What is CRM?

The process of storing and analysing the vast amounts of data

produced by sales calls, customer-service centres and actual
purchases, supposedly yielding greater insight into customer
behaviour.

CRM also allows businesses to treat different types of

customers differently - in some cases, for instance, by
responding more slowly to those who spend less or charging
more to those who require more expensive handholding.
 CRM is a strategic approach that is
concerned with creating improved
shareholder value through the development
of appropriate relationships with key
customers and customer segments.
 STEPS IN CRM
Peppers and Rogers pointed out 4 basic steps in CRM:
1. Identify customers individually in as much detail as possible, including
demographics, psychographics, habits and preferences.

2. Differentiate customers, one from another. ( for eg. most profitable and
least profitable)

3. Interact with customers. ( make interaction cost effective and cost

efficient through automation whenever possible)

4. Customize your offerings to fit customers needs through mass

customisation or individual tailoring.
 TANGIBLE COMPONENTS OF CRM
(A)The Five Key Areas of Any CRM
System
1. The integrated front office provides complete
customer profiles to all customer-facing persons,
including marketing, sales, and customer service
personnel. The technologies include customer
engagement centres, sales force automation, and the
Internet.
2. The business intelligence (BI) system captures
information from all customer touch points. It consists
of data warehouses, data marts, and data
mining/analytic techniques.

• Data warehouse works as a repository for all relevant

customer information over a period of time.

• Data is extracted from the DW and stored in a data

mart.

• Data mining and intelligence tools enable an

organization to segment its customer base, attach
3. Workflow and business rules transmit BI to front-
office personnel, enabling them to understand the
value they can give each customer when asked to
satisfy their requests or as part of a retention strategy.

4. Physical links to back-office systems, such as

inventory control, accounts receivable, and so on,
enable front-office personnel to make fulfilment
promises that the company can keep.

5. Performance metrics enable the company to

determine the success of their CRM efforts and the
(B) Multichannel Marketing

• Multichannel can be defined as the variety of channels

(store, phone, ATM/kiosk, catalogs, social networks,
text, chat, etc.) consumers use to interact and
transact with an organization. Typically the highest-
value customers use multiple channels for shopping
and purchasing.

• Multichannel customer buys more because of the

increase in marketing communication and messages
that multichannel provide.
• Portal technology that connects customers with the
best resources in the firm, whether it be a company’s
toll-free number, e-mail, or website—and puts all of
the different types of contacts into a common cue—
will be the key to a successful CRM strategy.

• A customer relationship portal provides consistent

information about all of a customer’s interactions and
enables an organization to measure the effectiveness
of its contact personnel.
(C) Database/ Data Warehouse/ Data Mart/
Data Mining/ SaaS and the Cloud

• A database is an aggregation of computer-based

data that is arrayed in a format to facilitate
retrieval.

• The data warehouse is the central element in the

CRM system and requires that relevant customer
data be entered, stored, and available for
analysis and dissemination to people in the
organization.
• The Data warehouse contains such a huge quantity of data
that it may prove unwieldy for country managers who merely
want to analyze their country subset or for product managers
who merely want to analyze product-related customer
behavior.

• Data marts contain a subset of the data in the data

warehouse and allow for more efficient analysis of the
relevant portion of the firm’s transactions.

 For example, if a business unit focuses on selling herbicides

to farmers and insecticides to pest control operators,
separate data marts may exist for farmers on the one hand
• Data mining is the process of using statistical
techniques to uncover patterns or relationships
among variables in the data warehouse or data mart.

• In data mining, analytical tools search for

relationships in the database that can lead to better
acquisition,
development, retention, win-back of lost customers,
and forecasts of customer behavior.
• With SaaS (software as a service), the software and
associated data are hosted centrally on the Internet (in the
“cloud”) by a service provider and is typically accessed by
users using a Web browser.

• Unlike traditional software, conventionally sold as a

perpetual license with an associated upfront fee, SaaS
providers generally price their applications using a
subscription fee, most commonly a monthly fee or an
annual fee, based on some usage parameters, such as the
number of users using the application.

• The cloud is responsible for CRMs growth because it

requires a much smaller up-front investment than
investment in premise-based CRM hardware and proprietary
(D) Touch Points
A touch point is any point of contact that a customer or
prospect has with the company.

 Eg. It can be an inquiry over the phone, a tweet, a

message on Facebook, an in person contact, an e-
mail, or a purchase transaction over the Internet,
over the phone, at an ATM or a kiosk, or at a trade
show.
 Eg. POS terminals that scan product data from bar
codes while correlating them with customer data
(E) Customer Service and the Customer
Engagement Center
CEC personnel are trained in the art of recognizing
which retention strategy is most suitable for the
customer, and they are aided in this through
predictive and prescriptive analytics, which predict
which offers are most suitable for the interaction at
hand.
 (F) Sales Force Automation
• While SFA products were originally introduced to improve
sales force productivity, today they are increasingly oriented
toward developing customer relationships and improving
satisfaction.
• SFA systems are an important subset of CRM systems because
they provide management of the sequence of sales activities;
data across and within a company’s client organization; leads
and opportunities; the building of items into a total package
for customers etc.

