overview of CRM

1. OVERVIEW OF
Relationship Marketing

2. Paradigm Shift in Marketing
Market place has been evolving under the converging
pressures of changing demographics, global politics,
economics, technology and so on.
Prominent marketing scholars like Philip Kotler and Frederick
Webster have expressed that there has been a shift from a
transactions to a relationship focus.
Driving Forces
• Customer orientation focus on profitability rather than sales
volumes and emphasis on market segmentation are
gaining importance.
• New trend in marketing has replaced “products and
“services” with “value”.
• Relationship Marketing concept requires specific resource
resource commitments, key part of which is the use of
marketing research

3. Paradigm Shift in Marketing
Themes for New Marketing
The 4Ps are also loosing credibility. They are more
production than customer oriented
and poses lot of flaws in its definition
A creative process to look at the market;
• Understand potential customer needs and wants
• Consider the basic capabilities of the firm;
• Conceive potential product offerings based on
the present and potential capabilities;
• Design and develop products and services for
their customers

4. Relationship Management
Organisation‟s Marketing activities:
- Create customers(bringing buyers and sellers).
- Firm‟s success depends upon getting customers but keeping
customers is crucial. Retaining customer is challenging than acquiring
customer.
Successful firms keep long term relationship with customers
Relationship Management : Interaction with customers over a long time
period.
A Sale is not the end of marketing(courtship) process but beginning
of relationship(marriage) with customer.
Customer is satisfied : receives more than what it expects from
organisation. Will repeat purchase when it has been treated well in past.
Establishing relationship increases long term sales and reduce
marketing costs.
Marketers job – use resources to create, interpret and maintain
relationship with customers.
Firm must focus on both getting and keeping customers.

5. Traditional Marketing vs RM
Traditional Marketing RM
Goal: Expand customer base, Goal: Establish a profitable, long-term,
increase market share by mass one-to-one relationship with
marketing. Gaining more and more customers; understanding their needs,
new customers preferences, expectations rather than
isolated individual transactions
Product oriented view. Less Customer oriented view. Idea to
attention to expectation, develop loyal customer for the purpose
satisfaction etc. of retaining them forever.
Does not focus long term Focuses long term perspective by
perspective retaining customers
Customer is viewed as an outsiders, Customer is insider to organisation,
less attention to customer service aims to long term never ending
and commitments relationship with them.
Mass marketing / mass production Mass customization, one-to-one
marketing
Standardization of customer needs Customer-supplier relationship

6. Why Organisations Lose Customers ?
• Price related reasons : mismatch in price and value
• Product related reasons : technology. New brand making entry will
be capable of offering better performance and will induce brand switch.
• Service related reasons : not only the brand the accompanying
services at pre, during and post sales.
• Benefit related reasons : appealing benefits offered by competitors
• Competitor related reasons :
• Personal reasons :
Organisation should analyze periodically reasons and accordingly develop
customer retention plan which should be the basis for building a strong and
long term relationship with customer.
Strategies for building relationship
• People : all should work towards satisfying customers.
• Process : need identification of customer till its fulfillment
• Product : offered must be constantly provide value addition
• Organisation : response must be faster than competitors
• Setting satisfactory service standard : pre, during and post services
• Concentration on competitors :competitor performance, Increase
own strength and reduce weakness

7. Strategies for building relationship
• Customer analysis : present consumers using products/service of the
organosation and prospective customers who are using competitors.
• Cost analysis : without reducing quality
• Concentration on the paying ability of customers : fixation of price
• Knowledge on purchase behavior pattern : % of purchase decision
Purchase, Rejection, Postponement, Search for substitute,
• Differentiation in price and quality standards
• Focus on reducing dissatisfaction : complaints must be well attended.
• Attention on changing requirements of customers :
• Concentration on Performance : in each stage of value chain
• Training to supply chain employees :
• Empowerment to service providers
• Augmenting Intangible Benefits : courtesy, effective listening made by
service providers, point of purchase atmosphere, expertise services
offered etc.
• Visit to point of usage of the product
• Develop partnership with customers : buyback arrangements, training
employees, extending managerial support to customer organisation
• Organizing customer clubs : would focus mutual belonging,
understanding, and sharing of common problems and emotions etc.

