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i
Consumer Relationship
Management
By
Dr. Ashok V. Giri
BLUE DIAMOND PUBLISHING
www.bluediamondpublishing.in
ii
“Customer Relationship Management”
Author and Publishing Copyrights © Dr. Ashok V. Giri
Book Published in India
With
BLUE DIAMOND PUBLISHING INDIA
Plot no.27 SBI Colony, Junwani, Bhilai, Chhattisgarh
Zip code: 490020
Website: www.bluediamondpublishing.in
© Copyright, Author
All rights reserved. No part of this book may be reproduced, stored in a retrieval system,
or transmitted, in any form by any means, electronic, mechanical, magnetic, optical,
chemical, manual, photocopying, recording or otherwise, without the prior written
consent of its writer.
Interior Design by Sharda Singh
Publishing Year 31 Jan 2017
ISBN: 978-93-86518-22-4
Price: 480.00 D
The opinions/ contents expressed in this book are solely of the author and do not
represent the opinions/ standings/ thoughts of Blue Diamond Publishing or the Printing
Press.
Printed and Distributed by Blue Diamond Publishing, India.
iii
About the Author
X
Dr. Ashok V. Giri
M.Com, B.Ed, M.Phil. G.D.C.& A. Ph.D.
(Marketing)
Dr. Ashok V. Giri is having an excellent
academic career. He has 27 years of
teaching experience in various subjects in
Commerce at graduate level as well as post
graduate level. Right now he is working as
Associate Professor in MES, Garware College of Commerce,
Karve Road, Pune-411004. He is recognized Research guide for
M.Phil and Ph.D course at Savitribai Phule pune University. He
has attended number of national and international conferences and
Published 66 Research Papers in various reputed research Journals.
He has been invited for presenting his research papers by Central
Queensland university, Sydney, Australia and F H wien University
of applied sciences, Vienna, Austria (Europe). He is the winner of
number of prestigious awards like Best Teacher Award (twice)
from Pune Municipal Corporation, Best ANO Award (6 Times)
from Group Commander Pune NCC Group, DDG Jammu &
Kashmir, Group Commander Ranchi Jharkhand Group, NGOs and
other educational and social related fields.
He is working since 2001 in the capacity of Head of
National Cadet Corps Department, MES, Garware College of
Commerce, Karve Road, Pune-411004. He has attended various
NCC camps including 12 NIC camps at National level and in all
NIC he won winner ship Trophy for Maharashtra.
He has organized several industrial study visits for
students. Such as District industries centre, Mitcon, Garware wall
ropes ltd, Telco, Mapro industries Ltd., Videocon industries Ltd.,
sahyadri industries Ltd, Satara.
iv
He has organized and conducted several study visits for
Environment science students namely Kaas Pathar Satara,
Ralegansiddhi as ideal Village of famous social activists – “Anna
Hajare” and Aadarsh gram Hivare Bazaar “Shri Popatrao Pawar”
for water conservation and rural development.
He has organized Various Trekking Camps for NCC
students on different forts such as Rajgad, Raigad, Rohideshwar,
Torna, kenjalgad and Purandar as well as various tree plantation
programs conducted by him. He also organized various pleasure
trips for students in Kokan area of Maharashtra.
He has initiated and conducted various social rallies like
Anti Tobacco Rally, Anti Gutaka Rally, Anti Smoking and Liquor
Rally, Anti Drunk and Drive ralley, 125 Km bicycle rally for
spreading the awareness about tree plantation, village surveys,
Traffic control in Pune city, security assistance in Ganpati
immersion procession and Dnyaneshwar and Tukaram maharaj
Palkhi Vari etc.
He has worked as support Executive on the organizing
committee of Pune international Marathon from 2004-2012.
X
v
About the book
X
This book presents an extensive information of the strategic and
tactical aspects of Consumer Relationship Management as we
know it today. It stresses developing an understanding the
consumer value as the guiding concept for marketing decisions.
The goal of the book is to serve as a comprehensive and up-to-date
learning information for students and executives who want a
detailed and conceptually sound insight into the field of Consumer
Relation Management.
X
vi
Contents
Chapter -1 :: Introduction and Origin of CRM 1-14
Introduction
What is CRM?
Ingredients of CRM
Objectives of CRM
Origin of CRM
How to Introduce CRM in the Business Organisation
Significance of the CRM
History of CRM
Chapter -2 :: Features, Importance and Benefits
of CRM 15-30
Features of CRM
Common Features of CRM Software
CRM Process
What is Relationship?
Evolution of Consumer-Suplier Relationship
Why a Business Wants Relationship with its Consumers?
The Benefits of CRM
Business Benefits of CRM
Chapter - 3 :: Need and Necessity of CRM 31- 42
Need of CRM
Use of CRM
Consumer Relationship Management
vii
Chapter- 4 :: CRM and Human Resource 43- 66
Operational CRM
Analytical CRM
Collaborative CRM
Measuring Consumer Response
Medium of Consumer Responses
Qualities of a Good Response - What a response must provide?
