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Customer Relationship

Management

11Lecture

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Explosion of CRM in Marketing & ITExplosion of CRM in Marketing & IT

Academicians “Darling”Academicians “Darling” Global CRM Market - $42.8 Global CRM Market - $42.8 billionbillion

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Enablers for Growth of CRMEnablers for Growth of CRM

Emergence of Service EconomyEmergence of Service Economy Emergence of Market Economy Emergence of Market Economy Global Orientation of BusinessesGlobal Orientation of Businesses Aging Population of Economically Aging Population of Economically Advanced EconomiesAdvanced Economies

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Emergence of Service EconomyEmergence of Service Economy

CountryCountry% of GDP% of GDP

USUS 7575Western Europe, Canada, Western Europe, Canada,

JapanJapan60-7060-70

PhillipinesPhillipines 5454

ChinaChina3333

IndiaIndia4848

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Emergence of Market EconomyEmergence of Market Economy

Market-OrientedMarket-Oriented ControlledControlled

CUBACUBAUNITED STATESUNITED STATES

Market Market ConditionsConditions

Innovation Innovation OrientationOrientation

Deregulation Deregulation of Banking, of Banking, Telecom, Telecom,

Broadcasting, Broadcasting, AirlinesAirlines

Entrepreneurship Entrepreneurship CultureCulture

Customer Focus

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Global Orientation of BusinessesGlobal Orientation of Businesses

Emergence of Trading Blocs : Emergence of Trading Blocs : NAFTA, EU, ASEANNAFTA, EU, ASEAN

WTOWTO Increasing International TradeIncreasing International Trade Liberalisation of MarketsLiberalisation of Markets

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Aging Population of Economically Aging Population of Economically Advanced EconomiesAdvanced Economies

CountryCountry % of Population% of Population

USUS 12.612.6JapanJapan 1717

SwedenSweden 17.217.2

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Aging Population of Economically Aging Population of Economically Advanced EconomiesAdvanced Economies

Slowdown in Birth RateSlowdown in Birth Rate Increase in Life ExpectancyIncrease in Life Expectancy Slowed Market for Traditional Goods & Slowed Market for Traditional Goods &

ServicesServices Increase “Share of Wallet”Increase “Share of Wallet” Deeper Understanding of Existing Deeper Understanding of Existing

CustomersCustomers

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Criticality of Customer RelationshipsCriticality of Customer Relationships

Non-Traditional CompetitionNon-Traditional Competition Market MaturityMarket Maturity Misalignment between Revenue & Misalignment between Revenue & ProfitsProfits

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Non-Traditional CompetitionNon-Traditional Competition Porter’s TheoryPorter’s Theory New EntrantsNew Entrants

Reliance (Telecom)Reliance (Telecom) Jet AirwaysJet Airways

Substitute TechnologySubstitute Technology Kodak – Sony – Samsung (Cameras)Kodak – Sony – Samsung (Cameras) VoiP (Telecom)VoiP (Telecom)

Supplier as a CompetitorSupplier as a Competitor

Nilkamal PlasticsNilkamal Plastics

Customer as a CompetitorCustomer as a Competitor Private Brands of Retail ChainsPrivate Brands of Retail Chains

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Market MaturityMarket Maturity Excess CapacityExcess Capacity

AgricultureAgriculture AutomobilesAutomobiles Telecom BandwithTelecom Bandwith

Slow or Negative Growth in Developed Slow or Negative Growth in Developed EconomiesEconomies

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Market MaturityMarket MaturityRepeat Customers

New Customers

Capacity

Utilisation

Capacity

Creation

Emerging Markets

Mature Markets

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Misalignment between Revenue & ProfitMisalignment between Revenue & Profit

Customers SmallestBiggest

Cost

Revenues

Non-traditional Competition

Customer Relationship Management

Unit/$

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Misalignment between Revenue & ProfitMisalignment between Revenue & Profit

Customer SubsidisationCustomer Subsidisation Large Accounts Large Accounts (Loss)(Loss) Traditional AccountingTraditional Accounting

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Why Biz. should adopt CRM?Why Biz. should adopt CRM? Demand : Rising Customer ExpectationsDemand : Rising Customer Expectations Supply : Affordable Technological Supply : Affordable Technological

AdvancesAdvances

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Rising Customer ExpectationsRising Customer Expectations

Increasing Affluence in Emerging EconomiesIncreasing Affluence in Emerging Economies GIMC – 300 millionGIMC – 300 million DINKDINK Outsourcing of traditional HH activitiesOutsourcing of traditional HH activities

Greater Awareness due to explosive media Greater Awareness due to explosive media growthgrowth C&S TV C&S TV Information Explosion leading to Raising Customer Aspirations Information Explosion leading to Raising Customer Aspirations

Customer DiversityCustomer Diversity Mass CustomisationMass Customisation

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Affordable Technological AdvancesAffordable Technological Advances

ProductionProduction

ConsumptionConsumption FacilitationFacilitation

DistributionDistribution

Affordable Technological Affordable Technological AdvancesAdvances

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Affordable Technological AdvancesAffordable Technological Advances

ProductionProduction CAD-CAMCAD-CAM FMSFMS JITJIT

DistributionDistribution CALSCALS TPLTPL ForecastingForecasting Database TechnologyDatabase Technology

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Affordable Technological AdvancesAffordable Technological Advances

FacilitationFacilitation EDI -- ExtranetEDI -- Extranet Internet – Airlines, BankingInternet – Airlines, Banking makemytrip.com – 150,000 usersmakemytrip.com – 150,000 users

ConsumptionConsumption Personal IDs Personal IDs Customer – Co-producer : Dell, LevisCustomer – Co-producer : Dell, Levis Anytime Anywhere Business : ICICI Bank Anytime Anywhere Business : ICICI Bank

(48% ATMs, 11% Net & 11% Call centre)(48% ATMs, 11% Net & 11% Call centre)

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Implementing CRMImplementing CRM Lower Costs of Customer Lower Costs of Customer RetentionRetention

Increased Profits due to lower Increased Profits due to lower defection ratesdefection rates

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Challenges in Implementing CRMChallenges in Implementing CRM

Top Management Commitment Top Management Commitment

Change ManagementChange Management

Developing Customer-Centric ProcessesDeveloping Customer-Centric Processes

Integration with legacy systemsIntegration with legacy systems

Identifying & Establishing Performance MetricesIdentifying & Establishing Performance Metrices

Evaluation of RoIEvaluation of RoI

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CRM : High Rate of FailureCRM : High Rate of Failure Technology FocusTechnology Focus Poor Implementation PlanPoor Implementation Plan No clarity of Purpose No clarity of Purpose

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3 Key Capabilities3 Key Capabilities

Relationship Orientation : Mindset, Relationship Orientation : Mindset, Values, Norms of OrganisationValues, Norms of Organisation

Deepen knowledge of customersDeepen knowledge of customers Internal Integration and External Internal Integration and External

Alignment with customers’ processesAlignment with customers’ processes