 Eg. Salesforce.com is a leader in SFA and provides a hosted

Web portal that allows users to outsource the operation and
(g)360-Degree View
• CRM systems should provide everyone in the organization a
standardized, consistent, and complete view of the customer
based on the customer’s data array from all touch points
collected across the business cycle.

• The 360-degree view insures that information provided by the

customer to every agent they talked with is on file and
available for review when the customer contacts the company
again.
•
• In addition to customer transaction information, the 360-
degree view contains demographic and psychographic
SCOPE OF CRM
 TYPES OF CRM
1.Operational CRM-
• It is the customer facing application concerned with the automation
of business processes involving initial customer contact points.
• The companies generate call centres for effective operations.
• It provides support to business front office business processes,
including sales ,marketing and services.
• Each interaction with customer is generally added to a customers
contact history and the staff can retrieve this information from the
database whenever required
2.Analytical CRM-
• Here the data collected in operational side of business is
captured, stored, organised , examined, interpreted for better
value analysis.
• This type of CRM results in personalisation and one to one
marketing through better customer knowledge.
• This helps in designing and executing targeted marketing
campaigns and also helps in analysing customer behavior to aid
product and service decision making(eg. pricing, new product
development)
3.Collaborative CRM-
• Enables the organization to interact with its departments,
divisions, and channels by using its collaborative services and
infrastructure.
• It enable the organisation to share customer information among
various business units such as marketing sales and technical
teams.
• Its primary goal is to improve the quality of customer services to
gain loyalty and acquire new customers.
• It helps in providing infrastructure for responsive and effective
support to customers issues, complaints, questions etc.
 EVOLUTION OF CRM
1.Pre-Industrial Age-
• This age was largely based on agricultural economy, and the farmers
and artisans used to sell their produce and artefacts in the nearby
markets.
• The producers and consumers developed close relationships and
based on the feedback received from time to time they offered
customized products to their consumers.
• Retaining customers through repeat purchases, building trust by
facilitating marketing became important concerns for marketers
during pre- industrial days.
2. Industrial Age-
• This era aimed at mass consumption which led to mass
production wherein machines were used to increase production
and sales of products.
• This in turn created both personal and impersonal selling
supported by advertising and promotion.
3. Service economy age-
• During this time service became an important factor for business to
succeed.
• Every customer was given importance and service differentiation
became a key factor in the market.
• Relationship played a critical role in creating market advantage as
this was seen as the best differentiation factor.
• Organisations started focusing on service factors by understanding
various segments of their customers, improving service quality, and
providing better customer satisfaction.
4. Knowledge Economy age-
• In 1990s with the advent of computers led to evolution of systems like Sales
Force Automation.

• Around mid 1990s CRM started acting as a hub of the sales and service
systems and started sharing information for customer analysis and marketing
campaign management.

• Till the late 1990s the Internet usage grew and many e-businesses e-CRM
applications emerged on a daily basis to acter to the online customers.

• All these CRM initiatives help the organisation in creating better strategies and
they look for more collaboration to improve their efficiency and limitations.
 IMPORTANCE OF CRM
1. Enhanced customer understanding: like customer age, income, address
and historical purchase data that can help in understanding the customers
better.

2. Focused and targeted marketing - This is possible because the company

gathers all the information through multiple customer touchpoints and uses
metrics to process this data. CRM, company can now focus to specific
audience. This will result in increased sales and cheaper costs.

3. Repeat Business/Loyalty: It is easy to retain the old customers rather than

to try to acquire new ones. By improving the customer relationship, many
customers become loyal to the company and thus will aid in increasing sales
4) Reduction in costs: Retention of customers enhances customer referrals for
the organisation and speeds order processing and reduces customer acquisition
costs.

5) Develops better communication channels: 2 way communication channels

should be established between company and client.

6) Identify new selling opportunities- A better knowledge of customers helps

the company in identifying new opportunities and markets for them. It also
assists in creating better strategies.
7. Developing a Proactive Management style: The information available about
the customers, can be used to track the buying patterns and behavior of the
customers. They are able to visualise the problems in the customer relationship
and accordingly can take measures so that they can retain these customers.

8. Enhances reputation- Improved customer relationship leads to enhancement

of referrals due to positive word of mouth. This enhances the organisations
reputation and may help in achieving higher growth.

9. Better decision making- CRM systems provide marketers with real-time-data

and helps in identifying trends and patterns. This helps in taking optimal
business decisions.
Q1What is the basic purpose of CRM?
a.To retain customers
b.To entertain customers
c.To give great deals and offers to customers
d.To market directly to customers
Q2What is not a key component of CRM?
a.Customer data mgmt.
b.Sales automation
c.Inventory mgmt.
d.Marketing automation
Q3_________ provides customer facing
departments information to offer a positive
customer experience?
a.Analytical CRM
b.Operational CRM
c.Collaborative CRM
Q4_________specializes in understanding
and drawing insights from gathered
customer data?
a.Analytical CRM
b.Operational CRM
c.Collaborative CRM
Q5 Marketing automation, sales
automation and customer service are 3
basic components of ____________.
a.Analytical CRM
b.Operational CRM
c.Collaborative CRM
EXERCISE
Do you belong to any point.
Loyalty, or frequency program? Are
they effective in increasing your
positive feelings toward the
company?