Definitions of CRM

• CRM is an information industry term for methodologies, software and

usually Internet capabilities that help an enterprise manage customer
relationships in an organized way.

• Customer Relationship Management is a comprehensive approach for

creating, maintaining and expanding customer relationships.
CRM is an integrated approach to identifying, acquiring and retaining
customers. By enabling organizations to manage and coordinate
customer interactions across multiple channels, departments, lines of
business and geographies, CRM helps organizations maximize the value
of every customer interaction and drive superior corporate
performance.
CRM is a discipline as well as a set of discrete software and technologies
which focuses on automating and improving the business process associated
with managing customer relationships in the areas of sales, marketing,
customer services and support. CRM software applications facilitate the
coordination of multiple business functions (such as sales, marketing,
customer services, and support) and also coordinate multiple channels of
communication with the customer face to face, call centres and the Web – so
that organizations can accommodate their customers‘ preferred channels of
interaction.
What does CRM involve?

CRM involves the following (3):

 Organisations must become customer focused

 Organisations must be prepared to adapt so that it take customer needs into

account and delivers them

 Market research must be undertaken to assess customer needs and

satisfaction.
 Transactional Vs Relationship Approach
• Transactional Approach: Transactional marketing is a business strategy that
focuses on single, "point of sale" transactions. The emphasis is on maximizing the
efficiency and volume of individual sales rather than developing a relationship with
the buyer.

• Relationship Approach: Customer relationship management (CRM) is a process

in which a business or other organization administers its interactions with
customers, typically using data analysis to study large amounts of information.
Customer Life Cycle
 Customer Acquisition

 Customer acquisition is a broad term that is used to identify the process and
procedures used to locate, qualify, and ultimately secure the business of new
customers.
The purpose of customer acquisition an organization is likely to focus its attention
on the following:

1. The suspects
2. The enquiries
3. The lapsed customers
4. The former customers
5. The competitors customers
6. The competitors lapsed customers
7. The competitors enquiries
8. The competitors former customers
9. The referrals
10. The existing customers
 STRATEGIES FOR CUSTOMER ACQUISITION

1. Focused Approach:
a) Knower b) Preferer c) Indifferent d) Rejecters
2. Providing a Win-Win Platform
3. Intimate Forum for Communication
4. Attempt to Minimize- ―FUD‖ (Fear, Uncertainty, Doubts)
5. Projection Of Benefits And Not Products
6. Contextual Application
7. Focus On Decision Process
 CUSTOMER RETENTION

• Customer retention is the activity that a selling organization undertakes in order to

reduce customer defections. Successful customer retention starts with the first contact
an organization has with a customer and continues throughout the entire lifetime of a
relationship. A company’s ability to attract and retain new customers, is not only
related to its product or services, but strongly related to the way it services its existing
customers and the reputation it creates within and across the marketplace.
 STRATEGIES FOR CUSTOMER RETENTIONS

• 1. People
• 2. Product
• 3. Process
• 4. Organisation
• 5. Setting Satisfactory Service Standards
• 6. Concentration on Competitors
• 7. Customer Analysis
• 8. Cost Analysis
• 9. Concentration on the Paying Ability of Customers
• 10. Knowledge on Purchase Behaviour Pattern
 CUSTOMER DEFECTION

• Customer defection is the rate at which customers defect or stop the usage
of products of a company. Business with high defection rate would be losing
their existing customers. In order to overcome this they use another term of
customer retention, in simple words it‘s to retain or prevent the existing
customers to defect the product.
 TYPES OF DEFECTION

Price Defectors
Product Defectors
Market Defectors
Technological Defectors
Organisational Defectors
 STRATEGIES FOR PREVENTION OF DEFECTION

• Every customer that you keep represents at least three that you don‘t have to
attract. Numerous research studies indicate that the cost of acquiring a new
customer usually runs from two to four times the annual cost of keeping an
existing customer. Obviously, an effective customer retention strategy
translates into profits.
It has been estimated that most companies spend about 98 percent of their time
reacting to problems and less than 2 percent preventing them. The first, most
important, way to prevent customer defections is to identify and define each
problem from the customer’s vantage point.
Superior service and database management provide your best defense against
customer defections. Service provides the opportunity to solve customer problems
and build partnerships; the database serves as a vehicle to personalize customer
communication and enhance your relationships.
The Key Points Are
1. Analyze Customer Defections and Monitor Declining Accounts
2. Address Key Churn Drivers
3. Implement Effective Complaint-Handling and Service Recovery
Procedures
4. Increase Switching Costs.
 CUSTOMER LOYALTY

