Introduction to Customer Relationship Management

CRM is about acquiring, developing and retaining satisfied loyal customer, achieving
profitable growth, and creating economic value in a company’s brand.

CRM today is a discipline as well as a set of discrete software and technologies, which
focuses on automating and improving the business processes associated with managing
customer relationships in the areas of sales, marketing, customer service and suppor t.

At present, more and more companies are adopting various CRM practices, as CRM
promises numerous benefits-including shorter sales cycles, integrated customer
feedback, improved communication, improved response, improved customer knowledge,
improved efficacy, better customer tracking, enhanced customer satisfaction and
increased loyalty.

The emergence of CRM as a business strategy has radically transformed the way
organizations operates. There has been a shift in business focus from traditional to
relationship marketing where the customer is at the centre of all business activity and
organizations are now desperately trying to restructure their processes around the needs
of their strategically significant customers.

However, reduction alone is no longer enough or is necessarily an effective strategy. In

facing the competitive threats, such as new entrants, pricing pressures, technology along
with the related costs and also including the time lags in procuring, maintaining and
strengthening one’s market, more and more organizations are realizing that the
traditional marketing model is no longer effective.

CRM has enabled business not only to respond to the threats in their marketplace but
also positioned them strategically to take advantage of the opportunities available.

What is CRM?

CRM is a process of collecting information about the customers and aligning and
remodelling the organisations strategy to meet the customer’s demand, the focus of CRM
is on people rather than products and services. Business and processes are built with the
customer in mind and the emphasis is on what can be done to make people who want to
do business with you over and over again.

CRM is a tool for servicing the customer. Firms of late are making use of technology to
serve the customers by using and application of latest development in information
technology.

CRM is an approach that integrates people, processes and technology to maximise the
relations of an organisation with its customers. Firms make use of the development in
communication and technology to collect information regarding product and its
marketing to meet expectations of people. Firms keep on developing customer’s data
base to update their need and designing marketing strategy to satisfy such needs.
Concept of CRM

The concept CRM is the methodology which enables the organization to understand the
customers’ needs and behaviour better. It introduces reliable processes and procedures
for interacting with customers and develops stronger relationships with them.

The process helps organization in assimilating information about customers, sales,

marketing effectiveness, responsiveness and market trends. Then this information is used
to give insight into behaviour of customers and value of retaining those customers.

The whole process is designed to reduce cost and increase profitability by holding on to
the customer loyalty.

A simple installation and integration of the software package does not ensure success. It
has to be absorbed into the system. Employees have to be convinced about its positive
attributes and then they have to be trained.

The existing business processes have to be modified. The company has to decide what
kind of information is to be collected about the customers, what is to be done with the
information and priorities this accumulated information.

The company must drill into this database of its customers and ascertain their buying
patterns, product preferences, the potential for add -on sales etc.

A good strategy will be to integrate every area of touch point with customers like
marketing, sales, customer service, and field support. This is achieved with the
integration of the people, process, and technology in the business.

According to one industry view, CRM consists of:

(i) Helping an enterprise to enable its marketing departments to identify and target their
best customers, manage marketing campaigns and generate quality leads for the sales
team.

(ii) Assisting the organization to improve telesales, account and sales management by
optimizing information shared by multiple employees and streamlining existing
processes (for example- taking orders using mobile devices).

(iii) Allowing the formation of individualized relationships with customers, with the aim
of improving customer satisfaction and maximizing profits; identifying the most
profitable customers and providing them the highest level of service.

(iv) Providing employees with the information and processes necessary to know their
customers understand and identify customer needs and effectively build relationships
between the company, its customer base and distribution partners.
Types of CRM

There are several variations in CRM. Among the most common is Sales force,
Automation, Customer Service, Marketing Automation, Analytics Automation etc.

Each of these mentioned above will be discussed below:

1. Sales Force Automation (SFA):

In sales force automations software is used by the company to improve the efficiency of
the sales process. This results in sales representatives having to spend less time on
different parts of the sales process, which allow them to spend more of their avai lable
time pursuing clients.

It allows the company to track or record each stage of the sales process and pay attention
to each client served by the company. Additionally, SFA software applications may also
provide information on territories, opportunities, work flow automation, sales forecasts
and knowledge of products.

2. Customer Service:

In customer services technology may be used by companies to improve the quality of

service they can offer customers, while at the same time increasing the efficiency and
minimizing the cost of that service. Comprehensive call center solutions are commonly
applied here, such as computer telephone integration (CTI) and intelligent call routing
(ICR).

3. Marketing Automation:

In marketing system the automation assist the company in locating and reaching its best
customers, as well as in finding leads the sales team can pursue. A valuable feature in
marketing is the ability to not only track but also measure diverse campaigns, including
domains such as social media, direct mail, email and searching. Data monitored by
marketing include deals, responses, revenue and leads.

