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MANAGEMENT INFORMATION SYSTEM
Third Year Information Technology
Part 13Customer Relationship Management
Tushar B Kute,Sandip Institute of Technology and Research Centre, Nashikhttp://www.tusharkute.com
CRM
Of the people, by the people, and for the people.
THREE ERAS IN THE HISTORY OF MARKETING
Production Era “A good product will sell itself.”
Sales Era “Creative advertising and selling will overcome
consumer resistance and convince them to buy.”
Marketing Era “The consumer is king! Find a need and fill it.”
PROFITABILITY OF LONG-LIFE CUSTOMERS According to a study conducted by the
American Management Association, 65 percent of the average company’s business comes from its present, satisfied customers
Costs a company 6x’s more to sell a product to a new customer than it does to an existing one
PROFITABILITY OF LONG-LIFE CUSTOMERS A business that each day for one year
loses one customer who customarily spends $50/week would suffer a sales decline of $1,000,000 the next year
Reichheld found that companies could boost profits by 100 percent by retaining just 5 percent more of their customers.
RELATIONSHIP MARKETING
Relationship marketing involves long-term, value-added relationships developed over time with customers and suppliers.
Relationship marketing recognizes the critical importance of internal marketing to the success of external marketing plans.
RELATIONSHIP MARKETING
Morgan and Hunt (1994) proposed the following definition of relationship marketing: Relationship marketing refers to all
marketing activities directed toward establishing, developing, and maintaining successful relationship exchanges
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.”
“A view of the customer that asserts that he or she is a valuable asset to be managed.” –S. Thomas Foster.
Deciding that “you want lifetime clients.” -Richard Buckingham.
CUSTOMER RELATIONSHIP MANAGEMENT
Bottom-line:
The use of information-enabled systems for enhancing individual customer relationships to ensure long-term customer loyalty and retention
CRM CONFIGURATION
Front office operations Meetings, phone calls, emails, online
services. Back office operations
Billing, maintenance, planning, marketing, advertising, finance, manufacturing.
Business relationships Interaction with companies and partners,
suppliers, vendors and retail outlets, distributors.
Complaint Resolution
Feedback
Guarantees
Corrective Action
FOUR TOOLS
Three types of complaints: Regulatory, Employee, Customer
Compensation Ease of Resolution
COMPLAINT RESOLUTION
Customer Data
Customer Behavior
Data-gathering
Analyzing Data
FEEDBACK
Customer Rights Guarantee Design:
Unconditional Meaningful Communicable Painless to invoke
GUARANTEES
The way a firm reacts to a problem so that the problem never reoccurs.
CORRECTIVE ACTION
CustomerRetention
Customer Relationships
Customer Referrals Recovery
BARNE’S 4 R’S
A low-cost way to increase revenue. Retention is cheaper than acquisition.
Must be voluntary.
Must lead to long-term relationships.
CUSTOMER RETENTION
Attempting to know the customer.
Commitment and Communication
“Clients should call you only once. After that, you should proactively call them.” –Richard Buckingham.
RELATIONSHIPS
Powerful tool that results from customer satisfaction or dissatisfaction.
“Referral clients are already sold, before they even call you.” –Richard Buckingham
REFERRALS
Empower employees so that they may deal with mistakes as they occur.
RECOVERY
CUSTOMER RELATIONSHIP MANAGEMENT
Time line of CRM evolutionFirst Generation (before 1990) started with such
functions like maintaining prospects data, generating leads, creating sales quotations & placing sales orders and other functions like after sales help desks, call centers etc
Second Generation (1990-1996) consolidation of various activities into pre-sales through SFA transactions and post sales through CSS. Not much of an integration with back office operations
Third Generation ( After 2002) integration of the customer facing front end systems with the back end systems as well as with partners& suppliers helped by the growth of the Internet technology.
TYPES OF CRM
1) Operational CRM automation of Business processes involving customers. e.g. Sales Force Automation, Customer service automation, Customer Touchpoints- all sources by which the customers interact with the company
2) Analytical CRM is the synthesis & interpretation of operational Data to identify opportunities, optimize customer interactions and manage business performance. e.g. Data warehousing and Data marts
3) Collaborative CRM provide interactions between customers, staff and business partners through web technologies. e.g. interactive voice technology, computer telephony and web conferencing.
CHANGES WITH RESPECT TO CUSTOMERSGrowing Customer DiversityTime ScarcityValue Consciousness & intolerance for Low Service LevelInformation AvailabilityDecrease in Loyalty
CHANGES WITH RESPECT TO MARKETPLACEGrowing Competition
CHANGES WITH RESPECT TO DATA STORAGE TECH.IT and ITES
CHANGES WITH RESPECT TO MARKETING FUNCTIONMedia Dilution & MultiplicationDecrease in Marketing Efficiency
WHY IS CRM IMPORTANT TODAY?
CRM OBJECTIVES Lifetime Value (LTV)
Refers to the net present value of the potential revenue stream for any particular customer over a number of years.
Starts with current purchase activity then extrapolates to include potential additions from cross-selling, upgrades, total ownership, etc.
Customer Ownership Attempts to “own” the lionshare of customer
spending and/or “share of mind” in a particular product category
Building brand equity, maintaining vigilant customer contact, keeping current with the market trends is critical
5% points increase in customer retention=20-125% increase in profit
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
APPROACHES TO CRM
Data driven approach. Process driven approach.
DATA DRIVEN APPROACH
It relies on the past data and information and customer intelligence for designing CRM strategies.
CustomerData
Analysis and Processing
Customerintelligence
Evolve CRM Strategies
ImplementStrategies
Evaluate and
Modify
PROCESS DRIVEN APPROACH
The CRM solution senses the behavior of the customer and act proactively to deliver the service.
Initiation Of
service
Transition to
servicePreservice Service
Post-Service
EvaluateKMS
CustomerKnowledgeDatabase
CRM-RELATED TERMS
eCRM CRM that is Web-based
ECRM Enterprise CRM
PRM Partner relationship management
cCRM Collaborative CRM
CRM-RELATED TERMS
SRM Supplier relationship management
mCRM Mobile CRM
xCRM More hybrids to com
“You can learn a lot about our motorcycle company by understanding our customers. By valuing and responding to our customers, we have become the leader in the heavyweight motorcycle market.” –Harley-Davidson website
“The customers’ first choice in casual dining.” –Chili’s Vision
QUOTES
REFERENCES
Waman Jawadekar, "Management Information Systems” , 4th Edition, Tata McGraw-Hill Publishing Company Limited.
Tushar B Kute,Sandip Institute of Technology and Research Centre, Nashikhttp://www.tusharkute.com