• Loyalty is at the heart of equity and is one of important brand assets. Brand loyalty is a
conscious or unconscious decision expressed through intention or behavior to repurchase a
brand continually. When the consumer buys with respect to product features, price and
convenience, with little concern to the brand there is likely little equity. But, if the consumers
prefer the brand even at the face of competitors with superior features and offers, then
brand is said to have high brand equity. Loyalty reflects the consumer‘s attitude towards the
brand, especially when there is a change, either in price or product features. As the brand
loyalty increases, the vulnerability of the customer base to competitive action gets reduced.
Ways to Maintain Customer Loyalty:
1. Quality is Key: Quality is everything-it‘s what keeps customers returning for
your product or service, and not your competitions.
2. Happy Staff, Happy Customers: Your staff not only represents your
organization, they‘re the individuals whom your customers actually build
relationships with. They‘re the face of your company.
3. Engage: Customer engagement is very important for continually building
customer loyalty, and also marketing your company. Asking your customers for
feedback is great because you gain insight into what you‘re doing right, as well as
improvement opportunities
4. Own Failure: While you should never strive to fail your customers, within
every failure is the opportunity to redeem the relationship and affirm your
customer‘s trust.
5. Loyalty Programs: Anything that adds value to your work and shows your
appreciation for your customers will go a long way maintaining their loyalty. One
way companies are doing this is through loyalty programs.
6. Innovate Operations: Customers want things simple, straightforward, and as
fast as possible
Prospect The prospect is an individual in a retail market or an organization in the
business market, which fulfils the requirement of the marketer‘s definition of target.
For example, a cellular service provider may segment the market and target executives
in blue chip companies with a special offer.

Customer The prospect becomes a customer when s/he gets attracted by the
offering of the marketer and buys the product / service.
Client A customer becomes a client when s/he purchases the product or service more
than once. While a customer may make the initial purchase as a trial or test, the client is
one who does a repeat purchase. It is likely that the trial was a satisfactory experience
for the client.

Supporter A client becomes a supporter when he satisfies with the offering and
recommends it to his friend, relatives and acquaintances. This positive Word – Of –
Mouth (WOM) has tremendous positive impact as it helps the company get new
customer. WOM is a most influential source of information in converting prospects
into customer.
Advocate An advocate is a supporter who, in addition to referrals that gives increases
sales, proactively works with the company to improve its product and services. While
developing new products software companies regularly depend on the feedback from
the lead users of their clients during the Beta test phase. So is a case in new product
development situation in several industrial firms, who set up the prototype in their
client‘s premises for usage and feedback, which helps in improvement. In these
situation, the level of interaction between the customer and the company is at a much
higher plane. There is sharing of vital information and the comfort level as well as
the confidence between the parties is high.
CRMs can be divided into four categories. This classification is mainly based on how they
perform tasks and functions and their business orientation.
 1. Operational CRM

Focus: Automating business processes.

• Sales Automation: Helps streamline the sales process, track leads, and close deals
efficiently.
• Marketing Automation: Manages campaigns, email marketing, lead generation, and
nurturing.
• Service Automation: Assists in customer service activities like managing support tickets
and inquiries.
Examples: Salesforce Sales Cloud, HubSpot CRM.
 2. Analytical CRM

Focus: Analyzing customer data for better decision-making.

• Collects and interprets customer data (purchase history, preferences, etc.).

• Enables predictive modeling and customer segmentation.
• Provides insights for targeted marketing and personalization.
Examples: Zoho Analytics, SAP CRM.
 3. Collaborative CRM

Focus: Facilitating communication between teams and with customers.

• Integrates communication across departments (sales, marketing, customer service).

• Shares customer data and interactions for a seamless experience.

• Enhances multi-channel communication with customers (email, chat, phone, social media).

Examples: Microsoft Dynamics 365, Freshworks CRM.

 4. Strategic CRM

Focus: Long-term relationship building.

• Centers on customer retention and satisfaction.

• Aligns company strategy with customer insights.
• Aims for a holistic view of customer needs to foster loyalty.
IDIC Model
Identify The initial step involves gathering extensive information about your
customers, such as their names, addresses, and purchase histories. This
data collection occurs at every point of contact across the company, aiming
to gain a deep understanding of customers’ needs, wants, and purchase
behaviours.

Differentiate Next, segment your customers based on their current and

projected lifetime value. Not all customers hold the same value to the
business; therefore, prioritising efforts towards the most valuable segments
optimises profitability. Tailor your interactions to suit each segment for
maximum effectiveness.
Interact In this stage, apply your CRM plans to interact with your
customers. After analysing and categorising customers, develop
customised interactions. For instance, offering loyalty benefits to valued
customers can foster retention and encourage continued spending.
Learn from each interaction to enhance future engagements
continuously.