4. Analytics Automation:

System involving analytics are typically integrated with applications related to service,
sales and marketing. The purpose of sales analysis is to allow companies to develop a
more comprehensive understanding of why clients do what they do and hold the
preferences they do.

Web analytics for example, have increased in complexity from their initial functions as
means to track mouse clicks to their current implementations as methods of predicting
likely purchases and identifying difficulties of customers facing in making purcha ses.

5. Small Business:
Small business solutions that assist both individuals and organizations in monitoring and
documenting interactions such as jobs, emails, faxes, documents and scheduling. Tools
for small businesses generally focus on account management. Small businesses are
increasing turning toward online solutions, particularly for workers who travel and
telecommunicate, to solve their business needs.

6. Integrated and Collaborative Practices:

Integrated and Collaborative practices refers to interaction and collaboration between

department inside companies and enterprises, the goal here is to increase levels of
cooperation among different departments such as marketing, sales and service.
Collaborative systems involve the use of technology to bridge distances between
departments.

7. Non Profit Organisations:

Non Profit Organisations are used to track constituents, as well as the actions they take
related to the org itself. Such systems typically include capabilities for tracking features
such as fund raising membership levels, volunteering demographics and communications
with target individuals.

Objectives & Context of CRM

CRM, the technology, along with human resources of the company, enables the company
to analyze the behaviour of customers and their value.

The main areas of focus are as the name suggests customer, relationship and the
management of relationship and the main objectives to implement CRM in the
business strategy are:

(i) To simplify marketing and sales process.

(ii) To make call centre’s more efficient.

(iii) To provide better customer service.

(iv) To discover new customers and increase customer revenue.

(v) To cross sell products more effectively.

Context of CRM

The context of CRM can be summarized as follows:

(i) Increased Sales Revenue:

Increased sales result from spending more time with customers, which results from
spending less time chasing needed information, (i.e., productivity improvement).
(ii) Increased Win Rates:

Win rates improve since companies can withdraw from unlikely or bad deals earlier on
in the sales process.

(iii) Increased Margins:

Increased margins resulting from knowing customer better, providing a value-sell and
discount prices.

(iv) Improved Customer Satisfaction Rating:

This increase occurs since customers find the company to be more responsive and better
in touch with their specific needs.

(v) Decreased General Sales and Marketing Administrative Costs:

This decrease occurs since the company has specified its target segment customers, it
knows their need better, and thus it is not wasting money and time, for example, on
mailing information to all customers in all existing and potential target segments.

Purposes of Adopting CRM Processes:

(i) Develop better communication channels.

(ii) Collect customer related data.

(iii) Create detailed profiles of individual customers.

(iv) Increase customer satisfaction.

(v) Access to customer account history, order information and customer information at
all touch points.

(vi) Identify new selling opportunities.

(vii) Increased market share and profit margin.

(viii) Increased revenues.

(ix) More effective reach and marketing.

(x) Improved customer service and support.

(xi) Improved response time to customer requests for information.

(xii) Enhanced customer loyalty.

(xiii) Improved ability to meet customer requirements.

(xiv) Improved quality communication and networking.

(xv) Reduced costs of buying and using product and services.

(xvi) Better stand against global competition.

Features of CRM:

(1) Customer Based:

Customer Relationship Management is a customer oriented feature with service response

based on customer input, one-to-one solutions to customer’s requirements, direct online
communications with customer and customer service centers that help to solve
customers’ questions.

(2) Automation of Sales:

Every sale transaction can be recorded, by tracking sales records that is name of a
customer, purchase details etc. Firms have to install automation system to record such
transactions. This function can implement sales promotion analysis tracking of a client’s
account history for repeated sales or future sales and also coordinate sales. Helpline and
call centres may be installed to keep record of customers.

(3) Use of Technology:

Firms make use of technology to keep detail information of customer needs. Use of ICT,
Computer to store information, e-mail Systems, Mobile phone data and even paper note
cards etc. storing all the data from all departments (ex- Sales, Customer service,
marketing and HR) in a central location gives, management and employees immediate
access to the most recent data when they need it.

It applies data warehouse technology in order to aggregate transaction information, to

merge the information with CRM solutions and to provide key performance indicators
(KPI). Such information is used to revise product and its marketing to match to need o f
customer and ensure effective CRM.

(4) Opportunity Management:

This feature helps the company to manage unpredictable growth and demand and
implement a good forecasting model to integrate sales history with sales projections.