Chapter- 5 :: Challenges and Issues of
CRM
67-78
The Challenges of CRM Implementations
CRM Implementation Issues
The Future of CRM Solutions
Types of Consumers
Consumer Orientation
Drawbacks of CRM
Chapter- 6 :: Strategy of CRM 79-94
Consumer Retention - A Strategic Process to Retain Existing Consumers
Consumer Retention Strategy
Strategic CRM - Maintain Long Term Relationship With Consumers
Determinants of Consumer Retention
Methods and Tools for Consumer Retention
Myths about Consumer Retention
Consumer Management Strategies
Consumer Acquisition
Chapter- 7 :: Type of Consumers and Relationships
Management 95- 118
Different Types of Consumers
Orientation of Consumers
Consumer Modeling - Meaning and its Different Aspects
Consumer Profiling
Regression Scoring - Meaning, Its Process and Types of Scoring
Quality of Relationship with Consumers
viii
Need of Relationship with Consumers
Consumer Relationship with Supplier
Cost / Price Sensitivity of Consumers
Bargaining Power of Consumers
Consumer Relationship Measurement
Chapter- 8 :: Market Research and CRM 119-132
Stages in Market Research Process
Desk Research - Methodology and Techniques
Field Research - Definition and its important sources
Data Analysis and Compilation
Report Preparation - Characteristics of a Good Report
Action Plan in Report Preparation Process
Chapter- 9:: Communication Issues in CRM 133-142
STEP 1. Ask Questions
STEP 2. Listen
STEP 3. Spend Time Together
STEP 4. Ask Significant Others About the Person
STEP 5. Create Opportunities for New Experiences
Chapter- 10 :: Impact of CRM on Various Business
Organizations 143-154
How CRM Impacts on the Organization
Why Does the Organization Need CRM?
Features of Good CRM
What Do Consumers Want?
Generating a Consumer Focused CRM Solution
CRM as A Process
Achieving Good CRM
Characteristics of Excellent CRM
CRM and Communications
Benefits of Effective CRM
CRM Software Solutions and ICT (Information and
Communications Technology)
Chapter- 11:: Consumer Privacy Concern and
Protective Response 155- 166
Importance of Consumer Information
ix
Privacy issues
The Concept of Consumer Privacy
Drivers of Consumer Privacy Concerns
Consumer Privacy Concerns
Consumer Privacy Protective Responses
Consequences of Privacy Protective Responses
Chapter- 12 :: Consumer Loyalty and Satisfaction 167-186
Consumer Loyalty: Important Concepts
What is Consumer Satisfaction?
Drivers of Consumer Loyalty
Consumer Loyalty Breakers
Tracking Consumer Loyalty
Increasing Consumer Loyalty
Measuring Consumer Satisfaction
Methods of Measuring Consumer Satisfaction
Factors affecting Consumer Satisfaction
Chapter- 13 :: Case Studies 187-202
Case Study-1
Case Study-2
1
Introduction
The biggest management challenge in the new millennium of
liberalization and globalization for a business is to serve and maintain
good relationship with the king – the consumer. In the past producers
took their consumers for granted, because at that time the consumers
were not demanding nor had alternative source of supply or suppliers.
But today there is a radical transformation. The changing business
environment is characterized by economic liberalization, increasing
competition, high consumer choice, demanding consumer, more
emphasis on quality and value of purchase etc.
All these changes have made today’s producer shift from
traditional marketing to modern marketing. Modern marketing calls for
more than developing a product, pricing it, promoting it and making it
accessible to target consumer. It demands building trust, a binding force
and value added relationship with the consumers.
The process of developing a cooperative and collaborative
relationship between the buyer and seller is called consumer relationship
management shortly called CRM. According to Ashoka dutt head of Citi
Bank “the idea of CRM is to know the individual consumer intimately,
so that the company has a customized product ready for him even before
he asks for it.”
What is CRM?
There can be multiple definitions of CRM from different perspectives
Chapter 1 Introduction and Origin of CRM
Consumer Relationship Management
2
From the viewpoint of the Management, CRM can be defined as
an organized approach of developing, managing, and
maintaining a profitable relationship with consumers.
By equating the term with technology, the IT organizations
define CRM as a software that assists marketing, merchandising,
selling, and smooth service operations of a business.
As per Franics Buttle, World’s first professor of CRM, it is the
core business strategy that integrates internal processes and
functions, and external networks, to create and deliver value to a
target consumer at profit. It is grounded on high quality
consumer data and information technology.
The primary goal of CRM is to increase consumer loyalty and in
turn improve business profitability.
Ingredients of CRM
Take a look at the following illustration. It shows the ingredients that
work together to form a successful CRM system.
Consumer
Care
HR
Management
Lead
Management Marketing
Sales force
Automation
Work flow
Automation
Analytics Business
Report
CRM
System
Dr. Ashok V. Giri
3
Here are some of the important ingredients of CRM −
Analytics − Analytics is the process of studying, handling, and
representing data in various graphical formats such as charts,
tables, trends, etc., in order to observe market trends.