Customise Finally, after documenting interactions, analyse them to

develop more personalised one-to-one services. The objective is to
meet individual customer needs and expectations precisely.
 QCI Model
•
• The Quality Competitive Index (QCI) model, often referred to as a customer
management model, focuses on three core activities: acquisition, retention,
and penetration.
• The QCI model begins by examining the customer’s external environment—
their pain points, business goals, and other factors that influence their
readiness to engage with your sales team. This understanding impacts the
overall customer experience, which in turn shapes your customer proposition
and management activities. As illustrated by the inner circle of the QCI model,
numerous activities are essential for acquiring and retaining customers.
• Crucially, the QCI model also considers the integral role of people and
technology in maintaining this system. Although the term “relationship” has
been replaced in this model, it still fundamentally revolves around human
interactions.
 Payne’s Five Process Model
• Five Key Processes:
1. Strategy Development: Define clear CRM objectives that align with your
business goals. Conduct a comprehensive market analysis to understand
customer needs and preferences, laying the groundwork for a targeted CRM
strategy.

2. Value Creation: Identify unique value propositions that differentiate your

offerings. Develop detailed customer personas and journey maps to tailor your
value creation efforts. This step focuses on understanding what truly matters to
your customers and how your business can meet those needs uniquely.
3. Multichannel Integration: Ensure a consistent customer experience
across all channels, from digital platforms to in-person interactions. Utilise
technology to create a cohesive communication strategy that keeps
customers engaged and informed.
4. Information Management: Implement robust data management
systems to capture and analyse customer data. Use this data to
personalise customer interactions and make informed strategic decisions.
This step is crucial for understanding customer behaviour and
preferences.
5. Performance Assessment: Regularly evaluate the effectiveness of
your CRM processes to ensure continuous improvement.
 Four Essential Elements for Successful CRM
Implementation
1.CRM Readiness: Conduct a readiness assessment to determine how
prepared your organisation is to implement a new CRM process.
2.CRM Change Management: Since CRM implementation involves
significant cultural and operational shifts, invest in change management
to support the transition.
3.CRM Project Management: Effective project management is necessary
to handle the complexities of CRM initiatives as they grow.
4.Employee Management: Employee buy-in is crucial for successful
CRM. Ensure your employees understand the strategies and processes
and are fully engaged with the new customer-centric culture.
 CRM Value Chain

• The CRM value chain is a sophisticated model developed by Michael Porter,

designed to identify and prioritise the processes a business uses to create an
end product or service for its customers. The primary objective of the value
chain model is to pinpoint the most valuable activities within a company and
refine these processes to secure a competitive edge.

• Applying this principle to customer relationships, the CRM value chain

examines all stages and activities required to build and maintain a relationship
with a customer. This CRM model is divided into two key stages: primary and
support.
Primary Stage
Consists of five essential processes that underpin the strategy.

•Customer Portfolio Analysis: Similar to the IDIC model, the first step involves
analysing your customer base to identify your SSCs (Strategically Significant Customers)
– those who generate the most value for your company. This analysis helps businesses
understand their customers’ needs and expectations, enabling the development of
strategies to maximise their lifetime value.

•Customer Intimacy: The next step is to foster closer engagement with customers by
building on the existing database of information. At each touchpoint, data should be
collected to enhance understanding and service delivery. The better you know your
customer and adjust your service accordingly, the more likely you are to retain their
•Network Development: A business’s network encompasses all individuals and
entities involved in the value chain, including partners, suppliers, customer
service teams, investors, and more. The goal is to utilise customer data to inform
processes at every network level, ensuring that the entire system collaborates to
optimise the customer experience.

•Value Proposition Development: With comprehensive customer information

and interaction data at hand, businesses can create significant value for their
target customers. This process involves shifting the focus from the product to the
service, aiming to reduce process costs and increase value for the customer.

•Relationship Management: The final stage of the primary process is managing

the customer lifecycle. This involves continuously evaluating and refining
business processes and organisational structures to effectively manage customer
acquisition, retention, and development.
Support Stage
To implement the strategic processes of the primary stage effectively,
five supporting conditions are necessary:

•Leadership and Culture: Strong leadership and a customer-centric

culture are crucial for fostering an environment where CRM strategies
can thrive.

•Procurement Processes: Efficient procurement processes ensure

that the necessary resources are available to support CRM activities.
•HR Management Processes: Human resources play a pivotal role in
managing and deploying the right talent to execute CRM strategies
effectively.

•IT/Data Management Processes: Robust IT and data management

systems are essential for capturing, storing, and analysing customer
data to inform strategic decisions.

•Organisation Design: An organisation’s design should facilitate

seamless integration and execution of CRM strategies across all
departments.