BGSCustomer Relationship

Management

BGSCustomer Relationship

ManagementChapter 2

History and Development of CRM

Chapter 2History and Development of

CRM

Thomson Publishing 2007 All Rights Reserved

The Origins of CRM

The Origins of CRM

• Relationship marketing• Marketing research• B2B relationships• MRP, SAP, and ERP• Customer contact centers• Sales force automation• Campaign management tools• Web and channel integration• Diffusion of PCs and analytical CRM• Success of direct response

marketing such as toll-free calling and direct mail

• Relational databases• Industrial and services marketing

Relationship Marketing and Relational Databases

• Database construction is easiest for firms having frequent and direct customer interaction– It is most difficult for firms having infrequent

and indirect customer interaction.– It is of intermediate difficulty for firms

having frequent but indirect customer interaction or direct but infrequent customer interaction.

Ease or Difficulty of Database Construction

Direct Indirect

Level Of Difficulty Easy Intermediate

Industry Banks, Retailers Package Goods

Companies

Level Of Difficulty Intermediate Difficult

Industry PC StoreAuto, Furniture Manufacturers

Inte

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Customer Interaction

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CRM: Why Now?

• Advancements in computer and information technology

• Substantial changes in the business environment

Changes in the Business Environment Leading to

Adoption of CRM• Increasing number of high-quality

products• Erosion of effectiveness of the

traditional 4 P’s• Changes in the pace of life• The Internet and multichannel usage

Organizations’ Expectations Regarding CRM

Success or Failure?????

Quantitative Benefits of CRM Using Revenue Enhancement

Metrics• Acquisition/prospect increase 27-45 percent• Expense per convert decrease 30-60 percent• Renewal rate increase 5-15 percent• Cross-sell/up-sell increase 3-25 percent• Share of wallet increase 3-25 percent• Service and churn decrease 30-80 percent• Campaign cycle time decrease 50-70

percent• Campaign conversion increase 20-50 percent• Win-back increase 25-33 percent

Challenges in Implementing CRM

How the Many Barriers Can Be Overcome

Three Major Ways to Overcome Barriers in Implementing CRM

• Through Communication– Adopt a CRM philosophy– Detail the benefits to all employees– Top executive support

• Through Integration– Business strategy should drive CRM– IT and business managers must be integrated– Customer data must be integrated

• Through foresight relating CRM tactics to success factors in the industry

Overcoming Barriers

• The organization must adopt a relationship marketing philosophy across all functional areas.

• The organization must detail and communicate the benefits of a CRM orientation to all managers and staff.

• Top executive support must be obtained and maintained throughout CRM development.

Overcoming Barriers

• Business strategies must drive CRM development rather than the other way around.

• If separate “quick-results” CRM projects are being implemented as opposed to an all-encompassing CRM suite, then these separate projects must be integrated and functionally aligned.

• Include both IT and business unit managers in CRM start-up teams.

Overcoming Barriers

• Customer data must be integrated and maintained.

• Build a business case and conduct a business analysis before deciding on a CRM solution.

• Develop success metrics to assess the effectiveness of your CRM efforts.

Developing CRM from a Tactical Perspective

• A checklist for customer service success– The importance of the customer contact center– Put process blueprints in place

• Customer analytics– Use your databases more effectively– Segment and identify the value of segments– Build customer relationships

• Product selection

Extending the Meaning of CRM?

• Should colleges only focus on students? What about alumni, donors, and legislators?

• Companies do not forget suppliers, distributors, manufacturers, and facilitating agencies.

• Do not forget VAPs as well as VANs.• CRM is really PRM.

Can CRM Create 1:1 Relationships that are Truly

Viable?Point

1. Consumers are faced with too many 1:1 relationships.

2. Companies ask for more and more info but give little in return.

3. Customers not in a company’s loyalty program feel like second-class citizens.

4. Today’s proliferation of products and catalogues is mind-boggling.

Counterpoint1. Consumers can opt-in or

opt-out as they see fit.2. Not so -- look at

supermarkets and hotels.

3. Consumers today are savvy enough to realize there are different levels of service for different levels of loyalty.

4. The former is not really due to CRM, and CRM should reduce the number of catalogues.

Questions?