Functions of CRM

CRM performs various functions for the marketing department of the organization.
These functions are as follows:

a. Managing Leads – It refers to generating and retaining potential customers.

b. Qualifying and Converting Leads – It refers to the assessment of generated leads to

know potential and profitable customers.

c. Managing Opportunities – It refers to utilize every possible opportunity to get long-

term benefit from customers.

d. Keeping a Track on Activities – It refers to capture information, such as customers’

buying pattern, quantity purchased, and time spent by customers in the store.

e. Managing Reporting and Forecasting – It refers to process input data, such as average
time spent by the customers in the store and their preferences for the product.

CRM also performs several functions in one-to-one marketing.

These functions are mentioned in the following points:

a. Identify Customers – It refers to differentiate between profitable and non-profitable

customers.

b. Differentiate the Needs of Customers – It refers to finding variation in the

requirements of customers. The organization makes different groups of customers as per
the needs of customers.

c. Customize Products and Services – It refers to the products and services produced as
per the requirements of individual customers.

d. Build Stronger Relationship – It refers to establish a relationship between an

organization and customers by facilitating a personalized way of communication.

Importance of Customer Relationship Management:

1. A CRM system consists of a historical view and analysis of all the acquired or to be
acquired customers. This helps in reduced searching and correlating customers and to
foresee customer needs effectively and increase business.

2. CRM contains each and every bit of details of a customer, hence it is very easy to
track a customer accordingly and can be used to determine which customer can be
profitable and which not.

3. In CRM system, customers are grouped according to different aspects according to the
type of business they do or according to physical location and are allocated to different
customer managers often called as account managers. This helps in focusing and
concentrating on each and every customer separately.
4. A CRM system is not only used to deal with the existing customers but is also useful
in acquiring new customers. The process first starts with identifying a customer and
maintaining all the corresponding details into the CRM system which is also called an
‘Opportunity of Business’.

The Sales and Field representatives then try getting business out of these customers by
sophistically following up with them and converting them into a winning deal. All this is
very easily and efficiently done by an integrated CRM system.

5. The strongest aspect of Customer Relationship Management is that it is very cost-

effective. The advantage of decently implemented CRM system is that there is very less
need of paper and manual work which requires lesser staff to manage and lesser
resources to deal with. The technologies used in implementing a CRM system are also
very cheap and smooth as compared to the traditional way of business.

6. All the details in CRM system is kept centralized which is available anytime on
fingertips. This reduces the process time and increases productivity.

7. Efficiently dealing with all the customers and providing them what they actually need
increases the customer satisfaction. This increases the chance of getting more business
which ultimately enhances turnover and profit.

8. If the customer is satisfied they will always be loyal to you and will remain in
business forever resulting in increasing customer base and ultimately enhancing net
growth of business.

Need for Customer Relationship Management:

Customer relationship management is a corporate level strategy focusing on creating and

maintaining relationships with customers. CRM is a term not only used by the business
organizations but also in any type of organizations to create a beneficial environ ment
among the customers. This is a business approach that combines people, processes and
technology to maximize the relation of an organization with all types of customers.

It helps in understanding the customer better and according to the needs of the customer;
the organization can effectively customize their products and services in order to retain
the customers and also to increase customer’s loyalty and satisfaction.

The ultimate purpose of CRM is to increase profit, which can be achieved mainly by
providing a better service to customers than competitors. CRM enables companies to
gather and access information about customer orders, complaints, preferences, and
participation in sales and marketing campaigns. This information can then be used to
better react to customer needs, automate some operations, and capture customer
feedback to improve products and services.

The need of CRM arises because of the following reasons:

a. To enable the company to identify, contact, attract and acquire new customers.
b. To obtain a better understanding to the customers- their wants and needs.

c. To define the appropriate product and service offering and match it to the unique
needs of the customer.

d. To manage and optimize company’s sales cycle.

e. To increase retention of existing customers through improved sales, service and

support.

f. To identify cross selling and up selling opportunities.

12. Management of Relationship:

It is a strategy employed by an organization in which a continuous relationship or

contact is maintained between the organization and its customers, Management of
relationship can be between Business (BRM) and its Customers (CRM).

Relationship Management aims to create partnership between the organization and its
customers rather than considering the relationship merely transactional. Customers who
feel that a business responds to their needs are likely to continue using the product s and
services that a business offers and thereby maintain a long term relationship.
Maintaining regular communication with consumers allows the business to identify
potential sources of problems.

Such problems may relate to quality, quantity, packing, pricing of product and it’s a
service and its marketing, regular and timely information can help a company to
minimise and manage the problem and ensure customer satisfaction by attention to solve
their problem. This relationship management can be understood clearly with the
customer relationship management (CRM).

CRM is a system for managing a company’s interaction with current and future
customers. It involves using technology to organize, automate and synchronize sales,
marketing customer service and technical support. It is a strategy that is recognized
broadly and implemented widely to both manage and increase the quality of a company’s
interactions with a variety of customers.

