Customer Relationship

Management
CRM is the infrastructure that enables the
delineation of and increase in customer
value, and the correct means by which to
motivate valuable customers to remain
loyal– indeed to buy again.
CRM is more than a standalone project for
the company, but a business philosophy
that affects the company-at-large.
What is Customer
Relationship Management
(CRM)?
CRM is “the development and maintenance of
mutually beneficial long-term relationships
with strategically significant customers”
(Buttle, 2000)

CRM is “an IT enhanced value process, which

identifies, develops, integrates and focuses the
various competencies of the firm to the ‘voice’ of
the customer in order to deliver long-term
superior customer value, at a profit to well
identified existing and potential customers”.
(Plakoyiannaki and
Tzokas, 2001)
 Customer Relationship
Management
 “Process of creating and maintaining
relationships with business customers
or consumers”
 “A holistic process of identifying,
attracting, differentiating, and
retaining customers”
 “Integrating the firm’s value chain to
create enhanced customer value at
every step”
 “An integrated cross-functional focus
on improving customer retention and
profitability for the company.”
 The Move Towards
Relationship Management
 E-commerce companies want to customize the user
experience
 Supermarkets want to be infomediaries
 Credit card companies want to recommend good
restaurants and hotels in new cities
 Phone companies want to know your friends and family
 Bottom line: Companies want to be in the business of
serving customers rather than merely selling products

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CRM is Revolutionary
 Grocery stores have been in the business of stocking
shelves
 Banks have been in the business of managing the
spread between money borrowed and money lent
 Insurance companies have been in the business of
managing loss ratios
 Telecoms have been in the business of completing
telephone calls
Key point: More companies are beginning to view
customers as their primary asset

5
 Why Now ?
Representative Growth in a Maturing Market
1200
total customers
As growth flattens out, exploiting
Number of Customers (1000s)

1000 existing customers becomes more

important

800

600
In this region of rapid growth,
building infrastructure is more
400 important than CRM

200 new customers

churners
0
0 1 2 3 4 5 6 7 8 9 10 11
Ye a r
6
 Functions of Customer
Relationship Management
Value Creation Process
Technology delivery process
•R&D
•Technology integration
Management •Efficiency, effectiveness
Decision learning
Process
Value-based
Customer sensitivity Product delivery process Strategies
•Concept to launch •Pricing
•Diversity •Manufacturing process •Communication
•Information
•Differentiated
offering Customer delivery process
•Supply chain
•Distribution
•Infomediation (distribution
of information)
(Sharma et. al., 2001)
 Models of Customer Relationship
Management
The Evans and Luskin (1994) model for
effective Relationship Marketing
Relationship marketing inputs
•Understanding customer expectations
•Building service partnerships
•Empowering employees
•Total quality management
Relationship marketing outcomes
•Customer Satisfaction
•Customer loyalty
•Quality products
•Increased profitability

Assessment state
•Customer feedback
•Integration
(Evans and Luskin, 1994)
Models of Customer Relationship
Management
The Brock and Barcklay (1999) model of
selling
Independence partner relationship effectiveness

Mutual trust Selling partner

relationship
Cooperation effectiveness

Relative influence
 Why CRM?
 To thoroughly understand customer needs– even
before they know it themselves.
 Decreasing customer churn by increasing customer
satisfaction.
 Motivating customers to initiate revenue-generating
contacts with the company.
 Increasing the likelihood of the ‘right response’ by a
given customer or customer group.
 To use technology to improve customer service and
enable greater degree of customer differentiation in
order to deliver unique customer interactions.
 To attract customers- both new and old- through
more personalized communications.
 Customer relationship
management (CRM)
Combination of strategies and tools that drives
relationship programs, reorienting the entire
organization to a concentrated focus on
satisfying customers.
BENEFITS OF CRM
• Software systems can make sense of huge
amounts of data.
• Simplify complex business processes while
keeping customers’ interests at heart.
PROBLEMS WITH CRM
• Requires companywide commitment
and knowledge of how to use system.
• Failures often result from failure to
effectively reorganize firm’s people
and processes to take advantage of
benefits CRM system offers.
RETRIEVING LOST CUSTOMERS
• Customers leave for a variety of
reasons.
• Customer winback—process of
rejuvenating lost relationships with
customers.
How the Internet changes
the Rules
24 hour access
Up-to-the-minute information (stock
levels, product features, and
prices).
The ability to research product or
merchant during a shopping trip.
Online customer support.
Online self-service
Personalized content.
 What Is In a Name?
eCRM: refers to electronic customer
relationship management or CRM which is
web-based.
ECRM: or ERM refers to enterprise CRM,
meaning a CRM program that spans an
enterprise-wide view of customer.
PRM: allows a company to manage its
alliance partner and reseller relationships
to provide customers with the optimal
sales channel.
 What Is In a Name?
cCRM: Collaborative CRM denotes situations in
which customers can interact directly with the
company, usually through the Web.
SRM: focuses on keeping the vendors happy.
mCRM: suggests the provision of data to
customers, suppliers, and business partners via
wireless technologies.
xCRM: a placeholder for hybrid CRMs.
 CRM & Business
Intelligence
CRM and business intelligence both
involve critical business decisions and rely
on IT to deliver value.
CRM is more complex than BI.
CRM integrates information into business
action.
CRM combines data analysis with
deployment of specific business actions.
The mandate of CRM is to act on data and
change the fundamental business
processes.
 Is CRM New?
No!
• Simply an extension of
relationship marketing
• Builds on customer service and
satisfaction concepts
• Just the latest buzzword for
creating customer orientation
• Bottom-line is still the same
Yes!
• A shift in corporate philosophy
concerning the approach to
value delivery
• Customer-centric approach to
value chain
• New and technology-enhanced
processes
• Focus is not just on bottom-
line, but on top-line
• Goal is to create satisfying
experiences across all
customer contact points
 Managing Customer
Relationships
Qualifying prospects for relationship building

High
Use a non Build a strong
customized and lasting
approach relationship

Opportunities
for adding value

Seek better Focus on

opportunities loyalty-building
elsewhere program

Low
Low Potential profitability of customerHigh
 Myths about CRM:
CRM has not been successful, it does
not work.
CRM is all about technology.
CRM is just a fad.
CRM is supposed to be able to
improve customer satisfaction, but
there is no evidence that improved
CRM is worthwhile.
 Common Pitfalls that
Prevent CRM from
becoming a Reality
The executive toy syndrome.
The destruction of shareholder value is
promoted by measuring the wrong things.
The best practice syndrome.
Development is driven by IT alone.
It becomes a reengineered reporting process.
Enterprise-wide common performance
management application are lacking.
The links to human resources are missing.