Business Reporting − Business Reporting includes accurate
reports of sales, consumer care, and marketing.
Consumer Service − Consumer Service involves collecting and
sending the following consumer-related information to the
concerned department −
o Personal information such as name, address, age
o Previous purchase patterns.
o Requirements and preferences.
o Complaints and suggestions.
Human Resource Management − Human Resource
Management involves employing and placing the most eligible
human resource at a required place in the business.
Lead Management − Lead Management involves keeping a
track of the sales leads and distribution, managing the
campaigns, designing customized forms, finalizing the mailing
lists, and studying the purchase patterns of the consumers.
Marketing − Marketing involves forming and implementing
sales strategies by studying existing and potential consumers in
order to sell the product.
Sales Force Automation − Sales Force Automation includes
forecasting, recording sales, processing, and keeping a track of
the potential interactions.
Workflow Automation − Workflow Automation involves
streamlining and scheduling various processes that run in
parallel. It reduces costs and time, and prevents assigning the
same task to multiple employees.
Objectives of CRM
The most prominent objectives of using the methods of Consumer
Relationship Management are as follows −
Consumer Relationship Management
4
Improve Consumer Satisfaction − CRM helps in consumer
satisfaction as the satisfied consumers remain loyal to the
business and spread good word-of-mouth. This can be
accomplished by fostering consumer engagement via social
networking sites, surveys, interactive blogs, and various mobile
platforms.
Expand the Consumer Base − CRM not only manages the
existing consumers but also creates knowledge for prospective
consumers who are yet to convert. It helps creating and
managing a huge consumer base that fosters profits continuity,
even for a seasonal business.
Enhance Business Sales − CRM methods can be used to close
more deals, increase sales, improve forecast accuracy, and
suggestion selling. CRM helps to create new sales opportunities
and thus helps in increasing business revenue.
Improve Workforce Productivity − A CRM system can create
organized manners of working for sales and sales management
staff of a business. The sales staff can view consumer’s contact
information, follow up via email or social media, manage tasks,
and track the salesperson’s performance. The salespersons can
address the consumer inquiries speedily and resolve their
problems.
Objectives
of CRM
Expand the
Consumer
Base
Improve
Workforce
Productivity
Improve
Consumer
Satisfaction
Enhance
Business
Sales
Dr. Ashok V. Giri
5
Origin of CRM
CRM originated in early 1970s when the business units had a
manifestation that it would be advisable to become ‘consumer emphatic’
rather that ‘product emphatic’. Birth of CRM was because of this needful
perceptiveness.
The famous writer and management consultant Peter Drucker
wrote; ‘The true business of every company is to make and keep
consumers’. Traditionally every transaction was on paper and dependent
on goodwill which created hindrance in clutching consumers. People
used to work hard in entertaining consumers by presenting new products
with astonishing services; they were ready to work overtime for grasping
more and more consumers for increasing business. This too resulted in
consumer satisfaction and loyalty up to some extent, but at the end of the
day there was no such bonding or relation between the two to carry on
with future business smoothly.
Previously business was quite easy as it was mere a one-to-one
dealing without any specific process. But with time, due to incoming
complexities in communication, it found itself in troubled waters.
Emerging of new strategies and technologies in global marketplace and a
mammoth degree of competition in business, the approach needed to be
changed to proactive rather than reactive. Origination of CRM turned out
to be a piece of cake for all suppliers and consumers due to its
advantages. Consumer relationship management came as a process that
dealt with relationships with consumers surpassing the whole business.
Originally consumer relationship management was based on
three major principles; shielding the current consumers, fostering new
consumers and enhancing asset value of all the consumers. With the
advent of CRM which was integrated with high end software and
technology, business perspectives were totally changed. A CRM system
eventually emerged as consisting of company-full of information which
is depicted sophistically to increase business profit and meliorate
consumer satisfaction and loyalty, on the same hand reduces business
cost and investment.
The outgrowth in origin of CRM as a strategic approach is a
result of some of the following important perspectives:
Consumer Relationship Management
6
1. The belief that consumers are the real assets and not just the
people in the audience.
2. The maturation of one-to-one transaction advent.
3. Extensive use of software and technologies to maintain useful
information and no manual labor.
4. The realization of the benefits of utilizing information
proactively and not reactively.
5. The change of business view to relationship approach rather than
transactional approach.
6. The approach of concentrating more on consumer values rather
than concentrating on how the product is delivered to the
consumer.
7. The approach of focusing on consumer satisfaction and loyalty
rather than focusing self-satisfaction and profit.
8. The acceptance of the fact that using high end technologies and
software the cost can radically be decreased without
compromising on quality and service of products.
9. The increasing tendency to retain existing consumers and trying
to get more and more business out of them.
10. The realization that the traditional trends of marketing and
selling are increasingly fading out in the current economic
scenario.
These additive approaches helped a lot in building up
consequently the modern CRM. Today we have well defined and
sophisticated CRM systems into being which are always in process of
improvement.