Back office work
 Statistics – Probabilistic models, Regression Models
 Cross Sell, Up Sell
Strategic CRM (Its Components)
 Customer Management Orientation
 Values, Beliefs and Principles
 Top Management Belief (Reasons of Failure)

 Important Questions
 Does the top management subscribe to the philosophy?
 Does the entire organization engage in implementation?
 Does the company attempt to establish the philosophy?
 Is the interaction with customers different based on their needs?
Strategic CRM (Its Components)
 Integration and Alignment of Organizational Processes
 Synchronize processes, systems, IT, units,
 Business functions (HR, Sales, Rewards, Budgets etc)

 Important Questions
 Is there a clear understanding of desired value of customers?
 Do its processes produce that value?
 Is there a synchronization in the processes internally?
 Is learning and outcomes applied for improvements?
Strategic CRM (Its Components)
 Information Capture & Alignment of Technology
 Necessary Technology to collect, process, store, retrieve timely
customer information

 Important Questions
 Are IT capabilities harnessed to its appropriate extent?
 How timely and relevant is available customer information?
 Can the data be leveraged on? Is it acted upon?
Strategic CRM (Its Components)
 CRM Implementation

CUSTOMER DIMENSION
Acquisition Growth & Decline &
Stage Retention Exit Stage
Stage

Operational
MANAGEMENT

Analytical
DIMENSION
Customer Based Strategic Matrix

 Idea of allocating different resources to different

customers based on economic value of customer
Traditional Marketing Matrix
 Used when customer data was hard or impossible to gain

 Market Share
 Gives aggregate notion of performance in category
 Does not give how sales is distributed by customers
 Sales Growth
 Quicker indicator of company health
 Relative measure of performance
 Does not give breakup of sales
Primary Customer-based Matrix
Availability of data developed basic understanding

 Acquisition Rate
 Acquisition Cost
 Retention Rate
 Survival Rate
 Lifetime Duration
 Win-back Rate
Popular Customer-based Value matrix
To understand Loyalty Measures

 Size of Wallet
 Share of Category Requirement (Measure f Loyalty)
 Share of Wallet (Measure of Loyalty)
 Expected Share of Wallet (Proposed or targeted Loyalty)
Strategic Customer-based Value matrix
To understand Customer Behavior and Monetary Value

 RFM value
 Past Customer Value (For projections)
 Customer Lifetime Value
 Customer Equity (Sum of CLVs of all customers)