This optimization primarily involves activities related to sales but may also involve
activities related to technical support, marketing and customer service. CRM goal is to
track, record store in databases and then data mine the information, make use of s uch
information to adopt and marketing as per the wish of customer’s.

This will help in a way increases customer relations. CRM is a business strategy
implemented at the company level involving all departments related to clients. Firms
regularly collect feedback from customers to receive their views and complaints on the
product and modify the product and its marketing to meet the expectation of customers.
A firm has numerous benefits of CRM like higher productivity in sales and marketing.
Reduction in expenses, more accurate targeting and profiling, higher overall levels of
profit and increase in market share.

Benefits of CRM

A complete view of all customer information, knowledge of what customers and the
general market want and integration with existing product and services to verify how
much does it match with customer’s needs. To consolidate all business information and
gather feedback from customers, understand their needs and improve product or services
and enable a firm to design and deliver the products as dreamed by the existing and
prospective customers.

CRM system will gather data from a huge variety of source social media, online chat,
customer calls etc. This allows the company to get a complete picture of what the
customer want and how they feel about the products services. This gives the firm the
opportunity to improve the offerings based on what the customers are saying.

Benefits of CRM are as follows:

(1) Provide Better Customer Service:

CRM system gives advantages such as the ability to personalize relationship with
customers. CRM maintains Customer Profiles, there by treating each client as an
individual and not as a group. This way every employee can be better informed about
each customer’s specific needs and transaction profiles.

Better Customer Service improves the responsiveness and understanding which helps in
building Customer loyalty. It also helps the company in getting continuous feedback
from the Customers on the Product they have brought.

For Example:

LG Company always make a follow- up with its Customers on the items the, Customers
have bought, so as to rectify the problem (if any) even before it gets logged as a
complaint.

(2) Increase Customers Revenues:

Regular updation of customer information will help a firm to keep on revising its product
and marketing strategy. Adaptation of product and its marketing to match the changing
needs of a customer make the organisation customer friendly resulting in increas e the
sales and revenue.

(3) Discover New Customers:

CRM systems help the organization in identifying potential Customers by keeping a

track of the profiles of their existing client, the business can easily come up with a
strategy to determine the kind of people they should target so that it returns them
maximum revenue.

(4) “Cross Sell” and “Up Sell”:

CRM system facilitates Cross-selling (offering customers complimentary products based

on their previous purchases) and Up-Selling (offering customers premium products in
the same category) It helps them to gain a better understanding of customers and
anticipate their purchases.

For Example- (Cross sell – A Bluetooth head set along with the smart phone and up sell
– Surf Detergent has introduced Surf Excel a better quality product.

(5) Help Sales Staff Close Deals Faster:

CRM helps the business in closing deals faster through quicker and more efficient
responses to customer needs and customer information. The organizations have to
implement CRM Systems effectively.

(6) Customer Loyalty:

Firms can gain loyalty of the customer by regularly understanding their needs and
meeting their needs. Customer develops regular association with the firm due to the
products and marketing style of a firm that is of customers liking.

(7) CRM Benefits Everyone:

It offers a win situation for everyone that is:

a. Customer is benefited as he gets product of his choice.

b. Retailer is benefited as he has less difficulty in selling the product.

c. Manufacturer is benefited due to regular sales.

Disadvantages of CRM

(1) Investment:

A firms has to invest capital in developing the CRM system and technology to gather
information about the customer regularly. Small firms with the limited capital may find
difficult to install the CRM system in their organisation.

(2) Technology:

Collection of information regarding the customer’s needs and its regular updating
requires use of modern information technology. A firm must not only have adequate
capital but needs necessary knowledge to install and implement the technology.
(3) Liaison between Production Marketing and CRM Team:

CRM is undertaken to understand to needs of customer and accordingly device product

and its marketing. It needs cooperation between manufacturer, retailer and their
infraction with the final customer to know customers’ needs and accordingly market the
product.

Lack of coordination between them will make the task of CRM unsuccessful. That is
information collected must be communicated to manufacturer. Manufacturer must
redesign product based on such communication. If the communication is not proper or
manufacture does not respond to communication CRM will be in effective.

(4) Regular Exercise:

CRM is a regular activity it is not a one time affair. Firms have to regularly monitor to
under and customer’s needs. The CRM system has to work 24×7 to regularly get
feedback from the customers. In such case use of technology like, Website, Toll free
communication, email may be effective.

(5) Wrong CRM Tool:

A mistaken tool choice may make CRM more complicated. So the companies need to
consider in advance what kind of tools would be appropriate in order to follow its
relationship with its customers.