8. What Is CRM
CRM “is a business strategy that aims to understand,
anticipate and manage the needs of an organisation‟s
current and potential customers”
It is a “comprehensive approach which provides seamless
integration of every area of business that touches the
customer- namely marketing, sales, customer services and
field support through the integration of people, process and
technology”
CRM is a shift from traditional marketing as it focuses on the
retention of customers in addition to the acquisition of new
customers
“The expression Customer Relationship Management (CRM)
is becoming standard terminology, replacing what is widely
perceived to be a misleadingly narrow term, relationship
marketing (RM)”.

9. What Is CRM
“CRM is concerned with the creation, development and
enhancement of individualised customer relationships with
carefully targeted customers and customer groups resulting in
maximizing their total customer life-time value”
CRM system brings together lots of pieces of information
about customers, characteristics, sales transactions, market
trends etc.
An effective CRM describes customer relationship in sufficient
detail so that all aspects of organisation can access
information, match customer needs with satisfying product
offerings, remind customers of service requirements, know
what products a customer has purchased etc.

10. Purpose of CRM
 “The focus [of CRM] is on creating value for the
customer and the company over the longer
term”.
 When customers value the customer service
that they receive from suppliers, they are less
likely to look to alternative suppliers for their
needs.
 CRM enables organisations to gain
„competitive advantage‟ over competitors that
supply similar products or services.

11. Why is CRM important?
 “Today‟s businesses compete with multi-product offerings
created and delivered by networks, alliances and
partnerships of many kinds. Both retaining customers and
building relationships with other value-adding allies is
critical to corporate performance”.
 “The adoption of CRM is being fuelled by a recognition
that long-term relationships with customers are one of the
most important assets of an organisation”.

12. Why did CRM develop?
CRM developed for a number of reasons:
• The 1980‟s onwards saw rapid shifts in business that
changed customer power.
• Supply exceeded demands for most products.
• Sellers had little pricing power.
• The only protection available to suppliers of goods and
services was in their relationships with customers.

13. CRM Process as a hub of applied learning
Cultivate &
develop
Recognize interest, Acquire
Needs/wants Trust, desire Customer &
of defined Establish a
segments relationship
Collect,
warehouse
and analyze
Customize data Customize
Channel Promotion,
Outlets, Information,
locations interaction
Customize
Offers,
Products and
Services

14. Potential Returns of CRM Systems
Customers are different : bring different level of profit to the
organization
Successful organisations : best customers
ROI in acquiring customer : comparison of revenue and costs
Benefits Costs
Organisation
Customer focus Privacy
Customer retention Opportunity
Share of customer Lifetime value of the
Long term profitability relationship Benefits
Continuity
Costs Customer Contact touch points
Infrastructure- Personalized service
Investments Enhanced satisfaction
Reactions to process Safety
Potential Costs and Benefits of CRM Systems

15. Potential Returns of CRM Systems
Benefits to the Organisation
Customer Focus : learn enough about the customer
• Retention : firm satisfies customer and offer variety such that
customer repeats transactions.
It cost six times more to get a new customer than to retain one.
Higher retaintion rates increases revenue and reduces costs.
• Share of customer/wallet :
-Cross selling : marketing complementary products to
existing customers
-Bundling :
-Up-selling : higher value customers to existing/new customers
• Long Term profitability : customer focus, retention of loyal
customers and greater share of customer implies long term profit.

16. Potential Returns of CRM Systems
Potential Costs to the Organisation
• IT Infrastructure :
• Process Change : It is the people who implement and customers
must appreciate, use them with ease, and feel safe in the process.
Potential Benefits for Customers
• Continuity : Firm has to consistently meet customer’s need over time
• Contact Point : customer communicate and explain their need,
enabling the organisation to learn more about each customer’s need
• Personalization : one-to-one marketing – tailor made offerings to
individuals(increased customization of goods and personalisation of
services.
Potential Costs for Customers
• Privacy :
• Opportunity costs :

17. Relationship : Lifetime Value
Customer is a member of household or organisation(suppliers, retail
stores, wholesalers). Relationship focuses on net gain to each party in
an exchange over time when interaction occurs.
CRM may be expensive to implement, the long term benefit will be
apparent as time progresses, repeat purchase occurs and customer
loyalty deepens.